Acquisition And Merger Agreement

MERGER AND ACQUISITION AGREEMENT


dated as of November 14, 1997


RELATING TO THE PURCHASE BY
DVI FINANCIAL SERVICES, INC


of


PARTNERSHIP INTERESTS IN
J.G. WENTWORTH PARTNERS, L.P.


and


J.G. WENTWORTH MORTGAGE FUNDING, L.P.


and


THE MERGERS OF
J.G. WENTWORTH SECURITIES, INC.
WITH AND INTO
DVI HEALTHCARE FINANCIAL ADVISORS, INC.


and


J.G. WENTWORTH PARTNERS INC.
WITH AND INTO
DVI MORTGAGE FUNDING, INC. 2
TABLE OF CONTENTS


Page No.
---------
ARTICLE I


SALE OF PARTNER INTERESTS
1.01 Purchase and Sale of Partner Interests......................... 1
1.02 Purchase Price................................................. 1


ARTICLE II


THE MERGERS


2.01 The DVIHA Merger............................................... 2
2.02 The DVIMF Merger............................................... 2
2.03 DVIHA Effective Time........................................... 2
2.04 DVIMF Effective Time........................................... 2
2.05 Certificates of Incorporation and Bylaws of the Surviving
Corporations................................................ 3
2.06 Directors and Officers of the Surviving Corporations........... 3
2.07 Effects of the Mergers......................................... 3
2.08 Further Assurances............................................. 3


ARTICLE III


CONVERSION OF SHARES; EXCHANGE PROCEDURES


3.01 DVIHA Merger Conversion of Capital Stock....................... 4
3.02 DVIMF Merger Conversion of Capital Stock....................... 4
3.03 Dissenting Stockholders........................................ 5


ARTICLE IV


CLOSING; CERTIFICATES


4.01 Closing........................................................ 5
4.02 Legend on Certificates......................................... 5


ARTICLE V


REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
AND THE PARTNERS


5.01 Organization; Authority........................................ 6
5.02 Capital Structure and Ownership................................ 6
5.03 Corporate and Partnership Documents............................ 7


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Page No.
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5.04 Governmental Approvals and Filings............................. 7
5.05 Books and Records.............................................. 7
5.06 Taxes.......................................................... 8
5.07 Legal Proceedings.............................................. 8
5.08 Compliance With Laws and Orders................................ 9
5.09 Tangible Personal Property..................................... 9
5.10 Bank Accounts.................................................. 9
5.11 Brokers........................................................ 9
5.12 Disclosure..................................................... 9


ARTICLE VI


REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS AND PARTNERS


6.01 Organization; Authority........................................ 10
6.02 No Conflicts................................................... 10
6.03 Title to Shares; Partner Interests............................. 10
6.04 No Government Proceedings...................................... 11
6.05 Investment Representations..................................... 11
6.06 Brokers........................................................ 11


ARTICLE VII


REPRESENTATIONS AND WARRANTIES OF JGW & CO.


7.01 Financial Statements........................................... 12
7.02 Absence of Changes; Undisclosed Liabilities.................... 12
7.03 Employee Benefits.............................................. 13
7.04 Subsidiaries................................................... 13
7.05 No Conflicts................................................... 13
7.07 Real Property.................................................. 14
7.08 Employees...................................................... 14
7.09 Organization; Authority........................................ 14
7.10 Material Contracts............................................. 14
7.11 Intellectual Property Rights................................... 15
7.12 Licenses....................................................... 15
7.13 Insurance...................................................... 15
7.14 Broker-Dealer Business......................................... 16


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Page No.
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ARTICLE VIII


REPRESENTATIONS AND WARRANTIES OF PURCHASER, DVIHA AND DVIMF


8.01 Organization................................................... 17
8.02 Authority...................................................... 17
8.03 No Conflicts................................................... 17
8.04 Governmental Approvals and Filings............................. 17
8.05 Legal Proceedings.............................................. 18
8.06 Purchase for Investment........................................ 18
8.07 DVI Stock...................................................... 18
8.08 Capital Stock.................................................. 18
8.09 SEC Reports.................................................... 18
8.10 Brokers........................................................ 18


