Exhibit 2.1 CONFORMED COPY
----------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Among
HOUSEHOLD INTERNATIONAL, INC.,
HOUSEHOLD ACQUISITION CORPORATION II
and
BENEFICIAL CORPORATION
Dated as of April 7, 1998
----------------------------------------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS.................................2
Section 1.1 Definitions...........................................2
ARTICLE II
THE MERGER.................................10
Section 2.1 The Merger............................................10
Section 2.2 Closing...............................................11
Section 2.3 Effective Time of the Merger..........................11
Section 2.4 Certificate of Incorporation..........................11
Section 2.5 By-Laws...............................................11
Section 2.6 Directors.............................................11
Section 2.7 Officers..............................................11
Section 2.8 Effects of the Merger.................................12
Section 2.9 Tax Treatment.........................................12
Section 2.10 Accounting Treatment..................................12
ARTICLE III
EFFECT ON CAPITAL STOCK......................12
Section 3.1 Effect on Company Capital Stock.......................12
Section 3.2 Exchange of Certificates Representing Shares..........14
Section 3.3 Dividends, Etc........................................16
Section 3.4 No Fractional Shares..................................16
Section 3.5 Termination of Exchange Fund..........................17
Section 3.6 Investment of Exchange Fund...........................17
Section 3.7 Closing of Company Transfer Books.....................17
Section 3.8 Employee Stock Options................................18
ARTICLE IV
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES.................19
Section 4.1 Disclosure Schedules..................................19
Section 4.2 Standards.............................................19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........20
Section 5.1 Organization..........................................20
Section 5.2 Capitalization........................................21
Section 5.3 Authority Relative to this Agreement..................22
Section 5.4 Consents and Approvals; No Violations.................22
Section 5.5 Reports and Financial Statements......................24
Section 5.6 Absence of Certain Changes or Events..................26
Section 5.7 Litigation............................................26
Section 5.8 Information in Disclosure Documents and
Registration Statement..............................26
Section 5.9 Compliance with Applicable Law........................27
Section 5.10 ERISA Compliance.....................................27
Section 5.11 Opinion of Financial Advisor.........................29
Section 5.12 Vote Required........................................29
Section 5.13 Takeover Statutes, Etc...............................29
Section 5.14 Agreements with Regulatory Agencies..................30
Section 5.15 Taxes................................................30
Section 5.16 Accounting for the Merger............................31
Section 5.17 Brokers..............................................31
Section 5.18 Interest Rate and Foreign Exchange Contracts.........31
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUIROR.............32
Section 6.1 Organization..........................................32
Section 6.2 Capitalization........................................33
Section 6.3 Authority Relative to this Agreement..................33
Section 6.4 Consents and Approvals; No Violations.................34
Section 6.5 Reports and Financial Statements......................35
Section 6.6 Absence of Certain Changes or Events..................36
Section 6.7 Litigation............................................36
Section 6.8 Information in Disclosure Documents
and Registration Statement..........................37
Section 6.9 Compliance with Applicable Law........................37
Section 6.10 Brokers..............................................38
Section 6.11 Ownership of Company Common Stock;
Affiliates and Associates..........................38
Section 6.12 Agreements with Regulatory Agencies..................38
Section 6.13 Vote Required........................................39
Section 6.14 Taxes................................................39
Section 6.15 Accounting for the Merger............................40
ARTICLE VII
COVENANTS RELATING TO CONDUCT OF BUSINESS.............40
Section 7.1 Conduct of Business by the Company....................40
Section 7.2 Conduct of Business by Acquiror.......................43
Section 7.3 Other Actions.........................................44
Section 7.4 Advice of Changes.....................................44
ARTICLE VIII
ADDITIONAL AGREEMENTS.......................45
Section 8.1 No Solicitation.......................................45
Section 8.2 Preparation of the Registration Statement
and the Merger Proxy Statement; Company and
Acquiror Stockholders Meetings......................45
Section 8.3 Access and Information; Confidentiality...............46
Section 8.4 Comfort Letters.......................................47
Section 8.5 Listing Application...................................47
Section 8.6 Affiliates............................................47
Section 8.7 Governmental Authorizations...........................48
Section 8.8 Employee Matters......................................49
Section 8.9 Continuance of Existing Indemnification
Rights..............................................51
Section 8.10 Expenses.............................................52
Section 8.11 Certain Other Matters................................53
Section 8.12 Beneficial Foundation; Certain
Charitable Contributions...........................53
Section 8.13 Public Announcements.................................53
Section 8.14 Reasonable Best Efforts..............................54
Section 8.15 Regulatory Filings...................................54
Section 8.16 Tax Treatment; Pooling of Interests..................55
ARTICLE IX
CONDITIONS TO CONSUMMATION OF THE MERGER..............55
Section 9.1 Conditions to Each Party's Obligation
to Effect the Merger................................55
Section 9.2 Conditions to Obligations of Acquiror.................56
Section 9.3 Conditions to Obligations of the Company..............57
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER.................58
Section 10.1 Termination..........................................58
Section 10.2 Effect of Termination................................61
Section 10.3 Amendment............................................61
Section 10.4 Extension; Waiver....................................62
ARTICLE XI
GENERAL PROVISIONS.........................62
Section 11.1 Survival of Representations and Warranties...........62
Section 11.2 Notices..............................................62
Section 11.3 Descriptive Headings.................................64
Section 11.4 Entire Agreement; No Third-Party Beneficiary.........64
Section 11.5 Interpretation.......................................64
Section 11.6 Severability.........................................65
Section 11.7 Assignment...........................................65
Section 11.8 Governing Law........................................65
Section 11.9 Specific Performance.................................65
Section 11.10 Counterparts........................................65
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 7, 1998
(this "Agreement"), among Household International, Inc., a Delaware
corporation ("Acquiror"), Household Acquisition Corporation II, a Delaware
corporation and a wholly owned subsidiary of Acquiror ("HAC"), and
Beneficial Corporation, a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Acquiror, HAC and the
Company deem it advisable and in the best interests of their respective
companies and their stockholders that HAC merge with and into the Company
(the "Merger"), upon the terms and subject to the conditions set forth
herein, and such Boards of Directors have approved the Merger;
WHEREAS, the Company and Acquiror desire to make certain
representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe certain conditions to the Merger;
WHEREAS, in connection with the execution of this Agreement,
the Company and Acquiror will enter into a stock option agreement, with the
Company, as issuer, and Acquiror, as grantee (the "Company Stock Option
Agreement"), in the form attached hereto as Exhibit A; and
WHEREAS, in connection with the execution of this Agreement,
Acquiror and the Company will enter into a stock option agreement, with
Acquiror, as issuer, and the Company, as grantee (the "Acquiror Stock
Option Agreement"), in the form attached hereto as Exhibit B.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the
following terms shall have the following meanings, the definitions to be
applicable to both the singular and plural forms of each term defined to
the extent that such forms of such terms are used in this Agreement.
"Acquiror" shall have the meaning ascribed to it in the
Preamble.
"Acquiror Common Stock" shall have the meaning ascribed to
it in Section 3.1(a).
"Acquiror Disclosure Schedule" shall have the meaning
ascribed to it in Section 4.1.
"Acquiror Licenses" shall have the meaning ascribed to it in
Section 6.9.
"Acquiror New Preferred Stock" shall have the meaning
ascribed to it in Section 3.1(c).
"Acquiror Preferred Stock" shall mean the preferred stock,
without par value, of Acquiror.
"Acquiror Ratio" shall have the meaning ascribed to it in
Section 10.1(f).
"Acquiror Regulatory Agreement" shall have the meaning
ascribed to it in Section 6.12.
"Acquiror SEC Reports" shall have the meaning ascribed to it
in Section 6.5(b).
"Acquiror Stock Option Agreement" shall have the meaning
ascribed to it in the Preamble.
"Acquiror Stock Option Plans" shall have the meaning
ascribed to it in Section 6.2.
"Acquiror Stock Options" shall have the meaning ascribed to
it in Section 6.2.
"Acquiror Stockholder Approval" shall have the meaning
ascribed to it in Section 6.3.
"Acquiror Stockholders Meeting" shall have the meaning
ascribed to it in Section 6.3.
"Acquisition Proposal" shall mean any proposal made by a
third party, other than the Acquiror, to acquire, directly or indirectly,
(i) more than 10% of the shares and/or voting power of the Company Common
Stock then outstanding pursuant to a merger, consolidation or other
business combination, purchase of shares, tender offer or exchange offer or
similar transaction, including, without limitation, any single or
multi-step transaction or series of related transactions or (ii) all or a
substantial portion of the business or assets of the Company and its
subsidiaries.
"Affiliate" shall mean, as to any Person (as hereinafter
defined), any other Person which, directly or indirectly, is in control of,
is controlled by, or is under common control with, such Person. The term
"control" (including, with correlative meanings, the terms "controlled by"
and "under common control with"), as applied to any Person, means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of voting securities or other ownership interest, by contract
or otherwise.
"Agreement" shall have the meaning ascribed to it in the
Preamble.
"Average Closing Price" shall have the meaning ascribed to
it in Section 10.1(f).
"Bank Merger Act" shall mean 12 U.S.C. ss. 1467a(S).
"BHC Act" shall mean the Bank Holding Company Act of 1956,
as amended.
"Certificate of Incorporation" have the meaning ascribed to
it in Section 2.4.
"Certificate of Merger" shall have the meaning ascribed to
it in Section 2.3.
"Change in Bank Control Act" shall mean 12 U.S.C. ss. 1817(j).
"Claim" shall have the meaning ascribed to it in Section 8.9(a).
"Closing" shall have the meaning ascribed to it in Section 2.2.
"Closing Date" shall have the meaning ascribed to it in
Section 2.2.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commonly Controlled Entity" shall have the meaning ascribed
to it in Section 5.10(a).
"Company" shall have the meaning ascribed to it in the
Preamble.
"Company Common Stock" shall have the meaning ascribed to it
in Section 3.1(a).
"Company Convertible Preferred Stock" shall mean the $5.50
Dividend Cumulative Convertible Preferred Stock, without par value, of the
Company.
"Company Disclosure Schedule" shall have the meaning
ascribed to it in Section 4.1.
"Company Employees" shall mean all current employees of the
Company and its subsidiaries as of the Effective Time.
"Company Licenses" shall have the meaning ascribed to it in
Section 5.9.
"Company Participating Preferred Stock" shall mean the
Company's Series A Participating Preferred Stock.
"Company Plans" shall have the meaning ascribed to it in
Section 5.10(a).
"Company 5% Preferred Stock" shall mean the 5% Cumulative
Preferred Stock, par value $50.00 per share, of the Company.
"Company $4.50 Preferred Stock" shall mean the $4.50
Dividend Cumulative Preferred Stock, par value $100.00 per share, of the
Company.
"Company $4.30 Preferred Stock" shall mean the $4.30
Dividend Cumulative Preferred Stock, without par value, of the Company.
"Company Right" shall have the meaning ascribed to it in
Section 3.1(a).
"Company Rights Agreement" shall mean the Renewed Rights
Agreement, dated as of August 22, 1996, by and between the Company and
First Chicago Trust Company of New York, as Rights Agent.
"Company Rule 145 Affiliates" shall have the meaning
ascribed to it in Section 8.6.
"Company SEC Reports" shall have the meaning ascribed to it
in Section 5.5(b).
"Company Stock Option Agreement" shall have the meaning
ascribed to it in the Preamble.
"Company Stock Option Plans" shall mean the Beneficial
Corporation 1990 Non-Qualified Stock Option Plan and the BenShares Equity
Participation Plan.
"Company Stockholder Approval" shall have the meaning
ascribed to it in Section 5.3.
"Company Stockholders Meeting" shall have the meaning
ascribed to it in Section 5.3.
"Confidentiality Agreement" shall have the meaning ascribed
to it in Section 8.3.
"Continuation Period" shall have the meaning ascribed to it
in Section 8.8(b).
"Contract" shall have the meaning ascribed to it in Section
5.4.
"D&O Insurance" shall have the meaning ascribed to it in
Section 8.9(c).
"Determination Date" shall have the meaning ascribed to it
in Section 10.1(f).
"DGCL" shall mean the Delaware General Corporation Law.
"Direct Purchase Plan" shall mean the Beneficial Direct
Investment Plan.
"DPC Shares" shall have the meaning ascribed to it in
Section 3.1(d).
"Effective Time" shall have the meaning ascribed to it in
Section 2.3.
"Employee Stock Options" shall mean all employee and
non-employee Director stock options issued pursuant to the Company Stock
Option Plans.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" shall have the meaning ascribed to it in
Section 5.10(a).
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Exchange Agent" shall have the meaning ascribed to it in
Section 3.2(a).
"Exchange Fund" shall have the meaning ascribed to it in
Section 3.2(a).
"FDIC" shall have the meaning ascribed to it in Section
5.1(b).
"Federal Reserve Board" shall mean the Board of Governors of
the Federal Reserve System.
"Filed Acquiror SEC Reports" shall have the meaning ascribed
to it in Section 6.5(c).
"Filed Company SEC Reports" shall have the meaning ascribed
to it in Section 5.5(c).
"Foreign Competition Laws" shall mean foreign statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines,
and other foreign Laws that are designed or intended to prohibit, restrict
or regulate actions having the purpose or effect of monopolization,
lessening of competition or restraint of trade.
"Foundation" shall have the meaning ascribed to it in
Section 8.12(a).
"GAAP" shall mean United States generally accepted
accounting principles and practices in effect from time to time as
consistently applied.
"▇▇▇▇▇▇▇ ▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇ Sachs & Co., one of the
Company's financial advisors.
"Governmental Entity" shall have the meaning ascribed to it
in Section 5.4.
"HOLA" shall mean the Home Owners' Loan Act, as amended.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976.
"Indemnified Person" shall have the meaning ascribed to it
in Section 8.9(a).
"Index Group" shall have the meaning ascribed to it in
Section 10.1(f).
"Index Price" shall have the meaning ascribed to it in
Section 10.1(f).
"Index Ratio" shall have the meaning ascribed to it in
Section 10.1(f).
"Injunction" shall have the meaning ascribed to it in
Section 9.1(d).
"Laws" shall mean any federal, state, local or foreign law,
statute, ordinance, rule, regulation, order, judgment or decree,
administrative order or decree, administrative or judicial decision, and
any other executive or legislative proclamation.
