-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, THzVjVbWNnpTNwN253/GrU/ll/d539//FpVhCF9aukvwyeyEWcjyBZ0/tgp43yie k17xYZKvALbT4jicjj/LUg== 0000950136-03-002823.txt : 20031114 0000950136-03-002823.hdr.sgml : 20031114 20031114155826 ACCESSION NUMBER: 0000950136-03-002823 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PANAVISION INC CENTRAL INDEX KEY: 0001022911 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 133593063 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12391 FILM NUMBER: 031004569 BUSINESS ADDRESS: STREET 1: 6219 DE SOTO AVE CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 8183161000 10-Q 1 file001.txt QUARTERLY REPORT ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- FORM 10-Q (MARK ONE) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________________ TO __________________ Commission file number: 001-12391 --------------------------- PANAVISION INC. (Exact name of Registrant as specified in its charter)
DELAWARE 13-3593063 - ----------------------------------------------- ------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6219 DE SOTO AVENUE WOODLAND HILLS, CALIFORNIA 91367 - ----------------------------------------------- ------------------------------------- (Address of principal executive offices) (Zip code)
(818) 316-1000 Registrant's telephone number including area code --------------------------- INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES |X| NO |_| INDICATE BY CHECKMARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN RULE 12b-2 OF THE SECURITIES EXCHANGE ACT OF 1934). YES |_| NO |X| APPLICABLE ONLY TO CORPORATE ISSUERS: INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE. As of November 14, 2003, there were 8,769,919 shares of Panavision Inc. Common Stock outstanding. ================================================================================ PANAVISION INC. INDEX TO QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2003
PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Operations...............................................3 Condensed Consolidated Balance Sheets.........................................................4 Condensed Consolidated Statements of Cash Flows...............................................6 Notes to Condensed Consolidated Financial Statements..........................................8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........18 Item 3. Quantitative and Qualitative Disclosures about Market Risk...................................27 Item 4. Controls and Procedures......................................................................27 PART II. OTHER INFORMATION Item 1. Legal Proceedings............................................................................28 Item 2. Changes in Securities and Use of Proceeds....................................................28 Item 3. Defaults Upon Senior Securities..............................................................28 Item 4. Submission of Matters to a Vote of Security Holders..........................................28 Item 5. Other Information............................................................................28 Item 6. Exhibits and Reports on Form 8-K.............................................................28 SIGNATURES............................................................................................29 CERTIFICATIONS........................................................................................30
2 PART I ITEM 1. FINANCIAL STATEMENTS The financial information herein and management's discussion thereof include consolidated data for Panavision Inc. ("Registrant" or "Panavision") and its subsidiaries. Registrant and its subsidiaries are sometimes herein referred to collectively as the "Company". PANAVISION INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED SEPTEMBER 30 FOR THE NINE MONTHS ENDED SEPTEMBER 30, --------------------------------------- --------------------------------------- 2003 2002 2003 2002 ----------------- -------------------- -------------- ---------------------- Camera rental ..................................$ 30,695 $ 33,394 $ 86,222 $ 88,782 Lighting rental................................. 11,399 8,495 27,663 24,701 Sales and other................................. 12,852 10,573 35,794 27,878 -------------- -------------- --------------- ------------- Total rental revenue and sales.................. 54,946 52,462 149,679 141,361 Cost of camera rental........................... 16,208 15,470 46,517 45,919 Cost of lighting rental......................... 9,727 6,829 25,242 19,847 Cost of sales and other......................... 7,185 6,132 20,670 17,076 -------------- -------------- --------------- ------------- Gross margin.................................... 21,826 24,031 57,250 58,519 Selling, general and administrative expenses.... 16,100 13,088 50,522 38,965 Research and development expenses............... 1,152 822 3,710 3,206 -------------- -------------- --------------- ------------- Operating income ............................... 4,574 10,121 3,018 16,348 Interest income................................. 31 208 143 367 Interest expense................................ (7,200) (8,648) (22,662) (26,572) Foreign exchange gain (loss).................... (77) 504 (665) 712 Refinancing expense............................. (1,549) (31) (1,549) (4,524) Other, net ..................................... 379 189 1,317 964 -------------- -------------- --------------- ------------- Income (loss) before income taxes............... (3,842) 2,343 (20,398) (12,705) Income tax (provision) benefit ................. 1,466 (1,643) 6,986 3,712 -------------- -------------- --------------- ------------- Net income (loss)...............................$ (2,376) $ 700 $ (13,412) $ (8,993) =============== ============== =============== ============= Net loss attributable to common stockholders....$ (6,471) $ (595) $ (22,999) $ (10,588) =============== ============== =============== ============= Net loss per share - basic and diluted..........$ (0.74) $ (0.07) $ (2.62) $ (1.21) =============== ============== =============== ============= Shares used in computation - basic and diluted.. 8,770 8,770 8,770 8,770
3 See accompanying notes. PANAVISION INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, 2003 DECEMBER 31, 2002 ------------------ ----------------- ASSETS (UNAUDITED) (NOTE 1) Current assets: Cash and cash equivalents ......................................... $ 4,139 $ 12,647 Accounts receivable (net of allowance of $1,911 in 2003 and $1,634 in 2002) ................................................. 33,845 27,542 Inventories ....................................................... 11,437 10,417 Prepaid expenses................................................... 5,018 3,708 Due from affiliate................................................. - 2,548 Other current assets............................................... 1,862 1,614 ---------- ---------- Total current assets ................................................. 56,301 58,476 Property, plant and equipment, net.................................... 219,483 223,394 Goodwill, net ........................................................ 270,971 268,280 Patents and trademarks, net .......................................... 67,169 67,574 Due from affiliate ................................................... - 313 Other assets ......................................................... 15,621 15,130 ---------- ---------- Total assets ......................................................... $ 629,545 $ 633,167 ========== ==========
See accompanying notes. 4 PANAVISION INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, 2003 DECEMBER 31, 2002 ------------------ ----------------- (UNAUDITED) (NOTE 1) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ............................................... $ 7,530 $ 6,695 Accrued liabilities ........................................... 27,836 28,451 Due to affiliate ............................................... 2,109 513 Current maturities of long-term debt ........................... 258,223 22,815 -------------- ------------- Total current liabilities ......................................... 295,698 58,474 Long-term debt .................................................... 66,683 408,625 Note payable to affiliate ......................................... 15,111 7,039 Deferred tax liabilities .......................................... 37,949 25,366 Other liabilities ................................................. 7,857 8,592 Due to affiliate .................................................. 1,927 1,209 Commitments and Contingencies Redeemable Series B Cumulative Pay-in-Kind Preferred Stock, $0.01 par value; 100,000 shares authorized; 49,199 shares issued and outstanding at December 31, 2002, (liquidation preference of $1,000 per share plus accrued and unpaid dividends) ............ - 51,733 Stockholders' equity: Series A Non-Cumulative Perpetual Participating Preferred Stock, $0.01 par value; 2,000,000 shares authorized; 1,381,690 shares issued and outstanding at September 30, 2003 and December 31, 2002 (liquidation preference of $1 per share plus declared and unpaid dividends) .......................... 14 14 Series C Cumulative Pay-in-Kind Preferred Stock, $0.01 par value; 200,000 shares authorized; 159,644 shares issued and outstanding at September 30, 2003 (liquidation preference of $1,000 per share plus accrued and unpaid dividends) .......... 2 - Common Stock, $0.01 par value; 50,000,000 shares authorized; 8,769,919 shares issued and outstanding at September 30, 2003 and December 31, 2002 ........................................ 88 88 Additional paid-in capital ..................................... 329,090 189,476 Revaluation capital ............................................ 333,199 333,199 Accumulated deficit ............................................ (457,451) (444,039) Accumulated other comprehensive loss ........................... (622) (6,609) -------------- ------------- Total stockholders' equity ........................................ 204,320 72,129 -------------- ------------- Total liabilities and stockholders' equity ........................ $ 629,545 $ 633,167 ============= =============
See accompanying notes. 5 PANAVISION INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, ------------------------------- 2003 2002 -------------- -------------- OPERATING ACTIVITIES Net loss ................................................. $ (13,412) $ (8,993) Adjustments to derive net cash provided by operating activities: Depreciation and amortization ....................... 32,360 32,857 Gain on sale of property and equipment .............. (996) (1,066) Amortization of deferred financing costs ............ 3,160 1,090 Amortization of discount on subordinated notes ...... - 1,480 Deferred income tax benefit.......................... (7,968) (6,816) Changes in operating assets and liabilities, net of effect of acquired business: Accounts receivable ............................... (5,226) (8,945) Inventories ....................................... (877) (604) Prepaid expenses and other current assets ......... (1,245) (1,948) Due from affiliates ............................... 105 - Accounts payable .................................. 398 (3,237) Accrued liabilities ............................... 373 6,760 Due to affiliates ................................. 1,016 (530) Other, net .......................................... (1,174) (3,666) ---------- ---------- Net cash provided by operating activities ................ 6,514 6,382 INVESTING ACTIVITIES Capital expenditures ................................... (18,971) (19,874) Net cash received in a business combination ........... 9 - Proceeds from dispositions of fixed assets ............. 1,520 2,319 ---------- ---------- Net cash used in investing activities .................. (17,442) (17,555) FINANCING ACTIVITIES Borrowings under Credit Agreement ...................... - 25,526 Borrowings under notes payable to affiliates............ 7,500 6,700 Notes payable to Deluxe Laboratories, Inc............... 580 - Repayments of notes payable and credit agreement ....... (16,978) (29,597) Deferred financing costs ............................... (3,155) (1,656) Investment by Deluxe Laboratories in EFILM LLC ......... - 5,000 Proceeds from issuance of Series B Preferred Stock ..... 4,372 10,000 Proceeds from issuance of Series C Preferred Stock, net of transaction costs .................................. 9,725 - ---------- ---------- Net cash provided by financing activities .............. 2,044 15,973 Effect of exchange rate changes on cash ................ 376 90 ---------- ---------- Net (decrease) increase in cash and cash equivalents ... (8,508) 4,890 Cash and cash equivalents at beginning of period ....... 12,647 2,048 ---------- ---------- Cash and cash equivalents at end of period ............. $ 4,139 $ 6,938 ========== ==========
6 PANAVISION INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, ------------------------------- 2003 2002 ---------- ---------- SUPPLEMENTAL CASH FLOW INFORMATION Interest paid during the period ........................ $ 22,896 $ 20,427 Income taxes paid during the period .................... $ 2,071 $ 2,091
SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES For the nine months ended September 30, 2003, the Company recorded an accreted dividend of $1,319 on the Series B Preferred Stock. On March 27, 2003, Mafco Holdings contributed $90.9 million principal amount of the 9 5/8% Senior Subordinated Discount Notes Due 2006 (the "Existing Notes") and $10.0 million in cash to the Company in exchange for 102,220 shares of Series C Cumulative Pay-in-Kind Preferred Stock ("Series C Preferred Stock") which it contributed to the capital of PX Holding, and PX Holding contributed to the Company 53,571 shares of Series B Preferred Stock in exchange for 57,424 shares of Series C Preferred Stock. In connection with the contribution of Existing Notes by the majority shareholder, deferred tax assets associated with these Existing Notes of $18.0 million were charged against additional paid-in capital. See accompanying notes. 7 PANAVISION INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PREPARATION The Company is an indirect majority-owned subsidiary of Mafco Holdings Inc. ("Mafco Holdings" or "Parent"), a corporation whose sole stockholder is Ronald O. Perelman. The Company's principal business operations are conducted through its subsidiaries. As also described in Note 2 of the Company's 2002 Annual Report on Form 10-K, on April 19, 2001, M&F Worldwide Corp. ("M&F Worldwide") purchased from PX Holding Corporation ("PX Holding"), a wholly owned subsidiary of Mafco Holdings, all 7,320,225 shares (the "Purchased Shares") of the Company's Common Stock held by PX Holding (the "M&F Purchase"). The Purchased Shares constituted approximately 83.5% of the Company's then outstanding Common Stock. As a result of the purchase, Mafco Holdings increased its indirect interest in M&F Worldwide to a majority position. During 2001, certain shareholders of M&F Worldwide brought lawsuits against M&F Worldwide and its directors challenging the M&F Purchase as an alleged breach of fiduciary duty and sought, among other things, rescission of the M&F Purchase transaction. One of the shareholders dismissed his lawsuit pursuant to a settlement. On December 3, 2002, the remaining parties to the litigation consummated a settlement of the litigation (the "M&F Settlement"), whereby Mafco Holdings acquired, through PX Holding, (1) the shares of the Company's Common Stock that M&F Worldwide had purchased in April 2001, (2) the shares of the Company's Series A Preferred Stock that M&F Worldwide acquired in December of 2001, (3) the Existing Notes that a subsidiary of M&F Worldwide acquired in November of 2001, and (4) the Las Palmas Note in the amount of $6.7 million that the Company issued to M&F Worldwide on its acquisition of the shares of Las Palmas (the "Las Palmas Note") (see Note 14 of the Company's 2002 Annual Report on Form 10-K). In addition, all agreements which M&F Worldwide entered into in connection with the M&F Purchase and the December 2001 issuance of the Series A Preferred Stock were terminated. Thus, after the consummation of the M&F Settlement, the Company ceased being a subsidiary of M&F Worldwide. Mafco Holdings, after giving effect to the M&F Settlement, indirectly controls 85.7% of the voting shares of the Company. The M&F Settlement did not have a significant impact on the recorded values of the Company's assets or liabilities since the transaction was between parties under common control. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal year. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002. All terms used but not defined elsewhere herein have the meaning ascribed to them in the Company's 2002 Annual Report on Form 10-K. The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. 8 PANAVISION INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The condensed consolidated financial statements include the accounts of Panavision and its majority-owned subsidiaries. All significant intercompany amounts and transactions have been eliminated. Certain amounts in previously issued financial statements have been reclassified to conform to the 2003 presentation. 2. INVENTORIES Inventories consist of the following (in thousands):
SEPTEMBER 30, 2003 DECEMBER 31, 2002 ---------------------- ----------------------- Finished goods $ 2,540 $ 2,209 Work-in-process 247 283 Component parts 1,435 1,391 Spare parts and supplies 2,146 1,792 Goods purchased for resale 5,069 4,742 ---------------------- ----------------------- $ 11,437 $ 10,417 ====================== =======================
3. USE OF ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including the collectibility of receivables and the realization of assets such as fixed assets and deferred taxes. Actual results could differ from such estimates. 4. LONG-TERM DEBT Long-term debt consists of the following (in thousands):
SEPTEMBER 30, 2003 DECEMBER 31, 2002 ------------------- -------------------- Existing Credit Agreement: Revolving Facility $ 99,200 $ 99,200 Term Facility 158,138 174,608 9 5/8% Senior Subordinated Discount Notes Due 2006 65,420 157,632 Note payable to affiliate 15,111 7,039 Other 2,148 - ------------------- -------------------- 340,017 438,479 Less current maturities 258,223 22,815 ------------------- -------------------- $ 81,794 $ 415,664 =================== ====================
