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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) MARCH 15, 1998
ST. PAUL BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 01-15580 36-3504665
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
6700 West North Avenue, Chicago, Illinois 60707
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (773) 622-5000
--------------
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On March 15, 1998, St. Paul Bancorp, Inc. ("St. Paul") announced that it
had entered into an Agreement and Plan of Merger (the "Agreement") by which St.
Paul will acquire Beverly Bancorporation, Inc. ("Beverly Corp.") in a tax-free
stock-for-stock exchange (the "Merger"). The Merger is subject to approval by
Beverly Corp.'s shareholders, and St. Paul's shareholders must approve a
proposal to increase the number of St. Paul's authorized shares and the
issuance of the stock being offered as consideration in connection with the
Merger. The Merger is subject to regulatory approvals and customary closing
conditions. In connection with the Agreement, St. Paul and Beverly Corp.
entered into an Option Agreement (the "Option Agreement") pursuant to which
Beverly Corp. granted St. Paul an option, exercisable under certain
circumstances, to purchase an aggregate of 1,100,488 newly issued shares of
common stock, par value $.01 per share, of Beverly Corp.
The Agreement (including exhibits thereto) and the Option Agreement are
attached hereto as Exhibit 2.1 and Exhibit 2.2, respectively, and are
incorporated by reference herein. St. Paul issued a press release on March 15,
1998 describing the signing of the Agreement with Beverly Corp. Such press
release is filed as Exhibit 99 hereto.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits
Exhibit No. Description
2.1 Agreement and Plan of Merger, dated as of March 15,
1998, by and between St. Paul Bancorp, Inc. and Beverly
Bancorporation, Inc.
2.2 Option Agreement, dated as of March 15, 1998 by and
between and St. Paul Bancorp, Inc. and Beverly
Bancorporation, Inc.
99 Press Release of St. Paul Bancorp, Inc. dated March 15,
1998.
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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.
ST. PAUL BANCORP, INC.
Date: March 19, 1998 By: /s/
---------------------------
Patrick J. Agnew
President
<PAGE> 4
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT DESCRIPTION PAGE
2.1 Agreement and Plan of Merger, dated as of
March 15, 1998, by and between St. Paul
Bancorp, Inc. and Beverly Bancorporation, Inc.
2.2 Option Agreement, dated as of March 15, 1998
by and between and St. Paul Bancorp, Inc. and
Beverly Bancorporation, Inc.
99 Press Release of St. Paul Bancorp, Inc. dated
March 15, 1998.
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EXHIBIT 2.1
-----------
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
ST. PAUL BANCORP, INC.
AND
BEVERLY BANCORPORATION, INC.
DATED AS OF
MARCH 15, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I THE MERGER ................................................... 1
1.1 The Merger. .................................................... 1
1.2 Effective Time. ................................................ 2
1.3 Effects of the Merger. ......................................... 2
1.4 Conversion of Beverly Corp. Common Stock. ...................... 2
1.5 Options. ....................................................... 3
1.6 Certificate of Incorporation. .................................. 3
1.7 By-Laws. ....................................................... 3
1.8 Directors and Officers. ........................................ 4
1.9 Tax Consequences. .............................................. 4
ARTICLE II EXCHANGE OF SHARES .......................................... 4
2.1 St. Paul to Make Shares Available. ............................. 4
2.2 Exchange of Shares. ............................................ 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BEVERLY CORP.............. 6
3.1 Corporate Organization. ........................................ 6
3.2 Capitalization. ................................................ 7
3.3 Authority; No Violation. ....................................... 7
3.4 Consents and Approvals. ........................................ 8
3.5 Loan Portfolio; Reports. ....................................... 9
3.6 Financial Statements; Exchange Act Filings; Books and Records... 9
3.7 Broker's Fees. ................................................. 10
3.8 Absence of Certain Changes or Events. .......................... 10
3.9 Legal Proceedings. ............................................. 11
3.10 Taxes and Tax Returns. ......................................... 11
3.11 Employee Plans. ................................................ 12
3.12 Certain Contracts. ............................................. 13
3.13 Agreements with Regulatory Agencies. ........................... 14
3.14 State Takeover Laws; Certificate of Incorporation. ............. 14
3.15 Environmental Matters. ......................................... 14
3.16 Reserves for Losses. ........................................... 15
3.17 Properties and Assets. ......................................... 16
3.18 Insurance. ..................................................... 16
3.19 Fiduciary Relationships. ....................................... 17
3.20 Compliance with Applicable Laws. ............................... 17
3.21 Loans. ......................................................... 17
3.22 Affiliates. .................................................... 18
3.23 Ownership of St. Paul Common Stock. ............................ 18
3.24 Fairness Opinion. .............................................. 19
3.25 Beverly Corp. Information. ..................................... 19
</TABLE>
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<TABLE>
<S> <C>
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ST. PAUL .................. 19
4.1 Corporate Organization. ........................................ 19
4.2 Capitalization. ................................................ 20
4.3 Authority; No Violation. ....................................... 20
4.4 Regulatory Approvals. .......................................... 21
4.5 Financial Statements; Exchange Act Filings; Books and Records... 22
4.6 Absence of Certain Changes or Events. .......................... 22
4.7 Ownership of Beverly Common Stock; Affiliates and Associates.... 22
4.8 Agreements with Regulatory Agencies. ........................... 23
4.9 Broker's Fees. ................................................. 23
4.10 Legal Proceedings. ............................................. 23
4.11 Compliance with Applicable Laws. ............................... 23
4.12 Fairness Opinion. .............................................. 23
4.13 St. Paul Information. .......................................... 24
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS .................... 24
5.1 Covenants of Beverly Corp. ..................................... 24
5.2 Merger Covenants. .............................................. 27
5.3 Compliance with Antitrust Laws. ................................ 27
ARTICLE VI ADDITIONAL AGREEMENTS ....................................... 28
6.1 Regulatory Matters. ............................................ 28
6.2 Access to Information. ......................................... 29
6.3 Shareholder Meetings. .......................................... 30
6.4 Legal Conditions to Merger. .................................... 30
6.5 Stock Exchange Listing. ........................................ 30
6.6 Employees. ..................................................... 30
6.7 Indemnification. ............................................... 31
6.8 Subsequent Interim and Annual Financial Statements. ............ 32
6.9 Additional Agreements. ......................................... 32
6.10 Advice of Changes. ............................................. 33
6.11 Current Information. ........................................... 33
6.12 Execution and Authorization of Bank Merger Agreement. .......... 33
6.13 Change in Structure. ........................................... 33
6.14 Transaction Expenses of Beverly. ............................... 33
6.15 Registration of Option Shares. ................................. 35
6.16 Further Actions of Beverly. .................................... 35
ARTICLE VII CONDITIONS PRECEDENT ....................................... 35
7.1 Conditions to Each Party's Obligation To Effect the Merger...... 35
7.2 Conditions to Obligations of St. Paul. ......................... 37
7.3 Conditions to Obligations of Beverly Corp. ..................... 38
ARTICLE VIII TERMINATION AND AMENDMENT ................................. 39
8.1 Termination. .................................................... 39
</TABLE>
ii
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<TABLE>
<S> <C>
8.2 Effect of Termination. ......................................... 42
8.3 Amendment. ..................................................... 42
8.4 Extension; Waiver. ............................................. 42
ARTICLE IX GENERAL PROVISIONS .......................................... 43
9.1 Closing. ....................................................... 43
9.2 Nonsurvival of Representations, Warranties and Agreements....... 43
9.3 Expenses; Breakup Fee. ......................................... 43
9.4 Notices. ....................................................... 43
9.5 Interpretation. ................................................ 44
9.6 Counterparts. .................................................. 44
9.7 Entire Agreement. .............................................. 45
9.8 Governing Law. ................................................. 45
9.9 Enforcement of Agreement. ...................................... 45
9.10 Severability. .................................................. 45
9.11 Publicity. ..................................................... 45
9.12 Assignment; Limitation of Benefits. ............................ 45
9.13 Additional Definitions. ........................................ 46
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
A Articles of Combination and Bank Merger Agreement
B Option Agreement
C Certificate of Merger
D Beverly Corp. Stockholder Agreement
E Index Group
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of March 15, 1998 (this
"Agreement"), is entered into by and between St. Paul Bancorp, Inc., a Delaware
corporation ("St. Paul") and Beverly Bancorporation, Inc., a Delaware
corporation ("Beverly Corp.").
WHEREAS, the Boards of Directors of St. Paul and Beverly Corp. have
determined that it is in the best interests of their respective companies and
shareholders to consummate the business combination transaction provided for
herein in which Beverly Corp. will, subject to the terms and conditions set
forth herein, merge with and into St. Paul, with St. Paul being the Surviving
Corporation (as defined) (the "Merger");
WHEREAS, prior to the consummation of the Merger, St. Paul and Beverly
Corp. will respectively cause St. Paul Federal Bank For Savings, a federal
savings bank and wholly-owned subsidiary of St. Paul ("St. Paul Bank"), and
Beverly National Bank ("Beverly Bank"), a National chartered bank and
wholly-owned subsidiary of Beverly Corp., to enter into a merger agreement, in
the form attached hereto as Exhibit A (the "Bank Merger Agreement"), providing
for the merger (the "Bank Merger") of Beverly Bank with and into St. Paul Bank,
with St. Paul Bank being the "Surviving Bank" of the Bank Merger, and it is
intended that the Bank Merger be consummated immediately after consummation of
the Merger;
WHEREAS, as an inducement to St. Paul to enter into this Agreement,
Beverly Corp. will enter into an option agreement, in the form attached hereto
as Exhibit B (the "Option Agreement"), with St. Paul immediately following the
execution of this Agreement pursuant to which Beverly Corp. will grant St. Paul
an option to purchase, under certain circumstances, an aggregate of 1,100,488
newly issued shares of common stock, par value $.01 per share, of Beverly Corp.
("Beverly Common Stock") upon the terms and conditions therein contained (which
number of shares is equal to 19.99% of the total the number of outstanding
shares of Beverly Common Stock on the date hereof, and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
Subject to the terms and conditions of this Agreement, in accordance with
the Delaware General Corporation Law (the "DGCL"), at the Effective Time (as
defined in Section 1.2 hereof), Beverly Corp. shall merge into St. Paul, with
St. Paul being the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger. Upon consummation of the Merger, the
corporate existence of Beverly Corp. shall cease and the Surviving Corporation
shall continue to exist as a Delaware corporation.
<PAGE> 6
1.2 EFFECTIVE TIME.
The Merger shall become effective on the Closing Date (as defined in
Section 9.1 hereof), as set forth in the certificate of merger (the
"Certificate of Merger") in the form attached as Exhibit C hereto which shall
be filed with the Secretary of State of the State of Delaware on the Closing
Date. The term "Effective Time" shall be the date and time when the Merger
becomes effective on the Closing Date, as set forth in the Certificate of
Merger.
1.3 EFFECTS OF THE MERGER.
At and after the Effective Time, the Merger shall have the effects set
forth in Sections 259 and 261 of the DGCL.
1.4 CONVERSION OF BEVERLY CORP. COMMON STOCK.
(a) At the Effective Time, subject to Sections 1.4(b), 2.2(e) and
8.1(h) hereof, each share of Beverly Common Stock issued and outstanding prior
to the Effective Time shall, by virtue of this Agreement and without any action
on the part of the holder thereof, be converted into and exchangeable for
1.0630 shares of St. Paul common stock, par value $.01 per share ("St. Paul
Common Stock"). The ratio of the number of shares of St. Paul Common Stock to
be exchanged for each share of Beverly Common Stock issued and outstanding is
hereinafter referred to as the "Exchange Ratio."
(b) All of the shares of Beverly Common Stock converted into St. Paul
Common Stock pursuant to this Article I shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each certificate
(each a "Certificate") previously representing any such shares of Beverly
Common Stock shall thereafter represent the right to receive (i) the number of
whole shares of St. Paul Common Stock and (ii) cash in lieu of fractional
shares into which the shares of Beverly Common Stock represented by such
Certificate have been converted pursuant to Section 1.4(a) and Section 2.2(e)
hereof. Certificates previously representing shares of Beverly Common Stock
shall be exchanged for certificates representing whole shares of St. Paul
Common Stock and cash in lieu of fractional shares issued in consideration
therefor upon the surrender of such Certificates in accordance with Section 2.2
hereof, without any interest thereon. If prior to the Effective Time St. Paul
should split or combine its common stock, or pay a dividend or other
distribution in such common stock, then the Exchange Ratio shall be
appropriately adjusted to reflect such split, combination, dividend or
distribution.
(c) At the Effective Time, all shares of Beverly Common Stock that are
owned by Beverly Corp. as treasury stock and all shares of Beverly Common Stock
that are owned directly or indirectly by St. Paul or Beverly Corp. or any of
their respective Subsidiaries (other than shares of Beverly Common Stock held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties (any such shares, and shares of St. Paul Common Stock which are
similarly held, whether held directly or indirectly by St. Paul or Beverly
Corp., as the case may be, being referred to herein as "Trust Account Shares")
and other than any shares of Beverly Common Stock held by St. Paul or Beverly
Corp. or any of their respective Subsidiaries in respect of a debt previously
contracted (any such shares of Beverly Common Stock, and shares of St. Paul
Common Stock which are similarly held, whether held directly or indirectly by
St. Paul or Beverly Corp., being referred to herein as "DPC Shares")) shall be
canceled and shall cease to exist and no stock of St. Paul or other
consideration shall be delivered in exchange therefor. All shares of St. Paul
Common Stock that are owned by Beverly Corp. or any of its Subsidiaries (other
than Trust Account Shares and DPC Shares) shall become treasury stock of St.
Paul.
2
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(d) Certificates for fractions of shares of St. Paul Common Stock
will not be issued. In lieu of a fraction of a share of St. Paul Common
Stock, each holder of Beverly Common Stock otherwise entitled to a fraction of
a share of St. Paul Common Stock shall be entitled to receive an amount of cash
equal to (i) the fraction of a share of the St. Paul Common Stock to which such
holder would otherwise be entitled, multiplied by (ii) the actual market value
of the St. Paul Common Stock, which shall be deemed to be the average of the
daily closing prices per share for St. Paul Common Stock for the fifteen
consecutive trading days on which shares of St. Paul Common Stock are actually
traded (as reported on the Nasdaq Stock Market National Market System) ending
on the third trading day preceding the Closing Date. Following consummation of
the Merger, no holder of Beverly Common Stock shall be entitled to dividends or
any other rights in respect of any such fraction.
1.5 OPTIONS.
At the Effective Time, each option granted by Beverly Corp. to purchase
shares of Beverly Common Stock which is outstanding and unexercised immediately
prior thereto shall be converted automatically into an option to purchase
shares of St. Paul Common Stock in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms of the Beverly
Bancorporation 1994 Incentive Stock Option Plan (the "1994 Plan") and the 1997
Long-Term Stock Incentive Plan (the "1997 Plan" and collectively with the 1994
Plan, the "Beverly Stock Plans");
(1) The number of shares of St. Paul Common Stock to be subject to
the option immediately after the Effective Time shall be equal to the
product of the number of shares of Beverly Common Stock subject to the
option immediately before the Effective Time, multiplied by the
Exchange Ratio, provided that any fractional shares of St. Paul Common
Stock resulting from such multiplication shall be rounded down to the
nearest share; and
(2) The exercise price per share of St. Paul Common Stock under the
option immediately after the Effective Time shall be equal to the
exercise price per share of Beverly Common Stock under the option
immediately before the Effective Time divided by the Exchange Ratio,
provided that such exercise price shall be rounded down to the nearest
cent.
The adjustment provided herein shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Internal Revenue Code of
1986, as amended (the "Code"). The duration and other terms of the option
immediately after the Effective Time shall be the same as the corresponding
terms in effect immediately before the Effective Time, except that all
references to Beverly Corp. or Beverly Bank in the Beverly Stock Plans (and the
corresponding references in the option agreement documenting such option) shall
be deemed to be references to St. Paul.
1.6 CERTIFICATE OF INCORPORATION.
At the Effective Time, the Certificate of Incorporation of St. Paul, as in
effect at the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation.
1.7 BY-LAWS.
At the Effective Time, the By-Laws of St. Paul, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation.
3
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1.8 DIRECTORS AND OFFICERS.
At the Effective Time, the directors and officers of St. Paul immediately
prior to the Effective Time shall be the directors and officers of the
Surviving Corporation. As of the Effective Time, St. Paul shall amend its
bylaws to increase the size of its Board of Directors by one member, and
thereupon invite Anthony R. Pasquinelli, Chairman of the Board of Beverly
Corp., to serve as an additional member (the "New Member") of the Board of
Directors of St. Paul provided, however, that St. Paul shall have no obligation
to invite the New Member to serve on St. Paul's Board if such person is not a
member in good standing of the Beverly Corp. Board of Directors immediately
prior to closing. In addition, all Advisory Board members of Beverly Bank
identified at Section 1.8 of the Beverly Corp. Disclosure Schedule (defined
below) who are Advisory Board members as of the Effective Time will be invited
promptly after the Effective Time to serve on an advisory board to St. Paul
Bank after the Bank Merger for a period of no less than 12 months.
1.9 TAX CONSEQUENCES.
It is intended that the Merger shall constitute a reorganization within
the meaning of Section 368(a) of the Code, and that this Agreement shall
constitute a "plan of reorganization" for the purposes of the Code.
ARTICLE II
EXCHANGE OF SHARES
2.1 ST. PAUL TO MAKE SHARES AVAILABLE.
At or prior to the Effective Time, St. Paul shall deposit, or shall cause
to be deposited, with St. Paul's transfer agent, Boston EquiServe, or such
other bank, trust company or transfer agent as St. Paul may select (the
"Exchange Agent"), for the benefit of the holders of Certificates, for exchange
in accordance with this Article II, certificates representing the shares of St.
Paul Common Stock and the cash in lieu of fractional shares (such cash and
certificates for shares of St. Paul Common Stock, being hereinafter referred to
as the "Exchange Fund") to be issued pursuant to Section 1.4 and paid pursuant
to Section 2.2(a) hereof (collectively, sometimes referred to herein as the
"Shares") in exchange for outstanding shares of Beverly Common Stock.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, the Exchange Agent
shall mail to each holder of record of a Certificate or Certificates a form
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 instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing the
shares of St. Paul Common Stock and the cash in lieu of fractional shares into
which the shares of Beverly Common Stock represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. Beverly
Corp. shall have the right to review both the letter of transmittal and the
instructions prior to such documents being finalized. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive promptly in exchange therefor (x) a certificate
representing that number of whole shares of St. Paul Common Stock to which such
holder of Beverly Common Stock shall have become entitled pursuant to the
provisions of Article I hereof and (y) a check representing the amount of cash
in lieu of
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fractional shares, if any, which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of Article I,
and the Certificate so surrendered shall forthwith be canceled. No interest
will be paid or accrued on the cash in lieu of fractional shares and unpaid
dividends and distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective
Time with respect to St. Paul Common Stock and payable to the holders of
record thereof shall be paid to the holder of any unsurrendered Certificate
until the holder thereof shall surrender such Certificate in accordance with
this Article II. After the surrender of a Certificate in accordance with this
Article II, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of St. Paul Common Stock
represented by such Certificate. No holder of an unsurrendered Certificate
shall be entitled, until the surrender of such Certificate, to vote the shares
of St. Paul Common Stock into which his Beverly Common Stock shall have been
converted.
(c) If any certificate representing shares of St. Paul Common Stock is
to be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to
the Exchange Agent in advance any transfer or other taxes required by reason of
the issuance of a certificate representing shares of St. Paul Common Stock in
any name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(d) As of the Effective Time, there shall be no transfers on the stock
transfer books of Beverly Corp. of the shares of Beverly Common Stock which
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be canceled and exchanged for
certificates representing shares of St. Paul Common Stock as provided in this
Article II.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Beverly Corp. for six months after the Effective Time may be
returned to St. Paul. After such funds have been returned to St. Paul, any
shareholders of Beverly Corp. who have not theretofore complied with this
Article II shall thereafter look only to St. Paul for payment of their shares
of St. Paul Common Stock, cash in lieu of fractional shares and unpaid
dividends and distributions on St. Paul Common Stock deliverable in respect of
each share of Beverly Common Stock such shareholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of St. Paul, Beverly Corp., the Exchange
Agent or any other person shall be liable to any former holder of shares of
Beverly Common Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(f) In the event 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 St. Paul,
the posting by such person of a bond in such amount as St. Paul may reasonably
direct 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 shares of St. Paul Common Stock and cash in
lieu of fractional shares deliverable in respect thereof pursuant to this
Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BEVERLY CORP.
