Exhibit 2(iii)
--------------
Agreement and Plan of Reorganization dated as of December 23, 1999
by and among Susquehanna, Susquehanna Bancshares Central, Inc.
and Valley Forge Investment Company, Inc.
EXHIBIT 2(iii)
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") dated as of December 23,
1999, by and among SUSQUEHANNA BANCSHARES, INC., a Pennsylvania business
corporation registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended ("SBI"), SUSQUEHANNA BANCSHARES CENTRAL, INC., a
Pennsylvania business corporation and a wholly-owned subsidiary of SBI
("Acquisition Corporation") and VALLEY FORGE INVESTMENT COMPANY, INC., a
Pennsylvania business corporation ("VFICO").
RECITALS:
WHEREAS, SBI is a multi-state, multi-institution bank holding company;
WHEREAS, SBI owns all of the issued and outstanding shares of capital stock
of Acquisition Corporation;
WHEREAS, VFICO is a Pennsylvania corporation;
WHEREAS, the Boards of Directors of SBI, Acquisition Corporation and VFICO
deem it advisable and in the best interests of the respective corporations and
their shareholders to consummate, and have approved, the business combination
transaction provided for herein in which Acquisition Corporation would merge
with and into VFICO (the "Merger");
WHEREAS, between VFICO and Acquisition Corporation, this Agreement shall
constitute a Plan of Merger pursuant to Section 1922 of the Pennsylvania
Business Corporation Law of 1988, as amended (the "BCL");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 Effective Time of the Merger. Subject to the provisions of
----------------------------
this Agreement, articles of merger in the form of Exhibit A (the "Articles of
Merger") shall be duly prepared and executed by VFICO and Acquisition
Corporation and thereafter delivered to the Department of State of the
Commonwealth of Pennsylvania for filing, as provided in the BCL, on the Closing
Date (as defined in Section 1.02). The Merger shall become effective upon
filing of the Articles of Merger with the Secretary of State of the Commonwealth
of Pennsylvania (the "Effective Time").
SECTION 1.02 Closing. The closing of the Merger (the "Closing") will take
-------
place at such place and at such time and on such date as shall be agreed upon by
the parties, which date shall not be later than thirty business days after the
day on which the last to be fulfilled or waived
1
of the conditions set forth in Article VI shall be fulfilled or waived in
accordance herewith. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date."
SECTION 1.03 Effects of the Merger.
---------------------
(a) At the Effective Time, (i) the separate corporate existence
of Acquisition Corporation shall cease and Acquisition Corporation shall be
merged with and into VFICO (Acquisition Corporation and VFICO are sometimes
referred to herein as the "Constituent Corporations" and VFICO is sometimes
referred to herein as the "Surviving Corporation"), (ii) the Articles of
Incorporation of Acquisition Corporation as in effect immediately prior to the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation, (iii) the Bylaws of Acquisition Corporation as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation, (iv) the individuals listed on Exhibit B shall become the directors
of the Surviving Corporation, (v) the individuals serving as officers of VFICO
immediately prior to the Effective Time shall become the officers of the
Surviving Corporation, (vi) the name of the Surviving Corporation shall be
"Valley Forge Investment Company, Inc.", and (vii) the registered office of the
Surviving Corporation shall be 00 Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxx
00000.
(b) At and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all the restrictions, disabilities and duties of each of the Constituent
Corporations; and all rights, privileges, powers and franchises of each of the
Constituent Corporations, and all property, real, personal and mixed, and all
debts due to either of the Constituent Corporations on whatever account, as well
as for stock subscription and all other things belonging to each of the
Constituent Corporations, shall be deemed to be transferred to and vested in the
Surviving Corporation without further action, and all property, rights,
privileges, powers and franchises, and all and every other interest shall be
thereafter the property of the Surviving Corporation as they were of the
Constituent Corporations, and the title to any real estate or any interest
herein vested by deed or otherwise in either of the Constituent Corporations,
shall not revert or be in any way impaired by reason of the Merger, but all
rights of creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said debts
and liabilities had been incurred by it.
(c) If at any time after the Closing Date, the Surviving
Corporation shall determine or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Acquisition Corporation acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of either Acquisition Corporation or VFICO, all deeds, bills of
sale, assignments or assurances and to take and do, in the name and on behalf of
each of such corporations or otherwise, all such other actions and things as may
be necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the Surviving
Corporation and otherwise to carry out this Agreement.
2
SECTION 1.04 Other Matters.
-------------
(a) Notwithstanding any term of this Agreement to the contrary,
SBI may, in its discretion at any time prior to the Closing, designate a direct
or an indirect wholly-owned subsidiary to substitute for Acquisition Corporation
hereunder by written notice to VFICO so long as the exercise of this right does
not materially adversely affect the interests of the shareholders of VFICO in a
manner that has not been disclosed to them or cause a material delay in the
consummation of the transactions contemplated herein; if such right is
exercised, this Agreement shall be deemed to be modified to accord such change.
(b) Notwithstanding any term of this Agreement to the contrary,
after the Closing, SBI may, in its sole discretion, merge or consolidate the
Surviving Corporation into, Valley Forge Asset Management Corporation ("VFAM"),
or alternatively, merge or consolidate VFAM, into the Surviving Corporation.
(c) Nothing in this Agreement shall be deemed to restrict the
ability of SBI or any of its subsidiaries to merge with or into another entity
so long as no such other transaction shall materially, adversely affect the
parties' ability to consummate the transactions contemplated herein or cause a
material delay in, or otherwise adversely affect, consummation of the
transactions contemplated herein.
SECTION 1.05 Dissenters' Rights. In accordance with the provisions of
------------------
Subchapter D of Chapter 15 of the BCL commencing at Section 1571, the
shareholders of VFICO shall be entitled to exercise dissenters' rights.
SECTION 1.06 Payment to SBI. Immediately following the Closing, VFICO
--------------
shall pay to SBI an amount equal to $1,500,000.
ARTICLE II
CONVERSION; CASH CONSIDERATION FOR SECURITIES
SECTION 2.01 Conversion of Capital Stock. As of the Effective Time, by
---------------------------
virtue of the Merger and without any action on the part of the holders of any
common stock, par value $.01 per share, of VFICO (the "VFCIO Common Stock") or
capital stock of Acquisition Corporation:
(a) Capital Stock of Acquisition Corporation. Each outstanding
----------------------------------------
share of capital stock of Acquisition Corporation shall be converted into and
become one fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation.
(b) Cash Consideration for VFICO Common Stock. Each outstanding
-----------------------------------------
share of VFICO Common Stock (other than shares to be cancelled in accordance
with Section 2.01(c) below, and shares the holders of which are exercising
appraisal rights pursuant to the BCL) shall be converted into the right to
receive cash from Acquisition Corporation in the amount of $8.5 million divided
by the number of issued and outstanding shares of VFICO Common Stock immediately
prior to Closing (the "Cash Consideration"). All such shares of VFICO Common
Stock, when so converted, shall no longer be outstanding and shall automatically
be cancelled and retired, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive the Cash Consideration, without interest, in
3
consideration therefor upon the surrender of such certificate in accordance with
Section 2.02 hereof.
(c) Cancellation of VFICO Common Stock. Each share of VFICO
----------------------------------
Common Stock held in treasury at the Effective Time shall be cancelled and
no Cash Consideration or other consideration shall be delivered in exchange
therefor.
SECTION 2.02 Surrender and Exchange of VFICO Common Stock.
--------------------------------------------
(a) At the Effective Time, VFICO shall deliver to SBI the
certificates representing all of the shares of VFICO Common Stock, accompanied
by blank stock powers duly executed with all necessary transfer tax and other
revenue stamps affixed and canceled, in exchange for the Cash Consideration, to
which each holder is entitled under Section 2.01 hereof.
(b) After the Effective Time, there shall be no transfer on the
stock transfer books of VFICO or the Surviving Corporation of VFICO Common
Stock. VFICO Certificates presented for transfer after the Effective Time, shall
be cancelled and Cash Consideration shall be issued in exchange therefor as
provided herein.
(c) If outstanding certificates for shares of VFICO Common Stock
are not surrendered prior to the date on which such certificates would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed items shall, to the extent permitted by abandoned property and other
applicable law, become the property of the Surviving Corporation (and to the
extent not in its possession shall be paid over to it), free and clear of claims
or interest of any person previously entitled to such claims. Notwithstanding
the foregoing, neither the Surviving Corporation nor its agents nor any other
person shall be liable to any former holder of VFICO Common Stock for any
property delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) In the event any certificates for shares of VFICO Common
Stock shall have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such VFICO Certificate to be lost, stolen or
destroyed and, if requested by SBI, the posting by such person of a bond in such
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such certificate, the Surviving
Corporation will issue the Cash Consideration in exchange for such lost, stolen
or destroyed certificate into which such certificate has been converted pursuant
to this Agreement.
