Credit Agreement

Exhibit 10.4 (v)


ACCLAIM ENTERTMNMENT
BNY - FEBRUARY 24,1997
CREDIT AGREEMENT


OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C.
230 PARK AVENUE
NEW YORK, N.Y 10169-0075
(212) 66l~9100


RICHARD L. STEHL CABLE ADDRESS: "OTLERTON" ADMITTED IN CONNECTICUT FACSIMILE: (212) 682-6104
TELEX: 960916


February 24, 1997


BY HAND


Deborah Aschheim, Esq. Rosenman & Colin LLP 575 Madison Avenue New York, New York 10022


Re: BNY Financial Corporation ("BNYFC") with
Acclaim Entertainment, Inc. ("AEI") et al. ("Borrowers")


Dear Deborah:


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 & ROSEN, P.C.


Document Received and Acknowledged:


Name: /s/ Deborah Aschheim /s/ Richard L. Stehl
-------------------------------------- Richard L. Stehl
cc: Mr. Anthony Marsicano (via fax w/o encl.)
Mr. Robert P. Grbic (via fax w/o encl.)
Bruce Tenzer, 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. One Acclaim Plaza Glen Cove, New York 11542-2708


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 app ...