"Liens" shall mean all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever.
"Material Adverse Effect" shall have the meaning ascribed to
it in Section 4.2(b).
"Merger" shall have the meaning ascribed to it in the
Recitals.
"Merger Proxy Statement" shall have the meaning ascribed to
it in Section 5.4.
"▇▇▇▇▇▇▇ ▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., one of the
Company's financial advisors.
"New Option" shall have the meaning ascribed to it in
Section 3.8.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OCC" shall mean the United States Office of the Comptroller.
"Other Company Preferred Stock" shall mean, collectively,
the Company 5% Preferred Stock, the Company $4.50 Preferred Stock and the
Company $4.30 Preferred Stock.
"OTS" shall mean the United States Office of Thrift
Supervision.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean the Beneficial Corporation Pension
Plan.
"Per Share Merger Consideration" shall have the meaning
ascribed to it in Section 3.1(a).
"Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization.
"Registration Statement" shall have the meaning ascribed to
it in Section 5.4.
"Regulatory Agencies" shall have the meaning ascribed to it
in Section 5.5(a).
"Regulatory Agreement" shall have the meaning ascribed to it
in Section 5.14.
"Requisite Regulatory Approvals" shall have the meaning
ascribed to it in Section 5.4.
"Retired Employees" shall have the meaning ascribed to it in
Section 8.8(b).
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Starting Date" shall have the meaning ascribed to it in
Section 10.1(f).
"Starting Price" shall have the meaning ascribed to it in
Section 10.1(f).
"subsidiary" shall mean, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated,
of which (i) such party or any other subsidiary of such party is a general
partner or (ii) at least 50% of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization or at least 50% of the value of the
outstanding equity is directly or indirectly owned or controlled by such
party or by any one or more of its subsidiaries, or by such party and one
or more of its subsidiaries.
"Surviving Corporation" shall have the meaning ascribed to
it in Section 2.1.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable")
shall mean (i) any federal, state, local or foreign net income, gross
income, receipts, windfall profit, severance, property, production, sales,
use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, transfer, stamp, or
environmental tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty, addition to tax or additional amount imposed by any
governmental authority; (ii) any liability of Acquiror or any Acquiror
subsidiary or the Company or any of its subsidiaries, as applicable, for
the payment of amounts with respect to payments of a type described in
clause (i) as a result of being a member of an affiliated, consolidated,
combined or unitary group; and (iii) any liability for the payment of any
amounts as a result of being party to a tax sharing arrangement or as a
result of any express or implied obligation to indemnify any other entity
or person with respect to the payment of amounts of the type described in
clause (i) or clause (ii).
"Trust Account Shares" shall have the meaning ascribed to it
in Section 3.1(d).
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the
conditions set forth herein, and in accordance with the DGCL, at the
Effective Time, HAC shall be merged with and into the Company. Following
the Effective Time, the Company shall continue as the surviving corporation
(the "Surviving Corporation"), and the separate corporate existence of HAC
shall cease. The name of the Surviving Corporation shall be "Beneficial
Corporation". Acquiror may at any time change the method of effecting the
combination with the Company (including, without limitation, the provisions
of this Article II) if and to the extent it deems such change to be
desirable, including, without limitation, to provide for a merger of the
Company into Acquiror; provided, however, that no such change shall (i)
alter or change the amount or kind of Per Share Merger Consideration (as
hereinafter defined) to be issued to holders of Company Common Stock as
provided for in this Agreement, (ii) adversely affect the tax treatment of
the Company's stockholders as a result of receiving the Per Share Merger
Consideration, or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
Section 2.2 Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m. on a date to be specified by the
parties (the "Closing Date"), which (subject to satisfaction or waiver of
the conditions set forth in Article IX) shall be no later than the third
NYSE trading day after satisfaction or waiver of the conditions set forth
in Section 9.1, at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another time, date or
place is agreed to in writing by the parties hereto.
Section 2.3 Effective Time of the Merger. The Merger shall
become effective on the date and at the time at which a properly executed
certificate of merger (the "Certificate of Merger") is duly filed with the
Secretary of State of the State of Delaware, or at such later date and time
as may be specified therein. The Certificate of Merger shall be filed as
soon as practicable on or after the Closing Date. When used in this
Agreement, the term "Effective Time" shall mean the time and date at which
such Certificate of Merger is so filed or at such later time as the parties
shall designate therein.
Section 2.4 Certificate of Incorporation. From and after the
Effective Time, the certificate of incorporation of the Company as in
effect immediately prior to the Effective Time (the "Certificate of
Incorporation") shall be the certificate of incorporation of the Surviving
Corporation until amended as provided by Law and the terms thereof.
Section 2.5 By-Laws. The by-laws of HAC as in effect
immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation until amended as provided by Law, the Certificate of
Incorporation of the Surviving Corporation and the terms thereof.
Section 2.6 Directors. The directors of HAC immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualify in the
manner provided in the Certificate of Incorporation and by-laws of the
Surviving Corporation, or as otherwise provided by Law.
Section 2.7 Officers. The officers of the Company
immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation and shall hold office from the Effective Time
until their respective successors are duly elected or appointed and qualify
in the manner provided in the Certificate of Incorporation and by-laws of
the Surviving Corporation, or as otherwise provided by Law.
Section 2.8 Effects of the Merger. At and after the
Effective Time, the Merger shall have the effects set forth in Section 259
of the DGCL.
Section 2.9 Tax Treatment. It is intended that the Merger
shall qualify as a reorganization under Section 368(a) of the Code, and
that this Agreement shall constitute a "plan of reorganization" for
purposes of Section 368 of the Code.
Section 2.10 Accounting Treatment. It is intended that the
Merger be accounted for as a "pooling of interests" transaction under GAAP.
ARTICLE III
EFFECT ON CAPITAL STOCK
Section 3.1 Effect on Company Capital Stock.
(a) At the Effective Time, subject to Section 3.4 hereof,
each share of the common stock, par value $.01 per share, of the Company
(including each attached right (a "Company Right") issued pursuant to the
Company Rights Agreement) (the "Company Common Stock") issued and
outstanding immediately prior to the Effective Time (other than shares of
Company Common Stock to be cancelled pursuant to Section 3.1(d) hereof)
shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive 1.0222 duly
authorized, validly issued, fully paid and nonassessable shares (the "Per
Share Merger Consideration") of the common stock, par value $1.00 per
share, of Acquiror ("Acquiror Common Stock"). All of the shares of Company
Common Stock converted into Acquiror Common Stock pursuant to this Article
III shall no longer be outstanding and shall automatically be cancelled and
shall cease to exist, and each certificate previously representing any such
shares of Company Common Stock shall thereafter only represent the right to
receive (i) the number of whole shares of Acquiror Common Stock and (ii)
the cash in lieu of fractional shares into which the shares of Company
Common Stock represented by such certificate have been converted pursuant
to this Section 3.1(a) and Section 3.4 hereof. Certificates previously
representing shares of Company Common Stock shall be exchanged for
certificates representing whole shares of Acquiror Common Stock and cash in
lieu of fractional shares issued in consideration therefor upon the
surrender of such certificates in accordance with Section 3.2 hereof,
without any interest thereon. If, between the date of this Agreement and
the Effective Time, the shares of Acquiror Common Stock shall be changed
into a different number or class of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of
shares or readjustment, or a stock dividend thereon shall be declared with
a record date within said period, the Per Share Merger Consideration shall
be adjusted accordingly.
(b) At the Effective Time, subject to Section 3.4 hereof,
each share of the Company Convertible Preferred Stock issued and
outstanding immediately prior to the Effective Time (other than shares of
Company Convertible Preferred Stock to be cancelled pursuant to Section
3.1(d)) shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into the right to receive the number of
shares of Acquiror Common Stock that a holder of the number of shares of
Company Common Stock into which such share of Company Convertible Preferred
Stock could have been converted immediately prior to the Effective Time
would have the right to receive pursuant to Section 3.1(a) hereof. All of
the shares of Company Convertible Preferred Stock converted into Acquiror
Common Stock pursuant to this Article III shall no longer be outstanding
and shall automatically be cancelled and shall cease to exist, and each
certificate previously representing any such shares of Company Convertible
Preferred Stock shall thereafter only represent the right to receive (i)
the number of whole shares of Acquiror Common Stock and (ii) the cash in
lieu of fractional shares into which the shares of Company Common Stock
represented by such certificate have been converted pursuant to this
Section 3.1(b) and Section 3.4 hereof. Certificates previously representing
shares of Company Convertible Preferred Stock shall be exchanged for
certificates representing whole shares of Acquiror Common Stock and cash in
lieu of fractional shares issued in consideration therefor upon the
surrender of such certificates in accordance with Section 3.2 hereof,
without any interest thereon.
(c) At the Effective Time, each share of Other Company
Preferred Stock issued and outstanding immediately prior to the Effective
Time (other than shares of Other Company Preferred Stock to be canceled
pursuant to Section 3.1(d)), shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive one share of newly created series of preferred stock of the
Acquiror (the "Acquiror New Preferred Stock") having terms substantially
identical to those of the Other Company Preferred Stock, except that each
share of the Acquiror New Preferred Stock shall entitle the holder thereof
to one vote, voting together with the Acquiror Common Stock and not as a
separate class, on all matters brought before the holders of the Acquiror
Common Stock.
(d) At the Effective Time, all shares of Company Common
Stock, Company Convertible Preferred Stock and Other Company Preferred
Stock that are owned directly or indirectly by Acquiror or the Company or
any of their respective subsidiaries (other than shares of Company Common
Stock, Company Convertible Preferred Stock and Other Company Preferred
Stock (x) held directly or indirectly in trust accounts, managed accounts
and the like or otherwise held in a fiduciary capacity for the benefit of
third parties (any such shares, whether held directly or indirectly by
Acquiror, being referred to herein as "Trust Account Shares") and (y) held
by Acquiror or any of its subsidiaries in respect of a debt previously
contracted (any such shares of Company Common Stock, Company Convertible
Preferred Stock and Other Company Preferred Stock which are similarly held
being referred to herein as "DPC Shares")) shall be cancelled and shall
cease to exist and no stock of Acquiror or other consideration shall be
delivered in exchange therefor.
(e) At the Effective Time, each issued and outstanding share
of capital stock of HAC shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value $.01
per share, of the Surviving Corporation.
Section 3.2 Exchange of Certificates Representing Shares.
(a) As of the Effective Time, Acquiror shall deposit, or
shall cause to be deposited, with an exchange agent selected by Acquiror
and satisfactory to the Company (the "Exchange Agent"), for the benefit of
the holders of shares of Company Common Stock, Company Convertible
Preferred Stock and Other Company Preferred Stock, for exchange in
accordance with this Article III, (i) certificates representing the number
of shares of Acquiror Common Stock issuable in the Merger, to be issued in
respect of all shares of Company Common Stock and Company Convertible
Preferred Stock outstanding immediately prior to the Effective Time and
which are to be exchanged pursuant to the Merger (other than shares to be
cancelled pursuant to Section 3.1(d) hereof), (ii) certificates
representing the number of shares of Acquiror New Preferred Stock issuable
in the Merger, to be issued in respect of all shares of Other Company
Preferred Stock outstanding immediately prior to the Effective Time and
which are to be exchanged pursuant to the Merger (other than shares to be
cancelled pursuant to Section 3.1(d) hereof), and (iii) cash in an amount
sufficient to make any cash payment due under Section 3.4 hereof (such cash
and certificates for shares of Acquiror Common Stock and shares of Acquiror
New Preferred Stock being hereinafter referred to collectively as the
"Exchange Fund").
(b) As soon as reasonably practicable after the Effective
Time, Acquiror shall cause the Exchange Agent to mail (or deliver at its
principal office) to each holder of record of a certificate or certificates
representing shares of Company Common Stock, Company Convertible Preferred
Stock or Other Company Preferred Stock, as the case may be, (i) a letter of
transmittal which shall specify that delivery shall be effected, and risk
of loss and title to the certificates for shares of Company Common Stock,
Company Convertible Preferred Stock or Other Company Preferred Stock, as
the case may be, shall pass, only upon delivery of the certificates for
such shares of Company Common Stock, Company Convertible Preferred Stock or
Other Company Preferred Stock, as the case may be, to the Exchange Agent
and shall be in such form and have such other provisions, including
appropriate provisions with respect to back-up withholding, as Acquiror may
reasonably specify, and (ii) instructions for use in effecting the
surrender of the certificates for shares of Company Common Stock, Company
Convertible Preferred Stock or Other Company Preferred Stock, as the case
may be. Upon surrender of certificates for shares of Company Common Stock,
Company Convertible Preferred Stock or Other Company Preferred Stock, as
the case may be, for cancellation to the Exchange Agent, together with such
letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder thereof shall be entitled to receive in
exchange therefor that portion of the Exchange Fund which such holder has
the right to receive pursuant to the provisions of this Article III, after
giving effect to any required withholding Tax, and the certificates for
shares of Company Common Stock, Company Convertible Preferred Stock or
Other Company Preferred Stock, as the case may be, so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on either the
stock or the cash portion of the Exchange Fund. In the event of any
transfer of ownership of shares of Company Common Stock, Company
Convertible Preferred Stock or Other Company Preferred Stock, as the case
may be, which has not been registered in the transfer records of the
Company, certificates representing the proper number of shares of Acquiror
Common Stock or Acquiror New Preferred Stock, if any, and a check in an
amount equal to the proper amount of the cash component, if any, of the
Exchange Fund, will be issued to the transferee of the certificate
representing the transferred shares of Company Common Stock, Company
Convertible Preferred Stock or Other Company Preferred Stock, as the case
may be, only upon presentation to the Exchange Agent of a certificate or
certificates representing such shares of Company Common Stock, Company
Convertible Preferred Stock or Other Company Preferred Stock, as the case
may be, accompanied by all documents required to evidence and effect the
prior transfer thereof and to evidence that any applicable stock transfer
Taxes associated with such transfer were paid.
