**Exhibit 10.50**

**AMENDMENT NO. 7 TO BUSINESS LOAN AGREEMENTAND WAIVER**

 

                This Amendment No. 7 to Business LoanAgreement and Waiver, dated as of January 15, 2002 (the “Amendment”), isbetween Media Arts Group, Inc., a Delaware corporation (“MAGI”), Lightpost Publishing,Inc., a California corporation (“Lightpost,” and together with MAGI, each a“Borrower” and collectively the “Borrowers”) and Bank of America, N.A. (the“Bank”).

 

                A.            TheBorrowers and the Bank have entered into a certain Business Loan Agreementdated as of October 27, 1999 as amended to date (the “Loan Agreement”).

 

                B.            TheBorrowers have requested that the Bank amend the Loan Agreement on the termsand conditions herein contained.

 

                C.            TheBorrowers have requested that the Bank waive compliance by the Borrowers withcertain provisions of the Loan Agreement, as more particularly described inthis Amendment.

 

                D.            TheBank has agreed to amend the Loan Agreement on the terms and conditions hereincontained. The Bank has agreed to waive compliance with the provisionsdescribed in paragraph C above, but on the terms and conditions hereincontained.

 

                NOW, THEREFORE, in consideration of thepremises herein contained and for other good and valuable consideration, theBorrowers and the Bank do hereby mutually agree as follows:

 

AGREEMENT

 

                1.             Definitions.Capitalized terms used but not defined in this Amendment shall have the meaninggiven to them in the Loan Agreement.

 

                2.             Amendment.

 

                2.1           Section 1.2of the Loan Agreement is amended by deleting this Section in its entirety, andby substituting the following therefor:

 

                “1.2         AvailabilityPeriod. The line of credit is available between the date of this Agreementand May 31, 2002 (the “Expiration Date”) unless any Borrower is indefault.”

 

                2.2           Section 1.3(a)of the Loan Agreement is amended by deleting this Section in its entirety, andby substituting the following therefor:

 

                “(a)         UnlessBorrowers elect an optional interest rate as described below, the interest rateis the Bank’s Reference Rate plus three (3.0) percentage points.”

 

 

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                2.3           Section3.1(b) of the Loan Agreement is amended by deleting the percentage “0.175%”where it appears in the second sentence of this Section, and by substitutingtherefor the percentage “0.50%.”

 

                2.4           Section8.4 of the Loan Agreement is amended by deleting the ratio “1.25:1.0” where itappears in the first sentence of this Section, and by substituting therefor theratio “1.75:1.0.”

 

                2.5           Section8.5 of the Loan Agreement is amended by deleting the first sentence thereof inits entirety, and by substituting the following therefor:

 

“To maintainon a consolidated basis an Adjusted EBITDA Debt Coverage Ratio not exceeding1.50:1.0.”

 

                2.6           Section8.6 of the Loan Agreement is amended by deleting this Section in its entirety,and by substituting the following therefor:

 

      “8.6         MinimumAdjusted EBITDA. To earn on a consolidated basis a minimum Adjusted EBITDAof at least One Hundred Thousand Dollars ($100,000) for the fiscal year of theBorrowers ending on March 31, 2002. “Adjusted EBITDA” means the following,computed without duplication on a consolidated basis for Borrowers: (i) the sumof net income before taxes, plus interest expense, plus depreciation,depletion, amortization and other non-cash charges, plus any extraordinary lossitems, (ii) minus any extraordinary income items, (iii) minus the currentDefaulted Lease Exposure, and (iv) plus the amount of any cash rental paymentsmade by Borrowers in reduction of the Defaulted Lease Exposure. The currentDefaulted Lease Exposure will be measured as of March 31, 2002. “DefaultedLease Exposure” means the aggregate of the following for each Defaulted RetailLease: (x) if a Borrower has agreed to pay any amount in settlement of itsobligations under such Defaulted Retail Lease, the amount of such settlement(which settlement amount shall not be deemed to be a cash rental payment forpurposes of the computation of Adjusted EBITDA), and (y) in all other events,twelve months’ rent under such Defaulted Retail Lease. The amount of theDefaulted Lease Exposure shall not be reduced by any payment made by eitherBorrower on account of any component of the Defaulted Lease Exposure.“Defaulted Retail Lease” means any Retail Lease where there has occurred anyuncured default by the tenant, if the default consists of a failure to make apayment when due or gives the landlord the right to cause a Borrower todirectly assume all or a portion of the obligations of the tenant under suchRetail Lease.”

