Exhibit 10.4 (iv)
ACCLAIM ENTERTMNMENT
BNY - DECEMBER 13, 1996
[EXECUTION COPY]
BNY FINANCIAL CORPORATION
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
December 13, 1996
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: Waiver of Covenant Non-Compliance and Amendment to Credit
Agreement
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. ("UN"), ACCLAIM ENTERTAINMENT CANADA,
LTD. ("Canada") and ARENA ENTERTAINMENT INC. ("Arena"; together with AEI, ADI,
LJN and Canada, collectively the "Borrowers'1) and BNY FINANCIAL CORPORATION
(the "Lender") as amended and restated on February 28, 1995 (as so amended and
restated, and as thereafter further amended, the 1'Credit Agreement"). All
capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Credit Agreement.
Pursuant to the Waiver of Financial Covenant Non-Compliance and Amendment
to Credit Agreement, dated November 8, 1996, among the Lender and the Borrowers
(as amended, the "November 8, 1996 Amendment"), AEI covenanted and agreed with
the Lender that, among other things, on or before November 15, 1996 (the "Pledge
Delivery Date") AEI would pledge to and deposit with the Lender all of the
issued and outstanding stock of Acclaim Cable Holdings, Inc. ("Cable") pursuant
to such documents as might be required by the Lender (the "Pledge Documents").
The Lender required the delivery of the stock certificate evidencing such stock,
the execution and delivery by AEI of a Stock Pledge and Security Agreement, a
Special Power of Attorney and a Stock Power, all in favor of the Lender, and
execution and delivery of a Consent, Waiver and Recognition Agreement among AEI,
Cable, Tele-Communications, Inc., TCI GameCo Ventures, Inc. and the Lender (the
"Consent to Pledge"). On or before the Pledge Delivery Date, the Borrower
delivered to the Lender the Pledge Documents except for the Consent to Pledge.
AEI also covenanted and agreed pursuant to the November 8, 1996 Amendment
to obtain certain documents as specified therein
from each Borrower's other institutional lenders (the "Institutional Lender
Documents") and to deliver the same to the Lender on or before November 27, 1996
(the "Institutional Lender Document Delivery Date").
AEI did not comply with the November 8, 1996 Amendment by reason of (i) its
failure to deliver the Consent to Pledge by the Pledge Delivery Date and (ii)
its failure to deliver the Institutional Lender Documents by the Institutional
Lender Document Date
AEI has requested a waiver of the aforementioned non-compliance with the
November 8, 1996 Amendment. In response to such request, subject to the terms of
this agreement, the Lender hereby waives such non-compliance, provided, that,
the Lender hereby reserves all rights and remedies granted to the Lender under
the Credit Agreement, the Other Documents, applicable law or otherwise, and
nothing contained herein shall be construed to limit, impair or otherwise affect
the right of the Lender to declare a default with respect to any future
non-compliance with any covenant, term or provision of the Credit Agreement or
any other document now or hereafter executed and delivered in connection
therewith which has not been waived as of the date hereof.
AEI has further requested that the Lender agree not to require the pledge
of the Cable stock and to return to AEI the original Pledge Documents previously
delivered to the Lender. In consideration of the mutual agreements herein
contained, Lender agrees that after the Borrowers execute and deliver this
agreement to the Lender, the Lender shall promptly return to AEI the original
Pledge Documents previously delivered to the Lender.
In addition, AEI has requested that the Lender make certain amendments to
the Credit Agreement and the Lender has agreed to do so, subject to the terms
and provisions contained herein.
Accordingly, the Borrowers and the Lender agree that the Credit Agreement
is hereby amended as follows:
1. The second sentence of Section 2.1(a) of the Credit Agreement is amended
and restated in its entirety to read as follows:
"The 'Formula Amount' shall mean the sum of the following amounts at
any time and from time to time:
(1) 70% of Eligible Receivables, other than Eligible Receivables
arising from the sale of personal computer CDROM software; plus
(2) 30% of Eligible Receivables arising from the sale of personal
computer CD-ROM software, provided, however, that the maximum amount of all
outstanding Advances against such
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Eligible Receivables shall not exceed $5,000,000 in the aggregate at any one
time; plus
(3) 50% of the Value of the Eligible Inventory; provided,
however, that the maximum amount of all outstanding Advances against Eligible
Inventory shall not exceed $10,000,000 in the aggregate at any one time; plus
(4) 40% of the first cost of goods to be imported under Letters
of Credit which remain outstanding; less
(5) in each case, such reserves, established in Lender's
reasonable discretion exercised in good faith, as Lender may deduct in relation
to Obligations chargeable to the account(s) of any of the Borrowers or which may
be chargeable to the account(s) of any of the Borrowers thereafter ("Reserves"),
including, without limitation, a permanent reserve in the amount of $6,000,000."