Section 3.3 Dividends, Etc. No dividends that are declared
on shares of Acquiror Common Stock or Acquiror New Preferred Stock will be
paid to persons entitled to receive certificates representing shares of
Acquiror Common Stock or Acquiror New Preferred Stock, as the case may be,
until such persons surrender their certificates representing shares of
Company Common Stock, Company Convertible Preferred Stock or Other Company
Preferred Stock, as the case may be. Upon such surrender, there shall be
paid to the person in whose name the certificates representing such shares
of Acquiror Common Stock or Acquiror New Preferred Stock, as the case may
be, shall be issued, any dividends which shall have become payable with
respect to such shares of Acquiror Common Stock or Acquiror New Preferred
Stock, as the case may be, between the Effective Time and the time of such
surrender. In no event shall the person entitled to receive such dividends
be entitled to receive interest on such dividends. If any certificates for
any shares of Acquiror Common Stock or Acquiror New Preferred Stock, as the
case may be, are to be issued in a name other than that in which the
certificate representing shares of Company Common Stock, Company
Convertible Preferred Stock or Other Company Preferred Stock, as the case
may be, surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the person requesting such exchange shall
pay to the Exchange Agent any transfer or other Taxes required by reason of
the issuance of certificates for such shares of Acquiror Common Stock or
Acquiror New Preferred Stock, as the case may be, in a name other than that
of the registered holder of the certificate surrendered or shall establish
to the satisfaction of the Exchange Agent that such Tax has been paid or is
not applicable. Notwithstanding the foregoing, (i) neither the Exchange
Agent nor any party hereto shall be liable to a holder of shares of Company
Common Stock, Company Convertible Preferred Stock or Other Company
Preferred Stock, as the case may be, for any shares of Acquiror Common
Stock or Acquiror New Preferred Stock, as the case may be, or dividends
thereon, or in accordance with Section 3.4 hereof, any cash in lieu of
fractional share interests, in each case, delivered to a public official
pursuant to applicable escheat Laws and (ii) any shares of Acquiror Common
Stock or Acquiror New Preferred Stock held by the Exchange Agent prior to
surrender of certificates representing shares of Company Common Stock,
Company Convertible Preferred Stock or Other Company Preferred Stock, as
the case may be, shall not be deemed outstanding for quorum and voting
purposes.
Section 3.4 No Fractional Shares. No certificates or scrip
representing fractional shares of Acquiror Common Stock shall be issued
upon the surrender for exchange of certificates representing shares of
Company Common Stock or Company Convertible Preferred Stock, as the case
may be, pursuant to this Article III and no dividend, stock split or other
change in the capital structure of Acquiror shall relate to any fractional
security, and such fractional interests shall not entitle the owner thereof
to vote or to any rights of a security holder. In lieu of any such
fractional shares of Acquiror Common Stock, each holder of shares of
Company Common Stock or Company Convertible Preferred Stock, as the case
may be, who would otherwise have been entitled to a fraction of a share of
Acquiror Common Stock upon surrender of certificates for exchange pursuant
to this Article III will be paid cash upon such surrender in an amount
equal to the product of such fraction multiplied by the closing sale price
of one share of Acquiror Common Stock on the NYSE on the day of the
Effective Time, or, if shares of Acquiror Common Stock are not so traded on
such day, the closing sale price of one such share on the next preceding
day on which such share was traded on the NYSE. For purposes of this
Section 3.4, shares of Company Common Stock or Company Convertible
Preferred Stock, as the case may be, of any holder represented by two or
more certificates may be aggregated, and in no event shall any holder be
paid an amount of cash in respect of more than one share of Acquiror Common
Stock.
Section 3.5 Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the Company
Common Stock, Company Convertible Preferred Stock or Other Company
Preferred Stock, as the case may be, for six months after the Effective
Time shall be delivered to Acquiror, upon demand, and any holders of
Company Common Stock, Company Convertible Preferred Stock or Other Company
Preferred Stock, as the case may be, who have not theretofore complied with
this Article III shall thereafter look only to Acquiror for payment of
their claim for the shares of Acquiror Common Stock or Acquiror New
Preferred Stock, as the case may be, and cash and dividends or other
distributions, if any, pursuant to this Article III.
Section 3.6 Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund, as directed by
Acquiror, on a daily basis. Any interest and other income resulting from
such investments shall be paid to Acquiror.
Section 3.7 Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and
no transfer of shares of Company Common Stock, Company Convertible
Preferred Stock or Other Company Preferred Stock, as the case may be, shall
thereafter be made. If, after the Effective Time, certificates representing
shares of Company Common Stock, Company Convertible Preferred Stock or
Other Company Preferred Stock, as the case may be, are presented to the
Surviving Corporation, they shall be cancelled and exchanged for
certificates representing shares of Acquiror Common Stock or shares of
Acquiror New Preferred Stock, as applicable.
Section 3.8 Employee Stock Options. At the Effective Time,
each of the Employee Stock Options which is outstanding and unexercised at
the Effective Time shall be converted automatically into an option to
purchase shares of Acquiror Common Stock (the "New Option") in an amount
and at an exercise price determined as provided below (and otherwise
subject to the terms of the Company Stock Option Plans governing the
Employee Stock Options):
(i) The number of shares of Acquiror Common
Stock to be issued upon exercise of the New Option shall be equal
to the product of the number of shares of Company Common Stock to
be issued upon exercise of the original option and the Per Share
Merger Consideration; and
(ii) The exercise price per share of Acquiror
Common Stock under the New Option shall be equal to the aggregate
exercise price of the original option divided by the total number
of full shares of Acquiror Common Stock to be issued upon exercise
of the New Option (as determined under paragraph (i) immediately
above); provided, however, that such exercise price shall be
rounded up to the nearest cent.
The duration and other terms of the New Option shall be the same as that of
the original option, except that all references to the Company shall be
deemed to be references to Acquiror. Acquiror shall file with the SEC a
registration statement on Form S-8 (or other appropriate form) or a
post-effective amendment to a previously filed registration statement as
promptly as practicable after the Effective Time for purposes of
registering all shares of Acquiror Common Stock issuable after the
Effective Time upon exercise of the Employee Stock Options, and shall have
such registration statement or post-effective amendment become effective
and comply, to the extent applicable, with state securities or blue sky
Laws with respect thereto at the Effective Time.
ARTICLE IV
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
Section 4.1 Disclosure Schedules. Prior to the execution and
delivery of this Agreement, the Company has delivered to Acquiror, and
Acquiror has delivered to the Company, a schedule (in the case of the
Company, the "Company Disclosure Schedule," and, in the case of Acquiror,
the "Acquiror Disclosure Schedule") setting forth, among other things,
items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision
hereof or as an exception to one or more of such party's representations or
warranties contained in Article V, in the case of the Company, or Article
VI, in the case of Acquiror, or to one or more of such party's covenants
contained in Article VII; provided, however, that, notwithstanding anything
in this Agreement to the contrary, (a) no such item is required to be set
forth in the relevant Disclosure Schedule as an exception to a
representation or warranty if its absence would not result in the related
representation or warranty being deemed untrue or incorrect under the
standard established by Section 4.2, and (b) the mere inclusion of an item
in a Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by a party that such item represents a
material exception or material fact, event or circumstance or that such
item has had or would have a Material Adverse Effect (as defined herein)
with respect to either the Company or Acquiror, respectively.
Section 4.2 Standards.
(a) No representation or warranty of the Company
contained in Article V or of Acquiror contained in Article VI shall be
deemed untrue or incorrect for any purpose under this Agreement, and no
party hereto shall be deemed to have breached a representation or warranty
for any purpose under this Agreement, in any case as a consequence of the
existence or absence of any fact, circumstance or event unless such fact,
circumstance or event, individually or when taken together with all other
facts, circumstances or events inconsistent with any representations or
warranties contained in Article V, in the case of the Company, or Article
VI, in the case of Acquiror, has had or would reasonably be expected to
have a Material Adverse Effect with respect to the Company or Acquiror,
respectively (disregarding for this purpose any materiality qualification
contained in such representations or warranties).
(b) As used in this Agreement, the term "Material
Adverse Effect" means, with respect to Acquiror or the Company, as the case
may be, a material adverse effect on (i) the business, results of
operations or financial condition of such party and its subsidiaries taken
as a whole, other than any such effect attributable to or resulting from
(v) any change resulting from the public announcement of the transactions
contemplated hereby, (w) any change in banking, insurance, consumer
finance, thrift, fair lending or similar laws, rules or regulations of
general applicability or interpretations thereof by courts or governmental
authorities, (x) any change in general economic conditions, in interest
rates or in conditions affecting the banking, insurance, consumer finance,
or thrift industries generally, (y) any action or omission of the Company
or Acquiror or any subsidiary of either of them taken with the express
prior written consent of the other party hereto, or (z) any expenses
incurred by such party in connection with this Agreement or the
transactions contemplated hereby or (ii) the ability of such party to
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article IV, the Company represents and warrants
to Acquiror as follows:
Section 5.1 Organization.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the Laws of the State of
Delaware. The Company has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure
to be so qualified would not have a Material Adverse Effect on the Company.
(b) The Company is duly registered as a bank holding
company under the BHC Act. Beneficial Savings Bank FSB is a federal savings
bank chartered by the OTS. Each of Beneficial National Bank and Beneficial
National Bank USA is a national bank chartered by the OCC. Each of the
Company's other subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Company's subsidiaries has the
corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so qualified would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company. The deposit accounts of the
Beneficial National Bank and Beneficial Savings Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent
permitted by Law, and all premiums and assessments required to be paid in
connection therewith have been paid when due, except where the failure to
make such payments when due would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
Section 5.2 Capitalization. The authorized capital stock of
the Company consists of (i) 160,000,000 shares of Company Common Stock,
(ii) 585,730 shares of Company 5% Preferred Stock, (iii) 103,976 shares of
Company $4.50 Preferred Stock, (iv) 1,069,204 shares of Company $4.30
Preferred Stock, (v) 1,164,077 shares of Company Convertible Preferred
Stock, and (vi) 570,000 shares of Company Participating Preferred Stock. As
of February 28, 1998, (i) 54,365,830 shares of Company Common Stock, (ii)
407,718 of Company 5% Preferred Stock, (iii) 103,976 shares of Company
$4.50 Preferred Stock, (iv) 836,585 shares of Company $4.30 Preferred
Stock, (v) 16,414 shares of Company Convertible Preferred Stock, and (vi)
no shares of Company Participating Preferred Stock were issued and
outstanding. As of February 28, 1998, (i) 4,512,547 shares of Company
Common Stock were reserved for issuance upon exercise of Employee Stock
Options outstanding under the Company Stock Option Plans, (ii) 147,726
shares of Company Common Stock were reserved for issuance upon the
conversion of shares of Company Convertible Preferred Stock and (iii) no
shares of Company Common Stock were reserved for issuance under the
dividend reinvestment provisions of the Direct Purchase Plan. As of
February 28, 1998, 2,507,471 shares of Company Common Stock and 178,012
shares of Company 5% Preferred Stock were held as treasury shares. All of
the issued and outstanding shares of Company Common Stock, Company
Convertible Preferred Stock and Other Company Preferred Stock are validly
issued, fully paid and nonassessable and free of preemptive rights. Except
as set forth above, as of February 28, 1998, there were no shares of
capital stock of the Company issued or outstanding or any options,
warrants, subscriptions, calls, rights, convertible securities or other
agreements or commitments obligating the Company to issue, transfer, sell,
redeem, repurchase or otherwise acquire any shares of its capital stock or
securities. Since February 28, 1998, no shares of capital stock of the
Company have been issued other than shares of Company Common Stock issued
(i) upon the exercise of options pursuant to the Company Stock Option
Plans, (ii) upon the conversion of shares of Company Convertible Preferred
Stock and (iii) pursuant to the dividend reinvestment provisions of the
Direct Purchase Plan. There are no notes, bonds, debentures or other
indebtedness of the Company having the right to vote (or convertible into
or exchangeable for securities having the right to vote) on any matters
upon which stockholders of the Company may vote.
Section 5.3 Authority Relative to this Agreement. The
Company has the corporate power and authority to enter into this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
the Company and, except for the approval of this Agreement by the requisite
vote of the Company's stockholders (the "Company Stockholder Approval") at
a special meeting of the Company's stockholders duly called for the purpose
of obtaining such approval (the "Company Stockholders Meeting"), no other
corporate action or proceeding on the part of the Company is necessary to
authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company and, assuming
the due authorization and valid execution and delivery by Acquiror,
constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar Laws now or hereafter in
effect relating to creditors' rights generally and general principles of
equity.
Section 5.4 Consents and Approvals; No Violations.
(a) Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act
and under HOLA, and/or with the OTS under HOLA or with the OTS under the
Bank Merger Act or the OCC under the Change in Bank Control Act, as
applicable, and the approval of such applications by the Federal Reserve
Board, OTS or OCC, as applicable, (ii) the filing of applications and
notices, as applicable, with the state regulatory authorities governing
consumer finance, mortgage lending and insurance in the states in which the
Company operates its business or the filing of applications and notices
with federal housing related authorities, and the approval of such
applications by such authorities, (iii) the filing of applications and
notices, as applicable, with the foreign governmental authorities
regulating consumer finance, mortgage lending and insurance in the foreign
jurisdictions in which the Company operates its business, including,
without limitation, the Bank of England and The Minister of Finance and the
Department of Enterprise and Employment (Insurance Division) of Ireland,
and the approval of such applications by such authorities, (iv) the filing
of notification and report forms with the United States Federal Trade
Commission and the United States Department of Justice under the HSR Act
and the expiration or termination of any applicable waiting period
thereunder, (v) the filing of applications and notices, as applicable, with
foreign governmental authorities under the Foreign Competition Laws, and
the approval of such applications by such authorities, if required, (vi)
the filing with the SEC of a proxy statement in definitive form relating to
the meetings of the Company's stockholders and Acquiror's stockholders to
be held in connection with this Agreement and the transactions contemplated
hereby (the "Merger Proxy Statement") and the filing and declaration of
effectiveness of the registration statement on Form S-4 relating to the
shares of Acquiror Common Stock to be issued in the Merger in which the
Merger Proxy Statement will be included as a prospectus (the "Registration
Statement"), (vii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware pursuant to the DGCL, (viii)
the approval of the listing of the Acquiror Common Stock to be issued in
the Merger on the NYSE, and (ix) the consents of third parties under the
Contracts (as defined below) listed in Section 5.4(a)(ix) of the Company
Disclosure Schedule, no notices to, consents or approvals of, or filings or
registrations with, any court, administrative agency or commission or other
governmental authority or instrumentality (each, a "Governmental Entity")
or with any self-regulatory authority or with any third party are necessary
in connection with the execution and delivery by the Company of this
Agreement and the consummation by the Company of the transactions
contemplated hereby, except for such notices, consents, approvals, filings
or registrations, the failure of which to be made or obtained would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company or on the ability of the Acquiror, following
the Effective Time, to conduct the business of the Company as presently
conducted. The notices, consents or approvals, filings or registrations,
and expirations or terminations of waiting periods referred in clauses
5.4(a)(i) through 5.4(a)(v) are hereinafter referred to as the "Requisite
Regulatory Approvals". As of the date hereof, the Company knows of no
reason why all Requisite Regulatory Approvals should not be obtained.
