Document:

AMENDMENT NO

Exhibit 10.50

AMENDMENT NO. 7 TO BUSINESS LOAN AGREEMENT

AND WAIVER

 

                This Amendment No. 7 to Business Loan

Agreement and Waiver, dated as of January 15, 2002 (the “Amendment”), is

between 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.            The

Borrowers and the Bank have entered into a certain Business Loan Agreement

dated as of October 27, 1999 as amended to date (the “Loan Agreement”).

 

                B.            The

Borrowers have requested that the Bank amend the Loan Agreement on the terms

and conditions herein contained.

 

                C.            The

Borrowers have requested that the Bank waive compliance by the Borrowers with

certain provisions of the Loan Agreement, as more particularly described in

this Amendment.

 

                D.            The

Bank has agreed to amend the Loan Agreement on the terms and conditions herein

contained. The Bank has agreed to waive compliance with the provisions

described in paragraph C above, but on the terms and conditions herein

contained.

 

                NOW, THEREFORE, in consideration of the

premises herein contained and for other good and valuable consideration, the

Borrowers and the Bank do hereby mutually agree as follows:

 

AGREEMENT

 

                1.             Definitions.

Capitalized terms used but not defined in this Amendment shall have the meaning

given to them in the Loan Agreement.

 

                2.             Amendment.

 

                2.1           Section 1.2

of the Loan Agreement is amended by deleting this Section in its entirety, and

by substituting the following therefor:

 

                “1.2         Availability

Period. The line of credit is available between the date of this Agreement

and May 31, 2002 (the “Expiration Date”) unless any Borrower is in

default.”

 

                2.2           Section 1.3(a)

of the Loan Agreement is amended by deleting this Section in its entirety, and

by substituting the following therefor:

 

                “(a)         Unless

Borrowers elect an optional interest rate as described below, the interest rate

is the Bank’s Reference Rate plus three (3.0) percentage points.”

 

 

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                2.3           Section

3.1(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 substituting

therefor the percentage “0.50%.”

 

                2.4           Section

8.4 of the Loan Agreement is amended by deleting the ratio “1.25:1.0” where it

appears in the first sentence of this Section, and by substituting therefor the

ratio “1.75:1.0.”

 

                2.5           Section

8.5 of the Loan Agreement is amended by deleting the first sentence thereof in

its entirety, and by substituting the following therefor:

 

“To maintain

on a consolidated basis an Adjusted EBITDA Debt Coverage Ratio not exceeding

1.50:1.0.”

 

                2.6           Section

8.6 of the Loan Agreement is amended by deleting this Section in its entirety,

and by substituting the following therefor:

 

      “8.6         Minimum

Adjusted EBITDA. To earn on a consolidated basis a minimum Adjusted EBITDA

of at least One Hundred Thousand Dollars ($100,000) for the fiscal year of the

Borrowers ending on March 31, 2002. “Adjusted EBITDA” means the following,

computed without duplication on a consolidated basis for Borrowers: (i) the sum

of net income before taxes, plus interest expense, plus depreciation,

depletion, amortization and other non-cash charges, plus any extraordinary loss

items, (ii) minus any extraordinary income items, (iii) minus the current

Defaulted Lease Exposure, and (iv) plus the amount of any cash rental payments

made by Borrowers in reduction of the Defaulted Lease Exposure. The current

Defaulted Lease Exposure will be measured as of March 31, 2002. “Defaulted

Lease Exposure” means the aggregate of the following for each Defaulted Retail

Lease: (x) if a Borrower has agreed to pay any amount in settlement of its

obligations under such Defaulted Retail Lease, the amount of such settlement

(which settlement amount shall not be deemed to be a cash rental payment for

purposes of the computation of Adjusted EBITDA), and (y) in all other events,

twelve months’ rent under such Defaulted Retail Lease. The amount of the

Defaulted Lease Exposure shall not be reduced by any payment made by either

Borrower on account of any component of the Defaulted Lease Exposure.

“Defaulted Retail Lease” means any Retail Lease where there has occurred any

uncured default by the tenant, if the default consists of a failure to make a

payment when due or gives the landlord the right to cause a Borrower to

directly assume all or a portion of the obligations of the tenant under such

Retail Lease.”

 

                2.7           Section

8.8 of the Loan Agreement is amended by deleting this Section in its entirety,

and by substituting the following therefor:

 

      “8.8         Tangible

Net Worth. To maintain on a consolidated basis, as of the end of the fiscal

year of the Borrowers ending March 31, 2002, tangible net worth equal to

at least Seventy Million Dollars ($70,000,000). “Tangible net worth” means the

gross book value of the Borrower’s assets (excluding goodwill, patents,

trademarks, trade names,

 

 

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organization

expense, treasury stock, unamortized debt discount and expense, capitalized or

deferred research and development costs, deferred marketing expenses, deferred

receivables, and other like intangibles, and monies due from officers,

directors, employees orshareholdersof the Borrowers) plus liabilities

subordinated to the Bank in a manner acceptable to the Bank (using the Bank’s

standard form) less total liabilities, including but not limited to accrued and

deferred income taxes, and any reserves against assets.”

