-----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, QMok74zBtFBSAvYYGCk/H1SHepi/nWFcow+TD+4NxqzSnrsx8F1d3DHq/DWCWJnO dRZ/Rl94sYubAkJ+wp3RPQ== /in/edgar/work/20000609/0001048750-00-000046/0001048750-00-000046.txt : 20000919 0001048750-00-000046.hdr.sgml : 20000919 ACCESSION NUMBER: 0001048750-00-000046 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20000609 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CYPRESS FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0000811510 STANDARD INDUSTRIAL CLASSIFICATION: [6199 ] IRS NUMBER: 841061382 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-50721 FILM NUMBER: 652838 BUSINESS ADDRESS: STREET 1: 5400 ORANGE AVE STREET 2: STE 200 CITY: CYPRESS STATE: CA ZIP: 90630 BUSINESS PHONE: 7149950627 MAIL ADDRESS: STREET 1: 5400 ORANGE AVENUE STREET 2: SUITE 200 CITY: CYPRESS STATE: CA ZIP: 90630 FORMER COMPANY: FORMER CONFORMED NAME: CHRISTMAS GUILD INC DATE OF NAME CHANGE: 19951201 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FRIEDMAN BILLINGS RAMSEY GROUP INC CENTRAL INDEX KEY: 0001048750 STANDARD INDUSTRIAL CLASSIFICATION: [6211 ] IRS NUMBER: 541837743 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1001 19TH STREET N CITY: ARLINGTON STATE: VA ZIP: 22209 BUSINESS PHONE: 7033129500 MAIL ADDRESS: STREET 1: 1001 NINETEENTH ST N CITY: ARLINGTON STATE: VA ZIP: 22209 SC 13D 1 0001.txt SC 13D CYPRESS FINANCIAL SERVICES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. )* Cypress Financial Services, Inc. (Name of Issuer) Common Stock (Title of Class of Securities) 171045305 (CUSIP Number) Lisa Merchant, Esq., 1001 Nineteenth Street North, Arlington, VA 22209 (703) 469-1188 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 30, 2000 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box / /. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Friedman, Billings, Ramsey Group, Inc. SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 54-1837743 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED BY 15,000,000 EACH REPORTING PERSON WITH ------------------------------------------------------------------- 8 SHARED VOTING POWER 0 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 15,000,000 ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 15,000,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 69.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON HC - -------------------------------------------------------------------------------- Page 2 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Emanuel J. Friedman SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 0 ------------------------------------------------------------------- 8 SHARED VOTING POWER 15,000,000 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 0 ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 15,000,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 15,000,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 69.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: Eric F. Billings SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 0 ------------------------------------------------------------------- 8 SHARED VOTING POWER 15,000,000 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 15,000,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 15,000,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 69.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- Page 3 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON: W. Russell Ramsey SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED BY 0 EACH REPORTING PERSON WITH ------------------------------------------------------------------- 8 SHARED VOTING POWER 15,000,000 ----------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 0 ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 15,000,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 15,000,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 69.8% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- Page 5 ITEM 1. Security and Issuer. This Statement relates to the common stock of Cypress Financial Services, Inc.., having its principal executive office at 5400 Orange Avenue, Suite 200. ITEM 2. Identity and Background. This statement is being filed by Friedman, Billings, Ramsey Group, Inc.: (a)-(c) The Reporting Person, Friedman, Billings, Ramsey Group, Inc., is a Virginia corporation and holding company for certain asset management and capital markets businesses. The shares underlying this filing were purchased by FBR Financial Fund, II ("Financial Fund"), a fund whose general partner, FBR Financial Fund Management, LLC, is managed and controlled by Friedman, Billings, Ramsey Investment Management, Inc.(FBRIM), an investment adviser registered with the Securities and Exchange Commission and wholly-owned subsidiary of Friedman, Billings, Ramsey Group, Inc. (d)-(e) During the last five years, Friedman, Billings, Ramsey Group, Inc. has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Page 6 ITEM 3. Funds for the purchase of the securities are derived from the Reporting Person's working capital. Specifically, $7,500,000 in cash was paid to the Issuer in consideration for 15,000,000 shares of common stock of the Issuer. ITEM 4. Financial Fund acquired the common stock of the Issuer for investment in a transaction in which the Reporting Person paid to the Issuer $7,500,000 in exchange for 15,000,000 shares pursuant to the terms of a Common Stock Purchase Agreement between the Issuer and Financial Fund (See Item 2). Pursuant to the terms of the Purchase Agreement Financial Fund, the Issuer, and Pacific Life Insurance Company ("Pacific Life"), which owns 9.9% of the Issuer's common stock on a fully diluted basis, entered into a Voting Agreement dated May 30, 2000 (the "Voting Agreement") under which Financial Fund and Pacific Life have, under certain circumstances, various rights and obligations related to the voting of the common stock of the Issuer held by Financial Fund and Pacific Life. Pursuant to the terms of the Purchase Agreement and the Voting Agreement, (i) the Board of Directors of the Issuer (the "Board") has been reconstituted at five members, (ii) four of the Issuer's directors have resigned from the Board and (iii) the remaining director has appointed George L. McCabe, Jr. and Edward M. Wheeler, both of whom are managing directors of FBRIM (see Item 2), to fill two of the vacancies on the Board. Under the terms of and subject to the conditions of the Voting Agreement, Financial Fund and Pacific Life agreed to vote for (i) one Board member designated for nomination by Financial Fund and (ii) one Board member designated for nomination by Pacific Life. Financial Fund has the ability to elect the remaining members of the Board by virtue of its voting control of the Issuer. On May 30, 2000, the Issuer entered into agreements to purchase (i) all of the outstanding capital stock of Orange County Professional Services, Inc. and its affiliated companies and (ii) substantially all of the assets of Insource Medical Solutions, Inc., RBA Rem-Care, Inc. and Hospital Employee Labor Pool. It is expected that upon the consummation of the closing of these acquisitions, the Board shall appoint Manuel Occiano, the Issuer's chief executive officer, to fill one of the current vacancies on the Board. Page 7 ITEM 5. Interest in Securities of the Issuer. There are approximately 21,493,904 shares of common stock issued and outstanding. As of May 30,2000 : (a) Amount beneficially owned: 15,000,000 Percent of class: 69.8% (b) The number of shares as to which the Reporting Person has: (i) Sole power to vote or direct the vote: 15,000,000 shares (ii) Shared power to vote or direct the vote: none (iii) Sole power to dispose or direct the disposition of: 15,000,000 shares (iv) Shared power to dispose or direct the disposition of: none (c) Recent Transactions: Not applicable (d) Grants with Respect to Dividents or Sales Proceeds: Not applicable. (e) Date of Cessation of Five Percent Beneficial Ownership: Not applicable. ITEM 6. Contracts, Arrangements, Understanding or Relationships with Respect to Securities of the Issuer. Pursuant to an Investor's Rights Agreement between Financial Fund and the Issuer dated May 30, 2000, Financial Fund has, under certain circumstances, various rights related to the registration of common stock of the Issuer purchased by Financial Fund. Item 7. Material to be Filed as Exhibits. The following exhibits are filed as part of this report in accordance the provisions of Item 601 of Regulation S-B: Exhibit Name of Exhibit 1 Common Stock Purchase Agreement by and between Cypress Financial Services, Inc. and FBR Financial Fund II, L.P. dated May 30, 2000 2 Voting Agreement by and among Cypress Financial Services, Inc., FBR Financial Fund II, L.P. and Pacific Life Insurance Company dated May 30, 2000. 3 Investor's Rights Agreement by and between Cypress Financial Services, Inc. and FBR Financial Fund II, L.P. dated May 30,2000. Page 8 Signature After reasonable inquiry and to the best knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Dated: June 9, 2000 By: /s/ EMANUEL J. FRIEDMAN --------------------------------- Name: Emanuel J. Friedman Title: Chairman Dated: June 9, 2000 /s/ ERIC F. BILLINGS ---------------------------------- Eric F. Billings Dated: June 9, 2000 /s/ EMANUEL J. FRIEDMAN ---------------------------------- Emanuel J. Friedman Dated: June 9, 2000 /s/ W. RUSSELL RAMSEY ---------------------------------- W. Russell Ramsey Page 9 Original Signature Page After reasonable inquiry and to the best knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Dated: June 9, 2000 By: --------------------------------- Name: Emanuel J. Friedman Title: Chairman Dated: June 9, 2000 ---------------------------------- Eric F. Billings Dated: June 9, 2000 ---------------------------------- Emanuel J. Friedman Dated: June 9, 2000 ---------------------------------- W. Russell Ramsey Page 6 of 6 Pages EX-1 2 0002.txt COMMON STOCK PURCHASE AGREEMENT COMMON STOCK PURCHASE AGREEMENT THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of May 30, 2000, by and between Cypress Financial Services, Inc., a Nevada corporation (the "Company"), and FBR Financial Fund II, L.P., a Delaware limited partnership (the "Investor"). THE PARTIES HEREBY AGREE AS FOLLOWS: 1. Purchase and Sale of Stock. 1.1 Sale and Issuance of Common Stock. (a) Subject to the terms and conditions of this Agreement, the Investor agrees to purchase at the closing (the "Closing") and the Company agrees to sell and issue to the Investor at the Closing 15,000,000 shares of the Company's Common Stock, par value $.001 per share (the "Stock"), at a price of $0.50 per share. 1.2 Closing. (a) The purchase and sale of the Stock shall take place at the offices of Pillsbury Madison & Sutro LLP, 101 West Broadway, Suite 1800, San Diego, California, 92101, at 2:00 p.m. on May 30, 2000, or at such other time and place as the Company and the Investor shall mutually agree, either orally or in writing (which time and place are designated as the "Closing Date"). (b) At the Closing the Company shall deliver to the Investor a certificate representing the shares of Stock that the Investor is purchasing against payment of the purchase price therefor, by check, wire transfer or such other form of payment as shall be mutually agreed upon by the Investor and the Company. 2. Representations and Warranties of the Company. The Company represents and warrants to the Investor that the statements contained in this Section 2 are true, correct and complete as of the execution of this Agreement and will be true, correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for date of execution of this Agreement throughout this Section), except as set forth on a Schedule of Exceptions (the "Schedule of Exceptions") delivered to the Investor upon execution of this Agreement (which exceptions shall be deemed to be a part of the Company's representations and warranties as if made hereunder). For purposes of this Agreement, the phrase "Material Adverse Effect" shall mean any event or occurrence that has or, if it occurred reasonably would be expected to have, a material adverse effect on the business, condition (financial or otherwise), results of operations, prospects, assets (including intangible assets), properties or liabilities (including contingent liabilities) of a party. As used in this Agreement, "Subsidiary" means any corporation or other organization, whether incorporated or unincorporated, of which more than fifty percent (50%) of either the equity interests in, or the voting control of, such corporation or other organization is, directly or indirectly through subsidiaries or otherwise, beneficially owned by a party. 