(b) Neither the execution and delivery of this
Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby, will (i) conflict with or result in any
breach of any provisions of the certificate of incorporation or by-laws of
the Company or the certificate of incorporation or by-laws of any of the
Company's subsidiaries; (ii) subject to the obtaining the consents listed
in Section 5.4(a)(ix) of the Company Disclosure Schedule and except as set
forth in Section 5.4(b)(ii) of the Company Disclosure Schedule, result in a
violation or breach of, or constitute (with or without due notice or lapse
of time, or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation (collectively, "Contracts") to
which the Company or any of the Company's subsidiaries is a party or by
which any of them or any of their respective properties or assets may be
bound; (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time, or both) a default (or give rise to
any right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any Company License (as hereinafter
defined); or (iv) subject to giving the notices, making the filings or
registrations or obtaining the consents or approvals referred to in
paragraph (a) above, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company, any of the Company's
subsidiaries or any of their respective properties or assets, except, in
the case of clauses (ii), (iii) and (iv), for violations, breaches or
defaults which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company or on the ability
of the Acquiror, following the Effective Time, to conduct the business of
the Company as presently conducted.
Section 5.5 Reports and Financial Statements.
(a) The Company and each of its subsidiaries have
timely filed all material reports, registrations and statements, together
with any amendments required to be made with respect thereto, that they
were required to file since December 31, 1995, with (i) the Federal Reserve
Board, (ii) the FDIC, (iii) the OCC, (iv) the OTS, (v) any state banking
commissions, any other state regulatory authorities or any comparable
regulatory authorities in England or Ireland and (vi) any self-regulatory
organization (collectively, the "Regulatory Agencies"), and have paid all
material fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the
regular course of the business of the Company and its subsidiaries, and
except as listed in Section 5.5(a) of the Company Disclosure Schedule, no
Regulatory Agency has initiated any proceeding or investigation or, to the
knowledge of the Company, threatened any investigation into the business or
operations of the Company or any of its subsidiaries since December 31,
1995, except for such proceedings or investigations which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
(b) The Company has filed all material reports,
forms, registrations, schedules, statements and other documents required to
be filed by it with the SEC since December 31, 1995 (the "Company SEC
Reports"). As of their respective dates, the Company SEC Reports complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the applicable rules and regulations
promulgated thereunder. Except to the extent that information contained in
any Company SEC Report has been revised or superseded by a later filed
Company SEC Report, none of the Company SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(c) The consolidated financial statements of the
Company included in the Company SEC Reports filed and publicly available
prior to the date of this Agreement (as amended to the date of this
Agreement, the "Filed Company SEC Reports") complied as to form in all
material respects with the applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated therein or in
the notes thereto) and fairly present the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and their consolidated
cash flows for the periods then ended (subject, in the case of the
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein).
(d) Except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since the
date of the most recent consolidated balance sheet included in the Filed
Company SEC Reports, neither the Company nor any of its subsidiaries has
any material liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be recognized or
disclosed on a consolidated balance sheet of the Company and its
consolidated subsidiaries or in the notes thereto.
Section 5.6 Absence of Certain Changes or Events. Except as
set forth in the Filed Company SEC Reports and as set forth in Section 5.6
of the Company Disclosure Schedule, the business of the Company and its
subsidiaries has been conducted only in the ordinary course of business
consistent with past practice, and there has not been any event, change or
development which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect on the Company,
and, during the period from the most recent consolidated balance sheet
included in the Filed Company SEC Reports through the date of this
Agreement, neither the Company nor any of its subsidiaries has taken any
action that, if taken during the period from the date of this Agreement
through the Effective Time, would constitute a breach of Section 7.1
hereof.
Section 5.7 Litigation. Except as set forth in the Filed
Company SEC Reports and as set forth in Section 5.7 of the Company
Disclosure Schedule, as of the date hereof, there is no suit, action,
proceeding or regulatory investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
subsidiaries that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company, nor is there any
judgment, order, decree, statute, Law, ordinance, rule or regulation of any
Regulatory Agency or other Governmental Entity or arbitrator outstanding
against the Company or any of its subsidiaries which, individually or in
the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect on the Company.
Section 5.8 Information in Disclosure Documents and
Registration Statement. None of the information to be supplied by the
Company for inclusion or incorporation by reference in the Merger Proxy
Statement or the Registration Statement will, in the case of the
Registration Statement, at the time it becomes effective and at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or, in the case of the Merger Proxy
Statement or any amendments thereof or supplements thereto, at the time of
the mailing of the Merger Proxy Statement and any amendments or supplements
thereto and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Merger Proxy Statement (except for such portions thereof
that relate only to Acquiror or its subsidiaries or Affiliates) will comply
as to form in all material respects with the provisions of the Exchange
Act, and the rules and regulations promulgated thereunder.
Section 5.9 Compliance with Applicable Law. The Company and
its subsidiaries have received such certificates, permits, licenses,
franchises, consents, approvals, orders, authorizations and clearances from
appropriate Governmental Entities (the "Company Licenses") as are necessary
to own or lease and operate their respective properties and to conduct
their respective businesses substantially in the manner described in the
Company SEC Reports and as currently owned or leased and conducted, and all
such Company Licenses are valid and in full force and effect, except for
any such Company Licenses which the failure to have or to be in full force
and effect would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. The Company and its
subsidiaries are in compliance with their respective obligations under the
Company Licenses, with only such exceptions as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company. Except as disclosed in the Company SEC Reports and
as set forth in Section 5.9 of the Company Disclosure Schedule, the Company
and its subsidiaries are in compliance with all judgments, orders, decrees,
statutes, Laws, ordinances, rules and regulations of any Governmental
Entity applicable to them, except for such noncompliance which,
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on the Company.
Section 5.10 ERISA Compliance.
(a) Section 5.10(a) of the Company Disclosure
Schedule sets forth a true and complete list of each employee benefit plan,
arrangement or agreement, including each employment, severance,
compensation, retention or similar agreement, that is maintained as of the
date of this Agreement (the "Company Plans") by the Company or any of its
subsidiaries or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), which, together with the Company, would be deemed a
"single employer" within the meaning of Section 414(b), (c), (m) or (o) of
the Code or Section 4001 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), for the benefit of any current or former
employee, officer, director or independent contractor of the Company or any
of its subsidiaries.
(b) The Company has heretofore made available to
Acquiror true and complete copies of each of the Company Plans and any
material amendments and modifications thereto and all other related
documents, including, but not limited to, (i) the actuarial report for such
Company Plan (if applicable) for each of the last two years, and (ii) the
most recent determination letter from the Internal Revenue Service (if
applicable) for such Company Plan.
(c) Except as listed in Section 5.10(c) of the
Company Disclosure Schedule, (i) each of the Company Plans has been
operated and administered in all material respects in accordance with
applicable Law, including, but not limited to, ERISA and the Code, (ii) a
favorable determination letter has been issued by the Internal Revenue
Service with respect to each of the Company Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code and there are
no existing circumstances nor any events that have occurred that could
adversely affect the qualified status of any "qualified" Company Plan,
(iii) with respect to each Company Plan that is subject to Title IV of
ERISA, the present value of accrued benefits under such Company Plan, based
upon actuarial assumptions used for funding purposes in the most recent
actuarial valuation report prepared by the Company Plan's actuary with
respect to such Company Plan, did not, as of the date of such valuation
report, exceed the then current value of the assets of such Company Plan
allocable to such accrued benefits and, since the last valuation date of
each such Company Plan, no such Company Plan has been amended to increase
the benefits thereunder, (iv) no Company Plan provides medical benefits
(whether or not insured) with respect to current or former employees of the
Company or any of its subsidiaries beyond their retirement or other
termination of service, other than coverage mandated by applicable Law or
benefits the full cost of which is borne by the current or former employee
(or his beneficiary), (v) no liability under Title IV of ERISA or Section
412 of the Code has been incurred (directly or indirectly) by the Company,
any of its subsidiaries or any ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to the
Company, any of its subsidiaries or any ERISA Affiliate of incurring a
material liability thereunder, (vi) no Company Plan is a "multiemployer
pension plan," as such term is defined in Section 3(37) of ERISA, or a plan
described in Section 4063 of ERISA, (vii) all contributions or other
amounts payable by the Company, any of its subsidiaries or any ERISA
Affiliate as of the Effective Time with respect to each Company Plan in
respect of current or prior plan years will have been paid or accrued in
accordance with GAAP and Section 412 of the Code, (viii) neither the
Company, any of its subsidiaries nor any ERISA Affiliate has engaged in a
transaction in connection with which the Company, its subsidiaries or any
ERISA Affiliate would be subject to either a material civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a material tax
imposed pursuant to Section 4975 or 4976 of the Code, and (ix) to the best
knowledge of the Company, there are no pending, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against
any of the Company Plans or any trusts related thereto and no Company Plan
is presently under audit or examination (or any notice thereof).
(d) Except as listed in Section 5.10(d) of the
Company Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(either alone or in conjunction with any other event) (i) result in any
payment (including, without limitation, severance, "excess parachute
payment" within the meaning of Section 280G of the Code, forgiveness of
indebtedness or otherwise) becoming due to any officer, director or
employee of the Company or any of its subsidiaries under any Company Plan
or otherwise, (ii) increase any benefits payable under any Company Plan or
(iii) result in any acceleration of the time of payment or vesting of any
such benefits.
Section 5.11 Opinion of Financial Advisor. The Board of
Directors of the Company has received the opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇, each dated the date hereof, to the effect that the Per Share
Merger Consideration is fair to the holders of shares of Company Common
Stock from a financial point of view.
Section 5.12 Vote Required. The Company Stockholder Approval
at the Company Stockholders Meeting will require the affirmative vote of
the holders of a majority of the voting power of all outstanding shares of
Company Common Stock, Company $4.30 Preferred Stock and Company Convertible
Preferred Stock, voting together as a single class. The Company Stockholder
Approval is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve and adopt this Agreement, and
approve the transactions contemplated hereby.
Section 5.13 Takeover Statutes, Etc. The Board of Directors
of the Company has approved the terms of this Agreement, the consummation
of the Merger and the other transactions contemplated by this Agreement,
and such approval is sufficient to render inapplicable to the Merger and
the other transactions contemplated by this Agreement the provisions of
Section 203 of the DGCL. To the best of the Company's knowledge, no other
state takeover statute or similar statute or regulation applies or purports
to apply to the Merger, this Agreement or any of the transactions
contemplated thereby. This Agreement has been approved by the Board of
Directors of the Company for purposes of Article VIII of the Company's
Restated Certificate of Incorporation. The Company has taken all action
necessary or appropriate so that the execution of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
result in the ability of any person to exercise any Company Rights (as
defined in the Company Rights Agreement) under the Company Rights Agreement
or enable or require the Rights to separate from the shares of Company
Common Stock to which they are attached or to be triggered or become
exercisable.
Section 5.14 Agreements with Regulatory Agencies. Except as
set forth in Section 5.14 of the Company Disclosure Schedule, neither the
Company nor any of its subsidiaries is subject to any cease-and-desist or
other order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter
from, or has adopted any board resolutions at the request of (each, whether
or not listed in Section 5.14 of the Company Disclosure Schedule, a
"Regulatory Agreement"), any Regulatory Agency or other Governmental Entity
that restricts the conduct of its business or that in any manner relates to
its capital adequacy, its credit policies, its management or its business,
except for any Regulatory Agreements that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company or on the Acquiror's ability to conduct the business of the Company
as presently conducted. None of the Company or any of its subsidiaries has
been advised by any Regulatory Agency or other Governmental Entity that it
is considering issuing or requesting any Regulatory Agreement, except for
any such proposed Regulatory Agreements that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company.
Section 5.15 Taxes.
(a) Each of the Company and its subsidiaries has
filed all material Tax returns or reports required to be filed by it and
all such returns and reports are complete and correct in all material
respects, or requests for extensions to file such returns or reports have
been timely filed, granted and have not expired, except to the extent that
such failures to file, to be complete or correct or to have extensions
granted that remain in effect, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company.
The Company and each of its subsidiaries have paid (or the Company has paid
on its behalf) all Taxes shown as due on such returns, and, the most recent
financial statements contained in the Filed Company SEC Reports reflect an
adequate reserve in accordance with GAAP for all Taxes payable by the
Company and its subsidiaries for all taxable periods and portions thereof
accrued through the date of such financial statements.
(b) Except as set forth in Section 5.15(b) of the
Company Disclosure Schedule, no deficiencies for any Taxes have been
proposed, asserted or assessed against the Company or any of its
subsidiaries that are not adequately reserved for, except for deficiencies
that, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company. The federal income tax
returns of the Company and each of its subsidiaries consolidated in such
returns for tax years through 1988 have closed by virtue of the applicable
statute of limitations.
(c) Neither the Company nor any of its subsidiaries
has taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(d) Except as set forth in Section 5.15(d) of the
Company Disclosure Schedule, the Company and its subsidiaries are not a
party to any Tax sharing or Tax indemnity agreements (other than agreements
between or among the Company and its subsidiaries).
Section 5.16 Accounting for the Merger. The Company has no
reason to believe that the Merger will fail to qualify for
pooling-of-interests treatment under GAAP and applicable SEC regulations.
Section 5.17 Brokers. No broker, investment banker or other
person, other than ▇▇▇▇▇▇▇ Sachs and ▇▇▇▇▇▇▇ ▇▇▇▇▇, the fees and expenses
of which will be paid by the Company (as reflected in agreements between
▇▇▇▇▇▇▇ Sachs and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Company), is entitled to any
broker's, finder's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
Section 5.18 Interest Rate and Foreign Exchange Contracts.
All interest rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements and foreign exchange contracts
to hedge its investments in foreign subsidiaries, whether entered into for
the account of the Company or one of its subsidiaries, were entered into in
the ordinary course of business and, to the Company's knowledge, in
accordance with prudent business practice and applicable rules, regulations
and policies of any Governmental Entity and with counterparties believed to
be financially responsible at the time, and are valid and binding
obligations of the Company or one of its subsidiaries enforceable in
accordance with their terms (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights
of creditors generally and the availability of equitable remedies), and are
in full force and effect. The Company and each of its subsidiaries have
duly performed in all material respects all of their material obligations
thereunder to the extent that such obligations to perform have accrued,
and, to the Company's knowledge, there are no material breaches, violations
or defaults or allegations or assertions of such by any party thereunder.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Subject to Article IV, Acquiror represents and warrants to
the Company as follows:
Section 6.1 Organization.
(a) Acquiror is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware and
has the corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted.
Acquiror is duly licensed or qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character
of its properties owned or held under lease or the nature of its activities
make such licensing or qualification necessary, except where the failure to
be so qualified would not have a Material Adverse Effect on Acquiror.
(b) Each of Acquiror's subsidiaries, including HAC,
is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation. Each subsidiary of Acquiror,
including HAC, has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure
to be so qualified would not have a Material Adverse Effect on Acquiror.
Section 6.2 Capitalization. The authorized capital stock of
Acquiror consists of 250,000,000 shares of Acquiror Common Stock, and
8,155,044 shares of Acquiror Preferred Stock. As of April 2, 1998, (i)
107,319,277 shares of Acquiror Common Stock were issued and outstanding;
(ii) 4,072,145 shares of Acquiror Common Stock were issuable upon exercise
of employee and non-employee stock options (the "Acquiror Stock Options")
outstanding under all stock option plans of Acquiror (the "Acquiror Stock
Option Plans"); and (iii) 3,754,635 shares of Acquiror Preferred Stock were
issued and outstanding. As of April 2, 1998, 17,011,848 shares of Acquiror
Common Stock were held as treasury shares. All of the issued and
outstanding shares of Acquiror Common Stock are validly issued, fully paid
and nonassessable and free of preemptive rights. All of the shares of
Acquiror Common Stock issuable as consideration in the Merger at the
Effective Time in accordance with this Agreement will be, when so issued,
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights. Except as set forth above, as of April 2, 1998, there
were no shares of capital stock of Acquiror issued or outstanding or any
options, warrants, subscriptions, calls, rights, convertible securities or
other agreements or commitments obligating Acquiror to issue, transfer,
sell, redeem, repurchase or otherwise acquire any shares of its capital
stock or securities. There are no notes, bonds, debentures or other
indebtedness of Acquiror having the right to vote (or convertible into or
exchangeable for securities having the right to vote) on any matters upon
which stockholders of Acquiror may vote. The authorized capital stock of
HAC consists of 1,000 shares of common stock, par value $.01 per share, all
of which are validly issued, fully paid and nonassessable, and are owned by
Acquiror free and clear of any Lien.
Section 6.3 Authority Relative to this Agreement. Each of
Acquiror and HAC has the corporate power and authority to enter into this
Agreement and to perform its respective obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by each of Acquiror and HAC and the consummation by each
of Acquiror and HAC of the transactions contemplated hereby have been duly
authorized by the Board of Directors of each of Acquiror and HAC and by
Acquiror as the sole stockholder of HAC. Except for the approval of this
Agreement by the requisite vote of Acquiror's stockholders (the "Acquiror
Stockholder Approval") at a special meeting of Acquiror's stockholders duly
called for the purpose of obtaining such approval (the "Acquiror
Stockholders Meeting"), no other corporate action or proceeding on the
part of Acquiror or HAC is necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Acquiror and HAC and, assuming the due authorization
and valid execution and delivery by the Company, constitutes a valid and
binding agreement of each of Acquiror and HAC, enforceable against each of
Acquiror and HAC in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar Laws now or hereafter in
effect relating to creditors' rights generally and general principles of
equity.
Section 6.4 Consents and Approvals; No Violations.
(a) Except for (i) the notices, consents or
approvals, and filings or registrations, required to obtain the Requisite
Regulatory Approvals, (ii) the filing with the SEC of the Merger Proxy
Statement and the filing and declaration of effectiveness of the
Registration Statement, (iii) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware, (iv) such filings and
approvals as are required to be made or obtained under the securities or
"Blue Sky" Laws of various states in connection with the issuance of the
shares of Acquiror Common Stock pursuant to this Agreement, (v) the
approval of the listing of the Acquiror Common Stock to be issued in the
Merger on the NYSE, and (vi) the consents of third parties under the
Contracts listed in Section 6.4(a)(vi) of the Acquiror Disclosure Schedule,
no notices to, consents or approvals of, or filings or registrations with
any Governmental Entity or with any self regulatory authority or with any
third party are necessary in connection with the execution and delivery by
each of Acquiror and HAC of this Agreement and the consummation by each of
Acquiror and HAC of the transactions contemplated hereby, except for such
notices, consents, approvals, filings or registrations, the failure of
which to be made or obtained would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Acquiror.
As of the date hereof, Acquiror knows of no reason why all Requisite
Regulatory Approvals will not be obtained.
(b) Except as listed in Section 6.4(b) of the
Acquiror Disclosure Schedule, neither the execution and delivery of this
Agreement by either Acquiror or HAC, nor the consummation by Acquiror or
HAC of the transactions contemplated hereby, will (i) conflict with or
result in any violation of or breach of any provisions of the certificate
of incorporation or by-laws of Acquiror or the certificate of incorporation
or by-laws of any of Acquiror's subsidiaries, including HAC; (ii) subject
to obtaining the consents listed in Section 6.4(a)(vi) of the Acquiror
Disclosure Schedule, result in a violation or breach of, or constitute
(with or without due notice or lapse of time, or both) a default (or give
rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any Contract to which Acquiror or
any of Acquiror's subsidiaries, including HAC, is a party or by which any
of them or any of their respective properties or assets may be bound; (iii)
result in a violation or breach of, or constitute (with or without due
notice or lapse of time, or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any Acquiror License (as hereinafter defined);
or (iv) subject to giving the notices, making the filings or registrations
or obtaining the consents or approvals referred to in paragraph (a) above,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Acquiror, any of Acquiror's subsidiaries, including HAC, or
any of their respective properties or assets, except, in the case of
clauses (ii), (iii) and (iv), for violations, breaches or defaults which
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on Acquiror.
Section 6.5 Reports and Financial Statements.
(a) Acquiror and each of its subsidiaries have timely
filed all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since December 31, 1995 with all Regulatory Agencies, and
have paid all material fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by a Regulatory Agency
in the regular course of the business of Acquiror and its subsidiaries, and
except as listed in Section 6.5 of the Acquiror Disclosure Schedule, no
Regulatory Agency has initiated any proceeding or investigation or, to the
knowledge of Acquiror, threatened any investigation into the business or
operations of Acquiror or any of its subsidiaries since December 31, 1995,
except for such proceedings or investigations which would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect on Acquiror.
(b) Acquiror and each of its subsidiaries have timely
filed all material reports, forms, registrations, schedules, statements and
other documents required to be filed by it with the SEC since December 31,
1995 (the "Acquiror SEC Reports"). As of their respective dates, the
Acquiror SEC Reports complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and the applicable rules and regulations promulgated thereunder. Except to
the extent that information contained in any Acquiror SEC Report has been
revised or superseded by a later filed Acquiror SEC Report, none of the
Acquiror SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) The consolidated financial statements of Acquiror
included in the Acquiror SEC Reports filed and publicly available prior to
the date of this Agreement (as amended to the date of this Agreement, the
"Filed Acquiror SEC Reports") complied as to form in all material respects
with the applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes
thereto) and fairly present the consolidated financial position of Acquiror
and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and their consolidated cash flows
for the periods then ended (subject, in the case of the unaudited
statements, to normal year-end audit adjustments and to any other
adjustments described therein).
(d) Except as set forth in the Filed Acquiror SEC
Reports, and except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since the date of
the most recent consolidated balance sheet included in the Filed Acquiror
SEC Reports, neither Acquiror nor any of its subsidiaries has any material
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be recognized or disclosed on
a consolidated balance sheet of Acquiror and its consolidated subsidiaries
or in the notes thereto.
Section 6.6 Absence of Certain Changes or Events. Except as
set forth in the Filed Acquiror SEC Reports, the business of Acquiror and
its subsidiaries has been conducted only in the ordinary course of business
consistent with past practice, and there has not been any event, change or
development which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect on Acquiror, and,
during the period from the most recent consolidated balance sheet included
in the Filed Acquiror SEC Reports through the date of this Agreement,
neither Acquiror nor any of its subsidiaries has taken any action that, if
taken during the period from the date of this Agreement through the
Effective Time, would constitute a breach of Section 7.2 hereof.
Section 6.7 Litigation. Except as set forth in the Filed
Acquiror SEC Reports, and as set forth in Section 6.7 of the Acquiror
Disclosure Schedule, as of the date hereof, there is no suit, action,
proceeding or regulatory investigation pending or, to the knowledge of
Acquiror, threatened against or affecting Acquiror or any of its
subsidiaries that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Acquiror, nor is there any
judgment, order, decree, statute, Law, ordinance, rule or regulation of any
Regulatory Agency or Governmental Entity or arbitrator outstanding against
Acquiror or any of its subsidiaries which, individually or in the
aggregate, has had or would reasonably be expected to have a Material
Adverse Effect on Acquiror.
Section 6.8 Information in Disclosure Documents and
Registration Statement. None of the information to be supplied by Acquiror
for inclusion or incorporation by reference in the Registration Statement
or the Merger Proxy Statement will, in the case of the Registration
Statement, at the time it becomes effective and at the Effective Time,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or, in the case of the Merger Proxy
Statement or any amendments thereof or supplements thereto, at the time of
the mailing of the Merger Proxy Statement and any amendments or supplements
thereto and at the time of the Company Stockholders Meeting and the
Acquiror Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Merger Proxy
Statement (except for such portions thereof that relate only to the Company
or its subsidiaries or Affiliates) and the Registration Statement will
comply as to form in all material respects with the provisions of the
Exchange Act and the Securities Act, respectively, and the rules and
regulations promulgated thereunder.
Section 6.9 Compliance with Applicable Law. Acquiror and its
subsidiaries have received such certificates, permits, licenses,
franchises, consents, approvals, orders, authorizations and clearances from
appropriate Governmental Entities (the "Acquiror Licenses") as are
necessary to own or lease and operate their respective properties and to
conduct their respective businesses substantially in the manner described
in the Acquiror SEC Reports and as currently owned or leased and conducted,
and all such Acquiror Licenses are valid and in full force and effect,
except for any such Acquiror Licenses which the failure to have or to be in
full force and effect would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Acquiror.
Acquiror and its subsidiaries are in compliance in all material respects
with their respective obligations under Acquiror Licenses, with only such
exceptions as, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Acquiror. Except as disclosed
in the Filed Acquiror SEC Reports, Acquiror and its subsidiaries are in
compliance with all judgments, orders, decrees, statutes, Laws, ordinances,
rules and regulations of any Governmental Entity applicable to them, except
for such noncompliance which, individually or in the aggregate, would not,
individually or in the aggregate have a Material Adverse Effect on
Acquiror.
Section 6.10 Brokers. No broker, investment banker or other
person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, the fees and expenses
of which will be paid by Acquiror (as reflected in an agreement between
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and Acquiror), is entitled to any
broker's, finder's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Acquiror.
Section 6.11 Ownership of Company Common Stock; Affiliates
and Associates. Neither Acquiror nor any of its affiliates or associates
(as such terms are defined under the Exchange Act) (i) beneficially owns,
directly or indirectly, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
any shares of capital stock of the Company (other than Trust Account Shares
and DPC Shares).
Section 6.12 Agreements with Regulatory Agencies. Except as
listed in Section 6.12 of the Acquiror Disclosure Schedule or as disclosed
in Acquiror's Annual Report on Form 10-K for the year ended December 31,
1996, neither Acquiror nor any of its subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is subject to
any order or directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions at the
request of (each, whether or not set forth in Section 6.12 of the Acquiror
Disclosure Schedule, an "Acquiror Regulatory Agreement"), any Regulatory
Agency or other Governmental Entity that restricts the conduct of its
business or that in any manner relates to its capital adequacy, its credit
policies, its management or its business, except for any Acquiror
Regulatory Agreements that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Acquiror, nor
has Acquiror or any of its subsidiaries been advised by any Regulatory
Agency or other Governmental Entity that it is considering issuing or
requesting any Acquiror Regulatory Agreement, except for any such proposed
Acquiror Regulatory Agreements that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Acquiror.
Section 6.13 Vote Required. The Acquiror Stockholder
Approval at the Acquiror Stockholders Meeting will require the affirmative
vote of the holders of a majority of the votes cast, provided that the
total number of votes cast represents over 50% of the total number of
outstanding shares of Acquiror Common Stock. The Acquiror Stockholder
Approval is the only vote of the holders of any class or series of
Acquiror's capital stock necessary to approve and adopt this Agreement, and
approve the transactions contemplated hereby.
Section 6.14 Taxes.
(a) Each of Acquiror and its subsidiaries has filed
all material Tax returns or reports required to be filed by it and all such
returns and reports are complete and correct in all material respects, or
requests for extensions to file such returns or reports have been timely
filed, granted and have not expired, except to the extent that such
failures to file, to be complete or correct or to have extensions granted
that remain in effect, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Acquiror.
Acquiror and each of its subsidiaries have paid (or Acquiror has paid on
its behalf) all Taxes shown as due on such returns, and the most recent
financial statements contained in the Filed Acquiror SEC Reports reflect an
adequate reserve in accordance with GAAP for all Taxes payable by Acquiror
and its subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements.
(b) No deficiencies for any Taxes have been proposed,
asserted or assessed against Acquiror or any of its subsidiaries that are
not adequately reserved for, except for deficiencies that, individually or
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on Acquiror. The federal income tax returns of Acquiror and
each of its subsidiaries consolidated in such returns for tax years through
1988 have closed by virtue of the applicable statute of limitations.
(c) Neither Acquiror nor any of its subsidiaries has
taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
Section 6.15 Accounting for the Merger. Acquiror has no
reason to believe that the Merger will fail to qualify for
pooling-of-interests treatment under GAAP and applicable SEC regulations.
