Exhibit 10.1

 

FOURTH AMENDMENT TO CREDIT AGREEMENT

 

THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Agreement”) is entered into as
of June 5, 2015, by and among JAKKS PACIFIC, INC., a Delaware corporation
(“JAKKS”), CREATIVE DESIGNS INTERNATIONAL, LTD., a Delaware corporation (“CDI”),
DISGUISE, INC., a Delaware corporation (“Disguise”), JAKKS SALES CORPORATION, a
Delaware corporation (“JAKKS Sales”), MAUI, INC., an Ohio corporation (“Maui”),
MOOSE MOUNTAIN MARKETING, INC., a New Jersey corporation (“Moose”), KIDS ONLY,
INC., a Massachusetts corporation (“Kids”; and together with JAKKS, CDI,
Disguise, JAKKS Sales, Maui and Moose, collectively referred to as “Borrowers”
and individually as a “Borrower”), GENERAL ELECTRIC CAPITAL CORPORATION, as
Agent and as a Lender, and the other Lenders signatory hereto.

 

RECITALS

 

A. Borrowers, the other Credit Parties party thereto, Agent and the Lenders from
time to time party thereto are parties to that certain Credit Agreement dated as
of March 27, 2014, as amended by the First Amendment to Credit Agreement dated
April 4, 2014, the Second Amendment to Credit Agreement dated June 5, 2014, and
the Third Amendment to Credit Agreement and Amendment to Guaranty and Security
Agreement dated December 31, 2014 (collectively, the “Credit Agreement”).
Capitalized terms used in this Agreement and not otherwise defined herein shall
have the respective meanings given to them in the Credit Agreement.

 

B. Borrowers have requested that Agent and Lenders amend certain provisions of
the Credit Agreement, and, subject to the satisfaction of the conditions set
forth herein, Agent and Lenders are willing to do so on the terms set forth
herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:

 

1.                  Amendment to Credit Agreement. Upon satisfaction of the
conditions set forth in Section 3 hereof, the Credit Agreement is hereby amended
as follows:

 

(a)                “Fee Letter” and “1.15(a)” are deleted from Section 12.01 of
the Credit Agreement.

 

(b)               The following new definitions of “Fourth Amendment Fee Letter”
and “Initial Fee Letter” are added to Section 12.02 of the Credit Agreement:

 

“Fourth Amendment Fee Letter” means the letter agreement between JAKKS and Agent
dated June 5, 2015.

 

“Initial Fee Letter” means the letter agreement between JAKKS and Agent dated
February 21, 2014.

 

 

 

 

(c)                The definitions of “Applicable Margin” and “Stated Maturity
Date” are deleted from Section 12.02 of the Credit Agreement, and the following
definitions of “Applicable Margin,” “Fee Letter” and “Stated Maturity Date” are
added to Section 12.02 of the Credit Agreement:

 

“Applicable Margin” means (i) if a Base Rate Loan, 1.25% per annum and (ii) if a
LIBOR Rate Loan, 2.25% per annum. Notwithstanding anything herein to the
contrary, Swing Loans may not be LIBOR Rate Loans.

 

“Fee Letter” means, collectively, the Initial Fee Letter and the Fourth
Amendment Fee Letter.

 

“Stated Maturity Date” means March 27, 2019.

 

(d)               Section 1.15 of the Credit Agreement is deleted in its
entirety and the following is substituted therefor:

 

Section 1.15. Fees.

 

(a) Fees. Borrowers shall pay to Agent, for Agent’s own account, fees in the
amounts and at the times set forth in the Fee Letter.

 

(b) Unused Commitment Fee. On the first Business Day of each calendar quarter
and on and until the date upon which the Obligations are paid in full, Borrowers
shall pay to Agent in arrears an unused commitment fee (the “Unused Commitment
Fee”) for the account of each Lender in an amount equal to: (i) the excess of
(A) the average daily balance of the Revolving Commitment of such Lender during
the preceding calendar quarter over (B) the sum of (1) the average daily balance
of all Revolving Loans held by such Lender, (2) the average daily amount of
Letter of Credit Obligations held by such Lender, and (3) in the case of the
Swingline Lender, the average daily balance of all outstanding Swing Loans held
by such Swingline Lender, in each case, during the preceding calendar quarter;
provided, that in no event shall the amount computed pursuant to clauses (1) and
(2) above with respect to the Swingline Lender be less than zero, multiplied by
(ii) (A) if the average daily balance of the aggregate of all outstanding
Revolving Loans, Letter of Credit Obligations and Swing Loans is equal to or
greater than 50% of the average daily Maximum Availability during the preceding
calendar quarter, then 0.25% per annum or (B) if the average daily balance of
the aggregate of all outstanding Revolving Loans, Letter of Credit Obligations
and Swing Loans is less than 50% of the average daily Maximum Availability
during the preceding calendar quarter, then 0.50% per annum. The total Unused
Commitment Fees payable by Borrowers on each such date will be equal to the sum
of all of the Unused Commitment Fees due to the Lenders on such date, subject to
Section 1.18(f).

 

(e)                The following Section 5.15 is added to Article V of the
Credit Agreement:

 

Section 5.15. Refinancing of 2018 Convertible Notes. On or before the date that
is six months prior to the Stated Maturity Date, the Credit Parties shall
refinance or extend the maturity date of the 2018 Convertible Notes, provided
that any such refinancing or extension shall have a maturity date that is no
sooner than that date that is six months after the Stated Maturity Date.

 

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(f)                Section 6.05(i) of the Credit Agreement is deleted in its
entirety and the following is substituted therefor:

 

(i) Subordinated Indebtedness (including any refinancing of the 2018 Convertible
Notes as contemplated by Section 5.15).

 

(g)               Section 7.02 of the Credit Agreement is deleted in its
entirety and the following is substituted therefor:

 

Section 7.02. Fixed Charge Coverage Ratio. On any date that Availability is less
than 25% of the Maximum Availability, Credit Parties shall not permit the Fixed
Charge Coverage Ratio of the Credit Parties for the four Fiscal Quarter period
ending as of the last day of the most recent Fiscal Quarter for which monthly
financial statements have been delivered to Agent in accordance with
Section 5.01, and on the end of each Fiscal Quarter thereafter to be less than
1.20 to 1.00.

 

(h)               Section 8.01(c) of the Credit Agreement is amended by
inserting “, 5.15” between “5.14” and “or”.

 

2.                  Consent under Credit Agreement. Reference is made to the
Consent under Credit Agreement and Release of Lien delivered by Agent and
Lenders to Borrower on May 6, 2015 (the “Consent Letter”). Notwithstanding the
express terms of the Consent Letter, the parties hereto agree that
notwithstanding Sections 6.10 and 6.19 or any other provision of the Credit
Agreement, provided that: (a) the Proposed Repurchase (as defined in the Consent
Letter) is consummated on or before March 31, 2016; (b) no Revolving Loans are
outstanding at the time of, and after giving effect to, the Proposed Repurchase;
(c) no Default or Event of Default shall have occurred and be continuing at the
time of, and after giving effect to, the Proposed Repurchase; and (d) if the
Proposed Repurchase is consummated after September 30, 2015, the Credit Parties
shall have consolidated EBITDA of not less than $45,000,000 as of the end of the
most recently ended fiscal quarter on a trailing four fiscal quarter basis, then
Agent and Lenders hereby consent to the consummation by JAKKS of the Proposed
Repurchase and agree that the consummation of the Proposed Repurchase shall not
constitute a breach of the provisions of Sections 6.10 or 6.19 of the Credit
Agreement.

 

3.                  Conditions Precedent. The effectiveness of this Agreement is
subject to the satisfaction of the following conditions precedent:

 

(a)                the execution and delivery of this Agreement by each
Borrower, Agent and Lenders; and

 

(b)               the truth and accuracy of the representations and warranties
contained in Section 4 hereof.

 

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4.                  Representations and Warranties. Each Borrower hereby
represents and warrants to Agent and each Lender as follows:

 

(a)                the execution, delivery and performance by each Borrower of
this Agreement have been duly authorized by all necessary action, and do not and
will not:

 

(i)                 contravene the terms of any of that Person’s Organization
Documents;

 

(ii)               conflict with or result in any material breach or
contravention of, or result in the creation of any Lien under, any document
evidencing any material Contractual Obligation to which such Person is a party
or any order, injunction, writ or decree of any Governmental Authority to which
such Person or its Property is subject; or

 

(iii)             violate any material Requirement of Law in any material
respect;

 

(b)               such Borrower has the power and authority to execute, deliver
and perform its obligations under this Agreement and the Credit Agreement, as
amended hereby;

 

(c)                this Agreement constitutes the legal, valid and binding
obligations of each Borrower enforceable against such Borrower in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles relating to enforceability;

 

(d)               after giving effect to this Agreement and the transactions
contemplated hereby, each of the representations and warranties contained in the
Credit Agreement and the other Loan Documents is true and correct in all
material respects on and as of the date hereof as if made on the date hereof
(except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date); and

 

(e)                no Default or Event of Default exists or would result from
the transactions contemplated by this Agreement.

