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EXHIBIT 10.21
ASSET PURCHASE AGREEMENT
between
B.A.T. Holdings, Inc.
(the "Sellers")
and Xxxxx X.Xxxxx and Xxxx Xxxxxxxx
-----------------------------------
(the "Stockholders")
and
XXXXXXXX AND XXXXXXXX, INC. ("Purchaser")
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TABLE OF CONTENTS
Page
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1. Definitions............................................................................................... 5
2. Sale and Transfer of Assets................................................................................7
3. Assumption of Liabilities..................................................................................7
4. Purchase Price.............................................................................................8
5. Allocation of Purchase Price...............................................................................9
6. Allocation of Expenses....................................................................................10
7. Collection of Accounts Receivable.........................................................................10
8. Closing Deliveries by the Sellers and Stockholders........................................................11
9. Closing Deliveries by Purchaser...........................................................................14
10. Representations and Warranties of the Sellers and the Stockholders........................................15
11. Covenants of the Sellers and the Stockholders.............................................................20
12. Representations and Warranties of Purchaser...............................................................23
13. Covenants of Purchaser...................................................................................24
14. Indemnity by the Sellers and the Stockholders.............................................................25
15. Indemnity by Purchaser....................................................................................26
16. Termination of Agreements.................................................................................26
17. Loss or Destruction.......................................................................................27
18. Conditions Precedent to Purchaser's Obligation to Close...................................................27
19. Conditions Precedent to the Sellers' Obligation to Close..................................................28
20. Additional Post-Closing Responsibilities..................................................................29
21. Notices...................................................................................................32
22. Termination...............................................................................................33
23. General Provisions........................................................................................34
24. Mediation and Arbitration.................................................................................35
25. Confidentiality...........................................................................................36
26. Bulk Transfer Laws........................................................................................37
27. Release by Sellers and Stockholders.......................................................................37
28. Release by Purchaser......................................................................................38
29. Survival of Representations...............................................................................39
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SCHEDULES
Schedule I - Tangible Assets
Schedule 2 - Assumed Contracts
Schedule 3 - List of Receivables to be Delivered at Closing
Schedule 4 - Allocation of Purchase Price
Schedule 5 - Encumbrances
Schedule 6 - Employees
Schedule 7 - Promissory Note
Schedule 8 - Subordination Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into effective
as of this__________ day of__________ , 1996, by and among B.A.T. Holdings,
Inc., an Illinois corporation (the "Sellers"), and Xxxxx X. Xxxxx and Xxxx
Xxxxxxxx (the "Stockholders"), on one hand, and XXXXXXXX AND XXXXXXXX, INC.
("Purchaser"), a Pennsylvania corporation, on the other hand.
RECITALS
WHEREAS Sellers are operating one (1) "Xxxxxxxx Personnel Services" office
(the "Office") pursuant to a certain franchise agreement with Purchaser at the
following location:
Office No. Location of Office. Date of Franchise Agreement,
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F0016 Xxxxxxxx Plaza June 29, 1990
3995 Algonquin
Xxxxxxx Xxxxxxx, XX 00000
WHEREAS, Stockholders are the owners of one hundred percent (100%) of the
issued and outstanding common stock of Sellers;
WHEREAS, Sellers desire to sell, transfer, convey and assign to Purchaser,
and Purchaser desires to purchase, under the terms and conditions set forth
herein, all of the assets of Sellers associated with the Office, including the
trademarks, service marks, and trade names, if any, and the good will
associated with the Office;
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WHEREAS, Sellers' franchise agreement with Purchaser is referred to in
this Agreement as the "Franchise Agreement."
WHEREAS, Purchaser also desires to obtain assignments of certain contracts
and agreements relating to the operation of Sellers' Office and agrees to
assume certain of Sellers' obligations and liabilities.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual promises contained
herein, the parties agree as follows:
1. Definitions. The following words shall have the following meanings when
used in this Agreement:
(a) "Assets" shall mean all of the rights, title and interest of Sellers
in the assets, properties, rights, claims and contracts of every kind,
character and description, whether real or personal, tangible or intangible,
which are used or usable in, or relate to, the operation of the Office, without
regard to whether reflected on the Sellers' financial statements or books.
Specifically excluded from the Assets being sold hereunder are any accounts
receivable of the Sellers related to work performed or services provided
through the close of business of the day immediately prior to the Closing Date.
Assets being acquired by Purchaser are:
(i) the tangible assets set forth and identified as being acquired
by Purchaser in Schedule I to this Agreement;
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(ii) all contracts and relationships of Sellers with clients and
with temporary employees (as those terms are defined in the Franchise
Agreement);
(iii) Sellers' rights in and to the telephone numbers and telephone
directory advertising for the Office, and all other intangible property, trade
secrets, rights under Assumed Contracts (as defined in Section 3), permits, and
licenses associated with the Office;
(iv) any Internet names registered by Sellers;
(v) all of Sellers' trade names, trademarks, or service marks used,
or available for use, in Sellers' business;
(vi) the rights of the Sellers under the assumption of the Lease of
real property relating to the Office (the "Lease");
(vii) all inventory and supplies on hand as of the Closing Date;
(viii) all business papers and records pertaining to the Office,
including but not limited to personnel records (including payroll records)
concerning each employee of the Sellers who will become employed by the
Purchaser after the Closing Date, client records, vendor lists, and operations
manuals; and
(ix) all Placement Receipts, if any, (as that term is defined in
the Franchise Agreement) except for those for which the employee has both been
offered permanent employment by a client and accepted such offer of employment
on or before the Closing Date.
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(b) "Closing" shall mean the events which take place for the purpose of
consummating the transactions contemplated by this Agreement, commencing at
9:00 a.m. on Monday, November 4, 1996, at Chicago, Illinois, or at another
acceptable time and location to which the parties agree; and
(c) "Closing Date" shall mean 12:01 a.m. on Monday, November 4, 1996.
2. Sale and Transfer of Certain Assets. Upon the terms and subject to the
conditions set forth in this Agreement, the Sellers agree to sell, transfer,
assign, grant, convey and deliver the tangible Assets listed on Schedule I and
all other Assets listed in Subsection I(a) to Purchaser on the Closing Date,
free and clear of all mortgages, liens, security interests, pledges, charges
and other encumbrances. Notwithstanding any language that may be stated in this
Agreement, Sellers' accounts receivable as that term is described herein, are
not an Asset being sold, transferred, assigned, granted, or conveyed to
Purchaser.
