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SICILIANO v. SICILIANO

December 18, 1975

Thomas V. SICILIANO, Plaintiff,
v.
Fred W. SICILIANO et al., Defendants



The opinion of the court was delivered by: GOURLEY

 This is a civil non jury proceeding whereby plaintiff claims that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C., Section 78j and Rule 10(b)(5) of the Securities Exchange Commission in that the defendants intentionally misrepresented and omitted certain material facts relating to the merger between Philadelphia Suburban Corporation and Siciliano Bros., Inc. The Court has afforded the parties a full and complete trial and has considered the briefs and arguments of counsel. Based thereon, it is the considered judgment of the Court that there is no merit to plaintiff's contentions.

 On numerous occasions the plaintiff expressed his willingness to sell his interest in the company. Finally in September of 1971, Tom Siciliano offered to sell his 66 shares of stock to the corporation for the sum of $310,000.00. A purchase agreement for the sale of plaintiff's stock to the defendant, Siciliano Bros., Inc., was reviewed by the plaintiff's lawyer and found to be proper in every respect and contained the following:

 
"Siciliano Bros., Inc., will pay $310,000.00 for Tom Siciliano's 66 shares by paying $60,000.00 in cash, by delivering to him five promissory notes of $48,000.00 each which are payable at the rate of one per year beginning January 1, 1972, and by assigning to him two automobiles valued at $10,000.00."
 
". . . upon payment in full of all such promissory notes, the escrow agent shall deliver all of my 66 shares of stock deposited with it to the corporation without any notice of further consent from me required."

 The agreement further provided:

 
"Siciliano Bros., Inc., shall not have the option or right of prepayment of this note before the due date thereof without the written consent of Thomas V. Siciliano or the holder thereof."
 
"So long as Siciliano Bros., Inc., is not in default under this agreement, or in the payment of its promissory notes, it, and not I, (Thomas V. Siciliano), shall exercise and enjoy all the rights accruing from the ownership of the shares."

 At the closing on September 30, 1971, plaintiff in the presence of his attorney also signed a general release. *fn1"

 Following this transaction, Siciliano Bros., Inc. was contacted by Amerifino, Inc., a business brokerage firm specializing in mergers, seeking to determine whether or not Siciliano Bros., Inc. was interested in being acquired by a larger corporation. During the next six months, Siciliano Bros., Inc. and Philadelphia Suburban Corporation, which was the larger corporation that Amerifino, Inc. was referring to, engaged in negotiations concerning the possible merger of the two companies. While these talks progressed, Philadelphia Suburban Corporation expressed much concern over the fact that the plaintiff's 66 treasury shares, which were presently in escrow at Pittsburgh National Bank, were not subject to retirement and accordingly, Philadelphia Suburban Corporation would not be able to use the pulling of interest accounting method if the merger took place.

 On February 5, 1972, the defendants, Fred and Anthony Siciliano, met with the plaintiff, Tom Siciliano, in an attempt to remove the possible impediment to the merger. They explained to the plaintiff that they were presently negotiating for the sale of their company to the Philadelphia Suburban Corporation and that the proposed agreement of sale contemplated Philadelphia Suburban Corporation's purchase of Siciliano Bros., Inc. by giving unregistered stock in Philadelphia Suburban Corporation which would have the worth of four or five million dollars if it could be sold on the open market. *fn2" The plaintiff was informed that the merger was probably being held up because of the treasury shares in escrow which could not be released until the promissory notes were paid and that the Philadelphia Suburban Corporation might pay him between $150,000.00 and $200,000.00 for his agreement to the prepayment of the promissory notes. On February 20, 1972, the plaintiff after consulting with his attorney agreed to prepayment of the promissory notes and executed an option agreement prepared by his attorney and which provided:

 
"Siciliano Bros., Inc. has the irrevocable right and option to purchase at any time within ninety (90) days from the date hereof, those four certain promissory notes, made by Siciliano Bros., Inc., payable to Thomas V. Siciliano, each in the amount of Forty-eight Thousand Dollars ($48,000.00), payable January 1 of 1973, 1974, 1975, and 1976, respectively . . . for the consideration of the sum of Three Hundred and Ninety-two Thousand Dollars ($392,000.00) plus any and all interest accrued on said notes . . . plus the cancellation and forgiveness of any and all indebtedness or alleged indebtedness of Thomas V. Siciliano to Siciliano Bros., Inc. . . ."

 On April 5, 1972, the plaintiff once again signed a general release in favor of defendants. *fn ...


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