SECTION 2.03 Dissenting Shares. Notwithstanding anything in this
-----------------
Agreement to the contrary, shares of VFICO Common Stock that are outstanding
immediately prior to the Effective Time and which are held by shareholders who
have perfected dissenters' rights in accordance with Subchapter D of Chapter 15
of the BCL (the "Dissenting Shares") shall not be converted into the Cash
Consideration, unless and until such holders shall have failed to perfect or
shall have effectively withdrawn or lost such holder's rights to an appraisal
under the BCL. Any payments to any holder who has exercised dissenters' rights
which exceed the per share value of the Cash Consideration, shall be paid out of
the Escrow Funds as defined in the Stock Purchase Agreement among SBI,
Acquisition Corporation, VFAM and certain Shareholders of VFAM (the "VFAM
Agreement"), or shall be paid as otherwise provided in the VFAM Agreement. If
any such holder shall have failed to perfect or shall have effectively withdrawn
or lost such holder's rights to appraisal of such shares of VFICO Common Stock
under the BCL, such holder's shares shall thereupon be deemed to have been
converted into and to have become
4
exchangeable for, at the Effective Time, the right to receive, upon surrender as
provided above, the Cash Consideration, without interest, for the certificate or
certificates that formerly evidenced such shares of VFICO Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF VFICO
As a material inducement to SBI and Acquisition Corporation to enter into
this Agreement and consummate the Merger and the other transactions contemplated
herein, VFICO represents and warrants to SBI and Acquisition Corporation that,
except as specifically disclosed to SBI and Acquisition Corporation in writing
in the disclosure schedules being delivered to SBI and Acquisition Corporation
(the "VFICO Schedules") which shall identify the specific sections or
subsections in this Agreement to which each such disclosure relates:
SECTION 3.01 Organization, Registration.
--------------------------
(a) VFICO is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Pennsylvania and has all
requisite corporate power and corporate authority and all necessary governmental
approvals to own, lease and operate its properties, and to carry on its
business, to enter into this Agreement and the other documents and instruments
to be executed and delivered by it and to carry out the transactions
contemplated hereby and thereby. VFICO is duly licensed or qualified to do
business as a foreign corporation and is in good standing in all jurisdictions
wherein the character of the properties owned or leased or the nature of its
business make such qualification to do business necessary, except for those
jurisdictions where the failure to be so qualified would not have a material
adverse effect. Schedule 3.01(a) lists all of the jurisdictions in which VFICO
is qualified to do business. VFICO has delivered to SBI true and correct copies
of its Articles of Incorporation and Bylaws, each as in effect on the date
hereof.
(b) VFICO has all federal, state, local and foreign governmental
licenses, permits, or registrations required for its business as currently
conducted, except where the absence would not have a material adverse effect.
Schedule 3.01(b) lists all of such licenses, permits or registrations currently
in effect, the applicable jurisdictions, and the date of expiration, if any.
All of such licenses, permits or registrations are in full force and effect, no
violations have occurred or been asserted with respect thereto, and no material
change in the facts or circumstances reported or assumed in any documents
submitted by VFICO in connection with any such license, permit or registration
has occurred which would require an amendment of such document, license, permit
or registration.
(c) VFICO is not, and has never been, registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and is not, and has never been, registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act").
(d) VFICO is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act"), which is
required to be registered under the 1940 Act in order to engage in the
transactions described in Section 7 of the 1940 Act. VFICO does not act as an
investment advisor or subadvisor to any "investment company," as defined in the
1940 Act, which is registered under the 1940 Act.
5
(e) Schedule 3.01(e) contains a complete list of all of the
directors and officers of VFICO as of the date hereof.
(f) There is no pending or, to the knowledge of VFICO, any
threatened claim or litigation against VFICO (nor to the knowledge of VFICO does
there exist any basis therefor) contesting the validity of or right to use the
"Valley Forge Investment Company, Inc." name as currently used by VFICO as its
corporate name in connection with its business activities, nor has VFICO
received any notice that its use of its respective name conflicts, with the
asserted rights of others.
(g) VFAM is the only entity in which VFICO holds an equity
interest. Except for VFAM, VFICO does not own any capital stock or other equity
interest of any corporation, has no direct or indirect equity or ownership
interest in, by way of stock ownership or otherwise, any corporation,
partnership, joint venture, association or business enterprise and is not
contemplating acquiring any such interest. VFICO owns beneficially and of record
the shares of stock or other interests of VFAM as set forth on Schedule 3.01(g),
free and clear of any mortgage, claim, lien, pledge, option, security interest
or other similar interest, encumbrance, easement, judgment or imperfection of
title of any nature whatsoever (each an "Encumbrance"), and, except as set forth
in Schedule 3.01(g), none of the shares or interests is subject to any covenant
or other contractual restriction preventing or limiting the right to transfer
such shares. Except as set forth on Schedule 3.01(g), there are not any
agreements or understandings to which VFICO or VFAM is a party which respect to
the voting of shares of capital stock of VFAM; and VFAM has no outstanding
options, calls, rights of conversion or other commitments to purchase or sell
any authorized or issued shares of capital stock. There are no contracts,
commitments, agreements, understandings or restrictions that require VFICO to
sell or deliver any shares of the capital stock of VFAM.
SECTION 3.02 Capitalization. The VFICO Common Stock, which constitutes
--------------
all of the authorized capital stock of VFICO, consists of 500,000 shares of
common stock, $1.00 par value per share, of which 497,800 shares are issued and
outstanding and 2,200 shares are held in treasury. All outstanding shares of
VFICO Common Stock are validly issued, fully paid and nonassessable and not
subject to any preemptive rights. There are no existing options, warrants,
calls, subscriptions or other rights (including rights of conversion) or other
agreements or commitments of any character (including voting agreements)
relating to the issued or unissued capital stock of VFICO, and, as of the date
hereof, there are no outstanding contractual obligations of VFICO to repurchase,
redeem or otherwise acquire any shares of its capital stock. All securities
issued by VFICO, including all shares of VFICO Common Stock, have been issued in
compliance with all applicable federal and state securities laws, including
applicable provisions of the Securities Act of 1933 (the "1933 Act").
SECTION 3.03 Authority. The execution, delivery and performance of this
---------
Agreement and the consummation of the Merger and the other transactions
contemplated herein have been duly authorized by all necessary corporate action
on the part of VFICO and no other corporate proceedings on the part of VFICO
(other than the approval of the adoption of this Agreement and the Merger by the
affirmative vote of the holders of a majority of the outstanding shares of VFICO
Common Stock in accordance with the BCL) are necessary to authorize this
Agreement or to consummate the transactions so contemplated.
6
SECTION 3.04 Consents and Approvals; No Violations. This Agreement
-------------------------------------
constitutes or when executed and delivered will constitute, a valid and binding
agreement of VFICO enforceable in accordance with its terms, and, except as such
enforceability may be limited by bankruptcy or other similar laws affecting
creditors' rights and remedies generally, and except as set forth on Schedule
3.04, neither the execution and delivery of this Agreement, nor the consummation
of the transactions contemplated hereby (i) conflict or result in a breach of
any provision of the Articles of Incorporation or Bylaws of VFICO, (ii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any of the VFICO Agreements (as defined in Section 3.10(b)), note, bond,
mortgage, indenture, lease or license to which VFICO is a party or by which any
of its properties or assets may be bound or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to VFICO or any of
its properties or assets. No permit, authorization, consent or approval of, any
court or other adjudicatory body, administrative agency or commission or other
governmental or regulatory authority or agency is required in connection with
the execution, delivery or performance by VFICO of this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 3.05 Financial Statements and Internal Control Structure.
---------------------------------------------------
(a) VFICO has delivered to SBI the audited financial statements,
including the notes thereto, of VFICO for the years ended December 31, 1998 and
1997 accompanied by the report of Xxxxxxx Xxxxxxxxxx & Company, LLP with respect
thereto (collectively, the "VFICO Financial Statements"), except as set forth on
Schedule 3.05(a), to the knowledge of VFICO, the VFICO Financial Statements were
prepared in accordance with generally accepted accounting principles ("GAAP").
The audited balance sheet of VFICO at December 31, 1998 is referred to herein as
the "VFICO Balance Sheet" and the date of such VFICO Balance Sheet is referred
to herein as the "VFICO Balance Sheet Date." The VFICO Financial Statements and
the notes thereto, if any, were prepared in accordance with the books and
records of VFICO and fairly present the assets, liabilities and financial
condition of VFICO as at the respective dates thereof, and the corresponding
results of operations, retained earnings and cash flows for the periods therein
referred to and except as set forth on Schedule 3.05(a), to the knowledge of
VFICO, were prepared in accordance with GAAP consistently applied throughout the
periods involved. In addition, VFICO has delivered unaudited financial
statements for the nine months ended September 30, 1999, which are contained in
the VFICO Financial Statements were prepared on a basis consistent with the
audited financial statements of VFICO contained in the VFICO Financial
Statements, subject to normal, recurring year-end adjustments.
(b) VFICO has not received any management letters from its
outside auditors relating to the VFICO Financial Statements.
SECTION 3.06 Title to Assets, Properties, Interests in Properties, Rights
------------------------------------------------------------
and Related Matters.
-------------------
(a) VFICO has good title to all of its properties, interest in
properties, and assets, free and clear of any mortgages, pledges, liens,
security interests, conditional and installment sale agreements, right of first
refusal or similar claims or encumbrances or charges of any kind other than any
such claim or encumbrance as disclosed in the notes to the VFICO Balance Sheet
(i) the lien of current taxes not yet due and payable; (ii) properties,
interests and assets that are leased or have been disposed of by VFICO since the
VFICO Balance Sheet Date,
7
in the ordinary course of business consistent with past practice; and (iii) such
imperfections of title, easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present or proposed use, of the properties
subject thereto.
(b) The assets and properties of VFICO constitute the rights,
properties and assets (tangible or intangible) necessary for the conduct of its
respective business as currently conducted.
(c) VFICO owns no real property.
SECTION 3.07 Absence of Certain Changes. Since the VFICO Balance Sheet
--------------------------
Date VFICO has not experienced, nor to the knowledge of VFICO has there been
threatened, any material adverse change in its condition (financial or
otherwise), assets, liabilities (absolute, accrued, contingent or otherwise),
business, or operations.
SECTION 3.08 Absence of Undisclosed Liabilities. Except to the extent set
----------------------------------
forth in the VFICO Balance Sheet VFICO has no material liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by GAAP to be reflected on its respective balance sheet
(including the notes thereto), and it does not have any material claims, debts,
liabilities or obligations or any alleged material claims, debts, liabilities or
obligations to any party, including but not limited to claims made by
governmental authorities for taxes or otherwise, except for (x) liabilities
expressly disclosed in this Agreement and in the Exhibits or Schedules and (y)
liabilities incurred between the date of this Agreement and the Closing Date,
the occurrence of which is not in violation of the provisions of this Agreement.
SECTION 3.09 Legal Proceedings. There are no claims, actions, suits,
-----------------
orders, proceedings or investigations pending or to the knowledge of VFICO
threatened by or against VFICO, at law or in equity or before or by any federal,
state or municipal or other governmental department, commission, board, agency,
instrumentality or authority. There is no valid basis known to VFICO for any
such claims, actions, suits, orders, proceedings or investigations, which if
adversely determined could have a material adverse effect on VFICO or the
ability of VFICO to consummate the transactions contemplated hereby. There are
no judgments, decrees, injunctions or orders of any court or governmental
department or agency outstanding against VFICO.
SECTION 3.10 Contracts, Leases, Agreements and Other Commitments.
---------------------------------------------------
(a) VFICO is not a party to any written or oral investment
advisor, administrator, distributor, custodian or agency agreement, contract or
understanding or any other agreement, contract or understanding under which
VFICO is required to provide investment advice or services.
(b) Schedule 3.10(b) contains an accurate list of all
commitments, contracts, leases and agreements to which VFICO is a party or by
which it is bound which involves a commitment or obligation in excess of $10,000
in the aggregate for each such commitment contract, lease or agreement or is
otherwise material to the business of VFICO (including, without limitation,
joint venture or partnership agreements, employment agreements, contracts,
tenant leases, equipment leases, equipment maintenance agreements, agreements
with municipalities and labor organizations, loan agreements, bonds, mortgages,
liens or other
8
security agreements) (the "VFICO Agreements"). VFICO has delivered true, correct
and complete copies of such agreements to SBI. Except as set forth in Schedule
3.10(b) attached hereto, as of the date of this Agreement, VFICO is not a party
to, or bound by, any oral or written:
(i) consulting agreement not terminable on thirty (30) days' or
less notice involving the payment of more than $10,000 per annum, in the case of
any such agreement;
(ii) agreement with any officer or other key employee the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction of the nature contemplated by this
Agreement;
(iii) agreement with respect to any officer providing any term of
employment or compensation guarantee extending for a period longer than one year
or for a payment in excess of $50,000;
(iv) agreement or plan, including any stock option plan, stock
appreciation rights plan, employee stock ownership plan, restricted stock plan
or stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement;
(v) agreement containing covenants that limit its ability to
compete in any line of business or with any person, or that involve any
restriction on the geographic area in which, or method by which, it may carry on
its business (other than as may be required by law or any regulatory agency);
(vi) its agreement, contract or understanding, other than this
Agreement, regarding the capital stock or committing to dispose of substantially
all of its assets;
(vii) collective bargaining agreement, contract, or other
agreement or understanding with a labor union or labor organization;
(viii) any employment contracts or any other contracts,
agreements or commitments to or with individual employees or agents of VFICO
which involves a commitment or obligation in excess of $50,000 in the aggregate
for each such contract, agreement or commitment and any contracts, agreements or
commitments with consultants or other independent contractors;
(ix) any power of attorney given by VFICO;
(x) any contracts or commitments providing for payments based
in any manner on the revenues or profits of VFICO;
(xi) any contract under which VFICO has agreed (i) to maintain
the confidentiality of third party information, (ii) not to compete or solicit
for hire employees of a third party or (iii) to otherwise limit or restrict its
operations;
9
(xii) any instruments relating to indebtedness for borrowed
money, including any note, bond, deed of trust, mortgage, indenture or agreement
to borrow money or any agreement of guarantee or indemnification, whether
written or oral, in favor of any person or entity; or
(xiii) any other contract or commitment, whether in the ordinary
course of business or not, which involves future payments, performance of
services or delivery of goods or materials, to or by VFICO of any amount or
value in excess of $50,000 in the aggregate for each such contract or
commitment.
(c) The VFICO Agreements constitute valid and legally binding
obligations of VFICO and are enforceable in accordance with their terms,
assuming due authorization, execution and delivery by parties other than VFICO
and except (i) as may be affected by bankruptcy, insolvency, reorganization,
moratorium or similar laws or by equitable principles relating to or limiting
creditors rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief is subject to the discretion of
the court before which any proceeding therefor may be brought.
(d) Each VFICO Agreement constitutes the entire agreement by and
between the respective parties thereto with respect to the subject matter
thereof.
(e) All obligations required to be performed under the terms of the
VFICO Agreements have been performed by VFICO, and to VFICO's knowledge by the
other parties thereto, no act or omission has occurred or failed to occur which,
with the giving of notice, the lapse of time or both would constitute a default
by VFICO under the VFICO Agreements.
(f) Except as expressly set forth on Schedule 3.10(f), none of the
VFICO Agreements requires the consent of the other parties thereto in order for
it to be in full force and effect with respect to the Surviving Corporation or
Acquisition Corporation after the Merger or would give rise to the other party's
right to terminate any VFICO Agreement; and VFICO will use its best efforts to
obtain any required consents prior to the Closing. Except as expressly set
forth on Schedule 3.10(f), VFICO has no plans, programs, commitments or
arrangements to which they are parties, or to which they are subject, pursuant
to which payments may be required or acceleration of benefits may be required
upon change of control of VFICO or the consummation of the Merger.
SECTION 3.11 Insurance. Schedule 3.11 is a summary of all insurance
---------
policies maintained by VFICO (specifying, among other things, the insurer, type
of insurance, amount of coverage and policy number). Such policies are in full
force and effect and all premiums with respect to such policies are currently
paid. VFICO has not been denied or had revoked or rescinded any policy of
insurance or received any notice of intent to cancel or not renew during the
past three years.
SECTION 3.12 Benefit Plans. Schedule 3.12 contains a complete list of all
-------------
pension, retirement, stock option, stock purchase, savings, stock appreciation
right, profit sharing, deferred compensation, consulting, bonus, group
insurance, severance and other employee incentive and welfare contracts and
plans, and all trust agreements related thereto, that VFICO maintains or to
which it contributes for any of its present or former directors, officers, or
other employees (hereinafter referred to collectively as the "Employee Plans").
10
(a) To the knowledge of VFICO, all of the Employee Plans comply in
all material respects with all applicable requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Code (as
defined in Section 3.16 hereto) and other applicable laws; VFICO has not engaged
in a "prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) with respect to any Employee Plan which is likely to result in
any penalties, taxes or other events under Section 502(i) of ERISA or Section
4975 of the Code.
(b) No liability to the Pension Benefit Guaranty Corporation has been
or is expected by VFICO to be incurred with respect to any Employee Plan which
is subject to Title IV of ERISA ("Pension Plan"), or with respect to any
"single-employer plan" (as defined in Section 4001(a)(15) of ERISA) currently or
formerly maintained by it or any entity which is considered one employer with
VFICO under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate").
(c) No Pension Plan or single-employer plan of an ERISA Affiliate had
an "accumulated funding deficiency" (as defined in Section 302 of ERISA (whether
or not waived)) as of the last date of the end of the most recent plan year
ending prior to the date hereof; all contributions to any Pension Plan or
single-employer plan of an ERISA Affiliate that were required by Section 302 of
ERISA and were due prior to the date hereof have been made on or before the
respective dates on which such contributions were due; the fair market value of
the assets of each Pension Plan or single-employer plan of an ERISA Affiliate
exceeds the present value of the "benefit liabilities" (as defined in Section
4001(a)(6) of ERISA) under such Pension Plan or single-employer plan of an ERISA
Affiliate as of the end of the most recent plan year with respect to the
respective Pension Plan or single-employer plan of an ERISA Affiliate ending
prior to the date hereof, calculated on the basis of the actuarial assumptions
used in the most recent actuarial valuation for such Pension Plan or single-
employer plan of an ERISA Affiliate as of the date hereof, and no notice of a
"reportable event" (as defined in Section 4043 of ERISA) for which the reporting
requirement has not been waived has been required to be filed for any Pension
Plan or single-employer plan of an ERISA Affiliate within the 12-month period
ending on the date hereof.
(d) VFICO has not provided, nor been required to provide, security to
any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401 (a)(29) of the Code.
(e) Neither VFICO nor any ERISA Affiliate has contributed to any
"multi-employer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980.