ARTICLE VII
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 7.1 Conduct of Business by the Company.
(a) During the period from the date of this Agreement
to the Effective Time, the Company shall, and shall cause its subsidiaries
to, carry on the business of the Company and its subsidiaries in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and in compliance in all material respects with all applicable
Laws and regulations and, to the extent consistent therewith, use all
reasonable efforts to preserve intact the current business organizations of
the Company and its subsidiaries, use reasonable efforts to keep available
the services of the current officers and other key employees of the Company
and its subsidiaries and preserve its relationships with those persons
having business dealings with the Company and its subsidiaries to the end
that the goodwill and ongoing businesses of the Company and its
subsidiaries shall be unimpaired at the Effective Time. Without limiting
the generality of the foregoing, during the period from the date of this
Agreement to the Effective Time, the Company agrees as to itself and its
subsidiaries that:
(i) Dividends. The Company and its subsidiaries
shall not (x) declare, set aside or pay any distributions (whether
in cash, stock or property) with respect to its capital stock
(other than normal quarterly dividends on the Company Common Stock
and the Company Preferred Stock and dividends from a wholly owned
subsidiary of the Company to the Company or another wholly owned
subsidiary of the Company), (y) split, combine, or reclassify any
of the Company's capital stock, or issue or authorize the issuance
of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock or (z) repurchase,
redeem or call any of its equity securities.
(ii) Issuance of Securities. Except as set
forth in Section 7.1(a)(ii) of the Company Disclosure Schedule, the
Company and its subsidiaries shall not issue, deliver, sell, pledge
or otherwise encumber any shares of capital stock of the Company or
any of its subsidiaries, any other voting securities or any
securities convertible into, or any options, warrants, stock
appreciation rights or rights to acquire, any such shares, voting
securities or convertible securities (other than the issuance of
Company Common Stock (i) upon the exercise of Employee Stock
Options, (ii) upon the conversion of Company Convertible Preferred
Stock and (iii) pursuant to the dividend reinvestment provisions of
the Direct Purchase Plan (in each case outstanding on the date of
this Agreement and/or in accordance with their present terms).
(iii) Governing Documents. The Company shall
not amend its certificate of incorporation or by-laws, nor shall it
permit any subsidiary of the Company to amend its certificate of
incorporation, by-laws or other comparable organizational
documents.
(iv) No Acquisitions. Except as set forth in
Section 7.1(a)(iv) of the Company Disclosure Schedule and other
than in connection with foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings and the
acquisition from time to time of receivables in the ordinary course
of business consistent with past practice, the Company and its
subsidiaries shall not acquire or agree to acquire (x) by merging
or consolidating with, or by purchasing a substantial portion of
the assets of, or by any other manner, any business or any
corporation, limited liability company, partnership, joint venture,
association or other business organization or division thereof or
(y) any assets that, individually or in the aggregate, are material
to the Company and its subsidiaries.
(v) No Dispositions. Except as set forth in
Section 7.1(a)(v) of the Company Disclosure Schedule and other than
activities in the ordinary course of business consistent with past
practice, the Company and its subsidiaries shall not sell, lease,
license or otherwise encumber or subject to any Lien or otherwise
dispose of any of the properties or assets of the Company and its
subsidiaries.
(vi) Indebtedness. Except as set forth in
Section 7.1(a)(vi) of the Company Disclosure Schedule and other
than in the ordinary course of business consistent with past
practice, the Company and its subsidiaries shall not (x) incur any
indebtedness or (y) make any advances or capital contributions to,
or investments in, any other Person, other than to officers and
employees of the Company and its subsidiaries for travel, business
or relocation expenses in the ordinary course of business.
(vii) Capital Expenditures. Except as set forth
in Section 7.1(a)(vii) of the Company Disclosure Schedule, the
Company and its subsidiaries shall not make or agree to make any
capital expenditure or capital expenditures relating to a single
project in excess of $1,000,000 without the prior written consent
of Acquiror.
(viii) Tax Matters. The Company and its
subsidiaries shall not make any Tax election or settle or
compromise any material income Tax liability, except in respect of
ongoing matters or in the ordinary course of business consistent
with past practice and in prior consultation with Acquiror.
(ix) Contracts. Except as set forth in Section
7.1(a)(ix) of the Company Disclosure Schedule, the Company and its
subsidiaries shall not enter into any material Contracts, except in
the ordinary course of business consistent with past practice and
in prior consultation with Acquiror. The Company and its
subsidiaries shall not modify or amend in any material respect or
terminate any material Contract to which the Company or any of its
subsidiaries is a party or waive, release or assign any material
rights or claims thereunder.
(x) Employee Matters. Except as required by Law
or in the ordinary course of business consistent with past practice
or in accordance with this Agreement, and the Company will not, nor
will it permit any of its subsidiaries to, (a) increase the
compensation of any of its employees, (b) enter into any Contract
with any of its employees regarding his or her employment,
compensation or benefits, or (c) adopt any plan, arrangement or
policy which would become a Company Plan or amend any Company Plan
to the extent such adoption or amendment would create or increase
any material liability or obligation on the part of the Company or
its subsidiaries.
(xi) Approvals. The Company and its
subsidiaries shall not take any action or enter into any agreement
that could reasonably be expected to materially jeopardize or delay
the receipt of any Requisite Regulatory Approval.
(xii) Accounting Policies and Procedures. The
Company and its subsidiaries shall not make any change to their
accounting methods, principles or practices, except as may be
required by GAAP or Regulation S-X promulgated by the SEC.
(xiii) Liens. The Company shall not, and shall
not permit any of its subsidiaries to, create, incur, suffer to
exist or assume any material Lien on any of their material assets.
(xiv) Claims. The Company and its subsidiaries
shall not settle any material claim, action or proceeding involving
money damages or waive or release any material rights or claims.
(xv) Interest Rate and Foreign Exchange. The
Company and its subsidiaries shall not materially restructure or
materially change its gap position, through purchases, sales,
▇▇▇▇▇▇, swaps, caps or collars or otherwise or the manner in which
any current ▇▇▇▇▇▇ are classified or reported.
(xvi) No Agreements. The Company shall not
agree to commit to do any of the foregoing.
Section 7.2 Conduct of Business by Acquiror. During the
period from the date of this Agreement to the Effective Time, Acquiror
agrees as to itself and its subsidiaries that:
(i) Dividends. Except as set forth in Section
7.2(i) of the Acquiror Disclosure Schedule, Acquiror and its
subsidiaries shall not (x) declare, set aside or pay any
distributions (whether in cash, stock or property) with respect to
its capital stock (other than normal quarterly dividends on the
Acquiror Common Stock and the Acquiror Preferred Stock and
dividends from a wholly owned subsidiary of Acquiror to Acquiror or
another wholly owned subsidiary of Acquiror), (y) split, combine,
or reclassify any of Acquiror's capital stock, or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock.
(ii) Approvals. Acquiror and its subsidiaries
shall not take any action or enter into any agreement that could
reasonably be expected to jeopardize or delay the receipt of any
Requisite Regulatory Approval.
(iii) Accounting Policies and Procedures.
Acquiror and its subsidiaries shall not make any change to their
accounting methods, principles or practices, except as may be
required by GAAP or Regulation S-X promulgated by the SEC.
(iv) No Agreements. Acquiror shall not agree or
commit to any of the foregoing.
Section 7.3 Other Actions. During the period from the date
hereof to the Effective Time, the Company and Acquiror shall not, and shall
not permit any of their respective subsidiaries to, take any action that
would, or that could reasonably be expected to, result in any of the
conditions to the Merger set forth in Article IX hereof not being
satisfied.
Section 7.4 Advice of Changes. The Company and Acquiror
shall promptly advise the other party orally and in writing of (a) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect, (b) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement or
(c) any change or event (i) having, or which, insofar as can reasonably be
foreseen, would have, in the case of Acquiror, a Material Adverse Effect on
Acquiror, and, in the case of the Company, a Material Adverse Effect on the
Company, or (ii) which has resulted, or which, insofar as can reasonably be
foreseen, would result, in any of the conditions set forth in Article IX
not being satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 No Solicitation. The Company shall not, and
shall use its reasonable best efforts to cause its officers, directors and
employees, and investment bankers, attorneys, accountants and other agents
retained by it, not to, initiate, solicit or encourage, directly or
indirectly, any inquiries relating to, or the making of any Acquisition
Proposal, or engage in negotiations or discussions with, or furnish any
information to, any third party relating to an Acquisition Proposal.
Notwithstanding the foregoing, the Company and the Board of Directors of
the Company (a) may participate in discussions or negotiations (including,
as a part thereof, making any counterproposal) with, or furnish information
to, any third party with respect to any Acquisition Proposal if the
Company's Board of Directors determines in good faith, after consultation
with its counsel, that the failure to participate in such discussions or
negotiations or to furnish such information may constitute a breach of its
fiduciary duties under, or otherwise violate, applicable Law, and (b) shall
be permitted to (i) take and disclose to the Company's stockholders a
position with respect to an Acquisition Proposal or amend or withdraw such
position or its position with respect to the Merger, or (ii) make
disclosure to the Company's stockholders, in each case, if the Company's
Board of Directors determines in good faith, after consultation with its
counsel, that the failure to take such action may constitute a breach of
its fiduciary duties under, or otherwise violate, applicable Law. The
Company shall promptly (within 24 hours) advise the Acquiror of its receipt
of any Acquisition Proposal, or any inquiry that may lead to an Acquisition
Proposal, including the substance thereof and the identity of the person
making such Acquisition Proposal or inquiry.
Section 8.2 Preparation of the Registration Statement and
the Merger Proxy Statement; Company and Acquiror Stockholders Meetings.
(a) As soon as reasonably practicable following the
date of this Agreement, Acquiror and the Company shall prepare and file
with the SEC the Merger Proxy Statement and Acquiror shall prepare and file
with the SEC the Registration Statement, in which the Merger Proxy
Statement will be included as a prospectus (including the financial
statements and pro forma financial information required to be set forth
therein). Each of Acquiror and the Company shall use all reasonable efforts
to have the Registration Statement declared effective under the Securities
Act as promptly as practicable after such filing. Each of Acquiror and the
Company will use all reasonable efforts to cause the Merger Proxy Statement
to be mailed to its respective stockholders as promptly as practicable
after it has been cleared by the SEC. Each of Acquiror and the Company
shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or to file a general
consent to service of process) required to be taken under any applicable
state securities Laws in connection with the issuance of Acquiror Common
Stock in connection with the Merger. The Company shall furnish all
information concerning the Company, its subsidiaries and the holders of the
Company Common Stock, and Acquiror shall furnish all information concerning
Acquiror and its subsidiaries, in each case, as may be reasonably requested
in connection with any such action.
(b) Each of Acquiror and the Company will, as soon as
practicable following the date of this Agreement, duly call, give notice
of, convene and hold the Acquiror Stockholders Meeting and the Company
Stockholders Meeting, respectively, for the purpose of obtaining the
Acquiror Stockholder Approval and the Company Stockholder Approval. Each of
Acquiror and the Company will, through its Board of Directors, subject in
the case of the Company to its fiduciary duties, recommend to its
respective stockholders the approval and adoption of this Agreement and the
transactions contemplated thereby. Acquiror and the Company will coordinate
and cooperate with respect to the foregoing matters, with a view towards,
among other things, holding the respective meetings of each party's
stockholders on the same day.
Section 8.3 Access and Information; Confidentiality. The
Company and Acquiror shall each afford to the other and to the other's
financial advisors, legal counsel, accountants, consultants and other
representatives full access at all reasonable times throughout the period
prior to the Effective Time to all of its books, records, properties,
plants and personnel and, during such period, each shall furnish promptly
to the other (a) a copy of each report, schedule and other document filed
or received by it pursuant to the requirements of federal or state
securities, banking or insurance Laws, and (b) all other information as
such other party may reasonably request, provided that no investigation
pursuant to this Section 8.3 shall affect any representations or warranties
made herein or the conditions to the obligations of the respective parties
to consummate the Merger. Each party and their respective affiliates,
representatives and agents shall hold in confidence all nonpublic
information in accordance with the terms of the Confidentiality Agreement
(the "Confidentiality Agreement") between Acquiror and the Company dated
February 18, 1998, until such time as such information is otherwise
publicly available and, if this Agreement is terminated, each party will
deliver to the other all documents, work papers and other material
(including copies) obtained by such party or on its behalf from the other
party as a result of this Agreement or in connection herewith, whether so
obtained before or after the execution hereof.
Section 8.4 Comfort Letters.
(a) The Company shall use its reasonable efforts to
cause to be delivered to Acquiror "comfort" letters of Deloitte & Touche
LLP, the Company's independent public accountants, dated the date on which
the Registration Statement shall become effective and as of the Closing
Date, and addressed to Acquiror and the Company, in form and substance
reasonably satisfactory to Acquiror and as is reasonably customary in scope
and substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
(b) Acquiror shall use its reasonable best efforts to
cause to be delivered to the Company "comfort" letters of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇'▇ independent public accountants, dated the date on which the
Registration Statement shall become effective and as of the Closing Date,
and addressed to the Company and Acquiror, in form and substance reasonably
satisfactory to the Company and as is reasonably customary in scope and
substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
Section 8.5 Listing Application. Acquiror shall prepare and
submit to the NYSE a listing application covering the shares of Acquiror
Common Stock and Acquiror New Preferred Stock to be issued in connection
with the Merger, and shall use its reasonable efforts to obtain, prior to
the Effective Time, approval for the listing of such shares of Acquiror
Common Stock, subject to official notice of issuance.
