Exhibit 10.4 (v)
ACCLAIM ENTERTMNMENT
BNY - FEBRUARY 24,1997
CREDIT AGREEMENT
OTTERBOURG, STEINDLER, HOUSTON & ▇▇▇▇▇, P.C.
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(212) 66l~9100
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ CABLE ADDRESS: "OTLERTON"
ADMITTED IN CONNECTICUT FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
TELEX: 960916
February 24, 1997
BY HAND
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: BNY Financial Corporation ("BNYFC") with
Acclaim Entertainment, Inc. ("AEI") et al. ("Borrowers")
Dear ▇▇▇▇▇▇▇:
We enclose the following original fully executed documents:
1. Amendment to Factoring Agreements;
2. Amendment to Credit Agreement and Consent;
Please be advised that pursuant to paragraph 1(iv) of the Amendment,
BNYFC's consent to the Private Placement is expressly conditioned upon the
Borrowers' representation, agreement and covenant that "the Indenture Agreement
pursuant to which the Subordinated Notes are issued and the Subordinated Notes
shall each contain subordination provisions in form and content satisfactory to
Lender and its counsel." The Borrowers have yet to deliver the final version of
the Indenture to BNYFC for its review, and BNYFC reserves all of its rights and
remedies granted under the loan agreements, including, without limitation,
Article IX of the Credit Agreement.
Please acknowledge receipt of the documents by signing the copy of this
letter attached hereto in the place provided and returning it to our messenger
who has been instructed to wait.
Very truly yours,
OTTERBOURG, STEINDLER, HOUSTON & ▇▇▇▇▇, P.C.
Document Received and Acknowledged:
Name: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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cc: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (via fax w/o encl.)
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (via fax w/o encl.)
▇▇▇▇▇ ▇▇▇▇▇▇, Esq. (via fax w/o encl.)
February 24 1997
ACCLAIM ENTERTAINMENT, INC.
ACCLAIM DISTRIBUTION INC.
LJN TOYS, LTD.
ACCLAIM ENTERTAINMENT CANADA, LTD.
ARENA ENTERTAINMENT INC.
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Re: Amendment to Credit Agreement and Consent
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 BNY FINANCIAL CORPORATION ("Lender"), as amended and restated in its
entirety on February 28, 1995 (as so amended and as from time to time thereafter
amended, the "Credit Agreement"). All capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to them in the Credit
Agreement.
1. Pursuant to the Waiver, Amendment and Consent dated January 30, 1997
(the "January 30 Amendment"), Borrowers requested that the Lender consent to AEI
entering into a Private Placement (as defined in the January 30 Amendment), the
proceeds of which Private Placement Borrowers have represented to Lender shall
be used, in part, to (a) satisfy the obligations of Acclaim Comics, Inc. and the
Borrowers to Midland, and (b) make a prepayment in the amount of $2,000,000 to
Fleet Bank, N.A. ("Fleet") with respect to the obligations of Acclaim Corporate
Center I, Inc. and Oyster Bay Warehouse Corp. to Fleet. Borrowers have
requested, and Lender has agreed based upon the foregoing representation, to
restate in its entirety the terms of the January 30 Amendment with respect to
the Private Placement (Item A on page 2 of the January 30 Amendment), and
Lender's consent thereto, as follows:
"Private Placement. Borrowers have requested that the Lender consent to the
issuance by AEI of not less than $50 million of convertible, unsecured
subordinated notes (the "Subordinated Notes" and such issuance being the
"Private Placement"). Lender hereby consents to the Private Placement,
waives any prohibition under the Credit Agreement and the Other
Documents with respect to the Private Placement and agrees that the Private
Placement shall not constitute an Event of Default, provided that, (i) AEI
receives the proceeds of the Private Placement in the aggregate amount of
not less than $46.0 million, net of expenses related to the issuance of the
Subordinated Notes, by February 28,1997, (ii) the Subordinated Notes shall
not be redeemed for cash or other distribution of the Borrower's assets by
the Borrower earlier than March 1, 2000, (iii) the Subordinated Notes shall
have a rate of interest not exceeding ten (10%) percent per annum, (iv) the
Indenture Agreement pursuant to which the Subordinated Notes are issued and
the Subordinated Notes shall each contain subordination provisions in form
and content satisfactory to Lender and its counsel, and (v) Lender receives
evidence satisfactory to Lender by no later than February 28, 1997 that the
obligations of Acclaim Comics, Inc. and the Borrower to Midland have been
paid in full and that Fleet Bank, N.A. has received a payment of $2,000,000
with respect to the obligations of Acclaim Corporate Center I, Inc. and
Oyster Bay Warehouse Corp. to Fleet."
2. In addition, 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:
(a) Section 1.2 of the Credit Agreement is hereby amended by inserting
the following definitions in their alphabetical order:
"'Companv Notice' shall have the meaning ascribed to such
term in the Indenture."
"'Indenture' shall mean the Indenture Agreement dated as of
February 26,1997 between the Trustee (as defined in the Indenture
Agreement) and AEI in connection with the issuance of the Subordinated
Notes."
"'Redemption Date' shall have the meaning ascribed to such
term in the Indenture."
"'Subordinated Notes' shall mean those 10% convertible
subordinated unsecured notes due 2002 in the aggregate amount of
$50,000,000 made by AEI on or about February 26, 1997."
(b) The following definitions in Section 1.2 of the Credit Agreement
are hereby amended and restated in their entirety as follows:
"'Tangible Net Worth' at a particular date means (a) the
aggregate amount of all assets of AEI and its consolidated
Subsidiaries, taken as a whole, and as may be properly classified as
such in accordance with AAP consistently applied, excluding such
assets as are properly
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classified as intangible assets under GAAP, less (b) the aggregate
amount of all liabilities of AEI and its consolidated Subsidiaries
taken as a whole, excluding any subordinated debt arising in
connection with the Subordinated Notes for so long as no default or
event of default exists under the Indenture or Subordinated Notes, and
as may be properly classified as such in accordance with GAAP
consistently applied.
"'Term' shall mean January 1,1993 through and including
January 31, 2000, as the same may be extended, reduced or terminated
in accordance with the provisions of Section 12.1 hereof."
(c) Sections 6.4, 6.5, 6.7, 6.8 and 6.9 of the Credit Agreement are
hereby amended and restated in their entirety to read as set forth on Exhibit A
annexed hereto and made a part hereof.
(d) Section 6.21, Section 6.22 Section 6.23 shall be added to the
Credit Agreement immediately following Section 6.20 as follows:
"Section 6.21 Prohibition of Amendments to Indenture. Not, without the
prior written consent of the Lender, amend, modify or in any way alter
the terms of the Indenture or the Subordinated Notes."
"Section 6.22 Prohibition of Grant of Collateral for Indenture. Not
grant, or permit any Subsidiary to grant, to any Person, any
Collateral or any other assets of the Borrowers or any Subsidiary, as
security for the Indenture or the Subordinated Notes or any obligation
arising thereunder or related thereto."
"Section 6.23 Notice Under the Indenture. Furnish to Lender any notice
given or received by AEI under the Indenture or the Subordinated
Notes, simultaneously upon the giving of such notice by AEI or
immediately upon receipt of such notice by AEI, as the case may be."
(e) Section 12.1 of the Credit Agreement is hereby amended and
restated in their entirety to read as follows:
"'Section 12.1 Term. This Agreement shall inure to the
benefit of and shall be binding upon the respective successors and
permitted assigns of the Borrowers and the Lender and shall become
effective on the date hereof until January 31, 2000 unless: (a) sooner
terminated by (i) the Borrowers, upon giving the Lender at least
ninety (90)
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days prior written termination notice in advance and effective as of
the end of the initial Term or any successive Term hereunder; (ii) the
Borrowers, at an earlier effective termination date than is specified
in subsection (a)(i) above, as more fully described in Section 12.2
below; (iii) the Lender, pursuant to Section 10 hereof; or (iv) the
Lender, upon giving the Borrower at least ninety (90) days prior
written termination notice in advance and effective as of the end of
the initial Term or any successive Term hereunder; or (b) extended in
accordance with the final sentence of this Section. Any termination in
accordance with subsection 12.1(ii) shall be deemed to be effective
provided that all Obligations shall be paid in full to Lender by no
later than the effective termination date of this Agreement and
provided that by such date, the indemnity provided for in Section
2.8(b) hereof as to all outstanding Letters of Credit, Lender
Guarantees and Acceptances shall have been executed and delivered to
Lender. Subject to the foregoing, the Term shall be automatically
extended for successive periods of one (1) year each through and
including January 31 of each Calendar Year after 2000 such that this
Agreement will remain in full force and effect, unless terminated by
either party at the end of the initial Term or any successive Term by
giving the other party at least ninety (90) days prior written
notice."
