Factoring Agreement - BNY Financial Corp. and Acclaim Entertainment Inc.
BNY FINANCIAL CORPORATION
RESTATED AND AMENDED FACTORING AGREEMENT
Acclaim Entertainment, Inc.
71 Audrey Avenue
Oyster Bay, NY 11771
Effective as of February 1, 1995, this agreement restates and amends in
its entirety, without a break in continuity, that certain Factoring
Agreement dated February 26, 1990 ("Effective Date"), as supplemented
and amended and all references to the "Factoring Agreement" contained
therein shall be deemed to be references to this Restated and Amended
Factoring Agreement. Nothing contained herein, however, is or shall be
deemed to change or limit any of the Other Documents (as defined in
that certain Revolving Credit and Security Agreement dated as of January
1, 1993, as Amended and Restated on February 28,1995 entered into
between ourselves, as Lender, and yourselves, Acclaim Distribution Inc.,
LJN Toys, Ltd., Acclaim Entertainment Canada, Ltd. and Arena
Entertainment, Inc. as Borrowers (each and all of such other Borrowers,
herein "Affiliated Concerns"); such Revolving Credit and Security
Agreement as amended and supplemented, herein the "Credit Agreement")
between or concerning us, which shall each remain in full force and
effect.
This agreement states the terms and conditions upon which we are to act
as your sole factor.
1. COVERED SALES; SECURITY INTEREST
(a) You hereby assign and sell to us, as absolute owner, and we hereby
purchase from you, all home interactive entertainment software
Receivables (as hereinafter defined) other than Receivables: (i) arising
from sales to your subsidiaries and affiliates, and (ii) arising from
sales made to customers outside the United States of America, Canada or
Mexico, which Receivables in each case are created on or after the
Effective Date, which arise from your rendition of services or your sale
of merchandise. Our purchase of and acquisition of title to each
Receivable will be effective as of the date of its creation and will be
entered on our books when you furnish us with a copy of the respective
invoice.
(b) You hereby grant to us a continuing security interest in all of
your present and future Receivables, as security for all "Obligations"
(as hereinafter defined).
2. CUSTOMER CREDIT APPROVAL
You shall submit to us the principal terms of each of your customers'
orders for our written credit approval. We may, in our discretion,
approve in writing all or a portion of your customers' orders, either by
establishing a credit line limited to a specific amount for a specific
customer, or by approving all or a portion of a proposed purchase order
submitted by you. No credit approval shall be effective unless in
writing and unless the goods are shipped or the services rendered within
the time specified in our written credit approval or within 45 days
after the approval is given, if no time is specified. After the customer
has accepted delivery of the goods or performance of the services, we
shall then have the "Credit Risk" as hereinafter defined (but not the
risk of non-payment for any other reason), to the extent of the dollar
amount specified in the credit approval, on all Receivables evidenced by
invoices which arise from orders approved by us in writing. We shall
have neither the Credit Risk nor the risk of non-payment for any other
reason on Receivables arising from orders not approved by us in writing.
We may withdraw our credit approval or withdraw or adjust a credit line
at any time before you deliver the goods or render the services.
3. PURCHASE PRICE OF RECEIVABLES
The purchase price of Receivables is the net face amount thereof less our
commission. The term "net face amount" means the gross face amount of
the invoice, less returns, discounts (which for purposes hereof shall be
determined by us where optional terms are given), anticipation
reductions or any other unilateral deductions taken by customers, and
credits, and allowances to customers of any nature. The purchase price
will be payable on the "Maturity Date" (hereinafter described). At the
close of each month, we will compute the average due date of all
Receivables purchased by us during the month. In computing the average
due date we will take into account all credits issued to customers. The
Maturity Date for all such Receivables will be six (6) business days
after the average due date. We may deduct, from the amount payable to
you on any Maturity Date, reserves for all Obligations then chargeable
to your account and Obligations which, in our sole judgment, may be
chargeable to your account thereafter ("Reserves").
