Exhibit 10.1 - Asset Purchase Agreement dated as of November 9, 2005 by and
among Temporary Financial Services, Inc., Command Staffing, LLC, Harborview
Software, Inc. and the Operations Entities (as defined therein).
ASSET PURCHASE AGREEMENT
TEMPORARY FINANCIAL SERVICES, INC.
COMMAND STAFFING, LLC
HARBORVIEW SOFTWARE, INC.
and the
OPERATIONS ENTITIES
Dated as of November 9, 2005
TABLE OF CONTENTS
ARTICLE I ACQUISITION AND DISPOSITION OF ACQUIRED ASSETS......................4
1.1 ACQUIRED ASSETS...................................................4
1.2 RETAINED ASSETS...................................................6
1.3 LIABILITIES.......................................................6
1.4 CLOSING AND DELIVERY OF ACQUIRED ASSETS...........................6
1.5 PURCHASE PRICE AND PAYMENT........................................7
1.6 METHOD OF ACQUISITION.............................................8
1.7 TAX FREE REORGANIZATION...........................................8
1.8 MANAGEMENT OF TFS AFTER FIRST CLOSING.............................8
ARTICLE II REPRESENTATIONS AND WARRANTIES.....................................9
2.1 REPRESENTATIONS AND WARRANTIES OF OF SELLING PARTIES..............9
2.2 REPRESENTATIONS AND WARRANTIES OF TFS............................17
ARTICLE 3 COVENANTS OF COMPANY...............................................17
3.1 CONDUCT OF BUSINESS..............................................17
3.2 ACCESS TO PROPERTIES AND RECORDS.................................17
3.3 BREACH OF REPRESENTATIONS AND WARRANTIES.........................17
3.4 CONSENTS.........................................................17
3.5 TAX RETURNS......................................................17
3.6 EXCLUSIVITY; ACQUISITION PROPOSALS...............................17
3.7 NOTICE OF EVENTS.................................................17
3.8 BEST EFFORTS.....................................................17
ARTICLE 4 COVENANTS OF TFS...................................................17
4.1 BREACH OF REPRESENTATIONS AND WARRANTIES.........................17
4.2 DIVIDENDS, ISSUANCE OF OR CHANGES IN SECURITIES..................17
4.3 GOVERNING DOCUMENTS..............................................17
4.4 NO ACQUISITIONS..................................................17
4.5 ACCESS TO PROPERTIES AND RECORDS.................................17
4.6 CONSENTS.........................................................17
4.7 NOTICE OF EVENTS.................................................17
4.8 BEST EFFORTS.....................................................17
ARTICLE 5 AGREEMENTS OF COMPANY..............................................17
5.1 LEGAL CONDITIONS.................................................17
5.2 EXPENSES.........................................................17
5.3 ADDITIONAL AGREEMENTS............................................17
5.4 PUBLIC ANNOUNCEMENTS.............................................17
ARTICLE 6 CONDITIONS PRECEDENT...............................................17
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE CLOSING...........17
6.2 CONDITIONS OF OBLIGATIONS OF TFS.................................17
6.3 CONDITIONS OF OBLIGATION OF COMPANY..............................17
6.4 SPECIAL CONDITION OF OPERATIONS ENTITIES.........................17
6.5 UNSATISFIED CONDITIONS...........................................17
ARTICLE 7 DELIVERIES AT CLOSINGS.............................................17
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ARTICLE 8 INDEMNIFICATION....................................................17
8.1 INDEMNIFICATION RELATING TO AGREEMENT............................17
8.2 INDEMNIFICATION RELATING TO AGREEMENT............................17
8.3 PROCEDURES.......................................................17
ARTICLE 9 MISCELLANEOUS......................................................17
9.1 ENTIRE AGREEMENT.................................................17
9.2 GOVERNING LAW....................................................17
9.3 NOTICES..........................................................17
9.4 SEVERABILITY.....................................................17
9.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.......................17
9.6 ASSIGNMENT.......................................................17
9.7 COUNTERPARTS.....................................................17
9.8 AMENDMENT........................................................17
9.9 EXTENSION, WAIVER................................................17
9.10 INTERPRETATION...................................................17
9.11 ATTORNEYS' FEES..................................................17
9.12 COSTS AND EXPENSES...............................................17
9.13 REMEDIES.........................................................17
9.14 CONSTRUCTION.....................................................17
9.15 MATERIALITY......................................................17
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SCHEDULES & EXHIBITS:
SCHEDULE 1 OPERATIONS ENTITIES..................................................
SCHEDULE 1.1(B) LEASE REAL PROPERTY.............................................
SCHEDULE 1.1(C) OWNED REAL PROPERTY.............................................
SCHEDULE 1.1(D) VEHICLES........................................................
SCHEDULE 1.1(F) ASSUMED CONTRACTS...............................................
SCHEDULE 1.1(K) LICENSES AND PERMITS............................................
SCHEDULE 1.2 SELLING PARTIES RETAINED ASSETS....................................
SCHEDULE 1.3 ASSUMED LIABILITIES................................................
SCHEDULE 1.5.1 COMMAND PURCHASE PRICE...........................................
SCHEDULE 1.5.2 OPERATIONS PURCHASE PRICE........................................
SCHEDULE 1.5.3(A) ALLOCATION OF THE COMMAND PURCHASE PRICE......................
SCHEDULE 1.5.3(B) ALLOCATION OF THE OPERATIONS PURCHASE PRICE...................
SCHEDULE 1.8 BOARD OF DIRECTORS AND OFFICERS TO BE ELECTED......................
EXHIBIT A FORM OF ▇▇▇▇ OF SALE.................................................
EXHIBIT B FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENTS.........................
EXHIBIT C FORM OF ASSIGNMENT AND ASSUMPTION OF LEASE...........................
EXHIBIT D VOTING AGREEMENT.....................................................
EXHIBIT E FORM OF JOINDER AGREEMENT............................................
EXHIBIT F FORM OF NONCOMPETITION AGREEMENT.....................................
EXHIBIT G FORM OF TFS CLOSING CERTIFICATE......................................
EXHIBIT H-1 FORM OF SELLING PARTIES CLOSING CERTIFICATES - CORP.................
EXHIBIT H-2 FORM OF SELLING PARTIES CLOSING CERTIFICATES - LLC.................
EXHIBIT I-1 FORM OF BOARD OF DIRECTORS RESOLUTIONS.............................
EXHIBIT I-2 FORM OF MANAGERS / MANAGING MEMBERS RESOLUTIONS....................
EXHIBIT J-1 FORM OF SHAREHOLDERS RESOLUTIONS...................................
EXHIBIT J-2 FORM OF MEMBERS RESOLUTIONS........................................
EXHIBIT K NAME CHANGE DOCUMENTATION............................................
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of November 9, 2005 (this "Agreement"),
by and among Temporary Financial Services, Inc., a Washington corporation
("TFS"), and Command Staffing, LLC a Nevada limited liability ("Command"),
Harborview Software, Inc., a Nevada corporation ("Harborview") and all of the
entities listed on Schedule 1 (which are collectively referred to as the
"Operations Entities") (Command, Harborview, and the Operations Entities are
sometimes collectively referred to herein as the "Selling Parties").
INTRODUCTION
A. Command is a franchising organization, offering franchises for staffing
offices providing temporary workers to skilled, semi-skilled and unskilled
manual jobs, as well as hospitality and certain office and clerical positions.
Many of the Operations Entities are franchisees of Command.
B. Harborview is the owner and licensor of the Labor Commander software
system which provides front and back office support for staffing offices. Each
of the Operations Entities is a licensor of Harborview software.
C. The Operations Entities are the owners and operators of staffing
offices doing business under one or more tradenames of Command. The location of
the staffing offices which are included in this transaction for each of the
Operations Entities is listed on Schedule 1.
D. TFS desires to acquire certain assets of the Selling Parties and to
assume certain contractual rights, obligations and liabilities of the Selling
Parties on the terms and subject to the conditions set forth herein.
E. Selling Parties desire to sell such assets to TFS, and to transfer such
contractual rights, obligations and liabilities to TFS, on the terms and subject
to the conditions set forth herein.
F. The parties desire that the consummation of the transactions
contemplated by this Agreement qualify as a tax free reorganization under
Sections 351 and/or 368 of the Internal Revenue Code of 1986, as amended.
INTENDING TO BE LEGALLY BOUND, and in consideration of the foregoing and
the mutual representations, warranties, covenants and agreements contained
herein, TFS and the Selling Parties hereby agree as follows:
ARTICLE 1.
ACQUISITION AND DISPOSITION OF ACQUIRED ASSETS
1.1. Acquired Assets. Subject to the terms and conditions of this
Agreement, at the respective Closings (as defined below), Selling Parties shall
sell, convey, transfer, assign and deliver to TFS, and TFS shall purchase,
acquire and accept from Selling Parties, all of the assets (the "Acquired
Assets") owned by Selling Parties, other than Retained Assets (as defined below)
including, without limitation, the following:
(a) Equipment. All of the equipment, machinery, vehicles, furniture,
fixtures, furnishings and leasehold improvements owned by Selling Parties and
located at (or, in the case of mobile assets, those used primarily in connection
with) the businesses of Selling Parties (the "Equipment");
(b) Real Estate Leases/Leasehold Improvements. The real property
leased by the Selling Parties and relating to the businesses of the Selling
Parties ("Offices") listed on Schedule 1.1(b) to this Agreement (collectively,
the "Leased Real Property") and Selling Parties' interest in all leasehold
improvements located on such real property (collectively, the "Leasehold
Improvements");
(c) Real Estate Owned/Owned Improvements. The real property owned by
the Selling Parties and relating to the Offices listed on Schedule 1.1(c) to
this Agreement (collectively, the "Owned Real Property") and Selling Parties'
interest in all owned improvements located on such real property (collectively,
the "Owned Improvements");
(d) Vehicles. Selling Parties' interest in all vehicles owned or
leased by the Selling Parties and listed on Schedule 1.1(d) to this Agreement
(collectively, the "Vehicles");
(e) Inventories; Purchase Contracts. The inventories, goods, wares,
raw materials, merchandise and supplies of Selling Parties at the Closings (as
defined below) either on hand at any of the Offices or owned by Selling Parties
and in transit to such Offices, and all orders or contracts for the purchase of
inventories entered into by Selling Parties for the Selling Parties businesses
in the ordinary course of business prior to the Closing;
(f) Executory Contracts. Selling Parties' interests in all executory
contracts or agreements (including the original executed agreements) and listed
on Schedule 1.1(f) to this Agreement (collectively, the "Assumed Contracts");
(g) Intangible Property Rights. All trade names, trademarks and
service marks relating to Selling Parties;
(h) Books and Records. All of Selling Parties' books, records and
other documents and information relating to the Acquired Assets and the Selling
Parties businesses, including, without limitation, all customer and supplier
lists, sales literature, inventory records, purchase orders and invoices, sales
orders and sales order log books, commission records, correspondence, product
data, price lists, quotes and bids, catalogues and brochures of every kind and
nature;
(i) Telephone Listings. The Selling Parties' current telephone and
fax listings and the right to use the telephone numbers currently being used at
the Offices;
(j) Internet Domain Names. All Internet domain names owned by
Selling Parties, including ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇;
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(k) Licenses and Permits. To the extent transferable, all licenses,
permits, bonds, consents, approvals, authorizations, qualifications and similar
permissions of governmental authorities (Federal, state and local) related to
the Selling Parties businesses and listed on Schedule 1.1(k) (collectively, the
"Licenses and Permits");
(l) Prepaid Expenses and Deposits. All prepaid expenses (including
those related to rent, maintenance, utilities and sign leases) and deposits
required for the operation of the Selling Parties businesses or relating to the
Acquired Assets;
(m) Goodwill. Goodwill, all related tangibles and intangibles, which
relate to the operation of the Selling Parties businesses and all rights to
continue to use the Acquired Assets in the conduct of a going business;
(n) Receivables. All accounts or notes receivable owing to Selling
Parties at the Closing including, without limitation, all customer accounts
receivable (collectively, the "Receivables");
(o) Cash. Except as provided in Section 1.2, all cash and cash
equivalents of Selling Parties at the Closing; and
(p) Miscellaneous Assets. Any and all other assets, properties,
rights or other interests of Selling Parties, tangible or intangible, used in
connection with the Selling Parties businesses or the other Acquired Assets
including, without limitation, all of Selling Parties' interest in any
applicable covenants not to compete.
