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EXHIBIT 10.8
AGREEMENT
This Nonqualified Stock Option Agreement ("Agreement") dated as of April
25, 1996 by and between COMPLETE BUSINESS SOLUTIONS, INC. ("Company"), a
Michigan corporation, having an office at 00000 Xxxx 00 Xxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000 and XXXXXXX X. LAND ("Holder"), an individual.
W I T N E S S E T H :
WHEREAS, the Company is a privately held Subchapter S corporation;
WHEREAS, the Company has the authority to issue additional shares of the
Company's common stock (all of the Company's shares of common stock being
hereinafter referred to as "Common Stock");
WHEREAS, Holder has provided valuable services to the Company, including,
without limitation, serving as a director on its Board of Directors;
WHEREAS, the Company desires to document its previous commitment to xxxxx
Xxxxxx an option to purchase a portion of the Company's Common Stock, upon the
price, terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the terms and covenants contained
herein, and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Option.
Holder shall have the right, at his sole and absolute option, to purchase
on terms and conditions hereinafter set forth, all or any part of the aggregate
of 40 shares of Common Stock of the Company (collectively, the "Option Shares")
at the purchase price of $25,000 per share (the "Option Price"). Such right is
hereinafter referred to as the "Option".
2. Exercise; Expiration Date.
(a) EXERCISE: The Option shall be exercisable in full on and after one
year from the date of grant, so that from and after October 27, 1996 the Holder
may purchase all of the Option Shares. If the Company files a registration
statement under the Securities Act of 1933 for an initial public offering of
its Common Stock Holder may purchase all of the Option Shares at such time or
any time thereafter. The Option may be exercised in whole or in part, at the
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option of Holder, on or before the Expiration Date (hereinafter defined) by
delivering to the Company written notice of Holder's exercise ("Exercise
Notice") stating the amount of Option Shares to be purchased thereby,
accompanied by either (i) a check ("Check") made payable to the order of the
Company for the aggregate sum due for the Option Shares then being purchased,
or (ii) notice to the Company that Holder elects to borrow the funds for such
purchase in accordance with Paragraph 5 below ("Loan Notice"). As soon as
practicable thereafter, and in any event within ten (10) business days of the
Company's receipt of the Exercise Notice and either a Check or a Loan Notice,
the Company shall issue and deliver to Holder a certificate representing the
Option Shares being purchased pursuant to such Exercise Notice. Each such
certificate shall bear the legend or legends required by applicable securities
laws as well as such other legends the Company requires to be included on
certificates for its Common Stock. Such certificate or certificates shall be
deemed to have been issued and Holder or any other persons so designated to be
named therein shall be deemed for all purposes to have become a holder of
record of such shares as of the date the Exercise Notice or Loan Notice is
delivered to the Company. In the case of an exercise for less than all of the
Option Shares permitted to be purchased hereunder, the Holder shall reserve the
right to exercise the Option at any time and from time to time prior to the
Expiration Date for the remainder of the Option Shares.
(b) EXPIRATION DATE: The term "Expiration Date" shall mean ten (10)
years from the date hereof, at 5:00 P.M. Detroit time on such date or if such
date shall be a federal holiday, a Saturday or a Sunday, then 5:00 P.M. Detroit
time the next following day which is not a federal holiday, a Saturday or a
Sunday.
3. Registration Rights.
(a) If the Company determines that it shall file a registration
statement under the Securities Act of 1933 (the "1933 Act") for an initial
public offering of its Common Stock, at such time the Company shall promptly
give Holder written notice of such determination setting forth the date on
which the Company proposes to file such registration statement, which date
shall be no earlier than forty-five (45) days after the date of such notice,
and advising Holder of its right to have its Option Shares included in such
registration, if Holder has exercised its Option or exercises the Option in
conjunction with expressing its intent to participate in the registration. Upon
the written request of Holder received by the Company by the date set forth in
the notice, which such date shall be no later than twenty-five (25) days after
the date of the Company's notice, the Company shall use its best efforts to
cause to be registered under the 1933 Act all of the Option Shares that Holder
has so requested to be registered. If, in the good faith written opinion of the
managing underwriter or underwriters (or, in the case of a non-underwritten
offering, in the good faith written opinion of the placement agent, or if there
is none, the Company) the total amount of such securities to be so registered,
including the Option Shares, will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to the then
current market value of such securities, or (ii) without otherwise materially
and adversely affecting the entire offering, then the amount of Option Shares
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to be offered for the account of Holder shall be reduced pro rata to the extent
necessary to reduce the total amount of securities to be included in such
offering to the recommended amount; provided, however, that if securities are
being offered for the account of other persons as well as the Company, such
reduction shall not represent a greater fraction of the number of securities
intended to be offered by Holder than the fraction of similar reductions
imposed on such other persons other than the Company over the amount of
securities they intended to offer. Such an offering which does not include all
or any portion of the Option Shares shall be referred to herein as a "Non
Option Share Registration", and the Option Shares not included in such an
offering shall be hereinafter referred to as the "Non-Registered Option
Shares".
