Exhibit 10.9
 
EMAK WORLDWIDE, INC.,
EQUITY MARKETING, INC.,
SCI PROMOTION, INC.,
POP ROCKET, INC.
LOGISTIX, INC.,
UPSHOT, INC.,
EMAK WORLDWIDE SERVICE CORP.,
CORINTHIAN MARKETING, INC.,
JOHNSON GROSSFIELD, INC.,
and
EQUITY MARKETING HONG KONG, LTD.,
as Borrowers
LOAN AND SECURITY AGREEMENT
Dated as of March 29, 2006
$25,000,000
CERTAIN FINANCIAL INSTITUTIONS,
as Lenders
and
BANK OF AMERICA, N.A.,
as Agent
 

 

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TABLE OF CONTENTS

         
 
    Page  
SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION
    1  
1.1 Definitions
    1  
1.2 Accounting Terms
    26  
1.3 Certain Matters of Construction
    26  
SECTION 2. CREDIT FACILITIES
    27  
2.1 Revolver Commitment
    27  
2.2 Letter of Credit Facility
    28  
SECTION 3. INTEREST, FEES AND CHARGES
    30  
3.1 Interest
    30  
3.2 Fees
    31  
3.3 Computation of Interest, Fees, Yield Protection
    32  
3.4 Reimbursement Obligations
    32  
3.5 Illegality
    33  
3.6 Increased Costs
    33  
3.7 Capital Adequacy
    34  
3.8 Mitigation
    34  
3.9 Funding Losses
    34  
3.10 Maximum Interest
    34  
SECTION 4. LOAN ADMINISTRATION
    35  
4.1 Manner of Borrowing and Funding Revolver Loans
    35  
4.2 Defaulting Lender
    36  
4.3 Number and Amount of LIBOR Loans; Determination of Rate
    36  
4.4 Borrower Agent
    36  
4.5 One Obligation
    37  
4.6 Effect of Termination
    37  
SECTION 5. PAYMENTS
    37  
5.1 General Payment Provisions
    37  
5.2 Repayment of Revolver Loans
    37  
5.3 Payment of Other Obligations
    38  
5.4 Marshaling; Payments Set Aside
    38  
5.5 Post-Default Allocation of Payments
    38  
5.6 Application of Payments
    39  

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TABLE OF CONTENTS
(continued)

         
 
    Page  
5.7 Loan Account; Account Stated
    39  
5.8 Taxes
    39  
5.9 Withholding Tax Exemption
    39  
5.10 Nature and Extent of Each Borrower’s Liability
    40  
SECTION 6. CONDITIONS PRECEDENT
    43  
6.1 Conditions Precedent to Initial Loans
    43  
6.2 Conditions Precedent to All Credit Extensions
    46  
6.3 Limited Waiver of Conditions Precedent
    47  
SECTION 7. COLLATERAL
    47  
7.1 Grant of Security Interest
    47  
7.2 Lien on Deposit Accounts; Cash Collateral
    48  
7.3 Real Estate Collateral
    48  
7.4 Other Collateral
    48  
7.5 No Assumption of Liability
    49  
7.6 Further Assurances
    49  
7.7 Foreign Subsidiary Stock
    49  
SECTION 8. COLLATERAL ADMINISTRATION
    49  
8.1 Borrowing Base Certificates
    49  
8.2 Administration of Accounts
    49  
8.3 Administration of Inventory
    50  
8.4 Administration of Equipment
    51  
8.5 Administration of Deposit Accounts; Securities Accounts
    51  
8.6 General Provisions
    51  
8.7 Power of Attorney
    52  
SECTION 9. REPRESENTATIONS AND WARRANTIES
    53  
9.1 General Representations and Warranties
    53  
9.2 Matters Relating to Collateral
    58  
9.3 Complete Disclosure
    59  
SECTION 10. COVENANTS AND CONTINUING AGREEMENTS
    59  
10.1 Affirmative Covenants
    59  
10.2 Negative Covenants
    65  
10.3 Financial Covenants
    70  

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TABLE OF CONTENTS
(continued)

         
 
    Page  
SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
    70  
11.1 Events of Default
    70  
11.2 Remedies upon Default
    72  
11.3 License
    72  
11.4 Setoff
    73  
11.5 Remedies Cumulative; No Waiver
    73  
SECTION 12. AGENT
    73  
12.1 Appointment, Authority and Duties of Agent
    73  
12.2 Agreements Regarding Collateral and Field Examination Reports
    74  
12.3 Reliance By Agent
    75  
12.4 Action Upon Default
    75  
12.5 Ratable Sharing
    75  
12.6 Indemnification of Agent Indemnitees
    75  
12.7 Limitation on Responsibilities of Agent
    76  
12.8 Successor Agent and Co-Agents
    76  
12.9 Due Diligence and Non-Reliance
    77  
12.10 Replacement of Certain Lenders
    77  
12.11 Remittance of Payments and Collections
    77  
12.12 Agent in its Individual Capacity
    78  
12.13 Agent Titles
    78  
12.14 No Third Party Beneficiaries
    78  
SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
    78  
13.1 Successors and Assigns
    78  
13.2 Participations
    78  
13.3 Assignments
    79  
13.4 Tax Treatment
    80  
13.5 Representation of Lenders
    80  
SECTION 14. MISCELLANEOUS
    80  
14.1 Consents, Amendments and Waivers
    80  
14.2 Indemnity
    81  
14.3 Notices and Communications
    81  
14.4 Performance of Borrowers’ Obligations
    81  

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TABLE OF CONTENTS
(continued)

         
 
    Page  
14.5 Credit Inquiries
    82  
14.6 Severability
    82  
14.7 Cumulative Effect; Conflict of Terms
    82  
14.8 Counterparts; Facsimile Signatures
    82  
14.9 Entire Agreement
    82  
14.10 Obligations of Lenders
    82  
14.11 Confidentiality
    82  
14.12 GOVERNING LAW
    83  
14.13 Consent to Forum; Arbitration
    83  
14.14 Waivers by Borrowers
    84  
14.15 Patriot Act Notice
    84  

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LIST OF EXHIBITS AND SCHEDULES

     
Exhibit A
  Revolver Note
Exhibit B
  Assignment and Acceptance
Exhibit C
  Assignment Notice
Exhibit D
  Collateral Access Agreement
Exhibit E
  Domestic Pledge Agreement
Exhibit F
  Additional Borrower Counterpart
Exhibit G
  Non-Offset Letter
Exhibit H
  Imported Goods Agreement

     
Schedule 1.1A
  Revolver Commitments of Lenders
Schedule 1.1B
  License Agreements
Schedule 1.1C
  EBITDA
Schedule 1.1D
  Specified Account Debtors
Schedule 2.2.1
  Existing Letters of Credit
Schedule 7.3
  Real Estate
Schedule 8.5
  Deposit Accounts and Securities Accounts
Schedule 8.6.1
  Business Locations
Schedule 9.1.4
  Names and Capital Structure
Schedule 9.1.5
  Former Names and Companies
Schedule 9.1.8
  Draft Financial Statements
Schedule 9.1.12
  Patents, Trademarks, Copyrights and Licenses
Schedule 9.1.15
  Environmental Matters
Schedule 9.1.17
  Restrictive Agreements
Schedule 9.1.18
  Litigation
Schedule 9.1.20
  Pension Plans
Schedule 9.1.22
  Labor Contracts
Schedule 9.2.3
  Third-Party Filings
Schedule 10.1.2
  Specified Liens
Schedule 10.2.1
  Existing Debt
Schedule 10.2.2
  Existing Liens
Schedule 10.2.17
  Existing Affiliate Transactions

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LOAN AND SECURITY AGREEMENT
     THIS LOAN AND SECURITY AGREEMENT is dated as of March 29, 2006 by and among
EMAK WORLDWIDE, INC., a Delaware corporation (“EMAK”), EQUITY MARKETING, INC., a
Delaware corporation (“EMI”), SCI PROMOTION, INC., a Delaware corporation
(“SCI”), POP ROCKET, INC., a Delaware corporation (“Pop Rocket”), LOGISTIX,
INC., a Delaware corporation (“Logistix”), UPSHOT, INC., a Delaware corporation
(“Upshot”), EMAK WORLDWIDE SERVICE CORP., a Delaware corporation (“EMAK
Worldwide”), CORINTHIAN MARKETING, INC., a Delaware corporation (“Corinthian”),
JOHNSON GROSSFIELD, INC., a Delaware corporation (“Johnson”) and EQUITY
MARKETING HONG KONG, LTD., a Delaware corporation (“Equity Marketing” and
together with EMAK, EMI, SCI, Pop Rocket, Upshot, EMAK Worldwide, Corinthian,
Johnson and future Subsidiaries executing this Agreement in accordance with
Section 10.1.9, collectively referred to herein as “Borrowers”, and individually
as a “Borrower”), the financial institutions party to this Agreement from time
to time as lenders (collectively, “Lenders”), and BANK OF AMERICA, N.A., a
national banking association (“Bank of America”), as agent for Lenders
(“Agent”).
R E C I T A L S:
     Borrowers have requested that Lenders make available a credit facility, to
be used by Borrowers to finance their mutual and collective business enterprise.
Lenders are willing to provide such credit facility on the terms and conditions
set forth in this Agreement.
     NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:
SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION
     1.1 Definitions. As used herein, the following terms have the meanings set
forth below:
     AAA — as defined in Section 14.13.
     Account — as defined in the UCC, including all rights to payment for goods
sold or leased, or for services rendered.
     Account Debtor — a Person who is obligated under an Account, Chattel Paper
or General Intangible.
     Accounts Formula Amount — 85% of the Value of Eligible Accounts; provided,
however, that such percentage shall be reduced by 1.0% for each 0.5 percentage
point that the Dilution Percent exceeds 7.5%.
     Acquisition — any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all or any significant portion of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of 50% of
the capital stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary (other than the
creation of a newly formed Subsidiary of a Obligor), or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary); provided that a Borrower or a wholly-owned Subsidiary
that becomes a Borrower is the surviving entity.
     Adjusted LIBOR — for any Interest Period, with respect to LIBOR Loans, the
per annum rate of interest (rounded upward, if necessary, to the nearest 1/8th
of 1%) appearing on Telerate Page 3750, or if such page is unavailable, the
Reuters Screen LIBO Page (or any successor page of either, as applicable),

 

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as the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if the Reuters Screen LIBO Page is used and more than one rate is shown
on such page, the applicable rate shall be the arithmetic mean thereof. If for
any reason none of the foregoing rates is available, the Offshore Base Rate
shall be the rate per annum determined by Agent as the rate of interest at which
Dollar deposits in the approximate amount of the applicable LIBOR Loan would be
offered to major banks in the offshore Dollar market at or about 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period. If the Board of Governors shall
impose a Reserve Percentage with respect to LIBOR deposits, then Adjusted LIBOR
shall equal the amount determined above, divided by 1 minus the Reserve
Percentage.
     Affiliate — with respect to any Person, another Person (a) who directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such first Person; (b) who beneficially owns 10% or
more of the voting securities or of Equity Interests of such first Person;
(c) at least 10% of whose voting securities or of Equity Interests is
beneficially owned, directly or indirectly, by such first Person; or (d) who is
an officer, director, partner or managing member of such first Person. “Control”
means the possession, directly or indirectly, of the power to direct or cause
direction of the management and policies of a Person, whether through ownership
of Equity Interests, by contract or otherwise.
     Agency of Record Agreement — any agency of record agreements between a
Borrower and its customer providing for the performance of services by such
Borrower in exchange for a fixed fee payable over time.
     Agent Indemnitees — Agent and its officers, directors, employees,
Affiliates, agents and attorneys.
     Agent Professionals — attorneys, accountants, appraisers, auditors,
business valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by Agent.
     Agreement — this Loan and Security Agreement, as amended, restated,
extended, supplemented or otherwise modified in writing from time to time.
     Allocable Amount — as defined in Section 5.10.6.
     Anti-Terrorism Laws — any laws relating to terrorism or money laundering,
including the Patriot Act.
     Applicable Law — all laws, rules, regulations and governmental guidelines
applicable to the Person, conduct, transaction, agreement or matter in question,
including all applicable statutory law, common law and equitable principles, and
all provisions of constitutions, treaties, statutes, rules, regulations, orders
and decrees of Governmental Authorities.
     Applicable Margin — with respect to any Base Rate Revolver Loans is 0.75%
and with respect to any LIBOR Revolver Loans is 2.50%; provided, that during the
Inventory Borrowing Period, to the extent that any portion of the Revolver Loans
outstanding on any day would have exceeded the Borrowing Base as of such day but
for the availability of the Inventory Formula Amount (such amount of the
Revolver Loans being referred to herein as the “Inventory Borrowing Portion”),
the Applicable Margin for such Revolver Loans that relate to the Inventory
Borrowing Portion is (a) with respect to such Revolver Loans that are Base Rate
Revolver Loans, 1.25% and (b) with respect to such Revolver Loans that are LIBOR
Revolver Loans, 3.00% (it being understood and agreed that (i) if both Base Rate
Revolver Loans and LIBOR Revolver Loans are outstanding on any day during the
Inventory Borrowing Period, subject to clause (ii) below, any Base Rate Revolver
Loans shall be deemed to relate first to the Inventory Borrowing Portion as of
such day before any LIBOR Revolver Loans are deemed to relate to any part of

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such Inventory Borrowing Portion and (ii) if after giving effect to the
foregoing clause (i) all or any portion of a LIBOR Loan is deemed to relate to
all or any part of the Inventory Borrowing Portion, then the higher Applicable
Margin (i.e., 3.00% instead of 2.50%) shall continue to apply to such LIBOR Loan
(or the applicable part thereof as of such day) until the end of the applicable
Interest Period whether or not the Inventory Borrowing Period terminates prior
to the end of such Interest Period and whether or not such LIBOR Loan (or any
part thereof) is no longer deemed to relate to all or any part of the Inventory
Borrowing Portion (e.g., as a result of an increase in the Accounts Formula
Amount or a decrease in the Inventory Borrowing Portion during the applicable
Interest Period)); provided, that nothing in this definition shall authorize
Borrowers to request a LIBOR Revolver Loan with respect to the Inventory
Borrowing Portion.
     Approved Fund — any Person (other than a natural person) that is engaged in
making, holding or investing in extensions of credit in its ordinary course of
business and is administered or managed by a Lender, an entity that administers
or manages a Lender, or an Affiliate of either.
     Asset Disposition — a sale, lease, license, consignment, transfer or other
disposition of Property of an Obligor, including a disposition of Property in
connection with a sale-leaseback transaction or synthetic lease.
     Assignment and Acceptance — an assignment agreement between a Lender and
Eligible Assignee, in the form of Exhibit B.
     Attorney Costs — all reasonable fees and disbursements of any law firm or
other external counsel and the reasonable allocated cost of internal legal
services and all disbursements of internal counsel.
     Availability — determined as of any date, the amount that Borrowers are
entitled to borrow as Revolver Loans, being the Borrowing Base minus the
principal balance of all Revolver Loans.
     Availability Block — (i) in the event that each of BK, RSI and their
respective Affiliates have delivered a Non-Offset Letter with respect to the BK
Agreements to which they are a party in form and substance satisfactory to Agent
before June 30, 2006, the Availability Block from the Closing Date and
thereafter shall be $0, (ii) in the event that RSI and its Affiliates (but not
all of BK and its Affiliates) have delivered a Non-Offset Letter with respect to
the BK Agreements to which they are a party in form and substance satisfactory
to Agent before June 30, 2006, the Availability Block from the Closing Date
until June 30, 2006 shall be $0 and the Availability Block thereafter shall be
the lesser of (a) $500,000 and (b) the increase in Availability that would
result from the aggregate amount of Eligible Accounts owing from BK and its
Affiliates from time to time, and (iii) otherwise, the Availability Block from
the Closing Date until June 30, 2006 shall be $0 and the Availability Block
thereafter shall be the lesser of (a) $1,000,000 and (b) the increase in
Availability that would result from the aggregate amount of Eligible Accounts
owing from BK, RSI and their respective Affiliates from time to time; provided,
however, that if before June 30, 2006, an Inventory Borrowing Period occurs,
(1) in the event that each of BK, RSI and their respective Affiliates have
delivered a Non-Offset Letter with respect to the BK Agreements to which they
are a party in form and substance satisfactory to Agent on or before the first
day of such Inventory Borrowing Period, the Availability Block from the Closing
Date and thereafter shall be $0, (2) in the event that RSI and its Affiliates
(but not all of BK and its Affiliates) have delivered a Non-Offset Letter with
respect to the BK Agreements to which they are a party in form and substance
satisfactory to Agent before the first day of such Inventory Borrowing Period,
the Availability Block from the Closing Date until the day preceding the first
day of such Inventory Borrowing Period shall be $0 and the Availability Block
thereafter shall be the lesser of (a) $500,000 and (b) the increase in
Availability that would result from the aggregate amount of Eligible Accounts
owing from BK and its Affiliates from time to time, and (3) otherwise, the
Availability Block from the Closing Date until the day preceding the first day
of such Inventory Borrowing Period shall be $0 and the Availability Block
thereafter shall be the lesser of (a)

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$1,000,000 and (b) the increase in Availability that would result from the
aggregate amount of Eligible Accounts owing from BK, RSI and their respective
Affiliates from time to time.
     Availability Reserve — the sum (without duplication) of (a) the Inventory
Reserve; (b) the Rent and Charges Reserve; (c) the LC Reserve; (d) the Bank
Product Reserve; (e) all accrued Royalties with respect to any Eligible
Inventory and/or any Eligible Account that is included in the Borrowing Base,
whether or not then due and payable by a Borrower; (f) the aggregate amount of
liabilities secured by Liens upon Collateral that are senior to Agent’s Liens
(but imposition of any such reserve shall not waive an Event of Default arising
therefrom); (g) the Availability Block; and (h) such additional reserves and in
such amounts as Agent may determine in its sole discretion including without
limitation those based upon (1) its consideration of any factor that it believes
could result in the loss of any material customer of any Borrower, a disruption
in the relationship between any Borrower or any of its customers or an adverse
change in the business prospects or business mix of any Borrower, (2) the
termination of, an amendment adverse to any Borrower or Lender, or the failure
to renew, any agreement of any Borrower (including without limitation any
Related Document), or (3) Agent’s consideration of any factor that it believes
creates or could result in a Default or an Event of Default.
     Bank of America — Bank of America, N.A., a national banking association,
and its successors and assigns.
     Bank of America Indemnitees — Bank of America and its officers, directors,
employees, Affiliates, agents and attorneys.
     Bank Product — any of the following products, services or facilities
extended to any Borrower or Subsidiary by Bank of America or any of its
Affiliates: (a) Cash Management Services; (b) products under Hedging Agreements;
(c) commercial credit card and merchant card services; and (d) other banking
products or services as may be requested by any Borrower or Subsidiary, other
than Letters of Credit.
     Bank Product Debt — Debt and other obligations of an Obligor relating to
Bank Products.
     Bank Product Reserve — the aggregate amount of reserves established by
Agent from time to time in its discretion in respect of Bank Product Debt.
     Bankruptcy Code — Title 11 of the United States Code.
     Base Rate — the rate of interest announced by Bank of America from time to
time as its prime rate. Such rate is a reference rate only and Bank of America
may make loans or other extensions of credit at, above or below it. Any change
in the prime rate announced by Bank of America shall take effect at the opening
of business on the effective date specified in the public announcement of the
change.
     Base Rate Revolver Loan — a Revolver Loan that bears interest based on the
Base Rate.
     BK — Burger King Corporation, a Florida corporation.
     BK Agreements — the BK Services Agreements, the BK Supply Agreements, the
RSI Supply Agreement and any other agreements entered into from time to time
between BK, RSI or any of their respective Affiliates, on the one hand, and any
Borrower or any of their respective Subsidiaries, on the other hand, and any
material purchase orders and similar agreements or arrangements entered into
from time to time with respect to any of the foregoing.
     BK Group — has meaning assigned to such term in the definition of Eligible
Accounts.
     BK Services Agreements- (i) that certain Services Agreement dated as of
October 1, 2002 between Equity Marketing, Inc. and BK, (ii) that certain
Services Agreement effective as of July 1, 2004

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between EMAK and BK, and (iii) any other services agreements entered into from
time to time between BK or any of its Affiliates and any Borrower or any of its
Subsidiaries, in each case as such agreement is in effect on the Closing Date
(to the extent in effect on the Closing Date) and as such agreement may be
amended from time to time thereafter to the extent permitted under
Section 10.2.21.
     BK Supply Agreements — (i) that certain Terms and Conditions of Supply
Agreement dated as of October 1, 2002 between BK and Equity Marketing, Inc.,
(ii) that certain International Master Premium Supply Agreement dated as of
October 1, 2002 between BK and Equity Marketing, Inc., and (iii) any other
supply agreements entered into from time to time between BK or any of its
Affiliates and any Borrower or any of its Subsidiaries, in each case as such
agreement is in effect on the Closing Date (in the case of clauses (i) and (ii))
and as such agreement may be amended from time to time thereafter to the extent
permitted under Section 10.2.21.
     Board of Governors — the Board of Governors of the Federal Reserve System.
     Borrowed Money — with respect to any Obligor, without duplication, its
(a) Debt that (i) arises from the lending of money by any Person to such
Obligor, (ii) is evidenced by notes, drafts, bonds, debentures, credit documents
or similar instruments, (iii) accrues interest or is a type upon which interest
charges are customarily paid (excluding trade payables owing in the Ordinary
Course of Business), or (iv) was issued or assumed as full or partial payment
for Property; (b) Capital Leases; (c) reimbursement obligations with respect to
letters of credit; and (d) guaranties of any Debt of the foregoing types owing
by another Person.
     Borrower Agent — as defined in Section 4.4.
     Borrowers — has the meaning set forth in the introductory paragraph hereto.
     Borrowing — a group of Revolver Loans of one Type that are made on the same
day or are converted into Revolver Loans of one Type on the same day.
     Borrowing Base — on any date of determination, an amount equal to the
lesser of (a) the aggregate amount of Revolver Commitments, minus the LC
Reserve, minus the Availability Block; or (b) the sum of the Accounts Formula
Amount, plus, solely during the Inventory Borrowing Period, the Inventory
Formula Amount, minus the Availability Reserve.
     Borrowing Base Certificate — a certificate, in form and substance
satisfactory to Agent, by which Borrowers certify calculation of the Borrowing
Base.
     Business Day — any day (a) excluding Saturday, Sunday and any other day on
which banks are permitted to be closed under the laws of the States of North
Carolina and California; and (b) when used with reference to a LIBOR Loan, also
excluding any day on which banks do not conduct dealings in Dollar deposits on
the London interbank market.
     Capital Adequacy Regulation — any law, rule, regulation, guideline, request
or directive of any central bank or other Governmental Authority, whether or not
having the force of law, regarding capital adequacy of a bank or any Person
controlling a bank.
     Capital Expenditures — all liabilities incurred, expenditures made or
payments due (whether or not made) by a Borrower or Subsidiary for the
acquisition of any fixed assets, or any improvements, replacements,
substitutions or additions thereto with a useful life of more than one year,
including the principal portion of Capital Leases. Without limiting the
generality of the foregoing, Capital Expenditures shall include, for any period,
the aggregate of all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Borrowers and Subsidiaries) by
Borrowers and Subsidiaries during that

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period that, in conformity with GAAP, are included in “additions to property,
plant or equipment” or comparable items reflected in the consolidated statement
of cash flows of Borrowers and Subsidiaries and shall include the aggregate of
all expenditures by Borrowers and Subsidiaries during that period to acquire (by
purchase or otherwise) the business, property or fixed assets of any Person, or
the stock or other evidence of beneficial ownership of any Person that, as a
result of such acquisition, becomes a Subsidiary of a Borrower. Notwithstanding
the foregoing, to the extent that any Borrower receives a landlord reimbursement
on or before June 30, 2006 with respect to certain Capital Expenditures in the
form of tenant improvements made by such Borrower in January of 2006, up to
$300,000 of such reimbursement received by such Borrower on or before June 30,
2006 shall reduce, dollar for dollar, the amount of Capital Expenditures in the
form of tenant improvements made by such Borrower in January of 2006.
     Capital Lease — any lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
     Cash Collateral — cash, and any interest or other income earned thereon,
that is delivered to Agent to Cash Collateralize any Obligations.
     Cash Collateral Account — a demand deposit, money market or other account
established by Agent at such financial institution as Agent may select in its
discretion, which account shall be subject to Agent’s Liens for the benefit of
Secured Parties.
     Cash Collateralize — the delivery of cash to Agent, as security for the
payment of Obligations, in an amount equal to (a) with respect to LC
Obligations, 105% of the aggregate LC Obligations, and (b) with respect to any
inchoate or contingent Obligations (including Obligations arising under Bank
Products), Agent’s good faith estimate of the amount due or to become due,
including all fees and other amounts relating to such Obligations. “Cash
Collateralization” has a correlative meaning.
     Cash Equivalents — (a) marketable obligations issued or unconditionally
guaranteed by, and backed by the full faith and credit of, the United States
government, maturing within 12 months of the date of acquisition;
(b) certificates of deposit, time deposits and bankers’ acceptances maturing
within 12 months of the date of acquisition, and overnight bank deposits, in
each case which are issued by a commercial bank organized under the laws of the
United States or any state or district thereof, rated A-1 (or better) by S&P or
P-1 (or better) by Moody’s at the time of acquisition, and (unless issued by a
Lender) not subject to offset rights; (c) repurchase obligations with a term of
not more than 30 days for underlying investments of the types described in
clauses (a) and (b) entered into with any bank meeting the qualifications
specified in clause (b); (d) commercial paper rated A-1 (or better) by S&P or
P-1 (or better) by Moody’s, and maturing within nine months of the date of
acquisition; and (e) shares of any money market fund that has substantially all
of its assets invested continuously in the types of investments referred to
above, has net assets of at least $500,000,000 and has the highest rating
obtainable from either Moody’s or S&P.
     Cash Management Services — any services provided from time to time by Bank
of America or any of its Affiliates to any Borrower or Subsidiary in connection
with operating, collections, payroll, trust, or other depository or disbursement
accounts, including automatic clearinghouse, controlled disbursement,
depository, electronic funds transfer, information reporting, lockbox, stop
payment, overdraft and/or wire transfer services.
     CERCLA — the Comprehensive Environmental Response Compensation and
Liability Act (42 U.S.C. § 9601 et seq.).

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     Certificate of Designation — certain Certificate of Designation of
Series AA Preferred Stock of EMAK filed with the Secretary of State of the State
of Delaware on December 31, 2004 (and amended on September 2, 2005) pursuant to
Section 151 of the General Corporation Law of the State of Delaware.
     Change of Control — an event or series of events by which:
     (a) EMAK ceases to own and control, beneficially and of record, directly or
indirectly, all Equity Interests in all Borrowers (other than EMAK), except for
the consolidation or merger of one Borrower with another Borrower to the extent
permitted under Section 10.2.9;
     (b) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan
and other than Crown so long as any such “person” or “group” does not become the
“beneficial owner”, directly or indirectly, of 40% or more of the Equity
Interests of EMAK entitled to vote for members of the board of directors of EMAK
on a fully diluted basis) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
person or group shall be deemed to have “beneficial ownership” of all securities
that such person or group has the right to acquire (such right, an “option
right”), whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of 20% or more of the Equity Interests of EMAK
entitled to vote for members of the board of directors or equivalent governing
body of EMAK on a fully-diluted basis (and taking into account all such
securities that such person or group has the right to acquire pursuant to any
option right);
     (c) during any period of 12 consecutive months, a majority of the members
of the board of directors or other equivalent governing body of EMAK cease to be
composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors);
     (d) any Person or two or more Persons acting in concert (other than Crown)
shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation thereof, will result in its or
their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of EMAK, or control over
the Equity Interests of EMAK entitled to vote for members of the board of
directors or equivalent governing body of EMAK on a fully-diluted basis (and
taking into account all such securities that such Person or group has the right
to acquire pursuant to any option right) representing 20% or more of the
combined voting power of such securities;
     (e) all or substantially all of a Borrower’s assets are sold or
transferred, other than sale or transfer to another Borrower; or

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     (f) a “Change of Control” (whether as defined in the Certificate of
Designation as in effect on the date hereof or as defined in the Certificate of
Designation as amended after the date hereof).
     Chattel Paper — as defined in the UCC.
     Claims — all liabilities, obligations, losses, damages, penalties,
judgments, proceedings, costs and expenses of any kind (including remedial
response costs, reasonable attorneys’ fees and Extraordinary Expenses) at any
time (including after Full Payment of the Obligations, resignation or
replacement of Agent, or replacement of any Lender) incurred by or asserted
against any Indemnitee in any way relating to (a) any Loan Documents or
transactions relating thereto, (b) any action taken or omitted to be taken by
any Indemnitee in connection with any Loan Documents, (c) the existence or
perfection of any Liens, or realization upon any Collateral, (d) exercise of any
rights or remedies under any Loan Documents or Applicable Law, or (e) failure by
any Obligor to perform or observe any terms of any Loan Document, in each case
including all costs and expenses relating to any investigation, litigation,
arbitration or other proceeding (including an Insolvency Proceeding or appellate
proceedings), whether or not the applicable Indemnitee is a party thereto.
     Closing Date — as defined in Section 6.1.
     Collateral — all Property described in Section 7.1, all Property described
in any Security Documents as security for any Obligations, and all other
Property that now or hereafter secures (or is intended to secure) any
Obligations.
     Collateral Access Agreement — any landlord waiver, mortgagee waiver, bailee
letter or any similar acknowledgement agreement of any landlord or mortgagee in
respect of any Real Estate or other location where any Inventory is located or
any warehouseman or processor in possession of Inventory (other than immaterial
Inventory) (which locations, as of the date hereof, are set forth on
Schedule 7.3), substantially in the form of Exhibit D annexed hereto, with such
changes thereto as may be agreed to by Agent in the reasonable exercise of its
discretion.
     Commercial Tort Claim — as defined in the UCC.
     Commitment Fee Rate — as defined in Section 3.2.1.
     Commitment Termination Date — the earliest to occur of (a) the Revolver
Termination Date; (b) the date on which Borrowers terminate the Revolver
Commitments pursuant to Section 2.1.4; or (c) the date on which the Revolver
Commitments are terminated pursuant to Section 11.2.
     Commitment Utilization Percentage — for any day, the ratio of (a) the sum
of (i) the principal amount of the Revolver Loans outstanding on such day plus
(ii) the stated amount of Letters of Credit outstanding on such day to (b) the
aggregate amount of Revolver Commitments for such day, expressed as a
percentage.
     Common Stock — the common stock, $.001 par value, of EMAK.
     Common Warrants — those certain warrants dated March 19, 2004 issued to
Crown pursuant to which Crown has the right to purchase 357,000 shares of Common
Stock at $16.00 per share expiring March 29, 2010, 79,333 shares of Common Stock
at $18.00 per share expiring March 29, 2010, 393,000 shares of Common Stock at
$16.00 per share expiring June 20, 2010 and 87,333 shares of Common Stock at
$18.00 per share expiring June 20, 2010.
     Compliance Certificate — a certificate, in form and substance satisfactory
to Agent, by which Borrowers certify compliance with Sections 10.2.3 and 10.3.