3. Assumption of Liabilities. Purchaser has not assumed, and shall not
assume, any liability or obligation of any nature, known or unknown, existing
or contingent, of the Sellers, except that, at Closing: (i) Purchaser shall
assume the Lease unless Purchaser notifies Sellers in writing within ten (10)
days of the Closing that Purchaser will not assume the Lease; and (ii) the
other written contracts and obligations specifically identified in Schedule 2
to this Agreement (the "Assumed Contracts"). Sellers shall assume and make
payments for the obligations for unused vacation and unused sick leave, if any,
accrued through the Closing Date by each employee of the Sellers. The Sellers
acknowledge that Purchaser does not assume any obligation in connection with
any actual or alleged breach or default of Lease or Assumed Contracts
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occurring at any time through the Closing Date. Except for the items specified
in clauses (i) and (ii) above, all obligations, liens, encumbrances, and
liabilities of the Sellers shall continue to be the sole responsibility of the
Sellers and Sellers shall hold Purchaser harmless.
4. Purchase Price. In reliance upon the representations and warranties for
the assets named herein, Purchaser shall pay the Sellers Four Million One
Hundred Twenty-Five Thousand Dollars ($4,125,000) (the "Purchase Price") plus
interest as provided in Subsection 4(b)(i) below. The Purchase Price shall be
paid as follows:
(a) At Closing, Purchaser shall pay the Sellers One Million Thirty-Two
Thousand Dollars ($1,032,000) in cash by certified check;
(b) At Closing, Purchaser shall deliver to Sellers a subordinated
promissory note (the "Note") in the amount of Three Million Ninety-Three
Thousand Dollars ($3,093,000). Terms of the Note are as follows:
(i) Interest at prime based upon the prime rate listed in the Wall
Street Journal on the last business day preceding the Closing;
(ii) One (1) payment in the amount of Eight Hundred Eighty-Eight
Thousand Dollars ($888,000) plus interest from the Closing Date to be paid on
January 2, 1997. The payment shall be by certified check sent overnight by the
close of business; and
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(iii) One (1) payment in the amount of Two Hundred Thousand Dollars
($200,000) plus interest from the Closing Date to be paid on February 3, 1997.
The payment shall be by certified check sent overnight by the close of
business.
(c) Twenty (20) equal payments of the remaining principal balance of Two
Million Five Thousand Dollars ($2,005,000), plus interest from the Closing
Date, to be paid quarterly on the last business day of the month beginning on
March 31, 1997, with a final payment to be made on December 31, 2001.
5. Allocation of Purchase Price. In accordance with Section 1060 of the
Internal Revenue Code of 1986, as amended, the Purchase Price shall be
allocated in the manner set forth in Schedule 4 to this Agreement. The Sellers,
the Stockholders, and Purchaser each covenant and warrant to each other that:
(i) in no tax return filed by the parties or any of their respective successors
or assigns shall the allocation of the Purchase Price be treated or reported
inconsistently with or differently from the allocation of the Purchase Price
set forth in Schedule 4, unless such change in allocation is the result of a
determination by a governing authority for that year or a preceding year; and
(ii) in no tax audit, tax examination, tax or compliance review or tax
litigation will the parties or any of their respective successors or assigns
claim or assert that the allocation of the Purchase Price is or should be
inconsistent with or different from that set forth in Schedule 4, unless as a
result of a determination made by a governing authority in a preceding year.
The parties agree to file all appropriate Internal Revenue Service Forms with
their respective Federal income tax returns for their respective tax year in
which the Closing occurs.
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6. Allocation of Expenses. All real estate taxes, personal property taxes,
rents, telephone charges, utilities, and other costs and expenses of owning or
operating the Assets which relate to periods both before and after the Closing
Date (the "Prorated Costs") shall be prorated on a per diem basis as of the
Closing Date, with the Sellers responsible for the portion of all such items
which relates to the period through the Closing Date, and Purchaser responsible
for the portion of all such items which relates to the period after the Closing
Date. Prorated Costs shall be settled between Purchaser and Sellers either at
Closing or as soon as practicable thereafter; and
(a) Any sales tax, use tax, excise tax, transfer tax, recording fee or
other tax or fee imposed on the transfer of the Assets from Sellers to
Purchaser shall be paid by Sellers.
7. Collection of Accounts Receivable. With respect to the accounts
receivable for the placement of employees, Sellers shall be entitled to all
monies owed Sellers, as evidenced by the accounts receivable list at time of
Closing covering all work completed through Friday, October 25, 1996, to be
followed by a subsequent report covering accounts receivable up to Closing,
which shall be due Purchaser by Thursday, November 7, 1996. Purchaser shall be
entitled to all monies received from the generation of accounts receivable
subsequent to November 3, 1996; and
(a) As described above, Sellers shall provide at Closing or immediately
thereafter, a list of placement and temporary accounts receivable due Sellers
on the Closing Date. For ninety (90) days
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subsequent to the Closing, Purchaser shall be responsible for the collection of
such accounts receivable and shall provide Sellers a weekly report accompanied
by all monies due Sellers in accordance with Sellers' Franchise Agreements with
Purchaser except that Sellers shall be responsible for all collection efforts
with inactive clients' accounts receivable which are over sixty (60) days old.
Inactive client shall be defined as a client who has not utilized the services
of Sellers within six (6) months of the Closing Date. Purchaser shall return to
Sellers at the end of the ninety (90) day period all uncollected accounts
receivable for further collection efforts by Sellers. Purchaser shall incur no
liability to Sellers for the uncollectibility of said accounts receivable.
Thereafter, Sellers shall submit to Purchaser monthly reports of all collection
activity accompanied by all monies due Purchaser in accordance with the
provisions of the Franchise Agreement. Sellers shall receive credit for all
collections subsequent to Closing, whether by Sellers or Purchaser, under the
Sales Incentive Program Agreement ("SIP") and shall receive payment in
accordance with SIP; and
(b) Sellers shall have access to all records to assist
Sellers in the collection of certain accounts receivable or for litigation or
government filing purposes.
