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).
<PAGE>
ASSET PURCHASE AGREEMENT
TEMPORARY FINANCIAL SERVICES, INC.
COMMAND STAFFING, LLC
HARBORVIEW SOFTWARE, INC.
and the
OPERATIONS ENTITIES
Dated as of November 9, 2005
<PAGE>
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
i
<PAGE>
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
ii
<PAGE>
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 BILL 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............................................
iii
<PAGE>
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:
<PAGE>
(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
www.commandonline.com;
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<PAGE>
(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 8687 Via de
Ventura, Suite 101,
Scottsdale,
Arizona 85258 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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<PAGE>
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.
-7-
<PAGE>
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 Bill 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 John Coghlan
and Brad Herr shall resign. John Coghlan
and Brad Herr shall immediately appoint
Glenn Welstad 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,
John Coghlan 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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<PAGE>
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.
-9-
<PAGE>
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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<PAGE>
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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<PAGE>
(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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<PAGE>
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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<PAGE>
(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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<PAGE>
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 act