Beverly Corp. hereby makes the following representations and warranties to
St. Paul as set forth in this Article III, each of which is being relied upon
by St. Paul as a material inducement to enter into and perform this Agreement.
All of the disclosure schedules of Beverly Corp. referenced below and thereby
required of Beverly Corp. pursuant to this Agreement, which disclosure
schedules shall be cross-referenced to the specific sections and subsections of
this Agreement and delivered herewith, are referred to herein as the "Beverly
Corp. Disclosure Schedule."
3.1 CORPORATE ORGANIZATION.
(a) Beverly Corp. is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Beverly Corp.
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature
of any material business conducted by it or the character or location of any
material properties or assets owned or leased by it makes such licensing or
qualification necessary. Beverly Corp. is duly registered as a bank holding
company with the Board of Governors of the Federal Reserve System ("FRB") under
the Banking Holding Company Act of 1956, as amended ("BHCA"). The Certificate
of Incorporation and By-Laws of Beverly Corp., copies of which have previously
been delivered to St. Paul, are true, correct and complete copies of such
documents as in effect as of the date of this Agreement. Beverly Bank and
Beverly Trust Company ("Beverly Trust") are the only subsidiaries of Beverly
Corp. that qualify as a "Significant Subsidiary" as such term is defined in
Regulation S-X promulgated by the Securities and Exchange Commission (the
"SEC").
(b) Beverly Bank is a nationally chartered bank duly organized and
validly existing and in good standing under the laws of the United States. The
deposit accounts of Beverly Bank are insured by the Federal Deposit Insurance
Corporation (the "FDIC") through the Bank Insurance Fund (the "BIF") to the
fullest extent permitted by law, and all premiums and assessments required in
connection therewith have been paid by Beverly Bank. Beverly Bank has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of any
material business conducted by it or the character or the location of any
material properties or assets owned or leased by it makes such licensing or
qualification necessary. The Certificate of Incorporation and By-Laws of
Beverly Bank, copies of which have previously been delivered to St. Paul, are
true, correct and complete copies of such documents as in effect as of the date
of this Agreement.
(c) Beverly Trust is a trust company duly organized, validly existing
and in good standing under the corporate, banking and fiduciary laws of the
State of Illinois. Beverly Trust has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business as it is
now being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of any material business conducted by it or
the character or location of any material properties or assets owned or leased
by it makes such licensing or qualification necessary. Deposit or other
accounts in Beverly Trust are not insured by the FDIC, and Beverly Trust is not
a "bank" as such term is defined in the BHCA. The Certificate of Incorporation
and Bylaws of Beverly Trust, copies of which have been provided to St. Paul,
are true, correct and complete copies of such documents as in effect as of the
date of this Agreement.
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3.2 CAPITALIZATION.
(a) The authorized capital stock of Beverly Corp. consists of 8,000,000
shares of Beverly Common Stock and 1,000,000 shares of serial preferred stock,
par value $.01 per share (the "Beverly Preferred Stock"). As of the date
hereof, there are (x) 5,502,445 shares of Beverly Common Stock issued and
outstanding and no shares of Beverly Common Stock are held in Beverly Corp.'s
treasury, (y) no shares of Beverly Common Stock reserved for issuance upon
exercise of outstanding stock options or otherwise, except for 718,050 shares
of Beverly Common Stock reserved for issuance pursuant to the Beverly Stock
Plans (of which options for 502,599 shares are currently outstanding) and (ii)
1,100,488 shares of Beverly Common Stock reserved for issuance upon exercise of
the option to be issued to St. Paul pursuant to the Option Agreement, and (z)
no shares of Beverly's Preferred Stock issued or outstanding, held in Beverly
Corp.'s treasury or reserved for issuance upon exercise of outstanding stock
options or otherwise. All of the issued and outstanding shares of Beverly
Common Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. Except for the Option Agreement and the
Beverly Stock Plans, Beverly Corp. does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Beverly
Common Stock or Beverly Preferred Stock or any other equity security of Beverly
Corp. or any securities representing the right to purchase or otherwise receive
any shares of Beverly Common Stock or any other equity security of Beverly
Corp. The names of the optionees, the date of each option to purchase Beverly
Common Stock granted, the number of shares subject to each such option, the
expiration date of each such option, and the price at which each such option
may be exercised under the Beverly Stock Plans are set forth in Section
3.2(a)(i) of the Beverly Corp. Disclosure Schedule. Except as set forth at
Section 3.2(a)(ii) of the Beverly Corp. Disclosure Schedule, since December 31,
1996 Beverly Corp. has not issued any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock,
other than pursuant to the exercise of director or employee stock options
granted under the Beverly Stock Plans.
(b) Section 3.2(b) of the Beverly Corp. Disclosure Schedule sets forth
a true, correct and complete list of all direct or indirect Subsidiaries of
Beverly Corp. as of the date of this Agreement. Except as set forth at Section
3.2(b) of the Beverly Corp. Disclosure Schedule, Beverly Corp. owns, directly
or indirectly, all of the issued and outstanding shares of capital stock of
each of its Subsidiaries, free and clear of all liens, charges, encumbrances
and security interests whatsoever, and all of such shares are duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. No
Beverly Corp. Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of such Subsidiary.
3.3 AUTHORITY; NO VIOLATION.
(a) Beverly Corp. has full corporate power and authority to execute and
deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
approved by the Board of Directors of Beverly Corp. The Board of Directors of
Beverly Corp. has directed that this Agreement and the transactions
contemplated hereby be submitted to Beverly Corp.'s shareholders for approval
at a special meeting of such shareholders and, except for the adoption of this
Agreement by the requisite vote of Beverly Corp.'s shareholders, no other
corporate proceedings on the part of Beverly Corp. (except for matters related
to setting the date, time, place and record date for the special meeting) are
necessary to approve this Agreement or the Option Agreement or to consummate
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the transactions contemplated hereby or thereby. This Agreement has been, and
the Option Agreement will be, duly and validly executed and delivered by
Beverly Corp. and (assuming due authorization, execution and delivery by St.
Paul of this Agreement and by St. Paul of the Option Agreement) will constitute
valid and binding obligations of Beverly Corp., enforceable against Beverly
Corp. in accordance with their terms, 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.
(b) Beverly Bank has full corporate power and authority to execute and
deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly
and validly approved by the Board of Directors of Beverly Bank and by Beverly
Corp. as the sole shareholder of Beverly Bank. No other corporate proceedings
on the part of Beverly Bank will be necessary to consummate the transactions
contemplated thereby. The Bank Merger Agreement, upon execution and delivery
by Beverly Bank, will be duly and validly executed and delivered by Beverly
Bank and will (assuming due authorization, execution and delivery by St. Paul
Bank) constitute a valid and binding obligation of Beverly Bank, enforceable
against Beverly Bank in accordance with its terms, 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.
(c) Neither the execution and delivery of this Agreement and the Option
Agreement by Beverly Corp. or the Bank Merger Agreement by Beverly Bank, nor
the consummation by Beverly Corp. or Beverly Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by Beverly Corp. or
Beverly Bank with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Certificate of Incorporation or By-Laws of Beverly
Corp. or the Certificate of Incorporation or By-Laws of Beverly Bank, or (ii)
assuming that the consents and approvals referred to in Section 3.4 hereof are
duly obtained, (x) violate any Laws (as defined in Section 9.13) applicable to
Beverly Corp., Beverly Bank or Beverly Trust, or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of Beverly Corp., Beverly Bank or Beverly Trust
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Beverly Corp., Beverly Bank or Beverly Trust is a party, or
by which they or any of their respective properties or assets may be bound or
affected.
3.4 CONSENTS AND APPROVALS.
(a) Except for (i) the filing of applications and notices, as
applicable,as to the Merger and the Bank Merger with the FRB under the
BHCA, the Office of Thrift Supervision ("OTS") under the Home Owners Loan Act
of 1933 ("HOLA") and the Bank Merger Act, the Office of the Comptroller of the
Currency ("OCC") under the Bank Merger Act and the Office of the Commissioner
of Banks & Real Estate of the State of Illinois (the "Illinois Commissioner")
under the change of control provisions of the Illinois Corporate Fiduciary Act,
as well as any other applications and notices to state officials related to the
Merger (the "State Banking Approvals"), and approval of the foregoing
applications and notices, (ii) the filing of any required applications or
notices with the FDIC and OTS as to the subsidiary activities of Beverly Bank
which become service corporation or operating subsidiaries of St. Paul Bank and
approval of such applications and notices, (iii) the filing with the SEC of a
registration statement on Form S-4 to register the shares of St. Paul Common
Stock to be issued in
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connection with the Merger (including the shares of St. Paul Common Stock
that may be issued upon the exercise of the options referred to in Section 1.5
hereof), which will include the joint proxy statement/prospectus to be used in
soliciting the approval of Beverly Corp.'s shareholders at a special meeting to
be held in connection with this Agreement and the transactions contemplated
hereby (the "Proxy Statement/Prospectus"), (iv) the approval of this Agreement
by the requisite vote of the shareholders of Beverly Corp., (v) the approval by
St. Paul's shareholders of each of the issuance of the Shares as contemplated
hereby (the "St. Paul Issuance"), and of an amendment to St. Paul's Certificate
of Incorporation to increase the authorized number of shares of Common Stock to
at least 80,000,000 shares (the "St. Paul Amendment"), (vi) the filing of the
Certificate of Merger with the Secretary of State of Delaware pursuant to the
DGCL, (vii) the filings required by the Bank Merger Agreement, and (viii) such
filings, authorizations or approvals as may be set forth in Section 3.4 of the
Beverly Corp. Disclosure Schedule, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity"), or
with any third party are necessary in connection with (1) the execution and
delivery by Beverly Corp. of this Agreement and the Option Agreement, (2) the
consummation by Beverly Corp. of the Merger and the other transactions
contemplated hereby, (3) the execution and delivery by Beverly Bank of the Bank
Merger Agreement, (4) the consummation by Beverly Corp. of the Option
Agreement; and (5) the consummation by Beverly Bank of the Bank Merger and the
transactions contemplated thereby, except, in each case, for such consents,
approvals or filings, the failure of which to obtain will not have a material
adverse effect on the ability of St. Paul to consummate the transactions
contemplated hereby.
(b) Beverly Corp. hereby represents to St. Paul that it has no
knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 3.4(a) cannot be
obtained or granted on a timely basis.
3.5 LOAN PORTFOLIO; REPORTS.
(a) Except as set forth at Section 3.5(a) of the Beverly Corp.
Disclosure Schedule, as of December 31, 1996 and thereafter through and
including the date of this Agreement, none of Beverly Corp., Beverly Bank nor
Beverly Trust is a party to any written or oral loan agreement, note or
borrowing arrangement (including, without limitation, leases, credit
enhancements, commitments, guarantees and interest-bearing assets)
(collectively, "Loans"), with any director, officer or five percent or greater
shareholder of Beverly Corp. or any of its Subsidiaries, or any Affiliated
Person (as defined in Section 9.13) of the foregoing.
(b) Beverly Corp., Beverly Bank and Beverly Trust have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December
31, 1992 with (i) the FRB, (ii) the OCC; (iii) the FDIC, (iv) the Illinois
Commissioner and any other state banking commissions or any other state
regulatory authority (each a "State Regulator"), (v) the SEC and (vi) any other
self-regulatory organization ("SRO") (collectively "Regulatory Agencies").
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of Beverly Corp. and its Subsidiaries, no Governmental
Entity is conducting, or has conducted, any proceeding or investigation into
the business or operations of Beverly Corp., Beverly Bank or Beverly Trust
since December 31, 1992.
3.6 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
Beverly Corp. has previously delivered to St. Paul true, correct and
complete copies of the consolidated statements of position of Beverly Corp. and
its Subsidiaries as of December 31 for the fiscal
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years 1995 and 1996 and the related consolidated statements of earnings,
shareholders' equity and cash flows for the fiscal years 1994 through 1996,
inclusive, as reported in Beverly Corp.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 filed with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in each case accompanied
by the audit report of Grant Thornton LLP, independent public accountants with
respect to Beverly Corp., and the interim financial statements of Beverly Corp.
as of and for the nine months ended September 30, 1996 and 1997, as included in
the Beverly Corp. quarterly report on Form 10-Q for the period ended September
30, 1997 as filed with the SEC. The financial statements referred to in this
Section 3.6 (including the related notes, where applicable) fairly present, and
the financial statements referred to in Section 6.8 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial condition of Beverly Corp. and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) comply, and the financial statements referred to in Section 6.8
hereof will comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and each of
such statements (including the related notes, where applicable) has been, and
the financial statements referred to in Section 6.8 hereof will be prepared in
accordance with generally accepted accounting principles consistently applied
during the periods involved ("GAAP"), except in each case as indicated in such
statements or in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. Beverly Corp.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 and all reports filed under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act since December 31, 1993 comply in all
material respects with the appropriate requirements for such reports under the
Exchange Act, and Beverly Corp. has previously delivered or made available to
St. Paul true, correct and complete copies of such reports. The books and
records of Beverly Corp. and Beverly Bank have been, and are being, maintained
in all material respects in accordance with GAAP and any other applicable legal
and accounting requirements.
3.7 BROKER'S FEES.
Neither Beverly Corp. nor any Beverly Corp. Subsidiary nor any of their
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement, except that Beverly Corp. has engaged, and
will pay a fee or commission to McDonald & Company Securities, Inc.
("McDonald") in accordance with the terms of a letter agreement between
McDonald and Beverly Corp., dated March 10, 1998, a true, complete and correct
copy of which is attached at Section 3.7 of the Beverly Corp. Disclosure
Schedule.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth at Section 3.8 of the Beverly Corp. Disclosure
Schedule, or as disclosed in Beverly Corp.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, since December 31, 1996 (i) neither
Beverly Corp. nor any of its Subsidiaries has incurred any material liability,
except as contemplated by the Agreement or in the ordinary course of their
business consistent with their past practices, and (ii) no event has occurred
which has had, or is likely to have, individually or in the aggregate, a
Material Adverse Effect (as defined in Section 9.13) on Beverly Corp.
(b) Since December 31, 1996 Beverly Corp. and its Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
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3.9 LEGAL PROCEEDINGS.
(a) Except as set forth at Section 3.9 of the Beverly Corp. Disclosure
Schedule, neither Beverly Corp. nor any of its Subsidiaries is a party to any,
and there are no pending or to the knowledge of Beverly Corp., threatened,
legal, administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Beverly Corp.
or any of its Subsidiaries in which, to the knowledge of Beverly Corp., there
is a reasonable probability of any material recovery against or other material
effect upon Beverly Corp. or any of its Subsidiaries or which challenge the
validity or propriety of the transactions contemplated by this Agreement, the
Bank Merger Agreement or the Option Agreement as to which there is a reasonable
probability of success.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Beverly Corp., any of its Subsidiaries or the assets
of Beverly Corp. or any of its Subsidiaries.
3.10 TAXES AND TAX RETURNS.
(a) Each of Beverly Corp. and its Subsidiaries has duly filed all Tax
Returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provision on the financial statements referred to in Sections 3.6 and
6.8 hereof in accordance with GAAP for the payment of all material Taxes which
have been incurred or are due or claimed to be due from it by Taxing
Authorities on or prior to the date hereof other than Taxes (a) which (x) are
not yet delinquent or (y) are being contested in good faith and set forth in
Section 3.10 of the Beverly Corp. Disclosure Schedule and (b) which have not
been finally determined. All liability with respect to the Tax Returns of
Beverly Corp. and its Subsidiaries has been satisfied for all years to and
including 1997. The Internal Revenue Service ("IRS") has not notified Beverly
Corp. of, or otherwise asserted, that there are any material deficiencies with
respect to the federal income Tax Returns of Beverly Corp. subsequent to 1993.
There are no material disputes pending, or claims asserted for, Taxes or
assessments upon Beverly Corp. or any of its Subsidiaries, nor has Beverly
Corp. or any of its Subsidiaries been requested to give any currently effective
waivers extending the statutory period of limitation applicable to any federal
or state income Tax Return for any period. In addition, Tax Returns which are
accurate and complete in all material respects have been filed by Beverly Corp.
and its Subsidiaries for all periods for which returns were due with respect to
income tax withholding, Social Security and unemployment taxes and the amounts
shown on such Tax Returns to be due and payable have been paid in full or
adequate provision therefor in accordance with GAAP has been included by
Beverly Corp. in the financial statements referred to in Sections 3.6 and 6.8
hereto. All Beverly Corp. Tax Returns have been examined by the relevant
Taxing Authorities, or closed without audit by applicable statutes of
limitations, and all deficiencies proposed as a result of such examinations
have been paid or settled, for all periods before and including the taxable
year ended 1993. Neither Beverly Corp. nor any of its Subsidiaries has
consented to any waiver or extension of any statute of limitations with respect
to any Tax. Neither Beverly Corp. nor any Beverly Corp. Subsidiary has made an
election under Section 341(f) of the IRC. Beverly Corp. has provided or made
available to St. Paul complete and correct copies of its Tax Returns and all
material correspondence and documents, if any, relating directly or indirectly
to taxes for each taxable year or other relevant period as to which the
applicable statute of limitations has not run on the date hereof. For this
purpose, "correspondence and documents" include, without limitation, amended
Tax Returns, claims for refunds, notices from Taxing Authorities of proposed
changes or adjustments to Taxes or Tax Returns, consents to assessment or
collection of Taxes, acceptances of proposed adjustments, closing agreements,
rulings and determination letters and requests therefor, and all other written
communications to or from Taxing Authorities relating to any material Tax
liability of Beverly Corp. or any Beverly Corp. Subsidiary. Beverly Corp. will
not be a "foreign person" as that term is used in Section 1.1445-2 of the
Treasury Regulations promulgated under the IRC. Beverly Bank is
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not a "United States real property holding corporation" within meaning of
Section 897 of the IRC and was not a "United States real property holding
corporation" on any "determination date" (as defined in Section 1.897-2(c) of
such Regulations) that occurred during any relevant period.
(b) For purposes of this Agreement:
"Tax" means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other
fee, and any related charge or amount (including any fine, penalty, interest,
or addition to tax), imposed, assessed, or collected by or under the authority
of any Taxing Authority or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Taxing Authority in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any law, regulation or other legal
requirement relating to any Tax.
"Taxing Authority" means any:
(i) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or other
government;
(iii) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
3.11 EMPLOYEE PLANS.
(a) Section 3.11(a) of the Beverly Corp. Disclosure Schedule sets
forth a true and complete list of each employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), arrangement or agreement that is maintained or
contributed to as of the date of this Agreement, or that has within the last
six years been maintained or contributed to, by Beverly Corp. or any of its
Subsidiaries or any other entity which together with Beverly Corp. would be
deemed a "single employer" within the meaning of Section 4001 of ERISA or Code
Sections 414(b), (c) or (m) or under which Beverly Corp. or any such Subsidiary
has any liability (collectively, the "Plans").
(b) Beverly Corp. has heretofore delivered or made available to
St. Paul true, correct and complete copies of each of the Plans and all related
documents, including but not limited to (i) the actuarial report for such Plan
(if applicable) for each of the last five years, (ii) the most recent
determination letter from the IRS (if applicable) for such Plan, (iii) the
current summary plan description and any summaries of material modification,
(iv) all annual reports (Form 5500 series) for each Plan filed for the
preceding five plan years, (v) all agreements with fiduciaries and service
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providers relating to the Plan, and (vi) all substantive correspondence
relating to any such Plan addressed to or received from the Internal Revenue
Service, the Department of Labor, the Pension Benefit Guaranty Corporation or
any other governmental agency.
