UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-1177
Beneficial Corporation
(Exact name of registrant as specified in its charter)
Delaware 51-0003820
(State of incorporation) (I.R.S. Employer Identification No.)
301 North Walnut Street,
Wilmington, Delaware 19801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302)425-2500
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
Name of each exchange
Title of each class on which registered
Common Stock, $1 Par Value New York Stock Exchange
5% Cumulative Preferred Stock, $50 Par Value New York Stock Exchange
$5.50 Dividend Cumulative Convertible Preferred
Stock, No Par Value $20 Stated Value
(convertible into nine shares of Common Stock) New York Stock Exchange
$4.50 Dividend Cumulative Preferred Stock,
$100 Par Value New York Stock Exchange
$4.30 Dividend Cumulative Preferred Stock, No
Par Value, $100 Stated Value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
8% Debentures Maturing at Holder's Option
Annually on June 15, Commencing in 1983 and
Due June 15, 2001 New York Stock Exchange
8.40% Debentures Maturing at Holder's Option
Annually on December 15, Commencing in 1986
and Due May 15, 2008 New York Stock Exchange
12 7/8% Debentures, Due August 1, 2013 New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE.
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject
to such filing requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive
proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
At March 1, 1996, there were 53,336,612 shares
outstanding of the registrant's common stock. The
aggregate market value of the voting stock of the
registrant held by non-affiliates of the registrant was
approximately $2.9 billion.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates by reference certain portions of the
Beneficial Corporation Proxy Statement for the 1996
Annual Meeting of Stockholders scheduled to be held May 23, 1996.
PART I
Item 1. BUSINESS.
General
Beneficial Corporation (Beneficial or Company) was
organized under the laws of the State of Delaware on May
9, 1929, through the consolidation of three companies which
had been operated under the same management. The Company
traces its origin to 1914 when its first consumer loan
office was opened. The Company is a holding company,
subsidiaries of which are engaged principally in the
consumer finance and credit-related insurance businesses.
Operations conducted by the subsidiaries consist
principally of a 1,130-office consumer finance network
located in the United States, Canada, Germany, and the United
Kingdom; Personal Mortgage Corporation, a direct response
mortgage lending unit, which originates second mortgage
loans chiefly in the Northeast and Middle Atlantic
regions; Beneficial National Bank USA, a specialized
privatelabel credit card bank located in Delaware;
Beneficial Credit Services, which is engaged in sales
finance activities; Beneficial National Bank, a full
service commercial bank located in Delaware, which is also
engaged in making income tax refund anticipation loans; The
Central National Life Insurance Company of Omaha and its
subsidiary, First Central National Life Insurance Company of
New York, which underwrite life and disability consumer credit insurance;
Wesco Insurance Company, which provides credit property
insurance; BFC Insurance Limited which is located in Ireland
and underwrites life, accident and health insurance; and
Harbour Island Inc. and subsidiaries, which are engaged
in real estate development in Florida. Beneficial and
its subsidiaries employed approximately 9,000 people at
December 31, 1995.
For information concerning various factors that
affected operations during 1995, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" under Item 7. For pertinent geographical data,
see Note 21 to the financial statements.
Operations
Consumer Finance Operations
Loan Office Network
Consumer loan subsidiaries operate through a loan
office network in the United States, Canada, Germany and
the United Kingdom. In addition to making consumer loans,
the subsidiaries purchase loans and sales finance
contracts and sell certain insurance products. The number
of loan offices has grown noticeably in the last two
years. In the United States, this trend reflects the
decision to re-enter smaller markets and inner-city urban
locations, with new, scaleddown offices, staffed by only
two or three people referred to as Vanguard offices.
Expansion in the United Kingdom reflects plans to increase
market share and capitalize on Beneficial Bank PLC's
strong competitive position. The number of offices in the
network for the past five years is shown in the following
table:
Number of Offices at December 31
<TABLE>
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1995 1994 1993 1992 1991
United States 927 902 886 883 891
Canada 105 102 103 103 103
United Kingdom 81 69 60 53 53
Germany 17 17 17 17 17
Total 1,130 1,090 1,066 1,056 1,064
In addition, consumer finance operations include
two subsidiaries engaged in private-label and bank credit
card and sales finance activities, a direct response
mortgage lending unit and a commercial bank and its
nine full-service branches located in Delaware.
Finance Receivables
The following table shows the composition of the
finance receivables portfolio at December 31
(in millions):
</TABLE>
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Receivables Owned: 1995 1994 1993 1992 1991
Real Estate Secured $ 6,636 $ 6,860 $ 6,708 $5,975 $4,983
Personal Unsecured 2,756 2,486 2,275 2,149 2,222
Credit Cards 3,084 2,062 1,243 790 684
Sales Finance Contracts 837 810 696 575 561
Commercial 103 105 97 103 124
Total 13,416 12,323 11,019 9,592 8,574
Receivables Sold with
Servicing Retained
(all real estate
secured) 1,114 630 192 370 638
Total Owned and
Serviced $14,530 $12,953 $11,211 $9,962 $9,212
Periodically, subsidiaries of the Company sell home
equity loans to trusts which elect to be treated as
real estate mortgage investment conduits and retains
servicing. A subsidiary of the Company also has an
economic interest in the residual cash flows of
such trusts. The subsidiaries securitized $1,104
million of home equity loans in 1995, $757
million in 1994, $620 million in 1991, as well as $248
million in 1989.
The table below discloses at December 31
international finance receivables by country as
translated into U.S. dollars (in millions):
</TABLE>
<TABLE>
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1995 1994 1993 1992 1991
Canada $ 684 $ 605 $ 517 $ 487 $ 541
United Kingdom 1,003 867 666 547 425
Germany 431 421 402 417 409
Total $2,118 $1,893 $1,585 $1,451 $1,375
Percentage of Total Owned
Receivables 15.8% 15.4% 14.4% 15.1% 16.0%
The above receivable balances are affected by
fluctuations in foreign currency exchange rates. The
following table shows finance receivables of
international operations in their indigenous
currencies (in millions):
</TABLE>
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1995 1994 1993 1992 1991
Canada C$933 848 687 619 625
United Kingdom pounds 646 553 451 363 228
Germany DM619 653 698 674 622
International Operations
The Canadian operation consists of 105 offices
located across Canada, although the provinces of Ontario,
Quebec and British Columbia represents 66% of total
Canadian receivables. At year-end 1995, approximately
46% of Canadian receivables were real estate secured, 29%
were personal unsecured, 17% were private-label credit
cards and 8% were sales finance contracts. The 10%
receivable growth in 1995 was primarily in the real
estate and personal unsecured portfolios. The
Canadian operations reported C$18.5 million (US$13.5 million)
in net income for 1995, compared with C$16.3 million (US$11.9
million) in 1994 and C$14.4 million (US$11.2 million)
in 1993. The increase in 1995 earnings was the result of a higher
gross margin, partially offset by increased operating
expenses. These increases are the result of receivables
growth in 1995 and 1994. Net chargeoffs increased to
C$21.9 million (US$16.0 million) in 1995 from C$17.9
million (US$13.1 million) in 1994, and increased modestly
as a percentage of average receivables outstanding to
2.50% from 2.42% in 1994. Contractual
delinquency rose to 2.73% at year-end 1995 from 1.98% a
year earlier.
The United Kingdom operation offers consumer loans,
sales finance contracts, credit card and deposit services
through 81 offices in the United Kingdom. United Kingdom
receivables at the end of 1995 were composed of 29% real estate secured,
35% private-label and Visa credit cards, 25% personal
unsecured and 11% sales finance contracts. Receivable
gains were 17% in 1995. The strong growth of the past three years
(compound growth rate of 21%) largely reflects
increased credit card outstandings. Profits were Pounds 10.4
million (US$16.4 million) in 1995, up from Pounds 9.1 million
(US$13.9 million) in 1994 and Pounds 7.7 million (US$11.6 million)
in 1993. Earnings benefited from receivables growth, wide lending
spreads, a reduced ratio of operating expenses, as well as a decline
in the net chargeoff ratios in 1995 and 1994. Net chargeoffs
increased to Pounds 10.2 million (US$16.1 million) in 1995
from Pounds 9.5 million (US$14.6 million) in 1994; however,
as a percentage of average receivables outstanding, net chargeoffs
declined to 1.70% from 1.91% in 1994. Contractual delinquency increased
moderately to 3.07% at year-end 1995 from 2.76% at the end of 1994.
BFK Bank AG (BFK or Bank) offers consumer loans
and accepts deposits through 17 offices in Germany. While
personal loans and sales finance contracts are the
German subsidiary's major loan product lines, the Bank
also makes real estate secured loans and commercial
loans. In December 1994, the Company announced its
intent to sell BFK and simultaneously recorded a DM60
million (US$38 million) aftertax charge to cover potential
losses on a block of loans granted to finance the purchase
of campground sites by German consumers from a financial
services company (the Fundus portfolio). In December 1995,
the Company announced it would retain BFK because it had not
received any acceptable offers for the Bank. Following a review of
BFK's portfolio and the related collateral which was
concluded following the decision to retain the operation,
the Company recorded a DM22 million (US$15 million)
aftertax charge for additional potential losses relating
to the Fundus portfolio, and a DM14 million (US$10 million)
provision for credit losses related to other (non-Fundus)
commercial loans. For further details regarding BFK
charges, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" under Item 7.
Reflecting the aforementioned charges, the Bank incurred
a loss of DM37 million (US$26 million) in 1995 and
DM52 million (US$32 million) in 1994, after recording net
income of DM4.3 million (US$2.6 million) in 1993.
Geographic Distribution
Finance receivables in each of the ten jurisdictions
(U.S. and international) with the highest percentages of
total owned receivables were as follows:
</TABLE>
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Jurisdiction Percent
California 16.2%
United Kingdom 7.5
New York 7.3
Canada 5.1
Pennsylvania 4.4
Ohio 4.4
Texas 4.0
Florida 3.7
New Jersey 3.2
Germany 3.2
Portfolio Distribution
The following table shows the distribution by size of
real estate secured and personal unsecured loans made
during the respective years:
Principal Amount of Loans Made in Each Size
Class as a Percent of Total Principal Amount
Years Ended December 31
</TABLE>
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1995 1994 1993 1992 1991
Under $ 5,000.... 42.0% 38.8% 35.2% 32.1% 35.2%
5,001 - 50,000.... 28.9 26.7 26.0 29.1 32.7
50,001 - 100,000.... 14.4 16.9 18.7 19.3 17.4
Over 100,000.... 14.7 17.6 20.1 19.5 14.7
Credit Quality Measures
Certain data regarding loss experience of finance
receivables are as follows:
(in millions, except percentages)
Net
Net Chargeoffs Allowance Allowance
Gross Chargeoffs to Average for Credit for Credit
Amount (after Gross Losses at Losses to
of Receivables offsetting Finance End of Net Finance
Year Charged Off recoveries) Receivables Year Receivables
</TABLE>
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1995 $247.2 $209.4 1.64% $406.1 3.03%
1994 183.3 148.7 1.28 331.6 2.69
1993 176.4 149.1 1.42 279.0 2.53
1992 185.0 162.6 1.75 262.4 2.74
1991 171.2 152.2 1.77 254.0 2.96
Note: 1995 and 1994 does not include $15.0 million and $38.0
million, respectively, in chargeoffs related to the Fundus
portfolio, which would increase net chargeoffs to average gross
receivables to 1.76% in 1995 and 1.61% in 1994.
The allowance for credit losses at year-end 1995
covered net chargeoffs 1.9 times, compared with 2.2
times a year earlier (in both cases excluding chargeoffs
on the Fundus portfolio). In addition to the allowance for
credit losses, the balance in dealer reserves at December 31,
1995 and 1994, was $10.0 million and $11.0 million, respectively.
Delinquency By Major Categories
</TABLE>
<TABLE>
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1995 1994 1993 1992 1991
Real Estate Secured Loans 2.07% 1.81% 2.13% 2.49% 2.30%
Personal Unsecured Loans 5.28 4.71 4.41 4.76 5.34
Credit Cards 2.76 1.78 2.25 4.84 4.64
Sales Finance Contracts 2.89 2.12 2.06 3.05 3.44
Overall 2.98% 2.46% 2.67% 3.24% 3.35%
Chargeoffs and delinquencies are generally higher
during periods of adverse economic conditions, such as
rising unemployment, falling housing values, and
increased inflationary pressures, which affect the ability of
the borrower to repay. It is the policy of the
subsidiaries generally not to renew delinquent
accounts. Receivables considered to be uncollectible or
to require disproportionate collection costs are charged to
the allowance for credit losses, but collection efforts are
generally continued. For further discussion on chargeoffs
and delinquency, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" under Item 7.
Lending Policies
Loans on both a secured and unsecured basis are made
after a thorough credit investigation and a favorable
evaluation as to the borrower's willingness and ability
to repay. Real estate secured loans are either closed-end
or revolving, and rates are either fixed or variable. Of the
portfolio of loans owned at the end of 1995, approximately
51% of real estate secured loans were fixed-rate and 49% were
variable-rate. Real estate secured loans are subject to
carefully monitored underwriting of both the borrower's ability
to repay and the independent professionally appraised
market value of the property. The loans are well-documented
consumer loans based on the creditworthiness of the borrower,
with the collateral of the real estate providing additional
security. U.S. consumer finance subsidiaries will generally
lend to a maximum of only 75% (including the existing first
mortgage) of the appraised value of the real estate as
determined by independent appraisers on second mortgage loans.
In the case of a first mortgage, the subsidiaries will generally
lend to only 80%. In addition, a rigorous discipline of
credit approval is enforced regarding borrower debt-to-
income ratios and overall consumer credit quality. Most
real estate loans must be approved by regional management,
as well as by the originating loan office manager. Loans
above $300,000 generally require additional approval of
an Executive Vice President at headquarters. Independent
appraisers are evaluated by regional management, as well as
by the loan office manager.
Closed-end loans and revolving loans made under
consumer finance acts generally are not secured by real
estate. Closed-end loans generally do not exceed a 60-month
term, and the interest rate may be limited according to the
size of the loan. Revolving loans are written with fixed
rates. Generally, loans under the consumer finance acts are
made at the maximum rates allowable. Experience indicates
that a borrower who qualifies for additional credit often
obtains a new loan in an amount larger than his existing
balance. A portion of the proceeds of the new loan is
applied to extinguish the existing balance.
Sales Finance and Credit Card Activities
Sales finance activities conducted by
subsidiaries featuring the name "Beneficial Credit Services"
represent an important source of new loan customers for the
consumer finance subsidiaries. In 1995, nearly 60% of new
loan customers for other consumer finance products
originated as sales finance customers. Beneficial Credit
Services programs are marketed through the loan office
network to smaller local and regional merchants.
Beneficial National Bank USA (BNB USA) is a
specialized credit card bank located in Wilmington,
Delaware. BNB USA offers customized private-label and
co-branded revolving charge programs to large regional
and national retailers, offering their retail customers open
lines of credit. Additionally, BNB USA provides marketing
and cardholder services designed to meet each retailer's needs.
Targeted retailers include home centers, electronics,
furniture and apparel industries, as well as warehouse clubs
and mail-order marketers. Outstanding receivables totaled
$2,545 million at year-end 1995, up from $1,613 million at
the end of 1994 and $937 million at the end of 1993. A
significant portion of the growth was provided by four retailers:
Best Buy Company, Inc., BJ's Wholesale Club, CompUSA and Rhodes
Furniture, Inc. Best Buy represented 52% of the portfolio at
December 31, 1995. BNB USA is currently entering into a
private-label credit card pilot program with Kmart
Corporation which is scheduled to begin on March 22,
1996. Upon successful completion of this pilot, the program
is expected to expand into all Kmart locations throughout
the United States and Canada. In addition, a private-label
pilot program with another large retailer is currently
underway. BNB USA is also a key source of new loan
office customers, as approximately 16% of new loans were
made to BNB USA customers in the fourth quarter of 1995.
Net aftertax profits increased to $21.1 million in 1995
from $5.9 million in 1994 and $15.9 million in 1993. Due to
the higher level of receivables growth and the anticipated
maturing of the portfolio, net chargeoffs increased to $49.9
million in 1995 from $26.4 million in 1994. As a
percentage of average receivables outstanding, net
chargeoffs rose to 2.64% in 1995 from 2.37% in
1994. Similarly, contractual delinquency increased to 2.98% at
year-end 1995 from 1.97% at December 31, 1994.
Personal Mortgage Corporation
Personal Mortgage Corporation (PMC), which
began operations in July 1991, provides consumers with fast action
on home equity loan applications -- all by telephone,
with an initial answer usually within 24 hours. The
menu of real estate products offered by PMC is wider than
typically offered in a loan office and therefore can meet
the needs of a broader demographic base. After initially
commencing operations in several upstate New York
metropolitan areas in 1991, PMC's operations now include
ten states in the Northeast and Mid-Atlantic regions, as
well as Florida. In 1995, PMC funded 3,636 loans for $171
million, a 16% improvement over 1994 in number and a 21%
improvement in dollars funded. Approximately 83%, or $143 million,
of loans funded were sold and transferred to other Beneficial
consumer loan subsidiaries in 1995. The remainder were sold to
other entities who provide products to service niches outside
of Beneficial's traditional customer base. PMC made an aftertax
profit of $1.7 million for 1995, up from $.9 million in 1994 and
an aftertax loss of $1.8 million in 1993.
Commercial Banking
Beneficial National Bank (BNB or Bank), based in
Wilmington, Delaware, is the Company's commercial
banking subsidiary. Through its nine full-service
branches in Delaware, BNB provides a full range of commercial and
consumer banking services to small- and medium-sized
businesses and to consumers in Delaware and surrounding
markets. Also, BNB, in conjunction with affiliated
companies, originates and services a portion of the
Refund Anticipation Loans (RALs) issued through H&R Block
and certain of its franchisees. In addition, the Bank
provides significant corporate cash management and treasury
services to the Company and its operating
subsidiaries. All disbursements through the consumer
finance subsidiaries' loan office network, as well as
all checks written by customers on revolving credit
lines originated through the loan office network, are drawn
on BNB.
At December 31, 1995, total loans outstanding,
excluding participations sold to other institutions, were
$227 million, essentially flat with $223 million at the end
of 1994 and up from $214 million at the end of 1993.
The Bank's loan portfolio is composed of 42% commercial
and industrial (C&I) loans and 58% consumer loans and credit card
receivables. A large portion of the C&I loans are
commercial mortgage loans or have real estate collateral as
additional security for cash flow-oriented business loans.
Total deposits at December 31, 1995 were $321 million, up
from $289 million at December 31, 1994 and $294 million at
December 31, 1993.
The Bank's earnings include processing fees
for originating and servicing the RAL program. These earnings
have also been included with the earnings reported in the
Refund Anticipation Loan Program section that follows, so
that all earnings related to RAL can be set forth
separately.
BNB's net income excluding RAL processing fees was
$7.0 million in 1995, up from $6.1 million in 1994 and $1.9
million in 1993. The increase in earnings in 1995 resulted
mainly from higher net interest income and non-interest
income, partially offset by a higher provision for credit
losses, reflecting a sharp increase in net chargeoffs
compared to 1994.
Refund Anticipation Loan Program
Through BNB, RALs are made to consumers entitled to a
tax refund who electronically file their returns with the
Internal Revenue Service (IRS) through either H&R
Block's (Block) electronic filing system or systems of
other independent electronic filers approved by the IRS.
After the return is processed, refund proceeds are
directly transferred from the IRS via electronic funds
transfer to a unique customer loan/deposit account at
BNB, with the proceeds applied to repay the outstanding
loan. In early February 1995, the IRS began delaying the
payment of the earned income tax credit portion of
the tax refund payable to BNB on returns filed in 1995,
and subsequently confirmed that, when finally released, the
held earned income portion would be sent directly to the
taxpayer, rather than to BNB as directed by the taxpayer.
This IRS action created serious collection problems for BNB as
related credit losses totaled $96 million. Of the $314
million in RALs affected by the IRS's action, $218
million, or 69%, was recovered by year-end 1995.
As a result of the IRS action described above, on
a corporate-wide basis the RAL program incurred an aftertax
loss of $37.9 million in 1995 compared with aftertax income
of $25.1 million in 1994 and $33.9 million in 1993. As
indicated in the Commercial Banking section, these
combined pretax results include BNB processing fees.
For further discussion, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
under Item 7.
BNB received an average fee of $49.00 in 1995
for extending the RAL, which was up from $29.00 for the prior
four years. This price increase corresponded to the
additional credit risk following the Treasury Department's
October 1994 decision to eliminate the Direct Deposit
Indicator, which previously allowed BNB to screen a
potential customer for possible liens or other offsets
against the customer's tax refund. Under the terms of the
most recent agreement with H&R Block, in which BNB has
exclusive rights to service 100% of Block's company-owned
offices, Block and their satellite franchisees received a
$7.00 fee for each BNB RAL approved for a Block customer in
1995, unchanged from 1994 and up from $5.00 in 1993. BNB
made approximately 2,717,000 RALs during the 1995 tax
season, compared with 2,829,000 in 1994 and 2,709,000 in
1993. The average loan amount was $1,162 in 1995, down
from $1,452 in 1994 and $1,346 in 1993. The decrease in RALs
made and the average loan amount is the result of the
stricter credit criteria during the 1995 tax season.
In early March 1996, the Company announced that it
appears that preliminary RAL results will significantly
exceed original expectations. For further details, see the
Recent Developments section of "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
under Item 7.
Insurance Operations
Operations of the Beneficial Insurance Group (BIG)
consist primarily of The Central National Life Insurance
Company of Omaha (CNL) and its subsidiary, First Central
National Life Insurance Company of New York (FCNL), which
underwrite life and disability consumer credit insurance
as well as annuity contracts. During mid-1993, BIG
acquired Wesco Insurance Company (Wesco), a
property/casualty insurance company licensed in 41
jurisdictions. The addition of Wesco allowed BIG to
directly underwrite the credit property coverage for
the Beneficial consumer finance network. In addition,
insurance agency relationships are maintained with
several outside insurance companies that offer selected
non-credit related products. These products are marketed
chiefly through the domestic Beneficial loan office
network. Agency operations earn a commission, while the
insurance risk of loss rests with the insurance carrier. In
October 1995, BFC Insurance Limited, located in Ireland,
began to provide credit-related life, accident and health
insurance products.
In late 1995, the decision was made to exit the
annuity business based on the conclusion that this product
line could not offer acceptable profitability or the strategic fit
with the core business. Further, recent research indicated
that the Beneficial core consumer is likely to remain a
borrower well into their mature years. In February
1996, the Company announced that SunAmerica Life
Insurance Company signed a definitive agreement to
purchase the annuity business from CNL, pending regulatory
approvals. The sale will enable BIG to pay a dividend to
the Company for the excess freed up capital. The sale is
expected to close March 31, 1996. See Recent
Developments section of "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
under Item 7.
CNL and its subsidiary, FCNL, rank among the
industry leaders in the highly specialized consumer credit
insurance marketplace, offering both life and disability
coverages. The credit products are generally marketed
through the domestic consumer finance subsidiary network
and, in the Northeast, through independent distribution
channels to commercial banks, thrift institutions,
finance companies and automotive
dealerships. During 1995, A.M. Best again affirmed its
rating of "A+ (Superior)" for CNL. CNL also carries a
claim-paying ability rating of "AA," which is considered
excellent, from Standard & Poor's Corporation.
Credit life insurance policies typically cover the life
of the borrower and provide for the full payment of the
outstanding balance in the event of the insured's
death. Credit accident and health insurance policies provide
for the payments of the installments as they become
due on the insured's obligation during a period of
unemployment or disability due to illness or injury. Credit
property insurance is written to protect the property
pledged as security for the obligation. Purchases of credit
life and credit accident and health are entirely voluntary
and at the borrower's request. Additionally, purchases of
property insurance are also at the borrower's request,
except for property damage coverage for property pledged as
collateral if the borrower does not provide evidence of
coverage with another insurance carrier.
The following table sets forth information concerning
the insurance operations (in millions):
Years Ended December 31
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Premiums Earned 1995 1994 1993
Consumer Finance Subsidiaries:
Credit-related $109.1 $ 96.1 $ 77.2
Other 3.9 5.2 2.3
Independent:
Credit-related 23.2 17.1 11.5
Ordinary 8.8 9.4 10.3
All Other 12.0 15.9 15.2
Total Premiums Earned $157.0 $143.7 $116.5
Operating Income
Consumer Finance Subsidiaries:
Credit-related $ 38.8 $ 34.0 $ 27.2
Agencies 15.1 12.4 18.3
Other 3.4 3.3 1.9
Total 57.3 49.7 47.4
Independent:
Credit-related (1.5) (5.0) (2.8)
Ordinary 1.0 -- --
Annuity 0.6 4.5 2.9
Other (0.5) (0.4) 0.4
Total (0.4) (0.9) 0.5
All Other (primarily unallocated
investment income and capital
gains) 20.2 21.1 21.3
Total Operating Income $ 77.1 $ 69.9 $69.2
Net Income $ 49.7 $ 45.1 $44.3
The increase in 1995 earnings resulted from an
improvement in the Beneficial-related credit insurance
business. 1994 earnings were essentially flat with 1993's
earnings; however, 1993 earnings increased $5.3 million
pretax, as previous estimates of accrued contingent
commissions and unearned commission reserves were adjusted
at the time of the Wesco acquisition.
BIG's total net premiums written, largely by CNL,
were $189.2 million in 1995, up 20% from $157.9 million in
1994. 1995 premium growth was supported by receivable
growth, particularly personal loans, in the Company's
domestic loan office network. Total credit premiums
written increased to $164.8 million in 1995 from $126.0
million in 1994. Premiums written through the loan office
network increased 28% to $136.3 million from $106.3 million
in 1994. Premiums written through outside accounts rose 45%
to $28.5 million from $19.7 million in 1994. Annuity
sales for 1995 were $167 million, compared
with $145 million in 1994.
Investment income (net of interest paid on
annuities) increased 4% to $52.1 million in 1995 from
$50.1 million in 1994 and $44.9 million in 1993.
Despite declining interest rates during most of the year,
average yield on the entire portfolio remained
steady at 7.21%, unchanged from 1994, and
declined from 7.64% in 1993. The market value of
investments at nearly $1.5 billion at year-end 1995,
was slightly higher than at year-end 1994, with investments
consisting almost entirely of fixed-income obligations rated
"A" or better. New funds are primarily being invested in
intermediate-term, highquality corporate bonds.
The aforementioned annuity business sale will result
in the disposition of approximately $900 million of the
investment portfolio and a release of approximately the same
amount of insurance policy reserves.
Real Estate Investments
Harbour Island is a 177-acre, mixed-use real
estate development located off the southerly waterfront of
downtown Tampa, Florida. The island is connected to
downtown Tampa by two bridges and a people-mover monorail system.
The Development of Regional Impact plan for full development of
the island has been approved and provides for commercial,
hotel, residential and retail space.
At year-end 1995, the investment in and advances
to Harbour Island amounted to $89 million, down from $91
million at the end of 1994. Some of the more significant
assets of Harbour Island include approximately 70 acres of
undeveloped land, a 300-room four-star hotel (currently under
lease to Wyndam Hotels), and two luxury garden apartment complexes
with a total of 516 units. The lessee of the hotel has full
operating responsibilities and makes basic rental payments
to Harbour Island. Contingent rent is received if net
operating income exceeds the basic rent plus a management
fee.
On a fully debt-funded basis, Harbour Island incurred
a pretax operating loss of $19.5 million for 1995, compared
with pretax losses of $18.0 million in 1994 and $17.0
million in 1993. The project is charged interest on all net cash
advanced since inception at Beneficial's annual overall
melded cost-offunds rate. Accordingly, nearly all of the
losses in recent years represent interest cost to
carry and non-cash depreciation charges. However, until
significant parcels of the land or entire ventures are sold,
accounting losses from Harbour Island are not likely to decline
substantially because of the continuing significant cost to carry.
Other Real Estate
Subsidiaries of the Company also own nearly 700 acres
of real estate adjacent to the Peapack, New Jersey office
complex. Including buildings, this real estate is
carried at approximately $15 million. Sales of significant parcels
of this land are not planned for the immediate future.
Financing
The Company and its subsidiaries obtain funds both in
the United States and in foreign markets through sales of
long-term debt securities and commercial paper and through
short-term borrowings on unsecured lines of credit from
banks. At December 31, 1995, long-term debt totaled $7,793 million
and short-term borrowings aggregated $4,024 million
(consisting of $3,506 million of commercial paper and $518
million of bank borrowings). In addition, deposits
payable totaled $642 million. Lines of credit are used
to support the Company's commercial paper borrowings. At
December 31, 1995, the total of all lines of credit was
$3,350 million. In 1995, in support of commercial paper
issuances, the Company concluded a $3 billion, five-year
syndicated revolving-credit agreement, which replaced the
various one- and three-year bilateral agreements. The unused
portion of all lines of credit was $3,184 million. The
overall, weighted average annual interest cost, including
the costs of maintaining lines of credit, of all short-
and long-term borrowings of the Company and consolidated
subsidiaries was 7.22%, 6.57%, 6.77%, 7.87%, and 9.01% in
1995, 1994, 1993, 1992 and 1991, respectively.
Continuously offered medium-term notes (MTNs) are
the primary vehicle used by the Company to place senior term
debt. During 1995, $2.4 billion of variable-rate MTNs were
sold at an all-in cost roughly equivalent to the
Company's cost of commercial paper borrowings. The
average maturity was 1.6 years. At December 31, 1995,
$2.8 billion of variable-rate MTNs were outstanding.
In addition, total fixed-rate MTNs provided $.6 billion
in funds during 1995, at an average coupon of 6.59%
and a weighted average maturity of 5.1 years. The
Company had available under a shelf registration with
the Securities and Exchange Commission $1.0 billion of
unissued debt securities at the end of 1995.
Beneficial Corporation guarantees the borrowings of
its Canadian, United Kingdom, and German subsidiaries,
thereby increasing such subsidiaries' access to local
capital markets and minimizing interest costs for these
foreign operations. The Canadian operation is funded
through commercial paper borrowings and notes sold in the
Canadian financial market. The United Kingdom operation
generates a modest amount of deposits but is chiefly
funded through bank borrowings, sterling commercial paper
sales, and medium and long-term debt placements. The German
consumer banking subsidiary is funded chiefly with
deposits.
Regulation
Real estate secured loans are supervised under
and regulated by state legislation, which generally requires
that the lender be licensed. Most states do not limit
rate, but rate is a competitive factor whether limited or
not. While the statutes of several states place no
maximum limit on the contractual term of closed-end loans
secured by real estate, the consumer finance subsidiaries
generally limit loans of this type to periods ranging from
60 to 180 months. The consumer finance subsidiaries also
operate under consumer finance acts (small loan statutes),
which typically require that the lender be licensed.
Licenses are subject to revocation for cause. The
subsidiaries also make non-real estate secured installment
loans under statutes other than consumer finance acts.
The banking subsidiaries are subject to regulations of
certain federal agencies and undergo periodic examination
by these regulatory authorities.
The insurance operations are subject to state
regulation in the jurisdictions in which they are
authorized to conduct business. Generally, such laws cover,
among other things, types of insurance that may be
sold, policy reserve requirements, permissible investments,
premiums charged, limitations on the amount of dividends payable by
any insurance company and guidelines and standards with
respect to dealings between insurance companies and
affiliates. The previously discussed dividend to be paid
following the annuity business sale will be subject to
regulatory approval. Most states have also enacted
insurance holding company legislation pertaining to
insurance companies and their affiliates.
The consumer finance subsidiaries are required to
comply with the Federal Truth-in-Lending Act, which
requires, among other things, disclosure of pertinent
elements of consumer credit transactions, including the
finance charges and the comparative costs of credit
expressed as an annual percentage rate. In addition, the
subsidiaries are also required to comply with the
Federal Equal Credit Opportunity Act (which prohibits
discrimination in any aspect of a credit transaction on the
basis of sex, marital status, race, color, religion,
national origin, age, receipt of income from a
public assistance program or the good faith exercise of
rights under the Federal Consumer Credit Protection Act)
and with the Real Estate Settlement Procedures Act.
Competition
In the consumer finance industry, the
Company's subsidiaries face strong competition from banks,
savings institutions, credit unions, finance companies and
other financial institutions. Rate competition among
finance companies is minimal for small consumer loans.
The subsidiaries compete for these loans primarily on the basis
of name recognition, service and reputation. There
is considerable rate competition within the home equity
loan market. In five years, BNB USA has grown to one
of the nation's largest private-label credit card
banks. This fiercely competitive business is based upon
service, pricing and product flexibility. In addition,
the business of the subsidiaries may be adversely affected
in the future by other unforeseen factors, such as
rate reductions, credit restrictions, economic
conditions, judicial decisions or legislative acts.
Item 2. PROPERTIES.
The Company and its subsidiaries do not hold
any substantial amount of property other than the real
estate investments described previously and properties
acquired through a security interest. Substantially all of
the property utilized by the Company and its subsidiaries
are held under lease. Loan offices generally have lease
terms of five years with a renewal option for a like term.
Most of the leases provide for cancellation rights after two years.
Information as to minimum rental commitments on leased property and
periods of expiration is contained in Note 25 of the
financial statements.
Item 3. LEGAL PROCEEDINGS.
The Company's private-label credit card issuer,
Beneficial National Bank USA (BNB USA) located in Delaware,
is a defendant in a putative class action filed in State
Court, Denver County, Colorado on December 16, 1994,
alleging that the $10 late charge
assessed by BNB USA on delinquent Colorado cardholders
violated Colorado law. By stipulation of the parties, a
stay of all proceedings in the case was ordered on March 10, 1995
pending final disposition by the Colorado Supreme Court
of identical litigation involving other out of state card
issuers. Subsequently, in those related cases, the
Colorado Supreme Court held that 85 of the National Bank Act
and 27 of the Federal Deposit Insurance Act preempt claims
challenging the legality of late fees assessed by out of state
card issuers in conformity with the laws of their home states.
Shortly thereafter, the Colorado Supreme Court granted
summary judgment in favor of BNB USA on similar grounds. An
appeal is currently pending before the U.S. Supreme Court.
On January 19, 1996, the U.S. Supreme Court
granted certiorari in a case involving the same legal
issues as in Colorado in an appeal of a California Supreme
Court decision in favor of Citibank (South Dakota), N.A. A
decision from the U.S. Supreme Court is expected before
July 1, 1996 and that decision will control the issue in the
pending BNB USA case. These cases are significant because the
same issues could arise with respect to BNB USA in other states
involving amounts of collected late charges that may be
material. Similar issues have recently been litigated in
dozens of state and federal courts and in all but two
pending cases, the courts have upheld the preemption
doctrine permitting the exportation of a bank's home state,
late fee laws notwithstanding inconsistent laws of other
states in which cardholders reside. Moreover, federal
regulators have also issued opinions in support of
the preemption doctrine in favor of BNB USA and other
defendant banks.
Accordingly, the Company believes this case against
BNB USA and similar cases involving other defendant
banks are without merit.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Beneficial Corporation's Common Stock is listed on the
New York Stock Exchange. The aggregate amounts of common
dividends paid during 1995 and 1994 were $94.5 million and
$84.0 million, respectively. As of March 1, 1996, Common
Stock was held of record by 14,695 stockholders.
Additional information pertaining to the Company's Common
Stock is set forth below:
Three Months Ended
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
3/31 6/30 9/30 12/31 Total
1995
Dividends per Common Share $ .43 $ .43 $ .47 $ .47 $1.80
Market Price of Common Stock:
High 42-1/2 45-3/4 53-3/4 55-1/2
Low 37 39-1/4 43-5/8 46-1/8
Close 39-1/4 44 52-1/4 46-5/8
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
1994
Dividends per Common Share $ .38 $ .38 $ .43 $ .43 $1.62
Market Price of Common Stock:
High 40-7/8 38-1/4 44 41-3/8
Low 34-1/2 35-1/4 36-7/8 35-1/4
Close 36-5/8 36-1/2 40-3/4 39
Item 6. SELECTED FINANCIAL DATA.
BENEFICIAL CORPORATION AND SUBSIDIARIES FIVE-YEAR SUMMARY
(in millions, except where noted)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
During The Year 1995 1994 1993 1992 1991
Net Income (Loss)
Income from Continuing
Operations (a) $ 150.5 $ 177.7 $ 186.0 $ 148.4 $ 150.1
Income (Loss) from
Discontinued
Operations $ -- -- -- (1.4) (1.3)
Extraordinary Items $ -- -- (2.8) (3.1) --
Cumulative Effect of
Accounting Changes $ -- -- -- (98.6) --
Net Income $ 150.5 177.7 183.2 45.3 148.8
Earnings (Loss) per
Common Share (dollars)
Continuing
Operations (a) $ 2.72 3.28 3.45 2.75 2.93
Discontinued
Operations $ -- -- -- (.03) (.03)
Extraordinary Items $ -- -- (.05) (.06) --
Cumulative Effect of
Accounting Changes $ -- -- -- (1.89) --
Earnings Per Common
Share $ 2.72 3.28 3.40 .77 2.90
Average Number of Common
Shares Outstanding 53.5 52.6 52.4 52.0 49.5
Dividends Paid per
Common Share (dollars) $ 1.80 1.62 1.43 1.35 1.275
Revenue $ 2,398.2 2,137.4 1,957.5 1,819.3 1,798.7
Interest Expense $ 816.2 673.6 633.2 642.7 679.6
Lending Spread $ 1,198.4 1,080.1 974.2 874.5 802.4
Lending Spread as a % of
Average Receivables 9.71 9.65 9.62 9.80 9.71
Provision for Credit
Losses (b) $ 280.2 198.7 171.8 164.1 159.9
Total Expenses $ 2,127.8 1,811.3 1,642.3 1,567.7 1,538.4
Income before Income
Taxes $ 270.4 326.1 315.2 251.6 260.3
% of Monthly Cash
Principal Collections to
Average Monthly Balances 5.03 4.52 3.85 3.91 3.60
% of Finance Receivables
Charged Off (less
recoveries) to Average
Monthly Balances (b) 1.64 1.28 1.42 1.75 1.77
At Year-End
Finance Receivables $13,416.2 12,322.6 11,018.7 9,592.3 8,573.9
Number of Accounts 5.1 4.4 3.5 3.0 2.9
Allowance for Credit
Losses $ 406.1 331.6 279.0 262.4 254.0
Total Assets $15,717.4 14,376.6 12,916.9 11,472.9 9,971.2
Short-Term Debt $ 4,023.9 3,473.9 2,934.4 2,649.8 2,212.0
Long-Term Debt $ 7,792.5 7,324.8 6,754.8 5,847.7 5,043.9
Shareholders' Equity $ 1,503.0 1,400.3 1,312.2 1,207.6 1,250.7
Book Value per Common
Share (dollars) $ 25.80 24.34 22.78 20.90 21.92
% of Allowance for
Credit Losses to Finance
Receivables 3.03 2.69 2.53 2.74 2.96
% of Finance Receivables
with Delinquency Two
Months and Greater on a
Contractual Basis 2.98 2.46 2.67 3.24 3.35
Holders of Common Shares
(whole numbers) 14,800 15,300 15,300 15,600 15,900
Employees (whole numbers) 9,000 8,500 8,200 7,900 8,000
Consumer Finance Offices
(whole numbers) 1,130 1,090 1,066 1,056 1,064
(a) Income from continuing operations includes a provision for
credit losses related to the German liquidating
loan portfolio of $15.0 ($.28 per share) in 1995 and $38.0
($.72 per share) in 1994, and a $5.9 aftertax ($.11 per
share) provision for restructuring in 1995.
(b) 1995 and 1994 do not reflect $15.0 (0.12% of
average monthly balances) and $38.0 (0.33% of average
monthly balances), respectively, of credit losses related
to the German liquidating loan portfolio, which has been
shown separately.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis provides
information that management believes to be relevant to an
understanding of the Company's consolidated
results of operations and financial condition. The
discussion should be read in conjunction with the consolidated
financial statements and the notes thereto.
Financial Condition
Despite a securitization in March 1995 of $1,104
million of variable-rate home equity loans through a trust
created as a real estate mortgage investment conduit (REMIC),
the Company's leverage (the ratio of interest-bearing debt to
total equity) increased to 8.29 times at the end of 1995 from
8.18 times at the end of 1994, with the higher leverage in 1995
reflecting a large gain in finance receivables. The
Company also completed a $757 million securitization
in March 1994, and is planning another substantial home equity
loan securitization during the first five months of 1996.
The Company believes sufficient cash resources exist
to support its long-term growth strategies. These
resources include cash generated by operations (including
repayments of receivables) and the Company's ability to
obtain additional financing through short-term borrowings
(primarily commercial paper supported by committed bank
lines) and long-term borrowings through both private and
public debt offerings. The Company's long-term debt is
rated "A" or "A+" and commercial paper "1" by all four
major rating agencies. Growth in finance receivables is
primarily funded through debt issuance.
Total owned finance receivables increased $1,094
million, or 9%, in 1995, compared with a gain of $1,304
million, or 12%, in 1994. Similar to 1994, growth was the
strongest during the fourth quarter. From a product line
perspective, growth was strongest in private-label revolving
charge programs marketed to large regional and national
retailers by BNB USA, the Company's private-label credit
card bank subsidiary (up $931 million or 58%). Reflecting the
securitization and consumers preference for fixed-rate real
estate products, variable-rate real estate receivables declined
$643 million or 16% in 1995. Fixed-rate real estate receivables
increased $420 million or 14%. This real estate growth mix was
in contrast to 1994, when consumers showed a strong preference
for variable-rate products. In total, unsecured loan portfolios
represented 50% of Beneficial's total outstandings at year-end 1995,
versus 43% at the end of 1994 and 38% at the end of 1993.
Total managed receivables increased $1,577 million,
or 12%, compared with a gain of $1,742 million or 16%
in the comparable 1994 period. Slower growth this year in real
estate secured products, which grew $260 million in 1995
compared with $590 million in 1994, accounted for the
unfavorable comparison.
Total loans owned delinquent two months and greater on
a contractual basis increased to 2.98% at the end of 1995
from 2.46% at the end of 1994. This increase reflects
both a greater proportion of, and higher delinquency in,
the credit card and unsecured portfolios. On a loans
managed basis, delinquency similarly increased to 2.97%
at the end of 1995 from 2.47% at the end of 1994.
Excluding the charges in both years related to
the Company's German liquidating loan portfolio, discussed
further in the Results of Operations that follow, net
chargeoffs were $209.4 million versus $148.7 million in
1994. As a percentage of average owned receivables, net
chargeoffs increased to 1.64% from 1.28% in 1994.
Including the German liquidating loan charges, net
chargeoffs were $224.4 million, or 1.76%
of average receivables in 1995, versus $186.7 million, or
1.61% of average receivables in 1994. At year-end 1995, the
allowance for credit losses as a percentage of finance
receivables was 3.03%, compared with 2.69% at the end of
1994. At this level, the allowance covers full year
chargeoffs (excluding German liquidating loan charges) 1.9
times, compared with 2.2 times in 1994.
Investment securities increased $185 million, or 14%,
in 1995, largely related to annuity sales. Annuity sales for
1995 were $167 million, up from $145 million in 1994. As
discussed in Results of Operations, the Company decided
to exit the annuity business in the fourth quarter of 1995.
Following this decision, and given the one-time
reclassification allowed temporarily under "A Guide to
Implementation of Statement of Financial Accounting
Standards No. 115," the Company transferred $795 million
of debt securities from the "Held-To-Maturity" category to
the "Available-For-Sale" category in December 1995.
Accordingly, the separate component of equity was increased
by $12 million for net aftertax unrealized gains on the
transferred securities. See Note 8 to the financial statements
for more information on investment securities.
Results of Operations
1995 net income fell to $150.5 million from $177.7
million in 1994 and $183.2 million in 1993, as this year's
earnings suffered from a large Refund Anticipation Loan
(RAL) loss provision in the first quarter. For the year,
consolidated results included a pretax loss of $63 million
or $38 million aftertax from the RAL business, versus
pretax earnings of $42 million or $25 million aftertax in
1994. The RAL business was severely impacted this year when
the Internal Revenue Service (IRS), released payment of the
earned income tax credit (EITC) portion on thousands of refunds
directly to the taxpayers who had already received these refunds
through the RAL program, rather than to the Company's
banking subsidiary to repay the loan as directed by the
taxpayer.
As announced in December 1995, the Company decided
to remain in the RAL business in 1996, as the Company
believed that the IRS had made efforts during the off-season
to improve the methods for processing refunds through
the electronic filing system. Further, during the 1995
season, the Company's proprietary credit screens and other
traditional underwriting methods proved to be an effective
replacement for determining the eligibility of RAL customers
following the Treasury Department's 1994 decision to discontinue
access to the Direct Deposit Indicator. For the 1996 season,
the Company's subsidiary, Beneficial National Bank (BNB), will not be
lending on the EITC portion of any refunds and the
majority of the volume will be with prior customers.
Based on the review of very early season trends, RAL
volume is running approximately 30% below the comparable period
in 1995, and initial delinquency levels indicate that payments
to BNB from the IRS are not being delayed or interrupted.
BNB will offer RALs to eligible H&R Block
(Block) customers in 100% of Block company-owned offices
in 1996. Prior to December 1994, when the agreement with Block was
revised to give BNB exclusivity to 100% of Block's offices,
BNB serviced only 40% of Block's locations. The revised
agreement extends through the 1997 tax season and gives BNB
the right of first refusal to continue to serve these additional
offices through the year 2000. The prior BNB agreement involving
the original 40% of Block's offices continues through 2006.
Under terms of the most recent agreement, Block and their satellite
franchisees will receive from BNB a license fee of $8 for
each RAL approved for a Block customer during 1996, and $9
for 1997. The license fee for the 1995 tax season was $7.
In December 1994, the Company announced its intent to
sell its German consumer banking subsidiary, BFK Bank AG
(BFK). Simultaneously, the Company recorded a $38.0 million,
or $0.72 per share, charge to reflect potential credit
losses and related expenses at BFK on a block of loans
granted to finance the purchase of campground sites by
German consumers from Fundus Grundstuecks GmbH (Fundus), a
financial services company in Luedinghausen, Germany. After
Fundus filed for bankruptcy, it became apparent that the
relationship between Fundus and many of the consumers was
not as represented to BFK. Following the bankruptcy, and the
publicity surrounding alleged fraud by Fundus, a high
proportion of the campground customers ceased paying, which
led to the charge in December 1994.
Continuing negotiations and other work-out
efforts relating to the Fundus loans, both apart from and
in conjunction with the possible BFK sale, did not progress
as anticipated in the original loss estimates. As a
result, in December 1995, the Company recorded a $15.0
million, or $0.28 per share, charge for additional
potential losses relating to the Fundus portfolio. This
charge reflects management's best estimate of collateral
value after carrying costs and legal fees, and
writes down the carrying value of the Fundus
portfolio to $11.6 million at year-end 1995. The Company
is pursuing a number of alternatives for the liquidation of
its interest in the Fundus loans and, if necessary, the
underlying real estate in which BFK has a collateral
interest.
In December 1995, the Company announced the decision
to retain BFK as no acceptable offers for the Bank were
received. Following a thorough analysis of BFK's entire
loan portfolio and the supporting collateral, which was
performed after the decision to retain the operation, the
Company recorded a $10.0 million, or $0.19 per share,
provision for loan losses related to other (non-Fundus)
commercial loans. None of the above mentioned German
charges have a tax offset due to BFK's net operating loss
position.
During the fourth quarter, as part of the
Company's expense-reduction efforts, the Company instituted
a headcount reduction of 225, principally within
headquarters operations. The program resulted in a $9.8
million pretax restructuring charge, chiefly representing
early retirement and severance expense corresponding to the
work force reduction in the fourth quarter. On an aftertax
basis, this charge reduced net income by $5.9 million, or
$0.11 per share.
Also during the fourth quarter, the Company made
the decision to exit the Insurance Group's annuity business
either through a sale or a managed liquidation. Employee
severance resulting from this decision is reflected in the
above charge. The Company is in the final stages of
negotiations with prospective purchasers of the annuity
business. However, a sale is not expected to have a
significant impact on net income. The annuity line
contributed $3.8 million, $4.5 million, and $2.9 million
to pretax profits in 1995, 1994, and 1993, respectively.
Excluding the impact of the RAL program, the German
losses and restructuring charges, 1995 results reflected a 10%
increase in average owned receivables during the year, and
a widening of interest margins from the preceding two
years. These favorable trends were mitigated by an increase
in net chargeoffs, which reflected the expected continuing
maturing of the BNB USA private-label portfolio, as well as
a noticeable increase in the loan office unsecured
portfolio chargeoffs. 1994 was also marked by strong
loan growth, as average outstandings increased 10% from
1993. However, unlike 1995, 1994 results also benefited
from an improvement in credit quality from the preceding
year. 1995 earnings also included a marked improvement in
BNB USA contribution, as pretax earnings increased to $35.1
million from $9.8 million in 1994. This improvement
reflected wider interest margins and the operating leverage
resulting from the receivables growth over the past two
years.
Lending spread income increased from the preceding year
by 11% in both 1995 and 1994, with the increases largely
attributable to higher average owned receivables. As
a percentage of average receivables, the lending spread
was 9.71%, compared to 9.65% in 1994 and 9.62% in 1993.