Section 8.6 Affiliates. Prior to mailing the Merger Proxy
Statement, the Company shall use its reasonable efforts to cause to be
prepared and delivered to Acquiror a list (reasonably satisfactory to
counsel for Acquiror) identifying each Person who, at the time of the
Company Stockholders Meeting, may be deemed to be an "affiliate" of the
Company, as such term is used in paragraphs (c) and (d) of Rule
145 under the Securities Act and for purposes of qualifying the Merger for
"pooling of interests" accounting treatment (the "Company Rule 145
Affiliates"). The Company shall use its reasonable efforts to cause each
Person who is identified as a Company Rule 145 Affiliate in such list to
deliver to Acquiror on or prior to mailing the Merger Proxy Statement a
written agreement, in customary form, that such Company Rule 145 Affiliate
will not (i) sell, pledge, transfer or otherwise dispose of, or in any
other way reduce such Company Rule 145 Affiliate's risk relative to, any
shares of Acquiror Common Stock issued to such Company Rule 145 Affiliate
in connection with the Merger, except pursuant to an effective registration
statement or in compliance with such Rule 145 or another exemption from the
registration requirements of the Securities Act, or (ii) sell or in any
other way reduce such Rule 145 Affiliate's risk relative to any shares of
Acquiror Common Stock received in the Merger (within the meaning of Section
201.01 of the SEC's Financial Reporting Release No. 1) during the period
commencing 30 days prior to the Effective Time and ending at such time as
the financial results (including combined sales and net income) covering at
least 30 days of post-Merger operations have been published (which
publication Acquiror shall cause to occur within 15 days after the end of
the first full calendar month following the month in which the Effective
Time occurs), except as permitted by Staff Accounting Bulletin No. 76
issued by the SEC.
Section 8.7 Governmental Authorizations. The Company and
Acquiror shall cooperate with each other and use their reasonable efforts
to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, and to obtain as promptly as
practicable all Requisite Regulatory Approvals. The Company and Acquiror
shall have the right to review in advance, and to the extent practicable
each will consult the other on, in each case, subject to applicable Laws
relating to the exchange of information, all the information relating to
the Company or Acquiror, as the case may be, and any of their respective
subsidiaries, which appears in any filing made with, or written materials
submitted to, any third parties or any Regulatory Agencies and Governmental
Entities in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto
shall act reasonably and as promptly as practicable. The parties hereto
agree that they will consult with each other with respect to the obtaining
of all consents of third parties and the Requisite Regulatory Approvals
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
Section 8.8 Employee Matters.
(a) Employee Benefits. From and after the Effective
Time, Acquiror shall either continue the Company Plans or provide to
Company Employees retired employees of the Company and its subsidiaries,
and individuals who are receiving (or eligible to receive as of the date
hereof) benefits by virtue of their relationship to a deceased employee
(collectively, the "Retired Employees") the same employee benefits, at the
same level, as Acquiror provides to similarly situated employees of
Acquiror and its subsidiaries and provide Company Employees with the same
incentive opportunities as similarly situated employees of Acquiror.
Notwithstanding the foregoing, the Acquiror shall continue the incentive
programs and other benefit arrangements which are listed in Section 8.8(a)
of the Company Disclosure Schedule on substantially the same terms and
conditions as are in effect at the Effective Time, until December 31, 1998.
For a period of two years following the Effective Time (the "Continuation
Period"), any Company Employee in the United States who is involuntarily
terminated, other than for cause, who by the conclusion of such period
would have accumulated sufficient age and service credit to become eligible
to retire early under the Pension Plan, shall be entitled to elect to
remain employed, in leave status, until such time as that eligibility has
been attained. If following the Effective Time, the health benefits
provided by the Acquiror to similarly situated retired employees are not
substantially equivalent to those provided to the Retired Employees under
the Company Plans, then the Acquiror shall continue the Company Plans, as
to such Retired Employee health benefits, for a period of two years
following the Effective Time. If following the Effective Time, the health
benefits, including covered benefits (assuming waiver of all pre-existing
condition limitations as provided for below) provided to similarly situated
employees are not substantially equivalent to those provided to Company
Employees under the Company Plans, the Acquiror shall continue the Company
Plans providing such health benefits for a period of one year following the
Effective Time. With respect to each employee benefit plan maintained by
Acquiror following the Effective Time (including, without limitation, plans
or policies providing severance benefits and vacation entitlement), service
with the Company and its subsidiaries shall be treated as service with
Acquiror for all purposes, other than for purposes of benefit accrual under
any qualified retirement plans; provided, however, that such service shall
not be recognized to the extent that such recognition would result in a
duplication of benefits. Such service shall also apply for purposes of
satisfying any waiting periods, evidence of insurability requirements, or
the application of any preexisting condition limitations. Company Employees
shall be given credit for amounts paid under a corresponding benefit plan
during the same period for purposes of applying deductibles, copayments and
out-of-pocket maximums as though such amounts had been paid in accordance
with the terms and conditions of the benefit plan maintained by Acquiror.
(b) Severance. Without limiting the generality of the
first sentence of paragraph (a) of this Section 8.8, Acquiror shall provide
to each individual who is an employee of the Company or any of its
subsidiaries in the United States immediately prior to the Effective Time
and whose employment is involuntarily terminated other than for cause or
non-performance during the Continuation Period, severance benefits no less
favorable to such individual than the severance pay plan described in
Section 8.8(b) of the Company Disclosure Schedule. During the Continuation
Period, if the continuing employment of any of the Company Employees is not
at the same or higher salary or wages, and on substantially the same terms
and conditions (subject to paragraph (a) of this Section 8.8), including
but not limited to reasonable geographic proximity to a Company Employee's
employment location as of the date hereof, and any such Company Employee
declines to continue employment on that basis, the termination of such
Company Employee's employment shall be an involuntary termination, other
than for cause, for purposes of the Company Plans.
(c) Outplacement Services. During the Continuation
Period, Acquiror shall provide to employees of the Company and its
subsidiaries whose employment is terminated during the Continuation Period
under circumstances entitling the employee to severance benefits under
paragraph (b) of this Section 8.8 or under any applicable employment or
severance agreement then in effect, outplacement services appropriate to
the employee's position, as determined by reasonable competitive practices.
(d) Compensation Contracts. Acquiror shall assume and
honor the obligations of the Company and its subsidiaries under all
employment, severance, consulting, retirement and other compensation
contracts, arrangements, commitments or understandings, in accordance with
their terms, as disclosed in Section 8.8(d) of the Company Disclosure
Schedule. Acquiror hereby acknowledges that the Merger will constitute a
"Change in Control" in accordance with the provisions of the Company Plans
listed in Section 5.10(d) of the Company Disclosure Schedule. Acquiror
agrees, after consummation of the Merger, to pay all amounts provided under
such Company Plans and agreements as a result of a change in control of the
Company, as applicable, in accordance with their respective terms, and to
honor all rights, privileges and modifications to or with respect to any
such Company Plans or agreements which become effective as a result of such
change in control.
(e) The Company shall take all actions necessary to
amend the terms of the Company Stock Option Plans to eliminate the cash
settlement of options granted thereunder as a result of or in connection
with the Merger and to provide that any such right shall be settled in
stock with a fair market value equal to the cash that would otherwise have
been payable thereunder. The Company will use all reasonable efforts to
obtain the consent of certain holders of options granted under the Company
Stock Option Plans to the foregoing treatment of such cash settlement
right.
Section 8.9 Continuance of Existing Indemnification Rights.
(a) For six years after the Effective Time, Acquiror
shall indemnify, defend and hold harmless any Person who is now, or has
been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director or officer of the Company (an "Indemnified
Person") against all losses, claims, damages, liabilities, costs and
expenses (including attorneys' fees and expenses), judgments, fines, losses
and amounts paid in settlement in connection with any actual or threatened
action, suit, claim, proceeding or investigation (each, a "Claim") to the
extent that any such Claim is based on, or arises out of: (i) the fact that
such Indemnified Person is or was a director or officer of the Company or
is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise; or (ii) this Agreement or any of the transactions
contemplated hereby, in each case, to the extent that any such Claim
pertains to any matter or fact arising, existing or occurring prior to or
at the Effective Time, regardless of whether such Claim is asserted or
claimed prior to, at or after the Effective Time, to the full extent
permitted under the DGCL, the Company's certificate of incorporation or
by-laws or any indemnification agreement in effect at the date hereof,
including provisions relating to advancement of expenses incurred in the
defense of any such Claim; provided, however, that neither Acquiror nor the
Surviving Corporation shall be required to indemnify any Indemnified Person
in connection with any proceeding (or portion thereof) involving any Claim
initiated by such Indemnified Person unless the initiation of such
proceeding (or portion thereof) was authorized by the Board of Directors of
the Company or unless such proceeding is brought by an Indemnified Person
to enforce rights under this Section 8.9. Without limiting the generality
of the preceding sentence, in the event any Indemnified Person becomes
involved in any Claim, after the Effective Time, Acquiror shall, or shall
cause the Surviving Corporation to, periodically advance to such
Indemnified Person its legal and other expenses (including the cost of any
investigation and preparation incurred in connection therewith), subject to
the providing by such Indemnified Person of an undertaking to reimburse all
amounts so advanced in the event of a final non-appealable determination by
a court of competent jurisdiction that such Indemnified Person is not
entitled thereto.
(b) Acquiror and the Company agree that all rights to
indemnification, and all limitations with respect thereto, existing in
favor of any Indemnified Person, as provided in the Company's certificate
of incorporation or by-laws and any indemnification agreement in effect at
the date hereof, shall survive the Merger and shall continue in full force
and effect, without any amendment thereto, for a period of six years from
the Effective Time, to the extent such rights and limitations are
consistent with the DGCL; provided, however, that in the event any Claim is
asserted or made within such six-year period, all such rights, liabilities
and limitations in respect of any such Claim shall continue until
disposition thereof; provided further, that any determination required to
be made with respect to whether an Indemnified Person's conduct complies
with the standards set forth under the DGCL, the Company's certificate of
incorporation or by-laws or any such agreement, as the case may be, shall
be made by independent legal counsel selected by such Indemnified Person
and reasonably acceptable to Acquiror; and provided further, that nothing
in this Section 8.9 shall impair any rights or obligations of any current
or former director or officer of the Company.
(c) Acquiror shall maintain the Company's existing
directors' and officers' liability insurance policy ("D&O Insurance") for a
period of not less than six years after the Effective Time; provided,
however, that Acquiror may substitute therefor policies of substantially
similar coverage and amounts containing terms no less advantageous to such
former directors or officers; provided further, that if the existing D&O
Insurance expires or is cancelled during such period, Acquiror or the
Surviving Corporation shall use its best efforts to obtain substantially
similar D&O Insurance; and provided further, that neither Acquiror nor the
Surviving Corporation shall be required to pay an annual premium for D&O
Insurance in excess of 200% of the last annual premium paid prior to the
date hereof, but in such case shall purchase as much coverage as possible
for such amount.
(d) The provisions of this Section 8.9 are intended
to be for the benefit of, and shall be enforceable by, each Indemnified
Person, his or her heirs and his or her personal representatives.
Section 8.10 Expenses. Whether or not the Merger is
consummated, all costs and expenses (including transfer Taxes) incurred in
connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expenses.
Section 8.11 Certain Other Matters. Acquiror hereby agrees
to honor all of its obligations and commitments contained in each of the
letters, dated April 6, 1998, addressed to ▇▇. ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇, the
Chairman and Chief Executive Officer of the Company, from ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, the Chairman and Chief Executive Officer of Acquiror, including,
without limitation, Acquiror's obligations and commitments contained
therein to (i) retain certain management personnel of the Company, (ii)
name certain current directors of the Company to Acquiror's Board of
Directors, (iii) continue the use of the "Beneficial" name and (iv)
continue the use of certain of the Company's facilities.
Section 8.12 Beneficial Foundation; Certain Charitable
Contributions.
(a) The Company represents and warrants to Acquiror,
and Acquiror acknowledges and agrees, that the Beneficial Foundation, Inc.
(the "Foundation"), a not-for-profit corporation created and funded under
the laws of the State of Delaware in 1951 by certain senior officers of the
Company, is a separate entity independent of the Company, and Acquiror
shall not have, nor shall Acquiror acquire as a result of the transactions
contemplated by this Agreement, any ownership interest or rights in the
Foundation and its operation or management, nor shall Acquiror have any
right to designate future officers or directors of the Foundation, or
grants by the Foundation. The Company further represents and warrants to
Acquiror that it has been advised that the Foundation will change its name
to a name not containing the word "Beneficial" or any variant thereof at or
about the Effective Time.
(b) Acquiror agrees to honor and to cause the Company
to honor the Company's obligations to pay in a timely fashion all currently
outstanding charitable pledges of the Company and its subsidiaries to the
extent they remain unpaid at the Effective Time, and to fund by transfers
to the Foundation all multi-year scholarships awarded by the Foundation to
children of employees of the Company and its subsidiaries outstanding at
the Effective Time, up to a combined maximum of $3,000,000.
Section 8.13 Public Announcements. Acquiror and the Company
shall consult with each other before issuing, and provide each other the
opportunity to review, comment upon and concur with, any press release or
other public statements with respect to the transactions contemplated by
this Agreement, and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
applicable Law or by existing obligations pursuant to any listing agreement
with any national securities exchange. The parties agree that the initial
press release to be issued with respect to the transactions contemplated by
this Agreement shall be in the form heretofore agreed to by the parties.
Section 8.14 Reasonable Best Efforts. Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
hereto agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement. The parties will execute any additional instruments necessary to
consummate the transactions contemplated hereby. In case at any time after
the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall take all such necessary action.
Section 8.15 Regulatory Filings.
(a) Without limiting the generality of Section 8.7 or
8.18 hereof, the Company and Acquiror shall (i) take promptly all actions
necessary to make the filings required of the Company, Acquiror or any of
their affiliates in order to obtain any Requisite Regulatory Approval, (ii)
comply at the earliest practicable date with any request for information or
documentary material received by the Company, Acquiror or any of their
respective Affiliates from any Regulatory Agency and (iii) cooperate with
each other in connection with any such filing and with resolving any
investigation or other inquiry concerning the transactions contemplated by
this Agreement commenced by any Regulatory Agency.
(b) In furtherance and not in limitation of the
covenants of the Company and Acquiror contained in Section 8.7 and Section
8.15(a) hereof, each of the Company and Acquiror shall use its reasonable
best efforts to resolve such objections, if any, as may be asserted with
respect to the Merger or any other transactions contemplated by this
Agreement under any applicable Law. If any administrative, judicial or
legislative action or proceeding is instituted (or threatened to be
instituted) challenging the Merger or any other transaction contemplated by
this Agreement as violative of any applicable Law, each of the Company and
Acquiror shall cooperate and use its reasonable best efforts vigorously to
contest and resist any such action or proceeding, and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
that restricts, prevents or prohibits consummation of the Merger or any
other transaction contemplated by this Agreement.
