Exhibit 2(i)
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Share Exchange Agreement dated as of November 17, 1999
by among Susquehanna, Boston Service Company, Inc.
(t/a Xxxx Financial Service Corporation) and the shareholders of Xxxx.
SHARE EXCHANGE AGREEMENT
DATED AS OF THE 17TH DAY OF NOVEMBER, 1999
BY AND AMONG
SUSQUEHANNA BANCSHARES, INC.,
BOSTON SERVICE COMPANY, INC.
(t/a XXXX FINANCIAL SERVICE CORPORATION)
AND
THE SHAREHOLDERS LISTED ON THE SIGNATURE PAGES HERETO
TABLE OF CONTENTS
Page(s)
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ARTICLE I
THE SHARE EXCHANGE 2
SECTION 1.1 The Share Exchange; Closing 2
SECTION 1.2 Effect on Outstanding Shares 3
SECTION 1.3 Surrender and Exchange of BSC Certificates 3
ARTICLE II
CONDUCT PENDING THE SHARE EXCHANGE 3
SECTION 2.1 Conduct of BSC Businesses 3
SECTION 2.2 Forbearance by BSC 3
SECTION 2.3 Cooperation 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES 5
SECTION 3.1 Representations and Warranties of BSC Shareholders and BSC 5
SECTION 3.2 Representations, Warranties and Covenants of the
BSC Shareholders 20
SECTION 3.3 Representations and Warranties of SBI 23
ARTICLE IV
COVENANTS 26
SECTION 4.1 Acquisition Proposals 26
SECTION 4.2 Securities Registration and Disclosure 26
SECTION 4.3 Employees 27
SECTION 4.4 Access and Information 27
SECTION 4.5 Certain Filings, Consents and Arrangements 28
SECTION 4.6 Additional Agreements 29
SECTION 4.7 Publicity 29
SECTION 4.8 Listing Application 29
SECTION 4.9 Notification of Certain Matters 29
SECTION 4.10 Insurance 29
SECTION 4.11 Board Seat 30
SECTION 4.12 Pooling; Reorganization 30
SECTION 4.13 General Release 30
SECTION 4.14 Employment Agreement 30
SECTION 4.15 Real Property Leases 30
SECTION 4.16 Consents 30
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SECTION 4.17 BSC Shares 30
SECTION 4.18 Non-Competition 31
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE SHARE EXCHANGE 31
SECTION 5.1 Conditions to Closing 31
SECTION 5.2 Conditions to Obligations of SBI 32
SECTION 5.3 Conditions to the Obligations of BSC and the BSC
Shareholders 33
ARTICLE VI
NATURE AND SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION, ETC. 34
SECTION 6.1 Survival of Representations and Warranties, Indemnities 34
ARTICLE VII
TERMINATION 37
SECTION 7.1 Termination 37
SECTION 7.2 Effect of Termination 38
SECTION 7.3 Expenses 38
SECTION 7.4 Extension, Waiver 38
SECTION 7.5 Approval of Federal Reserve Board 38
ARTICLE VIII
OTHER MATTERS 38
SECTION 8.1 Certain Defined Terms 38
SECTION 8.2 Parties in Interest 42
SECTION 8.3 Waiver and Amendment 42
SECTION 8.4 Counterparts 42
SECTION 8.5 Governing Law 42
SECTION 8.6 Expenses 42
SECTION 8.7 Notices 43
SECTION 8.8 Entire Agreement; Etc 43
SECTION 8.9 Severability 44
SECTION 8.10 Interpretation 44
SECTION 8.11 Waivers 44
SECTION 8.12 Incorporation of Schedules and Exhibits 44
SECTION 8.13 Enforcement of Agreement 44
SECTION 8.14 Knowledge 44
SECTION 8.15 Representative 45
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Schedules
Schedule 1.1 - Exchange Ratio
Schedule 3.1(a) - Foreign Qualifications
Schedule 3.1(b) - Outstanding Rights with Respect to Capital Stock
Schedule 3.1(c) - Ownership of Capital Stock or Equity Securities
Schedule 3.1(e) - No Violation
Schedule 3.1(h) - Taxes and Tax Returns
Schedule 3.1(i) - Litigation and Liabilities
Schedule 3.1(j) - Contracts
Schedule 3.1(k) - Employee Relations
Schedule 3.1(l) - Employee Benefit Plans
Schedule 3.1(m) - Title to Assets
Schedule 3.1(n) - Authorizations
Schedule 3.1(o) - Brokers & Finders
Schedule 3.1(p) - Environmental Matters
Schedule 3.1(q) - Interests of Certain Persons
Schedule 3.1(r) - Insurance
Schedule 3.1(s) - Dividends
Schedule 3.1(t) - Books and Records
Schedule 3.1(v) - Intellectual Property
Schedule 3.1(w) - Absence of Undisclosed Liabilities
Schedule 3.1(x) - Condition of Tangible Assets
Schedule 3.1(y) - Year 2000 Compliance
Schedule 3.2(a) - Ownership of BSC Shareholders
Schedule 3.3(g) - Absence of Undisclosed Liabilities of SBI
Schedule 4.3(b) - Employee Plans
Exhibits
Exhibit A - Registration Rights Agreement
Exhibit B - General Release
Exhibit C - Employment Agreement
Exhibit D - Real Property Leases
Exhibit E - Opinion of Counsel to BSC
Exhibit F - Servicing Agreement
Exhibit G - Opinion of Counsel to SBI
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This SHARE EXCHANGE AGREEMENT dated as of the 17th day of November, 1999
(this "Agreement"), is entered into by and among Susquehanna Bancshares, Inc., a
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Pennsylvania corporation ("SBI"), Boston Service Company, Inc., t/a Xxxx
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Financial Service Corporation, a New Jersey corporation ("BSC"), and Xxxxxxx X.
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Xxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxxxx X. Xxxxxx, Custodian for the
benefit of Xxxx Xxxxxx under the Uniform Gift to Minors Act (the "Custodial
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Shareholder") (each a "BSC Shareholder" and collectively, the "BSC
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Shareholders").
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RECITALS:
WHEREAS, SBI is a multi-state, multi-institution bank holding company;
WHEREAS, BSC is a corporation engaged in automobile financing
arrangements with a strong record of performance;
WHEREAS , SBI wishes to acquire from the BSC Shareholders, on the terms
and conditions set forth in this Agreement, all of the issued and outstanding
shares of the capital stock of BSC through a share exchange (the "Share
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Exchange");
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WHEREAS, the BSC Shareholders are the owners of 200 shares of common
stock, no par value per share of BSC (the "BSC Shares");
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WHEREAS, the BSC Shares represent all of the issued and outstanding
capital stock of BSC, and the BSC Shareholders desire to exchange the BSC Shares
for shares of the common stock, par value $2.00 per share, of SBI (the "SBI
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Shares");
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WHEREAS, the parties desire to make certain representations, warranties,
covenants and agreements in connection with this Agreement and to set forth the
conditions to the Share Exchange; and
WHEREAS, for federal income tax purposes, it is intended that the Share
Exchange shall qualify as a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code"), and for financial
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accounting purposes shall be accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of their mutual promises and obligations
hereunder, the parties hereto adopt and make this Agreement and prescribe the
terms and conditions hereof and the manner and basis of carrying it into effect,
which shall be as follows:
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ARTICLE I
THE SHARE EXCHANGE
SECTION 1.1 The Share Exchange; Closing
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(a) Subject to the terms and conditions of this Agreement, on the Closing
Date (as defined below), subject to the provisions of Section 1.3 hereof with
respect to the payment of fractional shares in cash, each BSC Share shall be
exchanged for the number of SBI Shares determined in conformity with the
Exchange Ratio set forth at Schedule 1.1 hereof (such SBI Shares, determined on
the basis of the Exchange Ratio, as to each BSC Shareholder and, collectively to
all BSC Shareholders, is the "Share Exchange Consideration"). On the Closing
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Date, SBI shall become the holder of record and beneficial owner of all the
issued and outstanding BSC Shares. Moreover, on the Closing Date, (i) SBI
shall direct that its transfer agent issue a certificate to each BSC Shareholder
for the required number of SBI Shares representing that BSC Shareholder's Share
Exchange Consideration with the restrictions set forth in this Agreement and
deliver the certificates by overnight courier to the BSC Shareholders and (ii)
the BSC Shareholders shall deliver to SBI certificates (each, a "BSC
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Certificate" and collectively, the "BSC Certificates") representing all of the
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outstanding BSC Shares registered in the name of such BSC Shareholder,
appropriately endorsed by such BSC Shareholder for transfer.
(b) The closing of the Share Exchange (the "Closing") shall take place at
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such place and time and on such date as shall be agreed upon by all parties,
which date shall not be later than the 10th business day after the day on which
the last to be fulfilled or waived of the conditions set forth in Article V
shall be fulfilled or waived in accordance herewith. Notwithstanding the
foregoing, in no event shall the Closing take place prior to January 1, 2000.
The date on which the Closing occurs is hereinafter referred to as the "Closing
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Date."
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(c) Notwithstanding any of the provisions of this Article I, if any of
the BSC Shareholders shall fail or refuse to deliver any of the BSC Certificates
representing BSC Shares, or if any of the BSC Shareholders shall fail or refuse
to consummate the transactions described in this Agreement, such failure or
refusal shall not relieve the other BSC Shareholders of any of their obligations
under this Agreement, and SBI, at its option and without prejudice to its rights
against any defaulting BSC Shareholder, may either (i) acquire the remaining BSC
Shares which it is entitled to acquire hereunder, or (ii) refuse to acquire the
remaining BSC Shares and thereby terminate all of its obligations hereunder.
The BSC Shareholders acknowledge that the BSC Shares are unique and otherwise
not available and agree that in addition to any other remedies, SBI may invoke
any equitable remedies to enforce delivery of the BSC Shares hereunder,
including, without limitation, an action or suit for specific performance.
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SECTION 1.2 Effect on Outstanding Shares. If prior to the Closing
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Date, the number of outstanding SBI Shares shall have been increased or
decreased through a reclassification, stock dividend, stock split or reverse
stock split, or other similar change, appropriate adjustment shall be made to
the Exchange Ratio.
SECTION 1.3 Surrender and Exchange of BSC Certificates.
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(a) No certificates for fractional SBI Shares shall be issued in
connection with the Share Exchange. In lieu thereof, SBI shall issue to a BSC
Shareholder otherwise entitled to a fractional share, upon surrender of such
certificates, a check for an amount of cash equal to the fraction of an SBI
Share represented by the certificates so surrendered multiplied by the Average
Closing Price per SBI Share as determined in conformity with Schedule 1.1 and as
defined therein. No interest will be paid or accrued on the cash in lieu of
fractional shares, if any, payable to holders of BSC Shares.
(b) In the event any BSC Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the BSC Shareholder
claiming such BSC Certificate to be lost, stolen or destroyed and agreeing to
indemnify SBI against any claim that may be made against it with respect to such
Certificate, SBI will issue in exchange for such lost, stolen or destroyed BSC
Certificate, the SBI Shares into which such BSC Certificates has been converted
pursuant to this Agreement and cash in lieu of fractional shares.
ARTICLE II
CONDUCT PENDING THE SHARE EXCHANGE
SECTION 2.1 Conduct of BSC Businesses. Except as expressly provided in
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this Agreement, during the period from the date of this Agreement to the
Closing, BSC shall (i) conduct its business in the usual, regular and ordinary
course consistent with past practice, (ii) maintain and preserve intact its
business organization, assets, leases, properties, employees and advantageous
business relationships and retain the services of its officers and key
employees, (iii) not take any action which would affect or delay its ability to
obtain any necessary approvals, consents or waivers of any governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements on a timely basis under this Agreement and (iv) not
take any action that would have an adverse effect on the business, operations or
prospects of BSC.