(f) Each Employee Plan of VFICO which is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the Code (a "Qualified Plan") has received a
favorable determination letter from the IRS covering the requirements of the Tax
Equity and Fiscal Responsibility Act of 1982, the Retirement Equity Act of 1984
and the Deficit Reduction Act of 1984 and the Tax Reform Act of 1986; VFICO is
not aware of any circumstances likely to result in revocation of any such
favorable determination letter; each such Employee Plan has been amended to
reflect the requirements of subsequent legislation applicable to such plans; and
each Qualified Plan has complied at all relevant times in all material respects
with all applicable requirements of Section 401 (a) of the Code.
11
(g) Each Qualified Plan which is an "employee stock ownership plan"
(as defined in Section 4975(e)(7) of the Code) has at all relevant times
satisfied all of the applicable requirements of Sections 409 and 4975(e)(7) of
the Code and the regulations thereunder.
(h) Neither VFICO, nor any ERISA Affiliate has committed any act or
omission or engaged in any transaction that has caused it to incur, or created a
material risk that it may incur, liability for any excise tax under Sections
4971 through 4980B, 4980D or 4980E of the Code, other than excise taxes which
heretofore have been paid and fully reflected in its financial statements.
(i) There is no pending or threatened litigation, administrative
action or proceeding relating to any Employee Plan other than routine claims for
benefits.
(j) Except as disclosed in Schedule 3.12(j), there has been no
announcement or legally binding commitment by VFICO to create an additional
Employee Plan, or to amend an Employee Plan except for amendments required by
applicable law which do not materially increase the cost of such Employee Plan,
and VFICO does not have any obligations for retiree health and life benefits
under any Employee Plan that cannot be terminated without incurring any
liability thereunder except as required to be maintained by COBRA.
(k) Except as disclosed in Schedule 3.12(k), the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not result in any payment or series of payments by VFICO, to any
person which is an "excess parachute payment" (as defined in Section 28OG of the
Code) under any Employee Plan or under any agreement executed in connection with
this Agreement, increase any benefits payable under any Employee Plan, or
accelerate the time of payment or vesting of any such benefit.
(l) Except as disclosed in Schedule 3.12(l), all required annual
reports have been filed timely with respect to each Employee Plan, and VFICO has
made available to SBI a true and correct copy of (A) reports on the applicable
form of the Form 5500 series filed with the IRS for plan years beginning after
1987, (B) such Employee Plan, including amendments thereto, (C) each trust
agreement and insurance contract relating to such Employee Plan, including
amendments thereto, (D) the most recent summary plan description for such
Employee Plan, including amendments thereto, if the Employee Plan is subject to
Title I of ERISA, and (E) the most recent actuarial report or valuation if such
Employee Plan is a Pension Plan and (F) the most recent determination letter
issued by the IRS if such Employee Plan is a Qualified Plan.
12
SECTION 3.13 Collective Bargaining Agreements and Employment Agreements.
----------------------------------------------------------
(a) VFICO has not entered into any collective bargaining
agreements; (ii) there is no labor strike, slowdown or work stoppage or lockout
actually pending or to the knowledge of VFICO threatened against or affecting
VFICO, and during the past five years there has not been any such action; (iii)
no union organizational campaign is in progress with respect to the employees of
VFICO; (iv) there is no unfair labor practice charge or complaint pending or to
the knowledge of VFICO threatened before the National Labor Relations Board; and
(v) no charges with respect to or relating to VFICO is pending before the Equal
Employment Opportunity Commission. VFICO does not have any plans, programs,
commitments or arrangements to which either such entity is a party, or to which
either such entity may be subject, pursuant to which payments may be required or
acceleration of benefits may be required upon change of control of VFICO.
(b) Set forth on Schedule 3.13 are:
i. any employment agreement VFICO has with any of its
employees; and
ii. any consulting, retainer or service agreement or
arrangement VFICO has with any individual or entity.
SECTION 3.14 Compliance with Applicable Law. VFICO has in the past
------------------------------
complied and is presently complying, in respect of the assets and operation of
its respective business in all material respects, with all applicable laws
(whether statutory or otherwise), rules, regulations, orders, ordinances,
judgments or decrees of all governmental authorities (federal, state, local or
otherwise), including but not limited to the 1934 Act, the 1933 Act, the
Advisers' Act and the 1940 Act and, in each case, the rules promulgated
thereunder, and VFICO has not received notification of any asserted present or
past failure to so comply. VFICO has delivered to SBI all inspection reports or
similar documents received during the past three years from the SEC or state
regulatory authorities, and their responses thereto.
SECTION 3.15 Actions since the Balance Sheet Date. Except as set forth on
------------------------------------
Schedule 3.15 VFICO has not, since the VFICO Balance Sheet Date and to date
hereof:
(a) taken any action outside of the ordinary course of business;
(b) borrowed any money or become contingently liable for any
obligation or liability of others outside of the ordinary course of business;
(c) not paid all of its debts and obligations as they became due
or otherwise in the ordinary course of business;
(d) incurred any material debt, liability or obligation of any
nature to any party except for obligations arising from the purchase of goods or
the rendition of services in the ordinary course of business;
(e) knowingly waived any right of substantial value;
13
(f) failed to use its reasonable best efforts to preserve its
business organization intact, kept available the services of its employees, and
preserved relationships with customers, suppliers and others with whom it deals;
and
(g) purchased or redeemed any shares of its capital stock, or
transferred, distributed or paid, directly or indirectly, any money or other
property or assets to its shareholders;
(h) made a change in the number of shares of capital stock of
VFICO issued and outstanding;
(i) declared, set aside, paid or distributed any dividend or
other distribution with respect to its capital stock, or with respect to any
split, combination or reclassification of its capital stock;
(j) increased the compensation or severance pay payable or to
become payable by VFICO to any employee or with respect to any employee welfare,
pension, retirement, profit-sharing or similar payment plan or arrangement
applicable to any present or former employee;
(k) incurred any capital expenditure or authorization for a
capital expenditure, acquisition of assets or execution of any lease, or
incurred liability therefor, requiring any payment or payments in excess of
$10,000 in the aggregate with respect to each individual transaction;
(l) borrowed or lent money, issued debt securities or pledges a
credit of VFICO or guaranteed any indebtedness of others by VFICO;
(m) lost the services of any employee that is, either
individually or in the aggregate, material to the conduct of the business of
VFICO; incurred the loss or termination of relationship with any supplier,
client or customer; or
(n) entered into any agreement, arrangement or understanding to
do any of the foregoing.
SECTION 3.16 Tax Matters.
------------
(a) For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, employment excise, withholding, property,
sales, use, transfer, license, payroll and franchise taxes, together with any
interest and any penalties, additions to tax or additional amounts with respect
thereto, imposed by the United States, or any state, local or foreign government
or subdivision or agency thereof. For purposes of this Agreement, the term "Tax
Return" shall mean any report, return or other information required to be
supplied to a taxing authority in connection with Taxes. All citations to
provisions of the Code, or to the Treasury Regulations promulgated thereunder,
shall include any amendments thereto and any substitute or successor provisions
thereto.
(b) VFICO has duly filed all Tax Returns required to be filed as
of the date hereof (and will file all Tax Returns required to be filed on or
before the Closing Date). All such
14
Tax Returns are (and, as to Tax Returns not filed as of the date hereof but
filed on or before the Closing Date, will be) true, correct and complete in all
material respects and were (and, as to Tax Returns not filed as of the date
hereof but filed on or before the Closing Date, will be) filed on a timely
basis. All taxes shown on such Tax Returns or otherwise due or payable with
respect to the income of VFICO (whether or not shown on any Tax Return) have
been timely paid except as expressly reserved on the VFICO Balance Sheet. Except
as disclosed in Schedule 3.16(b), VFICO has not requested any extension of time
within which to file any Tax Return, which Tax Return has not since been filed.
True and complete copies of the federal, state and local income Tax Returns of
VFICO for the last three years have been provided to SBI prior to the date
hereof. The reserves for Taxes reflected in the financial statements of VFICO
are sufficient for the payment of all unpaid Taxes (whether or not currently
disputed) which are incurred or may be incurred with respect to the period (or
portion thereof) ended on the date of such financial statements and for all
years and periods ended prior thereto, and the reserve for Taxes reflected in
the balance sheet is sufficient for the payment of all unpaid Taxes (whether or
not currently disputed) which are incurred or may be incurred with respect to
the period (or portion thereof) ended on the Closing Date and for all years and
periods ended prior thereto. Since December 31, 1998, VFICO has not incurred any
liability for Taxes other than in the ordinary course of business, which Taxes
would result in a material decrease in the net worth of VFICO. No waiver or
extension of any statute of limitations relating to Taxes has been given to, or
requested by, the Internal Revenue Service (the "IRS"), or any state or local
taxing authority. No claim is currently being made by any authority in a
jurisdiction where neither VFICO nor any Subsidiary files Tax Returns that they
are or may be subject to Taxes in that jurisdiction.
(c) Except as set forth on Schedule 3.16(c), VFICO has complied
(and until the Closing Date will comply) in all material respects with the
provisions of the Code relating to the withholding and payment of Taxes,
including, without limitation, the withholding and reporting requirements under
Code sections 1441 through 1464, 3401 through 3406, and 6041 through 6049, as
well as similar provisions under any other laws, and has, within the time and in
the manner prescribed by law, withheld from employee wages and paid over to the
proper governmental authorities all amounts required. VFICO has undertaken in
good faith to appropriately classify all service providers as either employees
or independent contractors for all Tax purposes.