On June 4, 1998, the Company entered into a credit agreement with a syndicate of lenders (as subsequently amended as of September 30, 1998, June 30, 1999, March 15, 2002, June 14, 2002, September 30, 2002, March 25, 2003, and November 12, 2003, the "Existing Credit Agreement"). 9 PANAVISION INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Effective September 30, 2002, the Company amended the Existing Credit Agreement to, among other things, reduce the minimum EBITDA the Company was required to achieve for the four fiscal quarters ending September 30, 2002 (the "September Amendment"). This provision of the September Amendment expired on March 28, 2003. The September Amendment also provided that it would be an event of default if (i) by February 1, 2003, an affiliate of the Company failed to make a cash equity contribution to the Company in the amount of the interest due February 1, 2003 on Existing Notes held by affiliates of the Company on that date or (ii) by March 28, 2003, the Existing Credit Agreement was not refinanced or the debt of the Company reduced, in either case by an amount acceptable to the lenders under the Existing Credit Agreement, or an affiliate of the Company failed to make a cash equity contribution to the Company in the amount of the interest which was due on February 1, 2003 on Existing Notes held by non-affiliates of the Company on that date. On January 31, 2003, Mafco Holdings made the required cash equity contribution to the Company in the amount of the interest due February 1, 2003 on the 9 5/8% Senior Subordinated Discount Notes Due 2006 (the "Existing Notes") held by affiliates of the Company on that date in exchange for 4,372 shares of the Company's Series B Preferred Stock. On March 25, 2003, the Company amended its Existing Credit Agreement to, among other things, decrease minimum EBITDA for the four fiscal quarters ended December 31, 2002, specify the minimum EBITDA, decrease the minimum interest coverage ratio and increase the maximum leverage ratio required for the four fiscal quarters ending on each of March 31, 2003, June 30, 2003, September 30, 2003 and December 31, 2003 (the "March 2003 Amendment"). Absent this amendment, the Company would not have been in compliance with financial covenants for the four fiscal quarters ended December 31, 2002. Under the March 2003 Amendment, certain lenders also agreed to defer amortization payments otherwise due in 2003 to March 31, 2004 such that amortization payments required of the Company in 2003 will be reduced by $20.0 million. The Company agreed to pay, among other fees, $2.0 million, representing 10% of the amount of deferred amortization, at closing. In connection with the March 2003 Amendment, Mafco Holdings contributed $90,860,000 principal amount of Existing Notes and $10.0 million in cash to the Company in exchange for 102,220 shares of Series C Cumulative Pay-in-Kind Preferred Stock, par value $0.01 per share, of the Company (the "Series C Preferred Stock"), which it contributed to the capital of PX Holding, and PX Holding contributed to the Company 53,571 shares of Series B Preferred Stock in exchange for 57,424 shares of Series C Preferred Stock. In connection with the contribution of Existing Notes by the majority shareholder, deferred tax assets associated with these Existing Notes of $18.0 million were charged against additional paid-in capital. Due to the related party nature of this transaction, the Company did not record any gain or loss in the first quarter of 2003. The Series C Preferred Stock is non-voting; has a liquidation preference of $1,000 per share plus accrued and unpaid dividends; and entitles the holder to cumulative dividends at a rate of 10% per annum regardless of whether declared or earned. Additionally, the Series C Preferred Stock is subject to redemption in certain circumstances upon a change of control. 10 PANAVISION INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) In addition, the Company has various lines of credit totaling approximately $13.4 million at September 30, 2003, under which $7.5 million was drawn. The Company's ability to draw on these lines of credit is restricted under the terms of the Existing Credit Agreement. On February 3, 2003, MacAndrews & Forbes Holdings Inc. agreed to extend to the Company a revolving line of credit (the "MacAndrews Line") in the amount of $4.0 million, at the same rate as provided for in the revolving facility pursuant to the Existing Credit Agreement. On August 13, 2003, MacAndrews & Forbes Holdings Inc. agreed to amend the terms of the MacAndrews Line to increase the amount available for borrowings thereunder from $4.0 million to $10.0 million and to extend the maturity date of the MacAndrews Line to August 31, 2006. As of September 30, 2003, the Company had drawn $7.5 million under the MacAndrews Line. In August 2003, the Company postponed an offering of Secured Notes it had previously announced due to unfavorable pricing terms resulting from deteriorating market conditions. Concurrently, the Company also deferred its plans to replace its Existing Credit Agreement with a new credit agreement. The Existing Credit Agreement, as amended by the March 2003 Amendment, remains in effect. Effective November 12, 2003, the Company amended the Existing Credit Agreement to, among other things, decrease minimum EBITDA required for the four fiscal quarters ending September 30, 2003 and December 31, 2003 (the "November 2003 Amendment"). The provisions of the November 2003 Amendment related to financial covenants will expire on March 22, 2004. In the absence of this amendment, the Company would not have been in compliance with financial covenants for the four fiscal quarters ending September 30, 2003 and likely would not be in compliance with financial covenants for the four fiscal quarters ending December 31, 2003, due to costs associated with the attempted offering of Secured Notes and lower than expected feature film and commercial television production, among other factors. In addition, the November 2003 Amendment requires that the interest payment due on February 1, 2004 on Existing Notes be financed exclusively by drawing on an additional line of credit extended by MacAndrews & Forbes Holdings Inc. (as described below) unless, prior to January 30, 2004, the Existing Credit Agreement is refinanced or terminated or the Company's debt reduced in a manner satisfactory to its lenders. In connection with the November 2003 Amendment, on November 12, 2003, MacAndrews & Forbes Holdings Inc. agreed to extend an additional revolving line of credit in the amount of $10 million at a rate equal to 50 basis points above the rate provided for in the revolving facility pursuant to the Existing Credit Agreement and a maturity of April 15, 2004. The Company is currently exploring alternative financing arrangements and intends, before March 22, 2004, to seek amendments of the Existing Credit Agreement or secure other sources of financing on terms more favorable to the Company, including dates of maturity and amortization schedules. Although the lenders under the Existing Credit Agreement have accommodated the Company to date and the Company believes they will continue to do so, there can be no assurance they will continue to do so nor can there be any assurance that the Company could successfully effect any alternative financing. Although there can be no assurance, the Company expects that cash flows from operations, borrowings under the Existing Credit Agreement and the MacAndrews lines of credit, and cash equity contributions and advances from affiliates will be sufficient to enable the Company to meet its anticipated operating, capital spending and debt service requirements through March 22, 2004. 11 PANAVISION INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 5. PREFERRED STOCK TRANSACTIONS In connection with the March 2003 Amendment, as discussed in Note 4 above, all Series B Preferred Stock was exchanged for Series C Preferred Stock. The Series C Preferred Stock, par value $0.01 per share, is non-voting; has a liquidation preference of $1,000 per share plus accrued and unpaid dividends; and entitles the holder to cumulative dividends at a rate of 10% per annum regardless of whether declared or earned. Additionally, the Series C Preferred Stock is subject to redemption in certain circumstances upon a change of control. 6. NEW ACCOUNTING PRONOUNCEMENTS In June 2002, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standard No 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146"). SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity" (including Certain Costs Incurred in a Restructuring). SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002 and did not have a material impact on the Company's financial statements. In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirement for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The application of FIN 45 did not have a material impact on the Company's financial statements. In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 provides guidance on the identification of entities for which control is achieved through means other than through voting rights, variable interest entities, and how to determine when and which business enterprises should consolidate variable interest entities. This interpretation applies immediately to variable interest entities created after January 31, 2003. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company is in the process of adopting FIN 46, and based on currently available information, does not believe the adoption will have a material impact on the Company's financial statements. In April 2003, the FASB issued Statement of Financial Accounting Standards No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" ("SFAS 149"). SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS 149 is generally effective for derivative instruments, including derivative instruments embedded in certain contracts, entered into or modified after September 30, 2003 and for 12 PANAVISION INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) hedging relationships designated after September 30, 2003. The adoption of SFAS 149 is not expected to have a material impact on the Company's financial statements. In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" ("SFAS No. 150"). SFAS 150 established standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS 150 requires that certain financial instruments be classified as liabilities that were previously considered equity. The adoption of this standard on July 1, 2003, as required, had no impact on the Company's consolidated financial statements. 7. SEGMENT INFORMATION The Company has one reportable segment, the rental of camera systems, lighting systems and other equipment, and the sales of related products. These activities are conducted in a number of geographic locations through the Company's owned-and-operated facilities and its network of independent agents. The geographic operations are organized in three regions: North America, Europe and Asia Pacific. The following table presents revenue and other financial information for the reportable segment by geographic region (in thousands):
RENTAL AND SALES -------------------------------------------------- THREE MONTHS ENDED NORTH ASIA SEPTEMBER 30, 2003 AMERICA EUROPE PACIFIC SUBTOTAL OTHER TOTAL ------------ ------------- ------------ ---------- ------------- ------------ Revenue from external customers $ 25,105 $ 20,635 $ 4,406 $ 50,146 $ 4,800 $ 54,946 Inter-regional revenue 3,228 1,345 - 4,573 - 4,573 Operating income (loss) 6,158 (609) (427) 5,122 (548) 4,574 RENTAL AND SALES -------------------------------------------------- THREE MONTHS ENDED NORTH ASIA SEPTEMBER 30, 2002 AMERICA EUROPE PACIFIC SUBTOTAL OTHER TOTAL ------------ ------------ ------------- ---------- ------------- ------------ Revenue from external customers $ 26,091 $ 17,419 $ 6,400 $ 49,910 $ 2,552 $ 52,462 Inter-regional revenue 4,092 1,023 - 5,115 - 5,115 Operating income (loss) 11,474 (972) 995 11,497 (1,376) 10,121 RENTAL AND SALES --------------------------------------------------- NINE MONTHS ENDED NORTH ASIA SEPTEMBER 30, 2003 AMERICA EUROPE PACIFIC SUBTOTAL OTHER TOTAL ------------ ------------- ------------ ----------- ------------- ------------ Revenue from external customers $ 65,767 $ 55,573 $ 16,919 $ 138,259 $ 11,420 $ 149,679 Inter-regional revenue 9,796 3,480 - 13,276 - 13,276 Operating income (loss) 14,109 (3,713) 613 11,009 (7,991) 3,018
13 PANAVISION INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
RENTAL AND SALES --------------------------------------------------- NINE MONTHS ENDED NORTH ASIA SEPTEMBER 30, 2002 AMERICA EUROPE PACIFIC SUBTOTAL OTHER TOTAL ------------ ------------- ------------ ----------- ------------- ----------- Revenue from external customers............ $ 69,902 $ 49,160 $ 19,747 $ 138,809 $ 2,552 $ 141,361 Inter-regional revenue.......... 11,270 3,049 - 14,319 - 14,319 Operating income (loss)......... 18,243 (3,571) 3,746 18,418 (2,070) 16,348
The accounting policies of the geographic regions are the same as those described in Note 1 of the Notes to the Consolidated Financial Statements included in the Company's 2002 Annual Report on Form 10-K. 8. COMPREHENSIVE LOSS The following table presents the components of comprehensive loss (in thousands):
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ------------------- ------------------- 2003 2002 2003 2002 -------- ------- -------- ------- Net income (loss)............................... $ (2,376) $ 700 $ (13,412) $ (8,993) Other comprehensive adjustment: Foreign currency translation adjustment......... 336 (713) 5,987 3,286 --------- -------- --------- -------- Total comprehensive loss........................ $ (2,040) $ (13) $ (7,425) $ (5,707) ========= ======== ========= ========
14 PANAVISION INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 9. NET LOSS PER SHARE For the three and nine month periods ended September 30, 2003 and 2002, the basic and diluted per share data is based on the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Potential common shares, consisting of outstanding stock options, warrants and preferred stock, are not included in the diluted loss per share calculation since they are antidilutive. The following table sets forth the computation for basic and diluted earnings per share (in thousands, except per share information):
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ------------------- ---------------------- 2003 2002 2003 2002 -------- ------- -------- ------- Net income (loss).............................. $ (2,376) $ 700 $ (13,412) $ (8,993) Accreted dividends on Redeemable Series B Preferred Stock................................ - (1,295) (1,319) (1,595) Series C Preferred Stock dividend in arrears... (4,095) - (8,268) - ------ ------ ------ ------ Net loss attributable to common shareholders... $ (6,471) $ (595) $ (22,999) $(10,588) ------ ------ ------ ------ Weighted average common shares................. 8,770 8,770 8,770 8,770 ------ ------ ------ ------ Denominator for basic calculation.............. 8,770 8,770 8,770 8,770 ------ ------ ------ ------ Net loss per common share - basic.............. $ (0.74) $ (0.07) $ (2.62) $ (1.21) ====== ====== ====== ====== Weighted average effect of dilutive securities: Stock options................................. - - - - Warrants...................................... - - - - Preferred stock............................... - - - - ------ ------ ------ ------ Total weighted average effect of dilutive securities..................................... - - - - ------ ------ ------ ------ Denominator for diluted calculation............ 8,770 8,770 8,770 8,770 ------ ------ ------ ------ Net loss per common share - diluted............ $ (0.74) $ (0.07) $ (2.62) $ (1.21) ====== ====== ====== ======
15 PANAVISION INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 10. STOCK-BASED BENEFITS The Company follows the provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which permits the Company to continue to follow the intrinsic value method set forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), but disclose the pro forma effects on net income (loss) had the fair value of the options been expensed. In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure" ("SFAS 148"), which amends SFAS 123. SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. The Company has complied with the disclosure requirements of SFAS 148. The following table illustrates the effect on net loss and loss per share if the Company had applied the fair value recognition provision of FASB No. 123, "Accounting for Stock-Based Compensation," to stock-based employee compensation (in thousands, except per share data):
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ------------------- ---------------------- 2003 2002 2003 2002 -------- ------- -------- ------- Net income (loss) as reported........................ $ (2,376) $ 700 $ (13,412) $ (8,993) Add: stock-based employee compensation expense included in reported net loss................... - - - - Deduct: total stock-based employee compensation expense determined under fair value for all awards.......................................... - - - (15) --------- -------- ---------- ------------- Pro forma net income (loss).......................... $ (2,376) $ 700 $ (13,412) $ (9,008) ========= ======== ========== ============= Pro forma net loss attributable to common shareholders......................................... $ (6,471) $ (595) $ (22,999) $ (10,603) ========= ======== ========== ============= Shares used in computation-basic and diluted......... 8,770 8,770 8,770 8,770 ========= ======== ========== ============= Loss per share: Basic and diluted net loss per share-as reported..... $ (0.74) $ (0.07) $ (2.62) $ (1.21) ========= ======== ========== ============= Basic and diluted net loss per share-pro forma....... $ (0.74) $ (0.07) $ (2.62) $ (1.21) ========= ======== ========== =============
16 PANAVISION INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 11. ACQUISITION OF MINORITY INTEREST IN PANY RENTAL INC. On May 30, 2003, the Company purchased an additional 1/3 interest in PANY Rental Inc. ("PANY Rental") for a combined purchase price of $333,000. This purchase increased the Company's ownership interest from a 1/3 interest to a 2/3 interest. As a result of this increased ownership interest, the Company consolidated the financial position and results of operations of PANY Rental in the accompanying consolidated financial statements, the effects of which were not material. PANY Rental holds an exclusive license to rent the Company's camera systems in the New York market and a license to use the Panavision trademark in connection with the rental of camera systems and related equipment to customers. In addition, on May 30, 2003, PX Holding, the holder of approximately 85.7% of the Company's voting stock, purchased the remaining 1/3 interest in PANY Rental for a purchase price of $700,000 and purchased a promissory note payable by PANY Rental with a principal amount plus accrued interest of approximately $700,000. The purchase price for this promissory note plus accrued interest was approximately $700,000. 12. RECENT DEVELOPMENTS On October 7, 2003, the Company named Robert L. Beitcher as Chief Executive Officer. Since April 2003, Mr. Beitcher served as President and Chief Operating Officer. 17 PANAVISION INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company's revenue is derived from three sources: (i) camera rental operations, (ii) lighting rental operations, and (iii) sales and other revenue. Revenue from camera rental operations consists of the rental of camera systems, lenses and accessories to the motion picture and television industries through a network of rental offices located throughout North America, Europe and the Asia Pacific region. The rental of cinematographic equipment to major feature film productions comprises the largest component of revenue generated from camera rental operations. The Company's lighting rental operations generate revenue through the rental of lighting, lighting grip, transportation and distribution equipment, as well as mobile generators, which are all used in the production of feature films, television programs, commercials and other events. The Company owns and operates lighting rental facilities in the United States, the United Kingdom, Canada and Australia. Lee Lighting, the Company's lighting rental facility located in the United Kingdom, generates the majority of the Company's lighting rental operations revenue. Sales and other revenue is comprised of: (i) the manufacture and sale of lighting and camera filters through Lee Filters in the United Kingdom and the United States; (ii) EFILM's operations, which provide high-resolution scanning of film, digital color timing, laser film recording of digital video and high definition images to film and digital mastering services to the motion picture and television industries, and (iii) sales of various consumable products, such as film stock, light bulbs and gaffer tape, which are used in all types of productions. This section should be read in conjunction with the Consolidated Financial Statements and accompanying Notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002 and the Critical Accounting Policies as disclosed under item 7 in the Company's Annual Report on Form 10-K for the year ended December 31, 2002. RELATED PARTY TRANSACTIONS As also described in Note 2 of the Company's 2002 Annual Report on Form 10-K, on April 19, 2001, M&F Worldwide Corp. ("M&F Worldwide") purchased from PX Holding Corporation ("PX Holding"), a wholly owned subsidiary of Mafco Holdings, all 7,320,225 shares (the "Purchased Shares") of the Company's Common Stock held by PX Holding (the "M&F Purchase"). The Purchased Shares constituted approximately 83.5% of the Company's then outstanding Common Stock. As a result of the purchase, Mafco Holdings increased its indirect interest in M&F Worldwide to a majority position. During 2001, certain shareholders of M&F Worldwide brought lawsuits against M&F Worldwide and its directors challenging the M&F Purchase as an alleged breach of fiduciary duty and sought, among other things, rescission of the M&F Purchase transaction. One of the shareholders dismissed his lawsuit pursuant to a settlement. On December 3, 2002, the remaining parties to the litigation consummated the M&F Settlement, whereby Mafco Holdings acquired, through PX Holding, (1) the shares of the Company's Common Stock that M&F Worldwide had purchased in April 2001, (2) the shares of the Company's Series A Preferred Stock that M&F Worldwide acquired in December of 2001, (3) the 95/8% Senior Subordinated Discount Notes Due 2006 (the "Existing Notes") that a subsidiary of M&F Worldwide acquired in November of 2001, and (4) the Las Palmas Note in the amount of $6.7 million that the Company issued to M&F Worldwide on its acquisition of the shares of Las Palmas (the "Las Palmas Note") (see Note 14 of the Company's 2002 Annual Report on Form 10-K). In addition, all agreements to which M&F Worldwide entered into in connection with the M&F Purchase and the December 2001 issuance of the Series A Preferred Stock were terminated. 