Exhibit 10.1
EMAK WORLDWIDE, INC.
EIGHTH AMENDMENT AND WAIVER
TO CREDIT AGREEMENT
This
EIGHTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT (this
“ Agreement ”) is dated as of March 30, 2005 and
entered into by and among EMAK Worldwide, Inc. (formerly known as
Equity Marketing, Inc.), a Delaware corporation (“
Company ”), the financial institutions listed on the
signature pages hereof (“ Lenders ”), Bank of
America, N.A., as administrative agent for Lenders (“
Administrative Agent ”), Equity Marketing Hong Kong,
Ltd., a Delaware corporation (“ EMHK ”),
Corinthian Marketing, Inc., a Delaware corporation (“
CMI ”), Equity Marketing, Inc., a Delaware corporation
(“ EMI ”), Upshot, Inc., a Delaware corporation
(“ Upshot ”), SCI Promotion, Inc., a Delaware
corporation (“ SCI ”), Logistix, Inc., a
Delaware corporation (“ Logistix ”), Pop Rocket,
Inc., a Delaware corporation (“ Pop Rocket ”),
EMAK Worldwide Service Corp., a Delaware corporation (“
EMAK Worldwide ”), and Johnson Grossfield, Inc., a
Delaware corporation (“ JGI ”), EMAK Hong Kong
Limited, a Hong Kong company (“ EMAK Hong Kong
”), and EMAK China Limited, a Hong Kong company (“
EMAK China ”, and together with Company, EMHK, CMI,
EMI, Upshot, SCI, Logistix, Pop Rocket, EMAK Worldwide, JGI and
EMAK Hong Kong, “ Grantors ”), is made with
reference to that certain Credit Agreement dated as of
April 24, 2001, as amended by that certain First Amendment
dated as of November 14, 2001, that certain Second Amendment
dated as of February 8, 2002, that certain Third Amendment and
Waiver dated as of September 30, 2002, that certain Fourth
Amendment dated as of November 14, 2003, that certain Fifth
Amendment dated as of April 26, 2004, that certain Sixth
Amendment dated as of August 12, 2004 and that certain Seventh
Amendment and Waiver dated as of November 15, 2004 (as so
amended, the “ Credit Agreement ”), by and among
Company, Lenders and Administrative Agent, and to the Security
Agreement described below. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the
Credit Agreement.
RECITALS
WHEREAS , Company and Lenders desire to amend the Credit
Agreement as set forth below;
WHEREAS , Company and Lenders desire that Lenders waive
Company’s compliance with certain provisions of the Credit
Agreement; and
WHEREAS , Grantors and Lenders desire to amend that certain
Security Agreement dated as of April 24, 2001, as amended by
that certain First Amendment to Security Agreement dated as of
September 30, 2002, by and among Grantors and Administrative
Agent on behalf of Lenders (as so amended, the “ Security
Agreement ”);
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereto agree as follows:
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Section 1. AMENDMENTS TO CREDIT AGREEMENT AND SECURITY
AGREEMENT
1.1 Amendments to Section 1.01. Defined
Terms
(A) Section 1.01
of the Credit Agreement is hereby amended by adding thereto the
following definition, which shall be inserted in proper
alphabetical order:
“‘
Consolidated Total Liabilities ’ means, as of any date
of determination, total liabilities of Borrower and its
Subsidiaries on a consolidated basis as determined in accordance
with GAAP.”
“‘
Consolidated Tangible Net Worth ’ means, as of any
date of determination, (i) total assets of Borrower and its
Subsidiaries on a consolidated basis as determined in accordance
with GAAP minus (ii) the sum of (a) total
liabilities of Borrower and its Subsidiaries on a consolidated
basis as determined in accordance with GAAP plus
(b) Intangible Assets.”
“‘
Eighth Amendment and Waiver to Credit Agreement ’
means that certain Eighth Amendment and Waiver to Credit Agreement
dated as of March 30, 2005, by and among Borrower, certain
Subsidiaries of Borrower, Lenders and Administrative
Agent.”
“‘
Eighth Amendment Effective Date ’ means that effective
date of that certain Eighth Amendment and Waiver to Credit
Agreement.”
“‘
Intangible Assets ” means assets of Borrower and its
Subsidiaries on a consolidated basis that are considered to be
intangible assets under GAAP, including customer lists, goodwill,
copyrights, trade names, trademarks, patents, franchises and
licenses.
“‘
SOFA ’ means a secured over-advanced
facility.”
“‘
SOFA Portion ’ means, as of any date of determination
during the SOFA Period, that portion of the Outstanding Obligations
on such date which exceeds the Borrowing Base then in
effect.”
“‘
SOFA Period ’ means a period from and including
May 1, 2005 to and excluding July 31,
2005.”
(B) The
definition of “Applicable Amount” is hereby amended by
adding the following fourth proviso after the table:
“;
provided further , that to the extent that the SOFA
Portion is greater than zero, such SOFA Portion shall be attributed
to Eurodollar Rate Loans then outstanding and to the extent that
such SOFA Portion is greater than the aggregate principal amount of
Eurodollar Rate Loans then outstanding, then to Base Rate Loans
then outstanding and the Applicable Amount for SOFA Portion of
Revolving Loans which are Eurodollar Rate Loans shall be 3.00% and
the Applicable Amount for SOFA Portion of Revolving Loans (without
duplication) which are Base Rate Loans shall be 1.25% during the
SOFA Period”.