 

                2.7           Section8.8 of the Loan Agreement is amended by deleting this Section in its entirety,and by substituting the following therefor:

 

      “8.8         TangibleNet Worth. To maintain on a consolidated basis, as of the end of the fiscalyear of the Borrowers ending March 31, 2002, tangible net worth equal toat least Seventy Million Dollars ($70,000,000). “Tangible net worth” means thegross book value of the Borrower’s assets (excluding goodwill, patents,trademarks, trade names,

 

 

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organizationexpense, treasury stock, unamortized debt discount and expense, capitalized ordeferred research and development costs, deferred marketing expenses, deferredreceivables, and other like intangibles, and monies due from officers,directors, employees orshareholdersof the Borrowers) plus liabilitiessubordinated to the Bank in a manner acceptable to the Bank (using the Bank’sstandard form) less total liabilities, including but not limited to accrued anddeferred income taxes, and any reserves against assets.”

 

                3.             Waivers.

 

                3.1           Section8.5 of the Loan Agreement requires the Borrowers to maintain on a consolidatedbasis an Adjusted EBITDA Debt Coverage Ratio not exceeding 1.50:1.0. TheBorrowers have violated this covenant for the fiscal quarter endingDecember 31, 2001. The Bank hereby waives compliance by the Borrowers withSection 8.5 of the Loan Agreement for the fiscal quarter endingDecember 31, 2001; provided that the Borrowers have maintained on a consolidatedbasis an Adjusted EBITDA Debt Coverage Ratio for such quarter not exceeding4.17:1.0.

 

                3.2           Section8.6 of the Loan Agreement requires the Borrowers to maintain on a consolidatedbasis as of the end of each fiscal quarter of the Borrowers a minimum Adjusted EBITDA of at least Nineteen MillionDollars ($19,000,000). The Borrowers have violated this covenant for the fiscalquarter ending December 31, 2001. The Bank hereby waives compliance by theBorrowers with Section 8.6 of the Loan Agreement for the fiscal quarter endingDecember 31, 2001; provided that the Borrowers have maintained on aconsolidated basis a Minimum Adjusted EBITDA for such quarter of at least SevenHundred Eighty-Eight Thousand Dollars ($788,000).

 

                4.             Representationsand Warranties. When the Borrowers sign this Amendment, each Borrowerrepresents and warrants to the Bank that: (a) giving effect to this Amendment,except as previously disclosed by the Borrowers to the Bank, there is no eventwhich is, or with notice of, or lapse of time, or both would be, a defaultunder the Loan Agreement, (b) giving effect to this Amendment, except aspreviously disclosed by the Borrowers to the Bank, the representations andwarranties of the Borrowers in the Loan Agreement are true on and as of thedate hereof as if made on and as of said date, (c) this Amendment is withinsuch Borrower’s powers, has been duly authorized and does not conflict with anyof such Borrower’s organizational papers, and (d) this Amendment does notconflict with any law, agreement or obligations by which such Borrower isbound.

 

                5.             Conditions.This Amendment will be effective upon the occurrence of the following, in eachcase in a manner satisfactory to the Bank:

 

                                5.1           Receiptby the Bank of this Amendment executed by each party hereto; and

 

                      5.2           Paymentby the Borrowers to the Bank of a fee in the amount of Twenty-Five ThousandDollars ($25,000.00).

 

 

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                6.             Release.Each Borrower, for itself and each of its predecessors, successors, assigns,representatives, attorneys, agents, affiliates and any other person or entitywho may in any fashion claim any interest in the subject matter hereof by,through or on behalf of any Borrower (collectively, the “Borrower Parties”),hereby forever, fully and irrevocably releases the Bank and each of itsrepresentatives, attorneys, agents, successors and assigns (collectively, the“Bank Released Parties”) from any and all liabilities, claims, cross-claims,losses, demands, controversies, damages, debts, obligations, and causes ofaction of every kind and nature (including, without limitation, claims fordamages, costs, expenses, and attorneys’, brokers’ and accountants’ fees andexpenses), whether known or unknown, suspected or unsuspected, in law or inequity, to the extent relating to actions, events or circumstances occurring orfailing to occur in the period to and including the date of this Amendment inconnection with or arising out of (i) any of the Obligations or the LoanDocuments, and (ii) any and all transactions effected or actions taken oromitted pursuant to or in connection with the foregoing (collectively, the“Bank Released Claims”). Each Borrower, on its own behalf and for each otherBorrower Party, hereby irrevocably agrees that each Borrower Party will refrainfrom directly or indirectly asserting any claim or demand or commencing (orcausing to be commenced) any suit, action, or proceeding of any kind, in anycourt or before any tribunal, against any Bank Released Party based upon anyBank Released Claim. Each Borrower, on its own behalf and for each otherBorrower Party, acknowledges that it is aware that statutes exist that rendernull and void releases and discharges of any claims, rights, demands,liabilities, actions and causes of action which are unknown to the releasing ordischarging party at the time of execution of the release and discharge. EachBorrower, on its own behalf and for each other Borrower Party, expresslywaives, surrenders and agrees to forego any protection, rights or benefits towhich they otherwise would be entitled by virtue of the existence of any suchstatute in any jurisdiction including, but not limited to, the provisions ofSection 1542 of the California Civil Code, which provide as follows:

 

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

 

Each Borrower, on its ownbehalf and for each other Borrower Party, acknowledges that they may hereafterdiscover facts different from, or in addition to, those that they now believeto be true, with respect to all or any of the liabilities, claims, demands andcauses of action herein released. Nevertheless, each Borrower, on its ownbehalf and for each other Borrower Party, agrees that the releases set forthabove shall be and remain effective in all respects, notwithstanding thediscovery of such different or additional facts. Each Borrower, on its behalfand on behalf of each Borrower Party, represents and warrants that (a) itunderstands and acknowledges the legal significance and consequences of arelease of unknown claims and hereby assumes full responsibility for anyinjuries, damages, losses or liabilities that hereafter may occur with respectto the matters described herein, (b) none of the claims, rights, demands,liabilities, actions and causes of action herein re-leased has been assigned toany person or entity, (c) it has received independent legal advice with respectto the advisability of entering into this Amendment, and it is not entitled torely upon and has not in fact relied upon the legal or other advice of anyother party or any other party’s counsel in entering into this Amendment, (d)it has carefully read this Amendment, it has had this Amendment fully explainedto it by its attorney, and it is entering into

 

 

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this Amendment voluntarily, and(e) it has conducted an adequate investigation into the matters in respect towhich this Amendment has been executed.

 

                7.             Effectof Amendment. If any provision of this Amendment shall be found by a courtto be invalid or unenforceable, in whole or in part, then such provision shall beconstrued and/or modified or restricted to the extent and in the mannernecessary to render the same valid and enforceable to the extent possible, or,if not so possible, shall be deemed excised from this Amendment, as the casemay require, and this Amendment shall be construed and enforced to the maximumextent permitted by law, or as if such provision  had not been originally incorporated herein, as the case may be.The parties further agree to seek a lawful substitute for any provision foundto be unlawful; provided that if the parties are unable to agree upon a lawfulsubstitute, the parties desire and request that a court or other authoritycalled upon to decide the enforceability of this Amendment modify thisAmendment so that, once modified, this Amendment will be enforceable to themaximum extent permitted by the laws in existence at the time of the requestedenforcement. Except as specifically amended above, the Loan Agreement shallremain in full force and effect and is hereby ratified and confirmed. Thewaiver contained above shall be limited precisely as written and relate solelyto the items and times above. Nothing in this Amendment shall be deemed to (a)constitute a waiver of compliance by any Borrower with respect to any otherterm, provision or condition of the Loan Agreement or any other instrument oragreement referred to therein or (b) prejudice any right or remedy that theBank may now have or may have in the future under applicable law or instrumentor agreement referred to therein.

 

                8.             Counterparts.This Amendment may be executed in any number of counterparts, each of whichwhen so executed shall be deemed an original, and all of said counterpartstaken together shall be deemed to constitute but one and the same instrument.

 

                IN WITNESS WHEREOF, this Amendment has beenexecuted by the parties hereto as of the date first above written.

 
| **BANK OF AMERICA, N.A.** | **MEDIA ARTS GROUP, INC.**     |
|---------------------------|--------------------------------|
|                      |                           |
|                      |                           |
| By:                       | /s/ Robert  J. Likos           |   | By: | /s/ Herbert  D. Montgomery |   |   |
|                      | Robert J.  Likos               |   | Name: | Herbert D.  Montgomery |
|                      | Title: Vice  President         |   | Title: | Executive  Vice President and CFO |
|                      |                           |
|                      | **LIGHTPOST PUBLISHING, INC.** |
|                      |                           |
|                      |                           |
|                      | By:                            | /s/ Herbert  D. Montgomery |   |
|                      |                           | Name: | Herbert D.  Montgomery |
|                      |                           | Title: | Executive  Vice President and CFO |
|                      |                           |
|                           |                                |  |  |  |  |  |  |  |

 

 

 

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