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     Conforming Letter of Credit — (a) an irrevocable letter of credit
satisfactory to Agent (as to form, substance and issuer) that is assigned to and
directory drawable by Agent (unless such assignment and direct drawability is
waived by Agent), or (b) an irrevocable letter of credit satisfactory to Agent
(as to form, substance and issuer) with respect to which Agent has a perfected
first priority Lien in the letter of credit rights thereunder.
     Contingent Obligation — any obligation of a Person arising from a guaranty,
indemnity or other assurance of payment or performance of any Debt, lease,
dividend or other obligation (“primary obligations”) of another obligor
(“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of such Person under any (a) guaranty, endorsement, co-making or sale
with recourse of an obligation of a primary obligor; (b) obligation to make
take-or-pay or similar payments regardless of nonperformance by any other party
to an agreement; and (c) arrangement (i) to purchase any primary obligation or
security therefor, (ii) to supply funds for the purchase or payment of any
primary obligation, (iii) to maintain or assure working capital, equity capital,
net worth or solvency of the primary obligor, (iv) to purchase Property or
services for the purpose of assuring the ability of the primary obligor to
perform a primary obligation, or (v) otherwise to assure or hold harmless the
holder of any primary obligation against loss in respect thereof. The amount of
any Contingent Obligation shall be deemed to be the stated or determinable
amount of the primary obligation (or, if less, the maximum amount for which such
Person may be liable under the instrument evidencing the Contingent Obligation)
or, if not stated or determinable, the maximum reasonably anticipated liability
with respect thereto.
     Contractual Obligation — as to any Person, any provision of any security
issued by such Person or of any agreement, instrument, mortgage or undertaking
to which such Person is a party or by which it or any of its property is bound
or to which it or any of its properties is subject.
     Corinthian — Corinthian Marketing, Inc., a Delaware corporation.
     Crown — Crown EMAK Partners, LLC, a Delaware limited liability company
formerly known as Crown Acquisition Partners, LLC.
     CWA — the Clean Water Act (33 U.S.C. §§ 1251 et seq.).
     Debt — as applied to any Person, without duplication, (a) all items that
would be included as liabilities on a balance sheet in accordance with GAAP,
including Capital Leases, but excluding trade payables incurred and being paid
in the Ordinary Course of Business; (b) all Contingent Obligations; (c) all
reimbursement obligations in connection with letters of credit issued for the
account of such Person; and (d) in the case of a Borrower, the Obligations. The
Debt of a Person shall include any recourse Debt of any partnership in which
such Person is a general partner or joint venturer.
     Default — an event or condition that, with the lapse of time or giving of
notice, would constitute an Event of Default.
     Default Rate — for any Obligation (including, to the extent permitted by
law, interest not paid when due), 2% plus the interest rate otherwise applicable
thereto.
     Deposit Account — as defined in the UCC.
     Deposit Account Control Agreements — the Deposit Account control agreements
to be executed by each institution maintaining a Deposit Account for a Borrower,
in favor of Agent, for the benefit of Secured Parties, as security for the
Obligations.
     Dilution Percent — the percent, determined on a trailing twelve month basis
as of the end of Borrowers’ most recent month, equal to (a) credit memos issued
for bad debt write-downs or write-offs,

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discounts, returns, promotions, credits, credit memos and other dilutive items
with respect to Accounts, divided by (b) gross sales.
     Disney — The Walt Disney Company and its Affiliates.
     Document — as defined in the UCC.
     Dollars — lawful money of the United States.
     Domestic Pledge Agreement — the pledge agreement substantially in the form
of Exhibit E, executed and delivered by Borrowers to Agent on the Closing Date,
as amended, supplemented or otherwise modified from time to time.
     Domestic Subsidiary — a Subsidiary that is not a Foreign Subsidiary.
     Dominion Account — a special account established by Borrowers at Bank of
America or another bank acceptable to Agent, over which Agent has exclusive
control for withdrawal purposes, which account shall initially be a Bank of
America account, account number 14591-38332 (which account may only be changed
with the prior written consent of Agent).
     Draft Financial Statements — the draft consolidated financial statements of
EMAK for Fiscal Year 2005 attached hereto as Schedule 9.1.8.
     EBITDA — for any period, determined on a consolidated basis for Borrowers
and Subsidiaries (other than EMAK Europe Holdings, Limited and its direct and
indirect Subsidiaries), the sum, without duplication, of the amounts for such
period of (i) net income, (ii) interest expense, (iii) provision for income
taxes, (iv) depreciation and amortization expense, (v) other non-cash items
consisting of stock-based compensation for which no future cash disbursements
will be made, and (vi) to the extent not included in any of the foregoing,
(a) to the extent such period includes any of the months in Fiscal Year 2005,
the non-recurring restructuring charges set forth in Schedule 1.1C hereto for
such months, and (b) to the extent such period includes any of the months in
Fiscal Year 2006, the lesser of (I) the non-recurring restructuring charges set
forth in Schedule 1.1C hereto for such months and (II) the actual amount of such
non-recurring restructuring charges that fall within such items for such months,
but only, in the case of clauses (ii)-(vi), to the extent deducted in the
calculation of net income, less (i) gains arising from the sale of capital
assets or from the write-up of assets, (ii) extraordinary gains, and
(iii) non-cash items added in the calculation of net income.
     Eligible Account — an Account owing to a Borrower that arises in the
Ordinary Course of Business from the sale of goods or rendition of services, is
payable in Dollars and is deemed by Agent, in its discretion, to be an Eligible
Account. Without limiting the foregoing, no Account shall be an Eligible Account
if (a) it is unpaid for more than 60 days after the original due date, or more
than 90 days (or, (i) solely if the Account Debtor is a member of the BK Group
(as defined below), 60 days and (ii) solely if the Account Debtor is any of
Target, Sunoco, Disney, P&G, Kellogg or MBC, 120 days) after the original
invoice date; (b) 50% or more of the Accounts owing by the Account Debtor and
its Affiliates are not Eligible Accounts under the foregoing clause; (c) when
aggregated with other Accounts owing by such Account Debtor and its Affiliates
or any designated group of Account Debtors and their Affiliates, as the case may
be, it exceeds 10% of the aggregate Eligible Accounts (or such higher percentage
(the “Applicable Concentration Percentage”) as Agent may designate for such
Account Debtor and its Affiliates or for any group of Account Debtors and their
Affiliates from time to time), provided that (i) the Applicable Concentration
Percentage for all of Supply Chain, RSI and BK and their Affiliates,
collectively as a group (such group being referred to herein as the “BK Group”),
shall be 50%, provided further that the aggregate Value of such Accounts of
Account Debtors in the BK Group that remain unpaid between 31 and 60 days after
the original invoice date shall not exceed 15% of all Eligible Accounts of
Account Debtors in the BK Group included hereunder pursuant to this clause
(c)(i) except to

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the extent such Accounts originally arose on extended terms with the prior
written approval of Agent in its sole discretion, (ii) the Applicable
Concentration Percentage for each of Disney, P&G, Kellogg and MBC is 25%, and
(iii) the Applicable Concentration Percentage for MidAmerica Overseas is 15%;
(d) it does not conform with a covenant or representation herein; (e) it is
owing by a creditor or supplier, or is otherwise subject to a potential offset
(including without limitation a potential offset which will permit such Account
Debtor to make offset payments to third parties), counterclaim, dispute,
deduction, discount, recoupment, reserve, defense, chargeback, credit or
allowance (but ineligibility shall be limited to the amount thereof); (f) an
Insolvency Proceeding has been commenced by or against the Account Debtor; or
the Account Debtor has failed, has suspended or ceased doing business, is
liquidating, dissolving or winding up its affairs, or is not Solvent; (g) the
Account Debtor is organized or has its principal offices or assets outside the
United States or Canada except to the extent the Account is supported by a
Conforming Letter of Credit or the Account Debtor is an Affiliate of a company
headquartered in the United States and specified on Schedule 1.1D; (h) it is
owing by a Government Authority, unless the Account Debtor is the United States
or any department, agency or instrumentality thereof and the Account has been
assigned to Agent in compliance with the Assignment of Claims Act; (i) it is not
subject to a duly perfected, first priority Lien in favor of Agent, or is
subject to any other Lien; (j) the goods giving rise to it have not been
delivered to and accepted by the Account Debtor, the services giving rise to it
have not been accepted by the Account Debtor, or it otherwise does not represent
a final sale; (k) it is evidenced by Chattel Paper or an Instrument of any kind,
or has been reduced to judgment; (l) its payment has been extended, the Account
Debtor has made a partial payment, or it arises from a sale on a
cash-on-delivery basis; (m) it arises from a sale to an Affiliate, or from a
sale on a bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment, or other repurchase or return basis; (n) it represents a progress
billing or retainage (other than that portion of such Accounts under an Agency
of Record Agreement with respect to which a Borrower has recognized revenue
thereunder pursuant to GAAP and has fully rendered services related to the
applicable billing period; provided that such portion shall not be subject to
any dispute or any claims of offset); (o) it includes a billing for interest,
fees or late charges, but ineligibility shall be limited to the extent thereof;
(p) it arises from a retail sale to a Person who is purchasing for personal,
family or household purposes; (q) if the applicable Account Debtor is not a
member of the BK Group and if the contract or agreement under or with respect to
which any Account of such Account Debtor or any of its Affiliates arises
contains a liquidated damages provision or any express offset provision and such
Account Debtor or any of its Affiliates has not delivered a fully executed
Non-Offset Letter to Agent that would apply to such Account; or (r) if the
applicable Account Debtor is not a member of the BK Group and if the contract or
agreement under or with respect to which any Account of such Account Debtor or
any of its Affiliates arises does not contain any liquidated damages provision
or any express offset provision and such Account Debtor or any of its Affiliates
has not delivered a fully executed Non-Offset Letter to Agent that would apply
to such Account (other than such Accounts described in this clause (r) (that
would otherwise be Eligible Accounts) to the extent that inclusion of such
Accounts pursuant to this parenthetical would not result in an aggregate
increase in Eligible Accounts in an amount greater than (i) during the period
from the Closing Date until September 30, 2006, the lesser of (1) $3,500,000 and
(2) 30% of the aggregate amount of Eligible Accounts that arise under a contract
(and not, e.g., under a purchase order) owing from all Account Debtors that are
not a member of the BK Group, (ii) during the period from October 1, 2006 until
March 31, 2007, the lesser of (1) $3,000,000 and (2) 25% of the aggregate amount
of Eligible Accounts that arise under a contract (and not, e.g., under a
purchase order) owing from all Account Debtors that are not a member of the BK
Group, (iii) during the period from April 1, 2007 until September 30, 2007, the
lesser of (1) $2,000,000 and (2) 20% of the aggregate amount of Eligible
Accounts that arise under a contract (and not, e.g., under a purchase order)
owing from all Account Debtors that are not a member of the BK Group, and
(iv) thereafter, the lesser of (1) $1,000,000 and (2) 15% of the aggregate
amount of Eligible Accounts that arise under a contract (and not, e.g., under a
purchase order) owing from all Account Debtors that are not a member of the BK
Group) at any time. In calculating delinquent portions of Accounts, credit
balances more than 90 days old will be excluded.

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     Eligible Assignee — a Person that is (a) a Lender, U.S.-based Affiliate of
a Lender or Approved Fund; (b) any other financial institution approved by Agent
and Borrower Agent (which approval by Borrower Agent shall not be unreasonably
withheld or delayed, and shall be deemed given if no objection is made within
two Business Days after notice of the proposed assignment), that is organized
under the laws of the United States or any state or district thereof, has total
assets in excess of $5 billion, extends asset-based lending facilities in its
ordinary course of business and whose becoming an assignee would not constitute
a prohibited transaction under Section 4975 of ERISA or any other Applicable
Law; and (c) during any Event of Default, any Person acceptable to Agent in its
discretion.
     Eligible Inventory — Inventory owned by a Borrower that Agent, in its
discretion, deems to be Eligible Inventory. Without limiting the foregoing, no
Inventory shall be Eligible Inventory unless it (a) is finished goods, and not
work-in-process, packaging or shipping materials, labels, samples, display
items, bags, replacement parts or manufacturing supplies; (b) is not held on
consignment, nor subject to any deposit or downpayment; (c) is in new and
saleable condition and is not damaged, defective, shopworn or otherwise unfit
for sale; (d) is not slow-moving, obsolete or unmerchantable, and does not
constitute returned or repossessed goods; (e) meets all standards imposed by any
Governmental Authority, and does not constitute hazardous materials under any
Environmental Law; (f) conforms with the covenants and representations herein;
(g) is subject to Agent’s duly perfected, first priority Lien, and no other
Lien; (h) is within the continental United States or Canada and is not in
transit except between locations of Borrowers, other than Inventory in transit
to the United States from vendors or suppliers (or from any Borrower or any of
their respective Subsidiaries) with respect to which Agent’s first priority Lien
is duly perfected and otherwise protected to Agent’s satisfaction in its sole
discretion (which shall include, without limitation, a fully executed Imported
Goods Agreement with respect to such Inventory in transit, satisfactory cargo
insurance, a negotiable bill of lading naming Agent as the consignee thereof,
and any other requirements required by Agent in its sole discretion); (i) is not
subject to any warehouse receipt or negotiable Document and is not consigned to
any Person; (j) is owned solely by the applicable Borrower or such Borrower has
good, valid and marketable title thereto; (k) it is subject to a purchase order
or other firm delivery contract (which may be an oral agreement that is followed
by a written contract in the ordinary course of business) under a Program Sales
Contract or other similar contract with Persons satisfactory to Agent (which
approval shall not be unreasonably withheld); and (l) is not located on leased
premises or in the possession of a warehouseman, processor, repairman, mechanic,
shipper, freight forwarder or other Person, unless the lessor or such Person has
delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been
established.
     EMAK — EMAK Worldwide, Inc., a Delaware corporation.
     EMI — Equity Marketing, Inc., a Delaware corporation.
     Enforcement Action — any action to enforce any Obligations or Loan
Documents or to realize upon any Collateral (whether by judicial action,
self-help, notification of Account Debtors, exercise of setoff or recoupment, or
otherwise).
     Environmental Agreement — each agreement of Borrowers with respect to any
Real Estate subject to a Mortgage, pursuant to which Borrowers agree to
indemnify and hold harmless Agent and Lenders from liability under any
Environmental Laws.
     Environmental Laws — all Applicable Laws (including all programs, permits
and guidance promulgated by regulatory agencies), relating to public health (but
excluding occupational safety and health, to the extent regulated by OSHA) or
the protection or pollution of the environment, including CERCLA, RCRA and CWA.
     Environmental Notice — a notice (whether written or oral) from any
Governmental Authority or other Person of any possible noncompliance with,
investigation of a possible violation of, litigation

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relating to, or potential fine or liability under any Environmental Law, or with
respect to any Environmental Release, environmental pollution or hazardous
materials, including any complaint, summons, citation, order, claim, demand or
request for correction, remediation or otherwise.
     Environmental Release — a release as defined in CERCLA or under any other
Environmental Law.
     Equipment — as defined in the UCC, including all machinery, apparatus,
equipment, fittings, furniture, fixtures, motor vehicles and other tangible
personal Property (other than Inventory), and all parts, accessories and special
tools therefor, and accessions thereto.
     Equity Interest — the interest of any (a) shareholder in a corporation,
(b) partner in a partnership (whether general, limited, limited liability or
joint venture), (c) member in a limited liability company, or (d) other Person
having any other form of equity security or ownership interest.
     Equity Marketing — Equity Marketing Hong Kong, Ltd., a Delaware
corporation.
     ERISA — the Employee Retirement Income Security Act of 1974.
     Event of Default — as defined in Section 11.1.
     Excluded Tax — Tax on the overall net income or gross receipts of a Lender
imposed by the jurisdiction in which such Lender’s principal executive office is
located.
     Existing Credit Agreement — the Credit Agreement dated as of April 21, 2001
among EMAK, as borrower, Bank of America, as administrative agent, swingline
lender and letter of credit issuing lender and the other financial institutions
party thereto, as amended, supplemented or otherwise modified from time to time
on or prior the date hereof.
     Existing Letters of Credit — as defined in Section 2.2.1(e).
     Extraordinary Expenses — all costs, expenses or advances that Agent may
incur during a Default or Event of Default, or during the pendency of an
Insolvency Proceeding of an Obligor, including those relating to (a) any audit,
inspection, repossession, storage, repair, appraisal, insurance, manufacture,
preparation or advertising for sale, sale, collection, or other preservation of
or realization upon any Collateral; (b) any action, arbitration or other
proceeding (whether instituted by or against Agent, any Lender, any Obligor, any
representative of creditors of an Obligor or any other Person) in any way
relating to any Collateral (including the validity, perfection, priority or
avoidability of Agent’s Liens with respect to any Collateral), Loan Documents or
Obligations, including any lender liability or other Claims; (c) the exercise,
protection or enforcement of any rights or remedies of Agent in, or the
monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of any
taxes, charges or Liens with respect to any Collateral; (e) any Enforcement
Action; (f) negotiation and documentation of any modification, waiver, workout,
restructuring or forbearance with respect to any Loan Documents or Obligations;
or (g) Protective Advances. Such costs, expenses and advances include transfer
fees, taxes, storage fees, insurance costs, permit fees, utility reservation and
standby fees, legal fees, appraisal fees, brokers’ fees and commissions,
auctioneers’ fees and commissions, accountants’ fees, environmental study fees,
wages and salaries paid to employees of any Obligor or independent contractors
in liquidating any Collateral, and travel expenses.
     Fiscal Quarter — a fiscal quarter of any Fiscal Year, which ends on
March 31, June 30, September 30 and December 31 of each calendar year.
     Fiscal Year — the fiscal year of Borrowers and Subsidiaries for accounting
and tax purposes, ending on December 31 of each year.

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     Fixed Charge Coverage Ratio — the ratio, determined on a consolidated basis
for Borrowers and Subsidiaries (other than EMAK Europe Holdings, Limited and its
direct and indirect Subsidiaries) for the most recent 12-month period, of
(a) EBITDA, to (b) Fixed Charges.
     Fixed Charges — for any period, the sum of cash interest expense paid or
payable, Capital Expenditures, principal payments made on Borrowed Money (other
than repayments of principal under this Agreement), net cash taxes paid or
payable during such period (but in any event not less than zero) and Restricted
Payments made (excluding Restricted Payments made to the extent permitted under
Section 10.2.4(b) and (c), it being understood that such exclusion shall not
exclude from Fixed Charges interest expense, Capital Expenditures, principal
payments or taxes paid with such Restricted Payments).
     FLSA — the Fair Labor Standards Act of 1938.
     Foreign Lender — any Lender that is organized under the laws of a
jurisdiction other than the laws of the United States, or any state or district
thereof.
     Foreign Plan — any employee benefit plan or arrangement maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States, or any employee benefit plan or arrangement mandated by a
government other than the United States for employees of any Obligor or
Subsidiary.
     Foreign Security Agreement — each security agreement or similar instrument
governed by the laws of a country other than the United States, executed (i) on
the Closing Date by EMAK, Equity Marketing and certain UK Subsidiaries, and
(ii) from time to time after the Closing Date in accordance with Section 10.1.9,
in each case in form and substance reasonably satisfactory to Agent, as such
Foreign Security Agreement may be amended, supplemented or otherwise modified
from time to time.
     Foreign Subsidiary — a Subsidiary that is a “controlled foreign
corporation” under Section 957 of the Internal Revenue Code, such that a
guaranty by such Subsidiary of the Obligations or a Lien on the assets of such
Subsidiary to secure the Obligations would result in material tax liability to
Borrowers.
     Full Payment — with respect to any Obligations, (a) the full and
indefeasible cash payment thereof, including any interest, fees and other
charges accruing during an Insolvency Proceeding (whether or not allowed in the
proceeding); (b) if such Obligations are LC Obligations or inchoate or
contingent in nature, Cash Collateralization thereof (or delivery of a standby
letter of credit acceptable to Agent in its discretion, in the amount of
required Cash Collateral); and (c) a release of any Claims of Obligors against
Agent, Lenders and Issuing Bank arising on or before the payment date. No Loans
shall be deemed to have been paid in full until all Revolver Commitments related
to such Loans have expired or been terminated.
     GAAP — generally accepted accounting principles in the United States in
effect from time to time.
     General Intangibles — as defined in the UCC, including causes in action,
causes of action, company or other business records, inventions, blueprints,
designs, patents, patent applications, trademarks, trademark applications, trade
names, trade secrets, service marks, goodwill, brand names, copyrights,
registrations, licenses, franchises, customer lists, permits, tax refund claims,
computer programs, operational manuals, internet addresses and domain names,
insurance refunds and premium rebates, all rights to indemnification, and all
other intangible Property of any kind.
     Goods — as defined in the UCC.
     Governmental Approvals — all authorizations, consents, approvals, licenses
and exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

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     Governmental Authority — any federal, state, municipal, foreign or other
governmental department, agency, commission, board, bureau, court, tribunal,
instrumentality, political subdivision, or other entity or officer exercising
executive, legislative, judicial, regulatory or administrative functions for or
pertaining to any government or court, in each case whether associated with the
United States, a state, district or territory thereof, or a foreign entity or
government.
     Guarantor Payment — as defined in Section 5.10.6.
     Guarantors — collectively, each Person who guarantees payment or
performance of any Obligations.
     Guaranty — each guaranty agreement executed by a Guarantor in favor of
Agent.
     Hedging Agreement — an agreement relating to any swap, cap, floor, collar,
option, forward, cross right or obligation, or combination thereof or similar
transaction, with respect to interest rate, foreign exchange, currency,
commodity, credit or equity risk.
     HK Subsidiaries — collectively, EMAK Asia Holdings Company Limited, a Hong
Kong company, EMAK China Limited, a Hong Kong company, EMAK Hong Kong Limited, a
Hong Kong company, and any other Foreign Subsidiary organized under the laws of
Hong Kong.
     Imported Goods Agreement — an agreement among any Borrower, its customs
broker and Agent, substantially in the form of Exhibit H annexed hereto, with
such changes hereto as may be agreed to by Agent in its discretion.
     Indemnitees — Agent Indemnitees, Lender Indemnitees, Issuing Bank
Indemnitees and Bank of America Indemnitees.
     Insolvency Proceeding — any case or proceeding commenced by or against a
Person under any state, federal or foreign law for, or any agreement of such
Person to, (a) the entry of an order for relief under the Bankruptcy Code, or
any other insolvency, debtor relief or debt adjustment law; (b) the appointment
of a receiver, trustee, liquidator, administrator, conservator or other
custodian for such Person or any part of its Property; or (c) an assignment or
trust mortgage for the benefit of creditors.
     Instrument — as defined in the UCC.
     Insurance Assignment — each collateral assignment of insurance pursuant to
which an Obligor assigns to Agent, for the benefit of Secured Parties, such
Obligor’s rights under key-man life, business interruption or other insurance
policies as Agent deems appropriate, as security for the Obligations.
     Intellectual Property — all intellectual and similar Property of a Person,
including inventions, designs, patents, patent applications, copyrights,
trademarks, service marks, trade names, trade secrets, confidential or
proprietary information, customer lists, know-how, software and databases; all
embodiments or fixations thereof and all related documentation, registrations
and franchises; all books and records describing or used in connection with the
foregoing; and all licenses or other rights to use any of the foregoing.
     Intellectual Property Claim — any claim or assertion (whether in writing,
by suit or otherwise) that a Borrower’s or Subsidiary’s ownership, use,
marketing, sale or distribution of any Inventory, Equipment, Intellectual
Property or other Property violates another Person’s Intellectual Property.
     Interest Period — as defined in Section 3.1.3.

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     Inventory — as defined in the UCC, including all goods intended for sale,
lease, display or demonstration; all work in process; and all raw materials, and
other materials and supplies of any kind that are or could be used in connection
with the manufacture, printing, packing, shipping, advertising, sale, lease or
furnishing of such goods, or otherwise used or consumed in a Borrower’s business
(but excluding Equipment).
     Inventory Borrowing Period — up to three 30-day periods during Fiscal Year
2006 as determined by Borrower Agent in its discretion by written notice to
Agent not less than ten Business Days prior to the commencement of such period;
provided however that no Inventory Borrowing Period shall commence until Agent
shall have completed a field examination with respect to the Inventory of
Borrowers in form and substance satisfactory to Agent.
     Inventory Borrowing Portion — as defined in the definition of “Applicable
Margin.”
     Inventory Formula Amount — the lesser of (a) $1,500,000; or (b) 15% of the
Value of Eligible Inventory.
     Inventory Reserve — reserves established by Agent to reflect factors that
may negatively impact the Value of Inventory, including change in salability,
obsolescence, seasonality, theft, shrinkage, imbalance, change in composition or
mix, markdowns and vendor chargebacks.
     Investment — any acquisition of all or substantially all assets of a
Person; any acquisition of record or beneficial ownership of any Equity
Interests of a Person or any significant portion of the assets of a Person or of
any business or division of a Person; or any advance or capital contribution to
or other investment in a Person.
     Investment Property — as defined in the UCC.
     Issuing Bank — Bank of America or an Affiliate of Bank of America.
     Issuing Bank Indemnitees — Issuing Bank and its officers, directors,
employees, Affiliates, agents and attorneys.
     Johnson — Johnson Grossfield, Inc., a Delaware corporation.
     Kellogg — Kellogg Company and its Affiliates.
     LC Application — an application by Borrower Agent to Issuing Bank for
issuance of a Letter of Credit, in form and substance satisfactory to Issuing
Bank.
     LC Conditions — the following conditions necessary for issuance of a Letter
of Credit: (a) each of the conditions set forth in Section 6; (b) after giving
effect to such issuance, total LC Obligations do not exceed the Letter of Credit
Subline, no Overadvance exists and, if no Revolver Loans are outstanding, the LC
Obligations do not exceed the Borrowing Base (without giving effect to the LC
Reserve for purposes of this calculation); (c) the expiration date of such
Letter of Credit is (i) no more than 365 days from issuance, in the case of
standby Letters of Credit, (ii) no more than 120 days from issuance, in the case
of documentary Letters of Credit, and (iii) at least 20 Business Days prior to
the Revolver Termination Date; (d) the Letter of Credit and payments thereunder
are denominated in Dollars; and (e) the form of the proposed Letter of Credit is
satisfactory to Agent and Issuing Bank in their discretion.
     LC Documents — all documents, instruments and agreements (including LC
Requests and LC Applications) delivered by Borrowers or any other Person to
Issuing Bank or Agent in connection with issuance, amendment or renewal of, or
payment under, any Letter of Credit.

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     LC Obligations — the sum (without duplication) of (a) all amounts owing by
Borrowers for any drawings under Letters of Credit; (b) the aggregate undrawn
amount of all outstanding Letters of Credit; and (c) all fees and other amounts
owing with respect to Letters of Credit.
     LC Request — a request for issuance of a Letter of Credit, to be provided
by Borrower Agent to Issuing Bank, in form satisfactory to Agent and Issuing
Bank.
     LC Reserve — the aggregate of all LC Obligations, other than (a) those that
have been Cash Collateralized, and (b) if no Default or Event of Default exists,
those constituting charges owing to the Issuing Bank.
     Lender Indemnitees — Lenders and their officers, directors, employees,
Affiliates, agents and attorneys.
     Lenders — as defined in the preamble to this Agreement, including Agent in
its capacity as a provider of Swingline Loans and any other Person who hereafter
becomes a “Lender” pursuant to an Assignment and Acceptance.
     Letter of Credit — any standby or documentary letter of credit issued by
Issuing Bank for the account of a Borrower, or any indemnity, guarantee,
exposure transmittal memorandum or similar form of credit support issued by
Agent or Issuing Bank for the benefit of a Borrower and the Existing Letters of
Credit.
     Letter-of-Credit Right — as defined in the UCC.
     Letter of Credit Subline — $10,000,000.
     LIBOR Loan — each set of LIBOR Revolver Loans having a common length and
commencement of Interest Period.
     LIBOR Revolver Loan — a Revolver Loan that bears interest based on Adjusted
LIBOR.
     License — any license or agreement under which an Obligor is authorized to
use Intellectual Property in connection with any manufacture, marketing,
distribution or disposition of Collateral, any use of Property or any other
conduct of its business.
     License Agreements — each of the license agreements listed on Schedule 1.1B
annexed hereto, as such agreements are in effect on the Closing Date and as such
agreements may be amended from time to time thereafter to the extent permitted
under Section 10.2.21 of this Agreement.
     Licensor — any Person from whom an Obligor obtains the right to use any
Intellectual Property.
     Lien — any Person’s interest in Property securing an obligation owed to, or
a claim by, such Person, whether such interest is based on common law, statute
or contract, including liens, security interests, pledges, hypothecations,
statutory trusts, reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Property.
     Lien Waiver — an agreement, in form and substance satisfactory to Agent, by
which (a) for any material Collateral located on leased premises, the lessor
waives or subordinates any Lien it may have on the Collateral, and agrees to
permit Agent to enter upon the premises and remove the Collateral or to use the
premises to store or dispose of the Collateral (including, without limitation
Collateral Access Agreements); (b) for any Collateral held by a warehouseman,
processor, shipper or freight forwarder, such Person waives or subordinates any
Lien it may have on the Collateral, agrees to hold any Documents

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in its possession relating to the Collateral as agent for Agent, and agrees to
deliver the Collateral to Agent upon request; (c) for any Collateral held by a
repairman, mechanic or bailee, such Person acknowledges Agent’s Lien, waives or
subordinates any Lien it may have on the Collateral, and agrees to deliver the
Collateral to Agent upon request; and (d) for any Collateral subject to a
Licensor’s Intellectual Property rights, the Licensor grants to Agent the right,
vis-à-vis such Licensor, to enforce Agent’s Liens with respect to the
Collateral, including the right to dispose of it with the benefit of the
Intellectual Property, whether or not a default exists under any applicable
License.
     Loan — any advance made by any Lender to Borrowers as provided in
Section 2.1 (collectively, the “Loans”), and may be a Base Rate Revolver Loan or
an LIBOR Loan, and includes any Revolver Loan.
     Loan Account — the loan account established by each Lender on its books
pursuant to Section 5.7.1.
     Loan Documents — this Agreement, Other Agreements and Security Documents.
     Loan Year — each calendar year commencing on the Closing Date and on each
anniversary of the Closing Date.
     Logistix — Logistix, Inc., a Delaware corporation.
     Margin Stock — as defined in Regulation U of the Board of Governors.
     Material Adverse Effect — the effect of any event or circumstance that,
taken alone or in conjunction with other events or circumstances, (a) has or
could be reasonably expected to have a material adverse effect on the business,
operations, Properties, prospects or condition (financial or otherwise) of EMI
or Borrowers taken as a whole, on the value of any material Collateral, on the
enforceability of any Loan Documents, or on the validity or priority of Agent’s
Liens on any Collateral; (b) impairs the ability of any Obligor to perform any
obligations under the Loan Documents, including repayment of any Obligations; or
(c) otherwise impairs the ability of Agent or any Lender to enforce or collect
any Obligations or to realize upon any Collateral.
     Material Contract — any agreement or arrangement to which a Borrower or
Subsidiary is party (other than the Loan Documents) (a) that is a Related
Document, (b) for which breach, termination, nonperformance or failure to renew
could reasonably be expected to have a Material Adverse Effect, or (c) that
relates to Subordinated Debt, or Debt in an aggregate amount of $1,000,000 or
more.
     MBC — Miller Brewing Company and its Affiliates.
     Moody’s — Moody’s Investors Service, Inc., and its successors.
     Mortgage — each mortgage, deed of trust or deed to secure debt pursuant to
which a Borrower grants to Agent, for the benefit of Secured Parties, Liens upon
the Real Estate owned by such Borrower, as security for the Obligations.
     Multiemployer Plan — any employee benefit plan or arrangement described in
Section 4001(a)(3) of ERISA that is maintained or contributed to by any Obligor
or Subsidiary.
     Net Proceeds — with respect to an Asset Disposition, proceeds (including,
when received, any deferred or escrowed payments) received by a Borrower or
Subsidiary in cash from such disposition, net of (a) reasonable and customary
costs and expenses actually incurred in connection therewith, including legal
fees and sales commissions; (b) amounts applied to repayment of Debt secured by
a Permitted Lien

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senior to Agent’s Liens on Collateral sold; (c) transfer or similar taxes; and
(d) reserves for indemnities, until such reserves are no longer needed.
     Negative Pledge — a Contractual Obligation that restricts Liens on
Property.
     Non-Offset Letter — any letter or any similar acknowledgement agreement of
any Account Debtor of any Borrower, substantially in the form of Exhibit G
annexed hereto, with such changes thereto as may be agreed to by Agent in its
discretion.
     Notice of Borrowing — a Notice of Borrowing to be provided by Borrower
Agent to request the funding of a Borrowing of Revolver Loans, in form
satisfactory to Agent.
     Notice of Conversion/Continuation — a Notice of Conversion/Continuation to
be provided by Borrower Agent to request a conversion or continuation of any
Loans as LIBOR Loans, in form satisfactory to Agent.
     Obligations — all (a) principal of and premium, if any, on the Loans,
(b) LC Obligations and other obligations of Obligors with respect to Letters of
Credit, (c) interest, expenses, fees and other sums payable by Obligors under
Loan Documents, (d) obligations of Obligors under any indemnity for Claims,
(e) Extraordinary Expenses, (f) Bank Product Debt, and (g) other Debts,
obligations and liabilities of any kind owing by Obligors pursuant to the Loan
Documents, whether now existing or hereafter arising, whether evidenced by a
note or other writing, whether allowed in any Insolvency Proceeding, whether
arising from an extension of credit, issuance of a letter of credit, acceptance,
loan, guaranty, indemnification or otherwise, and whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, or joint or
several.
     Obligor — each Borrower, Guarantor, or other Person that is liable for
payment of any Obligations or that has granted a Lien in favor of Agent on its
assets to secure any Obligations.
     Ordinary Course of Business — the ordinary course of business of any
Borrower or Subsidiary, consistent with past practices and undertaken in good
faith.
     Organic Documents — with respect to any Person, its charter, certificate or
articles of incorporation, bylaws, articles of organization, limited liability
agreement, operating agreement, members agreement, shareholders agreement,
partnership agreement, certificate of partnership, certificate of formation,
voting trust agreement, or similar agreement or instrument governing the
formation or operation of such Person.
     OSHA — the Occupational Safety and Hazard Act of 1970.
     Other Agreement — each Note; LC Document; Lien Waiver; Real Estate Related
Document; Collateral Access Agreement; Borrowing Base Certificate, Compliance
Certificate, financial statement or report delivered hereunder; or other
document, instrument or agreement (other than this Agreement or a Security
Document) now or hereafter delivered by an Obligor or other Person to Agent or a
Lender in connection with any transactions relating hereto.
     Other Customer Agreements — (i) that certain Promotional Services and
Materials Agreement dated as of March 1, 2005 between P&G and Upshot, Inc.,
(ii) that certain Consultant Services Agreement dated as of April 1, 2003
between Disney Vacation Development, Inc. and Equity Marketing, Inc., (iii) that
certain Master Promotional Services Agreement dated as of April 1, 2005 between
Miller Products Company and Upshot, Inc., (iv) that certain Premium Supply
Agreement dated as of March 14, 2006 among Kellogg North America Company,
Kellogg Canada, Inc. and Logistix, Inc., (v) that certain Promotional Services
Agreement dated as of April 1, 2005 among Foster’s USA, LLC and Upshot, Inc.,
(vi) that certain Premium Supplier Agreement dated as of January 1, 2005 among
Kraft Foods Global,

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Inc. (North America Commercial) and SCI and (vii) any other services or supply
agreements entered into from time to time between Borrower or any of its
Subsidiaries and any of its customers, in each case as such agreement is in
effect on the Closing Date (in the case of clauses (i) through (vi)) and as such
agreement may be amended from time to time thereafter to the extent permitted
under Section 10.2.21.
     Overadvance — as defined in Section 2.1.5.
     Overadvance Loan — a Base Rate Revolver Loan made when an Overadvance
exists or is caused by the funding thereof.
     P&G — The Proctor & Gamble Company and its Affiliates.
     Participant — as defined in Section 13.2.
     Patent Assignment — each patent collateral assignment agreement pursuant to
which an Obligor assigns to Agent, for the benefit of Secured Parties, such
Obligor’s interests in its patents, as security for the Obligations.
     Patriot Act — the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56, 115 Stat. 272 (2001).
     Payment Intangible — as defined in the UCC.
     Payment Item — each check, draft or other item of payment payable to a
Borrower, including those constituting proceeds of any Collateral.
     Permitted Asset Disposition — as long as no Default or Event of Default
exists and all Net Proceeds are remitted to the Dominion Account, an Asset
Disposition that is (a) a sale of Inventory in the Ordinary Course of Business;
(b) a disposition of Equipment that, in the aggregate during any 12 month
period, has a fair market or book value (whichever is more) of $250,000 or less;
(c) a disposition of Inventory that is obsolete, unmerchantable or otherwise
unsalable in the Ordinary Course of Business; (d) termination of a lease of real
or personal Property that is not necessary for the Ordinary Course of Business,
could not reasonably be expected to have a Material Adverse Effect and does not
result from an Obligor’s default; or (e) approved in writing by Agent and
Required Lenders.
     Permitted Contingent Obligations — Contingent Obligations (a) arising from
endorsements of Payment Items for collection or deposit in the Ordinary Course
of Business; (b) arising from Hedging Agreements permitted hereunder;
(c) existing on the Closing Date, and any extension or renewal thereof that does
not increase the amount of such Contingent Obligation when extended or renewed;
(d) incurred in the Ordinary Course of Business with respect to surety, appeal
or performance bonds, or other similar obligations; (e) arising from customary
indemnification obligations in favor of purchasers in connection with
dispositions of Equipment permitted hereunder; (f) arising under the Loan
Documents; or (g) in an aggregate amount of $250,000 or less at any time.
     Permitted Lien — as defined in Section 10.2.2.
     Permitted Purchase Money Debt — Purchase Money Debt of Borrowers and
Subsidiaries that is unsecured or secured only by a Purchase Money Lien, as long
as the aggregate amount does not exceed $1,000,000 at any time and its
incurrence does not violate Section 10.2.3.
     Person — any individual, corporation, limited liability company,
partnership, joint venture, joint stock company, land trust, business trust,
unincorporated organization, Governmental Authority or other entity.

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     Plan — an employee pension benefit plan that is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and that is either (a) maintained by a Borrower or
Subsidiary for employees or (b) maintained pursuant to a collective bargaining
agreement, or other arrangement under which more than one employer makes
contributions and to which a Borrower or Subsidiary is making or accruing an
obligation to make contributions or has within the preceding five years made or
accrued such contributions.
     Pledged Collateral — means the “Pledged Collateral” as defined in the
Domestic Pledge Agreement or any Foreign Security Agreement.
     Pop Rocket — Pop Rocket, Inc., a Delaware corporation.
     Preferred Stock — the Series AA Preferred Stock.
     Pro Rata — with respect to any Lender, a percentage (expressed as a
decimal, rounded to the ninth decimal place) determined (a) while Revolver
Commitments are outstanding, by dividing the amount of such Lender’s Revolver
Commitment by the aggregate amount of all Revolver Commitments; and (b) at any
other time, by dividing the amount of such Lender’s Loans and LC Obligations by
the aggregate amount of all outstanding Loans and LC Obligations.
     Prodesign — as defined in Section 10.1.16.
     Program Sales — the promotional programs for BK or RSI, and any Affiliates
thereof, which are serviced by Borrowers or Subsidiaries.
     Program Sales Contract — any contract or other arrangement relating to
Program Sales between BK or RSI, or any Affiliates thereof, and any Borrowers or
Subsidiaries.
     Properly Contested — with respect to any obligation of an Obligor, (a) the
obligation is subject to a bona fide dispute regarding amount or the Obligor’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued;
(c) appropriate reserves have been established in accordance with GAAP; (d)
non-payment could not have a Material Adverse Effect, nor result in forfeiture
or sale of any assets of the Obligor; (e) no Lien is imposed on assets of the
Obligor, unless bonded and stayed to the satisfaction of Agent; and (f) if the
obligation results from entry of a judgment or other order, such judgment or
order is stayed pending appeal or other judicial review.
     Property — any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
     Protective Advances — as defined in Section 2.1.6.
     PTO — the United States Patent and Trademark Office or any successor or
substitute office in the United States in which filings are necessary or, in the
opinion of Agent, desirable in order to create or perfect Liens on any
Intellectual Property Collateral.
     Purchase Money Debt — (a) Debt (other than the Obligations) for payment of
any of the purchase price of fixed assets; (b) Debt (other than the Obligations)
incurred within ten days before or after acquisition of any fixed assets, for
the purpose of financing any of the purchase price thereof; and (c) any
renewals, extensions or refinancings (but not increases) thereof.
     Purchase Money Lien — a Lien that secures Purchase Money Debt, encumbering
only the fixed assets acquired with such Debt and constituting a Capital Lease
or a purchase money security interest under the UCC.

