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PURCHASE AGREEMENT
AMONG
OSI HOLDINGS CORP.,
ACCOUNT PORTFOLIOS, INC.,
ACCOUNT PORTFOLIOS G.P., INC.,
AP MANAGEMENT, INC.,
GSC MANAGEMENT, INC.,
PERIMETER CREDIT MANAGEMENT CORPORATION,
ACCOUNT PORTFOLIOS TRUST ONE
AND
ACCOUNT PORTFOLIOS TRUST TWO
Dated as of September 21, 1995
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS..................................................... 2
Section 1.1. Definitions.............................................. 2
ARTICLE II SALE OF INTERESTS............................................... 11
Section 2.1. Purchase and Sale of Interests........................... 11
Section 2.2. Purchase Price........................................... 13
Section 2.3. Allocation of Purchase Price............................. 15
Section 2.4. Working Capital Adjustment............................... 15
Section 2.5. Adjustments to Closing Payments.......................... 20
Section 2.6. Operating Expenses....................................... 22
Section 2.7. Acknowledgment of Assumption of
Liabilities......................................... 22
Section 2.8. Cash Distributions....................................... 22
ARTICLE III CLOSING......................................................... 22
Section 3.1. Closing.................................................. 22
Section 3.2. Deliveries by the Sellers at the
Closing............................................. 23
Section 3.3. Deliveries by the Purchaser at
Closing............................................. 23
Section 3.4. Further Assurances....................................... 23
ARTICLE IV REPRESENTATIONS OF THE SELLER................................... 24
Section 4.1. Existence and Good Standing.............................. 24
Section 4.2. Authorization and Validity of this
Agreement........................................... 25
Section 4.3. Subsidiaries and Investments............................. 26
Section 4.4. Financial Statements; No Material
Changes............................................. 26
Section 4.5. Title to Properties; Encumbrances........................ 27
Section 4.6. Real Property............................................ 28
Section 4.7. Leases................................................... 28
Section 4.8. Intellectual Properties.................................. 29
Section 4.9. Material Contracts....................................... 29
Section 4.10. Consents and Approvals; No Violations................... 31
Section 4.11. Litigation.............................................. 32
Section 4.12. Taxes................................................... 33
Section 4.13. Liabilities............................................. 35
(i)
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Section 4.14. Insurance............................................... 36
Section 4.15. Compliance with Laws.................................... 36
Section 4.16. Employment Relations.................................... 37
Section 4.17. Employee Benefit Plans.................................. 37
Section 4.18. Interests in Customers, Suppliers, etc.................. 44
Section 4.19. Bank Accounts and Powers of Attorney.................... 45
Section 4.20. Conduct of Business..................................... 45
Section 4.21. Operation of Business/Equipment......................... 45
Section 4.22. Loans and Accounts Receivable........................... 45
Section 4.23. Environmental Matters................................... 46
Section 4.24. Acquisition for Investment.............................. 47
Section 4.25. Broker's or Finder's Fees............................... 48
ARTICLE V REPRESENTATIONS OF THE PURCHASER................................ 49
Section 5. Representations of the Purchaser........................... 49
Section 5.1. Existence and Good Standing of the
Purchaser; Power and Authority...................... 49
Section 5.2. Consents and Approvals; No Violations.................... 50
Section 5.3. Capital Stock............................................ 52
Section 5.4 Capitalization............................................ 52
Section 5.5 Absence of Liabilities.................................... 54
Section 5.6 Conduct of Business....................................... 55
Section 5.7 Other Agreements.......................................... 55
Section 5.8. Broker's or Finder's Fees................................ 55
ARTICLE VI TRANSACTIONS PRIOR TO THE CLOSING DATE.......................... 55
Section 6.1. Conduct of Business of the Seller........................ 55
Section 6.2. Exclusive Dealing........................................ 58
Section 6.3. Review of the Seller and Confidentiality................. 58
Section 6.4. Reasonable Best Efforts.................................. 59
ARTICLE VII CONDITIONS TO THE PURCHASERS' OBLIGATIONS....................... 60
Section 7. Conditions to the Purchasers' Obligations.................. 60
Section 7.1. Opinion of the Sellers' Counsel.......................... 60
Section 7.2. Truth of Representations and Warranties.................. 60
Section 7.3. Performance of Agreements................................ 60
Section 7.4. No Material Adverse Change............................... 61
Section 7.5. No Litigation Threatened................................. 61
Section 7.6. Approvals................................................ 61
(ii)
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Section 7.7. Noncompetition Agreements................................ 61
Section 7.8. Stockholders Agreement................................... 62
Section 7.9. Transfer Documents....................................... 62
Section 7.10. FIRPTA.................................................. 62
Section 7.11. Pre-Closing Transactions................................ 63
Section 7.12. Pledge Agreement........................................ 63
ARTICLE VIII CONDITIONS TO THE SELLERS' OBLIGATIONS.......................... 63
Section 8. Conditions to the Sellers'
Obligations............................................ 63
Section 8.1. Opinion of the Purchaser's Counsel....................... 63
Section 8.2. Truth of Representations and
Warranties......................................... 63
Section 8.3. Performance of Agreements................................ 64
Section 8.4. No Litigation Threatened................................. 64
Section 8.5. Approvals................................................ 64
Section 8.6. Stockholders Agreement................................... 64
Section 8.7. Pre-Closing Transactions................................. 65
Section 8.8. Delivery of Agreements................................... 65
Section 8.9. OSI Holdings Loan........................................ 65
ARTICLE IX OTHER AGREEMENTS................................................ 65
Section 9.1. Transfer Taxes........................................... 65
Section 9.2. Use of Name/Change of Name............................... 66
Section 9.4 Cooperation/Record Keeping................................ 67
Section 9.5. Certain Tax Returns...................................... 68
ARTICLE X SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.................... 68
Section 10. Survival of Representations............................... 68
Section 10.1. Indemnification......................................... 68
Section 10.2. Indemnification Procedure............................... 70
Section 10.3. Pledge of Shares........................................ 73
ARTICLE XI EVENTS OF TERMINATION........................................... 73
Section 11.1. Events of Termination................................... 73
Section 11.2. Effect of Termination................................... 74
ARTICLE XII MISCELLANEOUS................................................... 75
Section 12.1. Expenses................................................ 75
Section 12.2. Governing Law........................................... 75
Section 12.3. Captions................................................ 76
Section 12.4. Publicity............................................... 76
Section 12.5. Notices................................................. 76
Section 12.6. Parties in Interest..................................... 77
Section 12.7. Counterparts............................................ 78
(iii)
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Section 12.8. Entire Agreement........................................ 78
Section 12.9. Amendments.............................................. 78
Section 12.10. Severability........................................... 78
Section 12.11. Third Party Beneficiaries.............................. 78
Section 12.12. Knowledge of a Party................................... 79
Section 12.13. Jurisdiction........................................... 79
(iv)
Exhibits
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Exhibit A-1 Form of Seller Note (APT-1)
Exhibit A-2 Form of Seller Note (APT-2)
Exhibit B Form of Opinion of Xxxxxxxx Xxxxxxx
Exhibit C Form of Non-Competition Agreement
Exhibit D Form of Opinion of White & Case
Exhibit E Form of OSI Holdings Note
Exhibit F Form of Pledge Agreement
Schedules
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Schedule 2.3 Allocation of Purchase Price
Schedule 2.4 Estimated Closing Net Working Capital
Statement
Schedule 4.1 Limited Partners, Existence and Good
Standing
Schedule 4.3 Subsidiaries and Investments
Schedule 4.4 Balance Sheet Exceptions to GAAP
Schedule 4.5 Title to Property, Encumbrances
Schedule 4.7 Leases
Schedule 4.8 Intellectual Property
Schedule 4.9 Material Contracts
Schedule 4.10 Sellers' Consents and Approvals
Schedule 4.11 Litigation
Schedule 4.12 Taxes
Schedule 4.14 Insurance
Schedule 4.17 Employee Benefit Plans
Schedule 4.18 Interest in Customers, Suppliers
Schedule 4.19 Bank Accounts, Powers of Attorney
Schedule 4.20 Conduct of Business
Schedule 4.21 Operation of Business
Schedule 4.23 Environmental Matters
Schedule 5.4 OSI Holdings Ownership
Schedule 5.5 Purchasers' Liabilities
Schedule 5.7 Purchasers' Agreements
(v)
PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "Agreement") dated as of September 21, 1995
among OSI HOLDINGS CORP., a corporation organized under the laws of the State of
Delaware ("OSI Holdings"), ACCOUNT PORTFOLIOS, INC., a corporation organized
under the laws of the State of Delaware ("Newco-1"), ACCOUNT PORTFOLIOS G.P.,
INC., a corporation organized under the laws of the State of Delaware
("Newco-2," and together with OSI Holdings and Newco-1, the "Purchasers," and
each being a "Purchaser"), AP MANAGEMENT, INC., a corporation organized under
the laws of the State of Georgia ("APMI"), GSC MANAGEMENT, INC., a corporation
organized under the laws of the State of Georgia ("GSCMI"), PERIMETER CREDIT
MANAGEMENT CORPORATION, a corporation organized under the laws of the State of
Georgia ("PCMC"), ACCOUNT PORTFOLIOS TRUST ONE, a trust organized under the laws
of the State of Georgia ("APT-1") and ACCOUNT PORTFOLIOS TRUST TWO, a trust
organized under the laws of the Sate of Georgia ("APT-2", and together with
APMI, GSCMI, PCMC and APT-1 the "Sellers," and each a "Seller").
W I T N E S S E T H :
WHEREAS, the Sellers own all of the Interests (as defined below);
WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, the Sellers desire to sell the Interests, and the Purchasers
desire to purchase the Interests; and
WHEREAS, it is the intention of the parties hereto that, upon the
consummation of the transactions contemplated by this Agreement, the Purchasers
shall own all of the Interests and be in a position to operate the Partnerships
as a going concern.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. In addition to the terms defined elsewhere
in this Agreement, the following terms shall have the respective meanings
specified therefor below (such meanings to be equally applicable to both the
singular and the plural forms of the terms defined).
"Act" shall have the meaning specified in Section 4.24.
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"Actual Closing Net Working Capital Amount" shall have the meaning
specified in Section 2.4.
"Actual Closing Net Working Capital Statement" shall have the meaning
specified in Section 2.4.
"Affiliate" shall mean, with respect to any Person, any other Person
which, directly or indirectly, owns, or is owned by, or is under common
ownership with, the specified Person. For purposes of this definition, the term
"own" (including, with correlative meanings, "owned by" and "under common
ownership with") as applied to any corporation, partnership or other entity
means the ownership of 50% or more of the voting securities (or their
equivalent) of that corporation, partnership or other entity.
"Agreement" shall mean this Agreement, as amended, modified or
supplemented from time to time.
"APLP" shall have the meaning specified in Section 2.1.
"APLP Class A LP Interest" shall have the meaning specified in Section
2.1.
"APLP Class B LP Interest" shall have the meaning specified in Section
2.1.
"APMI" shall have the meaning specified in the preamble to this
Agreement.
"APT-1" shall have the meaning specified in the preamble to this
Agreement.
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"APT-2" shall have the meaning specified in the preamble to this
Agreement.
"Arbitrator" shall have the meaning specified in Section 2.4.
"Balance Sheet" shall have the meaning specified in Section 4.4.
"Business Day" shall mean any day other than a Saturday, or Sunday or
a day on which banks located in New York, New York, or Atlanta, Georgia shall be
authorized or required by law to close.
"Claim" shall have the meaning specified in Section 10.2.
"Closing" shall have the meaning specified in Section 3.1.
