Amendment To Credit Agreement

Exhibit 10.4 (iv)


ACCLAIM ENTERTMNMENT
BNY - DECEMBER 13, 1996


[EXECUTION COPY]


BNY FINANCIAL CORPORATION
1290 Avenue of the Americas
New York, New York 10104


December 13, 1996


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: 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 ...