8. Closing Deliveries by the Sellers and the Stockholders. The Sellers and
the Stockholders agree to execute and deliver at Closing, or cause to be
executed and delivered at Closing, the following:
(a) Such instruments of transfer, assignment and conveyance as shall be
necessary or desirable in the judgment of Purchaser to vest in Purchaser good
and marketable title to the Assets free and
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clear of all mortgages, liens, security interests, pledges, charges and other
encumbrances. Such instruments of transfer shall include:
(i) A Xxxx of Sale from the Sellers, in the form furnished to
the Sellers by Purchaser;
(ii) The written consent of the lessor to the assignment and
assumption of the Lease provided, however, if Sellers cannot obtain any such
assignment and assumption, Sellers shall assign any and all rights they have in
the Lease. Sellers shall indemnify and hold harmless Purchaser from any and all
damages and costs incurred by Purchaser if the lessor rejects the Sellers'
assignment of its rights to Purchaser and either reforms the Lease or
terminates the Lease, so long as lessor's action is based upon the assignment
and not a breach by Purchaser of any of the terms of the Lease Purchaser
accepted from Sellers. Sellers shall use their best efforts to obtain all such
assignments and assumptions;
(iii) Cooperation of parties to receive written consents of third
parties under the Assumed Contracts to the assignment and assumption of the
Assumed Contracts as soon as possible;
(iv) Form UCC-3 termination statements, signed by the creditor, to
cancel any financing statements disclosed in Schedule 5 to this Agreement
(other than financing statements filed in connection with Assumed Contracts);
(v) Unanimous written consents, signed by all Stockholders of the
Sellers, in a form consistent with the Sellers' bylaws and state laws,
approving the transactions contemplated hereunder, and any other duly executed
corporate and other documents which Purchaser may have reasonably requested
hereunder, satisfactory in form and substance, in the reasonable judgment of
Purchaser, and where appropriate certified by the proper corporate or
governmental authorities; and
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(vi) The written consents of any other persons whose approval or
consent to the execution, delivery, and performance of this Agreement by the
Sellers is legally or contractually required.
(b) The originals of the Lease, and (if written) the Assumed Contracts;
(c) A certificate signed by the president of Sellers to the effect that
all representations and warranties of Sellers contained in this Agreement are
true at and as of Closing, that Sellers have performed all agreements on its
part required to be performed hereunder, and that Sellers are not in default
under any of the provisions of this Agreement;
(d) Copies of insurance policies conforming to Subsection 10(m);
(e) A letter to the telephone company servicing Sellers requesting
transfer to Purchaser of the telephone number (including numbers for facsimile
machines and modems) and listings applicable to the Office;
(f) List of accounts receivable as of the Closing Date as provided in
Section 7;
(g) Any names or addresses Sellers have registered for use on the
Internet; and
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(h) No later than five (5) days prior to Closing, Sellers shall submit
to Purchaser such other instruments, documents or affidavits, in form and
substance reasonably acceptable to Purchaser, as may be necessary to effect the
Closing.
9. Closing Deliveries by Purchaser. In addition to delivery of the amount
required under Subsection 4(a) above, Purchaser agrees to execute and deliver
at the Closing, or cause to be executed and delivered at Closing:
(a) Immediately available funds in the amount provided in
Subsection 4(a);
(b) A Promissory Note in accordance with 4(b);
(c) Such instruments as shall be necessary or desirable in the judgment
of the Sellers to effect the assumption by Purchaser of the Lease and the
Assumed Contracts;
(d) Certified copy of resolutions duly adopted by the Board of Directors
of Purchaser authorizing the execution and delivery of this Agreement and
consummation of transactions described herein, which shall be in full force and
effect at the time of delivery;
(e) A certificate signed by the president of Purchaser to the effect
that all representations and warranties of Purchaser contained in this
Agreement are true at and as of Closing, that Purchaser has
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performed all agreements on its part required to be performed hereunder, and
that Purchaser is not in default under any of the provisions of this Agreement;
(f) Written consent from the bank, approving the transactions herein;
(g) Certified copy of resolutions authorizing Xxxxxxx X. Xxxxxxxx to act
or sign documents on behalf of Purchaser as an authorized agent; and
(h) With respect to Lease deposits, Sellers shall not seek nor accept
the return of the Lease deposit, or any part thereof, and Purchaser shall pay
to Sellers at Closing, among other payments, an amount sufficient to cover
Sellers' Lease deposit with Lessor. In the event lessor terminated the Lease
agreement and the termination is based upon the change of lessees, Sellers
shall request return of Lease deposit from lessor and return to Purchaser the
amount received from lessor.