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     RCRA — the Resource Conservation and Recovery Act (42 U.S.C. §§
6991-6991i).
     Real Estate — all right, title and interest (whether as owner, lessor or
lessee) in any real Property or any buildings, structures, parking areas or
other improvements thereon.
     Refinancing Conditions — the following conditions for Refinancing Debt:
(a) it is in an aggregate principal amount that does not exceed the principal
amount of the Debt being extended, renewed or refinanced; (b) it has a final
maturity no sooner than, a weighted average life no less than, and an interest
rate no greater than, the Debt being extended, renewed or refinanced; (c) it is
subordinated to the Obligations at least to the same extent as the Debt being
extended, renewed or refinanced; (d) the representations, covenants and defaults
applicable to it are no less favorable to Borrowers than those applicable to the
Debt being extended, renewed or refinanced; (e) no additional Lien is granted to
secure it; (f) no additional Person is obligated on such Debt; and (g) upon
giving effect to it, no Default or Event of Default exists.
     Refinancing Debt — Borrowed Money that is the result of an extension,
renewal or refinancing of Debt permitted under Section 10.2.1(d).
     Registration Rights Agreement - that certain Registration Rights Agreement
dated as of March 29, 2000 by and between EMAK and Crown, as such agreement is
in effect on the Closing Date and as such agreement may be amended from time to
time thereafter to the extent permitted under Section 10.2.21 of this Agreement.
     Reimbursement Date — as defined in Section 2.2.2.
     Related Documents — the Securities Purchase Agreement, the Warrants, the
Registration Rights Agreement, the Certificate of Designation, the BK Services
Agreements, the BK Supply Agreements, the Other Customer Agreements, any other
BK Agreements, and the RSI Supply Agreements.
     Related Real Estate Documents — with respect to any Real Estate subject to
a Mortgage, the following, in form and substance satisfactory to Agent and
received by Agent for review at least 15 days prior to the effective date of the
Mortgage: (a) a mortgagee title policy (or binder therefor) covering Agent’s
interest under the Mortgage, in a form and amount and by an insurer acceptable
to Agent, which must be fully paid on such effective date; (b) such assignments
of leases, estoppel letters, attornment agreements, consents, waivers and
releases as Agent may require with respect to other Persons having an interest
in the Real Estate; (c) a current, as-built survey of the Real Estate,
containing a metes-and-bounds property description and flood plain
certification, and certified by a licensed surveyor acceptable to Agent;
(d) flood insurance in an amount, with endorsements and by an insurer acceptable
to Agent, if the Real Estate is within a flood plain; (e) a current appraisal of
the Real Estate, prepared by an appraiser acceptable to Agent, and in form and
substance satisfactory to Required Lenders; (f) an environmental assessment,
prepared by environmental engineers acceptable to Agent, and accompanied by such
reports, certificates, studies or data as Agent may reasonably require, which
shall all be in form and substance satisfactory to Required Lenders; and (g) an
Environmental Agreement and such other documents, instruments or agreements as
Agent may reasonably require with respect to any environmental risks regarding
the Real Estate.
     Rent and Charges Reserve — the aggregate of (a) all past due rent and other
amounts owing by an Obligor to any landlord, warehouseman, processor, repairman,
mechanic, shipper, freight forwarder or other Person who possesses any
Collateral or could assert a Lien on any Collateral; and (b) a reserve at least
equal to three months rent and other charges that could be payable to any such
Person less the amount of any L/C Obligations securing such obligations, unless
it has executed a Lien Waiver.
     Report — as defined in Section 12.2.3.

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     Reportable Event — any event set forth in Section 4043(b) of ERISA.
     Required Lenders — Lenders (subject to Section 4.2) having (a) Revolver
Commitments in excess of 66 2/3% of the aggregate Revolver Commitments; and
(b) if the Revolver Commitments have terminated, Loans in excess of 66 2/3% of
all outstanding Loans.
     Reserve Percentage — the reserve percentage (expressed as a decimal,
rounded upward to the nearest 1/8th of 1%) applicable to member banks under
regulations issued from time to time by the Board of Governors for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as “Eurocurrency Liabilities”).
     Restricted Investment — any Investment by a Borrower or Subsidiary, other
than (a) Investments in Subsidiaries to the extent existing on the Closing Date;
(b) Cash Equivalents that are subject to Agent’s Lien and control, pursuant to
documentation in form and substance satisfactory to Agent; and (c) loans and
advances permitted under Section 10.2.7.
     Restricted Payment — (a) the declaration or payment of any dividend or
distribution by a Borrower or Subsidiary, either in cash or property, on any
shares of the capital stock of any class or any other Equity Interests of such
Borrower or Subsidiary (other than dividends or other distributions payable
solely in shares of capital stock of a Borrower or Subsidiary or payable by a
Subsidiary to a Borrower); (b) the purchase, redemption or retirement by a
Borrower or Subsidiary of any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its capital
stock or any other Equity Interests, whether directly or indirectly; (c) any
other payment or distribution by a Borrower or Subsidiary in respect of its
capital stock, either directly or indirectly (other than dividends or other
distributions payable solely in shares of capital stock or any other Equity
Interests of a Borrower or Subsidiary or payable by a Subsidiary to a Borrower);
(d) any prepayment, repayment, redemption, defeasance or other acquisition or
retirement for value (i) of any Debt to a holder of Equity Interests or (ii) of
Subordinated Debt; and (e) any payment of cash by any Borrower to any HK
Subsidiary, any UK Subsidiary or any other Foreign Subsidiary.
     Restrictive Agreement — an agreement (other than a Loan Document) that
conditions or restricts the right of any Borrower, Subsidiary or other Obligor
to incur or repay Borrowed Money, to grant Liens on any assets, to declare or
make Restricted Payments, to modify, extend or renew any agreement evidencing
Borrowed Money, or to repay any intercompany Debt.
     Revolver Commitment — for any Lender, its obligation to make Revolver Loans
and to participate in the LC Obligations up to the maximum principal amount
shown on Schedule 1.1A, or as specified hereafter in the most recent Assignment
and Acceptance to which it is a party. “Revolver Commitments” means the
aggregate amount of such commitments of all Lenders.
     Revolver Loan — a loan made pursuant to Section 2.1, and any Swingline
Loan, Overadvance Loan or Protective Advance.
     Revolver Note — a promissory note to be executed by Borrowers in favor of a
Lender in the form of Exhibit A, which shall be in the amount of such Lender’s
Revolver Commitment and shall evidence the Revolver Loans made by such Lender.
     Revolver Termination Date — March 29, 2009.
     Royalties — all royalties, fees, expense reimbursement and other amounts
payable by a Borrower under a License.
     RSI — Restaurant Services, Inc., a Delaware corporation.

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     RSI Supply Agreements — (i) that certain Fifth Amended and First Restated
Master Supply Agreement, dated as of May 15, 2002, by and between RSI and EMAK,
and (ii) any other supply agreements entered into from time to time between RSI
or any of its Affiliates and any Borrower or any of its Subsidiaries, in each
case as such agreement is in effect on the Closing Date (in the case of clause
(i)) and as such agreement may be amended from time to time thereafter to the
extent permitted under Section 10.2.2.
     SCI — SCI Promotion, Inc., a Delaware corporation.
     S&P — Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.
     Secured Parties — Agent, Issuing Bank, Lenders and providers of Bank
Products.
     Securities Account — as defined in the UCC.
     Securities Account Control Agreement — each securities account control
agreement executed and delivered by an Obligor, Agent and a securities
intermediary, in form and substance satisfactory to Agent, covering each of the
Securities Accounts established with such securities intermediary, as such
Securities Account Control Agreement may be amended, supplemented or otherwise
modified from time to time, and “Securities Account Control Agreements” means
all such Securities Account Control Agreements, collectively.
     Securities Purchase Agreement — that certain Securities Purchase Agreement
dated as of March 29, 2000 by and between Crown and EMAK, as amended (i) by that
certain Amendment No. 1 to Securities Purchase Agreement dated as of May 5, 2000
by and between Crown and EMAK, (ii) by that certain Amendment No. 2 to
Securities Purchase Agreement dated as of June 1, 2000 by and between Crown and
EMAK, and (iii) may be amended from to time to time to the extent permitted
under Section 10.2.21 of this Agreement.
     Security Documents — the Domestic Pledge Agreement, Foreign Security
Agreements, Guaranties, Mortgages, Patent Assignments, Trademark Security
Agreements, Insurance Assignments, Deposit Account Control Agreements,
Securities Account Control Agreements, and all other documents, instruments and
agreements now or hereafter securing (or given with the intent to secure) any
Obligations.
     Senior Officer — the chairman of the board, president, chief executive
officer or chief financial officer (or vice president-finance or vice
president-controller) or executive vice president of a Borrower or, if the
context requires, an Obligor.
     Series AA Preferred Stock — the Series AA Senior Cumulative Participating
Convertible Preferred Stock of EMAK, par value $0.001 per share.
     Settlement Report — a report delivered by Agent to Lenders summarizing the
Revolver Loans and participations in LC Obligations outstanding as of a given
settlement date, allocated to Lenders on a Pro Rata basis in accordance with
their Revolver Commitments.
     Software — as defined in the UCC.
     Solvent — as to any Person, such Person (a) owns Property whose fair
salable value is greater than the amount required to pay all of its debts
(including contingent, subordinated, unmatured and unliquidated liabilities);
(b) owns Property whose present fair salable value (as defined below) is greater
than the probable total liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities) of such Person as they become absolute
and matured; (c) is able to pay all of its debts as they

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mature; (d) has capital that is not unreasonably small for its business and is
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage; (e) is not “insolvent” within the
meaning of Section 101(32) of the Bankruptcy Code; and (f) has not incurred (by
way of assumption or otherwise) any obligations or liabilities (contingent or
otherwise) under any Loan Documents, or made any conveyance in connection
therewith, with actual intent to hinder, delay or defraud either present or
future creditors of such Person or any of its Affiliates. “Fair salable value”
means the amount that could be obtained for assets within a reasonable time,
either through collection or through sale under ordinary selling conditions by a
capable and diligent seller to an interested buyer who is willing (but under no
compulsion) to purchase.
     Statutory Reserves — the percentage (expressed as a decimal) established by
the Board of Governors as the then stated maximum rate for all reserves
(including those imposed by Regulation D of the Board of Governors, all basic,
emergency, supplemental or other marginal reserve requirements, and any
transitional adjustments or other scheduled changes in reserve requirements)
applicable to any member bank of the Federal Reserve System in respect of
Eurocurrency Liabilities (or any successor category of liabilities under
Regulation D).
     Subordinated Debt — Debt incurred by a Borrower that is expressly
subordinate and junior in right of payment to Full Payment of all Obligations,
and is on terms (including maturity, interest, fees, repayment, covenants and
subordination) satisfactory to Agent.
     Subsidiary — any entity at least 50% of whose voting securities or Equity
Interests is owned by a Borrower or any combination of Borrowers (including
indirect ownership by a Borrower through other entities in which the Borrower
directly or indirectly owns 50% of the voting securities or Equity Interests).
     Supporting Obligation — as defined in the UCC.
     Supply Chain — Supply Chain Services LLC and its Affiliates.
     Swingline Loan — any Borrowing of Base Rate Revolver Loans funded with
Agent’s funds, until such Borrowing is settled among Lenders pursuant to
Section 4.1.3.
     Sunoco — Sunoco, Inc. and its Affiliates.
     Target — Target Corporation and its Affiliates.
     Taxes — any taxes, levies, imposts, duties, fees, assessments, deductions,
withholdings or other charges of whatever nature, including income, receipts,
excise, property, sales, use, transfer, license, payroll, withholding, social
security, franchise, intangibles, stamp or recording taxes imposed by any
Governmental Authority, and all interest, penalties and similar liabilities
relating thereto.
     Threshold Amount — $500,000.
     Trademark Security Agreement — each trademark security agreement pursuant
to which an Obligor grants to Agent, for the benefit of Secured Parties, a Lien
on such Obligor’s interests in trademarks, as security for the Obligations.
     Transferee — any actual or potential Eligible Assignee, Participant or
other Person acquiring an interest in any Obligations.
     Type — any type of a Revolver Loan (i.e., Base Rate Revolver Loan or LIBOR
Loan) that has the same interest option and, in the case of LIBOR Loans, the
same Interest Period.

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     UCC — the Uniform Commercial Code as in effect in the State of California
or, when the laws of any other jurisdiction govern the perfection or enforcement
of any Lien, the Uniform Commercial Code of such jurisdiction.
     UK Subsidiaries — EMAK Europe Holdings, Limited, a United Kingdom company
and any other Foreign Subsidiary organized under the laws of United Kingdom or
Northern Ireland.
     Upshot — Upshot, Inc., a Delaware corporation.
     Value — (a) for Inventory, its value determined on the basis of the lower
of cost or market, calculated on a first-in, first-out basis; and (b) for an
Account, its face amount, net of any returns, rebates, discounts (calculated on
the shortest terms), credits, allowances or Taxes (including sales, excise or
other taxes) that have been or could be claimed by the Account Debtor or any
other Person.
     Warrants — the Common Warrants.
     1.2 Accounting Terms. Under the Loan Documents (except as otherwise
specified herein), all accounting terms shall be interpreted, all accounting
determinations shall be made, and all financial statements shall be prepared, in
accordance with GAAP applied on a basis consistent with the most recent audited
financial statements of Borrowers delivered to Agent before the Closing Date and
using the same inventory valuation method as used in such financial statements,
except for any change required or permitted by GAAP if Borrowers’ certified
public accountants concur in such change, the change is disclosed to Agent, and
Section 10.3 is amended in a manner satisfactory to Required Lenders to take
into account the effects of the change. Notwithstanding the foregoing and any
other provision of this Agreement, the financial covenants set forth in
Section 10.3 shall be calculated with respect to Borrowers and their
Subsidiaries (other than EMAK Europe Holdings, Limited and its direct and
indirect Subsidiaries) on a consolidated basis.
     1.3 Certain Matters of Construction. The terms “herein,” “hereof,”
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, “from” means “from and including,”
and “to” and “until” each mean “to but excluding.” The terms “including” and
“include” shall mean “including, without limitation” and, for purposes of each
Loan Document, the parties agree that the rule of ejusdem generis shall not be
applicable to limit any provision. Section titles appear as a matter of
convenience only and shall not affect the interpretation of any Loan Document.
All references to (a) laws or statutes include all related rules, regulations,
interpretations, amendments and successor provisions; (b) any document,
instrument or agreement include any amendments, waivers and other modifications,
extensions or renewals (to the extent permitted by the Loan Documents); (c) any
section mean, unless the context otherwise requires, a section of this
Agreement; (d) any exhibits or schedules mean, unless the context otherwise
requires, exhibits and schedules attached hereto, which are hereby incorporated
by reference; (e) any Person include successors and assigns; (f) time of day
mean time of day at Agent’s notice address under Section 14.3.1; or
(g) discretion of Agent, Issuing Bank or any Lender mean the sole and absolute
discretion of such Person. All calculations of Value, fundings of Loans,
issuances of Letters of Credit and payments of Obligations shall be in Dollars
and, unless the context otherwise requires, all determinations (including
calculations of Borrowing Base and financial covenants) made from time to time
under the Loan Documents shall be made in light of the circumstances existing at
such time. Borrowing Base calculations shall be consistent with historical
methods of valuation and calculation, and otherwise satisfactory to Agent (and
not necessarily calculated in accordance with GAAP). Borrowers shall have the
burden of establishing any alleged negligence, misconduct or lack of good faith
by Agent, Issuing Bank or any Lender under any Loan Documents. No provision of
any Loan Documents shall be construed against any party by reason of such party
having, or being deemed to have, drafted the provision. Whenever the phrase “to
the best of Borrowers’ knowledge” or words of similar import are

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used in any Loan Documents, it means actual knowledge of a Senior Officer, or
knowledge that a Senior Officer would have obtained if he or she had engaged in
good faith and diligent performance of his or her duties, including reasonably
specific inquiries of employees or agents and a good faith attempt to ascertain
the matter to which such phrase relates.
SECTION 2. CREDIT FACILITIES
     2.1 Revolver Commitment.
          2.1.1 Revolver Loans. Each Lender agrees, severally on a Pro Rata
basis up to its Revolver Commitment, on the terms set forth herein, to make
Revolver Loans to Borrowers from time to time through the Commitment Termination
Date. The Revolver Loans may be repaid and reborrowed as provided herein. In no
event shall Lenders have any obligation to honor a request for a Revolver Loan
if the unpaid balance of Revolver Loans outstanding at such time (including the
requested Revolver Loan) would exceed the Borrowing Base.
          2.1.2 Revolver Notes. The Revolver Loans made by each Lender and
interest accruing thereon shall be evidenced by the records of Agent and such
Lender. At the request of any Lender, Borrowers shall deliver a Revolver Note to
such Lender.
          2.1.3 Use of Proceeds. The proceeds of Revolver Loans shall be used by
Borrowers solely (a) to satisfy existing Debt; (b) to pay fees and transaction
expenses associated with the closing of this credit facility; (c) to pay
Obligations in accordance with this Agreement; and (d) for working capital and
other lawful corporate purposes of Borrowers.
          2.1.4 Voluntary Reduction or Termination of Revolver Commitments.
          (a) The Revolver Commitments shall terminate on the Revolver
Termination Date, unless sooner terminated in accordance with this Agreement.
Upon at least 90 days prior written notice to Agent at any time after the first
Loan Year, Borrowers may, at their option, terminate the Revolver Commitments
and this credit facility. Any notice of termination given by Borrowers shall be
irrevocable. On the termination date, Borrowers shall make Full Payment of all
Obligations.
          (b) Borrowers may permanently reduce the Revolver Commitments, on a
Pro Rata basis for each Lender, from time to time upon written notice to Agent,
which notice shall specify the amount of the reduction, shall be irrevocable
once given, shall be given at least five Business Days prior to the end of a
month and shall be effective as of the first day of the next month. Each
reduction shall be in a minimum amount of $1,000,000, or an increment of
$1,000,000 in excess thereof; provided, however, that Borrowers may not
permanently reduce the Revolver Commitments below $20,000,000.
          2.1.5 Overadvances. If the aggregate Revolver Loans exceed the
Borrowing Base (“Overadvance”) or the aggregate Revolver Commitments at any
time, the excess amount shall be payable by Borrowers on demand by Agent, but
all such Revolver Loans shall nevertheless constitute Obligations secured by the
Collateral and entitled to all benefits of the Loan Documents. Unless its
authority has been revoked in writing by Required Lenders, Agent may require
Lenders to honor requests for Overadvance Loans and to forbear from requiring
Borrowers to cure an Overadvance, (a) when no other Event of Default is known to
Agent, as long as (i) the Overadvance does not continue for more than 30
consecutive days (and no Overadvance may exist for at least five consecutive
days thereafter before further Overadvance Loans are required), and (ii) the
Overadvance is not known by Agent to exceed $2,000,000; and (b) regardless of
whether an Event of Default exists, if Agent discovers an Overadvance not
previously known by it to exist, as long as from the date of such discovery the
Overadvance (i) is not increased by more than $2,000,000 (including such
discovered Overadvance), and (ii) does not continue for more than 30 consecutive
days. In no event shall Overadvance Loans be required that would cause

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the outstanding Revolver Loans and LC Obligations to exceed the aggregate
Revolver Commitments. Any funding of an Overadvance Loan or sufferance of an
Overadvance shall not constitute a waiver by Agent or Lenders of the Event of
Default caused thereby. In no event shall any Borrower or other Obligor be
deemed a beneficiary of this Section nor authorized to enforce any of its terms.
          2.1.6 Protective Advances. Agent shall be authorized, in its
discretion, at any time that a Default or Event of Default exists or any
conditions in Section 6 are not satisfied, and without regard to the aggregate
Revolver Commitments, to make Base Rate Revolver Loans (“Protective Advances”)
(a) up to an aggregate amount of $2,000,000 outstanding at any time, if Agent
deems such Loans necessary or desirable to preserve or protect any Collateral,
or to enhance the collectibility or repayment of Obligations; or (b) to pay any
other amounts chargeable to Obligors under any Loan Documents, including costs,
fees and expenses. All Protective Advances shall be Obligations, secured by the
Collateral, and shall be treated for all purposes as Extraordinary Expenses.
Each Lender shall participate in each Protective Advance on a Pro Rata basis.
Required Lenders may at any time revoke Agent’s authorization to make further
Protective Advances by written notice to Agent. Absent such revocation, Agent’s
determination that funding of a Protective Advance is appropriate shall be
conclusive.
     2.2 Letter of Credit Facility.
          2.2.1 Issuance of Letters of Credit. Issuing Bank agrees to issue
Letters of Credit from time to time until 30 days prior to the Revolver
Termination Date (or until the Commitment Termination Date, if earlier), on the
terms set forth herein, including the following:
          (a) Each Borrower acknowledges that Issuing Bank’s willingness to
issue any Letter of Credit is conditioned upon Issuing Bank’s receipt of a LC
Application with respect to the requested Letter of Credit, as well as such
other instruments and agreements as Issuing Bank may customarily require for
issuance of a letter of credit of similar type and amount. Issuing Bank shall
have no obligation to issue any Letter of Credit unless (i) Issuing Bank
receives a LC Request and LC Application at least three Business Days prior to
the requested date of issuance; and (ii) each LC Condition is satisfied. If
Issuing Bank receives written notice from a Lender at least one Business Day
before issuance of a Letter of Credit that any LC Condition has not been
satisfied, Issuing Bank shall have no obligation to issue the requested Letter
of Credit (or any other) until such notice is withdrawn in writing by that
Lender or until Required Lenders have waived such condition in accordance with
this Agreement. Prior to receipt of any such notice, Issuing Bank shall not be
deemed to have knowledge of any failure of LC Conditions.
          (b) Letters of Credit may be requested by a Borrower only (i) to
support obligations of such Borrower incurred in the Ordinary Course of
Business; or (ii) for other purposes as Agent and Lenders may approve from time
to time in writing. The renewal or extension of any Letter of Credit shall be
treated as the issuance of a new Letter of Credit, except that delivery of a new
LC Application shall be required at the discretion of Issuing Bank.
          (c) Borrowers assume all risks of the acts, omissions or misuses of
any Letter of Credit by the beneficiary. In connection with issuance of any
Letter of Credit, none of Agent, Issuing Bank or any Lender shall be responsible
for the existence, character, quality, quantity, condition, packing, value or
delivery of any goods purported to be represented by any Documents; any
differences or variation in the character, quality, quantity, condition,
packing, value or delivery of any goods from that expressed in any Documents;
the form, validity, sufficiency, accuracy, genuineness or legal effect of any
Documents or of any endorsements thereon; the time, place, manner or order in
which shipment of goods is made; partial or incomplete shipment of, or failure
to ship, any goods referred to in a Letter of Credit or Documents; any deviation
from instructions, delay, default or fraud by any shipper or other Person in
connection with any goods, shipment or delivery; any breach of contract between
a shipper or vendor and a Borrower; errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex,
telecopy, e-mail, telephone or otherwise; errors in interpretation of technical

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terms; the misapplication by a beneficiary of any Letter of Credit or the
proceeds thereof; or any consequences arising from causes beyond the control of
Issuing Bank, Agent or any Lender, including any act or omission of a
Governmental Authority. The rights and remedies of Issuing Bank under the Loan
Documents shall be cumulative. Issuing Bank shall be fully subrogated to the
rights and remedies of each beneficiary whose claims against Borrowers are
discharged with proceeds of any Letter of Credit.
          (d) In connection with its administration of and enforcement of rights
or remedies under any Letters of Credit or LC Documents, Issuing Bank shall be
entitled to act, and shall be fully protected in acting, upon any certification,
notice or other communication in whatever form believed by Issuing Bank, in good
faith, to be genuine and correct and to have been signed, sent or made by a
proper Person. Issuing Bank may consult with and employ legal counsel,
accountants and other experts to advise it concerning its obligations, rights
and remedies, and shall be entitled to act upon, and shall be fully protected in
any action taken in good faith reliance upon, any advice given by such experts.
Issuing Bank may employ agents and attorneys-in-fact in connection with any
matter relating to Letters of Credit or LC Documents, and shall not be liable
for the negligence or misconduct of any such agents or attorneys-in-fact
selected with reasonable care.
          (e) As of the Closing Date, Bank of America has under the Existing
Credit Agreement issued for the account of Borrowers certain existing letters of
credit listed in Schedule 2.2.1 hereto (collectively the “Existing Letters of
Credit”). Upon satisfaction of the conditions set forth in Section 6.1, the
Existing Letters of Credit shall, effective as of the Closing Date, become
Letters of Credit under this Agreement to the same extent as if initially issued
hereunder and each Lender shall be deemed to have irrevocably purchased from the
Issuing Bank of such Existing Letters of Credit a participation in such Letters
of Credit and drawings thereunder in an amount equal to such Lender’s Pro Rata
share of the maximum amount which is or at any time may become available to be
drawn thereunder. All such Existing Letters of Credit which become Letters of
Credit under this Agreement shall be fully secured by the Collateral commencing
on the Closing Date to the same extent as if initially issued hereunder on such
date.
          2.2.2 Reimbursement; Participations.
          (a) If Issuing Bank honors any request for payment under a Letter of
Credit, Borrowers shall pay to Issuing Bank, on the same day (“Reimbursement
Date”), the amount paid by Issuing Bank under such Letter of Credit, together
with interest at the interest rate for Base Rate Revolver Loans from the
Reimbursement Date until payment by Borrowers. The obligation of Borrowers to
reimburse Issuing Bank for any payment made under a Letter of Credit shall be
absolute, unconditional, irrevocable, and joint and several, and shall be paid
without regard to any lack of validity or enforceability of any Letter of Credit
or the existence of any claim, setoff, defense or other right that Borrowers may
have at any time against the beneficiary. Whether or not Borrower Agent submits
a Notice of Borrowing, Borrowers shall be deemed to have requested a Borrowing
of Base Rate Revolver Loans in an amount necessary to pay all amounts due
Issuing Bank on any Reimbursement Date and each Lender agrees to fund its Pro
Rata share of such Borrowing whether or not the Revolver Commitments have
terminated, an Overadvance exists or is created thereby, or the conditions in
Section 6 are satisfied.
          (b) Upon issuance of a Letter of Credit, each Lender shall be deemed
to have irrevocably and unconditionally purchased from Issuing Bank, without
recourse or warranty, an undivided Pro Rata interest and participation in all LC
Obligations relating to the Letter of Credit. If Issuing Bank makes any payment
under a Letter of Credit and Borrowers do not reimburse such payment on the
Reimbursement Date, Agent shall promptly notify Lenders and each Lender shall
promptly (within one Business Day) and unconditionally pay to Agent, for the
benefit of Issuing Bank, the Lender’s Pro Rata share of such payment. Upon
request by a Lender, Issuing Bank shall furnish copies of any Letters of Credit
and LC Documents in its possession at such time.

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          (c) The obligation of each Lender to make payments to Agent for the
account of Issuing Bank in connection with Issuing Bank’s payment under a Letter
of Credit shall be absolute, unconditional and irrevocable, not subject to any
counterclaim, setoff, qualification or exception whatsoever, and shall be made
in accordance with this Agreement under all circumstances, irrespective of any
lack of validity or unenforceability of any Loan Documents; any draft,
certificate or other document presented under a Letter of Credit having been
determined to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect; or the
existence of any setoff or defense that any Obligor may have with respect to any
Obligations. Issuing Bank does not assume any responsibility for any failure or
delay in performance or any breach by any Borrower or other Person of any
obligations under any LC Documents. Issuing Bank does not make to Lenders any
express or implied warranty, representation or guaranty with respect to the
Collateral, LC Documents or any Obligor. Issuing Bank shall not be responsible
to any Lender for any recitals, statements, information, representations or
warranties contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of any LC Documents; the validity, genuineness,
enforceability, collectibility, value or sufficiency of any Collateral or the
perfection of any Lien therein; or the assets, liabilities, financial condition,
results of operations, business, creditworthiness or legal status of any
Obligor.
          (d) No Issuing Bank Indemnitee shall be liable to any Lender or other
Person for any action taken or omitted to be taken in connection with any LC
Documents except as a result of its actual gross negligence or willful
misconduct. Issuing Bank shall not have any liability to any Lender if Issuing
Bank refrains from any action under any Letter of Credit or LC Documents until
it receives written instructions from Required Lenders.
          2.2.3 Cash Collateral. If any LC Obligations, whether or not then due
or payable, shall for any reason be outstanding at any time (a) that an Event of
Default exists, (b) that Availability is less than zero, (c) after the
Commitment Termination Date, or (d) within 20 Business Days prior to the
Revolver Termination Date, then Borrowers shall, at Issuing Bank’s or Agent’s
request, pay to Issuing Bank the amount of all outstanding LC Obligations and
Cash Collateralize all outstanding Letters of Credit. If Borrowers fail to Cash
Collateralize outstanding Letters of Credit as required herein, Lenders may (and
shall upon direction of Agent) advance, as Revolver Loans, the amount of the
Cash Collateral required (whether or not the Revolver Commitments have
terminated, an Overadvance exists, or the conditions in Section 6 are
satisfied).
SECTION 3. INTEREST, FEES AND CHARGES
     3.1 Interest.
          3.1.1 Rates and Payment of Interest.
          (a) The Obligations shall bear interest (i) if a Base Rate Revolver
Loan, at the Base Rate in effect from time to time, plus the Applicable Margin;
(ii) if a LIBOR Loan, at Adjusted LIBOR for the applicable Interest Period, plus
the Applicable Margin; and (iii) if any other Obligation (including, to the
extent permitted by law, interest not paid when due), at the Base Rate in effect
from time to time, plus the Applicable Margin for Base Rate Revolver Loans.
Interest shall accrue from the date the Revolver Loan is advanced or the
Obligation is incurred or payable, until paid by Borrowers. If a Revolver Loan
is repaid on the same day made, one day’s interest shall accrue. Borrowers shall
not be permitted to request LIBOR Revolver Loans with respect to the Inventory
Borrowing Portion.
          (b) During an Insolvency Proceeding with respect to any Borrower, or
during any other Event of Default if Agent or Required Lenders in their
discretion so elect, Obligations shall bear interest at the Default Rate. Each
Borrower acknowledges that the cost and expense to Agent and each Lender due to
an Event of Default are difficult to ascertain and that the Default Rate is a
fair and reasonable estimate to compensate Agent and Lenders for such added cost
and expense.