1.2. Retained Assets. The Selling Parties and TFS expressly understand and
agree that the assets and properties of Selling Parties set forth on Schedule
1.2 shall be "Retained Assets" and shall be excluded from the Acquired Assets
hereunder.
1.3. Assumed Liabilities. TFS shall not assume or be deemed to have
assumed, or to have any obligations with respect to, any liabilities or
obligations of Selling Parties other than the contracts and liabilities
specifically assumed pursuant to Section 1.3 and specified on Schedule 1.3
("Assumed Liabilities"), whether such other liabilities and obligations arose or
arise before or after, or mature before or after, the Closing. All obligations
other than those listed on Schedule 1.3 shall remain solely the obligations of
Selling Parties (the "Retained Liabilities").
1.4. Closing and Delivery of Acquired Assets. The transaction shall close
in two phases. The first phase closing (the "First Closing") shall include the
Acquired Assets and Assumed Liabilities of Command and Harborview. The second
phase closing (the "Second Closing") shall include the Acquired Assets and
Assumed Liabilities of the Operations Entities. The First Closing and Second
Closing are each referred to as a "Closing" or collectively as the "Closings."
Each Closing and delivery of the Acquired Assets and Assumed Liabilities will
take place as soon as practicable after satisfaction or waiver of the last to be
fulfilled of the conditions set forth in Article VI that by their terms are to
occur prior to the respective Closing, at the place to be designated by the
parties, unless another date is agreed to by the parties hereto. Unless
otherwise agreed between Command, Harborview and TFS, the consummation of the
transactions contemplated for the First Closing shall occur at the offices of
Command Staffing, LLC, located at ▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ on November 9, 2005 at 2:00 p.m. The consummation of the
transactions contemplated for the Second Closing shall occur at the offices of
Command Center, Inc. on January 9, 2006, or as soon thereafter as may be
reasonably accomplished as determined by TFS, in its reasonable discretion, but
in no event later than March 1, 2006.
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1.5. Purchase Price and Payment. The purchase price (the "Purchase Price")
for the Acquired Assets shall be paid by the issuance and delivery of shares of
TFS common stock, $0.001 par value (the "Shares"). The Purchase Price for all of
the Acquired Assets and Assumed Liabilities shall be paid in full by the
issuance and delivery of a total of 19,897,933 Shares, allocated as set forth in
this section.
1.5.1. Command Purchase Price. At the First Closing, the
consideration to be paid to Command and Harborview for the Acquired Assets of
Command and Harborview shall be: (i) the issuance of 3,745,493 Shares to the
members of Command in accordance with Schedule 1.5.1; (ii) the issuance of
2,809,120 Shares to the shareholders of Harborview in accordance with Schedule
1.5.1; (iii) the assumption by TFS of the Command and Harborview Assumed
Liabilities; and (iv) the setting aside of 144,808 Shares to be issued as an
incentive, as determined by the Board of Directors of TFS, in its sole and
absolute discretion (collectively, the "Command Purchase Price").
1.5.2. Operations Purchase Price. At the Second Closing, the
consideration to be paid to the Operations Entities for the Acquired Assets of
the Operations Entities shall be: (i) the issuance of 13,198,512 Shares to the
members or shareholders of the Operations Entities, as the case may be, in
accordance with Schedule 1.5.2; and (ii) the assumption by TFS of the Assumed
Liabilities of the Operations Entities (collectively, the "Operations Purchase
Price"). Notwithstanding anything to the contrary in this Agreement, the total
Shares issued as part of the Operations Purchase Price shall be issued and
delivered in sufficient numbers to qualify the transaction as a reorganization
pursuant to Sections 351 and/or 368 of the Internal Revenue Code. In the event
that only 54 or less Operations Entities consummate the Second Closing for any
reason, TFS, in its reasonable discretion, may decrease the number of Shares in
the Operations Purchase Price in an equitable manner among those Operations
Entities selling by the number of Shares in the Operations Purchase Price that
would have been payable to the Operations Entities not consummating the Second
Closing.
1.5.3. Allocation of the Purchase Price. The Command Purchase Price
and the Operations Purchase Price (collectively, the "Purchase Price") shall be
allocated in accordance with this Section 1.5.3. The Command Purchase Price
shall be allocated to the Acquired Assets of Command and Harborview in
accordance with Schedule 1.5.3A. The Operations Purchase Price shall be
allocated to the Acquired Assets of the Operations Entities in accordance with
Schedule 1.5.3B. The Shares shall be issued directly to the shareholders or
members of the Selling Parties, as the case may be. The Shares to be issued in
payment of the Purchase Price shall all be "restricted securities" within the
meaning set forth in Rule 144 of the Securities Act of 1933, as amended.
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1.6. Method of Acquisition.
1.6.1. Conveyance of Acquired Assets. The sale, conveyance,
transfer, assignment and delivery to TFS of the Acquired Assets, as herein
provided, shall be effected by such bills of sale, endorsements, assignments and
other instruments of transfer and conveyance as may be necessary to vest in TFS
the right, title and interest of Selling Parties in and to the Acquired Assets,
free and clear of all liens, claims, charges and encumbrances, except as
otherwise provided in this Agreement. Such documents shall include, without
limitation, a ▇▇▇▇ of Sale, substantially in the form of Exhibit A attached
hereto and any documents required by the U.S. Patent and Trademark Office or
other government entities to reflect the transfer of registered trademarks.
Selling Parties shall, at each Closing and at any time or from time to time
after such Closing, upon request, perform or cause to be performed such acts and
execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such documents, as may be reasonably required or requested to
effectuate the sale, conveyance, transfer, assignment and delivery to TFS of any
of the Acquired Assets.
1.6.2. Assumption of Contracts. At each relevant Closing, TFS and
each Selling Party shall execute an Assignment and Assumption Agreement
("Assignment and Assumption Agreement"), substantially in the form attached
hereto as Exhibit B in order to effectuate the assumption by TFS of the Assumed
Liabilities of each such Selling Party. At each relevant Closing, and only to
the extent required under any real estate lease or by any landlord for a Selling
Party, TFS, the Selling Party and the landlord shall execute an Assignment and
Assumption of Lease, substantially in the form attached hereto as Exhibit C (or
such other documents necessary to assign any such lease as required by TFS). At
each Closing, or at any time or from time to time thereafter, upon request, the
parties shall perform or cause to be performed such acts, and execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered such
other documents, as may be reasonably required or requested for the assumption
by TFS of the Assumed Liabilities.
1.7. Tax Free Reorganization. As to Selling Parties, along with their
shareholders and members, the parties intend that the transactions contemplated
in this Agreement shall qualify as a tax free reorganization pursuant to
Sections 351 and/or 368 of the Internal Revenue Code. TFS shall execute and
deliver all such documents and take all such other actions as in the opinion of
legal counsel for any of the Selling Parties are necessary in order to preserve
the character of the transaction as a tax free reorganization.
1.8. Management of TFS After First Closing. Simultaneous with the First
Closing, the members of the Board of Directors of TFS other than ▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇▇ ▇▇▇▇ shall resign. ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ shall immediately appoint
▇▇▇▇▇ ▇▇▇▇▇▇▇ and other individuals identified on Schedule 1.8 to fill those
vacancies on the Board of Directors of TFS until the next annual Shareholders'
Meeting that occurs after the Second Closing. Simultaneous with the First
Closing, the executive officers of TFS shall resign and those persons identified
on Schedule 1.8 as the new executive officers of TFS shall be appointed by the
Board of Directors of TFS. By executing this Agreement individually for the
limited purpose of agreeing to the terms and conditions of this Section 1.8,
▇▇▇▇ ▇▇▇▇▇▇▇ agrees to execute and deliver to the Selling Parties, at the First
Closing, a Voting Agreement in the form attached hereto as Exhibit D (the
"Voting Agreement").
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ARTICLE 2.
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of Selling Parties. Except as
disclosed in the two separate Schedules of Exceptions delivered by Command and
Harborview at the First Closing, and by each of the Operations Entities at the
Second Closing and attached hereto (each, a "Schedule of Exceptions"), which
refers specifically to the representations and warranties in this Agreement and
which identifies by section number the section and subsection to which such
disclosure relates, and whether or not the Schedule of Exceptions is referred to
in a specific section or subsection, each of the Selling Parties represents and
warrants, severally and not jointly, with respect to its individual entity and
the business conducted by it, as follows:
2.1.1. Organization, Standing and Power. Each of the Selling Parties
is a corporation or limited liability company duly organized, validly existing
and in good standing under the laws of the state of its domicile, has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, and is duly qualified and in
good standing to do business in each jurisdiction in which a failure to so
qualify would have a material adverse effect on the Business Condition (as
hereinafter defined) of such party. Selling Parties have no Subsidiaries (as
hereinafter defined). As used in this Agreement, "Business Condition" with
respect to any entity shall mean the business, financial condition, results of
operations, assets or prospects (as defined below) (without giving effect to the
consequences of the transactions contemplated by this Agreement) of such entity
or entities taken as a whole. In this Agreement, a "Subsidiary" of any
corporation or other entity means a corporation, partnership, limited liability
company or other entity of which such corporation or entity directly or
indirectly owns or controls voting securities or other interests which are
sufficient to elect a majority of the board of directors or other managers of
such corporation, partnership, limited liability company or other entity. As
used in this Agreement, "prospects" shall mean events, conditions, facts or
developments which are known to Selling Parties and which in the reasonable
course of events are expected to have a material effect on future operations of
the business as presently conducted by Selling Parties. Selling Parties have
delivered to TFS complete and correct copies of the articles, certificates,
bylaws, and/or other primary charter and organizational documents ("Charter
Documents") of Selling Parties, in each case, as amended to the date hereof. The
minute books and stock records of Selling Parties, complete and correct copies
of which have been delivered to TFS, contain correct and complete records of all
material proceedings and actions taken at all meetings of, or effected by
written consent of, the shareholders of Selling Parties and their respective
boards of directors or members, and all original issuances and subsequent
transfers, repurchases, and cancellations of Selling Parties' capital stock and
membership interests. The Schedule of Exceptions contains a complete and correct
list of the officers, directors and members of Selling Parties.