4. ADVANCES; INTEREST; COMMISSIONS; LATE PAYMENT CHARGES; LOSSES
(a) For our services, we shall charge to your account
(i) effective as of February 1, 1995, monthly, as of the last day of
each month, interest on the average daily balance of all amounts charged
and chargeable to your account hereunder (said amounts being herein
called "Interest Bearing Obligations") which are outstanding during such
month at the average "Revolving Advance Rate" (as defined in the
Credit Agreement) in effect during such month; provided, that said
interest rate shall not be less than three percent (3%) per annum and
shall in no event be higher than the highest rate permitted by New York
law; provided however, that the interest rate applicable to the
relevant month shall be: (A) the Overformula Rate (as defined in the
Credit Agreement); or (B) the Default Rate (as defined in the
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Credit Agreement), in any instance where the same is stated to be the
applicable interest rate pertaining to Revolving Rate Advances (as
defined in the Credit Agreement and) under the Credit Agreement.
Interest shall be calculated on the basis of the actual number of days
elapsed over a year of 360 days.
(ii) effective as of February 1, 1995, monthly, as of the 15th day of
each month, a commission at the rate (the "Commission Rate") of twenty
five one hundredths of one percent (.25%) of the gross face amount of
each invoice evidencing a Receivable less promotional, advertising and
warehousing allowances which allowances, in the aggregate shall not
exceed 5% of the gross face amount of each invoice evidencing a
Receivable purchased hereunder during such month on terms not exceeding
60 days (including dating), plus an additional one hundred twenty five
one thousandths of one percent (.125%) for each additional thirty (30)
days or portion thereof of selling terms (such additional dating
commission shall not apply to Receivables due from Marisal, Best Buy and
Caldor, Inc.). However, the aggregate amount of commissions you shall
be obligated to pay to us for each Calendar Quarter (the three month
periods which start on each of January 1, April 1, July 1 and October 1
of each year) of a Calendar Year (the twelve month period starting
January 1 of each year) or part thereof ("Partial Calendar Quarter")
during which this agreement is in effect, shall not be less than
$125,000 (the "Minimum Commission"); provided however, that: (a) no
Minimum Commission shall be payable if we terminate this agreement prior
to the Yearly Cutoff Date as (defined and) described in Paragraph
9(a)(i) below in the absence of an Event of Default as defined in and
pursuant to Paragraph 9 (a)(ii) hereof; and (b) the Minimum Commission
applicable to any Partial Calendar Quarter shall be prorated, based upon
the number of calendar months included in such Partial Calendar Quarter.
If the commissions paid by you to us in any Calendar Quarter or
Partial Calendar Quarter (if any) is less than the Minimum Commission or
a prorated portion thereof, as the case may be, we shall charge to your
account the difference ("Minimum Volume Charge") between the
commissions so paid and the Minimum Commission or a prorated protion
thereof, as the case may be. We shall compute the Minimum Volume
Charge, if any, on a calendar quarterly basis and charge your account
therefor for each Calendar Quarter in the month following the end of
such Calendar Quarter, or in the month following the effective date of
termination of this agreement. If any Minimum Volume Charge is paid by
you to us for any particular Calendar Quarter(s) and in any subsequent
Calendar Quarter or Partial Calendar Quarter (if any) in the same
Calendar Year, you pay commissions to us hereunder which exceed the
Minimum Commissions for such subsequent Calendar Quarter, then at the
end of such subsequent Calendar Quarter, you shall be entitled to a
credit to your account, in an amount equal to the lesser of: (A) any
such excess from the subsequent Calendar Quarter(s) within the same
Calendar Year; or (B) the Minimum Volume Charge paid for any such
Calendar Quarter(s). Similarly, if for any Calendar Quarter(s) within a
particular Calendar Year, the commissions paid to us under this
Agreement exceed the Minimum Commissions applicable thereto, and we
otherwise are entitled to receive a Minimum Volume Charge for any
subsequent Calendar Quarter(s) in the same Calendar Year, in calculating
the amount of any such Minimum Volume Charge applicable to such
subsequent Calendar Quarter(s), you shall be entitled to a credit against
the same, in an amount equal to the lesser of: (y) any such excess
amount(s) from the prior Calendar Quarter(s) within the same Calendar
Year; or (z) the Minimum Volume Charge payable for any such Calendar
Quarter(s).
Our commission on any invoice evidencing a Receivable purchased hereunder
shall not be less than $4.50 ("Minimum Invoice Commission") except that
there shall be no Minimum Invoice Commission with respect to invoices
evidencing receivables arising from sales to Caldor, Inc., HQ Army & Air
Force, Shopko Stores, Inc., F.W. Woolworth Co. ("U.S.") and other
customers agreed to by us from time to time.
(iii) customer late payment charges (computed at the same rate as
charged on Interest Bearing Obligations, but only if the charge exceeds
Five Dollars ($5.00) and the payment is six (6) business days or more
past due.
(iv) all bank charges for wire transfers.
(b) Notwithstanding any of the terms hereof to the contrary, effective
as of February 1, 1995, at the close of the twelve month period from
February 1, 1995 to and including January 31, 1996 and each successive
twelve month period (a "Contract Year") and at the close of business on
the effective termination date of this Agreement (and the period of time
commencing on February 1, 1995 or any February 1 thereafter during which
this Agreement is in effect and ending on such effective termination
date, herein the "Partial Last Year"), you shall pay to us or, at our
option, we may debit to your account with us the first fifteen
hundredths of one percent (.15%) of the aggregate amount of Receivables
sold and assigned to us in each such Contract Year or Partial Last Year,
as the case may be, for Credit Losses in respect of Receivables for
which we have the Credit Risk but, except as provided above, we shall
continue to have the Credit Risk on all Receivables approved by us in
writing pursuant to, and to the extent provided in, this Agreement.
For purposes of this subsection (b), " Credit Loss" shall mean the
aggregate net face amount of all of your Receivables generated during a
Contract Year which we determine to have remained wholly or partially
unpaid at maturity solely because of the financial inability of the
customer to pay regardless of whether such determination is made in any
such Contract Year, or at any other time; provided, however, that for
the purposes of computing such aggregate net face amount under this
subparagraph (b), the net face amount of any such Receivable shall be
limited to the unpaid amount of such Receivable on the date the actual
write off is entered on our books for such Receivable.
5. MATURED FUNDS
On the last day of each month, we shall credit your account with interest
at the average Federal Funds Rate (as defined in the Credit Agreement)
in effect during such month on the average daily balance of any amounts
payable by us to you hereunder (as confirmed by us by appropriate credit
to your account with us) which are not drawn by you on the Maturity
Date, while held by us after the Maturity Date.
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6. CHARGES; BALANCES; RESERVES
We may charge to your account all Obligations. Unless otherwise
specified, all Obligations, including any debit balance in your account,
shall be payable on demand. Recourse to security will not be required
at any time. All credit balances or other sums at any time standing to
your credit and all Reserves on our books, and all of your property in
our possession at any time or in the possession of any parent, affiliate
or subsidiary of ours or on or in which we or any of them have a lien or
security interest, may be held and reserved by us as security for all
Obligations. We will account to you monthly and each monthly accounting
statement will be fully binding on you and will constitute an account
stated, unless, within ninety (90) days after such statement is mailed
to you or within ninety (90) days after the mailing of any adjustment
thereof we may make, you give us specific written notice of exceptions.
7. REPRESENTATIONS AND WARRANTIES; DISPUTES; RETURNS; CHARGEBACKS
(a) You warrant and represent that each Receivable purchased hereunder
is a bona fide, enforceable obligation created by the absolute sale and
delivery of goods or the rendition of services in the ordinary course of
business; you have good title to the Receivable free of any encumbrance
except in favor of us or in favor of the Hongkong and Shanghai Banking
Corporation Limited (the "Hongkong Bank") your customer is
unconditionally obligated to pay at maturity the full amount of each
Receivable purchased hereunder without defense, counterclaim or offset,
real or alleged; all documents in connection therewith are genuine; and
the customer will accept the goods or services without alleging any
defense, counterclaim, offset, dispute or other claim whether arising
from or relating to the sale of such goods or services or arising from
or relating to any other transaction or occurrence (a "Dispute").
