THIRD AMENDMENT
TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT ("Third Amendment") is
entered into as of June 14, 1996 by and between THE TODD-AO CORPORATION, a
Delaware corporation (the "Borrower") and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, (the "Bank") and amends that certain Credit Agreement dated
as of December 2, 1994 between Borrower and the Bank, as amended by a First
Amendment to Credit Agreement dated as of March 13, 1995 and a Second Amendment
to Credit Agreement dated as of April 5, 1996 (as so amended, the "Agreement").
RECITAL
The Borrower and the Bank desire to increase the Commitment, convert
the Agreement from a revolving-to-term facility to a reducing revolving facility
and amend certain covenants, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Borrower and the Bank
hereby agree as follows:
1. TERMS. All terms used herein shall have the same meaning as in
the Agreement unless otherwise defined herein. All references to the Agreement
shall mean the Agreement as hereby amended.
2. AMENDATORY PROVISIONS TO AGREEMENT. The Borrower and the Bank
hereby agree that the Agreement is amended as follows:
2.1 The following definitions in Section 1.2 of the Agreement are
amended and restated in their entirety as follows:
"'Commitments'" means the Revolving Loan Commitment."
"'Dollar Revolving Loan Commitment' means the Bank's undertaking to
make Dollar-denominated Revolving Loans to the Borrower subject to the
terms and conditions hereof in an aggregate principal amount not
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to exceed $20,000,000, as the same may be adjusted pursuant to the
provisions of Section 2.4."
2.2 Subsection (d) of the definition of "Interest Period" in Section
1.2 of the Agreement is amended and restated in its entirety as follows:
"(d) no Interest Period for a Borrowing shall extend beyond the
Maturity Date;"
2.3 The definition of "Loans" in Section 1.2 of the Agreement is
amended by deleting "and the Term Loan."
2.4 The definition of "Maturity Date" in Section 1.2 of the Agreement
is amended by deleting "November 30, 2000" and inserting "November 30, 2003" in
lieu thereof.
2.5 The definition of "Pound Sterling Borrowing" in Section 1.2 of
the Agreement is amended by deleting "or Pound Sterling Term Loans."
2.6 The following new definition is inserted in proper alphabetical
order as follows:
"'Regular Amortization Amount' has the meaning set forth in
Section 2.5(a)."
2.7 The definitions of "Dollar Term Loan Commitment," "Pound Sterling
Term Loan Commitment," "Pound Sterling Term Loans," "Term Loans," "Term Loan
Commitment" and "Termination Date" in Section 1.2 of the Agreement are deleted
in their entirety.
2.8 Sections 2.1 and 2.3 of the Agreement are amended by deleting
"Termination Date" and inserting "Maturity Date" in lieu thereof.
2.9 Section 2.5(a) of the Agreement is amended and restated in its
entirety as follows:
"(a) On the last Offshore Rate Business Day of February, 2000,
and on the last Offshore Rate Business Day of each May, August,
November, and February thereafter through the Maturity Date (each such
day, an "Amortization Date"), the Dollar Revolving Loan Commitment
shall automatically reduce by an amount equal to 5% of the original
Dollar Revolving Loan Commitment, and the Pound Sterling Revolving
Loan Commitment shall automatically reduce by an amount equal to 5% of
the original Pound Sterling Revolving Commitment (the "Regular
Amortization Amount"), and the
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Borrower shall on each such Amortization Date pay to the Bank the
amount by which the principal amount of Revolving Loans denominated in
Dollars and Pound Sterling Revolving Loans outstanding exceed the
Dollar Revolving Loan Commitment and the Pounds Sterling Revolving
Loan Commitment, respectively, as so reduced. The Dollar Revolving
Loan Commitment and the Pounds Sterling Revolving Loan Commitment
shall reduce to zero on the Maturity Date on which date the principal
amount of all Revolving Loans shall be due and payable in full."
2.10 Section 8.1(f) of the Agreement is amended by deleting
"$4,000,000" and inserting "$8,000,000" in lieu thereof.
2.11 Section 3 of the Agreement is amended and restated in its
entirety as follows:
"Section 3. Intentionally left blank."
2.12 The last sentence of Section 4.3(a) of the Agreement is amended
by deleting "Term Loans" and "Term Loan Commitment" and inserting "Revolving
Loans" and "Revolving Loan Commitment," respectively, in lieu thereof.
2.13 The first sentence of Section 4.3(c) of the Agreement is amended
by deleting ", in the case of Revolving Loans, and Section 3.2, in the case of
Term Loans."
2.14 The first sentence of Section 4.12 of the Agreement is amended
by deleting "or of Term Loans pursuant to Section 3.4."
2.15 Section 8.9 of the Agreement is amended by deleting "$5,000,000"
and inserting "$10,000,000" in lieu thereof.
2.16 Section 8.13 of the Agreement is amended and restated in its
entirety as follows:
"8.13 RATIO OF FREE AVAILABLE CASH FLOW TO FIXED CHARGES.
Permit at any time, for the Borrower and its Subsidiaries calculated
on a consolidated basis, the ratio of (i) Free Available Cash Flow for
the four immediately preceding fiscal quarters to (ii) Interest
Expense for the four immediately preceding fiscal quarters PLUS the
current portion of Funded Indebtedness (including without limitation
the current portion of capitalized leases, but excluding any Revolving
Loan repayments due on the Maturity Date in excess of the Regular
Amortization Amount) PLUS all pro
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forma operating lease expense for the immediately following four
fiscal quarters (excluding that portion of the lease balloon payment
exceeding the usual quarterly reduction) to be less than (a) 1.75 to
1.00 through and including November 30, 1998 and (b) 1.50 to 1.00
thereafter."
2.17 All references to Chrysalis Television Facilities, Ltd. in
the Agreement shall be deemed references to the new name of such Subsidiary,
Todd-AO Europe Holdings Ltd.
2.18 Exhibit A to the Agreement is amended by deleting all references
to Term Loans.
3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants to the Bank that:
3.1 AUTHORITY. The Borrower has all the necessary corporate power to
make, execute and deliver this Third Amendment, and this Third Amendment is the
legal, valid and enforceable obligation of the Borrower it purports to be.
3.2 NO LEGAL OBSTACLE TO AGREEMENT. Neither the
execution of this Third Amendment, the making by the Borrower of any borrowings
under the Agreement, nor the performance of the Agreement has constituted or
resulted in or will constitute or result in a breach of the provisions of any
contract to which the Borrower is a party, or the violation of any law,
judgment, decree or governmental order, rule or regulation applicable to
Borrower, or result in the creation under any agreement or instrument of any
security interest, lien, charge, or encumbrance upon any of the assets of the
Borrower other than pursuant to the Pledge Agreement. No approval or
authorization of any governmental authority is required to permit the execution,
delivery or performance by the Borrower of this Third Amendment, the Agreement,
or the transactions contemplated hereby or thereby, or the making of any
Borrowings by the Borrower under the Agreement.
3.3 INCORPORATION OF CERTAIN REPRESENTATIONS. The representations
and warranties set forth in Section 4 of the Agreement are true and correct in
all respects on and as of the date hereof as though made on and as of the date
hereof.
3.4 DEFAULT. No Event of Default under the Agreement has occurred
and is continuing.
3.5 NEW SIGNIFICANT SUBSIDIARIES. Except for Chrysalis Television
Facilities, Ltd., a United Kingdom company, and Todd-AO Europe Holdings Ltd., a
United Kingdom company, the Borrower has no
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Significant Subsidiaries which are not Guarantors or whose equity interests have
not been pledged to the Bank, as required by Section 7.9 of the Agreement.
4. CONDITIONS, EFFECTIVENESS. The effectiveness of this Third
Amendment shall be subject to the compliance by the Borrower with its agreements
herein contained, and to the delivery of the following to the Bank in form and
substance satisfactory to the Bank:
4.1 AMENDMENT FEE. An amendment fee of $190,000 payable in two
installments as follows: $150,000 due on the date of this Third Amendment and
$40,000 due on November 30, 1996; PROVIDED, HOWEVER, that if the Borrower
provides evidence satisfactory to the Bank that it has received at least
$30,000,000 in gross proceeds from new equity investments after the date hereof
and on or prior to November 30, 1996, the second installment of the amendment
fee shall be waived.
4.2 OTHER EVIDENCE. Such other evidence with respect to the Borrower
or any other person as the Bank may reasonably request to establish the
consummation of the transactions contemplated hereby, the taking of all
corporate action in connection with this Third Amendment and the Agreement and
the compliance with the conditions set forth herein.
5. MISCELLANEOUS.
5.1 CORPORATE PROCEEDINGS; INCUMBENCY CERTIFICATE. Not later than
July 31, 1996, the Borrower shall deliver the following to the Bank in form and
substance satisfactory to the Bank:
(a) Documents representing corporate action taken by the Borrower,
which documents may be in the form of consents or other form satisfactory to the
Bank, authorizing the execution, delivery and performance of this Third
Amendment, certified by the secretary or an assistant secretary of the Borrower
as of the date such documents are delivered.
(b) A certificate of the secretary or an assistant secretary of the
Borrower, dated the date such certificate is delivered, as to the incumbency and
signature of the officers of the Borrower executing on behalf of the Borrower
this Third Amendment.
5.2 REFERENCES TO CHRYSALIS IN PLEDGE AGREEMENT. All references to
Chrysalis Television Facilities, Ltd. in the Pledge Agreement shall be deemed
references to the new name of such Subsidiary, Todd-AO Europe Holdings Ltd.
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5.3 EFFECTIVENESS OF THE AGREEMENT. Except as provided in this
Amendment, all of the terms and conditions of the Agreement shall remain in full
force and effect.
5.4 WAIVER. This Third Amendment is specific in time and in intent
and does not constitute, nor should it be construed as, a waiver of any right,
power or privilege under the Agreement, or any agreement, contract, indenture,
document or instrument mentioned in the Agreement; nor does it preclude other or
further exercise of any right, power, privilege or default hereunder, under the
Agreement or under any agreement, contract, indenture, document or instrument
mentioned in the Agreement. The Bank expressly reserves its right to exercise
any remedy available to it under the Agreement, or any agreement, contract,
indenture, document or instrument mentioned in the Agreement.
5.5 COUNTERPARTS. This Third Amendment may be executed in any number
of counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument. This Third Amendment shall not become
effective until the Borrower and the Bank shall have signed a copy hereof,
whether the same or counterparts, and the same shall have been delivered to the
Bank.
5.6 LEGAL FEES. Borrower shall pay all inhouse legal counsel fees
and expenses of the Bank incurred in connection with the preparation and
negotiation of this Third Amendment when invoiced therefor.
5.7 JURISDICTION. This Third Amendment, and any instrument or
agreement required hereunder, shall be governed by and construed under the laws
of the State of California.
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IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment as of the day and year first above written.
THE TODD-AO CORPORATION,
a Delaware corporation
By: /s/ Coburn T. Haskell
--------------------------
Coburn T. Haskell
Title: Vice President, Controller
-----------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Fred L. Thorne
---------------------------------
Fred L. Thorne
Vice President
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CONSENT OF GUARANTORS
Each of the undersigned, as a Guarantor under its Continuing Guaranty
dated as of December 2, 1994, hereby consents to the foregoing Third Amendment
to Credit Agreement dated as of May 31, 1996 and confirms that its Continuing
Guaranty remains in full force and effect after giving effect thereto.
Dated as of June 14, 1996
TODD-AO PRODUCTIONS INC.
TODD-AO STUDIOS EAST INC.
TODD-AO DIGITAL IMAGES
TODD-AO VIDEO SERVICES
TODD-AO STUDIOS WEST
By:
-------------------------
J.R. DeLang
Vice President
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