EMAK Worldwide Responds to Second Egregious Lawsuit Filed by Donald Kurz

EMAK responds directly to the allegations in the suit with the following:

• While Kurz’s suit alleges that the Preferred Stock exchange was effected in response to the consent solicitation, the transaction was under discussion by the Board and Crown long before the October 2009 notice from Take Back EMAK, LLC of its intention to solicit written consents from stockholders.
• Kurz’s suit alleges that Crown now has effective control over the Company; however, EMAK has a majority voting provision (rather than a plurality provision) in its bylaws for the election of Directors, thus a 28 percent voting block is not controlling. Only a majority of voting securities are entitled to control EMAK.
• Kurz’s suit also alleges that Crown gave no consideration for its exchange, yet Crown gave up its ability to appoint two Directors to the Board (three in the event of a change of control).
• Finally, there is no “stealth poison pill” in place to trigger a $25 million payment to Crown if Kurz or his group buys more shares of EMAK. A change of control payment is triggered only if a person or group purchases more than 20 percent of shares outstanding and if one or more of their representatives or nominees are elected or appointed to the Board without Crown’s consent. This is a standard preferred stock provision. When the stock was originally issued in 2000, shares held by the Company’s two founders, Stephen Robeck and Kurz, were excluded from this provision. Now, nine years later, there is no justification for treating Robeck and Kurz differently from any other stockholder.

As with another lawsuit filed by Kurz in September, the Company believes that the allegations in this suit are without merit and intends to defend vigorously against the claims and causes of action asserted in this legal matter. Additionally, the Company will pursue damages at the appropriate time based on Kurz’s misuse of confidential information received as a Board member. With legal fees rising steadily, this second suit requires that the Company hire additional legal representation in the state of Delaware. Legal fees are now projected to reach at least $150,000 a month.

“Yet again, Kurz has presented EMAK with a costly lawsuit at a time when management and the Board are focused on delivering positive business results. We believe the recently mailed consent solicitation is part of a self-interested campaign by Kurz to regain control of the Company in order to get his old job back. The campaign also reflects a flat out refusal by Kurz to recognize the accomplishments made by current management and the Board, not the least of which is returning the Company to profitability,” said Jim Holbrook, EMAK’s Chief Executive Officer. “This does not serve the purpose of creating additional value for all stockholders, and we hope stockholders view this for what it is: at its core, it is a colossal waste of time and stockholders’ money.

“Even more outrageous, our employees have reported receiving phone calls from the consent solicitation firm, so not only is this a major distraction for management, but it is now a disruption to our employees, as well.”

STOCKHOLDERS ARE URGED TO IGNORE AND RECYCLE ALL MATERIALS RECEIVED FROM TAKE BACK EMAK, LLC, INCLUDING BUT NOT LIMITED TO ITS WHITE SHAREHOLDER CONSENT CARD AND LETTER TO SHAREHOLDERS DATED OCTOBER 19, 2009. THERE IS NO NEED TO RETURN THE CONSENT CARDS.

About EMAK Worldwide, Inc.

EMAK Worldwide, Inc. is the parent company of a family of marketing services agencies including Equity Marketing, Logistix, Neighbor and Upshot. Its agencies are experts in “consumer activation” by offering strategy-based marketing programs that directly impact consumer behavior. The agencies provide strategic planning and research, consumer insight development, entertainment marketing, design and manufacturing of custom promotional products, kids marketing, event marketing, shopper marketing and environmental branding. The Company’s blue-chip clients include Kellogg, Kohl’s, Kraft, Macy’s, Procter & Gamble and Safeway, among others. Headquartered in Los Angeles, EMAK has offices in Chicago and Hong Kong. More information about EMAK Worldwide is available on the Company’s website at www.emak.com.

Certain expectations and projections regarding the future performance of EMAK Worldwide, Inc. discussed in this news release are forward-looking and are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These expectations and projections are based on currently available competitive, financial and economic data along with the Company’s operating plans and are subject to future events and uncertainties. Management cautions the reader that the following factors, among others, could cause the Company’s actual consolidated results of operations and financial position in 2009 and thereafter to differ significantly from those expressed in forward-looking statements: the Company’s dependence on a single customer; the significant quarter-to-quarter variability in the Company’s revenues and net income; the Company’s dependence on the popularity of licensed entertainment properties and the ability to license, develop and market new products; the Company’s dependence on foreign manufacturers; the Company’s need for additional working capital; the negative results of litigation, governmental proceedings or environmental matters; and the potential negative impact of past or future acquisitions. The Company undertakes no obligation to publicly release the results of any revisions to forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The risks highlighted herein should not be assumed to be the only items that could affect the future performance of the Company.

EMAK Worldwide, Inc.
Media and investor inquiries:
Jim Holbrook
Chief Executive Officer
323-932-4068