<PAGE>
Total # of Pages 137
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 1997 OR
-------------
______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________
TO _____________
Commission File Number 1-13940
------------------------------------------------------
EVEREN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-4019175
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
77 West Wacker Drive
Chicago, Illinois 60601
- ----------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 574-6000
----------------------
Indicate by checkmark 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 (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ____
-----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. Shares outstanding as of
July 31, 1997:
$.01 par value common stock - 17,093,271
<PAGE>
INDEX
-----
<TABLE>
<CAPTION>
Page
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited):
Consolidated Statements of Financial Condition -
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations - Three and six
months ended June 30, 1997 and 1996 4
Consolidated Statement of Changes in Stockholders' Equity -
Six months ended June 30, 1997 5
Consolidated Statements of Cash Flows -Six months
ended June 30, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis -
Results of Operations
Liquidity and Capital Resources 9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 23
SIGNATURES 24
EXHIBIT INDEX 25
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EVEREN CAPITAL CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1997 1996
----------- -------------
<S> <C> <C>
Cash and cash equivalents $ 44,441 $ 46,592
Cash and securities segregated under
federal and other regulations 15,648 15,778
Receivables from:
Customers 790,423 764,405
Brokers and dealers 24,934 50,807
Others 46,733 52,804
Securities borrowed 55,522 50,687
Securities owned, at market 193,683 160,940
Securities purchased under agreements to resell 483,075 479,313
Investment in mortgage-backed certificates
available-for-sale, at fair value 138,060 144,962
Fixed assets, at cost, net 37,932 36,136
Other assets 26,070 21,921
---------- ----------
$1,856,521 $1,824,345
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Bank loans payable $ 163,000 $ 140,000
Payables to:
Customers 212,384 259,607
Brokers and dealers 43,860 24,632
Securities loaned 230,456 189,303
Collateralized mortgage obligations 130,751 137,699
Securities sold, not yet purchased, at market 115,822 89,709
Securities sold under agreements to repurchase 420,272 466,266
Deferred income taxes 7,283 13,491
Accounts payable, accrued expenses and
other liabilities 220,219 214,603
---------- ----------
1,544,047 1,535,310
========== ==========
Stockholders' Equity:
Common stock, $.01 par value per share; 40,000,000
shares authorized, 17,087,365 and 16,611,889 outstanding at
June 30, 1997 and December 31, 1996, respectively 175 170
Additional paid-in capital 267,275 255,040
Unrealized loss on available-for-sale securities, net of
income taxes (4,420) (4,381)
Unearned cost of restricted stock (6,144) (1,576)
Treasury stock, at cost, 426,420 and 354,473 shares at June 30, 1997
and December 31, 1996, respectively (7,243) (5,230)
Retained earnings (since January 1, 1996) 62,831 45,012
---------- ----------
312,474 289,035
---------- ----------
$1,856,521 $1,824,395
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
EVEREN CAPITAL CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
Three and six months ended June 30, 1997 and 1996
(unaudited)
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Commissions $61,901 $60,277 $123,712 $ 117,709
Principal transactions 24,656 34,469 47,929 65,345
Investment banking 15,514 16,540 25,504 26,983
Asset management 16,267 13,231 32,365 27,712
Other 8,371 13,486 17,228 25,209
Interest 18,195 19,278 36,217 37,469
------- ------- ------- -------
Total revenue 144,904 157,281 282,955 300,427
Interest expense 6,728 9,203 13,468 18,457
------- ------- ------- -------
Net revenue 138,176 148,078 269,487 281,970
Non-interest expenses:
Compensation and benefits 80,267 88,893 158,812 175,619
Brokerage and clearance 4,043 3,899 8,249 6,849
Communications 10,350 9,567 19,960 19,888
Occupancy and equipment 10,006 10,052 19,941 20,276
Promotional 5,461 4,375 10,050 8,357
Other 10,789 10,881 18,995 19,930
------- ------- ------- -------
Total non-interest expenses 120,916 127,667 236,007 250,919
Gain on sale of subsidiary - 50,181 - 50,181
------- ------- ------- -------
Income before income taxes 17,260 70,592 33,480 81,232
Income tax expense 6,445 28,173 12,564 32,007
------- ------- ------- -------
Net income $ 10,815 $ 42,419 $ 20,916 $ 49,225
======= ======= ======= =======
Net earnings applicable to
common stock $ 10,815 $ 20,916
======= =======
Weighted average common
shares outstanding 18,105,212 17,939,835
========== ==========
Net earnings per share $ .60 $ 1.17
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
EVEREN CAPITAL CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Six months ended June 30, 1997
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Unearned
Additional Unrealized cost of Retained Total
Paid-In loss on available Restricted Treasury Earnings Stockholders'
Common Stock Capital for sale securities Stock Stock (Since 1/1/96) Equity
------------ ---------- -------------------- ----------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996 $170 $255,040 $(4,381) $(1,576) $(5,230) $45,012 $289,035
Issuance of additional common
stock under equity plans 5 12,235 (4,568) 7,672
Dividend on common stock (3,097) (3,097)
Unrealized loss for the period (39) (39)
Purchase of treasury stock (2,013) (2,013)
Net income 20,916 20,916
------ ---------- --------- --------- --------- ---------- ----------
Balances at June 30, 1997 $175 $267,275 $(4,420) $(6,144) $(7,243) $62,831 $312,474
====== ========== ========= ========= ========= ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
EVEREN CAPITAL CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six months ended June 30, 1997 and 1996
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 20,916 $ 49,225
Adjustments to reconcile net income to net cash flows
from operating activities:
Gain on sale of subsidiary - (50,181)
Release of KSOP shares - 7,368
Depreciation and amortization 7,560 6,994
Deferred income taxes (6,187) 1,414
Change in assets and liabilities:
Cash and securities segregated under federal
and other regulations 130 (583)
Receivables from/payables to:
Customers (73,241) (121,720)
Brokers and dealers 45,101 31,217
Others 6,071 (2,957)
Securities borrowed (4,835) (29,321)
Securities owned (32,743) (39,917)
Securities purchased under agreements to resell (3,762) 926,075
Other assets (4,180) 383
Securities loaned 41,153 143,727
Securities sold, not yet purchased 26,113 (14,575)
Securities sold under agreements to repurchase (45,994) (893,357)
Accounts payable, accrued expenses,
and other liabilities 5,616 13,909
-------- ---------
Net cash flows from operating activities (18,282) 27,701
-------- ---------
Cash flows from investing activities:
Net proceeds from sale of subsidiary - 59,346
Purchase of investments in mortgage-backed securities - (9,505)
Collections of principal on investments in mortgage-
backed securities 7,208 9,665
Proceeds from sale of fixed assets - 2,120
Acquisition of fixed assets, net (8,506) (3,998)
-------- ---------
Net cash flows from investing activities (1,298) 57,628
-------- ---------
Cash flows from financing activities
Release of shares related to KSOP loan - 9,264
Proceeds from the issuance of collateralized mortgaged obligations - 9,422
Dividends paid on exchangeable preferred stock - (1,084)
Dividends paid on common stock (3,097) -
Proceeds from common stock issuance 6,751 4,183
Amount collected under indemnification agreement - 9,061
Repayment of collateralized mortgage obligations (7,212) (9,577)
Increase (decrease) in bank loans payable 23,000 (77,800)
Purchase of treasury stock (2,013) (188)
-------- ---------
Net cash flows from financing activities 17,429 (56,719)
-------- ---------
Increase (decrease) in cash and cash equivalents (2,151) 28,610
Cash and cash equivalents at beginning of the period 46,592 14,585
-------- ---------
Cash and cash equivalents at end of the period $ 44,441 $ 43,195
======== =========
Supplemental disclosure of cash flow information:
Interest paid $ 16,579 $ 17,978
======== =========
Income taxes paid $ 14,317 $ 14,510
======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
EVEREN CAPITAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Six months ended June 30, 1997
(unaudited)
- --------------------------------------------------------------------------------
(1) GENERAL INFORMATION
-------------------
The consolidated financial statements, prepared in accordance with
generally accepted accounting principles, include the accounts of EVEREN
Capital Corporation and its subsidiaries (the "Company"). The consolidated
financial statements are unaudited. However, in the opinion of management,
such financial statements include all adjustments, consisting of normal
recurring accruals, necessary for the fair presentation of the accompanying
consolidated financial statements.
Certain information and footnotes normally included in financial statements
prepared in accordance with generally accepted accounting principles have
been omitted pursuant to Securities and Exchange Commission ("SEC") rules
and regulations. Accordingly, these financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's 1996 Annual Report on Form 10-K.
All material intercompany balances and transactions have been eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts. Actual results could differ
from those estimates. The results of operations for interim periods are not
necessarily indicative of results for the entire year.
Certain reclassifications have been made in the prior period financial
statements to conform to the current period presentation.
(2) NET CAPITAL RULE
----------------
EVEREN Securities, Inc. ("EVEREN Securities") and EVEREN Clearing Corp.
("EVEREN Clearing"), the Company's broker-dealer subsidiaries, are subject
to the Uniform Net Capital Rule of the SEC. Both EVEREN Securities and
EVEREN Clearing operate under the alternative method, as defined, of
computing minimum net capital. At June 30, 1997, EVEREN Securities had net
capital of approximately $133.9 million which was approximately $132.9
million in excess of its required minimum net capital. At June 30, 1997,
EVEREN Clearing had net capital of approximately $67.1 million which was
approximately $50.8 million in excess of its required minimum net capital.
Such net capital requirements could restrict the ability of these
subsidiaries to make dividend distributions to their parent.
7
<PAGE>
EVEREN CAPITAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Six months ended June 30, 1997
(unaudited)
- --------------------------------------------------------------------------------
(3) COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company has been named as a defendant in various legal actions in
connection with its securities and commodities business. Some of these
lawsuits involve claims for substantial amounts. Although the ultimate
outcome of these suits cannot be ascertained at this time, it is the
opinion of management, after consultation with outside counsel, that the
resolution of such suits will not have a material adverse effect on the
consolidated financial position of the Company, but may be material to the
Company's operating results for any particular period, depending upon the
level of the Company's income for such period.
In the normal course of business, the Company enters into various
contractual commitments involving future settlement. These include futures,
forwards, options and securities sold, not yet purchased. These
transactions are executed either over-the-counter or are exchange-traded,
and are used primarily to hedge the Company's securities inventory. Many of
these products have maturities that do not extend beyond one year.
Transactions relating to such commitments which were open at June 30, 1997,
and subsequently settled, had no material effect on the consolidated
financial position of the Company
On July 11, 1997 the Company entered into a $50 million committed revolving
credit facility with two banks. The term of the agreement is for two years,
subject to a one year extension by mutual agreement of the parties.
Commitment fees under this facility are paid quarterly at a rate per annum
of .25% on the average daily unused balance.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the Company's
consolidated financial statements and notes thereto contained in Item 1 of this
report. In addition to historical information, the following Management's
Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements. Such forward looking statements are within
the meaning of that term in Section 27A of the Securities Act of 1933, as
amended, and Section 21F of the Securities Exchange Act of 1934, as amended..
Such statements may include, but are not limited to, projections of revenues,
income or loss, capital expenditures, plans for future operations, financing
needs or plans, and plans relating to products or services of the Company, as
well as assumptions relating to the foregoing.
Forward looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future events
and actual results could differ materially from those set forth in, contemplated
by, or underlying the forward looking statements. Statements in this quarterly
report, including the notes to the consolidated financial statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," describe factors, among others, that could contribute to or cause
such differences. Additional factors that could cause actual results to differ
materially from those expressed in such forward looking statements include those
discussed below in "Business Environment."
BUSINESS ENVIRONMENT
The Company's principal business, securities brokerage, is directly
affected by many factors, including economic and political conditions, broad
trends in business and finance, legislation and regulation affecting the
national and international business and financial communities, currency values,
inflation, market conditions, the availability and cost of short-term or long-
term funding and capital, the credit capacity or perceived creditworthiness of
the securities industry in the marketplace and the level and volatility of
interest rates. Such factors can lead to volatility in the price levels for
securities and illiquid markets.
Volatile price levels of securities may, among other things result in (a)
reduced volume of securities, options and futures transactions, with a
consequent reduction in commission revenues, (b) losses from declines in the
market value of securities held in trading, investment and underwriting
positions and (c) reduced management fees calculated as a percentage of assets
managed. In periods of low volume, levels of profitability are further
adversely affected because certain expenses remain relatively fixed. Illiquid
markets may result in the Company having difficulty selling securities, hedging
its securities positions and investing funds under its management. The Company
believes its trading strategy and risk management procedures reduce its exposure
to losses resulting from such risks, although there can be no assurance that
such losses will not occur or if they do, that they will not be material.
Consequently, the results of operations for a particular period may not be
indicative of results to be expected for other periods.
Industry market conditions remained generally favorable during the first
six months of 1997. The stock market experienced a modest slowdown in March and
April of 1997, due to a rise in short-term interest rates and some investor
uncertainty; however activity returned to more favorable levels in May and June
of 1997.
9
<PAGE>
EQUITY PARTICIPATION OF EMPLOYEES
As of June 30, 1997, the Company's employees and directors, through the
Company's 401(k) and Employee Stock Ownership Plan ("the KSOP") and otherwise,
own in excess of 70% of the outstanding Common Stock. Management believes that
significant employee ownership fosters a culture that encourages strong
performance and provides employees the opportunity to participate in the future
performance of the Company.
In the second quarter of 1996, the Company instituted three employee
benefit plans to provide current and future employees the opportunity to acquire
Common Stock outside of the KSOP. In connection with these plans, the Company
recognizes additional compensation expense over the respective vesting periods
equal to the difference between the fair value of the Common Stock issued under
each respective plan and cash paid (if any). During the first half of 1997, the
Company issued approximately 545,000 restricted shares under these equity plans
to employees.
COMPONENTS OF REVENUE AND EXPENSES
Revenue. Commissions include revenue generated by executing listed and
-------
over-the-counter transactions as agent, as well as commissions earned on the
sales of mutual funds, insurance, annuities and certain other products.
Principal transactions consist of gains and losses from the trading of
securities by the Company as principal, including principal sales credits.
Investment banking revenue includes merger and acquisition fees, other advisory
fees and underwriting revenue, which is comprised of underwriting selling
concessions, management fees and underwriting fees. Asset management revenue
primarily includes managed account fees and 12b-1 distribution fees. Other
revenue includes transaction and account fees, correspondent clearing and
execution income and miscellaneous income. Interest income primarily represents
interest earned on customer margin accounts and interest income on securities
owned and investments in mortgage-backed certificates. Net revenues equal total
revenues less interest expense. Interest expense includes interest paid on bank
borrowings, collateralized securities transactions with brokers and dealers and
collateralized mortgage obligations.
Expenses. Compensation and benefits expense includes sales, trading and
--------
incentive compensation, which are primarily variable based on revenue
production, and salaries, payroll taxes and employee benefits, which are
relatively fixed in nature. Brokerage and clearance expense includes the cost
of securities clearance, floor brokerage and exchange fees. Communications
expense includes charges for telecommunications, news and market data services,
customer statements and depreciation on data processing and telecommunications
equipment. Occupancy and equipment expense includes rent and operating expenses
for the Company's facilities, expenditures for repairs and maintenance, and
depreciation of furniture, fixtures and leasehold improvements. Promotional
expense includes travel, entertainment and advertising. Other expense includes
professional services, litigation expenses, office expenses, dues and
assessments, and other miscellaneous expenses.
10
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth certain financial data as a percentage of net
revenues:
Consolidated Statement of Operations Data:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Commissions 44.8% 40.7% 45.9% 41.7%
Principal transactions 17.8 23.3 17.8 23.2
Investment banking 11.2 11.2 9.5 9.6
Asset management 11.8 8.9 12.0 9.8
Other 6.1 9.1 6.4 9.0
Interest 13.2 13.0 13.4 13.3
----- ----- ----- -----
Total revenue 104.9 106.2 105.0 106.6
Interest expense 4.9 6.2 5.0 6.6
----- ----- ----- -----
Net revenue 100.0 100.0 100.0 100.0
----- ----- ----- -----
Non-interest expenses:
Compensation and benefits 58.1 60.0 58.9 62.3
Brokerage and clearance 2.9 2.6 3.0 2.4
Communications 7.5 6.5 7.4 7.1
Occupancy and equipment 7.2 6.8 7.4 7.2
Promotional 4.0 3.0 3.7 3.0
Other 7.8 7.3 7.1 7.1
----- ----- ----- -----
Total non-interest expenses 87.5 86.2 87.5 89.1
Gain on sale of subsidiary - 33.9/(1)/ - 17.8
----- ----- ----- ------
Income before taxes 12.5 47.7 12.5 28.7
Income tax provision 4.7 19.0 4.7 11.3
----- ----- ----- ------
Net income 7.8% 28.7%/(1)/ 7.8% 17.4%
===== ===== ===== ======
___________________
</TABLE>
/(1)/ Includes a $50.2 million pre-tax or 33.9% ($30.2 million after-tax or
20.4%) gain on the sale of BETA.
11
<PAGE>
Six months ended June 30, 1997 compared to the Six months ended June 30, 1996
The Company experienced strong operating results for the three and six
months ended June 30, 1997 when compared to the comparable periods of 1996. The
Company continues to focus on its core businesses. This focus resulted in the
sale of the Company's data-processing and quote service subsidiary, Beta
Systems, Inc. ("BETA"), in the second quarter of 1996, and the departure from
both the unit investment trust origination business and portions of the
municipal institutional sales and trading business in the fourth quarter of
1996. The sale of BETA resulted in a pre-tax gain of approximately $50.2 million
and an after-tax gain of approximately $30.2 million. As a result, while
revenues are slightly lower in the first half of 1997 than in the comparable
period of 1996, revenues from the Company's ongoing core businesses have
increased. Non-interest expenses have generally declined or remained constant in
most areas, as a percentage of net revenues. Net income from the Company's
ongoing operations improved in the first half of 1997 when compared to the first
six months of 1996. Management attributes these results to several factors.
First, favorable conditions continued to prevail in the industry for most of the
first half of 1997, reflecting continued investor optimism concerning inflation,
interest rate stability and the equity markets. Second, this period reflects the
continued benefits of ownership resolution, which, in management's opinion, have
enhanced employee morale, focus and productivity, and have allowed management to
concentrate on achieving its strategic initiatives. Finally, continued focus on
cost containment has contributed to the strong operating results.
Total revenue decreased $12.4 million and $17.5 million or 8% and 6% to
$144.9 million and $282.9 million for the three and six months ended June 30,
1997 from $157.3 million and $300.4 million for the three and six months ended
June 30, 1996. Net revenue decreased $9.9 million and $12.5 million or 7% and
4% to $138.2 million and $269.5 million for the three and six months ended June
30, 1997 from $148.1 million and $282.0 million for the three and six months
ended June 30, 1996. As previously noted, the Company sold or exited certain
non-strategic businesses in 1996. Excluding revenue from these businesses, total
revenue for the six months ended June 30, 1997 increased $2.7 million to $282.9
million from $280.2 million in 1996, and net revenue for the first half of 1997
increased by approximately $6.4 million or 2% over the same period of 1996.
Commission revenue increased $1.6 million and $6.0 million or 3% and 5% to
$61.9 million and $123.7 million for the three and six months ended June 30,
1997 from $60.3 million and $117.7 million for the three and six months ended
June 30, 1996. These increases are primarily due to increased business in both
the retail and institutional areas, consistent with the continued growth in
listed share volume on most major domestic equity exchanges in the first half of
1997.
Principal transactions revenue decreased $9.8 million and $17.4 million or
28% and 27% to $24.7 million and $47.9 million for the three and six months
ended June 30, 1997 from $34.5 million and $65.3 million for the three and six
months ended June 30, 1996. Excluding principal transactions revenue
attributable to the municipal sales and trading area in the first quarter of
1996, principal transactions revenue decreased $13.2 million or 21% in the first
half of 1997. These decreases are attributable, in part, to a shift in
transaction volume away from both fixed income products and from over-the-
counter stocks to listed equities. In addition, in the first half of 1997 the
Company experienced lower trading profits on principal transactions in equity
securities.
12
<PAGE>
Investment banking revenue decreased $1.0 million and $1.5 million or 6%
and 5% to $15.5 million and $25.5 million for the three and six months ended
June 30, 1997 from $16.5 million and $27.0 million for the three and six months
ended June 30, 1996. Excluding investment banking revenue of $5.1 million
generated from the aforementioned exited businesses, specifically the unit
investment trust origination business, in the first half of 1996, investment
banking revenues increased $3.7 million or 17% for the first half of 1997. This
increase is the result of the Company's continued focus on developing corporate
finance transactions in specific targeted industry sectors.
Asset management revenue increased $3.0 million and $4.7 million or 23% and
17% to $16.3 million and $32.4 million for the three and six months ended June
30, 1997 from $13.3 million and $27.7 million for the three and six months ended
June 30, 1996 due primarily to increased managed account fees and increased 12b-
1 distribution fees. These increases are reflective of increases in the number
of managed accounts and an increase in asset values.
Other income decreased $5.1 million and $8.0 million 1or 38% and 32% to
$8.4 million and $17.2 million for the three and six months ended June 30, 1997
from $13.5 million and $25.2 million for the three and six months ended June 30,
1996. This decrease is due primarily to the sale of BETA in the second quarter
of 1996. Excluding revenues attributable to BETA, other income increased $1.0
million or 5% for the first half of 1997 when compared to the first six months
of 1996. This increase is due in part to earnings from the Company's joint
venture with Mentor Investment Group, Inc. ("Mentor").
Interest and dividend income decreased $1.1 million and $1.3 million or 6%
and 3% to $18.2 million and $36.2 million for the three and six months ended
June 30, 1997 from $19.3 million and $37.5 million for the corresponding periods
in 1996. Net interest increased $1.4 million and $3.7 million or 14% and 20% to
$11.5 million and $22.7 million for the three and six months ended June 30, 1997
from $10.1 million and $19.0 million for the three and six months ended June 30,
1996. The decline a in interest expense of $2.5 million and $5.0 million ,or 27%
to $6.7 million and $13.5 million for the three and six months ended June 30,
1997 from $9.2 million and $18.4 million for the three and six months ended June
30, 1996 was the result of the elimination of the long-term debt incurred in
connection with the Company's separation from Kemper ("the Buy-Out") in
September 1995 and lower bank borrowings in the current period.
Total non-interest expenses decreased $6.8 million and $14.9 million or 5%
and 6% to $120.9 million and $236.0 million for the three and six months ended
June 30, 1997 from $127.7 million and $250.9 million for the three and six
months ended June 30, 1996 respectively. When analyzing non-interest expenses
for the six months ended June 30, 1997 and 1996, the sale of BETA has had the
effect of modesty decreasing many expense categories. Concurrent with the sale
of BETA, the Company entered into new service agreements with BETA, whereby BETA
operating costs previously included in the various consolidated operating
expense categories are now limited to amounts due under these agreements and
included in brokerage and clearance expense.
Compensation and benefits expense decreased $8.6 million and $16.8 million
or 10% to $80.3 million and $158.8 million for the three and six months ended
June 30, 1997 from $88.9 million and $175.6 million 3for the three and six
months ended June 30, 1996. This decrease is the result of several factors,
including the sale of BETA as mentioned above, the elimination of certain
compensation costs related to the release of unearned KSOP shares, and the
continued management focus on controlling overall compensation expense as a
percentage of net revenues.
13
<PAGE>
Brokerage and clearance expense increased $0.1 million and $1.4 million or
43% and 20% to $4.0 million and $8.2 million for the three and six months ended
June 30, 1997 from $3.9 million and $6.8 4million for the three and six months
ended June 30, 1996. The increase is due primarily to payments to BETA under the
new service agreements as described above.
Communications expense increased $0.8 million and $0.1 million or 8% and
0.4% to $10.4 million and $20.0 million for the three and six months ended June
30, 1997 from $9.6 million and $19.9 million for the three and six months ended
June 30, 1996. These increases are due primarily to technology initiatives and
enhancements undertaken in 1997 to improve the Company's overall productivity
and competitiveness.
Occupancy and equipment expense remained constant for the three and six
months ended June 30, 1997 when compared to the corresponding periods of 1996,
primarily due to the Company's focus on utilization of existing office space in
its recruiting efforts.
Promotional expense increased $1.1 million and $1.7 million or 25% and 20%
to $5.5 million and $10.1 million for the three and six months ended June 30,
1997 from $4.4 million and $8.4 million for the three and six ended June 30,
1996. These increases are due primarily to a new advertising campaign initiated
in 1997 to enhance the Company's name recognition and the internal promotion of
the Mentor mutual fund products.
Other expenses remained relatively constant for the three and six months
ended June 30, 1997 when compared to the corresponding periods of 1996,
reflecting the Company's on-going concentration on cost control.
The Company's income tax expense for the three and six months ended June
30, 1997 was $6.4 million and $12.6 million, which represented an effective tax
rate on income before taxes of 37.3% and 37.5%, compared to a $28.2 million and
$32.0 million or a 39.9% and 39.4% effective tax rate for the three and six
months ended June 30, 1996.
Net income decreased $31.6 million and $28.3 million to $10.8 million and
$20.9 million for the three and six months ended June 30, 1997 from $42.4
million and $49.2 million for the three and six months ended June 30, 1996.
Excluding the after-tax gain on sale of BETA of $30.2 million noted above, net
income for the six months ended June 30, 1997 improved $1.9 million over the
first half of 1996.
14
<PAGE>
QUARTERLY RESULTS
The information set forth below is derived from unaudited quarterly
financial statements of the Company. Such financial statements have been
prepared by the Company on a basis consistent with the consolidated financial
statements included elsewhere in this report and include all adjustments,
consisting principally of normal recurring accruals, that the Company considers
necessary for a fair presentation thereof. These operating results are not
necessarily indicative of the Company's future performance.
<TABLE>
<CAPTION>
Three months ended
------------------
6/30/97 3/31/97 12/31/96 9/30/96 6/30/96 3/31/96 12/31/95 9/30/95
------- ------- -------- ------- ------- ------- -------- -------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Commissions $ 61,901 $ 61,811 $ 57,348 $ 50,741 $ 60,277 $ 57,431 $ 49,591 $ 51,188
Principal transactions 24,656 23,273 23,557 26,389 34,469 30,875 30,863 33,670
Investment banking 15,514 9,990 17,229 11,677 16,540 10,442 15,520 8,220
Asset management 16,267 16,098 14,804 14,776 13,231 14,480 13,907 13,636
Other 8,371 8,856 9,775 7,234 13,486 11,722 14,552 11,493
Interest 18,195 18,023 18,328 18,270 19,278 18,191 19,452 20,497
-------- --------- -------- -------- ------- -------- -------- --------
Total revenue 144,904 138,051 141,041 129,087 157,281 143,141 143,885 138,704
Interest expense 6,728 6,740 6,850 8,613 9,203 9,254 12,567 12,942
-------- --------- -------- -------- ------- -------- -------- --------
Net revenue 138,176 131,311 134,191 120,474 148,078 133,887 131,318 125,762
Non-interest expenses:
Compensation and
benefits 80,267 78,545 80,170 75,601 88,893 86,725 83,101 98,378/(3)/
Brokerage and clearance 4,043 4,206 3,937 3,773 3,899 2,949 2,590 3,329
Communications 10,350 9,609 9,495 8,883 9,567 10,321 10,305 10,085
Occupancy and equipment 10,006 9,935 9,200 9,676 10,052 10,224 10,714 21,687/(3)/
Promotional 5,461 4,589 5,167 4,326 4,375 3,982 3,453 3,568
Other 10,789 8,206 11,194 6,640 10,881 9,049 10,504 17,219/(3)/
-------- --------- -------- -------- ------- -------- -------- --------
Total non-interest
expenses 120,916 115,090 119,163 108,899 127,667 123,250 120,667 154,266
Gain on sale of
subsidiary - - - - 50,181/(2)/ - - -
-------- --------- -------- -------- ------- -------- -------- --------
Income (loss) before
income taxes
and extraordinary charge 17,260 16,221 15,028 11,575 70,592 10,637 10,651 (28,504)
Income tax provision
(benefit) 6,445 6,119 5,266 5,165 28,173 3,831 4,413 (9,125)
-------- --------- -------- -------- ------- ------- ------- --------
Income (loss) before
extraordinary charge 10,815 10,102 9,762 6,410 42,419 6,806 6,238 (19,379)
Extraordinary charge, net
of income taxes of $1,561 - - - (2,900)/(1)/ - - - -
-------- --------- -------- -------- ------- -------- -------- --------
Net income (loss) $ 10,815 $ 10,102 $ 9,762 $ 3,510/(1)/ $42,419/(2)/ $ 6,806 $ 6,238 $(19,379)/(3)/
======== ========= ======== ======== ======= ======== ======== ========
</TABLE>
__________________
/(1)/ Includes a $2.9 million after-tax charge related to the early retirement
of the Company's junior subordinated debentures.
/(2)/ Includes a $50.2 million pre-tax ($30.2 million after-tax) gain
on the sale of BETA.
/(3)/ Includes $33.3 million pre-tax ($22.0 million after-tax) of non-
recurring charges incurred in connection with the Company's separation
from its former parent.--1995 Compared to 1994. On a pre-tax basis,
excluding these charges, compensation and benefits expense would decrease
$16.7 million to $81.7 million from $98.4 million; occupancy and equipment
expense would decrease $10.6 million to $11.1 million from $21.7 million;
and other expenses would decrease $6.0 million to $11.2 million from $17.2
million.
15
<PAGE>
The following table sets forth certain financial data as a percentage of net
revenues.