Reflecting the previously discussed portfolio mix changes,
the yield on the average receivables portfolio was 16.32%
in 1995, compared with 15.67% in 1994 and 15.87% in 1993.
Over the same periods, interest expense as a percentage of
average receivables was 6.61% in 1995 versus 6.02% in 1994
and 6.25% in 1993. In North America, the fixed-rate real
estate secured loans originated in 1995 were written at an
average yield of 13.85%, compared with 14.51% in 1994 and
14.79% in 1993, while variable-rate real estate secured loans
were written at a spread over prime of approximately 400 basis
points in 1995, compared with approximately 440 and 470 basis
points during the prior two years. In 1995, the average yield on
unsecured personal loans written in North America was
25.41%, compared with 25.28% and 25.37% in 1994 and 1993, respectively.
The yield on the credit card portfolio was 17.45% in 1995, up from
16.26% in 1994.
Interest expense increased $142.6 million and
$40.4 million from the preceding year in 1995 and 1994,
respectively. 1995 worldwide average borrowing costs
increased to 7.22% from 6.57% in 1994, in contrast to a decline
during 1994 from 1993's 6.77%. Higher borrowing levels added $72.9 million
and $60.2 million in interest costs from the preceding year
in 1995 and 1994, while the corresponding fluctuations
resulting from interest rate changes were an increase of
$69.7 million in 1995 and a decrease of $19.8 million in
1994. The Company minimizes its exposure to interest-rate
risk by closely managing the gap between its interest-
sensitive assets and liabilities. At the 1995 year-end,
Beneficial was in an essentially matched position
compared to a slightly asset-sensitive position at the end
of 1994. The Company utilizes interest rate swaps and
forward rate agreements to moderate its exposure to
interest rate fluctuations. See Notes 2h and 23 to the
financial statements for more information on derivatives.
The Beneficial Insurance Group reported pretax income
of $77.1 million in 1995, versus $69.9 and $69.2 million in
1994 and 1993, respectively. However, 1993 earnings
benefited from $5.3 million related to the acquisition of
Wesco Insurance Company, which resulted in adjustments to
previous estimates of accrued contingent commission and
unearned commission reserves to reflect actual amounts.
Excluding the favorable Wesco-related adjustment, the
earnings improvement in both years resulted from higher
volume and reduced loss ratios in the Beneficial-related
business.
Harbour Island Inc., the Company's real estate
subsidiary in Tampa, Florida, recorded a pretax loss, on a
fully debtfunded basis, of $19.5 million in 1995, up from
$18.0 million in 1994, and $17.0 million in 1993. Nearly
all of the losses in recent years represent imputed
interest costs computed at the Company's overall melded
cost of funds rate and depreciation charges. The pretax
loss relating to Harbour Island Inc. is likely to continue at current
levels, unless substantial portions of the real estate on
Harbour Island are sold.
Other revenues were essentially flat, decreasing 4%
from the preceding year in 1995, following an increase of
3% in 1994. In both years, the previously discussed
fluctuations from the RAL business were largely offset
by increased servicing revenue and gains from the
aforementioned securitizations.
The provision for credit losses, excluding the
German charges, increased $81.5 million, or 41%, in 1995
compared with an increase of $26.9 million, or 16%, in 1994.
The increase in 1995 reflects higher chargeoffs, as well as
additions to the allowance for credit losses
corresponding to increased unsecured receivables growth.
The increase in 1994 was entirely driven by a higher level
of unsecured lending as the Company has consistently provided
an immediate provision for credit losses on net receivable growth.
Including the German liquidating loan charges, the
provision increased $58.5 million, or 25%, in 1995 and
$64.9 million, or 38%, in 1994. As a percentage of average
owned receivables, the provision was 2.27% in 1995,
compared with 1.78% in 1994. Including the German
liquidating loan charges in both years, the provision for
credit losses was 2.39% and 2.12% of average receivables in
1995 and 1994.
Salaries and other operating expenses, combined, were
up 14% in 1995 and 7% in 1994 over the prior years,
generally reflecting normal increases attributable to
growth in receivables. As a percentage of average managed
receivables, salaries and other operating expenses were
6.85%, 6.89% and 7.32% in 1995, 1994, and 1993, respectively. The
fourth-quarter restructuring was an effort to improve
operating efficiencies and is expected to save approximately
$12 million in annual expenses.
Although the statutory rate was 35% for all years,
the effective tax rates on income before extraordinary items
were 44.3% in 1995, 45.5% in 1994 and 41.0% in 1993.
The effective tax rate was substantially higher in 1995 and 1994 than in
the prior year because of the German charges, which were not
offset by tax benefits. In general, taxes are higher than
the U.S. federal statutory rate because of state income
taxes and higher tax rates on foreign operations. Due to the
Company's earnings level, no valuation allowance (except for
a valuation allowance for foreign tax credit carryforwards)
related to net deferred tax assets of approximately $195
million has been recorded. Management has determined, based
on the Company's history of prior operating earnings and
its expectations for future earnings, that it is likely
that operating income of the Company will be sufficient to
recognize fully these deferred tax assets. See Note 18 to the financial
statements for further discussion.
In 1992, the IRS completed its examination of
the Company's federal income tax returns for 1984 through
1987 and proposed certain adjustments that relate
principally to activities of the Company's former subsidiary,
American Centennial Insurance Company, prior to its sale
in 1987. Although prepayments were made thereon in 1992, the
Company is in the process of contesting the proposed
adjustments within the administrative appeals process of
the IRS and is prepared to litigate if necessary.
Management does not expect the ultimate resolution of
these issues to have a material effect on the Company's
financial position, results of continuing operations or
liquidity. See Note 27 to the financial
statements for further discussion of the assessment.
Changes in Cash Flow and Liquidity
The principal sources of cash are collections of
finance receivables, proceeds from the issuance of short- and
long-term debt, and cash provided from operations (including maturities
and repayments of its receivables). The monthly collections
of cash principal as a percentage of average
receivables were 5.03% in 1995 and 4.52% in 1994. Also, from time to
time, subsidiaries of the Company sell receivables
through securitizations in the capital markets.
Substantial additional liquidity is available
through committed bank credit lines that the Company
maintains in support of its commercial paper borrowings.
During the fourth quarter of 1995, the Company entered into
a $3 billion, five-year syndicated revolving credit
agreement, which replaced the various one-and three-year
bilateral agreements, totaling $2.9 billion, that the
Company had previously maintained. This syndicated
revolving credit agreement has a $1.0 billion net-worth
test. At year-end 1995, total standby lines of credit
were $3.4 billion, of which $3.2 billion was unused.
One of the Company's financial strengths is its ability
to raise long-term debt in a wide variety of domestic
and international markets. Including medium-term notes,
long-term debt represented 63% of the Company's funding base
at the end of 1995, compared with 64% at the end of
1994. In 1995, Beneficial issued $2.4 billion in
variable-rate medium-term notes at an all-in cost roughly
equivalent to the Company's cost of commercial paper
borrowings. The average maturity was 1.6 years. Fixed-
rate medium-term note issuances totaled $.6 billion, at an
average coupon of 6.59% and an average maturity of 5.1
years. In addition, the Company had available under shelf
registrations with the Securities and Exchange Commission
$1.0 billion of unissued debt securities at year-end 1995.
The Company hedges the majority of its investment
in foreign subsidiaries by selling at-the-money (spot)
call options and buying out-of-the-money (spot) put
options on Canadian dollars, British sterling and German
marks. With the exception of the strike rates, all terms
of the call and put are identical. The notional amount of
each option is an amount that will generally produce
offsetting gains or losses (on an aftertax basis) to the
gains or losses produced by the underlying investment.
The combination of these instruments (a "no cost collar")
is effectively a partial hedge, as hedging gains or losses
occur only when the spot rates fluctuate outside the
range of the respective strike rates. These option
transactions generally have a maturity of three to six
months. Foreign currency forward exchange agreements are
also utilized to hedge a portion of the Company's
investment in foreign subsidiaries.
The Company monitors the effectiveness of its
hedging program through a quarterly analysis comparing
the foreign exchange gains and losses on the
investments in foreign operations to hedge gains and
losses due to currency fluctuations. Hedge gains and
losses are calculated by comparing the option strike rate to
the spot exchange rate on each financial statement date as
though the option were exercised at that time. There were no
amounts recognized in net income during the three years ended
December 31, 1995. Prospectively, gains and losses in
excess of the amount needed to offset gains or losses
on investments in foreign subsidiaries due to currency
fluctuations are not likely given the above hedging strategy.
See Notes 2h and 23 to the financial statements for further
information on derivatives.
The Company minimizes all off-balance-sheet credit
risk exposure by limiting the counterparties to major
international banks and financial institutions. The
Company has never experienced nonperformance by any
counterparty.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has
issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation"
effective for financial statements issued for fiscal years beginning
after December 15, 1995. The Company expects to disclose
the pro forma charge to earnings in 1996 for the valuation
of the nonqualified stock option plan which is described in
Note 20 to the financial statements.
Recent Developments
In February 1996, the Company announced that
SunAmerica Life Insurance Company signed a definitive
agreement to purchase the $950 million annuity portfolio of the
Central National Life Insurance Company of Omaha, a subsidiary of
the Beneficial Insurance Group. The closing date has been
set for March 31, 1996, pending regulatory approvals. The
sale will not have a material impact on net income.
As the Company announced in early March 1996, it
appears that the preliminary full-year 1996 pretax profits
from the RAL business may significantly exceed the 1993 peak
of $56 million. The number of RALs issued may approach the
2.7 million of last year. In addition, collections of
previously charged off amounts are much higher than
expected and delinquency is well within the Company's
expectation. Accordingly, the Company expects that
results of operations for the first quarter of 1996 will be
significantly impacted by RAL.
As also announced in early March 1996, BNB USA
is scheduled to begin a private-label credit card pilot
program with Kmart Corporation on March 22, 1996. Upon
successful completion of the pilot in 166 Kmart stores, the
two companies plan to expand the program in 1996 to all of
the more than 2,000 Kmart locations in the U.S. and
Canada. Although longterm profitability is expected from
this merchant relationship, the roll out will result in
considerable start-up losses in 1996, which will impact
1996 results of operations.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEPENDENT AUDITORS' REPORT
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS
OF BENEFICIAL CORPORATION:
We have audited the accompanying consolidated
balance sheets of Beneficial Corporation and
Subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income and retained earnings and
cash flows for each of the three years in the period ended
December 31, 1995. Our audits also included the financial
statement schedule listed in the Index at Item 14. These
financial statements and financial statement schedule are
the responsibility of the Corporation's management. Our
responsibility is to express an opinion on the financial
statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial
statements present fairly, in all material respects, the financial
position of Beneficial Corporation and Subsidiaries as
of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years
in the period ended December 31, 1995 in conformity with
generally accepted accounting principles. Also, in our
opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all
material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
January 29, 1996
BENEFICIAL CORPORATION AND SUBSIDIARIES BALANCE SHEET
December 31,
1995 1994
(in millions)
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ASSETS
Cash and Equivalents $ 273.1 $ 189.5
Finance Receivables (Note 6) 13,416.2 12,322.6
Allowance for Credit Losses (Note 7) (406.1) (331.6)
Net Finance Receivables 13,010.1 11,991.0
Investment Securities (Note 8) 1,491.4 1,306.3
Property and Equipment 183.1 185.9
Other Assets (Note 9) 759.7 703.9
TOTAL ASSETS $15,717.4 $14,376.6
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-Term Debt (Note 11) $ 4,023.9 $ 3,473.9
Deposits Payable 642.5 654.4
Long-Term Debt (Note 12) 7,792.5 7,324.8
Total Interest-Bearing Debt 12,458.9 11,453.1
Accounts Payable and Accrued
Liabilities (Note 10) 490.0 438.5
Insurance Policy and Claim Reserves 1,265.5 1,084.7
Total Liabilities 14,214.4 12,976.3
Shareholders' Equity:
Preferred Stock (Note 13) 114.8 114.9
Common Stock (160.0 shares authorized;
53.2 and 52.5 shares outstanding)
(Note 13) 53.2 52.5
Additional Capital (Note 14) 270.0 246.5
Net Unrealized Gain (Loss) on Investment
Securities (Note 8) 18.4 (8.8)
Accumulated Foreign Currency Translation
Adjustments (46.4) (47.0)
Retained Earnings 1,093.0 1,042.2
Total Shareholders' Equity 1,503.0 1,400.3
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $15,717.4 $14,376.6
See Notes to Financial Statements.
BENEFICIAL CORPORATION AND SUBSIDIARIES
STATEMENT OF INCOME AND RETAINED EARNINGS
Years Ended December 31
1995 1994 1993
(in millions, except per share amounts)
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REVENUE
Finance Charges and Fees $2,014.6 $1,753.7 $1,607.4
Interest Expense 816.2 673.6 633.2
Lending Spread 1,198.4 1,080.1 974.2
Insurance Premiums 152.7 143.7 116.5
Other 230.9 240.0 233.6
Total 1,582.0 1,463.8 1,324.3
OPERATING EXPENSES
Salaries and Employee Benefits 384.6 350.7 327.1
Insurance Benefits 80.4 86.5 75.9
Provision for Credit Losses 280.2 198.7 171.8
Provision for Credit Losses on German
Liquidating Loan Portfolio (Note 3) 15.0 38.0 --
Provision for Restructuring (Note 4) 9.8 -- --
Other (Note 19) 541.6 463.8 434.3
Total 1,311.6 1,137.7 1,009.1
Income Before Extraordinary Items and
Income Taxes 270.4 326.1 315.2
Provision for Income Taxes (Note 18) 119.9 148.4 129.2
INCOME BEFORE EXTRAORDINARY ITEMS 150.5 177.7 186.0
Extraordinary Items (Note 5) -- -- (2.8)
NET INCOME 150.5 177.7 183.2
Retained Earnings, Beginning of Period 1,042.2 953.7 849.7
Dividends Paid (Note 22) (99.7) (89.2) (79.2)
RETAINED EARNINGS, END OF PERIOD $1,093.0 $1,042.2 $ 953.7
EARNINGS PER COMMON SHARE
Before Extraordinary Items $ 2.72 $ 3.28 $ 3.45
Extraordinary Items -- -- (.05)
EARNINGS PER COMMON SHARE $ 2.72 $ 3.28 $ 3.40
DIVIDENDS PER COMMON SHARE $ 1.80 $ 1.62 $ 1.43
AVERAGE COMMON SHARES OUTSTANDING 53.5 52.6 52.4
See Notes to Financial Statements.
BENEFICIAL CORPORATION AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
Years Ended
December 31
1995 1994 1993
(in millions)
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 150.5 $ 177.7 $ 183.2
Reconciliation of Net Income to Net
Cash Provided by Operating Activities:
Extraordinary Items -- -- 2.8
Provision for Credit Losses 280.2 198.7 171.8
Provision for Credit Losses on
German Liquidating Loan Portfolio 15.0 38.0 --
Provision for Restructuring 9.8 -- --
Provision for Deferred Income Taxes (35.0) (30.9) (32.0)
Depreciation and Amortization 48.8 49.1 48.2
Insurance Policy and Claim Reserves 180.8 169.0 220.5
Accounts Payable and Accrued
Liabilities 41.7 54.9 20.6
Net Cash Provided by Operating
Activities 691.8 656.5 615.1
CASH FLOWS FROM INVESTING ACTIVITIES
Receivables Originated or Acquired (9,860.3) (8,251.3) (6,316.6)
Receivables Collected 7,443.3 6,064.1 4,675.3
Receivables Securitized 1,103.8 757.0 --
Available-For-Sale Investments
Purchased (313.9) (219.7) (197.5)
Held-To-Maturity Investments
Purchased (78.2) (251.1) (264.1)
Available-For-Sale Investments Sold 97.5 55.0 77.5
Available-For-Sale Investments Matured 154.5 158.9 115.2
Held-To-Maturity Investments Matured 21.1 66.3 83.4
Property and Equipment Purchased (37.2) (25.0) (22.7)
Discontinued Operations .2 (6.4) 131.6
Other (7.1) 7.6 (29.0)
Net Cash Used in Investing
Activities (1,476.3) (1,644.6) (1,746.9)
CASH FLOWS FROM FINANCING ACTIVITIES
Short-Term Debt, Net Change 556.4 537.3 299.6
Deposits Payable, Net Change (29.4) 9.0 (61.1)
Long-Term Debt Issued 3,102.1 2,767.1 2,289.9
Long-Term Debt Repaid (2,661.3) (2,228.5) (1,374.5)
Dividends Paid (99.7) (89.2) (79.2)
Net Cash Provided by Financing
Activities 868.1 995.7 1,074.7
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS 83.6 7.6 (57.1)
Cash and Equivalents at Beginning
of Period 189.5 181.9 239.0
CASH AND EQUIVALENTS AT END OF PERIOD $ 273.1 $ 189.5 $ 181.9
SUPPLEMENTAL CASH FLOW INFORMATION
Interest Paid $ 823.4 $ 680.0 $ 645.3
Income Taxes Paid 154.8 150.5 146.6
See Notes to Financial Statements.
BENEFICIAL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in millions, except per share amounts)
1. NATURE OF OPERATIONS
Beneficial Corporation (Company) is a holding
company, subsidiaries of which provide financial
services through their various consumer finance,
banking and insurance operations located throughout
the United States, Canada, Germany, Ireland and the
United Kingdom. The Beneficial finance system
includes more than 1,100 offices, offering both real
estate secured loans and unsecured loans, as well as
credit-related insurance products. Additionally, other
subsidiaries offer credit card products (largely
private-label), tax refund anticipated loans, and
selected noncredit-related insurance products.
Approximately 50% of loans outstanding are secured by
real estate. The majority of net income is derived
from the consumer finance operations and credit
insurance products related to the consumer finance
business. Operations in any one country outside the
United States are not significant in relation to the
Company's overall operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND PRACTICES
a) Basis of Consolidation. The consolidated
financial statements include the accounts of the
Company and its subsidiaries, after elimination of
all significant intercompany accounts and
transactions, and have been prepared in accordance
with generally accepted accounting principles. Certain
prior-period amounts have been reclassified to
conform with the 1995 presentation.
b) Use of Estimates. The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities
at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
c) Finance Operations. The financial statements are
prepared on the accrual basis. Finance charges are
recognized as income using the interest method or methods
that produce similar results. Loan origination fees are
deferred and amortized into interest income over the
estimated lives of the related loans, except to the extent
that they offset directly related lending costs. Income
accrual is generally suspended after 30 days on delinquent
loans.
Provisions for credit losses are charged to income in
amounts sufficient to maintain the allowance for credit
losses at a level considered adequate to cover the losses of
principal and interest in the finance receivables portfolio.
Delinquent real estate secured receivables are reviewed
individually by management, and accounts known to be
uncollectible are charged off. In general, other
receivables are automatically charged off after no payment
has been made for six months. For all types of loans,
collection efforts are generally continued.
Real estate properties acquired through foreclosure are
carried at the lower of cost or estimated fair market value,
minus estimated costs to sell, determined on an individual
asset basis. Valuations are periodically performed by
management, and an allowance for possible losses is
established if the book value exceeds the estimated fair
market value. Residual gains or losses on disposition are
recorded in expense as incurred.
Certain real estate secured loans are accounted for as
foreclosed property ("in-substance foreclosure") even though
the actual foreclosure has not occurred. These loans are
carried at the lower of cost or estimated fair value when
the borrower has little or no equity in the collateral at
its current estimated fair value and it appears unlikely
that the borrower will repay the loan other than through
liquidation of the property.
d) Receivables Sold with Servicing Retained. Periodically,
the Company has sold home equity loans to trusts created as
real estate mortgage investment conduits and retains the
servicing. Gains were recognized at the time of the sale
and are determined by present valuing the loan servicing
spread over the estimated life, adjusted for prepayments and
bad debts, and allowing for a normal servicing fee in future
periods. The deferred premium resulting from the gains is
amortized against servicing income over the life of the
loans, using a method that approximates the interest method.
e) Insurance Operations. The Company's insurance
subsidiaries are engaged in writing credit life, credit
accident and health insurance, credit property, ordinary
life insurance and deferred annuities. Premiums on credit
life insurance are taken into income using the sum-of-the
digits or actuarial methods, except in the case of level
term contracts, which are taken into income using the
straight-line method over the lives of the policies.
Premiums on credit accident and health insurance are
generally taken into income using an average of the sum-of
the-digits and the straight-line methods. Premiums for
credit property are generally taken into income using the
sum-of-the-digits method or on a pro-rata basis. Premiums
for ordinary life insurance are included in income when due.
Premiums collected on annuity contracts are included as a
liability in insurance policy and claim reserves, and
annuity income is recognized in investment income as the
difference between interest earned and interest credited on
the contracts. Policy reserves for credit life, credit
accident and health insurance and credit property are equal
to related unearned premiums. Additionally, claim reserves
for credit life, credit accident and health insurance, and
credit property are adjusted to reflect claim experience.
Liabilities for future life insurance policy benefits
associated with ordinary life contracts are accrued when
premium revenue is recognized and are computed on the basis
of assumptions as to investment yields, mortality, morbidity
and withdrawals.
f) Valuation of Investment Securities. Investments are
owned principally by the insurance subsidiaries.
Investments in debt securities that the Company has both the
ability and the intention of holding until maturity are
classified as held-to-maturity securities and reported at
amortized cost (remaining principal net of unearned premiums
or discounts). Investments that may be sold prior to
maturity to support the Company's investment strategy, such
as in response to changes in interest rates or tax
deductibility of interest, are considered as available-for
sale securities and reported at fair value, with unrealized
gains and losses excluded from earnings and reported in a
separate component of shareholders' equity. The Company
does not hold any securities for trading purposes. Equity
securities are mostly non-redeemable preferred stocks and
are carried at market value, with the adjustment from cost
to market value also recorded directly in shareholders'
equity. The cost of investments sold is determined on the
specific cost identification basis.
g) Translation of Foreign Currencies. Operations outside
the United States are conducted through subsidiaries located
in Canada, Germany, Ireland and the United Kingdom. Assets
and liabilities of these subsidiaries are translated at the
rates of exchange at the balance sheet dates, while income
and expense items are translated at the average exchange
rates for each period covered by the statement of income.
The resulting translation adjustments are included in
accumulated foreign currency translation adjustments, a
separate component of shareholders' equity.
h) Derivative Financial Instruments. To hedge its
investment in foreign subsidiaries and to moderate its
exposure to interest-rate fluctuations, the Company enters
into various transactions involving off-balance-sheet
financial instruments. These transactions include options,
currency swaps and forwards for foreign currency risk
management and interest-rate swaps and forward rate
agreements for interest-rate exposure management.
Gains or losses on foreign currency instruments designated
as hedges of the Company's net investments in foreign
subsidiaries are included with translation adjustments in
shareholders' equity. Gains or losses on these instruments
in excess of the amount needed to offset net investment
losses or gains are included in income. The net amount of
interest income and interest expense on agreements used to
hedge interest-rate exposure is recognized in interest
expense over the lives of the instruments. The indices on
derivatives used to hedge interest rate exposure match an
index corresponding to either a specific long-term debt
instrument or to a pool of short-term debt. The Company
does not terminate these derivatives prior to maturity.
The Company does not serve as a financial intermediary to
make markets in any off-balance-sheet financial instruments
nor does it hold or issue derivative financial instruments
for trading purposes.
i) Amortization of Intangible Assets. Premiums paid on
receivables purchased are amortized using straight-line and
accelerated methods generally over five years. Excess cost
applicable to acquisitions is generally amortized on a
straight-line basis over 40 years.
j) Earnings per Common Share. Earnings per common share
are computed by deducting dividend requirements on preferred
stocks of the Company from net income and dividing the
remainder by average common shares outstanding and their
equivalents. None of the preferred stocks are common stock
equivalents.
k) Cash Equivalents. The Company considers all highly
liquid debt instruments with original maturities of three
months or less to be cash equivalents.
l) Stock Split. All share and per share data have been
adjusted to reflect the two-for-one stock split in 1993.
3. PROVISION FOR CREDIT LOSSES ON GERMAN LIQUIDATING LOAN
PORTFOLIO
In December 1994, the Company announced the intent to sell
its German banking subsidiary, BFK Bank AG (BFK).
Simultaneously, the Company recorded a $38.0, or $.72 per
share, charge to reflect credit losses and related expenses
on a block of BFK loans granted to finance the purchase of
campground sites by German consumers from Fundus
Grundstuecks GmbH (Fundus), a German financial services
company. After Fundus filed for bankruptcy, it became
apparent that the relationship between Fundus and the
consumers was misrepresented to BFK. Following the
bankruptcy, and the publicity surrounding alleged fraud by
Fundus, a high proportion of the campground customers ceased
paying, which led to the charge in December, 1994.
Continuing negotiations and other work out efforts relating
to the Fundus loans, both apart from and in conjunction with
the possible BFK sale, did not progress as anticipated in
the original loss estimates. As a result, in December 1995,
the Company recorded a $15.0, or $.28 per share, charge for
additional potential losses relating to the Fundus
portfolio. The added charge reflects management's best
estimate of collateral value after carrying costs and legal
fees. The Company is pursuing a number of alternatives for
the liquidation of its interest in the Fundus loans and, if
necessary, the underlying real estate in which BFK has a
collateral interest. The carrying value at the end of 1995
was $11.6.
In December 1995, the Company announced the decision to
retain BFK as no acceptable offers for the Bank were
received.
4. PROVISION FOR RESTRUCTURING
In the fourth quarter of 1995, the Company decided to exit
the Beneficial Insurance Group annuity business, either
through a sale or a managed liquidation, and implemented a
program to reduce expenses, principally within headquarters
operations. The expense reduction program resulted in a
$9.8 restructuring charge, which is largely early retirement
and severance expenses corresponding to work force
reductions of 225. This restructuring charge reduced net
income by $5.9 or $.11 per share.
5. EXTRAORDINARY ITEMS
The Company called for early redemption and retired an
aggregate face value of long-term debt of $189.8 in 1993.
The aftertax premiums of $2.8 in 1993 (net of income tax
benefits of $1.5) related to these items are classified as
extraordinary losses in the statement of income and retained
earnings.
6. FINANCE RECEIVABLES
Finance receivables at December 31 consisted of the
following:
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1995 1994
Receivables Owned:
Real Estate Secured $ 6,636.6 $ 6,859.5
Personal Unsecured 2,756.1 2,485.9
Credit Cards 3,084.0 2,061.7
Sales Finance Contracts 836.6 810.4
Commercial 102.9 105.1
Total Owned 13,416.2 12,322.6
Receivables Sold with Servicing Retained
(all real estate secured) 1,113.5 630.4
Total Managed $14,529.7 $12,953.0
Average receivables during the years ended December 31 were
as follows:
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1995 1994
Receivables Owned $12,339.7 $11,191.7
Receivables Sold With Servicing Retained 1,182.1 631.7
Average Managed $13,521.8 $11,823.4
From time to time, subsidiaries of the Company have sold
home equity loans through securitizations and have retained
collection and administrative responsibilities as servicer
for the trust holding the home equity loans.
Scheduled contractual maturities of finance receivables
owned to be received after December 31, 1995, were as
follows:
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<S> <C> <C> <C> <C> <C>
1996 1997 1998 1999 Beyond
Real Estate Secured 17% 12% 13% 13% 45%
Personal Unsecured 45 32 16 3 4
Credit Cards 56 6 6 3 29
Sales Finance Contracts 72 18 6 1 3
Commercial 28 13 6 12 41
Overall 35 15 11 8 31
While the statutes of several states place no maximum limit
on the contractual term of closed-end loans secured by real
estate, the consumer finance subsidiaries generally limit
loans of this type to periods ranging from 60 to 180 months.
Terms of closed-end unsecured loans and sales finance
contracts generally do not exceed 60 months. It is the
Company's experience that a substantial portion of all
consumer receivables is renewed or repaid prior to
contractual maturity dates. Accordingly, the previous
tabulation should not be viewed as a forecast of future cash
collections. During the years ended December 31, 1995 and
1994, cash collections totaled $7,443.3 and $6,064.1,
respectively. The monthly collections of cash principal as
a percentage of average receivables were 5.03% in 1995 and
4.52% in 1994.
7. ALLOWANCE FOR CREDIT LOSSES
Changes in the allowance for credit losses were as follows:
</TABLE>
<TABLE>
<S> <C> <C>
1995 1994
Balance at Beginning of Year $331.6 $279.0
Accounts Charged Off* (247.2) (183.3)
Recoveries on Accounts Previously Charged
Off 37.8 34.6
Provision for Credit Losses* 280.2 198.7
Other 3.7 2.6
Balance at End of Year $406.1 $331.6
*Does not reflect $15.0 in 1995 and $38.0 in 1994 pertaining
to German liquidating loan portfolio (see Note 3).
8. INVESTMENT SECURITIES
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting
for Certain Investments in Debt and Equity Securities."
Upon adoption of SFAS 115, the Company reclassified $339.3
of debt securities from the "Held-To-Maturity" category to
the "Available-For-Sale" category (which is adjusted to fair
value) to more closely match the Company's investment
strategy. The resulting unrealized gain of $5.0, net of
applicable income taxes and an adjustment to deferred
acquisition costs, was recorded as an increase to the
securities valuation adjustment component of shareholders'
equity.
In the fourth quarter of 1995, the Company decided to exit
its annuity business (see Note 4). In light of this
decision, and the one time reclassification allowed
temporarily under "A Guide to Implementation of SFAS No.
115," the Company transferred $795.4 of debt securities from
the "Held-To-Maturity" category to the "Available-For-Sale"
category in December 1995. An unrealized gain of $12.4, net
of income taxes of $6.7 was recorded in the separate
component of equity as a result of this transfer. As of
December 31, 1995, shareholders' equity included a net
unrealized gain of $18.4, consisting of a $45.4 net gain on
the Available-For-Sale portfolio, partially offset by a
$17.5 adjustment to deferred acquisition costs related to
the annuity portfolio and $9.5 of applicable income taxes.
Investments at December 31 were as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
1995 Cost Gains Losses Value
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Available-For-Sale
Debt Securities:
Corporate $ 777.4 $32.9 $ 2.8 $ 807.5
Mortgage-backed 327.0 8.6 .1 335.5
Municipal 19.5 .7 -- 20.2
U.S. Government 172.8 3.5 -- 176.3
Foreign Government 56.8 2.6 -- 59.4
1,353.5 48.3 2.9 1,398.9
Equity Securities 6.3 -- -- 6.3
Total $1,359.8 $48.3 $ 2.9 $1,405.2
Held-To-Maturity
Debt Securities:
Corporate $ 41.2 $ .4 $ .1 $ 41.5
Mortgage-backed 2.6 .1 -- 2.7
Municipal 7.9 .4 -- 8.3
U.S. Government 17.5 .1 .1 17.5
Foreign Government 1.1 -- -- 1.1
Other 15.9 -- -- 15.9
Total $ 86.2 $ 1.0 $ .2 $ 87.0
Gross Gross Estimated
Amortized Unrealized Unrealized Market
1994 Cost Gains Losses Value
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Available-For-Sale
Debt Securities:
Corporate $ 281.4 $ .5 $14.8 $ 267.1
Mortgage-backed 124.0 .4 2.8 121.6
Municipal 4.0 -- .2 3.8
U.S. Government 64.1 .1 1.5 62.7
Foreign Government 36.5 -- 1.6 34.9
510.0 1.0 20.9 490.1
Equity Securities 7.4 -- -- 7.4
Total $ 517.4 $ 1.0 $20.9 $ 497.5
Held-To-Maturity
Debt Securities:
Corporate $ 448.0 $ -- $45.3 $ 402.7
Mortgage-backed 236.1 .5 14.5 222.1
Municipal 22.4 .1 2.0 20.5
U.S. Government 55.1 .1 2.2 53.0
Foreign Government 31.4 -- 3.2 28.2
Other 15.8 -- -- 15.8
Total $ 808.8 $ .7 $67.2 $ 742.3
The contractual maturities of debt securities at December
31, 1995, are shown in the table that follows. Actual
maturities may differ from contractual maturities because
some borrowers may have the right to call or prepay
obligations, with or without call or prepayment penalties.
Amortized Estimated
1995 Cost Market Value
</TABLE>
<TABLE>
<S> <C> <C>
Available-For-Sale
Due within one year $ 100.1 $ 100.1
Due one through five years 209.1 215.6
Due five through ten years 663.2 691.3
Due after ten years 54.1 56.4
Mortgage-backed Securities 327.0 335.5
Total $1,353.5 $1,398.9
Held-To-Maturity
Due within one year $ 1.4 $ 1.4
Due one through five years 44.5 44.8
Due five through ten years 19.7 20.1
Due after ten years 18.0 18.0
Mortgage-backed Securities 2.6 2.7
Total $ 86.2 $ 87.0
Proceeds from sales of Available-For-Sale securities totaled
$97.5 in 1995, compared with $55.0 in 1994. Gross gains of
$4.0 in 1995 and $2.7 in 1994, and gross losses of $0.4 in
1995 and $0.1 in 1994 were realized on those sales. The
cost of investments sold was determined on the specific cost
identification basis.
9. OTHER ASSETS
</TABLE>
<TABLE>
<S> <C> <C>
At December 31 1995 1994
Accrued Investment Income $ 25.2 $ 22.8
Deferred Income Tax Benefits 195.5 165.6
Excess Cost of Net Assets Acquired 16.6 18.4
Investments in and Advances to Discontinued
Operations 15.7 15.9
Miscellaneous Accounts and Notes Receivable 91.5 108.2
Prepaid Expenses 116.7 99.7
Property Acquired by Foreclosure 101.2 71.2
Recoverable Income Taxes 45.7 45.3
Unamortized Insurance Policy Acquisition
Costs 54.8 74.6
Other 96.8 82.2
Total $759.7 $703.9
10.ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
</TABLE>
<TABLE>
<S> <C> <C>
At December 31 1995 1994
Accounts Payable $144.6 $114.9
Accrued and Deferred Compensation 76.1 66.1
Accrued Interest 72.9 61.4
Accrued Postretirement Benefits 60.5 52.8
Accrued Pension Cost 19.9 22.1
Income Taxes Payable 85.2 76.8
Insurance Premiums Payable 20.8 20.8
Other 10.0 23.6
Total $490.0 $438.5
11.SHORT-TERM DEBT
Short-term debt, including $922.9 and $624.7 relating to
foreign subsidiaries at year-end 1995 and 1994,
respectively, consisted of the following:
</TABLE>
<TABLE>
<S> <C> <C>
At December 31 1995 1994
Commercial Paper $3,506.2 $3,209.5
Bank Borrowings 517.7 264.4
Total $4,023.9 $3,473.9
Selected details of short-term borrowings are as follows:
</TABLE>
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Highest Aggregate at Any Month-End $4,023.9 $4,052.6 $3,172.4
Daily Average Amount 3,366.3 3,110.5 2,699.0
Weighted Average Interest Rates:
At Year-End
Commercial Paper 5.85% 6.05% 3.48%
Bank Borrowings 6.71 6.23 4.49
Overall 5.98 6.07 3.60
Paid During Year*
Commercial Paper 6.24 4.51 3.62
Bank Borrowings 7.19 5.83 6.67
Overall 6.37 4.58 3.87
*Weighted average interest rates paid during the year have
been determined by relating short-term interest costs
(including the costs of maintaining lines of credit) for
each year to the daily average dollar amounts outstanding.
The Company maintains committed revolving credit agreements
in support of its outstanding commercial paper. At December
31, 1995, the Company had lines of credit of $3,350.4, of
which $3,184.3 was unused. The most significant of these
credit agreements has a net-worth test of $1,000. Annual
commitment fee requirements to support availability of
credit agreements at the end of 1995 totaled $5.8.
The impact of hedging activities on the Company's weighted
average short-term borrowing rates and on the reported short
term interest expense were as follows: .05% and $1.7 in
1995; .16% and $4.9 in 1994; and .16% and $4.4 in 1993.
12.LONG-TERM DEBT
</TABLE>
<TABLE>
<S> <C> <C>
At December 31 1995 1994
United States $7,263.9 $6,643.0
Canada 285.3 214.0
Germany 72.3 114.4
United Kingdom 171.3 353.8
Unamortized Discount (.3) (.4)
Total $7,792.5 $7,324.8
Long-term debt, including weighted average interest rates by
year of maturity on debt outstanding at December 31, 1995,
is shown below in the earliest year it could become payable:
</TABLE>
<TABLE>
<S> <C> <C> <C>
Average Rates
Maturity 1995 1995 1994
1995 $ -- $2,499.8
1996 6.70% 2,063.5 1,070.4
1997 6.84 2,164.5 976.3
1998 7.85 1,189.9 877.3
1999 7.69 891.2 867.6
2000 8.03 422.8 248.1
2001-2005 7.69 863.3 588.0
2006-2023 7.81 197.3 197.3
Total 7.24% $7,792.5 $7,324.8
The weighted average annual interest rates on debt
outstanding at year-end were 7.24%, 7.62%, and 7.24% for
1995, 1994, and 1993, respectively. Weighted average
interest rates (including issuance costs) paid during the
year on average long-term debt outstanding were 7.56%,
7.39%, and 7.93% for years ended December 31, 1995, 1994,
and 1993, respectively.
Long-term debt outstanding at December 31, 1995 and 1994,
includes $2,817.4 and $2,191.5, respectively, of variable
rate debt that reprices based on various indices. Such
variable-rate debt generally has an original maturity of one-to-
two years.
The impact of hedging activities on the Company's weighted
average long-term borrowing rates and on the reported long
term interest expense were as follows: .05% and $3.7 in
1995; .00% and ($.2) in 1994; and (.02%) and ($1.0) in 1993.
13.CAPITAL STOCK
Shares of capital stock outstanding were as follows:
</TABLE>
<TABLE>
<S> <C> <C> <C>
At December 31 1995 1994 1993
5% Cumulative Preferred - $50 par value.
Authorized, 585,730 407,718(a 407,718(a 407,718(a
$5.50 Dividend Cumulative Convertible
Preferred - no par value - $20 stated
value (each share convertible into
nine shares of Common; maximum
liquidation value, $2,031,000,
$2,236,200, and $2,552,500).
Authorized, 1,164,077.
Outstanding Shares Beginning of Year 22,362 25,525 28,432
Conversion into Common (2,052) (3,163) (2,907)
Outstanding Shares End of Year 20,310 22,362 25,525
$4.50 Dividend Cumulative Preferred
- $100 par value.
Authorized, 103,976 103,976 103,976 103,976
$4.30 Dividend Cumulative Preferred
- no par value - $100 stated value.
Authorized, 1,069,204 836,585 836,585 836,585
Common - $1 par value. Authorized
160,000,000
Outstanding Shares Beginning
of Year 52,509,728 52,170,270 25,969,246
Conversion of $5.50 Preferred
into Common 18,468 28,467 13,080
Exercise of Stock Options 669,903 310,991 128,179
Transfer into Treasury from Treasury
Shares Held as an Asset (677) -- --
Two-for-One Stock Spli -- -- 26,059,765
Outstanding Shares End of Year 53,197,422(b 52,509,728(b 52,170,270(b
After deducting treasury shares:
a) 5% Cumulative Preferred 178,012 178,012 178,012
b) Common 3,627,419 4,296,645 4,607,6 36
In addition, the Company is authorized to issue 500,000
shares of preferred stock (no par value) and 2,500,000
shares of preferred stock ($1.00 par value). Included
within such shares are 570,000 shares of Series A
Participating Preferred Stock ($1.00 par value) that the
Company is authorized to issue in connection with preferred
stock purchase rights (see Note 15). None of these
authorized preferred shares are issued or outstanding.
At December 31, 1995, a total of 182,790 shares of common
stock was reserved for conversion of $5.50 Preferred Stock.
14.ADDITIONAL CAPITAL
Additional capital increased by $23.5 and $10.3 in 1995 and
1994, respectively. The increase in both years resulted
from stock issuances in connection with various employee
stock plans.
15.PREFERRED STOCK PURCHASE RIGHTS
In 1987, Beneficial Corporation issued one Preferred Stock
Purchase Right (Right) for each outstanding share of common
stock of the Company. Under certain circumstances, each
Right entitles the registered holder to purchase from the
Company one two-hundredth of a share of the Company's Series
A Participating Preferred Stock at a price of $87.50,
subject to adjustment. Until the Rights become exercisable,
expire or are redeemed, they will automatically trade with
the common stock but will at no time have voting power.
The Rights will be exercisable under circumstances generally
involving certain acquisitions of, or tender offers for, the
common stock, or if a 10% stockholder is declared an
"Adverse Person" by the Board of Directors. If, at any time
after the Rights become exercisable, but before they expire
or are redeemed, the Company is acquired in a merger or
other business combination or sells 50% or more of its
assets or earning power, the holder of a Right will be
entitled to buy, at the exercise price, a number of shares
of Common Stock of the acquiring or surviving company having
a market value of twice the exercise price of each Right.
Generally, the Rights may be redeemed by the Company for
$.025 per Right at any time prior to the expiration of the
Rights on November 23, 1997.
16.EMPLOYEE RETIREMENT PLANS
The Company has a non-contributory defined benefit pension
plan covering substantially all employees of the Company and
its subsidiaries in the United States. The benefits
provided are based on the employee's age, years of service,
and average compensation during the highest three
consecutive years of earnings. The Company has made annual
contributions at least equal to the amounts accrued for
retirement expense. Plan assets are invested primarily in
equity securities and corporate bonds.
Employees of subsidiaries outside the United States
generally receive retirement benefits from Company-sponsored
plans or from statutory plans administered by governmental
agencies in other countries.
Net pension expense for domestic operations was $6.8, $6.6,
and $7.3 for 1995, 1994 and 1993, respectively. Pension
expense for the Company's subsidiaries outside the United
States was $2.6, $1.7 and $2.2 for the same periods. In
addition, the Company funds two 401(k) savings plans, which
collectively cover substantially all employees of the
Company and its subsidiaries in the United States, under
which basic contributions are made annually up to 2.5% of
each eligible employee's annual compensation up to $0.15.
Related costs charged to income for the years ended December
31, 1995, 1994 and 1993, were $4.6, $4.8 and $4.7,
respectively.
The domestic plan's funded status and amounts recognized in
the Company's balance sheet are as follows:
</TABLE>
<TABLE>
<S> <C> <C>
At December 31 1995 1994
Actuarial Present Value of Benefit
Obligation:
Vested Benefits $ 43.4 $33.6
Non-Vested Benefits 16.9 18.5
Accumulated Benefit Obligation 60.3 52.1
Effect of Future Salary Increases 42.5 35.7
Projected Benefit Obligation 102.8 87.8
Less Plan Assets at Fair Value 64.8 55.0
Projected Benefit Obligation in Excess
of Plan Assets 38.0 32.8
Less Unrecognized Net Loss 18.1 10.7
Accrued Pension Cost Included in Accounts
Payable and Accrued Liabilities $ 19.9 $22.1
For 1995, the projected benefit obligation was determined
using an assumed discount rate of 7.25% (compared with 8.5%
in 1994), an assumed long-term rate of return on assets of
9.0%, and an assumed long-term rate of future compensation
levels of 4.5%.
The following table details the components of net pension
expense for domestic operations:
</TABLE>
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Service Cost - Benefits Earned
During Period $ 4.4 $4.7 $3.8
Interest Cost on Projected
Benefit Obligation 7.6 6.8 6.8
Actual Return on Plan Assets (12.3) -- (7.3)
Net Amortization and Deferral 7.1 (4.9) 4.0
Net Periodic Pension Cost $ 6.8 $6.6 $7.3
17.POSTRETIREMENT BENEFITS
The Company provides postretirement health and dental care
benefits to eligible employees in the United States, along
with their spouses and eligible dependents. Employees
become eligible for these benefits if they meet minimum age
and service requirements and if they agree to contribute a
portion of the cost. The associated plans are unfunded, and
approved claims are paid from Company funds. Under the
terms of the plans, the Company reserves the right to modify
or terminate the plans. Most employees outside the United
States are covered by government health care programs. The
cost of such programs is not significant to the Company.
The cost to the Company of postretirement benefits consisted
of the following components:
</TABLE>
<TABLE>
<S> <C> <C> <C>
At December 31 1995 1994 1993
Postretirement Benefit Cost:
Service Cost - benefits attributable
to service during the year $1.5 $1.6 $1.2
Interest Cost on Accumulated
Benefit Obligation 4.2 3.7 3.4
Amortization of Deferred Gain (0.8) (0.7) (0.8)
Total $4.9 $4.6 $3.8
The actuarial and recorded liabilities for these benefits
were as follows:
</TABLE>
<TABLE>
<S> <C> <C>
At December 31 1995 1994
Accumulated Postretirement
Benefit Obligation:
Retirees $39.9 $34.0
Fully Eligible Active Plan Participants 8.9 8.8
Other Active Plan Participants 11.7 10.0
Total $60.5 $52.8
For measurement purposes, an 11.0% pre-65 trend rate was
used for 1995, decreasing from 13.5% in 1994, with an
ultimate rate of 5.0% in 2012. In addition, a 10.0% post-64
trend rate was used for 1995, unchanged from 1994, with an
ultimate rate of 5.0% in 2017. For dental costs, a trend
rate of 6.5% was used for 1995, down from 9.0% in 1994, with an
ultimate rate of 4.0% in 2000. The discount rate was 7.25%
at December 31, 1995, and 8.5% at December 31, 1994.
A one-percentage-point increase in the health care trend
rate would have increased the accumulated postretirement
benefit obligation by $4.6 at year-end 1995 and would have
added $0.8 to the benefit cost for the year.
18.INCOME TAXES
The provision for income taxes for income before
extraordinary items consisted of the following:
</TABLE>
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Federal:
Current:
U.S. $124.1 $149.8 $135.0
Foreign 18.4 16.4 13.5
Total 142.5 166.2 148.5
Deferred:
U.S. (34.2) (30.9) (32.0)
Foreign (0.8) -- --
Total (35.0) (30.9) (32.0)
State and Local 12.4 13.1 12.7
Total Provision for Income Taxes $119.9 $148.4 $129.2
Temporary differences that gave rise to deferred tax assets
and liabilities were as follows:
</TABLE>
<TABLE>
<S> <C> <C>
At December 31 1995 1994
Deferred Tax Assets:
Allowance for Credit Losses $137.1 $112.2
Retiree Benefit Plans 30.4 33.6
Accrued and Deferred Compensation 17.0 17.0
Foreign Tax Credits* 16.1 28.6
All Other 83.0 82.6
Subtotal 283.6 274.0
Deferred Tax Liabilities:
Real Estate Partnership Losses 25.6 24.3
Deferred Acquisition Costs 26.4 23.6
All Other 20.0 31.9
Subtotal 72.0 79.8
Valuation Allowance* (16.1) (28.6)
Net Deferred Taxes $195.5 $165.6
*Foreign Tax Credits are fully offset by valuation
allowances because utilization is improbable. The tax
credits expire over the next five years.
A reconciliation of the differences between income taxes
computed at the statutory U.S. income tax rate and the
consolidated tax provisions is as follows:
</TABLE>
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Statutory U.S. Tax Rate 35.0% 35.0% 35.0%
Increase (Decrease):
Differential Due to Operations
Outside U.S. 4.0* 5.9* 1.3
Tax Exempt Interest (.2) (.2) (.2)
State and Local Income Taxes 3.0 2.6 2.5
Other 2.5 2.2 2.4
Effective Tax Rate 44.3% 45.5% 41.0%
*Includes 3.2% in 1995 and 4.1% in 1994 for credit losses on
German banking subsidiary.
U.S. income taxes were not provided at December 31, 1995, on
$32.4 of undistributed earnings of foreign subsidiaries,
which are expected to be permanently invested in foreign
countries, and on $77.8 of undistributed earnings of life
insurance subsidiaries accumulated as policyholders' surplus
under tax laws in effect prior to 1984. Should these
amounts be distributed, the additional income taxes payable
would be approximately $1.6 and $27.2, respectively.
19.OTHER EXPENSES
</TABLE>
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Data Processing Costs $ 35.6 $ 31.7 $ 30.3
Depreciation 40.0 41.0 40.8
Insurance Commissions 21.7 20.7 16.8
Losses on Real Estate Foreclosures 45.9 34.9 40.3
Marketing 58.2 47.1 40.8
Occupancy 75.8 72.5 69.5
Origination Costs 26.7 20.7 16.3
Postage 26.6 20.4 17.9
Premium Amortization 25.3 21.9 23.6
Printing 22.6 18.6 14.4
Professional Services 26.6 19.3 18.2
Telecommunications 30.6 26.7 26.5
Travel 20.3 17.9 17.1
Other 85.7 70.4 61.8
Total $541.6 $463.8 $434.3
20.STOCK OPTIONS
The Company has a non-qualified stock option plan (Plan),
adopted in 1990, which provides for grants of options to
officers, directors, and key employees of the Company and
its participating subsidiaries. Under the Plan, the option
price shall not be less than 100% of fair market value on
the date the option is granted. Options generally become
exercisable in cumulative annual increments of 25% each
year, commencing one year after date of grant and expiring
after ten years. The aggregate number of options for any
calendar year may not exceed 1.75% of the total issued and
outstanding common stock of the Company as measured on the
first day of any such calendar year. If during any such
calendar year the total number of authorized options is not
granted, the remainder will be available for granting during
any succeeding year during the term of the Plan. Shares of
common stock to be issued upon exercise of options may be
treasury shares reacquired by the Company or authorized and
unissued common shares or a combination of both.
