Document:

Amendment and Modification to Revolving Credit

 
Exhibit
10.39 
 
GMAC COMMERCIAL FINANCE LLC

1290 Avenue of the Americas 
New York, New York 10104 
 
March 31, 2003 
 
ACCLAIM
ENTERTAINMENT, INC. 
ACCLAIM DISTRIBUTION INC. 
LJN TOYS, LTD. 
ACCLAIM ENTERTAINMENT CANADA, LTD. 
ARENA ENTERTAINMENT INC. 
One Acclaim Plaza 
Glen Cove, New York 11542-2708 
 
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 Finance LLC, successor by merger with 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 James R. Scoroposki (“Scoroposki”) in favor of Lender (as amended, the “Scoroposki Pledge Agreement”); and the Stock
Pledge and Security Agreement, dated July 18, 2001, executed by Gregory E. Fischbach (“Fischbach”) in favor of Lender (as amended, the “Fischbach Pledge Agreement”). 
 
All capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to
them in the Credit Agreement, the Scoroposki Pledge Agreement or the Fischbach 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. 
 

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2. Effective
as of the date hereof, the definition of “Maximum Loan Amount” appearing in Section 1.2 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
 
““Maximum Loan Amount”
means an amount equal to Thirty Million ($30,000,000) Dollars.” 
 
3. 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 (a) for the period commencing on March 18, 2003 and ending on May 31, 2003, an amount, in Lender’s sole discretion, of up to Eleven Million ($11,000,000) Dollars, and (b) for the period commencing on June 1, 2003 and
ending on September 29, 2003, an amount, in Lender’s sole discretion, of up to Five Million ($5,000,000) Dollars; provided, that, (x) from and after the earlier to occur of (A) the occurrence and continuance of an Event of Default
which is not waived by Lender in its sole discretion, or (B) September 30, 2003, the Permitted Overformula Amount shall be an amount equal to Zero ($0) Dollars; 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 James Scoroposki and Gregory Fischbach respectively, in favor of Lender) is less than Five Million ($5,000,000) Dollars until such time as Messrs. Scoroposki and Fischbach each deliver additional
Pledged Securities in accordance with the terms of the letters re: Pledged Securities.” 
 
4. Effective as of the date hereof, Sections 6.21, 6.22 and 6.23 of the Credit Agreement are hereby deleted in their entirety. 
 
5. Effective as of the date hereof, Section 6.21 and Section 6.22 are hereby added to the Credit Agreement
immediately following Section 6.20 as follows: 
 
“ Section 6.21 Advances to Equal or Exceed Supplemental Availability. At all times, the aggregate amount of Advances shall equal or exceed the Supplemental Availability. 
 
Section 6.22 Maximum Permitted Overformula
Amount and Aggregate Obligations. On September 30, 2003 and at all times thereafter, Borrowers shall (a) maintain a Overformula Amount equal to zero ($0) dollars, and (b) maintain an aggregate amount of all outstanding Obligations of less than
Eighteen Million ($18,000,000) Dollars; it being acknowledged that, in the event of Borrowers’ 
 

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failure to
comply with (a) and (b) above, as determined by Lender in its sole discretion, in addition to any of Lender’s other rights and remedies, Borrowers’ unconditionally agree to pay an overformula fee in the amount of Fifty Thousand ($50,000)
Dollars, which overformula fee shall be fully earned, due and payable on September 30, 2003, shall not be subject to refund, rebate or proration for any reason whatsoever, and shall be charged by Lender to Borrowers as of September 30, 2003.”

 
B. Condition to Effectiveness. The effectiveness of this
agreement and the agreement of Lender to the modifications and amendments set forth in this agreement are subject to the fulfillment of the following conditions precedent: 
 
1. Lender shall have received all fees and other amounts due and payable to Lender upon or prior to the
effectiveness of this agreement; 
 
2. Lender shall
have received, in form and substance satisfactory to Lender in its sole discretion, an original of this agreement duly authorized, executed and delivered by Borrowers, James Scoroposki and Gregory Fischbach; 
 
3. Lender shall have received, in form and substance
satisfactory to Lender in its sole discretion, an original of the Letter re: Cash Deposit, dated as of the date hereof, executed and delivered by each of James Scoroposki and Gregory Fischbach; 
 
4. Lender shall have received, in form and substance
satisfactory to Lender in its sole discretion, an original Limited Guaranty, dated as of the date hereof, executed and delivered by each of James Scoroposki and Gregory Fischbach; and 
 
5. No Event of Default shall have occurred and be continuing on the date of this agreement, or would exist
after giving effect to the transactions contemplated under this agreement. 
 
C. General Provisions. 
 
1.
In connection with the foregoing, each of Messrs. Fischbach and Scoroposki agree that effective as of the date hereof, Section 7(b) of each of the Scoroposki Pledge Agreement and the Fischbach Pledge Agreement, respectively, is hereby amended so
that all references to May 30, 2003 are replaced with September 30, 2003. 
 