"Closing Date" shall have the meaning specified in Section 3.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
"Confidentiality Agreement" shall have the meaning specified in
Section 6.3.
"Damages" shall have the meaning specified in Section 10.1.
"Employee Benefit Plans" shall have the meaning specified in Section
4.17.
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"Encumbrances" shall have the meaning specified in Section 4.5.
"Environmental Claims" shall mean administrative, regulatory or
judicial actions, suits, demand letters, claims, liens, notices of
non-compliance or violation or proceedings relating in any way to any
Environmental Law or any permit issued under any such Law (for purposes of this
definition only, referred to as "Claims"), including (i) Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(ii) Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
"Environmental Laws" means any applicable federal, state or local
statute, law, rule, regulation, ordinance, code or rule of common law in effect
and in each case as amended as of the Closing Date, relating to the environment
or Hazardous Materials, including the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss. 6901 et seq.;
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss. 9601 et
seq.; the Federal Water Pollution Control Act, as amended,
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33 U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601
et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water
Act, 42 U.S.C. ss. 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C. ss.
2701 et seq.; and their state and local counterparts and equivalents.
"Environmental Permits" shall mean all permits, approvals,
identification numbers, registrations, licenses and other authorizations
required under any applicable Environmental Law.
"ERISA" shall have the meaning specified in Section 4.17.
"Estimated Closing Net Working Capital Amount" shall have the meaning
specified in Section 2.4.
"Estimated Closing Net Working Capital Statement" shall have the
meaning specified in Section 2.4.
"GAAP" shall have the meaning specified in Section 4.4.
"GSCLP" shall have the meaning specified in Section 2.1
"GSCMI" shall have the meaning specified in the preamble to this
Agreement.
"Hazardous Material" means (a) any petroleum or petroleum products,
asbestos in a form that is friable and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls of 50
ppm or
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greater and (b) any chemicals, materials or substances defined as or included in
the definition of "Hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," or words of similar import, under any
applicable Environmental Law.
"HSR Act" shall have the meaning specified in Section 4.26.
"Indemnified Party" shall have the meaning specified in Section
10.2.
"Indemnifying Party" shall have the meaning specified in Section
10.2.
"Intellectual Property" shall have the meaning specified in Section
4.8.
"Interests" shall have the meaning specified in Section 2.1.
"Loans and Accounts Receivable" shall mean all loans, notes and
accounts receivable (and any guarantees thereof) of the Partnerships, including,
without limitation, any indebtedness of any obligor owed to any Partnership
which indebtedness such Partnership has purchased or received from another
Person and has not created from the sale of its own services or goods, and
includes the right to payment of any interest, finance, returned check or late
charges and other obligations of such obligor with respect thereto. Each loan
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or receivable includes, without limitation, all obligations of the obligor
thereof under any agreement governing or related to such loan or receivable.
Each loan or receivable shall include any increase in the outstanding balance
thereof, whether due to any increase resulting from the accrual of interest or
finance charges or the assessment of late or other similar charges with respect
to such loan or receivable or otherwise.
"Material Adverse Effect" shall have the meaning specified in Section
4.1.
"Newco-1" shall have the meaning specified in the preamble to this
Agreement.
"Newco-2" shall have the meaning specified in the preamble to this
Agreement.
"1993 and 1994 Balance Sheets" shall have the meaning specified in
Section 4.4.
"Notice of Objection" shall have the meaning specified in Section
2.4.
"OSI Holdings" shall have the meaning specified in the preamble to
this Agreement.
"OSI Holdings Common Stock" shall have the meaning specified in
Section 2.2.
"OSI Holdings Preferred Stock" shall have the meaning specified in
Section 2.2.
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"Partnerships" shall mean, collectively, APLP, GSCLP and PCLP.
"PCLP" shall have the meaning specified in Section 2.1.
"PCMC" shall have the meaning specified in the preamble to this
Agreement.
"Permitted Encumbrances" shall have the meaning specified in Section
4.5.
"Person" shall have the meaning specified in Section 4.9.
"Pre-Closing Period" shall have the same meaning specified in Section
4.12.
"Pre-Closing Transactions" shall have the meaning specified in Section
9.3.
"Purchase Price" shall have the meaning specified in Section 2.2.
"Purchaser" shall have the meaning specified in the preamble to this
Agreement.
"Returns" shall have the meaning specified in Section 4.12.
"Seller" shall have the meaning specified in the preamble to this
Agreement.
"Seller Notes" shall have the meaning specified in Section 2.2.
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"Seller Security Documents" shall mean, collectively, the following
documents, each dated the date hereof and delivered as security for the
obligations of Newco-1 under the Seller Notes: (i) Loan and Security Agreement
among Newco-1, APT-1 and APT-2, (ii) Pledge Agreement, among Newco-1, APT-1 and
APT-2, (iii) Continuing Guaranty made by Newco-2 in favor of APT-1 and APT-2,
(iv) Security Agreement among Newco-2, APT-1 and APT-2, (v) Continuing Guaranty
made by APLP in favor of APT-1 and APT-2, (vi) Security Agreement among APLP,
APT-1 and APT-2, (vii) Continuing Guaranty made by PCLP in favor of APT-1 and
APT-2, (viii) Security Agreement among PCLP, APT-1 and APT-2, (ix) Continuing
Guaranty made by GSCLP in favor of APT-1 and APT-2, (x) Security Agreement
among GSCLP, APT-1 and APT-2, (xi) Consent for Direct Payments, among Xxxxx-0,
Xxxxx-0, the Partnerships, APT-1 and APT-2 and (xii) Contribution Agreement,
among Xxxxx-0, Xxxxx-0 and the Partnerships.
"Shares" shall mean, collectively, the shares of OSI Holdings Common
Stock and OSI Holdings Preferred Stock issued to APT-1 and APT-2 pursuant to
Section 2.2.
"Tax" shall mean any net income, alternative or add-on minimum tax,
advance corporation, gross income, gross receipts, sales, use, transfer
(excluding Transfer Taxes), gains, ad valorem, franchise, profits, license,
value added, withholding, payroll, employment, excise, stamp, occupation,
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premium, property, environmental, windfall profit tax, documentary,
registration, severance, custom duty, governmental fee or other like assessment
or charge of any kind whatsoever imposed pursuant to the laws of any federal,
state, local or foreign jurisdiction or by any political subdivision or taxing
authority thereof or therein, together with any interest or any penalty with
respect thereto, and any liability for such amounts as a result either (i) of
being a member of a combined, consolidated, unitary or affiliated group or (ii)
of a contractual obligation to indemnify any person or other entity.
"Transfer Taxes" shall have the meaning specified in Section 9.1.
"Working Capital Assets" shall have the meaning specified in Section
2.4.
"Working Capital Liabilities" shall have the meaning specified in
Section 2.4.
ARTICLE II
SALE OF INTERESTS
Section 2.1. Purchase and Sale of Interests. Upon the terms and
subject to the conditions of this Agreement, the Purchasers agree to purchase
from the Sellers, and the Sellers agree to sell, convey, transfer, assign and
deliver to the Purchasers, on the Closing Date, against the receipt
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by the Sellers of the consideration specified in Section 2.2, the Interests,
free and clear of any Encumbrances of any kind. The Interests will be sold,
conveyed, transferred, assigned and delivered as follows: (i) OSI Holdings
agrees to purchase from each of APT-1 and APT-2, and each of APT-1 and APT-2
agrees to sell, convey, transfer, assign and deliver to OSI Holdings, its entire
Class A limited partnership interest ("APLP Class A LP Interest") in Account
Portfolios, L.P., a Georgia limited partnership ("APLP"), (ii) Newco-1 agrees to
purchase from each of APT-1 and APT-2, and each of APT-1 and APT-2 agrees to
sell, convey, transfer, assign and deliver to Newco-1, its entire Class B
limited partnership interest in APLP, (the "APLP Class B LP Interest"), and
(iii) Newco-2 agrees to purchase from APMI, GSCMI and PCMC, and APMI, GSCMI and
PCMC each respectively agrees to sell, convey, transfer, assign and deliver to
Newco-2, its general partnership interest in APLP, in the case of APMI, its
general partnership interest in Gulf State Credit, L.P., a Georgia limited
partnership ("GSCLP"), in the case of GSCMI, and its general partnership
interest in Perimeter Credit, L.P., a Georgia limited partnership ("PCLP"), in
the case of PCMC (each of the general partnership interests described in this
clause (iii), together with the APLP Class A LP Interest and the APLP Class B LP
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Interest, being collectively referred to herein as the "Interests").
Section 2.2. Purchase Price. In full consideration for the sale by the
Sellers of the Interests to the Purchasers, on the Closing Date the Purchasers
shall deliver to the Sellers the following (the "Purchase Price") (subject to
adjustment pursuant to Section 2.5):
(a) to APT-1 from OSI Holdings, (i) 466,667 shares of common stock,
par value $.01 per share, of OSI Holdings (the "OSI Holdings Common
Stock"), made out in the name of APT-1, and (ii) 133,334 shares of
non-voting, cumulative, redeemable, exchangeable preferred stock of OSI
Holdings (the "OSI Holdings Preferred Stock"), made out in the name of
APT-1.
(b) to APT-2 from OSI Holdings, (i) 466,666 shares of OSI Holdings
Common Stock, made out in the name of APT-2, and (ii) 133,333 shares of OSI
Holdings Preferred Stock, made out in the name of APT-2.
(c) to APT-1 from Newco-1, (i) a secured promissory note with an
aggregate principal amount equal to $17,500,000 due September 21, 1998,
issued by Newco-1 in substantially the form attached hereto as Exhibit A-1
and (ii) an amount equal to (A) $14,404,834.10 plus (or minus) (B) one half
of the amount by which the Estimated Closing Net Working Capital Amount
exceeds (or
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is less than) $0, by wire transfer of immediately available funds to an
account specified by APT-1 at least two Business Days prior to the Closing.
(d) to APT-2 from Newco-1, (i) a secured promissory note with an
aggregate principal amount equal to $17,500,000 due September 21, 1998,
issued by Newco-1 in substantially the form attached hereto as Exhibit A-2
(together with the secured promissory note issued by Newco-1 to APT-1
pursuant to Section 2.2(c), the "Seller Notes") and (ii) an amount equal to
(A) $14,404,834.10 plus (or minus) (B) one half of the amount by which the
Estimated Closing Net Working Capital Amount exceeds (or is less than) $0,
by wire transfer of immediately available funds to an account specified by
APT-2 at least two Business Days prior to the Closing.
(e) to APMI from Newco-2, an amount equal to $795,136.05, by wire
transfer of immediately available funds to an account specified by APMI at
least two Business Days prior to the Closing.
(f) to GSCMI from Newco-2, an amount equal to $106,809.66, by wire
transfer of immediately available funds to an account specified by GSCMI at
least two Business Days prior to the Closing.
(g) to PCMC from Newco-2, an amount equal to $288,386.09, by wire
transfer of immediately available
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funds to an account specified by PCMC at least two Business Days prior to
the Closing.
Section 2.3. Allocation of Purchase Price. The Sellers and the
Purchasers hereby undertake and agree to file timely any information that may be
required to be filed pursuant to Treasury Regulations promulgated under Section
1060(b) of the Code. The Sellers and the Purchasers agree to allocate the
Purchase Price in accordance with Schedule 2.3. The parties agree that no amount
of the Purchase Price is specifically allocable to interest that has or may have
accrued with respect to Loans or Accounts Receivable. Neither the Sellers nor
the Purchasers shall file any tax return or other document or otherwise take any
position which is inconsistent with the allocation determined pursuant to this
Section 2.3. The parties intend for the transfer of Interests to OSI Holdings to
qualify under Section 351 of the Code and as such intend that the receipt of the
Shares by APT-1 and APT-2 receive tax-free exchange treatment in accordance with
Section 351 of the Code.
Section 2.4. Working Capital Adjustment. (a) Closing Payment
Adjustment. Attached hereto as Schedule 2.4 is an estimated net closing working
capital statement of the Partnerships (the "Estimated Closing Net Working
Capital Statement"). The Estimated Closing Net Working Capital
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Statement reflects Working Capital Assets, Working Capital Liabilities and the
Estimated Closing Net Working Capital Amount, each as estimated to exist at the
Closing. For purposes hereof, "Working Capital Assets" shall mean the sum of (i)
cash and cash equivalents of the Partnerships that are not distributed to any
Seller prior to Closing, (ii) accounts receivable - miscellaneous, (iii)
accounts receivable Account Portfolios, L.P., (iv) interest receivable, (v)
deposit - South Trust Bank, (vi) deposit - United Parcel Service, (vii) deposit
- First Southern Investment, (viii) deposit - Salt River Project Utility, (ix)
deposit - Hohokam III Developers, (x) prepaid insurance - Acordia of the South
(commercial umbrella), (xi) prepaid insurance - Acordia of the South (excess
umbrella coverage), (xii) prepaid insurance - Cigna (workers compensations),
(xiii) prepaid insurance - Acordia of the South (fiduciary liability), (xiv)
prepaid insurance - Acordia of the South (commercial crime coverage), (xv)
prepaid insurance - Acordia of the South (combined inland marine), (xvi) prepaid
insurance - Acordia of the South (commercial package), (xvii) prepaid insurance
-Acordia of the South (simplified commercial package (Texas)), (xviii) prepaid
insurance - Acordia of the South (commercial general liability), and (xix) Texas
workers compensation; "Working Capital Liabilities" shall mean the sum of (i)
accounts payable - NationsBank Trust Accounts, (ii) accounts
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payable - HBR Capital, (iii) garnishments payable, (iv) accounts payable - Bally
Participations, (v) accounts payable - ITT Participations, (vi) accrued expense
- Xxxxx Xxxxx, (vii) accrued salaries, (viii) accrued vacation expense and (ix)
accrued interest to Cargill Financial; and "Estimated Closing Net Working
Capital Amount" shall mean the excess (or deficiency) of Working Capital Assets
over Working Capital Liabilities estimated as of the Closing.
(b) Closing Working Capital Statement. (i) As soon as practicable (and
in no event later than thirty (30) days after the Closing), the Purchasers shall
prepare and deliver to APT-1 and APT-2 a proposed actual closing net working
capital statement of the Partnerships' as of the Closing (the "Actual Closing
Net Working Capital Statement"). The Actual Closing Net Working Capital
Statement will reflect the Working Capital Assets, the Working Capital
Liabilities and the Actual Closing Net Working Capital Amount immediately prior
to the Closing and will be prepared on a basis consistent with the preparation
of the Estimated Closing Net Working Capital Statement. For purposes hereof,
"Actual Closing Net Working Capital Amount" shall mean the excess of Working
Capital Assets over Working Capital Liabilities as of the Closing.
(ii) If APT-1 and APT-2 do not object to the determination by the
Purchasers of the proposed Actual
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Closing Net Working Capital Amount by written notice of objection (the "Notice
of Objection") delivered to the Purchasers within thirty (30) days after APT-1's
and APT-2's receipt of such statement the proposed Actual Closing Net Working
Capital Amount shall be deemed final and binding.
(iii) If APT-1 and APT-2 deliver a Notice of Objection in respect of
the Actual Closing Net Working Capital Amount, then any dispute shall be
resolved in accordance with paragraph (c) of this Section 2.4.
(c) Resolution of Disputes. (i) If APT-1 and APT-2 object to the
Actual Closing Net Working Capital Statement as determined by the Purchasers,
then APT-1 and APT-2, on the one hand, and the Purchasers, on the other hand,
shall promptly endeavor to agree upon the Actual Closing Net Working Capital
Amount. In the event that a written agreement as to the Actual Closing Net
Working Capital Amount has not been reached within thirty (30) days after the
date of receipt by the Purchasers from APT-1 and APT-2 of their Notice of
Objection thereto, then the determination of the Actual Closing Net Working
Capital Amount shall be submitted to a nationally recognized accounting firm or
other arbitrator mutually acceptable to the Purchasers, on the one hand, and
APT-1 and APT-2, on the other hand, (the "Arbitrator"); provided that if the
Purchasers, on the one hand, and APT-1 and APT-2, on the other hand, cannot
agree on
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the Arbitrator the Purchasers, on the one hand, and APT-1 and APT-2, on the
other hand, shall each choose a nationally recognized accounting firm which two
firms shall together select a third nationally recognized accounting firm to act
as Arbitrator.
(ii) Within 45 days of the submission of any dispute concerning the
determination of the Actual Closing Net Working Capital Amount to the
Arbitrator, the Arbitrator shall render a decision in accordance with this
paragraph (c) hereof along with a statement of reasons therefor. The decision of
the Arbitrator shall be final and binding upon the parties hereto.
(iii) The fees and expenses of the Arbitrator for any determination
under this paragraph (c) shall be shared as follows: the Purchasers shall bear
that portion thereof equal to the total amount of such fees and expenses
multiplied by a fraction, the denominator of which shall be the difference
between the Actual Closing Net Working Capital Amount as proposed in the
determination by APT-1 and APT-2 and the Actual Closing Net Working Capital
Amount as proposed in the determination by the Purchasers, and the numerator of
which shall be the difference between the Actual Closing Net Working Capital
Amount as determined by the Arbitrator and the Actual Closing Net Working
Capital Amount as proposed by
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the Purchasers. The Sellers shall bear the remainder of such fees and expenses.
(iv) Nothing herein shall be construed to authorize or permit the
Arbitrator to determine (i) any question or matter whatever under or in
connection with this Agreement except the determinations of what adjustments, if
any, must be made in one or more of the items reflected in the Actual Closing
Net Working Capital Statement delivered by the Purchasers in order for the
Actual Closing Net Working Capital Amount to be determined in accordance with
the provisions of this Agreement, or (ii) an Actual Closing Net Working Capital
Amount that is not equal to one of or between the Actual Closing Net Working
Capital Amount as proposed in the determination by the Sellers and the Actual
Closing Net Working Capital Amount as proposed in the determination by the
Purchasers. Nothing herein shall be construed to require the Arbitrator to
follow any rules or procedures of any arbitration association.
Section 2.5. Adjustments to Closing Payments. (a) Upon the final
determination of the Actual Closing Net Working Capital Amount, the parties
shall make the following adjustments:
(i) If the Actual Closing Net Working Capital Amount is greater than
the Estimated Closing Net Working
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Xxxxxxx Xxxxxx, then the Purchase Price shall be increased by the amount of
such difference.
(ii) If the Actual Closing Net Working Capital Amount is less than the
Estimated Closing Net Working Capital Amount, then the Purchase Price shall
be decreased by the amount of such difference.
(b) Any adjustment to the Purchase Price required under this Section
2.5 shall bear interest from the Closing Date to the date of payment thereof at
a per annum rate equal to the "prime lending rate" as published in The Wall
Street Journal. Any such adjustment payment required pursuant hereto shall be
made by increasing or decreasing the Seller Notes, as appropriate. Such
application shall be made on such of the following dates as may be applicable:
(A) if APT-1 and APT-2 shall have not objected to the preparation of the Actual
Closing Net Working Capital Statement, the earlier of (1) thirty-five (35) days
after delivery to APT-1 and APT-2 of the Actual Closing Net Working Capital
Statement or (2) five (5) days after APT-1 and APT-2 has indicated that they
have no objections to the preparation of the Actual Closing Net Working Capital
Statement, or (B) if APT-1 and APT-2 shall have objected to such preparation,
within five (5) days following final agreement or decision with respect to the
Actual Closing Net Working Capital Statement as provided above.
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Section 2.6. Operating Expenses. The Purchasers acknowledge that the
Partnerships will be responsible for the payment of the expenses of the
Partnerships incurred as of and after the Closing and the Purchasers shall cause
the Partnerships to reimburse the Sellers for any such expenses so incurred by
the Sellers.
Section 2.7. Acknowledgment of Assumption of Liabilities. The
Purchasers hereby acknowledge and agree that they shall take the Interests
subject to all liabilities of the Partnerships and the liabilities of the
general partners of such Partnerships which result from such Partnership
liabilities; provided however, that the foregoing shall in no way limit the
indemnification obligations of the Sellers contained in Section 10.1.
Section 2.8. Cash Distributions. The parties acknowledge and
understand that the Partnerships will distribute all cash and cash equivalents
held by the Partnerships (other than $518,294.62) to the Sellers immediately
prior to the Closing.
ARTICLE III
CLOSING
Section 3.1. Closing. The closing of the sale referred to in Section
2.1 (the "Closing") shall take place at 10:00 A.M. at the offices of White &
Case, New York, New York on September 21, 1995, or at such other time, date and
place
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as the parties hereto shall by written instrument designate. Such time and date
are herein referred to as the "Closing Date."
Section 3.2. Deliveries by the Sellers at the Closing. At the Closing,
the Sellers shall deliver to the Purchasers each of the documents, instruments
or evidences of satisfaction of conditions required to be delivered by the
Sellers as a condition to the Closing pursuant to Article VII of this Agreement,
in form and substance reasonably satisfactory to the Purchasers and their
counsel.
Section 3.3. Deliveries by the Purchaser at Closing. At the Closing,
the Purchasers shall deliver to the Sellers (a) the cash payments referred to
above in Section 2.2, (b) the Shares, (c) the Seller Notes, (d) the Seller
Security Documents and (e) each of the documents, instruments or evidences of
satisfaction of conditions required to be delivered by the Purchasers as a
condition to Closing pursuant to Article VIII of this Agreement in form and
substance reasonably satisfactory to the Sellers and their counsel.
Section 3.4. Further Assurances. On or after the Closing Date, the
Sellers shall, at the Purchasers' request, from time to time execute and deliver
such further instruments of conveyance, assignment and transfer in addition to
those specified in Section 7.9, and each party shall take, or cause to be taken,
such other actions as either party may
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reasonably request for more effective conveyance, assignment and transfer of the
Interests to the Purchasers.
ARTICLE IV
REPRESENTATIONS OF THE SELLER
Section 4. Each Seller jointly and severally represents, warrants and
agrees, as follows:
Section 4.1. Existence and Good Standing. Each Seller other than APT-1
and APT-2 is a corporation duly organized, validly existing and in good standing
under the laws of the State of Georgia. Each of APT-1 and APT-2 is a trust duly
created under the laws of the State of Georgia. Each of APLP, GSCLP and PCLP is
a limited partnership duly organized, validly existing and in good standing
under the laws of the State of Georgia. The respective general partners of APLP,
GSCLP and PCLP are APMI, GSCMI and PCMC. Each such general partner has full
power and authority to act as general partner of the applicable Partnership. The
limited partners of each Partnership are set forth on Schedule 4.1. Each
Partnership has the requisite partnership power and authority to own, lease and
operate its properties and to carry on its business as now being conducted. Each
Partnership is duly qualified or licensed to do business and is in good standing
in the respective jurisdictions set forth on Schedule 4.1, which are the only
jurisdictions in which
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the character or location of the properties owned, leased or operated by such
Partnership or the nature of the business conducted by such Partnership makes
such qualification or license necessary, except where the failure to be so duly
qualified or licensed would not have a material adverse effect on the business,
operations, financial condition or results of operations of the Partnerships
taken as a whole (a "Material Adverse Effect").
Section 4.2. Authorization and Validity of this Agreement. Each Seller
has the requisite power and authority to execute and deliver this Agreement and
to perform its obligations hereunder. The execution, delivery and performance of
this Agreement by each Seller and the performance of its obligations hereunder
have been duly authorized and approved by such Seller and no other action on the
part of such Seller is necessary to authorize the execution, delivery and
performance of this Agreement by such Seller. This Agreement has been duly
executed and delivered by each Seller and, assuming due execution of this
Agreement by the Purchasers, is a valid and binding obligation of such Seller
enforceable against such Seller in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
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Section 4.3. Subsidiaries and Investments. Except as set forth on
Schedule 4.3, no Partnership owns, directly or indirectly, any capital stock or
other equity or ownership or proprietary interest in any corporation,
partnership, association, trust, joint venture or other entity.
Section 4.4. Financial Statements; No Material Changes. (a) The
Sellers have heretofore furnished the Purchasers with (i) consolidated audited
balance sheets of the Partnerships as of December 31, 1993, and December 31,
1994 (the "1993 and 1994 Balance Sheets"), together with related statements of
operations and partners' capital and cash flows for the years then ended, all
certified by Deloitte & Touche and (ii) an unaudited consolidated balance sheet
(the "Balance Sheet") of the Partnerships as at June 30, 1995, together with
related statements of operations and partners' capital and cash flows for the
six months ended on such date. Except as set forth on Schedule 4.4, the 1993 and
1994 Balance Sheets and the respective related statements of operations and
partners' capital and cash flows have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied by the Partnerships
throughout the periods indicated and fairly present in all material respects the
financial condition of the Partnerships for the periods indicated, and the
results of the operations of the Partnerships and cash flows for the periods
indicated.
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The Balance Sheet and the related statements of operations and partners' capital
and cash flows have been prepared in accordance with accounting principles
consistently applied by the Partnerships throughout the period indicated and
fairly present in all material respects the financial condition of the
Partnerships for the period indicated, and the results of the operations of the
Partnerships and cash flows for the period indicated.
(b) Since December 31, 1994, there has been no (i) material adverse
change in the business, operations, financial condition or results of operations
of the Partnerships or (ii) material damage, destruction or loss to any asset of
the Partnerships which materially affects the ability of any Partnership to
conduct its business.
Section 4.5. Title to Properties; Encumbrances. Except as set forth on
Schedule 4.5 attached hereto and except for such properties and assets which
have been sold or otherwise disposed of in the ordinary course of business, each
Partnership has good title to its material properties and assets (real and
personal, tangible and intangible), including, without limitation, the
properties and assets reflected in the Balance Sheet, subject to no encumbrance,
lien, charge or other restriction of any kind or character ("Encumbrances"),
except for (i) Encumbrances reflected in the Balance Sheet, (ii) Encumbrances
for current taxes,
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assessments or governmental charges or levies on property not yet due and
delinquent, (iii) Encumbrances arising by operation of law and (iv) Encumbrances
described on Schedule 4.5 attached hereto (Encumbrances of the type described in
clauses (i), (ii), (iii) and (iv) above are hereinafter sometimes referred to as
"Permitted Encumbrances").
Section 4.6. Real Property. No Partnership owns any real property.
Section 4.7. Leases. Schedule 4.7 attached hereto contains a list of
all leases or sub-leases to which any Partnership is a party requiring an annual
aggregate payment of at least $25,000. Except as otherwise set forth in Schedule
4.7 attached hereto, each lease or sub-lease set forth in Schedule 4.7 is in
full force and effect; all rents and additional rents due to date from any
Partnership on each such lease or sub-lease have been paid; no Partnership has
received notice that it is in material default under any such lease or
sub-lease; and, to the knowledge of each Seller and Partnership, there exists no
event, occurrence, condition or act (including the consummation of the sale
contemplated hereby) which, with the giving of notice, the lapse of time or the
happening of any further event or condition, would become a material default by
any Seller under such lease or sub-lease.
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Section 4.8. Intellectual Properties. (a) Schedule 4.8 attached hereto
contains a list of all licenses, patents, trade names, trademarks and service
marks (collectively, the "Intellectual Property") possessed by each Partnership
and necessary for the ownership of its assets and the conduct of its business as
presently conducted. All such Intellectual Property is in full force and effect
and no Partnership has received any written notice of any event, inquiry,
investigation or proceeding threatening the validity of such Intellectual
Property.
(b) None of the Intellectual Property is the subject of any action,
suit or proceeding, or written claim that is pending or, to the knowledge of any
Seller or Partnership, threatened which: (i) accuses any Partnership of
infringing or otherwise violating any Intellectual Property of any third party;
(ii) accuses any Partnership of breaching any contract with respect to any
Intellectual Property or (iii) raises any claim that is materially adverse to
the interest of any Partnership in such Intellectual Property.
Section 4.9. Material Contracts. Except as set forth on Schedule 4.5,
Schedule 4.7 and Schedule 4.9 attached hereto, no Partnership has nor is bound
by (a) any agreement, contract or commitment that involves the performance of
services or the delivery of goods and/or materials by such
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Partnership of an amount or value in excess of $25,000, (b) any agreement,
contract or commitment not in the ordinary course of business, (c) any
agreement, contract or other instrument related to Loans and Accounts
Receivable, (d) any agreement, contract or commitment relating to capital
expenditures in excess of $10,000, (e) any agreement, indenture or instrument
relating to indebtedness, liability for borrowed money or the deferred purchase
price of property (excluding payables in the ordinary course of business), (f)
any loan or advance to, or investment in, any individual, partnership, joint
venture, corporation, trust, unincorporated organization, government or other
entity (each a "Person"), any agreement, contract or commitment relating to the
making of any such loan, advance or investment or any agreement, contract or
commitment involving a sharing of profits, (g) any guarantee or other contingent
liability in respect of any indebtedness or obligation of any Person (other than
in the ordinary course of business), (h) any management service, consulting or
any other similar type contract, (i) any agreement, contract or commitment
limiting the ability of any Partnership to engage in any line of business or to
compete with any Person, (j) any warranty, guaranty or other similar undertaking
with respect to contractual performance extended by any Partnership other than
in the ordinary course of business, or (k) any amendment, modification or
supplement in
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respect of any of the foregoing. Except as otherwise set forth on Schedule 4.9,
each contract or agreement set forth on Schedule 4.9 is in full force and effect
and there exists no material default or event of default or, to the knowledge of
any Seller or any Partnership, event, occurrence, condition or act (including
the consummation of the sale contemplated hereby) which, with the giving of
notice, the lapse of time or the happening of any other event or condition,
would become a material default or event of default thereunder.
Section 4.10. Consents and Approvals; No Violations. Except as set
forth in Schedule 4.10 attached hereto, the execution and delivery of this
Agreement by each of the Sellers and the consummation of the transactions
contemplated hereby (a) will not violate or contravene any provision of the
organizational documents of any Seller or any Partnership, (b) will not violate
or contravene any statute, rule, regulation, order or decree of any public body
or authority by which any Seller or any Partnership is bound or by which any of
their assets are bound, (c) will not require any filing with, or permit, consent
or approval of, or the giving of any notice to, any governmental or regulatory
body, agency or authority, or any other Person; provided that no representation
is being made with respect to filings under the Xxxx-Xxxxx-Xxxxxx Anti-Trust
Improvements Act of 1976;
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(d) will not result in a violation or breach of, conflict with, constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, payment or acceleration) under, or result in
the creation of any Encumbrance upon any of the assets of any Seller or any
Partnership under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement (including the
provisions of any right of first refusal contained in any agreement relating to
any Loans and Accounts Receivable acquired by any Partnership), lease, franchise
agreement or any other instrument or obligation to which any Seller or any
Partnership is a party, or by which it or any of their assets may be bound,
excluding from the foregoing clauses (b), (c) and (d) filings, notices, permits,
consents and approvals, the absence of which, and violations, breaches,
defaults, conflicts and Encumbrances of which, in the aggregate, would not have
a Material Adverse Effect.
Section 4.11. Litigation. Except as set forth on Schedule 4.11
attached hereto and except for usual and customary litigation brought by the
Partnerships against account debtors related to the Partnerships' collection of
Loans and Accounts Receivable and counterclaims by account debtors related
thereto, there is no action, suit, proceeding at law or in equity, arbitration
or administrative or other
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proceeding by or before (or to the knowledge of any Seller or any Partnership
any investigation by) any governmental or other instrumentality or agency,
pending, or, to the knowledge of any Seller or any Partnership, threatened,
against or affecting any Seller or any Partnership or any of their assets or
rights which could materially and adversely affect the right or ability of any
Partnership to carry on its business as now conducted, or which could have a
Material Adverse Effect; and no Seller or Partnership knows of a valid basis for
any such action, proceeding or investigation. No Seller or Partnership is
subject to any judgment, order or decree entered in any lawsuit or proceeding
which may have a Material Adverse Effect.
Section 4.12. Taxes. (i) All material returns and reports for Taxes
for all taxable years or periods that end on or before the Closing Date and,
with respect to any taxable year or period beginning before and ending after the
Closing Date, the portion of such taxable year or period ending on and including
the Closing Date ("Pre-Closing Periods") which are required to be filed by or
with respect to any Partnership or any Seller (with respect to its Interest) or
the assets of any Partnership (collectively, the "Returns") have been or will be
filed when due in a timely fashion (including extensions) and such Returns as
filed are or will be accurate in all material respects.
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(ii) All material Taxes owed by or with respect to each Partnership,
each Seller (with respect to its Interests) and with respect to the assets of
each Partnership (whether or not shown on any Return) for all Pre-Closing
Periods have been or will be fully paid in a timely fashion (including
extensions).
(iii) Except as provided in Schedule 4.12 attached hereto, there is no
action now pending or, to the knowledge of any Seller or Partnership, threatened
by any governmental authority regarding any Taxes relating to any Partnership,
any Seller (with respect to its Interests) or the assets of any Partnership for
any Pre-Closing Period.
(iv) No claim has ever been made by any taxing authority in a
jurisdiction where any Seller or Partnership does not file Returns that any
Partnership or any Seller (with respect to its Interest) is or may be subject to
taxation by that jurisdiction.
(v) Except as provided in Schedule 4.12, there are no agreements for
the extension or waiver of the time for assessment of any Taxes relating to any
Partnership or any Seller (with respect to its Interest) or the assets of any
Partnership for any Pre-Closing Period and no Seller or Partnership has been
requested to enter into any such agreement or waiver.
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(vi) Except as provided in Schedule 4.12, no Partnership or Seller
(with respect to its Interest) has been included in any "consolidated",
"combined" or "unitary" Return provided for under the laws of the United States,
any state, locality or foreign country with respect to Taxes for any taxable
period for which the statute of limitations has not expired.
(vii) All Taxes relating to any Partnership or Seller (with respect to
its Interest) or the assets of any Partnership which any Partnership or Seller
is required by law to withhold or collect have been duly withheld or collected,
and have been timely paid over to the proper authorities to the extent due and
payable.
(viii) No Seller or Partnership is now or has ever been a party to any
Tax allocation, indemnification, sharing or similar agreement that could result
in any Liability to the Purchasers.
Section 4.13. Liabilities. No Partnership has any outstanding claims,
liabilities or indebtedness, contingent or otherwise, except (i) as set forth in
the Balance Sheet or referred to in the footnotes thereto, (ii) for contractual
obligations not required under GAAP to be set forth on the 1994 Balance Sheet or
referred to in the footnotes thereto incurred in the ordinary business which, in
the aggregate, are not material, (iii) other liabilities incurred subsequent
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to December 31, 1994 in the ordinary course of business and (iv) for the matters
set forth in Section 4.11.
Section 4.14. Insurance. Schedule 4.14 contains an accurate and
complete summary description of all policies of property, fire and casualty,
product liability, workers compensation and other forms of insurance owned or
held by each Partnership. No Partnership has received (i) any notice of
cancellation of any policy described in such Schedule or refusal of coverage
thereunder, (ii) any notice that any issuer of such policy has filed for
protection under applicable bankruptcy laws or is otherwise in the process of
liquidating or has been liquidated, or (iii) any other indication that such
policies are no longer in full force or effect or that the issuer of any such
policy is no longer willing or able to perform its obligations thereunder. Since
the most distant renewal date of any policy, there has not been any material
adverse change in any Partnership's relationship with its insurers or in the
premiums payable pursuant to such policies.
Section 4.15. Compliance with Laws. Each Partnership is in compliance
with all applicable laws, regulations, orders, judgments and decrees (including,
without limitation, the Fair Debt Collection Practices Act and any state or
local counterpart or equivalent), except where the failure to so comply would
not have a Material Adverse Effect.
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Section 4.16. Employment Relations. (a) Each Partnership is in
substantial compliance with all Federal, state or other applicable laws,
domestic or foreign, respecting employment and employment practices, terms and
conditions of employment and wages and hours, and has not, and is not, engaged
in any unfair labor practice;
(b) no unfair labor practice complaint against any Partnership is
pending before the National Labor Relations Board;
(c) there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against or involving any Partnership; and
(d) No Partnership is a party to a collective bargaining agreement and
no collective bargaining agreement is currently being negotiated by any
Partnership.
Section 4.17. Employee Benefit Plans. (i) List of Plans. Set forth in
Schedule 4.17 attached hereto is an accurate and complete list of all (A)
"employee benefit plans," within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations thereunder ("ERISA"), (B) bonus, stock option, stock purchase,
restricted stock, incentive, profit-sharing, pension or retirement, deferred
compensation, medi-cal, life, disability, accident, accrued leave, vacation,
sick pay, sick leave, supplemental retirement and unemploy-
-37-
ment benefit plans, programs, arrangements, commitments or practices (whether or
not insured), and (C) employment, consulting, termination, and severance
contracts or agreements, in each case for active, retired or former employees or
directors, whether or not any such plans, programs, arrangements, commitments,
contracts, agreements or practices (referred to in (A), (B) or (C) above) are in
writing or are otherwise exempt from the provisions of ERISA, that have been
established, maintained or contributed to (or with respect to which an
obligation to contribute has been undertaken) or with respect to which any
potential liability is borne by any Partnership (including, for this purpose and
for the purpose of all of the representations in this Section 4.17, any
predecessors to any Partnership and all employers (whether or not incorporated)
that are by reason of common control treated together with any Partnership as a
single employer (1) within the meaning of Section 414 of the Code or (2) as a
result of any Partnership being or having been a general partner of any such
employer) since September 2, 1974 ("Employee Benefit Plans").
(ii) Status of Plans. Each Employee Benefit Plan has at all times been
maintained and operated in substantial compliance with its terms and the
requirements of all applicable laws, including ERISA and the Code. No complete
or partial termination of any Employee Benefit Plan has occurred
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or is expected to occur. Except as disclosed in Schedule 4.17, no Partnership
has any commitment to create, modify or terminate any Employee Benefit Plan. No
condition or circumstance exists that would prevent the amendment or termination
of any Employee Benefit Plan in accordance with applicable law. No event has
occurred and no condition or circumstance has existed that could result in a
material increase in the benefits under or the expense of maintaining any
Employee Benefit Plan from the level of benefits or expense incurred for the
most recent fiscal year ended thereof.
(iii) No Single Employer/Multiemployer Plans. Neither any Partnership
nor any entity required to be aggregated with any Partnership (A) pursuant to
Section 414 of the Code or (B) as a result of any Partnership being or having
been a general partner of any such entity has maintained or contributed to (or
has had an obligation to contribute to) any "single employer plan" (as defined
in Section 4001(a)(15) of ERISA) or any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA).
(iv) Liabilities. No Partnership maintains any Employee Benefit Plan
which is a "group health plan" (as such term is defined in Section 5000(b)(1) of
the Code) that has not been administered and operated in all respects in
compliance with the applicable requirements of Section 601 of
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ERISA and Section 4980B(f) of the Code and no Partnership is subject to any
liability, including, without limitation, additional contributions, fines,
penalties or loss of tax deduction as a result of such administration and
operation. No Partnership maintains any Employee Benefit Plan (whether qualified
or nonqualified within the meaning of Section 401(a) of the Code) providing for
retiree health and/or life insurance benefits and having unfunded liabilities.
No Partnership maintains any Employee Benefit Plan which is an "employee welfare
benefit plan" (as such term is defined in Section 3(1) of ERISA) that has
provided any "disqualified benefit" (as such term is defined in Section 4976(b)
of the Code) with respect to which an excise tax could be imposed. No
Partnership has any unfunded liabilities pursuant to any Employee Benefit Plan
that is not intended to be qualified under Section 401(a) of the Code. There are
no actions, suits or claims pending, or, to the knowledge of any Seller or
Partnership, threatened, anticipated or expected to be asserted against any
Employee Benefit Plan or the assets of any such plan (other than routine claims
for benefits and appeals of denied routine claims). No civil or criminal action
brought pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is
pending, or to the knowledge of any Seller or any Partnership, threatened,
anticipated, or expected to be asserted against any Partnership or any
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fiduciary of any Employee Benefit Plan, or in any case with respect to any
Employee Benefit Plan. Except as set forth in Schedule 4.17, no Employee Benefit
Plan or any fiduciary thereof has been the direct or indirect subject of an
audit, investigation or examination by any governmental or quasi-governmental
agency.
(v) Contributions. Full payment has been made of all amounts which
each Partnership is required, under applicable law or under any Employee Benefit
Plan or any agreement relating to any Employee Benefit Plan to which any
Partnership is a party, to have paid as contributions thereto, or premiums with
respect thereto, as of the date hereof. All such contributions and premiums have
been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any governmental entity, and to the best knowledge
and belief of the Sellers and the Partnerships, no event has occurred and no
condition or circumstance has existed that could give rise to any such challenge
or disallowance. Each Partnership has made adequate provision for reserves to
meet contributions that have not been made because they are not yet due under
the terms of any Employee Benefit Plan or related agreements. Benefits under all
Employee Benefit Plans are as represented and have not been increased, except as
provided for under such Employee Benefit
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Plans, subsequent to the date as of which documents have been provided.
(vi) Tax Qualification. Each Employee Benefit Plan intended to be
qualified under Section 401(a) of the Code has been determined to be so
qualified by the Internal Revenue Service. Each trust established in connection
with any Employee Benefit Plan which is intended to be exempt from Federal
income taxation under Section 501(a) of the Code has been determined to be so
exempt by the Internal Revenue Service. Since the date of each most recent
determination referred to in this paragraph (vi), no event has occurred and no
condition or circumstance has existed that resulted or is likely to result in
the revocation of any such determination or that could adversely affect the
qualified status of any such Employee Benefit Plan or the exempt status of any
such trust.
(vii) Transactions. Neither the Partnerships nor any of their
respective partners, directors, officers, employees or, to the knowledge of any
Seller or any Partnership, other persons who participate in the operation of any
Employee Benefit Plan or related trust or funding vehicle, has engaged in any
transaction with respect to any Employee Benefit Plan or breached any applicable
fiduciary responsibilities or obligations under Title I of ERISA that would
subject any of them to a tax, penalty or liability for prohibited
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transactions under ERISA or the Code or would result in any claim being made
under, by or on behalf of any such Employee Benefit Plan by any party with
standing to make such claim.
(viii) Triggering Events. The execution of this Agreement and the
consummation of the transactions contemplated hereby, do not, by themselves,
constitute a triggering event under any Employee Benefit Plan, policy,
arrangement, statement, commitment or agreement, whether or not legally
enforceable, which (either alone or upon the occurrence of any additional or
subsequent event) will or may result in any payment (whether of severance pay or
otherwise), acceleration, vesting or increase in benefits to any employee or
former employee or director of any Partnership. No Employee Benefit Plan
provides for the payment of severance benefits upon the termination of an
employee's employment.
(ix) Documents. The Sellers have delivered or caused to be delivered
to the Purchasers or their counsel copies of all material documents in
connection with each Employee Benefit Plan, including (where applicable): (A)
all Employee Benefit Plans as in effect on the date hereof, together with all
amendments thereto, including, in the case of any Employee Benefit Plan not set
forth in writing, a written description thereof; (B) all current summary plan
descriptions, summaries of material modifications, and material communications;
(C) all current trust agreements,
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declarations of trust and other documents establishing other funding
arrangements (and all amendments thereto and the latest financial statements
thereof); (D) the most recent Internal Revenue Service determination letter, if
any, obtained with respect to each Employee Benefit Plan intended to be
qualified under Section 401(a) of the Code or exempt under Section 501(a) of the
Code; (E) Form 5500 for each of the last three years for each Employee Benefit
Plan required to file such Form; (F) the most recently prepared financial
statements; and (G) all contracts relating to each Employee Benefit Plan,
including service provider agreements, insurance contracts, annuity contracts,
investment management agreements, subscription agreements, participation
agreements, and recordkeeping agreements.
Section 4.18. Interests in Customers, Suppliers, etc. Except as set
forth on Schedule 4.18 attached hereto, no officer or director of any Seller or
Partnership possesses, directly or indirectly, any financial interest in, or is
a director, officer or employee of, any Person which is a supplier, customer,
lessor, lessee, licensor, developer or competitor of such Partnership. Ownership
of securities of a company whose securities are registered under the Securities
Exchange Act of 1934, as amended, of 5% or less of any class of such securities
shall not be deemed to be a financial interest for purposes of this Section
4.18.
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Section 4.19. Bank Accounts and Powers of Attorney. Set forth on
Schedule 4.19 attached hereto is an accurate and complete list showing (a) the
name and address of each bank in which any Partnership has an account or safe
deposit box, the number of any such account or any such box and the names of all
persons authorized to draw thereon or to have access thereto and (b) the names
of all persons, if any, holding powers of attorney from any Partnership and a
summary statement of the terms thereof.
Section 4.20. Conduct of Business. Except as disclosed on Schedule
4.20 attached hereto and except as expressly contemplated by this Agreement,
since July 31, 1995 no Partnership has taken any action which, if taken
subsequent to the execution of this Agreement and on or prior to the Closing
Date, would constitute a breach of the Sellers' agreements set forth in clauses
(a)-(k) of Section 6.1.
Section 4.21. Operation of Business/Equipment. Except as set forth on
Schedule 4.21, no part of any Partnership's business is operated or conducted by
or through any Person other than the Partnerships.
Section 4.22. Loans and Accounts Receivable. Except as set forth on
Item 2 and Item 4 of Schedule 4.5, each Partnership is the legal and beneficial
owner of the Loans and Accounts Receivable reflected on the Balance Sheet or
acquired since the Balance Sheet Date, and the Part-
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nerships have good title to, such Loan and Accounts Receivable and the
collections with respect thereto, free and clear of any liens and no effective
financing statement or other instrument similar in effect covering all or any
part of such Loan or Receivable or collections with respect thereto will at such
time be on file in any filing or recording office.
Section 4.23. Environmental Matters. Except as set forth in Schedule
4.23, to the knowledge of any Seller or Partnership:
(i) no Hazardous Material has been used, generated, treated, stored or
disposed of by any Partnership, or with respect to each Partnership's
operations, no Hazardous Material has been released, discharged or spilled
at any properties owned, leased or operated by any Partnership or is
present in the fixtures, structures, soil, groundwater or surface water or
on, under, about or emanating from such properties;
(ii) none of the properties owned, leased or operated by any
Partnership contains or has contained any underground or above-ground tanks
for the storage of Hazardous Material;
(iii) each Partnership has disposed of all wastes, including those
containing any Hazardous Material, in compliance in all material respects
with all applicable
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Environmental Laws and Environmental Permits so as not to give rise to any
Environmental Claim against any Partnership;
(iv) there are no facts, circumstances or conditions with respect to
any properties owned, leased or operated by any Partnership or any
operations thereon, or any properties in the vicinity of such properties,
which (A) could subject any of such properties to any restrictions on
ownership, occupancy, use or transferability under any applicable
Environmental Law or Environmental Permit or (B) form the basis of an
Environmental Claim against any Partnership;
(v) each Partnership and each property owned, leased or operated by
such Partnership, and all operations thereon, are in compliance, in all
material respects, with all Environmental Laws; and
(vi) each Partnership has provided the Purchasers or caused the
Purchasers to be provided with accurate and complete copies of any material
written information in the possession of such Partnership which pertains to
the environmental history of all the properties owned, leased or operated
by such Partnership.
Section 4.24. Acquisition for Investment. Each of APT-1 and APT-2 will
acquire the Shares for investment and not with a view toward any resale or
distribution thereof.
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The Shares have not been registered under the Securities Act of 1933, as amended
(the "Act"), or the securities laws of any states and are being offered and sold
in reliance on exemptions from the registration requirements of the Act and such
laws. The Shares are subject to restrictions on transferability and resale and
may not be transferred or resold except as permitted under the Stockholders
Agreement referred to in Sections 7.8 and 8.6 and under the Act and such laws
pursuant to registration or exemption therefrom. Each of APT-1 and APT-2
understands that the Shares are not freely transferable, and that there is no
market to which APT-1 and APT-2 could sell the Shares. Each of APT-1 and APT-2
hereby warrants, represents and acknowledges that it is an "accredited investor"
for purposes of Regulation D and Rule 230.501(a) promulgated under the Act.
Section 4.25. Broker's or Finder's Fees. Except for Xxxxxxx, Xxxxx &
Co., whose fees and expenses will be, except as provided in Section 12.1, paid
by the Sellers, no agent, broker, person or firm acting on behalf of the Sellers
or the Partnerships is, or will be, entitled to any commission or broker's or
finder's fees from any Seller or Partnership, or from any Person controlling,
controlled by or under common control with any Seller or Partnership in
connection with any of the transactions contemplated by this Agreement.
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Section 4.26. APLP Ownership. Account Portfolios, L.P. is the ultimate
parent entity of the acquired person (as defined in the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
regulations promulgated thereunder). Account Portfolios, L.P.'s annual net sales
and total assets (each as defined in the HSR Act and the regulations promulgated
thereunder) are less than $100,000,000.
ARTICLE V
REPRESENTATIONS OF THE PURCHASER
Section 5. Representations of the Purchaser. Each Purchaser jointly
and severally represents, warrants and agrees as follows:
Section 5.1. Existence and Good Standing of the Purchaser; Power and
Authority. Each Purchaser is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Each Purchaser has
the requisite corporate power and authority to enter into, execute and deliver
this Agreement, the Seller Notes and the Seller Security Documents to which it
is a party and perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement, the Seller Notes and the Seller
Security Documents by each
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Purchaser party to such Seller Note or Seller Security Document and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized and approved by the Board of Directors of each Purchaser and no
other corporate action on the part of any Purchaser is necessary to authorize
the execution, delivery and performance of this Agreement by such Purchaser and
the consummation of the transactions contemplated hereby and thereby. This
Agreement, the Seller Notes and Seller Security Documents have been duly
executed and delivered by each Purchaser party to such Seller Note or Seller
Security Document and, assuming due execution of this Agreement, the Seller
Notes and the Seller Security Documents by each party to any such Seller Note or
Seller Security Document (other than the Purchasers), this Agreement, such
Seller Notes and the Seller Security Documents are valid and binding obligations
of each Purchaser a party thereto enforceable against such Purchaser in
accordance with its terms, except to the extent that its enforceability may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
Section 5.2. Consents and Approvals; No Violations. The execution
and delivery of this Agreement, the Seller Notes and the Seller Security
Documents by each
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Purchaser party to such Seller Note or Seller Security Document and the
consummation of the transactions contemplated hereby and thereby (including,
without limitation, the issuance of the Shares) (a) will not violate or
contravene any provision of the Certificate of Incorporation or By-laws of any
Purchaser, (b) will not violate or contravene any statute, rule, regulation,
order or decree of any public body or authority by which any Purchaser is bound
or by which any of its properties or assets are bound, (c) will not require any
filing with, or permit, consent or approval of, or the giving of any notice to
(including any filings under the HSR Act), any governmental or regulatory body,
agency or authority or any other Person; provided that such representation with
respect to filings required to be made under the HSR Act is made in reliance
upon the Sellers' representation in Section 4.26; and (d) will not result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Encumbrance upon any of the interests of any Purchaser under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or any other instrument
or obligation to which any Purchaser is a party, or by which any of
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them or any of their properties or assets may be bound, excluding from the
foregoing clauses (b), (c) and (d) filings, notices, permits, consents and
approvals, the absence of which, and violations, breaches, defaults, conflicts
and Encumbrances, which would not prevent such Purchaser from performing its
obligations under this Agreement, any Seller Note or any Seller Security
Document or the consummation of the transactions contemplated hereby and
thereby.
Section 5.3. Capital Stock. The Shares to be received by APT-1 and
APT-2 in accordance with the terms of this Agreement will be duly authorized,
validly issued and fully paid and nonassessable.
Section 5.4 Capitalization. (a) Capitalization of OSI Holdings. The
authorized capital stock of OSI Holdings consists of (i) 5,600,000 shares of OSI
Holdings Common Stock, of which 2,812,000 shares will be duly authorized and
validly issued and outstanding, fully paid and nonassessable after giving effect
to the transactions contemplated by this Agreement, and (ii) 1,000,000 shares of
OSI Holdings Preferred Stock, of which 800,000 shares will be duly authorized
validly issued and outstanding, fully paid and nonassessable after giving effect
to the transactions contemplated by this Agreement. The record ownership of the
outstanding shares of OSI Holdings Common Stock and Preferred
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Stock (after giving effect to the transactions contemplated by this Agreement)
is reflected on Schedule 5.4 attached hereto. Except as set forth on Schedule
5.4 attached hereto, no shares of capital stock of OSI Holdings have been
reserved for any purpose. Except for the OSI Holdings Preferred Stock and for
rights contained in the Stockholders Agreement referred to in Sections 7.8 and
8.6, there are no outstanding securities convertible into or exchangeable for
the capital stock of OSI Holdings and no outstanding options, rights (preemptive
or otherwise), or warrants to purchase or to subscribe for any shares of such
stock or other securities of OSI Holdings. There are no outstanding agreements
affecting or relating to the voting, issuance, purchase, redemption, repurchase
or transfer of any of the securities of OSI Holdings, except for the
Stockholders Agreement referred to in Sections 7.8 and 8.6 or as otherwise
contemplated hereunder. After giving effect to the issuance of the Shares, APT-1
and APT-2 will collectively be the registered holders of 33.19% of outstanding
OSI Holdings Common Stock and 33 1/3% of outstanding OSI Holdings Preferred
Stock.
(b) Capitalization of Newco-1. The authorized capital stock of Newco-1
consists of 100 shares of common stock, $.01 par value per share, of which 100
shares are duly authorized and validly issued and outstanding, fully paid and
nonassessable, all of which are owned of record and
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beneficially by OSI Holdings. No shares of capital stock of Newco-1 have been
reserved for any purpose. There are no outstanding securities convertible into
or exchangeable for the capital stock of Newco-1 and no outstanding options,
rights (preemptive or otherwise), or warrants to purchase or to subscribe for
any shares of such stock or other securities of Newco-1. There are no
outstanding agreements affecting or relating to the voting, issuance, purchase,
redemption, repurchase or transfer of any of the securities of Newco-1.
(c) Capitalization of Newco-2. The authorized capital stock of Newco-2
consists of 100 shares of common stock, $.01 par value per share, of which 100
shares are duly authorized and validly issued and outstanding, fully paid and
nonassessable, all of which are owned of record and beneficially by Newco-1. No
shares of capital stock of Newco-2 have been reserved for any purpose. There are
no outstanding securities convertible into or exchangeable for the capital stock
of Newco-2 and no outstanding options, rights (preemptive or otherwise), or
warrants to purchase or to subscribe for any shares of such stock or other
securities of Newco-2. There are no outstanding agreements affecting or relating
to the voting, issuance, purchase, redemption, repurchase or transfer of any of
the securities of Newco-2.
Section 5.5 Absence of Liabilities. Except as reflected on Schedule
5.5 or as contemplated by this Agreement,
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the Seller Notes and the Seller Security Documents, there exists no liabilities
(whether contingent or absolute, matured or unmatured, known or unknown) of OSI
Holdings or the Purchasers.
Section 5.6 Conduct of Business. No Purchaser has conducted any
business other than that directly related to the transactions contemplated
hereby and by the agreements set forth in Schedule 5.7.
Section 5.7 Other Agreements. Schedule 5.7 sets forth all agreements
(other than the Seller Notes and the Seller Security Documents) to which any
Purchaser is a party and by which any Purchaser is bound at the date hereof.
Section 5.8. Broker's or Finder's Fees. No agent, broker, person or
firm acting on behalf of the Purchasers is, or will be, entitled to any
commission or broker's or finder's fees from the Sellers in connection with any
of the transactions contemplated by this Agreement.
ARTICLE VI
TRANSACTIONS PRIOR TO THE CLOSING DATE
Section 6.1. Conduct of Business of the Seller. During the period from
the date of this Agreement to the Closing Date, the Partnerships shall conduct
their operations in the ordinary course of business; use their reasonable best
efforts to: preserve intact their current business organiza-
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tion, keep available the services of their current officers, employees and
agents, and maintain their relations and good-will with suppliers, customers,
landlords, creditors, licensors, developers, employees, agents and others having
business relationships with them; confer with the Purchasers concerning
operational matters of a material nature; and report periodically to the
Purchasers concerning the status of the business, operations and finances of the
Partnerships. Notwithstanding the immediately preceding sentence, prior to the
Closing Date, except as may be first approved in writing by the Purchasers or as
is otherwise permitted or required by this Agreement, each of the Sellers shall
cause each Partnership to (a) refrain from paying any individual bonus greater
than $5,000 or increasing any salary or other compensation to any director,
officer, employee or stockholder by greater than $5,000 or hiring any employee
with an annual salary of greater than $50,000 or entering into any employment,
severance, or similar agreement with any director, officer, employee or
stockholder except for actions referred to in this clause (a) made in the
ordinary course of business consistent with such Partnership's past practice,
(b) refrain from the adopting or increasing of any profit sharing, deferred
compensation, savings, insurance, pension, retirement, or other employee benefit
plan for or with any employees of such Seller, (c) refrain from entering into
any
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material contract or commitment (other than the contracts and commitments listed
in Schedules 4.3, 4.5, 4.7 or 4.9) except material contracts and commitments in
the ordinary course of business, (d) refrain from incurring any indebtedness for
borrowed money, (e) other than in connection with portfolios of Loans and
Accounts Receivable purchased from third parties in the ordinary course of
business consistent with past practice, refrain from cancelling or waiving any
claim or right of substantial value which individually or in the aggregate is
material to such Partnership, (f) refrain from redeeming, purchasing or
otherwise acquiring any equity interest of such Partnership (except for GSCLP),
(g) refrain from making any material change in accounting methods or practices,
except as required by law or generally accepted accounting principles, (h)
except for the liquidation of investment securities for cash, refrain from
selling, leasing or otherwise disposing of any material asset or property of
such Partnership, (i) make any capital expenditure which individually exceeds
$10,000 or make any capital expenditure commitment which individually or in the
aggregate exceeds $10,000, (j) refrain from writing off as uncollectible any
Loans or Accounts Receivable, except write-offs in the ordinary course of
business consistent with past practice and (k) refrain from agreeing in writing
whether or not to do any of the foregoing.