2. 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 May
31, 1997, 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 At Each of
-------------------------- ----------
(a)
$160,000,000.00 February 28, May 31 and
August 31, 1995
$175,000,000.00 November 30, 1995,
February 29, May 31 and
August 31, 1996
An amount equal to ninety November 30, 1996,
(90%) percent of Tangible February 28, 1997, May 31,
Net Worth as stated in the 1997 and at the end of each
audited financial statements fiscal month thereafter,
of AEI and its consolidated August 31, 1997 and at the
Subsidiaries for the fiscal end of each fiscal month
year ended August 31, 1996 thereafter
(the "1996 Year-End Financial
Statements"), but not less
than $37,000,000.00 as at
November 30, 1996,
$35,000,000.00 as at
February 28, 1997 and at the
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end of each month thereafter
up to but not including May
31, 1997, $33,000,000 as at
May 31, 1997 and at the end of
each fiscal month thereafter
up to but not including August
31, 1997, and $48,000,000.00
as at August 31, 1997 and at
the end of each fiscal month
thereafter; provided, that
such amount shall be increased
as 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
----
(b) 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)
$100,000,000.00 February 28, May 31 and
August 31, 1995
$115,000,000.00 November 30,1995, February 29,
May 31 and August 31, 1996
($23,000,000.00) November 30, 1996
($23,000,000.00) February 28, 1997
($22,500,000.00) May 31, 1997
($ 5,000,000.00) August 31, 1997
($ 5,000,000.00), such amount November 30, 1997, February 28,
to be increased at the end of 1997, May 31, 1997 and at the
each of Borrower's fiscal end of each fiscal month
quarters after August 31, 1997 thereafter
by an amount equal to fifty
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percent (50%) of the net
profits of AEI and its
consolidated Subsidiaries for
each of Borrowers' fiscal
quarters thereafter, provided,
that on November 30, 1997 and
at the end of each fiscal
quarter thereafter the
Tangible Net Worth of AEI and
its consolidated Subsidiaries
shall not be less than
$0.00,
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
amount of any Letters of Credit then outstanding under this Agreement) 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
--------------------- ---------------------
3.50:1 November 30, 1996
3.50:1 February 28, 1997
3.25:1 May 31, 1997
3.00:1 August 31, 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
------------ ---------------------
1.4:1 November 30, 1996
1.0:1 February 28, 1997
0.5:1 May 31, 1997
1.2:1 August 31, 1997
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2.0:1 November 30, 1997 and each of
Borrowers' fiscal quarters
thereafter"
"6.9 Maximum Losses. AEI and its consolidated Subsidiaries shall not
incur, or permit to be incurred, losses taken as a whole, in respect of any
fiscal quarter, at any time to exceed the maximum amounts indicated below in
respect of the corresponding periods noted below:
Maximum Losses Fiscal Quarter Ending
-------------- ---------------------
$24,000,000.00 November 30, 1996
$20,000,000.00 February 28, 1997
$ 2,000,000.00 May 31, 1997
None August 31, 1997 and each of
Borrowers' fiscal quarters
thereafter"
3. Section 6.17 of the Credit Agreement is amended in its entirety to read
as follows:
"6.17 Prohibition on Loans to or Investments in Acclaim Cable
Holdings, Inc. and ACTC, L.P. Not, directly or indirectly, make any loans to
Acclaim Cable Holdings, Inc. or ACTC, L.P., or invest in (by capital
contribution or otherwise) or purchase the stock or Indebtedness or all or a
substantial part of the assets or properties of Acclaim Cable Holdings, Inc. or
ACTC, L.P. or hereafter guarantee, assume, endorse or otherwise become
responsible (directly or indirectly) for the Indebtedness, performance or
obligations of Acclaim Cable Holding, Inc. or ACTC, L.P. (each of the foregoing
individually, an "Investment" and collectively, "Investments"), or agree to do
any of the foregoing except an Investment which a Borrower may be presently
contractually obligated to make under certain contingencies, each Borrower
hereby warranting and representing to the Lender that the only Investments any
such Borrower may be contractually obligated to make are as set forth in the
Parents Agreement dated as of October 19, 1994 between AEI and
Tele-Communications, Inc. and the Guaranty by AEI to TCI Games Ventures, Inc. of
the obligations of Acclaim Cable Holdings, Inc. as set forth therein.
