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SECURITIES EXCHANGE AND COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 9, 1999
URS Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-7567 94-1381538
(Commission File No.) (I.R.S. Employer Identification No.)
100 California Street, Suite 500,
San Francisco, California 94111-4529
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (415) 774-2700
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Item 2. Acquisition or Disposition of Assets
On June 9, 1999, URS Corporation, a Delaware corporation ("URS"), through its
wholly-owned subsidiary, Demeter Acquisition Corporation, a Delaware corporation
(the "Purchaser") accepted for payment 17,858,895 shares of common stock, par
value $.01 per share (the "Shares"), of Dames & Moore Group (the "Company"),
that had been validly tendered and not withdrawn, including approximately
245,236 Shares tendered pursuant to notices of guaranteed delivery, pursuant to
the Purchaser's tender offer for all outstanding Shares at a price of $16.00 per
Share (the "Offer"). The Offer expired at 12:00 midnight, New York City time,
on Tuesday, June 8, 1999. The Offer was made pursuant to an Offer to Purchase,
dated as of May 11, 1999, as amended, and pursuant to an Agreement and Plan of
Merger (the "Merger Agreement") dated as of May 5, 1999 among the Company, URS
and the Purchaser. After the consummation of the Offer, the Merger Agreement
provides, among other things, for Purchaser to be merged with and into the
Company, with the Company surviving as a wholly-owned subsidiary of URS
following the merger (the "Merger").
The Shares purchased pursuant to the Offer constitute approximately 96% of the
issued and outstanding Shares. The remaining Shares, other than shares owned
directly or indirectly by URS, Purchaser or the Company (and except for shares
of Common Stock owned by any holder who properly demands appraisal rights) will
be converted into the right to receive $16.00 in cash upon consummation of the
Merger.
In accordance with the provisions of the Merger Agreement, effective upon
payment for the Shares by the Purchaser, the following designees of Purchaser
were appointed to the Company's Board of Directors: Kent P. Ainsworth, Martin M.
Koffel, Joseph Masters and Jean-Yves Perez. In accordance with the terms of the
Merger Agreement, Arthur C. Darrow, Robert F. Clarke and A. Ewan Macdonald will
remain on the Board of Directors of the Company until consummation of the
Merger, and Ursula M. Burns, Gary R. Krieger, George D. Leal, Michael R. Peevey,
Harald Peipers, and Arthur E. Williams resigned as Directors of the Company.
The total purchase price paid by Purchaser in connection with the Offer was
provided through the issuance by URS of $100 million of Series A and Series C
Preferred Stock to RCBA Strategic Partners, L.P., the issuance by URS of $200
milion of senior subordinated increasing rate notes pursuant to a bridge
financing facility provided by Morgan Stanley Senior Funding, Inc., and
borrowings of up to $450 million of the $550 million available under a senior
secured credit facility between URS, certain guarantors, including the Company,
and Wells Fargo Bank, National Association, as administrative agent, which
includes three term loan facilities in the aggregate amount of $450 million and
a revolving credit facility in the amount of $100 million. The term loan
facilities consist of a $250 million tranche ("Term Loan A"), a $100 million
tranche ("Term Loan B") and another $100 million tranche ("Term Loan C"). Term
Loan A matures six years from the funding date; Term Loan B matures seven years
from the funding date; Term Loan C matures eight years from the funding date;
and the revolving credit facility matures six years from the funding date.
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A portion of Term Loan A will be available to URS on a delayed draw-down basis
to fund payments due upon close of the Merger. The remainder of the revolving
credit facility will be used for URS' working capital requirements and for
general corporate purposes and to pay for any appraisal rights that dissenting
stockholders may have.
The term loans each bear interest, at URS' option, at a rate per annum equal to
either (1) the Base Rate or (2) LIBOR, in each case plus an applicable margin.
The revolving credit facility bears interest, at URS' option, at a rate per
annum equal to either (a) the Base Rate, (b) LIBOR or (c) the Adjusted Sterling
Rate, in each case plus an applicable margin. The applicable margin adjusts
according to a performance pricing grid based on a ratio of Funded Debt to
EBITDA (as defined in the credit facility). The "Base Rate" is defined as the
higher of (1) Wells Fargo Bank, National Association's Prime Rate and (2) the
Federal Funds Rate plus 9.50%. "LIBOR" is defined as the offered quotation that
first class banks in the London interbank market offer to Wells Fargo Bank,
National Association for dollar deposits, as adjusted for reserve requirements.
The "Adjusted Sterling Rate" is defined as the rate per annum displayed by
Reuters at which Sterling is offered to Wells Fargo Bank, National Association
in the London interbank market as determined by the British Bankers'
Association.
The press release issued by URS with respect to the purchase of Shares pursuant
to the Offer is incorporated herein by this reference.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Dames & Moore Group are included as Exhibit
99.2 to this Form 8-K.
(b) Unaudited Pro Forma Combined Financial Information of URS and Dames &
Moore (filed as Exhibit 99.1 to URS' Current Report on Form 8-K, dated May 7,
1999, and incorporated herein by reference).
(c) Exhibit Number Exhibit
2.1 Agreement and Plan of Merger, dated May 5, 1999,
by and among Dames & Moore Group, URS Corporation
and Demeter Acquisition Corporation (filed as
Exhibit 2.1 to URS' Current Form 8-K, dated May 7,
1999, and incorporated herein by reference).
2.2 Credit Agreement, dated June 9, 1999, by and
between Wells Fargo Bank, N.A. and URS
Corporation.
2.3 Note Purchase Agreement, dated June 9, 1999, by
and between Morgan Stanley Senior Funding, Inc.
and URS Corporation.
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2.4 Securities Purchase Agreement, dated May 5, 1999,
by and between RCBA Strategic Partners, L.P. and
URS Corporation.
99.1 Press Release, dated June 9, 1999 (filed as
Exhibit (a)(12) to URS' Schedule 14D-1 dated May
11, 1999, as amended, and incorporated herein by
reference).
99.2 Financial Statements of Dames & Moore Group.
Independent Auditors' Report.
Consolidated Statements of Financial Position as
of March 26, 1999 and March 27, 1998.
Consolidated Statements of Operations for the
years ended March 26, 1999, March 27, 1998 and
March 28, 1997.
Consolidated Statements of Changes in
Shareholders' Equity for the years ended March 26,
1999, March 27, 1998 and March 28, 1997.
Consolidated Statements of Cash Flows for the
years ended March 26, 1999, March 27, 1998 and
March 28, 1997.
Notes to Consolidated Financial Statements.
Supplementary Financial Information--Selected
Quarterly Financial Data (unaudited).
Schedule II--Valuation and Qualifying Accounts.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
URS Corporation
Dated: June 11, 1999 By: /s/ Kent P. Ainsworth
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Kent P. Ainsworth
Executive Vice President
Chief Financial Officer and Secretary
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EXHIBIT INDEX
Exhibit
Number Description
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2.1 Agreement and Plan of Merger, dated May 5, 1999, by and among Dames &
Moore Group, URS Corporation and Demeter Acquisition Corporation
(filed as Exhibit 2.1 to URS' Current Form 8-K, dated May 7, 1999, and
incorporated herein by reference).
2.2 Credit Agreement, dated June 9, 1999, by and between Wells Fargo Bank,
N.A. and URS Corporation.
2.3 Note Purchase Agreement, dated June 9, 1999, by and between Morgan
Stanley Senior Funding, Inc. and URS Corporation.
2.4 Securities Purchase Agreement, dated May 5, 1999, by and between RCBA
Strategic Partners, L.P. and URS Corporation.
23.1 Consent of Independent Auditors, dated June 10, 1999.
99.1 Press Release, dated June 9, 1999 (filed as Exhibit (a)(12) to URS'
Schedule 14D-1 dated May 11, 1999, as amended, and incorporated herein
by reference).
99.2 Financial Statements of Dames & Moore Group.
Independent Auditors' Report.
Consolidated Statements of Financial Position as of March 26, 1999 and
March 27, 1998.
Consolidated Statements of Operations for the years ended March 26,
1999, March 27, 1998 and March 28, 1997.
Consolidated Statements of Changes in Shareholders' Equity for the
years ended March 26, 1999, March 27, 1998 and March 28, 1997.
Consolidated Statements of Cash Flows for the years ended March 26,
1999, March 27, 1998 and March 28, 1997.
Notes to Consolidated Financial Statements.
Supplementary Financial Information--Selected Quarterly Financial Data
(unaudited).
Schedule II--Valuation and Qualifying Accounts.
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EXHIBIT 2.2
URS CORPORATION
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of June 9, 1999 and entered into by
and among URS CORPORATION, a Delaware corporation ("Company"), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a "Lender" and collectively as "Lenders"), and WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Wells Fargo"), as agent for Lenders (in such capacity,
"Administrative Agent") and as a Co-Lead Arranger and MORGAN STANLEY SENIOR
FUNDING, INC. ("Morgan Stanley") as Co-Lead Arranger (collectively, in such
capacity, "Co-Arrangers") and syndication agent (in such capacity, "Syndication
Agent").
R E C I T A L S
- - - - - - - -
WHEREAS, Company has formed its direct wholly owned Subsidiary, Merger
Sub (this and other capitalized terms used in these recitals without definition
being used as defined in subsection 1.1), for the purpose of acquiring all of
the outstanding shares of the common stock, par value $.01 per share, of DMG
("DMG Common Stock");
WHEREAS, on or before the Closing Date, RCBA will purchase shares of
Company Series A Preferred Stock and Company Series C Preferred Stock for cash
consideration of $100,000,000;
WHEREAS, on or before the Closing Date, Company will issue and sell
not less than $200,000,000 in aggregate principal amount of Senior Subordinated
Notes or, in lieu thereof, not less than $200,000,000 in aggregate principal
amount of Bridge Notes;
WHEREAS, Merger Sub has offered to purchase all of the issued and
outstanding shares of DMG Common Stock for $16.00 per share pursuant to the
Tender Offer;
WHEREAS, Merger Sub, Company and DMG have entered into the Merger
Agreement pursuant to which, upon completion of the Tender Offer and, with
respect to clauses (i) and (ii), upon receipt of the approval of holders of at
least a majority of the outstanding shares of DMG Common Stock (if required by
law):
(i) Merger Sub will be merged with and into DMG pursuant to the
Merger Agreement, with DMG being the surviving corporation in the
Merger (such surviving corporation is sometimes referred to herein as
the "Surviving Corporation");
(ii) Each of the shares of DMG Common Stock outstanding
immediately before the consummation of the Merger (other than shares
to be cancelled as described in clause (iii) below and shares held by
those who perfect appraisal rights under Delaware state law if such
rights are available) will be converted into the right to receive a
cash payment;
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(iii) Each of the shares of DMG Common Stock outstanding
immediately before the consummation of the Merger held by Company,
Merger Sub, DMG or any of their respective direct or indirect
Subsidiaries (the "Other DMG Shares") shall be cancelled and retired
without payment of any consideration therefor;
(iv) As a result of the Merger, each of the shares of the
Capital Stock of Merger Sub outstanding immediately before the
consummation of the Merger will be converted into shares of common
stock, par value $.01 per share, of Surviving Corporation (the
"Surviving Corporation Common Stock"); and
(v) Following the Merger, all of the outstanding shares of
Surviving Corporation Common Stock will be owned by Company.
WHEREAS, Company desires that Lenders extend certain credit facilities
to Company to provide financing for (i) the purchase of the Tendered Shares, the
payment of a portion of the Transaction Costs and the payment of reasonable
costs and expenses associated with the Tender Offer; (ii) the purchase pursuant
to the Merger of all shares of DMG Common Stock (other than Other DMG Shares)
not tendered in the Tender Offer, the payment of the balance of the Transaction
Costs, and the payment of reasonable costs and expenses associated with the
Merger; (iii) the refinancing of certain existing debt of Company and DMG and
(iv) the working capital and other general corporate purposes of Company;
WHEREAS, Lenders have agreed to extend certain credit facilities to
Company the proceeds of which will be used, together with the proceeds of the
issuance and sale of the Senior Subordinated Notes or the Bridge Notes and the
proceeds of the issuance of shares of Company Series A Preferred Stock and
Company Series C Preferred Stock described above, (i) to fund the Acquisition
Financing Requirements and (ii) to provide financing for working capital and
other general corporate purposes of Company and its Subsidiaries;
WHEREAS, Company desires to secure all of the Obligations hereunder
and under the other Loan Documents by granting to Administrative Agent, on
behalf of Lenders, a First Priority Lien on substantially all of its personal
property, including a pledge of 100% of the Capital Stock held by Company of
certain of its Domestic Subsidiaries and the lesser of (i) 100% of the Capital
Stock held by Company of certain of its Foreign Subsidiaries or (ii) 65% of the
Capital Stock of any such Foreign Subsidiary; and
WHEREAS, certain of the Domestic Subsidiaries of Company have agreed
to guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to Administrative Agent, on behalf of
Lenders, a First Priority Lien on substantially all of their respective personal
property, including a pledge of 100% of the Capital Stock held by such Domestic
Subsidiaries of certain of their respective Domestic Subsidiaries and the lesser
of (i) 100% of the Capital Stock held by such Domestic Subsidiaries of certain
of their respective Foreign Subsidiaries or (ii) 65% of the Capital Stock of any
such Foreign Subsidiary:
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NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders, Co-Arrangers,
Syndication Agent and Administrative Agent agree as follows:
Section 1. DEFINITIONS
1.1 Certain Defined Terms.
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The following terms used in this Agreement shall have the following meanings:
"Acquisition Financing Requirements" means the aggregate of all
amounts necessary (i) to finance the purchase of Tendered Shares pursuant to the
Tender Offer, (ii) to finance the purchase of shares of DMG Common Stock that
have been converted into the right to receive payment pursuant to the Merger
(including those for which appraisal rights have been perfected), (iii) to
repay amounts outstanding under the Existing Credit Agreements, and (iv) to pay
Transaction Costs.
"Acquisition Revolving Loans" has the meaning assigned to that term in
subsection 2.5A.
"Adjusted Domestic Sterling Rate" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Domestic Sterling
Rate Loan, the rate per annum displayed by Reuters at which Sterling is offered
to the Administrative Agent in the London interbank market at 11:00 A.M. (London
time) as determined by the British Bankers' Association based upon rates
supplied by the Reference Banks, as ranked and arithmetically averaged between
the middle two quartiles only and rounded upward, if necessary, to the nearest
1/16 of 1%.
"Adjusted Eurodollar Rate" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum obtained by dividing (i) the offered quotation (rounded upward to the
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nearest 1/16 of 1%) by first class banks in the London interbank market to Wells
Fargo for U.S. dollar deposits of amounts in same day funds comparable to the
principal amount of the Eurodollar Rate Loan of Wells Fargo for which the
Adjusted Eurodollar Rate is then being determined (which principal amount shall
be deemed to be $1,000,000 in the event Wells Fargo is not making, converting to
or continuing such a Eurodollar Rate Loan) with maturities comparable to such
Interest Period as of approximately 11:00 A.M. (London time) on such Interest
Rate Determination Date by (ii) a percentage equal to 100% minus the stated
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maximum rate of all reserve requirements (including any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurocurrency liabilities" as defined in Regulation D (or any successor
category of liabilities under Regulation D).
"Administrative Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5.
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"Affected Class" has the meaning assigned to that term in subsection
10.6.
"Affected Lender" has the meaning assigned to that term in subsection
2.6C.
"Affected Loans" has the meaning assigned to that term in subsection
2.6C.
"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person or is a director or officer of such Person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or otherwise. Any
Person, other than a Lender, who owns beneficially or of record Securities
representing more than 5% of the total outstanding Securities of Company shall
be an Affiliate of Company.
"Aggregate Amounts Due" has the meaning assigned to that term in
subsection 10.5.
"Agreement" means this Credit Agreement dated as of June 9, 1999, as
it may be amended, supplemented or otherwise modified from time to time.
"Applicable Commitment Fee Percentage" means, as at any date of
determination, the percentage per annum set forth below opposite the applicable
Leverage Ratio, as determined in accordance with subsection 2.3:
Leverage Ratio Commitment
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Fee
---
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Greater than or equal to 4.00 to 1.00 2.75
Greater than or equal to 3.50 to 1.00 2.50
Greater than or equal to 3.00 to 1.00 2.25
Greater than or equal to 2.50 to 1.00 2.00
Greater than or equal to 2.00 to 1.00 1.75
Less than 2.00 to 1.00 1.50
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"Applicable Margin" means, as at any date of determination and for any
type of Loan, the percentage per annum set forth below opposite the applicable
Leverage Ratio with respect to such type of Loan, as determined in accordance
with subsection 2.2A:
<TABLE>
<CAPTION>
Revolving
Tranche A Tranche B Tranche C Revolving Dollar Sterling
--------- --------- --------- ----------------
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Leverage Euro- Euro- Euro- Euro-
Ratio Base dollar Base dollar Base dollar Base dollar
---- ---- ------ ---- ---- ---- ------ ---- ------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Greater than or equal to 4.00 to 1.00 1.75 2.75 2.25 3.25 2.50 3.50 1.75 2.75 2.75
- ------------------------------------------------------------------------------------------------------------------------------
Greater than or equal to 3.50 to 1.00 1.50 2.50 2.25 3.25 2.50 3.50 1.50 2.50 2.50
- ------------------------------------------------------------------------------------------------------------------------------
Greater than or equal to 3.00 to 1.00 1.25 2.25 2.25 3.25 2.50 3.50 1.25 2.25 2.25
- ------------------------------------------------------------------------------------------------------------------------------
Greater than or equal to 2.50 to 1.00 1.00 2.00 2.00 3.00 2.25 3.25 1.00 2.00 2.00
- ------------------------------------------------------------------------------------------------------------------------------
Greater than or equal to 2.00 to 1.00 0.75 1.75 2.00 3.00 2.25 3.25 0.75 1.75 1.75
- ------------------------------------------------------------------------------------------------------------------------------
Less than 2.00 to 1.00 0.50 1.50 2.00 3.00 2.25 3.25 0.50 1.50 1.50
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
"Applicable Currency" means, as to any particular payment or Loan,
Dollars or Sterling in which it is denominated or is payable.
"Applied Amount" has the meaning assigned to that term in subsection
2.4B(iv)(b).
"Asset Sale", as applied to any Person, means the sale by such Person
or any of its Subsidiaries to any other Person of (i) any of the stock of any
Subsidiary of such Person (other than any stock sold to licensed professionals
employed by such Person or its Subsidiaries in order to comply with licensing
laws or any stock sold to qualify directors if required by applicable law), (ii)
substantially all of the assets of any division or line of business of such
Person or any of its Subsidiaries (other than the assets of any division or line
of business to the extent that the aggregate value of such assets is less than
$1,000,000), or (iii) any other assets (whether tangible or intangible) of such
Person or any of its Subsidiaries (other than any assets to the extent that the
aggregate value of such assets sold in any single transaction or related series
of transactions during any Fiscal Year is less than $1,000,000).
"Assignment Agreement" means an Assignment Agreement substantially in
the form of Exhibit XIII annexed hereto.
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"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Rate Loans" means Term Loans and Revolving Dollar Loans bearing
interest at rates determined by reference to the Dollar Base Rate.
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"Bridge Loan Agreement" means the Note Purchase Agreement dated as of
the Closing Date between Company and the purchasers listed therein and the
indenture with respect to the Rollover Notes provided for therein, as such
agreement or indenture, as the case may be, may be amended from time to time to
the extent permitted under subsection 7.13B.
"Bridge Notes" means the Senior Subordinated Increasing Rate Notes due
June 9, 2000.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of California or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close, and (ii) with respect to all notices,
determinations, fundings, issuances and payments in connection with the Adjusted
Eurodollar Rate, the Adjusted Domestic Sterling Rate or any Eurodollar Rate
Loans or any Domestic Sterling Rate Loans, any day that is a Business Day
described in clause (i) above and that is also (a) a day for trading by and
between banks in Dollar or Sterling, as the case may be, deposits in the London
interbank market and (b) a day on which banking institutions are open for
business in London.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), (iv) in the case of a limited liability
company, membership interests, and (v) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distribution of assets of, the issuing Person.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Cash Equivalents" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States of America the obligations of which are backed by
the full faith and credit of the United States of America, in each case maturing
within one year after such date; (ii) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof, in each case maturing within
one year after such date and having, at the time of the acquisition thereof, the
highest rating obtainable from either Standard & Poor's Ratings Group ("S&P") or
Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no
more than one year from the date of creation thereof and having, at the time of
the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America, any
state thereof, the District of Columbia or any foreign country recognized by the
United States of America and which bank (a) is at least "adequately
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capitalized" (as defined in the regulations of its primary Federal banking
regulator), (b) has Tier 1 capital (as defined in such regulations) of not less
than $100,000,000 (or the foreign currency equivalent thereof), and (c) has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act); and (v) shares of any money
market mutual fund that (a) has at least 95% of its assets invested continuously
in the types of investments referred to in clauses (i) and (ii) above, (b) has
net assets of not less than $500,000,000, and (c) has the highest rating
obtainable from either S&P or Moody's.
"Certificate re Non-Bank Status" means a certificate substantially in
the form of Exhibit XIV annexed hereto delivered by a Lender to Administrative
-----------
Agent pursuant to subsection 2.7B(iii).
"Class" means, as applied to Lenders, each of the following three
classes of Lenders: (i) Lenders having Revolving Loan Exposure and Term Loan A
Exposure; (ii) Lenders having Term Loan B Exposure; and (iii) Lenders having
Term Loan C Exposure.
"Closing Date" means the date, on or before September 30, 1999, on
which the initial Loans are made.
"Closing Date Company Disclosure Letter" means the letter dated the
Closing Date delivered to Administrative Agent by Company containing information
with respect to Company and its Subsidiaries and DMG and its Subsidiaries.
"Closing Date Compliance Certificate" means a certificate
substantially in the form of Exhibit X annexed hereto delivered to
---------
Administrative Agent and Lenders by Company pursuant to subsection 4.1I.
"Closing Date Loan Documents" means this Agreement, the Subsidiary
Guaranty, the Notes, the Pledge and Security Agreement and the Tender Pledge
Agreement.
"Closing Date Loan Parties" means Company, each of the Domestic
Subsidiaries of Company required to execute the Subsidiary Guaranty pursuant to
subsection 4.1, and DMG.
"Co-Arrangers" has the meaning assigned to that term in the
introduction to this Agreement.
"Collateral" means, collectively, all of the real, personal and mixed
property (including Capital Stock) in which Liens are purported to be granted
pursuant to the Collateral Documents as security for the Obligations.
"Collateral Documents" means the Pledge and Security Agreement, the
Tender Pledge Agreement, the Mortgages, and all other instruments or documents
delivered by any Loan Party pursuant to this Agreement or any of the other Loan
Documents in order to grant to Administrative Agent, on behalf of Lenders, a
Lien on any real, personal or mixed property (including Capital Stock) of that
Loan Party as security for the Obligations.
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"Commencement of the Third Stage of EMU" means January 1, 1999.
"Commitments" means the commitments of Lenders to make Loans as set
forth in subsection 2.1A.
"Company" has the meaning assigned to that term in the introduction to
this Agreement.
"Company Certificates of Designation" means the Certificates of
Designation for the Company Series A Preferred Stock, Company Series B Preferred
Stock and Company Series C Preferred Stock, in the form delivered to
Administrative Agent on May 3, 1999, as such Certificates of Designation may be
further amended from time to time to the extent permitted under subsection
7.13B.
"Company Series A Preferred Stock" means the Series A Preferred Stock,
$1.00 par value per share, of Company.
"Company Series B Preferred Stock" means the Series B Convertible
Exchangeable Preferred Stock, $1.00 par value per share, of Company.
"Company Series C Preferred Stock" means the Series C Preferred Stock,
$1.00 par value per share, of Company.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit IX annexed hereto delivered to Administrative Agent and Lenders by
----------
Company pursuant to subsection 6.1(iii).
"Consolidated Capital Expenditures" means, for any period, the sum,
without duplication, of (i) the aggregate of all expenditures (whether paid in
cash or other consideration or accrued as a liability and including that portion
of Capital Leases which is capitalized on the consolidated balance sheet of
Company and its Subsidiaries) by Company and its Subsidiaries during that period
for fixed assets and leasehold improvements of Company and its Subsidiaries plus
----
(ii) to the extent not covered by clause (i) of this definition, the aggregate
of all expenditures by Company and its Subsidiaries during that period to
purchase or develop computer software or systems (but only to the extent such
expenditures are capitalized on the consolidated balance sheet of Company and
its Subsidiaries in conformity with GAAP) minus (iii) to the extent included in
-----
clause (i) of this definition, the total cash consideration expended by Company
and its Subsidiaries during such period to acquire (by purchase or otherwise)
the business, property or fixed assets of any Person, or the stock or other
evidence of beneficial ownership of any Person that, as a result of such
acquisition, becomes a Subsidiary of Company.
"Consolidated Cash Interest Expense" means, for any period,
Consolidated Interest Expense for such period, excluding, however, any interest
expense not payable in Cash (including amortization of discount and amortization
of debt issuance costs).
"Consolidated Current Assets" means, as at any date of determination,
the total assets of Company and its Subsidiaries on a consolidated basis which
may properly be classified as current assets in conformity with GAAP.
8
<PAGE>
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, (i) excluding (a) the aggregate principal amount of all
outstanding Revolving Loans and (b) the maximum aggregate amount which is or at
any time thereafter may become available for drawing under all Letters of Credit
then outstanding and (ii) including the current portion of the aggregate
principal amount of all outstanding Term Loans.
"Consolidated EBITDA" means, for any period, the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) Consolidated Interest
Expense, (iii) provisions for taxes based on income, (iv) total depreciation
expense, (v) total amortization expense, and (vi) other non-cash items reducing
Consolidated Net Income less other non-cash items increasing Consolidated Net
----
Income, all of the foregoing as determined on a consolidated basis for Company
and its Subsidiaries in conformity with GAAP; provided, however, that
-------- -------
Consolidated EBITDA for any four-Fiscal Quarter period which includes one or
more Fiscal Quarters prior to completion of the Tender Offer shall be equal to
the sum of (i) Consolidated EBITDA for such period plus (ii) the product of (a)
----
$6,350,000, and (b) twelve minus the number of months that have elapsed since
the completion of the Tender Offer; provided, further, that in the event a
-------- -------
Subsequent Acquisition is consummated during any four-Fiscal Quarter period,
Consolidated EBITDA shall be calculated after giving pro forma effect thereto as
if such Subsequent Acquisition occurred on the first day of such four-Fiscal
Quarter period.
"Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) Consolidated EBITDA for such period minus (ii) the sum,
-----
without duplication, of (a) Consolidated Principal Payments for such period, (b)
Consolidated Capital Expenditures (net of any proceeds of any related financings
with respect to such expenditures) for such period, (c) Consolidated Cash
Interest Expense for such period, (d) the provision for current taxes based on
income of Company and its Subsidiaries on a consolidated basis and payable in
Cash during such period, and (e) the aggregate amount of all expenditures by
Company and its Subsidiaries during that period to acquire (by purchase or
otherwise) the business, property or fixed assets of any other Person, or the
stock or other evidence of beneficial ownership of any other Person that, as a
result of such acquisition, becomes a Subsidiary of Company (net of any proceeds
of any related financings with respect to such expenditures).
"Consolidated Fixed Charges" means, for any period, the sum (without
duplication) of the amounts for such period of (i) Consolidated Interest
Expense, (ii) provisions for taxes based on income and payable in Cash, and
(iii) Consolidated Scheduled Principal Payments, all of the foregoing as
determined on a consolidated basis for Company and its Subsidiaries in
conformity with GAAP.
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries during such period, including all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements to which
Company or any of its Subsidiaries is a party, but excluding, however, any
amounts referred to in subsection 2.3
9
<PAGE>
payable to Administrative Agent and Lenders on or before the Closing Date and
amounts paid pursuant to subsection 2.3 of the Existing URS Credit Agreement.
"Consolidated Net Income" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
--------
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales by Company or any of its Subsidiaries or returned surplus assets
of any Pension Plan of Company or any of its Subsidiaries, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"Consolidated Principal Payments" means, for any period, the aggregate
amount of all net voluntary and scheduled repayments of principal by Company and
its Subsidiaries on a consolidated basis during such period under all
Indebtedness of Company or any of its Subsidiaries (including the principal
component of Capital Leases).
"Consolidated Scheduled Principal Payments" means, for any period, the
aggregate amount of all scheduled repayments of principal by Company and its
Subsidiaries on a consolidated basis during such period under all Indebtedness
of Company or any of its Subsidiaries (including the principal component of
Capital Leases).
"Consolidated Total Funded Debt" means, as at any date of
determination, the sum, on a consolidated basis, of (i) the aggregate principal
amount of all outstanding Term Loans, (ii) the aggregate amount of that portion
of obligations with respect to Capital Leases of Company or any of its
Subsidiaries that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) the aggregate principal amount of all outstanding
Indebtedness of Company or any of its Subsidiaries for borrowed money evidenced
by a note or similar written instrument, (iv) the aggregate principal amount of
all outstanding Subordinated Indebtedness, and (v) the aggregate principal
amount of all outstanding Revolving Loans.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the
10
<PAGE>
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings, or (iii) under Hedge Agreements. Contingent
Obligations shall include (a) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other party or parties
to an agreement, and (c) any liability of such Person for the obligation of
another through any agreement (contingent or otherwise) (1) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(2) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (1) or (2) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
in the form of a letter of credit or a guaranty of a specified amount shall be
equal to the face amount of the letter of credit or the amount of the obligation
so guaranteed or otherwise supported, as the case may be, or, if less, the
amount to which such Contingent Obligation is specifically limited. The amount
of any Contingent Obligation which is not in the form of a guaranty of a
specified amount shall be equal to the reasonably anticipated maximum amount of
such Contingent Obligation as determined by Company in good faith.
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DMG" means Dames & Moore Group, a Delaware corporation.
"DMG Common Stock" has the meaning assigned to that term in the
Recitals to this Agreement.
"DMG Fiscal Year" means, prior to consummation of the Merger, the
fiscal year of DMG and its Subsidiaries ending on the last Friday of March in
each calendar year.
"DMG Loan Proceeds Notes" means those certain promissory notes issued
by DMG in favor of Company to evidence (i) all amounts advanced to DMG by
Company on the Closing Date and (ii) the proceeds of all Revolving Loans
advanced to DMG from Company from time to time during the period from and
including the Closing Date to and including the Merger Date.
11
<PAGE>
"Dollar Base Rate" means, at any time, the higher of (i) the Prime
Rate or (ii) the rate which is 1/2 of 1% in excess of the Federal Funds
Effective Rate.
"Dollar Equivalent" means, at any time, (i) as to any amount
denominated in Dollars, the amount thereof at such time, and (ii) as to any
amount denominated in Sterling, the equivalent amount in Dollars as determined
by Administrative Agent at such time on the basis of the Spot Rate for the
purchase of Dollars with Sterling on the most recent computation date provided
for in subsection 2.4D(i).
"Dollars" and the sign "$" mean the lawful money of the United States
of America.
"Domestic Sterling Rate Loans" means Revolving Sterling Loans bearing
interest at rates determined by reference to the Adjusted Domestic Sterling
Rate.
"Domestic Subsidiary" means any Subsidiary organized or incorporated
under the laws of a state of the United States of America.
"Eligible Assignee" means (i) (a) a commercial bank organized under
the laws of the United States of America or any state thereof and having a
combined capital and surplus of at least $100,000,000; (b) a savings and loan
association or savings bank organized under the laws of the United States of
America or any state thereof and having a combined capital and surplus of at
least $100,000,000; (c) a commercial bank organized under the laws of any other
country or a political subdivision thereof and having a combined capital and
surplus of at least $100,000,000; provided that (1) such bank is acting through
--------
a branch or agency located in the United States of America or (2) such bank is
organized under the laws of a country that is a member of the Organization for
Economic Cooperation and Development or a political subdivision of such country;
and (d) any other entity which is an "accredited investor" (as defined in
Regulation D under the Securities Act) which extends credit or buys loans as one
of its businesses, including insurance companies, investment funds, mutual funds
and lease financing companies, and which have a combined capital and surplus, a
net worth or total assets of at least $100,000,000; and (ii) any Lender and any
Affiliate of any Lender or, with respect to any Lender that is a fund that
invests in loans, any other fund that invests in loans and is advised or managed
by the same investment advisor as such Lender or by an Affiliate of such Lender;
provided that no Affiliate of Company shall be an Eligible Assignee.
- --------
"EMU" means Economic and Monetary Union as contemplated in the Treaty
on European Union.
"EMU Legislation" means legislative measures of the European Council
for the introduction of, changeover to or operation of a single or unified
European currency (whether known as the euro or otherwise), being in part the
implementation of the third stage of EMU.
"Employee Benefit Plan", as applied to any Person, means any "employee
benefit plan" as defined in Section 3(3) of ERISA which is or was maintained or
contributed to by such Person, any of its Subsidiaries or any of their
respective ERISA Affiliates.
12
<PAGE>
"Environmental Claim" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any governmental authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
"Environmental Laws" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other requirements of governmental
authorities relating to (i) environmental matters, including those relating to
any Hazardous Materials Activity, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, in any manner applicable to Company or any of its
Subsidiaries or any Facility, including the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et seq.), the
-- ---
Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.), the
-- ---
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), the Federal
-- ---
Water Pollution Control Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42
-- ---
U.S.C. (S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601
-- ---
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. (S)
- -- ---
136 et seq.), the Occupational Safety and Health Act (29 U.S.C. (S) 651 et
-- --- --
seq.), the Oil Pollution Act (33 U.S.C. (S) 2701 et seq.) and the Emergency
- --- ------
Planning and Community Right-to-Know Act (42 U.S.C. (S) 11001 et seq.), each as
-- ---
amended or supplemented, any analogous present or future state or local statutes
or laws, and any regulations promulgated pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA Affiliate," as applied to any Person, means (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Company or
such Subsidiary within the meaning of this definition with respect to the period
such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities arising after such period for which Company or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan of Company or any of its Subsidiaries (excluding those for which
the provision for 30-day notice to the PBGC has been waived by regulation); (ii)
the failure to meet the minimum funding standard
13
<PAGE>
of Section 412 of the Internal Revenue Code with respect to any Pension Plan of
Company or any of its Subsidiaries (whether or not waived in accordance with
Section 412(d) of the Internal Revenue Code) or the failure by Company or any of
its Subsidiaries to make by its due date a required installment under Section
412(m) of the Internal Revenue Code with respect to any Pension Plan or the
failure by Company or any of its Subsidiaries to make any required contribution
to a Multiemployer Plan; (iii) the provision by the administrator of any Pension
Plan of Company or any of its Subsidiaries pursuant to Section 4041(a)(2) of
ERISA of a notice of intent to terminate such plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the withdrawal by Company, any of
its Subsidiaries or any of their respective ERISA Affiliates from any Pension
Plan with two or more contributing sponsors or the termination of any such
Pension Plan resulting in liability pursuant to Section 4063 or 4064 of ERISA;
(v) the institution by the PBGC of proceedings to terminate any Pension Plan of
Company or any of its Subsidiaries, or the occurrence of any event or condition
which might constitute grounds under ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan of Company or any of
its Subsidiaries; (vi) the imposition of liability on Company, any of its
Subsidiaries or any of their respective ERISA Affiliates pursuant to Section
4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of
ERISA; (vii) the withdrawal of Company, any of its Subsidiaries or any of their
respective ERISA Affiliates in a complete or partial withdrawal (within the
meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there
is any potential liability therefor, or the receipt by Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated
under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or
omission which could give rise to the imposition on Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of fines, penalties,
taxes or related charges under Chapter 43 of the Internal Revenue Code or under
Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of
any Employee Benefit Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan of Company or any
of its Subsidiaries other than a Multiemployer Plan or the assets thereof, or
against Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in connection with any Employee Benefit Plan; (x) receipt from the
Internal Revenue Service of notice of the failure of any Pension Plan of Company
or any of its Subsidiaries (or any other Employee Benefit Plan of Company or any
of its Subsidiaries intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension Plan of Company or
any of its Subsidiaries to qualify for exemption from taxation under Section
501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant
to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to
ERISA with respect to any Pension Plan of Company or any of its Subsidiaries.
"euro" means the single currency of participating member states of the
European Union.
"euro Unit" means the currency unit of the euro.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
14
<PAGE>
"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Exchange Assets" has the meaning assigned to that term in subsection
2.4B(iii)(a)(2).
"Exchange Rate" means, on any date when an amount expressed in a
currency other than Dollars is to be determined with respect to any Letter of
Credit, the nominal rate of exchange of the Issuing Lender in the New York
foreign exchange market for the purchase by the Issuing Lender (by cable
transfer) of such currency in exchange for Dollars at 12:00 noon (New York time)
one Business Day prior to such date, expressed as a number of units of such
currency per one Dollar.
"Existing Company Letters of Credit" means those letters of credit
issued for the account of Company and identified on Schedule 1.1 of the Closing
------------
Date Company Disclosure Letter.
"Existing Credit Agreements" means, collectively, (i) the Existing URS
Credit Agreement and (ii) the Existing DMG Credit Agreement, in each case as
amended prior to the Closing Date.
"Existing DMG Credit Agreement" means that certain Amended and
Restated Credit Agreement dated as of October 22, 1998 among DMG, the several
lenders from time to time parties thereto, and Canadian Imperial Bank of
Commerce, as administrative agent.
"Existing DMG Letters of Credit" means those letters of credit issued
for the account of DMG and identified on Schedule 1.1 of the Closing Date
------------
Company Disclosure Letter.
"Existing Senior Subordinated Note Indenture" means the Indenture,
dated as of March 16, 1989, between Thortec International, Inc. and MTrust Corp,
National Association, as amended by Amendment Number 1 and Amendment Number 2,
as such indenture may be further amended from time to time to the extent
permitted under subsection 7.13B.
"Existing Senior Subordinated Notes" means Company's 8% Senior
Subordinated Notes due 2004 in the original aggregate principal amount of
$36,814,500 and the remaining aggregate principal amount of $6,455,000 as of the
Closing Date.
"Existing Subordinated Agreements" means, collectively, the Existing
Senior Subordinated Note Indenture and the Existing Subordinated Note Indenture.
"Existing Subordinated Indebtedness" means, collectively, the Existing
Senior Subordinated Notes and the Existing Subordinated Notes.
"Existing Subordinated Note Indenture" means the Indenture, dated as
of February 15, 1987, between Company and The Bank of New York as assignee of
First Interstate
15
<PAGE>
Bank of California, as amended by Amendment Number 1, as such indenture may be
further amended from time to time to the extent permitted under subsection
7.13B.
"Existing Subordinated Notes" means Company's 6 1/2% Convertible
Subordinated Notes due 2012 in the original aggregate principal amount of
$57,500,000 and the remaining aggregate principal amount of $1,833,000 as of the
Closing Date.
"Existing URS Credit Agreement" means that certain Credit Agreement
dated as of November 14, 1997 among Company, the lenders party thereto, and
Wells Fargo, as administrative agent.
"Facilities" means any and all real property (including all
buildings, fixtures or other improvements located thereon) now, hereafter or
heretofore owned, leased, operated or used by Company or any of its Subsidiaries
or any of their respective predecessors or Affiliates.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.
"Financial Plan" has the meaning assigned to that term in subsection
6.1(xii).
"First Priority" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that (i) such
Lien has priority over any other Lien on such Collateral (other than Permitted
Encumbrances) and (ii) such Lien is the only Lien (other than Permitted
Encumbrances and Liens permitted pursuant to subsection 7.2A) to which such
Collateral is subject.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Company and its Subsidiaries
ending on October 31 of each calendar year. For purposes of this Agreement, any
particular Fiscal Year shall be designated by reference to the calendar year in
which such Fiscal Year ends.
"Flood Hazard Property" means a Mortgaged Property located in an area
designated by the Federal Emergency Management Agency as having special flood or
mud slide hazards.
"Foreign Subsidiary" means any Subsidiary formed or organized under
the laws of a jurisdiction other than a state of the United States of America.
"Funding and Payment Office" means in respect of fundings, issuances
and payments (i) with respect to Term Loans, Revolving Dollar Loans and Swing
Line Loans, the office of Administrative Agent located at 201 3rd Street, 8th
Floor, San Francisco, California
16
<PAGE>
94103; (ii) with respect to Revolving Sterling Loans, the office of Lloyds Bank
P.L.C. in London (International SC 309634; Swift ID No.: LOYDGB2L) for the
account of Wells Fargo (Acct. No. 01084802 with the following reference note:
"For Account of Wells Fargo Bank, San Francisco, Reference: Sterling Loan"); or
(iii) with respect to any Loans, such office of Administrative Agent or Swing
Line Lender as may from time to time hereafter be designated as such in a
written notice delivered by Administrative Agent and Swing Line Lender to
Company and each Lender.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"Governmental Acts" has the meaning assigned to that term in
subsection 3.5A.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"Hazardous Materials" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", acutely
hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substances", or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(ix) pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental authority or which
may or could pose a hazard to the health and safety of the owners, occupants or
any Persons in the vicinity of any Facility or to the indoor or outdoor
environment.
"Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment,
17
<PAGE>
abatement, removal, remediation, disposal, disposition or handling of any
Hazardous Materials, and any corrective action or response action with respect
to any of the foregoing.
"Hedge Agreement" means an Interest Rate Agreement or a Currency
Agreement designed to hedge against fluctuations in interest rates or currency
values, respectively.
"Inactive Subsidiary" has the meaning assigned to that term in
subsection 5.1E.
"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, excluding, in the case of both clauses (a) and (b), accounts
receivable from Company and its Subsidiaries arising in the ordinary course of
business, and (v) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person. Obligations under Interest Rate Agreements and Currency
Agreements constitute (1) in the case of Hedge Agreements, Contingent
Obligations, and (2) in all other cases, Investments, and in neither case
constitute Indebtedness.
"Indemnified Liabilities" has the meaning assigned to that term in
subsection 10.3.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"Interest Payment Date" means (i) with respect to any Base Rate Loan,
the last Business Day of each January, April, July and October of each year,
commencing on the first such date to occur after the Closing Date; provided,
--------
however, that the first Interest Payment Date with respect to any Base Rate Loan
- -------
shall be October 31, 1999 and (ii) with respect to any Eurodollar Rate Loan or
Domestic Sterling Rate Loan, the last day of each Interest Period applicable to
such Loan; provided that in the case of each Interest Period of six or twelve
--------
months "Interest Payment Date" shall also include each date that is three
months, or an integral multiple thereof, after the commencement of such Interest
Period.
"Interest Period" has the meaning assigned to that term in subsection
2.2B.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement.
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<PAGE>
"Interest Rate Determination Date" means each date for calculating the
Adjusted Eurodollar Rate or the Adjusted Domestic Sterling Rate, for purposes of
determining the interest rate in respect of an Interest Period. The Interest
Rate Determination Date in respect of calculating the Adjusted Eurodollar Rate
and the Adjusted Domestic Sterling Rate shall be the second Business Day prior
to the first day of the related Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary of
Company), (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by any Subsidiary of Company from any Person other than
Company or any of its Subsidiaries, of any equity Securities of such Subsidiary,
(iii) any direct or indirect loan, advance (other than advances to employees for
moving, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
Company or any of its Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that, in the case of
accounts receivable from Persons other than Company and its Subsidiaries, are
not current assets or did not arise from sales to that other Person in the
ordinary course of business and, in the case of accounts receivable from Company
and its Subsidiaries, did not arise in the ordinary course of business, or (iv)
Interest Rate Agreements or Currency Agreements not constituting Hedge
Agreements. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment and minus the amount of any return of capital
contributed in respect of any Investment (not to exceed the original cost of
such Investment plus the cost of all additions thereto).
"Issuing Lender" means, with respect to any Letter of Credit, Wells
Fargo.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
--------
that in no event shall any Subsidiary of any Person be considered to be a Joint
Venture to which such Person is a party.
"Lender" and "Lenders" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires; provided that
the term "Lenders", when used in the context of a particular Commitment, shall
mean Lenders having that Commitment.
"Letter of Credit" or "Letters of Credit" means (i) any letter of
credit or similar instrument issued or to be issued by the Issuing Lender for
the account of Company pursuant to subsection 3.1 for the purpose of supporting
(a) Indebtedness of Company or any of its Subsidiaries in respect of industrial
revenue or development bonds or financings, (b) workers' compensation
liabilities of Company or any of its Subsidiaries, (c) the obligations of third
party insurers of Company or any of its Subsidiaries arising by virtue of the
laws of any jurisdiction requiring third party insurers, (d) obligations with
respect to Capital Leases or Operating Leases
19
<PAGE>
of Company or any of its Subsidiaries, and (e) performance, payment, deposit or
surety obligations of Company or any of its Subsidiaries, in any case if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry; provided that Letters of Credit may not be issued
--------
for the purpose of supporting any Indebtedness constituting "antecedent debt"
(as that term is used in Section 547 of the Bankruptcy Code), and (ii) the
Existing Company Letters of Credit.
"Letter of Credit Usage" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
----
(ii) the aggregate amount of all drawings under Letters of Credit honored by the
Issuing Lender and not theretofore reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Dollar Loans pursuant to
subsection 3.3B). For purposes of this definition, any amount described in
clause (i) or (ii) of the preceding sentence which is denominated in a currency
other than Dollars shall be valued based on the applicable Exchange Rate for
such currency as of the applicable date of determination.
"Leverage Ratio" means, as at any date of determination, the ratio of
(i) Consolidated Total Funded Debt as of such date to (ii) Consolidated EBITDA
for the four-Fiscal Quarter period ending on such date.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Term Loans, Revolving Loans
or Swing Line Loans or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit (and any applications for, or reimbursement agreements or other documents
or certificates executed by Company in favor of the Issuing Lender relating to,
the Letters of Credit), the Subsidiary Guaranty and the Collateral Documents.
"Loan Party" means each of Company and any Subsidiary Guarantor, and
"Loan Parties" means all such Persons, collectively.
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"Material Adverse Effect", as applied to any Person, means (i) a
material adverse effect upon the business, operations, properties, assets,
liabilities, financial condition or prospects of such Person and its
Subsidiaries, taken as a whole, or (ii) the material impairment of the ability
of any Loan Party to perform, or of Administrative Agent or Lenders to enforce,
the Obligations.
20
<PAGE>
"Material Real Property" means, as at any date of determination, any
fee interest in real property of Company or any of its Subsidiaries having a
fair market value of $10,000,000 or more.
"Maximum Consolidated Capital Expenditures Amount" has the meaning
assigned to that term in subsection 7.8.
"Merger" means the merger of DMG with Merger Sub in accordance with
the terms of the Merger Agreement, with DMG being the surviving corporation in
such Merger.
"Merger Agreement" means that certain Agreement and Plan of Merger by
and among DMG, Company and Merger Sub dated as of May 5, 1999 in the form
delivered to Administrative Agent and Lenders prior to their execution of this
Agreement and as such agreement may be amended from time to time thereafter to
the extent permitted under subsection 7.13A.
"Merger Date" means the date that the Merger becomes effective in
accordance with the terms of the Merger Agreement.
"Merger Date Loan Documents" means the Subsidiary Guaranty and the
Pledge and Security Agreement.
"Merger Date Loan Parties" means each of the Domestic Subsidiaries of
DMG required to execute the Subsidiary Guaranty pursuant to subsection 4.2.
"Merger Sub" means Demeter Acquisition Corporation, a Delaware
corporation and a wholly-owned Subsidiary of Company.
"Minimum Shares" means more than 50% of the shares of DMG Common
Stock, on a fully diluted basis.
"Morgan Stanley" has the meaning assigned to that term in the
introduction to this Agreement.
"Mortgage" means a security instrument (whether designated as a deed
of trust or a mortgage or by any similar title) executed and delivered by any
Loan Party, in such form as may be approved by Administrative Agent in its sole
discretion, with such changes thereto as may be recommended by Administrative
Agent's local counsel based on local laws or customary local mortgage or deed of
trust practices. "Mortgages" means all such instruments, collectively.
"Mortgaged Property" has the meaning assigned to that term in
subsection 6.8.
"Multiemployer Plan" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"National Currency Unit" means the unit of currency (other than a euro
Unit) of a Participating Member State.
21
<PAGE>
"Net Asset Sale Proceeds" means, with respect to any Asset Sale by
Company or any of its Subsidiaries, Cash payments (including any Cash received
by way of deferred payment pursuant to, or by monetization of, a note receivable
or otherwise, but only as and when so received) received from such Asset Sale,
net of any bona fide direct costs incurred in connection with such Asset Sale,
including (i) income taxes reasonably estimated to be actually payable within
two years of the date of such Asset Sale as a result of any gain recognized in
connection with such Asset Sale and (ii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans) that is secured by a Lien on the stock or assets in question and
that is required to be repaid under the terms thereof as a result of such Asset
Sale.
"Net Debt Securities Proceeds" has the meaning assigned to that term
in subsection 2.4B(iii)(d).
"Net Equity Securities Proceeds" has the meaning assigned to that term
in subsection 2.4B(iii)(e).
"Net Insurance/Condemnation Proceeds" means any Cash payments or
proceeds attributable to a loss by Company or any of its Subsidiaries (i) under
any business interruption or casualty insurance policy in respect of a covered
loss thereunder or (ii) as a result of the taking of any assets of Company or
any of its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs incurred by Company or any of its
Subsidiaries in respect thereof.
"Net Pension Proceeds" has the meaning assigned to that term in
subsection 2.4B(iii)(c).
"Net Proceeds Amount" has the meaning assigned to that term in
subsection 2.4B(iii)(g).
"Non-US Lender" has the meaning assigned to that term in subsection
2.7B(iii)(a).
"Notes" means one or more of the Revolving Notes, Tranche A Term
Notes, Tranche B Term Notes, Tranche C Term Notes or Swing Line Note or any
combination thereof.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Administrative Agent pursuant
- ---------
to subsection 2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to Administrative
----------
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
22
<PAGE>
"Notice of Issuance of Letter of Credit" means a notice substantially
in the form of Exhibit III annexed hereto delivered by Company to Administrative
-----------
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"Obligations" means all obligations of every nature of each Loan Party
from time to time owed to Administrative Agent, Lenders or any of them under the
Loan Documents, whether for principal, interest, reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
"Officer's Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its president or by its
chief financial officer; provided that every Officer's Certificate with respect
--------
to the compliance with a condition precedent to the making of any Loans
hereunder shall include (i) a statement that the officer making or giving such
Officer's Certificate has read such condition and any definitions or other
provisions contained in this Agreement relating thereto, (ii) a statement that,
in the opinion of the signer, he or she has made or has caused to be made such
examination or investigation as is necessary to enable such signer to express an
informed opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signer, such condition
has been complied with.
"Operating Lease" as applied to any Person, means any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease other than any
such lease under which that Person is the lessor.
"Organizational Documents" means (i) with respect to any corporation,
its certificate or articles of incorporation and its bylaws, (ii) with respect
to any limited partnership, its certificate of limited partnership and its
partnership agreement, (iii) with respect to any general partnership, its
partnership agreement, (iv) with respect to any limited liability company, its
articles or certificate of organization and its operating agreement, and (v)
with respect to any other entity, its equivalent organizational, governing
documents.
"Original Currency" has the meaning assigned to that term in
subsection 10.20A.
"Other Currency" has the meaning assigned to that term in subsection
10.20A.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Participating Member State" means each state so described in any EMU
Legislation.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"Permitted Encumbrances" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, any such Lien relating to or imposed in connection
with any Environmental Claim):
23
<PAGE>
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of banks and
rights of set-off, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by law, in each
case incurred in the ordinary course of business (a) for amounts not yet
overdue or (b) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of five days) are being
contested in good faith by appropriate proceedings, so long as (1) such
reserves or other appropriate provisions, if any, as shall be required by
GAAP shall have been made for any such contested amounts, and (2) in the
case of a Lien with respect to any portion of the Collateral, such contest
proceedings operate to stay the sale of any portion of the Collateral on
account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety, bid and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any portion of the
Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance with
any applicable terms of the Collateral Documents and not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each case which do not
and will not interfere in any material respect with the ordinary conduct of
the business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor under any
lease not prohibited by this Agreement, (b) restriction or encumbrance that
the interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b),
so long as the holder of such restriction or encumbrance agrees to
recognize the rights of such lessee or sublessee under any such material
lease;
(viii) Liens arising from filing UCC financing statements relating
solely to leases and Liens permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
24
<PAGE>
(x) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property; and
(xi) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"Pledge and Security Agreement" means the Pledge and Security
Agreement executed and delivered by the Closing Date Loan Parties on the Closing
Date and the Merger Date Loan Parties on the Merger Date and to be executed and
delivered by additional Subsidiaries of Company from time to time thereafter in
accordance with subsection 6.7, substantially in the form of Exhibit XV annexed
----------
hereto, as such Pledge and Security Agreement may thereafter be amended,
supplemented or otherwise modified from time to time.
"Pledged Collateral" means, collectively, the "Pledged Collateral" as
defined in the Pledge and Security Agreement and the Tender Pledge Agreement.
"Potential Event of Default" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"Prime Rate" means the rate most recently announced by Wells Fargo at
its principal office in San Francisco from time to time as its "Prime Rate." The
Prime Rate is one of Wells Fargo's base rates and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto, and is evidenced by the recording thereof after its announcement in
such internal publication or publications as Wells Fargo may designate. Wells
Fargo or any other Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate. Any change in the interest rate
resulting from a change in such Prime Rate shall become effective as of 12:01
A.M. (San Francisco time) of the Business Day on which each change in Prime Rate
is announced by Wells Fargo.
"Pro Rata Share" means (i) with respect to all payments, computations
and other matters relating to the Tranche A Term Loan Commitment or the Tranche
A Term Loan of any Lender, the percentage obtained by dividing (a) the Tranche A
--------
Term Loan Exposure of that Lender by (b) the aggregate Tranche A Term Loan
--
Exposure of all Lenders, (ii) with respect to all payments, computations and
other matters relating to the Tranche B Term Loan Commitment or the Tranche B
Term Loan of any Lender, the percentage obtained by dividing (a) the Tranche B
--------
Term Loan Exposure of that Lender by (b) the aggregate Tranche B Term Loan
--
Exposure of all Lenders, (iii) with respect to all payments, computations and
other matters relating to the Tranche C Term Loan Commitment or the Tranche C
Term Loan of any Lender, the percentage
25
<PAGE>
obtained by dividing (a) the Tranche C Term Loan Exposure of that Lender by (b)
--------
the aggregate Tranche C Term Loan Exposure of all Lenders, (iv) with respect to
all payments, computations and other matters relating to the Revolving Loan
Commitment or the Revolving Loans of any Lender or any Letters of Credit issued
or participations therein purchased by any Lender or any participations in any
Swing Line Loans purchased by any Lender, the percentage obtained by dividing
--------
(a) the Revolving Loan Exposure of that Lender by (b) the aggregate Revolving
--
Loan Exposure of all Lenders, and (v) for all other purposes with respect to
each Lender, the percentage obtained by dividing (a) the sum of the Tranche A
--------
Term Loan Exposure of that Lender plus the Tranche B Term Loan Exposure of that
----
Lender plus the Tranche C Term Loan Exposure of that Lender plus the Revolving
---- ----
Loan Exposure of that Lender by (b) the sum of the aggregate Tranche A Term Loan
--
Exposure of all Lenders plus the aggregate Tranche B Term Loan Exposure of all
----
Lenders plus the aggregate Tranche C Term Loan Exposure of all Lenders plus the
----
aggregate Revolving Loan Exposure of all Lenders, in any such case as the
applicable percentage may be adjusted by assignments permitted pursuant to
subsection 10.1. The initial Pro Rata Share of each Lender for purposes of each
of clauses (i), (ii), (iii), (iv) and (v) of the preceding sentence is set forth
opposite the name of that Lender in Schedule 2.1 annexed hereto.
------------
"Proceedings" has the meaning assigned to that term in subsection
6.1(ix).
"Projections" means the consolidated projected balance sheets and
consolidated projected statements of income and cash flows of Company and its
Subsidiaries, prepared by Company assuming the Merger has been consummated, for
each of Fiscal Years 1999 through 2007 delivered to Administrative Agent by
Company under cover of a letter dated May 3, 1999.
"PTO" means the United States Patent and Trademark Office or any
successor or substitute office in which filings are necessary or, in the opinion
of Administrative Agent, desirable in order to create or perfect Liens on any
Collateral.
"RCBA" means RCBA Strategic Partners, L.P., a Delaware limited
partnership.
"RCBA Registration Rights Agreement" means the Registration Rights
Agreement dated as of the Closing Date between Company and RCBA, as such
agreement may be amended from time to time to the extent permitted under
subsection 7.13B.
"Real Property Asset" means, at any date of determination, any
interest then owned by any Loan Party in any real property.
"Reference Banks" means the banks designated by the British Bankers'
Association as the reference panel of banks that reflect the balance of the
London interbank market.
"Refunded Swing Line Loans" has the meaning assigned to that term in
subsection 2.1A(vi).
"Register" has the meaning assigned to that term in subsection 2.1D.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
26
<PAGE>
"Reimbursement Date" has the meaning assigned to that term in
subsection 3.3B.
"Related Agreements" means, collectively, the Merger Agreement, the
Bridge Loan Agreement or the Senior Subordinated Note Indenture, as the case may
be, the Securities Purchase Agreement, the Company Certificates of Designation,
the RCBA Registration Rights Agreement, the Warrant Agreements to be entered
into between Company and the parties to the Bridge Loan Agreement, the Warrants
to be issued thereunder, and the Subsidiary Guaranty to be executed by the
Subsidiary Guarantors for the benefit of the parties to the Bridge Loan
Agreement.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), including the movement of any Hazardous Materials through the air,
soil, surface water or groundwater.
"Requisite Class Lenders" means, at any date of determination (i) for
the Class of Lenders having Tranche A Term Loan Exposure and/or Revolving Loan
Exposure, Lenders having or holding at least 51% of the sum of the aggregate
Tranche A Term Loan Exposure of all Lenders plus the aggregate Revolving Loan
----
Exposure of all Lenders, (ii) for the Class of Lenders having Tranche B Term
Loan Exposure, Lenders having or holding at least 51% of the aggregate Tranche B
Term Loan Exposure of all Lenders and (iii) for the Class of Lenders having
Tranche C Term Loan Exposure, Lenders having or holding more than at least 51%
of the aggregate Tranche C Term Loan Exposure of all Lenders.
"Requisite Lenders" means, at any date of determination, two or more
Lenders having or holding at least 51% of the sum of (i) the aggregate Tranche A
Term Loan Exposure of all Lenders plus (ii) the aggregate Tranche B Term Loan
----
Exposure of all Lenders plus (iii) the aggregate Tranche C Term Loan Exposure of
----
all Lenders plus (iv) the aggregate Revolving Loan Exposure of all Lenders;
----
provided, however, that if as of any date of determination there is only one
- -------- -------
Lender, then such Lender shall constitute Requisite Lenders.
"Responsible Officer" means, with respect to any Person, the chief
executive officer, the chief financial officer, the president, the general
counsel or any other employee who is a member of the Board of Directors of such
Person.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock to the holders of that
class, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of stock of Company or any of its Subsidiaries now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Company or any of its Subsidiaries now or hereafter outstanding, and
(iv) any payment or prepayment of principal of, premium, if any, or interest on,
or
27
<PAGE>
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any Subordinated
Indebtedness.
"Reuters" means the display designated as Page LIBOR 01 (as to
Sterling) on the Reuters Service or such other screen by the Reuters Service as
shall display the London interbank offered rates for deposits in Sterling quoted
by selected banks.
"Revolving Dollar Loans" means the Revolving Loans denominated and
payable in Dollars made by Lenders to Company pursuant to subsection 2.1A(iv).
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Dollar Loans and Revolving Sterling Loans to Company pursuant to
subsections 2.1A(iv) and 2.1A(v), and "Revolving Loan Commitments" means such
commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means June 9, 2005.
"Revolving Loan Exposure" means, with respect to any Lender as of any
date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
----
the event that Lender is the Issuing Lender, the aggregate Letter of Credit
Usage in respect of all Letters of Credit issued by that Lender (in each case
net of any participations purchased by other Lenders in such Letters of Credit
or any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
----
participations purchased by that Lender in any outstanding Letters of Credit or
any unreimbursed drawings under any Letters of Credit plus (d) in the case of
----
Swing Line Lender, the aggregate outstanding principal amount of all Swing Line
Loans (net of any participations therein purchased by other Lenders) plus (e)
----
the aggregate amount of all participations purchased by that Lender in any
outstanding Swing Line Loans.
"Revolving Loans" means one or more of the Revolving Dollar Loans and
the Revolving Sterling Loans, or any combination thereof.
"Revolving Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E on the Closing Date and (ii) any promissory notes
issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitments and Revolving
Loans of any Lenders, in each case substantially in the form of Exhibit IV
----------
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"Revolving Sterling Loans" means the Revolving Loans denominated and
payable in Sterling made by Lenders to Company pursuant to subsection 2.1A(v).
"Revolving Sterling Loan Commitment" means the commitment of a Lender
to make Revolving Sterling Loans to Company pursuant to subsection 2.1A(v), and
"Revolving Sterling Loan Commitments" means such commitments of all Lenders in
the aggregate.
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<PAGE>
"Rollover Notes" means the subordinated promissory notes issued by
Company pursuant to the Bridge Loan Agreement in the event the Bridge Notes are
not paid in full on or prior to June 9, 2000.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Securities Purchase Agreement" means the Securities Purchase
Agreement dated as of May 5, 1999 by and between RCBA and Company, in the form
delivered to Administrative Agent and Lenders prior to their execution of this
Agreement and as such agreement may be amended from time to time thereafter to
the extent permitted under subsection 7.13A.
"Senior Subordinated Note Indenture" means the Senior Subordinated
Indenture among Company and the trustee named therein pursuant to which the
Senior Subordinated Notes are issued, as such indenture may be amended from time
to time to the extent permitted under subsection 7.13B.
"Senior Subordinated Notes" means the Senior Subordinated Notes due
2009 of Company issued pursuant to the Senior Subordinated Note Indenture.
"Significant Subsidiary" means, as of any date of determination, any
Subsidiary of Company that, together with its Subsidiaries, (i) for the most
recent Fiscal Year accounted for more than 5% of the consolidated revenues of
Company and its Subsidiaries or (ii) as of the end of such Fiscal Year was the
owner of more than 5% of the consolidated assets of Company and its
Subsidiaries, all as set forth on the most recently available consolidated
financial statements of Company and its Subsidiaries for such Fiscal Year.
"Solvent" means, with respect to any Person, that as of the date of
determination both (i) (a) the then fair saleable value of the property of such
Person is (1) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (2) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (b) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (c) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (ii) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any
29
<PAGE>
time shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Spot Rate" for Dollars or Sterling means the rate quoted by Wells
Fargo as the spot rate for the purchase by Wells Fargo of such currency with the
other currency through its foreign exchange desk at approximately 11:00 A.M.
(San Francisco time) on the date two Business Days prior to the date as of which
the foreign exchange computation is made.
"Sterling" and the sign "(Pounds)" mean the lawful money of the United
Kingdom.
"Subordinated Indebtedness" means (i) the Existing Subordinated
Indebtedness, (ii) the Senior Subordinated Notes, (iii) the Bridge Notes, (iv)
the Rollover Notes and (v) any other Indebtedness of Company or any of its
Subsidiaries subordinated in right of payment to the Obligations pursuant to
documentation containing maturities, amortization schedules, covenants,
defaults, remedies, subordination provisions and other material terms in form
and substance satisfactory to Administrative Agent and Requisite Lenders.
"Subsequent Acquisition" has the meaning assigned to that term in
subsection 7.7(vi).
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, or other business entity of
which more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof; provided that in no event shall any Joint Venture be considered to be a
--------
Subsidiary of any Person.
"Subsidiary Guarantor" means DMG and any Domestic Subsidiary of
Company and any Domestic Subsidiary of DMG that executes and delivers the
Subsidiary Guaranty on the Closing Date or the Merger Date or from time to time
thereafter pursuant to subsection 6.7.
"Subsidiary Guaranty" means the Subsidiary Guaranty executed and
delivered by DMG and certain existing Subsidiaries of Company on the Closing
Date and certain existing Subsidiaries of DMG on the Merger Date and to be
executed and delivered by additional Subsidiaries of Company from time to time
thereafter in accordance with subsection 6.7 substantially in the form of
Exhibit XVI annexed hereto, as such Subsidiary Guaranty may hereafter be
- -----------
amended, supplemented or otherwise modified from time to time.
"Supplemental Collateral Agent" has the meaning assigned to that term
in subsection 9.1B.
"Surviving Corporation" has the meaning assigned to that term in the
Recitals to this Agreement.
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<PAGE>
"Surviving Corporation Common Stock" has the meaning assigned to that
term in the Recitals to this Agreement.
"Swing Line Lender" means Wells Fargo, or any Person serving as a
successor Administrative Agent hereunder, in its capacity as Swing Line Lender
hereunder.
"Swing Line Loan Commitment" means the commitment of Swing Line Lender
to make Swing Line Loans to Company pursuant to subsection 2.1A(vi).
"Swing Line Loans" means the Loans made by Swing Line Lender to
Company pursuant to subsection 2.1A(vi).
"Swing Line Note" means any promissory note of Company issued pursuant
to subsection 2.1E to evidence the Swing Line Loans of Swing Line Lender,
substantially in the form of Exhibit VIII annexed hereto, as it may be amended,
------------
supplemented or otherwise modified from time to time.
"Syndication Agent" has the meaning assigned to that term in the
introduction to this Agreement.
"Target" has the meaning assigned to that term in subsection 7.7(vi).
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "Tax on the overall net income" of a Person shall be
--------
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in
the case of a Lender, its lending office).
"Tender Offer" means the offer to purchase for cash all of the
outstanding shares of DMG Common Stock by Company pursuant to the Tender Offer
Materials.
"Tender Offer Materials" means the Tender Offer Statement on Schedule
14D-1 filed by Merger Sub on May 11, 1999 with the Securities and Exchange
Commission pursuant to Section 14(d)(1) of the Exchange Act, together with all
exhibits thereto, including the form of "Offer to Purchase For Cash", set forth
in Exhibit (a)(1) thereto, and any amendments prior to the date hereof that
relate only to any extension of time during which the offer to purchase remains
outstanding or to the results of the Tender Offer and other amendments that are
approved by Requisite Lenders.
"Tender Pledge Agreement" means the Pledge Agreement executed and
delivered by DMG on the Closing Date, substantially in the form of Exhibit XVII
------------
annexed hereto, as such Pledge Agreement may thereafter be amended, supplemented
or otherwise modified from time to time.
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<PAGE>
"Tendered Shares" means all shares of DMG Common Stock tendered to and
purchased by Merger Sub pursuant to the Tender Offer.
"Term Loans" means, collectively, the Tranche A Term Loans, the
Tranche B Term Loans and the Tranche C Term Loans.
"Total Purchase Price" means, with respect to any Subsequent
Acquisition, (i) the sum, without duplication, of (a) the aggregate amount of
all consideration payable by or on behalf of Company or any of its Subsidiaries
in connection with such Subsequent Acquisition in Cash, property (including
Securities of Company), services, notes, bonds, debentures or other debt
instruments, (b) the aggregate principal amount of all Indebtedness assumed by
Company or any or its Subsidiaries in connection with such Subsequent
Acquisition, (c) the reasonable estimate of the amount of any Contingent
Obligation of Company or any of its Subsidiaries incurred in connection with
such Subsequent Acquisition, and (d) the aggregate amount of any Indebtedness
incurred by Company or any Subsidiary in connection with such Subsequent
Acquisition minus (ii) all Cash and Cash Equivalents acquired by Company or any
-----
of its Subsidiaries as a result of such Subsequent Acquisition. For purposes of
this definition, any amount which is payable in a currency other than Dollars
shall be valued based on the applicable Exchange Rate for such currency as of
the date of such Subsequent Acquisition.
"Total Utilization of Revolving Loan Commitments" means, as at any
date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans (other than Revolving Loans made for the purpose of
repaying any Refunded Swing Line Loans or reimbursing the Issuing Lender for any
amount drawn under any Letter of Credit but not yet so applied) plus (ii) the
----
aggregate principal amount of all outstanding Swing Line Loans plus (iii) the
----
Letter of Credit Usage.
"Tranche A Term Loan Commitment" means the commitment of a Lender to
make a Tranche A Term Loan to Company pursuant to subsection 2.1A(i), and
"Tranche A Term Loan Commitments" means such commitments of all Lenders in the
aggregate.
"Tranche A Term Loan Commitment Termination Date" means the date that
is 180 days after the Closing Date.
"Tranche A Term Loan Exposure" means, with respect to any Lender as of
any date of determination (i) prior to the funding of the Tranche A Term Loans,
that Lender's Tranche A Term Loan Commitment and (ii) after the funding of the
Tranche A Term Loans, the outstanding principal amount of the Tranche A Term
Loan of that Lender.
"Tranche A Term Loan Maturity Date" means June 9, 2005.
"Tranche A Term Loans" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(i).
"Tranche A Term Notes" means (i) the promissory notes of Company
issued pursuant to subsection 21E on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Tranche A Term Loan Commitments or Tranche A
Term Loans of any Lenders, in each case
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<PAGE>
substantially in the form of Exhibit V annexed hereto, as they may be amended,
---------
supplemented or otherwise modified from time to time.
"Tranche B Term Loan Commitment" means the commitment of a Lender to
make a Tranche B Term Loan to Company pursuant to subsection 2.1A(ii), and
"Tranche B Term Loan Commitments" means such commitments of all Lenders in the
aggregate.
"Tranche B Term Loan Exposure" means, with respect to any Lender as of
any date of determination (i) prior to the funding of the Tranche B Term Loans,
that Lender's Tranche B Term Loan Commitment and (ii) after the funding of the
Tranche B Term Loans, the outstanding principal amount of the Tranche B Term
Loan of that Lender.
"Tranche B Term Loan Maturity Date" means June 9, 2006.
"Tranche B Term Loans" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(ii).
"Tranche B Term Notes" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Tranche B Term Loan Commitments or Tranche B
Term Loans of any Lenders, in each case substantially in the form of Exhibit VI
----------
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"Tranche C Term Loan Commitment" means the commitment of a Lender to
make a Tranche C Term Loan to Company pursuant to subsection 2.1A(iii), and
"Tranche C Term Loan Commitments" means such commitments of all Lenders in the
aggregate.
"Tranche C Term Loan Exposure" means, with respect to any Lender as of
any date of determination (i) prior to the funding of the Tranche C Term Loans,
that Lender's Tranche C Term Loan Commitment and (ii) after the funding of the
Tranche C Term Loans, the outstanding principal amount of the Tranche C Term
Loan of that Lender.
"Tranche C Term Loan Maturity Date" means June 9, 2007.
"Tranche C Term Loans" means the Loans made by Lenders to Company
pursuant to subsection 2.1A(iii).
"Tranche C Term Notes" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Tranche C Term Loan Commitments or Tranche C
Term Loans of any Lenders, in each case substantially in the form of Exhibit VII
-----------
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"Transaction Costs" means the sum of (i) the fees, costs and expenses
payable by Company on or before the Closing Date in connection with the
transactions contemplated by the Loan Documents and the Related Agreements, (ii)
the fees payable by Company on or before
33
<PAGE>
the Merger Date in connection with the transactions contemplated by the Loan
Documents and the Related Agreements and (iii) all expenses (including
attorney's fees and costs), damages and settlement payments payable in
connection with any litigation relating to the Tender Offer or the Merger.
"Treaty on European Union" means the Treaty of Rome of March 25, 1957,
as amended by the Single European Act 1986 and the Maastricht Treaty (which was
signed at Maastricht on February 7, 1992 and came into force on November 1,
1993), as amended from time to time.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
"URS" means URS Corporation, a Delaware corporation, prior to
consummation of the Tender Offer.
"Wells Fargo" has the meaning assigned to that term in the
introduction to this Agreement.
"Year 2000 Compliant" has the meaning assigned to that term in
subsection 6.10.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
------------------------------------------------------------------------
Agreement. Except as otherwise expressly provided in this Agreement, all
- ---------
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
and (xii) of subsection 6.1 shall be prepared in accordance with GAAP as in
effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(iv)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 5.3.
1.3 Other Definitional Provisions and Rules of Construction.
-------------------------------------------------------
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use herein of the word "include" or "including", when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter.
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<PAGE>
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; Notes.
-----------------------------------
A. Commitments. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Lender hereby severally agrees to make the Loans described in subsections
2.1A(i), 2.1A(ii), 2.1A(iii), 2.1A(iv) and 2.1A(v), and Swing Line Lender hereby
agrees to make the Loans described in subsection 2.1A(vi).
(i) Tranche A Term Loans. Each Lender severally agrees to lend to
--------------------
Company on the Closing Date and on the Merger Date an amount not exceeding
its Pro Rata Share of the aggregate amount of the Tranche A Term Loan
Commitments to be used for the purposes identified in subsections 2.5A and
2.5B. The amount of each Lender's Tranche A Term Loan Commitment is set
forth opposite its name on Schedule 2.1 annexed hereto and the aggregate
------------
amount of the Tranche A Term Loan Commitments is $250,000,000; provided
--------
that the Tranche A Term Loan Commitments of Lenders shall be adjusted to
give effect to any assignments of the Tranche A Term Loan Commitments
pursuant to subsection 10.1B. Each Lender's Tranche A Term Loan Commitment
shall expire immediately and without further action on September 30, 1999,
if the Closing Date has not occurred on or before that date and shall
expire immediately and without further action on the Tranche A Term Loan
Commitment Termination Date if the Merger Date has not occurred on or
before that date. Company may make only two borrowings under the Tranche A
Term Loan Commitments. Amounts borrowed under this subsection 2.1A(i) and
subsequently repaid or prepaid may not be reborrowed.
(ii) Tranche B Term Loans. Each Lender severally agrees to lend to
--------------------
Company on the Closing Date an amount not exceeding its Pro Rata Share of
the aggregate amount of the Tranche B Term Loan Commitments to be used for
the purposes identified in subsection 2.5A. The amount of each Lender's
Tranche B Term Loan Commitment is set forth opposite its name on Schedule
--------
2.1 annexed hereto and the aggregate amount of the Tranche B Term Loan
---
Commitments is $100,000,000; provided that the Tranche B Term Loan
--------
Commitments of Lenders shall be adjusted to give effect to any assignments
of the Tranche B Term Loan Commitments pursuant to subsection 10.1B. Each
Lender's Tranche B Term Loan Commitment shall expire immediately and
without further action on September 30, 1999 if the Tranche B Term Loans
are not made on or before that date. Company may make only one borrowing
under the Tranche B Term Loan Commitments. Amounts borrowed under this
subsection 2.1A(ii) and subsequently repaid or prepaid may not be
reborrowed.
(iii) Tranche C Term Loans. Each Lender severally agrees to lend to
--------------------
Company on the Closing Date an amount not exceeding its Pro Rata Share of
the aggregate amount of the Tranche C Term Loan Commitments to be used for
the purposes identified in subsection 2.5A. The amount of each Lender's
Tranche C Term Loan Commitment is set forth opposite its name on Schedule
--------
2.1 annexed hereto and the aggregate amount of the Tranche C Term Loan
---
Commitments is $100,000,000; provided that the Tranche C Term
--------
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<PAGE>
Loan Commitments of Lenders shall be adjusted to give effect to any
assignments of the Tranche C Term Loan Commitments pursuant to subsection
101.B. Each Lender's Tranche C Term Loan Commitment shall expire
immediately and without further action on September 30, 1999 if the Tranche
C Term Loans are not made on or before that date. Company may make only one
borrowing under the Trance C Term Loan Commitments. Amounts borrowed under
this subsection 2.1A(iii) and subsequently repaid or prepaid may not be
reborrowed.
(iv) Revolving Dollar Loans. Each Lender severally agrees, subject to
----------------------
the limitations set forth below with respect to the maximum amount of
Revolving Dollar Loans permitted to be outstanding from time to time, to
lend to Company from time to time during the period from the Closing Date
to but excluding the Revolving Loan Commitment Termination Date an
aggregate amount, the Dollar Equivalent of which shall not exceed its Pro
Rata Share of the aggregate amount of the Revolving Dollar Loan Commitments
to be used for the purposes identified in subsection 2.5C. The original
amount of each Lender's Revolving Dollar Loan Commitment is set forth
opposite its name on Schedule 2.1 annexed hereto and the aggregate original
------------
amount of the Revolving Dollar Loan Commitments is $100,000,000; provided
--------
that the Revolving Dollar Loan Commitments of Lenders shall be adjusted to
give effect to any assignments of the Revolving Dollar Loan Commitments
pursuant to subsection 10.1B. Each Lender's Revolving Dollar Loan
Commitment shall expire on the Revolving Loan Commitment Termination Date
and all Revolving Dollar Loans and all other amounts owed hereunder with
respect to the Revolving Dollar Loans and the Revolving Dollar Loan
Commitments shall be paid in full no later than that date; provided that
--------
each Lender's Revolving Dollar Loan Commitment shall expire immediately and
without further action on September 30, 1999 if the Tranche C Term Loans
are not made on or before that date. Amounts borrowed under this subsection
2.1A(iv) may be repaid and reborrowed to but excluding the Revolving Loan
Commitment Termination Date.
(v) Revolving Sterling Loans. Each Lender severally agrees, subject
------------------------
to the limitations set forth below with respect to the maximum amount of
Revolving Sterling Loans permitted to be outstanding from time to time, to
lend to Company a portion of the Revolving Loan Commitments from time to
time during the period from the Closing Date to but excluding the Revolving
Loan Commitment Termination Date an aggregate amount, the Dollar Equivalent
of which shall not exceed its Pro Rata Share of the aggregate amount of the
Revolving Sterling Loan Commitments to be used for the purposes identified
in subsection 2.5C. The original amount of each Lender's Revolving Sterling
Loan Commitment is set forth opposite its name on Schedule 2.1 annexed
------------
hereto and the aggregate original amount of the Revolving Sterling Loan
Commitments is $15,000,000; provided that the Revolving Sterling Loan
--------
Commitments of Lenders shall be adjusted to give effect to any assignments
of the Revolving Loan Commitments pursuant to subsection 10.1B. Each
Lender's Revolving Sterling Loan Commitment shall expire on the Revolving
Loan Commitment Termination Date and all Revolving Sterling Loans and all
other amounts owed hereunder with respect to the Revolving Sterling Loans
and the Revolving Sterling Loan Commitments shall be paid in full no later
than that date; provided that each Lender's Revolving Sterling Loan
--------
Commitment shall expire immediately and without further action on September
30, 1999 if the Tranche C Term
36
<PAGE>
Loans are not made on or before that date. Amounts borrowed under this
subsection 2.1A(v) may be repaid and reborrowed to but excluding the
Revolving Loan Commitment Termination Date.
Revolving Loans constituting Revolving Dollar Loans may not be
converted into Revolving Sterling Loans and Revolving Loans constituting
Revolving Sterling Loans may not be converted into Revolving Dollar Loans;
provided that, subject to applicable law, borrowings in one currency may be
--------
used to purchase the other currency and the other currency so purchased may
be used to repay borrowings made in such other currency.
(vi) Swing Line Loans. Swing Line Lender hereby agrees, subject to
----------------
the limitations set forth below with respect to the maximum amount of Swing
Line Loans permitted to be outstanding from time to time, to make a portion
of the Revolving Loan Commitments available to Company from time to time
during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date by making Swing Line Loans to Company in an
aggregate amount not exceeding the amount of the Swing Line Loan Commitment
to be used for the purposes identified in subsection 2.5C, notwithstanding
the fact that such Swing Line Loans, when aggregated with Swing Line
Lender's outstanding Revolving Loans and Swing Line Lender's Pro Rata Share
of the Letter of Credit Usage then in effect, may exceed Swing Line
Lender's Revolving Loan Commitment. The original amount of the Swing Line
Loan Commitment is $5,000,000; provided that any reduction of the Revolving
--------
Loan Commitments made pursuant to subsection 2.4B(ii) or 2.4B(iii) which
reduces the aggregate Revolving Loan Commitments to an amount less than the
then current amount of the Swing Line Loan Commitment shall result in an
automatic corresponding reduction of the Swing Line Loan Commitment to the
amount of the Revolving Loan Commitments, as so reduced, without any
further action on the part of Company, Administrative Agent or Swing Line
Lender. The Swing Line Loan Commitment shall expire on the Revolving Loan
Commitment Termination Date and all Swing Line Loans and all other amounts
owed hereunder with respect to the Swing Line Loans shall be paid in full
no later than that date; provided that the Swing Line Loan Commitment shall
--------
expire immediately and without further action on September 30, 1999 if the
Tranche C Term Loans are not made on or before that date. Amounts borrowed
under this subsection 2.1A(vi) may be repaid and reborrowed to but
excluding the Revolving Loan Commitment Termination Date.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender may,
at any time in its sole and absolute discretion, deliver to Administrative
Agent (with a copy to Company), no later than 9:00 A.M. (San Francisco
time) on the first Business Day in advance of the proposed Funding Date, a
notice (which shall be deemed to be a Notice of Borrowing given by Company)
requesting Lenders to make Revolving Dollar Loans that are Base Rate Loans
on such Funding Date in an amount equal to the amount of such Swing Line
Loans (the "Refunded Swing Line Loans") outstanding on the date such notice
is given which Swing Line Lender requests Lenders to prepay. Anything
contained in this Agreement to the contrary notwithstanding, (a) the
proceeds of such Revolving Dollar Loans made by Lenders other than Swing
Line Lender shall be immediately delivered by
37
<PAGE>
Administrative Agent to Swing Line Lender (and not to Company) and applied
to repay a corresponding portion of the Refunded Swing Line Loans and (b)
on the day such Revolving Dollar Loans are made, Swing Line Lender's Pro
Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with
the proceeds of a Revolving Dollar Loan made by Swing Line Lender, and such
portion of the Swing Line Loans deemed to be so paid shall no longer be
outstanding as Swing Line Loans and shall no longer be due under the Swing
Line Note, if any, of Swing Line Lender but shall instead constitute part
of Swing Line Lender's outstanding Revolving Dollar Loans and shall be due
under the Revolving Note, if any, of Swing Line Lender. Company hereby
authorizes Administrative Agent and Swing Line Lender to charge Company's
accounts with Administrative Agent and Swing Line Lender (up to the amount
available in each such account) in order to immediately pay Swing Line
Lender the amount of the Refunded Swing Line Loans to the extent the
proceeds of such Revolving Dollar Loans made by Lenders, including the
Revolving Dollar Loan deemed to be made by Swing Line Lender, are not
sufficient to repay in full the Refunded Swing Line Loans. If any portion
of any such amount paid (or deemed to be paid) to Swing Line Lender should
be recovered by or on behalf of Company from Swing Line Lender in
bankruptcy, by assignment for the benefit of creditors or otherwise, the
loss of the amount so recovered shall be ratably shared among all Lenders
in the manner contemplated by subsection 10.5.
If for any reason (a) Revolving Dollar Loans are not made upon the
request of Swing Line Lender as provided in the immediately preceding
paragraph in an amount sufficient to repay any amounts owed to Swing Line
Lender in respect of any outstanding Swing Line Loans or (b) the Revolving
Loan Commitments are terminated at a time when any Swing Line Loans are
outstanding, each Lender shall be deemed to, and hereby agrees to, have
purchased a participation in such outstanding Swing Line Loans in an amount
equal to its Pro Rata Share (calculated, in the case of the foregoing
clause (b), immediately prior to such termination of the Revolving Loan
Commitments) of the unpaid amount of such Swing Line Loans together with
accrued interest thereon. Upon one Business Day's notice from Swing Line
Lender, each Lender shall deliver to Swing Line Lender an amount equal to
its respective participation in same day funds at the Funding and Payment
Office. In order to further evidence such participation (and without
prejudice to the effectiveness of the participation provisions set forth
above), each Lender agrees to enter into a separate participation agreement
at the request of Swing Line Lender in form and substance reasonably
satisfactory to Swing Line Lender. In the event any Lender fails to make
available to Swing Line Lender the amount of such Lender's participation as
provided in this paragraph, Swing Line Lender shall be entitled to recover
such amount on demand from such Lender together with interest thereon at
the rate customarily used by Swing Line Lender for the correction of errors
among banks for three Business Days and thereafter at the Dollar Base Rate.
In the event Swing Line Lender receives a payment of any amount in which
other Lenders have purchased participations as provided in this paragraph,
Swing Line Lender shall promptly distribute to each such other Lender its
Pro Rata Share of such payment.
Anything contained herein to the contrary notwithstanding, each
Lender's obligation to make Revolving Dollar Loans for the purpose of
repaying any Refunded Swing Line Loans pursuant to the second preceding
paragraph and each Lender's
38
<PAGE>
obligation to purchase a participation in any unpaid Swing Line Loans
pursuant to the immediately preceding paragraph shall be absolute and
unconditional and shall not be affected by any circumstance, including (a)
any set-off, counterclaim, recoupment, defense or other right which such
Lender may have against Swing Line Lender, Company or any other Person for
any reason whatsoever; (b) the occurrence or continuation of an Event of
Default or a Potential Event of Default; (c) the occurrence of any Material
Adverse Effect; (d) any breach of this Agreement or any other Loan Document
by any party thereto; or (e) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; provided that
--------
such obligations of each Lender are subject to the condition that (1) Swing
Line Lender believed in good faith that all conditions under Section 4 to
the making of the applicable Refunded Swing Line Loans or other unpaid
Swing Line Loans, as the case may be, were satisfied at the time such
Refunded Swing Line Loans or unpaid Swing Line Loans were made or (2) the
satisfaction of any such condition not satisfied had been waived in
accordance with subsection 10.6 prior to or at the time such Refunded Swing
Line Loans or other unpaid Swing Line Loans were made.
(vii) Certain Limitations. Anything contained in this Agreement to
-------------------
the contrary notwithstanding, the Revolving Loans and the Revolving Loan
Commitments shall be subject to the following limitations: (a) in no event
shall the Total Utilization of Revolving Loan Commitments at any time
exceed the Revolving Loan Commitments then in effect; (b) in no event shall
the aggregate principal amount of all outstanding Revolving Sterling Loans
exceed the Revolving Sterling Loan Commitment then in effect; and (c)
during the period from and including the Closing Date to and excluding the
Merger Date, in no event shall the aggregate principal amount of Revolving
Loans exceed the sum of the aggregate principal amount of Acquisition
Revolving Loans plus $25,000,000.
----
B. Borrowing Mechanics. Term Loans or Revolving Loans made on any Funding
Date (other than Revolving Dollar Loans made pursuant to a request by Swing Line
Lender pursuant to subsection 2.1A(vi) for the purpose of repaying any Refunded
Swing Line Loans or Revolving Dollar Loans made pursuant to subsection 3.3B for
the purpose of reimbursing the Issuing Lender for the amount of a drawing under
a Letter of Credit) shall be in an aggregate minimum amount of $500,000 and
integral multiples of $10,000 in excess of that amount; provided that Term Loans
--------
made on any Funding Date as Eurodollar Rate Loans with a particular Interest
Period shall be in an aggregate minimum amount equal to or in excess of
$5,000,000 and that Revolving Dollar Loans made on any Funding Date as
Eurodollar Rate Loans with a particular Interest Period shall be in an aggregate
minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of
that amount. Revolving Sterling Loans made on any Funding Date shall be in an
aggregate minimum amount of (Pounds)2,500,000 and integral multiples of
(Pounds)1,000,000 in excess of that amount. Swing Line Loans made on any Funding
Date shall be in an aggregate minimum amount of $100,000 and integral multiples
of $100,000 in excess of that amount. Whenever Company desires that Lenders make
Term Loans or Revolving Loans it shall deliver to Administrative Agent a Notice
of Borrowing substantially in the form of Exhibit I annexed hereto no later than
---------
9:00 A.M. (San Francisco time) at least (i) three Business Days in advance of
the proposed Funding Date (in the case of a Eurodollar Rate Loan); (ii) one
Business Day in advance of the proposed Funding Date (in the case of a Base Rate
Loan); or (iii) four Business
39
<PAGE>
Days in advance of the proposed Funding Date (in the case of a Domestic Sterling
Rate Loan). Whenever Company desires that Swing Line Lender make a Swing Line
Loan, it shall deliver to Administrative Agent a Notice of Borrowing no later
than 1:00 P.M. (San Francisco time) on the proposed Funding Date. The Notice of
Borrowing shall specify (i) the proposed Funding Date (which shall be a Business
Day), (ii) the amount and type of Loans requested, (iii) in the case of Swing
Line Loans and any Revolving Dollar Loans made on the Closing Date, that such
Loans shall be Base Rate Loans, (iv) in the case of Revolving Loans not made on
the Closing Date, whether such Loans shall be Revolving Dollar Loans or
Revolving Sterling Loans and, in the case of Revolving Dollar Loans, whether
such Loans shall be Base Rate Loans or Eurodollar Rate Loans, and (v) in the
case of any Loans requested to be made as Eurodollar Rate Loans or Domestic
Sterling Rate Loans, the initial Interest Period requested therefor. Term Loans
and Revolving Dollar Loans may be continued as or converted into Base Rate Loans
and Eurodollar Rate Loans in the manner provided in subsection 2.2D. Revolving
Sterling Loans may be continued as Domestic Sterling Rate Loans in the manner
provided in subsection 2.2D. In lieu of delivering the above-described Notice of
Borrowing, Company may give Administrative Agent telephonic notice by the
required time of any proposed borrowing under this subsection 2.1B; provided
--------
that such notice shall be promptly confirmed in writing by delivery of a Notice
of Borrowing to Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct in
all material respects as of the applicable Funding Date, and the acceptance by
Company of the proceeds of any Loans shall constitute a re-certification by
Company, as of the applicable Funding Date, as to the matters to which Company
is required to certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan or a Domestic Sterling Rate Loan
(or telephonic notice in lieu thereof) shall be irrevocable, and Company shall
be bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All Term Loans and Revolving Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice
in lieu thereof), Administrative Agent shall notify each Lender or Swing Line
Lender, as the case may be, of the proposed
40
<PAGE>
borrowing. Each Lender shall make the amount of its Loan available to
Administrative Agent not later than 11:00 A.M. (San Francisco time) or 12:00
Noon (London time), as applicable, on the applicable Funding Date, and Swing
Line Lender shall make the amount of its Swing Line Loan available to
Administrative Agent not later than 11:00 A.M. (San Francisco time) on the
applicable Funding Date in same day funds in Dollars, at the Funding and Payment
Office. In the case of Revolving Sterling Loans, such notice will also provide
the approximate Dollar Equivalent of the amount of such Lender's Pro Rata Share
of such Revolving Sterling Loans, and Administrative Agent will, upon the
determination of the exact Dollar Equivalent of such amount on the applicable
Funding Date, promptly notify such Lender of such amount; provided that, unless
--------
Administrative Agent shall otherwise agree with any Lender in writing, nothing
in this sentence shall relieve any Lender of its obligation to fund its Pro Rata
Share of all Loans in the Applicable Currency. Except as provided in subsection
2.1A(vi) and subsection 3.3B with respect to Revolving Loans used to repay
Refunded Swing Line Loans or to reimburse the Issuing Lender for the amount of a
drawing under a Letter of Credit issued by it, upon satisfaction or waiver of
the conditions precedent specified in subsection 4.1 (in the case of Loans made
on the Closing Date) 4.2 (in the case of Loans made on the Merger Date) and 4.3
(in the case of all Loans), Administrative Agent shall make the proceeds of such
Loans available to Company on the applicable Funding Date by causing an amount
of same day funds in Dollars or Sterling, as the case may be, equal to the
proceeds of all such Loans received by Administrative Agent from Lenders or
Swing Line Lender, as the case may be, to be credited to the account of Company
at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date, Administrative Agent may assume that such Lender has made
such amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Company a corresponding amount on such Funding Date. If such
corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the
Dollar Base Rate. If such Lender does not pay such corresponding amount
forthwith upon Administrative Agent's demand therefor, Administrative Agent
shall promptly notify Company and Company shall immediately pay such
corresponding amount to Administrative Agent together with interest thereon, for
each day from such Funding Date until the date such amount is paid to
Administrative Agent, at the rate payable under this Agreement for Base Rate
Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Company may have against any Lender as a result of any default by
such Lender hereunder.
D. The Register.
(i) Administrative Agent shall maintain, at its address referred to
in subsection 10.8, a register for the recordation of the names and addresses of
Lenders and the Commitments and Loans of each Lender from time to time (the
"Register"). The
41
<PAGE>
Register shall be available for inspection by Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(ii) Administrative Agent shall record in the Register the Tranche A
Term Loan Commitment, Tranche B Term Loan Commitment, Tranche C Term Loan
Commitment, Revolving Sterling Loan Commitment and Revolving Loan
Commitment and the Term Loans and Revolving Loans from time to time of each
Lender, the Swing Line Loan Commitment and the Swing Line Loans from time
to time of Swing Line Lender, and each repayment or prepayment in respect
of the principal amount of the Term Loans or Revolving Loans of each Lender
or the Swing Line Loans of Swing Line Lender. Any such recordation shall be
conclusive and binding on Company and each Lender, absent manifest error;
provided that failure to make any such recordation, or any error in such
--------
recordation, shall not affect any Lender's commitments or Company's
Obligations in respect of any applicable Loans.
(iii) Each Lender shall record on its internal records (including the
Notes, if any, held by such Lender) the amount of the Term Loans and each
Revolving Loan made by it and each payment in respect thereof. Any such
recordation shall be conclusive and binding on Company, absent manifest
error; provided that failure to make any such recordation, or any error in
--------
such recordation, shall not affect any Lender's Commitments or Company's
Obligations in respect of any applicable Loans; and provided, further that
-------- -------
in the event of any inconsistency between the Register and any Lender's
records, the recordations in the Register shall govern.
(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.
(v) Company hereby designates Administrative Agent to serve as
Company's agent solely for purposes of maintaining the Register as provided
in this subsection 2.1D, and Company hereby agrees that, to the extent
Administrative Agent serves in such capacity, Administrative Agent and its
officers, directors, employees, agents and affiliates shall constitute
Indemnitees for all purposes under subsection 10.3.
E. Optional Notes. On the Closing Date, and if so requested by any Lender
by written notice to Company (with a copy to Administrative Agent) or at any
time thereafter, Company shall execute and deliver to such Lender (and/or, if
applicable and if so specified in such notice, to any Person who is an assignee
of such Lender pursuant to subsection 10.1) on the
42
<PAGE>
Closing Date (or, if such notice is delivered after the Closing Date, promptly
after Company's receipt of such notice) a promissory note or promissory notes to
evidence such Lender's Tranche A Term Loan, Tranche B Term Loan, Tranche C Term
Loan, Revolving Loans or Swing Line Loans, as the case may be, substantially in
the form of Exhibit V, Exhibit VI, Exhibit VII, Exhibit V or Exhibit VIII
--------- ---------- ----------- --------- ------------
annexed hereto, respectively, with appropriate insertions.
Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent as provided in subsection 10.1B(ii). Any request,
authority or consent of any person or entity who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, assignee or transferee of that
Note or of any Note or Notes issued in exchange therefor.
2.2 Interest on the Loans.
---------------------
A. Rate of Interest. Subject to the provisions of subsections 2.6 and
2.7, each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to (a) in the case
of Revolving Dollar Loans, the Dollar Base Rate or the Adjusted Eurodollar Rate,
as the case may be, and (b) in the case of Revolving Sterling Loans, the
Adjusted Domestic Sterling Rate. Subject to the provisions of subsection 2.7,
each Swing Line Loan shall bear interest on the unpaid principal amount thereof
from the date made through maturity (whether by acceleration or otherwise) at a
rate determined by reference to the Dollar Base Rate. The applicable basis for
determining the rate of interest with respect to any Term Loan or any Revolving
Loan shall be selected by Company initially at the time a Notice of Borrowing is
given with respect to such Loan pursuant to subsection 2.1B, and the basis for
determining the interest rate with respect to any Term Loan or any Revolving
Dollar Loan may be changed from time to time pursuant to subsection 2.2D. If on
any day a Term Loan or Revolving Dollar Loan is outstanding with respect to
which notice has not been delivered to Administrative Agent in accordance with
the terms of this Agreement specifying the applicable basis for determining the
rate of interest, then for that day that Loan shall bear interest determined by
reference to the Dollar Base Rate.
(i) Subject to the provisions of subsections 2.2E and 2.7, the
Tranche A Term Loans and the Revolving Loans shall bear interest through
maturity as follows:
(a) if a Base Rate Loan, then (1) for the period from and
including the Closing Date to and excluding the date on which
Administrative Agent receives a Compliance Certificate pursuant to
subsection 6.1(iii) for the Fiscal Quarter ended July 31, 2000, at the
sum of the Dollar Base Rate plus 1.75% and (2) thereafter, at the sum
----
of the Dollar Base Rate plus the appropriate Applicable Margin; or
----
(b) if a Eurodollar Rate Loan, then (1) for the period from and
including the Closing Date to and excluding the date on which
Administrative Agent receives a Compliance Certificate pursuant to
subsection 6.1(iii) for the Fiscal Quarter ended July 31, 2000, at the
sum of the Adjusted Eurodollar Rate
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<PAGE>
plus 2.75% and (2) thereafter, at the sum of the Adjusted Eurodollar
----
Rate plus the appropriate Applicable Margin; or
(c) if a Domestic Sterling Rate Loan, then, (1) for the period
from and including the Closing Date to and excluding the date on which
Administrative Agent receives a Compliance Certificate pursuant to
subsection 6.1(iii) for the Fiscal Quarter ended July 31, 2000, at the
sum of the Adjusted Domestic Sterling Rate, plus 2.75% and (2)
----
thereafter at the sum of the Adjusted Domestic Sterling Rate, plus the
----
appropriate Applicable Margin.
(ii) Subject to the provisions of subsections 2.2E and 2.7, the
Tranche B Term Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then (1) for the period from and
including the Closing Date to and excluding the date on which
Administrative Agent receives a Compliance Certificate pursuant to
subsection 6.1(iii) for the Fiscal Quarter ended July 31, 2000, at the
sum of the Dollar Base Rate plus 2.25% and (2) thereafter, at the sum
of the Dollar Base Rate plus the appropriate Applicable Margin; or
----
(b) If a Eurodollar Rate Loan, then (1) for the period from and
including the Closing Date to and excluding the date on which
Administrative Agent receives a Compliance Certificate pursuant to
subsection 6.1(iii) for the Fiscal Quarter ended July 31, 2000, at the
sum of the Adjusted Eurodollar Rate plus 3.25% and (2) thereafter, at
----
the sum of the Adjusted Eurodollar Rate plus the appropriate
----
Applicable Margin.
(iii) Subject to the provisions of subsections 2.2E and 2.7, the
Tranche C Term Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then (1) for the period from and
including the Closing Date to and excluding the date on which
Administrative Agent receives a Compliance Certificate pursuant to
subsection 6.1(iii) for the Fiscal Quarter ended July 31, 2000, at the
sum of the Dollar Base Rate plus 2.50% and (2) thereafter, at the sum
----
of the Dollar Base Rate plus the appropriate Applicable Margin; or
----
(b) if a Eurodollar Rate Loan, then (1) for the period from and
including the Closing Date to and excluding the date on which
Administrative Agent receives a Compliance Certificate pursuant to
subsection 6.1(iii) for the Fiscal Quarter ended July 31, 2000, at the
sum of the Adjusted Eurodollar Rate plus 3.50% and (2) thereafter, at
----
the sum of the Adjusted Eurodollar Rate plus the appropriate
----
Applicable Margin.
(iv) Subject to the provisions of subsections 2.2E and 2.7, the Swing
Line Loans shall bear interest through maturity (a) for the period from and
including the Closing Date to and excluding the date on which
Administrative Agent receives a Compliance Certificate pursuant to
subsection 6.1(iii) for the Fiscal Quarter ended July 31, 2000, at the sum
of the Dollar Base Rate plus 1.75% and (b) thereafter, at the sum of the
----
Dollar Base Rate plus the Applicable Margin with respect to Revolving
----
Dollar
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<PAGE>
Loans that are Base Rate Loans.
The Applicable Margin shall be determined on the first day of the
calendar month following the delivery of each Compliance Certificate pursuant to
subsection 6.1(iii), commencing with the Compliance Certificate for the Fiscal
Quarter ended July 31, 2000, by reference to such Compliance Certificate
(without regard to any subsequent corrections to reflect year-end audit
adjustments). The appropriate Applicable Margin so determined shall apply to
all Loans for the period from and including the date of determination to and
excluding the first day of the calendar month following the delivery of the next
Compliance Certificate; provided, however, that (1) if the Company fails to
-------- -------
deliver any Compliance Certificate in a timely manner pursuant to subsection
6.1(iii) or (2) upon the occurrence and during the continuation of any Event of
Default, the highest percentage per annum set forth in the definition of the
appropriate Applicable Margin shall apply to all Loans for the period from and
including the first day of the calendar month following the date on which such
Compliance Certificate was required to be delivered to and excluding the date on
which Administrative Agent receives such Compliance Certificate or during the
continuation of such Event of Default, as the case may be.
B. Interest Periods. In connection with each Eurodollar Rate Loan or
Domestic Sterling Rate Loan, as the case may be, Company may, pursuant to the
applicable Notice of Borrowing or Notice of Conversion/Continuation, as the case
may be, select an interest period (each an "Interest Period") to be applicable
to such Loan, which Interest Period shall be, at Company's sole option, either a
one, two, three, or six month or, if available to all Lenders, twelve month
period; provided that:
--------
(i) the initial Interest Period for any Eurodollar Rate Loan or
Domestic Sterling Rate Loan, as the case may be, shall commence on the
Funding Date in respect of such Loan, in the case of a Loan initially made
as a Eurodollar Rate Loan or Domestic Sterling Rate Loan, as the case may
be, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted to a Eurodollar
Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan or Domestic Sterling Rate Loan, as the
case may be, continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
--------
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last 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) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
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<PAGE>
(v) no Interest Period with respect to any portion of the Tranche A
Term Loans shall extend beyond the Tranche A Term Loan Maturity Date, no
Interest Period with respect to any portion of the Tranche B Term Loans
shall extend beyond the Tranche B Term Loan Maturity Date, no Interest
Period with respect to any portion of the Tranche C Term Loans shall extend
beyond the Tranche C Term Loan Maturity Date and no Interest Period with
respect to any portion of the Revolving Loans shall extend beyond the
Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the Tranche A
Term Loans, Tranche B Term Loans or Tranche C Term Loans shall extend
beyond a date on which Company is required to make a scheduled payment of
principal of the Tranche A Term Loans, Tranche B Term Loans or Tranche C
Term Loans, as the case may be, unless the sum of (a) the aggregate
principal amount of Tranche A Term Loans, Tranche B Term Loans or Tranche C
Term Loans, as the case may be, that are Base Rate Loans plus (b) the
----
aggregate principal amount of Tranche A Term Loans, Tranche B Term Loans or
Tranche C Term Loans, as the case may be, that are Eurodollar Rate Loans
with Interest Periods expiring on or before such date equals or exceeds the
principal amount required to be paid on the Tranche A Term Loans, Tranche B
Term Loans or Tranche C Term Loans, as the case may be, on such date;
(vii) there shall be no more than ten Interest Periods outstanding at
any time; and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan or Domestic Sterling Rate Loan in the applicable Notice
of Borrowing or Notice of Conversion/Continuation, Company shall be deemed to
have selected an Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid), upon any conversion of a Loan from
a Loan bearing interest at a rate determined by reference to one basis to a Loan
bearing interest at a rate determined by reference to an alternative basis and
at maturity (including final maturity); provided that in the event any Revolving
Dollar Loans that are Base Rate Loans are prepaid pursuant to subsection
2.4B(i), interest accrued on such Swing Line Loans or Revolving Dollar Loans
through the date of prepayment shall be payable on the next succeeding Interest
Payment Date applicable to Base Rate Loans (or, if earlier, at final maturity).
D. Conversion or Continuation. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Term Loans equal to or in excess of $5,000,000 or all or any
part of its outstanding Revolving Dollar Loans equal to $5,000,000 and integral
multiples of $1,000,000 in excess of that amount from Loans bearing interest at
a rate determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a Eurodollar Rate Loan or Domestic Sterling
Rate Loan, to continue all or any portion of such Loan equal to (x) in the case
of Eurodollar Rate Loans, any amount equal to or in excess of $5,000,000 as a
Eurodollar Rate Loan or (y) in the case of Domestic Sterling Rate
46
<PAGE>
Loans, (Pounds)2,500,000 and integral multiples of (Pounds)1,000,000 in excess
of that amount as a Domestic Sterling Rate Loan; provided, however, that a
-------- -------
Eurodollar Rate Loan may only be converted into a Base Rate Loan on the
expiration date of an Interest Period applicable thereto. Revolving Dollar Loans
may not be converted into Revolving Sterling Loans and Revolving Sterling Loans
may not be converted into Revolving Dollar Loans.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 9:00 A.M. (San Francisco time) at least (i)
one Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan), (ii) three Business Days in advance of the
proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan) or (iii) four Business Days in advance
of the proposed continuation date (in the case of a continuation of a Domestic
Sterling Rate Loan). A Notice of Conversion/Continuation shall specify (i) the
proposed conversion/continuation date (which shall be a Business Day), (ii) the
amount and type of the Loan to be converted/continued, (iii) the nature of the
proposed conversion/continuation, (iv) in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan, or in the case of a continuation of a
Domestic Sterling Rate Loan, the requested Interest Period, and (v) in the case
of a conversion to, or a continuation of, a Eurodollar Rate Loan, or in the case
of a continuation of a Domestic Sterling Rate Loan, that no Potential Event of
Default or Event of Default has occurred and is continuing. In lieu of
delivering the above-described Notice of Conversion/Continuation, Company may
give Administrative Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
--------
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Administrative Agent on or before the proposed
conversion/continuation date. Upon receipt of written or telephonic notice of
any proposed conversion/continuation under this subsection 2.2D, Administrative
Agent shall promptly transmit such notice by telefacsimile or telephone to each
Lender.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan or Domestic Sterling Rate Loan, as the case may be (or
telephonic notice in lieu thereof) shall be irrevocable on and after the related
Interest Rate Determination Date, and Company shall be bound to effect a
conversion or continuation in accordance therewith.
E. Default Rate. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
47
<PAGE>
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
--------
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Administrative Agent or any Lender.
F. Computation of Interest. Interest on the Loans shall be computed (i)
in the case of Base Rate Loans, on the basis of a 365-day or 366-day year, as
the case may be, (ii) in the case of Eurodollar Rate Loans, on the basis of a
360-day year, and (iii) in the case of Domestic Sterling Rate Loans, on the
basis of a 365-day or 366-day year, as the case may be, in each case for the
actual number of days elapsed in the period during which it accrues. In
computing interest on any Loan, the date of the making of such Loan or the first
day of an Interest Period applicable to such Loan or, with respect to a Base
Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of
such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded;
provided that if a Loan is repaid on the same day on which it is made, one day's
- --------
interest shall be paid on that Loan.
2.3 Fees.
----
A. Commitment Fees. Company agrees to pay to Administrative Agent in
Dollars, for distribution to each Lender in proportion to that Lender's Pro Rata
Share, (i) commitment fees for the period from and including the Closing Date to
and excluding the Revolving Loan Commitment Termination Date equal to the
average of the daily excess of the Revolving Loan Commitments over the sum of
the Dollar Equivalent of (a) the aggregate principal amount of outstanding
Revolving Loans and Swing Line Loans plus (b) the Letter of Credit Usage and
----
(ii) commitment fees for the period from and including the Closing Date to and
excluding the Merger Date equal to the excess of the Tranche A Term Loan
Commitment over the aggregate principal amount of outstanding Tranche A Term
Loans, in each case, multiplied by (a) for the period from and including the
-------------
Closing Date to and excluding the date on which Administrative Agent receives a
Compliance Certificate pursuant to subsection 6.1(iii) for the Fiscal Quarter
ended July 31, 2000, 0.50% and (b) thereafter, the appropriate Applicable
Commitment Fee Percentage. Such commitment fees shall be calculated on the basis
of a 365-day or 366-day year, as the case may be, and the actual number of days
elapsed and shall be payable quarterly in arrears on the last Business Day of
January, April, July and October of each year, commencing on the first such date
to occur after the Closing Date, on the Merger Date and on the Revolving Loan
Commitment Termination Date. For purposes of calculating the commitment fees,
the aggregate principal amount of the Revolving Sterling Loans (but not any
outstanding Swing Line
48
<PAGE>
Loans) shall be recalculated in accordance with subsection 2.4D(i) on the last
Business Day of each calendar month and on the Funding Date for any Revolving
Sterling Loan.
Except as provided in the immediately preceding paragraph, the
Applicable Commitment Fee Percentage shall be determined on the first day of the
calendar month following the delivery of each Compliance Certificate pursuant to
subsection 6.1(iii), commencing with the Compliance Certificate for the Fiscal
Quarter ended July 31, 2000, by reference to such Compliance Certificate
(without regard to any subsequent corrections to reflect year-end audit
adjustments). The Applicable Commitment Fee Percentage so determined shall
apply for the period from and including the date of determination to and
excluding the first day of the calendar month following the delivery of the next
Compliance Certificate; provided, however, that (1) if the Company fails to
-------- -------
deliver any Compliance Certificate in a timely manner pursuant to subsection
6.1(iii), or (2) upon the occurrence and during the continuation of any Event of
Default, the highest percentage per annum set forth in the definition of the
Applicable Commitment Fee Percentage shall apply for the period from and
including the first day of the calendar month following the date on which such
Compliance Certificate was required to be delivered to and excluding the date on
which Administrative Agent receives such Compliance Certificate or during the
continuation of such Event of Default, as the case may be.
B. Other Fees. Company agrees to pay to Administrative Agent the fees
described in the letter dated May 3, 1999 from Administrative Agent to Company
in the amounts and at the times set forth in such letter or separately agreed
upon in writing between Company and Administrative Agent.
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
--------------------------------------------------------------------
General Provisions Regarding Payments.
- -------------------------------------
A. Scheduled Payments of Term Loans.
(i) Scheduled Payments of Tranche A Term Loans. Company shall make
------------------------------------------
principal payments on the Tranche A Term Loans in quarterly installments on
the dates and in the amounts set forth below:
Scheduled Repayment
Date of Tranche A Term Loans
---- -----------------------
October 31, 1999 $ 3,125,000
January 31, 2000 3,125,000
April 30, 2000 3,125,000
July 31, 2000 3,125,000
October 31, 2000 6,250,000
January 31, 2001 6,250,000
April 30, 2001 6,250,000
July 31, 2001 6,250,000
October 31, 2001 9,375,000
January 31, 2002 9,375,000
April 30, 2002 9,375,000
49
<PAGE>
July 31, 2002 9,375,000
October 31, 2002 12,500,000
January 31, 2003 12,500,000
April 30, 2003 12,500,000
July 31, 2003 12,500,000
October 31, 2003 15,625,000
January 31, 2004 15,625,000
April 30, 2004 15,625,000
July 31, 2004 15,625,000
October 31, 2004 15,625,000
January 31, 2005 15,625,000
April 30, 2005 15,625,000
June 9, 2005 15,625,000
; provided, however, that the scheduled installments of principal of the
-------- -------
Tranche A Term Loans set forth above shall be reduced in connection with
any voluntary or mandatory prepayments of the Tranche A Term Loans in
accordance with subsection 2.4B(iv); and provided, further, that the
-------- -------
Tranche A Term Loans and all other amounts owed hereunder with respect to
the Tranche A Term Loans shall be paid in full no later than the Tranche A
Term Loan Maturity Date, and the final installment payable by Company in
respect of the Tranche A Term Loans on such date shall be in an amount, if
such amount is different from that specified above, sufficient to repay all
amounts owing by Company under this Agreement with respect to the Tranche A
Term Loans.
(ii) Scheduled Payments of Tranche B Term Loans. Company shall make
------------------------------------------
principal payments on the Tranche B Term Loans in quarterly installments on
the dates and in the amounts set forth below:
Scheduled Repayment
Date of Tranche B Term Loans
---- -----------------------
October 31, 1999 $250,000
January 31, 2000 $250,000
April 30, 2000 $250,000
July 31, 2000 $250,000
October 31, 2000 $250,000
January 31, 2001 $250,000
April 30, 2001 $250,000
July 31, 2001 $250,000
October 31, 2001 $250,000
January 31, 2002 $250,000
April 30, 2002 $250,000
July 31, 2002 $250,000
October 31, 2002 $250,000
January 31, 2003 $250,000
April 30, 2003 $250,000
50
<PAGE>
July 31, 2003 $ 250,000
October 31, 2003 $ 250,000
January 31, 2004 $ 250,000
April 30, 2004 $ 250,000
July 31, 2004 $ 250,000
October 31, 2004 $ 250,000
January 31, 2005 $ 250,000
April 30, 2005 $ 250,000
July 31, 2005 $ 250,000
October 31, 2005 $23,500,000
January 31, 2006 $23,500,000
April 30, 2006 $23,500,000
June 9, 2006 $23,500,000
; provided that the scheduled installments of principal of the Tranche B
--------
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Tranche B Term Loans in
accordance with subsection 2.4B(iv); and provided, further that the Tranche
-------- -------
B Term Loans and all other amounts owed hereunder with respect to the
Tranche B Term Loans shall be paid in full no later than the Tranche B Term
Loan Maturity Date, and the final installment payable by Company in respect
of the Tranche B Term Loans on such date shall be in an amount, if such
amount is different from that specified above, sufficient to repay all
amounts owing by Company under this Agreement with respect to the Tranche B
Term Loans.
(iii) Scheduled Payments of Tranche C Term Loans. Company shall make
------------------------------------------
principal payments on the Tranche C Term Loans in quarterly installments on
the dates and in the amounts set forth below:
Scheduled Repayment
Date of Tranche C Term Loans
---- -----------------------
October 31, 1999 $250,000
January 31, 2000 $250,000
April 30, 2000 $250,000
July 31, 2000 $250,000
October 31, 2000 $250,000
January 31, 2001 $250,000
April 30, 2001 $250,000
July 31, 2001 $250,000
October 31, 2001 $250,000
January 31, 2002 $250,000
April 30, 2002 $250,000
July 31, 2002 $250,000
October 31, 2002 $250,000
January 31, 2003 $250,000
April 30, 2003 $250,000
July 31, 2003 $250,000
51
<PAGE>
October 31, 2003 $ 250,000
January 31, 2004 $ 250,000
April 30, 2004 $ 250,000
July 31, 2004 $ 250,000
October 31, 2004 $ 250,000
January 31, 2005 $ 250,000
April 30, 2005 $ 250,000
July 31, 2005 $ 250,000
October 31, 2005 $ 250,000
January 31, 2006 $ 250,000
April 30, 2006 $ 250,000
July 31, 2006 $ 250,000
October 31, 2006 $23,250,000
January 31, 2007 $23,250,000
April 30, 2007 $23,500,000
June 9, 2007 $23,500,000
; provided that the scheduled installments of principal of the Tranche C
--------
Term Loans set forth above shall be reduced in connection with any
voluntary or mandatory prepayments of the Tranche C Term Loans in
accordance with subsection 2.4B(iv); and provided, further that the Tranche
-------- -------
C Term Loans and all other amounts owed hereunder with respect to the
Tranche C Term Loans shall be paid in full no later than the Tranche C Term
Loan Maturity Date, and the final installment payable by Company in respect
of the Tranche C Term Loans on such date shall be in an amount, if such
amount is different from that specified above, sufficient to repay all
amounts owing by Company under this Agreement with respect to the Tranche C
Term Loans.
B. Prepayments and Unscheduled Reductions in Revolving Loan Commitments.
(i) Voluntary Prepayments. Company may, upon not less than one
---------------------
Business Day's prior written or telephonic notice, in the case of Base Rate
Loans, and three Business Days' prior written or telephonic notice, in the
case of Eurodollar Rate Loans and four Business Days' prior written or
telephonic notice, in the case of Domestic Sterling Rate Loans, in each
case given to Administrative Agent by 9:00 A.M. (San Francisco time) on the
date required and, if given by telephone, promptly confirmed in writing to
Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or telephone
to each Lender), at any time and from time to time prepay, without premium
or penalty (except as provided in subsection 2.6D), any Term Loans,
Revolving Loans or any Swing Line Loan on any Business Day in whole or in
part in an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess of that amount (in the case of Term Loans and
Revolving Dollar Loans) or in an aggregate minimum amount of (Pounds)
2,500,000 and integral multiples of (Pounds) 1,000,000 in excess of that
amount (in the case of Revolving Sterling Loans). Notice of prepayment
having been given as aforesaid, the principal amount of the Loans specified
in such notice shall become due and payable on
52
<PAGE>
the prepayment date specified therein. Any such voluntary prepayment shall
be applied as specified in subsection 2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments. Company
may, upon not less than five Business Days' prior written or telephonic
notice confirmed in writing to Administrative Agent (which original written
or telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time to
time terminate in whole or permanently reduce in part, without premium or
penalty, the Revolving Loan Commitments in an amount up to the amount by
which the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments at the time of such proposed termination or
reduction; provided that any such partial reduction of the Revolving Loan
--------
Commitments shall be in an aggregate minimum amount of $2,000,000 and
integral multiples of $500,000 in excess of that amount (in the case of
Revolving Dollar Loan Commitments) or in an aggregate minimum amount of
(Pounds)2,500,000 and integral multiples of (Pounds)1,000,000 in excess of
that amount (in the case of Revolving Sterling Loan Commitments). Company's
notice to Administrative Agent shall designate the date (which shall be a
Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the Revolving Loan
Commitments shall be effective on the date specified in Company's notice
and shall reduce the Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share.
(iii) Mandatory Prepayments and Mandatory Reductions of Revolving
-----------------------------------------------------------
Loan Commitment. The Loans shall be prepaid and/or the Revolving Loan
---------------
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments and/or reductions to be
applied as set forth below or as more specifically provided in subsection
2.4B(iv):
(a) Prepayments from Net Asset Sale Proceeds.
----------------------------------------
(1) No later than the date of receipt by Company of any
Net Asset Sale Proceeds in respect of any sale by Company or
Merger Sub of Tendered Shares, Company shall prepay the Term
Loans in an aggregate amount equal to such Net Asset Sale
Proceeds; provided, however, that nothing contained in this
-------- -------
clause (1) shall be construed to permit any sale of assets
prohibited by subsection 7.7.
(2) No later than the date of receipt by Company or any
of its Subsidiaries of any Net Asset Sale Proceeds in respect
of any Asset Sale (other than any sale of assets subject to
subclause (1) above), Company shall prepay the Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an
aggregate amount equal to such Net Asset Sale Proceeds;
provided; however, that in the event Company notifies
-------- -------
Administrative Agent in writing on the date of receipt of such
Net Asset Sale Proceeds that Company or such Subsidiary intends
to replace any assets to be sold ("Exchange Assets") with
assets that are of a nature or type that are used or useful in
a business engaged in by Company and its
53
<PAGE>
Subsidiaries at the time of any such replacement or any
business or activity substantially similar or related thereto,
Company shall prepay the Loans and/or the Revolving Loan
Commitments shall be permanently reduced in an aggregate amount
equal to the excess of (1) the aggregate amount of such Net
Asset Sale Proceeds over (2) an amount equal to the amount of
cash expected to be expended by Company and its Subsidiaries to
acquire such assets during the 360-day period following the
date of receipt by Company or any of its Subsidiaries of such
Net Asset Sale Proceeds. Any amounts not expended by Company
and its Subsidiaries within such 360-day period (or within 18
months following such date of receipt in the event that a
binding commitment to acquire assets with such Net Asset Sale
Proceeds has been entered into by Company or any of its
Subsidiaries during such 360-day period) shall be prepaid
pursuant to clause (g) below. Nothing contained in this clause
(2) shall be construed to permit any sale of assets prohibited
by subsection 7.7.
(b) Prepayments and Reductions from Net Insurance/Condemnation
----------------------------------------------------------
Proceeds. No later than the first Business Day following the date of
--------
receipt by Administrative Agent or by Company or any of its
Subsidiaries of any Net Insurance/Condemnation Proceeds that are
required to be applied to prepay the Loans and/or reduce the Revolving
Loan Commitments pursuant to the provisions of subsection 6.4C, the
Loans shall be prepaid and/or the Revolving Loan Commitments shall be
permanently reduced in an aggregate amount equal to the amount of such
Net Insurance/Condemnation Proceeds.
(c) Prepayments Due to Reversion of Surplus Assets of Pension
---------------------------------------------------------
Plans. On the date of return to Company or any of its Subsidiaries of
-----
any surplus assets of any pension plan of Company or any of its
Subsidiaries, Company shall prepay the Loans and/or reduce the
Revolving Loan Commitments in an aggregate amount (such amount being
the "Net Pension Proceeds") equal to 100% of such returned surplus
assets, net of transaction costs and expenses incurred in obtaining
such return, including incremental taxes payable as a result thereof.
(d) Prepayments Due to Issuance of Debt Securities. On the
----------------------------------------------
date of receipt by Company of the Cash proceeds (any such Cash
proceeds, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including without
limitation reasonable legal fees and expenses, being "Net Debt
Securities Proceeds") from the issuance of any debt Securities of
Company or any of its Subsidiaries after the Closing Date (other than
issuances of Indebtedness permitted under subsection 7.1), Company
shall prepay the Loans in an aggregate amount equal to 100% of such
Net Debt Securities Proceeds.
(e) Prepayments Due to Issuance of Equity Securities. On the
------------------------------------------------
date of receipt by Company of the Cash proceeds (any such Cash
proceeds, net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including without
limitation reasonable legal fees and
54
<PAGE>
expenses, being "Net Equity Securities Proceeds") from the issuance of
any equity Securities of Company or any of its Subsidiaries, or any
equity contribution to Company or any of its Subsidiaries, after the
Closing Date (other than (1) issuances of equity Securities of Company
to directors and employees of Company and its Subsidiaries pursuant to
a written employee benefit plan maintained by Company or any of its
Subsidiaries, approved by Company's Board of Directors and issuances
of equity Securities of Company pursuant to the exercise of options or
warrants issued under any such plan, (2) the issuance of Company
Series B Preferred Stock to RCBA in the manner contemplated by the
Securities Purchase Agreement and (3) issuances of equity Securities
of Company, the Net Equity Securities Proceeds of which are applied by
Company or its Subsidiaries to the consideration paid by Company or
such Subsidiary for Subsequent Acquisitions, provided, that Company
shall apply such Net Equity Securities Proceeds to the consideration
for such Subsequent Acquisitions during the three-month period
following the date of receipt of such Net Equity Securities Proceeds
by Company), Company shall prepay the Loans in an aggregate amount
equal to 50% of such Net Equity Securities Proceeds.
(f) Prepayments from Consolidated Excess Cash Flow. Company
----------------------------------------------
shall, no later than 105 days after the end of (1) any Fiscal Year
(commencing with the Fiscal Year ending October 31, 2000) for which
the Leverage Ratio as of the last day of such Fiscal Year is less than
4.00 to 1.00, prepay the Term Loans in an aggregate amount equal to
50% of Consolidated Excess Cash Flow, if any, for such Fiscal Year or
(2) any other Fiscal Year, prepay the Term Loans in an aggregate
amount equal to 75% of Consolidated Excess Cash Flow.
(g) Calculations of Net Proceeds Amounts; Additional Prepayments
------------------------------------------------------------
Based on Subsequent Calculations. Concurrently with any prepayment of
--------------------------------
the Loans pursuant to subsections 2.4B(iii)(a)-(f), Company shall
deliver to Administrative Agent an Officer's Certificate demonstrating
the calculation of the amount (the "Net Proceeds Amount") of the
applicable Net Asset Sale Proceeds, Net Insurance/Condemnation
Proceeds, Net Pension Proceeds, Net Debt Securities Proceeds, Net
Equity Securities Proceeds or Consolidated Excess Cash Flow, as the
case may be, that gave rise to such prepayment. In the event that
Company shall subsequently determine that the actual Net Proceeds
Amount was greater than the amount set forth in such Officer's
Certificate, Company shall promptly make an additional prepayment of
the Loans in an amount equal to the amount of such excess, and Company
shall concurrently therewith deliver to Administrative Agent an
Officer's Certificate demonstrating the derivation of the additional
Net Proceeds Amount resulting in such excess.
(h) Prepayments Due to Reductions or Restrictions of Revolving
----------------------------------------------------------
Dollar Loan Commitments. Company shall from time to time prepay the
-----------------------
Revolving Loans to the extent necessary to give effect to the
limitations set forth in subsection 2.1(A) (vii).
55
<PAGE>
(i) Prepayments due to Fluctuations in Currency Exchange
----------------------------------------------------
Rates. Company shall, on the last Business Day of each calendar month
-----
that the Dollar Equivalent of the aggregate principal amount of all
outstanding Revolving Sterling Loans exceeds the Revolving Sterling
Loan Commitments, either (1) prepay the Revolving Sterling Loans or
(2) deposit funds into an account satisfactory to Administrative Agent
and in which Administrative Agent (on behalf of Lenders) has a First
Priority Lien for prepayment on the last day of the Interest Period
for such Revolving Sterling Loans, in each case to the extent
necessary so that the Total Utilization of Revolving Loan Commitments
does not exceed the Revolving Loan Commitments then in effect
(iv) Application of Prepayments.
--------------------------
(a) Application of Voluntary Prepayments by Type of Loans and
---------------------------------------------------------
Order of Maturity. Any voluntary prepayments pursuant to subsection
-----------------
2.4B(i) shall be applied as specified by Company in the applicable
notice of prepayment; provided that in the event Company fails to
--------
specify the Loans to which any such prepayment shall be applied, such
prepayment shall be applied first, to repay outstanding Swing Line
-----
Loans to the full extent thereof, second, to repay outstanding
------
Revolving Loans to the full extent thereof and third, to repay
-----
outstanding Term Loans to the full extent thereof. Any voluntary
prepayments of the Term Loans pursuant to subsection 2.4B(i) shall be
applied to prepay the Tranche A Term Loans, Tranche B Term Loans and
Tranche C Term Loans on a pro-rata basis (in accordance with the
respective outstanding principal amounts thereof) and to reduce the
scheduled installments of principal of the Tranche A Term Loans,
Tranche B Term Loans and Tranche C Term Loans set forth in subsection
2.4A in order of maturity.
(b) Application of Mandatory Prepayments by Type of Loans. Any
-----------------------------------------------------
amount (the "Applied Amount") required to be applied as a mandatory
prepayment of the Loans pursuant to subsections 2.4B(iii)(a)-(f) shall
be applied first, to prepay the Term Loans to the full extent thereof,
-----
second, to the extent of any remaining portion of the Applied Amount,
------
to prepay the Swing Line Loans to the full extent thereof and third,
-----
to the extent of any remaining portion of the Applied Amount, to
prepay the Revolving Loans to the full extent thereof and to
permanently reduce the Revolving Loan Commitment by the amount of such
prepayment.
(c) Application of Mandatory Prepayments of Term Loans to
------------------------------------------------------
Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans
-------------------------------------------------------------------
and the Scheduled Installments of Principal Thereof. Any mandatory
---------------------------------------------------
prepayments of the Term Loans pursuant to subsection 2.4B(iii) shall
be applied to prepay the Tranche A Term Loans, the Tranche B Term
Loans and the Tranche C Term Loans on a pro rata basis (in accordance
with the respective outstanding principal amounts thereof) and to
reduce on a pro rata basis the scheduled installments of principal of
the Tranche A Term Loans, Tranche B Term Loans and Tranche C Term
Loans set forth in subsection 2.4A that are unpaid at the time of such
56
<PAGE>
prepayment; provided that, in the case of any such mandatory
--------
prepayment of the Tranche B Term Loans or Tranche C Term Loans,
Administrative Agent shall, upon receipt of such mandatory prepayment,
notify each Tranche B Term Loan Lender and Tranche C Term Loan Lender
of such receipt and of the amount of such mandatory prepayment to be
applied to such Lender's Tranche B Term Loan or Tranche C Term Loan,
as the case may be. In the event any Tranche B Term Loan Lender or
Tranche C Term Loan Lender desires to waive such Lender's right to
receive such mandatory prepayment, (1) such Lender shall so advise
Administrative Agent in writing no later than the close of business on
the date it receives such notice from Administrative Agent and (2)
upon receipt of such written advice from such Lender, Administrative
Agent shall apply the amount so waived by such Lender first, to prepay
-----
the Tranche A Term Loans to the full extent thereof and to reduce on a
pro rata basis the scheduled installments of principal of the Tranche
A Term Loans set forth in subsection 2.4A(i) that are unpaid at the
time of such prepayment, second, to prepay the Swing Line Loans to the
------
full extent thereof and third, to prepay the Revolving Loans to the
-----
full extent thereof and to permanently reduce the Revolving Loan
Commitments by the amount of such prepayment.
(d) Application of Prepayments to Base Rate Loans and
-------------------------------------------------
Eurodollar Rate Loans. Considering Term Loans and Revolving Dollar
---------------------
Loans being prepaid separately, any prepayment thereof shall be
applied first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in each case in a manner which
minimizes the amount of any payments required to be made by Company
pursuant to subsection 2.6D.
(e) Application of Prepayments to Revolving Dollar Loans and
--------------------------------------------------------
Revolving Sterling Loans. Considering Revolving Loans being prepaid at
------------------------
any time, any prepayment thereof shall be allocated between Revolving
Dollar Loans and Revolving Sterling Loans as specified by Company or,
if no specification is given, in such a manner as to effect ratable
percentage reductions in the outstanding principal balances of
Revolving Dollar Loans and Revolving Sterling Loans constituting
Revolving Loans then outstanding.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by Company of
--------------------------
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in the Applicable Currency in same day funds, without
defense, setoff or counterclaim, free of any restriction or condition, and
delivered to Administrative Agent not later than 11:00 A.M. (San Francisco
time) on the date due at the Funding and Payment Office for the account of
Lenders; funds received by Administrative Agent after that time on such due
date shall be deemed to have been paid by Company on the next succeeding
Business Day. Company hereby authorizes Administrative Agent to charge its
accounts with Administrative Agent in order to cause timely payment to be
made to Administrative Agent of all principal, interest, fees and expenses
due hereunder (subject to sufficient funds being available in its accounts
for that purpose).
57
<PAGE>
(ii) Application of Payments to Principal and Interest. Except as
-------------------------------------------------
provided in subsection 2.2C, payments in respect of the principal amount of
any Loan shall include payment of accrued interest on the principal amount
being repaid or prepaid, and all such payments (and, in any event, any
payments in respect of any Loan on a date when interest is due and payable
with respect to such Loan) shall be applied to the payment of interest
before application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
-------------------------
payments in respect of Term Loans and Revolving Loans shall be apportioned
among all outstanding Loans to which such payments relate, in each case
proportionately to Lenders' respective Pro Rata Shares. Administrative
Agent shall promptly distribute to each Lender, at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro Rata Share of all such
payments received by Administrative Agent and the commitment fees of such
Lender when received by Administrative Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing
-------------------
of any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
D. Application of Proceeds of Collateral and Payments Under Subsidiary
Guaranty.
(i) Application of Proceeds of Collateral. Except as provided in
-------------------------------------
subsection 2.4B(iii)(a) with respect to prepayments from Net Asset Sale
Proceeds, all proceeds received by Administrative Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral under any Collateral Document may, in the discretion of
Administrative Agent, be held by Administrative Agent as Collateral for,
and/or (then or at any time thereafter) applied in full or in part by
Administrative Agent against, the applicable Secured Obligations (as
defined in such Collateral Document) in the following order of priority:
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(a) To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Administrative Agent and its agents and counsel, and all other
expenses, liabilities and advances made or incurred by Administrative
Agent in connection therewith, and all amounts for which
Administrative Agent is entitled to indemnification under such
Collateral Document and all advances made by Administrative Agent
thereunder for the account of the applicable Loan Party, and to the
payment of all costs and expenses paid or incurred by Administrative
Agent in connection with the exercise of any right or remedy under
such Collateral Document, all in accordance with the terms of this
Agreement and such Collateral Document;
(b) thereafter, to the extent of any excess such proceeds, to
the payment of all other such Secured Obligations for the ratable
benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds, to
the payment to or upon the order of such Loan Party or to whosoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
(ii) Application of Payments Under Subsidiary Guaranty. All
-------------------------------------------------
payments received by Administrative Agent under the Subsidiary Guaranty
shall be applied promptly from time to time by Administrative Agent in the
following order of priority:
(a) To the payment of the costs and expenses of any collection
or other realization under the Subsidiary Guaranty, including
reasonable compensation to Administrative Agent and its agents and
counsel, and all expenses, liabilities and advances made or incurred
by Administrative Agent in connection therewith, all in accordance
with the terms of this Agreement and the Subsidiary Guaranty;
(b) thereafter, to the extent of any excess such payments, to
the payment of all other Guarantied Obligations (as defined in the
Subsidiary Guaranty) for the ratable benefit of the holders thereof;
and
(c) thereafter, to the extent of any excess such payments, to
the payment to the applicable Subsidiary Guarantor or to whosoever may
be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
E. Matters Relating to Changes in Currency Exchange Rates and Conversion
of Amounts to Applicable Currencies.
(i) Fluctuations in Currency Exchange Rates. The Dollar Equivalent
---------------------------------------
of any Revolving Sterling Loans shall be calculated (a) on the Funding Date
for such Revolving Sterling Loans and (b) on the last Business Day of each
calendar month and such calculation shall remain in effect for purposes of
this Agreement until the next date on which an event described in the
foregoing clauses (a) and (b) occurs and a recalculation is made.
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(ii) Conversion of Amounts to Applicable Currencies. To the extent
----------------------------------------------
funds received by Administrative Agent from any Loan Party (or debited from
any Loan Party's account with Administrative Agent) in Dollars or in
Sterling must be converted into the Applicable Currency required for any
payment hereunder, Administrative Agent shall effect such conversion on the
applicable payment date on the basis of the rate at which Administrative
Agent is able to purchase such Applicable Currency with such other currency
on such payment date.
2.5 Use of Proceeds.
---------------
A. Term Loans. The proceeds of the Term Loans, together with up to
$25,000,000 in proceeds of the initial Revolving Loans (the "Acquisition
Revolving Loans"), Letters of Credit in a face amount equal to the aggregate
face amount of the Existing Company Letters of Credit and the Existing DMG
Letters of Credit and the proceeds of the debt and equity capitalization of
Company described in subsection 4.1 shall be applied to (i) purchase the
Tendered Shares; (ii) pay Transaction Costs in an aggregate amount not to exceed
$42,000,000; and (iii) repay amounts outstanding under the Existing Credit
Agreements; provided that Company shall first apply the proceeds from the
--------
Tranche C Terms Loans to the full extent thereof then the Tranche B Term Loans
to the full extent thereof then the Tranche A Terms Loans to the full extent
----
thereof before application of the Acquisition Revolving Loans.
B. Tranche A Term Loans. The proceeds of the Tranche A Term Loans not
used pursuant to subsection 2.5A shall be applied to (i) pay that portion of the
Acquisition Financing Requirements that becomes due and payable on the Merger
Date and (ii) pay Transaction Costs on the Merger Date in an aggregate amount,
together with Transaction Costs paid pursuant to subsection 2.5A, not to exceed
$42,000,000.
C. Revolving Loans; Swing Line Loans. The proceeds of the Acquisition
Revolving Loans shall be applied by Company as provided in subsection 2.5A. The
proceeds of any other Revolving Loans and any Swing Line Loans shall be applied
by Company for working capital purposes, which may include the making of
intercompany loans to its Subsidiaries in accordance with subsection 7.3 for
their own working capital purposes, for general corporate purposes not
prohibited hereby, for payments permitted under subsection 7.5 and for the
payment of amounts payable in respect of appraisal rights perfected by any
shareholder of DMG.
D. Margin Regulations. Based upon the calculation of good faith loan
value on the Form U-1 completed by Company and Lenders with respect to the Loans
to be made on the Closing Date, no portion of the proceeds of any borrowing
under this Agreement shall be used by Company or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation T, Regulation U or Regulation X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board or to violate
the Exchange Act, in each case as in effect on the date or dates of such
borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans and Domestic Sterling
------------------------------------------------------------------------
Rate Loans.
- ----------
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Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans and
Domestic Sterling Rate Loans as to the matters covered:
A. Determination of Applicable Interest Rate. As soon as practicable
after 9:00 A.M. (San Francisco time) or 11:00 A.M. (London time), as applicable,
on each Interest Rate Determination Date, Administrative Agent shall determine
(which determination shall, absent manifest error, be final, conclusive and
binding upon all parties) the interest rate that shall apply to the Eurodollar
Rate Loans or Domestic Sterling Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans or Domestic
Sterling Rate Loans, that by reason of circumstances affecting the London
interbank market adequate and fair means do not exist for ascertaining the
interest rate applicable to such Loans on the basis provided for in the
definition of Adjusted Eurodollar Rate or Adjusted Domestic Sterling Rate, as
the case may be, Administrative Agent shall on such date give notice (by
telefacsimile or by telephone confirmed in writing) to Company and each Lender
of such determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans or Domestic Sterling Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice
of Conversion/Continuation given by Company with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by Company.
C. Illegality or Impracticability of Eurodollar Rate Loans or Domestic
Sterling Rate Loans. In the event that on any date any Lender shall have
determined (which determination shall be final and conclusive and binding upon
all parties hereto but shall be made only after consultation with Company and
Administrative Agent) that the making, maintaining or continuation of its
Eurodollar Rate Loans or Domestic Sterling Rate Loans (i) has become unlawful as
a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the London interbank market or the position of
such Lender in that market, then, and in any such event, such Lender shall be an
"Affected Lender" and it shall on that day give notice (by telefacsimile or by
telephone confirmed in writing) to Company and Administrative Agent of such
determination (which notice Administrative Agent shall promptly transmit to each
other Lender). Thereafter (a) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, Eurodollar Rate Loans or Domestic Sterling
Rate Loans shall be suspended until such notice shall be withdrawn by the
Affected Lender, (b) to the extent such determination by the Affected Lender
relates to a Eurodollar Rate Loan or Domestic Sterling Rate Loan then being
requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender
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shall make such Loan as (or convert such Loan to, as the case may be) a Base
Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding
Eurodollar Rate Loans or Domestic Sterling Rate Loans (the "Affected Loans")
shall be terminated at the earlier to occur of the expiration of the Interest
Period then in effect with respect to the Affected Loans or when required by
law, and (d) the Affected Loans shall automatically convert into Base Rate Loans
on the date of such termination. Notwithstanding the foregoing, to the extent a
determination by an Affected Lender as described above relates to a Eurodollar
Rate Loan or Domestic Sterling Rate Loan then being requested by Company
pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation,
Company shall have the option, subject to the provisions of subsection 2.6D, to
rescind such Notice of Borrowing or Notice of Conversion/Continuation as to all
Lenders by giving notice (by telefacsimile or by telephone confirmed in writing)
to Administrative Agent of such rescission on the date on which the Affected
Lender gives notice of its determination as described above (which notice of
rescission Administrative Agent shall promptly transmit to each other Lender).
Except as provided in the immediately preceding sentence, nothing in this
subsection 2.6C shall affect the obligation of any Lender other than an Affected
Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate
Loans or Domestic Sterling Rate Loans in accordance with the terms of this
Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and Domestic Sterling Rate Loans and any reasonable loss, expense or
liability sustained by that Lender in connection with the liquidation or re-
employment of such funds) which that Lender may sustain: (i) if for any reason
(other than a default by that Lender) a borrowing of any Eurodollar Rate Loan or
Domestic Sterling Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan or Domestic Sterling Rate Loan, does
not occur on a date specified therefor in a Notice of Conversion/Continuation or
a telephonic request for conversion or continuation, (ii) if any prepayment
(including any prepayment pursuant to subsection 2.4B(i) and including any
prepayment of any Lender's Eurodollar Rate Loans as a result of the syndication
of the Loans on or prior to the date that is 90 days after the Closing Date) or
other principal payment or any conversion of any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period applicable to that
Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans or Domestic
Sterling Rate Loans is not made on any date specified in a notice of prepayment
given by Company, or (iv) as a consequence of any other default by Company in
the repayment of its Eurodollar Rate Loans and Domestic Sterling Rate Loans when
required by the terms of this Agreement. In the case of Domestic Sterling Rate
Loans, such reasonable losses, expenses and liabilities shall also include (i)
any loss or reasonable expense sustained or incurred in liquidating or employing
deposits from third Persons acquired to effect or maintain such Domestic
Sterling Rate Loans, (ii) an amount equal to the excess, if any of (a) the cost
sustained by any Lender of obtaining the funds for the Domestic Sterling Rate
Loans being prepaid or converted prior to the expiration of the applicable
Interest Period for such Domestic Sterling Rate Loans for the period from the
date of such prepayment or conversion to the last day of the applicable Interest
Period, over (b) the amount of interest (as reasonably determined by that
Lender) that would be realized by such Lender in re-employing the funds so
prepaid or converted for such Interest Period, (iii) any loss
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incurred in liquidating or closing out any foreign currency contract undertaken
by that Lender in funding or maintaining such Domestic Sterling Rate Loans in
funding or maintaining such Domestic Sterling Rate Loans, and (iv) any loss
arising from any change in the value of Dollars in relation to any such Domestic
Sterling Rate Loans which was not paid on the date due between the date such
payment was due and the date of payment, or which was not paid in Sterling, all
as determined by such Lender in its good faith discretion, but otherwise without
penalty.
E. Booking of Eurodollar Rate Loans and Domestic Sterling Rate Loans. Any
Lender may make, carry or transfer Eurodollar Rate Loans and Domestic Sterling
Rate Loans at, to, or for the account of any of its branch offices or the office
of an Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans and Domestic
Sterling Rate Loans. Calculation of all amounts payable to a Lender under this
subsection 2.6 and under subsection 2.7A shall be made as though that Lender had
actually funded each of its relevant Eurodollar Rate Loans and Domestic Sterling
Rate Loans through the purchase of a Eurodollar deposit or a Sterling deposit,
as the case may be, bearing interest at the rate obtained pursuant to clause (i)
of the definition of Adjusted Eurodollar Rate or Adjusted Domestic Sterling
Rate, as the case may be, in an amount equal to the amount of such Eurodollar
Rate Loan or Domestic Sterling Rate Loan and having a maturity comparable to the
relevant Interest Period and (y) in the case of a Term Loan or Revolving Dollar
Loan, through the transfer of such Eurodollar deposit from an offshore office of
that Lender to a domestic office of that Lender in the United States of America,
and (z) in the case of a Revolving Sterling Loan, through the making of the
relevant Loan at a branch in the United Kingdom; provided, however, that each
-------- -------
Lender may fund each of its Eurodollar Rate Loans and Domestic Sterling Rate
Loans in any manner it sees fit and the foregoing assumptions shall be utilized
only for the purposes of calculating amounts payable under this subsection 2.6
and under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
----------------------------------------
A. Compensation for Increased Costs and Taxes. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall reasonably determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any
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central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
or advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans and
Domestic Sterling Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate or Adjusted Domestic Sterling Rate, as the case
may be); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender reasonably
shall determine) as may be necessary to compensate such Lender for any such
increased cost or reduction in amounts received or receivable hereunder;
provided, however, that Company shall not be obligated to pay such Lender any
- -------- -------
compensation attributable to any period prior to the date that is 90 days prior
to the date on which such Lender gave notice to Company of the circumstances
entitling such Lender to compensation. Such Lender shall promptly deliver to
Company (with a copy to Administrative Agent) a written statement, setting forth
in reasonable detail the basis for calculating the additional amounts owed to
such Lender under this subsection 2.7A, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company
-----------------------------
under this Agreement and the other Loan Documents shall (except to the
extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Tax (other than a Tax on the
overall net income of any Lender) imposed, levied, collected, withheld or
assessed by or within the United States of America or any political
subdivision in or of the United States of America or any other jurisdiction
from or to which a payment is made by or on behalf of Company or by any
federation or
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organization of which the United States of America or any such jurisdiction
is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
-----------------------
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by Company to Administrative Agent or any
Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability
is imposed on Administrative Agent or such Lender, as the case may be)
on behalf of and in the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that
deduction, withholding or payment, Administrative Agent or such
Lender, as the case may be, receives on the due date a net sum equal
to what it would have received had no such deduction, withholding or
payment been required or made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required by
clause (b) above to pay, Company shall deliver to Administrative Agent
evidence satisfactory to Administrative Agent of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to any
--------
Lender under clause (c) above except to the extent that any change after
the date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment Agreement pursuant to which
such Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments to
such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
-----------------------------------------------
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States of America or any state or
other political subdivision thereof (for purposes of this subsection
2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent
for transmission to Company, on or prior to the Closing Date (in the
case of each Lender listed on the signature pages hereof) or
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on or prior to the date of the Assignment Agreement pursuant to which
it becomes a Lender (in the case of each other Lender), and at such
other times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service Form
1001 or 4224 (or any successor forms), properly completed and duly
executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal income
tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Loan
Documents or (2) if such Lender is not a "bank" or other Person
described in Section 881(c)(3) of the Internal Revenue Code and cannot
deliver either Internal Revenue Service Form 1001 or 4224 pursuant to
clause (1) above, a Certificate re Non-Bank Status substantially in
the form of Exhibit XIV annexed hereto together with two original
-----------
copies of Internal Revenue Service Form W-8 (or any successor form),
properly completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to
such Lender of interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such
Lender shall promptly (1) deliver to Administrative Agent for
transmission to Company two new original copies of Internal Revenue
Service Form 1001 or 4224, or a Certificate re Non-Bank Status and two
original copies of Internal Revenue Service Form W-8, as the case may
be, properly completed and duly executed by such Lender, together with
any other certificate or statement of exemption required in order to
confirm or establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to
payments to such Lender under the Loan Documents or (2) notify
Administrative Agent and Company of its inability to deliver any such
forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount
to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of clause (a) or
(b)(1) of this subsection 2.7B(iii); provided that if such Lender
--------
shall have satisfied the requirements of subsection 2.7B(iii)(a) on
the Closing Date (in the case of each Lender listed on the signature
pages hereof) or on the date of the Assignment Agreement pursuant to
which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.7B(iii)(c) shall relieve Company of its
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obligation to pay any additional amounts pursuant to clause
(c) of subsection 2.7B(ii) in the event that, as a result of any
change in any applicable law, treaty or governmental rule, regulation
or order, or any change in the interpretation, administration or
application thereof, such Lender is no longer properly entitled to
deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding
as described in subsection 2.7B(iii)(a).
C. Capital Adequacy Adjustment. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or Commitments or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by Company from
such Lender of the statement referred to in the next sentence, Company shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such reduction;
provided, however, that Company shall not be obligated to pay such Lender any
- -------- -------
compensation attributable to any period prior to the date that is 90 days prior
to the date on which such Lender gave notice to Company of the circumstances
entitling such Lender to compensation. Such Lender shall deliver to Company
(with a copy to Administrative Agent) a written statement, setting forth in
reasonable detail the basis of the calculation of such additional amounts, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
2.8 Obligation of Lenders and Issuing Lenders to Mitigate.
-----------------------------------------------------
Each Lender and the Issuing Lender agrees that, as promptly as
practicable after the officer of such Lender or Issuing Lender responsible for
administering the Loans or Letters of Credit of such Lender or Issuing Lender,
as the case may be, becomes aware of the occurrence of an event or the existence
of a condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender or Issuing Lender to receive payments under subsection
2.7 or subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitments of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which
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would otherwise be required to be paid to such Lender or Issuing Lender pursuant
to subsection 2.7 or subsection 3.6 would be materially reduced and if, as
determined by such Lender or Issuing Lender in its sole discretion, the making,
issuing, funding or maintaining of such Commitments or Loans or Letters of
Credit through such other lending or letter of credit office or in accordance
with such other measures, as the case may be, would not otherwise materially
adversely affect such Commitments or Loans or Letters of Credit or the interests
of such Lender or Issuing Lender; provided that such Lender or Issuing Lender
--------
will not be obligated to utilize such other lending or letter of credit office
pursuant to this subsection 2.8 unless Company agrees to pay all incremental
expenses incurred by such Lender or Issuing Lender as a result of utilizing such
other lending or letter of credit office as described in clause (i) above. A
certificate as to the amount of any such expenses payable by Company pursuant to
this subsection 2.8 (setting forth in reasonable detail the basis for requesting
such amount) submitted by such Lender or Issuing Lender to Company (with a copy
to Administrative Agent) shall be conclusive absent manifest error.
2.9 Substitution of Lenders.
-----------------------
If Company receives a notice from any Lender requesting payment
pursuant to subsection 2.7 or 3.6, or the obligation of any Lender to make or
maintain Eurodollar Rate Loans or Domestic Sterling Rate Loans has been
suspended or terminated pursuant to subsection 2.6C, so long as (i) no Potential
Event of Default or Event of Default shall have occurred and be continuing and
(ii), in the case of a notice pursuant to subsection 2.7 or 3.6, such Lender is
unwilling to withdraw the notice delivered to Company, upon 30 days prior
written notice to such Lender and Administrative Agent, Company may require such
Lender to assign all of its Loans, Commitments and other Obligations to another
Lender or Eligible Assignee from whom Company obtains a commitment to purchase
at par the Loans, Commitments and other Obligations of the Lender to be replaced
and to assume all obligations of such Lender pursuant to the provisions of
subsection 10.1B; provided that prior to or concurrently with such replacement
--------
(a) Company has paid to such Lender all amounts, if any, under subsections 2.7
and 3.6 through such date of replacement, (b) Company or the applicable assignee
has paid to Administrative Agent the recordation fee required to be paid by
subsection 10.1B, and (c) all of the requirements for such assignment contained
in subsection 10.1B have been fulfilled.
2.10 European Monetary Union.
-----------------------
A. Effectiveness of Provisions. The provisions of subsections 2.10C to
2.10J (inclusive) are hereby effective, provided that, if and to the extent
-------------
that any such provision relates to any state (or the currency of such state)
which shall not be a Participating Member State on the Commencement of the Third
Stage of EMU, such provision shall come into effect in relation to such state
(and the currency of such state) on and with effect from the date on which such
state becomes a Participating Member State.
B. Redenomination and Alternative Currencies. Each obligation under this
Agreement of a party to this Agreement which has been denominated in the
National Currency Unit of a Participating Member State shall be redenominated
into the euro Unit in accordance with EMU Legislation, provided that, if and to
-------------
the extent that any EMU Legislation provides that following the Commencement of
the Third Stage of EMU an amount denominated either in the
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euro or in the National Currency Unit of a Participating Member State and
payable within that Participating Member State by crediting an account of the
creditor can be paid by the debtor either in the euro Unit or in that National
Currency Unit, each party to this Agreement shall be entitled to pay or repay
any such amount either in the euro Unit or in such National Currency Unit.
C. Business Days. In relation to any amount denominated or to be
denominated in the euro or a National Currency Unit, any reference to a business
day shall be construed as a reference to a day (other than a Saturday or Sunday)
on which banks are generally open for business in:
(a) London and New York City, and
(b) Frankfurt am Main, Germany (or such principal financial
center or centers in such Participating Member State or states as the
Administrative Agent may from time to time designate for this purpose).
D. Advances. Any Revolving Sterling Loan in the currency of a
Participating Member State shall be made in the euro Unit.
E. Payments to the Administrative Agent. In relation to the payment of any
amount of euro Units or National Currency Units to Administrative Agent, such
amount shall be made available to the Administrative Agent in immediately
available, freely transferable, cleared funds to such account with such bank in
Frankfurt am Main, Germany (or such other principal financial center in such
Participating Member State as the Administrative Agent may from time to time
designate for this purpose) as the Administrative Agent shall from time to time
designate for this purpose.
F. Payments by the Administrative Agent to the Lenders. Any amount payable
by the Administrative Agent to the Lenders under this Agreement in the currency
of a Participating Member State shall be paid in the euro Unit.
G. Payments by the Administrative Agent. In relation to the payment of any
amount denominated in the euro or in a National Currency Unit, the
Administrative Agent shall not be liable to Company or any of the Lenders in any
way whatsoever for any delay, or the consequences of any delay, in the crediting
to any account of any amount required by this Agreement to be paid by the
Administrative Agent if the Administrative Agent shall have taken commercially
reasonable steps to achieve, on the date required by this Agreement, the payment
of such amount in immediately available, freely transferable, cleared funds (in
the euro Unit or, as the case may be, in a National Currency Unit) to the
account with the bank in the principal financial center in the Participating
Member State which Company or, as the case may be, any Bank shall have specified
for such purpose. In this subsection 2.10G, "commercially reasonable steps"
means such reasonable steps as may be prescribed from time to time by the
regulations or operating procedures of such clearing or settlement system as the
Administrative Agent may from time to time determine for the purpose of clearing
or settling payments of the euro.
H. Basis of Accrual. If, in relation to the currency of any state which
becomes a Participating Member State, the basis of accrual of interest expressed
in this Agreement (i.e., a
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365-day or 366-day year, as the case may be, or a 360-day year) in respect of
such currency shall be inconsistent with any convention or practice in the
London Interbank Market for the basis of accrual of interest in respect of the
euro, such expressed basis shall be replaced by such convention or practice,
effective on the date on which such state becomes a Participating Member State;
provided that, if any Revolving Sterling Loan in the currency of such state is
- -------------
outstanding immediately prior to such date, such replacement shall take effect,
with respect to such Revolving Sterling Loan, at the end of the then current
Interest Period.
I. Rounding and Other Consequential Changes. In addition to any method of
conversion or rounding prescribed by any EMU Legislation and without affecting
the respective obligations of Company to the Lenders and the Lenders to Company
under or pursuant to this Agreement:
(a) each reference in this Agreement to a minimum amount (or an
integral multiple thereof) in a National Currency Unit to be paid to or
by the Administrative Agent shall be replaced by a reference to such
reasonably comparable and convenient amount (or an integral multiple
thereof) in the euro Unit as the Administrative Agent may from time to
time specify; and
(b) except as expressly provided in this subsection 2.10I, each
provision of this Agreement shall be subject to such reasonable changes
of construction as the Administrative Agent may from time to time
determine to be necessary or appropriate to reflect the introduction of
or changeover to the euro in the Participating Member States.
J. Increased Costs. Company shall, from time to time, at the request of
any of the Lenders, pay to the Administrative Agent for the account of such
Lender the amount of any cost or increased cost incurred by, or of any reduction
in any amount payable to or in the effective return on its capital to, or of
interest or other return foregone by, a Lender or any holding company of such
Lender that such Lender shall reasonably determine is incurred or sustained by
such Lender as a result of the introduction of, changeover to or operation of
the euro in any Participating Member State. A certificate of the calculation of
such amount or amounts shall be delivered to Company and shall be conclusive
absent manifest error.
SECTION 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
---------------------------------------------------------------------
Therein.
- -------
A. Letters of Credit. In addition to Company requesting that Lenders make
Revolving Loans pursuant to subsections 2.1A(iv) and 2.1A(v) and that Swing Line
Lender make Swing Line Loans pursuant to subsection 2.1A(vi), Company may
request, in accordance with the provisions of this subsection 3.1, from time to
time during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date, that the Issuing Lender issue Letters of Credit for
the account of Company for the purposes specified in the definition of Letters
of Credit. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Company herein set forth,
the Issuing Lender shall issue such Letters of Credit in accordance with the
provisions of this subsection 3.1;
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provided that Company shall not request that the Issuing Lender issue (and the
- --------
Issuing Lender shall not issue):
(i) any Letter of Credit if, after giving effect to such issuance,
the sum of the aggregate principal amount of all outstanding Revolving
Dollar Loans (other than Revolving Dollar Loans made for the purpose of
reimbursing the Issuing Lender for any amount drawn under any Letter of
Credit but not yet so applied) plus the Letter of Credit Usage would exceed
----
the Revolving Dollar Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed $50,000,000;
(iii) any Letter of Credit having an expiration date later than the
earlier of (a) the Revolving Loan Commitment Termination Date and (b) the
date which is one year from the date of issuance of such Letter of Credit;
provided that the immediately preceding clause (b) shall not prevent the
--------
Issuing Lender from agreeing that a Letter of Credit will automatically be
extended for one or more successive periods not to exceed one year each
unless the Issuing Lender elects not to extend for any such additional
period; and provided, further that the Issuing Lender shall elect not to
-------- -------
extend such Letter of Credit if it has knowledge that an Event of Default
has occurred and is continuing (and has not been waived in accordance with
subsection 10.6) at the time the Issuing Lender must elect whether or not
to allow such extension; or
(iv) any Letter of Credit denominated in a foreign currency which in
the judgment of Administrative Agent is not readily and freely available.
On and after the Closing Date, the Existing Company Letters of Credit
shall be deemed for all purposes, including for purposes of the fees to be
collected pursuant to subsection 3.2, and reimbursement of costs and expenses to
the extent provided herein, to be Letters of Credit outstanding under this
Agreement and entitled to the benefits of this Agreement and the other Loan
Documents, and shall be governed by the applications and agreements pertaining
thereto and by this Agreement; provided, however, that, notwithstanding any
-------- -------
other provision of this Agreement, no fees with respect to the issuance of the
Existing Company Letters of Credit shall be due hereunder.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires the issuance of
------------------
a Letter of Credit, it shall deliver to Administrative Agent a Notice of
Issuance of Letter of Credit substantially in the form of Exhibit III
-----------
annexed hereto no later than 10:00 A.M. (San Francisco time) at least three
Business Days, or such shorter period as may be agreed to by the Issuing
Lender in any particular instance, in advance of the proposed date of
issuance. The Notice of Issuance of Letter of Credit shall specify (a) the
proposed date of issuance (which shall be a Business Day), (b) the face
amount of the Letter of Credit, (c) in the case of a Letter of Credit which
Company requests to be denominated in a currency other than Dollars, the
currency in which Company requests such Letter of Credit to be issued, (d)
the expiration date of the Letter of Credit, (e) the name and
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address of the beneficiary, and (f) the verbatim text of the proposed
Letter of Credit or the proposed terms and conditions thereof; provided
--------
that the Issuing Lender, in its reasonable discretion, may require changes
in the text of the proposed Letter of Credit; and provided, further that no
-------- -------
Letter of Credit shall require payment against a conforming draft to be
made thereunder on the same business day (under the laws of the
jurisdiction in which the office of the Issuing Lender to which such draft
is required to be presented is located) that such draft is presented if
such presentation is made after 10:00 A.M. (in the time zone of such office
of the Issuing Lender) on such business day.
Company shall notify the Administrative Agent prior to the
issuance of any Letter of Credit in the event that any of the matters to
which Company is required to certify in the applicable Notice of Issuance
of Letter of Credit is no longer true and correct in all material respects
as of the proposed date of issuance of such Letter of Credit, and upon the
issuance of any Letter of Credit Company shall be deemed to have re-
certified, as of the date of such issuance, as to the matters to which
Company is required to certify in the applicable Notice of Issuance of
Letter of Credit.
(ii) Issuance of Letter of Credit. Upon satisfaction or waiver
----------------------------
(in accordance with subsection 10.6) of the conditions set forth in
subsection 4.3, the Issuing Lender shall issue the requested Letter of
Credit in accordance with the Issuing Lender's standard operating
procedures.
(iii) Notification to Lenders. Upon the issuance of any Letter of
-----------------------
Credit the Administrative Agent shall promptly notify each other Lender of
such issuance, which notice shall be accompanied by a copy of such Letter
of Credit and shall notify each Lender of the amount of such Lender's
respective participation in such Letter of Credit, determined in accordance
with subsection 3.1C.
C. Lenders' Purchase of Participations in Letters of Credit. Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby agrees to, have irrevocably purchased from the Issuing Lender a
participation in such Letter of Credit and any drawings honored thereunder in an
amount equal to such Lender's Pro Rata Share of the maximum amount which is or
at any time may become available to be drawn thereunder.
3.2 Letter of Credit Fees.
---------------------
Company agrees to pay the following amounts with respect to Letters of
Credit issued hereunder:
(i) with respect to each Letter of Credit, (a) a fronting fee,
payable directly to the Issuing Lender for its own account, equal to 0.125%
per annum of the amount available to be drawn under such Letter of Credit
and (b) a nonrefundable letter of credit fee, payable to Administrative
Agent for the account of Lenders, equal to the amount available to be drawn
under such Letter of Credit multiplied by (1) for the period from and
----------
including the Closing Date to and excluding the date on which
Administrative Agent receives a Compliance Certificate pursuant to
subsection 6.1(iii) for the Fiscal Quarter ended July 31, 2000, 2.75% and
(2) thereafter, the Applicable Margin with respect to
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Revolving Dollar Loans that are Eurodollar Rate Loans, each such fronting
fee or letter of credit fee to be payable quarterly in advance at issuance
and on the last Business Day of each January, April, July and October of
each year and computed on the basis of a 360-day year; and
(ii) with respect to the issuance, amendment, negotiation or transfer
of each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees payable under clause (i) above),
documentary and processing charges payable directly to the Issuing Lender
for its own account in accordance with the Issuing Lender's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under this subsection 3.2, any
amount described in such clauses which is denominated in a currency other than
Dollars shall be valued based on the applicable Exchange Rate for such currency
as of the applicable date of determination. The Applicable Margin shall be
determined on the first day of the calendar month following the delivery of each
Compliance Certificate pursuant to subsection 6.1(iii), commencing with the
Compliance Certificate for the Fiscal Quarter ended July 31, 2000, by reference
to such Compliance Certificate (without regard to any subsequent corrections to
reflect year-end audit adjustments). The appropriate Applicable Margin so
determined shall apply to all Letters of Credit for the period from and
including the date of determination to and excluding the first day of the
calendar month following the delivery of the next Compliance Certificate;
provided, however, that (1) if the Company fails to deliver any Compliance
- -------- -------
Certificate in a timely manner pursuant to subsection 6.1(iii), or (2) upon the
occurrence and during the continuation of any Event of Default, the highest
percentage per annum set forth in the definition of the appropriate Applicable
Margin shall apply for the period from and including the first day of the
calendar month following the date on which such Compliance Certificate was
required to be delivered to and excluding the date on which Administrative Agent
receives such Compliance Certificate or during the continuation of such Event of
Default, as the case may be. Promptly upon receipt by Administrative Agent of
any amount described in clause (i)(b) of this subsection 3.2, Administrative
Agent shall distribute to each Lender its Pro Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit.
------------------------------------------------------------------
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. Reimbursement by Company of Amounts Paid Under Letters of Credit. In
the event the Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, the Issuing Lender shall immediately notify Company, and
Company shall reimburse the Issuing Lender on or before the Business Day
immediately following the date on which such drawing is honored (the
"Reimbursement Date") in an amount in Dollars (which amount, in the case of a
drawing under a Letter of Credit which is denominated in a currency other than
Dollars, shall be calculated by reference to the applicable Exchange Rate) and
in same day funds equal to
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the amount of such honored drawing; provided that,
anything contained in this Agreement to the contrary notwithstanding, (i) unless
Company shall have notified the Issuing Lender prior to 10:00 A.M. (San
Francisco time) on the date such drawing is honored that Company intends to
reimburse the Issuing Lender for the amount of such honored drawing with funds
other than the proceeds of Revolving Dollar Loans, Company shall be deemed to
have given a timely Notice of Borrowing to Administrative Agent requesting
Lenders to make Revolving Dollar Loans that are Base Rate Loans on the
Reimbursement Date in an amount in Dollars (which amount, in the case of a
drawing under a Letter of Credit which is denominated in a currency other than
Dollars, shall be calculated by reference to the applicable Exchange Rate) equal
to the amount of such honored drawing and (ii) subject to satisfaction or waiver
of the conditions specified in subsection 4.2B, Lenders shall, on the
Reimbursement Date, make Revolving Dollar Loans that are Base Rate Loans in the
amount of such honored drawing, the proceeds of which shall be applied directly
by Administrative Agent to reimburse the Issuing Lender for the amount of such
honored drawing; and provided, further that if for any reason proceeds of
Revolving Dollar Loans are not received by the Issuing Lender on the
Reimbursement Date in an amount equal to the amount of such honored drawing,
Company shall reimburse the Issuing Lender, on demand, in an amount in same day
funds equal to the excess of the amount of such honored drawing over the
aggregate amount of such Revolving Dollar Loans, if any, which are so received.
Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its
obligation to make Revolving Dollar Loans on the terms and conditions set forth
in this Agreement, and Company shall retain any and all rights it may have
against any Lender resulting from the failure of such Lender to make such
Revolving Dollar Loans under this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of
Credit.
(i) Payment by Lenders. In the event that Company shall fail for any
------------------
reason to reimburse the Issuing Lender as provided in subsection 3.3B in
an amount (calculated, in the case of a drawing under a Letter of Credit
denominated in a currency other than Dollars, by reference to the
applicable Exchange Rate) equal to the amount of any drawing honored by
the Issuing Lender under a Letter of Credit issued by it, the Issuing
Lender shall promptly notify each other Lender of the unreimbursed amount
of such honored drawing and of such other Lender's respective participation
therein based on such Lender's Pro Rata Share. Each Lender shall make
available to the Issuing Lender an amount equal to its respective
participation, in Dollars and in same day funds, at the office of the
Issuing Lender specified in such notice, not later than 11:00 A.M. (San
Francisco time) on the first business day (under the laws of the
jurisdiction in which such office of the Issuing Lender is located) after
the date notified by the Issuing Lender. In the event that any Lender fails
to make available to the Issuing Lender on such business day the amount of
such Lender's participation in such Letter of Credit as provided in this
subsection 3.3C, the Issuing Lender shall be entitled to recover such
amount on demand from the Lender together with interest thereon at the rate
customarily used by the Issuing Lender for the correction of errors among
banks for three Business Days and thereafter at the Dollar Base Rate.
Nothing in this subsection 3.3C shall be deemed to prejudice the right of
any Lender to recover from the Issuing Lender any amounts made available by
such Lender to the Issuing Lender pursuant to this subsection 3.3C in the
event that it is determined by the final judgment of a court of competent
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jurisdiction that the payment with respect to a Letter of Credit by the
Issuing Lender in respect of which payment was made by such Lender
constituted gross negligence or willful misconduct on the part of the
Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From Company.
---------------------------------------------------------------
In the event the Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of any drawing
honored by the Issuing Lender under a Letter of Credit issued by it, the
Issuing Lender shall distribute to each other Lender which has paid all
amounts payable by it under subsection 3.3C(i) with respect to such honored
drawing such other Lender's Pro Rata Share of all payments subsequently
received by the Issuing Lender from Company in reimbursement of such
honored drawing when such payments are received. Any such distribution
shall be made to a Lender at its primary address set forth below its name
on the appropriate signature page hereof or at such other address as such
Lender may request.
D. Interest on Amounts Paid Under Letters of Credit.
------------------------------------------------
(i) Payment of Interest by Company. Company agrees to pay to the
------------------------------
Issuing Lender, with respect to drawings honored under any Letters of
Credit issued by it, interest on the amount paid by the Issuing Lender in
respect of each such honored drawing from the date such drawing is honored
to but excluding the date such amount is reimbursed by Company (including
any such reimbursement out of the proceeds of Revolving Dollar Loans
pursuant to subsection 3.3B) at a rate equal to (a) for the period from the
date such drawing is honored to but excluding the Reimbursement Date, the
rate then in effect under this Agreement with respect to Revolving Dollar
Loans that are Base Rate Loans and (b) thereafter, if and to the extent not
fully reimbursed, a rate which is 2% per annum in excess of the rate of
interest otherwise payable under this Agreement with respect to Revolving
Dollar Loans that are Base Rate Loans. Interest payable pursuant to this
subsection 3.3D(i) shall be computed on the basis of a 365-day or 366-day
year, as the case may be, for the actual number of days elapsed in the
period during which it accrues and shall be payable on demand or, if no
demand is made, on the date on which the related drawing under a Letter of
Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
---------------------------------------------------
upon receipt by the Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing honored under a Letter of
Credit issued by it, (a) the Issuing Lender shall distribute to each other
Lender, out of the interest received by the Issuing Lender in respect of
the period from the date such drawing is honored to but excluding the date
on which the Issuing Lender is reimbursed for the amount of such drawing
(including any such reimbursement out of the proceeds of Revolving Dollar
Loans pursuant to subsection 3.3B), the amount that such other Lender would
have been entitled to receive in respect of the letter of credit fee that
would have been payable in respect of such Letter of Credit for such period
pursuant to subsection 3.2 if no drawing had been honored under such Letter
of Credit, and (b) in the event the Issuing Lender shall have been
reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any
portion of such honored drawing, the Issuing Lender shall distribute to
each other Lender which has paid all amounts payable by it under subsection
3.3C(i) with respect to such honored
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drawing such other Lender's Pro Rata Share of any interest received by the
Issuing Lender in respect of that portion of such honored drawing so
reimbursed by other Lenders for the period from the date on which the
Issuing Lender was so reimbursed by other Lenders to but excluding the date
on which such portion of such honored drawing is reimbursed by Company. Any
such distribution shall be made to a Lender at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request.
3.4 Obligations Absolute.
--------------------
The obligation of Company to reimburse the Issuing Lender for drawings
honored under the Letters of Credit issued by it and to repay any Revolving
Dollar Loans made by Lenders pursuant to subsection 3.3B and the obligations of
Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right
which Company or any Lender may have at any time against a beneficiary or
any transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), the Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company, whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of
its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(iv) payment by the Issuing Lender under any Letter of Credit
against presentation of a draft or other document which does not
substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by the Issuing Lender under the applicable
- --------
Letter of Credit shall not have constituted gross negligence or willful
misconduct of the Issuing Lender under the
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circumstances in question (as determined by a final judgment of a court of
competent jurisdiction).
3.5 Indemnification; Nature of Issuing Lenders' Duties.
--------------------------------------------------
A. Indemnification. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless the Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which the Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by the Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of the Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by the Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of the Issuing Lender to honor a drawing
under any such Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "Governmental
Acts").
B. Nature of Issuing Lenders' Duties. As between Company and the Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by the Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, the Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of the Issuing Lender, including any Governmental Acts, and none of the
above shall affect or impair, or prevent the vesting of, any of the Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by the Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put the Issuing Lender under any
resulting liability to Company.
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Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross negligence or willful
misconduct of the Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
-------------------------------------------------------
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that the
Issuing Lender or any Lender shall reasonably determine (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties hereto) that any law, treaty or governmental rule, regulation or order,
or any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by the
Issuing Lender or any Lender with any guideline, request or directive issued or
made after the date hereof by any central bank or other governmental or quasi-
governmental authority (whether or not having the force of law):
(i) subjects the Issuing Lender or any Lender (or its applicable
lending or letter of credit office) to any additional Tax (other than any
Tax on the overall net income of the Issuing Lender or such Lender) with
respect to the issuing or maintaining of any Letters of Credit or the
purchasing or maintaining of any participations therein or any other
obligations under this Section 3, whether directly or by such being imposed
on or suffered by the Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including
any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement in respect
of any Letters of Credit issued by the Issuing Lender or participations
therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting the Issuing Lender or any Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter
of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to the Issuing
Lender or any Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by the Issuing Lender or
any Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to the Issuing Lender or
any Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate the Issuing
Lender or any Lender for any such increased cost or reduction in amounts
received or receivable hereunder; provided, however, that Company shall not be
-------- -------
obligated to pay the Issuing Lender or such Lender any compensation attributable
to any period prior to the date that is 90 days prior to the date on which the
Issuing Lender or such Lender gave notice to Company of the circumstance
entitling the Issuing Lender or such Lender to compensation. The Issuing Lender
or any Lender shall deliver to Company a written statement, setting forth in
reasonable detail the basis for calculating
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the additional amounts owed to the Issuing Lender or any Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
4.1 Conditions to Initial Term Loans and the Acquisition Revolving Loans.
---------------------------------------------------------------------
The obligations of Lenders to make the initial Term Loans and the
Acquisition Revolving Loans to be made on the Closing Date are, in addition to
the conditions precedent specified in subsection 4.3, subject to prior or
concurrent satisfaction of the following conditions:
A. Closing Date Loan Party Documents. On or before the Closing Date,
Company shall, and shall cause each Closing Date Loan Party to, deliver to
Administrative Agent with sufficient originally executed copies, where
appropriate, for each Lender and its counsel the following with respect to
Company or each such Closing Date Loan Party, as the case may be, each, unless
otherwise noted, dated the Closing Date:
(i) Certified copies of the Organizational Documents of such
Person, together with a good standing certificate from the Secretary of
State of its jurisdiction of organization and, to the extent generally
available, a certificate or other evidence of good standing as to payment
of any applicable franchise or similar taxes from the appropriate taxing
authority of such jurisdiction, each dated a recent date prior to the
Closing Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Closing Date by such Person's corporate secretary or an assistant
secretary;
(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Closing Date
Loan Documents and Related Agreements to which it is a party, and approving
and authorizing the consummation of the Tender Offer and the Merger in the
manner contemplated by the Tender Offer Materials, certified as of the
Closing Date by the corporate secretary or an assistant secretary of such
Person as being in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing the Closing Date Loan Documents and the Related Agreements
to which it is a party;
(v) Executed originals of the Closing Date Loan Documents to which
such Person is a party; and
(vi) Such other documents as Administrative Agent may reasonably
request.
B. Foreign Subsidiary Documents. On or before the Closing Date, Company
shall cause each of the Foreign Subsidiaries of URS the Capital Stock of which
constitutes Pledged Collateral to deliver to Administrative Agent (with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) copies of the charter documents of such Subsidiary, certified as of
the Closing Date by such Subsidiary's corporate secretary or an assistant
secretary.
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C. Corporate and Capital Structure.
(i) Corporate Structure. The corporate organizational structure of
-------------------
Company and its Subsidiaries, immediately after giving effect to the Tender
Offer, shall be as set forth on Schedule 4.1C of the Closing Date Company
-------------
Disclosure Letter.
(ii) Capital Structure and Ownership. The capital structure and
-------------------------------
ownership of Company and its Subsidiaries, immediately after giving effect
to the Tender Offer, shall be as set forth on Schedule 4.1C of the Closing
-------------
Date Company Disclosure Letter.
D. Proceeds of Debt and Equity Capitalization of Company.
(i) Debt and Equity Capitalization of Company. On or before the
-----------------------------------------
Closing Date, (a) RCBA shall have purchased all of the outstanding Company
Series A Preferred Stock and Company Series C Preferred Stock for cash
consideration of $100,000,000 and (b) Company shall have issued and sold
not less than $200,000,000 in aggregate principal amount of Senior
Subordinated Notes or Bridge Notes.
(ii) Use of Proceeds by Company. Company shall have provided evidence
--------------------------
satisfactory to Administrative Agent that the proceeds of the debt and
equity capitalization of Company described in the immediately preceding
clause (i) have been applied, prior to or simultaneously with the
application of the proceeds of the Term Loans and the Acquisition Revolving
Loans, to the purchase of the Tendered Shares.
E. Tendered Shares. The Tendered Shares purchased on the Closing Date
shall represent the Minimum Shares, and Company and DMG shall have delivered to
Administrative Agent an Officers' Certificate to such effect.
F. Maximum Consideration for Tendered Shares. The aggregate consideration
for the Tendered Shares to be acquired on the Closing Date shall not exceed
$305,000,000.
G. Maximum Transaction Costs. Administrative Agent shall have received
evidence satisfactory to it that the Transaction Costs will not exceed
$42,000,000.
H. Related Agreements and Tender Offer Materials.
(i) Form of Bridge Loan Agreement or Senior Subordinated Note
---------------------------------------------------------
Indenture. The Bridge Loan Agreement shall incorporate the terms contained
---------
in that certain commitment letter dated May 3, 1999 by and between Company
and Morgan Stanley & Co. Incorporated with such changes thereto, if any,
that have been approved by Administrative Agent and Requisite Lenders or
that would otherwise have been permitted to be made pursuant to subsection
7.13B if the Bridge Notes were issued and outstanding at the time of any
such change or the Senior Subordinated Note Indenture shall be in form and
substance satisfactory to Requisite Lenders.
(ii) Tender Offer Materials. Administrative Agent shall have received
----------------------
a copy of all Tender Offer Materials and other documents filed by Company
and DMG with the Securities and Exchange Commission.
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(iii) Related Agreements in Full Force and Effect. Each Related
-------------------------------------------
Agreement shall be in full force and effect and no provision thereof shall
have been modified or waived in any respect determined by Administrative
Agent to be material, in each case without the consent of Administrative
Agent and Requisite Lenders. Administrative Agent shall have received an
executed copy of all Related Agreements, certified as of the Closing Date
by the corporate secretary or an assistant secretary.
(iv) Officer's Certificates. Administrative Agent shall have
----------------------
received an Officers' Certificate from DMG to the effect that the
representations and warranties pertaining to DMG in the Merger Agreement
are true, correct and complete in all material respects on and as of the
Closing Date to the same extent as though made on and as of that date (or,
to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct
and complete in all material respects on and as of such earlier date).
Administrative Agent shall have received Officers' Certificates from each
of the parties to the Merger Agreement to the effect that (a) the Merger
Agreement is in full force and effect and no provision thereof shall have
been modified or waived in any respect determined by Administrative Agent
to be material without the consent of Administrative Agent and Requisite
Lenders and (b) each such party has complied with all agreements and
conditions contained in the Merger Agreement and any agreements or
documents referred to therein required to be performed or complied with by
each of them on or before the Closing Date and none of such corporations
shall be in default in the performance or compliance with any of the terms
or provisions thereof.
I. Annualized Combined EBITDA. The sum of (a) Consolidated EBITDA for
URS and its Subsidiaries (determined in accordance with the definition of
Consolidated EBITDA substituting "URS and its Subsidiaries" for "Company and its
Subsidiaries" in the component definitions used therein) for the twelve-month
period ended April 30, 1999 plus (b) Consolidated EBITDA for DMG and its
----
Subsidiaries (determined in accordance with the definition of Consolidated
EBITDA substituting "DMG and its Subsidiaries" for "Company and its
Subsidiaries" in the component definitions used therein) for the six-month
period ended March 26, 1999 multiplied by 2 shall not be less than $143,000,000
----------
and Company shall deliver to Administrative Agent the Closing Date Compliance
Certificate demonstrating in reasonable detail compliance with such restriction.
J. Security Interests in Tendered Shares. Administrative Agent shall have
received evidence reasonably satisfactory to it that Company and Merger Sub
shall have taken or caused to be taken all such actions, executed and delivered
or caused to be executed and delivered all such agreements, documents and
instruments, and made or caused to be made all such filings and recordings that
may be necessary or, in the opinion of Administrative Agent, desirable in order
to create in favor of Administrative Agent, for the benefit of Lenders, a valid
and perfected First Priority Lien on the Tendered Shares. Such actions shall
include the following:
(i) Schedules to Collateral Documents. Delivery to Administrative
---------------------------------
Agent of accurate and complete schedules to the Pledge and Security
Agreement executed by Merger Sub;
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(ii) Stock Certificates. Delivery to Administrative Agent of
------------------
evidence of the purchase of the Tendered Shares and an acknowledgment
executed by the depositary with respect to the Lien of Administrative Agent
on the Tendered Shares; and
(iii) Form U-1. Delivery to Administrative Agent of a properly
--------
completed Form U-1 executed by Merger Sub.
K. Security Interests in Personal Property. On or prior to the Closing
Date, Administrative Agent shall have received evidence satisfactory to it that
Company and Subsidiary Guarantors constituting Closing Date Loan Parties shall
have taken or caused to be taken all such actions, executed and delivered or
caused to be executed and delivered all such agreements, documents and
instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clause (iii), (iv) and
(v) below) that may be necessary or, in the opinion of Administrative Agent,
desirable in order to create in favor of Administrative Agent, for the benefit
of Lenders, a valid and (upon such filing and recording) perfected First
Priority security interest in all Collateral. Such actions shall include the
following:
(i) Schedules to Collateral Documents. Delivery to Administrative
---------------------------------
Agent of accurate and complete schedules to all of the applicable
Collateral Documents;
(ii) Stock Certificates and Instruments. Delivery to Administrative
----------------------------------
Agent of (a) certificates (which certificates shall be accompanied by
irrevocable undated stock powers, duly endorsed in blank and otherwise
satisfactory in form and substance to Administrative Agent) representing
all Capital Stock required to be pledged pursuant to the Pledge and
Security Agreement and the Tender Pledge Agreement on the Closing Date and
(b) all promissory notes (duly endorsed, where appropriate, in a manner
satisfactory to Administrative Agent) evidencing any intercompany debt
required to be pledged pursuant to subsections 7.1(iii) and (iv) on the
Closing Date (including the DMG Loan Proceeds Notes);
(iii) Lien Searches and UCC Termination Statements. Delivery to
--------------------------------------------
Administrative Agent of (a) the results of a recent search, by a Person
satisfactory to Administrative Agent, of all effective UCC financing
statements and fixture filings and all judgment and tax lien filings which
may have been made with respect to any personal or mixed property of any
Loan Party, together with copies of all such filings disclosed by such
search, and (b) UCC termination statements duly executed by all applicable
Persons for filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements or fixture filings
disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding
pursuant to the terms of this Agreement);
(iv) UCC Financing Statements. Delivery to Administrative Agent of
------------------------
UCC financing statements, duly executed by each applicable Closing Date
Loan Party with respect to all personal property Collateral of such Closing
Date Loan Party, for filing in all jurisdictions as may be necessary or, in
the opinion of Administrative Agent, desirable
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to perfect the security interests created in such Collateral pursuant to
the Collateral Documents; and
(v) PTO Cover Sheets, Etc. Delivery to Administrative Agent of all
---------------------
cover sheets or other documents or instruments required to be filed with
the PTO in order to create or perfect Liens in respect of any Intellectual
Property Collateral.
L. Termination of Existing Credit Agreements and Related Liens; Existing
DMG Letters of Credit.
(i) As of the Closing Date, Company, DMG and their respective
Subsidiaries shall have (a) repaid in full all Indebtedness outstanding
under the Existing Credit Agreements, (b) terminated any commitments to
lend or make other extensions of credit thereunder, (c) delivered to
Administrative Agent all documents or instruments necessary to release all
Liens securing Indebtedness or other obligations of DMG and its
Subsidiaries thereunder and (d) made arrangements satisfactory to
Administrative Agent with respect to the Existing DMG Letters of Credit.
(ii) As of the Closing Date, DMG shall execute and deliver the DMG
Loan Proceeds Note.
M. Matters Relating to Existing Subordinated Indebtedness. On or prior to
the Closing Date, Company shall have delivered to Administrative Agent a fully
executed or conformed copy of the Existing Subordinated Agreements or an
Officer's Certificate stating that since November 14, 1997 there have been no
amendments to the Existing Subordinated Agreements.
N. Necessary Governmental Authorizations and Consents; Expiration of
Waiting Periods, Etc. Company shall have obtained all Governmental
Authorizations and all consents of other Persons, in each case that are
necessary or advisable in connection with the Tender Offer and the Merger, the
other transactions contemplated by the Loan Documents and the Related
Agreements, and the continued operation of the business conducted by DMG and its
Subsidiaries in substantially the same manner as conducted prior to the
consummation of the Tender Offer, and each of the foregoing shall be in full
force and effect, in each case other than those the failure to obtain or
maintain which, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to Company or DMG. All
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or otherwise
impose adverse conditions on the Tender Offer or the Merger or the financing
thereof. No action, request for stay, petition for review or rehearing,
reconsideration, or appeal with respect to any of the foregoing shall be
pending, and the time for any applicable agency to take action to set aside its
consent on its own motion shall have expired.
O. Financial Statements; Pro Forma Balance Sheet; Projections. On or
before the Closing Date, Lenders shall have received from Company (i) audited
financial statements of Company and its Subsidiaries for Fiscal Year 1998 and
DMG and its Subsidiaries for Fiscal Years 1998 and 1999, in each case consisting
of a consolidated balance sheet and the related
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consolidated statements of income, stockholders' equity and cash flows for such
Fiscal Years, (ii) unaudited financial statements of Company and its
Subsidiaries for each of the Fiscal Quarters prior to the Closing Date and for
which financial statements are available, consisting of a consolidated balance
sheet and the related consolidated statements of income and cash flows for the
period ending on each such date, all in reasonable detail and certified by the
chief financial officer of Company that they fairly present, in all material
respects, the financial condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows for the
periods indicated, subject to changes resulting from audit and normal year-end
adjustments, (iii) unaudited financial statements of DMG and its Subsidiaries
for each of the Fiscal Quarters ended June 26, 1998, September 25, 1998,
December 25, 1998 and each of the Fiscal Quarters ended following March 26, 1999
and prior to the Closing Date and for which financial statements are available,
consisting of a consolidated balance sheet and the related consolidated
statements of income and cash flows for the period ending on each such date, all
in reasonable detail and certified by the chief financial officer of DMG that
they fairly present, in all material respects, the financial condition of DMG
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments, (iv) a pro forma
consolidated balance sheet of Company and its Subsidiaries as at the Closing
Date, prepared in accordance with GAAP and reflecting the consummation of the
Tender Offer and the Merger, the related financings and the other transactions
contemplated by the Loan Documents and the Related Agreements, which pro forma
financial statement shall be in form and substance satisfactory to Lenders, and
(v) a statement of sources and uses of funds with respect to the Tender Offer
and Merger. There shall have been no change in the Projections.
P. No Material Adverse Effect. Since October 31, 1998, no Material
Adverse Effect with respect to URS shall have occurred. Since December 25, 1998
no Material Adverse Effect with respect to DMG shall have occurred.
Q. Solvency Assurances. A Financial Condition Certificate dated the
Closing Date, substantially in the form of Exhibit XVIII annexed hereto and with
appropriate attachments, in each case demonstrating that, after giving effect to
the consummation of the Tender Offer and the Merger, the related financings and
the other transactions contemplated by the Loan Documents and the Related
Agreements, Company and DMG will be Solvent.
R. Opinions of Counsel to Loan Parties. Lenders shall have received
originally executed copies of one or more favorable written opinions of Cooley
Godward LLP, Skadden, Arps, Slate, Meagher & Flom LLP, Vorys, Sater, Seymore and
Pease LLP and Marshall Hill Cassis & deLipkau, counsel to Loan Parties,
addressed to Administrative Agent and Lenders and dated as of the Closing Date
substantially in the form of Exhibit XI annexed hereto and as to such other
----------
matters as Administrative Agent may reasonably request.
S. Opinions of Administrative Agent's Counsel. Lenders shall have
received originally executed copies of one or more favorable written opinions of
O'Melveny & Myers LLP, counsel to Administrative Agent, addressed to
Administrative Agent and Lenders and dated as of the Closing Date, substantially
in the form of Exhibit XII annexed hereto and as to such other matters as
-----------
Administrative Agent may reasonably request.
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T. Fees. Company shall have paid to Administrative Agent, for
distribution (as appropriate) to Administrative Agent Lenders, the fees payable
on the Closing Date referred to in subsection 2.3.
U. Representations and Warranties; Performance of Agreements. Company
shall have delivered to Administrative Agent an Officers' Certificate, in form
and substance reasonably satisfactory to Administrative Agent, to the effect
that the representations and warranties in Section 5 are true, correct and
complete in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that Company shall have performed
in all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by
Administrative Agent and Requisite Lenders.
V. Closing Date Company Disclosure Letter. Company shall have delivered
to Administrative Agent the Closing Date Company Disclosure Letter.
W. Officer's Certificate Regarding Subsidiaries. The aggregate gross
revenues for the Fiscal Year ended October 31, 1998 of the Subsidiary Guarantors
that constitute the Closing Date Loan Parties shall be equal to at least 90% of
the aggregate gross revenues of URS and its Domestic Subsidiaries on a
consolidated basis for such Fiscal Year. All of the Domestic Subsidiaries of URS
whose gross revenues for the Fiscal Year ended October 31, 1998 are greater than
or equal to $5,000,000 are Closing Date Loan Parties and the Capital Stock of
all such Domestic Subsidiaries constitutes Pledged Collateral as of the Closing
Date. The Capital Stock of all of the first tier Domestic Subsidiaries of DMG
constitutes Pledged Collateral as of the Closing Date. On the Closing Date,
Company shall deliver to Administrative Agent an Officer's Certificate, in form
and substance satisfactory to Administrative Agent, demonstrating compliance
with this requirement.
X. Evidence of Insurance. Administrative Agent shall have received a
certificate from Company's insurance broker or other evidence satisfactory to it
that Administrative Agent has been named loss payee or additional insured, as
the case may be, as required by subsection 6.4.
Y. No Disruption of Financial and Capital Markets. Since May 3, 1999,
there shall not have occurred and be continuing a material disruption of or
change in the financial, banking or capital markets or in the regulatory
environment that in the good faith judgment of Administrative Agent could
materially and adversely affect the syndication of this Agreement.
Z. Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, and its counsel shall be reasonably
satisfactory in form and substance to Administrative Agent and such counsel, and
Administrative Agent and such counsel shall have received all such
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counterpart originals or certified copies of such documents as Administrative
Agent may reasonably request.
4.2 Conditions to Merger Date Loans.
-------------------------------
The obligations of Lenders to make additional Tranche A Term Loans on
the Merger Date and, if not already made, the initial Revolving Loans are, in
addition to the conditions precedent specified in subsection 4.2, subject to
prior or concurrent satisfaction of the following conditions:
A. Merger Date Loan Party Documents. On or before the Merger Date,
Company shall, and shall cause each Merger Date Loan Party to, deliver to
Administrative Agent (with sufficient originally executed copies, where
appropriate, for each Lender and its counsel) the following with respect to each
such Merger Date Loan Party, each, unless otherwise noted, dated the Merger
Date:
(i) Certified copies of the Organizational Documents of such
Person, together with a good standing certificate from the Secretary of
State of its jurisdiction of organization and, to the extent generally
available, a certificate or other evidence of good standing as to payment
of any applicable franchise or similar taxes from the appropriate taxing
authority of such jurisdiction;
(ii) Copies of the Bylaws of such Person, certified as of the Merger
Date by such Person's corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Merger Date
Loan Documents, certified as of the Merger Date by the corporate secretary
or an assistant secretary of such Person as being in full force and effect
without modification or amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing the Merger Date Loan Documents to which it is a party;
(v) Executed originals of the Merger Date Loan Documents to which
such Person is a party; and
(vi) Such other documents as Administrative Agent may reasonably
request.
B. Foreign Subsidiary Documents. On or before the Merger Date, Company
shall cause each of the Foreign Subsidiaries of DMG, the Capital Stock of which
constitutes Pledged Collateral, to deliver to Administrative Agent (with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) copies of the charter documents of such Subsidiary, certified as of
the Merger Date by such Subsidiary's corporate secretary or an assistant
secretary.
C. Corporate and Capital Structure, Ownership, Etc.
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(i) Corporate Structure. The corporate organizational structure of
-------------------
Company, DMG and their respective Subsidiaries, after giving effect to the
Merger, shall be as set forth on Schedule 4.2C of the Closing Date Company
-------------
Disclosure Letter.
(ii) Capital Structure and Ownership. The capital structure and
-------------------------------
ownership of Company, DMG and their respective Subsidiaries, after giving
effect to the Merger, shall be as set forth on Schedule 4.2C of the Closing
-------------
Date Company Disclosure Letter.
(iii) Merger Agreement. The Merger Agreement shall be in full force
----------------
and effect and no provision thereof shall have been modified or waived in
any respect determined by Administrative Agent to be material, in each case
without the consent of Administrative Agent and Requisite Lenders.
D. Consummation of Merger.
(i) All material conditions to the Merger shall have been satisfied
or the fulfillment of any such conditions shall have been waived, in the
case of a material condition to the performance of the obligations of URS,
with the consent of Administrative Agent and Requisite Lenders;
(ii) The Merger shall become effective concurrently with the making
of the Loans in accordance with the terms of the Merger Agreement, and the
laws of the State of Delaware;
(iii) Administrative Agent shall have received satisfactory evidence
of the filing of the documents with the Delaware Secretary of State
effecting the Merger on the Merger Date;
(iv) The aggregate consideration for the DMG Common Stock shall not
exceed $305,000,000; an d
(v) Administrative Agent shall have received evidence satisfactory
to it that the Transaction Costs will not exceed $42,000,000.
E. Security Interests in Personal Property. On or prior to the Merger
Date, Administrative Agent shall have received evidence satisfactory to it that
DMG and Subsidiary Guarantors constituting Merger Date Loan Parties shall have
taken or caused to be taken all such actions, executed and delivered or caused
to be executed and delivered all such agreements, documents and instruments, and
made or caused to be made all such filings and recordings (other than the filing
or recording of items described in clause (iii) and (iv) below) that may be
necessary or, in the opinion of Administrative Agent, desirable in order to
create in favor of Administrative Agent, for the benefit of Lenders, a valid and
(upon such filing and recording) perfected First Priority security interest in
the entire Collateral. Such actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Administrative
---------------------------------
Agent of accurate and complete schedules to all of the applicable
Collateral Documents;
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(ii) Stock Certificates and Instruments. Delivery to Administrative
----------------------------------
Agent of (a) certificates and instruments (which certificates and
instruments shall be accompanied by irrevocable undated stock powers, duly
endorsed in blank and otherwise satisfactory in form and substance to
Administrative Agent) representing all Capital Stock required to be pledged
pursuant to the Pledge and Security Agreement on the Merger Date and (b)
all promissory notes (duly endorsed, where appropriate, in a manner
satisfactory to Administrative Agent) evidencing any intercompany debt
required to be pledged pursuant to subsections 7.1(iii) and (iv) on the
Merger Date;
(iii) UCC Financing Statements. Delivery to Administrative Agent of
------------------------
UCC financing statements and, where appropriate, fixture filings, duly
executed by each applicable Merger Date Loan Party with respect to all
personal property Collateral of such Merger Date Loan Party, for filing in
all jurisdictions as may be necessary or, in the opinion of Administrative
Agent, desirable to perfect the security interests created in such
Collateral pursuant to the Collateral Documents; and
(iv) PTO Cover Sheets, Etc. Delivery to Administrative Agent of all
---------------------
cover sheets or other documents or instruments required to be filed with
the PTO in order to create or perfect Liens in respect of any Intellectual
Property Collateral.
F. Evidence of Insurance. Administrative Agent shall have received a
certificate from Company's insurance broker or other evidence satisfactory to it
that Administrative Agent has been named loss payee or additional insured, as
the case may be, as required by subsection 6.4.
G. Opinions of Counsel to Loan Parties. Lenders shall have received
originally executed copies of one or more favorable written opinions of counsel
to the Loan Parties, addressed to Administrative Agent and Lenders, dated as of
the Merger Date in form and substance satisfactory to Administrative Agent.
H. Fees. Company shall have paid to Administrative Agent the fees
payable on the Merger Date referred to herein.
I. Officer's Certificate Regarding Subsidiaries. The sum of (i) the
aggregate gross revenues for the DMG Fiscal Year ended March 26, 1999 of the
Subsidiary Guarantors that constitute Merger Date Loan Parties plus (ii) the
aggregate gross revenues for the Fiscal Year ended October 31, 1998 of the
Subsidiary Guarantors that constitute Closing Date Loan Parties shall be equal
to at least 90% of the sum of (i) the aggregate gross revenues of URS and its
Domestic Subsidiaries for such Fiscal Year and (ii) the aggregate gross revenues
of DMG and its Domestic Subsidiaries for such DMG Fiscal Year. All of the
Domestic Subsidiaries of Company whose gross revenues for the Fiscal Year ended
October 31, 1998 or the DMG Fiscal Year ended March 26, 1999, as the case may
be, are greater than or equal to $5,000,000 are Subsidiary Guarantors. On the
Merger Date, Company shall deliver to Administrative Agent an Officer's
Certificate, in form and substance satisfactory to Administrative Agent,
demonstrating compliance with this requirement.
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J. Representations and Warranties; Performance of Agreements. Company
shall have delivered to Administrative Agent an Officer's Certificate, in form
and substance satisfactory to Administrative Agent, to the effect that the
representations and warranties in Section 5 are true, correct and complete in
all material respects on and as of the Merger Date to the same extent as though
made on and as of the Merger Date (or, to the extent such representations and
warranties specifically relate to an earlier date, that such representations and
warranties were true, correct and complete in all material respects on and as of
such earlier date) and that Company shall have performed in all material
respects all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before the Merger Date
except as otherwise disclosed to and agreed to in writing by Administrative
Agent and Requisite Lenders and to the effect set forth in clauses (i)-(v) of
subsection 4.2D, and stating that Company will proceed to consummate the Merger
concurrently with the making of the Loans.
K. Completion of Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent and its counsel shall be reasonably satisfactory in form and substance to
Administrative Agent and such counsel, and Administrative Agent and such counsel
shall have received all such counterpart originals or certified copies of such
documents as Administrative Agent may reasonably request.
4.3 Conditions to All Loans.
-----------------------
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by the chief executive officer, the chief
financial officer or the treasurer of Company or by any executive officer of
Company designated by any of the above-described officers on behalf of Company
in a writing delivered to Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) Each Loan Party shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before that Funding Date;
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(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall
not violate any law including Regulation T, Regulation U or Regulation X of
the Board of Governors of the Federal Reserve System; and
(vi) (a) There shall not be pending or, to the actual knowledge of a
Responsible Officer of Company, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or affecting Company or
any of its Subsidiaries or any property of Company or any of its
Subsidiaries that has not been disclosed by Company in writing pursuant to
subsection 5.6 or 6.1(ix) prior to the making of the last preceding Loans
(or, in the case of the initial Loans, prior to the execution of this
Agreement), and (b) there shall have occurred no development not so
disclosed in any such action, suit, proceeding, governmental investigation
or arbitration so disclosed, that, in either event, in the reasonable
opinion of Administrative Agent or of Requisite Lenders, would be likely to
result in a Material Adverse Effect with respect to Company; and no
injunction or other restraining order shall have been issued and no hearing
to cause an injunction or other restraining order to be issued shall be
pending or noticed with respect to any action, suit or proceeding seeking
to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated by
this Agreement or the making of Loans hereunder.
4.4 Conditions to Letters of Credit.
-------------------------------
The issuance of any Letter of Credit hereunder (whether or not the
Issuing Lender is obligated to issue such Letter of Credit) is subject to the
following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer or the treasurer of Company or by any executive officer of Company
designated by any of the above-described officers on behalf of Company in a
writing delivered to Administrative Agent, together with all other information
specified in subsection 3.1B(i) and such other documents or information as the
Issuing Lender may reasonably require in connection with the issuance of such
Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.3B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
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In order to induce Lenders to enter into this Agreement and to make
the Loans, to induce the Issuing Lender to issue Letters of Credit and to induce
other Lenders to purchase participations therein, Company represents and
warrants to each Lender, on the Closing Date, on the Merger Date, on each
Funding Date and on the date of issuance of each Letter of Credit, that the
following statements are true, correct and complete:
5.1 Organization, Powers, Qualification, Good Standing, Business and
----------------------------------------------------------------
Subsidiaries.
- ------------
A. Organization and Powers. Each Loan Party is duly organized and formed,
validly existing and in good standing under the laws of its jurisdiction of
organization. Each Loan Party has all requisite partnership, company or
corporate power and authority to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to enter into the
Loan Documents and the Related Agreements to which it is a party and to carry
out the transactions contemplated thereby.
B. Qualification and Good Standing. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and would not be likely to result in a Material Adverse Effect with respect
to such Loan Party.
C. Conduct of Business. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.10.
D. Subsidiaries. As of the Closing Date and the Merger Date, all of the
Subsidiaries of Company, DMG and all of the Subsidiaries of DMG are identified
on Schedule 4.1C of the Closing Date Company Disclosure Letter. Each Subsidiary
-------------
of Company, DMG and each Subsidiary of DMG is duly organized and formed, validly
existing and in good standing under the laws of its respective jurisdiction of
organization, has all requisite corporate power and authority to own and operate
its properties and to carry on its business as now conducted and as proposed to
be conducted, and is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, in each case except where failure to be so
qualified or in good standing or a lack of such corporate power and authority
has not had and would not be likely to result in a Material Adverse Effect with
respect to Company. Except as set forth on Schedule 5.1D of the Closing Date
-------------
Company Disclosure Letter, Company, DMG or a Subsidiary of Company or DMG has
executed an agreement with respect to the Capital Stock of each non-wholly owned
Subsidiary of Company or DMG that gives Company, DMG or a Subsidiary of Company
or DMG the right to purchase any shares of Capital Stock of such non-wholly
owned Subsidiary held by any Person other than Company, DMG or a Subsidiary of
Company or DMG in the event of any proposed transfer thereof unless the failure
to execute such an agreement would not be likely to result in a Material Adverse
Effect with respect to Company.
E. Inactive Subsidiaries. None of the Subsidiaries of Company or DMG
identified on Schedule 5.1E of the Closing Date Company Disclosure Letter under
-------------
the heading "Inactive Subsidiaries" ("Inactive Subsidiaries"), as said Schedule
--------
5.1E may be supplemented from time
- ----
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to time pursuant to the provisions of subsection 6.1(xv), is conducting any
material business, owns any material property or is generating any material
revenue.
F. Capitalization. As of the Closing Date, Schedule 4.1C of the Closing
-------------
Date Company Disclosure Letter correctly sets forth the ownership interest of
Company and each of its Subsidiaries in each of the Subsidiaries of Company
identified therein and of DMG and each of its Subsidiaries in each of the
Subsidiaries of DMG identified therein. Schedule 4.1C of the Closing Date
-------------
Company Disclosure Letter correctly sets forth, as of the Closing Date, the
total number of outstanding shares of such Subsidiaries' Capital Stock. As of
the Closing Date, no other class of Capital Stock of Company or DMG is
outstanding. The Capital Stock of Company and DMG and each of their respective
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable.
G. Options and Other Rights. As of the Closing Date, except as set forth
on Schedule 5.1G of the Closing Date Company Disclosure Letter and except for
-------------
issuances of options to directors and employees of Company and its Subsidiaries
pursuant to a written employee benefit plan maintained by Company or any of its
Subsidiaries, there are no outstanding subscriptions, warrants, calls, options,
rights (including unsatisfied preemptive rights), commitments or agreements to
which Company or any of its Subsidiaries or DMG or any of its Subsidiaries is
bound that permit or entitle any Person to purchase or otherwise to receive from
or to be issued any shares of Capital Stock of Company or any of its
Subsidiaries or DMG or any of its Subsidiaries or any security or obligation of
any kind convertible into any class of Capital Stock of Company or any of its
Subsidiaries or DMG or any of its Subsidiaries.
5.2 Authorization of Borrowing, etc.
--------------------------------
A. Authorization of Borrowing. The execution, delivery and performance of
the Loan Documents and the Related Agreements have been duly authorized by all
necessary corporate action on the part of each Loan Party that is a party
thereto.
B. No Conflict. The execution, delivery and performance by each Loan
Party of the Loan Documents and the Related Agreements to which it is a party
and the consummation of the transactions contemplated by the Loan Documents and
such Related Agreements do not and will not (i) violate any provision of any law
or any governmental rule or regulation applicable to Company or any of its
Subsidiaries, the Organizational Documents of Company or any of its Subsidiaries
or any order, judgment or decree of any court or other agency of government
binding on Company or any of its Subsidiaries, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Company or any of its Subsidiaries in any
manner that would be likely to result in a Material Adverse Effect with respect
to such Loan Party; (iii) result in or require the creation or imposition of any
Lien upon any of the properties or assets of Company or any of its Subsidiaries
(other than any Liens created under any of the Loan Documents in favor of
Administrative Agent on behalf of Lenders or Permitted Encumbrances); or (iv)
require any approval of stockholders or any approval or consent of any Person
under any Contractual Obligation of Company or any of its Subsidiaries, except
for such approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lenders.
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C. Governmental Consents. The execution, delivery and performance by each
Loan Party of the Loan Documents and the Related Agreements to which it is a
party and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body.
D. Binding Obligation. Each of the Loan Documents and the Related
Agreements has been duly executed and delivered by each Loan Party that is a
party thereto and is the legally valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
E. Valid Issuance of Company Preferred Stock and Senior Subordinated
Notes.
(i) Company Preferred Stock. The Company Series A Preferred Stock and
-----------------------
Company Series C Preferred Stock to be sold on or before the Closing Date,
and the Company Series B Preferred Stock, in each case when issued and
delivered, will be duly and validly issued, fully paid and nonassessable.
The issuance and sale of such Company Series A Preferred Stock, Company
Series B Preferred Stock and Company Series C Preferred Stock, upon such
issuance and sale, will either (a) have been registered or qualified under
applicable federal and state securities laws or (b) be exempt therefrom.
(ii) Senior Subordinated Notes, Bridge Notes and Rollover Notes.
----------------------------------------------------------
Company has the corporate power and authority to issue the Senior
Subordinated Notes, the Bridge Notes and the Rollover Notes. The Senior
Subordinated Notes, the Bridge Notes, and the Rollover Notes when issued
and paid for, will be the legally valid and binding obligations of Company,
enforceable against Company in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability. The
subordination provisions of the Senior Subordinated Notes, the Bridge Notes
and the Rollover Notes will be enforceable against the holders thereof and
the Loans and all other monetary Obligations hereunder are and will be
within the definition of "Senior Indebtedness" included in such provisions.
The Senior Subordinated Notes, the Bridge Notes and the Rollover Notes when
issued and sold, will either (a) have been registered or qualified under
applicable federal and state securities laws or (b) be exempt therefrom.
5.3 Financial Condition.
-------------------
Company has heretofore delivered to Lenders, at Lenders' request, (i)
the audited consolidated balance sheet of Company and its Subsidiaries as at
October 31, 1998 and the related consolidated statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for the
Fiscal Year then ended and (ii) the unaudited consolidated balance sheets of
Company and its Subsidiaries as at January 31, 1999 and April 30, 1999 and the
related unaudited consolidated statements of income, stockholders' equity and
cash flows of Company
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and its Subsidiaries for the periods then ended. All such statements were
prepared in conformity with GAAP and fairly present, in all material respects,
the financial position (on a consolidated basis) of the entities described in
such financial statements as at the respective dates thereof and the results of
operations and cash flows (on a consolidated basis) of the entities described
therein for each of the periods then ended, subject, in the case of any such
unaudited financial statements, to changes resulting from audit and normal year-
end adjustments. Company does not (and will not following the funding of the
initial Loans) have any Contingent Obligation, contingent liability or liability
for taxes, long-term lease or unusual forward or long-term commitment that is
not reflected in the foregoing financial statements or the notes thereto and
which in any such case is material in relation to the business, operations,
properties, assets, financial condition or prospects of Company or any of its
Subsidiaries.
Company has heretofore delivered to Lenders, at Lenders' request, the
audited consolidated balance sheet of DMG and its Subsidiaries as at March 27,
1998 and March 26, 1999 and the related consolidated statements of income,
stockholders' equity and cash flows of DMG and its Subsidiaries for the DMG
Fiscal Year then ended. All such statements were prepared in conformity with
GAAP and fairly present, in all material respects, the financial position (on a
consolidated basis) of the entities described in such financial statements as at
the respective dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments. DMG does not (and
will not following the funding of the initial Loans) have any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that is not reflected in the foregoing
financial statements or the notes thereto and which in any such case is material
in relation to the business, operations, properties, assets, financial condition
or prospects of DMG or any of its Subsidiaries.
5.4 No Material Adverse Change; No Restricted Junior Payments.
---------------------------------------------------------
Since October 31, 1998, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect with respect to Company. Neither Company nor any of its Subsidiaries has
directly or indirectly declared, ordered, paid or made, or set apart any sum or
property for, any Restricted Junior Payment or agreed to do so except as
permitted by subsection 7.5.
5.5 Title to Properties; Liens; Real Property; Licenses, Trademarks; etc.
---------------------------------------------------------------------
A. Title to Properties; Liens. Company and its Subsidiaries and DMG and
its Subsidiaries have (i) good, sufficient and legal title to (in the case of
fee interests in real property), (ii) valid leasehold interests in (in the case
of leasehold interests in real or personal property), or (iii) good title to (in
the case of all other personal property), all of their respective properties and
assets reflected in the financial statements referred to in subsection 5.3 or in
the most recent financial statements delivered pursuant to subsection 6.1, in
each case except for assets disposed of since the date of such financial
statements in the ordinary course of business or as otherwise permitted under
subsection 7.7. Except as permitted by this Agreement, all such properties and
assets are free and clear of Liens.
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B. Real Property. As of the Closing Date, Schedule 5.5C of the Closing
-------------
Date Company Disclosure Letter contains a true, accurate and complete list of
all fee interests in any Real Property Asset of Company or any of its
Subsidiaries or of DMG or any of its Subsidiaries.
C. Licenses, Trademarks, etc. Company and each of its Subsidiaries and
DMG and each of its Subsidiaries have all patents, licenses, trademarks,
trademark rights, trade names, trade name rights, copyrights, permits and
franchises which are required in order for it to conduct its business and to
operate its properties as now or proposed to be conducted without known conflict
with the rights of others, except to the extent that the failure by Company or
such Subsidiary to have any such right would not be likely to result in a
Material Adverse Effect with respect to Company. As of the Closing Date and the
Merger Date, Schedule 5.5C of the Closing Date Company Disclosure Letter
-------------
contains a complete and correct list of all patents, copyrights, trade marks,
licenses, service marks, trade names and other similar rights owned or used by
Company, DMG or any of their respective Subsidiaries, showing for each item the
owner thereof and each public body with which such ownership is registered,
other than those the failure by Company, DMG or such Subsidiary to own or have
the right to use would not be likely to result in a Material Adverse Effect with
respect to Company.
5.6 Litigation; Adverse Facts.
-------------------------
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of Company, DMG or any of
their respective Subsidiaries) at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign (including any Environmental
Claims) that are pending or, to the knowledge of any Responsible Officer of
Company, threatened against or affecting Company, DMG or any of their respective
Subsidiaries or any property of Company, DMG or any of their respective
Subsidiaries and that, individually or in the aggregate, would be likely to
result in a Material Adverse Effect with respect to Company. None of Company,
DMG nor any of their respective Subsidiaries (i) is in violation of any
applicable laws (including Environmental Laws) that, individually or in the
aggregate, would be likely to result in a Material Adverse Effect with respect
to Company, or (ii) is subject to or in default with respect to any final
judgments, writs, injunctions, decrees, rules or regulations of any court or any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, that, individually or in
the aggregate, would be likely to result in a Material Adverse Effect with
respect to Company.
5.7 Payment of Taxes.
----------------
Except to the extent permitted by subsection 6.3 or to the extent that
failure to perform would not be likely to result in a Material Adverse Effect
with respect to Company, all tax returns and reports of Company and its
Subsidiaries required to be filed by any of them have been timely filed, and all
taxes shown on such tax returns to be due and payable and all assessments, fees
and other governmental charges upon Company and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. Company knows of no proposed
tax assessment against Company or any of its Subsidiaries which is not being
actively contested by Company or such
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Subsidiary in good faith and by appropriate proceedings; provided that such
--------
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements; Material
------------------------------------------------------------------
Contracts.
- ---------
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not be likely to result in a Material
Adverse Effect with respect to Company.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, would be likely
to result in a Material Adverse Effect with respect to Company.
5.9 Governmental Regulation.
-----------------------
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 Securities Activities.
---------------------
A. Neither Company nor any of its Subsidiaries is 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.
B. Following application of the proceeds of each Loan, not more than 25%
of the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject to any restriction contained in any agreement or
instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
5.11 Employee Benefit Plans.
----------------------
A. Company, each of its Subsidiaries and each of their respective ERISA
Affiliates are in compliance with all applicable provisions and requirements of
ERISA and the regulations and published interpretations thereunder with respect
to each Employee Benefit Plan of Company and its Subsidiaries, and have
performed all their obligations under each such Employee Benefit Plan, except
where such failure to comply or failure to perform would not be likely to result
in a Material Adverse Effect with respect to Company. Each such Employee
Benefit Plan which is intended to qualify under Section 401(a) of the Internal
Revenue Code is so qualified.
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B. No ERISA Event has occurred or is reasonably expected to occur.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as set forth on Schedule 5.11 of the Closing Date Company
-------------
Disclosure Letter, no such Employee Benefit Plan provides health or welfare
benefits (through the purchase of insurance or otherwise) for any retired or
former employee of Company, any of its Subsidiaries or any of their respective
ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan of Company
and its Subsidiaries, the amount of unfunded benefit liabilities (as defined in
Section 4001(a)(18) of ERISA), individually or in the aggregate for all such
Pension Plans (excluding for purposes of such computation any such Pension Plans
with respect to which assets exceed benefit liabilities), does not exceed
$1,000,000.
E. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of Company, its
Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all such
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $5,000,000.
5.12 Certain Fees.
------------
No broker's or finder's fee or commission will be payable with respect
to this Agreement or any of the transactions contemplated hereby, other than
those payable in connection with the Tender Offer and Merger, and Company hereby
indemnifies Lenders against, and agrees that it will hold Lenders harmless from,
any claim, demand or liability for any such broker's or finder's fees alleged to
have been incurred in connection herewith or therewith and any expenses
(including reasonable fees, expenses and disbursements of counsel) arising in
connection with any such claim, demand or liability.
5.13 Environmental Protection.
------------------------
Except as set forth on Schedule 5.13 of the Closing Date Company
-------------
Disclosure Letter:
(i) neither Company nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written
order, consent decree or settlement agreement with any Person relating to
(a) any Environmental Law, (b) any Environmental Claim, or (c) any
Hazardous Materials Activity that, individually or in the aggregate, would
be likely to result in a Material Adverse Effect with respect to Company;
(ii) neither Company nor any of its Subsidiaries has received on its
own behalf any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. (S) 9604) or any comparable state law;
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(iii) there are and, to the knowledge of each Responsible Officer of
Company, have been no conditions, occurrences, or Hazardous Materials
Activities which could reasonably be expected to form the basis of an
Environmental Claim against Company or any of its Subsidiaries that,
individually or in the aggregate, would be likely to result in a Material
Adverse Effect with respect to Company;
(iv) neither Company nor any of its Subsidiaries nor, to the
knowledge of each Responsible Officer of Company, any predecessor of
Company or any of its Subsidiaries has filed on its own behalf any notice
under any Environmental Law indicating past or present treatment of
Hazardous Materials at any Facility, and none of Company's or any of its
Subsidiaries' operations involves (other than in a solely advisory
capacity) the generation, transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state
equivalent; and
(v) compliance by Company and its Subsidiaries with all current or
reasonably foreseeable future requirements pursuant to or under
Environmental Laws will not, individually or in the aggregate, be likely to
result in a Material Adverse Effect with respect to Company.
Notwithstanding anything in this subsection 5.13 to the contrary, no
event or condition is occurring with respect to Company or any of its
Subsidiaries or, to the knowledge of any Responsible Officer of Company, has
occurred with respect to Company or any of its Subsidiaries relating to any
Environmental Law, any Release of Hazardous Materials, or any Hazardous
Materials Activity, including any matter disclosed on Schedule 5.13 of the
-------------
Closing Date Company Disclosure Letter, which individually or in the aggregate
has had or would be likely to result in a Material Adverse Effect with respect
to Company.
5.14 Employee Matters.
----------------
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that would be likely to result in a
Material Adverse Effect with respect to Company.
5.15 Solvency.
--------
Each of Company and each other Loan Party, upon the incurrence of any
Obligations by such Loan Party on any date on which this representation is made,
will be Solvent.
5.16 Matters Relating to Collateral.
------------------------------
A. Creation, Perfection and Priority of Liens. The execution and delivery
of the Collateral Documents by Loan Parties, together with (i) the actions taken
on or prior to the Closing Date pursuant to subsections 4.1K and 6.7, (ii) the
actions taken on or prior to the Merger Date pursuant to subsections 4.2E and
6.7 and (iii) the delivery to Administrative Agent of any Pledged Collateral not
delivered to Administrative Agent at the time of execution and delivery of the
applicable Collateral Document (all of which Pledged Collateral has been so
delivered) are effective to create in favor of Administrative Agent for the
benefit of Lenders, as
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security for the respective Secured Obligations (as defined in the applicable
Collateral Document in respect of any Collateral), a valid and perfected First
Priority Lien on all of the Collateral, and all filings and other actions
necessary or desirable to perfect and maintain the perfection and First Priority
status of such Liens have been duly made or taken and remain in full force and
effect, other than the filing of any UCC financing statements delivered to
Administrative Agent for filing (but not yet filed) and the periodic filing of
UCC continuation statements in respect of UCC financing statements filed by or
on behalf of Administrative Agent.
B. Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Administrative Agent pursuant
to any of the Collateral Documents or (ii) the exercise by Administrative Agent
of any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for filings or recordings contemplated
by subsection 5.16A and except as may be required, in connection with the
disposition of any Pledged Collateral, by laws generally affecting the offering
and sale of securities.
C. Absence of Third-Party Filings. Except such as may have been filed in
favor of Administrative Agent as contemplated by subsection 5.16A, (i) no
effective UCC financing statement, fixture filing or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office and (ii) no document granting any rights to any third party
with respect to any Intellectual Property that constitutes Collateral has been
recorded with the PTO.
D. Margin Regulations. Based upon the calculation of good faith loan
value on the Form U-1 completed by Company and Lenders with respect to the Loans
to be made on the Closing Date, on the Closing Date, the pledge of the Pledged
Collateral pursuant to the Collateral Documents does not violate Regulation T, U
or X of the Board of Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to
Administrative Agent by or on behalf of any Loan Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
5.17 Related Agreements.
------------------
A. Delivery of Related Agreements. Company has delivered to Lenders
complete and correct copies of each Related Agreement and of all exhibits and
schedules thereto.
B. DMG's Warranties. Except to the extent otherwise set forth herein or
in the schedules to the Closing Date Company Disclosure Letter, each of the
representations and warranties given by DMG to Company and Merger Sub in the
Merger Agreement is true and correct in all material
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respects as of the date hereof (or as of any earlier date to which such
representation and warranty specifically relates) and will be true and correct
in all material respects as of the Closing Date and the Merger Date (or as of
such earlier date, as the case may be), in each case subject to the
qualifications set forth in the schedules to the Merger Agreement.
C. Warranties of Company. Subject to the qualifications set forth
therein, each of the representations and warranties given by Company to DMG in
the Merger Agreement is true and correct in all material respects as of the date
hereof and will be true and correct in all material respects as of the Closing
Date.
D. Survival. Notwithstanding anything in the Merger Agreement to the
contrary, the representations and warranties of Company set forth in subsections
5.17B and 5.17C shall, solely for purposes of this Agreement, survive the
Closing Date for the benefit of Lenders.
5.18 Disclosure.
----------
No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or Related Agreement or in any other document,
certificate or written statement furnished to Lenders by or on behalf of Company
or any of its Subsidiaries for use in connection with the transactions
contemplated by this Agreement, including the Closing Date Company Disclosure
Letter, contains any untrue statement of a material fact or omits to state a
material fact (known to Company, in the case of any document not furnished by
it) necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by Company to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to Company (other than matters of a
general economic nature) that, individually or in the aggregate, would be likely
to result in a Material Adverse Effect with respect to Company and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1 Financial Statements and Other Reports.
--------------------------------------
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of consolidated financial statements in
conformity with GAAP. Company will deliver to Administrative Agent and Lenders:
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(i) Company Quarterly Financials: (a) as soon as available and in
----------------------------
any event within 55 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year, the consolidated balance sheet of Company and
its Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated statements of income and cash flows of Company and its
Subsidiaries for such Fiscal Quarter and for the period from the beginning
of the then current Fiscal Year to the end of such Fiscal Quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year, all in reasonable detail
and certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments, and (b) as
soon as available and in any event within 90 days after the end of each
Fiscal Quarter, a summary of such consolidated statements setting forth in
comparative form the corresponding figures from the Financial Plan for the
current Fiscal Year and a narrative report describing the operations of
Company and its Subsidiaries in each case in the form prepared for
presentation to the Board of Directors for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter;
(ii) Company Year-End Financials: as soon as available and in any
---------------------------
event within 100 days after the end of each Fiscal Year, (a) the
consolidated balance sheet of Company and its Subsidiaries as at the end of
such Fiscal Year and the related consolidated statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for
such Fiscal Year, setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year, all in reasonable
detail and certified by the chief financial officer of Company that they
fairly present, in all material respects, the financial condition of
Company and its Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated, (b) a
summary of such consolidated statements setting forth in comparative form
the corresponding figures from the Financial Plan for the current Fiscal
Year and a narrative report describing the operations of Company and its
Subsidiaries in each case in the form prepared for presentation to the
Board of Directors for such Fiscal Year, (c) an office performance summary
for the Fiscal Year then ended and (d) in the case of such consolidated
financial statements, a report thereon of Pricewaterhouse Coopers or other
independent certified public accountants of recognized national standing
selected by Company, which report shall be unqualified, shall express no
doubts about the ability of Company and its Subsidiaries to continue as a
going concern, and shall state that such consolidated financial statements
fairly present, in all material respects, the consolidated financial
position of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated
in conformity with GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial statements) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards;
(iii) Officer's and Compliance Certificates: together with each
-------------------------------------
delivery of financial statements of Company and its Subsidiaries pursuant
to subdivisions (i) and (ii)
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above, (a) an Officer's Certificate of Company stating that the signers
have reviewed the terms of this Agreement and have made, or caused to be
made under their supervision, a review in reasonable detail of the
transactions and condition of Company and its Subsidiaries during the
accounting period covered by such financial statements and that such review
has not disclosed the existence during or at the end of such accounting
period, and that the signers do not have knowledge of the existence as at
the date of such Officer's Certificate, of any condition or event that
constitutes an Event of Default or Potential Event of Default, or, if any
such condition or event existed or exists, specifying the nature and period
of existence thereof and what action Company has taken, is taking and
proposes to take with respect thereto; and (b) a Compliance Certificate
demonstrating in reasonable detail compliance during and at the end of the
applicable accounting periods with the restrictions contained in
subsections 7.1(x) and (xi), 7.2(viii), 7.3(viii) and (xiii), 7.4(ix), 7.6,
7.7(vi) and 7.8, in each case to the extent compliance with such
restrictions is required to be tested at the end of the applicable
accounting period;
(iv) Reconciliation Statements: if, as a result of any change in
-------------------------
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements delivered pursuant to subdivisions (i),
(ii) or (xii) of this subsection 6.1 will differ in any material respect
from the consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting principles
and policies been made, then (a) together with the first delivery of
financial statements pursuant to subdivision (i), (ii) or (xii) of this
subsection 6.1 following such change, consolidated financial statements of
Company and its Subsidiaries for (y) the current Fiscal Year to the
effective date of such change and (z) the two full Fiscal Years immediately
preceding the Fiscal Year in which such change is made, in each case
prepared on a pro forma basis as if such change had been in effect during
such periods, and (b) together with each delivery of financial statements
pursuant to subdivision (i), (ii) or (xii) of this subsection 6.1 following
such change, a written statement of the chief accounting officer or chief
financial officer of Company setting forth the differences (including any
differences that would affect any calculations relating to the financial
covenants set forth in subsection 7.6) which would have resulted if such
financial statements had been prepared without giving effect to such
change;
(v) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (ii) above, a written statement by the independent certified
public accountants giving the report thereon stating that their audit
examination has included a review of the terms of this Agreement and the
other Loan Documents as they relate to accounting matters and that, based
on their audit examination, nothing has come to their attention that causes
them to believe that the information relating to subsection 7.6 contained
in the certificates delivered therewith pursuant to subdivision (iii) above
is not correct or that the matters set forth in the Compliance Certificates
delivered therewith pursuant to clause (b) of subdivision (iii) above for
the applicable Fiscal Year are not stated in accordance with the terms of
this Agreement;
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(vi) Accountants' Reports: promptly upon receipt thereof (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including any comment letter submitted by such accountants to management in
connection with their annual audit;
(vii) SEC Filings and Press Releases: promptly upon their becoming
------------------------------
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders
other than Company or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or
a similar form) and prospectuses, if any, filed by Company or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority,
and (c) all press releases and other statements made available generally by
Company or any of its Subsidiaries to the public concerning material
developments in the business of Company or any of its Subsidiaries;
(viii) Events of Default, etc.: promptly upon any Responsible Officer
----------------------
of Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or becoming
aware that any Lender has given any notice (other than to Administrative
Agent) or taken any other action with respect to a claimed Event of Default
or Potential Event of Default, (b) that any Person has given any notice to
Company or any of its Subsidiaries or taken any other action with respect
to a claimed default or event or condition of the type referred to in
subsection 8.2, (c) of any condition or event that would be required to be
disclosed in a current report filed by Company with the Securities and
Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in
effect on the date hereof) if Company were required to file such reports
under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect with respect to Company, an Officer's Certificate
specifying the nature and period of existence of such condition, event or
change, or specifying the notice given or action taken by any such Person
and the nature of such claimed Event of Default, Potential Event of
Default, default, event or condition, and what action Company has taken, is
taking and proposes to take with respect thereto;
(ix) Litigation or Other Proceedings: (a) promptly upon any
-------------------------------
Responsible Officer of Company obtaining knowledge of (x) the institution
of, or non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries (collectively,
"Proceedings") not previously disclosed in writing by Company to Lenders or
(y) any material development in any Proceeding that, in any case:
(1) is reasonably likely to result in a Material Adverse
Effect with respect to Company; or
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(2) seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of,
the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) promptly upon request by Administrative
Agent, a copy of the list of Proceedings delivered by Company to its
independent certified public accountants in connection with the report
prepared by them on the consolidated financial statements of Company and
its Subsidiaries for each Fiscal Year, and promptly after request by
Administrative Agent such other information as may be reasonably requested
by Administrative Agent to enable Administrative Agent and its counsel to
evaluate any of such Proceedings;
(x) ERISA Events: promptly upon becoming aware of the occurrence of
------------
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action Company, any of its Subsidiaries or any of
their respective ERISA Affiliates has taken, is taking or proposes to take
with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto;
(xi) ERISA Notices: with reasonable promptness upon request by
-------------
Administrative Agent, copies of (a) each Schedule B (Actuarial Information)
to the annual report (Form 5500 Series) filed by Company, any of its
Subsidiaries or any of their respective ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan of Company or any of its
Subsidiaries; (b) all notices received by Company, any of its Subsidiaries
or any of their respective ERISA Affiliates from a Multiemployer Plan
sponsor concerning an ERISA Event; and (c) copies of such other documents
or governmental reports or filings relating to any Employee Benefit Plan of
Company or any of its Subsidiaries as Administrative Agent shall reasonably
request;
(xii) Financial Plans: as soon as practicable and in any event no
---------------
later than 60 days following the end of each Fiscal Year, a consolidated
plan and financial forecast for the then current Fiscal Year (the
"Financial Plan" for such Fiscal Year), including, (a) forecasted
consolidated balance sheets and forecasted consolidated statements of
income and cash flows of Company and its Subsidiaries for such Fiscal Year,
together with a projected Compliance Certificate for such Fiscal Year and
an explanation of the assumptions on which such forecasts are based, (b)
forecasted consolidated statements of income and cash flows of Company and
its Subsidiaries for each Fiscal Quarter of such Fiscal Year, together with
an explanation of the assumptions on which such forecasts are based, and
(c) such other information and projections as any Lender may reasonably
request;
(xiii) Insurance: as soon as practicable and in any event by the last
---------
day of each Fiscal Year, a report in form and substance reasonably
satisfactory to Administrative Agent outlining any change since the
proceeding Fiscal Year in any material insurance coverage maintained by
Company and its Subsidiaries;
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(xiv) Board of Directors: with reasonable promptness, written
------------------
notice of any change in the Board of Directors of Company;
(xv) New Subsidiaries or Change in Status of Subsidiaries:
----------------------------------------------------
annually within 100 days of the end of each Fiscal Year, all of the data
required to be set forth on Schedule 4.2C of the Closing Date Company
-------------
Disclosure Letter with respect to all Subsidiaries of Company and an
Officer's Certificate, together with supporting documentation in form and
substance satisfactory to Requisite Lenders, setting forth the aggregate
gross revenues for the immediately preceding Fiscal Year of the Subsidiary
Guarantors and the aggregate gross revenues for the immediately preceding
Fiscal Year of all Subsidiaries of Company, the Capital Stock of which
constitutes Pledged Collateral;
(xvi) Subordinated Debt Notices: promptly upon receipt by Company
-------------------------
or any of its Subsidiaries of any notice with respect to any Subordinated
Indebtedness, and promptly upon the giving of notice by Company or any of
its Subsidiaries with respect to any Subordinated Indebtedness, in each
case relating to any default or payment or prepayment of principal of,
premium, if any, redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with
respect to such Subordinated Indebtedness, a copy of such notice;
(xvii) UCC Search Report: As promptly as practicable after the date
-----------------
of delivery to Administrative Agent of any UCC financing statement executed
by any Loan Party pursuant to subsection 4.1K(iv), 4.2E(iii) or 6.7, copies
of completed UCC searches evidencing the proper filing, recording and
indexing of all such UCC financing statement and listing all other
effective financing statements that name such Loan Party as debtor,
together with copies of all such other financing statements not previously
delivered to Administrative Agent by or on behalf of Company or such Loan
Party; and
(xviii) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
6.2 Corporate Existence, etc.
-------------------------
Except as permitted under subsection 7.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; provided, however that neither Company nor any of its Subsidiaries
-------- -------
shall be required to preserve any such right or franchise if the Board of
Directors of Company or such Subsidiary shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Company or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to Company, such Subsidiary or Lenders.
6.3 Payment of Taxes and Claims; Tax Consolidation.
----------------------------------------------
A. Company will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or
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in respect of any of its income, businesses or franchises before any penalty
accrues thereon, and all claims (including, claims for labor, services,
materials and supplies) for sums that have become due and payable and that by
law have or may become a Lien upon any of its properties or assets, prior to the
time when any penalty or fine shall be incurred with respect thereto, except
where the failure to pay such taxes, assessments and governmental charges would
not be likely to result in a Material Adverse Effect with respect to Company;
provided that no such charge or claim need be paid if it is being contested in
- --------
good faith by appropriate proceedings promptly instituted and diligently
conducted, so long as (i) such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor and
(ii) in the case of a charge or claim which has or may become a Lien against any
of the Collateral, such contest proceedings conclusively operate to stay the
sale of any portion of the Collateral to satisfy such charge or claim.
B. Company will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than Company or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
-------------------------------------------------------------------
Condemnation Proceeds.
- ---------------------
A. Maintenance of Properties. Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Company and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof the failure of which
would be likely to result in a Material Adverse Effect with respect to Company.
B. Insurance. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry. Without limiting the generality
of the foregoing, Company will maintain or cause to be maintained (i) flood
insurance with respect to each Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors of
the Federal Reserve System, and (ii) replacement value casualty insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are at all times
satisfactory to Administrative Agent in its commercially reasonable judgment.
Each such policy of insurance shall (a) name Administrative Agent for the
benefit of Lenders as an additional insured thereunder as its interests may
appear and (b) in the case of each business interruption and casualty insurance
policy, contain a loss payable clause or endorsement, satisfactory in form and
substance to Administrative Agent, that names Administrative Agent for the
benefit of Lenders as the loss payee thereunder and provides for at
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least 30 days prior written notice to Administrative Agent of any modification
or cancellation of such policy.
C. Application of Net Insurance/Condemnation Proceeds.
(i) Business Interruption Insurance. Upon receipt by Company or any
-------------------------------
of its Subsidiaries of any Net Insurance/Condemnation Proceeds from
business interruption insurance, (a) so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing, Company
or such Subsidiary may retain and apply such Net Insurance/Condemnation
Proceeds for working capital purposes, and (b) if an Event of Default or
Potential Event of Default shall have occurred and be continuing, Company
shall apply an amount equal to such Net Insurance/Condemnation Proceeds to
prepay the Loans (and/or the Revolving Loan Commitments shall be reduced)
as provided in subsection 2.4B(iii)(b);
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
----------------------------------------
Company or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds other than from business interruption insurance, (a) so long as no
Event of Default or Potential Event of Default shall have occurred and be
continuing, Company shall, or shall cause one or more of its Subsidiaries
to, promptly and diligently (and in any event within 360 days of the date
of receipt of such Net Insurance/Condemnation Proceeds) apply such Net
Insurance/Condemnation Proceeds to pay or reimburse the costs of repairing,
restoring or replacing the assets in respect of which such Net
Insurance/Condemnation Proceeds were received or, to the extent not so
applied within such 360-day period), to prepay the Loans (and/or the
Revolving Loan Commitments shall be reduced) as provided in subsection
2.4B(iii)(b), and (b) if an Event of Default or Potential Event of Default
shall have occurred and be continuing, Company shall apply an amount equal
to such Net Insurance/Condemnation Proceeds to prepay the Loans (and/or the
Revolving Loan Commitments shall be reduced) as provided in subsection
2.4B(iii)(b); and
(iii) Net Insurance/Condemnation Proceeds Received by Administrative
--------------------------------------------------------------
Agent. Upon receipt by Administrative Agent of any Net
-----
Insurance/Condemnation Proceeds as loss payee, (a) if and to the extent
Company would have been required to apply such Net Insurance/Condemnation
Proceeds (if it had received them directly) to prepay the Loans and/or
reduce the Revolving Loan Commitments, Administrative Agent shall, and
Company hereby authorizes Administrative Agent to, apply such Net
Insurance/Condemnation Proceeds to prepay the Loans (and/or the Revolving
Loan Commitments shall be reduced) as provided in subsection 2.4B(iii)(b),
and (b) to the extent the foregoing clause (a) does not apply,
Administrative Agent shall deliver such Net Insurance/Condemnation Proceeds
to Company, and Company shall, or shall cause one or more of its
Subsidiaries to, promptly apply such Net Insurance/Condemnation Proceeds to
the costs of repairing, restoring, or replacing the assets in respect of
which such Net Insurance/Condemnation Proceeds were received, or, to the
extent not so applied, to prepay the Loans (and/or the Revolving Loan
Commitments shall be reduced as provided in subsection 2.4B(iii)(b).
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6.5 Inspection Rights.
-----------------
Company shall, and shall cause each of its Subsidiaries to, permit any
authorized representatives designated by any Lender to visit and inspect any of
the properties of Company or of any of its Subsidiaries, to inspect, copy and
take extracts from its and their financial and accounting records, and to
discuss its and their affairs, finances and accounts with its and their officers
and independent public accountants (provided that Company may, if it so chooses,
be present at or participate in any such discussion), all upon reasonable notice
and at such reasonable times during normal business hours and as often as may
reasonably be requested.
6.6 Compliance with Laws, etc.
--------------------------
Company shall comply, and shall cause each of its Subsidiaries to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority (including all Environmental Laws),
noncompliance with which would be likely to cause, individually or in the
aggregate, a Material Adverse Effect with respect to Company.
6.7 Execution of Subsidiary Guaranty and Personal Property Collateral Documents
---------------------------------------------------------------------------
by Certain Additional Subsidiaries.
- ----------------------------------
A. Execution of Subsidiary Guaranty and Personal Property Collateral
Documents. In the event that the aggregate gross revenues of the Subsidiary
Guarantors for any Fiscal Year, commencing with the Fiscal Year ending October
31, 1999, is less than 90% of the aggregate gross revenues of Company and its
Domestic Subsidiaries on a consolidated basis for such Fiscal Year, Company
will, within 100 days after the end of such Fiscal Year, (i) cause one or more
additional Domestic Subsidiaries after consultation with Requisite Lenders to
execute and deliver to Administrative Agent a counterpart of the Subsidiary
Guaranty and the Pledge and Security Agreement such that the aggregate gross
revenues of all Subsidiary Guarantors for such Fiscal Year shall be equal to at
least 90% of the aggregate gross revenues of Company and its Domestic
Subsidiaries on a consolidated basis for such Fiscal Year, and (ii) take, or
cause each such Domestic Subsidiary to take, all such further actions and
execute all such further documents and instruments (including actions, documents
and instruments comparable to those described in subsection 4.1K) as may be
necessary or, in the opinion of Administrative Agent, desirable to create in
favor of Administrative Agent, for the benefit of Lenders, a valid and perfected
First Priority Lien on all Material Real Property and all personal property of
each such Domestic Subsidiary described in the applicable forms of Collateral
Documents. In addition, in the event that any Domestic Subsidiary of Company
that has not previously executed the Subsidiary Guaranty has gross revenues for
any Fiscal Year, commencing with the Fiscal Year ending October 31, 1999,
greater than equal to $5,000,000 Company will, within 100 days after the end of
such Fiscal Year, (i) cause such Domestic Subsidiary to execute and deliver to
Administrative Agent a counterpart of the Subsidiary Guaranty and the Pledge and
Security Agreement and (ii) take, or cause such Domestic Subsidiary to take, all
such further actions and execute all such further documents and instruments
(including actions, documents and instruments comparable to those described in
subsection 4.1K) as may be necessary or, in the opinion of Administrative Agent,
desirable to create in favor of Administrative Agent, for the benefit of
Lenders, a valid and perfected First Priority Lien on all Material Real Property
and all personal property of each such Domestic Subsidiary described in the
applicable forms of Collateral Documents.
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B. Subsidiary Organizational Documents, Legal Opinions, Etc. Company
shall deliver to Administrative Agent, together with such Loan Documents, (i)
certified copies of the Organizational Documents of each Subsidiary described in
subsections 6.7A and 6.7D, together with a good standing certificate from the
Secretary of State of the jurisdiction of its incorporation and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate taxing
authority of such jurisdiction, each to be dated a recent date prior to their
delivery to Administrative Agent, (ii) a copy of such Subsidiary's Bylaws,
certified by its corporate secretary or an assistant secretary as of a recent
date prior to their delivery to Administrative Agent, (iii) a certificate
executed by the secretary or an assistant secretary of such Subsidiary as to (a)
the fact that the attached resolutions of the Board of Directors of such
Subsidiary approving and authorizing the execution, delivery and performance of
such Loan Documents are in full force and effect and have not been modified or
amended and (b) the incumbency and signatures of the officers of such Subsidiary
executing such Loan Documents, and (iv) a favorable opinion of counsel to such
Subsidiary, in form and substance reasonably satisfactory to Administrative
Agent and its counsel, as to (a) the due organization and good standing of such
Subsidiary, (b) the due authorization, execution and delivery by such Subsidiary
of such Loan Documents, (c) the enforceability of such Loan Documents against
such Subsidiary and (d) such other matters (including matters relating to the
creation and perfection of Liens in any Collateral pursuant to such Loan
Documents) as Administrative Agent may reasonably request, all of the foregoing
to be in form and substance reasonably satisfactory to Administrative Agent and
its counsel.
C. Pledged Collateral. In the event that the aggregate gross revenues of
the Subsidiaries of Company, the Capital Stock of which constitutes Pledged
Collateral, for any Fiscal Year, commencing with the Fiscal Year ending October
31, 1999, is less than 90% of the aggregate gross revenues of Company and its
Subsidiaries on a consolidated basis for such Fiscal Year, Company will, or will
cause its Domestic Subsidiaries to, within 100 days after the end of such Fiscal
Year, execute all such Collateral Documents and/or all such other documents and
instruments (including actions, documents and instruments comparable to those
described in subsection 4.1K) as may be necessary or, in the opinion of
Administrative Agent, desirable to create, in favor of Administrative Agent, for
the benefit of Lenders, a valid and perfected First Priority Lien on all the
Capital Stock of one or more additional Subsidiaries after consultation with
Requisite Lenders to the extent set forth in the applicable forms of Collateral
Documents such that the aggregate gross revenues of all Subsidiaries, the
Capital Stock of which constitutes Pledged Collateral, shall be equal to at
least 90% of the aggregate gross revenues of Company and its Subsidiaries on a
consolidated basis for such Fiscal Year; provided, however, that notwithstanding
-------- -------
the foregoing, no action shall be required to be taken with respect to the
Capital Stock of any Foreign Subsidiary pursuant to this subsection in the event
that Company and Administrative Agent agree in good faith that the pledge of
such stock would result in a significant tax liability to Company or any of its
Subsidiaries or is restricted by the laws of the jurisdiction under which such
Foreign Subsidiary is organized so long as the Capital Stock of all Subsidiaries
whose aggregate gross revenues for such Fiscal Year are greater than or equal to
$5,000,000 constitute Pledged Collateral unless Company and Administrative Agent
agree in good faith that the pledge of such stock of any Foreign Subsidiary
would result in a significant tax liability to Company or any of its
Subsidiaries or is restricted by the laws of the jurisdiction under which such
Foreign Subsidiary is organized; provided further that notwithstanding the
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foregoing, no action shall be required to be taken with respect to the Capital
Stock of any Subsidiary whose gross revenues for such Fiscal Year are $250,000
or less.
D. Optional Guaranty. In the event that any Subsidiary of Company
executes a guaranty of the Bridge Notes, Rollover Notes or Senior Subordinated
Notes, Company will (i) cause such Subsidiary to execute and deliver to
Administrative Agent a counterpart of the Subsidiary Guaranty and (ii) take, or
cause each such Subsidiary to take, all such further actions and execute all
such further documents and instruments (including actions, documents and
instruments comparable to those described in subsection 4.1K) as may be
necessary or, in the opinion of Administrative Agent, desirable to create in
favor of Administrative Agent, for the benefit of Lenders, a valid and perfected
First Priority Lien on all Material Real Property and all personal property of
each such Subsidiary described in the applicable forms of Collateral Documents.
6.8 Matters Relating to Real Property Collateral.
--------------------------------------------
From and after the Closing Date, in the event that (i) Company or any
Subsidiary Guarantor acquires any Material Real Property or (ii) at the time any
Person becomes a Subsidiary Guarantor, such Person owns or holds any Material
Real Property, in either case excluding any such Real Property Asset the
encumbrancing of which requires the consent of any then-existing senior
lienholder, where Company and its Subsidiaries are unable to obtain such
lessor's or senior lienholder's consent (any such non-excluded Real Property
Asset described in the foregoing clause (i) or (ii) being a "Mortgaged
Property"), Company or such Subsidiary Guarantor, if requested by Administrative
Agent shall deliver to Administrative Agent, as soon as practicable after such
Person acquires such Mortgaged Property or becomes a Subsidiary Guarantor, as
the case may be, (a) a fully executed and notarized Mortgage in proper form for
recording in all appropriate places in all applicable jurisdictions, encumbering
the interest of such Loan Party in such Mortgaged Property; (b) a favorable
opinion of counsel; (c) if required by Administrative Agent, an ALTA mortgagee
title insurance policy or an unconditional commitment therefor issued by title
company acceptable to Administrative Agent in form and substance and in an
amount satisfactory to Administrative Agent, insuring fee simple title to such
Mortgaged Property vested in such Loan Party and assuring Administrative Agent
that such Mortgage creates a valid and enforceable First Priority Lien on such
Mortgaged Property, and (d) such other documents, reports and information as
would be usual and customary in transactions of this type.
6.9 Interest Rate Protection.
------------------------
At all times during the period from and including the date which is 90
days after the Closing Date to and excluding the third anniversary of the
Closing Date, Company shall maintain in effect one or more Interest Rate
Agreements with respect to the Term Loans, in an aggregate notional principal
amount of not less than 50% of the aggregate principal amount of all outstanding
Term Loans, each such Interest Rate Agreement to be in form and substance
reasonably satisfactory to Administrative Agent.
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6.10 Year 2000.
---------
Company shall perform all acts reasonably necessary to ensure that
Company and its Subsidiaries become Year 2000 Compliant in a timely manner.
Such acts shall include performing a comprehensive review and assessment of all
of Company's systems and adopting a detailed plan, with itemized budget, for the
remediation, monitoring and testing of such systems. As used in this
subsection, "Year 2000 Compliant" shall mean, in regard to any entity, that all
software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity, will
properly perform date sensitive functions before, during and after the year
2000. Company shall, immediately upon request, provide to Administrative Agent
such certifications or other evidence of Company's compliance with the terms of
this paragraph as Administrative Agent may from time to time require.
6.11 Syndication.
-----------
Company and DMG shall cooperate with Administrative Agent in the
syndication of the Commitments (such cooperation to include participating in
meetings with the Lenders and assisting in the preparation of a Confidential
Information Memorandum and other materials to be used in connection with such
syndication) and shall provide and cause their respective advisors to provide
all information reasonably deemed necessary by Administrative Agent to such
syndication. Company and DMG shall also coordinate any other financings by
Company and DMG with Administrative Agent's primary syndication efforts relating
to the Commitments.
6.12 Consummation of Merger..
----------------------
Company shall proceed to consummate the Merger as soon as practical
following the consummation of the Tender Offer.
6.13 Post Closing Deliveries.
-----------------------
On or prior to September 9, 1999, Company will, or will cause its
Domestic Subsidiaries to, execute all such Collateral Documents and/or all such
documents and instruments (including actions, documents and instruments
comparable to those described in subsection 4.1K) as may be necessary or, in the
reasonable opinion of Administrative Agent, desirable to create, in favor of
Administrative Agent, for the benefit of Lenders, a valid and perfected First
Priority Lien on all Capital Stock required to be pledged pursuant to subsection
6.7C using, for the purposes of such calculation, the sum of (i) the aggregate
gross revenues of URS and its Subsidiaries for the Fiscal Year ended October 31,
1998 and (ii) the aggregate gross revenues of DMG and its Subsidiaries for the
DMG Fiscal Year ended March 26, 1999.
On or prior to September 9, 1999, Administrative Agent shall have
received, with respect to all Intellectual Property listed on Schedule 5.5C to
-------------
the Closing Date Company Disclosure Letter that Administrative Agent and Company
agree in good faith has significant value to Company or any of its Subsidiaries,
such documents as shall be necessary to create and perfect a security interest
in such Intellectual Property.
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SECTION 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 7.
7.1 Indebtedness.
------------
Company shall not, and shall not permit any of its Subsidiaries or any
Joint Venture in which Company or any of its Subsidiaries has any interest to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company and its Subsidiaries may become and remain liable with
respect to the Obligations;
(ii) Company, its Subsidiaries and Joint Ventures may become and
remain liable with respect to Contingent Obligations permitted by
subsection 7.4 and, upon any matured obligations actually arising pursuant
thereto, the Indebtedness corresponding to the Contingent Obligations so
extinguished;
(iii) Company may become and remain liable with respect to
Indebtedness to any Subsidiary Guarantor, and any Subsidiary Guarantor may
become and remain liable with respect to Indebtedness to Company or any
other Subsidiary Guarantor, provided that (a) such loan is evidenced by a
--------
promissory note pledged to Administrative Agent on behalf of Lenders
pursuant to the Pledge and Security Agreement, (b) all intercompany
Indebtedness owed by Company to any Subsidiary Guarantor and by any
Subsidiary Guarantor to Company shall be subordinated in right of payment
to the payment in full of the Obligations, and (c) any payment by any
Subsidiary Guarantor under any guaranty of the Obligations shall result
in a pro tanto reduction of the amount of any intercompany Indebtedness
--- -----
owed by such Subsidiary Guarantor to Company or to any Subsidiary Guarantor
for whose benefit such payment is made;
(iv) any Subsidiary of Company (other than a Subsidiary Guarantor or
an Inactive Subsidiary) may become and remain liable with respect to
Indebtedness to Company or any Subsidiary Guarantor to the extent such
corresponding Investment by Company or any such Subsidiary Guarantor is
permitted under subsection 7.3(xiii), provided that (a) such loan is
--------
evidenced by a promissory note pledged to Administrative Agent on behalf of
Lenders pursuant to the Pledge and Security Agreement, (b) all intercompany
Indebtedness owed by any Subsidiary Guarantor to Company shall be
subordinated in right of payment to the payment in full of the Obligations,
and (c) any payment by any Subsidiary Guarantor under any guaranty of the
Obligations shall result in a pro tanto reduction of the amount of any
--- -----
intercompany Indebtedness owed by such Subsidiary Guarantor to Company or
to any Subsidiary Guarantor for whose benefit such payment is made;
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(v) any Foreign Subsidiary of Company may become and remain liable
with respect to Indebtedness to any other Foreign Subsidiary of Company;
(vi) Company may become and remain liable with respect to
Indebtedness evidenced by (a) the Bridge Notes in an aggregate principal
amount not to exceed $200,000,000 plus the amount of all interest thereon
paid in the form of additional Bridge Notes, (b) the Rollover Notes in an
aggregate principal amount not to exceed $205,500,000 plus (1) an amount
equal to the aggregate amount of all interest on the Bridge Notes paid in
the form of additional Bridge Notes, and (2) the amount of all interest
thereon paid in the form of additional Rollover Notes, and (c) the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$205,500,000 plus (1) an amount equal to the aggregate amount of all
interest on the Bridge Notes or Rollover Notes paid in the form of
additional Bridge Notes or Rollover Notes, as the case may be, and (2) the
amount of any premium payable in respect of the Rollover Notes upon the
refinancing thereof;
(vii) any Joint Venture may become and remain liable with respect to
Indebtedness to Persons other than Company or any of its Subsidiaries,
provided that such Indebtedness is nonrecourse to Company, its Subsidiaries
--------
and their respective assets;
(viii) any Joint Venture may become and remain liable with respect to
Indebtedness to Company or any Subsidiary of Company (other than an
Inactive Subsidiary) to the extent such corresponding Investment by Company
or any such Subsidiary is permitted under subsection 7.3(viii);
(ix) Indebtedness (including the amount of any committed lines of
credit) listed on Schedule 7.1 of the Closing Date Company Disclosure
------------
Letter;
(x) Company and its Domestic Subsidiaries (other than Inactive
Subsidiaries) may become and remain liable with respect to Indebtedness to
Persons other than Company or any of its Subsidiaries in an aggregate
principal amount (not including the amount of any such Indebtedness and
committed lines of credit listed on Schedule 7.1 of the Closing Date
------------
Company Disclosure Letter) not to exceed $50,000,000 (less the aggregate
amount of all Contingent Obligations permitted by subsection 7.4(ix)) at
any time outstanding;
(xi) Foreign Subsidiaries of Company may become and remain liable
with respect to Indebtedness to Persons other than Company or any of its
Subsidiaries in an aggregate principal amount (including the amount of any
such Indebtedness listed on Schedule 7.1 of the Closing Date Company
------------
Disclosure Letter) not to exceed $30,000,000 at any time outstanding; and
(xii) any Target who becomes a Subsidiary or who is merged or
consolidated into a Subsidiary after the date hereof pursuant to a
Subsequent Acquisition permitted by subsection 7.7(vi) may remain liable
with respect to Indebtedness existing immediately prior to the date of such
Subsequent Acquisition; provided that (a) such Indebtedness was
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not incurred in connection with, or anticipation or contemplation of, such
Subsequent Acquisition, (b) no Event of Default or Potential Event of
Default shall have occurred and be continuing or would occur and be
continuing or would occur as a result of such Subsequent Acquisition, and
(c) neither Company nor any of its Subsidiaries (other than such Target or
the Subsidiary into which such Target is merged or consolidated) shall
become liable with respect to such Indebtedness.
7.2 Liens and Related Matters.
-------------------------
A. Prohibition on Liens. Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC or under any similar recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described on Schedule 7.2 of the Closing Date Company
------------
Disclosure Letter;
(iv) Liens on property or assets acquired by Company or any of its
Subsidiaries (other than Inactive Subsidiaries) after the date of this
Agreement or on property or assets of any Person which becomes a Subsidiary
of Company after the date of this Agreement, provided that (a) such Liens
--------
exist at the time such property or assets or the stock of such Person is
acquired, (b) such Liens were not created in contemplation of such
acquisition and (c) any such Lien shall attach only to the property or
assets so acquired;
(v) Liens created to secure the purchase price of property or
assets, provided that (a) any such Lien shall attach only to the property
--------
or assets so purchased, (b) the Indebtedness secured by any such Lien shall
not exceed 100% of the purchase price of the property or assets purchased,
and (c) any such Lien shall be created within 180 days following the
acquisition of such property or assets;
(vi) Liens on property or assets of any Foreign Subsidiary of
Company created to secure Indebtedness permitted under subsection 7.1(xi);
(vii) Liens incurred in connection with the extension, renewal or
refinancing of the Indebtedness secured by the Liens described in clauses
(iv) and (v) above; and
(viii) other Liens in an aggregate amount not to exceed $500,000 at
any time.
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B. Equitable Lien in Favor of Lenders. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
--------
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. No Further Negative Pledges. Neither Company nor any of its
Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired, except (i) restrictions contained in the Related
Agreements as in effect on the Closing Date, (ii) restrictions on the
encumbrance of specific property encumbered to secure payment of particular
Indebtedness or to be sold pursuant to an executed agreement with respect to an
Asset Sale, and (iii) customary non-assignment provisions contained in leases,
subleases, licenses and sublicenses permitted by this Agreement.
D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein and except for restrictions contained in
the terms of any Indebtedness of Foreign Subsidiaries of Company permitted by
subsection 7.1(xi) if such restriction applies only in the event of a payment
default or a default with respect to a financial covenant in such Indebtedness
or Company determines that any such restriction will not materially affect
Company's ability to make principal or interest payments on the Loans and the
restriction is not materially more disadvantageous to Lenders than is customary
in comparable financings, Company will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any such Subsidiary to (i) pay dividends or make any other distributions on
any of such Subsidiary's Capital Stock owned by Company or any other Subsidiary
of Company, (ii) repay or prepay any Indebtedness owed by such Subsidiary to
Company or any other Subsidiary of Company, (iii) make loans or advances to
Company or any other Subsidiary of Company, except as provided in the Bridge
Loan Agreement as in effect on the Closing Date and the Senior Note Indenture in
a form consistent with the "Description of Notes" contained in the Offering
Memorandum dated June 7, 1999 or such other form as may be approved by Requisite
Lenders, or (iv) transfer any of its property or assets to Company or any other
Subsidiary of Company, except for (a) restrictions contained in the Bridge Loan
Agreement as in effect on the Closing Date and the Senior Note Indenture in the
form approved by Requisite Lenders, (b) customary non-assignment provisions
contained in leases, subleases, licenses and sublicenses, (c) restrictions on
the transfer of Joint Venture interests contained in the organizational
documents of any Joint Venture, and (d) restrictions in an executed agreement
with respect to an Asset Sale.
7.3 Investments; Joint Ventures.
---------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
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(i) Company and its Subsidiaries (other than Inactive Subsidiaries)
may make and own Investments in Cash Equivalents;
(ii) Company and any Subsidiary Guarantor may make intercompany
loans to the extent permitted under subsections 7.1(iii) and (iv);
(iii) Company and its Subsidiaries (other than Inactive Subsidiaries)
may make Consolidated Capital Expenditures permitted by subsection 7.8;
(iv) Company and Merger Sub may consummate the Merger;
(v) Company and its Subsidiaries may continue to own the
Investments owned by them and described on Schedule 7.3 of the Closing Date
------------
Company Disclosure Letter;
(vi) Company and its Subsidiaries (other than Inactive Subsidiaries)
may make and own Investments in wholly-owned Subsidiary Guarantors;
(vii) Company and its Subsidiaries (other than Inactive Subsidiaries)
may own Investments received in connection with the restructuring or work-
out of the obligations of or the bankruptcy of suppliers and customers or
received pursuant to a plan of reorganization of any supplier or customer,
in each case in settlement of delinquent obligations or disputes with such
suppliers or customers;
(viii) Company and its Subsidiaries (other than Inactive Subsidiaries)
may make and own Investments in Joint Ventures in an aggregate amount not
to exceed $5,000,000 at any time;
(ix) Company or any of its Subsidiaries (other than Inactive
Subsidiaries) may make and own Investments consisting of non-cash
consideration received in the form of securities, notes or similar
obligations in connection with an Asset Sale permitted pursuant to
subsection 7.7; provided that (a) the aggregate amount of such non-cash
--------
consideration received in connection with such Asset Sale shall not exceed
10% of the total consideration received in connection with such Asset Sale
and (b) such non-cash consideration is pledged pursuant to the Pledge and
Security Agreement;
(x) any Foreign Subsidiary of Company may make and own Investments
in any other Foreign Subsidiary of Company;
(xi) Company and its Subsidiaries (other than Inactive Subsidiaries)
may make Subsequent Acquisitions permitted under subsection 7.7(vi);
(xii) any Target who becomes a Subsidiary or who is merged or
consolidated into a Subsidiary after the date hereof pursuant to a
Subsequent Acquisition permitted by subsection 7.7(vi) may continue to own
Investments owned by such Target on the date of such Subsequent
Acquisition; provided that (a) such Investment was not incurred in
connection with, or anticipation or contemplation of, such Subsequent
Acquisition, (b) no Event of Default or Potential Event of Default shall
have occurred and be continuing or
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would occur as a result of such Subsequent Acquisition, and (c) neither
Company nor any of its Subsidiaries (other than such Target or the
Subsidiary into which such Target is merged or consolidated) shall become
liable with respect to such Investment; and
(xiii) Company and Subsidiary Guarantors may make and own Investments
in Subsidiaries (other than wholly-owned Subsidiary Guarantors and Inactive
Subsidiaries) in an aggregate amount (including the amount of any such
Investments listed on Schedule 7.3 of the Closing Date Company Disclosure
------------
Letter) not to exceed $25,000,000 at any time.
7.4 Contingent Obligations.
----------------------
Company shall not, and shall not permit any of its Subsidiaries or any
Joint Venture in which Company or any of its Subsidiaries has an interest to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Subsidiaries of Company may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary Guaranty;
(ii) Company may become and remain liable with respect to Contingent
Obligations in respect of the Letters of Credit;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations described on Schedule 7.4 of the Closing
------------
Date Company Disclosure Letter;
(iv) Company may become and remain liable with respect to Contingent
Obligations under Currency Agreements and Interest Rate Agreements
constituting Hedge Agreements in the ordinary course of business;
(v) Company and its Subsidiaries (other than Inactive Subsidiaries)
may become and remain liable with respect to Contingent Obligations in
respect of any Indebtedness of any of its Domestic Subsidiaries (other than
Inactive Subsidiaries) permitted by subsection 7.1;
(vi) Joint Ventures may become and remain liable with respect to
Contingent Obligations; provided that such Contingent Obligations are
--------
nonrecourse to Company, its Subsidiaries and their respective assets;
(vii) Company, its Subsidiaries (other than Inactive Subsidiaries)
and Joint Ventures may become and remain liable with respect to Contingent
Obligations in respect of performance bonds, bid bonds, appeal bonds,
surety bonds and similar obligations provided in the ordinary course of
business to support the obligations of such Subsidiaries and Joint
Ventures;
(viii) Subsidiary Guarantors may become and remain liable with respect
to Contingent Obligations in respect of the Bridge Notes, the Rollover
Notes or the Senior
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Subordinated Notes; provided that such Contingent Obligations are
--------
subordinated to the Subsidiary Guaranty on terms satisfactory to Requisite
Lenders; and
(ix) Company and its Subsidiaries (other than Inactive Subsidiaries)
may become and remain liable with respect to Contingent Obligations in an
amount not to exceed $10,000,000 at any time.
7.5 Restricted Junior Payments.
--------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that (i) Company may make regularly
--------
scheduled payments of interest in respect of the Existing Subordinated
Indebtedness in accordance with the terms of, and only to the extent required
by, and subject to the subordination provisions contained in, the Existing
Subordinated Agreements, (ii) Company may make regularly scheduled payments of
interest in respect of the Senior Subordinated Notes in accordance with the
terms of, and only to the extent required by, and subject to the subordination
provisions contained in, the Senior Subordinated Note Indenture, (iii) Company
may make regularly scheduled payments of interest in respect of the Bridge Notes
and the Rollover Notes, in an amount not to exceed 15% per annum in cash and an
additional 2% per annum in the form of additional Bridge Notes or Rollover
Notes, in accordance with the terms of, and only to the extent required by, and
subject to the subordination provisions contained in, the Bridge Loan Agreement,
(iv) Company may make regularly scheduled sinking fund payments in accordance
with the terms of, and only to the extent required by, the Existing Subordinated
Note Indenture and may repay the outstanding principal amount of the Existing
Senior Subordinated Notes on the scheduled maturity thereof, (v) Company may
exchange the Bridge Notes for the Rollover Notes and may repay the principal
amount and premium, if any, of the Bridge Notes or the Rollover Notes with the
proceeds of the Senior Subordinated Notes, (vi) Company may exchange Company
Series A Preferred Stock and Company Series C Preferred Stock for Company Series
B Preferred Stock and may exchange Company Series A Preferred Stock, Company
Series B Preferred Stock or Company Series C Preferred Stock for common stock of
Company, in each case as contemplated in the Securities Purchase Agreement,
(vii) Company may repurchase common stock of Company that constitutes odd lots
pursuant to a program established by Company for the repurchase of such odd lots
in an aggregate amount not to exceed $100,000, (viii) Company may purchase
shares of DMG Common Stock from holders who have perfected their statutory
appraisal rights, (ix) any Subsidiary may declare and pay dividends to Company
or any wholly-owned Subsidiary of Company, and (x) Company and its Subsidiaries
may purchase shares of Capital Stock of any Subsidiary owned by professional
engineers in connection with licensing requirements in an aggregate amount not
to exceed $500,000.
7.6 Financial Covenants.
-------------------
A. Minimum Current Ratio. Company shall not permit the ratio of (i)
Consolidated Current Assets to (ii) Consolidated Current Liabilities as of the
last day of any Fiscal Quarter to be less than 1.20 to 1.00
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B. Minimum Fixed Charge Coverage Ratio. Company shall not permit the
ratio of (i) Consolidated EBITDA minus Consolidated Capital Expenditures (net of
any proceeds of any related financings with respect to such expenditures) to
(ii) Consolidated Fixed Charges for (a)(1) the one-Fiscal Quarter period ending
October 31, 1999, (2) the two-Fiscal Quarter period ending January 31, 2000, (3)
the three-Fiscal Quarter period ending April 30, 2000, (4) the four-Fiscal
Quarter period ending July 31, 2000, or (5) any four-Fiscal Quarter period
ending thereafter prior to January 31, 2006 to be less than 1.10 to 1.00, or (b)
any four-Fiscal Quarter period ending on or after January 31, 2006 to be less
than 1.0 to 1.0.
C. Maximum Leverage Ratio. As of the last day of any Fiscal Quarter
ending during any of the periods set forth below, Company shall not permit the
Leverage Ratio to exceed the correlative ratio indicated.
Period Maximum Leverage Ratio
------ ----------------------
Closing through 10/31/99 4.75:1.00
11/01/99 through 04/30/00 4.50:1.00
05/01/00 through 10/31/00 4.25:1.00
11/01/00 through 04/30/01 4.00:1.00
05/01/01 through 10/31/01 3.50:1.00
11/01/01 through 04/30/02 3.25:1.00
05/01/02 through 10/31/02 3.00:1.00
11/01/02 through 04/30/03 2.75:1.00
05/01/03 through 10/31/03 2.50:1.00
11/01/03 through 04/30/04 2.50:1.00
thereafter 2.25:1.00
D. Minimum Consolidated EBITDA. Company shall not permit Consolidated
EBITDA for any four-Fiscal Quarter period ending during any of the periods set
forth below to be less than the correlative amount indicated.
Period Minimum Consolidated EBITDA
------ ---------------------------
Closing through 10/30/00 $ 142,000,000
10/31/00 through 10/30/01 $ 160,000,000
10/31/01 through 10/30/02 $ 185,000,000
10/31/02 through 10/30/03 $ 200,000,000
10/31/03 through 10/30/04 $ 215,000,000
10/31/04 through 10/30/05 $ 230,000,000
10/31/05 through 10/30/06 $ 240,000,000
10/31/06 through 10/30/07 $ 250,000,000
thereafter $ 260,000,000
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7.7 Restriction on Fundamental Changes; AsSales and Acquisitions.
------------------------------------------------------------
Company shall not, and shall not peany of its Subsidiaries to,
alter the corporate, capital or legal structuf Company or any of its
Subsidiaries, or merge or consolidate, or liq e, wind-up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease
(as lessor or sublessor), transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business, property or
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or substantially all the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any Person or any division
or line of business of any Person, except:
(i) Company and Merger Sub may consummate the Tender Offer and the
Merger;
(ii) any Subsidiary of Company may be merged with or into Company or
any wholly-owned Subsidiary Guarantor, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Subsidiary Guarantor; provided that, in the case of such a merger, Company
--------
or such wholly-owned Subsidiary Guarantor shall be the continuing or
surviving corporation;
(iii) Company and its Subsidiaries may dispose of obsolete, worn out
or surplus property in the ordinary course of business;
(iv) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales, provided that
--------
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof;
(v) Company and its Subsidiaries may make Asset Sales of assets
(other than the Tendered Shares) having a fair market value of not in
excess of $10,000,000 during any Fiscal Year, provided that (a) the
--------
consideration received for such assets shall be in an amount at least equal
to the fair market value thereof and shall be Cash or non-cash
consideration permitted by subsection 7.3(ix); and (b) the proceeds of such
Asset Sales shall be applied as required by subsection 2.4B(iii)(a); and
(vi) subject to subsection 6.7, after January 1, 2000, Company and
its Subsidiaries (other than Inactive Subsidiaries) may acquire by purchase
or otherwise (each, a "Subsequent Acquisition") all or substantially all
the business, property or fixed assets of, or stock or other evidence of
beneficial ownership of, any Person (other than DMG) or any division or
line of business of any Person (other than DMG) (any such business,
property, assets, stock, evidence of ownership, division or line of
business, being a "Target"), provided that (a) the sum of the aggregate
--------
Total Purchase Price of all Subsequent Acquisitions does not exceed
$60,000,000 in the aggregate during the term of this Agreement and (b)
Company shall have delivered a Compliance Certificate to Administrative
Agent demonstrating that, after giving effect to such proposed Subsequent
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Acquisition, the Leverage Ratio is in compliance with the requirements of
subsection 7.6C;
(vii) licenses or sublicenses by the Company and its Subsidiaries of
software, trademarks, patents and other intellectual property in the
ordinary course of business and which do not materially interfere with the
business of the Company or any of its Subsidiaries;
(viii) transfers of condemned property to the respective governmental
authority or agency that have condemned the same (whether by deed in lieu
of condemnation or otherwise), and transfers of properties that have been
subject to a casualty to the respective insurer of such property or its
designee as part of an insurance settlement; and
(ix) Company and its Subsidiaries may sell or otherwise dispose of
Investments permitted to be made or owned by subsection 7.3(i).
7.8 Consolidated Capital Expenditures.
---------------------------------
Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in
an aggregate amount in excess of the corresponding amount (the "Maximum
Consolidated Capital Expenditures Amount") set forth below opposite such Fiscal
Year; provided that the Maximum Consolidated Capital Expenditures Amount for any
--------
Fiscal Year shall be increased by an amount equal to the excess, if any, of the
Maximum Consolidated Capital Expenditures Amount for the previous Fiscal Year
(without giving effect to any adjustment in accordance with this proviso) over
the actual amount of Consolidated Capital Expenditures for such previous Fiscal
Year:
Fiscal Year Maximum Consolidated Capital Expenditures Amount
----------- ------------------------------------------------
2000 $34,000,000
2001 $36,000,000
2002 $38,000,000
2003 $40,000,000
2004 $42,000,000
2005 $44,000,000
2006 $46,000,000
thereafter $48,000,000
7.9 Sales and Lease-Backs.
---------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by
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Company or any of its Subsidiaries to any Person (other than Company or any of
its Subsidiaries) in connection with such lease.
7.10 Sale or Discount of Receivables.
-------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, discount or otherwise sell for less
than the face value thereof, any of its accounts receivable.
7.11 Transactions with Shareholders and Affiliates.
---------------------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity Securities of
Company or with any Affiliate of Company or of any such holder, on terms that
are less favorable to Company or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such a holder or
Affiliate; provided that the foregoing restriction shall not apply to (i) any
--------
transaction between Company and any of its wholly-owned Subsidiaries or between
any of its wholly-owned Subsidiaries, (ii) reasonable and customary fees paid to
members of the Boards of Directors of Company and its Subsidiaries, (iii)
existing related party transactions described in Company's Annual Report on Form
10-K for the 1998 Fiscal Year, or (iv) the transactions contemplated by the
Securities Purchase Agreement.
7.12 Conduct of Business.
-------------------
From and after the Closing Date, Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by Company, DMG and their respective Subsidiaries on the
Closing Date and similar or related businesses and (ii) such other lines of
business as may be consented to by Requisite Lenders.
7.13 Amendments or Waivers of Related Agreements; Amendments of Documents
--------------------------------------------------------------------
Relating to Subordinated Indebtedness.
- -------------------------------------
A. Amendments or Waivers of Related Agreements. Except as set forth on
Schedule 7.13 of the Closing Date Company Disclosure Letter, neither Company nor
any of its Subsidiaries will agree to any material amendment to, or waive any of
its material rights under, any Related Agreement (other than the Bridge Loan
Agreement, the Senior Subordinated Note Indenture, the Existing Subordinated
Agreements, the Securities Purchase Agreement or the Company Certificates of
Designations) after the Closing Date without in each case obtaining the prior
written consent of Requisite Lenders to such amendment or waiver. Neither
Company nor any of its Subsidiaries will agree to any amendment to, or waive any
of its rights under, the Securities Purchase Agreement or the Company
Certificates of Designation in any respect that would be adverse to Company or
Lenders after the Closing Date without in each case obtaining the prior written
consent of Requisite Lenders to such amendment or waiver.
B. Amendments of Documents Relating to Subordinated Indebtedness. Company
shall not, and shall not permit any of its Subsidiaries to, amend or otherwise
change
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the terms of any Existing Subordinated Indebtedness, the Existing
Subordinated Agreements, the Bridge Loan Agreement, the Bridge Notes, the
Rollover Notes, the Senior Subordinated Notes or the Senior Subordinated Note
Indenture, or make any payment consistent with an amendment thereof or change
thereto.
C. Designated Senior Indebtedness. Company shall not designate any
Indebtedness as "Designated Senior Indebtedness" other than the Obligations for
purposes of the Senior Subordinated Note Indenture without the prior written
consent of Requisite Lenders.
7.14 Fiscal Year.
-----------
Company shall not change its Fiscal Year-end from October 31.
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur:
8.1 Failure to Make Payments When Due.
---------------------------------
Failure by Company to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay when
due any amount payable to the Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or failure by Company to pay any interest on any Loan
or any fee or any other amount due under this Agreement within five days after
the date due; or
8.2 Default in Other Agreements.
---------------------------
(i) Failure of Company or any of its Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of any
Subordinated Indebtedness or one or more items of any other Indebtedness
(other than Indebtedness referred to in subsection 8.1) or Contingent
Obligations in an individual principal amount of $5,000,000 or more or
with an aggregate principal amount of $5,000,000 or more, in each case
beyond the end of any grace period provided therefor; or (ii) breach or
default by Company or any of its Subsidiaries with respect to any other
material term of (a) any Subordinated Indebtedness or one or more items of
any other Indebtedness or Contingent Obligations in the individual or
aggregate principal amounts referred to in clause (i) above or (b) any
loan agreement, mortgage, indenture or other agreement relating to such
item(s) of Indebtedness or Contingent Obligation(s), if the effect of such
breach or default is to cause, or to permit the holder or holders of that
Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such
holder or holders) to cause, that Indebtedness or Contingent Obligation(s)
to become or be declared due and payable prior to its stated maturity or
the stated maturity of any underlying obligation, as the case may be (upon
the giving or receiving of notice, lapse of time, both, or otherwise); or
8.3 Breach of Certain Covenants.
---------------------------
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Failure of Company to perform or comply with any term or condition
contained in subsection 2.5, 6.1(vii) or 6.2 or Section 7 of this Agreement; or
8.4 Breach of Warranty.
------------------
Any representation, warranty, certification or other statement made
by Company or any of its Subsidiaries in any Loan Document or in any statement
or certificate at any time given by Company or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
-----------------------------------
Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents, other
than any such term referred to in any other subsection of this Section 8, and
such default shall not have been remedied or waived within 30 days after the
earlier of (i) a Responsible Officer of Company becoming aware of such default
or (ii) receipt by Company and such Loan Party of notice from Administrative
Agent or any Lender of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Company or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which
decree or order is not stayed; or any other similar relief shall be granted
under any applicable federal or state law; or (ii) an involuntary case
shall be commenced against Company or any of its Subsidiaries under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Company or any of its Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or there shall
have occurred the involuntary appointment of an interim receiver, trustee
or other custodian of Company or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its Subsidiaries, and any such event
described in this clause (ii) shall continue for 60 days unless dismissed,
bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
---------------------------------------------------
(i) Company or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or shall consent
to the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; or Company or any
of its Subsidiaries shall make any
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assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in
writing its inability, to pay its debts as such debts become due; or the
Board of Directors of Company or any of its Subsidiaries (or any committee
thereof) shall adopt any resolution or otherwise authorize any action to
approve any of the actions referred to in clause (i) above or this clause
(ii); or
8.8 Judgments and Attachments.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $5,000,000 or (ii)
in the aggregate at any time an amount in excess of $5,000,000 shall be entered
or filed against Company or any of its Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days (or in any event later than five days prior to the date of any
proposed sale thereunder); or
8.9 Dissolution.
-----------
Any order, judgment or decree shall be entered against Company or any
of its Material Subsidiaries decreeing the dissolution or split up of Company or
that Material Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of 30 days; or
8.10 Employee Benefit Plans.
----------------------
There shall occur one or more ERISA Events which individually or in
the aggregate results in or might reasonably be expected to result in liability
of Company, any of its Subsidiaries or any of their respective ERISA Affiliates
in excess of $5,000,000 during the term of this Agreement; or there shall exist
an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans of Company and
its Subsidiaries (excluding for purposes of such computation any such Pension
Plans with respect to which assets exceed benefit liabilities), which exceeds
$5,000,000; or
8.11 Material Adverse Effect.
-----------------------
Any event or change shall occur that has caused or evidences, either
in any case or in the aggregate, a Material Adverse Effect with respect to
Company; or
8.12 Change in Control.
-----------------
Any Person or any two or more Persons, other than RCBA and its
Affiliates, acting in concert shall have acquired after the date hereof
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Exchange Act), directly or indirectly, of
Securities of Company (or other Securities convertible into such Securities)
representing 35% or more of the combined voting power of all Securities of
Company entitled to vote in the election of directors, other than Securities
having such power only by reason of the happening of a contingency; or during
any period of 12 consecutive months after the Closing Date, individuals who at
the beginning of such 12-month period constituted the Board of Directors of
Company (together with any new directors whose election by such Board
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of Directors or whose nomination for election by the stockholders of Company was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved, including new directors designated in
or provided for in an agreement regarding the merger, consolidation or sale,
transfer or other conveyance, of all or substantially all of the assets of
Company, if such agreement was approved by a vote of such majority directors)
cease for any reason to constitute a majority of the Board of Directors of
Company then in office, or
8.13 Invalidity of Subsidiary Guaranty; Failure of Security; Repudiation of
----------------------------------------------------------------------
Obligations.
- -----------
At any time after the execution and delivery thereof, (i) the
Subsidiary Guaranty for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void, (ii) any
Collateral Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Obligations or any other termination
of such Collateral Document in accordance with the terms hereof or thereof) or
shall be declared null and void, or Administrative Agent shall not have or shall
cease to have a valid and perfected First Priority Lien in any material part of
the Collateral purported to be covered thereby, in each case for any reason
other than the failure of Administrative Agent or any Lender to take any action
within its control, or (iii) any Loan Party shall contest the validity or
enforceability of any Loan Document in writing or deny in writing that it has
any further liability, including with respect to future advances by Lenders,
under any Loan Document to which it is a party; or
8.14 Failure to Consummate Merger.
----------------------------
The Merger shall not be consummated in accordance with the Merger
Agreement or the Merger shall be unwound, reversed or otherwise rescinded in
whole or in part for any reason;
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7 with respect to Company or any of its Significant Subsidiaries, each of
(a) the unpaid principal amount of and accrued interest on the Loans, (b) an
amount equal to the maximum amount that may at any time be drawn under all
Letters of Credit then outstanding (whether or not any beneficiary under any
such Letter of Credit shall have presented, or shall be entitled at such time to
present, the drafts or other documents or certificates required to draw under
such Letter of Credit), and (c) all other Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by Company,
and the obligation of each Lender to make any Loan and the obligation of the
Issuing Lender to issue any Letter of Credit hereunder shall thereupon
terminate, and (ii) upon the occurrence and during the continuation of any other
Event of Default, Administrative Agent shall, upon the written request or with
the written consent of Requisite Lenders, by written notice to Company, declare
all or any portion of the amounts described in clauses (a) through (c) above to
be, and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan and the obligation of the Issuing
Lender to issue any Letter of Credit hereunder shall thereupon terminate;
provided that the foregoing shall not affect in any way the obligations of
- --------
Lenders
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<PAGE>
under subsection 3.3C(i) or the obligations of Lenders to purchase
participations in any unpaid Swing Line Loans as provided in subsection
2.1A(vi).
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent in an account
satisfactory to Administrative Agent and in which Administrative Agent (on
behalf of Lenders) has a First Priority Lien and shall be applied as provided in
an agreement entered into by the parties with respect thereto.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
clause (ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than non-
payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Company, and such provisions shall not at any
time be construed so as to grant Company the right to require Lenders to rescind
or annul any acceleration hereunder or to preclude Administrative Agent or
Lenders from exercising any of the rights or remedies available to them under
any of the Loan Documents, even if the conditions set forth in this paragraph
are met.
SECTION 9. ADMINISTRATIVE AGENT
9.1 Appointment.
-----------
A. Appointment of Administrative Agent. Wells Fargo is hereby appointed
Administrative Agent hereunder and under the other Loan Documents and each
Lender hereby authorizes Administrative Agent to act as its agent in accordance
with the terms of this Agreement and the other Loan Documents. Administrative
Agent agrees to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Administrative Agent and Lenders and Company shall
have no rights as a third party beneficiary of any of the provisions thereof.
In performing its functions and duties under this Agreement, Administrative
Agent shall act solely as an agent of Lenders and does not assume and shall not
be deemed to have assumed any obligation towards or relationship of agency or
trust with or for Company or any of its Subsidiaries.
B. Appointment of Supplemental Collateral Administrative Agents. It is the
purpose of this Agreement and the other Loan Documents that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction. It is recognized that in case of litigation under this
Agreement or any of the other Loan Documents, and in particular in case of the
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enforcement of any of the Loan Documents, or in case Administrative Agent deems
that by reason of any present or future law of any jurisdiction it may not
exercise any of the rights, powers or remedies granted herein or in any of the
other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that Administrative Agent
appoint an additional individual or institution reasonably acceptable to Company
as a separate trustee, co-trustee, collateral agent or collateral co-agent (any
such additional individual or institution being referred to herein individually
as a "Supplemental Collateral Agent" and collectively as "Supplemental
Collateral Agents"). Company shall not be obligated to pay any fees to such
Supplemental Collateral Agent.
In the event that Administrative Agent appoints a Supplemental
Collateral Administrative Agent with respect to any Collateral, (i) each and
every right, power, privilege or duty expressed or intended by this Agreement or
any of the other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Administrative Agent to the extent, and
only to the extent, necessary to enable such Supplemental Collateral
Administrative Agent to exercise such rights, powers and privileges with respect
to such Collateral and to perform such duties with respect to such Collateral,
and every covenant and obligation contained in the Loan Documents and necessary
to the exercise or performance thereof by such Supplemental Collateral
Administrative Agent shall run to and be enforceable by either Administrative
Agent or such Supplemental Collateral Administrative Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Administrative Agent and all references therein to Administrative Agent shall be
deemed to be references to Administrative Agent and/or such Supplemental
Collateral Administrative Agent, as the context may require.
Should any instrument in writing from Company or any other Loan Party
be required by any Supplemental Collateral Administrative Agent so appointed by
Administrative Agent for more fully and certainly vesting in and confirming to
him or it such rights, powers, privileges and duties, Company shall, or shall
cause such Loan Party to, execute, acknowledge and deliver any and all such
instruments promptly upon request by Administrative Agent. In case any
Supplemental Collateral Administrative Agent, or a successor thereto, shall die,
become incapable of acting, resign or be removed, all the rights, powers,
privileges and duties of such Supplemental Collateral Administrative Agent, to
the extent permitted by law, shall vest in and be exercised by Administrative
Agent until the appointment of a new Supplemental Collateral Administrative
Agent.
9.2 Powers and Duties; General Immunity.
-----------------------------------
A. Powers; Duties Specified. Each Lender irrevocably authorizes
Administrative Agent to take such action on such Lender's behalf and to exercise
such powers, rights and remedies hereunder and under the other Loan Documents as
are specifically delegated or granted to Administrative Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are
reasonably incidental thereto. Administrative Agent shall have only those duties
and responsibilities that are expressly specified in this Agreement and the
other Loan Documents. Administrative Agent may exercise such powers, rights and
remedies and perform such duties by or through its agents or employees.
Administrative Agent shall not have, by
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<PAGE>
reason of this Agreement or any of the other Loan Documents, a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or any of
the other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon Administrative Agent any obligations in respect of
this Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.
B. No Responsibility for Certain Matters. Administrative Agent shall not
be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Administrative Agent to Lenders or by
or on behalf of Company to Administrative Agent or any Lender in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Administrative Agent be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans or the use of the
Letters of Credit or as to the existence or possible existence of any Event of
Default or Potential Event of Default. Anything contained in this Agreement to
the contrary notwithstanding, Administrative Agent shall not have any liability
arising from confirmations of the amount of outstanding Loans or the Letter of
Credit Usage or the component amounts thereof.
C. Exculpatory Provisions. Neither Administrative Agent nor any of its
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by Administrative Agent under or in connection with any
of the Loan Documents except to the extent caused by Administrative Agent's
gross negligence or willful misconduct. Administrative Agent shall be entitled
to refrain from any act or the taking of any action (including the failure to
take an action) in connection with this Agreement or any of the other Loan
Documents or from the exercise of any power, discretion or authority vested in
it hereunder or thereunder unless and until Administrative Agent shall have
received instructions in respect thereof from Requisite Lenders (or such other
Lenders as may be required to give such instructions under subsection 10.6) and,
upon receipt of such instructions from Requisite Lenders (or such other Lenders,
as the case may be), Administrative Agent shall be entitled to act or (where so
instructed) refrain from acting, or to exercise such power, discretion or
authority, in accordance with such instructions. Without prejudice to the
generality of the foregoing, (i) Administrative Agent shall be entitled to rely,
and shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or
sent by the proper person or persons, and shall be entitled to rely and shall be
protected in relying on opinions and judgments of attorneys (who may be
attorneys for Company and its Subsidiaries), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against Administrative Agent as a result of Administrative
Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).
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D. Administrative Agent Entitled to Act as Lender. The agency hereby
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Administrative Agent in its individual
capacity as a Lender hereunder. With respect to its participation in the Loans
and the Letters of Credit, Administrative Agent shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include Administrative Agent in its individual capacity.
Administrative Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
9.3 Representations and Warranties; No Responsibility For Appraisal of
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Creditworthiness.
- ----------------
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries.
Administrative Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to make any such investigation or any such appraisal
on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter, and Administrative Agent
shall not have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 Right to Indemnity.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Administrative Agent, to the extent that Administrative Agent shall
not have been reimbursed by Company, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
Administrative Agent in exercising its powers, rights and remedies or performing
its duties hereunder or under the other Loan Documents or otherwise in its
capacity as Administrative Agent in any way relating to or arising out of this
Agreement or the other Loan Documents; provided that no Lender shall be liable
--------
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Administrative Agent's gross negligence or willful misconduct. If any indemnity
furnished to Administrative Agent for any purpose shall, in the opinion of
Administrative Agent, be insufficient or become impaired, Administrative Agent
may call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.
9.5 Successor Administrative Agent and Swing Line Lender.
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A. Administrative Agent may resign at any time by giving 30 days' prior
written notice thereof to Lenders and Company, and Administrative Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to Company and Administrative Agent and signed
by Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five Business Days' notice to
Company, to appoint a successor Administrative Agent, except during the
continuance of an Event of Default, with the consent of Company (which consent
shall not be unreasonably withheld or delayed). Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Administrative Agent and the retiring or removed Administrative Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring or removed Administrative Agent's resignation or removal hereunder
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.
B. Successor Swing Line Lender. Any resignation or removal of
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of Wells Fargo or its successor as Swing Line Lender, and
any successor Administrative Agent appointed pursuant to subsection 9.5A shall,
upon its acceptance of such appointment, become the successor Swing Line Lender
for all purposes hereunder. In such event (i) Company shall prepay any
outstanding Swing Line Loans made by the retiring or removed Administrative
Agent in its capacity as Swing Line Lender, (ii) upon such prepayment, the
retiring or removed Administrative Agent and Swing Line Lender shall surrender
any Swing Line Note held by it to Company for cancellation, and (iii) if so
requested by the successor Administrative Agent and Swing Line Lender in
accordance with subsection 2.1E, Company shall issue a new Swing Line Note to
the successor Administrative Agent and Swing Line Lender substantially in the
form of Exhibit IX annexed hereto, in the principal amount of the Swing Line
------- --
Loan Commitment then in effect and with other appropriate insertions.
9.6 Collateral Documents and Guaranties.
-----------------------------------
Each Lender hereby further authorizes Administrative Agent, on behalf
of and for the benefit of Lenders, to enter into each Collateral Document as
secured party and to be the agent for and representative of Lenders under the
Subsidiary Guaranty, and each Lender agrees to be bound by the terms of each
Collateral Document and the Subsidiary Guaranty; provided that Administrative
--------
Agent shall not (i) enter into or consent to any material amendment,
modification, termination or waiver of any provision contained in any Collateral
Document or the Subsidiary Guaranty or (ii) release any Collateral (except as
otherwise expressly permitted or required pursuant to the terms of this
Agreement or the applicable Collateral Document), in each case without the prior
consent of Requisite Lenders (or, if required pursuant to subsection 10.6, all
Lenders); provided further, however, that, without further written consent or
-------- ------- -------
authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have otherwise consented or (b) release
any Subsidiary Guarantor from the Subsidiary Guaranty if all of the Capital
Stock of such Subsidiary Guarantor is sold to any Person (other than an
Affiliate of
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Company) pursuant to a sale or other disposition permitted hereunder or to which
Requisite Lenders have otherwise consented. Anything contained in any of the
Loan Documents to the contrary notwithstanding, Company, Administrative Agent
and each Lender hereby agree that (1) no Lender shall have any right
individually to realize upon any of the Collateral under any Collateral Document
or to enforce the Subsidiary Guaranty, it being understood and agreed that all
powers, rights and remedies under the Collateral Documents and the Subsidiary
Guaranty may be exercised solely by Administrative Agent for the benefit of
Lenders in accordance with the terms thereof, and (2) in the event of a
foreclosure by Administrative Agent on any of the Collateral pursuant to a
public or private sale, Administrative Agent or any Lender may be the purchaser
of any or all of such Collateral at any such sale and Administrative Agent, as
agent for and representative of Lenders (but not any Lender or Lenders in its or
their respective individual capacities unless Requisite Lenders shall otherwise
agree in writing) shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Obligations
as a credit on account of the purchase price for any collateral payable by
Administrative Agent at such sale.
9.7 Syndication Agent.
-----------------
Syndication Agent shall have no right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such or to Syndication Agent as such.
SECTION 10. MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of Credit.
-------------------------------------------------------------
A. General. Subject to subsection 10.1B, each Lender shall have the right
at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii)
sell participations to any Person in, all or any part of its Commitments or any
Loan or Loans made by it or its Letters of Credit or participations therein or
any other interest herein or in any other Obligations owed to it; provided that
no such sale, assignment, transfer or participation shall, without the consent
of Company, require Company to file a registration statement with the Securities
and Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided, further that no
-------- -------
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
consented to by Company and Administrative Agent as provided in subsection
10.1B(ii); provided, further that no such sale, assignment, transfer or
-------- -------
participation of any Letter of Credit or any participation therein may be made
separately from a sale, assignment, transfer or participation of a corresponding
interest in the Revolving Loan Commitment and the Revolving Loans of the Lender
effecting such sale, assignment, transfer or participation; and provided,
further that, anything contained herein to the contrary notwithstanding, the
Swing Line Loan Commitment and the Swing Line Loan of Swing Line Lender may not
be sold, assigned or transferred as described in clause (i) above to any Person
other than a successor Administrative Agent and Swing Line Lender to the extent
contemplated by subsection 9.5. Except as otherwise provided in this subsection
10.1, no Lender shall, as between Company and such Lender, be relieved of any of
its obligations hereunder as a result of any sale, assignment or transfer of, or
any granting of participations in, all or any part of
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its Commitments or the Loans, the Letters of Credit or participations therein,
or the other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
--------------------------------
of Credit or participation therein, or other Obligation may (a) be assigned
in any amount to another Lender, or to an Affiliate of the assigning Lender
or another Lender, with the giving of notice to Company and Administrative
Agent or (b) be assigned in an aggregate amount of not less than $5,000,000
(or such lesser amount as shall constitute the aggregate amount of the
Commitments, Loans, Letters of Credit and participations therein, and other
Obligations of the assigning Lender) to any other Eligible Assignee with
the consent of Administrative Agent and, except during the continuance of
an Event of Default, with the consent of Company (which consent of Company
and Administrative Agent shall not be unreasonably withheld or delayed);
provided, however that any Lender that assigns its Revolving Sterling Loan
-------- -------
Commitment must also assign a pro rata portion of its Revolving Loan
Commitment. To the extent of any such assignment in accordance with either
clause (a) or (b) above, the assigning Lender shall be relieved of its
obligations with respect to its Commitments, Loans, Letters of Credit or
participations therein, or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance, an Assignment Agreement, together
with a recordation fee of $3,500 and such forms, certificates or other
evidence, if any, with respect to United States federal income tax
withholding matters as the assignee under such Assignment Agreement may be
required to deliver to Administrative Agent pursuant to subsection
2.7B(iii)(a). Upon such execution, delivery and acceptance, from and after
the effective date specified in such Assignment Agreement, (1) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(2) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive the
termination of this Agreement under subsection 10.9B) and be released from
its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto; provided that, anything contained in any of the Loan
--------
Documents to the contrary notwithstanding, if such Lender is the Issuing
Lender with respect to any outstanding Letters of Credit such Lender shall
continue to have all rights and obligations of the Issuing Lender with
respect to such Letters of Credit until the cancellation or expiration of
such Letters of Credit and the reimbursement of any amounts drawn
thereunder). The Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any remaining Commitment of such assigning
Lender and, if any such assignment occurs after the issuance of any Notes
hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its
applicable Notes, if any, to Administrative Agent for cancellation, and
thereupon new Notes shall, if so requested by the assignee and/or the
assigning Lender in accordance with subsection 2.1E, be issued to the
assignee and to the assigning Lender,
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substantially in the form of Exhibit IV, Exhibit V, Exhibit VI or Exhibit
------- -- --------- ---------- -------
VII annexed hereto, as the case may be, with appropriate insertions, to
---
reflect the new Commitments and/or outstanding Tranche A Term Loans and/or
Tranche B Term Loans and/or Tranche C Term Loans, as the case may be, of
the assignee and the assigning Lender.
(ii) Acceptance by Administrative Agent. Upon its receipt of an
----------------------------------
Assignment Agreement executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with the recordation
fee referred to in subsection 10.1B(i) and any forms, certificates or other
evidence with respect to United States federal income tax withholding
matters that such assignee may be required to deliver to Administrative
Agent pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if
Administrative Agent and Company have consented to the assignment evidenced
thereby (in each case to the extent such consent is required pursuant to
subsection 10.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall evidence
any required consent of Administrative Agent to such assignment), and (b)
give prompt notice thereof to Company. Administrative Agent shall maintain
a copy of each Assignment Agreement delivered to and accepted by it as
provided in this subsection 10.1B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the regularly scheduled maturity of any
portion of the principal amount of or interest on any Loan allocated to such
participation or (ii) a reduction of the principal amount of or the rate of
interest payable on any Loan allocated to such participation, and all amounts
payable by Company hereunder (including amounts payable to such Lender pursuant
to subsections 2.6D, 2.7 and 3.6) shall be determined as if such Lender had not
sold such participation.
D. Assignments to Federal Reserve Banks. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
--------
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.
E. Information. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.18.
F. Representations of Lenders. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (i) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities
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Act or the Exchange Act or other federal securities laws (it being understood
that, subject to the provisions of this subsection 10.1, the disposition of such
Loans or any interests therein shall at all times remain within its exclusive
control). Each Lender that becomes a party hereto pursuant to an Assignment
Agreement shall be deemed to agree that the representations and warranties of
such Lender contained in Section 2(c) of such Assignment Agreement are
incorporated herein by this reference.
10.2 Expenses.
--------
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents and any consents,
amendments, waivers or other modifications thereto and the transactions
contemplated thereby; (ii) all the costs of furnishing all opinions by counsel
for Company required hereunder and of Company's performance of and compliance
with all agreements and conditions on its part to be performed or complied with
under this Agreement and the other Loan Documents, including with respect to
confirming compliance with environmental, insurance and solvency requirements;
(iii) the reasonable fees, expenses and disbursements of counsel to
Administrative Agent (including allocated costs of internal counsel) in
connection with the negotiation, preparation, execution and administration of
the Loan Documents and any consents, amendments, waivers or other modifications
thereto and any other documents or matters requested by Company; (iv) all the
actual costs and reasonable expenses of creating and perfecting Liens in favor
of Administrative Agent on behalf of Lenders pursuant to any Collateral
Document, including filing and recording fees, expenses and taxes, stamp or
documentary taxes, search fees, title insurance premiums and reasonable fees,
expenses and disbursements of counsel to Administrative Agent and of counsel
providing any opinions required hereunder; (v) all the actual costs and
reasonable expenses (including the reasonable fees, expenses and disbursements
of any auditors, accountants or appraisers and any environmental or other
consultants, advisors and agents employed or retained by Administrative Agent or
its counsel) of obtaining and reviewing any reports provided for under
subsection 6.8; (vi) the custody or preservation of any of the Collateral; (vii)
all actual and reasonable costs and expenses incurred by Administrative Agent in
connection with the syndication of the Commitments; and (vi) after the
occurrence of an Event of Default, all costs and expenses, including reasonable
attorneys' fees (including allocated costs of internal counsel) and costs of
settlement, incurred by Administrative Agent and Lenders in enforcing any
Obligations of or in collecting any payments due from any Loan Party hereunder
or under the other Loan Documents by reason of such Event of Default (including
in connection with the sale of, collection from, or other realization upon any
of the Collateral or the enforcement of the Subsidiary Guaranty) or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or pursuant to any
insolvency or bankruptcy proceedings.
10.3 Indemnity.
---------
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel)
indemnify, pay and hold harmless Administrative Agent and Lenders, and the
officers, directors, employees, agents and affiliates of Administrative
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Agent and Lenders (collectively called the "Indemnitees"), from and against any
and all Indemnified Liabilities (as hereinafter defined); provided that Company
--------
shall not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan Documents or the Related
Agreements or the transactions contemplated hereby or thereby (including
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds thereof or the issuance of Letters of Credit hereunder or the use or
intended use of any thereof, or any enforcement of any of the Loan Documents
(including any sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Subsidiary Guaranty), (ii) the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto, or (iii) any Environmental Claim or any Hazardous Materials
Activity relating to or arising from, directly or indirectly, any past or
present activity, operation, land ownership, or practice of Company or any of
its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them. Promptly after receipt by an Indemnitee
of notice of the commencement of any action, such Indemnitee shall use
reasonable efforts to notify Company of the commencement of such action.
10.4 Set-Off.
-------
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Company at any time or from
time to time, without notice to Company or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, including Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any
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other Indebtedness at any time held or owing by that Lender to or for the credit
or the account of Company against and on account of the obligations and
liabilities of Company to that Lender under this Agreement, the Letters of
Credit and participations therein and the other Loan Documents, including all
claims of any nature or description arising out of or connected with this
Agreement, the Letters of Credit and participations therein or any other Loan
Document, irrespective of whether or not (i) that Lender shall have made any
demand hereunder or (ii) the principal of or the interest on the Loans or any
amounts in respect of the Letters of Credit or any other amounts due hereunder
shall have become due and payable pursuant to Section 8 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
Company hereby further grants to Administrative Agent and each Lender a security
interest in all deposits and accounts maintained with Administrative Agent or
such Lender as security for the Obligations.
10.5 Ratable Sharing.
---------------
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "Aggregate
Amounts Due" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; provided that if all or part of such proportionately
--------
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy or reorganization of Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the extent
of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder. Each Lender hereby agrees that, solely for purposes of
this subsection 10.5, a participant shall be considered to be a Lender.
10.6 Amendments and Waivers.
----------------------
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such
--------
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amendment, modification, termination, waiver or consent which: increases the
amount of any of the Commitments or reduces the principal amount of any of the
Loans; changes in any manner the definition of "Class" or the definition of "Pro
Rata Share" or the definition of "Requisite Class Lenders" or the definition of
"Requisite Lenders"; changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of all
Lenders; postpones the date or reduces the amount of any scheduled payment (but
not prepayment) of principal of any of the Loans; postpones the date on which
any interest or any fees are payable; decreases the interest rate borne by any
of the Loans (other than any waiver of any increase in the interest rate
applicable to any of the Loans pursuant to subsection 2.2E) or the amount of any
fees payable hereunder; increases the maximum duration of Interest Periods
permitted hereunder; reduces the amount or postpones the due date of any amount
payable in respect of, or extends the required expiration date of, any Letter of
Credit; changes in any manner the obligations of Lenders relating to the
purchase of participations in Letters of Credit; releases any Lien granted in
favor of Administrative Agent with respect to all or substantially all of the
Collateral; releases all or substantially all of the Subsidiary Guarantors from
their obligations under the Subsidiary Guaranty, in each case other than in
accordance with the terms of the Loan Documents; or changes in any manner the
provisions contained in subsection 8.1 or this subsection 10.6 shall be
effective only if evidenced by a writing signed by or on behalf of all Lenders.
In addition, (i) any amendment, modification, termination or waiver of any of
the provisions contained in Section 4 shall be effective only if evidenced by a
writing signed by or on behalf of Administrative Agent and Requisite Lenders,
(ii) no amendment, modification, termination or waiver of any provision of any
Note shall be effective without the written concurrence of the Lender which is
the holder of that Note, (iii) no amendment, modification, termination or waiver
of any provision of subsection 2.1A(vi) or of any other provision of this
Agreement relating to the Swing Line Loan Commitment or the Swing Line Loans
shall be effective without the written concurrence of Swing Line Lenders, (iv)
no amendment, modification, termination or waiver of any provision of Section 9
or of any other provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of Administrative Agent shall be effective
without the written concurrence of Administrative Agent and (iv) no amendment,
modification, termination or waiver of any provision of subsection 2.4 which has
the effect of changing any interim scheduled payments, voluntary or mandatory
prepayments, or Commitment reductions applicable to any Class (the "Affected
Class") in a manner that disproportionately disadvantages such Class relative to
any other Class shall be effective without the written concurrence of Requisite
Class Lenders of the Affected Class (it being understood and agreed that any
amendment, modification, termination or waiver of any such provision which only
postpones or reduces any interim scheduled payment, voluntary or mandatory
prepayment, or Commitment reduction from those set forth in subsection 2.4 with
respect to one Class but not the other Class shall be deemed to
disproportionately disadvantage such one Class but not to disproportionately
disadvantage such other Class for purposes of this clause (iv)). Administrative
Agent may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that Lender.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on Company
in any case shall entitle Company to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this subsection 10.6
138
<PAGE>
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by Company, on Company.
10.7 Independence of Covenants.
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 Notices.
-------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile or three Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices to Administrative Agent shall not be effective
--------
until received. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or (i) as
to Company and Administrative Agent, such other address as shall be designated
by such Person in a written notice delivered to the other parties hereto and
(ii) as to each other party, such other address as shall be designated by such
party in a written notice delivered to Administrative Agent.
10.9 Survival of Representations, Warranties and Agreements.
------------------------------------------------------
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4, 10.5 and 10.19 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn thereunder, and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of Administrative Agent or any Lender
in the exercise of any power, right or privilege hereunder or under any other
Loan Document shall impair such power, right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
-------------------------------
139
<PAGE>
Neither Administrative Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Company or any other party or
against or in payment of any or all of the Obligations. To the extent that
Company makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 Severability.
------------
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
----------------------------------------------------------
The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 Headings.
--------
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 Applicable Law.
--------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK).
140
<PAGE>
10.16 Successors and Assigns.
----------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 Consent to Jurisdiction and Service of Process .
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE
COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-
1402 OR OTHERWISE.
141
<PAGE>
10.18 Waiver of Jury Trial.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
10.19 Confidentiality.
---------------
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement, including pursuant to any inspection under
subsection 6.5, in accordance with such Lender's customary procedures for
handling confidential information of this nature and in accordance with safe and
sound banking practices, it being understood and agreed by Company that in any
event a Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein (provided that such assignee, transferee or
participant shall have agreed by accepting and retaining such information to the
terms of this subsection 10.19) or disclosures required or requested by any
governmental agency or representative thereof or pursuant to legal process or
disclosures to the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about any Lender's investment portfolio; provided that,
--------
unless specifically prohibited by applicable law or court order, each Lender
shall notify Company of any request by any governmental agency or representative
thereof (other than any such request in connection with any examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such non-public information prior to disclosure of such information; and
provided, further that in no event shall any Lender be obligated or required to
- -------- -------
return any materials furnished by Company or any of its Subsidiaries.
142
<PAGE>
10.20 Judgment Currency.
-----------------
A. Currency Conversion Rate. If, for the purposes of obtaining judgment
in any court, it is necessary to convert a sum due hereunder in any currency
(the "Original Currency") into another currency (the "Other Currency"), the
parties hereto agree, to the fullest extent permitted by law, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures Administrative Agent could purchase the Original Currency with the
Other Currency on the Business Day preceding that on which final judgment is
given.
B. Discharge of Judgment. The obligations of Company in respect of any
sum due from it to Lenders hereunder shall, notwithstanding any judgment in such
Other Currency, be discharged only to the extent that, on the Business Day
following receipt by Administrative Agent of any sum adjudged to be so due in
the Other Currency, Administrative Agent may in accordance with normal banking
procedures purchase the Original Currency with the Other Currency; if the
Original Currency so purchased is less than the sum originally due to Lenders in
the Original Currency, Company agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify Lenders against such loss, and
if the amount of the Original Currency so purchased exceeds the sum originally
due to Lenders in the Original Currency, Lenders shall remit such excess to
Company.
10.21 Counterparts; Effectiveness.
---------------------------
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
143
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
URS CORPORATION
By: /s/ Kent P. Ainsworth
---------------------
Name: Kent P. Ainsworth
Title: Executive Vice President and
Chief Financial Officer
Notice Address:
100 California Street
San Francisco, CA 94111
Attention: Mr. Kent P. Ainsworth
Executive Vice President and
Chief Financial Officer
Fax: (415) 398-1905
LENDERS:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
Individually and as Administrative Agent
By: /s/ Peter Gruebele
------------------
Name: Peter Gruebele
Title: Vice President
Notice Address:
420 Montgomery Street, 9th Floor
San Francisco, CA 94163
Attention: Mr. Peter Gruebele
Vice President
Fax: (415) 421-1352
S-2
<PAGE>
Payment Instructions:
WELLS FARGO BANK,
NATIONAL ASSOCIATION
San Francisco, CA
ABA #1210-00248
For Acct.: 4518-105598
Ref: URS Corporation
MORGAN STANLEY SENIOR FUNDING,
INC., Individually and as Syndication Agent
By: /s/ Michael Hart
---------------------------------------
Name: Michael Hart
-------------------------------------
Title: Principal
------------------------------------
Notice Address:
S-2
<PAGE>
CREDIT AGREEMENT
DATED AS OF JUNE 9, 1999
AMONG
URS CORPORATION,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Co-Lead Arranger and Administrative Agent
and
MORGAN STANLEY SENIOR FUNDING, INC.
as Co-Lead Arranger and Syndication Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. DEFINITIONS..................................................................................................... 3
1.1 Certain Defined Terms........................................................................................... 3
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement.............................. 33
1.3 Other Definitional Provisions and Rules of Construction......................................................... 34
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS...................................................................... 34
2.1 Commitments; Making of Loans; Notes............................................................................. 34
2.2 Interest on the Loans........................................................................................... 42
2.3 Fees............................................................................................................ 48
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments; General Provisions Regarding Payments..... 49
2.5 Use of Proceeds................................................................................................. 59
2.6 Special Provisions Governing Eurodollar Rate Loans and Domestic Sterling Rate Loans............................. 60
2.7 Increased Costs; Taxes; Capital Adequacy........................................................................ 63
2.8 Obligation of Lenders and Issuing Lenders to Mitigate........................................................... 67
2.9 Substitution of Lenders......................................................................................... 67
2.10 European Monetary Union......................................................................................... 68
Section 3. LETTERS OF CREDIT............................................................................................... 70
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein................................... 70
3.2 Letter of Credit Fees........................................................................................... 72
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit.............................................. 73
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
3.4 Obligations Absolute............................................................................................ 75
3.5 Indemnification; Nature of Issuing Lenders' Duties.............................................................. 76
3.6 Increased Costs and Taxes Relating to Letters of Credit......................................................... 77
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT....................................................................... 78
4.1 Conditions to Initial Term Loans and the Acquisition Revolving Loans............................................ 78
4.2 Conditions to Merger Date Loans................................................................................. 85
4.3 Conditions to All Loans......................................................................................... 88
4.4 Conditions to Letters of Credit................................................................................. 89
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES........................................................................ 90
5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries................................... 90
5.2 Authorization of Borrowing, etc................................................................................. 92
5.3 Financial Condition............................................................................................. 93
5.4 No Material Adverse Change; No Restricted Junior Payments....................................................... 94
5.5 Title to Properties; Liens; Real Property; Licenses, Trademarks; etc............................................ 94
5.6 Litigation; Adverse Facts....................................................................................... 95
5.7 Payment of Taxes................................................................................................ 95
5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts.................................... 96
5.9 Governmental Regulation......................................................................................... 96
5.10 Securities Activities........................................................................................... 96
5.11 Employee Benefit Plans.......................................................................................... 96
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
5.12 Certain Fees.................................................................................................... 97
5.13 Environmental Protection........................................................................................ 97
5.14 Employee Matters................................................................................................ 98
5.15 Solvency........................................................................................................ 98
5.16 Matters Relating to Collateral.................................................................................. 98
5.17 Related Agreements.............................................................................................. 99
5.18 Disclosure...................................................................................................... 100
Section 6. COMPANY'S AFFIRMATIVE COVENANTS................................................................................. 100
6.1 Financial Statements and Other Reports.......................................................................... 100
6.2 Corporate Existence, etc........................................................................................ 105
6.3 Payment of Taxes and Claims; Tax Consolidation.................................................................. 105
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/ Condemnation Proceeds....................... 106
6.5 Inspection Rights............................................................................................... 107
6.6 Compliance with Laws, etc....................................................................................... 108
6.7 Execution of Subsidiary Guaranty and Personal Property Collateral Documents by Certain Additional Subsidiaries.. 108
6.8 Matters Relating to Real Property Collateral.................................................................... 109
6.9 Interest Rate Protection........................................................................................ 110
6.10 Year 2000....................................................................................................... 110
6.11 Syndication..................................................................................................... 110
6.12 Consummation of Merger.......................................................................................... 110
Section 7. COMPANY'S NEGATIVE COVENANTS.................................................................................... 111
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
7.1 Indebtedness.................................................................................................... 111
7.2 Liens and Related Matters....................................................................................... 113
7.3 Investments; Joint Ventures..................................................................................... 114
7.4 Contingent Obligations.......................................................................................... 115
7.5 Restricted Junior Payments...................................................................................... 116
7.6 Financial Covenants............................................................................................. 117
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions................................................ 118
7.8 Consolidated Capital Expenditures............................................................................... 119
7.9 Sales and Lease-Backs........................................................................................... 119
7.10 Sale or Discount of Receivables................................................................................. 120
7.11 Transactions with Shareholders and Affiliates................................................................... 120
7.12 Conduct of Business............................................................................................. 120
7.13 Amendments or Waivers of Related Agreements; Amendments of Documents Relating to Subordinated Indebtedness...... 120
7.14 Fiscal Year..................................................................................................... 121
Section 8. EVENTS OF DEFAULT............................................................................................... 121
8.1 Failure to Make Payments When Due............................................................................... 121
8.2 Default in Other Agreements..................................................................................... 121
8.3 Breach of Certain Covenants..................................................................................... 121
8.4 Breach of Warranty.............................................................................................. 122
8.5 Other Defaults Under Loan Documents............................................................................. 122
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc............................................................ 122
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.............................................................. 122
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
8.8 Judgments and Attachments....................................................................................... 123
8.9 Dissolution..................................................................................................... 123
8.10 Employee Benefit Plans.......................................................................................... 123
8.11 Material Adverse Effect......................................................................................... 123
8.12 Change in Control............................................................................................... 123
8.13 Invalidity of Subsidiary Guaranty; Failure of Security; Repudiation of Obligations.............................. 123
8.14 Failure to Consummate Merger.................................................................................... 124
Section 9. ADMINISTRATIVE AGENT............................................................................................ 125
9.1 Appointment..................................................................................................... 125
9.2 Powers and Duties; General Immunity............................................................................. 126
9.3 Representations and Warranties; No Responsibility For Appraisal of Creditworthiness............................. 128
9.4 Right to Indemnity.............................................................................................. 128
9.5 Successor Administrative Agent and Swing Line Lender............................................................ 128
9.6 Collateral Documents and Guaranties............................................................................. 129
9.7 Syndication Agent............................................................................................... 130
Section 10. MISCELLANEOUS................................................................................................... 130
10.1 Assignments and Participations in Loans and Letters of Credit................................................... 130
10.2 Expenses........................................................................................................ 132
10.3 Indemnity....................................................................................................... 133
10.4 Set-Off......................................................................................................... 134
10.5 Ratable Sharing................................................................................................. 135
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
10.6 Amendments and Waivers.......................................................................................... 135
10.7 Independence of Covenants....................................................................................... 136
10.8 Notices......................................................................................................... 136
10.9 Survival of Representations, Warranties and Agreements.......................................................... 137
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative........................................................... 137
10.11 Marshalling; Payments Set Aside................................................................................. 137
10.12 Severability.................................................................................................... 137
10.13 Obligations Several; Independent Nature of Lenders' Rights...................................................... 138
10.14 Headings........................................................................................................ 138
10.15 Applicable Law.................................................................................................. 138
10.16 Successors and Assigns.......................................................................................... 138
10.17 Consent to Jurisdiction and Service of Process.................................................................. 138
10.18 Waiver of Jury Trial............................................................................................ 139
10.19 Confidentiality................................................................................................. 140
10.20 Judgment Currency............................................................................................... 140
10.21 Counterparts; Effectiveness..................................................................................... 141
</TABLE>
Signatures S-1
-vi-
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF REVOLVING NOTE
V FORM OF TRANCHE A TERM NOTE
VI FORM OF TRANCHE B TERM NOTE
VII FORM OF TRANCHE C TERM NOTE
VIII FORM OF SWING LINE NOTE
IX FORM OF COMPLIANCE CERTIFICATE
X FORM OF CLOSING DATE COMPLIANCE CERTIFICATE
XI FORM OF CLOSING DATE OPINION OF COMPANY'S COUNSEL
XII FORM OF OPINION OF ADMINISTRATIVE AGENT COUNSEL
XIII FORM OF ASSIGNMENT AGREEMENT
XIV FORM OF CERTIFICATE RE NON-BANK STATUS
XV FORM OF PLEDGE AND SECURITY AGREEMENT
XVI FORM OF SUBSIDIARY GUARANTY
XVII FORM OF TENDER PLEDGE AGREEMENT
XVIII FORM OF FINANCIAL CONDITION CERTIFICATE
(v)
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
<TABLE>
<CAPTION>
Revolving Revolving Tranche A Tranche B Tranche C
Loan Sterling Loan Term Loan Term Loan Term Loan
Commitment Commitment Commitment Commitment Commitment
<S> <C> <C> <C> <C> <C>
Wells Fargo Bank, $54,545,454.55 $8,181,818.19 $136,363,636.37 $95,454,545.46 $95,454,545.46
National Association
Morgan Stanley $45,454,545.45 $6,818,181.81 $113,636,363.63 $ 4,545,454.54 $ 4,545,454.54
Senior Funding, Inc.
Total $ 100,000,000 $ 15,000,000* $ 250,000,000 $ 100,000,000 $ 100,000,000
</TABLE>
*Part of Revolving Loan Commitment
-i-
<PAGE>
An extra section break has been inserted above this paragraph. Do not
delete this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.
<PAGE>
EXHIBIT 2.3
================================================================================
URS CORPORATION
===========================
$200,000,000
===========================
SENIOR SUBORDINATED INCREASING RATE NOTES DUE JUNE 9, 2000
================================================================================
NOTE PURCHASE AGREEMENT
Dated as of June 9, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. AUTHORIZATION OF NOTES; INTEREST..................................................... 1
2. SALE AND PURCHASE OF NOTES........................................................... 2
2.1. Obligation to Purchase....................................................... 2
2.2. Purchase Date................................................................ 2
3. CONDITIONS TO THE PURCHASE OF NOTES.................................................. 3
3.1. Documents Required........................................................... 3
3.2. Opinions of Counsel.......................................................... 5
3.3. Consummation of Tender Offer................................................. 5
3.4. Actions by DMG Board of Directors............................................ 5
3.5. Consummation of Other Financings............................................. 6
3.6. Consents and Approvals....................................................... 6
3.7. No Material Adverse Change; Pre-Commitment Information....................... 6
3.8. Litigation................................................................... 6
3.9. Change in Market Conditions.................................................. 7
3.10. Payment of Accrued Fees and Expenses......................................... 7
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................ 7
4.1. Organization; Power and Authority............................................ 7
4.2. Authorization, Enforceability, Etc........................................... 7
4.3. Disclosure................................................................... 8
4.4. Organization and Ownership of Shares of Subsidiaries; Inactive Subsidiaries.. 8
4.5. Financial Statements......................................................... 9
4.6. Compliance with Laws, Other Instruments, Etc................................. 9
4.7. Governmental Authorizations, Etc............................................. 9
4.8. Litigation................................................................... 10
4.9. Taxes........................................................................ 10
4.10. Compliance with ERISA........................................................ 11
4.11. Use of Proceeds.............................................................. 11
4.12. Environmental Matters........................................................ 11
4.13. Existing Indebtedness; Future Liens; Pari Passu Obligations.................. 12
4.14. Material Contracts........................................................... 13
4.15. DMG.......................................................................... 13
4.16. Investment Company Act; Other Regulations.................................... 13
4.17. Public Utility Holding Company Act........................................... 13
4.18. Year 2000 Representation..................................................... 14
4.19. Private Placement Representation............................................. 14
4.20. Compliance with Rule 144A Requirements....................................... 14
5. REPRESENTATIONS OF THE PURCHASERS.................................................... 15
5.1. Purchase for Investment, Etc15
5.2. Solicitation by Each Purchaser............................................... 15
</TABLE>
<PAGE>
<TABLE>
<S> <C>
6. PREPAYMENTS AND REDEMPTIONS OF THE NOTES................................................... 15
6.1. Optional Prepayment of the Notes and Rollover Notes................................ 15
6.2. Mandatory Redemption of Notes or Rollover Notes in the Event of a Change of
Control............................................................................ 16
6.3. Mandatory Redemptions of the Notes or Rollover Notes............................... 17
6A.3. Offer to Repurchase Fixed Rate Rollover Notes in Respect of an Asset Sale.......... 18
6.4. Allocation of Partial Prepayments.................................................. 19
6.5. Maturity; Surrender, Etc........................................................... 20
6.6. Purchase of Notes or Rollover Notes................................................ 20
7. ROLLOVER................................................................................... 20
7.1. Rollover Notes..................................................................... 20
7.2. Warrant Agreements................................................................. 20
7.3. Registration Rights................................................................ 21
7.4. Conditions to Rollover............................................................. 22
7.5. Documents Required................................................................. 22
7.6. Special Rollover Note Interest Rate Provisions..................................... 23
8. AFFIRMATIVE COVENANTS (NOTES).............................................................. 23
8.1. Financial Statements and Other Reports............................................. 23
8.2. Corporate Existence, Etc........................................................... 27
8.3. Payment of Taxes and Claims; Tax Consolidation..................................... 28
8.4. Maintenance of Properties; Insurance............................................... 28
8.5. Inspection Rights.................................................................. 28
8.6. Compliance with Laws, Etc.......................................................... 28
8.7. Execution of Subsidiary Guaranty by Certain Subsidiaries and Future Subsidiaries... 29
8.8. Year 2000.......................................................................... 30
8.9. Syndication........................................................................ 30
8.10. Consummation of Merger............................................................. 30
8.11. Use of Proceeds.................................................................... 30
8.12. Refinancing of the Notes; Rule 144A................................................ 30
8.13. Payment of Notes................................................................... 31
8.14. Global Notes....................................................................... 31
8.15. Opinion of Counsel................................................................. 31
8A. AFFIRMATIVE COVENANTS (ROLLOVER NOTES)..................................................... 31
8A.1. Financial Statements and Other Reports............................................. 31
8A.2. Corporate Existence, Etc........................................................... 35
8A.3. Payment of Taxes and Claims; Tax Consolidation..................................... 36
8A.4. Maintenance of Properties; Insurance............................................... 36
8A.5. Inspection Rights.................................................................. 36
8A.6. Compliance with Laws, Etc.......................................................... 36
8A.7. Execution of Subsidiary Guaranty by Certain Subsidiaries and Future Subsidiaries... 37
8A.8. Refinancing of the Rollover Notes; Rule 144A....................................... 38
8A.9. Payment of Rollover Notes.......................................................... 38
8A.10. Global Notes....................................................................... 38
8A.11. Issuance of Warrants............................................................... 38
9. NEGATIVE COVENANTS (NOTES)................................................................. 38
</TABLE>
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<TABLE>
<S> <C>
9.1. Indebtedness.................................................................. 39
9.2. Liens and Related Matters..................................................... 40
9.3. Investments; Joint Ventures................................................... 41
9.4. Contingent Obligations........................................................ 43
9.5. Restricted Junior Payments.................................................... 44
9.6. Restriction on Fundamental Changes; Asset Sales and Acquisitions.............. 44
9.7. Consolidated Capital Expenditures............................................. 45
9.8. Sales and Lease-Backs......................................................... 46
9.9. Sale or Discount of Receivables............................................... 46
9.10. Transactions with Shareholders and Affiliates................................. 46
9.11. Conduct of Business........................................................... 47
9.12. Amendments or Waivers of Related Agreements; Amendments of Documents
Relating to Subordinated Indebtedness......................................... 47
9.13. Fiscal Year................................................................... 47
9A. NEGATIVE COVENANTS (ROLLOVER NOTES)................................................... 47
9A.1. Restriction on Incurrence of Indebtedness..................................... 47
9A.2. Restriction on Senior Subordinated Indebtedness............................... 50
9A.3. Restriction on Restricted Payments............................................ 50
9A.4. Restriction on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries....................................................... 54
9A.5. Restriction on Issuances of Guarantees by Restricted Subsidiaries............. 56
9A.6. Restriction on Transactions with Shareholders and Affiliates.................. 57
9A.7. Restriction on Liens.......................................................... 58
9A.8. Restriction on Asset Sales.................................................... 59
10. EVENTS OF DEFAULT..................................................................... 59
10.1. Events of Default............................................................. 59
10.2. Acceleration.................................................................. 62
10.3. Other Remedies................................................................ 62
10.4. Rescission.................................................................... 62
10.5. Restoration of Rights and Remedies............................................ 63
10.6. No Waivers or Election of Remedies, Expenses, Etc............................. 63
11. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES....................................... 63
11.1. Registration of Notes......................................................... 63
11.2. Transfer and Exchange of Notes................................................ 64
11.3. Replacement of Notes.......................................................... 65
12. PAYMENTS ON NOTES..................................................................... 65
12.1. Place of Payment.............................................................. 65
12.2. Home Office Payment........................................................... 65
13. EXPENSES, INCREASED COSTS AND INDEMNIFICATION, ETC.................................... 66
13.1. Transaction Expenses.......................................................... 66
13.2. Indemnity..................................................................... 66
13.3. Taxes......................................................................... 68
13.4. Increased Costs............................................................... 71
13.5. Survival...................................................................... 71
</TABLE>
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<TABLE>
<S> <C>
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.................... 72
15. AMENDMENT AND WAIVER............................................................ 72
15.1. Requirements............................................................ 72
15.2. Solicitation of Holders of Notes........................................ 73
15.3. Binding Effect, Etc..................................................... 73
15.4. Notes Held by the Company, Etc.......................................... 73
16. NOTICES......................................................................... 74
17. REPRODUCTION OF DOCUMENTS....................................................... 74
18. CONFIDENTIAL INFORMATION........................................................ 75
19. SUBSTITUTION OF PURCHASER....................................................... 76
20. SUBORDINATION OF THE NOTES AND ROLLOVER NOTES................................... 76
20.1. Notes or Rollover Notes Subordinated to Senior Indebtedness............. 76
20.2. Payment Over of Proceeds Upon Bankruptcy................................ 76
20.3. Suspension of Payment When Senior Indebtedness in Default............... 77
20.4. Payment Permitted If No Default......................................... 78
20.5. Subrogation to Rights of Holders of Senior Indebtedness................. 78
20.6. Provisions Solely to Define Relative Rights............................. 79
20.7. No Waiver of Subordination Provisions................................... 79
20.8. Reliance on Judicial Order or Certificate of Liquidating Agent.......... 80
20.9. Notice to the Holders of the Notes and the Rollover Notes............... 80
20.10. Proof of Claim.......................................................... 80
21. MISCELLANEOUS................................................................... 81
21.1. Successors and Assigns.................................................. 81
21.2. Payments Due on Non-Business Days....................................... 81
21.3. Satisfaction Requirement................................................ 81
21.4. Severability............................................................ 81
21.5. Construction; Accounting Terms, Etc..................................... 81
21.6. Computation of Time Periods............................................. 82
21.7. Execution in Counterparts............................................... 82
21.8. GOVERNING LAW; SUBMISSION TO JURISDICTION, ETC.......................... 82
21.9. WAIVER OF JURY TRIAL.................................................... S-1
</TABLE>
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vi
<PAGE>
EXHIBITS
Exhibit A -- Form of Note
Exhibit B -- Form of Rollover Note
Exhibit C -- Form of Solvency Certificate
Exhibit D -- Form of Subsidiary Guaranty
Exhibit E-1 -- Form of Opinion of Cooley Godward LLP, Counsel for the
Company
Exhibit E-2 -- Form of Opinion of Skadden, Arps, Slate, Meagher & Flom
LLP, Special New York
Counsel for the Company
Exhibit E-3 -- Form of Opinion of Vorys, Sater, Seymour & Pease LLP,
Special Ohio Counsel for the Company
Exhibit E-4 -- Form of Opinion of Marshall Hill Cassas & de Lipkau,
Special Nevada Counsel for the Company
Exhibit E-5 __ Form of Opinion of Latham & Watkins LLP, Counsel for DMG
Exhibit F -- Form of Compliance Certificate
Exhibit G -- Form of Rollover Notes Registration Rights Agreement
Exhibit H -- Form of Warrant Agreement
vii
<PAGE>
URS CORPORATION
100 California Street, Suite 500
San Francisco, CA 94111-4529
Senior Subordinated Increasing Rate Notes due June 9, 2000
As of June 9, 1999
TO EACH OF THE PURCHASERS LISTED IN
SCHEDULE I ATTACHED HERETO:
Ladies and Gentlemen:
URS Corporation, a Delaware corporation (the "Company"), hereby agrees
with you as follows:
1. AUTHORIZATION OF NOTES; INTEREST.
(a) The Company has authorized the issue and sale of $200,000,000
aggregate principal amount of its Senior Subordinated Increasing Rate Notes due
June 9, 2000 (the Notes delivered pursuant to Section 2 of this Agreement, any
Secondary Notes (as hereinafter defined) issued in respect of such Notes or such
Secondary Notes and any Notes issued in substitution therefor pursuant to
Section 11 of this Agreement being, collectively, the "Notes"), to be dated the
date of issue, to bear interest from such date as provided therein and to mature
on June 9, 2000. The Notes shall be in substantially the form of Exhibit A
hereto, with such amendments, supplements and other modifications thereto, if
any, as shall be approved from time to time by you and the Company. Capitalized
terms used in this Agreement shall have the meanings specified in Schedule II
hereto (except that capitalized terms used in Section 9A of this Agreement shall
have the meanings specified in Schedule III); and references in this Agreement
to a "Schedule" or an "Exhibit" are, unless otherwise specified herein,
references to a Schedule or an Exhibit attached to this Agreement.
(b) On each Interest Payment Date on which interest accrued on a Note
or a Rollover Note or a Secondary Note (as hereinafter defined) at an interest
rate in excess of 15% per annum, the Company shall have the option to pay the
amount of such excess interest due on such date (the "PIK Portion") in cash or
through the issuance of additional Notes (the "Secondary Notes") in an aggregate
principal amount equal to the PIK Portion (rounded to the nearest whole cent);
provided that the Company shall pay cash in lieu of issuing Secondary Notes in
any denominations of less than $100,000 (determined for each Holder with respect
to the aggregate principal amount of all Notes or Rollover Notes, as the case
may be, held by such
<PAGE>
Holder). On each Interest Payment Date on which the Company elects to pay the
PIK Portion through the issuance of Secondary Notes, the Company shall issue and
deliver Secondary Notes to each Holder, in the aggregate principal amount
required to pay such PIK Portion, together with cash in the amount necessary to
pay the portion of the interest due on such Interest Payment Date that is
payable in cash. Any Secondary Notes so issued shall be dated the applicable
Interest Payment Date, shall mature on the same date as the maturity date of the
Note or Rollover Note or Secondary Note, as the case may be, in respect of which
it is issued, and shall be governed by, and subject to, the terms, provisions
and conditions of this Agreement, and shall bear interest from and after such
date in the same manner as, and have the same rights and benefits as, the Note
or Rollover Note or Secondary Note, as the case may be, in respect of which it
is issued. Any Secondary Notes issued in respect of the Notes issued pursuant to
Section 2 (and any Secondary Notes issued in respect of such Secondary Notes)
shall be in substantially the form of Exhibit A hereto and any Secondary Notes
issued in respect of the Rollover Notes (and any Secondary Notes issued in
respect of such Secondary Notes) shall be in substantially the form of Exhibit
B, but in each case shall be issued with the description "PIK" on their face.
The Company shall pay any interest payable on and after the date of maturity
(including as a result of acceleration) of any Note or Rollover Note or
Secondary Note, as the case may be, solely in cash. Any Holder shall have the
right to aggregate amounts of interest payable in the form of Secondary Notes to
such Holder and request the Company to issue to such Holder a single Secondary
Note in payment thereof.
2. SALE AND PURCHASE OF NOTES.
2.1. Obligation to Purchase.
Subject to the terms and conditions of this Agreement, the Company
will issue, and you severally agree to purchase from the Company, the respective
amount of Notes specified in Schedule I hereto, at the purchase price of 100% of
the aggregate principal amount thereof. Your respective obligations hereunder
are several and not joint obligations and you shall have no obligation under
this Agreement and no liability to any Person for the performance or
nonperformance by any other Purchaser hereunder. Notes purchased and sold under
this Section 2.1 and repaid or prepaid in full may not be repurchased and
resold.
2.2. Purchase Date.
The sale and purchase of Notes shall occur at the offices of Shearman
& Sterling, 555 California Street, Suite 2000, San Francisco, California 94104-
1522, at or before 10:00 A.M. (San Francisco time), at a closing on June 9, 1999
or on such other Business Day thereafter and on or prior to September 30, 1999
as may be agreed upon among the Company and you (such date being the "Purchase
Date"). On the Purchase Date, subject to the fulfillment of the
2
<PAGE>
applicable conditions set forth in Section 3, the Company will deliver to each
Purchaser the Notes to be purchased in the form of one or more Notes in amounts
equal to such Purchaser's Commitment and in an aggregate amount equal to the
Total Commitment, dated the Purchase Date and registered in each Purchaser's
respective name (or in the names of their respective nominees), against delivery
by you to the Company or its order of same day funds in the amount of the
aggregate purchase price therefor by wire transfer for the account of the
Company to Wells Fargo Bank, National Association, ABA No. 121000248, 420
Montgomery Street, San Francisco, California 94163, Account No. 4520105693,
Account Name: URS Corporation.
3. CONDITIONS TO THE PURCHASE OF NOTES.
Your obligation to purchase and pay for the Notes to be sold to you
on the Purchase Date is subject to the fulfillment, on or prior to the Purchase
Date, of the following conditions:
3.1. Documents Required.
You shall have received the following documents, each dated as of the
Purchase Date (except as otherwise specified below) and in the form of the
respective Exhibit hereto, if any, or otherwise in form and substance reasonably
satisfactory to you:
(a) Notes. One or more Notes, duly executed by the Company and
-----
payable to you in the amount of your Commitment.
(b) Corporate Approvals and Other Similar Documentation. Certified
---------------------------------------------------
copies of the resolutions of the Board of Directors of the Company and each
Subsidiary Guarantor approving each of the Note Documents to which it is or is
to be a party, the issuance and sale of the Notes, the issuance of the Rollover
Notes, the Secondary Notes, the Warrant Agreements and the Rollover Notes
Registration Rights Agreement and the transactions contemplated hereby and
thereby, and all documents evidencing other necessary corporate action with
respect to each such Note Document, the issuance and sale of the Notes, the
Rollover Notes, the Secondary Notes, the Warrant Agreements and the Rollover
Notes Registration Rights Agreement and the other transactions contemplated
hereby and thereby.
(c) Organizational Documents. A copy of the Organizational Documents
------------------------
of the Company and each Subsidiary Guarantor and each amendment thereto,
certified (as of a date reasonably near the Purchase Date) by the Secretary of
State of the respective jurisdiction of its incorporation as being a true and
complete copy thereof.
3
<PAGE>
(d) Good Standing Certificates. A copy of a certificate of the
--------------------------
Secretary of State of the respective jurisdiction of incorporation, dated
reasonably near the Purchase Date, listing the Organizational Documents of the
Company and each Subsidiary Guarantor and each amendment thereto on file in the
office of such Secretary of State and certifying that (i) such amendments are
the only amendments to the Organizational Documents of the Company or the
Subsidiary Guarantor, as the case may be, on file in his office, (ii) the
Company or the Subsidiary Guarantor, as the case may be, has paid all franchise
taxes (or the equivalent thereof) to the date of such certificate and (iii) the
Company or the Subsidiary Guarantor, as the case may be, is duly incorporated
and is in good standing under the laws of the jurisdiction of its incorporation.
(e) Secretary's Certificate. A certificate from the secretary or an
-----------------------
assistant secretary (or a person performing similar functions) of the Company
and each Subsidiary Guarantor certifying:
(i) the completeness and accuracy of the resolutions of the
Board of Directors of the Company or such Subsidiary Guarantor, as the case
may be, and all documents evidencing other necessary corporate action
thereof referred to under subsection (b) of this Section 3.1;
(ii) the completeness and accuracy of the bylaws of the Company
or such Subsidiary Guarantor, as the case may be, as in effect on the date
the resolutions specified in subsection (b) of this Section 3.1 were
adopted and on the Purchase Date (a copy of which shall be attached to such
certificate); and
(iii) the names and true signatures of the officers of the
Company or such Subsidiary Guarantor, as the case may be, authorized to
sign each of the Note Documents to which it is or is to be a party and the
other agreements, instruments and other documents to be delivered hereunder
or thereunder.
(f) Officer's Certificate. A certificate of the Company, signed on
---------------------
behalf of the Company by a Senior Financial Officer thereof (the statements made
in which certificate shall be true on and as of the Purchase Date), certifying
as to:
(i) the completeness and accuracy in all material respects of all
of the representations and warranties made by the Company in this Agreement
and the other Note Documents to which it is or is to be a party, before and
after giving effect to the issue and sale of the Notes and to the
application of the proceeds therefrom as contemplated by Section 4.11, as
though made on and as of the Purchase Date (except for such representations
and warranties that by their terms relate to an earlier date, which
representations and warranties shall only be required to be complete and
accurate as of such specified date);
4
<PAGE>
(ii) the absence of any event occurring and continuing, or
resulting from the issue and sale of the Notes or the consummation of any
of the transactions contemplated hereby, that constitutes a Default or an
Event of Default;
(iii) to the best of their knowledge, the absence of any
existing or threatened event or circumstance applicable to the Company or
any of its Subsidiaries that could reasonably be expected to impair the
ability of the Company to consummate the Refinancing;
(iv) the satisfaction of all conditions precedent by the
Company to the issue and sale of the Notes on and as of the Purchase Date;
and
(v) the aggregate gross revenues for the Fiscal Year ended
October 31, 1998 of the Subsidiary Guarantors, which shall be equal to at
least 90% of the aggregate gross revenues of the Company and its Domestic
Subsidiaries on a consolidated basis for such Fiscal Year.
(g) Solvency Certificate. The Company shall have delivered a
--------------------
certificate from its Senior Financial Officer in substantially the form of
Exhibit C hereto.
(h) Financial Information. Copies of the audited consolidated
---------------------
financial statements of the Company and its Subsidiaries referred to in Section
4.5(a).
(i) Consents. Certified copies of all material Governmental
--------
Authorizations, and all material consents, approvals and authorizations of, and
notices to and other actions by, all Persons with whom any of the Obligors or
any of their respective Subsidiaries has any Contractual Obligations, that are
necessary or advisable in connection with the execution, delivery or performance
of this Agreement and the other Note Documents or the consummation of the
issuance and sale of the Notes or any of the other transactions contemplated
hereby or thereby, including the Refinancing.
(j) Subsidiary Guaranties. A guaranty in the form of Exhibit D
---------------------
hereto executed by each Subsidiary Guarantor and DMG.
(k) Bridge Note Disclosure Letter. The Bridge Note Disclosure
-----------------------------
Letter, executed by the Company.
3.2 Opinions of Counsel.
You shall have received the following favorable opinions, each dated
the Purchase Date and in the form of the respective Exhibit hereto or otherwise
in form and substance reasonably satisfactory to you:
5
<PAGE>
(a) Cooley Godward LLP, counsel of the Company, in substantially the
form of Exhibit E-1 hereto;
(b) Skadden, Arps, Slate, Meagher & Flom LLP, special New York
counsel for the Company, in substantially the form of Exhibit E-2 hereto;
(c) Vorys, Sater, Seymour & Pease LLP, special Ohio counsel for the
Company, in substantially the form of Exhibit E-3 hereto;
(d) Marshall Hill Cassas & de Lipkau, special Nevada counsel for the
Company, in substantially the form of Exhibit E-4 hereto; and
(e) Latham & Watkins LLP, special counsel to DMG, in substantially
the form of Exhibit E-5 hereto.
3.3. Consummation of Tender Offer.
The Tender Offer shall have been consummated in accordance with the
terms of the Tender Offer Materials and the Merger Agreement (which shall be in
full force and effect), and in compliance with all applicable laws, and the
Company shall have delivered evidence reasonably satisfactory to you that in
excess of 50% of the shares of capital stock of DMG, on a fully diluted basis,
have been validly tendered for payment pursuant to the Tender Offer and that the
aggregate amount of funds required to consummate the Merger (including all
related costs and expenses) will not exceed $347,000,000.
3.4. Actions by DMG Board of Directors.
DMG's Board of Directors shall have taken such actions in connection
with its Stockholder Rights Agreement so that the Purchasers are satisfied that
the rights arising thereunder are not applicable to the Tender Offer or the
Merger.
3.5. Consummation of Other Financings.
(a) The Senior Credit Agreement (in a form reasonably satisfactory
to the Required Holders) shall have been executed by the parties thereto and
shall be in full force and effect, all conditions to the initial loans
thereunder shall have been satisfied or waived (or will be satisfied or waived
coincidentally with the sale of the Notes) and the initial Term Loans and the
Acquisition Revolving Loans (each as defined in the Senior Credit Agreement)
shall be made to the Company under the Senior Credit Agreement coincidentally
with the sale of the Notes and
6
<PAGE>
the proceeds of such loans shall be applied by the Company as contemplated by
the Senior Credit Agreement.
(b) The Securities Purchase Agreement shall be in full force and
effect and the Company Series A Preferred Stock, the Company Series B Preferred
Stock and the Company Series C Preferred Stock to be issued pursuant thereto
shall be reasonably satisfactory to the Required Holders. The Company shall have
sold to RCBA for cash consideration of $100,000,000 all of the outstanding
Company Series A Preferred Stock and Company Series C Preferred Stock pursuant
to the Securities Purchase Agreement, and such consideration shall be applied by
the Company as contemplated by the Securities Purchase Agreement.
3.6. Consents and Approvals.
All material governmental and third party consents and approvals
necessary in connection with the Transaction and the issuance of the Notes shall
have been obtained (without the imposition of any material conditions that are
not acceptable to the Purchasers) and shall be in full force and effect; all
applicable waiting periods shall have expired without any adverse action being
taken by any competent authority; and no law or regulation shall be applicable
in the reasonable judgment of the Required Holders that restrains, prevents or
imposes materially adverse conditions upon the Transaction or the issuance of
the Notes.
3.7. No Material Adverse Change; Pre-Commitment Information.
(a) There shall not have occurred any material adverse change in the
business, financial condition, operations, performance, properties or prospects
of the Company and its Subsidiaries, taken as a whole since October 31, 1998, or
DMG and its Subsidiaries, taken as a whole since December 25, 1998 (except for
those items included in the disclosure schedules to the Merger Agreement).
(b) No additional facts or information (including the occurrence of
any events or circumstances) shall have come to the attention of Purchasers that
are inconsistent with the Pre-Commitment Information and that, either
individually or in the aggregate, could reasonably be expected, in the
reasonable judgment of the Purchasers, to have a Material Adverse Effect.
3.8. Litigation.
There shall exist no action, suit, investigation, litigation or
proceeding (including those pertaining to Environmental Claims) pending or
threatened in any court or before any arbitrator or governmental or regulatory
agency or authority that could reasonably be expected to
7
<PAGE>
have a Material Adverse Effect (except for such actions, suits, investigations,
litigation and proceedings disclosed to the Purchasers in the Pre-Commitment
Information).
3.9. Change in Market Conditions.
There shall not have occurred any disruption or change in financial,
banking or capital markets or in the regulatory environment that in the good
faith judgment of the Purchasers could materially and adversely affect the sale
of the Notes or the Refinancing.
3.10. Payment of Accrued Fees and Expenses.
Without limiting the provisions of Section 13.1, all of the accrued
fees and expenses incurred in connection with the transactions contemplated by
this Agreement and the other Note Documents to be paid by or on behalf of the
Company, and all compensation payable to MS pursuant to the terms of the
Commitment Letter, on or prior to the Purchase Date shall have been paid.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that as of the date
hereof and the Purchase Date:
4.1. Organization; Power and Authority.
The Company and each of its Subsidiaries are Persons duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of organization and are duly qualified as foreign corporations or
other entities and are in good standing in each other jurisdiction in which the
ownership, lease or operation of their property and assets or the conduct of
their businesses requires such qualification, other than in any such
jurisdiction in which the failure to be so qualified or in good standing, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. The Company and each of its Subsidiaries have all
corporate and other necessary power and authority to own or to hold under lease
all of the property and assets they purport to own or hold under lease and to
conduct the business they conduct and propose to conduct. Each of the Obligors
has all corporate and other necessary power and authority to execute and deliver
this Agreement, the Notes and the other Note Documents to which it is or is to
be a party, to perform its Obligations hereunder and thereunder and to
consummate all of the transactions contemplated hereby and thereby.
8
<PAGE>
4.2. Authorization, Enforceability, Etc.
This Agreement and each of the other Note Documents have been duly
authorized by all necessary corporate or other appropriate action (including,
without limitation, all necessary shareholder action) on the part of each of the
Obligors intended to be a party thereto. This Agreement has been, and the Notes
and each of the other Note Documents, when delivered hereunder, will have been,
duly executed and delivered by each of the Obligors intended to be a party
thereto. This Agreement constitutes, and the Notes and each of the other Note
Documents, when delivered hereunder, will constitute, the legal, valid and
binding obligations of each of the Obligors intended to be a party thereto,
enforceable against such Obligor in accordance with their respective terms,
except as such enforceability may be limited by the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally.
4.3. Disclosure.
(a) All of the information (other than projections and forecasts)
furnished by or on behalf of any of the Obligors or any of their respective
Subsidiaries to you under or in connection with this Agreement (including but
not limited to the Bridge Note Disclosure Letter) or any of the other Note
Documents or any other document, certificate or other writing furnished to you
in connection with the sale and purchase of the Notes or any of the other
transactions contemplated hereby is complete and correct in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact (known to the Company, in the case of any document not
furnished by it) necessary to make the statements made therein, in light of the
circumstances under which any such statements were made, not misleading. All
financial projections and forecasts that have been prepared by or on behalf of
the Company or any of its Subsidiaries and made available to you have been
prepared in good faith based upon reasonable assumptions and represented at the
time each such financial projection or forecast was delivered to you the
Company's best estimate of its future financial performance (it being recognized
by you that such financial projections or forecasts are not to be viewed as
facts and that the actual results during the period or periods covered by any
such financial projections or forecasts may differ from the projected or
forecasted results).
(b) There is no fact or circumstance known to the Company or its
Subsidiaries that, either individually, or in the aggregate, could reasonably be
expected to have a Material Adverse Effect that has not been disclosed in this
Agreement or the other Note Documents or in other documents, certificates and
other writings delivered to the Purchasers by or on behalf of the Company,
specifically for use in connection with the purchase of the Notes.
(c) The statements set forth in clauses (a) and (b) above shall be
construed in the same manner as claims asserted pursuant to Section 10(b) of the
Securities Act.
9
<PAGE>
4.4. Organization and Ownership of Shares of Subsidiaries; Inactive
Subsidiaries.
(a) Section 4.4(a) of the Bridge Note Disclosure Letter sets forth
all of the Subsidiaries of the Company as of the Purchase Date, showing, as to
each such Subsidiary, the correct name thereof, the jurisdiction of its
organization and the percentage of shares of each class of its capital stock or
similar equity interests outstanding that are owned by the Company and/or one or
more of its Subsidiaries, except certain of such information in respect of
Subsidiaries of DMG will be provided as set forth in Section 8.1(q). All of the
outstanding shares of capital stock or similar equity interests of each
Subsidiary of the Company shown as being owned by the Company and/or one or more
of its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company and/or one or more of its Subsidiaries, free and
clear of all Liens, except for Liens permitted under Section 9.2.
(b) Except for restrictions in agreements with respect to
Indebtedness of Foreign Subsidiaries, none of the Subsidiaries of the Company is
a party to or otherwise is subject to any legal restriction or any agreement or
arrangement restricting the ability of such Subsidiary to pay dividends out of
profits or to make any other similar distributions of profits to the Company or
any of its Subsidiaries that owns shares of capital stock of or similar equity
interests in such Subsidiary.
(c) None of the Subsidiaries of the Company listed in Section 4.4(c)
of the Bridge Note Disclosure Letter (the "Inactive Subsidiaries") is conducting
any material business, owns any material property or is generating any material
revenue.
4.5. Financial Statements.
(a) (i) The audited consolidated balance sheets of the Company and
its Subsidiaries as of October 31, 1998 and the related audited consolidated
statements of income, stockholders' equity and cash flows of the Company for the
Fiscal Year then ended and (ii) the unaudited consolidated balance sheets of the
Company and its Subsidiaries as at January 31, 1999 and April 30, 1999 and the
related unaudited consolidated statements of income, stockholders' equity and
cash flows of the Company and its Subsidiaries for the period then ended, have
been prepared in accordance with GAAP and fairly present the consolidated
financial condition of the Company and its Subsidiaries as at such dates and the
consolidated results of operations and cash flows of the Company and its
Subsidiaries for the respective periods ended on such dates.
(b) Since October 31, 1998, except as disclosed in the Pre-
Commitment Information, there has been (i) no material adverse change in the
business, financial condition,
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operations, performance, properties or prospects of the Company and its
Subsidiaries, taken as a whole, and (ii) no development, event or circumstance
relating to or affecting the Company or any of its Subsidiaries that, either
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect.
4.6. Compliance with Laws, Other Instruments, Etc.
The execution, delivery and performance by each of the Obligors of
each of the Note Documents to which it is or is to be a party and the
consummation of the issue and sale of the Notes and the other transactions
contemplated hereby and thereby do not (a) contravene such Obligor's
Organizational Documents or bylaws, (b) violate any Requirement of Law, (c)
conflict with or result in the breach of, or constitute a default under, any
Contractual Obligation or (d) result in or require the creation or imposition of
any Lien upon or with respect to any of the property or assets of any of the
Obligors or any of their respective Subsidiaries that, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
Neither any of the Obligors nor any of their respective Subsidiaries is in
violation of any of the terms of its Organizational Documents or bylaws or any
Requirement of Law, the violation of which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
4.7. Governmental Authorizations, Etc.
(a) The Company and each of its Subsidiaries (i) own or possess all
of the Governmental Authorizations that are necessary to own or lease and
operate their respective property and assets and to conduct their respective
businesses as presently conducted, except where and to the extent that the
failure to obtain or maintain in effect any such Governmental Authorization,
either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect, and (ii) have not received any notice relating
to or threatening the revocation, termination, cancellation, denial, impairment
or modification of any such Governmental Authorization, nor is the Company or
any of its Subsidiaries in violation or contravention of, or in default under,
any such Governmental Authorization.
(b) No Governmental Authorization, and no consent, approval or
authorization of, or notice to, or other action by, any Person, is required for
the due execution, delivery, recordation, filing or performance by any of the
Obligors of this Agreement or any of the other Note Documents to which it is or
is to be a party, or for the consummation of the sale and purchase of the Notes
and the other transactions contemplated hereby and thereby.
4.8. Litigation.
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There are no actions, suits, investigations, litigations or
proceedings pending or, to the Company's knowledge, threatened against or
affecting any of the Obligors or any of their respective Subsidiaries or any of
the property or assets thereof in any court or before any arbitrator or by or
before any other Governmental Authority of any kind that either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
4.9. Taxes.
(a) Except to the extent that failure to perform would not be
likely to result in a Material Adverse Effect, each of the Obligors and each of
their respective Subsidiaries have filed or caused to be filed all tax returns
and reports that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all taxes shown
to be due and payable on any assessments of which such Obligor or such
Subsidiary, as the case may be, has received notice and all other taxes,
assessments, levies, fees and other governmental charges imposed upon any of the
Obligors or any of their respective Subsidiaries, or their property, assets,
income or franchises, to the extent such taxes, assessments, levies, fees and
other charges have become due and payable and before they have become
delinquent, except for taxes, assessments, levies, fees or other charges the
amount, applicability or validity of which is being contested in good faith and
by appropriate proceedings diligently conducted and with respect to which such
Obligor or such Subsidiary, as the case may be, has established appropriate and
adequate reserves in accordance with GAAP.
(b) The Company or the relevant Subsidiary has established
appropriate and adequate reserves for all taxable years and all other taxable
periods for which the expiration of the applicable statute of limitations for
assessment or collection of the federal income tax liabilities of the Company or
any of its Subsidiaries has not occurred (whether as a result of extension or
otherwise) and for its current fiscal period.
(c) Neither any of the Obligors nor any of their respective
Subsidiaries or Affiliates has entered into an agreement or waiver or been
requested to enter into an agreement or waiver extending any statute period of
limitations for the assessment of any material tax of any such Obligor or any
such Subsidiary or Affiliate, except to the extent that the Company or the
relevant Subsidiary has established an appropriate and adequate reserve in
respect of such tax.
4.10. Compliance with ERISA.
(a) The Company, each of its Subsidiaries and each of their
respective ERISA Affiliates are in compliance with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan of the Company and its
Subsidiaries, and have performed all their obligations under each such Employee
Benefit Plan, except where such failure to comply or failure to perform would
not be
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likely to result in a Material Adverse Effect. Each such Employee Benefit Plan
which is intended to qualify under Section 401(a) of the Internal Revenue Code
is so qualified.
(b) No ERISA Event has occurred or is reasonably expected to occur.
(c) Except to the extent required under Section 4980B of the
Internal Revenue Code or except as set forth on Section 4.10 of the Bridge Note
Disclosure Letter, no such Employee Benefit Plan provides health or welfare
benefits (through the purchase of insurance or otherwise) for any retired or
former employee of the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates.
(d) As of the most recent valuation date for any Pension Plan of
the company and its Subsidiaries, the amount of unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA) individually or in the aggregate for
all such Pension Plans (excluding for purposes of such computation any such
Pension Plans with respect to which assets exceed benefit liabilities), does not
exceed $1,000,000 .
(e) As of the most recent valuation date for each Multiemployer
Plan for which the actuarial report is available, the potential liability of the
Company, its Subsidiaries and their respective ERISA Affiliates for a complete
withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of
ERISA), when aggregated with such potential liability for a complete withdrawal
from all such Multiemployer Plans, based on information available pursuant to
Section 4221(e) of ERISA, does not exceed $5,000,000.
4.11. Use of Proceeds.
The proceeds received from the sale of the Notes to you will be used
solely to finance the purchase price of the Tender Offer, to refinance certain
existing Indebtedness of the Company and its Subsidiaries, and to pay costs,
fees and expenses incurred in connection with the Transaction.
4.12. Environmental Matters.
Except as set forth on Section 4.12 of the Bridge Note Disclosure
Letter:
(i) neither the Company nor any of its Subsidiaries nor any of
their respective Facilities or operations are subject to any outstanding
written order, consent decree or settlement agreement with any Person
relating to (a) any Environmental Law, (b) any Environmental Claim, or (c)
any Hazardous Materials Activity that, individually or in the aggregate,
would be likely to result in a Material Adverse Effect;
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(ii) neither the Company nor any of its Subsidiaries has received
on its own behalf any letter or request for information under Section 104
of the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. (S)9604) or any comparable state law;
(iii) there are and, to the knowledge of each Responsible Officer
of the Company, have been no conditions, occurrences, or Hazardous
Materials Activities that could reasonably be expected to form the basis of
an Environmental Claim against the Company or any of its Subsidiaries that,
individually or in the aggregate, would be likely to result in a Material
Adverse Effect;
(iv) neither the Company nor any of its Subsidiaries nor, to the
knowledge of each Responsible Officer of the Company, any predecessor of
the Company or any of its Subsidiaries has filed on its own behalf any
notice under any Environmental Law indicating past or present treatment of
Hazardous Materials at any Facility, and none of the Company's nor any of
its Subsidiaries' operations involves (other than in a solely advisory
capacity) the generation, transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state
equivalent; and
(v) compliance by the Company and its Subsidiaries with all
current or reasonably foreseeable future requirements pursuant to or under
Environmental Laws will not, individually or in the aggregate, be likely to
result in a Material Adverse Effect.
Notwithstanding anything in this Section 4.12 to the contrary, no
event or condition is occurring with respect to the Company or any of its
Subsidiaries or, to the knowledge of any Responsible Officer of the Company, has
occurred with respect to the Company or any of its Subsidiaries relating to any
Environmental Law, any Release of Hazardous Materials, or any Hazardous
Materials Activity, including any matter disclosed on Section 4.12 of the Bridge
Note Disclosure Letter that individually or in the aggregate has had or would be
likely to result in a Material Adverse Effect.
4.13. Existing Indebtedness; Future Liens; Pari Passu Obligations.
(a) Section 4.13 of the Bridge Note Disclosure Letter sets forth a
complete and correct list of all outstanding Indebtedness of the Company and
each of its Subsidiaries as of the Purchase Date. As of the Purchase Date and
after giving effect to the Transaction, neither the Company nor any of its
Subsidiaries will be in default, and no waiver of default will be in effect, in
the payment of any principal of or interest on any Indebtedness of the Company
or any such Subsidiary, and no event or condition will exist with respect to any
Indebtedness of the Company or any such Subsidiary that would permit (or that
with notice or the lapse of time, or both, would permit) one or more Persons to
cause such Indebtedness to become due and payable, or would
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require an offer to prepay, redeem, repurchase, purchase or defease such
Indebtedness to be made, in each case prior to its stated maturity or its
regularly scheduled dates of payment.
(b) Neither any of the Obligors nor any of their respective
Subsidiaries has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property or assets, whether
now owned or hereafter acquired, to be subject to a Lien not expressly permitted
under Section 9.2.
(c) The Obligations of the Company under this Agreement and the
other Note Documents shall (i) rank pari passu with all unsubordinated
Indebtedness of the Company (other than Senior Indebtedness of the Company),
(ii) rank senior to any other subordinated Indebtedness of the Company and (iii)
be subordinated to the Senior Indebtedness of the Company.
4.14. Material Contracts.
(a) Neither the Company nor any of its Subsidiaries is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, would not be likely to result in
a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is a party to
or is otherwise subject to any agreements or instruments or any charter or other
internal restrictions that, individually or in the aggregate, would be likely to
result in a Material Adverse Effect.
4.15. DMG.
The Company has heretofore delivered to the Purchasers, at the
Purchasers' request, the audited consolidated balance sheet of DMG and its
Subsidiaries as at March 27, 1998 and March 26, 1999 and the related
consolidated statements of income, stockholders' equity and cash flows of DMG
and its Subsidiaries for the DMG Fiscal Year then ended. All such statements
were prepared in conformity with GAAP and fairly present, in all material
respects, the financial position (on a consolidated basis) of the entities
described therein for each of the periods then ended, subject, in the case of
any such unaudited financial statements, to changes resulting from audit and
normal year-end adjustments. DMG does not (and will not following the purchase
of the Notes) have any Contingent Obligation, contingent liability or liability
for taxes, long-term lease or unusual forward or long-term commitment that is
not reflected in the foregoing financial statements or the notes thereto and
which in any such case is material in relation to the business, operations,
properties, assets, financial condition or prospects of DMG or any of its
Subsidiaries.
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4.16. Investment Company Act; Other Regulations.
Neither the Company nor any of its Subsidiaries is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended. The Company is not subject to regulation under any
Federal or State statute or regulation that limits its ability to incur
Indebtedness as contemplated herein.
4.17. Public Utility Holding Company Act.
Neither the Company nor any of its Subsidiaries is a "holding
company," or a "subsidiary company" of a "holding company" or an "affiliate," of
a "holding company" or of a "subsidiary company" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
4.18. Year 2000 Representation.
Any reprogramming or other corrective modifications required to
permit the proper functioning, in and following the year 2000, of (i) the
Company's and its Subsidiaries' computer systems and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the Company's and its Subsidiaries' systems interface) and the testing of
all such systems and equipment, as so reprogrammed, will be completed by
September 30, 1999, except to the extent the failure to complete such
reprogramming could not reasonably be expected to have a Material Adverse
Effect. The cost of the Company and its Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of the year 2000 to the
Company and its Subsidiaries (including, without limitation, reprogramming
errors and the failure of others' systems or equipment) could not reasonably be
expected to have a Material Adverse Effect. Except for such of the reprogramming
referred to in the preceding sentence as may be necessary, the computer and
management information systems of the Company and its Subsidiaries are and, with
ordinary course upgrading and maintenance, will continue to be, sufficient to
permit the Company and its Subsidiaries to conduct their respective businesses
without a Material Adverse Effect.
4.19. Private Placement Representation.
None of the Company, its Subsidiaries nor any of their respective
"affiliates" (as defined in Rule 501(b) of Regulation D under the Securities
Act) has directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any
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"security" (as defined in the Securities Act) that is or could be integrated
with the sale of the Notes in a manner that would require the registration under
the Securities Act of the Notes or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) in connection with the offering of the Notes or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act. Neither the Company nor any of its Subsidiaries has distributed
any offering material in connection with the offering of the Notes; provided
that the preceding portion of this sentence does not apply to any offering
material distributed directly by the Purchasers. No securities of the same class
as the Notes have been issued and sold by the Company or any of its Subsidiaries
within the six-month period immediately prior to the date hereof.
4.20. Compliance with Rule 144A Requirements.
(a) The Notes are not of the same class (within the meaning of
Rule 144A under the Securities Act) as any securities of the Company or any of
its Subsidiaries that are listed on a national securities exchange registered
under Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer
quotation system.
(b) Each of the Notes satisfies the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
5. REPRESENTATIONS OF THE PURCHASERS.
5.1. Purchase for Investment, Etc.
Each of the Purchasers, severally and not jointly, represents and
warrants to the Company that:
(a) such Purchaser is an institutional "accredited investor" within
the meaning of Regulation D of the Securities Act and the Notes (or Rollover
Notes and Warrants) to be acquired by it pursuant to this Agreement are being
acquired for its own account and without a view to, or for resale in connection
with, any distribution thereof or any interest therein; provided that the
provisions of this Section shall not prejudice such Purchaser's right at all
times to sell or otherwise dispose of all or any part of the Notes (or Rollover
Notes and Warrants) so acquired pursuant to a registration under the Securities
Act or an exemption from such registration available under the Securities Act;
(b) such Purchaser has such knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
its investment in the
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<PAGE>
Notes (or Rollover Notes and Warrants), such Purchaser is capable of bearing the
economic risks of such investment and such Purchaser has had the opportunity to
conduct its own due diligence investigation in relation to its purchase of the
Notes (or Rollover Notes and Warrants) hereunder;
(c) such Purchaser (i) is (A) exempt from withholding tax or (B)
entitled to a treaty-reduced rate of withholding tax and (ii) otherwise meets or
has satisfied the requirements of Section 13.3; and
(d) no part of the funds used by such Purchaser to purchase the
Notes (or Rollover Notes or Warrants) hereunder constitutes assets of any
Pension Plan or any "plan" (as defined in Section 4975 of the Internal Revenue
Code).
5.2. Solicitation by Each Purchaser.
Each of the Purchasers, severally and not jointly, represents and
warrants to the Company that no form of general solicitation or general
advertising was used by such Purchaser or, to the best of its knowledge, any
other Person acting on behalf of such Purchaser, in respect of the Notes (or
Rollover Notes and Warrants) or in connection with the purchase of the Notes (or
Rollover Notes and Warrants) and that the Notes have not been offered to any
Person that is not an institutional "accredited investor" within the meaning of
Regulation D of the Securities Act.
6. PREPAYMENTS AND REDEMPTIONS OF THE NOTES.
6.1. Optional Prepayment of the Notes and Rollover Notes.
(a) The Notes. The Company may, at its option, upon not less than
---------
ten days' prior written notice to the Holders of the Notes, prepay all or any
part of the Notes, in an aggregate principal amount of $5,000,000 or integral
multiples of $1,000,000 in excess thereof (or, if less, the remaining aggregate
principal amount of all Notes outstanding at such time), at a purchase price in
cash equal to 100% of the aggregate principal amount of the Notes so prepaid,
plus all accrued and unpaid interest thereon, if any, to the date of such
prepayment. Each notice of an optional prepayment of the Notes pursuant to this
Section 6.1(a) shall specify the date fixed for such prepayment, the aggregate
principal amount of Notes to be prepaid on such date, the principal amount of
each Note held by such Holder to be prepaid (determined in accordance with
Section 6.4) and the interest to be paid on the prepayment date with respect to
such principal amount being prepaid, and shall state that such prepayment is to
be made pursuant to this Section 6.1(a).
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(b) The Rollover Notes. The Company may, at its option, upon not
------------------
less than ten days' prior written notice to the Holders of the Rollover Notes,
prepay all or any part of the Rollover Notes, in an aggregate principal amount
of $5,000,000 or integral multiples of $1,000,000 in excess thereof (or, if
less, the remaining aggregate principal amount of all Notes outstanding at such
time) at a purchase price in cash equal to 100% of the aggregate principal
amount of the Notes so prepaid, plus all accrued and unpaid interest therein, if
any, to the date of such prepayment; provided, however, that the redemption
price (i) for any Fixed Rate Rollover Notes prepaid during the 5-year period
commencing from the Rollover Date also will include the Make-Whole Premium and
(ii) for any Fixed Rate Rollover Notes prepaid during the period from the fifth
anniversary of the Rollover Date to the ninth anniversary of the Rollover Date
will also include a premium equal to the product of 50% of the coupon interest
rate for such Fixed Rate Rollover Notes and the principal amount of the Fixed
Rate Rollover Notes prepaid from the fifth anniversary to but not including the
sixth anniversary of the Rollover Date, with such premium to decline to the
product of 37 1/2% of such interest rate and the principal amount of the Fixed
Rate Rollover Notes prepaid from the sixth anniversary to but not including the
seventh anniversary of the Rollover Date, the product of 25% of such interest
rate and the principal amount of the Fixed Rate Rollover Notes prepaid from the
seventh anniversary to but not including the eighth anniversary of the Rollover
Date and the product of 12 1/2% of such interest rate and the principal amount
of the Fixed Rate Rollover Notes prepaid from the eighth anniversary to but not
including the ninth anniversary of the Rollover Date. Each notice of an optional
prepayment of the Rollover Notes pursuant to this Section 6.1(b) shall specify
the date fixed for such prepayment, the aggregate principal amount of Rollover
Notes to be prepaid on such date, the principal amount of each Rollover Note
held by such Holder to be prepaid (determined in accordance with Section 6.4)
and the interest and premium, if any, to be paid on the prepayment date with
respect to such principal amount being prepaid, and shall state that such
prepayment is to be made pursuant to this Section 6.1(b).
6.2. Mandatory Redemption of Notes or Rollover Notes in the Event of a
Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
redeem all of the Notes or Rollover Notes at a redemption price in cash equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest,
if any, thereon to the date of such redemption (the "Change of Control
Payment"). Within three Business Days following any Change of Control, the
Company shall deliver a notice, by facsimile confirmed the same day by overnight
courier service, to each Holder of the Notes or Rollover Notes stating:
(i) that a Change of Control redemption is being made
pursuant to this Section 6.2; and
(ii) the redemption price for the Note or Rollover Note or
Notes or Rollover Notes of such Holder and the Change of Control Repurchase
Date therefor.
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Notwithstanding the foregoing, the failure of the Company to deliver the notice
referred to in the second sentence of this Section 6.2(a) to any Holder of the
Notes or Rollover Notes shall not affect or impair the obligation of the Company
to purchase any Note or Rollover Note from such Holder on the applicable Change
of Control Repurchase Date.
(b) On a date that is no earlier than 30 days nor later than 60 days
from the date that the Company delivers or causes to be delivered notice of the
Change of Control to the Holders or, if the Company fails to deliver such notice
or cause such notice to be delivered, on the date that is 30 days after the
occurrence of such Change of Control (the "Change of Control Repurchase Date"),
the Company shall pay to each of the Holders of the Notes or Rollover Notes the
Change of Control Payment for its Notes or Rollover Notes.
6.3. Mandatory Redemptions of the Notes or Rollover Notes.
(a) Refinancing. Upon the consummation of the sale of the
-----------
Refinancing Securities, the Company shall redeem all outstanding Notes or
Rollover Notes at a redemption price in cash equal to 100% of the aggregate
principal amount thereof plus accrued and unpaid interest to the date of such
redemption and all fees, expenses and other payments due and payable to the
Holders of the Notes or Rollover Notes under the Note Documents on such date;
provided, however, that the redemption price for any Fixed Rate Rollover Notes
also will include the respective premium provided for optional prepayments in
Section 6.1(b).
(b) The Notes. In addition to the mandatory redemption provided in
---------
Section 6.3(a), except to the extent that the respective Net Cash Proceeds or
Net Equity Securities Proceeds are applied to repay Indebtedness under the
Senior Credit Agreement, upon receipt by the Company or any of its Subsidiaries
of the Net Cash Proceeds or Net Equity Securities Proceeds, as the case may be,
from (i) the issuance or incurrence by the Company or any of its Subsidiaries of
any Indebtedness (other than Indebtedness issued or incurred pursuant to Section
9.1), (ii) the sale or issuance by the Company or any of its Subsidiaries of any
equity Securities other than (A) issuances of equity Securities of the Company
to directors and employees of the Company and its Subsidiaries pursuant to a
written employee benefit plan maintained by the Company or any of its
Subsidiaries, approved by the Company's Board of Directors and issuances of
equity Securities of the Company pursuant to the exercise of options or warrants
issued under any such plan, (B) the issuance of the Company Series B Preferred
Stock to RCBA in the manner contemplated by the Securities Purchase Agreement
and (C) issuances of equity Securities of the Company, the Net Equity Security
Proceeds of which are applied by the Company or its Subsidiaries to the
consideration paid by the Company or such Subsidiary for Subsequent Acquisitions
(provided that the Company shall apply such Net Equity Securities Proceeds to
the consideration for such Subsequent Acquisitions during the three-month period
following the date of receipt of such Net Equity Securities Proceeds by the
Company) and (iii) any Asset Sale (other than (A) Asset Sales effected in the
ordinary course of the Company's or the applicable Subsidiary's business or (B)
Asset Sales with respect to
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Exchange Assets (excluding, however, Net Cash Proceeds to the extent they exceed
the amount of cash expected to be expended by the Company and its Subsidiaries
to acquire such Exchange Assets)), the Company shall redeem outstanding Notes in
an amount equal to (1) in the case of clause (ii) above, the lesser of (xx) 50%
of the aggregate principal amount of all Notes outstanding on the date of such
redemption and (yy) the amount of such Net Equity Securities Proceeds and (2) in
the case of clauses (i) and (iii) above, the lesser of (xx) 100% of the
aggregate principal amount of all Notes outstanding on the date of such
redemption and (yy) the amount of such Net Cash Proceeds, in either case at a
purchase price in cash equal to 100% of the aggregate principal amount thereof
plus accrued and unpaid interest to the date of such redemption and all fees,
expenses and other payments due and payable to the Holders of the Notes under
the Note Documents on such date. For purposes of this Section 6.3, "Exchange
Assets" means assets that the Company or any of its Subsidiaries intends to
replace with assets that are of a nature and type that are used or useful in a
business engaged in by the Company and its Subsidiaries at the time of any such
replacement or any business activity substantially similar or related thereto.
(c) The Rollover Notes. Except to the extent that the respective Net
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Cash Proceeds or Net Equity Securities Proceeds are applied to repay
Indebtedness under the Senior Credit Agreement and until any Fixed Rate Rollover
Notes are issued, upon receipt by the Company or any of its Subsidiaries of the
Net Cash Proceeds or Net Equity Securities Proceeds, as the case may be, from
(i) the issuance or incurrence by the Company or any of its Subsidiaries of any
Indebtedness (other than Indebtedness issued or incurred pursuant to Section
9A.1), (ii) the sale or issuance by the Company or any of its Subsidiaries of
any equity Securities other than (A) issuances of equity Securities of the
Company to directors and employees of the Company and its Subsidiaries pursuant
to a written employee benefit plan maintained by the Company or any of its
Subsidiaries, approved by the Company's Board of Directors and issuances of
equity Securities of the Company pursuant to the exercise of options or warrants
issued under any such plan, (B) the issuance of the Company Series B Preferred
Stock to RCBA in the manner contemplated by the Securities Purchase Agreement,
(C) issuances of equity Securities of the Company, the Net Equity Security
Proceeds of which are applied by the Company or its Subsidiaries to the
consideration paid by the Company or such Subsidiary for Investments (as defined
in Schedule III) permitted under Section 9A.3 (provided that the Company shall
apply such Net Equity Securities Proceeds to the consideration for such
Investments during the three-month period following the date of receipt of such
Net Equity Securities Proceeds by the Company) and (D) the issuance of
Securities as provided in the Warrant Agreements and (iii) any Asset Sale (other
than (A) Asset Sales effected in the ordinary course of the Company's or the
applicable Subsidiary's business or (B) Asset Sales with respect to Exchange
Assets), the Company shall redeem outstanding Rollover Notes in an amount equal
to (1) in the case of clause (ii) above, the lesser of (xx) 50% of the aggregate
principal amount of all Rollover Notes outstanding on the date of such
redemption and (yy) the amount of such Net Equity Securities Proceeds and (2) in
the case of clauses (i) and (iii) above, the lesser of (xx) 100% of the
aggregate principal amount of all Rollover Notes outstanding on the date of such
redemption and (yy) the amount of such Net Cash Proceeds, in either case at
redemption
21
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price in cash equal to 100% of the aggregate principal amount thereof plus
accrued and unpaid interest to the date of such redemption and all fees,
expenses and other payments due and payable to the Holders of the Rollover Notes
under the Note Documents on such date.
6A.3. Offer to Repurchase Fixed Rate Rollover Notes in Respect of an
Asset Sale.
Except to the extent that the respective Net Cash Proceeds are
applied to repay Indebtedness under the Senior Credit Agreement, upon receipt by
the Company or any of its Subsidiaries of the Net Cash Proceeds that constitute
"Excess Proceeds" under Section 9A.8 from any Asset Sale (other than (i) Asset
Sales effected in the ordinary course of the Company's or the applicable
Subsidiary's business or (ii) Asset Sales with respect to Exchange Assets), each
Holder of the Fixed Rate Rollover Notes will have the right to require the
Company to repurchase all or any portion of the Fixed Rate Rollover Notes of
such Holder pursuant to an offer made in the manner described below (each, an
"Offer to Purchase"), at a purchase price (the "Repurchase Payment") in cash
equal to 100% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, thereon to the date of such repurchase (the "Repurchase Date")
plus the respective premium provided for optional prepayments in Section 6.1(b).
Within three Business Days following any Asset Sale generating Excess Proceeds,
the Company shall deliver a notice, by facsimile confirmed the same day by
overnight courier service, to each Holder of the Fixed Rate Rollover Notes
stating:
(i) that the Offer to Purchase is being made pursuant to this
Section 6A.3 and that all Fixed Rate Rollover Notes tendered shall be
accepted for repurchase;
(ii) the repurchase price for the Fixed Rate Rollover Note or
Fixed Rate Rollover Notes of such Holder and the proposed Repurchase Date
therefor (which shall not be less than 30 days nor more than 60 days from
the date the Company delivers such notice);
(iii) that any Fixed Rate Rollover Note not tendered for
repurchase shall continue to accrue interest in accordance with the terms
thereof;
(iv) that, unless the Company defaults in the payment of the
Repurchase Payment, all Fixed Rate Rollover Notes accepted for repurchase
pursuant to this Section 6A.3 shall cease to accrue interest after the
Repurchase Date; and
(v) that Holders whose Fixed Rate Rollover Notes are being
tendered for repurchase only in part shall be issued a new Fixed Rate
Rollover Note equal in principal amount to the unpurchased portion of the
Fixed Rate Rollover Notes surrendered.
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On the Repurchase Date, the Company shall pay the respective Repurchase Payment
in respect of all Fixed Rate Rollover Notes tendered as provided herein against
the delivery to the Company of such Fixed Rate Rollover Notes. Any Holder of
the Fixed Rate Rollover Notes that elects to have all or a portion of its Fixed
Rate Rollover Notes repurchased as part of the Offer to Purchase shall deliver
notice to the Company of its election at least three Business Days prior the
scheduled Repurchase Date. Any Holder of a Fixed Rate Rollover Note that does
not deliver to the Company notice accepting the Offer to Purchase at least three
Business Days prior to the Repurchase Date shall be deemed to have rejected such
Offer to Purchase. Notwithstanding the foregoing, the failure of the Company to
deliver the notice referred to in the third sentence of this Section 6A.3 to any
Holder of the Fixed Rate Rollover Notes shall not affect or impair the
obligation of the Company to purchase any Fixed Rate Rollover Notes from such
Holder as provided herein.
6.4. Allocation of Partial Prepayments.
In the case of each partial repurchase or redemption of Notes or
Rollover Notes pursuant to Section 6.1 or 6.3, the principal amount of Notes or
Rollover Notes to be repurchased or redeemed shall be allocated (in integral
multiples of $1,000) among all of the Notes or Rollover Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for repurchase or redemption,
with adjustments to the extent practicable to compensate for any prior
repurchases or redemptions not made exactly in such proportion.
6.5. Maturity; Surrender, Etc.
In the case of each repurchase or redemption of the Notes or Rollover
Notes pursuant to Section 6.1, 6.2 or 6.3, the principal amount of each Note or
Rollover Note to be redeemed and the principal amount of each Note or Rollover
Note surrendered for repurchase shall mature and become due and payable on the
date fixed for such repurchase or redemption, together with accrued and unpaid
interest on such principal amount to such date. From and after such date,
unless the Company shall fail to pay such principal amount when so due and
payable, together with the accrued and unpaid interest thereon as aforesaid,
interest on such principal amount shall cease to accrue. Any Note or Rollover
Note redeemed or repurchased in full shall be surrendered to the Company and
canceled and shall not be reissued, and no Note or Rollover Note shall be issued
in lieu of any repurchased or redeemed principal amount of any Note or Rollover
Note.
6.6. Purchase of Notes or Rollover Notes.
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<PAGE>
The Company will promptly cancel all Notes or Rollover Notes acquired
by it pursuant to any payment, prepayment or purchase of Notes or Rollover Notes
in accordance with the terms of this Agreement and the Notes or Rollover Notes,
and no Notes or Rollover Notes may be issued in substitution or exchange for any
such Notes or Rollover Notes.
7. ROLLOVER.
7.1. Rollover Notes.
If, on the Rollover Date, any Notes shall not have been prepaid or
redeemed in full pursuant to Section 6.1, 6.2 or 6.3, then, subject to the terms
contained herein and the satisfaction of the conditions set forth below, each
Note then outstanding shall be exchanged (the "Rollover") for a new Note (the
"Rollover Notes"), each in a principal amount equal to the sum of (a) 102.75% of
the principal amount of such exchanged Note and (b) the aggregate principal
amount of all Secondary Notes issued in respect of such Note. Any accrued and
unpaid interest on the Notes outstanding immediately prior to the Rollover Date
(including interest due on the Rollover Date in respect of the Notes) shall be
due and payable prior to the consummation of the Rollover. The Rollover Notes
shall mature ten years after their issuance. The Rollover Notes shall be in
substantially the form of Exhibit B hereto (except as set forth in Section 7.2),
with such changes therefrom, if any, as may be approved by you and the Company.
Unless otherwise specified in the Rollover Notes, in this Section 7 or in
Section 8A or 9A, the Rollover Notes shall have the same terms, and shall be
governed by the provisions of this Agreement to the same extent, as the Notes.
7.2. Warrant Agreements.
(a) Warrant Agreements to purchase up to an aggregate of 1.5% of the
fully diluted shares of the common stock of the Company will be issued to the
Holders of the Rollover Notes on the Rollover Date, and, consistent with Section
8A.11 hereof, Warrant Agreements to purchase an additional 1.5% of the fully
diluted shares of the common stock of the Company will be issued to the Holders
of the Rollover Notes on the six-month anniversary of the Rollover Date, with
the amount of shares subject to such Warrant Agreements to be determined in each
case as of the date of issuance of such Warrant Agreements.
(b) The aggregate amount of Warrants to be issued to the Holders of
Rollover Notes pursuant to Section 7.2(a) shall be allocated among the Holders
of Rollover Notes in accordance with the percentage that the outstanding
principal amount of Rollover Notes held by each Holder bears to the total
outstanding principal amount of all Rollover Notes held by all of the Holders
(excluding the Company and its Subsidiaries). The Holders of the Rollover Notes
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shall be reflected as the registered owners of Warrants on the register
maintained by the Company for such purpose pursuant to Section 3 of the Warrant
Agreements.
7.3. Registration Rights.
(a) Upon the issuance of the Rollover Notes, the Company shall
deliver to each Holder of Rollover Notes an executed counterpart of a
registration rights agreement substantially in the form of Exhibit G hereto, as
amended, supplemented or otherwise modified from time to time (the "Rollover
Notes Registration Rights Agreement"), providing for the following registration
rights and otherwise in form and substance satisfactory to the Holders of a
majority of the Rollover Notes. Pursuant to the Rollover Notes Registration
Rights Agreement, as soon as practicable after the Rollover Date, the Company
shall file, and shall use its best efforts to have declared effective, at the
expense of the Company, an exchange offer registration statement on Form S-4 (or
any other similar form adopted by the Securities and Exchange Commission) with
respect to the exchange of the Rollover Notes and to keep such exchange
registration statement effective until closing of the exchange offer. If such
exchange offer cannot be completed within 180 days from the date of issue of the
Rollover Notes, the issuer will file and cause to become effective, at the
expense of the Company, a "Shelf" registration with respect to resales of the
Rollover Notes.
(b) If the registration statement referred to in Subsection 7.3(a)
above is either (i) not filed within 60 days following the Rollover Date or (ii)
such exchange offer is not completed or a Shelf registration is not declared
effective within 180 days following the Rollover Date, the Company will pay
liquidated damages to each Holder of the Rollover Notes in an amount equal to
$.192 per week per $1,000 principal amount of Rollover Notes held by such Holder
until such time as such registration statement has been declared effective or
such exchange offer has been completed, as the case may be. The Company will
also pay to each Holder of Rollover Notes liquidated damages in an amount equal
to $.192 per week per $1,000 principal amount of Rollover Notes for any period
of time following the effectiveness of such registration statement during which
such registration statement is not available for resales of the Rollover Notes.
(c) In connection with the registration statement contemplated
herein, the Company will execute and deliver an indenture setting forth the
terms of the notes to be issued under such indenture, which terms will include,
without limitation, covenants and events of default identical to the Rollover
Notes, except that (i) the provisions of Section 10.2 with respect to
acceleration shall be replaced with a provision to the effect that if an Event
of Default (other than an Event of Default specified in Section 10.1(g)) occurs
and is continuing, the trustee under such indenture or the holders of not less
than 25% in principal amount of the outstanding notes issued thereunder may, and
the trustee under such indenture shall, at the request of the holders of not
less than 25% in principal amount of such notes, declare the principal of all of
such notes to be due and payable and (ii) such changes as are required for the
issuance of such notes under
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<PAGE>
such indenture shall be made. The other provisions of such indenture shall
contain customary terms and conditions and shall be in form and substance
reasonably satisfactory to the Required Holders. The Company shall appoint under
such indenture a trustee eligible to act as trustee under Section 310(a)(1) of
the Trust Indenture Act of 1939. Upon the issuance and effectiveness of an
indenture contemplated by this Section 7.3(c), which shall govern the rights of
the Holders of the Rollover Notes and the related obligations of the Company and
the Subsidiary Guarantors, this Note Purchase Agreement shall cease to be
effective.
7.4. Conditions to Rollover.
The obligation of the Holders of the Notes to consummate the Rollover
shall be subject to the following conditions precedent:
(a) No Event of Default shall have occurred and be continuing.
(b) The Rollover would not violate the terms of any order, decree,
injunction or judgment entered by a court of competent jurisdiction.
(c) The Company shall have paid all accrued fees and expenses
arising out of the transactions contemplated by this Agreement and the other
Note Documents (including the reasonable accrued fees and expenses of counsel).
(d) You shall have received each of the documents required to be
delivered pursuant to Section 7.5.
7.5. Documents Required.
On the Rollover Date, the Company shall deliver to you the following
documents, each dated the Rollover Date and duly executed or authenticated, as
the case may be, by each Person party thereto:
(a) The Rollover Notes in exchange for the Notes held by you.
(b) An executed counterpart of the Rollover Notes Registration
Rights Agreement, substantially in the form of Exhibit G hereto.
(c) Executed counterparts of the Warrant Agreements, substantially
in the form of Exhibit H hereto, for each Holder representing its ratable share
of 1.5% on a fully diluted basis of the common stock of the Company.
7.6. Special Rollover Note Interest Rate Provisions.
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<PAGE>
Upon not less than twenty days' prior notice to the Company, any
Person that was a Holder of a Rollover Note on the Rollover Date shall have the
right to sell such Rollover Note to any other Person and in connection with any
such sale to set, in its sole discretion, a fixed rate of interest for such
Rollover Note (in lieu of the increasing rate of interest then applicable to
such Rollover Note), which fixed rate of interest shall be no less favorable
(including that such fixed rate of interest shall not exceed the maximum rate of
interest per annum provided for in the Rollover Notes and the maximum rate of
interest per annum payable in cash in respect of such fixed rate of interest
shall not exceed the maximum interest rate per annum payable in cash provided
for in the Rollover Notes) to the Company than the then applicable rate of
interest on such Rollover Note. The Company agrees that from time to time
coincidental with any such sale it shall issue a replacement Rollover Note (the
"Fixed Rate Rollover Notes") to the respective Holder that shall provide for the
respective fixed rate of interest and otherwise be substantially in the form of
Exhibit B hereto.
8. AFFIRMATIVE COVENANTS (NOTES).
From the date of this Agreement and, thereafter, so long as any of
the Notes shall be outstanding, the Company will at all times perform and
comply, and will cause each of its Subsidiaries to perform and comply, with each
of the following covenants:
8.1. Financial Statements and Other Reports.
The Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated financial
statements in conformity with GAAP. The Company will deliver to each Holder of
a Note:
(a) Quarterly Financials. (i) as soon as available and in any event
--------------------
within 55 days after the end of each of the first three Fiscal Quarters of each
Fiscal Year, the consolidated balance sheet of the Company and its Subsidiaries
as at the end of such Fiscal Quarter and the related consolidated statements of
income and cash flows of the Company and its Subsidiaries for such Fiscal
Quarter and for the period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, setting forth in each case in comparative form
the corresponding figures for the corresponding periods of the previous Fiscal
Year, all in reasonable detail and certified by the Senior Financial Officer of
the Company that they fairly present, in all material respects, the financial
condition of the Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments, and
(ii) as soon as available and in any
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<PAGE>
event within 90 days after the end of each Fiscal Quarter, a summary of such
consolidated statements setting forth in comparative form the corresponding
figures from the Financial Plan for the current Fiscal Year and a narrative
report describing the operations of the Company and its Subsidiaries in each
case in the form prepared for presentation to the Board of Directors for such
Fiscal Quarter and for the period from the beginning of the then current Fiscal
Year to the end of such Fiscal Quarter;
(b) Year-End Financials. as soon as available and in any event within
-------------------
100 days after the end of each Fiscal Year, (i) the consolidated balance sheet
of the Company and its Subsidiaries as at the end of such Fiscal Year and the
related consolidated statements of income, stockholders' equity and cash flows
of the Company and its Subsidiaries for such Fiscal Year, setting forth in each
case in comparative form the corresponding figures for the previous Fiscal Year,
all in reasonable detail and certified by a Senior Financial Officer of the
Company that they fairly present, in all material respects, the financial
condition of the Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated, (ii)
a summary of such consolidated statements setting forth in comparative form the
corresponding figures from the Financial Plan for the current Fiscal Year and a
narrative report describing the operations of the Company and its Subsidiaries
in each case in the form prepared for presentation to the Board of Directors for
such Fiscal Year, (iii) an office performance summary for the Fiscal Year then
ended and (iv) in the case of such consolidated financial statements, a report
thereon of PricewaterhouseCoopers L.L.P. or other independent certified public
accountants of recognized national standing selected by the Company, which
report shall be unqualified, shall express no doubts about the ability of the
Company and its Subsidiaries to continue as a going concern, and shall state
that such consolidated financial statements fairly present, in all material
respects, the consolidated financial position of the Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(c) Officer's and Compliance Certificates. together with each
-------------------------------------
delivery of financial statements of the Company and its Subsidiaries pursuant to
subsections (a) and (b) above, (i) an Officer's Certificate of the Company
stating that the signers have reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of the Company and its Subsidiaries
during the accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such accounting
period, and that the signers do not have knowledge of the existence as at the
date of such Officer's Certificate, of any condition or event that constitutes
an Event of Default or Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Company has taken, is taking and proposes to take with respect thereto; and
(ii) a Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of the applicable accounting
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periods with the restrictions contained in Sections 9.1(j) and (k),
9.2(a)(viii), 9.3(h) and (m), 9.4(i) and 9.6(f) and 9.7, in each case to the
extent compliance with such restrictions is required to be tested at the end of
the applicable accounting period;
(d) Reconciliation Statements. if, as a result of any change in
-------------------------
accounting principles and policies from those used in the preparation of the
audited financial statements referred to in Section 4.5(a), the consolidated
financial statements delivered pursuant to subsections (a) or (b) of this
Section 8.1 will differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such subsections had no
such change in accounting principles and policies been made, then (i) together
with the first delivery of financial statements pursuant to subsection (a), (b)
or (l) of this Section 8.1 following such change, consolidated financial
statements of the Company and its Subsidiaries for (A) the current Fiscal Year
to the effective date of such change and (B) the two full Fiscal Years
immediately preceding the Fiscal Year in which such change is made, in each case
prepared on a pro forma basis as if such change had been in effect during such
periods, and (ii) together with each delivery of financial statements pursuant
to subsections (a) or (b) of this Section 8.1 following such change, a written
statement of a Senior Financial Officer of the Company setting forth the
differences that would have resulted if such financial statements had been
prepared without giving effect to such change;
(e) Accountants' Certification. together with each delivery of
--------------------------
consolidated financial statements of the Company and its Subsidiaries pursuant
to subsection (b) above, a written statement by the independent certified public
accountants giving the report thereon stating that their audit examination has
included a review of the terms of this Agreement and the other Note Documents as
they relate to accounting matters and that, based on their audit examination,
nothing has come to their attention that causes them to believe that the matters
set forth in the Compliance Certificates delivered therewith pursuant to clause
(ii) of subsection (c) above for the applicable Fiscal Year are not stated in
accordance with the terms of this Agreement;
(f) Accountants' Reports. promptly upon receipt thereof (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to the Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of the Company and its Subsidiaries made by such accountants,
including any comment letter submitted by such accountants to management in
connection with their annual audit;
(g) SEC Filings and Press Releases. promptly upon their becoming
------------------------------
available, copies of (i) all financial statements, reports, notices and proxy
statements sent or made available generally by the Company to its security
holders or by any Subsidiary of the Company to its security holders other than
the Company or another Subsidiary of the Company, (ii) all regular and periodic
reports and all registration statements (other than on Form S-8 or a similar
form) and prospectuses, if any, filed by the Company or any of its Subsidiaries
with any securities
29
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exchange or with the Securities and Exchange Commission or any governmental or
private regulatory authority and (iii) all press releases and other statements
made available generally by the Company or any of its Subsidiaries to the public
concerning material developments in the business of the Company or any of its
Subsidiaries;
(h) Events of Default, Etc. promptly upon any Responsible Officer of
-----------------------
the Company obtaining knowledge (i) of any condition or event that constitutes
an Event of Default or Default, or becoming aware that any Holder of a Note has
given any notice or taken any other action with respect to a claimed Event of
Default or Default, (ii) that any Person has given any notice to the Company or
any of its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in Section 10.1(f), (iii)
of any condition or event that would be required to be disclosed in a current
report filed by the Company with the Securities and Exchange Commission on Form
8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date hereof) if the
Company were required to file such reports under the Exchange Act or (iv) of the
occurrence of any event or change that has caused or evidences, either in any
case or in the aggregate, a Material Adverse Effect, an Officer's Certificate
specifying the nature and period of existence of such condition, event or
change, or specifying the notice given or action taken by any such Person and
the nature of such claimed Event of Default, Default, default, event or
condition, and what action the Company has taken, is taking and proposes to take
with respect thereto;
(i) Litigation or Other Proceedings.
-------------------------------
(i) promptly upon any Responsible Officer of the Company
obtaining knowledge of (A) the institution of, or non-frivolous threat of,
any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration against or affecting
the Company or any of its Subsidiaries or any property of the Company or
any of its Subsidiaries (collectively, "Proceedings") not previously
disclosed in writing by the Company to the Holders of the Notes or (B) any
material development in any Proceeding that, in any case:
(1) is reasonably likely to result in a Material Adverse
Effect; or
(2) seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to the Company to enable the Holders of the Notes and
their counsel to evaluate such matters; and
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(ii) promptly upon request by any Holder of a Note, a copy of the
list of Proceedings delivered by the Company to its independent certified
public accountants in connection with the report prepared by them on the
consolidated financial statements of the Company and its Subsidiaries for
each Fiscal Year, and promptly after request by any Holder of a Note such
other information as may be reasonably requested by such Holder to enable
such Holder and its counsel to evaluate any of such Proceedings;
(j) ERISA Events. promptly upon becoming aware of the occurrence of
------------
or forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto;
(k) ERISA Notices. with reasonable promptness upon request by any
-------------
Holder of a Note, copies of (i) each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by the Company, any of its Subsidiaries
or any of their respective ERISA Affiliates with the Internal Revenue Service
with respect to each Pension Plan of the Company or any of its Subsidiaries;
(ii) all notices received by the Company, any of its Subsidiaries or any of
their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning
an ERISA Event; and (iii) copies of such other documents or governmental reports
or filings relating to any Employee Benefit Plan of the Company or any of its
Subsidiaries as any Holder of a Note shall reasonably request;
(l) Financial Plans. as soon as practicable and in any event no
later than 60 days following the end of each Fiscal Year, a consolidated plan
and financial forecast for the then current Fiscal Year (the "Financial Plan"
for such Fiscal Year), including, (i) forecasted consolidated balance sheets and
forecasted consolidated statements of income and cash flows of the Company and
its Subsidiaries for such Fiscal Year, together with a projected Compliance
Certificate for such Fiscal Year and an explanation of the assumptions on which
such forecasts are based, (ii) forecasted consolidated statements of income and
cash flows of the Company and its Subsidiaries for each Fiscal Quarter of such
Fiscal Year, together with an explanation of the assumptions on which such
forecasts are based, and (iii) such other information and projections as any
Holder of a Note may reasonably request;
(m) Insurance. as soon as practicable and in any event by the last
---------
day of each Fiscal Year, a report in form and substance reasonably satisfactory
to the Holders of the Notes outlining any change since the proceeding Fiscal
Year in any material insurance coverage maintained by the Company and its
Subsidiaries;
(n) Board of Directors. with reasonable promptness, written notice
------------------
of any change in the Board of Directors of the Company;
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(o) New Subsidiaries or Change in Status of Subsidiaries. annually,
----------------------------------------------------
within 100 days of the end of each Fiscal Year, all of the data required to be
set forth on Section 4.4(a) of the Bridge Note Disclosure Letter as of the
Purchase Date with respect to all Subsidiaries of the Company and an Officer's
Certificate, together with supporting documentation in form and substance
satisfactory to the Required Holders, setting forth the aggregate gross revenues
for the immediately preceding Fiscal Year of the Subsidiary Guarantors;
(p) Subordinated Indebtedness Notices. promptly upon receipt by the
---------------------------------
Company or any of its Subsidiaries of any notice with respect to any
Subordinated Indebtedness, and promptly upon the giving of notice by the Company
or any of its Subsidiaries with respect to any Subordinated Indebtedness, in
each case relating to any default or payment or prepayment of principal of,
premium, if any, redemption, purchase, retirement, defeasance (including in-
substance or legal defeasance), sinking fund or similar payment with respect to
such Subordinated Indebtedness, a copy of such notice;
(q) DMG Subsidiaries. not later than the twentieth Business Day
----------------
after the Purchase Date, deliver to each Holder a supplement to Section 4.4(a)
of the Bridge Note Disclosure Letter showing as to each Subsidiary of the
Company (to the extent not set forth in Section 4.4(a) of the Bridge Note
Disclosure Letter), the correct name thereof, the jurisdiction of its
organization and the percentage of shares of each class of its capital stock or
similar equity interests outstanding that is owned by the Company and/or one or
more of its Subsidiaries; and
(r) Other Information. with reasonable promptness, such other
-----------------
information and data with respect to the Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Holder of a Note.
8.2. Corporate Existence, Etc.
Except as permitted under Section 9.6, the Company will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material to its
business; provided, however, that neither the Company nor any of its
Subsidiaries shall be required to preserve any such right or franchise if the
Board of Directors of the Company or such Subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company or such Subsidiary, as the case may be, and that the loss thereof is
not disadvantageous in any material respect to the Company, such Subsidiary or
the Holders of the Notes.
8.3. Payment of Taxes and Claims; Tax Consolidation.
The Company will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or
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in respect of any of its income, businesses or franchises before any penalty
accrues thereon, and all claims (including, claims for labor, services,
materials and supplies) for sums that have become due and payable and that by
law have or may become a Lien upon any of its properties or assets, prior to the
time when any penalty or fine shall be incurred with respect thereto, except
where the failure to pay such taxes, assessments and governmental charges would
not be likely to result in a Material Adverse Effect; provided that no such
charge or claim need be paid if it is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, so long as
such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
8.4. Maintenance of Properties; Insurance.
(a) Maintenance of Properties. The Company will, and will cause
-------------------------
each of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
properties used or useful in the business of the Company and its Subsidiaries
(including all intellectual property) and from time to time will make or cause
to be made all appropriate repairs, renewals and replacements thereof the
failure of which would likely result in a Material Adverse Effect.
(b) Insurance. The Company will maintain or cause to be maintained,
---------
with financially sound and reputable insurers, such public liability insurance,
third party property damage insurance, business interruption insurance and
casualty insurance with respect to liabilities, losses or damage in respect of
the assets, properties and businesses of the Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry.
8.5. Inspection Rights.
The Company shall, and shall cause each of its Subsidiaries to,
permit any authorized representatives designated by any Holder of a Note to
visit and inspect any of the properties of the Company or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that the Company may, if it so chooses, be present at or participate
in any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
8.6. Compliance with Laws, Etc.
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The Company shall comply, and shall cause each of its Subsidiaries to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority (including all Environmental Laws),
noncompliance with which would be likely to cause, individually or in the
aggregate, a Material Adverse Effect. The Company shall maintain and shall
cause each Subsidiary Guarantor to maintain, at all times, each Governmental
Authorization necessary in order to permit such Obligor fully to own or lease
its respective property and assets and properly to conduct its respective
business. The Company shall ensure and shall cause each Subsidiary Guarantor
to ensure, that at all times, it will have the full intended benefits of and
rights under each Governmental Authorization, unless the revocation,
termination, cancellation, denial, impairment or modification of such
Governmental Authorization, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
8.7. Execution of Subsidiary Guaranty by Certain Subsidiaries and Future
Subsidiaries.
(a) Execution of Subsidiary Guaranty. In the event that the
--------------------------------
aggregate gross revenues of the Subsidiary Guarantors for any Fiscal Year,
commencing with the Fiscal Year ending October 31, 1999, is less than 90% of the
aggregate gross revenues of the Company and its Domestic Subsidiaries on a
consolidated basis for such Fiscal Year, the Company will, within 100 days after
the end of such Fiscal Year, cause one or more additional Domestic Subsidiaries
after consultation with the Required Holders to execute and deliver to the
Holders of the Notes a counterpart of the Subsidiary Guaranty such that the
aggregate gross revenues of all Subsidiary Guarantors for such Fiscal Year shall
be equal to at least 90% of the aggregate gross revenues of the Company and its
Domestic Subsidiaries on a consolidated basis for such Fiscal Year; provided,
however, that notwithstanding the foregoing provision, the Company shall cause
any Subsidiary that executes and delivers a guaranty with respect to the Senior
Credit Agreement to execute and deliver to the Holders of the Notes a
counterpart of the Subsidiary Guaranty.
(b) Subsidiary Organizational Documents, Legal Opinions, Etc. The
---------------------------------------------------------
Company shall deliver to each Holder of the Notes, together with a Subsidiary
Guaranty, (i) certified copies of the Organizational Documents of each
Subsidiary described in Section 8.7(a), together with a good standing
certificate from the Secretary of State of the jurisdiction of its incorporation
and, to the extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from the
appropriate taxing authority of such jurisdiction, each to be dated a recent
date prior to their delivery to each Holder of the Notes, (ii) a copy of such
Subsidiary's bylaws, certified by its corporate secretary or an assistant
secretary as of a recent date prior to their delivery to each Holder of the
Notes, (iii) a certificate executed by the secretary or an assistant secretary
of such Subsidiary as to (a) the fact that the attached resolutions of the Board
of Directors of such Subsidiary approving and
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authorizing the execution, delivery and performance of the Subsidiary Guaranty
are in full force and effect and have not been modified or amended and (b) the
incumbency and signatures of the officers of such Subsidiary executing such
Subsidiary Guaranty, and (iv) a favorable opinion of counsel to such Subsidiary,
in form and substance reasonably satisfactory to the Required Holders of the
Notes and its counsel, as to (a) the due organization and good standing of such
Subsidiary, (b) the due authorization, execution and delivery by such Subsidiary
of such Subsidiary Guaranty, (c) the enforceability of such Subsidiary Guaranty
against such Subsidiary and (d) such other matters as the Required Holders of
the Notes may reasonably request, all of the foregoing to be reasonably
satisfactory in form and substance to the Required Holders of the Notes and
their counsel.
8.8. Year 2000.
The Company shall perform all acts reasonably necessary to ensure
that the Company and its Subsidiaries become Year 2000 Compliant in a timely
manner. Such acts shall include performing a comprehensive review and assessment
of all of the Company's systems and adopting a detailed plan, with itemized
budget, for the remediation, monitoring and testing of such systems. As used in
this Section, "Year 2000 Compliant" shall mean, in regard to any entity, that
all software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity, will
properly perform date sensitive functions before, during and after the year
2000. The Company shall, immediately upon request, provide to any Holder of a
Note such certifications or other evidence of the Company's compliance with the
terms of this paragraph as such Holder may from time to time require.
8.9. Syndication.
The Company shall cooperate with MS in the syndication of the Notes
(such cooperation to include participating in meetings with MS and assisting in
the preparation of an information memorandum and other materials to be used in
connection with such syndication) and shall provide and cause their respective
advisors to provide all information reasonably deemed necessary by MS to such
syndication. The Company shall coordinate any other financings by the Company
and its Subsidiaries with MS's primary syndication efforts relating to the
Notes.
8.10. Consummation of Merger.
The Company shall proceed to consummate the Merger as soon as
practicable following the consummation of the Tender Offer.
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8.11. Use of Proceeds.
The Company will use the proceeds of the issue and sale of the Notes
solely for the purposes set forth in Section 4.11 hereof.
8.12. Refinancing of the Notes; Rule 144A.
(a) The Company shall use its best efforts to effectuate a
Refinancing as soon as practicable after the date of this Agreement for the
purpose, among other things, of refinancing or redeeming the Notes then
outstanding, which Refinancing shall yield an amount sufficient, and, if
consummated, the proceeds of which shall be used, to repay the aggregate unpaid
principal amount of the Notes in full plus accrued interest thereon to the date
of repayment and all other amounts payable under the Note Documents.
(b) The Company will take all necessary actions so that the Notes
are eligible for resale under Rule 144A (or any successor rule) of the
Securities Act.
8.13. Payment of Notes.
The Company shall pay the principal of, premium, if any, and interest
on the Notes on the dates and in the manner provided in the Notes and this
Agreement.
8.14. Global Notes.
At the request of the Required Holders, the Company shall use its
best efforts to issue notes in global form (the "Global Notes") in replacement
of the Notes. The Global Notes shall be registered in the name of the Depository
Trust Company (or its nominee or successor) ("DTC"), be delivered to a paying
agent for DTC if so requested by the Required Holders and otherwise be legended,
have a "CUSIP" number, be subject to transfer restrictions and have other rights
and attributes as are customary in similar financial transactions involving
global notes. Without limiting the foregoing and in connection with any Global
Note, the Company shall maintain in the Borough of Manhattan in the City of New
York an office or agency where the Global Notes may be surrendered for
registration of transfer or exchange an where notices and demands to of upon the
Company may be served.
8.15. Opinion of Counsel.
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On the Rollover Date, the Company shall deliver to the Holders an
opinion of counsel to the Company, dated as of the Rollover Date and, where
applicable, substantially in the form of Exhibits E-1 and E-2 hereto, opining on
(i) the due authorization, execution and delivery, and enforceability against
the Company, of the Rollover Notes, the Warrant Agreements and the Rollover
Notes Registration Rights Agreement and (ii) such other matters as the Required
Holders may reasonably request.
8A. AFFIRMATIVE COVENANTS (ROLLOVER NOTES).
From the date of issuance of the Rollover Notes and thereafter until
the issuance of any Fixed Rate Rollover Notes, so long as any Rollover Notes
shall be outstanding, the Company will at all times perform and comply, and will
cause each of its Subsidiaries to perform and comply, with the following
covenants; provided that from the date of issuance of any Fixed Rate Rollover
Notes, so long as any Rollover Notes shall be outstanding, the Company will at
all times perform and comply, and will cause each of its Subsidiaries to perform
and comply, with the covenants set forth in Sections 8A.1(a), (b), (c), (e),
8A.2, 8A.3, and 8A.6 through 8A.11:
8A.1. Financial Statements and Other Reports.
The Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated financial
statements in conformity with GAAP. The Company will deliver to each Holder of
a Rollover Note:
(a) Quarterly Financials. (i) as soon as available and in any event
--------------------
within 55 days after the end of each of the first three Fiscal Quarters of each
Fiscal Year, the consolidated balance sheet of the Company and its Subsidiaries
as at the end of such Fiscal Quarter and the related consolidated statements of
income and cash flows of the Company and its Subsidiaries for such Fiscal
Quarter and for the period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, setting forth in each case in comparative form
the corresponding figures for the corresponding periods of the previous Fiscal
Year, all in reasonable detail and certified by the Senior Financial Officer of
the Company that they fairly present, in all material respects, the financial
condition of the Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments, and
(ii) as soon as available and in any event within 90 days after the end of each
Fiscal Quarter, a summary of such consolidated statements setting forth in
comparative form the corresponding figures from the Financial Plan for the
current Fiscal Year and a narrative report describing the operations of the
Company and its Subsidiaries in each case in the form prepared for presentation
to the Board of Directors for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal Quarter;
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(b) Year-End Financials. as soon as available and in any event within
-------------------
100 days after the end of each Fiscal Year, (i) the consolidated balance sheet
of the Company and its Subsidiaries as at the end of such Fiscal Year and the
related consolidated statements of income, stockholders' equity and cash flows
of the Company and its Subsidiaries for such Fiscal Year, setting forth in each
case in comparative form the corresponding figures for the previous Fiscal Year,
all in reasonable detail and certified by a Senior Financial Officer of the
Company that they fairly present, in all material respects, the financial
condition of the Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods indicated, (ii)
a summary of such consolidated statements setting forth in comparative form the
corresponding figures from the Financial Plan for the current Fiscal Year and a
narrative report describing the operations of the Company and its Subsidiaries
in each case in the form prepared for presentation to the Board of Directors for
such Fiscal Year, (iii) an office performance summary for the Fiscal Year then
ended and (iv) in the case of such consolidated financial statements, a report
thereon of PricewaterhouseCoopers L.L.P. or other independent certified public
accountants of recognized national standing selected by the Company, which
report shall be unqualified, shall express no doubts about the ability of the
Company and its Subsidiaries to continue as a going concern, and shall state
that such consolidated financial statements fairly present, in all material
respects, the consolidated financial position of the Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated in conformity with GAAP (except as
otherwise disclosed in such financial statements) and that the examination by
such accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;
(c) Officer's and Compliance Certificates. together with each
-------------------------------------
delivery of financial statements of the Company and its Subsidiaries pursuant to
subsections (a) and (b) above, an Officer's Certificate of the Company stating
that the signers have reviewed the terms of this Agreement and have made, or
caused to be made under their supervision, a review in reasonable detail of the
transactions and condition of the Company and its Subsidiaries during the
accounting period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting period, and
that the signers do not have knowledge of the existence as at the date of such
Officer's Certificate, of any condition or event that constitutes an Event of
Default or Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action the
Company has taken, is taking and proposes to take with respect thereto;
(d) Reconciliation Statements. if, as a result of any change in
-------------------------
accounting principles and policies from those used in the preparation of the
audited financial statements referred to in Section 4.5(a), the consolidated
financial statements delivered pursuant to subsections (a) or (b) of this
Section 8.1 will differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such subsections had no
such change in accounting principles and policies been made, then (i) together
with the first delivery of financial statements pursuant to subsection (a), (b)
or (l) of this Section 8.1 following such
38
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change, consolidated financial statements of the Company and its Subsidiaries
for (A) the current Fiscal Year to the effective date of such change and (B) the
two full Fiscal Years immediately preceding the Fiscal Year in which such change
is made, in each case prepared on a pro forma basis as if such change had been
in effect during such periods, and (ii) together with each delivery of financial
statements pursuant to subsections (a) or (b) of this Section 8.1 following such
change, a written statement of a Senior Financial Officer of the Company setting
forth the differences that would have resulted if such financial statements had
been prepared without giving effect to such change;
(e) Accountants' Certification. together with each delivery of
--------------------------
consolidated financial statements of the Company and its Subsidiaries pursuant
to subsection (b) above, a written statement by the independent certified public
accountants giving the report thereon stating that their audit examination has
included a review of the terms of this Agreement and the other Note Documents as
they relate to accounting matters and that, based on their audit examination,
nothing has come to their attention that causes them to believe that the matters
set forth in the Compliance Certificates delivered therewith pursuant to clause
(ii) of subsection (c) above for the applicable Fiscal Year are not stated in
accordance with the terms of this Agreement;
(f) Accountants' Reports. promptly upon receipt thereof (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to the Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of the Company and its Subsidiaries made by such accountants,
including any comment letter submitted by such accountants to management in
connection with their annual audit;
(g) SEC Filings and Press Releases. promptly upon their becoming
------------------------------
available, copies of (i) all financial statements, reports, notices and proxy
statements sent or made available generally by the Company to its security
holders or by any Subsidiary of the Company to its security holders other than
the Company or another Subsidiary of the Company, (ii) all regular and periodic
reports and all registration statements (other than on Form S-8 or a similar
form) and prospectuses, if any, filed by the Company or any of its Subsidiaries
with any securities exchange or with the Securities and Exchange Commission or
any governmental or private regulatory authority and (iii) all press releases
and other statements made available generally by the Company or any of its
Subsidiaries to the public concerning material developments in the business of
the Company or any of its Subsidiaries;
(h) Events of Default, Etc. promptly upon any Responsible Officer of
-----------------------
the Company obtaining knowledge (i) of any condition or event that constitutes
an Event of Default or Default, or becoming aware that any Holder of a Rollover
Note has given any notice or taken any other action with respect to a claimed
Event of Default or Default, (ii) that any Person has given any notice to the
Company or any of its Subsidiaries or taken any other action with respect to a
claimed default or event or condition of the type referred to in Section
10.1(f), (iii) of any
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condition or event that would be required to be disclosed in a current report
filed by the Company with the Securities and Exchange Commission on Form 8-K
(Items 1, 2, 4, 5 and 6 of such Form as in effect on the date hereof) if the
Company were required to file such reports under the Exchange Act or (iv) of the
occurrence of any event or change that has caused or evidences, either in any
case or in the aggregate, a Material Adverse Effect, an Officer's Certificate
specifying the nature and period of existence of such condition, event or
change, or specifying the notice given or action taken by any such Person and
the nature of such claimed Event of Default, Default, default, event or
condition, and what action the Company has taken, is taking and proposes to take
with respect thereto;
(i) Litigation or Other Proceedings.
-------------------------------
(i) promptly upon any Responsible Officer of the Company
obtaining knowledge of (A) the institution of, or non-frivolous threat of,
any Proceedings not previously disclosed in writing by the Company to the
Holders of the Rollover Notes or (B) any material development in any
Proceeding that, in any case:
(1) is reasonably likely to result in a Material Adverse
Effect; or
(2) seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to the Company to enable the Holders of the Rollover
Notes and their counsel to evaluate such matters; and
(ii) promptly upon request by any Holder of a Rollover Note, a
copy of the list of Proceedings delivered by the Company to its independent
certified public accountants in connection with the report prepared by them
on the consolidated financial statements of the Company and its
Subsidiaries for each Fiscal Year, and promptly after request by any Holder
of a Rollover Note such other information as may be reasonably requested by
such Holder to enable such Holder and its counsel to evaluate any of such
Proceedings;
(j) ERISA Events. promptly upon becoming aware of the occurrence of
------------
or forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto;
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(k) ERISA Notices. with reasonable promptness upon request by any
-------------
Holder of a Rollover Note, copies of (i) each Schedule B (Actuarial Information)
to the annual report (Form 5500 Series) filed by the Company, any of its
Subsidiaries or any of their respective ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan of the Company or any of its
Subsidiaries; (ii) all notices received by the Company, any of its Subsidiaries
or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (iii) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan of the
Company or any of its Subsidiaries as any Holder of a Rollover Note shall
reasonably request;
(l) Financial Plans. as soon as practicable and in any event no later
---------------
than 60 days following the end of each Fiscal Year, a Financial Plan including,
(i) forecasted consolidated balance sheets and forecasted consolidated
statements of income and cash flows of the Company and its Subsidiaries for such
Fiscal Year, together with a projected Compliance Certificate for such Fiscal
Year and an explanation of the assumptions on which such forecasts are based,
(ii) forecasted consolidated statements of income and cash flows of the Company
and its Subsidiaries for each Fiscal Quarter of such Fiscal Year, together with
an explanation of the assumptions on which such forecasts are based, and (iii)
such other information and projections as any Holder of a Rollover Note may
reasonably request;
(m) Insurance. as soon as practicable and in any event by the last
---------
day of each Fiscal Year, a report in form and substance reasonably satisfactory
to the Holders of the Rollover Notes outlining any change since the proceeding
Fiscal Year in any material insurance coverage maintained by the Company and its
Subsidiaries;
(n) Board of Directors. with reasonable promptness, written notice of
------------------
any change in the Board of Directors of the Company;
(o) New Subsidiaries or Change in Status of Subsidiaries. annually,
----------------------------------------------------
within 100 days of the end of each Fiscal Year, all of the data required to be
set forth on Section 4.4(a) of the Bridge Note Disclosure Letter as of the
Purchase Date with respect to all Subsidiaries of the Company and an Officer's
Certificate, together with supporting documentation in form and substance
satisfactory to the Required Holders, setting forth the aggregate gross revenues
for the immediately preceding Fiscal Year of the Subsidiary Guarantors;
(p) Subordinated Indebtedness Notices. promptly upon receipt by the
---------------------------------
Company or any of its Subsidiaries of any notice with respect to any
Subordinated Indebtedness, and promptly upon the giving of notice by the Company
or any of its Subsidiaries with respect to any Subordinated Indebtedness, in
each case relating to any default or payment or prepayment of principal of,
premium, if any, redemption, purchase, retirement, defeasance (including in-
substance or legal defeasance), sinking fund or similar payment with respect to
such Subordinated Indebtedness, a copy of such notice; and
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(q) Other Information. with reasonable promptness, such other
-----------------
information and data with respect to the Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Holder of a Rollover Note.
8A.2. Corporate Existence, Etc.
The Company will, and will cause each of its Subsidiaries to, at
all times preserve and keep in full force and effect its corporate existence and
all rights and franchises material to its business; provided, however, that
neither the Company nor any of its Subsidiaries shall be required to preserve
any such right or franchise if the Board of Directors of the Company or such
Subsidiary shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company or such Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any material respect
to the Company, such Subsidiary or the Holders of the Rollover Notes.
8A.3. Payment of Taxes and Claims; Tax Consolidation.
The Company will, and will cause each of its Subsidiaries to, pay
all taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including, claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto, except where the failure to pay such taxes, assessments and
governmental charges would not be likely to result in a Material Adverse Effect;
provided that no such charge or claim need be paid if it is being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, so long as such reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made therefor.
8A.4. Maintenance of Properties; Insurance.
(a) Maintenance of Properties. The Company will, and will cause
-------------------------
each of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
properties used or useful in the business of the Company and its Subsidiaries
(including all intellectual property) and from time to time will make or cause
to be made all appropriate repairs, renewals and replacements thereof the
failure of which would likely result in a Material Adverse Effect.
(b) Insurance. The Company will maintain or cause to be
---------
maintained, with financially sound and reputable insurers, such public liability
insurance, third party property damage insurance, business interruption
insurance and casualty insurance with respect to liabilities, losses or damage
in respect of the assets, properties and businesses of the Company and its
Subsidiaries as may customarily be carried or maintained under similar
circumstances by
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corporations of established reputation engaged in similar businesses, in each
case in such amounts (giving effect to self-insurance), with such deductibles,
covering such risks and otherwise on such terms and conditions as shall be
customary for corporations similarly situated in the industry.
8A.5. Inspection Rights.
The Company shall, and shall cause each of its Subsidiaries to,
permit any authorized representatives designated by any Holder of a Rollover
Note to visit and inspect any of the properties of the Company or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that the Company may, if it so chooses, be present at or participate
in any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
8A.6. Compliance with Laws, Etc.
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority (including all Environmental Laws),
noncompliance with which would be likely to cause, individually or in the
aggregate, a Material Adverse Effect. The Company shall maintain and shall cause
each Subsidiary Guarantor to maintain, at all times, each Governmental
Authorization necessary in order to permit such Obligor fully to own or lease
its respective property and assets and properly to conduct its respective
business. The Company shall ensure and shall cause each Subsidiary Guarantor to
ensure, that at all times, it will have the full intended benefits of and rights
under each Governmental Authorization, unless the revocation, termination,
cancellation, denial, impairment or modification of such Governmental
Authorization, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
8A.7. Execution of Subsidiary Guaranty by Certain Subsidiaries and Future
Subsidiaries.
(a) Execution of Subsidiary Guaranty. In the event that the aggregate
--------------------------------
gross revenues of the Subsidiary Guarantors for any Fiscal Year, commencing with
the Fiscal Year ending October 31, 1999, is less than 90% of the aggregate gross
revenues of the Company and its Domestic Subsidiaries on a consolidated basis
for such Fiscal Year, the Company will, within 100 days after the end of such
Fiscal Year, cause one or more additional Domestic Subsidiaries acceptable to
the Required Holders to execute and deliver to the Holders of the Rollover Notes
a counterpart of the Subsidiary Guaranty such that the aggregate gross revenues
of all Subsidiary Guarantors for such Fiscal Year shall be equal to at least 90%
of the aggregate gross revenues of the Company and its Domestic Subsidiaries on
a consolidated basis for such Fiscal Year;
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provided, however, that notwithstanding the foregoing provision, the Company
shall cause any Subsidiary that executes and delivers a guaranty with respect to
the Senior Credit Agreement to execute and deliver to the Holders of the
Rollover Notes a counterpart of the Subsidiary Guaranty.
(b) Subsidiary Organizational Documents, Legal Opinions, Etc. The
---------------------------------------------------------
Company shall deliver to each Holder of the Rollover Notes, together with a
Subsidiary Guaranty, (i) certified copies of the Organizational Documents of
each Subsidiary described in Section 8A.7(a), together with a good standing
certificate from the Secretary of State of the jurisdiction of its incorporation
and, to the extent generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from the
appropriate taxing authority of such jurisdiction, each to be dated a recent
date prior to their delivery to each Holder of the Rollover Notes, (ii) a copy
of such Subsidiary's bylaws, certified by its corporate secretary or an
assistant secretary as of a recent date prior to their delivery to each Holder
of the Rollover Notes, (iii) a certificate executed by the secretary or an
assistant secretary of such Subsidiary as to (a) the fact that the attached
resolutions of the Board of Directors of such Subsidiary approving and
authorizing the execution, delivery and performance of the Subsidiary Guaranty
are in full force and effect and have not been modified or amended and (b) the
incumbency and signatures of the officers of such Subsidiary executing such
Subsidiary Guaranty, and (iv) a favorable opinion of counsel to such Subsidiary,
in form and substance reasonably satisfactory to the Required Holders of the
Rollover Notes and its counsel, as to (a) the due organization and good standing
of such Subsidiary, (b) the due authorization, execution and delivery by such
Subsidiary of such Subsidiary Guaranty, (c) the enforceability of such
Subsidiary Guaranty against such Subsidiary and (d) such other matters as the
Required Holders of the Rollover Notes may reasonably request, all of the
foregoing to be reasonably satisfactory in form and substance to the Required
Holders of the Rollover Notes and their counsel.
8A.8. Refinancing of the Rollover Notes; Rule 144A.
(a) The Company shall use its best efforts to effectuate a
Refinancing as soon as practicable after the date of this Agreement for the
purpose, among other things, of refinancing or redeeming the Rollover Notes then
outstanding, which Refinancing shall yield an amount sufficient, and, if
consummated, the proceeds of which shall be used, to repay the aggregate unpaid
principal amount of the Rollover Notes in full plus accrued interest thereon to
the date of repayment and all other amounts payable under the Note Documents.
(b) The Company will take all necessary actions so that the Rollover
Notes are eligible for resale under Rule 144A (or any successor rule) of the
Securities Act.
8A.9. Payment of Rollover Notes.
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<PAGE>
The Company shall pay the principal of, premium, if any, and
interest on the Rollover Notes on the dates and in the manner provided in the
Rollover Notes and this Agreement.
8A.10. Global Notes.
At the request of the Required Holders, the Company shall use its
best efforts to issue Global Notes in replacement of the Rollover Notes. The
Global Notes shall be registered in the name of DTC, be delivered to a paying
agent for DTC if so requested by the Required Holders and otherwise be legended,
have a "CUSIP" number, be subject to transfer restrictions and have other rights
and attributes as are customary in similar financial transactions involving
global notes. Without limiting the foregoing and in connection with any Global
Note, the Company shall maintain in the Borough of Manhattan in the City of New
York an office or agency where the Global Notes may be surrendered for
registration of transfer or exchange an where notices and demands to of upon the
Company may be served.
8A.11. Issuance of Warrants.
On the date that is six months after the Rollover Date, the Company
shall deliver to each Holder, dated such date and duly executed by each Person
party thereto, executed counterparts of the Warrant Agreements, substantially in
the form of Exhibit H hereto, representing in the aggregate 1.5% on a fully
diluted basis of the common stock of the Company.
9. NEGATIVE COVENANTS (NOTES).
From the date of this Agreement and, thereafter, so long as any of
the Notes shall be outstanding or until the Rollover Date, the Company will
perform and comply, and will cause each of its Subsidiaries to perform and
comply, at all times with each of the following covenants:
9.1. Indebtedness.
The Company shall not, and shall not permit any of its Subsidiaries
or any Joint Venture in which the Company or any of its Subsidiaries has any
interest to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) the Company and its Subsidiaries may become and remain liable
with respect to their respective Obligations under the Note Documents;
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(b) the Company, its Subsidiaries and Joint Ventures may become and
remain liable with respect to Contingent Obligations permitted by Section 9.4
and, upon any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so extinguished;
(c) the Company may become and remain liable with respect to
Indebtedness to any Subsidiary Guarantor, and any Subsidiary Guarantor may
become and remain liable with respect to Indebtedness to the Company or any
other Subsidiary Guarantor, provided that (i) all intercompany Indebtedness owed
by the Company to any Subsidiary Guarantor and by any Subsidiary Guarantor to
the Company shall be subordinated in right of payment to the payment in full of
the Obligations of the Obligors under the Note Documents and (ii) any payment by
any Subsidiary Guarantor under any guaranty of such Obligations shall result in
a pro tanto reduction of the amount of any intercompany Indebtedness owed by
such Subsidiary Guarantor to the Company or to any Subsidiary Guarantor for
whose benefit such payment is made;
(d) any Subsidiary of the Company (other than a Subsidiary Guarantor
or an Inactive Subsidiary) may become and remain liable with respect to
Indebtedness to the Company or any Subsidiary Guarantor to the extent such
corresponding Investment by the Company or any such Subsidiary Guarantor is
permitted under Section 9.3(m), provided that (i) all intercompany Indebtedness
owed by any Subsidiary to the Company shall be subordinated in right of payment
to the payment in full of the Obligations of the Obligors under the Note
Documents and (ii) any payment by any Subsidiary under any guaranty of such
Obligations shall result in a pro tanto reduction of the amount of any
intercompany Indebtedness owed by such Subsidiary to the Company or to any
Subsidiary Guarantor for whose benefit such payment is made;
(e) any Foreign Subsidiary of the Company may become and remain
liable with respect to Indebtedness to any other Foreign Subsidiary of the
Company;
(f) the Company may remain liable with respect to Indebtedness
evidenced by the Senior Credit Agreement in a principal amount not to exceed
$550,000,000;
(g) Joint Ventures may become and remain liable with respect to
Indebtedness to Persons other than the Company or any of its Subsidiaries,
provided that such Indebtedness is nonrecourse to the Company, its Subsidiaries
and their respective assets;
(h) Joint Ventures may become and remain liable with respect to
Indebtedness to the Company or any Subsidiary of the Company (other than an
Inactive Subsidiary) to the extent such corresponding Investment by the Company
or any such Subsidiary is permitted under Section 9.3(k);
(i) Indebtedness (including the amount of any committed lines of
credit) listed in Section 4.13 of the Bridge Note Disclosure Letter;
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(j) the Company and its Domestic Subsidiaries may become and remain
liable with respect to Indebtedness to Persons other than the Company or any of
its Subsidiaries in an aggregate principal amount (not including the amount of
any such Indebtedness and committed lines of credit listed in Section 4.13 of
the Bridge Note Disclosure Letter) not to exceed $50,000,000 (less the aggregate
amount of all Contingent Obligations permitted by Section 9.4(i)) at any time
outstanding;
(k) Foreign Subsidiaries of the Company may become and remain liable
with respect to Indebtedness to Persons other than the Company or any of its
Subsidiaries in an aggregate principal amount (including the amount of any such
Indebtedness listed in Section 4.13 of the Bridge Note Disclosure Letter) not to
exceed $30,000,000 at any time outstanding; and
(l) any Target who becomes a Subsidiary or who is merged or
consolidated into a Subsidiary after the date hereof pursuant to a Subsequent
Acquisition permitted by Section 9.6(f) may remain liable with respect to
Indebtedness existing immediately prior to the date of such Subsequent
Acquisition; provided that (a) such Indebtedness was not incurred in connection
with, or anticipation or contemplation of, such Subsequent Acquisition, (b) no
Default or Event of Default shall have occurred and be continuing or would occur
and be continuing or would occur as a result of such Subsequent Acquisition, and
(c) neither the Company nor any of its Subsidiaries (other than such Target or
the Subsidiary into which such Target is merged or consolidated) shall become
liable with respect to such Indebtedness.
9.2. Liens and Related Matters.
(a) Prohibition on Liens. The Company shall not, and shall not permit
--------------------
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of the Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC or under any similar recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Senior Credit Agreement;
(iii) Liens described on Section 9.2 of the Bridge Note
Disclosure Letter;
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(iv) Liens on property or assets acquired by the Company or any
of its Subsidiaries after the date of this Agreement or on property or
assets of any Person that becomes a Subsidiary of the Company after the
date of this Agreement, provided that (A) such Liens exist at the time such
property or assets or the stock of such Person is acquired, (B) such Liens
were not created in contemplation of such acquisition and (C) any such Lien
shall attach only to the property or assets so acquired;
(v) Liens created to secure the purchase price of property or
assets, provided that (A) any such Lien shall attach only to the property
or assets so purchased, (B) the Indebtedness secured by any such Lien shall
not exceed 100% of the purchase price of the property or assets purchased,
and (C) any such Lien shall be created within 180 days following the
acquisition of such property or assets;
(vi) Liens on property or assets of any Foreign Subsidiary of
the Company created to secure Indebtedness permitted under Section 9.1(k);
(vii) Liens incurred in connection with the extension, renewal
or refinancing of the Indebtedness secured by the Liens described in
clauses (iv) and (v) above; and
(viii) other Liens in an aggregate amount not to exceed $500,000
at any time.
(b) No Further Negative Pledges. Neither the Company nor any of its
---------------------------
Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired, except (i) restrictions contained in the Related
Agreements as in effect on the Purchase Date, (ii) restrictions on the
encumbrance of specific property encumbered to secure payment of particular
Indebtedness or to be sold pursuant to an executed agreement with respect to an
Asset Sale, and (iii) customary non-assignment provisions contained in leases,
subleases, licenses and sublicenses permitted by this Agreement.
(c) No Restrictions on Subsidiary Distributions to the Company or
-------------------------------------------------------------
Other Subsidiaries. Except as provided herein and except for restrictions
- ------------------
contained in the terms of any Indebtedness of Foreign Subsidiaries of the
Company permitted by Section 9.1(k) if such restriction applies only in the
event of a payment default in such Indebtedness or the Company determines that
any such restriction will not materially affect the Company's ability to make
principal or interest payments on the Notes and the restriction is not
materially more disadvantageous to the Holders than is customary in comparable
financings, the Company will not, and will not permit any of its Subsidiaries
to, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any such
Subsidiary to (i) pay dividends or make any other distributions on any of such
Subsidiary's capital stock owned by the Company or any other Subsidiary of the
Company, (ii) repay or
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prepay any Indebtedness owed by such Subsidiary to the Company or any other
Subsidiary of the Company, (iii) make loans or advances to the Company or any
other Subsidiary of the Company, except as provided in the Senior Credit
Agreement or (iv) transfer any of its property or assets to the Company or any
other Subsidiary of the Company, except for (a) restrictions contained in the
Senior Credit Agreement, (b) customary non-assignment provisions contained in
leases, subleases, licenses and sublicenses, (c) restrictions on the transfer of
Joint Venture interests contained in the organizational documents of any Joint
Venture, and (d) restrictions in an executed agreement with respect to an Asset
Sale.
9.3. Investments; Joint Ventures.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, make or own any Investment in any Person, including
any Joint Venture, except:
(a) the Company and its Subsidiaries may make and own Investments in
Cash Equivalents;
(b) the Company and any Subsidiary Guarantor may make intercompany
loans to the extent permitted under Sections 9.1(c) and (d);
(c) the Company and its Subsidiaries (other than Inactive
Subsidiaries) may make Consolidated Capital Expenditures permitted under Section
9.7;
(d) the Company and the Merger Subsidiary may consummate the Merger;
(e) the Company and its Subsidiaries may continue to own the
Investments owned by them and described on Section 9.3 of the Bridge Note
Disclosure Letter;
(f) the Company and its Subsidiaries (other than Inactive
Subsidiaries) may make and own Investments in wholly-owned Subsidiary
Guarantors;
(g) the Company and its Subsidiaries may own Investments received in
connection with the restructuring or work-out of the obligations of or the
bankruptcy of suppliers and customers or received pursuant to a plan of
reorganization of any supplier or customer, in each case in settlement of
delinquent obligations or disputes with such suppliers or customers;
(h) the Company and its Subsidiaries (other than Inactive
Subsidiaries) may make and own Investments in Joint Ventures in an aggregate
amount not to exceed $5,000,000 at any time;
(i) the Company or any of its Subsidiaries may make and own
Investments consisting of non-cash consideration received in the form of
securities, notes or similar
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<PAGE>
obligations in connection with an Asset Sale permitted pursuant to Section 9.6;
provided that the aggregate amount of such non-cash consideration received in
connection with such Asset Sale shall not exceed 10% of the total consideration
received in connection with such Asset Sale.
(j) any Foreign Subsidiary of the Company may make and own Investments
in any other Foreign Subsidiary of the Company;
(k) the Company and its Subsidiaries may make Subsequent Acquisitions
permitted under Section 9.6(f);
(l) any Target who becomes a Subsidiary or who is merged or
consolidated into a Subsidiary after the date hereof pursuant to a Subsequent
Acquisition permitted by Section 9.6(f) may continue to own Investments owned by
such Target on the date of such Subsequent Acquisition; provided that (a) such
Investment was not incurred in connection with, or anticipation or contemplation
of, such Subsequent Acquisition, (b) no Default or Event of Default shall have
occurred and be continuing or would occur as a result of such Subsequent
Acquisition, and (c) neither the Company nor any of its Subsidiaries (other than
such Target or the Subsidiary into which such Target is merged or consolidated)
shall become liable with respect to such Investment; and
(m) the Company and Subsidiary Guarantors may make and own Investments
in Subsidiaries (other than wholly owned Subsidiary Guarantors and Inactive
Subsidiaries) in an aggregate amount (including the amount of any such
Investments listed in Section 9.3 of the Bridge Note Disclosure Letter) not to
exceed $25,000,000 at any time.
9.4. Contingent Obligations.
The Company shall not, and shall not permit any of its Subsidiaries or
any Joint Venture in which the Company or any of its Subsidiaries has an
interest to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(a) Subsidiaries of the Company may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary Guaranty;
(b) the Company may become and remain liable with respect to
Contingent Obligations in respect of letters of credit under the Senior Credit
Agreement;
(c) the Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations described in Section 9.4(c) of the Bridge Note
Disclosure Letter;
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<PAGE>
(d) the Company and its Subsidiaries (other than Inactive
Subsidiaries) may become and remain liable with respect to Contingent
Obligations under currency agreements and interest rate agreements constituting
hedge agreements in the ordinary course of business;
(e) Subsidiaries of the Company may become and remain liable with
respect to Contingent Obligations in respect of the guaranties contemplated by
the Senior Credit Agreement;
(f) the Company may become and remain liable with respect to
Contingent Obligations in respect of any Indebtedness of any of its Domestic
Subsidiaries (other than Inactive Subsidiaries) permitted by Section 9.1;
(g) Joint Ventures may become and remain liable with respect to
Contingent Obligations; provided that such Contingent Obligations are
nonrecourse to the Company, its Subsidiaries and their respective assets;
(h) the Company, its Subsidiaries (other than Inactive Subsidiaries)
and Joint Ventures may become and remain liable with respect to Contingent
Obligations in respect of performance bonds, bid bonds, appeal bonds, surety
bonds and similar obligations provided in the ordinary course of business to
support the obligations of such Subsidiaries and Joint Ventures; and
(i) the Company and its Subsidiaries (other than Inactive
Subsidiaries) may become and remain liable with respect to Contingent
Obligations in an amount not to exceed $10,000,000 at any time.
9.5. Restricted Junior Payments.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, declare, order, pay, make or set apart any sum for
any Restricted Junior Payment; provided that (a) the Company may make regularly
scheduled payments of interest in respect of the Existing Subordinated
Indebtedness, in accordance with the terms of, and only to the extent required
by, and subject to the subordination provisions contained in, the Existing
Subordinated Agreements, (b) the Company may make regularly scheduled sinking
fund payments in accordance with the terms of, and only to the extent required
by, the Existing Subordinated Note Indenture and may repay the outstanding
principal amount of the Existing Senior Subordinated Notes on the stated
maturity thereof, (c) the Company may exchange Company Series A Preferred Stock
or Company Series C Preferred Stock for Company Series B Preferred Stock and may
exchange Company Series A Preferred Stock, Company Series B Preferred Stock or
Company Series C Preferred Stock for common stock of the Company, in each case
as contemplated in the Securities Purchase Agreement, (d) the Company may
repurchase common stock of the Company that constitutes odd lots pursuant to a
program established by the
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Company for the repurchase of such odd lots in an amount not to exceed $100,000,
(e) the Company may purchase shares of DMG common stock from holders who have
perfected their statutory appraisal rights, (f) any Subsidiary may declare and
pay dividends to the Company or any wholly owned Subsidiary of the Company and
(g) the Company and its Subsidiaries may purchase shares of capital stock of any
Subsidiary owned by professional engineers in connection with licensing
requirements in an amount not to exceed $500,000.
9.6. Restriction on Fundamental Changes; Asset Sales and Acquisitions.
The Company shall not, and shall not permit any of its Subsidiaries
to, alter the corporate, capital or legal structure of the Company or any of its
Subsidiaries, or merge or consolidate, or liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease
(as lessor or sublessor), transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business, property or
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or substantially all the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any Person or any division
or line of business of any Person, except:
(a) the Company and the Merger Subsidiary may consummate the Tender
Offer and the Merger;
(b) any Subsidiary of the Company may be merged with or into the
Company or any wholly-owned Subsidiary Guarantor, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions, to the Company or any wholly-owned Subsidiary
Guarantor; provided that, in the case of such a merger, the Company or such
wholly-owned Subsidiary Guarantor shall be the continuing or surviving
corporation;
(c) the Company and its Subsidiaries may dispose of obsolete, worn out
or surplus property in the ordinary course of business;
(d) the Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales, provided that the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof;
(e) the Company and its Subsidiaries may make Asset Sales of assets
(other than the Tendered Shares) having a fair market value of not in excess of
$10,000,000 during any Fiscal Year, provided that (a) the consideration received
for such assets shall be in an amount at least equal to the fair market value
thereof and shall be cash or non-cash consideration permitted by Section 9.3(i);
and (b) the proceeds of such Asset Sales shall be applied as required by
Sections 6.3(b) and (c); and
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(f) subject to Section 8.7, after January 1, 2000, the Company and its
Subsidiaries may acquire by purchase or otherwise (each, a "Subsequent
Acquisition") all or substantially all the business, property or fixed assets
of, or stock or other evidence of beneficial ownership of, any Person (other
than DMG) or any division or line of business of any Person (other than DMG)
(any such business, property, assets, stock, evidence of ownership, division or
line of business, being a "Target") provided that the sum of the aggregate Total
Purchase Price of all Subsequent Acquisitions does not exceed $60,000,000 in the
aggregate during the term of this Agreement.
(g) licenses or sublicenses by the Company and its Subsidiaries of
software, trademarks, patents and other intellectual property in the ordinary
course of business and which do not materially interfere with the business of
the Company or any of its Subsidiaries;
(h) transfers of condemned property to the respective Governmental
Authority or agency that have condemned the same (whether by deed in lieu of
condemnation or otherwise), and transfers of properties that have been subject
to a casualty to the respective insurer of such property or its designee as part
of an insurance settlement; and
(i) the Company and its Subsidiaries may sell or otherwise dispose of
Investments permitted to be made or owned by Section 9.3(a).
9.7. Consolidated Capital Expenditures.
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The Company shall not, and shall not permit its Subsidiaries to, make
or incur Consolidated Capital Expenditures, in any Fiscal Year indicated below,
in an aggregate amount in excess of the corresponding amount (the "Maximum
Consolidated Capital Expenditures Amount") set forth below opposite such Fiscal
Year; provided that the Maximum Consolidated Capital Expenditures Amount for any
Fiscal Year shall be increased by an amount equal to 50% of the excess, if any,
of the Maximum Consolidated Capital Expenditures Amount for the previous Fiscal
Year (without giving effect to any adjustment in accordance with this proviso)
over the actual amount of Consolidated Capital Expenditures for such previous
Fiscal Year:
<TABLE>
<CAPTION>
Fiscal Year Maximum Consolidated Capital Expenditures
----------- -----------------------------------------
Amount
------
<S> <C>
2000 $34,000,000
2001 $36,000,000
2002 $38,000,000
2003 $40,000,000
2004 $42,000,000
2005 $44,000,000
2006 $46,000,000
thereafter $48,000,000
</TABLE>
9.8. Sales and Lease-Backs.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, become or remain liable as lessee or as a guarantor
or other surety with respect to any lease, whether an Operating Lease or a
Capital Lease, of any property (whether real, personal or mixed), whether now
owned or hereafter acquired, (i) that the Company or any of its Subsidiaries has
sold or transferred or is to sell or transfer to any other Person (other than
the Company or any of its Subsidiaries) or (ii) that the Company or any of its
Subsidiaries intends to use for substantially the same purpose as any other
property that has been or is to be sold or transferred by the Company or any of
its Subsidiaries to any Person (other than the Company or any of its
Subsidiaries) in connection with such lease.
9.9. Sale or Discount of Receivables.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, sell with recourse, discount or otherwise sell for
less than the face value thereof, any of its Accounts Receivable.
9.10. Transactions with Shareholders and Affiliates.
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The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder of 5% or more of any class of equity
Securities of the Company or with any Affiliate of the Company or of any such
holder, on terms that are less favorable to the Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
shall not apply to (a) any transaction between the Company and any of its
wholly-owned Subsidiaries or between any of its wholly-owned Subsidiaries, (b)
reasonable and customary fees paid to members of the Boards of Directors of the
Company and its Subsidiaries or (c) existing related party transactions
described in the Company's Annual Report on Form 10-K for the 1998 Fiscal Year
or (d) the transactions contemplated by the Securities Purchase Agreement.
9.11. Conduct of Business.
From and after the Purchase Date, the Company shall not, and shall
not permit any of its Subsidiaries to, engage in any business other than (a) the
businesses engaged in by the Company, DMG and their respective Subsidiaries on
the Purchase Date and similar or related businesses and (b) such other lines of
business as may be consented to by the Required Holders.
9.12. Amendments or Waivers of Related Agreements; Amendments of Documents
Relating to Subordinated Indebtedness.
(a) Amendments or Waivers of Related Agreements. Except as set forth
-------------------------------------------
in Section 9.12 of the Bridge Note Disclosure Letter, neither the Company nor
any of its Subsidiaries will agree to any material amendment to, or waive any of
its material rights under, any Related Agreement (other than the Senior Credit
Agreement and the Existing Subordinated Agreements, the Securities Purchase
Agreement or the Company Certificates of Designation) after the Purchase Date
without in each case obtaining the prior written consent of the Required Holders
to such amendment or waiver. Neither the Company nor any of its Subsidiaries
will agree to any amendment to, or waive any of its rights under, the Securities
Purchase Agreement or the Company Certificates of Designation in any respect
that would be adverse to the Company or the Holders of the Notes, after the
Purchase Date without in each case obtaining the prior written consent of the
Required Holders to such amendment or waiver.
(b) Amendments of Documents Relating to Subordinated Indebtedness.
-------------------------------------------------------------
The Company shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of any Existing Subordinated Indebtedness or the
Existing Subordinated Agreements, or make any payment consistent with an
amendment thereof or change thereto.
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9.13. Fiscal Year.
The Company shall not change its Fiscal Year-end from October 31.
9A. NEGATIVE COVENANTS (ROLLOVER NOTES).
From the Rollover Date and, thereafter, so long as any of the
Rollover Notes shall be outstanding, the Company will perform and comply, and
will cause each of its Subsidiaries to perform and comply, at all times with
each of the following covenants (provided that capitalized terms used in this
Section 9A shall have the meanings specified in Schedule III hereto):
9A.1. Restriction on Incurrence of Indebtedness.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Rollover Notes, the
Subsidiary Guaranties and other Indebtedness existing on the Rollover Date and
permitted as of such Rollover Date under Section 9.1); provided that the Company
or any Subsidiary Guarantor may Incur Indebtedness if, after giving effect to
the Incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Fixed Charge Coverage Ratio would be greater than 2:1.
Notwithstanding the preceding, Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(1) Indebtedness of the Company or any Subsidiary Guarantor
outstanding at any time pursuant to this clause (1) under the Senior Credit
Agreement in an aggregate principal amount (together with refinancings
thereof incurred under clause (3) of this paragraph) not to exceed $550
million, less any amount of such Indebtedness permanently repaid as
provided in Section 9A.8;
(2) Indebtedness owed (A) to the Company; provided that if such
Indebtedness exceeds $500,000 it shall be evidenced by a promissory note,
or (B) to any Restricted Subsidiary; provided that (x) any event that
results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than to
the Company or another Restricted Subsidiary) shall be deemed, in each
case, to constitute an Incurrence of such Indebtedness not permitted by
this clause (2) and (y) if the Company or any Subsidiary Guarantor is the
obligor on such Indebtedness, such Indebtedness must be expressly
subordinated in right of payment to the Rollover Notes, in the case of the
Company, or the Subsidiary Guaranty, in the case of a Subsidiary Guarantor;
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(3) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding Indebtedness and
any refinancings thereof in an amount not to exceed the amount so
refinanced or refunded (plus premiums, accrued interest, fees and
expenses); provided that (a) Indebtedness the proceeds of which are used to
refinance or refund the Rollover Notes or Indebtedness that is pari passu
with, or subordinated in right of payment to, the Rollover Notes or the
Subsidiary Guaranties shall only be permitted under this clause (3) if (x)
in case the Rollover Notes are refinanced in part or the Indebtedness to be
refinanced is pari passu with the Rollover Notes or any Subsidiary
Guaranties, such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new Indebtedness is
outstanding, is expressly made pari passu with, or subordinate in right of
payment to, the remaining Rollover Notes or such Subsidiary Guaranties, or
(y) in case the Indebtedness to be refinanced is subordinated in right of
payment to the Rollover Notes or any Subsidiary Guaranties, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is issued or remains outstanding,
is expressly made subordinate in right of payment to the Rollover Notes or
such Subsidiary Guaranties at least to the extent that the Indebtedness to
be refinanced is subordinated to the Rollover Notes or such Subsidiary
Guaranties, (b) such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to the Stated
Maturity of the Indebtedness to be refinanced or refunded or the Stated
Maturity of the Notes, if sooner, and the Average Life of such new
Indebtedness is at least equal to the remaining Average Life of the
Indebtedness to be refinanced or refunded, and (c) such new Indebtedness is
Incurred by the Company or by the Restricted Subsidiary that is the obligor
on the Indebtedness to be refinanced or refunded;
(4) Guarantees of the Rollover Notes and Guarantees of
Indebtedness of the Company or any Subsidiary Guarantor by any Restricted
Subsidiary; provided that the Guarantee of such Indebtedness is not
prohibited by and made in accordance with Section 9A.5;
(5) Indebtedness of Foreign Subsidiaries in an aggregate
principal amount outstanding at any time pursuant to this clause (5)
(together with refinancings thereof) not to exceed the greater of (x) $40
million and (y) 70% of the consolidated book value of the Accounts
Receivable of such Foreign Subsidiaries;
(6) Guarantees of Indebtedness of any Foreign Subsidiary incurred
under clause (5) above, by the Company or any Subsidiary Guarantor;
provided that the aggregate amount of Indebtedness guaranteed pursuant to
this clause (6) does not exceed $40 million;
(7) Purchase Money Indebtedness of the Company or any Subsidiary
Guarantor; provided that the aggregate amount of such Indebtedness
outstanding at any
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time pursuant to this clause (7) (together with refinancings thereof under
clause (3) of this paragraph) shall not exceed $15 million;
(8) Indebtedness of the Company or any Restricted Subsidiary
in an aggregate principal amount outstanding pursuant to this clause (8)
(together with refinancings thereof) not to exceed $5 million;
(9) the D&M Financing; and
(10) Indebtedness of the Company or any Subsidiary Guarantor
(in addition to Indebtedness permitted under clauses (1) through (9)
above), including Indebtedness under the Senior Credit Agreement,
outstanding at any time pursuant to this clause (10) (together with
refinancings thereof under clause (3) of this paragraph) in an aggregate
principal amount (together with refinancings thereof) not to exceed $25
million.
(b) Notwithstanding any other provision of this Section 9A.1, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur or that is deemed to be outstanding pursuant to this Section 9A.1 shall
not be affected by fluctuations in the exchange rates of currencies.
(c) For purposes of determining any particular amount of
Indebtedness under this Section 9A.1, (x) Indebtedness Incurred under the Senior
Credit Agreement on or prior to the Rollover Date shall be treated as Incurred
pursuant to Section 9A.1(a)(1), (y) Guarantees, Liens or obligations with
respect to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included and (z) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 9A.7
shall not be treated as Indebtedness. For purposes of determining compliance
with this Section 9A.1, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described above (other
than Indebtedness referred to in clause (x) of the preceding sentence), the
Company, in its sole discretion, shall classify, and from time to time may
reclassify, such item of Indebtedness and shall only be required to include the
amount and type of such Indebtedness in one of such clauses.
9A.2. Restriction on Senior Subordinated Indebtedness.
The Company will not, and will not permit any Subsidiary Guarantor
to Incur any Indebtedness that is subordinate in right of payment to any Senior
Indebtedness unless such Indebtedness is pari passu with, or subordinated in
right of payment to, the Rollover Notes or any Subsidiary Guaranty.
9A.3. Restriction on Restricted Payments.
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Company will not, and will not permit any Restricted Subsidiary,
directly or indirectly,
(1) to declare or pay any dividend or make any distribution on or with
respect to its Capital Stock held by persons other than Company or any of its
Restricted Subsidiaries other than
(x) dividends or distributions payable in shares of its Capital
Stock (other than Disqualified Stock) or in options, warrants or other
rights to acquire shares of such Capital Stock and
(y) pro rata dividends or distributions on Common Stock of
Restricted Subsidiaries,
(2) to purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock of the Company or any Subsidiary Guarantor (including
options, warrants or other rights to acquire such shares of Capital Stock) held
by any Person other than a Subsidiary Guarantor,
(3) to make any voluntary or optional principal payment, or voluntary
or optional redemption, repurchase, defeasance, or other voluntary or optional
acquisition or retirement for value, of Indebtedness of the Company that is
subordinated in right of payment to the Rollover Notes or any Indebtedness of a
Subsidiary Guarantor that is subordinated in right of payment to the Subsidiary
Guaranties or
(4) to make any Investment, other than a Permitted Investment, in any
Person (such payments or any other actions described in clauses (1) through (4)
above being collectively "Restricted Payments")
if, at the time of, and after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be
continuing,
(B) the Company could not Incur at least $1.00 of Indebtedness
under the first paragraph of Section 9A.1(a) or
(C) the aggregate amount of all Restricted Payments made after
the Rollover Date shall exceed the sum of
(1) 50% of the aggregate amount of the Adjusted Consolidated
Net Income (or, if the Adjusted Consolidated Net Income is a loss,
minus 100% of the amount of such loss) accrued on a cumulative basis
during the period (taken as
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one accounting period) beginning on the first day of the Fiscal
Quarter beginning immediately following the Rollover Date and ending
on the last day of the last Fiscal Quarter preceding the Transaction
Date for which reports have been filed with the Commission or provided
to the Holders plus
(2) the aggregate Net Cash Proceeds received by the Company
after the Rollover Date from
(a) the issuance and sale of its Capital Stock (other
than Disqualified Stock) to a Person who is not a Subsidiary of
the Company,
(b) an issuance or sale to a Person who is not a
Subsidiary of the Company not prohibited by this Agreement of
Indebtedness of the Company or a Subsidiary of the Company for
cash subsequent to the Rollover Date upon the conversion or
exchange of such Indebtedness into Capital Stock (other than
Disqualified Stock) of the Company,
(c) any exercise for, or exchange or conversion of,
securities (including options, warrants, rights and convertible
or exchangeable Indebtedness) of the Company or a Subsidiary of
the Company into Capital Stock (other than Disqualified Stock) of
the Company, and
(d) the issuance or sale to a Person who is not a
Subsidiary of the Company of any options, warrants or other
rights to acquire Capital Stock of the Company (in each case,
exclusive of any Disqualified Stock or any options, warrants or
other rights that are redeemable at the option of the holder, or
are required to be redeemed, prior to the Stated Maturity of the
Rollover Notes) plus
(3) an amount equal to the net reduction in Investments
(other than reductions in Permitted Investments) in any Person
resulting from distributions on or repayments of any Investments,
including payments of interest on Indebtedness, dividends, repayments
of loans or advances, or other distributions or transfers of assets,
in each case to the Company or any Restricted Subsidiary or from the
Net Cash Proceeds from the sale or other disposition of any such
Investment (except, in each case, in order to avoid duplication to the
extent any such payment or proceeds have been or would be included in
the calculation of Adjusted Consolidated Net Income for purposes of
Section 9A.3(4)(C)(1)), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), not to exceed, in each
case, the amount of Investments previously made by the
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Company or any Restricted Subsidiary in such Person or Unrestricted
Subsidiary plus
(4) $5 million.
The amount of all Restricted Payments, if other than in cash, shall be
the fair market thereof determined in good faith by the Board of Directors or a
Senior Officer of the Company, whose determination shall be conclusive; provided
that if the non cash amount of any single Restricted Payment or series of
related Restricted Payments exceeds $25 million, such amount shall be determined
in good faith by the Board of Directors, whose determination shall be conclusive
and evidenced by a Board Resolution.
The preceding provision shall not be violated by reason of:
(1) the payment of any dividend within 60 days after the date of its
declaration if, on the date of declaration, such payment would comply with the
foregoing paragraph;
(2) the making of any principal payment or the redemption, repurchase,
defeasance or other acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the Rollover Notes or any Subsidiary
Guaranty including principal, premium, if any, and accrued and unpaid interest,
with the proceeds of, or in exchange for, Indebtedness Incurred under Section
9A.1(a)(3);
(3) the repurchase, redemption, retirement or other acquisition of
Capital Stock of the Company, any Subsidiary Guarantor or an Unrestricted
Subsidiary (or options, warrants or other rights to acquire such Capital Stock)
in exchange for, or out of the proceeds of a substantially concurrent offering
of, shares of Capital Stock (other than Disqualified Stock) of the Company (or
options, warrants or other rights to acquire such Capital Stock; provided that
such options, warrants or other rights are not redeemable prior to the Stated
Maturity of the Rollover Notes);
(4) the making of any principal payment or the repurchase, redemption,
retirement, defeasance or other acquisition for value of Indebtedness that is
subordinated in right of payment to the Rollover Notes or any Subsidiary
Guaranty in exchange for, or out of the proceeds of, a substantially concurrent
offering of, shares of the Capital Stock (other than Disqualified Stock) of the
Company (or options, warrants or other rights to acquire such Capital Stock;
provided that such options, warrants or other rights are not redeemable prior to
the Stated Maturity of the Rollover Notes);
(5) payments or distributions, to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with a consolidation, merger or
transfer of assets that complies with the provisions of this Agreement
applicable to mergers, consolidations and transfers of all or substantially all
of the property and assets of the Company; provided that no
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Default or Event of Default shall have occurred and be continuing or would occur
as a consequence of such payment or distribution;
(6) Investments acquired in exchange for, or out of the proceeds of a
substantially concurrent offering of, Capital Stock (other than Disqualified
Stock) of the Company;
(7) the declaration or payment of dividends on Capital Stock (other
than Disqualified Stock) of the Company in an aggregate annual amount not to
exceed 6% of the Net Cash Proceeds received by the Company after the Rollover
Date from the sale of such Capital Stock; provided that no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence of
such action or payment;
(8) any purchase of fractional shares of Common Stock of the Company
in connection with the conversion of the Convertible Subordinated Debentures;
(9) the D&M Acquisition;
(10) loans or advances to employees of the Company or its Restricted
Subsidiaries in the ordinary course of business to purchase Capital Stock (other
than Disqualified Stock) of the Company in an aggregate amount outstanding at
any time under this clause (10) not to exceed $10 million;
(11) Investments in any Person the primary business of which is
related, ancillary or complementary to the business of the Company and its
Restricted Subsidiaries on the date of such Investment; provided that the
aggregate amount of such Investments under this clause (11) does not exceed $20
million plus the net reduction in Investments made pursuant to this clause (11)
resulting from distributions on or repayments of such Investments, including
payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other distributions or other transfers of assets, in each case to
the Company or any Restricted Subsidiary, or from the Net Cash Proceeds from the
sale or other disposition of any such Investment (except, in each case, in order
to avoid duplication to the extent any such payments or proceeds have been or
would be included in the calculation of Adjusted Consolidated Net Income for
purposes of Section 9A.3(4)(C)(1)) or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the
definition of "Investments"); provided that the net reduction in any Investments
from any person shall not exceed the amount of such Investments in such Person;
provided further that no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence of such Investment;
(12) repurchases of Capital Stock of the Company or a Subsidiary of
the Company or options, warrants or other rights to acquire Capital Stock of the
Company or a Subsidiary of the Company repurchased from employees (or their
heirs or estates) of the
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Company or its Subsidiaries upon the death, disability or termination of
employment in an aggregate amount under this clause (12) to all employees (or
their heirs or estates) that shall not during any one fiscal year exceed the sum
of:
(a) $2 million plus
(b) the aggregate amount of repurchases that would have been
permitted to be made during each preceding fiscal year pursuant to this
clause (12) and were not so made;
provided that no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence of such repurchase;
(13) purchases of shares of Capital Stock of any Subsidiary Guarantor
owned by professional engineers in connection with licensing requirements in an
aggregate amount not to exceed $500,000; or
(14) repurchases of shares of Capital Stock of the Company that
constitute odd lots, pursuant to a program established by the Company for the
repurchase of odd lots, in an aggregate amount during any Fiscal Year not to
exceed the sum of $100,000 plus the aggregate amount of repurchases that would
have been permitted to be made under this clause (14) during each preceding
Fiscal Year and were not so made;
(15) dividends on Preferred Stock of Restricted Subsidiaries permitted
to be issued pursuant to Section 9A.1; or
(16) other Restricted Payments in an aggregate amount not to exceed
$10 million, measured by the fair market value thereof at the time made;
provided that no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence of such Restricted Payment.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (2) of such paragraph,
an exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (3) or (4) of such paragraph, an Investment acquired in exchange for
Capital Stock referred to in clause (6) of such paragraph and an Investment
described in clause (9) or any loan or advance referred to in clause (10) of
such paragraph, repurchases of Capital Stock referred to in clause (12) or
clause (13) of such paragraph, dividends on Preferred Stock of Restricted
Subsidiaries referred to in clause (15) of such paragraph or Restricted Payments
referred to in clause (16) of such paragraph), and the Net Cash Proceeds from
any issuance of Capital Stock referred to in clauses (3), (4) and (6), shall be
included in calculating whether the conditions of Section 9A.3(4)(C) have been
met with respect to any subsequent Restricted Payments. For purposes of
determining compliance with this Section 9A.3, in the event that a Restricted
Payment meets the criteria of more than one of the
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types of Restricted Payments described in the above clauses, the Company, in its
sole discretion, may order and classify, and from time to time may reclassify,
such Restricted Payment if it would have been permitted at the time such
Restricted Payment was made and at the time of such reclassification.
9A.4. Restriction on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
The Company will not, and will not permit any Restricted Subsidiary
to, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary:
(1) to pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by the
Company or any other Restricted Subsidiary,
(2) to pay any Indebtedness owed to the Company or any other
Restricted Subsidiary,
(3) to make loans or advances to the Company or any other
Restricted Subsidiary or
(4) to transfer any of its property or assets to the Company or any
other Restricted Subsidiary.
The preceding provisions shall not restrict any encumbrances or
restrictions:
(1) existing on the Rollover Date in the Senior Credit Agreement,
this Agreement or any other agreements or Indebtedness in effect on the Rollover
Date, and any extensions, refinancings, renewals or replacements of such
agreements or Indebtedness; provided that the encumbrances and restrictions in
any such extensions, refinancings, renewals or replacements are no less
favorable in any material respect to the Holders than those encumbrances or
restrictions that are then in effect and that are being extended, refinanced,
renewed or replaced;
(2) existing under or by reason of applicable law;
(3) contained in any agreements binding upon or relating to any
property, asset, business or any Person or the property, assets or businesses of
such Person, in each case acquired by the Company or any Restricted Subsidiary
and existing at the time of such acquisition and not incurred in contemplation
of such acquisition; provided that such encumbrances or restrictions are not
applicable to any property, asset, business or any Person or
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the property, assets or businesses of such Person, other than the property,
asset, business or Person or the property, assets or businesses of such Person
so acquired;
(4) in the case of this Section 9A.4(4), (A) that restrict in a
customary manner the subletting, assignment or transfer of any property or asset
that is a lease, license, conveyance or contract or similar property or asset,
(B) existing by virtue of any transfer of, agreement to transfer, option or
right with respect to, or Lien on, any property or assets of the Company or any
Restricted Subsidiary not otherwise prohibited by this Agreement or (C) arising
or agreed to in the ordinary course of business, not relating to any
Indebtedness, and that do not, individually or in the aggregate, detract from
the value of property or assets of the Company or any Restricted Subsidiary in
any manner material to the Company or any Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary and imposed pursuant to
an agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock of, or property and assets of, such
Restricted Subsidiary;
(6) contained in the terms of any Indebtedness of the Company or any
Subsidiary Guarantor; provided that such encumbrances or restrictions taken as a
whole are no more restrictive in the aggregate than those contained in this
Agreement, as determined in good faith by the Board of Directors, whose
determination shall be conclusive;
(7) contained in any agreement or instrument governing Senior
Indebtedness not incurred in violation of Section 9A.1; provided that such
encumbrances or restrictions taken as a whole are no more restrictive in the
aggregate than those contained in the Senior Credit Agreement, as determined in
good faith by the Board of Directors or a Senior Officer of the Company, whose
determination shall be conclusive;
(8) on cash or other deposits or net worth, imposed by customers
under contracts entered into in the ordinary course of business;
(9) with respect to any Restricted Subsidiary, contained in the terms
of any Indebtedness or Preferred Stock or any agreement pursuant to which such
Indebtedness or Preferred Stock was issued if:
(A) the encumbrance or restriction applies only in the event of a
payment default or a default with respect to a financial covenant contained
in such Indebtedness or agreement,
(B) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Rollover Notes than is customary in
comparable financings (as determined by the Company) and
(C) the Company determines that any such encumbrance or
restriction will not materially affect the Company's ability to make
principal or interest payments on
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the Rollover Notes, as determined in good faith by the Board of Directors
or a Senior Officer of the Company, whose determination shall be
conclusive;
(10) with respect to any property or assets acquired with Purchase
Money Indebtedness and imposed by such Purchase Money Indebtedness;
(11) contained in any extensions, refinancings, renewals or
replacements of any of the agreements or instruments referred to in the
preceding clauses of this paragraph; provided that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements
taken as a whole and not materially less favorable to the Holders than those
encumbrances or restrictions that are then in effect and that are being
extended, refinanced, renewed or replaced, as determined in good faith by the
Board of Directors or a Senior Officer of the Company, whose determination shall
be conclusive;
(12) with respect to any Foreign Subsidiary, contained in the terms
of any Indebtedness or Preferred Stock or any agreement pursuant to which such
Indebtedness or Preferred Stock was issued if:
(A) either (i) the encumbrance or restriction applies only in
the event of a payment default or a default with respect to a
financial covenant in such Indebtedness or agreement or (ii) the
Company determines that any such encumbrance or restriction will
not materially affect the Company's ability to make principal or
interest payments on the Rollover Notes, as determined in good
faith by the Board of Directors or a Senior Officer of the Company,
whose determination shall be conclusive, and
(B) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Rollover Notes than is
customary in comparable financings (as determined by the Company).
Nothing contained in this Section 9A.4 shall prevent the Company or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 9A.7 or (2) restricting the sale
or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
9A.5. Restriction on Issuances of Guarantees by Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary that is not a
Subsidiary Guarantor, directly or indirectly, to Guarantee any Indebtedness of
the Company or any other Restricted Subsidiary other than a Foreign Subsidiary,
unless (1) such Restricted Subsidiary simultaneously executes and delivers a
supplement to the Subsidiary Guaranty by such Restricted Subsidiary
substantially in the form of Exhibit D hereto, and (2) such Restricted
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Subsidiary waives and will not in any manner whatsoever claim or take the
benefit or advantage of, any rights of reimbursement, indemnity or subrogation
or any other rights against the Company or any other Restricted Subsidiary as a
result of any payment by such Restricted Subsidiary under its Subsidiary
Guaranty. The Subsidiary Guaranty may be subordinated to the Senior
Indebtedness of the Subsidiary Guarantor to the same extent as the Rollover
Notes are subordinated to Senior Indebtedness of the Company.
Notwithstanding the preceding, any Subsidiary Guaranty by a
Restricted Subsidiary may provide by its terms that it shall be automatically
and unconditionally released and discharged upon (x) any sale, exchange or
transfer, to any Person (other than the Company or any other Restricted
Subsidiary), of all of the Company's and each Restricted Subsidiary's Capital
Stock in, or all or substantially all the assets of, such Restricted Subsidiary
(which sale, exchange or transfer is not prohibited by this Agreement) or (y)
the release or discharge of the Guarantee that resulted in the creation of such
Subsidiary Guaranty, except a discharge or release by or as a result of payment
under such Guarantee.
9A.6. Restriction on Transactions with Shareholders and Affiliates.
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any holder (or any
Affiliate of such holder) of 5% or more of any class of Capital Stock of the
Company or with any Affiliate of the Company or any Restricted Subsidiary,
except upon fair and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than could be obtained, at the time of such transaction
or, if such transaction is pursuant to a written agreement, at the time of the
execution of the agreement providing therefor, in a comparable arm's-length
transaction with a Person that is not such a holder or an Affiliate.
The preceding limitation does not limit, and shall not apply to:
(1) transactions (A) approved by a majority of the disinterested
members of the Board of Directors, if there are any such disinterested members
or (B) for which Company or a Restricted Subsidiary delivers to the Holders a
written opinion of a nationally recognized investment banking, accounting,
appraisal firm, or valuation stating that the transaction is fair to the Company
or such Restricted Subsidiary from a financial point of view;
(2) any transaction solely between Company and any of its Wholly
Owned Restricted Subsidiaries or solely between Wholly Owned Restricted
Subsidiaries;
(3) the payment of reasonable and customary regular fees to
directors of the Company who are not employees of the Company and
indemnification arrangements entered into by the Company in the ordinary course
of business;
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(4) any payments or other transactions pursuant to any tax-sharing
agreement between Company and any other Person with which Company files a
consolidated tax return or with which Company is part of a consolidated group
for tax purposes;
(5) any sale of shares of Capital Stock (other than Disqualified
Stock) of the Company;
(6) management and administrative services provided in the ordinary
course of business by the Company or any Restricted Subsidiary to any Restricted
Subsidiary or any Person in which Company or any Restricted Subsidiary has an
Investment;
(7) any employment agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business;
(8) payments to Richard C. Blum or Richard C. Blum & Associates,
L.P., under consulting agreements in an aggregate amount not to exceed $150,000
in any Fiscal Year; or
(9) any Permitted Investments and any Restricted Payments not
prohibited by Section 9A.3.
Notwithstanding the preceding, any transaction or series of related transactions
covered by the first paragraph of this Section 9A.6 and not covered by clauses
(2) through (9) of this paragraph, (a) the aggregate amount of which exceeds $10
million in value, must be approved or determined to be fair in the manner
provided for in clause (1)(A) or (B) above and (b) the aggregate amount of which
exceeds $15 million in value, must be determined to be fair in the manner
provided for in clause (1)(B) above.
9A.7. Restriction on Liens.
The Company will not, and will not permit any Subsidiary Guarantor
to, Incur any Indebtedness secured by a Lien ("Secured Indebtedness") that is
not Senior Indebtedness unless contemporaneously with such Incurrence effective
provision is made to secure the Rollover Notes or the Subsidiary Guaranties
equally and ratably with (or, if the Secured Indebtedness is subordinated in
right of payment to the Rollover Notes or the Subsidiary Guaranties, prior to)
such Secured Indebtedness for so long as such Secured Indebtedness is secured by
a Lien.
The preceding limitation does not apply to:
(1) any interest or title of a lessor in the property subject to
any Capitalized Lease;
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(2) Liens on shares of Capital Stock of any Unrestricted Subsidiary
to secure Indebtedness of such Unrestricted Subsidiary;
(3) Liens on cash set aside at the time of the Incurrence of any
Indebtedness, or government securities purchased with such cash, in either case
to the extent that such cash or government securities prefund the payment of
interest on such Indebtedness and are held in an escrow account or similar
arrangements to be applied for such purpose;
(4) Liens on assets or property purchased with Purchase Money
Indebtedness securing such Indebtedness; and
(5) Liens in favor of the Company.
9A.8. Restriction on Asset Sales.
The Company will not, and will not permit any Restricted Subsidiary
to, consummate any Asset Sale, unless (1) the consideration received by the
Company or such Restricted Subsidiary is at least equal to the fair market value
of the assets sold or disposed of and (2) at least 75% of the consideration
received consists of (a) cash or Temporary Cash Investments, (b) the assumption
of Indebtedness of the Company or any Restricted Subsidiary (other than
Indebtedness to the Company or any Restricted Subsidiary), provided that the
Company or such Restricted Subsidiary is irrevocably and unconditionally
released from all liability under such Indebtedness or (c) Replacement Assets.
In the event and to the extent that the Net Cash Proceeds received
by the Company or any of its Restricted Subsidiaries from one or more Asset
Sales occurring on or after the Rollover Date in any period of 12 consecutive
months exceed $5 million, then Company shall or shall cause the relevant
Restricted Subsidiary:
(1) within 12 months after the date Net Cash Proceeds so received
exceed $5 million,
(A) to apply an amount equal to such excess Net Cash Proceeds
permanently to repay Senior Indebtedness of the Company or of any
Subsidiary Guarantor or Indebtedness of any other Restricted Subsidiary, in
each case owing to a Person other than Company or any of its Restricted
Subsidiaries, or
(B) to invest an equal amount, or the amount not so applied
pursuant to clause (A) (or enter into a definitive agreement committing to
so invest within 12 months after the date of such agreement), in
Replacement Assets, and
(2) to apply (no later than the end of the 12-month period referred
to in clause (1)) an amount equal to such excess Net Cash Proceeds (to the
extent not applied or
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committed to be applied pursuant to clause (1)) as provided in the following
paragraph of this Section 9A.8.
The amount of such excess Net Cash Proceeds required to be applied
(or to be committed to be applied) during such 12-month period as set forth in
clause (1) of the preceding sentence and not applied as so required by the end
of such period shall constitute "Excess Proceeds".
10. EVENTS OF DEFAULT.
10.1. Events of Default.
An "Event of Default" shall exist if any of the following conditions
or events shall occur and be continuing (each, an "Event of Default"):
(a) the Company defaults in the payment of any principal of or
premium, if any, on any Note or Rollover Note when the same becomes due and
payable, whether by scheduled maturity or at a date fixed for redemption or
repurchase or by declaration, demand or otherwise or the Company fails to
deliver the respective Rollover Notes, the Warrant Agreements or the Rollover
Notes Registration Rights Agreements on the Rollover Date; or
(b) the Company defaults in the payment of any interest on any Note,
or the Company or any Significant Subsidiary defaults in the payment of any
other amount owing under or in respect of any of the Note Documents, and such
default shall continue for at least five days after the same becomes due and
payable, whether by scheduled maturity or at a date fixed for prepayment,
redemption or repurchase or by declaration, demand or otherwise; or
(c) the Company defaults in the performance of or compliance with
any term, covenant or agreement contained in Section 8.1(h), 8.2, 8.12, 8.15,
8A.1(h), 8A.2, or any of Sections 9.1 through 9.14 or 9A.1 through 9A.6 hereof;
or
(d) any Obligor defaults in the performance of or compliance with
any term, covenant or agreement contained in any of the Note Documents on its
part to be performed or complied with that is not referred to in Section
10.1(a), 10.1(b) or 10.1(c), and (i) prior to the Rollover Date, such default
shall remain unremedied for at least 30 consecutive days after the earlier of
the first date on which (A) a Responsible Officer becomes aware of such default
and (B) the Company receives notice of such default from any Holder of a Note,
and (ii) after the Rollover Date, such default shall remain unremedied for at
least 30 consecutive days after the Company receives notice of such default from
any Holder of a Rollover Note or any representative thereof; or
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(e) any representation or warranty made or deemed made on any Purchase
Date by or on behalf of any Obligor or by any officer of any Obligor under or in
connection with this Agreement or any of the other Note Documents or in any
writing furnished to you in connection with this Agreement or any of the other
Note Documents proves to have been false or incorrect in any material respect on
the date as of which it was made or deemed to have been made; or
(f) any Obligor shall fail to pay any principal of, premium or
interest on or any other amount payable in respect of, any Indebtedness that is
outstanding in a principal or notional amount of at least $5,000,000 (or the
equivalent thereof in one or more other currencies) prior to the Rollover Date
and at least $15,000,000 (or the equivalent thereof in one or more other
currencies) on or after the Rollover Date, either individually or in the
aggregate (but excluding Indebtedness outstanding hereunder), of any Obligor,
when the same becomes due and payable (whether by scheduled maturity, required
prepayment, redemption or repurchase, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in any agreement or instrument relating to such Indebtedness; or any other event
shall occur or condition shall exist under any agreement or instrument
evidencing, securing or otherwise relating to any such Indebtedness and shall
continue after the applicable grace period, if any, specified in such agreement
or instrument; and in either case any such Indebtedness shall be declared to be
due and payable or required to be prepaid, redeemed or repurchased (other than
by a regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, repurchase, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the stated
maturity thereof or any date fixed for prepayment, redemption or repurchase
thereunder; or
(g) any Obligor shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against any Obligor, seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or for any substantial part
of its property and assets and, in the case of any such proceeding instituted
against it (but not instituted by it) that is being diligently contested by it
in good faith, either such proceeding shall remain undismissed or unstayed for a
period of 60 consecutive days or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it
or any substantial part of its property and assets) shall occur; or any Obligor
shall take any action to authorize any of the actions set forth above in this
Section 10.1(g); or
(h) one or more judgments or orders for the payment of money
aggregating $5,000,000 (or the equivalent thereof in one or more other
currencies) (or $15,000,000 with
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respect to any date of determination occurring on or after the Rollover Date) or
more are rendered against one or more of the Obligors and remain unsatisfied and
either (i) enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order or (ii) there shall be a period of at least 60
consecutive days after entry thereof during which a stay of enforcement of any
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; provided, however, that any such judgment or order shall not give
rise to an Event of Default under this Section 10.1(h) if and for so long as (A)
the amount of such judgment or order is covered by a valid and binding policy of
insurance between the defendant and the insurer covering full payment thereof
and (B) such insurer has been notified, and has not disputed the claim made for
payment, of the amount of such judgment or order; or
(i) any material provision of any of the Note Documents after
delivery thereof shall for any reason (other than pursuant to the express terms
thereof) cease to be valid and binding on or enforceable against any of the
Obligors intended to be a party to it or shall cease to give you any of the
rights, powers or privileges purported to be created thereunder, or any such
Obligor shall so state any of the foregoing in writing; or
(j) there shall occur one or more ERISA Events that individually or
in the aggregate results in or might reasonably be expected to result in
liability of any Obligor or any of its ERISA Affiliates in excess of $5,000,000
(or $15,000,000 with respect to any date of determination occurring on or after
the Rollover Date) during the term of this Agreement; or there shall exist an
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in aggregate for all Pension Plans of the Company and
its Subsidiaries (excluding for purposes of such computation any such Pension
Plans with respect to which assets exceed benefit liabilities) that exceeds
$5,000,000 (or $15,000,000 with respect to any date of determination occurring
on or after the Rollover Date); or
(k) the Merger shall not be consummated in accordance with the
Merger Agreement or the Merger shall be unwound, reversed or otherwise rescinded
in whole or in part for any reason.
10.2. Acceleration.
(a) If an Event of Default described in Section 10.1(g) shall occur,
all of the Notes or Rollover Notes then outstanding shall automatically become
immediately due and payable.
(b) If any other Event of Default shall occur and be continuing, the
Required Holders may at any time, at their option, by notice or notices to the
Company, declare all of the Notes or Rollover Notes then outstanding to be
immediately due and payable.
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(c) If any Event of Default described in Section 10.1(a) or 10.1(b)
has occurred and is continuing, any Holder or Holders of the Notes or Rollover
Notes at the time outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company, declare all of the
Notes or Rollover Notes held by it or them to be immediately due and payable.
If any Holder of the Notes or Rollover Notes shall exercise its rights under
this Section 10.2(c) at any time, the Company will give prompt notice thereof to
the Holders of all other Notes or Rollover Notes at such time outstanding and
each such Holder may (whether or not such notice is given or received), by
notice to the Company, declare the aggregate principal amount of all Notes or
Rollover Notes held by it to be, and the same shall forthwith become, due and
payable.
(d) Upon any Notes or Rollover Notes becoming due and payable under
this Section 10.2, whether automatically or by declaration, such Notes or
Rollover Notes will forthwith mature and the entire unpaid principal amount of
such Notes or Rollover Notes, plus all accrued and unpaid interest thereon and
all other amounts due and payable to the Holder thereof under the Note Documents
and, in the case of a Holder of a Fixed Rate Rollover Note, the respective
premium provided for optional prepayment in Section 6.1 as if the date such
Fixed Rate Rollover Notes were due and payable under this Section 10.2 were the
proposed prepayment date under Section 6.1, shall be immediately due and
payable, in each and every case without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Company.
10.3. Other Remedies.
If one or more Events of Default shall occur and be continuing, and
if, irrespective of whether any of the Notes or Rollover Notes have become or
have been declared immediately due and payable under Section 10.2, any Holder of
the Notes or Rollover Notes (or representative thereof) at the time outstanding
may proceed to protect and enforce its rights by an action at law, suit in
equity or other appropriate proceeding, for payment of the Obligations of the
Obligors owed to it hereunder, under the Notes or Rollover Notes or under any
Note Document.
10.4. Rescission.
At any time after any Notes or Rollover Notes have been declared due
and payable pursuant to Section 10.2(c) or 10.2(d), as the case may be, the
Required Holders, by notice to the Company, may rescind and annul any such
declaration and its consequences if (a) the Company has paid all overdue
interest on the Notes or Rollover Notes, all principal of and premium, if any,
on the Notes or Rollover Notes that are due and payable and are unpaid other
than by reason of such declaration, and all interest on such overdue principal
and (to the fullest extent permitted by applicable law) any overdue interest in
respect of the Notes or Rollover Notes, at the Default Rate, (b) all Defaults
and Events of Default, other than nonpayment of
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amounts that have become due solely by reason of such declaration, have been
remedied or have been waived pursuant to Section 15 and (c) no judgment or
decree has been entered for the payment of any monies due pursuant to the Notes
or Rollover Notes or any of the other Note Documents. No rescission and
annulment under this Section 10.4 will extend to or affect any subsequent
Default or Event of Default or impair any right, power or remedy consequent
thereon.
10.5. Restoration of Rights and Remedies.
If any Holder of the Notes or Rollover Notes has instituted any
proceeding to enforce any right or remedy under this Agreement or any of the
other Note Documents and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to such Holder, then, and in each
such case, the Obligors and the Holders of Notes or Rollover Notes shall,
subject to any determination in such proceeding, be restored severally to their
respective former positions hereunder and under the other Note Documents and,
thereafter, all rights and remedies of the Holders of the Notes or Rollover
Notes shall continue as though no such proceeding had been instituted.
10.6. No Waivers or Election of Remedies, Expenses, Etc.
No course of dealing and no delay on the part of any Holder of the
Notes or Rollover Notes in exercising any right, power or remedy shall operate
as a waiver thereof or otherwise prejudice such Holder's rights, powers or
remedies. No right, power or remedy conferred by this Agreement or any of the
other Note Documents upon any Holder of the Notes or Rollover Notes shall be
exclusive of any other right, power or remedy referred to herein or therein or
now or hereafter available at law, in equity, by statute or otherwise. Without
limiting the obligations of the Company under Section 13.1, the Company will pay
to the Holder of each Note or Rollover Note, upon demand, such further amount as
shall be sufficient to cover all costs and expenses of such Holder incurred in
any enforcement or collection under this Section 10, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
11. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
11.1. Registration of Notes.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes or Rollover Notes.
The name and address of each Holder of one or more Notes or Rollover Notes, each
transfer thereof and the name, address, place of payment and account for payment
of each transferee of one or more Notes or Rollover
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Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note or Rollover Note
shall be registered shall be deemed and treated as the owner and Holder thereof
for all purposes of this Agreement and the other Note Documents, and the Company
shall not be affected by any notice or knowledge to the contrary. The Company
shall give to any Holder of the Notes or Rollover Notes that is an Institutional
Investor, promptly upon request therefor, a complete and correct copy of the
names and addresses of all registered Holders of Notes or Rollover Notes.
11.2. Transfer and Exchange of Notes.
(a) The Purchasers agree that any transfer of any Note or Rollover
Note shall be made in compliance with all applicable laws. Upon surrender of
any Note or Rollover Note at the principal executive office of the Company for
registration of transfer or exchange (and, in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered Holder of such Note or Rollover Note
or its attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or Rollover Note or part thereof), the
Company shall execute and deliver, at the Company's expense, one or more new
Notes or Rollover Notes (as requested by the Holder thereof) in exchange
therefor, in an aggregate principal amount equal to the unpaid principal amount
of the surrendered Notes or Rollover Notes. Each such new Note or Rollover Note
shall be payable to such Person as such Holder may request and shall be in
substantially the form of Exhibit A or Exhibit B hereto, respectively. Each
such new Note or Rollover Note shall be dated and bear interest from the date to
which interest shall have been paid on the surrendered Notes or Rollover Notes
or dated the date of the surrendered Notes or Rollover Notes if no interest
shall have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or other governmental charge imposed in
respect of any such transfer of Notes or Rollover Notes. Notes or Rollover
Notes shall not be transferred in denominations of less than $100,000; provided
that, if necessary to enable the registration of transfer by a Holder of its
entire holding of Notes or Rollover Notes, one Note or Rollover Note may be in a
denomination of less than $100,000 and that any notes issued in connection with
the registration statement referred to in Section 7.3 shall not be transferred
in denominations less than $1,000.
(b) Any transferee, by its acceptance of a Note or Rollover Note
registered in its name (or the name of its nominee), shall be deemed to (i) have
made the representations set forth in Section 5 hereof and (ii) confirm to and
agree with the transferor and the other parties hereto as follows:
(A) other than as provided in any written instrument of transfer
executed by the transferor and such transferee, such transferor makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Agreement or any of the other Note Documents, or the execution,
legality, validity, enforceability, genuineness, sufficiency or
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value of, this Agreement or any of the other Note Documents or any other
instrument or document furnished pursuant hereto or thereto;
(B) such transferor makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Company or any other Obligor or the performance or observance by any
Obligor of any of its Obligations under this Agreement or any of the other
Note Documents or any other instrument or document furnished pursuant
thereto;
(C) such transferee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 8.1 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to purchase the
Note or Rollover Note or Notes or Rollover Notes being purchased thereby;
(D) such transferee will, independently and without reliance
upon the transferor or any other Holder of the Notes or Rollover Notes and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking
action under this Agreement; and
(E) such transferee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Holder of the Notes or
Rollover Notes.
11.3. Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to
it of the ownership and the loss, theft, destruction or mutilation of any Note
or Rollover Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it; provided that if the Holder of such Note or
Rollover Note is, or is a nominee for, an original Purchaser of any of the Notes
or Rollover Notes or any other Institutional Investor, such Person's own
unsecured agreement of indemnity shall be deemed to be satisfactory, or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company, at its own expense, shall execute and deliver, in lieu thereof, a
new Note or Rollover Note, dated and bearing interest from the date to which
interest shall have been paid on
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such lost, stolen, destroyed or mutilated Note or Rollover Note or dated the
date of such lost, stolen, destroyed or mutilated Note or Rollover Note if no
interest shall have been paid thereon.
12. PAYMENTS ON NOTES.
12.1. Place of Payment.
Subject to Section 12.2 as to the place of payment, each payment
required to be made under this Agreement and under the Notes or Rollover Notes
shall be made not later than 12:00 (noon) New York City time in same day funds
in New York City, New York at the office of the Company in such jurisdiction.
The Company may at any time, by notice to each Holder of a Note or Rollover
Note, change the place of payment of the Notes or Rollover Notes so long as such
place of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
12.2. Home Office Payment.
So long as you or your nominee shall be the Holder of any Note or
Rollover Note, and notwithstanding anything contained in Section 12.1 or in such
Note or Rollover Note to the contrary, the Company will pay all sums becoming
due on such Note or Rollover Note for principal, premium, if any, and interest
by the method and at the address specified for such purpose below your name on
Schedule I hereto, or by such other method or at such other address as you shall
have from time to time specified to the Company for such purpose, without the
presentation or surrender of such Note or Rollover Note or the making of any
notation thereon, except that upon the request of the Company made concurrently
with or reasonably promptly after payment or prepayment in full of any Note or
Rollover Note, you shall surrender such Note or Rollover Note for cancellation,
reasonably promptly after any such request, to the Company at its principal
executive office or at the place of payment most recently designated by the
Company pursuant to Section 12.1. Prior to any permitted sale, transfer or
other disposition of any Note or Rollover Note held by you or your nominee, you
will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note or Rollover Note to the Company in exchange for a new Note or Rollover
Note or Notes or Rollover Notes pursuant to Section 11.2. The Company will
afford the benefits of this Section 12.2 to any Institutional Investor that is
the direct or indirect transferee of any Note or Rollover Note purchased by you
under this Agreement and that has made the same agreement relating to such Note
or Rollover Note as you have made in this Section 12.2 and in Section 18.
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13. EXPENSES, INCREASED COSTS AND INDEMNIFICATION, ETC.
13.1. Transaction Expenses.
Whether or not any of the transactions contemplated hereby are
consummated, the Company will pay, within 10 days of each demand therefor (such
demand to be accompanied by supporting documentation in reasonable detail), all
reasonable costs and expenses incurred by you (including, without limitation,
reasonable attorneys' fees of a special counsel and, if reasonably required,
local or other counsel for you) in connection with the preparation, execution,
delivery and administration of this Agreement, the Notes or Rollover Notes and
the other Note Documents and in connection with any amendments, waivers or
consents under or in respect of this Agreement, the Notes or Rollover Notes or
any of the other Note Documents (whether or not such amendment, waiver or
consent becomes effective), including, without limitation: (a) the reasonable
costs and expenses incurred in enforcing or defending (or determining whether or
how to enforce or defend) any rights under this Agreement, the Notes or Rollover
Notes or any of the other Note Documents or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement, the Notes or Rollover Notes or any of the other Note Documents,
and (b) the reasonable costs and expenses incurred in connection with the
insolvency or bankruptcy of any Obligor or any of its Subsidiaries or in
connection with any work-out, renegotiation or restructuring of any of the
transactions contemplated hereby, by the Notes or Rollover Notes or by the other
Note Documents. The Company will pay, and will save you and each other Holder
of the Notes or Rollover Notes harmless from, all claims in respect of any fees,
costs or expenses, if any, of brokers and finders (other than those retained by
you or any such Holder).
13.2. Indemnity.
(a) In addition to the payment of costs and expenses pursuant to
Section 13.1, the Company agrees to indemnify, pay and hold each Purchaser and
each other Person who is or was at any time a Holder and each other Person in
whose name or for whose benefit such Person holds or at any time held Notes, and
your and their Affiliates and your and their respective officers, directors,
employees, attorneys, agents and other advisors (each, an "Indemnified Party"),
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits and claims, and all reasonable costs,
expenses and disbursements, of any kind or nature whatsoever (including, without
limitation, reasonable fees and disbursements of counsel for such Indemnified
Parties) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of, or in
connection with the preparation for a defense of, any investigation, litigation
or proceeding arising out of, related to, or in connection with (i) this
Agreement, the Notes or Rollover Notes, the other Note Documents or any of the
transactions contemplated hereby or thereby, (ii) any use
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or intended use of the proceeds of any of the Notes or Rollover Notes or (iii)
the actual or alleged presence of Hazardous Materials on any property of the
Company or any of its Subsidiaries or any Environmental Claim relating in any
way to the Company or any of its Subsidiaries, in each case whether or not such
investigation, litigation or proceeding is brought by the Company, any of its
Subsidiaries, its directors, shareholders or creditors or an Indemnified Party
or any Indemnified Party is otherwise a party thereto and whether or not any
sale and purchase of the Notes or Rollover Notes pursuant to this Agreement is
effected (collectively, the "Indemnified Liabilities"); provided that the
Company shall not have any obligation to any Indemnified Party hereunder with
respect to any Indemnified Liabilities arising from the gross negligence or bad
faith of such Indemnified Party as determined in a final, nonappealable judgment
by a court of competent jurisdiction.
(b) The Company also agrees not to assert any claim against any
Purchaser, any Holder or any other Person in whose name or for whose benefit
such Person holds or at any time held any Notes or Rollover Notes, or any of
your or their Affiliates, or any of your or their respective officers,
directors, employees, attorneys, agents and other advisors, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to (i) this Agreement, the Notes or Rollover Notes or
any of the other Note Documents, or any of the transactions contemplated hereby
or thereby, (ii) any Purchaser's agreement to purchase the Notes or Rollover
Notes or (iii) any use or intended use of the proceeds of any of the Notes or
Rollover Notes.
(c) If and to the extent that the undertaking to indemnify, pay and
hold harmless the Indemnified Parties set forth in this Section 13.2 is
judicially determined to be unavailable to an Indemnified Party in respect of,
or is insufficient with respect to, any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits or claims referred to herein,
then, in lieu of indemnifying such Indemnified Party hereunder, the Company
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits or claims (and reasonable costs, expenses and disbursements
relating thereto) (i) in such proportion as is appropriate to reflect the
relative benefits to the Company and its Subsidiaries, on the one hand, and such
Indemnified Party, on the other hand, from this Agreement and the sale and
purchase of the Notes or (ii) if the allocation provided by clause (i) of this
subsection (c) is not available, in such proportion as is appropriate to reflect
not only the relative benefits referred to in such clause (i) but also the
relative fault of each of the Company and its Subsidiaries, on the one hand, and
such Indemnified Party, on the other hand, in connection with such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits or claims, as
well as any other relevant equitable considerations.
(d) Upon receipt by an Indemnified Party of actual notice of any
action, claim, suit, investigation or proceeding (each, an "Action") against
such Indemnified Party with respect to which indemnity may be sought under this
Agreement, such Indemnified Party shall promptly notify the Company in writing;
provided, however, that failure to so notify the Company shall
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not relieve the Company from any liability that it may have on account of this
indemnity or otherwise, except to the extent that it is materially prejudiced by
such failure. As long as (i) no Default or Event of Default shall have occurred
and be continuing and (ii) the Company continues diligently to prosecute the
defense of such Action, the Company shall be entitled to participate at its own
expense in the defense of any Action brought to enforce any claim or liability
of any Indemnified Party resulting from any such Action and, if it so elects,
the Company shall be entitled to assume the defense of such Action at its
expense, including the employment of counsel reasonably satisfactory to such
Indemnified Party (in which case the Company will not thereafter be responsible
for the fees, costs and expenses of any separate counsel retained by an
Indemnified Party). Notwithstanding the foregoing, an Indemnified Party shall
have the right to employ separate counsel in the defense of an Action, and the
Company shall bear the reasonable fees, costs and expenses of such separate
counsel if (A) the use of counsel chosen by the Company to represent the
Indemnified Party would present such counsel with a conflict of interest; (B)
such Indemnified Party has reasonably concluded that the representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them; (C) the Company shall not have employed
counsel satisfactory to the Indemnified Party in the exercise of the Indemnified
Party's reasonable judgment to represent the Indemnified Party, within a
reasonable time after notice of the institution of such Action; or (D) the
Company authorizes the Indemnified Party to employ separate counsel at its
expense. In no event shall the Company be responsible for the fees and expenses
of more than one counsel (together with appropriate local counsel, if any) for
all Indemnified Parties in connection with an Action. Without the prior written
consent of the Indemnified Parties, the Company shall not settle or compromise
any Action or permit a default or consent to the entry of any judgment in
respect thereof unless such settlement, compromise or consent includes, as an
unconditional term thereof, the giving by the claimant to each of the
Indemnified Parties of an unconditional and irrevocable release from all
liability in respect of such Action, with no admission of guilt or liability by
any Indemnified Party.
13.3. Taxes.
(a) Any and all payments by or on behalf of the Company hereunder or
under the Notes or Rollover Notes and the Note Documents shall be made, in
accordance with the terms of the Notes or Rollover Notes and the other
applicable Note Documents, free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings with respect thereto imposed by the United States of America, any
political subdivision thereof or any other jurisdiction from which a payment
under the Note Documents is made by or on behalf of the Company, excluding net
income taxes and branch profits taxes that are imposed by the United States of
America and net income taxes and franchise taxes (whether based on income or
capital) that are imposed on such Holder of the Notes or Rollover Notes by the
state or foreign jurisdiction under the laws of which such Holder of the Notes
or Rollover Notes is organized or any political subdivision thereof (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payments hereunder,
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under the Notes or Rollover Notes or the Note Documents being hereinafter
referred to as "Taxes"). If the Company shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder, under any Note or Notes
or Rollover Note or any of the Note Documents to any Holder of the Notes or
Rollover Notes, (i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 13.3) such Holder of the Notes or
Rollover Notes receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Company shall make such deductions and (iii)
the Company shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Company shall pay any present or future transfer,
stamp, documentary or other similar taxes, assessments, charges or levies that
arise from any payment made hereunder or under the Notes or Rollover Notes or
the other Note Documents or from the execution, delivery or registration of,
performance under, or otherwise with respect to, this Agreement, any Note or
Rollover Note or any of the other Note Documents, and all reasonable costs,
expenses, taxes, assessments and other charges incurred in connection with any
filing or perfection of any lien, pledge or security interest contemplated under
any of the other documents referred to herein or therein (hereinafter referred
to as "Other Taxes").
(c) The Company agrees to indemnify, pay and hold each Holder of the
Notes or Rollover Notes harmless from and against the full amount of Taxes and
Other Taxes, and for the full amount of taxes of any kind imposed by any
jurisdiction on amounts payable under this Section 13.3, imposed on or paid by
such Holder of the Notes or Rollover Notes as a result of receiving any payment
by or on behalf of the Company hereunder or under any Notes or Rollover Notes
and any penalties, additions to tax and interest) arising therefrom or with
respect thereto. This indemnification shall be made within 60 days from the
date such Holder of the Notes or Rollover Notes makes written demand therefor.
(d) Within 60 days after the date of any payment of Taxes, the Company
shall furnish to each Holder of the Notes or Rollover Notes, at its address
referred to in Section 16, the original receipt of payment thereof or a
certified copy of such receipt. In the case of any payment hereunder or under
any Note or Rollover Note or any of the other Note Documents by or on behalf of
the Company through an account or branch outside the United States or by or on
behalf of the Company by a payor that is not a United States person, if the
Company determines that no Taxes are payable in respect thereof, the Company
shall furnish, or shall cause such payor to furnish, to each Holder of the
Notes, at such address, an opinion of counsel acceptable to each Holder of the
Notes or Rollover Notes stating that such payment is exempt from Taxes. For
purposes of this subsection (d) and subsection (e) of this Section 13.3, the
terms "United States" and "United States person" shall have the meanings
specified in Section 7701 of the Internal Revenue Code.
(e) Each Holder of the Notes or Rollover Notes organized under the
laws of a jurisdiction outside the United States shall, on or prior to the date
of its execution and delivery of this Agreement, in the case of each original
Purchaser of the Notes or Rollover Notes, and on the
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date on which it becomes a Holder of the Notes or Rollover Notes, in the case of
each subsequent Holder of the Notes or Rollover Notes, and from time to time
thereafter as requested in writing by the Company (but only so long thereafter
as such Holder of the Notes or Rollover Notes remains lawfully able to do so),
provide the Company with two original Internal Revenue Service forms 1001 or
4224 or, (in the case of a Holder of the Notes or Rollover Notes that has
certified in writing to the Company that it is not a "bank" (as defined in
Section 881(c)(3)(A) of the Internal Revenue Code), form W-8 (and, if such
Holder of the Notes or Rollover Notes delivers a form W-8, a certificate
representing that such Holder of the Notes or Rollover Notes is not a "bank" for
purposes of Section 881(c) of the Internal Revenue Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of the Company and is not a controlled foreign corporation related to the
Company (within the meaning of Section 864(d)(4) of the Internal Revenue Code)),
as appropriate, or any successor or other form prescribed by the Internal
Revenue Service, certifying that such Holder of the Notes or Rollover Notes is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement, the Notes or Rollover Notes held thereby or
the other Note Documents or, in the case of a Holder of the Notes or Rollover
Notes that has provided a form W-8, certifying that such Holder of the Notes is
a foreign corporation, partnership, estate or trust. If the form provided by a
Holder of the Notes or Rollover Notes pursuant to this subsection (e) at the
time such Holder of the Notes or Rollover Notes first becomes a party to this
Agreement indicates a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from Taxes
unless and until such Holder of the Notes or Rollover Notes provides the
appropriate form certifying that a lesser rate applies, whereupon withholding
tax at such lesser rate only shall be considered excluded from Taxes for periods
governed by such form. If any form or document referred to in this subsection
(e) requires the disclosure of information, other than information necessary to
compute the tax payable and information required on the date hereof by Internal
Revenue Service form 1001, 4224 or W-8 (or the related certificate described
above) that the Holder of the Notes or Rollover Notes reasonably considers to be
confidential, the Holder of the Notes or Rollover Notes shall give notice
thereof to the Company and shall not be obligated to include in such form or
document such confidential information.
(f) For any period with respect to which a Holder of the Notes or
Rollover Notes has failed to provide the Company with the appropriate form or
document described in subsection (e) of this Section 13.3 (other than if such
failure is due to a change in law occurring after the date on which a form
originally was required to be provided or if such form otherwise is not required
under such subsection (e)), such Holder of the Notes or Rollover Notes shall not
be entitled to additional amounts or indemnification under Section 13.3(a), (b)
or (c) with respect to Taxes imposed by the United States or any political
subdivision thereof by reason of such failure; provided, however, that should a
Holder of the Notes or Rollover Notes become subject to Taxes because of its
failure to deliver a form required hereunder, the Company shall take such steps
as such Holder of the Notes or Rollover Notes shall reasonably request to assist
such Holder of the Notes or Rollover Notes to recover such Taxes at such
Holder's expense.
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(g) Any Holder of the Notes or Rollover Notes claiming any
additional amounts payable pursuant to this Section 13.3 shall use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to file any certificate or document reasonably requested by the
Company or to change the jurisdiction of its applicable lending office if the
making of such a filing or such change would avoid the need for or reduce the
amount of any such additional amounts that may thereafter accrue and would not,
in the sole determination of such Holder, be otherwise disadvantageous to such
Holder.
(h) If the Company reasonably believes that any Taxes or Other Taxes
it has paid or deducted from any payment made hereunder were not correctly or
legally asserted, the Holder of Notes or Rollover Notes on whose behalf such
Taxes or Other Taxes were paid or deducted, shall take all reasonable actions
requested by the Company to obtain a refund of such Taxes or Other Taxes. If a
Holder of Notes or Rollover Notes shall become aware that it is entitled to
receive a refund in respect of Taxes or Other Taxes, it shall promptly notify
the Company of the availability of such refund and shall, within 15 days after
receipt of a request by the Company pursue or timely claim such refund at the
Company's expense. If any Holder of Notes or Rollover Notes receives a refund
in respect of any Taxes or Other Taxes for which such Holder has received
payment from the Company hereunder, such Holder shall promptly repay such refund
(plus any interest received) to the Company (but only to the extent of payments
made or additional amounts paid by the Company under Section 13.3(a), (b) or (c)
with respect to the Taxes or Other Taxes giving rise to such refund) within 10
days of receipt thereof, provided that the Company, upon the request of such
Holder, agrees to return such refund (plus any interest or other charges
received) to such Holder in the event such Holder is required to repay such
refund to the relevant taxing authority.
(i) In the event that a Holder of Notes or Rollover Notes reasonably
determines that any payment of additional amounts to or on behalf of a Holder of
Notes or Rollover Notes under Section 13.3(a) hereof, or indemnification for
Taxes under Section 13.3(c) hereof, resulted in a tax credit becoming available
to such Holder of Notes or Rollover Notes, the Holder of Notes or Rollover Notes
shall promptly notify the Company and pay to the Company an amount equal to the
actual tax benefit resulting from such credit.
13.4. Increased Costs.
(a) If, due to either (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Holder of Notes or Rollover Notes of agreeing to make or of making,
funding or maintaining their investment in (or their commitment hereunder to
invest in) the Notes or Rollover Notes arising from such Holder actually match
funding Notes or Rollover Notes that accrue interest based on the interest rate
for Eurodollar deposits (excluding for purposes of this Section 13.4 any such
increased costs resulting from (i) Taxes or Other Taxes (as to which Section
13.3 shall govern) and (ii) changes in the basis of taxation of overall
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net income or overall gross income by the United States of America or by the
foreign jurisdiction or state under the laws of which such Holder of Notes or
Rollover Notes is organized or any political subdivision thereof), then the
Company shall from time to time, upon demand by such Holder of Notes or Rollover
Notes, pay to such Holder of Notes or Rollover Notes additional amounts
sufficient to compensate such Holder of Notes or Rollover Notes in full for such
increased cost. A certificate as to the amount of such increased cost, submitted
to the Company by such Holder of Notes or Rollover Notes, shall be conclusive
and binding for all purposes, absent manifest error.
(b) If any Holder of Notes or Rollover Notes determines that
compliance with any law or regulation or any guideline, directive or request
from any central bank or other Governmental Authority (whether or not having the
force of law) affects or would affect the amount of capital required or expected
to be maintained by such Holder of Notes or Rollover Notes or any corporation
controlling such Holder of Notes or Rollover Notes and that the amount of such
capital is increased by or based upon the existence of such Holder's investment
in (or its commitment hereunder to invest in) the Notes or Rollover Notes
arising from such Holder actually match funding Notes or Rollover Notes that
accrue interest based on the interest rate for Eurodollar deposits, then, upon
demand by such Holder of Notes or Rollover Notes, the Company shall pay to such
Holder of Notes or Rollover Notes, from time to time as specified by such Holder
of Notes or Rollover Notes, additional amounts sufficient to compensate such
Holder of Notes or Rollover Notes in the light of such circumstances, to the
extent that such Holder of Notes or Rollover Notes reasonably determines such
increase in capital to be allocable to the existence of such Holder's investment
in (or its commitment hereunder to invest in) the Notes or Rollover Notes. A
certificate as to such amounts submitted to the Company by such Holder of Notes
or Rollover Notes shall be conclusive and binding for all purposes, absent
manifest error.
13.5. Survival.
The Obligations of the Company under this Section 13 shall survive
the payment or transfer of any Note or Rollover Note, the enforcement, amendment
or waiver of any provision of this Agreement, the Notes or Rollover Notes or any
of the other Note Documents, and the termination of this Agreement and any
commitment to purchase Notes or Rollover Notes hereunder and, in respect of any
Person who was at any time a Holder or in whose name or for whose benefit such
Person held any Note or Rollover Note, the date on which such Person no longer
holds, or no longer holds in the name of or for the benefit of any other Person,
any Note or Rollover Note.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
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All representations and warranties contained herein and in the other
Note Documents, and in any certificate or other instrument delivered by or on
behalf of any Obligor pursuant to this Agreement or any of the other Note
Documents, shall survive the execution and delivery of this Agreement and the
Notes or Rollover Notes, the purchase or transfer by you of any Notes or
Rollover Notes or portion thereof or interest therein, issuance of Notes or
Rollover Notes and the payment of any Notes or Rollover Notes and may be relied
upon by any subsequent Holder of the Notes or Rollover Notes as of the date made
or deemed made. All statements contained in any certificate or other instrument
delivered by or on behalf of any Obligor pursuant to this Agreement or any of
the other Note Documents shall be deemed representations and warranties of the
Company under this Agreement. Subject to the immediately preceding sentence and
Section 20.6, this Agreement, the Notes or Rollover Notes and the other Note
Documents embody the entire agreement and understanding between you and the
Obligors and supersede all prior agreements and understandings relating to the
subject matter hereof.
15. AMENDMENT AND WAIVER.
15.1. Requirements.
This Agreement and the Notes or Rollover Notes may be amended, and
the observance of any term hereof or of the Notes or Rollover Notes may be
waived (either retroactively or prospectively), with and only with the written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 5 or 19 will be effective as
to you unless consented to in writing by you and (b) no such amendment or waiver
shall, without the written consent of the Holder of each Note or Rollover Note
at the time outstanding, do any of the following at any time:
(i) subject to the provisions of Section 10 relating to
acceleration or rescission, change the amount or the time of any redemption
or payment of principal of, or reduce the rate, or change the time fixed
for any payment or change the method of computation of interest or premium
on, the Notes or Rollover Notes;
(ii) change the percentage of the aggregate principal amount of
the Notes or Rollover Notes the Holders of which are required to consent to
any such amendment or waiver;
(iii) release any Subsidiary Guarantor, except as provided
herein; or
(iv) amend Section 10.1, 15.1 or 20, and, after the Rollover
Date, Section 6, 7.2 or 7.6.
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Notwithstanding any of the foregoing provisions of this Section 15.1, none of
the defined terms set forth in Schedule II hereto shall be amended, supplemented
or otherwise modified in any manner that would change the meaning, purpose or
effect of this Section 15.1 or any Section referred to herein unless such
amendment or modification is agreed to in writing by the Holders of the Notes or
Rollover Notes otherwise required to amend or waive such Section under the terms
of this Section 15.1.
15.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each Holder of the Notes
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or Rollover Notes (irrespective of the amount of Notes or Rollover Notes then
owned or otherwise held by it at the time) with sufficient information,
reasonably far in advance of the date a decision is required, to enable such
Holder to make an informed and considered decision with respect to any proposed
amendment, waiver or consent in respect of any of the provisions of this
Agreement or any of the other Note Documents. The Company will deliver executed
or true and correct copies of each amendment, waiver or consent effected
pursuant to the provisions of this Section 15 to each Holder of outstanding
Notes or Rollover Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite Holders of
the Notes or Rollover Notes.
(b) Payment. The Company will not directly or indirectly pay or
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cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any Holder of Notes or
Rollover Notes as consideration for or as an inducement to the entering into by
any Holder of Notes or Rollover Notes of any waiver or amendment of any of the
terms and provisions of this Agreement or any of the other Note Documents,
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each Holder of Notes or Rollover Notes
then outstanding even if such Holder did not consent to such waiver or
amendment.
15.3. Binding Effect, Etc.
Any amendment or waiver consented to as provided in this Section 15
applies equally to all Holders of Notes or Rollover Notes and is binding upon
them, upon each future Holder of any Note or Rollover Note and upon each Obligor
without regard to whether such Note or Rollover Note has been marked to indicate
such amendment or waiver. No such amendment or waiver will extend to or affect
any obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right, power or remedy consequent thereon. No
course of dealing nor any delay on the part of any Holder of any Note or
Rollover Note in exercising any right, power or remedy hereunder or under any of
the other Note Documents shall operate as a waiver of any right, power or remedy
of any Holder of such Note
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or Rollover Note; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided under this Agreement
and the other Note Documents are cumulative and not exclusive of any rights,
powers or remedies provided by applicable law.
15.4. Notes Held by the Company, Etc.
Solely for the purpose of determining whether the Holders of the
requisite percentage of the aggregate principal amount of Notes or Rollover
Notes then outstanding approved or consented to any amendment, waiver or consent
to be given under this Agreement or any of the other Note Documents, or have
directed the taking of any action provided for herein or in any of the other
Note Documents to be taken upon the direction of the Holders of a specified
percentage of the aggregate principal amount of Notes or Rollover Notes then
outstanding, Notes or Rollover Notes directly or indirectly owned by the Company
or any of its Affiliates shall be deemed not to be outstanding.
16. NOTICES.
(a) All notices and other communications provided for hereunder
shall be in writing and delivered by telecopier or (if expressly permitted under
the applicable provisions hereof) by telephone, if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), by registered or certified mail with return receipt
requested (postage prepaid) or by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule I hereto, or at such other
address as you or it shall have specified to the Company in writing;
(ii) if to any other Holder of any Note or Rollover Note, to
such Holder at such address as such other Holder shall have specified to
the Company in writing; or
(iii) if to the Company, to the Company at its address set forth
on the first page of this Agreement (Telecopier No. (415) 398-1905) to the
attention of Kent P. Ainsworth, or at such other address as the Company
shall have specified to the Holder of each Note in writing with a copy to
John E. Mendez, Esq., Skadden, Arps, Slate, Meagher & Flom LLP, 300 South
Grand Avenue, 34th Floor, Los Angeles, California 90071 (Telecopier No.
(213) 687-5600).
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All notices and other communications provided for under this Section 16 will be
deemed given and effective only when actually received.
(b) If any notice required under this Agreement or any of the other
Note Documents is permitted to be made, and is made, by telephone, actions taken
or omitted to be taken in reliance thereon by you shall be binding upon the
Company notwithstanding any inconsistency between the notice provided by
telephone and any subsequent writing in confirmation thereof provided to you;
provided that any such action taken or omitted to be taken by you shall have
been in good faith and in accordance with the terms of this Agreement.
17. REPRODUCTION OF DOCUMENTS.
This Agreement, each of the other Note Documents and all other
agreements, certificates and other documents relating thereto, including,
without limitation, (a) amendments, waivers and consents of or to this Agreement
or any other Note Document that may hereafter be executed, (b) documents
received by you on the Purchase Date (except the Notes themselves) and (c)
financial statements, certificates and other information previously or hereafter
furnished to you, may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 17
shall not prohibit the Company or any other Holder of Notes or Rollover Notes
from contesting any such reproduction to the same extent that it could contest
the original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.
18. CONFIDENTIAL INFORMATION.
You hereby agree to maintain, and to cause each of the Persons
referred to in clause (a) of this Section 18 to which you deliver or disclose
Confidential Information to maintain, the confidentiality of all Confidential
Information in accordance with procedures adopted by you in good faith to
protect confidential information obtained from the Company; provided that you
may deliver or disclose Confidential Information to (a) your Affiliates and your
and their respective directors, officers, employees, agents, attorneys and other
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 18, (b) your counsel
and your financial and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of
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this Section 18, (c) any other Holder of any Note or Rollover Note, (d) any
Institutional Investor to which you sell or offer to sell any Notes or Rollover
Notes or any part thereof or any participation therein (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by provisions similar to the provisions of this Section 18), (e) any
federal or state regulatory authority having jurisdiction over you, or (f) any
other Person to which such delivery or disclosure may be necessary (i) in order
to effect compliance with any Requirement of Law applicable to you, (ii) in
response to any subpoena or other legal process, (iii) in connection with any
litigation to which you or any other Holder of any Notes or Rollover Notes are a
party or (iv) if an Event of Default shall have occurred and be continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary in the enforcement or for the protection of the rights and remedies
afforded to you under your Notes or Rollover Notes, this Agreement and the other
Note Documents; provided that, unless specifically prohibited by the applicable
law or court order, you shall reasonably notify the Company of any request by
any governmental agency or representative thereof (other than any such request
in connection with any examination of your financial condition by such
government agency) for disclosure of any such non-public information prior to
disclosure of such information. Each Holder of a Note or Rollover Note, by its
acceptance of a Note or Rollover Note, will be deemed to have agreed to be bound
by and to be entitled to the benefits of this Section 18 as though it were a
party to this Agreement. Upon the reasonable request of the Company in
connection with the delivery to any Holder of a Note or Rollover Note of
information required to be delivered to such Holder under this Agreement or
requested by such Holder (other than a Holder that is a party to this Agreement
or its nominee), such Holder will enter into an agreement with the Company
embodying the provisions of this Section 18. Nothing in this Section 18 shall
obligate you or any other Holder of the Notes or Rollover Notes to return any
Confidential Information furnished by or on behalf of the Company or any of its
Subsidiaries to the Company or any such Subsidiary.
19. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your United States
Affiliates that constitutes an Institutional Investor as the Purchaser of the
Notes that you have agreed to purchase hereunder, by notice to the Company,
which notice shall be signed by both you and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 5. Upon receipt of such notice, wherever
the word "you" is used in this Agreement (other than in this Section 19), such
word shall be deemed to refer to such Affiliate in lieu of you. In the event
that such Affiliate is so substituted as a Purchaser hereunder and such
Affiliate thereafter transfers to you all of the Notes then held by such
Affiliate, upon receipt by the Company of notice of such transfer, wherever the
word "you" is used in this Agreement (other than in this Section 19), such word
shall no longer be deemed to refer to such Affiliate, but
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shall refer to you, and you shall have all of the rights of an original Holder
of the Notes under this Agreement.
20. SUBORDINATION OF THE NOTES AND ROLLOVER NOTES.
20.1. Notes or Rollover Notes Subordinated to Senior Indebtedness.
The Company covenants and agrees and each Holder of a Note or
Rollover Note, by its acceptance thereof, likewise covenants and agrees, that,
to the extent and in the manner hereinafter set forth in this Section 20, the
principal of, premium, if any, and interest on the Notes or Rollover Notes and
all other monetary obligations of the Company under the Note Documents are
hereby expressly made subordinate and subject in right of payment as provided in
this Section 20 to the prior payment in full in cash or Cash Equivalents of all
Senior Indebtedness.
20.2. Payment Over of Proceeds Upon Bankruptcy.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its assets, or
(b) any liquidation, dissolution or other winding up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c) any assignment for the benefit of creditors or any other marshalling of
assets or liabilities of the Company, then and in any such event the holders of
Senior Indebtedness shall be entitled to receive payment in full in cash or Cash
Equivalents of all Senior Indebtedness, or provision shall be made for such
payment in cash or Cash Equivalents, before the Holders of the Notes or Rollover
Notes are entitled to receive any payment or distribution of any kind or
character (excluding equity or debt securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment that, in
the case of such debt securities, are subordinated in right of payment to all
Senior Indebtedness that may at the time be outstanding to substantially the
same extent as, or to a greater extent than, the Notes or Rollover Notes are so
subordinated as provided in this Section 20 (such equity securities or
subordinated securities being hereinafter referred to as "Permitted Junior
Securities")) on account of principal of or interest on the Notes or Rollover
Notes, and to that end the holders of Senior Indebtedness shall be entitled to
receive, for application to the payment thereof, any payment or distribution of
assets of the Company of any kind or character (excluding Permitted Junior
Securities) that may be payable or deliverable in respect of the Notes or
Rollover Notes in any such case, proceeding, dissolution, liquidation or other
winding up or event.
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In the event that, notwithstanding the foregoing provisions of this
Section 20.2, any Holder of a Note or Rollover Note shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, in respect of principal, premium or
interest on the Notes or Rollover Notes before all Senior Indebtedness is paid
in full in cash or Cash Equivalents or payment thereof provided for in cash or
Cash Equivalents, then and in such event such payment or distribution (excluding
Permitted Junior Securities) shall be paid over or delivered forthwith to the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent
or other Person making payment or distribution of assets of the Company for
application to the extent necessary to pay all Senior Indebtedness in full in
cash or Cash Equivalents, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of Senior Indebtedness.
20.3. Suspension of Payment When Senior Indebtedness in Default.
(a) Unless Section 20.2 shall be applicable, upon the occurrence of
a Payment Event of Default, no payment or distribution of any assets of the
Company of any kind or character (excluding Permitted Junior Securities) shall
be made by the Company on account of principal of, premium or interest on the
Notes or Rollover Notes or any other amount payable hereunder, under the Notes
or Rollover Notes or under the other Note Documents unless and until such
Payment Event of Default shall have been cured or waived in writing or shall
have ceased to exist or such Senior Indebtedness shall have been discharged,
after which the Company shall resume making any and all required payments in
respect of the Notes or Rollover Notes, including any missed payments; provided,
however, that this Section 20.3(a) shall not prohibit any payment or prepayment
of the principal of, or accrued interest on, the Notes or Rollover Notes or any
other amount payable hereunder or under the Notes or Rollover Notes or under the
other Note Documents, which payment is made from the net proceeds of the sale of
Refinancing Securities or other debt or equity securities to the extent such
payment is otherwise required to be made under the terms of this Agreement.
(b) Unless Section 20.2 or 20.3(a) shall be applicable, upon (i) the
occurrence of a Non-payment Event of Default and (ii) receipt by each Holder (or
their representative for such notices if one has been appointed) of written
notice from the Bank Agent or other representative of the lenders under the
Senior Credit Agreement of such occurrence, then no payment or distribution of
any assets of the Company of any kind or character (excluding Permitted Junior
Securities) shall be made by the Company on account of principal of, premium or
interest on the Notes or Rollover Notes or any other amount payable hereunder,
under the Notes or Rollover Notes or under the other Note Documents for a period
(the "Payment Blockage Period") commencing on the date of receipt of such notice
unless and until (subject to any blockage of payments that may then be in effect
under Section 20.3(a)) (x) more than 179 days shall have elapsed since receipt
of such written notice by each Holder (or their representative for such notices
if one has been appointed), (y) such Non-payment Event of Default shall have
been cured or waived in writing or shall have ceased to exist or such Senior
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Indebtedness shall have been discharged or (z) such Payment Blockage Period
shall have been terminated by written notice to the Company and each Holder (or
their representative for such notices if one has been appointed) from the Bank
Agent or other representative of the lenders under the Senior Credit Agreement
initiating such Payment Blockage Period, after which, in the case of clause (x),
(y) or (z), the Company shall resume making any and all required payments in
respect of the Notes or Rollover Notes, including any missed payments; provided,
however, that this Section 20.3(b) shall not prohibit any payment or prepayment
of the principal of, or accrued interest on, the Notes or Rollover Notes or any
other amount payable hereunder, under the Notes or Rollover Notes or under the
other Note Documents, which payment is made from the proceeds of the sale of
Refinancing Securities or other debt or equity securities to the extent such
payment is otherwise required to be made under the terms of this Agreement. No
event of default with respect to Senior Indebtedness (other than an event of
default pursuant to the financial maintenance covenants of the Senior Credit
Agreement) that existed or was continuing on the date of the commencement of any
Payment Blockage Period shall be, or be made, the basis for the commencement of
a second Payment Blockage Period whether or not within a period of 365
consecutive days unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days (it being acknowledged that
any subsequent action that would give rise to an event of default pursuant to
any provisions under which an event of default previously existed or was
continuing shall constitute a new event default for this purpose).
Notwithstanding any other provision of this Agreement, only one Payment Blockage
Period may be commenced within any consecutive 365-day period, and in no event
will a Payment Blockage Period pursuant to this Section 20.3(b) extend beyond
179 days.
(c) In the event that, notwithstanding the foregoing, the Company
shall make any payment or distribution of assets of any kind or character,
whether in cash, property or securities, to any Holder of the Notes or Rollover
Notes prohibited by the foregoing provisions of this Section 20.3, then and in
such event such payment or distribution shall be held in trust for the benefit
of, and paid over and delivered to, the Bank Agent or other representative of
the lenders under the Senior Credit Agreement for application to the payment of
Senior Indebtedness remaining unpaid until all Senior Indebtedness has been paid
in full in cash or Cash Equivalents, after giving effect to any concurrent
payment, distribution or provision therefor to or for the benefit of the holders
of the Senior Indebtedness.
20.4. Payment Permitted If No Default.
Nothing contained in this Section 20 or elsewhere in this Agreement
or in the Notes or Rollover Notes shall prevent the Company, at any time except
in the circumstances described in Section 20.2 or under the conditions described
in Section 20.3, from making payments at any time of principal of or interest on
the Notes or Rollover Notes.
20.5. Subrogation to Rights of Holders of Senior Indebtedness.
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Subject to the payment in full of all Senior Indebtedness, the
Holders of the Notes or Rollover Notes shall be subrogated (equally and ratably
with the holders of all indebtedness of the Company that by its express terms is
subordinated to the Senior Indebtedness of the Company to the same extent as the
Notes or Rollover Notes are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of and interest on the Notes or Rollover
Notes and all other amounts payable under this Agreement and the other Note
Documents shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any cash, property
or securities to which the Holders of the Notes or Rollover Notes would be
entitled except for the provisions of this Section 20, and no payments over
pursuant to the provisions of this Section 20 to the holders of Senior
Indebtedness by the Holders of the Notes or Rollover Notes, shall, as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
of the Notes or Rollover Notes, be deemed to be a payment or distribution by the
Company to or on account of the Notes or Rollover Notes.
20.6. Provisions Solely to Define Relative Rights.
The provisions of this Section 20 are and are intended solely for
the purpose of defining the relative rights of the Holders of the Notes or
Rollover Notes, on the one hand, and the holders of Senior Indebtedness, on the
other hand. Nothing contained in this Section 20 or elsewhere in this Agreement,
in the Notes or Rollover Notes or in any other Note Documents is intended to or
shall (a) impair, as among the Company and its creditors other than holders of
Senior Indebtedness and the Holders of the Notes or Rollover Notes, the
obligation of the Company, which is absolute and unconditional, to pay the
Holders of the Notes or Rollover Notes the principal of and interest on the
Notes or Rollover Notes and all other amounts payable under this Agreement and
the other Note Documents as and when the same shall become due and payable, all
in accordance with the terms hereof and of the Notes or Rollover Notes; (b)
affect the relative rights against the Company of the Holders of the Notes or
Rollover Notes and creditors of the Company other than the holders of Senior
Indebtedness; (c) prevent the Holders of the Notes or Rollover Notes from
exercising all remedies otherwise permitted by applicable law upon default under
this Agreement or in any other Note Documents, subject to the rights, if any,
under this Section 20 of the holders of Senior Indebtedness (i) in any case,
proceeding, dissolution, liquidation or other winding up or assignment for the
benefit of creditors of the Company referred to in Section 20.2, to receive,
pursuant to and in accordance with such Section, cash, property and securities
otherwise payable or deliverable to the Holders of the Notes or Rollover Notes
or (ii) under the conditions specified in Section 20.3, to prevent any payment
prohibited by such Section; or (d) limit the right of the Holders of the Notes
or Rollover Notes to take any action to accelerate the maturity of the Notes or
Rollover Notes pursuant to Section 10 or to pursue any rights or remedies
hereunder or under applicable law.
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20.7. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Agreement, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
(b) Without in any way limiting the generality of Section 20.7(a),
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Holders of the Notes and the Rollover
Notes, without incurring responsibility to the Holders of the Notes and the
Rollover Notes and without impairing or releasing the subordination provided in
this Section 20 or the obligations hereunder of the Holders of the Notes and the
Rollover Notes to the holders of Senior Indebtedness, do any one or more of the
following: (1) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (3) release any
Person liable in any manner for the collection of Senior Indebtedness; and (4)
exercise or refrain from exercising any rights against the Company and any other
Person.
20.8. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred
to in this Section 20, the Holders of the Notes and the Rollover Notes shall be
entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Holders of the Notes and
the Rollover Notes, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Section 20.
20.9. Notice to the Holders of the Notes and the Rollover Notes.
The Holders of the Notes and the Rollover Notes shall not be charged
with knowledge of the existence of any fact that would prohibit the making of
any payment to the Holders of the Notes and the Rollover Notes under this
Agreement or the Notes, the Rollover
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Notes or any other Note Documents, unless and until the Holders of the Notes and
the Rollover Notes shall have received written notice thereof as contemplated
hereby; and, prior to the receipt of any such written notice, the Holders of the
Notes and the Rollover Notes shall be entitled in all respects to assume that no
such fact exists.
20.10. Proof of Claim.
(a) If any proceeding referred to in Section 10.1(g) above is
commenced by or against any Obligor, the Holders of the Notes and the Rollover
Notes shall duly and promptly take such action as the Bank Agent may reasonably
request to file appropriate claims or proofs of claim in respect of the
Subordinated Indebtedness.
(b) If any Holder of the Notes or the Rollover Notes does not file
a proper claim or proof of claim in the form required in any proceeding referred
to in Section 10.1(g) hereof at least 30 days before the expiration of the time
to file such claim, the Bank Agent is hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes and the Rollover Notes.
(c) Nothing herein contained shall be deemed to authorize the Bank
Agent, any holder of Senior Indebtedness or any representative thereof to
authorize or consent to, or accept or adopt on behalf of any Holder of Notes and
the Rollover Notes, any plan of reorganization, arrangement or composition
affecting the Notes, the Rollover Notes or the rights of any Holder thereof, or
to authorize the Bank Agent, any holder of Senior Indebtedness, or any
representative thereof to vote in respect of the claim of any Holder of the
Notes and the Rollover Notes in any such proceeding.
21. MISCELLANEOUS.
21.1. Successors and Assigns.
Each Purchaser shall have the right to resell in a manner
consistent with applicable law and the terms and conditions of this Agreement
the Notes or Rollover Notes to one or more third parties, whether by transfer,
assignment or participation, which right is unconditional.
All covenants and other agreements contained in this Agreement or
any of the other Note Documents by or on behalf of any of the parties hereto
bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent Holder of a Note or Rollover
Note), whether or not so expressed.
95
<PAGE>
21.2. Payments Due on Non-Business Days.
Anything in this Agreement or the Notes or the Rollover Notes to the
contrary notwithstanding, any payment of principal of, or premium, if any, or
interest on, any Note or Rollover Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day and such
extension of time shall in such case be included in the computation of payment
of interest thereunder.
21.3. Satisfaction Requirement.
Except as otherwise provided herein or in any of the other Note
Documents, if any agreement, certificate or other writing, or any action taken
or to be taken, is by the terms of this Agreement or any of the other Note
Documents required to be satisfactory to you or to the Required Holders, the
determination of such satisfaction shall be made by you or the Required Holders,
as the case may be, in the judgment (exercised reasonably and in good faith) of
the Person or Persons making such determination.
21.4. Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by applicable law) not
invalidate or render unenforceable such provision in any other jurisdiction.
21.5. Construction; Accounting Terms, Etc.
(a) Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any
other covenant. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
(b) Except as otherwise expressly provided in this Agreement or any
of the other Note Documents, all accounting terms used herein or therein shall
be interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to you hereunder shall be prepared,
in accordance with GAAP.
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21.6. Computation of Time Periods.
In this Agreement, in the computation of periods of time from a
specific date to a later specified date, the word "from" means "from and
including", the word "through" means "through and including", and the words "to"
and "until" each mean "to but excluding".
21.7. Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be effective as delivery of
a manually executed counterpart of this Agreement.
21.8. GOVERNING LAW; SUBMISSION TO JURISDICTION, ETC.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(b) THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY AND ASSETS, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW
YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW
YORK CITY, NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ROLLOVER
NOTES OR THE OTHER NOTE DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, AND THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH NEW YORK STATE COURT OR, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. THE
COMPANY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF COPIES OF ANY SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY DELIVERING A COPY
OF SUCH PROCESS TO THE COMPANY, AT ITS ADDRESS SPECIFIED IN SECTION 16 OR BY ANY
OTHER METHOD PERMITTED BY LAW. THE COMPANY HEREBY AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN
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ANY OTHER MANNER PROVIDED BY APPLICABLE LAW. NOTHING IN THIS AGREEMENT SHALL
AFFECT THE RIGHT OF ANY HOLDER OF NOTES OR ROLLOVER NOTES TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR ANY RIGHT THAT ANY HOLDER OF THE NOTES
OR ROLLOVER NOTES MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT, THE NOTES OR THE ROLLOVER NOTES OR THE OTHER NOTE DOCUMENTS
IN THE COURTS OF ANY JURISDICTION.
(c) THE COMPANY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, THE NOTES OR THE ROLLOVER NOTES OR THE OTHER NOTE
DOCUMENTS IN ANY NEW YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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21.9. WAIVER OF JURY TRIAL.
EACH OF THE COMPANY AND THE HOLDERS OF THE NOTES OR THE ROLLOVER
NOTES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES (AND ROLLOVER NOTES) OR
ANY OF THE OTHER NOTE DOCUMENTS, ANY DOCUMENT DELIVERED UNDER THE NOTE DOCUMENTS
OR THE ACTIONS OF ANY HOLDER OF THE NOTES IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
Very truly yours,
URS CORPORATION
By /s/ Kent P. Ainsworth
----------------------------------------
Name: Kent P. Ainsworth
Title: Executive Vice President and
Chief Financial Officer
* * * * *
S-99
<PAGE>
If you are in agreement with the foregoing, please sign in the appropriate
space provided below and return it to the Company, whereupon the foregoing shall
become a binding agreement between you and the Company.
Very truly yours,
MORGAN STANLEY SENIOR FUNDING, INC.
By /s/ Michael Hart
---------------------------------------
Name: Michael Hart
Title: Principal
S-100
<PAGE>
WELLS FARGO BANK, NATIONAL ASSOCIATION
By /s/ Abraham B. Mintz
----------------------------------------
Name: Abraham B. Mintz
Title: Senior Vice President
S-101
<PAGE>
SCHEDULE I
----------
COMMITMENT AMOUNTS AND
INFORMATION RELATING TO THE PURCHASERS
--------------------------------------
Name of Purchaser: Commitment
- -------------------------------------------------------------------
Morgan Stanley Senior Funding, Inc. $180,000,000
Name(s) for Registration of Notes Purchased:
Morgan Stanley Senior Funding, Inc.
Mailing Address:
1585 Broadway
New York, New York 10036
Attention: James Morgan
Telephone No.: (212) 761-4866
Telecopier No.: (212) 761-0592
Wire Instructions (including ABA No. and Account No.)
For Payment of Principal and Interest:
To: CITIBANK, N.A.
NEW YORK, NY 10043
ABA No. 021000089
In Favor of: Morgan Stanley Senior Funding, Inc.
Attention: James Morgan
Account #: 40699776
United States Tax Identification No. (if any): 13-3888640
Physical Delivery Instructions:
1585 Broadway
New York, New York 10036
Attention: James Morgan
<PAGE>
Name of Purchaser: Commitment
- --------------------------------------------------------------------------
Wells Fargo Bank, National Association $20,000,000
Name(s) for Registration of Notes Purchased:
Wells Fargo Bank, National Association
Mailing Address:
420 Montgomery Street
San Francisco, California 94163
Attention: [_________]
Telephone No.: (415) [___-____]
Telecopier No.: (415) [___-____]
Wire Instructions (including ABA No. and Account No.)
For Payment of Principal and Interest:
To: Wells Fargo Bank, National Association
420 Montgomery Street
San Francisco, California 94163
ABA #: [_________]
In Favor of: Wells Fargo Bank, National Association
Attention: [________]
Account #: ____________
United States Tax Identification No. (if any): [__________]
Physical Delivery Instructions:
420 Montgomery Street
San Francisco, California 94163]
Attention: [________]
I-2
<PAGE>
SCHEDULE II
- -----------
DEFINED TERMS
-------------
Except as set forth in Section 9A of this Agreement, as used in this
Agreement, the following terms shall have the respective meanings set forth
below (such meanings to be equally applicable to both the singular and plural
forms of the term defined):
"Account" means an account indicated in Schedule I hereto or otherwise
provided in writing to the Company.
"Account Receivable" means any right to payment for goods sold or
leased or for services rendered.
"Affiliate" as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or that is under common control
with, that Person or is a director or officer of such Person. For purposes
of this definition, "control" (including, with correlative meanings, the
terms "controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or by
contract or otherwise. Any Person, other than a Holder, who owns
beneficially or of record Securities representing more than 5% of the total
outstanding Securities of the Company shall be an Affiliate of the Company.
"Agreement" means this Note Purchase Agreement, as such agreement may
be amended, supplemented or otherwise modified from time to time in
accordance with the terms of Section 15.
"Asset Sale", as applied to any Person, means the sale by such Person
or any of its Subsidiaries to any other Person of (a) any of the stock of
any Subsidiary of such Person (other than any stock sold to licensed
professionals employed by such Person or its Subsidiaries in order to
comply with licensing laws or any stock sold to qualify directors if
required by applicable law), (b) substantially all of the assets of any
division or line of business of such Person or any of its Subsidiaries
(other than the assets of any division or line of business to the extent
that the aggregate value of such assets is less than $1,000,000) or (c) any
other assets (whether tangible or intangible) of such Person or any of its
Subsidiaries (other than any assets to the extent that the aggregate value
of such assets sold in any single transaction or related series of
transactions during any Fiscal Year is less than $1,000,000).
<PAGE>
"Bank Agent" means Wells Fargo or any successor thereto.
"Bridge Note Disclosure Letter" means the letter dated the Purchase
Date delivered to the Purchasers by the Company containing information with
respect to the Company and its Subsidiaries and DMG and its Subsidiaries.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which commercial banks are required or authorized by law to be
closed in New York, New York or San Francisco, California.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"capital stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (c) in the case of a partnership,
partnership interests (whether general or limited), (d) in the case of a
limited liability company, membership interests, and (e) any other interest
or participation that confers on a Person the right to receive a share of
the profits and losses of, or distribution of assets of, the issuing
Person.
"Cash Equivalents" means, as at any date of determination, (a)
marketable securities (i) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government or (ii) issued
by any agency of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America, in
each case maturing within one year after such date; (b) marketable direct
obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality
thereof, in each case maturing within one year after such date and having,
at the time of the acquisition thereof, the highest rating obtainable from
either Standard & Poor's Ratings Group ("S&P") or Moody's Investors
Service, Inc. ("Moody's"); (c) commercial paper maturing no more than one
year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (d) certificates of deposit or bankers' acceptances maturing
within one year after such date and issued or accepted by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia or any foreign country recognized by
the United States of America and which bank (i) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator), (ii) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000 or the foreign currency equivalent thereof, and
(iii) has outstanding debt that is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act); and (e)
shares of
<PAGE>
any money market mutual fund that (i) has at least 95% of its assets
invested continuously in the types of investments referred to in clauses
(a) and (b) above, (ii) has net assets of not less than $500,000,000 and
(iii) has the highest rating obtainable from either S&P or Moody's.
"Change of Control" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
other than RCBA and its Affiliates becomes the ultimate "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of Voting Interests
representing 35% or more of the total voting power of the Voting Interests
of the Company, on a fully diluted basis or (ii) individuals who on the
Purchase Date constitute the Board of Directors of the Company (together
with any new directors whose election by the Board of Directors of the
Company or whose nomination by the Board of Directors of the Company for
election by the Company's stockholders was approved by a vote of at least
one-half of the members of the Board of Directors of the Company then in
office who either were members of the Board of Directors of the Company on
June 9, 1999 or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the members of
the Board of Directors of the Company then in office.
"Change of Control Payment" has the meaning specified in Section
6.2(a).
"Change of Control Repurchase Date" has the meaning specified in
Section 6.2(b).
"Commitment" means, with respect to any Purchaser at any time, the
amount set forth opposite such Purchaser's name on Schedule I hereto under
the caption "Commitment" with respect to the Notes.
"Commitment Letter" means that certain letter and attached term sheets
dated May 3, 1999 from MS to the Company, as such letter may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Company" has the meaning specified on page one of this Agreement.
"Company Certificates of Designation" means the Certificates of
Designation for the Company Series A Preferred Stock, the Company Series B
Preferred Stock and the Company Series C Preferred Stock, in the form
delivered to MS on May 3, 1999, as such Certificate of Designation may be
further amended from time to time to the extent permitted under Section
9.13.
"Company Series A Preferred Stock" means the Series A Preferred Stock,
$0.01 par value per share, of the Company.
II-3
<PAGE>
"Company Series B Preferred Stock" means the Series B Convertible
Exchangeable Preferred Stock, $0.01 par value per share, of the Company.
"Company Series C Preferred Stock" means the Series C Preferred Stock,
$0.01 par value per share, of the Company.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit F hereto delivered to the Holders of the Notes by the Company
pursuant to Section 8.1(c).
"Confidential Information" means materials, documents and other
information delivered to you by or on behalf of the Company or any of its
Subsidiaries in connection with any of the transactions contemplated by or
otherwise pursuant to this Agreement or any of the other Note Documents,
whether before or after the date of this Agreement, that is proprietary in
nature and that was clearly marked, labeled or otherwise adequately
identified when received by any Holder as being confidential information of
the Company or such Subsidiary, but does not include any such information
that (a) is or was generally available to the public (other than as a
result of a breach of your confidentiality obligations hereunder) or (b)
becomes known or available to any Holder on a nonconfidential basis other
than through disclosure by the Company or any of its Subsidiaries.
"Consolidated Capital Expenditures" means, for any period, the sum,
without duplication, of (a) the aggregate of all expenditures (whether paid
in cash or other consideration or accrued as a liability and including that
portion of Capital Leases that is capitalized on the consolidated balance
sheet of the Company and its Subsidiaries) by the Company and its
Subsidiaries during that period for fixed assets and leasehold improvements
of the Company and its Subsidiaries plus (b) to the extent not covered by
clause (a) of this definition, the aggregate of all expenditures by the
Company and its Subsidiaries during that period to purchase or develop
computer software or systems (but only to the extent such expenditures are
capitalized on the consolidated balance sheet of the Company and its
Subsidiaries in conformity with GAAP) minus (c) to the extent included in
clause (a) of this definition, the total cash consideration expended by the
Company and its Subsidiaries during such period to acquire (by purchase or
otherwise) the business, property or fixed assets of any Person, or the
stock or other evidence of beneficial ownership of any Person that, as a
result of such acquisition, becomes a Subsidiary of the Company.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (a) with
respect to any Indebtedness, lease, dividend or other obligation of another
if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such
obligation of another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with,
or that the Holders of such
II-4
<PAGE>
obligation will be protected (in whole or in part) against loss in respect
thereof, (b) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for
reimbursement of drawings or (c) under "Hedge Agreements" under the Senior
Credit Agreement. Contingent Obligations shall include (i) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in
the ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of another, (ii) the
obligation to make take-or-pay or similar payments if required regardless
of non-performance by any other party or parties to an agreement, and (iii)
any liability of such Person for the obligation of another through any
agreement (contingent or otherwise) (A) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form
of loans, advances, stock purchases, capital contributions or otherwise) or
(B) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described
under subclauses (A) or (B) of this sentence, the primary purpose or intent
thereof is as described in the preceding sentence. The amount of any
Contingent Obligation in the form of a letter of credit or a guaranty of a
specified amount shall be equal to the face amount of the letter of credit
or the amount of the obligation so guaranteed or otherwise supported, as
the case may be, or, if less, the amount to which such Contingent
Obligation is specifically limited. The amount of any Contingent Obligation
that is not in the form of a guaranty of a specified amount shall be equal
to the reasonably anticipated maximum amount of such Contingent Obligation
as determined by the Company in good faith.
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is subject.
"Default" means any Event of Default or any event or condition that
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Default Rate" means 2% per annum above the rate of interest stated in
clause (a) of the second paragraph of the Notes.
"Discounted Value" means, with respect to any Fixed Rate Rollover
Note, the amount obtained by discounting (a) the principal amount of such
Fixed Rate Rollover Note from its scheduled maturity date and (b) each
interest payment due in respect of such Fixed Rate Rollover Note from its
respective payment date to, in each case, the proposed redemption or
repayment date, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Fixed Rate Rollover Notes is payable) equal to the
Reinvestment Yield with respect to the principal amount of such Fixed Rate
Rollover Note.
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<PAGE>
"DMG" means Dames & Moore Group, a Delaware corporation.
"DMG Fiscal Year" means, prior to the consummation of the Merger, the
fiscal year of DMG and its Subsidiaries ending on the last Friday in March
in each calendar year.
"Domestic Subsidiary" means any Subsidiary organized or incorporated
under the laws of a state of the United States of America.
"DTC" has the meaning specified in Section 8.14.
"Employee Benefit Plan", as applied to any Person, means any "employee
benefit plan" as defined in Section 3(3) of ERISA that is maintained or
contributed to by such Person, any of its Subsidiaries or any of their
respective ERISA Affiliates.
"Environmental Claim" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or
other order or directive (conditional or otherwise), by any Governmental
Authority or any other Person, arising (a) pursuant to or in connection
with any actual or alleged violation of any Environmental Law, (b) in
connection with any Hazardous Materials or any actual or alleged Hazardous
Materials Activity or (c) in connection with any actual or alleged damage,
injury, threat or harm to health, safety, natural resources or the
environment.
"Environmental Laws" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other requirements of Governmental
Authorities relating to (i) environmental matters, including those relating
to any Hazardous Materials Activity, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational
safety and health, industrial hygiene, land use or the protection of human,
plant or animal health or welfare, in any manner applicable to the Company
or any of its Subsidiaries or any Facility, including the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S) 9601
et seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. (S) 1251 et
seq.), the Clean Air Act (42 U.S.C. (S) 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. (S) 2601 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. (S) 136 et seq.), the Occupational
Safety and Health Act (29 U.S.C. (S) 651 et seq.), the Oil Pollution Act
(33 U.S.C. (S) 2701 et seq.) and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. (S) 11001 et seq.), each as amended or
supplemented, any analogous present or future state or local statutes or
laws, and any regulations promulgated pursuant to any of the foregoing.
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<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA Affiliate", as applied to any Person, means (a) any corporation
that is a member of a controlled group of corporations within the meaning
of Section 414(b) of the Internal Revenue Code of which that Person is a
member; (b) any trade or business (whether or not incorporated) that is a
member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person
is a member; and (c) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (a) above or any trade or
business described in clause (b) above is a member. Any former ERISA
Affiliate of the Company or any of its Subsidiaries shall continue to be
considered an ERISA Affiliate of the Company or such Subsidiary within the
meaning of this definition with respect to the period such entity was an
ERISA Affiliate of the Company or such Subsidiary and with respect to
liabilities arising after such period for which Company or such Subsidiary
could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (a) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to
any Pension Plan of the Company or any of its Subsidiaries (excluding those
for which the provision for 30-day notice to the PBGC has been waived by
regulation); (b) the failure to meet the minimum funding standard of
Section 412 of the Internal Revenue Code with respect to any Pension Plan
of the Company or any of its Subsidiaries (whether or not waived in
accordance with Section 412(d) of the Internal Revenue Code) or the failure
by the Company or any of its Subsidiaries to make by its due date a
required installment under Section 412(m) of the Internal Revenue Code with
respect to any Pension Plan or the failure by the Company or any of its
Subsidiaries to make any required contribution to a Multiemployer Plan; (c)
the provision by the administrator of any Pension Plan of the Company or
any of its Subsidiaries pursuant to Section 4041(a)(2) of ERISA of a notice
of intent to terminate such plan in a distress termination described in
Section 4041(c) of ERISA; (d) the withdrawal by the Company, any of its
Subsidiaries or any of their respective ERISA Affiliates from any Pension
Plan with two or more contributing sponsors or the termination of any such
Pension Plan resulting in liability pursuant to Section 4063 or 4064 of
ERISA; (e) the institution by the PBGC of proceedings to terminate any
Pension Plan of the Company or any of its Subsidiaries, or the occurrence
of any event or condition that might constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan of the Company or any of its Subsidiaries; (f) the imposition of
liability on the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or
by reason of the application of Section 4212(c) of ERISA; (g) the
withdrawal of the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates in a complete or partial withdrawal (within the
meaning of Sections 4203 and 4205 of
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<PAGE>
ERISA) from any Multiemployer Plan if there is any potential liability
therefor, or the receipt by the Company, any of its Subsidiaries or any of
their respective ERISA Affiliates of notice from any Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA, or that it intends to terminate or has terminated under Section
4041A or 4042 of ERISA; (h) the occurrence of an act or omission that could
give rise to the imposition on the Company, any of its Subsidiaries or any
of their respective ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 409,
Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any
Employee Benefit Plan; (i) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan of the
Company or any of its Subsidiaries other than a Multiemployer Plan or the
assets thereof, or against the Company, any of its Subsidiaries or any of
their respective ERISA Affiliates in connection with any Employee Benefit
Plan; (j) receipt from the Internal Revenue Service of notice of the
failure of any Pension Plan of the Company or any of its Subsidiaries (or
any other Employee Benefit Plan of the Company or any of its Subsidiaries
intended to be qualified under Section 401(a) of the Internal Revenue Code)
to qualify under Section 401(a) of the Internal Revenue Code, or the
failure of any trust forming part of any Pension Plan of the Company or any
of its Subsidiaries to qualify for exemption from taxation under Section
501(a) of the Internal Revenue Code; or (k) the imposition of a Lien
pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan of the Company or any of
its Subsidiaries.
"Event of Default" has the meaning specified in Section 10.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the regulations promulgated and the rulings issued
from time to time thereunder.
"Existing Senior Subordinated Note Indenture" means the Indenture,
dated as of March 16, 1989, between Thortec International, Inc. and MTrust
Corp, National Association, as amended by Amendment Number 1 and Amendment
Number 2, as such indenture may be further amended from time to time to the
extent permitted under Section 9.13(b).
"Existing Senior Subordinated Notes" means the Company's 8 5/8% Senior
Subordinated Notes due 2004 in the original aggregate principal amount of
$36,814,500 and the remaining aggregate principal amount of $6,455,000 as
of the Closing Date.
"Existing Subordinated Agreements" means, collectively, the Existing
Senior Subordinated Note Indenture and the Existing Subordinated Note
Indenture.
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<PAGE>
"Existing Subordinated Indebtedness" means, collectively, the Existing
Senior Subordinated Notes and the Existing Subordinated Notes.
"Existing Subordinated Note Indenture" means the Indenture, dated as
of February 15, 1987, between the Company and The Bank of New York as
assignee of First Interstate Bank of California, as amended by Amendment
Number 1, as such indenture may be further amended from time to time to the
extent permitted under Section 9.13(b).
"Existing Subordinated Notes" means the Company's 6 1/2% Convertible
Subordinated Notes due 2012 in the original aggregate principal amount of
$57,500,000 and the remaining aggregate principal amount of $1,833,000 as
of the Closing Date.
"Facilities" means any and all real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or
heretofore owned, leased, operated or used by the Company or any of its
Subsidiaries or any of their respective predecessors or Affiliates.
"Financial Plan" has the meaning assigned to that term in Section
8.1(l).
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of the Company and its
Subsidiaries ending on October 31 of each calendar year. For purposes of
this Agreement, any particular Fiscal Year shall be designated by reference
to the calendar year in which such Fiscal Year ends.
"Fixed Rate Rollover Notes" has the meaning assigned to that term in
Section 7.6.
"Foreign Subsidiary" means any Subsidiary formed or organized under
the laws of a jurisdiction other than a state of the United States of
America.
"GAAP" means generally accepted accounting principles in effect in the
United States of America and applied on a consistent basis.
"Global Note" has the meaning specified in Section 8.14.
"Governmental Authority" means any nation or government, any state,
province, city, municipal entity or other political subdivision thereof,
and any governmental, executive, legislative, judicial, administrative or
regulatory agency, department, authority, instrumentality, commission,
board or similar body, whether federal, state, provincial, territorial,
local or foreign.
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<PAGE>
"Governmental Authorization" means any authorization, approval,
consent, franchise, license, covenant, order, ruling, permit,
certification, exemption, notice, declaration or similar right, undertaking
or other action of, to or by, or any filing, qualification or registration
with, any Governmental Authority necessary in order for the Company or any
of its Subsidiaries (a) to own or lease and operate their respective
property and assets or to conduct their respective businesses, (b) to issue
and sell the Notes pursuant to the terms of this Agreement, and to perform
their other Obligations under or in respect of the Note Documents and (c)
to consummate the Refinancing.
"Hazardous Materials" means (a) any chemical, material or substance at
any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely
hazardous waste", "acutely hazardous waste", "radioactive waste",
"biohazardous waste", "pollutant", "toxic pollutant", "contaminant",
"restricted hazardous waste", "infectious waste", "toxic substances", or
any other term or expression intended to define, list or classify
substances by reason of properties harmful to health, safety or the indoor
or outdoor environment (including harmful properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity,
"TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (b) any oil, petroleum, petroleum fraction
or petroleum derived substance; (c) any drilling fluids, produced waters
and other wastes associated with the exploration, development or production
of crude oil, natural gas or geothermal resources; (d) any flammable
substances or explosives; (e) any radioactive materials; (f) any asbestos-
containing materials; (g) urea formaldehyde foam insulation; (h) electrical
equipment that contains any oil or dielectric fluid containing
polychlorinated biphenyls; (i) pesticides; and (j) any other chemical,
material or substance, exposure to which is prohibited, limited or
regulated by any Governmental Authority or that may or could pose a hazard
to the health and safety of the owners, occupants or any Persons in the
vicinity of any Facility or to the indoor or outdoor environment.
"Hazardous Materials Activity" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any
of the foregoing.
"Holder" means, with respect to any Note or Rollover Note, the Person
in whose name such Note or Rollover Note is registered in the register
maintained by the Company pursuant to Section 11.1.
"Inactive Subsidiary" has the meaning assigned to that term in Section
4.4(c).
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<PAGE>
"Indebtedness", as applied to any Person, means (a) all indebtedness
for borrowed money, (b) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (c) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money, (d) any obligation owed for all or any part of the deferred purchase
price of property or services (excluding any such obligations incurred
under ERISA), which purchase price is (i) due more than six months from the
date of incurrence of the obligation in respect thereof or (ii) evidenced
by a note or similar written instrument, excluding, in the case of both
clauses (i) and (ii), accounts receivable from the Company and its
Subsidiaries arising in the ordinary course of business and (e) all
indebtedness secured by any Lien on any property or asset owned or held by
that Person regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the credit of that
Person. Obligations under "Interest Rate Agreements" and "Currency
Agreements" constitute (A) in the case of "Hedge Agreements" (as those
terms are defined in the Senior Credit Agreement), Contingent Obligations,
and (B) in all other cases, Investments, and in neither case constitute
Indebtedness.
"Indemnified Liabilities" has the meaning specified in Section
13.2(a).
"Indemnified Party" has the meaning specified in Section 13.2(a).
"Institutional Investor" means any bank, trust company, savings and
loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer or any
other similar financial institution or entity, regardless of legal form
that meets the definition of a "qualified institutional buyer" under Rule
144A of the Securities Act.
"Interest Payment Date" has the meaning specified therefor in the
respective Note or Rollover Note.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the rulings
issued from time to time thereunder.
"Investment" means (a) any direct or indirect purchase or other
acquisition by the Company or any of its Subsidiaries of, or of a
beneficial interest in, any Securities of any other Person (including any
Subsidiary of the Company), (b) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by any Subsidiary of
the Company from any Person other than the Company or any of its
Subsidiaries, of any equity Securities of such Subsidiary, (c) any direct
or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
the
II-11
<PAGE>
Company or any of its Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that, in the
case of accounts receivable from Persons other than the Company and its
Subsidiaries, are not current assets or did not arise from sales to that
other Person in the ordinary course of business and, in the case of
accounts receivable from the Company and its Subsidiaries, did not arise in
the ordinary course of business, or (d) "Interest Rate Agreements" or
"Currency Agreements" not constituting "Hedge Agreements" (as those terms
are defined in the Senior Credit Agreement). The amount of any Investment
shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such
Investment and minus the amount of any return of capital contributed in
respect of any Investment (not to exceed the original cost of such
Investment plus the cost of all additions thereto).
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any Subsidiary of any Person be considered
to be a Joint Venture to which such Person is a party.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale
or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the
foregoing.
"Make-Whole Premium" means, with respect to any Fixed Rate Rollover
Note, an amount equal to the excess, if any, of the Discounted Value of the
unpaid principal amount of such Fixed Rate Rollover Note and of the
interest payments due in respect of such Fixed Rate Rollover Note to be
paid from the proposed redemption or repayment date to the respective
scheduled payment or maturity date thereof over such principal amount.
"Material Adverse Effect" means (a) a material adverse effect upon the
business, financial condition, operations, performance, properties or
prospects of the Company and its Subsidiaries, taken as a whole, or (b) the
material impairment of the ability of any Obligor to perform, or of any
Holder of a Note or Rollover Note to enforce, the Obligations of the
Obligors under the Note Documents.
"Merger" means the merger between the Merger Subsidiary and DMG in
which DMG will be the surviving corporation and a wholly-owned Subsidiary
of the Company.
"Merger Agreement" means that certain Agreement and Plan of Merger by
and among DMG, the Company and the Merger Subsidiary, dated as of May 5,
1999 in the form delivered to the Holders of the Notes prior to their
execution of this Agreement and
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<PAGE>
as such agreement may be amended from time to time thereafter to the extent
permitted under Section 9.13(a).
"Merger Subsidiary" means Demeter Acquisition Corporation, a Delaware
corporation, and a wholly-owned Subsidiary of the Company.
"MS" means Morgan Stanley Senior Funding, Inc.
"Multiemployer Plan" means any Employee Benefit Plan that is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"Net Cash Proceeds" means, with respect to the issuance or incurrence
of any Indebtedness by any Person, or any Asset Sale, as the case may be,
the aggregate amount of cash received from time to time (whether as initial
consideration or through payment or disposition of deferred consideration)
by or on behalf of such Person for its own account in connection with any
such transaction, after deducting therefrom only (a) brokerage commissions,
underwriting fees and discounts, legal fees, finder's fees and other
similar fees and commissions, (b) the amount of taxes payable in connection
with or as a result of such transaction, in each case to the extent, but
only to the extent, that the amounts so deducted are, at the time of
receipt of such cash, actually paid or payable to a Person that is not an
Affiliate of such Person and are properly attributable to such transaction
or to the property or asset that is the subject thereof and (c) payment of
the outstanding principal amount of, premium or penalty, if any, and
interest on any Indebtedness (other than the Indebtedness under the Senior
Credit Agreement) that is secured by a Lien on the assets in question and
that is to be repaid under the terms thereof as a result of such Asset
Sale.
"Net Equity Securities Proceeds" means the cash proceeds, net of
underwriting discounts and commissions and other reasonable costs and
expenses associated therewith, including without limitation, reasonable
legal fees and expenses of the sale or issuance by any Person of any shares
of its capital stock (or other ownership or profit interests therein), any
securities convertible into or exchangeable for shares of its capital stock
(or other ownership or profit interests therein) or any warrants, options
or other rights for the purchase or acquisition of any shares of its
capital stock (or other ownership or profit interests therein).
"Non-payment Event of Default" means any event (other than a Payment
Event of Default) the occurrence of which entitles one or more Persons to
accelerate the maturity of any Senior Indebtedness.
"Note Documents" means, collectively, this Agreement, the Notes, the
Rollover Notes, the Secondary Notes, the Rollover Notes Registration Rights
Agreement, the Warrant Agreements, the Warrants, and the Subsidiary
Guaranties and all other
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<PAGE>
agreements, instruments and other documents evidencing any Obligation of
any of the Obligors, in each case as such agreement, instrument or other
document may be amended, supplemented or otherwise modified hereafter from
time to time in accordance with the terms thereof and Section 15.
"Notes" has the meaning specified in Section 1.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 10.1(g). Without limiting the generality
of the foregoing, the Obligations of the Obligors under the Note Documents
include the obligation to pay principal, interest, premiums, charges,
expenses, fees, reasonable attorneys' fees and disbursements, indemnities
and other amounts payable by any of the Obligors under any of the Note
Documents.
"Obligors" means, collectively, the Company and each Subsidiary
Guarantor.
"Officer's Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its president or by
its chief financial officer; provided that every Officer's Certificate with
respect to the compliance with a condition precedent to the purchase of any
Notes hereunder shall include: (a) a statement that the officer making or
giving such Officer's Certificate has read such condition and any
definitions or other provisions contained in this Agreement relating
thereto, (b) a statement that, in the opinion of the signer, he or she has
made or has caused to be made such examination or investigation as is
necessary to enable such signer to express an informed opinion as to
whether or not such condition has been complied with, and (c) a statement
as to whether, in the opinion of the signer, such condition has been
complied with.
"Operating Lease" as applied to any Person, means any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease other than
any such lease under which that Person is the lessor.
"Organizational Documents" means (a) with respect to any corporation,
its certificate or articles of incorporation and its bylaws, (b) with
respect to any limited partnership, its certificate of limited partnership
and its partnership agreement, (c) with respect to any general partnership,
its partnership agreement, (d) with respect to any limited liability
company, its articles or certificate of organization and its operating
II-14
<PAGE>
agreement and (e) with respect to any other entity, its equivalent
organizational, governing documents.
"Other Taxes" has the meaning specified in Section 13.3(b).
"Payment Blockage Period" has the meaning specified in Section
20.3(b).
"Payment Event of Default" means any default in the payment of any
principal of, or premium, if any, or interest on, Senior Indebtedness
beyond any applicable grace period with respect thereto, whether at stated
maturity or as the result of acceleration or otherwise.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA, or any successor thereto.
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, that is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
"Permitted Encumbrances" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or by ERISA, any such Lien relating to or imposed in
connection with any Environmental Claim:
(a) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by Section 8.3;
(b) statutory Liens of landlords, statutory Liens of banks and
rights of set-off, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by law, in each
case incurred in the ordinary course of business (i) for amounts not yet
overdue or (ii) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of five days) are being
contested in good faith by appropriate proceedings, so long as such
reserves or other appropriate provisions, if any, as shall be required by
GAAP shall have been made for any such contested amounts;
(c) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety, bid and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
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<PAGE>
(d) any attachment or judgment Lien not constituting an Event of
Default under Section 10.1(h) or (i);
(e) leases or subleases granted to third parties not interfering
in any material respect with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(f) easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each case that do not
and will not interfere in any material respect with the ordinary conduct of
the business of the Company or any of its Subsidiaries;
(g) any (i) interest or title of a lessor or sublessor under any
lease not prohibited by this Agreement, (ii) restriction or encumbrance
that the interest or title of such lessor or sublessor may be subject to,
or (iii) subordination of the interest of the lessee or sublessee under
such lease to any restriction or encumbrance referred to in the preceding
clause (ii), so long as the holder of such restriction or encumbrance
agrees to recognize the rights of such lessee or sublessee under any such
material lease;
(h) Liens arising from filing UCC financing statements relating
solely to leases and Liens permitted by this Agreement;
(i) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with the
importation of goods;
(j) any zoning or similar law or right reserved to or vested in
any governmental office or agency to control or regulate the use of any
real property; and
(k) licenses of patents, trademarks and other intellectual
property rights granted by the Company or any of its Subsidiaries in the
ordinary course of business and not interfering in any material respect
with the ordinary conduct of the business of the Company or such
Subsidiary.
"Permitted Junior Securities" has the meaning specified in Section
20.2.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments (whether federal, state or local, domestic or foreign, and
including political subdivisions thereof) and agencies or other
administrative or regulatory bodies thereof.
II-16
<PAGE>
"PIK Portion" has the meaning specified in Section 1.
"Pre-Commitment Information" means all of the information furnished to
any Purchaser or any of its Affiliates, or any of its respective officers,
directors, employees, advisors or other representatives, on or prior to May
3, 1999 by or on behalf of, or obtained by any of the foregoing Persons on
or prior to May 3, 1999 from, the Company or any of its Subsidiaries or
other Affiliates (including, without limitation, presentations by or on
behalf of the Company and discussions among the Company or any of its
Affiliates or other authorized representatives with any of the foregoing
Persons) relating to the Company or any of its Subsidiaries or other
Affiliates, the sale and purchase of the Notes, the consummation of the
Merger or any of the other transactions contemplated hereby or thereby, or
to any of the legal, structural, financial, accounting, managerial, tax or
operational aspects of any of the foregoing (both prior to and after giving
effect to the sale and purchase of the Notes).
"Proceedings" has the meaning assigned to that term in subsection
8.1(i).
"property" or "properties" means, unless otherwise expressly stated in
this Agreement, real or personal property of any kind, tangible or
intangible, choate or inchoate.
"Purchase Date" has the meaning specified in Section 2.2.
"Purchasers" means, collectively, MS and Wells Fargo.
"RCBA" means RCBA Strategic Partners, L.P., a Delaware limited
partnership.
"RCBA Registration Rights Agreement" means the Registration Rights
Agreement dated as of the initial Purchase Date between the Company and
RCBA, as such agreement may be amended from time to time to the extent
permitted under Section 9.13(a).
"Refinancing" means the private placement or public offering and sale
by the Company of Refinancing Securities in an amount of at least
$200,000,000 in gross proceeds prior to the Rollover Date and $205,500,000
in gross proceeds thereafter.
"Refinancing Securities" means high-yield debt securities, including
redeemable preferred stock, of the Company.
"Reinvestment Yield" means, with respect to the principal amount of
any Fixed Rate Rollover Note, 0.50% over the yield to maturity implied by
(i) the yields reported, as of 10:00 a.m. (New York City time) on the
second Business Day preceding the proposed redemption or repayment date
with respect to such principal amount, on the display designated as "Page
678" on the Dow Jones Telerate Screen (or such other display
II-17
<PAGE>
as may replace Page 678 on the Dow Jones Telerate Screen) for actively
traded U.S. Treasury securities having a maturity closest to the maturity
of such Fixed Rate Rollover Note as of such date, or (ii) if such yields
are not reported as of such time or the yields reported as of such time are
not ascertainable, the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of the
second Business Day preceding such date with respect to such principal
amount, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a maturity closest to the maturity of such Fixed Rate
Rollover Note as of such date. Such implied yield will be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond-
equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly between (1) the actively traded U.S. Treasury
security with the maturity closest to and greater than the maturity of such
Fixed Rate Rollover Note and (2) the actively traded U.S. Treasury security
with the maturity closest to and less than the maturity of such Fixed Rate
Rollover Note.
"Related Agreements" means, collectively, the Merger Agreement, the
Senior Credit Agreement (and any guaranty thereof), the Securities Purchase
Agreement, the Company Certificates of Designation and the RCBA
Registration Rights Agreement.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or
outdoor environment (including, without limitation, the abandonment or
disposal of any barrels, containers or other closed receptacles containing
any Hazardous Materials), including the movement of any Hazardous Materials
through the air, soil, surface water or groundwater.
"Required Holders" means, at any time, the Holders of at least a
majority in interest of the aggregate principal amount of all of the Notes
or Rollover Notes outstanding at such time (excluding from any calculation
thereof any Notes or Rollover Notes then owned or held by the Company or
any of its Subsidiaries or other Affiliates).
"Requirements of Law" means, with respect to any Person, all laws,
constitutions, statutes, treaties, ordinances, rules and regulations, all
orders, writs, decrees, injunctions, judgments, determinations or awards of
an arbitrator, a court or any other Governmental Authority, and all
Governmental Authorizations, binding upon or applicable to such Person or
to any of its properties, assets or businesses.
"Responsible Officer" means, with respect to any Person, the chief
executive officer, the chief financial officer, the president, the general
counsel or any other employee who is a member of the Board of Directors of
such Person.
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<PAGE>
"Restricted Junior Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of the Company now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock to the holders of that
class, (b) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares
of any class of stock of the Company now or hereafter outstanding, (c) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock
of the Company now or hereafter outstanding and (d) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, any
Subordinated Indebtedness.
"Rollover" has the meaning specified in Section 7.1.
"Rollover Date" means June 9, 2000.
"Rollover Notes" has the meaning specified in Section 7.1 and shall
include if applicable all Secondary Notes issued in respect of Rollover
Notes or such Secondary Notes and any Fixed Rate Rollover Notes and any
Rollover Notes issued in substitution for any of the foregoing pursuant to
Section 11 of this Agreement.
"Rollover Notes Registration Rights Agreement" has the meaning
specified in Section 7.3.
"Secondary Notes" has the meaning specified in Section 1.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Securities Purchase Agreement" means the Securities Purchase
Agreement dated as of May 5, 1999 by and between RCBA and Company, in the
form delivered to the Purchasers prior to their execution of this Agreement
and as such agreement may be amended from time to time thereafter to the
extent permitted under Section 9.13(a).
"Senior Credit Agreement" means the Credit Agreement dated as of June
9, 1999 among the Company, Wells Fargo, the financial institutions party
thereto as "Lenders"
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<PAGE>
from time to time, Wells Fargo, as Co-Lead Arranger and Administrative
Agent, and MS, as Co-Lead Arranger and Syndication Agent (and any
amendments thereto and any refinancing, renewal, extension or replacement
thereof) that provides for credit facilities in an aggregate principal
amount not to exceed $550,000,000.
"Senior Financial Officer" means, with respect to any Person, the
chief financial officer, the principal accounting officer, the treasurer or
the controller of such Person.
"Senior Indebtedness" means whether outstanding on the Purchase Date
or thereafter issued (i) prior to the Rollover Date, all obligations
arising under the Senior Credit Agreement (including any guaranty thereof)
including interest (including interest accruing on or after the filing of,
or that would have accrued but for the filing of, any petition in
bankruptcy or for reorganization relating to the Company or any of its
Subsidiaries whether or not a claim for post-filing interest is allowed in
such proceeding) and premium, if any, thereon, and other monetary amounts
(including fees, expenses, reimbursement obligations under letters of
credit and indemnities) owing in respect thereof and (ii) after the
Rollover Date, all obligations referred to in subclause (i) hereof plus all
additional Indebtedness arising under the Senior Credit Agreement provided
that such Indebtedness can be incurred in compliance with Section 9A.1.
"Significant Subsidiary" means, at any date of determination, any
Subsidiary of the Company that, together with its Subsidiaries, (a) for the
most recent Fiscal Year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Subsidiaries or (b) as of the
end of such Fiscal Year, was the owner of more than 10% of the consolidated
assets of the Company and its Subsidiaries, all as set forth on the most
recently available consolidated financial statements of the Company for
such Fiscal Year.
"Stockholder Rights Agreement" means the Rights Agreement dated as of
March 28, 1997 between Dames & Moore, Inc. and ChaseMellon Shareholder
Services LLC.
"Subordinated Indebtedness" means any Indebtedness of the Company or
any of its Subsidiaries subordinated in right of payment to the Obligations
of any Obligor under the Note Documents pursuant to documentation
containing maturities, amortization schedules, covenants, defaults,
remedies, subordination provisions and other material terms in form and
substance reasonably satisfactory to the Required Holders.
"Subsequent Acquisition" has the meaning assigned to that term in
Section 9.6(f).
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, or other business
entity of which more than 50% of the total voting power of shares of stock
or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar
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<PAGE>
functions) having the power to direct or cause the direction of the
management and policies thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof; provided that in no
event shall any Joint Venture be considered to be a Subsidiary of any
Person.
"Subsidiary Guarantor" means any Domestic Subsidiary of the Company
that executes and delivers a Subsidiary Guaranty on the Purchase Date or
from time to time thereafter pursuant to Section 8.7.
"Subsidiary Guaranty" means the Subsidiary Guaranty executed and
delivered by the Subsidiary Guarantors on the Purchase Date and from time
to time thereafter in accordance with Section 8.7 substantially in the form
of Exhibit D hereto, as such Subsidiary Guaranty may hereafter be amended,
supplemented or otherwise modified from time to time.
"Target" has the meaning specified in Section 9.6(f).
"Taxes" has the meaning specified in Section 13.3(a).
"Tender Offer" means the offer to purchase for cash all of the
outstanding shares of capital stock of DMG by the Company pursuant to the
Tender Offer Materials.
"Tender Offer Materials" means the Tender Offer Statement on Schedule
14D-1 filed by Merger Subsidiary on May 11, 1999 with the Securities and
Exchange Commission pursuant to Section 14(d)(1) of the Exchange Act,
together with all exhibits thereto, including the form of "Offer to
Purchase For Cash", set forth in Exhibit (a)(1) thereto, and any amendments
prior to the date of this Agreement that relate only to any extension of
time during which the offer to purchase remains outstanding or to the
results of the Tender Offer and other amendments that are approved by the
Required Holders.
"Tendered Shares" means all shares of capital stock of DMG tendered to
and purchased by the Merger Subsidiary pursuant to the Tender Offer.
"Total Commitment" means an amount equal to the aggregate Commitments
of all Purchasers hereunder.
"Total Purchase Price" means, with respect to any Subsequent
Acquisition, (a) the sum, without duplication, of (i) the aggregate amount
of all consideration payable by or on behalf of the Company or any of its
Subsidiaries in connection with such Subsequent Acquisition in cash,
property (including Securities of the Company), services, notes, bonds,
debentures or other debt instruments, (ii) the aggregate principal amount
of all Indebtedness assumed by the Company or any or its Subsidiaries in
connection with such Subsequent Acquisition, (iii) the reasonable estimate
of the amount of any
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<PAGE>
Contingent Obligation of the Company or any of its Subsidiaries incurred in
connection with such Subsequent Acquisition, and (iv) the aggregate amount
of any Indebtedness incurred by the Company or any Subsidiary in connection
with such Subsequent Acquisition minus (b) all cash and Cash Equivalents
acquired by the Company or any of its Subsidiaries as a result of such
Subsequent Acquisition.
"Transaction" means, collectively, the Tender Offer, the Merger, this
Agreement, the Senior Credit Agreement, the Securities Purchase Agreement
and the transactions contemplated hereby or thereby.
"Warrant Agreements" means the Warrant Agreements in the form of
Exhibit H hereto to be issued pursuant to Section 7 of this Agreement.
"Warrants" means the warrants issued and to be issued by the Company
pursuant to the Warrant Agreements.
"Wells Fargo" means Wells Fargo Bank, National Association.
II-22
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SCHEDULE III
- ------------
DEFINED TERMS
(NEGATIVE COVENANTS FOR ROLLOVER NOTES)
---------------------------------------
Solely with respect to Section 9A of this Agreement and as otherwise
specified in this Agreement, the following terms shall have the respective
meanings set forth below (such meanings to be equally applicable to both the
singular and plural forms of the term defined):
"Acquired Indebtedness" means Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or assumed in connection
with an Asset Acquisition by a Restricted Subsidiary; provided that
Indebtedness of such Person which is redeemed, defeased, retired or
otherwise repaid at the time of or immediately upon consummation of the
transactions by which such Person becomes a Restricted Subsidiary or such
Asset Acquisition shall not be Acquired Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted
Subsidiaries for such period determined in conformity with GAAP; provided
that the following items shall be excluded in computing Adjusted
Consolidated Net Income (without duplication):
(1) the net income (or loss) of any Person that is not a
Restricted Subsidiary, except to the extent of the amount of dividends
or other distributions actually paid to the Company or any Restricted
Subsidiary by such Person during such period;
(2) solely for purposes of calculating the amount of Restricted
Payments that may be made pursuant to Section 9A.3(4)(C), the net
income (or loss) of any Person accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with the
Company or any of its Restricted Subsidiaries or all or substantially
all of the property and assets of such Person are acquired by the
Company or any of its Restricted Subsidiaries;
(3) the net income of any Restricted Subsidiary to the extent
that the declaration or payment of dividends or similar distributions
by such Restricted Subsidiary of such net income is not at the time
permitted by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Restricted Subsidiary;
<PAGE>
(4) any gains or losses (in each case on an after-tax basis)
attributable to sales of assets outside the ordinary course of
business of the Company and its Restricted Subsidiaries;
(5) solely for purposes of calculating the amount of Restricted
Payments that may be made pursuant to Section 9A.3(4)(C), any amount
paid or accrued as dividends on Preferred Stock of the Company owned
by Persons other than the Company and any of its Restricted
Subsidiaries;
(6) any non-cash compensation expense incurred in connection
with the exercise of or paid or payable with Capital Stock (other than
Disqualified Stock) of the Company or any options, warrants or other
rights to acquire Capital Stock (other than Disqualified Stock) of the
Company;
(7) writeoffs of intangible assets, including research and
development, relating to assets acquired by the Company and its
Restricted Subsidiaries if such writeoffs are done in accordance with
GAAP at the time of, or within one year after, such acquisition; and
(8) all extraordinary gains and extraordinary losses (in each
case on an after-tax basis).
"Affiliate" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (1) an investment by the Company or any of
its Restricted Subsidiaries in any other Person pursuant to which such
Person shall become a Restricted Subsidiary or shall be merged into or
consolidated with the Company or any of its Restricted Subsidiaries;
provided that such Person's primary business is related, ancillary or
complementary to the businesses of the Company and its Restricted
Subsidiaries on the date of such investment as determined in good faith by
the Board of Directors or a Senior Officer of the Company, whose
determination shall be conclusive, or (2) an acquisition by the Company or
any of its Restricted Subsidiaries of the property and assets of any Person
other than Company or any of its Restricted Subsidiaries that constitute
substantially all of a division or line of business of such Person;
provided that the property and assets acquired are related, ancillary or
complementary to the businesses of the Company and its Restricted
Subsidiaries on the date of such acquisition as determined in good faith by
the Board of Directors or a Senior Officer of the Company, whose
determination shall be conclusive.
<PAGE>
"Asset Disposition" means the sale or other disposition by the Company
or any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (1) all or substantially all of the Capital Stock
of any Restricted Subsidiary or (2) all or substantially all of the assets
that constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including
by way of merger, consolidation or sale-leaseback transaction) in one
transaction or a series of related transactions by the Company or any of
its Restricted Subsidiaries to any Person other than the Company or any of
its Restricted Subsidiaries of
(1) all or any of the Capital Stock of any Restricted
Subsidiary,
(2) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted
Subsidiaries or
(3) any other property and assets (other than the Capital Stock
or other Investment in an Unrestricted Subsidiary) of the Company or
any of its Restricted Subsidiaries outside the ordinary course of
business of the Company or such Restricted Subsidiary and
in each case, that is not governed by the provisions of this Agreement
applicable to mergers, consolidations and sales of assets of the Company;
provided that "Asset Sale" shall not include
(a) any sales or other dispositions of inventory,
receivables and other current assets, including cash and Temporary
Cash Investments,
(b) any sale, transfer, assignment or other disposition of
damaged, worn out or other obsolete property in the ordinary course of
business,
(c) any sale, transfer, assignment or other disposition of
assets having a fair market value of less than $1 million, or
(d) any sales, transfers, assignments or other dispositions
of assets constituting a Permitted Investment or Restricted Payment
permitted to be made under Section 9A.3.
"Average Life" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (1) the sum of the
products of (a) the number of years from such date of determination to the
dates of each successive scheduled
III-3
<PAGE>
principal payment of such debt security and (b) the amount of such
principal payment by (2) the sum of all such principal payments.
"Board of Directors" means the board of directors of the Company or
any committee thereof duly authorized to act for such board of directors.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Holders.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Rollover Date or issued thereafter, including, without limitation, all
Common Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such
Person.
"Capitalized Lease Obligations" means the discounted present value of
the rental obligations under a Capitalized Lease to the extent such
obligation would appear as a liability upon the consolidated balance sheet
of such Person in accordance with GAAP.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income:
(1) Consolidated Interest Expense;
(2) income taxes (other than income taxes (either positive or
negative) attributable to extraordinary gains or losses or sales of
assets);
(3) depreciation expense;
(4) amortization expense; and
(5) all other non-cash items reducing Adjusted Consolidated Net
Income (other than items that will require cash payments and for which
an accrual or reserve is, or is required by GAAP to be, made), less
all non-cash items increasing Adjusted Consolidated Net Income, all as
determined on a consolidated basis for the Company and its Restricted
Subsidiaries in conformity with GAAP;
III-4
<PAGE>
provided that, if any Restricted Subsidiary is not a Wholly Owned
Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the extent
not otherwise reduced in accordance with GAAP) by an amount equal to (a)
the amount of the Adjusted Consolidated Net Income attributable to such
Restricted Subsidiary multiplied by (b) the percentage ownership interest
in the income of such Restricted Subsidiary not owned on the last day of
such period by the Company or any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without
limitation, amortization of original issue discount on any Indebtedness and
the interest portion of any deferred payment obligation, calculated in
accordance with the effective interest method of accounting; all
commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing; the net costs
associated with Interest Rate Agreements; and Indebtedness that is
Guaranteed or secured by the Company or any of its Restricted
Subsidiaries), Preferred Stock dividends in respect of Preferred Stock of a
Restricted Subsidiary, and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be
paid or to be accrued by the Company and its Restricted Subsidiaries during
such period; excluding, however, (1) any amount of such interest of any
Restricted Subsidiary if the net income of such Restricted Subsidiary is
excluded in the calculation of Adjusted Consolidated Net Income pursuant to
clause (3) of the definition thereof (but only in the same proportion as
the net income of such Restricted Subsidiary is excluded from the
calculation of Adjusted Consolidated Net Income pursuant to clause (3) of
the definition thereof) and (2) any premiums, fees and expenses (and any
amortization thereof) payable in connection with the D&M Acquisition and
the financing of the D&M Acquisition, all as determined on a consolidated
basis (without taking into account Unrestricted Subsidiaries) in conformity
with GAAP. For purposes of the preceding sentence, Preferred Stock
dividends shall be deemed to be an amount equal to the actual dividends
paid divided by one minus the combined federal, state, local and foreign
income tax rate applicable to the Company and its Subsidiaries (expressed
as a decimal).
"Convertible Subordinated Debentures" means the 6 1/2% Convertible
Subordinated Debentures due 2012 of the Company issued pursuant to an
Indenture dated as of February 15, 1987 between the Company and First
Interstate Bank of California, as amended, and outstanding on the Rollover
Date.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement.
"D&M Acquisition" means the consummation of the Tender Offer and the
Merger.
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<PAGE>
"D&M Financing" means the transactions entered into by the Company and
its Restricted Subsidiaries to finance the D&M Acquisition, including (w)
the sale of the Notes or Rollover Notes, (x) the Senior Credit Agreement,
(y) the Securities Purchase Agreement and (z) the repayment of Indebtedness
in connection with the D&M Acquisition and sale of the Notes or Rollover
Notes.
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (1) required to be redeemed prior
to the Stated Maturity of the Rollover Notes, (2) redeemable at the option
of the holder of such class or series of Capital Stock at any time prior to
the Stated Maturity of the Rollover Notes or (3) convertible into or
exchangeable for Capital Stock referred to in clause (1) or (2) above or
Indebtedness having a scheduled maturity prior to the Stated Maturity of
the Rollover Notes; provided that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Rollover Notes shall not
constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the
holders of such Capital Stock than the provisions contained in Sections 6.2
and 9A.9 and such Capital Stock specifically provides that such Person will
not repurchase or redeem any such stock pursuant to such provision prior to
the Company's repurchase of such Rollover Notes as are required to be
repurchased pursuant to Sections 6.2 and 9A.9.
"fair market value" means the price that would be paid in an arm's-
length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to
buy, as determined in good faith by the Board of Directors or an Officer of
the Company, whose determination shall be conclusive; provided that if the
non cash amount is in excess of $10 million, such amount shall be
determined in good faith by the Board of Directors, whose determination
shall be conclusive if evidenced by a Board Resolution.
"Fixed Charge Coverage Ratio" means, on any Transaction Date, the
ratio of (1) the aggregate amount of Consolidated EBITDA for the then most
recent four Fiscal Quarters prior to such Transaction Date for which
reports have been filed with the Commission or provided to the Holders (the
"Four Quarter Period") to (2) the aggregate Consolidated Interest Expense
during such Four Quarter Period. In making the preceding calculation,
(A) pro forma effect shall be given to any Indebtedness Incurred
or repaid during the period (the "Reference Period") commencing on the
first day of the Four Quarter Period and ending on and including the
Transaction Date (other than Indebtedness Incurred or repaid under a
revolving credit or similar arrangement to the extent of the
commitment thereunder (or under any
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<PAGE>
predecessor revolving credit or similar arrangement) in effect on the
last day of such Four Quarter Period unless any portion of such
Indebtedness is projected, in the reasonable judgment of the senior
management of the Company, to remain outstanding for a period in
excess of 12 months from the date of the Incurrence thereof), in each
case as if such Indebtedness had been Incurred or repaid on the first
day of the Reference Period;
(B) Consolidated Interest Expense attributable to interest on
any Indebtedness (whether existing or being Incurred) computed on a
pro forma basis and bearing a floating interest rate shall be computed
as if the rate in effect on the Transaction Date (taking into account
any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months
or, if shorter, at least equal to the remaining term of such
Indebtedness) had been the applicable rate for the entire period;
(C) pro forma effect shall be given to Asset Dispositions and
Asset Acquisitions (including giving pro forma effect to the
application of proceeds of any Asset Disposition) that occur during
such Reference Period as if they had occurred and such proceeds had
been applied on the first day of such Reference Period; and
(D) pro forma effect shall be given to asset dispositions and
asset acquisitions (including giving pro forma effect to the
application of proceeds of any asset disposition) that have been made
by any Person that has become a Restricted Subsidiary or has been
merged with or into the Company or any Restricted Subsidiary during
such Reference Period and that would have constituted Asset
Dispositions or Asset Acquisitions had such transactions occurred when
such Person was a Restricted Subsidiary as if such asset dispositions
or asset acquisitions were Asset Dispositions or Asset Acquisitions
that occurred on the first day of such Reference Period; provided that
to the extent that clause (C) or (D) of this sentence requires that
pro forma effect be given to an Asset Acquisition or Asset
Disposition, such pro forma calculation shall be based upon the four
full Fiscal Quarters immediately preceding the Transaction Date of the
Person, or division or line of business of the Person, that is
acquired or disposed for which financial information is available.
"Foreign Subsidiary" means any Subsidiary of the Company that is an
entity that is a controlled foreign corporation under Section 957 of the
Internal Revenue Code.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other
Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (1)
to purchase or pay (or advance or supply funds for the
III-7
<PAGE>
purchase or payment of) such Indebtedness of such other Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-
well, to purchase assets, goods, securities or services (unless such
purchase arrangements are on arm's-length terms and are entered into in the
ordinary course of business), to take-or-pay, or to maintain financial
statement conditions or otherwise) or (2) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the
payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning.
"Incur" means, with respect to any Indebtedness, to incur, create,
issue, assume, Guarantee or otherwise become liable for or with respect to,
or become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an "Incurrence" of Acquired Indebtedness; provided
that neither the accrual of interest nor the accretion of original issue
discount nor the issuance of pay-in-kind securities as an interest or
dividend payment shall be considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication):
(1) all indebtedness of such Person for borrowed money to the
extent such indebtedness would appear as a liability upon the
consolidated balance sheet of such Person in accordance with GAAP;
(2) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments to the extent such
obligations would appear as a liability upon the consolidated balance
sheet of such Person in accordance with GAAP;
(3) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement
obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit)
securing obligations (other than obligations described in (1) or (2)
above or (5), (6) or (7) below) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not
drawn upon or, if drawn upon, to the extent such drawing is reimbursed
no later than the third Business Day following receipt by such Person
of a demand for reimbursement);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due
more than six months after the date of placing such property in
service or taking delivery and title thereto or the completion of such
services, except Trade Payables;
III-8
<PAGE>
(5) all Capitalized Lease Obligations;
(6) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, regardless of whether such Indebtedness is
assumed by such Person; provided that the amount of such Indebtedness
shall be the lesser of (A) the fair market value of such asset at such
date of determination and (B) the amount of such Indebtedness;
(7) all Indebtedness of other Persons Guaranteed by such Person
to the extent such Indebtedness is Guaranteed by such Person;
(8) all obligations to redeem or repurchase Preferred Stock of a
Restricted Subsidiary; and
(9) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements
(other than Currency Agreements and Interest Rate Agreements designed
solely to protect the Company or its Restricted Subsidiaries against
fluctuations in foreign currency exchange rates or interest rates and
that do not increase the Indebtedness of the obligor outstanding at
any time other than as a result of fluctuations in foreign currency
exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder).
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as
described above and, with respect to contingent obligations, the maximum
liability upon the occurrence of the contingency giving rise to the
obligation, provided
(A) that the amount outstanding at any time of any Indebtedness
issued with original issue discount is the face amount of such
Indebtedness less the remaining unamortized portion of the original
issue discount of such Indebtedness at such time as determined in
conformity with GAAP,
(B) that money borrowed and set aside at the time of the
Incurrence of any Indebtedness in order to prefund the payment of the
interest on such Indebtedness shall not be deemed to be "Indebtedness"
so long as such money is held to secure the payment of such interest,
(C) that the amount of Indebtedness at any time of any Preferred
Stock shall be the greater of its voluntary or involuntary liquidation
preference and the maximum fixed redemption or repurchase price in
respect thereof,
(D) that Indebtedness shall not include
III-9
<PAGE>
(w) any liability for federal, state, local or other taxes,
(x) obligations under performance, bid, surety, appeal or
similar bonds provided in the ordinary course of business,
(y) obligations arising in the ordinary course of business
out of standby letters of credit covering workers' compensation,
performance or similar obligations to the extent such letters of
credit are not drawn upon or, if drawn upon, to the extent such
drawing is reimbursed no later than the third Business Day
following receipt by the issuer of such letters of credit a
demand for reimbursement, or
(z) obligations pursuant to agreements providing for
indemnification, adjustment of purchase price or similar
obligations, or Guarantees or letters of credit, performance,
bid, surety, appeal or similar bonds securing any obligations of
the Company or any of its Restricted Subsidiaries pursuant to
such agreements, in any case Incurred in connection with the
disposition of any business, assets or Restricted Subsidiary
(other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such
acquisition), so long as the principal amount does not to exceed
the gross proceeds actually received by the Company or any
Restricted Subsidiary in connection with such disposition.
"Initial Subsidiary Guarantors" means (a) DMG; (b) Wholly Owned
Subsidiaries of the Company that (i) are not Foreign Subsidiaries and (ii)
the aggregate annual gross revenues of which constitute at least 90% of the
aggregate annual gross revenues of the Company and its Restricted
Subsidiaries that are not Foreign Subsidiaries or Subsidiaries of DMG, on a
consolidated basis; and (c) to the extent not otherwise included among the
Subsidiaries described in clauses (a) or (b), all of the Wholly Owned
Subsidiaries of the Company that (i) are not Foreign Subsidiaries and (ii)
have annual gross revenues in excess of $5 million. The determinations of
revenue amounts shall be based upon the most recently filed United States
income tax returns.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate
collar agreement, interest rate hedge agreement, option or future contract
or other similar agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan
or other extension of credit (including, without limitation, by way of
Guarantee or similar
III-10
<PAGE>
arrangement; but excluding advances to customers or suppliers in the
ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable, prepaid expenses or deposits on the balance sheet of
the Company or its Restricted Subsidiaries or endorsements for collection
or deposit arising in the ordinary course of business) or capital
contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, bonds, notes,
debentures or other similar instruments issued by, such Person and shall
include (1) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and (2) the retention of the Capital Stock (or any other
Investment) by the Company or any of its Restricted Subsidiaries, of (or
in) any Person that has ceased to be a Restricted Subsidiary. For purposes
of the definition of "Unrestricted Subsidiary" and Section 9A.3, the amount
of or a reduction in an Investment shall be equal to the fair market value
thereof at the time such Investment is made or reduced.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional
sale or other title retention agreement or lease in the nature thereof or
any agreement to give any security interest).
"Net Cash Proceeds" means:
(a) with respect to any Asset Sale, the proceeds of such Asset
Sale in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received
in the form of cash or cash equivalents and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of:
(1) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers)
related to such Asset Sale;
(2) provisions for all taxes (regardless of whether such
taxes will actually be paid or are payable) as a result of such
Asset Sale without regard to the consolidated results of
operations of the Company and its Restricted Subsidiaries, taken
as a whole;
(3) payments made to repay Indebtedness or any other
obligation outstanding at the time of such Asset Sale that either
(x) is secured by a Lien on the property or assets sold or (y) is
required to be paid as a result of such sale; and
III-11
<PAGE>
(4) appropriate amounts to be provided by the Company or any
Restricted Subsidiary as a reserve against any liabilities
associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset
Sale, all as determined in conformity with GAAP; and
(b) with respect to any issuance or sale of Capital Stock, the
proceeds of such issuance or sale in the form of cash or cash
equivalents, including payments in respect of deferred payment
obligations (to the extent corresponding to the principal, but not
interest, component thereof) when received in the form of cash or cash
equivalents and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of attorney's
fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees
incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
"Permitted Investment" means:
(1) an Investment in Company or a Subsidiary Guarantor or a
Person that will, upon the making of such Investment, become a
Subsidiary Guarantor or be merged or consolidated with or into or
transfer or convey all or substantially all its assets to, the Company
or a Subsidiary Guarantor; provided that such person's primary
business is related, ancillary or complementary to the businesses of
the Company and its Restricted Subsidiaries on the date of such
Investment, as determined in good faith by the Board of Directors or a
Senior Officer of the Company, whose determination shall be
conclusive;
(2) cash and Temporary Cash Investments;
(3) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as
expenses in accordance with GAAP;
(4) stock, obligations or securities received in satisfaction of
judgments;
(5) an Investment in an Unrestricted Subsidiary to the extent
consisting of an Investment in another Unrestricted Subsidiary;
(6) Interest Rate Agreements and Currency Agreements designed
solely to protect the Company or its Restricted Subsidiaries against
fluctuations in interest rates or foreign currency exchange rates;
III-12
<PAGE>
(7) any of the Rollover Notes;
(8) an Investment in a Restricted Subsidiary that is a Foreign
Subsidiary; and
(9) an Investment in a Restricted Subsidiary that is not a
Subsidiary Guarantor, provided that the aggregate amount of such
Investments under this clause (9) does not exceed $25 million plus the
net reduction in Investments made pursuant to this clause (9)
resulting from distributions on or repayments of such Investments or
from the Net Cash Proceeds from the sale or other disposition of any
such Investment (except in each case, in order to avoid duplication to
the extent any such payments or proceeds have been or would be
included in the calculation of Adjusted Consolidated Net Income for
purposes of Section 9A.3(4)(C)(1)) or from such Person becoming a
Subsidiary Guarantor (valued in each case as provided in the
definition of "Investments"); provided that the net reduction in any
Investment shall not exceed the amount of such Investment.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference
equity, whether outstanding on the Closing Date or issued thereafter,
including, without limitation, all series and classes of such preferred or
preference stock.
"Purchase Money Indebtedness" of any Person means any Indebtedness,
including Capitalized Leases, of such Person to any seller or other Person,
that is Incurred to finance the acquisition, construction, installation or
improvement of any Replacement Assets and that is incurred concurrently
with, or within 180 days following, such acquisition, construction,
installation or improvement.
"Replacement Assets" means, on any date, property or assets (other
than current assets) of a nature or type or that are used or useful in a
business (or an Investment in a company having property or assets of a
nature or type, or engaged in a business) similar or related to the nature
or type of the property and assets of, or the business of, the Company and
its Restricted Subsidiaries existing on such date, as determined in good
faith by the Board of Directors or a Senior Officer of the Company, whose
determination shall be conclusive.
"Restricted Payment" has the meaning specified in Section 9A.3(4).
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
III-13
<PAGE>
"Senior Credit Agreement" means the credit agreement dated June 9,
1999 by and among the Company, certain of its Subsidiaries, certain
financial institutions and Wells Fargo, as administrative agent, and
including any related notes, guarantees, collateral documents, instruments
and agreements executed in connection therewith, as such credit agreement
and/or related documents may be amended, restated, supplemented, renewed,
refinanced, extended, replaced, restructured or otherwise modified from
time to time regardless of whether with the same agent, trustee,
representative lenders or holders, including any agreement (1) extending
the maturity of any Indebtedness incurred thereunder or contemplated
thereby, (2) adding or deleting borrowers or guarantors thereunder, so long
as borrower and issuers include one or more of the Company and its
Subsidiaries and their respective successors and assigns or (3) increasing
the amount of Indebtedness incurred thereunder or available to be borrowed
thereunder.
"Senior Indebtedness" means the following obligations of the Company
or any Subsidiary Guarantor, whether outstanding on the Rollover Date or
thereafter Incurred: (1) all Indebtedness and all other monetary
obligations (including, without limitation, expenses, fees, principal,
interest, reimbursement obligations under letters of credit and indemnities
payable in connection therewith) of the Company under (or in respect of)
the Senior Credit Agreement or any Interest Rate Agreement or Currency
Agreement relating to the Indebtedness under the Senior Credit Agreement
and (2) all Indebtedness and all other monetary obligations of the Company
or any Subsidiary Guarantor (other than the Rollover Notes and the
Subsidiary Guaranties, the Convertible Subordinated Debentures and the
Senior Subordinated Debentures), including principal and interest on such
Indebtedness, unless such Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such Indebtedness is issued, is
pari passu with, or subordinated in right of payment to, the Rollover
Notes; provided that the term "Senior Indebtedness" shall not include (a)
any Indebtedness of the Company or any Subsidiary Guarantor that, when
Incurred, was without recourse to the Company or to such Subsidiary
Guarantor, (b) any Indebtedness of the Company or any Subsidiary Guarantor
to a Subsidiary of the Company, or to a joint venture in which the Company
has an interest, (c) any Indebtedness of the Company or any Subsidiary
Guarantor, to the extent not permitted by Section 9A.1 or 9A.2, (d) any
repurchase, redemption or other obligation in respect of Disqualified
Stock, (e) any Indebtedness to any employee of the Company or any of its
respective Subsidiaries, (f) any liability for taxes owed or owing by the
Company or any Subsidiary Guarantor, or (g) any Trade Payables.
"Senior Officer" of any Person means the Chief Executive Officer or
Chief Financial Officer of such Person.
"Senior Subordinated Debentures" means the 8 5/8% Senior Subordinated
Debentures due 2004 of the Company issued pursuant to the Indenture dated
as of March 16, 1989 between the Company and MTrust Corp., National
Association, as trustee, as amended.
III-14
<PAGE>
"Stated Maturity" means (1) with respect to any debt security, the
date specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (2)
with respect to any scheduled installment of principal of or interest on
any debt security, the date specified in such debt security as the fixed
date on which such installment is due and payable.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting
power of the outstanding Voting Stock is owned, directly or indirectly, by
such Person and one or more other Subsidiaries of such Person.
"Subsidiary Guarantor" means any Initial Subsidiary Guarantor and any
Restricted Subsidiary that provides a Guarantee of the Company's
obligations under this Agreement and the Rollover Notes.
"Temporary Cash Investment" means any of the following:
(1) direct obligations of the United States of America or any
agency thereof or obligations fully and unconditionally guaranteed by
the United States of America or any agency thereof maturing no more
than one year from the date of acquisition thereof;
(2) time deposit accounts, certificates of deposit and money
market deposits maturing within one year of the date of acquisition
thereof issued by a bank or trust company that is organized under the
laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America, and which bank or
trust company has capital, surplus and undivided profits aggregating
in excess of $100 million (or the foreign currency equivalent thereof)
and has outstanding debt that is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act)
or any money-market fund sponsored by a registered broker dealer or
mutual fund distributor;
(3) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (1) above
entered into with a bank or trust company meeting the qualifications
described in clause (2) above;
(4) commercial paper, maturing not more than one year after the
date of acquisition thereof, with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's
or "A-1" (or higher) according to S&P;
III-15
<PAGE>
(5) securities with maturities of one year or less from the date
of acquisition issued or fully and unconditionally guaranteed by any
state, commonwealth or territory of the United States of America, or
by any political subdivision or taxing authority thereof, and rated at
least "A" by S&P or Moody's; and
(6) any mutual fund that has at least 95% of its assets
continuously invested in investments of the types described in clauses
(1) through (5) and has the highest rating obtainable from either
Moody's or S&P.
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries
arising in the ordinary course of business in connection with the
acquisition of goods or services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date
such Indebtedness is to be Incurred and, with respect to any Restricted
Payment, the date such Restricted Payment is to be made.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary
by the Board of Directors in the manner provided below; and (2) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may
designate any Restricted Subsidiary (including any newly acquired or newly
formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, the Company or any Restricted Subsidiary; provided that (a)
any Guarantee by the Company or any Restricted Subsidiary of any
Indebtedness of the Subsidiary being so designated shall be deemed an
"Incurrence" of such Indebtedness and an "Investment" by the Company or
such Restricted Subsidiary (or both, if applicable) at the time of such
designation; (b) either (x) the Subsidiary to be so designated has total
assets of $1,000 or less or (y) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 9A.3 and (c) if
applicable, the Incurrence of Indebtedness and the Investment referred to
in clause (a) of this proviso would be permitted under Sections 9A.1 and
9A.3. The Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided that (1) no Default or Event of
Default shall have occurred and be continuing at the time of or after
giving effect to such designation and (2) all Liens and Indebtedness of
such Unrestricted Subsidiary outstanding immediately after such designation
would, if Incurred at such time, have been permitted to be Incurred (and
shall be deemed to have been Incurred) for all purposes of this Agreement.
Any such designation by the Board of Directors shall be evidenced to the
Holders by promptly filing with the Holders a copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying
that such designation complied with the preceding provisions.
III-16
<PAGE>
"Voting Stock" means with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person,
the ownership of all of the outstanding Capital Stock of such Subsidiary
(other than any director's qualifying shares, shares owned by professional
engineers in connection with licensing requirements or Investments by
foreign nationals mandated by applicable law) by such Person or one or more
Wholly Owned Subsidiaries of such Person.
III-17
<PAGE>
EXHIBIT A
---------
FORM OF NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED OR SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS
SECURITY ALSO IS SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN
THE NOTE PURCHASE AGREEMENT DATED AS OF JUNE 9, 1999, A COPY OF WHICH MAY BE
OBTAINED FROM URS CORPORATION.
URS CORPORATION
Senior Subordinated Increasing Rate Notes due June 9, 2000
No.__________ Dated: June 9, 1999
$____________
FOR VALUE RECEIVED, the undersigned URS CORPORATION, a Delaware
corporation (the "Company"), HEREBY PROMISES TO PAY to [NAME OF PURCHASER], or
its registered assigns, the principal amount of [SPECIFY PRINCIPAL AMOUNT
EVIDENCED BY THIS NOTE IN WORDS] DOLLARS, or such lesser unpaid principal amount
as shall be outstanding hereunder, on June 9, 2000, together with interest
(computed on the basis of a 360-day year of twelve 30-day months) at the
interest rates and payable at such times as are specified below.
Interest on the unpaid balance of the principal amount of this Note
shall accrue at a rate per annum equal to: (a) the Applicable Interest Rate
from (and including) the date hereof to (but excluding) December 9, 1999; (b)
the Applicable Interest Rate plus 1.00% per annum from (and including) December
9, 1999 to (but excluding) March 9, 2000; (c) the Applicable Interest Rate plus
1.50% from (and including) March 9, 2000 to (but excluding) June 9, 2000; and
(d) shall thereafter increase by an additional 0.50% at the end of each
subsequent three-month period until the unpaid principal balance of this Note
shall be paid in full (whether by scheduled maturity or at a date fixed for
prepayment, redemption or repurchase or by declaration, demand or otherwise),
payable quarterly on September 9, November 9, March 9 and June 9 of each year
(collectively, the "Interest Payment Dates"), commencing September 9, 1999, and
on the date on which the unpaid principal balance of this Note shall be paid in
full; provided,
<PAGE>
however, that any overdue payment (including, without limitation, any overdue
prepayment, redemption or repurchase) of principal and, to the extent permitted
by applicable law, any overdue payment of interest and premium, if any, shall
accrue interest at a rate per annum equal at all times to 2% per annum in excess
of the rate of interest otherwise in effect hereunder at such time, payable
quarterly on each of the dates on which interest is otherwise payable under the
provisions set forth above and, at the option of the registered Holder of this
Note, upon demand, until the unpaid principal balance of this Note shall be paid
in full; provided further that (i) in no event shall the interest rate on this
Note exceed 17.0% per annum and (ii) to the extent the interest on this Note
accrues at an interest rate per annum in excess of 15.0% per annum, the Company
shall have the option to pay such excess by the issuance of Secondary Notes as
provided in the Note Purchase Agreement referred to below. For purposes of this
Note, "Applicable Interest Rate" means the higher of the following, as
determined at the beginning of the three month period immediately preceding the
applicable Interest Payment Date: (A) the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) obtained by dividing (x) the interest
rate per annum for deposits in United States Dollars in an amount approximately
equal to the principal of this Note and for a three-month period that appears on
page 3750 of the Telerate Screen Information or any successor thereto (or if an
amount approximately equal to the principal amount hereof is not so specified,
then to the amount on such screen closest to such principal amount) as of 11:00
a.m. (London time) two Business Days prior to the beginning of such three-month
period for delivery on the first day of such three-month period by (y) a
percentage equal to 100% minus the stated maximum rate (expressed as a decimal)
of all reserve requirements (including any marginal, emergency, supplemental,
special or other reserves) applicable on such day to any member bank of the
Federal Reserve System in respect of "Eurocurrency Liabilities" as defined in
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor category of liabilities under such Regulation D) plus 6.50% per annum
and (B) the highest of the yields reported, as of 10:00 a.m. (New York City
time) two Business Days prior to the beginning of such three-month period that
appears on page 678 of the Telerate Screen Information or any successor thereto
for actively traded United States Treasury Securities having maturities of
approximately 1, 3, 5 and 10 years plus 6.00% per annum.
Payments of principal of, and interest and premium, if any, on, this
Note are payable in lawful money of the United States of America at the place
designated therefor on Schedule I of the Note Purchase Agreement, or at such
other place as the Holder of this Note shall have designated by written notice
to the Company as provided in the Note Purchase Agreement referred to below.
Whenever any payment under this Note shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest.
This Note is one of the Senior Subordinated Increasing Rate Notes due
June 9, 2000 (collectively, the "Notes") originally issued pursuant to the Note
Purchase Agreement dated as of June 9, 1999 (as amended, supplemented or
otherwise modified from time to time, the "Note Purchase Agreement"; capitalized
terms not otherwise defined herein having the same
A-2
<PAGE>
meanings as specified in Schedule II of the Note Purchase Agreement) between the
Company and the respective purchasers of the Notes (collectively, the
"Purchasers") named therein. The Holder of this Note is entitled to the benefits
of the Note Purchase Agreement and may enforce the agreements of the Company
therein and of the Obligors in the other Note Documents in accordance with the
respective terms thereof, and may enforce the rights and remedies provided for
thereby or otherwise available in respect thereof in accordance with the
respective terms thereof. Each Holder of this Note will be deemed, by its
acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 18 of the Note Purchase Agreement, (ii) to have made the
representation set forth in Section 5 of the Note Purchase Agreement and (iii)
otherwise to be bound to the provisions of the Note Purchase Agreement.
This Note is a registered Note and, as provided in and subject to the
terms of the Note Purchase Agreement, is transferable only upon surrender of
this Note for registration of transfer or exchange (and, in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer, duly executed by the registered Holder of this
Note or his attorney duly authorized in writing), at which time a new Note for a
like principal amount will be issued to, and registered in the name of, the
permitted transferee. Reference in this Note to a "Holder" shall mean the
person or entity in whose name this Note is at the time registered in the
register kept by the Company as provided in Section 11.1 of the Note Purchase
Agreement and, prior to due presentment for registration of transfer, the
Company may treat such person or entity as the owner of this Note for the
purpose of receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.
The Company is required to make redemptions of principal on the dates
and in the amounts specified in Sections 6.2 and 6.3 of the Note Purchase
Agreement. This Note is also subject to optional prepayment, in whole or from
time to time in part, at the times and on the terms specified in Section 6.1 of
the Note Purchase Agreement.
If an Event of Default shall occur and be continuing, the unpaid
balance of principal of this Note and any accrued and unpaid interest and other
amounts payable hereon may be declared or otherwise become due and payable in
the manner, at the price and with the effect provided in Section 10 of the Note
Purchase Agreement.
This Note is guaranteed on a subordinated basis by each Subsidiary
Guarantor, as set forth in the Note Purchase Agreement.
[The remainder of this page intentionally left blank.]
A-3
<PAGE>
This Note shall be governed by, and construed in accordance with, the laws
of the State of New York.
Very truly yours,
URS CORPORATION
By ______________________________
Name:
Title:
<PAGE>
EXHIBIT B
---------
FORM OF ROLLOVER NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED OR SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS
SECURITY ALSO IS SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN
THE NOTE PURCHASE AGREEMENT DATED AS OF JUNE 9, 1999, A COPY OF WHICH MAY BE
OBTAINED FROM URS CORPORATION.
URS CORPORATION
Senior Subordinated Increasing Rate Notes due June 9, 2010
No.__________ Dated: June 9, 2000
$____________
FOR VALUE RECEIVED, the undersigned URS CORPORATION, a Delaware
corporation (the "Company"), HEREBY PROMISES TO PAY to [NAME OF PURCHASER], or
its registered assigns, the principal amount of [SPECIFY PRINCIPAL AMOUNT
EVIDENCED BY THIS ROLLOVER NOTE IN WORDS] DOLLARS, or such lesser unpaid
principal amount as shall be outstanding hereunder, on June 9, 2010, together
with interest (computed on the basis of a 360-day year of twelve 30-day months)
at the interest rates and payable at such times as are specified below.
Interest on the unpaid balance of the principal amount of this
Rollover Note shall accrue at a rate per annum equal to: (a) the Applicable
Interest Rate plus 2.00% from (and including) the date hereof to (but excluding)
September 9, 2000; and (b) shall thereafter increase by an additional 0.50% at
the end of each subsequent three-month period until the unpaid principal balance
of this Rollover Note shall be paid in full (whether by scheduled maturity or at
a date fixed for prepayment, redemption or repurchase or by declaration, demand
or otherwise), payable quarterly on September 9, November 9, March 9 and June 9
of each year (collectively, the "Interest Payment Dates"), commencing September
9, 2000, and on the date on which the unpaid principal balance of this Rollover
Note shall be paid in full; provided, however, that any overdue payment
(including, without limitation, any overdue prepayment, redemption or
repurchase) of principal and, to the extent permitted by applicable law, any
overdue payment of
<PAGE>
interest and premium, if any, shall accrue interest at a rate per annum equal at
all times to 2% per annum in excess of the rate of interest otherwise in effect
hereunder at such time, payable quarterly on each of the dates on which interest
is otherwise payable under the provisions set forth above and, at the option of
the registered Holder of this Rollover Note, upon demand, until the unpaid
principal balance of this Note shall be paid in full; provided further that (i)
in no event shall the interest rate on this Note exceed 17.0% per annum and (ii)
to the extent the interest on this Rollover Note accrues at an interest rate per
annum in excess of 15.0% per annum, the Company shall have the option to pay
such excess by the issuance of Secondary Notes as provided in the Note Purchase
Agreement referred to below. For purposes of this Note, "Applicable Interest
Rate" means the higher of the following, as determined at the beginning of the
three month period immediately preceding the applicable Interest Payment Date:
(A) the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) obtained by dividing (x) the interest rate per annum for deposits in United
States Dollars in an amount approximately equal to the principal of this Note
and for a three-month period that appears on page 3750 of the Telerate Screen
Information or any successor thereto (or if an amount approximately equal to the
principal amount hereof is not so specified, then to the amount on such screen
closest to such principal amount) as of 11:00 a.m. (London time) two Business
Days prior to the beginning of such three-month period for delivery on the first
day of such three-month period by (y) a percentage equal to 100% minus the
stated maximum rate (expressed as a decimal) of all reserve requirements
(including any marginal, emergency, supplemental, special or other reserves)
applicable on such day to any member bank of the Federal Reserve System in
respect of "Eurocurrency Liabilities" as defined in Regulation D of the Board of
Governors of the Federal Reserve System (or any successor category of
liabilities under such Regulation D) plus 6.50% per annum and (B) the highest of
the yields reported, as of 10:00 a.m. (New York City time) two Business Days
prior to the beginning of such three-month period that appears on page 678 of
the Telerate Screen Information or any successor thereto for actively traded
United States Treasury Securities having maturities of approximately 1, 3, 5 and
10 years plus 6.00% per annum.
Payments of principal of, and interest and premium, if any, on, this
Rollover Note are payable in lawful money of the United States of America at the
place designated therefor on Schedule I of the Note Purchase Agreement, or at
such other place as the Holder of this Rollover Note shall have designated by
written notice to the Company as provided in the Note Purchase Agreement
referred to below. Whenever any payment under this Rollover Note shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest.
This Rollover Note is one of the Rollover Notes (collectively, the
"Rollover Notes") issued pursuant to the Note Purchase Agreement dated as of
June 9, 1999 (as amended, supplemented or otherwise modified from time to time,
the "Note Purchase Agreement"; capitalized terms not otherwise defined herein
having the same meanings as specified in Schedule II of the Note Purchase
Agreement) between the Company and the respective purchasers of the Notes
(collectively, the "Purchasers") named therein. The Holder of this
B-2
<PAGE>
Rollover Note is entitled to the benefits of the Note Purchase Agreement and may
enforce the agreements of the Company therein and of the Obligors in the other
Note Documents in accordance with the respective terms thereof, and may enforce
the rights and remedies provided for thereby or otherwise available in respect
thereof in accordance with the respective terms thereof. Each Holder of this
Rollover Note will be deemed, by its acceptance hereof, (i) to have agreed to
the confidentiality provisions set forth in Section 18 of the Note Purchase
Agreement, (ii) to have made the representation set forth in Section 5 of the
Note Purchase Agreement and (iii) otherwise to be bound to the provisions of the
Note Purchase Agreement.
This Rollover Note is a registered Rollover Note and, as provided in
and subject to the terms of the Note Purchase Agreement, is transferable only
upon surrender of this Rollover Note for registration of transfer or exchange
(and, in the case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer, duly executed by the registered
Holder of this Rollover Note or his attorney duly authorized in writing), at
which time a new Note for a like principal amount will be issued to, and
registered in the name of, the permitted transferee. Reference in this Rollover
Note to a "Holder" shall mean the person or entity in whose name this Rollover
Note is at the time registered in the register kept by the Company as provided
in Section 11.1 of the Note Purchase Agreement and, prior to due presentment for
registration of transfer, the Company may treat such person or entity as the
owner of this Rollover Note for the purpose of receiving payment and for all
other purposes, and the Company will not be affected by any notice to the
contrary.
The Company is required to make redemptions of principal on the dates
and in the amounts specified in Sections 6.2 and 6.3 of the Note Purchase
Agreement. This Rollover Note is also subject to optional prepayment, in whole
or from time to time in part, at the times and on the terms specified in Section
6.1 of the Note Purchase Agreement.
If an Event of Default shall occur and be continuing, the unpaid
balance of principal of this Rollover Note and any accrued and unpaid interest
and other amounts payable hereon may be declared or otherwise become due and
payable in the manner, at the price and with the effect provided in Section 10
of the Note Purchase Agreement.
This Rollover Note is guaranteed on a subordinated basis by each
Subsidiary Guarantor, as set forth in the Note Purchase Agreement.
[The remainder of this page intentionally left blank.]
B-3
<PAGE>
This Note shall be governed by, and construed in accordance with, the laws
of the State of New York.
Very truly yours,
URS CORPORATION
By ________________________________
Name:
Title:
<PAGE>
EXHIBIT F
---------
FORM OF COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected [President] [Chief Financial Officer] of
URS Corporation, a Delaware corporation (the "Company");
(2) I have reviewed the terms of that certain Note Purchase Agreement
dated as of June 9, 1999, as amended, supplemented or otherwise
modified to the date hereof (said Note Purchase Agreement, as so
amended, supplemented or otherwise modified, being the "Note
Purchase Agreement", the terms defined in Schedule II therein and
not otherwise defined in this Certificate (including Attachment
No. 1 annexed hereto and made a part hereof) being used in this
Certificate as therein defined), by and among the Company and the
Purchasers party thereto, and the terms of the other Note
Documents, and I have made, or have caused to be made under my
supervision, a review in reasonable detail of the transactions
and condition of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements;
and
(3) The examination described in paragraph (2) above did not
disclose, and I have no actual knowledge of, the existence of any
condition or event that constitutes a Default or an Event of
Default during or at the end of the accounting period covered by
the attached financial statements or as of the date of this
Certificate, except as set forth below.
Set forth below are all exceptions to paragraph (3) above listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Company has taken, is taking, or proposes to
take with respect to each such condition or event:
The foregoing certifications, together with the computations set forth
in Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this __________ day of _____________, ____ pursuant to Section 8.1(c)
of the Note Purchase Agreement.
URS CORPORATION
By: __________________________
Name: ________________________
Title: _______________________
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of ____________, ____ and pertains to the period from
____________, ____ to ____________, ____. Subsection references herein relate to
subsections of the Note Purchase Agreement.
A. Indebtedness (9.1)
1. Indebtedness of the Company and its Domestic
Subsidiaries to Persons other than Company or any of its
Subsidiaries (not including the amount of any such
Indebtedness and committed lines of credit listed in Section _________
4.13 of the Bridge Note Disclosure letter):
(Maximum permitted by Section 9.1(j) - $50,000,000)
2. Indebtedness of Foreign Subsidiaries to Persons
other than the Company or any of its Subsidiaries (including
the amount of any such Indebtedness and committed lines of _________
credit listed in Section 4.13 of the Bridge Note Disclosure
Letter):
(Maximum permitted by Section 9.1(k) - $30,000,000)
B. Liens (9.2)
1.Other Liens
(Maximum permitted by Section 9.2(a)(viii) - $500,000) _________
C. Investments (9.3)
1. Investments of the Company and its Subsidiaries
(other than Inactive Subsidiaries) in Joint Ventures: _________
(Maximum permitted by Section 9.3(h) - $5,000,000)
2. Investments of the Company and Subsidiary
Guarantors in Subsidiaries (other than wholly-owned Subsidiary
Guarantors and Inactive Subsidiaries) including the amount _________
of any such Investments listed in Section 9.3
<PAGE>
of the Bridge Note Disclosure Letter:
(Maximum permitted by Section 9.3(m) - $25,000,000)
D. Contingent Obligations (9.4)
1. Contingent Obligations of the Company and its
Subsidiaries: _________
(Maximum permitted by Section 9.4(i) - $10,000,000)
E. Asset Sales; Acquisitions (9.6)
1. Total Purchase Price for Subsequent Acquisitions: _________
(Maximum permitted by Section 9.6(f) - $60,000,000)
E. Capital Expenditures (9.7)
Consolidated Capital Expenditures: _________
(Maximum Consolidated Capital Expenditures permitted under
Section 9.7: ___________________________)
<PAGE>
EXHIBIT 2.4
SECURITIES PURCHASE AGREEMENT
Dated as of May 5, 1999
By and Between
RCBA Strategic Partners, L.P.,
and
URS Corporation
Corrected and conformed copy
<PAGE>
Table of Contents
-----------------
ARTICLE I
DEFINITIONS; CERTAIN REFERENCES 2
ARTICLE II
CLOSING 6
2.1 Time and Place of the Closing 6
-----------------------------
2.2 Transactions at the Closing 6
---------------------------
2.3 Use of Proceeds. 6
----------------
ARTICLE III
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER 6
3.1 Material Adverse Effect 6
-----------------------
3.2 Minimum D&M EBITDA 7
------------------
3.3 Certificates of Designation 7
---------------------------
3.4 Closing Deliveries 7
------------------
3.5 HSR 8
---
3.6 Section 203 8
-----------
3.7 Merger Agreement 8
----------------
3.8 Credit Facility 8
---------------
3.9 Subordinated Notes Offering 8
---------------------------
3.10 Simultaneous Closing 8
--------------------
3.11 Accuracy of Seller's Representations and Warranties. 8
----------------------------------------------------
3.12 Compliance by Seller 8
--------------------
3.13 No Legal Action 9
---------------
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER 9
4.1 Closing Deliveries 9
------------------
4.2 HSR 9
---
4.3 Simultaneous Closing. 9
---------------------
4.4 Accuracy of Purchaser's Representations and Warranties 9
------------------------------------------------------
4.5 Compliance by Purchaser 10
-----------------------
4.6 No Legal Action 10
---------------
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER 10
5.1 Organization, Good Standing, Power, Authority, Etc 10
--------------------------------------------------
5.2 Capitalization of Seller 10
------------------------
5.3 SEC Documents; Financial Statements 11
-----------------------------------
5.4 Authority and Qualification of Seller 12
-------------------------------------
5.5 No Contravention, Conflict, Breach, Etc. 13
----------------------------------------
5.6 Consents 13
--------
5.7 Vote Required. 13
--------------
<PAGE>
5.8 Certain Approvals. 13
------------------
5.9 Brokers. 14
--------
5.10 Certain Agreements. 14
-------------------
5.11 No Material Adverse Change 14
--------------------------
5.12 Exemption from Registration. 14
----------------------------
5.13 Opinion of Independent Investment Banking Firm. 14
-----------------------------------------------
5.14 Other Matters 14
-------------
ARTICLE VI
REPRESENTATIONS AND WARRANTIESOF PURCHASER 15
6.1 Organization, Good Standing, Power, Authority, Etc 15
--------------------------------------------------
6.2 Authority and Qualification of Purchaser 15
----------------------------------------
6.3 No Contravention, Conflict, Breach, Etc. 15
----------------------------------------
6.4 Consents 15
--------
6.5 Brokers. 16
--------
6.6 Investment Intent. 16
------------------
ARTICLE VII
CORPORATE GOVERNANCE 16
7.1 Board of Directors 16
------------------
7.2 Observer Rights for Purchaser Designee. 16
---------------------------------------
ARTICLE VIII
COVENANTS OF THE PARTIES 17
8.1 Restrictions 17
------------
8.2 Pre-Closing Activities 17
----------------------
8.3 Filing with SEC. 17
----------------
8.4 Stockholder Meeting 17
-------------------
8.5 Proxy Statement 18
---------------
8.6 Stock Exchange Listing 18
----------------------
8.7 HSR 18
---
8.8 Equity Proposals 18
----------------
8.9 Publicity 19
---------
8.10 Securities 19
----------
8.11 Access, Information and Confidentiality 21
----------------------------------------
8.12 Maintenance of Business 22
-----------------------
8.13 Exchange 22
--------
8.14 Tax Matters. 23
------------
8.15 Authorized Shares. 24
------------------
ARTICLE IX
TERMINATION 24
9.1 General 24
-------
9.2 Breach By Seller 24
----------------
9.3 Breach By Purchaser 24
-------------------
<PAGE>
9.4 Specific Remedies 25
-----------------
ARTICLE X
SURVIVAL; INDEMNIFICATION 25
10.1 Survival of Representations and Warranties and Covenants. 25
---------------------------------------------------------
10.2 Indemnification of Seller 25
-------------------------
10.3 Indemnification of Purchaser 25
----------------------------
ARTICLE XI
MISCELLANEOUS 25
11.1 Successors and Assigns 25
----------------------
11.2 Performance; Waiver 26
-------------------
11.3 Notices 26
-------
11.4 Expenses 27
--------
11.5 Governing Law 27
-------------
11.6 Severability; Interpretation 27
----------------------------
11.7 Headings 27
--------
11.8 Entire Agreement 27
----------------
11.9 Counterparts 28
------------
11.10 Absence of Third Party Beneficiary Rights 28
-----------------------------------------
11.11 Mutual Drafting 28
---------------
11.12 Further Representations 28
-----------------------
11.13 Specific Performance; Remedies 28
------------------------------
<PAGE>
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of May 5, 1999, by and between RCBA Strategic Partners, L.P., a Delaware
limited partnership ("Purchaser"), and URS Corporation, a Delaware corporation
("Seller").
WHEREAS, Seller wishes to sell, and Purchaser wishes to purchase, an
aggregate of 46,082.95 newly issued shares of Series A Preferred Stock of
Seller, par value $1.00 ("Series A Preferred Stock") and 450,000 newly issued
shares of Series C Preferred Stock of Seller, par value $1.00 ("Series C
Preferred Stock") (collectively, as to the Series A Preferred Stock and Series C
Preferred Stock issued on the date hereof, the "Bridge Securities") for the
consideration and upon the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the Series A Preferred Stock and Series C Preferred Stock will not
be convertible into common stock of Seller and will not have voting rights
because such conversion and voting rights would require (i) prior stockholder
approval by the stockholders of Seller pursuant to New York Stock Exchange
("NYSE") Rules and (ii) an amendment to Seller's Articles of Incorporation to
increase the number of authorized common shares; and
WHEREAS, Seller is using the funds raised by this Agreement to purchase all
of the outstanding equity of the Dames & Moore Group, a Delaware corporation
("D&M"), and such purchase is due to close before the approval of the
stockholders of Seller referred to above could be sought or obtained; and
WHEREAS, Seller has agreed to use its best efforts to obtain such
stockholder approval and Purchaser has agreed to vote, and to cause all
affiliated entities to vote, all voting securities they hold in the Seller in
favor of such approval; and
WHEREAS, Seller and Purchaser have agreed that upon receiving stockholder
approval for the transactions contemplated hereby the Bridge Securities so
purchased (and any additional shares of Series A Preferred Stock paid as
dividends thereon) will automatically, and without any further action of either
party, convert into shares of Series B Exchangeable Convertible Preferred Stock
of Seller, par value $1.00 (the "Series B Preferred Stock").
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, each of Purchaser and Seller (together "Parties") agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS; CERTAIN REFERENCES
The terms defined in this Article I, whenever used in this Agreement, shall
have the following meanings for all purposes of this Agreement:
1.1 "Act" means the Securities Act of 1933, as amended.
1.2 "Affiliate" has the meaning set forth in Rule 12b-2 under the
Exchange Act.
1.3 "Board" means the Board of Directors of Seller.
1.4A "Bridge Notes" has the meaning set forth in Section 3.9 of this
Agreement.
1.4 "Bridge Securities" has the meaning given it in the first recital of
this Agreement.
1.5 "Business Day" shall have the meaning specified in Rule 14d-1(e)(6) of
the Exchange Act.
1.6 "Capital Stock" has the meaning given it in Section 5.2 of this
Agreement.
1.7 "Certificates of Designation" means the Certificate of Designation of
Seller classifying 300,000 shares as Series A Preferred Stock, the Certificate
of Designation of Seller classifying 150,000 shares as Series B Exchangeable
Convertible Preferred Stock, and the Certificate of Designation of Seller
classifying 450,000 shares as Series C Preferred Stock, each to be filed by
Seller with the Office of the Secretary of State for the State of Delaware on or
prior to the date and time of the Closing, a true and correct copy of the text
of each of which is attached as Exhibit 1.7 hereto.
1.8 "Certificate of Incorporation" means the Certificate of Incorporation
of Seller as filed with the Office of the Secretary of State for the State of
Delaware, as amended from time to time.
1.9 "Closing" has the meaning set forth in Section 2.1 of this Agreement.
1.10 "Closing Date" has the meaning set forth in Section 2.1 of this
Agreement.
1.11 "Common Stock" means the common stock, par value $.01 per share, of
Seller.
1.12 "Conversion Shares" means the shares of Common Stock issuable or
issued upon conversion of the Series B Preferred Stock pursuant to the terms of
this Agreement and the Certificate of Designation for the Series B Preferred
Stock.
<PAGE>
1.12A "Credit Facility" has the meaning given it in Section 3.8 of this
Agreement.
1.13 "DGCL" means the Delaware General Corporation Law, as amended.
1.13A "D&M" has the meaning given it in the third recital of this
Agreement.
1.14 "Equity Proposal" has the meaning set forth in Section 8.8 of this
Agreement.
1.14A "Exchange" has the meaning given it in Section 8.13 of this
Agreement.
1.15 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.15A "Exchange Approval" has the meaning given it in Section 8.4 of this
Agreement.
1.16 "Exchange Debentures" means the subordinated debentures into which
the Series B Preferred Stock is exchangeable (at the option of Seller) and which
will have substantially the same terms as the Series B Preferred Stock, the form
of which will be agreed by the parties hereto prior to Closing if either party
so requests.
1.17 "Filed SEC Documents" has the meaning given it in Section 5.3 of
this Agreement.
1.18 "GAAP" has the meaning given it in Section 5.3 of this Agreement.
1.19 "Government Entity" means any foreign, federal, state, or local
court or tribunal or administrative, governmental or regulatory body, agency,
commission, division, department, public body or other authority.
1.20 "HSR" has the meaning given it in Section 3.5 of this Agreement.
1.21 "Indemnifiable Losses" shall mean any and all direct or indirect
demands, claims, payments, obligations, actions, or causes of action,
assessments, losses, liabilities, costs, or expenses paid or incurred, any kind
or character (whether or not known or asserted before the date of this
Agreement, fixed or unfixed, conditional or unconditional, choate or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent,
or otherwise). Indemnifiable Losses shall include penalties, interest, or any
amount payable to a third party as a result of such Indemnifiable Losses.
Indemnifiable Losses shall include legal or other expenses reasonably incurred
in connection with investigating or defending any claims or actions, whether or
not resulting in any liability, and all amounts paid in settlement of claims or
actions in accordance with Article X.
<PAGE>
1.22 "Issuable Securities" means the Series A Preferred Stock, the Series
B Preferred Stock, the Conversion Shares, the Series C Preferred Stock, the
Series C Redemption Shares and the Exchange Debentures.
1.23 "Knowledge of Seller" means to the actual or constructive knowledge
of any executive officer or director of Seller.
1.24 "Liens" has the meaning given it in Section 5.2 of this Agreement.
1.25 "Material Adverse Effect" means any condition, event or development
having, or likely to have a material adverse effect on the business, operations,
properties, assets, liabilities, financial condition, or prospects of Seller and
the Subsidiaries, taken as a whole, or of Purchaser, taken as a whole (as
applicable).
1.25A "Merger Agreement" has the meaning given it in Section 2.3 of this
Agreement.
1.26 "NYSE" has the meaning given it in the second recital of this
Agreement.
1.26A "Offer" has the meaning given it in the Merger Agreement.
1.27 "Person" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, limited liability company, an unincorporated
organization and a Government Entity.
1.28 [Intentionally omitted]
1.29 "Proxy Statement" means the proxy statement to be sent to the
shareholders of Seller in connection with the Stockholder Meeting of Seller with
respect to, among other matters, the Stockholder Meeting Matters.
1.30 "Purchase Price" means, for the Bridge Securities to be purchased by
Purchaser, $100,000,000 in the aggregate.
1.31 "Purchaser" has the meaning set forth in the first paragraph of this
Agreement.
1.32 "Registration Rights Agreement" means the Registration Rights
Agreement to be dated as of the date of the Closing among Seller and Purchaser,
in substantially the form attached as Exhibit 1.32 hereto, as amended,
supplemented and modified from time to time in accordance with the terms
thereof.
1.33 "Schedule 14D-9" has the meaning set forth in Section 5.6 of this
Agreement.
<PAGE>
1.33A "SEC" means the Securities and Exchange Commission.
1.33B "Seller" has the meaning given it in the first paragraph of this
Agreement.
1.34 "Series C Redemption Shares" means the shares of Common Stock
issuable or that may be issued upon redemption of the Series C Preferred Stock
pursuant to the terms of this Agreement and the Certificate of Designation for
the Series C Preferred Stock.
1.35 [Intentionally omitted]
1.36 "Significant Holder" means Purchaser and any transferee of Purchaser
for so long any such person owns Issuable Securities in the aggregate equal to
at least ten (10) percent of (a) prior to Stockholder Approval, the Issuable
Securities purchased by Purchaser and issued on the Closing Date, or (b) at any
other time, the Issuable Securities issued to Purchaser in exchange for the
Series A Preferred Stock and the Series C Preferred Stock on the effective date
of that Exchange. In determining the number of Issuable Securities held by any
person or outstanding at any time, (i) each share of Series A Preferred Stock
shall be deemed to be convertible into Common Stock (on the same terms and
conditions as the Series B Preferred Stock) and to have been converted (to the
fullest extent then determinable) and such calculation shall include the
hypothetical number of shares of Common Stock that then would be deliverable
upon the conversion of such stock (as if such stock were converted), and (ii)
each share of Series C Preferred Stock shall be deemed to have been redeemed in
exchange for Common Stock, and each share of Series B Preferred Stock shall be
deemed to have been converted (in either case, to the fullest extent then
determinable) and such calculation shall include the number of Series C
Redemption Shares or Conversion Shares then deliverable upon the redemption of
the Series C Preferred Stock or the conversion of the Series B Preferred Stock
(to the fullest extent then determinable), as the case may be.
1.36A "Stockholder Approval" has the meaning given it in Section 8.4 of
this Agreement.
1.37 "Stockholder Meeting" has the meaning set forth in Section 8.4 of
this Agreement.
1.37A "Stockholder Meeting Matters" has the meaning given it in Section
8.4 of this Agreement.
1.38 "Stock Plans" has the meaning given it in Section 5.2 of this
Agreement.
1.39 "Stock Purchase" means the purchase of Series A Preferred Stock and
Series C Preferred Stock by Purchaser from Seller under this Agreement.
<PAGE>
1.40 "Subsidiary" means, with respect to Seller, any corporation, limited
or general partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or other entity analogous to any of the foregoing
of which a majority of the equity ownership (whether voting stock or comparable
interest) is, at the time, owned, directly or indirectly by Seller.
1.41 "Transaction Documents" means this Agreement, the Certificates of
Designation, and the Registration Rights Agreement.
1.42 "Voting Debt" has the meaning given it in Section 5.2 of this
Agreement.
ARTICLE II
CLOSING
2.1 Time and Place of the Closing. Seller shall as promptly as
-----------------------------
practicable notify Purchaser, and Purchaser shall as promptly as practicable
notify Seller when the conditions, contained in Articles III and IV hereof, to
such parties' respective obligations to effect the Stock Purchase have been
satisfied. The closing of the Stock Purchase (the "Closing") shall take place
at the offices of Cooley Godward LLP in San Francisco, California, or such other
location as the parties may mutually agree, on a date to be agreed upon by the
parties that is no later than November 30, 1999 (the "Closing Date"), and shall
be effective as of 12:01 a.m. on the Closing Date, unless another date,
effective time, or place is agreed to in writing by Purchaser and Seller.
2.2 Transactions at the Closing. At the Closing, subject to the terms
---------------------------
and conditions of this Agreement, Seller shall issue and sell to Purchaser and
Purchaser shall purchase the Bridge Securities. At the Closing, Seller shall
deliver to Purchaser a certificate or certificates representing the number of
the Bridge Securities to be purchased, each registered in the name of Purchaser
or its nominee against payment of the Purchase Price with respect thereto by
wire transfer of immediately available funds to an account or accounts
previously designated by Seller.
2.3 Use of Proceeds. The proceeds from the purchase and sale of the
---------------
Bridge Securities hereunder will be used simultaneously with the Closing of the
Offer (as defined in the Merger Agreement by and among D&M, Seller and one or
more Affiliates of either or both, dated May 5, 1999 (the "Merger Agreement")),
and shall not be used for any other purpose.
<PAGE>
ARTICLE III
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to be discharged under this Agreement on or
prior to the Closing are subject to satisfaction of the following conditions at
or prior to the Closing (unless expressly waived in writing by Purchaser at or
prior to the Closing):
3.1 Material Adverse Effect.
-----------------------
(a) There shall not have occurred and there shall not otherwise exist
any Material Adverse Effect on Seller.
(b) There shall not have occurred (i) any suspension or limit of
trading in securities generally on the NYSE (including automatic halt in trading
pursuant to market-decline triggers other than those in which solely program
trading is temporarily halted), (ii) the imposition generally of minimum or
maximum prices on such exchange or on The Nasdaq Stock Market or additional
material governmental restrictions, in either case not in force on the date of
this Agreement, by such exchange or by order of the SEC or the NASD or any court
or other governmental authority, (iii) the declaration of any general banking
moratorium by either Federal or New York State authorities, or (iv) any material
adverse change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States or any outbreak
or escalation of hostilities or declaration by the United States of a national
emergency or war or other calamity or crisis, the effect of any of which is such
as to make it, in reasonable judgment of Purchaser, impracticable or inadvisable
to acquire the Bridge Securities on the terms and in the manner contemplated by
this Agreement.
3.2 Minimum D&M EBITDA. D&M EBITDA for the fiscal year ended March 26,
------------------
1999, before second quarter restructuring charges, as shown in the audit of D&M
for the fiscal year ended March 26, 1999, which such audit shall be completed
prior to Closing, shall be no less than $65 million.
3.3 Certificates of Designation. The Certificates of Designation shall
---------------------------
have been filed for record with the Office of the Secretary of State for the
State of Delaware and shall have become effective.
3.4 Closing Deliveries. Seller shall have delivered to Purchaser on or
------------------
before the Closing the following:
(a) Opinion of Cooley Godward LLP, dated as of the Closing Date, in
form reasonably satisfactory to Purchaser;
(b) Registration Rights Agreement executed by Seller;
<PAGE>
(c) Certificate of the Secretary or Assistant Secretary of Seller
dated as of the Closing Date certifying: (i) that attached thereto is a true
and complete copy of the By-Laws of Seller as in effect on the date of such
certification; (ii) that attached thereto is a true and complete copy of all
resolutions adopted by the Board authorizing the execution, delivery and
performance of the Agreement, the issuance, sale and delivery of the Issuable
Securities, and that all such resolutions are in full force in effect and are
all the resolutions adopted in connection with the transactions contemplated by
this Agreement; (iii) that attached thereto is a true and complete copy of the
Certificate of Incorporation as in effect on the date of such certification; and
(iv) to the incumbency and specimen signature of certain officers of Seller;
(d) Certificate or certificates representing the number of the Bridge
Securities to be purchased, as described in the first recital and Section 2.2;
and
(e) Executed and conformed copies of such other certificates, letters
and documents as Purchaser may reasonably request and as are customary for
transactions such as those contemplated by this Agreement.
3.5 HSR. The waiting period under the Hart-Scott-Rodino Antitrust
---
Improvements Act of 1976, as amended (the "HSR Act") shall have expired or been
terminated, if applicable.
3.6 Section 203. The issuance of (a) the Bridge Securities to Seller
-----------
hereunder, (b) additional shares of Series A Preferred Stock and Series B
Preferred Stock as dividends, (c) the Series B Preferred Stock for which the
Bridge Securities are exchangeable, (d) any securities of Seller into which such
Series B Preferred Stock is convertible or exchangeable, and (e) the Series C
Redemption Shares shall have been exempted from the provisions of Section 203 of
the DGCL.
3.7 Merger Agreement. The Merger Agreement shall not have been modified
----------------
between the date hereof and the Closing Date in any material respect (except
with the prior written consent of Purchaser).
3.8 Credit Facility. The Credit Facility between Seller and Wells Fargo
---------------
Bank, National Association, as agent, as contemplated by the commitment letter
dated as of May 3, 1999 (the "Credit Facility"), shall not deviate from the
terms of such commitment letter in any material respect (except with the prior
written consent of Purchaser).
3.9 Subordinated Notes Offering. Seller's issuance and sale on the date
---------------------------
on which the Offer is consummated, of senior subordinated increasing rate notes,
for permanent financing in replacement thereof, in an aggregate principal amount
of $200 million (the "Bridge Notes"), as contemplated by the commitment letter
between Seller and Morgan Stanley & Co. Incorporated, dated as of May 3, 1999,
shall not deviate from the terms of such commitment letter in any material
respect (except with the prior written consent of Purchaser).
<PAGE>
3.10 Simultaneous Closing. (a) The Offer shall have been consummated and
--------------------
all shares tendered accepted for purchase by Seller or one or more of its
Affiliates, (b) the Credit Facility shall have closed and (c) the Bridge Notes
shall have closed, each of the foregoing substantially simultaneously with the
Closing.
3.11 Accuracy of Seller's Representations and Warranties. The
---------------------------------------------------
representations and warranties of Seller contained in Article V hereof which are
not subject to a qualification regarding materiality shall be true and correct
in all material respects as of the date when made and as of the Closing Date, as
though made on such date, the representations and warranties of Seller contained
in Article V hereof, which are subject to a qualification regarding materiality
shall be true and correct in all respects as of the date when made and as of the
Closing Date, as though made on such date, and Purchaser shall have received a
certificate attesting thereto signed by the Chief Executive Officer of Seller,
on behalf of Seller.
3.12 Compliance by Seller. Seller shall have performed, satisfied and
complied with, in all material respects, all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with on or prior to the Closing Date, and Purchaser shall have received a
certificate attesting thereto signed by the Chief Executive Officer of Seller.
3.13 No Legal Action. No action, suit, investigation or other proceeding
---------------
relating to the transactions contemplated hereby shall have been instituted
before or threatened by any Government Entity which presents a substantial risk
of the restraint or prohibition of the transactions contemplated hereby or the
obtaining of material damages or other material relief in connection therewith.
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to be discharged under this Agreement on or prior
to the Closing are subject to satisfaction of the following conditions at or
prior to the Closing (unless expressly waived in writing by Seller at or prior
to the Closing):
4.1 Closing Deliveries. Purchaser shall have delivered to Seller on or
------------------
before the Closing the following:
(a) Opinion of Wilmer, Cutler & Pickering, dated as of the Closing
Date, in form reasonably satisfactory to Seller; and
(b) Immediately available funds in the amount of the Purchase Price.
<PAGE>
4.2 HSR. The waiting period under the HSR Act shall have expired or
---
been terminated, if applicable.
4.3 Simultaneous Closing. (a) The Offer shall have been consummated and
--------------------
all shares tendered accepted for purchase by Seller or one or more of its
Affiliates, (b) the Credit Facility shall have closed and (c) the Bridge Notes
shall have closed, each of the foregoing substantially simultaneously with the
Closing.
4.4 Accuracy of Purchaser's Representations and Warranties. The
------------------------------------------------------
representations and warranties of Purchaser contained in Article VI hereof which
are not subject to a qualification regarding materiality shall be true and
correct in all material respects as of the date when made and as of the Closing
Date, as though made on such date, the representations and warranties of
Purchaser contained in Article VI hereof, which are subject to a qualification
regarding materiality shall be true and correct in all respects as of the date
when made and as of the Closing Date, as though made on such date, and Seller
shall have received a certificate attesting thereto signed by an officer of
Purchaser, on behalf of Purchaser.
4.5 Compliance by Purchaser. Purchaser shall have performed, satisfied
-----------------------
and complied with, in all material respects, all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with on or prior to the Closing Date, and Seller shall have received a
certificate attesting thereto signed by an officer of Purchaser.
4.6 No Legal Action. No action, suit, investigation or other proceeding
---------------
relating to the transactions contemplated hereby shall have been instituted
before or threatened by any Government Entity which presents a substantial risk
of the restraint or prohibition of the transactions contemplated hereby or the
obtaining of material damages or other material relief in connection therewith.
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Filed SEC Documents, Seller hereby represents
and warrants to Purchaser as follows:
5.1 Organization, Good Standing, Power, Authority, Etc. Each of Seller
--------------------------------------------------
and the Subsidiaries (a) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization, (b) has all
requisite corporate power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to enable
it to own, lease or otherwise hold and operate its properties and to carry on
its business as now being conducted and (c) is duly qualified to do business and
in good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except, in the case of clause (b) or (c) above, where the failure to have such
power or authority, to possess such franchises, licenses, permits,
authorizations or approvals or to be so qualified or in good standing,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on Seller.
5.2 Capitalization of Seller.
------------------------
(a) The authorized capital stock of Seller ("Capital Stock"), the
number of shares of Seller outstanding, the number of shares of Common Stock
reserved for issuance upon the exercise of outstanding Seller stock options
pursuant to stock option plans, the employee stock purchase plan and the
director stock plan, each as described in the Filed SEC Documents (collectively,
the "Stock Plans"), and the number of additional shares of Common Stock reserved
for issuance pursuant to the Stock Plans, are all substantially as set forth in
Seller's proxy statement for its annual meeting held March 23, 1999. Other than
as set forth above, at the close of business on the date of Seller's proxy
statement for its annual meeting held March 23, 1999 ("Proxy Statement Date"),
there were outstanding no shares of Capital Stock or options, warrants or other
rights to acquire Capital Stock from Seller. Since the Proxy Statement Date,
there have been no issuances by Seller of shares of Capital Stock or of options,
warrants or other rights to acquire Capital Stock from Seller, other than
issuances and grants of shares of Common Stock and rights to acquire shares of
Common Stock that were reserved for issuance as of the Proxy Statement Date and
that were issued pursuant to the terms of the Stock Plans.
(b) No bonds, debentures, notes or other indebtedness having the
right to vote (or convertible into or exchangeable for securities having the
right to vote) on any matters on which stockholders of Seller may vote are
issued or outstanding ("Voting Debt").
<PAGE>
(c) All outstanding shares of Common Stock are, and any shares of
Common Stock which may be issued upon the exercise of stock options when issued
will be, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. All shares of Common Stock which may be issued
upon the exercise of stock options will at the time issued by Seller be free and
clear of all liens, claims, charges, pledges, mortgages, security interests or
other encumbrances ("Liens"). Other than as set forth above, and except for
this Agreement (and the securities being issued hereunder) and the Stock Plans,
there are not any options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights, stock-based
performance units, commitments, contracts, arrangements or undertakings of any
kind to which Seller or any of the Subsidiaries is a party or by which any of
them is bound (i) obligating Seller or any of the Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity interests in, or any security convertible or exercisable
for or exchangeable into any capital stock of or other equity interest in,
Seller or of any of the Subsidiaries or any Voting Debt, (ii) obligating Seller
or any of the Subsidiaries to issue, grant, extend or enter into any such
option, warrant, call, right, security, commitment, contract, arrangement or
undertaking or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights of
holders of Common Stock.
(d) There are no outstanding contractual obligations of Seller or any
of the Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Seller or any of the Subsidiaries and, to the Knowledge of
Seller, there are no irrevocable proxies with respect to shares of Common Stock
or shares of capital stock of any Subsidiary of Seller.
5.3 SEC Documents; Financial Statements.
-----------------------------------
(a) Seller has filed and provided or made available to Purchaser a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement required to be filed by Seller with the SEC since
January 1, 1995 (the "Filed SEC Documents"). As of their respective dates, each
Filed SEC Document complied in all material respects with the requirements of
the Act or the Exchange Act, as the case may be, applicable to such Filed SEC
Document. None of the Filed SEC Documents when filed contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to the
extent that information contained in any Filed SEC Document has been revised or
superseded by a later Filed SEC Document filed and publicly available prior to
the date of this Agreement, none of the Filed SEC Documents contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
<PAGE>
(b) All contracts or agreements, including agreements relating to
indebtedness of Seller or any of the Subsidiaries, required to be filed with the
SEC under the Exchange Act have been filed with the SEC.
(c) The financial statements of Seller included in the Filed SEC
Documents comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP") during the periods
involved (except, in the case of the unaudited statements, as permitted by Form
10-Q of the SEC) and fairly present the consolidated financial position of
Seller and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal and recurring
year-end adjustments which are not material). Except as set forth in the Filed
SEC Documents, neither Seller nor any Subsidiary of Seller has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on a consolidated balance sheet of
Seller and the Subsidiaries or in the notes thereto. None of the Subsidiaries
is, or has at any time since January 1, 1995 been, subject to the reporting
requirements of Sections 13(a) or 15(d) of the Exchange Act.
5.4 Authority and Qualification of Seller. Seller has all requisite
-------------------------------------
corporate power and authority to enter into this Agreement and the Merger
Agreement, and, subject to obtaining the Stockholder Approval with respect to
the matters set forth in Section 8.4, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Merger Agreement, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action
on the part of Seller subject, in the case of the Exchange, to obtaining the
stockholders' approval and adoption of certain matters described in Section 8.4
hereof. The Board, at a meeting duly called and held, duly and unanimously
adopted resolutions (a) approving this Agreement, the Merger Agreement and the
transactions contemplated hereby and thereby, (b) determining that the terms of
this Agreement, the Merger Agreement and the transactions contemplated hereby
and thereby are fair to and in the best interests of Seller and its
stockholders, (c) recommending that Seller's stockholders grant the Stockholder
Approval and (d) declaring that this Agreement and the Merger Agreement are each
advisable. Each of this Agreement and the Merger Agreement has been duly
executed and delivered by Seller and, assuming such agreement constitutes a
legal, valid and binding obligation of each of the other parties thereto,
constitutes a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity.
5.5 No Contravention, Conflict, Breach, Etc. The execution and delivery
---------------------------------------
of this Agreement and the Merger Agreement do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any breach or violation of, or default (with or without notice or lapse of
time or both) under,
<PAGE>
or result in the termination of, or accelerate the performance required by, or
give rise to a right of termination, cancellation or acceleration of any
obligation under, or to increased, additional, accelerated or guaranteed rights
or entitlements of any person under, or result in the creation of any Lien on
the properties or assets of Seller or any of the Subsidiaries pursuant to, (a)
any provision of the Certificate of Incorporation or the Seller's By-laws or the
comparable charter or organizational documents of any Subsidiary, or (b) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Seller or any Subsidiary or their respective properties or assets.
5.6 Consents. No consent, approval, order or authorization of, or
--------
registration, declaration or filing with, any Government Entity is required by
or with respect to Seller or any Subsidiary in connection with the execution and
delivery of this Agreement or the Merger Agreement by Seller, or the
consummation by Seller of the transactions contemplated hereby or thereby,
except for such consents, approvals, orders, authorizations, registrations,
declarations or filings the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on Seller, and
except for: (i) the filing with the SEC of (A) a Schedule 14D-9 of Seller to be
filed under the Exchange Act (the "Schedule 14D-9"), (B) a proxy statement
relating to the consideration of D&M's stockholders approval at a meeting of the
stockholders of D&M duly called and convened to consider the adoption of the
Merger Agreement, and (C) such other reports under the Exchange Act, as may be
required in connection with this Agreement or the Merger Agreement and the
transactions contemplated hereby, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which D&M is qualified to do
business, (iii) filings required pursuant to the HSR Act, and the rules and
regulations promulgated thereunder, (iv) filings necessary to satisfy the
applicable requirements of state securities or "blue sky" laws and (v) those
filings required under the rules and regulations of the NYSE.
5.7 Vote Required. The Stockholder Approval is the only vote of the
-------------
holders of any class or series of Capital Stock necessary to adopt this
Agreement and approve the transactions contemplated hereby. No stockholder
approval of any kind is required for the issuance of the Series A Preferred
Stock and the Series C Preferred Stock.
5.8 Certain Approvals. The Board has taken any and all necessary and
-----------------
appropriate action to render inapplicable to Stock Purchase, the Exchange and
the other transactions contemplated hereby the provisions of Section 203 of the
DGCL. No other state takeover statute or similar statute or regulation applies
to the Offer, the Merger Agreement or the other transactions contemplated
hereby.
5.9 Brokers. No broker, investment banker, financial advisor or other
-------
person, other than Morgan Stanley & Co. Incorporated, the fees and expenses of
which will be paid by Seller, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Seller.
<PAGE>
5.10 Certain Agreements. There are no employment contracts to which
------------------
Seller or any of the Subsidiaries is a party which provides for any benefit upon
or resulting from a "change in control" of Seller or any of the Subsidiaries or
any similar event.
5.11 No Material Adverse Change. Since October 31, 1998, there has not
--------------------------
been any event, change, effect, condition or development that, individually or
in the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect on Seller (other than any such Material Adverse Effect on Seller
the existence of which is specifically disclosed in any report filed and
publicly available on Form 10-Q or Form 8-K under the Exchange Act with the SEC
by Seller after October 31, 1998 and prior to the date hereof).
5.12 Exemption from Registration. Assuming the representations and
---------------------------
warranties of Purchaser set forth in Article VI hereof are true and correct in
all material respects, the offer and sale of the Series A Preferred Stock and
the Series C Preferred Stock made pursuant to this Agreement will be exempt from
the registration requirements of the Act. Neither Seller nor any Person acting
on its behalf has, in connection with the offering of the Series A Preferred
Stock or the Series C Preferred Stock, engaged in (a) any form of general
solicitation or general advertising (as those terms are used within the meaning
of Rule 502(c) under the Act), (b) any action involving a public offering within
the meaning of Section 4(2) of the Act, or (c) any action which would require
the registration of the offering and sale of the Series A Preferred Stock or the
Series C Preferred Stock pursuant to this Agreement under the Act or which would
violate applicable state securities or "blue sky" laws. Seller has not made and
will not make, directly or indirectly, any offer or sale of the Series A
Preferred Stock, the Series C Preferred Stock, or of securities of the same or a
similar class as the Series A Preferred Stock or the Series C Preferred Stock if
as a result the offer and sale of the Series A Preferred Stock and Series C
Preferred Stock contemplated hereby could fail to be entitled to exemption from
the registration requirements of the Act. As used herein, the terms "offer" and
"sale" have the meanings specified in Section 2(3) of the Act.
5.13 Opinion of Independent Investment Banking Firm. Seller has obtained
----------------------------------------------
advice from Morgan Stanley & Co. Incorporated that the financial terms of the
transactions contemplated by this Agreement are reasonable.
5.14 Other Matters. The Parties agree that each of the representations
-------------
and warranties made by Seller to the lenders pursuant to the Credit Facility
will be incorporated herein by reference as if such representations and
warranties had been made directly to Purchaser. By Closing on this Agreement,
Seller agrees that Purchaser may rely on such representations as if set forth
fully herein.
<PAGE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to Seller that:
6.1 Organization, Good Standing, Power, Authority, Etc. Purchaser is a
--------------------------------------------------
limited partnership duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization.
6.2 Authority and Qualification of Purchaser. Purchaser has all
----------------------------------------
requisite partnership power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of Purchaser. No vote
of the holders of partnership interests is necessary to approve or adopt this
Agreement or the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Purchaser and, assuming such agreement constitutes a
legal, valid and binding obligation of each of the other parties thereto,
constitutes a valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity.
6.3 No Contravention, Conflict, Breach, Etc. The execution and delivery
---------------------------------------
of this Agreement do not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time or both) under, or result in
the termination of, or accelerate the performance required by, or give rise to a
right of termination, cancellation or acceleration of any obligation under, or
to increased, additional, accelerated or guaranteed rights or entitlements of
any person under, or result in the creation of any Lien on the properties or
assets of Purchaser or any of its subsidiaries pursuant to, (a) any provision of
the Purchaser's organizational documents, or (b) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Purchaser or any
subsidiary of Purchaser or their respective properties or assets.
6.4 Consents. No consent, approval, order or authorization of, or
--------
registration, declaration or filing with, any Federal, state, local, or foreign
government or any court, administrative agency, tribunal or commission or other
Government Entity is required by or with respect to Purchaser in connection with
the execution and delivery of this Agreement by Purchaser or the consummation by
Purchaser of the transactions contemplated hereby, except for such consents,
approvals, orders, authorizations, registrations, declarations or filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Purchaser or filings required
pursuant to the HSR Act.
<PAGE>
6.5 Brokers. No broker, investment banker, financial advisor or other
-------
person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of Purchaser.
6.6 Investment Intent. Purchaser is an "Accredited Investor" within the
-----------------
meaning of Rule 501(a) of Regulation D under the Act, and it is or will be
acquiring the Issuable Securities for its own account and not with a view to, or
for sale in connection with, any distribution thereof in violation of the Act.
It understands that the Issuable Securities have not been registered under the
Act by reason of a specific exemption from the registration provisions thereof
which depends upon, among other things, the bona fide nature of their investment
intent as expressed herein.
ARTICLE VII
CORPORATE GOVERNANCE
7.1 Board of Directors.
------------------
(a) At all times on and after the Closing Date, for so long as
Purchaser and its Affiliates own or control at least 10% of the outstanding
shares of Common Stock, and until Richard C. Blum no longer wishes to serve as a
director, Seller shall take all such actions as may be necessary or appropriate
to cause Mr. Blum to be elected or re-elected as a member of the Board and to be
maintained in such position at all times.
(b) In the event that a vacancy is created on the Board at any time
by the death, disability, retirement, or resignation of Mr. Blum, Purchaser and
Seller will take such actions as will result in the election or appointment of a
new director designated by Purchaser, provided that such designee is acceptable
to Seller.
7.2 Observer Rights for Purchaser Designee. Seller shall, for so long as
--------------------------------------
Purchaser and its Affiliates own or control at least 10% of the outstanding
shares of Common Stock, permit an individual designated by Purchaser and
acceptable to Seller to attend and observe meetings of the Board, and such
designee shall have the right to receive all written information provided by
Seller to the Board (but only if specifically requested by such designee). Such
designee shall have no right to vote on any matter presented to the Board, but
otherwise shall have all rights of a Director, including: (i) the right to
examine books and records of Seller; (ii) the right to review and participate in
all discussions of the Board including, without limitation, capital or equity
programs; (iii) the right to receive, upon request, any information relating to
Seller and the Subsidiaries, and to any Affiliates thereof; and (iv) the right
to meet on a regular basis with the management personnel of Seller and the
Subsidiaries, or any Affiliates thereof; provided that any such designee shall
agree to be bound by all policies relating to confidentiality and material non-
public information which are applicable to the Directors and senior executive
officers of Seller.
<PAGE>
ARTICLE VIII
COVENANTS OF THE PARTIES
8.1 Restrictions. Purchaser covenants and agrees with Seller that
------------
Purchaser will not dispose of any of Purchaser's shares of the Issuable
Securities except pursuant to (a) an effective registration statement under the
Act or (b) an applicable exemption from registration under the Act. In
connection with any sale by Purchaser pursuant to clause (b) of the preceding
sentence, Purchaser shall furnish to Seller, if requested by Seller, an opinion
of counsel reasonably satisfactory to Seller to the effect that such exemption
from registration is available in connection with such sale.
8.2 Pre-Closing Activities. From and after the date of this Agreement
----------------------
until the Closing, each of Seller and Purchaser shall act with good faith
towards, and shall use all commercially reasonable efforts to consummate, the
transactions contemplated by this Agreement, and neither Seller nor Purchaser
will take any action that would prohibit or impair its ability to consummate the
transactions contemplated by the Merger Agreement and this Agreement.
8.3 Filing with SEC. So long as any of the Issuable Securities are
---------------
outstanding, Seller shall file with the SEC the annual reports and quarterly
reports and the information, documents and other reports that are required to be
filed with the SEC pursuant to Sections 13 and 15 of the Exchange Act, so long
as Seller has or is required to have a class of securities registered under the
Exchange Act and is then subject to the reporting requirements of the Exchange
Act, at the time Seller is required to file the same with the SEC and, promptly
after Seller is required to file such reports, information or documents with the
SEC, to mail copies of such reports, information and documents to the holders of
the Series A Preferred Stock, Series B Preferred Stock, the Conversion Shares,
Series C Preferred Stock and the Series C Redemption Shares at their addresses
set forth in the register maintained by the transfer agent therefor.
8.4 Stockholder Meeting. Seller shall cause a special meeting of its
-------------------
common stockholders (the "Stockholder Meeting") to be held as soon as
practicable but in no event later than six months after the Closing, for the
purpose of approving (i) the issuance of the Series B Preferred Stock (pursuant
to the Exchange contemplated by Section 8.13 hereof (the "Exchange Approval"))
as required by NYSE Rule 312 and (ii) an amendment to the Certificate of
Incorporation of Seller providing for an increase in the number of authorized
common shares to such number as may be deemed appropriate by Seller (the
"Charter Amendment Approval" and, together with the Exchange Approval, the
"Stockholder Approval"), and transacting such other business as may properly
come before the meeting or any adjournment thereof, (the "Stockholder Meeting
Matters"). Seller shall use its best efforts to obtain the Stockholder Approval
no later than six months after the Closing. Purchaser shall vote, and shall
cause its Affiliates to vote, all
<PAGE>
shares of Seller voting securities which they may hold at the time of the
Stockholder Meeting in favor of the Stockholder Approval.
8.5 Proxy Statement. Seller covenants that the Proxy Statement will not
---------------
include any untrue statement of a material fact, or omit to state any material
fact, necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
-------- -------
Seller's covenant shall not encompass any information in the Proxy Statement
that was furnished in writing to Seller by or on behalf of Purchaser for use
specifically in connection with the preparation of the Proxy Statement.
8.6 Stock Exchange Listing. Subsequent to consideration by the
----------------------
shareholders of Seller of the Stockholder Meeting Matters at the Shareholders
Meeting and until such shares shall cease to be outstanding, Seller shall take
all steps necessary to ensure that the Series A Preferred Stock (if still
outstanding), Conversion Shares and Series C Preferred Stock (if still
outstanding) and Series C Redemption Shares (if any) are approved for trading,
subject to notice of issuance by the NYSE and any other securities exchange on
which the Common Stock is listed.
8.7 HSR. Upon the terms and subject to the conditions set forth in this
---
Agreement, each of the parties agrees to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective all necessary filings required pursuant to the HSR Act no
later than five Business Days from the date of this Agreement, and shall use
their best efforts to obtain the early termination of the waiting period
thereunder, provided that neither Seller nor Purchaser shall be required to
agree to dispose of or hold separate any portion of its business or assets.
8.8 Equity Proposals.
----------------
(a) Prior to the Closing, Seller agrees that neither Seller nor any
Subsidiary nor any of the respective officers and directors of Seller or any of
the Subsidiaries shall, and Seller shall direct and use its best efforts to
cause its employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by Seller or any
Subsidiary) not to, initiate, solicit or encourage, directly or indirectly, any
inquiries or the making of any proposal or offer (including, without limitation,
any proposal or offer to stockholders of Seller) with respect to the offer, sale
or issuance of preferred stock or other comparable equity securities as
contemplated by this Agreement (any such proposal or offer being hereinafter
referred to as an "Equity Proposal") or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any Person relating to an Equity Proposal, or otherwise facilitate
directly or indirectly any effort or attempt to make or implement an Equity
Proposal; and
<PAGE>
(b) Seller will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Seller will take the necessary
steps to inform the individuals or entities referred to in the first sentence
hereof of the obligations undertaken in this subsection 8.8(b). Seller will
notify Purchaser immediately if any such inquiries or proposals are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with Purchaser.
8.9 Publicity. Seller and Purchaser will consult with each other before
---------
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or by obligations pursuant to any listing agreement with
any securities exchange.
8.10 Securities. Seller hereby covenants to Purchaser, that from and after
----------
the date hereof and so long as Purchaser owns any Issuable Securities:
(a) Unissued Shares of Common Stock. (i) Reserve and keep available
out of its authorized but unissued shares of Series B Preferred Stock and Common
Stock (including any shares held by Seller in its corporate treasury), for the
purpose of issuing any and all payment in kind dividends and effecting the
Exchange and the exercise in full of conversion and other rights related to the
Series B Preferred Stock and the Series C Preferred Stock, such number of its
duly authorized shares of Series B Preferred Stock and Common Stock as shall be
sufficient to effect such exercise, and if at any time the number of authorized
but unissued shares of Series B Preferred Stock or Common Stock shall not be
sufficient to effect such exercise, subject to any required approval by the
holders of the Common Stock and as may otherwise be required pursuant to the
DGCL and applicable federal and state securities laws, Seller shall take all
such corporate action as may be necessary (and desirable in the reasonable
discretion of Purchaser) to increase its authorized but unissued shares of
Series B Preferred Stock and Common Stock to such number of shares as shall be
sufficient for such purposes, and (ii) reserve and keep available out of its
authorized but unissued shares of Series A Preferred Stock, for the purpose of
issuing any and all payment in kind dividends on the Series A Preferred Stock,
such number of its duly authorized shares of Series A Preferred Stock as shall
be sufficient to effect any such dividend contemplated by the Series A Preferred
Stock, and if at any time the number of authorized but unissued Series A
Preferred Stock shall not be sufficient to effect such dividends, subject to any
required approval by the holders of the Common Stock and as may otherwise be
required pursuant to the DGCL and applicable federal and state securities laws,
Seller shall take all corporate action as may be necessary (and desirable in the
reasonable discretion of Purchaser) to increase its authorized but unissued
Series A Preferred Stock to such number of shares as shall be sufficient for
such purposes.
(b) Exchange of Certificates. Seller shall, upon surrender by the
holder of any certificates representing the Series A Preferred Stock, the Series
B
<PAGE>
Preferred Stock or the Series C Preferred Stock (or securities issued upon
exchange, conversion or redemption of any of the foregoing) for exchange or
reissuance at the office of Seller, cause to be issued in exchange therefor new
certificates in such denomination or denominations as may be requested for the
same aggregate number of such securities (or securities issued upon exchange,
conversion or redemption thereof) represented by the certificates so surrendered
and registered as such holder may request, subject to the provisions hereof.
(c) Replacement of Certificates. Upon receipt by Seller of evidence
reasonably satisfactory to it of loss, theft, destruction or mutilation of any
certificate evidencing any of the Series A Preferred Stock, the Series B
Preferred Stock, or the Series C Preferred Stock (or securities issued upon
exchange, conversion or redemption of any of the foregoing), and (in case of
loss, theft or destruction) of indemnity reasonably satisfactory to Seller, and
upon the surrender and cancellation of such certificate, if mutilated, Seller
shall make and deliver in lieu of such certificate a new certificate for the
number of such securities (or securities issued upon exchange, conversion or
redemption thereof), as the case may be, evidenced by such lost, stolen,
destroyed or mutilated certificate which remains outstanding. Purchaser's
agreement of indemnity shall constitute indemnity satisfactory to Seller for the
purposes of this Section 8.10 without the need of any further surety or bond.
(d) Government and Other Approvals. Seller shall promptly prepare,
submit and file with all public and governmental authorities, all applications,
notices, registrations, certificates, statements and such other information,
documents and instruments as may be required pursuant to any federal, state,
local or foreign law or rule or regulation of the NYSE, NASD or any other
securities exchange, in connection with the consummation of the transactions
contemplated by this Agreement, including the effect of any dividends, exchange,
conversion or redemption rights, anti-dilution provisions or Board control
contemplated by the terms of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, or other securities of Seller
which may be acquired by Purchaser pursuant to this Agreement and the
Certificates of Designation. Seller shall use its best efforts to obtain any
necessary consents or approvals from any Government Entity in connection with
the consummation of the transactions contemplated by this Agreement, including
the effect of any dividends, exchange, conversion or redemption rights or anti-
dilution provisions contemplated by the terms of the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock or other securities
of Seller which may be acquired by Purchaser pursuant to this Agreement and the
Certificates of Designation. Purchaser shall provide all cooperation and
support, and take all such actions as may be reasonably required to facilitate
such filings and obtain such consents.
<PAGE>
8.11 Access, Information and Confidentiality.
---------------------------------------
(a) Pre-Closing Access. Upon reasonable notice prior to the Closing,
Seller shall (and shall cause each of the Subsidiaries to) afford Purchaser and
its representatives reasonable access to its properties, books, contracts and
records and personnel and advisors and Seller shall (and shall cause each of the
Subsidiaries to) furnish promptly to Purchaser all information concerning its
business, properties and personnel as Purchaser or its representatives may
reasonably request.
(b) Post-Closing Access. From the date hereof until the Stockholder
Meeting, Seller shall permit Purchaser (and its designated representatives) to
visit and inspect any of the properties of Seller and the Subsidiaries,
including the books and records of Seller and the Subsidiaries (and to make
extracts and copies therefrom), and to consult with respect to and discuss the
affairs, businesses, finances, operations and accounts of Seller and the
Subsidiaries with the officers, directors and employees of such entities, all at
such reasonable times and as often as Purchaser may reasonably request.
(c) Information. Seller covenants that so long as Purchaser owns at
least 10% of any Issuable Securities it will deliver to Purchaser the following:
(i) As soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly period) in
each fiscal year, (A) a consolidated statement of income and consolidated
statements of changes in financial position and cash flows of Seller and the
Subsidiaries for such quarterly period and for the period from the beginning of
the current fiscal year to the end of such quarterly period, and (B) a
consolidated balance sheet of Seller and the Subsidiaries as at the end of such
quarterly period, setting forth in each case, in comparative form, figures for
the corresponding periods in the preceding fiscal year and corresponding figures
for the budget for such quarterly period, all in reasonable detail and certified
by an authorized financial officer of Seller, subject to changes resulting from
year-end adjustments;
(ii) As soon as practicable and in any event within 120 days
after the end of each fiscal year, (A) a consolidated statement of income and
consolidated statements of changes in financial position and cash flows of
Seller and the Subsidiaries for such year, and (B) a consolidated balance sheet
of Seller and the Subsidiaries as of the end of such year, setting forth in each
case, in comparative form, corresponding consolidated figures from the preceding
annual audit and corresponding figures for the budget for such fiscal year, all
in reasonable detail together with an opinion directed to Seller of independent
public accountants of recognized standing selected by Seller;
(iii) Promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall send to
its public stockholders and copies of all registration statements (without
exhibits), other than on
<PAGE>
Form S-8 or any similar successor form, and all reports which it files with the
SEC (or any governmental body or agency succeeding to the functions of the SEC);
(iv) With reasonable promptness, such other financial data as
any Purchaser may reasonably request.
(d) Confidentiality. Purchaser recognizes and acknowledges that it
has in the past, currently has, and in the future may possibly have, access to
certain confidential information of Seller. Purchaser agrees that it will not
disclose confidential information with respect to Seller to any Person for any
purpose or reason whatsoever, except to authorized representatives of Seller and
to counsel and other advisers, provided, however, that such advisers (other than
-------- -------
counsel) agree to the confidentiality provisions of this subsection 8.11(d),
unless (i) such information becomes known to the public generally through no
fault of Purchaser, or (ii) disclosure is required by law or the order of any
governmental authority under color of law; provided, however, that prior to
-------- -------
disclosing any information pursuant to clauses (i) or (ii) above, Purchaser
shall, if possible, give prior written notice thereof to Seller and provide
Seller with the opportunity to contest such disclosure.
8.12 Maintenance of Business. Seller covenants that between the date of
-----------------------
this Agreement and Closing, it shall and shall cause each of the Subsidiaries
to:
(a) conduct its business (including, but not limited to, making
loans, paying directors, officers and employees, including any salary, bonus, or
other compensation policy, disposing or acquiring assets, and incurring
liabilities) only in the ordinary course, consistent with past practice;
(b) use commercially reasonable efforts to preserve its business
organizations intact, to retain the services of its present officers and
employees and to preserve the good will of the suppliers and customers and
others having business relations with it;
(c) comply in all material respects with all laws that may be
applicable to its business;
(d) not make any distributions or dividends to its stockholders; and
(e) comply with its stated official accounting policies with respect
to charge-offs and loss provisions.
Subject to the foregoing, any transaction or action that is not in the ordinary
course of business, consistent with Seller's past practice, shall be subject to
the prior written consent of Purchaser.
<PAGE>
8.13 Exchange. In the event Seller shall have obtained the Stockholder
--------
Approval, on the first Business Day following the last to occur of (a) delivery
to Purchaser of a Certificate of the Chief Executive Officer or other executive
officer of Seller certifying that the Stockholder Approval has been obtained,
which Certificate shall be delivered within one Business Day of obtaining the
Stockholder Approval and (b) termination of any applicable waiting period under
the HSR Act, then the Bridge Securities and any additional shares of Series A
Preferred Stock paid as dividends thereon shall, without any further action on
the part of Seller or the holders thereof, be exchanged for shares of Series B
Preferred Stock (the "Exchange"). If the Stockholder Approval has not been
obtained prior to six months after the Closing, then the Exchange shall not take
place without the prior written consent of the holders of at least 67% of the
shares of Series A Preferred Stock and Series C Preferred Stock. In connection
with the Exchange, the holders of the Bridge Securities or any additional shares
of Series A Preferred Stock paid as dividends thereon shall receive the number
of shares of Series B Preferred Stock equal to 46,082.95 plus the number of any
additional shares of Series A Preferred Stock paid as dividends thereon then
owned by them on the date of the Exchange (after giving effect to any accrued
dividends and interest). From and after the date of the Exchange all of the
Bridge Securities and any additional shares of Series A Preferred Stock paid as
dividends thereon shall be deemed to have been exchanged for the Series B
Preferred Stock into which they were exchangeable. Holders of Issuable
Securities shall be entitled to obtain certificates representing the Series B
Preferred Stock to which they are entitled pursuant to the Exchange by
delivering to Seller certificates representing the Series A Preferred Stock and
the Series C Preferred Stock. Seller shall not take any action between the date
hereof and the date set for redemption of the Series A Preferred Stock that
would cause the Conversion Price (as defined in the Series B Certificate of
Designation) to be any amount other than $21.70 per share if shares of Series B
Preferred Stock were outstanding on the date hereof without making appropriate
adjustments thereof in the conversion price (which such adjustment or cumulative
adjustments to the Series B Preferred Stock shall take effect immediately after
the Exchange).
8.14 Tax Matters. Purchaser intends that no pay-in-kind dividends on the
-----------
Series A Preferred Stock or the Series B Preferred Stock will, when paid or
accrued, be includible in Purchaser's gross income for federal, state or local
tax purposes. Accordingly, for so long as there are any shares of Series A
Preferred Stock or Series B Preferred Stock outstanding then: (a) unless Seller
concludes in good faith that there is no reasonable basis to make or file any
tax return that is consistent with such intention, Seller shall not make or file
any tax return that is inconsistent with such intention; (b) if by reason of any
action taken by Seller over the objection of Purchaser the pay-in-kind dividends
which accrue or are paid with respect to the Series A Preferred Stock or Series
B Preferred Stock become taxable as income for tax purposes when paid or
accrued, Seller shall pay to the holders of such securities such additional
amount (the "Gross Up Amount") as may be necessary to fund any federal, state or
local income tax payable with respect to such dividend. Such Gross Up Amount
shall also include an amount necessary to fund the payment of any such income
tax payable with respect to the Gross Up Amount. Such Gross Up Amount shall be
paid upon notice to Seller at least ten (10) days
<PAGE>
before the date on which the relevant income tax payment is due or made. Prior
to receiving any taxable distribution from Seller, Purchaser shall provide
Seller with such documentation as may be reasonably requested by Seller in order
to make such distribution without withholding for tax purposes. All amounts paid
or accrued on any Issuable Security shall be net of applicable withholding
taxes.
8.15 Authorized Shares. If Seller is unable to obtain the Stockholder
-----------------
Approval, it will use its best efforts to obtain an amendment to the Certificate
of Incorporation providing for an increase in the number of authorized shares of
Common Stock to such number as is sufficient to permit the repurchase by Seller
of the Series C Preferred Stock pursuant to the terms of the Certificate of
Designation for the Series C Preferred Stock.
ARTICLE IX
TERMINATION
9.1 General. Except for the obligations in Article IX, Article XI and
-------
Section 8.11(a) and (d), this Agreement and the transactions contemplated hereby
shall terminate without any action by the parties hereto if the Closing shall
not have occurred on or before November 30, 1999. This Agreement may be
terminated at any time prior to the Closing (i) by a written instrument executed
and delivered by Seller and Purchaser; (ii) by Purchaser upon any material
breach or default by Seller under this Agreement; or (iii) by Seller upon any
material breach or default by Purchaser under this Agreement.
9.2 Breach By Seller. A material breach or default by Seller shall occur:
----------------
(a) in the event that any representation or warranty of Seller set
forth in Article V shall be false in any material respect; or
(b) in the event that Seller (or any applicable Subsidiary) shall not
perform in any material respect any covenant required of it in Article III or
Article VIII not otherwise waived by Purchaser; or
(c) breach of or default by Seller or any Subsidiary under any of the
Transaction Documents.
9.3 Breach By Purchaser. A material breach or default by Purchaser shall
-------------------
occur
(a) in the event that any representation or warranty of Purchaser set
forth in Article VI shall be false in any material respect; or
(b) in the event that Purchaser shall not perform in any material
respect any covenant required of it in Article IV or VIII not otherwise waived
by Seller; or
<PAGE>
(c) breach of or default by Purchaser under any of the Transaction
Documents.
9.4 Specific Remedies. In addition to the termination of this Agreement
-----------------
and the transactions contemplated herein prior to Closing, in the event of a
material breach or default by a party (the "Breaching Party"), the Breaching
Party shall indemnify the non-breaching party for any and all loss, cost, and
expense caused by the breach of representation, warranty, or covenant.
ARTICLE X
SURVIVAL; INDEMNIFICATION
10.1 Survival of Representations and Warranties and Covenants. All
--------------------------------------------------------
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement and the delivery of Bridge Securities
for a period of two (2) years from the date of such delivery and any examination
or investigation made by any party to this Agreement or any of their successors
and assigns. All covenants shall survive for the periods specified therein or,
if no period is specified, for a period of two (2) years.
10.2 Indemnification of Seller. From and after the Closing Purchaser
-------------------------
shall indemnify Seller and its Affiliates, officers, directors, employees,
partners (general or limited), shareholders, and shareholders of their partners
(general or limited), for, and shall defend and hold harmless each of them from,
against, and with respect to all Indemnifiable Losses as a result of, arising
from, in connection with, or incident to (a) any breach or inaccuracy of any
representation or warranty Purchaser makes in this Agreement; or (b) any failure
of Purchaser to fulfill, satisfy, and discharge any of its obligations or
covenants under this Agreement.
10.3 Indemnification of Purchaser. From and after the Closing Seller shall
----------------------------
indemnify Purchaser and its Affiliates, officers, directors, employees, partners
(general or limited) and shareholders of its partners (general or limited) for,
and shall defend and hold harmless each of them from, against, and with respect
to all Indemnifiable Losses as a result of, arising from, in connection with, or
incident to (a) any breach or inaccuracy of any written representation or
warranty made by Seller in this Agreement; or (b) any failure of Seller to
fulfill, satisfy, and discharge any of its obligations or covenants under this
Agreement.
<PAGE>
ARTICLE XI
MISCELLANEOUS
11.1 Successors and Assigns. All covenants and agreements contained in
----------------------
this Agreement by or on behalf of the parties hereto shall bind, and inure to
the benefit of, the respective successors and assigns of the parties hereto;
provided, however, that the rights granted to the parties hereto may not be
- -------- -------
assigned (except to wholly-owned subsidiaries of such parties) without the prior
written consent of the other party. Purchaser may assign to one or more of its
affiliated partnerships its obligations hereunder in whole or in part, but shall
not be relieved of such obligations.
11.2 Performance; Waiver. The provisions of this Agreement (including
-------------------
this Section 11.2) may be modified or amended, and waivers and consents to the
performance and observance of the terms hereof may be given by written
instrument executed and delivered by Seller and (1) prior to the Closing, by
Purchaser and (2) after the Closing, by the holder or holders of a majority of
the Series A Preferred Stock and Series C Preferred Stock or, after the
Exchange, of the Series B Preferred Stock. The failure at any time to require
performance of any provision hereof shall in no way affect the full right to
require such performance at any time thereafter (unless performance thereof has
been waived in accordance with the terms hereof for all purposes and at all
times by the parties to whom the benefit of such performance is to be rendered).
The waiver by any party to this Agreement of a breach of any provision hereof
shall not be taken or held to be a waiver of any succeeding breach of such
provision or any other provision or as a waiver of the provision itself.
11.3 Notices. All notices or other communications given or made hereunder
-------
shall be validly given or made if in writing and delivered by facsimile
transmission or in person at, or mailed by overnight courier to, the following
addresses (and shall be deemed effective at the time of receipt thereof).
If to Seller:
URS Corporation
100 California Street, Suite 500
San Francisco, California 94111
Attn: Kent P. Ainsworth
Facsimile: (415) 398-2621
<PAGE>
with a copy to:
Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, California 94111-3580
Attn: Samuel M. Livermore
Facsimile: (415) 951-3699
If to Purchaser:
RCBA Strategic Partners, L.P.
909 Montgomery Street, Suite 400
San Francisco, California 94133
Attn: Murray A. Indick
Facsimile: (415) 434-3130
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attn: Michael R. Klein and Eric R. Markus
Facsimile: (202) 663-6363
or to such other address as the party to whom notice is to be given may have
previously furnished notice in writing to the other in the manner set forth
above.
11.4 Expenses.
--------
(a) Seller shall reimburse Purchaser for all of Purchaser's
reasonable out-of pocket costs and third party expenses (including professional
fees), that Purchaser incurred in association with this Agreement including, but
not limited to, conducting "due diligence" review of Seller, as and when such
expenses are incurred; provided, however, that if Purchaser has breached this
-------- -------
Agreement as provided in Section 9.3, and Seller terminates this Agreement, each
party shall bear its own expenses.
(b) In addition to any other reimbursement to which Purchaser is
entitled pursuant to this Section, Seller shall pay to Purchaser in cash at
Closing the sum of One Million Five Hundred Thousand Dollars ($1,500,000.00) as
a transaction fee.
11.5 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware as applied to contracts made
and performed within the State of Delaware, without regard to principles of
conflicts of law.
<PAGE>
11.6 Severability; Interpretation. If any term, provision, covenant or
----------------------------
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, each of Seller and Purchaser directs that such
court interpret and apply the remainder of this Agreement in the manner which it
determines most closely effectuates their intent in entering into this
Agreement, and in doing so particularly take into account the relative
importance of the term, provision, covenant or restriction being held invalid,
void or unenforceable.
11.7 Headings. The index and section headings herein are for convenience
--------
only and shall not affect the construction hereof.
11.8 Entire Agreement. This Agreement together with the other Transaction
----------------
Documents embody the entire agreement between the Parties relating to the
subject matter hereof and any and all prior oral or written agreements,
representations or warranties, contracts, understandings, correspondence,
conversations, and memoranda, whether written or oral, among Seller and
Purchaser, or between or among any agents, representatives, parents,
subsidiaries, Affiliates, predecessors in interest or successors in interest,
with respect to the subject matter hereof.
11.9 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
11.10 Absence of Third Party Beneficiary Rights. No provision of this
-----------------------------------------
Agreement is intended, nor will be interpreted, to provide or to create any
third party beneficiary rights or any other rights of any kind in any client,
customer, Affiliate, shareholder, employee, or partner of any party hereto or
any other Person.
11.11 Mutual Drafting. This Agreement is the mutual product of the
---------------
parties hereto, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto.
11.12 Further Representations. Each party to this Agreement acknowledges
-----------------------
and represents that it has been represented by its own legal counsel in
connection with the transactions contemplated by this Agreement, with the
opportunity to seek advice as to its legal rights from such counsel. Each party
further represents that it is being independently advised as to the tax
consequences of the transactions contemplated by this Agreement and is not
relying on any representation or statements made by the other party as to such
tax consequences.
11.13 Specific Performance; Remedies.
------------------------------
(a) Seller acknowledges that Purchaser will be irreparably harmed
and that there will be no adequate remedy at law for any violation by Seller of
the covenants
<PAGE>
or agreements contained in Sections 8.4 (Stockholder Meeting), 8.6 (Stock
Exchange Listing), 8.8 (Equity Proposals), 8.9 (Publicity), 8.10 (Securities),
8.11(a), (b) and (c) (Pre-Closing Access; Post-Closing Access; Information),
8.13 (Exchange), and 8.14 (Tax Matters) of this Agreement. It is accordingly
agreed that, in addition to any other remedies which may be available upon the
breach of any such covenants or agreements, Purchaser shall have the right to
obtain injunctive relief to restrain a breach or threatened breach of, or
otherwise to obtain specific performance of, these covenants and agreements of
Seller.
(b) Purchaser acknowledges that Seller will be irreparably harmed
and that there will be no adequate remedy at law for any violation by Purchaser
of the covenants or agreements contained in Section 8.9 (Publicity) and
subsection 8.11(d) (Confidentiality) of this Agreement. It is accordingly agreed
that, in addition to any other remedies which may be available upon the breach
of any such covenants or agreements, Seller shall have the right to obtain
injunctive relief to restrain a breach or threatened breach of, or otherwise to
obtain specific performance of, these covenants and agreements of Purchaser.
[Remainder of page left intentionally blank.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
---------------------------------------------------------------------
RCBA STRATEGIC PARTNERS, URS CORPORATION
- -------------------------
L.P.
- ----
By: /s/ Kent P. Ainsworth
-------------------------
By: RCBA GP, L.L.C., its Name: Kent P. Ainsworth
- --------------------------
general partner Title: Executive Vice
- ---------------
President and Chief Financial
By: /s/ Murray A. Indick Officer
----------------------------
Name: Murray A. Indick
Title: Member
<PAGE>
EXHIBIT 1.7 TO THE SECURITIES PURCHASE AGREEMENT
CERTIFICATE OF DESIGNATION
of
SERIES A
PREFERRED STOCK
of
URS CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
URS Corporation, a Delaware corporation (the "Corporation"), certifies that
pursuant to the authority contained in its Certificate of Incorporation, as
amended, and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, its Board of Directors (the "Board of
Directors") has adopted the following resolution creating a series of its
Preferred Stock, par value $1.00 per share, designated as Series A Preferred
Stock:
RESOLVED, that a series of authorized Preferred Stock, par value $1.00 per
share, of the Corporation be hereby created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount.
----------------------
The shares of such series shall be designated as the "Series A Preferred
Stock" (the "Series A Preferred Stock") and the number of shares constituting
such series shall be 300,000 shares of Series A Preferred Stock. Section 12
below contains the definitions of certain defined terms used herein.
Section 2. Dividends and Distributions.
---------------------------
(a) The holders of shares of Series A Preferred Stock, in
preference to the holders of shares of the Common Stock and of any other Capital
Stock of the Corporation ranking junior to the Series A Preferred Stock as to
payment of dividends, shall be entitled to receive on the last day of each
calendar quarter, cumulative dividends on the Series A Preferred Stock accruing
on a daily basis (computed on the basis of a
<PAGE>
360-day year of twelve 30-day months) at the rate per annum equal to the
Dividend Rate (as defined herein) per share of Series A Preferred Stock
calculated as a percentage of $2,170.00, compounded quarterly, from and
including the date of issuance until the redemption of the Series A Preferred
Stock. Such dividends shall be paid in kind as herein provided, and will be paid
whether or not they have been declared and whether or not there are profits,
surplus or other funds of the Corporation legally available for the payment of
dividends. Dividends on the Series A Preferred Stock shall be paid in additional
shares of Series A Preferred Stock valued at $2,170.00 per share. For purposes
hereof, the "Dividend Rate" shall mean eight percent (8%) per annum from the
date of initial issuance of the Series A Preferred Stock until six (6) months
after the date of issuance, and (ii) and fifteen percent (15%) thereafter
(except as otherwise provided in the last sentence of Section 4(b)(ii));
provided, however, that if Stockholder Approval (as such term is defined in the
- -------- -------
Securities Purchase Agreement) has not been obtained within six (6) months after
the date of issuance, then the Dividend Rate shall be retroactively recalculated
as if it were fifteen percent (15%) from the time of issuance and additional
dividend shares shall be paid in respect of such retroactive increase.
(b) In case the Corporation or any Subsidiary of the Corporation
shall at any time or from time to time declare, order, pay or make a dividend or
other distribution (including, without limitation, any distribution of stock or
other securities or property or rights or warrants to subscribe for securities
of the Corporation or any of its Subsidiaries by way of dividend or spin off) on
the Common Stock, other than any dividend or distribution of shares of Common
Stock covered by paragraph (b)(i) of Section 7 hereof (a "Covered
Distribution"), the holders of shares of Series A Preferred Stock shall be
entitled to receive from the Corporation, with respect to each share of Series A
Preferred Stock held, in addition to the dividends payable under paragraph (a)
of this Section 2, the same dividend or distribution received by a holder of the
number of shares of Common Stock equal to the Common Liquidation Equivalent per
share of Series A Preferred Stock on the record date for such dividend or
distribution. Any such dividend or distribution shall be declared, ordered, paid
or made on the Series A Preferred Stock at the same time such dividend or
distribution is declared, ordered, paid or made on the Common Stock and shall be
in addition to any dividends payable under paragraph (a) of this Section 2.
Section 3. Voting Rights.
-------------
So long as any shares of Series A Preferred Stock shall be outstanding and
unless the consent or approval of a greater number of shares shall then be
required by law, without first obtaining the consent or approval of the
Requisite Holders, voting as a single class, given in person or by proxy at a
meeting at which the holders of such shares shall be entitled to vote separately
as a class, or by written consent, the Corporation shall not (and shall not
permit or authorize any subsidiary to): (i) authorize, create or issue any
class or series, or any shares of any class or series, of stock having any
preference or priority as to voting, dividends or upon liquidation, dissolution
or winding up over the Series A Preferred Stock ("Senior Stock"); (ii)
authorize, create or issue any class or
<PAGE>
series, or any shares of any class or series, of stock ranking on a parity as to
voting, dividends or upon liquidation, dissolution or winding up with the Series
A Preferred Stock ("Parity Stock"); (iii) reclassify any shares of stock of the
Corporation into shares of Senior Stock or Parity Stock; (iv) authorize any
security exchangeable for, convertible into, or evidencing the right to purchase
any shares of Senior Stock or Parity Stock, other than the exchange of Series B
Exchangeable Convertible Preferred Stock of the Corporation (the "Series B
Preferred Stock") for shares of Series A Preferred Stock and Series C Preferred
Stock of the Corporation (the "Series C Preferred Stock"); (v) alter or change
the rights, preferences or privileges of the Series A Preferred Stock; (vi)
increase or decrease the authorized number of shares of Series A Preferred Stock
or issue shares of Series A Preferred Stock other than to holders of Series A
Preferred Stock pursuant to its terms; or (vii) amend or waive any provision of
the Corporation's Certification of Incorporation or bylaws in a manner adverse
in any respect to the holders of Series A Preferred Stock.
Section 4. Mandatory Repurchase by the Corporation.
---------------------------------------
(a) On the twelfth anniversary of the Closing Date of the
Securities Purchase Agreement, the Corporation shall purchase for cash from each
holder of shares of Series A Preferred Stock the number of shares of the Series
A Preferred Stock held by such holder on such twelfth anniversary. Repurchases
made pursuant to this Section 4(a) shall be effected on such anniversary date
(or such other day as the holder and the Corporation may agree) and shall be for
the Liquidation Preference. The place of payment shall be at an office or agency
fixed therefor by the Corporation or, if not fixed, at the principal executive
office of the Corporation.
(b) (i) On the date fixed for repurchase, each holder of shares of
Series A Preferred Stock shall surrender the certificate representing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment in cash therefor provided in this
Section 4. Dividends with respect to the shares of Series A Preferred Stock so
purchased shall cease to accrue after the date so purchased, such shares shall
no longer be deemed outstanding after such date and the holders thereof shall
cease to be stockholders of the Corporation and all rights whatsoever with
respect to the shares so purchased shall terminate.
(ii) If the funds legally available for such purchase are not
sufficient to purchase all the shares of Series A Preferred Stock tendered to
the Corporation for purchase, the Corporation shall purchase the greatest number
of whole shares for which such funds are so available on a pro rata basis among
all tendering holders based on the ratio of the number of shares tendered by
each of them to the aggregate amount of all shares so tendered, and the
certificates representing the unpurchased shares shall be deemed not to be
surrendered for repurchase, such unpurchased shares shall remain outstanding and
the rights of the holders of shares of Series A Preferred Stock thereafter shall
continue to be those of a holder of shares of the Series A Preferred Stock;
provided, however, the Corporation shall thereafter be required
- -------- -------
<PAGE>
to repurchase all such remaining shares at the first date it has sufficient
funds legally available for such purpose at the price it would have paid at the
date such shares were actually tendered and the Corporation shall give notice as
aforesaid to each holder whose shares were not repurchased for such reason and
such holder shall thereafter have the right to elect to have such shares
repurchased, such election to be made within 30 days of receipt of such notice.
For purposes of this Section, the Corporation shall be deemed not to have
sufficient funds legally available for any such purchase if the Board of
Directors reasonably determines that immediately after such repurchase the
Corporation would be insolvent. Upon the failure to purchase all of the Series A
Preferred Stock as required by this Section 4, the Dividend Rate on any such
stock that has not been purchased shall automatically, pursuant to Section 2(a),
increase to eighteen percent (18%).
(c) Whenever the Corporation shall not have redeemed the shares of
Series A Preferred Stock within five (5) Business Days of the date such
redemption is required by Section 4(a), thereafter and until all redemption
payments shall have been made, if and so long as any shares of Series A
Preferred Stock remain outstanding, the Corporation shall not, nor shall it
permit any of its Subsidiaries to: (i) declare or pay dividends, or make any
other distributions, on any shares of Common Stock or other capital stock of the
Corporation ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Stock ("Junior Stock"), other than
dividends or distribution payable in Junior Stock; (ii) declare or pay
dividends, or make any other distributions, on any shares of Parity Stock, other
than dividends or distributions payable in Junior Stock, except dividends paid
ratably on the Series A Preferred Stock and all Parity Stock on which dividends
are payable or in arrears, in proportion to the total amounts to which the
holders of all such shares are then entitled; (iii) redeem or purchase or
otherwise acquire for consideration (other than Junior Stock) any shares of
Junior Stock or Parity Stock (other than, with respect to Parity Stock, ratably
with the Series A Preferred Stock); or (iv) purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, other than purchases
ratably among all holders of the Series A Preferred Stock.
(d) The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation unless the Corporation could, pursuant to
paragraph (c) of this Section 4, purchase or otherwise acquire such shares at
such time and in such manner.
Section 5. Reacquired Shares.
-----------------
Any shares of Series A Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof, and, if necessary to provide for the
lawful purchase of such shares, the capital represented by such shares shall be
reduced in accordance with the General Corporation Law of the State of Delaware.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock, par value $1.00 per share, of the Corporation and may
be reissued as part of another series of Preferred
<PAGE>
Stock, par value $1.00 per share, of the Corporation subject to the conditions
or restrictions on authorizing, or creating or issuing any class or series, or
any shares of any class or series, set forth in Section 3.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
If the Corporation shall adopt a plan of liquidation or of
dissolution, or commence a voluntary case under the Federal bankruptcy laws or
any other applicable state or Federal bankruptcy, insolvency or similar law, or
consent to the entry of an order for relief in any involuntary case under any
such law or to the appointment of a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) of the Corporation or of any
substantial part of its property, or make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due, or if a decree or order for relief in respect of the Corporation
shall be entered by a court having jurisdiction in the premises in an
involuntary case under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Corporation or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and any such decree or
order shall be unstayed and in effect for a period of ninety (90) consecutive
days and on account of such event the Corporation shall liquidate, dissolve or
wind up, or upon any other liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (i) to the holders of shares of
Junior Stock, unless prior thereto, the holders of shares of Series A Preferred
Stock shall have received in cash the Liquidation Preference, or (ii) to the
holders of shares of Parity Stock, except distributions made ratably on the
Series A Preferred Stock and all such Parity Stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up of the Corporation. A consolidation,
merger, corporate reorganization, recapitalization or other similar transaction
as a result of which the beneficial holders of the Corporation's Common Stock
immediately prior to such transaction do not hold, directly or indirectly, in
excess of 50% of the combined voting securities entitled to vote generally in
the election of the directors of the surviving or resulting corporation
immediately after such transaction, and a sale or other disposition of all or
substantially all of the assets of the Corporation in one transaction or series
of related transactions, each shall be deemed to be a "liquidation" within the
meaning of this Section 6; provided that no such transaction shall be deemed to
be a "liquidation" if first approved by the Board of Directors of the
Corporation and the Requisite Holders.
<PAGE>
Section 7. Common Liquidation Equivalent.
-----------------------------
(a) Subject to the provisions for adjustment hereinafter set forth,
the "Common Liquidation Equivalent" of each share of Series A Preferred Stock
shall be equal to an amount that would be payable to the holder of such share
upon the occurrence of an event described in Section 6 had such holder,
immediately prior to such event, exchanged such shares for shares of Common
Stock at the Applicable Exchange Rate. The Applicable Exchange Rate in effect at
any time shall be the quotient obtained by dividing $2,170.00 by the Applicable
Exchange Value, calculated as provided in Section 7(b).
(b) The Applicable Exchange Value shall be $21.70, except that such
amount shall be adjusted from time to time in accordance with this Section 7.
The Applicable Exchange Value shall be subject to adjustment from time to time
as follows:
(i) In case the Corporation shall at any time or from time to
time after the original issuance of the Series A Preferred Stock declare a
dividend, or make a distribution, on the outstanding shares of Common Stock in
either case, in shares of Common Stock, or effect a subdivision, combination,
consolidation or reclassification of the outstanding shares of Common Stock into
a greater or lesser number of shares of Common Stock, then, and in each such
case, the Applicable Exchange Value in effect immediately prior to such event or
the record date therefor, whichever is earlier, shall be adjusted by multiplying
the Applicable Exchange Value by a fraction, the numerator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event and the denominator of which is the number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
clause (i) shall become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of any such subdivision,
reclassification, consolidation or combination, at the close of business on the
day upon which such corporate action becomes effective.
(ii) In addition to the foregoing adjustments in subsection
(i) above, the Corporation will be permitted to make such reductions in the
Applicable Exchange Value as it considers to be advisable in order that any
event treated for Federal income tax purposes as a dividend of stock or stock
rights will not be taxable to the holders of the shares of Common Stock.
(iii) No adjustment in the Applicable Exchange Value shall be
required unless such adjustment would require an increase or decrease of at
least 0.1% of the Applicable Exchange Value; provided, that any adjustments
which by reason of this subsection (v) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 7 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
<PAGE>
(iv) In each case of an adjustment or readjustment of the
Applicable Exchange Rate, the Corporation at its expense will furnish each
holder of Series A Preferred Stock with a certificate, executed by the president
and chief financial officer (or in the absence of a person designated as the
chief financial officer, by the treasurer) showing such adjustment or
readjustment, and stating in detail the facts upon which such adjustment or
readjustment is based.
Section 8. Rank.
----
The Series A Preferred Stock shall rank, with respect to dividend
rights and rights upon liquidation, winding up and dissolution, prior to all
classes and series of the Corporation's preferred stock authorized or
outstanding on the date of initial issuance of the Series A Preferred Stock
(other than the Series C Preferred Stock, which shall rank on a par with the
Series A Preferred Stock) and prior to all classes of Common Stock.
Section 9. Other Covenants.
---------------
(a) Transfer Taxes. The Corporation shall pay any and all issue or
--------------
other taxes that may be payable in respect of any issue or delivery of shares of
Series B Preferred Stock on exchange of the Series A Preferred Stock and other
securities. The Corporation shall not, however, be required to pay any income
tax or tax which may be payable in respect of any transfer involved in the issue
or delivery of Series A Preferred Stock (or other securities or assets) in a
name other than that in which the shares of Series A Preferred Stock so
exchanged were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of such tax or has established, to the satisfaction of the Corporation,
that such tax has been paid.
(b) Prior Notice of Certain Events. In case:
------------------------------
(i) the Corporation shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or of any other rights or warrants; or
(ii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value), or
of any consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation shall be required, or of the
sale or transfer of all or substantially all of the assets of the Corporation or
of any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or other property; or
(iii) of the voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;
<PAGE>
then the Corporation shall cause to be filed with the transfer agent for the
Series A Preferred Stock, and shall cause to be mailed to the holders of record
of the Series A Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen days prior to
the applicable record date hereinafter specified, a notice stating, as the case
may be, (x) the record date (if any) for the purpose of such dividend,
distribution, redemption, repurchase or granting of rights or warrants or, if no
record date is to be set, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, redemption, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effective, and the date, if any, as of which
it is expected that holders of shares of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
Section 10. Remedies.
--------
(a) The Corporation stipulates that the remedies at law of
each holder of Series A Preferred Stock in the event of any failure in the
performance of or compliance with any of the terms hereof are not and will not
be adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise without requiring any holder to post a bond or other
security except to the extent required by applicable law.
(b) Any holder of Series A Preferred Stock shall be entitled
to recover from the Corporation the reasonable attorneys' fees and expenses
incurred by such holder in connection with the enforcement by such holder of any
obligation of the Corporation hereunder.
(c) No failure or delay on the part of any holder of Series A
Preferred Stock in exercising any right, power or remedy hereunder or under
applicable law or otherwise shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy
hereunder or thereunder. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law or otherwise.
Section 11. Severability of Provisions.
--------------------------
Whenever possible, each provision hereof shall be interpreted in a
manner as to be effective and valid under applicable law, but if any provision
hereof is held to be
<PAGE>
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or otherwise adversely affecting the remaining provisions hereof.
If a court of competent jurisdiction should determine that a provision hereof
would be valid or enforceable if a period of time were extended or shortened or
a particular percentage were increased or decreased, then such court may make
such change as shall be necessary to render the provision in question effective
and valid under applicable law.
Section 12. Definitions.
-----------
For the purposes of the Certificate of Designation of Series A
Preferred Stock which embodies this resolution:
(a) "Accrued Dividends" to a particular date (the "Applicable
Date") shall mean (i) all dividends accrued but not paid on the Series A
Preferred Stock pursuant to paragraph (a) of Section 2, whether or not declared,
accrued to the Applicable Date, plus (ii) all dividends or distributions payable
pursuant to paragraph (b) of Section 2 for which the Covered Distribution was
declared, ordered, paid or made on or prior to the Applicable Date.
(b) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which commercial banks in the City of New York are
authorized or obligated by law or executive order to close.
(c) "capital stock" shall mean (i) in the case of a
corporation, corporate stock, (ii) in the case of an association or business
entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, (iii) in the case of a
partnership or limited liability company, partnership or membership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing person.
(d) "Closing Price" per share of Common Stock on any date
shall mean the last sale price, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, in either case as reported
on the Nasdaq National Market or in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange or American Stock Exchange, as the case may be, or, if
the Common Stock is listed or admitted to trading on the New York Stock Exchange
or American Stock Exchange, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other system then in use,
or, if on any such date the Common Stock is not quoted by any such organization,
the average of the Closing bid and asked prices as furnished by a
<PAGE>
professional market maker making a market in the Common Stock selected by the
Board of Directors and reasonably acceptable to the Requisite Holders.
(e) "Common Liquidation Equivalent" shall have the meaning set
forth in Section 7.
(f) "Current Market Price" per share of Common Stock on any date
shall mean the average of the Closing Prices of a share of Common Stock for the
twenty (20) consecutive Trading Days ending on the date in question. If on any
such Trading Day the Common Stock is not quoted by any organization referred to
in the definition of Closing Price, the fair value of the Common Stock on such
day, as reasonably determined in good faith by the Board of Directors of the
Corporation, shall be used.
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(h) "Liquidation Preference" shall mean an amount per share of
Series A Preferred Stock equal to the greater of (i) the Common Liquidation
Equivalent and (ii) the Preferred Liquidation Amount.
(i) "Person" shall mean an individual, partnership, corporation,
limited liability company or partnership, unincorporated organization, trust or
joint venture, or a governmental agency or political subdivision thereof, or
other entity of any kind.
(j) "Preferred Liquidation Amount" per share of Series A
Preferred Stock shall be an amount equal to $2,170.00 plus all Accrued Dividends
thereon to the date of determination.
(k) "Requisite Holders" shall mean the holders of sixty-seven
percent (67%) of the then-outstanding shares of Series A Preferred Stock.
(l) "Securities Purchase Agreement" shall mean that certain
agreement dated as of May 5, 1999 by and among the Corporation and certain
purchasers of the Series A Preferred Stock party thereto.
(m) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
(n) "Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Stock is quoted, listed or
admitted to trading is open for the transaction of business or, if the Common
Stock is not quoted, listed or admitted to trading on any national securities
exchange (including the Nasdaq
<PAGE>
Stock Market), any day other than a Saturday, Sunday, or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series A Preferred Stock to be duly executed by its President and
attested to by its Secretary and has caused its corporate seal to be affixed
hereto, this 9th day of June, 1999.
URS CORPORATION
By: /s/ Kent P. Ainsworth
---------------------
Kent P. Ainsworth
<PAGE>
EXHIBIT 1.7 TO THE SECURITIES PURCHASE AGREEMENT
CERTIFICATE OF DESIGNATION
of
SERIES B EXCHANGEABLE
CONVERTIBLE PREFERRED STOCK
of
URS CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
URS Corporation, a Delaware corporation (the "Corporation"), certifies that
pursuant to the authority contained in its Certificate of Incorporation, as
amended, and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, its Board of Directors (the "Board of
Directors") has adopted the following resolution creating a series of its
Preferred Stock, par value $1.00 per share, designated as Series B Exchangeable
Convertible Preferred Stock:
RESOLVED, that a series of authorized Preferred Stock, par value $1.00 per
share, of the Corporation be hereby created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount.
-----------------------
The shares of such series shall be designated as the "Series B Exchangeable
Convertible Preferred Stock" (the "Series B Preferred Stock") and the number of
shares constituting such series shall be 150,000 shares of Series B Preferred
Stock. Section 14 below contains the definitions of certain defined terms used
herein.
Section 2. Dividends and Distributions.
----------------------------
(a) The holders of shares of Series B Preferred Stock, in
preference to the holders of shares of the Common Stock and of any other capital
stock of the Corporation ranking junior to the Series B Preferred Stock as to
payment of dividends, shall be entitled to receive on the last day of each
calendar quarter, cumulative dividends on the Series B Preferred Stock accruing
on a daily basis (computed on the basis of a
<PAGE>
360-day year of twelve 30-day months) at the rate per annum equal to the
Dividend Rate (as defined herein) per share of Series B Preferred Stock
calculated as a percentage of $2,170.00, compounded quarterly, from and
including the date of issuance of the Series B Preferred Stock until the
conversion or exchange of the Series B Preferred Stock. Such dividends shall be
paid in kind as herein provided, and will be paid whether or not they have been
declared and whether or not there are profits, surplus or other funds of the
Corporation legally available for the payment of dividends. Dividends on the
Series B Preferred Stock shall be paid in additional shares of Series B
Preferred Stock valued at $2,170.00 per share. For purposes hereof, the
"Dividend Rate" shall mean eight percent (8%) per annum from the date of initial
issuance of the Series B Preferred Stock (except as otherwise provided in the
last sentence of Section 4(b)(ii)).
(b) In case the Corporation or any Subsidiary of the Corporation
shall at any time or from time to time declare, order, pay or make a dividend or
other distribution (including, without limitation, any distribution of stock or
other securities or property or rights or warrants to subscribe for securities
of the Corporation or any of its Subsidiaries by way of dividend or spin off) on
the Common Stock, other than any dividend or distribution of shares of Common
Stock covered by paragraph (b)(i) of Section 8 hereof (a "Covered
Distribution"), the holders of shares of Series B Preferred Stock shall be
entitled to receive from the Corporation, with respect to each share of Series B
Preferred Stock held, in addition to the dividends payable under paragraph (a)
of this Section 2, the same dividend or distribution received by a holder of the
number of shares of Common Stock into which such share of Series B Preferred
Stock is convertible on the record date for such dividend or distribution. Any
such dividend or distribution shall be declared, ordered, paid or made on the
Series B Preferred Stock at the same time such dividend or distribution is
declared, ordered, paid or made on the Common Stock and shall be in addition to
any dividends payable under paragraph (a) of this Section 2.
Section 3. Voting Rights.
--------------
In addition to any voting rights provided elsewhere herein, and any voting
rights provided by law, the holders of shares of Series B Preferred Stock shall
have the following voting rights:
(a) So long as the Series B Preferred Stock is outstanding, each
share of Series B Preferred Stock shall entitle the holder thereof to vote on
all matters voted on by holders of the capital stock of the Corporation into
which such share of Series B Preferred Stock is convertible, voting together as
a single class with the other shares entitled to vote, at all meetings of the
stockholders of the Corporation. With respect to any such vote, each share of
Series B Preferred Stock shall entitle the holder thereof to cast the number of
votes equal to the number of votes which could be cast in such vote by a holder
of the shares of capital stock of the Corporation into which such share of
Series B Preferred Stock is convertible on the record date for such vote or, if
no such record date is established, on the date any written consent of
stockholders is solicited.
<PAGE>
(b) So long as any shares of Series B Preferred Stock shall be
outstanding and unless the consent or approval of a greater number of shares
shall then be required by law, without first obtaining the consent or approval
of the Requisite Holders, voting as a single class, given in person or by proxy
at a meeting at which the holders of such shares shall be entitled to vote
separately as a class, or by written consent, the Corporation shall not (and
shall not permit or authorize any subsidiary to): (i) authorize, create or issue
any class or series, or any shares of any class or series, of stock having any
preference or priority as to voting, dividends or upon liquidation, dissolution
or winding up over the Series B Preferred Stock ("Senior Stock"); (ii)
authorize, create or issue any class or series, or any shares of any class or
series, of stock ranking on a parity as to voting, dividends or upon
liquidation, dissolution or winding up with the Series B Preferred Stock
("Parity Stock"); (iii) reclassify any shares of stock of the Corporation into
shares of Senior Stock or Parity Stock; (iv) authorize any security exchangeable
for, convertible into, or evidencing the right to purchase any shares of Senior
Stock or Parity Stock; (v) alter or change the rights, preferences or privileges
of the Series B Preferred Stock; (vi) increase or decrease the authorized number
of shares of Series B Preferred Stock or issue shares of Series B Preferred
Stock other than to holders of Series B Preferred Stock pursuant to its terms;
(vii) amend or waive any provision of the Corporation's Certification of
Incorporation or bylaws in a manner adverse in any respect to the holders of
Series B Preferred Stock; (viii) authorize or pay any cash dividend on Common
Stock or any other class or series of stock over which the Series B Preferred
Stock has any preference or priority as to voting, dividends or upon
liquidation, dissolution or winding-up ("Junior Stock"); or (ix) redeem,
repurchase, retire or otherwise acquire Common Stock or any other Junior Stock
(other than by conversion into or exchange for shares of Junior Stock and other
than any redemptions, repurchases or acquisitions made pursuant to and as
required by the terms of any employee incentive or benefit plan of the
Corporation as in effect from time to time).
Section 4. Mandatory Repurchase by the Corporation.
----------------------------------------
(a) On the twelfth anniversary of the Closing Date of the
Securities Purchase Agreement, the Corporation shall purchase for cash from each
holder of shares of Series B Preferred Stock the number of shares of the Series
B Preferred Stock held by such holder on such twelfth anniversary. Repurchases
made pursuant to this Section 4(a) shall be effected on such anniversary date
(or such other day as the holder and the Corporation may agree) and shall be for
the Conversion Value. The place of payment shall be at an office or agency fixed
therefor by the Corporation or, if not fixed, at the principal executive office
of the Corporation.
(b) (i) On the date fixed for repurchase, each holder of shares of
Series B Preferred Stock shall surrender the certificate representing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment in cash therefor provided in this
Section 4. Dividends with respect to the shares of Series B Preferred Stock so
purchased shall cease to accrue after the date so purchased, such shares shall
no longer be deemed outstanding after such date and the
<PAGE>
holders thereof shall cease to be stockholders of the Corporation and all rights
whatsoever with respect to the shares so purchased shall terminate.
(ii) If the funds legally available for such purchase are not
sufficient to purchase all the shares of Series B Preferred Stock tendered to
the Corporation for purchase, the Corporation shall purchase the greatest number
of whole shares for which such funds are so available on a pro rata basis among
all tendering holders based on the ratio of the number of shares tendered by
each of them to the aggregate amount of all shares so tendered, and the
certificates representing the unpurchased shares shall be deemed not to be
surrendered for repurchase, such unpurchased shares shall remain outstanding and
the rights of the holders of shares of Series B Preferred Stock thereafter shall
continue to be those of a holder of shares of the Series B Preferred Stock;
provided, however, the Corporation shall thereafter be required to repurchase
- -------- -------
all such remaining shares at the first date it has sufficient funds legally
available for such purpose at the price it would have paid at the date such
shares were actually tendered and the Corporation shall give notice as aforesaid
to each holder whose shares were not repurchased for such reason and such holder
shall thereafter have the right to elect to have such shares repurchased, such
election to be made within 30 days of receipt of such notice. For purposes of
this Section, the Corporation shall be deemed not to have sufficient funds
legally available for any such purchase if the Board of Directors reasonably
determines that immediately after such repurchase the Corporation would be
insolvent. Upon the failure to purchase all of the Series B Preferred Stock as
required by this Section 4, the Dividend Rate on any such stock that has not
been purchased shall automatically, pursuant to Section 2(a), increase to twelve
percent (12%). If any part of the Series B Preferred Stock has not been
purchased pursuant to this Section 4 three (3) months after the twelfth
anniversary of the Closing Date of the Securities Purchase Agreement, the
Dividend Rate shall thereafter increase to fifteen percent (15%).
Section 5. Conversion at Option of the Corporation.
-----------------------------------------
(a) Securities Purchase Agreement (the "Third Anniversary"), so
long as shares of Common Stock shall have traded on the Primary Exchange for at
least thirty (30) of the forty-five (45) trading days immediately preceding the
Determination Date (defined below), at a Closing Price in excess of the Hurdle
Percentage of the Conversion Price then in effect for the Series B Preferred
Stock for each such trading day, all, but not less than all, of the shares of
Series B Preferred Stock may, at the option of the Corporation, be converted
into shares of Common Stock. The Corporation shall send notice of mandatory
conversion to each of the holders of the Series B Preferred Stock at such
holder's address as it appears on the transfer books of the Corporation.
<PAGE>
(b) Subject to the provisions for adjustment set forth in Section
8, each share of Series B Preferred Stock shall be -- if the Corporation so
elects as provided in Section 5(a) -- converted into a number of fully paid and
nonassessable shares of Common Stock equal to the product obtained by
multiplying the Applicable Conversion Rate by the number of shares of Series B
Preferred Stock being converted. The Applicable Conversion Rate shall be the
quotient obtained by dividing the Conversion Value on the date of conversion by
the applicable Conversion Price.
Section 6. Reacquired Shares.
-----------------
Any shares of Series B Preferred Stock converted, purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof, and, if necessary to provide
for the lawful purchase of such shares, the capital represented by such shares
shall be reduced in accordance with the General Corporation Law of the State of
Delaware. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock, par value $1.00 per share, of the
Corporation and may be reissued as part of another series of Preferred Stock,
par value $1.00 per share, of the Corporation subject to the conditions or
restrictions on authorizing, or creating or issuing any class or series, or any
shares of any class or series, set forth in paragraph (b) of Section 3.
Section 7. Liquidation, Dissolution or Winding Up.
---------------------------------------
If the Corporation shall adopt a plan of liquidation or of dissolution, or
commence a voluntary case under the Federal bankruptcy laws or any other
applicable state or Federal bankruptcy, insolvency or similar law, or consent to
the entry of an order for relief in any involuntary case under any such law or
to the appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Corporation or of any substantial part
of its property, or make an assignment for the benefit of its creditors, or
admit in writing its inability to pay its debts generally as they become due, or
if a decree or order for relief in respect of the Corporation shall be entered
by a court having jurisdiction in the premises in an involuntary case under the
Federal bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and any such decree or order shall be unstayed and
in effect for a period of ninety (90) consecutive days and on account of such
event the Corporation shall liquidate, dissolve or wind up, or upon any other
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (i) to the holders of shares of Junior Stock, unless prior thereto, the
holders of shares of Series B Preferred Stock shall have received in cash the
Liquidation Preference, or (ii) to the holders of shares of Parity Stock, except
distributions made ratably on the Series B Preferred Stock and all such Parity
Stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up of the
Corporation.
<PAGE>
Section 8. Conversion.
----------
Each share of Series B Preferred Stock may, at the option of the holder
thereof, be converted into shares of Common Stock at any time, whether or not
the Corporation has given notice of exchange under Section 9, on the terms and
conditions set forth in this Section 8. In addition:
(a) Subject to the provisions for adjustment hereinafter set forth,
each share of Series B Preferred Stock shall be convertible in the manner
hereinafter set forth into a number of fully paid and nonassessable shares of
Common Stock equal to the product obtained by multiplying the Applicable
Conversion Rate by the number of shares of Series B Preferred Stock being
converted. The Applicable Conversion Rate shall be the quotient obtained by
dividing the Conversion Value on the date of conversion by the applicable
Conversion Price.
(b) The Conversion Price shall be subject to adjustment from time
to time as follows:
(i) In case the Corporation shall at any time or from time to
time after the original issuance of the Series B Preferred Stock declare a
dividend, or make a distribution, on the outstanding shares of Common Stock in
either case, in shares of Common Stock, or effect a subdivision, combination,
consolidation or reclassification of the outstanding shares of Common Stock into
a greater or lesser number of shares of Common Stock, then, and in each such
case, the Conversion Price in effect immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted by multiplying the
Conversion Price by a fraction, the numerator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event and the
denominator of which is the number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this clause (i)
shall become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification,
consolidation or combination, at the close of business on the day upon which
such corporate action becomes effective.
(ii) In addition to the foregoing adjustments in subsections
(i), the Corporation will be permitted to make such reductions in the Conversion
Price as it considers to be advisable in order that any event treated for
Federal income tax purposes as a dividend of stock or stock rights will not be
taxable to the holders of the shares of Common Stock.
(iii) In any case in which this Section 8 shall require that an
adjustment (including by reason of the last sentence of subsection (i) above) be
made immediately following a record date, the Corporation may elect to defer the
effectiveness
<PAGE>
of such adjustment (but in no event until a date later than the effective time
of the event giving rise to such adjustment), in which case the Corporation
shall, with respect to any share of Series B Preferred Stock converted after
such record date and on and before such adjustment shall have become effective
(x) defer paying any cash payment pursuant to Section 8(f) hereof or issuing to
the holder of such shares of Series B Preferred Stock the number of shares of
Common Stock and other capital stock of the Corporation (or other assets or
securities) issuable upon such conversion in excess of the number of shares of
Common Stock and other capital stock of the Corporation issuable thereupon only
on the basis of the Conversion Price prior to adjustment, and (y) not later than
five Business Days after such adjustment shall have become effective, pay to
such holder the appropriate cash payment pursuant to Section 8(f) hereof and
issue to such holder the additional shares of Common Stock and other capital
stock of the Corporation issuable on such conversion.
(iv) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 0.1% of
the Conversion Price; provided, that any adjustments which by reason of this
subsection (iv) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section 8
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
(c) (i) In case of any capital reorganization or reclassification
of outstanding shares of Common Stock (other than a reclassification covered by
paragraph (b) (i) of this Section 8), or in case of any consolidation or merger
of the Corporation with or into another corporation, or in case of any sale or
conveyance to another corporation of the property of the Corporation as an
entirety or substantially as an entirety (each of the foregoing being referred
to as a "Transaction"), (x) if such Transaction occurs prior to the Third
Anniversary and constitutes or leads to a Change in Control, each holder of
Series B Preferred Stock shall then be entitled to the acceleration and
immediate vesting of all dividends such holder would have accrued on and prior
to the Third Anniversary, and (y) each share of Series B Preferred Stock then
outstanding shall thereafter be convertible into, in lieu of the Common Stock
issuable upon such conversion prior to the consummation of such Transaction, the
kind and amount of shares of stock and other securities and property (including
cash) receivable upon the consummation of such transaction by a holder of that
number of shares of Common Stock into which one share of Series B Preferred
Stock was convertible immediately prior to such Transaction (including, on a pro
rata basis, the cash, securities or property received by holders of Common Stock
in any tender or exchange offer that is a step in such Transaction). In any such
case, if necessary, appropriate adjustment (as determined by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 8 with respect to rights and interests thereafter of the holders of
shares of Series B Preferred Stock to the end that the provisions set forth
herein for the protection of the conversion rights of the Series B Preferred
Stock shall thereafter be applicable, as nearly as reasonably may be, to any
such other shares of stock and other securities and property deliverable upon
conversion of the shares of Series B Preferred Stock remaining outstanding (with
such
<PAGE>
adjustments in the conversion price and number of shares issuable upon
conversion and such other adjustments in the provisions hereof as the Board of
Directors shall determine to be appropriate). In case securities or property
other than Common Stock shall be issuable or deliverable upon conversion as
aforesaid, then all references in this Section 8 shall be deemed to apply, so
far as appropriate and as nearly as may be, to such other securities or
property.
(ii) Notwithstanding anything contained herein to the
contrary, the Corporation will not effect any Transaction unless, prior to the
consummation thereof, the Surviving Person (as defined in Section 14) thereof
shall assume, by written instrument mailed to each record holder of shares of
Series B Preferred Stock, at such holder's address as it appears on the transfer
books of the Corporation, the obligation to deliver to such holder such cash and
such securities to which, in accordance with the foregoing provisions, such
holder is entitled. Nothing contained in this paragraph (c) shall limit the
rights of holders of the Series B Preferred Stock to convert the Series B
Preferred Stock in connection with the Transaction.
(d) The holder of any shares of Series B Preferred Stock may
exercise its right to convert such shares into shares of Common Stock by
surrendering for such purpose to the Corporation, at its principal office or at
such other office or agency maintained by the Corporation for that purpose, a
certificate or certificates representing the shares of Series B Preferred Stock
to be converted duly endorsed to the Corporation in blank accompanied by a
written notice stating that such holder elects to convert all or a specified
whole number of such shares in accordance with the provisions of this Section 8.
The Corporation will pay any and all issue and other taxes (other than taxes
based on income) that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of Series B Preferred Stock pursuant
hereto. As promptly as practicable, and in any event within three Business Days
after the surrender of such certificate or certificates and the receipt of such
notice relating thereto and, if applicable, payment of all transfer taxes (or
the demonstration to the satisfaction of the Corporation that such taxes have
been paid), the Corporation shall deliver or cause to be delivered (i)
certificates registered in the name of such holder representing the number of
validly issued, fully paid and nonassessable full shares of Common Stock to
which the holder of shares of Series B Preferred Stock so converted shall be
entitled and (ii) if less than the full number of shares of Series B Preferred
Stock evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the number of
shares evidenced by such surrendered certificate or certificates less the number
of shares converted. Such conversion shall be deemed to have been made at the
close of business on the date of receipt of such notice and of such surrender of
the certificate or certificates representing the shares of Series B Preferred
Stock to be converted so that the rights of the holder thereof as to the shares
being converted shall cease except for the right to receive shares of Common
Stock and any declared but unpaid dividends in accordance herewith, and the
person entitled to receive the shares of Common Stock shall be treated for all
purposes as having become the record holder of such shares of Common Stock at
such time.
<PAGE>
(e) Notwithstanding any other provisions of this Certificate of
Designation, shares of Series B Preferred Stock may be converted at any time
and, if subject to exchange, up to the close of business on the last Business
Day immediately preceding the date fixed for such exchange of such shares.
(f) In connection with the conversion of any shares of Series B
Preferred Stock, no fractions of shares of Common Stock shall be issued, but in
lieu thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Current Market Price per share of Common Stock on the day on which such
shares of Series B Preferred Stock are deemed to have been converted.
(g) In case at any time or from time to time the Corporation shall
pay any dividend or make any other distribution to the holders of its Common
Stock, or shall offer for subscription pro rata to the holders of its Common
Stock any additional shares of stock of any class or any other right, or there
shall be any capital reorganization or reclassification of the Common Stock of
the Corporation or consolidation or merger of the Corporation with or into
another corporation, or any sale or conveyance to another corporation of the
property of the Corporation as an entirety or substantially as an entirety, or
there shall be a voluntary or involuntary dissolution, liquidation or winding up
of the Corporation, then, in any one or more of said cases the Corporation shall
give at least twenty (20) days' prior written notice (the time of mailing of
such notice shall be deemed to be the time of giving thereof) to the registered
holders of the Series B Preferred Stock at the addresses of each as shown on the
books of the Corporation of the date on which (i) the books of the corporation
shall close or a record shall be taken for such stock dividend, distribution or
subscription rights or (ii) such reorganization, reclassification,
consolidation, merger, sale or conveyance, dissolution, liquidation or winding
up shall take place, as the case may be, provided that in the case of any
Transaction to which paragraph (c) applies the Corporation shall give at least
thirty (30) days' prior written notice as aforesaid. Such notice shall also
specify the date as of which the holders of the Common Stock and of the Series B
Preferred Stock of record shall participate in said dividend, distribution or
subscription rights or shall be entitled to exchange their Common Stock or
Series B Preferred Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance, or
participate in such dissolution, liquidation or winding up, as the case may be.
(h) Whenever the number of shares of Common Stock into which each
share of Series B Preferred Stock is convertible (or the number of votes to
which each share of Series B Preferred Stock is entitled) is adjusted as
provided in Section 8 hereof, the Corporation shall promptly mail to the holders
of record of the outstanding shares of Series B Preferred Stock at their
respective addresses as the same shall appear in the Corporation's stock records
a notice stating that the number of shares of Common Stock into which the shares
of Series B Preferred Stock are convertible has been adjusted and
<PAGE>
setting forth the new number of shares of Common Stock (or describing the new
stock, securities, cash or other property) into which each share of Series B
Preferred Stock is convertible, as a result of such adjustment, a brief
statement of the facts requiring such adjustment and the computation thereof,
and when such adjustment became effective.
Section 9. Exchange at the Option of the Corporation.
------------------------------------------
(a) The Corporation may, at its option, exchange the Series B
Preferred Stock, in whole but not in part, at any time, for Exchange Debentures;
provided, however, that (i) on the date of such exchange there are no
- -------- -------
accumulated and unpaid dividends on the Series B Preferred Stock (including the
dividend payable on such date) that are not paid contemporaneously with such
exchange or other contractual impediments to such exchange; (ii) such exchange
is permitted under applicable law; and (iii) the Corporation shall have
delivered to the Trustee under the Exchange Indenture, an opinion of counsel
with respect to the due authorization and issuance of the Exchange Debentures.
(b) Upon any exchange of Series B Preferred Stock for Exchange
Debentures pursuant to this Section 9, each Holder of Series B Preferred Stock
will be entitled to receive, subject to the second succeeding sentence, $1.00
principal amount of Exchange Debentures for each $1.00 of Conversion Value of
Series B Preferred Stock so exchanged. The Exchange Debentures will be issued in
registered form without coupons. Exchange Debentures issued in exchange for
Preferred Stock will be issued in principal amounts of $1,000 and integral
multiples thereof to the extent possible, and will also be issued in principal
amounts less than $1,000 so that each Holder of Series Preferred Stock will
receive certificates representing the entire amount of Exchange Debentures to
which such Holder's shares of Preferred Stock entitle such Holder; provided,
--------
however, that the Corporation may pay cash in lieu of issuing a Exchange
- -------
Debenture in a principal amount less than $1,000.
(c) The Corporation will send a written notice of exchange (the
"Exchange Notice") by first-class mail to each Holder of record of shares of
Series B Preferred Stock not fewer than thirty (30), nor more than sixty (60),
days before the date fixed for any exchange (the "Exchange Date") at its
registered address and notice, if mailed in the manner herein provided, shall
conclusively be presumed to have been given, whether or not the Holder receives
such notice; provided, however, that no failure to give such notice nor any
-------- -------
deficiency therein shall affect the validity of the procedure for the exchange
of any shares of Series B Preferred Stock to be exchanged except as to the
Holder or Holders to whom the Corporation has failed to give said notice or
except as to the Holder or Holders whose notice was defective. The Exchange
Notice shall state: (1) the Exchange Date; (2) that the Holder is to surrender
to the Corporation, in the manner and at the place or places designated, his
certificate or certificates representing the shares of Preferred Stock to be
exchanged; (3) that dividends on the shares of Series B Preferred Stock to be
exchanged shall cease to accrue on such Exchange Date whether or not
certificates representing shares of Series B Preferred Stock are surrendered for
exchange
<PAGE>
on such Exchange Date unless the Corporation shall default in the delivery of
the Exchange Debentures to Holders of the Preferred Stock who have duly
surrendered their certificates for exchange in accordance with Section 9(c) on
or before the Exchange Date; and (4) that interest on the Exchange Debentures
shall accrue from the Exchange Date whether or not certificates for shares of
Series B Preferred Stock are surrendered for exchange on such Exchange Date.
(d) On and after the Exchange Date, dividends will cease to accrue
on the outstanding shares of Series B Preferred Stock, and all rights of the
Holders of Series B Preferred Stock (except the right to receive the Exchange
Debentures or an amount in cash, to the extent applicable, equal to the
accumulated and unpaid dividends to the Exchange Date and, if the Corporation so
elects, cash in lieu of any Exchange Debenture that is in a principal amount
that is not an integral multiple of $1,000) will terminate. From and after the
Exchange Date, the person entitled to receive the Exchange Debentures issuable
upon such exchange will be treated for all purposes as the registered holder of
such Exchange Debentures.
(e) On or before the Exchange Date, each Holder of Series B
Preferred Stock shall surrender the certificate or certificates representing
such shares of Preferred Stock, in the manner and at the place designated in the
Exchange Notice. Upon surrender in accordance with the Exchange Notice of the
certificates representing any shares of Series B Preferred Stock so exchanged,
duly endorsed (or otherwise in proper form for transfer, as determined by the
Company), such shares shall be exchanged by the Company for Exchange Debentures
in accordance with Section 9(b). The Corporation shall pay interest on the
Exchange Debentures at the rate and on the dates specified therein from the
Exchange Date.
(f) Notwithstanding the foregoing provisions of this Section 9, the
Corporation shall not be entitled to exchange the Series B Preferred Stock for
Exchange Debentures if such exchange, or any term or provision of the Exchange
Indenture or the Exchange Debentures, or the performance of the Company's
obligations under this Certificate of Designation, the Preferred Stock, the
Exchange Indenture or the Exchange Debentures, shall violate or conflict with
any applicable law or agreement or instrument then binding on the Company or if,
at the time of such exchange, the Company is insolvent or would be rendered
insolvent by such exchange.
(g) Notwithstanding the foregoing, if notice of exchange has been
given pursuant to this Section 9 and any holder of shares of Preferred Stock
shall, prior to the close of business on the Exchange Date, give written notice
to the Corporation pursuant to Section 8 of the conversion of any or all of the
shares held by the holder (accompanied by a certificate or certificates for such
shares, duly endorsed or assigned to the Corporation), then the exchange shall
not become effective as to the shares to be converted and the conversion shall
become effective as provided in Section 8.
<PAGE>
(h) Prior to the Exchange Date, the Corporation will comply with
any applicable securities and blue sky laws with respect to the exchange of the
Series B Preferred Stock for the Debentures.
Section 10. Rank.
-----
The Series B Preferred Stock shall rank, with respect to dividend rights
and rights upon liquidation, winding up and dissolution, prior to all classes
and series of the Corporation's preferred stock authorized or outstanding on the
date of initial issuance of the Series B Preferred Stock and prior to all
classes of Common Stock.
Section 11. Other Covenants.
----------------
(a) Reservation of Shares; Transfer Taxes; Etc.
------------------------------------------
(i) The Corporation shall at all times reserve and keep
available, out of its authorized and unissued stock, solely for the purpose of
effecting the conversion of the Series B Preferred Stock, such number of shares
of its Common Stock or Common Stock free of preemptive rights as shall from time
to time be sufficient to effect the conversion of all shares of Series B
Preferred Stock from time to time outstanding. The Corporation shall from time
to time, in accordance with the laws of the State of Delaware, increase the
number of authorized shares of Common Stock if at any time the number of shares
of authorized and unissued Common Stock shall not be sufficient to permit the
conversion of all the then outstanding shares of Series B Preferred Stock.
(ii) If any shares of Common Stock required to be reserved
for purposes of conversion of the Series B Preferred Stock hereunder require
registration with or approval of any governmental authority under any Federal or
State law before such shares may be issued upon conversion, the Corporation will
in good faith and as expeditiously as possible endeavor to cause such shares to
be duly registered or approved, as the case may be. If the Common Stock is
listed on the New York Stock Exchange or any other national securities exchange
or national quotation service, the Corporation will list and keep listed on such
exchange, upon official notice of issuance, all shares of Common Stock issuable
upon conversion of the shares of Series B Preferred Stock.
(iii) The Corporation shall pay any and all issue or other
taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion or exchange of the Series B Preferred Stock. The
Corporation shall not, however, be required to pay any income tax or tax which
may be payable in respect of any transfer involved in the issue or delivery of
Common Stock (or other securities or assets) in a name other than that in which
the shares of Series B Preferred Stock so converted were registered, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of such tax or has established, to
the satisfaction of the Corporation, that such tax has been paid.
<PAGE>
(b) Prior Notice of Certain Events. In case:
------------------------------
(i) the Corporation shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or of any other rights or warrants; or
(ii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value), or
of any consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation shall be required, or of the
sale or transfer of all or substantially all of the assets of the Corporation or
of any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or other property; or
(iii) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
(iv) then the Corporation shall cause to be filed with the
transfer agent for the Series B Preferred Stock, and shall cause to be mailed to
the holders of record of the Series B Preferred Stock, at their last addresses
as they shall appear upon the stock transfer books of the Corporation, at least
fifteen days prior to the applicable record date hereinafter specified, a notice
stating, as the case may be, (x) the record date (if any) for the purpose of
such dividend, distribution, redemption, repurchase or granting of rights or
warrants or, if no record date is to be set, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date, if any, as of which it is expected that holders of shares of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
Section 12. Remedies.
---------
(a) The Corporation stipulates that the remedies at law of each
holder of Series B Preferred Stock in the event of any Triggering Event or
threatened Triggering Event or otherwise or other failure in the performance of
or compliance with any of the terms hereof are not and will not be adequate and
that, to the fullest extent permitted by law, such terms may be specifically
enforced by a decree for the specific performance of any agreement contained
herein or by an injunction against a violation of any of the terms hereof or
otherwise without requiring any holder to post a bond or other security except
to the extent required by applicable law.
<PAGE>
(b) Any holder of Series B Preferred Stock shall be entitled to
recover from the Corporation the reasonable attorneys' fees and expenses
incurred by such holder in connection with any Triggering Event or enforcement
by such holder of any obligation of the Corporation hereunder.
(c) No failure or delay on the part of any holder of Series B
Preferred Stock in exercising any right, power or remedy hereunder or under
applicable law or otherwise shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy
hereunder or thereunder. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law or otherwise.
Section 13. Severability of Provisions.
---------------------------
Whenever possible, each provision hereof shall be interpreted in a manner
as to be effective and valid under applicable law, but if any provision hereof
is held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or otherwise adversely affecting the remaining provisions
hereof. If a court of competent jurisdiction should determine that a provision
hereof would be valid or enforceable if a period of time were extended or
shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
Section 14. Definitions.
------------
For the purposes of the Certificate of Designation of Series B Exchangeable
Convertible Preferred Stock which embodies this resolution:
(a) "Acceleration Amount" per share of Series B Preferred Stock
shall mean, as of the date of conversion or exchange of the Series B Preferred
Stock under Section 5, 8 or 9 hereof, or the date of any payments on the Series
B Preferred Stock under Section 7 hereof, or as of any other date on which it is
necessary to determine the number of shares of Common Stock into which a share
of Series B Preferred Stock is then convertible: (i) following a Change in
Control and prior to the Third Anniversary, an amount calculated to provide the
holder of a share of Series B Preferred Stock, as of such date, with a gross
amount of accretion calculated at the rate of eight percent (8%) on $2,170.00
per share of Series B Preferred Stock, compounded quarterly, from the date of
conversion or exchange of the Series B Preferred Stock under Section 5, 8 or 9
hereof, or the date of any payments on the Series B Preferred Stock under
Section 7 hereof, or the date of any other determination, as the case may be, to
and including the Third Anniversary, or (ii) other than as specified in clause
(i), zero.
<PAGE>
(b) "Accrued Dividends" to a particular date (the "Applicable
Date") shall mean (i) all dividends accrued but not paid on the Series B
Preferred Stock pursuant to paragraph (a) of Section 2, whether or not declared,
accrued to the Applicable Date, plus (ii) all dividends or distributions payable
pursuant to paragraph (b) of Section 2 for which the Covered Distribution was
declared, ordered, paid or made on or prior to the Applicable Date.
(c) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated by the Securities and Exchange Commission under the Exchange Act.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which commercial banks in the City of New York are
authorized or obligated by law or executive order to close.
(e) "Capital Stock" shall mean (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
(f) "Change in Control" shall mean any of the following:
(i) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other
than the Corporation, or any of its Subsidiaries, or any employee benefit plan
or related trust of the Corporation or any of its Subsidiaries or any Excluded
Person or Excluded Group (an "Acquiring Person"), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than fifty percent (50%) of the combined voting power of the then outstanding
voting securities of the Corporation entitled to vote generally in the election
of directors; or
(ii) the approval by the stockholders of the Corporation,
other than any Excluded Person or Excluded Group, of a reorganization, merger or
consolidation, in each case, with respect to which all or substantially all of
the individuals and entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such reorganization,
merger or consolidation do not, following such reorganization, merger or
consolidation, beneficially own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the Corporation
resulting from such reorganization, merger or consolidation; or
<PAGE>
(iii) the sale or other disposition of all or any substantial
part of the assets of the Corporation, other than to any Excluded Person or
Excluded Group, in one transaction or series of related transactions;
provided that the occurrence of any event identified in subparagraphs (i)
through (iii) above that would otherwise be treated as a Change in Control shall
not constitute a Change in Control hereunder if (x) the Board of Directors of
the Corporation, by vote duly taken, and (y) the Requisite Holders of Series B
Preferred Stock, by written consent, shall so determine.
(g) "Closing Price" per share of Common Stock on any date shall
mean the last sale price, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, in either case as reported on the
Nasdaq National Market or in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or American Stock Exchange, as the case may be, or, if the Common
Stock is listed or admitted to trading on the New York Stock Exchange or
American Stock Exchange, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other system then in use,
or, if on any such date the Common Stock is not quoted by any such organization,
the average of the Closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors and reasonably acceptable to the Requisite Holders.
(h) "Conversion Price" shall mean initially $21.70 per share, as
adjusted from time to time in accordance with Section 8.
(i) "Conversion Value" per share of Series B Preferred Stock shall
mean an amount equal to the sum of (x) $2,170.00, (y) all Accrued Dividends
thereon to the date of conversion and (z) the Acceleration Amount.
(j) "Current Market Price" per share of Common Stock on any date
shall mean the average of the Closing Prices of a share of Common Stock for the
twenty (20) consecutive Trading Days ending on the date in question. If on any
such Trading Day the Common Stock is not quoted by any organization referred to
in the definition of Closing Price, the fair value of the Common Stock on such
day, as reasonably determined in good faith by the Board of Directors of the
Corporation, shall be used.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(l) "Exchange Debenture" shall mean the Subordinated Exchange
Debentures of the Corporation, issuable in exchange for the Series B Preferred
Stock.
<PAGE>
(m) "Excluded Group" shall mean a "group" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) that includes one or more Excluded
Persons; provided that the voting securities of the Corporation "beneficially
owned" (as such term is used in Rule 13d-3 promulgated under the Exchange Act)
by such Excluded Persons represents a majority of the voting securities
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such group.
(n) "Excluded Person" shall mean each of RCBA Strategic Partners,
L.P., Richard C. Blum & Associates, L.P. and any affiliate (as defined in the
Exchange Act) of any of the foregoing.
(o) "Hurdle Percentage" shall mean 135%.
(p) "Liquidation Preference" shall mean an amount per share of
Series B Preferred Stock equal to the greater of (i) the Conversion Value or
(ii) in the event of any liquidation or winding up of the Corporation, the
amount the holders of the Series B Preferred Stock would have received had they
converted into Common Stock immediately prior to such liquidation or winding up
and, if such liquidation or winding up occurs prior to the Third Anniversary of
the Closing Date of the Securities Purchase Agreement, the amount such holders
would have received had they received the additional dividends that would have
been paid from the date of liquidation or winding up through such Third
Anniversary, and such additional shares were also converted into Common Stock
immediately prior to such liquidation or winding up.
(q) "Person" shall mean an individual, partnership, corporation,
limited liability company or partnership, unincorporated organization, trust or
joint venture, or a governmental agency or political subdivision thereof, or
other entity of any kind.
(r) "Requisite Holders" shall mean the holders of sixty-seven
percent (67%) of the then-outstanding shares of Series B Preferred Stock.
(s) "Securities Purchase Agreement" shall mean that certain
agreement dated as of May 5, 1999 by and among the Corporation and certain
purchasers of the Series B Preferred Stock party thereto.
(t) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(u) "Surviving Person" shall mean the continuing or surviving
Person of a merger, consolidation or other corporate combination, the Person
receiving a transfer of all or a substantial part of the properties and assets
of the Corporation, or the Person consolidating with or merging into the
Corporation in a merger, consolidation or other
<PAGE>
corporate combination in which the Corporation is the continuing or surviving
Person, but in connection with which the Series B Preferred Stock or Common
Stock of the Corporation is exchanged, converted or reinstated into the
securities of any other Person or cash or any other property; provided, however,
-------- -------
if such Surviving Person is a direct or indirect Subsidiary of a Person, the
parent entity also shall be deemed to be a Surviving Person.
(v) "Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is quoted, listed or admitted to
trading is open for the transaction of business or, if the Common Stock is not
quoted, listed or admitted to trading on any national securities exchange
(including the Nasdaq Stock Market), any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(w) "Triggering Event" shall mean any one or more of the
following:
(i) The Corporation shall fail to redeem any part or all of
the Series B Preferred Stock in accordance with Section 4.
(ii) The Corporation shall fail to pay any dividend on any
Series B Preferred Stock on any dividend payment date in accordance with Section
2 for any reason, including but not limited to, that such payment is prohibited
by applicable law or the Board of Directors elect not to pay such dividend, or
shall otherwise violate any term of Section 2 and such failure shall not be
cured within a period of 30 days after such dividend payment date or violation
(which cure shall be effected in a manner ensuring the holders the same yield as
if such violation had not occurred).
(iii) The Corporation shall enter into any transaction or
take any action required to be approved by any holders of Series B Preferred
Stock without obtaining the requisite approval of the holders of the Series B
Preferred Stock.
(iv) The Corporation shall (A) fail for any reason to issue
Common Stock as required under Section 8 upon the request of any holder of
Series B Preferred Stock; or (B) so long as any shares of the Series B Preferred
Stock are outstanding, fail to make any anti-dilution adjustment thereunder,
and, in each case, such failure to issue Common Stock or to make such adjustment
shall continue for 30 days after notice.
(v) The Corporation shall adopt a plan of liquidation or of
dissolution, or commence a voluntary case under the Federal bankruptcy laws or
any other applicable state or Federal bankruptcy, insolvency or similar law, or
consent to the entry of an order for relief in any involuntary case under any
such law or to the appointment of a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) of the Corporation or of any
substantial part of its property, or make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts
<PAGE>
generally as they become due, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having jurisdiction in the premises
in an involuntary case under the Federal bankruptcy laws or any other applicable
Federal or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Corporation or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs.
(x) "Voting Stock" shall mean the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series B Exchangeable Convertible Preferred Stock to be duly
executed by its President and attested to by its Secretary and has caused its
corporate seal to be affixed hereto, this 9th day of June, 1999.
URS CORPORATION
By: /s/ Kent P. Ainsworth
---------------------
Kent P. Ainsworth
<PAGE>
EXHIBIT 1.7 TO THE SECURITIES PURCHASE AGREEMENT
CERTIFICATE OF DESIGNATION
of
SERIES C
PREFERRED STOCK
of
URS CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
URS Corporation, a Delaware corporation (the "Corporation"), certifies that
pursuant to the authority contained in its Certificate of Incorporation, as
amended, and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, its Board of Directors (the "Board of
Directors") has adopted the following resolution creating a series of its
Preferred Stock, par value $1.00 per share, designated as Series C Preferred
Stock:
RESOLVED, that a series of authorized Preferred Stock, par value $1.00 per
share, of the Corporation be hereby created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount.
-----------------------
The shares of such series shall be designated as the "Series C Preferred
Stock" (the "Series C Preferred Stock") and the number of shares constituting
such series shall be 450,000 shares of Series C Preferred Stock. Section 11
below contains the definitions of certain defined terms used herein.
Section 2. Dividends and Distributions.
----------------------------
(a) The holders of shares of Series C Preferred Stock shall not be
entitled to any dividends or distributions except as provided in Section 2(b).
<PAGE>
(b) In case the Corporation or any Subsidiary of the Corporation
shall at any time or from time to time declare, order, pay or make a dividend or
other distribution (including, without limitation, any distribution of stock or
other securities or property or rights or warrants to subscribe for securities
of the Corporation or any of its Subsidiaries by way of dividend or spin off) on
the Common Stock, the holders of shares of Series C Preferred Stock shall be
entitled to receive from the Corporation, with respect to each share of Series C
Preferred Stock held, the same dividend or distribution received by a holder of
the number of shares of Common Stock equal to one share multiplied by the
Liquidation Multiplier.
Section 3. Voting Rights.
--------------
So long as any shares of Series C Preferred Stock shall be outstanding and
unless the consent or approval of a greater number of shares shall then be
required by law, without first obtaining the consent or approval of the
Requisite Holders, voting as a single class, given in person or by proxy at a
meeting at which the holders of such shares shall be entitled to vote separately
as a class, or by written consent, the Corporation shall not (and shall not
permit or authorize any subsidiary to): (i) authorize, create or issue any
class or series, or any shares of any class or series, of stock having any
preference or priority as to voting, dividends or upon liquidation, dissolution
or winding up over the Series C Preferred Stock ("Senior Stock"); (ii)
authorize, create or issue any class or series, or any shares of any class or
series, of stock ranking on a parity as to voting, dividends or upon
liquidation, dissolution or winding up with the Series C Preferred Stock
("Parity Stock") other than the issuance of shares of Series A Preferred Stock
of the Corporation (the "Series A Preferred Stock") as dividends in accordance
with such stock's terms; (iii) reclassify any shares of stock of the Corporation
into shares of Senior Stock or Parity Stock; (iv) authorize any security
exchangeable for, convertible into, or evidencing the right to purchase any
shares of Senior Stock or Parity Stock other than the exchange of Series B
Exchangeable Convertible Preferred Stock of the Corporation (the "Series B
Preferred Stock") for shares of Series A Preferred Stock and Series C Preferred
Stock; (v) alter or change the rights, preferences or privileges of the Series C
Preferred Stock; (vi) increase or decrease the authorized number of shares of
Series C Preferred Stock or issue shares of Series C Preferred Stock other than
to holders of Series C Preferred Stock pursuant to its terms; or (vii) amend or
waive any provision of the Corporation's Certification of Incorporation or
bylaws in a manner adverse in any respect to the holders of Series C Preferred
Stock.
Section 4. Mandatory Repurchase by the Corporation.
----------------------------------------
(a) On the twelfth anniversary of the Closing Date of the
Securities Purchase Agreement, the Corporation shall repurchase from each holder
of shares of Series C Preferred Stock the number of shares of the Series C
Preferred Stock held by such holder on such twelfth anniversary. Repurchases
made pursuant to this Section 4(a) shall be effected on such anniversary date
(or such other day as the holder and the
<PAGE>
Corporation may agree) and shall be for the Liquidation Preference. The
Corporation, at its election, may pay the Liquidation Preference in cash, in
Common Stock valued at the Current Market Price on the date of repurchase, or
any combination thereof. The place of payment shall be at an office or agency
fixed therefor by the Corporation or, if not fixed, at the principal executive
office of the Corporation.
(b) On or after the sixth anniversary of the Closing Date of the
Securities Purchase Agreement or, if earlier, the fifth Business Day after the
Corporation has sufficient shares of Common Stock authorized to permit the
repurchase of the oustanding Series C Preferred Stock, any holder of shares of
Series C Preferred Stock shall have the right (a person exercising such right,
an "Electing Holder") to require the Corporation to repurchase all, but not less
than all, of the shares of Series C Preferred Stock owned by such Electing
Holder by giving the Corporation at least one-hundred twenty (120) days prior
written notice of his/her/its intent to have the Corporation repurchase
his/her/its shares of Series C Preferred Stock in exchange for the Liquidation
Preference. The notice shall set forth the date set for repurchase, which date
shall be a Business Day, and the number of shares owned by the Electing Holder.
The Corporation, at its election, may choose to pay the Liquidation Preference
in cash, in Common Stock valued at the Current Market Price on the date of the
written notice to the Corporation, or any combination of thereof.
(c) (i) On the date fixed for repurchase, each holder of shares of
Series C Preferred Stock shall surrender the certificate representing such
shares to the Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment in cash and/or Common Stock therefor
provided in this Section 4. Such shares shall no longer be deemed outstanding
after such date and the holders thereof shall cease to be holders of Series C
Preferred Stock of the Corporation and all rights whatsoever with respect to the
shares so purchased shall terminate. As promptly as practicable, and in any
event within three Business Days after the surrender of such certificate or
certificates, the Corporation shall deliver or cause to be delivered cash,
Common Stock, or any combination thereof as specified above. To the extent
Common Stock is issued, certificates therefore shall be registered in the name
of such holder representing the number of validly issued, fully paid and
nonassessable full shares of Common Stock to which the holder of shares of
Series C Preferred Stock so repurchased shall be entitled. Such repurchase
shall be deemed to have been made at the close of business on the date of
surrender of the certificate or certificates representing the shares of Series C
Preferred Stock to be repurchased so that the rights of the Electing Holder as
to the shares being repurchased shall cease except for the right to receive cash
and/or shares of Common Stock (and, to the extent the person received the shares
of Common Stock, such person shall be treated for all purposes as having become
the record holder of such shares of Common Stock at such time).
(ii) If the cash legally available and Common Stock authorized
by the board of directors of the Corporation for such purchase are not
sufficient to purchase all the shares of Series C Preferred Stock tendered to
the Corporation for
<PAGE>
purchase pursuant to paragraph (a) or (b) of this Section 4, the Corporation
shall purchase the greatest number of whole shares for which such funds and
stock are so available on a pro rata basis among all tendering holders based on
the ratio of the number of shares tendered by each of them to the aggregate
amount of all shares so tendered, and the certificates representing the
unpurchased shares shall be deemed not to be surrendered for repurchase, such
unpurchased shares shall remain outstanding and the rights of the holders of
shares of Series C Preferred Stock thereafter shall continue to be those of a
holder of shares of the Series C Preferred Stock; provided, however, the
-------- -------
Corporation shall thereafter be required to repurchase all such remaining shares
at the first date it has sufficient funds legally available and Common Stock
authorized for such purpose at the price it would have paid at the date such
shares were actually tendered and the Corporation shall give notice as aforesaid
to each holder whose shares were not repurchased for such reason and such holder
shall thereafter have the right to elect to have such shares repurchased, such
election to be made within 30 days of receipt of such notice. For purposes of
this Section, the Corporation shall be deemed not to have sufficient funds
legally available for any such purchase if the Board of Directors reasonably
determines that immediately after such repurchase the Corporation would be
insolvent or if such repurchase would conflict with the terms or conditions of,
or result in a default under, any instrument or agreement applicable to or
binding upon the Corporation, pursuant to which the Corporation has incurred
indebtedness for borrowed money in an aggregate principal amount in excess of
$50 million.
(d) Whenever the Corporation shall not have redeemed the shares of
Series C Preferred Stock within five (5) Business Days of the date such
redemption is required by Section 4(a) or 4(b), thereafter and until all
redemption payments shall have been made, if and so long as any shares of Series
C Preferred Stock remain outstanding, the Corporation shall not, nor shall it
permit any of its Subsidiaries to: (i) declare or pay dividends, or make any
other distributions, on any shares of Common Stock or other capital stock of the
Corporation ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Stock ("Junior Stock"), other than
dividends or distribution payable in Junior Stock; (ii) declare or pay
dividends, or make any other distributions, on any shares of Parity Stock (other
than Series A Preferred Stock), other than dividends or distributions payable in
Junior Stock, except dividends paid ratably on the Series C Preferred Stock and
all Parity Stock on which dividends are payable or in arrears, in proportion to
the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration (other than
Junior Stock) any shares of Junior Stock or Parity Stock (other than, with
respect to Parity Stock, ratably with the Series C Preferred Stock); or (iv)
purchase or otherwise acquire for consideration any shares of Series C Preferred
Stock, other than purchases ratably among all holders of the Series C Preferred
Stock.
(e) The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
capital stock of the Corporation unless the Corporation could, pursuant to
paragraph (d) of this Section 4, purchase or otherwise acquire such shares at
such time and in such manner.
<PAGE>
Section 5. Reacquired Shares.
-----------------
Any shares of Series C Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof, and, if necessary to provide for the lawful
purchase of such shares, the capital represented by such shares shall be reduced
in accordance with the General Corporation Law of the State of Delaware. All
such shares shall upon their cancellation become authorized but unissued shares
of Preferred Stock, par value $1.00 per share, of the Corporation and may be
reissued as part of another series of Preferred Stock, par value $1.00 per
share, of the Corporation subject to the conditions or restrictions on
authorizing, or creating or issuing any class or series, or any shares of any
class or series, set forth in Section 3.
Section 6. Liquidation, Dissolution or Winding Up.
---------------------------------------
If the Corporation shall adopt a plan of liquidation or of dissolution, or
commence a voluntary case under the Federal bankruptcy laws or any other
applicable state or Federal bankruptcy, insolvency or similar law, or consent to
the entry of an order for relief in any involuntary case under any such law or
to the appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Corporation or of any substantial part
of its property, or make an assignment for the benefit of its creditors, or
admit in writing its inability to pay its debts generally as they become due, or
if a decree or order for relief in respect of the Corporation shall be entered
by a court having jurisdiction in the premises in an involuntary case under the
Federal bankruptcy laws or any other applicable Federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and any such decree or order shall be unstayed and
in effect for a period of ninety (90) consecutive days and on account of such
event the Corporation shall liquidate, dissolve or wind up, or upon any other
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (i) to the holders of shares of Junior Stock, unless prior thereto, the
holders of shares of Series C Preferred Stock shall have received in cash the
Liquidation Preference, or (ii) to the holders of shares of Parity Stock, except
distributions made ratably on the Series C Preferred Stock and all such Parity
Stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up of the
Corporation. A consolidation, merger, corporate reorganization, recapitalization
or other similar transaction as a result of which the beneficial holders of the
Corporation's Common Stock immediately prior to such transaction do not hold,
directly or indirectly, in excess of 50% of the combined voting securities
entitled to vote generally in the election of the directors of the surviving or
resulting corporation immediately after such transaction, and a sale or other
disposition of all or substantially all of the assets of the Corporation in one
transaction or series of related transactions, each shall be deemed to be a
"liquidation" within the meaning of this Section 6; provided that no such
transaction
<PAGE>
shall be deemed to be a "liquidation" if first approved by the Board of
Directors of the Corporation and the Requisite Holders.
Section 7. Rank.
----
The Series C Preferred Stock shall rank, with respect to dividend rights
and rights upon liquidation, winding up and dissolution, prior to all classes
and series of the Corporation's preferred stock authorized or outstanding on the
date of initial issuance of the Series C Preferred Stock (other than the Series
A Preferred Stock, which shall rank on a par with the Series C Preferred Stock)
and prior to all classes of Common Stock.
Section 8. Other Covenants.
----------------
(a) Transfer Taxes. The Corporation shall pay any and all issue or
--------------
other taxes that may be payable in respect of any issue or delivery of shares of
Series B Preferred Stock on exchange of the Series C Preferred Stock and other
securities. The Corporation shall not, however, be required to pay any income
tax or tax which may be payable in respect of any transfer involved in the issue
or delivery of Series C Preferred Stock (or other securities or assets) in a
name other than that in which the shares of Series C Preferred Stock so
exchanged were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of such tax or has established, to the satisfaction of the Corporation,
that such tax has been paid.
(b) Prior Notice of Certain Events. In case:
------------------------------
(i) the Corporation shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or of any other rights or warrants; or
(ii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value), or
of any consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation shall be required, or of the
sale or transfer of all or substantially all of the assets of the Corporation or
of any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or other property; or
(iii) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Series C Preferred Stock, and shall cause to be mailed to the holders of record
of the Series C Preferred Stock, at their last addresses as they shall appear
upon the stock transfer books of the Corporation, at least fifteen days prior to
the applicable record date hereinafter
<PAGE>
specified, a notice stating, as the case may be, (x) the record date (if any)
for the purpose of such dividend, distribution, redemption, repurchase or
granting of rights or warrants or, if no record date is to be set, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distribution, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date, if any, as of which it is expected that holders of
shares of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
Section 9. Remedies.
--------
(a) The Corporation stipulates that the remedies at law of each
holder of Series C Preferred Stock in the event of any failure in the
performance of or compliance with any of the terms hereof are not and will not
be adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise without requiring any holder to post a bond or other
security except to the extent required by applicable law.
(b) Any holder of Series C Preferred Stock shall be entitled to
recover from the Corporation the reasonable attorneys' fees and expenses
incurred by such holder in connection with the enforcement by such holder of any
obligation of the Corporation hereunder.
(c) No failure or delay on the part of any holder of Series C
Preferred Stock in exercising any right, power or remedy hereunder or under
applicable law or otherwise shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy
hereunder or thereunder. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law or otherwise.
Section 10. Severability of Provisions.
---------------------------
Whenever possible, each provision hereof shall be interpreted in a manner
as to be effective and valid under applicable law, but if any provision hereof
is held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or otherwise adversely affecting the remaining provisions
hereof. If a court of competent jurisdiction should determine that a provision
hereof would be valid or enforceable if a period of time were extended or
shortened or a particular percentage were increased or decreased, then such
<PAGE>
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
Section 11. Definitions.
------------
For the purposes of the Certificate of Designation of Series C Preferred
Stock which embodies this resolution:
(a) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which commercial banks in the City of New York are
authorized or obligated by law or executive order to close.
(b) "Capital Stock" shall mean (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
(c) "Closing Price" per share of Common Stock on any date shall
mean the last sale price, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, in either case as reported on the
Nasdaq National Market or in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or American Stock Exchange, as the case may be, or, if the Common
Stock is listed or admitted to trading on the New York Stock Exchange or
American Stock Exchange, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last quoted sale price or, if
not so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other system then in use,
or, if on any such date the Common Stock is not quoted by any such organization,
the average of the Closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of
Directors and reasonably acceptable to the Requisite Holders.
(d) "Current Market Price" per share of Common Stock on any date
shall mean the average of the Closing Prices of a share of Common Stock for the
twenty (20) consecutive Trading Days ending on the date in question. If on any
such Trading Day the Common Stock is not quoted by any organization referred to
in the definition of Closing Price, the fair value of the Common Stock on such
day, as reasonably determined in good faith by the Board of Directors of the
Corporation, shall be used.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
<PAGE>
(f) "Liquidation Base Amount" shall mean $21.70; provided, however,
-------- -------
that in case the Corporation shall at any time or from time to time after the
original issuance of the Series C Preferred Stock declare a dividend, or make a
distribution, on the outstanding shares of Common Stock in either case, in
shares of Common Stock, or effect a subdivision, combination, consolidation or
reclassification of the outstanding shares of Common Stock into a greater or
lesser number of shares of Common Stock, then, and in each such case, the
Liquidation Base Amount in effect immediately prior to such event or the record
date therefor, whichever is earlier, shall be adjusted by multiplying the
Liquidation Base Amount by a fraction, the numerator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event and
the denominator of which is the number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this definition
shall become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification,
consolidation or combination, at the close of business on the day upon which
such corporate action becomes effective.
(g) "Liquidation Multiplier" shall mean eight (8); provided,
--------
however, that in case the Corporation shall at any time or from time to time
- -------
after the original issuance of the Series C Preferred Stock declare a dividend,
or make a distribution, on the outstanding shares of Common Stock in either
case, in shares of Common Stock, or effect a subdivision, combination,
consolidation or reclassification of the outstanding shares of Common Stock into
a greater or lesser number of shares of Common Stock, then, and in each such
case, the Liquidation Multiplier in effect immediately prior to such event or
the record date therefor, whichever is earlier, shall be adjusted by dividing
the Liquidation Multiplier by a fraction, the numerator of which is the number
of shares of Common Stock that were outstanding immediately prior to such event
and the denominator of which is the number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this definition
shall become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, reclassification,
consolidation or combination, at the close of business on the day upon which
such corporate action becomes effective. In addition to the foregoing, (I) if
the Corporation fails to authorize sufficient common shares to permit the
repurchase of the Series C Preferred Stock on or prior to the sixth anniversary
or if the Corporation fails to repurchase the Series C Preferred Stock as
requested by an Electing Holder pursuant to Section 4(b) on or prior to the
sixth anniversary of the Closing Date (whether or not such repurchase is
permitted under the terms of the Corporation's debt facilities), then
immediately following the sixth anniversary the Liquidation Multiplier shall be
1.25 times the Liquidation Multiplier in effect immediately prior to such date
for purposes of the repurchase pursuant to Section 4(a) and 4(b) for repurchases
after that time; and (II) if the Corporation fails to repurchase the shares
requested by an Electing Holder pursuant to
<PAGE>
Section 4(b) on or prior to the eighth anniversary (whether or not such
repurchase is permitted under the terms of the Corporation's debt facilities),
then immediately following the eighth anniversary the Liquidation Multiplier
shall be 1.6 times the Liquidation Multiplier in effect immediately prior to the
eighth anniversary for repurchases after that time. The adjustment specified in
clause (II) shall be cumulative to, and not in place of, the adjustment
specified in clause (I).
(h) "Liquidation Preference" shall mean an amount per share of Series
C Preferred Stock equal to the sum of (i) $50.00 plus (ii) the greater of (y)
zero or (z) the product of the Liquidation Multiplier times the excess, if any,
of the Current Market Price on the date set for repurchase pursuant to Section
4(a) or the date of the written notice pursuant to Section 4(b), as the case may
be, over the Liquidation Base Amount.
(i) "Person" shall mean an individual, partnership, corporation,
limited liability company or partnership, unincorporated organization, trust or
joint venture, or a governmental agency or political subdivision thereof, or
other entity of any kind.
(j) "Requisite Holders" shall mean the holders of sixty-seven percent
(67%) of the then-outstanding shares of Series C Preferred Stock.
(k) "Securities Purchase Agreement" shall mean that certain agreement
dated as of May 5, 1999 by and among the Corporation and certain purchasers of
the Series C Preferred Stock party thereto.
(l) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(m) "Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is quoted, listed or admitted to
trading is open for the transaction of business or, if the Common Stock is not
quoted, listed or admitted to trading on any national securities exchange
(including the Nasdaq Stock Market), any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series C Preferred Stock to be duly executed by its President and
attested to by its Secretary and has caused its corporate seal to be affixed
hereto, this 9th day of June, 1999.
URS CORPORATION
By: /s/ Kent P. Ainsworth
---------------------
Kent P. Ainsworth
<PAGE>
EXHIBIT 1.32 TO THE SECURITIES PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of June 9, 1999,
among URS Corporation, a Delaware corporation (the "Corporation"), and RCBA
Strategic Partners, L.P., a Delaware limited partnership (the "Purchaser").
WHEREAS, the Corporation is a party to a Securities Purchase Agreement,
dated as of May 5, 1999 (as amended, the "Securities Purchase Agreement"), with
the Purchaser, pursuant to which the Corporation agreed to sell to the Purchaser
and the Purchaser agreed to purchase from the Corporation for an aggregate
purchase price of $100 million, upon the terms and subject to the conditions set
forth therein, (x) 46,082.95 shares of Series A Preferred Stock of the
Corporation (the "Series A Preferred Stock") and (y) 450,000 shares of Series C
Preferred Stock of the Corporation (the "Series C Preferred Stock");
WHEREAS, pursuant to the Securities Purchase Agreement, the Corporation and
Purchaser agreed that, upon receipt of stockholder approval of (x) certain
amendments to the Corporation's charter and (y) the issuance of convertible
preferred stock to Purchaser, the Series A Preferred Stock and Series C
Preferred Stock would be converted into Series B Convertible Exchangeable
Preferred Stock of the Corporation (the "Series B Preferred Stock");
WHEREAS, in order to induce the Purchaser to enter into the Securities
Purchase Agreement, the Corporation has agreed to provide the registration
rights set forth in this Agreement for the benefit of the Purchaser and its
direct and indirect transferees;
WHEREAS, the execution and delivery of this Agreement is a condition to the
Purchaser's obligations pursuant to the Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, each of Purchaser and the Corporation (together "Parties") agree as
follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the following
respective meanings:
1.1 "Affiliate" means, with respect to any Person, any other Person
directly or indirectly Controlling, Controlled by or under common Control with
such first Person. "Control" means the power to direct or cause the direction of
management or policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by
<PAGE>
contract or otherwise. Any director, member of management or other employee of
the Corporation or any of its Subsidiaries who would not otherwise be an
Affiliate of the Purchaser shall not be deemed to be an Affiliate of the
Purchaser.
1.2 "Agreement" is defined in the first paragraph of this Agreement.
1.3 "Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required to close.
1.4 "Closing Date" means the date the closing of the securities purchase
under the Securities Purchase Agreement.
1.5 "Common Stock" means the Common Stock, par value of $.01 per share,
of the Corporation.
1.6 "Conversion Shares" means the shares of Common Stock issued to a
holder upon the conversion of the Series B Preferred Stock.
1.7 "Corporation" is defined in the first paragraph of this Agreement.
1.8 "DTC" means the Depository Trust Company.
1.9 "Distributee" means any person that is a member, stockholder or
partner of Purchaser, or any person that is a member, stockholder or partner of
a Distributee to which Registrable Securities are transferred or distributed by
Purchaser or Distributee.
1.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations thereunder which
shall be in effect at the time. Any reference to a particular section thereof
shall include a reference to the corresponding section, if any, of any such
successor federal statute, and the rules and regulations thereunder.
1.11 "Holder" means Purchaser and any other holder of Registrable
Securities under this Agreement, including an Affiliate, a Distributee or other
successors, assigns and transferees of Purchaser or a Holder that has received
Registrable Securities pursuant to Section 3.4 and agree to be bound by the
terms of this Agreement as contemplated by Section 3.4.
1.12 "NASD" means the National Association of Securities Dealers.
1.13 "NYSE" means the New York Stock Exchange.
1.14 "Person" means any natural person, firm, partnership, association,
corporation, company, trust, business trust, governmental entity or other
entity.
<PAGE>
1.15 "Postponement Period" is defined in Section 2.3(n).
1.16 "Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement and
all other amendments and supplements to the prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
1.17 "Purchaser" is defined in the introduction to this Agreement.
1.18 "Registrable Securities" means (i) the Series A Preferred Stock, (ii)
the Series C Preferred Stock; (iii) the Conversion Shares and the Repurchase
Shares, and (iv) any securities issued or issuable with respect to any of the
foregoing clauses (i) through (iii), (x) upon any conversion or exchange
thereof, (y) by way of stock dividend or other distribution, stock split or
reverse stock split or (z) in connection with a combination of shares,
recapitalization, merger, consolidation, exchange offer or other reorganization.
As to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (A) a Registration Statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such Registration Statement, (B) such securities shall have been
distributed to the public in reliance upon Rule 144 or may be so distributed
pursuant to Rule 144(k), (C) subject to the provisions of Section 2.1(b)(ii),
such securities shall have been otherwise transferred, new certificates for such
securities not bearing a legend restricting further transfer shall have been
delivered by the Corporation and subsequent disposition of such securities shall
not require registration or qualification of such securities under the
Securities Act or any similar state law then in force, (D) such securities shall
have been acquired by the Corporation or (E) sold in a private transaction in
which the transferor's rights under this Agreement were not assigned. In
determining the number of Registrable Securities outstanding at any time or
whether the Holders of the requisite number of Registrable Securities have taken
any action hereunder and in calculating the number of Registrable Securities for
all other purposes under this Agreement, each share of Series A Preferred Stock
shall be deemed to have been convertible into Common Stock (on the same terms
and conditions as the Series B Preferred Stock) and to have converted (to the
fullest extent then determinable) and such calculation shall include the number
of Conversion Shares that then would be deliverable upon the conversion of such
stock (as if such stock were convertible), and each share of Series C Preferred
Stock shall be deemed to have been repurchased by the Corporation (to the
fullest extent then determinable) and such calculation shall include the number
of Repurchase Shares then deliverable upon the repurchase of such Series C
Preferred Stock (to the fullest extent then determinable).
<PAGE>
1.19 "Registration Expenses" means all fees and expenses incident to the
performance of or compliance with the provisions of this Agreement, whether or
not any registration statement is filed or becomes effective, including, without
limitation, all (i) registration and filing fees (including, without limitation,
(A) fees with respect to filings required to be made with the NASD in connection
with an underwritten offering, (B) fees and expenses of compliance with state
securities or blue sky laws, and (C) fees and other expenses associated with
admitting for trading on the NYSE or any other applicable exchange or automated
dealer system) the Series A Preferred Stock, the Series C Preferred Stock,
Conversion Shares and Repurchase Shares, (ii) printing expenses, (iii) fees and
disbursements of all independent certified public accountants referred to in
Section 2.3 (including, without limitation, the reasonable expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (iv) the fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Rule 2720 of the NASD Rules of Conduct, (v) fees and expenses of all
attorneys, advisers, appraisers and other persons retained by the Corporation or
any Subsidiary of the Corporation, (vi) internal expenses of the Corporation and
its Subsidiaries, (vii) the expense of any annual audit, (viii) the expenses
relating to printing, word processing and distributing all registration
statements, underwriting agreements, securities sales agreements, indentures and
any other documents necessary in order to comply with this Agreement, and (ix)
the reasonable out-of-pocket expenses and, as to in-house counsel, allocated
costs of the Holders of the Registrable Securities being registered in such
registration incurred in connection therewith including, without limitation, the
reasonable fees and disbursements of not more than one outside counsel and one
in-house counsel (who may be employed by an Affiliate of a Holder) chosen by the
Holders of a majority of the Registrable Securities to be included in such
Registration Statement. "Registration Expenses" shall not include any
underwriting discounts or commissions or any transfer taxes payable in respect
of the sale of Registrable Securities, which such expenses shall be paid or
borne by the Holders thereof. Nor shall "Registration Expenses" include any fees
or expenses incurred by or on behalf of any Holder who, without cause, either
withdraws a request for registration or withdraws from a registration.
1.20 "Registration Statement" means any registration statement of the
Corporation that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, and all amendments and supplements to any such
registration statement, including post-effective amendments, in each case
including the Prospectus, all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
1.21 "Repurchase Shares" means the shares of Common Stock issued to a
holder upon the repurchase of the Series C Preferred Stock.
1.22 "Rule 144" means Rule 144 (or any successor provision) under the
Securities Act.
<PAGE>
1.23 "Rule 145" means Rule 145 (or any successor provision) under the
Securities Act.
1.24 "Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations thereunder which shall
be in effect at the time. Any reference to a particular section thereof shall
include a reference to the corresponding section, if any, of any such successor
federal statute, and the rules and regulations thereunder.
1.25 "SEC" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange Act.
1.26 "Series A Preferred Stock" has the meaning given it in the first
recital.
1.27 "Series B Preferred Stock" has the meaning given it in second
recital.
1.28 "Special Registration" means the registration of shares of equity
securities and/or options or other rights in respect thereof to be offered
solely to directors, members of management, employees, consultants or sales
agents, distributors or similar representatives of the Corporation or its direct
or indirect Subsidiaries, solely on Form S-8 or any successor form.
1.29 "Subsidiary" means, with respect to any Person, any corporation or
Person, a majority of the outstanding voting stock or other equity interests of
which is owned, directly or indirectly, by that Person.
1.30 "underwritten registration" or "underwritten offering" means a
registration in which securities of the Corporation (including Registrable
Securities) are sold to an underwriter for reoffering to the public.
ARTICLE II
REGISTRATION
2.1 Demand Registration.
-------------------
(a) Requests. Subject to the provisions of Section 2.6, at any time
or from time to time after 12 months from the date of this Agreement,
Holders of not less than 50% of the then outstanding Registrable Securities
shall have the right to make written requests that the Corporation effect
up to two registrations under the Securities Act of all or part of the
Registrable Securities of the Holders making such request, which requests
shall specify the intended method of disposition thereof by such Holders,
including whether the registration requested is for an underwritten
offering. For a registration to be underwritten, a majority of the Holders
requesting registration (as measured by ownership of Registrable
<PAGE>
Securities) must so request. The Corporation shall not be required to
effect more than two registrations under this Section 2.1.
(b) Obligation to Effect Registration.
(i) Within 10 business days after receipt by the Corporation of
any request for registration pursuant to Section 2.1, the Corporation shall
promptly give written notice of such requested registration to all Holders, and
as soon as practicable will use its best efforts to effect the registration
under the Securities Act of
(1) the Registrable Securities which the Corporation has
been so requested to register pursuant to Section 2.1, and
(2) all other Registrable Securities which the Corporation
has been requested to register by the Holders thereof by written request given
to the Corporation within 10 days after the Corporation has given such written
notice (which request shall specify the intended method of disposition of such
Registrable Securities), all to the extent required to permit the disposition
(in accordance with the intended methods thereof as aforesaid) of the
Registrable Securities so to be registered.
(ii) The Corporation's obligations under Section 2.1(a)(i) shall
be subject to the following limitations:
(1) the Corporation shall not be required to effect a
registration pursuant to this Section 2.1 during the period starting with the
date of filing of, and ending on the date one hundred eighty (180) days
following the effective date of, the registration statement pertaining to a
public offering by the Corporation; provided, however, that unless the Holders
-------- -------
are permitted to register and sell in such offering all such Registrable
Securities as they have requested be included in such offering without cutback
under Section 2.2(b)(ii), then the Corporation may not decline to register
shares pursuant to this clause (1) more than once every two years (such time
period to commence upon the expiration of the end of the one hundred eighty
(180) day period referred to above); and
(2) the Corporation shall not be required to effect a
registration on Form S-1 if it has filed and has maintained an effective "shelf"
Registration Statement on Form S-3 pursuant to Section 2.1(c) and such Form S-3
is permitted to be used by the Holders demanding registration.
(c) Shelf Registration. If requested by Holders of a majority of the
Registrable Securities as to which registration has been requested pursuant to
this Section 2.1, and if the Corporation is eligible to file such Registration
Statement on Form S-3, the Registration Statement covering such Registrable
Securities shall provide for the sale by the Holders thereof of the Registrable
Securities from time to time on a delayed or a continuous basis under Rule 415
under the Securities Act. If more than one underwritten offering
<PAGE>
is requested under any particular shelf registration, each such additional
underwritten offering shall constitute a separate "demand" registration for
purposes of Section 2.1.
(d) Effective Registration Statement. A registration requested
pursuant to Section 2.1 shall not be deemed to have been effected unless it is
declared effective by the SEC and remains effective for the period specified in
Section 2.3(b). Notwithstanding the preceding sentence, a registration requested
pursuant to Section 2.1 that does not become effective after the Corporation has
filed a Registration Statement with respect thereto by reason of the refusal to
proceed of the Holders of Registrable Securities requesting the registration, or
by reason of a request by a majority of the Selling Holders participating in
such registration that such registration be withdrawn, shall be deemed to have
been effected by the Corporation at the request of such Holders.
(e) Pro Rata Allocation. If the Corporation determines, based on
consultation with the managing underwriters or, in an offering which is not
underwritten, with an investment banker, that the number of securities to be
sold in any such offering should be limited due to market conditions or
otherwise, Holders of Registrable Securities proposing to sell their securities
in such registration shall share pro rata in the number of securities being
offered (as determined by the Holders holding a majority of the Registrable
Securities for which registration is being requested in consultation with the
managing underwriters or investment banker, as the case may be) and registered
for their account, such sharing to be based on the number of Registrable
Securities as to which registration was requested by such Holders.
(f) Inclusion of Other Securities in Demand Registration.
Notwithstanding any other provision of this Section 2.1, and subject to the
Registration Rights Agreement dated February 21, 1990 (the "1990 Registration
Rights Agreement") by and among the Corporation, Wells Fargo Bank, N.A., a
national banking association, BK Capital Partners I, BK Capital Partners II, BK
Capital Partners III, Executive Life Insurance Company, Novato Partners, the
Common Fund, Richard C. Blum & Associates I, and the Management Holders (as
defined therein):
(i) The Corporation may, subject to the remainder of this
Section 2.1(f), elect to include in any Registration Statement made pursuant to
Section 2.1(a), authorized but unissued shares of Common Stock or shares of
Common Stock held as treasury stock;
(ii) The Corporation shall not register securities (other than
Registrable Securities) for sale for the account of any Person (other than the
Corporation) in any registration requested pursuant to Section 2.1(a); and
(iii) If any Registration Statement made pursuant to Section
2.1(a) involves an underwritten offering and the managing underwriter of such
offering (or, in connection with an offering that is not underwritten, an
investment banker) shall
<PAGE>
advise the Corporation that, in its view, the number of securities requested to
be included in such Registration exceeds the largest number that can be sold in
an orderly manner in such offering within a price range acceptable to the
selling Holders, the Corporation shall include in such Registration:
(1) first, all shares of Common Stock requested to be
included in such Registration by the selling Holders as provided in Section
2.1(e); and
(2) second, to the extent that the number of securities to
be registered pursuant to clause (1) is less than the largest number that can be
sold in an orderly manner in such offering within a price range acceptable to
the selling Holders, securities that the Corporation proposes to register.
2.1 Piggyback Registration. If the Corporation at any time proposes to
----------------------
register any of its common stock under the Securities Act (other than a
Registration relating solely to the sale of securities to participants in a
Company stock plan, on Form S-4 with respect to any merger, consolidation or
acquisition, pursuant to Section 2.1 or pursuant to a Special Registration),
whether or not for sale for its own account, and the registration form to be
used may be used for the registration of Registrable Securities, it shall each
such time give prompt written notice to all Holders of Registrable Securities of
its intention to do so and, upon the written request of any Holder of
Registrable Securities given to the Corporation within 10 days after the
Corporation has given any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Corporation will use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Corporation has been so requested to register by the
Holders thereof, to the extent required to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of the Registrable Securities so
to be registered, provided that:
(a) if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the Registration
Statement filed in connection with such registration, the Corporation shall
determine for any reason not to register such securities, the Corporation may,
at its election, give written notice of such determination to each Holder that
was previously notified of such registration and, thereupon, shall not register
any Registrable Securities in connection with such registration (but shall
nevertheless pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of any Holders to request that a registration
be effected under Section 2.1; and
(b) if the Corporation shall be advised in writing by the managing
underwriters (or, in connection with an offering which is not underwritten, by
an investment banker) that in their or its opinion the number of securities
requested to be included in such registration (whether by the Corporation,
pursuant to this Section 2.2 or pursuant to any other rights granted by the
Corporation to a holder or holders of its securities to request or demand such
registration or inclusion of any such securities in any
<PAGE>
such registration) exceeds the number of such securities which can be sold in
such offering in an orderly manner within a price range that is acceptable to
the Corporation, the Corporation shall include in such Registration:
(i) first, all shares of Common Stock that the Company proposes
to register for its own account; and
(ii) subject to the 1990 Registration Rights Agreement:
(1) second, to the extent that the number of shares
registered pursuant to clause (i) is less than the largest number that can be
sold in an orderly manner in such offering within a price range acceptable to
the Corporation, the Registrable Securities requested to be included by the
Holders; and
(2) third, to the extent that the number of shares
registered pursuant to clauses (i) and (ii) is less than the largest number that
can be sold in an orderly manner in such offering within a price range
acceptable to the Corporation, the securities requested to be included by any
other holders, and the Corporation shall so provide in any registration
agreement hereinafter entered into with respect to any of its securities.
The securities to be included in any such registration pursuant to clause (ii)
or (iii) shall be allocated on a pro rata basis among all holders requesting
that securities be included in such registration pursuant to such clause on the
basis of the number of securities requested to be included by such holders. No
registration effected under this Section 2.2 shall relieve the Corporation from
its obligation to effect registrations upon request under Section 2.1. The
Corporation shall not be obligated to cause any "piggyback" registration to be
underwritten.
2.3 Registration Procedures. If and whenever the Corporation is required
-----------------------
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 2.1 and 2.2, the Corporation
shall:
(a) prepare and file with the SEC, as soon as practicable, a
Registration Statement with respect to such securities, make all required
filings with the NYSE and use best efforts to cause such Registration Statement
to become effective at the earliest possible date;
(b) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the Prospectus used in connection therewith and
such other documents as may be necessary to keep such Registration Statement
effective until the earlier of (i) 30 days after the effective date of such
Registration Statement (360 days in the case of a Shelf Registration pursuant to
Section 2.1(c)) or (ii) the consummation of the disposition by the Holders of
all the Registrable Securities covered by such
<PAGE>
Registration Statement and otherwise comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement;
(c) furnish to counsel (if any) selected by the Holders of a majority
of the Registrable Securities covered by such Registration Statement and to
counsel for the underwriters in any underwritten offering copies of all
documents proposed to be filed with the SEC in connection with such registration
a reasonable time prior to the proposed filing thereof and give reasonable
consideration in good faith to any comments of such Holders, counsel and
underwriters. The Corporation shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto pursuant to a registration
under Section 2.1(a) if the Holders of a majority of the Registrable Securities
covered by such Registration Statement, their counsel, or the underwriters, if
any, shall reasonably object in writing;
(d) furnish to each seller of Registrable Securities, without charge,
such reasonable number of conformed copies of such Registration Statement and of
each such amendment and supplement thereto (in each case, including all exhibits
(including exhibits incorporated by reference), financial statements, schedules
and all documents incorporated therein, deemed to be incorporated therein by
reference or filed therewith, except that the Corporation shall not be obligated
to furnish any seller of securities with more than two copies of such exhibits
and documents), such number of copies of the Prospectus included in such
Registration Statement (including each preliminary prospectus and any summary
prospectus) in conformity with the requirements of the Securities Act, and such
other documents, as such seller may reasonably request in order to facilitate
the disposition of the securities owned by such seller;
(e) use its best efforts to register or qualify and cooperate with
the Holders of Registrable Securities, the underwriters and their respective
counsels in connection with the registration or qualification (or exemption from
such registration or qualification) of the securities covered by such
Registration Statement under such other securities or blue sky laws of such
jurisdictions as each seller shall request; provided, however, that where
Registrable Securities are offered other than through an underwritten offering,
the Corporation agrees to cause its counsel to perform blue sky investigations
and file registrations and qualifications required to be filed pursuant to this
Section 2.3(e); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be effective hereunder and do any and all other acts and things which may be
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the securities owned by such seller, except that the
Corporation shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified, subject itself to taxation in any jurisdiction wherein it is not so
subject, or take any action which would subject it to general service of process
in any jurisdiction wherein it is not so subject;
<PAGE>
(f) (i) notify each Holder of Registrable Securities subject to such
Registration Statement if such Registration Statement, at the time it or any
amendment thereto became effective, (x) contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading upon discovery by the
Corporation of such material misstatement or omission or (y) upon discovery by
the Corporation of the happening of any event as a result of which the
Corporation believes there would be such a material misstatement or omission,
and, as promptly as practicable, prepare and file with the SEC a post-effective
amendment to such registration statement and use best efforts to cause such
post-effective amendment to become effective such that such registration
statement, as so amended, shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and (ii) notify each Holder of
Registrable Securities subject to such Registration Statement, at any time when
a Prospectus relating thereto is required to be delivered under the Securities
Act, if the Prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading in each case upon discovery by the Company of such material
misstatement or omission or upon discovery by the Corporation of the happening
of any event as a result of which the Company believes there would be a material
misstatement or omission, and, as promptly as is practicable, prepare and
furnish to such Holder a reasonable number of copies of a supplement to or an
amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such Prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable, an earnings statement of the Corporation
complying with the provisions of Section 11(a) of the Securities Act and Rule
158 under the Securities Act (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month period (or
90 days after the end of any 12-month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable Securities
are sold to an underwriter or to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to an underwriter or to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Corporation after the effective date of the relevant
Registration Statement, which statements shall cover said 12-month periods;
(h) promptly notify each Holder of any Registrable Securities covered
by such Registration Statement, their counsel and the underwriters (i) when such
Registration Statement, or any post-effective amendment to such Registration
Statement, shall have become effective, or any amendment of or supplement to the
Prospectus used
<PAGE>
in connection therewith shall have been filed, (ii) of any request by the SEC to
amend such Registration Statement or to amend or supplement such Prospectus or
for additional information, (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of such Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
or threatening of any proceedings for any of such purposes, (iv) of the
suspension of the qualification of such securities for offering or sale in any
jurisdiction, or of the institution of any proceedings for any of such purposes
and (v) if at any time when a Prospectus is to be required by the Securities Act
to be delivered in connection with the sale of the Registrable Securities, the
representations and warranties of the Company contained in the underwriting
agreement contemplated in Section 2.4(b) below, to the knowledge of the
Corporation, cease to be true and correct in any material respect;
(i) use its best efforts to prevent the issuance of any order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities covered
thereby for sale in any jurisdiction, and, if any such order is issued, to
obtain the withdrawal of any such order at the earliest possible moment;
(j) if requested by the managing underwriter, if any, or the Holders
of a majority of the Registrable Securities being sold in connection with an
underwriting offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter, if any,
or such Holders reasonably request to be included therein to comply with
applicable law and (ii) make all required filings of such prospectus supplement
or such post-effective amendment as soon as practicable after the Corporation
has received notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;
(k) cooperate with the Holders and the managing underwriter, if any,
to facilitate the timely preparation and delivery of new certificates
representing Registrable Securities to be sold against delivery by the Holders
of any old certificates representing such Registrable Securities, which new
certificates shall not bear any restrictive legends whatsoever and shall be in a
form eligible for deposit with DTC, and enable such Registrable Securities to be
in such denominations and registered in such names as the underwriters, if any,
or Holders may reasonably request at least two business days prior to any sale
of Registrable Securities in a firm commitment underwritten public offering;
(l) prior to the effective date of the Registration Statement, (i)
provide the registrar for the Common Stock or such other Registrable Securities
with printed certificates for such securities in a form eligible for deposit
with DTC and (ii) provide a CUSIP number for such securities;
<PAGE>
(m) cause the Conversion Shares and Repurchase Shares, and use its
best efforts to cause the Series A Preferred Stock and Series C Preferred Stock,
to be admitted for trading on the NYSE (or such other exchange or automated
trading system as shall be the primary trading system or exchange for the Common
Stock) in the event that the Registrable Securities covered by such Registration
Statement include any Series A Preferred Stock, Series C Preferred Stock,
Conversion Shares and Repurchase Shares not already so listed; and
(n) have the right -- if the Board of Directors of the Company, in its
good faith judgment, determines that any Registration of shares of Common Stock
should not be made or continued because it would materially interfere with any
material financing, acquisition, corporation reorganization, merger, or other
transaction involving the Company or any of its subsidiaries, or would require
premature disclosure of material non-public information (a "Valid Business
Reason") -- (i) to postpone filing a Registration Statement until such Valid
Business Reason no longer exists, but in no event for more than 180 days, and
(ii) to cause any Registration Statement that has already been filed to be
withdrawn and its effectiveness terminated or to postpone amending or
supplementing such Registration Statement until such Valid Business Reason no
longer exists, but in no event for more than 90 days (the "Postponement
Period"); provided, however, that in no event shall the Company be permitted to
postpone or withdraw a Registration Statement within 180 days after the
expiration of the Postponement Period; and
(o) have the right to require each Holder of any Registrable
Securities as to which any registration is being effected to furnish to the
Corporation such information regarding such Holder and the distribution of such
securities as the Corporation may from time to time reasonably request in
writing and as shall be required by law in connection therewith. Each such
Holder agrees to furnish promptly to the Corporation all information required to
be disclosed in order to make the information previously furnished to the
Corporation by such Holder not materially misleading. The Corporation agrees
not to file or make any amendment to any Registration Statement with respect to
any Registrable Securities, or any amendment of or supplement to the Prospectus
used in connection therewith, which refers to any seller of any securities
covered thereby by name, or otherwise identifies such seller as the holder of
any securities of the Corporation, without the consent of such seller, such
consent not to be unreasonably withheld, except that no such consent shall be
required for any disclosure that is required by law. By the acquisition of
Registrable Securities, each Holder shall be deemed to have agreed that upon
receipt of any notice from the Corporation pursuant to Section 2.3(f) or (n),
such Holder will promptly discontinue such Holder's disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Holder shall have received, in the case of clause (i) of
Section 2.3(f), notice from the Corporation that such Registration Statement has
been amended, as contemplated by Section 2.3(f); in the case of clause (ii) of
Section 2.3(f), copies of the supplemented or amended Prospectus contemplated by
Section 2.3(f); or, in the case of Section 2.3(n), the time period specified has
elapsed or such Holder has received notice
<PAGE>
from the Corporation that the Postponement Period has been terminated. If so
directed by the Corporation, each Holder will deliver to the Corporation (at the
Corporation's expense) all copies, other than permanent file copies, in such
Holder's possession of the Prospectus covering such Registrable Securities at
the time of receipt of such notice. In the event that the Corporation shall give
any such notice, the period mentioned in Section 2.3(b) shall be extended by the
number of days during the period from and including the date of the giving of
such notice to and including the date when each seller of any Registrable
Securities covered by such Registration Statement shall have received the copies
of the supplemented or amended Prospectus contemplated by Section 2.3(f).
2.1 Underwritten Offerings. The provisions of this Section 2.4 do not
----------------------
establish additional registration rights but instead set forth procedures
applicable, in addition to those set forth in Sections 2.1 through 2.3, to any
registration that is an underwritten offering.
(a) Underwritten Offerings Exclusive. Whenever a registration
requested pursuant to Section 2.1 is for an underwritten offering, only
securities that are to be distributed by the underwriters may be included in the
registration.
(b) Underwriting Agreement. If requested by the underwriters for any
underwritten offering by Holders pursuant to a registration requested under
Section 2.1, the Corporation shall enter into an underwriting agreement with
such underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Holders of a majority of the
Registrable Securities to be covered by such registration and to the
underwriters and to contain such representations and warranties by the
Corporation and such other terms and provisions as are customarily contained in
agreements of this type, including, but not limited to, indemnities to the
effect and to the extent provided in Section 2.7, provisions for the delivery of
officers' certificates, opinions of counsel and accountants' "cold comfort"
letters, and hold-back arrangements. The Holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting
agreement.
(c) Selection of Underwriters. Whenever a registration requested
pursuant to Section 2.1 is for an underwritten offering, the Holders of a
majority of the Registrable Securities to be registered pursuant to such
offering shall have the right to select one or more underwriters to administer
the offering, subject to the consent of the Corporation, which shall not be
unreasonably withheld. If the Corporation at any time proposes to register any
of its securities under the Securities Act for sale for its own account and such
securities are to be distributed by or through one or more underwriters, the
Corporation shall have the right to select one or more underwriters to
administer the offering, subject to the consent of the Holders of a majority of
Registrable Securities to be registered pursuant to such offering, which shall
not be unreasonably withheld. In all cases in this Section 2.4(c), at least one
of the underwriters chosen by the Holders or the Corporation shall be an
underwriter of nationally recognized standing.
<PAGE>
(d) Hold Back Agreements. If and whenever the Corporation proposes to
register any of its equity securities under the Securities Act, whether or not
for its own account (other than pursuant to a Special Registration), or is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 2.1 or 2.2, each Holder,
if required by the managing underwriter in an underwritten offering, agrees by
acquisition of such Registrable Securities not to effect (other than pursuant to
such registration) any public sale or distribution, including, but not limited
to, any sale pursuant to Rule 144, of any Registrable Securities, any other
equity securities of the Corporation or any securities convertible into or
exchangeable or exercisable for any equity securities of the Corporation during
the 10 days prior to, and for 180 days after, the effective date of such
registration, to the extent timely notified in writing by the Corporation or the
managing underwriter, and the Corporation agrees to cause each holder of any
equity security, or of any security convertible into or exchangeable or
exercisable for any equity security, of the Corporation purchased from the
Corporation at any time other than in a public offering to enter into a similar
agreement with the Corporation. The foregoing provisions shall not apply to any
Holder if such Holder is prevented by applicable statute or regulation from
entering into any such agreement; provided, however, that any such Holder shall
undertake, in its request to participate in any such underwritten offering, not
to effect any public sale or distribution of any applicable class of Registrable
Securities commencing on the date of sale of such applicable class of
Registrable Securities unless it has provided 45 days prior written notice of
such sale or distribution to the underwriter or underwriters. The Corporation
further agrees not to effect (other than pursuant to such registration or
pursuant to a Special Registration) any public sale or distribution, or to file
any Registration Statement (other than such registration or a Special
Registration) covering any, of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
10 days prior to, and for 90 days after, the effective date of such registration
if required by the managing underwriter.
(e) in connection with an underwritten public offering only, furnish
to each underwriter
(i) an opinion of counsel for the Corporation experienced in
securities law matters, dated the effective date of the Registration Statement,
and
(ii) a "cold comfort" letter signed by the independent public
accountants who have issued an audit report on the Corporation's financial
statements included in the Registration Statement, subject to each seller having
executed and delivered to the independent public accountants such certificates
and documents as such accountants shall reasonably request, covering
substantially the same matters with respect to the Registration Statement (and
the Prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to the underwriters in underwritten public offerings of
securities.
<PAGE>
2.5 Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each Registration Statement registering Registrable
Securities under the Securities Act, the Corporation shall give the Holders of
such Registrable Securities so to be registered and their underwriters, if any,
and their respective counsel and accountants, the opportunity to participate in
the preparation of such Registration Statement, each Prospectus included therein
or filed with the SEC, and each amendment thereof or supplement thereto, and
shall give each of them such access to all pertinent financial, corporate and
other documents and properties of the Corporation and its Subsidiaries, and such
opportunities to discuss the business of the Corporation with its officers,
directors, employees and the independent public accountants who have issued
audit reports on its financial statements as shall be necessary, in the
reasonable opinion of such Holders' and such underwriters' respective counsel,
to conduct a reasonable investigation within the meaning of the Securities Act.
2.6 to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 2.1 or 2.2, and if such
registration shall not have been withdrawn or abandoned, the Corporation shall
not be obligated to and shall not file any Registration Statement with respect
to any of its securities (including Registrable Securities) under the Securities
Act (other than a Special Registration), whether of its own accord or at the
request or demand of any holder or holders of such securities, until a period of
180 days shall have elapsed from the effective date of such previous
registration, provided that the Corporation shall not be excused from filing a
registration statement by virtue of this Section 2.6 more than once in a 360 day
period.
2.7 Indemnification.
---------------
(a) Indemnification by the Corporation. In the event of any
registration of any Registrable Securities under the Securities Act pursuant to
Section 2.1 or 2.2, the Corporation shall indemnify and hold harmless the seller
of such securities, its directors, officers, and employees, each other person
who participates as an underwriter, broker or dealer in the offering or sale of
such securities and each other person, if any, who controls such seller or any
such participating person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all losses,
claims, damages or liabilities, joint or several, to which such seller or any
such director, officer, employee, participating person or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such securities were registered under the Securities Act, any Prospectus or
preliminary prospectus included therein, or any amendment or supplement thereto,
or (ii) any omission or alleged omission to state a material fact required to be
stated in any such Registration Statement, Prospectus, preliminary prospectus,
amendment or supplement or necessary to make the statements therein not
misleading; and the Corporation shall reimburse such seller and each such
director, officer, employee, participating person and controlling person for any
legal or any other
<PAGE>
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding as such expenses
are incurred; provided that the Corporation shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or expense arises out
of or is based upon an untrue statement or omission made in any such
Registration Statement, Prospectus, preliminary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Corporation by such seller or participating person expressly for use in
the preparation thereof; provided further that the Corporation shall not be
liable and indemnification shall not apply to amounts paid in any settlement
effected without the consent of the Corporation.
(b) Indemnification by the Sellers. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to Section 2.1
or 2.2, each of the prospective sellers of such securities, will indemnify and
hold harmless the Corporation, each director of the Corporation, each officer of
the Corporation who shall sign such Registration Statement, and each other
person, if any, who controls the Corporation or any such participating person
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any and all losses, claims, damages or liabilities, joint
or several, to which the Corporation or any such director, officer, employee,
participating person or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement under which such securities were
registered under the Securities Act, any Prospectus or preliminary prospectus
included therein, or any amendment or supplement thereto, or any omission or
alleged omission to state a material fact with respect to such seller required
to be stated in any such Registration Statement, Prospectus, preliminary
prospectus, amendment or supplement or necessary to make the statements therein
not misleading if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Corporation by such seller
expressly for use in the preparation of any such Registration Statement,
Prospectus, preliminary prospectus, amendment or supplement; provided that the
liability of each such seller shall be in proportion to and limited to the gross
amount received by such seller from the sale of Registrable Securities pursuant
to such Registration Statement; provided further that any Seller shall not be
liable and indemnification shall not apply to amounts paid in any settlement
effected without the consent of that Seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 2.7, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party hereunder, give prompt written notice to the latter of the
commencement of such action, provided that the failure of any indemnified party
to give notice as provided therein shall not relieve the indemnifying party of
its obligations under the preceding paragraphs of this Section 2.7 unless the
failure to provide prompt written notice shall cause actual prejudice to the
<PAGE>
indemnifying party. In case any such action is brought against an indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to retain counsel reasonably
satisfactory to such indemnified party to defend against such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel
and the payment of such fees by the indemnifying party or (ii) the named parties
to any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them or (iii) the indemnifying party has not retained counsel
to defend such proceeding, in which case (under any of such clauses (i), (ii) or
(iii)) it is understood that (x) the indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees and expenses of more than one separate firm for all such
indemnified parties and (y) such firm shall be designated in writing by the
Holders of a majority of the Registrable Securities included in such
Registration Statement in the case of parties indemnified pursuant to Section
2.7(a) and by the Corporation in the case of parties indemnified pursuant to
Section 2.7(b). All fees and expenses that an indemnified party is entitled to
receive from an indemnifying party under this Section 2.7 shall be reimbursed as
they are incurred, provided that each such indemnified party shall promptly
repay such fees and expenses if it is finally judicially determined that such
indemnified party is not entitled to indemnification hereunder. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of such indemnified party, which consent shall not be unreasonably
withheld, consent to entry of any judgment or enter into any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that specified
in the preceding paragraphs of this Section 2.7 (with appropriate modifications)
shall be given by the Corporation and each seller of Registrable Securities with
respect to any required registration or other qualification of such Registrable
Securities under any federal or state law or regulation of governmental
authority other than the Securities Act.
(e) Other Remedies. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other
<PAGE>
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Corporation or the Holders of Registrable Securities
covered by the Registration Statement in question and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Corporation and the Holders agree that it would
not be just and equitable if contribution pursuant to this Section 2.7 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph of this Section 2.7 shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. No party shall be liable for contribution under
this Section 2.7(e) except to the extent and under such circumstances as such
party would have been liable to indemnify under this Section 2.7 if such
indemnification were enforceable under applicable law.
(f) Officers and Directors. As used in this Section 2.7, the terms
"officers" and "directors" shall include the partners of Holders which are
partnerships and the members of Holders which are limited liability companies.
2.8 Expenses. The Corporation shall pay all Registration Expenses in
--------
connection with each registration of Registrable Securities pursuant to this
Section 2, as provided in this Agreement.
ARTICLE III
MISCELLANEOUS
3.1 Legended Securities; etc. The Corporation shall issue new
------------------------
certificates for Registrable Securities without a legend restricting further
transfer if (I) such securities have been sold to the public pursuant to an
effective Registration Statement under the Securities Act (other than Form S-8
if the Holder of such Registrable Securities is an Affiliate) or Rule 144, or
(ii) (x) such issuance is otherwise permitted under the Securities Act, (y) the
Holder of such shares has delivered to the Corporation an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to the Corporation,
to such effect and (z) the Holder of such shares expressly requests the issuance
of such certificates in writing.
<PAGE>
3.2 Amendments and Waivers. This Agreement may be amended, modified or
----------------------
supplemented, and the Corporation may take any action herein prohibited, or omit
to perform any act herein required to be performed by it, only if the
Corporation shall have obtained the written consent to such amendment, action or
omission to act, of the Holder or Holders of at least a majority of the
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders whose securities are being sold pursuant to
a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders may be given by Holders
of at least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; provided, however, that the provisions
-------- -------
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence. No
amendment, modification or discharge of this Agreement, and no waiver hereunder,
shall be valid or binding unless set forth in writing. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party or parties granting
such waiver in any other respect or at any other time.
3.3 Nominees for Beneficial Owners. In the event that any Registrable
------------------------------
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election and unless notice is otherwise
given to the Corporation by the record owner, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any Holder
or Holders pursuant to this Agreement or any determination of any number or
percentage of shares of Registrable Securities held by any Holder or Holders
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Corporation may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
3.4 Successors, Assigns and Transferees. This Agreement shall be binding
-----------------------------------
upon and shall inure to the benefit of the parties hereto and their respective
successors assign and transferees. Purchaser or a Holder may assign its rights
hereunder in whole or in part to an Affiliate or to a Distributee or to other
successors, assigns and transferees of Purchaser or such Holder; provided that
such Affiliate, Distributee or successor, assignee or transferee expressly
agrees to be bound by this Agreement by written supplement. This Agreement
shall survive any transfer of Registrable Securities to and shall inure to the
benefit of an Affiliate, a Distributee or such other successors, assigns and
transferees of Purchaser or such Holder.
<PAGE>
3.5 Notices. All notices or other communications given or made under this
-------
Agreement shall be validly given or made if in writing and delivered by
facsimile transmission or in person at, or mailed by overnight courier to, the
following addresses (and shall be deemed effective at the time of receipt
thereof):
If to Seller:
URS Corporation
100 California Street, Suite 500
San Francisco, California 94111
Attn: Kent P. Ainsworth
Facsimile: (415) 398-2621
with a copy to:
Cooley Godward LLP
One Maritime Plaza, 20th Floor
San Francisco, California 94111-3580
Attn: Samuel M. Livermore
Facsimile: (415) 951-3699
If to Purchaser:
RCBA Strategic Partners, L.P.
909 Montgomery Street, Suite 400
San Francisco, California 94133
Attn: Murray A. Indick
Facsimile: (415) 434-3130
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attn: Michael R. Klein and Eric R. Markus
Facsimile: (202) 663-6363
or to such other address as the party to whom notice is to be given may have
previously furnished notices to the other in the manner set forth above.
3.6 No Inconsistent Agreements. The Corporation shall not hereafter enter
--------------------------
into any agreement, or amend any existing agreement, with respect to its
securities if such agreement would be inconsistent with the rights granted to
the Holders by this Agreement.
3.7 Remedies; Attorneys' Fees. Each Holder of Registrable Securities, in
-------------------------
addition to being entitled to exercise all rights provided herein or granted by
law,
<PAGE>
including recovery of damages, shall be entitled to specific performance of its
rights under this Agreement. The Corporation agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any provision of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate. As
between the parties to this Agreement, in any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorney's fees in addition to its costs and expenses and any other
available remedy.
3.8 Severability. If any clause, provision or section of this Agreement
------------
shall be invalid, illegal or unenforceable, the invalidity, illegality or
unenforceability of such clause, provision or section shall not affect the
enforceability or validity of any of the remaining clauses, provisions or
sections hereof to the extent permitted by applicable law. The invalidity of any
one or more phrases, sentences, clauses, Sections or subsections of this
Agreement shall not affect the remaining portions of this Agreement.
3.9 Headings. The headings contained in this Agreement are for purposes of
--------
convenience only and shall not affect the meaning or interpretation of this
Agreement.
3.10 Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original and all of which together constitute
one and the same instrument.
3.11 No Third Party Beneficiaries. Except as provided in Sections 2.7 and
----------------------------
3.4, nothing in this Agreement shall confer any rights upon any person or entity
other than the parties hereto, each such party's respective successors and
permitted assigns.
3.12 Governing Law; Jurisdiction. This Agreement shall be governed by and
---------------------------
construed in accordance with the laws of the State of Delaware as applied to
contracts made and performed within the State of Delaware, without regard to
principles of conflicts of law.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or
caused this Agreement to be executed on its behalf as of the date first written
above.
RCBA STRATEGIC PARTNERS, URS CORPORATION
L.P.
By: /s/ Murray A. Indick By: /s/ Kent P. Ainsworth
-------------------- ---------------------
Name: Murry A. Indick Name: Kent P. Ainsworth
Title: Member Title: Executive Vice President
and Chief Financial
Officer
<PAGE>
Exhibit 23.1
The Board of Directors
Dames and Moore Group:
We consent to the inclusion of our report dated May 21, 1999 with respect to the
consolidated statements of financial position of Dames and Moore Group and
subsidiaries as of March 26, 1999 and March 27, 1998, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the years in the three-year period ended March 26, 1999, which
report appears in the Form 8-K of URS Corporation.
/s/ KPMG LLP
Los Angeles, California
June 10, 1999
<PAGE>
EXHIBIT 99.2
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Consolidated Statements of Financial Position as of March 26, 1999 and
March 27, 1998........................................................... F-3
Consolidated Statements of Operations for the years ended March 26, 1999,
March 27, 1998 and March 28, 1997........................................ F-4
Consolidated Statements of Changes in Shareholders' Equity for the years
ended March 26, 1999, March 27, 1998 and March 28, 1997.................. F-5
Consolidated Statements of Cash Flows for the years ended March 26, 1999,
March 27, 1998 and March 28, 1997........................................ F-6
Notes to Consolidated Financial Statements................................ F-7
Supplementary Financial Information--Selected Quarterly Financial Data
(unaudited).............................................................. F-26
Schedule II--Valuation and Qualifying Accounts............................ F-27
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
Dames & Moore Group
We have audited the consolidated financial statements of Dames & Moore Group
and subsidiaries as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we have also audited the
financial statement schedule listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dames &
Moore Group and subsidiaries as of March 26, 1999 and March 27, 1998 and the
results of their operations and their cash flows for each of the years in the
three-year period ended March 26, 1999 in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ KPMG LLP
-------------------------------------
KPMG LLP
Los Angeles, California
May 21, 1999
F-2
<PAGE>
DAMES & MOORE GROUP
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
March
26, March 27,
1999 1998
-------- ---------
<S> <C> <C>
ASSETS
Current:
Cash and cash equivalents................................ $ 15,880 $ 9,493
Marketable securities.................................... 336 1,031
Accounts receivable, net of allowance for doubtful
accounts of: 1999--$9,526 and 1998--$3,408.............. 193,051 135,298
Billed contract retentions............................... 22,071 10,992
Unbilled................................................. 98,256 55,844
-------- --------
Total accounts receivable.............................. 313,378 202,134
Deferred income taxes.................................... 10,705 4,303
Prepaid expenses and inventories......................... 14,841 7,310
Other current assets..................................... 11,366 3,858
-------- --------
Total current assets................................... 366,506 228,129
Property and equipment, net................................ 57,518 23,397
Goodwill of acquired businesses, net of accumulated
amortization of: 1999--$20,070 and 1998--$12,535.......... 159,918 117,849
Investments in affiliates.................................. 10,461 4,868
Other assets............................................... 40,176 12,118
-------- --------
$634,579 $386,361
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Current portion of long-term debt........................ $ 18,433 $ 9,614
Accounts payable......................................... 57,842 31,990
Accrued payroll and employee benefits.................... 38,934 26,364
Current income taxes payable............................. 6,245 6,864
Accrued expenses and other liabilities................... 60,882 23,727
-------- --------
Total current liabilities.............................. 182,336 98,559
Long-term debt............................................. 284,147 132,010
Other long-term liabilities................................ 21,176 5,883
Contingencies (Note 11)
Shareholders' equity:
Preferred stock, $0.01 par value, shares authorized:
1,000,000; shares issued: none.......................... -- --
Common stock and capital in excess of $0.01 par value,
shares authorized: 54,000,000; shares issued: 1999--
22,781,000, 1998--22,740,000............................ 108,045 107,512
Retained earnings........................................ 102,264 104,952
Treasury stock: 1999--4,451,000, 1998--4,573,000 shares.. (59,373) (61,157)
Accumulated other comprehensive income................... (3,594) (1,289)
Other shareholders' equity............................... (422) (109)
-------- --------
Total shareholders' equity............................. 146,920 149,909
-------- --------
$634,579 $386,361
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
DAMES & MOORE GROUP
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March March
March 26, 27, 28,
1999 1998 1997
---------- -------- --------
<S> <C> <C> <C>
Gross revenues................................ $1,029,967 $703,902 $653,378
Direct costs of outside services.............. 390,621 221,398 198,970
---------- -------- --------
Net revenues................................ 639,346 482,504 454,408
---------- -------- --------
Operating expenses:
Salaries and related costs.................. 445,594 337,474 315,896
General expenses............................ 123,206 88,401 86,275
Depreciation and amortization............... 12,840 9,216 8,832
Amortization of goodwill.................... 5,504 4,600 3,893
Acquisition related restructuring and other
charges.................................... 28,276 -- 2,651
---------- -------- --------
615,420 439,691 417,547
---------- -------- --------
Earnings from operations...................... 23,926 42,813 36,861
Investment and other income................. 1,231 997 2,014
Interest expense............................ (18,481) (10,292) (7,386)
---------- -------- --------
Earnings before income taxes.................. 6,676 33,518 31,489
Income taxes................................ 4,129 14,188 12,949
---------- -------- --------
Earnings before extraordinary item............ $ 2,547 $ 19,330 $ 18,540
Extraordinary item (less applicable income tax
benefit of $1,737)........................... (2,850) -- --
---------- -------- --------
Net (loss) earnings........................... $ (303) $ 19,330 $ 18,540
========== ======== ========
Basic earnings (loss) per share:
Earnings before extraordinary item.......... $ 0.14 $ 1.08 $ 0.91
Extraordinary item.......................... (0.16) -- --
---------- -------- --------
$ (0.02) $ 1.08 $ 0.91
========== ======== ========
Weighted average number of shares............. 18,237 17,890 20,287
========== ======== ========
Diluted earnings (loss) per share:
Earnings before extraordinary item.......... $ 0.14 $ 1.07 $ 0.91
Extraordinary item.......................... (0.16) -- --
---------- -------- --------
$ (0.02) $ 1.07 $ 0.91
========== ======== ========
Weighted average number of shares............. 18,319 18,048 20,446
========== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
DAMES & MOORE GROUP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
Common Accumulated
Stock & Other Other Comprehensive
Capital in Retained Treasury Comprehensive Shareholders' Earnings
Excess of Par Earnings Stock Income Equity (Loss)
------------- -------- -------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at March 29,
1996.................. $106,804 $ 75,295 $(13,859) $ -- $(293) --
Issued pursuant to
stock
option plan........... 438 -- -- -- (140) --
Net earnings........... -- 18,540 -- -- -- $18,540
Cash dividends, $0.12
per share............. -- (2,366) -- -- -- --
Treasury stock
acquired.............. -- -- (58,675) -- -- --
Treasury stock issued.. -- (3,490) 9,464 -- -- --
Amortization of
deferred
compensation.......... -- -- -- -- 218 --
Change in foreign
currency translation,
net of tax - $190..... -- -- -- (313) -- (313)
-------- -------- -------- ------- ----- -------
Balances at March 28,
1997.................. $107,242 $ 87,979 $(63,070) $ (313) $(215) $18,227
-------- -------- -------- ------- ----- =======
Issued pursuant to
stock
option plan........... 450 -- -- -- (100) --
Restricted shares
repurchased........... (180) -- -- -- 15 --
Net earnings........... -- 19,330 -- -- -- 19,330
Cash dividends, $0.12
per share............. -- (2,168) -- -- -- --
Treasury stock
acquired.............. -- -- (350) -- -- --
Treasury stock issued.. -- (189) 2,263 -- -- --
Amortization of
deferred
compensation.......... -- -- -- -- 191 --
Unrealized gain on
securities,
net of tax - $17...... -- -- -- 30 -- 30
Change in foreign
currency translation,
net of tax - $613..... -- -- -- (1,006) -- (1,006)
-------- -------- -------- ------- ----- -------
Balances at March 27,
1998.................. $107,512 $104,952 $(61,157) $(1,289) $(109) $18,354
-------- -------- -------- ------- ----- =======
Issued pursuant to
stock
option plan........... 578 -- -- -- (140) --
Restricted shares
repurchased........... (60) -- (14) -- 20 --
Net (loss)............. -- (303) -- -- -- (303)
Cash dividends, $0.12
per share............. -- (2,203) -- -- -- --
Treasury stock
acquired.............. -- -- (745) -- -- --
Treasury stock issued.. 15 (182) 2,543 -- (412) --
Amortization of
deferred
compensation.......... -- -- -- -- 219 --
Unrealized loss on
securities, net of tax
- $110................ -- -- -- (196) -- (196)
Change in foreign
currency translation,
net of tax,
net of tax - $641..... -- -- -- (1,052) -- (1,052)
Minimum pension
liability,
net of tax - $678..... -- -- -- (1,057) -- (1,057)
-------- -------- -------- ------- ----- -------
Balances at March 26,
1999.................. $108,045 $102,264 $(59,373) $(3,594) $(422) $(2,608)
======== ======== ======== ======= ===== =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
DAMES & MOORE GROUP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------
March 26, March 27, March 28,
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)............................ $ (303) $ 19,330 $ 18,540
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization............... 20,789 14,032 12,943
Non-cash special charges.................... 26,976 -- --
Losses (earnings) from equity investments... 859 252 (80)
Deferred income taxes....................... (7,672) (354) (2,437)
Change in assets and liabilities net of
effects of purchases of businesses:
Marketable securities..................... -- 5,984 8,952
Accounts receivable....................... (48,130) (21,725) (24,297)
Prepaid expenses and other assets......... (13,319) (2,496) 1,285
Income tax receivable..................... (413) 593 121
Accounts payable and accrued expenses..... 23,116 3,404 (9,247)
--------- -------- --------
Net cash provided by operating activities....... 1,903 19,020 5,780
--------- -------- --------
Cash flows from investing activities:
Purchases of businesses, net of cash acquired.. (128,146) (13,463) (22,118)
Purchases of property and equipment............ (18,615) (11,958) (9,524)
Investments and other assets................... (10,188) (3,600) (18,630)
Proceeds from sales of investments and other
property...................................... 7,354 7,387 --
--------- -------- --------
Net cash used in investing activities........... (149,595) (21,634) (50,272)
--------- -------- --------
Cash flows from financing activities:
Repayments on lines of credit.................. (194,561) (21,000) --
Debt issuance costs............................ (3,867) -- --
Proceeds from debt instruments................. 355,080 22,700 62,551
Issuance of common stock....................... 428 364 357
Stock repurchased.............................. (798) (515) (58,675)
Dividends...................................... (2,203) (2,168) (2,366)
--------- -------- --------
Net cash (used) provided by financing
activities..................................... 154,079 ( 619) 1,867
--------- -------- --------
Net (decrease) increase in cash and cash
equivalents.................................... 6,387 (3,233) (42,625)
Cash and cash equivalents, beginning of year.... 9,493 12,726 55,351
--------- -------- --------
Cash and cash equivalents, end of year.......... $ 15,880 $ 9,493 $ 12,726
========= ======== ========
Supplemental disclosures of cash flow
information:
Interest paid.................................. $ 13,897 $ 9,785 $ 3,263
Income taxes paid.............................. 11,276 10,751 14,810
Non cash investing activities--business
acquisitions................................... 16,027 5,110 9,879
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
Note 1--Summary of Significant Accounting Policies:
Basis of Presentation:
The consolidated financial statements include the accounts of all majority-
owned domestic and foreign subsidiaries. Investments in companies in which
Dames & Moore Group (the "Company") does not have control, but has the ability
to exercise significant influence over operating and financial policies are
accounted for by the equity method. Other investments are accounted for by the
cost method. All significant intercompany transactions and balances have been
eliminated. Certain items in the prior years' financial statements have been
reclassified to be consistent with the 1999 presentation.
Use of Estimates in the Preparation of Consolidated Financial Statements:
The preparation of the consolidated financial statements, in conformity with
generally accepted accounting principles, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenue and expenses
during the reporting period. Actual results may differ from the estimates and
assumptions used in preparing the consolidated financial statements.
Cash and Cash Equivalents:
Cash and cash equivalents consist of unrestricted deposits with banks and
highly liquid investments with an original maturity of three months or less.
Marketable Securities:
Marketable securities consist of equity and debt securities that are
considered either available-for-sale or trading securities as defined by
Statement of Financial Accounting Standard (SFAS) No. 115. Debt securities
with maturity dates beyond a year are classified as Other Assets. Marketable
securities are recorded at fair market value. Changes in unrealized gains and
losses for trading securities are included in earnings; for available-for-sale
securities, they are charged or credited as a component of accumulated other
comprehensive income, net of tax. A decline in the fair value of an available-
for-sale security below cost that is deemed other than temporary is charged to
earnings. Management determines the appropriate classifications of investments
at the time of purchase and reevaluates such designations as of each balance
sheet date.
Depreciation and Amortization:
Property and equipment are depreciated on a straight-line basis over
estimated useful lives ranging from 3 to 10 years and leasehold improvements
are amortized over the lesser of estimated useful lives or the term of the
lease.
Goodwill of Acquired Businesses:
The goodwill of acquired businesses represents the difference between the
purchase cost and the fair value of the net assets of acquired businesses, and
is being amortized on a straight-line basis over 3 to 40 years. The Company
annually evaluates the realizability of goodwill based upon undiscounted
forecasted operating earnings over the remaining amortization period for each
investment having a significant goodwill balance. If an impairment in the
value of the goodwill were to occur, the Company would reflect the impairment
through a reduction in the carrying value of the goodwill based upon the
estimated fair value of the investment.
F-7
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 1--Summary of Significant Accounting Policies: (continued)
Foreign Currency Translation:
The functional currencies for the Company's significant foreign subsidiaries
and branches are their respective local currencies. The assets and liabilities
of these entities are translated into U.S. dollars using exchange rates in
effect at period end. Revenue and expenses are translated at the average rates
of exchange prevailing during the period. The resulting translation
adjustments are reported as a component of accumulated other comprehensive
income, net of tax. In situations where the functional currency is the U.S.
dollar, translation adjustments are included in earnings.
The Company enters into forward foreign currency exchange contracts to
reduce the impact of foreign currency fluctuations on certain project revenues
and costs, and the asset and liability positions of foreign subsidiaries. The
terms of the currency derivatives are generally one year or less. Commencing
in fiscal 1997 the gains or losses from these contracts are generally also
reported as a separate component of shareholders' equity; previously they were
included in earnings.
Recognition of Revenue:
The Company recognizes revenue generally at the time services are performed.
On fixed price contracts, revenue is recognized on the basis of the estimated
percentage of completion of services rendered. On cost reimbursement
contracts, revenue is recognized as costs are incurred and includes applicable
fees earned essentially in the proportion that costs incurred bear to total
estimated final costs. Materials and subcontract costs reimbursed by clients
are included in gross revenues. Anticipated losses are recognized in the
period in which the losses are reasonably determinable. Substantially all
unbilled receivables are expected to be collected within the next 12 months
and retentions at the close of the respective project. Approximately $7,157 of
unbilled receivables and contract retentions not collectible within 12 months
have been classified as other assets.
A major portion of contracts with the United States Government, are subject
to audit and adjustment. Revenue has been recorded in amounts expected to be
realized on final settlement.
Income Taxes:
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Tax provisions are recorded at statutory rates
for taxable items included in the consolidated statements of earnings
regardless of the period such items are reported for tax purposes. Deferred
income taxes are recognized for temporary differences between financial
statement and income tax bases of assets and liabilities for which income tax
effects will be realized in future years.
Stock-Based Compensation:
Prior to March 30, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. As such, compensation expense would be recorded on the date
of grant only if the current market price of the underlying stock exceeded the
exercise price. On March 30, 1996, the Company adopted SFAS No. 123,
"Accounting for Stock-Based Compensation," which permits entities to recognize
as expense over the vesting period the fair value of all stock-based awards on
the date of grant. Alternatively, SFAS No. 123 also allows entities to
continue to apply the provisions of APB Opinion No. 25 and provide pro forma
net income and proforma earning per share disclosures for employee stock
option grants made in fiscal 1996 and future years as if the fair-value-based
method defined in SFAS No. 123 had been applied. The Company has elected to
continue to apply the provisions of APB Opinion No. 25 and provide the pro
forma disclosure provisions of SFAS No. 123.
F-8
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 1--Summary of Significant Accounting Policies: (continued)
Earnings Per Share:
Basic earnings per share is computed by dividing net earnings by the
weighted-average number of common shares outstanding for the period. Diluted
earnings per share adjusts the weighted-average number of common shares to
reflect the potential dilution that could occur if restricted stock was
unrestricted and the assumed exercise of the dilutive stock options
outstanding. This change did not have a material impact on the computation of
the earnings per share data.
Comprehensive Income:
The Financial Accounting Standards Board issued SFAS No. 130, "Reporting
Comprehensive Income," which establishes new standards for reporting and
display of comprehensive income and its components. Other comprehensive income
refers to revenues, expenses, gains and losses that under generally accepted
accounting principles are included in comprehensive income but are excluded
from net earnings as these amounts are recorded directly as an adjustment to
shareholders' equity. The Company adopted SFAS No. 130 in fiscal 1999. The
Company's other comprehensive income is primarily comprised of foreign
currency translation adjustments, unrealized gain or loss on securities, and
adjustments made to recognize additional minimum liabilities associated with
the Company's defined benefit pension plans. Reclassifications related to the
components of other comprehensive income were not significant.
Segment and Related Information:
In 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
established new standards for reporting information about operating segments
in interim and annual financial statements, in accordance with the "management
approach," The management approach designates the internal reporting that is
used by management for making operating decisions and assessing performance as
the source of the Company's reportable segments. The Company adopted SFAS No.
131 with its annual financial statements ending March 26, 1999 which did
affect the disclosure of segment information but did not affect results of
operations or the financial position of the Company.
Recent Accounting Pronouncements:
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which requires
that an entity recognize all derivatives as either assets or liabilities in
the statement of financial position and measure all derivatives at fair value.
Implementation of this statement is effective for fiscal years beginning after
June 15, 1999 commencing with interim periods. The Company is in the process
of determining the impact that the adoption of SFAS No. 133 will have on its
financial position and results of operations.
Fiscal Year:
The Company uses a 52-53 week fiscal year ending the last Friday in March.
The fiscal years were comprised of 52 weeks in 1999, 1998 and 1997.
F-9
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 2--Acquisitions:
On July 31, 1998, the Company acquired all of the membership interests of
Radian International LLC ("Radian"), a multinational engineering, consulting
and construction firm. The purchase price of $117 million in cash is subject
to a post-closing adjustment which is currently under discussion with the
seller. The purchase price in excess of the fair value of the net assets
acquired, plus estimated office closure costs and severance costs are
classified as goodwill and are being amortized over 40 years.
The Company also completed thirteen smaller acquisitions during fiscal 1999
for $16,555 one of which included the issuance of 157,991 shares of the
Company's treasury stock. Seven of the acquisitions have additional future
payments contingent on future earnings. The total purchase cost in excess of
fair value of identifiable assets acquired is classified as goodwill and is
being amortized over the period of expected benefit, which range from 3 to 25
years.
The Company also completed six smaller acquisitions during fiscal 1998 for
$5,740 one of which included the issuance of 163,107 shares of the Company's
treasury stock. Four of the acquisitions have additional future payments
contingent on future earnings. The total purchase cost in excess of fair value
of identifiable assets acquired is classified as goodwill and is being
amortized over the period of expected benefit, which range from 3 to 20 years.
On June 24, 1997, the Company acquired SRA Technologies, Inc., a
professional services company providing specialized clinical laboratory
services, contract research, analysis and management services in the areas of
life sciences, environmental health service studies, and energy. The purchase
price of $8,924 was paid in cash, and no additional payments are due. The
purchase price in excess of the fair value of the identifiable assets acquired
is classified as goodwill and is being amortized over 30 years.
The following schedule summarizes the unaudited pro forma results of
operations as if the acquisition of Radian had occurred at the beginning of
fiscal 1998. Certain adjustments, such as amortization of goodwill, increased
interest expense and income tax have been reflected.
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Net revenues............................................. $693,000 $655,042
======== ========
Earnings (loss) before extraordinary item................ $ (8,560) $ 7,618
======== ========
Earnings (loss) per share before extraordinary item
Basic.................................................. $ (.47) $ 0.43
======== ========
Diluted................................................ $ (.47) $ 0.42
======== ========
Net earnings (loss)...................................... $(11,410) $ 7,618
======== ========
Earnings (loss) per share
Basic.................................................. $ (.63) $ 0.43
======== ========
Diluted................................................ $ (.63) $ 0.42
======== ========
</TABLE>
The pro forma information is intended to show how the acquisitions might
have affected historical results of operations if the transactions had
occurred at an earlier time. The pro forma results are not necessarily
indicative of the periods presented or to be expected in the future.
All acquisitions have been accounted for as purchases. Results of operations
for all acquisitions have been included in the consolidated financial
statements from the date of the respective acquisition.
F-10
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 3--Investments in Debt and Equity Securities:
The cost and estimated fair value of equity and debt securities by
classification and major category follow. At March 26, 1999, $5,804 of debt
and equity securities were classified as other assets. At March 27, 1998,
$4,536 of the U.S. Government securities have a maturity greater than 1 year
but within 5 years, and are classified as other assets.
<TABLE>
<CAPTION>
Estimated
Fair
Cost Value
------ ---------
<S> <C> <C>
At March 26, 1999:
Available-for-sale:
Debt securities.......................................... $2,126 $2,122
Equity securities........................................ 4,302 4,018
------ ------
$6,428 $6,140
====== ======
At March 27, 1998:
Available-for-sale:
Securities of the U.S. Government........................ $4,502 $4,536
Equity securities........................................ 1,018 1,031
------ ------
$5,520 $5,567
====== ======
</TABLE>
Note 4--Investments in Affiliates:
The Company through its subsidiary Dames & Moore Ventures has a 50% interest
in Dames & Moore/ Brookhill L.L.C. (DMB) and affiliated companies. DMB was
formed to acquire environmentally impaired properties and to remediate; to
develop, redevelop, or reposition; and to maintain, operate and lease such
properties until their disposition. DMB acquires an interest in assets by
purchasing either a fee interest or a property-related mortgage note. At March
26, 1999, DMB holds 6 assets. Effective January 1, 1999, DMB agreed to
complete the redevelopment and disposition of existing assets, and to cease
the acquisition of any new assets.
Acquisitions have been financed 75% with senior debt, 20% subordinated debt
and 5% equity from DMB. The senior debt bears interest at London Interbank
Offshore Rate (LIBOR) plus 275 basis points, and requires monthly payments of
principal and interest. Cash flow from the properties, including sale proceeds
will generally be distributed 80% to the subordinated lender and 20% to DMB,
until the subordinated lender and DMB each receives its loan advances or
capital contributions, and a return on investment of 20% per annum.
Thereafter, cash flow will be distributed 50% to the subordinated lender and
DMB. The borrowings are all due on December 31, 1999, but may be extended
under certain terms and conditions.
F-11
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 4--Investments in Affiliates: (continued)
The Company accounts for its investment of $1,388 in fiscal 1999 and $3,144
in fiscal 1998 in DMB under the equity method of accounting. Condensed
financial information follows:
<TABLE>
<CAPTION>
March 26, March 27,
1999 1998
---------- ----------
<S> <C> <C>
Mortgage notes receivables........................... $ 1,316 $ 4,137
Property............................................. 28,877 33,508
Other assets......................................... 3,426 17,038
------- -------
Total assets....................................... $33,619 $54,683
======= =======
Mortgages payable.................................... $27,676 $41,958
Other liabilities.................................... 4,191 6,726
Shareholders' equity................................. 1,752 5,999
------- -------
Total liabilities and equity....................... $33,619 $54,683
======= =======
Company's share of equity............................ $ 1,330 $ 3,000
======= =======
<CAPTION>
Year Ended Year Ended
March 26, March 27,
1999 1998
---------- ----------
<S> <C> <C>
Revenues............................................. $ 209 $ 18
Costs and expenses................................... (2,280) (1,450)
Net gain on asset dispositions....................... 733 1,061
------- -------
Net loss........................................... $(1,338) $ (371)
======= =======
Company's share of net loss (investments and other
income)............................................. $ (756) $ (179)
======= =======
</TABLE>
Equity investments in other unconsolidated investments amounted to $9,131 at
fiscal 1999 and $1,868 in fiscal 1998.
F-12
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 5--Composition of Certain Financial Statement Captions:
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
Property and equipment, at cost:
Computer equipment........................................ $ 54,713 $36,145
Office equipment and furniture............................ 18,064 13,719
Technical and field equipment............................. 27,780 13,482
Leasehold improvements.................................... 10,799 5,847
-------- -------
111,356 69,193
Less accumulated depreciation and amortization............ 53,838 45,796
-------- -------
$ 57,518 $23,397
======== =======
Other assets:
Notes and other receivables............................... $ 26,705 $ 5,457
Other assets.............................................. 13,471 6,661
-------- -------
$ 40,176 $12,118
======== =======
Accrued payroll and employee benefits:
Salaries, wages and related taxes......................... $ 21,940 $12,901
Accrued vacation.......................................... 16,377 12,192
Accrued pension costs..................................... 617 1,271
-------- -------
$ 38,934 $26,364
======== =======
Accrued expenses and other liabilities:
Accrued insurance costs................................... $ 17,833 $ 6,913
Accrued occupancy......................................... 4,413 4,232
Accrued interest.......................................... 8,700 4,283
Deferred acquisition payments............................. 2,440 1,639
Restructuring and acquisition reserves.................... 10,174 --
Deferred income and client advances....................... 3,435 2,700
Other accrued expenses.................................... 3,987 837
Other liabilities......................................... 9,900 3,123
-------- -------
$ 60,882 $23,727
======== =======
</TABLE>
F-13
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 6--Long-Term Debt:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Long-term debt consists of the following:
Term loan................................................ $265,000 $ --
Revolving lines of credit................................ 37,232 20,015
Other notes payable...................................... 348 1,609
Senior Notes:
6.54% Series A notes, due March 29, 2001................ -- 40,000
6.87% Series B notes, due March 29, 2003................ -- 30,000
6.92% Series C notes, due September 29, 2003............ -- 10,000
7.19% Series F notes, due December 16, 2004............. -- 10,000
7.23% Series G notes, due December 16, 2005............. -- 10,000
7.20% Series D notes, due March 29, 2006................ -- 5,000
7.25% Series E notes, due September 29, 2006............ -- 15,000
-------- --------
302,580 141,624
Current portion of long-term debt......................... 18,433 9,614
-------- --------
$284,147 $132,010
======== ========
</TABLE>
The funding of the Radian acquisition resulted in the early extinguishment
of the Company's Senior Notes and certain bank lines of credit. Pre-payment
obligations and deferred financing costs resulted in a pretax charge of
$4,587; after the tax benefit of $1,737, the extraordinary charge was $2,850,
or ($.16) per share, basic and diluted.
The Company's amended long-term debt facility includes a term commitment of
$265,000 and a revolving commitment of $75,000. Interest is charged under
several options, including a base rate or at LIBOR, plus the applicable
margin, at the Company's option. Interest is payable quarterly for base rate
borrowings and for LIBOR borrowings the earlier of the last day of the
interest rate period or three months from the first day of the interest rate
period. The effective interest rate was 6.8% at March 26, 1999. The agreement
contains limitations on additional indebtedness, sales of assets, acquisitions
and capital expenditures, as well as maintenance of certain financial ratios.
The Company was in compliance with all such ratios at March 26, 1999. The term
loan requires quarterly principal payments commencing on June 30, 1999, with
$40,000 of the unpaid balance due on June 30, 2004 and the remaining unpaid
balance of $94,500 due in full on December 31, 2004. The revolving commitment
matures on June 30, 2004. Furthermore, mandatory principal pre-payments or
commitment reductions are required in the event of the occurrence of certain
transactions, as defined in the agreement. As of March 26, 1999, under these
lines, the Company had borrowings of $302,232, and standby letters of credit
totaling $14,156 principally for project performance, advance payment
guarantees and the Company's domestic insurance program. The fair value of the
Company's long-term debt approximates carrying value based on current rates
offered to the Company for debt of the same remaining maturities.
Annual maturities of long-term debt over the next five fiscal years are as
follows: 2000--$18,433; 2001--$16,147; 2002--$26,000; 2003--$36,000; and
2004--$41,000.
F-14
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 7--Foreign Currency Contracts:
In the past, the Company has entered into foreign exchange forward
contracts, all having maturities of less than one year. The amounts noted
below serve solely as a basis for the calculation of payment streams to be
exchanged. The Company is exposed to credit loss in the event of
nonperformance by counter parties for these contracts. The Company selects
major international banks and financial institutions as counter parties to
manage this credit risk. Transaction gains and losses including the effect of
foreign currency contracts and currency exchange rate conversion were a gain
of $3 in 1999, a loss of $206 in 1998, and a loss of $222 in 1997. The Company
did not have any open foreign currency contracts at March 26, 1999.
<TABLE>
<CAPTION>
1998
------
<S> <C>
Australian dollars.................................................. $1,000
United States dollars............................................... $ 644
</TABLE>
Note 8--Fair Values of Financial Instruments:
The carrying amount of marketable securities is based on quoted market
prices at the reporting date for those investments and as such equal fair
value. The fair value of the Company's long-term debt is estimated based on
current rates offered to the Company for debt of the same remaining
maturities, which approximates carrying value. All other financial instruments
bear relatively short-term maturities, and accordingly, the carrying amount of
these investments approximates fair value.
Note 9--Income Taxes:
Income taxes consist of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
U.S. Federal taxes:
Current.......................................... $ 5,643 $ 9,560 $11,761
Deferred......................................... (5,583) (478) (1,736)
------- ------- -------
60 9,082 10,025
State and local taxes:
Current.......................................... 1,117 1,706 1,841
Deferred......................................... (749) (115) (166)
------- ------- -------
368 1,591 1,675
Non-U.S. taxes:
Current.......................................... 4,003 3,541 1,249
Deferred......................................... (302) (26) --
------- ------- -------
3,701 3,515 1,249
------- ------- -------
$ 4,129 $14,188 $12,949
======= ======= =======
</TABLE>
The sources of earnings before income taxes consist of the following:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------- -------
<S> <C> <C> <C>
U.S. earnings before income taxes.................... $3,937 $27,438 $31,178
Non-U.S. earnings before income taxes................ 2,739 6,080 311
------ ------- -------
Earnings before income taxes....................... $6,676 $33,518 $31,489
====== ======= =======
</TABLE>
F-15
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 9--Income Taxes: (continued)
Income taxes differ from amounts computed by applying the statutory U.S.
Federal income tax rate of 35% to earnings before income taxes as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------- -------
<S> <C> <C> <C>
Statutory U.S. Federal income tax................... $2,337 $11,731 $11,021
State income taxes, net of Federal benefit.......... 240 1,034 1,089
Goodwill............................................ 682 653 499
Foreign operations.................................. 1,009 538 603
Other............................................... (139) 232 (263)
------ ------- -------
Total income taxes................................ $4,129 $14,188 $12,949
====== ======= =======
</TABLE>
Deferred income taxes result from temporary differences in the timing of the
recognition of revenues and expenses for financial statement and tax return
purposes. Management believes that it is more likely than not, that the
results of future operations will generate sufficient taxable income to
realize the deferred tax assets. The significant components of deferred taxes
were as follows:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Current deferred net tax assets:
Compensation expense...................................... $ 6,174 $ 3,975
Litigation reserve........................................ 788 410
Accrued expenses.......................................... 2,367 171
Allowance for doubtful accounts........................... 1,353 918
Other..................................................... 529 433
------- -------
Total current deferred tax assets....................... 11,211 5,907
------- -------
Cash to accrual adjustments from acquisitions............. 60 1,106
Other..................................................... 446 498
------- -------
Total current deferred tax liabilities.................. 506 1,604
------- -------
Net current deferred tax assets......................... $10,705 $ 4,303
======= =======
Noncurrent deferred net tax liabilities:
Foreign currency translation.............................. $ 1,502 836
Foreign tax credits....................................... 1,301 --
Other..................................................... 1,878 735
------- -------
Total noncurrent deferred tax assets.................... 4,681 1,571
------- -------
Depreciation and amortization............................. 3,457 2,481
Other..................................................... 1,020 569
------- -------
Total noncurrent deferred tax liabilities............... 4,477 3,050
------- -------
Net noncurrent deferred tax assets (liabilities)........ $ 204 $(1,479)
======= =======
</TABLE>
F-16
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 10--Lease Commitments:
The Company is obligated under various noncancelable leases for office
facilities, furniture and equipment. Certain leases contain renewal options,
escalation clauses and certain other operating expenses of the properties. In
the normal course of business, leases that expire are expected to be renewed
or replaced by leases for other properties.
The following is a schedule by year of future rental payments required under
operating leases that have initial or remaining noncancelable lease terms in
excess of one year as of March 26, 1999:
<TABLE>
<CAPTION>
Fiscal Year(s) Total
-------------- --------
<S> <C>
2000.......................................................... $28,890
2001.......................................................... 25,934
2002.......................................................... 18,591
2003.......................................................... 13,871
2004.......................................................... 9,164
Thereafter.................................................... 11,455
--------
Total minimum lease payments................................ $107,905
========
</TABLE>
The following schedule shows the composition of total rental expenses for
all operating leases:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Total rental expense............................. $32,986 $24,365 $23,617
Less sublease rentals.......................... 319 140 324
------- ------- -------
$32,667 $24,225 $23,293
======= ======= =======
</TABLE>
Note 11--Contingencies:
The Company in the ordinary course of business is a defendant in various
lawsuits involving claims typically filed against the engineering and
consulting professions, primarily alleging professional errors or omissions.
The Company through a wholly owned subsidiary insures the Company's risks for
professional liability, workers compensation, and general and automobile
claims up to certain policy limits. Claims in excess of these limits are
covered by unrelated insurance carriers. Management makes estimates and
assumptions that affect the reported amount of liability and the disclosure of
contingent liabilities. As claims develop, it is possible that the ultimate
results of these claims may differ from management's estimates. In the opinion
of management, based upon information it presently possesses, the resolution
of these claims will not have a material adverse effect on the Company's
consolidated financial position or results of operations.
Note 12--Stock Option Plans:
Long-Term Incentive Plan
The Company's Amended and Restated 1991 Long-Term Incentive Plan (the
"Plan"), which provides for the granting of stock options and the sale of
restricted stock to officers and key employees of the Company, has authorized
and reserved a total of 2,700,000 shares of common stock for issuance under
this Plan. Stock options granted or restricted stock sold under the Plan may
be granted or sold at a price and for such terms as determined by the
Compensation Committee of the Board of Directors.
Restricted stock sales are offered to newly elected officers and existing
officers, these shares are subject to restrictions on transfer and risk of
forfeiture until earned by continued employment. Should employment terminate
before ownership vests, shares are repurchased by the Company at the lesser of
the price originally
F-17
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 12--Stock Option Plans: (continued)
paid for the stock or its market value on the date of termination. During the
restriction period, holders have the rights of shareholders, including the
right to vote and receive dividends, but cannot transfer ownership. Restricted
stock is generally being issued at 67% of market value on the date of issuance
for newly elected officers and at no cost to existing officers, the stock
vests 3 years after the issue date. These restricted stock sales give rise to
unearned compensation that is amortized over the vesting period. Through March
26, 1999, 290,863 shares of restricted stock have been issued under the Plan.
<TABLE>
<CAPTION>
1999 1998 1997
------------------- ------------------- -------------------
<S> <C> <C> <C>
Restricted stock
issued................. 65,891 23,300 37,751
Weighted-average fair
value of restricted
stock granted during
the year............... $12.62 $12.88 $11.13
Non-qualified stock options are granted at fair value at the date of grant
and generally vest 25% per year commencing on the first anniversary after the
grant date. Options expire 10 years after the grant date, and all awards need
to be made by May 22, 2005.
<CAPTION>
1999 1998 1997
------------------- ------------------- -------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of the year............ 1,593,009 $16.08 1,678,856 $16.09 1,517,823 $16.87
Granted................. 286,039 12.45 8,000 12.88 276,554 11.24
Exercised............... (13,373) 11.85 (6,902) 11.78 (2,737) 12.00
Canceled................ (85,215) 15.90 (86,945) 16.17 (112,784) 14.83
--------- --------- ---------
Outstanding at the end
of the year............ 1,780,460 $15.54 1,593,009 $16.08 1,678,856 $16.09
========= ========= =========
Exercisable at year-
end.................... 1,255,314 $16.99 1,166,549 $17.69 970,941 $18.58
Weighted-average fair
value of options
granted during the
year................... $ 4.89 $ 5.46 $ 4.40
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1999, 1998 and 1997, respectively: expected
volatility of 27.91%, 28.28%, and 27.15%; risk-free interest rates of 5.53%,
6.81%, and 6.24%; expected lives of 6, 6, and 5.6 years and no dividends.
F-18
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 12--Stock Option Plans: (continued)
Directors' Stock Option Plan
The Company's amended and restated 1995 Stock Option Plan for Non-Employee
Directors of the Company (the "Plan") has 100,000 shares of common stock
authorized for issuance under the Plan. Shares of common stock awarded under
this Plan are non-qualified stock options, are granted at fair value at the
date the option is granted, vest and become exercisable in three equal annual
installments commencing on the first anniversary after the grant date. Options
expire 10 years after the grant date.
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
the year.................. 40,000 $13.20 23,000 $12.97 15,000 $13.63
Granted.................... 10,000 12.63 17,000 13.50 8,000 $11.75
Exercised.................. -- -- -- -- -- --
------ ------ ------
Outstanding at the end of
the year.................. 50,000 $13.08 40,000 $13.20 23,000 $12.97
====== ====== ======
Exercisable at year-end.... 25,995 $13.21 12,664 $13.23 4,998 $13.63
Weighted-average fair value
of options granted during
the year.................. $ 4.91 $ 5.59 $ 4.90
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1999, 1998, and 1997, respectively: expected
volatility of 27.82%, 28.51%, and 27.97%; risk-free interest rates of 5.4%,
6.3%, and 6.4%; expected lives of 6 years and no dividends.
The following table summarizes both stock option plans' information on stock
options outstanding at March 26, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------- ------------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 3/26/99 Life Price at 3/26/99 Price
--------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
$11.13 to $13.63.. 977,755 7.3 $12.01 428,604 $11.88
$16.65 to $19.50.. 589,818 4.5 18.96 589,818 18.96
$20.00 to $21.75.. 262,887 3.0 20.53 262,887 20.53
</TABLE>
Pro-Forma Disclosure
The Company continues to apply APB Opinion No. 25 in accounting for both of
its stock-based compensation plans. Accordingly, no compensation cost has been
recognized for the stock option plans. There was no material difference in the
Company's earnings or earnings per share had the stock option plans determined
compensation cost based on the fair value at the grant dates consistent with
the method of SFAS No. 123.
F-19
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 13--Employee Retirement Plans:
The Company and its domestic subsidiaries have several defined contribution
retirement plans covering substantially all of the Company's U.S. employees
with a minimum service requirement. Depending upon the plan, eligible
employees can invest up to 15% of their earnings; certain plans will match by
an equal amount from the Company generally up to the first 3% to 4.5% of the
employee's contribution. Employer matching contributions for fiscal years
1999, 1998, and 1997 were $6,641, $2,930 and $3,315, respectively. Profit-
sharing contributions to all plans are currently discretionary. However, prior
to January 1, 1997 the largest of the plans had a profit-sharing contribution
that was computed in accordance with a formula (set forth in the Plan) to
provide for an annual contribution of 6% of pre-tax earnings, as defined. The
contributions for 1999, 1998, and 1997 were $218, $1,381 and $1,684,
respectively.
Certain of the Company's foreign subsidiaries have trusteed retirement plans
covering substantially all of their employees. These pension plans are not
required to report to government agencies pursuant to ERISA and do not
otherwise determine the actuarial value of accumulated benefits or net assets
available for benefits. The aggregate pension expense for these plans for
fiscal years 1999, 1998 and 1997 were $1,711, $1,498, and $1,719,
respectively.
The Company, upon acquiring Radian, assumed certain of Radian's defined
benefit pension plans, including several post-retirement benefit plans. These
plans cover a select group of Radian employees and former employees who will
continue to be eligible to participate in the plans.
The defined benefit plans include a Supplemental Executive Retirement Plan
(SERP) and Salary Continuation Agreement (SCA) which are intended to
supplement retirement benefits provided by other benefit plans upon the
participant's meeting minimum age and years of service requirements. The plans
are unfunded, however, at March 26, 1999, the Company had designated and
deposited $6,309 in a trust account for the SERP. Radian also has a post-
retirement benefit program that provides certain medical insurance benefits to
participants upon meeting minimum age and years of service requirements, this
plan is also unfunded.
The Company recorded an additional minimum liability net of tax of $1,057 at
March 26, 1999 as a component of comprehensive income. This amount represents
the excess of the accumulated benefit obligations over the fair value of plan
assets to the extent possible because the asset recognized may not exceed the
amount of unrecognized prior service cost.
Management's estimate of accumulated benefits for the SERP and SCA as of
March 26, 1999 were as follows:
<TABLE>
<S> <C>
Actuarial present value of accumulated benefits:
Vested.......................................................... $10,464
Non-vested...................................................... 857
-------
Total......................................................... $11,321
=======
</TABLE>
F-20
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 13--Employee Retirement Plans: (continued)
The weighted-average discount rate used for the period was 6.75%.
<TABLE>
<CAPTION>
1999
-------
<S> <C>
Change in benefit obligation:
Benefit obligation at August 1, Acquisition..................... $ 9,787
Service Cost.................................................... 57
Interest cost................................................... 451
Amortization of unrecognized service cost....................... 20
-------
Net period cost............................................... 528
-------
Acturial loss................................................... 1,814
Benefit payments................................................ (808)
-------
Benefit obligation at March 26, 1999............................ $11,321
=======
</TABLE>
The funded status of the plans at March 26, 1999:
<TABLE>
<CAPTION>
1999
-------
<S> <C>
Projected benefit obligation.................................. $11,321
Plan assets available for benefits............................ --
-------
Deficiency of assets over projected benefit obligations....... 11,321
Unrecognized actuarial loss................................... 1,814
Unrecognized prior service costs.............................. --
-------
Accrued pension liability..................................... $ 9,507
=======
The funded status of the post-retirement program at March 26, 1999 is as
follows:
Accumulated post-retirement benefit obligation ("APBO"):
Retirees.................................................... $ 200
Active plan participants, fully eligible.................... 134
Active plan participants, not yet fully eligible............ 542
-------
Total APBO................................................ $ 876
Unrecognized net loss from past experience different from that
assumed and from changes in assumptions...................... (79)
-------
Accrued post-retirement benefits.............................. $ 797
=======
</TABLE>
The weighted-average discount rate used in determining the APBO was 6.75% as
of December 31, 1998.
F-21
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 14--Segment and Related Information:
Management has organized the Company by type of services provided. The
general engineering and consulting division ("GE&C") provides environmental
and specialized engineering services throughout the world to private sector
clients and governmental agencies. Construction services division ("CSD")
provides program, project and construction management services for public
sector projects of all sizes and complexity. The process and chemical
engineering division ("P&CE") provides process engineering and design services
to the oil and gas, petrochemical, pulp and paper industries, and to the
federal government. Transportation service division ("TSD") provides project
planning, design and construction-phase engineering services for the
transportation and infrastructure projects throughout the United States.
Specialty companies ("SC") include other business units which provide services
to both private sector clients and government agencies.
Accounting policies for each of the reportable segments are the same as
those described in Note 1, Notes to Consolidated Financial Statements.
Management evaluates the performance of its business segments based on
earnings from operations before acquisition-related restructuring and other
charges.
The following table shows summarized financial information on the Company's
reportable segments. Included in the "Other" column are corporate-related
items, results of shared operations, income and expense items from reportable
segments not reported to management, and eliminations of inter-segment sales
which are not significant.
<TABLE>
<CAPTION>
GE&C CSD P&CE TSD SC Other Total
1999: -------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues from U.S.
Government agencies
and departments....... $ 36,967 $ 38,027 $ 34,721 $ 275 $ 4,838 $ -- $114,828
Other net revenues..... 228,813 139,563 83,958 55,651 16,961 (428) 524,518
Segment profit (loss).. 40,314 10,352 10,638 5,089 (25) (14,166) 52,202
Total assets........... 182,080 241,663 115,500 38,114 46,851 10,371 634,579
Total accounts
receivable............ 125,932 122,117 32,743 25,259 9,732 (2,405) 313,378
Depreciation and
amortization.......... 6,069 6,507 2,482 1,660 1,181 445 18,344
<CAPTION>
GE&C CSD P&CE TSD SC Other Total
1998: -------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues from U.S.
Government agencies
and departments....... $ 35,225 $ 6,559 $ 16,377 $ 791 $ 7,488 $ -- $ 66,440
Other net revenues..... 230,601 87,414 36,060 46,476 15,670 (157) 416,064
Segment profit (loss).. 47,666 5,412 1,759 3,793 1,029 (16,846) 42,813
Total assets........... 162,336 103,291 46,789 31,381 34,857 7,707 386,361
Total accounts
receivable............ 115,205 48,184 11,878 19,114 8,702 (949) 202,134
Depreciation and
amortization.......... 6,228 2,639 1,675 1,613 1,130 531 13,816
<CAPTION>
GE&C CSD P&CE TSD SC Other Total
1997: -------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues from U.S.
Government agencies
and departments....... $ 41,931 $ 3,647 $ 16,284 $ 1,321 $ -- $ -- $ 63,183
Other net revenues..... 220,253 77,919 36,480 42,937 13,637 (1) 391,225
Segment profit (loss).. 39,402 2,628 3,960 3,428 1,372 (11,278) 39,512
Total assets........... 145,779 88,147 49,042 29,037 28,425 17,852 358,282
Total accounts
receivable............ 100,878 34,843 15,427 17,785 7,576 (797) 175,712
Depreciation and
amortization.......... 6,078 2,239 1,560 1,458 869 521 12,725
</TABLE>
F-22
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
The next table provides a reconciliation of segment profit to consolidated
earnings before income taxes and extraordinary items.
<TABLE>
<CAPTION>
March 26, March 27, March 28,
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Segment profit ............................ $ 52,202 $ 42,813 $39,512
Acquisition-related restructuring & other
charges................................... (28,276) -- (2,651)
Investment & other income.................. 1,231 997 2,014
Interest expense........................... (18,481) (10,292) (7,386)
-------- -------- -------
Earnings before income taxes............... $ 6,676 $ 33,518 $31,489
======== ======== =======
</TABLE>
The company provides services throughout the world. Services to other
countries may be performed within the United States, generally net revenues
are classified within the geographic area where the services were performed.
Selected geographic information is summarized as follows:
<TABLE>
<CAPTION>
United Other
States Countries Total
-------- --------- --------
<S> <C> <C> <C> <C>
Net revenues............................... 1999 $558,511 $80,835 $639,346
1998 412,751 69,753 482,504
1997 388,671 65,737 454,408
Earnings from operations................... 1999 $ 21,819 $ 2,107 $ 23,926
1998 34,756 8,057 42,813
1997 34,531 2,330 36,861
Identifiable assets........................ 1999 $553,398 $81,181 $634,579
1998 329,256 57,105 386,361
1997 304,847 53,435 358,282
</TABLE>
Note 15--Earnings Per Share (EPS):
The following is a reconciliation of the weighted average shares outstanding
used for computing basic and diluted EPS.
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Weighted average shares--Basic EPS......... 18,237,000 17,890,000 20,287,000
Dilutive securities:
Restricted stock......................... 65,000 127,000 124,000
Stock options............................ 17,000 31,000 35,000
---------- ---------- ----------
Weighted average shares--Diluted EPS....... 18,319,000 18,048,000 20,446,000
========== ========== ==========
</TABLE>
Stock options to purchase 1,144,000 941,000 and 965,000 shares of common
stock as of March 26, 1999, March 27, 1998 and March 28, 1997, respectively,
were outstanding but were not included in the computation of diluted EPS
because the stock options' exercise price was greater than the average market
price of the common shares.
F-23
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 16--Stock Repurchases:
The Company's Board of Directors authorized the Company to purchase up to
2,500,000 shares of its common stock on the open market. During fiscal 1999
the Company reacquired 67,000 shares of its common stock. As of March 26, 1999
the Company had repurchased 1,914,000 shares and reissued 1,132,000 shares.
The Company may continue to purchase shares on the open market.
Note 17--Common and Preferred Stock:
The Company adopted a Shareholder's Rights Agreement on March 28, 1997
granting, for each outstanding share of common stock, one stock purchase right
(each a "Right"). Each Right entitles the common stockholder to purchase, in
certain circumstances generally relating to a change in control of the
Company, one two-hundredth of a share of the Company's Series A Junior
Participating Preferred Stock, par value $0.01 per share (the "Series A
Preferred Stock") at the exercise price of $65 per share, subject to
adjustment. Alternatively, the Right holder may purchase common stock of the
Company having a market value equal to two times the exercise price, or may
purchase shares of common stock of the acquiring corporation having a market
value equal to two times the exercise price.
The Series A Preferred Stock confers to its holders rights as to dividends,
voting and liquidation that are in preference to common stockholders. The
Rights are nonvoting, are not presently exercisable and currently trade in
tandem with the common shares. The Rights may be redeemed at $0.01 per Right
by the Company in accordance with the Rights Agreement. The Rights will expire
on March 28, 2007, unless earlier exchanged or redeemed.
The Rights Agreement was amended on May 5, 1999 excepting from the
definition of a change in control of the Company, the contemplated Agreement
and Plan of Merger of the Company with URS Corporation and Demeter Acquisition
Corporation.
Note 18--Acquisition Restructuring and Other Charges:
During the second quarter of fiscal 1999, the Company took a charge for
purchased in-process research and development technology that had not reached
technological feasibility of $15,271. Additionally, the Company began
consolidation of certain facilities and operations primarily as a result of
the Radian acquisition, resulting in a charge of $9,213. This charge consisted
of $2,699 for lease termination, $3,635 for severance costs, and $2,879 for
unamortized goodwill and other costs related to the closure of certain
business units that were operating at a loss and were duplicative of Radian's
capabilities. Other charges also included $3,792 for consolidation of certain
of the Company's operational activities and other job related costs.
Approximately $5,892 remains to be expended at March 26, 1999 to complete the
restructuring.
In fiscal 1997 the Company determined it was necessary to restructure its
international operations, and construction and project management subsidiary.
Included in the 1997 restructuring costs are employee severance and
termination costs, costs associated with office closures, losses on work in
progress where there was extensive employee turnover and losses on other
current assets, all of which impact the Company's working capital. The
remaining balance represents losses on long-term assets.
F-24
<PAGE>
DAMES & MOORE GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(In thousands, except share and per share amounts)
Note 19--Subsequent Events:
On May 5, 1999, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with URS Corporation ("URS").
The Merger Agreement provides that URS will make a tender offer to purchase
100% of the outstanding common stock of the Company. Shares validly tendered
shall be entitled to receive $16.00 in cash.
Consummation of the Tender Offer and the merger is subject to certain
conditions as specified in the Merger Agreement.
F-25
<PAGE>
Selected Quarterly Financial Data (Unaudited) (In thousands, except per
share amounts):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1999:
Gross revenues........................ $189,150 $263,606 $287,434 $289,777
Net revenues.......................... 128,804 152,987 172,298 185,257
Earnings (loss) from operations....... 11,063 (14,521) 14,089 13,295
Net earnings (loss)................... 4,687 (15,139) 5,291 4,858
======== ======== ======== ========
Earnings (loss) per share--Basic...... $ 0.26 $ (0.83) $ 0.29 $ 0.27
======== ======== ======== ========
Earnings (loss) per share--Diluted.... $ 0.26 $ (0.83) $ 0.29 $ 0.27
======== ======== ======== ========
Weighted average number of shares--
Basic................................ 18,262 18,252 18,218 18,215
======== ======== ======== ========
Weighted average number of shares--
Diluted.............................. 18,336 18,252 18,299 18,291
======== ======== ======== ========
1998:
Gross revenues........................ $171,771 $176,214 $174,974 $180,943
Net revenues.......................... 119,785 123,254 118,725 120,740
Earnings from operations.............. 10,556 10,913 11,244 10,100
Net earnings.......................... 4,685 5,151 5,153 4,341
======== ======== ======== ========
Earnings per share--Basic............. $ 0.26 $ 0.29 $ 0.29 $ 0.24
======== ======== ======== ========
Earnings per share--Diluted........... $ 0.26 $ 0.28 $ 0.29 $ 0.24
======== ======== ======== ========
Weighted average number of shares--
Basic................................ 17,890 17,884 18,873 17,914
======== ======== ======== ========
Weighted average number of shares--
Diluted.............................. 18,041 18,047 18,031 18,074
======== ======== ======== ========
</TABLE>
F-26
<PAGE>
DAMES & MOORE GROUP
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Fiscal Years Ended March 26, 1999, March 27, 1998 and March 28, 1997
<TABLE>
<CAPTION>
Additions
---------------------
Balance at Charged to Charged to Balance at
beginning costs and other end of
Description of year expenses accounts Deductions year
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended March 26,
1999
Allowance for doubtful
accounts.............. $3,408 $1,456 $5,210(1) $(548) $9,526
====== ====== ====== ===== ======
Year Ended March 27,
1998
Allowance for doubtful
accounts.............. $3,001 $ 915 $ -- $(508) $3,408
====== ====== ====== ===== ======
Year Ended March 28,
1997
Allowance for doubtful
accounts.............. $1,886 $1,208 $ 465(1) $(558) $3,001
====== ====== ====== ===== ======
</TABLE>
- --------
(1)Amount recorded on books of acquired entities at date of acquisition.
F-27