(c) Except as set forth at Section 3.11(c) of the Beverly Corp.
Disclosure Schedule, (i) Each of the Plans has been operated and
administered in all material respects in compliance with applicable Laws,
including but not limited to ERISA and the Code, (ii) each of the Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code is
so qualified, (iii) with respect to each Plan which is subject to Title IV of
ERISA, the present value of accrued benefits under such Plan, based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Plan's actuary with respect to such Plan, did not, as
of its latest valuation date, exceed the then current value of the assets of
such Plan allocable to such accrued benefits, (iv) no Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of Beverly Corp. or any
Beverly Corp. Subsidiary beyond their retirement or other termination of
service, other than (w) coverage mandated by applicable Law, (x) death benefits
or retirement benefits under a Plan that is an "employee pension plan," as that
term is defined in Section 3(2) of ERISA, (y) deferred compensation benefits
under a Plan that are accrued as liabilities on the books of Beverly Corp. or
any Beverly Corp. Subsidiary, or (z) benefits the full cost of which is borne
by the current or former employee (or his beneficiary), (v) no liability under
Title IV of ERISA has been incurred by Beverly Corp. or any Beverly Corp.
Subsidiary that has not been satisfied in full, and no condition exists that
presents a material risk of Beverly Corp. or any Beverly Corp. Subsidiary
incurring a material liability thereunder, (vi) no Plan is a "multi employer
pension plan," as such term is defined in Section 3(37) of ERISA, (vii) all
contributions or other amounts payable by Beverly Corp. or any Beverly Corp.
Subsidiary as of the Effective Time with respect to each Plan and all other
liabilities of each such entity with respect to each Plan, in respect of
current or prior plan years have been paid or accrued in accordance with
generally accepted accounting practices and Section 412 of the Code, (viii)
neither Beverly Corp. nor any Beverly Corp. Subsidiary has engaged in a
transaction in connection with which Beverly Corp. or any Beverly Corp.
Subsidiary could be subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or
4976 of the Code, (ix) to the knowledge of Beverly Corp., there are no pending,
threatened or anticipated claims (other than routine claims for benefits) by,
on behalf of or against any of the plans or any trusts related thereto, and (x)
all Plans (other than Plans providing for the payment of benefits from the
general assets of Beverly Corp. or any Beverly Corp. Subsidiary) could be
terminated as of the Effective Time without material liability; (xi) no Plan,
program, agreement or other arrangement, either individually or collectively,
provides for any payment by Beverly Corp. or any Beverly Corp. Subsidiary that
would not be deductible under Code Sections 162(a)(1), 162(m) or 404 or that
would constitute a "parachute payment" within the meaning of Code Section 280G;
(xii) no "accumulated funding deficiency" as defined in Section 302(a)(2) of
ERISA or Section 412 of the Code, whether or not waived, and no "unfunded
current liability" as determined under Section 412(l) of the Code exists with
respect to any Plan; and (xiii) no Plan has experienced a "reportable event"
(as such term is defined in Section 4043(b) of ERISA) that is not subject to an
administrative or statutory waiver from the reporting requirement.
3.12 CERTAIN CONTRACTS.
(a) Except as set forth at Section 3.12 of the Beverly Corp.
Disclosure Schedule, neither Beverly Corp. nor any of its Subsidiaries is
a party to or bound by any contract, arrangement or commitment (i) with respect
to the employment of any directors, officers, employees or consultants, (ii)
which, upon the consummation of the transactions contemplated by this Agreement
or the Bank Merger Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment (whether of severance pay or
otherwise) becoming due from St. Paul, Beverly Corp., Beverly Bank, Beverly
Trust, St. Paul Bank or any of their respective Subsidiaries to any director,
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officer or employee thereof, (iii) which materially restricts the conduct of
any line of business by Beverly Corp., Beverly Trust, or Beverly Bank, (iv)
with or to a labor union or guild (including any collective bargaining
agreement) or (v) except as set forth on Section 3.12(a)(v) of the Beverly
Corp. Disclosure Schedule, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated by the occurrence of
any of the transactions contemplated by this Agreement or the Bank Merger
Agreement, or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement or the Bank
Merger Agreement (including as to this clause (v), any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan).
Except as set forth at Section 3.12 of the Beverly Corp. Disclosure Schedule,
there are no employment, consulting and deferred compensation agreements to
which Beverly Corp. or any of its Subsidiaries is a party. Section 3.12(a) of
the Beverly Corp. Disclosure Schedule sets forth a list of all material
contracts (as defined in Item 601(b)(10) of Regulation S-K) of Beverly Corp.
and its Subsidiaries. Each contract, arrangement or commitment of the type
described in this Section 3.12(a), whether or not set forth in Section 3.12(a)
of the Beverly Corp. Disclosure Schedule, is referred to herein as a "Beverly
Corp. Contract," and neither Beverly Corp. nor any of its Subsidiaries has
received notice of, nor do any executive officers of such entities know of, any
violation of any Beverly Corp. Contract.
(b) (i) Each Beverly Corp. Contract is valid and binding and in full
force and effect, (ii) Beverly Corp. and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by it to
date under each Beverly Corp. Contract, and (iii) no event or condition exists
which constitutes or, after notice or lapse of time or both, would constitute,
a material default on the part of Beverly Corp. or any of its Subsidiaries
under any such Beverly Corp. Contract.
3.13 AGREEMENTS WITH REGULATORY AGENCIES.
None of Beverly Corp., Beverly Trust, or Beverly Bank is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has
adopted any board resolutions at the request of (each, whether or not set forth
on Section 3.13 of the Beverly Corp. Disclosure Schedule, a "Regulatory
Agreement"), any Governmental Entity that restricts the conduct of its business
or that in any manner relates to its capital adequacy, its credit policies, its
management or its business, nor has Beverly Corp., Beverly Trust, or Beverly
Bank been advised by any Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
3.14 STATE TAKEOVER LAWS; CERTIFICATE OF INCORPORATION.
The Board of Directors of Beverly Corp. has approved the offer of St. Paul
to enter into this Agreement, the Bank Merger Agreement and the Option
Agreement, and has approved Beverly Corp. entering into this Agreement, the
Bank Merger Agreement and the Option Agreement, and the transactions
contemplated thereby, such that under applicable law and Beverly Corp.'s
Certificate of Incorporation the only vote of Beverly Corp. shareholders
necessary to consummate the transactions contemplated hereby (including the
Bank Merger and issuance under the Option Agreement) is the approval of at
least a majority of the outstanding shares of Beverly Common Stock.
3.15 ENVIRONMENTAL MATTERS.
(a) Each of Beverly Corp. and the Beverly Corp. Subsidiaries is in
compliance in all material respects with all applicable federal and state laws
and regulations relating to pollution or protection of the environment
(including without limitation, laws and regulations relating to emissions,
discharges, releases and threatened releases of Hazardous Materials (as
hereinafter defined), or
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otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials;
(b) There is no suit, claim, action, proceeding, investigation or
notice pending or, to the knowledge of Beverly Corp., Beverly Trust and Beverly
Bank, threatened (or past or present actions or events that could form the
basis of any such suit, claim, action, proceeding, investigation or notice), in
which Beverly Corp. or any Beverly Corp. Subsidiary has been or, with respect
to threatened suits, claims, actions, proceedings, investigations or notices
may be, named as a defendant (x) for alleged material noncompliance (including
by any predecessor), with any environmental law, rule or regulation or (y)
relating to any material release or threatened release into the environment of
any Hazardous Material, occurring at or on a site owned, leased or operated by
Beverly Corp. or any Beverly Corp. Subsidiary, or to the knowledge of Beverly
Corp., relating to any material release or threatened release into the
environment of any Hazardous Material, occurring at or on a site not owned,
leased or operated by Beverly Corp. or any Beverly Corp. Subsidiary;
(c) To the knowledge of Beverly Corp., Beverly Trust and Beverly Bank,
during the period of Beverly Corp.'s or any Beverly Corp. Subsidiary's
ownership or operation of any of its properties, there has not been any
material release of Hazardous Materials in, on, under or affecting any such
property.
(d) To the knowledge of Beverly Corp., Beverly Trust and Beverly Bank,
neither Beverly Corp. nor any Beverly Corp. Subsidiary has made or participated
in any loan to any person who is subject to any suit, claim, action,
proceeding, investigation or notice, pending or threatened, with respect to (i)
any alleged material noncompliance as to any property securing such loan with
any environmental law, rule or regulation, or (ii) the release or the
threatened release into the environment of any Hazardous Material at a site
owned, leased or operated by such person on any property securing such loan.
(e) For purposes of this section 3.15, the term "Hazardous Material"
means any hazardous waste, petroleum product, polychlorinated biphenyl,
chemical, pollutant, contaminant, pesticide, radioactive substance, or other
toxic material, or other material or substance (in each such case, other than
small quantities of such substances in retail containers) regulated under any
applicable environmental or public health statute, law, ordinance, rule or
regulation.
3.16 RESERVES FOR LOSSES.
All reserves or other allowances for possible losses reflected in Beverly
Corp.'s most recent financial statements referred to in Section 3.6 complied
with all Laws and are adequate under GAAP. None of Beverly Corp., Beverly
Trust or Beverly Bank has been notified by the FRB, the FDIC, OCC, the Illinois
Commissioner or Beverly Corp.'s independent auditor, in writing or otherwise,
that such reserves are inadequate or that the practices and policies of Beverly
Corp., Beverly Trust or Beverly Bank in establishing such reserves and in
accounting for delinquent and classified assets generally fail to comply with
applicable accounting or regulatory requirements, or that the FRB, the FDIC,
the OCC, the Illinois Commissioner or Beverly Corp.'s independent auditor
believes such reserves to be inadequate or inconsistent with the historical
loss experience of Beverly Corp., Beverly Trust or Beverly Bank. Beverly Corp.
has previously furnished St. Paul with a complete list of all extensions of
credit and other real estate owned ("OREO") that have been classified by any
bank or trust examiner (regulatory or internal) as other loans specially
mentioned, special mention, substandard, doubtful, loss, classified or
criticized, credit risk assets, concerned loans or words of similar import.
Beverly Corp. agrees to update such list no less frequently than monthly after
the date of this Agreement until the earlier of the Closing Date or the date
that this Agreement is terminated in accordance with Section
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8.1. All OREO held by Beverly Corp., Beverly Trust or Beverly Bank is being
carried net of reserves at the lower of cost or net realizable value.
3.17 PROPERTIES AND ASSETS.
Section 3.17 of the Beverly Corp. Disclosure Schedule lists (i) all real
property owned by Beverly Corp. and each Beverly Corp. Subsidiary; (ii) each
real property lease, sublease or installment purchase arrangement to which
Beverly Corp. or any Beverly Corp. Subsidiary is a party; (iii) a description
of each contract for the purchase, sale, or development of real estate to which
Beverly Corp. or any Beverly Corp. Subsidiary is a party; and (iv) all items of
Beverly Corp.'s or any Beverly Corp. Subsidiary's tangible personal property
and equipment with a book value of [$25,000] or more or having any annual lease
payment of [$10,000] or more. Except for (a) items reflected in Beverly
Corp.'s consolidated financial statements as of December 31, 1996 referred to
in Section 3.6 hereof, (b) exceptions to title that do not interfere materially
with Beverly Corp.'s or any Beverly Corp. Subsidiary's use and enjoyment of
owned or leased real property (other than OREO), (c) liens for current real
estate taxes not yet delinquent, or being contested in good faith, properly
reserved against (and reflected on the financial statements referred to in
Section 3.6 above), (d) properties and assets sold or transferred in the
ordinary course of business consistent with past practices since December 31,
1996, and (e) items listed in Section 3.17 of the Beverly Corp. Disclosure
Schedule, Beverly Corp. and each Beverly Corp. Subsidiary have good and, as to
owned real property, marketable and insurable title to all their properties and
assets, free and clear of all liens, claims, charges and other encumbrances.
Beverly Corp. and each Beverly Corp. Subsidiary, as lessees, have the right
under valid and subsisting leases to occupy, use and possess all property
leased by them, and neither Beverly Corp. nor any Beverly Corp. Subsidiary has
experienced any material uninsured damage or destruction with respect to such
properties since December 31, 1996. All properties and assets used by Beverly
Corp. and each Beverly Corp. Subsidiary are in good operating condition and
repair suitable for the purposes for which they are currently utilized and
comply in all material respects with all Laws relating thereto now in effect or
scheduled to come into effect. Beverly Corp. and each Beverly Corp. Subsidiary
enjoy peaceful and undisturbed possession under all leases for the use of all
property under which they are the lessees, and all leases to which Beverly
Corp. or any Beverly Corp. Subsidiary is a party are valid and binding
obligations in accordance with the terms thereof. Neither Beverly Corp. nor
any Beverly Corp. Subsidiary is in material default with respect to any such
lease, and there has occurred no default by Beverly Corp. or any Beverly Corp.
Subsidiary or event which with the lapse of time or the giving of notice, or
both, would constitute a material default under any such lease. There are no
Laws, conditions of record, or other impediments which interfere with the
intended use by Beverly Corp. or any Beverly Corp. Subsidiary of any of the
property owned, leased, or occupied by them.
3.18 INSURANCE.
Section 3.18 of the Beverly Corp. Disclosure Schedule contains a true,
correct and complete list of all insurance policies and bonds maintained by
Beverly Corp. and any Beverly Corp. Subsidiary, including the name of the
insurer, the policy number, the type of policy and any applicable deductibles,
and all such insurance policies and bonds (or other insurance policies and
bonds that have, from time to time, in respect of the nature of the risks
insured against and amount of coverage provided, been substantially similar in
kind and amount to that customarily carried by parties similarly situated who
own properties and engage in businesses substantially similar to that of
Beverly Corp. and any Beverly Corp. Subsidiary) are in full force and effect
and have been in full force and effect. As of the date hereof, neither Beverly
Corp. nor any Beverly Corp. Subsidiary has received any notice of cancellation
or amendment of any such policy or bond or is in default under any such policy
or bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion. The existing insurance carried
by Beverly Corp. and Beverly Corp. Subsidiaries is and will continue to
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be, in respect of the nature of the risks insured against and the amount of
coverage provided, substantially similar in kind and amount to that customarily
carried by parties similarly situated who own properties and engage in
businesses substantially similar to that of Beverly Corp. and the Beverly Corp.
Subsidiaries, and is sufficient for compliance by Beverly Corp. and the Beverly
Corp. Subsidiaries with all requirements of Law and agreements to which Beverly
Corp. or any of the Beverly Corp. Subsidiaries is subject or is party. True,
correct and complete copies of all such policies and bonds reflected at Section
3.18 of the Beverly Corp. Disclosure Schedule, as in effect on the date hereof,
have been delivered to St. Paul.
3.19 FIDUCIARY RELATIONSHIPS.
Beverly Trust is in compliance with all, and is not in violation, and, to
Beverly Trust's knowledge, is not under investigation with respect to any
violation, of any laws, applicable to Beverly Trust or the conduct of its
business. Without limiting the foregoing, Beverly Trust has conducted its
business in full compliance with all applicable standards and regulations under
ERISA and the fiduciary laws of the State of Illinois, and in accordance with
all trust and other fiduciary contracts or other relationships. Beverly
Trust's business and assets are limited to those that are permissible to be
conducted by and held by a trust under the laws, including without limitation,
the applicable laws of the State of Illinois.
3.20 COMPLIANCE WITH APPLICABLE LAWS.
Each of Beverly Corp. and any Beverly Corp. Subsidiary has complied in all
material respects with all Laws applicable to it or to the operation of its
business. Neither Beverly Corp. nor any Beverly Corp. Subsidiary has received
any notice of any material alleged or threatened claim, violation, or liability
under any such Laws that has not heretofore been cured and for which there is
no remaining liability.
3.21 LOANS.
As of the date hereof:
(a) All loans owned by Beverly Corp. or any Beverly Corp. Subsidiary,
or in which Beverly Corp. or any Beverly Corp. Subsidiary has an interest,
comply in all material respects with all Laws, including, but not limited to,
applicable usury statutes, underwriting and recordkeeping requirements and the
Truth in Lending Act, the Equal Credit Opportunity Act, and the Real Estate
Procedures Act, and other applicable consumer protection statutes and the
regulations thereunder.
(b) All loans owned by Beverly Corp. or any Beverly Corp. Subsidiary,
or in which Beverly Corp. or any Beverly Corp. Subsidiary has an interest, have
been made or acquired by Beverly Corp. in accordance with board of
director-approved loan policies and all of such loans are collectible, except
to the extent reserves have been made against such loans in Beverly Corp.'s
consolidated financial statements at September 30,1997 referred to in Section
3.6 hereof. Each of Beverly Corp. and each Beverly Corp. Subsidiary holds
mortgages contained in its loan portfolio for its own benefit to the extent of
its interest shown therein; such mortgages evidence liens having the priority
indicated by their terms, subject, as of the date of recordation or filing of
applicable security instruments, only to such exceptions as are discussed in
attorneys' opinions regarding title or in title insurance policies in the
mortgage files relating to the loans secured by real property or are not
material as to the collectability of such loans; and all loans owned by Beverly
Corp. and each Beverly Corp. Subsidiary are with full recourse to the borrowers
(except as set forth at Section 3.21(b) of the Beverly Corp. Disclosure
Schedule), and each of Beverly Corp. and any Beverly Corp. Subsidiary has taken
no action which
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would result in a waiver or negation of any rights or remedies available
against the borrower or guarantor, if any, on any loan. All applicable
remedies against all borrowers and guarantors are enforceable except as may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights and except as may be limited by the exercise of judicial
discretion in applying principles of equity. Except as set forth at Section
3.21(b) of the Beverly Corp. Disclosure Schedule, all loans purchased or
originated by Beverly Corp. or any Beverly Corp. Subsidiary and subsequently
sold by Beverly Corp. or any Beverly Corp. Subsidiary have been sold without
recourse to Beverly Corp. or any Beverly Corp. Subsidiary and without any
liability under any yield maintenance or similar obligation. True, correct and
complete copies of loan delinquency reports as of February 28, 1998 prepared by
Beverly Corp. and each Beverly Corp. Subsidiary, which reports include all
loans delinquent or otherwise in default, have been furnished to St. Paul.
True, correct and complete copies of the currently effective lending policies
and practices of Beverly Corp. and each Beverly Corp. Subsidiary also have been
furnished to St. Paul.
(c) Except as set forth at Schedule 3.21(c) each outstanding loan
participation sold by Beverly Corp. or any Beverly Corp. Subsidiary was sold
with the risk of non-payment of all or any portion of that underlying loan to
be shared by each participant (including Beverly Corp. or any Beverly Corp.
Subsidiary) proportionately to the share of such loan represented by such
participation without any recourse of such other lender or participant to
Beverly Corp. or any Beverly Corp. Subsidiary for payment or repurchase of the
amount of such loan represented by the participation or liability under any
yield maintenance or similar obligation. Beverly Corp. and any Beverly Corp.
Subsidiary have properly fulfilled in all material respects its contractual
responsibilities and duties in any loan in which it acts as the lead lender or
servicer and has complied in all material respects with its duties as required
under applicable regulatory requirements.
(d) Beverly Corp. and each Beverly Corp. Subsidiary have properly
perfected or caused to be properly perfected all security interests, liens, or
other interests in any collateral securing any loans made by it.
(e) Section 3.21(e) of the Beverly Disclosure Schedule sets forth a
list of all loans or other extensions of credit to all directors, officers and
employees, or any other person covered by Regulation O of the FRB.
3.22 AFFILIATES.
Each director, executive officer and other person who is an "affiliate"
(for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), and for purposes of qualifying the Merger for
"pooling-of-interests" accounting treatment) of Beverly Corp. is listed at
Section 3.22 of the Beverly Corp. Disclosure Schedule, and except as indicated
thereon each such person has delivered to St. Paul, concurrently with the
execution of this Agreement, a stockholder agreement in the form of Exhibit D
hereto (the "Beverly Stockholder Agreement"). The Beverly Stockholder
Agreement has been duly and validly executed and delivered by each person that
is a party thereto and, assuming due authorization, execution and delivery by
St. Paul, constitutes the valid and binding obligation of such person,
enforceable against such person in accordance with their terms, 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.