ARTICLE IX


COVENANTS OF THE STOCKHOLDERS AND THE PARTNERS


9.01 Regulatory and Other Approvals................................. 19
9.02 Investigation by Purchaser..................................... 19
9.03 No Solicitations............................................... 19
9.04 Conduct of Business............................................ 20
9.05 Employee Matters............................................... 21
9.06 Certain Restrictions........................................... 21
9.07 Affiliate Transactions......................................... 22
9.08 Books and Records.............................................. 23
9.09 Noncompetition................................................. 23
9.10 Notice and Cure................................................ 25
9.11 Fulfillment of Conditions...................................... 25
9.12 Relocation of Facilities....................................... 25
9.13 Allocation of Profits and Losses............................... 25
9.14 Use of JGW Name................................................ 26
9.15 Licenses....................................................... 26


ARTICLE X


COVENANTS OF PURCHASER, DVIHA AND DVIMF


10.01 Regulatory and Other Approvals........................... 26
10.02 Notice and Cure.......................................... 27
10.03 Fulfillment of Conditions................................ 27
10.04 Certain Payments......................................... 27
10.05 Non-Solicitation......................................... 27


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Page No.
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10.06 Compliance with Section 9.13............................. 28


ARTICLE XI


CONDITIONS TO OBLIGATIONS OF PURCHASER, DVIHA AND DVIMF


11.01 Representations and Warranties........................... 28
11.02 Performance.............................................. 28
11.03 Officers' Certificates................................... 28
11.04 Orders and Laws.......................................... 28
11.05 Third Party Consents..................................... 28
11.06 Opinion of Counsel....................................... 29
11.07 Certificates............................................. 29
11.08 Proceedings.............................................. 29


ARTICLE XII


CONDITIONS TO OBLIGATIONS OF THE
STOCKHOLDERS AND THE PARTNERS


12.01 Representations and Warranties........................... 29
12.02 Performance.............................................. 30
12.03 Officers' Certificates................................... 30
12.04 Orders and Laws.......................................... 30
12.05 Third Party Consents..................................... 30
12.06 Registration Rights Agreement............................ 30
12.07 Good Standing Certificates............................... 30
12.08 Opinion of Counsel....................................... 30


ARTICLE XIII


SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS


13.01 Survival of Representations, Warranties, Covenants and
Agreements............................................. 31


ARTICLE XIV


INDEMNIFICATION


14.01 Indemnification.......................................... 31
14.02 Method of Asserting Claims............................... 33


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Page No.
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ARTICLE XV


TERMINATION


15.01 Termination.............................................. 36
15.02 Effect of Termination.................................... 37


ARTICLE XVI


DEFINITIONS


16.01 Definitions.............................................. 37


ARTICLE XVII


MISCELLANEOUS


17.01 Notices.................................................. 44
17.02 Entire Agreement......................................... 45
17.03 Expenses................................................. 45
17.04 Public Announcements..................................... 46
17.05 Confidentiality.......................................... 46
17.06 Further Assurances; Post-Closing Cooperation............. 46
17.07 Waiver................................................... 47
17.08 Amendment................................................ 47
17.09 No Third Party Beneficiary............................... 47
17.10 No Assignment; Binding Effect............................ 47
17.11 Headings................................................. 48
17.12 Invalid Provisions....................................... 48
17.13 Governing Law............................................ 48
17.14 Counterparts............................................. 48


