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EXHIBIT 10.38
MULTI-AGREEMENT AMENDMENT NO. 5
This Multi-Agreement Amendment, dated as of June 1, 1997 by and among
XXXXXX COMICS, INC., a New York corporation ("Borrower") and CITY NATIONAL BANK,
N.A. ("BANK"). For good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Recital of Certain Facts:
(a) Borrower and Bank are parties to that certain
Revolving Loan and Security Agreement dated as of October 27, 1993 (the
"ORIGINAL LOAN AGREEMENT"), and as amended by that certain Multi-Agreement
Amendment, dated August 30, 1994 (the "FIRST AMENDMENT"), that certain
Multi-Agreement Amendment No. 2, dated as of November 1, 1994 (the "SECOND
AMENDMENT"), that certain Multi-Agreement No. 3, dated as of September 1, 1995
(the "THIRD AMENDMENT"), and that certain Multi-Agreement No. 4, dated as of
June 1, 1996 (the "FOURTH AMENDMENT"). The Original Loan Agreement, the First
Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment
are hereinafter collectively referred to as the "LOAN AGREEMENT." Capitalized
terms not otherwise defined herein shall have the same meaning as set forth in
the Loan Agreement.
(b) Borrower has requested that the Commitment
Termination Date be extended and that the amount available for borrowings be
increased from $2,500,000 to $5,000,000.
(c) Bank has agreed to (i) increase the Commitment
Amount and (ii) extend the Commitment Termination Date to June 1, 1998 as herein
provided, subject to the terms of this Agreement.
2. Amendment to Loan Agreement and Revolving Note:
2.1 Increase in Commitment Amount. The term "Commitment" is
hereby restated to mean the commitment of Lender to make Loans, on the terms and
conditions herein obtained from the date hereof through the Commitment
Termination Date in an aggregate principal amount at one time outstanding not in
excess of Five Million Dollars ($5,000,000.00).
2.2 Extension of Commitment Termination Date. Bank and Borrower
agree that the Commitment Termination Date shall be extended to June 1, 1998.
The Revolving Note shall also be deemed amended so that the payment due date
contained in the fourth paragraph thereof shall be changed to June 1, 1998.
Except as specifically amended hereby, all other provisions of the Loan
Agreement and the Collateral Documents shall remain in full force and effect.
2.3 Borrowing Base. Bank and Borrower agree that all further
Advances shall be the application of a Borrowing Base formula as set forth
below.
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2.3.1 Notwithstanding anything in this Loan Agreement to
the contrary, in no event may the aggregate principal amount of the Revolving
Loan outstanding exceed the Borrowing Base. The Borrowing Base shall include the
aggregate value of the following:
(a) 50% of the aggregate dollar value of all
Eligible Accounts Receivables; and
(b) the Library Value.
2.3.2 The calculation of the Borrowing Base shall be made
as of the end of each quarter that a Revolving Loan hereunder is outstanding and
in which the amount of Indebtedness hereunder is in excess of the Library Value,
and shall be delivered, in the form attached as Exhibit 1 hereto (the "BORROWING
BASE STATEMENT"), to Bank no later than fifteen (15) days following the end of
each such fiscal quarter. The Borrowing Base Statement shall set forth the
amount of each component included and to be included in the Borrowing Base (by
reference to this Section 2.3.2 and as of the last Business Day of the preceding
quarter, attached to which shall be detailed information including the
calculation of the Eligible Accounts, as well as such other information as
reasonably may be requested by the Bank with respect thereto.
2.3.3 The Bank shall have the sole discretion as to accept
or reject any such Account which is proposed to be included in the Borrowing
Base and to reject an Account which was previously included therein.
2.3.4 For purposes of the Loan Agreement, the following
terms shall have the meanings set forth below:
Account Debtor shall be any Person who is or who
may become obligated to Borrower under, with respect to or
on account of an Account.
Eligible Account Receivables shall be those
Eligible Domestic Accounts or Eligible Foreign Accounts
excluding each of the following:
(i) the particular amounts to be paid in
respect of an Accounts the payment date of which
exceeds 24 months from the date of applicable
Borrowing Base;
(ii) the particular amounts to be paid in
respect of any Accounts for invoiced balances which
extend beyond one (1) month past due;
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(iii) all amounts to be paid in respect of
any Account Debtor if any invoiced balances for
such Account Debtor extends beyond ninety (90) days
past due;
(iv) any intercompany
receivable;
(v) any Account
considered to be a risk in the sole
discretion of Bank based on country;
(vi) any Account generated as a result of a
default or cancellation by another Account Debtor;
and
(vii) any other Account which Bank has
rejected pursuant to Section 2.3.3 of Amendment No.
5.
Eligible Domestic Accounts shall consist of
Eligible Account Receivables with Account Debtors
domiciled in the United States, which Account Debtors are
acceptable to Bank in Bank's sole and absolute discretion,
which relate to (i) the sale or license of completed Film
Assets which are available for delivery, have been
delivered and/or have been accepted by such Account
Debtors, or (ii) relate to license fees or other royalty
payments regarding the use of assets of the Borrower, the
amount of which is either guaranteed or subject to
verification by reference to sale numbers or other similar
data.
