Exhibit 2.2
PURCHASE AGREEMENT
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This PURCHASE AGREEMENT (this "Agreement") is made and effective as of May
30, 2000 ("Effective Date") by and among Cypress Financial Services, Inc., a
Nevada corporation (the "Purchaser"); and Orange County Professional Services,
Inc. ("OCPS") a California corporation ("OCPS") on the one hand; Hospital
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Employee Labor Pool, a California corporation ("HELP"); Xxxxxxx Xxxxxxxx, an
individual, Xxxxxxx X. Xxxxxxxx, an individual (collectively, the "Mohrmanns");
and Xxxxx Xxxxxx, an individual ("Xxxxxx") (the Mohrmanns and Xxxxxx are
collectively referred to herein as the "Shareholders"), on the other hand, and
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is made with reference to the following:
A. HELP owns and operates an accounts receivable management services
business in conjunction with OCPS (the "Business"). The real property and all
improvements thereon used in the Business are referred to herein as the
"Premises" and are identified on Schedule 1 attached hereto. HELP holds a
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leasehold estate in such Premises pursuant to a lease agreement (the "Premises
Leases") by and between HELP and the third party owner identified on Schedule 1.
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B. All of the issued and outstanding shares of HELP are owned of record
(directly and indirectly) and beneficially by the Shareholders.
C. The Purchaser is concurrently entering into an agreement with the
Shareholders of OCPS to purchase all of the shares of OCPS.
D. All in accordance with the terms and conditions set forth herein: (i)
the Shareholders desire HELP to sell substantially all of its assets to OCPS and
(ii) the Purchaser and OCPS desire OCPS to purchase such assets.
E. As an essential inducement for the Purchaser and OCPS to enter into
this Agreement, the Shareholders and HELP have agreed to (i) make certain
representations, warranties and covenants regarding certain assets and property
to be transferred to OCPS, as well as other related matters, and (ii) provide
the Purchaser and OCPS with certain indemnification rights with respect to such
representations, warranties and covenants.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
of the parties contained herein, and for other good and valuable consideration,
the sufficiency and receipt of which is hereby acknowledged, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS
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1.1 Purchase and Sale of Assets. Subject to the terms of this Agreement,
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on the Closing Date (as defined below), HELP shall, and the Shareholders shall
cause HELP to sell, transfer, convey and assign to OCPS all of HELP's right,
title and interest in and to all of the assets and properties used in connection
with its Business. Such assets and properties are further defined on Schedule
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1.1 attached hereto and are collectively referred to herein as the "Assets."
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1.2 Non-Competition Agreement. On the Closing Date, the Purchaser, OCPS,
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HELP and the Shareholders shall enter into a non-competition agreement in
substantially the form attached hereto as Exhibit "A" and by this reference
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incorporated herein (the "Non-Competition Agreement").
1.3 Purchase Price.
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1.3.1 Base Purchase Price. The purchase price for the Assets is TWO
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TWO MILLION SIX HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($2,625,000) (the "Purchase
Price"), payable on the Closing Date as follows:
a. The Purchaser's delivery to OCPS of a cashier's check or wire
transfer from the Purchaser payable to OCPS in the aggregate amount of ONE
MILLION FIVE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($1,575,000), as a capital
contribution to OCPS;
b. OCPS's delivery to HELP of a cashier's check or wire transfer
from OCPS payable to HELP in the aggregate amount of ONE MILLION FIVE HUNDRED
SEVENTY-FIVE THOUSAND DOLLARS ($1,575,000), of which SEVEN HUNDRED EIGHTY-SEVEN
THOUSAND FIVE HUNDRED DOLLARS ($787,500) shall be distributed on the Closing
Date to the Mohrmanns and SEVEN HUNDRED EIGHTY-SEVEN THOUSAND FIVE HUNDRED
DOLLARS ($787,500) shall be distributed on the Closing Date to Xxxxxx;
c. Purchaser's delivery of convertible promissory notes (the
"Promissory Notes") with an aggregate principal balance of ONE MILLION FIFTY
THOUSAND DOLLARS ($1,050,000) in the form attached hereto as Exhibit "B". The
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Promissory Notes shall bear interest at eight percent (8%) per annum, shall be
payable in monthly installments of interest only for a period of twenty-four
(24) months ("Term") and shall be secured pursuant to the terms and conditions
of a security agreement, substantially in the form attached hereto as Exhibit
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"C". The principal balance of the Promissory Notes shall be convertible into
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Purchaser's Common Stock, par value $.001 per share ("Purchaser's Common
Stock"), at any time during the Term in accordance with the terms and conditions
of the Promissory Notes. The Promissory Notes may be prepaid, at the option of
OCPS, upon 60 days prior notice. If, at the end of the Term, any Promissory
Notes have not been converted, the remaining principal balance of such
Promissory Notes and all accrued but unpaid interest thereon shall be paid in
full.
1.3.2 Closing Adjustment.
a. The cash portion of the Purchase Price shall be reduced on the
Closing Date, on a dollar-for-dollar basis, to the extent that the Assets
(which, with respect to accounts receivable, includes only those that are less
than ninety (90) days from invoice date for the purposes of this calculation)
less the Assumed Liabilities (as defined below) are less than Ten Thousand
Dollars ($10,000) as of May 31, 2000, as reflected on the Financial Statements
(as defined below) dated as of May 31, 2000 (the "Closing Adjustment");
provided, however, that in no event shall the Closing Adjustment result in a
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total Purchase Price of less than Ten Million Dollars ($10,000,000), including
the Purchase Price and Capital Contribution under the CPS
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Purchase Agreement (defined below), and in the event the Closing Adjustment
exceeds $500,000, the Purchaser shall have the right to terminate this
Agreement.
b. For purposes of the Closing Adjustment and the Permitted
Distributions (defined below), the Assets and the Assumed Liabilities shall
include the "Assets" and "Assumed Liabilities" of the "CPS Group Companies", as
such terms are defined in that certain Purchase Agreement of even date herewith
between the Purchaser , Orange County Professional Services, Inc. and the other
parties named therein (the "CPS Purchase Agreement"). The parties shall
cooperate with each other and provide each other with access to the books and
records necessary to calculate the Closing Adjustment.
c. In the event of a dispute or disagreement relating to the
Closing Adjustment which the Purchaser and the Shareholders are unable to
resolve, any such party may elect to have such dispute or disagreement resolved
by an accounting firm, not otherwise employed or retained by any party to this
Agreement, to be mutually selected by the parties or, if no agreement is
reached, by Deloitte & Touche LLP (the "Third Accounting Firm"). The Third
Accounting Firm shall resolve the dispute and the calculation of any payment
required upon such resolution shall be final and binding for purposes of this
Section. The Third Accounting Firm shall be instructed to use every reasonable
effort to perform its services within fifteen (15) days of submission of the
dispute to it and, in any case, as soon as practicable after such submission.
The fees and expenses for the services of the Third Accounting Firm shall be
shared equally by the Purchaser, on the one hand, and the Shareholders, on the
other hand.
d. The Closing Adjustment determined in accordance with this
Section upon shall be promptly paid and; such amount, if any, owed to the
Purchaser which is not promptly paid, may, in the Purchaser's sole discretion,
be offset against the amounts due under the Promissory Notes.