The following table summarizes the activity relating to the
Plan:
</TABLE>
<TABLE>
<S> <C> <C>
Shares Under Option Number Price Per Share
Options Outstanding December 31, 1993 3,047,232 $21.75 - $38.44
Changes in 1994:
Options Exercised (310,991) 21.75 - 37.91
Options Canceled (41,025) 21.75 - 37.91
Options Granted 939,350 37.44 - 38.78
Options Outstanding December 31, 1994 3,634,566 21.75 - 38.78
Changes in 1995:
Options Exercised (669,903) 21.75 - 37.91
Options Canceled (132,425) 29.47 - 37.91
Options Granted 955,130 49.19 - 49.25
Options Outstanding December 31, 1995 3,787,368 $21.75 - $49.25
Options Exercisable December 31, 1995 1,585,674 $21.75 - $38.78
21.GEOGRAPHIC INFORMATION
Data by geographic area for the years ended December 31 are
shown in the following table:
Inter-
United Company
States Foreign Eliminations Total
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1995
Revenue $2,018.5 $389.0 $ (9.3) $2,398.2
Income before Income Taxes 251.7 18.7 -- 270.4
Net Assets 1,250.0 253.0 -- 1,503.0
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1994
Revenue 1,821.3 326.2 (10.1) 2,137.4
Income before Income Taxes 321.6 4.5 -- 326.1
Net Assets 1,181.7 218.6 -- 1,400.3
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1993
Revenue 1,674.7 294.2 (11.4) 1,957.5
Income before Income Taxes 281.6 33.6 -- 315.2
22.DIVIDENDS PAID
</TABLE>
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Preferred Stock:
5% $ 1.0 $ 1.0 $ 1.0
$5.50 Convertible .1 .1 .1
$4.50 .5 .5 .5
$4.30 3.6 3.6 3.6
5.2 5.2 5.2
Common Stock 94.5 84.0 74.0
Total Dividends $99.7 $89.2 $79.2
23.DERIVATIVE FINANCIAL INSTRUMENTS
The Company enters into foreign exchange forward agreements
and options to hedge its net investment in foreign
subsidiaries. The forward exchange agreements do not
subject the Company to risk due to exchange-rate movements
because gains and losses on these agreements offset losses
and gains on the assets and liabilities being hedged. The
forward exchange agreements generally have maturities that
do not exceed six months.
The Company sells at-the-money (spot) call options and buys
out-of-the-money (spot) put options on Canadian dollars,
British sterling and German marks. The strike rate of each
call option is set at the then-current exchange rate, and
the strike rate of each put option purchased is set at a
rate whereby the premium received on the related call option
exactly offsets the premium paid for such put option,
resulting in no out-of-the-pocket cost. With the exception
of the strike rates, all terms of the call and put are
identical. The notional amount of each option is an amount
that will generally produce offsetting gains or losses (on
an aftertax basis) to the gains or losses produced by the
underlying net investment. Further, the combination of
these instruments (a so-called "no cost collar") is
effectively a partial hedge, as hedging gains or losses
occur only when the spot rates fluctuate outside the range
of the respective strike rates. These option transactions
generally have a maturity of three to six months.
At December 31, 1995 and 1994, the Company had purchased
options to deliver British pounds, Canadian dollars, and
German marks in exchange for US$391.5 and $380.5,
respectively. Concurrently, the Company had sold options to
buy British pounds, Canadian dollars, and German marks in
exchange for US$393.3 and $381.1 in 1995 and 1994,
respectively. Additionally, the Company had two forward
sales of German marks outstanding at year-end 1995 and 1994,
obligating the Company to deliver DM107.0 and DM140.0 in
exchange for US$75.5 and US$90.2, respectively.
The Company accrued pretax gains of $1.2 at December 31,
1995 and $6.2 in 1994, on open options. All hedge gains and
losses, including the mark to spot on open options, are
recognized in a separate component of equity.
There were no gains or losses recognized in net income
attributable to the above hedging programs during the three
years ended December 31, 1995. Prospectively, gains and
losses in excess of the amount needed to offset gains or
losses on investments in foreign subsidiaries due to
currency fluctuations are not likely given the above hedging
strategy.
The Company utilizes interest-rate swaps to allow it to
match fund its variable-rate receivables with variable-rate
debt. The agreements effectively changed interest rates on
certain medium-term notes issued by the Company to variable
commercial paper or LIBOR indices, with interest received
exactly offsetting interest paid on medium-term notes. The
risks inherent in interest-rate swaps are the potential
inability of a counterparty to meet the terms of each
contract. The Company's agreements to exchange fixed and
floating, or floating versus floating, interest-rate
payments are with major international financial institutions
that are expected to fully perform under the terms of the
agreements, thereby mitigating credit risk from the
transactions.
The amounts to be paid or received under the agreements are
accrued in interest expense consistent with the terms of the
agreements. At December 31, 1995, accrued interest payable
related to these interest-rate swaps totaled $26.4, which is
offset by $25.7 of accrued interest receivable.
Additionally in 1995, foreign subsidiaries of the Company
entered into forward rate agreements (FRA) as hedges against
variable interest rate exposures. As of December 31, 1995,
the subsidiaries had $27.0 of such FRAs whereby they locked
in a weighted average fixed payable rate of 7.00%. These
agreements will all expire during the first quarter of 1996.
The impacts of the hedging activities on the Company's
weighted average borrowing rates and on the reported
interest expense were as follows: .05% and $5.4 in 1995;
.05% and $4.7 in 1994; and .04% and $3.4 in 1993.
The following table summarizes the interest-rate swaps
outstanding at December 31, 1995:
Weighted Average Weighted
Notional Interest Rates Average
Amount Pay Receive Maturity*
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Pay fixed-rate - receive
floating rate $ 777.3 7.33% 6.24% 1.9
Pay floating-rate -
receive fixed-rate 332.5 6.60 7.35 5.3
Pay floating-rate -
receive floating-rate 1,746.0 5.89 5.57 1.1
Total $2,855.8 6.36 5.96 1.8
*Remaining term in years.
24.CONCENTRATIONS OF CREDIT RISK
Concentrations of credit risk with respect to finance
receivables are limited because the Company's subsidiaries
primarily lend to consumers across many different geographic
areas. The highest percentage of owned receivables in any
geographic area is in California (16%), with no other state
or country having more than 7%. About 80% of receivables in
California are real estate secured, compared with 50% for
the overall system. Second mortgage loans are generally
limited to 75% of the appraised value of the home as
determined by certified, independent appraisers. In the
case of first mortgages, the lending cap is 80%. In
addition, a rigorous discipline of credit approval is
enforced regarding borrower debt-to-income ratios and
overall consumer credit quality.
In meeting the financing needs of its customers,
subsidiaries of the Company issue commitments to extend
additional credit to customers under revolving real estate
and sales finance contracts as long as there is no violation
of any conditions established in the contract. The
commitments generally have fixed expiration dates or other
termination clauses and generally require payment of a fee.
The Company uses the same credit procedures when entering
into such commitments as it does for traditional lending
products. At December 31, 1995, committed lines totaled
$12,741.2, compared with $10,597.6 at year-end 1994, of
which 54% at the end of 1995 was available for further
loans. A large majority of these commitments expire without
being exercised. As a result, total contractual commitments
do not represent future credit exposure of liquidity
requirements.
25.LEASES
The consumer finance system operates from premises under
leases generally having an original term of five years with
a renewal option for a like term. The Company leases its
headquarters in Wilmington, Delaware, under a lease expiring
in 2005, with options to extend the lease totaling 25 years.
Also, a subsidiary leases an office complex in Peapack,
N.J., with a primary term expiring in 2010 and renewal
options totaling 47 years. Data processing equipment lease
terms range from one to four years and are generally
renewable. The minimum rental commitments under
noncancelable operating leases at December 31, 1995, were as
follows:
</TABLE>
<TABLE>
<S> <C>
1996 $ 57.8
1997 52.0
1998 49.6
1999 44.3
2000 40.1
2001-2005 176.2
2006-2018 136.2
Total $556.2
26.FAIR VALUE OF FINANCIAL INSTRUMENTS
The information provided below is required by SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments."
These amounts represent estimates of fair value of financial
instruments at a point in time. Significant estimates using
available market information and appropriate valuation
methodologies were used for the purposes of this disclosure.
The estimates are not necessarily indicative of the amounts
the Company could realize in a current market exchange, and
the use of different market assumptions or methodologies
could have a material effect on the estimated fair value
amounts.
1995 1994
Carrying Estimated Carrying Estimated
At December 31 Value Fair Value Value Fair Value
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Assets
Cash and Equivalents $ 273 $ 273 $ 189 $ 189
Investment Securities 1,491 1,492 1,306 1,240
Finance Receivables, Net 13,010 14,074 11,991 12,695
Liabilities
Short-Term Debt 4,024 4,024 3,474 3,474
Deposits 642 642 654 654
Long-Term Debt 7,793 8,109 7,325 7,286
Accounts Payable 490 490 439 439
December 31
1995 1994
</TABLE>
<TABLE>
<S> <C> <C>
Net Unrealized Loss on Derivative
Financial Instruments $22 $3
The fair value of investment securities is based on quoted market
prices. The fair market valuation of real estate secured and
personal unsecured loans was estimated by discounting the
future cash flows over the estimated remaining term, based
on past cash collection experience. For credit cards and sales
finance products, the carrying amount is a reasonable estimate of
fair value. The discount factor was determined by taking into
consideration current funding costs, chargeoff experience, and
premiums paid on acquisitions of receivables with similar
characteristics.
Demand deposits are shown at their face values. For
short-term and long-term debt, the fair values are
estimated, using the interest rates currently offered
for debt with similar terms and remaining maturities.
The estimated fair value of accounts payable approximates
their carrying value. The fair value of interest-rate
swap agreements, forward exchange contracts and
foreign-exchange options is the estimated amount the
Company would receive or pay to terminate the
agreements at the balance sheet date, taking into account
current interest rates, foreign exchange rates, and the
creditworthiness of the counterparties.
The fair value estimates presented were based on
information available to the Company at December 31,
1995 and 1994. While management is not aware of any
significant factors that would affect the year-end
1995 estimate since that date, current estimates of
fair value could differ significantly from the amounts
disclosed.
27.CONTINGENT LIABILITIES
In July 1992, the Internal Revenue Service completed
its examination of the Company's federal income tax
returns for 1984 through 1987 and proposed certain
adjustments that relate principally to activities of
the Company's former subsidiary, American Centennial
Insurance Company (ACIC), prior to its sale. The
Company sold its entire interest in ACIC in May 1987.
The IRS has proposed, among other items, $142.0 in
adjustments relating to 1986 and 1987 ACIC additions
to loss reserves. In order to limit the further accrual
of interest on the proposed adjustments, the Company paid
$105.5 of tax and interest during the third quarter of
1992.
The Company's management and independent tax
advisers believe that certain of the IRS's proposed
adjustments are without merit and that in other instances
the IRS's position is unlikely to be sustained in the
amounts proposed. The Company is in the process of
contesting the proposed adjustments within the
administrative appeals process of the IRS and is
prepared to litigate if necessary. While the conclusion
of this matter cannot be predicted with certainty,
management does not anticipate the ultimate
resolution to differ materially from amounts
accrued. Resolution is not expected to occur within one
year.
BENEFICIAL CORPORATION AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
(in millions, except per share amounts)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Quarter Ended 3/31 6/30 9/30 12/31
1995
Gross Revenue $560.2 $594.2 $606.4 $637.4
Income before Income Taxes 35.1 106.4 101.9 27.0
Net Income 20.7 62.8 60.1 6.9
Earnings per Common Share .37 1.15 1.10 .10
Dividends per Common Share .43 .43 .47 .47
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
1994
Gross Revenue $537.2 $511.1 $528.0 $561.1
Income before Income Taxes 105.0 96.9 87.1 37.1
Net Income 60.9 56.2 51.4 9.2
Earnings per Common Share 1.13 1.05 .95 .15
Dividends per Common Share .38 .38 .43 .43
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS.
Executive Officers of the Registrant
</TABLE>
<TABLE>
<S> <C> <C>
Name Age Position and Offices Held as of March 1, 1996
Finn M. W. Caspersen 54 Director (1975 to present), Chairman of the Board
of Directors, Chief Executive Officer, and
Chairman of Executive Committee (1976 to present),
Member of Executive Committee (1975 to present),
and Member of Finance Committee (1975 to present)
of the Company.
David J. Farris 60 Director (1982 to present), Member of Office
of the President (1984 to present), Chief
Operating Officer (1987 to present), Member of
Executive Committee (1983 to present), and
Member of Finance Committee (1988 to present)
of the Company; President and Chief Executive
Officer (1982 to present) of Beneficial
Management Corporation, a subsidiary of the
Company.
James H. Gilliam, Jr. 50 Director (1984 to present), Executive Vice
President (1989 to present), General Counsel
(1986 to present), Secretary (1987 to 1992),
and Member of Executive Committee (1987 to
present) of the Company; Chairman (1987 to
present) of Beneficial National Bank, a
subsidiary of the Company.
Andrew C. Halvorsen 49 Director (1984 to present), Member of Office
of the President, First Vice President, and
Chief Financial Officer (1986 to present), and
Member of Executive and Finance Committees
(1984 to present) of the Company.
Ronald E. Bombolis 47 Senior Vice President, Controller and Chief
Accounting Officer (1992 to present) of the
Company; Vice President and Controller (1985
to 1992) of Beneficial Management Corporation,
a subsidiary of the Company.
Samuel F. McMillan 41 Senior Vice President and Treasurer (1995 to
present); Assistant Vice President (1988 to
1991) of the Company; Vice President -
Capital Markets (1992 to 1995) of
Beneficial Management Corporation,
a subsidiary of the Company.
Scott A. Siebels 41 Vice President and Secretary (1995 to present)
and Associate Counsel (1990 to present);
Assistant Vice President (1993 to 1995); and
Assistant Secretary (1991 to 1995) of the Company.
Robert G. Heinle 49 Vice President - Tax (1988 to present) of the
Company.
J.C. Heywood 49 Executive Vice President (1996), Senior Vice
President - Operating (1992 to 1995) of Beneficial
Management Corporation, a subsidiary of the
Company; Group President North Central Group
(1984 to 1992) of Beneficial Management
Corporation of America, a subsidiary of
the Company.
Michael J. Mayer 52 Executive Vice President (1996) and head of
Marketing and Business Development (1993 to
present); Senior Vice President (1993 to 1995)
of Beneficial Management Corporation, a
subsidiary of the Company; Vice President -
Consumer Credit Marketing (1986 to 1993) of
Beneficial Management Corporation of America,
a subsidiary of the Company.
Michael A. Woodall 48 Executive Vice President (1996) of Beneficial
Management Corporation, a subsidiary of the
Company; Group President - International
(1994 to present); Chief Executive Officer
and a Director (1991 to present); Group
President - United Kingdom (1991 to 1994) of
Beneficial Bank PLC, a subsidiary of the
Company; Managing Director, Avco Trust plc
(1988 - 1991).
Officers named hold office until the next Annual
Meeting of the Directors, to be held May 23, 1996, or
until their successors are otherwise elected as provided in
the By-Laws.
Information required under this Item relating to
disclosure of delinquent filers pursuant to Item 405
of Regulation S-K and to the directors of the Company
will be contained in the Company's Proxy Statement for the
1996 Annual Meeting of Stockholders, which is
incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION.
Information required under this Item will be contained
in the Company's Proxy Statement for the 1996 Annual
Meeting of Stockholders, which is incorporated herein by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required under this Item will be contained
in the Company's Proxy Statement for the 1996 Annual
Meeting of Stockholders, which is incorporated herein by
reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required under this Item will be contained
in the Company's Proxy Statement for the 1996 Annual
Meeting of Stockholders, which is incorporated herein by
reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
The following represents a listing of all financial
statements, financial statement schedules, and exhibits filed
as part of this report.
(1) Financial Statements
The following financial statements of
Beneficial Corporation and Subsidiaries and
Independent Auditors' Report are included in Item 8:
Independent Auditors' Report.
Balance Sheet at December 31, 1995 and 1994.
Statement of Income and Retained Earnings for
the three years ended December 31, 1995.
Statement of Cash Flows for the three years
ended December 31, 1995.
Notes to Financial Statements.
Selected Quarterly Financial Data (unaudited).
(2) Financial Statement Schedules
Schedule II Valuation and Qualifying Accounts and
Reserves.
(3) Exhibits
The Exhibit Index on pages 51-53 of this Annual
Report on Form 10-K lists the exhibits that are filed
as part of this report.
The Company filed the following reports on Form 8-K during
the last quarter of the period covered by this report:
(1) A report on Form 8-K, dated October 24, 1995,
was filed with respect to the Company's earnings for
the third quarter of 1995.
(2) A report on Form 8-K, dated December 14, 1995,
was filed with respect to the Company's announcement of
its intent to retain its German consumer
banking subsidiary, BFK Bank AG (BFK).
BENEFICIAL CORPORATION
SUPPLEMENTAL FINANCIAL DATA
The Financial Statements and Notes to Financial
Statements of Beneficial Corporation and Subsidiaries are
supplemented by the information in the following Schedule
II. All other schedules are omitted because of the
absence of the conditions under which they are
required or because all material information called
for is set forth in the Financial Statements and the Notes
referred to in this Item.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Years Ended December 31, 1995, 1994, and 1993
(in millions)
Additions
Column A Column B Column C Column D Column E
Charged
Balance at Charged (Credited) Balance
Beginning Costs and to Other at End
Description of Year Expenses Accounts Deductions of Year
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
YEAR ENDED
DECEMBER 31, 1995
Reserves shown
separately:
Insurance policy
and claim reserves:
Policy reserves $1,041.5 $ -- $188.1(A) $152.7(C) $1,210.6
133.7(B)
Claim reserves 43.2 80.4(D) -- 68.7(E) 54.9
Total $1,084.7 $ 80.4 $321.8 $221.4 $1,265.5
Allowance for credit
losses on finance
receivables $ 331.6 $295.2 $ 3.7 $224.4(F) $ 406.1
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
YEAR ENDED
DECEMBER 31, 1994
Reserves shown
separately:
Insurance policy
and claim reserves:
Policy reserves $ 880.0 $ -- $172.2(A) $143.7(C) $1,041.5
133.0(B)
Claim reserves 35.7 86.5(D) -- 79.0(E) 43.2
Total $ 915.7 $ 86.5 $305.2 $222.7 $1,084.7
Allowance for credit
losses on finance
receivables $ 279.0 $236.7 $ 2.6 $186.7(F) $ 331.6
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
YEAR ENDED
DECEMBER 31, 1993
Reserves shown
separately:
Insurance policy
and claim reserves:
Policy reserves $ 664.8 $ -- $161.0(A) $116.5(C) $ 880.0
170.7(B)
Claim reserves 30.4 75.9(D) -- 70.6(E) 35.7
Total $ 695.2 $ 75.9 $331.7 $187.1 $ 915.7
Allowance for credit
losses on finance
receivables $ 262.4 $171.8 $ (6.1) $149.1(F) $ 279.0
NOTES
(A) Net premiums written and reinsurance assumed.
(B) Premiums collected on annuity contracts
(C) Earned premiums.
(D) Provision for insurance claims.
(E) Claims paid.
(F) Finance receivables charged off (after offsetting recoveries)
during the period.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BENEFICIAL CORPORATION
Date: March 18, 1996 By /s/ Andrew C. Halvorsen
Andrew C. Halvorsen, Member of the
Office of the President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and the
capacities and on the dates indicated.
</TABLE>
<TABLE>
<S> <C> <C>
Signature Title Date
Chairman of the Board
of Directors and Chief
Executive Officer and
Director (Principal
X Executive Officer) March 18, 1996
(Finn M.W. Caspersen)
Member of the Office of
the President and Director
/s/ Andrew C. Halvorsen (Principal Financial Officer) March 18, 1996
(Andrew C. Halvorsen)
Senior Vice President and
and Controller (Principal
/s/ Ronald E. Bombolis Accounting Officer) March 18, 1996
(Ronald E. Bombolis)
X Director March 18, 1996
(Charles W. Bower)
X Director March 18, 1996
(Robert J. Callander)
X Director March 18, 1996
(Robert C. Cannada)
X Director March 18, 1996
(Leonard S. Coleman, Jr.)
X Director March 18, 1996
(David J. Farris)
X Director March 18, 1996
(James H. Gilliam, Jr.)
X Director March 18, 1996
(Roland A. Hernandez)
X Director March 18, 1996
(J. Robert Hillier)
X Director March 18, 1996
(Gerald L. Holm)
X Director March 18, 1996
(Thomas H. Kean)
X Director March 18, 1996
(Steven Muller)
X Director March 18, 1996
(Susan Julia Ross)
X Director March 18, 1996
(Robert A. Tucker)
X Director March 18, 1996
(Susan M. Wachter)
X Director March 18, 1996
(Charles H. Watts, II)
Director March , 1996
(K. Martin Worthy)
X Andrew C. Halvorsen, pursuant to Powers of Attorney
(executed by each of the directors listed above as signing)
filed with the Securities and Exchange Commission, does
hereby sign and execute this report on behalf of such
directors.
/s/ Andrew C. Halvorsen
Andrew C. Halvorsen
March 18, 1996
EXHIBIT INDEX
Exhibit
Number Exhibit
</TABLE>
<TABLE>
<S> <C>
3.1 Copy of the Company's Restated Certificate of
Incorporation, as amended, is incorporated by reference
to Exhibit 3.1 of the Annual Report on Form 10-K for
the year ended December 31, 1994.
3.2 Copy of the Company's By-Laws, as amended, is
incorporated by reference to Exhibit 3.2 of the Annual
Report on Form 10-K for the year ended December 31,
1990.
4 The principal amount of debt outstanding under any one
instrument defining the rights of holders of long-term
debt of the Company and its subsidiaries does not
exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis.
10 (a) Copy of form of agreement entered into between
Beneficial Corporation and key officers of the Company
and its subsidiaries is incorporated by reference to
Exhibit 10(e) of the Annual Report on Form 10-K for the
year ended December 31, 1981.
(b) Copy of Agreement of Amendment dated November 15,
1984 between Beneficial Corporation and key officers of
the Company and its subsidiaries, relating to Agreement
referred to in Exhibit 10(a) hereto, is incorporated by
reference to Exhibit 10(d) of the Annual Report on Form
10-K for the year ended December 31, 1984.
(c) Copy of form of letter agreement dated February 4,
1993 between Beneficial Corporation and key officers of
the Company and its subsidiaries amending the Agreement
referred to in Exhibit 10(a) hereto, is incorporated by
reference to Exhibit 10(c) of the Annual Report on Form
10-K for the year ended December 31, 1994.
(d) Copy of Lease, dated as of June 28, 1982, between
Hamilton Associates Limited Partnership and Beneficial
Management Corporation is incorporated by reference to
Exhibit 10(f) of the Annual Report on Form 10-K for the
year ended December 31, 1982.
(e) Guaranty, dated as of June 28, 1982, of Beneficial
Corporation relating to Lease included as Exhibit 10(d)
hereto is incorporated by reference to Exhibit 10(h) of
the Annual Report on Form 10-K for the year ended
December 31, 1982.
(f) Copies of Forms of Severance Agreements, dated
August 21, 1986, and Amendments thereto dated November
19, 1986, by and between Beneficial Corporation and its
executive officers are incorporated by reference to
Exhibit 10(r) of the Annual Report on 10-K for the year
ended December 31, 1986.
(g) Copy of form of letter agreement dated February 4,
1993 between Beneficial Corporation and certain
executive officers amending the Agreement referred to
in Exhibit 10(f) hereto, is incorporated by reference
to Exhibit 10(g) of the Annual Report on Form 10-K for
the year ended December 31, 1994.
(h) Copy of Form of Indemnification Agreement between
Beneficial Corporation and its directors, dated August
21, 1986, is incorporated by reference to Exhibit 10(s)
of the Annual Report on Form 10-K for the year ended
December 31, 1986.
(i) Copy of Annuity Plan between Beneficial Corporation
and its directors, dated December 4, 1986, is
incorporated by reference to Exhibit 10(t) of the
Annual Report on Form 10-K for the year ended December
31, 1986.
(j) Copy of the Company's Rights Plan is incorporated
by reference to Form 8-A filed with the Securities and
Exchange Commission on November 20, 1987, with respect
to the registration of Preferred Stock Purchase Rights.
(k) Copy of the Company's Amended and Restated Rights
Agreement is incorporated by reference to Form 8 filed
with the Securities and Exchange Commission on May 25,
1990.
(l) Copy of Agreement among H&R Block, Inc., Beneficial
Tax Masters Inc., Beneficial National Bank and
Beneficial Franchise Company Inc. dated August 22,
1991, relating to the Refund Anticipation Loan program
(confidential treatment was granted by the Securities
and Exchange Commission with respect to certain
portions of the Agreement) is incorporated by reference
to Exhibit 10(l) of the Annual Report on Form 10-K/A
(Amendment No. 1) for the year ended December 31, 1994.
(m) Copy of letter agreement dated December 6, 1994
amending the Agreement referred to in Exhibit 10(l)
(confidential treatment was granted by the Securities
and Exchange Commission with respect to certain
portions of the letter agreement) is incorporated by
reference to Exhibit 10(m) of the Annual Report on Form
10-K for the year ended December 31, 1994.
(n) Copy of letter agreement dated January 12, 1996
amending the letter agreement referred to in Exhibit 10
(m) Confidential treatment has been requested with
respect to certain portions of the letter agreement;
such portions will be separately filed with the
Securities and Exchange Commission.
(o) Copy of Beneficial Corporation Key Employees Stock
Bonus Plan, as amended, is incorporated by reference to
Exhibit 10(o) of the Annual Report on Form 10-K for the
year ended December 31, 1994.
(p) Copy of Beneficial Corporation 1990 Non-Qualified
Stock Option Plan, as amended, is incorporated by
reference to Exhibit 10(p) of the Annual Report on Form
10-K for the year ended December 31, 1994.
(q) Copy of Beneficial Corporation Supplemental Pension
Plan is incorporated by reference to Exhibit 10(n) of
the Annual Report on Form 10-K for the year ended
December 31, 1992.
(r) Copy of Beneficial Corporation Deferred
Compensation Plan is incorporated by reference to
Exhibit 10(r) of the Annual Report on Form 10-K for the
year ended December 31, 1994.
(s) Copy of letter agreement entered into by the
Company and MDE Associates, Inc. relating to personal
financial counseling services to be made available to
certain key officers of the Company and its
subsidiaries.
(t) Copy of Credit Agreement dated as of November 15,
1995 among Beneficial Corporation as a borrower and as
a guarantor, the borrowers defined in Article I, the
lenders defined in Article I, Bank of America National
Trust and Savings Association, Chemical Bank and Union
Bank of Switzerland as co-arrangers, and Credit Suisse
as administrative agent for the lenders.
11 Computation of Earnings per Common Share of Beneficial
Corporation and Subsidiaries.
12 Computation of Ratios of Earnings to Fixed Charges of
Beneficial Corporation and Subsidiaries (continuing
operations only).
21 List of the names and states of incorporation of
Beneficial's subsidiaries.
23 Consent of independent auditors.
24 Powers of Attorney.
27 Financial Data Schedule (in EDGAR filing only).
99 Form 11-K for the year ended December 31, 1995.
The Company agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of each instrument defining
the rights of holders of its long-term debt.
The Company will furnish to each stockholder, upon written
request, copies of the exhibits referred to above. Requests
should be addressed to Scott A. Siebels, Vice President and
Corporate Secretary, Beneficial Corporation, 301 North Walnut
Street, Wilmington, Delaware 19801.
EXHIBIT 10(n)
VIA FACSIMILE
January 12, 1996
Steven A. Christiansen
Corporate Counsel
H&R Block Tax Services, Inc.
4410 Main Street
Kansas City, MO 64111
Re: Amendment of December 6, 1994 Amendment to August 1991
Agreement with Block
Dear Steve:
This letter amends the December 6, 1994 Amendment to the
August 1991 Agreement (December 1994 Amendment) between H&R
Block Tax Services, Inc. ("Block"), Beneficial National Bank
("BNB"), Beneficial Tax Masters Inc. ("Tax Masters") and
Beneficial Franchise Company, Inc. ("Beneficial Franchise")
collectively "Beneficial".
As discussed, because of possible 1996 Tax Period IRS fraud
control measures which could result in substantial
withholding of EITC-based portions of a taxpayer's refund as
occurred during the 1995 Tax Period and the [
] of IRS split deposit programming, Block and Beneficial
agree to amend the December 1994 Amendment.
Accordingly, the December 1994 Amendment is hereby amended by
deleting from the second sentence of paragraph number 3 the
words "next sentence" and substituting in lieu thereof the
words "remainder of this paragraph" and deleting in their
entirety the third and fourth sentences in paragraph number 3
and inserting in lieu thereof the following:
Block and Beneficial further agree that if BNB has not
equalled or exceeded the approval percentages set forth
below using the [ ] Tax Period
Credit Criteria and credit scoring models for the
categories of the Tax Period 1995 RAL applicant
population as defined below, then [ ]
this December 1994 Amendment and BNB shall then
reimburse Block for the cost of retaining the consulting
firm referenced in subsection (d).
Using the Final Credit Criteria for Tax Period [
] set forth in Schedule II of the August 1991 Agreement
as modified from time to time and the Tax Season [
] credit scoring models, the BNB RAL approval rates for
the categories of Tax Period 1995 population of RAL
applicants in Block company-owned and corporate
satellite offices set forth below would at least have
been as follows:
Steven A. Christiansen
January 12, 1996
Page 2
(a) [ ] of Prior BNB RAL Applicants would have
been approved for Full RALs. For purposes of this
subsection (a), a "Full RAL" is a RAL for the entire
amount of a Prior BNB RAL Applicant's (as defined below)
federal income tax refund up to [ ] as calculated by
Block which refund amount does not include [
]). In addition, for purposes of this subsection (a),
"Prior BNB RAL Applicant" shall mean an approved or denied
1995 Tax Period RAL applicant through any Block company-owned
and corporate satellite office, whose federal tax refund was
at least [ ] [ ] and
whose 1994 tax refund was released during Tax Period 1995
by the IRS via Direct Deposit to his/her account at BNB
and which deposit [
].1
(b) [ ] of New RAL Applicants (defined as any Tax
Period 1995 RAL applicants who were not Prior BNB RAL
Applicants) who had at least a [ ] refund due [ ]
would have been approved for a [ ] plus fees RAL2
and of those who would have been approved up front for
such [ ] plus fees RAL if BNB's tax return based
prequalifying scorecard model had been used in such
Block offices in Tax Period 1995, [ ] of those who
then went forward with a RAL application to BNB would
have been approved for a higher RAL up to a maximum
amount of [ ] plus fees; and
(c) [ ] of New RAL Applicants who would not have
been approved up front if BNB's tax return based
prequalifying scorecard model had been used in such
Block offices in Tax Period 1995 and who had at least a
[ ] refund due [ ] would have
been approved for either a [ ] plus fees RAL or a
higher RAL up to a maximum amount of [ ] plus fees
after a second review by BNB.
-------------------------------
1In addition to the qualification criteria set forth in
this sentence, the 1995 Tax Period population of RAL
applicants through Block company-owned and corporate
satellite offices was subject to and reduced by certain
other exclusionary criteria which included [
].
2For qualified applicants having a refund due of less
than [ ] plus fees, the RAL amount (which includes
amounts to pay all fees) will equal the actual amount of
the refund due.
Steven A. Christiansen
January 12, 1996
Page 3
(d) For purposes of determining whether BNB
equalled or exceeded the approval percentages set forth
above using the credit criteria and credit scoring
models of Tax Period [
] for the categories of RAL
applicants set forth above, Block may retain at its
expense a qualified consulting firm of national
reputation mutually acceptable to both Block and
Beneficial to make such determination. Prior to
receiving any information from BNB, such consulting
firm shall enter into a Confidentiality Agreement with
BNB to permanently preserve the confidentiality of
information relating to the credit scoring models
provided by BNB or its affiliates as to all other
persons or entities including Block.
The undersigned parties have executed and delivered this
amendment to the December 1994 Amendment as of the date
indicated below.
Beneficial National Bank Beneficial Tax Masters Inc.
By: /s/ Wheeler K. Neff By: /s/ Elizabeth A. Dawson
Wheeler K. Neff Elizabeth A. Dawson
Senior Vice President Vice President
Beneficial Franchise Company Inc. H&R Block Tax Services, Inc.
By: /s/ Elizabeth A. Dawson By: /s/ Thomas L. Zimmerman
Elizabeth A. Dawson Thomas Zimmerman
Vice President Acting Head of Tax
Operations
EXHIBIT 10(s)
BENEFICIAL CORPORATION
LETTER OF AGREEMENT
WITH
MDE ASSOCIATES, INC.
FOR
PERSONAL FINANCIAL COUNSELING
Mr. Mitchell D. Eichen, Principal
MDE Associates, Inc.
7 Century Drive
Parsippany, New Jersey 07054
Dear Mr. Eichen:
By this Letter of Agreement (the "Agreement"),
Beneficial Corporation (sometimes hereinafter referred to as
the "Company"), wishes to engage MDE Associates, Inc.
(sometimes hereinafter referred to as MDE Associates) to
provide a comprehensive Personal Financial Counseling Service
to certain designated key executives of the Company and its
subsidiaries who enroll in MDE Associates' Personal
Financial Counseling Service under the terms of this
Agreement (the "Participants").
SERVICES PROVIDED BY MDE ASSOCIATES
1.For the members of the Executive Committee of
Beneficial Corporation and for the members of the
Senior Management Group, in the initial year of
participation MDE Associates shall provide each
Participant with the following personal financial
counseling services:
A. An introductory fact-finding meeting to assist
each Participant to complete his/her Fact Finder
check-list, to gather all additional necessary
information and to establish each Participant's
near-term and long-term goals, thereby encouraging
each Participant to become more actively involved
in the financial counseling process on an expedited
basis.
B. Preparation of a Complete Financial Management
binder, the first half of which shall include
comprehensive and individualized five-year tax, cash
flow, company benefit and net worth projections and,
where relevant, education funding and retirement
projections. Each set of projections shall include
a complete list of assumptions and recommendations.
Included in these assumptions and recommendations
shall be an analysis of each Participant's employee
benefits and MDE Associates' recommendations as to
ways in which his/her use of the Beneficial
Corporation employee benefit programs available to
the Participants could be maximized, within the
context of existing plan rules and limitations.
C. An individual working session wherein all of the
exhibits set forth in paragraph 1.B above shall be
thoroughly reviewed with each Participant.
D. Preparation of the second half of the Complete
Financial Management binder which shall include
comprehensive and individualized estate planning,
survivor income and other relevant projections. Each
set of projections shall include a complete list of
assumptions and comprehensive planning
recommendations.
E. A second individual meeting where all of the
exhibits set forth in Paragraph 1.D above shall be
thoroughly reviewed and discussed with each
Participant.
F. One additional follow-up meeting, for those
Participants who are members of the Executive
Committee only, wherein MDE Associates shall revise
and update all exhibits set forth in Paragraphs 1.B
& 1.D. above, review the same with the Participant
and ensure that the Participant agrees with, and
will begin to implement, the recommendations made
therein.
G. Continued proactive counseling, including
reasonable telephone consultation, which may be
reasonably required throughout the Participant's
participation in the Personal Financial Counseling
program.
2.For those individuals who are U.S. Group Presidents,
in the initial year of participation MDE Associates
shall provide each Participant with the following
personal financial counseling services:
A. Attendance at a full day group seminar to be
scheduled and arranged by the Company which shall
cover all relevant Personal Financial Counseling
disciplines.
B. An introductory fact finder meeting as more
fully described in paragraph 1.A above.
C. Preparation of a Complete Financial Management
binder including those exhibits more fully
described in paragraphs 1.B and 1.D above.
D. An individual working session as more fully
described in paragraph 1.C above.
E. Continuous proactive counseling as more fully
described in paragraph 1.G above.
3.After the initial year of participation in the
Personal Financial Counseling Service, all
Participants who are members of the Beneficial
Corporation Executive Committee shall be provided
with no fewer than three meetings per year; all
Participants who are members of the Senior Management
Group shall be provided with no fewer than two
meetings per year; and all Participants who are U.S.
Presidents shall be provided with no less than one
meeting per year. New sets of tax, cash flow, net
worth and other necessary and relevant exhibits,
along with complete sets of assumptions and
recommendations, shall be prepared for, and presented
during, each meeting.
A. To the extent more than one meeting is provided,
the meeting(s) in the first half of the year would
focus on near-term planning for the current year.
The meeting(s) held during the second half of the
year would focus on year-end and long-range
planning issues. New sets of five year exhibits,
which would focus on the attainment of long-term
goals, will be prepared for, and presented during,
the year-end meeting.
B. Continued proactive counseling, including
reasonable telephone consultation, which may be
reasonably required throughout the Participant's
participation in the Personal Financial Counseling
Service.
FEES
For those Participants who are members of the
Beneficial Corporation Executive Committee and members of
the Senior Management Group, the annual cost for the above
described service shall be $3,000 per Participant. For
those Participants who are U.S. Group Presidents the annual
cost for the above-described services shall be $2,000 per
Participant. The Company shall be notified in advance of
any future fee adjustments.
In addition to the above fees, MDE Associates shall be
reimbursed for all reasonable and necessary expenses related
to the services performed herein.
Invoices issued by MDE Associates pursuant to the terms
of this Agreement shall be directed to:
Marilyn A. Maher
Vice President - Corporate Benefits
Beneficial Management Corporation
200 Beneficial Center
Peapack, New Jersey 07977
OBLIGATIONS OF THE COMPANY
The Company agrees to provide MDE Associates with all
general written material on the Company's compensation and
benefits plans, as well as periodic information on changes in
these plans. Furthermore, the Company shall provide detailed
written information on each Participant's salary, stock
options, projected pension benefit, savings plan balances
and interest in any other company plans, including revised
data, from time to time, of each Participant who has
consented to such disclosure, when requested by MDE
Associates.
CONFIDENTIALITY
It is understood that all Beneficial Corporation and
individual Participant information and documentation shall be
maintained by MDE Associates on a confidential basis and
shall only be used in connection with advice and consultation
provided to the Participants. Such information shall not be
released to third parties unless so expressly authorized by
the Company and/or the Participants. No Participant's
personal information shall be discussed with the Company, or
any of its employees, unless expressly so authorized by the
Participant.
OTHER SERVICES
MDE Associates sells no financial products upon which
it earns a fee or commission. Except as otherwise provided
herein, to the extent a Participant needs and desires other
financial services such as money management, tax preparation,
estate planning documentation or other such similar services,
it is agreed that any other such services elected by the
Participant are not covered by the terms hereof and become
the Participant's independent contractual obligation for
which he or she shall be solely responsible.
NOTICES
All notices and other communications provided for by
this Agreement shall be in writing and shall be deemed to
have been given if mailed or transmitted by any standard form
of written telecommunication to the party entitled thereto at
the address stated below or to such other person at such
other address as may be designated in a notice mailed or
transmitted as aforesaid:
To the Company: One Christina Centre
301 North Walnut Street
Wilmington, Delaware 19801
Attention: Scott A. Siebels
Vice President and
Secretary
(Fax: 302 425-2518)
To MDE Associates: 7 Century Drive
Parsippany, NJ 07054
Attention: Mitchell D. Eichen
Principal
(Fax: 201 993-1902)
TERMINATION OF THIS AGREEMENT
It is understood that either party to this Agreement
may terminate the Agreement at any time upon written notice
to the other. Notice of termination shall be effective only
upon receipt thereof. MDE Associates' fees shall be prorated
to termination date.
Upon termination of this Agreement, MDE shall return
all individual data and worksheets to the respective
Participant, upon request of the Participant, and all Company
data to the Company. Following termination, MDE Associates
shall continue to respect the confidentiality of all
information and knowledge of the Company, its compensation
and benefit programs, and of the personal financial
information of Participants distributed during the term of
this Agreement, pursuant to its terms.
While MDE Associates shall use its best judgment and
information which it believes to be reliable in making its
recommendations to each Participant, actions taken by
Participants based upon such recommendations are done so at
their own risk. It is agreed that MDE Associates shall not
be liable on account of any action, omission, information, or
recommendation made within the context of the Personal
Financial Counseling Service, except for negligence or
misconduct. It is understood that the federal and state
securities laws impose liabilities under certain
circumstances on persons who act in good faith. Therefore,
nothing herein constitutes a waiver of, or limitation on, any
rights which the Participants may have under the federal
securities laws or other laws.
Very truly yours,
BENEFICIAL CORPORATION
Date: 10/9/95 /s/ Scott A. Siebels
Scott A. Siebels, Vice President
and Secretary
ACCEPTED BY: MDE ASSOCIATES, INC.
Date: 10/11/95 /s/ Mitchell D. Eichen
Mitchell D. Eichen, Principal
EXHIBIT 10(t)
CONFORMED COPY
CREDIT AGREEMENT
Dated as of November 15, 1995
among
THE BORROWERS NAMED HEREIN,
BENEFICIAL CORPORATION,
as the Guarantor
THE LENDERS NAMED HEREIN,
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
CHEMICAL BANK
and
UNION BANK OF SWITZERLAND,
as Co-Arrangers
and
CREDIT SUISSE,
as Administrative Agent and Arranger
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms 2
SECTION 1.02. Terms Generally 20
ARTICLE II
The Credits
SECTION 2.01. Commitments 20
SECTION 2.02. Loans 21
SECTION 2.03. Competitive Bid Procedure; Short- 24
Term Loans
SECTION 2.04. Borrowing Procedure 27
SECTION 2.05. Evidence of Debt; Repayment of 28
Loans
SECTION 2.06. Fees 29
SECTION 2.07. Interest on Loans 31
SECTION 2.08. Default Interest 32
SECTION 2.09. Alternate Rate of Interest 32
SECTION 2.10. Termination, Reduction and 33
Extension of Commitments
SECTION 2.11. Conversion and Continuation of 34
Borrowings
SECTION 2.12. Prepayment 36
SECTION 2.13. Reserve Requirements; Change in 37
Circumstances
SECTION 2.14. Change in Legality 40
SECTION 2.15. Indemnity 41
SECTION 2.16. Pro Rata Treatment 42
SECTION 2.17. Sharing of Setoffs 42
SECTION 2.18. Payments 43
SECTION 2.19. Taxes 44
SECTION 2.20. Assignment of Commitments Under 47
Certain Circumstances; Duty to
Mitigate
SECTION 2.21. Letters of Credit 48
SECTION 2.22. Increase of Commitments 54
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers 56
SECTION 3.02. Authorization 56
SECTION 3.03. Enforceability 56
SECTION 3.04. Governmental Approvals 57
SECTION 3.05. Financial Statements 57
SECTION 3.06. No Material Adverse Change 57
SECTION 3.07. Litigation; Compliance with Laws 57
SECTION 3.08. Agreements 58
SECTION 3.09. Federal Reserve Regulations 58
SECTION 3.10. Investment Company Act; Public 59
Utility Holding Company Act
SECTION 3.11. Use of Proceeds 59
SECTION 3.12. Tax Returns 59
SECTION 3.13. No Material Misstatements 59
SECTION 3.14. Employee Benefit Plans 59
SECTION 3.15. Environmental and Safety Matters 60
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Funding Events 60
SECTION 4.02. Closing Date 61
SECTION 4.03. First Funding Event in Respect of 63
Each Additional Subsidiary
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and 65
Properties
SECTION 5.02. Obligations and Taxes 66
SECTION 5.03. Financial Statements, Reports, etc. 66
SECTION 5.04. Litigation and Other Notices 68
SECTION 5.05. Employee Benefits 68
SECTION 5.06. Maintaining Records; Access to 69
Properties and Inspections
SECTION 5.07. Use of Proceeds 69
SECTION 5.08. Status of Obligations 69
SECTION 5.09. Business of Loan Parties and 69
Subsidiaries
ARTICLE VI
Negative Covenants
SECTION 6.01. Liens 70
SECTION 6.02. Sale and Lease-Back Transactions 73
SECTION 6.03. Mergers, Consolidations, Sales of 74
Assets and Acquisitions
SECTION 6.04. Consolidated Net Worth 75
ARTICLE VII
Events of Default 75
ARTICLE VIII
The Administrative 79
Agent
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices 82
SECTION 9.02. Survival of Agreement 83
SECTION 9.03. Binding Effect 83
SECTION 9.04. Successors and Assigns 83
SECTION 9.05. Expenses; Indemnity 88
SECTION 9.06. Right of Setoff 89
SECTION 9.07. Applicable Law 89
SECTION 9.08. Waivers; Amendment 89
SECTION 9.09. Interest Rate Limitation 91
SECTION 9.10. Entire Agreement 91
SECTION 9.11. Waiver of Jury Trial 91
SECTION 9.12. Severability 92
SECTION 9.13. Counterparts 92
SECTION 9.14. Headings 92
SECTION 9.15. Jurisdiction; Consent to Service 92
of Process
SECTION 9.16. Confidentiality 93
SECTION 9.17. Termination of the Existing Credit 94
Agreements
Schedule 1.01 Eligible Subsidiaries
Schedule 2.01 Lenders
Schedule 2.03 Short-Term Lenders
Schedule 3.07 Litigation
Schedule 4.02 Existing Credit Agreements
Exhibit A Form of Beneficial Corporation
Administrative Details Form
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D-1 Form of Competitive Bid Request
Exhibit D-2 Form of Competitive Bid
Exhibit D-3 Form of Competitive Bid Accept/
Reject Letter
Exhibit D-4 Form of Conversion/Continuation
Notice
Exhibit E Guarantee Agreement
Exhibit F Form of Opinion of Counsel
Exhibit G Form of Issuing Bank Agreement
Exhibit H Form of Additional Subsidiary
Agreement
CREDIT AGREEMENT dated as of
November 15, 1995, among BENEFICIAL
CORPORATION, a Delaware corporation
("Beneficial"), as a borrower and as a
guarantor (in such capacity, the "Guarantor"),
the Borrowers (as defined in Article I), the
Lenders (as defined in Article I), BANK OF
AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, CHEMICAL BANK and UNION BANK OF
SWITZERLAND, as co-arrangers (each, in such
capacity, a "Co-Arranger"), and CREDIT SUISSE,
as administrative agent (in such capacity,
the "Administrative Agent") for the Lenders.
The Borrowers have requested the Lenders to extend
credit in the form of Revolving Loans (such term and each
other capitalized term used but not defined herein having the
meaning given it in Article I) at any time and from time to
time prior to the Maturity Date, in an aggregate principal
amount at any time outstanding not in excess of
$3,000,000,000, as such amount may be reduced from time to
time pursuant to Section 2.10 or 2.20 or increased from time
to time pursuant to Section 2.22. The Borrowers have also
requested the Lenders to provide a procedure pursuant to
which each Borrower may invite the Lenders to bid on an
uncommitted basis on borrowings by such Borrower pursuant to
Section 2.03. The Borrowers have requested the Issuing Banks
to issue letters of credit, in an aggregate face amount at
any time outstanding not in excess of $50,000,000, to support
payment obligations incurred in the ordinary course of
business by the Borrowers. The proceeds of the Revolving
Loans, the Competitive Loans, the Short-Term Loans and the
Letters of Credit are to be used solely for general corporate
purposes of Beneficial, the Eligible Subsidiaries and,
subject to the provisions of Section 4.03, the Additional
Subsidiaries, and to provide liquidity for any of
Beneficial's commercial paper programs.
The Lenders are willing to extend such credit to
the Borrowers and the Issuing Banks are willing to issue
letters of credit for the account of the Borrowers on the
terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. Defined Terms. As used in this
Agreement, the following terms shall have the meanings
specified below:
"ABR Borrowing" shall mean a Borrowing comprised of
ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"Additional Subsidiaries" shall mean the Domestic
Subsidiaries of Beneficial added by Beneficial to Schedule
1.01 after the date hereof that are Consolidated
Subsidiaries. Beneficial shall promptly deliver to the
Administrative Agent any amendments to such Schedule 1.01.
"Additional Subsidiary Agreement" shall mean an
agreement executed and delivered by an Additional Subsidiary
pursuant to Section 4.03 in the form of Exhibit H.
"Adjusted CD Rate" shall mean, with respect to any
CD Borrowing for any Interest Period, an interest rate per
annum equal to the sum of:
(a) the rate per annum obtained by dividing (i) the
rate of interest determined by the Administrative Agent
to be the average (rounded upward to the nearest whole
multiple of 1/100 of 1% per annum, if such average is
not such a multiple) of the bid rates per annum, at 9:00
a.m., New York City time, (or as soon thereafter as
practicable) on the first day of such Interest Period,
of three certificate of deposit dealers of recognized
standing selected by the Administrative Agent for the
purchase at face value of negotiable dollar certificates
of deposit of the Administrative Agent in an amount
substantially equal to the Administrative Agent's CD
Loan made as part of such Borrowing and with a maturity
equal to such Interest Period, by (ii) a percentage
equal to 100% minus the Adjusted CD Rate Reserve
Percentage for such Interest Period, plus
(b) the Assessment Rate for such Interest Period.
