Production Resource Group, L.L.C. (PRG) and VLPS Lighting Services International, Inc. (VLPS) (OTC: LITE.PK) today jointly announced a merger agreement, under which a newly formed subsidiary of PRG would merge with and into VLPS, with VLPS becoming a wholly owned subsidiary of PRG. The new PRG would operate as PRG Lighting, PRG Audio and PRG Scenic Technologies. VLPS' sales in 2003 were $63.5 million.

The transaction, approved by the boards of both companies, is subject to the conditions set forth in the merger agreement, including the approval of VLPS' stockholders and completion of regulatory review. The holders of more than 50 percent of the outstanding shares of VLPS stock have executed a Voting Agreement and agreed to vote in favor of the merger. Terms of the transaction call for VLPS stockholders to receive approximately $8.32 per share in cash at closing, and up to approximately $0.50 per share payable from an escrow account established to pay for any indemnification claims. The announcement was made at company facilities in Los Angeles via teleconference hook-up to both companies' employees, worldwide.

PRG's shareholders, which include management shareholders, PRG's founders and Boston Ventures, have approved the deal, and appropriate regulatory filings have been made. Tony Bolland of Boston Ventures commented, "We think this is the kind of transaction that will position PRG as a global brand leader in the entertainment services industry." Upon closing, the transaction will result in a fully integrated equipment rental and services company for automated and conventional lighting and audio systems, as well as scenery fabrication and automation technologies to serve the entertainment industry from facilities in 13 cities, worldwide. GMAC Commercial Finance and Fortress Credit Corporation will provide senior and junior secured financing.

Both PRG and VLPS are pioneers in an industry that has been traditionally "cottage" in scope, often severely stressed by overall economic fluctuations. In this environment, both companies have seized industry leadership roles; VLPS with its Emmy® Award winning automated lighting technology, and PRG as a successful integrator of production design, management services and equipment for the live entertainment market. PRG's Jeremiah "Jere" Harris and H.R. "Rusty" Brutsché III of VLPS have been recognized for being at the vanguard of leadership and innovation in the industry's development. At the new PRG, Harris will be chairman and chief executive officer and Brutsché will be vice chairman and chief technology officer.

"This is a new beginning for our company," said Jere Harris. "We are taking the entertainment equipment and technology sector to the next level of development, responding to customer demands for more comprehensive production solutions available under one roof and new, more creative and more personalized approaches that bring productions to life.

"At the same time," Harris said, "we are bringing stability, resources and a stronger business orientation to an industry that is highly fragmented and under-capitalized.

"This is a very positive milestone for our companies, our employees and the industry," Harris continued. "We will have the largest inventory of new, state-of-the-art equipment in the world. And, we will provide timely and creative, integrated technologies to our customers in any venue around the globe."

Rusty Brutsché added, "Integration of equipment technologies and services solutions is inevitable. Our clients are continually looking for efficiencies, and that requires companies like ours to have a depth of resources and be broadly responsive to their creative demands. The merger of our two companies will enable us to create and provide new technologies with a broad scope and economy of scale to better serve the needs of our customers.

"We're a people-oriented business," Brutsché said, "and we will continue to be customer service and relationship driven. We will stay in the forefront of research and development; and, while we will have the benefits of being a large, well-capitalized company, we will also maintain the flexibility and responsiveness of a much smaller organization," he concluded.

Plans call for PRG to maintain its headquarters facilities in New Windsor, NY.