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          (c) Interest accrued on the Loans shall be due and payable in arrears,
(i) on the first day of each month and, for any LIBOR Loan, the last day of its
Interest Period; (ii) on any date of prepayment, with respect to the principal
amount of Loans being prepaid; and (iii) on the Revolver Commitment Termination
Date. Interest accrued on any other Obligations shall be due and payable as
provided in the Loan Documents and, if no payment date is specified, shall be
due and payable on demand. Notwithstanding the foregoing, interest accrued at
the Default Rate shall be due and payable on demand.
          3.1.2 Application of Adjusted LIBOR to Outstanding Revolver Loans.
          (a) Borrowers may on any Business Day, subject to delivery of a Notice
of Conversion/Continuation, elect to convert any portion of the Base Rate
Revolver Loans to, or to continue any LIBOR Loan at the end of its Interest
Period as, a LIBOR Loan. During any Default or Event of Default, Agent may (and
shall at the direction of Required Lenders) declare that no Loan may be made,
converted or continued as a LIBOR Loan.
          (b) Whenever Borrowers desire to convert or continue Loans as LIBOR
Loans, Borrower Agent shall give Agent a Notice of Conversion/Continuation, no
later than 11:00 a.m. at least two Business Days before the requested conversion
or continuation date. Promptly after receiving any such notice, Agent shall
notify each Lender thereof. Each Notice of Conversion/Continuation shall be
irrevocable, and shall specify the aggregate principal amount of Loans to be
converted or continued, the conversion or continuation date (which shall be a
Business Day), and the duration of the Interest Period (which shall be deemed to
be one month if not specified). If, upon the expiration of any Interest Period
in respect of any LIBOR Loans, Borrowers shall have failed to deliver a Notice
of Conversion/Continuation, they shall be deemed to have elected to convert such
Loans into Base Rate Revolver Loans.
          3.1.3 Interest Periods. In connection with the making, conversion or
continuation of any LIBOR Loans, Borrowers shall select an interest period
(“Interest Period”) to apply, which interest period shall be one, two, three or
six months; provided, however, that:
          (a) the Interest Period shall commence on the date the Loan is made or
continued as, or converted into, a LIBOR Loan, and shall expire on the
numerically corresponding day in the calendar month at its end;
          (b) if any Interest Period commences on a day for which there is no
corresponding day in the calendar month at its end or if such corresponding day
falls after the last Business Day of such month, then the Interest Period shall
expire on the last Business Day of such month; and if any Interest Period would
expire on a day that is not a Business Day, the period shall expire on the next
Business Day; and
          (c) no Interest Period shall extend beyond the Revolver Termination
Date.
          3.1.4 Interest Rate Not Ascertainable. If Agent shall determine that
on any date for determining Adjusted LIBOR, due to any circumstance affecting
the London interbank market, adequate and fair means do not exist for
ascertaining such rate on the basis provided herein, then Agent shall
immediately notify Borrowers of such determination. Until Agent notifies
Borrowers that such circumstance no longer exists, the obligation of Lenders to
make LIBOR Loans shall be suspended, and no further Loans may be converted into
or continued as LIBOR Loans.
     3.2 Fees.
          3.2.1 Unused Line Fee. Borrowers shall pay to Agent, for the Pro Rata
benefit of Lenders, a fee which shall accrue at a rate per annum equal to the
percentage set forth below opposite the Commitment Utilization Percentage with
respect to each day (the “Commitment Fee Rate”) of the daily

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unused amount of the respective Revolver Commitments of such Lenders (excluding
with respect to Agent the amount of any Swingline Loans) during the period from
and including the Closing Date to the Commitment Termination Date:

          Commitment Utilization Percentage   Commitment Fee Rate
Less than or equal to 25%
    0.500 %
Greater than 25%
    0.375 %

Such fee shall be payable in arrears, on the first day of each month and on the
Commitment Termination Date.
          3.2.2 LC Facility Fees. Borrowers shall pay (a) to Agent, for the Pro
Rata benefit of Lenders, a fee equal 2.50% per annum times the average daily
stated amount of Letters of Credit, which fee shall be payable monthly in
arrears, on the first day of each month; (b) to Agent, for its own account, a
fronting fee equal to 0.25% of the stated amount of each Letter of Credit, which
fee shall be payable upon issuance of the Letter of Credit and on each
anniversary date of such issuance, and shall be payable on any increase in
stated amount made between any such dates; and (c) to Issuing Bank, for its own
account, all customary charges associated with the issuance, amending,
negotiating, payment, processing, transfer and administration of Letters of
Credit, which charges shall be paid as and when incurred. During an Event of
Default, the fee payable under clause (a) shall be increased by 2% per annum.
With respect to Existing Letters of Credit, the fees described in clauses (a),
(b) and (c) above shall accrue from and including the Closing Date.
          3.2.3 Closing Fee. Borrowers shall pay to Agent, for the Pro Rata
benefit of the Lenders, a closing fee of $100,000, which shall be paid
concurrently with the funding of the initial Loans hereunder.
          3.2.4 Agent Fees. In consideration of Agent’s syndication of the
Revolver Commitments and service as Agent hereunder, Borrowers shall pay to
Agent, for its own account, a non-refundable annual administrative agent’s fee
of $15,000 per annum, payable in advance on the Closing Date and on each
anniversary thereof.
     3.3 Computation of Interest, Fees, Yield Protection. All interest, as well
as fees and other charges calculated on a per annum basis, shall be computed for
the actual days elapsed, based on a year of 360 days. Each determination by
Agent of any interest, fees or interest rate hereunder shall be final,
conclusive and binding for all purposes, absent manifest error. All fees shall
be fully earned when due and shall not be subject to rebate or refund, nor
subject to proration except as specifically provided herein. All fees payable
under Section 3.2 are compensation for services and are not, and shall not be
deemed to be, interest or any other charge for the use, forbearance or detention
of money. A certificate as to amounts payable by Borrowers under Section 3.4,
3.6, 3.7, 3.9 or 5.8, submitted to Borrowers by Agent or the affected Lender, as
applicable, shall be final, conclusive and binding for all purposes, absent
manifest error.
     3.4 Reimbursement Obligations. Borrowers shall reimburse Agent for all
Extraordinary Expenses. Borrowers shall also reimburse Agent for all legal,
accounting, appraisal, consulting, and other fees, costs and expenses incurred
by it in connection with (a) negotiation and preparation of any Loan Documents,
including any amendment or other modification thereof; (b) administration of and
actions relating to any Collateral, Loan Documents and transactions contemplated
thereby, including any actions taken to perfect or maintain priority of Agent’s
Liens on any Collateral, to maintain any insurance required hereunder or to
verify Collateral; and (c) each inspection, audit or appraisal with respect to
any Obligor or Collateral, whether prepared by Agent’s personnel or a third
party. All legal, accounting and

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consulting fees shall be charged to Borrowers by Agent’s professionals at their
full hourly rates, regardless of any reduced or alternative fee billing
arrangements that Agent, any Lender or any of their Affiliates may have with
such professionals with respect to this or any other transaction. All amounts
reimbursable by Borrowers under this Section shall constitute Obligations
secured by the Collateral and shall be payable on demand.
     3.5 Illegality. Notwithstanding anything to the contrary herein, if (a) any
change in any law or interpretation thereof by any Governmental Authority makes
it unlawful for a Lender to make or maintain a LIBOR Loan or to maintain any
Revolver Commitment with respect to LIBOR Loans or (b) a Lender determines that
the making or continuance of a LIBOR Loan has become impracticable as a result
of a circumstance that adversely affects the London interbank market or the
position of such Lender in such market, then such Lender shall give notice
thereof to Agent and Borrowers and may (i) declare that LIBOR Loans will not
thereafter be made by such Lender, whereupon any request for a LIBOR Loan from
such Lender shall be deemed to be a request for a Base Rate Revolver Loan unless
such Lender’s declaration has been withdrawn (and it shall be withdrawn promptly
upon cessation of the circumstances described in clause (a) or (b) above);
and/or (ii) require that all outstanding LIBOR Loans made by such Lender be
converted to Base Rate Revolver Loans immediately, in which event all
outstanding LIBOR Loans of such Lender shall be immediately converted to Base
Rate Revolver Loans.
     3.6 Increased Costs. If, by reason of (a) the introduction of or any change
(including any change by way of imposition or increase of Statutory Reserves or
other reserve requirements) in any law or interpretation thereof, or (b) the
compliance with any guideline or request from any Governmental Authority or
other Person exercising control over banks or financial institutions generally
(whether or not having the force of law):
          (i) a Lender shall be subject to any Tax with respect to any LIBOR
Loan or Letter of Credit or its obligation to make LIBOR Loans, issue Letters of
Credit or participate in LC Obligations, or a change shall result in the basis
of taxation of any payment to a Lender with respect to its LIBOR Loans or its
obligation to make LIBOR Loans, issue Letters of Credit or participate in LC
Obligations (except for Excluded Taxes); or
          (ii) any reserve (including any imposed by the Board of Governors),
special deposits or similar requirement against assets of, deposits with or for
the account of, or credit extended by, a Lender shall be imposed or deemed
applicable, or any other condition affecting a Lender’s LIBOR Loans or
obligation to make LIBOR Loans, issue Letters of Credit or participate in LC
Obligations shall be imposed on such Lender or the London interbank market;
and as a result there shall be an increase in the cost to such Lender of
agreeing to make or making, funding or maintaining LIBOR Loans, Letters of
Credit or participations in LC Obligations (except to the extent already
included in determination of Adjusted LIBOR), or there shall be a reduction in
the amount receivable by such Lender, then the Lender shall promptly notify
Borrowers and Agent of such event, and Borrowers shall, within five days
following demand therefor, pay such Lender the amount of such increased costs or
reduced amounts.
     If a Lender determines that, because of circumstances described above or
any other circumstances arising hereafter affecting such Lender, the London
interbank market or the Lender’s position in such market, Adjusted LIBOR or its
Applicable Margin, as applicable, will not adequately and fairly reflect the
cost to such Lender of funding LIBOR Loans, issuing Letters of Credit or
participating in LC Obligations, then (A) the Lender shall promptly notify
Borrowers and Agent of such event; (B) such Lender’s obligation to make LIBOR
Loans, issue Letters of Credit or participate in LC Obligations shall be
immediately suspended, until each condition giving rise to such suspension no
longer exists; and (C) such Lender shall make a Base Rate Revolver Loan as part
of any requested Borrowing of LIBOR Loans, which Base Rate Revolver Loan shall,
for all purposes, be considered part of such Borrowing.

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     3.7 Capital Adequacy. If a Lender determines that any introduction of or
any change in a Capital Adequacy Regulation, any change in the interpretation or
administration of a Capital Adequacy Regulation by a Governmental Authority
charged with interpretation or administration thereof, or any compliance by such
Lender or any Person controlling such Lender with a Capital Adequacy Regulation,
increases the amount of capital required or expected to be maintained by such
Lender or Person (taking into consideration its capital adequacy policies and
desired return on capital) as a consequence of such Lender’s Revolver
Commitments, Loans, participations in LC Obligations or other obligations under
the Loan Documents, then Borrowers shall, within five days following demand
therefor, pay such Lender an amount sufficient to compensate for such increase.
A Lender’s demand for payment shall set forth the nature of the occurrence
giving rise to such compensation and a calculation of the amount to be paid. In
determining such amount, the Lender may use any reasonable averaging and
attribution method.
     3.8 Mitigation. Each Lender agrees that, upon becoming aware that it is
subject to Section 3.5, 3.6, 3.7 or 5.8, it will take reasonable measures to
reduce Borrowers’ obligations under such Sections, including funding or
maintaining its Revolver Commitments or Loans through another office, as long as
use of such measures would not adversely affect the Lender’s Revolver
Commitments, Loans, business or interests, and would not be inconsistent with
any internal policy or applicable legal or regulatory restriction.
     3.9 Funding Losses. If for any reason (other than default by a Lender)
(a) any Borrowing of, or conversion to or continuation of, a LIBOR Loan does not
occur on the date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation (whether or not withdrawn), (b) any repayment or
conversion of a LIBOR Loan occurs on a day other than the end of its Interest
Period, or (c) Borrowers fail to repay a LIBOR Loan when required hereunder,
then Borrowers shall pay to Agent its customary administrative charge and to
each Lender all losses and expenses that it sustains as a consequence thereof,
including any loss or expense arising from liquidation or redeployment of funds
or from fees payable to terminate deposits of matching funds. Lenders shall not
be required to purchase Dollar deposits in the London interbank market or any
other offshore Dollar market to fund any LIBOR Loan, but the provisions hereof
shall be deemed to apply as if each Lender had purchased such deposits to fund
its LIBOR Loans.
     3.10 Maximum Interest. In no event shall interest, charges or other amounts
that are contracted for, charged or received by Agent and Lenders pursuant to
any Loan Documents and that are deemed interest under Applicable Law
(“interest”) exceed the highest rate permissible under Applicable Law (“maximum
rate”). If, in any month, any interest rate, absent the foregoing limitation,
would have exceeded the maximum rate, then the interest rate for that month
shall be the maximum rate and, if in a future month, that interest rate would
otherwise be less than the maximum rate, then the rate shall remain at the
maximum rate until the amount of interest actually paid equals the amount of
interest which would have accrued if it had not been limited by the maximum
rate. If, upon Full Payment of the Obligations, the total amount of interest
actually paid under the Loan Documents is less than the total amount of interest
that would, but for this Section, have accrued under the Loan Documents, then
Borrowers shall, to the extent permitted by Applicable Law, pay to Agent, for
the account of Lenders, (a) the lesser of (i) the amount of interest that would
have been charged if the maximum rate had been in effect at all times, or (ii)
the amount of interest that would have accrued had the interest rate otherwise
set forth in the Loan Documents been in effect, minus (b) the amount of interest
actually paid under the Loan Documents. If a court of competent jurisdiction
determines that Agent or any Lender has received interest in excess of the
maximum amount allowed under Applicable Law, such excess shall be deemed
received on account of, and shall automatically be applied to reduce,
Obligations other than interest (regardless of any erroneous application thereof
by Agent or any Lender), and upon Full Payment of the Obligations, any balance
shall be refunded to Borrowers. In determining whether any excess interest has
been charged or received by Agent or any Lender, all interest at any time
charged or received from Borrowers in connection with the Loan Documents shall,
to the extent permitted by Applicable Law, be amortized, prorated, allocated and
spread in equal parts throughout the full term of the Obligations.

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SECTION 4. LOAN ADMINISTRATION
     4.1 Manner of Borrowing and Funding Revolver Loans.
          4.1.1 Notice of Borrowing.
          (a) Whenever Borrowers desire funding of a Borrowing of Revolver
Loans, Borrower Agent shall give Agent a Notice of Borrowing. Such notice must
be received by Agent no later than 11:00 a.m. (i) on the Business Day of the
requested funding date, in the case of Base Rate Revolver Loans, and (ii) at
least two Business Days prior to the requested funding date, in the case of
LIBOR Loans. Notices received after 11:00 a.m. shall be deemed received on the
next Business Day. Each Notice of Borrowing shall be irrevocable and shall
specify (A) the principal amount of the Borrowing, (B) the requested funding
date (which must be a Business Day), (C) whether the Borrowing is to be made as
Base Rate Revolver Loans or LIBOR Loans, and (D) in the case of LIBOR Loans, the
duration of the applicable Interest Period (which shall be deemed to be one
month if not specified).
          (b) Unless payment is otherwise timely made by Borrowers, the becoming
due of any Obligations (whether principal, interest, fees or other charges,
including Extraordinary Expenses, LC Obligations, Cash Collateral and Bank
Product Debt) shall be deemed to be a request for Base Rate Revolver Loans on
the due date, in the amount of such Obligations. The proceeds of such Revolver
Loans shall be disbursed as direct payment of the relevant Obligation.
          (c) If Borrowers establish a controlled disbursement account with
Agent or any Affiliate of Agent, then the presentation for payment of any check
or other item of payment drawn on such account at a time when there are
insufficient funds to cover it shall be deemed to be a request for Base Rate
Revolver Loans on the date of such presentation, in the amount of the check and
items presented for payment. The proceeds of such Revolver Loans may be
disbursed directly to the controlled disbursement account or other appropriate
account.
          4.1.2 Fundings by Lenders. Each Lender shall timely honor its Revolver
Commitment by funding its Pro Rata share of each Borrowing of Revolver Loans
that is properly requested hereunder. Except for Borrowings to be made as
Swingline Loans, Agent shall endeavor to notify Lenders of each Notice of
Borrowing (or deemed request for a Borrowing) by 12:00 noon on the proposed
funding date for Base Rate Revolver Loans or by 3:00 p.m. at least two Business
Days before any proposed funding of LIBOR Loans. Each Lender shall fund to Agent
such Lender’s Pro Rata share of the Borrowing to the account specified by Agent
in immediately available funds not later than 2:00 p.m. on the requested funding
date, unless Agent’s notice is received after the times provided above, in which
event Lender shall fund its Pro Rata share by 11:00 a.m. on the next Business
Day. Subject to its receipt of such amounts from Lenders, Agent shall disburse
the proceeds of the Revolver Loans as directed by Borrower Agent. Unless Agent
shall have received (in sufficient time to act) written notice from a Lender
that it does not intend to fund its Pro Rata share of a Borrowing, Agent may
assume that such Lender has deposited or promptly will deposit its share with
Agent, and Agent may disburse a corresponding amount to Borrowers. If a Lender’s
share of any Borrowing is not in fact received by Agent, then Borrowers agree to
repay to Agent on demand the amount of such share, together with interest
thereon from the date disbursed until repaid, at the rate applicable to such
Borrowing.
          4.1.3 Swingline Loans; Settlement.
          (a) Agent may, but shall not be obligated to, advance Swingline Loans
to Borrowers out of Agent’s own funds, up to an aggregate outstanding amount of
$2,500,000, unless the funding is specifically required to be made by all
Lenders hereunder. Each Swingline Loan shall constitute a Revolver Loan for all
purposes, except that payments thereon shall be made to Agent for its own
account.

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The obligation of Borrowers to repay Swingline Loans shall be evidenced by the
records of Agent and need not be evidenced by any promissory note.
          (b) To facilitate administration of the Revolver Loans, Lenders and
Agent agree (which agreement is solely among them, and not for the benefit of or
enforceable by any Borrower) that settlement among them with respect to
Swingline Loans and other Revolver Loans may take place periodically on a date
determined from time to time by Agent, which shall occur at least once every
five Business Days. On each settlement date, settlement shall be made with each
Lender in accordance with the Settlement Report delivered by Agent to Lenders.
Between settlement dates, Agent may in its discretion apply payments on Revolver
Loans to Swingline Loans, regardless of any designation by Borrower or any
provision herein to the contrary. Each Lender’s obligation to make settlements
with Agent is absolute and unconditional, without offset, counterclaim or other
defense, and whether or not the Revolver Commitments have terminated, an
Overadvance exists, or the conditions in Section 6 are satisfied. If, due to an
Insolvency Proceeding with respect to a Borrower or otherwise, any Swingline
Loan may not be settled among Lenders hereunder, then each Lender shall be
deemed to have purchased from Agent a Pro Rata participation in each unpaid
Swingline Loan and shall transfer the amount of such participation to Agent, in
immediately available funds, within one Business Day after Agent’s request
therefor.
          4.1.4 Notices. Each Borrower authorizes Agent and Lenders to extend,
convert or continue Loans, effect selections of interest rates, and transfer
funds to or on behalf of Borrowers based on telephonic or e-mailed instructions.
Borrowers shall confirm each such request by prompt delivery to Agent of a
Notice of Borrowing or Notice of Conversion/Continuation, if applicable, but if
it differs in any material respect from the action taken by Agent or Lenders,
the records of Agent and Lenders shall govern. Neither Agent nor any Lender
shall have any liability for any loss suffered by a Borrower as a result of
Agent or any Lender acting upon its understanding of telephonic or e-mailed
instructions from a person believed in good faith by Agent or any Lender to be a
person authorized to give such instructions on a Borrower’s behalf.
          4.2 Defaulting Lender. If a Lender fails to make any payment to Agent
that is required hereunder, Agent may (but shall not be required to), in its
discretion, retain payments that would otherwise be made to such defaulting
Lender hereunder, apply the payments to such Lender’s defaulted obligations or
readvance the funds to Borrowers in accordance with this Agreement. The failure
of any Lender to fund a Loan or to make a payment in respect of a LC Obligation
shall not relieve any other Lender of its obligations hereunder, and no Lender
shall be responsible for default by another Lender. Lenders and Agent agree
(which agreement is solely among them, and not for the benefit of or enforceable
by any Borrower) that, solely for purposes of determining a defaulting Lender’s
right to vote on matters relating to the Loan Documents and to share in
payments, fees and Collateral proceeds thereunder, a defaulting Lender shall not
be deemed to be a “Lender” until all its defaulted obligations have been cured.
     4.3 Number and Amount of LIBOR Loans; Determination of Rate. For ease of
administration, all LIBOR Revolver Loans having the same length and beginning
date of their Interest Periods shall be aggregated together, and such Loans
shall be allocated among Lenders on a Pro Rata basis. No more than eight
aggregated LIBOR Loans may be outstanding at any time, and each aggregate LIBOR
Loan when made, continued or converted shall be in a minimum amount of
$1,000,000, or an increment of $100,000 in excess thereof. Upon determining
Adjusted LIBOR for any Interest Period requested by Borrowers, Agent shall
promptly notify Borrowers thereof by telephone or electronically and, if
requested by Borrowers, shall confirm any telephonic notice in writing.
     4.4 Borrower Agent. Each Borrower hereby designates EMAK (“Borrower Agent”)
as its representative and agent for all purposes under the Loan Documents,
including requests for Loans and Letters of Credit, designation of interest
rates, delivery or receipt of communications with Agent, Issuing

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Bank or any Lender, preparation and delivery of Borrowing Base and financial
reports, receipt and payment of Obligations, requests for waivers, amendments or
other accommodations, actions under the Loan Documents (including in respect of
compliance with covenants), and all other dealings with Agent, Issuing Bank or
any Lender. Borrower Agent hereby accepts such appointment. Agent and Lenders
shall be entitled to rely upon, and shall be fully protected in relying upon,
any notice or communication (including any notice of borrowing) delivered by
Borrower Agent on behalf of any Borrower. Agent and Lenders may give any notice
or communication with a Borrower hereunder to Borrower Agent on behalf of such
Borrower. Agent shall have the right, in its discretion, to deal exclusively
with Borrower Agent for any or all purposes under the Loan Documents. Each
Borrower agrees that any notice, election, communication, representation,
agreement or undertaking made on its behalf by Borrower Agent shall be binding
upon and enforceable against it.
     4.5 One Obligation. The Loans, LC Obligations and other Obligations shall
constitute one general obligation of Borrowers and (unless otherwise expressly
provided in any Loan Document) shall be secured by Agent’s Lien upon all
Collateral; provided, however, that Agent and each Lender shall be deemed to be
a creditor of, and the holder of a separate claim against, each Borrower to the
extent of any Obligations jointly or severally owed by such Borrower.
     4.6 Effect of Termination. On the effective date of any termination of the
Revolver Commitments, all Obligations shall be immediately due and payable, and
any Lender may terminate its and its Affiliates’ Bank Products (including, with
the consent of Agent, any Cash Management Services). All undertakings of
Borrowers contained in the Loan Documents shall survive any termination, and
Agent shall retain its Liens in the Collateral and all of its rights and
remedies under the Loan Documents until Full Payment of the Obligations.
Notwithstanding Full Payment of the Obligations, Agent shall not be required to
terminate its Liens in any Collateral unless, with respect to any damages Agent
may incur as a result of the dishonor or return of Payment Items applied to
Obligations, Agent receives (a) a written agreement, executed by Borrowers and
any Person whose advances are used in whole or in part to satisfy the
Obligations, indemnifying Agent and Lenders from any such damages; or (b) such
Cash Collateral as Agent, in its discretion, deems necessary to protect against
any such damages. The provisions of Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.4, 5.8,
12, 14.2 and this Section, and the obligation of each Obligor and Lender with
respect to each indemnity given by it in any Loan Document, shall survive Full
Payment of the Obligations and any release relating to this credit facility.
SECTION 5. PAYMENTS
     5.1 General Payment Provisions. All payments of Obligations shall be made
in Dollars, without offset, counterclaim or defense of any kind, free of (and
without deduction for) any Taxes, and in immediately available funds, not later
than 12:00 noon on the due date. Any payment after such time shall be deemed
made on the next Business Day. Borrowers may, at the time of payment, specify to
Agent the Obligations to which such payment is to be applied, but Agent shall in
all events retain the right to apply such payment in such manner as Agent,
subject to the provisions hereof, may determine to be appropriate. If any
payment under the Loan Documents shall be stated to be due on a day other than a
Business Day, the due date shall be extended to the next Business Day and such
extension of time shall be included in any computation of interest and fees. Any
payment of a LIBOR Loan prior to the end of its Interest Period shall be
accompanied by all amounts due under Section 3.9. Any prepayment of Loans shall
be applied first to Base Rate Revolver Loans and then to LIBOR Loans.
     5.2 Repayment of Revolver Loans. Revolver Loans shall be due and payable in
full on the Revolver Termination Date, unless payment is sooner required
hereunder. Revolver Loans may be prepaid from time to time, without penalty or
premium. If any Asset Disposition includes the disposition of Accounts or
Inventory, then Net Proceeds equal to the greater of (a) the net book value of
such Accounts and Inventory, or (b) the reduction in the Borrowing Base upon
giving effect to such disposition, shall be applied to the Revolver Loans.
Notwithstanding anything herein to the contrary, if

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an Overadvance exists, Borrowers shall, on the sooner of Agent’s demand or the
first Business Day after any Borrower has knowledge thereof, repay the
outstanding Revolver Loans in an amount sufficient to reduce the principal
balance of Revolver Loans to the Borrowing Base.
     5.3 Payment of Other Obligations. Obligations other than Revolver Loans,
including LC Obligations and Extraordinary Expenses, shall be paid by Borrowers
as provided in the Loan Documents or, if no payment date is specified, on
demand.
     5.4 Marshaling; Payments Set Aside. None of Agent or Lenders shall be under
any obligation to marshal any assets in favor of any Obligor or against any
Obligations. If any Obligor makes a payment to Agent or Lenders, or if Agent or
any Lender receives payment from the proceeds of Collateral, exercise of setoff
or otherwise, and such payment is subsequently invalidated or required to be
repaid to a trustee, receiver or any other Person, then the Obligations
originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been received and any enforcement or setoff had not occurred.
     5.5 Post-Default Allocation of Payments.
          5.5.1 Allocation. Notwithstanding anything herein to the contrary,
during an Event of Default, monies to be applied to the Obligations, whether
arising from payments by Obligors, realization on Collateral, setoff or
otherwise, shall be allocated as follows:
          (a) first, to all costs and expenses, including Extraordinary
Expenses, owing to Agent;
          (b) second, to all amounts owing to Agent on Swingline Loans or
Protective Advances;
          (c) third, to all amounts owing to Issuing Bank on LC Obligations;
          (d) fourth, to all Obligations constituting fees (excluding amounts
relating to Bank Products);
          (e) fifth, to all Obligations constituting interest (excluding amounts
relating to Bank Products);
          (f) sixth, to provide Cash Collateral for outstanding Letters of
Credit;
          (g) seventh, to all other Obligations, other than Bank Product Debt;
and
          (h) last, to Bank Product Debt.
Amounts shall be applied to each category of Obligations set forth above until
Full Payment thereof and then to the next category. If amounts are insufficient
to satisfy a category, they shall be applied on a pro rata basis among the
Obligations in the category. The allocations set forth in this Section are
solely to determine the rights and priorities of Agent and Lenders as among
themselves, and may be changed by agreement among them without the consent of
any Obligor. This Section is not for the benefit of or enforceable by any
Borrower.
          5.5.2 Erroneous Application. Agent shall not be liable for any
application of amounts made by it in good faith and, if any such application is
subsequently determined to have been made in error, the sole recourse of any
Lender or other Person to which such amount should have been made shall be to
recover the amount from the Person that actually received it (and, if such
amount was received by any Lender, such Lender hereby agrees to return it).

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     5.6 Application of Payments. The ledger balance in the main Dominion
Account as of the end of a Business Day shall be applied to the Obligations at
the beginning of the next Business Day. Each Borrower irrevocably waives the
right to direct the application of any payments or Collateral proceeds, and
agrees that Agent shall have the continuing, exclusive right to apply and
reapply same against the Obligations, in such manner as Agent deems advisable,
notwithstanding any entry by Agent in its records. If, as a result of Agent’s
receipt of Payment Items or proceeds of Collateral, a credit balance exists, the
balance shall not accrue interest in favor of Borrowers and shall be made
available to Borrowers as long as no Default or Event of Default exists.
     5.7 Loan Account; Account Stated.
          5.7.1 Loan Account. Agent shall maintain in accordance with its usual
and customary practices an account or accounts (“Loan Account”) evidencing the
Debt of Borrowers resulting from each Loan or issuance of a Letter of Credit
from time to time. Any failure of Agent to record anything in the Loan Account,
or any error in doing so, shall not limit or otherwise affect the obligation of
Borrowers to pay any amount owing hereunder. Agent may maintain a single Loan
Account in the name of Borrower Agent, and each Borrower confirms that such
arrangement shall have no effect on the joint and several character of its
liability for the Obligations.
          5.7.2 Entries Binding. Entries made in the Loan Account shall
constitute presumptive evidence of the information contained therein. If any
information contained in the Loan Account is provided to or inspected by any
Person, then such information shall be conclusive and binding on such Person for
all purposes absent manifest error, except to the extent such Person notifies
Agent in writing within 30 days after receipt or inspection that specific
information is subject to dispute.
     5.8 Taxes. If any Taxes (except Excluded Taxes) shall be payable by any
party due to the execution, delivery, issuance or recording of any Loan
Documents, or the creation or repayment of any Obligations, Borrowers shall pay
(and shall promptly reimburse Agent and Lenders for their payment of) all such
Taxes, including any interest and penalties thereon, and will indemnify and hold
harmless Indemnitees against all liability in connection therewith. If Borrowers
shall be required by Applicable Law to withhold or deduct any Taxes (except
Excluded Taxes) with respect to any sum payable under any Loan Documents,
(a) the sum payable to Agent or such Lender shall be increased as may be
necessary so that, after making all required withholding or deductions, Agent or
such Lender (as the case may be) receives an amount equal to the sum it would
have received had no such withholding or deductions been made; (b) Borrowers
shall make such withholding or deductions; and (c) Borrowers shall pay the full
amount withheld or deducted to the relevant taxing or other authority in
accordance with Applicable Law.
     5.9 Withholding Tax Exemption. At least five Business Days prior to the
first date for payment of interest or fees hereunder to a Foreign Lender, the
Foreign Lender shall deliver to Borrowers and Agent two duly completed copies of
IRS Form W-8BEN or W-8ECI (or any subsequent replacement or substitute form
therefor), certifying that such Lender can receive payment of Obligations
without deduction or withholding of any United States federal income taxes. Each
Foreign Lender shall deliver to Borrowers and Agent two additional copies of
such form before the preceding form expires or becomes obsolete or after the
occurrence of any event requiring a change in the form, as well as any
amendments, extensions or renewals thereof as may be reasonably requested by
Borrowers or Agent, in each case, certifying that the Foreign Lender can receive
payment of Obligations without deduction or withholding of any such taxes,
unless an event (including any change in treaty or law) has occurred that
renders such forms inapplicable or prevents the Foreign Lender from certifying
that it can receive payments without deduction or withholding of such taxes.
During any period that a Foreign Lender does not or is unable to establish that
it can receive payments without deduction or withholding of such taxes, other
than by reason of an event (including any change in treaty or law) that occurs
after it becomes a Lender, Agent may withhold taxes from payments to such
Foreign Lender at the applicable statutory and treaty rates, and

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Borrowers shall not be required to pay any additional amounts under this Section
as a result of such withholding.
     5.10 Nature and Extent of Each Borrower’s Liability.
          5.10.1 Joint and Several Liability; Obligations Absolute. Each
Borrower agrees that it is jointly and severally liable for, and absolutely and
unconditionally guarantees to Agent and Lenders the prompt payment and
performance of, all Obligations and all agreements under the Loan Documents.
Each Borrower agrees that its guaranty obligations hereunder constitute a
continuing guaranty of payment and performance and not of collection, that such
obligations shall not be discharged until Full Payment of the Obligations, and
that such obligations are absolute and unconditional, irrespective of (a) the
genuineness, validity, regularity, enforceability, subordination or any future
modification of, or change in, any Obligations or Loan Document, or any other
document, instrument or agreement to which any Obligor is or may become a party
or liable; (b) the absence of any action to enforce this Agreement (including
this Section) or any other Loan Document, or any waiver, consent or indulgence
of any kind by Agent or any Lender with respect thereto; (c) the existence,
value or condition of, or failure to perfect a Lien or to preserve rights
against, any security or guaranty for the Obligations or any action, or the
absence of any action, by Agent or any Lender in respect thereof (including the
release of any security or guaranty); (d) the insolvency of any Obligor; (e) any
election by Agent or any Lender in an Insolvency Proceeding for the application
of Section 1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a
Lien by any other Borrower, as debtor-in-possession under Section 364 of the
Bankruptcy Code or otherwise; (g) the disallowance of any claims of Agent or any
Lender against any Obligor for the repayment of any Obligations under
Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, except Full Payment of all Obligations. In
furtherance of the foregoing and without limiting the generality thereof, each
Borrower agrees that: (i) Agent and any Lender may enforce this obligation upon
the occurrence of an Event of Default hereunder notwithstanding the existence of
any dispute between any other Borrower and Agent or any Lender with respect to
the existence of such Event of Default; (ii) the obligations of each Borrower
hereunder are independent of each of the obligations of each other Borrower
under the Loan Documents and the obligations of any other Person and a separate
action or actions may be brought and prosecuted against each Borrower whether or
not any action is brought against any other Borrower or any other Person and
whether or not any other Borrower or any other Person is joined in any such
action or actions; and (iii) a payment of a portion, but not all, of the
Obligations by any Borrower shall in no way limit, affect, modify or abridge the
liability of such or any other Borrower for any portion of the Obligations that
has not been paid. Each Borrower agrees that its obligation under this
Section 5.10.1 with respect to the obligations of each other Borrower is a
continuing guaranty and shall be binding upon each Borrower and its successors
and assigns, and each Borrower irrevocably waives any right to revoke its
obligations under this Section 5.10.1 as to future transactions giving rise to
any Obligations.
          5.10.2 Actions by Agent and the Lenders. Agent and any Lender may from
time to time, without notice or demand and without affecting the validity or
enforceability of this Section 5.10 or giving rise to any limitation, impairment
or discharge of any Borrower’s liability hereunder (a) renew, extend, accelerate
or otherwise change the time, place, manner or terms of payment of the
Obligations of any other Borrower with the consent of such other Borrower,
(b) settle, compromise, release or discharge, or accept or refuse any offer of
performance with respect to, or substitutions for, the Obligations of any other
Borrower or any agreement relating thereto and/or subordinate the payment of the
same to the payment of any other obligations, (c) request and accept other
guaranties of the Obligations of any other Borrower and take and hold security
for the payment of such Obligations, (d) release, exchange, compromise,
subordinate or modify, with or without consideration, any security for payment
of the Obligations of any other Borrower, any other guaranties of such
Obligations, or any other obligation of any Person with respect to such
Obligations, (e) enforce and apply any security now or hereafter held from any
other Borrower by or for the benefit of Agent or any Lender in respect of the
Obligations of any

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other Borrower and direct the order or manner of sale thereof, or exercise any
other right or remedy that Agent or the Lenders, or any of them, may have
against any such security, in each case as Agent or the Lenders in their
discretion may determine consistent with this Agreement and any applicable
security agreement, including foreclosure on any such security pursuant to one
or more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable and (f) exercise any other rights available to
Agent or the Lenders, or any of them, under the Loan Documents.
          5.10.3 No Discharge. The obligations of each Borrower under this
Section 5.10 shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than payment in full
of the Obligations), including the occurrence of any of the following, whether
or not any Borrower shall have had notice or knowledge of any of them: (a) any
failure to assert or enforce or agreement not to assert or enforce, or the stay
or enjoining, by order of court, by operation of law or otherwise, of the
exercise or enforcement of, any claim or demand or any right, power or remedy
with respect to the Obligations of any other Borrower or any agreement relating
thereto, or with respect to any other guaranty of or security for the payment of
such Obligations, (b) any waiver or modification of, or any consent to departure
from, any of the terms or provisions of this Agreement or any of the other Loan
Documents or any agreement or instrument executed pursuant thereto, or of any
other guaranty or security for the Obligations of any other Borrower, (c) the
Obligations of any other Borrower, or any agreement relating thereto, at any
time being found to be illegal, invalid or unenforceable in any respect, (d) the
application of payments received from any source to the payment of indebtedness
other than the Obligations of any other Borrower, even though Agent or the
Lenders, or any of them, might have elected to apply such payment to any part or
all of the Obligations of any other Borrower, (e) any failure to perfect or
continue perfection of a security interest in any collateral which secures any
of the Obligations of any other Borrower, (f) any defenses, set-offs or
counterclaims which any other Borrower or any other Person may assert against
Agent or any Lender in respect of the Obligations, including but not limited to
failure of consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction and usury and (g) any other act
or thing or omission, or delay to do any other act or thing, which may or might
in any manner or to any extent vary the risk of any Borrower as an obligor in
respect of the Obligations.
          5.10.4 Waivers. Each Borrower waives, for the benefit of Agent and
each Lender: (a) any right to require Agent or any Lender, as a condition of
payment or performance by such Borrower, to (i) proceed against any other
Borrower or any other Person, (ii) proceed against or exhaust any security held
from any other Borrower or any other Person, (iii) proceed against or have
resort to any balance of any deposit account or credit on the books of Agent or
any Lender in favor of any other Borrower or any other Person, or (iv) pursue
any other remedy in the power of Agent or any Lender; (b) any defense arising by
reason of the incapacity, lack of authority or any disability or other defense
of any other Borrower including any defense based on or arising out of the lack
of validity or the unenforceability of the Obligations or any agreement or
instrument relating thereto or by reason of the cessation of the liability of
any other Borrower from any cause other than payment in full of the Obligations;
(c) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal; (d) any defense based upon Agent’s
or any Lender’s errors or omissions in the administration of the Obligations,
except behavior that amounts to gross negligence or willful misconduct; (e)
(i) any principles or provisions of law, statutory or otherwise, that are or
might be in conflict with the terms of this Section 5.10 and any legal or
equitable discharge of such Borrower’s obligations hereunder, (ii) the benefit
of any statute of limitations affecting such Borrower’s liability hereunder or
the enforcement hereof, (iii) any rights to set-offs, recoupments and
counterclaims and (iv) promptness, diligence and any requirement that Agent or
any Lender protect, secure, perfect or insure any Lien or any property subject
thereto; (f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of this Section 5.10, notices of default under this Agreement or any agreement
or instrument related thereto, notices of any renewal, extension or modification
of the Obligations or any agreement related thereto, notices of any extension of
credit to any other Borrower and

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notices of any of the matters referred to in Sections 5.10.2 and 5.10.3 and any
right to consent to any thereof; and (g) to the fullest extent permitted by law,
any defenses or benefits that may be derived from or afforded by law which limit
the liability of or exonerate guarantors or sureties, or which may conflict with
the terms of this Section 5.10.
          As used in this paragraph, any reference to “the principal” includes
each Borrower and any reference to “the creditor” includes Agent and each of the
Lenders. In accordance with Section 2856 of the California Civil Code each
Borrower waives any and all rights and defenses available to it by reason of
Sections 2787 to 2855, inclusive, 2899 and 3433 of the California Civil Code,
including any and all rights or defenses such Borrower may have because the
Obligations are secured by real property or by reason of protection afforded to
the principal with respect to any of the Obligations, or to any other guarantor
of any of the Obligations with respect to any of such guarantor’s obligations
under its guaranty, in either case pursuant to the antideficiency or other laws
of the State of California limiting or discharging the principal’s indebtedness
or such guarantor’s obligations, including Section 580a, 580b, 580d or 726 of
the California Code of Civil Procedure. Consequently, among other things:
(1) the creditor may collect from such Borrower without first foreclosing on any
real or personal property collateral pledged by the principal; and (2) if the
creditor forecloses on any real property collateral pledged by the principal:
(x) the amount of the Obligations may be reduced only by the price for which the
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price and (y) the creditor may collect from such Borrower even if
the creditor, by foreclosing on the real property collateral, has destroyed any
right such Borrower may have to collect from the principal. This is an
unconditional and irrevocable waiver of any rights and defenses such Borrower
may have because the Obligations are secured by real property. Each Borrower
also waives all rights and defenses arising out of an election of remedies by
the creditor, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for an Obligation, has destroyed such
Borrower’s rights of subrogation and reimbursement against the principal by the
operation of Section 580d of the Code of Civil Procedure or otherwise; and even
though that election of remedies by the creditor, such as nonjudicial
foreclosure with respect to security for an obligation of any other guarantor of
any of the Obligations, has destroyed such Borrower’s rights of contribution
against such other Borrower or any other guarantor. No other provision of this
Section 5.10 shall be construed as limiting the generality of any of the
covenants and waivers set forth in this paragraph.
          5.10.5 Borrowers’ Rights of Subrogation, Contribution, Etc.;
Subordination of Other Obligations. Each Borrower waives any claim, right or
remedy, direct or indirect, that such Borrower now has or may hereafter have
against any other Borrower or any of its assets in connection with this
Section 5.10 or the performance by such Borrower of its obligations hereunder,
in each case whether such claim, right or remedy arises in equity, under
contract, by statute (including under California Civil Code Section 2847, 2848
or 2849), under common law or otherwise and including (a) any right of
subrogation, reimbursement or indemnification that such Borrower now has or may
hereafter have against any other Borrower, (b) any right to enforce, or to
participate in, any claim, right or remedy that Agent or any Lender now has or
may hereafter have against any other Borrower and (c) any benefit of, and any
right to participate in, any collateral or security now or hereafter held by
Agent or any Lender. In addition, until the Obligations shall have been paid in
full, the Commitments shall have terminated and all Letters of Credit shall have
expired or been cancelled, each Borrower shall withhold exercise of any right of
contribution such Borrower may have against any other Borrower. Each Borrower
further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification such Borrower may have against any other Borrower or against
any collateral or security, and any rights of contribution such Borrower may
have against such other Borrower, shall be junior and subordinate to any rights
Agent or any Lender may have against such Borrower to all right, title and
interest Agent or any Lender may have in any such collateral or security, and to
any right Agent or any Lender may have against such other Borrower.