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(C) The
definition of “Applicable Average Commitment Amount” is
hereby amended by deleting the reference to “15% of the
outstanding principal amount of the Combined Commitments”
contained therein and substituting “15% of the average amount
of the Outstanding Obligations for such Fiscal Quarter”
therefor.
(D) The
definition of “Eligible Inventory Advance Rate” is
hereby amended by deleting it in its entirety therefrom and
substituting the following therefor:
“‘
Eligible Inventory Advance Rate ’ means
0%.”
(E) The
definition of “Maturity Date” is hereby amended by
deleting the reference to “June 30, 2005”
contained therein and substituting “March 31,
2006” therefor.
1.2 Amendment to Section 2: The Commitments and
Extensions of Credit
(A) Subsection
2.01(a) of the Credit Agreement is hereby amended by
(1) adding the following provisos at the end of the second
sentence of such subsection 2.01(a):
“;
provided , that from and including March 30, 2005, the
aggregate amount of the Revolving Loan Commitments shall be
automatically reduced to $20,000,000”,
and
(2) adding the following at the end of clause
(iii) appearing at the end of such subsection
2.01(a):
“(or,
during the SOFA Period, the lesser of (1) the combined
Revolving Loan Commitments then in effect (as reduced from time to
time pursuant to Section 2.05 or 2.06 or
otherwise), or (2) the Borrowing Base then in effect plus, at
any time that the Borrowing Base is greater than or equal to
$15,000,000, $3,000,000)”.
(B) Subsection
2.03(a) of the Credit Agreement is hereby amended by adding the
following at the end of clause (ii) of such subsection
2.03(a):
“(or,
during the SOFA Period, the lesser of (1) the combined
Revolving Loan Commitments then in effect (as reduced from time to
time pursuant to Section 2.05 or 2.06 or
otherwise), or (2) the Borrowing Base then in effect plus, at
any time that the Borrowing Base is greater then or equal to
$15,000,000, $3,000,000)”.
(C) Subsection
2.04(a) of the Credit Agreement is hereby amended by adding the
following at the end of such subsection 2.04(a):
“(or,
during the SOFA Period, the lesser of (1) the combined
Revolving Loan Commitments then in effect (as reduced from time to
time pursuant to Section 2.05 or 2.06 or
otherwise), or (2) the Borrowing Base then in effect plus, at
any time that the Borrowing Base is greater then or equal to
$15,000,000, $3,000,000)”.
(D) Subsection
2.05(c) is hereby amended by adding at the end of the phrase
“(2) the Borrowing Base then in effect” appearing
therein the following:
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“(or,
during the SOFA Period, the lesser of (1) the combined
Revolving Loan Commitments then in effect (as reduced from time to
time pursuant to Section 2.05 or 2.06 or
otherwise), or (2) the Borrowing Base then in effect plus, at
any time that the Borrowing Base is greater then or equal to
$15,000,000, $3,000,000)”.
1.3 Amendments to Section 6: Affirmative
Covenants
(A) Section 6.13
of the Credit Agreement is hereby amended by adding at the end
thereof the following:
“Notwithstanding
anything to the contrary in this Section 6.13, (i) with
respect to EMAK Europe Holdings Ltd., a United Kingdom company
(“ EMAK Europe ”), EMAK Hong Kong, EMAK China,
EMAK Asia Holdings Company Limited, a Hong Kong company, and
Megaprint Group Limited, a United Kingdom company (“
Megaprint ”), Borrower shall deliver, or cause to be
delivered, to Administrative Agent the applicable items set forth
above (which shall include an equitable charge governed by the law
of the United Kingdom) on or prior to May 15, 2005 and,
(ii) with respect to EMI, Upshot, SCI, Logistix, Pop Rocket
and EMAK Worldwide, Borrower shall deliver, or cause to be
delivered, to Administrative Agent the applicable items set forth
above on or prior to April 19, 2005, including without
limitation with respect to each such Domestic Subsidiary,
(a) the applicable items required by
Section 4.01(iii) , 4.01(vi) and 4.01(j)
hereof (to the extent not delivered on or prior to the Eighth
Amendment Effective Date), (b) the legal opinions described in
Section 6.13(c) (which the Grantors hereby agree are
being requested by Administrative Agent), (c) executed Grant
of Trademark Security Interest, Grant of Patent Security Interest
and Grant of Copyright Security Interest (in each case to the
extent required by Administrative Agent), and (d) collateral
documents relating to Real Property Assets of such Subsidiaries.
Borrower hereby represents and warrant that, as of the Eighth
Amendment Effective Date, EMAK Europe does not hold any assets
other than stock of Megaprint, EMAK Europe Services Limited, a
United Kingdom company (“ EMAK Europe Services
”) and Prodesign Marketing Limited, a United Kingdom company
(“ Prodesign ”) and hereby covenants that, after
the Eighth Amendment Effective Date, it will not own any assets
other than the stock of Megaprint, EMAK Europe Services, Prodesign
and Logistix Limited, a United Kingdom company.”
1.4 Amendments to Section 7: Negative
Covenants
(A) Section 7.06
of the Credit Agreement is hereby amended by deleting the reference
to “$28,000,000” contained therein and substituting
“$15,000,000” therefor.
(B) Section 7.12
of the Credit Agreement is hereby amended as follows:
(i) Subsection
7.12(a) is hereby amended by (1) deleting
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