(b) Commencing six (6) months after the date of the closing of the
Non-Option Share Registration, Holder may make a written request to the Company
that the Company file a registration statement under the 1933 Act (or a similar
document pursuant to any other statute then in effect corresponding to the 0000
Xxx) covering the registration of the Non-Registered Option Shares. In such
event, the Company shall use its best efforts to cause to be registered under
the 1933 Act all Non-Registered Option Shares that the Holder has requested be
registered.
(c) If the Holder intends to distribute the Non-Registered Option
Shares covered by its request by means of an underwritten offering, it shall so
advise the Company. Such underwriter or underwriters shall be selected by the
Holder and shall be approved by the Company, which approval shall not be
unreasonably withheld or delayed; provided, that all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
Holder and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement shall be conditions
precedent to the obligations of Holder; and provided further, that Holder shall
not be required to make any representations or warranties to or agreements with
the Company or the underwriters other than representations, warranties or
agreements regarding Holder, the Non-Registered Option Shares and Holder's
intended method of distribution and any other representation required by law or
reasonably required by the underwriter.
(d) Whenever required under Paragraph 3(b) hereto to use its best
efforts to effect the registration of any Non-Registered Option Shares, the
Company shall, as expeditiously as possible:
(i) prepare and file with the Securities and Exchange Commission
("Commission"), as soon as practicable after receipt of a request to file a
registration statement with respect to such Non-Registered Option Shares, a
registration statement and use its best efforts to cause such registration
statement to become effective as promptly as practicable thereafter;
provided that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company will (1) furnish to counsel
selected by Holder copies of all such documents proposed to be filed, and
(2) notify
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Holder of any stop order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to
remove it if entered;
(ii) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of not less than one hundred twenty (120) days or such shorter period which
will terminate when all Non-Registered Option Shares covered by such
registration statement have been sold (but not before the expiration of the
forty (40) or ninety (90) day period referred to in Section 4(3) of the 1933
Act and Rule 174 thereunder, if applicable), and comply with the provisions of
the 1933 Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(iii) furnish to Holder and any applicable underwriter copies of such
registration statement as filed and each amendment and supplement thereto, the
prospectus included in such registration statement and such other documents as
such Holder may reasonably request in order to facilitate the disposition of
the Non-Registered Option Shares and keep Holder specifically apprised of the
status of such registration, including, without limitation, notice of any
requirements under the 1933 Act relative to any prospectus or otherwise, make
available for inspection by Holder or any participating underwriter and any
attorney, accountant or other agent retained in connection with the
registration, all financial and other records, appurtenant corporate documents
and properties of the Company and supply such other reasonable information as
reasonably requested by any such party from time to time, and furnish such
signed legal opinions and certified public accountant letters as are reasonably
requested by Holder in connection with the registration;
(iv) use its best efforts to register or qualify such Non-Registered
Option Shares under such other securities or blue sky laws of such
jurisdictions as Holder or any applicable underwriter reasonably requests, and
do any and all other acts which may be reasonably necessary or advisable to
enable Holder to consummate the disposition of the Non-Registered Option
Shares;
(v) use its best efforts to cause the Non-Registered Option Shares covered
by such registration statement to be registered with or approved by such other
governmental agencies or other authorities as may be necessary by virtue of the
business and operations of the Company to enable the Holder to consummate the
disposition of such Non-Registered Option Shares;
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(vi) enter into customary agreements and take such other actions
as are reasonably required in order to expedite or facilitate the
disposition of the Non Registered Option Shares to be so included in the
registration statement;
(vii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, including, without
limitation, providing earnings statements to satisfy the provisions of
Section 11(a) of the 1933 Act; and
(viii) use its best efforts to cause all such Non Registered
Option Shares to be listed on the New York Stock Exchange and/or any
other securities exchange on which similar securities issued by the
Company are then listed, or traded on the National Association of
Securities Dealers Automated Quotations System, if such listing or
trading is then permitted under the rules of such exchange or system,
respectively.
(c) All costs and expenses incurred as a result of any registration
under this Paragraph 3 including, without limitation, any and all fees, costs
and expenses charged by an underwriter (other than underwriter's discount or
direct selling expense which shall be borne by all shares sold on a pro-rata
basis) in connection therewith shall be borne fully by the Company.
4. Anti-Dilution Provisions.
(a) The number of shares of Option Shares and the exercise price
per share pursuant to Schedule 1 hereto shall be subject to adjustment from
time to time as provided for in this Section 4(a). Notwithstanding any
provision contained herein, the aggregate Option Price for the total number of
Option Shares issuable pursuant to the Option shall remain unchanged. In case
the Company shall at any time change as a whole, by subdivision, combination,
acquisition or sale in any manner or by the making of a stock split or stock
dividend or by changing the number of outstanding shares of Common Stock into a
different number of shares, (i) the number of shares which Holder shall have
been entitled to purchase pursuant to this Agreement shall be increased or
decreased in direct proportion to such increase or decrease of shares, as the
case may be, and (ii) the Option Price (but not the aggregate Option Price of
all such shares) in effect immediately prior to such change shall be increased
or decreased in inverse proportion to such increase or decrease of shares, as
the case may be. In addition, and without limiting the foregoing, it is the
parties' intention hereto that the Option Price respective to the Option Shares
shall at all times be equal to or less than the lowest price per share for
additional shares of Common Stock hereafter issued at less than fair market
value or deemed to be hereafter issued at less than fair market value upon the
issuance of any warrants, options or other subscription rights with respect to
Common Stock or other securities convertible into Common Stock or the issuance
of any warrants, options or any similar rights with respect to such convertible
securities (all such shares or instruments of the Company being referred to
herein collectively as "Securities"). Accordingly, upon any issuance or deemed
issuance of Securities at a price per share which is less than the then current
fair market value of such Securities and less than the
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lowest price per share of the Option Shares, the per share price of the Option
Shares shall be forthwith reduced to an amount equal to the lowest price per
share of Securities so issued. If the Company shall in any manner grant, issue
or sell any Securities whether or not same or the right to convert or exchange
any of same are immediately exercisable, the Company will be deemed to have
issued or sold Common Stock.
(b) If, under this Paragraph 4, the purchase price provided for in any
Securities, the additional consideration, if any, payable upon the conversion
or exchange of any such Securities, or the rate at which any of same are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution), the Option Price in effect at the time of such event shall forthwith
be readjusted to the respective Option Price which would have been in effect at
such time had such Securities still remained outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. If the purchase
price provided for in any such Securities shall be reduced at any time under or
by reason of provisions with respect thereto designed to protect against
dilution, then, in case of the delivery of Common Stock upon the exercise of
any such Securities or upon conversion or exchange of any such Securities, the
Option Price in effect hereunder shall forthwith be adjusted to such respective
amounts as would have been effective upon the issuance of the shares of Common
Stock delivered as aforesaid.
(c) Upon the expiration of any Securities or the termination of any
right to convert or exchange any Securities without the exercise of a stock
option or right, the Option Price then in effect will be adjusted to the
respective Option Price which would have been in effect at the time of such
expiration or termination had such Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
(d) In case any shares of Common Stock and Securities shall be issued
or sold for cash, the consideration received therefor shall be deemed to be the
amount received upon such issuance or sale, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any shares of Common
Stock and Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration as determined in
good faith by the Board of Directors of the Company, without deduction of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any shares of Common
Stock or Securities shall be issued in connection with the issue and sale of
other securities of the Company, together comprising one integral transaction
in which no specific consideration is allocated to such shares of Common Stock
or Securities by the parties thereto, such shares of Common Stock or Securities
shall be deemed to have been issued at a rate of $.01 per share of Common Stock.
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(e) The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company,
and the disposition of any such shares shall be considered an issue or sale of
Common Stock for the purposes of this Paragraph 4.
(f) Upon any adjustment of an Option Price, then and in each such case the
Company shall give written notice thereof to Holder, which notice shall state
the Option Price resulting from such adjustment and the increase or decrease,
if any, in the number of shares of Common Stock purchasable at such price upon
the exercise of the Option, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
(g) In case of any capital reorganization or any reclassification of the
Common Stock of the Company or in case of the consolidation or merger of the
Company with another corporation (or in the case of any sale, transfer, or
other disposition to another corporation of all or substantially all the
property, assets, business, and goodwill of the Company), Holder shall
thereafter be entitled to purchase the same kind and amount of shares of
capital stock which the Option entitled Holder to purchase immediately prior to
such capital reorganization, reclassification of capital stock, consolidation,
merger, sale, transfer, or other disposition; and in any such case appropriate
adjustments shall be made in the application of the provisions of this
Paragraph 4 with respect to rights and interests thereafter of Holder to the
end that the provisions of this Paragraph 4 shall thereafter be applicable, as
near as reasonably may be, in relation to any shares or other property
thereafter purchasable upon the exercise of the Option.