SECTION 2.2 Forbearance by BSC. During the period from the date of this
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Agreement to the Closing, BSC shall not, without the prior written consent of
SBI:
(a) other than in the ordinary course of business consistent with past
practice: (i) make any advance or loan; (ii) incur any indebtedness for borrowed
money, under existing credit lines or otherwise; or (iii) assume, guarantee,
endorse or otherwise as an accommodation become responsible for, the obligations
of any other individual, corporation or other person;
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(b) issue any equity securities or options, warrants, rights or
convertible securities; adjust, split, combine or reclassify any capital stock;
make, declare or pay any dividend or make any distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock; cause its assets to be distributed to any of its
shareholders, except in the form of compensation to employees who are
shareholders consistent with subsection (d) of this Section 2.2; or grant any
stock appreciation rights or grant, sell or issue to any individual, corporation
or other person any shares of its capital stock or any right to acquire, or any
securities evidencing a right to convert into or acquire, any shares of its
capital stock;
(c) other than in the ordinary course of business, consistent with past
practice and pursuant to policies, if any, currently in effect: (i) sell,
transfer, mortgage, encumber or otherwise dispose of any of its properties,
leasehold interests or assets; (ii) cancel, release or assign any indebtedness
of any such person; or (iii) assign any contracts or agreements as in force at
the date of this Agreement;
(d) increase in any manner the annual compensation or fringe benefits of
any of its employees, other than the payment of bonuses in the ordinary course
of business consistent with past practice and not in excess of 10% of each such
employee's annual base compensation or annual salary increases not in excess of
5%, or pay any pension or retirement allowance not required by law or by any
existing plan or agreement to any such employees, or become a party to, amend,
increase, terminate, otherwise modify or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee, or grant any unusual or
extraordinary bonuses, benefits or other forms of direct or indirect
compensation to any employee, officer, director, or consultant, or voluntarily
accelerate the vesting of any stock options or other compensation or benefit;
(e) amend its articles of incorporation, or its bylaws, except as
expressly contemplated by this Agreement or required by law or regulation, in
each case as concurred in by its counsel;
(f) change its accounting principles or maintain its books in a manner
inconsistent with past practices or fail to promptly advise SBI in writing of
any material change in its business, earnings, assets, liabilities, financial or
other condition or results of operations;
(g) take any action that would prevent BSC from consummating the
transactions contemplated by this Agreement;
(h) take or agree to take any action that would prevent the Share
Exchange from constituting a reorganization qualifying under the provisions of
Section 368(a) of the Code, or
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prevent the Share Exchange from being treated as a pooling of interests for
financial accounting purposes;
(i) transfer any interest in the BSC Shares owned by them, or pledge or
otherwise encumber the BSC Shares owned by them; or
(j) fail to take any action that would be necessary to cause BSC to
perform its obligations under this Agreement.
SECTION 2.3 Cooperation. BSC and each BSC Shareholder shall cooperate
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with SBI, and SBI shall cooperate with BSC, in completing the transactions
contemplated hereby and each shall not knowingly take, or cause to be taken, or
knowingly agree or make any commitment to take, any action (i) that would cause
any of the representations or warranties of it that are set forth in Article III
hereof not to be true and correct in all material respects, (ii) that would
cause it to fail to comply with the covenants set forth in Article IV or (iii)
in the case of BSC, that is inconsistent with or prohibited by Section 2.1 or
Section 2.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of BSC Shareholders and BSC.
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BSC, and each BSC Shareholder jointly and severally, represents and warrants to
SBI that, except as specifically disclosed by BSC to SBI in writing in the
disclosure schedules being delivered to SBI (the "BSC Schedules") which shall
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identify the specific sections or subsections in the Agreement to which each
such disclosure relates:
(a) Corporate Organization and Qualification. BSC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New Jersey and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the business
conducted, by BSC requires such qualification, except for such failure to
qualify or be in such good standing which, when taken together with all other
such failures, would not have a material adverse effect on BSC. Each such
jurisdiction is listed on Schedule 3.1(a). BSC has the requisite corporate and
other power and authority (including all federal, state, local and foreign
governmental authorizations) to carry on its businesses as now being conducted
and to own its properties and assets. BSC has made available to SBI a complete
and correct copy of the articles of incorporation and bylaws of BSC and such
articles and bylaws are in full force and effect as of the date hereof.
(b) Authorized Capital. The authorized capital stock of BSC consists of
3,000 shares of common stock, no par value per share, of which only the 200 BSC
Shares were issued and outstanding as of the date of this Agreement. No other
equity securities are authorized for issuance by BSC. All of the BSC Shares
have been duly authorized and are validly issued, fully
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paid and nonassessable, and are held of record and beneficially owned by the BSC
Shareholders. BSC does not have any shares of capital stock reserved for
issuance. BSC does not have any outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
shareholders on any matter. The BSC Shares have not been issued in violation of
any preemptive rights. Except as set forth in Schedule 3.1(b), there are no
outstanding subscriptions, options, warrants, rights, convertible securities or
other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of BSC. After the Closing, SBI will
not have any obligation to issue, transfer or sell any shares of capital stock
pursuant to any Employee Plan (as defined in Section 3.1(l)).
(c) Subsidiaries. BSC does not have any Subsidiaries. Except as set
forth in Schedule 3.1(c), BSC does not own any capital stock or other equity
securities 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. BSC owns beneficially and of record
all shares of capital stock or other interests of any entity which shall be set
forth as owned by it in Schedule 3.1(c), 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 on Schedule 3.1(c), none of such shares
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or interests is subject to any covenant or other contractual restriction
preventing or limiting the right to transfer such shares.
(d) Corporate Authority. Subject to the regulatory approvals specified
in Section 5.1(b) hereof, BSC has the requisite corporate power and authority,
and legal right, and has taken all corporate action necessary in order to
execute and deliver this Agreement and to consummate the transactions applicable
to BSC contemplated hereby. This Agreement has been duly and validly executed
and delivered by BSC and constitutes the valid and binding obligations of BSC,
enforceable against BSC in accordance with its terms, except to the extent
enforcement is limited by bankruptcy, insolvency and other similar laws
affecting creditors' rights or the application by a court of equitable
principles.
(e) No Violations. The execution, delivery and performance of this
Agreement by it does not, and the consummation of the transactions contemplated
hereby by it will not, constitute (i) subject to receipt of the required
regulatory approvals specified in Section 5.1(b), a breach or violation of, or a
default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, to which it (or any of its respective
properties) is subject, (ii) a breach or violation of, or a default under BSC's
articles of incorporation or bylaws, (iii) a breach of any duty owed by BSC to
any person holding an interest in BSC, or (iv) except as disclosed in Schedule
3.1(e), a breach or violation of, or a default under (or an event which with due
notice or lapse of time or both would constitute a default under), or result in
the termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of it under any of the
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terms, conditions or provisions of any note, bond, indenture, deed of trust,
loan agreement or other agreement, instrument or obligation to which it is a
party, or to which any of their respective properties or assets may be bound or
affected; and the consummation of the transactions contemplated hereby will not
require any approval, consent or waiver under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or the approval, consent
or waiver of any other party to any such agreement, indenture or instrument,
other than the required approvals, consents and waivers of governmental
authorities referred to in Section 5.1(b).
(f) Financial Reports. BSC's audited statements of financial condition
as of and for the years ended December 31, 1996, 1997 and 1998, previously
provided to SBI (including in each case any related notes and schedules) fairly
presents or will fairly present the financial position of BSC as of its date and
each of the statements of income and stockholders' equity and of cash flows
provided therewith (including in each case any related notes and schedules),
fairly presents the results of operations, stockholders' equity and cash flows,
as the case may be, of BSC for the periods set forth therein, in each case in
accordance with generally accepted accounting principles consistently applied
("GAAP") during the periods involved, except as may be noted therein, and except
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as qualified as indicated in the audited statements of financial condition for
the years ended December 31, 1996 and 1997.
(g) Absence of Certain Changes or Events. Since December 31, 1998, to
the date hereof, it has not incurred any material liability, except in the
ordinary course of its business consistent with past practice. Additionally,
since December 31, 1998, there has been no material adverse change in the
financial condition, properties, assets, business, results of operations or
prospects of it, nor has it taken any of the actions set forth in Section 2.2 of
this Agreement.
(h) Taxes.
i. For purposes of this Agreement, the term "Taxes" shall mean all
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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
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Return" shall mean any report, return or other information required to be
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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.
ii. BSC 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 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
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Tax Returns not filed as of the date hereof but filed on or before the Closing
Date, will be) filed on a timely basis. Except as disclosed in Schedule 3.1(h),
BSC 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 BSC 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 BSC 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, BSC 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 BSC. There are no liens for taxes upon the assets of BSC or
for any liability, whenever assessed, arising pursuant to U.S. Treasury
Regulation Section 1.1502-6 or any comparable provision of state or local law.
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
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state or local taxing authority. No claim is currently being made by any
authority in a jurisdiction where BSC does not file Tax Returns that they are or
may be subject to Taxes in that jurisdiction.
iii. Except as set forth on Schedule 3.1(h), BSC has compiled (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 have, 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. BSC has undertaken in good faith
to appropriately classify all service providers as either employees or
independent contractors for all Tax purposes.
iv. Neither the consolidated federal income Tax Returns nor the
state or local income Tax Returns of BSC have been examined by the IRS or
relevant state taxing authorities, except as set forth on Schedule 3.1(h). All
deficiencies asserted as a result of the examinations referred to on Schedule
3.1(h) 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 BSC'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 3.1(h), there are no
examinations or other administrative or court proceedings relating to Taxes in
progress or pending nor has BSC received a revenue agents report asserting a tax
deficiency. To the best of
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BSC's knowledge, there are no threatened actions, suits, proceedings,
investigations or claims relating to or asserted for Taxes of BSC and there is
no basis for any such claim.
v. Since 1993, BSC has not been a member of any affiliated group of
corporations that filed a consolidated income tax return.
vi. Since the date of its incorporation, BSC 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) 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.
(i) Litigation and Liabilities. Except as set forth in Schedule 3.1(i),
there are no (i) civil, criminal or administrative actions, suits, claims,
hearings, investigations or proceedings before any court, governmental agency or
otherwise pending or, to the best of BSC's Knowledge, threatened against it or
(ii) obligations or liabilities, whether or not accrued, contingent or
otherwise, including, without limitation, those relating to environmental and
occupational safety and health matters, or any other facts or circumstances of
which its management is aware that could reasonably be expected to result in any
claims against or obligations or liabilities of it, or to hinder or delay the
consummation of the transactions contemplated by this Agreement. There are no
judgements, decrees, injunctions, rules or orders of any court or governmental
department or agency outstanding against BSC.
