-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kp63IC0gnlf16kad5gX41E5o0XjkWejvmWL/aVsciYvA3YTC7cfG+xdErpwqZ3bj 5dMaurgsR4LWlC4peAQvZQ== 0001144204-05-036323.txt : 20051116 0001144204-05-036323.hdr.sgml : 20051116 20051116144704 ACCESSION NUMBER: 0001144204-05-036323 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20051109 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Changes in Control of Registrant ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051116 DATE AS OF CHANGE: 20051116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEMPORARY FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0001140102 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 912084501 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-60326 FILM NUMBER: 051209518 BUSINESS ADDRESS: STREET 1: 422 W. RIVERSIDE, SUITE 1313 CITY: SPOKANE STATE: WA ZIP: 99201 BUSINESS PHONE: 5096248055 8-K 1 v029661_8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): November 9, 2005 TEMPORARY FINANCIAL SERVICES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Washington 333-60326 91-2079472 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 200 North Mullan Road, Suite 213, Spokane, Washington 99223 - -------------------------------------------------------------------------------- Address of principal executive offices Zip Code Registrant's telephone number, including area code: 509-340-0273 N.A. - -------------------------------------------------------------------------------- (Former name or former address, if changes since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 1 Item 1.01. Entry into a Material Definitive Agreement. On November 9, 2005 (the "Closing Date"), Temporary Financial Services, Inc. ("TPFS") entered into a definitive Asset Purchase Agreement (the "Agreement") to acquire the assets of Command Staffing, LLC ("Command") and Harborview Software, Inc. ("Harborview"). Command is a franchisor of temporary staffing stores. Harborview is an affiliated company providing the software used by franchisees in the operations of the temporary staffing stores. The parties to the Agreement include TPFS, Command, Harborview, and the members of Command, including Dwight Enget, Jerry Smith, John Coghlan, Tom Gilbert, Myron Thompson, Kevin Semerad, Glenn Welstad, and Ron Junck (collectively the "Members"). In addition, John Coghlan is a party to the Agreement for the purpose of implementing terms of a voting agreement. John Coghlan is an officer, director and controlling shareholder of TPFS, and also owns 5.94% of Command. Glenn Welstad and Ron Junck own 54.68% and 11.14% of Command, respectively, and collectively own 100% of Harborview. Under the terms of the Agreement, TPFS issued 3,745,493 shares of common stock, $0.001 par value per share (the "Common Stock") for the assets of Command and 2,809,120 shares of Common Stock for the assets of Harborview. Following the Closing Date, TPFS has 10,066,013 shares of Common Stock issued and outstanding, and the Members of Command and Harborview control an aggregate of 65% of the shares outstanding. In addition to the Common Stock issued for the Command and Harborview assets, the Agreement calls for reservation of 144,808 shares of Common Stock for use as incentives. The incentive shares are issuable at the discretion of the Board of Directors of TPFS following the Closing Date. The Agreement further provides for the reservation of up to 13,198,512 shares of Common Stock as consideration for acquiring the assets of approximately 70 temporary staffing stores at the time of a second closing (the "Second Closing"). If all shares set aside in the Agreement are issued, there will be 23,409,333 shares of Common Stock issued and outstanding, including the shares issued on the Closing Date. TPFS also assumed the operating liabilities of Command and Harborview. In addition, the Agreement required the following conditions to be satisfied: o the resignation of two of the directors of TPFS; o resignation of all of the officers of TPFS; o expansion of the Board of Directors of TPFS to nine members; o appointment of seven new board members; o appointment of new officers; and o a change of the name of TPFS to Command Center, Inc. Following the Closing Date, the Agreement contemplates a second transaction or series of transactions to acquire the assets of approximately 70 temporary staffing stores that operate as Command franchisees. The Second Closing is contingent upon further due diligence, and the completion or cancellation of the Second Closing will not affect the acquisition of the assets of Command and Harborview. 2 The foregoing description of the Agreement and the transactions contemplated thereby (the "Transaction") is qualified in its entirety by reference to the Agreement attached to this report as Exhibit 10.1 and incorporated herein by reference. Additional information on the Transaction, other terms and conditions of the Agreement, and the business of Command Center, Inc. ("Command Center") following the Closing Date are described below. Item 2.01. Completion of Acquisition or Disposition of Assets. On the Closing Date, TPFS acquired the operating assets and assumed the operating liabilities and obligations of Command and Harborview. After the Closing Date, TPFS changed its name to Command Center, Inc. and is now conducting its franchising and software operations as Command Center. The assets of Command consisted primarily of the intellectual property rights, trademarks and trade names used in the franchise business. Other Command assets included the incidental furniture, fixtures and equipment necessary to the conduct of the franchise business. The assets of Harborview consisted primarily of the software assets developed by Harborview to facilitate the operations of the franchisee stores. The assets of Command were held in a limited liability company and were acquired directly from the Members. The assets of Harborview were owned in a corporation and were acquired directly from the corporation. The Command assets were acquired through the issuance of 3,745,493 shares of TPFS Common Stock. The Harborview assets were acquired through the issuance of 2,809,120 shares of TPFS Common Stock. The material relationships of the parties to the Agreement are described in response to Item 1.01 above. Item 3.02. Unregistered Sales of Equity Securities. On the Closing Date, TPFS issued 6,554,613 shares of Common Stock to accredited investors, as that term is defined in Regulation D ("Regulation D") adopted under the Securities Act of 1933, as amended (the "Act"). The Common Stock was issued in acquisition of the assets of Command and Harborview, as described in Items 1.01 and 2.01 above. The Common Stock was exempt from registration under the Act by virtue of Rule 506 of Regulation D and the exemptions afforded under state "Blue Sky" laws of those states in which the recipients of the Common Stock reside. TPFS relied, as applicable, upon the representations made by the recipients of the Common Stock and other facts represented to TPFS after reasonable inquiry in determining that such exemptions were available. Certificates representing the Common Stock deliverable on the Closing Date are considered restricted stock, as that term is defined in Rule 144 adopted under the Act, and bear a restrictive legend prohibiting transfer of the securities unless first registered, or an exemption from registration is established to the satisfaction of TPFS. 3 Item 5.01. Changes in Control of Registrant. On the Closing Date, the Members of Command, together with Harborview, acquired control of TPFS when TPFS issued Common Stock to acquire the assets of Command and Harborview. Prior to the acquisition, TPFS had 3,511,400 shares of Common Stock issued and outstanding. A total of 6,554,613 shares were issued for the assets of Command and Harborview and there are now 10,066,013 shares of Common Stock outstanding in TPFS. The following table sets forth the shares issued, the recipients, and their percent of control of TPFS. Name Shares Percent - ---- --------- --------- John Coghlan 222,483 2.2% Dwight Enget 222,483 2.2% Tom Gilbert 167,424 1.6% Ron Junck 417,244 4.2% Kevin Semerad 111,335 1.1% Jerry Smith 222,483 2.2% Myron Thompson 334,005 3.3% Glenn Welstad 2,048,036 20.4% Harborview Software, Inc. (Note 1) 2,809,120 27.9% --------- --------- Aggregate for Acquiring Shareholders 6,554,613 65.1% ========= ========= Note 1: Harborview Software, Inc. is owned by Glenn Welstad and Ron Junck. As noted in Item 2.01 above, the shares were issued in acquisition of assets that served as the consideration delivered by the acquiring shareholders. Prior to the Closing Date, TPFS was controlled by John R. Coghlan, the President, Director and Chairman of the Board, and Brad E. Herr, Secretary and Director, until November 9, 2005. Mr. Coghlan continues to serve as a Director of TPFS and Mr. Herr continues to serve as Secretary and Director of TPFS following the Closing Date. As a condition of the Agreement, John Coghlan executed a voting agreement (the "Voting Agreement") wherein he agreed to vote his shares at regular and special shareholders meetings as directed by Glenn Welstad ("Welstad") and granted an irrevocable proxy in favor of Welstad for this purpose. On the Closing Date, two of the Directors of TPFS resigned their positions as Directors and the remaining two Directors of TPFS on that date appointed seven new directors to fill the vacancies then existing on the Board. The Voting Agreement terminated on appointment of the new directors. As of the Closing Date, the nine person Board of Directors of TPFS consists of John Coghlan, Dwight Enget, Tom Gilbert, Tom Hancock, Brad Herr, Ron Junck, Kevin Semerad, Glenn Welstad, and Todd Welstad. The officers of TPFS following the Closing Date include the following: Glenn Westad President and Chief Executive Officer Tom Gilbert Chief Operating Officer C. Eugene Olsen Chief Financial Officer and Treasurer Todd Welstad Executive Vice President and Chief Information Officer Brad Herr Secretary 4 Information on each of the Directors and Executive Officers of TPFS following the Closing Date is provided below. John R. Coghlan, age 62, is a Director. Mr. Coghlan graduated from the University of Montana with a degree in Business Administration and has held the designation of Certified Public Accountant since 1966. Mr. Coghlan was a founder of Labor Ready, Inc., a New York Stock Exchange traded company, and served as the Chief Financial Officer and as a Director of Labor Ready from 1987 through 1996, when he retired. Since his retirement, Mr. Coghlan has been employed by Coghlan Family Corporation, a privately held family business that manages family investment accounts. Coghlan Family Corporation is 100% owned by the Coghlan Family LLC. John and Wendy Coghlan, husband and wife, own minority interests in Coghlan Family LLC and control both the LLC and the Corporation through the LLC management agreement. The remaining interests in the Coghlan Family LLC are owned by Mr. Coghlan's children and grandchildren. Mr. Coghlan is also a director and principal stockholder of Genesis Financial, Inc. Prior to the Closing Date, Mr. Coghlan served as President, Director and Chairman of the Board of TPFS. Dwight Enget, age 55 is a Director. Beginning in January 1999 and continuing to the present time, Dwight Enget has invested in and is a self-employed developer of temporary labor offices. Along with other investors, he presently owns an interest in several temporary employment offices in various locations throughout the United States. From 1998 - 2000, Mr. Enget was involved as an investor and self-employed business developer in ventures such as hotel and land development, home construction and medical research and products. He worked for Labor Ready, Inc. in various positions including Western U.S. Director of Operations, National Accounts Manager and District Manager from 1989 through May 1998. It is expected that TPFS will acquire the temporary labor offices in which Mr. Enget has an interest at the time of the second closing. Tom Gilbert, age 50 is Chief Operating Officer and a Director. Thomas Gilbert is presently the owner and operator of Anytime Labor in Colorado. Founded in June 2002, the company has locations in the Denver, Colorado area. It is expected that TPFS will acquire the Anytime Labor offices at the time of the second closing. From July 1998 through December 2001, Mr. Gilbert, as Regional Vice President for Labor Ready, Inc. was responsible for the management of up to 400 temporary labor offices located in 23 states and 5 Canadian provinces. Beginning in July 1996 and continuing until his promotion to Regional Vice President, Thomas Gilbert was Area Director of Operations at Labor Ready, managing and directing the activities of 87 branch offices. Prior to his employment with Labor Ready, Mr. Gilbert gained extensive franchise experience as Division Operations Manager with Taco John's International (8/91 - 7/95), Director of Franchise Operations at Taco Time International (7/94 - 12/90) and Regional Manager for Perkins Restaurants (3/81 - 7/84). Tommy R. Hancock, age 61, is a Director. Mr. Hancock was regional director of the Los Angeles, California Metro District for Labor Ready in 1998 and 1999 and from 1999 through 2001 he worked for Skillmaster Staffing, Inc. in Los Angeles. In 2001, Mr. Hancock founded Temp Services of Arkansas, LLC in Little Rock Arkansas and since that time has been an owner/operator of temporary staffing stores in the Little Rock area. It is expected that TPFS will acquire the temporary labor offices in which Mr. Hancock has an interest at the time of the second closing. 5 Brad E. Herr, age 51, is Secretary and a Director. Mr. Herr graduated from the University of Montana with a Bachelor of Science Degree in Business Accounting in 1977 and a Juris Doctorate in 1983. In May 2005, Mr. Herr received a Masters Degree in Business Administration from Gonzaga University. From 1993 through 1996, Mr. Herr practiced law in the firm of Brad E. Herr, P.S. From June 1996 through June 2001, Mr. Herr was employed at AC Data Systems, Inc. (AC Data) in Post Falls, Idaho. During this period at AC Data, Mr. Herr held the position of Director of Finance (1996 through 1998) and Vice-President - Business Development (1998 through June 2001). AC Data is a privately held manufacturing business engaged in the design, manufacture and sale of surge suppression products marketed primarily to the telecommunications industry. In June 2001, Mr. Herr left employment at AC Data to pursue other business opportunities. From June 2001 through March 2002, Mr. Herr was employed by Brad E. Herr, P.S., a professional services corporation that he owns. During this period, Brad E. Herr, P.S., provided professional services to TPFS and other business clients. In April 2002, Mr. Herr was hired by the TPFS as Chief Operating Officer, and from April 2002 through December 31, 2003, was employed full time by TPFS. On January 2, 2004, Mr. Herr rejoined AC Data as President. Since rejoining AC Data, Mr. Herr has continued to consult with TPFS as needed, and up to the Closing Date served as Secretary and Principal Financial Officer. Mr. Herr is licensed to practice law in the states of Washington and Montana. Mr. Herr also maintains inactive status as a Certified Public Accountant in the State of Montana. Mr. Herr serves as a Director of Genesis Financial, Inc., a publicly traded financial services business located in Spokane, Washington. Ron Junck, age 57, is a Director. From 1974 until 1998, Mr. Junck practiced law in Phoenix, Arizona, specializing in business law and commercial transactions. As an attorney, he has extensive trial experience in a variety of commercial cases and has lectured widely at a number of colleges and universities. From 1998 through 2001, Mr. Junck served as Executive Vice President and General Counsel of Labor Ready, Inc. and for several years served as a director of that company. In 2001, Mr. Junck returned to the private practice of law. Mr. Junck has also been working with Command since inception and is a co-founder of Harborview. Kevin Semerad, age 39, is a Director. From 1989 through 2002, Mr. Semerad managed a number of temporary staffing stores that were franchised through Labor Ready, Inc. In 2002, after the Labor Ready franchise was terminated, Mr. Semerad continued to operate the temporary staffing stores and grew the business from 5 to 18 locations. Mr. Semerad holds Bachelor of Science degrees in Management and Marketing from the University of North Dakota in Grand Forks, North Dakota, and has sixteen years experience in the temporary labor business. 6 Glenn Welstad, age 62, is President, Chief Executive Officer and a Director. In 1989, Glenn Welstad, along with two partners, founded Labor Ready, Inc. As CEO and President, Mr. Welstad developed the company from a single office in Kent, Washington to 860 offices in three countries and one U.S. possession. At the time of his retirement from Labor Ready in June 2000, Labor Ready had grown to annual revenues of nearly $1 Billion. Prior to founding Labor Ready, Glenn Welstad was a successful restaurateur and owned a number of Hardees and Village Inn franchises. In 2003, Mr. Welstad co-founded Command Staffing, LLC and Harborview Software, Inc. and owns interests in a number of temporary labor businesses. It is expected that TPFS will acquire the temporary labor businesses in which Mr. Welstad has an interest at the time of the second closing. Todd Welstad, age 36, is Executive Vice President, Chief Information Officer, and a Director. Mr. Welstad served as Chief Information Officer of Labor Ready, Inc. from August 1993 through 2001. Since 2001, Mr. Welstad has worked in the temporary labor industry as owner/operator and has worked with Harborview in the development of the software used in temporary labor store operations. C. Eugene Olsen, age 63, is Chief Financial Officer. Mr. Olsen has over fifteen years experience in public accounting, with seven years as a partner in the Spokane, Washington office of an international CPA firm. From 1995 through 2002, Mr. Olsen has served as Chief Financial Officer for Dellen Wood Products, Inc. in Spokane Washington. From 2002 through 2003, Mr. Olsen was employed as President of AC Data Systems, Inc. Mr. Olsen also participates in other business ventures for his own account from time-to-time. Mr. Olsen received a Bachelor of Science Degree in Business from the University of Idaho, and holds Certified Public Accountant certificates in Washington and Montana. He has been active in the Washington and Montana Societies of CPAs, and has served as chairman and is a past president of the Spokane Chapter of Washington Society of CPAs. Item 5.02. Departure of Directors or Principal Officer; Election of Directors; Appointment of Principal Officers. On the Closing Date, in connection with the acquisition of the assets of Command and Harborview as described above, two directors of TPFS resigned. Michael Kirk and C. Eugene Olsen submitted their resignations on November 9, 2005 and the remaining directors of TPFS at that time accepted their resignations. Neither Mr. Kirk nor Mr. Olsen had any disagreements with management of TPFS and their resignations were tendered solely to facilitate the reorganization of TPFS as described in the Agreement. Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. In connection with the acquisition of the assets of Command and Harborview, and in accordance with the terms of the Agreement, the Board of Directors resolved as of the Closing Date to change the name of TPFS to Command Center, Inc. Articles of Amendment to the Articles of Incorporation reflecting this name change were submitted to the Washington Secretary of State for filing on November 10, 2005. The name change resolution was unanimously approved by consent by the Board of Directors of TPFS. Shareholder approval of this action was not required. A complete copy of the Articles of Amendment is attached to this report as Exhibit 3.1 and is incorporated herein by reference. 7 In connection with the acquisition of the assets of Command and Harborview, the Board of Directors amended Paragraph 4.4 of the Bylaws of TPFS to change the permitted size of the Board of Directors to between one and nine from between one and seven. Concurrently, the Board resolved to increase the size of the Board to nine members. The text of the change to Paragraph 4.4 of the Bylaws is attached to this report as Exhibit 3.2 and is incorporated herein by reference. Item 7.01. Regulation FD Disclosure. On November 11, 2005, TPFS announced that it had entered into a definitive agreement for the acquisition of the assets of Command and Harborview. A copy of the press release is attached to this report as Exhibit 99.1 and is incorporated herein by reference. This information is being disclosed pursuant to Regulation FD. Accordingly, the information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1934, except as shall be expressly set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits. Financial Statements Item Description - -------------------- ---------------- Businesses Acquired 9.01.1 Command Audited balance sheets of Command Staffing, LLC as of December 31, 2004 and 2003, and the related statements of income, member's equity, and cash flows for the years then ended. 9.01.2 Unaudited balance sheet of Command Staffing, LLC as of September 30, 2005, and the related statements of income and cash flows for the nine months then ended. 9.01.3 Harborview Audited balance sheets of Harborview Software, Inc. as of December 31, 2004 and 2003, and the related statements of operations, stockholders' equity, and cash flows for the years then ended. 9.01.4 Unaudited balance sheet of Harborview Software, Inc. as of September 30, 2005, and the related statements of income and cash flows for the nine months then ended. 9.01.5 Pro forma balance sheet of Temporary Financial Services, Inc. as of September 30, 2005, reflecting the acquisitions of the assets of Command Staffing, LLC and Harborview Software, Inc. Exhibit Number Item - -------------- ---- 3.1 Articles of Amendment of Temporary Financial Services, Inc. 3.2 Paragraph 4.4 of the Bylaws of Temporary Financial Services, Inc. 8 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) 99.1 Press Release, dated November 11, 2005, concerning the acquisition of the assets of Command Staffing, LLC and Harborview Software, Inc. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Temporary Financial Services, Inc. November 15, 2005 /s/ Brad E. Herr, Secretary - --------------------------- Brad E. Herr, Secretary 10 Item 9.01.1 Audited balance sheets of Command Staffing LLC as of December 31, 2004 and 2003, and the related statements of income, member's equity, and cash flows for the years then ended. COMMAND STAFFING, L.L.C. 11 [LOGO] Eide Bailly ------------------------ CPAs & BUSINESS ADVISORS INDEPENDENT AUDITOR'S REPORT - -------------------------------------------------------------------------------- The Members Command Staffing, L.L.C. Scottsdale, Arizona We have audited the accompanying balance sheets of Command Staffing, L.L.C. as of December 31, 2004 and 2003, and the related statements of income, members' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Command Staffing, L.L.C. as of December 31, 2004 and 2003, and the results of its operation and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Eide Bailly LLP Phoenix, Arizona June 13, 2005 PEOPLE. PRINCIPLES. POSSIBILITIES. ---------------------------------- www.eidebailly.com 1702 East Highland Avenue o Suite 100 o Phoenix, Arizona 85016 o Phone 602.264.5844 o Fax 602.277.4845 o EOE COMMAND STAFFING, L.L.C. BALANCE SHEETS DECEMBER 31, 2004 AND 2003 - -------------------------------------------------------------------------------- ASSETS 2004 2003 --------- --------- CURRENT ASSETS Cash $ 41,268 $ 14,412 Accounts receivable 8,625 6,581 Affiliated party receivables 65,857 181,290 Deposits 1,500 6,224 Prepaid expenses -- 21,554 --------- --------- Total current assets 117,250 230,061 --------- --------- PROPERTY AND EQUIPMENT Property and equipment 160,356 74,293 Less accumulated depreciation 31,209 7,100 --------- --------- Total property and equipment 129,147 67,193 --------- --------- OTHER ASSETS Note receivable - affiliates 99,000 -- Franchise options 31,045 62,085 130,045 62,085 --------- --------- $ 376,442 $ 359,339 ========= ========= LIABILITIES AND MEMBERS' EQUITY CURRENT LIABILITIES Notes payable - current $ -- $ 90,000 Accounts payable 110,564 26,837 Other current liabilities -- 11,771 --------- --------- Total current liabilities 110,564 128,608 --------- --------- LONG-TERM LIABILITIES Notes payable - member -- 106,190 --------- --------- Total liabilities 110,564 234,798 --------- --------- MEMBERS' EQUITY Member contributions 613,000 334,000 Retained earnings (347,122) (209,459) --------- --------- Total members' equity 265,878 124,541 --------- --------- $ 376,442 $ 359,339 ========= ========= See Notes to Financial Statements -2- COMMAND STAFFING, L.L.C. STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 - -------------------------------------------------------------------------------- 2004 2003 ----------- ----------- REVENUE Initial franchise and license fees $ 66,819 $ 134,119 Royalty income 921,223 139,585 Franchise option fees (31,040) 152,085 Other income 90,033 5,792 ----------- ----------- 1,047,035 431,581 ----------- ----------- OPERATING EXPENSES Salaries and benefits 301,908 234,217 Subcontract fees 160,416 -- Rent 60,825 20,685 Advertising and marketing 83,227 48,720 Legal and professional fees 117,308 121,099 Capital Temp Fund fees 78,943 68,521 Computer maintenance, support and storage 118,131 63,493 Travel, meals and entertainment 36,905 7,471 Depreciation expense 24,110 7,100 Telephone and internet charges 72,321 29,772 Office expense 22,071 10,810 Freight and postage 11,757 5,948 Interest expense 6,201 11,789 Other operating expenses 90,575 11,415 ----------- ----------- 1,184,698 641,040 ----------- ----------- NET LOSS $ (137,663) $ (209,459) =========== =========== See Notes to Financial Statements -3- COMMAND STAFFING, L.L.C. STATEMENTS OF MEMBERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 - -------------------------------------------------------------------------------- Total Members' Retained Members' Equity Earnings Equity --------- --------- --------- BEGINNING OF YEAR, JANUARY 1, 2003 $ 200,100 $ -- $ 200,100 Contributions 233,900 -- 233,900 Withdrawals (100,000) -- (100,000) Net loss -- (209,459) (209,459) --------- --------- --------- END OF YEAR, DECEMBER 31, 2003 334,000 (209,459) 124,541 Contributions 279,000 -- 279,000 Net loss -- (137,663) (137,663) --------- --------- --------- END OF YEAR, DECEMBER 31, 2004 $ 613,000 $(347,122) $ 265,878 ========= ========= ========= See Notes to Financial Statements -4- COMMAND STAFFING, L.L.C. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 - --------------------------------------------------------------------------------
2004 2003 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(137,663) $(209,459) --------- --------- Adjustments to reconcile net loss to net cash used in operating activities Depreciation 24,110 7,100 (Increase) decrease in Accounts receivable (2,044) (43,871) Affiliated party receivables 115,433 (144,000) Deposits 4,724 (6,224) Prepaid expenses 21,554 (21,554) Other assets 31,040 (62,085) Increase (decrease) in Accounts payable 83,727 26,837 Other current liabilities (11,771) 11,771 --------- --------- Total adjustments 266,773 (232,026) --------- --------- Net cash provided by (used in) operating activities 129,110 (441,485) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Advances (to) affiliates (99,000) -- Purchase of furniture and equipment (86,064) (74,293) --------- --------- Net cash used in investing activities (185,064) (74,293) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES (Repayment)/Borrowing on long-term member obligations (196,190) 196,190 Member distributions -- (100,000) Member contributions 279,000 233,900 --------- --------- Net cash provided by financing activities 82,810 330,090 --------- --------- NET INCREASE IN CASH 26,856 (185,688) CASH, beginning of year 14,412 200,100 --------- --------- CASH, end of year $ 41,268 $ 14,412 ========= =========
See Notes to Financial Statements -5- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE 1 - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------------------- NATURE OF OPERATIONS Command Staffing, L.L.C. is a limited liability company (the Company) organized under the laws of the jurisdiction of the State of Nevada on December 26, 2002 and registered in the State of Arizona on January 8, 2003. The Company was formed for the purpose of developing a franchise system to offer franchises for Command Labor and Staffing Centers. CASH AND CASH EQUIVALENTS The Company considers all highly liquid assets having a maturity of three months or less to be cash equivalents. BASIS OF ACCOUNTING AND PRESENTATION The financial statements of the Company are prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities. ACCOUNTS RECEIVABLE Accounts receivable consists of amounts due from franchisees related to royalties. Management reviews all accounts receivable balances, and based on an assessment of credit worthiness, estimates the portion, if any, of the balances that will not be collected. A reserve for uncollectible accounts is established as deemed necessary based upon overall accounts receivable aging levels and a specific review of accounts for franchisees with known financial difficulties. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation is provided using the straight-line and accelerated methods over the estimated useful lives of the assets. Estimated useful lives are usually five to seven years for furniture and equipment. Depreciation expense totaled $24,110 and $7,100 in 2004 and 2003. Depreciation expense is included as an operating cost in the statement of income. REVENUE Royalties and franchise fees are paid to the Company based on individual franchise agreements. Royalty rates are based on franchisees' gross margins, as defined in the franchise agreement, and are recognized as revenue in the period of the related sales. Franchise fees are recognized as revenue when the Company has performed substantially all services. Franchise fees collected but not yet earned are included in deferred revenue. The Company will refund 50% of franchise fees paid if the franchisee is unable to find an acceptable site for the franchise location. There are no refunds of any initial fees under any other circumstances. During 2004 and 2003, the Company received approximately $66,800 and $134,000 in franchise fees. There were no franchises available for refund at December 31, 2004 and 2003. -6- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- INCOME TAXES The Company and its members have elected to be taxed as a limited liability corporation for income tax purposes. Under such election, the Company is not subject to corporate income taxes. Instead, the Company's tax basis earnings are reported by the respective members for income tax reporting purposes. ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. RECLASSIFICATION Certain reclassification entries have been made to the December 31, 2003 financial statements to conform with the December 31, 2004 presentation. - -------------------------------------------------------------------------------- NOTE 2 - FRANCHISE OPTIONS - -------------------------------------------------------------------------------- Several franchisees entered into franchise option agreements with the Company. Franchise options are offered to franchisees to reserve certain territories outside their exclusive franchise area. Franchisees can reserve up to four territories in their franchise region. For the year ended December 31, 2004 and 2003, franchisees reserved 5 and 22 franchise options, respectively. During 2004, the Company received payment on 12 options and 5 were considered uncollectible; all remaining unpaid option agreements are due beginning in 2006. The Company discounts all unpaid franchise options at 12% annually. 2004 2003 -------- -------- Option agreements due within one year $ -- $ 90,000 Option agreements due in two to five years 37,500 75,000 -------- -------- $ 37,500 $165,000 ======== ======== Option agreements due in two years $ 37,500 $ 75,000 Less discount at 12% 6,455 12,915 -------- -------- $ 31,045 $ 62,085 ======== ======== - -------------------------------------------------------------------------------- NOTE 3 - NOTE PAYABLE - MEMBER - -------------------------------------------------------------------------------- Debt to a member owner at December 31, 2003 was paid including unpaid interest during 2004. Interest on the note was calculated at 12%. -7- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE 4 - COMMITMENTS - -------------------------------------------------------------------------------- The Company has entered into an agreement with Capital Tempfunds, Inc. for the financing of accounts receivable for its franchisees. Under this agreement, the Company has guaranteed that the franchisees will loan, at a minimum, $2,000,000 in accounts receivable financing on a monthly basis. The Company will pay interest on amounts less than $2,000,000 outstanding in accounts receivable financing. During 2004 and 2003, the Company paid approximately $79,000 and $68,000, respectively to Capital Tempfunds, Inc. for the interest guarantee shortfall. Franchisees can finance up to 80% of accounts receivables that are less than 60 days from invoice. The assets of the franchisees, including accounts receivable and franchisee owner guarantees, collateralize the amount financed by Capital Tempfunds, Inc. In addition to franchisee guarantees, the Company has a second guarantee on all outstanding loans to Capital Tempfunds, Inc. Interest rates are established at Prime Rate plus 4%. - -------------------------------------------------------------------------------- NOTE 5 - AFFILIATED FRANCHISEE COMPANIES - -------------------------------------------------------------------------------- Member owners of the Company own several franchises. During 2004 and 2003, the Company recognized franchise fee income, royalty income and franchise option revenue of approximately $978,000 and $442,000 from the affiliated owner companies. Unpaid accounts receivables/payables at December 31 are as follows: 2004 2003 -------- -------- Affiliated receivables Current $ 65,857 $181,290 Long-term 99,000 -- -------- -------- $164,857 $181,290 ======== ======== Affiliated payables Current $ 59,898 $ -- ======== ======== # # # # # -8- Item 9.01.2 Unaudited balance sheet of Command Staffing, LLC as of September 30, 2005, and the related statements of income and cash flows for the nine months then ended. Unaudited Financial Statements September 30, 2005 COMMAND STAFFING, LLC Balance Sheet 1 Statement of Operations 2 Statement of Cash Flows 3 Notes to Unaudited Financial Statements 4 COMMAND STAFFING, LLC Balance Sheet (Unaudited) - -------------------------------------------------------------------------------- September 30, Assets 2005 ------------ CURRENT ASSETS: Cash $ 159 Accounts receivable - trade 9,260 Accounts receivable - affiliates 186,640 Note receivable - affiliates 390,565 Note receivable, net of allowance 300,232 Deposits 1,500 ------------ Total current assets 888,356 ------------ PROPERTY AND EQUIPMENT, net of accumulated depreciation 215,470 ------------ $ 1,103,826 ============ Liabilities and Stockholders' Equity CURRENT LIABILITIES: Accounts payable $ 181,053 Accounts payable - affiliates 8,750 ------------ Total current liabilities 189,803 ------------ LONG-TERM LIABILITIES: Notes payable - member 85,000 ------------ Total liabilities 274,803 ------------ MEMBERS' EQUITY: Member's contributions 613,000 Retained earnings 216,023 ------------ Total members' equity 829,023 ------------ $ 1,103,826 ============ See Notes to Unaudited Financial Statements - -------------------------------------------------------------------------------- 1 COMMAND STAFFING, LLC Statement of Income and Retained Earnings (Unaudited) - -------------------------------------------------------------------------------- Nine Months Ended September 30, 2005 REVENUE: Initial franchise and license fees $ 27,927 Royalty income 1,249,876 Accounting service revenue 42,400 Other income 336,723 ----------------- 1,656,926 ----------------- OPERATING EXPENSES: Compensation and related expenses 303,406 Rent 30,845 Advertising and marketing 31,646 Legal and professional fees 226,454 Capital Temp Fund fees 13,750 Computer maintenance, support and storage 128,134 Travel, meals and entertainment 52,869 Depreciation expense 38,677 Telephone and internet charges 60,688 Office expense 87,659 Freight and postage 4,013 Interest expense 189 Other operating expenses 115,451 ----------------- 1,093,781 ----------------- NET INCOME 563,145 ----------------- RETAINED EARNINGS, beginning of year (347,122) ----------------- RETAINED EARNINGS, end of year $ 216,023 ================= See Notes to Unaudited Financial Statements - -------------------------------------------------------------------------------- 2 COMMAND STAFFING, LLC Statement of Cash Flows (Unaudited) - -------------------------------------------------------------------------------- Nine Months Ended Increase (Decrease) in Cash September 30, 2005 ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 563,145 ----------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 38,677 Allowance for uncollectibles 84,027 (Increase) decrease in Accounts receivable (635) Accounts receivable - affiliates (120,783) Notes receivable (353,214) Increase (decrease) in Accounts payable 70,489 Accounts payable - affiliates 8,750 ----------------- Total adjustments (272,689) ----------------- Net cash used by operating activities 290,456 ----------------- CASH FLOWS FROM INVESTING ACTIVITIES: Advances to affiliates (291,565) Purchase of furniture and equipment (125,000) ----------------- Net cash used in investing activities (416,565) ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowing on long-term member obligations 85,000 ----------------- Net provided by financing activities 85,000 ----------------- NET INCREASE (DECREASE) IN CASH (41,109) CASH, BEGINNING OF PERIOD 41,268 ----------------- CASH, END OF PERIOD $ 159 ================= See Notes to Unaudited Financial Statements - -------------------------------------------------------------------------------- 3 Notes to Unaudited Financial Statements Note 1 The unaudited financial statements of Command Staffing, LLC (the "Company") as of September 30, 2005 and for the nine months then ended omit substantially all footnote disclosures. The unaudited financial statements should be read with the audited financial statements of Command Staffing LLC as of December 31, 2004 and 2003 and for the years then ended, appearing elsewhere in this report. Note 2 The accompanying unaudited financial statements have been prepared in conformity with generally accepted accounting principles in the United States and reflect all normal recurring adjustments which, in the opinion of management of the Company are necessary for a fair presentation of the results for the periods presented. The results of operations for such period are not necessarily indicative of the results expected for the full fiscal year or for any future period. 4 Item 9.01.3 Audited balance sheets of Harborview Software, Inc. as of December 31, 2004 and 2003, and the related statements of income, stockholders' equity, and cash flows for the years then ended. HARBORVIEW SOFTWARE, INC. HARBORVIEW SOFTWARE, INC. TABLE OF CONTENTS - -------------------------------------------------------------------------------- Page INDEPENDENT AUDITOR'S REPORT 1 FINANCIAL STATEMENTS Balance Sheets 2 Operations 3 Stockholders' Equity 4 Cash Flows 5 Notes to Financial Statements 6 [LOGO] Eide Bailly ------------------------ CPAs & BUSINESS ADVISORS INDEPENDENT AUDITOR'S REPORT - -------------------------------------------------------------------------------- The Board of Directors Harborview Software, Inc. Scottsdale, Arizona We have audited the accompanying balance sheets of Harborview Software, Inc., as of December 31, 2004 and 2003, and the related statements of operations, stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Harborview Software, Inc., as of December 31, 2004 and 2003, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Eide Bailly LLP Phoenix, Arizona October 31, 2005 PEOPLE. PRINCIPLES. POSSIBILITIES. ---------------------------------- www.eidebailly.com 1702 East Highland Avenue o Suite 100 o Phoenix, Arizona 85016 o Phone 602.264.5844 o Fax 602.277.4845 o EOE 1 HARBORVIEW SOFTWARE, INC. BALANCE SHEETS DECEMBER 31, 2004 AND 2003 - --------------------------------------------------------------------------------
2004 2003 --------- --------- ASSETS CURRENT ASSETS Cash $ 797 $ 14,369 Receivables Trade, net of allowance for doubtful accounts of $6,000 in 2004 and $0 in 2003 2,417 5,990 Prepaid expenses 75,000 -- --------- --------- Total current assets 78,214 20,359 --------- --------- PROPERTY AND EQUIPMENT, net of accumulated depreciation 17,490 -- --------- --------- OTHER ASSETS Software development costs, net of accumulated amortization 400,000 -- --------- --------- $ 495,704 $ 20,359 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 365,666 $ -- Accounts payable 50,866 5,842 --------- --------- Total current liabilities 416,532 5,842 --------- --------- LONG-TERM DEBT, net of current maturities 133,334 -- --------- --------- STOCKHOLDERS' EQUITY Common stock Class A, voting, no par value; authorized 75,000 shares; issued and outstanding 1,500 shares 5,000 5,000 Additional paid in capital 72,410 29,910 Retained earnings (131,572) (20,393) --------- --------- (54,162) 14,517 --------- --------- $ 495,704 $ 20,359 ========= =========
See Notes to Financial Statements 2 HARBORVIEW SOFTWARE, INC. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 - -------------------------------------------------------------------------------- 2004 2003 --------- --------- SALES Programming revenue $ 150,660 $ 109,130 Hardware sales revenue -- 34,540 Software license revenue 105,000 115,000 --------- --------- 255,660 258,670 COST OF SALES 1,457 45,943 --------- --------- GROSS PROFIT 254,203 212,727 --------- --------- OPERATING EXPENSES Legal and professional 69,355 217 Maintenance 43,785 205 Salaries and employee benefits 210,639 128,328 General and administrative 38,755 31,896 --------- --------- 362,534 160,646 --------- --------- INCOME FROM OPERATIONS (108,331) 52,081 OTHER INCOME (EXPENSE) Other income (2,848) (44,781) --------- --------- NET INCOME (LOSS) $(111,179) $ 7,300 ========= ========= See Notes to Financial Statements 3 HARBORVIEW SOFTWARE, INC. STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 - --------------------------------------------------------------------------------
Common Additional Retained Stock Paid-in-Capital Earnings Total --------------- --------------- --------------- --------------- BALANCES, JANUARY 1, 2003 $ 5,000 $ 29,910 $ (27,693) $ 7,217 Net income -- -- 7,300 7,300 --------------- --------------- --------------- --------------- BALANCES, DECEMBER 31, 2003 5,000 29,910 (20,393) 14,517 Additional paid-in-capital -- 42,500 -- 42,500 Net income (loss) -- -- (111,179) (111,179) --------------- --------------- --------------- --------------- BALANCES, DECEMBER 31, 2004 $ 5,000 $ 72,410 $ (131,572) $ (54,162)
See Notes to Financial Statements 4 HARBORVIEW SOFTWARE, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 - --------------------------------------------------------------------------------
2004 2003 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $(111,179) $ 7,300 Charges and credits to net income not affecting cash Depreciation 4,662 -- Loss on disposal of equipment 2,862 -- Allowance for doubtful accounts 6,000 -- Changes in assets and liabilities Trade receivables (2,427) (5,990) Prepaid expenses (75,000) -- Accounts payable 45,024 5,842 --------- --------- Net cash provided by (used in) operating activities (130,058) 7,152 --------- --------- CASH FLOWS USED FOR INVESTING ACTIVITIES Purchase of property and equipment (25,014) -- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt 99,000 -- Contributed capital 42,500 -- --------- --------- Net cash provided by financing activities 141,500 7,152 --------- --------- NET CHANGE IN CASH (13,572) 7,152 CASH, BEGINNING OF YEAR 14,369 7,217 --------- --------- CASH, END OF YEAR $ 797 $ 14,369 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Non-cash investing activities Capitalized software costs resulting from shareholder litigation $ 400,000 $ -- ========= =========
See Notes to Financial Statements 5 HARBORVIEW SOFTWARE, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE 1 - PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------------------- Principal Business Activity Harborview Software, Inc. (the Company) is engaged in the business of developing, leasing, and maintaining the Labor Commander software for the Command Labor franchises. The location of general operations is in Scottsdale, Arizona. Cash and Cash Equivalents For the purposes of reporting cash flows, the Company considers all highly liquid assets purchased with an initial maturity of three months or less to be cash equivalents. Accounts Receivable Trade receivables are uncollateralized customer obligations, due under normal trade terms, requiring payment within thirty days from the invoice date. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on a customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices. The carrying amount of trade receivables may be reduced by a valuation allowance that reflects management's best estimate of uncollectible amounts. Management reviews all receivable balances that exceed thirty days from the invoice date, and based on an assessment of creditworthiness, estimates the portion, if any, of the balances that will not be collected. Based on the historical losses, the existing industry conditions, and the financial stability of its customers, management estimates the amount needed for an allowance for doubtful accounts. Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Property and Equipment Property and equipment are stated at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense currently. Depreciation and amortization are provided using the straight-line and accelerated methods for financial reporting purposes and are applied over the estimated lives of the respective assets. The Company reviews its property and equipment whenever events indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recorded when the sum of the future cash flows is materially less than the carrying amount of the asset. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. No impairment loss is recorded at December 31, 2004 and 2003. Revenue Recognition The Company charges Command Labor franchises a one time set-up fee of $5,000 for software licensing. Software license revenue is recognized at time of billing. The Company also receives monthly lease revenue from Command Labor franchises for the use of its software. (Continued) 6 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Income Taxes The Company has elected by unanimous consent of its shareholders to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Accordingly, no provision or liability for federal income taxes is reflected in the accompanying financial statements. Instead, the shareholders are liable for individual federal income taxes on their respective share of the Company's taxable income. - -------------------------------------------------------------------------------- NOTE 2 - property and equipment - -------------------------------------------------------------------------------- Property and equipment consisted of following at December 31: 2004 2003 -------- ---------- Equipment $ 16,618 $ -- -------- ---------- Software 4,962 -- -------- ---------- 21,580 -- Accumulated depreciation (4,090) -- -------- ---------- $ 17,490 $ -- ======== ========== Depreciation expense for the years ended December 31, 2004 and 2003 was $4,662 and $0. - -------------------------------------------------------------------------------- NOTE 3 - long-term debt - -------------------------------------------------------------------------------- Long-term debt consisted of the following at December 31: 2004 2003 --------- --------- Command Staffing LLC, note payable at 6% interest, due December 31, 2005 $ 99,000 $ -- Former shareholder settlement, due in 2006 400,000 -- --------- --------- 499,000 -- Less current maturities (365,666) -- --------- --------- $ 133,334 $ -- ========= ========= Future minimum principal payments are as follows: Years Ending December 31 Amount - ------------------------ --------- 2005 $ 365,666 2006 133,334 2007 -- 2008 -- 2009 -- Thereafter -- --------- $ 499,000 ========= 7 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE 4 - SOFTWARE DEVELOPMENT COSTS - -------------------------------------------------------------------------------- Capitalized computer software costs consisted of the following at December 31: 2004 2003 -------- ---------- Software development costs $400,000 $ -- Accumulated amortization -- -- -------- ---------- $400,000 $ -- ======== ========== There was no amortization expense for the year ended December 31, 2004. On December 10, 2004, the Company signed an agreement to compensate a former shareholder $400,000 for the release of Labor Command Software source code and license. Upon signing the agreement, the Company has full license rights to Labor Command Software. The Company has capitalized the related settlement/license costs and will begin to amortize these costs on a straight-line method over a three year period beginning January 1, 2005. - -------------------------------------------------------------------------------- NOTE 5 - RELATED PARTIES - -------------------------------------------------------------------------------- The Company's major shareholders also control several Command Labor franchises and Command Staffing, LLC. The major shareholders are in position to, and in the future may, influence the net income of the Company. The major shareholders also have the ability and intent to finance necessary capital and operating cash needs. Through September 30, 2005, the Company borrowed an additional $280,889 from Command Staffing, LLC and received additional capital from shareholders of $207,333 to finance operations. The following is a summary of transactions and balances with related and affiliated parties through common ownership for the years ended December 31: 2004 2003 -------- -------- Balances with: Accounts receivable, net of allowance $ 2,717 $ 5,990 Accounts payable 16,308 5,842 Notes payable 99,000 -- Transactions with: Sales revenue (programming and software license) $130,660 $132,670 8 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE 6 - subsequent event - -------------------------------------------------------------------------------- On October 7, 2005, the Company entered into a nonbinding Letter of Intent to sell all assets and liabilities of Harborview Software, Inc. to Temporary Financial Services, Inc. in exchange for shares on common stock in Temporary Financial Services, Inc. 9 Item 9.01.4 Unaudited balance sheet of Harborview Software, Inc. as of September 30, 2005, and the related statements of income and cash flows for the nine months then ended. Unaudited Financial Statements September 30, 2005 HARBORVIEW SOFTWARE, INC. Balance Sheet 1 Statement of Operations 2 Statement of Cash Flows 3 Notes to Unaudited Financial Statements 4 HARBORVIEW SOFTWARE, INC. Balance Sheet (Unaudited) - --------------------------------------------------------------------------------
September 30, Assets 2005 -------------- CURRENT ASSETS: Cash $ 728 Trade receivables, net of allowance for doubtful accounts of $11,000 75,551 -------------- Total current assets 76,279 -------------- PROPERTY AND EQUIPMENT, net of accumulated depreciation 14,398 -------------- OTHER ASSETS Software development costs, net of accumulated amortization 300,000 -------------- $ 390,677 ============== Liabilities and Stockholders' Equity CURRENT LIABILITIES: Current maturities of long-term debt $ 523,898 Accounts payable 128,124 -------------- Total current liabilities 652,022 -------------- STOCKHOLDERS' EQUITY: Common Stock Class A, voting, no par value; authorized 75,000 shares; issued and outstanding 1,500 shares 5,000 Additional paid-in capital 279,743 Retained earnings (deficit) (546,088) -------------- Total stockholders' equity (261,345) -------------- $ 390,677 ==============
See Notes to Unaudited Financial Satements - -------------------------------------------------------------------------------- 1 HARBORVIEW SOFTWARE, INC. Statement of Operations (Unaudited) - -------------------------------------------------------------------------------- Nine Months Ended September 30, 2005 ----------------- REVENUE: Programming revenue $ 121,017 Software license revenue 95,000 ----------------- Total revenues 216,017 ----------------- OPERATING EXPENSES: Legal and professional 160,311 Maintenance 169,500 Salaries and employee benefits 167,386 General and administrative 133,336 ----------------- 630,533 ----------------- NET LOSS $ (414,516) ================= See Notes to Unaudited Financial Satements - -------------------------------------------------------------------------------- 2 HARBORVIEW SOFTWARE, INC. Statement of Cash Flows (Unaudited) - -------------------------------------------------------------------------------- Nine Months Ended Increase (Decrease) in Cash September 30, 2005 ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) $ (414,516) Charges and credits to net income not affecting cash Depreciation 5,787 Amortization of capitalized software costs 100,000 Allowance for doubtful accounts 5,000 Changes in assets and liabilities Trade receivables (78,134) Prepaid expenses 75,000 Accounts payable 77,258 ----------------- Total adjustments 184,911 ----------------- Net cash used in operating activities (229,605) ----------------- INVESTING ACTIVITIES: Purchase of property and equipment (2,695) ----------------- Net cash used in investing activities (2,695) ----------------- FINANCING ACTIVITIES: Payments on long-term debt (266,667) Proceeds from issuance of long-term debt 291,565 Contributed capital 207,333 ----------------- Net cash provided by financing activities 232,231 ----------------- NET INCREASE (DECREASE) IN CASH (69) CASH, BEGINNING OF PERIOD 797 ----------------- CASH, END OF PERIOD $ 728 ================= See Notes to Unaudited Financial Satements - -------------------------------------------------------------------------------- 3 Notes to Unaudited Financial Statements Note 1 The unaudited financial statements of Harborview Software, Inc. (the "Company") as of September 30, 2005 and for the nine months then ended omit substantially all footnote disclosures. The unaudited financial statements should be read with the audited financial statements of Harborview Software, Inc. as of December 31, 2004 and 2003 and for the years then ended, appearing elsewhere in this report. Note 2 The accompanying unaudited financial statements have been prepared in conformity with generally accepted accounting principles in the United States and reflect all normal recurring adjustments which, in the opinion of management of the Company are necessary for a fair presentation of the results for the periods presented. The results of operations for the period presented period are not necessarily indicative of the results expected for the full fiscal year or for any future period. 4 Item 9.01.5 Pro forma balance sheet of Temporary Financial Services, Inc. as of September 30, 2005, reflecting the acquisitions of the assets of Command Staffing, LLC and Harborview Software, Inc. The following unaudited pro forma consolidated balance sheet at September 30, 2005 gives effect to the acquisition of Command Staffing LLC ("Command") and Harborview Software, Inc. ("Harborview") by Temporary Financial Services, Inc. (TPFS), which was effective November 9, 2005. TPFS subsequently changed its name to Command Center, Inc. The pro forma consolidated balance sheet is presented as if the acquisition had occurred at September 30, 2005. TPFS issued 6,554,513 shares of its Common Stock, 3,745,493 to the members of Command and 2,809,120 to the shareholders of Harborview in exchange for the operating assets of Command and Harborview. This transaction was accounted for as a recapitalization (the "Transaction"). The pro forma adjustments and the resulting unaudited pro forma balance sheet have been prepared based upon available information and certain assumptions and estimates deemed appropriate by TPFS. Management believes that the pro forma adjustments and the underlying assumptions and estimates reasonably present the significant effects of the Transaction and that any subsequent changes in the underlying assumptions and estimates will not materially affect the unaudited pro forma balance sheet presented herein. The unaudited pro forma balance sheet does not purport to project the financial position or results of operations for any future date or period. Furthermore, the unaudited pro forma balance sheet does not reflect changes that may occur as the result of post-Transaction activities. [The rest of this page intentionally left blank] UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
Temporary Financial Services, Inc. Balance Sheet - -------------------------------------------------------------------------------------------------------------------------------- Pro Forma TFS Command Harborview September 30, Reclass & September 30, September 30, September 30, Assets 2005 Eliminations 2005 2005 2005 ------------ ----------- ------------ ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 715,713 $ 714,826 $ 159 $ 728 Accounts receivable, net of allowance for bad debts 84,811 9,260 75,551 Accounts receivable - affiliates 186,640 -- 186,640 -- Accrued interest receivable 10,000 10,000 -- -- Note receivable - affiliates -- (390,565) -- 390,565 -- Loans receivable, net of allowance 709,818 409,586 300,232 -- Deposits 1,500 1,500 -- ------------ ------------ ------------ ------------ Total current assets 1,708,482 1,134,412 888,356 76,279 ------------ ------------ ------------ ------------ PROPERTY AND EQUIPMENT, net 229,868 -- 215,470 14,398 ------------ ------------ ------------ ------------ LONG TERM ASSETS: Loans receivable, non-current 117,500 117,500 -- -- ------------ ------------ ------------ ------------ OTHER ASSETS: Software development costs, net 300,000 -- -- 300,000 Investment in securities 404,000 404,000 -- -- ------------ ------------ ------------ ------------ Total other assets 704,000 404,000 -- 300,000 ------------ ------------ ------------ ------------ $ 2,759,850 $ 1,655,912 $ 1,103,826 $ 390,677 ============ ============ ============ ============ Liabilities and Stockholders' Equity CURRENT LIABILITIES: Current maturities of long-term debt $ 133,333 390,565 $ -- $ -- $ 523,898 Accounts payable 309,529 352 181,053 128,124 Accounts payable - affiliates 8,750 -- 8,750 ------------ ------------ ------------ ------------ Total current liabilities 451,612 352 189,803 652,022 ------------ ------------ ------------ ------------ LONG-TERM LIABILITIES: Notes payable - member 85,000 85,000 ------------ ------------ ------------ ------------ Total Liabilities 536,612 352 274,803 652,022 ------------ ------------ ------------ ------------ STOCKHOLDERS' EQUITY: Common stock - 100,000,000 shares, $0.001 par value, authorized;10,066,013 shares issued and outstanding 10,066 1,555 3,511 5,000 Preferred stock - 5,000,000 shares, $0.001 par value, authorized; none issued -- -- -- -- Member's contribution -- (613,000) 613,000 Additional paid-in capital 2,543,237 578,485 1,685,009 279,743 Retained earnings (deficit) (330,065) 32,960 (32,960) 216,023 (546,088) ------------ ------------ ------------ ------------ Total stockholders' equity 2,223,238 1,655,560 829,023 (261,345) ------------ ------------ ------------ ------------ $ 2,759,850 -- $ 1,655,912 $ 1,103,826 $ 390,677 ============ ============ ============ ============ See Notes to Pro Forma Financial Statements - --------------------------------------------------------------------------------------------------------------------------------
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET 1. BASIS OF PRESENTATION The unaudited pro forma balance sheet is presented assuming the Transaction occurred September 30, 2005. The unaudited pro forma balance sheet is based on the historical financial statements of Command and Harborview which are included elsewhere in this filing and should be read in conjunction with those financial statements and notes thereto. The unaudited pro forma balance sheet may not necessarily be indicative of future results. 2. PRO FORMA CONSOLIDATED BALANCE SHEET The reclassifications and eliminations to the unaudited pro forma balance sheet reflect the following: o Elimination of inter-company advances. o Reclassification of capital stock and member contributions as additional paid-in-capital. o Adjustment to maintain accounting acquiror's retained deficit After the Transaction, there will be 10,066,013 shares of TPFS common stock issued and outstanding, of which TPFS's prior stockholders will hold 3,511,400. Command Staffing, LLC is a franchise company offering temporary labor franchises to entrepreneurs. Harborview Software, Inc. is a software company that developed and provides temporary labor software to Command franchisees. Following the completion of the Command and Harborview acquisitions, TPFS changed its name to Command Center, Inc. (Command Center). Command Center intends to acquire and develop additional company owned temporary staffing stores. Command Center is currently performing due diligence and documentation on the acquisition of approximately 70 franchised temporary staffing stores. If completed as outlined in the acquisition agreement, Command Center will issue an additional 13,198,512 shares of Common Stock to the owners of the franchises and the temporary staffing stores will EX-3.1 2 v029661_ex3-1.txt Exhibit 3.1 Articles of Amendment of Temporary Financial Services, Inc. ARTICLES OF AMENDMENT OF TEMPORARY FINANCIAL SERVICES, INC. Pursuant to the provisions of the Washington Business Corporation Act, Chapter 23B.10 RCW, the following Articles of Amendment to Articles of Incorporation are submitted for filing. ARTICLE I The name of this corporation is Temporary Financial Services, Inc. (the "Corporation"). ARTICLE II The amendments to the Articles of Incorporation as adopted are as follows: Article I of the Articles of Incorporation is amended to change the name of this corporation to COMMAND CENTER, INC. ARTICLE III The amendment provides for no exchange, classification, or cancellation of issued shares. ARTICLE IV The amendments were adopted on November 9, 2005. ARTICLE V Shareholder action on the amendments was not required. The amendments were duly adopted by the Board of Directors by unanimous resolution without shareholder action. IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be executed on this 9th day of November, 2005. TEMPORARY FINANCIAL SERVICES, INC. By: /s/ Brad E. Herr ------------------------- Name: Brad E. Herr Title: Secretary EX-3.2 3 v029661_ex3-2.txt Exhibit 3.2 Paragraph 4.4 of the Bylaws of Temporary Financial Services, Inc. On November 9, 2005, the Board of Directors of Temporary Financial Services, Inc. amended Paragraph 4.4 of the Bylaws to increase the permitted size of the Board of Directors to nine. Paragraph 4.4 of the Bylaws now reads as follows: 4.4 Number and Qualification of Directors. The Board shall consist of no fewer than one (1) and no more than nine (9) directors. The corporation shall have one (1) director until that number is changed in accordance with these Bylaws. If the shareholders elect a greater or lesser number of directors than is specified in this section, then election of that number shall automatically amend these Bylaws to increase the number of directors to the number elected. No director need be a shareholder of the corporation. The Board or the Shareholders may fix the number of directors and may, at any time, increase the size of the Board to the maximum allowed by these Bylaws. EX-10.1 4 v029661_ex10-1.txt Exhibit 10.1 - Asset Purchase Agreement dated as of November 9, 2005 by and among Temporary Financial Services, Inc., Command Staffing, LLC, Harborview Software, Inc. and the Operations Entities (as defined therein). ASSET PURCHASE AGREEMENT TEMPORARY FINANCIAL SERVICES, INC. COMMAND STAFFING, LLC HARBORVIEW SOFTWARE, INC. and the OPERATIONS ENTITIES Dated as of November 9, 2005 TABLE OF CONTENTS ARTICLE I ACQUISITION AND DISPOSITION OF ACQUIRED ASSETS......................4 1.1 ACQUIRED ASSETS...................................................4 1.2 RETAINED ASSETS...................................................6 1.3 LIABILITIES.......................................................6 1.4 CLOSING AND DELIVERY OF ACQUIRED ASSETS...........................6 1.5 PURCHASE PRICE AND PAYMENT........................................7 1.6 METHOD OF ACQUISITION.............................................8 1.7 TAX FREE REORGANIZATION...........................................8 1.8 MANAGEMENT OF TFS AFTER FIRST CLOSING.............................8 ARTICLE II REPRESENTATIONS AND WARRANTIES.....................................9 2.1 REPRESENTATIONS AND WARRANTIES OF OF SELLING PARTIES..............9 2.2 REPRESENTATIONS AND WARRANTIES OF TFS............................17 ARTICLE 3 COVENANTS OF COMPANY...............................................17 3.1 CONDUCT OF BUSINESS..............................................17 3.2 ACCESS TO PROPERTIES AND RECORDS.................................17 3.3 BREACH OF REPRESENTATIONS AND WARRANTIES.........................17 3.4 CONSENTS.........................................................17 3.5 TAX RETURNS......................................................17 3.6 EXCLUSIVITY; ACQUISITION PROPOSALS...............................17 3.7 NOTICE OF EVENTS.................................................17 3.8 BEST EFFORTS.....................................................17 ARTICLE 4 COVENANTS OF TFS...................................................17 4.1 BREACH OF REPRESENTATIONS AND WARRANTIES.........................17 4.2 DIVIDENDS, ISSUANCE OF OR CHANGES IN SECURITIES..................17 4.3 GOVERNING DOCUMENTS..............................................17 4.4 NO ACQUISITIONS..................................................17 4.5 ACCESS TO PROPERTIES AND RECORDS.................................17 4.6 CONSENTS.........................................................17 4.7 NOTICE OF EVENTS.................................................17 4.8 BEST EFFORTS.....................................................17 ARTICLE 5 AGREEMENTS OF COMPANY..............................................17 5.1 LEGAL CONDITIONS.................................................17 5.2 EXPENSES.........................................................17 5.3 ADDITIONAL AGREEMENTS............................................17 5.4 PUBLIC ANNOUNCEMENTS.............................................17 ARTICLE 6 CONDITIONS PRECEDENT...............................................17 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE CLOSING...........17 6.2 CONDITIONS OF OBLIGATIONS OF TFS.................................17 6.3 CONDITIONS OF OBLIGATION OF COMPANY..............................17 6.4 SPECIAL CONDITION OF OPERATIONS ENTITIES.........................17 6.5 UNSATISFIED CONDITIONS...........................................17 ARTICLE 7 DELIVERIES AT CLOSINGS.............................................17 i 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 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 ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT, dated as of November 9, 2005 (this "Agreement"), by and among Temporary Financial Services, Inc., a Washington corporation ("TFS"), and Command Staffing, LLC a Nevada limited liability ("Command"), Harborview Software, Inc., a Nevada corporation ("Harborview") and all of the entities listed on Schedule 1 (which are collectively referred to as the "Operations Entities") (Command, Harborview, and the Operations Entities are sometimes collectively referred to herein as the "Selling Parties"). INTRODUCTION A. Command is a franchising organization, offering franchises for staffing offices providing temporary workers to skilled, semi-skilled and unskilled manual jobs, as well as hospitality and certain office and clerical positions. Many of the Operations Entities are franchisees of Command. B. Harborview is the owner and licensor of the Labor Commander software system which provides front and back office support for staffing offices. Each of the Operations Entities is a licensor of Harborview software. C. The Operations Entities are the owners and operators of staffing offices doing business under one or more tradenames of Command. The location of the staffing offices which are included in this transaction for each of the Operations Entities is listed on Schedule 1. D. TFS desires to acquire certain assets of the Selling Parties and to assume certain contractual rights, obligations and liabilities of the Selling Parties on the terms and subject to the conditions set forth herein. E. Selling Parties desire to sell such assets to TFS, and to transfer such contractual rights, obligations and liabilities to TFS, on the terms and subject to the conditions set forth herein. F. The parties desire that the consummation of the transactions contemplated by this Agreement qualify as a tax free reorganization under Sections 351 and/or 368 of the Internal Revenue Code of 1986, as amended. INTENDING TO BE LEGALLY BOUND, and in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, TFS and the Selling Parties hereby agree as follows: ARTICLE 1. ACQUISITION AND DISPOSITION OF ACQUIRED ASSETS 1.1. Acquired Assets. Subject to the terms and conditions of this Agreement, at the respective Closings (as defined below), Selling Parties shall sell, convey, transfer, assign and deliver to TFS, and TFS shall purchase, acquire and accept from Selling Parties, all of the assets (the "Acquired Assets") owned by Selling Parties, other than Retained Assets (as defined below) including, without limitation, the following: (a) Equipment. All of the equipment, machinery, vehicles, furniture, fixtures, furnishings and leasehold improvements owned by Selling Parties and located at (or, in the case of mobile assets, those used primarily in connection with) the businesses of Selling Parties (the "Equipment"); (b) Real Estate Leases/Leasehold Improvements. The real property leased by the Selling Parties and relating to the businesses of the Selling Parties ("Offices") listed on Schedule 1.1(b) to this Agreement (collectively, the "Leased Real Property") and Selling Parties' interest in all leasehold improvements located on such real property (collectively, the "Leasehold Improvements"); (c) Real Estate Owned/Owned Improvements. The real property owned by the Selling Parties and relating to the Offices listed on Schedule 1.1(c) to this Agreement (collectively, the "Owned Real Property") and Selling Parties' interest in all owned improvements located on such real property (collectively, the "Owned Improvements"); (d) Vehicles. Selling Parties' interest in all vehicles owned or leased by the Selling Parties and listed on Schedule 1.1(d) to this Agreement (collectively, the "Vehicles"); (e) Inventories; Purchase Contracts. The inventories, goods, wares, raw materials, merchandise and supplies of Selling Parties at the Closings (as defined below) either on hand at any of the Offices or owned by Selling Parties and in transit to such Offices, and all orders or contracts for the purchase of inventories entered into by Selling Parties for the Selling Parties businesses in the ordinary course of business prior to the Closing; (f) Executory Contracts. Selling Parties' interests in all executory contracts or agreements (including the original executed agreements) and listed on Schedule 1.1(f) to this Agreement (collectively, the "Assumed Contracts"); (g) Intangible Property Rights. All trade names, trademarks and service marks relating to Selling Parties; (h) Books and Records. All of Selling Parties' books, records and other documents and information relating to the Acquired Assets and the Selling Parties businesses, including, without limitation, all customer and supplier lists, sales literature, inventory records, purchase orders and invoices, sales orders and sales order log books, commission records, correspondence, product data, price lists, quotes and bids, catalogues and brochures of every kind and nature; (i) Telephone Listings. The Selling Parties' current telephone and fax listings and the right to use the telephone numbers currently being used at the Offices; (j) Internet Domain Names. All Internet domain names owned by Selling Parties, including www.commandonline.com; -5- (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. -6- 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- 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"). -8- 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- 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. -10- 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. -11- (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. -12- 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; -13- (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. -14- 2.1.15. Banking and Insurance Facilities. Schedule 2.1.15 contains a complete and correct list of (i) all contracts of insurance or indemnity of Selling Parties in force at the date of this Agreement (including name of insurer or indemnitor, agent, annual premium, coverage, deductible amounts, and expiration date), and (ii) the names and locations of all banks in which Selling Parties have accounts or safe deposit boxes, the designation of each such account and safe deposit box, and the names of all persons authorized to draw on or have access to each such account and safe deposit box. 2.1.16. Employment Agreements. Selling Parties do not have any written contracts of employment or other employment agreements with any of their employees that are not terminable at will by Selling Parties. Selling Parties are not a party to any pending, or to the knowledge of Selling Parties, threatened, labor dispute. Selling Parties have complied in all material respects with all applicable federal, state and local laws, ordinances, rules and regulations and requirements relating to the employment of labor, including, but not limited to, the provisions thereof relating to wages, hours, collective bargaining, payment of Social Security, unemployment and withholding taxes, and ensuring equality of opportunity for employment and advancement of minorities and women. There are no material claims or investigations pending, or to the knowledge of Selling Parties, threatened to be brought, in any court or administrative agency by any former or current Selling Parties employees for compensation, pending severance benefits, vacation time, vacation pay or pension benefits, or any other claim pending from any current or former employee or any other person arising out of Selling Parties' status as employer, whether in the form of claims for employment discrimination, harassment, unfair labor practices, grievances, wrongful discharge or otherwise. There are no charges or other actions involving the Selling Parties pending before the National Labor Relations Board. 2.1.17. Employee Benefit Plans. None of the Selling Parties have an Employee Pension Benefit Plan as defined in Section 3 of the Employee Retirement Income Security Act of 1974, as amended. 2.1.18. Certain Agreements. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby will: (i) result in any payment by Selling Parties (including, without limitation, severance, unemployment compensation, parachute payment, bonus or otherwise) becoming due to any director, employee or independent contractor of Selling Parties under any plan, agreement or otherwise; (ii) materially increase any benefits otherwise payable under any plan or agreement; or (iii) result in the acceleration of the time of payment or vesting of any such benefits. 2.1.19. Guarantees and Suretyships. Selling Parties have no powers of attorney outstanding (other than those issued in the ordinary course of business with respect to tax matters). Selling Parties have no obligations or liabilities (absolute or contingent) as guarantor, surety, cosigner, endorser, co-maker, indemnitor or otherwise respecting the obligations or liabilities of any person, corporation, partnership, joint venture, association, organization or other entity. 2.1.20. Brokers and Finders. None of the Selling Parties have retained any broker, finder or investment banker in connection with this Agreement or any of the transactions contemplated by this Agreement, nor does or will Selling Parties owe any fee or other amount to any broker, finder or investment banker in connection with this Agreement or the transactions contemplated by this Agreement. -15- 2.1.21. Certain Payments. None of the Selling Parties, and to the knowledge of Selling Parties, no shareholder or person or other entity acting on behalf of Selling Parties, has, directly or indirectly: (i) made an unreported political contribution; (ii) made or received any payment which was not legal to make or receive; (iii) engaged in any transaction or made or received any payment which was not properly recorded on the books of Selling Parties; (iv) created or used any "off-book" bank or cash account or "slush fund"; or (v) engaged in any conduct constituting a violation of the Foreign Corrupt Practices Act of 1977. 2.1.22. Vendors and Customers. To the knowledge of the Selling Parties, none of the Selling Parties' vendors or customers accounting for more than 5% of the combined revenue of Selling Parties has terminated, or intends to reduce materially or terminate the amount of its business with or for the Selling Parties in the future. The Selling Parties have maintained their customer lists and related information on a confidential and proprietary basis and have not granted to any third party any right to use such customer lists for any purpose. 2.1.23. Environmental Matters. To the knowledge of Selling Parties: (a) There has not been a discharge or release on any real property owned or leased by Selling Parties (the "Real Property") of any Hazardous Material (as defined below) in violation of any federal, state or local statute, regulation, rule or order applicable to health, safety and the environment, including, without limitation, contamination of soil, groundwater or the environment, generation, handling, storage, transportation or disposal of Hazardous Materials or exposure to Hazardous Materials; (b) No Hazardous Material has been used by Selling Parties in the operation of Selling Parties' business; (c) Selling Parties have not received from any Governmental Entity or third party any request for information, notice of claim, demand letter or other notification, notice or information that Selling Parties are or may be potentially subject to or responsible for any investigation or clean-up or other remediation of Hazardous Material present on any Real Property; (d) There have been no environmental investigations, studies, audits, tests, reviews or other analyses, the purpose of which was to discover, identify or otherwise characterize the condition of the soil, groundwater, air, or presence of asbestos at any of the Real Property sites; (e) There is no asbestos present in any Real Property presently owned or operated by Selling Parties, and no asbestos has been removed from any Real Property while such Real Property was owned or operated by Selling Parties; and -16- (f) There are no underground storage tanks on, in or under any of the Real Property and no underground storage tanks have been closed or removed from any Real Property which are or have been in the ownership of Selling Parties. For purposes of this Agreement, "Hazardous Material" means any substance (i) that is a "hazardous waste" or "hazardous substance" under any federal, state or local statute, regulation, rule or order, (ii) that is toxic, explosive, corrosive, flammable, infectious, radioactive, or otherwise hazardous and is regulated by any Governmental Entity, (iii) the presence of which on any of the Real Property causes or threatens to cause a nuisance on any of the Real Property or to adjacent properties or poses or threatens to pose a hazard to the health or safety of persons on or about any of the Real Property, or (iv) the presence of which on adjacent properties could constitute a trespass by Selling Parties or the then current owner(s) of any of the Real Property. 2.1.24. Undisclosed Liabilities. The Selling Parties have no liabilities except for the liabilities reflected or reserved against in the Selling Parties Financial Statements and current liabilities incurred in the ordinary course of business. 2.1.25. Title to Acquired Assets. Each of the Selling Parties owns good and marketable title to all of its respective Acquired Assets, free and clear of any claims, interests, conditions, liens, options, pledges, security interests, mortgages, rights of way, easements, encroachments, rights of first refusal and other encumbrances ("Encumbrances"). Command and Harborview each warrant to TFS that at the First Closing, all of each such party's Acquired Assets shall be free from all Encumbrances. Each of the Operations Entities warrants to TFS that at the First Closing and the Second Closing, all of the Acquired Assets of each of the Operations Entities shall be free from all Encumbrances. 2.1.26. Accredited Investor Status; Access to Information. Each of Harborview and Command qualify as an "accredited investor" as that term is defined under Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act") and shall complete and deliver to TFS all such documentation reasonably required by TFS in order to enable TFS to verify such party's status as an accredited investor under the Securities Act. Each of the Operations Entities will, at the time of the Second Closing, be an "accredited investor" or will provide such certification as required by TFS prior to the Second Closing as to each person's sophistication and ability to bear the risks of ownership of the Shares. At the time of each respective Closing, each of the Selling Parties acknowledges that it has been given access to full and complete information regarding TFS to its satisfaction for the purpose of obtaining information regarding TFS and has been given a reasonable opportunity to review such documents that it has requested and to ask questions of, and to receive answers from, representatives of TFS concerning the terms and conditions of the Shares and the transactions contemplated by this Agreement and to obtain any additional information concerning TFS' business. 2.1.27. Disclosure. Neither the representations or warranties made by Selling Parties in this Agreement, nor the final Schedule of Exceptions or any other certificate executed and delivered by Selling Parties pursuant to this Agreement, when taken together, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements or facts contained herein or therein not misleading in light of the circumstances under which they were furnished. -17- 2.1.28. Reliance. The foregoing representations and warranties are made by Selling Parties with the knowledge and expectation that TFS is placing reliance thereon. 2.1.29. Tax Free Transaction. Each Selling Party acknowledges and is fully aware that even though the parties are attempting to qualify all transactions contemplated by this Agreement as a tax free reorganization pursuant to Sections 351 and/or 368 of the Internal Revenue Code, where the Assumed Liabilities with respect to any particular Selling Party exceeds the tax basis in that Selling Party's assets at the time of Closing, that Selling Party may recognize a gain. Each Selling Party represents that it has consulted with a qualified attorney, tax advisor or accountant or has elected not to do so, and assumes the risk of all potential income tax risks associated with the transactions contemplated by this Agreement. 2.1.30. Limited Joinder. The representations and warranties of each of the Selling Parties shall be deemed made by the persons, jointly and severally, and solely with respect to the representations and warranties made by such Selling Party next to such person's name, as identified on Schedule 2.2.1. Each of such persons shall execute a limited Joinder Agreement in the form attached hereto as Exhibit E at the time of the First Closing, with regard to Command and Harborview, and the Second Closing, with regard to the Operations Entities. 2.2. Representations and Warranties of TFS. Except as disclosed in a document referring specifically to the representations and warranties in this Agreement and which identifies by section number the section and subsection to which such disclosure relates and is delivered by TFS to Selling Parties on or prior to the First Closing and again on or prior to the Second Closing (the "TFS Disclosure Schedule"), and whether or not the TFS Disclosure Schedule is referred to in a specific section or subsection, TFS represents and warrants to Selling Parties as follows: 2.2.1. Organization, Standing and Power. TFS is a corporation duly organized, validly existing under the laws of the State of Washington, has all requisite power and authority to own, lease and operate its properties and to carry on its businesses as now being conducted, and is duly qualified and in good standing to do business in each jurisdiction in which a failure to so qualify would have a material adverse effect on the Business Condition of TFS. 2.2.2. Capital Structure. The authorized capital stock of TFS (immediately prior to Closing) having voting rights under applicable law, the Charter Documents or agreement with the Company will consist of (i) 100,000,000 Shares of Common Stock, $0.001 par value per share ("Common Shares"), of which 3,511,400 Shares are issued and outstanding, and (ii) 5,000,000 shares of Preferred Stock, $0.001 par value per share, of which no shares have been issued. All of the outstanding equity securities of TFS have been duly authorized and validly issued and are fully paid and nonassessable. There are no contracts, commitments or understandings related to the issuance, sale or transfer of any equity securities or other securities of TFS. All of the outstanding equity securities of TFS have been issued in compliance with the federal and state securities laws and are owned free and clear of all liens and encumbrances by the holders thereof. -18- 2.2.3. Authority. The execution, delivery, and performance of this Agreement by TFS have been duly authorized by all necessary corporate action of TFS. No other act or proceeding on the part of TFS is necessary to approve this Agreement or the transactions contemplated herein. TFS has duly and validly executed and delivered this Agreement, and this Agreement constitutes a valid, binding and enforceable obligation of TFS in accordance with its terms. 2.2.4. Financial Statements. TFS shall deliver to Command, Harborview and the Operations Entities audited balance sheets and statements of income and cash flow for its most recently completed fiscal year and unaudited balance sheets and statements of income and cash flow as of September 30, 2005 (such balance sheets and statements of income and cash flow are collectively referred to as the "TFS Financial Statements"). The TFS Financial Statements: (i) shall be in accordance with the books and records of TFS; (ii) shall present fairly, in all material respects, the financial position of TFS as of the date indicated and the results of its operations for each of the periods indicated; and (iii) shall be prepared in accordance with generally accepted accounting principles consistently applied. There shall be no material off-balance sheet assets, liabilities, claims or obligations of any nature, whether accrued, absolute, contingent, anticipated, or otherwise, whether due or to become due, that are not shown or provided for either in the TFS Financial Statements or the. The TFS Financial Statements: (x) are the most recent regularly prepared balance sheet of TFS and (y) have been prepared in accordance with the accounting principles normally used by TFS. The "TFS Pro Forma Closing Balance Sheet" attached as Schedule 2.2.4 sets forth, based on reasonable assumptions relating to the operation of the business conducted by TFS, the projected TFS Pro Forma Closing Balance Sheet as of the estimated Closing. A "TFS Final Closing Balance Sheet" will be prepared by TFS following Closing, and any updates or revisions of such statement will be prepared, on a basis consistent with the TFS Financial Statements and Schedule 2.2.4. 2.2.5. Compliance with Laws and Other Instruments. Neither the execution and delivery of this Agreement by TFS nor the performance by TFS of its obligations under this Agreement will violate any provision of law or will conflict with, result in the breach of any of the terms and conditions of, constitute a default under, permit any party to accelerate any right under, renegotiate or terminate, require consent, approval, or waiver by any party under, or result in the creation of any lien, charge, or encumbrance upon any of the properties, assets, or shares of capital stock of TFS pursuant to any charter document of TFS or any agreement, indenture, mortgage, franchise, license, permit, lease, or other instrument of any kind to which TFS is a party or by which TFS or any of its assets are bound or affected. No Consent is required by or with respect to TFS in connection with the execution and delivery of this Agreement by TFS or the consummation by TFS of the transactions contemplated hereby or thereby, except for such consents, authorizations, filings, approvals and registrations which if not obtained or made would not have a material adverse effect on TFS' Business Condition. 2.2.6. Brokers and Finders. TFS has not retained any broker, finder or investment banker in connection with this Agreement or any of the transactions contemplated by this Agreement, nor does or will TFS owe any fee or other amount to any broker, finder or investment banker in connection with this Agreement or the transactions contemplated by this Agreement. -19- 2.2.7. Undisclosed Liabilities. TFS has no liabilities except for the liabilities reflected or reserved against in the TFS Financial Statements and current liabilities incurred in the ordinary course of business. 2.2.8. Litigation and Other Proceedings. Neither TFS nor its officers or directors is a party to any pending or, to the best knowledge of TFS and its officers and directors, threatened action, suit, labor dispute (including any union representation proceeding), proceeding, investigation or discrimination claim in or by any court or governmental board, commission, agency, department or officer, or any arbitrator, or, in the case of an individual, arising out of acts in his or her capacity as an officer or director of TFS nor, to the best knowledge of TFS and its officers and directors, is there any basis for any such actions. TFS is not subject to any order, writ, judgment, decree or injunction. 2.2.9. Disclosure. Neither the representations or warranties made by TFS in this Agreement, nor the final TFS Disclosure Schedule or any other certificate executed and delivered by TFS pursuant to this Agreement, when taken together, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements or facts contained herein or therein not misleading in light of the circumstances under which they were furnished. 2.2.10. Reliance. The foregoing representations and warranties are made by TFS with the knowledge and expectation that Selling Parties are placing reliance thereon. ARTICLE 3. COVENANTS OF COMMAND, HARBORVIEW AND THE OPERATING ENTITIES During the period from the date of this Agreement (except as otherwise indicated) and continuing until the Closing (or later where so indicated), each of Selling Parties, agree (except as expressly contemplated by this Agreement, as specifically permitted by the Schedule of Exceptions or otherwise permitted by TFS' prior written consent): 3.1. Conduct of Business. 3.1.1. Ordinary Course. Selling Parties shall carry on their business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent with such business, use all reasonable efforts consistent with past practice and policies to preserve intact their respective present business organizations, keep available the services of their present officers, consultants, and employees and preserve their relationships with customers, suppliers, distributors and others having business dealings with them. Selling Parties shall promptly notify TFS of any event or occurrence or emergency which is not in the ordinary course of business of Selling Parties and which is material and adverse to Selling Parties' Business Condition. The foregoing notwithstanding, Selling Parties shall not, except as approved in writing by TFS: (a) enter into any material commitment or transaction, including, but not limited to, any purchase of assets (other than raw materials, supplies or cash equivalents) for a purchase price in excess of $50,000 or a series of related transactions of more than $50,000 in the aggregate; -20- (b) grant any bonus, severance, or termination pay to any officer, director, independent contractor or employee of Selling Parties; (c) enter into or amend any agreements pursuant to which any other party is granted support, service, marketing, publishing or distribution rights of any type or scope with respect to any hardware or software products of Selling Parties, other than in the ordinary course. (d) enter into or terminate any contracts, arrangements, plans, agreements, leases, licenses, franchises, permits, indentures, authorizations, instruments or commitments, or amend or otherwise change the terms thereof other than in ordinary course; (e) commence a lawsuit other than: (i) for the routine collection of bills, (ii) in such cases where Selling Parties in good faith determine that failure to commence suit would result in a material impairment of a valuable aspect of Selling Parties' businesses, provided Selling Parties consult with TFS prior to filing such suit; or (iii) for a breach of this Agreement; (f) materially modify existing discounts or other terms and conditions with the Selling Parties' customers other than in the ordinary course; or (g) except as otherwise contemplated herein, accelerate the vesting or otherwise modify any Selling Parties option, restricted stock or other outstanding rights or other securities. 3.1.2. Governing Documents. Selling Parties shall not amend their Charter Documents. 3.1.3. No Acquisitions. Selling Parties shall not acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to make any such acquisition. 3.1.4. No Dispositions. Selling Parties shall not sell, lease, license, transfer, mortgage, encumber or otherwise dispose of any of their assets or cancel, release, or assign any indebtedness or claim, except in the ordinary course of business consistent with prior practice. 3.1.5. Indebtedness. Selling Parties shall not incur any indebtedness for borrowed money by way of direct loan, sale of debt securities, purchase money obligation, conditional sale, guarantee, or otherwise, except for receivables funding in the ordinary course. 3.1.6. Compensation. Selling Parties shall not adopt or amend any plan or pay any pension or retirement allowance not required by any existing employment benefit plan. Selling Parties shall not enter into or modify any employment contracts, increase the salaries, wage rates or fringe benefits of its officers, directors or employees or pay bonuses or other remuneration except for current salaries and other remuneration for which Selling Parties are obligated pursuant to a written agreement a copy of which has been provided to TFS. -21- 3.1.7. Claims. Selling Parties shall not settle any claim, action or proceeding, except in the ordinary course of business consistent with past practice. 3.2. Access to Properties and Records. Throughout the period between the date of this Agreement and the relevant Closing, Selling Parties shall give TFS and its representatives full access, during reasonable business hours but in such a manner as not unduly to disrupt the business of Selling Parties, to their premises, properties, contracts, commitments, books, records and affairs, and shall provide TFS with such financial, technical and operating data and other information pertaining to their businesses as TFS may reasonably request. With Selling Parties' prior written consent, which shall not be unreasonably withheld, TFS shall be entitled to make appropriate inquiries of third parties in the course of its investigation. 3.3. Breach of Representations and Warranties. Without the written approval of TFS, Selling Parties will not take any action that would cause or constitute a breach of any of the representations and warranties set forth in Section 2.1 or that would cause any of such representations and warranties to be inaccurate in any material respect. In the event of, and promptly after becoming aware of, the occurrence of or the pending or threatened occurrence of any event that would cause or constitute such a breach or inaccuracy, Selling Parties will give detailed notice thereof to TFS and will use their best efforts to prevent or promptly remedy such breach or inaccuracy. 3.4. Consents. Selling Parties will promptly apply for or otherwise seek, and use their best efforts to obtain, all consents and approvals, and make all filings required with respect to the consummation of the transactions contemplated by this Agreement. 3.5. Tax Returns. Selling Parties shall promptly make available to TFS with copies of all tax returns, reports and information statements that have been filed or are filed prior to the Closing. All such returns shall be prepared consistent with past practice and shall be subject to the approval of TFS, which shall not be unreasonably withheld. Each of the Selling Parties shall (i) notify TFS promptly if it receives notice of any tax audit, the assessment of any tax, the assertion of any tax lien, or any request, notice or demand for taxes by any taxing authority, (ii) provide TFS a description of any such matter in reasonable detail (including a copy of any written materials received from the taxing authority), and (iii) take no action with respect to such matter without the consent of TFS. Neither Command, Harborview nor the Operations Entities shall (i) make or revoke any tax election which may affect the Selling Parties, (ii) execute any waiver of restrictions on assessment of any tax, or (iii) enter into any agreement or settlement with respect to any tax without the approval of TFS, which shall not be unreasonably withheld. 3.6. Exclusivity; Acquisition Proposals. None of the Selling Parties shall (and each shall use its best efforts to ensure that none of its officers, directors, agents, representatives or affiliates) take or cause or permit any person to take, directly or indirectly, any of the following actions with any party other than TFS and its designees: (i) solicit, encourage, initiate or participate in any negotiations, inquiries or discussions with respect to any offer or proposal to acquire all or any significant part of its business, assets or capital shares whether by merger, consolidation, other business combination, purchase of assets, tender or exchange offer or otherwise (each of the foregoing, an "Acquisition Transaction"); (ii) disclose, in connection with an Acquisition Transaction, any information not customarily disclosed to any person other than TFS or its representatives concerning Selling Parties' business or properties or afford to any person or entity other than TFS or its representatives access to its properties, books or records, except in the ordinary course of business and as required by law or pursuant to a request for information by a Governmental Entity; (iii) enter into or execute any agreement relating to an Acquisition Transaction; or (iv) make or authorize any public statement, recommendation or solicitation in support of any Acquisition Transaction or any offer or proposal relating to an Acquisition Transaction. In the event that Selling Parties is contacted by any third party expressing an interest in discussing an Acquisition Transaction, Selling Parties will promptly notify TFS of such contact. -22- 3.7. Notice of Events. Throughout the period between the date of this Agreement and the Closing, Selling Parties shall promptly advise TFS of any and all material events and developments concerning their financial position, results of operations, assets, liabilities, or business or any of the items or matters concerning Selling Parties covered by the representations, warranties and covenants of Selling Parties contained in this Agreement. 3.8. Best Efforts. Selling Parties will use their reasonable best efforts to effectuate the transactions contemplated hereby and to fulfill and cause to be fulfilled the conditions to Closing under this Agreement. 3.9. Operations Entities' Duty to Close. At the Second Closing, each of the Operations Entities shall deliver to TFS (i) written certificates providing that all representations and warranties set forth in Article II are true and correct as of the Second Closing, and (ii) a Schedule of Exceptions. Each of the Operations Entities agrees and acknowledges that at the Second Closing so long as it has affirmatively elected to proceed to close in accordance with Section 6.4, it is legally bound to consummate the transactions contemplated by this Agreement. In the event that TFS agrees to waive certain closing conditions or closing deliveries in order to effectuate the Second Closing with regard to any Operations Entity, such action will not be deemed to constitute a waiver on behalf of TFS of any and all potential claims, at law or in equity, that TFS may have against such Operations Entity. ARTICLE 4. COVENANTS OF TFS During the period from the date of this Agreement and continuing until the Closing (or later where so indicated), TFS agrees (except as expressly contemplated by this Agreement or with Selling Parties' prior written consent) that it will take or cause the following actions to be taken: 4.1. Breach of Representations and Warranties. TFS will not take any action which would cause or constitute a breach of any of the representations and warranties set forth in Section 2.2 or which would cause any of such representations and warranties to be inaccurate in any material respect. In the event of, and promptly after becoming aware of, the occurrence of or the pending or threatened occurrence of any event which would cause or constitute such a breach or inaccuracy, TFS will give detailed notice thereof to Selling Parties and will use its best efforts to prevent or promptly remedy such breach or inaccuracy. -23- 4.2. Dividends, Issuance of or Changes in Securities. TFS shall not: (i) declare or pay any dividends on or make other distributions to its shareholders (whether in cash, shares or property); (ii) issue, deliver, sell or authorize, propose or agree to, or commit to the issuance, delivery, or sale of any shares of its capital stock of any class, any voting debt or any securities convertible into its capital stock, any options, warrants, calls, conversion rights, commitments, agreements, contracts, understandings, restrictions, arrangements or rights of any character obligating TFS to issue any such shares, TFS voting debt or other convertible securities; (iii) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of capital stock of TFS; (iv) repurchase or otherwise acquire, directly or indirectly, any shares of its capital stock; or (v) propose any of the foregoing. 4.3. Governing Documents. TFS shall not amend its Charter Documents, except as otherwise expressly provided in this Agreement. 4.4. No Acquisitions. TFS shall not acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to make any such acquisition. 4.5. Access to Properties and Records. Throughout the period between the date of this Agreement and the Closing, TFS shall give Selling Parties and their representatives full access, during reasonable business hours but in such a manner as not unduly to disrupt the business of TFS, to its premises, properties, contracts, commitments, books, records, and affairs, and shall provide Selling Parties with such financial, technical and operating data and other information pertaining to its business as Selling Parties' may request. With TFS prior written consent, which shall not be unreasonably withheld, Selling Parties' shall be entitled to make appropriate inquiries of third parties in the course of its investigation. 4.6. Consents. TFS will promptly apply for or otherwise seek, and use its best efforts to obtain, all consents and approvals, and make filings required with respect to the consummation of the transactions contemplated by this Agreement. 4.7. Notice of Events. Throughout the period between the date of this Agreement and the Closing, TFS shall promptly advise Selling Parties of any and all material events and developments concerning its financial position, results of operations, assets, liabilities, or business or any of the items or matters concerning TFS covered by the representations, warranties and covenants of TFS contained in this Agreement. 4.8. Best Efforts. TFS will use its reasonable best efforts to effectuate the transactions contemplated hereby and to fulfill and cause to be fulfilled the conditions to Closing under this Agreement. -24- ARTICLE 5. AGREEMENTS OF COMMAND, HARBORVIEW AND THE OPERATING ENTITIES In addition to the foregoing, TFS and Selling Parties each agree to take the following actions before or after the execution of this Agreement. 5.1. Legal Conditions. Each of TFS and Selling Parties will take all reasonable actions necessary to comply promptly with all legal requirements which may be imposed on it with respect to this Agreement. Each of TFS and Selling Parties will take all reasonable actions to obtain (and to cooperate with the other parties in obtaining) any consent required to be obtained or made by Selling Parties or TFS in connection with this Agreement, or the taking of any action contemplated thereby or by this Agreement. 5.2. Expenses. Whether or not the transactions contemplated by the Agreement are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby and thereby shall be paid by the party incurring such expense. 5.3. Additional Agreements. In case at any time after the Closing any further action is reasonably necessary or desirable to carry out the purposes of this Agreement or to vest TFS with full title to all properties, assets, rights, approvals, immunities and franchises of Selling Parties, the proper officers, directors and members of each entity which is a party to this Agreement shall take all such necessary action. 5.4. Public Announcements. Neither TFS nor Selling Parties shall disseminate any press release or other announcement concerning this Agreement or the transactions contemplated herein to any third party (except to the directors, officers, members, shareholders and employees of the parties to this Agreement whose direct involvement is necessary for the consummation of the transactions contemplated under this Agreement, to the attorneys and accountants of the parties hereto, or except as TFS determines in good faith to be required by the federal securities laws after consultation with Selling Parties) without the prior written consent of each of the other parties hereto, which consent shall not be unreasonably withheld. ARTICLE 6. CONDITIONS PRECEDENT 6.1. Conditions to Each Party's Obligation to Effect the Closing. The respective obligation of each party to effect the Closings shall be subject to the satisfaction prior to the First Closing of the following conditions: 6.1.1. Governmental Approvals. All consents legally required for the consummation of the transactions contemplated by this Agreement shall have been filed, occurred, or been obtained, other than such consents, for which the failure to obtain would have no material adverse effect on the consummation of the transactions contemplated hereby or on the business condition of TFS or Selling Parties. 6.1.2. No Restraints. No statute, rule, regulation, executive order, decree or injunction shall have been enacted, entered, promulgated or enforced by any United States court or Governmental Entity of competent jurisdiction which enjoins or prohibits the consummation of the transactions contemplated by this Agreement. -25- 6.2. Conditions of Obligations of TFS. The obligations of TFS to effect the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions prior to the First Closing unless waived by TFS: 6.2.1. Due Diligence Review. TFS shall have completed its due diligence review of Command and Harborview with regard to the First Closing and of each of the Operations Entities with regard to the Second Closing, and TFS, in its sole and unrestricted discretion, shall be satisfied on the basis of such review that it should proceed with the transactions contemplated by the First Closing and the Second Closing, as the case may be. Such review shall have no effect whatsoever on the liability of Selling Parties to TFS under this Agreement or otherwise for breach of any representations, warranties or covenants of Selling Parties hereunder. 6.2.2. Representations and Warranties of Selling Parties. The representations and warranties of Selling Parties set forth in this Agreement shall be true and correct in all material respects with respect to Command and Harborview, as of the First Closing, as though made on and as of the date of the First Closing, and with respect to the Operations Entities, as of the Second Closing, as though made on and as of the date of the Second Closing. 6.2.3. Opinion of Counsel. TFS is in receipt of an opinion of TFS' legal counsel to the effect that the issuance of Shares as described in Section 1.5 may be completed pursuant to an available exemption from the registration requirements of the United States Securities Act of 1933, as amended, and the applicable regulations of the various states affected by this transaction. 6.2.4. Performance of Obligations of Selling Parties. Selling Parties shall have performed in all material respects all agreements and covenants required to be performed by them under this Agreement prior to the First Closing. 6.2.5. Key Employees. TFS is satisfied that employment agreements with key individuals identified by TFS have been or will be executed (collectively, the "Employment Agreements"). 6.2.6. Noncompetition Agreements. Each of the key individuals identified by TFS shall have executed a Noncompetition Agreement (collectively, the "Noncompetition Agreements"), substantially in the form attached as Exhibit F and not taken any action or expressed any intent to terminate or modify such agreements. 6.2.7. Management Structure. TFS has agreed to the management structure by which TFS will operate following the First Closing. 6.2.8. Reporting Obligations. TFS is satisfied that TFS will be able to meet its reporting requirements to the Securities and Exchange Commission after the First Closing in a timely manner and will be able to comply with other applicable rules and regulations of the Securities and Exchange Commission, including those set forth in the Sarbanes-Oxley Act and the revisions to Rule 8-K. -26- 6.2.9. Timing of Second Closing. TFS is satisfied that acquisitions of the Operations Entities in the Second Closing can be consummated in a reasonable fashion and time frame, taking into account applicable rules and regulations of the Securities and Exchange Commission and applicable tax regulations. 6.2.10. Worker's Compensation Coverage. TFS is satisfied that workers compensation coverage will be available to TFS for the business of the Operations Entities following the Second Closing. 6.2.11. Legal Action. There shall not be overtly threatened or pending any action, proceeding or other application before any court or Governmental Entity brought by any person or Governmental Entity: (i) challenging or seeking to restrain or prohibit the consummation of the transactions contemplated by this Agreement, or seeking to obtain any damages caused by such transactions which, if successful, would have a material adverse effect on the viability of such transactions; or (ii) seeking to prohibit or impose any limitations on TFS' ownership or operation of all or any portion of Selling Parties' business or assets, or to compel TFS to dispose of or hold separate all or any portion of its or Selling Parties' business or assets as a result of the transactions contemplated by the Agreement which, if successful, would have a material adverse effect on TFS' ability to receive the anticipated benefits of the transactions contemplated by this Agreement and the employment of the individuals referenced in Section 6.2.5. 6.2.12. Approvals. This Agreement shall have been properly approved by all of the governing bodies of Selling Parties. 6.2.13. Consents. TFS shall have received duly executed copies of all third-party consents, approvals, assignments, waivers, authorizations or other certificates contemplated by this Agreement or the Schedule of Exceptions or reasonably deemed necessary by TFS' legal counsel to provide for the continuation in full force and effect of any and all material contracts and leases of Selling Parties and for TFS to consummate the transactions contemplated hereby in form and substance reasonably satisfactory to TFS, except for such thereof as TFS and Selling Parties shall have agreed in writing shall not be obtained. 6.2.14. Assignments of Rights to Selling Parties Intellectual Property. Selling Parties shall have executed such assignments and other documentation as may be reasonably requested by TFS to effectively transfer or confirm the transfer of all right, title and interest to Selling Parties intellectual property to TFS. 6.2.15. Closing Deliveries. The Selling Parties shall have delivered all closing deliveries contemplated in Section 7.1 on or prior to the First Closing and shall have delivered all closing deliveries contemplated in Section 7.2 on or prior to the Second Closing. 6.2.16. No Casualty. There shall not have been any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the proprietary software, documentation or other Selling Parties Intellectual Property where there are no undamaged duplicate copies of such proprietary software, documentation or other Selling Parties Intellectual Property in the possession of Selling Parties. Selling Parties shall have delivered copies of their source code and other Selling Parties Intellectual Property as requested by TFS. There shall not have been any damage, destruction or loss, whether or not covered by insurance, of any other asset of the Selling Parties, the damage, destruction or loss of which shall have a material adverse affect on the business of the Selling Parties. -27- 6.3. Conditions of Obligation of Selling Parties. The respective obligations of Selling Parties to effect the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions prior to the First Closing, unless waived by Command, Harborview or the Operations Entities, respectively, with regard to its obligations: 6.3.1. Due Diligence Review. On or prior to the First Closing, Selling Parties shall have completed their due diligence review and Selling Parties, in their sole and unrestricted discretion, shall be satisfied on the basis of such review that they should proceed with the transactions contemplated hereby. Such review shall have no effect whatsoever on the liability of TFS to Selling Parties under this Agreement or otherwise for breach of any representations, warranties or covenants of TFS hereunder. 6.3.2. Representations and Warranties of TFS. The representations and warranties of TFS set forth in this Agreement shall be true and correct in all material respects as of the First Closing as though made on and as of the date of the First Closing and as of the Second Closing as though made on and as of the date of the Second Closing, and Selling Parties shall have received a certificate signed on behalf of TFS by an officer of TFS to such effect. 6.3.3. Performance of Obligations of TFS. TFS shall have performed in all material respects all agreements and covenants required to be performed by it under this Agreement prior to the First Closing, and Selling Parties shall have received a certificate signed on behalf of TFS by an officer of TFS to such effect. 6.3.4. Opinion of Counsel. Selling Parties shall have received an opinion of legal counsel satisfactory to the Selling Parties in form and substance acceptable to legal counsel of Command. 6.3.5. Dividends, Issuance of or Changes in Securities. Command is satisfied that: (i) TFS has not declared or paid any dividends on or made other distributions to its shareholders; (ii) TFS has not issued, delivered, sold or authorized, or agreed to, or committed to the issuance, delivery, or sale of any shares of its capital stock of any class, any voting debt or any securities convertible into its capital stock, any options, warrants, calls, conversion rights, commitments, agreements, contracts, understandings, restrictions, arrangements or rights of any character obligating TFS to issue any such shares, TFS voting debt or other convertible securities; and (iii) that there are no more than 3,511,400 Shares outstanding. 6.3.6. Management Structure. TFS shall have provided all documentation necessary to effectuate the restructuring of TFS' Board of Directors and officers as more fully set forth in Section 1.8. -28- 6.3.7. Name Change. Command is satisfied that all actions have been taken or will be taken to change the corporate name of TFS as provided in Exhibit K attached hereto. 6.3.8. Increase in Size of TFS Board. Command is satisfied that all actions have been taken or will be taken to amend TFS' Bylaws to allow for a board of directors consisting of up to nine members. 6.3.9. Tax Free Reorganization. Command is satisfied that the transaction contemplated by this Agreement will qualify as a tax free reorganization pursuant to Sections 351 and/or 368 of the Internal Revenue Code. 6.3.10. Consents. Command shall have received duly executed copies of all third-party consents, approvals, assignments, waivers, authorizations or other certificates contemplated by this Agreement or the Schedule of Exceptions or reasonably deemed necessary by Command's legal counsel to provide for TFS to consummate the transactions contemplated hereby in form and substance reasonably satisfactory to Command, except for such thereof as TFS and Command shall have agreed in writing shall not be obtained. 6.4. Special Condition of Operations Entities. The parties acknowledge that TFS shall be obligated to deliver a disclosure document (the "Disclosure") with the Operations Entities in compliance with applicable requirements to qualify the issuance of the Shares as a transaction exempt from the registration provisions of the federal and state securities laws prior to the Operations Entities becoming legally bound to consummate and complete the transactions to acquire the Shares. As a special condition to the performance of the obligations of each of the Operations Entities, each of the Operations Entities shall not be required to effectuate the Second Closing and to consummate the transactions contemplated in this Agreement unless and until the Operations Entities have had ten days prior to the date of the Second Closing within which to review with their independent advisors and counsel the relative risks and merits of completing such transactions. In order to effectuate the transactions contemplated by this Agreement, each of the Operations Entities shall execute and deliver to TFS, prior to the Second Closing, all documentation reasonably related to the Disclosure in form and substance reasonably acceptable to TFS. 6.5. Closing Deliveries. TFS shall have delivered all closing deliveries contemplated in Section 7.1 on or prior to the First Closing and shall have delivered all closing deliveries contemplated in Section 7.2 on or prior to the Second Closing. 6.6. Unsatisfied Conditions. If any one or more of the foregoing conditions remains unsatisfied at the date of the First Closing, the party whose obligations are subject to fulfillment of the unsatisfied condition may elect not to close this transaction. The election not to close shall be evidenced by written notice to the other party. ARTICLE 7. DELIVERIES AT CLOSINGS 7.1. Deliveries at the First Closing. At or prior to the First Closing, the parties shall make the following deliveries: -29- 7.1.1. Deliveries of TFS. TFS shall deliver the following to the Selling Parties: (i) a fully executed signature page to this Agreement; (ii) the Command Purchase Price; (iii) the TFS Disclosure Schedule; (iv) a Voting Agreement executed by John R. Coghlan, in the form of Exhibit D attached hereto; (v) written resignations of Michael Kirk, C. Eugene Olsen and all other members of the Board of Directors of TFS (except for John Coghlan and Brad Herr) from the Board of Directors of TFS; (vi) written resignations of John Coghlan, Brad Herr and all other officers of TFS from their positions as officers of TFS; (vii) the TFS Closing Certificate, in the form attached hereto as Exhibit G; (viii) a fully executed Assignment and Assumption Agreement relating to Command's Assumed Liabilities, in the form of Exhibit B attached hereto; (ix) a fully executed Assignment and Assumption Agreement relating to Harborview's Assumed Liabilities, in the form of Exhibit B attached hereto; (x) a fully executed Assignment and Assumption of Lease relating to Command's real estate lease, if necessary, in the form of Exhibit C attached hereto; (xi) documentation providing that actions have been taken or will be taken to change the corporate name of TFS, in the form of Exhibit K attached hereto; (xii) documentation providing that actions have been taken or will be taken to increase the potential size of TFS' board of directors to nine; (xiii) Noncompetition Agreements executed by TFS, in the form attached of Exhibit F attached hereto; (xiv) Employment Agreements executed by TFS; (xv) an opinion of counsel, as contemplated in Section 6.3.4; and (xvi) duly executed copies of all third-party consents, approvals, assignments, waivers, authorizations or other certificates contemplated by this Agreement or the TFS Disclosure Schedule. 7.1.2. Deliveries of Selling Parties. Each of the Selling Parties shall deliver the following to TFS (unless otherwise indicated below): (i) fully executed signature pages to this Agreement; (ii) the Command Schedule of Exceptions; (iii) the Harborview Schedule of Exceptions; (iv) a Bill of Sale executed by Command relating to Command's Acquired Assets, in the form of Exhibit A attached hereto; (v) an Bill of Sale executed by Harborview relating to Harborview's Acquired Assets, in the form of Exhibit A attached hereto; -30- (vi) an Assignment and Assumption Agreement executed by Command relating to Command's Assumed Liabilities, in the form of Exhibit B attached hereto; (vii) an Assignment and Assumption Agreement executed by Harborview relating to Harborview's Assumed Liabilities, in the form of Exhibit B attached hereto; (viii) an Assignment and Assumption of Lease executed by Command relating to Command's real estate lease, if necessary, in the form of Exhibit C attached hereto; (ix) Noncompetition Agreements executed by the parties thereto, in the form attached of Exhibit F attached hereto; (x) Employment Agreements executed by the parties thereto; (xi) Closing Certificates executed by Command and Harborview, in the form attached hereto as Exhibit H; (xii) duly adopted resolutions of the Board of Directors or Managers / Managing Members of each Operations Entity, substantially in the form attached hereto as Exhibit I-1 or I-2; (xiii) duly adopted resolutions of the Board of Directors or Managers / Managing Members of each Operations Entity, substantially in the form of Exhibit I-1 or I-2 attached hereto; (xiv) duly adopted resolutions of the Shareholders or Members of each Operations Entity, substantially in the form of Exhibit J-1 or J-2 attached hereto; and (xv) duly executed copies of all third-party consents, approvals, assignments, waivers, authorizations or other certificates contemplated by this Agreement or the Schedule of Exceptions relating to Harborview and Command. 