(b) You further represent and warrant that (i) your address set forth
above is that of your chief place of business and chief executive office
and the location of all "Collateral" (as hereinafter defined) and of
your books and records relating to the Receivables, subject to the
understanding that on and after May 1, 1995, your chief place of
business and chief executive office, as well as the location of certain
of the "Collateral", and of your books and records relating to the
Receivables, shall be at 70 Glen Street, Glen Cove, New York; and (ii)
by a separate writing you have disclosed to us the locations of all of
your other places of business as well as all trade names or styles,
trademarks, divisions or other names under which you conduct business
(hereinafter collectively defined as the "Trade Names").
(c) You shall promptly provide us with duplicate originals of all
credits which you issue to your customers and immediately notify us of
any merchandise returns or Disputes. You will settle all Disputes at no
cost or expense to us; our practice is to allow you a reasonable time to
do so. Should we so elect, we may at any time in our discretion (i)
withdraw your authority, following the occurrence of the Event of
Default which is continuing, to issue credits to your customers without
our prior written consent; (ii) litigate Disputes or settle them
directly with the customers on terms acceptable to us; or (iii) direct
you to set aside, identify as our property and procure insurance
satisfactory to us on any returned or repossessed merchandise or other
goods which by sale resulted in Receivables theretofore assigned to us
("Retained Goods"). All Retained Goods (and the proceeds thereof) shall
be (A) held by you in trust for us as our property; and (B) subject to a
security interest in our favor as security for the Obligations; and (C)
disposed of only in accordance with our express written instructions.
(d) Our Credit Risk, if any, on a Receivable shall immediately
terminate without any action on our part in the event that (i) your
customer asserts a Dispute (regardless of merit) as a ground for
non-payment of the Receivable or returns or attempts to return the goods
represented thereby, other than as a result of the customer's inability
to pay such Receivable as to which we have the Credit Risk hereunder;
or (ii) any warranty as to the Receivable is breached. We may charge to
your account at any time the purchase price of any Receivable (or
portion thereof) paid by us, as such purchase price is computed in
accordance with paragraph 3 of this Agreement on which we do not then
have the Credit Risk, together with interest thereon from the due date
of such Receivable to the date of chargeback; such action on our part
shall not be deemed a reassignment of such Receivable and will not
impair our rights thereto or security interest therein, which will
continue to be effective until all Obligations are fully satisfied.
(e) All representations, warranties, covenants and agreements set forth
in the Credit Agreement relating in any manner to your Receivables in any
way applicable to this Agreement are hereby incorporated by reference and
made a part hereof.
8. INVOICING; PAYMENTS; RETURNS
Each of your invoices and all copies thereof shall bear a notice (in form
satisfactory to us) that it is owned by and payable directly and only to
us at locations designated by us, and you shall furnish us with
duplicate originals of your invoices accompanied by a confirmatory
assignment thereof. Your failure to furnish such specific assignments
shall not diminish our rights. You shall procure and hold in trust for
us and furnish to us at our request satisfactory evidence of each
shipment and delivery or rendition of services. Each invoice shall bear
the terms stated on the customer's order, as submitted to us, whether or
not the order has been approved by us, and no change from the original
terms of the order shall be made without our prior written consent. Any
such change not so approved by us shall automatically terminate our
Credit Risk, if any, on the Receivable arising from
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your performance of the order. You will hold in trust for us and deliver
to us any payments received from your customers in the form received,
and hereby irrevocably authorize us to endorse your name on all checks
and other forms of payment. Each payment made by a customer shall first
be applied to Receivables, if any, on which we have the Credit Risk, and
the balance, if any, of such payment shall be applied to other
Receivables due from such customer. You understand that we shall not be
liable for any selling expenses, orders, purchases, contracts or taxes
of any kind resulting from any of your transactions, and you agree to
indemnify us and hold us harmless with respect thereto, which indemnity
shall survive termination of this agreement.
9. TERMINATION
(a) This agreement shall remain in full force and effect until
terminated as follows:
(i) This agreement shall remain in full force and effect unless either
of us gives the other party hereto written notice of termination (by
certified mail, return receipt requested) no less than ninety (90) days
prior to and effective as of January 31, 1996 or any January 31st
thereafter; or
(ii) Should any Event of Default as (defined and) more fully set forth
in the Credit Agreement occur; or should the Credit Agreement be
terminated for any reason or the Term (as therein defined) thereof be at
an end, then in any of such events (each an "Event of Default"
hereunder), we may terminate this agreement at any time without notice.
(b) On the effective date of termination all Obligations shall become
immediately due and payable in full without further notice or demand.
Our rights with respect to Obligations owing to us, or chargeable to
your account, arising out of transactions having their inception prior
to the effective date of termination, will not be affected by
termination. Without limiting the foregoing, all of our security
interests and other rights in and to all Receivables, whether then
existing or arising thereafter (including assignments and remittance of
payments), Retained Goods, credit balances, and any other property in our
possession or in the possession of any parent, affiliate or subsidiary of
ours and any other security for the Obligations, whether coming into
existence or into our or their possession before, on or after the
effective date of termination and all proceeds thereof (collectively
"Collateral") shall continue to be operative until such Obligations have
been fully and finally satisfied or you have given us an indemnity
satisfactory to us.
10. DEFINITIONS: "RECEIVABLES;" "OBLIGATIONS;" "CREDIT RISK"
As used herein
(a) "Receivables" means all amounts and all forms of obligations now or
hereafter owing to you (including but not limited to accounts,
instruments, contract rights, documents and chattel paper) and general
intangibles; all security therefor and guaranties thereof; all of your
rights as an unpaid seller of goods and your rights to goods sold which
may be represented thereby (including but not limited to your rights of
replevin and stoppage in transit); all of your books of account,
records, files, and documents relating thereto and the equipment
containing said books, records, files and documents; all of your rights
under insurance policies relating to the foregoing; the right to use the
Trade Names in connection with our rights with respect to the goods; and
all proceeds of the foregoing.
(b) "Obligations" means all amounts of any nature whatsoever, direct or
indirect, absolute or contingent, due or to become due, arising or
incurred heretofore or hereafter, arising under this or any other
agreement, including without limitation the Credit Agreement or any of
the Other Documents therein described, or by operation of law, now or
hereafter owing by you or by any of your subsidiaries or affiliates to
us or to any parent, subsidiary or affiliate of ours. Said amounts
include, but are not limited to, loans, debts and liabilities heretofore
or hereafter acquired by purchase or assignment from other present or
future clients of ours. Without limiting the foregoing, Obligations
shall include the amounts of all interest, commission, customer late
payment charges and bank related charges, costs, fees, expenses, taxes
and all Receivables charged or chargeable to your account hereunder,
under said Credit Agreement, any of the Other Documents, or under any
other agreement now or hereafter in effect between us.
(c) "Credit Risk" means the risk of loss resulting solely and
exclusively from the financial inability of your customer to pay at
maturity a Receivable purchased hereunder.
(d) "Credit Agreement" shall have the meaning set forth in the
introductory paragraph of this Agreement.
Any terms which are initially capitalized in this Agreement and which are
not defined herein, but which are defined in the Credit Agreement, shall
have the respective meanings set forth in the Credit Agreement, which
definitions shall be incorporated herein by reference and made a part
hereof.
11. PLACE OF PAYMENT; NEW YORK LAW AND COURT
(a) All Obligations shall be paid at our office in New York, New York.
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(b) This agreement shall be governed by and construed according to the
laws of the State of New York. All terms used herein, unless otherwise
defined herein, shall have the meanings given in the New York Uniform
Commercial Code.
(c) Each of us expressly submits and consents to the exclusive
jurisdiction of the Supreme Court of the State of New York, and the
United States District Court for the Southern District of New York, with
respect to any controversy arising out of or relating to this agreement
or any supplement hereto or to any transactions in connection therewith
and hereby waives personal service of the summons, complaint or other
process or papers to be issued therein and hereby agrees that service of
such summons, complaint, process or papers may be made by registered or
certified mail addressed to the other party at the address appearing
herein.