(j) Agreements.
i. Schedule 3.1(j) contains an accurate list of all commitments,
contracts, leases (other than automobile leases entered into in the ordinary
course of business) and agreements to which BSC is a party or by which BSC is
bound which involves a commitment or obligation in excess of $50,000 in the
aggregate for each such commitment contract, lease or agreement or is otherwise
material to the business of BSC (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 security agreements) (the "Contracts"). BSC has delivered true,
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correct and complete copies of such Contracts to SBI. Except as set forth in
Schedule 3.1(j) attached hereto, as of the date of this Agreement it is not a
party to, or bound by, any oral or written:
(A) "material contract" as such term is defined in Item
601(b)(10) of Regulation S-K promulgated by the Securities and Exchange
Commission (the "SEC");
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9
(B) 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;
(C) 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;
(D) 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;
(E) 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;
(F) 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);
(G) agreement, contract or understanding, other than this
Agreement, regarding the capital stock of BSC or committing to dispose of
substantially all of the assets of BSC;
(H) collective bargaining agreement, contract, or other
agreement or understanding with a labor union or labor organization;
(I) any employment contracts or any other contracts, agreements
or commitments to or with individual employees or agents of BSC 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;
(J) any power of attorney given by BSC;
(K) any contracts or commitments providing for payments based in
any manner on the revenues or profits of BSC;
10
(L) any contract under which BSC 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;
(M) 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
(N) 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 BSC of any amount or value
in excess of $50,000 in the aggregate for each such contract or commitment.
ii. The Contracts constitute valid and legally binding obligations
of the parties thereto and are enforceable in accordance with their terms,
assuming due authorization, execution and delivery by parties other than BSC 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.
iii. Each Contract constitutes the entire agreement by and between
the respective parties thereto with respect to the subject matter thereof.
iv. All obligations required to be performed under the terms of the
Contracts have been performed, 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 BSC under the Contracts.
v. Except as expressly set forth on Schedule 3.1(j), none of the
Contracts requires the consent of the other parties thereto in order for it to
be in full force and effect with respect to BSC as controlled by SBI after the
Closing or would give rise to the other party's right to terminate any Contract;
and BSC will use its best efforts to obtain any required consents prior to the
Closing. Except as expressly set forth on Schedule 3.1(j), BSC 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 BSC.
(k) Employee Relations. Except as set forth on Schedule 3.1(k) there are
no pending claims by any current or former personnel of BSC against BSC other
than for compensation and benefits due in the course of employment; (ii) there
are no pending claims against BSC arising out of any statute, ordinance or
regulation relating to employment practices
11
or occupational or safety and health standards; (iii) there are no pending or,
to the best knowledge of BSC threatened labor disputes, strikes or work
stoppages against BSC; and (iv) to the best knowledge of BSC, there are no union
organizing activities in process or contemplated with respect to the BSC. No
collective bargaining units have been certified or recognized by BSC. Schedule
3.1(k) also identifies all employees on leave of absence and all current or
former employees and their dependents receiving health benefits, or eligible to
receive health benefits, as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"). Notice of the availability of COBRA
-----
coverage has been provided to all persons entitled thereto since June 30, 1996,
and all persons electing such coverage are being (or have been, if applicable)
provided such coverage.
(l) Employee Benefit Plans. Schedule 3.1(l) contains a complete list of
all pension, retirement, stock option, stock purchase, stock ownership, 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 it 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").
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i. 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 and other applicable laws; it 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.
ii. No liability to the Pension Benefit Guaranty Corporation has been
or is expected by it 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
BSC under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
-----
Affiliate").
---------
iii. 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
12
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.
iv. Neither has it provided, nor is it 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.
v. Neither it 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.
vi. Each Employee Plan of it 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; it 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.
vii. 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.
viii. Neither it 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.
ix. There is no pending or threatened litigation, administrative
action or proceeding relating to any Employee Plan other than routine claims for
benefits.
x. Except as disclosed in Schedule 3.1(l), there has been no
announcement or legally binding commitment by it 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 it 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.
13
xi. Except as disclosed in Schedule 3.1(l), 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 BSC to any person
which is an "excess parachute payment" (as defined in Section 28OG of the Code)
under any Employee Plan, increase any benefits payable under any Employee Plan,
or accelerate the time of payment or vesting of any such benefit.
xii. Except as disclosed in Schedule 3.1(l), all required annual
reports have been filed timely with respect to each Employee Plan, and it 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.
(m) Title to Assets. Except as disclosed on Schedule 3.1(m), it has good
and marketable title to its properties and assets (other than property as to
which it is lessee), free and clear of all Encumbrances, except for (i) such
items shown in the BSC consolidated financial statements or notes thereto; (ii)
liens on real property for current real estate taxes not yet delinquent or (iii)
such minor defects in title which would not, individually or in the aggregate,
adversely effect the intended use of the property. BSC does not own any real
property. With respect to any property leased by it which is set forth on
Schedule 3.1(m), there are no defaults by it, or any of the other parties
thereto, or any events which, with the giving of notice or lapse of time or
both, would become defaults by it or any of the other parties thereto, under any
of such leases; and all such leases are in full force and effect and are
enforceable against it, as the case may be, and there is no circumstance
existing as of the date of this Agreement which causes or would cause such
leases to be unenforceable against any of the other parties thereto except as
the same may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally as well as principles
of equity to the extent enforcement by a court of equity is required.
(n) Compliance with Laws.
i. BSC holds all licenses, franchises, certificates, consents,
permits, approvals, certificates of public convenience and necessity,
concessions, rights and authorizations ("Authorizations") from all federal,
--------------
state, local and foreign governmental entities and other persons or entities
which are necessary for the lawful conduct of its business and its use and
occupancy of its assets and properties in the manner heretofore conducted, used
and occupied. A complete and correct list of the Authorizations held by BSC is
14
set forth in Schedule 3.1(n). All of such Authorizations are valid, in good
standing and in full force and effect, not subject to any default and no
suspension or cancellation of any of which is threatened, and BSC has duly
performed in all material respects all of their respective obligations under
such Authorizations. No event has occurred with respect to the material
Authorizations which permits, or after notice or lapse of time or both would
permit, revocation or termination thereof or would result in any other material
impairment of the rights of the holder of any of the Authorizations, and no
terminations thereof have been, to the knowledge of BSC, threatened. Except as
disclosed in Schedule 3.1(n), all such Authorizations are renewable by their
terms or in the ordinary course of business and will not be adversely affected
by the transactions contemplated by this Agreement.
ii. BSC is in compliance with all applicable laws, statutes,
ordinances, codes, rules and regulations of any governmental entities, and BSC
has not received any notice from a governmental entity within five years of the
date hereof of any such violation.
iii. Except as expressly set forth on Schedule 3.1(n), none of
the Authorizations requires the consent of any governmental entity or any other
party in order for it to be in full force and effect with respect to BSC as
controlled by SBI after the Closing or would give rise to a governmental
entity's or any other party's right to terminate any Authorization as a result
of the Share Exchange; and BSC will use its best efforts to obtain any required
consents prior to the Closing.
(o) Brokers and Finders. Except as set forth in Schedule 3.1(o)
attached hereto, BSC and its officers, directors, employees or agents, and the
BSC Shareholders have not employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions, finders'
fees or similar fees or expenses and no broker or finder has acted directly or
indirectly for BSC or any BSC Shareholder in connection with this Agreement or
the transactions contemplated hereby and no investment banking, financial
advisory or similar fees have been incurred or are or will be payable by BSC or
any BSC Shareholder in connection with this Agreement or the transactions
contemplated hereby.
(p) Environmental Matters.
i. Except as disclosed in Schedule 3.1(p):
(A) BSC 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, BSC. To the best
knowledge of BSC, there are no circumstances that may prevent or interfere with
such full compliance in the future.
(B) BSC 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 BSC is in compliance with all terms
15
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.
(C) There is no lawsuit, claim, action, cause of action,
judicial or administrative proceeding, investigation, summons, or written notice
by any person pending, or to BSC's knowledge, threatened, against BSC 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 BSC.
(D) BSC 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 BSC.
(E) No Environmental Lien (as defined below) has attached
to any of the property owned, operated, occupied or otherwise used by BSC.
(F) There has been no Release of any Hazardous Substance
at, to or from any of the properties owned, operated, occupied or otherwise used
by BSC.
(G) BSC 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 Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. (S)(S) 9601 et. seq. ("CERCLA"), or any similar
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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.
(H) All of the third parties with which BSC presently has
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 BSC is properly
permitted under Environmental Laws to perform the foregoing activities or
conduct.
(I) BSC has no 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 BSC or any of the predecessors of BSC.
16
(J) 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 BSC under any Environmental Law.
(K) 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 BSC are identified
in Schedule 3.1(p), (ii) except as identified in Schedule 3.1(p), there is no
asbestos contained in or forming part of any building, building component,
structure or office space owned or operated by BSC, and (iii) no polychlorinated
biphenyls (PCBS) are used or stored at any part of the property owned or
operated by BSC.
(L) The following terms shall have the following meanings:
1. "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.
2. "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.
3. "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, petroleum products and
byproducts, and substances (including, without limitation, wastes) defined in or
regulated under Environmental Law.
4. "Permit" means any permit, license, consent or
other approval or authorization required under any Environmental Law.
5. "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.
17
(q) Interests of Certain Persons. Except as noted in Schedule 3.1(q),
none of its respective officers or directors, or any BSC Shareholder, or any
"associate" (as such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) of any such officer or director or
------------
any BSC Shareholder, has any interest in (i) any contract or property (real or
personal), tangible or intangible, used in or pertaining to its business, except
in connection with his or her service as an employee in the ordinary course of
business or (ii) any business that furnished goods or services to BSC since July
1, 1996, except for an interest of less than 5% of the stock of a company whose
securities are traded on a national securities exchange.
(r) Insurance. Set forth in Schedule 3.1(r) is a complete and
accurate list and description of all policies of fire, liability, product
liability, workers compensation, health and other forms of insurance presently
in effect with respect to the business and properties of BSC, true and correct
copies of which have been furnished to SBI. Schedule 3.1(r) includes, without
limitation, the carrier, a summary description of coverage, the limits of
coverage, retention or deductible amounts, amount of annual premiums, date of
expiration with respect to each such policy, and any pending claims in excess of
$5,000. No such policy (nor any previous policy) is subject to any currently
enforceable retroactive rate or premium adjustment, loss sharing arrangement or
other actual or contingent liability arising wholly or partially out of events
arising prior to the date hereof. Schedule 3.1(r) indicates each policy as to
which (a) the coverage limit has been reached or (b) the total incurred losses
to date equal 75% or more of the coverage limit. No notice of cancellation or
termination has been received with respect to any such policy, and no act or
omission of BSC could result in cancellation of any such policy prior to its
scheduled expiration date. BSC has not been refused any insurance with respect
to any aspect of the operations of the business nor has its coverage been
limited by any insurance carrier to which it has applied for insurance or with
which it has carried insurance during the last five (5) years. BSC has duly and
timely made all claims it has been entitled to make under each policy of
insurance. BSC has not received notice from any insurer or agent of such insurer
that substantial capital improvements or other expenditures will have to be made
in order to continue such insurance and, to the best knowledge of BSC, no such
improvements or expenditures are required.
(s) Dividends. The only dividends or other distributions which it has
made on its capital stock since January 1, 1999 are set forth in Schedule
3.1(s).
(t) Books and Records. Except as set forth on Schedule 3.1(t), its
books and records 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.
(u) Board Action. Its board of directors (at a meeting duly called
and held) has been duly convened and by the requisite vote of all directors (a)
determined that the Share
18
Exchange is advisable and in the best interests of it and its shareholders and
(b) approved this Agreement and the transactions contemplated hereby and
thereby.
(v) Intellectual Property. BSC, directly or indirectly, possesses 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 3.1(v), all right,
----------------------
title and interest in and to each item of Intellectual Property is owned by BSC,
is not subject to any license, royalty arrangement or pending or threatened
claim or dispute and is valid and in full force and effect. None of the
Intellectual Property owned or used by BSC, infringes any Intellectual Property
right of any other entity and no Intellectual Property owned by BSC is infringed
upon by any other entity.