3.23 OWNERSHIP OF ST. PAUL COMMON STOCK.
Except as set forth at Section 3.23 of the Beverly Corp. Disclosure
Schedule, neither Beverly Corp. nor any of its directors, officers, 5% or
greater shareholders or affiliates (as used above in Section
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3.22) (i) beneficially own, directly or indirectly, or (ii) is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, any shares of outstanding capital stock
of St. Paul (other than those agreements, arrangements or understandings
specifically contemplated hereby).
3.24 FAIRNESS OPINION.
Beverly Corp. has received an opinion from McDonald to the effect that, in
its opinion, the consideration to be paid to shareholders of Beverly Corp.
hereunder is fair to such shareholders from a financial point of view (the
"McDonald Fairness Opinion"), and McDonald has consented to the inclusion of
the McDonald Fairness Opinion in the Registration Statement.
3.25 BEVERLY CORP. INFORMATION.
The information relating to Beverly Corp. and its Subsidiaries to be
provided by Beverly Corp. to be contained in the Joint Proxy
Statement/Prospectus (defined below) and the Registration Statement (defined
below) will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Joint Proxy
Statement/Prospectus (except for the portions thereof relating solely to St.
Paul or any of its Subsidiaries, as to which Beverly Corp. makes no
representation or warranty) will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ST. PAUL
St. Paul, on behalf of itself and its wholly-owned subsidiary, St. Paul
Bank hereby makes the following representations and warranties to Beverly Corp.
as set forth in this Article IV, each of which is being relied upon by Beverly
Corp. as a material inducement to enter into and perform this Agreement.
4.1 CORPORATE ORGANIZATION.
(a) St. Paul is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. St. Paul has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
St. Paul is duly registered as a savings and loan holding company with the OTS
under HOLA. The Certificate of Incorporation and By-Laws of St. Paul, copies
of which have previously been made available to Beverly Corp., are true,
correct and complete copies of such documents as in effect as of the date of
this Agreement.
(b) St. Paul Bank is a federal savings bank chartered by the OTS under
the laws of the United States with its main office in the State of Illinois.
St. Paul Bank has the corporate power and authority to own or lease all of its
properties and assets and to carry on business as is now being conducted, and
is duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. The Charter and By-Laws of St. Paul Bank, copies of
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which have previously been made available to Beverly Corp., are true, correct
and complete copies of such documents as in effect as of the date of this
Agreement.
4.2 CAPITALIZATION.
(a) The authorized capital stock of St. Paul consists of 40,000,000
shares of St. Paul Common Stock, of which 34,303,720 shares were outstanding
(net of 1,140,147 treasury shares) at February 28, 1998 and 10,000,000 shares
of serial preferred stock, par value $.01 per share ("St. Paul Preferred
Stock"), none of which were outstanding at February 28, 1998. At such date,
there were 3,546,195 shares of St. Paul Common Stock reserved for issuance
pursuant to options. All of the issued and outstanding shares of St. Paul
Common Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and upon issuance in accordance with the
terms hereof, the Shares will be duly authorized and validly issued, and fully
paid, nonassessable and free of preemptive rights. As of the date of this
Agreement, except as set forth above, St. Paul does not have and is not bound
by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of St. Paul Common Stock or St. Paul Preferred Stock or any other equity
securities of St. Paul or any securities presenting the right to purchase or
otherwise receive any shares of St. Paul Common Stock or St. Paul Preferred
Stock, other than pursuant to that certain Rights Agreement between St. Paul
and First National Bank of Boston.
(b) All of the outstanding shares of common stock of St. Paul Bank are
owned by St. Paul free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are duly authorized and
validly issued and fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to ownership thereof.
4.3 AUTHORITY; NO VIOLATION.
(a) St. Paul has full corporate power and authority to execute and
deliver this Agreement and the Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of St. Paul. The Board of Directors of St. Paul has
directed that the St. Paul Issuance and the St. Paul Amendment be submitted to
St. Paul's shareholders for approval at a special meeting of such shareholders
and, except for the approval of such matters by the requisite vote of St.
Paul's shareholders, no other corporate proceedings on the part of St. Paul
(except for matters related to setting the date, time, place and record date
for the special meeting) are necessary to approve this Agreement or the Option
Agreement or to consummate the transactions contemplated hereby or thereby.
This Agreement has been, and the Option Agreement will be, duly and validly
executed and delivered by St. Paul and (assuming due authorization, execution
and delivery by Beverly Corp.) will constitute valid and binding obligations of
St. Paul, enforceable against St. Paul in accordance with their terms, 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 law affecting creditors' rights and remedies generally.
(b) St. Paul Bank has full corporate power and authority to execute and
deliver the Bank Merger Agreement and to consummate the transactions
contemplated thereby. The execution and delivery of the Bank Merger Agreement
and the consummation of the transactions contemplated thereby have been duly
and validly approved by the Board of Directors of St. Paul Bank and by St. Paul
as the sole shareholder of St. Paul Bank. All corporate proceedings on the
part of St. Paul Bank necessary to consummate the transactions contemplated
thereby have been taken. The Bank Merger
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Agreement, upon execution and delivery by St. Paul Bank, will be duly and
validly executed and delivered by St. Paul Bank and will (assuming due
authorization, execution and delivery by Beverly Bank) constitute a valid and
binding obligation of St. Paul Bank, enforceable against St. Paul Bank in
accordance with its terms, 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.
(c) Neither the execution and delivery of this Agreement or the Option
Agreement by St. Paul or the Bank Merger Agreement by St. Paul Bank, nor the
consummation by St. Paul or St. Paul Bank, as the case may be, of the
transactions contemplated hereby or thereby, nor compliance by St. Paul or St.
Paul Bank with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Certificate of Incorporation or Bylaws of St. Paul
or the Charter or By-Laws of St. Paul Bank, as the case may be, or (ii)
assuming that the consents and approvals referred to in Section 4.4 are duly
obtained, (x) violate any Laws applicable to St. Paul, St. Paul Bank or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of St. Paul or St.
Paul Bank under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which St. Paul or St. Paul Bank is a party, or by
which they or any of their respective properties or assets may be bound or
affected.
4.4 REGULATORY APPROVALS.
(a) Except for (i) the filing of applications and notices, as
applicable, as to the Merger and the Bank Merger with the FRB, the OTS and the
OCC and approval of such applications and notices, (ii) the filing of any
required applications or notices with the FDIC and OTS as to the subsidiary
activities of Beverly Bank which become service corporation or operating
subsidiaries of St. Paul Bank and approval of such applications and notices,
(iii) the State Banking Approvals, (iv) the filing with the SEC of a
registration statement on Form S-4 to register the shares of St. Paul Common
Stock to be issued in connection with the Merger (including the shares of St.
Paul Common Stock that may be issued upon the exercise of the options referred
to in Section 1.5 hereof), which will include the Proxy Statement/Prospectus,
(v) the approval of this Agreement by the requisite vote of the shareholders of
Beverly Corp., (vi) the approval of each of the St. Paul Issuance and the St.
Paul Amendment by the requisite vote of shareholders of St. Paul; (vii) the
filing of the Certificate of Merger with the Secretary of State of Delaware
pursuant to the DGCL, (viii) the filings required by the Bank Merger Agreement,
and (ix) such filings and approvals as are required to be made or obtained
under the securities or "Blue Sky" laws of various states or with Nasdaq (or
such other exchange as may be applicable) in connection with the issuance of
the shares of St. Paul Common Stock pursuant to this Agreement, no consents or
approvals of or filings or registrations with any Governmental Entity or with
any third party are necessary in connection with (1) the execution and delivery
by St. Paul of this Agreement and the Option Agreement, (2) the consummation by
St. Paul of the Merger and the other transactions contemplated hereby, (3) the
execution and delivery by St. Paul Bank of the Bank Merger Agreement, and (4)
the consummation by St. Paul Bank of the transactions contemplated by the Bank
Merger Agreement except for such consents, approvals or filings the failure of
which to obtain will not have a material adverse effect on the ability of
Beverly Corp. to consummate the transactions contemplated thereby.
(b) St. Paul hereby represents to Beverly Corp. that it has no
knowledge of any reason why approval or effectiveness of any of the
applications, notices or filings referred to in Section 4.4(a) cannot be
obtained or granted on a timely basis.
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4.5 FINANCIAL STATEMENTS; EXCHANGE ACT FILINGS; BOOKS AND RECORDS.
St. Paul has previously delivered to Beverly Corp. true, correct and
complete copies of the consolidated balance sheets of St. Paul and its
Subsidiaries as of December 31 for the fiscal years 1995 and 1996 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1994 through 1996, inclusive, as reported in
St. Paul's Annual Report on Form 10-K for the fiscal year ended December 31,
1996 filed with the SEC under the Exchange Act, in each case accompanied by the
audit report of Ernst & Young LLP, independent public accountants with respect
to St. Paul, and the interim financial statements of St. Paul as of and for the
nine months ended September 30, 1996 and 1997, as included in St. Paul's
quarterly report on Form 10-Q for the period ended September 30, 1997, as filed
with the SEC. The financial statements referred to in this Section 4.5
(including the related notes, where applicable) fairly present, and the
financial statements referred to in Section 6.8 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial condition of St. Paul and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) comply, and the financial statements referred to in Section 6.8
hereof will comply, with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; and each of
such statements (including the related notes, where applicable) has been, and
the financial statements referred to in Section 6.8 hereof will be, prepared in
accordance with GAAP consistently applied during the periods involved, except
as indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. St. Paul's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 and all subsequently filed reports under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act comply in all material respects
with the appropriate requirements for such reports under the Exchange Act, and
St. Paul has previously delivered to Beverly Corp. true, correct and complete
copies of such reports. The books and records of St. Paul and St. Paul Bank
have been, and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting requirements and
reflect only actual transactions.
4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in St. Paul's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, true, correct and complete copies of which
have previously been delivered to Beverly Corp., since December 31, 1996, no
event has occurred which has had, or is likely to have, individually or in the
aggregate, a Material Adverse Effect on St. Paul.
4.7 OWNERSHIP OF BEVERLY COMMON STOCK; AFFILIATES AND ASSOCIATES.
(a) Except for this Agreement, neither St. Paul nor any of its
affiliates or associates (as such terms are defined under the Exchange Act),
(i) beneficially own, directly or indirectly, or (ii) is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, more than five percent of the outstanding
capital stock of Beverly Corp., excluding the shares of Beverly Common Stock
issuable pursuant to the Option Agreement to be executed subsequent to the
execution of the Agreement.
(b) Neither St. Paul nor any of its Subsidiaries is an "affiliate" (as
such term is defined in DGCL Section 203(c) (1)) or an "associate" (as such
term is defined in DGCL Section 203(c) (2)) of Beverly Corp.
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4.8 AGREEMENTS WITH REGULATORY AGENCIES.
Neither St. Paul nor any of its affiliates is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or has
adopted any board resolutions at the request of any Governmental Entity that
restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor has
St. Paul, nor St. Paul Bank been advised by any Governmental Entity that it is
considering issuing or requesting any Regulatory Agreement.
4.9 BROKER'S FEES.
Neither St. Paul nor any St. Paul Subsidiary nor any of their respective
officers or directors has employed any broker or finder or incurred any
liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement, the Bank Merger
Agreement or the Option Agreement, except that St. Paul has engaged, and will
pay a fee or commission to Merrill Lynch & Co. ("Merrill Lynch") in accordance
with the terms of a letter agreement between Merrill Lynch and St. Paul, dated
March 12, 1998, a true, complete and correct copy of which has been provided to
Beverly Corp.
4.10 LEGAL PROCEEDINGS.
(a) Neither St. Paul nor any of its Subsidiaries is a party to any, and
there are no pending or, to St. Paul's knowledge, threatened, legal,
administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against St. Paul or any
of its Subsidiaries in which, to St. Paul's knowledge, there is a reasonable
probability of any material recovery against or other material effect upon St.
Paul or any of its Subsidiaries or which challenge the validity or propriety of
the transactions contemplated by this Agreement, the Bank Merger Agreement or
the Option Agreement as to which there is a reasonable probability of success.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon St. Paul, any of its Subsidiaries or the assets of St.
Paul or any of its Subsidiaries.
4.11 COMPLIANCE WITH APPLICABLE LAWS.
Each of St. Paul and any St. Paul Subsidiary has complied in all material
respects with all Laws applicable to it or to the operation of its business.
Neither St. Paul nor any St. Paul Subsidiary has received any notice of any
material alleged or threatened claim, violation, or liability under any such
Laws that has not heretofore been cured and for which there is no remaining
liability.
4.12 FAIRNESS OPINION.
St. Paul has received an opinion from Merrill Lynch to the effect that, in
its opinion, the Exchange Ratio is fair to St. Paul stockholders from a
financial point of view (the "Merrill Lynch Fairness Opinion"), and Merrill
Lynch has consented to the inclusion of the Merrill Lynch Fairness Opinion in
the Registration Statement.
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4.13 ST. PAUL INFORMATION.
The information relating to St. Paul and its Subsidiaries to be provided
by St. Paul to be contained in the Joint Proxy Statement/Prospectus and the
Registration Statement will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading. The Joint
Proxy Statement/Prospectus (except for the portions thereof relating solely to
Beverly Corp. or any of its Subsidiaries, as to which St. Paul makes no
representation or warranty) will comply in all material respects with the
provisions of the Securities Act, Exchange Act and the rules and regulations
thereunder.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 COVENANTS OF BEVERLY CORP.
During the period from the date of this Agreement and continuing until the
Effective Time, except as expressly contemplated or permitted by this
Agreement, the Bank Merger Agreement or the Option Agreement or with the prior
written consent of St. Paul, Beverly Corp. and each Beverly Corp. Subsidiary
shall carry on their respective businesses in the ordinary course consistent
with past practices and consistent with prudent banking practices. Beverly
Corp. will use its reasonable efforts to (x) preserve its business organization
and that of each Beverly Corp. Subsidiary intact, (y) keep available to itself
and St. Paul the present services of the employees of Beverly Corp. and each
Beverly Corp. Subsidiary and (z) preserve for itself and St. Paul the goodwill
of the customers of Beverly Corp. and each Beverly Corp. Subsidiary and others
with whom business relationships exist. Without limiting the generality of the
foregoing, and except as set forth in the Beverly Corp. Disclosure Schedule or
as otherwise contemplated by this Agreement or consented to by St. Paul in
writing, Beverly Corp. shall not, and shall not permit any Beverly Corp.
Subsidiary to:
(a) declare or pay any dividends on, or make other distributions in
respect of, any of its capital stock (except for the payment of regular
quarterly cash dividends by Beverly Corp. not to exceed $.09 per share on the
Beverly Common Stock with declaration, record and payment dates corresponding
to the quarterly dividends paid by Beverly Corp. during its fiscal year ended
December 31, 1997 and except that any Beverly Corp. Subsidiary may declare and
pay dividends and distributions to Beverly Corp.); provided, however, that
under no circumstances shall Beverly Corp. declare, set aside or pay any
dividends if it would result in the holders of Beverly Common Stock receiving
more than four cash dividend payments in fiscal 1998, when considered with
anticipated St. Paul dividends based on past practice, nor shall Beverly Corp.
be prohibited from declaring, setting aside or paying dividends consistent
herewith if the Closing Date is such that holders of Beverly Common Stock would
receive fewer than four cash dividends in fiscal 1998, when considered with
anticipated St. Paul dividends based on past practice it being understood that
the parties hereto intend for Beverly Corp. to pay its regular quarterly cash
dividends to shareholders as to any completed fiscal quarter prior to the
Effective Time;
(b) (i) split, combine or reclassify any shares of its capital stock or
issue, authorize or propose the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock except upon the
exercise or fulfillment of rights or options issued or existing pursuant to the
Beverly Stock Plans in accordance with their present terms, all to the extent
outstanding and in existence on the date of this Agreement, and except pursuant
to the Option Agreement, or (ii) repurchase, redeem or otherwise acquire
(except for the acquisition of Trust Account Shares and
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DPC Shares, as such terms are defined in Section 1.4(c) hereof), any shares of
the capital stock of Beverly Corp. or any Beverly Corp. Subsidiary, or any
securities convertible into or exercisable for any shares of the capital stock
of Beverly Corp. or any Beverly Corp. Subsidiary;
(c) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into or exercisable for, or any rights, warrants or options to
acquire, any such shares, or enter into any agreement with respect to any of
the foregoing, other than (i) the issuance of Beverly Common Stock pursuant to
stock options or similar rights to acquire Beverly Common Stock granted
pursuant to the Beverly Stock Plans and outstanding prior to the date of this
Agreement, in each case in accordance with their present terms and (ii)
pursuant to the Option Agreement;
(d) amend its Certificate of Incorporation, By-Laws or other similar
governing documents;
(e) authorize or permit any of its officers, directors, employees or
agents to, directly or indirectly, (i) solicit, initiate or encourage any
inquiries relating to, or the making of any proposal from, (ii) engage in
substantive discussions or negotiations with or (iii) provide any information
to, any person, entity or group (other than St. Paul) concerning any
Acquisition Transaction (as defined below). Notwithstanding the foregoing,
Beverly Corp. may enter into discussions or negotiations or provide information
in connection with a possible Acquisition Transaction if the Board of Directors
of Beverly Corp., following receipt of a written opinion of counsel, reasonably
determines in the exercise of its fiduciary duty that such discussions or
negotiations must be commenced or such information must be furnished. Beverly
Corp. shall promptly communicate to St. Paul the material terms of any
proposal, whether written or oral, which it may receive in respect of any such
Acquisition Transaction and whether it is having discussions or negotiations
with a third party about an Acquisition Transaction with, or providing
information in connection with, or which may lead to, an Acquisition
Transaction with a third party. Beverly Corp. will promptly cease and cause to
be terminated any existing activities, discussions or negotiations previously
conducted with any parties other than St. Paul with respect to any of the
foregoing. As used in this Agreement, Acquisition Transaction shall mean any
offer, proposal or expression of interest relating to (I) any tender or
exchange offer, (II) merger, consolidation or other business combination
involving Beverly Corp. or any Beverly Corp. Subsidiary, or (III) the
acquisition in any manner of a substantial equity interest in, or a substantial
portion of the assets, out of the ordinary course of business, of, Beverly
Corp. or Beverly Bank other than the transactions contemplated or permitted by
this Agreement, the Bank Merger Agreement and the Option Agreement;
(f) make capital expenditures aggregating in excess of $25,000;
(g) enter into any new line of business;
(h) acquire or agree to acquire, by merging or consolidating with, or
by purchasing an equity interest in or the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire any assets, other than in
connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructurings, or in the ordinary course of business consistent
with prudent banking practices;
(i) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue or in any of the conditions to the Merger set forth in
Article VII not being satisfied, or in a violation of any provision of this
Agreement or the Bank Merger Agreement, except, in every case, as may be
required by applicable law;
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(j) change its methods of accounting in effect at December 31, 1997
except as required by changes in GAAP or regulatory accounting principles as
concurred to by St. Paul's independent auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Plan
or any agreement, arrangement, plan or policy between Beverly Corp. or any
Beverly Corp. Subsidiary and one or more of its current or former directors or
officers, (ii) increase in any manner the compensation of any employee or
director or pay any benefit not required by any plan or agreement as in effect
as of the date hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock, restricted stock units or
performance units or shares), (iii) enter into, modify or renew any contract,
agreement, commitment or arrangement providing for the payment to any director,
officer or employee of compensation or benefits, other than normal annual
increases in pay, consistent with past practice, (iv) hire any new employee at
an annual compensation in excess of $40,000, (v) pay expenses of any employees
or directors for attending conventions or similar meetings which conventions or
meetings are held after the date hereof, (vi) promote to a rank of vice
president or more senior any employee, or (vii) pay any retention or other
bonuses to any employees;
(l) except for short-term borrowings with a maturity of one year or
less in the ordinary course of business consistent with past practices, incur
any indebtedness for borrowed money, assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any other
individual, corporation or other entity;
(m) sell, purchase, enter into a lease, relocate, open or close any
banking or other office, or file an application pertaining to such action with
any Governmental Entity;
(n) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosure, settlements in lieu of foreclosure, or troubled
loan or debt restructuring, in the ordinary course of business consistent with
past banking practices;
(o) make any new loans to, modify the terms of any existing loan to,
or engage in any other transactions (other than routine banking transactions)
with, any Affiliated Person of Beverly Corp. or any Beverly Corp. Subsidiary;
(p) make any investment, or incur deposit liabilities, other than in
the ordinary course of business consistent with past practices, including
deposit pricing, and which would not change the risk profile of Beverly Bank
based on its existing deposit and lending policies or make any equity
investments;
(q) purchase any loans or sell, purchase or lease any real property,
except for the sale of real estate that is the subject of a casualty loss or
condemnation or the sale of OREO on a basis consistent with past practices;
(r) originate (i) any loans except in accordance with existing Beverly
Bank lending policies, (ii) residential mortgage loans in excess of $500,000,
(iii) unsecured consumer loans in excess of $25,000, (iv) commercial business
loans in excess of $250,000 as to any loan or $250,000 in the aggregate as to
related loans, or loans to related persons, (v) commercial real estate first
mortgage loans in excess of $500,000 as to any loan or $500,000 in the
aggregate as to related loans, or loans to related persons, or (vi) land
acquisition loans to borrowers who intend to construct a residence on such land
in excess of the lesser of 75% of the appraised value of such land or $150,000,
except in each case for loans for which written applications have been received
by Beverly Bank.;
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(s) make any investments in any equity or derivative securities, or
any debt securities issued or guaranteed by any municipality or otherwise
exempt to any extent from federal, state or local taxation, or engage in any
forward commitment, futures transaction, financial options transaction, hedging
or arbitrage transaction or covered asset trading activities or make any
investments in any investment security with a maturity of greater than one
year;
(t) sell or purchase any mortgage loan servicing rights; or
(u) agree or commit to do any of the actions set forth in (a) - (t)
above.