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          Any indebtedness of any other Borrower now or hereafter held by any
Borrower is subordinated in right of payment to the Obligations, and any such
indebtedness of such other Borrower to such Borrower collected or received by
such Borrower after an Event of Default has occurred and is continuing, and any
amount paid to any Borrower on account of any subrogation, reimbursement,
indemnification or contribution rights referred to in the preceding paragraph
when all Obligations have not been paid in full, shall be held in trust for
Agent and the Lenders and shall forthwith be paid over to Agent for the benefit
of the Lenders to be credited and applied against the Obligations.
          5.10.6 Extent of Liability; Contribution.
          (a) Notwithstanding anything herein to the contrary, each Borrower’s
liability under this Section 5.10 shall be limited to the greater of (i) all
amounts for which such Borrower is primarily liable, as described below, and
(ii) such Borrower’s Allocable Amount.
          (b) If any Borrower makes a payment under this Section 5.10 of any
Obligations (other than amounts for which such Borrower is primarily liable) (a
“Guarantor Payment”) that, taking into account all other Guarantor Payments
previously or concurrently made by any other Borrower, exceeds the amount that
such Borrower would otherwise have paid if each Borrower had paid the aggregate
Obligations satisfied by such Guarantor Payments in the same proportion that
such Borrower’s Allocable Amount bore to the total Allocable Amounts of all
Borrowers, then such Borrower shall be entitled to receive contribution and
indemnification payments from, and to be reimbursed by, each other Borrower for
the amount of such excess, pro rata based upon their respective Allocable
Amounts in effect immediately prior to such Guarantor Payment. The “Allocable
Amount” for any Borrower shall be the maximum amount that could then be
recovered from such Borrower under this Section 5.10 without rendering such
payment voidable or avoidable under Section 548 of the Bankruptcy Code or under
any applicable state fraudulent transfer or conveyance act, or similar statute
or common law.
          (c) Nothing contained in this Section 5.10 shall limit the liability
of any Borrower to pay Loans made directly or indirectly to that Borrower
(including Loans advanced to any other Borrower and then re-loaned or otherwise
transferred to, or for the benefit of, such Borrower), LC Obligations relating
to Letters of Credit issued to support such Borrower’s business, and all accrued
interest, fees, expenses and other related Obligations with respect thereto, for
which such Borrower shall be primarily liable for all purposes hereunder. Agent
and Lenders shall have the right, at any time in their discretion, to condition
Loans and Letters of Credit upon a separate calculation of borrowing
availability for each Borrower and to restrict the disbursement and use of such
Loans and Letters of Credit to such Borrower.
          5.10.7 Joint Enterprise. Each Borrower has requested that Agent and
Lenders make this credit facility available to Borrowers on a combined basis, in
order to finance Borrowers’ business most efficiently and economically.
Borrowers’ business is a mutual and collective enterprise, and Borrowers believe
that consolidation of their credit facility will enhance the borrowing power of
each Borrower and ease the administration of their relationship with Lenders,
all to the mutual advantage of Borrowers. Borrowers acknowledge and agree that
Agent’s and Lenders’ willingness to extend credit to Borrowers and to administer
the Collateral on a combined basis, as set forth herein, is done solely as an
accommodation to Borrowers and at Borrowers’ request.
SECTION 6. CONDITIONS PRECEDENT
     6.1 Conditions Precedent to Initial Loans. In addition to the conditions
set forth in Section 6.2, Lenders shall not be required to fund any requested
Loan, issue any Letter of Credit, or otherwise extend credit to Borrowers
hereunder, until the date (“Closing Date”) that each of the following conditions
has been satisfied:

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          (a) Revolver Notes shall have been executed by Borrowers and delivered
to each Lender that requests issuance of a Revolver Note. Each other Loan
Document shall have been duly executed and delivered to Agent by each of the
signatories thereto, and each Obligor shall be in compliance with all terms
thereof.
          (b) [Intentionally Omitted.]
          (c) Agent shall have received duly executed agreements establishing
each Dominion Account and related lockbox, in form and substance, and with
financial institutions, satisfactory to Agent.
          (d) Agent shall have received certificates, in form and substance
satisfactory to it, from a knowledgeable Senior Officer of each Borrower
certifying that, after giving effect to the initial Loans and transactions
hereunder, (i) such Borrower is Solvent; (ii) no Default or Event of Default
exists; (iii) the representations and warranties set forth in Section 9 are true
and correct; and (iv) such Borrower has complied with all agreements and
conditions to be satisfied by it under the Loan Documents.
          (e) Agent shall have received a certificate of a duly authorized
officer of each Obligor, certifying (i) that attached copies of such Obligor’s
Organic Documents are true and complete, and in full force and effect, without
amendment except as shown, (ii) that an attached copy of resolutions authorizing
execution and delivery of the Loan Documents is true and complete, and that such
resolutions are in full force and effect, were duly adopted, have not been
amended, modified or revoked, and constitute all resolutions adopted with
respect to this credit facility, and (iii) to the title, name and signature of
each Person authorized to sign the Loan Documents. Agent may conclusively rely
on this certificate until it is otherwise notified by the applicable Obligor in
writing.
          (f) Agent shall have received a written opinion of General Counsel of
Borrowers, in form and substance satisfactory to Agent.
          (g) Agent shall have received copies of the charter documents of each
Obligor, certified as appropriate by the Secretary of State or another official
of such Obligor’s jurisdiction of organization. Agent shall have received good
standing certificates for each Obligor, issued by the Secretary of State or
other appropriate official of such Obligor’s jurisdiction of organization and
each jurisdiction where such Obligor’s conduct of business or ownership of
Property necessitates qualification.
          (h) Agent shall have received copies of policies or certificates of
insurance for the insurance policies carried by Borrowers and their
Subsidiaries, all in compliance with the Loan Documents, outlining all material
insurance coverage maintained by the Borrowers and their Subsidiaries, including
directors and officers insurance coverage and all insurance required to be
maintained pursuant to Sections 8.6.2 and 10.1.7. Agent, on behalf of Lenders,
shall have been named as additional insured, mortgagee and/or loss payee
thereunder (other than any directors and officers insurance and life insurance)
to the extent required under Sections 8.6.2 and 10.1.7.
          (i) Agent shall have completed its business, financial and legal due
diligence of Obligors, including a roll-forward of its previous field
examination and completion of its collateral audit with respect to Inventory and
Accounts, with results satisfactory to Agent. Except as disclosed in the Draft
Financial Statements, no material adverse change in the financial condition of
any Obligor or in the quality, quantity or value of any Collateral shall have
occurred since December 31, 2004.
          (j) Borrowers shall have paid all fees and expenses to be paid to
Agent and Lenders on the Closing Date.
          (k) Agent shall have received a Borrowing Base Certificate prepared as
of March 24, 2006. Upon giving effect to the initial funding of Loans and
issuance of Letters of Credit, and the

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payment by Borrowers of all fees and expenses incurred in connection herewith as
well as any payables stretched beyond their customary payment practices,
Availability shall be at least $5,500,000.
          (l) Borrowers shall have (a) repaid in full all outstanding Debt of
Borrowers under the Existing Credit Agreement and all other outstanding Debt of
Borrowers (other than Permitted Debt described in Section 10.2.1),
(b) terminated any commitments to lend or make other extensions of credit
thereunder (other than Permitted Debt described in Section 10.2.1),
(c) delivered to Agent all documents or instruments necessary to release all
Liens securing existing Debt or other obligations of Borrowers thereunder (other
than Permitted Debt described in Section 10.2.1), and (d) made arrangements
satisfactory to Agent with respect to the cancellation of any letters of credit
outstanding thereunder (other than the Existing Letters of Credit) or the
issuance of Letters of Credit to support the obligations of Borrowers and their
respective Subsidiaries with respect thereto. Borrowers shall have paid all
Attorney Costs of Agent to the extent invoiced prior to or on the Closing Date,
plus such additional amounts of Attorney Costs as shall constitute its
reasonable estimate of Attorney Costs incurred or to be incurred by it through
the closing proceedings (provided that such estimate shall not thereafter
preclude final settling of accounts between Borrowers and Agent).
          (m) Agent shall have received evidence satisfactory to it that
Borrowers shall have taken or caused to be taken all such actions, executed and
delivered or caused to be executed and delivered all such agreements, documents
and instruments, and made or caused to be made all such filings and recordings
that may be necessary or, in the opinion of Agent, desirable in order to create
in favor of Agent, for the benefit of Lenders, a valid and perfected first
priority security interest in the Collateral. Such actions shall include the
following:
          (i) Schedules to Security Documents. Delivery to Agent of accurate and
complete schedules to all of the applicable Security Documents.
          (ii) Stock Certificates and Instruments. Delivery to Agent of
(a) certificates (which certificates shall be accompanied by irrevocable undated
stock powers, duly endorsed in blank and otherwise satisfactory in form and
substance to Agent) representing all capital stock pledged pursuant to the
Security Documents, and (b) all promissory notes (including a master
intercompany note) or other instruments (duly endorsed, where appropriate, in a
manner satisfactory to Agent) evidencing any Collateral.
          (iii) Lien Searches and UCC Termination Statements. Delivery to Agent
of (a) the results of a recent search, by a Person satisfactory to Agent, of all
effective UCC financing statements and fixture filings and all judgment and tax
lien filings which may have been made with respect to any personal or mixed
property of each Obligor, together with copies of all such filings disclosed by
such search, and (b) UCC termination statements duly executed by all applicable
Persons for filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements or fixture filings disclosed in
such search (other than Permitted Liens).
          (iv) UCC Financing Statements and Fixture Filings. Delivery to Agent
of acknowledgements of all filings and recordations of UCC financing statements
and, where appropriate, fixture filings, duly executed by each applicable
Obligor with respect to all personal and mixed property Collateral of such
Obligor, in all jurisdictions as may be necessary or, in the opinion of Agent,
desirable to perfect the security interests created in such Collateral pursuant
to the Security Documents.
          (v) Cash Management. Delivery to Agent of lock box agreements in form
and substance satisfactory to Agent and Deposit Account Control Agreements
executed by each Person that is a party thereto with respect to the Deposit
Accounts listed therein.

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          (vi) Securities Accounts. Delivery to Agent of Securities Account
Control Agreements, in form and substance satisfactory to Agent, executed by
each Person that is a party thereto with respect to each of the Securities
Accounts of each applicable Borrower.
          (n) Borrowers shall have delivered to Agent any Lien Waivers as may be
reasonably required by Agent.
          (o) Borrowers shall have delivered an accurate copy of each Related
Document, together with any amendments, exhibits and schedules thereto.
          (p) Each Obligors shall have obtained all Governmental Approvals and
all consents of other Persons, in each case that are necessary or advisable in
connection with the transactions contemplated by the Loan Documents and the
continued operation of the business conducted by Borrowers and their
Subsidiaries in substantially the same manner as conducted prior to the Closing
Date. Each such Governmental Approval or consent shall be in full force and
effect, except in a case where the failure to obtain or maintain a Governmental
Approval or consent, either individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. All applicable
waiting periods shall have expired without any action being taken or threatened
by any competent authority that would restrain, prevent or otherwise impose
adverse conditions on the transactions contemplated by the Loan Documents. No
action, request for stay, petition for review or rehearing, reconsideration, or
appeal with respect to any of the foregoing shall be pending, and the time for
any applicable Governmental Authority to take action to set aside its consent on
its own motion shall have expired.
          (q) There shall not be pending or, to the knowledge of any Senior
Officer of any Borrower, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Borrowers or any of their
Subsidiaries or any property of Borrowers or any of their Subsidiaries that has
not been disclosed to Agent by Borrowers in writing prior to the execution of
this Agreement, and there shall have occurred no development not so disclosed in
any such action, suit, proceeding, governmental investigation or arbitration so
disclosed, that, in either event, in the opinion of Agent could reasonably be
expected to have a Material Adverse Effect; and no injunction or other
restraining order shall have been issued and no hearing to cause an injunction
or other restraining order to be issued shall be pending or noticed with respect
to any action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of, the
transactions contemplated by this Agreement or the making of Revolver Loans
hereunder.
          (r) Agent shall have received and be satisfied with such other
information as Agent may reasonably request.
     6.2 Conditions Precedent to All Credit Extensions. Agent, Issuing Bank and
Lenders shall not be required to fund any Loans, arrange for issuance of any
Letters of Credit or grant any other accommodation to or for the benefit of
Borrowers, unless the following conditions are satisfied:
          (a) No Default or Event of Default shall exist at the time of, or
result from, such funding, issuance or grant;
          (b) The representations and warranties of each Obligor in the Loan
Documents shall be true and correct on the date of, and upon giving effect to,
such funding, issuance or grant (except for representations and warranties that
expressly relate to an earlier date);
          (c) All conditions precedent in any other Loan Document shall be
satisfied;
          (d) No event shall have occurred or circumstance exist that has or
could reasonably be expected to have a Material Adverse Effect; and

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          (e) With respect to issuance of a Letter of Credit, the LC Conditions
shall be satisfied.
     Each request (or deemed request) by Borrowers for funding of a Loan,
issuance of a Letter of Credit or grant of an accommodation shall constitute a
representation by Borrowers that the foregoing conditions are satisfied on the
date of such request and on the date of such funding, issuance or grant. As an
additional condition to any funding, issuance or grant, Agent shall have
received such other information, documents, instruments and agreements as it
deems appropriate in connection therewith.
     6.3 Limited Waiver of Conditions Precedent. If Agent, Issuing Bank or
Lenders fund any Loans, arrange for issuance of any Letters of Credit or grant
any other accommodation when any conditions precedent are not satisfied
(regardless of whether the lack of satisfaction was known or unknown at the
time), it shall not operate as a waiver of (a) the right of Agent, Issuing Bank
and Lenders to insist upon satisfaction of all conditions precedent with respect
to any subsequent funding, issuance or grant; nor (b) any Default or Event of
Default due to such failure of conditions or otherwise.
SECTION 7. COLLATERAL
     7.1 Grant of Security Interest. To secure the prompt payment and
performance of all Obligations, each Borrower hereby grants to Agent, for the
benefit of Secured Parties, a continuing security interest in and Lien upon all
personal Property of such Borrower, including all of the following Property,
whether now owned or hereafter acquired, and wherever located:
          (a) all Accounts;
          (b) all Chattel Paper, including electronic chattel paper;
          (c) all Commercial Tort Claims;
          (d) all Deposit Accounts and Securities Accounts;
          (e) all Documents;
          (f) all General Intangibles, including Payment Intangibles, Software
and Intellectual Property;
          (g) all Goods, including Inventory, Equipment and fixtures;
          (h) all Instruments;
          (i) all Investment Property;
          (j) all Letter-of-Credit Rights;
          (k) all Supporting Obligations;
          (l) all monies, whether or not in the possession or under the control
of Agent, a Lender, or a bailee or Affiliate of Agent or a Lender, including any
Cash Collateral;
          (m) all accessions to, substitutions for, and all replacements,
products, and cash and non-cash proceeds of the foregoing, including proceeds of
and unearned premiums with respect to insurance policies, and claims against any
Person for loss, damage or destruction of any Collateral; and

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          (n) all books and records (including customer lists, files,
correspondence, tapes, computer programs, print-outs and computer records)
pertaining to the foregoing.
     7.2 Lien on Deposit Accounts; Cash Collateral.
          7.2.1 Deposit Accounts and Securities Accounts. To further secure the
prompt payment and performance of all Obligations, each Borrower hereby grants
to Agent, for the benefit of Secured Parties, a continuing security interest in
and Lien upon all of such Borrower’s right, title and interest in and to each
Deposit Account and Securities Account of such Borrower and any deposits or
other sums at any time credited to any such Deposit Account or Securities
Account, including any sums in any blocked or lockbox accounts or in any
accounts into which such sums are swept. Each Borrower authorizes and directs
each bank or other depository to deliver to Agent, on a daily basis, all
balances in each Deposit Account maintained by such Borrower with such
depository for application to the Obligations then outstanding. Each Borrower
irrevocably appoints Agent as such Borrower’s attorney-in-fact to collect such
balances to the extent any such delivery is not so made.
          7.2.2 Cash Collateral. Any Cash Collateral may be invested, in Agent’s
discretion, in Cash Equivalents, but Agent shall have no duty to do so,
regardless of any agreement, understanding or course of dealing with any
Borrower, and shall have no responsibility for any investment or loss. Each
Borrower hereby grants to Agent, for the benefit of Secured Parties, a security
interest in all Cash Collateral held from time to time and all proceeds thereof,
as security for the Obligations, whether such Cash Collateral is held in the
Cash Collateral Account or elsewhere. Agent may apply Cash Collateral to the
payment of any Obligations, in such order as Agent may elect, as they become due
and payable. The Cash Collateral Account and all Cash Collateral shall be under
the sole dominion and control of Agent. No Borrower or other Person claiming
through or on behalf of any Borrower shall have any right to any Cash
Collateral, until Full Payment of all Obligations.
     7.3 Real Estate Collateral. The Obligations shall also be secured by
Mortgages upon all Real Estate owned by Borrowers, including the Real Estate
listed on Schedule 7.3. The Mortgages shall be duly recorded, at Borrowers’
expense, in each office where such recording is required to constitute a fully
perfected Lien on the Real Estate covered thereby. If any Borrower acquires Real
Estate hereafter, Borrowers shall, within 30 days, execute, deliver and record a
Mortgage sufficient to create a first priority Lien in favor of Agent on such
Real Estate, and shall deliver all Related Real Estate Documents within such
30 days.
     7.4 Other Collateral.
          7.4.1 Commercial Tort Claims. Borrowers shall promptly notify Agent in
writing if any Borrower has a Commercial Tort Claim (other than, as long as no
Default or Event of Default exists, a Commercial Tort Claim for less than
$250,000) and, upon Agent’s request, shall promptly execute such documents and
take such actions as Agent deems appropriate to confer upon Agent (for the
benefit of Secured Parties) a duly perfected, first priority Lien upon such
claim.
          7.4.2 Certain After-Acquired Collateral. Borrowers shall promptly
notify Agent in writing if, after the Closing Date, any Borrower obtains any
interest in any Collateral consisting of Deposit Accounts, Chattel Paper,
Documents, Instruments, Intellectual Property, Investment Property or
Letter-of-Credit Rights and, upon Agent’s request, shall promptly execute such
documents and take such actions as Agent deems appropriate to effect Agent’s
duly perfected, first priority Lien upon such Collateral, including obtaining
any appropriate possession, control agreement or Lien Waiver. If any Collateral
is in the possession of a third party, at Agent’s request, Borrowers shall
obtain an acknowledgment that such third party holds the Collateral for the
benefit of Agent.

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     7.5 No Assumption of Liability. The Lien on Collateral granted hereunder is
given as security only and shall not subject Agent or any Lender to, or in any
way modify, any obligation or liability of Borrowers relating to any Collateral.
     7.6 Further Assurances. Promptly upon request, Borrowers shall deliver such
instruments, assignments, title certificates, or other documents or agreements,
and shall take such actions, as Agent deems appropriate under Applicable Law to
evidence or perfect its Lien on any Collateral, or otherwise to give effect to
the intent of this Agreement. Each Borrower authorizes Agent to file any
financing statement that indicates the Collateral as “all assets” or “all
personal property” of such Borrower, or words to similar effect, and ratifies
any action taken by Agent before the Closing Date to effect or perfect its Lien
on any Collateral.
     7.7 Foreign Subsidiary Stock. Notwithstanding Section 7.1, the Collateral
shall include only 65% of the voting stock of any Foreign Subsidiary.
SECTION 8. COLLATERAL ADMINISTRATION
     8.1 Borrowing Base Certificates. Unless extended in writing by Agent in its
sole discretion, by Wednesday (or, if the preceding Monday or Friday is not a
Business Day, then Thursday) of each week, Borrowers shall deliver to Agent (and
Agent shall promptly deliver same to Lenders) a Borrowing Base Certificate
prepared as of the close of business of the previous week, with such supporting
schedules and at such other times as Agent may request. All calculations of
Availability in any Borrowing Base Certificate shall originally be made by
Borrowers and certified by a Senior Officer, provided that Agent may from time
to time review and adjust any such calculation (a) to reflect its reasonable
estimate of declines in value of any Collateral, due to collections received in
the Dominion Account or otherwise; (b) to adjust advance rates to reflect
changes in dilution, quality, mix and other factors affecting Collateral; and
(c) to the extent the calculation is not made in accordance with this Agreement
or does not accurately reflect the Availability Reserve.
     8.2 Administration of Accounts.
          8.2.1 Records and Schedules of Accounts. Each Borrower shall keep
accurate and complete records of its Accounts, including all payments and
collections thereon, and shall submit to Agent, on such periodic basis as Agent
may request (and in any event no less frequently than on a weekly basis) a sales
and collections report, in form satisfactory to Agent. Each Borrower shall also
provide to Agent, on or before Wednesday (or, if the preceding Monday or Friday
is not a Business Day, then Thursday) of each week (unless extended in writing
by Agent in its sole discretion), a detailed aged trial balance of all Accounts
as of the end of the preceding week, specifying each Account’s Account Debtor
name and address, amount, invoice date and due date, showing any discount,
allowance, credit, authorized return or dispute, and including such proof of
delivery, copies of invoices and invoice registers, copies of related documents,
repayment histories, status reports and other information as Agent may
reasonably request. If Accounts in an aggregate face amount of $250,000 or more
cease to be Eligible Accounts, Borrowers shall notify Agent of such occurrence
promptly (and in any event within one Business Day) after any Borrower has
knowledge thereof.
          8.2.2 Taxes. If an Account of any Borrower includes a charge for any
Taxes, Agent is authorized, in its discretion, to pay the amount thereof to the
proper taxing authority for the account of such Borrower and to charge Borrowers
therefor; provided, however, that neither Agent nor Lenders shall be liable for
any Taxes that may be due from Borrowers or with respect to any Collateral.
          8.2.3 Account Verification. Whether or not a Default or Event of
Default exists, Agent shall have the right at any time, in the name of Agent,
any designee of Agent or any Borrower to verify the validity, amount or any
other matter relating to any Accounts of Borrowers by mail, telephone or

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otherwise. Borrowers shall cooperate fully with Agent in an effort to facilitate
and promptly conclude any such verification process.
          8.2.4 Maintenance of Dominion Account. Borrowers shall maintain
Dominion Accounts pursuant to lockbox or other arrangements acceptable to Agent.
Borrowers shall obtain an agreement (in form and substance satisfactory to
Agent) from each lockbox servicer and Dominion Account bank, establishing
Agent’s control over and Lien in the lockbox or Dominion Account, requiring
immediate deposit of all remittances received in the lockbox to a Dominion
Account and, if such Dominion Account is not maintained with Bank of America,
requiring immediate transfer of all funds in the Dominion Account to a Dominion
Account maintained with Bank of America, and waiving offset rights of such
servicer or bank against any funds in the lockbox or Dominion Account, except
offset rights for customary administrative charges. Neither Agent nor Lenders
assume any responsibility to Borrowers for any lockbox arrangement or Dominion
Account, including any claim of accord and satisfaction or release with respect
to any Payment Items accepted by any bank.
          8.2.5 Proceeds of Collateral. Borrowers shall request in writing and
otherwise take all reasonable steps to ensure that all payments on Accounts or
otherwise relating to Collateral are made directly to a Dominion Account (or a
lockbox relating to a Dominion Account). If any Borrower or Subsidiary receives
cash or Payment Items with respect to any Collateral, it shall hold same in
trust for Agent and promptly (not later than the next Business Day) deposit same
into a Dominion Account.
     8.3 Administration of Inventory.
          8.3.1 Records and Reports of Inventory. Each Borrower shall keep
accurate and complete records of its Inventory, including costs and daily
withdrawals and additions, and shall submit to Agent inventory reports in form
satisfactory to Agent, on such periodic basis as Agent may request (and in any
event no less frequently than on a monthly basis). Each Borrower shall conduct a
physical inventory at least once per calendar year (and on a more frequent basis
if requested by Agent when an Event of Default exists) and periodic cycle counts
consistent with historical practices, and shall provide to Agent a report based
on each such inventory and count promptly upon completion thereof, together with
such supporting information as Agent may request. Agent may participate in and
observe each inventory or physical count.
          8.3.2 Returns of Inventory. During Inventory Borrowing Period, no
Borrower shall return any Inventory to a supplier, vendor or other Person,
whether for cash, credit or otherwise, unless (a) such return is in the Ordinary
Course of Business; (b) no Default, Event of Default or Overadvance exists or
would result therefrom; (c) Agent is promptly notified if the aggregate Value of
all Inventory returned in any month exceeds $100,000; and (d) any payment
received by a Borrower for a return is promptly remitted to Agent for
application to the Obligations.
          8.3.3 Acquisition, Sale and Maintenance. No Borrower shall acquire or
accept any Inventory on consignment or approval, and shall take all steps to
assure that all Inventory is produced in accordance with Applicable Law,
including the FLSA. No Borrower shall sell any Inventory on consignment or
approval or any other basis under which the customer may return or require a
Borrower to repurchase such Inventory (other than customary right of customers
to return merchandise in the Ordinary Course of Business). Borrowers shall use,
store and maintain all Inventory with reasonable care and caution, in accordance
with applicable standards of any insurance and in conformity with all Applicable
Law, and shall make current rent payments (within applicable grace periods
provided for in leases) at all locations where any Collateral is located.

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     8.4 Administration of Equipment.
          8.4.1 Records and Schedules of Equipment. Each Borrower shall keep
accurate and complete records of its Equipment, including kind, quality,
quantity, cost, acquisitions and dispositions thereof, and shall submit to
Agent, on such periodic basis as Agent may request, a current schedule thereof,
in form satisfactory to Agent. Promptly upon request, Borrowers shall deliver to
Agent evidence of their ownership or interests in any Equipment.
          8.4.2 Dispositions of Equipment. No Borrower shall sell, lease or
otherwise dispose of any Equipment, without the prior written consent of Agent,
other than (a) a Permitted Asset Disposition; and (b) replacement of Equipment
that is worn, damaged or obsolete with Equipment of like function and value, if
the replacement Equipment is acquired substantially contemporaneously with such
disposition and is free of Liens other than Purchase Money Liens securing
Permitted Purchase Money Debt.
          8.4.3 Condition of Equipment. The Equipment is in good operating
condition and repair, and all necessary replacements and repairs have been made
so that the value and operating efficiency of the Equipment is preserved at all
times, reasonable wear and tear excepted. Each Borrower shall ensure that the
Equipment is mechanically and structurally sound, and capable of performing the
functions for which it was designed, in accordance with the manufacturer’s
published and recommended specifications. No Borrower shall permit any Equipment
to become affixed to real Property unless any landlord or mortgagee delivers a
Lien Waiver or similar instrument.
     8.5 Administration of Deposit Accounts; Securities Accounts. Schedule 8.5
sets forth all Deposit Accounts and Securities Accounts maintained by Borrowers,
including all Dominion Accounts. Each Borrower shall take all actions necessary
to establish Agent’s control of each such Deposit Account and such Securities
Account (other than an account exclusively used for payroll, payroll taxes or
employee benefits, or an account containing not more that $10,000 at any time).
Each Borrower shall be the sole account holder of each Deposit Account and
Securities Account and shall not allow any other Person (other than Agent) to
have control over a Deposit Account or a Securities Account or any Property
deposited therein. Each Borrower shall promptly notify Agent of any opening or
closing of a Deposit Account or a Securities Account and, with the consent of
Agent, will amend Schedule 8.5 to reflect same.
     8.6 General Provisions.
          8.6.1 Location of Collateral. All tangible items of Collateral, other
than Inventory in transit, shall at all times be kept by Borrowers at the
business locations set forth in Schedule 8.6.1, except that Borrowers may
(a) make sales or other dispositions of Collateral in accordance with
Section 10.2.6; and (b) move Collateral to another location in the United
States, upon 30 Business Days prior written notice to Agent.
          8.6.2 Insurance of Collateral; Condemnation Proceeds.
          (a) Each Borrower shall maintain insurance with respect to the
Collateral, covering casualty, hazard, public liability, theft, malicious
mischief, and such other risks, in such amounts, with such endorsements, and
with such insurers (rated A+ or better by A.M. Best Rating Guide) as are
satisfactory to Agent. All proceeds under each policy shall be payable to Agent.
From time to time upon request, Borrowers shall deliver to Agent the originals
or certified copies of its insurance policies. Unless Agent shall agree
otherwise, each policy shall include satisfactory endorsements (i) showing Agent
as sole loss payee or additional insured, as appropriate; (ii) requiring 30 days
prior written notice to Agent in the event of cancellation of the policy for any
reason whatsoever; and (iii) specifying that the interest of Agent shall not be
impaired or invalidated by any act or neglect of any Borrower or the owner of
the Property, nor by the occupation of the premises for purposes more hazardous
than are permitted by the policy. If any Borrower fails to provide and pay for
such insurance, Agent may, at its option, but shall

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not be required to, procure the insurance and charge Borrowers therefor. Each
Borrower agrees to deliver to Agent, promptly as rendered, copies of all reports
made to insurance companies. While no Event of Default exists, Borrowers may
settle, adjust or compromise any insurance claim, as long as the proceeds are
delivered to Agent. If an Event of Default exists, only Agent shall be
authorized to settle, adjust and compromise such claims.
          (b) Any proceeds of insurance (other than proceeds from workers’
compensation or D&O insurance or proceeds related to a Permitted Lien which are
expressly required by the terms of the document under which such Permitted Lien
was created to be used to repay the Debt secured by such Permitted Lien upon the
occurrence of the event which resulted in such proceeds (so long as such Debt is
permanently reduced thereby)) and any awards arising from condemnation of any
Collateral shall be deposited into the Dominion Account. Any such proceeds or
awards that relate to Inventory shall be applied to payment of the Revolver
Loans, and then to any other Obligations outstanding. Subject to clause
(c) below, any proceeds or awards that relate to Equipment or Real Estate shall
be applied first to Revolver Loans and then to other Obligations.
          (c) If requested by Borrowers in writing within 15 days after Agent’s
receipt of any insurance proceeds or condemnation awards relating to any loss or
destruction of Equipment or Real Estate, Borrowers may use such proceeds or
awards to repair or replace such Equipment or Real Estate (and until so used,
the proceeds shall be held by Agent as Cash Collateral) as long as (i) no
Default or Event of Default exists; (ii) such repair or replacement is promptly
undertaken and concluded, in accordance with plans satisfactory to Agent;
(iii) replacement buildings are constructed on the sites of the original
casualties and are of comparable size, quality and utility to the destroyed
buildings; (iv) the repaired or replaced Property is free of Liens, other than
Permitted Liens that are not Purchase Money Liens; (v) Borrowers comply with
disbursement procedures for such repair or replacement as Agent may reasonably
require; and (vi) the aggregate amount of such proceeds or awards from any
single casualty or condemnation does not exceed $250,000.
          8.6.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes payable with respect to any Collateral (including any sale thereof), and
all other payments required to be made by Agent to any Person to realize upon
any Collateral, shall be borne and paid by Borrowers. Agent shall not be liable
or responsible in any way for the safekeeping of any Collateral, for any loss or
damage thereto (except for reasonable care in its custody while Collateral is in
Agent’s actual possession), for any diminution in the value thereof, or for any
act or default of any warehouseman, carrier, forwarding agency or other Person
whatsoever, but the same shall be at Borrowers’ sole risk.
          8.6.4 Defense of Title to Collateral. Each Borrower shall at all times
defend its title to Collateral and Agent’s Liens therein against all Persons,
claims and demands whatsoever, except Permitted Liens.
     8.7 Power of Attorney. Each Borrower hereby irrevocably constitutes and
appoints Agent (and all Persons designated by Agent) as such Borrower’s true and
lawful attorney (and agent-in-fact) for the purposes provided in this Section.
Agent, or Agent’s designee, may, without notice and in either its or a
Borrower’s name, but at the cost and expense of Borrowers:
          (a) Endorse a Borrower’s name on any Payment Item or other proceeds of
Collateral (including proceeds of insurance) that come into Agent’s possession
or control; and
          (b) During an Event of Default, (i) notify any Account Debtors of the
assignment of their Accounts, demand and enforce payment of Accounts, by legal
proceedings or otherwise, and generally exercise any rights and remedies with
respect to Accounts; (ii) settle, adjust, modify, compromise, discharge or
release any Accounts or other Collateral, or any legal proceedings brought to

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collect Accounts or Collateral; (iii) sell or assign any Accounts and other
Collateral upon such terms, for such amounts and at such times as Agent deems
advisable; (iv) take control, in any manner, of any proceeds of Collateral;
(v) prepare, file and sign a Borrower’s name to a proof of claim or other
document in a bankruptcy of an Account Debtor, or to any notice, assignment or
satisfaction of Lien or similar document; (vi) receive, open and dispose of mail
addressed to a Borrower, and notify postal authorities to change the address for
delivery thereof to such address as Agent may designate; (vii) endorse any
Chattel Paper, Document, Instrument, invoice, freight bill, bill of lading, or
similar document or agreement relating to any Accounts, Inventory or other
Collateral; (viii) use a Borrower’s stationery and sign its name to
verifications of Accounts and notices to Account Debtors; (ix) use the
information recorded on or contained in any data processing equipment and
computer hardware and software relating to any Collateral; (x) make and adjust
claims under policies of insurance; (xi) take any action as may be necessary or
appropriate to obtain payment under any letter of credit or banker’s acceptance
for which a Borrower is a beneficiary; and (xii) take all other actions as Agent
deems appropriate to fulfill any Borrower’s obligations under the Loan
Documents.
SECTION 9. REPRESENTATIONS AND WARRANTIES
     9.1 General Representations and Warranties. To induce Agent and Lenders to
enter into this Agreement and to make available the Revolver Commitments, Loans
and Letters of Credit, each Borrower represents and warrants that:
          9.1.1 Existence and Qualification; Power. Each Borrower and its
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the state of its organization as specified in
Schedule 9.1.4 annexed hereto, has the corporate power and authority to own and
operate its properties, to lease the properties it operates and to conduct its
business, is duly qualified and in good standing under the Applicable Laws of
each jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
that lack of good standing in any jurisdiction does not have a Material Adverse
Effect.
          9.1.2 Power; Authority; Enforceable Obligations.
          (a) Each Obligor has the corporate power and authority to make,
deliver and perform each Loan Document to which it is a party and each Borrower
has power and authority to borrow hereunder and has taken all necessary action
to authorize the borrowings on the terms and conditions of this Agreement and
each Obligor has taken all necessary action to authorize the execution, delivery
and performance of the Loan Documents to which it is a party.
          (b) No Governmental Approval is required in connection with the
Borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the other Loan Documents.
          (c) The Loan Documents have been duly executed and delivered by each
Obligor which is a party thereto, and constitute a legal, valid and binding
obligation of each Obligor party thereto, enforceable against each such Obligor
in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors’ rights generally or by equitable principles.
          9.1.3 No Legal Bar. The execution, delivery, and performance by each
Obligor of the Loan Documents to which it is a party and compliance with the
provisions thereof have been duly authorized by all requisite action on the part
of such Obligor and do not and will not (i) violate or conflict with, or result
in a breach of, or require any consent under (x) any Organic Documents or
charter documents of such Obligor or any of its Subsidiaries, (y) any Applicable
Laws, rules, or regulations or any order, writ, injunction, or decree of any
Governmental Authority or arbitrator applicable to such