The term "Adjusted CD Rate Reserve Percentage" for the
Interest Period for each CD Borrowing shall mean the reserve
percentage applicable on each day of such Interest Period
under regulations issued from time to time by the Board (or
any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for a
member bank of the Federal Reserve System in New York City
with deposits exceeding one billion dollars with respect to
liabilities consisting of or including (among other
liabilities) dollar non-personal time deposits in the United
States with a maturity equal to such Interest Period. The
term "Assessment Rate" for the Interest Period for each CD
Borrowing shall mean the lowest then-current annual
assessment rate, as determined by the Administrative Agent on
the first day of such Interest Period, that can be employed
by an insured domestic bank in determining amounts payable to
the Federal Deposit Insurance Corporation (or any successor)
for insuring time deposits made in dollars at such bank's
offices in the United States. The Adjusted CD Rate for the
Interest Period for each CD Borrowing shall be determined by
the Administrative Agent on the first day of such Interest
Period, subject, however, to the provisions of Section
2.09(b). Upon calculation of the Adjusted CD Rate for any
Interest Period in accordance herewith, the Administrative
Agent shall communicate such rate to Beneficial and to each
Lender.
"Administrative Agent" shall have the meaning
assigned to such term in the preamble.
"Administrative Agent Fees" shall have the meaning
assigned to such term in Section 2.06(b).
"Administrative Questionnaire" shall mean an
Administrative Details Form in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a
specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled
by or is under common Control with the Person specified.
"Agreement" shall mean this Credit Agreement, as
amended, supplemented or otherwise modified from time to
time.
"Aggregate Revolving Credit Exposure" shall mean
the aggregate amount of the Lenders' Revolving Credit
Exposures.
"Alternate Base Rate" shall mean, for any day, a
rate per annum equal to the greater of (a) the Base Rate in
effect on such day and (b) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. If for any reason the
Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability of the Administrative
Agent to obtain sufficient quotations in accordance with the
terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the first sentence of this
definition, until the circumstances giving rise to such
inability no longer exist. Any change
in the Alternate Base Rate due to a change in the Base Rate
or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Base Rate or the Federal
Funds Effective Rate, respectively. The term "Base Rate"
shall mean, for any day, a fluctuating rate of interest per
annum equal to that rate of interest from time to time
announced by the Administrative Agent at its principal office
in New York as its base rate.
"Applicable Percentage" shall mean, for any day,
with respect to any Eurodollar Loan (other than any
Eurodollar Competitive Loan) or CD Loan, or with respect to
the Facility Fees or the Utilization Fees, as the case may
be, the applicable percentage set forth below under the
caption "Eurodollar Spread", "CD Spread", "Facility Fee
Percentage" or "Utilization Fee Percentage", as the case may
be, based upon the ratings by S&P and Moody's, respectively,
applicable on such date to the Index Debt:
Facility Utilization
Eurodollar CD Fee Fee
Spread Spread Percentage Percentage
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Category 1
At least
AA- from S&P or
Aa3 from Moody's .185% .310% .065% .000%
Category 2
A+ from S&P or
A1 from Moody's .200% .325% .080% .000%
Category 3
A or A- from S&P
or A2 or A3 from
Moody's .210% .335% .090% .050%
Category 4
BBB+ or BBB from
S&P or
Baa1 or Baa2 from
Moody's .325% .450% .125% .050%
Category 5
BBB- or lower
from S&P and
Baa3 or lower
from Moody's .425% .550% .200% .050%
For purposes of the foregoing, (i) if either
Moody's or S&P shall not have in effect a rating for the
Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition), then
such rating agency shall be deemed to have established a
rating in Category 5; (ii) if the ratings established or
deemed to have been established by Moody's and S&P for the
Index Debt shall fall within different Categories, the
Applicable Percentage shall be based on the higher of the two
ratings; and (iii) if the ratings established or deemed to
have been established by Moody's and S&P for the Index Debt
shall be changed (other than as a result of a change in the
rating system of Moody's or S&P), such change shall be
effective as of the date on which it is first announced by
the applicable rating agency. Each change in the Applicable
Percentage shall apply during the period commencing on the
effective date of such change and ending on the date
immediately preceding the effective date of the next such
change. If the rating system of Moody's or S&P shall change,
or if either such rating agency shall cease to be in the
business of rating corporate debt obligations, Beneficial and
the Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the non-
availability of ratings from such rating agency and, pending
the effectiveness of any such amendment, the Applicable
Percentage shall be determined by reference to the rating
most recently in effect prior to such change or cessation.
"Assignment and Acceptance" shall mean an
assignment and acceptance entered into by a Lender and an
assignee, and accepted by the Administrative Agent, in the
form of Exhibit B or such other form as shall be approved by
the Administrative Agent.
"Board" shall mean the Board of Governors of the
Federal Reserve System of the United States of America.
"Borrowers" shall mean Beneficial, the Eligible
Subsidiaries and the Additional Subsidiaries. Any Eligible
Subsidiary or Additional Subsidiary that ceases to be a
Consolidated Subsidiary shall be excluded from this
definition and shall no longer be able to borrow or request
Letters of Credit hereunder.
"Borrowing" shall mean a group of Loans of a single
Type made by the Lenders (or, in the case of a Competitive
Borrowing or Short-Term Loans, by the Lender or Lenders whose
Competitive Bids or bids for Short-Term Loans have been
accepted pursuant to Section 2.03) on a single date and as to
which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by a
Borrower in accordance with the terms of Section 2.04 and
substantially in the form of Exhibit C.
"Business Day" shall mean any day other than a
Saturday, Sunday or day on which banks in New York City are
authorized or required by law to close; provided, however,
that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are
not open for dealings in dollar deposits in the London
interbank market.
"Capital Lease Obligations" of any Person shall
mean the obligations of such Person to pay rent or other
amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such
Person under GAAP, and the amount of such obligations shall
be the capitalized amount thereof determined in accordance
with GAAP.
"CD Borrowing" shall mean a Borrowing comprised of
CD Loans.
"CD Loan" shall mean any Loan bearing interest at a
rate determined by reference to the Adjusted CD Rate in
accordance with the provisions of Article II.
A "Change in Control" shall be deemed to have
occurred if:
(a) any person or group (within the meaning of Rule
13d-5 of the Securities Exchange Act of 1934 as in
effect on the date hereof) shall acquire beneficial
ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934 as in effect on the date
hereof) of shares representing more than 20% of the
aggregate ordinary voting power represented by the
issued and outstanding capital stock of Beneficial or
any corporation directly or indirectly Controlling
Beneficial, unless a majority of the Continuing
Directors approves the acquisition of such shares not
later than 10 days after such acquisition. The term
"Continuing Directors" shall mean the individuals who
were directors of Beneficial for the three calendar
months preceding the acquisition of beneficial ownership
of the shares described in the next preceding sentence;
(b) a majority of the seats (other than vacant
seats) on the board of directors of Beneficial or any
person directly or indirectly Controlling Beneficial
shall at any time be occupied by persons who were
neither (i) nominated by the board of directors of
Beneficial, nor (ii) appointed by directors so
nominated; or
(c) any change in control (or similar event,
however denominated) with respect to Beneficial, any
person directly or indirectly controlling Beneficial or
any Borrower shall occur under and as defined in any
indenture or agreement in respect of Indebtedness to
which Beneficial, any person directly or indirectly
controlling Beneficial or any Borrower is a party.
"Closing Date" shall mean the date of this
Agreement.
"Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
"Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Loans hereunder
as set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender assumed its
Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.10 or pursuant to
Section 2.20, (b) increased from time to time pursuant to
Section 2.22 and (c) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to
Section 9.04.
"Competitive Bid" shall mean an offer by a Lender
to make a Competitive Loan pursuant to Section 2.03(b) in the
form of Exhibit D-2.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by the applicable Borrower pursuant to
Section 2.03(d) in the form of Exhibit D-3.
"Competitive Bid Rate" shall mean, as to any
Competitive Bid, (i) in the case of a Eurodollar Competitive
Loan, the Margin, and (ii) in the case of a Fixed Rate Loan,
the fixed rate of interest offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" shall mean a request made
by a Borrower pursuant to Section 2.03(a) in the form of
Exhibit D-1.
"Competitive Borrowing" shall mean a Borrowing
consisting of a Competitive Loan or concurrent Competitive
Loans from the Lender or Lenders whose Competitive Bids for
such Borrowing have been accepted by the applicable Borrower
under the bidding procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan from a Lender
to a Borrower pursuant to the bidding procedure described in
Section 2.03. Each Competitive Loan shall be a Eurodollar
Competitive Loan or a Fixed Rate Loan.
"Confidential Information Memorandum" shall mean
the Confidential Information Memorandum of Beneficial dated
October 1995.
"Consolidated Net Worth" shall mean at any time the
Net Worth of Beneficial and the Consolidated Subsidiaries on
such date, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Subsidiary" shall mean any Subsidiary
the accounts of which are properly included in Beneficial's
consolidated financial statements in accordance with GAAP.
"Control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of
the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and
"Controlling" and "Controlled" shall have meanings
correlative thereto.
"Conversion/Continuation Notice" shall mean a
notice made by the applicable Borrower pursuant to Section
2.11 in the form of Exhibit D-4.
"Default" shall mean any event or condition which
upon notice, lapse of time or both would constitute an Event
of Default.
"dollars" or "$" shall mean lawful money of the
United States of America.
"Domestic Subsidiaries" shall mean all Subsidiaries
incorporated or organized under the laws of the United States
of America, any State thereof or the District of Columbia.
"Eligible Subsidiaries" shall mean the Domestic
Subsidiaries of Beneficial listed on Schedule 1.01 on the
date hereof that are Consolidated Subsidiaries.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as the same may be amended from time to
time.
"ERISA Affiliate" shall mean any trade or business
(whether or not incorporated) that, together with any Loan
Party, is treated as a single employer under Section 414(b)
or (c) of the Code, or solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable
event", as defined in Section 4043 of ERISA or the
regulations issued thereunder, with respect to a Plan; (b)
the adoption of any amendment to a Plan that would require
the provision of security pursuant to Section 401(a)(29) of
the Code or Section 307 of ERISA; (c) the existence with
respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (d) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with
respect to any Plan; (e) the incurrence of any liability
under Title IV of ERISA with respect to the termination of
any Plan or the withdrawal or partial withdrawal of any Loan
Party or any of its ERISA Affiliates from any Plan or
Multiemployer Plan; (f) the receipt by any Loan Party or any
ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to the intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (g) the
receipt by any Loan Party or any ERISA Affiliate of any
notice concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; (h) the occurrence of a "prohibited
transaction" with respect to which any Loan Party or any of
its Subsidiaries is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to which
any Loan Party or any such Subsidiary could otherwise be
liable; and (i) any other event or condition with respect to
a Plan or Multiemployer Plan that could reasonably be
expected to result in liability of any Loan Party.
"Eurodollar Borrowing" shall mean a Borrowing
comprised of Eurodollar Loans.
"Eurodollar Competitive Borrowing" shall mean a
Borrowing comprised of Eurodollar Competitive Loans.
"Eurodollar Competitive Loan" shall mean any
Competitive Loan bearing interest at a rate determined by
reference to LIBOR in accordance with the provisions of
Article II.
"Eurodollar Loan" shall mean any Eurodollar
Revolving Loan or Eurodollar Competitive Loan.
"Eurodollar Revolving Credit Borrowing" shall mean
a Borrowing comprised of Eurodollar Revolving Loans.
"Eurodollar Revolving Loan" shall mean any
Revolving Loan bearing interest at a rate determined by
reference to LIBOR in accordance with the provisions of
Article II.
"Event of Default" shall have the meaning assigned
to such term in Article VII.
"Existing Credit Agreements" shall mean the
existing bilateral credit agreements listed on Schedule 4.02.
"Facility Fee" shall have the meaning assigned to
such term in Section 2.06(a).
"Federal Funds Effective Rate" shall mean, for any
period, a fluctuating interest rate per annum equal for each
day during such period to (i) the weighted average of the
rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or, if such day is not a Business
Day, for the preceding Business Day) by the Federal Reserve
Bank of New York, or (ii) if such rate is not so published
for any day that is a Business Day, the average of the
quotations at approximately 11:00 a.m., New York City time,
for the day for such transactions received by the
Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
"Fee Letter" shall mean the Fee Letter dated
October 4, 1995, between Beneficial and the Administrative
Agent.
"Fees" shall mean the Facility Fees, the
Administrative Agent Fees, the L/C Participation Fees, the
Issuing Bank Fees and the Utilization Fees.
"Financial Officer" of any corporation shall mean
the chief financial officer, principal accounting officer,
Treasurer or Controller of such corporation.
"Fixed Rate Borrowing" shall mean a Borrowing
comprised of Fixed Rate Loans.
"Fixed Rate Loan" shall mean (a) any Competitive
Loan bearing interest at a fixed percentage rate per annum
(expressed in the form of a decimal to no more than four
decimal places) specified by the Lender making such Loan in
its Competitive Bid, and (b) any Short-Term Loan.
"Funding Event" shall have the meaning assigned to
such term in Section 4.01.
"GAAP" shall mean United States generally accepted
accounting principles applied on a consistent basis.
"Governmental Authority" shall mean any Federal,
state, local or foreign court or governmental agency,
authority, instrumentality or regulatory body.
"Guarantee" of or by any Person shall mean any
obligation, contingent or otherwise, of such Person
guaranteeing or having the economic effect of guaranteeing
any Indebtedness of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or to purchase (or to
advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase or lease
property, securities or services for the purpose of assuring
the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity
capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the
term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guarantee Agreement" shall mean the Guarantee
Agreement, substantially in the form of Exhibit E, made by
the Guarantor in favor of the Lenders.
"Indebtedness" of any Person shall mean, without
duplication, (a) all obligations of such Person for borrowed
money or with respect to deposits or advances of any kind,
(b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations
of such Person upon which interest charges are customarily
paid, (d) all obligations of such Person under conditional
sale or other title retention agreements relating to property
or assets purchased by such Person, (e) all obligations of
such Person issued or assumed as the deferred purchase price
of property or services (excluding trade accounts payable and
accrued obligations incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all
Guarantees by such Person of Indebtedness of others, (h) all
Capital Lease Obligations of such Person and (i) all
obligations of such Person as an account party in respect of
letters of credit and bankers' acceptances. The Indebtedness
of any Person shall include the Indebtedness of any
partnership in which such Person is a general partner.
"Index Debt" shall mean the senior, unsecured, non
credit enhanced, long-term indebtedness for borrowed money of
Beneficial.
"Interest Payment Date" shall mean, with respect to
any Loan, the last day of the Interest Period applicable to
the Borrowing of which such Loan is a part and, in the case of
a Eurodollar Borrowing with an Interest Period of more than
three months' duration or a CD Borrowing or Fixed Rate
Borrowing with an Interest Period of more than 90 days'
duration, each day that would have been an Interest Payment
Date had successive Interest Periods of three months' duration
or 90 days' duration, as the case may be, been applicable to
such Borrowing, and, in addition, the date of any prepayment
of such Borrowing or conversion of such Borrowing to a
Borrowing of a different Type.
"Interest Period" shall mean (a) as to any
Eurodollar Revolving Credit Borrowing, the period commencing
on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that
is 1, 2, 3 or 6 months (or, if Interest Periods of such
duration shall have been made available from each Lender, 9 or
12 months) thereafter, as the applicable Borrower may elect,
(b) as to any CD Borrowing, a period of 30, 60, 90 or 180
days' duration, as the applicable Borrower may elect,
commencing on the date of such Borrowing, (c) as to any ABR
Borrowing, the period commencing on the date of such Borrowing
and ending on the earliest of (i) the last Business Day of
each succeeding March, June, September or December, (ii) the
Maturity Date and (iii) the date such Borrowing is converted
to a Borrowing of a different Type in accordance with Section
2.11 or repaid or prepaid in accordance with Section 2.05 or
2.12, (d) as to any Fixed Rate Borrowing or Eurodollar Competitive
Borrowing, the period commencing on the date of such Borrowing and
ending on the date specified in the Competitive Bids in which the
offers to make the Fixed Rate Loans or the Eurodollar
Competitive Loans, as the case may be, comprising such
Borrowing were extended, which shall not be earlier than
seven days after the date of such Borrowing or later than 180
days in the case of any Fixed Rate Loans, or 6 months in the
case of any Eurodollar Competitive Loans, after the date of
such Borrowing and (e) as to any Short-Term Loan, the period
commencing on the date of such Loan and ending on the date
agreed upon by the applicable Borrower and Short-Term Lender,
which shall not be earlier than one day after the date of
such Loan or later than seven days after the date of such
Loan; provided, however, that if any Interest Period would
end on a day other than a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless,
in the case of a Eurodollar Borrowing only, such next
succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the
next preceding Business Day. Interest shall accrue from and
including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Issuing Bank" shall mean any Lender that becomes
an Issuing Bank pursuant to Section 2.21(i).
"Issuing Bank Fees" shall have the meaning
assigned to such term in Section 2.06(c).
"L/C Commitment" shall mean the commitment of each
Issuing Bank to issue Letters of Credit pursuant to Section
2.21.
"L/C Disbursement" shall mean a payment or
disbursement made by any Issuing Bank pursuant to a Letter of
Credit.
"L/C Exposure" shall mean at any time the sum of
(a) the aggregate undrawn amount of all outstanding Letters
of Credit at such time plus (b) the aggregate principal
amount of all L/C Disbursements that have not yet been
reimbursed at such time. The L/C Exposure of any Lender at
any time shall mean its Pro Rata Percentage of the aggregate
L/C Exposure at such time.
"L/C Participation Fees" shall have the meaning
assigned to such term in Section 2.06(c).
"Lenders" shall mean (a) the financial institutions
listed on Schedule 2.01 (other than any such financial
institution that has ceased to be a party hereto pursuant to
an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an
Assignment and Acceptance.
"Letter of Credit" shall mean any letter of credit
issued pursuant to Section 2.21.
"LIBOR" shall mean, for any Interest Period for
each Eurodollar Loan comprising part of the same Borrowing,
an interest rate per annum equal to the average (rounded
upwards to the nearest whole multiple 1/16 of 1% per annum,
if such average is not such a multiple) of the rate per annum
at which deposits in dollars are offered to the principal
office of each of the Reference Banks in London,
England in the London interbank market at 11:00 a.m., London
time, two Business days before the first day of such Interest
Period for a period equal to such Interest Period. LIBOR for
any Interest Period for each Eurodollar Loan comprising part
of the same Borrowing shall be determined by the
Administrative Agent on the basis of applicable rates
furnished to and received by the Administrative Agent from
the Reference Banks two Business Days before the first day of
such Interest Period. If any Reference Bank fails to provide
its rate to the Administrative Agent, LIBOR shall be
determined on the basis of the rate or rates of the other
Reference Bank or Banks, as the case may be. Upon
calculation of LIBOR for any Interest Period in accordance
herewith, the Administrative Agent shall communicate such
rate to Beneficial.
"Lien" shall mean, with respect to any asset, any
mortgage, deed of trust, lien, pledge, encumbrance, charge or
security interest in or on such asset.
"Loan Documents" shall mean this Agreement, any
promissory note issued pursuant to Section 2.05(e), any
Additional Subsidiary Agreement signed by an Additional
Subsidiary pursuant to Section 4.03, the Letters of Credit,
the Guarantee Agreement, the Fee Letter and all other
documents or instruments furnished or required to be
furnished pursuant hereto and thereto from time to time.
"Loan Parties" shall mean the Borrowers and the
Guarantor.
"Loans" shall mean the Revolving Loans, the
Competitive Loans and the Short-Term Loans.
"Margin" shall mean, as to any Eurodollar Competi
tive Loan, the margin (expressed as a percentage rate per
annum in the form of a decimal to no more than four decimal
places) to be added to or subtracted from LIBOR in order to
determine the interest rate applicable to such Loan, as
specified in the Competitive Bid relating to such Loan.
"Margin Stock" shall have the meaning assigned to
such term in Regulation U.
"Material Adverse Effect" shall mean (a) a
materially adverse effect on the business, assets,
operations, prospects or condition, financial or otherwise,
of Beneficial and the Subsidiaries taken as a whole, (b)
material impairment of the ability of any Loan Party to
perform any of its obligations under any Loan Document to
which it is or will be a party or (c) material impairment of
the rights of or benefits available to the Lenders under any
Loan Document.
"Maturity Date" shall mean the fifth anniversary of
the Closing Date, as such date may be extended in accordance
with Section 2.10(d).
"Moody's" shall mean Moody's Investors Service,
Inc.
"Multiemployer Plan" shall mean a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"Net Worth" with respect to any Person shall mean
all amounts which would be included under shareholder's
equity on a balance sheet of such Person, determined in
accordance with GAAP.
"Obligations" shall mean all obligations defined
as "Obligations" in the Guarantee Agreement.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation referred to and defined in ERISA.
"Person" shall mean any natural person,
corporation, business trust, joint venture, association,
limited liability company, limited liability partnership,
company, partnership or government, or any agency or
political subdivision thereof.
"Plan" shall mean any employee pension benefit
plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code
or Section 307 of ERISA, and in respect of which any Loan
Party or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to
be) an "employer" as defined in Section 3(5) of ERISA.
"Pro Rata Percentage" of any Lender at any time
shall mean the percentage of the Total Commitment
represented by such Lender's Commitment. In the event the
Commitments shall have expired or been terminated, the Pro
Rata Percentages shall be determined on the basis of the
Commitments most recently in effect, but giving effect to
any subsequent assignments pursuant to Section 9.04.
"Reference Banks" shall mean Credit Suisse,
Deutsche Bank AG and Morgan Guaranty Trust Company of New
York.
"Register" shall have the meaning given such term
in Section 9.04(d).
"Regulation G" shall mean Regulation G of the
Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the
Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the
Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"Required Lenders" shall mean, at any time,
Lenders having Commitments representing at least 66-2/3% of
the sum of all Commitments at such time or, for purposes of
acceleration pursuant to clause (ii) of the last paragraph
of Article VII (or if the Commitments shall have been
terminated in full and any Loans shall remain outstanding),
Lenders having Loans, L/C Exposures and unused Commitments
representing at least 66-2/3% of the sum of all loans
outstanding, L/C Exposures and unused Commitments, after
giving effect to the provision set forth in the penultimate
sentence of Section 2.16.
"Responsible Officer" of any corporation shall
mean any executive officer or Financial Officer of such
corporation and any other officer or similar official or
agent thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a
Borrowing comprised of Revolving Loans.
"Revolving Credit Exposure" shall mean, with
respect to any Lender at any time, the aggregate principal
amount at such time of all outstanding Revolving Loans of
such Lender, plus the aggregate amount at such time of such
Lender's L/C Exposure.
"Revolving Loans" shall mean the revolving loans
made by the Lenders to the Borrowers pursuant to Section 2.01
or Section 2.02(f). Each Revolving Loan shall be a
Eurodollar Revolving Loan, a CD Loan or an ABR Loan.
"Sale and Leaseback Transaction" shall mean any
arrangement with any Person pursuant to which Beneficial or
any Consolidated Subsidiary leases any property, real or
personal, that has been or is to be sold or transferred by
Beneficial or a Consolidated Subsidiary to such Person, other
than (1) temporary leases for a term, including renewals at
the option of the leasee, of not more than three years, (2)
leases between Beneficial and a Consolidated Subsidiary or
between Consolidated Subsidiaries, and (3) leases of property
executed by the time of, or within 12 months after the latest
of, the acquisition, the completion of construction or
improvement, or the commencement of commercial operation of
the property.
"Selected Subsidiaries" shall mean Beneficial
National Bank USA, Beneficial Management Corporation of
America, Beneficial Mortgage Corporation, Beneficial Canada
Holdings Inc. and Beneficial Bank Public Limited Company.
"Short-Term Lender" shall have the meaning
assigned to such term in Section 2.03(h).
"Short-Term Loans" shall have the meaning assigned
to such term in Section 2.03(h).
"Significant Subsidiary" shall mean any Subsidiary
that would be a "Significant Subsidiary" within the meaning
of Rule 1-02 of Regulation S-X promulgated by the Securities
and Exchange Commission.
"S&P" shall mean Standard & Poor's Ratings
Service, a division of McGraw-Hill, Inc.
"subsidiary" shall mean, with respect to any Person
(herein referred to as the "parent"), any corporation,
partnership, limited liability company, association or other
business entity (a) of which securities or other ownership
interests representing more than 50% of the ordinary voting
power or more than 50% of the general partnership interests
are, at the time any determination is being made, owned,
controlled or held by the parent or one or more subsidiaries
of the parent or by the parent and one or more subsidiaries
of the parent.
"Subsidiary" shall mean any subsidiary of
Beneficial.
"10% Subsidiaries" shall mean any Subsidiaries
that, individually or in the aggregate, have Net Worth
exceeding 10% of Consolidated Net Worth.
"Total Commitment" shall mean, at any time, the
aggregate amount of the Commitments, as in effect at such
time.
"Transactions" shall have the meaning assigned to
such term in Section 3.02.
"Type", when used in respect of any Loan or
Borrowing, shall refer to the Rate by reference to which
interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term
"Rate" shall include LIBOR, the Adjusted CD Rate and the
Alternate Base Rate.
"Utilization Fee" shall have the meaning assigned
to such term in Section 2.06(d).
"Value" shall mean, with respect to a Sale and
Leaseback Transaction, an amount equal to the net present
value of the lease payments with respect to the term of the
lease remaining on the date as of which the amount is being
determined, without regard to any renewal or extension
options contained in the lease, discounted at the Alternate
Base Rate in effect on the effective date of such Sale and
Leaseback Transaction.
"Withdrawal Liability" shall mean liability to a
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.02. Terms Generally. The definitions in
Section 1.01 shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by
the phrase "without limitation". All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall
otherwise require. Except as otherwise expressly provided
herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated,
supplemented or otherwise modified from time to time and (b)
all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to
time; provided, however, that for purposes of determining
compliance with the covenants contained in Article VI, all
accounting terms herein shall be interpreted and all
accounting determinations hereunder shall be made in
accordance with GAAP as in effect on the date of this
Agreement and applied on a basis consistent with the
application used in the financial statements referred to in
Section 3.05.
ARTICLE II. THE CREDITS
Section 2.01. Commitments. Subject to the terms
and conditions and relying upon the representations and
warranties herein set forth, each Lender agrees, severally
and not jointly, to make Revolving Loans to any Borrower, at
any time and from time to time on or after the date hereof,
and until the earlier of the Maturity Date and the
termination of the Commitment of such Lender in accordance
with the terms hereof, in an aggregate principal amount at
any time outstanding that will not result in (i) such
Lender's Revolving Credit Exposure exceeding (ii) such
Lender's Commitment minus the amount by which the outstanding
Competitive Borrowings and Short-Term Loans shall be deemed
to have utilized such Commitment in accordance with Section
2.16. Within the limits set forth in the preceding sentence
and subject to the terms, conditions and limitations set
forth herein, each Borrower may borrow, pay or prepay and
reborrow Revolving Loans.
Section 2.02. Loans. (a) Each Loan (other than
Competitive Loans and Short-Term Loans) shall be made as part
of a Borrowing consisting of Loans made by the Lenders
ratably in accordance with their respective Commitments;
provided, however, that the failure of any Lender to make any
Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however,
that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such
other Lender). Each Competitive Loan shall be made in
accordance with the procedures set forth in paragraphs (a)
through (g) of Section 2.03 and each Short-Term Loan shall be
made in accordance with the procedures set forth in Section
2.03(h). Except for Loans deemed made pursuant to Section
2.02(f), the Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) with respect to any
Borrowing, an integral multiple of $5,000,000 and not less
than $20,000,000 or (ii) equal to the remaining available
balance of the applicable Commitments.
(b) Subject to Sections 2.09 and 2.14, each
Competitive Borrowing shall be comprised entirely of
Eurodollar Competitive Loans or Fixed Rate Loans, and each
other Borrowing (other than a Short-Term Loan) shall be
comprised entirely of ABR Loans, CD Loans or Eurodollar Loans
as the applicable Borrower may request pursuant to Section
2.03 or 2.04, as applicable. Each Lender may at its option
make any Eurodollar Loan by causing any domestic or foreign
branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect
the obligation of the applicable Borrower to repay such Loan
in accordance with the terms of this Agreement. Borrowings of
more than one Type may be outstanding at the same time;
provided, however, that no Borrower shall be entitled to
request any Borrowing that, if made, would result, in the
aggregate, in more than six Eurodollar and CD Borrowings
being outstanding hereunder at any time. For purposes of the
foregoing, Borrowings having different Interest Periods,
regardless of whether they commence on the same date, shall
be considered separate Borrowings.
(c) Each Lender shall make each Loan (other than a
Short-Term Loan) to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds
to such account in New York City as the Administrative Agent
may designate not later than (i) in the case of an ABR
Borrowing, 1:00 p.m., New York City time, and (ii) in the
case of all other Borrowings, 11:00 a.m., New York City time,
and the Administrative Agent shall by (i) in the case of an
ABR Borrowing, 2:00 p.m., New York City time, and (ii) in the
case of all other Borrowings, 12:00 (noon), New York City
time, credit the amounts so received to an account in the
name of the applicable Borrower and designated by such
Borrower in the applicable Borrowing Request or Competitive
Bid Request or, if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not
have been met, return the amounts so received to the
respective Lenders.
(d) Unless the Administrative Agent shall have
received notice from a Lender prior to the date of any
proposed Borrowing (other than in the case of an ABR
Borrowing, in which case the Administrative Agent shall have
received notice from a Lender prior to 12:00 (noon), New York
City time, on the date of such proposed ABR Borrowing) that
such Lender will not make available to the Administrative
Agent such Lender's portion of such Borrowing, the
Administrative Agent may assume that such Lender has made
such portion available to the Administrative Agent on the
date of such Borrowing in accordance with paragraph (c) above
and the Administrative Agent may, in reliance upon such
assumption, make available to the applicable Borrower on such
date a corresponding amount. If the Administrative Agent
shall have so made funds available then, to the extent that
such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the applicable Borrower
severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is
made available to such Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of such
Borrower, the interest rate applicable at the time to the
Loans comprising such Borrowing and (ii) in the case of such
Lender, the Federal Funds Effective Rate in effect on such
repayment date. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount
shall constitute such Lender's Loan as part of such Borrowing
for purposes of this Agreement.
(e) Notwithstanding any other provision of this
Agreement, no Borrower shall be entitled to request any
Borrowing if the Interest Period requested with respect
thereto would end after the Maturity Date.
(f) If any Issuing Bank shall not have received
from the applicable Borrower any payment required to be made
by Section 2.21(e) in respect of an L/C Disbursement within
the time specified in such Section, such Issuing Bank will
promptly notify the Administrative Agent of such L/C
Disbursement and the Administrative Agent will promptly
notify each Lender of such L/C Disbursement and its Pro Rata
Percentage thereof. Each Lender shall pay by wire transfer
of immediately available funds to the Administrative Agent
not later than 2:00 p.m., New York City time, on such date
(or, if such Lender shall have received such notice later
than 12:00 (noon), New York City time, on any day, not later
than 10:00 a.m., New York City time, on the immediately
following Business Day), an amount equal to such Lender's Pro
Rata Percentage of such L/C Disbursement (it being understood
that such amount shall be deemed to constitute an ABR Loan of
such Lender and such payment shall be deemed to have reduced
the L/C Exposure), and the Administrative Agent will promptly
pay to such Issuing Bank amounts so received by it from the
Lenders. The Administrative Agent will promptly pay to such
Issuing Bank any amounts received by it from the applicable
Borrower pursuant to Section 2.21(e) prior to the time that
any Lender makes any payment pursuant to this paragraph (f);
any such amounts received by the Administrative Agent thereafter
will be promptly remitted by the Administrative Agent to the
Lenders that shall have made such payments and to such Issuing
Bank, as their interests may appear. If any Lender shall not
have paid its Pro Rata Percentage of such L/C Disbursement to
the Administrative Agent as provided above, such Lender and the
applicable Borrower severally agree to pay interest on such amount,
for each day from and including the date such amount is required
to be paid in accordance with this paragraph to but excluding
the date such amount is paid, to the Administrative Agent at
(i) in the case of such Borrower, a rate per annum equal to
the interest rate applicable to ABR Revolving Loans pursuant
to Section 2.07, and (ii) in the case of such Lender, for the
first such Business Day, the Federal Funds Effective Rate,
and for each day thereafter, the Alternate Base Rate.
Section 2.03. Competitive Bid Procedure; Short-Term
Loans. (a) In order to request Competitive Bids, the
applicable Borrower shall hand deliver or telecopy to the
Administrative Agent a duly completed Competitive Bid Request
(i) in the case of a Eurodollar Competitive Borrowing , not
later than 10:00 a.m., New York City time, four Business Days
before the proposed date of such Borrowing and (ii) in the
case of a Fixed Rate Borrowing, not later than 10:00 a.m.,
New York City time, one Business Day before the proposed date
of such Borrowing. A Competitive Bid Request shall not be
made within two Business Days after the date of any previous
Competitive Bid Request. No CD Loan or ABR Loan shall be
requested in, or made pursuant to, a Competitive Bid Request.
A Competitive Bid Request that does not conform substantially
to the format of Exhibit D-1 may be rejected by the
Administrative Agent and the Administrative Agent shall
promptly notify the applicable Borrower of such rejection by
telephone. Each Competitive Bid Request shall refer to this
Agreement and specify (i) whether the Borrowing being
requested is to be a Eurodollar Borrowing or a Fixed Rate
Borrowing; (ii) the date of such Borrowing (which shall be a
Business Day); (iii) the number and the location of the
account to which funds are to be disbursed (which shall be an
account that complies with the requirements of Section
2.02(c)); (iv) the aggregate principal amount of such
Borrowing, which shall be a minimum of $20,000,000 and an
integral multiple of $5,000,000; and (v) the Interest Period
with respect thereto (which may not end after the Maturity
Date). Promptly after its receipt of a Competitive Bid
Request that is not rejected, the Administrative Agent shall
by telecopy invite the Lenders to bid to make Competitive
Loans pursuant to the Competitive Bid Request.
(b) Each Lender may make one or more Competitive
Bids to the appropriate Borrower responsive to a Competitive
Bid Request. Each Competitive Bid by a Lender must be
received by the Administrative Agent by telecopy, (i) in the
case of a Eurodollar Competitive Borrowing, not later than
9:30 a.m., New York City time, three Business Days before the
proposed date of such Competitive Borrowing, and (ii) in the
case of a Fixed Rate Borrowing, not later than 9:30 a.m., New
York City time, on the proposed date of such Competitive
Borrowing. Competitive Bids that do not conform
substantially to the format of Exhibit D-2 may be rejected by
the Administrative Agent after conferring with the applicable
Borrower, and the Administrative Agent shall notify the
applicable Lender as promptly as practicable. Each
Competitive Bid shall refer to this Agreement and
specify (x) the principal amount (which shall be a minimum
principal amount of $5,000,000 and an integral multiple of
$1,000,000 and which may (A) equal the entire principal
amount of the Competitive Borrowing requested by the
appropriate Borrower and/or (B) exceed the Commitment of such
Lender) of the Competitive Loan or Loans that the Lender is
willing to make, (y) the Competitive Bid Rate or Rates at
which the Lender is prepared to make such Loan or Loans and
(z) the Interest Period applicable to such Loan or Loans and
the last day thereof. A Competitive Bid submitted by a
Lender pursuant to this paragraph (b) shall be irrevocable.
(c) The Administrative Agent shall promptly notify
the appropriate Borrower by telecopy of the Competitive Bid
Rate and the principal amount of each Competitive Loan in
respect of which a Competitive Bid shall have been made and
the identity of the Lender that shall have made each bid.
(d) The appropriate Borrower may in its sole and
absolute discretion, subject only to the provisions of this
paragraph (d), accept or reject any Competitive Bid. The
appropriate Borrower shall notify the Administrative Agent by
telephone, confirmed by telecopy in the form of a Competitive
Bid Accept/Reject Letter, whether and to what extent it has
decided to accept or reject each Competitive Bid, (x) in the
case of a Eurodollar Competitive Borrowing, not later than
10:30 a.m., New York City time, three Business days before
the date of the proposed Competitive Borrowing, and (y) in
the case of a Fixed Rate Borrowing, not later than 10:30
a.m., New York City time, on the proposed date of the
Competitive Borrowing; provided, however, that (i) the
failure of such Borrower to give such notice shall be deemed
to be a rejection of each Competitive Bid, (ii) such Borrower
shall not accept a Competitive Bid made at a particular
Competitive Bid Rate if such Borrower has decided to reject a
Competitive Bid made at a lower Competitive Bid Rate, (iii)
the aggregate amount of the Competitive Bids accepted by such
Borrower shall not exceed the principal amount specified in
the Competitive Bid Request, (iv) if such Borrower shall
accept a Competitive Bid or Bids made at a particular
Competitive Bid Rate but the amount of such Competitive Bid
or Bids would cause the total amount to be accepted by such
Borrower to exceed the amount specified in the Competitive
Bid Request, then such Borrower shall accept a portion of
such Competitive Bid or Bids in an amount equal to the amount
specified in the Competitive Bid Request less the amount of
all other Competitive Bids so accepted, which acceptance, in
the case of multiple Competitive Bids at such Competitive Bid
Rate, shall be made pro rata in accordance with the amount of
each such Bid, and (v) except pursuant to clause (iv) above,
no Competitive Bid shall be accepted for a Competitive Loan
unless such Competitive Loan is in a minimum principal amount
of $5,000,000 and an integral multiple of $1,000,000;
provided further, however, that if a Competitive Loan must be
in an amount less than $5,000,000 because of the provisions
of clause (iv) above, such Competitive Loan must be for a
minimum of $1,000,000 and any integral multiple thereof, and
in calculating the pro rata allocation of acceptances of
portions of multiple Competitive Bids at a particular
Competitive Bid Rate pursuant to clause (iv) the amounts
shall be rounded to integral multiples of $1,000,000 in a
manner determined by such Borrower. A notice given by the
applicable Borrower pursuant to this paragraph (d) shall
be irrevocable.
(e) The Administrative Agent shall promptly notify
each bidding Lender by telecopy whether or not its
Competitive Bid has been accepted (and, if so, in what amount
and at what Competitive Bid Rate), and each successful bidder
will thereupon become bound, upon the terms and subject to
the conditions hereof, to make the Competitive Loan in
respect of which its Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to
submit a Competitive Bid in its capacity as a Lender, it
shall submit such Competitive Bid directly to the applicable
Borrower at least one quarter of an hour earlier than the
time by which the other Lenders are required to submit their
Competitive Bids to the Administrative Agent pursuant to
paragraph (b) above.
(g) No Competitive Loan shall be made if the sum
of the Aggregate Revolving Credit Exposure and the aggregate
outstanding principal amount of the Competitive Loans and
Short-Term Loans will exceed the Total Commitment.
(h) Notwithstanding anything contained in this
Agreement to the contrary, any Borrower may request any
Lender that is listed on Schedule 2.03, which Schedule may be
amended from time to time by Beneficial (each, a "ShortTerm
Lender"), to submit directly a bid for a short-term loan
maturing in not more than seven days and bearing interest at
a percentage rate specified by the such Short-Term Lender
(each such Loan being called a "Short-Term Loan"). The
appropriate Borrower may accept or reject any bid for a Short-
Term Loan in its sole and absolute discretion. The aggregate
principal amount of any Short-Term Loan shall be a minimum of
$1,000,000 and an integral multiple thereof. The appropriate
Borrower and Short-Term Lenders shall notify the
Administrative Agent as to the terms, including the principal
amount and maturity, of any Short-Term Loan by no later than
3:00 p.m., New York City time, on the day the bid submitted
with respect to such Loan is accepted. No Short-Term Loan
shall be made if after giving effect thereto the sum of the
Aggregate Revolving Credit Exposure and the aggregate
outstanding principal amount of the Competitive Loans and
Short-Term Loans would exceed the Total Commitment.
Section 2.04. Borrowing Procedure. In order to
request a Borrowing (other than a Competitive Borrowing, a
Short-Term Loan or a deemed Borrowing pursuant to Section
2.02(f), as to which this Section 2.04 shall not apply), the
applicable Borrower shall hand deliver or telecopy to the
Administrative Agent a duly completed Borrowing Request (a)
in the case of a Eurodollar Borrowing, not later than 11:00
a.m., New York City time, three Business days before a
proposed Borrowing, (b) in the case of a CD Borrowing, not
later than 10:00 a.m., New York City time, two Business days
before a proposed Borrowing and (c) in the case of an
ABR Borrowing, not later than 10:00 a.m., New York City time,
on the date of a proposed Borrowing. Each Borrowing Request
shall be irrevocable, shall be signed by or on behalf of the
applicable Borrower and shall specify the following
information: (i) whether the Borrowing then being requested
is to be a Eurodollar Borrowing, a CD Borrowing or an ABR
Borrowing; (ii) the date of such Borrowing (which shall be a
Business Day), (iii) the number and location of
the account to which funds are to be disbursed (which shall
be an account that complies with the requirements of Section
2.02(c)); (iv) the amount of such Borrowing; and (v) if such
Borrowing is to be a Eurodollar Borrowing or CD Borrowing,
the Interest Period with respect thereto; provided, however,
that, notwithstanding any contrary specification in any
Borrowing Request, each requested Borrowing shall comply with
the requirements set forth in Section 2.02. If no election
as to the Type of Borrowing is specified in any such notice,
then the requested Borrowing shall be an ABR Borrowing. If
no Interest Period with respect to any Eurodollar Borrowing
or CD Borrowing is specified in any such notice, then the
applicable Borrower shall be deemed to have selected an
Interest Period of one month's duration, in the case of a
Eurodollar Borrowing, or 30 days' duration in the case of a
CD Borrowing. The Administrative Agent shall promptly advise
the Lenders of any notice given pursuant to this Section 2.04
(and the contents thereof), and of each Lender's portion of
the requested Borrowing.
Section 2.05. Evidence of Debt; Repayment of
Loans. (a) Each Borrower hereby unconditionally promises to
pay to the Administrative Agent for the account of each
Lender (i) the then unpaid principal amount of each
Competitive Loan, on the last day of the Interest Period
applicable to such Loan or, if earlier, on the Maturity Date
and (ii) the then unpaid principal amount of each Revolving
Loan on the Maturity Date. Each Borrower hereby
unconditionally promises to pay directly to the appropriate
Lender the then unpaid principal amount of each Short-Term
Loan, on the last day of the Interest Period applicable to
such Loan or, if earlier, on the Maturity Date.
(b) Each Lender shall maintain in accordance with
its usual practice, either mechanically or electronically, an
account or accounts evidencing the indebtedness of each
Borrower to such Lender resulting from each Loan made by such
Lender from time to time, including the amounts of principal
and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain
accounts in which it will record (i) the amount of each Loan
made hereunder, the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from
each Borrower to each Lender hereunder and (iii) the amount
of any sum received by the Administrative Agent hereunder
from each Borrower or the Guarantor and each Lender's share
thereof.
(d) The entries made in the accounts maintained
pursuant to paragraphs (b) and (c) above shall be prima facie
evidence of the existence and amounts of the obligations
therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the
obligations of the Borrowers to repay the Loans in accordance
with their terms; provided further, however, that in case of
any differences between the entries made in the accounts
maintained pursuant to paragraphs (b) and (c) above, the
appropriate Lender and the Administrative Agent shall
cooperate in good faith to reconcile such differences.
(e) Notwithstanding any other provision of this
Agreement, in the event any Lender shall request and receive
a promissory note payable to such Lender and its registered
assigns, the interests represented by such note shall at all
times (including after any assignment of all or part of such
interests pursuant to Section 9.04) be represented by one or
more promissory notes payable to the payee named therein or
its registered assigns.
Section 2.06. Fees. (a) Beneficial and the other
Borrowers agree, jointly and severally, to pay to each
Lender, through the Administrative Agent, on the last
Business Day of March, June, September and December in each
year, and on the date on which the Commitment of such Lender
shall expire or be terminated as provided herein (other than
upon an assignment pursuant to Section 9.04, in which case
payment shall be made on the next day that is the last
Business Day of March, June, September or December), a
facility fee (a "Facility Fee") equal to the Applicable
Percentage per annum in effect from time to time on the
average daily amount of the Commitment of such Lender
(whether used or unused) during the preceding quarter (or
shorter period commencing with the date hereof or ending with
the Maturity Date or the date on which the Commitment of such
Lender shall expire or be terminated). All Facility Fees
shall be computed on the basis of the actual number of days
elapsed in a year of 360 days. The Facility Fee due to each
Lender shall commence to accrue on the date of this Agreement
and shall cease to accrue on the date on which the Commitment
of such Lender shall expire or be terminated as provided
herein.
(b) Beneficial and the other Borrowers agree,
jointly and severally, to pay to the Administrative Agent,
for its own account, the fees set forth in the Fee Letter at
the times and in the amounts specified therein (the
"Administrative Agent Fees").
(c) Beneficial and the other Borrowers agree,
jointly and severally, to pay (i) to each Lender, through the
Administrative Agent, on the last Business Day of March,
June, September and December of each year and on the date on
which the Commitment of such Lender shall be terminated as
provided herein, a fee (an "L/C Participation Fee")
calculated on such Lender's Pro Rata Percentage of the
average daily aggregate L/C Exposure (excluding the portion
thereof attributable to unreimbursed L/C Disbursements)
during the preceding quarter (or shorter period commencing
with the date hereof or ending with the Maturity Date or the
date on which all Letters of Credit have been canceled or
have expired and the Commitments of all Lenders shall have
been terminated) at a rate equal to the Applicable Percentage
from time to time used to determine the interest rate on
Revolving Credit Borrowings comprised of Eurodollar Loans
pursuant to Section 2.07, and (ii) to each Issuing Bank with
respect to each Letter of Credit the fees agreed upon from
time to time by Beneficial and such Issuing Bank (the
"Issuing Bank Fees"). All L/C Participation Fees and Issuing
Bank Fees shall be computed on the basis of the actual number
of days elapsed in a year of 360 days.
(d) In the event that during any calendar quarter
(or other shorter period commencing with the date hereof or
ending with the Maturity Date or the date on which the
Commitment of a Lender shall expire or be terminated) the
average daily principal amount of Loans outstanding equals or
exceeds 50% of the average daily Total Commitment,
Beneficial and the other Borrowers agree, jointly and
severally, to pay each Lender, through the Administrative
Agent, on the last Business Day of such calendar quarter or
shorter period, a utilization fee (a "Utilization Fee") equal
to the Applicable Percentage per annum in effect from time to
time on the average daily amount of the Loans outstanding
during such calendar quarter or shorter period. All
Utilization Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days.
All Fees shall be paid on the due dates therefor as
provided herein, in immediately available funds, to the
Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Issuing Bank Fees shall be
paid directly to the Issuing Bank entitled thereto. Once
paid, none of the Fees shall be refundable under any
circumstances.
Section 2.07. Interest on Loans. (a) Subject to
the provisions of Section 2.08, the Loans comprising each ABR
Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days,
as the case may be) at a rate per annum equal to the
Alternate Base Rate.
(b) Subject to the provisions of Section 2.08, the
Loans comprising each CD Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to the
Adjusted CD Rate for the Interest Period in effect for such
Borrowing, plus the Applicable Percentage in effect from time
to time.
(c) Subject to the provisions of Section 2.08, the
Loans comprising each Eurodollar Borrowing shall bear
interest (computed on the basis of the actual number of days
elapsed over a year of 360 days) at a rate per annum equal to
(i) in the case of each Revolving Loan, LIBOR for the
Interest Period in effect for such Borrowing plus the
Applicable Percentage in effect from time to time, and (ii)
in the case of each Competitive Loan, LIBOR for the Interest
Period in effect for such Borrowing plus the Margin offered
by the Lender making such Loan and accepted by the applicable
Borrower pursuant to Section 2.03.
(d) Subject to the provisions of Section 2.08, each
Fixed Rate Loan and Short-Term Loan shall bear interest
(computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to the
fixed rate of interest offered by the Lender making such Loan
and accepted by the applicable Borrower pursuant to Section
2.03.
(e) Interest on each Loan shall be payable on the
Interest Payment Dates applicable to such Loan except as
otherwise provided in this Agreement. The applicable
Alternate Base Rate, Adjusted CD Rate or LIBOR for each
Interest Period or day within an Interest Period, as the case
may be, shall be determined by the Administrative Agent, and
such determination shall be conclusive absent manifest error.
Section 2.08. Default Interest. If any Borrower
shall default in the payment of the principal of or interest
on any Loan or any other amount becoming due hereunder, by
acceleration or otherwise, or under any other Loan Document,
such Borrower shall on demand from time to time pay interest,
to the extent permitted by law, on such defaulted amount to
but excluding the date of actual payment (after as well as
before judgment) (a) in the case of overdue principal, at the
rate otherwise applicable to such Loan pursuant to Section
2.07 plus 2.00% per annum and (b) in all other cases, at a
rate per annum (computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may
be, when determined by reference to the Base Rate and over a
year of 360 days at all other times) equal to the sum of the
Alternate Base Rate plus 2.00%.