Eligible Foreign Account shall consist of Accounts
with Account Debtor who are domiciled outside of the
United States, which Account Debtors are acceptable to
Bank in Bank's sole and absolute discretion, which relate
to the sale or license of completed Film Assets which are
available for delivery, have been delivered and/or have
been accepted by such Account Debtors, or (ii) relate to
license fees or other royalty payments regarding the use
of assets of the Borrower, the amount of which is
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either guaranteed or subject to verification by
reference to sales numbers or other similar data.
Notwithstanding the foregoing, no Account may be
considered to be Eligible Foreign Account unless it is
to be paid in U. S. Dollars.
Library Value shall mean the sum of $2,500,000.
2.4 Amendment to Covenants. Sections 6.5 and 6.6 of the Loan Agreement
are hereby stated in their entirety as follows:
"6.5 Net Worth. Borrower shall not permit its Net Worth to fall
below $17,000,000 for any quarter or any fiscal year end.
6.6 Current Ratio. Borrower shall not permit is Current Ratio to
be less than 1.0 to 1.0 at any quarter or at any fiscal year
end."
2.5 Inclusion of Additional Covenants. Borrower agrees that it will not
use any proceeds of any advance hereunder for any acquisition, business
combination, or other merger without the express written consent of the Bank,
which consent may be withheld by the Bank in its sole and absolute discretion.
2.6 Amendment to Notice Provisions. Section 9.11 of the Loan Agreement
is hereby restated in its entirety as follows:
"9.11 Notice. Except as otherwise provided herein, any notice
required hereunder shall be in writing, and shall be deemed to
have been validly served, given or delivered upon deposit in the
United States mails, with proper postage prepaid, and addressed
to the party to be notified at the following addresses (or such
other address(es) as a party may designate for itself by like
notice):
(A) If to Lender, at
CITY NATIONAL BANK
Entertainment Department
000 X. Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxx
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With a copy to:
XXXXX XXXXXX XXXXX & XXXX
1900 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
If to the Borrower, at
XXXXXX COMICS, INC.
1999 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. Xxxx Xxxxxxxxxx
with a copy to:
THE XXXXXX ENTERTAINMENT COMPANY
1999 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. Xxxx Xxxxxxxxxx
3. Consents: Each of the parties hereto consents to the foregoing
amendments to the extent the consent of any such party is required under the
Loan Agreement's current notice provisions.
4. Representations and Warranties of Borrower: In order to induce Bank
to enter into this Agreement, Borrower represents and warrants to Bank that:
(a) Borrower has the power and authority and has
taken all action necessary to execute, deliver and perform this Agreement and
all other agreements and instruments executed or delivered to be executed or
delivered in connection herewith and therewith and this Agreement and such other
agreements and instruments constitute the valid, binding and enforceable
obligations of Borrower.
(b) The representations and warranties contained in
the Loan Agreement are true and correct in all respects on and as of the date
hereof as though made on and as of the date hereof an no Event of Default (as
said term is defined in the Loan Agreement) or event which with the passage of
time or the giving or notice or both would constitute an Event of Default has
occurred and is continuing as of the date hereof.
(c) Since the date of the most recent financial
statements, if any, furnished by Borrower to Bank, there has been no material
adverse change in the business or assets or in the financial condition or
Borrower.
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5. Representations and Warranties of Guarantor. The Guaranty of Borrower
remains in full force and effect and Guarantor provides that as of the date of
this Agreement, it has no offsets, claims or defenses against any of its
obligations under the Guaranty.
6. Acknowledgment of Borrower: Borrower acknowledges and agrees that as
of the date of this Agreement, it has not offsets, claims or defenses whatsoever
against any of its obligations under the Revolving Note, or its obligations
under the Loan Agreement, the Collateral Documents, or any other agreements,
documents or instruments securing or pertaining to the Revolving Note or the
Loan Agreement.
7. Fee: As an additional consideration for the extension contemplated
under this Agreement, Borrower shall concurrently pay to (i) Bank, the sum of
$37,500 as additional loan fees, and to (ii) XXXXX XXXXXX XXXXX & XXXX, the
Bank's counsel, such sums as may be owing in respect of the preparation of this
amendment and the filing fees related thereto.
8. Full Force and Effect: Each of the Collateral Documents, and all
other documents, agreements and instruments relating to thereto remain in full
force and effect.
9. Governing Law: This Agreement and the rights and obligations of the
parties hereunder shall be governed by, construed and enforce in accordance with
the laws of the State of California applicable to agreements executed and to be
wholly performed therein.
10. Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which when
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date first above
written.
XXXXXX COMICS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Its: Chief Financial Officer
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THE XXXXXX ENTERTAINMENT COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
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Its: Chief Financial Officer
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CITY NATIONAL BANK, N.A.
By: /s/ Xxxxxx Xxxxx
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Its: Vice President
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EXHIBIT 1
BORROWING BASE SCHEDULE
Outstanding Indebtedness $______________
Borrowing Base
Library Value $______________
Eligible Accounts (see Attachment 1) x 50% $______________
Total Borrowing Base $______________
The undersigned, the Chief Financial Officer of Borrower, certifies that the
foregoing is true and correct as of the date hereof.
Xxxxxx Comics, Inc.
By: __________________
Its: _________________
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