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Obligor, or (z) any material Contractual Obligation of such Obligor or any of
its Subsidiaries or by which any of them or any of their property is bound or
subject, (ii) constitute a default under any such Contractual Obligation, or
(iii) result in, or require, the creation or imposition of any Lien on any of
the properties of such Obligor or any of its Subsidiaries (other than any Liens
created under any of the Loan Documents in favor of the Agent on behalf of
Lenders).
          9.1.4 Capital Structure. Schedule 9.1.4 shows, for each Borrower and
Subsidiary, its name, its jurisdiction of organization, its authorized and
issued Equity Interests, the holders of its Equity Interests (other than EMAK),
and all agreements binding on such holders with respect to their Equity
Interests. Each Borrower and Subsidiary has good title to its Equity Interests
in its Subsidiaries, subject only to Agent’s Lien, and all such Equity Interests
are duly issued, fully paid and non-assessable none of such Equity Interest
constitute Margin Stock. There are no outstanding options to purchase, warrants,
subscription rights, agreements to issue or sell, convertible interests, phantom
rights or powers of attorney relating to any Equity Interests of any Borrower or
Subsidiary (other than EMAK). As of the Closing date, no Borrower or Subsidiary
has any equity investment in any other Person other than specifically disclosed
in Schedule 9.1.4.
          9.1.5 Corporate Names; Locations. During the five years preceding the
Closing Date, except as shown on Schedule 9.1.5, no Borrower or Subsidiary has
been known as or used any corporate, fictitious or trade names, has been the
surviving corporation of a merger or combination, or has acquired any
substantial part of the assets of any Person. The chief executive offices and
other places of business of Borrowers and Subsidiaries are shown on
Schedule 8.6.1. During the five years preceding the Closing Date, no Borrower or
Subsidiary has had any other office or place of business.
          9.1.6 Title to Properties; Priority of Liens. Each Borrower and
Subsidiary has good and marketable title to (or valid leasehold interests in)
all of its Real Estate, and good title to all of its personal Property,
including all Property reflected in any financial statements delivered to Agent
or Lenders, in each case free of Liens except Permitted Liens. Each Borrower and
Subsidiary has paid and discharged all lawful claims that, if unpaid, could
become a Lien on its Properties, other than Permitted Liens. All Liens of Agent
in the Collateral are duly perfected, first priority Liens, subject only to
Permitted Liens that are expressly allowed to have priority over Agent’s Liens.
As of the Closing Date, Schedule 7.3 annexed hereto contains a true, accurate
and complete list of (i) all fee Real Estate owned by any Obligor, and (ii) all
leases, subleases or assignments of leases (together with all amendments,
modifications, supplements, renewals or extensions of any thereof) affecting
each Real Estate of any Obligor, regardless of whether such Obligor is the
landlord or tenant (whether directly or as an assignee or successor in interest)
under such lease, sublease or assignment.
          9.1.7 Accounts. Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrowers with
respect thereto. Borrowers warrant, with respect to each Account at the time it
is shown as an Eligible Account in a Borrowing Base Certificate, that:
          (a) it is genuine and in all respects what it purports to be, and is
not evidenced by a judgment;
          (b) it arises out of a completed, bona fide sale and delivery of goods
or rendition of services in the Ordinary Course of Business, and substantially
in accordance with any purchase order, contract or other document relating
thereto;
          (c) it is for a sum certain, maturing as stated in the invoice
covering such sale or rendition of services, a copy of which has been furnished
or is available to Agent on request;

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          (d) it is not subject to any offset, Lien (other than Agent’s Lien),
deduction, defense, dispute, counterclaim or other adverse condition except as
arising in the Ordinary Course of Business and disclosed to Agent; and it is
absolutely owing by the Account Debtor, without contingency in any respect;
          (e) no purchase order, agreement, document or Applicable Law restricts
assignment of the Account to Agent (regardless of whether, under the UCC, the
restriction is ineffective);
          (f) no extension, compromise, settlement, modification, credit,
deduction or return has been authorized with respect to the Account, except
discounts or allowances granted in the Ordinary Course of Business for prompt
payment that are reflected on the face of the invoice related thereto and in the
reports submitted to Agent hereunder; and
          (g) to the best of Borrowers’ knowledge, (i) there are no facts or
circumstances that are reasonably likely to impair the enforceability or
collectibility of such Account; (ii) the Account Debtor had the capacity to
contract when the Account arose, continues to meet the applicable Borrower’s
customary credit standards, is Solvent, is not contemplating or subject to an
Insolvency Proceeding, and has not failed, or suspended or ceased doing
business; and (iii) there are no proceedings or actions threatened or pending
against any Account Debtor that could reasonably be expected to have a material
adverse effect on the Account Debtor’s financial condition.
          9.1.8 Financial Statements. The consolidated and consolidating balance
sheets, and related statements of income, cash flow and shareholder’s equity, of
Borrowers and Subsidiaries that have been and are hereafter delivered to Agent
and Lenders, are prepared in accordance with GAAP, and fairly present the
financial positions and results of operations of Borrowers and Subsidiaries at
the dates and for the periods indicated. All projections delivered from time to
time to Agent and Lenders have been prepared in good faith, based on reasonable
assumptions in light of the circumstances at such time. Except as disclosed in
the Draft Financial Statements attached hereto as Schedule 9.1.8, since
December 31, 2004, there has been no change in the condition, financial or
otherwise, of any Borrower or Subsidiary that could reasonably be expected to
have a Material Adverse Effect. No financial statement delivered to Agent or
Lenders at any time contains any untrue statement of a material fact, nor fails
to disclose any material fact necessary to make such statement not materially
misleading. Each of (i) EMAK, (ii) any other Borrower that borrows directly
hereunder, and (iii) EMAK and its Subsidiaries on a consolidated basis is
Solvent.
          9.1.9 Surety Obligations. No Borrower or Subsidiary is obligated as
surety or indemnitor under any bond or other contract that assures payment or
performance of any obligation of any Person, except as permitted hereunder.
          9.1.10 Taxes. Each Borrower and Subsidiary has filed all federal,
state and local tax returns and other reports that it is required by law to
file, and has paid, or made provision for the payment of, all Taxes upon it, its
income and its Properties that are due and payable, except to the extent being
Properly Contested. The provision for Taxes on the books of each Borrower and
Subsidiary is adequate for all years not closed by applicable statutes, and for
its current Fiscal Year. No Obligor is a “foreign person” within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended and the
related Treasury Department regulations, including temporary regulations.
          9.1.11 Brokers. There are no brokerage commissions, finder’s fees or
investment banking fees payable in connection with any transactions contemplated
by the Loan Documents, and each Borrower hereby indemnifies Agent and Lenders
against, and agrees that it will hold Agent and Lenders harmless from, any
claim, demand or liability for any such brokerage commissions, lender’s fees or
investment banking fees alleged to have been incurred in connection herewith and
therewith and any expense including lease fees, expense and disbursements of
counsel arising in connection with any such claim, demand or liability.

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          9.1.12 Intellectual Property. Each Borrower and Subsidiary owns or has
the lawful right to use all Intellectual Property necessary for the conduct of
its business, without conflict with any rights of others. There is no pending
or, to any Borrower’s knowledge, threatened Intellectual Property Claim with
respect to any Borrower, any Subsidiary or any of their Property (including any
Intellectual Property). Except as disclosed on Schedule 9.1.12, no Borrower or
Subsidiary pays or owes any Royalty or other compensation to any Person with
respect to any Intellectual Property. All Intellectual Property owned, used or
licensed by, or otherwise subject to any interests of, any Borrower or
Subsidiary is shown on Schedule 9.1.12. To the knowledge of any Borrower, the
use of the Intellectual Property by Borrowers and Subsidiaries does not infringe
on the rights of any Person, except for such claims and infringements that, in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
          9.1.13 Governmental Approvals. Each Borrower and Subsidiary has, is in
compliance with, and is in good standing with respect to, all Governmental
Approvals necessary to conduct its business and to own, lease and operate its
Properties. All necessary import, export or other licenses, permits or
certificates for the import or handling of any goods or other Collateral have
been procured and are in effect, and Borrowers and Subsidiaries have complied
with all foreign and domestic laws with respect to the shipment and importation
of any goods or Collateral, except where noncompliance could not reasonably be
expected to have a Material Adverse Effect.
          9.1.14 Compliance with Laws. Each Borrower and Subsidiary has duly
complied, and its Properties and business operations are in compliance, in all
material respects with all Applicable Law, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect. There have been no
citations, notices or orders of material noncompliance issued to any Borrower or
Subsidiary under any Applicable Law. No Inventory has been produced in violation
of the FLSA.
          9.1.15 Compliance with Environmental Laws. Except as disclosed on
Schedule 9.1.15, no Borrower’s or Subsidiary’s past or present operations, Real
Estate or other Properties are subject to any federal, state or local
investigation to determine whether any remedial action is needed to address any
environmental pollution, hazardous material or environmental clean-up. No
Borrower or Subsidiary has received any Environmental Notice. No Borrower or
Subsidiary has any contingent liability with respect to any Environmental
Release, environmental pollution or hazardous material on any Real Estate now or
previously owned, leased or operated by it. The representations and warranties
contained in the Environmental Agreement (if any) are true and correct on the
Closing Date.
          9.1.16 Insurance. The properties of each Borrower and their
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of any Borrower, in such amounts, with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar properties in localities where such
Borrower or such Subsidiary operates, and all other insurance required to be
maintained pursuant to Section 10.1.7.
          9.1.17 Burdensome Contracts. No Borrower or Subsidiary is a party or
subject to any contract, agreement or charter restriction that could reasonably
be expected to have a Material Adverse Effect. No Borrower or Subsidiary is
party or subject to any Restrictive Agreement, except as shown on
Schedule 9.1.17, none of which prohibit the execution or delivery of any Loan
Documents by an Obligor nor the performance by an Obligor of any obligations
thereunder.
          9.1.18 Litigation. Except as shown on Schedule 9.1.18, there are no
proceedings or investigations pending or, to any Borrower’s knowledge,
threatened against any Borrower or Subsidiary, or any of their businesses,
operations, Properties, prospects or conditions, that (a) relate to any Loan
Documents or transactions contemplated thereby; or (b) could reasonably be
expected to have a Material Adverse Effect if determined adversely to any
Borrower or Subsidiary. No Borrower or Subsidiary is in default with respect to
any order, injunction or judgment of any Governmental Authority.

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          9.1.19 No Defaults. To the knowledge of Borrowers, no event or
circumstance has occurred or exists that constitutes a Default or Event of
Default. No Borrower or Subsidiary is in default, and no event or circumstance
has occurred or exists that with the passage of time or giving of notice would
constitute a default, under any Material Contract or any other Related Document
or in the payment of any Borrowed Money. To the knowledge of Borrowers, there is
no basis upon which any party (other than a Borrower or Subsidiary) could
terminate a Material Contract prior to its scheduled termination date.
          9.1.20 ERISA. Except as disclosed on Schedule 9.1.20, no Borrower or
Subsidiary has any Multiemployer Plan or Foreign Plan. Each Borrower and
Subsidiary is in full compliance with the requirements of all Applicable Law,
including ERISA, relating to each Multiemployer Plan and Foreign Plan. No fact
or situation exists that could reasonably be expected to result in a Material
Adverse Effect in connection with any Multiemployer Plan or Foreign Plan. No
Borrower or Subsidiary has any withdrawal liability in connection with a
Multiemployer Plan or Foreign Plan. All employer and employee contributions to
Foreign Plans, to the extent required by law or the terms of such plans, have
been made or accrued in accordance with normal accounting principles. The fair
market value of the assets of each funded Foreign Plan, the liability of each
insurer for any Foreign Plan funded through insurance and/or the book reserve
established for each Foreign Plan, together with any accrued contributions, are
sufficient to provide the accrued benefit obligations of all participants in
such plans according to the actuarial assumptions and valuations most recently
used to account for such obligations in accordance with applicable generally
accepted accounting principles. Each Foreign Plan required to be registered has
been registered and is maintained in good standing with all applicable
regulatory authorities.
          9.1.21 Trade Relations. There exists no actual or threatened
termination, limitation or modification of any business relationship between any
Borrower or Subsidiary and any customer or supplier, or any group of customers
or suppliers, who individually or in the aggregate are material to the business
of such Borrower or Subsidiary. There exists no condition or circumstance that
could reasonably be expected to impair the ability of any Borrower or Subsidiary
to conduct its business at any time hereafter in substantially the same manner
as conducted on the Closing Date.
          9.1.22 Labor Relations. Except as described on Schedule 9.1.22, no
Borrower or Subsidiary is party to or bound by any collective bargaining
agreement, management agreement or consulting agreement. There are no material
grievances, disputes or controversies with any union or other organization of
any Borrower’s or Subsidiary’s employees, or, to any Borrower’s knowledge, any
asserted or threatened strikes, work stoppages or demands for collective
bargaining.
          9.1.23 Payable Practices. No Borrower or Subsidiary has made any
material change in its historical accounts payable practices from those in
effect on the Closing Date.
          9.1.24 Not a Regulated Entity. No Obligor is (a) an “investment
company” or a “person directly or indirectly controlled by or acting on behalf
of an investment company” within the meaning of the Investment Company Act of
1940; (b) a “holding company,” a “subsidiary company” of a “holding company,” or
an “affiliate” of either, within the meaning of the Public Utility Holding
Company Act of 1935; or (c) subject to regulation under the Federal Power Act,
the Interstate Commerce Act, any public utilities code or any other Applicable
Law regarding its authority to incur Debt.
          9.1.25 Margin Stock. No Borrower or Subsidiary is engaged, principally
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock. No Loan proceeds or
Letters of Credit will be used by Borrowers to purchase or carry, or to reduce
or refinance any Debt incurred to purchase or carry, any Margin Stock or for any
related purpose governed by Regulations T, U or X of the Board of Governors.

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          9.1.26 Plan Assets. No Borrower is an entity deemed to hold “plan
assets” within the meaning of 29 C.F.R. §2510.3-101 of any “employee benefit
plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA
or any “plan” (within the meaning of Section 4975 of the Internal Revenue Code),
and neither the execution of this Agreement nor the funding of any Loans gives
rise to a prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code.
          9.1.27 Shareholder Agreements. As of the Closing Date, no Obligor is a
party to any material agreement with Donald A. Kurz or Crown, or their
Affiliates, other than, the Securities Purchase Agreement, the Warrants, the
Registration Rights Agreement and the Certificate of Designation.
          9.1.28 BK Agreements and Other Customer Agreements. Borrowers have
delivered to Agent a copy of each BK Services Agreement, BK Supply Agreement,
RSI Supply Agreement, Other Customer Agreement or, to the knowledge of
Borrowers, any other written customer supply or service agreement in effect on
or after the Closing Date (other than a purchase order) to the extent an Account
owing to any Borrower has arisen from an Account Debtor party to such other
written customer supply or service agreement or any of its Affiliates or is
reasonably expected to arise from an Account Debtor party to such agreement or
any of its Affiliates within 12 months from any date of determination.
          9.1.29 Permits. Each of the Borrowers and their Subsidiaries has such
certificates, permits, licenses (including trademark and other Intellectual
Property licenses), franchises, consents, approvals, authorizations and
clearances that are material to the condition (financial or otherwise), business
or operations of any Borrower or Subsidiary (“Permits”), except to the extent
the lack thereof would not have a Material Adverse Effect; and all such Permits
are valid and in full force and effect and will be valid and in full force and
effect immediately after the Closing Date, except for those where the failure to
be valid or in effect could not reasonably be expected to result in a Material
Adverse Effect. Each of the Borrowers and their Subsidiaries is in compliance in
all respects with its obligations under such Permits, except where failure to be
in compliance could not reasonably be expected to result in a Material Adverse
Effect, and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination of such Permits, except where such
revocation or termination could not reasonably be expected to result in a
Material Adverse Effect.
          9.1.30 Inventory Locations. Schedule 8.6.1 attached hereto lists all
locations at which any Borrower or any of its Domestic Subsidiaries has any
personal Property (including without limitation Inventory) stored or otherwise
located. None of the Borrowers or any of its Subsidiaries have any personal
Property (including without limitation any Inventory) stored in or otherwise
located on any of the following locations: 19400 Western Avenue, Torrance,
California 90502; 553-A South Joliet Road, Bollingbrook, Illinois 60440; 5335
West 74th Street, Indianapolis, Indiana 46268; and 490 Supreme Drive,
Bensenville, Illinois 60106.
9.2 Matters Relating to Collateral.
          9.2.1 Creation, Perfection and Priority of Liens. The execution and
delivery of the Security Documents by each Obligor party thereto and the
delivery to Agent of the Pledged Collateral (all of which Pledged Collateral has
been so delivered) are effective to create in favor of Agent for the benefit of
Lenders, as security for the respective Secured Obligations (as defined in the
applicable Security Document in respect of any Collateral), a valid and
perfected first priority Lien on all of the Collateral, and all filings and
other actions necessary or desirable to perfect and maintain the perfection and
first priority status of such Liens have been duly made or taken and remain in
full force and effect, other than the filing of any UCC financing statements
delivered to Agent for filing (but not yet filed) and the periodic filing of UCC
continuation statements in respect of UCC financing statements filed by or on
behalf of Agent.

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          9.2.2 Governmental Approvals. No Governmental Approval is required for
either (i) the pledge or grant by any Obligor of the Liens purported to be
created in favor of Agent pursuant to any of the Security Documents, or (ii) the
exercise by Agent of any rights or remedies in respect of any Collateral
(whether specifically granted or created pursuant to any of the Security
Documents or created or provided for by applicable law), except for filings or
recordings contemplated by Section 9.2.1 and except as may be required, in
connection with the disposition of any Pledged Collateral, by laws generally
affecting the offering and sale of securities. As of the Closing Date, Borrowers
and Subsidiaries have received no written notice of any pending or threatened
condemnation proceeding, exercise of the power of eminent domain by any
Governmental Authority, or any similar proceeding affecting any facility or any
interest therein. As of the Closing Date, no such proceeding is pending,
contemplated or threatened.
          9.2.3 Absence of Third-Party Filings. Except such as may have been
filed in favor of Agent as contemplated by Section 9.2.1 and as set forth on
Schedule 9.2.3 annexed hereto, (i) no effective UCC financing statement, fixture
filing or other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office, and (ii) no effective
filing covering all or any part of the Intellectual Property Collateral is on
file in the PTO.
          9.2.4 Margin Stock. The pledge of the Pledged Collateral pursuant to
the Security Documents does not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
          9.2.5 Information Regarding Collateral; Representations and
Warranties. All information supplied to Agent by or on behalf of any Obligor
with respect to any of the Collateral (in each case taken as a whole with
respect to any particular Collateral) is accurate and complete in all material
respects. All representations and warranties of the Obligors set forth in the
Security Documents are true and correct.
     9.3 Complete Disclosure. No statement, information, report, representation,
or warranty made by any Obligor in any Loan Document or furnished to Agent or
any Lender in connection with any Loan Document contains any untrue statement of
a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. Any projections, budgets, and pro
forma financial information contained in such materials are based upon good
faith estimates and assumptions believed by any Borrower or the Obligors to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known (or which should upon the
reasonable exercise of diligence be known) to any Borrower (other than matters
of a general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lenders for use in connection with the transactions contemplated
hereby.
SECTION 10. COVENANTS AND CONTINUING AGREEMENTS
     10.1 Affirmative Covenants. For so long as any Revolver Commitments or
Obligations are outstanding, each Borrower shall, and shall cause each
Subsidiary to:
          10.1.1 Inspections; Appraisals.
          (a) Permit Agent (or any of its authorized representatives) from time
to time, subject (except when a Default or Event of Default exists) to
reasonable notice and normal business hours, to visit and inspect the Properties
of any Borrower or Subsidiary, inspect, audit and make extracts from any
Borrower’s or Subsidiary’s books and records, conduct audit field examinations
and appraisals and discuss with its officers, employees, agents, advisors and
independent accountants such Borrower’s or

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Subsidiary’s business, financial condition, assets, prospects and results of
operations. Lenders may participate in any such visit or inspection, at their
own expense. Neither Agent nor any Lender shall have any duty to any Borrower to
make any inspection, nor to share any results of any inspection, appraisal or
report with any Borrower. To the extent any appraisal or other information is
shared by Agent or a Lender with any Borrower, such Borrower acknowledges that
it was prepared by Agent and Lenders for their purposes and Borrowers shall not
be entitled to rely upon it.
          (b) Reimburse Agent for all charges, costs and expenses of Agent in
connection with (i) examinations of any Obligor’s books and records or any other
financial or Collateral matters as Agent deems appropriate; and (ii) appraisals
of Inventory, Equipment and Real Estate (if any). Borrowers shall pay Agent’s
then standard charges for each day that an employee of Agent or its Affiliates
is engaged in any examination activities, and shall pay the standard charges of
Agent’s internal appraisal group. This Section shall not be construed to limit
Agent’s right to conduct examinations or to obtain appraisals at any time in its
discretion, nor to use third parties for such purposes.
          10.1.2 Financial and Other Information. Keep adequate records and
books of account with respect to its business activities, in which proper
entries are made in accordance with GAAP reflecting all financial transactions;
and furnish to Agent and Lenders (unless extended in writing by Agent in its
sole discretion):
          (a) as soon as available, and in any event within 90 days after the
close of each Fiscal Year, balance sheets as of the end of such Fiscal Year and
the related statements of income, cash flow and shareholders’ equity for such
Fiscal Year, on consolidated and consolidating basis for Borrowers and
Subsidiaries, which consolidated statements shall be audited and certified
(without qualification as to scope, “going concern” or similar items) by a firm
of independent certified public accountants of recognized standing selected by
Borrowers and acceptable to Agent, and shall set forth in comparative form
corresponding figures for the preceding Fiscal Year and other information
acceptable to Agent;
          (b) as soon as available, and in any event within 45 days after the
close of each Fiscal Quarter (excluding the Fiscal Quarter ending on
December 31), (i) balance sheets as of the end of such Fiscal Quarter and the
related statements of income, cash flow and shareholders’ equity for such Fiscal
Quarter, on consolidated and consolidated basis for Borrowers and Subsidiaries,
setting forth in comparative form corresponding figures for the preceding Fiscal
Year and certified by the chief financial officer (or vice president-finance or
vice president-controller) of Borrower Agent as being prepared in accordance
with GAAP and fairly presenting the financial position and results of operations
for such Fiscal Quarter and period, subject to normal year-end adjustments and
the absence of footnotes, and (ii) the Form 10-Q filed by Borrower Agent with
the Securities and Exchange Commission with respect to such Fiscal Quarter;
          (c) as soon as available, and in any event within 30 days after the
end of each month, unaudited balance sheets as of the end of such month and the
related statements of income and cash flow for such month and for the portion of
the Fiscal Year then elapsed, on consolidated and consolidating bases for
Borrowers and Subsidiaries, setting forth in comparative form corresponding
figures for the preceding Fiscal Year and certified by the chief financial
officer (or vice president-finance or vice president-controller) of Borrower
Agent as being prepared in accordance with GAAP and fairly presenting the
financial position and results of operations for such month and period, subject
to normal quarter or year-end adjustments and the absence of footnotes;
          (d) concurrently with delivery of financial statements under clauses
(a), (b) and (c) above, (i) balance sheets as of the end of the applicable
period and the related statements of income, cash flow and shareholders’ equity
for such period, on a consolidated basis for Borrowers and Subsidiaries (other
than EMAK Europe Holdings, Limited and its direct and indirect Subsidiaries),
setting forth in comparative form corresponding figures for the preceding
applicable period and certified by the chief

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financial officer (or vice president-finance or vice president-controller) of
Borrower Agent as being prepared in accordance with GAAP and fairly presenting
the financial position and results of operations for such period (together with
reconciliation information reconciling the exclusion of EMAK Europe Holdings,
Limited and its direct and indirect Subsidiaries) and (ii) a Compliance
Certificate executed by the chief financial officer (or vice president-finance
or vice president-controller) of Borrower Agent;
          (e) concurrently with delivery of financial statements under clause
(a) above, copies of all management letters and other material reports submitted
to Borrowers by their accountants in connection with such financial statements;
          (f) not later than the end of each Fiscal Year (and in any event prior
to approval thereof by the Board of Directors of any Borrower), projections of
Borrowers’ consolidated balance sheets, results of operations, cash flow and
Availability for the next three Fiscal Years, year by year, and for the next
Fiscal Year, month by month;
          (g) at Agent’s request, a listing of each Borrower’s trade payables,
specifying the trade creditor and balance due, and a detailed trade payable
aging, all in form satisfactory to Agent;
          (h) promptly after the sending or filing thereof, copies of any proxy
statements, financial statements or reports that any Borrower has made generally
available to its shareholders; copies of any regular, periodic and special
reports or registration statements or prospectuses that any Borrower files with
the Securities and Exchange Commission or any other Governmental Authority, or
any securities exchange; and copies of any press releases or other statements
made available by a Borrower to the public concerning material changes to or
developments in the business of such Borrower;
          (i) promptly after the sending or filing thereof, copies of any annual
report to be filed in connection with each Plan or Foreign Plan;
          (j) such other reports and information (financial or otherwise) as
Agent may request from time to time in connection with any Collateral or any
Borrower’s, Subsidiary’s or other Obligor’s financial condition or business;
          (k) as soon as available, and in any event within 120 days after the
close of each Fiscal Year, financial statements for each Guarantor, in form and
substance satisfactory to Agent;
          (l) (i) no later than 20 days after the Closing Date, Borrowers shall
have delivered to Agent a fully executed Collateral Access Agreement
substantially in the form of Exhibit D annex hereto or as otherwise agreed to by
Agent (or in cases where Borrowers have an existing Collateral Access Agreement
delivered pursuant to the Existing Credit Agreement, a confirmation thereof in
form and substance satisfactory to Agent) executed by the applicable Borrower(s)
and its landlord with respect to each location identified on Schedule 8.6.1,
which schedule includes the locations where any Inventory (other than immaterial
Inventory) is located, including locations of warehousemen and shipping
companies in possession of Inventory (other than immaterial Inventory) and
(ii) no later than 20 days after Agent’s request with respect to any Borrower’s
location created after the Closing Date where any Inventory (other than
immaterial Inventory) is located, including locations of warehousemen and
shipping companies in possession of Inventory (other than immaterial Inventory),
Borrowers shall have delivered to Agent a fully executed Collateral Access
Agreement substantially in the form of Exhibit D annex hereto or any other form
of Lien Waiver reasonably requested by Agent with respect thereto.
          (m) (i) ten days prior to the formation of any Subsidiary or ten days
prior to the consummation of any Acquisition (or such shorter period agreed to
by Agent), notice of such formation or such Acquisition, together with all of
the data required to be set forth in Schedule 9.1.4 annexed hereto with respect
to all Borrowers and Subsidiaries (it being understood that such written notice
shall be

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deemed to supplement Schedule 9.1.4 annexed hereto for all purposes of this
Agreement) and such other information regarding such Subsidiary or such
Acquisition as may be reasonably requested by Agent; and (ii) promptly upon any
Person becoming a Subsidiary of any Borrower, a written notice setting forth
with respect to such Person the date on which such Person became a Subsidiary of
such Borrower; provided that nothing in this paragraph should be deemed to
authorize any Acquisition and no Acquisition shall be consummated unless
consented to by Agent and Required Lenders in the their sole discretion;
          (n) annually, within 120 days after the end of each Fiscal Year, a
certificate of Borrower Agent executed by its Senior Officer (and, if requested
by Agent, any insurance broker of Borrowers) setting forth the nature and extent
of all insurance maintained by Borrowers and their Subsidiaries in accordance
with Section 10.1.7 or any Security Documents (and which, in the case of a
certificate of a broker, were placed through such broker) and certifying that
Borrowers are in compliance with Sections 8.6.2(a) and 10.1.7;
          (o) as soon as practicable following receipt thereof, copies of all
environmental audits and reports, whether prepared by personnel of Borrowers or
Subsidiaries or by independent consultants, with respect to significant
environmental matters at any real Property or which relate to an Environmental
Notice in either case which could reasonably be expected to result in a Material
Adverse Effect;
          (p) promptly after any Senior Officer of any Borrower knows of any
actual liability (other than contractual liability incurred in purchase orders
in the Ordinary Course of Business) or potential contingent liabilities where
the amount involved exceeds the Threshold Amount and such actual or potential
contingent liabilities are not reflected in the most recent financial statements
delivered to Lenders pursuant to Sections 10.1.2(a), 10.1.2(b) or 10.1.2(c)
written notice thereof;
          (q) promptly, and in any event within five Business Days (i) after any
material change in or termination of any contractual arrangement between any
Borrower on the one hand and any member of the BK Group or any other material
customer of any Borrower on the other hand (including without limitation any BK
Agreements), or (ii) after learning of any impending material change or
termination of any contractual arrangement between any Borrower on the one hand
and any member of the BK Group or any other material customer of any Borrower on
the other hand (including without limitation any of the BK Agreements or any of
the Other Customer Agreements), written notice thereof;
          (r) promptly, and in any event within five Business Days of entering
into any new BK Services Agreement, BK Supply Agreement, RSI Supply Agreement,
Other Customer Agreement or any other customer agreement (other than a purchase
order) after the Closing Date, a copy of such agreement;
          (s) promptly, and in any event within five Business Days of any
Borrower having any other location on which they store or otherwise place
Inventory or other personal Property that is not already disclosed to Agent
pursuant to Section 9.1.30 a notice of such location together with such other
details reasonably satisfactory to Agent.
          (t) promptly, and in any event before engaging any new customs broker
(other than the customs broker that has executed an Imported Goods Agreement), a
fully executed Imported Goods Agreement executed by the applicable Borrower(s)
and such new customs broker;
          (u) promptly, and in any event within 20 Business Days of the Closing
Date, evidence in form and substance satisfactory to Agent that the Liens set
forth in Schedule 10.1.2 have been released or terminated;

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          (v) promptly, and in any event within 20 Business Days of the Closing
Date, a fully executed Securities Account Control Agreement (or in cases where
Borrowers have an existing Securities Account Control Agreement delivered
pursuant to the Existing Credit Agreement, a confirmation thereof in form and
substance satisfactory to Agent) executed by the applicable Borrower(s) and
Fidelity Investments;
          (w) promptly, and in any event within 20 Business Days of the Closing
Date, a fully executed Securities Account Control Agreement (or in cases where
Borrowers have an existing Securities Account Control Agreement delivered
pursuant to the Existing Credit Agreement, a confirmation thereof in form and
substance satisfactory to Agent) executed by the applicable Borrower(s) and UBS
or evidence in form and substance satisfactory to Agent that the relevant
Securities Account has been terminated;
          (x) promptly, and in any event within 10 days of the Closing Date, a
fully executed Imported Goods Agreement executed by any Borrower that imports
Inventory into the United States and its customs broker.
          (y) promptly, and in any event within ten Business Days of the Closing
Date, evidence in form and substance satisfactory to Agent that the Securities
Account (account number 22024479) and the bank accounts (account numbers
14592-02663, 14590-29277 and 3299837643), in each case with Bank of America has
been closed; and
          (z) promptly, such other data and information as from time to time may
be reasonably requested by Agent.
          10.1.3 Notices. Notify Agent and Lenders in writing, promptly after a
Borrower’s obtaining knowledge thereof, of any of the following that affects an
Obligor: (a) the threat or commencement of any proceeding or investigation,
whether or not covered by insurance, if an adverse determination could have a
Material Adverse Effect; (b) any pending or threatened labor dispute, strike or
walkout, or the expiration of any material labor contract; (c) any default under
or termination of a Material Contract or any other Related Document; (d) the
existence of any Default or Event of Default; (e) any material change in
accounting policies or financial reporting practices of Borrowers and
Subsidiaries; (f) any judgment in an amount exceeding the Threshold Amount;
(g) the assertion of any Intellectual Property Claim, if an adverse resolution
could have a Material Adverse Effect; (h) any violation or asserted violation of
any Applicable Law (including ERISA, OSHA, FLSA, or any Environmental Laws), if
an adverse resolution could have a Material Adverse Effect; (i) any
Environmental Release by an Obligor or on any Property owned, leased or occupied
by an Obligor; or receipt of any Environmental Notice; (j) the discharge of or
any withdrawal or resignation by Borrowers’ independent accountants; or (k) any
opening of a new office or place of business, at least 30 days prior to such
opening.
          10.1.4 Landlord and Storage Agreements. Upon request, provide Agent
with copies of all existing agreements, and promptly after execution thereof
provide Agent with copies of all future agreements, between an Obligor and any
landlord, warehouseman, processor, shipper, bailee or other Person that owns any
premises at which any Collateral may be kept or that otherwise may possess or
handle any Collateral.
          10.1.5 Compliance with Laws. Comply with all Applicable Laws,
including ERISA, Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws
regarding collection and payment of Taxes, and maintain all Governmental
Approvals necessary to the ownership of its Properties or conduct of its
business, unless failure to comply (other than failure to comply with
Anti-Terrorism Laws) or maintain could not reasonably be expected to have a
Material Adverse Effect. Without limiting the generality of the foregoing, if
any Environmental Release occurs at or on any Properties of any Borrower or
Subsidiary, it shall act promptly and diligently to investigate and report to
Agent and all appropriate