Section 2.09. Alternate Rate of Interest. (a) In
the event, and on each occasion, that on the day two Business
days prior to the commencement of any Interest Period for a
Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of
the Loans comprising such Borrowing are not generally
available in the London interbank market, or that the rates
at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of
making or maintaining its Eurodollar Loan during such
Interest Period, or that reasonable means do not exist for
ascertaining LIBOR, the Administrative Agent shall, as soon
as practicable thereafter, give written or telecopy notice of
such determination to the Borrowers and the Lenders. In the
event of any such determination, until the Administrative
Agent shall have advised the Borrowers and the Lenders that
the circumstances giving rise to such notice no longer exist,
(i) any request by a Borrower for a Eurodollar Revolving
Credit Borrowing pursuant to Section 2.04 shall be deemed to
be a request for an ABR Borrowing and (ii) any request by the
applicable Borrower for a Eurodollar Competitive Borrowing
pursuant to Section 2.03 shall be of no force and effect and
shall be denied by the Administrative Agent. Each
determination by the Administrative Agent hereunder shall be
conclusive absent manifest error.
(b) In the event, and on each occasion, that on or
before the day on which the Adjusted CD Rate for a CD
Borrowing is to be determined the Administrative Agent shall
have determined that such Adjusted CD Rate cannot be
determined for any reason, including the inability of the
Administrative Agent to obtain sufficient bids in accordance
with the terms of the definition of Adjusted CD Rate, or the
Administrative Agent shall determine that the Adjusted CD
Rate for such CD Borrowing will not adequately and fairly
reflect the cost to any Lender of making or maintaining its
CD Loan during such Interest Period, the Administrative Agent
shall, as soon as practicable thereafter, give written or
telecopy notice of such determination to the Borrowers and
the Lenders. In the event of any such determination, any
request by a Borrower for a CD Borrowing pursuant to Section
2.04 shall, until the Administrative Agent shall have advised
the Borrowers and the Lenders that the circumstances giving
rise to such notice no longer exist, be deemed to be a
request for an ABR Borrowing. Each determination by the
Administrative Agent hereunder shall be conclusive absent
manifest error.
Section 2.10. Termination, Reduction and Extension
of Commitments. (a) The Commitments and the L/C Commitment
shall automatically terminate on the Maturity Date.
(b) Upon at least three Business days' prior
irrevocable written or telecopy notice to the Administrative
Agent, the Borrowers may at any time in whole permanently
terminate, or from time to time in part permanently reduce,
the Commitments; provided, however, that (i) each partial
reduction of the Commitments shall be in an integral multiple
of $5,000,000 and in a minimum amount of $20,000,000 and (ii)
the Total Commitment shall not be reduced to an amount that
is less than the sum of the Aggregate Revolving Credit
Exposure and the aggregate outstanding principal amount of
the Competitive Loans and Short-Term Loans at the time.
(c) Each reduction in the Commitments hereunder
shall be made ratably among the Lenders in accordance with
their respective Commitments. The Borrowers shall pay to the
Administrative Agent for the account of the applicable
Lenders, on the date of each termination or reduction of the
Commitment as provided herein, the Facility Fees on the
amount of the Commitments so terminated or reduced accrued to
but excluding the date of such termination or reduction.
(d) Not later than the date 60 days prior to the
fourth anniversary of the date hereof, the Borrowers may
deliver to the Administrative Agent (which shall promptly
transmit to each Lender) a notice requesting that the
Commitments be extended to the first anniversary of the
Maturity Date. Within 30 days after its receipt of any such
notice, each Lender shall notify the Administrative Agent of
its willingness or unwillingness so to extend its Commitment.
If any Lender fails to so notify the Administrative Agent,
such Lender shall be deemed to be unwilling so to extend its
Commitment. In the event (and only in the event) Lenders
having at least 66-2/3% of the aggregate Commitments shall be
willing to extend their Commitments, the Administrative Agent
shall so notify the applicable Borrower and each Lender, and
the Maturity Date shall without further act be extended to
the first anniversary of the date which shall theretofore
have been the Maturity Date; provided, however, that such
extension shall be effective only with respect to Lenders
that have consented to such extension, and the Commitments of
the nonconsenting Lenders shall terminate, and the L/C
Commitments of the non-consenting Issuing Banks shall
terminate and the Loans and the participations in L/C
Disbursements of such Lenders shall mature, on the Maturity
Date in effect prior to such extension.
Section 2.11. Conversion and Continuation of
Borrowings. The applicable Borrower shall have the right at
any time upon prior irrevocable notice (each, a
"Conversion/Continuation Notice") to the Administrative Agent
(a) not later than 10:00 a.m., New York City time, on the
date of conversion, to convert any Eurodollar Borrowing or CD
Borrowing into an ABR Borrowing, (b) not later than 10:00
a.m., New York City time, two Business days prior to
conversion or continuation, to convert any Eurodollar
Borrowing or ABR Borrowing into a CD Borrowing or to continue
any CD Borrowing as a CD Borrowing for an additional Interest
Period, (c) not later than 11:00 a.m., New York City time,
three Business days prior to conversion or continuation, to
convert any ABR Borrowing or CD Borrowing into a Eurodollar
Borrowing or to continue any Eurodollar Borrowing as a
Eurodollar Borrowing for an additional Interest Period, (d)
not later than 10:00 a.m., New York City time, three Business
days prior to conversion, to convert the Interest Period with
respect to any Eurodollar Borrowing to another permissible
Interest Period, and (e) not later than 10:00 a.m., New York
City time, two Business days prior to conversion, to convert
the Interest Period with respect to any CD Borrowing to another
permissible Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made
pro rata among the Lenders in accordance with the
respective principal amounts of the Loans comprising the
converted or continued Borrowing;
(ii) if less than all the outstanding principal
amount of any Borrowing shall be converted or continued,
then each resulting Borrowing shall satisfy the
limitations specified in Sections 2.02(a) and 2.02(b)
regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each
Lender and the Administrative Agent by recording for the
account of such Lender the new Loan of such Lender
resulting from such conversion and reducing the Loan (or
portion thereof) of such Lender being converted by an
equivalent principal amount; accrued interest on any
Loan (or portion thereof) being converted shall be paid
by such Borrower at the time of conversion;
(iv) if any Eurodollar Borrowing or CD Borrowing is
converted at a time other than the end of the Interest
Period applicable thereto, such Borrower shall pay, upon
demand, any amounts due to the Lenders pursuant to
Section 2.15;
(v) any portion of a Borrowing maturing or required
to be repaid in less than one month may not be converted
into or continued as a Eurodollar Borrowing;
(vi) any portion of a Borrowing maturing or
required to be repaid in less than 30 days may not be
converted into or continued as a CD Borrowing;
(vii) any portion of a Eurodollar Borrowing or CD
Borrowing that cannot be converted into or continued as
a Eurodollar Borrowing or a CD Borrowing by reason of
the two immediately preceding clauses shall be
automatically converted at the end of the Interest
Period in effect for such Borrowing into an ABR
Borrowing; and
(viii) upon notice to the Borrowers from the
Administrative Agent given at the request of the
Required Lenders, after the occurrence and during the
continuance of a Default or Event of Default, no
outstanding Loan may be converted into, or continued as,
a Eurodollar Loan or CD Loan.
Each notice pursuant to this Section 2.11 shall be
irrevocable and shall refer to this Agreement and specify (i)
the identity and amount of the Borrowing that the applicable
Borrower requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a
Eurodollar Borrowing, a CD Borrowing or an ABR Borrowing,
(iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such
Borrowing is to be converted to or continued as a Eurodollar
Borrowing or CD Borrowing, the Interest Period with respect
thereto. If no Interest Period is specified in any such
notice with respect to any conversion to or continuation as a
Eurodollar Borrowing or CD Borrowing, the applicable Borrower
shall be deemed to have selected an Interest Period of one
month's duration, in the case of a Eurodollar Borrowing, or
30 days' duration, in the case of a CD Borrowing. The
Administrative Agent shall advise the Lenders of any notice
given pursuant to this Section 2.11 and of each Lender's
portion of any converted or continued Borrowing. If a
Borrower shall not have given notice in accordance with this
Section 2.11 to continue any Borrowing into a subsequent
Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.11 to convert such Borrowing),
such Borrowing shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms
hereof), automatically be continued into a new Interest
Period as an ABR Borrowing. No Borrower shall have the right
to continue or convert the Interest Period with respect to
any Competitive Borrowing pursuant to this Section 2.11.
Section 2.12. Prepayment. (a) Subject to the
provisions of Section 2.15, each Borrower shall have the
right at any time and from time to time to prepay any
Borrowing, in whole or in part, (i) upon at least three
Business days' prior written or telecopy notice (or telephone
notice promptly confirmed by written or telecopy notice) to
the Administrative Agent before 11:00 a.m., New York City
time, in the case of a CD Borrowing or a Eurodollar Revolving
Credit Borrowing and (ii) upon at least same-day written or
telecopy notice (or telephone notice promptly confirmed by
written or telecopy notice) to the Administrative Agent
before 11:00 a.m., New York City time, in the case of a ABR
Borrowing; provided, however, that each partial prepayment
shall be in an amount that is an integral multiple of
$5,000,000 and not less than $20,000,000. Competitive Loans
shall not be subject to prepayment.
(b) In the event of any termination of all the
Commitments, each Borrower shall repay or prepay all its
outstanding Revolving Credit Borrowings on the date of such
termination. In the event of any partial reduction of the
Commitments, then (i) at or prior to the effective date of
such reduction or termination, the Administrative Agent shall
notify the Borrowers and the Lenders of the Aggregate
Revolving Credit Exposure after giving effect thereto and
(ii) if the sum of the Aggregate Revolving Credit Exposure
and the aggregate outstanding principal amount of the
Competitive Loans and the Short-Term Loans at the time would
exceed the Total Commitment after giving effect to such
reduction or termination, then each Borrower shall, on the
date of such reduction or termination, repay or prepay
Revolving Credit Borrowings in an amount sufficient to
eliminate such excess.
(c) If on any date the sum of the Aggregate
Revolving Credit Exposure and the aggregate outstanding
principal amount of the Competitive Loans and Short-Term
Loans as of such date exceeds the Total Commitment, then,
immediately upon notice or knowledge, each Borrower shall
prepay Revolving Credit Borrowings in an amount sufficient to
eliminate such excess.
(d) Each notice of prepayment shall specify the
prepayment date and the principal amount of each Borrowing
(or portion thereof) to be prepaid, shall be irrevocable and
shall commit the applicable Borrower to prepay such Borrowing
by the amount stated therein on the date stated therein. All
prepayments under this Section 2.12 shall be subject to
Section 2.15 but otherwise without premium or penalty. All
prepayments under this Section 2.12 shall be accompanied by
accrued interest on the principal amount being prepaid to the
date of payment.
Section 2.13. Reserve Requirements; Change in
Circumstances. (a) Notwithstanding any other provision of
this Agreement, if after the date of this Agreement any
change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental
Authority charged with the interpretation or administration
thereof (whether or not having the force of law) shall change
the basis of taxation of payments to any Lender or any
Issuing Bank of the principal of or interest on any
Eurodollar Loan, CD Loan or Fixed Rate Loan made by such
Lender or any Fees or other amounts payable hereunder
including, but not limited to, reimbursements of any drawings
under a Letter of Credit (other than changes in respect of
taxes imposed on the overall net income, and franchise taxes
imposed in lieu of taxes on net income of such Lender or such
Issuing Bank and excluding withholding taxes imposed for
failure to comply with Section 2.19(f)), or shall impose,
modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for
the account of, Letters of Credit issued or credit extended
by any Lender or any Issuing Bank (except any such reserve
requirement which is reflected in LIBOR or the Adjusted CD
Rate) or shall impose on such Lender or such Issuing Bank or
the London interbank market any other condition affecting
this Agreement or Eurodollar Loans, CD Loans or Fixed Rate
Loans made by such Lender or any Letter of Credit or
participation therein, and the result of any of the foregoing
shall be to increase the cost to such Lender or such Issuing
Bank of making or maintaining any Commitment, Eurodollar
Loan, CD Loan or Fixed Rate Loan or increase the cost to any
Lender of issuing or maintaining any Letter of Credit or
purchasing or maintaining a participation therein or to
reduce the amount of any sum received or receivable by such
Lender or such Issuing Bank hereunder (whether of principal,
interest or otherwise) by an amount deemed by such Lender or
such Issuing Bank to be material, then the applicable
Borrowers will pay to such Lender or such Issuing Bank, as
the case may be, within 15 days of demand for such additional
amount or amounts as will compensate such Lender or such
Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.
(b) If any Lender or any Issuing Bank shall have
determined that the adoption after the date hereof of any
law, rule, regulation, agreement or guideline regarding
capital adequacy, or any change after the date hereof in any
such law, rule, regulation, agreement or guideline (whether
such law, rule, regulation, agreement or guideline has been
adopted) or in the interpretation or administration thereof
by any Governmental Authority charged with the interpretation
or administration thereof, or compliance by any Lender (or
any lending office of such Lender) or any Issuing Bank or any
Lender's or any Issuing Bank's holding company with any
request or directive regarding capital adequacy (whether or
not having the force of law) of any Governmental Authority has
or would have the effect of reducing the rate of return on such
Lender's or such Issuing Bank's capital or on the capital of
such Lender's or such Issuing Bank's holding company, if any,
as a consequence of this Agreement or the Loans made or
participations in Letters of Credit purchased by such Lender
pursuant hereto or the Letters of Credit issued by such Issuing
Bank pursuant hereto to a level below that which such Lender or
such Issuing Bank or such Lender's or such Issuing Bank's holding
company could have achieved but for such applicability, adoption,
change or compliance (taking into consideration such Lender's or
such Issuing Bank's policies and the policies of such Lender's or
such Issuing Bank's holding company with respect to capital
adequacy) by an amount deemed by such Lender or such Issuing
Bank to be material, then from time to time the applicable
Borrowers shall pay to such Lender or such Issuing Bank, as
the case may be, such additional amount or amounts as will
compensate such Lender or such Issuing Bank or such Lender's
or such Issuing Bank's holding company for any such reduction
suffered.
(c) A certificate of a Lender or an Issuing Bank
setting forth in reasonable detail the calculation of the
amount or amounts necessary to compensate such Lender or such
Issuing Bank or its holding company, as applicable, as
specified in paragraph (a) or (b) above shall be delivered to
the applicable Borrowers and shall be conclusive absent
manifest error. The applicable Borrowers shall pay such
Lender or such Issuing Bank the amount shown as due on any
such certificate delivered by it within 15 days after its
receipt of the same.
(d) Failure or delay on the part of any Lender or
any Issuing Bank to demand compensation for any increased
costs or reduction in amounts received or receivable or
reduction in return on capital shall not constitute a waiver
of such Lender's or such Issuing Bank's right to demand such
compensation. The protection of this Section shall be
available to each Lender and each Issuing Bank regardless of
any possible contention of the invalidity or inapplicability
of the law, rule, regulation, agreement, guideline or other
change or condition that shall have occurred or been imposed.
Notwithstanding any other provision of this Section, no
Lender shall be entitled to demand compensation hereunder in
respect of any Competitive Loan if it shall have been aware
of the event or circumstance giving rise to such demand at
the time it submitted the Competitive Bid pursuant to which
such Loan was made, unless such Lender had at such time
reasonably believed it was not obligated to take into account
such event or circumstance.
Section 2.14. Change in Legality. (a)
Notwithstanding any other provision of this Agreement, if,
after the date hereof, any change in any law or regulation or
in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof
shall make it unlawful for any Lender to make or maintain any
Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan,
then, by written notice to the applicable Borrowers and to
the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans
will not thereafter (for the duration of such
unlawfulness) be made by such Lender hereunder (or be
continued for additional Interest Periods and ABR Loans
and CD Loans will not thereafter (for such duration) be
converted into Eurodollar Loans), whereupon such Lender
shall not submit a Competitive Bid in response to a
request for a Eurodollar Competitive Loan and any
request for a Eurodollar Borrowing (or to convert an ABR
Borrowing or a CD Borrowing to a Eurodollar Borrowing or
to continue a Eurodollar Borrowing for an additional
Interest Period) shall, as to such Lender only, be
deemed a request for an ABR Loan (or a request to
continue an ABR Loan as such for an additional Interest
Period or to convert a Eurodollar Loan into an ABR Loan,
as the case may be), unless such declaration shall be
subsequently withdrawn; and
(ii) such Lender may require that all outstanding
Eurodollar Loans made by it be converted to ABR Loans,
in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective
date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i)
or (ii) above, all payments and prepayments of principal that
would otherwise have been applied to repay the Eurodollar
Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be
applied to repay the ABR Loans made by such Lender in lieu
of, or resulting from the conversion of, such Eurodollar
Loans.
(b) For purposes of this Section 2.14, a notice to
the Borrowers by any Lender shall be effective as to each
Eurodollar Loan made by such Lender, if lawful, on the last
day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be
effective on the date of receipt by the Borrowers.
Section 2.15. Indemnity. The Borrowers shall,
jointly and severally, indemnify each Lender against any loss
or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such
Lender in the performance of its obligations hereunder, which
results in (i) such Lender receiving or being deemed to
receive any amount on account of the principal of any Fixed
Rate Loan, CD Loan or Eurodollar Loan prior to the end of the
Interest Period in effect therefor, (ii) the conversion of
any Eurodollar Loan or CD Loan to a Loan of another Type, or
the conversion of the Interest Period with respect to any
Eurodollar Loan or CD Loan, in each case other than on the
last day of the Interest Period in effect therefor, or (iii)
any Fixed Rate Loan, Eurodollar Loan or CD Loan to be made by
such Lender (including any Eurodollar Loan or CD Loan to be
made pursuant to a conversion or continuation under Section
2.11) not being made after notice of such Loan shall have
been given by the Borrowers hereunder (any of the events
referred to in this clause (a) being called a "Breakage
Event") or (b) any default in the making of any payment or
prepayment required to be made hereunder. In the case of any
Breakage Event, such loss shall include an amount equal to
the excess, as reasonably determined by such Lender, of (i)
its cost of obtaining funds for the Fixed Rate Loan,
Eurodollar Loan or CD Loan that is the subject of such
Breakage Event for the period from the date of such Breakage
Event to the last day of the Interest Period in effect (or
that would have been in effect) for such Loan over (ii) the
amount of interest likely to be realized by such Lender in
redeploying the funds released or not utilized by reason of
such Breakage Event for such period. A certificate of any
Lender setting forth in reasonable detail the calculation
upon which such Lender determined any amount or amounts
which such Lender is entitled to receive pursuant to this
Section 2.15 shall be delivered to the Borrowers and shall
be conclusive absent manifest error.
Section 2.16. Pro Rata Treatment. Except as
provided below in this Section 2.16 with respect to
Competitive Borrowings and Short-Term Loans and as required
under Section 2.14, each Borrowing, each payment or
prepayment of principal of any Borrowing, each payment of
interest on the Loans, each payment of the Facility Fees and
Utilization Fees, each reduction of the Commitments and each
conversion of any Borrowing to or continuation of any
Borrowing as a Borrowing of any Type shall be allocated pro
rata among the Lenders in accordance with their respective
applicable Commitments (or, if such Commitments shall have
expired or been terminated, in accordance with the respective
principal amounts of their outstanding Loans). Each payment
of principal of any Competitive Borrowing or any Short-Term
Loan shall be allocated pro rata among the Lenders
participating in such Competitive Borrowing or any Borrowing
of which such Short-Term Loan is a part in accordance with
the respective principal amounts of their outstanding Short-
Term Loans or Competitive Loans comprising such Borrowing.
Each payment of interest on any Competitive Borrowing or any
Short-Term Loan shall be allocated pro rata among the Lenders
participating in such Competitive Borrowing or any Borrowing
of which such Short-Term Loan is a part in accordance with
the respective amounts of accrued and unpaid interest on
their outstanding Short-Term Loans or Competitive Loans
comprising such Borrowing. For purposes of determining the
available Commitments of the Lenders at any time, each
outstanding Competitive Borrowing and Short-Term Loan shall be
deemed to have utilized the Commitments of the Lenders
(including those Lenders which shall not have made Short-Term
Loans and Loans as part of such Competitive Borrowing) pro
rata in accordance with such respective Commitments. Each
Lender agrees that in computing such Lender's portion of any
Borrowing to be made hereunder, the Administrative Agent may,
in its discretion, round each Lender's percentage of such
Borrowing to the next higher or lower whole dollar amount.
Section 2.17. Sharing of Setoffs. Each Lender
agrees that if it shall, through the exercise of a right of
banker's lien, setoff or counterclaim against any Loan Party,
or pursuant to a secured claim under Section 506 of Title 11
of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by
such Lender under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or
Loans or L/C Disbursement as a result of which the unpaid
principal portion of its Revolving Loans and participations
in L/C Disbursements shall be proportionately less than the
unpaid principal portion of the Revolving Loans and
participations in L/C Disbursements of any other Lender, it
shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such
other Lender the purchase price for, a participation in the
Revolving Loans and L/C Exposure of such other Lender, so
that the aggregate unpaid principal amount of the Revolving
Loans and L/C Exposure and participations in Revolving Loans
and L/C Exposure held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all
Revolving Loans and L/C Exposure then outstanding as the
principal amount of its Revolving Loans and L/C Exposure
prior to such exercise of banker's lien, setoff or counterclaim
or other event was to the principal amount of all Revolving
Loans and L/C Exposure outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event; provided,
however, that if any such purchase or purchases or adjustments
shall be made pursuant to this Section 2.17 and the payment
giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment
restored without interest. Each Borrower and the Guarantor
expressly consent to the foregoing arrangements and agree
that any Lender holding a participation in a Revolving Loan
or L/C Disbursement deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by such
Borrower and Guarantor to such Lender by reason thereof as
fully as if such Lender had made a Loan directly to such
Borrower in the amount of such participation.
Section 2.18. Payments. (a) Each Loan Party
shall make each payment (including principal of or interest
on any Borrowing or any L/C Disbursement or any Fees or other
amounts) hereunder and under any other Loan Document not
later than 12:00 (noon), New York City time, on the date when
due in immediately available dollars, without setoff, defense
or counterclaim. Each such payment (other than Issuing Bank
Fees, which shall be paid directly to the Issuing Bank
entitled thereto,) shall be made to the Administrative Agent
at its offices at 12 East 49th Street, New York, New York
10017.
(b) Whenever any payment (including principal of
or interest on any Borrowing or any Fees or other amounts)
hereunder or under any other Loan Document shall become due,
or otherwise would occur, on a day that is not a Business
Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be
included in the computation of interest or Fees, if
applicable.
Section 2.19. Taxes. (a) Subject to subparagraph
(g) below, any and all payments by or on behalf of any Loan
Party hereunder and under any other Loan Document shall be
made, in accordance with Section 2.18, free and clear of and
without deduction for any and all current or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) income taxes
imposed on the net income of the Administrative Agent, any
Lender or any Issuing Bank (or any transferee or assignee
thereof, including a participation holder (any such entity a
"Transferee")) and (ii) franchise taxes imposed on the net
income of the Administrative Agent, any Lender or any Issuing
Bank (or Transferee), (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities,
collectively or individually, being called "Taxes"). If any
Loan Party shall be required to deduct any Taxes from or in
respect of any sum payable hereunder or under any other Loan
Document to the Administrative Agent, any Lender or any Issuing
Bank (or any Transferee), (i) the sum payable shall be increased
by the amount (an "additional amount") necessary so that after
making all required deductions (including deductions
applicable to additional sums payable under this Section
2.19) the Administrative Agent, such Lender or such Issuing
Bank (or Transferee), as the case may be, shall receive an
amount equal to the sum it would have received had no such
deductions been made, (ii) such Loan Party shall make such
deductions and (iii) such Loan Party shall pay the full
amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, each Loan Party agrees to pay to
the relevant Governmental Authority in accordance with
applicable law any current or future stamp or documentary
taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or
under any other Loan Document or from the execution, delivery
or registration of, or otherwise with respect to, this
Agreement or any other Loan Document ("Other Taxes").
(c) The Borrowers will, jointly and severally,
indemnify the Administrative Agent, each Lender and each
Issuing Bank (or Transferee) for the full amount of Taxes and
Other Taxes paid by the Administrative Agent, such Lender or
such Issuing Bank (or Transferee), as the case may be, and
any liability (including penalties, interest and expenses
(including reasonable attorney's fees and expenses)) arising
therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the
relevant Governmental Authority. A certificate as to the
amount of such payment or liability prepared by the
Administrative Agent, a Lender or any Issuing Bank (or
Transferee), or the Administrative Agent on its behalf,
absent manifest error, shall be final, conclusive and binding
for all purposes. Such indemnification shall be made within
30 days after the date the Administrative Agent, any Lender
or any Issuing Bank (or Transferee), as the case may be,
makes written demand therefor.
(d) If the Administrative Agent, a Lender or any
Issuing Bank (or Transferee) receives a refund in respect of
any Taxes or Other Taxes as to which it determines in its
sole discretion it has been indemnified by any Borrower or
with respect to which any Loan Party has paid additional
amounts pursuant to this Section 2.19, it shall within 30
days from the date of such receipt pay over such refund to
such Loan Party (but only to the extent of indemnity payments
made, or additional amounts paid, by such Loan Party under
this Section 2.19 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all reasonable out-of-
pocket expenses of the Administrative Agent, such Lender or
such Issuing Bank (or Transferee) incurred in connection with
obtaining such refund and without interest (other than
interest paid by the relevant Governmental Authority with
respect to such refund); provided, however, that such Loan
Party, upon the request of the Administrative Agent, such
Lender or such Issuing Bank (or Transferee), shall repay the
amount paid over to such Loan Party (plus penalties, interest
or other charges) to the Administrative Agent, such Lender or
such Issuing Bank (or Transferee) in the event the
Administrative Agent, such Lender or such Issuing Bank (or
Transferee) is required to repay such refund to such
Governmental Authority.
(e) As soon as practicable after the date of any
payment of Taxes or Other Taxes by any Loan Party to the
relevant Governmental Authority, such Loan Party will deliver
to the Administrative Agent, at its address referred to in
Section 9.01, the original or a certified copy of a receipt
issued by such Governmental Authority evidencing payment
thereof.
(f) Each Lender (or Transferee) that is organized
under the laws of a jurisdiction other than the United
States, any State thereof or the District of Columbia (a "Non-
U.S. Lender") shall deliver to the Borrowers and the
Administrative Agent two copies of either United States
Internal Revenue Service Form 1001 or Form 4224, or, in the
case of a Non-U.S. Lender claiming exemption from U.S.
Federal withholding tax under Section 871(h) or 881(c) of the
Code with respect to payments of "portfolio interest", a Form
W-8, or any subsequent versions thereof or successors thereto
(and, if such Non-U.S. Lender delivers a Form W-8, a
certificate representing that such Non-U.S. Lender is not a
bank for purposes of Section 881(c) of the Code, is not a 10-
percent shareholder (within the meaning of Section
871(h)(3)(B) of the Code) of any Borrower and is not a
controlled foreign corporation related to any Borrower
(within the meaning of Section 864(d)(4) of the Code)),
properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from, or reduced rate of, U.S.
Federal withholding tax on payments by the Borrowers under
this Agreement and the other Loan Documents. Such forms
shall be delivered by each Non-U.S. Lender on or before the
date it becomes a party to this Agreement (or, in the case of
a Transferee that is a participation holder, on or before the
date such participation holder becomes a Transferee
hereunder) and on or before the date, if any, such Non-U.S.
Lender changes its applicable lending office by designating a
different lending office (a "New Lending Office"). In
addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Notwithstanding
any other provision of this Section 2.19(f), a Non-U.S.
Lender shall not be required to deliver any form pursuant to
this Section 2.19(f) that such Non-U.S. Lender is not legally
able to deliver.
(g) No Borrower shall be required to indemnify any
Non-U.S. Lender or to pay any additional amounts to any Non-
U.S. Lender, in respect of United States Federal withholding
tax pursuant to paragraph (a) or (c) above to the extent that
(i) the obligation to withhold amounts with respect to United
States Federal withholding tax existed on the date such Non-
U.S. Lender became a party to this Agreement (or, in the case
of a Transferee that is a participation holder, on the date
such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date
such Non-U.S. Lender designated such New Lending Office with
respect to a Loan, except when such Non-U.S. Lender or
Transferee was not aware at such time of the existence of
such withholding tax obligation; provided, however, that this
paragraph (g) shall not apply (x) to any Transferee or New
Lending Office that becomes a Transferee or New Lending
Office as a result of an assignment, participation, transfer
or designation made at the request of the Borrowers and (y)
to the extent the indemnity payment or additional amounts any
Transferee, or any Lender (or Transferee), acting through a
New Lending Office, would be entitled to receive (without
regard to this paragraph (g)) do not exceed the indemnity payment or
additional amounts that the person making the assignment,
participation or transfer to such Transferee, or Lender (or
Transferee) making the designation of such New Lending
Office, would have been entitled to receive in the absence of
such assignment, participation, transfer or designation or
(ii) the obligation to pay such additional amounts would not
have arisen but for a failure by such Non-U.S. Lender to
comply with the provisions of paragraph (f) above.
(h) Nothing contained in this Section 2.19 shall
require any Lender or any Issuing Bank (or any Transferee) or
the Administrative Agent to make available any of its tax
returns (or any other information that it deems to be
confidential or proprietary).
Section 2.20. Assignment of Commitments Under
Certain Circumstances; Duty to Mitigate. (a) In the event
(i) any Lender or any Issuing Bank delivers a certificate
requesting compensation pursuant to Section 2.13, (ii) any
Lender or any Issuing Bank delivers a notice described in
Section 2.14 or (iii) any Borrower is required to pay any
additional amount to any Lender or any Issuing Bank or any
Governmental Authority on account of any Lender or any
Issuing Bank pursuant to Section 2.19, the Borrowers may, at
their sole expense and effort (including with respect to the
processing and recordation fee referred to in Section
9.04(b)), upon notice to such Lender or such Issuing Bank and
the Administrative Agent, require such Lender or such Issuing
Bank to transfer and assign, without recourse (in accordance
with and subject to the restrictions contained in Section
9.04), all of its interests, rights and obligations under
this Agreement to an assignee that shall assume such assigned
obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (x) such
assignment shall not conflict with any law, rule or
regulation or order of any court or other Governmental
Authority having jurisdiction, (y) the Borrowers shall have
received the prior written consent of the Administrative
Agent (and, if a Commitment is being assigned, of each
Issuing Bank), which consent shall not unreasonably be
withheld, and (z) the Borrowers or such assignee shall have
paid to the affected Lender or Issuing Bank in immediately
available funds an amount equal to the sum of the principal
of and interest accrued to the date of such payment on the
outstanding Loans and participations in L/C Disbursements of
such Lender or such Issuing Bank plus all Fees and other
amounts accrued for the account of such Lender or such
Issuing Bank hereunder (including any amounts under Section
2.13 and Section 2.15).
(b) If (i) any Lender or any Issuing Bank shall
request compensation under Section 2.13, (ii) any Lender or
any Issuing Bank delivers a notice described in Section 2.14
or (iii) any Borrower is required to pay any additional
amount to any Lender or any Issuing Bank or any Governmental
Authority on account of any Lender or any Issuing Bank,
pursuant to Section 2.19, then such Lender or such Issuing
Bank shall use reasonable efforts (which shall not require
such Lender or such Issuing Bank to incur an unreimbursed
loss or unreimbursed cost or expense or otherwise take any
action inconsistent with its internal policies or legal or
regulatory restrictions or suffer any disadvantage or burden
deemed by it to be significant) (x) to file any certificate
or document reasonably requested in writing by the Borrowers
or (y) to assign its rights and delegate and transfer its
obligations hereunder to another of its offices, branches or
affiliates, if such filing or assignment would reduce its
claims for compensation under Section 2.13 or enable it to
withdraw its notice pursuant to Section 2.14 or would reduce
amounts payable pursuant to Section 2.19, as the case may be,
in the future. The Borrowers hereby agree, jointly and
severally, to pay all reasonable costs and expenses incurred
by any Lender or any Issuing Bank in connection with any such
filing or assignment, delegation and transfer.
Section 2.21. Letters of Credit. (a) General. Any
Borrower may request any Issuing Bank to issue a Letter of
Credit, in a form reasonably acceptable to the Administrative
Agent and such Issuing Bank, appropriately completed, for the
account of such Borrower, at any time and from time to time
while the Commitments remain in effect. This Section shall
not be construed to impose an obligation upon any Issuing
Bank to issue any Letter of Credit that is inconsistent with
the terms and conditions of this Agreement or the policies of
such Issuing Bank or prohibited by applicable law.
Notwithstanding anything contained in this Agreement, no
Issuing Bank shall issue any Letter of Credit after receiving
notice or being aware of any Default or Event of Default.
(b) Notice of Issuance, Amendment, Renewal,
Extension; Certain Conditions. In order to request the
issuance of a Letter of Credit (or to amend, renew or extend
an existing Letter of Credit), the appropriate Borrower shall
hand deliver or telecopy to the applicable Issuing Bank and
the Administrative Agent (five Business Days prior to the
requested date of issuance, amendment, renewal or extension)
a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or
extended, and setting forth the date of issuance, amendment,
renewal or extension, the date on which such Letter of Credit
is to expire (which shall comply with paragraph (c) below),
the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall
be necessary to prepare such Letter of Credit. A Letter of
Credit shall be issued, amended, renewed or extended only if,
and upon issuance, amendment, renewal or extension of each
Letter of Credit the appropriate Borrower shall be deemed to
represent and warrant that, after giving effect to such
issuance, amendment, renewal or extension (A) the L/C
Exposure shall not exceed $50,000,000 and (B) the sum of the
Aggregate Revolving Credit Exposure and the aggregate
principal amount of outstanding Competitive Borrowings and
Short-Term Loans shall not exceed the Total Commitment.
(c) Expiration Date. Each Letter of Credit shall
by its terms expire at the close of business of the office of
the Issuing Bank where drawings thereunder are to be made on
the earlier of the date one year after the date of the
issuance of such Letter of Credit and the date that is five
Business days prior to the Maturity Date, unless such Letter
of Credit expires by its terms on an earlier date.
(d) Participations. By the issuance of a Letter
of Credit and without any further action on the part of the
applicable Issuing Bank or the Lenders, such Issuing Bank
hereby grants to each Lender, and each such Lender hereby
acquires from the applicable Issuing Bank, a participation in
such Letter of Credit equal to such Lender's Pro Rata
Percentage from time to time of the aggregate amount
available to be drawn under such Letter of Credit, effective
upon the issuance of such Letter of Credit. In consideration
and in furtherance of the foregoing, each Lender hereby
agrees to pay to the Administrative Agent, for the account of
any Issuing Bank, such Lender's Pro Rata Percentage of each
L/C Disbursement made by such Issuing Bank and not reimbursed
by the applicable Borrower (or, if applicable, another party
pursuant to its obligations under any other Loan Document)
forthwith on the date due as provided in Section 2.02(f),
provided such L/C Disbursement was not the result of the
gross negligence or willful misconduct of the Issuing Bank.
Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect
of Letters of Credit is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including the
occurrence and continuance of a Default or an Event of
Default, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever;
provided, however, that the foregoing shall not be construed
to excuse any Issuing Bank from liability to any Lender to
the extent of any direct damages (as opposed to consequential
damages) suffered by such Lender that are caused by the
Issuing Bank's gross negligence or wilful misconduct in
determining whether drafts or documents presented under a
Letter of Credit comply with the terms thereof.
(e) Reimbursement. If any Issuing Bank shall make
any L/C Disbursement in respect of a Letter of Credit, the
applicable Borrower shall pay to such Issuing Bank an amount
equal to such L/C Disbursement not later than two hours after
such Borrower shall have received notice from such Issuing
Bank that payment of such draft will be made, or, if such
Borrower shall have received such notice later than 10:00
a.m., New York City time, on any Business Day, not later than
10:00 a.m., New York City time, on the immediately following
Business Day.
(f) Obligations Absolute. Each Borrower's
obligation to reimburse L/C Disbursements as provided in
paragraph (e) above shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all
circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any
Letter of Credit or any Loan Document, or any term or
provision therein;
(ii) any amendment or waiver of or any consent to
departure from all or any of the provisions of any
Letter of Credit or any Loan Document;
(iii) the existence of any claim, setoff, defense
or other right that such Borrower, any other party
guaranteeing, or otherwise obligated with, such
Borrower, any Subsidiary or other Affiliate thereof or
any other Person may at any time have against the
beneficiary under any Letter of Credit, the applicable
Issuing Bank, the Administrative Agent or any Lender or
any other Person, whether in connection with this
Agreement, any other Loan Document or any other related
or unrelated agreement or transaction;
(iv) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(v) payment by any Issuing Bank under a Letter of
Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of
Credit; and
(vi) any other act or omission to act or delay of
any kind of the applicable Issuing Bank, the Lenders,
the Administrative Agent or any other Person or any
other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or
equitable discharge of such Borrower's obligations
hereunder.
Without limiting the generality of the foregoing,
it is expressly understood and agreed that the absolute and
unconditional obligation of each Borrower hereunder to
reimburse L/C Disbursements will not be excused by the gross
negligence of the applicable Issuing Bank. However, the
foregoing shall not be construed to excuse any Issuing Bank
from liability to such Borrower to the extent of any direct
damages (as opposed to consequential damages, claims in
respect of which are hereby waived by each Borrower to the
extent permitted by applicable law) suffered by such Borrower
that are caused by such Issuing Bank's gross negligence or
wilful misconduct in determining whether drafts and other
documents presented under a Letter of Credit comply with the
terms thereof; it is understood that any Issuing Bank may
accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless
of any notice or information to the contrary and, in making
any payment under any Letter of Credit (i) any Issuing Bank's
exclusive reliance on the documents presented to it under
such Letter of Credit as to any and all matters set forth
therein, including reliance on the amount of any draft
presented under such Letter of Credit, whether or not the
amount due to the beneficiary thereunder equals the amount of
such draft and whether or not any document presented pursuant
to such Letter of Credit proves to be insufficient in any
respect, if such document on its face appears to be in order,
and whether or not any other statement or any other document
presented pursuant to such Letter of Credit proves to be
forged or invalid or any statement therein proves to be
inaccurate or untrue in any respect whatsoever and (ii) any
noncompliance in any immaterial respect of the documents
presented under such Letter of Credit with the terms thereof
shall, in each case, be deemed not to constitute gross
negligence of such Issuing Bank.
(g) Disbursement Procedures. Each Issuing Bank
shall, promptly following its receipt thereof, examine all
documents purporting to represent a demand for payment under
a Letter of Credit issued by such Issuing Bank. Each Issuing
Bank shall as promptly as possible give telephonic
notification, confirmed by telecopy, to the Administrative
Agent and the applicable Borrower of such demand for payment
and whether such Issuing Bank has made or will make an L/C
Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve any Borrower of
its obligation to reimburse such Issuing Bank and the Lenders
with respect to any such L/C Disbursement. The Administrative
Agent shall promptly give each Lender notice thereof.
(h) Interim Interest. If any Issuing Bank shall
make any L/C Disbursement in respect of a Letter of Credit,
then, unless the applicable Borrower shall reimburse such L/C
Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of such Issuing Bank, for
each day from and including the date of such L/C
Disbursement, to but excluding the earlier of the date of
payment by the applicable Borrower or the date on which
interest shall commence to accrue thereon as provided in
Section 2.02(f), at the rate per annum that would apply to
such amount if such amount were an ABR Loan.
(i) Appointment, Resignation or Removal of Issuing
Banks. The appointment of any Lender as an Issuing Bank
hereunder shall be evidenced by an agreement substantially in
the form of Exhibit G hereto executed by such Lender,
Beneficial and the Administrative Agent, and, from and after
the effective date of such agreement, (i) such Lender shall
have all the interests, rights and obligations of an Issuing
Bank under this Agreement and the other Loan Documents and
(ii) references herein and in the other Loan Documents to the
term "Issuing Bank" shall be deemed to refer to such
additional Issuing Bank and to any previously appointed
Issuing Banks, or to such successor and all previous Issuing
Banks, as the context shall require. Beneficial may appoint
additional Issuing Banks. Any Issuing Bank may resign at any
time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and Beneficial, and may be
removed at any time by Beneficial by notice to such Issuing
Bank, the Administrative Agent and the Lenders. At the time
a removal or resignation shall become effective, the
Borrowers shall pay all accrued and unpaid Issuing Bank Fees
accrued for the account of the affected Issuing Bank pursuant
to Section 2.06(c)(ii). After the resignation or removal of
an Issuing Bank hereunder, such Issuing Bank shall remain a
party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement and the
other Loan Documents with respect to Letters of Credit issued
by it prior to such resignation or removal, but shall not be
required to issue additional Letters of Credit.
(j) Cash Collateralization. If any Event of
Default shall occur and be continuing, the Borrowers shall,
on the Business Day they receive notice from the
Administrative Agent or the Required Lenders thereof, or upon
any acceleration of the Loans, any Event of Default described
in paragraph (g) or (h) of Article VII or termination of the
Commitments pursuant to Article VII, deposit in an account
with the Administrative Agent, for the benefit of the
Lenders, an amount in cash equal to the L/C Exposure as of
such date and hereby grant to the Administrative Agent for
the benefit of the Lenders a security interest in such cash,
account and proceeds thereof. Such deposit shall be held by
the Administrative Agent as collateral for the payment and
performance of the obligations of the Borrowers under this
Agreement. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest
earned on the investment of such deposits in short-term high-
quality instruments or securities, which investments shall be
made at the option and sole discretion of the Administrative
Agent, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall (i) automatically be
applied by the Administrative Agent to reimburse each Issuing
Bank for L/C Disbursements for which it has not been
reimbursed, (ii) be held for the satisfaction of the
reimbursement obligations of the Borrowers for the L/C
Exposure at such time and (iii) if the maturity of the Loans
has been accelerated, be applied to satisfy other obligations
of the Borrowers under this Agreement. If the Borrowers are
required to provide an amount of cash collateral hereunder as
a result of the occurrence of an Event of Default, such
amount (to the extent not applied as aforesaid) shall be
returned to the Borrowers within three Business days after
all Events of Default have been cured or waived.
Section 2.22. Increase of Commitments. (a)
Beneficial may from time to time, on the terms set forth
below, request that the Total Commitment hereunder be
increased to an amount not to exceed $4,500,000,000;
provided, however, that (i) each increase of the Total
Commitment shall be in an integral multiple of $25,000,000
and in a minimum amount of $100,000,000, (ii) no increase in
the Total Commitment shall be made unless at the time thereof
Beneficial's Index Debt ratings from Moody's and S&P are
equal to or higher than A3 and A-, respectively, (iii) no
increase in the Total Commitment shall be made at a time when
a Default or Event of Default shall have occurred and be
continuing, and (iv) the Total Commitment shall not be
increased more than once during any six-month period.
(b) In the event of such a requested increase in
the Total Commitment, (i) each of the Lenders shall be given
the opportunity to participate in the increased Commitments
(x) initially ratably in the proportions that their
respective Commitments bear to the Total Commitment and (y)
to the extent that the requested increase of Commitments is
not fulfilled pursuant to the preceding clause (x), ratably
in the proportion that the respective Commitments of the
Lenders desiring to participate in any such increase bear to
the Total Commitment, and (ii) to the extent that the Lenders
do not elect so to participate in such increased Commitments
after being afforded an opportunity to do so, then Beneficial
shall consult with the Administrative Agent as to the number,
identity and requested Commitments of additional financial
institutions which Beneficial may upon the written consent of
the Administrative Agent, which consent shall not be
unreasonably withheld, invite to participate in the
Commitments.
(c) No Lender shall have any obligation to
increase its Commitment pursuant to a request by Beneficial
hereunder.
(d) In the event that Beneficial and one or more
of the Lenders (or other financial institutions) shall agree
upon such an increase in the Total Commitment, Beneficial,
the Administrative Agent and each Lender or other financial
institution increasing its Commitment or extending a new
Commitment shall enter into an amendment to this Agreement
setting forth the amounts of the Commitments, as so
increased, and providing that the financial institutions
extending new Commitments shall be Lenders for all purposes
of this Agreement, and setting forth such additional
provisions as the Administrative Agent shall consider
reasonably appropriate. Subject to the terms of this
paragraph (d) and generally subject to the provisions of
Section 9.08, no such amendment shall require the approval or
consent of any Lender whose Commitment is not being
increased. Upon the execution and delivery of such amendment
as provided above, and upon satisfaction of such other
conditions as the Administrative Agent may reasonably specify
(including the delivery of certificates, evidence of
corporate authority and legal opinions on behalf of
Beneficial and the other Borrowers), this Agreement shall be
deemed to be amended accordingly.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Each of the Loan Parties represents and warrants to
the Administrative Agent, each of the Issuing Banks and each
of the Lenders that:
Section 3.01. Organization; Powers. Each of the
Loan Parties and each of the Subsidiaries (a) is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to
own its property and assets and to carry on its business as
now conducted and as proposed to be conducted, (c) is
qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required,
except where the failure so to qualify could not reasonably
be expected to result in a Material Adverse Effect, and (d)
has the corporate power and authority to execute, deliver and
perform its obligations under each of the Loan Documents and
each other agreement or instrument contemplated hereby to
which it is or will be a party and, in the case of the Loan
Parties, to borrow hereunder.
Section 3.02. Authorization. The execution,
delivery and performance by each Loan Party of each of the
Loan Documents and the borrowings hereunder (collectively,
the "Transactions") (a) have been duly authorized by all
requisite corporate and, if required, stockholder action and
(b) will not (i) violate (A) any provision of law, statute,
rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of
any Loan Party or any Subsidiary, (B) any order of any
Governmental Authority or (C) any provision of any indenture,
agreement or other instrument to which any Loan Party or any
Subsidiary is a party or by which any of them or any of their
property is or may be bound, (ii) be in conflict with, result
in a breach of or constitute (alone or with notice or lapse
of time or both) a default under, or give rise to any right
to accelerate or to require the prepayment, repurchase or
redemption of any obligation under any such indenture,
agreement or other instrument or (iii) result in the creation
or imposition of any Lien upon or with respect to any
property or assets now owned or hereafter acquired by any
Loan Party or any Subsidiary.
Section 3.03. Enforceability. This Agreement has
been duly executed and delivered by each Loan Party and
constitutes, and each other Loan Document when executed and
delivered by the each Loan Party thereto will constitute, a
legal, valid and binding obligation of such Loan Party
enforceable against such Loan Party in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting creditors'
rights generally or by general principles of equity.
Section 3.04. Governmental Approvals. No action,
consent or approval of, registration or filing with or any
other action by any Governmental Authority is or will be
required in connection with the Transactions, except for such
as have been made or obtained and are in full force and
effect.
Section 3.05. Financial Statements. Beneficial
has heretofore furnished to the Lenders its consolidated
balance sheets and statements of income and retained earnings
and cash flows (a) as of and for the fiscal year ended
December 31, 1994, audited by and accompanied by the opinion
of Deloitte & Touche LLP, independent public accountants, and
(b) as of and for the fiscal quarter and the portion of the
fiscal year ended June 30, 1995, in the form of Beneficial's
June 30, 1995 Quarterly Report on Form 10-Q and signed by its
chief financial officer. Such financial statements present
fairly the consolidated financial condition and results of
operations and cash flows of Beneficial and its Consolidated
Subsidiaries as of such dates and for such periods. Such
balance sheets and the notes thereto disclose all material
liabilities, direct or contingent, of Beneficial and its
Consolidated Subsidiaries as of the dates thereof. Such
financial statements were prepared in accordance with GAAP
applied on a consistent basis (subject, in the case of the
unaudited statements, to normal year-end adjustments and to
the absence of notes).
Section 3.06. No Material Adverse Change. There
has been no change in the business, assets, operations,
prospects, condition, financial or otherwise, or material
agreements of Beneficial and the Subsidiaries, taken as a
whole, since June 30, 1995, which constitutes or could
reasonably be expected to result in a Material Adverse
Effect.
Section 3.07. Litigation; Compliance with Laws.
(a) Except as set forth on Schedule 3.07, there are not any
actions, suits or proceedings at law or in equity or by or
before any Governmental Authority now pending or, to the
knowledge of Beneficial's "Executive Officers" (as defined in
Beneficial's Annual Report on Form 10-K dated June 30, 1995),
threatened against or affecting any Loan Party or any
Subsidiary or any business, property or rights of any such
person (i) that involve any Loan Document or the Transactions
or (ii) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined,
could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(b) None of Beneficial, any Borrower or any of the
Subsidiaries or any of their respective material properties
or assets is in violation of, nor will the continued
operation of their material properties and assets as
currently conducted violate, any law, rule or regulation, or
is in default with respect to any judgment, writ, injunction,
decree or order of any Governmental Authority, where such
violation or default could reasonably be expected to result
in a Material Adverse Effect.
Section 3.08. Agreements. (a) None of
Beneficial, any Borrower or any of the Subsidiaries is a
party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably
be expected to result in a Material Adverse Effect.
(b) None of Beneficial, any Borrower or any of the
Subsidiaries is in default in any manner under any provision
of any indenture or other agreement or instrument evidencing
Indebtedness, or any other material agreement or instrument
to which it is a party or by which it or any of its
properties or assets are or may be bound, where such default
could reasonably be expected to result in a Material Adverse
Effect.