2.1.2. Capital Structure. The authorized capital stock or membership
units of each of the Selling Parties (immediately prior to the Closing) having
voting rights under applicable law, the Charter Documents or agreements with the
Selling Parties and the owners of the capital stock and membership units are
listed on Schedule 2.1.2.
2.1.3. Authority. The execution, delivery, and performance of this
Agreement by Selling Parties have been duly authorized by all necessary action
of the respective boards of directors or members of Selling Parties and has
received the favorable vote or consent of the requisite number of holders of
Selling Parties shares or membership units entitled to vote thereon in
accordance with Section 6.2, the Charter Documents and the laws of the state of
their domicile. No other act or proceeding on the part of Selling Parties is
necessary to approve this Agreement or the transactions contemplated hereby.
Each of Selling Parties and has duly and validly executed and delivered this
Agreement, and this Agreement constitutes a valid, binding and enforceable
obligation of each of the Selling Parties in accordance with its terms.
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2.1.4. Compliance with Laws and Other Instruments. Each of Selling
Parties holds, and at all times has held, all licenses, permits, and
authorizations from all Governmental Entities, (as defined below) necessary for
the lawful conduct of its business pursuant to all applicable statutes, laws,
ordinances, rules, and regulations of all such authorities having jurisdiction
over it or any part of its operations, excepting, however, when such failure to
hold would not have a material adverse effect on Selling Parties' Business
Condition. There are no violations or claimed violations known by Selling
Parties of any such license, permit, or authorization or any such statute, law,
ordinance, rule or regulation. Neither the execution and delivery of this
Agreement by Selling Parties nor the performance by Selling Parties of their
obligations under this Agreement will, in any material respect, violate any
provision of law or will conflict with, result in the material breach of any of
the terms or conditions of, constitute a material breach of any of the terms or
conditions of, constitute a material default under, permit any party to
accelerate any right under, renegotiate, or terminate, require consent,
approval, or waiver by any party under, or result in the creation of any lien,
charge, encumbrance, or restriction upon any of the properties, the Acquired
Assets, or Selling Parties pursuant to, any of the Charter Documents or any
agreement (including government contracts), indenture, mortgage, franchise,
license, permit, lease or other instrument of any kind to which Selling Parties
is a party or by which Selling Parties or any of their assets are bound or
affected. No consent, approval, order or authorization of or registration,
declaration or filing with or exemption (collectively "Consents") by any court,
administrative agency or commission or other governmental authority or
instrumentality, whether domestic or foreign (each a "Governmental Entity") is
required by or with respect to Selling Parties in connection with the execution
and delivery of this Agreement by Selling Parties or the consummation by Selling
Parties of the transactions contemplated hereby, except for such Consents, which
if not obtained or made would not have a material adverse effect on Selling
Parties' Business Condition or the anticipated benefits of the transactions
contemplated by this Agreement.
2.1.5. Confidentiality Agreements. Selling Parties have obtained
written agreements from all employees and third parties with whom Selling
Parties have shared confidential proprietary information (i) of Selling Parties,
or (ii) received from others which Selling Parties are obligated to treat as
confidential, which agreements require such employees and third parties to keep
such information confidential. Selling Parties have delivered copies of such
written agreements, as executed, to TFS.
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2.1.6. Financial Statements. Each of the Selling Parties shall
deliver to TFS audited balance sheets and statements of income and cash flow for
their most recently completed fiscal years and unaudited balance sheets and
statements of income and cash flow as of September 30, 2005 (such balance sheets
and statements of income and cash flow are collectively referred to as the
"Selling Parties Financial Statements"). The Selling Parties Financial
Statements: (i) shall be in accordance with the books and records of Selling
Parties; (ii) shall present fairly, in all material respects, the financial
position of Selling Parties as of the date indicated and the results of their
operations for each of the periods indicated; and (iii) shall be prepared in
accordance with generally accepted accounting principles consistently applied
except as described in the Schedule of Exceptions. There shall be no material
off-balance sheet assets, liabilities, claims or obligations of any nature,
whether accrued, absolute, contingent, anticipated, or otherwise, whether due or
to become due, that are not shown or provided for either in the Selling Parties
Financial Statements or the Schedule of Exceptions. The liabilities of Selling
Parties were incurred in the ordinary course of Selling Parties' business. The
Selling Parties Financial Statements: (x) are the most recent regularly prepared
balance sheets of the Selling Parties; and (y) have been prepared in accordance
with the accounting principles normally used by the Selling Parties. The
"Selling Parties Pro Forma Closing Balance Sheet" attached as Schedule 2.1.6
sets forth, based on reasonable assumptions relating to the operation of the
business conducted by Selling Parties, the projected Selling Parties Pro Forma
Closing Balance Sheet as of the estimated Closing. A "Selling Parties Final
Closing Balance Sheet" will be prepared by TFS following Closing, and any
updates or revisions of such statement will be prepared, on a basis consistent
with the Selling Parties Financial Statements and Schedule 2.1.6.
2.1.7. Taxes.
(a) Selling Parties have timely filed (or caused to be filed)
all federal, state, local and foreign tax returns, reports and information
statements required to be filed by them, which returns, reports and statements
are true, correct and complete in all material respects, and paid all taxes
required to be paid as shown on such returns, reports and statements. All taxes
required to be paid in respect of the periods covered by such returns ("Return
Periods") have either been paid or fully accrued on the books of Selling
Parties. Selling Parties has fully accrued all unpaid taxes in respect of all
periods (or the portion of any such periods) subsequent to the Return Periods.
There is no material difference between the amounts of the book basis and the
tax basis of any assets of Selling Parties that is not reflected in an
appropriate accrual of deferred tax liability on the books of Selling Parties.
No deficiencies or adjustments for any tax have been claimed, proposed or
assessed, or to the knowledge of Selling Parties, threatened. The Schedule of
Exceptions accurately sets forth the years for which Selling Parties' federal
and state income tax returns, respectively, have been audited and any years
which are the subject of a pending audit by the Internal Revenue Service and the
applicable state agencies. Selling Parties are not subject to any pending or, to
the knowledge of Selling Parties, threatened tax audit or examination and
Selling Parties have not waived any statutes of limitation with respect to the
assessment of any tax. For the purposes of this Agreement, the terms "tax" and
"taxes" shall include all federal, state, local and foreign taxes, assessments,
duties, tariffs, registration fees and other governmental charges including,
without limitation, all income, franchise, property, production, sales, use,
payroll, license, windfall profits, severance, withholding, excise, gross
receipts and other taxes, as well as any interest, additions or penalties
relating thereto and any interest in respect of such additions or penalties.
Selling Parties have provided TFS true and correct copies of all tax returns,
information, statements, reports, work papers and other tax data reasonably
requested by TFS. No consent or agreement has been made under Section 341 of the
Internal Revenue Code by or on behalf of Selling Parties or any predecessor
thereof.
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(b) There are no liens for taxes upon the Acquired Assets
except for taxes that are not yet payable. Selling Parties have not entered into
any agreements, waivers or other arrangements in respect of the statutes of
limitations in respect of their respectable taxes or tax returns. Selling
Parties has withheld all taxes required to be withheld in respect of wages,
salaries and other payments to all employees, officers and directors and timely
paid all such amounts withheld to the proper taxing authority.
2.1.8. Absence of Certain Changes and Events. Since December 31,
2004, there has not been:
(a) Any transaction involving more than $50,000 entered into
by Selling Parties other than in the ordinary course of business; any change (or
any development or combination of developments of which Selling Parties have
knowledge which is reasonably likely to result in such a change) in Selling
Parties' Business Condition, other than changes in the ordinary course of
business which in the aggregate have not been materially adverse to Selling
Parties' Business Condition; or, without limiting the foregoing, any loss of or
damage to any of the properties of Selling Parties due to fire or other
casualty, or any other loss, whether or not insured, amounting to more than
$50,000 in the aggregate;
(b) Any termination, modification or rescission of, or waiver
by Selling Parties of rights under, any existing contract having or likely to
have a material adverse effect on Selling Parties' Business Condition;
(c) Any mortgage, pledge, imposition of any security interest,
claim, encumbrance or other restriction on any of the assets, tangible or
intangible, of Selling Parties.
2.1.9. Leases in Effect. All real property leases and subleases as
to which Selling Parties are a party and any amendments or modifications thereof
are listed on the Schedule of Exceptions (each a "Lease" and collectively, the
"Leases") and are valid, in full force and effect and enforceable, and there are
no existing defaults, and Selling Parties have not received or given notice of
default or claimed default with respect to any Lease, nor is there any event
that with notice or lapse of time, or both, would constitute a default
thereunder.
2.1.10. Personal Property. Selling Parties have good and marketable
title, free and clear of all title defects, security interests, pledges,
options, claims, liens, encumbrances, and restrictions of any nature whatsoever
(including, without limitation, leases, chattel mortgages, conditional sale
contracts, purchase money security interests, collateral security arrangements
and other title or interest-retaining agreements), to all inventory,
receivables, furniture, machinery, equipment and other personal property,
tangible or otherwise, reflected on the balance sheet included in the Selling
Parties Financial Statements, or used in Selling Parties' business as of the
date of such Selling Parties Financial Statements even if not reflected thereon,
except for acquisitions and dispositions since December 31, 2004 in the ordinary
course of business. All such Equipment and property is in good operating
condition and repair, reasonable wear and tear excepted, is sufficient for the
conduct of the Selling Parties' business as currently conducted and as proposed
to be conducted up to the Closing and is available for immediate use in the
business of the Selling Parties.
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2.1.11. Certain Transactions. None of Selling Parties' officers,
directors or members has any interest in any property, real or personal,
tangible or intangible, including inventions, copyrights, trademarks or trade
names, used in or pertaining to the business of Selling Parties, or any
supplier, distributor or customer of Selling Parties, except for the rights of a
shareholder or member under the Charter Documents or under applicable state law,
and except for rights under existing employee benefit plans.
2.1.12. Litigation and Other Proceedings. None of the Selling
Parties or any of their respective officers, directors or members is a party to
any pending or, to the best knowledge of Selling Parties, threatened action,
suit, labor dispute (including any union representation proceeding), proceeding,
investigation or discrimination claim in or by any court or governmental board,
commission, agency, department or officer, or any arbitrator, or, in the case of
an individual, arising out of acts in his or her capacity as an officer,
director or member of Selling Parties nor, to the best knowledge of Selling
Parties, is there any basis for any such actions. Selling Parties are not
subject to any order, writ, judgment, decree or injunction.