(w) Absence of Undisclosed Liabilities. Except (i) as and to the
extent specifically reserved against in BSC's audited balance sheet as of
December 31, 1998, and in the notes to such balance sheet for the period then
ended, (ii) liabilities which have been incurred since December 31, 1998 in the
ordinary course of business consistent with past practice as a result of arm's
length negotiations and (iii) liabilities and obligations specifically disclosed
on Schedule 3.1(w), BSC has no material liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise and whether due or to become
due). BSC and the BSC Shareholders have no reason to believe that any reserves
for liabilities are inadequate. Except as and to the extent described in BSC's
audited balance sheet as of December 31, 1998 or in Schedule 3.1(w), neither BSC
nor any BSC Shareholder has knowledge of any basis for the assertion against BSC
of any liability and there are no circumstances, conditions, happenings, events
or arrangements, contractual or otherwise which may give rise to liabilities,
except commercial liabilities and obligations incurred in the ordinary course of
BSC's business and consistent in amount and nature with past practice. Except as
set forth on Schedule 3.1(w), BSC's audited balance sheet as of December 31,
1998 reflects a reasonable residual value for the total portfolio of the leases
pursuant to which BSC acts as lender, lessor or sublessor, finances, leases or
subleases automobiles.
(x) Condition of Tangible Assets. Except as set forth in Schedule
3.1(x), in all material respects all the real property leased by it is free from
structural defects, and to the best knowledge of BSC the operation and use of
the real property conform in all material respects to all applicable laws,
ordinances, regulations, permits, licenses and certificates.
(y) Year 2000 Compliance. Except as provided in Schedule 3.1(y)
hereof, BSC 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, and 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
19
change in the Year 2000. BSC has contacted its vendors and borrowers in order to
assess their efforts to mitigate any adverse effects to their computer programs
and systems beyond December 31, 1999.
(z) SBI Stock Ownership. BSC does not own any SBI Shares or other
securities convertible into SBI Shares.
(aa) Pooling of Interests. Neither BSC nor any BSC Shareholder has
taken or failed to take any action or has knowledge of any fact or circumstance
that would, or would be reasonably likely to, prevent the accounting for the
Share Exchange as a pooling of interests in accordance with GAAP and the
published pronouncements of the SEC.
(bb) Tax Reorganization. Neither BSC nor any BSC Shareholder has taken
or failed to take any action, or has knowledge of any fact or circumstance, that
would, or would be reasonably likely to, adversely affect the status of the
Share Exchange as a reorganization under Section 368(a) of the Code.
(cc) Disclosure. No representation or warranty by BSC and/or any BSC
Shareholder contained in this Agreement, nor any statement, certificate,
schedule, document or exhibit hereto furnished or to be furnished by or on
behalf of BSC or the BSC Shareholders pursuant to this Agreement or in any
documents delivered by BSC or the BSC Shareholders to SBI in connection with the
transactions contemplated by this Agreement, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statements contained therein not misleading. All
statements and information contained in any such certificate, instrument,
schedule or document delivered by or on behalf of BSC and/or any BSC Shareholder
shall be deemed representations and warranties by BSC and the BSC Shareholders.
SECTION 3.2 Representations, Warranties and Covenants of the BSC
----------------------------------------------------
Shareholders. The BSC Shareholders severally and not jointly represent, warrant
------------
and covenant to SBI that, except as specifically disclosed by the BSC
Shareholders to SBI in writing in the disclosure schedules being delivered to
SBI (the "BSC Shareholder Schedules") and which BSC Shareholder Schedules shall
-------------------------
identify the specific sections or subsections in the Agreement to which each
such disclosure relates:
(a) Ownership; Authority.
i. Such BSC Shareholder owns beneficially and of record the
number of shares set forth opposite his or her name on Schedule 3.2(a) free and
clear of all Encumbrances and such BSC Shareholder has the authority to execute
and deliver this Agreement, and no other acts or other proceedings on the part
of the BSC Shareholders are necessary to authorize this Agreement or the
transactions contemplated hereby or thereby. This Agreement has been duly and
validly executed and delivered by such BSC Shareholder and constitutes the
legal, valid and
20
binding obligation of such BSC Shareholder, enforceable against each BSC
Shareholder in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights in general, or by general
principles of equity.
ii. Neither the execution and delivery by such BSC Shareholder
of this Agreement nor the consummation of the transactions contemplated hereby
or thereby nor compliance by such BSC Shareholder with any of the provisions
hereof or thereof will (i) violate or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any Encumbrance upon any of the BSC Shares owned by such BSC
Shareholder under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, sublease, option agreement
or other instrument or obligation to which such BSC Shareholder is a party, or
by which he or she or the BSC Shares owned by such BSC Shareholder may be bound
or affected, (ii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to such BSC Shareholder or the BSC Shares owned by such
BSC Shareholder or (iii) require any consent, approval or authorization of, or
notice to, or declaration, filing or registration with, any person or entity
applicable to such BSC Shareholder.
(b) Brokers or Finders. Such BSC Shareholder has not entered into and
will not enter into any agreement, arrangement or understanding with any broker,
finder or investment banker pertaining to the Share Exchange.
(c) No Other Agreements to Sell Shares. Other than pursuant to this
Agreement, no BSC Shareholder has any legal obligation, absolute or contingent,
to any other person or firm to sell any of the BSC Shares or to enter into any
agreement with respect thereto.
(d) Economic Risk; Sophistication. Each BSC Shareholder represents
and warrants that such BSC Shareholder has not relied on any purchaser
representative, or on BSC or any other BSC Shareholder, in connection with the
acquisition of shares of SBI Shares hereunder. Such BSC Shareholders is an
"accredited investor" within the meaning of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act"); and (a) has such
--------------
knowledge, sophistication and experience in business and financial matters that
such BSC Shareholder is capable of evaluating the merits and risks of an
investment in the SBI Shares, (b) fully understands the nature, scope and
duration of the limitations on transfer contained in this Agreement and (c) can
bear the economic risk of an investment in the SBI Shares and can afford a
complete loss of such investment. Such BSC Shareholder has had an adequate
opportunity to ask questions and receive answers from the officers of SBI
concerning any and all matters relating to the transactions described herein
including without limitation the background and experience of the officers and
directors of SBI, the plans for the operations of the business of SBI, the
business, operations and financial condition of SBI, and any plans for
additional acquisitions and the like. Such BSC Shareholder has asked any and all
questions of the nature
21
described in the preceding sentence and all questions have been answered to his
or her satisfaction. Additionally, such BSC Shareholder has received from SBI
copies of (i) SBI's Annual Report on Form 10-K for the year ended December 31,
1998, (ii) SBI's Quarterly Report on Form 10-Q for the period ended March 31,
1999 and (iii) the Proxy Statement for SBI's 1999 annual shareholder meeting,
and have also obtained such other information as such BSC Shareholder requires
in order to evaluate an investment in the Shares.
(e) Private Placement; Resale Restrictions.
i. By execution and delivery of this Agreement, each BSC
Shareholder represents and warrants to SBI that the representing BSC Shareholder
does not have any contract, undertaking, agreement or arrangement, written or
oral, with any other person to sell, transfer or grant participations in any SBI
Shares to be acquired by such BSC Shareholder. Additionally, each BSC
Shareholder represents and warrants that the SBI Shares are being acquired by
each of the BSC Shareholders for his or her own account, and not with a view to
the sale or distribution of any part thereof, except pursuant to a registration
statement filed pursuant to the Securities Act or an exemption from registration
thereunder.
ii. Each BSC Shareholder understands that the Shares have not
been registered under the Securities Act on the basis that the sale to the BSC
Shareholders in connection with the Share Exchange is exempt from registration
under the Securities Act pursuant to Section 4(2) thereof, and the SBI's
reliance on such exemption is predicated on the BSC Shareholder's
representations set forth herein.
iii. Each BSC Shareholder will not directly or indirectly,
offer, sell, contract to sell, pledge or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of) any SBI Shares
unless (i) registered under the Securities Act, (ii) pursuant to an exemption
from registration under the Securities Act, (iii) in a transaction not requiring
registration under the Securities Act or (iv) accompanied by an opinion of
counsel satisfactory to SBI that registration is not required.
iv. The certificate or certificates evidencing the SBI Shares
to be delivered to the BSC Shareholders pursuant to the Share Exchange will bear
a legend substantially in the form set forth below and containing such other
information as SBI may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF
REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES
ACT OR AN
22
OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE
AND SUBSTANCE TO SUSQUEHANNA BANCSHARES, INC.
("SUSQUEHANNA") THAT SUCH REGISTRATION IS NOT REQUIRED. IN
ADDITION, THE TRANSFER OF THESE SHARES IS RESTRICTED UNTIL
SUSQUEHANNA HAS PUBLICLY RELEASED ITS FIRST REPORT
INCLUDING THE COMBINED FINANCIAL RESULTS OF SUSQUEHANNA
AND BOSTON SERVICE COMPANY, INC. FOR A PERIOD OF AT LEAST
30 DAYS OF COMBINED OPERATIONS.
v. Notwithstanding anything herein contained to the contrary,
each BSC Shareholder will not sell, transfer or otherwise dispose of any of the
SBI Shares, or any option, right or other interest with respect to the SBI
Shares that such BSC Shareholder will acquire pursuant to this Agreement, or any
securities that may be paid as a dividend thereon or with respect thereto or
issued or delivered in exchange or substitution therefor, or offer or agree to
sell, transfer or otherwise dispose of, or in any other way reduce such BSC
Shareholder's risk of ownership or investment in the SBI Shares until SBI has
publicly released its first report including the combined financial results of
SBI and BSC for a period of at least thirty (30) days of combined operations.
After the release of the report described in the immediately preceding sentence,
certificates evidencing the SBI Shares delivered at or after the Closing Date,
may at the BSC Shareholder's election, be surrendered for cancellation and
reissuance with a legend relating only to the restriction on the transfer of the
SBI Shares pursuant to the Securities Act.
vi. Each BSC Shareholder acknowledges that SBI may place stop
transfer instructions with the transfer agent with respect to the SBI Shares.
SECTION 3.3 Representations and Warranties of SBI. SBI represents and
--------------------------------------
warrants to the BSC Shareholders (and the word "it" in this Article III refers
to SBI and each of its Subsidiaries), that, except as specifically disclosed by
SBI to the BSC Shareholders in writing in the disclosure schedules being
delivered to the BSC Shareholders (the "SBI Schedules") and which SBI Schedules
-------------
shall identify the specific sections or subsections in the Agreement to which
each such disclosures relates, to the best of its knowledge:
(a) Corporate Organization and Qualification. SBI is a corporation
duly incorporated, validly existing and duly subsisting under the laws of the
Commonwealth of Pennsylvania and is in good standing as a foreign corporation in
each jurisdiction where the properties owned, leased or operated, or the
business conducted, by SBI requires such qualification, except for such failure
to qualify or be in such good standing which, when taken together with all other
such failures, would not have a material adverse effect on SBI. It has the
requisite corporate and other power and authority (including all federal, state,
local and foreign governmental authorizations) to carry on its business as now
conducted and to own its properties and assets.
23
(b) Corporate Authority. Subject only to the regulatory approvals
specified in Section 5.1(a) hereof, SBI has the requisite corporate power and
authority, and legal right, and has taken all corporate action necessary in
order to execute and deliver this Agreement and to consummate the transactions
applicable to SBI contemplated hereby. This Agreement has been duly and validly
executed and delivered by SBI and constitutes the valid and binding obligations
of SBI enforceable against SBI, in accordance with its terms, except to the
extent enforcement is limited by bankruptcy, insolvency and other similar laws
affecting creditors' rights or the application by a court of equitable
principles.