 

                3.             Waivers.

 

                3.1           Section

8.5 of the Loan Agreement requires the Borrowers to maintain on a consolidated

basis an Adjusted EBITDA Debt Coverage Ratio not exceeding 1.50:1.0. The

Borrowers have violated this covenant for the fiscal quarter ending

December 31, 2001. The Bank hereby waives compliance by the Borrowers with

Section 8.5 of the Loan Agreement for the fiscal quarter ending

December 31, 2001; provided that the Borrowers have maintained on a consolidated

basis an Adjusted EBITDA Debt Coverage Ratio for such quarter not exceeding

4.17:1.0.

 

                3.2           Section

8.6 of the Loan Agreement requires the Borrowers to maintain on a consolidated

basis as of the end of each fiscal quarter of 

the Borrowers a minimum Adjusted EBITDA of at least Nineteen Million

Dollars ($19,000,000). The Borrowers have violated this covenant for the fiscal

quarter ending December 31, 2001. The Bank hereby waives compliance by the

Borrowers with Section 8.6 of the Loan Agreement for the fiscal quarter ending

December 31, 2001; provided that the Borrowers have maintained on a

consolidated basis a Minimum Adjusted EBITDA for such quarter of at least Seven

Hundred Eighty-Eight Thousand Dollars ($788,000).

 

                4.             Representations

and Warranties. When the Borrowers sign this Amendment, each Borrower

represents 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 event

which is, or with notice of, or lapse of time, or both would be, a default

under the Loan Agreement, (b) giving effect to this Amendment, except as

previously disclosed by the Borrowers to the Bank, the representations and

warranties of the Borrowers in the Loan Agreement are true on and as of the

date hereof as if made on and as of said date, (c) this Amendment is within

such Borrower’s powers, has been duly authorized and does not conflict with any

of such Borrower’s organizational papers, and (d) this Amendment does not

conflict with any law, agreement or obligations by which such Borrower is

bound.

 

                5.             Conditions.

This Amendment will be effective upon the occurrence of the following, in each

case in a manner satisfactory to the Bank:

 

                                5.1           Receipt

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

 

                      5.2           Payment

by the Borrowers to the Bank of a fee in the amount of Twenty-Five Thousand

Dollars ($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 entity

who 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 its

representatives, 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 of

action of every kind and nature (including, without limitation, claims for

damages, costs, expenses, and attorneys’, brokers’ and accountants’ fees and

expenses), whether known or unknown, suspected or unsuspected, in law or in

equity, to the extent relating to actions, events or circumstances occurring or

failing to occur in the period to and including the date of this Amendment in

connection with or arising out of (i) any of the Obligations or the Loan

Documents, and (ii) any and all transactions effected or actions taken or

omitted pursuant to or in connection with the foregoing (collectively, the

“Bank Released Claims”). Each Borrower, on its own behalf and for each other

Borrower Party, hereby irrevocably agrees that each Borrower Party will refrain

from directly or indirectly asserting any claim or demand or commencing (or

causing to be commenced) any suit, action, or proceeding of any kind, in any

court or before any tribunal, against any Bank Released Party based upon any

Bank Released Claim. Each Borrower, on its own behalf and for each other

Borrower Party, acknowledges that it is aware that statutes exist that render

null and void releases and discharges of any claims, rights, demands,

liabilities, actions and causes of action which are unknown to the releasing or

discharging party at the time of execution of the release and discharge. Each

Borrower, on its own behalf and for each other Borrower Party, expressly

waives, surrenders and agrees to forego any protection, rights or benefits to

which they otherwise would be entitled by virtue of the existence of any such

statute in any jurisdiction including, but not limited to, the provisions of

Section 1542 of the California Civil Code, which provide as follows:

 

A general release

does not extend to claims which the creditor does not know or suspect to exist

in his favor at the time of executing the release, which if known by him must

have materially affected his settlement with the debtor.