2.1.13. No Defaults. Selling Parties are not, nor have Selling
Parties received notice that they would be with the passage of time, in default
or violation of any term, condition or provision of: (i) the Charter Documents
of Selling Parties or any comparable governing instrument of Selling Parties;
(ii) any judgment, decree or order applicable to Selling Parties; or (iii) any
loan or credit agreement, note, bond, mortgage, indenture, contract, agreement,
lease, license or other instrument to which Selling Parties is now a party or by
which Selling Parties or any of their respective properties or assets may be
bound, except for defaults and violations which, individually or in the
aggregate, would not have a material adverse effect on the Business Condition of
Selling Parties.
2.1.14. Major Contracts. Selling Parties are not parties to or
subject to:
(a) Any union contract;
(b) Any plan or contract or arrangement, written or oral,
providing for bonuses, pensions, deferred compensation, retirement payments,
profit-sharing or the like;
(c) Any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of profits;
(d) Any lease for real or personal property in which the
amount of payments which Selling Parties are required to make on an annual basis
exceeds $50,000;
(e) Any material agreement, license, franchise, permit,
indenture or authorization which has not been terminated or performed in its
entirety and not renewed which may be, by its terms, terminated, impaired or
adversely affected by reason of the execution of this Agreement, the Closing, or
the consummation of the transactions contemplated hereby or thereby;
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(f) Any contract containing covenants purporting to limit
Selling Parties' freedom to compete in any line of business in any geographic
area, other than contracts with TFS; or
(g) Any material agreement not otherwise disclosed pursuant to
this Section 2.1.14.
Schedule 2.1.14 lists all contracts, arrangements, plans, agreements,
leases, licenses, franchises, permits, indentures, authorizations, instruments
and other commitments of the Selling Parties that are material to the business
or operations of the Selling Parties (collectively, the "Material Agreements").
The Material Agreements are valid and in full force and effect and the Selling
Parties have not, nor, to the best knowledge of Selling Parties, has any other
party thereto, breached any material provisions of, or entered into default in
any material respect under the terms thereof. All outstanding debt or
obligations with respect to long-term liabilities of the Selling Parties, or
current portion thereof, may be prepaid at any time and from time to time in
whole or in part without premium or penalty.
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2.1.15. Banking and Insurance Facilities. Schedule 2.1.15 contains a
complete and correct list of (i) all contracts of insurance or indemnity of
Selling Parties in force at the date of this Agreement (including name of
insurer or indemnitor, agent, annual premium, coverage, deductible amounts, and
expiration date), and (ii) the names and locations of all banks in which Selling
Parties have accounts or safe deposit boxes, the designation of each such
account and safe deposit box, and the names of all persons authorized to draw on
or have access to each such account and safe deposit box.
2.1.16. Employment Agreements. Selling Parties do not have any
written contracts of employment or other employment agreements with any of their
employees that are not terminable at will by Selling Parties. Selling Parties
are not a party to any pending, or to the knowledge of Selling Parties,
threatened, labor dispute. Selling Parties have complied in all material
respects with all applicable federal, state and local laws, ordinances, rules
and regulations and requirements relating to the employment of labor, including,
but not limited to, the provisions thereof relating to wages, hours, collective
bargaining, payment of Social Security, unemployment and withholding taxes, and
ensuring equality of opportunity for employment and advancement of minorities
and women. There are no material claims or investigations pending, or to the
knowledge of Selling Parties, threatened to be brought, in any court or
administrative agency by any former or current Selling Parties employees for
compensation, pending severance benefits, vacation time, vacation pay or pension
benefits, or any other claim pending from any current or former employee or any
other person arising out of Selling Parties' status as employer, whether in the
form of claims for employment discrimination, harassment, unfair labor
practices, grievances, wrongful discharge or otherwise. There are no charges or
other actions involving the Selling Parties pending before the National Labor
Relations Board.
2.1.17. Employee Benefit Plans. None of the Selling Parties have an
Employee Pension Benefit Plan as defined in Section 3 of the Employee Retirement
Income Security Act of 1974, as amended.
2.1.18. Certain Agreements. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
will: (i) result in any payment by Selling Parties (including, without
limitation, severance, unemployment compensation, parachute payment, bonus or
otherwise) becoming due to any director, employee or independent contractor of
Selling Parties under any plan, agreement or otherwise; (ii) materially increase
any benefits otherwise payable under any plan or agreement; or (iii) result in
the acceleration of the time of payment or vesting of any such benefits.
2.1.19. Guarantees and Suretyships. Selling Parties have no powers
of attorney outstanding (other than those issued in the ordinary course of
business with respect to tax matters). Selling Parties have no obligations or
liabilities (absolute or contingent) as guarantor, surety, cosigner, endorser,
co-maker, indemnitor or otherwise respecting the obligations or liabilities of
any person, corporation, partnership, joint venture, association, organization
or other entity.
2.1.20. Brokers and Finders. None of the Selling Parties have
retained any broker, finder or investment banker in connection with this
Agreement or any of the transactions contemplated by this Agreement, nor does or
will Selling Parties owe any fee or other amount to any broker, finder or
investment banker in connection with this Agreement or the transactions
contemplated by this Agreement.
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2.1.21. Certain Payments. None of the Selling Parties, and to the
knowledge of Selling Parties, no shareholder or person or other entity acting on
behalf of Selling Parties, has, directly or indirectly: (i) made an unreported
political contribution; (ii) made or received any payment which was not legal to
make or receive; (iii) engaged in any transaction or made or received any
payment which was not properly recorded on the books of Selling Parties; (iv)
created or used any "off-book" bank or cash account or "slush fund"; or (v)
engaged in any conduct constituting a violation of the Foreign Corrupt Practices
Act of 1977.
2.1.22. Vendors and Customers. To the knowledge of the Selling
Parties, none of the Selling Parties' vendors or customers accounting for more
than 5% of the combined revenue of Selling Parties has terminated, or intends to
reduce materially or terminate the amount of its business with or for the
Selling Parties in the future. The Selling Parties have maintained their
customer lists and related information on a confidential and proprietary basis
and have not granted to any third party any right to use such customer lists for
any purpose.
2.1.23. Environmental Matters. To the knowledge of Selling Parties:
(a) There has not been a discharge or release on any real
property owned or leased by Selling Parties (the "Real Property") of any
Hazardous Material (as defined below) in violation of any federal, state or
local statute, regulation, rule or order applicable to health, safety and the
environment, including, without limitation, contamination of soil, groundwater
or the environment, generation, handling, storage, transportation or disposal of
Hazardous Materials or exposure to Hazardous Materials;
(b) No Hazardous Material has been used by Selling Parties in
the operation of Selling Parties' business;
(c) Selling Parties have not received from any Governmental
Entity or third party any request for information, notice of claim, demand
letter or other notification, notice or information that Selling Parties are or
may be potentially subject to or responsible for any investigation or clean-up
or other remediation of Hazardous Material present on any Real Property;
(d) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses, the purpose of which was to discover,
identify or otherwise characterize the condition of the soil, groundwater, air,
or presence of asbestos at any of the Real Property sites;
(e) There is no asbestos present in any Real Property
presently owned or operated by Selling Parties, and no asbestos has been removed
from any Real Property while such Real Property was owned or operated by Selling
Parties; and
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(f) There are no underground storage tanks on, in or under any
of the Real Property and no underground storage tanks have been closed or
removed from any Real Property which are or have been in the ownership of
Selling Parties.
For purposes of this Agreement, "Hazardous Material" means any
substance (i) that is a "hazardous waste" or "hazardous substance" under any
federal, state or local statute, regulation, rule or order, (ii) that is toxic,
explosive, corrosive, flammable, infectious, radioactive, or otherwise hazardous
and is regulated by any Governmental Entity, (iii) the presence of which on any
of the Real Property causes or threatens to cause a nuisance on any of the Real
Property or to adjacent properties or poses or threatens to pose a hazard to the
health or safety of persons on or about any of the Real Property, or (iv) the
presence of which on adjacent properties could constitute a trespass by Selling
Parties or the then current owner(s) of any of the Real Property.
2.1.24. Undisclosed Liabilities. The Selling Parties have no
liabilities except for the liabilities reflected or reserved against in the
Selling Parties Financial Statements and current liabilities incurred in the
ordinary course of business.
2.1.25. Title to Acquired Assets. Each of the Selling Parties owns
good and marketable title to all of its respective Acquired Assets, free and
clear of any claims, interests, conditions, liens, options, pledges, security
interests, mortgages, rights of way, easements, encroachments, rights of first
refusal and other encumbrances ("Encumbrances"). Command and Harborview each
warrant to TFS that at the First Closing, all of each such party's Acquired
Assets shall be free from all Encumbrances. Each of the Operations Entities
warrants to TFS that at the First Closing and the Second Closing, all of the
Acquired Assets of each of the Operations Entities shall be free from all
Encumbrances.
2.1.26. Accredited Investor Status; Access to Information. Each of
Harborview and Command qualify as an "accredited investor" as that term is
defined under Rule 501(a) of Regulation D promulgated under the Securities Act
of 1933, as amended (the "Securities Act") and shall complete and deliver to TFS
all such documentation reasonably required by TFS in order to enable TFS to
verify such party's status as an accredited investor under the Securities Act.
Each of the Operations Entities will, at the time of the Second Closing, be an
"accredited investor" or will provide such certification as required by TFS
prior to the Second Closing as to each person's sophistication and ability to
bear the risks of ownership of the Shares. At the time of each respective
Closing, each of the Selling Parties acknowledges that it has been given access
to full and complete information regarding TFS to its satisfaction for the
purpose of obtaining information regarding TFS and has been given a reasonable
opportunity to review such documents that it has requested and to ask questions
of, and to receive answers from, representatives of TFS concerning the terms and
conditions of the Shares and the transactions contemplated by this Agreement and
to obtain any additional information concerning TFS' business.
2.1.27. Disclosure. Neither the representations or warranties made
by Selling Parties in this Agreement, nor the final Schedule of Exceptions or
any other certificate executed and delivered by Selling Parties pursuant to this
Agreement, when taken together, contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements or
facts contained herein or therein not misleading in light of the circumstances
under which they were furnished.
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2.1.28. Reliance. The foregoing representations and warranties are
made by Selling Parties with the knowledge and expectation that TFS is placing
reliance thereon.
2.1.29. Tax Free Transaction. Each Selling Party acknowledges and is
fully aware that even though the parties are attempting to qualify all
transactions contemplated by this Agreement as a tax free reorganization
pursuant to Sections 351 and/or 368 of the Internal Revenue Code, where the
Assumed Liabilities with respect to any particular Selling Party exceeds the tax
basis in that Selling Party's assets at the time of Closing, that Selling Party
may recognize a gain. Each Selling Party represents that it has consulted with a
qualified attorney, tax advisor or accountant or has elected not to do so, and
assumes the risk of all potential income tax risks associated with the
transactions contemplated by this Agreement.
2.1.30. Limited Joinder. The representations and warranties of each
of the Selling Parties shall be deemed made by the persons, jointly and
severally, and solely with respect to the representations and warranties made by
such Selling Party next to such person's name, as identified on Schedule 2.2.1.