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Governmental Authorities the extent of, and to make appropriate remedial action
to eliminate, such Environmental Release, whether or not directed to do so by
any Governmental Authority.
          10.1.6 Taxes. Pay and discharge all Taxes prior to the date on which
they become delinquent or penalties attach, unless such Taxes are being Properly
Contested.
          10.1.7 Insurance. In addition to the insurance required hereunder with
respect to Collateral, maintain insurance with insurers (rated A+ or better by
Best Rating Guide) satisfactory to Agent, (a) with respect to the Properties and
business of Borrowers and Subsidiaries of such type (including product
liability, workers’ compensation, larceny, embezzlement, or other criminal
misappropriation insurance), in such amounts, and with such coverages and
deductibles as are customary for companies similarly situated, and (b) business
interruption insurance in an amount not less than $2,000,000, with deductibles
and subject to an Insurance Assignment satisfactory to Agent.
          10.1.8 Licenses. Keep each License affecting any Collateral (including
the manufacture, distribution or disposition of Inventory) or any other material
Property of Borrowers and Subsidiaries in full force and effect; promptly notify
Agent of any proposed modification to any such License, or entry into any new
License, in each case at least 30 days prior to its effective date; pay all
Royalties when due; and notify Agent of any default or breach asserted by any
Person to have occurred under any License.
          10.1.9 Future Subsidiaries. Within five Business Days of the date of
the formation or on or before the date of Acquisition (provided that nothing in
this paragraph shall be deemed to authorize the Acquisition of any entity) of
any Subsidiary or Borrowers shall deliver, or cause to be delivered, to Agent
the following items applicable to such Subsidiary, each in form and substance
satisfactory to Agent:
          (a) If such Subsidiary is a Domestic Subsidiary, (i) an Additional
Borrower counterpart of this Agreement executed by such Subsidiary in the form
of Exhibit F annexed hereto, (ii) a counterpart of the Domestic Pledge Agreement
executed by such Subsidiary, together with any required supplements to any
schedules hereto or thereto, and (iii) the applicable items required by
Sections 6.1(d) and 6.1(e) as if such Subsidiary were executing this Agreement
on the date hereof and, if requested by Agent, such other items that would be
required by Section 6.1 if such Subsidiary were executing this Agreement on the
date hereof; provided that notwithstanding compliance with this Section 10.1.9
and any other provision of this Agreement, none of the Accounts and Inventory of
such Subsidiary shall be included in Eligible Accounts and Eligible Inventory,
as applicable, until such time as Agent shall have obtained field examination
reports and appraisals with respect thereto in form and substance satisfactory
to Agent;
          (b) If such Subsidiary is a Foreign Subsidiary, any required
counterparts of, or supplements to, the applicable Foreign Security Agreement in
order to pledge 65% of the equity interests of such Foreign Subsidiary; and
          (c) Such other assurances, certificates, documents, consents or
opinions as Agent, Issuing Lender or the Required Lenders reasonably may
require.
     In addition, Borrowers shall execute such documents, instruments and
agreements and take such other actions as Agent shall require to evidence and
perfect a Lien in favor of Agent (for the benefit of Secured Parties) on all
assets of such Subsidiary, including delivery of such legal opinions, in form
and substance satisfactory to Agent, as it shall deem appropriate.
          10.1.10 Preservation of Existence. Except to the extent permitted by
Section 10.2.9 preserve and maintain its existence, licenses, permits, rights,
franchises and privileges necessary or

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desirable in the normal conduct of its business, except where failure to do so
does not have a Material Adverse Effect.
          10.1.11 Maintenance of Properties. Maintain, preserve and protect all
of its material Properties and Equipment necessary in the operation of its
business in good order and condition, subject to wear and tear in the ordinary
course of business.
          10.1.12 Compliance with ERISA. Except with respect to each
Multiemployer Plan, (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended, and other federal or state law; (b) cause each Plan which is
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended,
to maintain such qualification; and (c) make all required contributions to any
Plan subject to Section 412 of the Internal Revenue Code of 1986, as amended.
          10.1.13 Compliance With Agreements. Comply with all Contractual
Obligations to which any one or more of them is a party, except for any such
Contractual Obligations (a) the performance of which would cause a Default or
Event of Default, (b) then being contested by any of them in good faith by
appropriate proceedings, or (c) if the failure to comply therewith does not have
a Material Adverse Effect.
          10.1.14 Use of Proceeds. Use the proceeds of Revolver Loans solely
(a) to satisfy existing Debt; (b) to pay fees and transaction expenses
associated with the closing of this credit facility; (c) to pay Obligations in
accordance with this Agreement; and (d) for working capital and other lawful
corporate purposes of Borrowers.
          10.1.15 Securities Account Control Agreements. Execute and cause to be
executed a Securities Account Control Agreement for any additional Securities
Account established with a securities intermediary subsequent to the Closing
Date within five (5) Business Days of establishment thereof.
          10.1.16 Prodesign Marketing. Cause Prodesign Marketing Limited, a
Northern Ireland company (“Prodesign”), to be liquidated within 15 months of the
Closing Date and in any event (i) not transfer any assets of any Obligor to
Prodesign and not guarantee any obligations of Prodesign at any time on or after
the Closing Date and (ii) not permit Prodesign to own assets exceeding $10,000
in the aggregate at any time.
          10.1.17 Bank Products. In order to facilitate the administration of
this Agreement and Agent’s security interest in the Collateral, maintain Bank of
America and its Affiliates as Borrowers’ principal depository bank, including
for the maintenance of operating, administrative, cash management, collection
activity and other deposit accounts for the conduct of Borrowers’ business, and
as the principal provider of cash management services.
     10.2 Negative Covenants. For so long as any Revolver Commitments or
Obligations are outstanding, each Borrower shall not, and shall cause each
Subsidiary not to:
          10.2.1 Permitted Debt. Create, incur, guarantee or suffer to exist any
Debt, except:
          (a) the Obligations;
          (b) Debt of any Borrower that is either EMAK or a wholly-owned
Domestic Subsidiary of EMAK to any other Borrower that is either EMAK or a
wholly-owned Domestic Subsidiary of EMAK; provided that (a) all such
intercompany Debt shall be evidenced by promissory notes that are pledged to
Agent pursuant to the terms of the applicable Security Document, (b) all such
intercompany Debt owed by any such Borrower to any such other Borrower shall be
subordinated in right of payment to the payment in full of the Obligations
pursuant to the terms of the applicable promissory notes or an

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intercompany subordination agreement, and (c) any payment by any such Borrower
under any guaranty of the Obligations shall result in a pro tanto reduction of
the amount of any intercompany Debt owed by such Borrower to any such other
Borrower for whose benefit such payment is made;
          (c) Permitted Purchase Money Debt;
          (d) Borrowed Money (other than the Obligations, Subordinated Debt and
Permitted Purchase Money Debt), but only to the extent outstanding on the
Closing Date and listed on Schedule 10.2.1 and not satisfied with proceeds of
the initial Loans;
          (e) Bank Product Debt;
          (f) Debt of Foreign Subsidiaries to banks for working capital purposes
not exceeding 5,000,000 in the aggregate at any time outstanding;
          (g) Permitted Contingent Obligations;
          (h) Refinancing Debt as long as each Refinancing Condition is
satisfied; and
          (i) Debt that is not included in any of the preceding clauses of this
Section, is not secured by a Lien and does not exceed $1,000,000 in the
aggregate at any time.
          10.2.2 Permitted Liens.
          (i) Create or suffer to exist any Lien or Negative Pledge upon any of
its Property, except the following (collectively, “Permitted Liens”):
     (a) Liens in favor of Agent;
     (b) Purchase Money Liens securing Permitted Purchase Money Debt;
     (c) Liens for Taxes not yet due or being Properly Contested;
     (d) statutory Liens (other than Liens for Taxes or imposed under ERISA)
arising in the Ordinary Course of Business, but only if (i) payment of the
obligations secured thereby is not yet due or is being Properly Contested, and
(ii) such Liens do not materially impair the value or use of the Property or
materially impair operation of the business of any Borrower or Subsidiary;
     (e) Liens incurred or deposits made in the Ordinary Course of Business to
secure the performance of tenders, bids, leases, contracts (except those
relating to Borrowed Money), statutory obligations and other similar
obligations, or arising as a result of progress payments under government
contracts, as long as such Liens are at all times junior to Agent’s Liens;
     (f) Liens arising by virtue of a judgment or judicial order against any
Borrower or Subsidiary, or any Property of a Borrower or Subsidiary, as long as
such Liens are (i) in existence for less than 20 consecutive days or being
Properly Contested, and (ii) at all times junior to Agent’s Liens;
     (g) easements, rights-of-way, restrictions, covenants or other agreements
of record, and other similar charges or encumbrances on Real Estate, that do not
secure any monetary obligation and do not interfere with the Ordinary Course of
Business;

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     (h) normal and customary rights of setoff upon deposits in favor of
depository institutions, and Liens of a collecting bank on Payment Items in the
course of collection;
     (i) existing Liens and Negative Pledges shown on Schedule 10.2.2; and
     (j) Liens on the assets of Foreign Subsidiaries to secure the Debt
permitted by Section 10.2.1(f).
          (ii) Equitable Lien in Favor of Lenders. If Borrowers or Subsidiaries
shall create or assume any Lien upon any of its properties or assets, whether
now owned or hereafter acquired, other than Liens excepted by the provisions of
Section 10.2.2(i), they shall make or cause to be made effective provision
whereby the Obligations will be secured by such Lien equally and ratably with
any and all other Debt secured thereby as long as any such Debt shall be so
secured; provided that, notwithstanding the foregoing, this covenant shall not
be construed as a consent by Required Lenders to the creation or assumption of
any such Lien not permitted by the provisions of Section 10.2.2(i).
          (iii) No Further Negative Pledges. Except with respect to (i) specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Disposition, and
(ii) any debt facility of a Foreign Subsidiary in connection with Indebtedness
of such Foreign Subsidiary permitted by Section 10.2.1(f), enter into any
agreement prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired.
          (iv) No Restrictions on Subsidiary Distributions to Borrowers or Other
Subsidiaries. Except for restrictions under the Loan Documents, under Applicable
Law or in effect on the Closing Date as shown on Schedule 9.1.17 and except with
respect to any debt facility of a Foreign Subsidiary in connection with Debt of
such Foreign Subsidiary permitted by Section 10.2.1(f), create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any Subsidiary to (i) pay dividends or
make any other distributions on any of such Subsidiary’s capital stock owned by
any Borrower or any other Subsidiary of such Borrower, (ii) repay or prepay any
Debt owed by such Subsidiary to any Borrower or any other Subsidiary of such
Borrower, (iii) make loans or advances to any Borrower or any other Subsidiary
of such Borrower, or (iv) transfer any of its property or assets to any Borrower
or any other Subsidiary of such Borrower.
          10.2.3 Capital Expenditures. Make Capital Expenditures in excess of
$2,500,000 in the aggregate during any Fiscal Year; provided, however, that if
the amount of Capital Expenditures permitted to be made in any Fiscal Year
exceeds the amount actually made, up to $500,000 of such excess may be carried
forward to the next Fiscal Year.
          10.2.4 Restricted Payments. Declare or make any Restricted Payments,
except for:
          (a) so long as no Default or Event of Default or material adverse
alteration in the relationship between Borrowers and any member of the BK Group
has occurred and is continuing or would result therefrom and so long as after
giving pro forma effect thereto, the Fixed Charge Coverage Ratio is at least
1.10:1.00, EMAK may make dividend payments to the holders of its Preferred
Stock; provided that no such dividend payments shall be made (i) unless and
until Lenders shall have received the Compliance Certificate due with the
audited financial statements for the Fiscal Year ending on December 31, 2006
that certifies that Borrowers are in full compliance with all of the covenants
under the Credit Agreement and that there are no Defaults or Events of Default
that have occurred and are continuing or (ii) during the Inventory Borrowing
Period; provided further that the aggregate amount of

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such payments (including dividends to Crown with respect to Preferred Stock)
shall not exceed $1,500,000 in any twelve-month period (it being understood and
agreed that the aggregate amount of such amount may exceed such $1,500,000 for
such twelve month period if such excess payment is for the sole purpose of
catching up on dividend payments with respect to the Preferred Stock that were
not made in a timely manner in accordance with the Certificate of Designation
and if at the time of any such excess payment, (A) all of the conditions
required to make such $1,500,000 payment are also met with respect to such
excess payment and (B) after giving effect to such excess payment, there is an
Availability of at least $3,500,000 and Lenders shall have been delivered a
Borrowing Base Certificate showing such Availability and a Compliance
Certificate showing that Borrowers are in compliance with all of the other
provisions of this Agreement after giving effect to such excess payment);
          (b) Borrowers may make cash payments to HK Subsidiaries in an
aggregate amount not exceeding the lesser of (i) $5,000,000 in any Fiscal Year
(and in any event not exceeding $1,000,000 in any of the first three Fiscal
Quarters and $2,000,000 in the fourth Fiscal Quarter) and (ii) an amount equal
to the operating costs (including Taxes and Capital Expenditures) incurred and
payable by HK Subsidiaries during such Fiscal Year (or such Fiscal Quarter, as
applicable); and
          (c) Borrowers may make a loan to UK Subsidiaries on or prior to
June 30, 2006 in an aggregate amount not exceeding $500,000 for the sole purpose
of such UK Subsidiaries paying amounts to settle working capital adjustment
claims arising from the acquisition of Megaprint Group Limited.
          10.2.5 Restricted Investments. Make any Restricted Investment.
          10.2.6 Disposition of Assets. Make any Asset Disposition, except a
Permitted Asset Disposition, a disposition of Equipment under Section 8.4.2, a
transfer of Property by a Subsidiary or Obligor to a Borrower, or Asset
Dispositions permitted by Section 10.2.9.
          10.2.7 Loans. Make any loans or other advances of money to any Person,
except (a) advances to an officer or employee for salary, travel expenses,
commissions and similar items in the Ordinary Course of Business and in any
event not exceeding $250,000 in the aggregate at any time; (b) prepaid expenses
and extensions of trade credit made in the Ordinary Course of Business;
(c) deposits with financial institutions permitted hereunder; and (d) as long as
no Default or Event of Default exists, intercompany loans by a Borrower to
another Borrower so long as such intercompany loans meet the requirements
described in Section 10.2.1(b).
          10.2.8 Restrictions on Payment of Certain Debt. Make any payments
(whether voluntary or mandatory, or a prepayment, redemption, retirement,
defeasance or acquisition) with respect to any (a) Subordinated Debt, except
regularly scheduled payments of principal, interest and fees, but only to the
extent permitted under any subordination agreement relating to such Debt (and a
Senior Officer of Borrower Agent shall certify to Agent, not less than five
Business Days prior to the date of payment, that all conditions under such
agreement have been satisfied); or (b) Borrowed Money (other than the
Obligations) prior to its due date under the agreements evidencing such Debt as
in effect on the Closing Date (or as amended thereafter with the consent of
Agent).
          10.2.9 Fundamental Changes. Merge, combine or consolidate with any
Person, or liquidate, wind up its affairs or dissolve itself, in each case
whether in a single transaction or in a series of related transactions, except
for mergers or consolidations of a wholly-owned Subsidiary with another
wholly-owned Subsidiary or into a Borrower; change its name or conduct business
under any fictitious name; change its tax, charter or other organizational
identification number; or change its form or state of organization.

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          10.2.10 Subsidiaries. Form or acquire any Subsidiary after the Closing
Date, except in accordance with Sections 10.1.9 and 10.2.5; or permit any
existing Subsidiary to issue any additional Equity Interests except director’s
qualifying shares.
          10.2.11 [Intentionally Omitted.]
          10.2.12 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than Borrowers and
Subsidiaries.
          10.2.13 Accounting Changes. Make any material change in accounting
treatment or reporting practices, except as required by GAAP and in accordance
with Section 1.2; or change its Fiscal Year.
          10.2.14 Restrictive Agreements. Become a party to any Restrictive
Agreement, except (a) a Restrictive Agreement as in effect on the Closing Date
and shown on Schedule 9.1.17; (b) a Restrictive Agreement relating to secured
Debt permitted hereunder, if such restrictions apply only to the collateral for
such Debt; and (c) customary provisions in leases and other contracts
restricting assignment thereof.
          10.2.15 Hedging Agreements. Enter into any Hedging Agreement, except
to hedge risks arising in the Ordinary Course of Business and not for
speculative purposes.
          10.2.16 Conduct of Business. Engage in any business, other than its
business as conducted on the Closing Date and any activities incidental thereto.
          10.2.17 Affiliate Transactions. Enter into or be party to any
transaction with any holder of 10% or more of any class of capital stock of any
Borrower or with an Affiliate, except (a) transactions contemplated by the Loan
Documents; (b) payment of reasonable compensation to officers and employees for
services actually rendered, and loans and advances permitted by Section 10.2.7;
(c) payment of customary directors’ fees and indemnities; (d) transactions
solely among Borrowers; (e) transactions with Affiliates that were consummated
prior to the Closing Date, as shown on Schedule 10.2.17; and (f) transactions
with Affiliates in the Ordinary Course of Business, upon fair and reasonable
terms fully disclosed to Agent and no less favorable than would be obtained in a
comparable arm’s-length transaction with a non-Affiliate.
          10.2.18 Plans. Become party to any Multiemployer Plan or Foreign Plan,
other than any in existence on the Closing Date; or at any time engage in a
transaction which could be subject to Sections 4069 or 4212(c) of ERISA, or
permit any Plan to (a) engage in any non-exempt “prohibited transaction” (as
defined in Section 4975 of the Internal Revenue Code of 1986, as amended); (b)
fail to comply with ERISA or any other Applicable Laws; or (c) incur any
material “accumulated funding deficiency” (as defined in Section 302 of ERISA),
which, with respect to each event listed above, has a Material Adverse Effect.
          10.2.19 Amendments to Subordinated Debt. Amend, supplement or
otherwise modify any document, instrument or agreement relating to any
Subordinated Debt, if such modification (a) increases the principal balance of
such Debt, or increases any required payment of principal or interest;
(b) accelerates the date on which any installment of principal or any interest
is due, or adds any additional redemption, put or prepayment provisions;
(c) shortens the final maturity date or otherwise accelerates amortization;
(d) increases the interest rate; (e) increases or adds any fees or charges;
(f) modifies any covenant in a manner or adds any representation, covenant or
default that is more onerous or restrictive in any material respect for any
Borrower or Subsidiary, or that is otherwise materially adverse to any Borrower,
any Subsidiary or Lenders; or (g) results in the Obligations not being fully
benefited by the subordination provisions thereof.

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          10.2.20 Margin Regulations. Use the proceeds of any Extensions of
Credit hereunder for “purchasing” or “carrying” Margin Stock within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the Federal Reserve System as in effect from time to time or for
any purpose which violates, or which would be inconsistent with, the provisions
of Regulations T, U or X of such Board of Governors.
          10.2.21 Amendments or Waivers of the Related Documents. Agree to any
amendment materially adverse to any Borrower or to Agent or any Lender, or waive
any of its material rights in favor of any Obligor under, any Related Document
or any Organic Document of any Obligor after the Closing Date, without in each
case obtaining the prior written consent of Required Lenders to such amendment
or waiver.
          10.2.22 Amendments to Transfer Pricing. Agree to or otherwise
implement or institute any change to the transfer pricing between Borrowers on
the one hand and Subsidiaries that are not Borrowers on the other hand if such
change is less favorable to any Borrower.
          10.2.23 Bills of Lading. Permit any bill of lading relating to any
Inventory of any Borrower or any Inventory (whether or not then owned by any
Borrower) being sold to BK, RSI and their respective Affiliates, in each case in
transit to the United States leaving for the United States on or after April 10,
2006 to name any Person other than Agent as consignee of such bill of lading.
     10.3 Financial Covenants. For so long as any Revolver Commitments or
Obligations are outstanding, Borrowers shall:
          10.3.1 Minimum EBITDA. Achieve EBITDA (i) that is no less than
negative $2,250,000 calculated as of March 31, 2006 and April 30, 2006, for the
three and four month period, respectively, then ended, (ii) that is no less than
$2,000,000 calculated as of May 31, 2006, June 30, 2006 and July 31, 2006 for
the five, six and seven month period, respectively, then ended, (iii) that is no
less than negative $2,500,000 calculated as of August 31, 2006 for the eight
month period then ended, and (iv) that is no less than $0 calculated as of
September 30, 2006 for the nine month period then ended.
          10.3.2 Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage
Ratio of at least 1.10 to 1.0 at the end of each month (starting on the month
ended on September 30, 2006) with respect to the twelve-month period then ended.
SECTION 11. EVENTS OF DEFAULT; REMEDIES ON DEFAULT
     11.1 Events of Default. Each of the following shall be an “Event of
Default” hereunder, if the same shall occur for any reason whatsoever, whether
voluntary or involuntary, by operation of law or otherwise:
          (a) Any Borrower fails to pay any Obligations when due (whether at
stated maturity, on demand, upon acceleration or otherwise);
          (b) Any representation, warranty or other written statement of any
Obligor made in connection with any Loan Documents or transactions contemplated
thereby is incorrect or misleading in any material respect when given;
          (c) Any Borrower breaches or fail to perform any covenant contained in
Section 7.2, 7.4, 7.6, 8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.1, 10.1.2, 10.2 or 10.3;
          (d) Any Obligor breaches or fails to perform any other covenant
contained in any Loan Documents (not specified in subsections (a), (b) or (c)),
and such breach or failure is not cured within 15 days after a Senior Officer of
such Obligor has knowledge thereof or receives notice thereof

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from Agent, whichever is sooner; provided, however, that such notice and
opportunity to cure shall not apply if the breach or failure to perform is not
capable of being cured within such period or is a willful breach by an Obligor;
          (e) Any Guarantor repudiates, revokes or attempts to revoke its
Guaranty; any Obligor denies or contests the validity or enforceability of any
Loan Documents or Obligations, or the perfection or priority of any Lien granted
to Agent; or any Loan Document ceases to be in full force or effect for any
reason (other than a waiver or release by Agent and Lenders);
          (f) Any breach or default of an Obligor occurs under any document,
instrument or agreement to which it is a party or by which it or any of its
Properties is bound, relating to any Debt (other than the Obligations) in excess
of $250,000, if the maturity of or any payment with respect to such Debt may be
accelerated or demanded due to such breach;
          (g) Any judgment or order for the payment of money is entered against
an Obligor in an amount that exceeds, individually or cumulatively with all
unsatisfied judgments or orders against all Obligors, $500,000 (net of any
insurance coverage therefor acknowledged in writing by the insurer), unless a
stay of enforcement of such judgment or order is in effect, by reason of a
pending appeal or otherwise;
          (h) Any loss, theft, damage or destruction occurs with respect to any
Collateral if the amount not covered by insurance exceeds $250,000;
          (i) Any Obligor is enjoined, restrained or in any way prevented by any
Governmental Authority from conducting any material part of its business; any
Obligor suffers the loss, revocation or termination of any material license,
permit, lease or agreement necessary to its business; there is a cessation of
any material part of an Obligor’s business for a material period of time; any
material Collateral or Property of an Obligor is taken or impaired through
condemnation; any Obligor or any of its Subsidiaries (to the extent the Equity
Interests of such Subsidiaries are a part of the Collateral) to or commences any
liquidation, dissolution or winding up of its affairs; or any Obligor ceases to
be Solvent;
          (j) Any Insolvency Proceeding is commenced by any Obligor or any of
its Subsidiaries (to the extent the Equity Interests of such Subsidiaries are a
part of the Collateral); an Insolvency Proceeding is commenced against any
Obligor or any of its Subsidiaries (to the extent the Equity Interests of such
Subsidiaries are a part of the Collateral) and such Obligor or such Subsidiary
consents to the institution of the proceeding against it, the petition
commencing the proceeding is not timely controverted by such Obligor or such
Subsidiary, such petition is not dismissed within 30 days after its filing, or
an order for relief is entered in the proceeding; a trustee (including an
interim trustee) is appointed to take possession of any substantial Property of
or to operate any of the business of any Obligor or any of its Subsidiaries (to
the extent the Equity Interests of such Subsidiaries are a part of the
Collateral); or any Obligor or any of its Subsidiaries (to the extent the Equity
Interests of such Subsidiaries are a part of the Collateral) makes an offer of
settlement, extension or composition to its unsecured creditors generally;
          (k) A Reportable Event occurs that constitutes grounds for termination
by the Pension Benefit Guaranty Corporation of any Multiemployer Plan or
appointment of a trustee for any Multiemployer Plan; any Multiemployer Plan is
terminated or any such trustee is requested or appointed; any Obligor is in
“default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments
to a Multiemployer Plan resulting from any withdrawal therefrom; or any event
similar to the foregoing occurs or exists with respect to a Foreign Plan;

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          (l) Any Obligor or any of its Senior Officers is criminally indicted
or convicted for (i) a felony committed in the conduct of such Obligor’s
business, or (ii) any state or federal law (including the Controlled Substances
Act, Money Laundering Control Act of 1986 and Illegal Exportation of War
Materials Act) that could lead to forfeiture of any material Property or any
Collateral; or
          (m) A Change of Control occurs, or any event occurs or condition
exists that has a Material Adverse Effect.
     11.2 Remedies upon Default. If an Event of Default described in
Section 11.1(j) occurs with respect to any Borrower, then to the extent
permitted by Applicable Law, all Obligations shall become automatically due and
payable and all Revolver Commitments shall terminate, without any action by
Agent or notice of any kind. In addition, or if any other Event of Default
exists, Agent may in its discretion (and shall upon written direction of
Required Lenders) do any one or more of the following from time to time:
          (a) declare any Obligations immediately due and payable, whereupon
they shall be due and payable without diligence, presentment, demand, protest or
notice of any kind, all of which are hereby waived by Borrowers to the fullest
extent permitted by law;
          (b) terminate, reduce or condition any Revolver Commitment, or make
any adjustment to the Borrowing Base;
          (c) require Obligors to Cash Collateralize LC Obligations, Bank
Product Debt and other Obligations that are contingent or not yet due and
payable, and, if Obligors fail promptly to deposit such Cash Collateral, Agent
may (and shall upon the direction of Required Lenders) advance the required Cash
Collateral as Revolver Loans (whether or not an Overadvance exists or is created
thereby, or the conditions in Section 6 are satisfied); and
          (d) exercise any other rights or remedies afforded under any
agreement, by law, at equity or otherwise, including the rights and remedies of
a secured party under the UCC. Such rights and remedies include the rights to
(i) take possession of any Collateral; (ii) require Borrowers to assemble
Collateral, at Borrowers’ expense, and make it available to Agent at a place
designated by Agent; (iii) enter any premises where Collateral is located and
store Collateral on such premises until sold (and if the premises are owned or
leased by a Borrower, Borrowers agree not to charge for such storage); and
(iv) sell or otherwise dispose of any Collateral in its then condition, or after
any further manufacturing or processing thereof, at public or private sale, with
such notice as may be required by Applicable Law, in lots or in bulk, at such
locations, all as Agent, in its discretion, deems advisable. Each Borrower
agrees that ten days notice of any proposed sale or other disposition of
Collateral by Agent shall be reasonable. Agent shall have the right to conduct
such sales on any Obligor’s premises, without charge, and such sales may be
adjourned from time to time in accordance with Applicable Law. Agent shall have
the right to sell, lease or otherwise dispose of any Collateral for cash, credit
or any combination thereof, and Agent may purchase any Collateral at public or,
if permitted by law, private sale and, in lieu of actual payment of the purchase
price, may set off the amount of such price against the Obligations.
     11.3 License. Agent is hereby granted an irrevocable, non-exclusive license
or other right to use, license or sub-license (without payment of royalty or
other compensation to any Person) any or all Intellectual Property of Borrowers,
computer hardware and software, trade secrets, brochures, customer lists,
promotional and advertising materials, labels, packaging materials and other
Property, in advertising for sale, marketing, selling, collecting, completing
manufacture of, or otherwise exercising any rights or remedies with respect to,
any Collateral. Each Borrower’s rights and interests under Intellectual Property
shall inure to Agent’s benefit.

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     11.4 Setoff. Agent, Lenders and their Affiliates are each authorized by
Borrowers at any time during an Event of Default, without notice to Borrowers or
any other Person, to set off and to appropriate and apply any deposits (general
or special), funds, claims, obligations, liabilities or other Debt at any time
held or owing by Agent, any Lender or any such Affiliate to or for the account
of any Obligor against any Obligations, whether or not demand for payment of
such Obligation has been made, any Obligations have been declared due and
payable, are then due, or are contingent or unmatured, or the Collateral or any
guaranty or other security for the Obligations is adequate.
     11.5 Remedies Cumulative; No Waiver.
          11.5.1 Cumulative Rights. All covenants, conditions, provisions,
warranties, guaranties, indemnities and other undertakings of Borrowers
contained in the Loan Documents are cumulative and not in derogation or
substitution of each other. In particular, the rights and remedies of Agent and
Lenders are cumulative, may be exercised at any time and from time to time,
concurrently or in any order, and shall not be exclusive of any other rights or
remedies that Agent and Lenders may have, whether under any agreement, by law,
at equity or otherwise.
          11.5.2 Waivers. The failure or delay of Agent or any Lender to require
strict performance by Borrowers with any terms of the Loan Documents, or to
exercise any rights or remedies with respect to Collateral or otherwise, shall
not operate as a waiver thereof nor as establishment of a course of dealing. All
rights and remedies shall continue in full force and effect until Full Payment
of all Obligations. No modification of any terms of any Loan Documents
(including any waiver thereof) shall be effective, unless such modification is
specifically provided in a writing directed to Borrowers and executed by Agent
or the requisite Lenders, and such modification shall be applicable only to the
matter specified. No waiver of any Default or Event of Default shall constitute
a waiver of any other Default or Event of Default that may exist at such time,
unless expressly stated. If Agent or any Lender accepts performance by any
Obligor under any Loan Documents in a manner other than that specified therein,
or during any Default or Event of Default, or if Agent or any Lender shall delay
or exercise any right or remedy under any Loan Documents, such acceptance, delay
or exercise shall not operate to waive any Default or Event of Default nor to
preclude exercise of any other right or remedy. It is expressly acknowledged by
Borrowers that any failure to satisfy a financial covenant on a measurement date
shall not be cured or remedied by satisfaction of such covenant on a subsequent
date.
SECTION 12. AGENT
     12.1 Appointment, Authority and Duties of Agent. —
          12.1.1 Appointment and Authority. Each Lender appoints and designates
Bank of America as Agent hereunder. Agent may, and each Lender authorizes Agent
to, enter into all Loan Documents to which Agent is intended to be a party and
accept all Security Documents, for Agent’s benefit and the Pro Rata benefit of
Lenders. Each Lender agrees that any action taken by Agent or Required Lenders
in accordance with the provisions of the Loan Documents, and the exercise by
Agent or Required Lenders of any rights or remedies set forth therein, together
with all other powers reasonably incidental thereto, shall be authorized and
binding upon all Lenders. Without limiting the generality of the foregoing,
Agent shall have the sole and exclusive authority to (a) act as the disbursing
and collecting agent for Lenders with respect to all payments and collections
arising in connection with the Loan Documents; (b) execute and deliver as Agent
each Loan Document, including any intercreditor or subordination agreement, and
accept delivery of each Loan Document from any Obligor or other Person; (c) act
as collateral agent for Secured Parties for purposes of perfecting and
administering Liens under the Loan Documents, and for all other purposes stated
therein; (d) manage, supervise or otherwise deal with Collateral; and
(e) exercise all rights and remedies given to Agent with respect to any
Collateral under the Loan Documents, Applicable Law or otherwise. The duties of
Agent shall be ministerial and administrative in nature, and Agent shall not
have a fiduciary relationship with any Lender, Secured

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Party, Participant or other Person, by reason of any Loan Document or any
transaction relating thereto. Agent alone shall be authorized to determine
whether any Accounts or Inventory constitute Eligible Accounts or Eligible
Inventory, or whether to impose or release any reserve, which determinations and
judgments, if exercised in good faith, shall exonerate Agent from liability to
any Lender or other Person for any error in judgment.
          12.1.2 Duties. Agent shall not have any duties except those expressly
set forth in the Loan Documents, nor be required to initiate or conduct any
Enforcement Action except to the extent directed to do so by Required Lenders
while an Event of Default exists. The conferral upon Agent of any right shall
not imply a duty on Agent’s part to exercise such right, unless instructed to do
so by Required Lenders in accordance with this Agreement.
          12.1.3 Agent Professionals. Agent may perform its duties through
agents and employees. Agent may consult with and employ Agent Professionals, and
shall be entitled to act upon, and shall be fully protected in any action taken
in good faith reliance upon, any advice given by an Agent Professional. Agent
shall not be responsible for the negligence or misconduct of any agents,
employees or Agent Professionals selected by it with reasonable care.
          12.1.4 Instructions of Required Lenders. The rights and remedies
conferred upon Agent under the Loan Documents may be exercised without the
necessity of joinder of any other party, unless required by Applicable Law.
Agent may request instructions from Required Lenders with respect to any act
(including the failure to act) in connection with any Loan Documents, and may
seek assurances to its satisfaction from Lenders of their indemnification
obligations under Section 12.6 against all Claims that could be incurred by
Agent in connection with any act. Agent shall be entitled to refrain from any
act until it has received such instructions or assurances, and Agent shall not
incur liability to any Person by reason of so refraining. Instructions of
Required Lenders shall be binding upon all Lenders, and no Lender shall have any
right of action whatsoever against Agent as a result of Agent acting or
refraining from acting in accordance with the instructions of Required Lenders.
Notwithstanding the foregoing, instructions by and consent of all Lenders shall
be required in the circumstances described in Section 14.1.1, and in no event
shall Required Lenders, without the prior written consent of each Lender, direct
Agent to accelerate and demand payment of Loans held by one Lender without
accelerating and demanding payment of all other Loans, nor to terminate the
Revolver Commitments of one Lender without terminating the Revolver Commitments
of all Lenders. In no event shall Agent be required to take any action that, in
its opinion, is contrary to Applicable Law or any Loan Documents or could
subject any Agent Indemnitee to personal liability.
     12.2 Agreements Regarding Collateral and Field Examination Reports.
          12.2.1 Lien Releases; Care of Collateral. Lenders authorize Agent to
release any Lien with respect to any Collateral (a) upon Full Payment of the
Obligations, (b) that is the subject of an Asset Disposition which Borrowers
certify in writing to Agent is a Permitted Asset Disposition or a Lien which
Borrowers certify is a Permitted Lien entitled to priority over Agent’s Liens
(and Agent may rely conclusively on any such certificate without further
inquiry), (c) that does not constitute a material part of the Collateral, or
(d) with the written consent of all Lenders. Agent shall have no obligation
whatsoever to any Lenders to assure that any Collateral exists or is owned by a
Borrower, or is cared for, protected, insured or encumbered, nor to assure that
Agent’s Liens have been properly created, perfected or enforced, or are entitled
to any particular priority, nor to exercise any duty of care with respect to any
Collateral.
          12.2.2 Possession of Collateral. Agent and Lenders appoint each other
Lender as agent for the purpose of perfecting Liens (for the benefit of Secured
Parties) in any Collateral that, under the UCC or other Applicable Law, can be
perfected by possession. If any Lender obtains possession of any

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such Collateral, it shall notify Agent thereof and, promptly upon Agent’s
request, deliver such Collateral to Agent or otherwise deal with such Collateral
in accordance with Agent’s instructions.
          12.2.3 Reports. Agent shall promptly, upon receipt thereof, forward to
each Lender copies of the results of any field audit or other examination or any
appraisal prepared by or on behalf of Agent with respect to any Obligor or
Collateral (“Report”). Each Lender agrees (a) that neither Bank of America nor
Agent makes any representation or warranty as to the accuracy or completeness of
any Report, and shall not be liable for any information contained in or omitted
from any Report; (b) that the Reports are not intended to be comprehensive
audits or examinations, and that Agent or any other Person performing any audit
or examination will inspect only specific information regarding Obligations or
the Collateral and will rely significantly upon Borrowers’ books and records as
well as upon representations of Borrowers’ officers and employees; and (c) to
keep all Reports confidential and strictly for such Lender’s internal use, and
not to distribute any Report (or the contents thereof) to any Person (except to
such Lender’s Participants, attorneys and accountants) or use any Report in any
manner other than administration of the Loans and other Obligations. Each Lender
agrees to indemnify and hold harmless Agent and any other Person preparing a
Report from any action such Lender may take as a result of or any conclusion it
may draw from any Report, as well as any Claims arising in connection with any
third parties that obtain all or any part of a Report through such Lender.
     12.3 Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy or e-mail) believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person, and upon the advice and statements of Agent Professionals.
     12.4 Action Upon Default. Agent shall not be deemed to have knowledge of
any Default or Event of Default unless it has received written notice from a
Lender or Borrower specifying the occurrence and nature thereof. If any Lender
acquires knowledge of a Default or Event of Default, it shall promptly notify
Agent and the other Lenders thereof in writing. Each Lender agrees that, except
as otherwise provided in any Loan Documents or with the written consent of Agent
and Required Lenders, it will not take any Enforcement Action, accelerate its
Obligations, or exercise any right that it might otherwise have under Applicable
Law to credit bid at foreclosure sales, UCC sales or other similar dispositions
of Collateral. Notwithstanding the foregoing, however, a Lender may take action
to preserve or enforce its rights against an Obligor where a deadline or
limitation period is applicable that would, absent such action, bar enforcement
of Obligations held by such Lender, including the filing of proofs of claim in
an Insolvency Proceeding.
     12.5 Ratable Sharing. If any Lender shall obtain any payment or reduction
of any Obligation, whether through set-off or otherwise, in excess of its share
of such Obligation, determined on a Pro Rata basis or in accordance with
Section 5.5.1, as applicable, such Lender shall forthwith purchase from Agent,
Issuing Bank and the other Lenders such participations in the affected
Obligation as are necessary to cause the purchasing Lender to share the excess
payment or reduction on a Pro Rata basis or in accordance with Section 5.5.1, as
applicable. If any of such payment or reduction is thereafter recovered from the
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.
     12.6 Indemnification of Agent Indemnitees.
          12.6.1 Indemnification. EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS
AGENT INDEMNITEES, TO THE EXTENT NOT REIMBURSED BY OBLIGORS (BUT WITHOUT
LIMITING THE INDEMNIFICATION OBLIGATIONS OF OBLIGORS UNDER ANY LOAN DOCUMENTS),
ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT MAY BE INCURRED BY OR ASSERTED
AGAINST ANY AGENT INDEMNITEE. If Agent is sued by any receiver, trustee in
bankruptcy, debtor-in-possession or other Person for any alleged

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preference from an Obligor or fraudulent transfer, then any monies paid by Agent
in settlement or satisfaction of such proceeding, together with all interest,
costs and expenses (including attorneys’ fees) incurred in the defense of same,
shall be promptly reimbursed to Agent by Lenders to the extent of each Lender’s
Pro Rata share.
          12.6.2 Proceedings. Without limiting the generality of the foregoing,
if at any time (whether prior to or after the Commitment Termination Date) any
proceeding is brought against any Agent Indemnitees by an Obligor, or any Person
claiming through an Obligor, to recover damages for any act taken or omitted by
Agent in connection with any Obligations, Collateral, Loan Documents or matters
relating thereto, or otherwise to obtain any other relief of any kind on account
of any transaction relating to any Loan Documents, each Lender agrees to
indemnify and hold harmless Agent Indemnitees with respect thereto and to pay to
Agent Indemnitees such Lender’s Pro Rata share of any amount that any Agent
Indemnitee is required to pay under any judgment or other order entered in such
proceeding or by reason of any settlement, including all interest, costs and
expenses (including attorneys’ fees) incurred in defending same. In Agent’s
discretion, Agent may reserve for any such proceeding, and may satisfy any
judgment, order or settlement, from proceeds of Collateral prior to making any
distributions of Collateral proceeds to Lenders.
     12.7 Limitation on Responsibilities of Agent. Agent shall not be liable to
Lenders for any action taken or omitted to be taken under the Loan Documents,
except for losses directly and solely caused by Agent’s gross negligence or
willful misconduct. Agent does not assume any responsibility for any failure or
delay in performance or any breach by any Obligor or Lender of any obligations
under the Loan Documents. Agent does not make to Lenders any express or implied
warranty, representation or guarantee with respect to any Obligations,
Collateral, Loan Documents or Obligor. No Agent Indemnitee shall be responsible
to Lenders for any recitals, statements, information, representations or
warranties contained in any Loan Documents; the execution, validity,
genuineness, effectiveness or enforceability of any Loan Documents; the
genuineness, enforceability, collectibility, value, sufficiency, location or
existence of any Collateral, or the validity, extent, perfection or priority of
any Lien therein; the validity, enforceability or collectibility of any
Obligations; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor or Account
Debtor. No Agent Indemnitee shall have any obligation to any Lender to ascertain
or inquire into the existence of any Default or Event of Default, the observance
or performance by any Obligor of any terms of the Loan Documents, or the
satisfaction of any conditions precedent contained in any Loan Documents.
     12.8 Successor Agent and Co-Agents.
          12.8.1 Resignation; Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving at least 30 days written notice thereof to Lenders and Borrowers. Upon
receipt of such notice, Required Lenders shall have the right to appoint a
successor Agent which shall be (a) a Lender or an Affiliate of a Lender; or
(b) a commercial bank that is organized under the laws of the United States or
any state or district thereof, has a combined capital surplus of at least
$200,000,000 and (provided no Default or Event of Default exists) is reasonably
acceptable to Borrowers. If no successor agent is appointed prior to the
effective date of the resignation of Agent, then Agent may appoint a successor
agent from among Lenders. Upon acceptance by a successor Agent of an appointment
to serve as Agent hereunder, such successor Agent shall thereupon succeed to and
become vested with all the powers and duties of the retiring Agent without
further act, and the retiring Agent shall be discharged from its duties and
obligations hereunder but shall continue to have the benefits of the
indemnification set forth in Sections 12.6 and 14.2. Notwithstanding any Agent’s
resignation, the provisions of this Section 12 shall continue in effect for its
benefit with respect to any actions taken or omitted to be taken by it while
Agent. Any successor by merger or acquisition of the stock or assets of Bank of
America shall continue to be Agent hereunder without further act on the part of
the parties hereto, unless such successor resigns as provided above.