Section 3.09. Federal Reserve Regulations. (a)
None of Beneficial, any Borrower or any of the Subsidiaries
is engaged principally, or as one of its important
activities, in the business of extending credit for the
purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any
Letter of Credit will be used, whether directly or
indirectly, and whether immediately, incidentally or
ultimately (i) to purchase or carry Margin Stock or to extend
credit to others for the purpose of purchasing or carrying
Margin Stock or to refund indebtedness originally incurred
for such purpose, or (ii) for any purpose that entails a
violation of, or that is inconsistent with, the provisions of
the Regulations of the Board, including Regulation G, U or X.
Section 3.10. Investment Company Act; Public
Utility Holding Company Act. None of Beneficial, any
Borrower or any Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment
Company Act of 1940 or (b) a "holding company" as defined in,
or subject to regulation under, the Public Utility Holding
Company Act of 1935.
Section 3.11. Use of Proceeds. Each Loan Party
will use the proceeds of the Loans and will request the
issuance of Letters of Credit only for the purposes specified
in the preamble to this Agreement.
Section 3.12. Tax Returns. Each of the Loan
Parties and the Subsidiaries has filed all United States
Federal income tax returns and all other material Federal,
state, local and foreign tax returns which are required to be
filed by it and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by any Loan
Party or any Subsidiary, except such taxes, if any, which are
immaterial or are being contested in good faith. The
charges, accruals and reserves on the books of Beneficial and
its Subsidiaries in respect of taxes or other governmental
charges are adequate in accordance with GAAP.
Section 3.13. No Material Misstatements. None of
(a) the Confidential Information Memorandum or (b) any other
information, report, financial statement, exhibit or schedule
furnished by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or
delivered pursuant thereto contained, contains or will
contain any material misstatement of fact or omitted, omits
or will omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under
which they were, are or will be made, not misleading.
Section 3.14. Employee Benefit Plans. Each of the
Loan Parties and their ERISA Affiliates is in compliance in
all material respects with the applicable provisions of ERISA
and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or
is reasonably expected to occur that, when taken together
with all other such ERISA Events, could reasonably be
expected to result in a Material Adverse Effect.
Section 3.15. Environmental and Safety Matters.
Neither Beneficial nor any Borrower is aware of any event,
condition or circumstance involving environmental pollution
or contamination or employee health or safety that could
reasonably be expected to result in a Material Adverse
Effect.
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans and of
the Issuing Banks to issue Letters of Credit hereunder are
subject to the satisfaction of the following conditions:
Section 4.01. All Funding Events. On the date of
each Borrowing and each issuance of a Letter of Credit (each
such event being called a "Funding Event"):
(a) The Administrative Agent shall have received a
notice of such Borrowing as required by Section 2.03 or
2.04, as applicable (or such notice shall have been
deemed given in accordance with Section 2.04), or, in
the case of the issuance of a Letter of Credit, the
applicable Issuing Bank and the Administrative Agent
shall have received a notice requesting the issuance of
such Letter of Credit as required by Section 2.21(b).
(b) The representations and warranties set forth in
Article III hereof (other than the representations and
warranties set forth in Section 3.06 and 3.07(a)) shall
be true and correct in all material respects on and as
of the date of such Funding Event with the same effect
as though made on and as of such date, except to the
extent such representations and warranties expressly
relate to an earlier date.
(c) Each Loan Party shall be in compliance with all
the terms and provisions set forth herein and in each
other Loan Document on its part to be observed or
performed, and at the time of and immediately after such
Funding Event, no Event of Default or Default shall have
occurred and be continuing.
Each Funding Event shall be deemed to constitute a
representation and warranty by each Loan Party on the date of
such Funding Event as to the matters specified in paragraphs
(b) (except as aforesaid) and (c) of this Section 4.01.
Section 4.02. Closing Date. On the Closing Date:
(a) The Administrative Agent shall have received,
on behalf of itself, the Lenders and the Issuing Banks,
a favorable written opinion of Charles D. Brown, the
Vice President and Assistant General Counsel of
Beneficial Management Corporation of America, a wholly
owned Subsidiary of Beneficial, and counsel for the
Loan Parties, substantially to the effect set forth in
Exhibit F (A) dated the Closing Date, (B) addressed to
the Issuing Banks, the Administrative Agent and the
Lenders, and (C) covering such other matters relating to
the Loan Documents and the Transactions as the
Administrative Agent shall reasonably request, and
Beneficial and the Borrowers hereby request such counsel
to deliver such opinion.
(b) All legal matters incident to this Agreement,
the Borrowings and extensions of credit hereunder and
the other Loan Documents shall be reasonably
satisfactory to the Lenders, to the Issuing Banks and to
Cravath, Swaine & Moore, counsel for the Administrative
Agent.
(c) The Administrative Agent shall have received
(i) a copy of the certificate or articles of
incorporation, including all amendments thereto, of each
Loan Party, certified as of a recent date by the
Secretary of State of the state of its organization, and
a certificate as to the good standing of each Loan Party
as of a recent date, from such Secretary of State; (ii)
a certificate of the Secretary or Assistant Secretary of
each Loan Party dated the Closing Date and certifying
(A) that attached thereto is a true and complete copy of
the by-laws of such Loan Party as in effect on the
Closing Date and at all times since a date prior to the
date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors (or
the appropriate duly authorized committee thereof) of
such Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which such person
is a party and, in the case of each Loan Party, the
borrowings hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full
force and effect, (C) that the certificate or articles
of incorporation of such Loan Party have not been
amended since the date of the last amendment thereto
shown on the certificate of good standing furnished
pursuant to clause (i) above, and (D) as to the
incumbency and specimen signature of each officer
executing any Loan Document or any other document
delivered in connection herewith on behalf of such Loan
Party; (iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant
to (ii) above; and (iv) such other documents as the
Lenders, the Issuing Banks or Cravath, Swaine & Moore,
counsel for the Administrative Agent, may reasonably
request.
(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a
Financial Officer of each Loan Party, confirming (i)
that the representations and warranties set forth in
Article III hereof are true and correct in all material
respects on the Closing Date and (ii) compliance with
the conditions precedent set forth in paragraph (c) of
Section 4.01.
(e) The Administrative Agent shall have received
all Fees and other amounts due and payable on or prior
to the Closing Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Loan Parties
hereunder or under any other Loan Document.
(f) A counterpart of each Loan Document shall have
been duly executed by the parties hereto and thereto.
(g) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a
Financial Officer of Beneficial, certifying as to (i)
the termination of each Existing Credit Agreement and
(ii) the payment in full of all obligations of each Loan
Party under each such Agreement.
(h) All requisite Governmental Authorities and
third parties shall have approved or consented to the
transactions contemplated hereby and by the other Loan
Documents and there shall be no governmental or judicial
action, actual or threatened, that has or could have a
reasonable likelihood of restricting, preventing or
imposing burdensome conditions on the transactions
contemplated hereby or thereby.
SECTION 4.03. First Funding Event in Respect of
Each Additional Subsidiary. The obligation of the Lenders to
make Loans and of the Issuing Banks to issue Letters of
Credit for the account of each Additional Subsidiary
hereunder are subject to the satisfaction of the following
additional conditions on the date of the first Funding Event
in respect of such Additional Subsidiary:
(a) The Administrative Agent shall have received,
on behalf of itself, the Lenders and the Issuing Banks,
a favorable written opinion of counsel for such
Additional Subsidiary (which counsel shall be reasonably
acceptable to the Administrative Agent), substantially
to the effect set forth in Exhibit F, (A) dated the date
of the Additional Subsidiary Agreement, (B) addressed to
the Issuing Banks, the Administrative Agent and the
Lenders, and (c) covering such other matters relating to
the Loan Documents and the Transactions as the
Administrative Agent shall reasonably request, and
Beneficial and the Additional Subsidiary shall request
such counsel to deliver such opinion.
(b) All legal matters incident to this Agreement,
the Borrowings and extensions of credit hereunder and
the other Loan Documents shall be reasonably
satisfactory to the Lenders, to the Issuing Banks and to
Cravath, Swaine & Moore, counsel for the Administrative
Agent.
(c) The Administrative Agent shall have received
(i) a copy of the certificate or articles of
incorporation, including all amendments thereto, of such
Additional Subsidiary, certified as of a recent date by
the Secretary of State of the state of its organization,
and a certificate as to the good standing of such
Additional Subsidiary as of a recent date, from such
Secretary of State; (ii) a certificate of the Secretary
or an Assistant Secretary of such Additional Subsidiary
dated the date the Additional Subsidiary Agreement and
certifying (A) that attached thereto is a true and
complete copy of the by-laws of such Additional
Subsidiary as in effect on the date of such
Agreement and at all times since a date prior to the
date of the resolutions of such Additional Subsidiary
described in clause (B) below, (B) that attached thereto
is a true and complete copy of resolutions duly adopted
by the Board of Directors (or the appropriate duly
authorized committee thereof), of such Additional
Subsidiary authorizing the execution, delivery and
performance of the Additional Subsidiary Agreement and
all other Loan Documents to which such Additional
Subsidiary is a party delivered by such Additional
Subsidiary and the borrowings hereunder by such
Additional Subsidiary, and that such resolutions have
not been modified, rescinded or amended and are in full
force and effect, (C) that the certificate or articles
of incorporation of such Additional Subsidiary have not
been amended since the date of the last amendment
thereto shown on the certificate of good standing
furnished pursuant to clause (i) above, and (D) as to
the incumbency and specimen signature of each officer of
such Additional Subsidiary executing the Additional
Subsidiary Agreement delivered by such Additional
Subsidiary, any other Loan Document or any other
document delivered in connection herewith or therewith;
(iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant
to (ii) above and (iv) such other documents as the
Lenders, the Issuing Banks or Cravath, Swaine & Moore,
counsel for the Administrative Agent, may reasonably
request.
(d) The Administrative Agent shall have received a
copy of the Additional Subsidiary Agreement executed by
such Additional Subsidiary, the Guarantor and the
Administrative Agent.
(e) The Administrative Agent shall have received a
certificate, dated the date of the Additional Subsidiary
Agreement and signed by a Financial Officer of
Beneficial, confirming (i) that the representations and
warranties set forth in Article III hereof are true and
correct in all material respects on the date of such
Additional Subsidiary Agreement and (ii) compliance with
the conditions precedent set forth in paragraph (c) of
Section 4.01.
(f) The Administrative Agent shall have received
all Fees and other amounts due and payable on or prior
to such date, if any.
(g) All requisite Governmental Authorities and
third parties shall have approved or consented to the
transactions contemplated hereby and by the other Loan
Documents and there shall be no governmental or judicial
action, actual or threatened, that has or could have a
reasonable likelihood of restricting, preventing or
imposing burdensome conditions on the transactions
contemplated hereby or thereby.
ARTICLE V. AFFIRMATIVE COVENANTS
Each of the Loan Parties covenants and agrees with
each Lender that so long as this Agreement shall remain in
effect and until the Commitments have been terminated and the
principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document
shall have been paid in full and all Letters of Credit have
been canceled or have expired and all amounts drawn
thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing, each of the Loan
Parties will, and will cause each of the Subsidiaries to:
Section 5.01. Existence; Businesses and
Properties. (a) Do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its
legal existence, except as otherwise expressly permitted
under Section 6.03.
(b) Do or cause to be done all things necessary to
obtain, preserve, renew, extend and keep in full force and
effect the rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks and trade
names material to the conduct of its business; comply with
all applicable laws, rules, regulations and decrees and
orders of any Governmental Authority, whether now in effect
or hereafter enacted, except where the failure so to comply
could not reasonably be expected to result in a Material
Adverse Effect; and at all times maintain and preserve all
property material to the conduct of such business and keep
such property in good repair, working order and condition and
from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted
at all times.
Section 5.02. Obligations and Taxes. Pay and
discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the
same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise
that, if unpaid, might give rise to a Lien upon such
properties or any part thereof, the amounts of which are
material to the business, assets, operations, prospects or
condition, financial or otherwise, of Beneficial and the
Subsidiaries, taken as a whole; provided, however, that such
payment and discharge shall not be required with respect to
any such tax, assessment, charge, levy or claim so long as
the validity or amount thereof shall be contested in good
faith by appropriate proceedings and Beneficial or such
Borrower shall have set aside on its books adequate reserves
with respect thereto in accordance with GAAP.
Section 5.03. Financial Statements, Reports, etc.
In the case of Beneficial, furnish to the Administrative
Agent and with sufficient copies for each Lender:
(a) within 120 days after the end of each fiscal
year, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash
flows showing the financial condition of Beneficial and
its Consolidated Subsidiaries as of the close of such
fiscal year and the results of its operations and the
operations of such Subsidiaries during such year, all
audited by Deloitte & Touche LLP or other independent
public accountants of recognized national standing and
accompanied by an opinion of such accountants to the
effect that such consolidated financial statements
fairly present the financial condition and results of
operations of Beneficial and its Consolidated
Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied (provided, however, that no
such financial statements or opinion need be so delivered
if Beneficial shall have delivered to the Administrative
Agent its annual report for the relevant year containing
such financial statements and opinion required to be
delivered under this sub-paragraph (a));
(b) within 90 days after the end of each of the
first three fiscal quarters of each fiscal year, its
consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows showing
the financial condition of Beneficial and its
Consolidated Subsidiaries as of the close of such fiscal
quarter and the results of its operations and the
operations of such Subsidiaries during such fiscal
quarter and the then elapsed portion of the fiscal year,
all certified by one of its Financial Officers as fairly
presenting the financial condition and results of
operations of Beneficial and its Consolidated
Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end
audit adjustments (provided, however, that no such
financial statements or certificate need be so delivered
if Beneficial shall have delivered to the Administrative
Agent its quarterly report for the relevant quarter
containing such financial statements and certificate
required to be delivered under this sub-paragraph (b));
(c) concurrently with any delivery of financial
statements under sub-paragraph (a) above, a certificate
of the accounting firm or Financial Officer opining on or
certifying such statements (which certificate, when
furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal
interpretations) certifying that no Event of Default or
Default has occurred or, if such an Event of Default or
Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be
taken with respect thereto;
(d) promptly after the same become publicly
available, each annual and quarterly report and each
Current Report on Form 8-K, if any, filed by any Borrower
or any Subsidiary with the Securities and Exchange
Commission or any Governmental Authority succeeding to
any or all of the functions of said Commission;
(e) promptly after the same become publicly
available, copies of any additional financial statements
or reports as any Borrower shall send to financial
institutions with which it has lines of credit or other
agreements and promptly upon request, copies of all
periodic and other reports, proxy statements and other
materials filed by any Borrower or any Subsidiary with
the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national
securities exchange, or distributed to its shareholders,
as the case may be; and
(f) promptly, from time to time, such other
information regarding the operations, business affairs
and financial condition of any Loan Party or any
Subsidiary (including, without limitation, its
consolidated balance sheets), or compliance with the
terms of any Loan Document, as the Administrative Agent
or any Lender may reasonably request.
Section 5.04. Litigation and Other Notices.
Furnish to the Administrative Agent for distribution to each
Issuing Bank and each Lender prompt written notice of the
following:
(a) any Event of Default or Default, specifying the
nature and extent thereof and the corrective action (if
any) taken or proposed to be taken with respect thereto;
(b) the filing or commencement of, or any threat or
notice of intention of any person to file or commence,
any action, suit or proceeding, whether at law or in
equity or by or before any Governmental Authority,
against any Loan Party or any Affiliate thereof that
could reasonably be expected to materially impair (i)
the ability of any Loan Party to perform any of its
obligations under any Loan Document to which it is or
will be a party or (ii) the rights of or benefits
available to the Lenders under any Loan Document; and
(c) any change in the ratings by S&P or Moody's of
the Index Debt.
Section 5.05. Employee Benefits. (a) Comply in
all material respects with the applicable provisions of ERISA
and the Code and (b) furnish to the Administrative Agent (i)
as soon as possible after, and in any event within 10 days
after any Responsible Officer of Beneficial or any Borrower
or any ERISA Affiliate knows or has reason to know that, any
ERISA Event has occurred that, alone or together with any
other ERISA Event could reasonably be expected to result in
liability of any Loan Party in an aggregate amount exceeding
$100,000,000 or requiring payments exceeding $25,000,000 in
any year, a statement of a Financial Officer of Beneficial
setting forth details as to such ERISA Event and the action,
if any, that the Loan Party proposes to take with respect
thereto.
Section 5.06. Maintaining Records; Access to
Properties and Inspections. Keep proper books of record and
account in which full, true and correct entries in conformity
with GAAP and all requirements of law are made of all
dealings and transactions in relation to its business and
activities. Beneficial will permit any representatives
designated by the Administrative Agent to visit Beneficial
and inspect the financial records and the properties of
Beneficial or any other Loan Party or any Subsidiary at
reasonable times and as often as reasonably requested and to
make extracts from and copies of such financial records, and
permit any representatives designated by the Administrative
Agent to discuss the affairs, finances and condition of any
Loan Party or any Subsidiary with the officers of Beneficial,
and to the extent necessary, of any Loan Party or any other
Subsidiary and independent accountants therefor.
Section 5.07. Use of Proceeds. Use the proceeds
of the Loans and request the issuance of Letters of Credit
only for the purposes set forth in the preamble to this
Agreement.
Section 5.08. Status of Obligations. Ensure that
the obligations under the Loan Documents shall at all times
be direct and general obligations of the applicable Loan
Party and shall at all times rank at least pari passu in all
respects with all other present and future outstanding
unsecured and unsubordinated indebtedness of such Loan Party.
Section 5.09. Business of Loan Parties and
Subsidiaries. Carry on and conduct, and cause each
Subsidiary to carry on and conduct, its business in the
financial services industry and do all things necessary to
remain duly incorporated, validly existing and in good
standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is
conducted from time to time.
ARTICLE VI. NEGATIVE COVENANTS
Each of the Loan Parties covenants and agrees with
each Lender that, so long as this Agreement shall remain in
effect and until the Commitments have been terminated and the
principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document
have been paid in full and all Letters of Credit have been
cancelled or have expired and all amounts drawn thereunder
have been reimbursed in full, unless the Required Lenders
shall otherwise consent in writing, neither Beneficial nor
any Borrower will:
Section 6.01. Liens. Create, incur, assume or
permit to exist, nor will they cause or permit any of the
Consolidated Subsidiaries to create, incur, assume or permit
to exist, any Lien on any property or assets (including stock
or other securities of any Person, including any Subsidiary)
now owned or hereafter acquired by it or on any income or
revenues or rights in respect of any thereof, securing any
obligation unless contemporaneously therewith effective
provision is made to secure the Lenders equally and ratably
with such obligation for so long as such obligation is so
secured; provided, however, that the foregoing restrictions
of this Section 6.01 shall not prevent or be deemed to
prohibit:
(a) any Liens on property or assets of Beneficial
and the Consolidated Subsidiaries existing on the date
hereof; provided that such Liens shall secure only those
obligations which they secure on the date hereof;
(b) any Lien existing on any property or asset at
the date of acquisition thereof by Beneficial or any
Consolidated Subsidiary whether or not the Indebtedness
secured by such Lien is assumed or guaranteed by
Beneficial or any Consolidated Subsidiary; provided that
such Lien does not extend to any other property or
assets of Beneficial or any Consolidated Subsidiary;
(c) any deposits or pledges of any property or
asset of Beneficial or any Consolidated Subsidiary with
or any other form of Lien given to any Governmental
Authority or any body created or approved by law or
governmental regulation in order to entitle Beneficial
or such Consolidated Subsidiary to maintain self
insurance, or to participate in any fund in connection
with workmen's compensation, disability benefits,
unemployment insurance, old age pensions, or other
social benefits or to share in any privileges or other
benefits available to companies participating in any
such arrangement or for liability or any insurance risks
or for any other purpose at any time required by law or
governmental regulation in connection with the
transaction of any business or the exercise of any
privilege or license; or deposits of assets of
Beneficial or a Consolidated Subsidiary with any surety
company or clerk of any court, or in escrow, as
collateral in connection with, or in lieu of, any bond
on appeal by Beneficial or such Consolidated Subsidiary
from any judgment or decree against it, or in connection
with any other proceedings in actions at law or in
equity or in admiralty by or against Beneficial or any
Consolidated Subsidiary;
(d) purchases of property or assets upon
conditional sale agreements or lease agreements or
conditional sale and lease agreements;
(e) (i) in favor of any lender of moneys or holder
of commercial paper, a banker's lien or a right of
offset on moneys of Beneficial or a Consolidated
Subsidiary (A) deposited with such lender or holder in
the ordinary course of business or (B) lent or otherwise
made available to such lender, or to an affiliate
thereof, in connection with the obtaining from such
lender of borrowings in currencies other than U.S.
dollars, (ii) Liens for taxes, assessments and
governmental charges or levies imposed upon it or upon
its income or profits, or upon any of its property, real
or personal, or upon any part thereof if the same shall
not at the time be due and payable, or are being
contested in good faith by appropriate proceedings, and
(iii) Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens, for sums not yet
due or being contested in good faith by appropriate
proceedings;
(f) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar
encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount
and do not materially detract from the value of the
property subject thereto or interfere with the ordinary
conduct of the business of Beneficial or any of the
Consolidated Subsidiaries;
(g) any Liens securing Indebtedness or other
obligations of a Consolidated Subsidiary owing to
Beneficial;
(h) purchase money mortgages or pledges or other
purchase money Liens upon any property hereafter
acquired by Beneficial or such Consolidated Subsidiary,
which shall include mortgages, pledges or Liens securing
the payment of any part of or all the purchase price of
such property or securing any Indebtedness incurred or
committed to prior to, at the time of or within 90 days
after the acquisition of such property for the purpose
of financing any part of the purchase price thereof;
(i) any Liens on property, assets or shares of
stock of a Consolidated Subsidiary at the time such
Subsidiary becomes a Consolidated Subsidiary;
(j) Liens to secure any refinancing, refunding,
extension, renewal or replacement (or successive
refinancings, refundings, extensions, renewals or
replacements) as a whole, or in part, of any
Indebtedness secured by any Lien referred to in the
foregoing clauses (a), (b), (h) and (i); provided,
however, that (x) such new Lien shall be limited to all
or part of the same property that secured the original
Lien (plus improvements on such property) and (y) the
Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed
amount of Indebtedness described under clauses (a), (b),
(h) and (i) above at the time the original Lien became a
permitted Lien under this Section 6.01 and (B) an amount
necessary to pay any fees and expenses, including
premiums, related to such refinancing, refunding,
extension, renewal and replacement;
(k) in connection with any Consolidated Subsidiary
operating outside the territorial limits of the United
States of America, any Lien of any kind upon any of its
properties of any character to secure, in the ordinary
course of business, its Indebtedness for money borrowed
outside the territorial limits of the United States of
America if, in the countries in which it incurs such
Indebtedness it is necessary or appropriate to borrow on
a secured basis or to deposit collateral to secure all
or any of its obligations; and
(l) (i) other consensual Liens in the ordinary
course of business of Beneficial or any Consolidated
Subsidiary that secure Indebtedness, which, in
accordance with GAAP, would not be included in total
liabilities as shown on Beneficial's consolidated
balance sheet, or (ii) Liens created by Beneficial or
any Consolidated Subsidiary in connection with a
transaction intended by Beneficial or such Consolidated
Subsidiary to be a sale of the properties or assets of
Beneficial or such Consolidated Subsidiary, provided
that the Lien is upon any or all of the properties or
assets intended to be sold, the income from such
properties or assets and/or the proceeds of such
properties or assets.
Notwithstanding the provisions of this Section
6.01, Beneficial or any Consolidated Subsidiary may, without
equally and ratably securing the Lenders hereunder, create,
incur, assume or permit to exist any Lien on any property or
assets not excepted by subsections (a) through (l) hereof to
secure Indebtedness of Beneficial or any Consolidated
Subsidiary, if the aggregate amount of such Indebtedness
existing at such time and secured by Liens not so excepted,
and the aggregate Value of the Sale and Lease-Back
Transactions permitted under subsection (ii) of Section 6.02,
does not exceed an amount equal to 10% of the Consolidated
Net Worth at such time.
Section 6.02. Sale and Lease-Back Transactions.
Enter into, nor will they cause or permit any of the
Consolidated Subsidiaries to enter into, any Sale and Lease-
Back Transactions unless (i) Beneficial or such Consolidated
Subsidiary would be entitled to create a Lien on such
property securing Indebtedness in an amount equal to the
Value with respect to such Sale and Lease-Back Transaction
without equally and ratably securing the Lenders pursuant to
Section 6.01 or (ii) the net proceeds from such Sale and
Lease-Back Transaction are at least equal to the fair value
(as determined by the Board of Directors) of such property
and Beneficial or such Consolidated Subsidiary shall apply or
cause to be applied an amount in cash equal to such net
proceeds to (x) the acquisition of property, within six
months of the effective date of any such Sale and Lease-Back
Transaction or (y) the retirement, within 30 days of the
effective date of any such sale and Lease-Back Transaction, of
Indebtedness.
Section 6.03. Mergers, Consolidations, Sales of
Assets and Acquisitions. Consolidate with any other Person
or permit a merger of any other Person into it or merge into
any other Person, or sell its properties and assets as, or
substantially as, an entirety, except upon the terms and
conditions set forth in this Section 6.03. Nothing contained
in this Agreement shall be deemed to prevent the
consolidation or merger of Beneficial with or into any other
corporation, or the merger into Beneficial of any other
corporation, or the sale by Beneficial of its property and
assets as, or substantially as, an entirety, or otherwise;
provided, however, that: (a) in case of any such
consolidation or merger, the corporation resulting from such
consolidation or any corporation other than Beneficial into
which Beneficial shall merge shall succeed to and be
substituted for Beneficial with the same effect as if
Beneficial had been named as a Loan Party herein and shall
become liable and be bound for, and shall expressly assume,
the due and punctual payment of all obligations and the
performance and observance of each and every covenant,
agreement and condition of this Agreement on Beneficial's
part to be performed or observed; (b) as a condition of any
such sale of the property and assets of Beneficial as, or
substantially as, an entirety, the corporation to which such
property and assets shall be sold shall (1) expressly assume,
as a part of the purchase price thereof, the due and punctual
payment of all obligations and the performance and observance
of all the covenants, agreements and conditions of this
Agreement on Beneficial's part to be performed or observed,
and (2) simultaneously with the delivery to Beneficial of the
conveyances or instruments of transfer of such property and
assets, execute and deliver to the Administrative Agent a
proper agreement in form and substance satisfactory to the
Administrative Agent, whereby such purchasing corporation
shall so assume the due and punctual payment of all
obligations and the performance and observance of each and
every covenant, agreement and condition of this Agreement on
Beneficial's part to be performed or observed, to the same
extent that Beneficial is bound and liable; and (c) in the
case of any such consolidation, merger, or sale, immediately
after giving effect thereto, no Event of Default or Default
shall have occurred and be continuing.
Upon any consolidation or merger, or any sale of
the properties and assets of Beneficial as, or substantially
as, an entirety in accordance with the provisions of this
Section 6.03, the corporation formed by such consolidation or
into which Beneficial shall have been merged or to which such
sale shall have been made shall succeed to and be substituted
for Beneficial with the same effect as if Beneficial had been
named herein as a party hereto, and thereafter from time to
time such corporation may exercise each and every right and
power of Beneficial under this Agreement in its own name; and
any act or proceeding by any provision of this Agreement required
or permitted to be done by any board or officer of Beneficial
may be done with like force and effect by the like board or
officer of any corporation that shall at the time be the successor of
Beneficial hereunder.
Nothing contained in this Agreement shall be deemed
to prevent the consolidation or merger of any Borrower (other
than Beneficial) with or into Beneficial or any other
corporation, or the sale by such Borrower of its property and
assets as, or substantially as, an entirety, or otherwise;
provided, however, that any such Borrower prior to entering
into any such transaction with any other corporation (other
than Beneficial) shall (i) prepay all of its outstanding CD
Borrowings, Eurodollar Revolving Credit Borrowings and ABR
Borrowings, in whole, pursuant to Section 2.12 and (ii) have
Beneficial assume all of its outstanding Competitive
Borrowings and Short-Term Loans.
Section 6.04. Consolidated Net Worth. Permit at
any time Consolidated Net Worth to be less than
$1,000,000,000.
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following
events ("Events of Default"):
(a) any representation or warranty made or deemed
made in or in connection with any Loan Document or the
borrowings or issuances of Letters of Credit hereunder,
or any representation, warranty, statement or
information contained in any report, certificate,
financial statement or other instrument furnished in
connection with or pursuant to any Loan Document, shall
prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any
principal of any Loan or the reimbursement with respect
to any L/C Disbursement when and as the same shall
become due and payable, whether at the due date thereof
or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any
interest on any Loan or any Fee or L/C Disbursement or
any other amount (other than an amount referred to in
(b) above) due under any Loan Document (other than the
Guarantee Agreement), when and as the same shall become
due and payable, and such default shall continue
unremedied for a period of five Business Days;
(d) default shall be made in the due observance or
performance by any Loan Party or any Subsidiary of any
covenant, condition or agreement contained in Section
5.01(a), 5.04 or 5.07 or in Article VI;
(e) default shall be made in the due observance or
performance by any Loan Party or any Subsidiary of any
covenant, condition or agreement contained in any Loan
Document (other than the Guarantee Agreement) (other
than those specified in (b), (c) or (d) above) and such
default shall continue unremedied for a period of 30
days after written notice thereof from the
Administrative Agent or any Lender to Beneficial;
(f) any Loan Party or any Subsidiary shall fail to
pay any principal or interest, regardless of amount, due
in respect of any Indebtedness in a principal amount in
excess of $50,000,000, individually or in the aggregate,
when and as the same shall become due and payable (after
giving effect to any original, contractual grace
period);
(g) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of
any Loan Party, any Selected Subsidiary or any 10%
Subsidiaries or of a substantial part of the property or
assets of any Loan Party, any Selected Subsidiary or any
10% Subsidiaries, under Title 11 of the United States
Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator
or similar official for any Loan Party, any Selected
Subsidiary or any 10% Subsidiaries or for a substantial
part of the property or assets of a Loan Party or any
such Subsidiary or (iii) the winding-up or liquidation
of any Loan Party, any Selected Subsidiary or any 10%
Subsidiaries; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be
entered;
(h) any Loan Party, any Selected Subsidiary or any
10% Subsidiaries shall (i) voluntarily commence any
proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal, state or
foreign bankruptcy, insolvency, receivership or similar
law, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in
(g) above, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Loan Party, any
Selected Subsidiary or any 10% Subsidiaries or for a
substantial part of the property or assets of any Loan
Party, any Selected Subsidiary or any 10% Subsidiaries,
(iv) file an answer admitting the material allegations
of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they
become due or (vii) take any action for the purpose of
effecting any of the foregoing;
(i) one or more judgments for the payment of money
in an aggregate amount in excess of $50,000,000 shall be
rendered against any Loan Party, any Subsidiary or any
combination thereof and the same shall remain
undischarged for a period of 90 consecutive days during
which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to
levy upon assets or properties of any Loan Party or any
Subsidiary or to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the
opinion of the Required Lenders, when taken together with
all other such ERISA Events, could reasonably be expected
to result in liability of Beneficial and its ERISA
Affiliates in an aggregate amount exceeding $200,000,000
or to require payments exceeding $50,000,000 in any year;
(k) there shall have occurred a Change in Control;
or
(l) if the Guarantor shall default in the payment or
performance of any of its obligations under the Guarantee
Agreement;
then, and in every such event (other than an event with
respect to any Loan Party described in paragraph (g) or (h)
above), and at any time thereafter during the continuance of
such event, the Administrative Agent may with the consent of
the Required Lenders, and at the request of the Required
Lenders shall, by notice to Beneficial, take either or both of
the following actions, at the same or different times: (i)
terminate forthwith the Commitments and (ii) declare the Loans
then outstanding to be forthwith due and payable in whole or
in part, whereupon the principal of the Loans so declared to
be due and payable, together with accrued interest thereon and
any unpaid accrued Fees and all other liabilities of
Beneficial and the Borrowers accrued hereunder and under any
other Loan Document, shall become forthwith due and payable,
without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived by
Beneficial and each Borrower, anything contained herein or in
any other Loan Document to the contrary notwithstanding; and
in any event with respect to any Loan Party described in
paragraph (g) or (h) above, the Commitments shall
automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Loan
Parties accrued hereunder and under any other Loan Document,
shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by each Loan Party,
anything contained herein or in any other Loan Document to the
contrary notwithstanding.
ARTICLE VIII. THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated
by this Agreement, Credit Suisse is hereby appointed to act as
Administrative Agent on behalf of the Lenders and the Issuing
Banks. Each of the Lenders and each assignee of any such
Lender, hereby irrevocably authorizes the Administrative Agent
to take such actions on behalf of such Lender or assignee or
such Issuing Bank and to exercise such powers as are
specifically delegated to the Administrative Agent by the
terms and provisions hereof and of the other Loan Documents,
together with such actions and powers as are reasonably
incidental thereto. The Administrative Agent is hereby
expressly authorized by the Lenders and the Issuing Banks,
without hereby limiting any implied authority, (a) to receive
on behalf of the Lenders and the Issuing Banks all payments of
principal of and interest on the Loans (other than Short-Term
Loans), all payments in respect of L/C Disbursements and all
other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender or each Issuing Bank its proper share
of each payment so received; (b) to give notice on behalf of each
of the Lenders to Beneficial of any Event of Default specified in
this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; and
(c) to distribute to each Lender copies of all notices, financial
statements and other materials delivered by any Loan Party pursuant
to this Agreement or the other Loan Documents as received by the
Administrative Agent.
Neither the Administrative Agent nor any of its
directors, officers, employees or agents shall be liable as
such for any action taken or omitted by any of them except for
its or his acts or omissions that constitute its or his own
gross negligence or wilful misconduct, or be responsible for
any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or
be required to ascertain or to make any inquiry concerning the
performance or observance by any Loan Party of any of the
terms, conditions, covenants or agreements contained in any
Loan Document. The Administrative Agent shall not be
responsible to the Lenders for the due execution, genuineness,
validity, enforceability or effectiveness of this Agreement or
any other Loan Documents, instruments or agreements. The
Administrative Agent shall in all cases be fully protected in
acting, or refraining from acting, in accordance with written
instructions signed by the Required Lenders and, except as
otherwise specifically provided herein, such instructions and
any action or inaction pursuant thereto shall be binding on
all the Lenders. The Administrative Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on
any instrument or document reasonably believed by it in good
faith to be genuine and correct and to have been signed or
sent by the proper Person or Persons. Neither the
Administrative Agent nor any of its directors, officers,
employees or agents shall have any responsibility to any Loan
Party on account of the failure of or delay in performance or
breach by any Lender or any Issuing Bank of any of its
obligations hereunder or to any Lender or any Issuing Bank on
account of the failure of or delay in performance or breach by
any other Lender or Issuing Bank or any Loan Party of any of
their respective obligations hereunder or under any other Loan
Document or in connection herewith or therewith. The
Administrative Agent may execute any and all duties hereunder
by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with
respect to all matters arising hereunder and shall not be
liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.
The Lenders hereby acknowledge that the
Administrative Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested
in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a
successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by notifying the
Lenders and Beneficial. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor.
If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative
Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in
New York, New York, having a combined capital and surplus of
at least $500,000,000 or an Affiliate of any such bank. Upon
the acceptance of any appointment as Administrative Agent
hereunder by a successor bank, such successor shall succeed to
and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and
obligations hereunder. After the Administrative Agent's
resignation hereunder, the provisions of this Article and
Section 9.05 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it
while it was acting as Administrative Agent.
With respect to the Loans made by it hereunder, the
Administrative Agent in its individual capacity and not as
Administrative Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were
not the Administrative Agent, and the Administrative Agent and
its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with any Loan Party
or any Subsidiary or other Affiliate thereof as if it were not
Administrative Agent.
Each Lender agrees (a) to reimburse the
Administrative Agent, on demand, in the amount of its pro rata
share (based on its Commitment hereunder) of any expenses
incurred for the benefit of the Lenders by the Administrative
Agent, including counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Lenders,
that shall not have been reimbursed by any Loan Party;
provided that the Administrative Agent shall repay any amount
paid over to it (net of all out-of-pocket expenses of the
Administrative Agent) to such Lender to the extent that the
Administrative Agent shall have recovered such expenses from
any Loan Party and (b) to indemnify and hold harmless the
Administrative Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata
share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted
against it in its capacity as the Administrative Agent or any
of them in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or
omitted by it or any of them under this Agreement or any other
Loan Document, to the extent the same shall not have been
reimbursed by any Loan Party, provided that no Lender shall be
liable to the Administrative Agent or any such other
indemnified Person for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements are determined by a
court of competent jurisdiction to have resulted from the
gross negligence or wilful misconduct of the Administrative
Agent or any of its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any
other Lender and based on such documents and
information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own
decisions in taking or not taking action under or based upon
this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX. MISCELLANEOUS
Section 9.01. Notices. Notices and other
communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopy, as
follows:
(a) if to Beneficial, to it at One Christina Centre,
301 North Walnut Street, 18th Floor, Wilmington, Delaware
19801, Attention of Corporate Secretary (telecopy number
(302) 425-2518), with a copy to it at 300 Beneficial
Center, Peapack, New Jersey 07977, Attention of Corporate
Treasurer (Telecopy No. (908) 781-3623) and if to an
Eligible Subsidiary, to it at One Christina Centre, 301
North Walnut Street, 18th Floor, Wilmington, Delaware
19801, Attention of Corporate Secretary (telecopy number
(302) 425-2518), with a copy to it at Beneficial as set
forth above;
(b) if to the Administrative Agent, to it at 12 East
49th Street, New York, New York 10017, Attention of
Agency Group (Telecopy No. (212) 238-5073); and
(c) if to a Lender, to it at its address (or
telecopy number) set forth on Schedule 2.01 or in the
Assignment and Acceptance pursuant to which such Lender
shall have become a party hereto.
All notices and other communications given to any party hereto
in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt if delivered
by hand or overnight courier service or sent by telecopy or on
the date five Business days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or
mailed (properly addressed) to such party as provided in this
Section 9.01 or in accordance with the latest unrevoked
direction from such party given in accordance with this
Section 9.01.
Section 9.02. Survival of Agreement. All
covenants, agreements, representations and warranties made by
the Loan Parties herein and in the certificates or other
instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and the
Issuing Banks and shall survive the making by the Lenders of
the Loans and the issuance of Letters of Credit by the Issuing
Banks, regardless of any investigation made by the Lenders or
the Issuing Banks or on their behalf, and shall continue in
full force and effect as long as the principal of or any
accrued interest on any Loan or any Fee or any other amount
payable under this Agreement or any other Loan Document is
outstanding and unpaid or any Letter of Credit is outstanding
and so long as the Commitments have not been terminated. The
provisions of Sections 2.13, 2.15, 2.19 and 9.05 shall remain
operative and in full force and effect regardless of the
expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the expiration
of any Letter of Credit, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the
Administrative Agent, any Lender or any Issuing Bank.
Section 9.03. Binding Effect. This Agreement shall
become effective when it shall have been executed by each Loan
Party and the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure
to the benefit of the parties hereto and their respective
permitted successors and assigns.
Section 9.04. Successors and Assigns. (a)
Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of each
Loan Party, the Administrative Agent, the Issuing Banks or the
Lenders that are contained in this Agreement shall bind and
inure to the benefit of their respective successors and
assigns.
(b) Each Lender may assign to one or more
assignees all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it);
provided, however, that (i) except in the case of an
assignment to a Lender or an Affiliate of such Lender, (x)
Beneficial (but only to the extent that no Default or Event of
Default has occurred and is continuing) and the Administrative
Agent (and, in the case of any assignment of a Commitment,
each Issuing Bank) must give their prior written consent to
such assignment (which consents shall not be unreasonably
withheld) and (y) the amount of the Commitment of the
assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to
such assignment is delivered to the Administrative Agent)
shall not be less than $10,000,000 (or, if less, the entire
remaining amount of such Lender's Commitment), (ii) the
parties to each such assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500 and
(iii) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire.
Upon acceptance and recording pursuant to paragraph (e) of
this Section 9.04, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall
be at least five Business Days after the execution thereof,
(A) the assignee thereunder shall be a party hereto and, to
the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under
this Agreement and (B) the assigning Lender thereunder shall,
to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an
assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Sections
2.13, 2.15, 2.19 and 9.05, as well as to any Fees accrued for
its account and not yet paid).
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the assignee
thereunder shall be deemed to confirm to and agree with each
other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial
owner of the interest being assigned thereby free and clear of
any adverse claim and that its Commitment, and the outstanding
balances of its Revolving Loans and Competitive Loans, in each
case without giving effect to assignments thereof which have
not become effective, are as set forth in such Assignment and
Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with
this Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this
Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto, or the financial condition
of any Loan Party or any Subsidiary or the performance or
observance by any Loan Party or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or
any other instrument or document furnished pursuant hereto;
(iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv)
such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial
statements referred to in Section 3.05 or delivered pursuant
to Section 5.03 and such other documents and information as it
has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v)
such assignee will independently and without reliance upon the
Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement;
(vi) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to
the Administrative Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this
purpose as an agent of the Borrowers, shall maintain at one of
its offices in The City of New York a copy of each Assignment
and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans owing to,
each Lender pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be
conclusive and the Borrowers, the Administrative Agent, the
Issuing Banks and the Lenders may treat each person whose name
is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The
Register shall be available for inspection by Beneficial, any
Issuing Bank and any Lender, at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed
Assignment and Acceptance executed by an assigning Lender and
an assignee, an Administrative Questionnaire completed in
respect of the assignee (unless the assignee shall already be
a Lender hereunder), the processing and recordation fee
referred to in paragraph (b) above and, if required, the
written consent of Beneficial, each Issuing Bank and the
Administrative Agent to such assignment, the Administrative
Agent shall (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and
(iii) give prompt notice thereof to the Lenders and the
Issuing Banks. No assignment shall be effective unless it has
been recorded in the Register as provided in this paragraph
(e).
(f) Each Lender may without the consent of
Beneficial, the Borrowers, any Issuing Bank or the
Administrative Agent sell participations to one or more banks
or other entities in all or a portion of its rights and
obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it); provided,
however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks
or other entities shall be entitled to the benefit of the cost
protection provisions contained in Sections 2.13, 2.15 and
2.19 to the same extent as if they were Lenders and (iv) Beneficial,
the Borrowers, the Administrative Agent, the Issuing Banks and the
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under
this Agreement, and such Lender shall retain the sole right to
enforce the obligations of Beneficial, the Borrowers relating
to the Loans or L/C Disbursements and to approve any
amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications or waivers
decreasing any Facility Fees, L/C Participation Fees or
Utilization Fees payable hereunder or the amount of principal
of or the rate at which interest is payable on the Loans,
extending any scheduled principal payment date or date fixed
for the payment of interest on the Loans, extending any
payment date on any Facility Fees, L/C Participation Fees or
Utilization Fees or increasing or extending the Commitments or
releasing the Guarantor).
(g) Any Lender or participant may, in connection
with any assignment or participation or proposed assignment or
participation pursuant to this Section 9.04, disclose to the
assignee or participant or proposed assignee or participant
any information relating to the Loan Parties furnished to such
Lender by or on behalf of the Loan Parties; provided that,
prior to any such disclosure of information designated by the
Loan Parties as confidential, each such assignee or
participant or proposed assignee or participant shall execute
an agreement whereby such assignee or participant shall agree
(subject to customary exceptions) to preserve the
confidentiality of such confidential information on terms no
less restrictive than those applicable to the Lenders pursuant
to Section 9.16.
(h) Any Lender may at any time assign all or any
portion of its rights under this Agreement to a Federal
Reserve Bank to secure extensions of credit by such Federal
Reserve Bank to such Lender; provided that no such assignment
shall release a Lender from any of its obligations hereunder
or substitute any such Bank for such Lender as a party hereto.
In order to facilitate such an assignment to a Federal Reserve
Bank, the applicable Borrower shall, at the request of the
assigning Lender, duly execute and deliver to the assigning
Lender a promissory note or notes evidencing the Loans made to
such Borrower by the assigning Lender hereunder.
(i) Except as set forth in this Agreement, no Loan
Party shall assign or delegate any of its rights or duties
hereunder without the prior written consent of the
Administrative Agent, each Issuing Bank and each Lender, and
any attempted assignment without such consent shall be null
and void.
Section 9.05. Expenses; Indemnity. (a) The
Borrowers and Beneficial agree, jointly and severally, to pay
all out-of-pocket expenses incurred by the Administrative
Agent in connection with the syndication of the credit
facilities provided for herein and the preparation and
administration of this Agreement and the other Loan Documents
or in connection with any amendments, modifications or waivers
of the provisions hereof or thereof (whether or not the
transactions hereby or thereby contemplated shall be
consummated) or incurred by the Administrative Agent or any
Lender in connection with the enforcement or protection of its
rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made or Letters of
Credit issued hereunder, including the fees, charges and
disbursements of Cravath, Swaine & Moore, counsel for the
Administrative Agent, and, in connection with any such
enforcement or protection, the fees, charges and disbursements
of any other counsel (including the allocated costs of in-
house counsel) for the Administrative Agent or any Issuing
Bank or Lender.
(b) The Borrowers and Beneficial agree, jointly and
severally, to indemnify the Administrative Agent, each Lender
and each Issuing Bank, each Affiliate of any of the foregoing
persons and each of their respective directors, officers,
employees and agents (each such person being called an
"Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees, charges
and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a
result of (i) the execution or delivery of this Agreement or
any other Loan Document or any agreement or instrument
contemplated thereby, the performance by the parties thereto
of their respective obligations thereunder or the consummation
of the Transactions and the other transactions contemplated
thereby, (ii) the use of the proceeds of the Loans or the
Letters of Credit, or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to
have resulted from the gross negligence or wilful misconduct
of such Indemnitee.
(c) The provisions of this Section 9.05 shall
remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the consummation
of the transactions contemplated hereby, the repayment of any
of the Loans, the expiration of the Commitments, the
expiration of any Letter of Credit, the invalidity or
unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on
behalf of the Administrative Agent, any Lender or any Issuing
Bank. All amounts due under this Section 9.05 shall be
payable on written demand therefor.
Section 9.06. Right of Setoff. If an Event of
Default shall have occurred and be continuing, each Lender is
hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time
owing by such Lender to or for the credit or the account of
any Borrower or Beneficial against any of and all the
obligations of any Borrower or Beneficial now or hereafter
existing under this Agreement and other Loan Documents held by
such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. The
rights of each Lender under this Section 9.06 are in addition
to other rights and remedies (including other rights of
setoff) which such Lender may have.
Section 9.07. Applicable Law. THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS
EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF. EACH LETTER OF CREDIT SHALL BY ITS
TERMS BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE
WITH, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS
(1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE,
PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS
NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF
NEW YORK.
Section 9.08. Waivers; Amendment. (a) No failure
or delay of the Administrative Agent, any Lender or any
Issuing Bank in exercising any power or right hereunder or
under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps
to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Administrative Agent,
the Issuing Banks and the Lenders hereunder and under the
other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such
waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or
demand on any Loan Party in any case shall entitle such Loan
Party to any other or further notice or demand in similar or
other circumstances.
(b) Neither this Agreement nor any provision hereof
may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the
Borrowers, Beneficial and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the
principal amount of, or extend the maturity of or any
scheduled principal payment date or date for the payment of
any interest on any Loan or any date for reimbursement of an
L/C Disbursement, or extend the payment date of any Facility
Fees, L/C Participation Fees or Utilization Fees or waive or
excuse any such payment or any part thereof, or decrease the
rate of interest on any Loan or L/C Disbursement, or amend or
modify the provisions of Section 2.13, 2.15 or 2.19 without
the prior written consent of each Lender affected thereby,
(ii) change or extend the Commitment or decrease the Facility
Fees, the L/C Participation Fees or the Utilization Fees of
any Lender without the prior written consent of such Lender,
or (iii) amend or modify the provisions of Section 2.16 or
9.04(i), the provisions of this Section, the definition of the
term "Required Lenders" or release the Guarantor, without the
prior written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent or any Issuing
Bank hereunder or under any other Loan Document without the
prior written consent of the Administrative Agent or each
Issuing Bank.
Section 9.09. Interest Rate Limitation.
Notwithstanding anything herein to the contrary, if at any
time the interest rate applicable to any Loan or participation
in any L/C Disbursement, together with all fees, charges and
other amounts which are treated as interest on such Loan or
participation in such L/C Disbursement under applicable law
(collectively the "Charges"), shall exceed the maximum lawful
rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding
such Loan or participation in accordance with applicable law,
the rate of interest payable in respect of such Loan or
participation hereunder, together with all Charges payable in
respect thereof, shall be limited to the Maximum Rate and, to
the extent lawful, the interest and Charges that would have
been payable in respect of such Loan or participation but were
not payable as a result of the operation of this Section 9.09
shall be cumulated and the interest and Charges payable to
such Lender in respect of other Loans or participations or
periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest
thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
Section 9.10. Entire Agreement. This Agreement and
the other Loan Documents constitute the entire contract
between the parties relative to the subject matter hereof. Any
other previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement and the
other Loan Documents. Nothing in this Agreement or in the
other Loan Documents, expressed or implied, is intended to
confer upon any party other than the parties hereto and
thereto any rights, remedies, obligations or liabilities under
or by reason of this Agreement or the other Loan Documents.