(d) Neither the federal income Tax Returns nor the state or local
income Tax Returns of VFICO have been examined by the IRS or relevant state
taxing authorities, except as set forth on Schedule 3.16(d). All deficiencies
asserted as a result of the examinations referred to on Schedule 3.16(d) have
been paid, and no issue has been raised by any federal, state, local or foreign
income tax authority in any such examination which, by application of the same
or similar principles to similar transactions, could reasonably be expected to
result in a proposed deficiency for any subsequent period. Further, to the best
of VFICO's knowledge, no state of facts exists or has existed which would
constitute grounds for the assessment of any material liability for Taxes with
respect to the periods which have not been audited by the IRS or other taxing
authority. Except as described on Schedule 3.16(d), there are no examinations
or other administrative or court proceedings relating to Taxes in progress or
pending nor has VFICO received a revenue agent's report asserting a tax
deficiency. To the best of VFICO's knowledge, there are no threatened actions,
suits, proceedings, investigations or claims relating to or asserted for Taxes
of VFICO and there is no basis for any such claim.
(e) Since 1993, VFICO has not been a member of any affiliated
group of corporations that filed a consolidated income tax return.
15
(f) Since its date of incorporation, VFICO has not (A) filed any
consent or agreement under Section 341(f) of the Code, (B) applied for any tax
ruling, (C) entered into a closing agreement with any taxing authority, (D)
filed an election under Section 338(g) or Section 338(h)(10) of the Code (nor
has a deemed election under Section 338(e) of the Code occurred), (E) made any
payments, or been a party to an agreement (including this Agreement), or any
transactions related thereto that under any circumstances could obligate it to
make payments that will not be deductible because of Section 280G of the Code,
or (F) been a party to any tax allocation or tax sharing agreement.
SECTION 3.17 Environmental Matters.
---------------------
(a) Except as disclosed in Schedule 3.17(a):
(i) VFICO has been and is in full compliance with all
Environmental Laws (as defined below) applicable to the operations of, and the
property owned, operated, occupied or otherwise used by, VFICO. To the best
knowledge of VFICO, there are no circumstances that may prevent or interfere
with such full compliance in the future.
(ii) VFICO has obtained all Permits (as defined below)
necessary for the operation of their businesses and the ownership, operation,
occupation or other use of their properties, all such Permits are in good
standing and VFICO are in compliance with all terms and conditions of such
Permits. There has been no material change in the facts or circumstances
reported or assumed in the applications for or the granting of such Permits.
(iii) There is no lawsuit, claim, action, cause of action,
judicial or administrative proceeding, investigation, summons, or written notice
by any person pending, or to VFICO's knowledge, threatened, against VFICO
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damages, personal injuries or penalties) arising out
of or resulting from (i) the violation of any Environmental Law or (ii) the
presence or Release of any Hazardous Substance (as defined below) at any
location, whether or not owned, operated, occupied or otherwise used by VFICO.
(iv) VFICO is not subject to any writ, injunction, order,
decree or settlement addressing (i) any alleged violation of any Environmental
Law or (ii) the alleged presence, or Release into the environment of any
Hazardous Substance at any location, whether or not owned, operated, occupied or
otherwise used by VFICO.
(v) No Environmental Lien (as defined below) has attached to
any of the property owned, operated, occupied or otherwise used by VFICO.
(vi) There has been no Release of any Hazardous Substance at,
to or from any of the properties owned, operated, occupied or otherwise used by
VFICO.
(vii) VFICO has not transported or arranged for the transport
of any Hazardous Substance to any facility or site for the purpose of treatment,
storage, disposal or recycling which (i) is included on the National Priorities
List or the Comprehensive Environmental Response, Compensation and Liability
Information System under the
16
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
(S)(S) 9601 et. seq. ("CERCLA"), or any similar state list which is required by
------
any state Environmental Law to be kept, or (ii) is presently subject to a
governmental enforcement action under CERCLA or the Solid Waste Disposal Act, 42
U.S.C. (S)(S) 6901 et. seq., or any similar state Environmental Law.
(viii) All of the third parties with which VFICO presently have
arrangements, engagements or contracts to accept, treat, transport, store,
dispose, remove or recycle any Hazardous Substances generated or present at any
of the properties owned, operated, occupied or otherwise used by VFICO are
properly permitted under Environmental Laws to perform the foregoing activities
or conduct.
(ix) VFICO does not have any liability for the violation of any
Environmental Law or the Release of any Hazardous Substance in connection with
any business or property previously owned, operated, occupied or otherwise used
by VFICO or any of the predecessors of VFICO.
(x) There are no past or present actions, activities,
circumstances, conditions, event or incidents, including, without limitation,
the generation, handling, transportation, treatment, storage, Release, presence,
disposal or arranging for disposal of any Hazardous Substance, that could form
the basis of any claim against VFICO under any Environmental Law.
(xi) Without in any way limiting the generality of the foregoing,
(i) all underground storage tanks, and the capacity and contents of such tanks,
located on the real property owned or operated by VFICO are identified in
Schedule 3.17(a), (ii) except as identified in Schedule 3.17(a), there is no
asbestos contained in or forming part of any building, building component,
structure or office space owned or operated by VFICO, and (iii) no
polychlorinated biphenyls (PCBS) are used or stored at any part of the property
owned or operated by VFICO.
(xii) The following terms shall have the following meanings:
A. "Environmental Laws" means all federal, state, local
and foreign laws, statutes, codes, ordinances, rules, regulations, orders,
directives, binding policies, common law, or Permits as amended and in effect on
the date hereof and on the Closing Date relating to or addressing the
environment, health or safety, including, but not limited to, any law, statute,
code, ordinance, rule, regulation, order, directive, binding policy, common law
or Permit relating to the generation, use, handling, treatment removal, storage,
production, manufacture, transportation, remediation, disposal, arranging for
disposal, or Release of Hazardous Substances.
B. "Environmental Lien" means a lien in favor of any
conventional authority for any (a) liability under any Environmental Law or (b)
damages arising from, or costs incurred by, such governmental authority in
response to a release or threatened release of a Hazardous Substance into the
environment.
C. "Hazardous Substances" means any toxic or hazardous
substances (including, without limitation, wastes), pollutants, explosives,
radioactive materials or substances (including, without limitation, wastes),
including, without limitation, asbestos, PCBs,
17
petroleum products and byproducts, and substances (including, without
limitation, wastes) defined in or regulated under Environmental Law.
D. "Permit" means any permit, license, consent or other
approval or authorization required under any Environmental Law.
E. "Release" means the release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migrating of any Hazardous Substance through or in the air, soil, surface water,
or groundwater.
SECTION 3.18 Books and Records. The books and records of VFICO have
-----------------
been, and are being, maintained in accordance with applicable legal and
accounting requirements and reflect in all material respects the substance of
events and transactions that should be included therein.
SECTION 3.19 Intellectual Property. VFICO, directly or indirectly,
---------------------
possess or has adequate rights to all licenses, permits and all other
franchises, trademarks, trade names, service marks, inventions, patents,
copyrights, and any applications therefor, trade secrets, research and
development, know-how, technical data, computer software programs or
applications and technology systems necessary to operate its business and
required by applicable law (the "Intellectual Property"). Except as set forth on
Schedule 3.19, all right, title and interest in and to each item of Intellectual
Property is owned by VFICO, is not subject to any license, royalty arrangement
or pending or threatened claim or dispute and is valid and in full force and
effect To VFICO's knowledge, none of the Intellectual Property owned or used by
VFICO, infringes any Intellectual Property right of any other entity and no
Intellectual Property owned by VFICO is infringed upon by any other entity.
SECTION 3.20 Condition of Tangible Assets. Except as set forth in
----------------------------
Schedule 3.20, in all material respects: (i) all buildings, structures and
improvements on the real property leased by VFICO are in good condition,
ordinary wear and tear excepted, and are free from structural defects, and (ii)
the equipment, including heating, air conditioning and ventilation equipment
owned by VFICO, is in good operating condition, ordinary wear and tear excepted.
The operation and use of the property in the business conform in all material
respects to all applicable laws, ordinances, regulations, permits, licenses and
certificates.
SECTION 3.21 Year 2000 Compliance. Except as provided in Schedule 3.21
--------------------
hereof, VFICO has undertaken an assessment of its software and hardware in order
to reveal those portions thereof which will require modification or replacement
to utilize properly dates beyond December 31, 1999, has contracted with
appropriate third parties to modify or replace such existing software and
hardware so that such software and hardware will not be affected by the change
in the Year 2000. VFICO has contacted its critical vendors and borrowers in
order to assess their efforts to mitigate any adverse effects to their computer
programs and systems beyond December 31, 1999.
SECTION 3.22 Conflict of Interest. No present or former officer or
--------------------
director managerial employee, of VFICO and no shareholder of VFICO has (i) any
interest in the property, tangible or intangible, including, without limitation,
licenses, inventions, processes, know how or formula of a proprietary nature
used in or pertaining to the business of VFICO, (ii) any contract, commitment,
claim, arrangement or understanding, including, without limitation, any loan
arrangement, with VFICO. Except as set forth on Schedule 3.22, to the knowledge
of
18
VFICO, no present officer, director or managerial employee of VFICO and no
shareholder of VFICO, has any ownership or stock interest in any other
enterprise, firm, corporation, trust or any other entity which is engaged in any
contractual arrangement or understanding with VFICO or is engaged in any line or
lines of business which are the same as, or similar to, or competitive with, the
line or lines of business or VFICO. For the purpose of this representation,
ownership of not more than 3% of the voting stock of any publicly-held company
whose stock is listed on a recognized securities exchange or traded over-the-
counter shall be disregarded.
SECTION 3.23 Vote Required. The affirmative vote of the holders of a
-------------
majority of the outstanding shares of VFICO Common Stock is necessary in order
to approve this Agreement, the Merger and the other transactions contemplated
herein.
SECTION 3.24 Disclosure. No representation or warranty by VFICO
----------
contained in this Agreement, and no statement contained in any Exhibit or
Schedule hereto or any lists, certificates or writing delivered in connection
herewith or pursuant hereto to the knowledge of VFICO, contains any untrue
statement of a material fact, or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading or
necessary in order to fully and fairly provide the information required to be
provided in such document.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SBI
AND ACQUISITION CORPORATION
As a material inducement to VFICO to enter into this Agreement and
consummate the Merger and the other transactions contemplated herein, SBI and
Acquisition Corporation, jointly and severally, represent and warrant to VFICO
that, except as specifically disclosed to VFICO in writing in the disclosure
schedules being delivered to VFICO (the "SBI Schedules") which shall identify
the specific sections or subsections in this Agreement to which each such
disclosure relates:
SECTION 4.01 Organization. Each of SBI and Acquisition Corporation is a
------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and has the corporate power and
authority to carry on its business as presently conducted, to enter into this
Agreement, and the other documents and instruments to be executed and delivered
by it pursuant hereto and to carry out the transactions contemplated hereby and
thereby.
SECTION 4.02 Authority. The execution and delivery of this Agreement and
---------
the other documents and instruments to be executed and delivered by SBI and
Acquisition Corporation pursuant hereto and the consummation by SBI and
Acquisition Corporation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of SBI and Acquisition Corporation,
respectively. No other corporate act or proceeding on the part of SBI or
Acquisition Corporation or their respective shareholders (other than the
approval of the merger by SBI as the sole shareholder of Acquisition
Corporation) is necessary to authorize this Agreement, the Merger or the other
documents and instruments to be executed and delivered by SBI or Acquisition
Corporation.
19
SECTION 4.03 Consents and Approvals; No Violation. This Agreement
------------------------------------
constitutes a valid and binding agreements of each of SBI and Acquisition
Corporation, enforceable in accordance with its respective terms, and except as
such enforceability may be limited by bankruptcy or other similar laws affecting
creditors' rights and remedies generally, neither the execution and delivery of
this Agreement nor the consummation of the Merger or the other transactions
contemplated hereby (i) conflict or result in a breach of any provision of the
Articles of Incorporation or Bylaws of SBI or Acquisition Corporation, (ii)
result in a violation or breach of, or constitute with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which SBI or Acquisition
Corporation is a party or by which any of its properties or assets may be bound
or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to SBI or Acquisition Corporation or any of their
respective properties or assets. Except as set forth in Schedule 4.03, no
permit, authorization, consent or approval of, any court or other adjudicatory
body, administrative agency or commission or other governmental or regulatory
authority or agency is required in connection with the execution, delivery or
performance by SBI or Acquisition Corporation of this Agreement, the Merger or
the consummation of the transactions contemplated hereby.
SECTION 4.04 SEC Reports and Financial Statements. SBI has delivered to
------------------------------------
VFICO complete (except in certain cases for listed exhibits which are available
upon request) and correct copies of SBI's (a) Proxy Statement and Annual Report
on Form 10-K for the fiscal year ended December 31, 1998; (b) Quarterly Reports
on Form 10-Q for the fiscal quarters ended March 31, June and September 30,
1999, in each case as filed by SBI with the SEC pursuant to the 1934 Act (such
reports and other filings collectively referred to herein as the "1934 Act
Filings"). As of their respective dates, the 1934 Act Filings did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and, since
the date of the last 1934 Act Filing, SBI has not experienced nor to the
knowledge of SBI has there been threatened or anticipated any material adverse
change in the condition (financial or otherwise), assets, liabilities (absolute,
accrued, contingent or otherwise), business, or operations of SBI taken as a
whole.
SECTION 4.05 Disclosure. No representation or warranty by SBI or
----------
Acquisition Corporation contained in this Agreement, and no statement contained
in any Exhibit or SBI Schedule hereto or any lists, certificate or writing
delivered in connection herewith or pursuant hereto, contains any untrue
statement of a material fact, or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading or
necessary in order to fully and fairly provide the information required to be
provided in any such document.
SECTION 4.06 Vote Required. SBI, as the sole shareholder of Acquisition
-------------
Corporation, has executed or will execute prior to the Closing Date, an Action
by Written Consent approving this Agreement, the Merger and the transactions
contemplated hereby and thereby.
SECTION 4.07 Disciplinary History. Except as set fort on Schedule 4.07,
--------------------
there is no information concerning SBI or Buyer, or any person or entity that,
upon the consummation of the transactions contemplated by this Agreement and the
VFAM Agreement, will be a control affiliate (as such term is defined in
Instruction 4(3) to Form BD, Uniform Application for Broker-Dealer Registration
("Form BD") or an advisory affiliate (as such term is defined in Item
20
11 of Form ADV, Uniform Application for Investment Adviser Registration (Form
ADV")) of VFICO (other than persons and entities that are presently control
affiliates or advisory affiliates of VFAM), that will be required to be
disclosed in response to Item 11 or Schedule DRP of VFAM's Form BD or in
response to Item 11 or Schedule E of VFAM's Form ADV.
ARTICLE V
CERTAIN COVENANTS PENDING THE CLOSING
SECTION 5.01 Access and Information. Between the date hereof and the
----------------------
Closing Date, VFICO will give SBI and Acquisition Corporation and their
authorized representatives full and free access during normal business hours, in
such manner as not to unduly disrupt normal business activities, to any and all
premises, properties, contracts, commitments, books and records, and VFICO will
cause its officers to furnish any and all financial, technical and operating
data and other information as SBI and Acquisition Corporation and their
authorized representatives from time to time reasonably may request.
SECTION 5.02 Conduct of the Business of VFICO pending the Closing Date.
---------------------------------------------------------
Except as set forth on Schedule 5.02, between the date hereof and the Closing
Date, unless SBI otherwise consents in writing or unless otherwise required by
the VFAM Agreement (as defined in Section 6.01(b) hereof), VFICO shall:
(a) Not take any action which would render untrue any of the
representations or warranties of VFICO herein contained; not omit to take any
action, the omission of which would render untrue any such representation or
warranty; provided, however, it shall not be obligated to take any action not in
the ordinary course of business that would result in the expenditure of funds by
it exceeding $5,000 in the aggregate; and not take any action or commit any
omission that would have as a result any of the conditions set forth in Article
VI not being satisfied.
(b) Conduct its business in a good and diligent manner in the
ordinary and usual course.
(c) Use its best efforts to preserve its business organization
intact, to keep available the services of its employees, and to preserve its
relationships with customers, vendors, suppliers and others with whom it deals.
(d) Not reveal, orally or in writing, to any party, other than
consultants and vendors of services with a need to know and other than SBI and
Acquisition Corporation and their authorized agents, any of the confidential
business procedures and practices followed by it in the conduct of its business.
(e) Not enter into any contract, agreement, commitment or arrangement
with any party, other than contracts in the ordinary and usual course of
business.
(f) Not redeem or otherwise acquire any shares of its capital stock
or issue any capital stock or any stock or any stock option, warrant,
preference, call or right relating thereto.
21
(g) Use its best efforts to maintain in full force and effect all of
the insurance policies presently maintained by it, make no change in any
insurance coverage and notify SBI at least ten days prior to any pending
cancellation or lapse of any insurance policy.
(h) Keep the premises occupied and owned or leased by it and all of
its equipment and other tangible personal property in good order and repair and
perform all necessary repairs and maintenance.
(i) Continue to maintain all of its usual business books and records
in accordance with its past practices.
(j) Not amend or propose to amend its Articles of Incorporation or
Bylaws.
(k) Not waive any material right or cancel any material claim without
the receipt of adequate consideration.
(l) Maintain its respective corporate existence and not merge or
consolidate it with any other entity.
(m) Comply with all material provisions of any of the VFICO
Agreements and all applicable laws, rules and regulations.
(n) Not make any capital expenditure other than in the ordinary
course of its business and in an amount not exceeding $10,000 in the aggregate.
(o) Not place any additional encumbrances on any of its inventory or
assets not in the ordinary course of business, except that existing encumbrances
may attach to its inventory or assets acquired after the date hereof.
(p) Not pay any severance, deferred compensation or other payments to
any shareholder, whether or not accrued.
(q) Not declare or make any dividend or other payment on or with
respect to its capital stock, and not declare or pay any bonuses or non-periodic
compensation to any of its shareholders or employees
(r) Not engage in any transaction of the type listed in Section 3.15.
SECTION 5.03 Notices. VFICO shall give prompt notice to SBI of (i) any
-------
notice of, or other communication relating to, a default which would have a
material adverse effect on VFICO or event which, with notice or lapse of time or
both, would become a default which would have a material adverse effect on
VFICO, received by it subsequent to the date of this Agreement and prior to the
Closing, under its Articles of Incorporation or Bylaws or any of the VFICO
Agreements and (x) by which it is bound or (y) to which it is subject, (ii) any
claim, action, suit, proceeding or investigation by any governmental department,
taxing authority commission, board, agency, instrumentality or authority
involving or relating to its assets, properties or business or the VFICO
Agreements (or any communication indicating that the same may he contemplated),
(iii) any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions
22
contemplated hereby and (iv) any matter which would cause any material change
with respect to any representations made hereunder.