Each of such persons shall execute a limited Joinder Agreement in the form
attached hereto as Exhibit E at the time of the First Closing, with regard to
Command and Harborview, and the Second Closing, with regard to the Operations
Entities.
2.2. Representations and Warranties of TFS. Except as disclosed in a
document referring specifically to the representations and warranties in this
Agreement and which identifies by section number the section and subsection to
which such disclosure relates and is delivered by TFS to Selling Parties on or
prior to the First Closing and again on or prior to the Second Closing (the "TFS
Disclosure Schedule"), and whether or not the TFS Disclosure Schedule is
referred to in a specific section or subsection, TFS represents and warrants to
Selling Parties as follows:
2.2.1. Organization, Standing and Power. TFS is a corporation duly
organized, validly existing under the laws of the State of Washington, has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, and is duly qualified and in
good standing to do business in each jurisdiction in which a failure to so
qualify would have a material adverse effect on the Business Condition of TFS.
2.2.2. Capital Structure. The authorized capital stock of TFS
(immediately prior to Closing) having voting rights under applicable law, the
Charter Documents or agreement with the Company will consist of (i) 100,000,000
Shares of Common Stock, $0.001 par value per share ("Common Shares"), of which
3,511,400 Shares are issued and outstanding, and (ii) 5,000,000 shares of
Preferred Stock, $0.001 par value per share, of which no shares have been
issued. All of the outstanding equity securities of TFS have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
contracts, commitments or understandings related to the issuance, sale or
transfer of any equity securities or other securities of TFS. All of the
outstanding equity securities of TFS have been issued in compliance with the
federal and state securities laws and are owned free and clear of all liens and
encumbrances by the holders thereof.
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2.2.3. Authority. The execution, delivery, and performance of this
Agreement by TFS have been duly authorized by all necessary corporate action of
TFS. No other act or proceeding on the part of TFS is necessary to approve this
Agreement or the transactions contemplated herein. TFS has duly and validly
executed and delivered this Agreement, and this Agreement constitutes a valid,
binding and enforceable obligation of TFS in accordance with its terms.
2.2.4. Financial Statements. TFS shall deliver to Command,
Harborview and the Operations Entities audited balance sheets and statements of
income and cash flow for its most recently completed fiscal year and unaudited
balance sheets and statements of income and cash flow as of September 30, 2005
(such balance sheets and statements of income and cash flow are collectively
referred to as the "TFS Financial Statements"). The TFS Financial Statements:
(i) shall be in accordance with the books and records of TFS; (ii) shall present
fairly, in all material respects, the financial position of TFS as of the date
indicated and the results of its operations for each of the periods indicated;
and (iii) shall be prepared in accordance with generally accepted accounting
principles consistently applied. There shall be no material off-balance sheet
assets, liabilities, claims or obligations of any nature, whether accrued,
absolute, contingent, anticipated, or otherwise, whether due or to become due,
that are not shown or provided for either in the TFS Financial Statements or
the. The TFS Financial Statements: (x) are the most recent regularly prepared
balance sheet of TFS and (y) have been prepared in accordance with the
accounting principles normally used by TFS. The "TFS Pro Forma Closing Balance
Sheet" attached as Schedule 2.2.4 sets forth, based on reasonable assumptions
relating to the operation of the business conducted by TFS, the projected TFS
Pro Forma Closing Balance Sheet as of the estimated Closing. A "TFS Final
Closing Balance Sheet" will be prepared by TFS following Closing, and any
updates or revisions of such statement will be prepared, on a basis consistent
with the TFS Financial Statements and Schedule 2.2.4.
2.2.5. Compliance with Laws and Other Instruments. Neither the
execution and delivery of this Agreement by TFS nor the performance by TFS of
its obligations under this Agreement will violate any provision of law or will
conflict with, result in the breach of any of the terms and conditions of,
constitute a default under, permit any party to accelerate any right under,
renegotiate or terminate, require consent, approval, or waiver by any party
under, or result in the creation of any lien, charge, or encumbrance upon any of
the properties, assets, or shares of capital stock of TFS pursuant to any
charter document of TFS or any agreement, indenture, mortgage, franchise,
license, permit, lease, or other instrument of any kind to which TFS is a party
or by which TFS or any of its assets are bound or affected. No Consent is
required by or with respect to TFS in connection with the execution and delivery
of this Agreement by TFS or the consummation by TFS of the transactions
contemplated hereby or thereby, except for such consents, authorizations,
filings, approvals and registrations which if not obtained or made would not
have a material adverse effect on TFS' Business Condition.
2.2.6. Brokers and Finders. TFS has not retained any broker, finder
or investment banker in connection with this Agreement or any of the
transactions contemplated by this Agreement, nor does or will TFS owe any fee or
other amount to any broker, finder or investment banker in connection with this
Agreement or the transactions contemplated by this Agreement.
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2.2.7. Undisclosed Liabilities. TFS has no liabilities except for
the liabilities reflected or reserved against in the TFS Financial Statements
and current liabilities incurred in the ordinary course of business.
2.2.8. Litigation and Other Proceedings. Neither TFS nor its
officers or directors is a party to any pending or, to the best knowledge of TFS
and its officers and directors, threatened action, suit, labor dispute
(including any union representation proceeding), proceeding, investigation or
discrimination claim in or by any court or governmental board, commission,
agency, department or officer, or any arbitrator, or, in the case of an
individual, arising out of acts in his or her capacity as an officer or director
of TFS nor, to the best knowledge of TFS and its officers and directors, is
there any basis for any such actions. TFS is not subject to any order, writ,
judgment, decree or injunction.
2.2.9. Disclosure. Neither the representations or warranties made by
TFS in this Agreement, nor the final TFS Disclosure Schedule or any other
certificate executed and delivered by TFS pursuant to this Agreement, when taken
together, contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading in light of the circumstances under which they were
furnished.
2.2.10. Reliance. The foregoing representations and warranties are
made by TFS with the knowledge and expectation that Selling Parties are placing
reliance thereon.
ARTICLE 3.
COVENANTS OF COMMAND, HARBORVIEW AND THE OPERATING ENTITIES
During the period from the date of this Agreement (except as otherwise
indicated) and continuing until the Closing (or later where so indicated), each
of Selling Parties, agree (except as expressly contemplated by this Agreement,
as specifically permitted by the Schedule of Exceptions or otherwise permitted
by TFS' prior written consent):
3.1. Conduct of Business.
3.1.1. Ordinary Course. Selling Parties shall carry on their
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and, to the extent consistent with such business,
use all reasonable efforts consistent with past practice and policies to
preserve intact their respective present business organizations, keep available
the services of their present officers, consultants, and employees and preserve
their relationships with customers, suppliers, distributors and others having
business dealings with them. Selling Parties shall promptly notify TFS of any
event or occurrence or emergency which is not in the ordinary course of business
of Selling Parties and which is material and adverse to Selling Parties'
Business Condition. The foregoing notwithstanding, Selling Parties shall not,
except as approved in writing by TFS:
(a) enter into any material commitment or transaction,
including, but not limited to, any purchase of assets (other than raw materials,
supplies or cash equivalents) for a purchase price in excess of $50,000 or a
series of related transactions of more than $50,000 in the aggregate;
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(b) grant any bonus, severance, or termination pay to any
officer, director, independent contractor or employee of Selling Parties;
(c) enter into or amend any agreements pursuant to which any
other party is granted support, service, marketing, publishing or distribution
rights of any type or scope with respect to any hardware or software products of
Selling Parties, other than in the ordinary course.
(d) enter into or terminate any contracts, arrangements,
plans, agreements, leases, licenses, franchises, permits, indentures,
authorizations, instruments or commitments, or amend or otherwise change the
terms thereof other than in ordinary course;
(e) commence a lawsuit other than: (i) for the routine
collection of bills, (ii) in such cases where Selling Parties in good faith
determine that failure to commence suit would result in a material impairment of
a valuable aspect of Selling Parties' businesses, provided Selling Parties
consult with TFS prior to filing such suit; or (iii) for a breach of this
Agreement;
(f) materially modify existing discounts or other terms and
conditions with the Selling Parties' customers other than in the ordinary
course; or
(g) except as otherwise contemplated herein, accelerate the
vesting or otherwise modify any Selling Parties option, restricted stock or
other outstanding rights or other securities.
3.1.2. Governing Documents. Selling Parties shall not amend their
Charter Documents.
3.1.3. No Acquisitions. Selling Parties shall not acquire or agree
to acquire by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof or otherwise acquire or agree to make any such acquisition.
3.1.4. No Dispositions. Selling Parties shall not sell, lease,
license, transfer, mortgage, encumber or otherwise dispose of any of their
assets or cancel, release, or assign any indebtedness or claim, except in the
ordinary course of business consistent with prior practice.
3.1.5. Indebtedness. Selling Parties shall not incur any
indebtedness for borrowed money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, or otherwise, except for
receivables funding in the ordinary course.
3.1.6. Compensation. Selling Parties shall not adopt or amend any
plan or pay any pension or retirement allowance not required by any existing
employment benefit plan. Selling Parties shall not enter into or modify any
employment contracts, increase the salaries, wage rates or fringe benefits of
its officers, directors or employees or pay bonuses or other remuneration except
for current salaries and other remuneration for which Selling Parties are
obligated pursuant to a written agreement a copy of which has been provided to
TFS.
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3.1.7. Claims. Selling Parties shall not settle any claim, action or
proceeding, except in the ordinary course of business consistent with past
practice.
3.2. Access to Properties and Records. Throughout the period between the
date of this Agreement and the relevant Closing, Selling Parties shall give TFS
and its representatives full access, during reasonable business hours but in
such a manner as not unduly to disrupt the business of Selling Parties, to their
premises, properties, contracts, commitments, books, records and affairs, and
shall provide TFS with such financial, technical and operating data and other
information pertaining to their businesses as TFS may reasonably request. With
Selling Parties' prior written consent, which shall not be unreasonably
withheld, TFS shall be entitled to make appropriate inquiries of third parties
in the course of its investigation.
3.3. Breach of Representations and Warranties. Without the written
approval of TFS, Selling Parties will not take any action that would cause or
constitute a breach of any of the representations and warranties set forth in
Section 2.1 or that would cause any of such representations and warranties to be
inaccurate in any material respect. In the event of, and promptly after becoming
aware of, the occurrence of or the pending or threatened occurrence of any event
that would cause or constitute such a breach or inaccuracy, Selling Parties will
give detailed notice thereof to TFS and will use their best efforts to prevent
or promptly remedy such breach or inaccuracy.
3.4. Consents. Selling Parties will promptly apply for or otherwise seek,
and use their best efforts to obtain, all consents and approvals, and make all
filings required with respect to the consummation of the transactions
contemplated by this Agreement.