18 PANAVISION INC. Thus, after the consummation of the M&F Settlement, the Company ceased being a subsidiary of M&F Worldwide. Mafco Holdings, after giving effect to the M&F Settlement, indirectly controls 85.7% of the voting shares of the Company. The M&F Settlement did not have a significant impact on the recorded values of the Company's assets or liabilities since the transaction was between parties under common control. On February 3, 2003, MacAndrews & Forbes Holdings Inc. agreed to extend to the Company a revolving line of credit (the "MacAndrews Line") in the amount of $4.0 million, at the same rate as provided for in the revolving facility pursuant to the Existing Credit Agreement. On August 13, 2003, MacAndrews & Forbes Holdings Inc. agreed to amend the terms of the MacAndrews Line to increase the amount available for borrowings thereunder from $4.0 million to $10.0 million and to extend the maturity date of the MacAndrews Line to August 31, 2006. As of September 30, 2003, the Company had drawn $7.5 million under the MacAndrews Line. In connection with the November 2003 Amendment, on November 12, 2003, MacAndrews & Forbes Holdings Inc. agreed to extend an additional revolving line of credit in the amount of $10 million at a rate equal to 50 basis points above the rate provided for in the revolving facility pursuant to the Existing Credit Agreement and a maturity of April 15, 2004. RESULTS OF OPERATIONS The following discussion and analysis includes the Company's consolidated results of operations for 2003 as compared to 2002. Results of operations for 2003 as compared to 2002 have been impacted by the strengthening of international currencies relative to the U.S. dollar. QUARTER ENDED SEPTEMBER 30, 2003 COMPARED TO QUARTER ENDED SEPTEMBER 30, 2002 CAMERA RENTAL OPERATIONS Camera rental revenue for the third quarter of 2003 was $30.7 million. Revenue decreased $2.7 million, or 8.1%, as compared to the third quarter of 2002. The decrease reflects decreased features activity, principally in the U.S. and Australia, partially offset by increases attributable to foreign exchange rate changes impacting our international operations. Cost of camera rental for the third quarter of 2003 was $16.2 million, an increase of $0.7 million, or 4.8%, as compared to the third quarter of 2002. The increase was due to increased repairs and maintenance costs, the inclusion of the results of our recently acquired PANY Rental operations, and increases attributable to foreign exchange rate changes impacting our international operations. LIGHTING RENTAL OPERATIONS Lighting rental revenue for the third quarter of 2003 was $11.4 million, an increase of $2.9 million, or 34.2%, as compared to the third quarter of 2002. The increase reflects increased lighting rental activity at Lee Lighting in the U.K., and increases attributable to foreign exchange rate changes impacting our international operations and our recently acquired PANY Rental operations, partially offset by lower lighting rental activity in Australia, principally attributable to strong feature activity in the third quarter of 2002. Cost of lighting rental for the third quarter of 2003 was $9.7 million, an increase of $2.9 million, or 42.4%, as compared to the third quarter of 2002. The increase was primarily due to increased labor expenses related to the increase in lighting rental activity at Lee Lighting in the U.K., and increases 19 PANAVISION INC. attributable to foreign exchange rate changes impacting our international operations, partially offset by lower expenses in Australia. SALES AND OTHER Sales and other revenue in the third quarter of 2003 was $12.9 million, an increase of $2.3 million, or 21.6%, over the corresponding 2002 quarter. The increase was primarily due to increased business at EFILM, increased sales of consumables in the U.K., and increases attributable to foreign exchange rate changes impacting our international operations. Cost of sales and other for the third quarter of 2003 was $7.2 million, an increase of $1.1 million, or 17.2%, as compared to the third quarter of 2002. The change was primarily due to increased activity at EFILM and the increase in sales and other revenue discussed above. OPERATING COSTS Selling, general and administrative expenses for the third quarter of 2003 were $16.1 million, an increase of $3.0 million, or 23.0%, as compared to the third quarter of 2002. The increase was primarily due to $0.7 million in costs related to the expansion of EFILM since the prior year, increases attributable to foreign exchange rate changes impacting our international operations, and inclusion of the PANY Rental results for the third quarter of 2003. The remaining increase reflects increased employee costs, principally salaries, benefits, taxes, and various other increases throughout the Company. Research and development expenses for the third quarter of 2003 were $1.2 million, as compared to $0.8 million for third quarter of 2002. The change was mainly due to payroll increases as compared to the prior year. INTEREST, OTHER AND TAXES Net interest expense for the third quarter of 2003 was $7.2 million, a decrease of $1.3 million, or 15.1%, as compared to the third quarter of 2002. The decrease principally reflects a lower debt level, due primarily to the contribution of $90.0 million principal amount of Mafco Holdings owned Existing Notes in exchange for equity, payments of scheduled amortization compared to the third quarter of 2002, and other changes including the amortization of debt issuance costs. Foreign exchange loss for the third quarter of 2003 was $0.1 million as compared to a $0.5 million gain in the third quarter of 2002. The decrease was primarily due to a weaker U.S. dollar as compared to the prior year. Refinancing expense of $1.5 million for the third quarter of 2003 reflects costs incurred in connection with the Company's August 2003 postponed offering of secured notes. These costs include professional fees and other expenses incurred by the Company. The tax benefit for the third quarter of 2003 was $1.5 million, as compared to a tax provision of $1.6 million for the third quarter of 2002. For the third quarter of 2003, the Company recorded an income tax benefit of $1.9 million resulting from the benefit associated with domestic tax losses, offset by a $0.4 million provision relating to profitable foreign operations and foreign taxes withheld at source. See Notes 2 and 6 of the Notes to Consolidated Financial Statements included in the Company's 2002 Annual Report on Form 10-K for a discussion of the Company's Tax Sharing Agreements. Under applicable Internal Revenue Service regulations, as a result of the M&F Settlement, the Company may not join in filing a consolidated federal income tax return with either Mafco Holdings or the Company's subsidiaries until May 2006 without consent from the Internal Revenue Service. Accordingly, for the period from the effective date of the M&F Settlement of December 3, 2002 through December 31, 20 PANAVISION INC. 2002, and for the 2003 tax year, the Company will file separate federal income tax returns for the Company and incorporated subsidiaries. The Company does not believe that deconsolidation of its federal income tax returns will have a material adverse effect on the Company's business or financial condition. NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2002 CAMERA RENTAL OPERATIONS Camera rental revenue for the nine months ended September 30, 2003 was $86.2 million. Revenue decreased $2.6 million, or 2.9%, as compared to the nine months ended September 30, 2002. The decrease reflects decreased features revenue, partially offset by increases attributable to foreign exchange rate changes impacting our international operations, and increased commercial rental revenue. Cost of camera rental for the nine months ended September 30, 2003 was $46.5 million, an increase of $0.6 million, or 1.3%, as compared to the nine months ended September 30, 2002. The increased costs were driven in part by increased repairs and maintenance and in part by increases attributable to foreign exchange rate changes impacting our international operations. LIGHTING RENTAL OPERATIONS Lighting rental revenue for the nine months ended September 30, 2003 was $27.7 million, an increase of $3.0 million, or 12.0%, as compared to the nine months ended September 30, 2002. The increase reflects increased lighting rental activity at Lee Lighting in the U.K., inclusion of PANY Rental activity, and increases attributable to foreign exchange rate changes impacting our international operations, partially offset by decreased lighting rental revenue in Australia, principally due to decreased features activity. Cost of lighting rental for the nine months ended September 30, 2003 was $25.2 million, an increase of $5.4 million, or 27.2%, as compared to the nine months ended September 30, 2002. The increase was primarily due to increased labor expenses related to the increase in lighting rental activity at Lee Lighting in the U.K., inclusion of PANY Rental activity, partially offset by lower expenses in Australia. SALES AND OTHER Sales and other revenue for the nine months ended September 30, 2003 was $35.8 million, an increase of $7.9 million, or 28.4%, over the nine months ended September 30, 2002. The increase was primarily due to increased business at EFILM, increases attributable to foreign exchange rate changes impacting our international operations, as well as increased sales of consumables at Lee Lighting in the U.K., partially offset by decreased activity in Australia. Cost of sales and other for the nine months ended September 30, 2003 was $20.7 million, an increase of $3.6 million, or 21.0%, as compared to the nine months ended September 30, 2002. The change was primarily due to the increases in sales and other revenue discussed above. OPERATING COSTS Selling, general and administrative expenses for the nine months ended September 30, 2003 were $50.5 million, an increase of $11.6 million, or 29.7%, as compared to the nine months ended September 30, 2002. The increase was primarily due to a $4.0 million accrual for severance costs in connection with the departure of the Company's former Chief Executive Officer and Chief Financial Officer, $3.1 million in costs related to the expansion of EFILM since the prior year, increases attributable to foreign exchange rate changes impacting our international operations, increased employee costs, including salaries, taxes, and benefits, and various other increases throughout the Company. 21 PANAVISION INC. Research and development expenses for the nine months ended September 30, 2003 were $3.7 million, an increase of $0.5 million, or 15.7%, as compared to the nine months ended September 30, 2002. The change was mainly due to employee cost increases as compared to the prior year. INTEREST, OTHER AND TAXES Net interest expense for the nine months ended September 30, 2003 was $22.5 million, a decrease of $3.7 million, or 14.1%, as compared to the nine months ended September 30, 2002. The decrease reflects a lower debt level, compared to the nine months ended September 30, 2002 as a result of the contribution of $90.9 million principal amount of Mafco Holdings owned Existing Notes in exchange for equity, and payments of scheduled amortization. Had Mafco Holdings contributed $90.9 million principal amount of Existing Notes on January 1, 2003, net interest expense would have been approximately $20.3 million in the nine months ended September 30, 2003. Foreign exchange loss for the nine months ended September 30, 2003 was $0.7 million as compared to a foreign exchange gain of $0.7 million for the nine months ended September 30, 2002. The decrease was primarily due to a weaker U.S. dollar as compared to the prior year. Refinancing expense of $1.5 million for the nine months ended September 30, 2003 reflects costs, principally professional services, incurred in connection with the Company's postponed offering of Senior Notes. Refinancing expense of $4.5 million for the nine months ended September 30, 2002 reflects costs incurred in connection with the Company's discontinued offering of secured notes and bank refinancing. These costs include $2.2 million of charges, primarily consisting of professional fees incurred in connection with the Company's refinancing and lender's fees of $2.9 million paid in accordance with the March 2002 Amendment. Such charges were offset by a gain of approximately $0.6 million associated with the $37.7 million principal amount at maturity of Existing Notes that were cancelled on June 28, 2002. Net other income for the nine months ended September 30, 2003 was $1.3 million as compared to $1.0 million for the nine months ended September 30, 2002. The tax benefit for the nine months ended September 30, 2003 was $7.0 million, as compared to a tax benefit of $3.7 million for the nine months ended September 30, 2002. For the nine months ended September 30, 2003, the Company recorded an income tax benefit of $8.3 million resulting from the benefit associated with domestic tax losses, offset by a $1.3 million provision relating to profitable foreign operations and foreign taxes withheld at source. See Notes 2 and 6 of the Notes to Consolidated Financial Statements included in the Company's 2002 Annual Report on Form 10-K for a discussion of the Company's Tax Sharing Agreements. Under applicable Internal Revenue Service regulations, as a result of the M&F Settlement, the Company may not join in filing a consolidated federal income tax return with either Mafco Holdings or the Company's subsidiaries until May 2006 without consent from the Internal Revenue Service. Accordingly, for the period from the effective date of the M&F Settlement of December 3, 2002 through December 31, 2002, and for the 2003 tax year, the Company will file separate federal income tax returns for the Company and incorporated subsidiaries. The Company does not believe that deconsolidation of its federal income tax returns will have a material adverse effect on the Company's business or financial condition. 22 PANAVISION INC. LIQUIDITY AND CAPITAL RESOURCES The following table sets forth certain information from the Company's condensed consolidated statements of cash flows for the periods indicated (in thousands):
NINE MONTHS ENDED SEPTEMBER 30, ---------------------------- 2003 2002 ------------ ------------ Net cash provided by (used in): Operating activities .................................. $ 6,514 $ 6,382 Investing activities .................................. (17,442) (17,555) Financing activities .................................. 2,044 15,973
Cash provided by operating activities for the nine months ended September 30, 2003, totaled $6.5 million comprised of the net loss of $13.4 million, adjusted for depreciation and amortization of $32.4 million, offset by the net change in working capital (excluding cash) and other miscellaneous items totaling $12.5 million. Total net cash used in investing activities of $17.4 million consisted of capital expenditures of $18.9 million, offset by proceeds from the disposition of fixed assets of $1.5 million. The Company also purchased an additional 1/3 ownership interest in PANY Rental Inc. in May 2003 that resulted in the consolidation of PANY Rental Inc.'s financial position and results of operation in the Company's accompanying consolidated financial statements. The purchase price plus additional payments resulting from this transaction approximated $0.6 million and were offset by a similar amount of cash received upon consolidation. The majority of the capital expenditures were used to manufacture camera rental systems and accessories. Total net cash provided by financing activities was $2.0 million, which was comprised of borrowings of $7.5 million under the MacAndrews Line, notes payable to Deluxe Laboratories, Inc. of $0.6 million, proceeds from the issuance of Series B Preferred Stock of $4.4 million, and proceeds from the issuance of Series C Preferred Stock of $9.7 million, net of transaction costs, offset by repayments of $17.0 million and deferred financing costs of $3.2 million. Cash provided by operating activities for the nine months ended September 30, 2002, totaled $6.4 million comprised of the net loss of $9.0 million, adjusted for depreciation and amortization of $32.9 million and the amortization of the discount on the Existing Notes of $1.5 million, offset by the net change in working capital (excluding cash) and other miscellaneous items totaling $19.0 million. Total net cash used in investing activities of $17.6 million included $19.9 million of capital expenditures, offset by $2.3 million in proceeds received from the disposition of fixed assets. The majority of the capital expenditures were used to manufacture camera rental systems and accessories, purchase lighting equipment and expand EFILM's operations. Cash provided by financing activities was $16.0 million, reflecting borrowings of $25.5 million under the Credit Agreement, borrowings of $6.7 million under the Las Palmas Note, the issuance of Series B Preferred Stock for $10.0 million, and the $5.0 million investment by Deluxe Laboratories, Inc. in EFILM, LLC, offset by repayments of $29.6 million under the Existing Credit Agreement, and deferred financing costs of $1.6 million. EXISTING CREDIT AGREEMENT Effective September 30, 2002, the Company amended the Existing Credit Agreement to, among other things, reduce the minimum EBITDA the Company was required to achieve for the four fiscal quarters ending September 30, 2002 (the "September Amendment"). This provision of the September Amendment expired on March 28, 2003. The September Amendment also provided that it would be an event of default if (i) by February 1, 2003, an affiliate of the Company failed to make a cash equity contribution to the Company in the amount of the interest due February 1, 2003 on Existing Notes held by affiliates of the Company on that date or (ii) by March 28, 2003, the Existing Credit Agreement was not refinanced or the debt of the Company reduced, in either case by an amount acceptable to the lenders under the Existing Credit Agreement, or an affiliate of 23 PANAVISION INC. the Company failed to make a cash equity contribution to the Company in the amount of the interest which was due on February 1, 2003 on Existing Notes held by non-affiliates of the Company on that date. On January 31, 2003, Mafco Holdings made the required cash equity contribution to the Company in the amount of the interest due February 1, 2003 on the Existing Notes held by affiliates of the Company on that date in exchange for 4,372 shares of the Company's Series B Preferred Stock. On March 25, 2003, the Company amended its Existing Credit Agreement to, among other things, decrease minimum EBITDA for the four fiscal quarters ended December 31, 2002, specify the minimum EBITDA, decrease the minimum interest coverage ratio and increase the maximum leverage ratio required for the four fiscal quarters ending on each of March 31, 2003, June 30, 2003, September 30, 2003 and December 31, 2003 (the "March 2003 Amendment"). Absent this amendment, the Company would not have been in compliance with financial covenants for the four fiscal quarters ended December 31, 2002. Under the March 2003 Amendment, certain lenders also agreed to defer amortization payments otherwise due in 2003 to March 31, 2004 such that amortization payments required of the Company in 2003 will be reduced by $20.0 million. The Company agreed to pay, among other fees, $2.0 million, representing 10% of the amount of deferred amortization, at closing. In connection with the March 2003 Amendment, Mafco Holdings contributed $90.9 million principal amount of Existing Notes and $10.0 million in cash to the Company in exchange for 102,220 shares of Series C Cumulative