[WELLS FARGO LETTERHEAD]
May 3, 1999
CONFIDENTIAL
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URS Corporation
100 California Street
San Francisco, CA 94111
Attention: Mr. Kent P. Ainsworth
Executive Vice President and Chief Financial Officer
Re: Senior Facilities for Acquisition of Dames & Moore Group
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Ladies and Gentlemen:
You have advised us that URS Corporation (the "Company") would like to have
$550,000,000 available for the purpose of acquiring (the "Acquisition") all of
the outstanding capital stock (the "Shares") of Dames & Moore Group ("DMG"). We
understand that the Acquisition will be accomplished through a tender offer (the
"DMG Tender Offer") by a wholly-owned subsidiary of the Company ("Merger Sub")
for up to 100% of the Shares at a price not to exceed $16 per Share followed by
a merger (the "Merger") of Merger Sub with and into DMG in which DMG will be the
surviving corporation. We further understand that in the Merger any Shares not
tendered in the DMG Tender Offer will be converted into the right to receive the
same amount of cash paid in the DMG Tender Offer. The aggregate purchase price
of the Shares shall not exceed $305,000,000. We also understand that the DMG
Tender Offer will be conditioned on, among other things, the tender and purchase
of at least that number of Shares (the "Minimum Shares") required to permit
Merger Sub to cause the Merger to occur as set forth in the Agreement and Plan
of Merger dated May 5, 1999 among the Company, Merger Sub and DMG (said
agreement, in the form delivered to Wells Fargo on the date hereof, the "Merger
Agreement"). Upon the consummation of the Merger, DMG will be wholly-owned by
the Company.
Wells Fargo Bank, National Association ("Wells Fargo") is pleased to commit
$550,000,000 of senior bank credit facilities described in Annex A attached
hereto. Such senior bank credit facilities will consist of three term loan
facilities, one in the amount of $250,000,000 ("Term Loan A"), another in the
amount of $100,000,000 ("Term Loan B") and another in the amount of $100,000,000
("Term Loan C" and, together with Term Loan A and Term Loan B, the "Term
Loans"), and a revolving credit facility of $100,000,000 with a sublimit for
letters of credit to be agreed upon (the "Revolving Credit Facility" and,
together with the Term Loans, the "Senior Facilities"). Wells Fargo intends to
arrange for other financial institutions and "accredited investors" (as defined
in the SEC regulations; each such entity, including Wells Fargo, being a
"Lender" and, collectively, the "Lenders") to provide a portion of the Senior
Facilities. We are also pleased to advise you of our willingness to act as
Arranger and
Administrative Agent for the Senior Facilities. No additional agents for the
Senior Facilities will be appointed without the prior approval of the Company
and Wells Fargo.
You have advised us that the proceeds of the Term Loans, up to $25,000,000
of the Revolving Credit Facility and a portion of the letter of credit sublimit
of the Revolving Credit Facility (to be determined), together with (i) not less
than $100,000,000 in cash preferred equity contributions to the Company by RCBA
Strategic Partners, L.P. ("RCBA") and/or its affiliates pursuant to that certain
Securities Purchase Agreement dated May 5, 1999 between the Company and RCBA
(said agreement, in the form delivered to Wells Fargo on the date hereof, the
"RCBA Agreement") and (ii) the proceeds of not less than $200,000,000 of
subordinated bridge financing (the "Bridge Financing"; which term shall include
the Rollover Notes described in the MS & Co. Letter (as defined below)) made
available to the Company pursuant to that certain letter dated May 3, 1999
between the Company and Morgan Stanley & Co. Incorporated (said letter, in the
form delivered to Wells Fargo on the date hereof, the "MS & Co. Letter") or, in
lieu thereof, the proceeds of not less than $200,000,000 of new senior
subordinated debt securities of Company (the "Permanent Financing"), will be
used to (a) pay the consideration for the Shares, (b) refinance existing senior
indebtedness of the Company and DMG in an aggregate maximum amount of not more
than $450,000,000, and (c) pay fees and expenses in connection with the
Acquisition and the related financings in an aggregate maximum amount of
approximately $40,000,000. You have further advised us that the Revolving
Credit Facility will also be used to provide for the working capital
requirements and other corporate purposes of the Company and its subsidiaries.
You agree to use your best efforts to assist Wells Fargo in forming the
syndicate and ensure a syndication satisfactory to us. This assistance will be
accomplished by a variety of means, including, but not limited to, direct
contact prior to completion of the syndication between your senior management
and prospective Lenders. You further agree to refrain from any activity in the
bank loan syndication market, other than with respect to the Senior Facilities,
for a period from the date you sign this letter until the Senior Facilities are
closed and funded unless otherwise agreed to by Wells Fargo. Wells Fargo shall
be entitled, after consultation with you, to change the structure, terms,
tranching, pricing or amounts of any or all of the facilities comprising the
Senior Facilities (so long as the aggregate amount of the Senior Facilities is
not reduced) as set forth in Annex A if Wells Fargo determines that such changes
are necessary in order to ensure a successful syndication. The agreement in
this paragraph shall survive the closing of the Senior Facilities until a
successful syndication of all of the Senior Facilities has occurred.
We have reviewed certain historical and pro forma financial statements of
the Company and DMG and their respective subsidiaries and have met with
representatives of and members of the management of the Company and DMG
regarding the transactions contemplated hereby. In the event that any
information previously disclosed to us is inaccurate, incomplete or misleading
in any material respect, or any new information or additional developments
concerning previously disclosed information is disclosed to us which has or is
likely to have (in our reasonable judgment) a material adverse effect on the
business, operations, properties, assets, liabilities, financial condition or
prospects of the Company and its subsidiaries, taken as a whole, or DMG and its
subsidiaries, taken as a whole, we may, in our sole discretion, suggest
alternative structures, terms, tranching, pricing or amounts of any or all of
the facilities
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comprising the Senior Facilities that ensure adequate protection for the Lenders
or decline to participate in the proposed financing. In addition, Wells Fargo's
commitment is subject to the accuracy and completeness of the Information (as
defined below) and the absence of any adverse change in the Projections (as
defined below) delivered to Wells Fargo on the date hereof, our satisfaction
with the structure of the Acquisition (the structure of the Acquisition
described in the Merger Agreement is hereby deemed satisfactory), and the
satisfaction of the conditions set forth in Annex A which are to be set forth in
the definitive documentation relating to the Senior Facilities.
The Company hereby represents that, based on its review and analysis, to
its knowledge (i) all information, other than Projections, which has been or is
hereafter made available to Wells Fargo or the other Lenders by the Company or
DMG or any of its representatives in connection with the transactions
contemplated hereby (the "Information"), as supplemented as contemplated by the
next sentence, is (or will be, in the case of Information made available after
the date hereof) complete and correct in all material respects and does not (or
will not, as the case may be) contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained therein
not materially misleading in light of the circumstances under which such
statements were or are made, and (ii) all financial projections concerning the
Company and DMG or any of their respective subsidiaries that have been or are
hereafter made available to Wells Fargo or the other Lenders by the Company, DMG
or any of their representatives in connection with the transactions contemplated
hereby (the "Projections") have been (or will be, in the case of Projections
made available after the date hereof) prepared in good faith based upon
reasonable assumptions (it being understood that the Projections are subject to
significant uncertainties and contingencies many of which are beyond the control
of the Company and that no assurance can be given that the Projections will be
realized). The Company agrees to supplement the Information and the Projections
prior to the closing date so that the representation and warranty in the
preceding sentence is correct on the closing date. In arranging and syndicating
the Senior Facilities, Wells Fargo will be using and relying on the Information
and the Projections without independent verification thereof. The
representations and covenants contained in this paragraph shall remain effective
until a definitive financing agreement is executed and thereafter the disclosure
representations contained herein shall be superseded by those contained in such
definitive financing agreement.
The Company shall pay the reasonable costs and expenses (including the
reasonable fees and expenses of counsel to Wells Fargo, reasonable professional
fees of consultants and other experts and reasonable out-of-pocket expenses of
Wells Fargo, including, without limitation, syndication expenses) arising in
connection with the preparation, execution and delivery of this letter and the
definitive financing agreements and the syndication of the Senior Facilities.
The Company further agrees to indemnify and hold harmless each of the Lenders
(including Wells Fargo) and each director, officer, employee, agent, attorney
and affiliate thereof (each an "indemnified person") from and against any
losses, claims, damages, liabilities or other expenses to which a Lender or such
indemnified persons may become subject, insofar as such losses, claims, damages,
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) or other expenses arise out of or in any way relate to or result from
the actions of the Company, DMG or any of their respective affiliates in
connection with the Acquisition, any of the statements contained in this letter
or relating to the extension of the financing contemplated by this letter, or
any use or intended use of the proceeds of any of the loans and
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other extensions of credit contemplated by this letter, and to reimburse each of
the Lenders and each indemnified person for any reasonable legal or other
expenses incurred in connection with investigating, defending or participating
in any such investigation, litigation or other proceeding (whether or not any
such investigation, litigation or other proceeding involves claims made between
the Company or any third party and such Lender or any such indemnified person,
and whether or not such Lender or any such indemnified person is a party to any
investigation, litigation or proceeding out of which any such expenses arise);
provided, however, that the indemnity contained herein shall not apply to the
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extent that such losses, claims, damages, liabilities or other expenses result
from the bad faith, gross negligence or willful misconduct of such Lender or
indemnified person. The obligations to pay reasonable fees, costs and expenses,
to indemnify each Lender and such indemnified persons and to pay such legal and
other expenses shall remain effective until the initial funding under a
definitive financing agreement and thereafter the indemnification and expense
reimbursement obligations contained herein shall be superseded by those
contained in such definitive financing agreement. Neither Wells Fargo nor any
other Lender shall be responsible or liable to any other party or any other
person for consequential damages which may be alleged as a result of this
letter. The foregoing provisions of this paragraph shall be in addition to any
rights that any Lender or any indemnified person may have at common law or
otherwise.
This letter is confidential and shall not be disclosed by you to any person
other than your accountants, attorneys and other advisors, and to Merger Sub,
the other subsidiaries of the Company, DMG and its subsidiaries, RCBA, Morgan
Stanley Dean Witter, the Securities and Exchange Commission, other parties or
participants referenced in this letter or that are parties to the transactions
contemplated hereby, and their respective accountants, attorneys and other
advisors, and as appropriate in connection with any offering memorandum, proxy
statement, rights book, or other similar document, and then, except with respect
to public filings, only on a confidential basis and in connection with the
Acquisition and the related transactions contemplated herein. Additionally, you
may make such disclosures of this letter as are required by law or judicial
process or as may be required or appropriate in response to any summons or
subpoena or in connection with any litigation; provided that you will use your
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best efforts to notify us of any such disclosure prior to making such
disclosure.
Our offer will terminate on May 7, 1999, unless on or before that date you
sign and return an enclosed counterpart of this letter together with an executed
copy of the accompanying letter concerning certain fee arrangements. The Senior
Facilities referred to herein shall in no event be available unless the DMG
Tender Offer has been consummated on or prior to September 30, 1999.
This letter agreement shall be governed by and construed in accordance with
the internal laws of the State of New York. This letter agreement 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.
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We appreciate having been given the opportunity by you to be involved in
this transaction.
Very truly yours,
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Peter Gruebele
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Name: Peter Gruebele
Title: Vice President
AGREED AND ACCEPTED
this 5th day of May, 1999.
URS CORPORATION
By: /s/ Kent Ainsworth
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Name: Kent P. Ainsworth
Title: Executive Vice President and Chief Financial Officer
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EXHIBIT A
URS CORPORATION
$550,000,000 SENIOR SECURED CREDIT FACILITIES
SUMMARY OF TERMS AND CONDITIONS
All terms defined in the financing letter to which this Summary of Terms is
attached and not otherwise defined herein shall have the same meaning when used
herein.
BORROWER: URS Corporation ("Borrower").
GUARANTORS: All direct and indirect domestic subsidiaries of
Borrower having $250,000 (or such higher figure as
may be agreed to by Agent and Borrower) or more in
income.
FACILITIES: A $100,000,000 senior secured revolving credit
facility ("Revolver"). A portion of the Revolver
will be available as a subfacility for standby and
commercial letters of credit and a portion of the
Revolver will be available as a subfacility for
loans denominated and payable in Sterling.
A $250,000,000 senior secured term loan ("Term
Loan A").
A $100,000,000 senior secured term loan ("Term
Loan B").
A $100,000,000 senior secured term loan ("Term
Loan C" and, together with Term Loan A and Term
Loan B, the "Term Loans").
AGENT AND
ARRANGER: Wells Fargo Bank, National Association ("Wells
Fargo").
LENDERS: Wells Fargo and a group of financial institutions
and other accredited investors mutually acceptable
to Borrower and Wells Fargo.
MATURITY: Revolver: Six years from the date of the
satisfaction of the conditions precedent set forth
below (the "Closing Date").
Term Loan A: Six years from the Closing Date.
Term Loan B: Seven years from the Closing Date.
Term Loan C: Eight years from the Closing Date.
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AMORTIZATION: The Term Loans will be payable in quarterly
principal installments, beginning with the first
full fiscal quarter following the Closing Date,
according to the following grid:
YEAR TERM LOAN A TERM LOAN B TERM LOAN C
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1 5% 1% of initial 1% of initial
commitment commitment
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2 0% 1% of initial 1% of initial
commitment commitment
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3 5% 1% of initial 1% of initial
commitment commitment
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4 0% 1% of initial 1% of initial
commitment commitment
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5 5% 1% of initial 1% of initial
commitment commitment
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6 5% 1% of initial 1% of initial
commitment commitment
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7 Remaining 1% of initial
principal commitment
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8 Remaining
principal
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Any outstanding loans under the Revolver will be
payable, and all letters of credit will expire, on
the sixth anniversary of the Closing Date.
PURPOSE: The proceeds of the Term Loans, up to $25,000,000
of the Revolver and a portion of the letter of
credit sublimit of the Revolver (to be
determined), together with (i) not less than
$100,000,000 in cash preferred equity
contributions to Borrower by RCBA Strategic
Partners, L.P. ("RCBA") and/or its affiliates and
(ii) the proceeds of not less than $200,000,000 of
the Bridge Financing or the Permanent Financing,
will be made available on the Closing Date and
shall be used to (a) pay the consideration for the
Shares pursuant to the DMG
2
Tender Offer and the Merger, including any
appraisal rights (the "Acquisition
Consideration"), in an aggregate maximum amount of
approximately $305,00,000, (b) refinance existing
senior indebtedness of Borrower and DMG in an
aggregate maximum amount of not more than
$450,000,000, and (c) pay fees and expenses in
connection with the Acquisition and the related
financings in an aggregate maximum amount of
approximately $40,000,000.
A portion of Term Loan A (such portion being the
"Delayed-Draw Term Loan") will be available on a
delayed-draw basis, for a period not to exceed 180
days after the Closing Date to pay that portion of
the Acquisition Consideration that becomes due and
payable upon the consummation of the Merger.
The Revolver will also be available for the
working capital requirements and general corporate
purposes of Borrower and its subsidiaries, for the
payment of amounts required to be paid to
dissenting shareholders and, subject to a sublimit
to be agreed upon, to issue commercial letters of
credit and standby letters of credit to support
workers' compensation contingencies and for other
corporate purposes to be agreed upon. During the
period from the Closing Date to the consummation
of the Merger, outstanding loans under the
Revolver will not exceed the sum of (i) the
principal amount of the Revolver used to purchase
shares on the Closing Date, (ii) $25,000,000, and
(iii) letters of credit (in an amount to be
determined).
INTEREST RATES: Borrower will have the following initial pricing
options:
Term Loan A - Base Rate plus 1.75%
LIBOR plus 2.75%
Term Loan B - Base Rate plus 2.25%
LIBOR plus 3.25%
Term Loan C Base Rate plus 2.50%
LIBOR plus 3.50%
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Revolver - Base Rate plus 1.75%
LIBOR plus 2.75%
Adjusted Domestic
Sterling Rate plus 2.75%
Effective with the receipt of financial statements
for the fiscal quarter ending twelve months after
the Closing Date, interest rate margins shall be
determined based upon the ratio of Funded Debt to
four-quarter trailing pro-forma EBITDA according
to a grid to be agreed upon.
Base Rate on any day means the higher of (i) the
Prime Rate in effect on that day, and (ii) the
Federal Funds Rate in effect on that day as
announced by the Federal Reserve Bank of New York,
plus 0.50%.
Prime Rate means at any time the rate of interest
most recently announced within Wells Fargo at its
principal office in San Francisco as its Prime
Rate, with the understanding that Wells Fargo's
Prime Rate is one of its 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. Each change in the Prime Rate will be
effective on the day the change is announced
within Wells Fargo.
LIBOR for an interest period means the average of
the rate of interest at which deposits
(approximately equal to the amount of the
requested loan and for the same term as the
interest period) are offered to Agent in the
London interbank Eurodollar market for delivery on
the first day of the interest period, rounded
upwards if necessary to the next higher 1/16%, as
adjusted for reserve requirements.
Adjusted Sterling Rate for an interest period
means the rate per annum displayed by Reuters at
which Sterling is offered to Agent in the London
interbank market as determined by the British
Bankers' Association rounded upwards if necessary
to the next higher 1/16%.
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Interest on Base Rate loans will be payable
quarterly. Interest on LIBOR and Sterling loans
will be payable at the end of each interest period
selected by Borrower (one, two, three or six
months), and at the end of three months in the
case of a six-month interest period. Interest on
all loans will also be payable upon their
conversion to another pricing option, prepayment
and maturity.
All interest on Base Rate Loans will be computed
on the basis of actual days elapsed in a 365/366-
day year and all other interest will be computed
on the basis of actual days elapsed in a 360-day
year.
INTEREST RATE
PROTECTION: Borrower will enter into interest rate protection
agreements satisfactory to Agent within 90 days
after the Closing Date, such that the effective
interest rate on at least 50% of the Term Loans is
fixed for the lesser of three years or the
extinguishment of the Term Loans.
COMMITMENT FEE: Initially, 0.50% per annum on the unused portion
of the Revolver and the Delayed Draw Term Loan,
payable quarterly in arrears and accruing from the
Closing Date. Effective with the receipt of
financial statements for the fiscal quarter ending
twelve months after the Closing Date, the
commitment fee shall be determined based upon the
ratio of Funded Debt to four-quarter trailing pro-
forma EBITDA according to a grid to be agreed
upon.
All fees will be computed on the basis of actual
days elapsed in a 365/366-day year.
SECURITY: The Senior Facilities will be secured by a first
priority, perfected security interest in all
existing and after-acquired personal property of
Borrower (including 100% of the stock of all
domestic subsidiaries of Borrower having $250,000
(or such higher figure as may be agreed to by
Agent and Borrower) or more in income and 65% of
the stock of all foreign subsidiaries of Borrower
having $250,000 (or such higher figure as may be
agreed to by Agent and Borrower) or more in income
unless the pledge of the stock of any such foreign
5
subsidiary is reasonably likely to create adverse
tax consequences) and all after-acquired material
fee interests in real property of Borrower. A
negative pledge will apply to all other assets,
subject to agreed upon exceptions.
Each guaranty of a domestic subsidiary will be
secured by a first priority, perfected security
interest in all existing and after-acquired
personal property of such subsidiary (including
100% of the stock of all its domestic subsidiaries
having $250,000 (or such higher figure as may be
agreed to by Agent and Borrower) or more in income
and 65% of the stock of all its foreign
subsidiaries having $250,000 (or such higher
figure as may be agreed to by Agent and Borrower)
or more in income unless the pledge of the stock
of any such foreign subsidiary is reasonably
likely to create adverse tax consequences) and all
after-acquired material fee interests in real
property of such subsidiary. A negative pledge
will apply to all other assets, subject to agreed
upon exceptions. Intercompany debt of guarantors
shall be evidenced by notes which are subordinated
to the Senior Facilities and pledged to Lenders.
During the period from the Closing Date to the
consummation of the Merger, the Senior Facilities
will be secured by a first priority, perfected
security interest in 100% of the stock of Merger
Sub and, to the extent permitted by applicable
law, including margin regulations, the stock of
DMG acquired in the DMG Tender Offer. In
addition, during such period the Senior Facilities
will be secured by a first priority, perfected
security interest in the promissory note executed
by DMG in favor of Borrower and an assignment of
the collateral securing such note.
NOTICES OF
BORROWING: Similar to existing credit agreement.
MINIMUM BORROWING: Similar to existing credit agreement.
COMMITMENT REDUCTION
OR CANCELLATION: Similar to existing credit agreement.
6
OPTIONAL PREPAYMENT: Similar to existing credit agreement.
REQUIRED PREPAYMENT
FROM EXCESS CASH FLOW: Borrower will prepay a portion of the Term Loans
within 105 days after the end of each fiscal year
in an amount equal to (i) 50% of its Excess Cash
Flow for any Fiscal Year for which the Leverage
Ratio is less than 4.0x and (ii) 75% of its Excess
Cash Flow for any other fiscal year.
Excess Cash Flow shall be defined as EBITDA minus
capital expenditures (net of related financing) ,
acquisition expenses (net of related financing),
cash taxes, cash interest and scheduled debt
maturities. These prepayments will be in addition
to the scheduled periodic payments on the Term
Loans described above, and will be applied to
reduce all such scheduled payments pro rata.
OTHER REQUIRED
PREPAYMENTS: Similar to existing credit agreement; provided,
however, that the proceeds of the Permanent
Financing may be used to prepay the Bridge
Financing; provided further that 50% of the
proceeds of any equity issuance shall be used to
prepay the Term Loans.
APPLICATION OF
REQUIRED PREPAYMENTS: All such amounts shall be applied first to the
prepayment of the Term Loans and thereafter to the
prepayment of the Revolver and the reduction of
commitments thereunder. All such mandatory
prepayments of the Term Loans shall be applied
ratably to the Term Loans and shall be applied on
a pro rata basis to all remaining scheduled
installments thereof. Notwithstanding the
foregoing, in the case of any mandatory prepayment
to be applied to Term Loan B or Term Loan C, the
holders thereof shall have the opportunity to
waive the right to receive the amount of such
mandatory prepayment. In the event any such
holders elect to waive such right, the amount that
would otherwise have been applied as a mandatory
prepayment of Term Loan B
7
or Term Loan C, as the case may be, shall be
applied to the prepayment of Term Loan A.
INCREASED COSTS OR
REDUCED RETURNS: Similar to existing credit agreement.
CONDITIONS
PRECEDENT TO CLOSING
AND INITIAL BORROWING: The obligations of Lenders to make the initial
loan will be subject to satisfaction of the
following conditions precedent (with scope
exceptions and qualifications to be agreed upon)
and such others as are mutually agreeable to Agent
and Borrower:
1) The definitive documentation evidencing the
Senior Facilities shall be prepared by counsel
to Agent and shall be customary for
transactions of this type.
2) Lenders shall have received (i) audited
financial statements for Borrower and its
subsidiaries for the fiscal year ended October
31, 1998 and for DMG and its subsidiaries for
the fiscal year ended March 26, 1999; (ii)
unaudited financial statements of Borrower and
its subsidiaries for the fiscal quarter ended
January 31 and April 30, 1999; (iii) a
statement of sources and uses of funds
regarding the Acquisition; (v) final projected
financial statements (including balance sheets
and statements of operations, stockholders'
equity and cash flow) of Borrower and its
subsidiaries for the seven-year period after
the Closing Date; and (vi) a pro forma opening
balance sheet for Borrower and its
subsidiaries as of the Closing Date, all of
the foregoing to be in form and substance
satisfactory to Agent.
3) Proforma combined trailing four-quarter EBITDA
as of April 30, 1999, after giving effect to
the Acquisition, of not less than
$143,000,000. Proforma combined trailing four-
quarter EBITDA means the sum of (i) actual URS
EBITDA for the 12-month period ending April
30, 1999 plus (ii) actual
8
DMG EBITDA for the 6-month period ending March
26, 1999 multiplied by 2.
4) Since October 31, 1998, there shall have
occurred no material adverse change in the
business, operations, properties, assets,
liabilities, financial condition or prospects
of Borrower and its subsidiaries, taken as a
whole. Since December 25, 1998, there shall
have occurred no material adverse change in
the business, operations, properties, assets,
liabilities, financial condition or prospects
of DMG and its subsidiaries, taken as a whole
(except for those items included in the
respective disclosure schedule to the Merger
Agreement).
5) The corporate, capital and ownership structure
of Borrower and the structure utilized to
consummate the Acquisition (including the DMG
Tender Offer and the Merger) shall be as set
forth in the Merger Agreement, no provision of
which shall have been amended, supplemented,
waived or otherwise modified in any material
respect without the prior written consent of
Agent and the Merger Agreement shall be in
full force and effect.
6) On or prior to the Closing Date, Borrower
shall have received not less than $100,000,000
in cash proceeds from the sale of preferred
stock to RCBA and/or its affiliates (the "RCBA
Equity") on the terms and conditions set forth
in the RCBA Agreement.
7) On or prior to the Closing Date, Borrower
shall have received not less than $200,000,000
of proceeds of the Bridge Financing in
accordance with the MS & Co. Letter or the
Permanent Financing, which Permanent Financing
shall be in form and substance satisfactory to
Agent.
9
8) Merger Sub shall have acquired not less than
the Minimum Shares pursuant to the DMG Tender
Offer, and all other aspects of the DMG Tender
Offer shall have been consummated pursuant to
the Merger Agreement, no provision of which
shall have been amended, supplemented, waived
or otherwise modified in any material respect
without the prior written consent of Agent.
9) The Shares purchased in the DMG Tender Offer
shall have been purchased with the proceeds of
first, the RCBA Equity, second, the Bridge
Financing or the Permanent Financing, third,
Term Loan C, fourth, Term Loan B, fifth, Term
Loan A, and sixth, the Revolver.
10) Agent shall have received satisfactory
evidence that the fees and expenses to be
incurred in connection with the Acquisition
and the related financings will not exceed
$40,000,000.
11) All material governmental and third party
approvals necessary or advisable in connection
with the Acquisition, the financings
contemplated thereby and the continuing
operations of the business of Borrower and DMG
and their respective subsidiaries shall have
been obtained and be in full force and effect
and 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
material adverse conditions on the Acquisition
or the financing thereof.
12) Agent, for the benefit of Lenders, shall have
been granted a first priority perfected
security interest in all assets to the extent
described above under the heading "Security."
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13) No violation of law, including Regulation U,
shall occur as a result of the Closing.
14) Agent shall have received a certificate of the
chief financial officer of Borrower, in form
and substance satisfactory to Agent,
supporting the conclusions that, after giving
effect to the Acquisition, and the related
transactions contemplated hereby, Borrower and
its subsidiaries, taken as a whole, and DMG
and its subsidiaries, taken as a whole, will
not be insolvent or be rendered insolvent by
the indebtedness incurred in connection
therewith, or be left with unreasonably small
capital with which to engage in its
businesses, or have incurred debts beyond its
ability to pay such debts as they mature.
15) DMG shall have repaid in full and terminated
all commitments relating to its credit
facility with CIBC/Oppenheimer and Borrower
shall have repaid in full and terminated all
commitments relating to its credit facility
with Agent and Agent shall have received
evidence that all liens on the assets of DMG
and its subsidiaries related thereto have been
terminated or released, in each case on terms
satisfactory to Agent.
16) Receipt of customary certificates, charter
documents, resolutions, insurance
certificates, uniform commercial code searches
and opinions of counsel.
17) All representations and warranties are true
and correct in all material respects.
18) No event of default or potential default
exists or will result from the loan.
19) Absence of any disruption or change in the
financial, banking or capital markets or in
the regulatory environment that in the good
faith judgment of Agent could materially
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and adversely affect the syndication of the
Senior Facilities.
CONDITIONS
PRECEDENT TO FUNDING
OF DELAYED-DRAW TERM LOAN: The obligations of Lenders to make the Delayed-
Draw Term Loan will be subject to satisfaction of
conditions precedent consistent with transactions
of this type, including but not limited to
1) The initial loans shall have been made in
accordance with the conditions precedent to
the initial borrowing set forth above.
2) The Merger shall have been consummated
pursuant to the Merger Agreement, no
provision of which shall have been amended,
supplemented, waived or otherwise modified
in any material respect without the prior
written consent of Agent. Upon consummation
of the Merger, all of the shares of DMG
shall be owned Borrower.
3) After giving effect to the consummation of
the Merger, the aggregate Acquisition
Consideration shall not exceed $305,000,000.
REPRESENTATIONS AND
WARRANTIES: Similar to existing credit agreement.
COVENANTS: Similar to existing credit agreement. The
principal financial covenants expected to be
included in the Credit Agreement are indicated
below. Financial terms and calculations will be
in accordance with generally accepted accounting
principles. All covenants will apply to Borrower
and its subsidiaries. Covenants will be tested at
the end of each fiscal quarter unless otherwise
stated and be certified as to correctness by the
chief financial officer.
Quick Ratio: Ratio to be determined.
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Leverage Ratio: The ratio of Funded Debt to
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EBITDA shall at no time exceed a level to be
negotiated with step downs to be negotiated.
Fixed Charge Coverage Ratio: The ratio of (i)
---------------------------
EBITDA less capital expenditures and cash taxes to
(ii) interest plus principal shall at no time
exceed a level to be negotiated.
Minimum EBITDA: EBITDA shall at no time be less
--------------
than a level to be negotiated with step ups to be
negotiated.
EVENTS OF DEFAULT: Similar to existing credit agreement.
ASSIGNMENTS AND
PARTICIPATIONS: A Lender may grant, to an Eligible Assignee,
assignments or participations in all or any
portion of its loans or commitments under the
Senior Facilities. Assignments will be in minimum
amounts of $5,000,000.
FEES, EXPENSES AND
INDEMNIFICATION: Whether or not the Credit Agreement is executed,
Borrower will (i) pay all reasonable fees and
expenses of Agent (including fees and expenses of
outside counsel and allocated costs of internal
counsel) relating to preparation of the loan
documents or to the Senior Facilities, and (ii)
indemnify Agent, prospective Lenders and their
respective directors, officers and employees
against all claims asserted and losses,
liabilities and expenses incurred in connection
with the Senior Facilities except to the extent
resulting from the bad faith, gross negligence or
willful misconduct of the indemnitee.
REQUIRED LENDERS: Two or more Lenders holding at least 51% of
outstanding loans and commitments under the Senior
Facilities.
GOVERNING LAW: State of New York.
CONFIDENTIALITY: Agent and each Lender agrees not to disclose any
non-public information obtained in connection with
the transactions contemplated by this letter;
provided, however, that disclosure of such
information may be made to affiliates of such
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Lender or Agent in connection with the
transactions contemplated herein, to prospective
Lenders and Eligible Assignee (provided that such
Eligible Assignees shall have agreed by accepting
and retaining such information to the terms of
this confidentiality agreement) and to their
respective accountants, attorneys and other
advisors, or as required by any governmental
agency having appropriate jurisdiction or pursuant
to legal process; provided that, unless
specifically prohibited by the applicable law or
court order, Agent and each Lender shall notify
Borrower 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 Agent or 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 Agent or any Lender be obligated or
required to return any material furnished by
Borrower, DMG, or any of their subsidiaries.
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