2.1 Organization; Good Standing; Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted, to execute and deliver this Agreement, the Investor's Rights Agreement dated as of the date hereof by and among the Company and the Investor (the "Investor's Rights Agreement"), the form of which is attached hereto as Exhibit A, and any other agreement to which the Company is a party and the execution and delivery of which is contemplated hereby (the "Ancillary Agreements"), to issue and sell the Stock and to carry out the provisions of this Agreement, the Investor's Rights Agreement and any Ancillary Agreement. Each of the Company and its Subsidiaries is qualified to transact business as a foreign corporation in each jurisdiction where such qualification is now required and where the failure to so qualify would have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole. 2.2 Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the Investor's Rights Agreement and any Ancillary Agreement, the performance of all obligations of the Company hereunder and thereunder and the authorization, issuance, sale and delivery of the Stock being sold hereunder has been taken, and this Agreement, the Investor's Rights Agreement and any Ancillary Agreement constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (b)as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (c) to the extent the indemnification provisions contained in the Investor's Rights Agreement may be limited by applicable federal or state securities laws. 2.3 Governmental Consents. No consent, approval, qualification, order or authorization of, or filing with, any local, state or federal governmental authority or securities self-regulatory organization is required on the part of the Company in connection with the Company's valid execution, delivery or performance of this Agreement, the Investor's Rights Agreement and the other Ancillary Agreements or the offer, sale or issuance of the Stock by the Company, except (i) such filings as have been made prior to the Closing, (ii) any notices of sale required to be filed with the Securities and Exchange Commission (the "SEC") under Regulation D of the Securities Act of 1933, as amended (the "Securities Act"), or (iii) such post-closing filings as may be required under applicable state securities laws, (noting that filings referenced in clauses (ii) and (iii) will be timely filed within the applicable periods therefor). 2.4 Capitalization and Voting Rights. The authorized capital of the Company consists of: (a) Preferred Stock. 5,000,000 shares of Preferred Stock, par value $.001 per share (the "Preferred Stock"), of which 345,000 have been designated Series A Preferred Stock (the "Series A Preferred Stock"), all of which shares of Series A Preferred Stock are issued and outstanding. The rights, privileges and preferences of the Series A Preferred Stock are as stated in the Amended and Restated Articles of Incorporation of the Company, as filed by the Nevada Secretary of State on December 7, 1995, as amended by that certain Certificate of Determination of the Company, as filed by the Nevada Secretary of State on December 11, 1996 (collectively, the "Articles of Incorporation"). (b) Common Stock. 30,000,000 shares of Common Stock, par value $.001 per share (the "Common Stock"), of which 6,493,904 shares are issued and outstanding. Except for (i) the conversion privileges of the Series A Preferred Stock, (ii) the rights provided in this Agreement and the Investor's Rights Agreement, (iii) warrants to purchase up to 400,000 shares of the Company's Common Stock (the "Warrants"), (iv) those certain options granted pursuant to the Company's 1995 Stock Option Plan (the "Plan"), representing options to purchase, in the aggregate, 742,050 shares of Common Stock and (v) the rights provided in the draft versions of the documents with respect to the CPS Acquisition (as defined below), there are not outstanding any options, warrants, rights (including conversion or preemptive rights and rights of first refusal) or agreements for the purchase or acquisition from the Company of any shares of its capital stock. The Company has reserved 3,250,000 shares of its Common Stock for purchase upon exercise of options outstanding and options to be granted pursuant to the Plan. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the approval and adoption of the Plan and the reservation of shares of Common Stock for issuance upon the exercise of stock options granted pursuant to the Plan has been taken, except for filing an Information Statement with the SEC and distributing it to the Company's shareholders, as required under Rule 14c-2. The Company will complete the SEC filing and distribute the Information Statement to its shareholders within thirty (30) days of the Closing. Except for the voting agreement described in Section 4.9, the Company is not a party or subject to any agreement or understanding, and there is no agreement or understanding between any persons that affects or relates to the voting or giving of written consents with respect to any security or the voting by a director of the Company. 2.5 Valid Issuance of Preferred and Common Stock. All of the issued and outstanding shares of Common Stock and Preferred Stock are duly and validly issued, fully paid and nonassessable. The Stock that is being purchased by the Investor hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws. The certificate representing the Stock, when issued in accordance with this Agreement, will be in due and proper form as authorized by the Company Board of Directors and will be duly and validly executed by representatives of the Company authorized by the Company Board of Directors to execute such certificate. 2.6 Charter Documents. The copies of the Articles of Incorporation and the Bylaws of the Company which have been provided to the Investor are true and complete copies of such instruments as amended to date, and such instruments are in full force and effect on the date hereof. 2.7 SEC Reports and Financial Statements. The Company has made available to the Investor a true and complete copy of each form, report, schedule, registration statement, definitive proxy statement and other document (together with all amendments thereof and supplements thereto) filed by the Company with the SEC since January 1, 1998 (as such documents have since the time of their filing been amended or supplemented, the "SEC Reports"), which are all the documents (other than preliminary material) that the Company was required to file with the SEC since such date. As of their respective dates, the SEC Reports (i) complied as to form in all material respects with the requirements of the Securities Act or the Securities Exchange Act of 1934, as amended, as the case may be, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited interim consolidated financial statements (including, in each case, the notes, if any, thereto) included in the SEC Reports (the "Financial Statements") complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-QSB of the SEC) and fairly present (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end audit adjustments which are not expected to be, individually or in the aggregate, materially adverse to the Company and its Subsidiaries taken as a whole) the consolidated financial position of the Company and its consolidated Subsidiaries as at the respective dates thereof and the consolidated results of their operations and cash flows for the respective periods then ended. 2.8 Absence of Undisclosed Liabilities. Neither the Company nor its Subsidiaries has any debts, liabilities or obligations of any nature (whether absolute, accrued, unliquidated, contingent or otherwise, whether known or unknown, and whether due or to become due) which are likely to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, other than those which (a) are set forth in the Financial Statements or (b) have been incurred since the date of the most recent Financial Statements in the ordinary course of business in amounts and on terms consistent, individually and in the aggregate, with the past practices of the Company and its Subsidiaries. 2.9 Changes. Since December 31, 1999, there has been no event or change which has had or may reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole. 2.10 Registration Rights. Except as provided in the Investor's Rights Agreement, the Warrants and that certain Registration Rights Agreement between the Company and the parties named therein dated September 30, 1996 the Company is not obligated to register under the Securities Act any of its presently outstanding securities or any of its securities that may subsequently be issued. 2.11 Permits. Each of the Company and its Subsidiaries (i) has all franchises, permits, licenses and any similar authority and has posted all bonds necessary for the conduct of its business as now being conducted by it, the lack of which could reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, and (ii) believes it can obtain, without undue burden or expense, any similar authority or bond for the conduct of its business as planned to be conducted. None of the Company or its Subsidiaries is in default in any material respect under any of such franchises, permits, licenses or bonds. 2.12 Compliance. Neither the Company nor any of its Subsidiaries is in violation or default of any provision of its Articles of Incorporation or Bylaws or in any material respect of any provision of any mortgage, agreement, instrument or contract to which it is a party or by which it is bound or of any federal or state judgment, order, writ, decree, statute, rule or regulation applicable to the Company or its Subsidiaries. The execution, delivery and performance by the Company of this Agreement, the Investor's Rights Agreement and any Ancillary Agreement, and the consummation of the transactions contemplated hereby and thereby will not result in any such violation or be in material conflict with or constitute, with or without the passage of time or giving of notice, either a material default under any such provision or an event that results in the creation of any material lien, charge or encumbrance upon any assets of the Company or its Subsidiaries or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties. 2.13 Litigation. Except as disclosed in the SEC Reports filed prior to the date of this Agreement, (i) there are no actions, suits, arbitrations or proceedings pending or, to the knowledge of the Company, threatened against, relating to or affecting, nor are there any governmental or regulatory authority investigations or audits pending or, to the knowledge of the Company, threatened against, relating to or affecting, the Company or its Subsidiaries or any of their respective assets and properties which, individually or in the aggregate, would be reasonably expected to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, or that questions the ability of the Company to consummate the transactions contemplated by this Agreement, (ii) neither the Company nor any of its Subsidiaries is subject to any order of any governmental or regulatory authority which, individually or in the aggregate, is having or would be reasonably expected to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, and (iii) there is no action, suit, arbitration or proceeding by the Company or its Subsidiaries currently pending or that the Company or its Subsidiaries currently intends to initiate. 2.14 Title to Property and Assets; Leases. Except as disclosed in the SEC Reports and (i) for liens for current taxes not yet delinquent, (ii) for liens imposed by law and incurred in the ordinary course of business for obligations not past due to carriers, warehousemen, laborers, materialmen and the like, (iii) for liens in respect of pledges or deposits under workers' compensation laws or similar legislation or (iv) for minor defects in title, none of which, individually or in the aggregate, materially interferes with the use of such property, each of the Company and its Subsidiaries owns its property and assets free and clear of all mortgages, liens, claims and encumbrances. With respect to the property and assets it leases, each of the Company and its Subsidiaries is in compliance with such leases and holds a valid leasehold interest free of any liens, claims or encumbrances, subject to clauses(i)-(iv) above. 2.15 Intellectual Property Rights. Each of the Company and its Subsidiaries owns and possesses sufficient title to, or has sufficient valid and enforceable licenses to, all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, domain names, URLs, websites or other proprietary rights of any material kind (collectively, "Intellectual Property Rights") which are necessary for the operation of its business as presently conducted. There have been no claims made against the Company or its Subsidiaries asserting the invalidity, misuse or unenforceability of any of the Intellectual Property Rights owned or used by the Company or its Subsidiaries and, to the Company's knowledge, there is no basis for any such claim. The conduct of the Company's and its Subsidiaries' business has not infringed, misappropriated or conflicted with and, to the Company's knowledge, does not infringe, misappropriate or conflict with any Intellectual Property Rights of any third party. 2.16 Employees; Employee Compensation. There is no strike, labor dispute or union organization activities pending or threatened between the Company and its Subsidiaries and their respective employees. None of the Company's or its Subsidiaries' employees belongs to any union or collective bargaining unit. Each of the Company and its Subsidiaries has complied in all material respects with all applicable state and federal equal opportunity and other laws related to employment. Except (i) as disclosed in the SEC Reports and (ii) for the Plan and any options granted pursuant thereto, neither the Company nor its Subsidiaries is a party to or bound by any currently effective employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation agreement. Subject to general principles related to wrongful termination of employees, the employment of each officer and employee of the Company and its Subsidiaries is terminable at the will of the Company. 2.17 Taxes. Each of the Company and its Subsidiaries has timely filed or caused to be timely filed all federal, state, local and foreign income and other Tax returns required under applicable law to be filed on or before the Closing Date (or obtained extensions to file) and to the Company's knowledge, all such returns are true and correct in all material respects. Each of the Company and its Subsidiaries has paid or made provision for all Taxes and other charges which have or may become due for the periods covered by such returns. There have been no material adverse adjustments as a result of any examination or investigation of any period for which any such return was or should have been filed or any Tax matter relating thereto, and none of the Tax returns or reports of the Company or its Subsidiaries is currently under investigation or examination. There are no outstanding agreements or waivers extending the statutory period of limitations applicable to any Tax return for any period. There are no material liens for Taxes upon any property or assets of the Company or its Subsidiaries, except for liens for taxes not yet due. All Taxes owed by the Company or its Subsidiaries or which the Company or its Subsidiaries is obligated to withhold from amounts owing to any employee, creditor or third party have been paid or reserved for payment. For purposes of this Agreement the term "Taxes" means all federal, state, and local income, gross receipts, sales, use, transfer, franchise, profits, social security, withholding, payroll, excise, property, or other taxes together with any interest and any penalties with respect thereto, and the term "Tax" means any one of the foregoing Taxes. 2.18 Environmental Regulations. Neither the Company nor any of its Subsidiaries has been associated with any spill, disposal, storage, discharge or release of any Hazardous Materials into or upon or over any real property (including, without limitation, the Premises) or into or upon ground or surface water and neither the Company nor its Subsidiaries has incurred any liability with respect thereto. For the purposes of this Agreement, the term "Hazardous Materials" shall mean any hazardous or toxic substance, material or waste which is regulated by any local government authority, the State of California or the government of the United States of America. 2.19 Minute Books. The copy of the minute books of the Company made available to the Investor contains minutes of all meetings of directors and stockholders and all actions by written consent without a meeting by the directors and stockholders since October 31, 1995 and reflects all actions by the directors (and any committee of directors) and stockholders with respect to all transactions referred to in such minutes accurately in all material respects. 2.20 Client Relations. No (i) client with net fees in excess of $100,000 over the past twelve (12) months nor (ii) clients with aggregate net fees in excess of $500,000 over the past twelve (12) months has raised any material claim, dispute or controversy with respect to any of the services provided by the Company or any of its Subsidiaries, nor does the Company have any knowledge that any of such clients may totally or partially terminate or suspend the use of the Company's or such Subsidiaries services or otherwise reduce their current monthly placements in the foreseeable future. Neither the Company nor any of its Subsidiaries has in any respect misrepresented its services or employed misleading or deceptive practices in connection with the sale of its services. 2.21 Distributions. Since September 30, 1999, there has been no declaration or payment by the Company or its Subsidiaries of any dividend, nor any other distribution by the Company or its Subsidiaries of any assets of any kind, to any of its stockholders. 2.22 Brokers. No broker, finder or investment banker has acted directly or indirectly for the Company or its Subsidiaries in connection with this Agreement or the transactions contemplated hereby. 2.23 Offering. Subject in part to the truth and accuracy of the Investor's representations set forth in this Agreement, the offer, sale and issuance of the Stock as contemplated by this Agreement are exempt from the registration requirements of the Securities Act, and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption. 2.24 Disclosure. The Company has made available to the Investor all the information reasonably available to it without undue expense that the Investor has requested for deciding whether to purchase the Stock. Neither this Agreement nor any other written statements or certificates made or delivered in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not misleading. 3. Representations and Warranties of the Investor. The Investor represents and warrants to the Company that the statements contained in this Section 3 are true, correct and complete as of the execution of this Agreement and will be true, correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for date of execution of this Agreement throughout this Section): 3.1 Organization; Good Standing; Qualification. The Investor is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted, to execute and deliver this Agreement, the Investor's Rights Agreement and any Ancillary Agreements to which the Investor is a party and to carry out the provisions of this Agreement, the Investor's Rights Agreement and any Ancillary Agreement. The Investor is qualified to transact business as a foreign corporation in each jurisdiction where such qualification is now required and where the failure to so qualify would have a Material Adverse Effect on the Investor. 3.2 Authorization. All action on the part of the Investor necessary for the authorization, execution and delivery of this Agreement, the Investor's Rights Agreement and any Ancillary Agreement and the performance of the Investor's obligations hereunder and thereunder has been taken or will be taken prior to the Closing, and this Agreement, the Investor's Rights Agreement and any Ancillary Agreement constitute valid and legally binding obligations of the Investor, enforceable in accordance with their respective terms except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (c) to the extent the indemnification provisions contained in the Investor's Rights Agreement may be limited by applicable federal or state securities laws. 3.3 Voting Rights. Except for the voting agreement described in Section 4.9 below, the Investor is not a party or subject to any agreement or understanding, and there is no agreement or understanding between any persons that affects or relates to the voting or giving of written consents with respect to any security or the voting by a director of the Investor. 3.4 Changes. Since the formation of the Investor, there has been no event or change which has or may reasonably be expected to have a Material Adverse Effect on the Investor. 3.5 Charter Documents. The copies of the Investor's Certificate of Partnership and Partnership Agreement which have been provided to the Company are true and complete copies of such instruments as amended to date, and such instruments are in full force and effect on the date hereof. 3.6 Compliance. The Investor is not in violation or default of any provision of its Certificate of Partnership or Partnership Agreement or in any material respect of any provision of any mortgage, agreement, instrument or contract to which it is a party or by which it is bound or of any federal or state judgment, order, writ, decree, statute, rule or regulation applicable to the Investor. The execution, delivery and performance by the Investor of this Agreement, the Investor Rights Agreement and any Ancillary Agreement, and the consummation of the transactions contemplated hereby and thereby will not result in any such violation or be in material conflict with or constitute, with or without the passage of time or giving of notice, either a material default under any such provision or an event that results in the creation of any material lien, charge or encumbrance upon any assets of the Investor or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Investor, its business or operations, or any of its assets or properties. 3.7 Purchase Entirely for Own Account. This Agreement is made with the Investor in reliance upon the Investor's representation to the Company, which by the Investor's execution of this Agreement the Investor hereby confirms, that the Stock to be purchased by the Investor will be acquired for investment for the Investor's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Investor further represents that the Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person with respect to any of the Stock. 3.8 Investment Experience. The Investor is experienced in evaluating and investing in companies such as the Company. The Investor has had an opportunity to ask questions and receive answers from the Company regarding matters relevant to the Company and an investment therein. In addition, the Investor has been given access to all books, records and other information of the Company which the Investor has desired to review and analyze in connection with the Investor's purchase of the Stock. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Investor to rely thereon. 3.9 Accredited Investor. The Investor is an "accredited investor" within the meaning of SEC Rule 501 of Regulation D, as presently in effect. 3.10 Restricted Securities. The Investor understands that the Stock may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Stock or an available exemption from registration under the Securities Act, the Stock must be held indefinitely. In particular, the Investor is aware that the Stock may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of that Rule are met. 3.11 Legends. It is understood that the certificates evidencing the Stock may bear one or all of the following legends: (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT." (b) Any legend required by the "blue sky" laws of any state or any other jurisdiction. 4. Conditions to Investor's Obligations at Closing. The obligations of the Investor under Section 1.1 of this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions, any one or more of which may be waived by written agreement of the parties: 4.1 No Restriction. No injunction or restraining order shall be in effect to forbid or enjoin, and no suit, action or proceeding shall be pending or threatened to prohibit, nullify or otherwise materially adversely affect the consummation of the transactions contemplated by this Agreement or the consideration to be received hereunder. 4.2 No Material Adverse Change. Since December 31, 1999 and the Closing Date, no event or change shall have occurred which has or may reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole. 4.3 Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing Date. 4.4 Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing Date. 4.5 Compliance Certificate. If the Closing occurs later than the date hereof, the President of the Company shall deliver to the Investor at the Closing a certificate certifying that the representations and warranties of the Company contained herein are true and correct as of the Closing and that the Company has complied with all agreements, obligations and conditions that are required to be performed or complied with by the Company on or before the Closing Date. 4.6 Secretary's Certificate. The Company shall deliver to the Investor at the Closing a certificate executed by the Secretary of the Company certifying as to the valid adoption of resolutions of the Board of Directors of the Company and its stockholders, as necessary, approving this Agreement and the consummation of the transactions contemplated hereby. 4.7 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Stock pursuant to this Agreement shall be duly obtained and effective as of the Closing. 4.8 Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Investor. 4.9 Board of Directors. As of immediately following the Closing (a) the Company Board of Directors shall have been reconstituted, (b) the Company Board of Directors will consist of Diane Dales, George McCabe and Edward M. Wheeler, with two vacanies and (c) the Company, the Investor and Pacific Life Insurance Company shall have entered into a voting agreement in a form mutually agreeable to the Company, the Investor and Pacific Life Insurance Company. 4.10 Stock Certificate. The Company shall have delivered to the Investor a certificate representing the Stock. 4.11 Investor's Rights Agreement. The Company and the Investor shall have entered into the Investor's Rights Agreement in the form attached hereto as Exhibit A. 4.12 Legal Opinion. The Investor shall have received from Jeffers, Shaff & Falk, LLP, counsel for the Company, an opinion, dated as of the Closing, in substantially the form attached hereto as Exhibit B. 5. Conditions to the Company's Obligations at Closing. The obligations of the Company to the Investor under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by the Investor, any one or more of which may be waived by written agreement of the parties: 5.1 No Restriction. No injunction or restraining order shall be in effect to forbid or enjoin, and no suit, action or proceeding shall be pending or threatened to prohibit, nullify or otherwise materially adversely affect the consummation of the transactions contemplated by this Agreement or the consideration to be received hereunder. 5.3 Representations and Warranties. The representations and warranties of the Investor contained in Section 3 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing. 5.4 Payment of Purchase Price. The Investor shall have delivered the purchase price specified in Section 1.1. 5.5 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Stock pursuant to this Agreement shall be duly obtained and effective as of the Closing. 5.6 Investor's Rights Agreement. The Company and the Investor shall have entered into the Investor's Rights Agreement. 5.7 Legal Opinion. The Company shall have received from Pillsbury, Madison & Sutro LLP, counsel for the Investor, an opinion, dated as of the Closing, in substantially the form attached hereto as Exhibit C. 5.8 Compliance Certificate. If the Closing occurs later than the date hereof, the General Partner or President of the Investor shall deliver to the Company at the Closing a certificate certifying that the representations and warranties of the Investor contained herein are true and correct as of the Closing and that the Investor has complied with all agreements, obligations and conditions that are required to be performed or complied with by the Investor on or before the Closing Date. 5.9 General Partner's Certificate. The Investor shall deliver to the Company at the Closing a certificate executed by the General Partner of the Investor certifying as to the approval of this Agreement and the consummation of the transactions contemplated hereby. 6. Indemnification and Other Agreements. 6.1 Survival of Representations and Warranties. Notwithstanding any investigation or inquiries made by the Investor prior to Closing, the Company acknowledges and agrees that the Investor has entered into this Agreement and has purchased the Stock in reliance upon the representations and warranties by the Company contained in this Agreement. The representations and warranties in this Agreement shall survive the Closing as follows: (a) The representations and warranties in Section 2.1 (Organization; Good Standing; Qualification), Section 2.2 (Authorization), Section 2.4 (Capitalization and Voting Rights), Section 2.5 (Valid Issuance of Preferred and Common Stock), Section 2.10 (Registration Rights) and Section 2.12 (Compliance) shall not terminate; (b) All other representations and warranties in this Agreement shall terminate three (3) years after the Closing; provided, however, that any representation or warranty in respect of which indemnity may be sought under this Section 6, and the indemnity with respect thereto, shall survive the time at which it would otherwise terminate pursuant to this Section 6 if notice of the inaccuracy or breach or potential inaccuracy or breach thereof giving rise to such right or potential right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time. The representations and warranties in this Agreement shall survive for the periods set forth in this Section 6 and shall in no event be affected by any investigation, inquiry or examination made for or on behalf of any party, or the knowledge of any party's officers, directors, stockholders, employees or agents or the acceptance by any party of any certificate or opinion hereunder; and (c) The Company and the Investor agree that (i) their sole respective rights for any recourse of any kind with respect to any breaches of any representations, warranties or covenants under this Agreement shall be the Investor's and the Company's respective rights to indemnification as expressly set forth in this Section 6. 6.2 General Indemnification. (a) The Company shall indemnify the Investor and its, stockholders, partners, officers, directors, employees, agents, representatives, successors and permitted assigns (collectively, the "Investor Parties"), and save and hold each of them harmless against and pay on behalf of or reimburse the Investor Parties as and when incurred for any loss, liability, demand, claim, action, cause of action, cost, damage, deficiency, tax, penalty, fine or expense, whether or not arising out of third party claims (including interest, penalties, reasonable attorneys' fees and expenses and all amounts paid in investigation, defense or settlement of any of the foregoing) (collectively, "Losses"), which any the Investor Party may suffer, sustain or become subject to, as a result of, in connection with, relating or incidental to or by virtue of: (i) any material breach of any representation or warranty of the Company in this Agreement; or (ii) any material nonfulfillment or material breach of any covenant or agreement by the Company under this Agreement or the Investor's Rights Agreement. (b) The Investor shall indemnify the Company and its affiliates, stockholders, officers, directors, employees, agents, representatives, successors and permitted assigns (collectively, the "Company Parties"), and save and hold each of them harmless against and pay on behalf of or reimburse such Company Parties as and when incurred for any Losses which any such Company Party may suffer, sustain or become subject to, as a result of, in connection with, relating or incidental to or by virtue of: (a) any material breach of any representation or warranty of the Investor in this Agreement; or (b) any material nonfulfillment or material breach of any covenant or agreement by the Investor under this Agreement or the Investor's Rights Agreement. 6.3 Procedure For Indemnification--Indemnified Party Claims. (a) If an indemnified party (the "Indemnified Party") becomes aware of facts or circumstances establishing a claim ("Claim") that the Indemnified Party has experienced or incurred any Loss or may experience or incur any Losses which will give rise to indemnification under this Section 6, then the Indemnified Party shall give written notice to the indemnifying party (the "Indemnifying Party") of such Claim ("Indemnification Notice"). The Indemnification Notice shall be provided as soon as reasonably practicable but in no event more than thirty (30) days after the Indemnified Party has received written notice or actual knowledge of such facts or circumstances (provided that failure to give an Indemnification Notice shall not limit the Indemnifying Party's indemnification obligation hereunder except to the extent that the delay in giving, or failure to give, the Indemnification Notice adversely affects the Indemnifying Party's ability to defend against a Claim). To the extent reasonably practicable, the Indemnification Notice will describe the nature, basis and amount of the Claim and include any relevant supporting documentation. Any Claim described in the Indemnification Notice shall be deemed final and binding (hereinafter, a "Permitted Indemnification Claim") if the Indemnifying Party does not object in writing to the propriety of the Claim or the amount of the Loss by delivering a notice of objection to the Indemnified Party (an "Indemnification Objection Notice") within thirty (30) days after receipt of the Indemnification Notice. The Indemnification Objection Notice shall detail all specific objections to the Claim. (b) The Indemnified Party against whom a third party claim ("Third Party Claim") is made or brought shall give the Indemnifying Party an opportunity to defend such Third Party Claim with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party. Notwithstanding the above, the Indemnified Party at all times shall have the right to participate fully in the defense at its own expense. Failure of an Indemnifying Party to give the Indemnified Party written notice of its election to defend such Third Party Claim within thirty (30) days after receipt of notice shall be deemed a waiver of its right to defend such Third Party Claim. In that event, the Indemnified Party against whom such Third Party Claim is made shall have the right, but not the obligation, to undertake, defend and compromise or settle the Third Party Claim. The party that undertakes the defense shall defend the Third Parry Claim in good faith and shall periodically apprise the other party of the progress of such defense. If the Indemnifying Party undertakes the defense of a Third Party Claim, it shall not consent to the entry of any judgment or enter into any settlement (except with the written consent of the Indemnified Party) which does not include as an unconditional term thereof the giving by the claimant to the Indemnified Party against whom such Third Party Claim is made a release from all liability in respect of such Third Party Claim (which release shall exclude only any obligations incurred in connection with any such settlement). The Indemnified Party shall make available, at the Indemnifying Party's expense, all information and assistance that the Indemnifying Party reasonably may request. 