 

Each Borrower, on its own

behalf and for each other Borrower Party, acknowledges that they may hereafter

discover facts different from, or in addition to, those that they now believe

to be true, with respect to all or any of the liabilities, claims, demands and

causes of action herein released. Nevertheless, each Borrower, on its own

behalf and for each other Borrower Party, agrees that the releases set forth

above shall be and remain effective in all respects, notwithstanding the

discovery of such different or additional facts. Each Borrower, on its behalf

and on behalf of each Borrower Party, represents and warrants that (a) it

understands and acknowledges the legal significance and consequences of a

release of unknown claims and hereby assumes full responsibility for any

injuries, damages, losses or liabilities that hereafter may occur with respect

to the matters described herein, (b) none of the claims, rights, demands,

liabilities, actions and causes of action herein re-leased has been assigned to

any person or entity, (c) it has received independent legal advice with respect

to the advisability of entering into this Amendment, and it is not entitled to

rely upon and has not in fact relied upon the legal or other advice of any

other 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 explained

to 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 to

which this Amendment has been executed.

 

                7.             Effect

of Amendment. If any provision of this Amendment shall be found by a court

to be invalid or unenforceable, in whole or in part, then such provision shall be

construed and/or modified or restricted to the extent and in the manner

necessary 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 case

may require, and this Amendment shall be construed and enforced to the maximum

extent 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 found

to be unlawful; provided that if the parties are unable to agree upon a lawful

substitute, the parties desire and request that a court or other authority

called upon to decide the enforceability of this Amendment modify this

Amendment so that, once modified, this Amendment will be enforceable to the

maximum extent permitted by the laws in existence at the time of the requested

enforcement. Except as specifically amended above, the Loan Agreement shall

remain in full force and effect and is hereby ratified and confirmed. The

waiver contained above shall be limited precisely as written and relate solely

to 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 other

term, provision or condition of the Loan Agreement or any other instrument or

agreement referred to therein or (b) prejudice any right or remedy that the

Bank may now have or may have in the future under applicable law or instrument

or agreement referred to therein.

 

                8.             Counterparts.

This Amendment may be executed in any number of counterparts, each of which

when so executed shall be deemed an original, and all of said counterparts

taken together shall be deemed to constitute but one and the same instrument.

 

                IN WITNESS WHEREOF, this Amendment has been

executed 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

  
	

   

  	

   

  
									

 

 

 

5COMPENSATION AGREEMENT

Exhibit

10.51

COMPENSATION AGREEMENT

 

 

This Compensation Agreement, between Media Arts Group, Inc. (“MAGI”)

and Anthony D. Thomopoulos (“Executive”), is made as of January 24, 2002.

 

WHEREAS, the Board of Directors requested that Executive serve as

MAGI’s interim Chief Executive Officer;

 

WHEREAS, the Board of Directors approved that, for services as MAGI’s

interim Chief Executive Officer, MAGI shall pay to Executive $250,000 for the

first three months of service (the “Cash Compensation”), and, if Executive

shall continue to serve as interim Chief Executive Officer thereafter, for each

month of service, up to three months, Executive shall be granted options to

purchase 150,000 shares of common stock of MAGI, such options to be immediately

exercisable and have an exercise price of $1.00 per share (the “Options”);

 

WHEREAS, Executive accepted the appointment as interim Chief Executive

Officer and served in such capacity for seven (7) months;

 

WHEREAS, MAGI paid the Cash Compensation to Executive,

 

WHEREAS, upon mutual agreement of Executive and MAGI and MAGI’s Board

of Directors, MAGI did not grant or issue the Options to Executive;

 

WHEREAS, upon mutual Agreement of Executive and MAGI and MAGI’s Board

of Directors, in lieu of granting and issuing the Options to Executive, MAGI

agreed to pay, and Executive agreed to accept, the payments set forth in this

Compensation Agreement.

 

NOW, THEREFORE, the Executive and MAGI hereby agree as follows:

 

1.                                       MAGI shall pay to Executive an aggregate

of $400,000 in four equal $100,000 monthly payments, commencing on February 1,

2002.

 

2.                                       Any purported grant or issuance of the

Options shall be null and void.

 

3.                                       This Agreement shall be governed by,

construed and enforced in accordance with the internal laws of the State of

California without regard to principles of conflict of laws.

 

4.                                       This Agreement may not be extended,

renewed, amended or modified other than by a written agreement executed by

Executive and MAGI, and approved by MAGI’s Board of Directors.

 

 

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5.                                       This Agreement may be executed in

counterparts, each of which shall be deemed an original, and all of which

together shall constitute one and the same original instrument.

 

ON WITNESS WHEREOF, the parties hereto have executed this Agreement.

 

 

 

	

  MEDIA ARTS GROUP, INC.

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Herbert D. Montgomery

  	

   

  
	

   

  	

  Herb Montgomery

  	

   

  
	

   

  	

  Chief Financial Officer

  	

   

  
	

   

  	

   

  	

   

  
	

  /s/ Anthony D. Thomopoulos

  	

   

  	

   

  
	

  Anthony D. Thomopoulos

  	

   

  	

   

  
						

 

 

 

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