Section 9.11. WAIVER OF JURY TRIAL. EACH PARTY
HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section
9.11.
Section 9.12. Severability. In the event any one
or more of the provisions contained in this Agreement or in
any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
and therein shall not in any way be affected or impaired
thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good
faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
Section 9.13. Counterparts. This Agreement may be
executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an
original but all of which when taken together shall constitute
a single contract, and shall become effective as provided in
Section 9.03. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be as effective as
delivery of a manually signed counterpart of this Agreement.
Section 9.14. Headings. Article and Section
headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement
and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
Section 9.15. Jurisdiction; Consent to Service of
Process. (a) Each of the Loan Parties hereby irrevocably and
unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New
York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted
by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that
the Administrative Agent, any Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to
this Agreement or the other Loan Documents against each Loan
Party or its properties in the courts of any jurisdiction.
(b) Each of the Loan Parties hereby irrevocably and
unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives,
to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably
consents to service of process in the manner provided for
notices in Section 9.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
Section 9.16. Confidentiality. The Administrative
Agent, each of the Issuing Banks and Lenders agrees to keep
confidential (and to use its best efforts to cause its
respective agents and representatives to keep confidential)
the Information (as defined below) and all copies thereof,
extracts therefrom and analyses or other materials based
thereon, except that the Administrative Agent, any Issuing
Bank or any Lender shall be permitted to disclose Information
(a) to such of its respective officers, directors, employees,
agents, affiliates and representatives as need to know such
Information, (b) to the extent requested by any regulatory
authority, (c) to the extent otherwise required by applicable
laws and regulations or by any subpoena or similar legal
process, (d) in connection with any suit, action or
proceeding relating to this Agreement or any other Loan
Documents or (e) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this
Section 9.16 or (ii) becomes available to the Administrative
Agent, any Issuing Bank or any Lender on a nonconfidential
basis from a source other than any Loan Party. For the
purposes of this Section, "Information" shall mean all
financial statements, certificates, reports, agreements and
information (including all analyses, compilations and studies
prepared by the Administrative Agent, any Issuing Bank or any
Lender based on any of the foregoing) that are received from
any Loan Party and related to such Loan Party, any
shareholder of any Loan Party or any employee, customer or
supplier of such Loan Party, other than any of the foregoing
that were available to the Administrative Agent, any Issuing
Bank or any Lender on a nonconfidential basis prior to its
disclosure thereto by any Loan Party, and which are in the
case of Information provided after the date hereof, clearly
identified at the time of delivery as confidential. The
provisions of this Section 9.16 shall remain operative and in
full force and effect regardless of the expiration and term
of this Agreement.
Section 9.17. Termination of the Existing Credit
Agreements. Each of the undersigned Lenders, solely in its
capacity as a lender under the Existing Credit Agreements to
which it is a party with Beneficial, hereby waives any
requirement for notice of termination provided for in such
Agreements, and, assuming repayment of all amounts
outstanding thereunder, each such Lender agrees that the
Existing Credit Agreements to which each is a party shall
terminate as of the date hereof (other than any provisions
thereof that specifically survive the termination thereof).
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
BENEFICIAL CORPORATION,
by
/s/ Thomas P. McGough
Name: Thomas P. McGough
Title: Senior Vice President-
Finance and Treasurer
BENEFICIAL OKLAHOMA INC.,
by
/s/ Elizabeth A. Dawson
Name: Elizabeth A. Dawson
Title: Vice President and Treasurer
BENEFICIAL MORTGAGE CO. OF
OKLAHOMA,
by
/s/ Elizabeth A. Dawson
Name: Elizabeth a. Dawson
Title: Vice President and Treasurer
BENEFICIAL LOUISIANA INC.,
by
/s/ Elizabeth A. Dawson
Name: Elizabeth A. Dawson
Title: Vice President and Treasurer
BENEFICIAL MORTGAGE CO. OF
LOUISIANA,
by
/s/ Elizabeth A. Dawson
Name: Elizabeth A. Dawson
Title: Vice President and Treasurer
BENEFICIAL MORTGAGE CORPORATION,
by
/s/ Elizabeth A. Dawson
Name: Elizabeth A. Dawson
Title: Vice President and Treasurer
BENEFICIAL HOMEOWNER SERVICE CORPORATION,
by
/s/ Elizabeth A. Dawson
Name: Elizabeth A. Dawson
Title: Vice President and Treasurer
PERSONAL MORTGAGE CORPORATION,
by
/s/ Elizabeth A. Dawson
Name: Elizabeth A. Dawson
Title: Vice President and Treasurer
CREDIT SUISSE, Administrative Agent,
by
/s/ Heather J. Riekenberg
Name: Heather J. Riekenberg
Title: Associate
by
/s/ Ira Lubinsky
Name: Ira Lubinsky
Title: Associate
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, individually and
as Co-Arranger,
by
/s/ George Poon
Name: George Poon
Title: Vice President
CHEMICAL BANK, individually and
as Co-Arranger,
by
/s/ George C. Johnson
Name: George C. Johnson
Title: Vice President
UNION BANK OF SWITZERLAND, NEW
YORK BRANCH, individually and
as Co-Arranger,
by
/s/ Paul R. Morrison
Name: Paul R. Morrison
Title: Assistant Vice President
by
/s/ Robert A. High
Name: Robert A. High
Title: Assistant Treasurer
CREDIT SUISSE,
by
/s/ Christopher J. Eldin
Name: Christopher J. Eldin
Title: Member of Senior Management
by
/s/ Andrea E. Shkane
Name: Andrea E. Shkane
Title: Member of Senior Management
ABN AMRO BANK N.V. NEW YORK BRANCH,
by
/s/ Giovanni P. Fallone
Name: Giovanni P. Fallone
Title: Vice President
by
/s/ David W. Eastep
Name: David W. Eastep
Title: Credit Officer
BANCA DI ROMA S.P.A.,
by
/s/ Ralph L. Riehle
Name: Ralph L. Riehle
Title: First Vice President
by
/s/ Luca Balestra
Name: Luca Balestra
Title: Assistant Vice President
BANK OF MONTREAL,
by
/s/ Joseph Bliss
Name: Joseph Bliss
Title: Director
THE BANK OF NEW YORK,
by
/s/ Maria C. Mamilovich
Name: Maria C. Mamilovich
Title: Vice President
THE BANK OF NOVA SCOTIA,
by
/s/ John Campbell
Name: John Campbell
Title: Unit Head
THE BANK OF TOKYO TRUST COMPANY,
by
/s/ Mark R. Marron
Name: Mark R. Marron
Title: Vice President
BANQUE NATIONALE DE PARIS,
by
/s/ Phil Truesdale
Name: Phil Truesdale
Title: Vice President
by
/s/ John S. McGill
Name: John S. McGill
Title: Vice President
CANADIAN IMPERIAL BANK OF COMMERCE,
by
/s/ Lu Ann Bowers
Name: Lu Ann Bowers
Title: Authorized Signatory
THE CHASE MANHATTAN BANK, N.A.,
by
/s/ Susan F. Herzog
Name: Susan F. Herzog
Title: Vice President
COMERICA BANK,
by
/s/ Chris Georvassilis
Name: Chris Georvassilis
Title: Vice President
COMMERZBANK A.G.,
by
/s/ G. Rod McWalters Michael D. Hintz
Name: G. Rod McWalters Michael D. Hintz
Title: Vice President Vice President
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES,
by
/s/ Gayma Z. Shivnarain
Name: Gayma Z. Shivnarain
Title: Vice President
by
/s/ Robert M. Powers
Name: Robert M. Powers
Title: Associate
Credit Agreement dated as of DEN DANSKE BANK AKTIESELSKAB, CAYMAN
November 15, 1995 among the ISLANDS BRANCH,
Borrowers guaranteed by
Beneficial Corporation, various by
Banks as Lenders and Credit Suisse /s/ John A. O'Neill Sonia Kataria
as Administrative Agent and Name: John A. O'Neill Sonia Kataria
Arranger Title: Vice President Assistant Vice
President
DG BANK,
by
/s/ Pamela D. Ingram Robert B. Herber
Name: Pamela D. Ingram Robert B. Herber
Title: Assistant Vice Vice President
President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES,
by
/s/ Craig Erickson
Name: Craig Erickson
Title: Vice President
by
/s/ Lucas Missong
Name: Lucas Missong
Title: Assistant Treasurer
FIRST FIDELITY BANK N.A.,
by
/s/ Mary Grace Finn
Name: Mary Grace Finn
Title: Vice President
FIRST HAWAIIAN BANK,
by
/s/ Kathryn A. Plumb
Name: Kathryn A. Plumb
Title: Vice President
FIRST INTERSTATE BANK OF CALIFORNIA,
by
/s/ Patrick McCormick Jonathan S. David
Name: Patrick McCormick Jonathan S. David
Title: Senior Vice Assistant Vice
President President
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Peter Shimkus
Name: Peter Shimkus
Title: Corporate Banking Officer
THE FUJI BANK, LIMITED,
by
/s/ Gina M. Kearns
Name: Gina M. Kearns
Title: Vice President and Manager
LLOYDS BANK PLC,
by
/s/ Windsor R. Davies Stephen J. Attree
Name: Windsor R. Davies Stephen J. Attree
Title: Vice President Assistant Vice
and Manager President
MELLON BANK, N.A.,
by
/s/ Inba Ponnusamy
Name: Inba Ponnusamy
Title: Vice President
MIDLANTIC BANK, N.A.,
by
/s/ Eilleen McDonald
Name: Eilleen McDonald
Title: Assistant Vice President
THE MITSUBISHI BANK, LIMITED, NEW YORK BRANCH,
by
/s/ Robert J. Dilloff
Name: Robert J. Dilloff
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
by
/s/ Richard J. Herder
Name: Richard J. Herder
Title: Vice President
NATIONSBANK OF GEORGIA, N.A.,
by
/s/ Betty E. Reed
Name: Betty E. Reed
Title: Senior Vice President
NATIONAL WESTMINSTER BANK PLC, NATIONAL WESTMINSTER BANK PLC,
New York Branch NASSAU BRANCH
by
/s/ David L. Smith by
Name: David L. Smith /s/ David L. Smith
Title: Vice President Name: David L. Smith
Title: Vice President
NORDDEUTSCHE LANDESBANK
GIRONZENTRALE, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH,
by
/s/ Stephen K. Hunter
Name: Stephen K. Hunter
Title: Senior Vice President
by
/s/ Stephanie Hoevermann
Name: Stephanie Hoevermann
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Karen L. Voight
Name: Karen L. Voight
Title: Vice President
THE SANWA BANK LIMITED, NEW YORK BRANCH,
by
/s/ Joseph E. Leo
Name: Joseph E. Leo
Title: Vice President and Area Manager
SHAWMUT BANK CONNECTICUT, N.A.,
by
/s/ Philip S. Walker, Jr., CFA
Name: Philip S. Walker, Jr., CFA
Title: Vice President
SOCIETE GENERALE,
by
/s/ Gordon SaintDenis
Name: Gordon Saint-Denis
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH,
by
/s/ Shuntaro Higashi
Name: Shuntaro Higashi
Title: Joint General Manager
UNITED STATES NATIONAL BANK OF OREGON,
by
/s/ Douglas A. Rich
Name: Douglas A. Rich
Title: Vice President
THE YASUDA TRUST AND BANKING
COMPANY, LIMITED, NEW YORK BRANCH,
by
/s/ Patrick Owens
Name: Patrick Owens
Title: First Vice President
SCHEDULE 1.01
Eligible Subsidiaries
Beneficial Oklahoma Inc.
Beneficial Mortgage Co. of Oklahoma
Beneficial Louisiana Inc.
Beneficial Mortgage Co. of Louisiana
Beneficial Mortgage Corporation
Beneficial Homeowner Service Corporation
Personal Mortgage Corporation
SCHEDULE 2.01
Lenders
Name and Address of Lender Commitment
Credit Suisse $175,000,000
12 East 49th Street, New York, NY 10017-1071
Tel: (212) 238-5359
Fax: (212) 238-5389
Attn: Andrea Shkane
Bank of America NT&SA $175,000,000
335 Madison Avenue, New York, NY 10017
Tel: (212) 503-7045
Fax: (212) 503-7066
Attn: George Poon
Chemical Bank $150,000,000
270 Park Avenue, New York, NY 10017
Tel: (212) 270-4133
Fax: (212) 270-1789
Attn: George C. Johnson
Union Bank of Switzerland, $175,000,000
New York Branch
299 Park Avenue, New York, NY 10171
Tel: (212) 821-3358/3862
Fax: (212) 821-3383
Attn: Paul R. Morrison/Robert A. High
ABN AMRO Bank N.V. New York Branch $ 75,000,000
500 Park Avenue, New York, NY 10022
Tel: (212) 446-4111
Fax: (212) 446-4335
Attn: Giovanni P. Fallone
Banca di Roma S.p.A. $ 30,000,000
34 East 51st Street, New York, NY l0022
Tel: (212) 407-1772
Fax: (212) 407-1740
Attn: Ralph L. Riehle
Bank of Montreal $ 50,000,000
430 Park Avenue, New York, NY l0022
Tel: (212) 605-1463
Fax: (212) 605-1454
Attn: Melanie L. Shorofsky
The Bank of New York $110,000,000
One Wall Street, New York, NY l0286
Tel: (212) 635-6804
Fax: (212) 635-6999
Attn: Maria C. Mamilovich
The Bank of Nova Scotia $110,000,000
One Liberty Plaza, New York, NY l0006
Tel: (212) 225-5030
Fax: (212) 225-5090
Attn: Brian S. Allen
The Bank of Tokyo Trust Company $ 75,000,000
1251 Avenue of the Americas, New York, NY l0020
Tel: (212) 782-4337
Fax: (212) 782-6445
Attn: Mark R. Marron
Banque Nationale de Paris $ 50,000,000
499 Park Avenue, New York, NY l0022
Tel: (212) 415-9719
Fax: (212) 415-9695
Attn: Phil Truesdale
Canadian Imperial Bank of Commerce $110,000,000
425 Lexington Avenue, New York, NY l0017
Tel: (212) 856-3638
Fax: (212) 856-3613
Attn: Lu Ann Bowers
The Chase Manhattan Bank, N.A. $ 75,000,000
One Chase Manhattan Plaza, New York, NY l0081
Tel: (212) 552-6563
Fax: (212) 552-7879
Attn: Robert Frasca
Comerica Bank $ 50,000,000
500 Woodward Avenue, Detroit, MI 48226-3280
Tel: (313) 222-6239
Fax: (313) 222-3330
Attn: Chris Georvassilis
Commerzbank A.G. $110,000,000
2 World Financial Center, New York, NY l0281-
1050
Tel: (212) 266-7316
Fax: (212) 266-7235
Attn: Michael D. Hintz
Den Danske Bank Aktieselskab, Cayman Islands $ 25,000,000
Branch
280 Park Avenue, New York, NY l0017
Tel: (212) 984-8473
Fax: (212) 370-9239
Attn: Sonia Kataria
Deutsche Bank AG, New York and/or Cayman $110,000,000
Islands Branches
31 West 52nd Street, New York, NY l0019
Tel: (212) 474-7060
Fax: (212) 474-8108
Attn: Elisabeth A. Gutweniger
DG Bank $ 25,000,000
609 Fifth Avenue, New York, NY l0017
Tel: (212) 745-1581
Fax: (212) 745-1556
Attn: Robert B. Herber
Dresdner Bank AG, New York and Grand Cayman $ 75,000,000
Branches
75 Wall Street, New York, NY 10005
Tel: (212) 429-2237
Fax: (212) 429-2524
Attn: Ernest Fung
First Fidelity Bank N.A. $ 50,000,000
550 Broad Street, Newark, NJ 07102
Tel: (201) 565-1682
Fax: (201) 565-6681
Attn: Mary Grace Finn
First Hawaiian Bank $ 25,000,000
1132 Bishop Street, Honolulu, HI 96813
Tel: (808) 525-8179
Fax: (808) 525-6372
Attn: Kathryn A. Plumb
First Interstate Bank of California $ 70,000,000
770 Wilshire Boulevard, Los Angeles, CA 90017
Tel: (213) 614-4933
Fax: (213) 614-2569
Attn: Patrick J. McCormick
The First National Bank of Chicago $110,000,000
One First National Plaza, Chicago, IL 60670
Tel: (312) 732-2882
Fax: (312) 732-5296
Attn: Peter Shimkus
The Fuji Bank, Limited $ 25,000,000
Two World Trade Center, New York, NY 10048
Tel: (212) 898-2064
Fax: (212) 912-0516
Attn: Michael Gebauer
Lloyds Bank PLC $ 25,000,000
199 Water Street, New York, NY 10038
Tel: (212) 607-4970
Fax: (212) 607-4999
Attn: Windsor R. Davies
Mellon Bank, N.A. $122,500,000
One Mellon Bank Center, Pittsburgh, PA 15258-0001
Tel: (412) 234-4351
Fax: (412) 234-8087
Attn: Inba Ponnusamy
Midlantic Bank, N.A. $ 30,000,000
499 Thornall Street, Edison, NJ 08837
Tel: (908) 321-2307
Fax: (908) 321-2533
Attn: Eileen McDonald
The Mitsubishi Bank, Limited, New York Branch $ 25,000,000
225 Liberty Street, Two World Financial
Center, New York, NY 10281
Tel: (212) 667-2670
Fax: (212) 667-3554
Attn: Frank Conigliaro
Morgan Guaranty Trust Company of New York $122,500,000
60 Wall Street, New York, NY 10260-0060
Tel: (212) 648-6790
Fax: (212) 648-5548
Attn: Richard J. Herder
National Westminster Bank PLC $ 75,000,000
Birmingham Business Centre
P.O. Box 4641, 103 Colmore Row,
Birmingham, UK B3 3NR
Tel: (0121) 2342132
Fax: (0121) 2342111
Attn: Mike Ward
NationsBank of Georgia, N.A. $ 75,000,000
600 Peachtree Street, Atlanta, GE 30308
Tel: (404) 607-5578
Fax: (404) 607-6318
Attn: James W. Fee, Jr.
Norddeutsche Landesbank Gironzentrale, $ 25,000,000
New York Branch and/or Cayman Islands
Branch
1270 Avenue of Americas, New York, NY 10020
Tel: (212) 332-8606
Fax: (212) 332-8660
Attn: Stephanie Hoevermann
PNC Bank, National Association $ 75,000,000
100 South Broad Street, Land Title Building,
Philadelphia, PA 19101
Tel: (215) 585-5224
Fax: (215) 585-7615
Attn: Karen L. Voight
The Sanwa Bank Limited, New York Branch $ 75,000,000
55 East 52nd Street, New York, NY 10055
Tel: (212) 339-6205
Fax: (212) 754-1304
Attn: Joseph E. Leo
Shawmut Bank Connecticut, N.A. $ 50,000,000
777 Main Street, Hartford, CT 06115
Tel: (203) 986-5366
Fax: (203) 986-5367
Attn: Phillip S. Walker, Jr.
Societe Generale $110,000,000
1221 Avenue of the Americas, New York, NY
10020
Tel: (212) 278-7141
Fax: (212) 278-7430
Attn: Gordon Saint-Denis
The Sumitomo Bank, Limited, New York Branch $ 75,000,000
277 Park Avenue, New York, NY 10172
Tel: (212) 224-4127
Fax: (212) 224-5188
Attn: Michael D. Deadder
United States National Bank of Oregon $ 50,000,000
555 S.W. Oak Street PL-4, Portland, OR 97204
Tel: (503) 275-4940
Fax: (503) 275-4267
Attn: Douglas A. Rich
The Yasuda Trust and Banking Company, Limited, $ 30,000,000
New York Branch
666 Fifth Avenue, New York, NY 10103
Tel: (212) 373-5728
Fax: (212) 373-5796
Attn: Patrick Owens
SCHEDULE 2.03
Short-Term Lenders
Credit Suisse
Bank of America National Trust and Savings Association
Chemical Bank
Union Bank of Switzerland
The Bank of Tokyo Trust Company
Commerzbank A.G.
First Fidelity Bank N.A.
First Interstate Bank of California
Mellon Bank, N.A.
PNC Bank, National Association
SCHEDULE 3.07
Litigation
None.
SCHEDULE 4.02
EXISTING CREDIT AGREEMENTS
Counterparty with Beneficial Corporation Amount
Bank of America, N.T. & S.A. $ 52,500,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Amended and Restated Revolving Credit Agreement 122,500,000.00
dated as of September 1, 1994
Credit Suisse 52,500,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Renewable Revolving Credit Agreement 122,500,000.00
dated as of August 24, 1992
Union Bank of Switzerland 48,000,000.00
Short-Term Revolving Credit Agreement
dated as of October 1, 1991
Revolving Credit Agreement 112,000,000.00
dated as of September 1, 1994
Mellon Bank, N.A. 45,000,000.00
Short-Term Revolving Credit Agreement
dated as of October 1, 1994
Amended and Restated Revolving Credit Agreement 105,000,000.00
dated as of October 1, 1994
Morgan Guaranty Trust Company of New York 45,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 105,000,000.00
dated as of September 30, 1991
The Chase Manhattan Bank, N.A. 45,000,000.00
Short-Term Revolving Credit Agreement
dated as of July 1, 1991
Revolving Credit Agreement 105,000,000.00
dated as of July 1, 1991
Canadian Imperial Bank of Commerce 30,000,000.00
Revolving Credit Facility Letter
dated July 1, 1991
Revolving Credit Agreement 70,000,000.00
dated as of July 1, 1991
Chemical Bank 30,000,000.00
Short-Term Revolving Credit Agreement
dated as of October 1, 1994
Amended and Restated Revolving Credit Agreement 70,000,000.00
dated as of October 1, 1994
Commerzbank Aktiengesellschaft, New York Branch 30,000,000.00
Short-Term Revolving Credit Agreement
dated as of April 1, 1992
Multi-Year Revolving Credit Agreement 70,000,000.00
dated as of October 3, 1994
Deutsche Bank AG, New York Branch 30,000,000.00
and Deutsche Bank AG, Cayman Islands Branch
Short-Term Revolving Credit Agreement
dated as of October 1, 1994
Amended and Restated Revolving Credit Agreement 70,000,000.00
dated as of October 1, 1994
First Interstate Bank of California 30,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 30, 1993
Revolving Credit Agreement 70,000,000.00
dated as of September 30, 1991
The Bank of New York 30,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1991
Multi-Year Revolving Credit Agreement 70,000,000.00
dated as of October 1, 1994
The Bank of Nova Scotia 30,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 70,000,000.00
dated as of June 1, 1994
The First National Bank of Chicago 30,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Amended and Restated Revolving Credit Agreement 70,000,000.00
dated as of September 1, 1994
ABN AMRO Bank N.V. 85,000,000.00
Multi-Tranch Revolving Credit Agreement
dated as of September 2, 1991
PNC Bank, National Association 22,500,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Amended and Restated Revolving Credit Agreement 52,500,000.00
dated as of September 1, 1994
Shawmut Bank Connecticut, N.A. 22,500,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 52,500,000.00
dated as of November 1, 1993
Swiss Bank Corporation 70,000,000.00
Amended and Restated Revolving Credit Agreement
dated as of September 29, 1994
Bank of Montreal 15,000,000.00
Amended and Restated Revolving Credit Agreement
dated as of October 1, 1994
Multi-Year Revolving Credit Agreement 35,000,000.00
dated as of October 1, 1994
NatWest Bank N.A. formerly know as 17,000,000.00
National Westminster Bank USA
Amended and Restated Revolving Credit Agreement
dated as of October 1, 1994
Multi-Year Revolving Credit Agreement 33,000,000.00
dated as of October 1, 1994
Dresdner Bank AG, New York Branch 15,000,000.00
and Grand Cayman Branch
Short-Term Revolving Credit Agreement
dated as of October 1, 1994
Revolving Credit Agreement 35,000,000.00
dated as of October 1, 1993
NationsBank of Georgia, N.A. 15,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 35,000,000.00
dated as of October 18, 1993
The First National Bank of Boston 15,000,000.00
Short-Term Revolving Credit Agreement
dated as of July 1, 1994
Revolving Credit Agreement 35,000,000.00
dated as of July 1, 1994
The Sanwa Bank Limited, New York Branch 15,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 15, 1994
Revolving Credit Agreement 35,000,000.00
dated as of September 15, 1994
The Sumitomo Bank, Limited, New York Branch 15,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 35,000,000.00
dated as of March 31, 1993
The Bank of Tokyo Trust Company 13,500,000.00
Short-Term Revolving Credit Agreement
dated as of April 1, 1992
Revolving Credit Agreement 31,500,000.00
dated as of April 29, 1994
Comerica Bank 12,000,000.00
Amended and Restated Short-Term
Revolving Credit Agreement
dated as of September 1, 1994
Amended and Restated Long-Term 28,000,000.00
Revolving Credit Agreement
dated as of September 1, 1994
First Fidelity Bank, N.A. 12,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 28,000,000.00
dated as of December 3, 1993
Banca di Roma S.p.A., New York Branch 9,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Amended and Restated Revolving Credit Agreement 21,000,000.00
dated as of September 1, 1994
Banque Nationale de Paris, New York Branch 9,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 21,000,000.00
dated as of April 1, 1991
Midlantic Bank, National Association, formerly 9,000,000.00
Midlantic National Bank
Short-Term Revolving Credit Agreement
dated as of October 1, 1994
Revolving Credit Agreement 21,000,000.00
dated as of December 15, 1988
The Mitsubishi Bank, Limited, New York Branch 9,000,000.00
Short-Term Revolving Credit Agreement
dated as of January 1, 1995
Multi-Year Revolving Credit Agreement 21,000,000.00
dated as of January 1, 1995
The Northern Trust Company 9,000,000.00
Amended and Restated Revolving Credit Agreement
dated as of October 1, 1994
Multi-Year Revolving Credit Agreement 21,000,000.00
dated as of October 1, 1994
The Yasuda Trust & Banking Company, Limited 9,000,000.00
New York Branch
Short-Term Revolving Credit Agreement
dated as of January 13, 1995
Revolving Credit Agreement 21,000,000.00
dated as of June 4, 1993
United States National Bank of Oregon 9,000,000.00
Short-Term Revolving Credit Agreement
dated as of January 1, 1995
Multi-Year Revolving Credit Agreement 21,000,000.00
dated as of January 1, 1995
DG - Deutsche Genossenshaftsbank 7,500,000.00
New York and Cayman Island Branches
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 17,500,000.00
dated as of February 5, 1991
Norddeutsche Landesbank Girozentrale, New York 7,500,000.00
Branch and/or Cayman Islands Branch
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 17,500,000.00
dated as of October 1, 1993
Lloyds Bank Plc., New York Branch 6,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 14,000,000.00
dated as of July 15, 1993
Union Bank 4,500,000.00
Short-Term Revolving Credit Agreement
dated as of April 20, 1994
Multi-Year Revolving Credit Agreement 10,500,000.00
dated as of January 1, 1995
Wilmington Trust Company 4,500,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Amended and Restated Revolving Credit Agreement 10,500,000.00
dated as of September 1, 1994
Deposit Guaranty National Bank 3,000,000.00
Short-Term Revolving Credit Agreement
dated as of October 1, 1994
Multi-Year Revolving Credit Agreement 7,000,000.00
dated as of October 1, 1994
The First National Bank of Maryland 3,000,000.00
Short-Term Revolving Credit Agreement
dated as of September 1, 1994
Revolving Credit Agreement 7,000,000.00
dated as of April 20, 1992
EXHIBIT A
[FORM OF ADMINISTRATIVE DETAILS FORM]
EXHIBIT B
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as
of November 15, 1995 (the "Credit Agreement"), among
Beneficial Corporation, a Delaware corporation
("Beneficial"), the Guarantor, the Eligible Subsidiaries, the
Lenders, the Co-Arrangers and Credit Suisse, as
administrative agent for the Lenders (in such capacity, the
"Administrative Agent"). Terms defined in the Credit
Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without
recourse, to the Assignee, and the Assignee hereby purchases
and assumes, without recourse, from the Assignor, effective
as of the Effective Date set forth below (but not prior to
the registration of the information contained herein in the
Register pursuant to Section 9.04(e) of the Credit
Agreement), the interests set forth below (the "Assigned
Interest") in the Assignor's rights and obligations under the
Credit Agreement and the other Loan Documents, including,
without limitation, the amounts and percentages set forth
below of (i) the Commitments of the Assignor on the Effective
Date, (ii) the Loans owing to the Assignor which are
outstanding on the Effective Date and
(iii) participations in Letters of Credit which are
outstanding on the Effective Date. Each of the Assignor and
the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in
Section 9.04(c) of the Credit Agreement, a copy of which has
been received by each such party. From and after the
Effective Date (i) the Assignee shall be a party to and be
bound by the provisions of the Credit Agreement and, to the
extent of the interests assigned by this Assignment and
Acceptance, have the rights and obligations of a Lender
thereunder and under the Loan Documents and (ii) the Assignor
shall, to the extent of the interests assigned by this
Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being
delivered to the Administrative Agent together with (i) if
the Assignee is organized under the laws of a jurisdiction
outside the United States, the forms specified in Section
2.19(f) of the Credit Agreement, duly completed and executed
by such Assignee, (ii) if the Assignee is not already a
Lender under the Credit Agreement, an Administrative
Questionnaire in the form of Exhibit A to the Credit
Agreement and (iii) a processing and recordation fee of
$3,500.
3. This Assignment and Acceptance shall be
governed by and construed in accordance with the laws of the
State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
Percentage Assigned of Applicable
(Commitment Facility/Commitment
Amount Assigned (set forth, to at
and Identifying least 8 decimals, as a
information as to percentage of the
individual Facility and the
Competitive aggregate Commitments
Loans) of all Lenders
thereunder)
Facility/Commitment
Revolving Credit $ %
Competitive Loans $ %
The terms set forth above are
hereby agreed to: Accepted */
_________________, as Assignor CREDIT SUISSE,
as Administrative Agent
by:_________________________ by:_________________________
Name: Name:
Title: Title:
_________________, as Assignee BENEFICIAL CORPORATION
by:_________________________ by:_________________________
Name: Name:
Title: Title:
[Issuing Bank]
by:_________________________
Name:
Title:
*/To be completed to the extent consents are required under
Section 9.04(b) of the Credit Agreement.
EXHIBIT C
[Form of]
BORROWING REQUEST
Credit Suisse, as Administrative Agent for
the Lenders referred to below,
12 East 49th Street
New York, NY 10017
Attention of [ ]
[Date]
Ladies and Gentlemen:
The undersigned, [ ] (the
"Borrower"), refers to the Credit Agreement dated as of
November 15, 1995 (the "Credit Agreement"), among the
Borrower, Beneficial Corporation, the Eligible Subsidiaries,
the Co-Arrangers, the Lenders and Credit Suisse, as
administrative agent for the Lenders (in such capacity, the
"Agent"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms
in the Credit Agreement. The Borrower hereby gives notice
pursuant to Section 2.04 of the Credit Agreement that it
requests a Revolving Credit Borrowing under the Credit
Agreement, and in that connection sets forth below the terms
on which such Borrowing is requested to be made:
(A) Date of Borrowing
(which is a Business Day) ______________________
(B) Principal Amount of
Borrowing 1/ ______________________
_____________________
1/ Not less than $20,000,000 and in an integral
multiple of $5,000,000, but in any event not exceeding the
available Total Commitment.
(C) Borrowing option 2/ ______________________
(D) Interest Period and the last
day thereof 3/ ______________________
(E) Funds are requested to be disbursed to the Borrower's
account (Account No. ).
Upon acceptance of any or all of the Loans offered
by the Lenders in response to this request, the Borrower
shall be deemed to have represented and warranted that the
conditions to lending specified in Sections 4.01(b) and (c)
of the Credit Agreement have been satisfied.
[NAME OF BORROWER],
by
Name:
Title: [Responsible Officer]
_____________________
2/ Specify Eurodollar Borrowing, CD Borrowing or ABR
Borrowing.
3/ Which shall be subject to the definition of "Interest
Period" and end not later than the Maturity Date (applicable
for Eurodollar and CD Borrowings only).
EXHIBIT D-1
[Form of]
COMPETITIVE BID REQUEST
Credit Suisse, as Administrative Agent for
the Lenders referred to below,
12 East 49th Street
New York, N.Y. 10017
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [Name of Borrower] (the
"Borrower"), refers to the Credit Agreement dated as of
November 15, 1995 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among
the Borrower, Beneficial Corporation, the Eligible
Subsidiaries, the Lenders, the Co-Arrangers and Credit
Suisse, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"). Capitalized terms
used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives notice pursuant to Section 2.03(a)
of the Credit Agreement that it requests one or more
Competitive Borrowings under the Credit Agreement, and in
that connection sets forth below the terms on which such
Competitive Borrowing(s) is/are requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day) ____________________
(B) Principal Amount of
Competitive Borrowing 1/ ____________________
(C) Eurodollar or Fixed Rate Loan ____________________
1/ Not less than $20,000,000 (and in integral multiples
of $5,000,000) or greater than the Total Commitment then
available.
(D) Interest Period 2/ ____________________
Upon acceptance of any or all of the Loans offered
by the Lenders in response to this request, the Borrower
shall be deemed to have represented and warranted that the
conditions to lending specified in Sections 4.01(b) and
4.01(c) of the Credit Agreement have been satisfied.
Very truly yours,
[NAME OF BORROWER],
by
___________________________
Name:
Title: [Responsible Officer]
2/ Which shall be subject to the definition of "Interest
Period" and end not later than the Maturity Date.
3/ Unless an Alternative Currency is requested, bids
will be for Competitive Loans denominated in dollars.
EXHIBIT D-2
[Form of]
COMPETITIVE BID
Credit Suisse, as Administrative Agent for
the Lenders referred to below,
12 East 49th Street
New York, NY 10017
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [Name of Lender], refers to the
Credit Agreement dated as of November 15, 1995 (as amended,
supplemented or otherwise modified from time to time, the
"Credit Agreement"), among [Name of Borrower] (the
"Borrower"), Beneficial Corporation, the Eligible
Subsidiaries, the Co-Arrangers, the Lenders and Credit
Suisse, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"). Capitalized terms
used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The
undersigned hereby makes one or more Competitive Bids
pursuant to Section 2.03(b) of the Credit Agreement, in
response to the Competitive Bid Request made by the Borrower
on , 19 , and in that connection sets forth below
the terms on which such Competitive Bid(s) is/are made:
(A) Principal Amount 1/ ____________________
1/ In dollars not less than $20,000,000 or greater than
the requested Competitive Borrowing and in integral multiples
of $5,000,000. Multiple bids will be accepted by the
Administrative Agent.
(B) Competitive Bid Rate 2/ ____________________
(C) Interest Period ____________________
The undersigned hereby confirms that it is
prepared, subject to the conditions set forth in the Credit
Agreement, to extend credit to the Borrower upon acceptance
by the Borrower of this bid in accordance with Section
2.03(d) of the Credit Agreement.
Very truly yours,
[Name of Lender],
by
___________________
Name:
Title:
2/ I.e., LIBOR + or - %, in the case of Eurodollar
Loans or %, in the case of Fixed Rate Loans.
EXHIBIT D-3
[Form of]
COMPETITIVE BID ACCEPT/REJECT LETTER
Credit Suisse, as Administrative Agent for
the Lenders referred to below
12 East 49th Street
New York, NY 10017
[Date]
Attention: [ ]
Dear Sirs:
The undersigned, [Name of Borrower] (the
"Borrower"), refers to the Credit Agreement dated as of
November 15, 1995 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the
Borrower, Beneficial Corporation, the Eligible Subsidiaries,
the Co-Arrangers, the Lenders and Credit Suisse, as
administrative agent for the Lenders (in such capacity, the
"Administrative Agent").
In accordance with Section 2.03(c) of the Credit
Agreement, we have received a summary of bids in connection
with our Competitive Bid Request dated ___________ and in
accordance with Section 2.03(d) of the Credit Agreement, we
hereby accept the following bids for maturity on [date]:
Principal Amount Fixed Rate/Margin Lender
$ [%]/[+/-. %]
$
We hereby reject the following bids:
Principal Amount Fixed Rate/Margin Lender
$ [%]/[+/-. %]
$
The $ should be deposited in Credit
Suisse account number [ ] on [date].
Very truly yours,
[NAME OF BORROWER],
by
____________________
Name:
Title:
EXHIBIT D4
[Form of]
CONVERSION/CONTINUATION NOTICE
Credit Suisse, as Administrative Agent for
the Lenders referred to below,
12 East 49th Street
New York, NY 10017
Attention of [ ]
[Date]
Ladies and Gentlemen:
The undersigned, [ ] (the
"Borrower"), refers to the Credit Agreement dated as of
November 15, 1995 (the "Credit Agreement"), among the
Borrower, Beneficial Corporation, the Eligible Subsidiaries,
the Co-Arrangers, the Lenders and Credit Suisse, as
administrative agent for the Lenders (in such capacity, the
"Agent"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms
in the Credit Agreement. The Borrower hereby gives notice
pursuant to Section 2.11 of the Credit Agreement that it
requests a conversion or continuation under the Credit
Agreement, and in that connection sets forth below the terms
on which such conversion or continuation is requested to be
made:
(A) Principal Amount of
Borrowing to be
[converted] [continued] ______________________
(B) Date of [Conversion]
[Continuation](which
is a Business Day) ______________________
(C) Conversion from 1/ ______________________
(D) Conversion to 1/ ______________________
_____________________
1/ Specify Eurodollar Borrowing, CD Borrowing or ABR
Borrowing.
(E) If borrowing is to be
converted/continued as
Eurodollar or CD
Borrowing, Interest
Period ______________________
[NAME OF BORROWER],
by
________________________
Name:
Title: [Responsible Officer]
EXHIBIT E
GUARANTEE AGREEMENT dated as
of November 15, 1995, between BENEFICIAL
CORPORATION, a Delaware corporation (the
"Guarantor"), and CREDIT SUISSE, as
administrative agent (the "Administrative
Agent") for the Lenders (as defined in the
Credit Agreement referred to below).
Reference is made to the Credit Agreement dated as
of November 15, 1995 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among
Beneficial Corporation ("Beneficial"), the borrowers from
time to time party thereto, other than Beneficial (the
"Borrowers"), the Co-Arrangers party thereto, the lenders
from time to time party thereto (the "Lenders"), and Credit
Suisse, as Administrative Agent. Capitalized terms used and
not defined herein shall have the meanings assigned to such
terms in the Credit Agreement.
The Lenders have agreed to make Loans to
Beneficial and the Borrowers, and the Issuing Banks have
agreed to issue Letters of Credit for the accounts of
Beneficial and the Borrowers, pursuant to, and upon the terms
and subject to the conditions specified in, the Credit
Agreement. As the beneficial owner, directly or indirectly,
of all of the issued and outstanding capital stock of the
Borrowers, the Guarantor acknowledges that it will derive
substantial benefit from the making of the Loans by the
Lenders and the issuance of the Letters of Credit by the
Issuing Banks. The obligations of the Lenders to make Loans
and of the Issuing Banks to issue Letters of Credit are
conditioned on, among other things, the execution and
delivery by the Guarantor of a Guarantee Agreement in the
form hereof. As consideration therefor and in order to
induce the Lenders to make Loans and the Issuing Banks to
issue Letters of Credit, the Guarantor is willing to execute
this Agreement.
Accordingly, the parties hereto agree as follows:
Section 1. Guarantee. The Guarantor
unconditionally guarantees, as a primary obligor and not
merely as a surety, (a) the due and punctual payment of (i)
the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be
made by each Borrower under the Credit Agreement in respect
of any Letter of Credit, when and as due, including payments
in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (iii)
all other monetary obligations, including, without
limitation, interest, fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or
otherwise (including monetary obligations incurred during the
pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or
allowable in such proceeding), of each Borrower to the
Lenders under the Credit Agreement and the other Loan
Documents and (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of each
Borrower under or pursuant to the Credit Agreement and the
other Loan Documents and (c) unless otherwise agreed upon in
writing by the applicable Lender party thereto, all
obligations of each Borrower, monetary or otherwise, under
each interest rate cap agreement, interest rate swap
agreement or other agreement or arrangement that is entered
into by any Borrower in order to protect such Borrower
against fluctuations in interest rates (each, a "Interest
Rate Protection Agreement") entered into with a counterparty
that was a Lender at the time such Interest Rate Protection
Agreement was entered into (all the monetary and other
obligations referred to in the preceding clauses (a), (b) and
(c) being collectively called the "Obligations"). The
Guarantor further agrees that the Obligations may be extended
or renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its
guarantee notwithstanding any extension or renewal of any
Obligation.
Section 2. Obligations Not Waived. To the fullest
extent permitted by applicable law, the Guarantor waives
presentment to, demand of payment from and protest to any
Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable
law, the obligations of the Guarantor hereunder shall not be
affected by (a) the failure of the Administrative Agent, any
Issuing Bank or any Lender to assert any claim or demand or
to enforce or exercise any right or remedy against
Beneficial, any Borrower or any other guarantor of the
Obligations under the provisions of the Credit Agreement, any
other Loan Document or otherwise, (b) any rescission, waiver,
amendment or modification of, or any release from any of the
terms or provisions of this Agreement, any other Loan
Document, any Guarantee or any other agreement, including
with respect to any other guarantor of the Obligations or (c)
the failure to perfect any security interest in, or the
release of, any of the security held by or on behalf of the
Administrative Agent, any Issuing Bank or any Lender.
Section 3. Security, etc. To the extent security
is given for the payment of the this Guarantee or the
Obligations, the Guarantor authorizes the Administrative
Agent, the Issuing Banks and the Lenders to apply such
security and direct the order or manner of sale thereof as
they in their sole discretion may determine. The Guarantor
further authorizes the Administrative Agent to release or
substitute any one or more endorsees, other guarantors or
other obligors.
Section 4. Guarantee of Payment. The Guarantor
further agrees that its guarantee constitutes a guarantee of
payment when due and not of collection, and waives any right
to require that any resort be had at any time by the
Administrative Agent, any Issuing Bank or any Lender to any
balance of any deposit account or credit on the books of the
Administrative Agent, any Issuing Bank or any Lender in favor
of Beneficial, any Borrower or any other person or any
security for the payment of this Guarantee or the Obligations
held by the Administrative Agent, any Issuing Bank or any
Lender.
Section 5. No Discharge or Diminishment of
Guarantee. The obligations of the Guarantor hereunder shall
not be subject to any reduction, limitation, impairment or
termination for any reason (other than the indefeasible
payment in full in cash of the Obligations), including any
claim of waiver, release, surrender, alteration or compromise
of any of the Obligations, and shall not be subject to any
defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations of
the Guarantor hereunder shall not be discharged or impaired
or otherwise affected by and the Guarantor expressly waives
any defenses based upon, the failure of the Administrative
Agent, any Issuing Bank or any Lender to assert any claim or
demand or to enforce any remedy under the Credit Agreement,
any other Loan Document or any other agreement, by any waiver
or modification of any provision of any thereof, by any
default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any other act or
omission (including, without limitation, any statute of
limitations or any existence of or reliance on any
representation by the Administrative Agent, any Issuing Bank
or any Lender) that may or might in any manner or to any
extent vary the risk of the Guarantor or that would otherwise
operate as a discharge of the Guarantor as a matter of law or
equity (other than the indefeasible payment in full in cash
of all the Obligations).
Section 6. Defenses of Borrowers Waived. To the
fullest extent permitted by applicable law, the Guarantor
waives any defense based on or arising out of any defense of
any Borrower or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any
cause of the liability of any Borrower, other than the final
and indefeasible payment in full in cash of the Obligations.
The Administrative Agent, the Issuing Banks and the Lenders
may, at their election, foreclose on any security held by one
or more of them by one or more judicial or nonjudicial sales,
accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with any Borrower
or any other guarantor or exercise any other right or remedy
available to them against any Borrower or any other
guarantor, without affecting or impairing in any way the
liability of the Guarantor hereunder except to the extent the
Obligations have been fully, finally and indefeasibly paid in
cash. To the fullest extent permitted by applicable law, the
Guarantor waives any defense arising out of any such election
even though such election operates, pursuant to applicable
law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of the Guarantor against
any Borrower or any other guarantor, as the case may be, or
any security.
Section 7. Agreement to Pay; Subrogation. In
furtherance of the foregoing and not in limitation of any
other right that the Administrative Agent, any Issuing Bank
or any Lender has at law or in equity against the Guarantor
by virtue hereof, upon the failure of any Borrower to pay any
Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice of prepayment or
otherwise, the Guarantor hereby promises to and will
forthwith pay, or cause to be paid, to the Administrative
Agent or such Lender or Issuing Bank as designated thereby in
cash the amount of such unpaid Obligations. Upon payment by
the Guarantor of any sums to the Administrative Agent, any
Issuing Bank or any Lender as provided above, all rights of the
Guarantor against each Borrower arising as a result thereof by
way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subordinate and junior in
right of payment to the prior indefeasible payment in full in
cash of all the Obligations. In addition, any indebtedness
of each Borrower now or hereafter held by the Guarantor is
hereby subordinated in right of payment to the prior payment
in full of the Obligations. If any amount shall erroneously
be paid to the Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or
(ii) any such indebtedness of any Borrower, such amount shall
be held in trust for the benefit of the Lenders and the
Issuing Banks and shall forthwith be paid to the
Administrative Agent to be credited against the payment of
the Obligations, whether matured or unmatured, in accordance
with the terms of the Loan Documents.
Section 8. Information. The Guarantor assumes all
responsibility for being and keeping itself informed of each
Borrower's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks
that the Guarantor assumes and incurs hereunder, and agrees
that none of the Administrative Agent, the Issuing Banks or
the Lenders will have any duty to advise the Guarantor of
information known to it or any of them regarding such
circumstances or risks.
Section 9. Termination. The Guarantee made
hereunder (a) shall terminate when all the Obligations have
been indefeasibly paid in full and the Lenders have no
further commitment to lend under the Credit Agreement, the
L/C Exposure has been reduced to zero and the Issuing Banks
have no further obligation to issue Letters of Credit under
the Credit Agreement and (b) shall continue to be effective
or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any Obligation is rescinded or must
otherwise be restored by any Lender or any Issuing Bank or
the Guarantor upon the bankruptcy or reorganization of any
Borrower, the Guarantor or otherwise.
Section 10. Binding Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantor that
are contained in this Agreement shall bind and inure to the
benefit of each party hereto and their respective successors
and assigns. This Agreement shall become effective when a
counterpart hereof executed on behalf of the Guarantor shall
have been delivered to the Administrative Agent and a
counterpart hereof shall have been executed on behalf of the
Administrative Agent, and thereafter shall be binding upon
the Guarantor and the Administrative Agent and their
respective successors and assigns, and shall inure to the
benefit of the Guarantor, the Administrative Agent, the
Issuing Banks and the Lenders, and their respective
successors and assigns, except that the Guarantor shall not
have the right to assign its rights or obligations hereunder
or any interest herein (and any such attempted assignment
shall be void).
Section 11. Waivers; Amendment. (a) No failure or
delay of the Administrative Agent in exercising any power or
right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further
exercise thereof or the exercise of any other right or power.
The rights and remedies of the Administrative Agent hereunder
and of the Lenders and the Issuing Banks under the other Loan
Documents are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any
provision of this Agreement or consent to any departure by
the Guarantor therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given.
No notice or demand on the Guarantor in any case shall
entitle the Guarantor to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may
be waived, amended or modified except pursuant to a written
agreement entered into between the Guarantor and the
Administrative Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit
Agreement).
Section 12. Governing Law. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF.
Section 13. Notices. All communications and
notices hereunder shall be in writing and given as provided
in Section 9.01 of the Credit Agreement. All communications
and notices hereunder to the Guarantor shall be given to it
at One Christina Centre, 301 North Walnut Street, 18th Floor,
Wilmington, Delaware 19801, Attention of Corporate Secretary
(telecopy number (302) 425-2518), with a copy to it at 300
Beneficial Center, Peapack, New Jersey 07977, Attention of
Corporate Treasurer (telecopy number (908) 7813623).
Section 14. Survival of Agreement. All covenants,
agreements, representations and warranties made by the
Guarantor herein and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to
have been relied upon by the Administrative Agent, the
Issuing Banks and the Lenders and shall survive the making by
the Lenders of the Loans and the issuance of the Letters of
Credit by the Issuing Banks regardless of any investigation
made by the Lenders or on their behalf, and shall continue in
full force and effect as long as the principal of or any
accrued interest on any Loan or any other fee or amount
payable under this Agreement or any other Loan Document is
outstanding and unpaid or the L/C Exposure does not equal
zero and as long as the Commitments and the L/C Commitment
have not been terminated.
Section 15. Counterparts. This Agreement may be
executed in counterparts, each of which shall constitute an
original, but all of which when taken together shall
constitute a single contract, and shall become effective as
provided in Section 10. Delivery of an executed signature
page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of
this Agreement.