6.4 CPS Acquisition. The proceeds received by the Company from the sale of the Stock shall be used to (i) acquire the stock and/or assets of Orange County Professional Services, Inc., a California corporation, and its affiliated entities (collectively, the "CPS Acquisition") and (ii) to pay certain expenses incurred by the Company and the Investor in the negotiation and preparation of documents with respect to the CPS Acquisition. 6.5 Exclusivity; No Issuance of Equity Securities. The Company agrees that until the closing of the CPS Acquisition, the Company will not, and will not permit any of its officers, directors, employees or representatives to, without the prior written consent of the Investor and the Board of Directors of the Company: (a) solicit, enter into any negotiations with or respond to any proposals from other third parties indicating an interest in making an investment in the Company; or (b) issue or grant any shares, options, warrants, convertible notes or other equity securities ("Equity Securities") of the Company (except for the issuance of shares upon the exercise of options granted under the Plan prior to the Closing Date in accordance with the terms thereof) or enter into any contract, commitment or agreement for the issuance by the Company, or purchase or acquisition by the Company from any individual or entity of any Equity Securities; (c) create a mortgage, pledge, lien or encumbrance on any of the properties or assets of the Company; (d) make any expenditures in excess of $10,000 (individually or in the aggregate), except in the ordinary course of business; or (e) incur any indebtedness for money borrowed by the Company or obligations assumed or guaranteed by the Company. 6.6 Advance for Payment of Certain Legal Fees; Monitoring Fee. Subsequent to the Closing Date and for so long as the Investor holds any Stock, the Company shall pay to the Investor a quarterly monitoring fee of $15,000, payable on July 1, 2000 and on the first day of each quarter thereafter. The first monitoring fee will be pro rated from the Closing Date. Initial monitoring fees in an aggregate amount of $17,442.49 will be offset against amounts owed by the Investor to the Company for amounts borrowed to by the Investor at the Closing to pay certain transaction expenses. 6.7 Name Change. Within ninety (90) days of the Closing Date, the Company shall change the Company's name to "RevCare, Inc." 7. Miscellaneous. 7.1 Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. 7.2 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including permitted transferees of any shares of Stock sold hereunder). 7.3 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California. 7.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 7.5 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 7.6 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, and if not, then on the next business day, or upon personal delivery to the party to be notified by hand or professional courier service or five (5) days after deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by ten (10) days' advance written notice to the other parties. 7.7 Public Announcements. The parties shall jointly cooperate in the preparation of any press releases or public statements to be made with respect to this Agreement and the transactions contemplated hereby. 7.8 Finders' Fees. Each party represents that it neither is nor will be obligated for any finders' fee or commission in connection with this transaction. The Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which the Investor or any of its officers, employees or representatives is responsible. The Company agrees to indemnify and hold harmless the Investor from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible. 7.9 Expenses. Irrespective of whether the Closing is effected, the Company and the Investor shall each bear their respective costs and expenses incurred with respect to the negotiation, execution, delivery and performance of this Agreement. provided, however, that concurrent with and contingent upon the Closing, the Company shall pay the reasonable fees and costs of special counsel for the Investor in connection with the negotiation, execution and delivery of this Agreement. 7.10 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Investor. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding, each future holder of all such securities and the Company. 7.11 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CYPRESS FINANCIAL SERVICES, INC. Name: Title: Address: 5400 Orange Avenue, Suite 200 Cypress, California 90630 FBR FINANCIAL FUND II, L.P. By: FBR Financial Fund Management, L.L.C., Title: General Partner By: Friedman, Billings, Ramsey Investment Management, Inc. Title: Managing Member By: Name: Title: Address: 1001 19th Street N Arlington, VA 22209 EX-2 3 0003.txt VOTING AGREEMENT VOTING AGREEMENT This Voting Agreement (this "Agreement") is made as of May 30, 2000 by and among Cypress Financial Services, Inc., a Nevada corporation (the "Company"), FBR Financial Fund II, L.P., a Delaware limited partnership ("FBR"), and Pacific Life Insurance Company, a _________ corporation ("Pacific Life"). RECITALS A. FBR desires to purchase from the Company 15,000,000 shares (the "Shares") of the Company's common stock, par value $.001 per share (the "Common Stock"), and the Company desires to sell such Shares to FBR; B. Pacific Life currently owns shares of the Company's Common Stock; C. The parties desire that Pacific Life be given the right to designate one (1) nominee to serve on the Board of Directors (the "Board") of the Company (the "Pacific Life Director"); D. The parties desire that FBR be given the right to designate the remaining nominees (the "Remaining Directors") to serve on the Board in the manner described below; and E. FBR, Pacific Life and the Company acknowledge that they are entering into this Agreement in consideration of the purchase of the Shares by FBR, pursuant to that certain Common Stock Purchase Agreement dated as of the date hereof. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: Size of Board. During the term of this Agreement and so long as (a) FBR and its affiliates ("Affiliates") (as defined in Rule 405 promulgated under the Securities Act of 1933, as amended) hold at least Seven Million Five Hundred Thousand (7,500,000) shares of the Common Stock (on a fully diluted, as-converted basis and subject to adjustment for any stock split, dividend, combination or other recapitalization) and (b) Pacific Life and its Affiliates hold at least One Million One Hundred Fifty Thousand (1,150,000) shares of the Common Stock (on a fully diluted, as-converted basis and subject to adjustment for any stock split, dividend, combination or other recapitalization), each of FBR and Pacific Life covenant and agree that it will vote its shares of Common Stock so as to provide, and the Company will use its best efforts to cause, the Board to consist of at least three (3) members. Pacific Life Nominee. During the term of this Agreement and so long as Pacific Life and its Affiliates hold at least One Million One Hundred Fifty Thousand (1,150,000) shares of the Common Stock (on a fully diluted, as-converted basis and subject to adjustment for any stock split, dividend, combination or other recapitalization), each of FBR and Pacific Life agree to vote all of its shares of Common Stock now or hereafter owned by it as follows: (i) to elect the nominee of Pacific Life ("Pacific Life Nominee") as the Pacific Life Director and (ii) if requested by Pacific Life, to remove the incumbent Pacific Life Director and elect a new Pacific Life Nominee as the Pacific Life Director or to fill a vacancy created by the death of such Pacific Life Director or otherwise. Pacific Life shall designate the Pacific Life Nominee in writing to the Company prior to each election of Directors of the Company. The Company shall promptly notify FBR of the nomination of the Pacific Life Nominee by Pacific Life. Any vacancy occurring because of the death, resignation, removal or disqualification of the Pacific Life Nominee shall be filled according to this Section 2. Remaining Directors. During the term of this Agreement and so long as FBR and its Affiliates hold at least Seven Million Five Hundred Thousand (7,500,000) shares of the Common Stock (on a fully diluted, as-converted basis and subject to adjustment for any stock split, dividend, combination or other recapitalization), each of FBR and Pacific Life agrees as follows: FBR shall have the right to nominate all other directors of the Board; provided that FBR will give Pacific Life the opportunity to discuss any questions or concerns Pacific Life may have in respect of any FBR nominee for seats one (1) through four (4) of the Board. Pacific Life agree to vote all of its shares of Common Stock now or hereafter owned by it to elect the nominee of FBR for one of Board seats one (1) through four (4) (the "FBR Nominee") and (ii) if requested by FBR, to remove the incumbent FBR director and elect a new FBR Nominee as the a director or to fill a vacancy created by the death of such FBR director or otherwise. FBR shall designate its director nominees in writing to the Company prior to each election of directors of the Company. The Company shall promptly notify Pacific Life of the nominations of the directors by FBR. Any vacancy occurring because of the death, resignation, removal or disqualification of any director other than the Pacific Life Director shall be filled according to this Section 3. Directors upon Closing. Upon the consummation of the closing of the sale of the Shares, Diane Dales, Edward M. Wheeler and George L. McCabe Jr. shall fill three (3) of the five (5) Board seats and the remaining two (2) seats shall be vacant. Successors in Interest. The rights of FBR and Pacific Life under Sections 1 through 4 above are not assignable other than to one of their respective Affiliates; however, the provisions of this Agreement shall be binding upon the successors in interest to any of the shares of Common Stock. The Company shall not permit the transfer of any shares of the Common Shares on its books or issue new certificates representing any shares of such securities unless and until the person(s) to whom such shares are to be transferred shall have executed a written agreement, substantially in the form of this Agreement, pursuant to which such person becomes a party to this Agreement, and agrees to be bound by all the provisions hereof as if such person was a party hereunder. Legend. Each certificate representing any of the shares of Common Stock held by FBR or Pacific Life shall bear a legend reading as follows: "The shares evidenced hereby are subject to the terms of a Voting Agreement (a copy of which may be obtained without charge from the issuer), and by accepting any interest in such shares the person accepting such interest shall be deemed to agree to and shall become bound by all the provisions of such Voting Agreement." Voting Agreement; Proxy to Vote Shares. This Agreement is intended to be a "voting agreement" for purposes of Section 706 of the California Corporations Code. Without limitation, if either FBR or Pacific Life shall fail to vote their shares of Common Stock so as to achieve the structure of the Board and/or representation on the Board as set forth in this Agreement, such party shall be deemed immediately upon the existence of such a breach to have granted to a designee of the other party a proxy on the shares then held by such defaulting party as shall be necessary to obtain from such defaulting party the minimum requisite voting power to ensure such appropriate structure of the Board and/or such representation on the Board. Each of parties acknowledges that each proxy granted hereby, including successive proxies if need be, is given to secure the performance of a duty and shall be irrevocable until the duty is performed. Termination. This Agreement shall terminate on the tenth (10th) anniversary hereof. Amendments and Waivers. Any term hereof may be amended and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company, FBR and Pacific Life. Any amendment or waiver so effected shall be binding upon the Company, FBR, Pacific Life and their assigns subject to the terms of this Agreement, whether or not such party, assignee, or other stockholder entered into or approved such amendment or waiver. Stock Splits, Stock Dividends, etc. In the event of any stock split, stock dividend, recapitalization, reorganization, or the like, any securities issued with respect to the Common Stock held by FBR or Pacific Life shall become subject to this Agreement and shall be endorsed with the legend set forth in Section 6 hereof. Enforceability/Severability. The parties hereto agree that each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If any provision of this Agreement shall nevertheless be held to be prohibited by or invalid under applicable law, such provision shall be effective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement, so as to make effective and enforceable the intent of this Agreement. Governing Law. This Agreement shall be governed by and construed under the laws of the State of California as applied to contracts among California residents entered into and to be performed entirely within California. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Notices. All notices, requests and other communications to any party hereunder shall be in writing, shall refer specifically to this Agreement and shall be personally delivered or sent by facsimile transmission, overnight delivery with a nationally recognized overnight delivery service or by registered or certified mail, return receipt requested, postage prepaid, in each case to the respective address specified on the signature page hereto. Any notice or communication given in conformity with this Section 14 shall be deemed to be effective when received by the addressee, if delivered by hand or facsimile transmission, one (1) business day after deposit with a nationally recognized overnight delivery service and three (3) days after mailing by first class U.S. Mail. Equitable Remedies. The Company, FBR and Pacific Life acknowledge and agree that the legal remedies available to the Company, FBR and Pacific Life in the event any party violates the covenants and agreements made in this Agreement would be inadequate and that the Company, FBR and Pacific Life shall be entitled, without posting any bond or other security, to temporary, preliminary and permanent injunctive relief, specific performance and other equitable remedies in the event of such a violation, in addition to any other remedies which the Company, FBR or Pacific Life may have at law or in equity. Further Assurances. Each of the parties hereto shall execute and deliver all additional documents and instruments and shall do any and all acts and things reasonably requested in connection with the performance of the obligations undertaken in this Agreement and/or otherwise to effectuate in good faith the intent of the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year hereinabove first written. THE COMPANY: CYPRESS FINANCIAL SERVICES, INC. By: Name: Title: Address: 5400 Orange Avenue Suite 200 Cypress, CA 90630 FBR FINANCIAL FUND II, L.P. By: FBR Financial Fund Management, L.L.C., Title:General Partner By: Friedman, Billings, Ramsey Investment Management, Inc. Title: Managing Member By: Name: Title: Address: 1001 19th Street North Arlington, VA 22209 PACIFIC LIFE INSURANCE COMPANY By: Name: Title: Address: EX-3 4 0004.txt INVESTOR'S RIGHTS AGREEMENT INVESTOR'S RIGHTS AGREEMENT THIS INVESTOR'S RIGHTS AGREEMENT (this "Agreement") is made and entered into as of May 30, 2000, by and among Cypress Financial Services, Inc., a Nevada corporation (the "Company"), and FBR Financial Fund II, L.P., a Delaware limited partnership (the "Investor"). The parties hereby agree as follows: SECTION 1 Definitions 1.1 Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: (a) "Affiliate" shall mean with respect to any Person, any Person which directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person. (b) "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. (c) "Common Stock" shall mean the common stock of the Company, par value $0.001 per share. (d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time. (e) "Holder" shall mean the Investor and any holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 2.10 hereof. (f) "Initiating Holders" shall mean any Holder or Holders who in the aggregate hold not less than fifty percent (50%) of the then outstanding Registrable Securities. (g) "Other Shares" shall mean other securities of the Company with registration rights. (h) "Other Stockholders" shall mean persons other than Holders who, by virtue of agreements with the Company, are entitled to include their securities in certain registrations hereunder. (i) "Person" shall mean an individual, a corporation, a partnership, a limited liability company, a trust or an unincorporated organization or any other entity or organization. (j) "Registrable Securities" shall mean (i) the Shares and (ii) any Common Stock issued as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in clause (i) above; provided, however, that Registrable Securities shall not include any shares of Common Stock which have (x) previously been registered, (y) been sold to the public or (z) been sold to a transferee in a transaction in which the transferor's registration rights were not assigned. (k) The terms "register," "registered" and "registration" shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement. (l) "Registration Expenses" shall mean all expenses incurred in effecting any registration pursuant to this Agreement, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, expenses of any regular or special audits incident to or required by any such registration and reasonable fees and disbursements of up to $10,000 for a single counsel for the selling Holders, but shall not include the compensation of regular employees of the Company (which compensation shall be paid in any event by the Company) and Selling Expenses. (m) "Rule 144" shall mean Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission. (n) "Rule 145" shall mean Rule 145 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission. (o) "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time. (p) "Selling Expenses" shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities. (q) "Common Stock Purchase Agreement" shall mean the Common Stock Purchase Agreement of even date herewith entered into between the Company and the Investor. (r) "Shares" shall mean the Common Stock issued pursuant to the Common Stock Purchase Agreement. SECTION 2 Registration Rights 2.1 Requested Registration. (a) Request for Registration. If the Company shall receive from Initiating Holders at any time or times not earlier than twelve (12) months after the date of this Agreement a written request that the Company effect a registration with respect to Registrable Securities, the Company will: (i) promptly give written notice of the proposed registration to all other Holders; and (ii) as soon as practicable, use its best efforts to effect such registration (including, without limitation, filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and appropriate compliance with the Securities Act) as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within twenty (20) days after such written notice from the Company is effective in accordance with Section 3.5 hereof. The Company shall not be obligated to effect, or to take any action to effect, any such registration pursuant to this Section 2.1: (A) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification, or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; (B) Except as provided in the last sentence of Section 2.1(b), after the Company has initiated two (2) such registrations pursuant to this Section 2.1(a) (counting for these purposes only (i) a registration which has been declared or ordered effective and pursuant to which securities have been sold and (ii) registrations which have been withdrawn by the Holders as to which the Holders have not elected to bear the Registration Expenses pursuant to Section 2.3 hereof and would, absent such election, have been required to bear such expenses); or (C) during the period starting with the date sixty (60) days prior to the Company's good faith estimate of the date of filing of, and ending on a date one hundred eighty (180) days after the effective date of, a Company-initiated registration; provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective. (b) Deferment. Subject to the foregoing clauses (A) through (C), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Initiating Holders; provided, however, that if (i) in the good faith judgment of the Board of Directors of the Company, such registration would be seriously detrimental to the Company and the Board of Directors of the Company concludes, as a result, that it is essential to defer the filing of such registration statement at such time and (ii) the Company furnishes to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company for such registration statement to be filed in the near future and that it is, therefore, essential to defer the filing of such registration statement, then the Company shall have the right to defer such filing for the period during which such filing would be seriously detrimental, provided that the Company may not defer the filing for a period of more than ninety (90) days after receipt of the request of the Initiating Holders, and, provided further, that the Company shall not defer its obligation in this manner more than once in any twelve-month period. The registration statement filed pursuant to the request of the Initiating Holders may not include other securities of the Company (except for securities with respect to which registration rights have been granted prior to the date of this Agreement) unless the written request of the Initiating Holders has been obtained. If written consent is not obtained, the Company may nevertheless include other securities in such registration; provided, however, that if the amount of Registrable Securities actually sold is less than the amount of Registrable Securities requested to be so registered by the Initiating Holders, then the Initiating Holders shall have a subsequent demand registration right or rights, pursuant to this Section 2.1, with respect to any Registrable Securities requested to be registered but not successfully sold. (c) Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1 and the Company shall include such information in the written notice referred to in Section 2.1(a). The right of any Holder to registration pursuant to Section 2.1 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder with respect to such participation and inclusion) to the extent provided herein. A Holder may elect to include in such underwriting all or a part of such Holder's Registrable Securities. (d) Procedures. If other Persons shall request inclusion in any registration pursuant to Section 2.1, the Initiating Holders shall, on behalf of all Holders, offer to include such securities in the underwriting and may condition such offer on such other Person's acceptance of the further applicable provisions of this Section 2 (including Section 2.11). The Company shall (together with all Holders and other Persons proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders, which underwriters are reasonably acceptable to the Company. Notwithstanding any other provision of this Section 2.1, if the representative of the underwriters advises the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, the number of shares to be included in the underwriting or registration shall be allocated as set forth in Section 2.12 hereof. If a Person who has requested inclusion in such registration as provided above does not agree to the terms of any such underwriting, such Person shall be excluded therefrom by written notice from the Company, the underwriter or the Initiating Holders. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. If shares are so withdrawn from the registration and if the number of shares to be included in such registration was previously reduced as a result of marketing factors pursuant to this Section 2.1(d), then the Company shall offer to all Holders and other Persons who have retained rights to include securities in the registration the right to include additional securities in the registration in an aggregate amount equal to the number of shares so withdrawn, with such shares to be allocated among such Holders and other Persons requesting additional inclusion in accordance with Section 2.12. 2.2 Company Registration. (a) Registration. If the Company shall determine to register any of its securities either for its own account or the account of a security holder or holders (other than pursuant to Section 2.1 or 2.4 hereof), other than a registration relating solely to employee benefit plans, or a registration relating solely to a Rule 145 transaction, or a registration on any registration form that does not permit secondary sales, the Company will: (i) promptly give to each Holder written notice thereof; and (ii) use its best efforts to include in such registration (and any related qualification under blue sky laws or other compliance), except as set forth in Section 2.2(b) below, and in any underwriting involved therein, all of such Holder's Registrable Securities specified in a written request or requests received by the Company within twenty (20) days after the written notice from the Company described in clause (i) above is given. Such written request may specify all or a part of a Holder's Registrable Securities. (b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 2.2(a)(i). In such event, the right of any Holder to registration pursuant to this Section 2.2 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other holders of securities of the Company with registration rights to participate therein distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected by the Company. Notwithstanding any other provision of this Section 2.2, if the representative of the underwriters advises the Company in writing that marketing factors require a limitation on the number of shares to be underwritten, the representative may (subject to the limitations set forth below) exclude all Registrable Securities from, or limit the number of Registrable Securities to be included in, the registration and underwriting. If such registration is a Company-initiated registered offering of the Company's securities to the general public, the Company may limit, to the extent so advised by the underwriters, the amount of securities to be included in the registration by the Company's stockholders (including the Holders); provided, however, that the aggregate value of Registrable Securities to be included in such registration by Holders may not be so reduced to less than thirty-five percent (35%) of the total amount of such securities included in such registration without the consent of at least two-thirds (2/3) of the Holders. The Company shall so advise all Holders and other stockholders requesting registration pursuant to this Section 2.2, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated first to the Company for securities being sold for its own account (subject to the foregoing provisions of this paragraph) and thereafter as set forth in Section 2.12. If any Person does not agree to the terms of any such underwriting, he shall be excluded therefrom by written notice from the Company or the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. If shares are so withdrawn from the registration and if the number of shares of Registrable Securities to be included in such registration was previously reduced as a result of marketing factors, the Company shall then offer to all Persons who have retained the right to include securities in the registration the right to include additional securities in the registration in an aggregate amount equal to the number of shares so withdrawn, with such shares to be allocated among the Persons requesting additional inclusion in accordance with Section 2.12 hereof. (c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The Registration Expenses and Selling Expenses, if any, of such withdrawn registration shall be borne by the Company. 2.3 Expenses of Registration. All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Sections 2.1, 2.2 or 2.4 hereof shall be borne by the Company; provided, however, that if the Holders bear the Registration Expenses for any registration proceeding begun pursuant to Section 2.1 and subsequently withdrawn by the Holders registering shares therein, such registration proceeding shall not be counted as a requested registration pursuant to Section 2.1 hereof; and provided, further, that in the event Holders withdraw a registration begun pursuant to Section 2.1 and such withdrawal is based upon material adverse information relating to the Company that is different from the information known or available (upon request from the Company or otherwise) to the Holders requesting registration at the time of their request for registration under Section 2.1, such registration shall not be treated as a counted registration for purposes of Section 2.1 hereof, even though the Holders do not bear the Registration Expenses for such registration. All Selling Expenses incurred in connection with any registration, qualification or compliance pursuant to Sections 2.1, 2.2 and 2.4 hereof shall be borne by the holders of such securities pro-rata on the basis of the number of shares of securities so registered on their behalf. 2.4 Registration on Form S-3. (a) In addition to the rights contained in the foregoing provisions of this Section 1, the Holders of Registrable Securities shall have the right to request registrations on Form S-3 (such requests shall be in writing and shall state the number of shares of Registrable Securities to be disposed of and the intended methods of disposition of such shares by such Holder or Holders); provided, however, that the Company shall not be obligated to effect any such registration if, in a given twelve-month period, the Company has effected one (1) such registration in any such period. (b) If a request complying with the requirements of Section 2.4(a) hereof is delivered to the Company, the provisions of Sections 2.1(a)(i) and (ii) and Section 2.1(b) hereof shall apply to such registration. If the registration is for an underwritten offering, the provisions of Sections 2.1(c) and 2.1(d) hereof shall also apply to such registration. 2.5 Registration Procedures. In the case of each registration effected by the Company pursuant to Section 2, the Company will keep each Holder advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Company will use its best efforts to: (a) Prepare and file with the Commission a registration statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Securities in accordance with the intended method of distribution thereof, and use its best efforts to cause such registration statement to become effective; provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will (i) furnish to counsel selected by the Holders of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents will be subject to the review of such counsel and (ii) notify each Holder of Registrable Securities of any stop order issued or threatened by the Commission or any state regulatory authority and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered; (b) Keep such registration effective for a period of one hundred twenty (120) days or until the Holder or Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs; provided, however, that (i) such 120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Company and (ii)in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that Rule 415, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis; and provided further, that applicable rules under the Securities Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment that (x) includes any prospectus required by Section 10(a)(3) of the Securities Act or (y) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (x) and (y) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration statement; (c) Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement; (d) Furnish such number of prospectuses and other documents incident thereto, including any amendment of or supplement to the prospectus, as a Holder from time to time may reasonably request; (e) Use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any Holder reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder, provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (e), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction; (f) Use its best efforts to cause the Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Holder or Holders thereof to consummate the disposition of such Registrable Securities; (g) Notify each Holder of such Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Company will prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (h) Use its best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed (or, if none are so listed, on each securities exchange requested by the holders of a majority of the Registrable Securities and Other Shares covered by the applicable registration statement), in each case provided that the applicable listing requirements are satisfied; (i) In connection with any underwritten offering pursuant to a registration statement filed pursuant to Section 2.1 hereof, the Company will enter into an underwriting agreement reasonably necessary to effect the offer and sale of Common Stock, provided such underwriting agreement contains customary underwriting provisions and provided further that if the underwriter so requests, the underwriting agreement will contain customary contribution provisions; (j) Use its best efforts to obtain an opinion letter from the Company's legal counsel in customary form and covering such matters of the type customarily covered by opinion letters as the holders of a majority of the Registrable Securities and Other Shares being sold reasonably request; (k) Use its best efforts to take all other steps necessary to effect the registration of the Registrable Securities covered by the registration statement contemplated hereby; and (l) Otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering a period of twelve (12) months, beginning within three (3) months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder. 2.6 Indemnification. (a) The Company (i) will indemnify each of its officers, directors and partners, legal counsel, and accountants, each Holder and each Person who controls such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification, or compliance has been effected pursuant to this Section 2, and each underwriter, if any, and each Person who controls any such underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages and liabilities (or