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Section 6.2. Exclusive Dealing. During the period from the date of
this Agreement to the Closing Date, neither any Seller, nor any representative
thereof, shall take any action to, directly or indirectly, encourage, initiate
or engage in discussions or negotiations with, or provide any information to,
any Person, other than the Purchasers and their representatives, concerning any
purchase of the Interests, any assets of any Partnership or any merger or
similar transaction involving any Partnership.
Section 6.3. Review of the Seller and Confidentiality. The Purchasers
may, prior to the Closing Date, directly or through its representatives, review
the properties, books and records of each Seller and its financial and legal
condition to the extent it reasonably deems necessary or advisable to
familiarize itself with such properties and other matters; such review shall
not, however, affect the representations and warranties made by each Seller in
this Agreement or the remedies of the Purchasers for breaches of those
representations and warranties. Each Seller shall permit the Purchasers and
their representatives to have reasonable access to the premises and to the books
and records of such Seller during normal working hours and to furnish the
Purchasers with such financial and operating data and other information with
respect to the business and properties of such Seller as the Purchasers shall
from time to time reason-
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ably request. The Purchasers shall cooperate fully with each Seller to implement
procedures designed to minimize disruption to such Seller's business while
ensuring access to all relevant information. The parties hereto acknowledge that
XxXxxx De Leeuw & Co. and Affiliates or representatives of the Sellers have
entered into a Confidentiality Agreement dated June 22, 1995 (the
"Confidentiality Agreement") and the Purchasers confirm that they will comply
with their obligations thereunder as if they were parties thereto and that
information obtained during any such review will be subject to the terms of the
Confidentiality Agreement.
Section 6.4. Reasonable Best Efforts. The Sellers and the Purchasers
shall cooperate and use their respective reasonable best efforts to take, or
cause to be taken, all appropriate actions, and to make, or cause to be made,
all filings necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, their respective reasonable best
efforts to obtain, prior to the Closing Date, all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts with any of the Partnerships as are necessary for
consummation of the transactions contemplated by the Agreement and to fulfill
the conditions to the sale contemplated hereby.
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ARTICLE VII
CONDITIONS TO THE PURCHASERS' OBLIGATIONS
Section 7. Conditions to the Purchasers' Obligations. The obligations
of the Purchasers to effect the transactions contemplated by this Agreement are
conditioned upon satisfaction, at or prior to the Closing, of the following
conditions:
Section 7.1. Opinion of the Sellers' Counsel. The Purchasers shall
have received an opinion, dated the Closing Date, of Xxxxxxxx Xxxxxxx LLP, to
the effect set forth in Exhibit B attached hereto.
Section 7.2. Truth of Representations and Warranties. The
representations and warranties of the Sellers contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date.
Section 7.3. Performance of Agreements. The agreements of the Sellers
to be performed prior to the Closing pursuant to the terms of this Agreement
shall have been duly performed.
Section 7.4. No Material Adverse Change. Prior to the Closing there
shall have been no material adverse change
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in the business, operations, financial condition or results of operations of the
Partnerships.
Section 7.5. No Litigation Threatened. No action or proceedings shall
have been instituted or, to the knowledge of any Seller or any Partnership,
threatened before a court or other government body or by any public authority to
restrain or prohibit any of the transactions contemplated hereby.
Section 7.6. Approvals. All governmental and other consents and
approvals, if any, disclosed on any Schedule attached hereto or otherwise
necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been received.
Section 7.7. Noncompetition Agreements. The Purchasers and each of
Xxxxx X. Xxxxx III and Xxxxx X. Xxxxx shall have entered into a noncompetition
and noninterference agreement in substantially the form of Exhibit C attached
hereto.
Section 7.8. Stockholders Agreement. OSI Holdings, Xxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxxx, APT-1, APT-2 and Affiliates of XxXxxx De Leeuw & Co. shall
have entered into a stockholders agreement in the form of Exhibit D attached
hereto.
Section 7.9. Transfer Documents. Each Seller shall have executed and
delivered to the Purchasers such
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deeds, transfers in registrable form, endorsements, assurances, conveyances,
releases, discharges, assignments, certificates, or other instruments of
transfer and conveyance, duly executed by such Seller, as the Purchasers shall
reasonably deem necessary to vest in the Purchasers good and marketable title to
the Interests free and clear of any Encumbrance of any kind, and such other
documents as the Purchasers may reasonably request to demonstrate satisfaction
of the conditions and compliance with this Agreement by each Seller.
Section 7.10. FIRPTA. Each Seller shall have furnished to the
Purchasers, on or prior to the Closing Date, a non-foreign person affidavit
required by Section 1445 of the Code.
Section 7.11. Pre-Closing Transactions. The Pre-Closing Transactions
shall have been completed as described in Section 9.3.
Section 7.12. Pledge Agreement. Each of APT-1 and APT-2 shall have
executed and delivered to the Purchasers the Pledge Agreement referred to in
Section 10.3.
ARTICLE VIII
CONDITIONS TO THE SELLERS' OBLIGATIONS
Section 8. Conditions to the Sellers' Obligations. The obligations of
the Sellers to effect the transactions
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contemplated by this Agreement are conditioned upon satisfaction, at or prior to
the Closing, of the following conditions:
Section 8.1. Opinion of the Purchaser's Counsel. The Sellers shall
have received an opinion, dated the Closing Date, of White & Case, to the effect
set forth in Exhibit D attached hereto.
Section 8.2. Truth of Representations and Warranties. The
representations and warranties of the Purchasers contained in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of such date.
Section 8.3. Performance of Agreements. The agreements of the
Purchasers to be performed prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed.
Section 8.4. No Litigation Threatened. No actions or proceedings shall
have been instituted or, to the knowledge of the Purchasers, threatened before a
court or other government body or by any public authority to restrain or
prohibit any of the transactions contemplated hereby.
Section 8.5. Approvals. All governmental and other consents and
approvals, if any, disclosed on any Schedule attached hereto or otherwise
necessary to permit the
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consummation of the transactions contemplated by this Agreement shall have been
received.
Section 8.6. Stockholders Agreement. OSI Holdings, Xxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxxx, APT-1, APT-2 and Affiliates of XxXxxx De Leeuw & Co. shall
have entered into a stockholders agreement in substantially the form of Exhibit
D attached hereto.
Section 8.7. Pre-Closing Transactions. The Pre-Closing Transactions
shall have been completed as described in Section 9.3.
Section 8.8. Delivery of Agreements. The Purchasers shall have
delivered the Seller Notes and the Seller Security Documents to the Sellers
executed by each Purchaser party to any such Seller Note or Seller Security
Document. Each Purchaser shall have executed and delivered to the Sellers such
financing statements, pledges, hypothecations, notices and assignments, in each
case in form and substance reasonably satisfactory to Sellers, as the Sellers
shall reasonably deem necessary or desirable to create, preserve, perfect,
confirm or validate the security interests, liens and pledges evidenced by the
Seller Security Documents.
Section 8.9. OSI Holdings Loan. Affiliates of
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XxXxxx De Leeuw & Co. shall have loaned $1,450,000 to OSI Holdings and OSI
Holdings shall have issued a promissory note in the Form of Exhibit E attached
hereto to such Affiliates.
ARTICLE IX
OTHER AGREEMENTS
Section 9.1. Transfer Taxes. All stamp, transfer, documentary, sales,
use, value added, registration and other similar taxes and fees imposed by the
United States or by any political subdivision or taxing authority thereof or
therein (including any penalties and interest) incurred in connection with the
sale of the Interests pursuant to this Agreement (collectively, the "Transfer
Taxes") shall be borne by the Purchasers. Each party will, to the extent
required by law, file on a timely basis all necessary Returns and other
documentation with respect to any Transfer Taxes.
Section 9.2. Use of Name/Change of Name. Each Seller agrees that it
will not, nor will it permit any of its Affiliates to, directly or indirectly,
initiate or support the initiation of any legal proceeding, or take any other
action, the intent or effect of which is to interfere with the Purchasers' use
of the phrases "Account Portfolios," "Gulf State," "Perimeter" or any
derivatives thereof, at any time after the date of this Agreement. No later than
thirty (30) days after the Closing Date, each Seller shall (if
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applicable), and shall cause each of its Affiliates to (if applicable), change
its name to a name not containing the phrases "Account Portfolios," "Gulf
State," "Perimeter" or any derivative thereof.
Section 9.3 Pre-Closing Transactions. Prior to the Closing Date, the
Sellers agree to (i) cause APLP to transfer all of the issued and outstanding
capital stock of PCMC to APMI, APT-1 and APT-2, (ii) amend the partnership
agreement of APLP to provide for the APLP Class A LP Interest (which will
represent a 18.75% interest in APLP) and the APLP Class B LP Interest (which
will represent a 80.25% interest in APLP), to provide that the APLP Class A LP
Interest is freely transferrable and to prohibit transfers of the APLP Class B
LP Interest (excepting from such prohibition the transfer to Newco-1
contemplated by Article II hereof) and (iii) exchange each of APT-1 and APT-2's
APLP limited partnership interest for respective one half interests in the APLP
Class A and APLP Class B LP Interests. The actions described in clauses (i),
(ii) and (iii) of this Section 9.3 are collectively referred to as the
"Pre-Closing Transactions."
Section 9.4 Cooperation/Record Keeping. The Sellers may retain books
and records of the Partnerships relating to Taxes or Returns with respect to any
Pre-Closing Period. After the Closing Date, the Sellers and the
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Purchasers shall furnish or cause to be furnished to the other party or parties
upon request such information relating to Taxes or Returns of the Partnerships
with respect to any Pre-Closing Period (including books and records). With
respect to the foregoing, the Sellers will not allow the destruction or
disposition of any books, records or files relating to the business, properties,
assets of the Partnerships to the extent they pertain to the operations of the
Partnerships with respect to any Pre-Closing Period, without first having
delivered such books, records and files to the Purchasers.
Section 9.5. Certain Tax Returns. Purchasers acknowledge that Sellers
will file Returns with respect to the Partnerships' Pre-Closing Periods on a
"Closing of the Books" method.
ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 10. Survival of Representations. The representations and
warranties of the Sellers and the Purchasers contained in this Agreement shall
survive for a period of two years following the consummation of the sale
contemplated hereby; provided that the representations and warranties set forth
in Section 4.12 shall survive the con-
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summation of the sale for the relevant statute of limitations period.