The consent of St. Paul to any action by Beverly Corp. or any Beverly Corp.
Subsidiary that is not permitted by any of the preceding paragraphs shall be
evidenced by a writing signed by the Chairman, President or any Senior Vice
President of St. Paul.
5.2 MERGER COVENANTS.
Notwithstanding that Beverly Corp. believes that it has established all
reserves and taken all provisions for possible loan losses required by GAAP and
applicable laws, rules and regulations, Beverly Corp. recognizes that St. Paul
may have adopted different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan losses). In that
regard, and in general, from and after the date of this Agreement to the
Effective Time, Beverly Corp. and St. Paul shall consult and cooperate with
each other in order to formulate the plan of integration for the Merger,
including, among other things, with respect to conforming, based upon such
consultation, Beverly Corp.'s loan, accrual and reserve policies to those
policies of St. Paul to the extent appropriate.
5.3 COMPLIANCE WITH ANTITRUST LAWS.
Each of St. Paul and Beverly Corp. shall use its reasonable best efforts
to resolve objections, if any, which may be asserted with respect to the Merger
under antitrust laws, including, without limitation, the Hart-Scott-Rodino Act.
In the event a suit is threatened or instituted challenging the Merger as
violative of antitrust laws, each of St. Paul and Beverly Corp. shall use its
reasonable best efforts to avoid the filing of, or resist or resolve such suit.
St. Paul and Beverly Corp. shall use their reasonable best efforts to take
such action as may be required: (a) by the Antitrust Division of the
Department of Justice or the Federal Trade Commission in order to resolve such
objections as either of them may have to the Merger under antitrust laws, or
(b) by any federal or state court of the United States, in any suit brought by
a private party or governmental entity challenging the Merger as violative of
antitrust laws, in order to avoid the entry of, or to effect the dissolution
of, any injunction, temporary restraining order, or other order which has the
effect of preventing the consummation of the Merger. Reasonable best efforts
shall not include, among other things and to the extent St. Paul so desires,
the willingness of St. Paul to accept an order agreeing to the divestiture, or
the holding separate, of any assets of St. Paul or Beverly Corp.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Upon the execution and delivery of this Agreement, St. Paul and
Beverly Corp. (as to information to be included therein pertaining to Beverly
Corp.) shall promptly cause to be prepared and filed with the SEC a
registration statement of St. Paul on Form S-4, including the Proxy
Statement/Prospectus (the "Registration Statement") for the purpose of
registering the St. Paul Common Stock to be issued in the Merger, and for
soliciting the approval of this Agreement and the Merger by the shareholders of
Beverly Corp., and the St. Paul Issuance and St. Paul Amendment by the
shareholders of St. Paul. St. Paul and Beverly Corp. shall use their
reasonable best efforts to have the Registration Statement declared effective
by the SEC as soon as possible after the filing. The parties shall cooperate
in responding to and considering any questions or comments from the SEC staff
regarding the information contained in the Registration Statement. If at any
time after the Registration Statement is filed with the SEC, and prior to the
Closing Date, any event relating to Beverly Corp. is discovered by Beverly
Corp. which should be set forth in an amendment of, or a supplement to, the
Registration Statement, including the Prospectus/Proxy Statement, Beverly Corp.
shall promptly inform St. Paul, and shall furnish St. Paul with all necessary
information relating to such event whereupon St. Paul shall promptly cause an
appropriate amendment to the Registration Statement to be filed with the SEC.
Upon the effectiveness of such amendment, each of St. Paul and Beverly Corp.
(if prior to the meeting of shareholders pursuant to Section 6.3 hereof) will
take all necessary action as promptly as practicable to permit an appropriate
amendment or supplement to be transmitted to its shareholders entitled to vote
at such meeting. If at any time after the Registration Statement is filed with
the SEC, and prior to the Closing Date, any event relating to St. Paul is
discovered by St. Paul which should be set forth in an amendment of, or a
supplement to, the Registration Statement, including the Prospectus/Proxy
Statement, St. Paul shall promptly inform Beverly Corp., and St. Paul shall
promptly cause an appropriate amendment to the Registration Statement to be
filed with the SEC. Upon the effectiveness of such amendment, each of St. Paul
and Beverly Corp. (if prior to the meeting of shareholders pursuant to Section
6.3 hereof) will take all necessary action as promptly as practicable to permit
an appropriate amendment or supplement to be transmitted to its shareholders
entitled to vote at such meeting. St. Paul shall also use reasonable efforts
to obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this Agreement
and the Bank Merger Agreement and Beverly Corp. shall furnish all information
concerning Beverly Corp. and the holders of Beverly Common Stock as may be
reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
best efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including without
limitation the Merger and the Bank Merger). Beverly Corp. and St. Paul shall
have the right to review in advance, and to the extent practicable each will
consult the other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to Beverly Corp. or St.
Paul, as the case may be, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement; provided,
however, that nothing contained herein shall be deemed to provide either party
with a right to review any information provided to any Governmental Entity on a
confidential basis in connection with the transactions contemplated hereby. In
exercising the foregoing right, each of the parties hereto shall act reasonably
and as promptly as practicable. The parties hereto agree that they will
consult with each other with respect to the obtaining of all permits, consents,
approvals and authorizations of all third
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parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to contemplation of the transactions
contemplated herein.
(c) Beverly Corp. shall, upon request, furnish St. Paul with all
information concerning Beverly Corp. and its directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Registration Statement or any other statement, filing,
notice or application made by or on behalf of St. Paul to any Governmental
Entity in connection with the Merger or the other transactions contemplated by
this Agreement.
(d) St. Paul and Beverly Corp. shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (defined in Section 7.1(c)
hereof) will not be obtained or that the receipt of any such approval will be
materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, Beverly Corp. shall accord to the officers,
employees, accountants, counsel and other representatives of St. Paul, access,
during normal business hours during the period prior to the Effective Time, to
all its, Beverly Trust's and Beverly Bank's properties, books, contracts,
commitments and records and, during such period, Beverly Corp. shall make
available to St. Paul (i) a copy of each report, schedule, registration
statement and other document filed or received by it (including Beverly Trust
and Beverly Bank) during such period pursuant to the requirements of federal
securities laws or federal or state banking laws and (ii) all other information
concerning its (including Beverly Trust and Beverly Bank) business, properties
and personnel as St. Paul may reasonably request. St. Paul shall receive
notice of all meetings of the Beverly Corp., Beverly Trust and Beverly Bank
Board of Directors and any committees thereof, and of any management committees
(in all cases, at least as timely as all Beverly Corp., Beverly Trust and
Beverly Bank, as the case may be, representatives to such meetings are required
to be provided notice). Up to two representatives of St. Paul shall be
permitted to attend all meetings of the Board of Directors (except for the
portion of such meetings which relate to the Merger or an Acquisition
Transaction or such other matters deemed confidential ("Confidential Matters")
of Beverly Corp., Beverly Trust or Beverly Bank, as the case may be) and such
meetings of committees of the Board of Directors and management of Beverly
Corp., Beverly Trust and Beverly Bank which St. Paul desires. St. Paul will
hold all such information in confidence to the extent required by, and in
accordance with, the provisions of the confidentiality agreement which St. Paul
entered into with Beverly Corp. dated February 13, 1998 (the "Confidentiality
Agreement").
(b) Upon reasonable notice and subject to applicable Laws relating to
the exchange of information, St. Paul shall afford to the officers, employees,
accountants, counsel and other representatives of Beverly Corp., access, during
normal business hours during the period prior to the Effective Time, to such
information regarding St. Paul as shall be reasonably necessary for Beverly
Corp. to fulfill its obligations pursuant to this Agreement or which may be
reasonably necessary for Beverly Corp. to confirm that the representations and
warranties of St. Paul contained herein are true and correct and that the
covenants of St. Paul contained herein have been performed in all material
respects. Beverly Corp. will hold all such information in confidence to the
extent required by, and in accordance with, the provisions of the
Confidentiality Agreement.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other
set forth herein.
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(d) Beverly Corp. shall provide St. Paul with true, correct and
complete copies of all financial and other information provided to directors of
Beverly Corp., Beverly Trust and Beverly Bank in connection with meetings of
their Boards of Directors or committees thereof.
6.3 SHAREHOLDER MEETINGS.
(a) Beverly Corp. shall take all steps necessary to duly call, give
notice of, convene and hold a meeting of its shareholders within 35 days after
the Registration Statement becomes effective for the purpose of voting upon the
approval of this Agreement and the Merger (the "Special Meeting"). Management
and the Board of Directors of Beverly Corp. shall recommend to Beverly Corp.'s
shareholders approval of this Agreement, including the Merger, and the
transactions contemplated hereby, together with any matters incident thereto,
and shall oppose any third party proposal or other action that is inconsistent
with this Agreement or the consummation of the transactions contemplated
hereby, unless the Board of Directors of Beverly Corp. reasonably determines,
based upon the written advice of Beverly Corp.'s legal counsel, that such
recommendation or opposition, as the case may be, would constitute a breach of
the exercise of its fiduciary duty. Beverly Corp. and St. Paul shall
coordinate and cooperate with respect to the foregoing matters.
(b) St. Paul shall take all steps necessary to duly call, give notice
of, convene and hold a meeting of its shareholders within 35 days after the
Registration Statement becomes effective for the purpose of voting upon the
approval of each of the St. Paul Issuance and the St. Paul Amendment.
Management and the Board of Directors of St. Paul shall recommend approval of
each of the St. Paul Issuance and the St. Paul Amendment.
6.4 LEGAL CONDITIONS TO MERGER.
Each of St. Paul and Beverly Corp. shall use their reasonable best efforts
(a) to take, or cause to be taken, all actions necessary, proper or advisable
to comply promptly with all legal requirements which may be imposed on such
party with respect to the Merger and, subject to the conditions set forth in
Article VII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by Beverly Corp. or St. Paul in connection with the Merger and the other
transactions contemplated by this Agreement.
6.5 STOCK EXCHANGE LISTING.
St. Paul shall cause the shares of St. Paul Common Stock to be issued in
the Merger and pursuant to options referred to herein to be approved for
quotation on the Nasdaq Stock Market National Market System (or such other
exchange on which the St. Paul Common Stock has become listed, or approved for
listing) prior to or at the Effective Time.
6.6 EMPLOYEES.
(a) To the extent permissible under the applicable provisions of the
Code and ERISA, for purposes of crediting periods of service for eligibility to
participate, but not for vesting and benefit accrual purposes, under employee
pension benefit plans (within the meaning of ERISA Section 3(2)) maintained by
St. Paul or St. Paul Bank, as applicable, (other than St. Paul's Employee Stock
Ownership Plan), individuals who are employees of Beverly Corp. or any Beverly
Corp.
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Subsidiary at the Effective Time will be credited with periods of service with
Beverly Corp. or any Beverly Corp. Subsidiary before the Effective Time as if
such service had been with St. Paul or St. Paul Bank, as applicable. Similar
service credit shall also be given by St. Paul or St. Paul Bank in determining
eligibility to participate in other retirement, vacation and similar benefits
provided to such employees of Beverly Corp., Beverly Trust or Beverly Bank
after the Merger.
(b) St. Paul Bank will merge the existing 401(k) plan of Beverly Bank
with the St. Paul 401(k) Plan after the Merger in accordance with the
applicable provisions of the Code and ERISA, subject to St. Paul having
obtained before such merger of plans a favorable determination letter from the
Internal Revenue Service with respect thereto. St. Paul Bank will not be
obligated to make any matching or other employer contributions to either 401(k)
plan after the Merger.
(c) After the Effective Time, employees of Beverly Corp. or its
Subsidiaries who continue to be employed by St. Paul or any of its
Subsidiaries, will be eligible for benefits that St. Paul or such Subsidiary,
as the case may be, provides to its employees generally and on substantially
the same basis to such employees. St. Paul will or will cause St. Paul Bank to
(i) give credit to employees of Beverly Corp. and its Subsidiaries, with
respect to the satisfaction of the limitations as to pre-existing condition
exclusions and waiting periods for participation and coverage which are
applicable under the welfare benefit plans of St. Paul or St. Paul Bank, equal
to the credit that any such employee had received as of the Effective Time
towards the satisfaction of any such limitations and waiting periods under the
comparable welfare benefit plans of Beverly Corp. or its Subsidiaries.
6.7 INDEMNIFICATION.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, in
which any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of Beverly Corp. (the "Indemnified Parties") is, or is threatened to
be, made a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he is or was a director, officer or
employee of Beverly Corp. or any of their respective predecessors or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Time, the parties hereto
agree to cooperate and defend against and respond thereto to the extent
permitted by applicable law and the Certificate of Incorporation and Bylaws of
Beverly Corp. It is understood and agreed that after the Effective Time, St.
Paul shall indemnify and hold harmless, as and to the fullest extent permitted
by applicable law and the Certificate of Incorporation and Bylaws of St. Paul
as in effect on the date hereof (subject to change as required by law), each
such Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law upon receipt of any
undertaking required by applicable law), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action,
suit, proceeding or investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding or investigation (whether asserted or
arising before or after the Effective Time), the Indemnified Parties may retain
counsel reasonably satisfactory to St. Paul; provided, however, that (1) St.
Paul shall have the right to assume the defense thereof and upon such
assumption St. Paul shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if St.
Paul elects not to assume such defense or counsel for the Indemnified Parties
reasonably advises the Indemnified Parties that there are issues which raise
conflicts of interest between St. Paul and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to St. Paul, and
St. Paul shall pay the reasonable fees and expenses of such counsel for the
Indemnified Parties, (2) St. Paul shall be obligated pursuant to this paragraph
to pay for only one firm of counsel for each Indemnified Party, (3) St. Paul
shall not be liable for any settlement effected without its prior written
consent (which consent shall not
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be unreasonably withheld or delayed), and (4) St. Paul shall not be obligated
pursuant to this paragraph to the extent that a final judgment determines that
any such losses, claims, damages, liabilities, costs, expenses, judgments,
fines and amounts paid in settlement are as a result of the gross negligence,
willful misconduct or malfeasance of the Indemnified Party. St. Paul shall
have no obligation to advance expenses incurred in connection with a threatened
or pending action, suit or preceding in advance of final disposition of such
action, suit or proceeding, unless (i) St. Paul would be permitted to advance
such expenses pursuant to the DGCL and St. Paul's Certificate of Incorporation
or Bylaws, and (ii) St. Paul receives an undertaking by the Indemnified Party
to repay such amount if it is determined that such party is not entitled to be
indemnified by St. Paul pursuant to the DGCL and St. Paul's Certificate of
Incorporation or Bylaws. Any Indemnified Party wishing to claim indemnification
under this Section 6.7, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify St. Paul thereof; provided, however,
that the failure to so notify shall not affect the obligations of St. Paul
under this Section 6.7 except to the extent such failure to notify materially
prejudices St. Paul. St. Paul's obligations under this Section 6.7 continue in
full force and effect for a period of six years from the Effective Time;
provided, however, that all rights to indemnification in respect of any claim
asserted or made within such period shall continue until the final disposition
of such claim.
(b) St. Paul shall purchase for the benefit of the persons serving as
executive officers and directors of Beverly Corp. immediately prior to the
Effective Time, directors' and officers' liability insurance coverage for at
least one year after the Effective Time, under either Beverly Corp.'s policy in
existence on the date hereof, or under a policy of similar coverage and amounts
containing terms and conditions which are generally not less advantageous than
St. Paul's current policy, and in either case, with respect to acts or
omissions occurring prior to the Effective Time which were committed by such
executive officers and directors in their capacity as such ("Tail Insurance").
For the period beginning after one year from the Effective Time, through up to
two years after the Effective Time, St. Paul shall use commercially reasonable
efforts to purchase for the benefit of the persons serving as executive
officers and directors of Beverly Corp. immediately prior to the Effective Time
Tail Insurance; provided, however, that St. Paul shall not be required to spend
more than the amount it paid for the Tail Insurance for the first year
following the Effective Time.
6.8 SUBSEQUENT INTERIM AND ANNUAL FINANCIAL STATEMENTS.
As soon as reasonably available, but in no event more than 45 days after
the end of each fiscal quarter (other than the fourth fiscal quarter, as to
which the time period shall be 90 days), St. Paul will deliver to Beverly Corp.
and Beverly Corp. will deliver to St. Paul their respective Quarterly Reports
on Form 10-Q and Annual Reports on Form 10-K, as filed with the SEC under the
Exchange Act. Each party shall deliver to the other any Current Reports on
Form 8-K promptly after filing such reports with the SEC.
6.9 ADDITIONAL AGREEMENTS.
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, or to vest
the Surviving Corporation or the Surviving Bank with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, or the constituent banks to the Bank Merger, as the case
may be, the proper officers and directors of each party to this Agreement and
St. Paul's and Beverly Corp.'s Subsidiaries shall take all such necessary
action as may be reasonably requested by St. Paul.
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6.10 ADVICE OF CHANGES.
St. Paul and Beverly Corp. shall promptly advise the other party of any
change or event that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect on it or to cause or
constitute a material breach of any of its representations, warranties or
covenants contained herein. From time to time prior to the Effective Time,
each party will promptly supplement or amend its disclosure schedule delivered
in connection with the execution of this Agreement to reflect any matter which,
if existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such disclosure schedule or which is
necessary to correct any information in such disclosure schedule which has been
rendered inaccurate thereby. No supplement or amendment to such disclosure
schedule shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Sections 7.2(a) or 7.3(a) hereof, as the case may
be, or the compliance by Beverly Corp. with the covenants set forth in Section
5.1 hereof.
6.11 CURRENT INFORMATION.
During the period from the date of this Agreement to the Effective Time,
Beverly Corp. will cause one or more of its designated representatives to
confer on a regular and frequent basis (not less than monthly) with
representatives of St. Paul and to report the general status of the ongoing
operations of Beverly Corp. Beverly Corp. will promptly notify St. Paul of any
material change in the normal course of business or in the operation of the
properties of Beverly Corp. and of any governmental complaints, investigations
or hearings (or communications indicating that the same may be contemplated),
or the institution or the threat of litigation involving Beverly Corp., and
will keep St. Paul fully informed of such events.