Section 16. Rules of Interpretation. The rules
of interpretation specified in Section 1.02 of the Credit
Agreement shall be applicable to this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
BENEFICIAL CORPORATION, as
Guarantor,
by
__________________
Name:
Title:
CREDIT SUISSE, as
Administrative Agent,
by
_________________
Name:
Title:
by
________________
Name:
Title:
EXHIBIT F
FORM OF OPINION OF COUNSEL
November 15, 1995
To each of the Issuing Banks, Lenders and Co-Arrangers party
to the Credit Agreement referred to below
Credit Suisse, as Administrative Agent for
such Lenders
12 East 49th Street
New York, New York 10017
Ladies and Gentlemen:
This opinion is being rendered to you pursuant to
Section 4.02(a) of the Credit Agreement, dated as of November
15, 1995 (the "Agreement"), among Beneficial Corporation, a
Delaware corporation (the "Guarantor"), the Borrowers, the
Lenders, the Co-Arrangers and Credit Suisse,
as administrative agent for the Lenders (the "Administrative
Agent"). All defined terms used herein without definition
shall have the meanings ascribed thereto in the Agreement.
I am Vice President and Assistant General Counsel
of Beneficial Management Corporation of America, a wholly
owned Subsidiary of the Guarantor, and as such I have acted
as counsel to each of the Loan Parties and I am familiar with
the matters to which this opinion relates.
As to various questions of fact material to my
opinion I have relied upon certificates of officers of the
Loan Parties. I have also examined and am familiar with
originals or copies, certified or otherwise identified to my
satisfaction, of such documents, corporate records,
certificates of public officials and other instruments, and
have conducted such other investigations of fact and of law,
as I have deemed necessary or appropriate to enable me to
render this opinion, including the following: (i) the
corporate proceedings with respect to (1) the organization of
each of the Loan Parties pursuant to their respective
articles or certificates of incorporation and (2) the
authorization of the Transactions by each of the Loan
Parties; and (ii) the Loan Documents.
The law covered by this opinion is limited to the
law of the State of New York, the Delaware General
Corporation Law, the federal law of the United States and,
with respect to the opinion expressed in clause (ii) of
paragraph 1 below, the law of the States of California,
Connecticut, Florida, Louisiana, Massachusetts, New Jersey,
Oklahoma and Pennsylvania (collectively, the "Additional
States"). I call to your attention the fact that I am a
member of the bar of the State of New York and I am not
qualified to practice law in any of the Additional States,
nor do I profess expertise with respect thereto. Although I
do not profess to be an expert on the law of any of the
Additional States, I have made a limited investigation of the
law of the Additional States, to the extent necessary to
express the opinion set forth in clause (ii) of paragraph 1
below. Accordingly, the opinion expressed in clause (ii) of
paragraph 1 below is based solely upon an examination of the
statutes and regulations of the Additional States as reported
in standard compilations and upon certificates obtained from
Governmental Authorities in the Additional States.
Credit Suisse, as Administrative
Agent, et al.
November 15, 1995
Page 2
Based upon the foregoing, it is my opinion that:
1. Each of the Loan Parties (i) has been duly
incorporated in, and is a validly existing corporation
in good standing under the laws of, its jurisdiction of
incorporation, (ii) is duly qualified to do business and
is in good standing as a foreign corporation in every
jurisdiction where such qualification is required,
except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse
Effect, and (iii) has all requisite corporate power and
authority to own, or hold under lease, the properties it
purports to own or hold under lease, to carry on its
business as now being conducted, to execute and deliver
the Agreement and each of the Loan Documents and each
other agreement or instrument contemplated thereby to
which it is or will be a party, to borrow money thereunder,
to incur any reimbursement obligations in respect of any Letter of
Credit and to perform the provisions thereof.
2. The execution, delivery and performance by
each Loan Party of the Loan Documents to which it is or
will be a party and any borrowings thereunder or the
incurrence of any reimbursement obligations in respect
of any Letter of Credit (collectively, the
"Transactions") do not and will not (i) violate any of
the provisions of the articles or certificates of
incorporation or the by-laws of any of the Loan Parties,
(ii) breach, or result in a default, or give rise to any
right to accelerate or to require the prepayment,
repurchase or redemption of any obligation, or result in
the creation of any Lien with respect to any property or
assets now owned, or hereafter acquired, by any of the
Loan Parties, under any material indenture, agreement,
instrument or undertaking to which any of the Loan
Parties is a party or by which they or any of their
property is bound or affected, (iii) breach, or result
in a default under, any judgement or order of any court,
arbitrator or Governmental Authority applicable to any
of the Loan Parties, or (iv) violate any law, statute or
any rule or regulation of any Governmental Authority
applicable to any of the Loan Parties.
3. The Transactions have been duly and
validly authorized by all necessary corporate action on
the part of each of the Loan Parties. The Loan
Documents have been duly and validly authorized,
executed and delivered by each Loan Party, and assuming
due execution and delivery thereof by the Lenders which
are parties thereto, constitute valid and binding
agreements, enforceable against each such Loan Party in
accordance with their terms, except to the extent
enforcement thereof is subject to (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights and remedies of
creditors generally, and (ii) the effect of general
principles of equity, whether applied by a court of law
or equity.
4. No action, consent, approval or
authorization of, or registration, filing or declaration
with, any Governmental Authority is or will be required
on the part of any Loan Party in connection with the
Transactions.
Credit Suisse, as Administrative
Agent, et al.
November 15, 1995
Page 3
5. None of the Loan Parties is engaged
principally, or as one of its important activities, in
the business of extending credit for the purpose of
buying or carrying Margin Stock.
6. None of the Loan Parties is (i) an
"investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940,
as amended, or (ii) a "holding company" as defined in,
or subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended.
7. There are no actions, suits or proceedings
at law or in equity or by or before any Governmental
Authority now pending or, to my knowledge, threatened
against or affecting any Loan Party or any business,
property or rights of any such person (i) that involve
any Loan Document or the Transactions, or (ii) as to
which there is a reasonable possibility of an adverse
determination and which, if adversely determined, could
reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
This opinion is being rendered to you pursuant to
the Agreement for your benefit, and for the benefit of your
assignees under the Agreement, and may not be relied upon by
any other party for any reason without my express prior
written consent.
Very truly yours,
Charles D. Brown
CDB/jem
EXHIBIT G
[Form of]
ISSUING BANK AGREEMENT
The undersigned agrees that effective the date
hereof, [Name of Lender], whose address is [ ],
(" "), will become an Issuing Bank under the Credit
Agreement dated as of November 15, 1995 (the "Credit
Agreement"; other capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement), among Beneficial
Corporation, the Eligible Subsidiaries, the Co-Arrangers and
Credit Suisse, as Administrative Agent, and will thereafter
have all the interests, rights and obligations of an Issuing
Bank thereunder and under the other Loan Documents.
[Name of Lender], as an Issuing Bank, shall perform
the obligations and duties of an Issuing Bank until the
termination of the L/C Commitments in accordance with the
Credit Agreement and the other Loan Documents, but shall in
no event be obligated to issue any Letter of Credit after [
], 200[1]. The applicable Borrower shall pay to
[Name of Lender], as an Issuing Bank, the following Issuing
Bank Fees: A fee as to each Letter of Credit issued
hereunder of [ ]% per annum of the average daily undrawn
amount outstanding during the preceding quarter or portion
thereof and payable [describe payment], plus [describe any
other fees and payments thereof].
This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but
all of which when taken together shall constitute one
agreement.
Date: [ ] BENEFICIAL CORPORATION,
by
_________________________
Name:
Title:
[NAME OF LENDER], as Issuing Bank,
by
_________________________
Name:
Title:
CREDIT SUISSE, as
Administrative Agent,
by
_________________________
Name:
Title:
by
_________________________
Name:
Title:
EXHIBIT H
[Form of]
ADDITIONAL SUBSIDIARY AGREEMENT
dated as of , 19 , among
BENEFICIAL CORPORATION, a Delaware corporation
(the "Company"), [Name of Additional
Subsidiary], a [ ] corporation (the "Additional
Subsidiary"), the Guarantor, the Borrowers, the
Lenders, the Co-Arrangers and Credit Suisse, as
administrative agent (the "Administrative Agent").
Reference is hereby made to the Credit Agreement
dated as of November 15, 1995, (as amended, supplemented or
otherwise modified through the date hereof, the "Credit
Agreement") among the Company, the Eligible Subsidiaries
listed on Schedule 1.01 and on the signature pages thereof
(the "Initial Subsidiaries"), the Additional Subsidiaries (as
such term is defined therein; together with the Initial
Subsidiaries, the "Borrowers"), the Lenders, the CoArrangers
and the Administrative Agent. Capitalized terms used herein
but not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement. Under the
Credit Agreement, the Lenders and the Issuing Banks have
agreed, upon the terms and subject to the conditions therein
set forth, to make Loans and to issue Letters of Credit to
the Initial Subsidiaries and to the Additional Subsidiaries
that execute and deliver to the Lenders and Issuing Banks
Additional Subsidiary Agreements in the form of this
Agreement. The Company represents that the Additional
Subsidiary is a Subsidiary. The parties hereto agree that
the guarantee of the Guarantor contained in the Guarantee
Agreement applies to the obligations of the Additional
Subsidiary. In consideration of being permitted to borrow
under the Credit Agreement upon the terms and subject to the
conditions set forth therein, the Additional
Subsidiary agrees that from and after the date of this
Agreement it will be, and will be liable for the observance
and performance of all the obligations of, an Additional
Subsidiary under the Credit Agreement (including as a
Borrower), as the same may be amended, supplemented or
otherwise modified from time to time, to the same extent as
if it had been one of the original parties to the Credit
Agreement including, without limitation, Section 9.15
thereof.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their authorized
officers as of the date first appearing above.
BENEFICIAL CORPORATION,
as Guarantor
by ___________________
Name:
Title:
CREDIT SUISSE, as
Administrative Agent
by ___________________
Name:
Title:
by ___________________
Name:
Title:
[Additional Subsidiary]
by ___________________
Name:
Title:
EXHIBIT 11
Exhibit 11
BENEFICIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(in millions, except per share amounts)
Years Ended December 31
</TABLE>
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Primary Earnings
Income Before Extraordinary Items $150.5 $177.7 $186.0
Dividends on Preferred Stock (5.2) (5.2) (5.2)
Income Before Extraordinary Items
Applicable to Common Stock 145.3 172.5 180.8
Extraordinary Items -- -- (2.8)
Net Income Applicable to Common Stock $145.3 $172.5 $178.0
Shares
Weighted Average Number of
Shares Outstanding 53.5 52.6 52.4
Primary Earnings per Common Share:
Income Before Extraordinary Items $ 2.72 $ 3.28 $ 3.45
Extraordinary Items -- -- (.05)
Net Income $ 2.72 $ 3.28 $ 3.40
Fully Diluted Earnings*
Income Before Extraordinary Items $150.5 $177.7 $186.0
Dividends on Non-Convertible
Preferred Stock (5.1) (5.1) (5.1)
Income Before Extraordinary Items
as Adjusted $145.4 $172.6 $180.9
Extraordinary Items -- -- (2.8)
Net Income Applicable to Common Stock $145.4 $172.6 $178.1
Shares
Weighted Average Number of
Shares Outstanding 53.5 52.6 52.5
Assuming Conversion of Convertible
Preferred Stock .3 .3 .3
Weighted Average Number of Shares
Outstanding as Adjusted 53.8 52.9 52.8
Fully Diluted Earnings per Common Share:
Income Before Extraordinary Items $ 2.70 $ 3.26 $ 3.43
Extraordinary Items -- -- (.05)
Net income $ 2.70 $ 3.26 $ 3.38
* This calculation is submitted in accordance with
Regulation S-K item 601(b)(11) although not required by
footnote 2 to paragraph 14 of APB Opinion No. 15 because it
results in dilution of less than 3%.
EXHIBIT 12
Exhibit 12
BENEFICIAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Continuing Operations Only)
Years Ended December 31
1995 1994 1993 1992 1991
(in millions)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Income From Continuing Operations $ 150.5 $ 177.7 $186.0 $148.4 $150.1
Add Provision for Income Taxes 119.9 148.4 129.2 103.2 110.2
Earnings Before Income Taxes 270.4 326.1 315.2 251.6 260.3
Fixed charges:
Interest and Debt Expense 816.2 673.6 633.2 642.7 679.6
Interest Factor Portion of Rentals 22.3 16.3 15.8 15.7 15.4
Total Fixed Charges 838.5 689.9 649.0 658.4 695.0
Earnings Before Income Taxes
and Fixed Charges $1,108.9 $1,016.0 $964.2 $910.0 $955.3
Ratio of Earnings to Fixed Charges 1.32 1.47 1.49 1.38 1.37
EXHIBIT 21
LIST OF BENEFICIAL CORPORATION SUBSIDIARIES 12/31/95
COMPRISING THE FINANCE DIVISION
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Bencharge Credit Service Holding Company DE
301 North Walnut St., Wilmington, DE 19801
Bencharge Credit Service of America, Inc. DE
301 North Walnut St., Wilmington, DE 19801
Beneficial Credit Services Inc. DE
301 North Walnut St., Wilmington, DE 19801
Beneficial Credit Services of Connecticut Inc. DE
926 Main St., East Hartford, CT 06108 Beneficial
Credit Services of Mississippi Inc. DE
2310 Highway 80 W., Jackson, MS 39204 Beneficial
Credit Services of South Carolina Inc. DE
1660 Sam Ritterburg Blvd., Charleston, SC 29407
Beneficial Arizona Inc. DE
7315 North Oracle Road, Ste. 107, Tucson, AZ 85704
Beneficial California Inc. DE
1731 W. Colorado Blvd., Los Angeles, CA 90041
Beneficial Colorado Inc. DE
3200 South Wadsworth Blvd., Lakewood, CO 80227
Beneficial Connecticut Inc. DE
926 Main St., East Hartford, CT 06108
Beneficial Delaware Inc. DE
514 Jefferic Blvd., Unit 1, Dover, DE 19901 Beneficial
Florida Inc. DE
4004 S. University Blvd., Jacksonville, FL 32216
Beneficial Mortgage Co. of Florida DE
4004 S. University Blvd., Jacksonville, FL 32216
Beneficial Georgia Inc. DE
700 North Main St., Ste. 10, Alpharetta, GA 30201
Beneficial Hawaii Inc. DE
James Campbell Bldg., 826 Ft. Street Mall, Honolulu,
HI 96813
Beneficial Idaho Inc. DE
1003 Vista Ave., Boise, ID 83709
Beneficial Illinois Inc. DE
4012 West 79th St., Chicago, IL 60652
Beneficial Indiana Inc. DE
812 State Road, 9 South, Anderson, IN 46012
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Beneficial Iowa Inc. IA
301 North Walnut St., Wilmington, DE 19801 Beneficial
Kansas Inc. KS
Capitol Hills Shops, 400 SW 29th St., Ste. L, Topeka,
KS 66611
Beneficial Kentucky Inc. DE
8512 Preston Hwy., Louisville, KY 40219
Beneficial Louisiana Inc. DE
11439 Florida Blvd., Baton Rouge, LA 70815 Beneficial
Maryland Inc. DE
79 Forest Dr., Annapolis, MD 21401
Beneficial Massachusetts Inc. DE
Gr. Fl., 236 Cabot St., Beverly, MA 01915 Beneficial
Michigan Inc. DE
12900 Hall Road., Ste. 190, Sterling Hts., MI 48313
Beneficial Minnesota Inc. DE
5180 Central Ave., NE Columbia Heights, MN 55421
Beneficial Mississippi Inc. DE
2310 Highway 80 W., Jackson, MS 39204
Beneficial Missouri, Inc. DE
2219 C Missouri Blvd., Jefferson City, MO 65109
Beneficial Montana Inc. DE
1520 3rd St., NW, Ste. A,
Great Falls, MT 59404
Beneficial Nebraska Inc. NE
5005 O Street, Lincoln, NE 68510
Beneficial Nevada Inc. DE
1055 South Wells, Ste. 115, Reno, NV 89502 Beneficial
New Hampshire Inc. DE
45 S. Main St., Concord, NH 03301
Beneficial New Jersey Inc. DE
146 South Street, Morristown, NJ 07960
Beneficial New Mexico Inc. DE
7200 Montgomery Blvd, NE, Ste. B 3-4,
Albuquerque, NM 87109
Beneficial North Carolina Inc. DE
6300 - 170 Creedmoor Road
Raleigh, NC 27612
Beneficial Oklahoma Inc. DE
6935 South Lewis, Tulsa, OK 74136
Beneficial Oregon Inc. DE
3671 SW Hall St., Beaverton, OR 97005
Beneficial Rhode Island Inc. DE
457 Main St., East Greenwich, RI 02818
Beneficial South Carolina Inc. DE
1660 Sam Ritterburg Blvd., Charleston, SC 29407
Beneficial Tennessee Inc. TN
3802 B Nolensville Rd., Nashville, TN 37211
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Beneficial Texas Inc. TX
6406 N. 1 H-35, Lincoln Village Shopping Center
Austin, TX 78752
Beneficial Utah Inc. DE
1741 West 7800 South, West Jordan, UT 84088
Beneficial Virginia Inc. DE
10175 Hull Street Road, Midlothian, VA 23112
Beneficial Washington Inc. DE
2111 N. Northgate Way, Seattle, WA 98133 Beneficial
West Virginia, Inc. WV
100 Lee Street West, Charleston, WV 25302 Beneficial
Wisconsin Inc. DE
11102 West National Ave., West Allis, WI 53227
Beneficial Commercial Holding Corporation DE
301 North Walnut St., Wilmington, DE 19801
Beneficial Commercial Corporation DE
200 Beneficial Center, Peapack, NJ 07977
*same as above, Lee J. Grenci
Beneficial Finance Leasing Corporation DE
200 Beneficial Center, Peapack, NJ 07977
*same as above, Lee J. Grenci
Beneficial Leasing Group, Inc. DE
200 Beneficial Center, Peapack, NJ 07977
*same as above, Lee J. Grenci
Neil Corporation DE
200 Beneficial Center, Peapack, NJ 07977
*same as above, Lee J. Grenci
Silliman Corporation DE
200 Beneficial Center, Peapack, NJ 07977
*same as above, Lee J. Grenci
Beneficial Consumer Discount Company PA
3368 Paxton St., Scottsdale Plaza
Harrisburg, PA 17111
Beneficial Discount Co. of Virginia DE
10175 Hull Street Road, Midlothian, VA 23113
Beneficial Finance Co. of West Virginia DE
100 Lee Street West, Charleston, WV 25302
Beneficial Finance Services, Inc. KS
8771 W. 95th St., Overland Park, KS 66204
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Beneficial Income Tax Service Holding Co., Inc. DE
301 North Walnut St., Wilmington, DE 19801
Beneficial Tax Masters Inc. DE
301 North Walnut St., Wilmington, DE 19801
Beneficial Industrial Loan Company of Kentucky DE
8512 Preston Hwy., Louisville, KY 40219
Beneficial Investment Co. DE
301 North Walnut St., Wilmington, DE 19801
B B Credit Corp. DE
301 North Walnut St., Wilmington, DE 19801
Beneficial Credit Services of New York, Inc. * DE
622 Yonkers Ave., Yonkers, NY 10704
Beneficial New York Inc. NY
622 Yonkers Ave., Yonkers, NY 10704
Beneficial Homeowner Service Corporation DE
622 Yonkers Ave., Yonkers, NY 10704
Beneficial Homeowners Inc. * DE
301 North Walnut St., Wilmington, DE 19801
Beneficial Loan & Thrift Co. MN
5180 Central Ave., NE.
Columbia Heights, MN 55421
*Inactive
Beneficial Mortgage Holding Company DE
301 North Walnut St., Wilmington, DE 19801
Beneficial Excess Servicing Inc. DE
301 North Walnut St., Wilmington, DE 19801
*same as above, Elizabeth A. Dawson
Beneficial Home Mortgage Loan Corp. DE
457 Main St., East Greenwich, RI 02818 Beneficial
Mortgage Co. of Arizona DE
7315 North Oracle Road, Ste. 107, Tucson, AZ 85704
Beneficial Mortgage Co. of Colorado DE
3200 South Wadsworth Blvd., Lakewood, CO 80227
Beneficial Mortgage Co. of Connecticut DE
926 Main St., East Hartford, CT 06108
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Beneficial Mortgage Co. of Georgia DE
700 North Main Street, Ste. 10
Alpharetta, GA 30201
Beneficial Mortgage Co. of Idaho DE
1003 Vista Ave., Boise, ID 83709
Beneficial Mortgage Co. of Indiana DE
812 State Road, 9 South, Anderson, IN 46012
Beneficial Mortgage Co. of Kansas, Inc. DE
Capitol Hills Shops, 400 SW 29th St., Ste. L,
Topeka, KS 66611
Beneficial Mortgage Co. of Louisiana DE
11439 Florida Blvd., Baton Rouge, LA 70815
Beneficial Mortgage Co. of Maryland DE
79 Forest Dr., Annapolis, MD 21401
Beneficial Mortgage Co. of Massachusetts DE
Gr. Fl., 236 Cabot St., Beverly, MA 01915
Beneficial Mortgage Co. of Mississippi DE
2310 Highway 80 W., Jackson, MS 39204
Beneficial Mortgage Co. of Missouri, Inc. DE
2219 C Missouri Blvd., Jefferson City, MO 65109
Beneficial Mortgage Co. of Nevada DE
1055 South Wells, Ste. 115, Reno, NV 89502
Beneficial Mortgage Co. of New Hampshire DE
45 S. Main St., Concord, NH 03301
Beneficial Mortgage Co. of North Carolina DE
6300 - 170 Creedmoor Road
Raleigh, NC 27612
Beneficial Mortgage Co. of Oklahoma DE
6935 South Lewis, Tulsa, OK 74136
Beneficial Mortgage Co. of Rhode Island DE
457 Main St., East Greenwich, RI 02818 Beneficial
Mortgage Co. of South Carolina DE
1660 Sam Ritterburg Blvd., Charleston, SC 29407
Beneficial Mortgage Co. of Texas DE
6406 N. 1 H-35, Lincoln Village Shopping Center
Austin, TX 78752
Beneficial Mortgage Co. of Utah DE
1741 West 7800 South, West Jordan, UT 84088
Beneficial Mortgage Co. of Virginia DE
10175 Hull Street Road, Midlothian, VA 23112
Beneficial Savings Bank, FSB A
430 Knights Run Ave., Tampa, FL 33602 Federal
*same as above, Andrea J. Kaplan Savings Bank
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Beneficial Service Corporation DE
430 Knights Run Ave., Tampa, FL 33602
Benevest Group Inc. DE
301 N. Walnut Street, Wilmington, DE 19801
Benevest Services, Inc. WA
2111 N. Northgate Way, Seattle, WA 98133
Alabama Properties, Inc. DE
200 Beneficial Center, Peapack, NJ 07977
*same as above, Matthew J. Broas, Esq.
Owns real estate in the District of Columbia
and State of Colorado
BMC Holding Company DE
301 North Walnut St., Wilmington, DE 19801
*same as above, Janice L. Lewis
Beneficial Mortgage Corporation DE
301 North Walnut St., Wilmington, DE 19801
*same as above, Janice L. Lewis
Beneficial Credit Corp. DE
301 North Walnut St., Wilmington, DE 19801
*same as above, Janice L. Lewis
Beneficial Finance Limited UK
Beneficial House, Easthampstead Road,
Bracknell, Berkshire, RG12 1NS
*same as above, Anthony Lee
Beneficial Insurance Group Holding Company DE
301 North Walnut St., Wilmington, DE 19801
*same as above, Elizabeth A. Dawson
BFC Agency, Inc. DE
400 Beneficial Center, Peapack, NJ 07977
*same as above, Leonard Fisher
Acts as an insurance agency
BFC Insurance Agency of America WY
400 Beneficial Center, Peapack, NJ 07977
*same as above, Leonard Fisher
Acts as an insurance agency
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Beneficial Bank Public Limited Company UK
Beneficial House, Easthampstead Road Bracknell,
Berkshire, RG12 1NS
*same as above, Anthony Lee
Operates in the banking field in the
United Kingdom
Beneficial Financial Services Limited UK
Beneficial House, Easthampstead Road
Bracknell, Berkshire, RG12 1NS
*same as above, Anthony Lee
Performs services for Beneficial Bank Public
Limited Company
Beneficial Financing Limited UK
Beneficial House, Easthampstead Road
Bracknell, Berkshire, RG12 1NS
*same as above, Anthony Lee,
Performs services for Beneficial Bank Public
Limited Company
Beneficial Leasing Limited UK
Beneficial House, Easthampstead Road
Bracknell, Berkshire, RG12 1NS *same as
above, Anthony Lee
Performs services for Beneficial
Bank Public Limited Company
Beneficial Trust (Guernsey) Limited UK
*Rysaffe International Services Ltd.
La Tonnelle House, Les Banques, St. Sampson,
Guernsey, Channel Islands
Performs services for Beneficial Bank Public
Limited Company
Beneficial Trust Investments Limited UK
Beneficial House, Easthampstead Road
Bracknell, Berkshire, RG12 1NS
* same as above, Anthony Lee
Performs services for Beneficial Bank Public
Limited Company
Beneficial Trust (Jersey) Limited UK
*Rysaffe International Services Ltd.
La Tonnelle House, Les Banques, St. Sampson,
Guernsey, Channel Islands
Performs services for Beneficial Bank Public
Limited Company
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Beneficial Trust Nominees Limited UK
Beneficial House, Easthampstead Road
Bracknell, Berkshire, RG12 1NS
*same as above, Anthony Lee
Performs services for Beneficial Bank Public
Limited Company
The Loan Corporation Limited UK
Abbey Gardens, 6 Abbey Street, Reading,
Berkshire RG1 3BA, England
*Anthony Lee, Beneficial House,
Easthampstead Road., Bracknell, Berkshire,
RG 12 1NS, England
Performs a Loan Broker Service for
Sterling Bank & Trust Limited
Security Trust Limited UK
Beneficial House, Easthampstead Road
Bracknell, Berkshire, RG12 1NS
*same as above, Anthony Lee
Performs services for Beneficial Bank Public
Limited Company
Sterling Credit Limited UK
Abbey Gardens, 6 Abbey Street, Reading,
Berkshire RG1 3BA, Eng.
*Anthony Lee, 6th Floor, Beneficial
House, Easthampstead Road, Bracknell,
Berkshire, RG12 1NS
Engages in making Second Mortgage Consumer
Loans.
Sterling Credit Management Limited UK
Abbey Gardens, 4 Abbey Street,
Reading, Berkshire RG1 3BA,
England
*Anthony Lee, Beneficial House,
Easthampstead Road, Bracknell,
Berkshire, RG12 1NS
Engages in Managing and Collecting Loan
Portfolios of Third Parties.
Beneficial Canada Holdings Inc. Canada
8500 Leslie St., Ste. 600,
Thornhill, Ont., Canada
*same as above, Jean A. Bedard
A holding company
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Beneficial Canada Inc. Canada
8500 Leslie St., Ste. 600
Thornhill, Ont., Canada
*same as above, Jean A. Bedard
Engaged in the business of making
consumer loans to individuals,
purchasing installment sales
contracts, evidencing time sales
of merchandise on services
and related activities in Canada
Beneficial Realty Ltd. Canada
8500 Leslie St., Ste. 600
Thornhill, Ont., Canada
*same as above, Jean A Bedard
Engaged in the business of second mortgage
loans.
BFC Insurance (Life) Limited Ireland
22-24 Lower Mount Street
Newmount House, Dublin 2, Ireland
Will operate as a full line life,
accident and health insurance company
BFC Insurance Limited Ireland
22-24 Lower Mount Street
Newmount House, Dublin 2, Ireland
Will operate as a full line life,
accident and health insurance company
BFK Bank A.G. Germany
Augustenstrasse 7
7000 Stuttgart 1, Germany
*Dr. Klaus A. Gerstenmaier, Lenzhalde 83,
7000, Stuttgart 1, Germany
Engaged in consumer loans in Germany
Beneficial Corporation Agency GMBH Germany
Augustenstrasse 7
7000 Stuttgart 1, Germany
*Dr. Klaus A. Gerstenmaier, Lenzhalde 83,
7000, Stuttgart 1, Germany
Engaged in consumer loans in Germany
Extracard Corp. DE
301 North Walnut St., Wilmington, DE 19801
*same as above, Elizabeth A. Dawson
Engage in any lawful acts or activities for
which corporations may be organized under the
General Corporation Law of Delaware.
Name of Subsidiary State
and of
Principal Place of Business Incorporation
BFC Insurance Agency of Nevada NV
301 N. Walnut St., Wilmington, DE 19801
*same as above, Elizabeth A. Dawson
Acts as an insurance agency
Beneficial Insurance Group, Inc. DE
400 Beneficial Center, Peapack, NJ 07977
*same as above, Leonard Fisher
A management company
Service Administrators, Inc. (USA) CO
205 E. 10th St., Amarillo, TX 79101
*400 Beneficial Center, Peapack, NJ 07977
Leonard Fisher
Service General Insurance Company OH
400 Beneficial Center, Peapack, NJ 07977
*same as above, Leonard Fisher
Beneficial Ohio Inc. DE
5025 Arlington Centre Blvd., Columbus, OH 43220
Beneficial Mortgage Co. of Ohio DE
5025 Arlington Centre Blvd., Columbus, OH 43220
Service Management Corporation OH
400 Beneficial Center, Peapack, NJ 07977
*same as above, Leonard Fisher
B.I.G. Insurance Agency, Inc. OH
400 Beneficial Center, Peapack, NJ 07977
*same as above, Leonard Fisher
The Central National Life Insurance Company of Omaha DE
400 Beneficial Center, Peapack, NJ 07977
*same as above, Leonard Fisher
Full line life, accident and health insurance company
The Central National Life Insurance Company NJ
400 Beneficial Center, Peapack, NJ 07977
*same as above, Leonard Fisher
First Central National Life Insurance Company NY
of New York
400 Beneficial Center, Peapack, NJ 07977
*same as above, Leonard Fisher
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Wesco Insurance Company DE
400 Beneficial Center, Peapack, NJ 07977
*Elizabeth A. Dawson, 301 N. Walnut St.
Wilmington, DE 19801
Selling non-filing insurance in Delaware
Southwest Texas General Agency, Inc. TX
205 East 10th St., Amarillo, TX 79101
*same as above, Leah Kelley
Beneficial Land Company, Inc. NJ
200 Beneficial Center, Peapack, NJ 07977
*same as above, Matthew J. Broas, Esq.
Owns real estate in the Borough of Peapack &
Gladstone, NJ
Beneficial Management Corporation DE
200 Beneficial Center, Peapack, NJ 07977
*same as above, Millicent A. Picker, Esq.
Provides Management, Accounting Services and
Advertising for Affiliates.
Beneficial Management Institute, Inc. NY
200 Beneficial Center, Peapack, NJ 07977
*same as above, Millicent A. Picker, Esq.
Beneficial Management Corporation of America DE
301 North Walnut St., Wilmington, DE 19801
*same as above, Janice L. Lewis
Management companies providing supervision, audit,
legal, training and other services for financial
and other subsidiaries, at cost
Beneficial Franchise Company Inc. DE
301 North Walnut St., Wilmington, DE
19801 *same as above, Elizabeth A. Dawson
Engages in the Management and Ownership of
Trademarks and Patents.
Beneficial Management Headquarters, Inc. NJ
200 Beneficial Center, Peapack, NJ 07977
*same as above, Matthew J. Broas, Esq.
Owns real estate in Peapack and Gladstone Borough, NJ
and Bedminster Township, NJ
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Beneficial Facilities Corporation NJ
200 Beneficial Center, Peapack, NJ 07977
*same as above Matthew J. Broas, Esq.
Owns real estate in Peapack and Gladstone
Borough, NJ
Beneficial National Bank National
1300 Market Street, Wilmington, DE 19801 Banking Assoc.
*same as above, Kevin T. Peck, Esq.
A commercial bank doing business in the State of Delaware
Beneficial Service Corporation of Delaware DE
1300 Market Street, Wilmington, DE 19801
To sell Insurance on behalf of its Parent
Corporation
Beneficial National Bank USA National
100 Beneficial Center, Peapack, NJ 07977 Banking Assoc.
*Wheeler K. Neff, Esq., 301 North Walnut St. (DE)
Wilmington, DE 19801
A private label credit card operation
Beneficial Service Corporation of New Jersey DE
100 Beneficial Center, Peapack, NJ 07977
To sell Insurance on behalf of its Parent
Corporation.
Beneficial Real Estate Company, Inc. NJ
200 Beneficial Center, Peapack, NJ 07977
*same as above, Matthew J. Broas, Esq.
Owns real estate in Peapack and Gladstone Borough, NJ
Beneficial Systems Development Corporation DE
101 East Kennedy Blvd., Ste. 700, Tampa, FL 33602
Will engage in the business of applications, development,
computer programming, consulting and other related
services in Tampa, Florida
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Beneficial Technology Corporation DE
500 Beneficial Center, Peapack, NJ 07977
*same as above, Peter R. Callas
Performs data processing services for finance and
other subsidiaries
Bon Secour Properties Inc. AL
200 Beneficial Center, Peapack, NJ 07977
*same as above, Matthew J. Broas, Esq.
Owns real estate in Peapack and Gladstone Borough, NJ
Capital Financial Services Inc. NV
5025 Arlington Centre Blvd, Columbus, OH 43220
Corporate Security Engineering Services, Inc. NJ
200 Beneficial Center, Peapack, NJ 07977
*same as above, Matthew J. Broas, Esq.
Engaged in the business of designing security
and life safety systems for commercial use
Garrison Platt Properties Inc. FL
200 Beneficial Center, Peapack, NJ 07977
*same as above, Matthew J. Broas, Esq.
Owns real estate in Tampa, FL
Harbour Island Inc. FL
424 Knights Run Avenue
Tampa, FL 33602
*Matthew J. Broas, Esq., 200 Beneficial Center,
Peapack, NJ 07977
Oversees the development of a piece of
real estate in Florida and all activities
related thereto
Harbour Island Property Management Inc. FL
Harbour Island Security Co., Inc. FL
H I Venture One, Inc. FL
H I Venture Three, Inc. FL
H I Venture Four, Inc. FL
Tampa Island Transit Company, Inc. FL
All the above, 424 Knights Run Avenue
Tampa, FL 33602
*Matthew J. Broas, Esq., 200 Beneficial Center,
Peapack, NJ 07977
Personal Mortgage Holding Company DE
301 North Walnut St., Wilmington, DE 19801
Name of Subsidiary State
and of
Principal Place of Business Incorporation
Personal Mortgage Corporation DE
100 Business Center Dr., Hwy. 22,
Brewster, NY 10509
Southern Trust Company DE
301 North Walnut St., Wilmington, DE 19801
*same as above, Elizabeth A. Dawson
Acts as transfer agent for certain subsidiaries of
Beneficial Corporation
Southwest Beneficial Finance, Inc. IL
301 North Walnut St., Wilmington, DE 19801
Wasco Properties, Inc. DE
Wilmington, DE 19801
*same as above, Carolyn Micolucci
Holds real estate
Beneficial Real Estate Joint Ventures, Inc. DE
301 North Walnut St., Wilmington, DE 19801
*same as above, Elizabeth A. Dawson
* Minutes of company kept at this address
** Remaining shares are Directors' qualifying shares
*** Remaining shares are owned by Beneficial Corporation
NOTE: Except where otherwise stated, minutes of the
companies arekept by Janice L. Lewis, 301 North Walnut St.,
Wilmington, Delaware 19801.
12/31/95
State of
INACTIVE CORPORATIONS Incorporation
Bencharge Credit Service, Inc. DE
Beneficial Alabama Inc. AL
Beneficial Business Credit DE
Corp.
Beneficial Credit Services of DE
Alabama Inc.
Beneficial Finance Co. DE
Beneficial Finance Co. of DE
Alaska
Beneficial Finance Co. of Canada
Canada
Beneficial Finance Co. of DC
Columbia
Beneficial Finance Co. of Maine ME
Beneficial Financial Center, DE
Inc.
Beneficial Marketing OH
Corporation
Beneficial North Dakota Inc. DE
Beneficial PayNet Systems, Inc. DE
Beneficial Premium Services UK
Limited
Beneficial Securities, Inc. DE
Beneficial South Dakota Inc. DE
Beneficial Vermont Inc. DE
Beneficial Wyoming Inc. WY
Benevest Escrow Company DE
Benevest Service Company DE
Capital Credit Services Inc. DE
Guaranty and Indemnity DE
Insurance Company
Personal Finance Company, Inc. NY
Sterling Mortgages Limited UK
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in
Registration Statements No. 33-64357 and No. 33-57541 on
Form S-3 and Registration Statement No. 2-83020 on Form S-8
of our report dated January 29, 1996 appearing in this
Annual Report on Form 10-K of Beneficial Corporation for the
year ended December 31, 1995.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
March 25, 1996
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, CHARLES W.
BOWER, Director of Beneficial Corporation, One Christina
Centre, 301 North Walnut Street, Wilmington, Delaware 19801
(the "Company"), do hereby make, constitute and appoint
ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and RONALD E.
BOMBOLIS, officers of the Company, or any of them, with full
power to act without the others, my true and lawful attorney-in-
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10K for
the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
8th day of March, 1996.
/s/ CHARLES W. BOWER
CHARLES W. BOWER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, ROBERT J.
CALLANDER, a Director of Beneficial Corporation, One
Christina Centre, 301 North Walnut Street, Wilmington,
Delaware 19801 (the "Company"), do hereby make, constitute
and appoint ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and
RONALD E. BOMBOLIS, officers of the Company, or any of them,
with full power to act without the others, my true and
lawful attorney-in-fact or agent for me and in my name,
place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 pursuant to the Securities Exchange Act of
1934, as amended, and any amendment thereto, to be filed by
Beneficial Corporation, a Delaware corporation, with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
20th day of March, 1996.
/s/ ROBERT J. CALLANDER
ROBERT J. CALLANDER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, ROBERT C.
CANNADA, a Director of Beneficial Corporation, One Christina
Centre, 301 North Walnut Street, Wilmington, Delaware 19801
(the "Company"), do hereby make, constitute and appoint
ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and RONALD E.
BOMBOLIS, officers of the Company, or any of them, with full
power to act without the others, my true and lawful attorney-in-
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10K for
the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
8th day of March, 1996.
/s/ ROBERT C. CANNADA
ROBERT C. CANNADA
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, FINN M. W.
CASPERSEN, a Director of Beneficial Corporation, One
Christina Centre, 301 North Walnut Street, Wilmington,
Delaware 19801 (the "Company"), do hereby make, constitute
and appoint ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and
RONALD E. BOMBOLIS, officers of the Company, or any of them,
with full power to act without the others, my true and
lawful attorney-in-fact or agent for me and in my name,
place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 pursuant to the Securities Exchange Act of
1934, as amended, and any amendment thereto, to be filed by
Beneficial Corporation, a Delaware corporation, with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
8th day of March, 1996.
/s/ FINN M. W. CASPERSEN
FINN M. W. CASPERSEN
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, LEONARD S.
COLEMAN, JR., a Director of Beneficial Corporation, One
Christina Centre, 301 North Walnut Street, Wilmington,
Delaware 19801 (the "Company"), do hereby make, constitute
and appoint ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and
RONALD E. BOMBOLIS, officers of the Company, or any of them,
with full power to act without the others, my true and
lawful attorney-in-fact or agent for me and in my name,
place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 pursuant to the Securities Exchange Act of
1934, as amended, and any amendment thereto, to be filed by
Beneficial Corporation, a Delaware corporation, with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
18th day of March, 1996.
/s/ LEONARD S. COLEMAN, JR.
LEONARD S. COLEMAN, JR.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, DAVID J.
FARRIS, a Director of Beneficial Corporation, One Christina
Centre, 301 North Walnut Street, Wilmington, Delaware 19801
(the "Company"), do hereby make, constitute and appoint
ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and RONALD E.
BOMBOLIS, officers of the Company, or any of them, with full
power to act without the others, my true and lawful attorney-in-
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10K for
the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
8th day of March, 1996.
/s/ DAVID J. FARRIS
DAVID J. FARRIS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, JAMES H.
GILLIAM, JR., a Director of Beneficial Corporation, One
Christina Centre, 301 North Walnut Street, Wilmington,
Delaware 19801 (the "Company"), do hereby make, constitute
and appoint ANDREW C. HALVORSEN and RONALD E. BOMBOLIS,
officers of the Company, or either of them, with full power
to act without the other, my true and lawful attorney-in
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
21st day of March, 1996.
/s/ JAMES H. GILLIAM, JR.
JAMES H. GILLIAM, JR.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, ANDREW C.
HALVORSEN, a Director of Beneficial Corporation, One
Christina Centre, 301 North Walnut Street, Wilmington,
Delaware 19801 (the "Company"), do hereby make, constitute
and appoint JAMES H. GILLIAM, JR. and RONALD E. BOMBOLIS,
officers of the Company, or either of them, with full power
to act without the other, my true and lawful attorney-in
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10-K
for the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
11th day of March, 1996.
/s/ ANDREW C. HALVORSEN
ANDREW C. HALVORSEN
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, ROLAND A.
HERNANDEZ, a Director of Beneficial Corporation, One
Christina Centre, 301 North Walnut Street, Wilmington,
Delaware 19801 (the "Company"), do hereby make, constitute
and appoint ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and
RONALD E. BOMBOLIS, officers of the Company, or any of them,
with full power to act without the others, my true and
lawful attorney-in-fact or agent for me and in my name,
place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 pursuant to the Securities Exchange Act of
1934, as amended, and any amendment thereto, to be filed by
Beneficial Corporation, a Delaware corporation, with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
8th day of March, 1996.
/s/ ROLAND A. HERNANDEZ
ROLAND A. HERNANDEZ
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, J. ROBERT
HILLIER, a Director of Beneficial Corporation, One Christina
Centre, 301 North Walnut Street, Wilmington, Delaware 19801
(the "Company"), do hereby make, constitute and appoint
ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and RONALD E.
BOMBOLIS, officers of the Company, or any of them, with full
power to act without the others, my true and lawful attorney-in-
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10K for
the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
11th day of March, 1996.
/s/ J. ROBERT HILLIER
J. ROBERT HILLIER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, GERALD L.
HOLM, a Director of Beneficial Corporation, One Christina
Centre, 301 North Walnut Street, Wilmington, Delaware 19801
(the "Company"), do hereby make, constitute and appoint
ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and RONALD E.
BOMBOLIS, officers of the Company, or any of them, with full
power to act without the others, my true and lawful attorney-in-
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10K for
the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
12th day of March, 1996.
/s/ GERALD L. HOLM
GERALD L. HOLM
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, THOMAS H.
KEAN, a Director of Beneficial Corporation, One Christina
Centre, 301 North Walnut Street, Wilmington, Delaware 19801
(the "Company"), do hereby make, constitute and appoint
ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and RONALD E.
BOMBOLIS, officers of the Company, or any of them, with full
power to act without the others, my true and lawful attorney-in-
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10K for
the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
12th day of March, 1996.
/s/ THOMAS H. KEAN
THOMAS H. KEAN
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, STEVEN MULLER,
a Director of Beneficial Corporation, One Christina Centre,
301 North Walnut Street, Wilmington, Delaware 19801 (the
"Company"), do hereby make, constitute and appoint ANDREW C.
HALVORSEN, JAMES H. GILLIAM, JR. and RONALD E. BOMBOLIS,
officers of the Company, or any of them, with full power to
act without the others, my true and lawful attorney-in-fact
or agent for me and in my name, place and stead, in any and
all capacities, to sign the Annual Report on Form 10-K for
the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
11th day of March, 1996.
/s/ STEVEN MULLER
STEVEN MULLER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, SUSAN JULIA
ROSS, a Director of Beneficial Corporation, One Christina
Centre, 301 North Walnut Street, Wilmington, Delaware 19801
(the "Company"), do hereby make, constitute and appoint
ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and RONALD E.
BOMBOLIS, officers of the Company, or any of them, with full
power to act without the others, my true and lawful attorney-in-
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10K for
the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
8th day of March, 1996.
/s/ SUSAN JULIA ROSS
SUSAN JULIA ROSS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, ROBERT A.
TUCKER, a Director of Beneficial Corporation, One Christina
Centre, 301 North Walnut Street, Wilmington, Delaware 19801
(the "Company"), do hereby make, constitute and appoint
ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and RONALD E.
BOMBOLIS, officers of the Company, or any of them, with full
power to act without the others, my true and lawful attorney-in-
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10K for
the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
11th day of March, 1996.
/s/ ROBERT A. TUCKER
ROBERT A. TUCKER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, SUSAN M.
WACHTER, a Director of Beneficial Corporation, One Christina
Centre, 301 North Walnut Street, Wilmington, Delaware 19801
(the "Company"), do hereby make, constitute and appoint
ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and RONALD E.
BOMBOLIS, officers of the Company, or any of them, with full
power to act without the others, my true and lawful attorney-in-
fact or agent for me and in my name, place and stead, in any
and all capacities, to sign the Annual Report on Form 10K for
the fiscal year ended December 31, 1995 pursuant to the
Securities Exchange Act of 1934, as amended, and any
amendment thereto, to be filed by Beneficial Corporation, a
Delaware corporation, with the Securities and Exchange
Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
11th day of March, 1996.
/s/ SUSAN M. WACHTER
SUSAN M. WACHTER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: THAT I, CHARLES H.
WATTS, II a Director of Beneficial Corporation, One
Christina Centre, 301 North Walnut Street, Wilmington,
Delaware 19801 (the "Company"), do hereby make, constitute
and appoint ANDREW C. HALVORSEN, JAMES H. GILLIAM, JR. and
RONALD E. BOMBOLIS, officers of the Company, or any of them,
with full power to act without the others, my true and
lawful attorney-in-fact or agent for me and in my name,
place and stead, in any and all capacities, to sign the
Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 pursuant to the Securities Exchange Act of
1934, as amended, and any amendment thereto, to be filed by
Beneficial Corporation, a Delaware corporation, with the
Securities and Exchange Commission.
IN WITNESS WHEREOF, I have hereunto set my hand this
12th day of March, 1996.
/s/ CHARLES H. WATTS, II
CHARLES H. WATTS, II
EXHIBIT 99
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the period from to
Commission file number 1-1177
BENEFICIAL THRIFT PLAN
(Full Title of the Plan)
BENEFICIAL CORPORATION
One Christina Centre
301 North Walnut Street
Wilmington, Delaware
(Name of Issuer Under the Plan)
All funds remitted by members of the Beneficial Thrift
Plan constituted direct loans to Beneficial Corporation by
such members. Such funds were immediately available for use
in its business and that of its subsidiaries and were not
invested by the Trustees for the account of such members.
Account balances were unsecured general obligations of
Beneficial Corporation.
Effective at the close of business December 15, 1995,
the Beneficial Thrift Plan was terminated and any member's
outstanding account balance was returned to such member, all
in accordance with the Trust Indenture which governed the
Plan's operation.
Financial Statements
The financial statements of Beneficial Corporation
included in Item 14 of the attached Form 10-K are
incorporated herein by reference.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET AND STATEMENT OF INCOME (BOTH DATED 12/31/95) AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 273
<SECURITIES> 0<F1>
<RECEIVABLES> 13416
<ALLOWANCES> 406
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 451<F3>
<DEPRECIATION> 268<F3>
<TOTAL-ASSETS> 15717
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 7793<F4>
<COMMON> 53
0
115
<OTHER-SE> 1335<F5>
<TOTAL-LIABILITY-AND-EQUITY> 15717
<SALES> 0
<TOTAL-REVENUES> 2398<F6>
<CGS> 0
<TOTAL-COSTS> 816<F7>
<OTHER-EXPENSES> 1016<F8>
<LOSS-PROVISION> 295
<INTEREST-EXPENSE> 0<F9>
<INCOME-PRETAX> 270
<INCOME-TAX> 120
<INCOME-CONTINUING> 150
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150
<EPS-PRIMARY> 2.72
<EPS-DILUTED> 2.70
<FN>
<F1>CURRENT MARKETABLE EQUITY SECURITIES ARE NOT SEPARATELY STATED
<F2>DO NOT PREPARE CLASSIFIED BALANCE SHEET
<F3>PP&E PER BALANCE SHEET (183.1) IS SHOWN NET OF DEPRECIATION.
<F4>LONG-TERM DEBT PER BALANCE SHEET
<F5>INCLUDES ADDITIONAL CAPITAL (270.0), NET UNREALIZED GAIN ON INVESTMENT
(18.4), FOREIGN CURRENCY TRANSLATION ADJ (-46.4), AND RETAINED EARNINGS
(1093.0) PER BALANCE SHEET = 1335.0
<F6>INCLUDES FINANCE CHARGES AND FEES (2014.6), INSURANCE PREMIUMS (152.7) AND
OTHER REVENUE (230.9) PER INCOME STATEMENT = 2398.2
<F7>INTEREST EXPENSE PER INCOME STATEMENT.
<F8>INCLUDES SALARIES & BENEFITS (384.6), INSURANCE BENEFITS (80.4), PROVISION FOR
RESTRUCTURING (9.8) AND OTHER (541.6) PER INCOME STATEMENT = 1016.4
<F9>COMPANY'S PRIMARY COST OF GENERATING REVENUE IS INTERST EXPENSE WHICH IS
INCLUDED IN TOTAL COSTS (ABOVE).
</FN>
</TABLE>