10. Representations and Warranties of the Sellers and the Stockholders.
The Sellers and the Stockholders, jointly and severally, represent and warrant
as follows:
(a) The Sellers have been duly organized and are validly existing and
in good standing under the laws of the State of Illinois;
(b) The Stockholders together own all of the issued and outstanding
stock of the Sellers. The execution, delivery, and performance of this
Agreement have been duly authorized by the Board of
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Directors of the Sellers, and all necessary Stockholders action under the
Sellers' bylaws and Illinois law has been taken for approval of the execution
and delivery of this Agreement by the Sellers, their performance of the terms
of this Agreement, and the consummation of the transactions contemplated
hereunder;
(c) The execution and delivery of this Agreement, the Sellers'
performance hereunder, and the consummation of the transactions herein
contemplated, do not, and to the best of the Stockholders' knowledge will not
immediately or with the passage of time, the giving of notice or otherwise,
result in the breach of, constitute a default or violation under, or accelerate
any obligation under any agreement or other instruments to which either the
Sellers or any of the Stockholders are a party, or may be bound, so as to give
or create any rights in third parties with respect to the Assets;
(d) The Sellers have good title and right to use of all trade names,
trademarks or service marks used or available for use in Sellers' Office, and
neither the Sellers nor the Stockholders have notice of any claim concerning a
violation of or infringement upon the rights of any third party with respect to
the use of any trade name, trademark, service xxxx, copyright or patent;
(e) This Agreement and the other agreements and transactions
contemplated herein to which the Sellers are or will be a party will each, upon
execution and delivery, be a legal, valid, and binding obligation of the
Sellers, enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally;
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(f) Except as disclosed in Schedule 5, the Sellers have good and
marketable title to the Assets free and clear of all mortgages, liens, security
interests, pledges, charges, obligations and other encumbrances;
(g) The Sellers have previously delivered to Purchaser the Sellers'
most recent federal income tax returns, balance sheets as of June 30, 1996,
together with the Sellers' income statements for the fiscal year then ended,
and the interim balance sheets and income statements of the Sellers, June 30,
1996, (collectively, the "Financial Statements"). The Financial Statements
reflect or provide for all material claims against, and all material debts and
liabilities relating to, the Office, fixed or contingent, as of the dates of
the Financial Statements. There has not been any change since the date of the
most recent Financial Statements which materially and adversely affected the
Office or the Assets or the financial condition or results of the operation of
the Sellers. The Financial Statements are true, correct and complete and were
prepared in good faith in accordance with a cash basis of accounting which
system is a comprehensive accounting method used by Sellers;
(h) The Sellers have filed all federal, state, and local tax returns
including income, sales, and payroll, which were required to be filed prior to
the date of this Agreement and have made payment of all taxes shown by those
returns to be due and payable;
(i) The Sellers have all requisite power and all known necessary
permits, certificates, contracts, approvals and other authorizations required
by federal, state, city, county or other municipal
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bodies to own, lease, and use the Assets to operate the Office in the manner in
which they are presently operated;
(j) In connection with the operation of the Office and ownership and
use of the Assets, there are not now and have not been any material failures to
comply with any applicable known local, state or federal laws, regulations,
ordinances or administrative or judicial orders, and no allegations have been
made of any such failure;
(k) Sellers are not subject to any order of any court or governmental
authority; any pending or, to the best of the Sellers' and the Stockholders'
knowledge, threatened action, suit, proceeding, inquiry or investigation at law
or in equity; or any proceeding before any court, arbitrator, public board or
body, in which an unfavorable decision, ruling or finding would, in any way,
prevent the carrying out of this Agreement or any of the transactions
contemplated hereunder, declare unlawful any such transactions, cause such
transactions to be rescinded, have a material adverse effect on the Office or
the financial condition of the Sellers;
(l) Except for the Lease and the Assumed Contracts, and the
encumbrances listed in Schedule 5, there are no agreements, Lease, contracts,
charges, encumbrances or restrictions which may restrict Purchaser's use or
right to use any of the Assets or which create obligations for which Purchaser
could be liable;
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(m) The Sellers have maintained liability insurance for any claims
which may have arisen or cause of action which may have accrued during Sellers'
ownership and/or operation of the Assets and the Office. Such liability
insurance is of the "occurrence" type, so that if the policies are discontinued
by the Sellers after the Closing Date, liability insurance coverage will
nevertheless continue (subject to the terms and conditions of such policies)
with respect to such claims and causes of action;
(n) Neither this Agreement nor any Exhibit, Schedule, or attachment
hereto, nor any certificate or other information or document furnished by or on
behalf of the Sellers or the Stockholders knowingly contains any untrue
statement of a material fact, or knowingly omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading;
(o) Schedule 6 to this Agreement is a list of all persons currently
employed by the Sellers. Schedule 6 accurately and completely shows the listed
employees' current rates of compensation. Sellers have no employment agreements
with any of its employees which Purchaser will be required to assume and has no
oral or written understandings with any of its employees which relate to terms
or conditions of such employee's employment which Purchaser will be required to
assume. Purchaser has agreed to employ under employment at will agreements for
Sellers' staff employees; and
(p) The Sellers have no pension sharing plans or employee benefit plans
(as that term is defined in the federal law commonly known as the Employees'
Retirement Income Security Act, as amended) for any of its employees, which
Purchaser will be required to assume.
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11. Covenants of the Sellers and the Stockholders. The Sellers and the
Stockholders covenant that, between the date of this Agreement and the Closing,
they will:
(a) Carry on the business of the Office in the ordinary course;
(b) With Sellers' approval which will not be unreasonably withheld and
subject to any attorney client privilege, give Purchaser and its attorneys,
auditors and other representatives full access during normal business hours to
the Office and to the properties, books, contracts, commitments and records
pertaining to the Office;
(c) With Sellers' approval which will not be unreasonably withheld and
subject to any attorney client privilege, provide Purchaser with access to such
information concerning the affairs of the Office as Purchaser may reasonably
request, including authorizing the Sellers' auditors, attorneys and other
representatives to cooperate with Purchaser's auditors and attorneys and other
representatives and authorizing the Sellers' auditors to give Purchaser's
auditors full access to their files and working papers with respect to the
Office;
(d) Do all reasonable things and cause all reasonable things to be done
to ensure that the warranties and representations of the Sellers and the
Stockholders contained in this Agreement remain true and correct throughout the
period until Closing, as if such representations and warranties were
continuously made throughout such period;
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(e) Not enter into any new contracts, commitments or transactions
pertaining to the Office, except in the ordinary course of business;
(f) Not sell, agree to sell, or otherwise dispose of any of the Assets
(other than supplies used or sold in the ordinary course of business), without
the prior written consent of Purchaser;
(g) Use best efforts to obtain the releases of all mortgages, liens,
security interests, pledges, charges, obligations, and other encumbrances set
forth in Schedule 5;
(h) Not create or assume any new pledge, lien, or encumbrance with
respect to the Assets;
(i) Maintain the Assets in as good repair, order, and condition as they
were in as of the date of this Agreement, reasonable wear and use and damage by
fire, acts of God, or other casualty excepted;
(j) Not incur any indebtedness, obligations, or liability with respect
to the Office or Assets or make any payment in respect thereof, except in the
ordinary course of business;
(k) Pay, satisfy, and discharge the current obligations and liabilities
of the Office in the ordinary course of business, including but not limited to
royalties accruing under the Franchise Agreements and any other amounts payable
to Purchaser and its affiliates;
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(l) File all federal, state, and local tax returns which become due
prior to the Closing, and pay all taxes shown by those returns to be due and
payable, together with any interest or penalties which may be assessed by
taxing authorities on any taxes which were not timely paid;
(m) Maintain or cause to be maintained in full force and effect all of
the fire and other insurance on property and all of the liability and other
casualty insurance (including any bonds on personnel) that was in effect with
respect to the Office as of the date of this Agreement;
(n) Use reasonable efforts to preserve intact the Sellers' business
organization and the goodwill of the Sellers' Clients and suppliers;
(o) Conduct advertising and promotion for the Office consistent with
the amount and type of such advertising and promotion conducted during the
twelve months prior to the date of this Agreement;
(p) Maintain the books of account and records of the Office in the
usual manner;
(q) Promptly, at Purchaser's request, join and cooperate in any
application which Purchaser may make in order to ensure the timely transfer of
any licenses, permits, or certificates to Purchaser at Closing;
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(r) Promptly advise Purchaser in writing of any material adverse change
with respect to the Office, the Assets, or the financial condition of the
Sellers; and
(s) Deliver to Purchaser prompt written notice of any event or
condition known to either the Sellers or to any of the Stockholders which, if
it had existed on the date of execution of this Agreement, would have
constituted a breach of any of their representations and warranties under this
Agreement.
