EXHIBIT 10.45
ACCLAIM ENTERTAINMENT, INC.
TO
U.S. BANK TRUST NATIONAL ASSOCIATION,
AS TRUSTEE
FIRST SUPPLEMENTAL INDENTURE
Dated February 17, 2004
$25,000,000
9% Senior Subordinated Convertible Notes due 2007
Supplemental to Indenture Dated February 17, 2004
ACCLAIM ENTERTAINMENT, INC.
to
U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE
FIRST SUPPLEMENTAL INDENTURE
9% Senior Subordinated Convertible Notes due 2007
TABLE OF CONTENTS
Page
ARTICLE ONE DEFINITIONS 2
Section 1.01.
Definitions 2
ARTICLE TWO FORM OF NOTES 17
Section 2.01.
Form of Notes 17
Section 2.02.
Form of Face of Notes 17
Section 2.03.
Form of Reverse of Notes 20
Section 2.04.
Form of Conversion Notice 23
ARTICLE THREE THE NOTES 24
Section 3.01.
Establishment of Series; Amount 24
Section 3.02.
Defeasance 24
ARTICLE FOUR REMEDIES 25
Section 4.01.
Events of Default 25
ARTICLE FIVE COVENANTS 26
Section 5.01.
Limitations on Certain Indebtedness 26
Section 5.02.
Investment Company Act 26
Section 5.03.
Limitations on Asset Sales, Liquidations, Etc.; Certain Matters 26
Section 5.04.
Limitations on Liens 27
Section 5.05.
Certain Obligations 27
Section 5.06.
Notice of Defaults 27
Section 5.07.
Further Documentation; Pledge of Instruments and Chattel Paper 27
Section 5.08.
Indemnification 28
Section 5.09.
Maintenance of Records 28
Section 5.10.
Limitation on Liens on Collateral 28
Section 5.11.
Limitations on Dispositions of Collateral 29
Section 5.12.
Performance of Contracts and Agreements Giving Rise to Accounts 29
Section 5.13.
Further Identification of Collateral 29
Section 5.14.
Notices 29
Section 5.15.
Changes in Locations, Name, Etc. 29
Section 5.16.
Additional Collateral in Respect of Pledged Securities 29
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Section 5.17.
Limitations on Dividends and Other Share Payments 30
Section 5.18.
Limitation on Certain Issuances of Securities 31
ARTICLE SIX PLEDGE, SECURITY INTEREST AND MORTGAGE; COLLATERAL AND MORTGAGED PROPERTY 31
ARTICLE SEVEN REPURCHASE UPON A REPURCHASE EVENT 31
Section 7.01.
Repurchase Right 31
Section 7.02.
Notices; Method of Exercising Repurchase Rights, Etc. 32
Section 7.03.
Other 33
Section 7.04.
Form of Company Notice 33
Section 7.05.
Form of Holder Notice 34
ARTICLE EIGHT CONVERSION 35
Section 8.01.
Right to Convert 35
Section 8.02.
Exercise of Conversion Right; Issuance of Common Stock on Conversion 36
Section 8.03.
Adjustment of Conversion Price 39
(k)
Additional Reductions in Conversion Price 45
Section 8.04.
Effect of Reclassification, Consolidation, Merger or Sale 45
Section 8.05.
Reservation of Shares; Shares to Be Fully Paid; Listing of Common Stock 47
Section 8.06.
Notice to Holders Prior to Certain Actions 47
Section 8.07.
Limitation on Conversions 48
ARTICLE NINE OPTIONAL REDEMPTION 49
Section 9.01.
Optional Redemption Right 49
Section 9.02.
Optional Redemption Notice 50
Section 9.03.
Payment of Optional Redemption Price 52
Section 9.04.
Redemption to Be Pro Rata; Minimum Amount 52
Section 9.05.
Effect of Conversions; Limitation on Redemptions 52
Section 9.06.
No Prepayment 53
ARTICLE TEN SUBORDINATION 53
Section 10.01.
Agreement to Subordinate 53
Section 10.02
Liquidation, Dissolution, Bankruptcy 53
Section 10.03
Senior Indebtedness 54
Section 10.04.
Acceleration of Payment of Notes and Exercise of Remedies 54
Section 10.05.
When Distribution Must Be Paid Over 54
Section 10.06.
Subrogation 54
Section 10.07.
Relative Rights 55
Section 10.08.
Subordination May Not Be Impaired by Company 55
Section 10.09.
Reinstatement 55
Section 10.10.
Proofs of Claim 55
Section 10.11.
Non-Impairment 56
Section 10.12.
No Modification 56
Section 10.13.
Waivers; Reliance by Holders of Senior Indebtedness 57
Section 10.14.
Enforcement of Rights 57
Section 10.15.
Prohibition of Payment of Notes 57
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Section 10.16
Trustee Not Charged with Knowledge of Prohibition 57
Section 10.17
Rights of Trustee as Holder of Senior Indebtedness 57
Section 10.18
Trustee Not Fiduciary for Holders of Senior Indebtedness 58
ARTICLE ELEVEN SUNDRY PROVISIONS 58
Section 11.01.
Trustee Not Responsible for Recitals 58
Section 11.02.
Effect of Headings and Table of Contents 58
Section 11.03.
Successors and Assigns 58
Section 11.04.
Separability Clause 58
Section 11.05.
Benefits of Supplemental Indenture 58
Section 11.06.
Governing Law 58
Section 11.07.
Counterparts 58
Section 11.08.
Enforceable Obligation 58
Section 11.09.
Certain Performance 59
Section 11.10.
Amendments and Waivers 59
Section 11.11.
Reference to and Effect on Original Indenture 59
Section 11.12.
Notices 59
Section 11.13.
Payment of Notes on Repurchase; Deposit of Repurchase Price, Etc. 60
Section 11.14
Certain Determinations 61
SCHEDULE I
Certain Permitted Indebtedness
SCHEDULE II
Certain Pledged Securities
SCHEDULE III
Subordination Of Indebtedness
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ACCLAIM ENTERTAINMENT, INC.
TO
U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE
FIRST SUPPLEMENTAL INDENTURE
9% Senior Subordinated Convertible Notes due 2007
FIRST SUPPLEMENTAL INDENTURE, dated February 17, 2004, between ACCLAIM ENTERTAINMENT, INC. , a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal executive office at One Acclaim Plaza, Glen Cove, New York, 11542, and U.S. BANK TRUST NATIONAL ASSOCIATION , a national banking association duly organized and existing under the laws of the United States of America, as Trustee under the Original Indenture mentioned below (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company and the Trustee have heretofore entered into an Indenture, dated February 17, 2004 (hereinafter called the "Original Indenture"), to provide, among other things, for the issuance from time to time of Securities, unlimited as to principal amount, all as provided in the Original Indenture.
The Securities authorized hereby are the first series of Securities to be authorized under the Original Indenture.
Section 901 of the Original Indenture provides that, without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time or from time to time, may enter into one or more indentures supplemental to the Original Indenture, in form satisfactory to the Trustee, for the purpose of, among other things, establishing the form or terms of Securities of any series as permitted by Sections 201 and 301 of the Original Indenture, to add to, change or eliminate any provisions of the Original Indenture in respect of any one or more series of Securities, to secure the Securities of one or more series or to make provision with respect to the conversion rights of Holders of Securities of one or more series.
The Company desires to issue from time to time its 9% Senior Subordinated Convertible Notes due 2007, and to add to the provisions of the Original Indenture certain provisions with respect to such Notes.
The entry into this Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Original Indenture.
All things necessary to make this Supplemental Indenture a valid agreement of the Company in accordance with its terms have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes, without preference, priority or distinction of any of the Notes over any of the others by reason of priority in time of issuance or otherwise, except as otherwise provided in the Original Indenture or this Supplemental Indenture, as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions . (a) For all purposes of this Supplemental Indenture, except as otherwise herein expressly provided or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular;
(2) terms used herein in capitalized form and defined in the Original Indenture and not otherwise defined herein shall have the respective meanings specified in the Original Indenture;
(3) the words "herein", "hereof" and "hereunder" and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision of this Supplemental Indenture;
(4) the terms defined in the introductory paragraph hereof and in the first paragraph of the Recitals of the Company herein shall have the respective meanings specified therein;
(5) The following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
"Accounts" means all rights to payment for goods sold or leased or for services rendered, whether or not such rights have been earned by performance.
"Aggregation Persons" shall have the meaning provided in Section 8.07(a).
"AMEX" means the American Stock Exchange, Inc.
"Applicable Rate" means 9 percent per annum; provided , however, that if an Event of Default shall have occurred, then the Applicable Rate shall be increased to the Default Rate during the period from the date of such Event of Default until the date no Event of Default
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is continuing (or in either such case such lesser rate as shall be the highest rate permitted by applicable law).
"Business Day" means any day other than a Saturday, Sunday or a day on which commercial banks in The City of New York are authorized or required by law or executive order to remain closed.
"Chattel Paper" shall have the meaning assigned to such term under the Code.
"Code" means the Uniform Commercial Code as in effect from time to time in the State of New York.
"Collateral" shall have the meaning assigned to such term in the security agreement or supplemental indenture hereto to be executed and delivered as contemplated by Section 5(h) of the Note Purchase Agreement, the form and contents of which are set forth on Annex VII attached thereto subject to the consent and final approval of GMAC.
"Common Stock" includes the Company's Common Stock, $.02 par value, and the related Preferred Share Purchase Rights (and any similar rights issued with respect to the Common Stock), as authorized on the date hereof, and any other securities into which or for which the Common Stock or the related Preferred Share Purchase Rights (and any similar rights issued with respect to the Common Stock) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise and any stock (other than Common Stock) and other securities of the Company or any other Person which the Holders at any time shall be entitled to receive, or shall have received, on the conversion of the Notes, in lieu of or in addition to Common Stock.
"Common Stock Equivalent" means any warrant, option, subscription or purchase right with respect to shares of Common Stock, any security convertible into, exchangeable for, or otherwise entitling the holder thereof to acquire, shares of Common Stock or any warrant, option, subscription or purchase right with respect to any such convertible, exchangeable or other security.
"Company" shall have the meaning provided in the first paragraph of this Supplemental Indenture.
"Company Certificate" means a certificate of the Company signed by an Officer.
"Company Notice" means a Company Notice in the form set forth in Section 7.04.
"Contracts" shall have the meaning assigned to such term under the Code.
"Conversion Date" means the date on which a Conversion Notice is given in accordance with Section 8.02(a).
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"Conversion Notice" means a duly executed Notice of Conversion of 9% Senior Subordinated Convertible Note due 2007 substantially in the form set forth in Section 2.04.
"Conversion Price" means $0.65, subject to adjustment as provided in Section 8.03.
"Current Market Price" shall mean the arithmetic average of the daily Market Prices per share of Common Stock for the ten consecutive Trading Days immediately prior to the date in question; provided, however, that (1) if the "ex" date (as hereinafter defined) for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 8.03(a), (b), (c), (d), or (e) occurs during such ten consecutive Trading Days, the Market Price for each Trading Day prior to the "ex" date for such other event shall be adjusted by multiplying such Market Price by the same fraction by which the Conversion Price is so required to be adjusted as a result of such other event, (2) if the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 8.03(a), (b), (c), (d), or (e) occurs on or after the "ex" date for the issuance or distribution requiring such computation and prior to the day in question, the Market Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Market Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event, and (3) if the "ex" date for the issuance or distribution requiring such computation is prior to the day in question, after taking into account any adjustment required pursuant to clause (1) or (2) of this proviso, the Market Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the Fair Market Value (as determined by the Board of Directors in a manner consistent with any determination of such value for purposes of Section 8.03(d), whose determination shall be conclusive and described in a Board Resolution) of the evidences of indebtedness, shares of capital stock or assets being distributed applicable to one share of Common Stock as of the close of business on the day before such "ex" date. For purposes of any computation under Section 8.03(d), the Current Market Price of the Common Stock on any date shall be deemed to be the arithmetic average of the daily Market Prices per share of Common Stock for such day and the next two succeeding Trading Days; provided, however, that if the "ex" date for any event (other than the Tender Offer requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 8.03(a), (b), (c), (d), or (e), occurs on or after the Expiration Time for the Tender Offer requiring such computation and prior to the day in question, the Market Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Market Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event. For purposes of this paragraph, the term "ex" date, (1) when used with respect to any issuance or distribution, means the first date on which the Common Stock trades, regular way, on the relevant exchange or in the relevant market from which the Market Price was obtained without the right to receive such issuance or distribution, (2) when used with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades, regular way, on such exchange or in such market after the time at which such subdivision or combination becomes effective, and (3) when used with respect to any Tender Offer means the first date on which the Common Stock trades, regular way, on such exchange or in such market after the Expiration Time of such Tender Offer. Notwithstanding the
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foregoing, whenever successive adjustments to the Conversion Price are called for pursuant to Section 8.03, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of Section 8.03 and to avoid unjust or inequitable results as determined in good faith by the Board of Directors.
"Default" means any event that is, or with the passage of time or the giving of notice or both would become, an Event of Default.
"Default Rate" means 14 percent per annum (or such lesser rate equal to the highest rate permitted by applicable law).
"Depositary" means The Depository Trust Company.
"Documents" shall have the meaning assigned to such term under the Code.
"Equipment" shall have the meaning provided in Annex VI to the Note Purchase Agreement.
"Event of Default" shall have the meaning provided in Section 4.01.
"Excluded Shares" shall have the meaning provided in Section 8.07.
"Expiration Time" shall have the meaning provided in Section 8.03(f).
"Extended Redemption Date" means with respect to any Note or portion thereof that is an Inconvertible Note, the date that is 20 Trading Days after the latest date on which such Note or portion thereof no longer is an Inconvertible Note.
"Fundamental Change" means
(a) Any consolidation or merger of the Company with or into another entity where the stockholders of the Company immediately prior to such transaction do not collectively own at least 51% of the outstanding voting securities of the surviving entity of such consolidation or merger immediately following such transaction; or the sale of all or substantially all of the assets of the Company and the Subsidiaries in a single transaction or a series of related transactions; or
(b) The occurrence of any transaction or event in connection with which all or substantially all the Common Stock shall be exchanged for, converted into, acquired for or constitute the right to receive consideration (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) which is not all or substantially all common stock which is (or will, upon consummation of or immediately following such transaction or event, will be) listed on the NYSE or the AMEX or approved for quotation on Nasdaq or any similar United States system of automated dissemination of transaction reporting of securities prices; or
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(c) The acquisition by a Person or entity or group of Persons or entities acting in concert as a partnership, limited partnership, syndicate or group, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, of beneficial ownership of securities of the Company representing 50% or more of the combined voting power of the outstanding voting securities of the Company ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors.
"General Intangibles" shall have the meaning assigned to such term under the Code.
"Generally Accepted Accounting Principles" for any Person means the generally accepted accounting principles and practices applied by such Person from time to time in the preparation of its audited financial statements.
"GMAC" means GMAC Commercial Finance LLC, as successor in interest by merger to GMAC Commercial Credit LLC, formally known as BNY Factoring LLC, as successor by merger to BNY Financial Corporation.
"GMAC Credit Agreement" means the Revolving Credit and Security Agreement, dated as of January 1, 1993, between the Company, Acclaim Distribution Inc., LJN Toys, Ltd., Acclaim Entertainment Canada, Ltd. and Arena Entertainment Inc., as borrowers, and GMAC, as lender, as amended and restated on February 28, 1995, and as amended thereafter.
"GMAC Intercreditor Agreement" means such intercreditor agreement or agreements as GMAC shall present to the Trustee and the Trustee shall execute and deliver on terms satisfactory to GMAC relating to their respective rights and remedies with respect to the Collateral and the Mortgaged Property, unless such intercreditor agreement contains terms relating to the Trustee that are unsatisfactory as they relate to the Trustee.
"Government Obligations" means direct obligations of, or obligations the timely payment of the principal of and the interest on which are unconditionally guaranteed by, the United States of America and which are not, by their terms, callable.
"Guaranty" means any obligation, contingent or otherwise, of any Person, directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pa ...
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