2. Each of the Borrowers hereby acknowledges, confirms and agrees that all amounts charged or credited to the Loan Account as of February 28, 2003 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 February 28, 2003 are due and owing without defense, offset or counterclaim. 
 

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3. Commencing
on the first day of the month immediately following the date hereof, and on the first day of each month thereafter, Borrowers shall pay to Lender monthly in arrears, a collateral monitoring fee in an amount equal to Two Thousand ($2,000) Dollars per
month (the “Collateral Monitoring Fee”). The Collateral Monitoring Fee shall be fully earned monthly when due and shall not be subject to refund, rebate or proration for any reason whatsoever. 
 
4. In consideration of the amendments set forth herein,
Borrowers unconditionally agree to pay an amendment fee in the amount of Fifty Thousand ($50,000) Dollars on the date hereof, which amendment fee shall be fully earned as of the date hereof, shall not be subject to refund, rebate or proration for
any reason whatsoever, and shall be charged by Lender to Borrowers as of the date hereof. 
 
5. Lender and Borrowers hereby agree that the overformula fee provided for in Paragraph C.3 of the Letter re: Amendment and Modification to Agreements, dated February 13, 2003, by and among Lender,
Borrowers, James Scoroposki and Gregory Fischbach shall be forgiven and in no event shall such fee be due and payable by Borrowers. 
 
6. In addition to and not in limitation of anything contained in the Credit Agreement, in the event that (i) at any time during the period
from the date hereof to May 31, 2003, an Overformula Amount exists, after giving effect to the Permitted Overformula Amount of up to Eleven Million ($11,000,000) Dollars through May 31, 2003, or (ii) at any time during the period from June 1, 2003
to September 30, 2003, an OverFormula Amount exists, after giving effect to the Permitted Overformula Amount of up to Five Million ($5,000,000) Dollars through September 29, 2003, or (iii) on September 30, 2003 or at any time thereafter, the
Overformula Amount is equal to an amount greater than Zero ($0) Dollars, then such event shall at the option of Lender, in its sole discretion, constitute an Event of Default under the Credit Agreement and the Other Documents. 
 
7. Except as specifically set forth herein, no other
amendments, changes or modifications to the Credit Agreement, the Scoroposki Pledge Agreement or the Fischbach Pledge Agreement are intended or implied, and, in all other respects, the Credit Agreement, the Scoroposki Pledge Agreement and the
Fischbach Pledge Agreement 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 of any other provision of the Credit Agreement, the Scoroposki Pledge Agreement or the Fischbach Pledge Agreement nor shall anything contained herein be construed as a consent by the Lender to any transaction other than those specifically
consented to herein. 
 
8. 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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9. 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. 
 
10. 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 FINANCE LLC

	
	 By:
	 	 /s/    FRANK IMPEROLI
        

	 Title:
	 	 Senior Vice President

 
ACKNOWLEDGED
AND AGREED: 
 
ACCLAIM ENTERTAINMENT, INC.

ACCLAIM DISTRIBUTION INC. 
LJN TOYS, LTD. 
ARENA ENTERTAINMENT INC. 
ACCLAIM ENTERTAINMENT CANADA, LTD. 
 

	
	 By:
	 	 /s/    GERARD F.
AGOGLIA        

	 	 	 Gerard F. Agoglia
 Executive Vice President
 and Chief Financial
Officer

 
[SIGNATURES CONTINUED ON NEXT PAGE] 
 

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[SIGNATURES
CONTINUED FROM PREVIOUS PAGE] 
 
ACKNOWLEDGED AND AGREED FOR
PURPOSES 
OF PARAGRAPHS A.3, B.2, B.3, B.4, C.1, C.5, C.6 AND C.7 
 

	 /s/    GREGORY E.
FISCHBACH        

	 Gregory E. Fischbach

 

	 /s/    JAMES R.
SCOROPOSKI        

	 James R. Scoroposki

 

6Amended and Restated Cash Deposti Agreement between Gregory E. Fischbach & GMAC

 
Exhibit
10.40 
 
GMAC COMMERCIAL FINANCE LLC

1290 Avenue of the Americas 
New York, New York 10104 
 
March 31, 2003 
 
Mr. Gregory Fischbach 
740 Park Avenue, Apartment 17B 
New York, New York 10021 
 
Re:  Amended and Restated Cash Deposit 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. (“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 Finance LLC, successor by merger with GMAC Commercial Credit LLC, formerly known as BNY Factoring LLC, as successor by merger
to BNY Financial Corporation (“Lender”), as amended and restated on February 28, 1995 (as so amended and as the same now exists or may hereafter be amended, restated, renewed, replaced, substituted, supplemented, extended, or otherwise
modified, the “Credit Agreement”) and to the Limited Guaranty dated February 13, 2003 executed by Gregory E. Fischbach (“Pledgor”) in favor of the Lender (the “February Guaranty”) and to the Letter Re: Cash Deposit
dated February 13, 2003 executed by Pledgor (the “February Pledge Letter”). All capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Credit Agreement. This letter amends,
restates, supercedes and replaces in its entirety, without a break in continuity, the February Pledge Letter. 
 