6.12 EXECUTION AND AUTHORIZATION OF BANK MERGER AGREEMENT.
Prior to the Effective Time, (a) St. Paul and Beverly Corp. each shall
execute and deliver the Certificate of Merger substantially in the form at
Exhibit C, and (b) St. Paul and Beverly Corp. each shall cause St. Paul Bank
and Beverly Bank, respectively, to execute and deliver the Bank Merger
Agreement, in substantially the form at Exhibit A.
6.13 CHANGE IN STRUCTURE.
St. Paul may elect to modify the structure of the transactions
contemplated by this Agreement as noted herein so long as (i) there are no
material adverse federal income tax consequences to the Beverly Corp.
shareholders as a result of such modification, (ii) the consideration to be
paid to the Beverly Corp. shareholders under this Agreement is not thereby
changed or reduced in kind or amount, and (iii) such modification will not be
reasonably likely to delay materially or jeopardize receipt of any required
regulatory approvals. In the event that St. Paul elects to change the
structure of the Merger, the Bank Merger or any other transactions contemplated
hereby, the parties agree to modify this Agreement and the various exhibits
hereto, or enter into any other agreements, to reflect such revised structure.
In such event, St. Paul shall prepare appropriate amendments to this Agreement
and the exhibits hereto, or other documents, for execution by the parties
hereto. St. Paul and Beverly Corp. agree to cooperate fully with each other to
effect such amendments or other documents.
6.14 TRANSACTION EXPENSES OF BEVERLY.
(a) For planning purposes, Beverly Corp. shall, within 15 days from
the date hereof, provide St. Paul with its estimated budget of
transaction-related expenses reasonably
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anticipated to be payable by Beverly Corp. in connection with this transaction,
including the fees and expenses of counsel, accountants, investment bankers and
other professionals. Beverly Corp. shall promptly notify St. Paul if or when
it determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, Beverly Corp.
shall ask all of its attorneys and other professionals to render current and
correct invoices for all unbilled time and disbursements. Beverly Corp. shall
accrue and/or pay all of such amounts which are actually due and owing as soon
as possible.
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(c) Beverly Corp. shall advise St. Paul monthly of all out-of-pocket
expenses which Beverly Corp. has incurred in connection with this transaction.
(d) St. Paul, in reasonable consultation with Beverly Corp., shall
make all arrangements with respect to the printing and mailing of the Joint
Proxy Statement/Prospectus. Each of St. Paul and Beverly Corp. shall, if St.
Paul reasonably deems necessary, also engage a proxy solicitation firm to
assist in the solicitation of proxies for their respective the Special Meeting.
Beverly Corp. agrees to cooperate as to such matters.
6.15 REGISTRATION OF OPTION SHARES.
Promptly following the Effective Time, St. Paul will cause to be
registered under the Securities Act the shares of St. Paul Common Stock subject
to issuance under the Beverly Stock Plans.
6.16 FURTHER ACTIONS OF BEVERLY.
Upon the written request of St. Paul, Beverly Corp. shall, within 5
business days of the date of such written request, demand payment of, or cause
Beverly Bank to demand payment of, any and all loans (to the extent identified
by St. Paul) of Beverly Corp. or Beverly Bank, as the case may be, which loans
are (or should have been) set forth at Sections 3.5(a) or 3.21(e) of the
Beverly Corp. Disclosure Schedule, and which loans are secured or
collateralized in any way by Beverly Common Stock.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(A) SHAREHOLDER APPROVALS.
(i) This Agreement, including the Certificate of Merger, and
the Merger shall have been approved and adopted by the affirmative vote of the
holders of at least majority of the outstanding shares of Beverly Common Stock
entitled to vote thereon.
(ii) The St. Paul Issuance and the St. Paul Amendment each
shall have been approved by the requisite vote of the outstanding shares of
St. Paul Common Stock.
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(B) STOCK EXCHANGE LISTING.
The shares of St. Paul Common Stock which shall be issued in the
Merger (including the St. Paul Common Stock that may be issued upon exercise
of the options referred to in Section 1.5 hereof) upon consummation of the
Merger shall have been authorized for quotation on the Nasdaq Stock Market
National Market System (or such other exchange on which the St. Paul Common
Stock may become listed).
(C) OTHER APPROVALS.
All regulatory approvals required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory Approvals"). No Requisite
Regulatory Approval shall contain a non-customary condition that St. Paul
reasonably determines to be burdensome or otherwise alter the benefits for
which it bargained in this Agreement.
(D) REGISTRATION STATEMENT.
The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(E) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY.
No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions (an "Injunction")
contemplated by this Agreement or the Certificate of Merger shall be in effect.
No statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
(F) FEDERAL TAX OPINION.
St. Paul shall have received from Hogan & Hartson L.L.P., St. Paul's
special counsel, an opinion in form and substance reasonably satisfactory to
St. Paul, substantially to the effect that on the basis of facts,
representations, and assumptions set forth in such opinion which are consistent
with the state of facts existing at the time of such opinion, the Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, such counsel
may require and, to the extent such counsel deems necessary or appropriate, may
rely upon representations made in certificates of officers of Beverly Corp.,
St. Paul, their respective affiliates and others.
(G) POOLING OF INTERESTS.
St. Paul shall have received (i) advice of Ernst & Young LLP and
Grant Thornton, LLP, independent accountants, within two weeks of the date
hereof, to the effect that the Merger will be accounted for as a pooling of
interests, and (ii) as of the Effective Time, a written opinion of each of
Ernst & Young LLP and Grant Thornton, LLP to the effect that the Merger will be
accounted for as a pooling-of-interests.
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7.2 CONDITIONS TO OBLIGATIONS OF ST. PAUL.
The obligation of St. Paul to effect the Merger is also subject to the
satisfaction or waiver by St. Paul at or prior to the Effective Time of the
following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Beverly Corp. set forth in this
Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date; provided, however, that for purposes of this paragraph, such
representations and warranties shall be deemed to be true and correct, unless
the failure or failures of such representations and warranties to be so true
and correct, individually or in the aggregate, would have a Material Adverse
Effect on Beverly Corp. Such determination of aggregate Material Adverse
Effect shall be made as if there were no materiality qualifications in such
representations and warranties. St. Paul shall have received a certificate
signed on behalf of Beverly Corp. by each of the President and Chief Executive
Officer and the Chief Financial Officer of Beverly Corp. to the foregoing
effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS OF BEVERLY CORP.
Beverly Corp. shall have performed in all material respects all
covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing Date. St. Paul shall have received a certificate
signed on behalf of Beverly Corp. by each of the President and Chief Executive
Officer and the Chief Financial Officer of Beverly Corp. to such effect.
(C) CONSENTS UNDER AGREEMENTS.
(i) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c) hereof) whose consent or
approval shall be required in order to permit the succession by the Surviving
Corporation pursuant to the Merger to any obligation, right or interest of
Beverly Corp. under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument shall have been obtained except
for those, the failure of which to obtain, will not result in a Material
Adverse Effect on the Surviving Corporation.
(ii) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c) hereof) whose consent or
approval shall be required in order to permit the succession by the Surviving
Bank pursuant to the Bank Merger to any obligation, right or interest of
Beverly Bank under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument shall have been obtained except
for those, the failure of which to obtain, will not result in a Material
Adverse Effect on the Surviving Bank.
(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(E) NO MATERIAL ADVERSE CHANGE.
There shall have been no changes, other than changes contemplated by
this Agreement, in the business, operations, condition (financial or
otherwise), assets or liabilities of Beverly Corp. or any Beverly Corp.
Subsidiary (regardless of whether or not such events or changes
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are inconsistent with the representations and warranties given herein) that
individually or in the aggregate has had or would have a Material Adverse
Effect on Beverly Corp.
(F) LEGAL OPINION.
St. Paul shall have received the opinion of Lord, Bissell & Brook,
counsel to Beverly Corp., dated the Closing Date, as to such matters as St.
Paul may reasonably request. As to any matter in such opinion which involves
matters of fact, such counsel may rely upon the certificates of officers and
directors of Beverly Corp. and of public officials, reasonably acceptable to
St. Paul.
(G) ACCOUNTANT'S COMFORT LETTER.
Beverly Corp. shall have caused to be delivered on the respective
dates thereof to St. Paul "comfort letters" from Grant Thornton, LLP, Beverly
Corp.'s independent public accountants, dated the date on which the Registration
Statement or last amendment thereto shall become effective, and dated the date
of the Closing (defined in Section 9.1 hereof), and addressed to St. Paul and
Beverly Corp., with respect to Beverly Corp.'s financial data presented in the
Proxy Statement/Prospectus, which letters shall be based upon Statements on
Auditing Standards Nos. 72 and 76.
(H) TERMINATION OF DATA PROCESSING CONTRACT
Notwithstanding any other representation, warranty, covenant or other
agreement to the contrary herein, that certain data processing agreement dated
May 1, 1995 between Midwest Payment Systems, Inc. and Beverly Corp., including
all addendums, attachments and other documents incorporated therein or made a
part thereof, shall have been terminated effective May 1, 1998, with no
liability whatsoever as a result thereof or otherwise to Beverly Corp. or any
of its Subsidiaries, or any of their respective successors or assigns.
(I) REPAYMENT OF LOANS.
Any and all loans of Beverly Corp. and Beverly Bank as to which St.
Paul has requested that Beverly Corp. or Beverly Bank make demand for payment
in accordance with Section 6.16 above, shall have been paid in full, with no
waiver or negation of any rights or remedies available against the borrower
thereunder.
7.3 CONDITIONS TO OBLIGATIONS OF BEVERLY CORP.
The obligation of Beverly Corp. to effect the Merger is also subject to
the satisfaction or waiver by Beverly Corp. at or prior to the Effective Time
of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES.
The representations and warranties of St. Paul set forth in this
Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date; provided, however, that for purposes of this paragraph, such
representations and warranties shall be deemed to be true and correct, unless
the failure or failures of such representations and warranties to be so true
and correct, individually or in the aggregate, would have a Material Adverse
Effect on St. Paul. Such determination of aggregate Material Adverse Effect
shall be made as if there were no materiality qualifications in such
representations and warranties. Beverly Corp. shall have received a
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certificate signed on behalf of St. Paul by each of the President and the
Chief Financial Officer of St. Paul to the foregoing effect.
(B) PERFORMANCE OF COVENANTS AND AGREEMENTS OF ST. PAUL.
St. Paul shall have performed in all material respects all covenants
and agreements required to be performed by it under this Agreement at or prior
to the Closing Date. Beverly Corp. shall have received a certificate signed on
behalf of St. Paul by each of the President and the Chief Financial Officer of
St. Paul to such effect.
(C) CONSENTS UNDER AGREEMENTS.
The consent or approval or waiver of each person (other than the
Governmental Entities referred to in Section 7.1(c)) whose consent or approval
shall be required in connection with the transactions contemplated hereby under
any loan or credit agreement, note, mortgage, indenture, lease, license or
other agreement or instrument to which St. Paul is a party or is otherwise
bound shall have been obtained.
(D) NO PENDING GOVERNMENTAL ACTIONS.
No proceeding initiated by any Governmental Entity seeking an
Injunction shall be pending.
(E) LEGAL OPINION.
Beverly Corp. shall have received the opinion of Clifford M. Sladnick,
Esq., Senior Vice President, General Counsel and Corporate Secretary of St.
Paul, dated the Closing Date, as to the authorization, validity and
non-assessibility of the St. Paul Common Stock to be issued pursuant to this
Agreement, and as to such matters as Beverly Corp. may reasonably request. As
to any matter in such opinion which involves matters of fact, such counsel may
rely upon the certificates of officers and directors of St. Paul and of public
officials and opinions of local counsel, reasonably acceptable to Beverly Corp.
(F) NO MATERIAL ADVERSE CHANGE.
There shall have been no changes, other than changes contemplated by
this Agreement, in the business, operations, condition (financial or
otherwise), assets or liabilities of St. Paul or any St. Paul Subsidiary
(regardless of whether or not such events or changes are inconsistent with the
representations and warranties given herein) that individually or in the
aggregate has had or would have a Material Adverse Effect on St. Paul.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with
the Merger by the shareholders of Beverly Corp. or St. Paul, if applicable:
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(a) by mutual consent of St. Paul and Beverly Corp. in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either St. Paul or Beverly Corp. upon written notice to the
other party (i) 30 days after the date on which any request or application for
a Regulatory Approval shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such Regulatory
Approval, unless within the 30-day period following such denial or withdrawal
the parties agree to file, and have filed with the applicable Governmental
Entity, a petition for rehearing or an amended application, provided, however,
that no party shall have the right to terminate this Agreement pursuant to this
Section 8.1(b), if such denial or request or recommendation for withdrawal
shall be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
(c) by either St. Paul or Beverly Corp. if the Merger shall not have
been consummated on or before December 31, 1998, unless the failure of the
Closing to occur by such date shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by either St. Paul or Beverly Corp. (provided that the terminating
party is not in breach of its obligations under Section 6.3 hereof) if the
approval of the shareholders of either party hereto required for the
consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of shareholders or
at any adjournment or postponement thereof;
(e) by either St. Paul or Beverly Corp. (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, if such breach, individually or in
the aggregate, has had or is likely to have a Material Adverse Effect on the
breaching party, and such breach shall not have been cured within 30 days
following receipt by the breaching party of written notice of such breach from
the other party hereto or such breach, by its nature, cannot be cured prior to
the Closing;
(f) by either St. Paul or Beverly Corp. (provided that the terminating
party is not then in breach of any representation, warranty, covenant or other
agreement contained herein that, individually or in the aggregate, would give
the other party the right to terminate this Agreement) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, and such breach shall not have been
cured within 30 days following receipt by the breaching party of written notice
of such breach from the other party hereto or such breach, by its nature,
cannot be cured prior to the Closing;
(g) by St. Paul, if the management of Beverly Corp. or its Board of
Directors, for any reason, (i) fails to call and hold within 35 days of the
effectiveness of the Registration Statement a special meeting of Beverly
Corp.'s shareholders to consider and approve this Agreement and the
transactions contemplated hereby, (ii) fails to recommend to shareholders the
approval of this Agreement and the transactions contemplated hereby, (iii)
fails to oppose any third party proposal that is inconsistent with the
transactions contemplated by this Agreement or (iv) violates Section 5.1(e) of
this Agreement, and by Beverly Corp., if the management of St. Paul or its
Board of Directors, for any reason, (i) fails to call and hold within 35 days
of the effectiveness of the Registration Statement a special meeting of St.
Paul's shareholders to consider and approve the St. Paul Issuance and the St.
Paul Amendment, or (ii) fails to recommend to shareholders the approval of the
St. Paul Issuance and the St. Paul Amendment;
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(h)
(i) by Beverly Corp., if (either before or after its approval by the
shareholders of Beverly Corp.) both (A) its Board of Directors so determines by
a vote of at least two-thirds of the members of its entire Board, at any time
during the ten-day period commencing with the Determination Date, and (B) the
St. Paul Common Stock Average Price on the Determination Date shall be less
than the lesser of $21.25, or $21.25 multiplied by the Index Ratio.
(ii) Notwithstanding the foregoing, if Beverly Corp. elects to exercise
its termination right pursuant to subsection (h)(i), it shall give prompt
written notice to St. Paul (provided that such notice of election to terminate
may be withdrawn at any time within the aforementioned ten-day period). During
the seven-day period commencing with its receipt of such notice, St. Paul shall
have the option of increasing the consideration to be received by the holders
of Beverly Corp. Common Stock hereunder by increasing the Exchange Ratio to
equal the lesser of (A) a number (rounded to four decimals) equal to a
quotient, the numerator of which is $21.25 multiplied by the Exchange Ratio (as
then in effect) and the denominator of which is the St. Paul Common Stock
Average Price (defined below), and (B) a number equal to a quotient, the
numerator of which is the Index Ratio less 0.20, multiplied by the Exchange
Ratio (as then in effect) and the denominator of which is the St. Paul Ratio
(defined below). If St. Paul makes an election contemplated by the preceding
sentence, within such seven-day period, it shall give prompt written notice to
Beverly Corp. of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to subsection (h)(i) and this
Agreement shall remain in effect in accordance with its terms (except as the
Exchange Ratio shall have been so modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this subsection (h)(ii).
For purposes of this subsection (h), the following terms shall have the
meanings indicated:
"St. Paul Common Stock Average Price" means the average of the daily
closing sales prices of St. Paul Common Stock as reported on the Nasdaq Stock
Market's National Market Tier (as reported in The Wall Street Journal or, if
not reported thereby, another authoritative source as chosen by St. Paul) for
the 20 consecutive full trading days in which such shares are reported on the
Nasdaq Stock Market ending at the close of trading on the Determination Date.
"Determination Date" means the date on which the approval of the OTS
required for consummation of the Merger shall be received or, if no OTS
approval is required, then the date of the last federal banking approval
required of St. Paul is received.
"Index Price" on a given date mean the weighted average (weighted in
accordance with the factors listed below) of the closing prices on such date of
the companies composing the Index Group ( as defined below). If any company
belonging to the Index Group or St. Paul declares of effects a stock dividend,
reclassification, recapitalization, split-up, combination, exchange of share or
similar transaction between the Starting Date and the Determination Date, the
prices for the common stock of such company or St. Paul will be appropriately
adjusted for use in the Index.
"Starting Date" means the first Nasdaq Stock Market trading day
preceding the date of this Agreement.
"St. Paul Ratio" means the number obtained by dividing the St. Paul
Common Stock Average Price on the Determination Date by the Starting Date
Closing Price.
"Index Ratio" means the number obtained by dividing the Index Price at
the close of business on the Determination Date by the Index Price at close of
business on the Starting Date.
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"Index Group" means the 23 financial institution holding companies
listed at Exhibit E hereto, the common stock of all of which will be publicly
traded and as to which there will not have been, since the Starting Date and
before the Determination Date, any public announcement of a proposal for such
company to be acquired or for such company to acquire another company or
companies in transactions with a value exceeding 25% of the acquirors market
capitalization as of the Starting Date. In the event that the common stock of
any such company ceases to be publicly traded or such an announcement is made,
such company will be removed from the Index Group, and the weights (which were
determined based on the number of outstanding share of common stock)
redistributed proportionately for the purposes of determining the Index Price.
The 23 holding companies and the weights attributed to them are as set forth at
Exhibit E.
(i) by St. Paul if Beverly Corp. has complied with Section 5.1(e)
above, and has given written notice to St. Paul that Beverly Corp. has agreed
to enter into an Acquisition Transaction other than as contemplated hereby;
provided, however, that such termination under this Section 8.1(i) shall not be
effective unless and until Beverly shall have complied with the expense and
breakup fee provisions of Section 9.3 below, and shall have acknowledged in the
written notice to be provided in accordance herewith that the Option granted
pursuant to the Option Agreement shall then be exercisable in accordance with
terms thereof.
8.2 EFFECT OF TERMINATION.
In the event of termination of this Agreement by either St. Paul or
Beverly Corp. as provided in Section 8.1 hereof, this Agreement shall forthwith
become void and have no effect except (i) the last sentences of Sections 6.2(a)
and 6.2(b) and Sections 8.2, 9.2 and 9.3 hereof shall survive any termination
of this Agreement, and (ii) notwithstanding anything to the contrary contained
in this Agreement, no party shall be relieved or released from any liabilities
or damages arising out of its willful or intentional breach of any provision of
this Agreement.
8.3 AMENDMENT.
Subject to compliance with applicable law, this Agreement may be amended
by the parties hereto, by action taken or authorized by their respective Board
of Directors, at any time before or after approval of the matters presented in
connection with the Merger by the shareholders of Beverly Corp.; provided,
however, that after any approval of the transactions contemplated by this
Agreement by Beverly Corp.'s shareholders, there may not be, without further
approval of such shareholders, any amendment of this Agreement which reduces
the amount or changes the form of the consideration to be delivered to Beverly
Corp. shareholders hereunder other than as contemplated by this Agreement.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER.