12. Representations and Warranties of Purchaser. Purchaser represents and
warrants as follows:
(a) Purchaser has been duly organized and is validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. Purchaser is
qualified to do business and is in good standing under the laws of the State of
Texas, where it has its headquarters. Purchaser's wholly owned subsidiary
Advance Processing Systems, Inc. is qualified to do business and is in good
standing under the laws of the State of Illinois;
(b) The execution, delivery and performance of this Agreement have been
duly authorized by the Board of Directors of Purchaser, and Purchaser has the
complete and unrestricted power and authority to, and has taken all corporate
action necessary to enter into, execute and deliver this Agreement and to
perform all of its obligations hereunder and to consummate all transactions
contemplated herein; and
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(c) This Agreement and the other agreements and transactions
contemplated herein to which Purchaser is or will be a party will each, upon
execution and delivery, be a legal, valid and binding obligation of Purchaser
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally. This Agreement does not conflict with any other
agreement affecting Purchaser.
13. Covenants of Purchaser. Purchaser covenants that, between the date
of this Agreement and the Closing:
(a) Purchaser will offer to hire the employees of the Sellers
listed on Schedule 6, subject to Purchaser's ordinary pre-employment and
post-employment standards and conditions, at rates of pay and with benefits
consistent with those of similarly-situated employees of Purchaser. Purchaser
shall have no obligation to offer employment to any specific individual listed
in Schedule 6 who does not meet Purchaser's ordinary standards and conditions,
or to offer any individual on Schedule 6 pay or benefits comparable to those
identified in such Schedule. Purchaser assumes no liability for any wages or
other benefits (including but not limited to bonuses, vacations, sick leave,
retirement benefits, and medical benefits) accrued by any person listed in
Schedule 6 during such person's employment by the Sellers. Purchaser shall
recognize the original date of hire of employees shown on Schedule 6 and
employed after Closing by Purchaser for purpose of service related benefits by
Purchaser;
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(b) Purchaser shall use reasonable efforts to assist the Sellers in
obtaining necessary consents and approvals to the assignment of the Lease and
the Assumed Contracts and any other rights which are to be assumed by Purchaser
in accordance with this Agreement;
(c) Purchaser shall make applications to such governmental authorities
and agencies as Purchaser deems appropriate to ensure that licenses, permits,
and certificates held by the Sellers are transferred to Purchaser as of the
Closing, and at the request of the Sellers shall join and cooperate in any such
application which the Sellers may make; and
(d) Purchaser shall do all reasonable things and cause all reasonable
things to be done to ensure that the warranties and representations of
Purchaser contained in this Agreement remain true and correct throughout the
period until Closing, as if such representations and warranties were
continuously made throughout such period.
14. Indemnity by the Sellers and the Stockholders. Without limiting any of
their other obligations under this Agreement, the Sellers and the Stockholders,
individually agree to indemnify and hold harmless Purchaser and its affiliates,
Officers, directors, Stockholders and employees against and from any loss,
liability, damages, cost or expense incurred by them (including, but not
limited to, reasonable attorneys' and accounting fees and expenses) based upon,
arising out of, or relating to: (i) any materially inaccurate, untruthful or
erroneous representation or warranty of the Sellers or the Stockholders set
forth in this Agreement or any certificate or document delivered pursuant to Ns
Agreement; (ii) any material failure
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to perform with respect to any of the covenants, conditions or agreements of
the Sellers or the Stockholders set forth in this Agreement, or any transaction
contemplated in this Agreement, except that each Stockholder shall be liable to
Purchaser only for Sellers' or such Stockholders' individual conduct and
compliance with the non-compete provisions of this Agreement subsequent to the
Closing; or (iii) the ownership or operation of the Office through the Closing
Date.
15. Indemnity by Purchaser. Purchaser agrees to indemnify and hold
harmless the Sellers and the Stockholders against and from any loss, liability,
damages, cost or expense incurred by them (including but not limited to
reasonable legal, attorneys' and accounting fees and expenses) based upon,
arising out of, or relating to: (i) any breach of any representation or
warranty of Purchaser set forth in this Agreement or any certificate or
document delivered pursuant to this Agreement; (ii) the breach of any covenant
or agreement of Purchaser set forth in this Agreement; or (iii) the ownership
or operation of the Office after the Closing Date.
16. Termination of Agreements.The Sellers and the Purchaser agree, that
upon completion of the Closing, the Franchise Agreements and any other
agreements relating to the Franchise will terminate without separate notice to
any party as of the Closing Date, subject to the post-termination obligations
of the Sellers and Purchaser under the Franchise Agreement and any other
agreements, including but not limited to SIP. If the parties fail to Close for
any reason, the Franchise Agreement, SIP Agreement, and any other agreements
thereto, shall remain in full force and effect in accordance with their terms.
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17. Loss or Destruction. Sellers shall continue to own and operate the
Offices until the Closing Date. Sellers shall assume all risk of loss,
destruction, or damage due to fire or other casualty until such date. Purchaser
shall have the right to cancel this Agreement if the Offices are interrupted
prior to said date by loss, destruction, or damage due to fire or other
casualty. If Purchaser does not exercise its right to cancel, as stated herein,
Purchaser shall take the Assets in the existing condition, together with any
insurance proceeds payable by virtue of such loss or damage.