(c) Capitalization. As of Xxxx 00, 0000, XXX common stock was held of
record by more than 6,700 shareholders and the authorized capital stock of SBI
consisted of 100,000,000 shares of SBI common stock, of which approximately
36,977,488 shares are issued and outstanding (an additional 12,612 shares are
held as treasury stock) and 5,000,000 shares of Preferred Stock, no par value
per share, of which none are outstanding. Sufficient shares of authorized, but
unissued, SBI common stock to effect the transactions herein contemplated will
be reserved by SBI for such purpose.
(d) No Violations. The execution, delivery and performance of this
Agreement by SBI does not, and the consummation of the transactions contemplated
hereby by SBI will not, constitute (i) a breach or violation of, or a default
under, any law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument to which SBI (or any of
SBI's respective properties or assets) is subject, (ii) a breach or violation
of, or a default under, SBI's articles of incorporation or bylaws or (iii) a
breach or violation of, or a default under (or an event which with due notice or
lapse of time or both would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of SBI's properties or assets under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which it is a party, or to which any of
SBI's properties or assets may be bound or affected; and the consummation of the
transactions contemplated hereby will not require any approval, consent or
waiver under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than (i) the
required approvals, consents and waivers of governmental authorities referred to
in Section 5.1(b) and (ii) any such approval, consent or waiver that already has
been obtained.
(e) Board Action. SBI's board of directors (at a meeting duly called
and held) has been duly convened and by the requisite vote of all directors (a)
determined that the Share Exchange is advisable and in the best interests of it
and its shareholders, and (b) approved this Agreement and the transactions
contemplated hereby, subject to the receipt of the opinion of SBI's financial
advisor to the effect that the Exchange Ratio and the Share Exchange
Consideration are fair from a financial point of view to the holders of SBI
Shares, as set forth in Section 5.2(f).
24
(f) SBI SEC Reports and Financial Statements. SBI has furnished to
the BSC Shareholders copies of the Annual Report of SBI on Form 10-K for the
fiscal year ended December 31, 1998, any proxy statements and other reports
(including Quarterly Reports on Form 10-Q) under the Exchange Act, filed by SBI
after such date (collectively, the "SEC Reports"), each as filed with the SEC,
-----------
and SBI's 1998 Annual Report to Shareholders (the "1998 Annual Report"). As of
------------------
their respective dates, each SEC Report and any proxy statements and other
reports filed by SBI with the SEC after the date of this Agreement (i) compiled,
or will comply with on the date of such filing, as to form in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act and (ii) did not, or will not, on the date of filing or the date as of which
information is set forth therein, 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 the light of the circumstances under which
they were made, not misleading. The representation in clause (ii) of the
immediately preceding sentence shall not apply to any misstatement or omission
in any SEC Report filed prior to the date hereof which was superseded by a
subsequent SEC Report filed prior to the date hereof. The financial statements
(including any related schedules and/or notes) included in the SEC Reports and
the 1998 Annual Report have been prepared in accordance with GAAP consistently
applied (except as may be indicated in the notes thereto) throughout the periods
involved and fairly present the financial position, results of operations and
cash flows as of the dates and for the periods indicated therein.
(g) Absence of Undisclosed Liabilities. Except (i) as disclosed in,
or reflected in the financial statements included in, the SEC Reports, (ii)
liabilities which have been incurred since March 31, 1999 in the ordinary course
of business consistent with past practice as a result of arm's length
negotiations, which liabilities would not be reasonably likely to have a
material adverse effect on the business, earnings, assets, liabilities,
financial or other condition or results of operations of SBI and its
Subsidiaries taken as a whole and (iii) liabilities and obligations specifically
disclosed on Schedule 3.3(g), neither SBI nor any of its Subsidiaries has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise and whether due or to become due).
(h) SBI Shares. The issuance and delivery by SBI of the SBI Shares in
connection with the Share Exchange and this Agreement have been duly and validly
authorized by all necessary corporate action on the part of SBI. The SBI Shares
to be issued in connection with the Share Exchange and this Agreement, when
issued in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable.
(i) Pooling of Interests. Neither SBI nor any of its Subsidiaries has
taken or failed to take any action or has knowledge of any fact or circumstance
that would, or would be reasonably likely to, prevent the accounting for the
Share Exchange as a pooling of interests in accordance with GAAP and the
pronouncements of the SEC.
25
(j) Tax Reorganization. SBI understands that this transaction is
intended by the BSC Shareholders to qualify as a tax-free reorganization under
Section 368(a) of the Code. Neither SBI nor any of its Subsidiaries has taken,
failed to take or will take any action, or has knowledge of any fact or
circumstances that would, or would be reasonably likely to, adversely affect the
status of the Share Exchange as a tax-free reorganization under Section 368(a)
of the Code.
ARTICLE IV
COVENANTS
SECTION 4.1 Acquisition Proposals. BSC and the BSC Shareholders agree
---------------------
that they shall not, and that they shall direct and use their best efforts to
cause the BSC employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by them) not
to, initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to their shareholders) with respect to a
merger, acquisition, consolidation, reorganization, share exchange, tender
offer, exchange offer or similar transaction involving, or any purchase, sale or
other disposition of all or any significant portion of the assets or any equity
securities of, BSC (any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal") or, engage in any negotiations concerning, or provide
--------------------
any confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal, or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal. BSC and the BSC
Shareholders agree that they will take the necessary steps to inform the
appropriate individuals or entities referred to in the first sentence hereof of
the obligations undertaken by each of them in this Section 4.1. BSC and the BSC
Shareholders agree that they will notify SBI immediately if any such inquiries
or proposals are received by, any such information is requested from, or any
such negotiations, or discussions are sought to be initiated or continued with,
them.
SECTION 4.2 Securities Registration and Disclosure. Following the
--------------------------------------
publication of financial results covering at least thirty (30) days of combined
operations of SBI and BSC have been published within the meaning of Section
201.01 of the SEC's Codification of Financial Reporting Policies, SBI will
promptly prepare and file with the SEC under the Securities Act a registration
statement for the registration of the resale of the SBI Shares to be issued
pursuant hereto (the "Registration Statement"), as provided in the Registration
----------------------
Rights Agreement between the BSC Shareholders and SBI set forth in Exhibit A
attached hereto. SBI shall take any action required to be taken under any
applicable state securities or "blue sky" laws in connection with the issuance
of SBI Shares pursuant to this Agreement and the BSC Shareholders shall furnish
SBI all information concerning them as SBI may reasonably request in connection
with any such action.
SBI shall use reasonable efforts to provide a copy of the Registration
Statement to the BSC Shareholders for their review ten (10) business days prior
to its filing with the SEC. Each
26
party will promptly provide the other with copies of all correspondence, comment
letters, notices or other communications to or from the SEC or the Board
relating to the Registration Statement, or any amendment or supplement thereto,
and SBI will advise the BSC Shareholders promptly after it receives notice
thereof, of the effectiveness of the Registration Statement, of the issuance of
any stop order with respect to the effectiveness thereof, of the suspension of
the qualification of the SBI Shares issuable in connection herewith for offering
or sale in any jurisdiction, or the initiation or threat of any proceeding for
any such purpose.
SECTION 4.3 Employees.
---------
(a) Each person employed by BSC prior to the Closing who remains an
employee of BSC following the Closing (each a "Continued Employee") shall be
------------------
entitled to participate in whatever employee benefit plans, as defined in
Section 3(3) of ERISA, or whatever stock option, bonus or incentive plans or
other fringe benefit programs that may be in effect generally for employees of
SBI or SBI's Subsidiaries from time to time ("SBI's Plans"), if such Continued
-----------
Employee shall be eligible or selected for participation therein and otherwise
shall not be participating in a similar plan which continues to be maintained by
the BSC for such employee. All such participation shall be subject to such terms
of such plans as may be in effect from time to time provided, further that
Continued Employees will be eligible to participate in SBI's plans on the same
basis as similarly situated employees of SBI or SBI's Subsidiaries. Such
Continued Employees will receive credit for past service with BSC for purposes
of eligibility and vesting, but not benefit accrual, under SBI's Plans.
(b) BSC shall take all timely and necessary action to cease
participation or accrual of benefits, effective as of the Closing, by each
person employed by BSC prior to the Closing in each Employee Plan (as defined in
Section 3.1(l), including timely notice to all participants under Section 204(h)
of ERISA, if applicable, and to terminate each Employee Plan, other than an
Employee Plan containing a cash or deferred arrangement qualified under Section
401(k) of the Code ("Employee 401(k) Plan") and other than those specified in
--------------------
Schedule 4.3(b), effective as of the Closing; provided that SBI may, in its sole
discretion, give notice to BSC not less than twenty (20) days prior to the
Closing, that any Employee Plan shall not be terminated and/or participation or
accrual of benefits thereunder shall not cease pursuant to this Section 4.3(b).
At the sole discretion of SBI, any Employee 401(k) Plan shall be merged with any
similar such plan maintained and designated by SBI, effective at or after the
Closing, as elected by SBI, and BSC shall take any and all timely and necessary
action to effect such merger.
SECTION 4.4 Access and Information. Upon reasonable notice, and
----------------------
subject to applicable laws relating to the exchange of information, each party
to this Agreement shall provide the other party and its representatives
(including, without limitation, directors, officers and employees of the party
and its affiliates, and counsel, accountants and other professionals retained)
such access during normal business hours throughout the period prior to the
Closing to the facilities, books, records (including, without limitation, tax
returns and work papers of independent auditors), properties, personnel and such
other information as the requesting party
27
may reasonably request (other than reports or documentation which are not
permitted to be disclosed under applicable law); provided, however, that no
investigation pursuant to this Section 4.4 shall affect or be deemed to modify
any representation or warranty made herein. Each of the parties will not, and
will cause their respective representatives not to, use any information obtained
pursuant to this Section 4.4 or Section 3.1 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement and in no event
will any party directly or indirectly use such information for any competitive
or commercial purpose. Subject to the requirements of law, each party to this
Agreement will keep confidential, and will cause its representatives to keep
confidential, all information and documents obtained pursuant to this Section
4.4 and Section 3.1 unless such information (i) is generally available to or
known by the public other than as a result of improper disclosure by the
receiving party or (ii) is obtained by a receiving party from a source other
than another party to this Agreement, provided that such source was not bound by
a duty of confidentiality with respect to such information. Without in any way
limiting the foregoing, BSC shall provide to SBI within forty-five (45) days of
the end of each calendar quarter financial statements (including a balance sheet
and income statement) (except for the calendar quarter financial statements for
the calendar quarter ended December 31, 1999, which shall be provided to SBI
within thirty (30) days) as of the end of, and for, such period prepared in each
case on a basis consistent with past practice for the quarters ended March 31,
1999, June 30, 1999 (each as restated to conform with GAAP) and September 30,
1999 and December 31, 1999, if applicable, as prepared in conformance with GAAP
and the representations set forth in Section 3.1(f) for the quarters ended
September 30, 1999 and December 31, 1999, if applicable. In the event that this
Agreement is terminated or the transactions contemplated by this Agreement shall
otherwise not be consummated, each party shall, if so requested, promptly cause
all copies of documents or extracts thereof containing information and data as
to another party hereto (or an affiliate of any party hereto) to be returned to
the party which furnished the same.
SECTION 4.5 Certain Filings, Consents and Arrangements. SBI shall use
------------------------------------------
all reasonable efforts to obtain all necessary approvals required to be obtained
by SBI to carry out the transactions contemplated by this Agreement and to
consummate the Share Exchange. BSC shall cooperate with SBI in connection
therewith, including without limitation furnishing all information concerning
BSC as may be reasonably requested by SBI in connection with any such action.