At any time prior to the Effective Time, the parties hereto, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party, but such extension or
waiver or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
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ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING.
Subject to the terms and conditions of this Agreement, the closing of the
Merger (the "Closing") will take place at 10:00 a.m. at the main offices of St.
Paul on (i) the fifth day after the last Requisite Regulatory Approval and
shareholder approvals are received and all applicable waiting periods have
expired, or (ii) such other date, place and time as the parties may agree (the
"Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement (other than
pursuant to the Option Agreement, which shall terminate in accordance with its
terms) shall survive the Effective Time, except for those covenants and
agreements contained herein and therein which by their terms apply in whole or
in part after the Effective Time.
9.3 EXPENSES; BREAKUP FEE.
All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense, except that all filing and other fees paid to the SEC, the Illinois
Commissioner and the OTS in connection with this Agreement shall be borne by
St. Paul. Except as set forth in the next sentence, in the event that this
Agreement is terminated by either St. Paul or Beverly Corp. by reason of a
material breach pursuant to Sections 8.1(e) or (f) hereof or by St. Paul or
Beverly Corp. pursuant to Section 8.1(g) hereof, the other party shall pay all
documented, reasonable costs and expenses up to $500,000 incurred by the
terminating party in connection with this Agreement and the transactions
contemplated hereby. In the event that this Agreement is terminated by St.
Paul under Section 8.1(d) by reason of Beverly Corp. shareholders not having
given any required approval, or in the event this Agreement is terminated by
St. Paul by reason of a willful material breach pursuant to Sections 8.1(e) or
(f) hereof, Beverly Corp. shall pay all documented, reasonable costs and
expenses up to $500,000 incurred by St. Paul in connection with this Agreement
and the transactions contemplated hereby, plus a breakup fee of $1.0 million.
In the event that this Agreement is terminated by St. Paul under Section 8.1(i)
by reason of Beverly Corp. having agreed to enter into an Acquisition
Transaction other than as contemplated hereby, Beverly Corp. shall pay all
documented, reasonable costs and expenses up to $500,000 incurred by St. Paul
in connection with this Agreement and the transactions contemplated hereby,
plus a breakup fee of $1.0 million. In the event that this Agreement is
terminated by Beverly Corp. under Section 8.1(d) by reason of St. Paul
shareholders not having given any required approval, St. Paul shall pay Beverly
Corp. $1,000,000.
9.4 NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by registered or
certified mail (return receipt requested) or delivered by an express courier
(with confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
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<PAGE> 48
(a) if to St. Paul, to:
St. Paul Bancorp. Inc.
6700 West North Avenue
Chicago, Illinois 60707
Attn.: Clifford M. Sladnick
Senior Vice President, General Counsel and
Corporate Secretary
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004-1109
Attn.: Stuart G. Stein, Esq.
and
(b) if to Beverly Corp., to:
Beverly Bancorporation, Inc.
Suite 3E
16345 South Harlem Ave.
Tinley Park, Illinois 60477
Attn.: John Van Winkle
President
with a copy (which shall not constitute notice) to:
Lord, Bissell & Brook
115 South LaSalle St.
Chicago, Illinois 60603
Attn.: Kurt W. Florian, Esq.
9.5 INTERPRETATION.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of or an Exhibit or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
9.6 COUNTERPARTS.
This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
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<PAGE> 49
9.7 ENTIRE AGREEMENT.
This Agreement (including the disclosure schedules, documents and the
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, other than the
Confidentiality Agreement, the Certificate of Merger, the Option Agreement and
the Beverly Stockholder Agreement.
9.8 GOVERNING LAW.
This Agreement shall be governed and construed in accordance with the laws
of the State of Delaware, without regard to any applicable conflicts of law
rules.
9.9 ENFORCEMENT OF AGREEMENT.
The parties hereto agree that irreparable damage would occur in the event
that the provisions of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions thereof
in any court of the United States or any state having jurisdiction, this being
in addition to any other remedy to which they are entitled at law or in equity.
9.10 SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
9.11 PUBLICITY.
Except as otherwise required by law or the rules of the Nasdaq Stock
Market National Market System (or such other exchange on which the St. Paul
Common Stock may become listed), so long as this Agreement is in effect,
neither St. Paul nor Beverly Corp. shall, or shall permit any of St. Paul's or
Beverly Corp.'s Subsidiaries to, issue or cause the publication of any press
release or other public announcement with respect to, or otherwise make any
public statement concerning, the transactions contemplated by this Agreement,
the Certificate of Merger, the Option Agreement or the Beverly Stockholder
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
9.12 ASSIGNMENT; LIMITATION OF BENEFITS.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns. Except as otherwise specifically provided in Section
6.7 hereof, this Agreement (including the
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<PAGE> 50
documents and instruments referred to herein) is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder, and
the covenants, undertakings and agreements set out herein shall be solely for
the benefit of, and shall be enforceable only by, the parties hereto and their
permitted assigns.
9.13 ADDITIONAL DEFINITIONS.
In addition to any other definitions contained in this Agreement, the
following words, terms and phrases shall have the following meanings when used
in this Agreement.
"Affiliated Person": any director, officer or 5% or greater shareholder,
spouse or other person living in the same household of such director, officer
or shareholder, or any company, partnership or trust in which any of the
foregoing persons is an officer, 5% or greater shareholder, general partner or
5% or greater trust beneficiary.
"knowledge": with respect to any entity, refers to the knowledge of such
entity's directors and officers in the ordinary course of their duties in such
positions.
"Laws": any and all statutes, laws, ordinances, rules, regulations,
orders, permits, judgments, injunctions, decrees, case law and other rules of
law enacted, promulgated or issued by any Governmental Entity.
"Material Adverse Effect": with respect to St. Paul or Beverly Corp., as
the case may be, means a condition, event, change or occurrence that is
reasonably likely to have a material adverse effect upon (A) the financial
condition, results of operations, business or properties of St. Paul or Beverly
Corp. (other than as a result of (i) changes in laws or regulations or
accounting rules of general applicability or interpretations thereof, or (ii)
decreases in capital under Financial Accounting Standards No. 115 attributable
to general changes in interest rates), or (B) the ability of St. Paul or
Beverly Corp. to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement, the Certificate of Merger and, in
the case of Beverly Corp., the Option Agreement.
"Subsidiary": with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated,
which is consolidated with such party for financial reporting purposes.
[SIGNATURES PAGE FOLLOWS]
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<PAGE> 51
IN WITNESS WHEREOF, St. Paul and Beverly Corp. have caused this Agreement
to be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
ST. PAUL BANCORP, INC.
ATTEST:
By: /s/ By: /s/
------------------------------- -----------------------------
Name: Clifford M. Sladnick Name: Joseph C. Scully
Title: Senior Vice President and Title: Chairman and Chief
Corporate Secretary Executive Officer
BEVERLY BANCORPORATION, INC.
ATTEST:
By: /s/ By: /s/
------------------------------ -----------------------------
Name: John D. Van Winkle Name: Anthony R. Pasquinelli
Title: President Title: Chairman
47
<PAGE> 1
EXHIBIT 2.2
OPTION AGREEMENT
THE TRANSFER OF THE OPTION GRANTED
BY THIS AGREEMENT IS SUBJECT TO RESALE RESTRICTIONS.
This OPTION AGREEMENT, dated as of March 15, 1998 (this "Agreement"),
is entered into between BEVERLY BANCORPORATION, INC., a Delaware corporation
("Issuer"), and ST. PAUL BANCORP, INC., a Delaware corporation ("Grantee").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger, dated as of March 15, 1998 (the "Plan"), which was executed by the
parties thereto prior to the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering into the
Plan and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 1,100,488
fully paid and nonassessable shares of common stock, par value $.01 per share
of Issuer ("Issuer Common Stock") (which number of shares is equal to 19.99% of
the total of the number of outstanding shares of Issuer Common Stock on the
date hereof), at a price per share equal to $22.92 (the "Initial Price");
provided, however, that in the event Issuer issues or agrees to issue any
additional shares of Issuer Common Stock (other than shares issued upon the
exercise of options outstanding as of the date of the Plan in accordance with
their terms pursuant to existing stock option plans), or grants one or more
options to purchase additional shares of Issuer Common Stock at a price less
than the Initial Price, as adjusted pursuant to Section 5(b) hereof, such price
shall be equal to such lesser price (such price, as adjusted, is hereinafter
referred to as the "Option Price"). The number of shares of Issuer Common Stock
that may be received upon the exercise of the Option and the Option Price are
subject to adjustment as herein set forth.
SECTION 2. (a) Grantee may exercise the Option, in whole or part, at any
time and from time to time following the occurrence of a Purchase Event (as
defined below); provided, however, that the Option shall terminate and be of
no further force and effect upon the earliest to occur of the following events
(which are collectively referred to as an "Exercise Termination Event"):
(i) The time immediately prior to the Effective Time;
(ii) 18 months after the first occurrence of a Purchase Event;
(iii) 18 months after the termination of the Plan following the
occurrence of a Preliminary Purchase Event (as defined below), unless
clause (vii) is applicable;
<PAGE> 2
(iv) upon the termination of the Plan, prior to the occurrence of a
Purchase Event or Preliminary Purchase Event, by Issuer pursuant to
Sections 8.1(d), (e), (f), (g) or (h)of the Plan, both parties pursuant
to Section 8.1(a) of the Plan, or by either party pursuant to Section
8.1(b) or (c) of the Plan;
(v) 18 months after the termination of the Plan, by either party
pursuant to Section 8.1(d) of the Plan based on the required vote of
Issuer's shareholders not being received, if no Purchase Event or
Preliminary Purchase Event has occurred prior to the meeting of
shareholders (or any adjournment or postponement thereof) held to vote on
the Plan;
(vi) 18 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a breach by
Issuer, unless such breach was willful or intentional; or
(vii) 24 months after the termination of the Plan, by Grantee
pursuant to Section 8.1(e) or (f) thereof as a result of a willful or
intentional breach by Issuer, or by Grantee pursuant to Section 8.1(g) or
(i) of the Plan.
(b) The term "Preliminary Purchase Event" shall mean any of the
following events or transactions occurring on or after the date hereof and
prior to an Exercise Termination Event:
(i) Issuer without having received Grantee's prior written
consent, shall have entered into any letter of intent or definitive
agreement to engage in an Acquisition Transaction (as defined below) with
any person (as defined below) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of
Issuer shall have recommended that the shareholders of Issuer approve or
accept any Acquisition Transaction with any Person (as the term "person"
is defined in Section 3(a)9 and 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the rules and regulations
thereunder) other than Grantee or any Grantee Subsidiary. For purposes
of this Agreement "Acquisition Transaction" shall mean (x) a merger,
consolidation or other business combination involving Issuer, (y) a
purchase, lease or other acquisition of all or substantially all of the
assets of Issuer, (z) a purchase or other acquisition (including by way
of merger, consolidation, share exchange or otherwise) of Beneficial
Ownership (as the term "beneficial ownership" is defined in Regulation
13d-3(a) of the Exchange Act) of securities representing 10.0% or more of
the voting power of Issuer; provided, however, that "Acquisition
Transaction" shall not include a transaction entered into after the
termination of the Plan in which the Issuer is the surviving entity, if
in connection with such transaction, no person acquires Beneficial
Ownership of 10.0% or more of the total voting power of the Issuer to be
outstanding after giving effect to such transaction and in which the
aggregate voting power of Issuer acquired by all persons is less than 15%
of the total voting power of Issuer;
(ii) Any Person (other than Grantee, any Grantee Subsidiary or any
current affiliate of Issuer) shall have acquired Beneficial Ownership of
10.0% or more of the outstanding shares of Issuer Common Stock;
(iii) (a) Any Person (other than Grantee or any Grantee Subsidiary)
shall have made a bona fide proposal to Issuer or, by a public
announcement or written communication that is or becomes the subject of
public disclosure, to Issuer's shareholders to engage in an Acquisition
Transaction (including, without limitation, any situation in which any
Person other than Grantee or any Grantee Subsidiary shall have commenced
(as such term is defined in Rule 14d-2 under the Exchange Act), or shall
have filled a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to
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<PAGE> 3
a tender offer or exchange offer to purchase any shares of Issuer
Common Stock such that, upon consummation of such offer, such person
would have Beneficial Ownership of 10.0% or more of the then outstanding
shares of Issuer Common Stock (such an offer being referred to herein as
a "Tender Offer" or an "Exchange Offer", respectively)), and (b) the
shareholders of Issuer do not approve the Merger, as defined in the Plan,
at the Special Meeting, as defined in the Plan;
(iv) There shall exist a willful or intentional breach under the
Plan by Issuer and such breach would entitle Grantee to terminate the
Plan;
(v) The special meeting of Issuers' shareholders held for the
purpose of voting on the Plan shall not have been held pursuant to the
Plan or shall have been canceled prior to termination of the Plan, or for
any reason whatsoever Issuer's Board of Directors shall have failed to
recommend, or shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors, that Issuer's
shareholders approve the Plan, or if Issuer or Issuer's Board of
Directors fails to oppose any proposal by any Person (other than Grantee
or any Grantee Subsidiary); or
(vi) Any Person (other than Grantee or any Grantee Subsidiary)
shall have filed an application or notice with the Board of Governors of
the Federal Reserve System (the "FRB"), the Federal Deposit Insurance
Corporation (the "FDIC"), the Office of the Comptroller of the Currency
(the "OCC"), the Illinois Office of the Commissioner of Banks & Real
Estate (the "Illinois Commissioner"), or other regulatory or
administrative agency or commission (each, a "Governmental Authority")
for approval to engage in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean any of the following events or
transactions occurring on or after the date hereof and prior to an Exercise
Termination Event:
(i) The acquisition by any Person (other than Grantee or any
Grantee Subsidiary) of Beneficial Ownership (other than on behalf of the
Issuer) of 25% or more of the then outstanding Issuer Common Stock;
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i) except that the percentage referred to in clause (z)
thereof shall be 25%; or
(iii) The termination of the Plan by Grantee pursuant to Section
8.1(e) or (f) thereof as a result of a willful or intentional breach by
Issuer, or by Grantee pursuant to Section 8.1(g) or (i) of the Plan.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event known to Issuer; provided,
however, that the giving of such notice by Issuer shall not be a condition to
the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the "Option Notice," the date
of which being hereinafter referred to as the "Notice Date") specifying (i) the
total number of shares of Issuer Common Stock it will purchase pursuant to such
exercise and (ii) the time (which shall be on a business day that is not less
than three nor more than 10 business days from the Notice Date) on which the
closing of such purchase shall take place (the "Closing Date"); such closing to
take place at the principal office of the Issuer; provided, however, that, if
prior notification to or approval of the FDIC, the FRB, the OCC, the Illinois
Commissioner or any other Governmental Authority is required in connection with
such purchase (each, a "Notification" or an "Approval," as the case may be),
(a) Grantee shall promptly file the required notice or application for approval
("Notice/Application"), (b) Grantee shall expeditiously
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<PAGE> 4
process the Notice/Application and (c) for the purpose of determining the
Closing Date pursuant to clause (ii) of this sentence, the period of time that
otherwise would run from the Notice Date shall instead run from the later of
(x) in connection with any Notification, the date on which any required
notification periods have expired or been terminated and (y) in connection with
any Approval, the date on which such approval has been obtained and any
requisite waiting period or periods shall have expired. For purposes of Section
2(a) hereof, any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto. On or prior to the Closing Date, Grantee shall have the
right to revoke its exercise of the Option by written notice to the Issuer
given not less than three business days prior to the Closing Date.
(f) At the closing referred to in Section 2(e) hereof, Grantee shall
pay to Issuer the aggregate purchase price for the number of shares of Issuer
Common Stock specified in the Option Notice in immediately available funds by
wire transfer to a bank account designated by Issuer; provided, however, that
failure or refusal of Issuer to designate such a bank account shall not
preclude Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in Section 2(f) hereof, Issuer shall deliver to
Grantee a certificate or certificates representing the number of shares of
Issuer Common Stock specified in the Option Notice and, if the Option should be
exercised in part only, a new Option evidencing the rights of Grantee thereof
to purchase the balance of the shares of Issuer Common Stock purchasable
hereunder.
(h) Certificates for Issuer Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend substantially as follows:
The transfer of the shares represented by this certificate is subject
to resale restrictions arising under the Securities Act of 1933, as
amended, and applicable state securities laws and to certain provisions of
an agreement between St. Paul Bancorp, Inc. and Beverly Bancorporation,
Inc. dated as of March 15, 1998. A copy of such agreement is on file at
the principal office of St. Paul Bancorp, Inc., and will be provided to
the holder hereof without charge upon receipt by St. Paul Bancorp, Inc. of
a written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission (the "SEC") or Governmental Authority responsible for
administering any applicable state securities laws or an opinion of counsel, in
form and substance satisfactory to Issuer's counsel, to the effect that such
legend is not required for purposes of the Securities Act or applicable state
securities laws; (ii) the reference to the provisions of this Agreement in the
above legend shall be removed by delivery of substitute certificate(s) without
such reference if the shares have been sold or transferred in compliance with
the provisions of this Agreement and under circumstances that do not require
the retention of such reference; and (iii) the legend shall be removed in its
entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition such certificates shall bear any other legend as may be
required by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice and the
tender of the applicable purchase price in immediately available funds on the
Closing Date, unless prohibited by applicable law, Grantee shall be deemed to
be the holder of record of the number of shares of Issuer Common Stock
specified in the Option Notice, notwithstanding that the stock transfer books
of Issuer shall then be closed or that certificates representing such shares of
Issuer Common Stock shall not then actually be delivered to Grantee. Issuer
shall pay all expenses and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
2 in the name of Grantee.
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<PAGE> 5
SECTION 3. Issuer agrees: (i) that it shall at all times until the
termination of this Agreement have reserved for issuance upon the exercise of
the Option that number of authorized and reserved shares of Issuer Common Stock
equal to the maximum number of shares of Issuer Common Stock at any time and
from time to time issuable hereunder, all of which shares will, upon issuance
pursuant hereto, be duly authorized, validly issued, fully paid,
non-assessable, and delivered free and clear of all claims, liens, encumbrances
and security interests and not subject to any preemptive rights; (ii) that it
will not, by amendment of its certificate of incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of
any of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all reasonable action as may from
time to time be requested by the Grantee, at Grantee's expense (including (x)
complying with all premerger notification, reporting and waiting period
requirements specified in 15 U.S.C. Section 18a and regulations promulgated
thereunder and (y) in the event prior approval of or notice to the FDIC, the
FRB, the OCC, the Illinois Commissioner or any other Governmental Authority,
under the Change in Bank Control Act of 1978, as amended, the Bank Holding
Company Act, as amended, or any other applicable federal or state banking law,
is necessary before the Option may be exercised, cooperating with Grantee in
preparing such applications or notices and providing such information to each
such Governmental Authority as it may require in order to permit Grantee to
exercise the Option and Issuer duly and effectively to issue shares of Issuer
Common Stock pursuant hereto; and (iv) to take all action provided herein to
protect the rights of Grantee against dilution.
SECTION 4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the
holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Issuer Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any agreements and related options for which
this Agreement (and the Option granted hereby) may be exchanged. Upon receipt
by Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date.
SECTION 5. The number of shares of Issuer Common Stock purchasable upon
the exercise of the Option shall be subject to adjustment from time to time as
follows:
(a) In the event of any change in the type or number of shares of
Issuer Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or other issuances of additional shares (other than pursuant to the exercise of
the Option), the type and number of shares of Issuer Common Stock purchasable
upon exercise hereof shall be appropriately adjusted and proper provision shall
be made so that, in the event that any additional shares of Issuer Common Stock
are to be issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of shares of
Issuer Common Stock that remain subject to the Option shall be increased or
decreased (as applicable) so that, after such issuance and together with the
shares of Issuer Common Stock previously issued pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing changes in the Issuer
Common Stock), the Option shall equal the sum of 19.9% of the total of the
number of shares of Issuer Common Stock then issued and outstanding.