3.5. Tax Returns. Selling Parties shall promptly make available to TFS
with copies of all tax returns, reports and information statements that have
been filed or are filed prior to the Closing. All such returns shall be prepared
consistent with past practice and shall be subject to the approval of TFS, which
shall not be unreasonably withheld. Each of the Selling Parties shall (i) notify
TFS promptly if it receives notice of any tax audit, the assessment of any tax,
the assertion of any tax lien, or any request, notice or demand for taxes by any
taxing authority, (ii) provide TFS a description of any such matter in
reasonable detail (including a copy of any written materials received from the
taxing authority), and (iii) take no action with respect to such matter without
the consent of TFS. Neither Command, Harborview nor the Operations Entities
shall (i) make or revoke any tax election which may affect the Selling Parties,
(ii) execute any waiver of restrictions on assessment of any tax, or (iii) enter
into any agreement or settlement with respect to any tax without the approval of
TFS, which shall not be unreasonably withheld.
3.6. Exclusivity; Acquisition Proposals. None of the Selling Parties shall
(and each shall use its best efforts to ensure that none of its officers,
directors, agents, representatives or affiliates) take or cause or permit any
person to take, directly or indirectly, any of the following actions with any
party other than TFS and its designees: (i) solicit, encourage, initiate or
participate in any negotiations, inquiries or discussions with respect to any
offer or proposal to acquire all or any significant part of its business, assets
or capital shares whether by merger, consolidation, other business combination,
purchase of assets, tender or exchange offer or otherwise (each of the
foregoing, an "Acquisition Transaction"); (ii) disclose, in connection with an
Acquisition Transaction, any information not customarily disclosed to any person
other than TFS or its representatives concerning Selling Parties' business or
properties or afford to any person or entity other than TFS or its
representatives access to its properties, books or records, except in the
ordinary course of business and as required by law or pursuant to a request for
information by a Governmental Entity; (iii) enter into or execute any agreement
relating to an Acquisition Transaction; or (iv) make or authorize any public
statement, recommendation or solicitation in support of any Acquisition
Transaction or any offer or proposal relating to an Acquisition Transaction. In
the event that Selling Parties is contacted by any third party expressing an
interest in discussing an Acquisition Transaction, Selling Parties will promptly
notify TFS of such contact.
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3.7. Notice of Events. Throughout the period between the date of this
Agreement and the Closing, Selling Parties shall promptly advise TFS of any and
all material events and developments concerning their financial position,
results of operations, assets, liabilities, or business or any of the items or
matters concerning Selling Parties covered by the representations, warranties
and covenants of Selling Parties contained in this Agreement.
3.8. Best Efforts. Selling Parties will use their reasonable best efforts
to effectuate the transactions contemplated hereby and to fulfill and cause to
be fulfilled the conditions to Closing under this Agreement.
3.9. Operations Entities' Duty to Close. At the Second Closing, each of
the Operations Entities shall deliver to TFS (i) written certificates providing
that all representations and warranties set forth in Article II are true and
correct as of the Second Closing, and (ii) a Schedule of Exceptions. Each of the
Operations Entities agrees and acknowledges that at the Second Closing so long
as it has affirmatively elected to proceed to close in accordance with Section
6.4, it is legally bound to consummate the transactions contemplated by this
Agreement. In the event that TFS agrees to waive certain closing conditions or
closing deliveries in order to effectuate the Second Closing with regard to any
Operations Entity, such action will not be deemed to constitute a waiver on
behalf of TFS of any and all potential claims, at law or in equity, that TFS may
have against such Operations Entity.
ARTICLE 4.
COVENANTS OF TFS
During the period from the date of this Agreement and continuing until the
Closing (or later where so indicated), TFS agrees (except as expressly
contemplated by this Agreement or with Selling Parties' prior written consent)
that it will take or cause the following actions to be taken:
4.1. Breach of Representations and Warranties. TFS will not take any
action which would cause or constitute a breach of any of the representations
and warranties set forth in Section 2.2 or which would cause any of such
representations and warranties to be inaccurate in any material respect. In the
event of, and promptly after becoming aware of, the occurrence of or the pending
or threatened occurrence of any event which would cause or constitute such a
breach or inaccuracy, TFS will give detailed notice thereof to Selling Parties
and will use its best efforts to prevent or promptly remedy such breach or
inaccuracy.
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4.2. Dividends, Issuance of or Changes in Securities. TFS shall not: (i)
declare or pay any dividends on or make other distributions to its shareholders
(whether in cash, shares or property); (ii) issue, deliver, sell or authorize,
propose or agree to, or commit to the issuance, delivery, or sale of any shares
of its capital stock of any class, any voting debt or any securities convertible
into its capital stock, any options, warrants, calls, conversion rights,
commitments, agreements, contracts, understandings, restrictions, arrangements
or rights of any character obligating TFS to issue any such shares, TFS voting
debt or other convertible securities; (iii) split, combine or reclassify any of
its capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of TFS;
(iv) repurchase or otherwise acquire, directly or indirectly, any shares of its
capital stock; or (v) propose any of the foregoing.
4.3. Governing Documents. TFS shall not amend its Charter Documents,
except as otherwise expressly provided in this Agreement.
4.4. No Acquisitions. TFS shall not acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial portion of the assets of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to make any such acquisition.
4.5. Access to Properties and Records. Throughout the period between the
date of this Agreement and the Closing, TFS shall give Selling Parties and their
representatives full access, during reasonable business hours but in such a
manner as not unduly to disrupt the business of TFS, to its premises,
properties, contracts, commitments, books, records, and affairs, and shall
provide Selling Parties with such financial, technical and operating data and
other information pertaining to its business as Selling Parties' may request.
With TFS prior written consent, which shall not be unreasonably withheld,
Selling Parties' shall be entitled to make appropriate inquiries of third
parties in the course of its investigation.
4.6. Consents. TFS will promptly apply for or otherwise seek, and use its
best efforts to obtain, all consents and approvals, and make filings required
with respect to the consummation of the transactions contemplated by this
Agreement.
4.7. Notice of Events. Throughout the period between the date of this
Agreement and the Closing, TFS shall promptly advise Selling Parties of any and
all material events and developments concerning its financial position, results
of operations, assets, liabilities, or business or any of the items or matters
concerning TFS covered by the representations, warranties and covenants of TFS
contained in this Agreement.
4.8. Best Efforts. TFS will use its reasonable best efforts to effectuate
the transactions contemplated hereby and to fulfill and cause to be fulfilled
the conditions to Closing under this Agreement.
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ARTICLE 5.
AGREEMENTS OF COMMAND, HARBORVIEW AND THE OPERATING ENTITIES
In addition to the foregoing, TFS and Selling Parties each agree to take
the following actions before or after the execution of this Agreement.
5.1. Legal Conditions. Each of TFS and Selling Parties will take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on it with respect to this Agreement. Each of TFS and
Selling Parties will take all reasonable actions to obtain (and to cooperate
with the other parties in obtaining) any consent required to be obtained or made
by Selling Parties or TFS in connection with this Agreement, or the taking of
any action contemplated thereby or by this Agreement.
5.2. Expenses. Whether or not the transactions contemplated by the
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby and thereby shall be
paid by the party incurring such expense.
5.3. Additional Agreements. In case at any time after the Closing any
further action is reasonably necessary or desirable to carry out the purposes of
this Agreement or to vest TFS with full title to all properties, assets, rights,
approvals, immunities and franchises of Selling Parties, the proper officers,
directors and members of each entity which is a party to this Agreement shall
take all such necessary action.
5.4. Public Announcements. Neither TFS nor Selling Parties shall
disseminate any press release or other announcement concerning this Agreement or
the transactions contemplated herein to any third party (except to the
directors, officers, members, shareholders and employees of the parties to this
Agreement whose direct involvement is necessary for the consummation of the
transactions contemplated under this Agreement, to the attorneys and accountants
of the parties hereto, or except as TFS determines in good faith to be required
by the federal securities laws after consultation with Selling Parties) without
the prior written consent of each of the other parties hereto, which consent
shall not be unreasonably withheld.
ARTICLE 6.
CONDITIONS PRECEDENT
6.1. Conditions to Each Party's Obligation to Effect the Closing. The
respective obligation of each party to effect the Closings shall be subject to
the satisfaction prior to the First Closing of the following conditions:
6.1.1. Governmental Approvals. All consents legally required for the
consummation of the transactions contemplated by this Agreement shall have been
filed, occurred, or been obtained, other than such consents, for which the
failure to obtain would have no material adverse effect on the consummation of
the transactions contemplated hereby or on the business condition of TFS or
Selling Parties.
6.1.2. No Restraints. No statute, rule, regulation, executive order,
decree or injunction shall have been enacted, entered, promulgated or enforced
by any United States court or Governmental Entity of competent jurisdiction
which enjoins or prohibits the consummation of the transactions contemplated by
this Agreement.
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6.2. Conditions of Obligations of TFS. The obligations of TFS to effect
the transactions contemplated by this Agreement are subject to the satisfaction
of the following conditions prior to the First Closing unless waived by TFS:
6.2.1. Due Diligence Review. TFS shall have completed its due
diligence review of Command and Harborview with regard to the First Closing and
of each of the Operations Entities with regard to the Second Closing, and TFS,
in its sole and unrestricted discretion, shall be satisfied on the basis of such
review that it should proceed with the transactions contemplated by the First
Closing and the Second Closing, as the case may be. Such review shall have no
effect whatsoever on the liability of Selling Parties to TFS under this
Agreement or otherwise for breach of any representations, warranties or
covenants of Selling Parties hereunder.
6.2.2. Representations and Warranties of Selling Parties. The
representations and warranties of Selling Parties set forth in this Agreement
shall be true and correct in all material respects with respect to Command and
Harborview, as of the First Closing, as though made on and as of the date of the
First Closing, and with respect to the Operations Entities, as of the Second
Closing, as though made on and as of the date of the Second Closing.
6.2.3. Opinion of Counsel. TFS is in receipt of an opinion of TFS'
legal counsel to the effect that the issuance of Shares as described in Section
1.5 may be completed pursuant to an available exemption from the registration
requirements of the United States Securities Act of 1933, as amended, and the
applicable regulations of the various states affected by this transaction.
6.2.4. Performance of Obligations of Selling Parties. Selling
Parties shall have performed in all material respects all agreements and
covenants required to be performed by them under this Agreement prior to the
First Closing.
6.2.5. Key Employees. TFS is satisfied that employment agreements
with key individuals identified by TFS have been or will be executed
(collectively, the "Employment Agreements").
6.2.6. Noncompetition Agreements. Each of the key individuals
identified by TFS shall have executed a Noncompetition Agreement (collectively,
the "Noncompetition Agreements"), substantially in the form attached as Exhibit
F and not taken any action or expressed any intent to terminate or modify such
agreements.
6.2.7. Management Structure. TFS has agreed to the management
structure by which TFS will operate following the First Closing.
6.2.8. Reporting Obligations. TFS is satisfied that TFS will be able
to meet its reporting requirements to the Securities and Exchange Commission
after the First Closing in a timely manner and will be able to comply with other
applicable rules and regulations of the Securities and Exchange Commission,
including those set forth in the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the revisions to Rule
8-K.
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6.2.9. Timing of Second Closing. TFS is satisfied that acquisitions
of the Operations Entities in the Second Closing can be consummated in a
reasonable fashion and time frame, taking into account applicable rules and
regulations of the Securities and Exchange Commission and applicable tax
regulations.