 

5.                  No Modification. Except as expressly set forth herein,
nothing contained herein shall be deemed to constitute a waiver of compliance
with any term or condition contained in the Credit Agreement or any of the other
Loan Documents or constitute a course of conduct or dealing among the parties.
Except as expressly stated herein, Agent and Lenders reserve all rights,
privileges and remedies under the Loan Documents. Except as amended or consented
to hereby, the Credit Agreement and other Loan Documents remain unmodified and
in full force and effect. All references in the Loan Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement as modified
hereby. This Agreement shall constitute a Loan Document.

 

6.                  Counterparts. This Agreement may be executed in any number
of counterparts and by different parties in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart. Delivery of an executed signature page of this Agreement by
facsimile transmission or Electronic Transmission shall be as effective as
delivery of a manually executed counterpart hereof.

 

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7.                  Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent.

 

8.                  Governing Law. The laws of the State of New York shall
govern all matters arising out of, in connection with or relating to this
Agreement, including, without limitation, its validity, interpretation,
construction, performance and enforcement (including, without limitation, any
claims sounding in contract or tort law arising out of the subject matter hereof
and any determinations with respect to post-judgment interest).

 

9.                  Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.

 

10.              Captions. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.

 

11.              Reaffirmation. Each Borrower as debtor, grantor, pledgor,
guarantor, assignor, or in other any other similar capacity in which such
Borrower grants liens or security interests in its property or otherwise acts as
accommodation party or guarantor, as the case may be, hereby (i) ratifies and
reaffirms all of its payment and performance obligations, contingent or
otherwise, under each of the Loan Documents to which it is a party (after giving
effect hereto) and (ii) to the extent such Borrower granted liens on or security
interests in any of its property pursuant to any such Loan Document as security
for or otherwise guaranteed Borrower’s Obligations under or with respect to the
Loan Documents, ratifies and reaffirms such guarantee and grant of security
interests and liens and confirms and agrees that such security interests and
liens hereafter secure all of the Obligations as amended hereby. Each Borrower
hereby consents to this Agreement and acknowledges that each of the Loan
Documents remains in full force and effect and is hereby ratified and
reaffirmed. The execution of this Agreement shall not operate as a waiver of any
right, power or remedy of Agent or Lenders, constitute a waiver of any provision
of any of the Loan Documents or serve to effect a novation of the Obligations.

 

12.              Release of Claims. In consideration of Lenders’ and Agent’s
agreements contained in this Agreement, each Borrower hereby irrevocably
releases and forever discharges Lenders and Agent and their respective
affiliates, subsidiaries, successors, assigns, directors, officers, employees,
agents, consultants and attorneys (each, a “Released Person”) of and from any
and all claims, suits, actions, investigations, proceedings or demands, whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute or common law of any kind or character, known or unknown, which
such Borrower ever had or now has against Agent, any Lender or any other
Released Person which relates, directly or indirectly, to any acts or omissions
of Agent, any Lender or any other Released Person relating to the Credit
Agreement or any other Loan Document on or prior to the date hereof. Each
Borrower expressly and completely waives and relinquishes any and all rights or
benefits that has or may have pursuant to Section 1542 of the Civil Code of the
State of California and any other similar provision of law or principle of
equity in any other jurisdiction pertaining to the matters released herein.
Section 1542 provides as follows:

 

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A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.

 

[signature pages follow]

 

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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as of
the date set forth above.

 

“Borrowers”                 JAKKS PACIFIC, INC.   MAUI, INC.           By:
                             By:                   Name:     Name:   Title:    
Title:             CREATIVE DESIGNS INTERNATIONAL, LTD.   MOOSE MOUNTAIN
MARKETING, INC.           By:     By:   Name:       Name:     Title:     Title:
            DISGUISE, INC.   KIDS ONLY, INC.           By:     By:   Name:    
Name:   Title:     Title:             JAKKS SALES CORPORATION                
By:         Name:         Title:        

  

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  “Agent” and “Lender”         GENERAL ELECTRIC CAPITAL CORPORATION        
By:         Eric J. Watson     Duly Authorized Signatory

  

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