BSC shall use all reasonable efforts to obtain all necessary approvals required
to be obtained by BSC to carry out the transactions contemplated by this
Agreement and to consummate the Share Exchange. SBI shall cooperate with BSC in
connection therewith, including without limitation furnishing all information
concerning SBI as may be reasonably requested by BSC in connection with any such
action. Each party will consult with the other party with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and governmental authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party apprised of the status of matters relating to completion of the
transactions contemplated hereby. Each party shall promptly furnish the other
party with copies of applications to any governmental authority in respect of
the transactions contemplated hereby.
28
SECTION 4.6 Additional Agreements. Subject to the terms and
---------------------
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take promptly, or cause to be taken promptly, all actions
and to do promptly, or cause to be done promptly, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement as promptly as
practicable, including using efforts to obtain all necessary actions or non-
actions, extensions, waivers, consents and approvals from all applicable
governmental authorities, or other entities, effecting all necessary
registrations, applications and filings and obtaining any required contractual
consents and regulatory approvals.
SECTION 4.7 Publicity. Except and to the extent required by law,
---------
without the prior written consent of the other parties, none of the parties to
this Agreement shall, and each shall direct its representatives not to, directly
or indirectly, make any public comment, statement or communication with respect
to, or otherwise disclose or permit the disclosure of any information regarding
this Agreement or the transactions described herein. Prior to issuing any press
release or making any public filings under securities laws which makes any
reference to BSC, SBI shall provide a copy to BSC for comment and in all such
instances the parties shall cooperate.
SECTION 4.8 Listing Application. Following the disclosure of
-------------------
financial results covering at least thirty (30) days of combined operations of
SBI and BSC, SBI shall promptly prepare and submit to the Nasdaq National Market
a listing application covering the SBI Shares issuable in the Share Exchange,
and shall use its best efforts to obtain, prior to the effectiveness of the
Registration Statement, approval for the listing of such SBI Shares, subject to
official notice of issuance.
SECTION 4.9 Notification of Certain Matters. Each party shall give
-------------------------------
prompt notice to the others of (a) any notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by it or any of its subsidiaries subsequent to
the date of this Agreement and prior to the Closing, under any contract material
to the financial condition, properties, businesses, results of operations or
prospects of it to which it is a party or is subject; and (b) any material
adverse change in its financial condition, properties, business, or results of
operations taken as a whole or the occurrence of any event which, so far as
reasonably can be foreseen at the time of its occurrence, is reasonably likely
to result in any such change. Each party shall give prompt notice to the other
parties of 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 contemplated by this Agreement.
SECTION 4.10 Insurance. BSC shall use its best efforts to retain no
---------
less than the level of insurance coverage presently held by it as of the date
hereof.
29
SECTION 4.11 Board Seat. At the meeting of the SBI Board of
----------
Directors next following the Closing Date, Xxxxxxx X. Xxxxxx shall be appointed
as a director of SBI in the class of directors whose term expires upon the
election of the successors to that class at the annual meeting of SBI
shareholders in or around May of 2000. So long as Xxxxxxx X. Xxxxxx remains
employed under the Employment Agreement between Xxxxxxx X. Xxxxxx and BSC, the
SBI Board of Directors shall recommend him for reelection as a director of SBI
in the class of directors whose term expires upon the election of the successors
to that class at the annual meeting of SBI shareholders in or around May of
2003.
SECTION 4.12 Pooling; Reorganization. From and after the date
-----------------------
hereof and until the Closing, neither SBI nor BSC nor any of their respective
subsidiaries or other affiliates nor any BSC Shareholder shall (i) take any
action, or fail to take any action, that could jeopardize the qualification of
the Share Exchange as a "pooling of interests" for accounting purposes; (ii)
take any action, or fail to take any action, that could jeopardize qualification
of the Share Exchange as a reorganization under Section 368(a) of the Code; or
(iii) enter into any contract, agreement, commitment or arrangement with respect
to either of the foregoing. At the Closing, the auditors of BSC will deliver a
letter to PricewaterhouseCoopers, as accountants for SBI, to the effect that BSC
has complied with all pooling requirements applicable to BSC in form and
substance satisfactory to PricewaterhouseCoopers.
SECTION 4.13 General Release. At the Closing, each BSC Shareholder
---------------
shall deliver a general release to SBI, in the form attached hereto as
Exhibit B, releasing SBI and the directors, officers, agents and employees of
SBI from all liabilities to the Closing Date.
SECTION 4.14 Employment Agreement. At the Closing, BSC and
-----------------
Xxxxxxx X. Xxxxxx will enter into an Employment Agreement, substantially in the
form attached hereto as Exhibit C.
SECTION 4.15 Real Property Leases. At the Closing, real property
--------------------
leases substantially in the form of Exhibit D hereto will be entered into by BSC
and MTW Realty, L.L.C.
SECTION 4.16 Consents. BSC and the BSC Shareholders will use their
--------
best efforts prior to Closing to obtain all consents necessary for the
consummation of the transactions contemplated by this Agreement.
SECTION 4.17 BSC Shares. Between the date of this Agreement and the
----------
Closing Date, the BSC Shareholders will not transfer any of the BSC Shares or
convey any interest in the BSC Shares, nor will the BSC Shareholders vote the
BSC Shares in any way to cause a breach of this Agreement.
30
SECTION 4.18 Non-Competition. (a) Subject to the Closing, and as
---------------
an inducement to SBI to execute this Agreement and complete the transactions
contemplated hereby, and in order to preserve the goodwill associated with the
business of BSC being acquired pursuant to this Agreement, BSC and the BSC
Shareholders hereby covenant and agree that for a period of five (5) years from
the Closing Date, they will not, directly for themselves or any third party,
become engaged in any business or activity which is directly in competition with
any services or financial products sold by, or any business or activity engaged
in by, BSC, SBI or any of their affiliates including, without limitation, any
business or activity engaged in by any leasing company or any federally or state
chartered bank, savings bank, savings and loan association, trust company and/or
credit union, and/or any services or financial products sold by such entities,
including, without limitation, the taking and accepting of deposits, the
provision of trust services, the making of loans and/or the extension of credit,
brokering loans and/or leases and the provision of insurance and investment
services, within the states of New Jersey, New York, Pennsylvania, Delaware,
Maryland and Virginia; provided, however that Xxxxxxx X. Xxxxxx may continue,
consistent with past practice, to engage in business activities with Auto
Lenders Liquidation Center, Inc. This provision shall not restrict BSC or the
BSC Shareholders from owing or investing in publicly traded securities of
financial institutions, so long as their respective aggregate holdings in any
financial institution do not exceed ten percent (10%) of the outstanding capital
stock of such institution.
In the event that a court of competent jurisdiction determines that
the provisions of this covenant not to compete are excessively broad as to
duration, geographical scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any such
over broad provisions shall be deemed, without further action on the part of any
person, to be modified, amended and/or limited, but only to the extent necessary
to render the same valid and enforceable in such jurisdiction.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE SHARE EXCHANGE
SECTION 5.1 Conditions to Closing. The respective obligations of
---------------------
the parties to effect the Share Exchange shall be subject to the satisfaction or
waiver prior to the Closing of the following conditions:
(a) All of the required approvals, consents or waivers of
governmental authorities with respect to this Agreement and the transactions
contemplated hereby including, without limitation, the approvals, notices to,
consents or waivers of (i) the Board of Governors of the Federal Reserve and
(ii) jurisdictions with respect to "blue sky" obligations; and the parties shall
have procured all other regulatory approvals, consents or waivers of
governmental authorities that are necessary or appropriate to the consummation
of the transactions contemplated by this Agreement.
31
(b) No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Share Exchange, or any other transaction
contemplated by this Agreement, and no litigation or proceeding shall be pending
against any of the parties herein or any of their subsidiaries brought by any
governmental agency seeking to prevent consummation of the transactions
contemplated hereby. In the event any order or injunction shall have been
issued, each party to this Agreement agrees to use its reasonable efforts to
have any such injunction lifted.
(c) No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any governmental
authority which prohibits, restricts or makes illegal consummation of the Share
Exchange, or any other transaction contemplated by this Agreement.
SECTION 5.2 Conditions to Obligations of SBI. The obligations of
--------------------------------
SBI to effect the Share Exchange shall be subject to the satisfaction or waiver
prior to the Closing of the following additional conditions:
(a) Each of the representations and warranties of BSC and the BSC
Shareholders contained in this Agreement and in any document delivered in
connection herewith shall be true and correct in all material respects as of the
Closing Date as if made on such date (or on the date when made in the case of
any representation or warranty which specifically relates to an earlier date);
BSC shall have performed each of its covenants and agreements, contained in this
Agreement; and SBI shall have received a certificate signed by the Chief
Executive Officer and the Controller of the BSC, dated the Closing Date, to the
foregoing effect.
(b) SBI shall have received an opinion or opinions dated as of the
Closing Date, from Xxxxxxxx & Scatchard, P.A., counsel to BSC, substantially in
the form attached hereto as Exhibit E.
(c) There shall not have occurred any material adverse change in the
financial condition, prospects, properties, assets, liabilities (including
contingent liabilities), business or results of operation of BSC.
(d) The Share Exchange shall as of the date of the Closing meet the
requirements for pooling-of-interests accounting treatment under GAAP and under
the published accounting rules of the SEC, and SBI shall have received a letter
from PricewaterhouseCoopers LLP in form and substance reasonably satisfactory to
SBI as to the matters specified in this Section 5.2(d).
(e) Xxxxxxx X. Xxxxxx shall have entered into an Employment Agreement
with BSC, substantially in the form of Exhibit C hereto.
32
(f) SBI shall have received the opinion from its financial advisor to
the effect that the Exchange Ratio and the Share Exchange Consideration are fair
from a financial point of view to the holders of SBI Shares.
(g) BSC shall have entered into an agreement with Auto Lenders
Liquidation Center with respect to the provision of services, substantially in
the form attached hereto as Exhibit F.
(h) X.X. Xxxxxx & Co., LLP, or such other accounting firm as is
acceptable to the parties, shall have furnished to SBI an "agreed upon
procedures" letter, dated the Closing Date, in form and substance satisfactory
to SBI to the effect that, based upon procedures performed with respect to the
financial condition of BSC for the period from December 31, 1998 to a specified
date not more than five (5) business days prior to the date of such letter,
including but not limited to (i) their inspection of the minute books of BSC,
(ii) inquiries made by them of officers and other employees of BSC and
affiliates responsible for financial and accounting matters as to transactions
and events during the period, as to consistency of GAAP with prior periods and
as to the existence and disclosure of any material contingent liabilities, and
(iii) other specified procedures and inquiries performed by them, noting in the
letter based only upon the procedures noted above, (A) during the period from
December 31, 1998 to a specified date not more than five (5) business days prior
to the date of such letter, any change in the capitalization of BSC on a
consolidated basis, (B) any material adjustments that would be required to the
audited financial statements for the period ended December 31, 1998 in order for
them to be in conformity with GAAP applied on a consistent basis with prior
periods or (C) any material adjustments which would be required to the unaudited
financial statements for the most recent quarter end period prior to the Closing
in order for them to be in conformity with GAAP applied on a consistent basis
with prior periods.
SECTION 5.3 Conditions to the Obligations of BSC and the BSC
------------------------------------------------
Shareholders. The obligations of BSC and the BSC Shareholders to effect the
------------
Share Exchange shall be subject to the satisfaction or waiver prior to the
Closing of the following additional conditions:
(a) Each of the representations, warranties and covenants of SBI
contained in this Agreement and in any document delivered in connection herewith
shall be true and correct in all material respects on the Closing Date as if
made on such date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date); SBI shall have
performed each of its covenants and agreements, which are material to its
operations and prospects, contained in this Agreement; and BSC shall have
received certificates signed by the President or Vice President and Secretary or
Assistant Secretary of SBI, dated the Closing Date, to the foregoing effect.
(b) BSC shall have received an opinion dated as of the Closing Date,
from Counsel of SBI, substantially in the form attached hereto as Exhibit G.
33
ARTICLE VI
NATURE AND SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION, ETC.
SECTION 6.1 Survival of Representations and Warranties, Indemnities.
-------------------------------------------------------
(a) All covenants and agreements of the parties made in this Agreement or
provided herein shall survive the Closing Date to the extent expressly provided
herein. All representations and warranties of the parties made in this
Agreement or as provided herein shall be made as of the date hereof and shall
survive the Closing for a period of two years (the "Survival Period"), except
---------------
that (a) any intentional or knowing misrepresentation shall survive the Closing
indefinitely, and (b) Sections 3.1(a), (b), (d), (h), (n) and (p) and Section
3.2(a) shall survive the expiration of the fifteen (15) day period commencing on
the expiration date of the relevant statute of limitations period (including any
applicable extensions thereof), if longer than the two-year period previously
specified (provided that if there is no relevant statute of limitations,
survival shall be indefinite), unless survival is governed by the preceding
clause (a).
(b) The BSC Shareholders (other than the Custodial Shareholder),
jointly and severally, hereby agree to defend, indemnify and hold SBI and its
Subsidiaries and their officers, directors and employees (collectively, the "SBI
---
Indemnitees") harmless from and against any and all claims, liabilities, losses,
-----------
damages, deficiencies, penalties, fines, costs or expenses (including, without
limitation, the fees and expenses of investigation and counsel) (collectively,
"Losses"), arising out of or resulting from (i) any breach of the
------
representations and warranties contained in Section 3.1; (ii) any breach in any
material respect by the BSC Shareholder or BSC of any covenant or agreement of
the BSC Shareholder or BSC contained in or arising out of this Agreement or
(iii) any and all actions, suits, proceedings, claims, demands, assessments and
judgments incidental to the foregoing to the enforcement of such
indemnification. Each BSC Shareholder, jointly and severally, hereby agrees to
defend, indemnify and hold the SBI Indemnitees harmless from and against any and
all Losses arising out of or resulting from any breach of any representation or
warranty by such BSC Shareholder contained in Section 3.2.
(c) Notwithstanding anything to the contrary in this Agreement, the
BSC Shareholders shall not be liable to the SBI Indemnitees for any Losses until
the Losses incurred by the SBI Indemnitees exceed Five Hundred Thousand Dollars
($500,000) (the "Threshold Amount"), and then the BSC Shareholders shall be
----------------
liable to indemnify and hold the SBI Indemnitees harmless hereunder only to the
extent such Losses exceed the Threshold Amount; provided that this Section
6.1(c) shall not apply to any intentional or knowing misrepresentations or
breaches of covenants or agreements by BSC or the BSC Shareholders.
(d) Notwithstanding anything to the contrary in this Agreement, the
BSC Shareholders shall not have any liability under this Article VI to the
extent that any such liability exceeds Three Million Dollars ($3,000,000).
34
(e) SBI hereby agrees to defend, indemnify and hold the BSC
Shareholders (collectively, the "BSC Shareholder Indemnitees") harmless from and
---------------------------
against any and all Losses, arising out of or resulting from (i) any breach of
the representations and warranties contained in Section 3.3; (ii) any breach in
any material respect by SBI of any covenant or agreement of SBI contained in or
arising out of this Agreement or (iii) any and all actions, suits, proceedings,
claims, demands, assessments and judgments incidental to the foregoing to the
enforcement of such indemnification.
(f) Notwithstanding anything to the contrary in this Agreement, SBI
shall not have any liability under this Article VI to the extent that any such
liability exceeds Three Million Dollars ($3,000,000), except that nothing
contained in this subparagraph shall limit SBI's obligation to provide validly
issued SBI Shares to the BSC Shareholders in the amount provided for in this
Agreement.
(g) Promptly after the receipt by the SBI Indemnitees of a notice
of any claim, action, suit or proceeding of any third party which is subject to
indemnification hereunder, such party or parties (the "Indemnified Buyer Party")
-----------------------
shall give written notice of such claim (a "Notice of Claim") to the party or
---------------
parties obligated to provide indemnification hereunder (collectively, the
"Indemnifying Shareholder Party"), stating the nature and basis of such claim
------------------------------
and the amount thereof, to the extent known. The failure of the Indemnified
Buyer Party to so notify the Indemnifying Shareholder Party shall not impair the
Indemnified Buyer Party's ability to seek indemnification from the Indemnifying
Shareholder Party, except to the extent that the Indemnifying Shareholder Party
is materially prejudiced. The Indemnifying Shareholder Party shall be entitled
to participate in the defense or settlement of such matter and the parties agree
to cooperate in any such defense or settlement and to give each other full
access to all information relevant thereto. The Indemnifying Shareholder Party
shall not be obligated to indemnify an Indemnified Buyer Party hereunder for any
settlement entered into without the Indemnifying Shareholder Party's prior
written consent, which consent shall not be unreasonably withheld, conditioned
or delayed. If any Notice of Claim relates to a claim by a person or persons
other than any federal state, local or foreign tax authority; and the amount of
such claim is acknowledged by the Indemnifying Shareholder Party to be fully
covered by the foregoing indemnity, as limited herein, the Indemnifying
Shareholder Party may elect to defend against such claim at its own expense, in
lieu of the Indemnified Buyer Party assuming such defense; provided, that the
--------
Indemnified Buyer Party shall be entitled to participate in or monitor such
defense at its own expense and the Indemnifying Shareholder Party will fully
cooperate with the Indemnified Buyer Party and its counsel with respect thereto.
If the Indemnifying Shareholder Party elects to assume such defense, the
Indemnifying Shareholder Party shall retain counsel reasonably satisfactory to
the Indemnified Buyer Party. No compromise or settlement of such claim may be
effected by the Indemnifying Shareholder Party without the consent of the
Indemnified Buyer Party (which shall not be unreasonably withheld, conditioned
or delayed) unless (i) there is no finding or admission of any violation of law
and no effect on any other claims that may be made against such Indemnified
Buyer Party and (ii) the sole relief provided is monetary damages that are paid
---
in full by the Indemnifying Shareholder Party. If a Notice of
35
Claim relates to a claim by a federal, state, local or foreign Tax authority and
the Indemnifying Shareholder Party requests that the Indemnified Buyer Party
accept a settlement offer (other than an offer conditioned upon the Indemnified
Buyer Party's agreement with respect to any other issue not deemed a Loss
hereunder) and agrees to pay the indemnity with respect thereto, then the
Indemnified Buyer Party shall either (i) accept such settlement offer or (ii)
not accept such settlement offer, in which case the Indemnifying Shareholder
Party shall only be liable to the Indemnified Buyer Party for the amount the
Indemnifying Shareholder Party would have been required to pay the Indemnified
Buyer Party had the Indemnified Buyer Party accepted the settlement offer.
(h) All claims for indemnification by a BSC Shareholder Indemnitee
under this Article VI shall be asserted and resolved under the procedures set
forth above substituting in the appropriate place "Indemnified Shareholder
Party" for "Indemnified Buyer Party" and variations thereof and "SBI" for
"Indemnifying Shareholder Party."
(i) Notwithstanding any provision in this Article VI to the contrary,
any claim for indemnification in respect of which notice is given in accordance
with the provisions of Section 6.1(a) hereof prior to the expiration of the
Survival Period shall survive with respect to such claim until final resolution
thereof.
(j) Notwithstanding any provision in this Article VI to the contrary,
no party shall be able to avoid the limitations of this Article by electing to
pursue some other remedy, except with respect to remedies relating to fraud or
intentional or knowing misrepresentation.
36
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated, and the
-----------
Share Exchange abandoned, prior to the Closing:
(a) by the mutual, written consent of BSC and SBI;
(b) by BSC if (i) there has been a material breach by SBI of any
representation, warranty, covenant or agreement contained herein and such breach
is not cured or not curable within ten (10) days after written notice of such
breach is given to SBI by BSC; or (ii) any condition precedent to BSC's
obligations as set forth in Article V of this Agreement has not been met or
waived by BSC at such time as such condition can no longer be satisfied.
(c) by SBI by written notice to BSC and the BSC Shareholders, in the
event (1) of a material breach by BSC or any BSC Shareholder of any
representation, warranty, covenant or agreement contained herein and such breach
is not cured or not curable within ten (10) days after written notice of such
breach is given to BSC and the BSC Shareholders by SBI; or (ii) any condition
precedent to SBI's obligations as set forth in Article V of this Agreement has
not been met or waived by SBI at such time as such condition can no longer be
satisfied.
(d) by SBI or BSC by written notice to the other, in the event that
the Share Exchange is not consummated by February 28, 2000, unless the failure
to so consummate by such time is due to the breach of any representation,
warranty or covenant contained in this Agreement by the party seeking to
terminate; provided, however, that such date may be extended by the written
agreement of SBI and BSC, and such date will be automatically extended until
May 31, 2000 if the approval set forth in Section 7.5 of this Agreement has not
been received by such date.
(e) by BSC, by giving written notice of such election to SBI within
one (1) business day following determination of the Average Closing Price per
SBI Share in connection with Closing if such Average Closing Price is greater
than $25.00 per share (subject to adjustment in accordance with Section 1.1
herein) at the time such calculation is required to be made pursuant to
Schedule 1.1 hereof
(f) by SBI, by giving written notice of such election to BSC within
one (1) business day following determination of the Average Closing Price per
SBI Share in connection with Closing if such Average Closing Price is less than
$15.00 per share (subject to adjustment in accordance with Section 1.1 herein)
at the time such calculation is required to be made pursuant to Schedule 1.1
hereof.
37
SECTION 7.2 Effect of Termination. In the event of the termination
---------------------
of this Agreement, as provided above, this Agreement shall thereafter become
void and have no effect, except that the provisions of Sections 3.1(o) (fees),
4.4 (as applicable to confidentiality and return of documents), 4.7 (publicity)
and 7.3 (expenses) of this Agreement shall survive any such termination and
abandonment.
SECTION 7.3 Expenses. Any termination of this Agreement pursuant to
--------
Sections 7.1(a), 7.1(d), 7.1(e) or 7.1(f) hereof shall be without cost, expense
or liability on the part of any party to the others. Any termination of this
Agreement pursuant to Section 7.1(b) or 7.1(c) hereof shall also be without
cost, liability or expense on the part of any party to the others, unless the
breach of a representation or warranty or covenant is caused by the willful
conduct or gross negligence of a party, in which event said party shall be
liable to the other parties for all out-of-pocket costs and expenses, including
without limitation, reasonable legal and accounting, incurred by such other
party in connection with their entering into this Agreement and their carrying
out of any and all acts contemplated hereunder ("Expenses").
--------
SECTION 7.4 Extension, Waiver. At any time prior to the Closing, any
-----------------
party hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions for the benefit of
such party 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 an instrument in
writing signed on behalf of such party.
SECTION 7.5 Approval of Federal Reserve Board. Notwithstanding the
---------------------------------
foregoing or any other provision of this Agreement to the contrary, in the event
that SBI is required to file with the Federal Reserve Bank an approval request,
with respect to the transactions contemplated by this Agreement, BSC and the BSC
Shareholders hereby agree to extend the date of this Agreement until such
approval is granted, or May 31, 2000, whichever is earlier, and BSC and the BSC
Shareholders hereby agree that the time period required for the filing of such
an approval request and the receipt of approval from the Federal Reserve Bank
shall not give rise to a right to terminate this Agreement under Section 7.1(d).