18. Conditions Precedent to Purchaser's Obligation to Close. The
obligation of Purchaser to consummate the transactions herein contemplated is,
at Purchaser's option, subject to the following express conditions precedent:
(a) The Assets shall be free and clear of all mortgages, liens,
security interests, pledges, charges, obligations and other encumbrances;
(b) The representations and warranties of the Sellers and the
Stockholders contained in this Agreement shall be true in all material respects
at and as of Closing, as though such representations and warranties had been
made at and as of the Closing;
(c) The Sellers and the Stockholders shall have delivered all of the
items to be delivered by them to Purchaser at Closing pursuant to Subsection 8
above, and shall not be in default under any other provision of this Agreement
at or prior to Closing;
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(d) The Assets shall not have been damaged as the result of any act of
God, fire, flood, war, labor disturbance or similar calamity (unless Purchaser
has waived the event), and there shall have been no material adverse changes in
the Assets, the Office, or the financial condition of the Sellers since the
execution of this Agreement;
(e) Purchaser has obtained approval of its Senior Lenders for this
transaction; and
(f) Sellers shall have delivered to Purchaser executed UCC-3 statements
for any liens on Sellers' Assets.
19. Conditions Precedent to the Sellers' Obligation to Close. The
obligation of the Sellers to consummate the transactions contemplated herein at
Closing is, at the option of the Sellers, subject to the following express
conditions precedent:
(a) The representations and warranties of Purchaser contained in this
Agreement were true when made and shall be true in all material respects at and
as of Closing, as though such representations and warranties had been made at
and as of Closing; and
(b) Purchaser shall have delivered all of the items to be delivered by
it to the Sellers and the Stockholders at Closing pursuant to Subsection 9
above, and shall not be in default under any other provisions of this Agreement
at or prior to Closing.
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20. Additional Post-Closing Responsibilities. The parties shall comply
with the following obligations after the Closing:
(a) At Purchaser's request, without further consideration, the Sellers
and the Stockholders will execute and deliver after Closing such further
instruments of conveyance and transfer and take such other action as Purchaser
may reasonably require for the transfer of the Assets;
(b) At the request of Sellers, without further consideration, Purchaser
will execute and deliver after Closing such further evidence as the Sellers may
reasonably require of Purchaser's assumption of the Lease and the Assumed
Contracts;
(c) For ninety (90) days after the Closing Date at Purchaser's requests
the Sellers and the Stockholders shall assist Purchaser in every reasonable
manner in billing and collection efforts and in maintaining the business
relationships presently enjoyed by the Sellers and the Stockholders with
respect to the Office;
(d) Except for assisting Professional Staffing Services initially in
the implementation of Spectrum Software, the Sellers and the Stockholders agree
that for a period of three (3) years after the Closing Date, they will not,
directly or indirectly:
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(i) own, operate, manage, be employed by, engage in, provide
assistance to, or have a financial interest in any temporary employment
services business, permanent placement business, or similar business within the
county(s) of Xxxx, DuPage. and McHenry in the State of Illinois and within the
county(s) of Kalamazoo , in the State of Michigan, so long as Purchaser, or a
person or entity deriving title from Purchaser to operate the Office, continues
to operate the Office. For purposes of this provision "temporary employment
services business" includes, but is not limited to, "employee leasing,"
"temp-to-hire," and "contract temporary" services;
(ii) solicit employment services business from any client with
whom the Office did business, if such client placed an order with Sellers
within the three (3) year period prior to the Closing Date; or
(iii) for a period of three (3) years employ or seek to employ any
employee of the Office or Purchaser or in any other manner attempt, directly or
indirectly, to influence, induce or encourage any employee to leave the
employment of the Office or Purchaser.
(e) Within fourteen (14) days subsequent to Closing, Sellers shall
provide to Purchaser an affidavit stating that all state and local taxes due
through the Closing Date have been paid. Sellers shall timely file all federal,
state and local tax returns relating to the period through the Closing Date
which become due after the Closing Date; shall timely pay all taxes shown by
such returns to be due and payable, together with any interest or penalties
which may be assessed by taxing authorities on any taxes which were not timely
paid; and shall deliver to Purchaser copies of all tax clearance letters and
closing notices received from government authorities which relate to the
Office; and
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(f) Provide Sellers with the quarterly compliance report provided
Purchaser's senior lenders in accordance with Purchaser's loan agreement,
contemporaneous with submission to the senior lenders.
(g) (i) Sellers and Xxxxx X. Xxxxx ("Xxxxx") hereby each acknowledges,
covenants, agrees and authorizes, that if Xxxxx breaches or causes Sellers to
breach Subsection 20(d) of this Agreement, Purchaser shall have the right to
withhold payment under the Rolling Xxxxxxx Note, the Kalamazoo Note, the Des
Plaines Note and all other amounts otherwise payable by Purchaser to Sellers
and the Stockholders, whether or not evidenced by a note (collectively, the
"Note Amounts"); and upon determination of the amount of any damages sustained
by Purchaser because of such breach of Subsection 20(d), Purchaser shall have
the right to offset and retain such damages against an aggregate amount, which
shall equal fifty percent (50%) of the aggregate amount of all outstanding
principal due and owing under and pursuant to the Note Amounts.
(ii) Sellers and Xxxx Xxxxxxxx ("Xxxxxxxx") hereby each
acknowledges, covenants, agrees and authorizes, that if Xxxxxxxx breaches or
causes Sellers to breach Subsection 20(d) of this Agreement, Purchaser shall
have the right to withhold payment under the Rolling Xxxxxxx Note, the
Kalamazoo Note, the Des Plaines Note and all other amounts otherwise payable by
Purchaser to Sellers and the Stockholders, whether or not evidenced by a note
(collectively, the "Note Amounts"); and upon determination of the amount of any
damages sustained by Purchaser because of such breach of Subsection 20(d),
Purchaser shall have the right to offset and retain such damages against an
aggregate amount,
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which shall equal fifty percent (50%) of the aggregate amount of all
outstanding principal due and owing under and pursuant to the Note Amounts.
(iii) Sellers and Stockholders each hereby further acknowledge,
covenant and agree that Purchaser shall retain the above-stated rights of
offset and that Purchaser shall not be in breach of the terms of this Agreement
until resolution of the breach of Subsection 20(d) occurs, whether by
agreement, compromise, settlement or final unappealable judgment.
(iv) The withholding of Note payments to either or both
Stockholders and the establishment of actual damages shall be in addition to
all other rights of Purchaser whether at law or in equity.