(f) Clauses (s) and (t) of Article IX of the Credit Agreement are
amended and restated in their entirety to read as follows:
"(s) Southcoast Capital Corporation shall (i) cease to be engaged as
the underwriter for AEI's issuance of the Subordinated Notes, or (ii)
advise AEI that the offering of such Subordinated Notes is withdrawn
or otherwise terminated or shall not be consummated by February 28,
1997;
(t) AEI shall fail to receive by February 28, 1997, cash proceeds in
an aggregate amount, net of expenses related to the issuance of the
Subordinated Notes, of not less than $46.0 million from such issuance;
or"
(g) The following clause shall be added to Article IX of the Credit
Agreement at the end thereof:
"(u) A default or event of default shall occur under the Indenture or
the Subordinated Notes;
(v) Borrower shall amend, modify or in any way alter the terms of the
Indenture or the Subordinated Notes, without the prior written consent
of Lender; or
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(w) A Company Notice shall be delivered under the Indenture."
3. In addition to all other Collateral, as additional security for the
Obligations, Borrowers, jointly and severally, are contemporaneously herewith
depositing with Lender the sum of $2,500,000 ("Cash Deposit"), which Cash
Deposit (i) shall be in addition to all other Collateral and shall be included
within the definition of Collateral, and (ii) shall be held by Lender pursuant
to the terms of the letter Re: Cash Deposit dated the date hereof among Lender
and the Borrowers.
4. Each of the Borrowers hereby acknowledge, confirm and agree that
all amounts charged or credited to the Loan Account as of the date hereof are
correct and binding upon each of the Borrowers and that all amounts reflected to
be due and owing in that Loan Account as of the date hereof are due and owing
without defense, offset or counterclaim.
5. Except as specifically set forth herein, no other changes or
modifications to the Credit Agreement are intended or implied, and, in all other
respects, the Credit Agreement shall continue to remain in full force and effect
in accordance with its terms as of the date hereof. Except as specifically set
forth herein, nothing contained herein shall evidence a waiver or amendment by
the Lender of any other provision of the Credit Agreement nor shall anything
contained herein be construed as a consent by the Lender to any transaction
other than those specifically consented to herein.
6. The terms and provisions of this amendment 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 amendment.
7. This amendment may be signed in counterparts, each of which shall
be an original and all of which taken together constitute one agreement. In
making proof of this amendment, it shall not be necessary to produce or account
for more than one counterpart signed by the party to be charged.
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8. This amendment sets forth the entire amendment and understanding of
the parties with respect to the matters set forth herein and supersedes any and
all understandings, discussions, negotiations, correspondence, memoranda and
agreements (whether written or oral) of the parties hereto with respect to the
foregoing, all of which are hereby merged herein. This amendment cannot be
changed, modified, amended or terminated except in a writing executed by the
party to be charged.
Very truly yours,
BNY FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Senior Vice President
ACKNOWLEDGED AND AGREED:
ACCLAIM ENTERTAINMENT, INC.
ACCLAIM DISTRIBUTION INC.
LIN TOYS, LTD.
ARENA ENTERTAINMENT INC.
ACCLAIM ENTERTAINMENT CANADA, LTD.
By: /s/ J. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Exec. V.P. and CFO of each
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EXHIBIT A TO
AMENDMENT TO CREDIT AGREEMENT AND CONSENT
DATED FEBRUARY 24, 1997
Sections 6.4, 6.5, 6.7, 6.8 and 6.9 of the Credit Agreement are
amended and restated in their entirety to read as follows:
"6.4 Tangible Net Worth of AEI and its consolidated Subsidiaries. Not,
as at the end of any fiscal quarter of the Borrowers ended on or before February
28, 1997 and as at the end of any fiscal month of the Borrowers commencing the
month after the filing of AEI's August 31, 1997 Form 10K, permit the Tangible
Net Worth on a consolidated basis to be less than the minimum amounts indicated
below in respect of the corresponding periods noted below:
Minimum Tangible Net Worth
--------------------------
An amount equal to ninety
(90%) percent of Tangible Net
Worth as stated in the audited
financial statements of AEI
and its consolidated
Subsidiaries for the fiscal
year ended August 31, 1996
(the "1996 Year-End Financial
Statements"), but not less
than $37,000,000 as at
November 30, 1996, $45,000,000
as at February 28,1997 and at
the end of each quarter
thereafter up to but not
including May 31, 1997,
$43,000,000 as at May 31, 1997
and at the end of each fiscal
quarter thereafter up to but
not including August 31,1997,
and $40,000,000 as at August
31, 1997 and at the end of each
fiscal quarter thereafter, and
$40,000,000 as at November 30,
1997 and at the end of each
fiscal month thereafter,
provided, that such amount
shall be increased as
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of the end of each of
Borrowers' fiscal quarters
after August 31,1997 by an
amount equal to seventy-five
percent (75%) of the net
profits of AEI and its
consolidated Subsidiaries for
such quarter,
plus
----
an amount equal to eighty percent (80%) of the aggregate amount of any capital
contribution and/or equity infusion into, or any other additional equity derived
from any source by, any Borrower or any Subsidiary."
"6.5 Working Capital of AEI and its consolidated Subsidiaries. Not, as
at the end of any fiscal quarter of the Borrowers, permit the Working Capital on
a consolidated basis to be less than the minimum amounts indicated below in
respect of the corresponding periods noted below:
Minimum Working Capital At Each of
----------------------- ----------
(a)
($23,000,000) November 30, 1996
$5,000,000 February 28,1997
$14,000,000 May 31, 1997
$12,000,000 August 31, 1997
$12,000,000, such amount to be November 30,1997, February 28,
increased at the end of each 1998, May 31,1998 and at the
of Borrower's fiscal quarters end of each fiscal month
after August 31, 1997 by an thereafter
amount equal to fifty percent
(50%) of the net profits of
AEI and its consolidated
Subsidiaries for each of
Borrowers' fiscal quarters
thereafter,
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plus
(b) An amount equal to seventy-five percent (75%) of the aggregate
amount of any capital contribution and/or equity infusion into, or any other
additional equity derived from any source by, any Borrower or any Subsidiary."
"6.7 Ratio of Total Indebtedness to Tangible Net Worth. Cause to be
maintained as at the end of each fiscal quarter of the Borrowers on a
consolidated basis, a ratio of total Indebtedness (excluding, however, the net
proceeds received by the Borrowers in connection with the issuance of the
Subordinated Notes) to Tangible Net Worth of AEI and its consolidated
Subsidiaries of not greater than the ratio indicated below in each case tested
on a quarterly basis:
Maximum Ratio
of Total Indebtedness Fiscal Quarter
to Tangible Net Worth Ending
--------------------- ---------------
3:1 November 30, 1996
3:1 February 28, 1997
3:1 May 31, 1997
3:1 August 31,1997
3:1 November 30, 1997 and each of the Borrowers
fiscal quarters thereafter"
"6.8 Fixed Charge Ratio. AEI and its consolidated Subsidiaries shall
cause to be maintained during each of the fiscal quarters of the Borrowers
indicated below a Fixed Charge Ratio of not less than the ratio indicated below
in each case tested on a quarterly basis:
Minimum Fixed
Charge Ratio Fiscal Quarter Ending
------------ ---------------------
.5:1 November 30, 1997
.75:1 February 28,1998
.75:1 May 31,1998
1:1 August 31, 1998
2:1 November 30, 1998 and each of the Borrowers' fiscal
quarters thereafter"
"6.9 Maximum Losses. AEI and its consolidated Subsidiaries shall not
incur, or permit to at any time to be incurred, losses taken as a whole, in
respect of any fiscal quarter, at anytime to
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exceed the maximum amounts indicated below in respect of the corresponding
periods noted below:
Maximum Losses Fiscal Quarter Ending
-------------- ---------------------
$24,000,000 November 30,1996
$20,000,000 February 25, 1997
$8,000,000 May 31,1997
$5,000,000 August 31, 1997
None November 30, 1997 and at each of Borrowers' fiscal
quarters thereafter"
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