1.3.3 Permitted Distributions. The parties acknowledge and agree that the
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Shareholders will be entitled to receive profits distributions, calculated in
accordance with GAAP, that were earned prior to the Closing in accordance with
the provisions of this Section (collectively, "Permitted Distributions");
provided, however, that Permitted Distributions shall only be payable if Assets
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less Assumed Liabilities as May 31, 2000 are at least equal to Ten Thousand
Dollars ($10,000). Permitted Distributions shall be equal to the excess of
current assets over current liabilities as of May 31, 2000, as determined from
the Financial Statements dated as of May 31, 2000. Assets and current assets
shall include cash, accounts receivable that are less than ninety (90) days from
invoice date and prepaid expenses. Current liabilities shall include all
accounts payable, accrued payroll and benefits, accrued vacation and all other
accrued but not contingent liabilities whose payments are due in less than one
(1) year from the Closing Date. Any Permitted Distributions shall be paid
monthly out of surplus cash, which shall be equal to cash received from
operations during the month less cash used to pay all liabilities due during the
respective month, calculated on a per entity basis and paid to the Shareholders
based on their pro rata ownership interest in such entity as of immediately
prior to the Closing Date. The first Permitted Distributions shall occur
promptly after the first month end following agreement upon or other resolution
of the Closing Adjustment in accordance with Section 1.3.2. Any remaining
Permitted Distributions owing at the time the Promissory Notes mature or are
accelerated shall be paid in full. In addition, (a) in the event accounts
receivable in excess of ninety (90) days of the invoice date at the time of
Closing which were excluded from current
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assets are subsequently collected, such amounts shall be promptly paid to the
Shareholders and (b) the Purchaser agrees not to unreasonably withhold its
consent to allow the Shareholders, following the Closing, to attempt to collect
accounts receivable in excess of ninety (90) days of the invoice date at the
time of Closing.
1.4 Assumption of Liabilities. On the Closing Date, OCPS shall assume the
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liabilities of HELP set forth on Schedule 1.4 (collectively, the "Assumed
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Liabilities"). Except for the liabilities specifically to be assumed by OCPS as
forth on Schedule 1.4, OCPS shall not assume and shall under no circumstances be
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responsible for any liabilities or obligations of HELP or the Shareholders
(whether personal or corporate) with respect to and/or arising out of the Assets
and/or the Business, regardless of amount, character or description, or whether
accrued, contingent or otherwise, including, without limitation, (a) any
liability for federal, state or local income, franchise, excise, sales, use,
occupation or other taxes or assessments arising out of or in connection with
conduct or operative facts occurring prior to the Closing Date and (b) any
liability for the purchase of ownership interests of current and/or former
owners (the "Former Shareholder Debt"), except for payment of the Purchase Price
to the Shareholders in accordance with the terms of this Agreement.
1.5 Investors' Rights Agreement. On the Closing Date, the Purchaser and
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those parties receiving Promissory Notes shall enter into an investors' rights
agreement, substantially in the form attached hereto as Exhibit "D" and by this
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reference incorporated herein (the "Investors' Rights Agreement").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
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2.1 Shareholders and HELP. Subject to the exceptions set forth in
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Schedule 2.1, the representations and warranties made to the Purchaser and OCPS
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in this Article 2 shall continue to be true and correct on and as of the Closing
Date. All Shareholders and HELP make the representations and warranties set
forth in this Article 2 jointly and severally. The representations and
warranties made by Xxxxx Xxxxxx in Sections 2.1.7(b) and 2.1.19 are made to the
best of his knowledge.
2.1.1 Title.
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a. Shares.
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(i) The entire authorized capital stock of HELP consists solely
of One Hundred Thousand (100,000) shares, of which Five Thousand (5,000) shares
are issued and outstanding, Two Thousand Five Hundred (2,500) of which are owned
of record and beneficially by the Mohrmanns and Two Thousand Five Hundred
(2,500) of which are owned of record and beneficially by Xxxxxx.
b. Assets. HELP has good and marketable title to (or, as of the
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Closing Date will have), as sole owner, or a valid leasehold interest in all of
the Assets used in connection with its Business.
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c. No Liens. All of the Assets are (or will be, as of the Closing Date)
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free and clear of any and all liens, mortgages, pledges, security interests,
conditional sales or title retention agreements, assessments, covenants,
commitments or any other encumbrances of any nature, except as otherwise noted
on Schedule 2.1.1C attached hereto, all of which liens and encumbrances shall be
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extinguished and released as of the Closing Date.
2.1.2 No Contravention of Laws. The execution, delivery and performance
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by the Shareholders and HELP of this Agreement and the consummation of the
transactions contemplated hereby will not cause the Shareholders or HELP to
violate or contravene (i) to the best of the Shareholders' and HELP's knowledge,
any provision of any law or any rule or regulation of any agency or government
or (ii) any order, writ, judgment, injunction, decree, determination or award to
which any of the Shareholders, HELP or the Assets are subject.
2.1.3 Good Standing. HELP is a corporation duly organized, validly
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existing and in good standing under the laws of the State of California. HELP
(i) has the power to own its property and to carry on its business as now being
conducted and (ii) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned by it therein
or in which the transaction of its business makes such qualification necessary.
2.1.4 Equity Investments. HELP does not own and has not subscribed or
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otherwise agreed to purchase any equity interest, directly or indirectly, in any
corporation, partnership, limited liability company, joint venture or other
entity.
2.1.5 Binding Agreement. This Agreement constitutes the valid and legally
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binding obligation of each of HELP and the Shareholders, and is enforceable in
accordance with its terms. HELP has full power, authority and legal right and
capacity to execute and deliver this Agreement, to transfer its right, title and
interest in the Premises and Assets and to perform and observe the terms and
conditions hereof. The Shareholders have full power, authority and legal right
and capacity to execute and deliver this Agreement, and to perform and observe
the terms and conditions hereof.
2.1.6 No Conflict. No provision of any mortgage, lease indenture,
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contract, agreement, commitment, obligation, understanding and promise (whether
written or oral) ("Contract") binding on any of HELP, the Assets, the Premises
or the Shareholders or affecting any of HELP, the Assets, the Premises or the
Shareholders in any way conflicts with, or in any way prevents or threatens to
prevent, the execution, delivery or performance of this Agreement by HELP or any
of the Shareholders (including, without limitation, the transfer of any of the
Assets to OCPS). No event of default (or event which, with the passing of time
or the giving of notice, or both, would constitute such an event of default)
exists under any Contract, and the execution, delivery and performance of this
Agreement by the HELP or the Shareholders (including, without limitation, the
transfer of any of the Assets to OCPS) will not result, or threaten to result,
in such an event of default or any basis for any claim of such an event of
default or a right to terminate any Contract.
2.1.7 Compliance with Charter Documents and Laws. HELP has complied with
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and is not in violation of the following: (a) any material term or provision of
its Articles of Incorporation or Bylaws or any resolutions adopted by its Board
of Directors or shareholders and
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(b) applicable federal, state or local statutes, laws and regulations
(including, without limitation, (i) to the best of the Shareholder's knowledge,
any applicable environmental, health, building, zoning, employment or
occupational safety law, ordinance or regulation and (ii) any laws, ordinances
or regulations affecting the business, properties, assets or operation of
businesses selling accounts receivable management services, and/or the operation
of the Business, including, without limitation, the Federal Fair Debt Collection
Practices Act.
2.1.8 Other Approvals. Any and all consents, approvals, authorizations
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and ratifications required by HELP or any of the Shareholders under all
applicable laws, regulations and Contracts in order to execute, deliver and
perform under this Agreement (including the consummation of all transactions
contemplated hereby) are set forth on Schedule 2.1.8. All consents, approvals,
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authorizations and ratifications set forth on Schedule 2.1.8 have been or will
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be obtained prior to the Closing Date.