(h) No certificate for fractional shares shall be issued upon the exercise
of the Option, but in lieu thereof the Company shall purchase any such
fractional shares calculated to the nearest cent.
(i) In addition to the foregoing, if the Company shall acquire any entity
and Holder shall in its sole discretion consider that the acquisition is made
at other than fair value, an adjustment should fairly and appropriately be made
to the Common Stock and the Option Shares so that the value of Common Stock and
Option Shares is, in the agreed opinion of Holder and Company, the same as it
would have been if such acquisition had been made at fair value. Such
adjustment shall become effective (if appropriate) retroactively, on the day
on which the acquisition in question is completed. If Holder and the Company
cannot agree on an appropriate adjustment as required to reflect the fair
value, the independent auditor of the Company shall choose a nationally
recognized valuation firm to make the determination of the required adjustment
(if any). The choice of the valuation firm and the determination of the
valuation firm shall be final and binding.
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5. Loan.
At Holder's sole and absolute discretion as exercised by the Loan
Notice, Holder shall have the right from time to time and at any time to borrow
from the Company the necessary funds to purchase the Option Shares. In such
event, the Company shall loan to Holder and Holder shall borrow from the
Company, the aggregate sum of money required to buy the Option Shares then
being purchased ("Loan"), which Loan shall be upon terms and conditions to be
mutually agreed upon by the parties hereto except that the following shall
apply to any and each such Loan; (i) the interest rate shall be no more than
the "prime rate of interest" as set forth in the Wall Street Journal on the
date of the Exercise Notice or if the Wall Street Journal shall not exist at
such time, such comparable publication publishing the "prime rate of interest",
(ii) the Loan shall have a term of not less than five (5) years, or at another
date mutually agreed upon between the Holder and the Company, (iii) the Loan
shall be repaid at "interest only" until the maturity date of the Loan at which
time the principal shall be due, such interest to be paid no more frequently
than semi-annually but no interest shall be paid on interest. Interest shall
accrue but not be paid prior to the Option Shares being registered with the
Securities and Exchange Commission in accordance with Paragraph 3 of this
Agreement, and (iv) The Loan shall be with recourse to the Holder and the
Company shall have a security interest in Holder's Option Shares.
6. Repurchase Obligation.
At Holder's option the Company shall repurchase any Option Shares
of the Company owned by Holder at any time. The repurchase price shall be
equivalent to the option price as set forth on Schedule I of this Agreement.
This repurchase obligation shall be terminated at the time the Company
completes an initial public offering of its common stock.
7. Holder's Income Tax Coverage.
For so long as the Company shall be a Subchapter S corporation, the
Company agrees that notwithstanding any of its distributions, dividends or
payments made to the shareholders of the Company, the Company shall pay to
Holder after any exercise of the Option, an amount not less than Holder's
federal, state and local personal income tax liability in the aggregate as a
result of the Company's income for the preceding calendar year. Distributions
will be made on a pro-rata basis based upon percentage ownership of stock of
the Company. Nothing in this Agreement is intended to create a second class of
stock in accordance with Section 1361 (b)(1)(D) of the Internal Revenue Code of
1986 as amended which would result in the termination of the Company's S
Corporation election. Any provision in this Agreement which is deemed to create
such a second class of stock is null and void.
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8. Change of Ownership Protection.
If fifty percent (50%) or more of the ownership of the Company is
transferred, sold or otherwise disposed of in one (1) or more transactions,
then as part of such transfer, sale or other disposition; then, at Holder's
request, any and all shares of Common Stock held by Holder shall be
simultaneously transferred, sold or disposed of therewith at a per share price
no less than the highest per share price paid for the other shares of Common
Stock then being transferred, sold or otherwise disposed of.
9. Assignability.
The Option granted herein may not be pledged, assigned, transferred,
sold or otherwise disposed of by Holder without the prior written consent of
the Company other than to parties who have a financial interest in Chesapeake
Group Inc. or Economic Analysis Group or Holder's family trusts, family members,
household members, estate trusts, retirement plans or by Will or by the laws of
descent and distribution.
10. Reservation of Shares.
The Company covenants that it will, at all times, reserve and keep
available out of its authorized Common Stock solely for the purpose of issuance
upon exercise of the Option, such number of shares of Common Stock as shall
then be issuable upon the exercise of the Option. The Company agrees that, upon
issuance in accordance with the terms and conditions or this Agreement, all
Option Shares shall be duly and validly issued and fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof.
11. Loss of Mutilation.
Upon receipt by the Company of reasonable evidence of the loss,
theft, destruction, or mutilation of this Agreement, the Company shall execute
and deliver in lieu thereof a new Agreement representing an equal number of
Option Shares exercisable thereunder.
12. Transfer Taxes; Expenses.
The Company shall pay any and all brokerage fees, transfer taxes and
expenses incidental to the exercise of the Option and shall pay all the fees
and expenses of any special attorneys or accountants retained by it in
connection therewith.
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13. Notice.
Any notice and other communication given pursuant to the
provisions of this Agreement shall be in writing and shall be given (i) by
mailing the same by certified mail or registered mail, return receipt
requested, postage prepaid, (ii) by hand, providing for receipted delivery, or
(iii) by reputable overnight courier providing for receipted delivery. Except
as may be expressly otherwise provided in this Agreement, any such notice or
other communication given by mail shall be deemed given two (2) business days
after same is mailed and any such notice or other communication given by hand
or overnight courier as aforesaid shall be deemed given when received or when
receipt is refused. If sent to the Company, such notices or other communication
shall be sent to the Company at 00000 Xxxx 00 Xxxx Xxxx, Xxxxx 000, Xxxxxxxxxx
Xxxxx, Xxxxxxxx 00000, or at such other address or addresses as the Company may
hereafter designate by notice to Holder. If sent to Holder, such notices or
other communications shall be sent to Holder at 000 Xxxxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or at such other address or addresses as Holder may
hereafter designate by notice to the Company.
14. Governing Law.
This Agreement shall be governed by and construed in accordance
with, the laws of the State of Michigan, without giving effect to any conflicts
of laws.
15. Indemnity.
(a) To the full extent permitted by law the Company shall
save Holder harmless from and indemnify Holder and his heirs, executors and
administrators against any and all injury, loss, damage, costs, expenses,
claims, suits, actions or proceedings (including, without limitation,
reasonable attorney's fees) and against any payments in settlement of any such
claims, suits, actions or proceedings or in satisfaction of any related
judgement, fine or penalty caused by or resulting from any act, omission,
negligence or willful conduct of Holder or Holder's agents no matter how caused
from Holder's involvement with the Company its subsidiaries and affiliates,
including, without limitation, being a shareholder, member of board of
directors, trustee of a Company benefit plan, officer or consultant of the
Company its subsidiaries and affiliates.
(b) To the full extent permitted by law the Company shall
advance all reasonable expenses incurred by or on behalf of Holder in
connection with any proceeding by reason of Holder's corporate status within
ten (10) days after the receipt by the Company of a statement or statements
from Holder requesting such advance or advances from time to time, whether
prior to or after final disposition of such proceeding. Such statement or
statements shall reasonably evidence the expenses incurred by Holder and shall
include or be preceded or accompanied by an undertaking by or on behalf of
Holder to repay any expenses advanced if it shall ultimately
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be determined that Holder is not entitled to be indemnified against such
expenses. Any advances and undertakings to repay pursuant to this Paragraph 15
shall be unsecured and interest free.
(c) The obligations of the Company contained in this
indemnity clause shall continue during the period Holder is a director or
employee of the Company (or is or was serving at the request of the Company as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise) and shall continue thereafter so long
as Holder shall be subject to any proceeding by reason of his corporate status,
whether or not he is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification can be provided
under this Agreement. Such rights of indemnification and reimbursement shall
not be deemed exclusive of any other rights to which Holder may be entitled
under any statute, agreement, vote of shareholders or otherwise.
16. Successors and Assigns.
This Agreement shall inure to the benefit of the Company and
Holder and their respective successors and permitted assigns.
17. Entire Agreement.
This Agreement constitutes the entire agreement of the Company
and Holder as to its subject matter and supersedes any previous written or oral
agreement or understanding between the Company and Holder with respect to such
subject matter.
18. Counterparts.
This Agreement may be executed in duplicate originals, each of
which when taken together shall be deemed an original.
19. Amendment.
This Agreement may not be modified except in a writing signed
by both parties hereto.
COMPLETE BUSINESS SOLUTIONS, INC.
By: Xxxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxx
Title: President
Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
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