SECTION 5.04 Advice of Changes. Each of SBI, Acquisition Corporation and
-----------------
VFICO shall confer on a regular and frequent basis with the other, report on
operational matters and promptly advise the other orally and in writing of any
change or event having, or which, insofar as can reasonably be foreseen, could
have, a material adverse effect on such party.
SECTION 5.05 Legal Conditions to Stock Purchase. Each of SBI, Acquisition
----------------------------------
Corporation and VFICO will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on itself with respect
to the transactions contemplated hereby (which actions shall include, without
limitation, approvals or filings with any governmental entity) and will promptly
cooperate with and furnish information to each other with any such requirements
imposed upon any of them in connection with the same. Each of SBI, Acquisition
Corporation and VFICO will take all reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any governmental entity or other public or
private third party, required to be obtained by SBI, Acquisition Corporation or
VFICO in connection with the taking of any action contemplated by this
Agreement. Each of SBI, Acquisition Agreement and VFICO will use its best
efforts to effectuate the transactions and agreements contemplated by this
Agreement, and, in furtherance thereof, shall make and execute, under the
corporate seal of SBI, Acquisition Corporation or VFICO, if required, whatever
certificates and documents are required by the appropriate federal and state
regulatory authorities to effect the transactions contemplated hereby, and to
cause the same to be filed, in the manner provided by law, and to do all things
whatsoever, whether within or without the Commonwealth of Pennsylvania, which
would be necessary and proper to effect the transactions and agreements
contemplated herein.
SECTION 5.06 Best Efforts. Subject to the terms and conditions of this
------------
Agreement, each of the parties hereto agrees to use best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
SECTION 5.07 VFICO Shareholder Approval. VFICO shall use its best efforts
--------------------------
to cause to be prepared, as promptly as possible following the date of this
Agreement, proxy materials for the Special Meeting of its shareholders, and to
use its best efforts to cause such proxy solicitation to be undertaken as soon
as practicable, in accordance with the BCL and VFICO's Articles of Incorporation
and Bylaws. VFICO shall bear the full cost of such solicitation, meeting and
approval. SBI and its counsel shall have the opportunity to review all Special
Meeting materials prior to their delivery to the VFICO shareholders, and all
such materials shall be in form and substance reasonably satisfactory to SBI and
its counsel. The Board of Directors of VFICO shall recommend to its shareholders
that they approve the Merger and the consummation of the transactions
contemplated by this Agreement.
SECTION 5.08 December 31, 1999 Financial Statements. If the Closing has
--------------------------------------
not occurred by January 15, 2000, then VFICO shall deliver to SBI the unaudited
financial statement of VFICO for the year ended December 31, 1999, prepared in
accordance with GAAP (the "December 31, 1999 Financials").
23
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.01 Conditions to Each Party's Obligation To Effect the
---------------------------------------------------
Transaction. The respective obligation of each party to effect the Merger shall
-----------
be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
(b) Consummation of Closing under VFAM Agreement. The Closing
--------------------------------------------
contemplated in Section 1.04 of the VFAM Agreement shall have occurred prior to,
or shall occur simultaneously with, Closing under this Agreement.
(c) Shareholder Approval. This Agreement, the Merger and the
--------------------
transactions contemplated hereby shall have been approved in the manner required
by applicable law by the holders of the issued and outstanding shares of VFICO
Common Stock.
SECTION 6.02 Conditions of Obligations of SBI and Acquisition Corporation.
------------------------------------------------------------
The obligations of SBI and Acquisition Corporation to effect the Merger are
subject to the satisfaction of the following conditions unless waived by SBI and
Acquisition Corporation:
(a) Representations and Warranties. The representations and
------------------------------
warranties of VFICO set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date.
(b) Performance of Obligations of VFICO. VFICO shall have performed
-----------------------------------
in all material respects all of its obligations required to be performed by it
under this Agreement at or prior to the Closing Date.
(c) Consents, Approvals, etc. Any and all material consents, waivers,
------------------------
permits and approvals from any governmental or regulatory body required by VFICO
in connection with the execution, delivery and performance of this Agreement as
listed in Schedule 3.04 shall have been duly obtained and shall be in full force
and effect on the Closing Date. No litigation, governmental action or other
proceedings involving or potentially involving a liability, obligation or loss
on the part of VFICO, or which by reason of the nature of the relief sought
might have a materially adverse effect on VFICO's business, shall be threatened
or commenced against VFICO with respect to any matter and no litigation,
governmental action or other proceedings shall be threatened or commenced
against any person with respect to the consummation of the transactions provided
for herein.
(d) Other Approvals. Other than the filing provided for by Section
---------------
1.01, all authorizations, consents, orders or approvals, including, without
limitation, all licenses or assignments of licenses, of, or declarations or
filings with any governmental entity by VFICO the failure to obtain which would
have a material adverse effect on SBI shall have been filed, occurred or been
obtained.
24
(e) Closing Documents. All documents required to be delivered by
-----------------
VFICO at or prior to the Closing Date shall have been delivered.
(f) Lease Termination. VFICO shall have terminated any written or
-----------------
verbal lease arrangement that it may have with Warner Road Associates.
(g) Share Transfer Restrictions. Any and all share transfer
---------------------------
restrictions on the VFICO Common Stock, including, without limitation, any
restrictions imposed in VFICO's articles of incorporation, bylaws or any
shareholder agreements, shall be terminated or waived.
(h) VFICO Dissenting Shareholders. Holders of less than 5 percent of
-----------------------------
the outstanding VFICO Common Stock shall have elected to exercise their
dissenters' rights.
(i) Payment of VFICO's Expenses. VFICO shall have paid all fees and
---------------------------
expenses of its advisors, accountants and counsel, whether incident to the
negotiations, preparation, execution, delivery and performance of this Agreement
or otherwise for the period through the Closing Date, such that no liability or
obligation with respect to such fees and expenses shall be included on VFICO's
closing balance sheet. VFICO's and VFICO's advisors and accountants shall have
executed and delivered to VFICO, and SBI a release agreement in a form
satisfactory to SBI reflecting that all such amounts have been paid and that as
of the Closing Date they have no right to any further payment from VFICO,
Acquisition Corporation or SBI for any fees or expenses.
(j) VFICO Closing Financial Certificate. SBI shall have received a
-----------------------------------
certificate, (the "VFICO Closing Financial Certificate") dated as of the Closing
Date, signed on behalf of VFICO, certifying that:
(i) the tangible net worth of VFICO as of the Closing Date is
at least $2,000,000;
(ii) VFICO has a cash balance of at least $1,500,000 plus
current liabilities; and
(iii) VFICO has no long term liabilities.
An example of the calculation of such certificate is set forth on Schedule
6.02(j).
(k) Pro Forma Balance Sheet and Income Statements. In addition to
---------------------------------------------
the December 31, 1999 Financials, at least ten days prior to the Closing Date,
VFICO shall deliver to SBI a pro forma balance sheet and income statement and
supporting documents for the period from the most recent audited financial
statements through the Closing Date, which shall confirm the accuracy of the
VFICO Closing Financial Certificate.
SECTION 6.03 Conditions of Obligations of VFICO. The obligation of VFICO
----------------------------------
to effect the transactions contemplated herein is subject to the satisfaction of
the following conditions unless waived by VFICO:
25
(a) Representations and Warranties. The representations and
------------------------------
warranties of SBI and Acquisition Corporation set forth in this Agreement shall
be true and correct in all material respects as of the date of this Agreement
and as of the Closing Date.
(b) Performance of Obligations of SBI and Acquisition Corporation.
-------------------------------------------------------------
SBI and Acquisition Corporation shall have performed in all material respects
all of their respective obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
(c) Consents, Approvals, etc. Any and all material consents,
------------------------
waivers, permits and approvals from any governmental or regulatory body required
by SBI or Acquisition Corporation in connection with the execution, delivery and
performance of this Agreement as listed in Schedule 4.03, including, without
limitation, the approval of the Board of Governors of the Federal Reserve
System, shall have been duly obtained and shall be in full force and effect on
the Closing Date except for such items which may lawfully be obtained after the
Closing Date without a material adverse effect on VFICO. No litigation,
governmental action or other proceedings involving a liability, obligation or
loss on the part of SBI or Acquisition Corporation, or which by reason of the
nature of the relief sought might have a materially adverse effect on SBI's
business, shall be threatened or commenced against SBI or Acquisition
Corporation with respect to any matter, and no litigation, governmental action
or other proceedings shall be threatened or commenced against any person with
respect to the consummation of the transactions provided for herein.
(d) Other Approvals. Other than the filing provided for by Section
---------------
1.01, all authorizations, consents, orders or approvals shall have been filed,
occurred or been obtained.
(e) Closing Documents. All documents required to be delivered by SBI
-----------------
or Acquisition Corporation at or prior to the Closing Date shall have been
delivered.