(c) Each of the Company and Acquiror shall promptly
inform the other of any material communication received by such party or
any of its Affiliates from any Regulatory Agency regarding any of the
transactions contemplated hereby. Each of the Company and Acquiror shall
advise the other promptly of any understandings, undertakings or agreements
which such party or any of its Affiliates proposes to make or enter into
with any Regulatory Agency in connection with the transactions contemplated
hereby.
Section 8.16 Tax Treatment; Pooling of Interests. Each of
the Company and Acquiror shall use its respective best efforts to (a) cause
the Merger to be accounted for as a "pooling of interests" transaction
under GAAP, (b) cause the Merger to qualify as a reorganization under
Section 368(a) of the Code and (c) obtain the opinions of counsel referred
to in Sections 9.2(c) and 9.3(c).
ARTICLE IX
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 9.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger
shall be subject to the satisfaction or waiver, to the extent permitted by
Law, at or prior to the Effective Time, of the following conditions:
(a) Registration Statement. The Registration
Statement shall have become effective in accordance with the provisions of
the Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceeding for such
purpose shall be pending before or threatened by the SEC.
(b) Listing of Shares. The shares of Acquiror Common
Stock which shall be issued to the stockholders of the Company shall have
been approved for listing on the NYSE, subject to official notice of
issuance.
(c) Stockholder Approval. Each of the Acquiror
Stockholder Approval and the Company Stockholder Approval shall have been
obtained in accordance with applicable Law.
(d) No Injunctions or Restraints; Illegality. No
preliminary or permanent injunction or other order by any federal or state
court in the United States of competent jurisdiction ("Injunction") which
prohibits the consummation of the Merger shall have been issued and remain
in effect. No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any Governmental
Entity which prohibits, restricts or makes illegal consummation of the
Merger.
(e) Regulatory Approvals. All Requisite Regulatory
Approvals listed in Section 9.1(e) of the Company Disclosure Schedule shall
have been obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired.
(f) No Pending Governmental Actions. No proceeding
initiated by any Governmental Entity seeking an Injunction shall be
pending.
Section 9.2 Conditions to Obligations of Acquiror. The
obligation of Acquiror to effect the Merger is also subject to the
satisfaction or waiver by Acquiror at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. Subject to
Section 4.2, the representations and warranties of the Company set forth in
this Agreement shall be true and correct as of the date of this Agreement
and (except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of the
Closing Date. Acquiror shall have received a certificate signed on behalf
of the Company by an executive officer of the Company to the foregoing
effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Date, and Acquiror shall have received a certificate signed on
behalf of the Company by an executive officer of the Company to such
effect.
(c) Federal Tax Opinion. Acquiror shall have received
an opinion of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, tax counsel to Acquiror, in
form and substance reasonably satisfactory to Acquiror, dated as of the
date of the Effective Time, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state
of facts existing as of the Effective Time, substantially to the effect
that the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, such tax counsel
shall be entitled to rely upon representations and covenants of officers of
Acquiror and the Company substantially in the form of Exhibits C and D
hereto.
(d) Pooling of Interests. Acquiror shall have
received a letter from each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and Deloitte & Touche
LLP, each addressed to Acquiror and dated the Closing Date, in form and
substance reasonably acceptable to Acquiror, confirming that the
transactions contemplated by this Agreement, if consummated, can properly
be accounted for as a pooling-of-interests business combination in
accordance with GAAP and the criteria of Accounting Principles Board
Opinion No. 16 and the regulations of the Securities and Exchange
Commission.
Section 9.3 Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company at or prior to the Effective Time of
the following conditions:
(a) Representations and Warranties. Subject to
Section 4.2, the representations and warranties of Acquiror set forth in
this Agreement shall be true and correct as of the date of this Agreement
and (except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of the
Closing Date. The Company shall have received a certificate signed on
behalf of Acquiror by an executive officer of Acquiror to the foregoing
effect.
(b) Performance of Obligations of Acquiror. Acquiror
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date,
and the Company shall have received a certificate signed on behalf of
Acquiror by an executive officer of Acquiror to such effect.
(c) Federal Tax Opinion. The Company shall have
received an opinion from Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, tax
counsel to the Company, in form and substance reasonably satisfactory to
the Company, dated as of the date of the Effective Time, on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing as of the Effective Time,
substantially to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code. In
rendering such opinion, such tax counsel shall be entitled to rely upon
representations and covenants of officers of Acquiror and the Company
substantially in the form of Exhibits C and D hereto.
(d) Pooling of Interests. The Company shall have
received copies of the letters from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and Deloitte &
Touche LLP referred to in Section 9.2(d) hereof.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after approval
of the matters presented in connection with the Merger by the stockholders
of the Company:
(a) by mutual consent of the Company and Acquiror;
(b) by either Acquiror or the Company (i) 60 days
after the date on which any request or application for a Requisite
Regulatory Approval listed in Section 9.1(e) of the Company Disclosure
Schedule shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 60-day period following such denial
or withdrawal a petition for rehearing or an amended application has been
filed with the applicable Governmental Entity; provided, however, that no
party shall have the right to terminate this Agreement pursuant to this
Section 10.1(b)(i) if such denial or request or recommendation for
withdrawal shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such
party set forth herein or (ii) if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the Merger;
(c) by either Acquiror or the Company if the Merger
shall not have been consummated on or before December 31, 1998, unless the
failure of the Closing to occur by such date shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein;
(d) by either Acquiror or the Company (provided that
the terminating party shall not be in material breach of any of its
obligations under Section 8.3), if the Company Stockholder Approval or the
Acquiror Stockholder Approval shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of such
stockholders or at any adjournment or postponement thereof;
(e) by either Acquiror or the Company (provided that
the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein), if there shall
have been a material breach of any of the representations, warranties,
covenants or agreements set forth in this Agreement on the part of the
other party, which breach is not cured within thirty days following written
notice to the party committing such breach, or which breach, by its nature,
cannot be cured prior to the Closing Date; provided, however, that neither
party shall have the right to terminate this Agreement pursuant to this
Section 10.1(e) unless the breach, together with all other such breaches,
would entitle the non-breaching party not to consummate the transactions
contemplated hereby under Sections 9.2(a) and (b) (in the case of a breach
by the Company) or Sections 9.3(a) and (b) (in the case of a breach by
Acquiror);
(f) by the Company, by written notice to Acquiror at
least two days prior to the anticipated Closing Date that the Company is
unwilling to accept the Per Share Merger Consideration calculated in
accordance with Section 3.1(a), in the event that (i) the Average Closing
Price shall be less than the product of 0.80 and the Starting Price, or
(ii) both of the following conditions are satisfied:
(x) the Average Closing Price shall be less than the product
of 0.85 and the Starting Price; and
(y) (i) the number obtained by dividing the Average Closing
Price by the Starting Price (such number being referred to herein
as the "Acquiror Ratio") shall be less than (ii) the number
obtained by dividing the Index Price on the Determination Date by
the Index Price on the Starting Date and subtracting 0.15 from such
quotient (such number being referred to herein as the "Index
Ratio");
subject to the following four sentences. If the Company elects to exercise
its termination right pursuant to the immediately preceding sentence, it
shall give prompt written notice to Acquiror, which notice shall specify
which of clause (i) or (ii) is applicable (or, if both would be applicable,
which clause is being invoked); provided that such notice of election to
terminate may be withdrawn at any time within the aforementioned two-day
period. No right of termination shall arise under this Section 10.1(f) if
Acquiror shall have given written notice to the Company at any time within
24 hours of its receipt of the Company's written notice of termination that
Acquiror elects (x), in the case of a termination invoked under clause (i),
to adjust the Per Share Merger Consideration to equal a number equal to a
quotient (rounded to the nearest one-ten-thousandth), the numerator of
which is the product of 0.80, the Starting Price and the Per Share Merger
Consideration (as then in effect), and the denominator of which is the
Average Closing Price, or (y) to adjust the Per Share Merger Consideration
to equal the lesser of (A) a number equal to a quotient (rounded to the
nearest one-ten-thousandth), the numerator of which is the product of 0.85,
the Starting Price and the Per Share Merger Consideration (as then in
effect), and the denominator of which is the Average Closing Price, and (B)
a number equal to a quotient (rounded to the nearest one-ten-thousandth),
the numerator of which is the Index Ratio multiplied by the Per Share
Merger Consideration (as then in effect), and the denominator of which is
the Acquiror Ratio. If Acquiror makes an election contemplated by either of
the two preceding sentences, within such 24-hour period, it shall give
prompt written notice to the Company of such election and the revised Per
Share Merger Consideration, whereupon no termination shall have occurred
pursuant to this Section 10.1(f) and this Agreement shall remain in effect
in accordance with its terms (except as the Per Share Merger Consideration
shall have been so modified), and any references in this Agreement to "Per
Share Merger Consideration" shall thereafter be deemed to refer to the Per
Share Merger Consideration as adjusted pursuant to this Section 10.1(f).
For purposes of this Section 10.1(f), the following terms shall have the
meanings indicated:
"Average Closing Price" means the average of the last
reported sale prices per share of Acquiror Common Stock as reported on the
NYSE (as reported in The Wall Street Journal or, if not reported therein,
in another mutually agreed upon authoritative source) for the 10
consecutive trading days on the NYSE ending at the close of trading on the
Determination Date.
"Index Group" means the group of companies included in the
S&P Financials Index, but excluding Acquiror and the Company, the common
stock of all of which shall be publicly traded and as to which there shall
not have been, since the Starting Date and before the Determination Date,
an announcement of a proposal for such company to be acquired or for such
company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization as of the
Starting Date. In the event that the common stock of any such company
ceases to be publicly traded or any such announcement is made with respect
to any such company, such company will be removed from the Index Group, and
the weights assigned to the remaining companies included in the Index Group
will be appropriately adjusted for purposes of determining the Index Price.
"Determination Date" shall mean the date that is three days
prior to the anticipated Closing Date.
"Index Price" on a given date shall mean the weighted
average of the closing prices of the companies comprising the Index Group.
"Starting Date" shall mean the last full day on which the
NYSE was open for trading prior to the execution of this Agreement.
"Starting Price" shall mean the last reported sale price per
share of Acquiror Common Stock on the Starting Date, as reported by NYSE
(as reported in The Wall Street Journal or, if not reported therein, in
another mutually agreed upon authoritative source).
If any company belonging to the Index Group or Acquiror
declares or effects a stock dividend, reclassification, recapitalization,
split-up, combination, exchange of shares or similar transaction between
the Starting Date and the Determination Date, the prices for the common
stock of such company or Acquiror shall be appropriately adjusted for the
purposes of applying this Section 10.1(f).
Section 10.2 Effect of Termination. In the event of
termination of this Agreement by either Acquiror or the Company as provided
in Section 10.1, this Agreement shall forthwith become void and have no
effect except that (i) the last sentence of Section 8.3 and this Section
10.2 shall survive any termination of this Agreement and (ii) that
notwithstanding anything to the contrary contained in this Agreement, no
party shall be relieved or released from any liabilities or damages arising
out of its willful breach of any provision of this Agreement.
Section 10.3 Amendment. Subject to compliance with
applicable Law, this Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with
the Merger by the stockholders of either the Company or Acquiror; provided,
however, that after any approval of the transactions contemplated by this
Agreement by the Company's stockholders, there may not be, without further
approval of such stockholders, any amendment of this Agreement which
reduces the amount or changes the form of the consideration to be delivered
to the Company's stockholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 10.4 Extension; Waiver. At any time prior to the
Effective Time, each of the parties hereto, by action taken or authorized
by its Board of Directors, may, to the extent legally allowed, (a) extend
the time for the performance of any of the obligations or other acts of the
other party hereto, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions of the other 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 a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Survival of Representations and Warranties. No
representations or warranties contained herein shall survive beyond the
Effective Time. This Section 11.1 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the
Effective Time.
Section 11.2 Notices. All notices or other communications
hereunder shall be deemed to have been duly given and made if in writing
and if delivered personally or if sent by registered or certified mail
(return receipt requested), or by a national courier service (providing
proof of delivery) or by telecopier (with confirmation of receipt), to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(a) If to Acquiror, to:
Household International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Senior Vice President and General
Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
Beneficial Corporation
One ▇▇▇▇▇▇▇▇▇ Center
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇
& ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notification shall be deemed delivered (i) upon receipt, if
delivered personally, (ii) three business days after deposit in the mails,
if sent by registered or certified mail, (iii) on the next business day, if
sent by national courier service for the next business day delivery, or
(iv) the business day received, if sent by telecopier.
Section 11.3 Descriptive Headings. The headings contained in
this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 11.4 Entire Agreement; No Third-Party Beneficiary.
This Agreement (including the Exhibits, Disclosure Schedules and other
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties or any of them, with respect to
the subject matter hereof; and (b) except for the provisions of Section 8.9
hereof, is not intended to confer upon any other person other than the
signatories to this Agreement any rights or remedies hereunder or
thereunder.
Section 11.5 Interpretation. When a reference is made in
this Agreement to an Article, Section or Annex, such reference shall be to
an Article or Section of, or an Annex to, this Agreement unless otherwise
indicated. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words
"without limitation". The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party
to whom such information is to be made available. All terms defined in this
Agreement shall have the defined meanings used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including
(in the case of agreements or instruments) by waiver or consent and (in the
case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns
and, in the case of an individual, to his heirs and estate, as applicable.
Section 11.6 Severability. If any provision of this
Agreement or the application thereof to any Person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof, or the application of such
provision to Persons or circumstances other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect
and shall in no way be affected, impaired or invalidated thereby. Upon any
such determination, the parties shall negotiate in good faith in an effort
to agree upon a suitable and equitable substitute provision to effect the
original intent of the parties.
Section 11.7 Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of Law or otherwise by any of
the parties without the prior written consent of the other parties. Any
assignment in violation of the preceding sentence shall be void. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective
successors and assigns.
Section 11.8 Governing Law. This Agreement shall be governed
by and construed in accordance with the Laws of the State of Delaware,
without giving effect to the provisions thereof relating to conflicts of
Law.
Section 11.9 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any of the provisions of
this Agreement were not performed in accordance with the terms hereof and
that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at Law or in equity.
Section 11.10 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
HOUSEHOLD ACQUISITION CORPORATION II
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Secretary
BENEFICIAL CORPORATION
By: /s/ ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer