EMAK swaps series AA convertible preferred for new preferred series

By Devika Patel

Knoxville, Tenn., Oct. 19 - EMAK Worldwide, Inc. said it exchanged all series AA senior cumulative convertible preferred shares, held by Crown EMAK Partners, LLC, for a new series B senior convertible preferred stock, which has substantially equivalent terms, but will allow Crown to vote with stockholders on an as-converted basis in the election of common directors.

Crown's new voting rights represent approximately 2.8 million shares, or 28% of outstanding common shares.

There are no material changes to the economics of the series B preferred. The preferreds will not carry a dividend and the conversion price of $9.00 per share is unchanged; however, in the event of a change of control, the redemption payment due Crown will accrue interest if the company fails to meet its redemption payment obligation within six months.

With the exchange, Crown has surrendered the right to appoint its own members to EMAK's board, unless and until there is a change of control. Like the series AA preferreds, the new series B preferreds are redeemable if there is a change of control.

"Over the years Crown has been diligent in working with us as a partner implementing our long-term strategic plans. This transaction levels the playing field for all of our stockholders and gives Crown an equal voice in governance," EMAK's chief executive officer Jim Holbrook said in a press release.

Based in Los Angeles, EMAK is the parent company of a family of marketing services agencies, including Equity Marketing, Logistix, Mega, Neighbor and Upshot.

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