Reference is also made to that certain Limited Guaranty, (“Guaranty”) dated as of the date hereof executed by Pledgor in favor
of Lender pursuant to which Pledgor has guaranteed the Obligations (as defined in the Guaranty) of the Borrowers to Lender not to exceed the aggregate principal amount of One Million ($1,000,000) Dollars, plus (b) interest thereon at the
Default Rate from and after the date of demand thereunder, plus (c) any and all costs, fees and expenses of collection thereunder, including, without limitation, attorneys’ fees and expenses. 
 
Pledgor hereby acknowledges, confirms and agrees that,
concurrently with the execution of this Cash Deposit Letter, Pledgor has made an additional cash deposit in the aggregate amount of Five Hundred Thousand ($500,000) Dollars with Lender to be held by Lender as collateral security for the obligations
of the Pledgor under the Guaranty (collectively, the “Cash Deposit”; 
 

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and together with the $500,000 cash deposit made pursuant to the February Pledge Letter, the “Cash
Deposits”). 
 
Pledgor is depositing the Cash
Deposit with Lender in his personal capacity as a shareholder of the Borrowers. The Cash Deposit is being made by Pledgor on behalf of and for the benefit of the Borrowers. 
 
Pledgor hereby grants to Lender a (and with respect to the cash deposit made pursuant to the February Pledge
Letter, ratifies the) continuing first security interest in and right of setoff with respect to the Cash Deposits, securing payment and performance of all of the obligations of Pledgor under the Guaranty. In the event of a default by Borrowers in
payment or performance of the Obligations, when due, or in the event of any other Event of Default under the Credit Agreement or under any other agreement among Lender and any Borrower or executed by any Borrower in Lender’s favor or
guaranteeing, evidencing or standing as collateral security for the Obligations, or in the event of the termination for any reason of any guarantee of the Obligations, then Lender may immediately apply the Cash Deposits to payment of the Obligations
without notice or demand and in such order as Lender shall determine. Pledgor agrees that Lender need not attempt to exercise any of Lender’s rights or remedies with respect to any other collateral for the Obligations or against any other
obligor or guarantor of the Obligations (which rights and remedies may be exercised by Lender in such order and manner as Lender shall elect, and which shall be cumulative and not exclusive) before applying the Cash Deposits to payment of the
Obligations. Lender may add or release any collateral for the Obligations or any party primarily or secondarily liable for the Obligations without affecting Lender’s rights or recourse with respect to the Cash Deposits. 
 
Any rights and remedies granted to Lender under the Credit
Agreement with respect to collateral security for the Obligations shall apply with equal force to the Cash Deposits. 
 
While held by Lender, the Cash Deposits shall bear interest in Pledgor’s favor at the rate applicable to “Matured Funds”
established by Lender from time to time. 
 
The
Cash Deposit made hereunder is in addition to and not in limitation of the Five Hundred Thousand ($500,000) Dollar cash deposit made under the February Pledge Letter. 
 
Notwithstanding anything to the contrary set forth herein, the Cash Deposits shall be returned to Pledgor (to
the extent not previously applied to the Obligations) on September 30, 2003, provided, that, (i) no Event of Default has occurred and is continuing; and (ii) on September 30, 2003: (A) the Overformula Amount shall not exceed Zero ($0)
Dollars; (B) the Permitted Overformula Amount shall not exceed Zero ($0) Dollars; and (C) the aggregate amount of outstanding Obligations under the Credit Agreement shall not exceed Eighteen Million ($18,000,000) Dollars. If, however, at September
30, 2003, Lender has determined, in Lender’s sole and absolute discretion, that any of the foregoing conditions has not been satisfied, then the Cash Deposits shall not be returned to Pledgor at that time; provided, however,
that if at any time after September 30, 2003 Lender has determined, in its sole and absolute discretion, that each of the foregoing conditions has been satisfied (which for purposes of this proviso shall mean, with respect to the conditions
set forth in subclauses (ii)(A), (ii)(B) and (ii)(C) above, that 
 

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such conditions shall each be satisfied as of the same five (5) consecutive Business Day period for any
such period commencing on or after September 30, 2003), then the Cash Deposits shall be returned to Pledgor (to the extent not previously applied to the Obligations) within five (5) days after such determination by Lender. Satisfaction of each of
the foregoing conditions shall be determined by Lender, in Lender’s sole and absolute discretion in accordance with the terms and provisions of the Credit Agreement. 
 
If you are in agreement with all of the foregoing, please so indicate by signing and returning to us the
enclosed copy of this letter. 
 

	 Very truly yours,
  
 GMAC COMMERCIAL FINANCE LLC

	
	 By:
	 	 /s/    FRANK IMPEROLI

	 Title:
	 	 Senior Vice President

 
AGREED: 
 

	
	 /s/    GREGORY E. FISCHBACH        

	 Gregory E. Fischbach

 

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