GMAC COMMERCIAL CREDIT LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
March 14, 2002
ACCLAIM ENTERTAINMENT, INC.
ACCLAIM DISTRIBUTION INC.
LJN TOYS, LTD.
ACCLAIM ENTERTAINMENT CANADA, LTD.
ARENA ENTERTAINMENT INC.
Xxx Xxxxxxx Xxxxx
Xxxx Xxxx, Xxx Xxxx 00000-0000
Re: Amendment and Modification to Agreements
Gentlemen:
Reference is made to the Revolving Credit and Security Agreement, dated
as of January 1, 1993, by and among ACCLAIM ENTERTAINMENT, INC. ("AEI"), ACCLAIM
DISTRIBUTION INC. ("ADI"), LJN TOYS, LTD. ("LJN"), ACCLAIM ENTERTAINMENT CANADA,
LTD. ("Canada") and ARENA ENTERTAINMENT INC. ("Arena"; together with AEI, ADI,
LJN and Canada, individually, a "Borrower" and collectively, the "Borrowers")
and GMAC Commercial Credit LLC, formerly known as BNY Factoring LLC, as
successor by merger to BNY Financial Corporation (sometimes referred to herein
as "Lender"), as amended and restated on February 28, 1995 (as so amended and as
from time to time thereafter amended, the "Credit Agreement"); the Stock Pledge
and Security Agreement, dated July 18, 2001, executed by Xxxxx X. Xxxxxxxxxx
("Scoroposki") in favor of Lender (as amended, the "Scoroposki Pledge
Agreement"); and the Stock Pledge and Security Agreement, dated July 18, 2001,
executed by Xxxxxxx X. Xxxxxxxxx ("Xxxxxxxxx") in favor of Lender (as amended,
the "Xxxxxxxxx Pledge Agreement").
Reference is further made to that certain Restated and Amended
Factoring Agreement bearing the effective date as of February 1, 1995 (the "AEI
Factoring Agreement") by and between AEI and GMAC Commercial Credit LLC,
formerly known as BNY Factoring LLC, as successor by merger to BNY Financial
Corporation (sometimes referred to herein as "Factor"); the Restated and Amended
Factoring Agreement bearing the effective date as of January 1, 1995 (the "ADI
Factoring Agreement") by and between ADI and Factor; the Restated and Amended
Factoring Agreement bearing the effective date of January 1, 1995 (the "LJN
Factoring Agreement") by and between LJN and Factor; the Restated and Amended
Factoring Agreement bearing the effective date of January 1, 1995 (the "Canada
Factoring Agreement") by and between Canada and Factor; and the Restated and
Amended Factoring Agreement bearing the effective date as of January 1, 1995
(the "Arena Factoring Agreement"; and together with the AEI Factoring Agreement,
the ADI Factoring Agreement, the LJN Factoring Agreement and the
Canada Factoring Agreement, as the same may now exist or may hereafter be
amended, restated, renewed, replaced, extended, substituted, supplemented or
otherwise modified, collectively, the "Factoring Agreements").
All capitalized terms used and not otherwise defined herein shall have
the respective meanings ascribed to them in the Credit Agreement, the Factoring
Agreements, the Scoroposki Pledge Agreement or the Xxxxxxxxx Pledge Agreement,
as applicable.
A. Amendments to Credit Agreement.
1. The Borrowers have requested that Lender make certain amendments to
the Credit Agreement, and Lender has agreed to do so, subject to the terms and
provisions contained herein.
2. Effective as of the date hereof, the definition of "Permitted
Overformula Amount" appearing in Section 1.2 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
""Permitted Overformula Amount" shall mean for the period
commencing on January 1, 2002 and ending on June 2, 2002, an
amount, in Lender's sole discretion, of up to $5,000,000;
provided, that, (x) from and after the occurrence and
continuance of an Event of Default which is not waived by
Lender in its sole discretion, the Permitted Overformula
Amount shall be an amount equal to $0; and (y) on, and as of
the fifth (5th) Business Day of each month, Lender may, in its
sole and absolute discretion, reduce the Permitted Overformula
Amount from time to time by the amount by which the aggregate
Market Price of Pledged Securities (as such capitalized terms
are defined in or referenced to in the letters re: Pledged
Securities, dated July 18, 2001, executed by each of Xxxxx
Xxxxxxxxxx and Xxxxxxx Xxxxxxxxx respectively, in favor of
Lender) is less than Five Million ($5,000,000) Dollars until
such time as Messrs. Scoroposki and Xxxxxxxxx each deliver
additional Pledged Securities in accordance with the terms of
the letters re: Pledged Securities. Notwithstanding anything
to the contrary set forth herein, during the calendar months
of January, 2002, February, 2002, March, 2002, April, 2002,
May, 2002 and for the period of June 1, 2002 through June 2,
2002, provided, that, the Tax Claims (as defined in that
certain Waiver, Consent and Amendment, dated November 21,
2001, among Borrowers, Scoroposki, Xxxxxxxxx and Lender)
remain validly due and owing to AEI at all times during such
periods, Lender shall not reduce the Permitted Overformula
Amount below One Million Six Hundred Thousand ($1,600,000)
Dollars in consideration of the collateral assignment by AEI
to Lender of certain tax claims approximating One Million Six
Hundred Thousand ($1,600,000) Dollars (the "Tax Claims")
pursuant to that certain Assignment of Tax Claims, dated
November 21, 2001, executed by AEI in favor of Lender."
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B. Modifications to Factoring Agreements. Notwithstanding anything to the
contrary set forth in the Factoring Agreements, effective as of the date hereof,
AEI, ADI, LJN, Canada and Arena acknowledge, confirm and agree as follows:
1. AEI, ADI, LJN, Canada and Arena shall identify, specify and
separately report to Factor all Receivables arising from sales to distributors
(the "Distributor Receivables"), in a form and manner satisfactory to Factor,
together with all other Receivables purchased by Factor under the Factoring
Agreements.
2. Any identification, specification or reporting by any of AEI, ADI,
LJN, Canada or Arena of a Receivable as a Distributor Receivable purchased under
the Factoring Agreement or a Receivables which is not a Distributor Receivable
purchased under the Factoring Agreement shall be subject to verification by
Factor from time to time and, if necessary, reclassification by Factor in its
sole and absolute discretion as a Distributor Receivable or a Receivable which
is not a Distributor Receivable, as appropriate.
3. The purchase price of Distributor Receivables will be payable six
(6) business days after the day on which the Distributor Receivable is actually
collected by Factor (the "Settlement Date"). Factor may, in Factor's sole
discretion, deduct all Reserves (as defined in the Factoring Agreements) from
the amount payable on the Settlement Date.
C. General Provisions.
1. In connection with the foregoing, each of Messrs. Xxxxxxxxx and
Scoroposki agree that effective as of the date hereof, Section 7(b) of the
Scoroposki Pledge Agreement and the Xxxxxxxxx Pledge Agreement, respectively, is
hereby amended so that all references to March 7, 2002 are replaced with June 2,
2002.
2. Each of the Borrowers hereby acknowledges, confirms and agrees that
all amounts charged or credited to the Loan Account as of March 3, 2002 are
correct and binding upon each of the Borrowers and that all amounts reflected to
be due and owing in the Loan Account as of March 3, 2002 are due and owing
without defense, offset or counterclaim.
3. Except as specifically set forth herein, no other amendments changes
or modifications to the Credit Agreement, the Factoring Agreements or the Pledge
Agreements are intended or implied, and, in all other respects, the Credit
Agreement, the Factoring Agreements and the Pledge Agreements shall continue to
remain in full force and effect in accordance with their respective terms as of
the date hereof. Except as specifically set forth herein, nothing contained
herein shall evidence a waiver or amendment by the Lender or Factor, as the case
may be, of any other provision of the Credit Agreement, the Factoring Agreements
or the Pledge Agreements nor shall anything contained herein be construed as a
consent by the Lender to any transaction other than those specifically consented
to herein.
4. The terms and provisions of this agreement shall be for the benefit
of the parties hereto and their respective successors and assigns; no other
person, firm, entity or corporation shall have any right, benefit or interest
under this agreement.
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5. This agreement may be signed in counterparts, each of which shall be
an original and all of which taken together constitute one amendment. In making
proof of this agreement, it shall not be necessary to produce or account for
more than one counterpart signed by the party to be charged.
6. This agreement sets forth the entire agreement and understanding of
the parties with respect to the matters set forth herein. This agreement cannot
be changed, modified, amended or terminated except in a writing executed by the
party to be charged.
Very truly yours,
GMAC COMMERCIAL CREDIT LLC
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Xxxxx Xxxxxxxx
Senior Vice President
ACKNOWLEDGED AND AGREED:
ACCLAIM ENTERTAINMENT, INC.
ACCLAIM DISTRIBUTION INC.
LJN TOYS, LTD.
ARENA ENTERTAINMENT INC.
ACCLAIM ENTERTAINMENT CANADA, LTD.
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx
Executive Vice President and
Chief Financial Officer
ACKNOWLEDGED AND AGREED FOR PURPOSES
OF PARAGRAPHS A.2, C.1, C.3., X.0, X.0 XXX X.0
/x/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxx X. Xxxxxxxxxx
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Xxxxx X. Xxxxxxxxxx
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