ARTICLE VII
OTHER MATTERS
SECTION 8.1 Certain Defined Terms. As used in the Agreement, the
---------------------
following terms shall have the meanings indicated:
"1998 Annual Report" shall be defined as at Section 3.3(f).
"Acquisition Proposal" shall be defined as at Section 4.1.
38
"Agreement" shall be this Share Agreement dated as of the 17th day of
November, 1999 by and among Susquehanna Bancshares, Inc., Boston Service
Company, Inc., t/a Xxxx Financial Services Corporation and Xxxxxxx Xxxxxx, Xxxxx
Xxxxxx and Xxxxxx Xxxxxx.
"Authorizations" shall be defined as at Section 3.1(n).
"Average Closing Price" means the average closing price per share of
SBI common stock as determined in conformity with Schedule 1.1 and as defined
therein.
"BSC" shall mean Boston Service Company, Inc. (t/a Xxxx Financial
Service Corporation).
"BSC Certificate" shall be defined as at Section 1.1(a).
"BSC Schedules" shall be defined as at Section 3.1.
"BSC Shareholder Indemnitees" shall be defined as at Section 6.1(e).
"BSC Shareholder Schedules" shall be defined as at Section 3.2.
"BSC Shareholders" shall mean Xxxxxxx X. Xxxxxx, Xxxxx Xxxxxx and
Xxxxxx Xxxxxx.
"BSC Shares" shall be defined in the recitals to this Agreement.
"CERCLA" shall be defined as at Section 3.1(p)(i)(G).
"COBRA" is the Consolidated Omnibus Budget Reconciliation Act of 1985
and shall be defined as at Section 3.1(k).
"Closing" shall be defined as at Section 1.1(b).
"Closing Date" shall be defined as at Section 1.1(b).
"Code" is the Internal Revenue Code of 1986, as amended and shall be
defined in the recitals to this Agreement.
"Continued Employee" shall be defined as at Section 4.3(a).
"Contracts" shall be defined as at Section 3.1(j)(i).
"corporate affiliate" shall mean, with respect to a person, any other
corporation controlling, controlled by, or under common control with, such
person.
39
"Custodial Shareholder" shall mean Xxxxx Xxxxxx, custodian for the
benefit of Xxxx Xxxxxx under the Uniform Gift to Minors Act.
"ERISA" is the Employee Retirement Income Security Act and defined as
at Section 3.1(l)(i).
"ERISA Affiliate" shall be defined as at Section 3.1(l)(ii).
"Employee 401(k) Plan" shall be defined as at Section 4.3(b).
"Employee Plans" shall be defined as at Section 3.1(l).
"Encumbrance" shall be defined as at Section 3.1(c).
"Environmental Laws" shall be defined as at Section 3.1(p)(i)(L)(1).
"Environmental Lien" shall be defined as at Section 3.1(p)(i)(L)(2).
"Exchange Act" is the Securities Exchange Act of 1934, as amended, and
defined as at Section 3.1(q).
"Exchange Ratio" shall be described on Schedule 1.1 hereof
"Expenses" shall be described as at Section 7.3.
"GAAP" shall be described as at Section 3.1(f).
"Hazardous Substances" shall be described as at Section
3.1(p)(i)(L)(3).
"Indemnified Buyer Party" shall be defined as at Section 6.1(g).
"Indemnified Shareholder Party" shall be defined as at Section 6.1(h).
"Indemnifying Shareholder Party" shall be defined as at
Section 6.1(g).
"IRS" is the Internal Revenue Service and shall be defined as at
Section 3.1(h)(ii).
"Losses" shall be defined as at Section 6.1(b).
"material" means material to the party in question (as the case may
be) and its respective subsidiaries, taken as a whole.
"Notice of Claim" shall be defined as at Section 6.1(g).
40
"Pension Plan" is an employee benefit plan subject to Title IV of
ERISA and shall be defined as at Section 3.1(l)(ii).
"Permit" shall be defined as at Section 3.1(p)(i)(L)(4).
"person" includes an individual, corporation, partnership,
association, trust or unincorporated organization.
"Qualified Plan" shall be defined as at Section 3.1(l)(vi).
"Registration Statement" shall be defined as at Section 4.2.
"Release" shall be defined as at Section 3.1(p)(i)(L)(5).
"Representative" shall be defined as at Section 8.15.
"SBI" shall be Susquehanna Bancshares, Inc., a Pennsylvania
corporation and a multi-state, multi-institutional bank holding company.
"SBI Indemnitees" shall be defined as at Section 6.1(b).
"SBI Schedules" shall be defined as at Section 3.3.
"SBI Shares" shall be defined in the recitals to this Agreement.
"SBI's Plans" shall be defined as at Section 4.3.
"SEC" is the Securities and Exchange Commission and shall be defined
as at Section 3.1(j)(i)(A).
"SEC Reports" shall be defined as at Section 3.3(f).
"Securities Act" is the Securities Act of 1933, as amended, and shall
be defined as at Section 3.2(d).
"Share Exchange" shall be defined in the recitals to this Agreement.
"Share Exchange Consideration" shall be determined on the basis of the
Exchange Ratio set forth at Schedule 1.1 hereof, and shall be defined as at
Section 1.1(a).
"Subsidiary" means, with respect to any party, any corporation,
limited liability company, partnership, joint venture, or other business
association or entity, at least a majority of
41
the voting securities or economic interests of which is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries.
"Survival Period" shall be defined as at Section 6.1(a).
"Tax Return" shall be defined as at Section 3.1(h)(i).
"Threshold Amount" shall be defined as at Section 6.1(c).
When a reference is made in this Agreement to Exhibits, Sections, or Schedules,
such reference shall be to a Section of, or Exhibit, or Schedule to, this
Agreement unless otherwise indicated. The table of contents, tie sheet and
headings contained in this Agreement are for ease of reference only and shall
not affect the meaning or interpretation of this Agreement. Whenever the words
"include," "includes," or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation." Any singular term in this
Agreement shall be deemed to include the plural and any plural term the
singular.
SECTION 8.2 Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto and their respective
successors and assigns, and, other than the right to receive the consideration
payable in the Share Exchange pursuant to Article I hereof, is not intended to
and shall not confer upon any other person any rights, benefits or remedies of
any nature whatsoever under or by reason of this Agreement.
SECTION 8.3 Waiver and Amendment. Prior to the Closing, any
--------------------
provision of this Agreement may be: (i) waived by the party benefited by the
provision; or (ii) amended or modified at any time (including the structure of
the transaction) by an agreement in writing between the parties hereto approved
by their respective boards of directors, except that no amendment or waiver may
be made that would change the form or the amount of the Share Exchange
Consideration or otherwise have the effect of prejudicing the BSC shareholders'
interest in the Share Exchange Consideration.
SECTION 8.4 Counterparts. This Agreement may be executed in
------------
counterparts each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same instrument.
SECTION 8.5 Governing Law. This Agreement shall be governed by, and
-------------
interpreted in accordance with, the laws of the Commonwealth of Pennsylvania,
or, to the extent it may control, federal law, without reference to the choice
of law principles thereof.
SECTION 8.6 Expenses. Subject to the provisions of Section 7.3
--------
hereof, SBI will bear all expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby and, at the election of the
BSC Shareholders, BSC will pay up to One Hundred Thousand Dollars ($100,000) of
the expenses incurred by them in connection with this
42
Agreement; provided, however, that all filing and other fees (other than federal
and state income taxes) required to be paid to any governmental agency or
authority in connection with the consummation of the transactions contemplated
hereby shall be borne by SBI.
SECTION 8.7 Notices. All notices, requests, acknowledgments and
-------
other communications hereunder to a party shall be in writing and shall be
deemed to have been duly given when delivered by hand, telecopy, telegram or
telex (confirmed in writing) to such party at its address set forth below or
such other address as such party may specify by notice to the other party
hereto.
If to BSC, to:
Boston Service Company, Inc.
(t/a Xxxx Financial Service Corporation)
Xxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
With copies to:
Xxxxxxxx & Scatchard, P.A.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Xx., Esquire
If to SBI, to:
Susquehanna Bancshares, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer
With copies to:
Xxxxxx, Xxxxx & Xxxxxxx llp
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, III, Esquire
SECTION 8.8 Entire Agreement; Etc. This Agreement, together with
---------------------
other agreements as are executed by the parties in connection herewith, on the
such Date hereof, represent
43
the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and supersede any and all other
oral or written agreements heretofore made. All terms and provisions of this
Agreement, together with such other agreements as are executed by the parties in
connection herewith, on the date hereof, and thereof, shall be binding upon and
shall inure to the benefit of the parties hereto and thereto and their
respective successors and assigns. Nothing in this Agreement is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement except as expressly provided.
SECTION 8.9 Severability. If any provision of this Agreement or the
------------
application thereof to any person or circumstances is held invalid or
unenforceable in any jurisdiction, the remainder of this Agreement, and the
application of such provision to such person or circumstances in any other
jurisdiction or to the other person or circumstances in any jurisdiction shall
not be affected thereby, and to this end the provisions of this Agreement shall
be severable.
SECTION 8.10 Interpretation. In this Agreement, unless the context
--------------
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa.
SECTION 8.11 Waivers. Except as provided in this Agreement, no
-------
action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
SECTION 8.12 Incorporation of Schedules and Exhibits. All
---------------------------------------
Schedules and Exhibits attached hereto and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
SECTION 8.13 Enforcement of Agreement. The parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any Delaware Court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 8.14 Knowledge. As used in this Agreement, the words
---------
"knowledge of BSC" or "best of BSC's knowledge" or "known to BSC" or similar
phrases shall mean the actual knowledge of the BSC Shareholders and the
executive officers of BSC and the knowledge
44
reasonably imputed to such persons assuming prudent performance of their
respective duties as officers and directors of the BSC.
SECTION 8.15 Representative. Each of the BSC Shareholders hereby
--------------
appoints Xxxxxxx X. Xxxxxx as his exclusive agent and attorney-in-fact to act on
his behalf with respect to any and all matters, claims, controversies, or
disputes arising out of the terms of this Agreement (the "Representative"). SBI
--------------
shall have the right to rely on any actions taken or omitted to be taken by the
Representative as being the act or omission of the BSC Shareholders, without the
need for any inquiry, and any such actions or omissions shall be binding upon
the BSC Shareholders. The BSC Shareholders shall have the right to change the
identity of the Representative and shall deliver to SBI prompt written notice of
any such change of identity, which upon receipt by SBI will effect said change.
The BSC Shareholders agree to hold the Representative free and harmless from and
indemnify the Representative against any and all loss, damage or liability which
he may sustain as a result of any action taken in good faith hereunder,
including, without limitation, any legal fees and expenses.
45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the day and year first above
written.
SUSQUEHANNA BANCSHARES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President and CEO
BOSTON SERVICE COMPANY, INC. (t/a XXXX FINANCIAL
SERVICE CORPORATION)
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and CEO
XXXXXXX X. XXXXXX
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
XXXXX XXXXXX
By: /s/ Xxxxx X. Xxxxxx, by Xxxxxxx X.
--------------------------------------------
Xxxxxx, Attorney-In-Fact
------------------------
XXXXXX XXXXXX
By: /s/ Xxxxxx Xxxxxx, by Xxxxxxx X. Xxxxxx,
--------------------------------------------
Attorney-In-Fact
----------------
XXXXXXX X. XXXXXX, Custodian f/b/o XXXX XXXXXX
under the UNIFORM GIFT TO MINORS ACT
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
46