(b) Whenever the number of shares of Issuer Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the Option
Price shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Issuer Common
Stock purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Issuer Common Stock purchasable after the
adjustment.
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<PAGE> 6
SECTION 6. (a) Upon the occurrence of a Purchase Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
(whether on its own behalf or on behalf of any subsequent holder of the Option
(or part thereof) or of any of the shares of Issuer Common Stock issued
pursuant hereto), promptly prepare, file and keep current a shelf registration
statement with the SEC, under the Securities Act covering any shares issued and
issuable pursuant to the Option and shall use its reasonable best efforts to
cause such registration statement to become effective, and to remain current
and effective for a period not in excess of 180 days from the day such
registration statement first becomes effective, in order to permit the sale or
other disposition of any shares of Issuer Common Stock issued upon total or
partial exercise of the Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee. Grantee shall have the right to demand two
such registrations which right shall be transferable. Grantee shall provide
all information reasonably requested by Issuer for inclusion in any offering
circular or, if applicable, registration statement to be filed hereunder. In
connection with any such offering circular or, if applicable, registration
statement, Issuer and Grantee shall provide each other with representations,
warranties, indemnities and other agreements customarily given in connection
with such registration. If requested by Grantee in connection with such
registration, Issuer and Grantee shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating themselves in respect of representations, warranties, indemnities
and other agreements customarily included in such underwriting agreements.
Notwithstanding the foregoing, if Grantee revokes any exercise notice or fails
to exercise any Option with respect to any exercise notice pursuant to Section
2(e) hereof, Issuer shall not be obligated to continue any registration process
with respect to the sale of Option Shares issuable upon the exercise of such
Option and Grantee shall not be deemed to have demanded registration of Option
Shares.
(b) In the event that Grantee requests Issuer to prepare an offering
circular or, if applicable, to file a registration statement following the
failure to obtain any approval required to exercise the Option as described in
Section 9 hereof, the closing of the sale or other disposition of the Issuer
Common Stock or other securities pursuant to such offering circular or, if
applicable, registration statement shall occur substantially simultaneously
with the exercise of the Option.
(c) Concurrently with the preparation and filing of a registration
statement under Section 6(a) hereof, Issuer shall also make all filings
required to comply with state securities laws in such number of states as
Grantee may reasonably request.
SECTION 7. (a) Upon the occurrence of a Purchase Event that occurs prior
to an Exercise Termination Event, (i) at the request (the date of such request
being the "Option Repurchase Request Date") of Grantee, Issuer shall
repurchase, subject to compliance with applicable law and out of funds legally
available therefor, the Option from Grantee at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which the Option may then be exercised and (ii) at the request (the date of
such request being the "Option Share Repurchase Request Date") of the owner of
Option Shares from time to time (the "Owner"), Issuer shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term
"market/offer price" shall mean the highest of (i) the price per share of
Issuer Common Stock at which a tender offer or exchange offer therefor has been
made after the date hereof and on or prior to the Option Repurchase Request
Date or the Option Share Repurchase Request Date, as the case may be, (ii) the
price per share of Issuer Common Stock paid or to be paid by any third party
pursuant to an agreement with Issuer (whether by way of a merger, consolidation
or otherwise), (iii) the average of the 20 highest last sale prices for shares
of Issuer Common Stock as reported within the 90-day period ending on the
Option Repurchase Request Date or the Option Share Repurchase Request Date, as
the case may be, and (iv) in the event of a sale of all or substantially all of
Issuer's assets, the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as determined by an
investment banking firm
-6-
<PAGE> 7
selected by Grantee or the Owner, as the case may be, and reasonably acceptable
to Issuer, divided by the number of shares of Issuer Common Stock outstanding
at the time of such sale. In determining the market/offer price, the value of
consideration other than cash shall be the value determined by an investment
banking firm selected by Grantee or the Owner, as the case may be, and
reasonably acceptable to Issuer. The investment banking firm's determination
shall be conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within 30 business days
after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to Grantee the Option Repurchase Price or to
the Owner the Option Share Repurchase Price.
(c) Issuer hereby undertakes to use its reasonable best efforts to
obtain all required regulatory, shareholder and legal approvals and to file any
required notices as promptly as practicable in order to accomplish any
repurchase contemplated by this Section 7. Nonetheless, to the extent that
Issuer is prohibited under applicable law or regulation from repurchasing any
Option and/or any Option Shares in full, Issuer shall promptly so notify
Grantee and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to Grantee and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days
after the date on which Issuer is no longer so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of repurchase pursuant to
Section 7(b) hereof is prohibited as referred to above, from delivering to
Grantee and/or the Owner, as appropriate, the Option Repurchase Price or the
Option Share Repurchase Price, respectively, in full, Grantee or the Owner, as
appropriate, may revoke its notice of repurchase of the Option or the Option
Shares either in whole or in part whereupon, in the case of a revocation in
part, Issuer shall promptly (i) deliver to Grantee and/or the Owner, as
appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering after taking
into account any such revocation and (ii) deliver, as appropriate, either (A)
to Grantee, a new Agreement evidencing the right of Grantee to purchase that
number of shares of Issuer Common Stock equal to the number of shares of Issuer
Common Stock purchasable immediately prior to the delivery of the notice of
repurchase less the number of shares of Issuer Common Stock covered by the
portion of the Option repurchased or, (B) to the Owner, a certificate for the
number of Option Shares covered by the revocation.
(d) Issuer shall not enter into any agreement with any Person (other
than Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the
other Person assumes all the obligations of Issuer pursuant to this Section 7
in the event that Grantee or the Owner elects, in its sole discretion, to
require such other Person to perform such obligations.
SECTION 8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into a letter of intent or definitive agreement (i)
to consolidate or merge with any Person (other than Grantee or a Grantee
Subsidiary), and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any Person (other than Grantee or
a Grantee Subsidiary) to merge into Issuer, and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged
for stock or other securities of any other Person or cash or any other property
or the then outstanding shares of Issuer Common Stock shall after such merger
represent less than 50% of the outstanding shares and share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or substantially all
of its assets to any Person (other than
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<PAGE> 8
Grantee or a Grantee Subsidiary) then, and in each such case, such letter of
intent or definitive agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of such transaction
and upon the terms and conditions set forth herein, be converted into, or
exchanged for, an option (the "Substitute Option"), at the election of Grantee,
of either (x) the Acquiring Corporation (as defined below) or (y) any person
that controls the Acquiring Corporation (the Acquiring Corporation and any such
controlling person being hereinafter referred to as the "Substitute Option
Issuer").
(b) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as is hereinafter defined) as is equal to
the market/offer price (as defined in Section 7 hereof) multiplied by the
number of shares of Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as hereinafter defined). The
exercise price of the Substitute Option per share of the Substitute Common
Stock (the "Substitute Purchase Price") shall then be equal to the Option Price
multiplied by a fraction in which the numerator is the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares for which the Substitute Option is
exercisable.
(c) The Substitute Option shall otherwise have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee, provided, further that the terms
of the Substitute Option shall include (by way of example and not limitation)
provisions for the repurchase of the Substitute Option and Substitute Common
Stock by the Substitute Option Issuer on the same terms and conditions as
provided in Section 7 hereof.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing
or surviving corporation, and (iii) the transferee of all or any
substantial part of Issuer's assets.
(ii) "Substitute Common Stock" shall mean the common stock issued
by the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one-year period immediately
preceding the consolidation, merger or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on
the day preceding such consolidation, merger or sale; provided, that if
Issuer is the issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of Issuer Common Stock issued by Issuer,
the corporation merging into Issuer or by any company which controls or
is controlled by such merging corporation, as Grantee may elect.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.99% of the shares of
Substitute Common Stock outstanding immediately prior to the issuance of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than such number of shares of Substitute Common Stock but
for this clause (e), the Substitute Option Issuer shall make a cash payment to
Grantee equal to the excess of (i) the value of the Substitute Option without
giving effect to the limitation in this clause (e) over (ii) the value of the
Substitute Option after giving effect to the limitation in this clause (e).
This difference in value shall be determined by a nationally recognized
investment banking firm selected by Grantee and the Substitute Option Issuer.
In addition, the provisions of Section 5(a) hereof shall not apply to the
issuance of any Substitute Option and for purposes of applying Section 5(a)
hereof thereafter to any Substitute Option, the percentage referred to in
Section 5(a) hereof shall thereafter
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<PAGE> 9
equal the percentage that the percentage of the shares of Substitute Common
Stock subject to the Substitute Option bears to the number of shares of
Substitute Common Stock outstanding.
SECTION 9. Notwithstanding Sections 2, 6 and 7 hereof, if Grantee has
given the notice referred to in one or more of such Sections, the exercise of
the rights specified in any such Section shall be extended (a) if the exercise
of such rights requires obtaining regulatory approvals (including any required
waiting periods) to the extent necessary to obtain all regulatory approvals for
the exercise of such rights, and (b) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise; provided,
that in no event shall any closing date occur more than 12 months after the
related notice date, and, if the closing date shall not have occurred within
such period due to the failure to obtain any required approval by the OTS, the
FDIC, the OCC, the Illinois Commissioner or any other Governmental Authority
despite the best efforts of Issuer or the Substitute Option Issuer, as the case
may be, to obtain such approvals, the exercise of the rights shall be deemed to
have been rescinded as of the related notice date. In the event (a) Grantee
receives official notice that an approval of the OTS, the FDIC, the OCC, the
Illinois Commissioner or any other Governmental Authority required for the
purchase and sale of the Option Shares will not be issued or granted or (b) a
closing date has not occurred within 12 months after the related notice date
due to the failure to obtain any such required approval, Grantee shall be
entitled to exercise the Option in connection with the concurrent resale of the
Option Shares pursuant to a registration statement as provided in Section 6
hereof. Nothing contained in this Agreement shall restrict Grantee from
specifying alternative means of exercising rights pursuant to Sections 2, 6 or
7 hereof in the event that the exercising of any such rights shall not have
occurred due to the failure to obtain any required approval referred to in this
Section 9.
SECTION 10. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly approved by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer
are necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by, and
constitutes a valid and binding obligation of, Issuer, enforceable against
Issuer in accordance with its terms, subject to any required Governmental
Approval, and except as enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
may be brought.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Issuer Common Stock equal to the maximum number of shares of Issuer
Common Stock at any time and from time to time issuable hereunder, and all such
shares, upon issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, non-assessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any preemptive
rights.
SECTION 11. (a) Neither of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express written consent of
the other party, except that Grantee may assign this Agreement to a wholly
owned subsidiary of Grantee and Grantee may assign its rights hereunder in
whole or in part after the occurrence of a Preliminary Purchase Event. The term
"Grantee" as used in this Agreement shall also be deemed to refer to Grantee's
permitted assigns.
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<PAGE> 10
(b) Any assignment of rights of Grantee to any permitted assignee of
Grantee hereunder shall bear the restrictive legend at the beginning thereof
substantially as follows:
The transfer of the option represented by this assignment and the
related option agreement is subject to resale restrictions arising under
the Securities Act of 1933, as amended, and applicable state securities
laws and to certain provisions of an agreement between St. Paul Bancorp,
Inc. and Beverly Bancorporation, Inc., dated as of March 15, 1998. A
copy of such agreement is on file at the principal office of St. Paul
Bancorp, Inc., and will be provided to any permitted assignee of the
Option without charge upon receipt of a written request therefor.
SECTION 12. Each of Grantee and Issuer will use its reasonable efforts to
make all filings with, and to obtain consents of, all third parties and
Governmental Authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
FDIC, the FRB, the OCC, the Illinois Commissioner and any other Governmental
Authority for approval to acquire the shares issuable hereunder.
SECTION 13. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and
that the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
SECTION 14. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that Grantee is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7 hereof, the full number of shares
of Issuer Common Stock provided in Section 1 hereof (as adjusted pursuant
hereto), it is the express intention of Issuer to allow Grantee to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible without any amendment or modification hereof.
SECTION 15. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in the manner and at the respective addresses of the parties set forth in the
Plan.
SECTION 16. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto shall be governed by and
construed in accordance with the laws of the State of Delaware (but not
including the choice of law rules thereof).
SECTION 17. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one and
the same agreement and shall be effective at the time of execution and
delivery.
SECTION 18. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder.
SECTION 19. Except as otherwise expressly provided herein or in the Plan,
this Agreement contains the entire agreement between the parties with respect
to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or
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<PAGE> 11
oral. The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is intended
to confer upon any party, other than the parties hereto, and their respective
successors except as assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except as expressly provided herein.
SECTION 20. Capitalized terms used in this Agreement and not defined
herein but defined in the Plan shall have the meanings assigned thereto in the
Plan.
SECTION 21. Nothing contained in this Agreement shall be deemed to
authorize or require Issuer or Grantee to breach any provision of the Plan or
any provision of law applicable to the Grantee or Issuer.
SECTION 22. In the event that any selection or determination is to be made
by Grantee or the Owner hereunder and at the time of such selection or
determination there is more than one Grantee or Owner, such selection shall be
made by a majority in interest of such Grantees or Owners.
SECTION 23. In the event of any exercise of the option by Grantee, Issuer
and such Grantee shall execute and deliver all other documents and instruments
and take all other action that may be reasonably necessary in order to
consummate the transactions provided for by such exercise.
SECTION 24. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Issuer Common Stock covered hereby.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 12
IN WITNESS WHEREOF, each of the parties has caused this Option Agreement
to be executed and delivered on its behalf by their respective officers
thereunto duly authorized, all as of the date first above written.
BEVERLY BANCORPORATION, INC.
By: /s/
-----------------------------
Name: Anthony R. Pasquinelli
Title: Chairman
ST. PAUL BANCORP, INC.
By: /s/
----------------------------
Name: Joseph C. Scully
Title: Chairman and Chief
Executive Officer
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<PAGE> 1
EXHIBIT 99
[ LETTERHEAD OF ST. PAUL BANCORP INC. ]
NEWS
FOR IMMEDIATE RELEASE
March 15, 1998
Contacts: Robert N. Parke
(773) 804-2360
Robert E. Williams
(773) 804-2284
ST. PAUL BANCORP AND BEVERLY BANCORP
TO MERGE IN STOCK TRANSACTION
CHICAGO, March 15, 1998 - The boards of directors of St. Paul Bancorp,
Inc. (Nasdaq: SPBC), and Beverly Bancorporation, Inc. (Nasdaq: BEVB) today
announced a definitive agreement to merge through a stock-for-stock exchange.
Beverly Bancorporation, headquartered in Tinley Park, IL is the holding company
for Beverly National Bank. Beverly is a commercial bank with a $669 million in
assets and 13 full-service branches in the south and southwest regions of Cook
County and Will County.
Terms of the agreement call for a tax-free exchange of shares at a fixed
exchange ratio of 1.063 shares in St. Paul common stock for each of Beverly's
common shares outstanding at the time of the merger. It is expected that
approximately 6.4 million new shares of St. Paul stock will be issued in
conjunction with the merger, including conversion of options. The initial
value of the transaction is approximately $170 million and the pro forma market
capitalization of the combined company will be approximately $1.1 billion.
Based on St. Paul's March 13, 1998 stock price of $26.44, the exchange
ratio represents a price of $28.10 for each BEVB share(1), after adjusting for
5% stock dividend to be paid by Beverly on April 14th. The pricing reflects a
multiple of 228% of Beverly's book value at December 31, 1997 and approximately
24 times the last twelve months' earnings.
The merger, which will be accounted for as a pooling of interests, is
expected to close in the summer of 1998. Due diligence work has been completed
by both companies and their advisors. The transaction has been approved by the
boards of directors of both companies and is subject to approval by bank
regulatory authorities and Beverly's shareholders. The transaction will
require St. Paul shareholder approval for an increase in the number of common
shares authorized and the issuance of stock in the merger. In addition,
Beverly has granted St. Paul an option to purchase shares equal to 19.9% of
Beverly's shares under certain conditions. Beverly has been granted the right
to terminate the transaction if St. Paul's stock price falls below $21.25 (as
adjusted for declines in a thrift index). St. Paul has the option to adjust
the exchange ratio if this event occurs.
___________________________
(1) Giving effect to the 5% stock dividend payable on April 14th, the effective
price per share on the currently outstanding Beverly stock is $29.51.
<PAGE> 2
ST.PAUL BANCORP INC. TO
ACQUIRE BEVERLY BANCORP INC.
PAGE 2 OF 3
St. Paul estimates that the synergies of the transaction will produce
annual cost savings equal to approximately 19% of Beverly's operating expenses,
or approximately $4.8 million, pre-tax. The targeted cost savings would be
created by elimination of duplicative back office operations as well as
efficiencies to be gained from merging the two institutions into one. St. Paul
expects that the transaction will be accretive to earnings based on cost saves
alone. In addition, St Paul expects to achieve revenue enhancements of
approximately $1 million. One-time charges in conjunction with the merger are
expected to approximate $11.5 million, pre-tax.
"Our customers, our community and our shareholders will all benefit from
this transaction," said Anthony Pasquinelli, Chairman of Beverly. "St. Paul
and Beverly have both demonstrated an unwavering commitment to serving the
Chicago area, with both institutions operating here for over 100 years. St.
Paul has generated average compound annual returns in excess of 20% for its
shareholders in the ten-plus years it has operated as a public company," he
added.
"We are thrilled to be able to acquire an excellent institution whose
branch network will significantly strengthen our presence in the south and
southwest suburbs of Chicago," said Joseph C. Scully, Chairman and Chief
Executive Officer of St. Paul. "The addition of Beverly's 13 branches
represents a 37% increase in the number of full-service branches. The combined
institution will have more than $5 billion in assets, over 60 branches and more
than 550 ATMs," he noted.
"While the transaction offers many synergies, we are also pleased with the
opportunity to expand the range of products for our customers. Beverly's trust
business and commercial lending activities are welcome additions to our product
line. We are a full-service financial institution that offers savings and
checking services, mortgage loans, personal loans, insurance, commercial loans,
investments, annuities and a variety of trust services to our customers," added
Scully.
Terms of the agreement provide that Mr. Pasquinelli will join St. Paul's
Board of Directors. McDonald and Company is representing Beverly and Merrill
Lynch is advising St. Paul. Both have provided fairness opinions in connection
with the transaction.
FORWARD-LOOKING INFORMATION
Statements contained in this news release that are not historical facts
may constitute forward-looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995), which involve significant risks and
uncertainties. Actual results may differ materially from the results discussed
in these forward-looking statements. Factors that might cause such a
difference include, but are not limited to: (1) expected cost savings from the
merger cannot be fully realized within the expected time frame; (2) expected
revenue enhancements from the merger cannot be fully realized within the
expected time frame; (3) competitive pressures among depository institutions
increase significantly; (4) costs or difficulties related to the integration of
the business of St. Paul or Beverly are greater than expected; (5) changes in
the interest rate environment reduce interest margins; (6) general economic
conditions are less favorable than expected; and (7) legislation or regulatory
changes adversely affect the business in which the combined company would be
engaged.
St. Paul Bancorp is the parent of St. Paul Federal Bank for Savings, the
largest independent savings institution in Illinois. St. Paul Federal operates
53 branches throughout metropolitan Chicago.
<PAGE> 3
ST.PAUL BANCORP INC. TO
ACQUIRE BEVERLY BANCORP INC.
PAGE 3 OF 3
The Company also provides discount brokerage, insurance, annuity, real estate
development and mortgage brokerage services through other subsidiaries. St.
Paul stock is listed on the Nasdaq Stock Market under the symbol SPBC.
To receive this news release and other information on St. Paul Bancorp via
fax or mail, use your touch-tone phone to call the Company's News Hotline at
(773) 889-SPBC (7722). Additional information is available on the internet at
www.stpaulbank.com.
Stockholders may dial (800) 730-4001 toll-free to inquire about
stockholder records, stock transfers, ownership changes, address changes,
dividend payments or the dividend reinvestment plan. Written inquiries can be
directed to BankBoston, P.O. Box 8040, Boston, MA 02266-8040.
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