ARTICLE VII
DELIVERIES
SECTION 7.01 VFICO's Deliveries. At the Closing, VFICO shall deliver or
------------------
cause to be delivered to SBI, the following:
(a) The legal opinion of Xxxxx X. Xxxxxx, Esq. in form reasonably
acceptable to SBI and its counsel;
(b) The VFICO Closing Financial Certificate;
(c) A "Good Standing Certificate" and/or a certificate of valid
registration of VFICO issued by the Secretary of State of each State in which it
is qualified or registered to do business, dated as of recent date;
(d) A certified copy of the Articles of Incorporation and all
amendments thereto of VFICO issued by the Secretary of State of the Commonwealth
of Pennsylvania, dated as of a recent date;
(e) An Officer's Certificate of VFICO certifying that, as of the
Closing Date, (i) each of the representations and warranties of VFICO is true
and correct in all material
26
respects, (ii) VFICO has performed all of its obligations under this Agreement,
and (iii) attached thereto is a true and correct copy of any and all approvals,
consents, etc. required to be obtained by VFICO pursuant to Section 3.04 hereof,
and that the same are in full force and effect on the Closing Date;
(f) A Secretary's Certificate certifying (i) that the persons
identified in such certificate are the officers of VFICO; (ii) that attached
thereto is a true and complete copy of the Articles of Incorporation and the
Bylaws of VFICO as in effect on the date thereof, (iii) that attached thereto is
a true and complete copy of all resolutions adopted by the Board of Directors of
VFICO relating to the transactions contemplated by this Agreement, and (iv) the
vote of the shareholders of VFICO at the Special Meeting (including, without
limitation, the existence of a quorum, the number of votes cast for or against
this Agreement, the Merger and the other transactions contemplated herein, and
the number of shares that abstained from voting);
(g) The stock books and records, corporate minute books (containing
the originals of all minutes and resolutions ever adopted or consented to or
agreed by the shareholders, directors or any committee of directors of VFICO and
corporate seal of VFICO);
(h) Releases executed by each of VFICO's advisors and accountants
reflecting that all fees and expenses as provided in Section 6.02(i) have been
paid and that as of the Closing Date they have no right to any further payment
from VFICO, Acquisition Corporation or SBI for any fees or expenses relating to
work performed on or prior to the Closing Date.
SECTION 7.02 SBI's and Acquisition Corporation's Deliveries. At the
----------------------------------------------
Closing, SBI and Acquisition Corporation shall deliver or cause to be delivered
to VFICO, the following:
(a) Proof that Acquisition Corporation has obtained the $8.5 million
necessary for the Cash Consideration;
(b) The legal opinion of SBI's and Acquisition Corporation's legal
counsel in form reasonably acceptable to VFICO and its counsel;
(c) A "Good Standing Certificate" of each of SBI and Acquisition
Corporation and a certified copy of the Articles of Incorporation and all
amendments thereto issued by the Secretary of State of the Commonwealth of
Pennsylvania, dated as of a recent date;
(d) An Officer's Certificate of each of SBI and Acquisition
Corporation certifying that, as of the Closing Date, (i) each of the
representations and warranties of SBI and Acquisition Corporation is true and
correct in all material respects, and (ii) each of SBI and Acquisition
Corporation has performed all of its obligations under this Agreement, and (iii)
attached thereto is a true and correct copy of any and all approvals, consents,
etc. required to be obtained by SBI or Acquisition Corporation pursuant to
Section 4.03 hereof, and that the same are in full force and effect on the
Closing Date; and;
(e) A Secretary's Certificate of each of SBI and Acquisition
Corporation, certifying that (i) attached thereto is a true and complete copy of
the Articles of Incorporation and the Bylaws of SBI and Acquisition Corporation,
as the case may be, in each case as in effect on the date thereof, and (ii) that
attached thereto is a true and complete copy of all resolutions
27
adopted by the Board of Directors of SBI and Acquisition Corporation, as the
case may be, relating to the transactions contemplated by this Agreement.
ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.01 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the transactions contemplated herein:
(a) by mutual consent of VFICO, SBI and Acquisition Corporation;
(b) (i) by SBI and Acquisition Corporation on the one hand or by
VFICO on the other hand, respectively, if there shall have been a material
breach of any representation, warranty, covenant or agreement on the part of the
other set forth in this Agreement which breach shall not have been cured, in the
case of a representation or warranty, within five business days following notice
of such breach given to the breaching party by the other party or, in the case
of a covenant or agreement, within five business days following receipt by the
breaching party of notice of such breach, or (ii) by either SBI and Acquisition
Corporation or VFICO if any permanent injunction or other order of a court or
other competent authority preventing the consummation of the Merger or the other
transactions contemplated hereunder shall have become final and non-appealable;
or
(c) by SBI and Acquisition Corporation or VFICO if the transactions
contemplated herein shall not have been consummated before March 31, 2000.
SECTION 8.02 Effect of Termination. In the event of a termination of this
---------------------
Agreement by either VFICO or SBI and Acquisition Corporation as provided in
Section 8.01, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of SBI, Acquisition Corporation or VFICO, or
their respective officers or directors, except (y) with respect to the second
and third sentences of Section 5.01, and Sections 9.01 and 9.02, and (z) to the
extent that such termination results from the willful breach by a party hereto
of any of its representations, warranties, covenants or agreements set forth in
this Agreement.
SECTION 8.03 Amendment. This Agreement may be amended by the parties
---------
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by VFICO's shareholders. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
SECTION 8.04 Extension; Waiver. At any time prior to the Effective Time,
-----------------
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
28
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Costs and Expenses. All costs and expenses incurred in
------------------
connection with this Agreement and the transactions contemplated hereby shall be
paid by VFICO to the extent incurred by it and paid by SBI and Acquisition
Corporation to the extent incurred by them.
SECTION 9.02 Brokers or Finders. Except with respect to any amounts that
------------------
might be due to VFICO's advisors, including without limitation any amounts that
may be due to Xxxxx X. Xxxxxxx (any of which amounts shall be paid by VFICO),
each of SBI, Acquisition Corporation and VFICO hereby represents and warrants
that there is no corporation, firm or person entitled to receive from it any
brokerage commission or finder's fee in connection with this Agreement or the
transactions and agreements provided for herein, and each hereby indemnifies and
agrees to save the other parties hereto harmless from and against any claim for
brokerage commission or finder's fee based on any retention or alleged retention
of a broker or finder by it.
SECTION 9.03 Statements as Representations. All statements contained
-----------------------------
herein or in any Schedule, Exhibit, certificate, list or other document
delivered pursuant hereto or in connection with the transactions contemplated
herein shall be deemed representations, warranties and covenants within the
meaning of Articles III, IV and V hereof.
SECTION 9.04 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if SBI or Acquisition Corporation, to:
Susquehanna Bancshares, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, President and
Chief Executive Officer
Telecopy No.: 717.626.1874
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, III, Esquire
Telecopy No : 215.963.5299
(b) if VFICO, to:
VFICO
X.X. Xxx 000
Xxxxxx Xxxxx, XX 00000
29
Attention: Xxxxxx X. Xxxxxx
Telecopy No.: 610.687.1848
with a copy to:
Xxxxxxxx Ronon, Xxxxxxx & Xxxxx LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopy No.: 215.564.8120
SECTION 9.05 Publicity. Except as otherwise required by law or the rules
---------
of the NASD for so long as this Agreement is in effect, neither VFICO, SBI nor
Acquisition Corporation shall issue or cause the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld. Until a press release of the
execution of this Agreement has been made in accordance with the rules of the
NASD, all of the parties hereto shall treat the Agreement and the terms thereof
in the strictest confidence.
SECTION 9.06 Binding Nature of Agreement; No Assignment. This Agreement
------------------------------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns, except that
no party may assign or transfer its rights or obligations under this Agreement
(other than as provided herein) without the prior written consent of the other
parties hereto; provided, however, that any substitute corporation as provided
in Section 1.04 hereof shall be entitled to the same rights and privileges as
those of SBI and Acquisition Corporation pursuant to this Agreement.
SECTION 9.07 Controlling Law. The Agreement and all questions relating
---------------
to its validity, interpretation, performance and enforcement (including without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
other than the choice of law provisions thereof, and without the aid of any
canon, custom, or rule of law requiring construction against the drafting party.
SECTION 9.08 Exhibits and Schedules. All Exhibits and Schedules attached
----------------------
hereto are hereby incorporated by reference into, and made a part of, this
Agreement.
SECTION 9.09 Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signature of all of the parties reflected hereon as the
signatories.
SECTION 9.10 Provisions Separable. The provisions of this Agreement are
--------------------
independent of and separable from each other, and no provisions shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part.
30
SECTION 9.11 Entire Agreement. This Agreement and the Confidentiality
----------------
Agreement dated April 16, 1999 contain the entire understanding among the
parties hereto and with respect to the subject matter hereof, and together
supersede all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained. This Agreement may not be modified or amended other than by an
agreement in writing signed by the parties hereto.
SECTION 9.12 Paragraph Headings. The headings in this Agreement are for
------------------
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
SECTION 9.13 Gender, Etc. Words used herein, regardless of the number
-----------
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context requires.
SECTION 9.14 Knowledge of VFICO. For purposes of this Agreement,
------------------
"knowledge of VFICO" or similar words and phrases shall be conclusively deemed
to include: (i) actual knowledge of VFICO or the officers and directors of
VFICO, and (ii) that knowledge which any officer or director of VFICO should
have obtained after exercising due diligence which a prudent officer or director
should have undertaken with respect thereto.
31
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
SUSQUEHANNA BANCSHARES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
SUSQUEHANNA BANCSHARES CENTRAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
VALLEY FORGE INVESTMENT
COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Chairman
32