v 7
EXHIBIT 10.1


This MERGER AND ACQUISITION AGREEMENT dated as of November 14, 1997 is made and entered into by and among DVI Financial Services, Inc., a Delaware corporation ("Purchaser"), DVI Healthcare Financial Advisors, Inc., a Delaware corporation ("DVIHA"), DVI Mortgage Funding, Inc., a Delaware corporation ("DVIMF"), J.G. Wentworth Management Company, Inc., a Pennsylvania corporation ("JGW & Co."), J.G. Wentworth Securities, Inc., a Pennsylvania corporation (the "Company"), J.G. Wentworth Partners, Inc., a Pennsylvania corporation (the "General Partner"), the persons listed on Schedule A (the "JGW Partners"), Schedule B (the "MF Partners" and, together with the JGW Partners, the "Partners"), Schedule C (the "JGW Stockholders") and Schedule D (the "JGW Partners Stockholders" and, together with the JGW Stockholders, the "Stockholders") and relates to (i) the merger of (A) the Company with and into DVIHA and (B) the General Partner with and into DVIMF and (ii) the purchase by Purchaser (A) from the respective JGW Partners of the limited partner interests (the "JGW Partner Interests") in J.G. Wentworth Partners, L.P., a Pennsylvania limited partnership (the "JGW Partnership"), listed on Schedule A and (B) from the respective MF Partners of the limited partner interests (the "MF Partner Interests" and, together with the JGW Partner Interests, the "Partner Interests") in J.G. Wentworth Mortgage Funding, L.P., a Pennsylvania limited partnership (the "MF Partnership"), listed on Schedule B. The JGW Partnership, the MF Partnership, the Company and the General Partner are sometimes hereinafter collectively referred to as the "Purchased Entities." Capitalized terms used herein and not otherwise defined have the meanings ascribed to such terms in Article 16.


WHEREAS, the Boards of Directors of DVIHA, DVIMF, the Company and the General Partner have each determined that it is advisable and in the best interests of their respective stockholders to consummate, and have approved, the business combination transaction provided for herein in which the Company would merge with and into DVIHA (the "DVIHA Merger") and the General Partner would merge with and into DVIMF (the "DVIMF Merger");


NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


ARTICLE I


SALE OF PARTNER INTERESTS


1.01 Purchase and Sale of Partner Interests. The Partners agree to sell to Purchaser, and Purchaser agrees to purchase from the Partners, all of the right, title and interest of the Partners in and to the Partner Interests at the Closing on the terms and subject to the conditions set forth in this Agreement. 8
1.02 Purchase Price. The aggregate purchase price for the Partner Interests (the "Purchase Price") shall be 37,940 shares of common stock, par value $.005 per share (the "DVI Stock"), of DVI, Inc., a Delaware corporation and the parent of Purchaser ("DVI"), which will be issued to the Partners in the amounts set forth on Schedules A and B.


ARTICLE II


THE MERGERS


2.01 The DVIHA Merger. At the DVIHA Effective Time (as defined in Section 2.03), upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of Delaware (the "DGCL") and the Pennsylvania Business Corporation Law of 1988 (the "PBCL"), the Company shall be merged with and into DVIHA. DVIHA shall be the surviving corporation in the DVIHA Merger. As a result of the DVIHA Merger, the outstanding shares of capital stock of DVIHA and the Company shall be converted or cancelled in the manner provided in Article III.


2.02 The DVIMF Merger. At the DVIMF Effective Time (as defined in Section 2.04), upon the terms and subject to the conditions of this Agreement and in accordance with the DGCL and the PBCL, the General Partner shall be merged with and into DVIMF. DVIMF shall be the surviving corporation in the DVIMF Merger. As a result of the DVIMF Merger, the outstanding shares of capital stock of DVIMF and the General Partner shall be converted or cancelled in the manner provided in Article III.