4. Clause (h) of Article IX of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(h) (i) any event of default occurring on or after September 1, 1997,
whether or not declared, waived or forborne, of any of the Borrowers under any
agreement now or hereafter in effect with Midland or HKSB , or (ii) any
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event of default occurring on or after September 1, 1997 of any of
Borrowers or any of the Subsidiaries under any agreement, document, note,
mortgage or guaranty now or hereafter executed and delivered by any of the
Borrowers or any of the Subsidiaries in favor of Fleet Bank, N.A., or (iii)
a default of the obligations of any of the Borrowers with respect to any
other Indebtedness and/or any other contractual obligations, and in the
case of the foregoing clauses (i), (ii) and (iii), subject to Section 5.9
and/or 5.10 of this Agreement.'1
5. Clauses (o) and (p) of Article IX of the Credit Agreement are
amended and restated in their entirety to read as follows:
"(0) delivery to the Lender of financial projections projecting
financial results which if realized would cause an Event of Default under
any other clause of this Article IX;
(p) dilution in collections on Receivables for the last three (3)
consecutive months exceeds thirty percent (30%);"
6. The following clause shall be added to Article IX of the Credit
Agreement at the end thereof:
"(q) the acceleration by any institutional lender, other than Lender,
including, without limitation, Midland and Fleet Bank, N.A., of the
maturity of any of the Indebtedness of any Borrower or of any Subsidiary of
any Borrower to any such institutional lender; or
(r) the receipt by Lender of notice from any other institutional
lender of an event of default under such institutional lender's respective
credit agreements with any Borrower or any Subsidiary provided such notice
commences (i) any "standstill period" during which period such
institutional lender has agreed with the Lender not to take any steps to
enforce any of such institutional lender's rights in or to any of the
Collateral or any of the other property of any Borrower or any Subsidiary
pending the expiration of such "standstill period", or (ii) any period
during which an institutional lender may direct the Lender to remove any of
the Collateral from the premises of any Borrower or any Subsidiary upon
which premises such institutional lender has a lien."
7. The last full paragraph on page 13 and the carry over paragraph on
pages 13 and 14 of the November 8, 1996 Amendment are amended in their
entirety to read as follows:
"To induce the Lender to agree to the waivers and amendments herein
contained, and in consideration thereof, AEI covenants and agrees with the
Lender that on or before September 1, 1997 AEI shall obtain from Midland
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and Fleet Bank, N.A., (i) waivers of any and all defaults under such
Borrower's agreements with such institutional lenders, and (ii)
amendments to such agreements reflecting all financial projections
heretofore furnished by AEI to the Lender and/or Midland, all of such
waivers and amendments to be in form and substance satisfactory to the
Lender. The failure of any of the Borrowers to timely perform any
agreement to be performed by it pursuant to this paragraph shall, at
the option of the Lender, constitute an Event of Default under the
Credit Agreement."
In consideration of the agreement by the Lender to the waivers and
amendments contained herein and, including, without limitation, the increased
credit risk borne by the Lender by reason of its agreement to the immediately
preceding paragraph 7 of this agreement, (i) the Borrowers agree, jointly and
severally, to pay a non-refundable waiver fee in the amount of $50,000, which
fee shall be fully earned as of the date hereof and shall be charged by the
Lender to the account of the Borrowers upon the execution and delivery of this
agreement, and (ii) in the event the Borrowers do not obtain the requisite
waivers and amendments from their institutional lenders as now required by the
November 8, 1996 Amendment on or before February 28, 1997, then the Borrowers
agree, jointly and severally, to pay to the Lender a non-refundable,
noncompliance fee in the amount of $150,000 which shall be fully earned as of
February 28, 1997 and charged to an account of the Borrowers on or after March
3, 1997.
AEI hereby agrees to deliver or cause to be delivered to the Lender, no
later than 30 days after the date of this agreement, a letter agreement in the
form of Exhibit A attached hereto duly executed by Midland. The failure by AEI
to timely perform its agreement as set forth in this paragraph shall, at the
option of the Lender, constitute an Event of Default under the Credit Agreement.