Pay-in-Kind Preferred Stock, par value $0.01 per share, of the Company (the "Series C Preferred Stock"), which it contributed to the capital of PX Holding, and PX Holding contributed to the Company 53,571 shares of Series B Preferred Stock in exchange for 57,424 shares of Series C Preferred Stock. In connection with the contribution of Existing Notes by the majority shareholder, deferred tax assets associated with these Existing Notes of $18.0 million were charged against additional paid-in capital. Due to the related party nature of this transaction, the Company did not record any gain or loss in the first quarter of 2003. The Series C Preferred Stock is non-voting; has a liquidation preference of $1,000 per share plus accrued and unpaid dividends; and entitles the holder to cumulative dividends at a rate of 10% per annum regardless of whether declared or earned. Additionally, the Series C Preferred Stock is subject to redemption in certain circumstances upon a change of control. In addition, the Company has various lines of credit totaling approximately $13.4 million at September 30, 2003, under which $7.5 million was drawn. The Company's ability to draw on these lines of credit is restricted under the terms of the Existing Credit Agreement. On February 3, 2003, MacAndrews & Forbes Holdings Inc. agreed to extend to the Company a revolving line of credit in the amount of $4.0 million, at the same rate as provided for in the revolving facility pursuant to the Existing Credit Agreement (the "MacAndrews Line"). On August 13, 2003, MacAndrews & Forbes Holdings Inc. agreed to amend the terms of the MacAndrews Line to increase the amount available for borrowings thereunder from $4.0 million to $10.0 million and to extend the maturity date of the MacAndrews Line to August 31, 2006. The Company does not have any off-balance sheet financing arrangements other than operating leases of equipment. In August 2003, the Company postponed an offering of Secured Notes it had previously announced due to unfavorable pricing terms resulting from deteriorating market conditions. Concurrently, the Company also deferred its plans to replace its Existing Credit Agreement with a new credit agreement. The Existing Credit Agreement, as amended by the March 2003 Amendment, remains in effect. Effective November 12, 2003, the Company amended the Existing Credit Agreement to, among other things, decrease minimum EBITDA required for the four fiscal quarters ending September 30, 2003 and December 31, 2003 (the "November 2003 Amendment"). The provisions of the November 2003 Amendment related to financial covenants will expire on March 22, 2004. In the absence of this amendment, the Company would not have been in compliance with financial covenants for the four fiscal quarters ending September 30, 2003 and likely would not be in compliance with financial covenants for the four fiscal quarters ending December 31, 2003, due to costs associated with the attempted offering of Secured Notes and lower than expected feature film and commercial television production, among other 24 PANAVISION INC. factors. In addition, the November 2003 Amendment requires that the interest payment due on February 1, 2004 on Existing Notes be financed exclusively by drawing on an additional line of credit extended by MacAndrews & Forbes Holdings Inc. (as described below) unless, prior to January 30, 2004, the Existing Credit Agreement is refinanced or terminated or the Company's debt reduced in a manner satisfactory to its lenders. In connection with the November 2003 Amendment, on November 12, 2003, MacAndrews & Forbes Holdings Inc. agreed to extend an additional revolving line of credit in the amount of $10 million at a rate equal to 50 basis points above the rate provided for in the revolving facility pursuant to the Existing Credit Agreement and a maturity of April 15, 2004. The Company is currently exploring alternative financing arrangements and intends, before March 22, 2004, to seek amendments of the Existing Credit Agreement or secure other sources of financing on terms more favorable to the Company, including dates of maturity and amortization schedules. Although the lenders under the Existing Credit Agreement have accommodated the Company to date and the Company believes they will continue to do so, there can be no assurance they will continue to do so nor can there be any assurance that the Company could successfully effect any alternative financing. Although there can be no assurance, the Company expects that cash flows from operations, borrowings under the Existing Credit Agreement and the MacAndrews lines of credit, and cash equity contributions and advances from affiliates will be sufficient to enable the Company to meet its anticipated operating, capital spending and debt service requirements through March 22, 2004. CAPITAL EXPENDITURES LIQUIDITY REQUIREMENTS AND OTHER The Company intends to use the cash provided by operating activities to make additional capital expenditures to manufacture camera systems and accessories and purchase other rental equipment. CONTRACTUAL OBLIGATIONS The Company has certain cash obligations and other commercial commitments that will affect its short and long-term liquidity. At September 30, 2003, such obligations and commitments were as follows (in millions):
PAYMENTS DUE BY PERIOD ---------------------------------------------------------------- LESS THAN 1 BETWEEN 2-3 BETWEEN 4-5 AFTER 5 CONTRACTUAL OBLIGATIONS TOTAL YEAR YEARS YEARS YEARS - ----------------------- ----- ---- ----- ----- ----- Long-term debt $ 340.0 $ 265.8 $ 74.2 $ - $ - Operating leases 46.0 9.9 15.5 10.7 9.9 -------- -------- ------- -------- ------- Total Contractual Cash Obligations $ 386.0 $ 275.7 $ 89.7 $ 10.7 $ 9.9 ======== ======== ======= ======== =======
Panavision is a holding company whose principal material asset is the ownership interest in its subsidiaries. The Company's principal business operations are conducted by its subsidiaries. Accordingly, the Company's source of cash to pay its obligations is expected to be distributions with respect to its ownership interests in its subsidiaries. There can be no assurance that its subsidiaries will generate sufficient cash flow to pay dividends or distribute funds to the Company or that applicable state law and contractual restrictions, including negative covenants contained in the debt instruments of such subsidiaries, will permit such dividends or distributions. SEASONALITY The Company's revenue and net income are subject to seasonal fluctuations. In North America, episodic television programs cease filming in the second quarter for several months, and typically resume 25 PANAVISION INC. production in August. Feature film production activity typically reaches its peak in the third and fourth quarters. SFAS NO. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS" The Company adopted Financial Accounting Standards (SFAS) No. 142 "Goodwill and Other Intangible Assets," on January 1, 2002. SFAS No. 142 requires that goodwill and indefinite-lived intangible assets not be amortized but, instead, tested at least annually for impairment while intangible assets that have finite useful lives continue to be amortized over their respective useful lives. Accordingly, the Company ceased amortization of goodwill and tradename, on January 1, 2002, and will continue to amortize intangible assets with finite useful lives over their respective useful lives. SFAS No. 142 requires that goodwill be tested for impairment using a two-step process. The first step is to determine the fair value of the reporting unit, which may be calculated using a discounted cash flow methodology, and compare this value to its carrying value. If the fair value exceeds the carrying value, no further work is required and no impairment loss would be recognized. The second step is an allocation of the fair value of the reporting unit to all of the reporting unit's assets and liabilities under a hypothetical purchase price allocation. The Company will perform its annual impairment tests of goodwill and tradename during the fourth quarter of fiscal 2003 in connection with the Company's planning efforts for 2004. As the Company has not yet determined what the effect of these tests will be on its earnings and financial position, these effects, which may have a material impact, will be reflected in the consolidated financial statements for the year ending December 31, 2003. FORWARD-LOOKING STATEMENTS This quarterly report on Form 10-Q for the quarter ended September 30, 2003, as well as certain of the Company's other public documents and statements and oral statements, contain forward-looking statements that reflect management's current assumptions and estimates of future performance and economic conditions. Such statements are made in reliance upon safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions investors that forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those projected, stated, or implied by the forward-looking statements. Further, the Company encourages investors to read the summary of its critical accounting policies included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002. In addition to factors described in the Company's Securities and Exchange Commission filings and others, the following factors could cause the Company's actual results to differ materially from those expressed in any forward-looking statements made by the Company: (a) a significant reduction in the number of feature film, commercial or series television productions; (b) competitive pressures arising from changes in technology, customer requirements, price competition and industry standards; (c) an increase in expenses related to new product initiatives or product development efforts; (d) unfavorable foreign currency fluctuations; (e) significant increases in interest rates; (f) lower-than-expected cash flows from operations; (g) difficulties or delays in developing and introducing new products or failure of the Company's customers to accept new product offerings; (h) difficulties or delays in implementing improvements in operating efficiencies; (i) delays in customer acceptance of digital laboratory services; or (j) the inability to secure capital contributions or loans from affiliates, refinance its indebtedness or sell its equity securities. The Company assumes no responsibility to update the forward-looking statements contained in this filing. 26 PANAVISION INC. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company has exposure to market risk both as a result of changing interest rates and movements in foreign currency exchange rates. The Company manages its exposure to these market risks through its regular operating and financing activities. Item 7A of the Company's Annual Report on Form 10-K for the year ended December 31, 2002 presents quantitative and qualitative disclosures about market risk as of December 31, 2002. There have been no material changes in this disclosure as of September 30, 2003. ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES (a) Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the fiscal period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is within the time periods specified in the Commission's rules and forms. (b) Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 27 PANAVISION INC. PART II ITEM 1. LEGAL PROCEEDINGS No material legal proceedings are pending. ITEM 2. CHANGES IN SECURITIES There were no modifications made to the rights of stockholders of any class of securities during the quarter ended September 30, 2003. ITEM 3. DEFAULTS UPON SENIOR SECURITIES There were no events of default upon senior securities during the quarter ended September 30, 2003. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the quarter ended September 30, 2003. ITEM 5. OTHER INFORMATION No additional information need be presented. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K EXHIBITS 4.13 Amended and Restated Line of Credit Agreement, dated as of August 13, 2003, between Panavision Inc. and MacAndrews and Forbes Holdings Inc. 4.14 Senior Subordinated Line of Credit Agreement, dated as of November 12, 2003, between Panavision Inc. and MacAndrews and Forbes Holdings Inc. 4.15 Seventh Amendment, dated as of November 12, 2003, to the Credit Agreement among Panavision Inc., the several lenders named therein, Credit Suisse First Boston, as Documentation Agent, and JP Morgan Chase Bank, as Administrative Agent. 31.1 * Section 302 CEO certification 31.2 * Section 302 CFO certification 32.1 * Section 906 CEO certification 32.2 * Section 906 CFO certification FORM 8-K July 24, 2003 - The Company announced its planned offering of $275.0 million in aggregate principal amount of senior secured notes due 2008 and its ongoing discussions to enter into a new credit agreement to replace its existing credit agreement. July 28, 2003 - In connection with a financing undertaken by the Company, it provided certain financial information to potential financing sources. October 8, 2003 - The Company announced that Robert L. Beitcher, President of the registrant since April 1, 2003, has been named Chief Executive Officer. * Filed herewith 28 PANAVISION INC. SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. PANAVISION INC. Date: November 14, 2003 By: /s/ ROBERT L. BEITCHER ------------------------ ---------------------------------------- President and Chief Executive Officer By: /s/ BOBBY G. JENKINS ---------------------------------------- Bobby G. Jenkins Executive Vice President, Chief Financial Officer and principal accounting officer 29 EX-4.13 3 file002.txt AMENDED AND RESTATED LINE OF CREDIT AGREEMENT =============================================================================== PANAVISION INC., AS BORROWER ------------------------ $10,000,000 AMENDED AND RESTATED LINE OF CREDIT AGREEMENT Dated as of August 13, 2003 -------------------------- MACANDREWS & FORBES HOLDINGS INC., AS LENDER =============================================================================== TABLE OF CONTENTS Page ---- SECTION 1. DEFINITIONS......................................................1 1.1. Defined Terms..................................................1 1.2. Other Definition Provisions....................................5 SECTION 2. AMOUNT AND TERMS OF COMMITMENT...................................5 2.1. The Commitment.................................................5 2.2. Procedure for Borrowing........................................5 2.3. Voluntary Termination or Reduction of the Commitment...........6 2.4. Repayment of Loans; Evidence of Debt...........................6 2.5. Use of Proceeds................................................6 SECTION 3. PROVISIONS RELATING TO THE LOANS.................................6 3.1. Optional Prepayments...........................................6 3.2. Mandatory Prepayments..........................................6 3.3. Interest Rate and Payment Dates................................7 3.4. Method of Payments.............................................7 SECTION 4. REPRESENTATIONS AND WARRANTIES...................................8 4.1. Corporate Existence............................................8 4.2. Corporate Power................................................8 4.3. No Legal Bar to Loans..........................................8 SECTION 5. CONDITIONS PRECEDENT.............................................8 5.1. Conditions to Initial Loan.....................................8 5.2. Conditions to Each Loan........................................9 SECTION 6. EVENTS OF DEFAULT................................................9 6.1. Events of Default..............................................9 SECTION 7. MISCELLANEOUS...................................................11 7.1. Amendments and Waivers........................................11 7.2. Notices.......................................................11 7.3. No Waiver; Cumulative Remedies................................12 7.4. Survival of Representations and Warranties....................12 7.5. Payment of Expenses; General Indemnity........................12 7.6. Successors and Assigns........................................13 7.7. Counterparts..................................................13 7.8. Severability..................................................13 7.9. Integration...................................................13 7.10. GOVERNING LAW.................................................13 7.11. Submission To Jurisdiction; Waivers...........................13 7.12. WAIVERS OF JURY TRIAL.........................................14 Exhibit 4.13 AMENDED AND RESTATED LINE OF CREDIT AGREEMENT AMENDED AND RESTATED LINE OF CREDIT AGREEMENT, dated as of August 13, 2003, between PANAVISION INC., a Delaware corporation (the "Borrower"), and MACANDREWS & FORBES HOLDINGS INC., a Delaware corporation (the "Lender"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Borrower and the Lender entered into the Line of Credit Agreement, dated as of February 3, 2003, (as amended by the First Amendment, dated as of March 27, 2003, the "Existing Agreement"), pursuant to which the Lender agreed to extend credit on a senior unsecured basis in order to enable the Borrower, subject to the terms and conditions of the Existing Agreement, to borrow, on a revolving basis, at any time and from time to time in an aggregate principal amount at any time outstanding not to exceed $4,000,000; WHEREAS, the Borrower has requested the Lender (i) to extend the Maturity Date under the Existing Agreement to August 31, 2006 and (ii) to increase the Commitment under the Existing Agreement to an aggregate principal amount at any one time outstanding of up to $10,000,000; WHEREAS, the Lender is willing to provide for an extension to the Maturity Date and for an increase of the Commitment under the Existing Agreement as requested by the Borrower only on the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree to amend and restate the Existing Agreement as follows: SECTION 1. DEFINITIONS 1.1. Defined Terms. As used in this Agreement, the following terms shall have the following respective meanings (such definitions to be equally applicable to the singular and plural forms thereof): "Affiliate" of any Person means any Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including with its correlative meanings, "controlled by" and "under common control with") shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). 2 "Agreement" shall mean this Amended and Restated Line of Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Applicable Rate" means the sum of (i) the three-month London Interbank Offered Rate published in the Wall Street Journal on the day of the relevant borrowing, provided that if the Wall Street Journal is not published on such day, the Lender shall designate in good faith an alternative source for determining the three-month London Interbank Offered Rate on such day and (ii) the Applicable Margin for Revolving Credit Loans bearing interest at the rate for Eurodollar Loans under (and as each such term is defined in) the Bank Credit Agreement. "Available Commitment" means, at any time, an amount equal to the excess, if any, of (a) the Commitment over (b) the aggregate principal amount of all Loans then outstanding. "Bank Commitment" means the Total Revolving Credit Commitments under (and as such term is defined in) the Bank Credit Agreement. "Bank Credit Agreement" means the Credit Agreement, dated as of May 28, 1998, by and among the Borrower, the several banks and other financial institutions from time to time parties thereto, the Arranger named therein, the Documentation Agent named therein, and JPMorgan Chase Bank, as Administrative Agent, as amended, supplemented and otherwise modified through the date hereof and as further amended, supplemented and otherwise modified from time to time. "Bank Letter of Credit" means a letter of credit issued under the Bank Credit Agreement. "Bank Revolving Loan" means a Revolving Credit Loan made under (and as such term is defined in) the Bank Credit Agreement. "Bankruptcy Law" means Title 11 of the United States Code or any similar Federal or state law for the relief of debtors. "Borrower" is defined in the introductory paragraph of this Agreement. "Borrower's Bank Account" is defined in Section 2.2(a) hereof. "Borrowing Amount", "Borrowing Date" and "Borrowing Notice" are each defined in Section 2.2(a) hereof. "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. "Commitment" means the obligation of the Lender to make Loans to the Borrower hereunder in an aggregate principal amount at any one time outstanding of up 3 to $10,000,000, as such obligation is reduced from time to time in accordance with Section 2.3 hereof. "Commitment Period" means the period from and including the Effective Date to the Business Day immediately preceding the Termination Date. "Contractual Obligation" means, with respect to any Person, any provision of any material debt security or of any material preferred stock or other equity interest issued by such Person or of any material indenture, mortgage, agreement, guarantee, instrument or undertaking to which such Person is a party or by which it or any of its material property is bound. "Cross Default" of any Person means (a) default in the payment of any amount when due (whether at maturity or by acceleration) on any of its Indebtedness (other than any such default in respect of the Loans) or in the payment of any matured Guarantee Obligation in respect of any Indebtedness of any other Person (except for any such payments on account of any such Indebtedness and Guarantee Obligations in an aggregate principal amount at any one time outstanding of up to $5,000,000) or (b) default in the observance or performance of any other agreement or condition relating to any such Indebtedness (except for any such Indebtedness and Guarantee Obligations in an aggregate principal amount at any one time outstanding of up to $5,000,000) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness (except for any such Indebtedness in an aggregate principal amount at any one time outstanding of up to $5,000,000) to become due or to be required to be redeemed or repurchased prior to its stated maturity. For purposes of this definition, the terms "Indebtedness" and "Guarantee Obligation" shall have the meanings given to them in the Bank Credit Agreement. "Default" means any of the events specified in Section 6.1 hereof, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition specifically set forth therein, has been satisfied. "Dollars" and "$" mean dollars in lawful currency of the United States of America. "Effective Date" is defined in Section 5.1 hereof. "Eurodollar Loans" has the meaning set forth in the Bank Credit Agreement. "Event of Default" means any of the events specified in Section 6.1 hereof, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition specifically set forth therein, has been satisfied. 4 "Existing Agreement" is defined in the recitals of this Agreement. "Governmental Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including, without limitation, any governmental department, commission, board, bureau, agency or instrumentality, or other court or arbitrator, in each case whether of the United States of America or foreign). "Interest Payment Date" means, as to any Loan, the Termination Date and the date of any prepayment made in respect thereof. "Lender" is defined in the introductory paragraph of this Agreement. "Loans" is defined in Section 2.1(a) hereof. "Maturity Date" means August 31, 2006. "Person" means an individual, a partnership, a corporation, a business trust, a joint stock company, a limited liability company, a trust, an unincorporated association, a joint venture, a Governmental Authority or any other entity of any nature whatsoever. "Requirement of Law" means, for any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its material property or to which such Person or any of its material property is subject. "Subsidiary" of any Person means a corporation or other entity of which shares of capital stock or other ownership interests having ordinary voting power (other than stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person; provided that, (a) unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower and (b) unless otherwise qualified, all references to a "wholly-owned Subsidiary" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower of which the Borrower directly or indirectly owns all of the capital stock or other ownership interests (other than directors' qualifying shares). "Termination Date" means the Maturity Date or, if earlier, the date upon which the Commitment shall terminate in accordance with the terms hereof. 5 1.2. Other Definition Provisions. (a) All terms defined in this Agreement shall have such defined meanings when used in any certificate or other document made or delivered pursuant hereto or thereto unless otherwise defined therein. (b) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and Section, subsection, Schedule and Exhibit references contained in this Agreement are references to Sections, subsections, Schedules and Exhibits in or to this Agreement, unless otherwise specified. SECTION 2. AMOUNT AND TERMS OF COMMITMENT 2.1. The Commitment. (a) Subject to the terms and conditions hereof, the Lender agrees to make revolving loans ("Loans") in Dollars to the Borrower from time to time during the Commitment Period with an aggregate amount of principal outstanding at any one time not to exceed the amount of the Commitment then in effect; provided, that no Loan shall be made unless, as of the date it is made, the Bank Commitment has been substantially drawn after giving effect to any Bank Revolving Loans to be made, and any Bank Letters of Credit to be issued, under the Bank Credit Agreement substantially concurrently with such Loan. (b) During the Commitment Period, the Borrower may use the Commitment by borrowing, prepaying the Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. 2.2. Procedure for Borrowing. (a) The Borrower may borrow under the Commitment during the Commitment Period on any Business Day; provided, that the Borrower shall deliver to the Lender a written notice (a "Borrowing Notice") which must (i) specify the date on which such borrowing is to be made (the "Borrowing Date"), the amount to be borrowed from the Lender on such Borrowing Date (the "Borrowing Amount"), and the bank account and other pertinent wire transfer instructions of the Borrower to which such borrowing is to be deposited by the Lender (the "Borrower's Bank Account"), (ii) certify that all applicable conditions to such borrowing hereunder have been satisfied and (iii) be received by the Lender prior to 1:00 P.M., New York City time, one Business Day prior to such Borrowing Date or, in the case of a Loan to be made on the Effective Date, on or before the Borrowing Date. (b) On each Borrowing Date set forth in a Borrowing Notice, the Lender will make a Loan to the Borrower in an amount equal to the lesser of (i) the Borrowing Amount set forth in such Borrowing Notice and (ii) the Available Commitment by making the proceeds thereof available to the Borrower in immediately 6 available funds in Dollars not later than 4:00 p.m., New York City time, on such Borrowing Date to the Borrower's Bank Account. 2.3. Voluntary Termination or Reduction of the Commitment. The Borrower shall have the right, in its sole discretion, to terminate the Commitment or, from time to time, to permanently reduce the Commitment during the Commitment Period by delivering to the Lender a written notice specifying such termination or the amount of such reduction. Any termination of or permanent reduction in the Commitment pursuant to this Section 2.3 shall take effect on the date specified in such written notice. 2.4. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay to the Lender the then unpaid principal amount of each Loan on the Termination Date. The Borrower hereby further agrees to pay to the Lender interest on the unpaid principal amount of each Loan from time to time outstanding from the date hereof until payment in full thereof at the rates per annum and in the manner set forth in Section 3.3 hereof. (b) The Lender shall maintain an account evidencing the indebtedness of the Borrower to the Lender resulting from the Loans, including the outstanding principal amount of each Loan, accrued and unpaid interest outstanding in respect thereof and the amount of any sum received by the Lender hereunder from the Borrower in respect of the Loans and the manner in which it was applied. The entries made in such account of the Lender shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of the Lender to maintain any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans in accordance with the terms of this Agreement. 2.5. Use of Proceeds. The Borrower shall use the proceeds of the Loans hereunder to provide working capital for the Borrower and its Subsidiaries and for other general corporate purposes. Such use may include repaying Bank Revolving Loans if the Bank Commitment continues to be substantially drawn after giving effect to such repayment of Bank Revolving Loans, and to any Bank Revolving Loans to be made, and to any Bank Letters of Credit to be issued, under the Bank Credit Agreement substantially concurrently with such repayment. SECTION 3. PROVISIONS RELATING TO THE LOANS 3.1. Optional Prepayments. The Borrower may prepay the Loans, in whole or in part, at any time without premium or penalty. Each such optional prepayment shall be applied first to accrued and unpaid interest on the Loans, and then to the outstanding principal amount of the Loans on a pro rata basis. 3.2. Mandatory Prepayments. (a) If, at any time, the aggregate outstanding principal amount of the Loans exceeds the Commitment then in effect, the 7 Borrower shall immediately repay the principal amount of the Loans in an amount equal to such excess. (b) Upon the effective date of any reduction in the Commitment pursuant to Section 2.3 hereof, the Borrower shall prepay on such date the principal amount of the Loans then outstanding in excess of the Commitment after giving effect to such reduction. (c) On the Termination Date, the Commitment shall terminate and the Borrower shall cause all outstanding Loans, together with any interest accrued thereon, to be paid in full. 3.3. Interest Rate and Payment Dates. (a) All Loans shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Applicable Rate. (b) If all or a portion of any Loan, any interest payable thereon or any other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration, as a result of an event requiring a mandatory prepayment or otherwise), then, for so long as such amount remains unpaid, such overdue amount shall bear interest at a rate per annum equal to the Applicable Rate plus 2%. (c) Interest on the outstanding principal amount of each Loan from time to time shall accrue and be payable in arrears in cash on each Interest Payment Date, provided that interest accruing pursuant to paragraph (b) of this Section shall be payable from time to time on demand. (d) Interest shall be calculated on the basis of a 365 (or 366, as the case may be) day year for the actual days elapsed. 3.4. Method of Payments. (a) All payments (including prepayments) to be made by the Borrower on account of principal, interest, costs and expenses shall be made without set-off, counterclaim, deduction or withholding and shall be made to the Lender at such location or to such account as the Lender may specify to the Borrower, on or prior to 1:00 P.M., New York City time, on the due date thereof, in Dollars and in immediately available funds. (b) If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day and interest thereon shall be payable at the then applicable rate during such extension. 8 SECTION 4. REPRESENTATIONS AND WARRANTIES In order to induce the Lender to enter into this Agreement and to make the Loans hereunder, the Borrower hereby represents and warrants to the Lender that: 4.1. Corporate Existence. The Borrower is duly incorporated, validly existing and in good standing under the laws of the State of Delaware. 4.2. Corporate Power. (a) The Borrower has the corporate power, authority and legal right to execute, deliver and perform this Agreement and to borrow hereunder, and it has taken as of the Effective Date all necessary corporate action to authorize its borrowings on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of this Agreement. (b) No consent of any other Person (including, without limitation, stockholders or creditors of the Borrower or of any parent entity of the Borrower), and no consent, license, permit, approval or authorization of, exemption by, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement by or against the Borrower, except for any consents, licenses, permits, approvals or authorizations, exemptions, registrations, filings or declarations that have already been obtained and remain in full force and effect. (c) This Agreement has been executed and delivered by a duly authorized officer of the Borrower and constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms except as enforceability may be limited by Bankruptcy Laws or other similar laws affecting creditors' rights generally and except as enforceability may be limited by general principles of equity. 4.3. No Legal Bar to Loans. The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, will not violate any Contractual Obligation or material Requirement of Law to which the Borrower or any of its Subsidiaries is a party, or by which the Borrower or any of its Subsidiaries or any of their respective material properties or assets may be bound, and will not result in the creation or imposition of any lien on any of their respective material properties or assets pursuant to the provisions of any such Contractual Obligation. SECTION 5. CONDITIONS PRECEDENT 5.1. Conditions to Initial Loan. The obligation of the Lender to make the initial Loan requested to be made by it shall be subject to the satisfaction or waiver by the Lender of the following conditions precedent (the date on which said conditions are satisfied or waived being herein called the "Effective Date"): 9 (a) Agreement. The Lender shall have received this Agreement, executed and delivered by a duly authorized officer of the Borrower. (b) Additional Matters. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Lender, and the conditions set forth in Section 5.2 hereof shall have been satisfied or waived by the Lender. 5.2. Conditions to Each Loan. The obligation of the Lender to make any Loan requested to be made on any Borrowing Date (including, without limitation, the initial Loan) shall be subject to the satisfaction or waiver by the Lender of the following conditions precedent: (a) Utilization of the Bank Credit Agreement. As of the Borrowing Date, the Bank Commitment shall have been substantially drawn after giving effect to any Bank Revolving Loans to be made, and any Bank Letters of Credit to be issued, under the Bank Credit Agreement substantially concurrently with such Loan. (b) Credit Availability. The amount of the Loan requested to be made on such Borrowing Date shall not exceed the amount that the Lender is obligated to make in accordance with Section 2.1(a) hereof. (c) Representations and Warranties. Each of the representations and warranties made by the Borrower in or pursuant to this Agreement shall be true and correct in all material respects on and as of such Borrowing Date as if made on and as of such date, both before and after giving effect to such Loan and the use of the proceeds thereof. (d) No Event of Default. No Event of Default shall have occurred and be continuing on such Borrowing Date, both before and after giving effect to the Loan requested to be made on such date. Each borrowing by the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the Borrowing Date thereof that the conditions contained in this Section 5.2 have been satisfied. SECTION 6. EVENTS OF DEFAULT 6.1. Events of Default. An "Event of Default" occurs if: (a) The Borrower shall fail to pay any principal of any Loan when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan, or any other amount payable hereunder, within three days after any such interest or other amount becomes due in accordance with the terms hereof; or 10 (b) Any representation or warranty made or deemed made by the Borrower herein or in connection with this Agreement shall prove to have been inaccurate in any material respect on or as of the date made or deemed made; or (c) The Borrower or any of its Subsidiaries shall Cross Default; or (d) (i) The Borrower or any of its Subsidiaries shall commence any case, proceeding or other action (A) under the Bankruptcy Law or any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. If an Event of Default shall have occurred, (A) if such event is an Event of Default specified in paragraph (d) of this Section 6.1 with respect to the Borrower, automatically the Commitment shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) the Lender may by notice to the Borrower declare the Commitment to be terminated forthwith, whereupon such Commitment shall immediately terminate; and (ii) the Lender may by notice to the Borrower declare the Loans hereunder (with accrued interest thereon) and all other amounts owing by the Borrower under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly 11 provided above in this Section 6.1, presentment, demand, protest and all other notices of any kind are hereby expressly waived. SECTION 7. MISCELLANEOUS 7.1. Amendments and Waivers. This Agreement shall not be amended, supplemented or otherwise modified, except by written instrument which has been duly executed and delivered by each party hereto. In the case of any waiver of the terms hereof, the parties to this Agreement shall be restored to their former positions and rights hereunder, and any Default or any Event of Default waived shall, to the extent provided in such waiver, be deemed to be cured and not continuing; but, no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. 7.2. Notices. All notices, consents, requests and demands to or upon the respective parties hereto to be effective shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three Business Days after being deposited in the mail, certified mail, return receipt requested, postage prepaid, or, in the case of telecopy or electronic mail notice, when sent and receipt has been confirmed, addressed as follows (or to such other address as may be hereafter notified by any of the respective parties hereto): Borrower: Panavision Inc. 6219 DeSoto Avenue Woodland Hills, CA 91367 Attention: Bobby Jenkins Executive Vice President and Chief Financial Officer Telecopy: (818) 316-1130 E-mail: bobby_jenkins@panavision.com With a copy to: Panavision Inc. 6219 DeSoto Avenue Woodland Hills, CA 91367 Attention: Eric Golden Executive Vice President and General Counsel Telecopy: (818) 316-1120 E-mail: eric_golden@panavision.com Lender: MacAndrews & Forbes Holdings Inc. 35 East 62nd Street New York, New York 10021 Attention: General Counsel Telecopy: (212) 572-5056 Email: bschwartz@mafgrp.com 12 provided that any notice, request or demand to or upon the Lender pursuant to Sections 2 and 3 shall not be effective until received. 7.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 7.4. Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. 7.5. Payment of Expenses; General Indemnity. The Borrower agrees (a) to pay or reimburse the Lender for all of its reasonable out-of-pocket attorneys' fees and expenses incurred in connection with the preparation, execution and delivery of, and any amendment, supplement or modification to, this Agreement and any other documents prepared in connection herewith, and the consummation of the transactions contemplated hereby and thereby, (b) to pay or reimburse the Lender for all its reasonable out-of-pocket costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred in connection with the enforcement or preservation of any rights under this Agreement and any such other documents, (c) to pay, indemnify, and to hold the Lender harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay caused by the Borrower in paying, stamp, excise and other similar taxes, if any, if legal, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement and any such other documents, and (d) to pay, indemnify, and hold harmless the Lender from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, reasonable attorneys' fees and expenses) with respect to the execution, delivery, consummation, enforcement, performance and administration of this Agreement and any such other documents (all of the foregoing, collectively, the "indemnified liabilities"); provided that the Borrower shall have no obligation hereunder with respect to indemnified liabilities arising from (i) the gross negligence or willful misconduct of the Lender, (ii) legal proceedings commenced against the Lender by any security holder or creditor thereof arising out of and based upon rights afforded any such security holder or creditor solely in its capacity as such or (iii) amounts of the types referred to in clauses (a) through (c) above except as provided therein. The agreements in this Section 7.5 shall survive the termination of the Commitment and the repayment of the Loans and all other amounts payable hereunder. 13 7.6. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender and their respective successors and permitted assigns and, except as set forth below, neither the Borrower nor the Lender may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other party. This Agreement, or the Lender's obligations hereunder, may be assigned, delegated or transferred, in whole or in part, by the Lender to any Affiliate of the Lender over which the Lender or its Affiliates exercises investment authority, including, without limitation, with respect to voting and dispositive rights provided any such assignee assumes the obligations of the Lender hereunder and agrees in writing to be bound by the terms of this Agreement in the same manner as the Lender. Notwithstanding the foregoing, no such assignment shall relieve the Lender of its obligations hereunder if such assignee fails to perform such obligations. Without complying with the provisions of this Section 7.6, the Lender may satisfy its obligations under Sections 2.1 or 2.2 hereof by causing an Affiliate of the Lender to satisfy its obligations under such Sections. 7.7. Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 7.8. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 7.9. Integration. This Agreement represents the agreement of the Borrower and the Lender with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Lender for the benefit of the Borrower relative to the subject matter hereof not expressly set forth or referred to herein. 7.10. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 7.11. Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; 14 (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower at its address set forth in Section 7.2 or at such other address of which the Lender shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages. 7.12. WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. Remainder of page intentionally left blank. 15 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. PANAVISION INC. By: /S/ BOBBY G. JENKINS ---------------------- Name: BOBBY G. JENKINS Title: EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER MACANDREWS & FORBES HOLDINGS INC. By: /S/ TODD J. SLOTKIN ---------------------- Name: TODD J. SLOTKIN Title: EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER EX-4.14 4 file003.txt SENIOR SUBORDINATED LINE OF CREDIT AGREEMENT Exhibit 4.14 SENIOR SUBORDINATED LINE OF CREDIT AGREEMENT SENIOR SUBORDINATED LINE OF CREDIT AGREEMENT, dated as of November 12, 2003, between PANAVISION INC., a Delaware corporation (the "Borrower"), and MACANDREWS & FORBES HOLDINGS INC., a Delaware corporation (the "Lender"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Borrower has requested the Lender to extend credit on a subordinated unsecured basis in order to enable the Borrower, subject to the terms and conditions of this Agreement, to borrow, on a revolving basis, at any time and from time to time in an aggregate principal amount at any time outstanding not to exceed $10,000,000; WHEREAS, the Lender is willing to make such loans to the Borrower only on the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1. Defined Terms. As used in this Agreement, the following terms shall have the following respective meanings (such definitions to be equally applicable to the singular and plural forms thereof): "Affiliate" of any Person means any Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including with its correlative meanings, "controlled by" and "under common control with") shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "Agreement" shall mean this Senior Subordinated Line of Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time. "Applicable Rate" means the sum of (i) the three-month London Interbank Offered Rate published in the Wall Street Journal on the day of the relevant borrowing, provided that if the Wall Street Journal is not published on such day, the Lender shall designate in good faith an alternative source for determining the three-month London Interbank Offered Rate on such day, (ii) the Applicable Margin for Revolving Credit Loans bearing interest at the rate for Eurodollar Loans under (and as each such term is defined in) the Bank Credit Agreement and (iii) 0.5%. "Available Commitment" means, at any time, an amount equal to the excess, if any, of (a) the Commitment over (b) the aggregate principal amount of all Loans then outstanding. "Bank Commitment" means the Total Revolving Credit Commitments under (and as such term is defined in) the Bank Credit Agreement. "Bank Credit Agreement" means the Credit Agreement, dated as of May 28, 1998, by and among the Borrower, the several banks and other financial institutions from time to time parties thereto, the Arranger named therein, the Documentation Agent named therein, and JPMorgan Chase Bank, as Administrative Agent, as amended, supplemented and otherwise modified through the date hereof and as further amended, supplemented, modified, replaced or refinanced, in whole or in part, from time to time. "Bank Letter of Credit" means a letter of credit issued under the Bank Credit Agreement. "Bank Revolving Loan" means a Revolving Credit Loan made under (and as such term is defined in) the Bank Credit Agreement. "Bankruptcy Law" means Title 11 of the United States Code or any similar Federal or state law for the relief of debtors. "Blocking Period" is defined in Section 7.4 hereof. "Borrower" is defined in the introductory paragraph of this Agreement. "Borrower's Bank Account" is defined in Section 2.2(a) hereof. "Borrowing Amount", "Borrowing Date" and "Borrowing Notice" are each defined in Section 2.2(a) hereof. "Business Day" means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. "Commitment" means the obligation of the Lender to make Loans to the Borrower hereunder in an aggregate principal amount at any one time outstanding of up to $10,000,000, as such obligation is reduced from time to time in accordance with Section 2.3 hereof. "Commitment Period" means the period from and including the Effective Date to the Business Day immediately preceding the Termination Date. "Contractual Obligation" means, with respect to any Person, any provision of any material debt security or of any material preferred stock or other equity interest issued by such Person or of any material indenture, mortgage, agreement, guarantee, 2 instrument or undertaking to which such Person is a party or by which it or any of its material property is bound. "Cross Default" of any Person means (a) default in the payment of any amount when due (whether at maturity or by acceleration) on any of its Indebtedness (other than any such default in respect of the Loans) or in the payment of any matured Guarantee Obligation in respect of any Indebtedness of any other Person (except for any such payments on account of any such Indebtedness and Guarantee Obligations in an aggregate principal amount at any one time outstanding of up to $5,000,000) or (b) default in the observance or performance of any other agreement or condition relating to any such Indebtedness (except for any such Indebtedness and Guarantee Obligations in an aggregate principal amount at any one time outstanding of up to $5,000,000) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness (except for any such Indebtedness in an aggregate principal amount at any one time outstanding of up to $5,000,000) to become due or to be required to be redeemed or repurchased prior to its stated maturity. For purposes of this definition, the terms "Indebtedness" and "Guarantee Obligation" shall have the meanings given to them in the Bank Credit Agreement. "Default" means any of the events specified in Section 6.1 hereof, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition specifically set forth therein, has been satisfied. "Dollars" and "$" mean dollars in lawful currency of the United States of America. "Effective Date" is defined in Section 5.1 hereof. "Eurodollar Loans" has the meaning set forth in the Bank Credit Agreement. "Event of Default" means any of the events specified in Section 6.1 hereof, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition specifically set forth therein, has been satisfied. "Governmental Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including, without limitation, any governmental department, commission, board, bureau, agency or instrumentality, or other court or arbitrator, in each case whether of the United States of America or foreign). "Interest Payment Date" means, as to any Loan, the Termination Date and the date of any prepayment made in respect thereof. 3 "Lender" is defined in the introductory paragraph of this Agreement. "Loans" is defined in Section 2.1(a) hereof. "Maturity Date" means April 15, 2004. "Obligations" is defined in Section 7.2 hereof. "Person" means an individual, a partnership, a corporation, a business trust, a joint stock company, a limited liability company, a trust, an unincorporated association, a joint venture, a Governmental Authority or any other entity of any nature whatsoever. "Refinancing Condition" means (x) the termination or refinancing of the Facilities (as defined in the Bank Credit Agreement) or (y) the reduction of the outstanding Indebtedness (as defined in the Bank Credit Agreement) of the Borrower and its Subsidiaries in amount and in such a manner satisfactory to the Required Lenders (as defined in the Bank Credit Agreement). "Requirement of Law" means, for any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its material property or to which such Person or any of its material property is subject. "Senior Debt" is defined in Section 7.2 hereof. "Subsidiary" of any Person means a corporation or other entity of which shares of capital stock or other ownership interests having ordinary voting power (other than stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person; provided that, (a) unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower and (b) unless otherwise qualified, all references to a "wholly-owned Subsidiary" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower of which the Borrower directly or indirectly owns all of the capital stock or other ownership interests (other than directors' qualifying shares). "Termination Date" means the Maturity Date or, if earlier, the date upon which the Commitment shall terminate in accordance with the terms hereof. 4 1.2. Other Definition Provisions. --------------------------- (a) All terms defined in this Agreement shall have such defined meanings when used in any certificate or other document made or delivered pursuant hereto or thereto unless otherwise defined therein. (b) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and Section, subsection, Schedule and Exhibit references contained in this Agreement are references to Sections, subsections, Schedules and Exhibits in or to this Agreement, unless otherwise specified. SECTION 2. AMOUNT AND TERMS OF COMMITMENT 2.1. The Commitment. -------------- (a) Subject to the terms and conditions hereof, the Lender agrees to make revolving loans ("Loans") in Dollars to the Borrower from time to time during the Commitment Period with an aggregate amount of principal outstanding at any one time not to exceed the amount of the Commitment then in effect; provided, that no Loan shall be made (except a Loan requested pursuant to Section 3.5 hereof) unless, as of the date it is made, the Bank Commitment has been substantially drawn after giving effect to any Bank Revolving Loans to be made, and any Bank Letters of Credit to be issued, under the Bank Credit Agreement substantially concurrently with such Loan. (b) During the Commitment Period, the Borrower may use the Commitment by borrowing, prepaying the Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. 2.2. Procedure for Borrowing. ----------------------- (a) The Borrower may borrow under the Commitment during the Commitment Period on any Business Day; provided, that the Borrower shall deliver to the Lender a written notice (a "Borrowing Notice") which must (i) specify the date on which such borrowing is to be made (the "Borrowing Date"), the amount to be borrowed from the Lender on such Borrowing Date (the "Borrowing Amount"), and the bank account and other pertinent wire transfer instructions of the Borrower to which such borrowing is to be deposited by the Lender (the "Borrower's Bank Account"), (ii) certify that all applicable conditions to such borrowing hereunder have been satisfied and (iii) be received by the Lender prior to 1:00 P.M., New York City time, one Business Day prior to such Borrowing Date or, in the case of a Loan to be made on the Effective Date, on or before the Borrowing Date. (b) On each Borrowing Date set forth in a Borrowing Notice, the Lender will make a Loan to the Borrower in an amount equal to the lesser of (i) the Borrowing Amount set forth in such Borrowing Notice and (ii) the Available Commitment by making the proceeds thereof available to the Borrower in immediately 5 available funds in Dollars not later than 4:00 p.m., New York City time, on such Borrowing Date to the Borrower's Bank Account. 2.3. Voluntary Termination or Reduction of the Commitment. The Borrower shall have the right, in its sole discretion, to terminate the Commitment or, from time to time, to permanently reduce the Commitment during the Commitment Period by delivering to the Lender a written notice specifying such termination or the amount of such reduction. Any termination of or permanent reduction in the Commitment pursuant to this Section 2.3 shall take effect on the date specified in such written notice. 2.4. Repayment of Loans; Evidence of Debt. ------------------------------------ (a) The Borrower hereby unconditionally promises to pay to the Lender the then unpaid principal amount of each Loan on the Termination Date. The Borrower hereby further agrees to pay to the Lender interest on the unpaid principal amount of each Loan from time to time outstanding from the date hereof until payment in full thereof at the rates per annum and in the manner set forth in Section 3.3 hereof. (b) The Lender shall maintain an account evidencing the indebtedness of the Borrower to the Lender resulting from the Loans, including the outstanding principal amount of each Loan, accrued and unpaid interest outstanding in respect thereof and the amount of any sum received by the Lender hereunder from the Borrower in respect of the Loans and the manner in which it was applied. The entries made in such account of the Lender shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of the Lender to maintain any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans in accordance with the terms of this Agreement. 2.5. Use of Proceeds. The Borrower shall use the proceeds of the Loans hereunder to provide working capital for the Borrower and its Subsidiaries and for other general corporate purposes. Such use may include repaying Bank Revolving Loans if the Bank Commitment continues to be substantially drawn after giving effect to such repayment of Bank Revolving Loans, and to any Bank Revolving Loans to be made, and to any Bank Letters of Credit to be issued, under the Bank Credit Agreement substantially concurrently with such repayment. SECTION 3. PROVISIONS RELATING TO THE LOANS 3.1. Optional Prepayments. The Borrower may prepay the Loans, in whole or in part, at any time without premium or penalty, provided that any Loan made pursuant to Section 3.5 hereof may not be repaid prior to April 15, 2004. Each such optional prepayment shall be applied first to accrued and unpaid interest on the Loans, and then to the outstanding principal amount of the Loans on a pro rata basis. 6 3.2. Mandatory Prepayments. (a) If, at any time, the aggregate outstanding principal amount of the Loans exceeds the Commitment then in effect, the Borrower shall immediately repay the principal amount of the Loans in an amount equal to such excess. (b) Upon the effective date of any reduction in the Commitment pursuant to Section 2.3 hereof, the Borrower shall prepay on such date the principal amount of the Loans then outstanding in excess of the Commitment after giving effect to such reduction. (c) On the Termination Date, the Commitment shall terminate and the Borrower shall cause all outstanding Loans, together with any interest accrued thereon, to be paid in full. 3.3. Interest Rate and Payment Dates. ------------------------------- (a) All Loans shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the Applicable Rate. (b) If all or a portion of any Loan, any interest payable thereon or any other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration, as a result of an event requiring a mandatory prepayment or otherwise), then, for so long as such amount remains unpaid, such overdue amount shall bear interest at a rate per annum equal to the Applicable Rate plus 2%. (c) Interest on the outstanding principal amount of each Loan from time to time shall accrue and be payable in arrears in cash on each Interest Payment Date, provided that interest accruing pursuant to paragraph (b) of this Section shall be payable from time to time on demand. (d) Interest shall be calculated on the basis of a 365 (or 366, as the case may be) day year for the actual days elapsed. 3.4. Method of Payments. ------------------ (a) All payments (including prepayments) to be made by the Borrower on account of principal, interest, costs and expenses shall be made without set-off, counterclaim, deduction or withholding and shall be made to the Lender at such location or to such account as the Lender may specify to the Borrower, on or prior to 1:00 P.M., New York City time, on the due date thereof, in Dollars and in immediately available funds. (b) If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day and interest thereon shall be payable at the then applicable rate during such extension. 7 3.5. Refinancing Condition. If the Refinancing Condition has not been satisfied on or before January 30, 2004, the Borrower shall, on such date, request a Loan in an amount equal to the aggregate amount of interest due and payable on February 1, 2004 on the Senior Subordinated Notes (as defined in the Bank Credit Agreement) and the Borrower shall use the proceeds thereof to make such payment of interest on February 1, 2004 on the Senior Subordinated Notes (as defined in the Bank Credit Agreement). SECTION 4. REPRESENTATIONS AND WARRANTIES In order to induce the Lender to enter into this Agreement and to make the Loans hereunder, the Borrower hereby represents and warrants to the Lender that: 4.1. Corporate Existence. The Borrower is duly incorporated, validly existing and in good standing under the laws of the State of Delaware. 4.2. Corporate Power. --------------- (a) The Borrower has the corporate power, authority and legal right to execute, deliver and perform this Agreement and to borrow hereunder, and it has taken as of the Effective Date all necessary corporate action to authorize its borrowings on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of this Agreement. (b) No consent of any other Person (including, without limitation, stockholders or creditors of the Borrower or of any parent entity of the Borrower), and no consent, license, permit, approval or authorization of, exemption by, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement by or against the Borrower, except for any consents, licenses, permits, approvals or authorizations, exemptions, registrations, filings or declarations that have already been obtained and remain in full force and effect. (c) This Agreement has been executed and delivered by a duly authorized officer of the Borrower and constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms except as enforceability may be limited by Bankruptcy Laws or other similar laws affecting creditors' rights generally and except as enforceability may be limited by general principles of equity. 4.3. No Legal Bar to Loans. The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, will not violate any Contractual Obligation or material Requirement of Law to which the Borrower or any of its Subsidiaries is a party, or by which the Borrower or any of its Subsidiaries or any of their respective material properties or assets may be bound, and will not result in the creation or imposition of any lien on any of their respective material properties or assets pursuant to the provisions of any such Contractual Obligation. 8 SECTION 5. CONDITIONS PRECEDENT 5.1. Conditions to Initial Loan. The obligation of the Lender to make the initial Loan requested to be made by it shall be subject to the satisfaction or waiver by the Lender of the following conditions precedent (the date on which said conditions are satisfied or waived being herein called the "Effective Date"): (a) Agreement. The Lender shall have received this Agreement, executed and delivered by a duly authorized officer of the Borrower. (b) Additional Matters. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Lender, and the conditions set forth in Section 5.2 hereof shall have been satisfied or waived by the Lender. 5.2. Conditions to Each Loan. The obligation of the Lender to make any Loan requested to be made on any Borrowing Date (including, without limitation, the initial Loan) shall be subject to the satisfaction or waiver by the Lender of the following conditions precedent (provided that Section 5.2(a) hereof shall not apply to any Loan requested pursuant to Section 3.5 hereof): (a) Utilization of the Bank Credit Agreement. As of the Borrowing Date, the Bank Commitment shall have been substantially drawn after giving effect to any Bank Revolving Loans to be made, and any Bank Letters of Credit to be issued, under the Bank Credit Agreement substantially concurrently with such Loan. (b) Credit Availability. The amount of the Loan requested to be made on such Borrowing Date shall not exceed the amount that the Lender is obligated to make in accordance with Section 2.1(a) hereof. (c) Representations and Warranties. Each of the representations and warranties made by the Borrower in or pursuant to this Agreement shall be true and correct in all material respects on and as of such Borrowing Date as if made on and as of such date, both before and after giving effect to such Loan and the use of the proceeds thereof. (d) No Event of Default. No Event of Default shall have occurred and be continuing on such Borrowing Date, both before and after giving effect to the Loan requested to be made on such date. Each borrowing by the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the Borrowing Date thereof that the conditions contained in this Section 5.2 have been satisfied. 9 SECTION 6. EVENTS OF DEFAULT 6.1. Events of Default. An "Event of Default" occurs if: (a) The Borrower shall fail to pay any principal of any Loan when due in accordance with the terms hereof; or the Borrower shall fail to pay any interest on any Loan, or any other amount payable hereunder, within three days after any such interest or other amount becomes due in accordance with the terms hereof; or (b) Any representation or warranty made or deemed made by the Borrower herein or in connection with this Agreement shall prove to have been inaccurate in any material respect on or as of the date made or deemed made; or (c) The Borrower or any of its Subsidiaries shall Cross Default; or (d) (i) The Borrower or any of its Subsidiaries shall commence any case, proceeding or other action (A) under the Bankruptcy Law or any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. If an Event of Default shall have occurred, (A) if such event is an Event of Default specified in paragraph (d) of this Section 6.1 with respect to the Borrower, 10 automatically the Commitment shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) the Lender may by notice to the Borrower declare the Commitment to be terminated forthwith, whereupon such Commitment shall immediately terminate; and (ii) the Lender may by notice to the Borrower declare the Loans hereunder (with accrued interest thereon) and all other amounts owing by the Borrower under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section 6.1, presentment, demand, protest and all other notices of any kind are hereby expressly waived. SECTION 7. SUBORDINATION 7.1. General. The Borrower and the Lender agree that the payment of the principal amount of Loans, together with accrued and unpaid interest thereon and any other amount whatsoever from time to time owing hereunder by the Borrower, is subordinated, to the extent and in the manner provided in this Section 7, to the prior payment in full of all Senior Debt (as defined below). The terms and conditions of this Section 7 shall constitute a continuing offer to all persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Debt, and such provisions are made for the benefit of the holders of Senior Debt, and such holders are made obligees hereunder and any one or more of them may enforce such provisions. 7.2. Senior Debt. For purposes hereof, "Senior Debt" shall mean all Obligations (as defined below) of or owing by the Borrower or any of its subsidiaries under the Bank Credit Agreement or any guaranty, security agreement, note or other financing document referred to in or delivered pursuant to or in connection with the Bank Credit Agreement unless such document, instrument or agreement under which such Obligation arises expressly provides that such Obligation is not senior or superior in right of payment to amounts due in respect of this Agreement. For purposes hereof, "Obligations" shall mean loans, advances, debts, liabilities, obligations, covenants and duties of any kind or nature, present or future, whether absolute or contingent, whether due or to become due, and shall include, without limitation, all principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to any obligor thereon, would accrue on such obligation), fees, charges, expenses, attorneys fees and expenses, indemnities and any other sum chargeable to or payable under the Bank Credit Agreement or any guaranty, security agreement, note or other financing document or referred to in or delivered pursuant to or in connection with the Bank Credit Agreement. 7.3. Bankruptcy, Insolvency and Liquidation, Etc. -------------------------------------------- (a) In the event of any distribution of assets to creditors in any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, 11 reorganization or other similar case or proceeding in connection therewith, relative to the Borrower or its creditors, as such, or to its assets, or in the event of any voluntary or involuntary liquidation, dissolution or other winding-up of the Borrower, whether or not involving insolvency or bankruptcy or any assignment for the benefit of creditors or any other marshalling of assets or liabilities of the Borrower, then and in any such event all principal, premium, if any, and interest to the date of payment on, and all other amounts due in respect of, all Senior Debt (including any post-petition interest) shall first be paid in full in cash before any payment or distribution of assets of any kind or character is made, whether in cash, property or securities, on account of principal or interest or any other amount due in respect of this Agreement, and any payment or distribution of any kind or character, whether in cash or property or securities, which but for this Section 7.3 would be payable or deliverable in respect of this Agreement, shall be paid or delivered directly to the holders of such Senior Debt for application in payment thereof, unless and until all principal, premium and interest to the date of payment on and all other amounts due in respect of all such Senior Debt shall have been paid and satisfied in full in cash (including post-petition interest); provided, however, that nothing contained in this paragraph (a) shall contravene any final order of a court of competent jurisdiction in a reorganization proceeding to the extent that such order expressly considers the subordination provisions contained in this paragraph (a) and determines the relative rights of the Lender and the holders of Senior Debt with respect to the payment or delivery of cash, securities or other property of the Borrower. (b) In the event that the Lender shall have received any payment or distribution of any assets of any kind or character, whether in cash or property or securities, prohibited by the provisions of this Section 7, then and in any such event, such payment or distribution shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other person making payment or distribution of assets for application to the payment in full in cash of all Senior Debt remaining unpaid to the extent necessary to pay all Senior Debt in full. (c) Upon the maturity of any Senior Debt by lapse of time, acceleration or otherwise, all principal thereof and interest thereon then due, and all other amounts then due in respect thereof, shall first be paid in full in cash before any payment is made on account of principal of and interest on Loans under, or any other amount due in respect of, this Agreement. (d) In the event that any Loan shall become due and payable before its expressed maturity for any reason (and the provisions of the foregoing paragraph (a) or the following paragraph (e) of this Section 7.3 are not applicable), the Lender shall not be entitled to, and the Borrower shall not make, any such payment or prepayment of such Loan unless and until there shall first have been paid in full, including interest to the date of payment, in cash, all Senior Debt due and payable at such time (whether or not an event of default has occurred under the Senior Debt or the maturity of such Senior Debt has been declared due and payable prior to the date on which it otherwise would have become due and payable) and the Lender agrees not to seek payment of the Loans by any remedy allowed at law or at equity so long as any Senior Debt remains due and payable. 12 (e) In the event that, notwithstanding the foregoing, the Borrower shall make any payment to the Lender prohibited by the foregoing provisions, then and in such event such payment shall be paid over and delivered forthwith to the holders of Senior Debt to the extent necessary to pay the amounts then due and payable (if any) on the Senior Debt. 7.4. Senior Debt Default. In the event that any default shall occur and be continuing with respect to any Senior Debt that permits (or with notice or lapse of time or both, would permit) the holders of such Senior Debt to declare such Senior Debt due and payable prior to the date on which it otherwise would be due and payable, unless payment in full shall have first been made on all principal of, premium, if any, and interest on, and all other amounts due and payable in respect of the Senior Debt, the Borrower shall not make any payment on or with respect to Loans under this Agreement during any period: (i) in which a default exists with respect to the payment of any interest, premium or principal due on or with respect to any Senior Debt; or (ii) of 90 days after written notice shall have been given to the Borrower of any such default during which there has been no acceleration of the Senior Debt (a "Blocking Period"), provided that only one such Blocking Period shall occur pursuant to this Section 7 in any consecutive 12 months; provided that upon the cure or waiver of the default or, in the case of clause (ii) above, upon expiration of the Blocking Period, the Lender shall be entitled to receive payment of all payments due under this Agreement which had been suspended during such period if this Section 7 otherwise permits payment at that time. In the event that, notwithstanding the foregoing, the Borrower shall make any payment to the Lender under this Agreement prohibited by the foregoing provisions, then and in such event such payment shall be paid over and delivered forthwith to the holders of Senior Debt to the extent necessary to pay the amounts then due and payable (if any) on the Senior Debt. 7.5. Senior Subordinated Notes. All amounts due in respect of this Agreement shall rank pari passu in right of payment with the Senior Subordinated Notes (as defined in the Bank Credit Agreement). SECTION 8. MISCELLANEOUS 8.1. Amendments and Waivers. This Agreement shall not be amended, supplemented or otherwise modified, except by written instrument which has been duly executed and delivered by each party hereto. In the case of any waiver of the terms 13 hereof, the parties to this Agreement shall be restored to their former positions and rights hereunder, and any Default or any Event of Default waived shall, to the extent provided in such waiver, be deemed to be cured and not continuing; but, no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. 8.2. Notices. All notices, consents, requests and demands to or upon the respective parties hereto to be effective shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or three Business Days after being deposited in the mail, certified mail, return receipt requested, postage prepaid, or, in the case of telecopy or electronic mail notice, when sent and receipt has been confirmed, addressed as follows (or to such other address as may be hereafter notified by any of the respective parties hereto):
Borrower: Panavision Inc. 6219 DeSoto Avenue Woodland Hills, CA 91367 Attention: Bobby Jenkins Executive Vice President and Chief Financial Officer Telecopy: (818) 316-1130 E-mail: bobby_jenkins@panavision.com With a copy to: Panavision Inc. 6219 DeSoto Avenue Woodland Hills, CA 91367 Attention: Eric Golden Executive Vice President and General Counsel Telecopy: (818) 316-1120 E-mail: eric_golden@panavision.com Lender: MacAndrews & Forbes Holdings Inc. 35 East 62nd Street New York, New York 10021 Attention: General Counsel Telecopy: (212) 572-5056 Email: bschwartz@mafgrp.com
provided that any notice, request or demand to or upon the Lender pursuant to Sections 2 and 3 shall not be effective until received. 8.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, 14 powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 8.4. Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. 8.5. Payment of Expenses; General Indemnity. The Borrower agrees (a) to pay or reimburse the Lender for all of its reasonable out-of-pocket attorneys' fees and expenses incurred in connection with the preparation, execution and delivery of, and any amendment, supplement or modification to, this Agreement and any other documents prepared in connection herewith, and the consummation of the transactions contemplated hereby and thereby, (b) to pay or reimburse the Lender for all its reasonable out-of-pocket costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred in connection with the enforcement or preservation of any rights under this Agreement and any such other documents, (c) to pay, indemnify, and to hold the Lender harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay caused by the Borrower in paying, stamp, excise and other similar taxes, if any, if legal, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement and any such other documents, and (d) to pay, indemnify, and hold harmless the Lender from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, reasonable attorneys' fees and expenses) with respect to the execution, delivery, consummation, enforcement, performance and administration of this Agreement and any such other documents (all of the foregoing, collectively, the "indemnified liabilities"); provided that the Borrower shall have no obligation hereunder with respect to indemnified liabilities arising from (i) the gross negligence or willful misconduct of the Lender, (ii) legal proceedings commenced against the Lender by any security holder or creditor thereof arising out of and based upon rights afforded any such security holder or creditor solely in its capacity as such or (iii) amounts of the types referred to in clauses (a) through (c) above except as provided therein. The agreements in this Section 8.5 shall survive the termination of the Commitment and the repayment of the Loans and all other amounts payable hereunder. 8.6. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lender and their respective successors and permitted assigns and, except as set forth below, neither the Borrower nor the Lender may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other party. This Agreement, or the Lender's obligations hereunder, may be assigned, delegated or transferred, in whole or in part, by the Lender to any Affiliate of the Lender over which the Lender or its Affiliates exercises investment authority, including, without limitation, with respect to voting and dispositive rights 15 provided any such assignee assumes the obligations of the Lender hereunder and agrees in writing to be bound by the terms of this Agreement in the same manner as the Lender. Notwithstanding the foregoing, no such assignment shall relieve the Lender of its obligations hereunder if such assignee fails to perform such obligations. Without complying with the provisions of this Section 8.6, the Lender may satisfy its obligations under Sections 2.1 or 2.2 hereof by causing an Affiliate of the Lender to satisfy its obligations under such Sections. 8.7. Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 8.8. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 8.9. Integration. This Agreement represents the agreement of the Borrower and the Lender with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Lender for the benefit of the Borrower relative to the subject matter hereof not expressly set forth or referred to herein. 8.10. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 8.11. Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower at its address set 16 forth in Section 8.2 or at such other address of which the Lender shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages. 8.12. WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN. Remainder of page intentionally left blank. 17 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. PANAVISION INC. By: /S/BOBBY G. JENKINS -------------------- Name: BOBBY G. JENKINS Title: EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER MACANDREWS & FORBES HOLDINGS INC. By: /S/TODD J. SLOTKIN ------------------- Name: TODD J. SLOTKIN Title: EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER : 18 =============================================================================== PANAVISION INC., AS BORROWER ------------------------ $10,000,000 SENIOR SUBORDINATED LINE OF CREDIT AGREEMENT Dated as of November 12, 2003 -------------------------- MACANDREWS & FORBES HOLDINGS INC., AS LENDER =============================================================================== TABLE OF CONTENTS -----------------
Page ---- SECTION 1. DEFINITIONS...................................................................................1 1.1. Defined Terms........................................................................1 1.2. Other Definition Provisions..........................................................5 SECTION 2. AMOUNT AND TERMS OF COMMITMENT................................................................5 2.1. The Commitment.......................................................................5 2.2. Procedure for Borrowing..............................................................5 2.3. Voluntary Termination or Reduction of the Commitment.................................6 2.4. Repayment of Loans; Evidence of Debt.................................................6 2.5. Use of Proceeds......................................................................6 SECTION 3. PROVISIONS RELATING TO THE LOANS..............................................................6 3.1. Optional Prepayments.................................................................6 3.2. Mandatory Prepayments................................................................7 3.3. Interest Rate and Payment Dates......................................................7 3.4. Method of Payments...................................................................7 3.5. Refinancing Condition................................................................8 SECTION 4. REPRESENTATIONS AND WARRANTIES................................................................8 4.1. Corporate Existence..................................................................8 4.2. Corporate Power......................................................................8 4.3. No Legal Bar to Loans................................................................8 SECTION 5. CONDITIONS PRECEDENT..........................................................................9 5.1. Conditions to Initial Loan...........................................................9 5.2. Conditions to Each Loan..............................................................9 SECTION 6. EVENTS OF DEFAULT............................................................................10 6.1. Events of Default...................................................................10 SECTION 7. SUBORDINATION................................................................................11 7.1. General.............................................................................11 7.2. Senior Debt.........................................................................11 7.3. Bankruptcy, Insolvency and Liquidation, Etc.........................................11 7.4. Senior Debt Default.................................................................13 7.5. Senior Subordinated Notes...........................................................13 SECTION 8. MISCELLANEOUS................................................................................13 8.1. Amendments and Waivers..............................................................13 8.2. Notices.............................................................................14 8.3. No Waiver; Cumulative Remedies......................................................14 8.4. Survival of Representations and Warranties..........................................15 8.5. Payment of Expenses; General Indemnity..............................................15
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Page ---- 8.6. Successors and Assigns..............................................................15 8.7. Counterparts........................................................................16 8.8. Severability........................................................................16 8.9. Integration.........................................................................16 8.10. GOVERNING LAW.......................................................................16 8.11. Submission To Jurisdiction; Waivers.................................................16 8.12. WAIVERS OF JURY TRIAL...............................................................17
ii EX-4.15 5 file004.txt SEVENTH AMENDMENT SENIOR SUBORDINATED LINE OF EXHIBIT 4.15 ------------ SEVENTH AMENDMENT ----------------- SEVENTH AMENDMENT, dated as of November 12, 2003 (this "Amendment" or the "Seventh Amendment"), with respect to the Credit Agreement, dated as of May 28, 1998 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; unless otherwise defined herein, capitalized terms which are defined in the Credit Agreement are used herein as defined therein), among PANAVISION INC., a Delaware corporation (the "Borrower"), the several banks and other financial institutions or entities from time to time parties thereto (the "Lenders"), CREDIT SUISSE FIRST BOSTON, as documentation agent, and JPMORGAN CHASE BANK, as administrative agent (in such capacity, the "Administrative Agent"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make, and have made, certain loans and other extensions of credit to the Borrower; and WHEREAS, the Borrower has requested, and, upon this Amendment becoming effective, the Lenders have agreed, that certain provisions of the Credit Agreement be modified in the manner provided for in this Amendment; NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the premises, the parties hereto hereby agree as follows: SECTION I AMENDMENTS 1.1. Amendments to Section 1.1. (a) The definition of "Applicable Margin" in Section 1.1 of the Credit Agreement is hereby amended in its entirety, effective from and after the date upon which the conditions to effectiveness set forth in Section 2.1 of this Amendment are satisfied, to read as follows: "Applicable Margin": for each Type of Loan, the rate per annum set forth under the relevant column heading below:
Alternate Base Rate Eurodollar Loans Loans ----- ----- Revolving Credit Loans 3.75% 4.75% Tranche A Term Loans 3.75% 4.75% Tranche B Term Loans 4.00% 5.00%
(b) The definition of "Consolidated EBITDA" in Section 1.1 of the Credit Agreement is hereby amended by adding the following clause (l) to the end thereof: "plus (l) to the extent deducted in determining Consolidated Net Income in such period, the aggregate amount of refinancing costs paid by the Borrower in connection with the Proposed August 2003 Refinancing, not to exceed $2,100,000" 2 (c) The definition of "Consolidated Interest Coverage Ratio" in Section 1.1 of the Credit Agreement is hereby amended in its entirety to read as follows: "Consolidated Interest Coverage Ratio": for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense (excluding in the case of this clause (b) only any fees paid or payable to the Lenders in such period with respect to waivers or amendments of the Loan Documents) for such period. (d) Section 1.1 of the Credit Agreement is hereby further amended by inserting the following definitions in the appropriate alphabetical order: "Incremental Line of Credit Agreement": the Senior Subordinated Line of Credit Agreement, dated as of November 12, 2003, between the Borrower and MacAndrews & Forbes Holdings Inc., as it may be amended from time to time to the extent permitted by Section 7.9 and the terms and conditions of which are reasonably acceptable to the Administrative Agent. "Line of Credit Facilities": the collective reference to the Line of Credit Agreement and the Incremental Line of Credit Agreement. "Proposed August 2003 Refinancing": the proposed refinancing of the Facilities in July and August 2003 to be arranged by Credit Suisse First Boston and Bear Stearns in which the closing thereof never occurred. 1.2. Amendment to Section 7.1. Certain rows in the tables contained in Section 7.1 of the Credit Agreement are hereby replaced with the rows indicated below (a) Consolidated Total Leverage Ratio. ---------------------------------
Consolidated Total Period Leverage Ratio ------ -------------- July 1, 2003 to September 30, 2003 6.00 to 1.00 October 1, 2003 to December 31, 2003 6.00 to 1.00 January 1, 2004 and thereafter 5.00 to 1.00
(b) Consolidated Interest Coverage Ratio. ------------------------------------
Fiscal Quarter Consolidated Interest Coverage Ratio -------------- ------------------------------------ December 31, 2003 2.00 to 1.00 March 31, 2004 and each quarter thereafter 2.50 to 1.00
(c) Consolidated EBITDA. -------------------
Fiscal Quarter Amount -------------- ------ September 30, 2003 $57,750,000 December 31, 2003 $55,000,000 March 31, 2004 and each quarter thereafter $65,000,000
3 The amendments to the Credit Agreement contained in this Section 1.2 shall automatically expire at the close of business on March 22, 2004, and, in the event that the Borrower is not in compliance with the financial covenants contained in Section 7.1 of the Credit Agreement for any of the periods or dates referenced above without giving effect to this Section 1.2, an Event of Default shall then be in existence. 1.3. Amendment to Section 7.2. Paragraph (f) of Section 7.2 of the Credit Agreement is hereby amended by deleting "$10,000,000" and inserting in lieu thereof "$20,000,000". 1.4. Amendment to Section 7.9. Section 7.9 of the Credit Agreement is hereby amended by deleting subsection (d) thereof in its entirety and substituting in lieu thereof the following: "(d) amend, modify or waive any Line of Credit Facility in any manner that would (i) shorten its maturity prior to April 15, 2004 or (ii) increase the rate of interest payable thereunder." 1.5. Amendment to Section VIII. Section VIII of the Credit Agreement is hereby amended by (a) inserting the word "or" at the end of paragraph (q) thereof and (b) adding the following new paragraphs (r) and (s) immediately after paragraph (q): "(r) (i) the interest payment due on February 1, 2004 in respect of all Senior Subordinated Notes shall not be financed exclusively through a drawing under the Incremental Line of Credit Agreement unless, on or prior to January 30, 2004, (x) the Facilities shall have been terminated or refinanced or (y) the outstanding Indebtedness of the Borrower and its Subsidiaries shall have been reduced in amount and in such a manner satisfactory to the Required Lenders, or (ii) the Borrower shall prepay prior to April 15, 2004 any amount so drawn under the Incremental Line of Credit Agreement pursuant to clause (i) above; or (s) either Line of Credit Facility shall for any reason cease to be in full force and effect in an amount of no less than $10,000,000 prior to April 15, 2004;" SECTION II MISCELLANEOUS 2.1. Conditions to Effectiveness of Amendment. This Amendment shall become effective as of the date first set forth above upon satisfaction of the following conditions: (a) the Administrative Agent shall have received counterparts of this Amendment duly executed and delivered by the Borrower, the Administrative Agent and the Required Lenders; (b) the Administrative Agent shall have received, for the account of each Lender executing this Amendment on or prior to November 12, 2003 an amendment fee equal to 0.250% of the sum of each such executing Lender's Revolving Credit Commitment and Term Loans then outstanding (in respect of each such Lender, an "Amendment Fee"); and (c) the Incremental Line of Credit Agreement shall be in full force and effect in the amount of $10,000,000 with a final maturity of no earlier than April 15, 2004. 2.2. Representations and Warranties. The Borrower represents and warrants to each Lender that as of the effective date of this Amendment: (a) this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, 4 moratorium or similar laws affecting creditors' rights generally, by general equitable principles (whether enforcement is sought by proceedings in equity or at law) and an implied covenant of good faith and fair dealing; (b) the representations and warranties made by the Loan Parties in the Loan Documents are true and correct in all material respects on and as of the date hereof (except to the extent that such representations and warranties are expressly stated to relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date); and (c) after giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing as of the date hereof. 2.3. Counterparts. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Borrower and the Administrative Agent. The execution and delivery of the Amendment by any Lender shall be binding upon each of its successors and assigns (including Transferees of its commitments and Loans in whole or in part prior to effectiveness hereof) and binding in respect of all of its commitments and Loans, including any acquired subsequent to its execution and delivery hereof and prior to the effectiveness hereof. 2.4. Continuing Effect; No Other Amendments. Except to the extent the Credit Agreement is expressly modified hereby, all of the terms and provisions of the Credit Agreement and the other Loan Documents are and shall remain in full force and effect. This Amendment shall constitute a Loan Document. 2.5. Payment of Expenses. The Borrower agrees to pay and reimburse the Administrative Agent for all of its out-of-pocket costs and reasonable expenses incurred to date in connection with this Amendment and the other Loan Documents, including, without limitation, the reasonable fees and disbursements of legal counsel to the Administrative Agent. 2.6. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. [REST OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers as of the day and year first above written. PANAVISION INC. By: /S/ ERIC W. GOLDEN ----------------------- Name: Eric W. Golden Title: Executive Vice President and General Counsel JPMORGAN CHASE BANK, as Administrative Agent and as a Lender By: /S/ NEIL R. BOYLAN ------------------------ Name: Neil R. Boylan Title: Managing Director CREDIT SUISSE FIRST BOSTON, as Documentation Agent and as a Lender By: /S/ SO VONNA DAY-GOINS ---------------------------- Name: So Vonna Day-Goins Title: Vice President By: /S/ JAY CHALI ------------------- Name: Jay Chali Title: Director Archimedes Funding I, LLC, By: ING Capital Advisors LLC, as Collateral Manager By: /S/ JANE MUSSER NELSON ------------------------- Name: Jane Musser Nelson Title: Managing Director Archimedes Funding III, Ltd. By: ING Capital Advisors LLC, as Collateral Manager By: /S/ JANE MUSSER NELSON ------------------------- Name: Jane Musser Nelson Title: Managing Director CanPartners Investments IV, LLC By: /S/ MITCHELL R. JULIS ------------------------ Name: Mitchell R. Julis Title: Managing Director Crescent/Mach I Partners, By: TCW Asset Management Company As Investment By: /S/ RICHARD F. KURTH ----------------------- Name: Richard F. Kurth Title: Senior Vice President By: /S/ G. STEVEN KALIN ---------------------- Name: G. Steven Kalin Title: Senior Vice President CSAM Funding I By: /S/ ANDREW H. MARSHAK ------------------------ Name: Andrew H. Marshak Title: Authorized Signatory Eaton Vance Institution Senior Loan Fund By: Eaton Vance Management As Investment Advisor By: /S/ MICHAEL B. BOTTHOF ------------------------- Name: Michael B. Botthof Title: Vice President Eaton Vance Senior Income Trust By: Eaton Vance Management As Investment Advisor By: /S/ MICHAEL B. BOTTHOF ------------------------- Name: Michael B. Botthof Title: Vice President Eaton Vance CDO III, Ltd. By: Eaton Vance Management As Investment Advisor By: /S/ MICHAEL B. BOTTHOF ------------------------- Name: Michael B. Botthof Title: Vice President First Dominion Funding I By: /S/ ANDREW H. MARSHAK ------------------------ Name: Andrew H. Marshak Title: Authorized Signatory First Dominion Funding II By: /S/ ANDREW H. MARSHAK ------------------------ Name: Andrew H. Marshak Title: Authorized Signatory First Dominion Funding III By: /S/ ANDREW H. MARSHAK ------------------------ Name: Andrew H. Marshak Title: Authorized Signatory Sun America Life Insurance Company By: AIG Global Investment Corp., its Investment Advisor By: /S/ W. JEFFREY BAXTER ------------------------ Name: W. Jeffrey Baxter Title: Vice President Galaxy CLO 1999-1 Ltd By: AIG Global Investment Corp., As Collateral Manager By: /S/ W. JEFFREY BAXTER ------------------------ Name: W. Jeffrey Baxter Title: Vice President General Electric Capital Corporation By: /S/ SUSAN TIMMERMAN ---------------------- Name: Susan Timmerman Title: Sr. Risk Manager Grayson & Co By: Boston Management and Research As Investment Advisor By: /S/ MICHAEL B. BOTTHOF ------------------------- Name: Michael B. Botthof Title: Vice President ING Prime Rate Trust By: Aeltus Investment Management, Inc. As its Investment Manager By: /S/ BRIAN S. HORTON ---------------------- Name: Brian S. Horton Title: Vice President KZH Crescent - 2 LLC By: /S/ SUSAN LEE ----------------- Name: Susan Lee Title: Authorized Agent KZH ING - 2 LLC By: /S/ SUSAN LEE ----------------- Name: Susan Lee Title: Authorized Agent KZH Soleil LLC By: /S/ SUSAN LEE ----------------- Name: Susan Lee Title: Authorized Agent Lloyds TSB Bank plc By: /S/ NICHOLAS J. BRUCE ------------------------- Name: Nicholas J. Bruce Title: Vice President Credit Services B-499 By: /S/ MATTHEW A.L. PACKHAM ---------------------------- Name: Matthew A.L. Packham Title: Assistant Director Credit Services P-002 ML CLO XV Pilgrim America (Cayman) Ltd, By : ING Investments, LLC as its Investment Manager By: /S/ BRIAN S. HORTON ----------------------- Name: Brian S. Horton Title: Vice President Morgan Stanley Prime Income Trust By: /S/ SHEILA A. FINNERTY -------------------------- Name: Sheila A. Finnerty Title: Executive Director Natexis Banques Populaires By: /S/ FRANK H. MADDEN, JR. ---------------------------- By: Frank H. Madden, Jr. Title: Vice President & Group Manager By: /S/ YOSMERY D. ORTEGA ------------------------ Name: Yosmery D. Ortega Title: Associate Oxford Strategic Income Fund By: Eaton Vance Management As Investment Advisor By: /S/ MICHAEL B. BOTTHOF ------------------------ Name: Michael B. Botthof Title: Vice President Pilgrim America High Income Investments Ltd. By: ING Investments, LLC as its Investment Manager By: /s/ BRIAN S. HORTON ----------------------- Name: Brian S. Horton Title: Vice President Satellite Senior Income Fund, LLC By: Satellite Asset Management, L.P. By: /s/ MARK SONNINO_______________ ----------------------------------- Name: Mark Sonnino Title: Principal Senior Debt Portfolio By: Boston Management and Research As Investment Advisor By: /S/ MICHAEL B. BOTTHOF ------------------------ Name: Michael B. Botthof Title: Vice President Sequils - Pilgrim I, Ltd. By: ING Investments, LLC as its Investment Manager By: /s/ BRIAN S. HORTON ----------------------- Name: Brian S. Horton Title: Vice President Van Kampen CLO I, Limited By: Van Kampen Investment Advisory Corp as Collateral Manager By: /s/ WILLIAM D. LENGA ------------------------ Name: William D. Lenga Title: Vice President Van Kampen Senior Loan Fund By: Van Kampen Investment Advisory Corp. By: /s/ CHRISTINA JAMIESON -------------------------- Name: Christina Jamieson Title: Vice President Van Kampen Senior Income Trust By: Van Kampen Investment Advisory Corp. By: /s/ BRAD LANGS ----------------- Name: Brad Langs Title: Executive Director THE UNDERSIGNED GUARANTORS HEREBY CONSENT AND AGREE TO THE FOREGOING AMENDMENT AS OF THE DATE HEREOF. PANAPAGE ONE LLC By: /S/ ERIC W. GOLDEN ------------------------ Name: Eric W. Golden Title: Executive Vice President and General Counsel PANAPAGE TWO LLC By: /S/ ERIC W. GOLDEN ------------------------ Name: Eric W. Golden Title: Executive Vice President and General Counsel PANAPAGE CO. LLC By: /S/ ERIC W. GOLDEN ------------------------ Name: Eric W. Golden Title: Executive Vice President and General Counsel PANAVISION INTERNATIONAL, L.P. By: Panavision Inc., its General Partner By: /S/ ERIC W. GOLDEN ------------------------ Name: Eric W. Golden Title: Executive Vice President and General Counsel PANAVISION U.K. HOLDINGS, INC. By: /S/ ERIC W. GOLDEN ------------------------ Name: Eric W. Golden Title: Executive Vice President and General Counsel PANAVISION REMOTE SYSTEMS, INC. By: /S/ ERIC W. GOLDEN ------------------------ Name: Eric W. Golden Title: Executive Vice President and General Counsel LAS PALMAS PRODUCTIONS, INC. By: /S/ ERIC W. GOLDEN ------------------------ Name: Eric W. Golden Title: Executive Vice President and General Counsel EX-31.1 6 file005.txt SECTION 302 CEO CERTIFICATION EXHIBIT 31.1 PANAVISION INC. CERTIFICATION I, Robert L. Beitcher, certify that: 1. I have reviewed this quarterly report on Form 10-Q (the "Report") of Panavision Inc. (the "Registrant"); 2. Based on my knowledge, this Report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b. [Intentionally omitted per SEC's transition rules in SEC Release Nos. 33-8238 and 34-47986] c. Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and d. Disclosed in this Report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: November 14, 2003 -------------------- By: /S/ ROBERT L. BEITCHER ------------------------------------------ Name: Robert L. Beitcher Title: President and Chief Executive Officer 30 EX-31.2 7 file006.txt SECTION 302 CFO CERTIFICATION EXHIBIT 31.2 PANAVISION INC. CERTIFICATION I, Bobby G. Jenkins, certify that: 1. I have reviewed this quarterly report on Form 10-Q (the "Report") of Panavision Inc. (the "Registrant"); 2. Based on my knowledge, this Report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; b. [Intentionally omitted per SEC's transition rules in SEC Release Nos. 33-8238 and 34-47986]; c. Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and d. Disclosed in this Report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. Date: November 14, 2003 By: /S/ BOBBY G. JENKINS -------------------------- Name: Bobby G. Jenkins Title: Executive Vice President, Chief Financial Officer and principal accounting officer 31 EX-32.1 8 file007.txt SECTION 906 CEO CERTIFICATION EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Panavision Inc. (the "Company") for the period ended September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert L. Beitcher, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /S/ ROBERT L. BEITCHER ------------------------------------ Robert L. Beitcher President and Chief Executive Officer November 14, 2003 EX-32.2 9 file008.txt SECTION 906 CFO CERTIFICATION EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Panavision Inc. (the "Company") for the period ended September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bobby G. Jenkins, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /S/ BOBBY G. JENKINS ------------------------------- Bobby G. Jenkins Chief Financial Officer November 14, 2003 -----END PRIVACY-ENHANCED MESSAGE-----