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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): AUGUST 24, 1997
ACC CONSUMER FINANCE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-27268 33-0682821
(Commission File No.) (IRS Employer Identification No.)
12750 HIGH BLUFF DRIVE, SUITE 320
SAN DIEGO, CALIFORNIA 92130
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (619) 793-6300
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ITEM 5. OTHER EVENTS.
On August 24, 1997, ACC Consumer Finance Corporation, a Delaware
corporation ("ACC"), entered into a definitive agreement (the "Merger
Agreement") with Household International, Inc. ("Household") and a subsidiary of
Household, pursuant to which ACC will become a wholly-owned subsidiary of
Household by way of a merger (the "Merger") of the subsidiary of Household with
and into ACC. The Merger is expected to be completed prior to December 31, 1997.
The terms of the Merger Agreement provide that the stockholders of
ACC will receive consideration equal to $22 for each share of ACC common stock.
This consideration will include not less than $2 in cash and not more than $4 in
cash, with the remainder paid in shares of Household common stock. The Household
common stock will be valued based on the volume weighted average price of
Household common stock during the 10-day trading period ending one day prior to
the ACC stockholders' meeting to approve the Merger Agreement and the Merger.
The Merger is intended to qualify as a tax-free reorganization, within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended, with
respect to the portion of the consideration to be paid in Household stock; and
will be accounted for as a purchase. The closing of the Merger is subject to
stockholder approval at the stockholders' meeting, and the satisfaction or
waiver of customary closing conditions. In connection with the execution of the
Merger Agreement, certain stockholders of ACC, and certain members of ACC
management, entered into voting agreements relating to their shares of ACC
common stock (constituting approximately 70 percent of ACC's outstanding common
stock).
The foregoing description of the transactions involving ACC and
Household and the various agreements entered into in connection therewith is
qualified in its entirety by reference to the Merger Agreement and the forms of
stockholder agreements entered into in connection therewith, copies of which are
filed as an exhibit to this Form 8-K and are incorporated herein by this
reference.
2.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
2.1 Agreement and Plan of Merger dated as of
August 24, 1997 among Household
International, Inc., Household Auto
Corporation and ACC Consumer Finance
Corporation.
99.1 Press Release dated August 25, 1997
3.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACC CONSUMER FINANCE CORPORATION
Dated: August 26, 1997 By: /s/ GARY S. BURDICK
--------------------------------
Gary S. Burdick
President
4.
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INDEX TO EXHIBITS
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PAGE NO.
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2.1 Agreement and Plan of Merger dated as of August 24, 1997 among
Household International, Inc., Household Auto Corporation and ACC
Consumer Finance Corporation.
99.1 Press Release dated August 25, 1997
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5.
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of August 24, 1997
by and among
HOUSEHOLD INTERNATIONAL, INC.,
HOUSEHOLD AUTO CORPORATION
and
ACC CONSUMER FINANCE CORPORATION
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS.........................................................................1
SECTION 1.1 Definitions....................................................1
ARTICLE II
THE MERGER..........................................................................8
SECTION 2.1 The Merger.....................................................8
SECTION 2.2 Effective Time of the Merger...................................8
SECTION 2.3 Closing........................................................8
SECTION 2.4 Effects of the Merger..........................................8
SECTION 2.5 Certificate of Incorporation and By-Laws.......................8
SECTION 2.6 Directors......................................................8
SECTION 2.7 Officers.......................................................9
ARTICLE III
CONVERSION OF SHARES 9
SECTION 3.1 Conversion of Capital Stock of Merger Sub......................9
SECTION 3.2 Conversion of Capital Stock of Garage..........................9
SECTION 3.3 Exchange of Certificates......................................10
SECTION 3.4 Dividends, Fractional Shares, Etc.............................11
SECTION 3.5 Garage Stock Options..........................................13
SECTION 3.6 Tax Treatment.................................................14
SECTION 3.7 Appraisal Rights..............................................14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GARAGE..........................................14
SECTION 4.1 Organization and Qualifications; Subsidiaries.................15
SECTION 4.2 Certificate of Incorporation and Bylaws.......................15
SECTION 4.3 Capitalization................................................15
SECTION 4.4 Authority Relative to This Agreement .........................16
SECTION 4.5 No Conflict; Required Filings and Consents; Certain
Contracts.....................................................16
SECTION 4.6 Compliance ...................................................17
SECTION 4.7 SEC Reports and Financial Statements..........................17
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SECTION 4.8 Absence of Certain Changes or Events.........................18
SECTION 4.9 Litigation...................................................18
SECTION 4.10 Intentionally Omitted........................................18
SECTION 4.11 Employee Benefit Plans.......................................18
SECTION 4.12 Labor........................................................20
SECTION 4.13 Insurance....................................................20
SECTION 4.14 Brokers......................................................21
SECTION 4.15 Taxes........................................................21
SECTION 4.16 Environmental Matters........................................22
SECTION 4.17 Loans........................................................22
SECTION 4.18 Intellectual Property........................................23
SECTION 4.19 Books and Records............................................23
SECTION 4.20 Transactions with Affiliates.................................24
SECTION 4.21 Opinion of Financial Advisor.................................24
SECTION 4.22 Reliance.....................................................24
SECTION 4.23 Disclosure...................................................24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HOME AND MERGER SUB............................24
SECTION 5.1 Organization and Qualifications; Subsidiaries................24
SECTION 5.2 Charter and Bylaws...........................................25
SECTION 5.3 Capitalization...............................................25
SECTION 5.4 Authority Relative to This Agreement ........................25
SECTION 5.5 No Conflict; Required Filings and Consents...................25
SECTION 5.6 Compliance...................................................26
SECTION 5.7 SEC Reports and Financial Statements.........................26
SECTION 5.8 Absence of Certain Changes or Events.........................27
SECTION 5.9 Litigation...................................................27
SECTION 5.10 Intentionally Omitted........................................28
SECTION 5.11 Insurance....................................................28
SECTION 5.12 Brokers......................................................28
SECTION 5.13 Taxes........................................................28
SECTION 5.14 Reliance.....................................................29
SECTION 5.15 Financial Capability ........................................29
SECTION 5.16 Disclosure...................................................29
ARTICLE VI
COVENANTS........................................................................29
SECTION 6.1 Notification of Certain Matters..............................29
SECTION 6.2 Further Action, Reasonable Efforts; Consents and Approvals...29
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SECTION 6.3 Conduct of Business of Garage Pending the Closing............30
SECTION 6.4 Conduct of Business of Home Pending the Closing..............32
SECTION 6.5 Access to Information........................................32
SECTION 6.6 No Solicitation..............................................33
SECTION 6.7 Stockholder Meeting..........................................34
SECTION 6.8 Registration Statements and Joint Proxy
Statement/Prospectus.........................................34
SECTION 6.9 Letters of Accountants.......................................35
SECTION 6.10 Intentionally Omitted........................................35
SECTION 6.11 Public Announcements.........................................35
SECTION 6.12 Blue Sky.....................................................36
SECTION 6.13 NYSE Listing.................................................36
SECTION 6.14 Affiliates...................................................36
SECTION 6.15 Indemnification with Respect to the Registration Statement...36
SECTION 6.16 Directors' and Officers' Indemnification and Insurance.......38
SECTION 6.17 Employee Matters.............................................39
SECTION 6.18 Tax-Free Reorganization......................................39
SECTION 6.19 Form S-8.....................................................39
ARTICLE VII
CONDITIONS TO THE MERGER.........................................................39
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger...40
SECTION 7.2 Conditions to Obligations of Garage to Effect the Merger.....40
SECTION 7.3 Conditions to Obligations of Home and Merger Sub to Effect
the Merger...................................................41
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING.......................................42
SECTION 8.1 Termination..................................................42
SECTION 8.2 Effect of Termination........................................43
SECTION 8.3 Amendment or Supplement......................................43
SECTION 8.4 Extension of Time, Waiver, Etc...............................44
SECTION 8.5 Termination Fee..............................................44
ARTICLE IX
MISCELLANEOUS.....................................................................44
SECTION 9.1 Governing Law................................................44
SECTION 9.2 Entire Agreement.............................................45
SECTION 9.3 Modification; Waiver.........................................45
SECTION 9.4 Notices......................................................45
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SECTION 9.5 Expenses.....................................................46
SECTION 9.6 Assignment...................................................46
SECTION 9.7 No Survival..................................................46
SECTION 9.8 Severability.................................................47
SECTION 9.9 Successors and Assigns; Third Parties........................47
SECTION 9.10 Counterparts.................................................47
SECTION 9.11 Interpretation; References...................................47
SECTION 9.12 Dispute Resolution and Jurisdiction..........................47
SECTION 9.13 Exhibits and Schedules.......................................48
SECTION 9.14 Attorneys' Fees..............................................48
SECTION 9.15 Waiver of Jury Trial.........................................48
SECTION 9.16 Further Assurances...........................................48
SECTION 9.17 Negotiation of Agreement.....................................48
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DISCLOSURE SCHEDULES
Schedule 4.1 -- Subsidiary
Schedule 4.5 -- Conflicts
Schedule 4.6 -- Compliance
Schedule 4.8 -- Absence of Certain Changes or Events
Schedule 4.9 -- Litigation
Schedule 4.11 -- Employee Benefit Plans
Schedule 4.12 -- Labor
Schedule 4.13 -- Insurance
Schedule 4.14 -- Brokers
Schedule 4.17 -- Loans
Schedule 4.20 -- Transactions with Affiliates
Schedule 6.3 -- Conduct of Business of Garage Pending the Closing
Schedule 6.16 -- Directors' and Officers' Indemnification and
Insurance
EXHIBITS
Exhibit A -- Form of Rule 145 Affiliate Agreement
Exhibit B -- Form of Legal Opinion of J. W. Blenke, Counsel to
Home and Merger Sub
Exhibit C -- Form of Legal Opinion of Cooley Godward LLP, Counsel
to Garage
Exhibit D -- Forms of Stockholder Agreements
Exhibit E -- Form of Management Stockholder Agreement
Exhibit F -- Form of Tax Representation Letters
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 24, 1997 (the
"Agreement"), by and among HOUSEHOLD INTERNATIONAL, INC., a Delaware
corporation ("Home"), HOUSEHOLD AUTO CORPORATION, a Delaware corporation
and a wholly-owned subsidiary of Home ("Merger Sub"), and ACC CONSUMER
FINANCE CORPORATION, a Delaware corporation ("Garage").
WHEREAS, Home, Merger Sub and Garage have determined that the merger
of Merger Sub with and into Garage on the terms set forth herein (the
"Merger"), with Garage surviving as a wholly-owned subsidiary of Home, is
advisable and in the best interests of their respective corporations and
stockholders and have approved this Agreement;
WHEREAS, to satisfy a condition to Home entering into this Agreement
and incurring the obligations set forth herein, concurrently with the
execution and delivery of this Agreement, certain stockholders of Garage
have entered into Stockholder Agreements with Home pursuant to which such
stockholders have agreed, on the terms and subject to conditions thereof,
to vote certain of their shares of Garage Common Stock;
WHEREAS, to satisfy a condition to Home entering into this Agreement
and incurring the obligations set forth herein, concurrently with the
execution and delivery of this Agreement, certain management stockholders
of Garage have entered into a Management Stockholder Agreement with Home
pursuant to which such stockholders have agreed, on the terms and subject
to conditions thereof, to vote certain of their shares of Garage Common
Stock;
WHEREAS, by executing this Agreement, the parties intend to adopt a
plan of reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The capitalized terms used in this
Agreement and not otherwise defined shall have the following meanings
(unless the context otherwise requires, such
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capitalized terms shall include the singular and plural and the conjunctive
and disjunctive forms of the terms defined):
"Acquisition Proposal" shall have the meaning set forth in Section
6.6.
"Benefit Arrangement" shall mean any benefit arrangement,
obligation, custom, or practice to provide benefits, other than salary, as
compensation for services rendered, to present or former directors,
employees, agents, or independent contractors, other than any obligation,
arrangement, custom or practice that is a Benefit Plan, including, without
limitation, employment agreements, severance agreements, executive
compensation arrangements, including but not limited to stock options,
restricted stock rights and performance unit awards, incentive programs or
arrangements, sick leave, vacation pay, severance pay policies, plant
closing benefits, salary continuation for disability, consulting, or other
compensation arrangements, workers' compensation, retirement, deferred
compensation, bonus, stock purchase, hospitalization, medical insurance,
life insurance, tuition reimbursement or scholarship programs, employee
discounts, employee loans, employee banking privileges, any plans subject
to Section 125 of the Code, and any plans providing benefits or payments in
the event of a change of control, change in ownership, or sale of a
substantial portion (including all or substantially all) of the assets of
any business or portion thereof, in each case with respect to any present
or former employees, directors, or agents. Benefit Arrangements exclude any
employment agreements that would, by their terms, terminate on or before
the Closing Date and those that could be terminated immediately after the
Closing Date without additional expense to the Garage Companies.
"Benefit Plan" shall have the meaning given in Section 3(3) of ERISA
and shall include comparable plans subject to the laws of foreign
countries.
"Blue Sky Laws" shall have the meaning set forth in Section 4.5.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions in Chicago, Illinois or New York City,
New York are not required to be open.
"Cash Consideration" shall mean (a) the aggregate cash component of
the Merger Consideration determined by Home in accordance with Section
3.2(a) and Section 3.2(c) of this Merger Agreement plus (b)(x) the number
of Dissenting Shares multiplied by (y) $22 per share. For purposes of
making the foregoing calculation, Dissenting Shares shall be determined as
of the Effective Time.
"Certificate of Merger" shall have the meaning set forth in Section
2.2.
"Certificates" shall have the meaning set forth in Section 3.2.
"Claim" shall have the meaning set forth in Section 6.16.
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"Closing" shall have the meaning set forth in Section 2.3.
"Closing Date" shall have the meaning set forth in Section 2.3.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidential Information" shall have the meaning set forth in
Section 6.5.
"Consents" shall have the meaning set forth in Section 6.2.
"Contract" shall mean, with respect to any Person, any note, bond,
indenture, lease, license, permit, franchise, deed of trust, mortgage, loan
agreement or other document, instrument, obligation or agreement, oral or
written, to which such Person or any of its subsidiaries is a party or by
which any of them or their assets or properties is bound or affected.
"DGCL" means the General Corporation Law of the State of Delaware.
"Dissenting Shares" shall have the meaning set forth in Section 3.7.
"Effective Day" shall mean the day on which the Effective Time
occurs.
"Effective Time" shall have the meaning set forth in Section 2.2.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended (including without limitation any successor act), and the
rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any Person that together with any of
the Garage Companies would be or was at any time treated as a single
employer under Section 414 of the Code or Section 4001 of ERISA and any
general partnership of which any of the Garage Companies is or has been a
general partner.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall have the meaning set forth in Section 3.3.
"Exchange Ratio" shall have the meaning set forth in Section 3.2.
"GAAP" shall mean generally accepted accounting principles.
"Garage 1995 Option Plan" shall have the meaning set forth in
Section 3.5.
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"Garage Benefit Arrangement" shall mean any Benefit Arrangement
sponsored or maintained by the Garage Companies or with respect to which
any of the Garage Companies has or may have any liability (whether actual,
contingent, with respect to any of its assets or otherwise), in each case
with respect to any present or former directors, employees, or agents of
the Garage Companies.
"Garage Common Stock" shall mean the common stock, par value, $.001
per share, of Garage.
"Garage Companies" shall mean Garage and any subsidiary of Garage
that currently has or previously had employees.
"Garage Directors' Option Plan" shall have the meaning set forth in
Section 3.5.
"Garage Financial Advisor" shall have the meaning set forth in
Section 4.14.
"Garage Meeting" shall have the meaning set forth in Section 6.7.
"Garage Option Plans" shall mean the Garage 1995 Option Plan and the
Garage Directors' Option Plan.
"Garage Plan" shall mean any Benefit Plan for which any of the
Garage Companies is the "plan sponsor" (as defined in Section 3(16)(B) of
ERISA) or any Benefit Plan maintained by any of the Garage Companies or to
which any of the Garage Companies is obligated to make payments, in each
case with respect to any present or former employees of the Garage
Companies. Garage Plan shall include any Qualified Plan terminated within
the preceding six years.
"Garage SEC Reports" shall have the meaning set forth in Section
4.7.
"Garage Stock Options" shall have the meaning set forth in Section
3.5.
"Garage Stockholder Approval" shall have the meaning set forth in
Section 6.7.
"Governmental Authority" shall mean any government or any agency,
bureau, board, commission, court, judicial or quasi-judicial body,
department, authority, official, political subdivision, tribunal or other
instrumentality of any government, whether Federal, state or local,
domestic or foreign.
"Home Common Stock" shall mean Common Stock, par value $1.00 per
share, of Home.
"Home Registration Statement" shall have the meaning set forth in
Section 6.8.
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"Home SEC Reports" shall have the meaning set forth in Section 5.7.
"Home Stock Plans" shall have the meaning set forth in Section 5.3.
"HSR Act" shall have the meaning set forth in Section 4.5.
"IRS" shall mean the United States Internal Revenue Service or any
successor agency.
"Indemnified Officers/Directors" shall have the meaning set forth in
Section 6.16.
"Indemnified Party" shall have the meaning set forth in Section
6.15.
"Indemnifying Party" shall have the meaning set forth in Section
6.15.
"Intellectual Property" shall have the meaning set forth in Section
4.18.
"Law" shall mean any law, statute, rule, regulation, ordinance,
decree or order of any Governmental Authority.
"Lien" shall mean any mortgage, pledge, assessment, security
interest, lease, sublease, lien, adverse claim, levy, charge, option, right
of others or restriction (whether on voting, sale, transfer, disposition or
otherwise) or other encumbrance of any kind, whether imposed by agreement,
understanding, law or equity, or any conditional sale contract, title
retention contract or other contract to give or to refrain from giving any
of the foregoing.
"Loans" shall have the meaning set forth in Section 4.17.
"Losses" shall have the meaning set forth in Section 6.16.
"Management Stockholder Agreement" shall mean an agreement among
certain stockholders of Garage and Home in the form attached hereto as
Exhibit E.
"Material Adverse Effect" shall mean, with respect to any Person, a
material adverse effect on (i) the validity or enforceability of this
Agreement, (ii) the ability of such Person to perform its obligations under
this Agreement or (iii) the business, assets, condition or results of
operations of the Person and its subsidiaries, taken as a whole; provided,
however, that any adverse change, event or effect that is proximately
caused (i) by conditions affecting the United States economy generally or
the economy of the regions in which the Person conducts a material part of
its business, (ii) by conditions affecting the industry in which the Person
competes, (iii) by the announcement of the Merger or by virtue of the
Merger Agreement, including, without limitation, compliance by such Person
with its covenants set forth in this Agreement or (iv) by the breach by the
other Person of any covenant or obligation set forth in this Agreement
shall not be taken into account in determining whether there has been a
Material Adverse Effect.
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"Material Subsidiary" shall mean, with respect to any Person, a
subsidiary of such Person that (i) constitutes a "significant subsidiary"
of such Person, within the meaning of Rule 1-02 of Regulation S-X of the
SEC, (ii) has a direct or indirect ownership interest in any other
subsidiary of such Person that is a Material Subsidiary of such Person, or
(iii) is otherwise material to the business or operations of such Person
and its subsidiaries, taken as a whole.
"Merger" shall have the meaning set forth in the preamble to this
Agreement.
"Merger Consideration" shall have the meaning set forth in Section
3.2.
"Merger Filing" shall have the meaning set forth in Section 2.2.
"NYSE" means the New York Stock Exchange, Inc.
"Notices" shall have the meaning set forth in Section 9.4.
"Option" shall mean, with respect to any Person, any option,
warrant, call, right, subscription, convertible or exchangeable security or
other right, agreement, arrangement or commitment of any kind or character
to which such Person or any of its subsidiaries is a party relating to the
issued or unissued capital stock of such Person or any of its subsidiaries,
or obligating such Person or any of its subsidiaries to issue, transfer,
grant or sell any shares of capital stock of, or other equity interest in,
or securities convertible into or exchangeable for any capital stock or
other equity interest in, such Person or any of its subsidiaries.
"Organizational Documents" shall mean (i) with respect to a
corporation, its certificate or articles of incorporation and bylaws, (ii)
with respect to any limited liability company, its certificate of
formation, articles of organization, regulations, operating agreement and
limited liability company agreement, as applicable, (iii) with respect to
any limited partnership, its certificate of limited partnership and limited
partnership agreement, (iv) with respect to any general partnership, its
partnership agreement, and (v) all other similar organizational documents.
"Person" shall mean any natural person, corporation, general
partnership, limited partnership, limited liability company, limited
liability partnership, proprietorship, trust, union, association, court,
tribunal, agency, government, department, commission, self-regulatory
organization, arbitrator, board, bureau, instrumentality or other entity,
enterprise, authority or business organization.
"Proxy Statement/Prospectus" shall have the meaning set forth in
Section 6.8.
"Qualified Plan" shall mean any Garage Plan that meets, purports to
meet, or is intended to meet the requirements of Section 401(a) of the
Code.
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"Representatives" means, with respect to any Person, the officers,
directors, employees, auditors and other agents and representatives of such
Person.
"Rule 145 Affiliate Agreement" shall have the meaning set forth in
Section 6.14.
"Rule 145 Affiliates" shall have the meaning set forth in Section
6.14.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stockholder Agreement" shall mean the agreements among certain
stockholders of Garage and Home in the forms attached hereto as Exhibit D.
"Suit" shall have the meaning set forth in Section 9.12.
"Surviving Corporation" shall have the meaning set forth in Section
2.1.
"Tax" or "Taxes" shall mean all Federal, state, local and foreign
taxes and other assessments and governmental charges of a similar nature
(whether imposed directly or through withholdings), including any interest,
penalties and additions to Tax applicable thereto.
"Tax Returns" shall mean all Federal, state, local and foreign
returns, declarations, statements, reports, schedules, forms and
information returns relating to Taxes, and all amendments thereto.
"Total Consideration" shall mean the sum of (i) the Cash
Consideration and (ii)(x) the product of the Exchange Ratio and the closing
price per share of Home Common Stock on the Effective Day multiplied by (y)
the total number of shares of Garage Common Stock issued and outstanding at
the Effective Time which are to be converted pursuant to Section 3.2(a)
into shares of Home Common Stock.
"Trading Day" shall mean a day on which Home Common Stock is traded
on the NYSE.
"Transactions" means the transactions contemplated by this Agreement
in Article II.
"Weighted Average Home Stock Price" shall have the meaning set forth
in Section 3.2.
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ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time, in accordance with the DGCL,
Merger Sub shall be merged with and into Garage in accordance with this
Agreement and the separate existence of Merger Sub shall cease. Garage
shall be the surviving corporation in the Merger (hereinafter sometimes
referred to as the "Surviving Corporation").
SECTION 2.2 Effective Time of the Merger. Upon the terms and subject
to the conditions hereof, a certificate of merger (the "Certificate of
Merger") shall be duly prepared, executed and acknowledged by the Surviving
Corporation and thereafter delivered to the Secretary of State of the State
of Delaware, for filing on the Closing Date (as defined in Section 2.3).
The Merger shall become effective as of the date and at such time as the
Certificate of Merger pursuant to Section 251 of the DGCL and any other
documents necessary to effect the Merger in accordance with the DGCL are
duly filed (the "Merger Filing") with the Secretary of State of the State
of Delaware or at such subsequent date or time as shall be agreed by Home
and Garage and specified in the Certificate of Merger (the time the Merger
becomes effective pursuant to the DGCL being referred to herein as the
"Effective Time").
SECTION 2.3 Closing. Subject to the satisfaction or waiver of all of
the conditions to closing contained in Article VII, the closing of the
Merger (the "Closing") will take place at 10:00 a.m., eastern time, on a
date to be specified by the parties, which shall be no later than the first
Business Day after the satisfaction or waiver of the conditions to Closing
contained in Article VII, at the offices of Wilmer, Cutler & Pickering,
2445 M Street, N.W., Washington, D.C. 20037, unless another date, time or
place is agreed to in writing by the parties hereto. The date and time at
which the Closing occurs is referred to herein as the "Closing Date."
SECTION 2.4 Effects of the Merger. The Merger shall have the effects
set forth in the DGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of Garage and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Garage
and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.5 Certificate of Incorporation and By-Laws. Subject to
Section 6.16, the Certificate of Incorporation of Merger Sub in effect
immediately prior to the Effective Time shall become the Certificate of
Incorporation of the Surviving Corporation. The By-Laws of Merger Sub in
effect immediately prior to the Effective Time shall become the By-Laws of
the Surviving Corporation.
SECTION 2.6 Directors. The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office from the
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Effective Time in accordance with the Certificate of Incorporation and
By-Laws of the Surviving Corporation and until his or her successor is duly
elected and qualified.
SECTION 2.7 Officers. The officers of Merger Sub immediately prior
to the Effective Time shall be the initial officers of the Surviving
Corporation, each to hold office from the Effective Time in accordance with
the Certificate of Incorporation and By-Laws of the Surviving Corporation
and until his or her successor is duly appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion of Capital Stock of Merger Sub. At the
Effective Time, each issued and outstanding share of common stock, par
value $1.00 per share, of Merger Sub shall be converted into and become
one fully paid and nonassessable share of common stock, par value $1.00
per share, of the Surviving Corporation.
SECTION 3.2 Conversion of Capital Stock of Garage.
(a) Except as otherwise provided in Section 3.4 and Section
3.7 and subject to Section 3.2(c), at the Effective Time, each issued and
outstanding share of Garage Common Stock shall be converted into the right
to receive (i) $2.00 in cash and (ii) that number of shares of Home Common
Stock equal to the Exchange Ratio (together, the "Merger Consideration").
(b) The "Exchange Ratio" shall mean the number determined by
dividing (x) $20 by (y) the Weighted Average Home Stock Price, rounding the
result to the nearest 1/100,000 per share. The "Weighted Average Home
Stock Price" shall mean (i) the sum of the daily volume weighted average
prices per share of Home Common Stock on the NYSE as reported by the
Bloomberg Equity AQR Screen (and confirmed by J.P. Morgan & Co. and Garage
Financial Advisor) for each of the ten consecutive Trading Days ending on
the Trading Day that is the Trading Day prior to the Garage Meeting (the
"Pricing Period"), divided by (ii) ten. In all events the Pricing Period
shall begin on the 11th Trading Day preceding the date on which the Garage
Meeting has been scheduled by notice to the stockholders, unless the
meeting is adjourned or rescheduled in which case the Pricing Period shall
begin eleven (11) Trading Days before the date of the resumption of the
adjourned meeting or the rescheduled meeting date.