21. Notices. All notices pursuant to this Agreement shall be sent in
writing to addresses set forth below, unless changed by written notice in
accordance with this Section 21. Any notice sent by telecopy shall be confirmed
by mail.
To Sellers and/or the Stockholders: XXXXX XXXXX
00000 XXXX XXXXXXX XXXXX
XXXXXXX, XXXXXXXX 00000
XXXX XXXXXXXX
000 XXXX XXXXX
XXXXXXXX, XXXXXXXX 00000
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To Purchaser:
XXXXXXXX AND XXXXXXXX, INC.
00000 X. XXXXXXX XXXXXXXXXX
XXXXX 000
XXXXXX, XXXXX 00000
ATTN: XXXXXXX X. XXXXXXXX
Telecopy No.: (000)000-0000
22. Termination. (a) The Sellers or Purchaser may terminate this Agreement
by written notice
to the other in the event the transactions contemplated herein have not closed
by November 15, 1996; and
(b) This Agreement may also be terminated at any time prior to the
Closing date:
(i) By mutual consent of Purchaser and Sellers;
(ii) By the Purchaser, if any of the conditions of its
obligations hereunder shall not have been satisfied at or prior to the Closing
on the Closing Date and shall not have been waived by it; and
(iii) By the Sellers, if any of the conditions of its
obligations hereunder shall not have been satisfied at or prior to the Closing
on the Closing Date, or if the senior lender approval by this Agreement shall
not have been obtained by Purchaser and the requirements shall not have been
waived by it.
(c) Such notice of termination shall be effective as to all parties
to this Agreement, whether or not they receive notice individually. If this
Agreement is terminated by the Sellers or by Purchaser for the reason stated
above without consummation of the transactions contemplated herein, such
termination shall be without liability or further obligation by any party to
any other party to this Agreement.
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23. General Provisions. (a) Each party shall bear its own legal and other
costs and expenses in connection with the negotiation, preparation and
execution of this Agreement, and the performance of the transactions
contemplated hereby;
(b) This Agreement and the documents referred to herein constitute
the entire agreement among the parties with respect to the sale and purchase of
the Assets and supersede all previous written or oral negotiations,
commitments, and writing concerning the same subject matter;
(c) This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument;
(d) This Agreement may be amended only in writing and executed by
all of the parties;
(e) This Agreement will inure to the benefit of, and bind, the
respective heirs, personal representatives, successors and permitted assigns of
the parties;
(f) The parties represent that no person is entitled to any
brokerage commission, finder's fee, or any other like payment in connection
with any transaction contemplated by this Agreement, by reason of the action of
any party to this Agreement; and
(g) This Agreement shall be governed by the laws of the State of
Texas.
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24. Mediation and Arbitration. THE PARTIES AGREE THAT ANY AND ALL DISPUTES,
CLAIMS OR CONTROVERSIES ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
SUBMITTED TO J.A.M.S/ENDISPUTE, OR ITS SUCCESSOR, FOR MEDIATION, AND IF THE
MATTER IS NOT RESOLVED THROUGH MEDIATION, THEN IT SHALL BE SUBMITTED TO
J.A.M.S./ENDISPUTE, OR ITS SUCCESSOR, FOR FINAL AND BINDING ARBITRATION. EITHER
PARTY MAY COMMENCE MEDIATION BY PROVIDING TO J.A.M.S/ENDISPUTE, AND THE OTHER
PARTY A WRITTEN REQUEST FOR MEDIATION, SETTING FORTH THE SUBJECT OF THE DISPUTE
AND THE RELIEF REQUESTED. THE PARTIES WILL COOPERATE WITH J.A.M.S/ENDISPUTE AND
WITH ONE ANOTHER IN SELECTING A MEDIATOR FROM J.A.M.S/ENDISPUTE'S PANEL OF
NEUTRALS, AND IN SCHEDULING THE MEDIATION PROCEEDINGS. THE PARTIES COVENANT
THAT THEY WILL PARTICIPATE IN THE MEDIATION IN GOOD FAITH, AND THAT THEY WILL
SHARE EQUALLY IN ITS COSTS. AR OFFERS, PROMISES, CONDUCT AND STATEMENTS,
WHETHER ORAL OR WRITTEN, MADE IN THE COURSE OF THE MEDIATION BY ANY OF THE
PARTIES, THEIR AGENTS, EMPLOYEES, EXPERTS AND ATTORNEYS, AND BY THE MEDIATOR OR
ANY J.A.M.S/ENDISPUTE EMPLOYEES, ARE CONFIDENTIAL, PRIVILEGED AND INADMISSIBLE
FOR ANY PURPOSE, INCLUDING IMPEACHMENT, IN ANY ARBITRATION OR OTHER PROCEEDING
INVOLVING THE PARTIES, PROVIDED THAT EVIDENCE THAT IS OTHERWISE ADMISSIBLE OR
DISCOVERABLE SHALL NOT BE RENDERED INADMISSIBLE OR NON-DISCOVERABLE AS A RESULT
OF ITS USE IN THE MEDIATION. THE PARTIES AGREE THAT ANY AND ALL DISPUTES,
CLAIMS OR CONTROVERSIES ARISING OUT OF OR RELATING TO THIS AGREEMENT THAT ARE
NOT RESOLVED BY THEIR MUTUAL AGREEMENT OR MANDATORY OR REASONABLE MEDIATION SET
FORTH ABOVE, SHALL BE SUBMITTED TO FINAL AND BINDING ARBITRATION BEFORE
J.A.M.S/ENDISPUTE, OR ITS SUCCESSOR, PURSUANT TO THE UNITED STATES ARBITRATION
ACT, 9 U.S.C. SEC. 1 ET SEQ. EITHER PARTY MAY COMMENCE THE ARBITRATION PROCESS
CALLED FOR IN THIS AGREEMENT BY FILING A WRITTEN DEMAND FOR
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ARBITRATION WITH J.A.M.S/ENDISPUTE, WITH A COPY TO THE OTHER PARTY. THE
ARBITRATION WILL BE CONDUCTED IN ACCORDANCE WITH THE PROVISION OF
J.A.M.S/ENDISPUTE'S COMPREHENSIVE ARBITRATION RULES AND PROCEDURES IN EFFECT AT
THE TIME OF FILING OF THE DEMAND FOR ARBITRATION. THE PARTIES WILL COOPERATE
WITH J.A.M.S/ENDISPUTE AND WITH ONE ANOTHER IN SELECTING AN ARBITRATOR FROM
J.A.M.S/ENDISPUTE'S PANEL OF NEUTRALS, AND IN SCHEDULING THE ARBITRATION
PROCEEDINGS. THE PARTIES COVENANT THAT THEY WILL PARTICIPATE IN THE ARBITRATION
IN GOOD FAITH, AND THAT THEY WILL SHARE EQUALLY IN ITS COSTS. THE PROVISIONS OF
THIS PARAGRAPH MAY BE ENFORCED BY ANY COURT OF COMPETENT JURISDICTION, AND THE
PARTY SEEKING ENFORCEMENT SHALL BE ENTITLED TO AN AWARD OF ALL COSTS, FEES AND
EXPENSES, INCLUDING ATTORNEYS FEES, TO BE PAID BY THE PARTY AGAINST WHOM
ENFORCEMENT IS ORDERED.