actions, proceedings or settlements in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and (ii) will reimburse each of its officers, directors, partners, legal counsel and accountants, each such Holder and each Person who controls such Holder, each such underwriter and each Person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder or underwriter and stated to be specifically for use therein. It is agreed that the indemnity agreement contained in this Section 2.6(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent has not been unreasonably withheld). (b) Each Holder will, if Registrable Securities held by him are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors, officers, partners, legal counsel and accountants, each underwriter, if any, of the Company's securities covered by such registration statement, each Person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, each other such Holder and Other Stockholders, and each of their officers, directors and partners, and each Person controlling such Holder or Other Stockholders, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and such Holders, Other Stockholders, directors, officers, partners, legal counsel and accountants, Persons, underwriters, or control Persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder expressly for use in such registration statement, prospectus, offering circular or other document; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided further, that such Holder will not be liable under this Section 2.6(b) for any losses, costs, damages or expenses exceeding the gross proceeds received by Holder in such registration or offering. (c) Each party entitled to indemnification under this Section 2.6 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2.6, to the extent such failure is not prejudicial. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (which consent shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom. (d) If the indemnification provided for in this Section 2.6 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and of the Indemnified Party, on the other hand, in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 2.7 Information by Holder. Each Holder of Registrable Securities shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Section 2. 2.8 Limitations on Registration of Issues of Securities. From and after the date of this Agreement, the Company shall not, without the prior written consent of a majority in interest of the Holders, enter into any agreement with any holder or prospective holder of any securities of the Company giving such holder or prospective holder any registration rights, unless the terms of such agreement provide that such registration rights are subordinate to the registration rights granted to the Holders hereunder. 2.9 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its best efforts to: (a) make and keep public information regarding the Company available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times from and after ninety (90) days following the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public; (b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act at any time after it has become subject to such reporting requirements; and (c) so long as a Holder owns any Registrable Securities, furnish to the Holder forthwith upon written request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time from and after ninety (90) days following the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company and (iii) such other reports and documents so filed as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a holder to sell any such securities without registration. 2.10 Transfer or Assignment of Registration Rights. The rights to cause the Company to register securities granted to a Holder by the Company under this Section 2 may be transferred or assigned by a Holder only to a transferee or assignee (a) who acquires at least 100,000 shares of Registrable Securities (as adjusted for any stock splits, dividends and the like), (b) who is a Holder of Registrable Securities and already possesses such registration rights or (c) hat is a shareholder, member, partner, officer, director of a Holder or a partnership, corporation, limited liability company or other organization which is controlled by, controls or is under common control with a Holder or its permitted transferees; provided that the Company is given written notice at the time of or within a reasonable time after said transfer or assignment, stating the name and address of the transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned, and, provided, further, that the transferee or assignee assumes the obligations of such Holder under this Section 2. 2.11 "Market Stand-Off" Agreement. In respect of any underwritten public offering by the Company, each Holder hereby agrees that such Holder shall not sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by such Holder (other than those included in the registration) during a reasonable and customary period of time as agreed to by the Company and the underwriters, not to exceed the greater of (a)one hundred eighty (180) days following the effective date of the registration statement of the Company filed under the Securities Act in respect of such offering and (b) such other period of time as agreed to by holders of a majority of the then outstanding Shares, provided that: (i) all officers and directors of the Company and all other Persons with registration rights (whether or not pursuant to this Agreement) enter into similar agreements; and (ii) any discretionary waiver or termination of the restrictions of any such agreement by the Company or representatives of the underwriters shall apply to Holders on a pro rata basis together with any holder of securities other than a Holder. Each Holder agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. The obligations described in this Section 2.11 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of such period. 2.12 Allocation of Registration Opportunities. In any circumstance in which all of the Registrable Securities and Other Shares requested to be included in a registration on behalf of the Holders or other selling stockholders cannot be so included as a result of limitations of the aggregate number of shares of Registrable Securities and Other Shares that may be so included, the number of shares of Registrable Securities and Other Shares that may be so included shall be reduced pro rata amongst all Holders and other selling stockholders on the basis of the number of shares of Registrable Securities to be included in such registration, assuming conversion; provided, however, so that such allocation shall not operate to reduce the aggregate number of Registrable Securities and Other Shares to be included in such registration, if any Holder or other selling stockholders does not request inclusion of the maximum number of shares of Registrable Securities and Other Shares allocated to him pursuant to the above-described procedure, the remaining portion of his allocation shall be reallocated among those requesting Holders and other selling stockholders whose allocations did not satisfy their requests, and this procedure shall be repeated until all the shares of Registrable Securities and Other Shares which may be included in the registration on behalf of the Holders and other selling stockholders have been so allocated. The Company shall not limit the number of Registrable Securities or Other Shares to be included in a registration pursuant to this Agreement in order to include shares held by stockholders with no registration rights or to include other shares of stock issued to employees, officers, directors or consultants, or, with respect to registrations under Section 2.1 or 2.4 hereof, in order to include in such registration securities registered for the Company's own account. 2.13 Termination of Registration Rights. The right of any Holder to request registration or inclusion in any registration pursuant to Section 2.1, 2.2 or 2.4 hereof shall terminate on such date as all shares of Registrable Securities held or entitled to be held upon conversion by such Holder may immediately be sold under Rule 144 during any three (3)-month period. SECTION 3 Miscellaneous 3.1 Aggregation of Stock. All Registrable Securities held or acquired by affiliated entities or Persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 3.2 Governing Law. This Agreement shall be governed in all respects by the laws of the State of California, without regard to the conflicts of law principles thereof. 3.3 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. 3.4 Entire Agreement; Amendment; Waiver. This Agreement (including the schedules and exhibits hereto) constitutes the full and entire understanding and agreement between the parties hereto with regard to the subjects hereof and thereof. Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by the Company and the Holders of at least fifty percent (50%) of the Registrable Securities; and any such amendment, waiver, discharge or termination shall be binding on all the Holders, but in no event shall the obligation of any Holder hereunder be materially increased, except upon the written consent of such Holder. 3.5 Notices, Etc. All notices and other communications required or permitted hereunder shall be in writing and shall be sent by confirmed telex or facsimile, mailed by United States first-class mail, postage prepaid, or delivered personally addressed by hand or special courier (a)if to a Holder, as indicated below the Holder's signature hereto, or at such other address as such Holders or permitted assignee shall have furnished to the Company in writing, or (b) if to the Company, at 5400 Orange Avenue, Suite 200, Cypress, CA 90630, or at such other address as the Company shall have furnished to each Holder in writing. All such notices and other written communications shall be effective (i)if sent by confirmed telex or facsimile, on the day sent if sent during normal business hours of the recipient and, if not, on the next business day, (ii) if mailed, five (5) days after mailing and (iii) if delivered, upon delivery. 3.6 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Holder, upon any breach or default of the Company under this Agreement shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement or any waiver on the part of any Holder of any provisions or conditions of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any Holder, shall be cumulative and not alternative. 3.7 Rights; Severability. Unless otherwise expressly provided herein, any Holder's rights hereunder are several rights, not rights jointly held with any of the other Holders. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 3.8 Information Confidential. Each Holder acknowledges that the information received by such Holder pursuant hereto may be confidential and for such Holder's use only, and such Holder will not use such confidential information in violation of the Exchange Act or reproduce, disclose or disseminate such information to any other Person (other than such Holder's employees or agents having a need to know the contents of such information, and such Holder's attorneys), except in connection with the exercise of rights under this Agreement, unless the Company has made such information available to the public generally or such Holder is required to disclose such information by a governmental body. 3.9 Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. 3.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. IN WITNESS WHEREOF, the parties hereto have executed this Investor's Rights Agreement effective as of the day and year first above written. CYPRESS FINANCIAL SERVICES, INC. By: Name: Title: FBR FINANCIAL FUND II, L.P. By: FBR Financial Fund Management, L.L.C., Title: General Partner By: Friedman, Billings, Ramsey Investment Management, Inc. Title: Managing Member By: Name: Title: Address: 1001 19th Street North Arlington, VA 22209 -----END PRIVACY-ENHANCED MESSAGE-----