(c) Notwithstanding anything to the contrary, Home shall have
the one-time option to elect to increase the cash portion of the Merger
Consideration up to an additional $2 per share of Garage Common Stock in
lieu of a corresponding amount of the Home Common Stock constituting the
Merger Consideration, which option shall be exercisable through a limited
irrevocable written notice of exercise, which may expressly be modified by
Home as required consistent with Section 3.2(d) hereof, delivered to Garage
on or before the close of business on
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the day preceding the first day of the Pricing Period. Any increase in the
cash portion of the Merger Consideration pursuant to this Section 3.2(c)
shall result in a corresponding decrease in the dollar amount set forth in
Section 3.2(b)(x) used to calculate the Exchange Ratio.
(d) Notwithstanding anything herein to the contrary, if as of
the close of the NYSE on the Effective Day, the Cash Consideration exceeds
19.85% of the Total Consideration, then, if possible, the cash portion of
the Merger Consideration shall be reduced so that the Cash Consideration
does not exceed 19.85% of the Total Consideration; provided, however, in
no event shall the cash portion of the Merger Consideration be reduced so
that shares of Garage Common Stock converted as provided in Section 3.2(a)
above will receive less than $2 per share in cash. If the cash portion is
reduced, the additional stock portion of the Merger Consideration paid to
compensate for such reduction shall equal that number of shares of Home
Common Stock equal to (x) the dollar amount per share by which the cash
portion of the Merger Consideration is reduced, divided by (y) the closing
price per share of Home Common Stock on the Effective Day.
(e) As a result of the Merger and without any action on the
part of the holders thereof, at the Effective Time, all shares of Garage
Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of shares of
Garage Common Stock shall thereafter cease to have any rights with respect
to such shares of Garage Common Stock, except the right to receive, without
interest, the Merger Consideration and cash for fractional shares of Home
Common Stock in accordance with Section 3.4 upon the surrender of a
certificate that, immediately prior to the Effective Time, represented an
outstanding share or shares of Garage Common Stock or, in the case of
book-entry securities, appropriate documentation of the book entry
securities maintained through the Depository Trust Company (a
"Certificate").
(f) Notwithstanding anything contained in this Section 3.2 to
the contrary, each share of Garage Common Stock issued and held in Garage's
treasury or by a wholly-owned subsidiary of Garage immediately prior to the
Effective Time, and each share of Garage Common Stock owned by Home or
Merger Sub immediately prior to the Effective Time, if any, shall, by
virtue of the Merger, cease to be outstanding and shall be canceled and
retired and shall cease to exist without payment of any consideration
therefor.
SECTION 3.3 Exchange of Certificates.
(a) Promptly after the Effective Time, Home shall deposit (or
cause to be deposited) with a bank or trust company to be designated by
Home and reasonably acceptable to Garage (the "Exchange Agent"), for the
benefit of the holders of shares of Garage Common Stock, for exchange in
accordance with this Article III, (i) cash in an amount sufficient to pay
the cash portion of the Merger Consideration and cash in lieu of fractional
shares and (ii) certificates representing the aggregate number of shares of
Home Common Stock that may be issued in respect of shares of Garage Common
Stock in the Merger. Home Common Stock into which
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Garage Common Stock shall be converted pursuant to the Merger shall be
deemed to have been issued at the Effective Time.
(b) Promptly after the Effective Time and in any event within
five Business Days, Home shall cause the Exchange Agent to mail to each
holder of record of Garage Common Stock immediately prior to the Effective
Time (i) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be
in customary form with such customary provisions as Home may reasonably
specify (the "Letter of Transmittal") and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Home shall have the Letter of Transmittal available for
stockholders of Garage to obtain, at such stockholders' request, as of the
close of business on the Closing Date.
(c) Upon surrender of a Certificate, in such form and with
such (i) endorsements, stock powers and signature guarantees as may be
required by the Letter of Transmittal, or (ii) an appropriate guarantee of
delivery of such Certificate from a member of any registered national
securities exchange or of the National Association of Securities Dealers,
Inc. or a commercial bank or trust company in the United States as may be
required by the Letter of Transmittal, for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Home,
together with the Letter of Transmittal, duty executed, and such other
documents as Home or the Exchange Agent shall reasonably request, the
holder of such Certificate shall be entitled to receive in exchange
therefor, (i) a certified or bank cashier's check in an amount equal to the
cash which such holder has the right to receive pursuant to the provisions
of this Article III and (ii) a certificate representing the number of
shares of Home Common Stock which such holder has the right to receive
pursuant to the provisions of this Article III (in each case, less the
amount of any required withholding taxes), and the Certificate so
surrendered shall forthwith be cancelled. Until surrendered as contemplated
by this Section 3.3(c), each Certificate shall be deemed at any time after
the Effective Time to represent only the right to receive the Merger
Consideration with respect to the shares of Garage Common Stock formerly
represented thereby.
SECTION 3.4 Dividends, Fractional Shares, Etc.
(a) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared after the Effective Time on Home
Common Stock shall be paid to the holder of any unsurrendered Certificates
until such Certificates are surrendered for exchange as provided in this
Article III. Subject to the effect of applicable laws, following the
surrender of any such Certificate, there shall be paid, without interest,
to the Person in whose name the certificates representing the shares of
Home Common Stock into which the shares of Garage Common Stock formerly
represented by such Certificate were converted are registered, (i) at the
time of such surrender, the amount of all dividends and other distributions
with a record date after the Effective Time therefore payable with respect
to such whole shares of Home Common Stock and not paid, less the amount of
any withholding taxes which may be required thereon, and
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(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect
to such whole shares of Home Common Stock, less the amount of any
withholding taxes which may be required thereon.
(b) No fractional shares of Home Common Stock shall be issued
in the Merger. All fractional shares of Home Common Stock that a holder of
shares of Garage Common Stock would otherwise be entitled to receive as a
result of the Merger shall be aggregated and, if a fractional share results
from such aggregation, such holder shall be entitled to receive, in lieu
thereof, an amount in cash determined by multiplying (i) the fraction of a
share of Home Common Stock to which such holder would otherwise have been
entitled by (ii) the Weighted Average Home Stock Price. No interest will be
paid or will accrue on any cash paid or payable in lieu of any fractional
shares of Home Common Stock.
(c) At and after the Effective Time, there shall be no further
registration of transfers of shares of Garage Common Stock. If, after the
Effective Time, Certificates are presented to the Surviving Corporation,
they shall be cancelled and exchanged for the consideration provided for,
and in accordance with the procedures set forth, in this Article III.
Certificates surrendered for exchange by any Person constituting an
"affiliate" of Garage for purposes of Rule 145(c) under the Securities Act
shall not be exchanged until Home has received a written Rule 145 Affiliate
Agreement from such Person as provided in Section 6.14.
(d) If any portion of the Merger Consideration is to be paid
to a Person other than the registered holder of the shares of Garage Common
Stock represented by the Certificate or Certificates surrendered in
exchange therefor, it shall be a condition to such payment that the
Certificate or Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting
such payment shall pay to the Exchange Agent any transfer or other taxes
required as a result of such payment to a Person other than the registered
holder of such Certificates or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(e) Any portion of the Merger Consideration or cash payable in
lieu of fractional shares made available to the Exchange Agent pursuant to
this Article III that remains unclaimed by the former holders of shares of
Garage Common Stock one year after the Effective Time shall be delivered to
Home. Any such holder who has not theretofore exchanged his Certificates
for the Merger Consideration in accordance with this Article III shall
thereafter look only to Home for payment of the applicable Merger
Consideration, cash in lieu of fractional shares and unpaid dividends and
distributions on the Home Common Stock deliverable in respect thereof,
determined pursuant to this Agreement, in each case, without interest. None
of Home, Garage or the Surviving Corporation shall be liable to any former
holder of shares of Garage Common Stock for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar
laws. Any amounts remaining unclaimed by holders of shares of Garage Common
Stock five years after the Effective Time (or such earlier date immediately
prior to such
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time as such amounts would otherwise escheat to or become the property of
any governmental entity) shall, to the extent permitted by applicable law,
become the property of Home free and clear of any claims or interest of any
person previously entitled thereto.
(f) In the event that any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Home, the posting by such Person of a bond in a customary
amount as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the applicable Merger
Consideration, cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Home Common Stock deliverable in respect thereof
pursuant to this Agreement.
(g) If at any time during the period between the date of this
Agreement and the Effective Time, any change in the outstanding shares of
capital stock of Home shall occur, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date
during such period, the number of shares of Home Common Stock constituting
all or part of the Merger Consideration shall be appropriately adjusted.
SECTION 3.5 Garage Stock Options.
(a) At the Effective Time, all options to purchase shares of
Garage Common Stock (each a "Garage Stock Option") then outstanding under
the Garage 1995 Stock Option Plan (the "Garage 1995 Option Plan"), whether
or not exercisable, will be assumed by Home. Each Garage Stock Option so
assumed by Home under this Agreement will continue to have, and be subject
to, the same terms and conditions set forth in the Garage 1995 Option Plan
immediately prior to the Effective Time and the stock option agreement by
which it is evidenced, except that (i) each such Garage Stock Option will
be exercisable for that number of whole shares (and no fractional shares)
of Home Common Stock equal to the product of the number of shares of Garage
Common Stock that were issuable upon the exercise of such Garage Stock
Option multiplied by the number determined by dividing (x) $22.00 by (y)
the Weighted Average Home Stock Price, rounded down to the nearest whole
cent (the "Option Exchange Ratio") and (ii) the per share exercise price
for the shares of Home Common Stock issuable upon the exercise of such
assumed Garage Stock Option will be equal to the quotient determined by
dividing the exercise price per share of Garage Common Stock at which such
Garage Stock Option would have been exercisable immediately prior to the
Effective Time by the Option Exchange Ratio, rounded up to the nearest
whole cent. As soon as reasonably practicable after the Effective Time,
Home will issue to each holder of an outstanding Garage Stock Option a
notice describing the foregoing assumption of such Garage Stock Option by
Home.
(b) Garage shall cause to be delivered to Home, prior to the
Effective Time, a list specifying those holders of Garage Stock Options
under the Garage 1995 Option Plan who have
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exercised stock appreciation rights (a "Specified Option"). As of the
Effective Time, each Specified Option shall be cancelled and Garage shall
pay with respect to each Specified Option that has not been exercised as of
the Effective Time, an amount of cash per share of Garage Common Stock
subject to the Specified Option equal to $22 less the per share exercise
price of the applicable Specified Option.
(c) On the date of the Garage Meeting, if Garage Stockholder
Approval has been obtained, Garage shall cause each outstanding Garage
Stock Option issued pursuant to the Garage 1995 Directors' Stock Option
Plan (the "Garage Directors' Option Plan") granted prior to the date of
this Agreement to immediately become fully vested and exercisable, if not
fully vested and exercisable at such time, and each such Garage Stock
Option then outstanding and not exercised shall be cancelled in exchange
for an amount of cash per share of Garage Common Stock for which such
Garage Stock Option was exercisable equal to $14.75 per share of such
Garage Stock Option.
SECTION 3.6 Tax Treatment. It is intended by the parties hereto that
the Merger shall constitute a reorganization within the meaning of Section
368 of the Code. The parties hereto adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Income Tax Regulations.
SECTION 3.7 Appraisal Rights. Garage Common Stock which is not voted
in favor of the Merger and with respect to which a demand for payment and
appraisal shall have been property made in accordance with Section
262(d)(1) of the DGCL ("Dissenting Shares") shall not be converted into the
right to receive any cash or stock portions of the Merger Consideration and
the holders of Dissenting Shares shall be entitled only to such rights as
may be granted by the DGCL; provided, however, that if a holder of
Dissenting Shares shall withdraw his, her or its demand for such payment
and appraisal or shall become ineligible for such payment and appraisal,
then as of the Effective Time or the occurrence of such event of withdrawal
or ineligibility, whichever later occurs, such holder's Dissenting Shares
shall cease to be Dissenting Shares and shall be converted into the right
to receive the cash portion and stock portion of the Merger Consideration
into which the Dissenting Shares would have been converted pursuant to
Section 3.2.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GARAGE
Except as disclosed or otherwise referred to in the attached Garage
Disclosure Schedules or in the documents identified in the Garage
Disclosure Schedules, Garage hereby represents and warrants to Home and
Merger Sub that:
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SECTION 4.1 Organization and Qualifications; Subsidiaries. Garage
and each subsidiary of Garage is a corporation, partnership or other legal
entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and has the
corporate power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its business as it is
now being conducted, except where failure to obtain such approvals would
not cause a Material Adverse Effect. Each of Garage and its subsidiaries is
duly qualified or licensed as a foreign corporation or partnership to
transact business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature
of its business makes such qualification or licensing necessary and where
the failure to so qualify would cause a Material Adverse Effect. Each
subsidiary of Garage or other person in which Garage has an equity interest
is listed on Schedule 4.1.
SECTION 4.2 Certificate of Incorporation and Bylaws. Complete and
correct copies of the certificate of incorporation and bylaws of Garage, as
amended to date, have been filed (or incorporated by reference) as Exhibits
3.1 and 3.2, respectively, to Garage's Annual Report on Form 10-K for the
year ended December 31, 1996. Such Organizational Documents are in full
force and effect and have not been amended or modified in any respect.
Garage is not in violation of any provision of its Organizational
Documents. No subsidiary of Garage is in violation of any provision of its
Organizational Documents.
SECTION 4.3 Capitalization. The authorized capital stock of Garage
consists of 18,000,000 shares of Garage Common Stock and 1,817,718 shares
of preferred stock. As of August 21, 1997, (a)(i) 8,485,728 shares of
Garage Common Stock were issued and outstanding, all of which were validly
issued, fully paid and nonassessable and (ii) no shares of preferred stock
were issued and outstanding; and (b)(i) 529,338 shares of Garage Common
Stock were reserved for issuance upon the exercise of outstanding stock
options granted pursuant to the Garage Options Plans and (ii) 20,662 shares
of Garage Common Stock were reserved for issuance pursuant to options
available for grant under the Garage Option Plans. Except as set forth
above, as of August 21, 1997, no shares of capital stock or other voting
securities of Garage were issued, reserved for issuance or outstanding and,
since such date, no shares of capital stock or other voting securities or
options in respect thereof have been issued except upon the exercise of
Garage Stock Options issued under the Garage Option Plans outstanding on
August 21, 1997. Except for the Garage Stock Options, there are not now,
and at the Closing there will not be, any Options. All shares of Garage
Common Stock subject to issuance as aforesaid, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of Garage
or any of its subsidiaries to repurchase, redeem or otherwise acquire any
shares of Garage Common Stock or any other shares of capital stock of
Garage or any of its subsidiaries, or make any material investment (in the
form of a loan, capital contribution or otherwise) in any subsidiary of
Garage or any other Person, other than a wholly-owned subsidiary of Garage
or a Person wholly-owned by one or more wholly-owned subsidiaries of
Garage. Each outstanding share of capital stock of each subsidiary of
Garage is
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duly authorized, validly issued, fully paid and nonassessable and each
such share owned by Garage or any subsidiary of Garage is owned free and
clear of any Liens.
SECTION 4.4 Authority Relative to This Agreement. Garage has all
necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and, subject to the
adoption of this Agreement by the stockholders of Garage as contemplated
herein and the Merger Filing, to consummate the Transactions. The execution
and delivery of this Agreement by Garage, the performance by Garage of its
obligations hereunder and the consummation by Garage of the Transactions
have been duly and validly authorized by all necessary corporate action and
approved by the affirmative vote of a majority of the entire Board of
Directors of Garage and no other corporate proceedings on the part of
Garage are necessary to authorize this Agreement or to consummate the
Transactions (other than the Garage Stockholder Approval and the Merger
Filing). This Agreement has been duly and validly executed and delivered by
Garage and, assuming the due authorization, execution and delivery thereof
by Home and Merger Sub, constitutes the legal, valid and binding obligation
of Garage, enforceable against Garage in accordance with its terms, except
as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity.
SECTION 4.5 No Conflict; Required Filings and Consents; Certain
Contracts.
(a) Except as set forth on Schedule 4.5, the execution and
delivery of this Agreement by Garage does not, and the performance of its
obligations under this Agreement and the consummation of the Transactions
by Garage will not, (i) conflict with, result in a breach of, cause a
dissolution or require the consent or approval of any Person under, or
violate any provision of, the Organizational Documents of Garage, (ii)
require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Authority, except for (A) applicable
requirements of the Exchange Act, the Securities Act, state securities or
"blue sky" laws ("Blue Sky Laws "), and the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (as amended, the "HSR Act"), in each case,
including any rules and regulations promulgated thereunder, (B) the Merger
Filing, (C) the Garage Stockholder Approval and (D) such other consents,
authorizations, filings, approvals and registrations which if not obtained
or made would not be material to Garage or Home or have a material adverse
effect on the ability of the parties to consummate the Merger, (iii)
subject to the making of the filings and obtaining the approvals identified
in clause (ii), conflict with or violate any Law, judgment, order, writ,
injunction or decree applicable to Garage or by which any property or asset
of Garage is bound or affected, which conflict or violation would result in
a loss of material benefits to or in any material liability to Garage, Home
or the Surviving Corporation, or (iv) conflict with or result in any breach
of or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, result in the loss by Garage or
modification in a manner materially adverse to Garage of any right or
benefit under, or give to others any right of termination, amendment,
acceleration, repurchase or repayment, increased payments or cancellation
of, or result in the creation of a Lien or other encumbrance on any Garage
Common Stock or any material property or asset of Garage or any subsidiary
of Garage pursuant to, any Contract of
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Garage, except, in each case, such as would not, individually or in the
aggregate have a material adverse effect on the ability of the parties to
consummate the Merger, or otherwise, individually or in the aggregate,
prevent Garage from performing its obligations under this Agreement in any
material respect, and would not, individually or in the aggregate, have a
Material Adverse Effect on Garage.
(b) Except as set forth in the Contracts filed (or
incorporated by reference) as exhibits to Garage's Annual Report on Form
10-K for the year ended December 31, 1996 or the other Garage SEC Reports
filed thereafter or except as set forth in Schedule 4.5, there are no
Contracts to which Garage or any subsidiary of Garage is a party or by
which Garage or any subsidiary of Garage or any asset of Garage or any
subsidiary of Garage is bound, which by its terms materially limits the
ability of Garage or any subsidiary of Garage, or to Garage's knowledge,
after consummation of the Transactions, would by its terms materially limit
the ability of Home or any of its affiliates, to engage in any business in
any area or for any period.
SECTION 4.6 Compliance. Except as set forth on Schedule 4.6, neither
Garage nor any Material Subsidiary of Garage is in conflict with, or in
default or violation of, (a) any Law applicable to such Person or by which
any property or asset of such Person is bound or affected, or (b) any
Contract to which Garage or any subsidiary of Garage is a party or by which
such Person or any property or asset of such Person is bound or affected,
except for such conflicts, defaults, or violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.7 SEC Reports and Financial Statements. Each form, report,
schedule, registration statement and definitive proxy statement filed with
the SEC by Garage prior to the date hereof (as such documents have been
amended prior to the date hereof, the "Garage SEC Reports") as of their
respective dates, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations thereunder. None of the Garage SEC Reports, as of their
respective dates, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading, except for such statements, if any, as have
been modified or superseded by subsequent filings prior to the date hereof.
Garage has made available to Home a true, accurate and complete list of all
of the Garage SEC Reports. The consolidated financial statements of Garage
and its subsidiaries included in such reports comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto or, in the case of the unaudited interim financial statements, as
permitted by Form 10-Q of the SEC) and fairly present in all material
respects (subject, in the case of the unaudited interim financial
statements, to normal, year-end audit adjustments) the consolidated
financial position of Garage and its subsidiaries as at the dates thereof
and the consolidated results of their operations and cash flows for the
periods then ended. Since December 31, 1996, neither Garage nor any of its
subsidiaries has incurred any liabilities or obligations (whether
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absolute, accrued, fixed, contingent, liquidated, unliquidated or otherwise
and whether due or to become due) of any nature, except liabilities,
obligations or contingencies (a) which are reflected on the consolidated
balance sheet of Garage and its subsidiaries as at December 31, 1996
(including the notes thereto) or (b) which (i) were incurred in the
ordinary course of business after December 31, 1996, (ii) are disclosed in
the Garage SEC Reports filed after December 31, 1996 or (iii) would not,
individually or in the aggregate, have a Material Adverse Effect on Garage.
Since June 30, 1996, Garage has timely filed with the SEC all forms,
reports and other documents required to be filed prior to the date hereof,
and no subsidiary of Garage has filed, or been required to file, any form,
report or other document with the SEC, in each case, pursuant to the
Securities Act, the Exchange Act or the rules and regulations thereunder.
Since December 31, 1996, there has been no change in any of the significant
accounting (including tax accounting) policies, practices or procedures of
Garage or any subsidiary of Garage, except changes to comply with changes
in accounting pronouncements of the Financial Accounting Standards Board,
other changes in GAAP or changes in applicable laws or rules or regulations
thereunder.
SECTION 4.8 Absence of Certain Changes or Events. Except as
contemplated by this Agreement or as disclosed in any Garage SEC Report or
as set forth on Schedule 4.8, since June 30, 1997, (a) Garage and its
subsidiaries have conducted their respective businesses only in the
ordinary course, and have not taken any of the actions set forth in
paragraphs (a) through (j) of Section 6.3 and (b) as of the date hereof,
there has not occurred or arisen any event that, individually or in the
aggregate, has had or, insofar as reasonably can be foreseen, is likely in
the future to have, a Material Adverse Effect on Garage.
SECTION 4.9 Litigation. Except as disclosed in the Garage SEC
Reports or as set forth on Schedule 4.9, as of the date hereof, there are
no claims, suits, actions or proceedings pending or, to Garage's knowledge,
threatened or contemplated, nor are there any investigations or reviews by
any Governmental Authority pending or, to Garage's knowledge, threatened or
contemplated, against, relating to or affecting Garage or any of its
subsidiaries, which would, individually or in the aggregate, have a
Material Adverse Effect on Garage or prohibit or materially restrict the
consummation of the Transactions, nor is there any judgment, decree, order,
injunction or writ of any Governmental Authority or any arbitrator
outstanding against Garage or any of its subsidiaries. In addition, as of
the date hereof, there have not been any developments with respect to any
of the claims, suits, actions, proceedings, investigations or reviews
disclosed in the Garage SEC Reports which, insofar as can be reasonably
foreseen, in the future are likely to have a Material Adverse Effect on
Garage.
SECTION 4.10 Intentionally Omitted.
SECTION 4.11 Employee Benefit Plans. With respect, as applicable, to
Benefit Plans and Benefit Arrangements: neither Garage nor any ERISA
Affiliate has maintained or contributed to any Qualified Plans since July
1, 1993 other than the American Credit Corporation on 401(k) Salary Savings
Plan (the "401(k) Plan"). Schedule 4.11 completely and accurately lists
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all Garage Plans and Garage Benefit Arrangements and specifically
identifies any that are Qualified Plans. The Qualified Plan has always
qualified in form and operation under Code Section 401(a) and has a
currently applicable determination letter from the Internal Revenue
Service, and its trust has always been exempt under Code Section 501(a),
and nothing has occurred with respect to such plan and trust that could
cause the loss of such qualification or exemption or the imposition of any
liability, lien, penalty, or tax under ERISA or the Code, except any
failure to qualify or occurrence that will not have a Material Adverse
Effect on Garage. Each Garage Plan and each Garage Benefit Arrangement has
been maintained in accordance with its constituent documents and with all
applicable provisions of the Code, ERISA and other domestic and foreign
laws, including federal, state, and foreign securities laws and all laws
respecting reporting and disclosure, except any failure to comply that will
not have a Material Adverse Effect on Garage. No Garage Plan holds employer
securities. No Garage Company or other ERISA Affiliate (since July 1, 1993)
has sponsored, maintained, or had any liability (direct or indirect, actual
or contingent) with respect to any Benefit Plan subject to Title IV of
ERISA. No Garage Company and no ERISA Affiliate has ever made or been
obligated to make, or reimbursed or been obligated to reimburse another
employer for, contributions to any multiemployer plan (as defined in ERISA
Section 3(37)). There are no pending claims or lawsuits by, against, or
relating to any non-Garage Benefit Plans or non-Garage Benefit Arrangements
that would, if successful, result in liability for the Garage Companies,
and no claims or lawsuits (other than routine benefit claims) have been
asserted, instituted or, to the knowledge of the Garage Companies,
threatened by, against, or relating to any Garage Plan or Garage Benefit
Arrangement, and the Garage Companies do not have knowledge of any fact
that could form the basis for any such claim or lawsuit. The Garage Plans
and Garage Benefit Arrangements are not presently under audit or
examination (and have not received notice of a potential audit or
examination) by any governmental authority, and no matters are pending with
respect to the Qualified Plan under any governmental compliance programs.
No Garage Plan or Garage Benefit Arrangement contains any provision or is
subject to any law that would give rise to any vesting of benefits (other
than if the 401(k) Plan is terminated), severance, termination, or other
payments or liabilities as a result of the Transactions, and the Garage
Companies have not declared or paid any bonus or other incentive
compensation or established any severance plan, program, or arrangement in
contemplation of the Transactions. To Garage's knowledge, with respect to
each Garage Plan, there have been no violations of Code Section 4975 or
ERISA Sections 404 or 406 as to which successful claims would result in any
liability for the Garage Companies or the Merger Sub or any Person required
to be indemnified by them. The Garage Companies have made all required
contributions to the Garage Plans as of the last day of the each plan's
most recent fiscal year; all benefits accrued under any unfunded Garage
Plan or Garage Benefit Arrangement will have been paid, accrued, or
otherwise adequately reserved in accordance with GAAP as of the Balance
Sheet Date; and all monies withheld from employee paychecks with respect to
Garage Plans have been transferred to the appropriate plan within the
timing required by governmental regulations. To Garage's knowledge, the
Garage Companies and their ERISA Affiliates have complied with the health
continuation rules of Code Sections 4980B (and its predecessor) and with
Code Section 5000. The Garage Companies have no liability (whether actual,
contingent, or otherwise) with respect
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to any Benefit Plan or Benefit Arrangement that is not a Garage Benefit
Arrangement or with respect to any Benefit Plan sponsored or maintained (or
which has been or should have been sponsored or maintained) by any ERISA
Affiliate that is not a Garage Company; and no facts exist that could
reasonably be expected to result in such liability, as a result of a
termination, withdrawal or funding waiver with respect to any such plan,
program, or arrangement. No employee or former employee of the Garage
Companies nor beneficiary of any such employee or former employee is, by
reason of such employee's or former employee's employment, entitled to
receive any benefits subject to reporting under Statement of Financial
Accounting Standards No. 106, other than as required by Code Section 4980B
or other applicable law. There are no contracts, agreements, plans or
arrangements, including but not limited to the provisions of this
Agreement, covering any employee or former employee of the Garage Companies
that, individually or collectively, could give rise to the payment of any
amount (or portion thereof) that would not be deductible pursuant to Code
Sections 280G, 404 or 162.
SECTION 4.12 Labor. With respect to employees of the Garage
Companies: the Garage Companies are and have been in compliance in all
material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, including without limitation any such laws respecting employment
discrimination, workers' compensation, family and medical leave, the
Immigration Reform and Control Act, and occupational safety and health
requirements, and have not and are not engaged in any unfair labor
practice. The employees of the Garage Companies are not and have never been
represented by any labor union, and no collective bargaining agreement is
binding and in force against, or currently being negotiated by, any of the
Garage Companies, and to the Garage Companies' knowledge, no labor
representation organization effort exists nor has there been any such
activity within the past three years. All Persons classified by the Garage
Companies as independent contractors do satisfy and have satisfied the
requirements of law to be so classified, and the Garage Companies have
fully and accurately reported their compensation on IRS Forms 1099 when
required to do so, except to the extent that any misclassification of any
such Person will not have a Material Adverse Effect on Garage. Since
December 31, 1996, no employee of the Garage Companies, or group of
employees, the loss of whom would have a Material Adverse Effect on the
business of any of the Garage Companies, has notified any of the Garage
Companies of his or their intent to (A) terminate his or their relationship
with the Garage Companies or (B) make any demand for material payments or
modifications of his or their arrangements with the Garage Companies. Each
of the Garage Companies has complied with all garnishment orders it has
received and has made available to the Purchaser all garnishment orders it
has received in the last year, except where the failure to so comply will
not cause a Material Adverse Effect on Garage. There is no charge or
compliance proceeding actually pending or, to the knowledge of Garage,
threatened against any Garage Company before the Equal Employment
Opportunity Commission or any state, local, or foreign agency responsible
for the prevention of unlawful employment practices, except as disclosed on
Schedule 4.12.
SECTION 4.13 Insurance. Schedule 4.13 sets forth (a) an accurate
summary description of each insurance policy providing coverage for
liability exposure (including policies providing
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property, casualty, liability and workers' compensation coverage and bond
and surety arrangements) to which Garage is currently, or has been during
the past three years, a party, a named insured or otherwise the beneficiary
of coverage and (b) all insurance loss runs or worker's compensation claims
received for the past three policy years. With respect to each such
insurance policy: to the knowledge of Garage, (a) the policy is legal,
valid, binding, enforceable and in full force and effect; (b) there will be
no breach or other violation of the policy resulting from the Transactions;
and (c) Garage is not in breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification or acceleration, under the
policy.
SECTION 4.14 Brokers. Other than Credit Suisse First Boston (the
"Garage Financial Advisor") and Strome Susskind Investment Management, each
of whom shall be paid pursuant to the agreement and in the amount set forth
on Schedule 4.14, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based on any arrangement or agreement made by or on behalf of
Garage.
SECTION 4.15 Taxes.
(a) Each of Garage and its subsidiaries has timely filed (or
has had timely filed on its behalf) or will file or cause to be timely
filed, all material Tax Returns required by applicable law to be filed by
it prior to or as of the Effective Time. All such Tax Returns and
amendments thereto are, or will be before the Effective Time, true,
complete and correct in all material respects.
(b) Each of Garage and its subsidiaries has paid (or has had
paid on its behalf), or has established (or has had established on its
behalf and for its sole benefit and recourse), or will establish or cause
to be established on or before the Effective Time, an adequate accrual for
the payment of, all material Taxes due with respect to any period ending
prior to or as of the Effective Time.
(c) No deficiency or adjustment for any material Taxes has
been proposed, asserted or assessed against Garage or any of its
subsidiaries that has not been resolved or paid or for which an adequate
accrual has not been established in accordance with generally accepted
accounting principles. There are no Liens for material Taxes upon the
assets of Garage or any of its subsidiaries, except Liens for current Taxes
not yet due.
(d) Neither Garage nor any of its subsidiaries has entered
into any Contract that would result in the disallowance of any tax
deductions pursuant to section 28OG of the Code. No "consent" within the
meaning of section 341 (f) of the Code has been filed with respect to
Garage or any of its subsidiaries. None of Garage or its subsidiaries has
been a United States real property holding corporation within the meaning
of Code Section 897(c)(2) during the applicable period specified in Code
Section 897(c)(1)(A)(ii).
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(e) All Tax sharing agreements (other than agreements between
or among Garage and its subsidiaries), Tax indemnity agreements and similar
agreements to which Garage or any of its subsidiaries is a party are
disclosed in the Garage SEC Reports. None of Garage and its subsidiaries
has been a member of an affiliated group filing a consolidated Federal
income tax return (other than a group of which the common parent was
Garage). None of Garage or its subsidiaries has any liability for the Taxes
of any person (other than Garage and its subsidiaries under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(f) No federal, state, local or foreign audits or other
administrative or court proceedings are pending or, to the knowledge of any
employee of Garage with responsibility for Taxes, threatened with regard to
any Tax Returns or Taxes of Garage or any of its subsidiaries which, if
determined adversely, would have a Material Adverse Effect on Garage.
SECTION 4.16 Environmental Matters. Garage and its subsidiaries are
in compliance with all environmental laws, rules, regulations and standards
promulgated, adopted or enforced by the Environmental Protection Agency
("EPA") and of similar agencies in states in which they conduct their
respective businesses, other than where such noncompliance would not
reasonably be expected to result, with respect to Garage, in any Material
Adverse Effect. There is no suit, claim, action or proceeding now pending
before any court, governmental agency or board or other forum or, to the
knowledge of Garage, threatened by any Person, which taken singularly or as
a whole, if adversely determined, would have a Material Adverse Effect on
Garage (a) for alleged noncompliance with any environmental law, rule or
regulation or (b) relating to the discharge or release into the environment
of any hazardous material or waste at or on a site presently or formerly
owned, leased or operated by Garage or any of its subsidiaries.
SECTION 4.17 Loans. All currently outstanding installment contracts
owned by Garage (individually, a "Loan," and collectively, the "Loans")
and acquired from third parties were purchased by Garage in compliance with
all applicable requirements of United States federal and state law and, to
the best of Garage's knowledge, were solicited and originated in material
compliance with all applicable requirements of United States federal and
state law, in each case, except where the failure to comply will not have a
Material Adverse Effect on Garage. All Loans directly originated by Garage
or direct extensions of credit by Garage were solicited and originated in
compliance with all applicable requirements of United States federal and
state law, except where the failure to comply will not have a Material
Adverse Effect on Garage. Each note evidencing a Loan or loan or credit
agreement or security instrument or automobile installment contract related
to the Loans constitutes a valid, legal and binding obligation of the
obligor thereunder, enforceable against such obligor in accordance with the
terms thereof (except as enforcement may be limited by general principles
of equity whether applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally), except where the failure thereof, individually or in
the aggregate, would not have a Material Adverse Effect with respect to
Garage. There are no oral modifications or
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amendments related to the Loans that are not reflected in Garage's records,
no defenses as to the enforcement of any Loan have been asserted, and there
have been no acts or omissions which would give rise to any claim or right
of rescission, set-off, counterclaim or defense, except where any of the
foregoing would not have, either individually or in the aggregate, a
Material Adverse Effect with respect to Garage. None of the Loans is
presently serviced by third parties and there is no obligation which could
result in any Loan becoming subject to any third party servicing, except as
disclosed on Schedule 4.17. The reserves established against the Loans have
been established based on Garage's prior loss experience in accordance with
GAAP.
SECTION 4.18 Intellectual Property.
(a) Garage owns or has the right to use pursuant to license,
sublicense, agreement, permission or otherwise all patents, copyrights,
software, trademarks, service marks, trade dress, logos, trade names and
corporate names and all applications, registrations and renewals in
connection therewith and all other proprietary rights ("Intellectual
Property"), in each case to the extent necessary for the operation of its
business as presently conducted and except where the failure to own or have
such right would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Garage. Each such item of
Intellectual Property owned or used by Garage immediately prior to the
Closing hereunder will continue to be owned or available for use by the
Surviving Corporation on identical terms and conditions immediately
subsequent to the Closing hereunder, except where failure of such ownership
or availability for use will not have a Material Adverse Effect on Garage.
(b) To the knowledge of Garage, Garage has not interfered
with, infringed upon or misappropriated any Intellectual Property rights of
third parties, and has not received any complaint, claim, demand or notice
alleging any such interference, infringement or misappropriation (including
any claim that Garage must license or refrain from using any Intellectual
Property rights of any third party) within the last three years. To
Garage's knowledge, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual
Property rights of Garage.
SECTION 4.19 Books and Records. The books and records, minutes
books, stock record books and other records of Garage and all of its
subsidiaries, all of which have been made available to Home, are complete
and correct in all material respects and have been maintained in accordance
with sound business practices, except for minutes of meetings of the Board
of Directors that have not been completed or approved by the Board of
Directors as of the date of this Agreement (provided, that, summaries of
any such minutes have been made available to Home). The respective minutes
books of Garage and each of its subsidiaries contain accurate and complete
records of all meetings held of, and corporate action taken by, the
stockholders, the Boards of Directors and committees of the Boards of
Directors of Garage and each of its subsidiaries.
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SECTION 4.20 Transactions with Affiliates. Except as set forth in
the Garage SEC Documents or on Schedule 4.20, since December 31, 1996,
neither Garage nor any of its subsidiaries has entered into any transaction
with any current director or officer of Garage or any subsidiary or any
transaction which would be subject to proxy statement, disclosure under the
Exchange Act pursuant to the requirements of Item 404 of Regulation S-K.
SECTION 4.21 Opinion of Financial Advisor. The Garage Financial
Advisor has delivered to Garage an opinion dated the date of this Agreement
to the effect that the Merger Consideration to be received by the holders
of the issued and outstanding shares of the Garage Common Stock is fair
from a financial point of view to the holders of the Garage Common Stock.
SECTION 4.22 Reliance. In entering into this Agreement, Garage has
relied solely on representations made in this Agreement, including the
Schedules hereto, and any certificates and documents required to be
provided by Home and the Merger Sub pursuant to this Agreement. Garage has
been represented by counsel and has had unrestricted opportunity to examine
and understand the business and assets of Home.
SECTION 4.23 Disclosure. No representation or warranty of Garage
contained in this Agreement and no statement contained in any certificate
or schedule furnished or to be furnished by or on behalf of Garage to Home
or any of its Representatives pursuant hereto contains or will contain any
untrue statement of a material fact.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HOME
AND MERGER SUB
Except as disclosed or otherwise referred to in the attached Home
Disclosure Schedule or in the documents identified in the Home Disclosure
Schedule, Home and Merger Sub hereby represent and warrant to Garage that:
SECTION 5.1 Organization and Qualifications; Subsidiaries. Home,
Merger Sub and each subsidiary of Home is a corporation, partnership or
other legal entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and
has the corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where failure to obtain such
approvals would have a Material Adverse Effect. Each of Home, Merger Sub
and Home's subsidiaries is duly qualified or licensed as a foreign
corporation, partnership or limited liability company to transact business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by
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it or the nature of its business makes such qualification or licensing
necessary and where the failure to so qualify would cause a Material
Adverse Effect.
SECTION 5.2 Charter and Bylaws. Complete and correct copies of the
charter and bylaws of Home, as amended to date, have been filed (or
incorporated by reference) as exhibits 3.1 and 3.2, respectively, to
Home's Annual Report on Form 10-K for the year ended December 31, 1996.
Such Organizational Documents are in full force and effect and have not
been amended or modified in any respect. Home is not in violation of any
provision of its Organizational Documents. No subsidiary of Home is in
violation of any provision of its Organizational Documents.
SECTION 5.3 Capitalization. The authorized capital stock of Home
consists of 250,000,000 shares of Home Common Stock and 8,155,004 shares of
preferred stock of Home, no par value. As of June 30, 1997, (i) 106,727,186
shares of Home Common Stock were issued and outstanding, all of which were
validly issued, fully paid and nonassessable; and (ii)(A) 12,370,658
shares of Home Common Stock were reserved for issuance under Home employee
or director benefit programs or Home's dividend reinvestment plan
(collectively, the "Home Stock Plans"), (B) 17,603,989 shares of Home
Common Stock were classified as treasury shares. Except as set forth above,
as of June 30, 1997, no shares of Home Common Stock or other voting
securities of Home (other than Home's Junior Participating Preferred Stock)
were issued, reserved for issuance or outstanding. All shares of Home
Common Stock subject to issuance as aforesaid and all shares of Home Common
Stock subject to issuance as Merger Consideration, upon issuance on the
terms and conditions specified in the instruments pursuant to which they
are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of Home to
repurchase, redeem or otherwise acquire any shares of Home Common Stock or
any other shares of capital stock of Home, or make any material investment
(in the form of a loan, capital contribution or otherwise) in any
subsidiary of Home or any other Person, other than a wholly-owned
subsidiary of Home or a Person wholly-owned by one or more wholly-owned
subsidiaries of Home. Each outstanding share of capital stock of each
subsidiary of Home is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by Home or any subsidiary of Home
is owned free and clear of any Liens.
SECTION 5.4 Authority Relative to This Agreement. This Agreement has
been duly and validly executed and delivered by Home and Merger Sub and,
assuming the due authorization, execution and delivery thereof by Garage,
constitutes the legal, valid and binding obligation of Home and Merger Sub,
enforceable against Home and Merger Sub in accordance with its terms,
except as enforceability may be limited by bankruptcy and other similar
laws and general principles of equity.
SECTION 5.5 No Conflict; Required Filings and Consents. The
execution and delivery of this Agreement by Home and Merger Sub do not, and
the performance of their respective obligations under this Agreement and
the consummation of the Transactions by Home and
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Merger Sub will not, (a) conflict with, result in a breach of, cause a
dissolution or require the consent or approval of any Person under, or
violate any provision of, the Organizational Documents of Home or Merger
Sub, (b) require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except for (i)
applicable requirements, if any, of the Exchange Act, the Securities Act,
the Blue Sky Laws and the HSR Act, in each case, including any rules and
regulations promulgated thereunder, (ii) the Merger Filing, (iii) the
Garage Stockholder Approval and (iv) such other consents, authorizations,
filings, approvals and registrations which if not obtained or made would
not be material to Garage or Home or have a material adverse effect on the
ability of the parties to consummate the Merger, (c) subject to the making
of the filings and obtaining the approvals identified in clause (b),
conflict with or violate any Law, judgment, order, writ, injunction or
decree applicable to Home or Merger Sub or by which any property or asset
of Home or Merger Sub is bound or affected, which conflict or violation
would result in a loss of material benefits to or in any material liability
to Garage, Home or the Surviving Corporation, or (d) conflict with or
result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, result in
the loss by Home or Merger Sub or modification in a manner materially
adverse to Home or Merger Sub of any right or benefit under, or give to
others any right of termination, amendment, acceleration, repurchase or
repayment, increased payments or cancellation of, or result in the creation
of a Lien or other encumbrance on any Home Common Stock issued pursuant to
the Merger or any material property or asset of Home or Merger Sub or any
subsidiary of Home or Merger Sub pursuant to, any Contract of Home or
Merger Sub, except, in each case, such as would not, individually or in the
aggregate have a Material adverse effect on the ability of the parties to
consummate of the Merger, or otherwise, individually or in the aggregate,
prevent Home or Merger Sub from performing its obligations under this
Agreement in any material respect, and would not, individually or in the
aggregate, have a Material Adverse Effect on Home.
SECTION 5.6 Compliance. Neither Home, Merger Sub nor any Material
Subsidiary of Home is in conflict with, or in default or violation of, (a)
any Law applicable to such Person or by which any property or asset of such
Person is bound or affected, or (b) any Contract to which Home or Merger
Sub or any subsidiary of Home is a party or by which such Person or any
property or asset of such Person is bound or affected, except for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 5.7 SEC Reports and Financial Statements. Each form, report,
schedule, registration statement and definitive proxy statement filed by
Home with the SEC prior to the date hereof (as such documents have been
amended prior to the date hereof, the "Home SEC Reports"), as of their
respective dates, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations thereunder. None of the Home SEC Reports, as of their
respective dates, contained or contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except for such statements, if
any, as have been modified or
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superseded by subsequent filings prior to the date hereof. The consolidated
financial statements of Home and its subsidiaries included in such reports
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except as may be
indicated in the notes thereto or, in the case of the unaudited interim
financial statements, as permitted by Form 10-Q of the SEC) and fairly present
in all material respects (subject, in the case of the unaudited interim
financial statements, to normal, year-end audit adjustments) the consolidated
financial position of Home and its subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. Since December 31, 1996, neither Home nor any of its subsidiaries has
incurred any liabilities or obligations (whether absolute, accrued, fixed,
contingent, liquidated, unliquidated or otherwise and whether due or to become
due) of any nature, except liabilities, obligations or contingencies (a) which
are reflected on the consolidated balance sheet of Home and its subsidiaries as
at December 31, 1996 (including the notes thereto) or (b) which (i) were
incurred in the ordinary course of business after December 31, 1996 and
consistent with past practices, (ii) are disclosed in the Home SEC Reports filed
after December 31, 1996, or (iii) would not, individually or in the aggregate,
have a Material Adverse Effect on Home. Since January 1, 1996, Home has timely
filed with the SEC all forms, reports and other documents required to be filed
prior to the date hereof, and no subsidiary of Home has filed, or been required
to file, any form, report or other document with the SEC, in each case, pursuant
to the Securities Act, the Exchange Act or the rules and regulations thereunder.
Since December 31, 1996, except as described in the Home SEC Reports, there has
been no change in any of the significant accounting (including tax accounting)
policies, practices or procedures of Home or any subsidiary of Home, except
changes resulting from changes in accounting pronouncements of Financial
Accounting Standards Boards or changes in applicable laws or rules or
regulations thereunder.
SECTION 5.8 Absence of Certain Changes or Events. Except as
contemplated by this Agreement or as disclosed in any Home SEC Report, since
December 31, 1996, (a) Home and its subsidiaries have conducted their respective
businesses only in the ordinary course, consistent with past practice, and (b)
as of the date hereof, there has not occurred or arisen any event that,
individually or in the aggregate, has had or, insofar as reasonably can be
foreseen, is likely in the future to have, a Material Adverse Effect on Home.
SECTION 5.9 Litigation. Except as disclosed in the Home SEC Reports,
as of the date hereof, there are no claims, suits, actions or proceedings
pending or, to Home's knowledge, threatened or contemplated, nor are there any
investigations or reviews by any Governmental Authority pending or, to Home's
knowledge, threatened or contemplated, against, relating to or affecting Home or
any of its subsidiaries, which would have, individually or in the aggregate, a
Material Adverse Effect on Home, or to prohibit or materially restrict the
consummation of the Transactions, nor is there any judgment, decree, order,
injunction, writ or rule of any Governmental Authority or any arbitrator
outstanding against Home or any of its subsidiaries having, or which, insofar as
can be reasonably foreseen, in the future is likely to have, a Material Adverse
Effect on Home. In addition, as of the date hereof, there have not been any
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developments with respect to any of the claims, suits, actions, proceedings,
investigations or reviews disclosed in the Home SEC Reports which, insofar as
can be reasonably foreseen, in the future are likely to have a Material Adverse
Effect on Home.
SECTION 5.10 Intentionally Omitted.
SECTION 5.11 Insurance. With respect to each insurance policy
providing coverage for liability exposure (including policies providing
property, casualty, liability and workers' compensation coverage and bond and
surety arrangements) to which Home is currently a party, a named insured or
otherwise the beneficiary of coverage, to the knowledge of Home, (a) the policy
is legal, valid, binding, enforceable and in full force and effect; (b) there
will be no breach or other violation of the policy resulting from the
Transactions; and (c) Home is not in breach or default (including with respect
to the payment of premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification or acceleration, under the policy.
SECTION 5.12 Brokers. Other than J.P. Morgan & Co., no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based on any arrangement or
agreement made by or on behalf of Home.
SECTION 5.13 Taxes.
(a) Home and each of its subsidiaries has timely filed (or has had
timely filed on its behalf) or will file or cause to be timely filed, all
material Tax Returns required by applicable law to be filed by it prior to or as
of the Effective Time. All such Tax Returns and amendments thereto are, or will
be before the Effective Time, true, complete and correct in all material
respects.
(b) Each of Home and its subsidiaries has paid (or has had paid on
its behalf), or has established (or has had established on its behalf and for
its sole benefit and recourse), or will establish or cause to be established on
or before the Closing Date, an adequate accrual for the payment of, all material
Taxes due with respect to any period ending prior to or as of the Closing Date.
(c) No deficiency or adjustment for any material Taxes has been
proposed, asserted or assessed against Home or any of its subsidiaries that has
not been resolved or paid or for which an adequate accrual has not been
established in accordance with generally accepted accounting principles. There
are no Liens for material Taxes upon the assets of Home or any of its
subsidiaries, except Liens for current Taxes not yet due.
(d) No federal, state, local or foreign audits or other
administrative or court proceedings are pending or, to the knowledge of any
employee of Home with responsibility for
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Taxes, threatened with regard to any Tax Returns or Taxes of Home or any of its
subsidiaries which, if determined adversely, would have a Material Adverse
Effect on Home.
SECTION 5.14 Reliance. In entering into this Agreement, Home has
relied solely on representations made in this Agreement, including the Schedules
hereto, and any certificates and documents required to be provided by Garage
pursuant to this Agreement. Home has been represented by counsel and has had
unrestricted opportunity to examine and understand the business and assets of
Garage.
SECTION 5.15 Financial Capability. Home will have on the Closing Date
and immediately prior to and at the Effective Time, funds and authorized and
unissued shares of Home Common Stock sufficient to consummate the Merger and the
transactions contemplated hereby. To the extent that such funds are to be
provided by third party financing, Home will provide Garage with complete and
correct copies of all documents relating to the provision of such financing.
SECTION 5.16 Disclosure. No representation or warranty of Home
contained in this Agreement and no statement contained in any certificate or
schedule furnished or to be furnished by or on behalf of Home to Garage or any
of its Representatives pursuant hereto contains or will contain any untrue
statement of a material fact.
ARTICLE VI
COVENANTS
SECTION 6.1 Notification of Certain Matters. Each of the parties
hereto shall give prompt notice to the other parties hereto of the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause (a) any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect, or (b) any covenant,
condition or agreement contained in this Agreement not to be complied with or
satisfied in any material respect. The delivery of any notice pursuant to this
Section 6.1 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice, except that Garage may amend in Disclosure
Schedules to disclose any information that was omitted in good faith at the time
of the Disclosure Schedules were prepared that individually and in the aggregate
do not have a Material Adverse Effect on Garage.
SECTION 6.2 Further Action, Reasonable Efforts; Consents and
Approvals. Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use commercially reasonable efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereby, including,
without limitation, using commercially reasonable efforts to obtain all
licenses, permits, consents,
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approvals, authorizations, certificates, qualifications and orders of, and make
all filings and required submissions with, all Governmental Authorities, and all
shareholders, lenders and partners of, and parties to Contracts with, Home,
Garage or any other Person, in each case, as are reasonably necessary for the
consummation of the Transactions (collectively "Consents"), except for such
other consents, authorizations filings, approvals and registrations which if not
obtained or made would not be material to Garage or Home or have a material
adverse effect on the ability of the parties to consummate the Merger. Garage
shall, as soon as possible prior to the Closing, deliver to Home copies of all
Consents obtained by Garage. Home shall, as soon as possible prior to the
Closing, deliver to Garage copies of all Consents obtained by Home. In case at
any time after the Closing Date any further action is necessary or desirable to
carry out the purposes of this Agreement, Home and Garage shall use commercially
reasonable efforts to take all such action. Prior to the Closing, each party
shall use its best efforts not to take any action, or enter into any
transaction, that would cause any of its representations or warranties contained
in this Agreement to be untrue.
SECTION 6.3 Conduct of Business of Garage Pending the Closing. From
the date hereof through the Closing, except as expressly permitted or
contemplated by this Agreement or as set forth on Schedule 6.3 hereto, unless
Home shall otherwise agree in writing (which agreement shall not be unreasonably
withheld) prior to the taking of any action prohibited by the terms of this
Section 6.3, Garage and its subsidiaries shall conduct their operations and
business in the ordinary and usual course of business and use reasonable efforts
(which shall not include any obligation to offer to pay any retention or stay
bonus) to keep available the services of its present officers and key employees
and preserve the goodwill and business relationships with all Persons having
business relationships with it. Without limiting the generality of the
foregoing, and except as otherwise expressly permitted by this Agreement, prior
to the Closing, without the prior written consent of Home, neither Garage nor
any of its subsidiaries shall:
(a) amend or modify its Organizational Documents;
(b) issue, sell, pledge or dispose of, grant or otherwise create,
or agree to issue, sell, pledge or dispose of, grant or otherwise create any
capital stock or other equity securities, any debt or other securities
convertible into or exchangeable for any of its capital stock or other equity
securities, or any Option with respect thereto, except for the issuance of stock
upon the exercise of outstanding options, warrants or securities convertible
into equity securities pursuant to the Garage Option Plans;
(c) purchase, redeem or otherwise acquire or retire, or offer to
purchase, redeem or otherwise acquire or retire, any of its capital stock or
other equity securities (including any options with respect to any of its
capital stock or other equity securities and any securities convertible or
exchangeable into any of its capital stock or other equity securities) or any
long term debt, except the repurchase of any of its securities from any former
employees in accordance with any existing stock option agreements or other
existing repurchase rights;
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(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock or other equity securities (except dividends declared and
paid by a subsidiary of Garage only to Garage or a wholly-owned subsidiary of
Garage), or subdivide, reclassify, recapitalize, split, combine or exchange any
of its capital stock or other equity securities;
(e) incur or become contingently liable with respect to any
indebtedness for borrowed money or guarantee any such indebtedness or issue any
debt securities, except for additional indebtedness incurred under existing debt
agreements or credit facilities, or new credit facilities, provided, however,
such new credit facilities are terminable by Garage on no more than 90 days
notice and Garage is not obligated for any termination fee, breakage costs or
other costs and expenses in excess of $25,000 as a result of such termination;
(f) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business entity;
(g) mortgage or otherwise encumber or subject to any Lien, or
sell, transfer or otherwise dispose of, any assets or properties that are
material, individually or in the aggregate, to Garage and its subsidiaries,
taken as a whole, other than Liens incurred in the ordinary course of business
consistent with past practice, and sales and dispositions in the ordinary course
of business consistent with past practice; it being expressly understood that
Garage shall be permitted to (i) continue to utilize the funding options
provided by currently existing asset-back transactions entered into by Garage or
an affiliate of Garage on substantially the same terms and conditions existing
as of the date of this Agreement and (ii) utilize existing credit facilities or
new credit facilities permitted by subsection (e) above;
(h) except as may be required by applicable Law, or as
contemplated by this Agreement, (i) enter into any employment agreement, (ii)
increase the compensation payable or to become payable to its executive officers
or employees, except with respect to non-executive officer employees in the
ordinary course of business consistent with past practice, (iii) grant any
severance or termination pay to any director, executive officer or employee of
Garage or any subsidiary of Garage, except with respect to non-executive officer
employees in the ordinary course of business or pursuant to existing Garage
Benefit Plans, (iv) enter into any severance agreement or retention agreement
with any director, executive officer or employee except with respect to
non-executive officer employees in the ordinary course of business, or (v)
establish, adopt, enter into, terminate, withdraw from or amend in any material
respect or take action to accelerate any rights or benefits under any collective
bargaining agreement, any stock option plan, or any employee benefit plan or
policy;
(i) take any action, other than reasonable actions in the ordinary
course of business, with respect to accounting policies or procedures (including
Tax accounting policies, procedures and elections relating to Taxes that would
apply to Garage, Home or the Surviving
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Corporation after the Merger), except as may be required by GAAP or changes in
law, or settle any material Audit or, except as required by Law, amend in any
material respect any material Tax Return;
(j) enter into, modify, amend, extend or terminate any agreement
or agreements for goods, property rights or services with (i) any director or
officer, or any legal entity controlled by such Person, or (ii) any other Person
which obligates Garage, or any affiliate of Garage, to pay in excess of $25,000
in any twelve-month period, provided, however, that Garage may offer employment
to individuals consistent with past practice; and
(k) authorize any of, or commit or agree to take any of, the
foregoing actions,
SECTION 6.4 Conduct of Business of Home Pending the Closing. From the
date hereof through the Closing, except as expressly permitted or contemplated
by this Agreement, unless Garage shall otherwise agree in writing prior to the
taking of any action prohibited by the terms of this Section 6.4, Home and its
subsidiaries shall conduct their operations and business in the ordinary and
usual course of business and consistent with past practice and use reasonable
efforts to keep available the services of its present officers and key employees
and preserve the goodwill and business relationships with all Persons having
business relationships with it.
SECTION 6.5 Access to Information.
(a) From the date hereof to the Effective Time, Garage shall (and
shall cause their respective subsidiaries and Representatives to) afford the
Representatives of Home reasonable access at all reasonable times during normal
business hours to its officers, employees, agents, properties, offices, plants
and other facilities, books, records and Tax Returns, and shall furnish such
Representatives with all financial, operating and other data and information as
may be reasonably requested.
(b) Each of Home, the Merger Sub and Garage covenants and agrees
to maintain the confidentiality of any Confidential Information, as defined
below, it receives from any other party and, except as expressly permitted in
this Agreement or as required by law or in connection with judicial proceedings,
shall not disclose any such Confidential Information to third parties. A party
receiving Confidential Information from another party shall use at least the
same degree of care to maintain its confidentiality as it uses to maintain its
own Confidential Information. A party receiving Confidential Information shall
not, except in connection with this Agreement, directly or indirectly use
Confidential Information of the disclosing party without the prior written
consent of such disclosing party. As used in this Agreement, "Confidential
Information" includes, without limitation, information not previously disclosed
to the public or to the trade by a party to this Agreement relating to its
products, facilities and methods, trade secrets and other intellectual property,
software, source code, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information (including revenues,
costs or profits
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associated with any product), business plans, prospects, or opportunities, but
shall exclude any information already in the public domain.
SECTION 6.6 No Solicitation.
(a) Garage shall not, nor shall it permit any of its subsidiaries
to, and it shall instruct its Representatives (including, without limitation,
any investment banker, attorney or accountant retained by Garage or a subsidiary
of Garage) not to, directly or indirectly, (i) initiate, solicit or encourage
any inquiries or proposals that constitute, or could reasonably be expected to
lead to, a proposal or offer for a merger, consolidation, business combination,
sale of assets representing a substantial portion of the assets of Garage and
its subsidiaries, taken as a whole, sale of shares of capital stock (other than
to Garage or a subsidiary of Garage or as permitted by Section 6.3 hereto),
including, without limitation, by way of a tender offer or exchange offer by any
person (other than Garage or a subsidiary of Garage) for shares of capital stock
of Garage, other than the Transactions (any of the foregoing inquiries or
proposals being referred to in this Agreement as an "Acquisition Proposal"),
(ii) engage in negotiations or discussions concerning, or provide to any person
or entity any non-public information or data relating to Garage or any
subsidiary of Garage for the purposes of, or otherwise cooperate with or assist
or participate in, facilitate or encourage, any inquiries or the making of any
Acquisition Proposal, (iii) agree to, approve or recommend any Acquisition
Proposal, or (iv) take any other action inconsistent with the obligations and
commitments assumed by Garage pursuant to this Section 6.6; provided, however,
that nothing contained in this Agreement shall prevent Garage or its Board of
Directors from (A) furnishing nonpublic information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written Acquisition Proposal to Garage or its stockholders
(which may be subject to a "due diligence" condition), if and only to the extent
that (1) the Board of Directors of Garage determines in good faith (after
consultation with outside legal counsel) that such action is necessary for such
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law, and (2) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such person or entity, the Board
of Directors of Garage receives from such person or entity an executed
confidentiality agreement; or (B) complying with Rule 14e-2 or Rule 14d-9
promulgated under the Exchange Act with regard to an Acquisition Proposal or
making any other public disclosure that, in the opinion of Garage's counsel, is
required by applicable law, rule or regulation; provided, that prior to making
any such other public disclosure Garage shall to the extent reasonably
practicable inform Home that it intends to make such disclosure and consult with
Home regarding the necessity for such disclosure. Garage will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
by Garage or its Representatives with any parties conducted heretofore with
respect to any of the foregoing. In addition, notwithstanding the provisions of
this Section 6.6, or any other provision of this Agreement, Garage may (i)
withdraw, modify, or refrain from making its recommendation in accordance with
Section 6.7 and (ii) terminate this Agreement in accordance with Section 8.1
(f).
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(b) Garage shall (i) promptly notify Home in writing after receipt
by Garage (or its Representatives) of any Acquisition Proposal or any inquiries
indicating that any person is considering making or wishes to make an
Acquisition Proposal, which notification shall be in writing and shall contain
the principal financial terms of any such Acquisition Proposal, and (ii)
promptly notify Home in writing after receipt of any request for nonpublic
information relating to it or any of its subsidiaries or for access to its or
any of its subsidiaries' properties, books or records by any person that, to
Garage's knowledge, may be considering making, or has made, an Acquisition
Proposal.
SECTION 6.7 Stockholder Meeting. Garage shall take all action
necessary, in accordance with the DGCL and Garage's Organizational Documents, to
call a meeting of its stockholders (the "Garage Meeting") to be held as promptly
as practicable after the effective date of the Home Registration Statement for
the purpose of considering and voting upon this Agreement and the Merger (the
"Garage Stockholder Approval"). The Board of Directors of Garage shall recommend
that the stockholders of Garage approve this Agreement and the Merger; provided,
that the Board of Directors of Garage, by action of a majority of the entire
Board of Directors of Garage, may withdraw, modify or refrain from making such
recommendation if such Board of Directors determines in good faith, after
receipt of an Acquisition Proposal and after consultation with outside legal
counsel, that the withdrawal or modification of or failure to make such
recommendation is necessary for such Board of Directors to comply with its
fiduciary duties under applicable law.
SECTION 6.8 Registration Statements and Joint Proxy
Statement/Prospectus.
(a) As promptly as practicable after the execution of this
Agreement, (i) Home and Garage shall prepare and file with the SEC a proxy
statement relating to the Garage Meeting to be held in connection with the
Transactions (together with any amendments thereof or supplements, thereto, the
"Proxy Statement/Prospectus") and (ii) Home shall prepare and file with the SEC
a registration statement on Form S-4 (together with all amendments thereto, the
"Home Registration Statement"), in which the Proxy Statement/Prospectus shall be
included as a prospectus, in connection with the registration under the
Securities Act of the shares of Home Common Stock to be issued pursuant to the
Merger. Each of Home and Garage (i) shall cause the Proxy Statement/Prospectus
and the Home Registration Statement to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder, (ii) shall use commercially reasonable
efforts to have or cause the Home Registration Statement to become effective as
promptly as practicable, and (iii) shall take any and all action required under
any applicable Federal or state securities laws in connection with the issuance
of shares of Home Common Stock pursuant to the Merger. Home and Garage shall
furnish to the other all information concerning Home and Garage as the other may
reasonably request in connection with the preparation of the documents referred
to herein. Each of Home and Garage will notify the other promptly upon the
receipt of any comments from the SEC or its staff or any other governmental
officials and of any request by the SEC or its staff or any other governmental
officials for amendments or supplements to the Registration
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Statement, Proxy Statement/Prospectus or any other filing or for additional
information and will supply the other with copies of all correspondence between
such party or any of its representatives, on the one hand, and the SEC, or its
staff or any other governmental officials, on the other hand, with respect to
the Registration Statement, Proxy Statement/Prospectus or other filing. Each of
Home and Garage will cause all documents that it is responsible for filing with
the SEC or other regulatory authorities under this Section 6.8 to comply in all
material respects with all applicable requirements of law and the rules and
regulations thereunder. Whenever Home or Garage obtains knowledge of the
occurrence of any event which is required to be set forth in an amendment or
supplement to the Proxy Statement/Prospectus, the Registration Statement or
other filing, Home or Garage, as the case may be, will promptly inform the other
of such occurrence and cooperate in filing with the SEC or its staff or any
other governmental officials, and or mailing to Stockholders of Garage such
amendment or supplement. As promptly as practicable after the Home Registration
Statement shall have become effective, Garage shall cause the Proxy
Statement/Prospectus to be mailed to its Stockholders.
(b) The information supplied by each of Home and Garage for
inclusion in the Home Registration Statement and the Proxy Statement/Prospectus
shall not (i) at the time the Home Registration Statement is declared effective
and(ii) at the time the Proxy Statement/Prospectus (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of Garage, (iii) at the
time of the Garage Meeting, or (iv) 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 in order to make the statements therein not
misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to Garage, any subsidiary of Garage, Home, any subsidiary
of Home, or their respective officers or directors, should be discovered by such
party which should be set forth in an amendment or a supplement to the Home
Registration Statement or the Proxy Statement/Prospectus, such party shall
promptly inform the other thereof and take appropriate action in respect
thereof.
SECTION 6.9 Letters of Accountants. Garage shall use commercially
reasonable efforts to cause to be delivered to Home a "comfort" letter of KPMG
Peat Marwick LLP, Garage's, independent public accountants, dated and delivered
on the date on which the Home Registration Statement shall become effective and
as of the Effective Time, and addressed to the Board of Directors of Home
relating to the performance of KPMG Peat Marwick LLP of customary procedures
with respect to the financial statements of Garage contained in or incorporated
by reference in the Registration Statement, including a review of the interim
financial statement information as described in SAS No. 71.
SECTION 6.10 Intentionally Omitted.
SECTION 6.11 Public Announcements. At all times at or before the
Closing, neither Garage nor Home shall issue or make, directly or indirectly,
any reports, statements or releases to the public with respect to this Agreement
or the transactions contemplated hereby without the prior written consent of the
other; provided, however, that Garage and Home may, without the
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prior written consent of the other, issue or make, directly or indirectly, any
report, statement or release required by Law, its fiduciary obligations or any
listing agreement or arrangement to which such Person is a party with a national
securities exchange or national market system if the other parties to this
Agreement are so notified as soon as possible in advance of such report,
statement or release and, to the extent practicable, given a reasonable
opportunity to review and comment on the report, statement or release. The
parties have agreed to the text of the press releases announcing the signing of
the Agreement.
SECTION 6.12 Blue Sky. Home shall use its best efforts to obtain prior
to the Effective Time all approvals or permits required to carry out the
transactions contemplated hereby under applicable Blue Sky Laws in connection
with the issuance of shares of Home Common Stock in the Merger and as
contemplated by this Agreement; provided, however, that with respect to such
qualifications neither Home nor Garage shall be required to register or qualify
as a foreign corporation or to take any action which would subject it to general
service of process or taxation in any jurisdiction where any such entity is not
now so subject.
SECTION 6.13 NYSE Listing. Home shall promptly prepare and submit to
the NYSE listing applications covering the shares of Home Common Stock to be
issued in the Merger, and shall use its best efforts to cause such shares to be
approved for listing and trading on the NYSE prior to the Effective Time,
subject to official notice of issuance.
SECTION 6.14 Affiliates. Within five days after the Proxy
Statement/Prospectus is mailed to the stockholders of Garage, (a) Garage shall
deliver to Home a letter identifying all persons who may be deemed to be
affiliates of Garage under Rule 145 of the Securities Act as of the record date
for the Garage Meeting (the "Rule 145 Affiliates") and (b) Garage shall advise
the persons identified in such letter of the resale restrictions imposed by
applicable securities laws and shall use commercially reasonable efforts to
obtain prior to the Effective Date from each person identified in such letter a
written agreement, substantially in the form of Exhibit A hereto (a "Rule 145
Affiliate Agreement").
SECTION 6.15 Indemnification with Respect to the Registration
Statement.
(a) Each party hereto shall (i) indemnify (in such role, an
"Indemnifying Party") and hold harmless each other party and their respective
directors, officers and controlling persons (an "Indemnified Party") against any
and all loss, liability, claim, damage and expense whatsoever to which an
Indemnified Party may become subject, under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Home Registration Statement or the
Proxy Statement/Prospectus, or any amendment or supplement thereto, or any
preliminary Proxy Statement/Prospectus, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading; and (ii) will reimburse the Indemnified
Party for any legal or other expenses reasonably incurred by the Indemnified
Party in connection
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with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that (i) Garage shall
be liable under this Section 6.15 only for information provided by Garage and
relating to Garage included or incorporated by reference in the Home
Registration Statement or Proxy Statement/Prospectus, (ii) Home and Merger Sub
shall be liable under this Section 6.15 only for information provided by Home
and relating to Home and Merger Sub included or incorporated by reference in the
Home Registration Statement or Proxy Statement/Prospectus, and (iii) no
Indemnifying Party will be liable in any such case under this Section 6.15 to
the extent that any such loss, claim, damage, liability or action arises out of
any untrue statement or alleged untrue statement or omission or alleged omission
made in any of such documents in reliance upon and in conformity with written
information furnished to the Indemnifying Party by or on behalf of such
Indemnified Party specifically for use therein.
(b) Promptly after receipt by an Indemnified Party under this
Section 6.15 of notice of any claim or the commencement of any action, the
Indemnified Party shall, if a claim in respect thereof is to be made against the
Indemnifying Party under this Section 6.15, promptly notify the Indemnifying
Party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify or a delay in notifying the Indemnifying
Party shall not relieve it from any liability which it may have to an
Indemnified Party otherwise than under this Section 6.15 except to the extent
that such Indemnifying Party is prejudiced thereby. If any such claim or action
shall be brought against an Indemnified Party, and it shall notify the
Indemnifying Party thereof, the Indemnifying Party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any other
similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party under this Section 6.15 for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the employment thereof has been specifically
authorized by the Indemnifying Party in writing, (ii) such Indemnified Party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party and in the reasonable judgment of such
counsel it is advisable for such Indemnified Party to employ separate counsel or
(iii) the Indemnifying Party has failed to assume the defense to such claim or
action and employ counsel reasonably satisfactory to the Indemnified Party, in
which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense of
such claim or action on behalf of such Indemnified Party; it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
claim or action or separate but substantially similar or related claims or
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys at any time for all such Indemnified Parties, which
firm shall be designated in writing by such Indemnified Parties. Each
Indemnified Party, as a condition of the indemnity agreements contained herein
shall use its best
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efforts to cooperate with the Indemnifying Party in the defense of any such
claim or action. The Indemnifying Party shall not be liable for any settlement
of any such claim or action effected without its written consent (which consent
shall not be unreasonably withheld), but if settled with its written consent or
if there be a final judgment in favor of the plaintiff in any such claim or
action, the Indemnifying Party agrees to indemnify and hold harmless any
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment.
SECTION 6.16 Directors' and Officers' Indemnification and Insurance.
(a) From and after the Effective Time, the Surviving Corporation
shall, and Home shall cause the Surviving Corporation to, indemnify, defend and
hold harmless the present and former officers and directors of Garage (the
"Indemnified Officers/Directors") against all losses, expenses (including
attorneys fees), claims, damages, liabilities or amounts ("Losses") that are
paid in settlement (provided that such settlement has been approved by Home,
such approval not to be unreasonably withheld) of, or otherwise in connection
with, any claim, action, suit, proceeding or investigation (a "Claim"), based in
whole or in part on the fact that such person is or was a director or officer of
Garage and arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the Transactions), in each case,
to the full extent permitted under the DGCL and Garage's certificate of
incorporation and bylaws (to the extent permitted by applicable law) as in
effect on the date of this Agreement. The Surviving Corporation shall pay any
expenses in advance of the final disposition of any such Claim to each of the
Indemnified Officers/Directors to the fullest extent permitted under the DGCL
upon receipt from any of the Indemnified Officers/Directors to whom expenses are
advanced of any undertaking to repay such advances as required under the DGCL.
The Surviving Corporation shall cooperate in the defense of any such matter.
(b) The Surviving Corporation shall, and Home shall cause the
Surviving Corporation to, keep in effect provisions in its certificate of
incorporation and bylaws providing for exculpation of director liability and its
indemnification of the Indemnified Officers/Directors to the fullest extent
permitted under the DGCL, which provisions shall not be amended except as
required by applicable law or except to make changes permitted by law that would
enlarge the right of indemnification of the Indemnified Officers/Directors. The
Surviving Corporation shall, and Home shall cause the Surviving Corporation to,
keep in effect and to comply with the terms and conditions of the
indemnification agreements between Garage and each of its directors in effect as
of the date of this Agreement.
(c) For a period of five years after the Effective Time, the
Surviving Corporation shall, and Home shall cause the Surviving Corporation to,
maintain in effect the current policies of directors' and officers' liability
insurance maintained by Garage covering persons who are currently covered by
Garage's officers' and directors' liability insurance policies with respect to
actions or omissions occurring at or prior to the Effective Time, a true and
correct summary of which is set forth on Schedule 6.l6, to the extent that such
policies are available; provided, that policies of at least the same coverage
containing terms and conditions which are
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no less advantageous to the insureds may be substituted therefor.
(d) From and after the Effective Time, Home agrees to indemnify,
defend and hold harmless the Indemnified Officers/Directors against all Losses
that are paid in settlement (provided that such settlement has been approved by
Home, such approval not to be unreasonably withheld) of, or otherwise in
connection with, a Claim based in whole or in part on the fact that such Person
is or was a director or officer of Garage and arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the Transactions), in each case to the fullest extent permitted by
applicable Law and whether or not the Surviving Corporation is permitted by
applicable Law to provide any indemnity with respect to such Losses. Home shall
pay any expenses in advance of the final disposition of any such Claim to each
of the Indemnified Officers/Directors to the fullest extent permitted by
applicable Law. Home shall cooperate in the defense of any such matter.
(e) The provisions of this Section 6.16 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Officers/Directors.
SECTION 6.17 Employee Matters. The parties' agreement with respect to
certain employee matters is set forth in Annex I hereto.
SECTION 6.18 Tax-Free Reorganization. Home, Merger Sub and Garage each
acknowledges and agrees that (i) it intends the Merger to constitute a
reorganization within the meaning of Section 368(a) of the Code, as amended, and
(ii) to the extent permissible by law, it will report the Merger as such a
reorganization in any and all federal, state and local income Tax returns filed
by it. No party shall take any action either prior to or after the Closing Date
that could reasonably be expected to cause the Merger to fail to qualify as a
"reorganization" under Section 368(a) of the Code. Home, Merger Sub, and Garage
will each execute and deliver to Wilmer, Cutler & Pickering and Cooley Godward
LLP tax representation letters substantially in the forms set forth in Exhibit F
hereto for purposes of the review of the federal income tax consequences of the
Merger and preparation of the discussion of tax consequences of the Merger to be
included in the Home Registration Statement.
SECTION 6.19 Form S-8. Home agrees to file a registration statement on
Form S-8 for shares of Home Common Stock issuable with respect to assumed Garage
Stock Options as soon as reasonably practicable (and in any event within five
days) after the Effective Time.
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ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the following conditions:
(a) All consents, approvals and action of any Governmental
Authority required to permit the consummation of the Transactions shall have
been obtained or made, free of any condition that would have a Material Adverse
Effect on either Home or Garage.
(b) No action shall have been taken, and no statute, rule,
regulation, executive order, judgment, decree, or injunction (other than a
temporary restraining order) shall have been enacted, entered, promulgated or
enforced (and not repealed, superseded, lifted or otherwise made inapplicable),
by any court of competent jurisdiction or Governmental Authority which
restrains, enjoins or otherwise prohibits the consummation of the Merger (each
party agreeing to use its commercially reasonable efforts to avoid the effect of
any such statute, rule, regulation or order or to have any such order, judgment,
decree or injunction lifted).
(c) The Home Registration Statement shall have become effective in
accordance with the provisions of all applicable Federal Securities laws, rules
and regulations, and no stop order suspending such effectiveness shall have been
issued and remain in effect.
(d) The shares of Home Common Stock shall have been approved for
listing on the NYSE, subject only to official notice of issuance.
(e) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(f) Garage shall have received the Garage Stockholder Approval.
SECTION 7.2 Conditions to Obligations of Garage to Effect the Merger.
The obligations of Garage to effect the Merger are subject to the satisfaction
of the following conditions, unless waived by Garage:
(a) (i) The representations and warranties of Home and Merger Sub
contained herein that are qualified as to materiality shall be true and
accurate, and those not so qualified shall be true and accurate in all material
respects, in each case, at and as of the date hereof (except to the extent a
representation or warranty speaks specifically as of an earlier date or except
as contemplated by this Agreement) and (ii) the representations and warranties
of Home and Merger Sub contained herein shall be true and accurate at and as of
the Effective Time as
40
<PAGE> 47
though made at the Effective Time (except to the extent a representation or
warranty speaks specifically as of an earlier date or has become untrue or
inaccurate because of Transactions contemplated herein) except in such cases
where the failure to be true and accurate would not have a Material Adverse
Effect (determined disregarding any qualification as to materiality contained in
the representation or warranty) on Home or Merger Sub; provided, that any
representation and warranty that is true and accurate as of the date hereof (or
such earlier date as set forth above) shall be deemed to be true and accurate at
and as of the Effective Time except to the extent that Home or any of its
subsidiaries shall have taken any voluntary action completely within the control
of such person that has been the principal cause of such representation or
warranty not being true and accurate; and provided, further, that the
representations and warranties set forth in Section 5.9 and clause (b) of
Section 5.8 shall be true and accurate only as of the date hereof.
(b) Home and Merger Sub shall have performed, in all material
respects, all obligations and complied, in all material respects, with all
covenants required by this Agreement to be performed or complied with by them
prior to the Effective Time.
(c) Home shall have delivered to Garage a certificate, dated the
Effective Time and signed by its Chief Executive Officer or Chief Financial
Officer and Executive Vice President, evidencing compliance with Sections 7.2(a)
and (b).
(d) Garage shall have received an opinion of J.W. Blenke, counsel
to Home and Merger Sub, in form and substance reasonably satisfactory to Garage,
addressing the matters set forth in Exhibit B.
SECTION 7.3 Conditions to Obligations of Home and Merger Sub to Effect
the Merger. The obligations of Home and Merger Sub to effect the Merger are
subject to the satisfaction of the following conditions, unless waived by Home
and Merger Sub:
(a) (i) The representations and warranties of Garage contained
herein that are qualified as to materiality shall be true and accurate, and
those not so qualified shall be true and accurate in all material respects, in
each case at and as of the date hereof (except to the extent a representation or
warranty speaks specifically as of an earlier date or except as contemplated by
this Agreement) and (ii) the representations and warranties of Garage contained
herein shall be true and accurate at and as of the Effective Time as though made
at the Effective Time (except to the extent a representation or warranty speaks
specifically as of an earlier date or has become untrue or inaccurate because of
Transactions contemplated herein) except in such cases where the failure to be
true and accurate would not have a Material Adverse Effect (determined
disregarding any qualification as to materiality contained in the representation
or warranty) on Garage; provided, that any representation and warranty that is
true and accurate as of the date hereof (or such earlier date as set forth
above) shall be deemed to be true and accurate at and as of the Effective Time
except to the extent that Garage and its subsidiaries shall have taken any
voluntary action completely within the control of such person, that has been the
principal cause
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<PAGE> 48
of such representation or warranty not being true and accurate; and provided,
further, that the representations and warranties set forth in Section 4.9 and
clause (b) of Section 4.8 shall be true and accurate only as of the date hereof.
(b) Garage shall have performed, in all material respects, all
obligations and complied, in all material respects, with all covenants required
by this Agreement to be performed or complied with by it prior to the Effective
Time.
(c) Garage shall have delivered to Home a certificate, dated the
Effective Time and signed by its Chief Executive Officer or Chief Financial
Officer, evidencing compliance with Sections 7.3(a) and (b).
(d) Home and Merger Sub shall have received an opinion of Cooley
Godward LLP, counsel to Garage, in form and substance reasonably satisfactory to
Home and Merger Sub, addressing the matters set forth in Exhibit C.
(e) The Management Stockholder Agreement shall not have been
modified or terminated without the consent of Home and shall be in full force
and effect.
(f) Each Stockholder Agreement shall not have been modified or
terminated without the consent of Home and shall be in full force and effect.
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
SECTION 8.1 Termination. This Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before or after
approval of this Agreement or the Merger by the stockholders of Garage:
(a) by the mutual written consent of Garage and Home;
(b) by Garage or Home, if (i) the Effective Time shall not have
occurred on or before December 31, 1997, (ii) any Governmental Authority, the
consent of which is a condition to the obligations of Garage and Home to
consummate the Transactions, shall have determined not to grant its consent and
all appeals of such determination shall have been taken and have been
unsuccessful or (iii) any court of competent jurisdiction shall have issued an
order, judgment or decree (other than a temporary restraining order)
restraining, enjoining or otherwise prohibiting the Merger and such order,
judgment or decree shall have become final and nonappealable; provided, however,
that the right to terminate this Agreement pursuant to clause (i) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement
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<PAGE> 49
has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before such date;
(c) by Garage, if there has been a material breach by Home of any
representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within ten Business Days following receipt by
Home of notice of such breach from Garage; provided, however, that the right to
terminate this Agreement pursuant to this Section 8.1 (c) shall not be
available to Garage if Garage, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement;
(d) by Home, if there has been a material breach by Garage of any
representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within ten Business Days following receipt by
Garage of notice of such breach from Home; provided, however, that the right to
terminate this Agreement pursuant to this Section 8.1 (d) shall not be
available to Home if Home, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement;
(e) by Home or Garage if, at the Garage Meeting (including any
adjournment or postponement thereof) called pursuant to Section 6.7 hereof, the
Garage Stockholder Approval shall not have been obtained; and
(f) by Garage if (i) Garage receives an alternative Acquisition
Proposal, (ii) Garage is not then in breach of Section 6.6 , (iii) at least
three Business Days prior to such termination, Garage shall have provided to
Home written notice (A) as to the material terms of any such Acquisition
Proposal and (B) that the Board of Directors of Garage in the exercise of its
good faith judgment as to fiduciary duties to stockholders under applicable law,
after consultation with outside legal counsel, has determined, by action of a
majority of the entire Board of Directors of Garage that such termination is
necessary in order for such Board of Directors to comply with such duties, and
(iv) on the date of such termination, the Board of Directors of Garage
determines, by action of a majority of the entire Board of Directors of Garage
that such termination continues to be necessary in order for such Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law (which determination shall be made in light of any revised proposal made by
Home) and Garage concurrently enters into a definitive agreement providing for
the implementation of such Acquisition Proposal.
SECTION 8.2 Effect of Termination. In the event of termination of this
Agreement by Garage or Home as provided in Section 8.1 hereof, this Agreement
shall forthwith become void (except Sections 6.5(b), 6.15, 8.2, 8.5, 9.1, 9.2,
9.4, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10, 9.12(b), 9.14 or 9.15) and there shall be no
liability on the part of Garage, Home, Merger Sub or their respective officers
or directors, except for any breach of a party's obligations under Sections
6.5(b), 6.15, 8.2, 8.5, 9.1, 9.2, 9.4, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10, 9.12(b),
9.14 and 9.15. Notwithstanding the foregoing, no party hereto shall be relieved
from liability for any willful, material breach of this Agreement.
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<PAGE> 50
SECTION 8.3 Amendment or Supplement. At any time before or after
approval of this Agreement by the stockholders of Garage and prior to the
Effective Time, this Agreement may be amended or supplemented in writing by
Garage, Merger Sub and Home with respect to any of the terms contained in this
Agreement, except that following approval by the stockholders of Garage there
shall be no amendment or supplement which by law requires further approval by
such stockholders without such further approval by the stockholders of Garage.
SECTION 8.4 Extension of Time, Waiver, Etc. At any time prior to the
Effective Time:
(a) Home may extend the time for the performance of any of the
obligations or acts of Garage, and Garage may extend the time for the
performance of any of the obligations or acts of Home or Merger Sub;
(b) Home may waive any inaccuracies in the representations and
warranties of Garage contained herein or in any document delivered pursuant
hereto, and Garage may waive any inaccuracies in the representations and
warranties of Home contained herein or in any document delivered pursuant
hereto; or
(c) Home may waive compliance with any of the agreements of Garage
contained herein, and Garage may waive compliance with any of the agreements of
Home or Merger Sub contained herein; provided, however, that no failure or delay
by Garage or Home in exercising any right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right hereunder.
SECTION 8.5 Termination Fee.
(a) If this Agreement is terminated pursuant to Section 8.1(f) or
if the Board of Directors of Garage shall fail to recommend (for any reason
other than a breach of the Merger Agreement by Home) that the stockholders of
Garage approve the Merger Agreement and the Merger and the Garage Stockholder
Approval is not obtained, then Garage will immediately pay to Home a termination
fee equal to $6,000,000 in cash and the reasonable out-of-pocket expenses (not
to exceed $750,000) incurred by Home in connection with this Agreement.
(b) The agreement contained in this Section 8.5 is an integral
part of the Transactions and constitutes liquidated damages in the event of the
circumstances specified in 8.5(a) above and not a penalty.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Governing Law. This Agreement and the legal relations
among the parties hereto shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without regard to its
principles of conflicts of law.
SECTION 9.2 Entire Agreement. This Agreement, including the exhibits
and schedules attached hereto, constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, letters of intent, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements, express or implied, made to any party by
any other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.
SECTION 9.3 Modification; Waiver. No supplement, modification,
extension, waiver or termination of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any provision
of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
SECTION 9.4 Notices. All notices, consents, requests, reports, demands
or other communications hereunder (collectively, "Notices") shall be in writing
and may be given personally, by registered mail, fax or by Federal Express (or
other reputable overnight delivery service):
if to Home or Merger Sub, to it at:
Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois 60070
Attention: John W. Blenke, Esq.
Tel: (847) 564-6150
Fax: (847) 205-7536
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<PAGE> 52
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: Russell J. Bruemmer, Esq.
Tel: (202) 663-6804
Fax: (202) 663-6363
if to Garage, to it at:
ACC Consumer Finance Corporation
12750 High Bluff Drive, Suite 320
San Diego, California 92130
Attention: Rocco Fabiano
Tel: (619) 793-6300
Fax: (619) 793-6333
with a copy to:
Cooley Godward LLP Cooley Godward LLP
4365 Executive Drive, Suite 1100 Five Palo Alto Square
San Diego, CA 92121-2128 3000 El Camino Real
Attention: Barbara L. Borden, Esq. Palo Alto, CA 94306-2155
Tel: (619) 550-6000 Attention: Michael R. Jacobson, Esq.
Fax: (619) 453-3555 Tel: (415) 843-5000
Fax: (415) 857-0603
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given (i) when delivered personally, (ii) three days after being sent
by registered mail, (iii) upon transmission by fax and receipt of confirmation
of such transmission by the sender's fax machine, or (iv) one day after being
sent by Federal Express (or other reputable overnight delivery service).
SECTION 9.5 Expenses. Whether or not the transactions contemplated by
this Agreement shall be consummated, all fees and expenses incurred by any party
hereto in connection with this Agreement shall be borne by such party, except
that the filing fee paid to the SEC in connection with the Proxy
Statement/Prospectus and expenses incurred in connection with printing and
mailing the Proxy Statement/Prospectus shall be paid 50% by Garage and 50% by
Home.
SECTION 9.6 Assignment. No party hereto shall have the right, power or
authority to assign or pledge this Agreement or any portion of this Agreement,
or to delegate any duties or
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obligations arising under this Agreement, voluntarily, involuntarily, or by
operation of law. without the prior written consent of the other parties hereto.
SECTION 9.7 No Survival. Except as otherwise expressly provided
herein, none of the representations and warranties in this Agreement or in any
document or instrument delivered pursuant to this Agreement shall survive the
Merger or the termination of this Agreement pursuant to Article VIII.
SECTION 9.8 Severability. Any provision or part of this Agreement
which is invalid or unenforceable in any situation in any jurisdiction shall, as
to such situation and such jurisdiction, be ineffective only to the extent of
such invalidity and shall not affect the enforceability of the remaining
provisions hereof or the validity or enforceability of any such provision in any
other situation or in any other jurisdiction.
SECTION 9.9 Successors and Assigns; Third Parties. Subject to and
without waiver of the provisions of Section 9.6, all of the rights, duties,
benefits, liabilities and obligations of the parties shall inure to the benefit
of, and be binding upon, their respective successors, assigns, heirs and legal
representatives. Except as specifically set forth in Section 3.2, 3.3, 3.4, 3.5,
and 6.16 nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person or entity, other than the parties hereto
and their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
SECTION 9.10 Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
SECTION 9.11 Interpretation; References. Any use of masculine,
feminine or neuter pronouns herein shall not be limiting, but shall be construed
as referring to persons of any gender, as the context may require. Any use of
the singular or plural form herein shall not be limiting, but shall be construed
as referring to either the plural or singular, as the context may require.
References to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement, and references to an
"Article" or a "Section" are, unless otherwise specified, to an Article or a
Section of this Agreement. The Article and Section headings of this Agreement
are for convenience of reference only and shall not be deemed to modify,
explain, restrict, alter or affect the meaning or interpretation of any
provision hereof.
SECTION 9.12 Dispute Resolution and Jurisdiction.
(a) Each party to this Agreement shall appoint a Representative to
coordinate with the other party the implementation of this Agreement. If any
dispute arises with respect to either party's performance hereunder, the
Representatives shall meet to attempt to resolve such
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dispute, either in person or by telephone, within two (2) business days after
the written request of either Representative. If the Representatives are unable
to resolve such dispute, the chief executive officers of Garage and Home shall
meet, either in person or by telephone, within ten (10) business days after
either Representative provides written notice that the Representatives have been
unable to resolve such dispute. If the chief executive officers are unable to
resolve such dispute, either party may submit such dispute to Deloitte and
Touche LLP, or another nationally-recognized accounting firm, if such dispute is
solely of a financial nature.
(b) Any disputes arising out of, in connection with or with
respect to this Agreement, the subject matter hereof, the performance or
non-performance of any obligation hereunder, or any of the transactions
contemplated hereby that cannot be resolved in accordance with subsection (a)
hereof, shall be adjudicated in a state or federal court of competent civil
jurisdiction sitting in the State of Delaware and nowhere else. Each of the
parties hereto hereby irrevocably submits to the jurisdiction of any such court
of the purposes of any suit, civil action or other proceeding arising out of, in
connection with or with respect to this Agreement, the subject matter hereof,
the performance of non-performance of any obligation hereunder, or any of the
transactions contemplated hereby (each, a "Suit"). To the extent permitted by
Law, each of the parties hereto hereby waives and agrees not to assert by way of
motion, as a defense or otherwise in any such Suit, any claim that it is not
subject to the jurisdiction of the above courts, that such Suit is brought in an
inconvenient forum, that the venue of such Suit is improper or that it is
entitled to a trial by jury.
SECTION 9.13 Exhibits and Schedules. All exhibits and schedules
attached hereto are hereby incorporated by reference as though set out in full
herein.
SECTION 9.14 Attorneys' Fees. In the event that any party hereto
brings an action or proceeding against the other party to enforce or interpret
any of the covenants, conditions, agreements or provisions of this Agreement,
the prevailing party in such action or proceeding shall be entitled to recover
all costs and expenses of such action or proceeding, including, without
limitation, reasonable attorneys' fees, charges, disbursements and the fees and
costs of expert witnesses.
SECTION 9.15 Waiver of Jury Trial. Each party to this Agreement
further waives its respective right to a jury trial of any claim or cause of
action arising out of this Agreement or any dealings between any of the parties
hereto relating to the subject matter of this Agreement. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this Agreement,
including, without limitation, contract claims, tort claims and all other common
law and statutory claims. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or modifications to this Agreement or to any
other document or agreement relating to the Transactions.
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SECTION 9.16 Further Assurances. Each of the parties shall, without
further consideration, use reasonable efforts to execute and deliver such
additional documents and take such other action as the other parties, or any of
them, may reasonably request to carry out the intent of this Agreement and the
Transactions.
SECTION 9.17 Negotiation of Agreement. Each of the parties
acknowledges that it has been represented by independent counsel of its choice
throughout all negotiations that have preceded the execution of this Agreement
and that it has executed the same with consent and upon the advice of said
independent counsel. Each party and its counsel cooperated in the drafting and
preparation of this Agreement and the documents referred to herein, and any and
all drafts relating thereto shall be deemed the work product of the parties and
may not be construed against any party by reason of its preparation.
Accordingly, any rule of law or any legal decision that would require
interpretation of any ambiguities in this Agreement against the party that
drafted it is of no application and is hereby expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to effect the
intentions of the parties and this Agreement.
(Remainder of page intentionally left blank)
49
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ JOHN W. BLENKE
---------------------------
Name: J.W. Blenke
Title: Asst Sec & VP
ACC CONSUMER FINANCE CORPORATION
By: /s/ ROCCO J. FABIANO
---------------------------
Name:
Title:
HOUSEHOLD AUTO CORPORATION
By: /s/ PATRICK D. SCHWARTZ
---------------------------
Name: Patrick D. Schwartz
Title: Vice President
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ANNEX I
EMPLOYEE MATTERS
Employee Benefits
Home will cause all Garage employees to be eligible to participate as
soon as practicable (i) in any holiday, sick leave, vacation pay, leave of
absence, or similar policy of Home in which similarly situated employees of Home
are generally eligible to participate without duplication of benefits and (ii)
in the Benefit Plans of Home in which similarly situated employees of Home are
generally eligible to participate. Home will use its best efforts, to the extent
practicable, to admit employees to the foregoing plans no later than the first
entry date following the Closing Date. Prior to admittance of employees to the
foregoing plans, Home will use its reasonable best efforts to maintain the
relevant Garage plans existing prior to the Closing Date. In addition, as of the
Closing Date, Home will cover or maintain coverage of Garage employees and their
dependents under a Home or Garage group health plan and under basic
company-provided life and disability coverage, subject to the rules applicable
to other similarly situated employees of Home, without regard to any preexisting
condition exclusions or, to the extent the Garage employee was covered by such a
plan before the Closing Date, any waiting periods, or similar limitations under
any Benefit Plans of Home and Home shall provide each such employee with credit
for any copayments previously made and any deductible previously satisfied. For
purposes of any seniority or length of service requirements, waiting periods,
vesting periods, or differential benefits based on length of service in any such
plan or policy of Home as of the Closing Date for which a Garage employee may be
eligible after the Closing, Home shall treat service by such employee with
Garage as though it had been service with Home for all purposes under any such
plan or policy to the extent Garage credited such service under its similar
plans, excluding benefit accruals under any defined benefit plan maintained by
Home, so long as this crediting of service does not violate applicable laws and
is consistent with the rules governing Benefit Plans qualified under Section 401
(a) of the Code.
<PAGE> 58
Employee Communication.
Any communications proposed to be delivered to the Garage employees
before the Closing regarding the matters contained in or the transactions
contemplated under the Merger Agreement or this Annex I, or otherwise respecting
any changes or potential changes in employee benefit plans, practices, or
procedures that may or will occur in connection with the transactions
contemplated by the Merger Agreement, shall be subject to the prior approval of
Home or Garage, respectively, which approval shall not be unreasonably withheld
and who shall be deemed to have approved a proposed communication absent
objection provided within 72 hours of receipt of the proposed communications.
The proposed communication to be delivered to the Garage employees on the
Business Day immediately following the execution of the Merger Agreement has
been approved by Home.
No Other Restrictions; No Third Party Beneficiaries
Nothing in this Annex I or in the Merger Agreement shall (a) restrict
or otherwise inhibit Home's right to terminate the employment of any Garage
employee on or after the Closing Date or (b) be construed or interpreted to
restrict Home's right or authority to amend or terminate any of its employee
benefit plans, policies, or programs effective on or after the Closing Date.
Nothing expressed or implied in this Annex I or in the Merger Agreement shall
give any Garage employee any third party beneficiary rights or other rights to
sue under or with respect to the Merger Agreement, including Annex I, except as
set forth in Section 9.9 of the Merger Agreement.
<PAGE> 59
EXHIBITS TO
AGREEMENT AND PLAN OF MERGER
dated as of
August _, 1997
by and among
HOUSEHOLD INTERNATIONAL, INC.,
HOUSEHOLD AUTO CORPORATION
and
ACC CONSUMER FINANCE CORPORATION
<PAGE> 60
<TABLE>
<CAPTION>
INDEX
<S> <C> <C>
EXHIBIT A Form of Affiliate Letter.................................................. A-1
EXHIBIT B Form of Legal Opinion of Counsel to Home and Merger Sub.................... B-1
EXHIBIT C Form of Legal Opinion of Counsel to Garage................................. C-1
EXHIBIT D Form of Stockholder Agreement.............................................. D-1
EXHIBIT E Form of Management Stockholder Agreement................................... E-1
EXHIBIT F Form of Tax Representation Letters......................................... F-1
</TABLE>
<PAGE> 61
EXHIBIT A
FORM OF AFFILIATE LETTER
Household International, Inc.
2700 Sanders Road
Prospect Heights, Illinois 60070
Attn: John W. Blenke, Esq.
Ladies and Gentlemen:
I have been advised that, as of the date of this letter agreement, I
may be deemed to be an "affiliate" of ACC Consumer Finance Corporation, a
Delaware corporation ("Garage"), as such term is defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act").
Pursuant to the terms of the Agreement and Plan of Merger, dated as of
August 24, 1997 (the "Merger Agreement"), by and among Household International,
Inc., a Delaware corporation ("Home"), Garage and Household Auto Corporation, a
Delaware corporation and a wholly owned subsidiary of Home ("Merger Sub"),
Merger Sub will be merged with and into Garage (the "Merger"). Pursuant to the
Merger, all of the shares of Common Stock, par value $0.001 per share, of Garage
owned by the undersigned will be converted into the right to receive a
combination of cash and shares of Common Stock, par value $ 1.00 per share, of
Home (the "Home Common Stock").
I represent, warrant and covenant to Home that, with respect to all
shares of Home Common Stock received as a result of the Merger:
1. I shall not make any sale, transfer or other disposition of the
shares of Home Common Stock in violation of the Act or the Rules and
Regulations.
2. I have carefully read this letter and the Merger Agreement and have
had an opportunity to discuss the requirements of such documents and any other
applicable limitations upon my ability to sell, transfer or otherwise dispose of
shares of Home Common Stock with my counsel or counsel for Garage.
3. I have been advised that the issuance of shares of Home Common
Stock to me pursuant to the Merger has been registered with the Commission under
the Act. However, I have also been advised that, since at the time the Merger
was submitted for a vote of the stockholders of Garage, I may be deemed to have
been an affiliate of Garage and the distribution
<PAGE> 62
by me of the Home Common Stock has not been registered under the Act, I may not
sell, transfer or otherwise dispose of shares of Home Common Stock issued to me
in the Merger unless (i) such sale, transfer or other disposition has been
registered under the Act or is made in conformity with Rule 145 under the Act,
or (ii) in the opinion of counsel reasonably acceptable to Home, or pursuant to
a "no action" letter obtained by the undersigned from the staff of the
Commission or pursuant to a change in Rule 145 under the Act, such sale,
transfer or other disposition is otherwise exempt from registration under the
Act.
4. I understand that Home is under no obligation to register under the
Act the sale, transfer or other disposition of shares of Home Common Stock by me
or on my behalf or to take any other action necessary in order to make
compliance with an exemption from such registration available.
5. I understand that Home will give stop transfer instructions to
Home's transfer agents with respect to the Home Common Stock and that the
certificates for the shares of Home Common Stock issued to me, or any
substitutions therefor, will bear a legend substantially to the following
effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 APPLIES
AND MAY ONLY BE TRANSFERRED PURSUANT TO THE REQUIREMENTS OF SUCH RULE
AND IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED AUGUST
24,1997, BETWEEN THE REGISTERED HOLDER HEREOF AND HOUSEHOLD
INTERNATIONAL, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF HOUSEHOLD INTERNATIONAL, INC."
It is understood and agreed that the legend set forth in paragraph 5
above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act. It is understood
and agreed that such legend and the stop orders referred to above will be
removed if (i) one year shall have elapsed from the date the undersigned
acquired the Home Common Stock received in the Merger and the provisions of Rule
145(d)(2) are then available to the undersigned, (ii) two years shall have
elapsed from the date the undersigned acquired the shares of Home Common Stock
received in the Merger and the provisions of Rule 145(d)(3) are then available
to the undersigned, (iii) Home has received either an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to Home, or a " no action"
letter obtained by the undersigned from the staff of the Commission, to the
effect that the restrictions imposed by Rule 145 under the Act no longer apply
to the undersigned, or (iv) the Commission amends Rule 145 such that there are
no longer restrictions on sale under Rule 145.
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Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of Garage as described in the first paragraph of
this letter.
Home agrees that, for a period of at least two years after the
effective date of Merger, it will make publicly available the information
required by, and in the manner specified by, Rule 144(c) under the Act.
Sincerely,
-----------------------------
Name:
Accepted this ___day of_________________,1997:
HOUSEHOLD INTERNATIONAL, INC.
By:_____________________________________
Name:
Title:
A-3
<PAGE> 64
EXHIBIT B
FORM OF LEGAL OPINION OF
JOHN W. BLENKE, ASSISTANT GENERAL COUNSEL
AND SECRETARY OF HOME AND MERGER SUB
1. Merger Sub has been duly incorporated and each of Merger Sub and
Home is validly existing and in good standing under the laws of the State of
Delaware.
2. Each of Home and Merger Sub has the corporate power and corporate
authority to enter into the Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Agreement by each of
Home and Merger Sub and the consummation of the transactions contemplated
thereby have been duly authorized by all requisite corporate action on the part
of Home and Merger Sub.
3. The Agreement has been executed and delivered by each of Home and
Merger Sub and (assuming it has been duly authorized, executed and delivered by
Garage) is a valid and binding obligation of Home and Merger Sub, enforceable
against Home and Merger Sub in accordance with its terms, except (a) to the
extent that enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity) and (b) that rights to indemnification thereunder may be limited by
Federal or state securities laws or the policies underlying such laws.
4. Neither the execution and delivery of the Agreement by Home, nor
the consummation by each of Home and Merger Sub of the transactions contemplated
thereby, will (a) violate the Certificate of Incorporation or By-laws of Home or
Merger Sub, or (b) to the best of my knowledge, constitute a violation of or a
default under any material contract, agreement or instrument to which Home,
Merger Sub or any of their Material Subsidiaries is subject.
5. The shares of Home Common Stock to be issued in the Merger pursuant
to the Merger Agreement have been lawfully and duly authorized and such shares
of Home Common Stock, when issued and delivered in accordance with the terms of
the Merger Agreement, will be validly issued, fully paid and nonassessable.
6. Neither the execution or delivery by Home or Merger Sub of the
Agreement nor the consummation by Home or Merger Sub of the Merger in accordance
with the terms and provisions thereof will violate any Applicable Law (as
hereinafter defined). "Applicable Laws" shall mean those laws, rules and
regulations of the general corporate law of
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the State of Delaware and of the United States of America which, in my
experience, are normally applicable to transactions of the type contemplated by
the Agreement.
7. No Governmental Approval (as hereinafter defined), which has not
been obtained or taken and is not in full force and effect, is required to
authorize or is required in connection with the execution, delivery or
performance of the Agreement by Home or Merger Sub, except that I express no
opinion with regard to the securities or Blue Sky laws of the various states.
"Governmental Approval" means any consent, approval, license, authorization or
validation of, or filing, recording or registration with, any Governmental
Authority pursuant to Applicable Laws.
8. The Home Registration Statement has been declared effective under
the Securities Act and, to the best of my knowledge, no stop order suspending
the effectiveness of the Home Registration Statement or preventing the use of
the Proxy Statement/Prospectus has been issued.
9. The Proxy Statement/Prospectus, as of the date it was mailed to
stockholders of Garage and as of the date hereof, and the Home Registration
Statement, as of the date of its effectiveness and as of the date hereof,
appeared on its face to be appropriately responsive in all material respects to
the applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations thereunder, except that, in each case, I express no
opinion or belief as to the financial statements, schedules and other financial
data included or incorporated, or deemed to be incorporated, by reference
therein or excluded therefrom or any information to the extent it was furnished
by or relates to Garage, and I do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Proxy
Statement/Prospectus or the Home Registration Statement.
In addition, I have participated in conferences with other officers
and representatives of Home, representatives of the independent public
accountants of Home, officers and other representatives of Garage, counsel for
Garage and representatives of the independent public accountants of Garage, at
which the contents of the Proxy Statement/Prospectus, the Home Registration
Statement and related matters were discussed and, although I am not passing
upon, and do not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Proxy Statement/Prospectus or the
Home Registration Statement and have made no independent check or verification
thereof, on the basis of the foregoing, no facts have come to my attention that
have led me to believe that, insofar as it relates to Home, the Proxy
Statement/Prospectus, the Home Registration Statement, in each case, as of its
date and the date of the Garage Meeting, contained or contains an untrue
statement of a material fact or omitted or omits 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, except
that I express no opinion or belief with respect to the financial statements,
schedules and other financial data included or incorporated, or deemed to be
incorporated, by reference in the Proxy Statement/Prospectus or the Home
Registration Statement or the information included or
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incorporated, or deemed to be incorporated, by reference in the Proxy
Statement/Prospectus or the Home Registration Statement to the extent such
information was furnished by or relates to Garage.
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EXHIBIT C
FORM OF LEGAL OPINION OF
COOLEY GODWARD LLP,
COUNSEL TO GARAGE
1. Garage and each subsidiary of Garage listed on Schedule A attached
hereto has been duly incorporated and is validly existing and in good standing
under the laws of its respective jurisdiction of incorporation.
2. Garage has the corporate power and corporate authority to enter
into the Agreement and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement by Garage and the consummation of the
transactions contemplated thereby have been duly authorized by all requisite
corporate action on the part of Garage.
3. The Agreement has been executed and delivered by Garage and
(assuming it has been duly authorized, executed and delivered by Home and Merger
Sub) is a valid and binding obligation of Garage, enforceable against Garage in
accordance with its terms, except (a) to the extent that enforcement thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity) and (b) that rights to
indemnification thereunder may be limited by Federal or state securities laws or
the policies underlying such laws.
4. Neither the execution and delivery of the Agreement by Garage, nor
the consummation by Garage of the transactions contemplated thereby, will (a)
violate the Certificate of Incorporation or By-laws of Garage, or (b) constitute
a violation of or a default under any material contract, agreement or instrument
to which Garage or any of its Material Subsidiaries is subject.
5. Neither the execution or delivery by Garage of the Agreement nor
the consummation by Garage of the Merger in accordance with the terms and
provisions thereof will violate any Applicable Law (as hereinafter defined).
"Applicable Laws" shall mean those laws, rules and regulations of the State of
California, the general corporate law of the State of Delaware and of the United
States of America which, in our experience, are normally applicable to
transactions of the type contemplated by the Agreement.
6. No Governmental Approval (as hereinafter defined), which has not
been obtained or taken and is not in full force and effect, is required to
authorize or is required in connection with the execution, delivery or
performance of the Agreement by Garage, except that we express no opinion with
regard to the securities or Blue Sky laws of the various states.
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"Governmental Approval" means any consent, approval, license, authorization or
validation of, or filing, recording or registration with, any Governmental
Authority pursuant to Applicable Laws.
7. The Proxy Statement/Prospectus, as of the date it was mailed to
stockholders of Garage and as of the date hereof, appeared on its face to be
appropriately responsive in all material respects to the applicable requirements
of the Securities Act and the Exchange Act and the rules and regulations
thereunder, except that, in each case, we express no opinion or belief as to the
financial statements, schedules and other financial data included or
incorporated, or deemed to be incorporated, by reference therein or excluded
therefrom or any information to the extent it was furnished by or relates to
Home or Merger Sub, and we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Proxy
Statement/Prospectus.
In addition, we have participated in conferences with officers and
other representatives of Garage, representatives of the independent public
accountants of Garage, officers and other representatives of Home, counsel for
Home and representatives of the independent public accountants of Home, at which
the contents of the Proxy Statement/Prospectus and related matters were
discussed and, although we are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Proxy Statement/Prospectus and have made no independent check
or verification thereof, on the basis of the foregoing, no facts have come to
our attention that have led us to believe that, insofar as it relates to Garage,
the Proxy Statement/Prospectus in each case, as of its date and the date of the
Garage Meeting, contained or contains an untrue statement of a material fact or
omitted or omits 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, except that we express no opinion or
belief with respect to the financial statements, schedules and other financial
data included or incorporated, or deemed to be incorporated, by reference in the
Proxy Statement/Prospectus or the information included or incorporated, or
deemed to be incorporated, by reference in the Proxy Statement/Prospectus to the
extent such information was furnished by or relates to Home or Merger Sub.
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EXHIBIT D
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of August 24, 1997 (this "Agreement"),
among HOUSEHOLD INTERNATIONAL, INC., a Delaware corporation ("Home") and the
other parties signatory hereto (each a "Stockholder").
WHEREAS, each Stockholder desires that ACC CONSUMER FINANCE
CORPORATION, a Delaware corporation ("Garage"), Home and HOUSEHOLD AUTO
CORPORATION, a Delaware corporation and a wholly-owned subsidiary of Home
("Sub"), enter into an Agreement and Plan of Merger dated as of the date hereof
in the form of Exhibit A hereto (as the same may be amended or supplemented, the
"Merger Agreement"), pursuant to which it is intended that Sub merge with and
into the Garage (the "Merger");
WHEREAS, as of the date hereof, each of the Stockholders is beneficial
owner of, and has the sole right to vote and dispose of the number of shares of
Garage Common Stock, which is set forth opposite such Stockholder's name in
Schedule A hereto; and
WHEREAS, each Stockholder is executing this Agreement as an inducement
to Home and Sub to enter into and execute the Merger Agreement;
NOW, THEREFORE, in consideration of the execution and delivery by Home
and Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
Section 1. Representations and Warranties. Each Stockholder severally
represents and warrants to Home as follows:
(a) Such Stockholder is the record and beneficial owner of the
number of shares of Garage Common Stock set forth opposite such
Stockholder's name in Schedule A hereto (such "Stockholder's Shares" or
such "Shares"). Except for such Stockholder's Shares and any other
shares of Garage Common Stock subject hereto, such Stockholder is not
the record or beneficial owner of any shares of Garage Common Stock.
(b) This Agreement has been duly authorized, executed and
delivered by such Stockholder and, assuming due execution and delivery
of this Agreement by the other parties hereto, shall constitute the
legal, valid and binding obligation of such Stockholder, enforceable
against such Stockholder in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws and
general principles of equity. Neither the execution and delivery of
this Agreement nor the consummation by such Stockholder of the
transactions contemplated hereby will result in a violation of, or a
default under, or conflict with, any contract, trust, commitment,
agreement,
<PAGE> 70
understanding, arrangement or restriction of any kind to which such
Stockholder is a party or bound or to which such Stockholder's Shares
are subject. Execution and delivery of the Agreement by such
Stockholder and performance of the transactions contemplated hereby
will not violate, or require any consent, approval, or notice under,
any provision of any judgment, order, decree, statute, law, rule or
regulation applicable to such Stockholder or such Stockholder's Shares,
except for filings under the Exchange Act, if applicable.
(c) Such Stockholder's Shares and the certificates
representing such Shares are now and at all times during the term
hereof will be held by such Stockholder, or by a nominee or custodian
for the benefit of such Stockholder, free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever,
except for any such encumbrances or proxies arising hereunder or under
the existing terms of a trust which such Stockholder is the trustee.
(d) No broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of
such Stockholder.
(e) Such Stockholder understands and acknowledges that Home is
entering into the Merger Agreement in reliance upon such Stockholder's
execution and delivery of this Agreement. Such Stockholder acknowledges
that the irrevocable proxy set forth in Section 4 is granted in
consideration for the execution and delivery of the Merger Agreement by
Home and Sub.
Home represents and warrants to each Stockholder as follows:
(a) This Agreement and the Merger Agreement have been duly and
validly executed and delivered by Home and Sub, and assuming due
execution and delivery of this Agreement by each Stockholder and the
Merger Agreement by Garage, shall constitute the legal, valid and
binding obligation of Home and Sub enforceable in accordance with their
terms, except as enforceability may be limited by bankruptcy and other
similar laws and general principles of equity. Neither the execution
and delivery of this Agreement or the Merger Agreement nor the
consummation of the transactions contemplated hereby and the Merger
will result in the violation of, or a default under, or conflict with,
any contract, trust, commitment, agreement, understanding, arrangement
or restriction of any kind to which Home or Sub is a party or bound.
Execution and delivery by Home and Sub of this Agreement and the Merger
Agreement, and performance of the transactions contemplated thereby
will not violate or require any consent, approval, notice under any
provision of any judgment, order decree, statute, law, rule or
regulation applicable to Home or Sub, except for (i) applicable
requirements, if any, of the Exchange
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Act, the Securities Act, the Blue Sky Laws and the HSR Act, in each
case, including rules and regulations promulgated thereunder and (ii)
the Merger Filing.
(b) Home and Sub understand and acknowledge that each
Stockholder is entering into this Agreement in reliance upon the
covenant and agreement of Home and Sub to perform their respective
covenants and obligations under the Merger Agreement in accordance with
its terms. Home and Sub hereby covenant to each Stockholder to perform
their respective covenants and obligations under the Merger Agreement
in accordance with its terms.
(c) A true and correct copy of each of the Merger Agreement,
the Stockholder Agreement between Home and Cargill Financial Services
Corporation and the Management Stockholder Agreement is attached hereto
as Exhibits A, B and C, respectively.
Section 2. The Merger. Each Stockholder hereby severally agrees to (i)
vote its Shares in favor of the Merger and the Merger Agreement at the Garage
Meeting, or any adjournment or postponement thereof and (ii) deliver its Shares
to Home pursuant to the terms of the Merger Agreement. Further, each Stockholder
hereby severally agrees that it will not exercise any rights of appraisal that
it may have with respect to the Merger.
Section 3. Covenants. Each Stockholder severally agrees with, and
covenants to Home as follows:
(a) Such Stockholder shall not, except as contemplated by the
terms of this Agreement or the Merger Agreement, (i) transfer (which
terms shall include, without limitation, for the purposes of this
Agreement, any sale, gift, pledge or other disposition), or consent to
any transfer of, any or all of such Stockholder's Shares or any
interest therein, (ii) enter into any contract, option or other
agreement of understanding with respect to any transfer of any or all
of such Stockholder's Shares or any interest therein, (iii) grant any
proxy, power-of-attorney or other authorization in or with respect to
such Stockholder's Shares, (iv) deposit such Stockholder's Shares into
a voting trust or enter into a voting agreement or arrangement with
respect to such Stockholder's Shares or (v) take any other action that
would in any way restrict, limit or interfere with the performance of
its obligations hereunder or the transactions contemplated hereby.
(b) Such Stockholder shall not, and shall instruct any
attorney or other advisor or representative retained by such
Stockholder to work specifically on the Merger or in respect of Garage,
for or on behalf of Stockholder not to, directly or indirectly, (i)
solicit, initiate or encourage the submission of, any takeover proposal
or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any
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proposal that constitutes, or may reasonably be expected to lead to,
any takeover proposal with respect to Garage; provided, however, that
nothing in this Agreement shall limit or affect the ability of such
Stockholder (i) in its capacity as officer or director to take any
action set forth in this Section 33(b) subject, as applicable, to any
restrictions contained in the Merger Agreement or (ii) to engage in any
activity permitted or contemplated by this Agreement or the Merger
Agreement.
(c) Such Stockholder shall not take any action which would
restrict, limit or frustrate in any way the Merger as set forth in the
Merger Agreement; provided, however, that nothing in this Agreement
shall limit or affect the ability of such Stockholder (i) in its
capacity as officer or director to take any action set forth in this
Section 3(c) subject, as applicable, to any restrictions contained in
the Merger Agreement or (ii) to engage in any activity permitted or
contemplated by this Agreement or the Merger Agreement. Notwithstanding
the foregoing and Section 3(a)(i) above, such Stockholder may
distribute any of its Shares to its partners or stockholders, as the
case may be, if prior to such distribution, such person or persons who
shall own the Shares beneficially and of record following such
distribution executes a counterpart of this Agreement and agrees to be
bound hereby; provided, that such distribution may only take place (i)
after the Home Registration Statement is declared effective or (ii)
after delivery by such Stockholder to Home of a proposal for such
distribution, which distribution, in Home's reasonable judgement, would
not result in a violation or contravention of the Securities Act or
Exchange Act or the rules and regulations promulgated thereunder.
(d) At any meeting of stockholders of Garage or at any
adjournment thereof or in any other circumstances upon which their
vote, consent or other approval is sought, such Stockholder shall vote
(or cause to be voted) such Stockholder's Shares against (i) any merger
agreement or merger, consolidation, combination, tender offer
(including an exchange offer), sale of substantial assets,
reorganization, joint venture, recapitalization, dissolution,
liquidation or winding up of or by Garage (other than such transactions
as are contemplated by the Merger Agreement) and (ii) any amendment of
Garage's Certificate of Incorporation or By-laws or other proposal or
transaction involving Garage or any of its subsidiaries which amendment
or other proposal or transaction would in any manner impede, frustrate,
prevent or nullify, or result in a breach of any covenant,
representation or warranty or any other obligation or agreement of
Garage under or with respect to, the Merger Agreement or any of the
other transactions contemplated by the Merger Agreement (each of the
foregoing in clause (i) or (ii) above, a "Competing Transaction").
Section 4. Grant of Irrevocable Proxy: Appointment of Proxy.
(a) Each Stockholder hereby irrevocably grants to, and
appoints, Home, David A. Schoenholz, and Paul R. Shay, in their
respective capacities as officers of Home, and any individual who shall
hereafter succeed to any such office of Home, and each of them
individually, such Stockholder's proxy and attorney-in-fact (with full
power of
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substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Shares, or grant a consent or
approval in respect of such Shares against any Competing Transaction.
Such proxy shall terminate upon the termination of this Agreement.
(b) Such Stockholder represents that any proxies (other than
as set forth in this Section 4) heretofore given in respect of such
Stockholder's Shares are not irrevocable, and that any such proxies are
hereby revoked.
(c) Such Stockholder hereby affirms that the irrevocable proxy
set forth in this Section 4 is given in connection with the execution
of the Merger Agreement, and that such irrevocable proxy is given to
secure the performance of the duties of the Stockholder under this
Agreement. Such Stockholder hereby further affirms that the irrevocable
proxy is coupled with an interest and may under no circumstances be
revoked, except as revoked automatically upon termination of this
Agreement. Such Stockholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof
Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 212(e) of the Delaware
General Corporation Law (the "DGCL").
Section 5. Certain Events. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or otherwise,
including without limitation such Stockholder's heirs, guardians, administrators
or successors. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of
Garage affecting the Garage Common Stock, or the acquisition of additional
shares of Garage Common Stock or other voting securities of Garage by any
Stockholder, the number of Stockholder's Shares listed in Schedule A beside the
name of such Stockholder shall be adjusted appropriately and this Agreement and
the obligations hereunder shall attach to any additional shares of Garage Common
Stock or other voting securities of Garage issued to or acquired by such
Stockholder.
Section 6. Legend. Each Stockholder agrees that such Stockholder will
deliver to Garage, within ten (10) business days after the date hereof, any and
all certificates representing such Stockholder's Shares in order that Garage may
inscribe upon such certificates the following legend: "The shares of Common
Stock, $.001 par value, of ACC Consumer Finance Corporation represented by this
certificate are subject to a Stockholder Agreement dated as of August 24, 1997
and may not be sold or otherwise transferred, except in accordance therewith.
Copies of such Agreement may be obtained at the principal executive offices of
ACC Consumer Finance Corporation." Garage shall promptly return by registered
mail the certificates to each Stockholder.
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Section 7. Restriction of Stock Sales. Except in accordance with this
Section or as otherwise contemplated in this Agreement, each Stockholder agrees
that without the prior consent of Home, such Stockholder will not sell, offer
for sale, contract to sell, grant any option for sale, pledge, hedge or
otherwise dispose of any Garage Common Stock or any securities convertible into
or exchangeable for such Garage Common Stock (including any Home Common Stock),
or any options or right to purchase or acquire Garage Common Stock or Home
Common Stock; provided, however, that without the consent of Home, such
Stockholder may, in compliance with the Exchange Act and the Securities Act and
any rules or regulations thereunder, as applicable, in any manner hedge, in the
aggregate, that number of shares of Home Common Stock that it is reasonably
likely to receive pursuant to the Merger Agreement. In the event that
Stockholder engages in any activity specified in the preceding sentence during
the Pricing Period (as defined in the Merger Agreement), Stockholder shall give
written notice to Home of such activity and the number of shares of Garage
Common Stock or Home Common Stock to which such activity related, which notice
shall be delivered to Home via facsimile at the number set forth in Section 9.4
of the Merger Agreement on the date such activity occurs.
Section 8. Voidability. If prior to the execution hereof, the Board of
Directors of Garage shall not have duly and validly authorized and approved by
all necessary corporate action, this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby, so that by the execution and
delivery hereof Home or Sub would become, or could reasonably be expected to
become an "interested stockholder" with whom Garage would be prevented for any
period pursuant to Section 203 of the DGCL or the Certificate of Incorporation
of Garage from engaging in any "business combination" (as such terms are defined
in Section 203 of the DGCL), then this Agreement shall be void and unenforceable
unless within two Business Days of this Agreement becoming void and
unenforceable, such authorization and approval by Garage's Board of Directors
shall have been duly and validly obtained, in which case this Agreement shall be
immediately reinstated and shall be effective on and after such date without any
further action on the part of the parties hereto.
Section 9. Stockholder Capacity. No person executing this Agreement who
is or becomes during the term hereof a director or officer of Garage makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each Stockholder signs solely in his capacity as the record holder and
beneficial owner of such Stockholder's Shares and nothing herein shall limit or
affect any actions taken by a Stockholder in its capacity as an officer or
director of Garage to the extent specifically permitted by the Merger Agreement.
Section 10. Affiliate Agreements, Prior to the Effective Time, each
Stockholder hereby agrees to execute and deliver to Home a Rule 145 Affiliate
Agreement, substantially in the form of Exhibit A to the Merger Agreement.
Section 11. Further Assurances. Each Stockholder shall, upon request of
Home, execute and deliver any additional documents and take such further actions
as may reasonably be deemed by Home to be necessary or desirable to carry out
the provisions hereof and to vest the
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power to vote such Stockholder's Shares as contemplated by Section 4 in Home and
the other irrevocable proxies described therein.
Section 12. Termination. This Agreement, and all rights and obligations
of the parties hereunder, including without limitation the irrevocable proxy
granted herein, shall terminate upon the first to occur of (i) the date upon
which the Merger Agreement is terminated in accordance with its terms, (ii)
December 31, 1997, (iii) as provided in Section 8 hereof and (iv) if the Merger
Agreement is not executed by the parties thereto on or before August 29, 1997.
Otherwise, this Agreement, and all rights and obligations of the parties
hereunder, including without limitation the irrevocable proxy granted herein,
shall terminate upon the Effective Time of the Merger.
Section 13. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned such terms in the Merger
Agreement.
(b) All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice): (i) if to Home, to the
address set forth in Section 9.4 of the Merger Agreement; and (ii) if to a
Stockholder, to the address set forth in Schedule A hereto, or such other
address as may be specified in writing by such Stockholder.
(c) 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.
(d) This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective as to any Stockholder when one or more counterparts have been signed
by each of Home and such Stockholder and delivered to Home and such Stockholder.
(e) This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
-7-
<PAGE> 76
(g) 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, except by laws of descent.
(h) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
(i) Each Stockholder agrees that irreparable damage would occur
and that Home would not have any adequate remedy at law in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that Home
shall be entitled to an injunction or injunctions to prevent breaches by any
Stockholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which it is entitled at law or in equity. Home agrees that
irreparable damage would occur and that each Stockholder would not have any
adequate remedy at law in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that each Stockholder shall be entitled to an
injunction or injunctions to prevent breaches by Home of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in Delaware state court,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (i) consents to submit such
party to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) agrees that such
party will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (iii) agrees that such party
will not bring any action relating to this Agreement of any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware or a Delaware state court. It is further agreed that any breaching
or defaulting party hereunder shall pay to the other parties hereto such out of
pocket costs and expenses, including legal and accounting fees, as are
reasonably incurred in pursuit of such parties' remedies hereunder.
(j) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be in writing and
signed by such party. In addition, Home hereby agrees with each Stockholder that
the Merger Agreement shall not be amended, modified or altered in any material
respect, or any material provision thereof
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<PAGE> 77
waived, without the consent of each Stockholder. Without limiting the foregoing,
no amendment or modification of the Merger Agreement that materially changes the
form or amount of the Merger Consideration shall be effective unless each
Stockholder shall have consented to such amendment or modification.
(Remainder of page intentionally left blank)
-9-
<PAGE> 78
IN WITNESS WHEREOF, Home and the Stockholders have caused this
Agreement to be duly executed and delivered as of the date first written above.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ JOHN W. BLENKE
---------------------------------
Title: Asst. Secretary & VP
-----------------------------
STROME OFFSHORE LIMITED
By:
---------------------------------
Title:
-----------------------------
STROME PARTNERS, L.P.
By:
---------------------------------
Title:
-----------------------------
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<PAGE> 79
IN WITNESS WHEREOF, Home and the Stockholders have caused this
Agreement to be duly executed and delivered as of the date first written above.
HOUSEHOLD INTERNATIONAL, INC.
By:
------------------------------------------
Title:
---------------------------------------
STROME OFFSHORE LIMITED
By: /s/ Jeffrey S. Lambert
------------------------------------------
Title: C.F.O. of Strome Susskind Investment
Management, L.P.
---------------------------------------
STROME PARTNERS, L.P.
By: /s/ Jeffrey S. Lambert
------------------------------------------
Title: C.F.O. of Strome Susskind Investment
Management, L.P.
---------------------------------------
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<PAGE> 80
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Name and Address of Stockholder Stockholder Shares
- ------------------------------- ------------------
<S> <C>
Strome Offshore Limited 1,637,255
c/o Meespierson (Cayman) Ltd.
British Amer Centre
POB 2003
Dr. Roy's Drive
Georgetown, Grand Cayman
Cayman Islands
Strome Partners, L.P. 1,613,933
100 Wilshire Boulevard, 15th Floor
Santa Monica, California 90401
</TABLE>
<PAGE> 81
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of August 24,1997 (this "Agreement"),
between HOUSEHOLD INTERNATIONAL, INC., a Delaware corporation ("Home") and
CARGILL FINANCIAL SERVICES CORPORATION, a Delaware corporation (the
"Stockholder").
WHEREAS, Stockholder desires that ACC CONSUMER FINANCE CORPORATION, a
Delaware corporation ("Garage"), Home and HOUSEHOLD AUTO CORPORATION, a Delaware
corporation and a wholly-owned subsidiary of Home ("Sub"), enter into an
Agreement and Plan of Merger dated as of the date hereof in the form of Exhibit
A hereto (as the same may be amended or supplemented, the "Merger Agreement"),
pursuant to which it is intended that Sub merge with and into the Garage (the
"Merger");
WHEREAS, as of the date hereof, Stockholder is beneficial owner of, and
has the sole right to vote and dispose of the number of shares of the Garage
Common Stock, which is set forth opposite Stockholder's name in Schedule A
hereto; and
WHEREAS, Stockholder is executing this Agreement as an inducement to
Home and Sub to enter into and execute the Merger Agreement;
NOW, THEREFORE, in consideration of the execution and delivery by Home
and Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
Section 1. Representations and Warranties. Stockholder represents and
warrants to Home as follows:
(a) Stockholder is the record and beneficial owner of the
number of shares of Garage Common Stock set forth opposite Stockholder's
name in Schedule A hereto (the "Stockholder's Shares" or the "Shares").
Except for the Stockholder's Shares and any other shares of Garage
Common Stock subject hereto, Stockholder is not the record or beneficial
owner of any shares of Garage Common Stock.
(b) This Agreement has been duly authorized, executed and
delivered by Stockholder and, assuming due execution and delivery of
this Agreement by Home, shall constitute the legal, valid and binding
obligation of Stockholder, enforceable against Stockholder in accordance
with its terms, except as enforceability may be limited by bankruptcy
and other similar laws and general principles of equity. Neither the
execution and delivery of this Agreement nor the consummation by
Stockholder of the transactions contemplated hereby will result in a
violation of, or a default under, or conflict with, any contract, trust,
commitment, agreement, understanding, arrangement or restriction of any
kind to which Stockholder is a party or bound or to which Stockholder's
Shares are
<PAGE> 82
subject. Execution and delivery of this Agreement by Stockholder and
performance of the transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to
Stockholder or Stockholder's Shares, except for necessary filings under
the Exchange Act including rules and regulations promulgated thereunder.
(c) The Stockholder's Shares and the certificates representing such
Shares are now and at all times during the term hereof will be held by
Stockholder, or by a nominee or custodian for the benefit of
Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or
any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder or rights under the Investors Rights Agreement
attached hereto as Exhibit D.
(d) No broker, investment banker, financial adviser or other person
is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of
Stockholder.
(e) Stockholder understands and acknowledges that Home is entering
into the Merger Agreement in reliance upon Stockholder's execution and
delivery of this Agreement. Stockholder acknowledges that the
irrevocable proxy set forth in Section 4 is granted in consideration for
the execution and delivery of the Merger Agreement by Home and Sub.
(f) To the best of Stockholder's knowledge, on the date hereof,
Garage is not in default under nor otherwise in breach of, and no event
known to Stockholder will become, with the passage of time, such a
default or breach, the terms and conditions of the Subordinated
Certificate and Net Interest Margin Certificate Financing Agreement
dated as of September 1, 1995, among Garage and certain of its
subsidiaries named therein, Stockholder and Norwest Bank, National
Association, as amended (the "Subordinated Certificate Agreement"), and
the documents and instruments entered into or executed pursuant thereto,
and any other credit facility, direct extension of credit,
indemnification agreement or other agreement between or among
Stockholder and Garage and/or certain of its subsidiaries named therein.
Home represents and warrants to Stockholder as follows:
(a) This Agreement and the Merger Agreement have been duly and
validly executed and delivered by Home and Sub, and assuming due
execution and delivery of this Agreement by Stockholder and the Merger
Agreement by Garage, shall constitute the legal, valid and binding
obligation of Home and Sub enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy and other similar
laws and general principles of equity. Neither the execution and
delivery of this Agreement or the
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<PAGE> 83
Merger Agreement nor the consummation of the transactions contemplated
hereby and the Merger will result in the violation of, or a default
under, or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which Home or
Sub is a party or bound. Execution and delivery by Home and Sub of this
Agreement and the Merger Agreement and performance of the transactions
contemplated thereby will not violate or require any consent, approval,
notice under any provision of any judgment, order decree, statute, law,
rule or regulation applicable to Home or Sub, except for (i) applicable
requirements, if any, of the Exchange Act, the Securities Act, the Blue
Sky Laws and the HSR Act, in each case, including rules and regulations
promulgated thereunder and (ii) the Merger Filing.
(b) Home and Sub understand and acknowledge that Stockholder is
entering into this Agreement in reliance upon the covenant and agreement
of Home and Sub to perform their respective covenants and obligations
under the Merger Agreement in accordance with its terms. Home and Sub
hereby covenant to Stockholder to perform their respective covenants and
obligations under the Merger Agreement in accordance with its terms.
(c) A true and correct copy of each of the Merger Agreement, the
Stockholder Agreement among Home, Strome Offshore Limited and Strome
Partners, L.P., and the Management Stockholder Agreement is attached
hereto as Exhibits A, B and C, respectively.
Section 2. The Merger. Stockholder hereby covenants and agrees to (i)
vote its Shares in favor of the Merger and the Merger Agreement at the Garage
Meeting, including any adjournment or postponement thereof, and (ii) deliver its
Shares to Home pursuant to the terms of the Merger Agreement. Further,
Stockholder covenants and agrees that it will not exercise any rights of
appraisal that it may have with respect to the Merger.
Section 3. Covenants. Stockholder agrees with, and covenants to, Home as
follows:
(a) Stockholder shall not, except as contemplated by the terms of
this Agreement or the Merger Agreement, (i) transfer (which terms shall
include, without limitation, for the purposes of this Agreement, any
sale, gift, pledge or other disposition), or consent to any transfer of,
any or all of Stockholder's Shares or any interest therein, (ii) enter
into any contract, option or other agreement of understanding with
respect to any transfer of any or all of Stockholder's Shares or any
interest therein, (iii) grant any proxy, power-of-attorney or other
authorization in or with respect to such Stockholder's Shares, (iv)
deposit such Stockholder's Shares into a voting trust or enter into a
voting agreement or arrangement with respect to Stockholder's Shares or
(v) take any other action that would in any way restrict, limit or
interfere with the performance of its obligations hereunder or the
transactions contemplated hereby.
-3-
<PAGE> 84
(b) Stockholder shall not, directly or indirectly, (i)
solicit, initiate or encourage the submission of, any takeover proposal
or (ii) participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any
takeover proposal with respect to Garage; provided, however, that
nothing in this Agreement shall limit or affect the ability of
Stockholder (i) in its capacity as officer or director of Garage to
take any action set forth in this Section 3(b) subject, as applicable,
to any restrictions contained in the Merger Agreement or (ii) to
otherwise engage in any activity permitted or contemplated by this
Agreement or the Merger Agreement. In addition, Stockholder shall not
instruct any attorney or other advisor or representative to, directly
or indirectly, take any of the actions set forth in the preceding
sentence and subject to the provisos set forth in the preceding
sentence.
(c) Stockholder shall not take any action which would
restrict, limit or frustrate in any way the Merger as set forth in the
Merger Agreement; provided, however, that nothing in this Agreement
shall limit or affect the ability of Stockholder (i) in its capacity as
officer or director of Garage to take any action set forth in this
Section 3(c) subject, as applicable, to any restrictions contained in
the Merger Agreement or (ii) to otherwise engage in any activity
permitted or contemplated by this Agreement or the Merger Agreement.
(d) At any meeting of stockholders of Garage or at any
adjournment thereof or in any other circumstances upon which
Stockholder's vote, consent or other approval is sought, Stockholder
shall vote (or cause to be voted) Stockholder's Shares against (i) any
merger agreement or merger, consolidation, combination, tender offer
(including an exchange offer), sale of substantial assets,
reorganization, joint venture, recapitalization, dissolution,
liquidation or winding up of or by Garage (other than such transactions
as are contemplated by the Merger Agreement) and (ii) any amendment of
Garage's Certificate of Incorporation or By-laws or other proposal or
transaction involving Garage or any of its subsidiaries which amendment
or other proposal or transaction would in any manner impede, frustrate,
prevent or nullify, or result in a breach of any covenant,
representation or warranty or any other obligation or agreement of
Garage under or with respect to, the Merger Agreement or any of the
transactions contemplated by the Merger Agreement (each of the
foregoing in clause (i) or (ii) above, a "Competing Transaction").
Section 4. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Stockholder hereby irrevocably grants to, and appoints,
Home, David A. Schoenholz, and Paul R. Shay, in their respective
capacities as officers of Home, and any individual who shall hereafter
succeed to any such office of Home, and each of them individually,
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of Stockholder, to
vote Stockholder's Shares, or
-4-
<PAGE> 85
grant a consent or approval in respect of such Shares against any
Competing Transaction. Such proxy shall terminate upon the termination
of this Agreement.
(b) Stockholder represents that any proxies (other than as set
forth in this Section 4) heretofore given in respect of Stockholder's
Shares are not irrevocable, and that any such proxies are hereby
revoked.
(c) Stockholder hereby affirms that the irrevocable proxy set forth
in this Section 4 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of Stockholder under this Agreement.
Stockholder hereby further affirms that the irrevocable proxy is coupled
with an interest and may under no circumstances be revoked, except as
revoked automatically upon termination of this Agreement. Stockholder
hereby ratifies and confirms all that such irrevocable proxy may
lawfully do or cause to be done by virtue hereof. Such irrevocable proxy
is executed and intended to be irrevocable in accordance with the
provisions of Section 212(e) of the Delaware General Corporation Law
(the "DGCL").
Section 5. Certain Events. Stockholder agrees that this Agreement and the
obligations hereunder shall attach to Stockholder's Shares and shall be binding
upon any person or entity to which legal or beneficial ownership of such Shares
shall pass, whether by operation of law or otherwise, including without
limitation Stockholder's heirs, guardians, administrators, successors or
transferees. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of
Garage affecting Garage Common Stock, or the acquisition of additional shares of
Garage Common Stock or other voting securities of Garage by any Stockholder, the
number of Stockholder's Shares listed in Schedule A beside the name of
Stockholder shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of Garage Common
Stock or other voting securities of Garage issued to or acquired by Stockholder.
Section 6. Legend. Stockholder agrees that Stockholder will deliver to
Garage, within ten (10) business days after the date hereof, any and all
certificates representing Stockholder's Shares in order that Garage may inscribe
upon such certificates the following legend: "The shares of Common Stock, $.001
par value, of ACC Consumer Finance Corporation represented by this certificate
are subject to a Stockholder Agreement dated as of August 24, 1997 and may not
be sold or otherwise transferred, except in accordance therewith. Copies of such
Agreement may be obtained at the principal executive offices of ACC Consumer
Finance Corporation." Garage shall promptly return by registered mail the
certificates to Stockholder.
Section 7. Restriction of Stock Sales. Except in accordance with this
Section or as otherwise contemplated in this Agreement, the Stockholder agrees
that without the prior consent of Home, Stockholder will not sell, offer for
sale, contract to sell, grant any option for sale, pledge, hedge or otherwise
dispose of any Garage Common Stock or any securities convertible
-5-
<PAGE> 86
into or exchangeable for such Garage Common Stock (including any Home Common
Stock), or any options or right to purchase or acquire Garage Common Stock or
Home Common Stock; provided, however, that without the consent of Home,
Stockholder may, in compliance with the Exchange Act and the Securities Act and
any rules or regulations thereunder, as applicable, in any manner hedge, in the
aggregate, that number of shares of Home Common Stock that it is reasonably
likely to receive pursuant to the Merger Agreement. In the event that
Stockholder engages in any activity specified in the preceding sentence during
the Pricing Period (as defined in the Merger Agreement), Stockholder shall give
written notice to Home of such activity and the number of shares of Garage
Common Stock or Home Common Stock to which such activity related, which notice
shall be delivered to Home via facsimile at the number set forth in Section 9.4
of the Merger Agreement on the date such activity occurs.
Section 8. Voidability. If prior to the execution hereof, the Board of
Directors of Garage shall not have duly and validly authorized and approved by
all necessary corporate action, this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby, so that by the execution and
delivery hereof Home or Sub would become, or could reasonably be expected to
become an "interested stockholder" with whom Garage would be prevented for any
period pursuant to Section 203 of the DGCL or the Certificate of Incorporation
of Garage from engaging in any "business combination" (as such terms are defined
in Section 203 of the DGCL), then this Agreement shall be void and unenforceable
unless within two Business Days of this Agreement becoming void and
unenforceable such authorization and approval by Garage's Board of Directors
shall have been duly and validly obtained, in which case this Agreement shall be
immediately reinstated and shall be effective on and after such date without any
further action on the part of the parties hereto.
Section 9. Stockholder Capacity. No person executing this Agreement who is
or becomes during the term hereof a director or officer of Garage makes any
agreement or understanding herein in his or her capacity as such director or
officer. Stockholder signs solely in its capacity as the record holder and
beneficial owner of Stockholder's Shares and nothing herein shall limit or
affect any actions taken by Stockholder in its capacity as an officer or
director of Garage to the extent specifically permitted by the Merger Agreement.
Section 10. Affiliate Agreements. If Stockholder is identified as an
affiliate of Garage in accordance with Section 6.14 of the Merger Agreement,
prior to the Effective Time, Stockholder hereby agrees to execute and deliver to
Home a Rule 145 Affiliate Agreement, substantially in the form of Exhibit A to
the Merger Agreement.
Section 11. Further Assurances. Stockholder shall, upon request of
Home, execute and deliver any additional documents and take such further actions
as may reasonably be deemed by Home to be necessary or desirable to carry out
the provisions hereof and to vest the power to vote Stockholder's Shares as
contemplated by Section 4 in Home and the other irrevocable proxies described
therein.
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<PAGE> 87
Section 12. Termination. This Agreement, and all rights and obligations
of the parties hereunder, including without limitation the irrevocable proxy
granted herein, shall terminate upon the first to occur of (i) the date upon
which the Merger Agreement is terminated in accordance with its terms, (ii)
December 31, 1997, (iii) as provided in Section 8 hereof and (iv) if the Merger
Agreement is not executed by the parties thereto on or before August 29, 1997.
Otherwise, this Agreement, and all rights and obligations of the parties
hereunder, including without limitation the irrevocable proxy granted herein,
shall terminate upon the Effective Time of the Merger. Notwithstanding anything
herein to the contrary, Stockholder shall have the ongoing right, as a creditor
or contract counterparty of Garage to enforce all of its rights and obtain all
of the benefits under the Subordinated Certificate Agreement, and the documents
and instruments entered into or executed pursuant thereto, and any other credit
facility, direct extension of credit, indemnification agreement or other
agreement between or among Stockholder and Garage and/or certain of its
subsidiaries named therein, even if the enforcement of such agreements by
Stockholder has a Material Adverse Effect on Garage, frustrates or limits the
Merger, results in the termination of the Merger Agreement or otherwise.
Stockholder shall not owe Home any duties with respect to such agreements and
Home shall not be a third party beneficiary of any such agreements as a result
of this Agreement or the Merger Agreement.
Section 13. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned such terms in the
Merger Agreement.
(b) All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice): (i) if to Home, to the address set forth in Section 9.4 of the
Merger Agreement; and (ii) if to Stockholder, to the address set forth
in Schedule A hereto, or such other address as may be specified in
writing by Stockholder.
(c) 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.
(d) This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement and shall
become effective as to Stockholder when one or more counterparts have
been signed by each of Home and Stockholder and delivered to Home and
Stockholder.
(e) This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
-7-
<PAGE> 88
(f) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(g) 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, except by laws of descent.
(h) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
(i) Stockholder agrees that irreparable damage would occur and that Home
would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that Home
shall be entitled to an injunction or injunctions to prevent breaches by
Stockholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which it is entitled at law or in equity. Home agrees that
irreparable damage would occur and that Stockholder would not have any adequate
remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that Stockholder shall be entitled to an injunction or
injunctions to prevent breaches by Home of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (i) consents to submit such
party to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (ii) agrees that such
party will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (iii) agrees that such party
will not bring any action relating to this Agreement of any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware or a Delaware state court. It is further agreed that any breaching
or defaulting party hereunder shall pay to the other parties hereto such out of
pocket costs and expenses, including legal and accounting fees, as are
reasonably incurred in pursuit of such parties' remedies hereunder.
-8-
<PAGE> 89
(j) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be in
writing and signed by such party. Home hereby agrees with Stockholder
that the Merger Agreement shall not be amended, modified or altered in
any material respect, or any material provision thereof waived, without
the consent of Stockholder. Without limiting the generality of the
foregoing, no amendment or modification to the Merger Agreement that
materially changes the form or amount of the Merger Consideration shall
be effective unless Stockholder shall have consented to such amendment
or modification.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
-9-
<PAGE> 90
IN WITNESS WHEREOF, Home and Stockholder have caused this Agreement to
be duly executed and delivered as of the date first written above.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ JOHN W. BLENKE
------------------------------------
Title: V.P. and Asst. Secretary
---------------------------------
CARGILL FINANCIAL SERVICES CORPORATION
By:
------------------------------------
Title:
---------------------------------
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<PAGE> 91
IN WITNESS WHEREOF, Home and Stockholder have caused this Agreement to
be duly executed and delivered as of the date first written above.
HOME, INC.
By:
------------------------------------
Title:
---------------------------------
STROME OFFSHORE LIMITED
By:
------------------------------------
Title:
---------------------------------
STROME PARTNERS, L.P.
By:
------------------------------------
Title:
---------------------------------
CARGILL FINANCIAL SERVICES CORPORATION
By: /s/ JEFFREY A.Z. HILLIGOSS
------------------------------------
Title: Vice President
---------------------------------
<PAGE> 92
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Name and Address of Stockholder Stockholder Shares
------------------------------- ------------------
<S> <C>
Cargill Financial Services Corporation 1,132,450
6000 Clearwater Drive
Minnetonka, Minnesota 55343
</TABLE>
<PAGE> 93
EXHIBIT E
MANAGEMENT STOCKHOLDER AGREEMENT
MANAGEMENT STOCKHOLDER AGREEMENT dated as of August 24,1997 (this
"Agreement"), among HOUSEHOLD INTERNATIONAL, INC., a Delaware corporation
("Home") and the other parties signatory hereto (each a "Stockholder").
WHEREAS, each Stockholder desires that ACC CONSUMER FINANCE CORPORATION,
a Delaware corporation ("Garage"), Home and HOUSEHOLD AUTO CORPORATION, a
Delaware corporation and a wholly-owned subsidiary of Home ("Sub"), enter into
an Agreement and Plan of Merger dated as of the date hereof in the form of
Exhibit A hereto (as the same may be amended or supplemented, the "Merger
Agreement"), pursuant to which it is intended that Sub merge with and into the
Garage (the "Merger");
WHEREAS, as of the date hereof, each of the Stockholders is beneficial
owner of, and has the right to vote and dispose of the number of shares of
Garage Cormmon Stock, which is set forth opposite such Stockholder's name in
Schedule A hereto; and
WHEREAS, each Stockholder is executing this Agreement as an inducement
to Home and Sub to enter into and execute the Merger Agreement;
NOW, THEREFORE, in consideration of the execution and delivery by Home and
Sub of the Merger Agreement and the mutual covenants, conditions and agreements
contained herein and therein, the parties agree as follows:
Section 1. Representations and Warranties. Each Stockholder severally
represents and warrants to Home as follows:
(a) Such Stockholder is the record and beneficial owner of, or is
trustee of a trust that is the record holder of, and whose beneficiaries
are the beneficial owners of, the number of shares of Garage Common
Stock set forth opposite such Stockholder's name in Schedule A hereto
(such "Stockholder's Shares" or such "Shares"). Except for such
Stockholder's Shares and any other shares of Garage Common Stock subject
hereto, such Stockholder is not the record or beneficial owner of any
shares of Garage Common Stock.
(b) This Agreement has been duly authorized, executed and delivered
by such Stockholder and, assuming due execution and delivery of this
Agreement by the other parties hereto, shall constitute the legal, valid
and binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms, except as enforceability may
be limited by bankruptcy and other similar laws and general principles
of equity. Neither the execution and delivery of this Agreement nor the
consummation by such Stockholder of the transactions contemplated hereby
will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement,
<PAGE> 94
understanding, arrangement or restriction of any kind to which such
Stockholder is a party or bound or to which such Stockholder's Shares
are subject. No trust of which such Stockholder is a trustee requires
the consent of any beneficiary to the execution and delivery of this
Agreement or to the consummation of the transactions contemplated
hereby. If such Stockholder is married and such Stockholder's Shares
constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement
of such Stockholder's spouse, enforceable against such person in
accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity.
Execution and delivery of the Agreement by such Stockholder and
performance of the transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation applicable to
such Stockholder or such Stockholder's Shares, except for filings under
the Exchange Act, if applicable.
(c) Such Stockholder's Shares and the certificates representing
such Shares are now and at all times during the term hereof will be held
by such Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising hereunder or under the existing terms of
a trust which such Stockholder is the trustee.
(d) No broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
(e) Such Stockholder understands and acknowledges that Home is
entering into the Merger Agreement in reliance upon such Stockholder's
execution and delivery of this Agreement. Such Stockholder acknowledges
that the irrevocable proxy set forth in Section 4 is granted in
consideration for the execution and delivery of the Merger Agreement by
Home and Sub.
Home represents and warrants to each Stockholder as follows:
(a) This Agreement and the Merger Agreement have been duly and
validly executed and delivered by Home and Sub, and assuming due
execution and delivery of this Agreement by Stockholder and the Merger
Agreement by Garage, shall constitute the legal, valid and binding
obligation of Home and Sub enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy and other similar
laws and general principles of equity. Neither the execution and
delivery of this Agreement or the Merger Agreement nor the consummation
of the transactions contemplated hereby and
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<PAGE> 95
Merger will result in the violation of, or a default under, or conflict
with, any contract, trust, commitment, agreement, understanding,
arrangement or restriction of any kind to which Home or Sub is a party
or bound. Execution and delivery by Home and Sub of this Agreement and
the Merger Agreement and performance of the transactions contemplated
thereby will not violate or require any consent, approval, notice under
any provision of any judgment, order decree, statute, law, rule or
regulation applicable to Home or Sub, except for (i) applicable
requirements, if any, of the Exchange Act, the Securities Act, the Blue
Sky Laws and the HSR Act, in each case, including rules and regulations
promulgated thereunder and (ii) the Merger Filing.
(b) Home and Sub understand and acknowledge that each Stockholder
is entering into this Agreement in reliance upon the covenant and
agreement of Home and Sub to perform their respective covenants and
obligations under the Merger Agreement in accordance with its terms.
Home and Sub hereby covenant to each Stockholder to perform their
respective covenants and obligations under the Merger Agreement in
accordance with its terms.
(c) A true and correct copy of each of the Merger Agreement, the
Stockholder Agreement between Home and Cargill Financial Services
Corporation, and the Stockholder Agreement among Home, Strome Offshore
Limited and Strome Partners, L.P. is attached hereto as Exhibits A, B
and C, respectively.
Section 2. The Merger. Each Stockholder hereby severally agrees to (i)
vote his or her Shares in favor of the Merger and the Merger Agreement
at the Garage Meeting, and any adjournment or postponement thereof and
(ii) deliver his or her Shares to Home pursuant to the terms of the
Merger Agreement. Further, each Stockholder hereby severally agrees that
he or she will not exercise any rights of appraisal that he or she may
have with respect to the Merger.
Section 3. Covenants. Each Stockholder severally agrees with, and
covenants to Home and, with respect to paragraph (c) below, each
beneficiary of any revocable trust for which any Stockholder serves as
trustee, agrees with and covenants to Home, as follows:
(a) Such Stockholder shall not, except as contemplated by the terms
of this Agreement or the Merger Agreement, (i) transfer (which terms
shall include, without limitation, for the purposes of this Agreement,
any sale, gift, pledge or other disposition), or consent to any transfer
of, any or all of such Stockholder's Shares or any interest therein,
(ii) enter into any contract, option or other agreement of understanding
with respect to any transfer of any or all of such Stockholder's Shares
or any interest therein, (iii) grant any proxy, power-of-attorney or
other authorization in or with respect to such Stockholder's Shares,
(iv) deposit such Stockholder's Shares into a voting trust or enter into
a voting agreement or arrangement with respect to such Stockholder's
Shares or (v) take any other action that would in any way restrict,
limit or interfere with the performance of its obligations hereunder or
the transactions contemplated hereby.
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<PAGE> 96
(b) Such Stockholder shall not, and shall instruct any attorney or other
advisor or representative retained by such Stockholder to work specifically on
the Merger or in respect of Garage, for and on behalf of Stockholder not to,
directly or indirectly, (i) solicit, initiate or encourage the submission of,
any takeover proposal or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any takeover proposal
with respect to Garage; provided, however, that nothing in this Agreement shall
limit or affect the ability of such Stockholder (i) in his capacity as officer
or director to take any action set forth in this Section 3(b) subject, as
applicable, to any restrictions contained in the Merger Agreement or (ii) to
engage in any activity permitted or contemplated by this Agreement or the Merger
Agreement.
(c) Such Stockholder, and any beneficiary of a revocable trust for which
such Stockholder serves as trustee, shall not take any action to revoke or
terminate such trust or take any other action which would restrict, limit or
frustrate in any way the transactions contemplated by this Agreement or the
Merger Agreement; provided, however, that nothing in this Agreement shall limit
or affect the ability of such Stockholder or beneficiary (i) in his capacity as
officer or director to take any action set forth in this Section 3(c) subject,
as applicable, to any restrictions contained in the Merger Agreement or (ii) to
engage in any activity permitted or contemplated by this Agreement or the Merger
Agreement. Each such beneficiary hereby acknowledges and agrees to be bound by
the terms of this Agreement applicable to it. Notwithstanding the foregoing,
such Stockholder may revoke a revocable trust if the person or persons who own
such shares after revocation is the Stockholder and/or such Stockholder's spouse
and prior to such revocation, such person or persons who shall own the shares
beneficially and of record following such revocation executes a counterpart of
this Agreement and agrees to be bound hereby.
(d) At any meeting of stockholders of the Garage or at any adjournment
thereof or in any other circumstances upon which their vote, consent or other
approval is sought, such Stockholder shall vote (or cause to be voted) such
Stockholder's Shares against (i) any merger agreement or merger, consolidation,
combination, tender offer (including an exchange offer), sale of substantial
assets, reorganization, joint venture, recapitalization, dissolution,
liquidation or winding up of or by the Garage (other than the Merger as set
forth in the Merger Agreement) and (ii) any amendment of Garage's Certificate of
Incorporation or By-laws or other proposal or transaction involving Garage or
any of its subsidiaries which amendment or other proposal or transaction would
in any manner impede, frustrate, prevent or nullify, or result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Garage under or with respect to, the Merger Agreement or any of the other
transactions contemplated by
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<PAGE> 97
the Merger Agreement (each of the foregoing in clause (i) or (ii)
above, a "Competing Transaction").
Section 4. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Each Stockholder hereby irrevocably grants to, and appoints,
Home, David A. Schoenholz, and Paul R. Shay, in their respective
capacities as officers of Home, and any individual who shall hereafter
succeed to any such office of Home, and each of them individually, such
Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Stockholder,
to vote such Stockholder's Shares, or grant a consent or approval in
respect of such Shares against any Competing Transaction. Such proxy
shall terminate upon the termination of this Agreement.
(b) Such Stockholder represents that any proxies (other than as set
forth in this Section 4) heretofore given in respect of such
Stockholder's Shares are not irrevocable, and that any such proxies are
hereby revoked.
(c) Such Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 4 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Stockholder under this Agreement. Such
Stockholder hereby further affirms that the irrevocable proxy is coupled
with an interest and may under no circumstances be revoked, except as
revoked automatically upon termination of this Agreement. Such
Stockholder hereby ratifies and confirms all that such irrevocable proxy
may lawfully do or cause to be done by virtue hereof. Such irrevocable
proxy is executed and intended to be irrevocable in accordance with the
provisions of Section 212(e) of the Delaware General Corporation Law
(the "DGCL").
Section 5. Certain Events. Each Stockholder agrees that this Agreement
and the obligations hereunder shall attach to such Stockholder's Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or otherwise,
including without limitation such Stockholder's heirs, guardians, administrators
or successors. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of
Garage affecting the Garage Common Stock, or the acquisition of additional
shares of Garage Common Stock or other voting securities of Garage by any
Stockholder, the number of Stockholder's Shares listed in Schedule A beside the
name of such Stockholder shall be adjusted appropriately and this Agreement and
the obligations hereunder shall attach to any additional shares of Garage Common
Stock or other voting securities of Garage issued to or acquired by such
Stockholder.
Section 6. Legend. Each Stockholder agrees that such Stockholder will
deliver to Garage, within ten (10) business days after the date hereof, any and
all certificates representing
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<PAGE> 98
such Stockholder's Shares in order that Garage may inscribe upon such
certificates the following legend: "The shares of Common Stock, $.001 par
value, of ACC Consumer Finance Corporation represented by this certificate are
subject to a Stockholder Agreement dated as of August 24, 1997 and may not be
sold or otherwise transferred, except in accordance therewith. Copies of such
Agreement may be obtained at the principal executive offices of ACC Consumer
Finance Corporation."
Section 7. Restriction on Stock Sales.
(a) Except in accordance with the provisions of this Section, each
Stockholder agrees that without the prior consent of Home, the
Stockholder will not offer for sale, contract to sell, sell or otherwise
dispose of any of the shares of Home Common Stock received as a
portion of the Merger Consideration pursuant to the Merger Agreement or
sell short any shares of Home Common Stock; provided, however, that,
without the consent of Home, (i) each Stockholder may pledge on margin
or otherwise all shares of Home Common Stock beneficially owned by such
Stockholder, may purchase, sell, write and close options on shares of
Home Common Stock, may purchase, sell, write and close future contracts
on share of Home Common Stock, may enter in swap transactions with
respect to Home Common Stock and may otherwise engage in any
transactions to hedge the market risk of owning Home Common Stock other
than the short sale of Home Common Stock, whether or not against the
box, (ii) each Stockholder may exercise any outstanding options to
acquire Home Common Stock, (iii) each Stockholder may sell, contract to
sell or otherwise dispose of all shares of Home Common Stock
beneficially owned by such Stockholder upon the termination without
cause of such Stockholder as an employee of Home or its subsidiaries as
cause is defined in such Stockholder's employment agreement, or upon a
change in control of Home and (iv) subject to satisfaction of Home's
stock ownership goal program revised guidelines dated January 1, 1996,
each Stockholder may sell, contract to sell or otherwise dispose of (x)
up to 66 2/3% of the shares of Home Common Stock acquired by such
Stockholder as part of the Merger Consideration, in whole or in part,
following the first anniversary of the Closing Date and (y) all of the
shares of Home Common Stock acquired by such Stockholder as part of the
Merger Consideration, in whole or in part, following the third
anniversary of the Closing Date; provided, that if the Merger is deemed
not to constitute a reorganization within the meaning of Section 368(a)
of the Code, as amended, each Stockholder may sell, contract to sell or
otherwise dispose of 30% of the shares of Home Common Stock acquired by
such Stockholder as part of the Merger Consideration without regard to
the restrictions set forth above. Each Stockholder's agreement to these
restrictions on stock sales is subject to and conditioned upon such
Stockholder entering into an employment agreement with Home in form and
substance satisfactory to Home and such Stockholder on or before the
Closing Date. This Section 7 shall be effective upon the Closing of the
Merger and shall survive termination of this Agreement upon the Closing
of the Merger.
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<PAGE> 99
(b) In consideration of the stock transfer restrictions in
Section 7(a), in addition to any dividends payable in respect of the
Home Common Stock beneficially owned by such Stockholder, Home shall pay
each Stockholder on the first anniversary of the Closing Date, a cash
payment equal to 5% per annum of the market value of 66 2/3% of the
shares of Home Common Stock beneficially acquired by such Stockholder as
part of the Merger Consideration. The market value of such Home Common
Stock shall be fixed on the Closing Date based upon the Weighted Average
Home Stock Price (as defined in the Merger Agreement).
(c) Home shall take reasonable steps to facilitate each
Stockholder's exercise of his right to pledge, margin or hedge his
beneficial ownership of Home Common Stock as permitted in Section 7(a).
Section 8. Voidability. If prior to the execution hereof, the Board of
Directors of Garage shall not have duly and validly authorized and approved by
all necessary corporate action, this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby, so that by the execution and
delivery hereof Home or Sub would become, or could reasonably be expected to
become an "interested stockholder" with whom Garage would be prevented for any
period pursuant to Section 203 of the DGCL or the Certificate of Incorporation
of Garage from engaging in any "business combination" (as such terms are defined
in Section 203 of the DGCL), then this Agreement shall be void and unenforceable
unless within two Business Days of this Agreement becoming void and
unenforceable, such authorization and approval by Garage's Board of Directors
shall have been duly and validly obtained, in which case this Agreement shall be
immediately reinstated and shall be effective on and after such date without any
further action on the part of the parties hereto.
Section 9. Stockholder Capacity. No person executing this Agreement who
is or becomes during the term hereof a director or officer of Garage makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each Stockholder signs solely in his or her capacity as the record
holder and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, such Stockholder's Shares and nothing herein shall
limit or affect any actions taken by a Stockholder in its capacity as an officer
or director of Garage to the extent specifically permitted by the Merger
Agreement.
Section 10. Affiliate Agreements. Prior to the Effective Time, each
Stockholder hereby agrees to execute and deliver to Home a Rule 145 Affiliate
Agreement, substantially in the form of Exhibit A to the Merger Agreement.
Section 11. Further Assurances. Each Stockholder shall, upon request of
Home, execute and deliver any additional documents and take such further actions
as may reasonably be deemed by Home to be necessary or desirable to carry out
the provisions hereof and to vest the power to vote such Stockholder's Shares as
contemplated by Section 4 in Home and the other irrevocable proxies described
therein.
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<PAGE> 100
Section 12. Termination. This Agreement, and all rights and obligations
of the parties hereunder, including without limitation the irrevocable proxy
granted herein, shall terminate upon the first to occur of (i) the date upon
which the Merger Agreement is terminated in accordance with its terms, (ii)
December 31, 1997, (iii) as provided in Section 8 hereof and (iv) if the Merger
Agreement is not executed by the parties thereto on or before August 29, 1997.
Otherwise, this Agreement, and all rights and obligations of the parties
hereunder, including without limitation the irrevocable proxy granted herein but
excluding Section 7 hereof, shall terminate upon the Effective Time of the
Merger.
Section 13. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned such terms in the
Merger Agreement.
(b) All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice): (i) if to Home, to the address set forth in Section 9.4 of the
Merger Agreement; and (ii) if to a Stockholder, to the address set forth
in Schedule A hereto, or such other address as may be specified in
writing by such Stockholder.
(c) 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.
(d) This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement and shall
become effective as to any Stockholder when one or more counterparts
have been signed by each of Home and such Stockholder and delivered to
Home and such Stockholder.
(e) This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the
laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(g) 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,
-8-
<PAGE> 101
by any of the parties without the prior written consent of the other
parties, except by laws of descent.
(h) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held
by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions herein and the application thereof to any other
circumstances, shall remain in full force and effect, shall not in any
way be affected, impaired or invalidated, and shall be enforced to the
fullest extent permitted by law.
(i) Each Stockholder agrees that irreparable damage would occur and
that Home would not have any adequate remedy at law in the event that
any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly
agreed that Home shall be entitled to an injunction or injunctions to
prevent breaches by any Stockholder of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in Delaware state
court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto
(i) consents to submit such party to the personal jurisdiction of any
Federal court located in the State of Delaware or any Delaware state
court in the event any dispute arises out of this Agreement or any of
the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court and (iii) agrees that such
party will not bring any action relating to this Agreement of any of the
transactions contemplated hereby in any court other than a Federal court
sitting in the State of Delaware or a Delaware state court. It is
further agreed that any breaching or defaulting party hereunder shall
pay to the other parties hereto such out of pocket costs and expenses,
including legal and accounting fees, as are reasonably incurred in
pursuit of such parties' remedies hereunder.
(j) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be in
writing and signed by such party. Home hereby agrees with Stockholder
that the Merger Agreement shall not be amended, modified or altered in
any material respect, or any material provision thereof waived, without
the consent of Stockholder. Without limiting the generality of the
foregoing, no amendment or modification to the Merger Agreement that
materially changes the form or amount of the Merger Consideration shall
be effective unless Stockholder shall have consented to such amendment
or modification.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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<PAGE> 102
IN WITNESS WHEREOF, Home and the Stockholders have caused this Agreement
to be duly executed and delivered as of the date first written above.
HOUSEHOLD INTERNATIONAL, INC.
By: /s/ JOHN W. BLENKE
--------------------------------------
Title: VP & Asst. Secretary
--------------------------------------
/s/ Rocco J. Fabiano
-----------------------------------------
Rocco J. Fabiano, individually and as
trustee
-----------------------------------------
Joan Fabiano, individually and as trustee
/s/ GARY S. BURDICK
-----------------------------------------
Gary S. Burdick
-----------------------------------------
Mary Burdick
/s/ RELLEN M. STEWART
-----------------------------------------
Rellen M. Stewart
-----------------------------------------
Claudia Stewart
-----------------------------------------
Jack Fitzpatrick, Trustee
<PAGE> 103
IN WITNESS WHEREOF, Home and the Stockholders have caused this Agreement
to be duly executed and delivered as of the date first written above.
HOUSEHOLD INTERNATIONAL, INC.
By:
--------------------------------------
Title:
--------------------------------------
-----------------------------------------
Rocco Fabiano, individually and as trustee
/s/ JOAN FABIANO
-----------------------------------------
Joan Fabiano, individually and as trustee
-----------------------------------------
Gary S. Burdick
-----------------------------------------
Mary Burdick
/s/ RELLEN M. STEWART
-----------------------------------------
Rellen M. Stewart
-----------------------------------------
Claudia Stewart
-----------------------------------------
Jack Fitzpatrick, Trustee
<PAGE> 104
IN WITNESS WHEREOF, Home and the Stockholders have caused this Agreement
to be duly executed and delivered as of the date first written above.
HOUSEHOLD INTERNATIONAL, INC.
By:
--------------------------------------
Title:
--------------------------------------
-----------------------------------------
Rocco Fabiano, individually and as trustee
-----------------------------------------
Joan Fabiano, individually and as trustee
-----------------------------------------
Gary S. Burdick
/s/ MARY BURDICK
-----------------------------------------
Mary Burdick
/s/ RELLEN M. STEWART
-----------------------------------------
Rellen M. Stewart
/s/ CLAUDIA STEWART
-----------------------------------------
Claudia Stewart
/s/ JACK FITZPATRICK
-----------------------------------------
Jack Fitzpatrick, Trustee
<PAGE> 105
SCHEDULE A
Name and Address of Stockholder Number of Stockholder Shares
- ------------------------------- ----------------------------
Rocco J. Fabiano and Joan Fabiano, Trustees 557,723
Fabiano Family Trust
1646 Lugano Lane
Del Mar, California 92014
Rocco J. Fabiano and Joan Fabiano 21,666
Fabiano SEP-IRA
1646 Lugano Lane
Del Mar, California 92014
Jack Fitzpatrick, Trustee 57,615
Fabiano Irrevocable Trust
1070 Calle Anacapa
Olivenhain, California 92024
Gary S. Burdick and Mary Burdick 605,000
3315 Rocking Horse Circle
Encinitas, California 92024
Rellen M. Stewart and Claudia Stewart 431,000
3374 Rocking Horse Circle
Encinitas, California 92024
<PAGE> 106
EXHIBIT F
TAX REPRESENTATION LETTER
OF
HOUSEHOLD INTERNATIONAL, INC.
AND
HOUSEHOLD AUTO CORPORATION
_________________ __, 1997
Cooley Godward LLP Wilmer, Cutler & Pickering
One Maritime Plaza, 20th Floor 2445 M Street, N.W.
San Francisco, CA 94111 Washington, D.C. 20037
RE: MERGER PURSUANT TO THE AGREEMENT AND PLAN OF MERGER (THE "PLAN OF
MERGER") DATED AS OF AUGUST __, 1997, BY AND AMONG HOUSEHOLD
INTERNATIONAL, INC., A DELAWARE CORPORATION ("PARENT"), HOUSEHOLD AUTO
CORPORATION, A DELAWARE CORPORATION AND A WHOLLY OWNED DIRECT
SUBSIDIARY OF PARENT ("MERGER SUB"), AND ACC CONSUMER FINANCE
CORPORATION, A DELAWARE CORPORATION (THE "COMPANY") AND THE RELATED
CERTIFICATE OF MERGER BETWEEN MERGER SUB AND THE COMPANY (THE
"CERTIFICATE OF MERGER").
Ladies and Gentlemen:
This letter is supplied to you to assist you with your review of the
federal income tax consequences of the Merger (the "Tax Consequences") and with
your preparation of the discussion of the Tax Consequences for Parent's Form S-4
Registration Statement to be filed in connection with the Merger (the
"Discussion"). Unless otherwise indicated, capitalized terms not defined herein
have the meanings set forth in the Plan of Merger. The Plan of Merger and the
Certificate of Merger, including exhibits and schedules attached thereto, are
collectively referred to as the "Agreements."
After consulting with their counsel and auditors regarding the meaning
of and factual support for the following representations, the undersigned hereby
certify and represent that the following facts are now true and will continue to
be true as of the Effective Time and thereafter where relevant:
1. Pursuant to the Merger, Merger Sub will merge with and into the
Company, and the Company will acquire all of the assets and liabilities of
Merger Sub. Specifically, the assets transferred to the Company pursuant to the
Merger will represent at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by Merger Sub at the Effective Time of the Merger. In
addition, at least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by the Company at the Effective Time of the Merger will continue to
be held by the Company after the Merger. For the purpose of determining the
percentage of the Company's and Merger Sub's net and gross assets held by
1.
<PAGE> 107
the Company immediately following the Merger, the following assets will be
treated as property held by the Company or Merger Sub, as the case may be,
immediately prior but not subsequent to the Merger: (i) assets disposed of by
the Company or Merger Sub (other than assets transferred from Merger Sub to the
Company in the Merger) prior to or subsequent to the Merger and in contemplation
thereof (including without limitation any asset disposed of by the Company,
other than in the ordinary course of business, pursuant to a plan or intent
existing during the period ending at the Effective Time and beginning with the
commencement of negotiations (whether formal or informal) with Parent regarding
the Merger (the "Pre-Merger Period")), (ii) assets used by the Company or Merger
Sub to pay stockholders of the Company in connection with the exercise of
dissenters' rights or other expenses or liabilities incurred in connection with
the Merger and (iii) assets used to make distributions, redemptions or other
payments in respect of stock of the Company or rights to acquire such stock
(including payments treated as such for tax purposes) that are made in
contemplation of the Merger or that are related thereto;
2. Parent's principal reasons for participating in the Merger are bona
fide business purposes not related to taxes;
3. Prior to the Merger, Parent will be in "Control" of Merger Sub. As
used in this letter, "Control" shall consist of direct ownership of shares of
stock possessing at least eighty percent (80%) of the total combined voting
power of all classes of stock entitled to vote and at least eighty percent (80%)
of the total number of shares of all other classes of stock of the corporation.
For purposes of determining Control, a person shall not be considered to own
shares of voting stock if rights to vote such shares (or to restrict or
otherwise control the voting of such shares) are held by a third party
(including a voting trust) other than an agent of such person;
4. Parent has no plan or intention to cause the Company to issue
additional shares of stock after the Merger, or to take any other action, that
would result in Parent losing Control of the Company;
5. Parent has no plan or intention to reacquire any of its stock issued
pursuant to the Merger;
6. Except for transfers described in both Section 368(a)(2)(C) of the
Code and Treasury Regulations Section 1.368-2(j)(4), Parent has no plan or
intention to liquidate the Company; to merge the Company with or into another
corporation, including Parent or its affiliates; to sell, distribute or
otherwise dispose of the stock of the Company; to cause the Company to sell or
otherwise dispose of the stock of the Company; or to cause the Company to sell
or otherwise dispose of any of its assets or of any assets acquired from Merger
Sub except for dispositions made in the ordinary course of business or payment
of expenses incurred by Merger Sub or the Company pursuant to the Merger;
2.
<PAGE> 108
7. Parent intends that, following the Merger, the Company will continue
its historic business or use a significant portion of the Company's historic
business assets in a business;
8. During the past five (5) years, none of the outstanding shares of
capital stock of the Company, including the right to acquire or vote any such
shares have, directly or indirectly, been owned by Parent or affiliates of
Parent;
9. Parent is not an investment company within the meaning of Section
368(a)(2)(F)(iii) and (iv) of the Code;
10. No stockholder of the Company is acting as an agent for Parent in
connection with the Merger or the approval thereof; Parent will not reimburse
any stockholder of the Company for any stock of the Company such stockholder may
have purchased or for other obligations such stockholder may have incurred;
11. Neither Parent nor Merger Sub is, or will be at the Effective Time,
under the jurisdiction of a court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code;
12. Except with respect to (i) payments of cash to stockholders of the
Company in connection with the exercise of dissenters' rights, (ii) payments of
cash to stockholders of the Company in lieu of fractional shares of Parent
Common Stock, and (iii) payments of cash to stockholders of the Company pursuant
to Section 3.2(a) of the Plan of Merger (such amounts not to exceed ten percent
(10%) of the aggregate consideration to be received by such stockholders for
their Company Common Stock)("Cash Consideration"), one hundred percent (100%) of
the stock of the Company outstanding immediately prior to the Merger will be
exchanged solely for Parent Common Stock. Thus, except as set forth in the
preceding sentence, Merger Sub and Parent intend that no consideration be paid
or received (directly or indirectly, actually or constructively) for stock of
the Company other than Parent Common Stock;
13. The total fair market value of all consideration other than Parent
Common Stock received by stockholders of the Company in the Merger in exchange
for their stock of the Company (including, without limitation, Cash
Consideration and cash paid to stockholders of the Company in connection with
the exercise of dissenters' rights or in lieu of fractional shares of Parent
Common Stock) will be less than twenty percent (20%) of the aggregate fair
market value of stock of the Company outstanding immediately prior to the
Merger;
14. The fair market value of the Parent Common Stock and Cash
Consideration received by each stockholder of the Company will be approximately
equal to the fair market value of the stock of the Company surrendered in
exchange therefor, and the aggregate consideration received by stockholders of
the Company in exchange for their stock of the Company will be approximately
equal to the fair market value of all of the outstanding shares of stock of the
Company immediately prior to the Merger;
3.
<PAGE> 109
15. Merger Sub, Parent, the Company and the stockholders of the Company
will each pay separately its or their own expenses relating to the Merger;
16. There is no intercorporate indebtedness existing between Parent and
the Company or between Merger Sub and the Company that was issued, acquired or
will be settled at a discount as a result of the Merger, and Parent will assume
no liabilities of the Company or any stockholder of the Company in connection
with the Merger;
17. The terms of the Agreements are the product of arm's length
negotiations;
18. None of the compensation, if any, received or to be received from
Parent or Merger Sub by any stockholder-employee of the Company will be separate
consideration for, or allocable to, any of their shares of stock of the Company;
none of the shares of Parent Common Stock received by any stockholder-employee
of the Company will be separate consideration for, or allocable to, any
employment agreement or any covenants not to compete; and the compensation, if
any, paid or to be paid by Parent or Merger Sub to any stockholder-employee of
the Company will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services;
and
19. Parent and Merger Sub are authorized to make all of the
representations set forth herein.
The undersigned recognize that (i) your Discussion will be based on the
representations set forth herein and on the statements contained in the
Agreements and documents related thereto, and (ii) your Discussion will be
subject to certain limitations and qualifications, including that they may not
be relied upon if any such representations are not accurate in all material
respects.
The undersigned recognize that your Discussion will not address any tax
consequences of the Merger or any action taken in connection therewith except as
expressly set forth therein.
Very truly yours,
HOUSEHOLD INTERNATIONAL, INC.,
A DELAWARE CORPORATION
By:________________________________
Title:_____________________________
HOUSEHOLD AUTO CORPORATION,
4.
<PAGE> 110
A DELAWARE CORPORATION
By:________________________________
Title:_____________________________
5.
<PAGE> 111
TAX REPRESENTATION LETTER
OF
ACC CONSUMER FINANCE CORPORATION
__________________ __, 1997
Cooley Godward LLP Wilmer, Cutler & Pickering
One Maritime Plaza, 20th Floor 2445 M Street, N.W.
San Francisco, CA 94111 Washington, D.C. 20037
RE: MERGER PURSUANT TO THE AGREEMENT AND PLAN OF MERGER (THE "PLAN OF
MERGER") DATED AS OF AUGUST __, 1997, BY AND AMONG HOUSEHOLD
INTERNATIONAL, INC., A DELAWARE CORPORATION ("PARENT"), HOUSEHOLD AUTO
CORPORATION, A DELAWARE CORPORATION AND A WHOLLY OWNED DIRECT
SUBSIDIARY OF PARENT ("MERGER SUB"), AND ACC CONSUMER FINANCE
CORPORATION, A DELAWARE CORPORATION (THE "COMPANY") AND THE RELATED
CERTIFICATE OF MERGER BETWEEN MERGER SUB AND THE COMPANY (THE
"CERTIFICATE OF MERGER").
Ladies and Gentlemen:
This letter is supplied to you to assist you with your review of the
federal income tax consequences of the Merger (the "Tax Consequences") and with
your preparation of the discussion of the Tax Consequences for Parent's Form S-4
Registration Statement to be filed in connection with the Merger (the
"Discussion"). Unless otherwise indicated, capitalized terms not defined herein
have the meanings set forth in the Plan of Merger. The Plan of Merger and the
Certificate of Merger, including exhibits and schedules attached thereto, are
collectively referred to as the "Agreements".
After consulting with its counsel and auditors regarding the meaning of
and factual support for the following representations, the undersigned hereby
certifies and represents that the following facts are now true and will continue
to be true as of the Effective Time and thereafter where relevant:
1. Pursuant to the Merger, Merger Sub will merge with and into the
Company, and the Company will acquire all of the assets and liabilities of
Merger Sub. The Company will retain at least ninety percent (90%) of the fair
market value of the net assets and at least seventy percent (70%) of the fair
market value of the gross assets held by the Company immediately prior to the
Merger. At least ninety percent (90%) of the fair market value of the net assets
and at least seventy percent (70%) of the fair market value of the gross assets
held by Merger Sub immediately prior to the Merger will be held by the Company
immediately after the Merger. For purposes of this representation, any amounts
paid by the Company to dissenters, any amounts paid by the Company to
stockholders who receive cash or other property, any amounts used by the Company
to pay reorganization expenses, and all redemptions and distributions
1.
<PAGE> 112
(except for regular, normal dividends) made by the Company will be included as
assets of the Company immediately prior to the Merger;
2. Other than in the ordinary course of business, the Company has made
no transfer of any of its assets (including any distribution of assets with
respect to, or in redemption of, stock) in contemplation of the Merger or during
the period ending at the Effective Time and beginning with the commencement of
negotiations (whether formal or informal) with Parent regarding the Merger;
3. The Company's principal reasons for participating in the Merger are
bona fide business purposes unrelated to taxes;
4. At the Effective Time, the Company will have no outstanding equity
interests other than those disclosed in Section 4.3 of the Plan of Merger and
the related Section 4.3 of the Disclosure Schedule. At the Effective Time,
except as specified in the Agreements, the Company will have no outstanding
warrants, options, or convertible securities or any other type of right
outstanding pursuant to which any person could acquire shares of the Company
stock or any other equity interest in the Company;
5. In the Merger, shares of stock of the Company representing "Control"
of the Company will be exchanged solely for shares of voting stock of Parent; at
the Effective Time there will exist no rights to acquire Company stock or to
vote (or restrict or otherwise control the vote of) shares of stock of the
Company which, if exercised, would affect Parent's acquisition and retention of
Control of the Company. For purposes of this paragraph, shares of the stock of
Company exchanged in the Merger for cash and other property (including, without
limitation, cash paid to the stockholders of the Company pursuant to Section
3.2(a) of the Plan of Merger (such amounts not to exceed ten percent (10%) of
the aggregate consideration to be received by such stockholders for their
Company Common Stock)("Cash Consideration") and cash paid to stockholders of the
Company in connection with the exercise of dissenters' rights or in lieu of
fractional shares of Parent Common Stock) will be treated as shares of stock of
the Company outstanding at the Effective Time but not exchanged for shares of
voting stock of Parent. As used in this letter, "Control" shall consist of
direct ownership of shares of stock possessing at least eighty percent (80%) of
the total combined voting power of shares of all classes of stock entitled to
vote and at least eighty percent (80%) of the total number of shares of all
other classes of stock of the corporation. For purposes of determining Control,
a person shall not be considered to own shares of voting stock if rights to vote
such shares (or to restrict or otherwise control the voting of such shares) are
held by a third party (including a voting trust) other than an agent of such
person;
6. The total fair market value of all consideration other than shares
of Parent Common Stock to be received by stockholders of the Company in the
Merger in exchange for their stock of the Company (including, without
limitation, Cash Consideration and cash paid to stockholders of the Company in
connection with the exercise of dissenters' rights or in lieu of fractional
shares of Parent Common Stock) will be less than twenty percent (20%) of the
aggregate fair market value of shares of stock of the Company outstanding
immediately prior to the Merger;
2.
<PAGE> 113
7. The Company has no plan or intention to issue additional shares of
stock after the Merger, or to take any other action, that would result in Parent
losing Control of the Company;
8. Except for transfers described in both Section 368(a)(2)(C) of the
Code and Treasury Regulations Section 1.368-2(j)(4), the Company has no plan or
intention to sell or otherwise dispose of any of its assets or of any of the
assets acquired from Merger Sub in the Merger except for dispositions made in
the ordinary course of business or to pay expenses incurred by the Company
pursuant to the Merger;
9. The Company intends to continue its historic business or use a
significant portion of its historic business assets in a business following the
Merger;
10. The liabilities of the Company have been incurred by the Company in
the ordinary course of its business;
11. The fair market value of the Company's assets will, at the
Effective Time, exceed the aggregate liabilities of the Company plus the amount
of liabilities, if any, to which such assets are subject;
12. The Company is not an "investment company" within the meaning of
Section 368(a)(2)(F)(iii) and (iv) of the Code;
13. The Company is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code;
14. The fair market value of the total merger consideration received
and to be received by each stockholder of the Company will be approximately
equal to the fair market value of the shares of stock of the Company surrendered
in exchange therefor and the aggregate total consideration received and to be
received by stockholders of the Company in exchange for their shares of stock of
the Company will be approximately equal to the fair market value of all of the
outstanding shares of stock of the Company immediately prior to the Merger;
15. Merger Sub, Parent, the Company and the stockholders of the Company
will each pay separately its or their own expenses relating to the Merger;
16. There is no intercorporate indebtedness existing between Parent and
the Company or between Merger Sub and the Company that was issued, acquired, or
will be settled at a discount as a result of the Merger, and Parent will assume
no liabilities of the Company or any stockholder of the Company in connection
with the Merger;
17. The terms of the Agreements are the product of arm's length
negotiations;
18. None of the compensation received by any stockholder
employee/consultant of the Company will be separate consideration for, or
allocable to, any of their shares of stock of the Company; none of the shares of
Parent Common Stock received by any stockholder employee/consultant of the
Company will be separate consideration for, or allocable to, any
3.
<PAGE> 114
employment agreement, consulting agreement or any covenant not to compete; and
the compensation paid to any stockholder employee/consultant of the Company will
be for services actually rendered (or for refraining from rendering competitive
services to others) and will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services/restrictions; and
19. The Company is authorized to make all of the representations set
forth herein.
The undersigned recognizes that (i) your Discussion will be based on
the representations set forth herein and on the statements contained in the
Agreements and documents related thereto, and (ii) your Discussion will be
subject to certain limitations and qualifications, including that they may not
be relied upon if any such representations are not accurate in all material
respects.
Notwithstanding anything herein to the contrary, the undersigned makes
no representations regarding any actions or conduct of the Company pursuant to
Parent's exercise of control over the Company after the Merger.
The undersigned recognizes that your Discussion will not address any
tax consequence of the Merger or any action taken in connection therewith except
as expressly stated.
Very truly yours,
ACC CONSUMER FINANCE CORPORATION,
a Delaware corporation
By:________________________________
Title:_____________________________
4.
<PAGE> 1
Exhibit 99.1
ACC CONSUMER FINANCE CORP. AGREES TO BE ACQUIRED FOR BUSINESS WIRE
APPROXIMATELY $200 MILLION
August 25, 1997 9:14 AM EDT
SAN DIEGO--(BUSINESS WIRE)--Aug. 25, 1997--ACC Consumer Finance Corp.
(NASDAQ:ACCI) Monday announced that it has entered into a definitive agreement
to be acquired by Household International (NYSE:HI).
The agreement has been approved by the boards of directors of both companies.
Further, shareholders representing more than 70 percent of ACCI's outstanding
common stock have entered into voting agreements with Household. The transaction
is expected to be completed before Dec. 31, 1997.
The terms of the transaction entitle the shareholders of ACCI to receive
consideration equal to $22 for each share of ACCI. This consideration will
include not less than $2 in cash and not more than $4 in cash, with the
remainder paid in Household common stock.
The Household stock will be valued on the basis of the volume weighted average
price of Household common stock during a 10-day trading period ending one day
prior to the stockholders' meeting. The total value of the transaction is
approximately $200 million.
The transaction is subject to various conditions, including expiration of the
Hart-Scott-Rodino waiting period, receipt of other approvals and a vote of the
shareholders of ACCI. The transaction will be structured as a merger between
ACCI and a subsidiary of Household, and is intended to be tax-free with respect
to the portion of the consideration paid in Household stock.
The operating plan includes the consolidation of ACCI with Household's auto
finance subsidiary, HFC Auto Credit Corp. Rocco Fabiano, the current chairman of
the board and chief executive officer of ACCI, will become the president of the
consolidated entity following the merger.
Fabiano observed that "The management team at ACCI is extremely pleased with
this potential business combination. This partnership with Household
International, an industry leader in consumer finance, will enable us to take
optimal advantage of the current consolidation within the sub-prime automobile
finance sector. This alliance will create greater opportunities for our
employees and enable us to better meet the needs of our dealers."
ACCI's profitability has grown steadily since its initial public offering in May
1996, despite the significant difficulties experienced by many of its
competitors. For the six-month period ended June 30, 1997, ACCI's operating
income increased 86 percent over the comparable period last year. ACCI's return
on assets was 10.2 percent, and its return on equity was 34.1 percent during the
first six months of 1997.
ACCI manages a portfolio of more than $400 million in automobile installment
contracts and is one of the nation's most successful specialty lenders to the
automotive industry.
ACCI focuses on the indirect financing of automobile installment contracts
purchased primarily from franchised automobile dealers for consumers who have
limited access to traditional sources of financing for vehicle purchases. The
company purchases these contracts through its six regional credit centers in
Atlanta; Dallas; Newark, Del.; Miami; St. Louis and San Diego.
The company currently actively markets its program to dealers in Arizona,
California, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana,
Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri,
Montana, North Carolina, Nebraska, Nevada, New Jersey, New Mexico, Ohio,
Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah,
Virginia, West Virginia and Washington.
Household International, through its subsidiaries, is a leading provider of
consumer finance and credit-card products in the United States, Canada and the
United Kingdom. One of Household's primary businesses is HFC, the nation's
oldest consumer finance company.
Household is also one of the nation's largest issuers of private-label and
general-purpose credit cards. Its principal cards included the GM Card and the
AFL-CIO's Union Privilege Card.
