AMENDMENT NO. 2
to
CREDIT AGREEMENT
AMENDMENT No. 2 (this "Amendment"), dated as of June 18, 1998, to the
Credit Agreement, dated as of July 31, 1997, by and among Production Resource
Group, L.L.C. (the "Borrower"), the Lenders party thereto and The Bank of New
York, as agent for the Lenders (in such capacity, the "Agent"), as amended by
Amendment Xx. 0 ("Xxxxxxxxx Xx. 0"), dated as of December 12, 1997 (as so
amended, the "Credit Agreement").
RECITALS
A. Capitalized terms used herein which are not defined herein and
which are defined in the Credit Agreement shall have the same meanings as
therein defined.
B. The Borrower has requested that the Agent and the Lenders amend
the Credit Agreement to adjust certain financial covenants for certain fiscal
periods, waive certain other provisions of the Credit Agreement and consent to
two Acquisitions as set forth below, and the Agent and the Lenders have agreed
to do so subject to the terms and conditions set forth herein.
In consideration of the covenants, conditions and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and pursuant to Section
11.1 of the Credit Agreement, the parties hereto hereby agree as follows:
Article I. Amendment.
The Credit Agreement is, effective on the date of this Amendment,
hereby amended as follows:
1. The definition of "Collateral Documents" contained in Section 1.1
of the Credit Agreement is amended and restated in its entirety as follows:
"Collateral Documents": collectively, (i) the Pledge
Agreements, the Security Agreement, the Guaranty, (ii) any guaranty,
security agreement or equivalent document delivered to the Agent at
any time in respect of foreign Subsidiaries or foreign assets, and
(iii) all documents executed or delivered in connection with any of
the foregoing.
2. The definition of "Consolidated" contained in Section 1.1 of the
Credit Agreement is amended and restated in its entirety as follows:
"Consolidated": the Borrower and its Subsidiaries which are
consolidated for financial reporting purposes, and from and after
January 1, 1998, the Borrower, its Subsidiaries and Affiliates, to
the extent that such Affiliates are consolidated for financial
reporting purposes.
3. The definition of "Excess Cash Flow" contained in Section 1.1 of
the Credit Agreement is amended by deleting the text following "(v)" and
inserting in its place the following:
mandatory payments of principal of the Revolving Credit Loans
pursuant to Sections 2.5(b), 2.5(f) and 2.5(g), and (vi) mandatory
payments of principal of other Indebtedness.
4. The definition of "Fixed Charge Coverage Ratio" contained in
Section 1.1 of the Credit Agreement is amended and restated in its entirety as
follows:
"Fixed Charge Coverage Ratio": at any date of determination,
the ratio of (a) the sum of (i) EBITDA (before giving effect to
Acquisitions, mergers and other Dispositions during such period)
plus (ii) cash proceeds received by the Borrower from any equity
issuance or other capital contribution to the Borrower occurring
during the immediately preceding four fiscal quarter period
excluding the capital contributions required pursuant to Section
7.14, to (b) Fixed Charges for the four fiscal quarter period ending
on such date or, if such date is not the last day of a fiscal
quarter, for the immediately preceding four fiscal quarter period.
For any calculation of the Fixed Charge Coverage Ratio which
includes the fiscal quarter ended March 31, 1998, the sum of
$18,900,000 will be added to EBITDA.
5. The definition of "Fixed Charges" contained in Section 1.1 of the
Credit Agreement is amended and restated in its entirety as follows:
"Fixed Charges": for any period, with respect to the Borrower
and its Subsidiaries on a Consolidated basis in accordance with
GAAP, the sum of (i) mandatory payments of principal (including
mandatory payments of the Revolving Credit Loans resulting from
reductions in the Aggregate Commitment Amount pursuant to Section
2.4(b)(ii)) on Total Debt made or required to be made during such
period, but excluding (a) payments pursuant to Section 2.5(c), and
(b) mandatory payments of principal related to the payment in full
of any Indebtedness secured by any Real Property owned by Scenic,
(ii) Capital Expenditures made during such period minus the sum of
(A) to the extent not included in calculating EBITDA, net cash
proceeds from the sale of used rental equipment sold during such
period for cash and (B) the Capital
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Expenditures incurred, on or after April 1, 1998, on the Las Vegas
Property not in excess of $3,500,000, (iii) Capital Lease
Obligations paid or required to be paid during such period, (iv)
without duplication, taxes and Restricted Payments (excluding any
Restricted Payments made pursuant to Sections 8.6(v), 8.6(vi) or
8.6(vii)), and (v) Interest Expense to the extent paid or required
to be paid in cash, minus the sum of (A) income from Investments
permitted under Section 8.5(a) actually received in cash during such
period, (B) the lesser of (x) the Net Cash Proceeds received from
the sale of any of the Real Property described in Paragraph 2 of
Article II of Amendment No. 1, and (y) any Capital Expenditures made
on such Real Property, in either case to the extent of the Capital
Expenditures included in subpart (ii) hereof, (C) the capital
contributions made pursuant to Section 7.14 and (D) any amount of
the Restricted Payments allowed pursuant to Section 8.6(vii) to the
extent that the same have not been paid out.
6. The definition of "Real Property" contained in Section 1.1 of the
Credit Agreement is amended and restated in its entirety as follows:
"Real Property": all real property owned or leased by the
Borrower, any of its Subsidiaries or any Consolidated Affiliate.
7. Section 1.1 of the Credit Agreement is amended by inserting the
following definitions in the appropriate alphabetical order:
"Las Vegas Property": the Real Property located at 0000 Xxxxx
Xxxxxx Xxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxx.
"Pro-Mix Acquisition": The Acquisition by the Borrower, on
January 2, 1998, of certain assets of Pro-Mix, Incorporated, a New
York corporation, and Pro-Mix A.F.I., Inc., a New York corporation.
"Scenic": Scenic Properties L.L.C., a New York limited
liability company.
"Year 2000 Issue": the failure of computer software, hardware
and firmware systems and equipment containing embedded computer
chips to properly receive, transmit, process, manipulate, store,
retrieve, re-transmit or in any other way utilize data and
information due to the occurrence of the year 2000 or the inclusion
of dates on or after January 1, 2000.
8. Section 2.5(d) of the Credit Agreement is amended by inserting the
phrase "(except Scenic)" after the words "any Guarantor".
9. Section 2.5 of the Credit Agreement is amended by redesignating
Subsection (g) to be Subsection (h), and a new Subsection (g) is inserted as
follows:
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(g) Mandatory Prepayments of Revolving Credit Loans Relating to
Receipt of Offering Proceeds. On the date of receipt of any Offering
Proceeds (other than proceeds received in connection with the
issuance of Preferred Membership Units and proceeds received in
connection with any Investment permitted under Section 8.5(f) to
purchase Capital Stock of the Borrower), such Offering Proceeds
shall be applied to the prepayment of the Revolving Credit Loans.
10. Section 4 of the Credit Agreement is amended by adding a new
Section 4.21 as follows:
4.21. Year 2000 Issue
The Borrower and its Subsidiaries have reviewed the effect of
the Year 2000 Issue on the computer software, hardware and firmware
systems and equipment containing embedded microchips owned or
operated by or for the Borrower and its Subsidiaries or used or
relied upon in the conduct of their business (including systems and
equipment supplied by others or with which such computer systems of
the Borrower and its Subsidiaries interface). The costs to the
Borrower and its Subsidiaries of any reprogramming required as a
result of the Year 2000 Issue to permit the proper functioning of
such systems and equipment and the proper processing of data, and
the testing of such reprogramming, and of the reasonably foreseeable
consequences of the Year 2000 Issue to the Borrower or any of its
Subsidiaries (including reprogramming errors and the failure of
systems or equipment supplied by others) are not reasonably expected
to result in a Default or Event of Default or to have a material
adverse effect on the business, assets, operations, prospects or
condition (financial or otherwise) of the Borrower or any of its
Subsidiaries.
11. Section 7.11 of the Credit Agreement is amended to amend and
restate Subsections (a) and (b) of such Section in their entirety as follows:
(a) Pro Forma Interest Coverage Ratio. Maintain at all times
during the periods set forth below, a Pro Forma Interest Coverage
Ratio of not less that the ratios set forth below:
Pro Forma Interest
Period Coverage Ratio
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January 1, 1998 through
September 30, 1999 1.75:1:00
October 1, 1999
and thereafter 2.00:1.00
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(b) Fixed Charge Coverage Ratio. Maintain at all times during
the periods set forth below, a Fixed Charge Coverage Ratio of not
less that the ratios set forth below:
Fixed Charge
Period Coverage Ratio
------ --------------
January 1, 1998 through
June 30, 1998 1.05:1:00
July 1, 1998
and thereafter 1.10:1.00
12. Section 7 of the Credit Agreement is amended by inserting new
Sections 7.14 and 7.15 after Section 7.13 to read as follows:
7.14 Mandatory Capital Contribution
Ensure that each of the individuals listed on the Consent of
Members attached hereto files all of such individual's personal
income tax returns by no later than August 15, 1998, and requests
therein the maximum available cash refund of taxes paid for the tax
year 1997; and to the extent that each such individual receives, as
a result of such filings, refunds of income taxes paid up to the
amount of the Restricted Payments received by such individual during
1997, the Borrower shall receive capital contributions in cash from
each such individual in an aggregate amount up to $3,500,000.
7.15 Year 2000 Issue
The Borrower shall take, and shall cause each of its
Subsidiaries to take, all necessary action to complete in all
material respects by September 30, 1999, the reprogramming of
computer software, hardware and firmware systems and equipment
containing embedded microchips owned or operated by or for the
Borrower and its Subsidiaries or used or relied upon in the conduct
of their business (including systems and equipment supplied by
others or with which such systems of the Borrower or any of its
Subsidiaries interface) required as a result of the Year 2000 Issue
to permit the proper functioning of such computer systems and other
equipment and the testing of such systems and equipment, as so
reprogrammed. At the request of the Agent, the Borrower shall
provide, and shall cause each of its Subsidiaries to provide, to the
Agent reasonable assurance of its compliance with the preceding
sentence.
13. Section 8.3(a) of the Credit Agreement is amended and restated in
its entirety as follows:
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(a) Capital Expenditures, which, in any fiscal quarter ending
after April 1, 1998 and on or before December 31, 1998, shall not
exceed the sum of (i) $3,500,000, (ii) any remaining amount under
this Section 8.3(a) which was unspent in any preceding fiscal
quarter of such period, which amount shall not exceed $3,500,000,
(iii) the aggregate of such amounts as shall have been specified as
"Additional Permitted Capital Expenditures" in any Consents that the
Agent and the Lenders shall execute in connection with any
Acquisitions made subsequent to the date hereof and no later than
December 31, 1998, (iv) the lesser of (x) the Net Cash Proceeds
received from the sale of any of the Real Property described in
Paragraph 2 of Article II of Amendment No. 1, and (y) any Capital
Expenditures made on such Real Property, in either case to the
extent of Capital Expenditures previously counted against the
limitation of this Section 8.3(a), (v) the capital contributions
made pursuant to Section 7.14 to the extent that the same shall not
have been counted in this Section 8.3(a) in any previous fiscal
quarter, and (vi) any amount of the Restricted Payments allowed
pursuant to Section 8.6(vii) to the extent that the same have not
been paid out.
14. Section 8.3 of the Credit Agreement is amended by redesignating
Subsections (b) through (e) to be Subsections (c) through (f) respectively,
and a new Subsection (b) is inserted as follows:
(b) Capital Expenditures on the Las Vegas Property not to
exceed $3,500,000 in the aggregate from and after April 1, 1998.
15. Section 8.3(f) (formerly 8.3(e)) of the Credit Agreement is
amended by inserting the phrase ", excluding the Acquisition Cost of the
Pro-Mix Acquisition," after each occurrence of the words "$30,000,000 in the
aggregate".
16. Section 8.6 of the Credit Agreement is amended by inserting the
words "or Consolidated Affiliates" after the words "permit any of its
Subsidiaries" in the introductory phrase of such Section.
17. Section 8.6 of the Credit Agreement is amended by deleting the
word "and" immediately preceding Subsection (vi) thereof, and by inserting the
following immediately preceding the "." at the end of such Section:
, and (vii) one or more Restricted Payments to the members of
Scenic, each in an amount not to exceed an amount equal to (a) the
Net Cash Proceeds from the sale of any Real Property owned by
Scenic, minus (b) the aggregate amount of all Capital Expenditures
made, on or after January 1, 1998, on such Real Property, provided
that (A) the capital contributions required pursuant to Section 7.14
shall have occurred, (B) the Real Property owned by Scenic in Xxx
Xxxxxxx, Xxx Xxxx xxx Xxx Xxxxx, Xxxxxx shall have been sold, (C)
all Indebtedness secured by all Real Property owned by Scenic shall
have been
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repaid in full, and (D) no Default or Event of Default shall have
occurred and be continuing or would occur after giving effect
thereto
Article II. Waivers.
The Agent and the Lenders hereby agree, effective on the date of this
Amendment, as follows:
1. The Agent and the Lenders waive any Defaults occurring under
Sections 7.11(a) and 7.11(b) of the Credit Agreement prior to the
effectiveness of this Amendment.
2. The Agent and the Lenders waive compliance with Section 7.1(a) of
the Credit Agreement with respect to the delivery of the financial statements
for the Borrower's fiscal year ended December 31, 1997, to the extent that
such financial statements were received by the Agent on April 30, 1998.
3. In connection with the Pro-Mix Acquisition, the Borrower issued
79,179 of Preferred Units (as such term is defined in the Second Amended and
Restated Limited Liability Company Agreement of the Borrower, dated as of
December 1, 1997). The Agent and the Lenders waive, through June 15, 1998,
compliance with the requirements of Sections 8.3(f) and 8.12(a) of the Credit
Agreement with respect to the pledge of the Preferred Units and other
documentation required in respect of the Pro-Mix Acquisition.
Article III. Consents.
The Agent and the Lenders hereby agree, subject to the satisfaction
of the conditions precedent set forth in Article IV below, as follows:
1. The Agent and the Lenders consent, effective on each Consent
Effective Date (as defined below), to the Acquisitions by the Borrower of (a)
Light & Sound Design Holdings Limited, a U.K. corporation (the "LSDHL
Acquisition"), which may be structured as more than one partial purchase of
the company's stock, and (b) Production Arts Lighting Inc. (the "PA
Acquisition" and, collectively with the LSDHL Acquisition, the "Pending
Acquisitions"), substantially on the terms outlined in the letters of intent
dated February 24, 1998 and March 16, 1998, respectively, provided that no
other Acquisitions shall have been consumated prior to the date on which the
Borrower completes each of the Pending Acquisitions. If, at any time, one or
both of the Pending Acquisitions have not been consumated, the Borrower may
make other Acquisitions, provided that the Borrower remains in compliance with
the requirements of Section 8.3(f) of the Credit Agreement. In the event that
any other such Acquisitions are consumated prior to one or both of the Pending
Acquisitions, then the consent herein shall only be effective to the extent
that the consumation of such Pending Acquisition shall be in compliance with
the requirements of Section 8.3(f) of the Credit Agreement. Each Acquisition,
including each of the Pending Acquisitions, when consumated, shall reduce the
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amount available for Acquisitions pursuant to Section 8.3(f) of the Credit
Agreement in the amount of the Acquisition Cost of such Acquisition.
2. The Agent and the Lenders consent to the disposition by Scenic of
any of the Real Property owned by it, provided that (i) all Indebtedness
secured by such Real Property shall be repaid in full from the proceeds of
such disposition, and (ii) all loans or advances made by the Borrower to
Scenic in connection with such Real Property shall be repaid in full from the
proceeds of such disposition.
Article IV. Conditions of Effectiveness.
1. This Amendment shall become effective, and shall be dated, as of
the date that the Agent shall have received (i) counterparts of this Amendment
executed by each of the Borrower, the Guarantors, the Required Lenders and the
Agent, (ii) an opinion of counsel to the Borrower and the Guarantors, in form
and substance satisfactory to the Agent, and (iii) the Borrower shall have
paid all fees and expenses owed to the Agent, the Lenders and Special Counsel
which have been accrued and/or incurred up to and including the date hereof.
2. The Consents granted under Paragraph 1 of Article III hereof shall
become effective as of the dates (each, a "Consent Effective Date") that the
Agent shall have received, in form and substance satisfactory to the Agent,
the items required pursuant to Sections 8.3(f) and 8.12 of the Credit
Agreement in respect of the Pending Acquisitions. Notwithstanding anything to
the contrary in the foregoing sentence, it is agreed that the pledge and
delivery of any Capital Stock required pursuant to said sections may be made
to the Agent within fifteen (15) days after the closing of the related
Acquisition. To the extent that the Acquisition of LSDHL consists of foreign
assets or creates a foreign Subsidiary, the documentation executed with
respect to a security interest therein and/or a guaranty therefrom, as
required by Sections 8.3(f) and 8.12(c) of the Credit Agreement shall be such
that the rights and obligations of the various parties created thereunder are
substantially equivalent to those which would be created by execution of the
Supplements to the Guaranty and the Security Agreement with respect to a
domestic Subsidiary or domestic assets, with such changes as may be required
by the Agent or to comply with laws governing such foreign transactions. The
requirements of Sections 8.3(f) and 8.12(c) of the Credit Agreement will be
deemed met by the delivery of such documentation in form and substance
satisfactory to the Agent and its counsel.
Article V. Other Provisions.
1. Except as specifically amended or waived above, the Credit
Agreement and all other Loan Documents shall remain in all respects in full
force and effect.
2. In order to induce the Agent and the Lenders to execute this
Amendment, the Borrower hereby (i) certifies that, immediately after giving
effect to this Amendment or any portion thereof, all representations and
warranties contained in the Credit Agreement are true
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and correct in all respects as of the date hereof and that no Default or Event
of Default exists under the Credit Agreement, (ii) reaffirms and admits the
validity and enforceability of the Loan Documents and its obligations
thereunder, and (iii) agrees and admits that it has no valid defenses to or
offsets against any of its obligations to the Agent and the Lenders under the
Loan Documents as of the date hereof.
3. This Amendment may be executed in any number of counterparts, each
of which shall be an original and all of which shall constitute one agreement.
It shall not be necessary in making proof of this Amendment to produce or
account for more than one counterpart signed by the party to be charged.
4. This Amendment is being delivered in and is intended to be
performed in the State of New York and shall be construed and enforceable in
accordance with, and be governed by, the internal laws of the State of New
York without regard to principles of conflict of laws.
5. This Amendment shall be subject to the conditions and limitations
specified herein, and the rights of the parties hereto under the Loan
Documents shall be otherwise unaffected.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
PRODUCTION RESOURCE GROUP,
L.L.C.
By:
------------------------
Name:
------------------------
Title:
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THE BANK OF NEW YORK,
Individually and as Agent
By:
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Name:
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Title:
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BANK OF SCOTLAND
By:
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Name:
------------------------
Title:
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CIBC INC.
By:
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Name:
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Title:
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CORESTATES BANK, N.A.
By:
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Name:
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Title:
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FIRST UNION NATIONAL BANK
By:
------------------------
Name:
------------------------
Title:
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IBJ XXXXXXXX BANK & TRUST
COMPANY
By:
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Name:
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Title:
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KEY CORPORATE CAPITAL INC.
By:
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Name:
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Title:
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USTRUST
By:
------------------------
Name:
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Title:
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XXXXX XXXXXX XXXX AND TRUST
COMPANY
By:
------------------------
Name:
------------------------
Title:
------------------------
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PRODUCTION RESOURCE GROUP, L.L.C.
AMENDMENT NO. 2
Consent of Guarantors
The undersigned, as Guarantors to the Credit Agreement, each
hereby consents to the foregoing Amendment No. 2 and hereby confirms and
agrees that, notwithstanding the effectiveness of said Amendment No. 2,
the Guaranty and each Loan Document in effect on the date hereof to which
it is a party are, and shall continue to be, in full force and effect and
are hereby confirmed and ratified in all respects.
XXXXXX PRODUCTION SERVICES, INC.
By:
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Name:
------------------------
Title:
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ECTS, A SCENIC TECHNOLOGY
COMPANY, INC., a Delaware corporation
By:
------------------------
Name:
------------------------
Title:
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SHOWPAY, INC.
By:
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Name:
------------------------
Title:
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SCENIC PROPERTIES L.L.C.
By:
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Name:
------------------------
Title:
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PRG PLANNING & DEVELOPMENT L.L.C.
By: PRODUCTION RESOURCE GROUP,
L.L.C., Majority Member
By:
------------------------
Name:
------------------------
Title:
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SHOWPAY, L.L.C.
By:
------------------------
Name:
------------------------
Title:
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ATTRACTION MANAGEMENT L.L.C.
By:
------------------------
Name:
------------------------
Title:
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Consent of Members
Each of the undersigned holders of the Capital Stock of the
Borrower and/or Xxxxxx Production Services, Inc. hereby agrees that, to
the extent that such individual received, whether actually or
constructively, any Restricted Payments during 1997 related to the fiscal
years ended December 31, 1996 or December 31, 1997, such individual shall
(i) file all of his personal income tax returns and request the maximum
available cash refund of taxes paid for the year 1997 by no later than
August 15, 1998, and (ii) make one or more capital contributions as
required pursuant to Section 7.14 of the Credit Agreement, which requires
that, to the extent that each such individual receives, as a result of
such filings, refunds of income taxes paid up to the amount of the
Restricted Payments received by such individual during 1997, the Borrower
shall receive capital contributions in cash from each such individual in
an aggregate amount up to $3,500,000.
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XXXXX XXXXXX
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XXXXXXX XXXXX
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XXXX XXXXX
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XXXXXXXX XXXXXX
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XXX XXXXX
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XXXX XXXX
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The Borrower hereby represents that the above listed
individuals are the only individuals to have received, either actually or
constructively, the Restricted Payments referred to herein.
PRODUCTION RESOURCE GROUP, L.L.C.
By:
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Name:
------------------------
Title:
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Affirmation of Guaranty of
Scenic Properties L.L.C.
Notwithstanding anything to the contrary contained in Paragraph 2
of Article II of Amendment No. 1, Scenic Properties L.L.C. ("Scenic")
hereby affirms that (i) its Guaranty has remained in effect at all times,
and (ii) it continues to be bound by the terms of the Loan Documents to
which it is a party, both heretofore and hereafter executed.
Pursuant to Section 5(d) of the Guaranty and Article II,
Paragraph 2 of Amendment No. 1 to the Credit Agreement, Scenic may engage
in no business other than the ownership of the Real Property described
therein and real property management activities directly related thereto.
Scenic hereby agrees that, following the sale of such Real Property, and
for such period of time as it remains a Guarantor, it shall engage in no
other business activity without the prior written consent of the Agent and
the Lenders.
SCENIC PROPERTIES L.L.C.
By:
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Name:
------------------------
Title:
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