Page 75
National Service Industries, Inc.
As of July 14, 1997
As of July 14, 1997
National Service Industries, Inc.
NSI Center
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxx, XX 00000
Gentlemen:
Reference is hereby made to the Asset Purchase Agreement by and among
National Service Industries, Inc., a Delaware corporation, National Service
Industries, Inc., a Georgia corporation, NSI Enterprises, Inc., a California
corporation and G&K Services, Inc., dated as of May 30, 1997 (the "Agreement").
Capitalized terms used in this letter without definition shall have the meanings
set forth in the Agreement. The parties hereby agree as follows:
1. Reduction of Base Price. Section 3.1 of the Agreement is hereby amended
to provide that the Base Price shall be reduced from $263,500,000 to
$262,850,000.
2. Certain Obsolete Inventory. New Inventory in excess of a six (6) months
supply, as measured by the Business' usage history, may be shipped out of any
Acquired Facility by Seller on or prior to the Closing Date to a Seller
distribution center, provided that such New Inventory quantities will not exceed
the quantities identified in Schedule 4.23(c) as obsolete. Purchaser or its
assignee shall have all rights until August 15, 1997 to purchase such New
Inventory as are contemplated by Section 3.4 of the Agreement. Seller will keep
a written record of such obsolete New Inventory and make such record available
to Purchaser for review.
3. Consent for Lakeland Branch #4710. Seller shall have until July 31, 1997
to obtain the consent of the landlord with respect to assignment of the Real
Property Lease covering the Acquired Facility identified on Exhibit A as
Lakeland Branch #4710 and that assignment of such Real Property Lease under the
Agreement is conditioned on receipt of such consent. In the event Seller does
not obtain the landlord's consent with respect to assignment of such Real
Property Lease by July 31, 1997, then unless otherwise agreed to in writing by
Purchaser in its sole discretion, Seller shall be required to exercise promptly
its purchase option with respect thereto and thereafter, promptly assign its
Page 76
purchase rights to Purchaser or its designated assignee, as required by Section
6.3(e) of the Agreement.
4. Assignable Special Industrial Accounts. Notwithstanding anything in the
Asset Purchase Agreement to the contrary, all revenue attributed to those
Assignable Special Industrial Accounts or portions thereof to be subcontracted
to Seller by Purchaser pursuant to Section 1.5(c)(ii)(2) of the Purchase
Agreement will be included as part of the Average Weekly Industrial Revenue. The
subcontract agreement which Seller will enter into with Purchaser, pursuant to
which Seller will provide service to such Assignable Special Industrial Accounts
or portions thereof, will be on substantially the same terms as are set forth in
the Subcontract Agreement attached to the Purchase Agreement as Exhibit "B",
except that the respective roles of Seller and Purchaser will be reversed and
except that Purchaser will have the right to terminate such subcontract
agreement with respect to any such Assignable Special Industrial Account or
portion thereof upon thirty (30) days' prior written notice to Seller.
5. Clarification of Section 7.2. Section 7.2 of the Agreement shall be
clarified as follows:
(a) Buyer shall not be required to hire any Employee of the Business if as
a result of such hire Buyer would be in violation of law.
(b) The words "salaried, exempt employees of the Business" as set forth in
Section 7.2(c) shall not include any employee who is paid in whole or in part on
a commission basis (with the exception of the following employees: regional
sales managers; managers of the service centers located in Utica, NY, Syracuse,
NY, Elmira, NY, Oneonta, NY, and Schenectady, NY; and the distribution manager
and client relations manager of the service center located in Utica, NY).
6. Wages, Commissions and Bonuses. All wages, sales commission and bonuses
earned by an Employee of the Business prior to the Closing Date will be an
Excluded Liability, the sole responsibility of Seller, and paid directly by
Seller. In addition any sales commission and bonuses relating to a Covered
Account where service was installed by Seller prior to the Closing Date will be
an Excluded Liability, the sole responsibility of Seller, and paid directly by
Seller, except that such commissions and bonuses payable to route sales
representatives and route drivers shall be paid by Purchaser and reimbursed by
Seller to Purchaser.
7. Vacation Days. Any vacation days earned by an Employee of the Business
(not covered by a Collective Bargaining Agreement) which have been carried over
by such Employee from any prior period to such Employee's current employment
period (the "CarryOver Days") shall be an Excluded Liability, the sole
responsibility of Seller, not included in the Accrued Employee Credit, and paid
directly by Seller. All earned/vested, or accrued vacation days of an Employee
of the Business relating to such Employee's current employment period (excluding
any CarryOver Days) shall be included in the Accrued Employee Credit.
2
Page 77
8. Vested Sick Pay. All vested sick pay for Employees of the Business (not
covered by a Collective Bargaining Agreement) shall be an Excluded Liability,
the sole responsibility of Seller, not included in the Accrued Employee Credit,
and paid directly by Seller.
9. No Hiring or Firing Freeze. Seller confirms that since May 30, 1997
Seller has not authorized a hiring or firing freeze with respect to Employees of
the Business.
10. Non-Exclusive License. Section 1.3(b) of the Agreement shall be amended
to add the following sentence: "For the one (1) year period following the
Closing Date, Seller hereby grants Purchaser a non-exclusive license and right
to operate the Business under the names used by Seller to operate the Business
as of the Closing Date and to use the marks, names, logos or other rights of
Seller or an Affiliate in a manner consistent with and to the extent such marks,
names, logos or other rights were used within the last twelve months in the
Business conducted by the Acquired Facilities identified on Exhibit "A" to the
Agreement as Portland #133, Utica #107, Youngstown #3910, Fort Xxxxx #196,
Houston #461, Austin #167 and Corpus Christi #424."
11. Richmond Volume. The definition of Covered Accounts shall also include
Richmond Volume which shall be defined as all of the industrial volume which on
the Closing Date is delivered out of Seller's facility known as Richmond #268.
Section 3.3(d)(iv) of the Agreement shall be amended to add the words "and
Richmond Volume" immediately after the words "Jacksonville Volume" in such
section. The first sentence of Section 4.16 shall be amended to add the words
"in addition to the Richmond Volume" immediately after the words "as of the
Closing Date" in such sentence.
3
Page 78
Please indicate your acknowledgment and agreement with the foregoing in the
space provided below.
Yours truly,
G&K SERVICES, INC.
s/ Xxxxxxx Hope
Xxxxxxx Hope, President and
Chief Executive Officer
Acknowledged and Agreed to:
NATIONAL SERVICE INDUSTRIES, INC.
a Delaware corporation
By: s/ Xxxxx Xxxxxx
Its: E.V.P.
NATIONAL SERVICE INDUSTRIES, INC.
a Georgia corporation
By: s/ Xxxxx Xxxxxx
Its: E.V.P.
NSI ENTERPRISES, INC.
a California corporation
By: s/ Xxxxx Xxxxxx
Its: E.V.P.
138948-7
4