Section 10.1. Indemnification. (a) The Sellers hereby agree to jointly
and severally indemnify and hold the Purchasers and their officers, directors,
Affiliates and agents, and any successors thereto, harmless from damages, losses
or expenses (including, without limitation, reasonable attorneys' fees and
expenses) ("Damages") incurred or suffered as a result of or arising out of (i)
the failure of any representation or warranty made by any Seller pursuant to
this Agreement (without regard to any materiality exception contained therein)
to be true and correct as of the Closing Date, or (ii) the breach of any
covenant or agreement made or to be performed by any Seller pursuant to this
Agreement prior to the Closing Date; provided, however, that no Seller shall be
liable under clause (i) of this Section 10.1(a) unless the aggregate amount of
Damages with respect to matters referred to in such clause exceeds $500,000 and
then only to the extent of such excess; provided, further, that solely for
purposes of calculating such $500,000, the amount of the fees and expenses of
Purchasers' counsel incurred in connection with the preparation, prosecution and
enforcement of such indemnification claim shall not constitute Damages;
(b) The Purchasers hereby agree to jointly and severally indemnify and
hold harmless the Sellers and their
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officers, directors, trustees, Affiliates and agents, and any successors
thereto, from any and all Damages incurred or suffered as a result of or arising
out of the (i) failure of any representation or warranty made by the Purchasers
pursuant to this Agreement (without regard to any materiality exception
contained therein) to be true and correct as of the Closing Date or, or (ii) the
breach of any covenant or agreement made or to be performed by the Purchasers
pursuant to this Agreement; provided, however, that the Purchaser shall not be
liable under clause (i) of this Section 10.1(b) unless the aggregate amount of
Damages with respect to matters referred to in such clause exceeds $500,000 and
then only to the extent of such excess; provided, further, that solely for
purposes of calculating such $500,000, the amount of the fees and expenses of
Sellers' counsel incurred in connection with the preparation, prosecution and
enforcement of such indemnification claim shall not constitute Damages.
(c) The foregoing indemnification provision shall be the exclusive
remedy for any breach of the covenants, obligations, representations or
warranties set forth in this Agreement and recourse by the Purchasers for any
indemnification claim made as a result of any breach of any of the Seller's
covenants, obligations, representations or warranties set forth in this
Agreement shall be limited to
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the Shares pledged by the Sellers pursuant to Section 10.3 of this Agreement.
Section 10.2. Indemnification Procedure. (a) Any party seeking
indemnification (the "Indemnified Party") from any other party (the
"Indemnifying Party") with respect to any claim, demand, action, proceeding or
other matter pursuant to this Article X (the "Claim") shall promptly notify the
Indemnifying Party of the existence of the Claim, setting forth in reasonable
detail the facts and circumstances pertaining thereto and the basis for the
Indemnified Party's right to indemnification.
(b) If any third party shall notify any Indemnified Party with respect
to any matter which may give rise to a Claim for indemnification against the
Indemnifying Party under this Agreement, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent) the Indemnifying Party thereby is
materially prejudiced by such failure to give notice. In the event that any
Indemnifying Party notifies the Indemnified Party within 30 days after the
Indemnified Party has given notice of the matter that the Indemnifying Party
would be required to indemnify the Indemnified Party in
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full against any such Claim and is assuming the defense thereof:
(i) the Indemnifying Party will defend the Indemnified Party against
the matter with counsel of its choice reasonably satisfactory to the
Indemnified Party;
(ii) the Indemnified Party may retain separate cocounsel at its sole
cost and expense (except that the Indemnifying Party will be responsible
for the fees and expenses of the separate co-counsel (a) to the extent the
Indemnified Party concludes reasonably based upon advice of counsel that a
conflict of interest exists between the Indemnified Party and Indemnifying
Party or (b) the named parties to any such action (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party and
such Indemnified Party shall have been advised by counsel that there may be
one or more legal defenses available to the Indemnified Party which are not
available to the Indemnifying Party, or available to the Indemnifying
Party, but the assertion of which would be adverse to the interest of the
Indemnified Party);
(iii) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without
the written consent of the
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Indemnifying Party (not to be withheld unreasonably); and
(iv) the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified
Party from all liability with respect thereto, without the written consent
of the Indemnified Party (not to be withheld unreasonably).
(c) If no Indemnifying Party notifies the Indemnified Party within 30
days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then the Indemnified Party
may defend against, or enter into any settlement with respect to, the matter in
any manner it reasonably may deem appropriate, without prejudice to any of its
rights hereunder.
(d) The Indemnified Party shall be entitled to reimbursement of
reasonable expenses included in Damages with respect to any Claim (including,
without limitation, the cost of defense, preparation and investigation relating
to such Claim) as such expenses are incurred by the Indemnified Party.
Section 10.3. Pledge of Shares. To secure the indemnification
obligations of the Sellers hereunder, each of APT-1 and APT-2 hereby grants to
OSI Holdings a security
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interest in all of APT-1 and APT-2's right, title and interest in and to all of
the Shares and all certificates representing any of such common stock. APT-1 and
APT-2 shall each enter into a pledge agreement with OSI Holdings in the form of
Exhibit F hereto.
ARTICLE XI
EVENTS OF TERMINATION
Section 11.1. Events of Termination. This Agreement may be terminated
(a) by mutual written agreement of the Purchasers and the Sellers or (b) by the
Purchasers by written notice to the Sellers, if the conditions set forth in
Article VII hereof shall not have been complied with or performed on or prior to
the Closing Date in any material respect and no Purchaser shall have materially
breached any of its representations, warranties, covenants or agreements
contained herein, or (c) by the Sellers by written notice to the Purchasers, if
the conditions set forth in Article VIII hereof shall not have been complied
with or performed on or prior to the Closing Date in any material respect and no
Seller shall have materially breached any of its representations, warranties,
covenants or agreements contained herein, and, in either case of clauses (b) or
(c), such noncompliance or nonperformance shall not have been
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cured or eliminated (or by its nature cannot be cured or eliminated) on or
before September 21, 1995.
Section 11.2. Effect of Termination. In the event that this Agreement
shall be terminated pursuant to Section 11.1, all further obligations of the
parties hereto under this Agreement (other than pursuant to Sections 12.1 and
12.4 and as provided with respect to confidentiality in Section 6.3, which shall
continue in full force and effect) shall terminate without further liability or
obligation of any party to the other parties hereunder; provided, however, that
no party shall be released from liability hereunder if this Agreement is
terminated and the transactions abandoned by reason of (i) willful failure of
such party to have performed its obligations hereunder or (ii) any knowing
misrepresentation made by such party of any matter set forth herein.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Expenses. The parties acknowledge that (i) the
Partnerships will bear (a) $750,000 of the Sellers' expenses related to the
transactions contemplated by this Agreement and (b) $750,000 of the Purchaser's
expenses related to the transactions contemplated by this Agreement and (ii) OSI
Holdings will bear $1,600,000 of the Purchasers' expenses related to the
transactions contemplated by this
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Agreement. Such expenses shall include, without limitation, the fees and
expenses of their brokers, finders, agents, representatives (including, without
limitation, Xxxxxxx, Xxxxx & Co. and XxXxxx De Leeuw & Co.), financial
consultants, accountants and counsel. Except as provided in the previous
sentence, the partes hereto shall pay all of their own expenses related to the
transactions contemplated by this Agreement with the payment owed to Mr. Xxxxx
Xxxxxx as a result of this transaction being deemed to be a Sellers' expense.
Section 12.2. Governing Law. THE INTERPRETATION AND CONSTRUCTION OF
THIS AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN THE STATE OF NEW YORK.
Section 12.3. Captions. The Article and Section captions used herein
and in the Schedules are for reference purposes only, and shall not in any way
affect the meaning or interpretation of this Agreement.
Section 12.4. Publicity. Except as otherwise required by law or
regulation as advised by counsel, none of the parties hereto shall issue prior
to the closing any press release or make any other public statement, in each
case relating to or connected with or arising out of this Agreement or the
matters contained herein, without obtaining the prior
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approval of the Purchasers, on the one hand, and APT-1 and APT-2 on the other
hand, to the contents and the manner of presentation and publication thereof.
Section 12.5. Notices. Any notice or other communications required or
permitted hereunder shall be sufficiently given if delivered in person or sent
by telecopy or by registered or certified mail, postage prepaid, addressed as
follows: if to any Purchaser to it, c/x XxXxxx De Leeuw & Co., 000 Xxxx 00xx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopy Number (000) 000-0000,
Attention: Xx. Xxxxx X. Xxxx, with a copy to its counsel, White & Case, 0000
Xxxxxx xx xxx Xxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopy Number (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.; if to any Seller (other than APT-2) to it at
Xxx Xxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, Telecopy Number (770)
901-5815, Attention: Xx. Xxxxx X. Xxxxx III; if to APT-2, at Xxx Xxxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, Telecopy Number (000) 000-0000, Attention:
Xxxxx X. Xxxxx; with a copy in the case of any notice to any Seller to its
counsel, Xxxxxx X. Xxxxx, Esq., Xxxxxxxx Xxxxxxx LLP, Nationsbank Plaza, 000
Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000, Telecopy Number (000) 000-0000;
or such other address or number as shall be furnished in writing by any such
party, and such notice or communication shall be deemed
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to have been given as of the date so delivered, sent by telecopy or mailed.
Section 12.6. Parties in Interest. This Agreement may not be
transferred, assigned, pledged or hypothecated by any party hereto, other than
by operation of law; provided, however, that each Purchaser may assign or
transfer all or any portion of this Agreement to any one of its wholly-owned
subsidiaries, but any such assignment shall not relieve such Purchaser of any of
its obligations hereunder. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns.
Section 12.7. Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
Section 12.8. Entire Agreement. This Agreement, including the
Exhibits, Schedules and other documents referred to herein (including the
Confidentiality Agreement) which form a part hereof, contain the entire
understanding of the parties hereto with respect to the subject matter contained
herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
Section 12.9. Amendments. This Agreement may not be changed orally,
but only by an agreement in writing signed
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by the parties hereto. Any provision of this Agreement can be waived, amended,
supplemented or modified by written agreement of the parties hereto.
Section 12.10. Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
Section 12.11. Third Party Beneficiaries. Each party hereto intends
that this Agreement shall not benefit or create any right or cause of action in
or on behalf of any Person other than the parties hereto.
Section 12.12. Knowledge of a Party. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to the
knowledge of a party hereto, such party confirms that it has made due and
diligent inquiry as to the matters that are the subject of such representations
and warranties.
Section 12.13. Jurisdiction. Any judicial proceeding brought against
any of the parties to this Agreement or any dispute arising out of this
Agreement or any matter related hereto may be brought in the courts of the State
of New York, or in the United States District Court for the Southern District of
New York, and, by execution and delivery of this Agreement, each of the parties
to this
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Agreement accepts the jurisdiction of such courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement. The
foregoing consent to jurisdiction shall not be deemed to confer rights on any
Person other than the respective partes to this Agreement.
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IN WITNESS WHEREOF, each Purchaser and each Seller has caused its
name to be hereunto subscribed by its officer or trustee, as applicable,
thereunto duly authorized all as of the day and year first above written.
OSI HOLDINGS CORP.
By /s/ Xxxxx X. Xxxx
---------------------------------
Name: Xxxxx X. Xxxx
Title: President
ACCOUNT PORTFOLIOS, INC.
By /s/ Xxxxx X. Xxxx
---------------------------------
Name: Xxxxx X. Xxxx
Title: President
ACCOUNT PORTFOLIOS G.P., INC.
By /s/ Xxxxx X. Xxxx
---------------------------------
Name: Xxxxx X. Xxxx
Title: President
AP MANAGEMENT, INC.
By /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: President
GSC MANAGEMENT, INC.
By /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: President
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PERIMETER CREDIT,
MANAGEMENT CORPORATION
By /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: President
ACCOUNT PORTFOLIOS TRUST ONE
By /s/ Xxxxx X. Xxxxx III
---------------------------------
Name: Xxxxx X. Xxxxx III
Title: Trustee
ACCOUNT PORTFOLIOS TRUST TWO
By /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Trustee
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