2.03 DVIHA Effective Time. At the Closing, (a) a certificate of merger (the "DVIHA Certificate of Merger") shall be duly prepared and executed by DVIHA as the surviving corporation of the DVIHA Merger and as soon as practicable thereafter delivered to the Secretary of State of the State of Delaware (the "Delaware Secretary of State") for filing, as provided in Section 251 of the DGCL and (b) articles of merger (the "DVIHA Articles of Merger") shall be duly prepared and executed by DVIHA as the surviving corporation of the DVIHA Merger and, as soon as practicable thereafter, delivered to the Department of State of the Commonwealth of Pennsylvania (the "Pennsylvania Department of State") for filing, as provided in Sections 1921 and 1927 of the PBCL, each, on, or as soon as practicable after, the Closing Date. The DVIHA Merger shall become effective on the later to occur of (i) the time of the filing of the DVIHA Certificate of Merger with the Delaware Secretary of State and (ii) the time of filing of the DVIHA Articles of Merger with the Pennsylvania Department of State (the date and time of such later filing being referred to herein as the "DVIHA Effective Time").


2.04 DVIMF Effective Time. At the Closing, (a) a certificate of merger (the "DVIMF Certificate of Merger") shall be duly prepared and executed by DVIMF as the surviving corporation of the DVIMF Merger and as soon as practicable thereafter delivered to the Delaware Secretary of State for filing, as provided in Section 251 of the DGCL and (b) articles of merger (the "DVIMF Articles of Merger") shall be duly prepared and executed by DVIMF as the surviving corporation of the DVIMF Merger and, as soon as practicable thereafter, delivered to the Pennsylvania Department of State for filing, as provided in Sections 1921 and 1927 of the PBCL, each, on, or as soon as practicable after, the Closing Date. The


2 9 DVIMF Merger shall become effective on the later to occur of (i) the time of the filing of the DVIMF Certificate of Merger with the Delaware Secretary of State and (ii) the time of filing of the DVIMF Articles of Merger with the Pennsylvania Department of State (the date and time of such later filing being referred to herein as the "DVIMF Effective Time").


2.05 Certificates of Incorporation and Bylaws of the Surviving Corporations.


(a) At the DVIHA Effective Time, (i) the Certificate of Incorporation of DVIHA as in effect immediately prior to the DVIHA Effective Time shall be the Certificate of Incorporation of DVIHA, as the surviving corporation of the DVIHA Merger, until thereafter amended as provided by law and such Certificate of Incorporation, and (ii) the Bylaws of DVIHA as in effect immediately prior to the DVIHA Effective Time shall be the Bylaws of DVIHA, as the surviving corporation of the DVIHA Merger, until thereafter amended as provided by law, the Certificate of Incorporation of DVIHA and such Bylaws.


(b) At the DVIMF Effective Time, (i) the Certificate of Incorporation of DVIMF as in effect immediately prior to the DVIMF Effective Time shall be the Certificate of Incorporation of DVIMF, as the surviving corporation of the DVIMF Merger, until thereafter amended as provided by law and such Certificate of Incorporation, and (ii) the Bylaws of DVIMF as in effect immediately prior to the DVIMF Effective Time shall be the Bylaws of DVIMF, as the surviving corporation of the DVIMF Merger, until thereafter amended as provided by law, the Certificate of Incorporation of DVIMF and such Bylaws.


2.06 Directors and Officers of the Surviving Corporations.


(a) The directors and officers of DVIHA immediately prior to the DVIHA Effective Time shall, from and after the DVIHA Effective Time, be the directors and officers, respectively, of DVIHA, as the surviving corporation of the DVIHA Merger, until their successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the DVIHA's Certificate of Incorporation and Bylaws.


(b) The directors and officers of DVIMF immediately prior to the DVIMF Effective Time shall, from and after the DVIMF Effective Time, be the directors and officers, respectively, of DVIMF, as the surviving corporation of the DVIMF Merger, until their successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the DVIMF's Certificate of Incorporation and Bylaws.


2.07 Effects of the Mergers. Subject to the foregoing, the effects of the DVIHA Merger and the DVIMF Merger shall be as provided in the applicable provisions of the DGCL and the PBCL.


2.08 Further Assurances. Each party hereto will execute such further documents and instruments and take such further actions as may reasonably be requested by one or more of the others to consummate the DVIHA Merger and the DVIMF Merger, to vest the surviving corporations with full title to all assets, properties, rights, approvals, immunities and


3 10 franchises of the Company or the General Partner, as the case may be, or to effect the other purposes of this Agreement.


ARTICLE III


CONVERSION OF SHARES; EXCHANGE PROCEDURES


3.01 DVIHA Merger Conversion of Capital Stock. At the DVIHA Effective Time, by virtue of the DVIHA Merger and without any action on the part of the holders thereof:


3.011 Capital Stock. Each issued and outstanding share of the common stock, par value $.01 per share, of DVIHA ("DVIHA Common Stock") shall be converted into and become one fully paid and nonassessable share of common stock, par value $.01 per share, of DVIHA, as the surviving corporation ("DVIHA Surviving Corporation Common Stock"). Each certificate representing outstanding shares of DVIHA Common Stock shall at the DVIHA Effective Time represent an equal number of shares of DVIHA Surviving Corporation Common Stock.


3.012 Cancellation of Treasury Stock. All shares of common stock, par value $.01 per share, of the Company (the "JGW Stock") that are owned by the Company as treasury stock shall be canceled and retired and shall cease to exist and no stock of DVIHA or other consideration shall be delivered in exchange therefor.


3.013 Consideration. All of the shares of JGW Stock held by the JGW Stockholders shall be cancelled, and shall be converted into the right of the JGW Stockholders to receive 42,005 shares of DVI Stock, which will be issued to the JGW Stockholders in the amounts set forth on Schedule C.


3.02 DVIMF Merger Conversion of Capital Stock. At the DVIMF Effective Time, by virtue of the DVIMF Merger and without any action on the part of the holders thereof:


3.021 Capital Stock. Each issued and outstanding share of the common stock, par value $.01 per share, of DVIMF ("DVIMF Common Stock") shall be converted into and become one fully paid and nonassessable share of common stock, par value $.01 per share, of DVIMF, as the surviving corporation ("DVIMF Surviving Corporation Common Stock"). Each certificate representing outstanding shares of DVIMF Common Stock shall at the DVIMF Effective Time represent an equal number of shares of DVIMF Surviving Corporation Common Stock.


3.022 Cancellation of Treasury Stock. All shares of common stock, par value $.01 per share, of the General Partner (the "JGW Partners Stock" and, together with the JGW Stock, the "Stock") that are owned by the General Partner as treasury stock shall be canceled and retired and shall cease to exist and no stock of DVIMF or other consideration shall be delivered in exchange therefor.


4 11
3.023 Consideration. All of the shares of JGW Partners Stock held by the JGW Stockholders shall be cancelled, and shall be converted into the right of the JGW Partners Stockholders to receive 4,065 shares of DVI Stock, which will be issued to the JGW Partners Stockholders in the amounts set forth on Schedule D.


3.03 Dissenting Stockholders.


3.031 Any shares of Stock the holder of which has, as of the DVIHA Effective Time or the DVIMF Effective Time, as the case may be, asserted and preserved, and not effectively withdrawn or otherwise lost, his dissenters' rights pursuant to the PBCL (all such holders, collectively, the "Dissenting Stockholders" and all such shares, the "Dissenting Shares") shall not be converted into the right to receive the consideration described in Section 3.013 or 3.023, as the case may be, and the Dissenting Stockholders shall be entitled to payment of the value of the Dissenting Shares in accordance with the provisions of the PBCL; but if, after the DVIHA Effective Time or the DVIMF Effective Time, as the case may be, any Dissenting Stockholder fails to perfect or otherwise loses any such dissenters' rights pursuant to the PBCL, any such Dissenting Stockholder shall forfeit the right to appraisal of such Dissenting Shares, and to the extent that the PBCL requires such treatment, such Dissenting Shares shall thereupon be deemed to have been converted as of the DVIHA Effective Time or the DVIMF Effective Time, as the case may be, into the right to receive the consideration described in Section 3.013 or 3.023, as the case may be, without any interest unless otherwise required by law.


3.032 T ...