Notwithstanding anything to the contrary contained in Section 8.7 of the
Credit Agreement, Borrowers' failure to provide management prepared financial
statements within 90 days after the end of the fiscal year ended August 31, 1996
shall not constitute an Event of Default under the Credit Agreement.
This agreement shall be effective as of the date hereof, except that
paragraph 4 of this agreement shall be effective as of September 1, 1996.
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.
The terms and provisions of this agreement shall be for the benefit of the
parties hereto and their respective successors and
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assigns; no other person, firm, entity or corporation shall have any right,
benefit or interest under this agreement.
This agreement 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 agreement, it shall not be necessary to produce or account for more than
one counterpart signed by the party to be charged.
This agreement sets forth the entire agreement and understanding of the parties
with respect to the matters set forth herein and superseded any and all
understandings, discussions, negotiations, correspondences, memoranda and
agreements (whether written or oral) of the parties hereto with respect to the
foregoing, all of which are hereby merged herein. This agreement cannot be
changed, modified, amended or terminated except in a writing executed by the
party to be charged.
Very truly yours,
KEY FINANCIAL CORPORATION
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Xxxxxx Xxxxx
Senior Vicec President
ACKNOWLEDGED AND AGREED
ACCLAIM ENTERTAINMENT, INC.
ACCLAIM DISTRIBUTION INC.
LJN TOTS, LTD.
AREMA ENTERTAINMENT, INC.
By:
-----------------------------------
Title:
--------------------------------
ACCLAIM ENTERTAINMENT, CANADA, LTD.
By:
-----------------------------------
Title:
--------------------------------
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assigns; no other person, firm, entity or corporation shall have any right,
benefit or interest under this agreement.
This agreement 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 agreement, it shall not be necessary to produce or account for more than
one counterpart signed by the party to be charged.
This agreement sets forth the entire agreement and understanding of the parties
with respect to the matters set forth herein and superseded any and all
understandings, discussions, negotiations, correspondences, memoranda and
agreements (whether written or oral) of the parties hereto with respect to the
foregoing, all of which are hereby merged herein. This agreement cannot be
changed, modified, amended or terminated except in a writing executed by the
party to be charged.
Very truly yours,
KEY FINANCIAL CORPORATION
By:
-----------------------------------
Xxxxxx Xxxxx
Senior Vicec President
ACKNOWLEDGED AND AGREED
ACCLAIM ENTERTAINMENT, INC.
ACCLAIM DISTRIBUTION INC.
LJN TOTS, LTD.
AREMA ENTERTAINMENT, INC.
By: /s/ J. Xxxx Xxxxxxxxxx
-----------------------------------
Title: Exec. VP & CFO
--------------------------------
ACCLAIM ENTERTAINMENT, CANADA, LTD.
By: /s/ J. Xxxx Xxxxxxxxxx
-----------------------------------
Title: Exec. VP & CFO
--------------------------------
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EXHIBIT A
BNY FINANCIAL CORPORATION
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
, 1996
Midland Bank
000 Xxxxxxxx, 0xx XX
Xxx Xxxx, Xxx Xxxx 00000
Re: Acclaim Entertainment, Inc.
Gentlemen:
Reference is made to the letter agreement between us dated July 29, 1994
Re: Acclaim Entertainment, Inc. (the "Intercreditor Agreement"). Capitalized
terms used but not defined herein shall have the meanings set forth in the
Intercreditor Agreement.
Notwithstanding anything to the contrary contained in the Intercreditor
Agreement, you hereby confirm to and agree with us that (i) as of the date
hereof the 120 period referred to in paragraph 4 of the Intercreditor Agreement
(the "Standstill period") has not started to run, and (ii) after the date hereof
the Standstill Period will not start to run until the date on which we receive
written notice directly from you of a default by Acclaim Comics, Inc. under or
in connection with your credit agreement with Acclaim Comics, Inc., it being
understood and agreed that you expressly reserve your rights to give, and may
give, such notice at any time any such default exists (and at any time after 120
days thereafter may enforce any of your rights in or to any of the Collateral).
Except as hereinabove amended, the Intercreditor Agreement shall remain in
full force and effect in accordance with its terms.
Please indicate your confirmation of and agreement to the foregoing by
executing a copy of this letter where indicated below and return it to us.
Very truly yours,
BNY FINANCIAL CORPORATION
By:
----------------------------------
Title:
-------------------------------
Duly Authorized
Confirmed and Agreed:
MIDLAND BANK
By:
------------------------------
Title:
---------------------------
Duly Authorized