<TABLE>
<CAPTION>
Three months ended
------------------
6/30/97 3/31/97 12/31/96 9/30/96 6/30/96 3/31/96 12/31/95 9/30/95
------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Commissions 44.8% 47.1% 42.7% 42.1% 40.7% 42.9% 37.8% 40.7%
Principal transactions 17.8 17.7 17.6 21.9 23.3 23.1 23.5 26.8
Investment banking 11.2 7.6 12.8 9.7 11.2 7.8 11.8 6.5
Asset management 11.8 12.3 11.0 12.3 8.9 10.8 10.6 10.8
Other 6.1 6.7 7.3 6.0 9.1 8.8 11.1 9.1
Interest 13.2 13.7 13.7 15.2 13.0 13.6 14.8 16.3
------- -------- ------- -------- -------- ------- ------- ------
Total revenue 104.9 105.1 105.1 107.2 106.2 107.0 109.6 110.2
Interest expense 4.9 5.1 5.1 7.2 6.2 7.0 9.6 10.2
------- -------- ------- -------- -------- ------- ------- ------
Net revenue 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
------- -------- ------- -------- -------- ------- ------- ------
Non-interest expenses:
Compensation and benefits 58.1 59.8 59.7 62.8 60.0 64.8 63.3 78.2/(3)/
Brokerage and clearance 2.9 3.2 2.9 3.1 2.6 2.2 2.0 2.6
Communications 7.5 7.3 7.1 7.4 6.5 7.7 7.8 8.0
Occupancy and equipment 7.2 7.6 6.9 8.0 6.8 7.6 8.2 17.2/(3)/
Promotional 4.0 3.5 3.9 3.6 3.0 3.0 2.6 2.8
Other 7.8 6.2 8.3 5.5 7.3 6.8 8.0 13.7/(3)/
------- -------- ------ ------- ------- -------- ------- ------
Total non-interest expenses 87.5 87.6 88.8 90.4 86.2 92.1 91.9 122.5
Gain on sale of subsidiary - - - - 33.9/(2)/ - - -
------- -------- ------ ------- ------- ------- ------ ------
Income (loss) before
income taxes and extraordinary charge 12.5 12.4 11.2 9.6 47.7 7.9 8.1 (22.5)
Income tax provision (benefit) 4.7 4.7 3.9 4.3 19.0 2.9 3.4 (7.3)
------- -------- ------ ------- ------- ------- ------ ------
Income (loss) before
extraordinary charge 7.8 7.7 7.3 5.3 28.7 5.0 4.7 (15.2)
------ -------- ------ ------- ------- ------- ------ ------
Extraordinary charge, net
of income taxes - - - (2.4)/(1)/ - - - -
------ ------- ------ ------- ------- ------- ------ ------
Net income (loss) 7.8% 7.7% 7.3% 2.95.3%/(1)/ 28.7%/(2)/ 5.0% 4.7% (15.2)%/(3)/
======= ======= ======= ======= ======= ======= ====== ======
</TABLE>
______________________
/(1)/ Includes a $2.9 million or 2.4% after-tax charge related to the early
retirement of the Company's junior subordinated debentures.
/(2)/ Includes a $50.2 million pre-tax or 33.9% ($30.2 million after-tax or
20.4%) gain on the sale of BETA.
/(3)/ Includes $33.3 million pre-tax or 26.5% ($22.0 million after-tax or 17.4%)
of net revenues for non-recurring charges incurred in connection with the
s-1995 Compared to 1994.Company's separation from its former parent. On a
pre-tax basis, excluding these charges, compensation and benefits expense
would decrease 13.3% to 64.9% forom 78.2%; occupancy and equipment expense
would decrease 8.4% to 8.8% from 17.2%; and other expenses would decrease
4.8% to 8.9% from 13.7%.
16
<PAGE>
The generally favorable trend in the Company's revenues for the eight
quarterly periods ended June 30, 1997 reflects the equally favorable retail
brokerage industry market conditions and relative stability in the fixed income
markets. Revenues in the first quarter of 1997 and the third quarter of 1996
were adversely effected by market volatility and decreased transactional volume
seen throughout the industry at that time.
Net revenues during this eight-quarter period follow the same trend, with
the Company realizing the benefit of declining non-customer/dealer related
interest expense as a result of the elimination of certain long-term debt owed
to its former parent and the accelerated repayment of the KSOP loans.
While as a percentage of net revenues, non-interest expenses have generally
remained in a consistent range during the eight periods (excluding the third
quarter 1995 non-recurring charges of $33.3 million pre-tax discussed
previously), the absolute dollar variations are generally attributable to
compensation and benefits expense and brokerage and clearance expense which are
significantly correlated to revenues. As a percentage of net revenues, non-
interest expenses have generally trended downward during such periods, which
management believes to be a result of the Company's focus on cost containment
focus.
Net income (both in absolute dollar amounts and as a percentage of net
revenues) also reflects a positive trend during this eight-quarter period, with
the exception of the third quarter of 1995 which includes the $22.0 million
(after-tax) of non-recurring charges discussed previously and the third quarter
of 1996 when weaker market conditions occurred; and the second quarter of 1996
which includes the one time gain on the sale of BETA.
LIQUIDITY AND CAPITAL RESOURCES
Holding Company
EVEREN Capital Corporation ("EVEREN Capital") is the parent holding company
for EVEREN Securities Holdings, Inc. ("EVEREN Holdings"), the holding company
for the Company's operating subsidiaries. As the parent, EVEREN Capital expects
to receive dividends, interest on any loans and payments for federal income tax
from its subsidiaries. Dividends and other distributions, as well as certain
interest payments, to EVEREN Capital from its registered broker-dealer
subsidiaries, which are expected to be EVEREN Capital's primary sources of
liquidity, are restricted as to amounts which may be paid by applicable laws or
regulations. The "net capital" rules are the primary regulatory restrictions.
EVEREN Capital's rights (and the rights of its stockholders and creditors) to
participate in the assets of any subsidiary are also subject to prior claims of
the subsidiary's creditors, including customers of the broker-dealer
subsidiaries (except to the extent the Company itself may be a creditor with
recognized claims). See Note 2 of Notes to Consolidated Financial Statements
contained in Item 1 of this report.
Since becoming a publicly-traded company in the fourth quarter of 1996, the
Company, with approval from its Board of Directors, has paid a quarterly
dividend of $.09 per share on the outstanding shares of Common Stock.
On July 11, 1997 EVEREN Capital entered into a $50 million committed
revolving credit facility with two banks. The term of the agreement is for two
years, subject to a one year extension by mutual agreement of the parties.
Commitment fees under this facility are equal to a rate per annum of .25% on the
average daily unused balance.
17
<PAGE>
The Company believes that its current level of equity capital and available
credit resources, combined with funds anticipated to be generated from
operations, will be adequate to fund its capital needs operations for the
foreseeable future.
Operating Subsidiaries
The assets of EVEREN Securities, Inc. and EVEREN Clearing Corp., the
Company's primary operating subsidiaries (the "Subsidiaries"), are highly
liquid. The majority of their assets consist of securities inventories and
collateralized receivables, both of which fluctuate depending on the levels of
customer business. Collateralized receivables consist primarily of securities
purchased under agreements to resell ("resale agreements") and securities
borrowed, both of which are secured by U.S. government and agency securities and
highly marketable corporate debt and equity securities. In addition, the
Subsidiaries have significant receivables from customers, brokers and dealers
which turn over rapidly. As a securities dealer, the Company may carry
significant levels of securities inventories to meet client needs. As such, the
Subsidiaries' total assets and the individual components of total assets vary
significantly from period to period because of changes relating to customer
needs and economic and market conditions. A relatively small percentage of total
assets is fixed or held for a period of longer than one year. The Company's
total assets at June 30, 1997 and December 31, 1996 were approximately $1.9
billion and $1.8 billion, respectively.
The majority of the Subsidiaries' assets are financed through daily
operations by securities sold under agreements to repurchase, securities sold
not yet purchased, bank loans, securities loaned and, through payables to
customers, brokers and dealers. Short-term funding is generally obtained at
rates based on the federal funds, LIBOR and other money market rates. Other
borrowing costs are negotiated depending upon prevailing market conditions. The
Company monitors overall liquidity by tracking the extent to which unencumbered
marketable assets exceed short-term unsecured borrowings. The Company maintains
borrowing relationships with a broad range of banks, financial institutions,
counterparties and others. At June 30, 1997, the Subsidiaries had approximately
$600 million in uncommitted and committed credit lines with several banks.
Repurchase agreements are used primarily for customer accommodation
purposes and to finance the Company's inventory positions in U.S. government and
agency securities. These inventory positions provide products and liquidity for
customers and are generally not maintained for the Company's investment or
market speculation. The level of activity fluctuates significantly depending on
customer needs; however, these fluctuations have no material effect on cash
flows, liquidity or capital resources. The Company monitors the collateral
position and counterparty risk on these transactions daily. See "Risk
Management."
The Subsidiaries are capital intensive. In addition to normal operating
requirements, capital is required to cover financing and regulatory charges on
securities inventories, investment banking commitments and investments in fixed
assets. The Company's overall capital needs are continually reviewed to ensure
that its capital base can appropriately support the anticipated needs of the
Subsidiaries. Management believes that existing capital, funds from operations
and current credit facilities will be sufficient to finance the operating
subsidiaries' ongoing businesses. The majority of the Subsidiaries' assets are
funded with liabilities that reprice on a matched basis, generally producing a
positive spread. As a result, the Company has modest exposure to fluctuations
in interest rates (other than the effect of interest rate volatility on market
conditions and prices of fixed income securities, and the impact on the
Company's revenues).
18
<PAGE>
CASH FLOWS
The Company's statements of consolidated cash flows classify cash flows
into three broad categories: net cash flows from operating activities, investing
activities and financing activities. The Company's net cash flows are
principally associated with operating and financing activities, which support
the Company's trading, customer and banking activities.
Six months ended June 30, 1997 and 1996
Cash and cash equivalents at June 30, 1997 and 1996 totaled $44.4 million
and $43.2 million, respectively, reflecting a decrease of $2.1 million and an
increase of $.28.6 million, respectively.
For the six months ended June 30, 1997, cash used by operating activities
was funded through financing activities, primarily by an increase in bank loans
payable, while in 1996 cash provided by operating activities and investing
activities primarily the gain on the sale of BETA, were used to reduce bank
financings.
Net cash used by operating activities totaled $18.2 million and net cash
provided from operating activities totaled $27.7 million in 1997 and 1996,
respectively. In 1997, changes in securities owned and securities sold not yet
purchased of $6.6 million and securities purchased under agreements to resell
and repurchase of $49.8 million used cash. These uses were partially offset by
changes in securities borrowed and loaned of $36.3 million. In 1996, there were
changes in securities borrowed and loaned of $114.4 million and changes in
other assets and other liabilities of $14.3 million which generated cash. These
sources were partially offset by a $54.5 million increase in securities owned
and securities sold not yet purchased and a $93.5 million use of funds related
to the net change in receivables from and payables to customers, broker-dealers
and others.
In 1997, net cash used in investing activities of $1.3 million is the
result of collections of principal on investments in mortgage-backed securities
of $7.2 million offset by a net increase of $8.5 million due to the purchases of
fixed assets primarily technology related. In 1996 cash provided from investing
activities of $57.6 million resulted primarily from the $59.3 million net
proceeds from sale of BETA and the $2.1 million of net cash flows from the sale
of fixed assets and principal collections on investments in mortgage-backed
securities of $9.7 million, which were offset by $4.0 million of fixed asset
purchases and $9.5 million of purchases of investments in mortgage-backed
securities.
In 1997, net cash flows from financing activities amounted to $17.4
million, the net result of a $23.0 million increase in bank loans, $6.8 million
of proceeds from the issuance of common stock under its equity participation
programs, payment of dividends of $3.1 million, purchase of treasury stock of
$2.0 million and the repayment of collateralized mortgage obligations of $7.2
million. In 1996 the Company's financing activities used $56.7 million of net
cash flows, the net result of a $77.8 million decrease in bank loans, $9.6
million of repayments of collateralized mortgage obligations, money collected
under an indemnification agreement of $9.1 million, proceeds from common stock
issuance of $4.2 million, $9.3 million release of shares related to KSOP loan
and $9.4 million proceeds from the issuance of collateralized mortgage
obligations.
19
<PAGE>
DERIVATIVE FINANCIAL INSTRUMENTS
Derivatives are financial instruments, the payments on which are linked to
the prices, or relationships between prices, of securities or commodities,
interest rates, currency exchange rates or other financial measures
(collectively referred to as "cash market instruments"). Derivatives enable the
Company and its clients to manage their exposure to interest rates and currency
exchange rates, and security and other price risks. Derivatives include
structured notes, swaps, futures or forward contracts and options. Certain types
of derivatives, including forwards and certain options, are traded in the OTC
markets. Other types of derivatives, including futures contracts and listed
options, are traded on regulated exchanges.
Based on relative notional amounts, management believes that the Company's
derivative activities are not as extensive as those of many of its competitors.
The Company does not engage Iin the speculative trading of derivatives.
Instead, the Company has focused its derivative activities on trading in forward
and futures contracts in U.S. government and agency issued or guaranteed
securities as hedges against the Company's securities inventory positions. The
Company also executes transactions in exchange-traded futures contracts and
listed options on behalf of its customers.
The Company enters into certain futures and options contracts on a limited
basis in the ordinary course of its business to hedge or modify exposures to
interest rate fluctuations related to interest-sensitive securities in its
inventory. Given the limited use of such derivatives, the Company has not
incurred and does not expect to incur any material losses relating to its
derivative investments that would not be substantially offset with corresponding
gains on the securities positions hedged. Both the securities hedged and the
derivative instruments are carried on the statement of financial condition at
their market values. Gains and losses, both realized and unrealized, from both
the hedged securities and the derivative instruments are included in current
operating results.
RISK MANAGEMENT
The Company monitors its market and counterparty risk on a daily basis
through a number of control procedures designed to identify and evaluate the
various risks to which the Company is exposed.
The Company often acts as a principal in customer-related transactions in
financial instruments which expose the Company to market risks. The Company
makes dealer markets in certain equity securities, investment-grade corporate
debt, high-yield securities, U.S. government and agency securities, mortgages
and mortgage-backed securities, and municipal fixed-income securities. As such,
the Company maintains securities inventories to facilitate customer
transactions. The Company covers its exposure to market risk by limiting its net
long or short positions, both overall and by individual product area, by
limiting the number of days inventory is held, by selling or buying similar
instruments and by utilizing various derivative financial instruments such as
futures and forward and option contracts. Management believes the Company's
philosophy, risk management and hedging practices result in carefully managed
market exposure and reduced earnings volatility.
20
<PAGE>
At June 30, 1997 and December 31, 1996, the Company's securities owned and
securities sold, not yet purchased consisted of the following (in thousands):
<TABLE>
<CAPTION>
6/30/97 12/31/96
------- --------
OWNED
- -----
<S> <C> <C>
Obligations of the U.S. Government
or its agencies $ 84,274 $ 83,083
State and municipal obligations 16,764 10,354
Corporate debt obligations 82,088 58,115
Corporate stocks and warrants 9,394 8,459
Other 1,163 929
-------- ---------
$193,683 $ 160,940
======== =========
SOLD, NOT YET PURCHASED
- -----------------------
Obligations of the U.S. Government
or its agencies $ 89,954 $ 68,713
State and municipal obligations 410 657
Corporate debt obligations 13,782 8,461
Corporate stocks and warrants 10,611 11,372
Other 1,065 506
-------- ---------
$115,822 $ 89,709
======== =========
</TABLE>
The Company manages risk exposure utilizing mechanisms involving various
levels of management. The Company's risk management committee assists senior
management in managing risk associated with trading and inventory accounts. The
primary function of this committee is to establish and monitor position limits
for these accounts on an ongoing basis. Current and proposed underwriting and
other commitments are subject to due diligence reviews by senior management as
well as professionals in the appropriate business and support units involved.
The Company's trading activities generally result in the creation of
inventory positions. Position and exposure reports are prepared daily by
operations staff. Such reports are distributed to and reviewed independently on
a daily basis by the Company's risk management committee as well as members of
senior management. In addition, the corporate accounting group prepares a daily
consolidated summarized position report indicating both long and short exposure.
These reports, which are distributed to various levels of management throughout
the Company, enable senior management to better control inventory levels and
monitor results of the trading areas. The Company also reviews and monitors, at
various levels of management, inventory aging, pricing, concentration and
securities ratings.
In addition to position and exposure reports, the Company produces a daily
revenue report which summarizes the trading, interest, commissions, fees,
underwriting and other revenue items for each of the trading departments. Daily
revenue is reviewed for various risk factors and is independently verified by
members of the risk management committee. The daily revenue report is
summarized by the corporate accounting group and distributed to various levels
of management throughout the Company, including to the Chief Executive Officer,
together with position and exposure reports. These
21
<PAGE>
reports enable senior management to monitor and better control the overall
activity of the trading areas.
Credit risk related to various financing activities is reduced by the
industry practice of obtaining and maintaining possession and control of
collateral. The Company monitors its exposure to counterparty risk on a daily
basis through the use of credit exposure information and the monitoring of
collateral values. The Company's credit department is responsible for reviewing
counterparties to establish appropriate exposure limits for a variety of
transactions. In addition, the Company actively manages the credit exposure
relating to its trading activities by monitoring the creditworthiness of
counterparties and their related trading limits on an ongoing basis, requesting
additional collateral when deemed necessary and limiting the amount and duration
of exposure to individual counterparties.
The Company seeks to control the risks associated with its investment
banking activities through by a thorough review process that results in a
thorough review by various committees of the risks associated with all
significant transactions prior to acceptance of any engagement. The Company
currently has various commitment and other review committees. Each such
committee is chaired by a member of senior management and has at least one
additional senior management member. Other committee members include employees
who provide expertise in the evaluation and analysis of proposed transactions
brought before the particular committee.
The Company's risk management effort also includes an emphasis on
compliance. Retail branch managers and other supervisors are required to engage
in specific review and other tasks, and complete various reports, as part of
their supervisory responsibilities. The Company's compliance department
professionals monitor the Company's retail and capital markets activities,
conduct periodic and other examinations, respond to any customer complaints that
arise and interface with the various regulatory agencies that have jurisdiction
over the Company and its business.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of stockholders of the Company was held on May 6, 1997.
(b) At the annual meeting, the following directors, constituting the entire
board of directors, were elected until the 1998 annual meeting of stockholders
of the Company, or until their respective successors have been elected and
qualified: James R. Boris, William T. Esrey, Jack Kemp, Homer J. Livingston,
Jr., Stephen G. McConahey and William C. Springer.
22
<PAGE>
(c) The number of votes cast for and withheld for each of the nominees for
director were as follows:
<TABLE>
<CAPTION>
Board Member For Withheld
------------ ---------- --------
<S> <C> <C>
James R. Boris 15,042,612 620,989
William T. Esrey 15,048,702 614,899
Jack Kemp 15,044,029 619,573
Homer J. Livingston, Jr. 15,048,702 614,899
Stephen G. McConahey 15,038,980 624,621
William C. Springer 15,048,702 614,899
</TABLE>
In addition to the election of directors, the following matters were voted
upon by the holders of the Company's Common Stock:
<TABLE>
<CAPTION>
For Against Abstain
---- ------- -------
<S> <C> <C> <C>
Approval of the
Company's Senior
Management Incentive
Compensation Plan 10,829,879 4,027,195 806,528*
* Includes 216,765 broker non-votes
Ratification of Deloitte &
Touche LLP as the Company's
independent accountants for
1997 15,245,905 334,908 82,788
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.27 Credit agreement by and among EVEREN Capital Corporation, the
Lenders Party thereto, LaSalle National Bank, as documentation
agent, and the Bank of New York, as administrative agent, dated July
11, 1997
11 Pro Forma Computation of earnings per share
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant during the period
covered by this report.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, EVEREN
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
EVEREN CAPITAL CORPORATION
Date: August 14, 1997 By: /s/Daniel D. Williams
---------------------------
Daniel D. Williams
Senior Executive Vice President
Treasurer and Chief Financial
Officer (Principal Financial
Officer)
By: /s/Thomas M. Mansheim
---------------------------
Thomas M. Mansheim
Executive Vice President
Controller and Chief
Accounting Officer
24
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
----------- ----------- --------
10.27 Credit agreement by and among EVEREN Capital
Corporation, the Lenders Party thereto,
LaSalle National Bank, as documentation agent, and
the Bank of New York, as administrative agent,
dated July 11, 1997
11 Pro Forma Computation of Earnings per share
27 Financial Data Schedule
25
<PAGE>
EXHIBIT 10.27
CREDIT AGREEMENT
by and among
EVEREN CAPITAL CORPORATION,
THE LENDERS PARTY HERETO,
LASALLE NATIONAL BANK, as Documentation Agent,
and
THE BANK OF NEW YORK,
as Administrative Agent
__________________________
$50,000,000
__________________________
Dated as of July 11, 1997
ARRANGED BY: BNY CAPITAL MARKETS, INC.
and
LASALLE NATIONAL BANK
<PAGE>
Credit Agreement, dated as of July 11, 1997, by and among EVEREN CAPITAL
CORPORATION, a Delaware corporation (the "Borrower"), the Lenders party hereto
--------
from time to time, including each party that shall become a Lender pursuant to
Section 10.7 (each a "Lender" and, collectively, the "Lenders"), LaSalle
------ -------
National Bank, as documentation agent (in such capacity, the "Documentation
-------------
Agent"), and The Bank of New York ("BNY"), as administrative agent for the
- ----- ---
Lenders (in such capacity, the "Administrative Agent").
--------------------
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
------------------------------------------
1.1 Definitions
-----------
When used herein, each of the following terms shall have the meaning
ascribed thereto unless the context hereof otherwise specifically requires:
"ABR Advances": the Loans (or any portions thereof) at such time as they
------------
(or such portions) are made or are being maintained at a rate of interest based
upon the Alternate Base Rate.
"Accountants": Deloitte & Touche LLP, or such other firm of independent
-----------
certified public accountants of recognized national standing as shall be
selected by the Borrower and reasonably satisfactory to the Administrative
Agent.
"Acquisition": the purchase or other acquisition by any Person, by any
-----------
means whatsoever (including by devise, bequest, gift, through a dividend or
otherwise), of ownership of (a) Stock of, or other equity securities of, any
other Person if, immediately thereafter, such other Person would be either a
consolidated subsidiary of such Person or otherwise under the control of such
Person, (b) any business, going concern or division or segment thereof, or (c)
the Property of any other Person other than in the ordinary course of business,
provided, however, that no acquisition of substantially all of the assets of
such other Person shall be deemed to be in the ordinary course of business.
"Administrative Agent": as defined in the preamble.
--------------------
"Advance": an ABR Advance or a LIBOR Advance, as the case may be.
-------
"Affected Advance": as defined in Section 3.8(b).
----------------
"Affiliate": with respect to any Person at any time and from time to time,
---------
any other Person (other than a consolidated subsidiary of such Person) which, at
such time (a) controls such Person, or (b) is under common control with such
Person. The term "control", as used in this definition with respect to any
Person, means the power, whether direct, or indirect
27
<PAGE>
through one or more intermediaries, to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or other interests, by contract or otherwise.
"Aggregate Commitments": the Commitments of all of the Lenders.
---------------------
"Aggregate Commitment Amount": the sum of the Commitment Amounts of all
---------------------------
Lenders.
"Aggregate Outstandings": the sum of the Outstandings of all Lenders.
----------------------
"Agreement": this Credit Agreement, as the same may be amended,
---------
supplemented or otherwise modified from time to time.
"Alternate Base Rate": for any day, a rate per annum equal to the greater
-------------------
of (a) the BNY Rate in effect on such day, or (b) 0.50% plus the Federal Funds
Effective Rate.
"Annual EBITDA": as of any date, EBITDA for the period comprised of the
-------------
four consecutive fiscal quarters ended on or immediately prior to such date in
respect of which financial statements have been delivered pursuant to Section
6.7(a) or 6.7(c), as the case may be.
"Annual Interest Expense": as of any date, Interest Expense for the period
-----------------------
comprised of the four consecutive fiscal quarters ended on or immediately prior
to such date in respect of which financial statements have been delivered
pursuant to Section 6.7(a) or 6.7(c), as the case may be.
"Applicable Margin": 0.0% for ABR Advances and 1.25% for LIBOR Advances.
-----------------
"Assignment": as defined in Section 10.7(c).
----------
"Assignment and Acceptance Agreement": an assignment and acceptance
-----------------------------------
agreement executed by an assignor and an assignee pursuant to which, subject to
the terms and conditions hereof, the assignor assigns to the assignee all or any
portion of such assignor's Commitment, Loan and Note, substantially in the form
of Exhibit I.
"BNY": as defined in the preamble.
---
"BNY Rate": a rate of interest per annum equal to the rate of interest
--------
publicly announced in New York, New York by BNY from time to time as its prime
commercial lending rate, such rate to be adjusted automatically (without notice)
on the effective date of any change in such publicly announced rate.
28
<PAGE>
"Borrower": as defined in the preamble.
--------
"Borrower Security Agreement": as defined in Section 5.1(c).
---------------------------
"Borrowing Date": as defined in Section 2.3.
--------------
"Borrowing Request": a request for Loans in the form of Exhibit C.
-----------------
"Capital Expenditures": with respect to any Person for any period, the
--------------------
aggregate of all expenditures incurred by such Person during such period for
property, plant and equipment which, in accordance with GAAP, is or should be
capitalized on the balance sheet of such Person.
"CFO": the chief financial officer of the Borrower or such other officer
---
thereof as shall be reasonably satisfactory to the Administrative Agent.
"Code": the Internal Revenue Code of 1986, as amended from time to time, or
----
any successor thereto, and the rules and regulations issued thereunder, as from
time to time in effect.
"Collateral": the assets and other property in which a security interest is
----------
granted under the Collateral Documents.
"Collateral Documents": collectively, upon the execution and delivery
--------------------
thereof, the Borrower Security Agreement, and all documents executed or
delivered in connection therewith.
"Commitment": in respect of any Lender, such Lender's undertaking during
----------
the Commitment Period to make Loans, subject to the terms and conditions hereof,
in an aggregate outstanding principal amount not exceeding its Commitment
Amount.
"Commitment Amount": as of any date and with respect to any Lender, the
-----------------
amount set forth adjacent to its name under the heading "Commitment Amount" in
Exhibit A on such date or, in the event that such Lender is not listed in
Exhibit A, the "Commitment Amount" which such Lender shall have assumed from
another Lender in accordance with Section 10.7 on or prior to such date, in each
case as the same may be adjusted from time to time pursuant to Sections 2.7 and
10.7.
"Commitment Fee": as defined in Section 3.11.
--------------
"Commitment Percentage": as of any date and with respect to any Lender, a
---------------------
fraction the numerator of which is such Lender's Commitment Amount and the
denominator of which is the Aggregate Commitment Amount on such date (or, if no
Commitments then exist, the
29
<PAGE>
percentage equal to such Lender's Commitment Amount on the last day upon which
Commitments did exist divided by the Aggregate Commitment Amount on such day).
"Commitment Period": the period from the Effective Date to but excluding
-----------------
the Initial Maturity Date or, if the Initial Maturity Date has been extended in
accordance with Section 2.5(b), the Extended Maturity Date, or such earlier date
on which the Commitments shall have been terminated.
"Common Stock": the Common Stock, $.01 par value per share, of the
------------
Borrower.
"Compliance Certificate": a certificate in the form of Exhibit H.
----------------------
"Consolidated": the Borrower and the Subsidiaries on a consolidated basis
------------
in accordance with GAAP.
"Contingent Obligation": as to any Person (the "secondary obligor"), any
---------------------
obligation of such secondary obligor (a) guaranteeing or in effect guaranteeing
any return on any Investment made by another Person, or (b) guaranteeing or in
effect guaranteeing any Indebtedness, lease (other than an operating lease, but
only until such time as a demand is made upon the secondary obligor to perform
under its guarantee of such operating lease), dividend or other obligation
("primary obligations") of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including any obligation of such
secondary obligor, whether contingent or otherwise, (i) to purchase any such
primary obligation or any Property constituting direct or indirect security
therefor, (ii) to advance or supply funds (A) for the purchase or payment of any
such primary obligation or (B) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase Property, securities or services primarily
for the purpose of assuring the beneficiary of any such primary obligation of
the ability of the primary obligor to make payment of such primary obligation,
(iv) otherwise to assure or hold harmless the beneficiary of such primary
obligation against loss in respect thereof, and (v) in respect of the
Indebtedness of any partnership in which such secondary obligor is a general
partner, except to the extent that such Indebtedness of such partnership is
nonrecourse to such secondary obligor and its separate Property; provided,
however, that the term "Contingent Obligation" shall not include the endorsement
of instruments for deposit or collection in the ordinary course of business.
For purposes of this Agreement, the amount of any Contingent Obligation shall be
deemed to be the amount that is equal to the stated amount of such Contingent
Obligation or, if the same is not stated, the maximum reasonably anticipated
amount payable by such Person in respect thereof as determined by such Person in
good faith.
30
<PAGE>
"Control Person": as defined in Section 3.6.
--------------
"Default": any of the events specified in Section 8.1, whether or not any
-------
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.
"Disposition": with respect to any Person, any sale, assignment, transfer
-----------
or other disposition by such Person, by any means, of
(a) the Stock of, or other equity interests of, any other Person,
other than in the ordinary course of business,
(b) any business, operating entity, division or segment thereof, or
(c) any other Property of such Person, other than tangible personal
Property in the ordinary course of business, provided that no such sale,
assignment, transfer or other disposition of Property shall be deemed to be in
the ordinary course of business if it is the sale, assignment, transfer or
disposition of (i) all or substantially all of the Property of such Person or
(ii) an Operating Entity.
"Documentation Agent": as defined in the preamble.
-------------------
"Dollar or "$": lawful currency of the United States of America.
------ -
"Domestic Business Day": any day on which the Administrative Agent shall be
---------------------
open to the public at its office set forth in Section 10.2 for the transaction
of its normal banking business.
"EBITDA": for any period, the net income of the Borrower and the
------
Subsidiaries on a Consolidated basis in respect of such period plus, to the
----
extent used in determining such net income, the sum of, without duplication,
Interest Expense, income tax expense, depreciation, amortization (including
amortization of Forgivable Loans), and all other non-cash charges in respect of
such period.
"Employee Stock Program": the Borrower's 1995 Stock Plan, 1995 Non-Employee
----------------------
Directors Plan, 1996 New Employee Restricted Stock Purchase Plan, 1996 Employee
Periodic Payroll Stock Purchase Plan and 1996 Restricted Stock Incentive Plan,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Effective Date": as defined in Section 10.19.
--------------
"Employee Benefit Plan": an employee benefit plan within the meaning of
---------------------
Section 3(3) of ERISA maintained, sponsored or contributed to by the Borrower,
any Subsidiary or any ERISA Affiliate.
31
<PAGE>
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time, or any successor thereto, and the rules and regulations
issued thereunder, as from time to time in effect.
"ERISA Affiliate": when used with respect to an Employee Benefit Plan,
---------------
ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans,
any Person that is a member of any group of organizations within the meaning of
Sections 414(b) or (c) of the Code or, solely with respect to applicable
provisions of the Code, Sections 414(m) or (o) of the Code, of which the
Borrower or any Subsidiary is a member.
"ESOP": the EVEREN Capital Corporation 401(k) and Employee Stock Ownership
----
Plan, as the same may be amended, supplemented or otherwise modified from time
to time.
"ESOP Trust": the EVEREN Capital Corporation 401(k) and Employee Stock
----------
Ownership Trust which implements and forms a part of the ESOP.
"Event of Default": any of the events specified in Section 8.1, provided
----------------
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition has been satisfied.
"EVEREN Clearing Corp.": EVEREN Clearing Corp., a Delaware corporation.
---------------------
"EVEREN Holdings": EVEREN Securities Holdings, Inc., a Delaware
---------------
corporation.
"EVEREN Securities": EVEREN Securities, Inc., a Delaware corporation.
-----------------
"Extended Maturity Date": the one year anniversary of the Initial Maturity
----------------------
Date or, if such day is not a Domestic Business Day, the immediately preceding
Domestic Business Day.
"Extension Request Notice": an extension request notice substantially in
------------------------
the form of Exhibit E.
"Federal Funds Effective Rate": for any period, a fluctuating interest rate
----------------------------
per annum equal for each day during such period to the weighted average
(rounded, if necessary, to the nearest 1/100 of 1% or, if there is no nearest
1/100 of 1%, then to the next higher 1/100 of 1%) 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
Domestic Business Day, for the next preceding Domestic Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Domestic Business Day, the average (rounded, if necessary, to the
nearest 1/100 of 1% or, if there is no nearest 1/100 of 1%, then to the next
higher 1/100 of 1%) of the quotations for such day on
32
<PAGE>
such transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fees": as defined in Section 3.2.
----
"Financial Statements": as defined in Section 4.15.
--------------------
"Forgivable Loan": a loan made to induce a prospective or current employee
---------------
to become or remain employed by EVEREN Securities, EVEREN Holdings or the
Borrower that by its terms will be forgiven in part or in whole if the recipient
remains employed by EVEREN Securities, EVEREN Holdings or the Borrower, as
appropriate, for the time period(s) specified in the note evidencing such loan.
"Funded Current Liability Percentage": as defined in Section 401(a)(29) of
-----------------------------------
the Code.
"GAAP": generally accepted accounting principles as from time to time in
----
effect in the United States. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in this Agreement,
and either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith
to amend such ratio or requirement to reflect such change in GAAP (subject to
the approval of the Required Lenders), provided that, until so amended, (a) such
ratio or requirement shall continue to be computed in accordance with GAAP prior
to such change therein and (b) the Borrower shall provide to the Administrative
Agent and the Lenders financial statements and other documents required under
this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made before and
after giving effect to such change in GAAP.
"Gateway": Gateway Mortgage Acceptance Corporation, a Delaware corporation.
-------
"Governmental Authority": any foreign, federal, state, municipal or other
----------------------
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof, or any court or arbitrator.
"Highest Lawful Rate": the maximum rate of interest, if any, which at any
-------------------
time or from time to time may be contracted for, taken, charged or received on
the Loans or the Notes or which may be owing to any Lender pursuant to this
Agreement under the laws applicable to such Lender and this Agreement.
"Indebtedness": as to any Person, at a particular time, all items of such
------------
Person which constitute, without duplication, (a) indebtedness for borrowed
money or the deferred purchase price of Property (other than trade payables and
accrued expenses (including repurchase obligations, short sales and payables to
broker/dealers and customers arising out of the
33
<PAGE>
purchase and sale of securities and commodities) incurred in the ordinary course
of business), (b) indebtedness evidenced by notes, bonds, debentures or similar
instruments, (c) obligations with respect to any conditional sale or other title
retention agreement, (d) indebtedness arising under acceptance facilities and
the amount available to be drawn under all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn thereunder to
the extent such Person shall not have reimbursed the issuer in respect of the
issuer's payment of such drafts, (e) all liabilities secured by any Lien on any
Property owned by such Person even though such Person shall not have assumed or
otherwise become liable for the payment thereof (other than carriers',
warehousemen's, mechanics', repairmen's or other like non-consensual Liens
arising in the ordinary course of business), (f) that portion of any obligation
of such Person, as lessee, which in accordance with GAAP is required to be
capitalized on the balance sheet of such Person, and (g) Contingent Obligations.
Notwithstanding the foregoing, the following shall not constitute Indebtedness:
(i) collateralized mortgage obligations reflected in the balance sheet of
Gateway incurred or assumed by Gateway in the ordinary course of its business,
and (ii) Indebtedness incurred by Everen Securities and EVEREN Clearing Corp. to
finance the acquisition or carrying of securities for its own account or for the
account of its customers in the ordinary course of business.
"Indemnified Liabilities": as defined in Section 10.5.
-----------------------
"Initial Maturity Date": June 30, 1999, or, if such day is not a Domestic
---------------------
Business Day, the immediately preceding Domestic Business Day.
"Intercompany Indebtedness": (a) Indebtedness of the Borrower to one or
-------------------------
more of the Subsidiaries, provided that such Indebtedness is subordinated to all
of the obligations of the Borrower under the Loan Documents pursuant to a
subordination agreement in all respects reasonably satisfactory to the
Administrative Agent and the Required Lenders, and (b) demand Indebtedness of
one or more of the Subsidiaries to the Borrower or any one or more of the other
Subsidiaries.
"Interest Coverage Ratio": as of any date, the ratio of (a) Annual EBITDA
-----------------------
on such date to (b) Annual Interest Expense on such date.
"Interest Expense": for any period, the interest expense on Indebtedness of
----------------
the Borrower and the Subsidiaries on a Consolidated basis (excluding (a)
interest expense of EVEREN Securities and EVEREN Clearing Corp. on indebtedness
incurred to finance the acquisition or carrying of securities for their
respective own accounts or for the accounts of their respective customers in the
ordinary course of business, and (b) interest expense in respect of
collateralized mortgage obligations reflected in the balance sheet of Gateway
incurred or assumed by Gateway in the ordinary course of its business) in
respect of such period (after giving effect to all Interest Rate Protection
Arrangements), determined in accordance with GAAP.
34
<PAGE>
"Interest Payment Date": (i) as to any ABR Advance, the last day of each
---------------------
March, June, September and December commencing on the first of such days to
occur after such ABR Advance shall have been made or any LIBOR Advance shall
have been converted to such ABR Advance, (ii) as to any LIBOR Advance in respect
of which the Borrower shall have selected an Interest Period of one, two or
three months, the last day of such Interest Period, (iii) as to any LIBOR
Advance in respect of which the Borrower shall have selected an Interest Period
greater than three months, the last day of each three month interval during such
Interest Period and, in any event, on the last day of such Interest Period, and
(iv) as to all Advances, on the date that the Loans shall become or shall be
declared to be due and payable.
"Interest Period": the period commencing on any LIBOR Business Day selected
---------------
by the Borrower in accordance with Section 2.3 or Section 3.3 and ending one,
two, three or six months thereafter, as selected by the Borrower in accordance
with such Sections, subject to the following:
(i) if any Interest Period would otherwise end on a day which is not
a LIBOR Business Day, such Interest Period shall be extended to the immediately
succeeding LIBOR Business Day unless the result of such extension would be to
carry the end of such Interest Period into another calendar month, in which
event such Interest Period shall end on the LIBOR Business Day immediately
preceding such day; and
(ii) if any Interest Period shall begin on the last LIBOR Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period),
such Interest Period shall end on the last LIBOR Business Day of such latter
calendar month.
"Interest Rate Protection Arrangement": any interest rate swap, cap or
------------------------------------
collar arrangement or any other derivative product customarily offered by banks
to their customers in order to reduce the exposure of such customers to interest
rate fluctuations, as the same may be amended, supplemented or otherwise
modified from time to time.
"Investments": as defined in Section 7.5.
-----------
"Lender" and "Lenders": as defined in the preamble.
------ -------
"Leverage Ratio": as of any date, the ratio of (a) Total Indebtedness on
--------------
such date to (b) Annual EBITDA as of such date.
"LIBOR Advance": a given portion of the Loans selected by the Borrower to
-------------
bear interest during an Interest Period selected by the Borrower at a rate per
annum based upon a LIBOR Rate determined with reference to such Interest Period,
all pursuant to and in accordance with Sections 2.3 and 3.3.
35
<PAGE>
"LIBOR Business Day": any Domestic Business Day on which the Administrative
------------------
Agent is open for international business (including dealings in Dollar
deposits).
"LIBOR Rate": with respect to each LIBOR Advance and as determined by BNY
----------
and reported to the Administrative Agent, the rate of interest per annum
(rounded, if necessary, to the nearest 1/16 of 1% or, if there is no nearest
1/16 of 1%, then to the next higher 1/16 of 1%) equal to a fraction, the
numerator of which is the rate, as reported by BNY to the Administrative Agent,
quoted by BNY to leading banks in the interbank eurodollar market as the rate at
which BNY is offering Dollar deposits in an amount approximately equal to BNY's
Commitment Percentage of such LIBOR Advance and having a period to maturity
approximately equal to the Interest Period applicable to such LIBOR Advance, as
quoted two LIBOR Business Days prior to the first day of such Interest Period,
and the denominator of which is an amount equal to 1.00 minus the aggregate of
-----
the then stated rates during such Interest Period of all reserve requirements
(including marginal, emergency, supplemental and special reserves), expressed as
a decimal, established by the Board of Governors of the Federal Reserve System
and any other banking authority to which BNY and other major United States money
center banks are subject, in respect of eurocurrency funding (currently referred
to as "eurocurrency liabilities" in Regulation D of the Board of Governors of
the Federal Reserve System) without benefit of credits for proration, exceptions
or offsets which may be available from time to time to BNY.
"Lien": any mortgage, pledge, assignment, lien, encumbrance or security
----
interest of any kind, or the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement.
"Liquidity Ratio": at any time, with respect to EVEREN Clearing Corp., the
---------------
ratio of (x) the sum of, without duplication, the Loan Value of (i) all Cash,
Cash Equivalents (excluding Customer Securities), Debt Securities (excluding
Customer Securities), Investment Grade Structured Finance Securities (excluding
Customer Securities) and Marketable Securities (excluding Customer Securities)
of EVEREN Clearing Corp. to the extent not subject to any Liens, and (ii) all
Customer Securities of EVEREN Clearing Corp. that collateralize margin debts to
the extent not subject to any Liens other than the rights of the applicable
customers therein to (y) all Indebtedness of EVEREN Clearing Corp. to the extent
not secured by any Liens (excluding settlement obligations of EVEREN Clearing
Corp. in the ordinary course of its business). For purposes of calculating the
Liquidity Ratio, the following terms shall have the following meanings:
"Cash": freely transferable lawful money of the United States.
----
"Cash Equivalents": Treasury bills, commercial paper, certificates of
----------------
deposit and bankers acceptances.
36
<PAGE>
"Customer Securities": securities received by or on behalf of a broker
-------------------
or dealer for the account of any customer, securities carried long by a
broker or dealer for the account of any customer, and securities sold to,
or bought for, a customer by a broker or dealer.
"Debt Securities": securities evidenced by notes, bonds, debentures or
---------------
similar instruments issued by U.S. corporations.
"Investment Grade": a security having a credit rating of BBB- or
----------------
better by S&P or Baa3 or better by Moody's or, in the case of commercial
paper, having a credit rating of A-2 or better by S&P or P-2 or better by
Moody's.
"Loan Value": (i) with respect to Cash, 100%; (ii) with respect to
----------
Cash Equivalents, 98% of Market Value; (iii) with respect to Debt
Securities issued by or fully guaranteed by the United States of America:
95% of Market Value; (iv) with respect to Investment Grade Debt Securities
issued by any state or municipality: 90% of Market Value; (v) with respect
to Investment Grade Debt Securities issued by any corporation: 90% of
Market Value; (vi) with respect to non-Investment Grade Debt Securities
issued by any corporation: 80% of Market Value; (vii) with respect to
Investment Grade Structured Finance Securities, 85% of Market Value; (viii)
with respect to Customer Securities constituting Marketable Securities: 80%
of Market Value; and (ix) with respect to Marketable Securities (excluding
Customer Securities): 50% of Market Value.
"Marketable Securities": shares of capital stock and Debt Securities
---------------------
convertible into shares of capital stock (excluding warrants, options,
derivatives and similar securities).
"Market Value": of each share or other unit of any securities of any
------------
class at a particular time, means the fair market value determined for such
share or other unit at or immediately prior to such time by the party
making the determination in good faith in accordance with its customary
procedures. For purposes of this definition, accrued interest on interest
bearing securities (other than governmental securities and Investment Grade
securities) will be excluded from the determination of Market Value by the
party making such determination.
"Moody's Moody's Investors Service, Inc., or any successor thereto.
-------
"S&P": Standard & Poor's Ratings Services, a division of The McGraw-
---
Hill Companies, Inc., or any successor thereto.
37
<PAGE>
"Structured Finance Securities": (a) any securities representing
-----------------------------
participations in, or the payment of which is secured by, a pool of loans
the repayment of which is secured by a mortgage, deed of trust, other
mortgage securities or other fee or leasehold interest upon real estate or
other assets, (b) securities representing participations in, or the payment
of which is secured by, a pool of receivables (of any nature) or (c) any
similar securities.
"Loan" and "Loans": as defined in Section 2.1.
---- -----
"Loan Documents": this Agreement, the Collateral Documents and, upon the
--------------
execution and delivery thereof, the Notes.
"Loan Party": with respect to any Loan Document, any Person (other than the
----------
Administrative Agent or any Lender) which, in accordance with the terms of such
Loan Document, is or is to be a party thereto.
"Management Fees": with respect to any Person, all fees and expenses paid
---------------
or incurred by such Person for corporate, general, administrative and management
services.
"Margin Stock": any "margin stock", as said term is defined in Regulation U
------------
of the Board of Governors of the Federal Reserve System, as amended from time to
time.
"Material Adverse": with respect to any change or effect, a material
----------------
adverse change in, or effect on, as the case may be, (i) the financial
condition, operations, business or Property of the Borrower or the Borrower and
its Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform
its obligations under the Loan Documents, or (iii) the enforceability of any
Loan Document.
"Multiemployer Plan": a Pension Plan which is a multiemployer plan as
------------------
defined in Section 4001(a)(3) of ERISA.
"Net Worth": at any date of determination, the sum of all amounts which
---------
would be included under stockholders' equity on a Consolidated balance sheet of
the Borrower determined in accordance with GAAP.
"Note" and "Notes": as defined in Section 2.2.
---- -----
"Operating Entity": (a) any Person, (b) any business or operating units of
----------------
a Person which is, or could be, operated separate and apart from the other
businesses and operations of such Person, or (c) any other line of business or
business segment.
38
<PAGE>
"Other Non-Allowable Assets": assets other than assets (a) resulting
--------------------------
from Capital Expenditures and Forgivable Loans that are excluded when
calculating net capital (as defined in Rule 15c3-1) and (b) that constitute
deposits with clearing organizations, securities not readily marketable or
exchange memberships.
"Outstandings": as of any date and with respect to each Lender, an
------------
amount equal to the outstanding principal balance on such date of the Loans of
such Lender.
"Outstanding Percentage": as of any date and with respect to each Lender,
----------------------
a fraction the numerator of which is the Outstandings of such Lender on such
date, and the denominator of which is the aggregate Outstandings of all Lenders
on such date.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
----
Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to the
functions thereof.
"Pension Plan": at any time, any Employee Benefit Plan (including a
------------
Multiemployer Plan) subject to Section 302 of ERISA or Section 412 of the Code,
the funding requirements of which are, or at any time within the six years
immediately preceding the time in question, were in whole or in part, the
responsibility of the Borrower, any Subsidiary or an ERISA Affiliate.
"Person": any individual, firm, partnership, joint venture, corporation,
------
association, business enterprise, joint stock company, unincorporated
association, trust, Governmental Authority or any other entity, whether acting
in an individual, fiduciary, or other capacity, and for the purpose of the
definition of "ERISA Affiliate", a trade or business.
"PO": any purchase of, or offering (including an initial public offering)
--
to purchase, the Stock of the Borrower, excluding purchases under the Employee
Stock Programs.
"Prohibited Transaction": a transaction that is prohibited under Section
----------------------
4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of
the Code or Section 408 of ERISA or any other prohibited transaction exemption.
"Property": in respect of any Person, all types of real, personal or mixed
--------
property and all types of tangible or intangible property owned or leased by
such Person.
"Regulatory Change": (a) the introduction or phasing in of any law, rule or
-----------------
regulation after the date hereof, (b) the issuance or promulgation after the
date hereof of any directive, guideline or request from any central bank or
United States or foreign Governmental Authority (whether or not having the force
of law), or (c) any change after the date hereof, or any clarification after the
date hereof having the effect of a change, in the interpretation of any existing
law, rule, regulation, directive, guideline or request by any central bank or
United States or foreign Governmental Authority charged with the administration
thereof.
39
<PAGE>
"Required Lenders": at any time, Lenders having Commitment Amounts or, if
----------------
the Commitments have been terminated or are otherwise no longer in effect,
Lenders having Outstandings equal to or more than 66-2/3% of the Aggregate
Commitment Amount or the Aggregate Outstandings, as the case may be, at such
time.
"Restricted Payment": with respect to any Person, any of the following,
------------------
whether direct or indirect: (a) the declaration or payment by such Person of any
dividend or distribution on any class of Stock of such Person, other than a
dividend payable solely in shares of that class of Stock to the holders of such
class, (b) the declaration or payment by such Person of any distribution on any
other type or class of equity interest or equity investment in such Person, and
(c) any redemption, retirement, purchase or acquisition of, or sinking fund or
other similar payment in respect of, any class of Stock of, or other type or
class of equity interest or equity investment in, such Person, except for
purchases or retirements required under the terms of the ESOP.
"Rule 15c3-1": Rule 15c3-1 of the General Rules and Regulations as
-----------
promulgated by the SEC (17 CFR 240. 15c3-1), as such Rule may be amended from
time to time, or any rule or regulation of the SEC which replaces such Rule.
"SEC: the Securities and Exchange Commission, or any other Governmental
---
Authority succeeding to the functions thereof.
"Special Counsel": Emmet, Marvin & Martin, LLP, or such other counsel as
---------------
the Administrative Agent shall retain as its counsel in connection herewith.
"Stock": any and all shares, interests, warrants, options, rights of
-----
conversion, participations or other equivalents (however designated) of capital
stock.
"Subsidiary": at any time and from time to time, any corporation,
----------
association, partnership, joint venture or other business entity of which the
Borrower and/or any Subsidiary of the Borrower, directly or indirectly at such
time, either (a) in respect of a corporation, owns or controls more than 50% of
the outstanding Stock having ordinary voting power to elect a majority of the
board of directors or similar managing body, irrespective of whether a class or
classes shall or might have voting power by reason of the happening of any
contingency, or (b) in respect of an association, partnership, joint venture or
other business entity, is entitled to share in more than 50% of the profits and
losses, however determined.
"Taxes": as defined in Section 3.10.
-----
"Total Indebtedness": as of any date, all Indebtedness of the Borrower and
------------------
the Subsidiaries on a Consolidated basis on such date.
"Unqualified Amount": as defined in Section 3.4(c).
------------------
40
<PAGE>
"Unrecognized Retiree Welfare Liability": with respect to any Employee
--------------------------------------
Benefit Plan that provides post-retirement benefits other than pension benefits,
the amount of the transition obligation, as determined in accordance with
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Post-retirement Benefits Other Than Pensions," as of the most recent valuation
date, that has not been recognized as an expense in the income statement of the
Borrower and its Consolidated Subsidiaries, provided that (a) prior to the date
such Statement is applicable to the Borrower, such amount shall be based on an
estimate made in good faith of the transition obligation, and (b) for purposes
of determining the aggregate amount of the Unrecognized Retiree Welfare
Liability, Employee Benefit Plans maintained by a Consolidated Subsidiary that
is not otherwise an ERISA Affiliate shall be included.
"Upstream Dividends": as defined in Section 7.8.
------------------
1.2 Principles of Construction
--------------------------
(a) All capitalized terms defined in this Agreement shall have the
meanings given to such capitalized terms herein when used in the other Loan
Documents or any certificate, opinion or other document made or delivered
pursuant hereto or thereto, unless otherwise expressly provided therein.
(b) As used in the Loan Documents and in any certificate, opinion
or other document made or delivered pursuant thereto, accounting terms not
defined in Section 1.1, and accounting terms partly defined in Section 1.1 to
the extent not defined, shall have the respective meanings given to them under
GAAP. Unless otherwise expressly provided herein, the word "fiscal" when used
herein shall refer to the relevant fiscal period of the Borrower.
(c) The words "hereof", "herein", "hereto" and "hereunder" and
similar words when used in each Loan Document shall refer to such Loan Document
as a whole and not to any particular provision of such Loan Document, and
Section, schedule and exhibit references contained therein shall refer to
Sections thereof or schedules or exhibits thereto unless otherwise expressly
provided therein.
(d) All references herein to a time of day shall mean the then
applicable time in New York, New York, unless otherwise expressly provided
herein.
(e) Section headings have been inserted herein and in the other
Loan Documents for convenience only and shall not be construed to be a part
hereof or thereof. Unless the context otherwise requires, words in the singular
number include the plural, and words in the plural include the singular.
(f) Whenever in any Loan Document or in any certificate or other
document made or delivered pursuant thereto, the terms thereof require that a
Person sign or execute the same or refer to the same as having been so signed or
executed, such terms shall mean that the
41
<PAGE>
same shall be, or was, duly signed or executed by (i) in respect of any Person
that is a corporation, any duly authorized officer thereof, and (ii) in respect
of any other Person (other than an individual), any analogous counterpart
thereof.
(g) The words "include" and "including", when used in each Loan
Document, shall mean that the same shall be included "without limitation",
unless otherwise specifically provided.
2. AMOUNT AND TERMS OF LOANS
-------------------------
2.1 Loans
-----
Subject to the terms and conditions hereof, each Lender severally
(and not jointly) agrees to make loans (each a "Loan" and, collectively with the
----
Loans of each other Lender, the "Loans") to the Borrower during the Commitment
-----
Period in an aggregate outstanding principal amount not exceeding its Commitment
Amount. During the Commitment Period, the Borrower may borrow, prepay and
reborrow in accordance with, and subject to the terms and conditions of, this
Agreement. At no time shall the Aggregate Outstandings exceed the Aggregate
Commitment Amount. Subject to the provisions of Sections 2.3 and 3.3, the Loans
may be (a) ABR Advances, (b) LIBOR Advances or (c) any combination thereof.
2.2 Notes
-----
The Loans made by each Lender shall be evidenced by a promissory
note of the Borrower, substantially in the form of Exhibit B (each, as endorsed
or modified from time to time, a "Note" and, collectively with the Note of each
----
other Lender, the "Notes"), payable to the order of such Lender, dated the
-----
Effective Date, and in the original principal amount of such Lender's Commitment
Amount.
2.3 Notice of Borrowing
-------------------
(a) The Borrower agrees to notify the Administrative Agent, which
notification shall be irrevocable, no later than 11:00 a.m. on, or in the case
of a LIBOR Advance, at least three LIBOR Business Days prior to, each date it
intends to borrow Loans (each a "Borrowing Date"), specifying the aggregate
--------------
amount requested to be borrowed under the Aggregate Commitments, the Borrowing
Date, whether the borrowing is to be of one or more ABR Advances, one or more
LIBOR Advances, or a combination thereof, and the amount of each thereof, and
the Interest Period for each LIBOR Advance, which notice shall be promptly
confirmed by delivery to the Administrative Agent of a Borrowing Request. The
Administrative Agent shall promptly notify each Lender (by telephone or
otherwise, such
42
<PAGE>
notice to be confirmed by facsimile or other writing) of such borrowing request.
Subject to its receipt of each such notice from the Administrative Agent and
subject to the terms and conditions hereof, each Lender shall make immediately
available funds available to the Administrative Agent at the address therefor
set forth in Section 10.2 not later than 2:00 P.M. on the Borrowing Date in an
amount equal to such Lender's Commitment Percentage of the Loans requested.
(b) If a Lender makes a new Loan on a Borrowing Date on which the
Borrower is to repay a Loan from such Lender, such Lender shall apply the
proceeds of such new Loan to make such repayment, and only the excess of the
proceeds of such new Loan over the Loan being repaid need be made available to
the Administrative Agent.
2.4 Use of Proceeds
---------------
The Borrower agrees that the proceeds of the Loans shall be used for
the general corporate purposes of the Borrower. Notwithstanding anything to the
contrary contained in any Loan Document, the Borrower further agrees that no
part of the proceeds of any Loan will be used, directly or indirectly, for a
purpose which violates any law, rule or regulation of any Governmental
Authority, including the provisions of Regulations G, U or X of the Board of
Governors of the Federal Reserve System, as amended.
2.5 Repayment of the Loans
----------------------
(a) The aggregate outstanding principal balance of the Loans shall
be due and payable on the Initial Maturity Date or, if such Initial Maturity
Date has been extended pursuant to Section 2.5(b), the Extended Maturity Date.
(b) At any time during the period from the 75th day to the 45th day
prior to June 30, 1998, the Borrower may request an extension of the Initial
Maturity Date to the Extended Maturity Date by delivery to the Administrative
Agent and each Lender of an Extension Request Notice, provided that no Default
or Event of Default shall exist on the date of such Extension Request Notice and
on the Initial Maturity Date. If each Lender shall consent to such request
(such consent to be within the sole and absolute discretion of each such
Lender), the Initial Maturity Date shall be extended to the Extended Maturity
Date.
2.6 Prepayments of the Loans
------------------------
(a) Voluntary Prepayments. The Borrower may, at its option,
---------------------
prepay the Loans, in whole or in part, without premium or penalty (but subject
to Section 3.5), at any time and from time to time, by notifying the
Administrative Agent in writing at least three LIBOR Business Days, in the case
of a prepayment of a LIBOR Advance, or one Domestic Business Day, in the case of
a prepayment of an ABR Advance, prior to the proposed
43
<PAGE>
prepayment date and specifying (i) the amount to be prepaid, and (ii) the date
of such prepayment. Upon receipt of each such notice, the Administrative Agent
shall promptly notify each Lender thereof. Each such notice given by the
Borrower pursuant to this Section 2.6(a) shall be irrevocable. Each partial
prepayment of principal under this Section 2.6(a) shall be in a minimum amount
of $3,000,000 (or, if less, the outstanding principal amount of the Loans) or an
integral multiple of $1,000,000 in excess thereof in the case of ABR Advances,
and in a minimum amount of $3,000,000 or an integral multiple of $1,000,000 in
excess thereof in the case of each LIBOR Advance.
(b) Mandatory Disposition Prepayments. On each date during any
---------------------------------
fiscal year of the Borrower that the Borrower or any Subsidiary shall make a
Disposition pursuant to Section 7.3(b) which, when aggregated with all other
Dispositions made by the Borrower and its Subsidiaries pursuant to Section
7.3(b) during such fiscal year, shall exceed $25,000,000, the Borrower shall
prepay the Loans in an amount equal to such excess, and the Aggregate Commitment
Amount shall be automatically reduced by an amount equal to such prepayment.
(c) In General. Simultaneously with each prepayment of the Loans,
----------
the Borrower shall prepay all accrued interest on the amount prepaid through the
date of prepayment and any amounts due under Section 3.5.
2.7 Termination or Reduction of Commitments
---------------------------------------
(a) Voluntary Reductions. The Borrower shall have the right, upon
--------------------
at least three Business Days' prior written notice to the Administrative Agent,
to reduce permanently the Aggregate Commitment Amount, in whole at any time, or
in part from time to time, to an amount not less than the aggregate principal
balance of the Loans then outstanding (after giving effect to any
contemporaneous prepayment thereof), provided, however, that each partial
reduction of the Aggregate Commitment Amount shall be in an amount equal to
$3,000,000 (or, if less, the then remaining Aggregate Commitment Amount) or an
integral multiple of $1,000,000 in excess thereof.
(b) Mandatory Reductions Relating to Dispositions. The Aggregate
---------------------------------------------
Commitment Amount shall be permanently reduced by the amounts, at the times and
to the extent required by Section 2.6(b).
44
<PAGE>
3. PROCEEDS, PAYMENTS, CONVERSIONS, INTEREST, YIELD PROTECTION AND FEES
--------------------------------------------------------------------
3.1 Disbursement of the Proceeds of the Loans
-----------------------------------------
The Administrative Agent shall disburse the proceeds of the Loans on
the date requested therefor (provided that the Administrative Agent shall have
received the same) at its office designated in Section 10.2 by crediting to the
Borrower's general deposit account with the Administrative Agent the funds
received from each Lender or by transferring such funds by wire transfer to such
account as the Borrower shall specify to the Administrative Agent in writing.
Unless the Administrative Agent shall have received prior notice from a Lender
(by telephone or otherwise, such notice to be confirmed by facsimile or other
writing) that such Lender will not make available to the Administrative Agent
such Lender's Commitment Percentage of the Loans on a Borrowing Date, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent on such Borrowing Date in accordance with this
Section 3.1, and the Administrative Agent may, in reliance upon such assumption,
make available to the Borrower on such Borrowing Date a corresponding amount. If
and to the extent such Lender shall not have so made such amount available to
the Administrative Agent (and the Administrative Agent has made such amount
available to the Borrower), such Lender and the Borrower severally agree to pay
to the Administrative Agent, forthwith on demand, such corresponding amount (to
the extent not previously paid by the other), together with interest thereon for
each day from the date such amount is made available to the Borrower until the
date such amount is paid to the Administrative Agent, at a rate per annum equal
to, in the case of the Borrower, the applicable interest rate set forth in
Section 3.4(a) and, in the case of such Lender, the Federal Funds Effective Rate
to and including the third Domestic Business Day after such funding was so made
available by the Administrative Agent, and the Alternate Base Rate thereafter.
Any such payment by the Borrower shall be without prejudice to its rights
against such Lender. If such Lender shall pay to the Administrative Agent such
corresponding amount, such amount so paid shall constitute such Lender's Loan as
part of the Loans for purposes of this Agreement, which Loan shall be deemed to
have been made by such Lender on the applicable Borrowing Date.
3.2 Payments
--------
(a) Each payment, including each prepayment, of principal and
interest on the Loans, the Commitment Fee and the other fees to be paid to the
Administrative Agent and the Lenders in connection with this Agreement (the
Commitment Fee and such other fees, collectively, the "Fees") and of all other
----
amounts payable by the Borrower under the Loan Documents shall be made by the
Borrower to the Administrative Agent at its office set forth in Section 10.2 in
funds immediately available in New York by 2:00 p.m. on the due date for such
payment. The failure of the Borrower to make any such payment by such time shall
not constitute a default hereunder, provided that such payment is made on such
due date, but any such payment made after 2:00 p.m. on such due date shall be
deemed to have been made on
45
<PAGE>
the next Domestic Business Day or LIBOR Business Day, as the case may be, for
the purpose of calculating interest on amounts outstanding on the Loans.
Promptly upon receipt thereof by the Administrative Agent, each payment of
principal and interest on the Loans shall be remitted by the Administrative
Agent in like funds as received to each Lender pro rata according to its
Outstanding Percentage of the Loans.
(b) If any payment hereunder or under the Loans shall be due and
payable on a day which is not a Domestic Business Day or LIBOR Business Day, as
the case may be, the due date thereof (except as otherwise provided in the
definition of Interest Period) shall be extended to the next Domestic Business
Day or LIBOR Business Day, as the case may be, and interest on the principal
amount thereof shall be payable at the applicable rate specified herein during
such extension.
3.3 Conversions; Other Matters
--------------------------
(a) The Borrower may elect from time to time to convert any one or
more LIBOR Advances to an ABR Advance, an ABR Advance to any one or more new
LIBOR Advances, or any one or more existing LIBOR Advances to any one or more
new LIBOR Advances, in each case by giving the Administrative Agent at least
three LIBOR Business Days' prior irrevocable notice of such election, specifying
the amount to be so converted and, if applicable, the initial Interest Period
relating thereto, provided that (i) any such conversion of an ABR Advance to a
LIBOR Advance shall only be made on a LIBOR Business Day, and (ii) any such
conversion of an existing LIBOR Advance shall only be made on the last day of
the Interest Period applicable thereto. The Administrative Agent shall promptly
provide the Lenders with notice of each such election. Loans may be converted
pursuant to this Section 3.3 in whole or in part, provided that the amount to be
converted to each LIBOR Advance shall equal no less than $3,000,000 or an
integral multiple of $1,000,000 in excess thereof.
(b) Notwithstanding anything in this Agreement to the contrary,
upon (i) the occurrence and during the continuance of a Default and the delivery
by the Administrative Agent of written notice to the Borrower that the Borrower
shall have no right to so convert during the continuance of such Default, or
(ii) the occurrence and during the continuance of an Event of Default, the
Borrower shall have no right to elect to convert any existing ABR Advance to a
new LIBOR Advance or to convert any existing LIBOR Advance to a new LIBOR
Advance. In such event, such ABR Advance shall be automatically continued as an
ABR Advance or such LIBOR Advance shall be automatically converted to an ABR
Advance on the last day of the Interest Period applicable to such LIBOR Advance.
(c) Each such conversion shall be effected by each Lender by
applying the proceeds of the new ABR Advance or LIBOR Advance, as the case may
be, to the existing Advance (or portion thereof) being converted (it being
understood that such conversion shall not constitute a borrowing for purposes of
Sections 4 or 5).
46
<PAGE>
(d) Notwithstanding any other provision of any other Loan Document:
(i) If the Borrower shall have failed to elect a LIBOR
Advance under Section 2.3 or 3.3, as the case may be, in connection with
the borrowing of Loans or expiration of an Interest Period with respect to
any existing LIBOR Advance, the amount of such Loans or such existing LIBOR
Advance shall thereafter be an ABR Advance until such time, if any, as the
Borrower shall elect a new LIBOR Advance pursuant to this Section 3.3,
(ii) The Borrower shall not be permitted to select any LIBOR
Advance the Interest Period in respect of which ends later than the Initial
Maturity Date or, if the Initial Maturity Date has been extended pursuant
to Section 2.5(b), the Extended Maturity Date, and
(iii) The Borrower shall not be permitted to have more than
five LIBOR Advances outstanding at any one time.
3.4 Interest Rates and Payment Dates
--------------------------------
(a) Prior to Maturity. Except as otherwise provided in Section
-----------------
3.4(b) and Section 3.4(c), the Loans shall bear interest on the unpaid principal
balance thereof at the applicable interest rate or rates per annum set forth
below:
ADVANCES RATE
-------- ----
Each ABR Advance the Alternate Base Rate plus the
Applicable Margin.
Each LIBOR Advance the LIBOR Rate applicable to such
LIBOR Advance plus the Applicable
Margin.
(b) Default Rate. Upon the occurrence and during the continuance
------------
of any Default under Sections 8.1(a) or 8.1(b), (i) the unpaid principal balance
of each Loan shall bear interest at a rate per annum equal to 2% plus the rate
which would otherwise be applicable pursuant to Section 3.4(a), and (ii)
interest on the Loans, the Fees and all other amounts (other than principal)
payable by the Borrower under the Loan Documents shall bear interest at a rate
per annum equal to 2% plus the Alternate Base Rate.
(c) Highest Lawful Rate. Notwithstanding anything to the contrary
-------------------
contained in this Agreement, at no time shall the interest rate payable on the
Loans, together with the Fees and other amounts payable hereunder to the extent
the same constitute or are
47
<PAGE>
deemed to constitute interest, exceed the Highest Lawful Rate. If in respect of
any period during the term of this Agreement, any amount paid hereunder, to the
extent the same shall (but for the provisions of this Section 3.4) constitute or
be deemed to constitute interest, would exceed the maximum amount of interest
permitted by the Highest Lawful Rate during such period (such amount being
hereinafter referred to as an "Unqualified Amount"), then such Unqualified
------------------
Amount shall be applied or shall be deemed to have been applied as a prepayment
of the Loans.
(d) General. Interest shall be payable in arrears on each Interest
-------
Payment Date and, to the extent provided in Section 2.6(c), upon each payment
(including each prepayment) of the Loans. Any change in the interest rate on the
Loans resulting from a change in the Alternate Base Rate, any reserve
requirement, or any deposit insurance assessment shall become effective as of
the opening of business on the day on which such change shall become effective.
The Administrative Agent shall, as soon as practicable, notify the Borrower and
the Lenders of the effective date and the amount of each such change in the BNY
Rate, but any failure to so notify shall not in any manner affect the obligation
of the Borrower to pay interest on the Loans in the amounts and on the dates set
forth herein. Each determination by the Administrative Agent of the Alternate
Base Rate and the LIBOR Rate pursuant to this Agreement shall be conclusive and
binding on the Borrower and the Lenders absent manifest error. The Borrower
acknowledges that to the extent interest payable on the Loans is based on the
Alternate Base Rate, such rate is only one of the bases for computing interest
on loans made by the Lenders, and by basing interest payable on the ABR Advances
on the Alternate Base Rate, the Lenders have not committed to charge, and the
Borrower has not in any way bargained for, interest based on a lower or the
lowest rate at which the Lenders may now or in the future make extensions of
credit to other Persons. All interest based on the BNY Rate shall be calculated
on the basis of a 365/366day year for the actual number of days elapsed. All
other interest shall be calculated on the basis of a 360-day year for the actual
number of days elapsed.
3.5 Indemnification for Loss
------------------------
Notwithstanding anything contained herein to the contrary, if the
Borrower shall fail for any reason to borrow or convert an Advance after it
shall have given notice to do so in which it shall have requested a LIBOR
Advance pursuant to Section 2.3 or 3.3, as the case may be, or if a LIBOR
Advance shall be terminated for any reason prior to the last day of the Interest
Period applicable thereto, or if any repayment or prepayment of the principal
amount of a LIBOR Advance is made by the Borrower for any reason on a date which
is prior to the last day of the Interest Period applicable thereto, the Borrower
agrees to indemnify each Lender against, and to pay on demand directly to such
Lender the amount equal to any loss or out-of-pocket expense (other than any
special or consequential damages or other losses) suffered by such Lender as a
result of such failure to borrow or convert, or such termination, repayment or
prepayment, including any loss, cost or expense suffered by such Lender in
48
<PAGE>
liquidating or employing deposits acquired to fund or maintain the funding of
such LIBOR Advance, or redeploying funds prepaid or repaid, in amounts which
correspond to such LIBOR Advance, and any internal processing charge customarily
charged by such Lender in connection therewith. Calculations of all amounts
payable under this Section 3.5 shall be made on the assumption that each Lender
has funded each of its relevant LIBOR Advances through the purchase of LIBOR
deposits bearing interest at the LIBOR Rate and in an amount equal to the amount
of such LIBOR Advances and with a maturity equivalent to the Interest Periods
applicable to such LIBOR Advances.
3.6 Reimbursement for Costs, Etc.
-----------------------------
(a) If at any time or from time to time after the occurrence of a
Regulatory Change any Lender shall have determined that such Regulatory Change
(i) shall have had the effect of reducing (A) the rate of return on such
Lender's capital or the capital of any Person directly or indirectly owning or
controlling such Lender (each a "Control Person"), or (B) the asset value (for
--------------
capital purposes) to such Lender or such Control Person, as applicable, of the
Loans, in any case to a level below that which such Lender or such Control
Person could have achieved but for such Regulatory Change (after taking into
account such Lender's or such Control Person's policies regarding capital), (ii)
will impose, modify or deem applicable any reserve, asset, special deposit or
special assessment requirements on deposits obtained in the interbank eurodollar
market in connection with this Agreement and the Notes, (iii) will subject such
Lender to any tax (documentary, stamp or otherwise) with respect to this
Agreement or any Note, or (iv) change the basis of taxation of payments to such
Lender of principal, interest or fees payable under this Agreement or any Note
(except for any tax, or changes in the rate of tax on such Lender's net income
imposed by the United States or any other jurisdiction), then, in each such
case, within five days after demand therefor by such Lender upon the Borrower,
the Borrower shall pay to such Lender such additional amount or amounts as shall
be sufficient to compensate such Lender or such Control Person, as the case may
be, for (1) any such reduction referred to in clause (a)(i) of this Section 3.6,
and (2) any taxes, losses, costs or expenses (excluding general administrative
and overhead costs) attributable to such Lender's or such Control Person's
compliance during the term hereof with such Regulatory Change.
(b) Each Lender agrees to provide the Borrower with notice of each
Regulatory Change which would require the Borrower to make a payment to such
Lender under this Section 3.6 promptly upon such Lender obtaining actual
knowledge thereof and determining that it intends to require the Borrower to
make such payment. Each Lender agrees to designate a different office or branch
for the making of Loans and the receipt of payments thereon, if such designation
would reduce the amount of compensation that such Lender is requesting under
this Section 3.6 so long as such designation would not be otherwise
disadvantageous (other than by way of a de minimis inconvenience) to such Lender
----------
in any respect.
3.7 Illegality of Funding
---------------------
49
<PAGE>
Notwithstanding any other provision hereof, if any Lender shall
reasonably determine that any law, regulation, treaty or directive, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for such Lender to make or maintain any LIBOR Advance as contemplated
by this Agreement, (a) the commitment of such Lender to make LIBOR Advances or
convert ABR Advances to LIBOR Advances shall forthwith be suspended, (b) such
Lender's Loan then outstanding as LIBOR Advances, if any, shall be converted
automatically to an ABR Advance on the last day of the then current Interest
Period applicable thereto or at such earlier time as may be required, and (c)
such Lender shall give notice thereof to the Borrower promptly after becoming
aware thereof. If the commitment of any Lender with respect to any LIBOR
Advances is suspended pursuant to this Section 3.7 and such Lender shall notify
the Administrative Agent and the Borrower that it is once again legal for such
Lender to make or maintain LIBOR Advances (which notice such Lender agrees to
give promptly after becoming aware of such occurrence), such Lender's commitment
to make or maintain LIBOR Advances shall be reinstated.
3.8 Option to Fund; Substituted Interest Rate
-----------------------------------------
(a) Each Lender has indicated that, if the Borrower requests a
LIBOR Advance, such Lender may wish to purchase one or more deposits in order to
fund or maintain its funding of its Commitment Percentage of such LIBOR Advance
during the Interest Period with respect thereto; it being understood that the
provisions of this Agreement relating to such funding are included only for the
purpose of determining the rate of interest to be paid in respect of such LIBOR
Advance and any amounts owing under Sections 3.5 and 3.6. Each Lender shall be
entitled to fund and maintain its funding of all or any part of each LIBOR
Advance in any manner it sees fit, but all such determinations hereunder shall
be made as if each Lender had actually funded and maintained its Commitment
Percentage of each LIBOR Advance during the applicable Interest Period through
the purchase of deposits in an amount equal to its Commitment Percentage of such
LIBOR Advance having a maturity corresponding to such Interest Period. Any
Lender may fund its Commitment Percentage of each LIBOR Advance from or for the
account of any branch or office of such Lender as such Lender may choose from
time to time.
(b) In the event that (i) the Administrative Agent shall have
determined (which determination shall be conclusive and binding upon the
Borrower) that by reason of circumstances affecting the interbank eurodollar
market either adequate and reasonable means do not exist for ascertaining the
LIBOR Rate applicable pursuant to Section 2.3 or Section 3.3, or (ii) any Lender
shall have notified the Administrative Agent that it has determined (which
determination shall be conclusive and binding on the Borrower) that the
applicable LIBOR Rate will not adequately and fairly reflect the cost to such
Lender of maintaining or funding loans bearing interest based on such LIBOR Rate
with respect to any portion of the Loans that the Borrower has requested be made
as a LIBOR Advance or any LIBOR Advance that will result from the requested
conversion of any portion of the Loans into a LIBOR Advance (each,
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<PAGE>
an "Affected Advance"), the Administrative Agent shall promptly notify the
----------------
Borrower and the Lenders (by telephone or otherwise, to be promptly confirmed in
writing) of such determination on or, to the extent practicable, prior to the
Borrowing Date or conversion date for such Affected Advance. If the
Administrative Agent shall give such notice, (A) any Affected Advances shall be
made as ABR Advances, (B) the portion of the Loans that were to have been
converted to Affected Advances shall be converted to or continued as ABR
Advances, and (C) any outstanding Affected Advances shall be converted, on the
last day of the then current Interest Period with respect thereto, to ABR
Advances. Until any notice under clauses (i) or (ii), as the case may be, of
this Section 3.8(b) has been withdrawn by the Administrative Agent (by notice to
the Borrower), which notice shall be given promptly upon either (x) the
Administrative Agent having determined that such circumstances affecting the
relevant market no longer exist and that adequate and reasonable means do exist
for determining the LIBOR Rate pursuant to Section 2.3 or Section 3.3, or (y)
the Administrative Agent having been notified by such Lender (which notice such
Lender shall give promptly upon its becoming aware thereof) that circumstances
no longer render the Loans (or any portion thereof) Affected Advances, no
further LIBOR Advances of the affected type shall be required to be made by the
Lenders nor shall the Borrower have the right to convert all or any portion of
the Loans to such type of LIBOR Advances.
3.9 Certificates of Payment and Reimbursement
-----------------------------------------
Each Lender agrees, in connection with any request by it for payment
or reimbursement pursuant to Section 3.5 or 3.6, to provide the Borrower with a
certificate, signed by an officer of such Lender, setting forth a description in
reasonable detail of any such payment or reimbursement. Each Lender's
determination of such payment or reimbursement shall be conclusive absent
manifest error.
3.10 Taxes; Net Payments
-------------------
(a) All payments made by the Borrower under the Loan Documents
shall be made free and clear of, and without reduction for or on account of, any
taxes required by law to be withheld from any amounts payable under the Loan
Documents but excluding therefrom any taxes to which the Lender becomes subject
subsequent to the later of the date of this Agreement or the date such Lender
becomes a Lender to the extent that the Lender becomes subject to such taxes as
a result of (i) a change in the residence of the Lender, (ii) a change in the
place of incorporation of the Lender, (iii) a change in the principal place of
business of the Lender, (iv) a change in the branch or lending office of the
Lender participating in the transactions set forth herein, (v) any other change
in the circumstances of the Lender which change (A) is within the control of the
Lender and (B) a diligent person would reasonably anticipate would result in
subjecting payments to the Lender to additional taxes, or (vi) any sale,
assignment, transfer or negotiation by the Lender of all or a portion of its
Commitment, its Loans or its Note to a subsidiary or Affiliate of any Lender
which sale, assignment, transfer
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<PAGE>
or negotiation (A) is accomplished without the consent of the Borrower pursuant
to Section 10.7(c) and (B) a diligent person would reasonably anticipate would
result in subjecting payments to the Lender to additional taxes (any taxes
required by law to be withheld from any amounts payable under the Loan
Documents, other than excluded taxes, shall be referred to in this Section 3.10
as "Taxes"). In the event that the Borrower is prohibited by law from making
-----
payments hereunder free of deductions or withholdings for Taxes, then the
Borrower shall pay such additional amounts to the Administrative Agent, for the
benefit of the Lenders, as may be necessary in order that the actual amounts
received by each Lender in respect of interest and any other amounts payable
hereunder or under its Note after deduction or withholding for Taxes shall equal
the amount that would have been received if such deduction or withholding for
Taxes were not required. In the event that any such deduction or withholding can
be reduced or nullified as a result of the application of any relevant double
taxation convention, the Administrative Agent and the Lenders will, at the
expense of the Borrower, cooperate with the Borrower in making application to
the relevant taxing authorities seeking to obtain such reduction or
nullification, provided, however, that the Administrative Agent and the Lenders
shall have no obligation to engage in litigation with respect thereto. If the
Borrower shall make any payments under this Section 3.10 or shall make any
deductions or withholdings from amounts paid hereunder, the Borrower shall
forthwith forward to the Administrative Agent original or certified copies of
official receipts or other evidence acceptable to the Administrative Agent
establishing such payment and the Administrative Agent in turn shall distribute
copies of such receipts to each Lender. If payments to any Lender hereunder are
or become subject to any withholding for Taxes, such Lender shall (unless
otherwise required by a Governmental Authority or as a result of any law, rule,
regulation, order or similar directive applicable to such Lender) designate a
different office or branch to which payments are to be made under the Loan
Documents from that initially selected by such Lender, if such designation would
avoid such withholding and would not be otherwise disadvantageous (other than by
way of a de minimis inconvenience) to such Lender in any respect. In the event
-- -------
that any Lender receives a refund or credit for taxes paid by the Borrower under
this Section 3.10, such Lender shall promptly notify the Administrative Agent
and the Borrower and remit to the Borrower the amount of such refund or credit
applicable to the payments made by the Borrower in respect of such Lender under
this Section 3.10. The additional amounts required to be paid by the Borrower
pursuant to this Section 3.10 shall be computed with respect to taxes required
to be withheld from payments to a Lender and shall not be computed with respect
to a tax imposed on or measured by the overall net income (including a franchise
tax based on net income) of a Lender or its lending offices by the United States
(or any political subdivision or taxing authority thereof or therein) or by the
jurisdictions in which such Lender's principal office or lending offices are
located, or are resident, or in which such Lender is incorporated.
(b) Each Lender not incorporated under the laws of the United
States or any State thereof shall deliver to the Borrower such certificates,
documents, or other evidence as the Borrower may reasonably require from time to
time (including Forms 1001 and 4224) as
52
<PAGE>
are necessary to establish that such Lender is not subject to withholding under
Section 1441, 1442 or 3406 of the Code or as may be necessary to establish,
under any law imposing upon the Borrower, hereafter, an obligation to withhold
any portion of the payments made by the Borrower under the Loan Documents, that
payments to the Administrative Agent on behalf of such Lender are not subject to
withholding. Notwithstanding any provision herein to the contrary, the Borrower
shall have no obligation to pay any Lender any amount which the Borrower is
liable to withhold due to the failure of such Lender to file any statement of
exemption required by the Code or any Governmental Authority, provided, however,
that there shall be no requirement to file any such statement of exemption and
this sentence shall not apply if an event (including any changes in treaty law
or regulation) has occurred prior to the date on which such filing would be
required, which renders such statement of exemption inapplicable or which would
prevent the Lender from duly completing and delivering such statement of
exemption.
3.11 Commitment Fee
--------------
(a) The Borrower agrees to pay to the Administrative Agent, for the
account of the Lenders in accordance with each Lender's Commitment Percentage, a
fee (the "Commitment Fee"), during the Commitment Period, at a rate per annum
--------------
equal to 0.25% on the average daily unused amount of the Aggregate Commitments.
The Commitment Fee shall be payable quarterly in arrears on the last day of each
March, June, September and December of each year, commencing on the first such
day following the Effective Date, and ending on the date that the Commitments
shall expire or otherwise terminate. The Commitment Fee shall be calculated on
the basis of a 360 day year for the actual number of days elapsed.
4. REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Administrative Agent to enter into this Agreement,
and to induce the Lenders to enter into this Agreement and to make the Loans,
the Borrower hereby makes the following representations and warranties to the
Administrative Agent and the Lenders:
53
<PAGE>
4.1 Subsidiaries; Capitalization
----------------------------
As of the date of this Agreement, the Borrower has only the
Subsidiaries set forth on, and the authorized, issued and outstanding capital
stock of the Borrower and each such Subsidiary (or partnership or other
interests, as the case may be) is as set forth on, Schedule 4.1. The shares of,
or partnership or other equity interests in, each Subsidiary are owned
beneficially and of record by the Borrower or another Subsidiary, are free and
clear of all Liens except as otherwise permitted by Section 7.2, and are duly
authorized, validly issued, fully paid and, except solely as a result of any
applicable law, nonassessable. As of the date of this Agreement, except as set
forth on Schedule 4.1, (a) neither the Borrower nor any Subsidiary has issued
any securities convertible into, or options or warrants for, any common or
preferred equity securities thereof, (b) there are no agreements, voting trusts
or understandings binding upon the Borrower or any Subsidiary with respect to
the voting securities of any Subsidiary or affecting in any manner the sale,
pledge, assignment or other disposition thereof, including any right of first
refusal, option, redemption, call or other right with respect thereto, whether
similar or dissimilar to any of the foregoing, and (c) the Borrower owns,
directly or indirectly, all of the outstanding capital stock of each Subsidiary.
4.2 Existence and Power
-------------------
Each of the Borrower and each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, has all requisite power and authority to own its Property and to
carry on its business as now conducted, and is in good standing and authorized
to do business in each jurisdiction in which the failure so to qualify could
reasonably be expected to have a Material Adverse effect.
4.3 Authority
---------
The Borrower has full power and authority to enter into, execute,
deliver and perform the terms of the Loan Documents to which it is a party, all
of which have been duly authorized by all proper and necessary corporate action,
and none of which are in conflict with its certificate of incorporation and by-
laws. No consent or approval of, or other action by, shareholders of the
Borrower, any Governmental Authority or any other Person, which has not already
been obtained, is required to authorize in respect of the Borrower, or is
required in connection with the execution, delivery or performance by the
Borrower of, the Loan Documents to which it is a party, or is required as a
condition to the enforceability against the Borrower of the Loan Documents to
which it is a party.
4.4 Binding Agreement
-----------------
The Loan Documents constitute the valid and legally binding
obligations of the Borrower to the extent it is a party thereto, enforceable in
accordance with their respective
54
<PAGE>
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity.
4.5 Litigation
----------
Except as set forth on Schedule 4.5, there are no actions, suits,
arbitration proceedings or claims (whether purportedly on behalf of the
Borrower, any Subsidiary or otherwise) pending or, to the knowledge of the
Borrower, threatened against the Borrower or any Subsidiary, or maintained by
the Borrower or any Subsidiary, or which may affect the Property of the Borrower
or such Subsidiary, at law or in equity, before any Governmental Authority which
could reasonably be expected to have a Material Adverse effect. There are no
proceedings pending or, to the knowledge of the Borrower, threatened against the
Borrower or any Subsidiary (a) which call into question the validity or
enforceability of, or otherwise seek to invalidate any Loan Document, or (b)
which would reasonably be expected to, individually or in the aggregate,
materially and adversely affect any of the transactions contemplated by any Loan
Document.
4.6 No Conflicting Agreements
-------------------------
(a) Neither the Borrower nor any Subsidiary is in default under any
agreement to which it is a party or by which it or any of its Property is bound
the effect of which could reasonably be expected to have a Material Adverse
effect. No notice to, or filing with, any Governmental Authority, not already
made, is required for the due execution, delivery and performance by the
Borrower of the Loan Documents to which it is a party, other than such notices
and filings as are required from time to time (i) for the Borrower to perform
its obligations under Sections 6.1, 6.2, 6.6 and 6.9 of this Agreement and
similar obligations under any other Loan Document, and (ii) to perfect, and
maintain the perfection of, the Administrative Agent's security interests in the
Collateral.
(b) No provision of any statute, rule, regulation, judgment, decree
or order or, solely as of the date hereof, any mortgage, indenture, contract or
agreement, binding on the Borrower or any Subsidiary or affecting the Property
of the Borrower or any Subsidiary conflicts with, or requires any consent which
has not already been obtained under, or would in any way prevent the execution,
delivery or performance by the Borrower of the terms of, any Loan Document. As
of the date hereof, the execution, delivery or performance by the Borrower of
the terms of each Loan Document to which it is a party will not constitute a
default under, or result in the creation or imposition of, or obligation to
create, any Lien (other than pursuant to the Loan Documents) upon the Property
of the Borrower or any Subsidiary pursuant to the terms of any such mortgage,
indenture, contract or agreement.
55
<PAGE>
4.7 Taxes
-----
Other than those returns and taxes the failure of which to file or
pay could not reasonably be expected to have a Material Adverse effect, the
Borrower and each Subsidiary has filed or caused to be filed all tax returns,
and has paid, or has made adequate provision for the payment of, all taxes shown
to be due and payable on said returns or in any assessments made against them.
No tax Liens have been filed against the Borrower or any Subsidiary and no
claims are being asserted with respect to such taxes which are required by GAAP
to be reflected in the Financial Statements and are not so reflected therein.
The charges, accruals and reserves on the books of the Borrower and each
Subsidiary with respect to all federal, state, local and other taxes are
considered by the management of the Borrower to be adequate, and the Borrower
knows of no unpaid assessment which is or might be due and payable against it or
any Subsidiary or any Property of the Borrower or any Subsidiary that could
reasonably be expected to have a Material Adverse effect, except such thereof as
are being contested in good faith and by appropriate proceedings diligently
conducted, and for which adequate reserves have been set aside in accordance
with GAAP.
4.8 Compliance with Applicable Laws; Filings
----------------------------------------
Neither the Borrower nor any Subsidiary is in default with respect
to any judgment, order, writ, injunction, decree or decision of any Governmental
Authority which default could reasonably be expected to have a Material Adverse
effect. The Borrower and each Subsidiary are complying with all applicable
statutes, rules and regulations of all Governmental Authorities, a violation of
which could reasonably be expected to have a Material Adverse effect. The
Borrower and each Subsidiary have filed or caused to be filed with all
Governmental Authorities all reports, applications, documents, instruments and
information required to be filed pursuant to all applicable laws, rules,
regulations and requests which, if not so filed, could reasonably be expected to
have a Material Adverse effect.
4.9 Governmental Regulations
------------------------
Neither the Borrower nor any Subsidiary nor any corporation
controlling the Borrower or any Subsidiary or under common control with the
Borrower or any Subsidiary is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, or the Investment Company
Act of 1940, in each case as amended, or, except for those statutes and
regulations applicable to registered future commission merchants, broker dealers
and investment advisers, any other statute or regulation which regulates the
incurrence of Indebtedness.
56
<PAGE>
4.10 Property
--------
Except as set forth on Schedule 4.10, each of the Borrower and each
Subsidiary has good and marketable title to, or a valid leasehold interest in,
all of its Property which is material to the Borrower or such Subsidiary,
subject to no Liens, except such Liens permitted by Section 7.2. Other than
leases the termination of which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse effect, all leases of Property
to each of the Borrower and each Subsidiary are in full force and effect, the
Borrower or such Subsidiary enjoys quiet and undisturbed possession thereunder
and neither the Borrower nor any Subsidiary is in default thereunder beyond any
applicable grace period.
4.11 Federal Reserve Regulations; Use of Loan Proceeds
-------------------------------------------------
The Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock. No part of the proceeds of the Loans will be used,
directly or indirectly, for a purpose which violates any law, including
Regulations G, U, T or X of the Board of Governors of the Federal Reserve
System, as amended.
4.12 No Misrepresentation
--------------------
No representation or warranty contained in any Loan Document and no
certificate or written report furnished or to be furnished by the Borrower in
connection with the transactions contemplated hereby, contains or will contain,
as of its date, a misstatement of material fact, or omits or will omit to state,
as of its date, a material fact required to be stated in order to make the
statements therein contained not misleading in the light of the circumstances
under which made.
4.13 Plans
-----
Neither the Borrower nor any ERISA Affiliate maintains, or has
within the past six years maintained, a Pension Plan or participated in a
Multiemployer Plan. The amount of the aggregate Unrecognized Retiree Welfare
Liability under all applicable Employee Benefit Plans does not exceed $1,000,000
as of the date of this Agreement. Each Employee Benefit Plan of the Borrower or
any ERISA Affiliate that is a group health plan within the meaning of Section
5000(b)(1) of the Code is in substantial compliance with all material
requirements of Section 4980B of the Code.
4.14 Environmental Matters
---------------------
Neither the Borrower nor any Subsidiary (a) has received written
notice or otherwise learned of any claim, demand, action, event, condition,
report or investigation
57
<PAGE>
indicating or concerning any potential or actual liability which individually or
in the aggregate could reasonably be expected to have a Material Adverse effect,
arising in connection with (i) any non-compliance with or violation of the
requirements of any applicable federal, state or local environmental health or
safety statute or regulation, or (ii) the release or threatened release of any
toxic or hazardous waste, substance or constituent, or other substance into the
environment, (b) to the best knowledge of the Borrower, has any threatened or
actual liability in connection with the release or threatened release of any
toxic or hazardous waste, substance or constituent, or other substance into the
environment which individually or in the aggregate could reasonably be expected
to have a Material Adverse effect, (c) has received written notice of any
federal or state investigation evaluating whether any remedial action is needed
to respond to a release or threatened release of any toxic or hazardous waste,
substance or constituent or other substance into the environment for which the
Borrower or any Subsidiary is or would be liable, which liability would
reasonably be expected to have a Material Adverse effect, or (d) has received
written notice that the Borrower or any Subsidiary is or may be liable to any
Person under the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. Section 9601 et seq., or any analogous
-- ---
state law, which liability would reasonably be expected to have a Material
Adverse effect. The Borrower and each Subsidiary is in compliance with the
financial responsibility requirements of federal and state environmental laws to
the extent applicable, including those contained in 40 C.F.R., parts 264 and
265, subpart H, and any analogous state law, except in those cases in which the
failure so to comply would not reasonably be expected to have a Material Adverse
effect.
4.15 Financial Statements
--------------------
The Borrower has heretofore delivered to the Lenders and the
Administrative Agent copies of its (a) audited Consolidated and Balance Sheet as
of December 31, 1996, and the related Consolidated Statements of Operations,
Retained Earnings and Cash Flows for the fiscal year then ended, and (b)
unaudited Consolidated Balance Sheet as of March 31, 1997 and the related
Consolidated Statements of Operations, Retained Earnings and Cash Flows for the
three month period then ended (collectively, together with the related notes and
schedules, the "Financial Statements"). The Financial Statements fairly present
--------------------
the Consolidated financial condition and results of the operations of the
Borrower and the Subsidiaries as of the dates and for the periods indicated
therein and have been prepared in conformity with GAAP as then in effect.
Neither the Borrower nor any Subsidiary has any obligation or liability of any
kind (whether fixed, accrued, contingent, unmatured or otherwise) which, in
accordance with GAAP as then in effect, should have been disclosed in the
Financial Statements and was not. Since December 31, 1996, there has been no
Material Adverse change and, except for items disclosed in the footnotes of the
March 31, 1997 financial statements referred to in (b) above, the Borrower and
the Subsidiaries have conducted their businesses only in the ordinary course.
58
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5. CONDITIONS OF LENDING
---------------------
5.1 First Loans
-----------
The obligation of each Lender to make its Loan on the first Borrowing
Date is subject to the fulfillment of the conditions set forth in Section 5.2
and the fulfillment of the following conditions prior to or simultaneously with
the making of such Loan:
(a) Evidence of Corporate Action
----------------------------
The Administrative Agent shall have received a certificate, dated the
Effective Date, of the Secretary or Assistant Secretary of the Borrower (i)
attaching a true and complete copy of the resolutions of its Board of Directors
and of all documents evidencing all necessary corporate action (in form and
substance reasonably satisfactory to the Administrative Agent) taken by it to
authorize the Loan Documents and the transactions contemplated thereby, (ii)
attaching a true and complete copy of its certificate of incorporation and by-
laws, (iii) setting forth the incumbency of the corporate officer(s) who may
sign such Loan Documents, including therein a signature specimen of such
corporate officer, as the case may be, and (iv) attaching a certificate of good
standing of the Secretary of State of the State of its incorporation.
(b) Notes.
-----
The Borrower shall have delivered to the Administrative Agent (for
delivery to each Lender) each of the Notes, dated the Effective Date, executed
by the Borrower.
(c) Borrower Security Agreement
---------------------------
The Borrower shall have delivered to the Administrative Agent (a) a
security agreement, dated as of the date hereof, executed by the Borrower and
substantially in the form of Exhibit D (as the same may be amended, supplemented
or otherwise modified from time to time, the "Borrower Security Agreement"), (b)
---------------------------
one or more share certificates, representing all of the issued and outstanding
capital stock of EVEREN Holdings owned directly by the Borrower, together with
one undated stock power executed in blank by the Borrower in respect of each
such certificate, and (c) such UCC Financing Statements, executed by the
Borrower, as shall be reasonably requested by the Administrative Agent in order
to perfect the security interest in any collateral security granted under the
Borrower Security Agreement.
(d) Approval of Special Counsel
---------------------------
All legal matters incident to the making of the Loans on the first
Borrowing Date shall be satisfactory to Special Counsel, and the Administrative
Agent shall have received
59
<PAGE>
from Special Counsel an opinion, dated the Effective Date, substantially in the
form of Exhibit F.
(e) Opinion of Counsel to the Borrower
----------------------------------
The Administrative Agent shall have received an opinion of Janet L.
Reali, counsel to the Borrower, dated the Effective Date, substantially in the
form of Exhibit G.
(f) Payment of Fees
---------------
The Borrower or a Subsidiary shall have paid to the Administrative
Agent and the Lenders all Fees and all expenses which it shall have agreed to
pay, to the extent such Fees and expenses shall have become due and payable on
or prior to the first Borrowing Date.
5.2 All Loans
---------
The obligation of each Lender to make its Loan on each Borrowing Date
is subject to the fulfillment of the following conditions prior to or
simultaneously with the making of such Loan:
(a) Borrowing Request
-----------------
The Administrative Agent shall have received a Borrowing Request,
executed by the Borrower.
(b) Other Documents
---------------
The Administrative Agent shall have received such other documents
(including financial statements and projections), each in form and substance
reasonably satisfactory to the Administrative Agent, as the Administrative Agent
shall reasonably require in connection with the making of the Loans.
(c) Compliance
----------
On the Borrowing Date, and after giving effect to the Loans, (a) there
shall exist no Default or Event of Default, and (b) the representations and
warranties contained in the Loan Documents shall be true and correct with the
same effect as though such representations and warranties had been made on such
Borrowing Date.
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(d) Loan Closings
-------------
All documents required by the provisions of this Agreement to have
been executed or delivered by each Loan Party to the Administrative Agent or any
Lender on or before the Borrowing Date shall have been so executed or delivered
on or before such Borrowing Date.
6. AFFIRMATIVE AND FINANCIAL COVENANTS
-----------------------------------
The Borrower covenants and agrees that on and after the Effective Date and
until the termination of the Aggregate Commitments, the payment in full of the
Notes and the payment by the Borrower of all other amounts then due and payable
under the Loan Documents, the Borrower will:
6.1 Legal Existence
---------------
Except as may otherwise be permitted by Sections 7.3 and 7.4,
maintain, and cause each Subsidiary to maintain, its corporate or partnership
existence, as the case may be, in good standing in the jurisdiction of its
incorporation or formation and in each other jurisdiction in which the failure
so to do could reasonably be expected to have a Material Adverse effect.
6.2 Taxes
-----
Pay and discharge when due, and cause each Subsidiary so to do, all
material taxes, assessments, governmental charges, license fees and levies upon
or with respect to the Borrower and such Subsidiary, and upon the income,
profits and Property thereof unless, and only to the extent, that (a) such
taxes, assessments, governmental charges, license fees and levies shall be
contested in good faith and by appropriate proceedings diligently conducted by
the Borrower or such Subsidiary, and (b) such reserve or other appropriate
provision as shall be required by GAAP shall have been made therefor.
6.3 Insurance
---------
Maintain, and cause each Subsidiary to maintain, insurance with
insurance carriers of recognized standing against at least such risks, and in at
least such amounts, as are usually insured against by similar businesses,
including business interruption, public liability (bodily injury and property
damage), fidelity, workers' compensation and property insurance, and which, in
the case of such property insurance, shall be (A) in amounts sufficient to
prevent the Borrower and each Subsidiary from becoming a co-insurer and (B)
against all risks; and upon request by the Administrative Agent file with the
Administrative Agent a detailed list of
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<PAGE>
such insurance then in effect, stating the names of the carriers thereof, the
policy numbers, the insureds thereunder, the amounts of insurance, dates of
expiration thereof, and the Property and risks covered thereby, together with a
certificate of the CFO certifying that in the opinion of the CFO such insurance
is adequate in nature and amount, complies with the obligations of the Borrower
under this Section 6.3, and is in full force and effect.
6.4 Performance of Obligations
--------------------------
Pay and discharge promptly when due, and cause each Subsidiary so to
do, all lawful obligations and claims for labor, materials and supplies or
otherwise which, if unpaid, could reasonably be expected to (a) have a Material
Adverse effect, or (b) become a Lien on the Property of the Borrower or any
Subsidiary, except those Liens permitted under Section 7.2, provided that
neither the Borrower nor such Subsidiary shall be required to pay or discharge
or cause to be paid or discharged any such obligation or claim so long as (i)
the validity thereof shall be contested in good faith and by appropriate
proceedings diligently conducted by the Borrower or such Subsidiary, and (ii)
such reserve or other appropriate provision as shall be required by GAAP shall
have been made therefor.
6.5 Condition of Property
---------------------
Except for ordinary wear and tear and except as permitted by Sections
7.3 and 7.4, at all times, maintain, protect and keep in good repair, working
order and condition, all material Property necessary for the operation of its
business (other than Property which is replaced with similar Property), and
cause each Subsidiary so to do.
6.6 Observance of Legal Requirements
--------------------------------
Observe and comply in all material respects, and cause each Subsidiary
so to do, with all laws, ordinances, orders, judgments, rules, regulations,
certifications, franchises, permits, licenses, directions and requirements of
all Governmental Authorities, which now or at any time hereafter may be
applicable to it or to such Subsidiary, a violation of which could reasonably be
expected to have a Material Adverse effect, except such thereof as shall be
contested in good faith and by appropriate proceedings diligently conducted by
the Borrower or such Subsidiary, provided that such reserves or other
appropriate provisions, if any, as shall be required by the Accountants in
accordance with GAAP shall have been made in respect thereof.
6.7 Financial Statements and Other Information
------------------------------------------
Maintain, and cause each Subsidiary to maintain, a standard system of
accounting in accordance with GAAP, and furnish to each Lender:
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(a) As soon as available, and in any event within 95 days after the
close of each fiscal year, a copy of (i) the Borrower's Consolidated Balance
Sheet as of the end of such fiscal year, and (ii) the Borrower's related
Consolidated Statements of Income, Retained Earnings and Cash Flows, as of and
through the end of such fiscal year, setting forth in each case in comparative
form the corresponding figures in respect of the previous fiscal year, all in
reasonable detail, and accompanied by a report of the Accountants, which report
shall state that (A) the Accountants audited such financial statements, (B) such
audit was made in accordance with generally accepted auditing standards in
effect at the time and provides a reasonable basis for such opinion, and (C)
said financial statements have been prepared in accordance with GAAP;
(b) Simultaneously with the delivery of the certified statements for
each fiscal year required by clause (a) above, copies of a certificate of such
Accountants (i) expressing their opinion that the computations by the Borrower
(which computations shall accompany such certificate, shall be calculated as at
the end of such fiscal year and shall be in reasonable detail) show compliance
with Sections 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.17, 7.3, 7.4, 7.6, 7.7, 7.15
and 7.16 as at the end of such fiscal year and are in accordance with such
Sections, and (ii) stating that, in making the examination necessary for their
audit of the financial statements of the Borrower for such fiscal year, nothing
came to their attention of a financial or accounting nature that caused them to
believe that the Borrower was not in compliance with the terms, covenants,
provisions, or conditions of each Loan Document, or that there shall have
occurred any condition or event which would constitute a Default or an Event of
Default, or, if so, specifying in such certificate all such instances of non-
compliance and the nature and status thereof;
(c) As soon as available, and in any event within 50 days after the
end of each of the first three fiscal quarters of each fiscal year, a copy of
(i) the Borrower's Consolidated Balance Sheet as of the end of such quarter, and
(ii) the related Consolidated Statements of Income, Retained Earnings and Cash
Flows for the period from the beginning of the then current fiscal year to the
end of such quarter, in each case in comparable form with the prior fiscal year,
together with a certificate of the CFO, which certificate shall state that such
financial statements fairly present the Consolidated financial condition and
results of operations of the Borrower and the Subsidiaries at the times and for
the periods covered thereby and were prepared in all material respects in
accordance with GAAP (without footnotes and subject to year-end adjustments);
(d) Within 50 days after the end of each of the first three fiscal
quarters, and within 95 days after the end of the last fiscal quarter, of each
fiscal year, a Compliance Certificate, as of the end of such fiscal quarter,
certified by the CFO;
(e) Prompt written notice upon the Borrower obtaining knowledge that:
(i) any Indebtedness of the Borrower or any Subsidiary in an aggregate amount in
excess of
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$1,000,000 shall have been declared or become due and payable prior to its
stated maturity, or called and not paid when due, in each case as a result of
any default under or in respect of such obligations, or (ii) the holders of any
notes (other than the Notes), or other evidence of Indebtedness, certificates or
securities evidencing any such Indebtedness, or any obligees with respect to any
other Indebtedness of the Borrower or any Subsidiary, have the right to declare
Indebtedness in an aggregate amount in excess of $1,000,000 due and payable
prior to its stated maturity;
(f) Prompt written notice of: (i) any citation, summons, subpoena,
order to show cause or other order naming the Borrower or any Subsidiary a party
to any proceeding before any Governmental Authority which could reasonably be
expected to have a Material Adverse effect, and include with such notice a copy
of such citation, summons, subpoena, order to show cause or other order, (ii)
any lapse or other termination of any license, permit, franchise or other
authorization issued to the Borrower or any Subsidiary by any Governmental
Authority, (iii) any refusal by any Governmental Authority to renew or extend
any license, permit, franchise or other authorization, and (iv) any dispute
between the Borrower or any Subsidiary and any Governmental Authority, which
lapse, termination, refusal or dispute, referred to in clause (ii), (iii) or
(iv) above, could reasonably be expected to have a Material Adverse effect;
(g) Promptly upon becoming available, copies of (i) all Form 10-K,
10-Q and 8-K Reports and all proxy statements, registration statements and other
material reports filed by the Borrower with the SEC, (ii) all FOCUS Reports
(Form X-17A-5), Reports of Change in Membership Status (Form X-17A-19) and Risk
Assessment Reports for Brokers and Dealers (Form 17-H) which the Borrower or any
Subsidiary may now or hereafter be required to file with or deliver to any
securities or commodities exchange or commission, including the SEC and the
Commodity Futures Trading Commission, or any other Governmental Authority
succeeding to the functions thereof, (iii) each report of any financial
operations examination of any Subsidiary conducted by any such securities or
commodities exchange or commission or Governmental Authority and the response of
such Subsidiary to such examination report and (iv) copies of all material news
releases sent by the Borrower or any Subsidiary to financial analysts;
(h) Prompt written notice in the event that the Borrower or any
Subsidiary knows, or has reason to know, that (i) the aggregate amount of
Unrecognized Retiree Welfare Liability under all applicable Employee Benefit
Plans has increased to an amount in excess of $2,000,000, (ii) the Borrower, any
Subsidiary or any ERISA Affiliate has engaged in a Prohibited Transaction with
respect to an Employee Benefit Plan, (iii) the imposition of a tax in excess of
$2,000,000 upon the Borrower or any Subsidiary under Section 4980B(a) of the
Code, or (iv) the assessment of a civil penalty in excess of $2,000,000 under
Section 502(c) of ERISA against the Borrower or any Subsidiary, in each case
together with a certificate of the CFO setting forth the details of such event
and the action which the Borrower, such Subsidiary
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or such ERISA Affiliate proposes to take with respect thereto, together with a
copy of all notices and filings with respect thereto;
(i) Promptly upon the same becoming available, and in any event
within 10 Domestic Business Days after the date such amendment is adopted, a
copy of any Pension Plan amendment that the Borrower, any Subsidiary or any
ERISA Affiliate proposes to adopt which would require the posting of security
under Section 401(a)(29) of the Code, together with a certificate of the CFO
setting forth the reasons for the adoption of such amendment and the action
which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take
with respect thereto;
(j) As soon as practicable and in any event by the 10th Domestic
Business Day after any material required installment or other payment under
Section 412 of the Code owed to a Pension Plan by the Borrower, any Subsidiary
or any ERISA Affiliate shall have become due and owing and remain unpaid, a copy
of any required notice of failure to make required contributions provided to the
PBGC by the Borrower, any Subsidiary or any ERISA Affiliate under Section 412(n)
of the Code, together with a certificate of the CFO setting forth the action
which the Borrower, such Subsidiary or such ERISA Affiliate proposes to take
with respect thereto;
(k) Upon becoming aware thereof, prompt written notice of the
occurrence of (i) each Default and (ii) each Event of Default;
(l) Promptly upon receipt thereof, copies of all audit reports
relating to the Borrower and its Subsidiaries on a Consolidated basis submitted
by the Accountants in connection with each annual, interim or special audit of
the books of the Borrower or any Subsidiary; and
(m) Promptly upon request therefor by the Administrative Agent, such
other in formation and reports relating to the past, present or future financial
condition, operations, budgets and projections of the Borrower and the
Subsidiaries, as the Administrative Agent or any Lender at any time or from time
to time may reasonably request.
6.8 Inspection
----------
At all reasonable times during normal business hours, upon reasonable
prior notice, permit representatives of the Administrative Agent or any Lender
to visit the offices of the Borrower and each Subsidiary, to examine the books
and records thereof and Accountants' reports relating thereto, and to make
copies or extracts therefrom, to discuss the affairs of the Borrower and each
Subsidiary with the respective officers thereof, and to examine and inspect the
Property of the Borrower and each Subsidiary and to meet and discuss the affairs
of the Borrower and each Subsidiary with the Accountants.
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6.9 Authorizations
--------------
Except where any failure to so maintain could not reasonably be
expected to have a Material Adverse effect, maintain and cause each Subsidiary
to maintain, in full force and effect, all material copyrights, patents,
trademarks, trade names, franchises, licenses, permits, applications, reports,
and other authorizations and rights, as are necessary for the conduct from time
to time of their businesses.
6.10 Subsidiaries
------------
Except as set forth on Schedule 4.1 or as may otherwise be permitted
by Sections 7.3 and 7.4, at all times maintain (directly or indirectly),
beneficially and of record, 100% (at least 99% in the case of EVEREN Clearing
Corp.) of the voting control of, and 100% (at least 99% in the case of EVEREN
Clearing Corp.) of the equity in, each Subsidiary.
6.11 Net Worth
---------
At the end of each fiscal quarter have Net Worth of not less than the
sum of (i) $225,000,000 and (ii) 50% of the cumulative positive Consolidated net
income (excluding net loss) of the Borrower and the Subsidiaries since January
1, 1997.
6.12 Leverage Ratio
--------------
At the end of each fiscal quarter have a Leverage Ratio not greater
than 1.50:1.00.
6.13 Interest Coverage Ratio
-----------------------
At the end of each fiscal quarter have an Interest Coverage Ratio
greater than 4.00:1.00.
6.14 EVEREN Clearing Corp. Liquidity Ratio
-------------------------------------
At all times cause EVEREN Clearing Corp. to maintain a Liquidity Ratio
greater than 1.00:1.00.
6.15 EVEREN Securities and EVEREN Clearing Corp. Net Capital to Debits
-----------------------------------------------------------------
Ratio
- -----
At all times cause each of EVEREN Securities and EVEREN Clearing Corp.
to maintain a ratio of net capital to aggregate debit items (as each such term
is defined in Rule 15c3-3 of the General Rules and Regulations as promulgated by
the SEC (17 CFR 240. 15c3-
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3), as such Rule may be amended from time to time, or any rule or regulation of
the SEC which re places such Rule) equal to or greater than 0.060:1.00.
6.16 EVEREN Securities and EVEREN Clearing Corp. Net Capital Requirement
-------------------------------------------------------------------
At all times cause each of EVEREN Securities and EVEREN Clearing Corp.
to be in full compliance with the minimum net capital requirements of Rule
15c3-1.
6.17 EVEREN Securities Minimum Net Capital
-------------------------------------
At the end of each month cause EVEREN Securities (including EVEREN
Clearing Corp. on a flow-through basis) to maintain net capital (as defined in
Rule 15c3-1) equal to or greater than $85,000,000.
6.18 Administration of ESOP
----------------------
Cause the ESOP and the ESOP Trust to continue to be maintained as a
qualified plan and trust under all applicable Sections of the Code and ERISA.
7. NEGATIVE COVENANTS
------------------
The Borrower covenants and agrees that on and after the Effective Date and
until the termination of the Aggregate Commitments, the payment in full of the
Notes and the payment by the Borrower of all other amounts then due and payable
under the Loan Documents, the Borrower will not:
7.1 Indebtedness
------------
Create, incur, assume or suffer to exist any Indebtedness, or permit
any Subsidiary so to do, except any one or more of the following types of
Indebtedness: (a) Indebted ness under the Loan Documents, (b) Indebtedness of
the Borrower arising out of Interest Rate Protection Arrangements, (c)
Indebtedness of the Borrower and the Subsidiaries in an aggregate principal
amount not in excess of $25,000,000 at any one time outstanding in respect of
capital leases, (d) Intercompany Indebtedness, (e) other Indebtedness of EVEREN
Clearing Corp., provided that such Indebtedness of EVEREN Clearing Corp. is
created, incurred or assumed in the ordinary course of business and in respect
of which neither the Borrower nor any other Subsidiary has any obligation,
contingent or otherwise, and (f) other Indebtedness of the Borrower and the
Subsidiaries in an aggregate principal amount at any one time outstanding not to
exceed $500,000 on a Consolidated basis.
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7.2 Liens; Negative Pledges
-----------------------
(a) Create, incur, assume or suffer to exist any Lien against or
on any Property now owned or hereafter acquired by the Borrower or any
Subsidiary, or permit any Subsidiary so to do, except any one or more of the
following types of Liens: (i) Liens in connection with workers' compensation,
unemployment insurance or other social security obligations (which phrase shall
not be construed to refer to ERISA or the minimum funding obligations under
Section 412 of the Code), (ii) Liens to secure the performance of bids, tenders,
letters of credit, contracts (other than contracts for the payment of
Indebtedness), leases, statutory obligations, surety, customs, appeal,
performance and payment bonds and other obligations of like nature, in each such
case arising in the ordinary course of business, (iii) mechanics', workmen's,
carriers', warehousemen's, materialmen's, landlords', or other like Liens
arising in the ordinary course of business with respect to obligations which are
not due or which are being contested in good faith and by appropriate
proceedings diligently conducted, (iv) Liens for taxes, assessments, fees or
governmental charges the payment of which is not required by Section 6.2, (v)
easements, rights of way, restrictions, leases of Property to others, easements
for installations of public utilities, title imperfections and restrictions,
zoning ordinances and other similar encumbrances affecting Property which in the
aggregate do not materially impair its use for the operation of the business of
the Borrower or such Subsidiary, (vi) Liens set forth on Schedule 7.2, (vii)
Liens under capital leases, provided that such Liens attach only to the Property
subject to such capital leases and provided further that the Indebtedness
secured by such Liens is permitted by Section 7.1(c), (viii) Liens created under
the Loan Documents, (ix) statutory Liens in favor of lessors arising in
connection with Property leased to the Borrower or any Subsidiary, (x) Liens on
Property of EVEREN Clearing Corp. securing Indebtedness permitted by Section
7.1(e), and (xi) other Liens securing Indebtedness and other obligations of the
Borrower and the Subsidiaries having, in the aggregate at any time outstanding,
a principal amount not in excess of $500,000 on a Consolidated basis.
(b) Except as provided in Section 7.2(a), enter into any agreement
not to create, incur, assume or suffer to exist any Lien against or on any
Property now owned or here after acquired by the Borrower or any Subsidiary, or
permit any Subsidiary so to do.
7.3 Dispositions
------------
Make any Disposition or permit any Subsidiary so to do, except: (a)
Dispositions in the ordinary course of business of any Investments permitted
under Section 7.5(a), (b), (g) or (h), and (b) other Dispositions in the
ordinary course of business, provided that, in the case of this subsection (b),
the Borrower shall prepay the Loans to the extent required by Section 2.6(b).
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7.4 Mergers and Acquisitions
------------------------
Consolidate or merge into or with any Person, or make any
Acquisition, or enter into any binding agreement to do any of the foregoing
which is not contingent on obtaining the consent of the Required Lenders and
which is otherwise prohibited by this Section 7.4, or permit any Subsidiary so
to do, except any one or more of the following: (a) Capital Expenditures
permitted by Section 7.6, (b) Acquisitions of Investments permitted by Section
7.5, and (c) other Acquisitions of one or more Operating Entities, provided
that:
(i) immediately before and after giving effect to each such
Acquisition, no Default or Event of Default shall or would exist,
(ii) each such Operating Entity shall be in one or more of the
same lines of business as the Borrower and the Subsidiaries,
(iii) the aggregate consideration paid in connection with each such
Acquisition (or series of related transactions) shall not exceed $100,000,000,
and
(iv) the aggregate consideration paid for all such Acquisitions
shall not exceed $100,000,000.
7.5 Investments
-----------
At any time hold, purchase, invest in or otherwise acquire any debt
security or Stock of, or any other equity interest in, any other Person, or make
any loan or advance to, or enter into any arrangement for the purpose of
providing funds or credit to, or make any other investment, whether by way of
capital contribution or otherwise, in any other Person (all of which are
sometimes referred to herein as "Investments"), or permit any Subsidiary so to
-----------
do, except any one or more of the following Investments: (a) Investments in
short-term certificates of deposit issued by any Lender, or any other commercial
bank, trust company or national banking association incorporated under the laws
of the United States or any State thereof having undivided capital surplus and
retained earnings exceeding $250,000,000, (b) Investments in short-term direct
obligations of the United States of America or agencies thereof which
obligations are guaranteed by the United States of America, (c) Investments in
Intercompany Indebtedness and other Investments in wholly-owned Subsidiaries,
in each case in the ordinary course of business and consistent with past
practices, (d) Investments constituting security deposits with, and advances
to, landlords, (e) Investments listed on Schedule 7.5, (f) Acquisitions
permitted by Section 7.4, (g) Investments constituting futures contracts,
repurchase obligations and similar Investments in the ordinary course of
business and not inconsistent with past practice, (h) other Investments of
EVEREN Securities and EVEREN Clearing Corp. made in the ordinary course of
business in which the issuer has no recourse to EVEREN Securities or EVEREN
Clearing Corp., (i) other Investments of the
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Borrower and the Subsidiaries having an aggregate cost not exceeding
$35,000,000, (j) additional non-cash Investments of the Borrower in Mentor
Investment Group LLC received in connection with the Borrower's ownership
interest therein and (k) other Investments of the Borrower and the Subsidiaries,
in each case acquired in connection with the settlement of an action, suit,
arbitration proceeding or claim involving such Investment.
7.6 Capital Expenditures
--------------------
Make any Capital Expenditure, or permit any Subsidiary so to do,
except (a) Acquisitions permitted under Sections 7.4, and (b) other Capital
Expenditures, provided that such other Capital Expenditures shall not exceed
$20,000,000 on a Consolidated basis in any fiscal year.
7.7 Restricted Payments
-------------------
Make any Restricted Payment or permit any Subsidiary so to do,
except that (a) any direct or indirect wholly-owned Subsidiary may make
Restricted Payments to the Borrower or any other direct or indirect wholly-owned
Subsidiary, (b) the Borrower or any Subsidiary may make Restricted Payments in
an amount not to exceed $500,000 in any one fiscal quarter, and (c) on or before
the date which is 85 days after the end of each fiscal quarter of each fiscal
year, the Borrower may declare and pay cash dividends in an aggregate amount not
to exceed 30% of the net income of the Borrower and the Subsidiaries on a
Consolidated basis for such fiscal quarter (excluding any amount permitted under
Section 7.7(b) above), provided that (i) financial statements for such fiscal
quarter shall have been delivered to the Administrative Agent and each Lender
pursuant to Section 6.7, and (ii) immediately before and after giving effect to
each such Restricted Payment under Section 7.7(b) and each declaration or
payment of a cash dividend under Section 7.7(c), (A) no Default or Event of
Default shall or would exist, and (B) all of the representations and warranties
contained in Section 4 shall be true and correct as if then made.
7.8 Limitation on Upstream Dividends by Subsidiaries
------------------------------------------------
The Borrower will not permit any Subsidiary to enter into or agree,
or otherwise be or become subject, to any agreement, contract or other
arrangement (other than this Agreement and other than as may be required by
applicable law or regulation) with any Person pursuant to the terms of which (a)
such Subsidiary is or would be prohibited from declaring or paying any cash
dividends on any class of its stock owned directly or indirectly by the Borrower
or any other Subsidiary or from making any other distribution on account of any
class of any such stock (herein referred to as "Upstream Dividends"), or (b) the
------------------
declaration or payment of Upstream Dividends by a Subsidiary to the Borrower or
another Subsidiary, on an annual or cumulative basis, is or would be otherwise
limited or restricted, in each case other
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than pursuant to any contract or other arrangement in respect of any lease or
any capital leases or other purchase money Indebtedness of any Subsidiary.
7.9 Line of Business
----------------
Engage, or permit any Subsidiary to engage, in any business other
than any business in which the Borrower or any Subsidiary is engaged in on the
Effective Date or any other business closely related thereto.
7.10 Amendment of Certain Documents and Agreements
---------------------------------------------
Amend, supplement or otherwise modify its certificate of
incorporation or by-laws, or cause, permit or otherwise allow any Subsidiary to
amend, supplement or otherwise modify its certificate of incorporation or by-
laws or, if such Subsidiary is not a corporation, any analogous counterpart
thereof, unless, in each such case, such amendment, supplement or modification
would not adversely affect the Administrative Agent or any Lender.
7.11 Transactions with Affiliates
----------------------------
Become, or permit any Subsidiary to become, a party to any
transaction with any Affiliate of the Borrower on a basis less favorable to the
Borrower or such Subsidiary in any material respect than if such transaction
were not with an Affiliate of the Borrower, provided that this Section 7.11
shall not apply to a transaction solely between Subsidiaries of the Borrower
which are at least 99% owned, directly or indirectly, by the Borrower.
7.12 Compliance with ERISA
---------------------
Except as required by applicable law (a) other than in the ordinary
course of business, and provided that Section 4.13 shall be true and correct
immediately before and after giving effect thereto, establish or contribute to
any Pension Plan, or permit any Subsidiary thereof so to do, (b) cause or permit
any Pension Plan to have any Funded Current Liability Percentage, or (c) other
than in the ordinary course of business, and provided that Section 4.13 shall be
true and correct immediately after giving effect thereto, increase benefits
under any Employee Benefit Plan, establish or contribute to any new Employee
Benefit Plan, or permit any Subsidiary thereof so to do.
7.13 Stock
-----
On or after the date hereof, issue or cause to be outstanding any
additional Stock, or permit any Subsidiary so to do, except that the Borrower
may issue additional Stock in connection with (i) a PO, (ii) its Employee Stock
Programs, (iii) its ESOP contributions and (iv) Acquisitions permitted pursuant
to Section 7.4.
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7.14 Management Fees
---------------
Pay or obligate itself to pay any Management Fee to any Affiliate
thereof, or permit any Subsidiary so to do, except that any Subsidiary may pay
Management Fees to the Borrower, EVEREN Securities or EVEREN Holdings.
7.15 Other Non-Allowable Assets
--------------------------
Create, acquire or assume any Other Non-Allowable Assets, or permit
any Subsidiary so to do, if immediately before or after giving effect thereto,
the aggregate amount of the Other Non-Allowable Assets of the Borrower and the
Subsidiaries on a Consolidated basis shall exceed $30,000,000.
7.16 Forgivable Loans
----------------
Make or assume any Forgivable Loan, or permit any Subsidiary so to
do, if immediately before or after giving effect thereto, the aggregate
principal amount of Forgivable Loans of the Borrower and the Subsidiaries on a
Consolidated basis shall exceed $45,000,000 (excluding Forgivable Loans acquired
pursuant to an Acquisition permitted pursuant to Section 7.4).
7.17 ESOP Trust Distributions
------------------------
Unless otherwise required by law or by Sections 10.3, 12.3 or 12.4
of the ESOP, (a) with respect to plan participants who separate from service for
reasons other than death, disability or retirement, permit the ESOP Trust to
distribute any of the Common Stock (or cash in lieu thereof) to such plan
participants prior to the close of the plan year in which the Loans are repaid
in full, and (b) with respect to plan participants who separate from service by
reason of death, disability or retirement, permit the ESOP Trust to distribute
any of the Common Stock (or cash in lieu thereof) to such plan participants
prior to the latest time for such distributions permitted by Section 409(o) of
the Code.
8. DEFAULT
-------
8.1 Events of Default
-----------------
The following shall each constitute an "Event of Default" hereunder:
----------------
(a) The failure of the Borrower to make any principal payment on any
Note when due and payable; or
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(b) The failure of the Borrower to make payment of any installment of
interest on any Loan, any Fee or any other amount payable by it under the Loan
Documents on any date when due and payable and such default shall continue
unremedied for a period of 3 Domestic Business Days after the same shall have
become due; or
(c) The failure of the Borrower to observe or perform any covenant or
agreement contained in Section 2.4, 6.1, 6.3, 6.10, 6.11, 6.12. 6.13, 6.14,
6.15, 6.16, 6.17 or 6.18, or in Section 7; or
(d) The failure of the Borrower to observe or perform any other
covenant or agreement contained in this Agreement, and such failure shall have
continued unremedied for a period of 30 days after the Borrower shall have
obtained actual knowledge of such failure; or
(e) Any representation or warranty of any Loan Party (or of any of
its officers on its behalf) made in any Loan Document or in any certificate,
report, opinion (other than an opinion of counsel) or other document delivered
on or after the date hereof, shall in any such case prove to have been incorrect
or misleading (whether because of misstatement or omission) in any material
respect when made; or
(f) (i) Obligations in an aggregate amount in excess of $1,000,000 of
the Borrower (other than its obligations hereunder and under the Notes) and/or
any Subsidiary, whether as principal, guarantor, surety or other obligor, for
the payment or purchase of any Indebtedness, (A) shall become or shall be
declared to be due and payable prior to the expressed maturity thereof as a
result of any default under or in respect of such obligations, or (B) shall not
be paid within any grace period for the payment or purchase thereof, or (ii) any
holder of any such obligations shall have the right to declare the Indebtedness
evidenced thereby due and payable or to require the purchase of the Indebtedness
evidenced thereby prior to its stated maturity; or
(g) The Borrower or any Subsidiary shall (i) suspend or discontinue
its business (except as may otherwise be expressly permitted herein), or (ii)
make an assignment for the benefit of creditors, or (iii) generally not be
paying its debts as such debts become due, or (iv) admit in writing its
inability to pay its debts as they become due, or (v) file a voluntary petition
in bankruptcy, or (vi) become insolvent (however such insolvency shall be
evidenced), or (vii) file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment of debt, liquidation or
dissolution or similar relief under any present or future statute, law or
regulation of any jurisdiction, or (viii) petition or apply to any tribunal for
any receiver, custodian or any trustee for any substantial part of its Property,
or (ix) be the subject of any such proceeding filed against it which remains
undismissed for a period of 60 days, or (x) file any answer admitting or not
contesting the material allegations of any such petition filed against it, or of
any order, judgment or decree approving such petition in any such proceeding, or
(xi) seek, approve, consent to, or acquiesce in any such proceeding, or in
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the appointment of any trustee, receiver, custodian, liquidator, or fiscal agent
for it, or any substantial part of its Property, or an order is entered
appointing any such trustee, receiver, custodian, liquidator or fiscal agent and
such order remains unstayed and in effect for 45 days, or (xii) take any formal
action for the purpose of effecting any of the foregoing or looking to the
liquidation or dissolution of the Borrower or any Subsidiary (except as may
otherwise be expressly permitted herein); or
(h) An order for relief is entered under the United States bankruptcy
laws or any other decree or order is entered by a court having jurisdiction and
continues unstayed and in effect for a period of 45 days (i) adjudging the
Borrower or any Subsidiary a bankrupt or in solvent, or (ii) approving as
properly filed a petition seeking reorganization, liquidation, arrangement,
adjustment or composition of, or in respect of the Borrower or any Subsidiary
under the United States bankruptcy laws or any other applicable Federal or state
law, or (iii) appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Borrower or any Subsidiary or of
any substantial part of the Property of any thereof, or (iv) ordering the
winding up or liquidation of the affairs of the Borrower or any Subsidiary and
any such decree or order continues unstayed and in effect for a period of 45
days; or
(i) Judgments or decrees in an aggregate amount in excess of
$5,000,000 against the Borrower and/or any Subsidiary shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of 30
days; or
(j) Any license, franchise, permit, right, approval or agreement of
the Borrower or any Subsidiary to own or operate any Operating Entity owned or
operated by the Borrower or such Subsidiary is not renewed, or is suspended or
revoked, and the non-renewal, suspension or revocation thereof would have a
Material Adverse effect; or
(k) (i) the imposition of any tax in excess of $2,000,000 under
Section 4980(B)(a) of the Code; (ii) the assessment of a civil penalty in excess
of $2,000,000 with respect to any Employee Benefit Plan under Section 502(c) of
ERISA; or (iii) any other event or condition shall occur or exist with respect
to an Employee Benefit Plan which would have a Material Adverse effect,
provided, however, that the events described in clauses (i) and (ii) shall only
constitute an Event of Default if, individually or in the aggregate, such events
give rise to a current liability of the Borrower or any Subsidiary in accordance
with GAAP (taking into account all liabilities of the Borrower or any Subsidiary
arising on account of events occurring in respect of ERISA Affiliates) of not
less than $1,000,000; or
(l) Any Collateral Document shall cease to be in full force and
effect (other than as a result of the full performance thereof), or an "Event of
Default" shall have occurred under, and as such term is defined in, any
Collateral Document; or
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8.2 Contract Remedies
-----------------
(a) Upon the occurrence or at any time during the continuance of an
Event of Default, the Administrative Agent may, and upon the direction of the
Required Lenders shall, notify the Borrower that all of the Aggregate
Commitments have been terminated and that all of the Notes have been declared
immediately due and payable, provided that upon the occurrence of an Event of
Default under Section 8.1(g) or (h), all of the Aggregate Commitments shall
automatically terminate and all of the Notes shall become immediately due and
payable without declaration or notice to the Borrower. To the fullest extent
not prohibited by law, except for the notice provided for in the preceding
sentence, the Borrower hereby expressly waives any presentment, demand, protest,
notice of protest or other notice of any kind in connection with the Loan
Documents and its obligations thereunder. To the fullest extent not prohibited
by law, the Borrower hereby further expressly waives and covenants not to
assert any appraisement, valuation, stay, extension, redemption or similar law,
now or at any time hereafter in force which might delay, prevent or otherwise
impede the performance or enforcement of this Agreement and the other Loan
Documents.
(b) In the event that all of the Aggregate Commitments shall have
been terminated or all of the Notes shall have been declared due and payable
pursuant to the provisions of this Section 8.2, the Lenders agree, among
themselves, that any funds received from or on behalf of the Borrower under any
Loan Document by any Lender (except funds received by any Lender as a result of
a purchase from such Lender pursuant to the provisions of Section 10.9) shall be
remitted to the Administrative Agent, and shall be applied by the
Administrative Agent in payment of the Loans and the other obligations of the
Borrower under the Loan Documents in the following manner and order: (i) first,
to the payment of interest on, and then the principal portion of, any Loans
which the Administrative Agent may have advanced on behalf of any Lender for
which the Administrative Agent has not then been reimbursed by such Lender or
the Borrower; (ii) second, to reimburse the Administrative Agent and the
Lenders, in that order, for any expenses due from the Borrower pursuant to the
provisions of Section 10.5, (iii) third, to the payment of the Fees, (iv)
fourth, to the payment of any other fees, expenses or amounts (other than the
principal of and interest on the Notes) payable by the Borrower to the
Administrative Agent or any of the Lenders under the Loan Documents, (v) fifth,
to the payment, pro rata according to the Outstanding Percentage of each Lender,
of interest due on the Notes, (vi) sixth, to the payment, pro rata according to
the aggregate outstanding principal balance of the Notes, of such principal, and
(vii) seventh, any remaining funds shall be paid to whomsoever shall be entitled
thereto or as a court of competent jurisdiction shall direct.
(c) In the event that the Notes shall have been declared due and
payable pursuant to the provisions of this Section 8.2, the Administrative
Agent
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(i) may, and upon the direction of the Required Lenders shall,
proceed to enforce the rights of the holders of the Notes by suit in
equity, action at law and/or other appropriate proceedings, whether for
payment or the specific performance of any covenant or agreement contained
in the Loan Documents. In the event that the Administrative Agent shall
fail or refuse so to proceed, each Lender shall be entitled to take such
action as the Required Lenders under the Loan Documents, and
(ii) may exercise any and all rights and remedies (1) granted to a
secured party in the State of New York or otherwise allowed at law, and (2)
otherwise provided to the Administrative Agent by this Agreement.
9. THE AGENT
---------
9.1 Appointment
-----------
Each Lender hereby irrevocably designates and appoints BNY as the
Administrative Agent of such Lender under the Loan Documents and each Lender
hereby irrevocably authorizes BNY, as Administrative Agent, to take such action
on its behalf under the provisions of the Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the Administrative
Agent by the terms of the Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities except those
expressly set forth herein or therein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into the Loan Documents or otherwise
exist against the Administrative Agent.
9.2 Delegation of Duties
--------------------
The Administrative Agent may execute any of its duties under the Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
rely upon the advice of counsel concerning all matters pertaining to such
duties.
9.3 Exculpatory Provisions
----------------------
Neither the Administrative Agent nor any of its respective officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with the Loan Documents (except the Administrative Agent
for its own gross negligence or willful misconduct), or (ii) responsible in any
manner to any Lender for any recitals, statements, representations or warranties
made by any party contained in the Loan Documents or in any certificate, report,
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statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, the Loan Documents or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
any of the Loan Documents or for any failure of the Borrower, any Subsidiary, or
any other Person to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, the Loan Documents, or to inspect the
properties, books or records of the Borrower or any Subsidiary. The
Administrative Agent shall not be under any liability or responsibility to the
Borrower or any other Person as a consequence of any failure or delay in
performance, or any breach, by any Lender of any of its obligations under any of
the Loan Documents. The Lenders acknowledge that the Administrative Agent shall
not be under any duty to take any discretionary action permitted hereunder
unless the Administrative Agent shall be requested in writing to do so by the
Required Lenders.
9.4 Reliance by Administrative Agent
--------------------------------
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, opinion, letter, cablegram, telegram, facsimile, telex
or teletype message, statement, order or other document or conversation
reasonably believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including counsel to the Borrower), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent
may treat each Lender, or the Person designated in the last notice filed with
the Administrative Agent under Section 10.7, as the holder of all of the
interests of such Lender in its Loan and in its Note until written notice of
transfer, signed by such Lender (or the Person designated in the last notice
filed with the Administrative Agent) and by the Person designated in such
written notice of transfer, in form and substance satisfactory to the
Administrative Agent, shall have been filed with the Administrative Agent. The
Administrative Agent shall not be under any duty to examine or pass upon the
validity, effectiveness or genuine ness of the Loan Documents or any instrument,
document or communication furnished pursuant thereto or in connection therewith,
and the Administrative Agent shall be entitled to assume that the same are
valid, effective and genuine, have been signed or sent by the proper parties and
are what they purport to be. The Administrative Agent shall be fully justified
in failing or refusing to take any action under the Loan Documents unless it
shall first receive such advice or concurrence of the Required Lenders as it
deems appropriate. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under the Loan Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
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9.5 Notice of Default
-----------------
The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the
Administrative Agent shall have received written notice thereof from a Lender or
the Borrower. In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall promptly give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders,
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action or give such directions, or refrain from taking such action or
giving such directions, with respect to such Default or Event of Default as it
shall deem to be in the best interests of the Lenders.
9.6 Non-Reliance
------------
Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Administrative Agent hereinafter, including any review of
the affairs of the Borrower or the Subsidiaries, shall be deemed to constitute
any representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent 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
evaluation of and investigation into the business, operations, Property,
financial and other condition and creditworthiness of the Borrower and the
Subsidiaries and made its own decision to enter into this Agreement. Each Lender
also represents 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 deem appropriate at the time, continue to make its own
credit analysis, evaluations and decisions in taking or not taking action under
the Loan Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, Property, financial and other
condition and creditworthiness of the Borrower and the Subsidiaries. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, Property, financial and
other condition or credit worthiness of the Borrower and the Subsidiaries which
may come into the possession of the Administrative Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates.
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9.7 Indemnification
---------------
Each Lender agrees to indemnify the Administrative Agent in its
capacity as such (to the extent not promptly reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
its Outstanding Percentage, from and against any and all liabilities,
obligations, claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind whatsoever, including any amounts
paid to the Lenders (through the Administrative Agent) by or for the account of
the Borrower pursuant to the terms hereof, that are subsequently rescinded or
avoided (or must otherwise be restored or returned) which may at any time
(including at any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of this Agreement, any other Loan Document or any other document
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted to be taken by the Administrative Agent under or in
connection with any of the foregoing; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting solely from the gross negligence or willful misconduct
of the Administrative Agent. The agreements in this Section 9.7 shall survive
termination of the Aggregate Commitments, the payment of the Notes and all other
amounts payable under the Loan Documents and the performance and observance by
the Borrower of all of its other obligations under the Loan Documents.
9.8 Administrative Agent in Its Individual Capacity
-----------------------------------------------
BNY and its respective affiliates may make loans to, accept deposits
from, issue letters of credit for the account of and generally engage in any
kind of business with, the Borrower and the Subsidiaries as though BNY was not
the Administrative Agent hereunder. With respect to the Aggregate Commitments
made or renewed by BNY and each Note issued to BNY, BNY shall have the same
rights and powers under this Agreement as any Lender and may exercise the same
as though it was not the Administrative Agent and the term "Lender" shall
include BNY.
9.9 Successor Administrative Agent
------------------------------
If at any time the Administrative Agent deems it advisable, in its
sole discretion, it may submit to each Lender (with a copy to the Borrower) a
written notification of its resignation as Administrative Agent under this
Agreement, such resignation to be effective on the earlier to occur of (a) the
thirtieth day after the date of such notice, and (b) the date upon which any
successor Administrative Agent, in accordance with the provisions of this
Section 9.9, shall have accepted in writing its appointment as such successor
Administrative Agent. Upon any such resignation, the Required Lenders shall have
the right to appoint from among the Lenders a successor Administrative Agent
reasonably acceptable to the Borrower.
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If no successor Administrative Agent shall have been so appointed by the
Required Lenders and accepted such appointment within 30 days after the retiring
Administrative Agent's giving of notice of resignation then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which successor Administrative Agent shall be a commercial
bank organized under the laws of the United States of America or of any State
thereof having a combined capital and surplus of at least $500,000,000 and,
provided that no Default or Event of Default shall then exist, shall be
reasonably acceptable to the Borrower. Upon the written acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall automatically become a party to
this Agreement and shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent's rights, powers, privileges and duties as
Administrative Agent under this Agreement shall be terminated. The Borrower and
the Lenders shall execute such documents as shall be necessary to effect such
appointment. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If at any time there shall not be a
duly appointed and acting Administrative Agent, upon notice duly given, the
Borrower agrees to make each payment when due hereunder and under the Notes and
the other Loan Documents directly to the Lenders entitled thereto during such
time.
9.10 Documentation Agent
-------------------
The Documentation Agent shall have no duties or obligations under
the Loan Documents in its capacity as Documentation Agent. The Documentation
Agent in such capacity shall be entitled to the same protections and indemnities
as the Administrative Agent.
10. OTHER PROVISIONS
----------------
10.1 Amendments, Waivers, Etc.
-------------------------
(a) With the written consent of the Required Lenders, the
Administrative Agent and the appropriate parties to the Loan Documents (other
than the Lenders) may, from time to time, enter into written amendments,
supplements or modifications thereof and, with the consent of the Required
Lenders, the Administrative Agent on behalf of the Lenders may execute and
deliver to any such parties a written instrument waiving or consenting to the
departure from, on such terms and conditions as the Administrative Agent may
specify in such instrument, any of the requirements of the Loan Documents or any
Default or Event of Default and its consequences, provided that no such
amendment, supplement, modification, waiver or consent shall, without the
consent of all of the Lenders (i) increase the Commitment Amount of any Lender
(provided that no waiver of a Default or Event of Default shall be deemed to
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constitute such an increase), (ii) reduce the rate, or extend the time of
payment, of interest on any Loan or any Note (other than the applicability of
any post-default increase in such rate of interest), (iii) reduce the amount or
extend the time of payment of any installment of principal on any Loan required
to be paid pursuant to Section 2.5, (iv) decrease or forgive the principal
amount of any Loan or any Note, (v) reduce the amount, or extend the time of
payment, of the Commitment Fee, (vi) consent to any assignment or delegation by
the Borrower or any Subsidiary, or any other Loan Party, of any of its rights or
obligations under any Loan Document, (vii) release all or substantially all of
the obligations of any Loan Party under the Collateral Documents, (viii) release
any collateral or any security interest therein (other than in connection with
(A) a Disposition permitted under Section 7.3 or (B) any release specifically
provided for in the Collateral Documents), (ix) change the provisions of
Sections 2.5, 3.5, 3.6, 3.7, 3.8, 3.10, 5.1, 5.2, 9.1(a), 10.1 or 10.7(a), or
(x) change the definition of Required Lenders, and provided further that no such
amendment, supplement, modification, waiver or consent shall amend, modify or
waive any provision of Section 9 or other wise change any of the rights or
obligations of the Administrative Agent under any Loan Document without the
written consent of the Administrative Agent. Any such amendment, supplement,
modification, waiver or consent shall apply equally to each of the Lenders and
shall be bind ing upon the parties to the applicable agreement, the Lenders, the
Administrative Agent and all fu future holders of the Notes. In the case of any
waiver, the parties to the applicable agreement, the Lenders and the
Administrative Agent shall be restored to their former position and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall not extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.
(b) Notwithstanding anything to the contrary contained in Section
10.1(a), the Agent may, at any time and from time to time without the consent of
any one or more of the Lenders, release any Collateral or any security interest
therein in connection with (i) any Disposition permitted under Section 7.3 or
(ii) any release specifically provided for in the Collateral Documents.
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10.2 Notices
-------
Except as otherwise expressly provided herein, all notices, requests
and demands to or upon the respective parties hereto to be effective shall be in
writing and, if in writing, shall be deemed to have been duly given or made (a)
when delivered by hand, (b) one Domestic Business Day after having been sent by
overnight courier service, (c) five Domestic Business Days after having been
deposited in the mail, first- class postage prepaid, or (d) in the case of
facsimile notice, upon receipt of confirmation that such notice was sent,
addressed as follows in the case of the Borrower and the Administrative Agent,
and as set forth in Exhibit A in the case of each of the Lenders, or to such
other addresses as to which the Administrative Agent may be hereafter notified
by the respective parties hereto or any future holders of the Notes:
the Borrower:
EVEREN Capital Corporation
77 West Wacker Drive
Chicago, Illinois 60601
Attention: Daniel D. Williams,
Senior Executive Vice President
Chief Financial Officer
Facsimile: (312) 574-8992
Telephone: (312) 574-5401,
the Administrative Agent:
The Bank of New York
One Wall Street - 1st Floor
New York, New York 10286
Attention: Joseph Ciacciarelli
Vice President
Facsimile: (212) 809-9566
Telephone: (212) 635-6818,
with a copy to, in the case of the Borrowing Request, prepayment notices under
Section 2.6(a) and notices under Section 3.3, and to the attention of, in the
case of all fundings by the Lenders:
The Bank of New York
One Wall Street
18th Floor
New York, New York 10286
Attention: Frances C. Ryan,
Assistant Treasurer
Facsimile: (212) 635-4698
Telephone: (212) 635-4694,
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except that any notice, request or demand by the Borrower to or upon the
Administrative Agent or the Lenders pursuant to Sections 2.3 or 3.3 shall not be
effective until received. Any party to a Loan Document may rely on signatures
of the parties thereto which are transmitted by telecopier or other electronic
means as fully as if originally signed.
10.3 No Waiver; Cumulative Remedies
------------------------------
No failure to exercise and no delay in exercising, on the part of
the Administrative Agent or any Lender, any right, remedy, power or privilege
under any Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege under any Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges under the Loan Documents are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties
------------------------------------------
All representations and warranties made in the Loan Documents and in
any document, certificate or statement delivered pursuant thereto or in
connection therewith shall survive the execution and delivery of this Agreement,
the Notes and the other Loan Documents.
10.5 Payment of Expenses and Taxes
-----------------------------
The Borrower agrees, promptly upon presentation of a statement or
invoice therefor, and whether any Loan is made, (a) to pay or reimburse the
Administrative Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, syndication, preparation and
execution of, and any amendment, waiver, consent, supplement or modification
requested by any Loan Party to, the Loan Documents, any documents prepared in
connection therewith and the consummation of the transactions contemplated
thereby whether such Loan Documents or any such amendment, waiver, consent,
supplement or modification to the Loan Documents or any documents prepared in
connection therewith are executed and whether the transactions contemplated
thereby are consummated, including the reasonable fees and disbursements of
Special Counsel, (b) to pay or reimburse the Administrative Agent and the
Lenders for all of their respective reasonable out-of-pocket costs and expenses
incurred in connection with the enforcement or preservation of any rights under
the Loan Documents (including reasonable fees and disbursements of counsel), (c)
to pay, indemnify, and hold each Lender and the Administrative Agent harmless
from any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp or excise taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent
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under or in respect of, the Loan Documents and any such other documents, and (d)
to pay, indemnify and hold each Lender or the Administrative Agent and each of
their respective officers, directors and employees harmless from and against any
and all other liabilities, obligations, claims, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including reasonable fees and disbursements of counsel) with
respect to the enforcement and performance of the Loan Documents (all the
foregoing, collectively, the "Indemnified Liabilities") and, if and to the
-----------------------
extent that the foregoing indemnity may be unenforceable for any reason, the
Borrower agrees to make the maximum payment permitted under applicable law;
provided, however, that the Borrower shall have no obligation hereunder to pay
Indemnified Liabilities to the Administrative Agent or any Lender arising from
the gross negligence or willful misconduct of the Administrative Agent or such
Lender. The agreements in this Section 10.5 shall survive the termination of the
Aggregate Commitments, the payment of the Notes and all other amounts payable
under the Loan Documents, and the performance and observance by the Borrower of
all of its other obligations under the Loan Documents hereunder.
10.6 Lending Offices
---------------
Each Lender shall have the right at any time and from time to time
to transfer any Loan to a different office of such Lender.
10.7 Successors and Assigns
----------------------
(a) This Agreement, the Notes and the other Loan Documents to which
the Borrower is a party shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of the Notes
and their respective successors and assigns. Neither the Borrower nor any other
Loan Party shall delegate any obligation or duty under any Loan Document without
the prior written consent of the Administrative Agent and each Lender.
(b) Subject to Section 10.7(e), any Lender may at any time assign
all or any portion of its rights under any Loan Document to any Federal Reserve
Bank.
(c) In addition to its rights under Section 10.7(b), each Lender
shall have the right to sell, assign, transfer or negotiate (each an
"Assignment") all or any part of its Commitment, its Loans and its Note to any
----------
subsidiary or Affiliate of such Lender, to any other Lender, or to any other
bank, insurance company, financial institution, pension fund, mutual fund or
other similar fund, provided that (i) unless the assignee is another Lender or a
subsidiary or Affiliate of any Lender, or unless at the time of such Assignment
an Event of Default shall exist, the Borrower shall have consented thereto in
writing (which consent shall not be unreasonably withheld), and (ii) the
assignor Lender and such assignee shall deliver to the Administrative Agent
three copies of an Assignment and Acceptance Agreement executed
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by each of them, along with an assignment fee in the sum of $2,500 for the
account of the Administrative Agent. Upon receipt of such number of executed
copies of each such Assignment and Acceptance Agreement together with the
assignment fee therefor and the Borrower's consent to such Assignment, if
required, the Administrative Agent shall record the same and execute not less
than two copies of such Assignment and Acceptance Agreement in the appropriate
place, deliver one such copy to the as signor and one such copy to the assignee,
and deliver one photocopy thereof, as executed, to the Borrower. From and after
the Assignment Effective Date specified in, and as defined in, such Assignment
and Acceptance Agreement, the assignee thereunder shall be a party hereto and
shall for all purposes of this Agreement and the other Loan Documents be deemed
a "Lender" and, to the extent provided in such Assignment and Acceptance
Agreement, the assignor Lender thereunder shall be released from its obligations
under this Agreement and the other Loan Documents. The Borrower agrees that, in
connection with each such Assignment, it shall at its own cost and expense
execute and deliver (A) to the Administrative Agent or such assignee a Note in a
principal amount equal to the amount of the Commitment assigned to such
assignee, each payable to the order of such assignee and dated the first
Borrowing Date, and (B) to the Administrative Agent or such assignor Lender, in
the event that such assignor Lender shall not have assigned all of its
Commitment, a Note in a principal amount equal to the amount of the Commitment
retained by such assignor. The Administrative Agent shall be entitled to rely
upon the representations and warranties made by the assignee under each
Assignment and Acceptance Agreement.
(d) In addition to the participations provided for in Section
10.9(b), each Lender may grant participations in all or any part of its
Commitment, its Loans and its Note to one or more banks, insurance companies,
pension funds, mutual funds or other financial institutions provided that (i)
such Lender's obligations under this Agreement and the other Loan Documents
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties to this Agreement and the other Loan Documents for the performance
of such obligations, (iii) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents, (iv) no sub-participations shall be permitted, (v) the
granting of such participation does not require that any additional loss, cost
or expense (including interest expense) be borne by the Borrower at any time,
and (vi) the voting rights of any holder of any participation shall be limited
to the right to consent to any action taken or omitted to be taken by such
Lender under the Loan Documents which would (A) increase the Commitment Amount
of any Lender (provided that no waiver of a Default or Event of Default or of
any mandatory reduction of any of the foregoing shall be deemed to constitute
such a change), (B) reduce the rate or extend the time of payment of interest on
any Loan or any Note (other than the applicability of any post-default increase
in such rate of interest), (C) reduce the amount or extend the time of payment
of any installment of principal on any Loan or any Note, (D) decrease or forgive
the principal amount of any Loan required to be paid pursuant to Section 2.5,
(E) reduce the amount or extend the time of payment of the
85
<PAGE>
Commitment Fee, (F) consent to any assignment or delegation by the Borrower or
any Subsidiary, or any other Loan Party, of all of its rights or obligations
under all of the Loan Documents, or (G) release all of the Collateral (other
than in connection with any Disposition permitted under Section 7.3 or any
release specifically provided for in the Collateral Documents).
(e) No Lender shall, as between and among the Borrower, the
Administrative Agent and such Lender, be relieved of any of its obligations
under the Loan Documents as a result of any assignment of or granting of
participations in, all or any part of its Loans and its Note, except that a
Lender shall be relieved of its obligations to the extent of any such Assignment
of all or any part of its Loan or its Note pursuant to Section 10.7(c).
10.8 Counterparts
------------
Each of the Loan Documents (other than the Notes) may be executed on
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same agreement. It shall not be
necessary in making proof of any Loan Document to produce or account for more
than one counterpart signed by the party to be charged. A set of the copies of
this Agreement and each of the other Loan Documents signed by all of the parties
thereto shall be lodged with each of the Borrower and the Administrative Agent.
Any party to a Loan Document may rely upon the signatures of any other party
thereto which are transmitted by facsimile or other electronic means to the same
extent as if originally signed.
10.9 Set-off and Sharing of Payments
-------------------------------
(a) In addition to any rights and remedies of each Lender provided
by law, upon the occurrence of an Event of Default and acceleration of the
Notes, or at any time upon the occurrence and during the continuance of an Event
of Default under Sections 8.1(a) or 8.1(b), each Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, to set-off and apply
against any indebtedness or other liability, whether matured or unmatured, of
the Borrower to such Lender arising under the Loan Documents, any amount owing
from such Lender to the Borrower. To the extent permitted by applicable law, the
aforesaid right of set-off may be exercised by such Lender against the Borrower
or against any trustee in bankruptcy, custodian, debtor in possession, assignee
for the benefit of creditors, receiver, or execution, judgment or attachment
creditor of the Borrower, or against anyone else claiming through or against the
Borrower or such trustee in bankruptcy, custodian, debtor in possession,
assignee for the benefit of creditors, receivers, or execution, judgment or
attachment creditors, notwithstanding the fact that such right of set-off shall
not have been exercised by such Lender prior to the making, filing or issuance
of, service upon such Lender of, or notice to such Lender of, any petition,
assignment for the benefit of creditors, appointment or application for
86
<PAGE>
the appointment of a receiver, or issuance of execution, subpoena, order or
warrant. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after each such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
(b) If any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) on
account of its Loans or its Note in excess of its Outstanding Percentage of
payments then due and payable on account of the Loans and the Notes received by
all the Lenders, such Lender shall forthwith purchase, without recourse, for
cash, from the other Lenders such participations in their Loans and Notes as
shall be necessary to cause such purchasing Lender to share such excess payment
with each of them according to their Outstanding Percentages, provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from such other Lenders shall be rescinded
and such other Lenders shall repay to the purchasing Lender the purchase price
to the extent of such recovery, together with an amount equal to the Lender's
pro rata share (according to the proportion of (i) the amount of such other
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from such other Lenders
pursuant to this Section 10.9(b) may exercise such rights to payment (including
the right of set- off) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation.
10.10 Indemnity
---------
The Borrower agrees to indemnify and hold harmless the
Administrative Agent and each Lender from and against any loss, cost, liability,
damage or expense, including the reasonable fees and disbursements of Special
Counsel and such local counsel(s) as may reasonably be required by the
Administrative Agent, to the Administrative Agent and each Lender incurred by
the Administrative Agent or such Lender in investigating, preparing for,
defending against, or providing evidence, producing documents or taking any
other action in respect of, any commenced or threatened litigation,
administrative proceeding or investigation under any federal securities law or
any other statute of any jurisdiction, or any regulation, or at common law or
otherwise, which is alleged to arise out of or is based upon (1) any untrue
statement or alleged untrue statement of any material fact, in any document or
schedule executed or filed with any Governmental Authority by or on behalf of
the Borrower or any Subsidiary which relates to the transactions contemplated by
the Loan Documents, (2) any omission or alleged omission to state any material
fact required to be stated in such document or schedule, or necessary to make
the statements made therein, in light of the circumstances under which made, not
misleading, (3) any acts, practices or omissions or alleged acts, practices or
omissions of the Borrower or its agents relating to the use of the proceeds of
any Loan which is alleged to be in violation of Section 2.4, or in violation of
any federal securities
87
<PAGE>
law or of any other statute, regulation or other law of any jurisdiction
applicable thereto, or (4) this Agreement, any other Loan Document or any other
document contemplated by or referred to herein or the transactions contemplated
hereby or any action taken or omitted to be taken by the Administrative Agent or
such Lender under or in connection with any of the foregoing. The indemnity set
forth herein shall be in addition to any other obligations or liabilities of the
Borrower to the Administrative Agent and the Lenders hereunder or at common law
or otherwise, and shall survive any termination of this Agreement, the
expiration of the Aggregate Commitments and the payment of all indebtedness of
the Borrower here under and under the other Loan Documents, provided that the
Borrower shall have no obligation under this Section 10.10 to the Administrative
Agent or any Lender with respect to any of the foregoing to the extent the same
shall have arisen from the gross negligence or willful misconduct of the
Administrative Agent or such Lender or the violation by any such Person of any
law applicable to it (but only to the extent such violation shall not have
resulted solely from such Person's reliance on any representation or warranty
made by any Loan Party).
10.11 Governing Law
-------------
The Loan Documents and the rights and obligations of the parties
thereto shall be governed by, and construed and interpreted in accordance with,
the laws of the State of New York, without regard to principles of conflict of
laws.
10.12 Severability
------------
Every provision of this Agreement and the other Loan Documents is
intended to be severable, and if any term or provision hereof or thereof shall
be invalid, illegal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions hereof or thereof shall not be
affected or impaired thereby, and any invalidity, illegality or unenforceability
in any jurisdiction shall not affect the validity, legality or enforceability of
any such term or provision in any other jurisdiction.
10.13 Integration
-----------
All exhibits to this Agreement or any other Loan Document shall be
deemed to be a part of this Agreement or such other Loan Document, as the case
may be. Each Loan Document ment embodies the entire agreement and understanding
between or among the parties thereto with respect to the subject matter thereof
and supersedes all prior agreements and understandings between or among the
parties thereto with respect to the subject matter thereof.
10.14 Acknowledgments
---------------
Each Loan Party acknowledges that (a) it has been advised by counsel
in the negotiation, execution and delivery of the Loan Documents, (b) by virtue
of the Loan
88
<PAGE>
Documents, neither the Administrative Agent nor any Lender has any fiduciary
relationship to such Loan Party, and the relationship between the Administrative
Agent and the Lenders, on the one hand, and such Loan Party, on the other hand,
is solely that of debtor and creditor, and (c) by virtue of the Loan Documents,
no joint venture exists among the Administrative Agent and the Lenders or among
such Loan Party and the Administrative Agent and/or the Lenders.
10.15 Consent to Jurisdiction
-----------------------
Each Loan Party irrevocably submits to the jurisdiction of any New
York State or Federal Court sitting in the City of New York over any suit,
action or proceeding arising out of or relating to the Loan Documents. Each Loan
Party irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in such a court and any claim that any such suit,
action or proceeding brought in such a court has been brought in an
inconvenient forum. Each Loan Party agrees that a final judgment in any such
suit, action or proceeding brought in such a court, after all appropriate
appeals, shall be conclusive and binding upon it.
10.16 Service of Process
------------------
Each Loan Party agrees that process may be served against it in any
suit, action or proceeding referred to in Section 10.15 by sending the same by
first class mail, return receipt requested, or by overnight courier service, to
the address of such Loan Party set forth in Section 10.2 or in the applicable
Loan Document executed by such Loan Party. Each Loan Party agrees that any such
service (i) shall be deemed in every respect effective service of process upon
it in any such suit, action, or proceeding, and (ii) shall, to the fullest
extent enforceable by law, be taken and held to be valid personal service upon
and personal delivery to it.
10.17 No Limitation on Service or Suit
--------------------------------
Nothing in the Loan Documents or any modification, waiver, or
amendment thereto shall affect the right of the Administrative Agent or any
Lender to serve process in any manner permitted by law or limit the right of the
Administrative Agent or any Lender to bring proceedings against any Loan Party
in the courts of any jurisdiction or jurisdictions.
89
<PAGE>
10.18 WAIVER OF TRIAL BY JURY
-----------------------
EACH OF THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT, THE
LENDERS AND THE LOAN PARTIES KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT
OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY. FURTHER, EACH LOAN PARTY HEREBY CERTIFIES THAT NO
REPRESENTATIVE OR AGENT OF THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT OR
THE LENDERS, OR COUNSEL TO THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT OR
THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR THE
LENDERS WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER
OF RIGHT TO JURY TRIAL PROVISION. EACH LOAN PARTY ACKNOWLEDGES THAT THE
ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT AND THE LENDERS HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS SECTION
----- ----
10.18.
10.19 Effective Date
--------------
This Agreement shall be effective at such time (the "Effective
---------
Date") as executed counterparts hereof shall have been delivered to the
- ----
Administrative Agent by the Borrower and each Lender, and the Administrative
Agent shall have executed and delivered a counterpart hereof to the Borrower and
each Lender.
90
<PAGE>
AS EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Agreement to be
executed on its behalf.
EVEREN CAPITAL CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
THE BANK OF NEW YORK, in its
capacity as a Lender and the
Administrative Agent
By:___________________________________________
Name:_________________________________________
Title:________________________________________
LASALLE NATIONAL BANK, in its capacity as a Lender
and the Documentation Agent
By:___________________________________________
Name:_________________________________________
Title:________________________________________
<PAGE>
EVEREN EXHIBIT A
----------------
LIST OF COMMITMENTS, LENDING OFFICES AND ADDRESSES FOR NOTICES
--------------------------------------------------------------
A. LIST OF COMMITMENTS
-------------------
<TABLE>
<CAPTION>
Commitment
Lender Amount
- ------ -----------
<S> <C>
THE BANK OF NEW YORK $25,000,000
LASALLE NATIONAL BANK $25,000,000
TOTALS $50,000,000
</TABLE>
<PAGE>
B. LIST OF LENDING OFFICES AND ADDRESSES FOR NOTICES
-------------------------------------------------
Joseph Ciacciarelli
Vice President
The Bank of New York
One Wall Street
1st Floor
New York, New York
10286
Telephone: (212) 635-6818
Facsimile: (212) 809-9566
Mary Josephs,
Vice President
LaSalle National Bank
135 South LaSalle Street
Room 308
Chicago, Illinois 60603
Telephone: (312) 904-8696
Facsimile: (312) 904-8544
<PAGE>
EVEREN EXHIBIT B
----------------
FORM OF NOTE
------------
$______________ _____________, 1997
New York, New York
FOR VALUE RECEIVED, the undersigned, EVEREN CAPITAL CORPORATION, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
--------
_________________________ (the "Lender"), on the Initial Maturity Date or, if
------
the Initial Maturity Date has been extended in accordance with Section 2.5(b) of
the Credit Agreement referred to below, the Extended Maturity Date, the
principal sum of the lesser of $_____________ or the outstanding principal
amount of the Loans made by the Lender, and to pay interest from the date hereof
on the outstanding principal balance of such Loans at the rate or rates, and at
the times, set forth in the Credit Agreement (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
----------------
dated as of July 11, 1997 by and among the Borrower, the Lenders party thereto,
LaSalle National Bank, as Documentation Agent, and The Bank of New York, as
Administrative Agent (in such capacity, the "Administrative Agent"), in each
--------------------
case at the office of the Administrative Agent located at One Wall Street, New
York, New York, or at such other place as the Administrative Agent may specify
from time to time, in lawful money of the United States of America in
immediately available funds.
Capitalized terms used herein which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
The Loans evidenced by this Note are prepayable (at the option of the
Borrower or as may be required by the Credit Agreement) in the amounts, and at
the times, set forth in the Credit Agreement. This Note is one of the Notes
under, and as such term is defined in, the Credit Agreement, and is subject to,
and should be construed in accordance with, the provisions thereof, and is
entitled to the benefits and security set forth in the Loan Documents.
The Lender is hereby authorized to record on the schedule annexed hereto,
and any continuation sheets which the Lender may attach thereto, (a) the date
and amount of each Loan made by such Lender, (b) the character of each Loan made
by such Lender as an ABR Advance, a LIBOR Advance or a combination thereof, (c)
the Interest Period and the interest rate (without regard to the Applicable
Margin) applicable to each LIBOR Advance, and (d) the date and amount of each
conversion of, and each payment or prepayment of principal of, such Loan. No
failure to so record or any error in so recording shall affect the obligation of
the Borrower to repay the Loans, together with interest thereon, as provided in
the Credit
<PAGE>
Agreement, and the outstanding principal balance of the Loans made by such
Lender as set forth in such schedule shall be presumed to be correct absent
manifest error.
Except as specifically otherwise provided in the Credit Agreement, the
Borrower hereby waives presentment, demand, notice of dishonor, protest, notice
of protest, and all other demands, protests, and notices in connection with the
execution, delivery, performance, collection, and enforcement of this Note.
This Note may only be amended by an instrument in writing executed
pursuant to the provisions of Section 10.1 of the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS.
EVEREN CAPITAL CORPORATION
By: _______________________
Name: _____________________
Title: ____________________
<PAGE>
SCHEDULE TO NOTE
----------------
<TABLE>
<CAPTION>
Type of Amount of
Advance Interest Interest Rate on LIBOR Conversion
(LIBOR or Period (if Advance or Principal
ABR Amount of LIBOR without regard to Payment or Notation
Date Advance Advance Advance Applicable Margin Prepayment Made By
- ---- ------- ------- ------- ----------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EVEREN EXHIBIT C
----------------
FORM OF BORROWING REQUEST
-------------------------
[DATE]
The Bank of New York,
as Administrative Agent
One Wall Street
New York, New York 10286
Attention: Joseph Ciacciarelli
Vice President
Re: Credit Agreement, dated as of July 11, 1997, by and among EVEREN
Capital Corporation, the Lenders party thereto, LaSalle National Bank,
as Documentation Agent, and The Bank of New York, as Administrative
Agent (as the same may be amended, supplemented or otherwise modified
from time to time, the "Credit Agreement")
------------------------------------------
Capitalized terms used herein which are not otherwise defined herein shall
have the respective meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 2.3 of the Credit Agreement, the Borrower hereby gives
notice of its intention to borrow Loans in the aggregate sum of $________ on
____________, which borrowing shall consist of the following type or types of
Advances:
Interest Period
Type of Advance (LIBOR or (for LIBOR
ABR Advance) Amount Advance)
- ------------------------- ------ --------
(A)
(B)
The Borrower hereby certifies that on the date hereof and on the Borrowing
Date set forth above, and after giving effect to the Loans requested hereby:
(a) The Borrower is in compliance with all of the terms, covenants and
conditions of the Loan Documents.
(b) There exists, and at the time of the borrowing of such Loans there
shall exist, no Default or Event of Default.
<PAGE>
(c) The representations and warranties contained in the Credit Agreement
are, and at the time of the borrowing of such Loans shall be, true and correct.
IN EVIDENCE of the foregoing, the undersigned has caused this Borrowing
Request to be duly executed on its behalf.
EVEREN CAPITAL CORPORATION
By: ________________________
Name: ______________________
Title: _____________________
By: ________________________
Name: ______________________
Title: _____________________
<PAGE>
EVEREN EXHIBIT D
----------------
FORM OF BORROWER SECURITY AGREEMENT
-----------------------------------
Security Agreement, dated as of ____________, 1997, by and between EVEREN
Capital Corporation, a Delaware corporation (the "Borrower"), and The Bank of
--------
New York, as Administrative Agent (as the same may be amended, supplemented or
otherwise modified from time to time, this "Agreement").
---------
RECITALS
--------
I. Reference is made to the Credit Agreement, dated as of July 11, 1997,
by and among the Borrower, the Lenders party thereto, LaSalle National Bank, as
Documentation Agent, and The Bank of New York, as Administrative Agent (as the
same may be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement").
- -----------------
II. It is a condition precedent to the making of all Loans under the
Credit Agreement that the Borrower shall have executed and delivered this
Agreement.
Therefore, in consideration of the Recitals, the terms and conditions
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the
Administrative Agent hereby agree as follows:
1. Defined Terms
-------------
(a) Capitalized terms used herein which are not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
(b) When used in this Agreement, the following capitalized terms
shall have the respective meanings ascribed thereto as follows:
"Collateral": as defined in Section 2.
----------
"Equity Interest": (a) with respect to a corporation, capital stock
---------------
thereof, (b) with respect to a partnership, a partnership interest therein, (c)
with respect to any other firm, association, trust, business enterprise or other
entity which is similar to any other Person listed in clauses (a) and (b), and
this clause (c), of this definition, any equity interest therein, including,
without limitation, any interest therein which entitles the holder thereof to
share in the revenue, income, earnings or losses thereof or to vote or otherwise
participate in any election of one or more members of the managing body thereof,
and (d) all warrants and
<PAGE>
options in respect of any of the foregoing and all other securities which are
convertible or exchangeable therefor.
"Event of Default": as defined in Section 5.
----------------
"NYUCC": the UCC as in effect in the State of New York on the date
-----
hereof.
"Obligations": all of the obligations and liabilities of the Borrower
-----------
under each Interest Rate Protection Arrangement with one or more of the Lenders
and under the Loan Documents, in each case whether fixed, contingent, now
existing or hereafter arising, created, assumed, incurred or acquired.
"Office Location": as defined in Section 3(a)(ii).
---------------
"Permitted Lien": a Lien permitted by Section 7.2 of the Credit
--------------
Agreement.
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of the
---
Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms shall
have the respective meanings ascribed thereto in the NYUCC: "Certificated
------------
Security", "Issuer", "Proceeds", "Secured Party", "Security", "Security
- -------- ------ -------- ------------- -------- --------
Interest" and "Uncertificated Security".
-----------------------
2. Grant of Security Interest
--------------------------
To secure the prompt and complete payment, observance and performance
of the Obligations, the Borrower hereby grants to the Administrative Agent, for
its benefit and the ratable benefit of the Lenders, a Security Interest in and
to all of the Borrower's right, title and interest in and to all Equity
Interests of EVEREN Securities Holdings, Inc., together with all additions
thereto, and all substitutions, exchanges and replacements therefor, and all
Proceeds (which shall include all dividends, distributions, accessions and
income on and in respect of all of the foregoing and all other rights and
benefits in respect thereof) of all of the forego ing, whether now owned or
existing or hereafter arising or acquired (collectively, the "Collateral").
----------
3. Representations and Warranties
------------------------------
The Borrower hereby represents and warrants to the Administrative
Agent as follows:
(a) Generally. (i) This Agreement constitutes the valid and binding
---------
obligation of the Borrower, enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium
<PAGE>
or similar laws related to or affecting the enforcement of creditors' rights
generally and general principles of equity.
(ii) As of the date hereof, all of the information set forth on each
of the Schedules hereto is true, complete and correct.
(iii) This Agreement, together with the delivery to the Administrative
Agent of the Certificated Securities constituting Collateral and the continuous
possession thereof by the Administrative Agent in the State of New York, creates
a continuing "enforceable" Security Interest in the Collateral in favor of the
Administrative Agent. There are no Liens upon the Collateral other than
Permitted Liens, if any. Upon (A) the delivery to the Administrative Agent of
the Certificated Securities constituting the Collateral, and (B) the
registration, in accordance with Article 8 of the NYUCC, of the Security
Interest granted hereby on the books of each Person which is an Issuer of an
Uncertificated Security constituting the Collateral, (1) such Se curity Interest
shall be perfected, (2) such security interest in the Collateral constituting
Certificated Securities in the possession of the Administrative Agent shall
constitute a first priority security interest, and (3) assuming that the
Administrative Agent has acted in "good faith and without notice of any adverse
claim" within the meaning of Article 8 of the NYUCC, the Administrative Agent
shall be a "bona fide purchaser", within the meaning of such Article, with
respect to the Collateral consisting of Securities.
(b) Equity Interests. The Equity Interests listed on Schedule I
----------------
hereto constitute all of the Equity Interests in EVEREN Securities Holdings,
Inc. in which the Borrower has, as of the date hereof, any right, title or
interest, and to the best of the Borrower's knowledge, each such Equity Interest
issued by EVEREN Securities Holdings, Inc. has been duly authorized, validly
issued and fully paid for, and is non-assessable.
4. Covenants
---------
The Borrower hereby covenants with the Administrative Agent as
follows:
(a) Generally. (i) The Borrower shall, at its own expense, promptly
---------
execute and deliver all certificates, documents, instruments, financing and
continuation statements and amendments thereto, notices and other agreements,
and take all further action, that the Administrative Agent may reasonably
request from time to time, in order to perfect and protect the Security Interest
granted hereby or to enable the Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to the Collateral.
(ii) The Borrower shall furnish to the Administrative Agent such
information, reports, statements and schedules with respect to the Collateral as
the Administrative Agent may reasonably re quest from time to time.
<PAGE>
(iii) The Borrower shall defend the Collateral against all claims
of any kind or nature (other than Permitted Liens, if any) of all Persons at any
time claiming the same or any interest therein adverse to the interests of the
Administrative Agent or any Lender, and the Borrower shall not cause, permit or
suffer to exist any Lien upon the Collateral other than (A) the Lien granted
hereby, and (B) Permitted Liens, if any.
(iv) The Borrower shall cause each Person which is an Issuer of
an Uncertificated Security constituting the Collateral (A) to register the
Security Interest granted hereby upon the books of such Person in accordance
with Article 8 of the NYUCC, and (B) to issue to the Administrative Agent an
initial transaction statement in the form of Annex A hereto and issue to the
Administrative Agent subsequent transaction statements in accordance with
Section 8-408 of the UCC in effect in the State of New York.
(v) Except as otherwise required by law, the Borrower agrees
that, with respect to the Collateral, neither the Administrative Agent nor any
Lender has any obligation to preserve rights against prior or third parties.
(vi) The Administrative Agent's only duty with respect to the
Collateral delivered to it shall be to use reasonable care in the custody and
preservation of the Collateral, and the Borrower agrees that if the
Administrative Agent accords the Collateral substantially the same kind of care
as it accords its own Property, such care shall conclusively be deemed
reasonable. In the event that all or any part of the Equity Interests
constituting the Collateral are lost, destroyed or wrongfully taken while such
Equity Interests are in the possession of the Administrative Agent, the Borrower
agrees that it will use its best efforts to cause the delivery of new Equity
Interests in place of the lost, destroyed or wrongfully taken Equity Interests
upon re quest therefor by the Administrative Agent, without the necessity of any
indemnity bond or other security, other than the Agent's agreement of indemnity
upon usual and customary terms therefor.
(vii) Anything herein to the contrary notwithstanding, (A) the
Borrower shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (B) the exercise by the Administrative Agent or any Lender of any of
its rights hereunder shall not release the Borrower from any of its duties or
obligations under any such contract or agreement, (C) neither the Administrative
Agent nor any Lender shall have any obligation or liability, including
indemnification obli gations, under any such contract or agreement by reason of
this Agreement, nor shall the Administrative Agent or any Lender be obligated to
perform any of the obligations or duties of the Borrower thereunder, to make any
payment, to make any inquiry as to the nature or sufficiency of any payment
received by the Borrower or the sufficiency of any performance by any party
under any such contract or agreement or to take any action to collect or enforce
any claim for payment assigned hereunder, and (D) neither the Administrative
Agent nor any
<PAGE>
Lender shall be under any duty to send notices, perform services, exercise any
rights of collection, enforcement, conversion or exchange, vote, pay for
insurance, taxes or other charges or take any action of any kind in con nection
with the management of the Collateral.
(b) Equity Interests. All of the Equity Interests now or hereafter owned
----------------
by or in the possession of the Borrower which constitute the Collateral shall
be promptly delivered to the Administrative Agent, to be held by the
Administrative Agent pursuant hereto, in suitable form for transfer by delivery
or accompanied by duly executed documents of transfer or assignments in blank,
all in form and substance reasonably satisfactory to the Administrative Agent.
The Borrower agrees that, with respect to all items of the Collateral which it
is or shall hereafter be obligated to deliver to the Administrative Agent, until
so delivered such items shall be held by the Borrower in trust for the benefit
of the Administrative Agent and be segregated from the other Property of the
Borrower.
5. Events of Default
-----------------
Each of the following shall constitute an "Event of Default":
----------------
(a) If the Borrower shall fail to observe or perform any term,
covenant or agreement contained in this Agreement within 10 Domestic Business
Days after the Borrower shall have become aware thereof; or
(b) The occurrence and continuance of an Event of Default under, and
as such term is defined in, the Credit Agreement.
6. Remedies
--------
(a) Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, the Administrative Agent may:
(i) exercise any and all rights and remedies (A) granted to a Secured
Party by the UCC in effect in the State of New York or otherwise allowed at
law, and (B) otherwise provided by this Agreement, and
(ii) dispose of the Collateral as it may choose, so long as every
aspect of the disposition including the method, manner, time, place and
terms are commercially reasonable, and the Borrower agrees that, without
limitation, the following are each commercially reasonable: (A) the
Administrative Agent shall not in any event be required to give more than 5
days' prior notice to the Borrower of any such disposition, (B) any place
within the City of New York or the Counties of Nassau, Suffolk, and
Westchester may be designated by the Administrative Agent for disposition,
and (C) the Administrative Agent may adjourn any public or private sale
from time to time by
<PAGE>
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(b) To the extent permitted by law, the Borrower hereby expressly waives
and covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, now or at any time hereafter in force, which might
delay, prevent or otherwise impede the performance or enforcement of this
Agreement.
7. Notices
-------
All notices and other communications provided for or otherwise
required hereunder or in connection herewith shall be given in the manner and to
the addresses set forth in Section 10.2 of the Credit Agreement.
8. Relationship to Credit Agreement
--------------------------------
This Agreement is the Borrower Security Agreement under, and as such
term is defined in, the Credit Agreement, and is subject to, and should be
construed in accordance with, the provisions thereof.
9. Governing Law
-------------
This Agreement and the rights and obligations of the parties hereto
shall be governed by, and construed and interpreted in accordance with, the laws
of the State of New York, without regard to principles of conflict of laws.
<PAGE>
IN EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Agreement to be
duly executed on its behalf.
EVEREN CAPITAL CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
THE BANK OF NEW YORK,
as Administrative Agent
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE>
SCHEDULE I TO SECURITY AGREEMENT
LIST OF EQUITY INTERESTS
------------------------
<TABLE>
<CAPTION>
Percentage
of Issued and
Number of Outstanding
Issuer Certificate No. Shares Capital Stock
------ --------------- ------ -------------
<S> <C> <C> <C>
EVEREN 7 995,000 100%
Securities
Holdings, Inc.
</TABLE>
<PAGE>
ANNEX A TO SECURITY AGREEMENT
TRANSACTION STATEMENT
---------------------
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE
TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHT
ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A
SECURITY.
[DATE]
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Reference is made to the Security Agreement, dated as of ____________,
1997, by and between EVEREN Capital Corporation and The Bank of New York, as
Administrative Agent. This Transaction Statement is issued under Section 8-408
of the New York State Uniform Commercial Code.
DESCRIPTION OF THE ISSUE: ___________________________________
NUMBER OF SHARES OR UNITS PLEDGED: __________________________
REGISTERED OWNER: ______________________________________, Taxpayer ID#
_______________
REGISTERED PLEDGEE: The Bank of New York, as Administrative Agent, One Wall
Street, New York, New York 10286, Taxpayer ID# _______________
NOTATION OF LIENS: There are no liens, restrictions or adverse claims on the
shares or units iden tified above as having been pledged.
DATE OF REGISTRATION OF THE PLEDGE: ______________, ____
[NAME OF ISSUER]
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
EVEREN EXHIBIT E
FORM OF EXTENSION REQUEST NOTICE
--------------------------------
EXTENSION REQUEST NOTICE, dated as of ____________, 1999, to the Credit
Agreement, dated as of July 11, 1997, by and among EVEREN Capital Corporation
(the "Borrower"), the Lenders party thereto, LaSalle National Bank, as
--------
Documentation Agent, and The Bank of New York, as Administrative Agent (as
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement").
- ---------
Capitalized terms used herein which are not defined herein and which are
defined in the Credit Agreement shall have the same meanings as therein defined.
1. The Borrower hereby requests an extension (the "Extension") of the
---------
Initial Maturity Date from June 30, 1999 to June 30, 2000 (the "Extended
--------
Maturity Date").
- -------------
2. The Borrower hereby represents and warrants to the Administrative
Agent, the Documentation Agent and each Lender that immediately before and after
giving effect to the Extension no Default or Event of Default shall exist.
3. The Borrower acknowledges that the Extension is subject to the
consent of all Lenders and that the decision of each Lender to consent or not
consent to the Extension is within the sole and absolute discretion of such
Lender.
EVEREN CAPITAL CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
THE BANK OF NEW YORK, as
Administrative Agent
By:_________________________________
Name:_______________________________
Title:______________________________
<PAGE>
Request for Extension is
hereby Consented to:
THE BANK OF NEW YORK
By:_____________________________
Name:___________________________
Title:__________________________
LASALLE NATIONAL BANK
By:_____________________________
Name:___________________________
Title:__________________________
[Other Lenders]
<PAGE>
EVEREN EXHIBIT F
----------------
FORM OF OPINION OF SPECIAL COUNSEL
----------------------------------
July 11, 1997
TO THE PARTIES LISTED
ON SCHEDULE A ANNEXED HERETO
Re: Credit Agreement, dated as of July 11, 1997 by and among EVEREN
Capital Corporation (the "Borrower"), the Lenders party thereto,
--------
LaSalle National Bank, as Documentation Agent, and The Bank of New
York, as Administrative Agent (the "Agreement")
---------
We have acted as Special Counsel to the Administrative Agent in connection
with the Agreement. Capitalized terms used herein which are not otherwise
defined herein shall have the respective meanings ascribed thereto in the
Agreement.
We have examined originals or copies certified to our satisfaction of the
documents required to be delivered pursuant to the provisions of Section 5 of
the Agreement. In conducting such examination, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, and the conformity to originals of all documents submitted to us as
copies.
Based upon the foregoing examination, and relying with your permission upon
the opinion delivered to the Administrative Agent pursuant to Section 5.1(e) of
the Agreement, and upon the representations and warranties of the Loan Parties
contained in the Loan Documents, and subject to all of the assumptions,
qualifications and other limitations contained in such opinions which are
expressly incorporated herein by reference, we are of the opinion that all legal
preconditions set forth in Section 5.1 of the Agreement to the making of the
first Loans under the Agreement have been satisfactorily met.
<PAGE>
This opinion is rendered solely for your benefit in connection with the
transactions referred to herein and may not be relied upon by any other Person.
We express no opinion as to laws other than the laws of the State of New
York and the federal laws of the United States of America.
Very truly yours,
<PAGE>
SCHEDULE A
----------
The Bank of New York,
individually and as Administrative Agent
LaSalle National Bank,
individually and as Documentation Agent
<PAGE>
Except as set forth on Schedule 4.5 to the Credit Agreement, there are
no actions, suits, arbitration proceedings or claims (whether purportedly on
behalf of the Borrower, any Subsidiary or otherwise) pending or, to my
knowledge, threatened against the Borrower or any Subsidiary, or maintained by
the Borrower or any Subsidiary, or which may affect the Property of the Borrower
or such Subsidiary, at law or in equity, before any Governmental Authority which
could reason ably be expected to have a Material Adverse effect. There are no
proceedings pending or, to my knowledge, threatened against the Borrower or any
Subsidiary (a) which call into question the validity or enforceability of, or
otherwise seek to invalidate any Loan Document, or (b) which would reasonably be
expected to, individually or in the aggregate, materially and adversely affect
any of the transactions contemplated by any Loan Document.
5. No Conflicting Agreements
-------------------------
(a) To my knowledge, neither the Borrower nor any Subsidiary is in
default under any agreement to which it is a party or by which it or any of its
Property is bound the effect of which could reasonably be expected to have a
Material Adverse effect. No notice to, or filing with, any Governmental
Authority, not already made, is required for the due execution, delivery and
performance by the Borrower of the Loan Documents to which it is a party, other
than such notices and filings as are required from time to time (i) for the
Borrower to perform its obligations under Sections 6.1, 6.2, 6.6 and 6.9 of the
Credit Agreement and similar obligations under any other Loan Document, and (ii)
to perfect, and maintain the perfection of, the Administrative Agent's security
interests in the Collateral.
(b) No provision of any statute, rule, regulation, judgment, decree
or order or, solely as of the date hereof, any mortgage, indenture, contract or
agreement, binding on the Borrower or any Subsidiary or affecting the Property
of the Borrower or any Subsidiary conflicts with, or requires any consent which
has not already been obtained under, or would in any way prevent the execution,
delivery or performance by the Borrower of the terms of, any Loan Document. As
of the date hereof, the execution, delivery or performance by the Borrower of
the terms of each Loan Document to which it is a party will not constitute a
default under, or result in the creation or imposition of, or obligation to
create, any Lien (other than pursuant to the Loan Documents) upon the Property
of the Borrower or any Subsidiary pursuant to the terms of any such mortgage,
indenture, contract or agreement.
6. Compliance with Applicable Laws; Filings
----------------------------------------
Neither the Borrower nor any Subsidiary is in default with respect to
any judgment, order, writ, injunction, decree or decision of any Governmental
Authority which default could reasonably be expected to have a Material Adverse
effect. The Borrower and each Subsidiary are complying with all applicable
statutes, rules and regulations of all Governmental Authorities, a violation of
which could reasonably be expected to have a Material Adverse effect. The
Borrower and each Subsidiary have filed or caused to be filed with all
Governmental Authorities all reports, applications, documents, instruments and
information
<PAGE>
required to be filed pursuant to all applicable laws, rules, regulations and
requests which, if not so filed, could reasonably be expected to have a Material
Adverse effect.
7. Governmental Regulations
------------------------
Neither the Borrower nor any Subsidiary nor any corporation
controlling the Borrower or any Subsidiary or under common control with the
Borrower or any Subsidiary is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, or the Investment Company
Act of 1940, in each case as amended, or, except for those statutes and
regulations applicable to registered future commission merchants, broker dealers
and investment advisers, any other statute or regulation which regulates the
incurrence of Indebtedness.
8. Property
--------
To my knowledge, except as set forth on Schedule 4.10 to the Credit
Agreement, each of the Borrower and each Subsidiary has good and marketable
title to, or a valid leasehold interest in, all of its Property which is
material to the Borrower or such Subsidiary, subject to no Liens, except Liens
permitted by Section 7.2 of the Credit Agreement. To my knowledge, other than
leases the termination of which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse effect, all leases of Property
to each of the Borrower and each Subsidiary are in full force and effect, the
Borrower or such Subsidiary enjoys quiet and undisturbed possession thereunder
and neither the Borrower nor any Subsidiary is in default thereunder beyond any
applicable grace period.
9. Federal Reserve Regulations; Use of Loan Proceeds
-------------------------------------------------
If used in accordance with Section 2.4 of the Credit Agreement, no
part of the proceeds of the Loans will be used, directly or indirectly, for a
purpose which violates any law, including Regulations G, U, T or X of the Board
of Governors of the Federal Reserve System, as amended.
10. Subsidiaries; Capitalization
----------------------------
The securities listed on Schedule I to the Borrower Security Agreement
constitute all of the securities representing capital stock of EVEREN Securities
Holdings, Inc. in which the Borrower has any right, title or interest, and each
such security has been duly authorized, validly issued and fully paid for, and
is, except solely as a result of any applicable law, non-assessable. Each share
of Common Stock is duly authorized, validly issued and fully paid for and,
except solely as a result of any applicable law, nonassessable.
11. Collateral
----------
The Collateral Documents, together with the delivery to the
Administrative Agent of the Certificated Securities (as defined in the
Collateral Documents) constituting Col-
<PAGE>
lateral and the continuous possession thereof by the Administrative Agent in the
State of New York, create a continuing "enforceable" security interest in the
Collateral in favor of the Administrative Agent. Upon (A) the delivery to the
Administrative Agent of the Certificated Securities constituting the Collateral,
and (B) the registration, in accordance with Article 8 of the NYUCC (as defined
in the Collateral Documents), of the security interest granted by the Collateral
Documents on the books of each Person which is an issuer of an Uncertificated
Security (as defined in the Collateral Documents) constituting the Collateral,
(1) such security interest shall be perfected, (2) such security interest in the
Collateral constituting Certificated Securities in the possession of the
Administrative Agent shall constitute a first priority security interest, and
(3) assuming that the Administrative Agent has acted in "good faith and without
notice of any adverse claim" within the meaning of Article 8 of the NYUCC, the
Administrative Agent shall be a "bona fide purchaser", within the meaning of
such Article, with respect to the Collateral consisting of Securities (as
defined in the Collateral Documents). The opinions set forth in this paragraph
are subject to the limitations on perfection of security interests in proceeds
resulting from the operation of Section 9-306 of the Uniform Commercial Code.
<PAGE>
EVEREN EXHIBIT H
----------------
FORM OF COMPLIANCE CERTIFICATE
------------------------------
[DATE]
TO THE PARTIES LISTED
ON SCHEDULE A ANNEXED HERETO
Re: Credit Agreement, dated as of July 11, 1997, by and among EVEREN
Capital Corporation (the "Borrower"), the Lenders party thereto,
--------
LaSalle National Bank, as Documentation Agent, and The Bank of New
York, as Administrative Agent (as the same may be amended,
supplemented or otherwise modified from time to time, the "Credit
-------------------------
Agreement")
-----------
Capitalized terms used herein which are not otherwise defined herein shall
have the respective meanings ascribed thereto in the Credit Agreement.
With respect to the financial statements delivered herewith, I hereby
certify, on behalf of the Borrower, to the best of my knowledge, as follows:
(A) all such financial statements are true, complete and correct, and
(B) all such financial statements have been prepared in all material
respects in accordance with GAAP (but without footnotes and subject to
year-end adjustments).
In addition, I hereby certify, on behalf of the Borrower that, to the best
of my knowledge, there exists no violation of any covenant or agreement of any
Loan Document and that no condition or event has occurred which would
constitute a Default or an Event of Default, [EXCEPT AS FOLLOWS:
SPECIFY ALL SUCH VIOLATIONS, CONDITIONS AND EVENTS AND THE NATURE AND
STATUS THEREOF]
Attached are calculations required to establish that the Borrower is in
compliance with Sections 6.11, 6.12, 6.13, 6.14, 6.15, 6.16 and 6.17 of the
Credit Agreement.
EVEREN CAPITAL CORPORATION
By:____________________
Name: ___________________
Title:_________________
<PAGE>
SCHEDULE A
----------
The Bank of New York,
individually and as Administrative Agent
LaSalle National Bank,
individually and as Documentation Agent
<PAGE>
EVEREN EXHIBIT I
----------------
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
-------------------------------------------
Assignment and Acceptance Agreement (as the same may be amended,
supplemented or otherwise modified from time to time, this "Agreement"), dated
---------
as of ____________, by and between ____________ (the "Assignor") and
--------
____________ (the "Assignee").
--------
RECITALS
--------
I. Reference is made to the Credit Agreement, dated as of July 11, 1997,
by and among EVEREN Capital Corporation, the Lenders party thereto, LaSalle
National Bank, as Documentation Agent, and The Bank of New York, as
Administrative Agent (as the same may be amended, supplemented or otherwise
modified from time to time, the "Credit Agreement").
----------------
II. The Assignor wishes to assign and delegate to the Assignee, and the
Assignee wishes to purchase and assume from the Assignor, some or all of the
Assignor's rights and obligations under the Loan Documents upon the terms, and
subject to the conditions, contained herein.
Therefore, in consideration of the Recitals, the terms and conditions
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Assignor and the Assignee
hereby agree as follows:
1. Defined Terms
-------------
(a) Each capitalized term used herein which is not otherwise defined
herein shall have the meaning ascribed thereto in the Credit Agreement.
(b) When used in this Agreement, each of the following capitalized
terms shall have the meaning ascribed thereto unless the context hereof
otherwise specifically requires:
"Assigned Percentage": _____%.
-------------------
"Assignment Effective Date": as defined in Section 5.
-------------------------
"Assignor Rights and Obligations": as of the Assignment Effective
-------------------------------
Date, the Assigned Percentage of all of the Assignor's rights and obligations
under the Loan Documents, including, without limitation, such percentage of its
Commitment and Commitment Amount, Loans and Note.
"Purchase Price": an amount equal to the Assigned Percentage of
--------------
the aggregate unpaid principal amount of the Assignor's Loans as of the
Assignment Effective Date.
<PAGE>
2. Assignment; Payment by Assignee
-------------------------------
The Assignor hereby assigns and delegates to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, without recourse or,
except as otherwise specifically provided herein, representation or warranty,
the Assignor Rights and Obligations. The Assignee agrees to pay to the Assignor
the Purchase Price on the Assignment Effective Date.
3. Representations and Warranties
------------------------------
(a) Assignor. The Assignor hereby represents and warrants to the
--------
Assignee that its Commitment Amount is $______, the aggregate unpaid principal
amount of its Loans is $_________, and such Loans are composed of the following
ABR Advances and LIBOR Advances: (1) ABR Advances: $_____________, and (2) LIBOR
------------ -----
Advances: (A) $__________ for [LENGTH OF INTEREST PERIOD], the last day of which
- --------
is _______________, (B) $__________ for [LENGTH OF INTEREST PERIOD], the last
day of which is _______________,
(b) Assignee. The Assignee hereby represents and warrants to the
--------
Assignor that (i) it is legally authorized to enter into this Agreement, (ii) it
is an "accredited investor" within the meaning of Regulation D of the Securities
and Exchange Commission, as amended, [AND] (iii) it has, independently and
without reliance upon the Assignor, and based on such documents and information
as it has deemed appropriate, made its own evaluation of, and investigation
into, the business, operations, Property, financial and other condition and
creditworthiness of the Borrower and made its own decision to enter into this
Agreement [, AND (IV) IT IS A LENDER OR A SUBSIDIARY OR AFFILIATE OF A LENDER].
4. Covenants of the Assignee
-------------------------
The Assignee hereby covenants and agrees that it will, independently
and without reliance upon the Assignor, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, evaluations and decisions in taking or not taking action under
the Loan Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, Property, financial and other
condition and creditworthiness of the Borrower.
<PAGE>
5. Effectiveness of this Agreement
-------------------------------
(a) Section 2 of this Agreement shall not become effective until such
date (the "Assignment Effective Date") as all of the following conditions shall
-------------------------
have been fulfilled:
(i) The Administrative Agent shall have received this Agreement duly
executed by each of the Assignor, the Assignee and, if required by the
Credit Agreement, the Borrower;
(ii) The Administrative Agent shall have executed a copy of this
Agreement;
(iii) The Assignor shall have delivered to the Assignee (with a copy
to the Administrative Agent) a duly completed letter in the form of Annex A
hereto;
(iv) The Assignee shall have confirmed in writing to the Assignor
(with a copy to the Administrative Agent) that, on or before the Assignment
Effective Date, it shall have transferred (in accordance with Section 6
hereof) the Purchase Price to the Assignor. At the time of such
confirmation, the Assignee shall be deemed to have remade the
representations and warranties contained in Section 3(b)(i), (ii) [AND]
(iii) [, AND (IV)] hereof on and as of the date of such confirmation; and
(vi) The Administrative Agent shall have received an assignment fee in
the amount of $2,500.
(b) Upon the Assignment Effective Date, (i) the Administrative Agent
shall record the assignment contemplated hereby, (ii) the Assignee shall be a
Lender, and (iii) the Assignor, to the extent of the assignment provided for
herein, shall be released from its obligations under the Loan Documents.
(c) The Assignee hereby appoints and authorizes the Administrative
Agent to take such action, on and after the Assignment Effective Date, as agent
on its behalf and to exercise such powers under the Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto.
(d) From and after the Assignment Effective Date, the Administrative
Agent shall make all payments in respect of the interest assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and the Assignee shall make all appropriate adjustments
with respect to amounts under the Loan Documents which accrued prior to the
Assignment Effective Date and which were paid thereafter, directly between
themselves.
<PAGE>
6. Payment Instructions
--------------------
All payments to be made to the Assignor by the Assignee hereunder
shall be made by wire transfer of immediately available funds to the Assignor
at: [WIRE INSTRUCTIONS].
-------------------
7. Notices
-------
All notices, requests and demands to or upon the Assignee in
connection with this Agreement and the Loan Documents are to be sent or
delivered to the place set forth adjacent to its name on the signature page(s)
hereof.
8. Miscellaneous
-------------
(a) For purposes of this Agreement, all calculations and
determinations with respect to the outstanding principal amount of the
Assignor's Loans and all other similar calculations and determinations, shall be
made and shall be deemed to be made as of the commencement of business on the
date of such calculation or determination, as the case may be.
(b) Section headings have been inserted herein for convenience only
and shall not be construed to be a part hereof.
(c) This Agreement embodies the entire agreement and understanding
among the parties hereto with respect to the subject matter hereof and
supersedes all other prior arrangements and understandings between the Assignor
and the Assignee with respect to the subject matter hereof.
(d) This Agreement may be executed in any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same agreement. It shall not be necessary in making
proof of this Agreement to produce or account for more than one counterpart
signed by the party to be charged.
(e) Every provision of this Agreement is intended to be severable,
and if any term or provision hereof shall be invalid, illegal or unenforceable
for any reason, the validity, legality and enforceability of the remaining
provisions hereof shall not be affected or impaired thereby, and any invalidity,
illegality or unenforceability in any jurisdiction shall not affect the
validity, legality or enforceability of any such term or provision in any other
jurisdiction.
(f) This Agreement shall be binding upon and inure to the benefit of
the Assignor and the Assignee and their respective successors and permitted
assigns, except that neither party may assign or transfer any of its rights or
obligations hereunder (i) without the prior written consent of the other party,
and (ii) in contravention of the Credit Agreement.
(g) This Agreement and the rights and obligations of the parties
hereunder shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of New York without regard to principles of
conflicts of law.
<PAGE>
AS EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Agreement to be
duly executed on its behalf.
[NAME OF ASSIGNOR]
By:_______________________________
Name:_____________________________
Title:_____________________
Address for notices: [NAME OF ASSIGNEE]
__________________________________ By:_______________________________
__________________________________ Name:_____________________________
__________________________________ Title:_____________________
Attention:________________
Telephone:________________
Facsimile:________________
Consented to and Accepted this __ day
of __________, ____
THE BANK OF NEW YORK, as Administrative Agent
By:_______________________________
Name:_____________________________
Title:____________________
[CONSENTED TO THIS __ DAY
OF __________, ____
EVEREN CAPITAL CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________
ANNEX A TO ASSIGNMENT AND
<PAGE>
ACCEPTANCE AGREEMENT
FORM OF LETTER
--------------
[Assignment Effective Date]
[Name and Address of Assignee]
Attention: _______________,
_______________
Re: Assignment and Acceptance Agreement, dated as of _______________,
by and between _______________ and _______________ (as the same
may be amended, supplemented or otherwise modified from time to
---------------------
time, the "Agreement")
----------------------
Ladies and Gentlemen:
This letter is being delivered pursuant to Section 5(a)(iii) of the
Agreement. Capitalized terms used herein which are not otherwise defined herein
shall have the respective meanings ascribed thereto in the Agreement.
The Assignor hereby represents and warrants to the Assignee as follows:
(i) its Commitment Amount is $___________,
(ii) the aggregate unpaid principal amount of its Loans is $_________, and
such Loans are composed of the following ABR Advances and LIBOR Advances: (1)
ABR Advances: $_____________, and (2) LIBOR Advances: (A) $__________ for
- ------------ --------------
[LENGTH OF INTEREST PERIOD], the last day of which is _______________, (B)
$__________ for [LENGTH OF INTEREST PERIOD], the last day of which is
_______________, and
(iii) it is the legal and beneficial owner of the Assignor Rights and
Obligations free and clear of any adverse claim created by it.
Very truly yours,
[NAME OF ASSIGNOR]
By:_______________________________
Name:_____________________________
Title:____________________________
cc: [Name and title of Administrative Agent contact]
<PAGE>
July 11, 1997
TO THE PARTIES LISTED
ON SCHEDULE A ANNEXED HERETO
Re: Credit Agreement, dated as of July 11, 1997 by and among EVEREN
Capital Corporation (the "Borrower"), the Lenders party thereto,
--------
LaSalle National Bank, as Documentation Agent, and The Bank of New
York, as Administrative Agent (the "Agreement")
---------
We have acted as Special Counsel to the Administrative Agent in connection
with the Agreement. Capitalized terms used herein which are not otherwise
defined herein shall have the respective meanings ascribed thereto in the
Agreement.
We have examined originals or copies certified to our satisfaction of the
documents required to be delivered pursuant to the provisions of Section 5 of
the Agreement. In conducting such examination, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, and the conformity to originals of all documents submitted to us as
copies.
Based upon the foregoing examination, and relying with your permission upon
the opinion delivered to the Administrative Agent pursuant to Section 5.1(e) of
the Agreement, and upon the representations and warranties of the Loan Parties
contained in the Loan Documents, and subject to all of the assumptions,
qualifications and other limitations contained in such opinions which are
expressly incorporated herein by reference, we are of the opinion that all legal
preconditions set forth in Section 5.1 of the Agreement to the making of the
first Loans under the Agreement have been satisfactorily met.
This opinion is rendered solely for your benefit in connection with the
transactions referred to herein and may not be relied upon by any other Person.
We express no opinion as to laws other than the laws of the State of New
York and the federal laws of the United States of America.
Very truly yours,
<PAGE>
SCHEDULE A
----------
The Bank of New York,
individually and as Administrative Agent
LaSalle National Bank,
individually and as Documentation Agent
<PAGE>
BORROWER SECURITY AGREEMENT
---------------------------
Security Agreement, dated as of July 11, 1997, by and between EVEREN
Capital Corporation, a Delaware corporation (the "Borrower"), and The Bank of
--------
New York, as Administrative Agent (as the same may be amended, supplemented or
otherwise modified from time to time, this "Agreement").
---------
RECITALS
--------
I. Reference is made to the Credit Agreement, dated as of July 11,
1997, by and among the Borrower, the Lenders party thereto, LaSalle National
Bank, as Documentation Agent, and The Bank of New York, as Administrative Agent
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement").
----------------
II. It is a condition precedent to the making of all Loans under the
Credit Agreement that the Borrower shall have executed and delivered this
Agreement.
Therefore, in consideration of the Recitals, the terms and conditions
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the
Administrative Agent hereby agree as follows:
1. Defined Terms
-------------
(a) Capitalized terms used herein which are not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
(b) When used in this Agreement, the following capitalized terms
shall have the respective meanings ascribed thereto as follows:
"Collateral": as defined in Section 2.
----------
"Equity Interest": (a) with respect to a corporation, capital stock
---------------
thereof, (b) with respect to a partnership, a partnership interest therein, (c)
with respect to any other firm, association, trust, business enterprise or other
entity which is similar to any other Person listed in clauses (a) and (b), and
this clause (c), of this definition, any equity interest therein, including,
without limitation, any interest therein which entitles the holder thereof to
share in the revenue, income, earnings or losses thereof or to vote or otherwise
participate in any election of one or more members of the managing body thereof,
and (d) all warrants and options in respect of any of the foregoing and all
other securities which are convertible or exchangeable therefor.
<PAGE>
"Event of Default": as defined in Section 5.
----------------
"NYUCC": the UCC as in effect in the State of New York on the date
-----
hereof.
"Obligations": all of the obligations and liabilities of the Borrower
-----------
under each Interest Rate Protection Arrangement with one or more of the Lenders
and under the Loan Documents, in each case whether fixed, contingent, now
existing or hereafter arising, created, assumed, incurred or acquired.
"Office Location": as defined in Section 3(a)(ii).
---------------
"Permitted Lien": a Lien permitted by Section 7.2 of the Credit
--------------
Agreement.
"UCC": with respect to any jurisdiction, Articles 1, 8 and 9 of the
---
Uniform Commercial Code as from time to time in effect in such jurisdiction.
(c) When used in this Agreement, the following capitalized terms
shall have the respective meanings ascribed thereto in the NYUCC: "Certificated
------------
Security", "Issuer", "Proceeds", "Secured Party", "Security", "Security
- -------- ------ -------- ------------- -------- --------
Interest" and "Uncertificated Security".
-----------------------
2. Grant of Security Interest
--------------------------
To secure the prompt and complete payment, observance and performance
of the Obligations, the Borrower hereby grants to the Administrative Agent, for
its benefit and the ratable benefit of the Lenders, a Security Interest in and
to all of the Borrower's right, title and interest in and to all Equity
Interests of EVEREN Securities Holdings, Inc., together with all additions
thereto, and all substitutions, exchanges and replacements therefor, and all
Proceeds (which shall include all dividends, distributions, accessions and
income on and in respect of all of the foregoing and all other rights and
benefits in respect thereof) of all of the foregoing, whether now owned or
existing or hereafter arising or acquired (collectively, the "Collateral").
----------
3. Representations and Warranties
------------------------------
The Borrower hereby represents and warrants to the Administrative
Agent as follows:
(a) Generally. (i) This Agreement constitutes the valid and binding
---------
obligation of the Borrower, enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws related to or affecting the
enforcement of creditors' rights generally and general principles of equity.
<PAGE>
(ii) As of the date hereof, all of the information set forth on
each of the Schedules hereto is true, complete and correct.
(iii) This Agreement, together with the delivery to the
Administrative Agent of the Certificated Securities constituting Collateral and
the continuous possession thereof by the Administrative Agent in the State of
New York, creates a continuing "enforceable" Security Interest in the Collateral
in favor of the Administrative Agent. There are no Liens upon the Collateral
other than Permitted Liens, if any. Upon (A) the delivery to the Administrative
Agent of the Certificated Securities constituting the Collateral, and (B) the
registration, in accordance with Article 8 of the NYUCC, of the Security
Interest granted hereby on the books of each Person which is an Issuer of an
Uncertificated Security constituting the Collateral, (1) such Security Interest
shall be perfected, (2) such security interest in the Collateral constituting
Certificated Securities in the possession of the Administrative Agent shall
constitute a first priority security interest, and (3) assuming that the
Administrative Agent has acted in "good faith and without notice of any adverse
claim" within the meaning of Article 8 of the NYUCC, the Administrative Agent
shall be a "bona fide purchaser", within the meaning of such Article, with
respect to the Collateral consisting of Securities.
(b) Equity Interests. The Equity Interests listed on Schedule I
----------------
hereto constitute all of the Equity Interests in EVEREN Securities Holdings,
Inc. in which the Borrower has, as of the date hereof, any right, title or
interest, and to the best of the Borrower's knowledge, each such Equity Interest
issued by EVEREN Securities Holdings, Inc. has been duly authorized, validly
issued and fully paid for, and is non-assessable.
4. Covenants
---------
The Borrower hereby covenants with the Administrative Agent as
follows:
(a) Generally. (i) The Borrower shall, at its own expense, promptly
---------
execute and deliver all certificates, documents, instruments, financing and
continuation statements and amendments thereto, notices and other agreements,
and take all further action, that the Administrative Agent may reasonably
request from time to time, in order to perfect and protect the Security Interest
granted hereby or to enable the Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to the Collateral.
(ii) The Borrower shall furnish to the Administrative Agent
such information, reports, statements and schedules with respect to the
Collateral as the Administrative Agent may reasonably request from time to time.
(iii) The Borrower shall defend the Collateral against all
claims of any kind or nature (other than Permitted Liens, if any) of all Persons
at any time claiming the same
<PAGE>
or any interest therein adverse to the interests of the Administrative Agent or
any Lender, and the Borrower shall not cause, permit or suffer to exist any Lien
upon the Collateral other than (A) the Lien granted hereby, and (B) Permitted
Liens, if any.
(iv) The Borrower shall cause each Person which is an Issuer of
an Uncertificated Security constituting the Collateral (A) to register the
Security Interest granted hereby upon the books of such Person in accordance
with Article 8 of the NYUCC, and (B) to issue to the Administrative Agent an
initial transaction statement in the form of Annex A hereto and issue to the
Administrative Agent subsequent transaction statements in accordance with
Section 8-408 of the UCC in effect in the State of New York.
(v) Except as otherwise required by law, the Borrower agrees
that, with respect to the Collateral, neither the Administrative Agent nor any
Lender has any obligation to preserve rights against prior or third parties.
(vi) The Administrative Agent's only duty with respect to the
Collateral delivered to it shall be to use reasonable care in the custody and
preservation of the Collateral, and the Borrower agrees that if the
Administrative Agent accords the Collateral substantially the same kind of care
as it accords its own Property, such care shall conclusively be deemed
reasonable. In the event that all or any part of the Equity Interests
constituting the Collateral are lost, destroyed or wrongfully taken while such
Equity Interests are in the possession of the Administrative Agent, the Borrower
agrees that it will use its best efforts to cause the delivery of new Equity
Interests in place of the lost, destroyed or wrongfully taken Equity Interests
upon request therefor by the Administrative Agent, without the necessity of any
indemnity bond or other security, other than the Agent's agreement of indemnity
upon usual and customary terms therefor.
(vii) Anything herein to the contrary notwithstanding, (A) the
Borrower shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (B) the exercise by the Administrative Agent or any Lender of any of
its rights hereunder shall not release the Borrower from any of its duties or
obligations under any such contract or agreement, (C) neither the Administrative
Agent nor any Lender shall have any obligation or liability, including
indemnification obligations, under any such contract or agreement by reason of
this Agreement, nor shall the Administrative Agent or any Lender be obligated to
perform any of the obligations or duties of the Borrower thereunder, to make any
payment, to make any inquiry as to the nature or sufficiency of any payment
received by the Borrower or the sufficiency of any performance by any party
under any such contract or agreement or to take any action to collect or enforce
any claim for payment assigned hereunder, and (D) neither the Administrative
Agent nor any Lender shall be under any duty to send notices, perform services,
exercise any rights of
<PAGE>
collection, enforcement, conversion or exchange, vote, pay for insurance, taxes
or other charges or take any action of any kind in connection with the
management of the Collateral.
(b) Equity Interests. All of the Equity Interests now or hereafter owned
----------------
by or in the possession of the Borrower which constitute the Collateral shall
be promptly delivered to the Administrative Agent, to be held by the
Administrative Agent pursuant hereto, in suitable form for transfer by delivery
or accompanied by duly executed documents of transfer or assignments in blank,
all in form and substance reasonably satisfactory to the Administrative Agent.
The Borrower agrees that, with respect to all items of the Collateral which it
is or shall hereafter be obligated to deliver to the Administrative Agent, until
so delivered such items shall be held by the Borrower in trust for the benefit
of the Administrative Agent and be segregated from the other Property of the
Borrower.
5. Events of Default
-----------------
Each of the following shall constitute an "Event of Default":
----------------
(a) If the Borrower shall fail to observe or perform any term,
covenant or agreement contained in this Agreement within 10 Domestic Business
Days after the Borrower shall have become aware thereof; or
(b) The occurrence and continuance of an Event of Default under, and
as such term is defined in, the Credit Agreement.
6. Remedies
--------
(a) Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, the Administrative Agent may:
(i) exercise any and all rights and remedies (A) granted to a Secured
Party by the UCC in effect in the State of New York or otherwise allowed at
law, and (B) otherwise provided by this Agreement, and
(ii) dispose of the Collateral as it may choose, so long as every
aspect of the disposition including the method, manner, time, place and
terms are commercially reasonable, and the Borrower agrees that, without
limitation, the following are each commercially reasonable: (A) the
Administrative Agent shall not in any event be required to give more than 5
days' prior notice to the Borrower of any such disposition, (B) any place
within the City of New York or the Counties of Nassau, Suffolk, and
Westchester may be designated by the Administrative Agent for disposition,
and (C) the Administrative Agent may adjourn any public or private sale
from time to time by
<PAGE>
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(b) To the extent permitted by law, the Borrower hereby expressly waives
and covenants not to assert any appraisement, valuation, stay, extension,
redemption or similar laws, now or at any time hereafter in force, which might
delay, prevent or otherwise impede the performance or enforcement of this
Agreement.
7. Notices
-------
All notices and other communications provided for or otherwise
required hereunder or in connection herewith shall be given in the manner and to
the addresses set forth in Section 10.2 of the Credit Agreement.
8. Relationship to Credit Agreement
--------------------------------
This Agreement is the Borrower Security Agreement under, and as such
term is defined in, the Credit Agreement, and is subject to, and should be
construed in accordance with, the provisions thereof.
9. Governing Law
-------------
This Agreement and the rights and obligations of the parties hereto
shall be governed by, and construed and interpreted in accordance with, the laws
of the State of New York, without regard to principles of conflict of laws.
<PAGE>
IN EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Agreement to be
duly executed on its behalf.
EVEREN CAPITAL CORPORATION
By: ____________________________
Name: ____________________________
Title:____________________________
THE BANK OF NEW YORK,
as Administrative Agent
By: ____________________________
Name: ____________________________
Title:____________________________
<PAGE>
SCHEDULE I TO SECURITY AGREEMENT
LIST OF EQUITY INTERESTS
------------------------
<TABLE>
<CAPTION>
Percentage
of Issued and
Number of Outstanding
Issuer Certificate No. Shares Capital Stock
------ --------------- ------ -------------
<S> <C> <C> <C>
EVEREN Securities Holdings, Inc. 7 995,000 100%
</TABLE>
<PAGE>
ANNEX A TO SECURITY AGREEMENT
TRANSACTION STATEMENT
---------------------
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE
TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHT
ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A
SECURITY.
[DATE]
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Reference is made to the Security Agreement, dated as of ____________,
1997, by and between EVEREN Capital Corporation and The Bank of New York, as
Administrative Agent. This Transaction Statement is issued under Section 8-408
of the New York State Uniform Commercial Code.
DESCRIPTION OF THE ISSUE: ___________________________________
NUMBER OF SHARES OR UNITS PLEDGED: __________________________
REGISTERED OWNER: ______________________________________, Taxpayer ID#
_______________
REGISTERED PLEDGEE: The Bank of New York, as Administrative Agent, One Wall
Street, New York, New York 10286, Taxpayer ID# _______________
NOTATION OF LIENS: There are no liens, restrictions or adverse claims on the
shares or units identified above as having been pledged.
DATE OF REGISTRATION OF THE PLEDGE: ______________, ____
[NAME OF ISSUER]
By:_________________________
Name:_______________________
Title:________________________
<PAGE>
EXHIBIT 11
EVEREN CAPITAL CORPORATION
PRO FORMA COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Six months
ended ended
June 30, 1996 June 30, 1996
------------- -------------
<S> <C> <C>
Net income reported $ 42,419 $ 49,225
============ ============
Net income applicable to common shares $ 42,419 $ 49,225
============ ============
Pro forma weighted average common shares
outstanding 17,213,995 17,213,995
============ ============
Pro forma net income per share of common stock $ 2.46 2.86
============ ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000945770
<NAME> EVEREN CAPITAL CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 44,441,000
<SECURITIES> 193,683,000
<RECEIVABLES> 46,733,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 37,932,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,856,521,000
<CURRENT-LIABILITIES> 163,000,000
<BONDS> 0
0
0
<COMMON> 175,000
<OTHER-SE> 312,299,000
<TOTAL-LIABILITY-AND-EQUITY> 1,856,521,000
<SALES> 123,712,000
<TOTAL-REVENUES> 282,955,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 236,007,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,468,000
<INCOME-PRETAX> 33,480,000
<INCOME-TAX> 12,564,000
<INCOME-CONTINUING> 20,916,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,916,000
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 0
</TABLE>