6.2.10. Worker's Compensation Coverage. TFS is satisfied that
workers compensation coverage will be available to TFS for the business of the
Operations Entities following the Second Closing.
6.2.11. Legal Action. There shall not be overtly threatened or
pending any action, proceeding or other application before any court or
Governmental Entity brought by any person or Governmental Entity: (i)
challenging or seeking to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain any damages
caused by such transactions which, if successful, would have a material adverse
effect on the viability of such transactions; or (ii) seeking to prohibit or
impose any limitations on TFS' ownership or operation of all or any portion of
Selling Parties' business or assets, or to compel TFS to dispose of or hold
separate all or any portion of its or Selling Parties' business or assets as a
result of the transactions contemplated by the Agreement which, if successful,
would have a material adverse effect on TFS' ability to receive the anticipated
benefits of the transactions contemplated by this Agreement and the employment
of the individuals referenced in Section 6.2.5.
6.2.12. Approvals. This Agreement shall have been properly approved
by all of the governing bodies of Selling Parties.
6.2.13. Consents. TFS shall have received duly executed copies of
all third-party consents, approvals, assignments, waivers, authorizations or
other certificates contemplated by this Agreement or the Schedule of Exceptions
or reasonably deemed necessary by TFS' legal counsel to provide for the
continuation in full force and effect of any and all material contracts and
leases of Selling Parties and for TFS to consummate the transactions
contemplated hereby in form and substance reasonably satisfactory to TFS, except
for such thereof as TFS and Selling Parties shall have agreed in writing shall
not be obtained.
6.2.14. Assignments of Rights to Selling Parties Intellectual
Property. Selling Parties shall have executed such assignments and other
documentation as may be reasonably requested by TFS to effectively transfer or
confirm the transfer of all right, title and interest to Selling Parties
intellectual property to TFS.
6.2.15. Closing Deliveries. The Selling Parties shall have delivered
all closing deliveries contemplated in Section 7.1 on or prior to the First
Closing and shall have delivered all closing deliveries contemplated in Section
7.2 on or prior to the Second Closing.
6.2.16. No Casualty. There shall not have been any damage,
destruction or loss, whether or not covered by insurance, materially and
adversely affecting the proprietary software, documentation or other Selling
Parties Intellectual Property where there are no undamaged duplicate copies of
such proprietary software, documentation or other Selling Parties Intellectual
Property in the possession of Selling Parties. Selling Parties shall have
delivered copies of their source code and other Selling Parties Intellectual
Property as requested by TFS. There shall not have been any damage, destruction
or loss, whether or not covered by insurance, of any other asset of the Selling
Parties, the damage, destruction or loss of which shall have a material adverse
affect on the business of the Selling Parties.
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6.3. Conditions of Obligation of Selling Parties. The respective
obligations of Selling Parties to effect the transactions contemplated by this
Agreement are subject to the satisfaction of the following conditions prior to
the First Closing, unless waived by Command, Harborview or the Operations
Entities, respectively, with regard to its obligations:
6.3.1. Due Diligence Review. On or prior to the First Closing,
Selling Parties shall have completed their due diligence review and Selling
Parties, in their sole and unrestricted discretion, shall be satisfied on the
basis of such review that they should proceed with the transactions contemplated
hereby. Such review shall have no effect whatsoever on the liability of TFS to
Selling Parties under this Agreement or otherwise for breach of any
representations, warranties or covenants of TFS hereunder. 6.3.2.
Representations and Warranties of TFS. The representations and warranties of TFS
set forth in this Agreement shall be true and correct in all material respects
as of the First Closing as though made on and as of the date of the First
Closing and as of the Second Closing as though made on and as of the date of the
Second Closing, and Selling Parties shall have received a certificate signed on
behalf of TFS by an officer of TFS to such effect.
6.3.3. Performance of Obligations of TFS. TFS shall have performed
in all material respects all agreements and covenants required to be performed
by it under this Agreement prior to the First Closing, and Selling Parties shall
have received a certificate signed on behalf of TFS by an officer of TFS to such
effect.
6.3.4. Opinion of Counsel. Selling Parties shall have received an
opinion of legal counsel satisfactory to the Selling Parties in form and
substance acceptable to legal counsel of Command.
6.3.5. Dividends, Issuance of or Changes in Securities. Command is
satisfied that: (i) TFS has not declared or paid any dividends on or made other
distributions to its shareholders; (ii) TFS has not issued, delivered, sold or
authorized, or agreed to, or committed to the issuance, delivery, or sale of any
shares of its capital stock of any class, any voting debt or any securities
convertible into its capital stock, any options, warrants, calls, conversion
rights, commitments, agreements, contracts, understandings, restrictions,
arrangements or rights of any character obligating TFS to issue any such shares,
TFS voting debt or other convertible securities; and (iii) that there are no
more than 3,511,400 Shares outstanding.
6.3.6. Management Structure. TFS shall have provided all
documentation necessary to effectuate the restructuring of TFS' Board of
Directors and officers as more fully set forth in Section 1.8.
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6.3.7. Name Change. Command is satisfied that all actions have been
taken or will be taken to change the corporate name of TFS as provided in
Exhibit K attached hereto.
6.3.8. Increase in Size of TFS Board. Command is satisfied that all
actions have been taken or will be taken to amend TFS' Bylaws to allow for a
board of directors consisting of up to nine members.
6.3.9. Tax Free Reorganization. Command is satisfied that the
transaction contemplated by this Agreement will qualify as a tax free
reorganization pursuant to Sections 351 and/or 368 of the Internal Revenue Code.
6.3.10. Consents. Command shall have received duly executed copies
of all third-party consents, approvals, assignments, waivers, authorizations or
other certificates contemplated by this Agreement or the Schedule of Exceptions
or reasonably deemed necessary by Command's legal counsel to provide for TFS to
consummate the transactions contemplated hereby in form and substance reasonably
satisfactory to Command, except for such thereof as TFS and Command shall have
agreed in writing shall not be obtained.
6.4. Special Condition of Operations Entities. The parties acknowledge
that TFS shall be obligated to deliver a disclosure document (the "Disclosure")
with the Operations Entities in compliance with applicable requirements to
qualify the issuance of the Shares as a transaction exempt from the registration
provisions of the federal and state securities laws prior to the Operations
Entities becoming legally bound to consummate and complete the transactions to
acquire the Shares. As a special condition to the performance of the obligations
of each of the Operations Entities, each of the Operations Entities shall not be
required to effectuate the Second Closing and to consummate the transactions
contemplated in this Agreement unless and until the Operations Entities have had
ten days prior to the date of the Second Closing within which to review with
their independent advisors and counsel the relative risks and merits of
completing such transactions. In order to effectuate the transactions
contemplated by this Agreement, each of the Operations Entities shall execute
and deliver to TFS, prior to the Second Closing, all documentation reasonably
related to the Disclosure in form and substance reasonably acceptable to TFS.
6.5. Closing Deliveries. TFS shall have delivered all closing deliveries
contemplated in Section 7.1 on or prior to the First Closing and shall have
delivered all closing deliveries contemplated in Section 7.2 on or prior to the
Second Closing.
6.6. Unsatisfied Conditions. If any one or more of the foregoing
conditions remains unsatisfied at the date of the First Closing, the party whose
obligations are subject to fulfillment of the unsatisfied condition may elect
not to close this transaction. The election not to close shall be evidenced by
written notice to the other party.
ARTICLE 7.
DELIVERIES AT CLOSINGS
7.1. Deliveries at the First Closing. At or prior to the First Closing,
the parties shall make the following deliveries:
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7.1.1. Deliveries of TFS. TFS shall deliver the following to the
Selling Parties:
(i) a fully executed signature page to this Agreement;
(ii) the Command Purchase Price;
(iii) the TFS Disclosure Schedule;
(iv) a Voting Agreement executed by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in the form of
Exhibit D attached hereto;
(v) written resignations of ▇▇▇▇▇▇▇ ▇▇▇▇, C. ▇▇▇▇▇▇ ▇▇▇▇▇ and all
other members of the Board of Directors of TFS (except for
▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇) from the Board of Directors of
TFS;
(vi) written resignations of ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ and all other
officers of TFS from their positions as officers of TFS;
(vii) the TFS Closing Certificate, in the form attached hereto as
Exhibit G;
(viii) a fully executed Assignment and Assumption Agreement relating
to Command's Assumed Liabilities, in the form of Exhibit B
attached hereto;
(ix) a fully executed Assignment and Assumption Agreement relating
to Harborview's Assumed Liabilities, in the form of Exhibit B
attached hereto;
(x) a fully executed Assignment and Assumption of Lease relating
to Command's real estate lease, if necessary, in the form of
Exhibit C attached hereto;
(xi) documentation providing that actions have been taken or will
be taken to change the corporate name of TFS, in the form of
Exhibit K attached hereto;
(xii) documentation providing that actions have been taken or will
be taken to increase the potential size of TFS' board of
directors to nine;
(xiii) Noncompetition Agreements executed by TFS, in the form
attached of Exhibit F attached hereto;
(xiv) Employment Agreements executed by TFS;
(xv) an opinion of counsel, as contemplated in Section 6.3.4; and
(xvi) duly executed copies of all third-party consents, approvals,
assignments, waivers, authorizations or other certificates
contemplated by this Agreement or the TFS Disclosure Schedule.
7.1.2. Deliveries of Selling Parties. Each of the Selling Parties
shall deliver the following to TFS (unless otherwise indicated below):
(i) fully executed signature pages to this Agreement;
(ii) the Command Schedule of Exceptions; (iii) the Harborview
Schedule of Exceptions;
(iv) a ▇▇▇▇ of Sale executed by Command relating to Command's
Acquired Assets, in the form of Exhibit A attached hereto;
(v) an ▇▇▇▇ of Sale executed by Harborview relating to
Harborview's Acquired Assets, in the form of Exhibit A
attached hereto;
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(vi) an Assignment and Assumption Agreement executed by Command
relating to Command's Assumed Liabilities, in the form of
Exhibit B attached hereto;
(vii) an Assignment and Assumption Agreement executed by Harborview
relating to Harborview's Assumed Liabilities, in the form of
Exhibit B attached hereto;
(viii) an Assignment and Assumption of Lease executed by Command
relating to Command's real estate lease, if necessary, in the
form of Exhibit C attached hereto;
(ix) Noncompetition Agreements executed by the parties thereto, in
the form attached of Exhibit F attached hereto;
(x) Employment Agreements executed by the parties thereto;
(xi) Closing Certificates executed by Command and Harborview, in
the form attached hereto as Exhibit H;
(xii) duly adopted resolutions of the Board of Directors or Managers
/ Managing Members of each Operations Entity, substantially in
the form attached hereto as Exhibit I-1 or I-2;
(xiii) duly adopted resolutions of the Board of Directors or
Managers / Managing Members of each Operations Entity,
substantially in the form of Exhibit I-1 or I-2 attached
hereto;
(xiv) duly adopted resolutions of the Shareholders or Members of
each Operations Entity, substantially in the form of Exhibit
J-1 or J-2 attached hereto; and
(xv) duly executed copies of all third-party consents, approvals,
assignments, waivers, authorizations or other certificates
contemplated by this Agreement or the Schedule of Exceptions
relating to Harborview and Command.