2.1.9 Brokers or Finders. No individual or entity has or, as a result of
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the transactions contemplated hereby, will have, directly or indirectly, any
valid claim against or upon the Purchaser, OCPS, HELP or any of the
Shareholders, the Premises or the Assets for any compensation as a finder,
broker or agent, or in any similar capacity with respect to the transactions
contemplated hereby.
2.1.10 Financial Information. At the Closing, Schedule 2.1.10 to this
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Agreement shall contain the audited balance sheets of HELP (i) as of December
31, 1998 and December 31, 1999, and related audited statements of operations,
changes in shareholders' equity and cash flows for the years then ended and (ii)
as of May 31, 2000, and related audited statements of operations, changes in
shareholders' equity and cash flows for the five months then ended (the
financial statements contained in Schedule 2.1.10 are referred to as the
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"Financial Statements").
a. Preparation of Financial Statements. As of the Closing Date,
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all of the Financial Statements have been prepared in accordance with generally
accepted accounting principles on a consistent basis throughout the periods
covered, are in accordance with HELP's books and records, and fairly present the
financial position of HELP and the results of its operations as of the dates and
for the periods indicated thereon. As of the Closing Date, there are no
liabilities of HELP, contingent or otherwise, except as set forth on the
Financial Statements. As of the Closing Date, the Financial Statements do not
contain any untrue statement of material fact or omit or fail to state any
material fact necessary to make the Financial Statements not misleading.
b. Financial Statement Schedules. True, correct and complete lists
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of any and all accounts, notes and claims receivable of HELP in existence as of
the date hereof are set forth in Schedule 2.1.10. None of these accounts, notes
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and claims is in default and all are, to the best of the Shareholders' and
HELP's knowledge, fully collectible in accordance with their terms, net of
applicable reserves. To the extent that a specific and descriptive reference
thereto is not made on Schedule 2.1.10, a true, correct and complete list of any
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and all Contracts and other obligations of HELP which have not been fully
performed as of the date hereof is set forth on Schedule 2.1.19, which Schedule
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includes the identity of the parties involved, the nature of the obligations of
HELP thereunder and the Assets which have been committed to the fulfillment of
such obligations.
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2.1.11 Maintenance of Financial Condition. Except as set forth on
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Schedule 2.1.11, since December 31, 1999, there has not been any:
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a. Change in the condition (financial or otherwise) or title of any
of HELP, the Business, the Assets or the Premises except changes in the ordinary
course of business, none of which (individually or in the aggregate) has been
material;
b. Loss of any vendor to any of HELP whose services could not
easily be replaced at substantially the same costs;
c. Loss of any customer or client of the HELP whose net fees over
the past twelve (12) months exceeded $100,000 or loss of customers or clients of
HELP whose aggregate net fees over the past twelve (12) months exceeded
$250,000;
d. Except for customary market adjustments and Permitted
Distributions, change in the compensation or benefits of, or any bonuses paid or
promised to, any employees, officers or directors of HELP whose annual
compensation exceeds $50,000;
e. Except for Permitted Distributions, declaration of any dividend
or other distribution to any shareholder or other holder of any beneficial
interest in HELP;
f. Creation of a mortgage, pledge, lien or encumbrance made on any
of the properties or assets of HELP;
g. Capital expenditures in excess of $10,000 (individually or in
the aggregate), except for operating equipment purchases made in the ordinary
course of business which in the aggregate do not exceed $100,000;
h. Indebtedness for borrowed money incurred, assumed or guaranteed
by HELP except for routine borrowings in the ordinary course of HELP's business;
i. Delay in payment of accounts payable, except delays due to recent expansion
of the Business, none of which exceed sixty (60) days;
j. Other occurrence, event or condition of any similar or
dissimilar character which has materially adversely affected, or may materially
adversely affect (individually or in the aggregate), HELP or the Business; or
k. Agreement or commitment to take any of the actions referred to
in subparagraphs (d) through (j) above.
2.1.12 Good Condition and Sufficiency. The assets used in the Business
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(including, without limitation, the Assets and the Premises) are in good
operating condition and repair (subject to ordinary wear and tear). The Assets
and the Premises have been properly maintained and have been repaired or
replaced when necessary.
2.1.13 Insurance. HELP, the Business, the Premises and the Assets are
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each covered by insurance policies in commercially reasonable amount and with
commercially reasonable terms and provisions. A summary of the name, address
and telephone number of the
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agent, the name of the insurer, policy holders and insureds, the policy number
and the period and type of coverage for each such policy is set forth on
Schedule 2.1.13. Each such policy shall remain binding and in full force and
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effect through the Closing Date and otherwise in accordance with their
respective provisions. Schedule 2.1.13 also includes a list of all liability
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insurance coverage maintained with respect to each of HELP, the Business, the
Premises and the Assets during any part of the last five (5) years, including
the name of the insuring entity and policy number as well as the amount of
insurance coverage.
2.1.14 Litigation. Except as provided on Schedule 2.1.14, there is no
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legal, administrative or arbitration proceeding ("Proceeding") pending or, to
the best of the Shareholders' and HELP's knowledge, threatened against or
affecting any of HELP, the Business, the Assets, the Premises or the
Shareholders in any court or before any governmental entity or authority. Except
as provided on Schedule 2.1.14, there is no outstanding judgment, order, writ,
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injunction or decree of any court, governmental agency, authority or arbitration
tribunal against or affecting any of HELP, the Business, the Assets, the
Premises, or the Shareholders. Except as set forth on Schedule 2.1.14, to the
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best of the Shareholders' and HELP's knowledge, there exists no basis for any
Proceeding against or affecting any of HELP, the Business, the Assets, the
Premises, or the Shareholders including, without limitation, any condition
which, if revealed to all interested parties, would give rise to a Proceeding.
2.1.15 Licenses and Bonds. HELP possesses from the appropriate
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governmental body all licenses, permits, authorizations, approvals and rights
and has posted all bonds ("Licenses and Bonds") as are necessary for it to
engage in the Business as such business is currently conducted or as are
required under applicable laws, regulations or Contracts. Lists of all Licenses
and Bonds currently held or posted by HELP and required in the operation of the
Business, including their respective expiration dates and any conditions to
their validity, are set forth on Schedule 2.1.15, attached hereto. All such
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Licenses and Bonds have been lawfully and validly issued and are in full force
and effect. No violation of such Licenses and Bonds has been recorded and there
is no pending or, to the best of the Shareholders' and HELP's knowledge,
threatened proceeding which may revoke or limit any or all of them. Licenses and
Bonds with respect to the Business shall continue in full force and effect
through the Closing Date; moreover, Licenses and Bonds with respect to the
Business constitute Assets and shall be transferred to OCPS by or as of the
Closing Date without interruption.
2.1.16 Intellectual Property Rights. All of the patents, copyrights,
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trademarks, service marks, logos, trade names, domain names, URLs and websites
which are currently being used in the operation of the Business, which are
listed on Schedule 2.1.16 attached hereto, are valid, in good standing and free
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and clear of all liens and encumbrances of any nature whatsoever, and have not
been (a) challenged in any way or (b) involved in any interference claim or
proceeding. To the best of the Shareholders' and HELP's knowledge, operation of
the Business in the ordinary course will not involve infringement or claimed
infringement of any issued or applied-for United States patent or trademark.
2.1.17 Third Parties. The Business operating in the ordinary course, to
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the best of the Shareholders' and HELP's knowledge, (a) does not, and will not
as of the Closing Date, infringe upon or violate any rights of any third party,
and (b) does not, and will not as of the Closing Date, violate any right of
privacy or any personal or proprietary right.
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2.1.18 Taxes. HELP and each of the Shareholders have filed, on a timely
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basis, all tax returns (or extensions for the filing thereof), reports and
declarations required to be filed for all periods prior to, and those periods
including, the Closing Date. State and federal income and franchise tax returns
for the prior three fiscal years for HELP are attached hereto as Schedules
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2.1.18A, 2.1.18B and 2.1.18C, respectively. No time in which to file any such
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unfiled returns, reports or declarations has been extended, except for the
fiscal year ended December 31, 1999. Each of HELP and the Shareholders have
paid, at the time and in the manner required, and where payment is not due have
accrued on their respective balance sheets, all taxes for all periods prior to
and those periods including the Closing Date. All taxes shown to be due on any
returns, reports and declarations have been paid, and neither HELP nor any of
the Shareholders is delinquent in the payment of any tax, estimated tax,
assessment or governmental charge payable by or on behalf of such party. There
is no tax audit of any kind pending or, to the best of the Shareholders' and
HELP's knowledge, threatened against HELP or any of the Shareholders nor has a
claim for assessment, proposed assessment, or collection of any tax been
received or, to the best of the Shareholders' and HELP's knowledge, threatened.
Neither HELP nor any of the Shareholders has any outstanding agreement or waiver
extending or waiving any statute of limitations with respect to the collection
or assessment of any tax, nor will such an agreement be entered into prior to
the Closing Date. No payments contemplated by this Agreement are subject to the
provisions of Section 280G of the Internal Revenue Code. There are no tax liens
on any portion of the Business, the Premises or the Assets. For purposes of this
Agreement, the term "tax" shall include all federal, state, local, foreign or
other governmental income, franchise, gross-receipts, property, sales, use,
transfer, excise, employment, and other taxes of any nature whatsoever
including, without limitation, all interest, penalties, fines, assessments and
deficiencies relating thereto.
2.1.19 Contracts. A complete list of each Contract in the following
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categories and to which HELP is a party, under or by which it has any obligation
or by which the Business or Assets are bound in any respect, is attached hereto
as Schedule 2.1.19 (copies of which have been provided to the Purchaser):
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a. Contracts for the purchase, sale, lease or other disposition of
equipment, goods, materials, supplies, or capital assets, or the performance of
services, in any case involving more than Ten Thousand Dollars ($10,000), except
for operating equipment purchases made in the ordinary course of business which
in the aggregate do not exceed $100,000;
b. Notes, mortgages, deeds of trust, loan agreements, security
agreements, guarantees, debentures, credit agreements and other evidences of
indebtedness;
c. Contracts relating to the employment of, or the performance of
services by, any employee, consultant or independent contractor;
d. Contracts with individuals or entities to whom HELP has agreed
to provide services, in any case involving average monthly net fees in excess of
$5,000 over the past twelve (12) months;
e. Licenses and Bonds, sublicenses, royalty agreements and other
Contracts to which HELP is a party, or to which the Business or Assets are
otherwise subject;
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f. Any Contract that is not terminable by HELP unilaterally for
convenience (without ongoing liability) upon thirty (30) days' notice;
g. Contracts limiting the right of HELP to compete in any
business or with any individual or entity; and
h. All other Contracts material to the Business as presently
conducted.
Each of the Contracts constitutes the valid and legally binding obligation
of HELP and the other individuals or entities that are a party thereto, will be
binding after the sale of the Assets to OCPS and is enforceable in accordance
with its terms.
2.1.20 Employees. Schedules of all current employees for HELP, their
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current rates of compensation (and any other remuneration of any kind) and
benefits and date of last compensation increase, any accrued vacation and all
compensation, benefits and bonuses paid since January 1, 2000 are attached
hereto as Schedule 2.1.20. Except as set forth on Schedule 2.1.20, there has
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been no hiring of new employees or termination of existing employees since
December 31, 1999. All Contracts and relationships between HELP and its current
or former officers, directors, managers, principals, employees or consultants
who are or were employed or otherwise compensated in connection with activities
of HELP ("Employees") are and have been in full compliance with law and are
terminable at-will. None of the Employees belongs to a union, and HELP is not
bound, in any way, by any collective bargaining agreements or consent decrees
involving the Employees. On and as of the Closing Date, there shall be no
outstanding liabilities, obligations, expenses or commitments in respect of any
Employees, except liabilities or obligations relating to any employee benefit
plans, pension plans, welfare benefit plans, retirement, disability, medical,
dental or other health insurance plans, life insurance or other death benefit
plans, profit-sharing, deferred compensation, severance, bonus, stock purchase,
stock ownership or other compensation plans or arrangements, accrued but unpaid
vacation, sick-leave or personal time which (x) arose out of the ordinary course
of business, (y) and are set forth on the books and records of HELP as of the
Closing Date and (z) will be taken into account with respect to any purchase
price adjustment pursuant to Paragraph 1.3.2. Copies of any of the foregoing
plans are attached, as appropriate, to Schedule 2.1.20. None of HELP or any
---------------
Related Party ("Related Party" means any company, trade or business, whether or
not incorporated, which is considered a single employer with HELP under Section
4001 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) has sponsored, been obligated to contribute to, terminated or
withdrawn from any employee pension benefit plan (within the meaning of Section
3(2) of ERISA) which is a multi-employer plan (as defined in Section 3(37) of
ERISA), and none of HELP or any Related Party has incurred any withdrawal
liability (as defined in Section 4201 of ERISA) with respect to any multi-
employer plan, and no such withdrawal liability will result from this Agreement
or the consummation of any of the transactions contemplated hereby. No
liability under Title IV of ERISA which has not been satisfied has been incurred
by HELP or by any Related Party with respect to an employee pension benefit plan
(within the meaning of Section 3(2) of ERISA), and no proceedings by the Pension
Benefit Guaranty Corporation to terminate any such plan pursuant to Title IV of
ERISA have been instituted or threatened under which HELP or any Related Party
could have any present or future liability. Neither HELP nor or any member of a
group described in Internal
-10-
Revenue Code (the "Code") Sections 414(b), (c), (m), (n) or (o) which includes
HELP has violated the requirements of Code Section 4980B or Sections 601, et
--
seq. of ERISA.
----
2.1.21 Environmental Matters. Except as set forth on Schedule 2.1.21
--------------------- ---------------
hereto, to the best of the Shareholders' and HELP's knowledge, none of HELP, the
Business, the Premises or the Assets, nor any portion of any of the foregoing,
have been associated with any spill, disposal, storage, discharge or release of
any Hazardous Materials (as hereinafter defined) into or upon or over any real
property (including, without limitation, the Premises) or into or upon ground or
surface water. To the best of the Shareholders' and HELP's knowledge, neither
the Assets, the Premises nor the Business includes any asbestos-containing
materials nor do they include any electrical transformer, fluorescent light
fixture with ballasts or other equipment containing polychlorinated biphenyls or
any underground storage tanks. As used herein, the term "Hazardous Materials"
shall mean any hazardous or toxic substance, material or waste which is
regulated by any local government authority, the State of California or the
government of the United States of America.
2.1.22 Real Property. HELP owns no real property. To the best of the
-------------
Shareholders' and HELP's knowledge, neither the Premises nor any portion thereof
is in violation of any applicable building, zoning or other law, ordinance or
regulation (including, without limitation, OSHA or ADA), nor has any notice or
citation from any public or quasi-public authority in respect thereto been
received, including notice of an exercise of the right of eminent domain, nor do
any facts exist that would warrant any such notice or citation.
2.1.23 Land Use. To the best of the Shareholders' and HELP's knowledge,
--------
there are no existing or threatened condemnation, zoning, moratoriums,
conditions, restrictions, limitations, controls or other land use regulation
proceedings which would detrimentally affect the use and/or operation of the
Premises as the Purchaser intends and the normal incidents thereto.
2.1.24 Client Relations. No (i) client with net fees in excess of
----------------
$100,000 over the past twelve (12) months nor (ii) clients with aggregate net
fees in excess of $250,000 has raised any claim, dispute or controversy with
respect to any of the services provided by any of HELP, nor are there any facts
which exist indicating that any of such clients may totally or partially
terminate or suspend the use of HELP's services or otherwise reduce their
current monthly placements in the foreseeable future. HELP has not in any
respect misrepresented its services or employed misleading or deceptive
practices in connection with the sale of its services.
2.1.25 Investment Representations. The Shareholders and HELP
--------------------------
acknowledge that the Promissory Note(s) (and the Purchaser Common Stock issuable
upon the conversion thereof) to be issued pursuant to this Agreement (i)
constitute "securities" under federal and applicable state securities laws, (ii)
will be unregistered as such, and (iii) are being transferred in reliance upon
exemptions from registration based, in part, upon the Shareholders' and HELP's
representations contained herein. The Shareholders and HELP are acquiring such
securities for their own account and not with a view to, or for sale in
connection with, any distribution thereof. The Shareholders and HELP that such
securities may not be sold or transferred unless such sale or transfer is
registered or qualified with the appropriate securities authorities or unless an
opinion of counsel, satisfactory to the Purchaser is rendered which states that
such sale or transfer is exempt from registration and qualification. The
Shareholders and HELP have had an
-11-
opportunity to ask questions and receive answers from the Purchaser regarding
matters relevant to the Purchaser and an investment therein.
2.1.26 Disclosure. No representation, warranty or covenant by HELP or the
----------
Shareholders contained in this Agreement, or in any schedule, exhibit, statement
or certificate furnished, or to be furnished, to the Purchaser by HELP or the
Shareholders pursuant to this Agreement or in connection with the transactions
contemplated herein, contains or will contain any untrue or misleading statement
of any material fact, or omits or will omit, or fail to state any material fact
necessary to make any such representation, warranty or covenant not misleading
to a prospective purchaser of any of the Assets, the Premises, the Business or
any portion of the foregoing.
2.2 Purchaser. The Purchaser hereby represents and warrants to the
---------
Shareholders as follows, which representations and warranties shall continue to
be true and correct on and as of the Closing Date:
2.2.1 Good Standing. The Purchaser (a) is a corporation duly organized,
-------------
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (b) has the corporate power to own its property and to carry on
its business as now being conducted and (c) is duly qualified to do business and
is in good standing in each jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such qualification necessary.
2.2.2 Binding Agreement. This Agreement constitutes the valid and
-----------------
legally binding obligation of the Purchaser and is enforceable in accordance
with its terms. The Purchaser has full power, authority and legal right to
execute and deliver this Agreement and to perform and observe the terms and
conditions hereof, subject to the filing of an Information Statement with the
Securities and Exchange Commission and distributing it to the Purchaser's
stockholders, as required by Rule14c-2, with respect to increasing the
Purchaser's authorized capital to 50,000,000 shares of Purchaser's Common Stock.
2.2.3 No Conflict. No provision of any Contract binding on the Purchaser
-----------
or affecting the Purchaser in any material way conflicts with, or in any way
prevents, the execution, delivery or performance of this Agreement by the
Purchaser.
2.2.4 Compliance with Charter Documents and Laws. The Purchaser has
------------------------------------------
complied with and is not in violation of, nor will the execution of this
Agreement or the consummation of the transactions contemplated hereby fail to
comply with or cause a violation of, the following: (a) any material term or
provision of its Certificate of Incorporation or Bylaws or any resolutions
adopted by its board of directors or shareholders; and (b) applicable federal,
state or local statutes, laws and regulations.
2.2.5 Disclosure. No representation, warranty or covenant by the
----------
Purchaser contained in this Agreement, or in any schedule, exhibit, statement or
certificate furnished, or to be furnished, to the Shareholders by the Purchaser
pursuant to this Agreement or in connection with the transactions contemplated
herein, contains or will contain any untrue or misleading statement of any
material fact, or omits or will omit, or fail to state any material fact
necessary to
-12-
make any such representation, warranty or covenant contained herein not
misleading to the Shareholders.
2.3 Survival of Representations and Warranties. The representations
------------------------------------------
and warranties of each party contained herein shall continue and be true and
correct on and as of the Closing Date and shall survive the Closing Date as
follows:
2.3.1 The representations and warranties contained in Sections
2.1.1 (Title), 2.1.3 and 2.2.1 (Good Standing), 2.1.5 and 2.2.2 (Binding
Agreement), 2.1.6 and 2.2.3 (No Conflict) shall survive the consummation of the
transactions contemplated herein indefinitely; and
2.3.2 All other representations and warranties shall survive for a
period of three (3) years following the Closing Date.
ARTICLE 3
ACCESS AND INFORMATION
----------------------
3.1 Access by the Purchaser. The Purchaser and its officers, directors,
-----------------------
employees, counsel and other authorized representatives, throughout the period
prior to the Closing Date, shall be provided with reasonable access (during
normal business hours and without undue interference with normal business
activities) to the Assets, the Premises and to any other property, books and
records relating to HELP, the Business, and the Shareholders for the purpose of
facilitating a due diligence review thereof by the Purchaser. Notwithstanding
the Purchaser's rights and the obligations of any other party hereunder, the
Purchaser may or may not conduct such investigations and/or review such
information and the provisions of this Article 3 shall in no way be deemed to
lessen the Purchaser's entitlement to rely on the representations and warranties
of any other party contained herein; rather, the Purchaser is, and shall
continue to be, entitled to rely absolutely on such representations and
warranties.
3.2 Access by the Shareholders. The Shareholders and their counsel and
--------------------------
other authorized representative, throughout the period prior to the Closing
Date, shall be provided with reasonable access (during normal business hours and
without undue interference with normal business activities) all material
agreements of the Purchaser, including agreements among the Purchaser and FBR
Financial Fund II, L.P. ("FBR"), including without limitation, shareholder
agreements, employment, incentive, option or other executive based compensation
agreements, and any other documentation between or among the Purchaser, FBR, the
Shareholders and Xxxxxx Xxxxxxx. The Shareholders shall use such information for
the purpose of facilitating a due diligence review thereof by the Shareholders
and shall not otherwise disclose or use such information.
-13-
ARTICLE 4
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
4.1 Conditions to Obligations of the Purchaser. The obligations of the
------------------------------------------
Purchaser under this Agreement are, at the option of the Purchaser (in its sole
and absolute discretion), subject to the following conditions precedent:
4.1.1 All consents required in order for the transfer to OCPS of good
title to the Assets of shall have been obtained and such transfers shall be in
accordance with all applicable laws and regulations (including applicable
regulatory approvals);
4.1.2 All of the conditions precedent to the closing of the sale of
the assets and shares set forth in the CPS Purchase Agreement shall have been
satisfied;
4.1.3 The results of the audit of HELP's financial statements for the
fiscal years ended December 31, 1998 and December 31, 1999 and the five-month
period ended May 31, 2000 by Xxxxxx Xxxxxxxx LLP are satisfactory to the
Purchaser, in the Purchaser's reasonable satisfaction;
4.1.4 Between December 31, 1999 and the Closing Date, there shall
have been no material adverse change in the condition, prospects or title of
HELP, the Business, the Assets, taken as a whole, except changes in the ordinary
course of business, none of which has been materially adverse;
4.1.5 The Purchaser's investigations and review, if any, pursuant to
Article 3 hereof shall not have revealed any information which materially and
adversely reflects upon any HELP, the Business, the Premises or the
Shareholders;
4.1.6 All parties to this Agreement other than the Purchaser shall
have taken all requisite action for the valid performance of this Agreement,
including the transfer of the Assets to OCPS, lien-free and in the condition
otherwise required herein;
4.1.7 The Purchaser shall have received an executed form of Release
of Financing Statement on Form UCC-2, or such other form of release reasonably
acceptable to the Purchaser, for each lien or other encumbrance shown on
Schedule 2.1.1C hereto, and such form(s) of release shall, in the reasonable
---------------
opinion of the Purchaser, effect a complete release thereof (collectively, the
"Executed Releases");
4.1.8 All representations and warranties of parties to this Agreement
other than the Purchaser shall be true and correct in all material respects as
of the Closing Date ;
4.1.9 No covenant of a party to this Agreement other than the
Purchaser shall be in default nor shall a default be threatened with solely the
passing of time, the giving of notice, or both;
4.1.10 No impediments shall exist or be threatened with respect to the
execution, delivery and performance by the parties to each of the Investors'
Rights Agreement and the Non-Competition Agreement other than the Purchaser;
-14-
4.1.11 HELP shall have completed and executed all documents necessary
to change its name to a name which is sufficiently dissimilar to its current
name, which determination shall be in the Purchaser's sole discretion; and
4.1.12 The Purchaser shall have received the legal opinion of counsel
HELP and the Shareholders dated as of the Closing Date and substantially in the
form attached hereto as Exhibit "E" ("Opinion of Counsel to HELP and the
-----------
Shareholders"), which opinion may be relied upon by the Purchaser and the
Purchaser's counsel in the rendering of the opinion of the Purchaser's counsel
to the parties providing financing to the Purchaser to consummate the
transactions contemplated by this Agreement.
4.2 Conditions to Obligations of Parties other than the Purchaser. The
-------------------------------------------------------------
obligations of the Shareholders and HELP under this Agreement are, at the option
of the Shareholders and HELP (in their sole discretion), subject to the
following conditions:
4.2.1 The Purchaser shall have taken all requisite corporate action
for the valid performance of this Agreement;
4.2.2 The Purchaser's representations and warranties contained herein
shall be true and correct in all material respects as of the Closing Date; and
4.2.3 The Shareholders shall have received the legal opinion of
counsel to the Purchaser dated as of the Closing Date and substantially in the
form attached hereto as Exhibit "F" ("Opinion of Counsel to the Purchaser").
-----------
4.3 Impossibility. If, except as otherwise provided in this Agreement,
-------------
any of the parties shall be prevented from closing, completing or proceeding
with any of the transactions contemplated herein for any cause beyond the
reasonable power and control of that party, the Shareholders, if the
impossibility is on the part of the Purchaser, or the Purchaser, if the
impossibility is on the part of the Shareholders, may elect to (i) accept a
partial performance as dictated by the circumstance, or (ii) terminate this
Agreement in lieu of any other remedy.
ARTICLE 5
CLOSING
-------
5.1 Time and Place. The transactions provided for herein shall be
--------------
consummated at 10:00 a.m. on June 15, 2000 or such other date and time as the
parties may agree (the "Closing Date"), at the offices of Pillsbury Madison &
Sutro LLP, located at 000 X. Xxxxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000,
or such other location as the parties may agree.
5.1.1 Actions and Deliveries. On the Closing Date, the following
----------------------
actions and deliveries shall take place:
5.1.2 Delivery by Parties other than the Purchaser. The parties
--------------------------------------------
other than the Purchaser shall deliver to the Purchaser the following:
-15-
a. A certificate executed by each Shareholder and the President
of HELP dated as of the Closing Date to the effect that the representations and
warranties contained herein are true and correct as of the Closing Date;
b. A certificate executed by the Secretary of HELP, certifying
as to the valid adoption of resolutions of the Board of Directors of HELP and
the Shareholders approving this Agreement and the consummation of the
transactions contemplated hereby, in form acceptable to counsel for HELP;
c. Certificates of good standing of HELP from (i) the California
Secretary of State (ii) the Secretary of State of the state in which its
principal place of business is located, if different that the State of
California, and (iii) the Franchise Tax Board of the State of California, each
dated within a reasonable period prior to the Closing;
d. The Executed Releases;
e. A Xxxx of Sale in form acceptable to the Purchaser
transferring the Assets from HELP to OCPS;
f. The Investors' Rights Agreement executed by the Shareholders;
g. The Security Agreement executed by the Shareholders;
h. The Non-Competition Agreement executed by the Shareholders;
i. The Opinion of Counsel to HELP and the Shareholders; and
j. Such other documents as are necessary to effect the intent of
this Agreement and confirm the performance by the Shareholders and HELP of their
obligations hereunder (including Schedules revised as of the Closing Date) as
the Purchaser may reasonably request.
5.1.3 Delivery by the Purchaser. The Purchaser shall deliver to the
-------------------------
Shareholders and HELP the following:
a. Cashier's checks or wire transfers from the Purchaser payable
in the aggregate amount of ONE MILLION FIVE HUNDRED SEVENTY-FIVE THOUSAND
DOLLARS ($1,575,000) as described in Section 1.3.1;
b. The Promissory Notes executed by an authorized officer of the
Purchaser;
c. A certificate executed by an authorized officer of the
Purchaser and dated as of the Closing Date to the effect that the
representations and warranties of the Purchaser and contained herein are true
and correct as of the Closing Date;
d. The Investors' Rights Agreement executed by an authorized
officer of the Purchaser;
-16-
e. The Security Agreement and UCC-1 financing statements in
forms reasonably acceptable to the Shareholders' counsel executed by an
authorized officer of the Purchaser and the other parties thereto other than the
Shareholders;
f. The Non-Competition Agreement executed by an authorized
officer of the Purchaser;
g. The Opinion of Counsel to the Purchaser; and
h. Such other documents as are necessary to effect the intent of
this Agreement and confirm the performance by the Purchaser of its obligations
hereunder as any party other than the Purchaser may reasonably request.
5.2 Further Acts. On the Closing Date, the Shareholders and HELP shall
------------
deliver to the Purchaser such bills of sale, endorsements, assignments, and
other good and sufficient instruments of conveyance and assignment, reasonably
satisfactory in form and substance to the Purchaser and its counsel, as shall be
effective to vest in OCPS all right, title and interest in and to the Assets.
Simultaneously with such delivery, the Shareholders and HELP shall take all
additional steps as may be reasonably necessary to put OCPS into full
possession, enjoyment and operating control of each of the Business, the
Premises and the Assets.
5.3 Simultaneous Transactions and Duration of Closing. All transactions
-------------------------------------------------
on the Closing Date shall be deemed to have taken place simultaneously, and no
transaction shall be deemed to have been completed until all transactions are
completed and all documents delivered.
ARTICLE 6
OBLIGATIONS BEFORE CLOSING
--------------------------
6.1 Conduct of Business in Normal Course. From the date of this Agreement
------------------------------------
until the Closing Date, each of HELP and the Shareholders shall carry on the
Business and activities diligently and in substantially the same manner as it
previously has been carried on, and shall not make or institute any unusual or
novel methods of purchase, sale, lease, commitment, management, accounting or
operation that will vary materially from the methods used by it as of the date
of this Agreement, or take any of the actions described in Section 2.1.11,
---------------
except with the prior consent of Xxxxxx Xxxxxxx.
6.2 Full Payment of Liabilities. The Shareholders covenant that any and
---------------------------
all liabilities of HELP and the Business, except the Assumed Liabilities, shall
be paid in full at or prior to the Closing Date and any and all liens, claims
and encumbrances affecting the Premises or the Assets shall be removed to the
reasonable satisfaction of Purchaser.
6.3 Preservation of Business and Relationships. HELP and the Shareholders
------------------------------------------
shall use their best efforts, without making any commitments on behalf of the
Purchaser, to preserve its business organization intact, to keep available to
its business its present Employees, and to preserve its present relationships
with suppliers, lessors, licensors, customers and others having business
relationships with it.
-17-
6.4 Existing Agreements. HELP and the Shareholders shall not modify,
-------------------
amend, cancel or terminate any of its existing Contracts, or agree to do any of
those acts.
6.5 Governmental Filings. HELP and the Shareholders shall cooperate fully
--------------------
with the Purchaser in preparing and filing all information and documents deemed
necessary or desirable by the Purchaser under any statutes or governmental rules
or regulations pertaining to the transactions contemplated by this Agreement.
6.6 Consents. HELP and the Shareholders shall give all notices required
--------
to be made and given by HELP or the Shareholders and use their best efforts to
obtain all consents required to be obtained by HELP or the Shareholders in
connection with the sale of the Assets and the other transactions contemplated
by this Agreement.
6.7 Notice to the Purchaser. HELP and the Shareholders shall give prompt
-----------------------
notice to the Purchaser of (a) any notice of, or order or communication relating
to, any default or potential default received by such party or of which such
party is aware with respect to any Contract, and (b) any notice or other
communication from any third party alleging that the consent of such third party
may be required in connection with any of the transactions contemplated by this
Agreement.
6.8 Actions by the Shareholders. HELP and the Shareholders shall take any
---------------------------
and all actions which may be necessary to cause such party to perform its
obligations hereunder in a timely and appropriate manner.
ARTICLE 7
INDEMNIFICATION
---------------
7.1 Indemnification.
---------------
7.1.1 Shareholders and HELP. Each of the Shareholders and HELP shall
---------------------
indemnify, defend (with counsel reasonably acceptable to the Purchaser and/or
the OCPS, as the case may be) and hold the Purchaser and OCPS harmless from and
against any and all costs, actions, expenses (including reasonable attorneys'
fees), claims, demands and liabilities arising from any material
misrepresentation or material inaccuracy in, material breach or material
nonperformance of, any warranty, representation, covenant or agreement made by
such party in this Agreement or any certificate delivered in connection with
this Agreement.
7.1.2 Purchaser. The Purchaser shall indemnify, defend (with counsel
---------
reasonably acceptable to the Shareholders) and hold the Shareholders and HELP
harmless from and against any and all costs, actions, expenses (including
reasonable attorneys' fees), claims, demands and liabilities arising from (a)
any material misrepresentation or material inaccuracy in, material breach or
material nonperformance of, any warranty, representation, covenant or agreement
made by the Purchaser in this Agreement or any certificate delivered in
connection with this Agreement or (b) the Assumed Liabilities.
7.1.3 Offset Right. Except for the Closing Adjustment, which may be
------------
offset in accordance with and the provisions of Section 1.3.2 subject to the
dispute resolution procedures described in therein, the Purchaser and OCPS may
charge and offset the amount of any and all of
-18-
the Purchaser's or OCPS's losses, costs, actions, expenses (including reasonable
attorneys' fees), claims, demands and liabilities arising from any material
misrepresentation, inaccuracy in, breach, or nonperformance of any warranty,
representation, covenant or agreement made by the Shareholders or HELP in this
Agreement or any agreements or transactions contemplated hereby prior to or as
of the Closing Date against any amounts payable by the Purchaser or OCPS to the
Shareholders (including, without limitation, amounts payable pursuant to the
Promissory Notes). The Purchaser and OCPS shall give the Shareholders fifteen
(15) days' advance written notice of its intention to seek such an offset,
including the grounds or reasons therefor, and will, during such period, discuss
the matter with the Shareholders in an attempt to resolve the matter without
effecting an offset. Failing a complete resolution of the claim during such 15-
day period, the Purchaser shall initiate arbitration of the dispute in
accordance with Section 9.6 hereof and shall, during the pendency of such
arbitration (and the 15-day period beginning with notice of a claim), make any
payments otherwise due and owing under the Promissory Notes into an account
under the control of the Judicial Arbitration and Mediation Service ("JAMS"). An
offset against such payments will be made only upon the final award of the
arbitrator in such arbitration proceeding. The existence of a claim and/or the
pendency of an arbitration proceeding in connection therewith shall not toll,
delay or excuse the Purchaser's obligation to make the payments called for under
the Promissory Notes into an arbitration account as provided herein.
7.1.4 Mutual Cooperation. Each party to this Agreement shall
------------------
cooperate with the other party(ies) in defending claims for which the other
party(ies) is/are or may be liable under this Article 7 by giving prompt notice
to the other party(ies) of the existence of any such claim and by promptly
furnishing such documents and information as may be useful in defense of such
claims.
ARTICLE 8
TAXES, FEES AND TERMINATION
---------------------------
8.1 Tax Returns. The Shareholders shall prepare and file all tax returns,
-----------
schedules and filings in respect of HELP for the fiscal year ended December 31,
1999 and the stub period from January 1, 2000 up to and including the Closing
Date, and pay all taxes due in respect of such returns, prior to the applicable
due date therefor (as such due dates may be extended) and provide copies of all
such tax returns, schedules and filings to the Purchaser. All such returns,
schedules and filings shall be accurate and shall comply fully with applicable
law and regulations and past practice in both form and substance.
8.2 Fees and Expenses.
-----------------
8.2.1 The Shareholders and the Purchaser shall each pay their
respective costs and expenses (including attorneys' fees) incurred or to be
incurred in negotiating and preparing this Agreement and in closing and
performing the transactions contemplated herein. The Shareholders and the
Purchaser shall each pay one-half of the cost of the Purchaser's lien and
litigation searches on HELP, the Shareholders, the Premises and the Assets,
copies of such lien searches have been provided to the Shareholders.
-19-
8.2.2 The Purchaser shall pay the cost of the audit to be performed
by Xxxxxx Xxxxxxxx LLP of HELP's financial statements for the fiscal years ended
December 31, 1998 and December 31, 1999.
8.3 Termination. This Agreement may be terminated as follows:
-----------
8.3.1 Purchaser. By the Purchaser if there is any breach of this
---------
Agreement by a party other than the Purchaser or any condition precedent to the
obligations of the Purchaser hereunder is not satisfied and such condition is
not waived by the Purchaser on or prior to the Closing Date; or
8.3.2 Shareholders. By the Shareholders if there is a breach of this
------------
Agreement by a party other than the Shareholders or HELP or any condition
precedent to the obligations of the Shareholders or HELP hereunder is not
satisfied and such condition is not waived by the Shareholders on or prior to
the Closing Date;
in which case, the party with a right of termination may terminate this
Agreement at its option by notice to the other parties. In the event of a
termination of this Agreement by any party as above provided due to the default
of the other party(ies), such defaulting party(ies) shall be liable to the other
parties for damages proximately caused by such default.
ARTICLE 9
MISCELLANEOUS
-------------
9.1 Warranty of Title. All warranties of title contained herein with
-----------------
respect to the Assets, any portion thereof is hereby made a part of all
instruments of transfer by which any of the Assets are transferred to OCPS.
9.2 Notices. Any notices or other communications pursuant to this
-------
Agreement shall be given in writing and shall be deemed to have been given when
delivered personally, or three (3) business days after deposit in the United
States mail, registered or certified, with proper postage and registration or
certification fees prepaid, or one (1) business day after delivery to Federal
Express or a similar overnight carrier, addressed to the following:
IF TO PURCHASER:
Cypress Financial Services, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
-20-
with copies of all notices to the Purchaser to:
Pillsbury Madison & Sutro LLP
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
IF TO THE SHAREHOLDERS:
Xxxxxxx Xxxxxxxx
0000 Xxxxxx Xxxxx Xxxxxx
Xxxxx Xxxx, XX 00000-0000
Xxxxx Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
with copies of all notices to the Shareholders to:
Xxxxxx X. Xxxxxx, Esq.
Attorney at Law
000 X. Xxxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and:
Xxxxx X. Xxxxxxx, Esq.
Coss Shreiar & Law
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other addresses as may be designated by any of the parties from
time to time by written notice given to the other party(ies) in the aforesaid
manner.
9.3 Survival. The indemnities, agreements and covenants made in this
--------
Agreement shall survive the Closing Date.
9.4 Assignment. Neither this Agreement nor any rights pertaining hereto
----------
may be assigned by any party.
9.5 Severability. Should any one or more of the provisions of this
------------
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be unlawful or
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unenforceable in any relevant jurisdiction, then such illegal or unenforceable
provision shall be modified by the proper court, if possible, but only to the
extent necessary to make such provision enforceable, and such modified provision
and all other provisions of this Agreement and of each other agreement entered
into pursuant to this Agreement shall be given effect separately from the
provision or portion thereof determined to be unlawful or unenforceable and
shall not be affected thereby; provided, that any such modification shall apply
only with respect to the operation of this Agreement in the particular
jurisdiction in which such determination of unlawfulness or unenforceability is
made.
9.6 Arbitration. Except with respect to the Closing Adjustment, which
shall be governed by Sections 1.3.2, in the event of a claim or dispute
concerning or arising out of this Agreement and the agreements and transactions
contemplated hereby, such dispute shall be submitted to binding arbitration.
Arbitration proceedings may be commenced by giving the other party(ies) written
notice thereof and shall proceed thereafter in accordance with and be governed
by the rules and procedures of JAMS then in effect. The arbitrator shall be a
neutral arbitrator (the "Arbitrator") mutually selected by Xxxxxx Xxxxxxx and
Xxxx Xxxxxxxx from among five individuals proposed by JAMS. The decision of the
Arbitrator shall be final, binding and nonappealable with respect to all
persons, including, without limitation, persons who have failed or refused to
participate in the arbitration process. The Arbitrator shall have authority to
award relief under legal or equitable principles, including interim or
preliminary relief. Unless the Arbitrator finds that exceptional circumstances
require otherwise, all costs incurred in connection with the arbitration,
including the Arbitrator's fees and expenses of expert witnesses, legal counsel
and accountants, shall be allocated to the parties by the Arbitrator, taking
into account the parties' original positions and the ultimate determination by
the Arbitrator.
9.7 Brokerage Commission. The parties acknowledge that neither the
--------------------
Shareholders or HELP will pay any commission to any broker in connection
herewith. Each party shall indemnify and hold harmless the other parties
against any and all losses, costs, damages, expenses (including attorneys' fees)
and liabilities whatsoever based upon any commitment by such indemnifying party
to pay any brokerage commission or other fee by reason of the transactions
contemplated herein.
9.8 Applicable Law. This Agreement and the rights and obligations of the
--------------
parties hereunder shall be construed under, and governed by, the laws of the
State of California without giving effect to conflict of laws provisions.
9.9 Binding Effect. The terms and provisions of this Agreement shall be
--------------
binding upon, and shall inure to the benefit of, the parties hereto and their
respective assigns, heirs, representatives and successors.
9.10 Further Assurances. Each party hereby agrees to execute all such
------------------
further instruments and documents and to take all such further action as the
other party(ies) may reasonably request in order to give effect to the
provisions and purposes of this Agreement.
9.11 Entire Agreement. This Agreement, the attached schedules and
----------------
exhibits referenced herein, and the instruments, agreements and certificates to
be executed and delivered pursuant hereto, constitute the entire understanding
of the parties with respect to the subject
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matter hereof and supersede any and all prior letters, agreements or memorandums
of understanding.
9.12 Waiver, Modification or Cancellation. Any waiver, modification or
------------------------------------
cancellation of any of the provisions of this Agreement shall not be valid
unless in writing and signed by the parties hereto.
9.13 Headings; Terminology. The various headings or titles used herein
---------------------
are for convenience only and shall not affect the interpretation of any of the
provisions hereof. All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other genders; and
the singular number shall include the plural, and vice versa.
9.14 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.15 Publicity. All notices to third parties and all other publicity
---------
concerning the transactions contemplated herein shall be jointly planned and
coordinated by and between the Purchaser and the Shareholders. None of the
parties shall act unilaterally in this regard without the prior written consent
of the other; however, such consent shall not be unreasonably withheld.
9.16 Condemnation. If, prior to the Closing Date, condemnation
------------
proceedings are commenced or threatened against the Premises which could result
in the taking of all or a portion of the Premises, the Purchaser shall have the
right to terminate this Agreement and its obligations hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CYPRESS FINANCIAL SERVICES, ORANGE COUNTY PROFESSIONAL
INC., a Nevada corporation SERVICES, INC., a California corporation
By:________________________ By:_______________________________
Name:______________________ Name:_____________________________
Title:_____________________ Title:____________________________
HOSPITAL EMPLOYEE LABOR POOL
A California corporation
By:______________________________
Name: ___________________________
Title: __________________________
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SHAREHOLDERS:
--------------------------------
Xxxxxxx Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxx Xxxxxx
INDEX OF EXHIBITS
EXHIBITS
--------
A - Non-Competition Agreement
B - Promissory Notes
C - Security Agreement
D - Investors' Rights Agreement
E - Opinion of Counsel to HELP and the Shareholders
F - Opinion of Counsel to the Purchaser
INDEX OF SCHEDULES
------------------
SCHEDULES
---------
1 Premises
1.1 Assets
Exhibit 1 - Equipment
Exhibit 2 - Contracts and Receivables
Exhibit 3 Cash and Accounts
1.4 Assumed Liabilities
2.1 Schedule of Exceptions to Representations and Warranties
2.1.1A Outstanding Options, Etc., and Agreements for the Purchase or
Acquisition of Shares
2.1.1C Liens; Bank Loans and Lines of Credit
2.1.7A(i) Articles of Incorporation
2.1.7A(ii) Bylaws
2.1.8 Required Approvals and Consents
2.1.10 Financial Statements and Schedules
2.1.11 Exceptions to Maintenance of Financial Condition
2.1.13 Insurance Policies
2.1.14 Litigation
2.1.15 Licenses and Bonds
2.1.16 Intellectual Property Rights
2.1.18A State and Federal Tax Returns for 1999
2.1.18B State and Federal Tax Returns for 1998
2.1.18C State and Federal Tax Returns for 1997
2.1.19 Contracts
2.1.20 Employees
2.1.21 Environmental Matters