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          12.8.2 Separate Collateral Agent. It is the intent of the parties that
there shall be no violation of any Applicable Law denying or restricting the
right of financial institutions to transact business in any jurisdiction. If
Agent believes that it may be limited in the exercise of any rights or remedies
under the Loan Documents due to any Applicable Law, Agent may appoint an
additional Person who is not so limited, as a separate collateral agent or
co-collateral agent. If Agent so appoints a collateral agent or co-collateral
agent, each right and remedy intended to be available to Agent under the Loan
Documents shall also be vested in such separate agent. Every covenant and
obligation necessary to the exercise thereof by such agent shall run to and be
enforceable by it as well as Agent. Lenders shall execute and deliver such
documents as Agent deems appropriate to vest any rights or remedies in such
agent. If any collateral agent or co-collateral agent shall die or dissolve,
become incapable of acting, resign or be removed, then all the rights and
remedies of such agent, to the extent permitted by Applicable Law, shall vest in
and be exercised by Agent until appointment of a new agent.
     12.9 Due Diligence and Non-Reliance. Each Lender acknowledges and agrees
that it has, independently and without reliance upon Agent or any other Lenders,
and based upon such documents, information and analyses as it has deemed
appropriate, made its own credit analysis of each Obligor and its own decision
to enter into this Agreement and to fund Loans and participate in LC Obligations
hereunder. Each Lender has made such inquiries concerning the Loan Documents,
the Collateral and each Obligor as such Lender feels necessary. Each Lender
further acknowledges and agrees that the other Lenders and Agent have made no
representations or warranties concerning any Obligor, any Collateral or the
legality, validity, sufficiency or enforceability of any Loan Documents or
Obligations. Each Lender will, independently and without reliance upon the other
Lenders or Agent, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in making Loans and participating in LC Obligations,
and in taking or refraining from any action under any Loan Documents. Except for
notices, reports and other information expressly requested by a Lender, Agent
shall have no duty or responsibility to provide any Lender with any notices,
reports or certificates furnished to Agent by any Obligor or any credit or other
information concerning the affairs, financial condition, business or Properties
of any Obligor (or any of its Affiliates) which may come into possession of
Agent or any of Agent’s Affiliates.
     12.10 Replacement of Certain Lenders. In the event that any Lender
(a) fails to fund its Pro Rata share of any Loan or LC Obligation hereunder, and
such failure is not cured within two Business Days, (b) defaults in performing
any of its obligations under the Loan Documents, or (c) fails to give its
consent to any amendment, waiver or action for which consent of all Lenders was
required and Required Lenders consented, then, in addition to any other rights
and remedies that any Person may have, Agent may, by notice to such Lender
within 120 days after such event, require such Lender to assign all of its
rights and obligations under the Loan Documents to Eligible Assignee(s)
specified by Agent, pursuant to appropriate Assignment and Acceptance(s) and
within 20 days after Agent’s notice. Agent is irrevocably appointed as
attorney-in-fact to execute any such Assignment and Acceptance if the Lender
fails to execute same. Such Lender shall be entitled to receive, in cash,
concurrently with such assignment, all amounts owed to it under the Loan
Documents, including all principal, interest and fees through the date of
assignment (but excluding any prepayment charge).
     12.11 Remittance of Payments and Collections.
          12.11.1 Remittances Generally. All payments by any Lender to Agent
shall be made by the time and on the day set forth in this Agreement, in
immediately available funds. If no time for payment is specified or if payment
is due on demand by Agent and request for payment is made by Agent by 11:00 a.m.
on a Business Day, payment shall be made by Lender not later than 2:00 p.m. on
such day, and if request is made after 11:00 a.m., then payment shall be made by
11:00 a.m. on the next Business Day. Payment by Agent to any Lender shall be
made by wire transfer, in the type of funds received by Agent. Any such payment
shall be subject to Agent’s right of offset for any amounts due from such Lender
under the Loan Documents.

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          12.11.2 Failure to Pay. If any Lender fails to pay any amount when due
by it to Agent pursuant to the terms hereof, such amount shall bear interest
from the due date until paid at the rate determined by Agent as customary in the
banking industry for interbank compensation. In no event shall Borrowers be
entitled to receive credit for any interest paid by a Lender to Agent.
          12.11.3 Recovery of Payments. If Agent pays any amount to a Lender in
the expectation that a related payment will be received by Agent from an Obligor
and such related payment is not received, then Agent may recover such amount
from each Lender that received it. If Agent determines at any time that an
amount received under any Loan Document must be returned to an Obligor or paid
to any other Person pursuant to Applicable Law or otherwise, then,
notwithstanding any other term of any Loan Document, Agent shall not be required
to distribute such amount to any Lender. If any amounts received and applied by
Agent to any Obligations are later required to be returned by Agent pursuant to
Applicable Law, Lenders shall pay to Agent, on demand, such Lender’s Pro Rata
share of the amounts required to be returned.
     12.12 Agent in its Individual Capacity. As a Lender, Bank of America shall
have the same rights and remedies under the other Loan Documents as any other
Lender, and the terms “Lenders,” “Required Lenders” or any similar term shall
include Bank of America in its capacity as a Lender. Each of Bank of America and
its Affiliates may accept deposits from, maintain deposits or credit balances
for, invest in, lend money to, provide Bank Products to, act as trustee under
indentures of, serve as financial or other advisor to, and generally engage in
any kind of business with, Obligors and their Affiliates, as if Bank of America
were any other bank, without any duty to account therefor (including any fees or
other consideration received in connection therewith) to the other Lenders. In
their individual capacity, Bank of America and its Affiliates may receive
information regarding Obligors, their Affiliates and their Account Debtors
(including information subject to confidentiality obligations), and each Lender
agrees that Bank of America and its Affiliates shall be under no obligation to
provide such information to Lenders, if acquired in such individual capacity and
not as Agent hereunder.
     12.13 Agent Titles. Each Lender, other than Bank of America, that is
designated (on the cover page of this Agreement or otherwise) by Bank of America
as an “Agent” or “Arranger” of any type shall not have any right, power,
responsibility or duty under any Loan Documents other than those applicable to
all Lenders, and shall in no event be deemed to have any fiduciary relationship
with any other Lender.
     12.14 No Third Party Beneficiaries. This Section 12 is an agreement solely
among Lenders and Agent, and does not confer any rights or benefits upon
Borrowers or any other Person. As between Borrowers and Agent, any action that
Agent may take under any Loan Documents shall be conclusively presumed to have
been authorized and directed by Lenders as herein provided.
SECTION 13. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
     13.1 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of Borrowers, Agent and Lenders and their respective successors
and assigns, except that (a) no Borrower shall have the right to assign its
rights or delegate its obligations under any Loan Documents, and (b) any
assignment by a Lender must be made in compliance with Section 13.3. Agent may
treat the Person which made any Loan as the owner thereof for all purposes until
such Person makes an assignment in accordance with Section 13.3. Any
authorization or consent of a Lender shall be conclusive and binding on any
subsequent transferee or assignee of such Lender.
     13.2 Participations.
          13.2.1 Permitted Participants; Effect. Any Lender may, in the ordinary
course of its business and in accordance with Applicable Law, at any time sell
to a financial institution (“Participant”) a participating interest in the
rights and obligations of such Lender under any Loan Documents. Despite

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any sale by a Lender of participating interests to a Participant, such Lender’s
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for performance of such
obligations, such Lender shall remain the holder of its Revolver Loans and
Revolver Commitments for all purposes, all amounts payable by Borrowers shall be
determined as if such Lender had not sold such participating interests, and
Borrowers and Agent shall continue to deal solely and directly with such Lender
in connection with the Loan Documents. Each Lender shall be solely responsible
for notifying its Participants of any matters under the Loan Documents, and
Agent and the other Lenders shall not have any obligation or liability to any
such Participant. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 5.8 unless Borrowers
agree otherwise in writing.
          13.2.2 Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, waiver or other
modification of any Loan Documents other than that which forgives principal,
interest or fees, reduces the stated interest rate or fees payable with respect
to any Loan or Revolver Commitment in which such Participant has an interest,
postpones the Commitment Termination Date or any date fixed for any regularly
scheduled payment of principal, interest or fees on such Loan or Revolver
Commitment, or releases any Borrower, Guarantor or substantial portion of the
Collateral.
          13.2.3 Benefit of Set-Off. Borrowers agree that each Participant shall
have a right of set-off in respect of its participating interest to the same
extent as if such interest were owing directly to a Lender, and each Lender
shall also retain the right of set-off with respect to any participating
interests sold by it. By exercising any right of set-off, a Participant agrees
to share with Lenders all amounts received through its set-off, in accordance
with Section 12.5 as if such Participant were a Lender.
     13.3 Assignments.
          13.3.1 Permitted Assignments. A Lender may assign to any Eligible
Assignee any of its rights and obligations under the Loan Documents, as long as
(a) each assignment is of a constant, and not a varying, percentage of the
transferor Lender’s rights and obligations under the Loan Documents and, in the
case of a partial assignment, is in a minimum principal amount of $2,000,000
(unless otherwise agreed by Agent in its discretion) and integral multiples of
$500,000 in excess of that amount; (b) except in the case of an assignment in
whole of a Lender’s rights and obligations, the aggregate amount of the Revolver
Commitments retained by the transferor Lender be at least $4,000,000 (unless
otherwise agreed by Agent in its discretion); and (c) the parties to each such
assignment shall execute and deliver to Agent, for its acceptance and recording,
an Assignment and Acceptance. Nothing herein shall limit the right of a Lender
to pledge or assign any rights under the Loan Documents to (i) any Federal
Reserve Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors and any Operating Circular issued by such
Federal Reserve Bank, or (ii) counterparties to swap agreements relating to any
Loans; provided, however, that any payment by Borrowers to the assigning Lender
in respect of any Obligations assigned as described in this sentence shall
satisfy Borrowers’ obligations hereunder to the extent of such payment, and no
such assignment shall release the assigning Lender from its obligations
hereunder.
          13.3.2 Effect; Effective Date. Upon delivery to Agent of an assignment
notice in the form of Exhibit C and a processing fee of $5,000, such assignment
shall become effective as specified in the notice, if it complies with this
Section 13.3. From the effective date of such assignment, the Eligible Assignee
shall for all purposes be a Lender under the Loan Documents, and shall have all
rights and obligations of a Lender thereunder. Upon consummation of an
assignment, the transferor Lender, Agent and Borrowers shall make appropriate
arrangements for issuance of replacement and/or new Notes, as appropriate.

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     13.4 Tax Treatment. If any interest in a Loan Document is transferred to a
Transferee that is organized under the laws of any jurisdiction other than the
United States or any state or district thereof, the transferor Lender shall
cause such Transferee, concurrently with the effectiveness of such transfer, to
comply with the provisions of Section 5.9.
     13.5 Representation of Lenders. Each Lender represents and warrants to each
Borrower, Agent and other Lenders that none of the consideration used by it to
fund its Loans or to participate in any other transactions under this Agreement
constitutes for any purpose of ERISA or Section 4975 of the Internal Revenue
Code assets of any “plan” as defined in Section 3(3) of ERISA or Section 4975 of
the Internal Revenue Code and the interests of such Lender in and under the Loan
Documents shall not constitute plan assets under ERISA.
SECTION 14. MISCELLANEOUS
     14.1 Consents, Amendments and Waivers. —
          14.1.1 Amendment. No modification of any Loan Document, including any
extension or amendment of a Loan Document or any waiver of a Default or Event of
Default, shall be effective without the prior written agreement of Agent, with
the consent of Required Lenders, and each Obligor party to such Loan Document;
provided, however, that
          (a) without the prior written consent of Agent, no modification shall
be effective with respect to any provision in a Loan Document that relates to
any rights, duties or discretion of Agent;
          (b) without the prior written consent of Issuing Bank, no modification
shall be effective with respect to any LC Obligations or Section 2.2;
          (c) without the prior written consent of each affected Lender, no
modification shall be effective that would (i) increase the Revolver Commitment
of such Lender; or (ii) reduce the amount of, or waive or delay payment of, any
principal, interest or fees payable to such Lender; and
          (d) without the prior written consent of all Lenders (except a
defaulting Lender as provided in Section 4.2), no modification shall be
effective that would (i) extend the Revolver Termination Date; (ii) alter
Section 5.5, 7.1 (except to add Collateral), or 14.1.1; (iii) amend the
definitions of Borrowing Base (and the defined terms used in such definition),
Pro Rata or Required Lenders; (iv) increase any advance rate, decrease the
Availability Block, or increase total Revolver Commitments; (vi) release
Collateral with a book value greater than $2,000,000 during any calendar year,
except as currently contemplated by the Loan Documents; or (vii) release any
Obligor from liability for any Obligations, if such Obligor is Solvent at the
time of the release.
          14.1.2 Limitations. The agreement of Borrowers shall not be necessary
to the effectiveness of any modification of a Loan Document that deals solely
with the rights and duties of Lenders, Agent and/or Issuing Bank as among
themselves. Only the consent of the parties to any agreement relating to a Bank
Product shall be required for any modification of such agreement, and no
Affiliate of a Lender that is party to a Bank Product agreement shall have any
other right to consent to or participate in any manner in modification of any
other Loan Document. The making of any Loans during the existence of a Default
or Event of Default shall not be deemed to constitute a waiver of such Default
or Event of Default, nor to establish a course of dealing. Any waiver or consent
granted by Lenders hereunder shall be effective only if in writing, and then
only in the specific instance and for the specific purpose for which it is
given.
          14.1.3 Payment for Consents. No Borrower will, directly or indirectly,
pay any remuneration or other thing of value, whether by way of additional
interest, fee or otherwise, to any Lender (in its capacity as a Lender
hereunder) as consideration for agreement by such Lender with any

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modification of any Loan Documents, unless such remuneration or value is
concurrently paid, on the same terms, on a Pro Rata basis to all Lenders
providing their consent.
     14.2 Indemnity. EACH BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE
INDEMNITEES AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY
INDEMNITEE, INCLUDING CLAIMS ARISING FROM THE NEGLIGENCE OF AN INDEMNITEE. In no
event shall any party to a Loan Document have any obligation thereunder to
indemnify or hold harmless an Indemnitee with respect to a Claim that is
determined in a final, non-appealable judgment by a court of competent
jurisdiction to result from the gross negligence or willful misconduct of such
Indemnitee.
     14.3 Notices and Communications.
          14.3.1 Notice Address. Subject to Section 4.1.4, all notices, requests
and other communications by or to a party hereto shall be in writing and shall
be given to any Borrower, at Borrower Agent’s address shown on the signature
pages hereof, and to any other Person at its address shown on the signature
pages hereof (or, in the case of a Person who becomes a Lender after the Closing
Date, at the address shown on its Assignment and Acceptance), or at such other
address as a party may hereafter specify by notice in accordance with this
Section 14.3. Each such notice, request or other communication shall be
effective only (a) if given by facsimile transmission, when transmitted to the
applicable facsimile number, if confirmation of receipt is received; (b) if
given by mail, three Business Days after deposit in the U.S. mail, with
first-class postage pre-paid, addressed to the applicable address; or (c) if
given by personal delivery, when duly delivered to the notice address with
receipt acknowledged. Notwithstanding the foregoing, no notice to Agent pursuant
to Section 2.1.4, 2.2, 3.1.2, 4.1.1 or 5.2.3 shall be effective until actually
received by the individual to whose attention at Agent such notice is required
to be sent. Any written notice, request or other communication that is not sent
in conformity with the foregoing provisions shall nevertheless be effective on
the date actually received by the noticed party. Any notice received by Borrower
Agent shall be deemed received by all Borrowers.
          14.3.2 Electronic Communications; Voice Mail. Electronic mail and
internet websites may be used only for routine communications, such as financial
statements, Borrowing Base Certificates and other information required by
Section 10.1.2, administrative matters, distribution of Loan Documents for
execution, and matters permitted under Section 4.1.4. Agent and Lenders make no
assurances as to the privacy and security of electronic communications.
Electronic and voice mail may not be used as effective notice under the Loan
Documents.
          14.3.3 Non-Conforming Communications. Agent and Lenders may rely upon
any notices purportedly given by or on behalf of any Borrower even if such
notices were not made in a manner specified herein, were incomplete or were not
confirmed, or if the terms thereof, as understood by the recipient, varied from
a later confirmation. Each Borrower shall indemnify and hold harmless each
Indemnitee from any liabilities, losses, costs and expenses arising from any
telephonic communication purportedly given by or on behalf of a Borrower.
     14.4 Performance of Borrowers’ Obligations. Agent may, in its discretion at
any time and from time to time, at Borrowers’ expense, pay any amount or do any
act required of a Borrower under any Loan Documents or otherwise lawfully
requested by Agent to (a) enforce any Loan Documents or collect any Obligations;
(b) protect, insure, maintain or realize upon any Collateral; or (c) defend or
maintain the validity or priority of Agent’s Liens in any Collateral, including
any payment of a judgment, insurance premium, warehouse charge, finishing or
processing charge, or landlord claim, or any discharge of a Lien. All payments,
costs and expenses (including Extraordinary Expenses) of Agent under this
Section shall be reimbursed to Agent by Borrowers, on demand, with interest from
the date incurred to the date of payment thereof at the Default Rate applicable
to Base Rate Revolver Loans. Any payment made or

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action taken by Agent under this Section shall be without prejudice to any right
to assert an Event of Default or to exercise any other rights or remedies under
the Loan Documents.
     14.5 Credit Inquiries. Each Borrower hereby authorizes Agent and Lenders
(but they shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning any Borrower or Subsidiary.
     14.6 Severability. Wherever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be valid under Applicable Law. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect.
     14.7 Cumulative Effect; Conflict of Terms. The provisions of the Loan
Documents are cumulative. The parties acknowledge that the Loan Documents may
use several different limitations, tests or measurements to regulate the same or
similar matters, and they agree that these are cumulative and that each must be
performed as provided. Except as otherwise specifically provided in another Loan
Document (by specific reference to the applicable provision of this Agreement),
if any provision contained herein is in direct conflict with any provision in
another Loan Document, the provision herein shall govern and control.
     14.8 Counterparts; Facsimile Signatures. Any Loan Document may be executed
in counterparts, each of which taken together shall constitute one instrument.
Loan Documents may be executed and delivered by facsimile, and they shall have
the same force and effect as manually signed originals. Agent may require
confirmation by a manually-signed original, but failure to request or deliver
same shall not limit the effectiveness of any facsimile signature.
     14.9 Entire Agreement. Time is of the essence of the Loan Documents. The
Loan Documents embody the entire understanding of the parties with respect to
the subject matter thereof and supersede all prior understandings regarding the
same subject matter.
     14.10 Obligations of Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations or Revolver
Commitments of any other Lender. Amounts payable hereunder to each Lender shall
be a separate and independent debt, and each Lender shall be entitled, to the
extent not otherwise restricted hereunder, to protect and enforce its rights
arising out of the Loan Documents. It shall not be necessary for Agent or any
other Lender to be joined as an additional party in any proceeding for such
purposes. Nothing in this Agreement and no action of Agent or Lenders pursuant
to the Loan Documents shall be deemed to constitute Agent and Lenders to be a
partnership, association, joint venture or any other kind of entity, nor to
constitute control of any Borrower. Each Borrower acknowledges and agrees that
in connection with all aspects of any transaction contemplated by the Loan
Documents, Borrowers, Agent, Issuing Bank and Lenders have an arms-length
business relationship that creates no fiduciary duty on the part of Agent,
Issuing Bank or any Lender, and each Borrower, Agent, Issuing Bank and Lender
expressly disclaims any fiduciary relationship.
     14.11 Confidentiality. During the term of this Agreement and for 12 months
thereafter, Agent and Lenders agree to take reasonable precautions to maintain
the confidentiality of any information that Borrowers deliver to Agent and
Lenders and identify as confidential at the time of delivery, except that Agent
and any Lender may disclose such information (a) to their respective officers,
directors, employees, Affiliates and agents, including legal counsel, auditors
and other professional advisors; (b) to any party to the Loan Documents from
time to time; (c) pursuant to the order of any court or administrative agency;
(d) upon the request of any Governmental Authority exercising regulatory
authority over Agent or such Lender; (e) which ceases to be confidential, other
than by an act or omission of Agent or any Lender, or which becomes available to
Agent or any Lender on a nonconfidential basis; (f) to the extent reasonably
required in connection with any litigation relating to any Loan Documents or
transactions contemplated

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thereby, or otherwise as required by Applicable Law; (g) to the extent
reasonably required for the exercise of any rights or remedies under the Loan
Documents; (h) to any actual or proposed party to a Bank Product or to any
Transferee, as long as such Person agrees to be bound by the provisions of this
Section; (i) to the National Association of Insurance Commissioners or any
similar organization, or to any nationally recognized rating agency that
requires access to information about a Lender’s portfolio in connection with
ratings issued with respect to such Lender; (j) to any investor or potential
investor in an Approved Fund that is a Lender or Transferee, but solely for use
by such investor to evaluate an investment in such Approved Fund, or to any
manager, servicer or other Person in connection with its administration of any
such Approved Fund; or (k) with the consent of Borrowers. Notwithstanding the
foregoing, Agent and Lenders may issue and disseminate to the public general
information describing this credit facility, including the names and addresses
of Borrowers and a general description of Borrowers’ businesses, and may use
Borrowers’ names in advertising and other promotional materials.
     14.12 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, UNLESS
OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA,
WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO
FEDERAL LAWS RELATING TO NATIONAL BANKS).
     14.13 Consent to Forum; Arbitration.
     14.13.1 Forum. EACH BORROWER HEREBY CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER
CALIFORNIA, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO ANY LOAN
DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN
ANY SUCH COURT. EACH BORROWER IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND
DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER
JURISDICTION, VENUE OR INCONVENIENT FORUM. Nothing herein shall limit the right
of Agent or any Lender to bring proceedings against any Obligor in any other
court. Nothing in this Agreement shall be deemed to preclude enforcement by
Agent of any judgment or order obtained in any forum or jurisdiction.
          14.13.2 Arbitration. Notwithstanding any other provision of this
Agreement to the contrary, any controversy or claim among the parties relating
in any way to any Obligations or Loan Documents, including any alleged tort,
shall at the request of any party hereto be determined by binding arbitration
conducted in accordance with the United States Arbitration Act (Title 9 U.S.
Code). Arbitration proceedings will be determined in accordance with the Act,
the then-current rules and procedures for the arbitration of financial services
disputes of the American Arbitration Association (“AAA”), and the terms of this
Section. In the event of any inconsistency, the terms of this Section shall
control. If AAA is unwilling or unable to serve as the provider of arbitration
or to enforce any provision of this Section, Agent may designate another
arbitration organization with similar procedures to serve as the provider of
arbitration. The arbitration proceedings shall be conducted in Los Angeles or
Pasadena, California. The arbitration hearing shall commence within 90 days of
the arbitration demand and close within 90 days thereafter. The arbitration
award must be issued within 30 days after close of the hearing (subject to
extension by the arbitrator for up to 60 days upon a showing of good cause), and
shall include a concise written statement of reasons for the award. The
arbitrator shall give effect to applicable statutes of limitation in determining
any controversy or claim, and for these purposes, service on AAA under
applicable AAA rules of a notice of claim is the equivalent of the filing of a
lawsuit. Any dispute concerning this Section or whether a controversy or claim
is arbitrable shall be determined by the arbitrator. The arbitrator shall have
the power to award legal fees to the extent provided by this Agreement. Judgment
upon an arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuant to a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or

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claim to arbitration if any other party contests such action for judicial
relief. No controversy or claim shall be submitted to arbitration without the
consent of all parties if, at the time of the proposed submission, such
controversy or claim relates to an obligation secured by Real Estate, but if all
parties do not consent to submission of such a controversy or claim to
arbitration, it shall be determined as provided in the next sentence. At the
request of any party, a controversy or claim that is not submitted to
arbitration as provided above shall be determined by judicial reference; and if
such an election is made, the parties shall designate to the court a referee or
referees selected under the auspices of the AAA in the same manner as
arbitrators are selected in AAA sponsored proceedings and the presiding referee
of the panel (or the referee if there is a single referee) shall be an active
attorney or retired judge; and judgment upon the award rendered by such referee
or referees shall be entered in the court in which proceeding was commenced.
None of the foregoing provisions of this Section shall limit the right of Agent
or Lenders to exercise self-help remedies, such as setoff, foreclosure or sale
of any Collateral or to obtain provisional or ancillary remedies from a court of
competent jurisdiction before, after or during any arbitration proceeding. The
exercise of a remedy does not waive the right of any party to resort to
arbitration or reference. At Agent’s option, foreclosure under a Mortgage may be
accomplished either by exercise of power of sale thereunder or by judicial
foreclosure.
     14.14 Waivers by Borrowers. To the fullest extent permitted by Applicable
Law, each Borrower waives (a) the right to trial by jury (which Agent and each
Lender hereby also waives) in any proceeding, claim or counterclaim of any kind
relating in any way to any Loan Documents, Obligations or Collateral;
(b) presentment, demand, protest, notice of presentment, default, non-payment,
maturity, release, compromise, settlement, extension or renewal of any
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Agent on which a Borrower may in any
way be liable, and hereby ratifies anything Agent may do in this regard;
(c) notice prior to taking possession or control of any Collateral; (d) any bond
or security that might be required by a court prior to allowing Agent to
exercise any rights or remedies; (e) the benefit of all valuation, appraisement
and exemption laws; (f) any claim against Agent or any Lender, on any theory of
liability, for special, indirect, consequential, exemplary or punitive damages
(as opposed to direct or actual damages) in any way relating to any Enforcement
Action, Obligations, Loan Documents or transactions relating thereto; and
(g) notice of acceptance hereof. Each Borrower acknowledges that the foregoing
waivers are a material inducement to Agent and Lenders entering into this
Agreement and that Agent and Lenders are relying upon the foregoing in their
dealings with Borrowers. Each Borrower has reviewed the foregoing waivers with
its legal counsel and has knowingly and voluntarily waived its jury trial and
other rights following consultation with legal counsel. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
     14.15 Patriot Act Notice. Agent and Lenders hereby notify Borrowers that
pursuant to the requirements of the Patriot Act, Agent and Lenders are required
to obtain, verify and record information that identifies each Borrower,
including its legal name, address, tax ID number and other information that will
allow Agent and Lenders to identify it in accordance with the Patriot Act. Agent
and Lenders will also require information regarding each personal guarantor, if
any, and may require information regarding Borrowers’ management and owners,
such as legal name, address, social security number and date of birth.
[Remainder of page intentionally left blank; signatures begin on following page]

-84-

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     IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date set forth above.

     
 
BORROWERS:
 
 
 
   
 
EMAK WORLDWIDE, INC.
 
   
 
   
 
By: /s/ Teresa L. Tormey
 
Title: Chief Administrative Officer and
 
  General Counsel
 
   
 
Address:  
 
  6330 San Vicente Blvd.
 
  Los Angeles, CA 90048
 
  Attention: Teresa L. Tormey
 
  Telecopy: 323-930-8346
 
   
 
EQUITY MARKETING, INC.
 
   
 
   
 
By: /s/ Teresa L. Tormey
 
Title: Executive Vice President,
 
  General Counsel and Secretary
 
   
 
Address:  
 
  6330 San Vicente Blvd.
 
  Los Angeles, CA 90048
 
  Attention: Teresa L. Tormey
 
  Telecopy: 323-930-8346
 
   
 
SCI PROMOTION, INC.
 
   
 
   
 
By: /s/ Teresa L. Tormey
 
Title: Executive Vice President,
 
  General Counsel and Secretary
 
   
 
Address:
 
  6330 San Vicente Blvd.
 
  Los Angeles, CA 90048
 
  Attention: Teresa L. Tormey
 
  Telecopy: 323-930-8346

 

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  POP ROCKET, INC.
 
   
 
   
 
  By: /s/ Teresa L. Tormey
 
  Title: Executive Vice President,
 
             General Counsel and Secretary
 
   
 
  Address:
 
             6330 San Vicente Blvd.
 
             Los Angeles, CA 90048
 
             Attention: Teresa L. Tormey
 
             Telecopy: 323-930-8346
 
   
 
  LOGISTIX, INC.
 
   
 
   
 
  By: /s/ Teresa L. Tormey
 
  Title: Executive Vice President,
 
             General Counsel and Secretary
 
   
 
  Address:
 
             6330 San Vicente Blvd.
 
             Los Angeles, CA 90048
 
             Attention: Teresa L. Tormey
 
             Telecopy: 323-930-8346
 
   
 
  UPSHOT, INC.
 
   
 
   
 
  By: /s/ Teresa L. Tormey
 
  Title: Executive Vice President,
 
             General Counsel and Secretary
 
   
 
  Address:
 
             6330 San Vicente Blvd.
 
             Los Angeles, CA 90048
 
             Attention: Teresa L. Tormey
 
             Telecopy: 323-930-8346
 
   
 
  EMAK WORLDWIDE SERVICE CORP.
 
   
 
   
 
  By: /s/ Teresa L. Tormey
 
  Title: Chief Administrative Officer and
 
             General Counsel
 
   
 
  Address:
 
             6330 San Vicente Blvd.
 
             Los Angeles, CA 90048
 
             Attention: Teresa L. Tormey
 
             Telecopy: 323-930-8346

 

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  CORINTHIAN MARKETING, INC.
 
   
 
   
 
  By: /s/ Teresa L. Tormey
 
  Title: Executive Vice President,
 
             General Counsel and Secretary
 
   
 
  Address:
 
             6330 San Vicente Blvd.
 
             Los Angeles, CA 90048
 
             Attention: Teresa L. Tormey
 
             Telecopy: 323-930-8346
 
   
 
  JOHNSON GROSSFIELD, INC.
 
   
 
   
 
  By: /s/ Teresa L. Tormey
 
  Title: Executive Vice President,
 
             General Counsel and Secretary
 
   
 
  Address:
 
             6330 San Vicente Blvd.
 
             Los Angeles, CA 90048
 
             Attention: Teresa L. Tormey
 
             Telecopy: 323-930-8346
 
   
 
  EQUITY MARKETING HONG KONG, LTD.
 
   
 
   
 
  By: /s/ Teresa L. Tormey
 
  Title: Executive Vice President,
 
             General Counsel and Secretary
 
   
 
  Address:
 
             6330 San Vicente Blvd.
 
             Los Angeles, CA 90048
 
             Attention: Teresa L. Tormey
 
             Telecopy: 323-930-8346

 

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  AGENT AND LENDERS:
 
   
 
  BANK OF AMERICA, N.A.,
 
  as Agent and Lender
 
   
 
   
 
  By: /s/ David T. Knoblauch
 
  Title: Senior Vice President
 
   
 
  Address:
 
               55 South Lake Avenue
 
               Pasadena, California 91101-2627
 
               Attention: Portfolio Manager
 
               Telecopy: (626) 584-4600