7.2. Deliveries at the Second Closing. At or prior to the Second Closing,
the parties shall make the following deliveries:
7.2.1. Deliveries of TFS. TFS shall deliver the following to the
Selling Parties:
(i) the Operations Purchase Price;
(ii) an updated TFS Disclosure Schedule;
(iii) fully executed Assignment and Assumption Agreements relating
to the Assumed Liabilities of each Operations Entity, in the
form of Exhibit B attached hereto;
(iv) a fully executed Assignment and Assumption of Lease relating
to the real estate leases of each Operations Entity, if
necessary, in the form of Exhibit C attached hereto;
(v) an updated TFS Closing Certificate, in the form attached
hereto as Exhibit G;
(vi) the Disclosure; and
(vii) duly executed copies of all third-party consents, approvals,
assignments, waivers, authorizations or other certificates
contemplated by this Agreement or the TFS Disclosure Schedule.
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7.2.2. Deliveries of Selling Parties. Each of the Operations
Entities shall deliver the following to TFS (unless otherwise indicated below):
(i) a Schedule of Exceptions;
(ii) a fully executed ▇▇▇▇ of Sale relating to the Acquired Assets
of each Operations Entity, in the form of Exhibit A attached
hereto;
(iii) a fully executed Assignment and Assumption Agreement relating
the Assumed Liabilities of each Operations Entity, in the form
of Exhibit B attached hereto
(iv) a fully executed Assignment and Assumption of Lease relating
to the real estate leases of each Operations Entity, if
necessary, in the form of Exhibit C attached hereto;
(v) Employment Agreements executed by the parties thereto, if
necessary;
(vi) fully executed documentation relating to the Disclosure; (vii)
an opinion of counsel in form and substance reasonably
acceptable to TFS;
(viii) a fully executed Joinder Agreement by Command, Harborview and
the persons identified on Schedule 2.2.11, in the form
attached hereto as Exhibit E;
(ix) fully executed Closing Certificate of each Operations Entity,
substantially in the form of Exhibit H-1 or H-2 attached
hereto; and
(x) duly executed copies of all third-party consents, approvals,
assignments, waivers, authorizations or other certificates
contemplated by this Agreement or the Schedule of Exceptions
relating to each Operations Entity.
ARTICLE 8.
INDEMNIFICATION
8.1. Indemnification By Command, Harborview, and the Operations Entities.
Each of the Selling Parties agree severally and not jointly, to defend,
indemnify, and hold TFS harmless from and against, and to reimburse TFS with
respect to, any and all losses, damages, liabilities, claims, judgments,
settlements, fines, costs, and expenses (including attorneys' fees)
("Indemnifiable Amounts") of every nature whatsoever incurred by TFS by reason
of or arising out of or in connection with (i) any breach, or any claim that, if
true, would constitute a breach by Command, Harborview or the Operations
Entities of any representation or warranty of Command, Harborview or the
Operations Entities contained in this Agreement or in any certificate or other
document delivered to TFS, but only for a period of one year after such
representation and warranty was made (at which time this subsection (i) will be
deemed lapsed), (ii) the failure, partial or total, of Command, Harborview or
the Operations Entities to perform any agreement or covenant required by this
Agreement to be performed by it or them, (iii) any undisclosed federal or state
tax liability, or asserted liability of Command, Harborview or the Operations
Entities, but excluding federal or state tax liabilities related to taxable
periods after the Closing Date, and (iv) undisclosed liabilities or obligations
of Command, Harborview or the Operations Entities in existence as of the First
Closing or arising from or related to events occurring prior to the First
Closing, that are not assumed by TFS.
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8.2. Indemnification By TFS. TFS agrees to defend, indemnify, and hold
Selling Parties harmless from and against, and to reimburse Selling Parties with
respect to, any Indemnifiable Amounts of every nature whatsoever incurred by
Command, Harborview or the Operations Entities by reason of or arising out of or
in connection with (i) any breach, or any claim that, if true, would constitute
a breach by TFS of any representation or warranty of TFS contained in this
Agreement or in any certificate or other document delivered to Command,
Harborview or the Operations Entities, but only for a period of one year after
such representation and warranty was made (at which time this subsection (i)
will be deemed lapsed), (ii) the failure, partial or total, of TFS to perform
any agreement or covenant required by this Agreement to be performed by it and
(iii) any of the Assumed Liabilities.
8.3. Procedures. TFS and each Selling Party agree that, upon receipt by
either party of a third-party claim in respect of which indemnity may be sought
under this Article VIII, said party (the "Claimant") shall give written notice
within 15 days of such claim (the "Notice of Claim") to the party from whom
indemnification may be sought hereunder (the "Indemnitor"). No indemnification
under this Article VIII shall be available to any party who fails to give the
required Notice of Claim within 15 days if the party to whom such notice should
have been given was unaware of the claim and was prejudiced by the failure to
receive the Notice of Claim in a timely manner. The Indemnitor shall be entitled
at its own expense to participate in the defense of any claim or action against
the Claimant. The Indemnitor shall have the right to assume the entire defense
of such claim provided that (a) Indemnitor gives written notice of its desire to
defend such claim (the "Notice of Defense") to the Claimant within 15 days after
Indemnitor's receipt of the Notice of Claim; (b) Indemnitor's defense of such
claim shall be without cost of Claimant or prejudice to Claimant's rights under
this Article VIII; (c) counsel chosen by Indemnitor to defend such claim shall
be reasonably acceptable to Claimant; (d) the Indemnitor shall bear all costs
and expenses in connection with the defense of such claim; (e) Claimant shall
have the right, at Claimant's expense, to have Claimant's counsel participate in
the defense of such claim; and (f) Claimant shall have the right to receive
periodic reports from Indemnitor and Indemnitor's counsel with respect to the
status and details of the defense of such claim and shall have the right to make
direct inquiries to Indemnitor's counsel in this regard. Solely for the purpose
of subparagraph (f) above, Indemnitor shall waive its attorney-client privilege.
ARTICLE 9.
MISCELLANEOUS
9.1. Entire Agreement. This Agreement, including the exhibits and
schedules delivered pursuant to this Agreement, contain all of the terms and
conditions agreed upon by the parties relating to the subject matter of this
Agreement and supersede all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, whether oral or written,
respecting that subject matter, including, but not limited to, the Letter of
Intent, dated October 6, 2005, by and between Command and TFS.
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9.2. Governing Law. All aspects of this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Washington as applied
to agreements entered into and entirely to be performed within that State.
Selling Parties and TFS consent to exclusive jurisdiction and venue in the state
and federal courts in Spokane County, Washington.
9.3. Notices. All notices, requests, demands or other communications which
are required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed to have been duly given: (i) on the date of delivery
if personally delivered by hand; (ii) upon the third day after such notice is
(a) deposited in the United States mail, if mailed by registered or certified
mail, postage prepaid, return receipt requested, or (b) sent by a nationally
recognized overnight express courier; or (iii) by facsimile upon written
confirmation (other than the automatic confirmation that is received from the
recipient's facsimile machine) of receipt by the recipient of such notice:
If to TFS: If to Command and Harborview:
--------- ----------------------------
Technical Financial Services, Inc. Command Staffing, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ 8687 ▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇. ▇▇▇▇ Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: With a copy to:
Workland & Witherspoon, PLLC ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Mutual Financial Center ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Operations Entities:
To the address set forth under the signature of
each Operations Entity on the signature page
to this Agreement.
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 9.3.
9.4. Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be modified rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement shall be
deemed valid and enforceable to the full extent.
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9.5. Survival of Representations and Warranties. All representations and
warranties contained in this Agreement, including the exhibits and schedules
delivered pursuant to this Agreement, shall survive for a period of one year
following the First Closing or Second Closing, whenever such representations and
warranties were made.
9.6. Assignment. No party to this Agreement may assign, by operation of
law or otherwise, all or any portion of its rights, obligations, or liabilities
under this Agreement without the prior written consent of the other parties to
this Agreement, which consent may be withheld in the absolute discretion of any
of the parties asked to grant such consent. Any attempted assignment in
violation of this Section 9.6 shall be voidable.
9.7. Counterparts. This Agreement may be executed by facsimile and in two
or more partially or fully executed counterparts, each of which shall be deemed
an original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument. The execution and delivery of a
signature page in the form annexed to this Agreement by any party hereto which
shall have been furnished the final form of this Agreement shall constitute the
execution and delivery of this Agreement by such party.
9.8. Amendment. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
9.9. Extension, Waiver. At any time prior to the Closing, any parties
hereto may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto;
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements, covenants or conditions for the
benefit of such party contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
9.10. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section, Exhibit
or Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes," and "including" when used herein and therein shall be deemed in each
case to be followed by the words "without limitation." The table of contents,
index to defined terms, and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.11. Attorneys' Fees. Should any proceeding or litigation be commenced
between the parties hereto arising out of or relating to the terms of this
Agreement, or the rights and duties of the parties hereto, the prevailing party
in such proceeding or litigation shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum as and for the prevailing party's
attorneys' fees.
9.12. Costs and Expenses. Each party hereto shall bear its own costs,
including counsel fees and accounting fees, incurred in connection with the
negotiation and preparation for the Closing under this Agreement and all matters
incident thereto.
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9.13. Remedies. In the event of a breach of this Agreement or any term
hereof by any party, the other parties shall have all rights and remedies
available at law, in equity or under the terms of this Agreement, including,
without limitation, the right to seek injunctive relief and specific performance
of any party's obligations hereunder. All rights and remedies of any party
hereto shall be cumulative and the exercise of any right or remedy by any party
shall not be deemed a waiver, relinquishment or abandonment of any other right
or remedy, and shall not affect or limit in any way the future assertion of the
same, or any other right or remedy, except to the extent otherwise expressly
provided in this Agreement.
9.14. Construction. This Agreement is intended to express the mutual
intent of the parties hereto, and irrespective of the identity of the party or
counsel who prepared this document, no rule of strict construction shall be
applied against any party. All words used herein shall refer to the appropriate
number or gender, regardless of the number or gender stated.
9.15. Materiality. Subject to the terms and conditions of Section 9.5, all
covenants, agreements, representations and warranties made herein shall be
deemed to be material and to have been relied on by the parties in entering into
this Agreement and shall survive the execution and delivery of this Agreement.
[Remainder of Page Intentionally Omitted]
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SIGNATURE PAGE - ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, TFS and Selling Parties have each executed this
Agreement as of the date first written above.
TEMPORARY FINANCIAL SERVICES, COMMAND STAFFING, LLC, a Nevada
INC., a Washington corporation limited liability company
By: /s/ ▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Secretary Title: Member
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
HARBORVIEW SOFTWARE, INC., Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
A Nevada corporation Title: Member
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President Title: Member
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Solely with respect to Section 1.8 of this Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Agreement: Title: Member
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Member
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Member
By: /s/ ▇▇▇ ▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇
Title: Member
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Member
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