25. Confidentiality. Neither Purchaser nor Sellers, nor any of their
respective Stockholders, affiliates, Officers, employees, agents or
representatives shall: (a) make any press releases or any published statement
concerning the transactions contemplated herein without the prior written
consent of all of the parties hereto, which consent shall not be withheld where
such press releases or statement is required by applicable law; or (b) disclose
the terms or existence of this Agreement to any person or entity, other than to
their respective attorneys and other representatives, and to those parties such
as bankers and lessors with whom they must communicate in order to consummate
the proposed transactions. Purchaser and Sellers shall be permitted to discuss
the transactions contemplated herein with their respective suppliers and
vendors, provided that they instruct such suppliers and vendors to keep all
such communications confidential.
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26. Bulk Transfer Laws. The parties waive compliance with the requirements
of the bulk transfer or bulk sales law of any jurisdiction in connection with
the sale of the Assets to Purchaser under this Agreement. Sellers shall
indemnify and hold Purchaser harmless against any and all losses incurred by
Purchaser as a result of noncompliance with any such laws.
27. Release by Sellers and Stockholders. The Sellers and each Stockholder,
for themselves and on behalf of their officers, directors, employees,
successors, representatives, and agents, do hereby irrevocably and
unconditionally release, acquit, and forever discharge (the "Release")
Purchaser, its officers, directors, stockholders, employees, successors,
representatives, and agents from any and all claims, debts, damages, demands,
liabilities, suits in equity, complaints, grievances, obligations, promises,
agreements, rights, controversies, consents, losses, damages, attorneys' fees
and expenses, punitive damages and other compensation, suits, appeals, actions,
and causes of actions, of whatever kind of character, whether heretofore or
hereafter accruing, whether known or unknown, suspected or unsuspected,
specified or unspecified, fixed or contingent, liquidated or unliquidated, for
or because of any matter or thing done, omitted, or suffered to be done by,
Purchaser, its officers, directors, stockholders, employees, successors,
representatives, and agents, for any incidents, including those past and
present, which may have existed prior to, or contemporaneously with, the
execution of this Agreement, or subsequent to the execution of this Agreement
if arising out of conduct occurring before the execution of this Agreement. The
Sellers and each Stockholder hereby represent that nothing which is released
hereunder has been transferred, assigned, or given away prior to the date
hereof to any person, firm, or entity.
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(a) It is the intention of the Sellers and each Stockholder in
executing this Agreement that the Release shall be effective as a bar to each
and every claim, demand, and cause of action hereinabove specified, and the
Sellers and each Stockholder hereby knowingly and voluntarily waive any and all
rights and benefits. The Sellers and each Stockholder expressly consent that,
this release shall be given full force and effect according to each and all of
its express terms and provisions, including those relating to unknown and
unspecified claims, demands, and causes of action. The Sellers and each
Stockholder acknowledge and agree that this waiver is an essential and material
term of the Release of this Agreement and without the waiver of transaction
contemplated by this Agreement would not be consummated.
28. Release by Purchaser. The Purchaser, for itself and on behalf of their
officers, directors, employees, successors, representatives, and agents, do
hereby irrevocably and unconditionally release, acquit, and forever discharge
(the "Release") the Sellers and Stockholders, its officers, directors,
employees, successors, representatives, and agents from any and all claims,
debts, damages, demands, liabilities, suits in equity, complaints, grievances,
obligations, promises, agreements, rights, controversies, consents, losses,
damages, attorneys' fees and expenses, punitive damages and other compensation,
suits, appeals, actions, and causes of actions, of whatever kind of character,
whether heretofore or hereafter accruing, whether known or unknown, suspected
or unsuspected, specified or unspecified, fixed or contingent, liquidated or
unliquidated, for or because of any matter or thing done, omitted, or suffered
to be done by, the Sellers and Stockholders, its officers, directors,
employees, successors, representatives, and agents, for any incidents,
including those past and present, which may have existed prior to, or
contemporaneously with, the execution of this Agreement, or subsequent to the
execution of this Agreement if arising out of conduct occurring
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before the execution of this Agreement. The Purchaser hereby represents that
nothing which is released hereunder has been transferred, assigned, or given
away prior to the date hereof to any person, firm, or entity.
(a) It is the intention of the Purchaser in executing this
Agreement that the Release shall be effective as a bar to each and every claim,
demand, and cause of action hereinabove specified, and the Purchaser hereby
knowingly and voluntarily waives any and all rights and benefits. The Purchaser
expressly consents that, this release shall be given full force and effect
according to each and all of its express terms and provisions, including those
relating to unknown and unspecified claims, demands, and causes of action. The
Purchaser acknowledges and agrees that this waiver is an essential and material
term of the Release of this Agreement and without the waiver of transaction
contemplated by this Agreement would not be consummated.
29. Survival of Representations. All representations, warranties and
agreements made by the parties hereto, shall survive Closing.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
under seal of the date first written above.
B.A.T. HOLDINGS, INC. Stockholders:
By: By:
--------------------------------- -------------------------
Xxxxx X. Xxxxx Xxxxx X. Xxxxx
President
By:
-------------------------
Xxxx Xxxxxxxx
XXXXXXXX AND XXXXXXXX, INC.
By:
---------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President
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