7.2. Deliveries at the Second Closing. At or prior to the Second Closing, the parties shall make the following deliveries: 7.2.1. Deliveries of TFS. TFS shall deliver the following to the Selling Parties: (i) the Operations Purchase Price; (ii) an updated TFS Disclosure Schedule; (iii) fully executed Assignment and Assumption Agreements relating to the Assumed Liabilities of each Operations Entity, in the form of Exhibit B attached hereto; (iv) a fully executed Assignment and Assumption of Lease relating to the real estate leases of each Operations Entity, if necessary, in the form of Exhibit C attached hereto; (v) an updated TFS Closing Certificate, in the form attached hereto as Exhibit G; (vi) the Disclosure; and (vii) duly executed copies of all third-party consents, approvals, assignments, waivers, authorizations or other certificates contemplated by this Agreement or the TFS Disclosure Schedule. -31- 7.2.2. Deliveries of Selling Parties. Each of the Operations Entities shall deliver the following to TFS (unless otherwise indicated below): (i) a Schedule of Exceptions; (ii) a fully executed Bill of Sale relating to the Acquired Assets of each Operations Entity, in the form of Exhibit A attached hereto; (iii) a fully executed Assignment and Assumption Agreement relating the Assumed Liabilities of each Operations Entity, in the form of Exhibit B attached hereto (iv) a fully executed Assignment and Assumption of Lease relating to the real estate leases of each Operations Entity, if necessary, in the form of Exhibit C attached hereto; (v) Employment Agreements executed by the parties thereto, if necessary; (vi) fully executed documentation relating to the Disclosure; (vii) an opinion of counsel in form and substance reasonably acceptable to TFS; (viii) a fully executed Joinder Agreement by Command, Harborview and the persons identified on Schedule 2.2.11, in the form attached hereto as Exhibit E; (ix) fully executed Closing Certificate of each Operations Entity, substantially in the form of Exhibit H-1 or H-2 attached hereto; and (x) duly executed copies of all third-party consents, approvals, assignments, waivers, authorizations or other certificates contemplated by this Agreement or the Schedule of Exceptions relating to each Operations Entity. ARTICLE 8. INDEMNIFICATION 8.1. Indemnification By Command, Harborview, and the Operations Entities. Each of the Selling Parties agree severally and not jointly, to defend, indemnify, and hold TFS harmless from and against, and to reimburse TFS with respect to, any and all losses, damages, liabilities, claims, judgments, settlements, fines, costs, and expenses (including attorneys' fees) ("Indemnifiable Amounts") of every nature whatsoever incurred by TFS by reason of or arising out of or in connection with (i) any breach, or any claim that, if true, would constitute a breach by Command, Harborview or the Operations Entities of any representation or warranty of Command, Harborview or the Operations Entities contained in this Agreement or in any certificate or other document delivered to TFS, but only for a period of one year after such representation and warranty was made (at which time this subsection (i) will be deemed lapsed), (ii) the failure, partial or total, of Command, Harborview or the Operations Entities to perform any agreement or covenant required by this Agreement to be performed by it or them, (iii) any undisclosed federal or state tax liability, or asserted liability of Command, Harborview or the Operations Entities, but excluding federal or state tax liabilities related to taxable periods after the Closing Date, and (iv) undisclosed liabilities or obligations of Command, Harborview or the Operations Entities in existence as of the First Closing or arising from or related to events occurring prior to the First Closing, that are not assumed by TFS. -32- 8.2. Indemnification By TFS. TFS agrees to defend, indemnify, and hold Selling Parties harmless from and against, and to reimburse Selling Parties with respect to, any Indemnifiable Amounts of every nature whatsoever incurred by Command, Harborview or the Operations Entities by reason of or arising out of or in connection with (i) any breach, or any claim that, if true, would constitute a breach by TFS of any representation or warranty of TFS contained in this Agreement or in any certificate or other document delivered to Command, Harborview or the Operations Entities, but only for a period of one year after such representation and warranty was made (at which time this subsection (i) will be deemed lapsed), (ii) the failure, partial or total, of TFS to perform any agreement or covenant required by this Agreement to be performed by it and (iii) any of the Assumed Liabilities. 8.3. Procedures. TFS and each Selling Party agree that, upon receipt by either party of a third-party claim in respect of which indemnity may be sought under this Article VIII, said party (the "Claimant") shall give written notice within 15 days of such claim (the "Notice of Claim") to the party from whom indemnification may be sought hereunder (the "Indemnitor"). No indemnification under this Article VIII shall be available to any party who fails to give the required Notice of Claim within 15 days if the party to whom such notice should have been given was unaware of the claim and was prejudiced by the failure to receive the Notice of Claim in a timely manner. The Indemnitor shall be entitled at its own expense to participate in the defense of any claim or action against the Claimant. The Indemnitor shall have the right to assume the entire defense of such claim provided that (a) Indemnitor gives written notice of its desire to defend such claim (the "Notice of Defense") to the Claimant within 15 days after Indemnitor's receipt of the Notice of Claim; (b) Indemnitor's defense of such claim shall be without cost of Claimant or prejudice to Claimant's rights under this Article VIII; (c) counsel chosen by Indemnitor to defend such claim shall be reasonably acceptable to Claimant; (d) the Indemnitor shall bear all costs and expenses in connection with the defense of such claim; (e) Claimant shall have the right, at Claimant's expense, to have Claimant's counsel participate in the defense of such claim; and (f) Claimant shall have the right to receive periodic reports from Indemnitor and Indemnitor's counsel with respect to the status and details of the defense of such claim and shall have the right to make direct inquiries to Indemnitor's counsel in this regard. Solely for the purpose of subparagraph (f) above, Indemnitor shall waive its attorney-client privilege. ARTICLE 9. MISCELLANEOUS 9.1. Entire Agreement. This Agreement, including the exhibits and schedules delivered pursuant to this Agreement, contain all of the terms and conditions agreed upon by the parties relating to the subject matter of this Agreement and supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, whether oral or written, respecting that subject matter, including, but not limited to, the Letter of Intent, dated October 6, 2005, by and between Command and TFS. -33- 9.2. Governing Law. All aspects of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Washington as applied to agreements entered into and entirely to be performed within that State. Selling Parties and TFS consent to exclusive jurisdiction and venue in the state and federal courts in Spokane County, Washington. 9.3. Notices. All notices, requests, demands or other communications which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be deemed to have been duly given: (i) on the date of delivery if personally delivered by hand; (ii) upon the third day after such notice is (a) deposited in the United States mail, if mailed by registered or certified mail, postage prepaid, return receipt requested, or (b) sent by a nationally recognized overnight express courier; or (iii) by facsimile upon written confirmation (other than the automatic confirmation that is received from the recipient's facsimile machine) of receipt by the recipient of such notice: If to TFS: If to Command and Harborview: - --------- ---------------------------- Technical Financial Services, Inc. Command Staffing, LLC 200 North Mullan Road, Suite 213 8687 Via de Ventura, Suite 101 Spokane, Washington 99206 Scottsdale, Arizona 85258 Attention: John R. Coghlan or Brad E. Herr Attention: Glenn Welstad or Ron Junck Telephone No.: (509) 340-0273 Telephone No.: (480) 609-1250 Facsimile No.: (509) 340-0277 Facsimile No.: (480) 609-1350 With a copy to: With a copy to: Workland & Witherspoon, PLLC Rogers & Theobald Washington Mutual Financial Center 2425 East Camelback Road, Suite 850 601 West Main Avenue, Suite 714 Phoenix, Arizona 85016 Spokane, Washington 99201-0677 Attention: Michael D. Hool, Esq. Attention: Gregory B. Lipsker, Esq. Telephone No.: (602) 852-5560 Telephone No.: (509) 455-9077 Facsimile No.: (602) 852-5570 Facsimile No.: (509) 624-6441 If to the Operations Entities: To the address set forth under the signature of each Operations Entity on the signature page to this Agreement. Such addresses may be changed, from time to time, by means of a notice given in the manner provided in this Section 9.3. 9.4. Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be modified rather than voided, if possible, in order to achieve the intent of the parties to this Agreement to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the full extent. -34- 9.5. Survival of Representations and Warranties. All representations and warranties contained in this Agreement, including the exhibits and schedules delivered pursuant to this Agreement, shall survive for a period of one year following the First Closing or Second Closing, whenever such representations and warranties were made. 9.6. Assignment. No party to this Agreement may assign, by operation of law or otherwise, all or any portion of its rights, obligations, or liabilities under this Agreement without the prior written consent of the other parties to this Agreement, which consent may be withheld in the absolute discretion of any of the parties asked to grant such consent. Any attempted assignment in violation of this Section 9.6 shall be voidable. 9.7. Counterparts. This Agreement may be executed by facsimile and in two or more partially or fully executed counterparts, each of which shall be deemed an original and shall bind the signatory, but all of which together shall constitute but one and the same instrument. The execution and delivery of a signature page in the form annexed to this Agreement by any party hereto which shall have been furnished the final form of this Agreement shall constitute the execution and delivery of this Agreement by such party. 9.8. Amendment. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 9.9. Extension, Waiver. At any time prior to the Closing, any parties hereto may, to the extent legally allowed: (i) extend the time for the performance of any of the obligations or other acts of the other party hereto; (ii) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto, and (iii) waive compliance with any of the agreements, covenants or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 9.10. Interpretation. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section, Exhibit or Schedule to this Agreement unless otherwise indicated. The words "include," "includes," and "including" when used herein and therein shall be deemed in each case to be followed by the words "without limitation." The table of contents, index to defined terms, and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 9.11. Attorneys' Fees. Should any proceeding or litigation be commenced between the parties hereto arising out of or relating to the terms of this Agreement, or the rights and duties of the parties hereto, the prevailing party in such proceeding or litigation shall be entitled, in addition to such other relief as may be granted, to a reasonable sum as and for the prevailing party's attorneys' fees. 9.12. Costs and Expenses. Each party hereto shall bear its own costs, including counsel fees and accounting fees, incurred in connection with the negotiation and preparation for the Closing under this Agreement and all matters incident thereto. -35- 9.13. Remedies. In the event of a breach of this Agreement or any term hereof by any party, the other parties shall have all rights and remedies available at law, in equity or under the terms of this Agreement, including, without limitation, the right to seek injunctive relief and specific performance of any party's obligations hereunder. All rights and remedies of any party hereto shall be cumulative and the exercise of any right or remedy by any party shall not be deemed a waiver, relinquishment or abandonment of any other right or remedy, and shall not affect or limit in any way the future assertion of the same, or any other right or remedy, except to the extent otherwise expressly provided in this Agreement. 9.14. Construction. This Agreement is intended to express the mutual intent of the parties hereto, and irrespective of the identity of the party or counsel who prepared this document, no rule of strict construction shall be applied against any party. All words used herein shall refer to the appropriate number or gender, regardless of the number or gender stated. 9.15. Materiality. Subject to the terms and conditions of Section 9.5, all covenants, agreements, representations and warranties made herein shall be deemed to be material and to have been relied on by the parties in entering into this Agreement and shall survive the execution and delivery of this Agreement. [Remainder of Page Intentionally Omitted] -36- SIGNATURE PAGE - ASSET PURCHASE AGREEMENT IN WITNESS WHEREOF, TFS and Selling Parties have each executed this Agreement as of the date first written above. TEMPORARY FINANCIAL SERVICES, COMMAND STAFFING, LLC, a Nevada INC., a Washington corporation limited liability company By: /s/ Brad Herr By: /s/ Glenn Welstad Name: Brad Herr Name: Glenn Welstad Title: Secretary Title: Member By: /s/ Myron Thompson HARBORVIEW SOFTWARE, INC., Name: Myron Thomson A Nevada corporation Title: Member By: /s/ Glenn Welstad By: /s/Dwight Enget Name: Glenn Welstad Name: Dwight Enget Title: President Title: Member By: /s/Thomas Gilbert Solely with respect to Section 1.8 of this Name: Thomas Gilbert Agreement: Title: Member /s/ John R. Coghlan By: /s/ John Coghlan JOHN R. COGHLAN, an individual Name: John Coghlan Title: Member By: /s/ Jerry Smith Name: Jerry Smith Title: Member By: /s/ Ron Junck Name: Ron Junck Title: Member By: Kevin Semerad Name: Kevin Semerad Title: Member -37- EX-99.1 5 v029661_ex99-1.txt Exhibit 99.1 Press Release dated November 11, 2005. Contact: Glenn Welstad 480-609-1250 FOR IMMEDIATE RELEASE November 11, 2005 TEMPORARY FINANCIAL SERVICES, INC. ACQUIRES COMMAND STAFFING Glenn Welstad Elected Chief Executive Officer Spokane, WA. -Temporary Financial Services, Inc. (OTCBB:TPFS) announced that it has completed the acquisition of Command Staffing, LLC (Command) and Harborview Software, Inc. (Harborview) and at the same time has entered into an Asset Purchase Agreement to acquire substantially all of the assets of entities which own and operate 70 staffing offices doing business as Command Center. TPFS expects the closing on the store acquisitions to occur in January, 2006. The staffing offices being acquired are located in 19 states and the District of Columbia. After the January closing, these offices will be operated as company owned stores and management intends to open or acquire new stores inside the company. TPFS issued 3,745,493 shares of common stock to acquire the assets and operations of Command and 2,809,120 shares of common stock to acquire the assets and operations of Harborview. The Asset Purchase Agreement further provides for the issuance of 13,198,512 shares of common stock for the acquisition of the 70 staffing offices and sets aside 144,808 shares of common stock for issuance as incentive shares to key employees and store operators. As of November 9, 2005 (the closing date), TPFS has 10,066,013 shares of common stock issued and outstanding. If all incentive shares are issued and all temporary labor stores are acquired as provided in the Agreement, at the time of the second closing anticipated for January, TPFS will then have 23,409,333 common shares issued and outstanding. As part of the transaction, Glenn Welstad has been elected Chief Executive Officer of TPFS. Prior to the Closing Date, Command and Harborview were controlled by Glenn Welstad and others and TPFS was controlled by John Coghlan. Both Welstad and Coghlan are original founders and former executive officers of Labor Ready, Inc. (NYSE:LRW). Coghlan will continue his involvement in the business as a Director. Command Staffing is an emerging provider of temporary staffing solutions. Harborview provides the software system used in the operation of the staffing offices and is an affiliate of Command. Following the acquisitions, TPFS will do business as Command Center, and plans to aggressively expand its national footprint. This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of forward looking terminology such as "may", "will", "intend", "expect", "anticipate", "estimate", or "continue", or the negatives thereof or comparable terminology. The Company's actual results could differ materially from those anticipated in such forward looking statements as a result of certain factors, including, but not limited to, economic conditions, product demand, competitive products and pricing, and/or state and federal regulations. There are conditions attached to the second closing and consequently there can be no assurances that the transaction will close as to any or all of the staffing offices. ### -----END PRIVACY-ENHANCED MESSAGE-----