12. REPORTS; RECORDS; ASSURANCES; WAIVERS; REMEDIES; ETC.
(a) Upon request you shall periodically furnish us with statements
showing your financial condition and the results of your operations. We
may during normal business hours have access to, and inspect, audit, and
make extracts from, all of your records, files and books of account, and
we may charge your account with the reasonable costs, fees or expenses
incurred in connection therewith.
(b) You shall perform all acts requested by us to perfect and maintain
our security interest and other rights in the Collateral.
(c) Failure by us to exercise any right, remedy or option under this
agreement or delay by us in exercising the same will not operate as a
waiver; no waiver by us will be effective unless we confirm it in writing
and then only to the extent specifically stated.
(d) We may charge to your account, when incurred by us, the amount of
reasonable legal fees (including fees, expenses and costs payable or
allocable to attorneys retained or employed by us) and other costs, fees
and expenses incurred by us in negotiating or preparing this agreement
and any legal documentation required by us or requested by you in
connection with this agreement or any amendments or supplements thereof,
of in enforcing our rights hereunder or in connection with the
litigation of any controversy arising out of this agreement, or in
protecting, preserving or perfecting our interest in, any Collateral,
including without limitation all taxes assessed or payable with respect
to any Collateral, and the costs of all public record filings,
appraisals and searches relating to any Collateral. We may also charge
to your account our then standard price for furnishing to you or your
designees copies of any statements, records, files or other data
(collectively "Reports") requested by you or them other than Reports of
the kind furnished to you and our other clients on a regular, periodic
basis in the ordinary course of our business. We may file Financing
Statements under the Uniform Commercial Code without your signature or,
if we so elect, sign and file them as your agent.
(e) Our rights and remedies under this agreement will be cumulative and
not exclusive of any other right or remedy we may have hereunder or under
the Uniform Commercial Code or otherwise. Without limiting the
foregoing, if we exercise our rights as a secured party we may, at any
time or times, without demand, advertisement or notice, all of which you
hereby waive, sell the Collateral, or any part of it, at public or
private sale, for cash, upon credit, or otherwise, at our sole option
and discretion, and we may bid or become purchaser at any such sale,
free of any right of redemption which you hereby waive. After
application of all Collateral to your Obligations (in such order and
manner as we in our sole discretion shall determine), you shall remain
liable to us for any deficiency.
(f) We shall have no liability hereunder (i) for any losses or damages
(including indirect, special or consequential damages) resulting from
our refusal to assume, or delay in assuming, the Credit Risk, or any
malfunction, failure or interruption of communication facilities, or
labor difficulties, or other causes beyond our control; or (ii) for
indirect, special or consequential damages arising from accounting
errors with respect to your account with us except due to our willful
misconduct or our gross negligence. Our liability for any default by us
hereunder shall be limited to a refund to you of any commission paid by
you during the period starting on the occurrence of the default and
ending when it is cured or waived, or when this agreement is terminated,
whichever is earlier.
(g) This agreement cannot be changed or terminated orally and is for
the benefit of and binding upon the parties and their respective
successors and assigns. This agreement supersedes and replaces the
Factoring Agreement previously in place between us.
(h) This agreement shall not be effective unless signed by you below,
and signed by us at the place for our acceptance.
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(i) TO THE EXTENT LEGALLY PERMISSIBLE, BOTH YOU AND WE WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY LITIGATION RELATING TO TRANSACTIONS UNDER THIS
AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
Very truly yours,
BNY FINANCIAL CORPORATION
AGREED TO on this 28th day of February, 1995.
ACCLAIM ENTERTAINMENT, INC.
By: /s/_______________________
Anthony R. Williams
Title:Executive Vice President
ACCEPTED at New York, New York, as of the above date.
BNY FINANCIAL CORPORATION
By: /s/_______________________
Title: President
[SEAL]
1290 Avenue of the Americas
New York, New York 10104