AMENDMENT NO. 3 TO
CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT (this "AMENDMENT")
effective as of September 30, 1998, by and among VARI-LITE INTERNATIONAL,
INC., a Delaware corporation (the "BORROWER"), SUNTRUST BANK, ATLANTA, XXXXX
BROTHERS XXXXXXXX & CO., CHASE BANK OF TEXAS, N.A. (FORMERLY KNOWN AS TEXAS
COMMERCE BANK NATIONAL ASSOCIATION), COMERICA BANK-TEXAS and THE FIRST
NATIONAL BANK OF CHICAGO (collectively, the "LENDERS"), SUNTRUST BANK,
ATLANTA, as agent and collateral agent for the Lenders (in such capacities,
the "AGENT" and "COLLATERAL AGENT", respectively), and XXXXX BROTHERS
XXXXXXXX & CO, as co-agent for the Lenders (in such capacity, the "CO-AGENT").
W I T N E S S E T H:
WHEREAS, BORROWER, THE LENDERS, THE AGENT, THE COLLATERAL AGENT,
AND THE CO-AGENT ARE PARTIES TO A CERTAIN MULTICURRENCY CREDIT AGREEMENT
DATED AS OF DECEMBER 19, 1997, AS AMENDED BY A CERTAIN AMENDMENT NO. 1 TO
CREDIT AGREEMENT DATED AS OF APRIL 21, 1998, AND AS AMENDED BY A CERTAIN
AMENDMENT NO. 2 TO CREDIT AGREEMENT DATED AS OF JULY 31, 1998 (AS SO AMENDED,
THE "CREDIT AGREEMENT"; defined terms used herein without definition shall
have the meanings ascribed to such terms in the Credit Agreement);
WHEREAS, Borrower has requested, and the Lenders have agreed, that
the Credit Agreement be amended to make certain modifications therein, all as
more specifically set forth below;
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. Subject to the
satisfaction of the conditions precedent set forth in Section 2 hereof, and
effective as of the Effective Date (as hereinafter defined), the Credit
Agreement is hereby amended as follows:
1.1 SECTION 1.01 of the Credit Agreement is hereby amended by
deleting in their entirety the defined terms "ADJUSTED LIBO RATE", "ADJUSTED
SPECIAL LIBO RATE", "APPLICABLE COMMITMENT FEE RATE", "APPLICABLE MARGIN",
"BUSINESS DAY", "COMMITMENT", "CONSOLIDATED EBIT", "CONSOLIDATED RENTAL
EXPENSE", "CURRENCY", "FIXED CHARGE COVERAGE RATIO", "MASTER SYNDICATED LOAN
COMMITMENT", "MULTICURRENCY
SYNDICATED LOAN SUBCOMMITMENT", "PLEDGE AGREEMENTS", "PLEDGED STOCK",
"SECURITY DOCUMENTS", "SWING LINE ADVANCE", "SWING LINE BORROWING NOTICE",
"SWING LINE COMMITMENT", "SWING LINE LENDER", "SWING LINE LOANS", and "SWING
LINE NOTE" and their accompanying definitions, and substituting in lieu
thereof the following defined terms and accompanying definitions:
"ADJUSTED LIBO RATE" shall mean, with respect to each Interest Period
for a Euro Advance, the sum of (i) the rate obtained by dividing (a) LIBOR
for such Interest Period by (b) a percentage equal to 1 MINUS the then
stated maximum rate (stated as a decimal) of all reserves requirements
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or against any successor category of liabilities as defined
in Regulation D), PLUS (ii) a percentage sufficient to compensate the
Lenders for the cost of complying with any reserves, liquidity and/or
special deposit requirements directly or indirectly affecting the
maintenance or funding of such Advance imposed by the Bank of England or
any other central bank or governmental or quasi-governmental authority of
any jurisdiction that is an issuer of a Currency or the Council of the
European Union.
"ADJUSTED SPECIAL LIBO RATE" shall mean, with respect to a Euro
Advance, the sum of (i) the rate obtained by dividing (a) Special LIBOR as
in effect from time to time by (b) a percentage equal to 1 MINUS the then
stated maximum rate (stated as a decimal) of all reserves requirements
(including, without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or against any successor category of liabilities as defined
in Regulation D), PLUS (ii) a percentage sufficient to compensate the
Lenders for the cost of complying with any reserves, liquidity and/or
special deposit requirements directly or indirectly affecting the
maintenance or funding of such Advance imposed by the Bank of England or
any other central bank or governmental or quasi-governmental authority of
any jurisdiction that is an issuer of a Currency or the Council of the
European Union.
"APPLICABLE COMMITMENT FEE RATE" shall mean (x) through September 30,
1998, the rate determined pursuant to the definition of "Applicable
Commitment Fee Rate" as defined in the Agreement immediately prior to the
effectiveness of Amendment No. 3, and (y) on and after October 1, 1998, the
rate for any date to be used to calculate commitment fees payable by
Borrower pursuant to Section 3.05, expressed as a percentage and determined
from the chart set forth below based on Borrower's Adjusted Fund
Debt/EBITDA Ratio calculated as the relevant determination date:
ADJUSTED FUNDED APPLICABLE COMMITMENT
DEBT/EBITDA RATIO FEE RATE
----------------------------------------------------
Greater than or equal to
2.50:1.00 0.500%
Less than 2.50:1.00, but
greater than or equal to
2.00:1.00 0.375%
Less than 2.00:1.00, but
greater than or equal to
1.00:1.00 0.250%
Less than 1.00:1.00 0.200%
The Adjusted Funded Debt/EBITDA Ratio and the resulting Applicable
Commitment Fee Rate shall be determined quarterly, based upon the financial
statements delivered to the Lenders pursuant to Section 6.07(a) or Section
6.07(b) hereof, as the case may be, in accordance with Section 6.08(b),
with such Applicable Commitment Fee Rate to be effective with respect to
calculations based upon the financial statements delivered pursuant to
Section 6.07 as of the 1st day of the 2nd fiscal quarter immediately
following the fiscal quarter for which such financial statements are
delivered (for example, the Applicable Commitment Fee Rate effective as of
the 1st day of the 3rd fiscal quarter shall be calculated based on the
financial statements delivered for the 1st fiscal quarter of Borrower).
Notwithstanding the foregoing, at any time during which Borrower has failed
to deliver the financial statements and certificates when required by
Section 6.07(a), (b), and (c), as applicable (and the cure period set forth
in Section 8.02 hereof shall have expired), the Applicable Commitment Fee
Rate shall be 0.500%.
"APPLICABLE MARGIN" shall mean (x) with respect to all outstanding
Euro Advances through September 30, 1998, the percentage determined
pursuant to the definition of "Applicable Margin" as defined in the
Agreement immediately prior to the effectiveness of Amendment No. 3, and
(y) on and after October 1, 1998, with respect to all outstanding Euro
Advances for any day, the applicable percentage determined from the chart
set forth below based on Borrower's Adjusted Funded Debt/EBITDA Ratio
calculated as of the relevant determination date:
ADJUSTED FUNDED APPLICABLE
DEBT/EBITDA RATIO MARGIN
---------------------------------------------
Greater than or equal to
3.00:1.00 3.50%
Less than 3.00:1.00, but
greater than or equal to
2.50:1.00 3.00%
Less than 2.50:1.00, but
greater than or equal to
2.00:1.00 2.50%
Less than 2.00:1.00, but
greater than or equal to
1.50:1.00 2.00%
Less than 1.50:1.00, but
greater than or equal to
1.00:1.00 1.50%
Less than 1.00:1.00 1.00%
The Adjusted Funded Debt/EBITDA Ratio and the resulting Applicable Margin
shall be determined quarterly, based upon the financial statements
delivered to the Lenders pursuant to Section 6.07(a) or Section 6.07(b)
hereof, as the case may be, in accordance with Section 6.08(b), with such
Applicable Margin to be effective with respect to calculations based upon
the financial statements delivered pursuant to Section 6.07 as of the first
day of the second fiscal quarter immediately following the fiscal quarter
for which such financial statements are delivered (for example, the
Applicable Margin effective with respect to all outstanding Euro Advances
as of the first day of the third fiscal quarter shall be calculated based
upon the financial statements delivered for the first fiscal quarter of
Borrower). Notwithstanding the foregoing, at any time during which
Borrower has failed to deliver the financial statements and certificates
when required by Section 6.07(a), (b), and (c), as applicable (and the cure
period set forth in Section 8.02 hereof shall have expired), the Applicable
Margin with respect to the Euro Advances then outstanding shall be 3.50%.
"BUSINESS DAY" shall mean (i) with respect to any borrowing, payment
or rate selection of Euro Advances, a day (other than a Saturday or Sunday)
on which banks generally are open in Atlanta, Georgia, Dallas, Texas, and
New York, New York for the conduct of substantially all of their commercial
lending activities and on which dealings in Dollars and each of the
Currencies are carried on in the London interbank market (and, if the
Advances which are the subject of such borrowing, payment or rate selection
are denominated in the EURO, a day upon which such clearing system as is
determined by the Agent to be suitable for clearing or settlement of the
EURO is open for business), and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally
are open in Atlanta, Georgia, Dallas, Texas, and New York, New York for
the conduct of substantially all of their commercial lending activities.
"COMMITMENT" shall mean (i) for any Lender at any time, any of its
Master Syndicated Loan Commitment or Multicurrency Syndicated Loan
Subcommitment, and (ii) for any Swing Line Lender at any time, its Swing
Line Commitment, in each case as the context may require.
"CONSOLIDATED EBIT" shall mean, for any fiscal period of Borrower, an
amount equal to the sum for such fiscal period of (i) Consolidated Net
Income (Loss), PLUS (ii) to the extent subtracted in determining such
Consolidated Net Income (Loss), (x) provisions for taxes based on income,
and (y) Consolidated Interest Expense for such period, and MINUS (iii) any
items of gain (or PLUS any items of loss) not realized in the ordinary
course of business that were included (or any items of loss that had been
excluded) in determining such Consolidated Net Income (Loss), including
without limitation, one-time gains or losses associated with the sale of
any Subsidiary of Borrower and one-time gains or losses recognized in
connection with the settlement of any pending litigation; PROVIDED,
HOWEVER, that in connection with the sale of Irideon, Inc. the amount of
loss that may be used to increase Consolidated EBIT pursuant to the
foregoing clause (iii) shall not exceed $4,000,000 in the aggregate. For
purposes of calculating Consolidated EBIT, to the extent that the net
income (loss) of any Person acquired or consolidated with a Consolidated
Company is included in the calculation of Consolidated Net Income (Loss),
corresponding additions and deductions of the types described in clauses
(ii) and (iii) of the preceding sentence shall be made pursuant to this
definition for such Person in accordance with GAAP.
"CONSOLIDATED RENTAL EXPENSE" shall mean, as at any date of
determination, total rental expense of the Consolidated Companies
determined on a consolidated basis in accordance with GAAP, but excluding
(i) Synthetic Lease Obligations, and (ii) rental expense for equipment not
being leased together with, and included in the same rental or lease
agreement as, any related real property.
"CURRENCY" shall mean, with respect to the Multicurrency Syndicated
Loan Subcommitments, each of the following currencies, so long as such
currencies remain Eligible Currencies: British pounds sterling, Belgian
francs, German marks, Japanese yen, French francs, and from and after
becoming generally available in the international currency and exchange
markets, the EURO, as selected by Borrower. For purposes of this
definition, each of the specific currencies referred to in the immediately
preceding sentence shall mean and be deemed to refer to the lawful currency
of the jurisdiction referred to in connection with such currency, E.G.,
"Japanese yen" means the lawful currency of Japan.
"FIXED CHARGE COVERAGE RATIO" shall mean the ratio of (i) Consolidated
EBITDAR to (ii) the sum of (x) Consolidated Interest Expense, (y)
Consolidated Rental Expense, and (z) Capital Expenditures of the
Consolidated Companies, in each case as determined on the last day of each
fiscal quarter of Borrower on a consolidated basis for the quarter then
ending and three immediately preceding fiscal quarters.
"MASTER SYNDICATED LOAN COMMITMENT" shall mean, at any time for each
Lender, the amount of such commitment as in effect at such time as set
forth under such Lender's name on SCHEDULE 2.01 (PART I) attached to
Amendment No. 3, as the same may be increased or decreased from time to
time as a result of any reduction thereof pursuant to Section 2.05, any
amendment thereof pursuant to Section 10.02, or any assignment thereof
pursuant to Section 10.06.
"MULTICURRENCY SYNDICATED LOAN SUBCOMMITMENT" shall mean, at any time
for each Lender, the amount of such commitment as in effect at such time as
set forth under such Lender's name on SCHEDULE 2.01 (PART II) attached to
Amendment No. 3, as the same may be increased or decreased from time to
time as a result of any reduction thereof pursuant to Section 2.05, any
amendment thereof pursuant to Section 10.02, or any assignment thereof
pursuant to Section 10.06.
"PLEDGE AGREEMENTS" shall mean, collectively, (i) that certain Pledge
and Security Agreement dated as of September 30, 1998, from Borrower in
favor of the Collateral Agent for the ratable benefit of the Lenders in
respect of shares of Vari-Lite Asia, Inc., (ii) that certain Deed of Pledge
dated as of 30 September 1998 from Borrower in favor of the Collateral
Agent for the ratable benefit of the Lenders in respect of shares of
Vari-Lite Europe Holdings Limited, (iii) the Domestic Pledge Agreement,
and (iv) each other pledge agreement, security agreement deed of charge,
and similar instrument from Borrower or any of its Subsidiaries in favor
of the Collateral Agent for the ratable benefit of the Lenders delivered
pursuant to the requirements of Section 6.10 hereof, in each case as the
same may be amended, restated and supplemented from time to time.
"PLEDGED STOCK" shall mean, collectively, (i) not less than 65% of all
issued and outstanding capital stock, together with not less than 65% of
all warrants, stock options, and other purchase and conversion rights in
respect of such capital stock, of Vari-Lite Asia, Inc. and Vari-Lite Europe
Holdings Limited, (ii) 100% of all issued and outstanding capital stock or
other equity or ownership interests, together with not less than 100% of
all warrants, options, and other purchase and conversion rights in respect
of such capital stock or other equity or ownership interests, of each
Domestic Subsidiary of Borrower whose capital stock or other equity or
ownership interests are subject to a Pledge Agreement, and (iii) not less
than 65% of all issued and outstanding capital stock or other equity or
ownership interests, together with not less than 65% of all warrants,
options, and other purchase and conversion rights in respect of such
capital stock or other
equity or ownership interest, of each Foreign Subsidiary whose capital
stock or other equity or ownership interests are subject to a Pledge
Agreement.
"SECURITY DOCUMENTS" shall mean, collectively, the Guaranty Agreement,
the Pledge Agreements, the Borrower Security Agreement, the Subsidiary
Security Agreement, and each other guaranty agreement, mortgage, deed of
trust, security agreement, pledge agreement, and other security or
collateral document guaranteeing or securing the Obligations, as the same
may be amended, restated, and supplemented from time to time.
"SWING LINE ADVANCE" shall mean a Borrowing pursuant to Section 2.03
consisting of a Swing Line Loan (which may be made either as a Base Rate
Advance or as a Transaction Rate Advance) made to Borrower on the same date
and interest rate basis by the same Swing Line Lender and, if made as a
Fixed Rate Advance, for the same Interest Period.
"SWING LINE BORROWING NOTICE" shall mean the notice given by Borrower
to a Swing Line Lender (with a copy to the Agent) requesting a Swing Line
Advance as provided in Section 2.03(c).
"SWING LINE COMMITMENT" shall mean the commitment of each Swing Line
Lender to make Swing Line Loans in an aggregate principal amount at any
time outstanding not to exceed the amount set forth under such Swing Line
Lender's name on SCHEDULE 2.01 (PART III) attached to Amendment No. 3.
"SWING LINE LENDER" shall mean (i) SunTrust Bank, Atlanta, (ii) Chase
Bank of Texas, N.A., and (iii) each other Lender extending to Borrower a
Swing Line Commitment hereunder, or all of such Lenders, as the context may
require.
"SWING LINE LOANS" shall mean, collectively, the loans made to
Borrower pursuant to Section 2.03.
"SWING LINE NOTE" shall mean the promissory notes evidencing the Swing
Line Loans made by each Swing Line Lender, substantially in the form of
EXHIBIT N attached to Amendment No. 3 and duly completed in accordance with
the terms hereof.
1.2 SECTION 1.01 of the Credit Agreement is hereby amended by
adding the following defined terms and accompanying definitions in proper
alphabetical order:
"AMENDMENT NO. 3" shall mean that certain Amendment No. 3 to Credit
Agreement effective as of September 30, 1998, by and among Borrower, the
Agent and Collateral Agent, the Co-Agent, and the Lenders, as the same may
be amended, restated and supplemented from time to time.
"BORROWER SECURITY AGREEMENT" shall mean that certain Borrower
Security Agreement dated as of November __, 1998, executed by Borrower and
granting to the Collateral Agent for the ratable benefit of the Lenders, in
the form of EXHIBIT L attached to Amendment No. 3, first priority Liens on
the personal property of Borrower as described therein, as the same may be
amended, restated and supplemented from time to time.
"BRAZOS LEASE" shall mean the Ground Lease Agreement dated as of
December 21, 1995, among Brazos Beltline Development, Inc., Vari-Lite,
Inc., Showco, Inc., Showco Creative Services, Inc., Concert Production
Lighting, Inc., and Trideon, Inc., as the same may have been or hereafter
be amended, restated and supplemented from time to time.
"CAPITAL EXPENDITURES" shall mean, for any period and without
duplication, the sum of all amounts that would, in conformity with GAAP, be
included as (i) additions to property, plant and equipment (including
renewals, improvements and replacements thereof) and (ii) other capital
expenditures on a consolidated statement of cash flows for the Consolidated
Companies for such period.
"CONSOLIDATED EBITDAR" shall mean, for any fiscal period of Borrower,
an amount equal to Consolidated EBITDA PLUS, to the extent subtracted in
determining Consolidated Net Income (Loss) in relation thereto,
Consolidated Rental Expense of the Consolidated Companies, as determined
for such period on a consolidated basis in accordance with GAAP.
"CONTRIBUTION AGREEMENT SUPPLEMENT" shall mean each Supplement to the
Contribution Agreement substantially in the form of ANNEX I attached
thereto executed by a Domestic Subsidiary of Borrower pursuant to the
requirements of Section 6.10.
"DOMESTIC PLEDGE AGREEMENT" shall mean the Domestic Pledge and
Security Agreement dated as of November __, 1998 executed by Borrower and,
if applicable, certain Subsidiaries of Borrower, granting to the Collateral
Agent for the ratable benefit of the Lenders, in the form of EXHIBIT K
attached to Amendment No. 3, first priority Liens on 100% of all issued and
outstanding common stock or other equity or ownership interests, together
with 100% of all warrants, stock options, and other purchase and conversion
rights with respect to such capital stock or other equity or ownership
interests, of each Domestic Subsidiary owned directly by Borrower or such
Subsidiaries, as the case may be.
"DOMESTIC PLEDGE AGREEMENT SUPPLEMENT" shall mean each Supplement to
the Domestic Pledge Agreement substantially in the form of ANNEX II or
ANNEX III attached thereto, executed by Borrower and, if applicable,
certain Subsidiaries of Borrower, in favor of the Collateral Agent for the
ratable benefit of the Lenders pursuant to the requirements of Section
6.10.
"DOMESTIC SHELL SUBSIDIARY" shall mean any Domestic Subsidiary of
Borrower that has no assets (other than legally required minimum paid-in
capital) or operations.
"DOMESTIC SUBSIDIARY" shall mean each Subsidiary of Borrower that is
not a Foreign Subsidiary.
"ELIGIBLE CURRENCY" shall mean any currency other than Dollars (i)
that is readily available, (ii) that is freely traded, (iii) in which
deposits are customarily offered to banks in the London interbank market,
(iv) that is convertible into Dollars in the international interbank market
and (v) as to which a Dollar Equivalent may be readily calculated. If,
with respect to any such currency, (x) currency control or other exchange
regulations are imposed in the country in which such currency is issued
with the result that different types of such currency are introduced, (y)
such currency is, in the determination of the Agent, no longer readily
available or freely traded, or (z) in the determination of the Agent, a
Dollar Equivalent of such currency is not readily calculable, the Agent
shall promptly notify the Lenders and Borrower, and such currency shall no
longer be a Currency as provided herein until such time as all of the
Lenders agree to reinstate such currency as a Currency hereunder.
"EURO" shall mean the euro referred to in Council Regulations (EC) No.
1103/97 dated June 17, 1997 passed by the Council of the European Union,
or, if different, the then lawful currency of the member states of the
European Union that participate in the third stage of Economic and Monetary
Union.
"EURO IMPLEMENTATION DATE" shall mean the first date (currently
expected to be January 1, 1999) on which the EURO becomes the currency of
some or all of the member states of the European Union.
"EXCLUDED PROPERTY" shall mean any of the following property now owned
or hereafter acquired by Borrower or any Domestic Subsidiary of Borrower:
(a) any property subject to a Permitted Lien of the type described in
clauses (a), (b), (h), (i), (j), (l) or (m) of Section 7.02 to the extent
that the terms of any instrument or agreement evidencing such Lien or the
Indebtedness secured thereby prohibit Liens on such property in favor of
the Collateral Agent securing the Obligations, such instruments and
agreements as in effect on November __, 1998 being more particularly
described on SCHEDULE 1.01-EP attached to Amendment No. 3, (b) the capital
stock of any Domestic Shell Subsidiary, and (c) any contract rights or
other general intangibles to the extent that the instruments or agreements
evidencing such contract rights or other general intangibles prohibit Liens
on such contract rights or other general intangibles in favor of the
Collateral Agent securing the Obligations, such instruments and agreements
evidencing material contract rights or other general intangibles as in
effect on November __, 1998 being more particularly described on SCHEDULE
1.01-EP attached to Amendment
No. 3, PROVIDED THAT all accounts arising from such contract rights or
other general intangibles shall not constitute "Excluded Property" for
purposes of this Agreement or the other Credit Documents.
"GUARANTY AGREEMENT SUPPLEMENT" shall mean each Supplement to the
Guaranty Agreement substantially in the form ANNEX I attached thereto,
executed by a Domestic Subsidiary of Borrower in favor of the Lenders, the
Agent and the Collateral Agent pursuant to the requirements of Section
6.10.
"SUBSIDIARY SECURITY AGREEMENT" shall mean that certain Subsidiary
Security Agreement in the form of EXHIBIT M attached to Amendment No. 3,
dated as of November __, 1998, executed by the Domestic Subsidiaries of
Borrower and granting to the Collateral Agent for the ratable benefit of
the Lenders first priority Liens on the personal property of such Domestic
Subsidiaries as described therein, as the same may be amended, restated and
supplemented from time to time.
"SUBSIDIARY SECURITY AGREEMENT SUPPLEMENT" shall mean each Supplement
to the Subsidiary Security Agreement substantially in the form of ANNEX I
attached thereto, executed by a Domestic Subsidiary of Borrower in favor of
the Collateral Agent pursuant to the requirements of Section 6.10.
"YEAR 2000 ISSUES" shall mean the actual and anticipated costs,
claims, losses, liabilities, delays, and other consequences associated with
the inability of certain computer applications to handle effectively data
that includes dates on and after January 1, 2000, as such inability in
respect of Borrower and its Subsidiaries and in respect of their respective
customers, suppliers and vendors affects the business, operations,
liabilities, prospects, and financial condition of Borrower and its
Subsidiaries.
1.3 SECTION 2.01 of the Credit Agreement is hereby amended by
deleting the first six words of clause (b) thereof and substituting in lieu
thereof the words "the Swing Line Lenders hereby establish. . . ."
1.4 SECTION 2.03 of the Credit Agreement is hereby amended by
deleting said Section 2.03 in its entirety and substituting in lieu thereof the
following SECTION 2.03:
SECTION 2.03. SWING LINE LOANS.
(a) Subject to and upon the terms and conditions herein set forth
(including the limitation set forth in Section 2.01), each Swing Line
Lender agrees to make to Borrower, from time to time prior to the
Revolver/Multicurrency Maturity Date, Swing Line Loans in an aggregate
principal amount outstanding at any time not to exceed its Swing Line
Commitment then in effect; PROVIDED,
HOWEVER, that the aggregate principal amount of all Swing Line Loans
outstanding to all Swing Line Lenders shall at no time exceed $5,000,000.
Borrower shall be entitled to repay and reborrow Swing Line Loans in
accordance with the provisions, and subject to the limitations, set forth
herein (including the limitation set forth in Section 2.01).
(b) Each Swing Line Loan shall, at the option of Borrower, be made
as a Base Rate Advance or Transaction Rate Advance. The aggregate
principal amount of each Swing Line Borrowing shall be not less than
$100,000 or a greater integral multiple of $1,000. At no time shall the
number of Swing Line Borrowings outstanding under this Section 2.03 to any
Swing Line Lender exceed three; PROVIDED THAT, for purposes of determining
the number of Swing Line Borrowings outstanding, all Swing Line Borrowings
consisting of Base Rate Advances shall be considered as one Swing Line
Borrowing.
(c) Whenever Borrower desires to make a Swing Line Borrowing, it
shall give the Swing Line Lender from which the Swing Line Borrowing is
being requested (with a copy to the Agent) prior written notice (or
telephonic notice promptly confirmed in writing) of such Swing Line
Borrowing (each a "Swing Line Borrowing Notice") prior to 10:00 a.m. (local
time for the Swing Line Lender) on the date of such Swing Line Borrowing.
Each Swing Line Borrowing Notice shall specify the aggregate principal
amount of the Swing Line Borrowing, the date of such Swing Line Borrowing
(which shall be a Business Day), whether a Transaction Rate Quote is being
requested and, if so, the Interest Period to be applicable thereto. If
Borrower requests a Transaction Rate Quote as aforesaid, then prior to
12:00 noon (local time for the Swing Line Lender) on such date, the Swing
Line Lender receiving such Swing Line Borrowing Notice shall furnish
Borrower (with a copy to the Agent) with a quotation of the interest rate
being offered with respect to such Swing Line Borrowing (whether expressed
as a fixed rate of interest in effect for the Interest Period applicable
thereto or as a floating rate of interest based on a specified interest
rate index and applicable margin for the Interest Period to be applicable
thereto; in either case, a "Transaction Rate Quote") by telephone (promptly
confirmed in writing) or by facsimile transmission. Borrower shall
immediately inform such Swing Line Lender (with a copy to the Agent) of its
decision as to whether to accept the Transaction Rate Quote and to confirm
the Swing Line Borrowing (which may be done by telephone, promptly
confirmed in writing, and which decision shall be irrevocable). If
Borrower has so informed such Swing Line Lender and confirmed the terms of
the Swing Line Borrowing, then no later than 2:00 p.m. (local time for the
Swing Line Lender) on such date, such Swing Line Lender shall make the
principal amount of the Swing Line Loan available to the Agent in
immediately available funds at the Pyment Office of the Agent, and the
Agent will make available to Borrower such amount by crediting such amount
to Borrower's demand deposit account maintained with the Agent. In the
event that such Swing Line Lender does not make such amount available to
the Agent at the time
prescribed above, but such amount is received later that day, such amount
may be credited to Borrower in the manner described in the preceding
sentence on the next Business Day (with interest on such amount to begin
accruing hereunder on such next Business Day).
(d) Borrower's obligations to pay the principal of, and interest
on, the Swing Line Loans shall be evidenced by the records of the Agent and
each Swing Line Lender and by the Swing Line Note payable to each Swing
Line Lender (or the assignor of such Swing Line Lender) completed in
conformity with this Agreement.
(e) The outstanding principal amount under each Swing Line Loan
shall be due and payable in full (i) on the expiration of the Interest
Period applicable to such Swing Line Loan if outstanding as a Transaction
Rate Advance, and (ii) on the Revolver/Multicurrency Maturity Date.
(f) At any time on the request of any Swing Line Lender, each
Lender other than such Swing Line Lender shall purchase a participating
interest in all outstanding Swing Line Loans of such Swing Line Lender in
an amount equal to its Pro Rata Share of such Swing Line Loans, and such
Swing Line Lender shall furnish each Lender with a certificate evidencing
such participating interest. Such purchase shall be made on the third
Business Day after such request is made; PROVIDED, HOWEVER, that unless an
Event of Default has occurred and is continuing on the date such request is
made, the purchase of a participating interest in any Swing Line Loan
outstanding as a Transaction Rate Advance shall not be required to be made
until the expiration of the current Interest Period in effect for such
Swing Line Loan. On the date of such required purchase, each Lender will
immediately transfer to such Swing Line Lender, in immediately available
funds, the amount of its participation. Whenever, at any time after such
Swing Line Lender has received from any such Lender the funds for its
participating interest in a Swing Line Loan, the Agent or such Swing Line
Lender receives any payment on account thereof, the Agent or such Swing
Line Lender will distribute to such Lender its participating interest in
such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender's participating
interest was outstanding and funded); PROVIDED, HOWEVER, that if such
payment received by the Agent or such Swing Line Lender is required to be
returned, such Lender will return to the Agent or such Swing Line Lender
any portion thereof previously distributed by the Agent or such Swing Line
Lender to it. Each Lender's obligation to purchase such participating
interests shall be absolute and unconditional and shall not be affected by
any circumstance, including without limitation (i) any setoff,
counterclaim, recoupment, defense or other right that such Lender or any
other Person may have against the Lender requesting such purchase or any
other Person for any reason whatsoever, (ii) the occurrence or continuation
of a Default or an Event of Default or the termination of any of the
Commitments, (iii) any adverse change in the condition (financial or
otherwise) of Borrower, any of its Consolidated Subsidiaries, or any other
Person,
(iv) any breach of this Agreement by Borrower or any other Lender, or
(v) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing; PROVIDED, HOWEVER, that no such obligation
shall exist (A) to the extent that the aggregate Swing Line Loans were
advanced in excess of the Swing Line Commitment then in effect, or
(B) with respect to any Swing Line Loan where the Swing Line Lender
actually advanced to Borrower net proceeds from the Swing Line Loan (and
therefore was not refunding a previous Swing Line Loan) at a time when (x)
the Swing Line Lender had actual knowledge that an Event of Default had
occurred and then existed, and (y) the Required Lenders had not agreed to
waive such Event of Default for purposes of funding such Swing Line Loan.
1.5 SECTION 2.04(b) of the Credit Agreement is hereby amended by
adding the following sentence as the penultimate sentence of said SECTION
2.04(b):
The aggregate principal amount of each Borrowing of
Multicurrency Syndicated Loans made in the EURO shall be in
the minimum amounts and multiples determined by the Agent
and communicated to Borrower in writing based on the
approximate Dollar Equivalent of EUROS for a minimum amount
of $500,000 and a multiple of $250,000.
1.6 SECTION 2.06 of the Credit Agreement is hereby amended by
deleting subsection (a) thereof in its entirety and substituting in lieu thereof
the following subsection (a):
(a) Subject to Section 2.06(b) below in the case of
currency fluctuations, if the aggregate outstanding principal amounts
of the Loans exceed at any time the amount of the Master Syndicated
Loan Commitments, or if the aggregate outstanding principal amount of
the Multicurrency Syndicated Loans exceed at any time the amount of
the Multicurrency Syndicated Loan Subcommitments, in either case as
reduced in accordance with SCHEDULE 2.01 or pursuant to Section 2.05
or 10.02 or otherwise, Borrower shall immediately repay the Loans
and/or the Multicurrency Syndicated Loans, as the case may be, by an
amount equal to such excess, together with all accrued but unpaid
interest on such excess amount(s).
1.7 SECTION 3.05(a) of the Credit Agreement is hereby amended by
deleting clause (ii) of the second sentence of SECTION 3.05(a) and
substituting in lieu thereof the following clause (ii):
(ii) the aggregate principal amount of the Swing Line Loans from
time to time outstanding from any Swing Line Lender shall constitute a
usage of the Master Syndicated Loan Commitment only with respect to such
Swing Line
Lender unless and until a participation is purchased in such Swing Line
Loans by the other Lenders.
1.8 SECTION 3.06 of the Credit Agreement is hereby amended by
deleting the first sentence of subsection (a) thereof in its entirety and
substituting the following sentence as the new first sentence of subsection
(a) of said SECTION 3.06:
Borrower may, at its option, prepay Borrowings consisting of Base Rate
Advances and Transaction Rate Advances (to the extent not outstanding
as Fixed Rate Advances) at any time in whole, or from time to time in
part, in amounts aggregating $250,000 (or, in the case of Swing Line
Borrowings, $100,000) or any greater integral multiple of $1,000, by
paying the principal amount to be prepaid together with interest
accrued and unpaid thereon to the date of prepayment.
1.9 SECTION 3.09 of the Credit Agreement is hereby amended by
deleting SECTION 3.09 in its entirety and substituting in lieu thereof the
following SECTION 3.09:
SECTION 3.09. ILLEGALITY, CURRENCY CONTROL AND EXCHANGE REGULATIONS,
MARKET DISRUPTION, ETC.
(a) In the event that any Lender shall have determined
(which determination shall be made in good faith and, absent manifest
error, shall be final, conclusive and binding on all parties) at any
time (i) that the making or continuance of any Euro Advance has become
unlawful by compliance by such Lender in good faith with any
applicable law, governmental rule, regulation, guideline or order
(whether or not having the force of law and whether or not failure to
comply therewith would be unlawful), (ii) that there have been imposed
any currency control or exchange regulations that prohibit Borrower
from making payment to the Agent for the account of the Lenders in
any particular Currency or which results in any particular Currency
ceasing to exist or otherwise qualify as an "Eligible Currency"
hereunder, or (iii) that any change occurs in the national or
international financial, political or economic conditions that would
make it unlawful, impossible, or impracticable for any Lender to make
or have outstanding Loans denominated in any particular Currency to
Borrower as contemplated by this Agreement, then, in any such event,
the Lender shall give prompt written notice (by telephone confirmed in
writing) to Borrower and to the Agent of such determination and a
summary of the basis for such determination (which notice the Agent
shall promptly transmit to the other Lenders).
(b) Upon the giving of the notice to Borrower referred to
in subsection (a) above, Borrower's right to request and such Lender's
obligation to fund its portion of Euro Advances, as the case may be
(limited in the case of clauses (ii) and (iii) of subsection (a) above
to the affected Currency or Currencies) shall be immediately
suspended, whereupon any request for a Euro Advance shall, as to such
Lender only, (A) if such Loan is not a Multicurrency Syndicated Loan,
be deemed to have been a request for a Base Rate Advance, and (B) if
such Loan is a Multicurrency Syndicated Loan, be deemed to have been
withdrawn unless and until such Lender shall advise the Agent that the
circumstances giving rise to such suspension no longer exists. In
addition, such Lender may require that all outstanding Eurodollar
Loans or Multicurrency Syndicated Loans (in the affected Currency or
Currencies) as the case may be, made by it be (A) if such Loan is not
a Multicurrency Syndicated Loan, converted to a Base Rate Advance, and
(B) if such Loan is a Multicurrency Syndicated Loan, repaid (in the
affected Currency or Currencies or, if specified by such Lender, in an
amount equal to the Dollar Equivalent (as of the date of repayment) of
such Multicurrency Syndicated Loan), in which case all such
Multicurrency Syndicated Loans (in the affected Currency or
Currencies) shall be required to be repaid in full by Borrower as of
the effective date of the notice as provided in subsection (c) below;
PROVIDED that if more than one Lender is affected at any time, then
all affected Lenders must be treated the same pursuant to this SECTION
3.09(b).
(c) For purposes of this SECTION 3.09, a notice to Borrower
by any Lender shall be effective as to each such Loan on the last day
of the Interest Period currently applicable thereto except where it
would be contrary to any currency control or exchange regulations or
otherwise unlawful for such Loan to remain outstanding, in which case
such notice shall be effective on the date of receipt by Borrower.
1.10 ARTICLE III of the Credit Agreement is hereby amended by
adding a new SECTION 3.20 as follows:
SECTION 3.20. EUROPEAN ECONOMIC AND MONETARY UNION.
(a) If any Multicurrency Syndicated Advance made (or to be
made) on or after the EURO Implementation Date would, but for the
provisions of this Section 3.20, be capable of being made in either
the EURO or in another Currency, such Multicurrency Syndicated Advance
shall be made in the EURO.
(b) With effect on and from the EURO Implementation Date:
(i) Without prejudice to any method of conversion or
rounding prescribed by any legislative measures of the
Council of the European Union, each reference in this
Agreement to a
fixed amount or amounts in another Currency of a
member state of the European Union that is
participating in the Economic and Monetary Union to
be paid to or by the Agent shall, notwithstanding any
other provision of this Agreement, be replaced by a
reference to such comparable and convenient fixed
amount or amounts in the EURO as the Agent may from
time to time specify; and
(ii) The Agent may notify the other parties to this
Agreement of any modifications to this Agreement which
the Agent (acting reasonably and after consultation
with the other parties to this Agreement) determines to
be necessary as a result of the commencement of the
third stage of European Economic and Monetary Union and
the occurrence of the EURO Implementation Date. So far
as possible, such modifications shall be such as to put
the parties in the same position as if the EURO
Implementation Date had not occurred. However, if and
to the extent that the Agent determines that it is not
possible to put the parties in such position, the Agent
may give priority to putting the Agent and the Lenders
into such position. Notwithstanding any other
provision of this Agreement, any modifications of which
the Agent so notifies the other parties shall take
effect in accordance with the terms of such
notification; PROVIDED, HOWEVER, that if such
modifications shall materially increase the liability
and obligations, or materially diminish the rights, of
the Consolidated Companies under this Agreement and the
other Credit Documents, Borrower may terminate in its
entirety the Multicurrency Syndicated Loan
Subcommitments of the Lenders (without any
corresponding termination or reduction of the Master
Syndicated Loan Commitments of the Lenders) and
simultaneously repay all outstanding Multicurrency
Syndicated Loans, together with all interest accrued
and unpaid thereon and all compensation payments that
may be due pursuant to Section 3.12 in respect of such
payments.
1.11 ARTICLE V of the Credit Agreement is hereby amended by adding
an additional SECTION 5.24 thereto as follows:
SECTION 5.24. YEAR 2000 ISSUES. Borrower and the other Consolidated
Companies have made a full and complete assessment of the Year 2000 Issues
and have a realistic and achievable program for remediating the Year 2000
Issues
on a timely basis. Based on such assessment and program, Borrower does
not reasonably anticipate that Year 2000 Issues will have a Materially
Adverse Effect.
1.12 SECTION 6.07 of the Credit Agreement is hereby amended by
deleting clause (ii) of subsection (c) thereof in its entirety and substituting
in lieu thereof the following clause (ii):
(ii) demonstrating in reasonable detail compliance as at the end of
such fiscal year or such fiscal quarter with Sections 6.08 and 6.12
and with Sections 7.01 through 7.05;
SECTION 6.07 of the Credit Agreement is hereby further amended by (i) deleting
the word "and" at the end of subsection (s) thereof, (ii) re-lettering existing
subsection (t) thereof as subsection (v), and (iii) adding new subsections (t)
and (u) as follows:
(t) (i) Simultaneously with the delivery of each set of annual
and semi-annual financial statements referred to in Sections 6.07(a) and
(b), a statement of a member of Senior Management of Borrower to the effect
that nothing has come to Borrower's attention to cause it to believe that
the hardware and software systems of Borrower and the other Consolidated
Companies will not be Year 2000 compliant on a timely basis in accordance
with the Year 2000 plan previously disclosed in writing to the Lenders,
(ii) within five (5) Business Days after Borrower becomes aware of any
deviations from the Year 2000 plan previously disclosed in writing to the
Lenders that would cause compliance with such plan to be delayed or not
achieved in any material respect, a statement of a member of Senior
Management of Borrower setting forth the details thereof and the action
that Borrower is taking or proposes to take with respect thereto, and (iii)
promptly upon the receipt thereof, a copy of any third party assessments of
Borrower's Year 2000 plan, together with any recommendations made by such
third party with respect to Year 2000 compliance;
(u) MONTHLY FINANCIAL STATEMENTS AND REPORTS. As soon as
available and in any event within 45 days after the end of each calendar
month of each fiscal year of Borrower (but excluding, in the case of the
financial statements described in clause (i) below, the final calendar
month of each fiscal year), (i) consolidated statements of income,
shareholders' equity, and cash flows (including itemization of capital
expenditures) for such month, presented on a consolidated basis, all in
reasonable detail and certified by the chief financial officer or principal
accounting officer of Borrower that such financial statements fairly
present in all material respects the results of operations and cash flows
for such monthly period (subject to normal year-end audit adjustments), and
(ii) utilization reports for automated luminaires, by location, in such
detail as the Agent may reasonably request; and
1.13 SECTION 6.08 of the Credit Agreement is hereby amended by
deleting said Section 6.08 in its entirety and substituting in lieu thereof the
following Section 6.08:
(a) LEVERAGE RATIO. Maintain as of the last day of each fiscal
quarter of Borrower, a maximum Leverage Ratio of no greater than the
amounts specified below for the period(s) indicated:
END OF FISCAL QUARTER MAXIMUM LEVERAGE RATIO
-------------------------------------------------------------------------
4th fiscal quarter of 1998
fiscal year through 2nd
fiscal quarter of 1999
fiscal year 57%
3rd fiscal quarter of 1999
fiscal year 56%
4th fiscal quarter of 1999
fiscal year and 1st fiscal
quarter of 2000 fiscal year 55%
All other fiscal quarters 50%
(b) ADJUSTED FUNDED DEBT/EBITDA. Maintain as of the last day of
each fiscal quarter of Borrower, a maximum Adjusted Funded Debt/EBITDA
Ratio of no greater than the amounts specified below for the period(s)
indicated:
MAXIMUM ADJUSTED FUNDED
END OF FISCAL QUARTERS DEBT/EBITDA RATIO
---------------------------------------------------------------------------
4th fiscal quarter of
1998 fiscal year and
1st fiscal quarter of
1999 fiscal year 3.70:1.00
2nd fiscal quarter of
1999 fiscal year 3.30:1.00
3rd fiscal quarter of
1999 fiscal year 2.95:1.00
4th fiscal quarter of 1999 fiscal
year and all fiscal quarters thereafter 2.50:1.00
(c) FIXED CHARGE COVERAGE. Maintain as of the last day of
each fiscal quarter of Borrower a minimum Fixed Charge Coverage Ratio of no
less than the amounts specified below for the period(s) indicated:
MINIMUM FIXED CHARGE
END OF FISCAL QUARTERS COVERAGE RATIO
---------------------------------------------------------------------
4th fiscal quarter of
1998 fiscal year and 1st
fiscal quarter of 1999 fiscal year 0.54:1.00
2nd fiscal quarter of
1999 fiscal year 0.66:1.00
3rd fiscal quarter of
1999 fiscal year 0.92:1.00
4th fiscal quarter of
1999 fiscal year 1.12:1.00
1st fiscal quarter of
2000 fiscal year and thereafter 1.20:1.00
(d) CONSOLIDATED NET WORTH. Maintain as of the last day of each
fiscal quarter of Borrower, a Consolidated Net Worth equal to or greater
than the Minimum Compliance Level. The "Minimum Compliance Level" shall,
as of any date of determination, equal to the sum of (1) $42,000,000, PLUS
(2) an additional amount calculated as of the last day of each fiscal year
of Borrower, commencing with the fiscal year ending September 30, 1998,
equal to 50% of the Consolidated Net Income for such fiscal year of
Borrower then ending, PLUS (3) without duplication of any amount reflected
in the preceding clause (2), the amount of any gain recognized by Borrower
in the settlement of pending litigation that is included in the calculation
of Consolidated Net Worth, and PLUS (4) the net proceeds of any equity
offering consummated by any Consolidated Company since the last date of the
determination of Minimum Compliance Level; PROVIDED, HOWEVER, in the event
that the Consolidated Companies suffer a net loss for any fiscal year,
Consolidated Net Income shall be deemed to be $0, and further provided that
amounts calculated pursuant to clauses (2), (3) and (4) above shall be
permanent increases in the Minimum Compliance Level so that in no event
shall the Minimum Compliance Level at any date of determination be less
than the amount required at any preceding date of determination.
(e) FOURTH FISCAL QUARTER CALCULATIONS. SCHEDULE 6.08-B attached
to Amendment No. 3 sets forth the calculation of the estimated financial
covenant amounts, ratios, and percentages required by subsections (a)
through (d) of this Section 6.08 calculated, using preliminary financial
results and information as of the end of the 4th fiscal quarter of
Borrower's 1998 fiscal year; PROVIDED, HOWEVER, that because Borrower has
not prepared final financial statements for the fourth fiscal quarter of
Borrower's 1998 fiscal year, such calculations represent estimates only
based on Borrower's preliminary financial statements prepared from
financial information currently available to Borrower, and no
representations or warranties are made as to the accuracy of the
calculations set forth in SCHEDULE 6.08-B.
1.14 SECTION 6.10 is hereby amended by deleting subsections (a)
and (b) of said Section 6.10 in their entirety and substituting in lieu
thereof new subsections (a) and (b) as follows:
(a) [INTENTIONALLY OMITTED]
(b) Promptly after (i) the formation or acquisition of any
Subsidiary of Borrower not listed on SCHEDULE 5.01, (ii) the domestication
of any Foreign Subsidiary of Borrower, or (iii) the occurrence of any other
event creating a new Subsidiary of Borrower, Borrower shall execute and
deliver, and cause to be executed and delivered, the following documents,
in each case in form and substance satisfactory to the Agent:
(x) With respect to each Domestic Subsidiary (other than a
Domestic Shell Subsidiary) so formed, acquired, domesticated
or otherwise created, the following documents: (1) a Guaranty
Agreement Supplement from such Domestic Subsidiary, (2) a
Domestic Pledge Agreement Supplement executed by the owner(s)
of the capital stock or other equity or ownership interests in
such Domestic Subsidiary, together with appropriate stock
powers and endorsements, (3) a Subsidiary Security Agreement
Supplement executed by such Domestic Subsidiary, together with
appropriate Uniform Commercial Code financing statements and
other filings necessary or appropriate to perfect the security
interests in the collateral therein described, (4) a
Contribution Agreement Supplement executed by such Domestic
Subsidiary, and (5) related documents of the type described in
Section 4.01(d), (e), (f), (g), (h), and (k); and
(y) With respect to each Foreign Subsidiary so formed, acquired,
or otherwise created, the following documents: (1) a Pledge
Agreement with respect to not less than sixty-five percent
(65%) of the capital stock or other equity or ownership
interests of such Foreign Subsidiary (as specified in the
immediately following
sentence) if such Foreign Subsidiary is directly owned by
Borrower or a Subsidiary that is not, and is not directly or
indirectly controlled by, a Foreign Subsidiary, together with
such certificates or other instruments as may evidence the
Pledged Stock subject thereto, with appropriate stock powers
and endorsements, and (2) such opinions, officer's certificates
and other evidence as to the enforceability and priority of
the Liens granted thereby as may be requested by the Agent;
PROVIDED, HOWEVER, that Borrower shall not be required at such
time to execute and deliver, or cause to be executed and
delivered, a Pledge Agreement with respect to any capital stock
of a Foreign Subsidiary that may be included as one of the
Non-Material Foreign Subsidiaries without causing the portion
of the Consolidated EBITDA or Consolidated Tangible Assets
contributed or possessed by such Non-Material Foreign
Subsidiaries in the aggregate (on a pro forma basis) to exceed
the specified percentage of Consolidated EBITDA or
Consolidated Tangible Assets set forth in the definition of
the term "Non-Material Foreign Subsidiaries." In complying
with the requirements set forth in the immediately preceding
sentence, (i) Borrower shall pledge capital stock or other
equity or ownership interests of that Foreign Subsidiary or
those Foreign Subsidiaries that have contributed or possessed,
or would have contributed or possessed (on a pro forma basis),
the greatest portion of such Consolidated EBITDA or
Consolidated Tangible Assets for the most recently ended
fiscal quarter of Borrower, and (ii) all other Foreign
Subsidiaries whose capital stock shall not have been pledged
pursuant to this Section 6.10 shall in the aggregate qualify
(on a pro forma basis) as Non-Material Foreign Subsidiaries as
defined herein.
1.15 ARTICLE VI of the Credit Agreement is hereby amended
by adding new Sections 6.11, 6.12 and 6.13 thereto as follows:
SECTION 6.11. YEAR 2000 COMPLIANCE. Take, and cause its
Subsidiaries to take, all actions reasonably necessary to implement the
Year 2000 plan previously disclosed to the Lenders and otherwise to assure
that the Year 2000 Issues will not have a Materially Adverse Effect. Upon
request by any Lender or the Agent, Borrower will provide the Lenders a
written updated description of its Year 2000 compliance program. Borrower
will promptly advise the Lenders and the Agent of any reasonably
anticipated Materially Adverse Effect as a result of any Year 2000 Issues.
SECTION 6.12. COLLATERAL REQUIREMENT FOR EQUIPMENT AND OTHER
PROPERTY. Grant and convey, and cause its Domestic Subsidiaries to grant
and convey, to Collateral Agent for the ratable benefit of the Lenders and
Agent, a
first-priority perfected Lien on those assets of Borrower and its Domestic
Subsidiaries that constitute lighting and sound equipment, machinery and
tools, furniture and fixtures, office and computer equipment, work in
progress and raw materials inventory, and any other fixed assets
classified on Borrower's consolidated financial statements as "equipment
and other property", such that at all times all such assets of Borrower and
its Domestic Subsidiaries that are subject to such Lien shall not be less
than seventy-five percent (75%) of all the assets of the Consolidated
Companies of the same types, in each case determined by the book value of
such assets, net of depreciation, in accordance with GAAP. Borrower shall
execute and deliver, and cause its Domestic Subsidiaries to execute and
deliver, such documents as Collateral Agent may reasonably require in order
to evidence such Liens, together with appropriate collateral filings,
recordings and registrations, and reports, certificates and opinions
evidencing and confirming the perfection and priority of such Liens.
SECTION 6.13. MOVEMENT OF LUMINAIRES. If any automated
luminaires that are located outside the United States of America and owned
by Borrower or any of its Subsidiaries receive no utilization for a period
in excess of 90 days, Borrower or its Subsidiaries will promptly cause such
automated luminaires to be taken (i) to another location where such
automated luminaires are under contract for sale or lease, or (ii) to a
storage location in the United States of America in a jurisdiction where
such automated luminaires are subject to a Lien in favor of the Collateral
Agent for the benefit of the Lenders duly perfected by the filing of all
necessary Uniform Commercial Code financing statements in such
jurisdiction; PROVIDED, HOWEVER, that the foregoing requirement shall not
apply to automated luminaires in the possession and control of (x) dealers
and distributors that are not Affiliates of Borrower or its Subsidiaries,
or (y) the Dubai division of Vari-Lite, Inc. so long as the aggregate value
(expressed in Dollars) of all such automated luminaires at the Dubai
division at any time does not exceed $3,750,000.
1.16 SECTION 7.03 of the Credit Agreement is hereby amended by
deleting subsection (c) of said Section 7.03 in its entirety and substituting in
lieu thereof a new subsection (c) as follows:
(c) Acquisitions (i) which have been approved in advance by a
majority of the board of directors of the seller, (ii) where the
information required to be delivered to the Lenders pursuant to Section
6.07(h) has been provided and the Required Lenders have approved the
Acquisition, and (iii) which are in compliance with the terms of Section
7.07, where the total consideration to be paid by the Consolidated
Companies does not exceed (1) with respect to any Acquisition or related
series of Acquisitions, 40% of the Consolidated Net Worth of Borrower, as
calculated as of the last day of the most recently ended fiscal quarter of
Borrower, and (2) with respect to all Acquisitions made during such fiscal
quarter and the most recent three fiscal quarters of Borrower, an amount
equal to the Consolidated EBITDA for the most recently ended four fiscal
quarters of Borrower;
1.17 ARTICLE VII of the Credit Agreement is hereby amended by
adding new Sections 7.13, 7.14 and 7.15 at the end of said Article VII, as
follows:
SECTION 7.13. CAPITAL EXPENDITURES. Incur or otherwise permit to be
made Capital Expenditures for the periods specified below in an aggregate
amount in excess of the amount specified for such period:
FISCAL QUARTER(S) MAXIMUM AMOUNT
--------------------------------------------------------------
1st fiscal quarter of 1999
fiscal year $ 4,500,000
1st and 2nd fiscal quarters of 1999
fiscal year (cumulative total) $ 7,500,000
1st, 2nd and 3rd fiscal quarters of 1999
fiscal year (cumulative total) $10,500,000
1999 fiscal year
(cumulative total) $13,000,000
SECTION 7.14. BANK ACCOUNTS AND CASH.
(a) Maintain any deposit or other bank accounts with any banks or
other depositary institutions other than the Lenders and Affiliates of the
Lenders, except that Borrower and its Subsidiaries may maintain accounts
with such other banks or other depositary institutions where the aggregate
amount maintained in all such accounts does not exceed $2,000,000 (or the
Dollar Equivalent thereof) at any time.
(b) Maintain cash or cash equivalents in Foreign Subsidiaries in
an aggregate amount in excess of $5,000,000 (or the Dollar Equivalent
thereof) at any time.
SECTION 7.15. OPERATING LEASES. Enter in or maintain in
effect as lessee thereunder operating leases in respect of equipment and
other personal property having aggregate payments thereunder in excess of
$1,000,000 in any fiscal year of Borrower.
1.18 ARTICLE VIII of the Credit Agreement is hereby amended by
adding a new Section 8.15 thereto immediately following Section 8.14, as
follows:
SECTION 8.15. BRAZOS LEASE. Any "Event of Default" shall
occur or exist under the terms of the Brazos Lease, or any "Default" shall
occur or exist under the terms of the "Guaranty" (as defined in the Brazos
Lease) given by Borrower in respect of the Brazos Lease;
1.19 SECTION 10.02 of the Credit Agreement is hereby amended by
deleting clause (vi) in its entirety and substituting in lieu thereof the
following clause (vi):
(vi) Agree to release any Guarantor from its obligations
under any Guaranty Agreement or release any collateral from the Lien
of the Security Documents (PROVIDED, HOWEVER, that (1) no agreement to
any such release shall be required from any Lenders in connection with
(x) any Asset Sale expressly permitted by Section 7.03(b) or any
Sales/Leases effected in the ordinary course of business consistent
with prior practices, or (y) any grant by Borrower or any other
Consolidated Company of any Lien on any of the collateral described in
the Security Documents where such Lien is of the type described in
clauses (b), (h), (i), (l) or (m) of Section 7.02 where, as a result
of the grant of such Lien, such collateral then constitutes Excluded
Property hereunder, and (2) at the request and sole expense of
Borrower, so long as there exists no Default of Event of Default
hereunder, the Collateral Agent will deliver such documents reasonably
requested by Borrower to evidence such release), or
1.20 SECTION 10.05 of the Credit Agreement is hereby amended by
deleting said Section 10.05 in its entirety and substituting in lieu thereof
the following Section 10.05:
SECTION 10.5. RIGHT OF SETOFF. In addition to and not in
limitation of all rights of offset that any Lender or other holder of
a Note may have under applicable law, each Lender or other holder of a
Note shall, during the continuance of any Event of Default and whether
or not such Lender or such holder has made any demand or any Credit
Party's obligations are matured, have the right to appropriate and
apply to the payment of any Credit Party's obligations hereunder and
the other Credit Documents, all deposits of any Credit Party (general
or special, time or demand, provisional or final) then or thereafter
held by and other indebtedness or property then or thereafter owing by
such Lender or other holder, or by any Affiliate of such Lender or
holder, to any Credit Party, whether or not related to this Agreement
or any transaction hereunder.
1.21 The Credit Agreement is hereby amended by adding SCHEDULE
1.01-EP, SCHEDULE 2.01 and SCHEDULE 6.08-B thereto in the forms attached to
this Amendment.
SECTION 2. CONDITIONS OF EFFECTIVENESS. This Amendment shall
become effective as of the date first above written (the "EFFECTIVE DATE") on
the first day when the following conditions have been satisfied:
(a) This Amendment shall have been executed and delivered by
Borrower, the Lenders, the Agent and the Co-Agent;
(b) The Swing Line Notes shall have been executed by Borrower and
delivered to the Collateral Agent;
(c) The Borrower Security Agreement and Subsidiary Security
Agreement, together with accompanying agreements and UCC-1 financing
statements, shall have been executed by Borrower and the Domestic
Subsidiaries of Borrower, as the case may be, and delivered to the
Collateral Agent;
(d) The Domestic Pledge Agreement, together with all original
stock certificates referenced therein and appropriately completed stock
powers executed in blank, shall have been executed by Borrower and any
Domestic Subsidiaries of Borrower that are parties thereto, as the case may
be, and delivered to the Collateral Agent;
(e) The Agent shall have received certificates of the Secretary or
Assistant Secretary of Borrower and each Domestic Subsidiary attaching and
certifying copies of the resolutions of their respective boards of
directors authorizing the execution, delivery and performance of this
Amendment and all Credit Documents to be executed and delivered by Borrower
and its Domestic Subsidiaries pursuant to the terms of this Amendment;
(f) The Agent shall have received examination reports from the
Uniform Commercial Code, judgment, and tax lien records of the
jurisdictions of the principal places of business and chief executive
offices of Borrower and its Domestic Subsidiaries and those jurisdictions
where any tangible personal property of Borrower and its Domestic
Subsidiaries are located, reflecting no Liens other than those expressly
permitted by the Credit Agreement;
(g) The Agent shall have received copies of all documents and
instruments, including all consents, authorizations and filings, required
or advisable under any applicable law or by any material contractual
obligation of Borrower or any of its Subsidiaries, in connection with the
execution, delivery, performance, validity and enforceability of this
Amendment and the Credit Documents being executed and delivered hereunder,
and such consents, authorizations, filings and orders shall be in full
force and effect;
(h) The Agent shall have received a certificate of Borrower and
each Domestic Subsidiary, as the case may be, dated as of the date hereof,
signed by
the Secretary or an Assistant Secretary of Borrower or such Subsidiary,
as the case may be, certifying (i) as to the names, true signatures and
incumbency of the officer or officers of Borrower or such Subsidiary
authorized to execute and deliver this Amendment and each other Credit
Document being executed and delivered pursuant to the requirements of
this Amendment, and (ii) that Borrower's or such Subsidiary's articles
or certificate of incorporation and by-laws attached to such certificate
have not been amended or modified and are in full force and effect as of
the date hereof;
(i) The Agent shall have received the favorable opinion of Xxxxxx
& Xxxxxx L.L.P., counsel to Borrower and its Domestic Subsidiaries
addressed to the Agent and Collateral Agent, the Co-Agent, and the Lenders,
covering such matters relating to Borrower and the Domestic Subsidiaries
and the transactions contemplated by this Amendment and the Credit
Documents being delivered pursuant to this Amendment, as the Lenders may
reasonably request;
(j) Borrower shall have paid to the Agent, for the benefit of each
Lender, a total amendment fee equal to $75,000, payable to each Lender in
the amount of $15,000;
(k) The Agent shall have received stock certificate(s)
representing the Pledged Stock with respect to Vari-Lite Asia, Inc.; and
(l) The Agent shall have received payment in full from Borrower
for all outstanding costs and expenses required to be paid or reimbursed by
Borrower under the Credit Agreement, including without limitation, all
professional fees and expenses of counsel for the Agent and Collateral
Agent.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower,
without limiting the representations and warranties provided in the Credit
Agreement, represents and warrants to the Lenders and the Agents as follows:
3.1 The execution, delivery and performance by Borrower of this
Amendment, and by Borrower and the Domestic Subsidiaries of the Credit
Documents being delivered pursuant to this Amendment, are within Borrower's
and such Subsidiaries' corporate powers, have been duly authorized by all
necessary corporate action (including any necessary shareholder action) and
do not and will not (a) violate any provision of any law, rule or regulation,
any judgment, order or ruling of any court or governmental agency, the
articles or certificate of incorporation or by-laws of Borrower or any such
Subsidiary or any indenture, agreement or other instrument to which Borrower
or any such Subsidiary is a party or by which Borrower or any such Subsidiary
or any of its properties is bound or (b) be in conflict with, result in a
breach of, or constitute with notice or lapse of time or both a default under
any such indenture, agreement or other instrument.
3.2 This Amendment and the Credit Documents being delivered
pursuant to this Amendment constitute the legal, valid and binding
obligations of Borrower and its Domestic Subsidiaries, enforceable against
Borrower and its Domestic Subsidiaries in accordance with their terms.
3.3 After giving effect to this Amendment, no Default or Event
of Default has occurred and is continuing as of the Effective Date.
SECTION 4. SURVIVAL. Each of the foregoing representations and
warranties and each of the representations and warranties made in the Credit
Agreement (other than those made only as of a specified date) shall be made
at and as of the Effective Date. Each of the foregoing representations and
warranties shall constitute a representation and warranty of Borrower under
the Credit Agreement, and it shall be an Event of Default if any such
representation and warranty shall prove to have been incorrect or false in
any material respect at the time when made. Each of the representations and
warranties made under the Credit Agreement (including those made herein)
shall survive and not be waived by the execution and delivery of this
Amendment or any investigation by the Lenders or the Agent or the Collateral
Agent.
SECTION 5. NO WAIVER, ETC. Borrower hereby agrees that nothing
herein shall constitute a waiver by the Lenders of any Default or Event of
Default, whether known or unknown, which may exist under the Credit
Agreement, other than any Default or Event of Default that ceases to exist as
a result of the amendments made by the express provisions of this Amendment.
Borrower hereby further agrees that no action, inaction or agreement by the
Lenders, including without limitation, any indulgence, waiver, consent or
agreement altering the provisions of the Credit Agreement which may have
occurred with respect to the non-payment of any obligation during the terms
of the Credit Agreement or any portion thereof, or any other matter relating
to the Credit Agreement, shall require or imply any future indulgence,
waiver, or agreement by the Lenders. In addition, Borrower acknowledges and
agrees that it has no defenses, counterclaims, offsets or objections in its
favor against any Lender with regard to any of the obligations due under the
terms of the Credit Agreement or otherwise as of the date of this Amendment.
SECTION 6. AFFIRMATION OF COVENANTS. Borrower hereby affirms
and restates as of the date hereof all covenants set forth in the Credit
Agreement, as amended hereby, and such covenants are incorporated by
reference herein as if set forth herein directly.
SECTION 7. RATIFICATION OF CREDIT AGREEMENT. Except as
expressly amended herein, all terms, covenants and conditions of the Credit
Agreement and the other Loan Documents shall remain in full force and effect,
and the parties hereto do expressly ratify and confirm the Credit Agreement
as amended herein. All future references to the Credit Agreement shall be
deemed to refer to the Credit Agreement as amended hereby.
SECTION 8. BINDING NATURE. This Amendment shall be binding
upon and inure to the benefit of the parties hereto, their respective heirs,
successors, successors-in-titles, and assigns.
SECTION 9. COSTS, EXPENSES AND TAXES. Borrower agrees to pay
on demand all reasonable costs and expenses of the Agent and the Collateral
Agent in connection with the preparation, execution and delivery of this
Amendment and the other instruments and documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel for the Agent and the Collateral Agent with respect thereto and
with respect to advising the Agent and the Collateral Agent as to its rights
and responsibilities hereunder and thereunder. In addition, Borrower shall
pay any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, and agrees to save the
Agent, the Collateral Agent, the Co-Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes.
SECTION 10. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of Georgia.
SECTION 11. ENTIRE UNDERSTANDING. This Amendment sets forth the
entire understanding of the parties with respect to the matters set forth
herein, and shall supersede any prior negotiations or agreements, whether
written or oral, with respect thereto.
SECTION 12. COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts and may be delivered by telecopier. Each counterpart so
executed and delivered shall be deemed an original and all of which taken
together shall constitute but one and the same instrument.
[Signatures Set Forth on Next Page]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
through their authorized officers as of the date first above written.
VARI-LITE INTERNATIONAL, INC.
By:
Name:
Title:
SUNTRUST BANK, ATLANTA,
INDIVIDUALLY AND AS AGENT AND COLLATERAL
AGENT
By:
Name:
Title:
By:
Name:
Title:
XXXXX BROTHERS XXXXXXXX & CO.,
INDIVIDUALLY AND AS CO-AGENT
By:
Name:
Title:
CHASE BANK OF TEXAS, N.A.
(FORMERLY TEXAS COMMERCE BANK NATIONAL
ASSOCIATION)
By:
Name:
Title:
COMERICA BANK-TEXAS
By:
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
Name:
Title:
