EXHIBIT 1
---------
January 31, 1997
GameTek, Inc.
GameTek (FL), Inc.
I.J.E., Inc.
Cybersoft, Inc.
Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Re: New Loan in an Amount Up To $1.1 Million
from Xxxxx Resources, Inc. ("Lender")
Gentlemen:
When signed by each of the parties, this letter will constitute our
agreement regarding the matters described below (the "Agreement"). We agree
as follows:
1. Subject to the terms and conditions of this Agreement, Lender shall
lend to
GameTek, Inc. ("GameTek"), I.J.E., Inc. ("IJE"), GameTek (FL), Inc.
("GTI") and Cybersoft, Inc. ("Cybersoft") (collectively, "Borrower") a
principal amount not to exceed $1.1 million (the "Loan"), which may be
drawn down by Borrower in installments from time to time as needed,
provided that (i) no amounts may be drawn down hereunder (A) while
Borrower is in default, or (B) after December 31, 1997, and (ii)
each such
installment shall be disbursed only if and when Lender shall have
determined, in its reasonable discretion, that the amount and
intended use of the funds
proposed to be drawn down is prudent under the circumstances
then known to Lender. The Loan is not a revolving credit facility,
and amounts drawn down and repaid hereunder may not thereafter be
reborrowed.
2. Interest on the Loan shall accrue at a rate equal to the interest
rate charged
by Lender to Borrower from time to time under its existing Revolving
Credit Agreement dated as of August 11, 1994 (as amended to date, the
"Revolving Credit Agreement"). Interest accruing on the Loan shall
be paid monthly in arrears on or before the tenth (10th) day of the
month following the month in respect of which such payment is made.
The principal amount of the Loan shall be reduced by Borrower to no
more than $500,000 on or before December 31, 1997 and shall be due
and payable in
full on August 1, 1998. Any amount not paid when due hereunder shall
accrue interest at a rate equal to the penalty interest rate
specified in the Revolving Credit Agreement from the original due
date until paid in full.
3. Drawings shall be requested and advanced in the manner provided in
the Revolving Credit Agreement, and shall be evidenced by a
promissory note,
with xxxxxx, in the form annexed hereto (the "1997 Note"). The 1997
Note shall
be endorsed from time to time by Lender to reflect drawings and re-
payments thereunder. Such endorsements shall constitute prima facie
evidence of the amount due under the 1997 Note. Any default under
the 1997 Note shall constitute a default under the Revolving Credit
Agreement, and vice versa.
4. In order to secure the full and prompt payment and performance by
Borrower of its obligations hereunder, Borrower hereby grants to
Lender a security interest in and lien upon all assets of each
company included within
Borrower, including, without limitation, all stock held by GameTek
in IJE,
GTI, Cybersoft, Alternative Reality Technologies, Inc. ("ART"),
Gametek (UK)
Limited ("GTUK") and any other direct or indirect subsidiaries of
GameTek. Borrower represents and warrants that there are no security
interests in any of the assets pledged hereunder that have any
priority
superior to that of Lender hereunder other than (i) the security
interest granted to Ocean Bank pursuant to Borrower's existing credit
facility with
Ocean Bank, (ii) a security interest granted to Barclay's Bank in
the assets
of GTUK, including the security interest held by such bank in the
stock of
GTUK, and (iii) the security interest granted to Lender pursuant to
the Revolving Credit Agreement. All of the rights granted to Lender
and obligations imposed upon Borrower under the Security Agreement
executed
and delivered in connection with the Revolving Credit Agreement and
relating to the indebtedness incurred by Borrower thereunder shall
also
apply to the Loan made hereunder and the security interest granted to
Lender herein in the same manner and to the same extent as if the
parties
had executed and delivered an identical security agreement in
connection the Loan.
5. Borrower represents and warrants to Lender that it has obtained from
Ocean Bank extensions of the due dates of all obligations coming due
to Ocean Bank pursuant to letters of credit heretofore issued by
Ocean Bank for the
benefit of Borrower, as evidenced by the loan documents attached
hereto as
Exhibit A. Borrower further covenants and agrees that all amounts
owing
to Ocean Bank under any banking facility that Borrower may now or
hereafter have with Ocean Bank shall be repaid in full no later than
December 31, 1997, at which time Borrower shall terminate its banking
relationships and credit facilities with Ocean Bank.
6. The parties agree that the Revolving Credit Agreement is hereby
amended
to limit the maximum amount that can be borrowed by the Company
thereunder to $9,655,000. Borrower further covenants and agrees
that (i)
any accrued interest outstanding under the Revolving Credit
Agreement will
be repaid on or before December 31, 1997, and (ii) as of December 31,
1997, Borrower will be current on all payment then owing to any of
its suppliers.
7. Borrower covenants and agrees that it will execute, deliver and/or
file any
and all such further documents and instruments, including Forms UCC-1
and extensions or renewals thereof, and will do all such further
acts and
things as Lender may request from time to time in order to confirm,
evidence or perfect Lender's security interest hereunder, or to
enable Lender
to exercise fully any of the rights granted to it hereunder or under
the 1997
Note. Any such documents or instruments that Lender may request
Borrower to execute and deliver shall be in such form and have such
content as Lender may determine in the excercise of its sole
judgment.
If the above accurately reflects our agreement, kindly so indicate
by signing
the enclosed copy of this Agreement in the space provided below and
returning it to the undersigned as promptly as possible.
Very truly yours,
XXXXX RESOURCES, INC.
By: s/ Xxxx X. Xxxxx
___________________________________
Name:
Title:
Understood and agreed:
GAMETEK, INC.
By: s/ Xxx X. Xxxxxxxx
___________________________________
Name:
Title:
GAMETEK (FL), INC.
By: s/ Xxx X. Xxxxxxxx
___________________________________
Name:
Title:
I.J.E., INC
By: s/ Xxx X. Xxxxxxxx
______________________________________
Name:
Title:
CYBERSOFT, INC.
By: s/ Xxx X. Xxxxxxxx
_______________________________________
Name:
Title:
