EXHIBIT 2.3
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URS CORPORATION
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$200,000,000
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SENIOR SUBORDINATED INCREASING RATE NOTES DUE JUNE 9, 2000
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NOTE PURCHASE AGREEMENT
Dated as of June 9, 1999
TABLE OF CONTENTS
Page
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
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
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
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
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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
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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
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
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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
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payable to you in the amount of your Commitment.
(b) Corporate Approvals and Other Similar Documentation. Certified
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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
(d) Good Standing Certificates. A copy of a certificate of the
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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
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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
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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
(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
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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
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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
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hereto executed by each Subsidiary Guarantor and DMG.
(k) Bridge Note Disclosure Letter. The Bridge Note Disclosure
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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:
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(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
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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
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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.
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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
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,
10
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.
11
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
12
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;
13
(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
14
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.
15
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
16
"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
17
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).
18
(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.
19
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
20
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
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.
22
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.
23
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
24
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
25
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.
26
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
27
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
28
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
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
30
(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;
31
(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
32
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.
33
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
34
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.
35
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.
36
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;
37
(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
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
39
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;
40
(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
41
(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
42
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;
43
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.
44
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;
45
(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;
46
(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;
47
(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
48
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
49
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;
50
(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
51
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
52
(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.
53
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:
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
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.
54
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.
55
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;
56
(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
57
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
59
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
60
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
61
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
62
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
63
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
64
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
65
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
66
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;
67
(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;
68
(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
69
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
71
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
73
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
74
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
75
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
76
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
78
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
79
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
------------
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
86
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).
87
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
88
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
89
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
91
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.
92
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.
93
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
94
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
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.
96
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
97
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]
98
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
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
WELLS FARGO BANK, NATIONAL ASSOCIATION
By /s/ Abraham B. Mintz
----------------------------------------
Name: Abraham B. Mintz
Title: Senior Vice President
S-101
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
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
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).
"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
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
"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
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.
II-5
"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.
II-6
"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
II-7
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.
II-8
"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.
II-9
"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).
II-10
"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
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
II-12
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
II-13
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
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);
II-15
(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
"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
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.
II-18
"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"
II-19
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
II-20
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
II-21
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
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;
(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.
"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
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
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.
III-5
"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
III-6
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
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
(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
(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
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
(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
(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
"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
"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
(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
"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
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,
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
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.
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A-3
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:
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
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
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.
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B-3
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:
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: _______________________
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
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: ___________________________)