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Exhibit 10.1
As of June 30, 1997
GT Interactive Software Corp.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement (the
"Credit Agreement") dated as of January 21, 1997 among GT Interactive Software
Corp., Republic National Bank of New York, individually and as agent, and The
First National Bank of Chicago as successor in interest to NBD Bank. Unless
otherwise defined herein, capitalized terms used herein shall have the
respective meanings ascribed to them in the Credit Agreement.
1. By signing this Letter Agreement, European American Bank and
First Union National Bank (collectively, the "New Banks") shall become
signatories to the Credit Agreement and a "Bank" for all purposes of
the Credit Agreement as of the First Amendment Effective Date (as
defined in Section 6 hereof) with (a) the Commitment set forth opposite
the name of such New Bank on the signature pages hereof, as such amount
may be reduced from time to time pursuant to Section 2.07 of the Credit
Agreement, and (b) the address, facsimile number or telex number set
forth on the signature pages hereof.
2. The parties hereto agree that the Credit Agreement is
modified by:
(a) inserting immediately after the definition of "Borrowing"
contained in Section 1.01 of the Credit Agreement a definition
of "Borrowing Base" reading in its entirety as follows:
"'BORROWING BASE' means the lesser of (a) the aggregate amount
of Commitments of the Banks or (b) 50% of Consolidated
Accounts Receivable.";
(b) inserting immediately after the definition of "Commitments"
contained in Section 1.01 of the Credit Agreement a definition
of "Consolidated Accounts
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Receivable" reading in its entirety as follows:
"'CONSOLIDATED ACCOUNTS RECEIVABLE' means at any date the
total accounts receivable of the Borrower and its Consolidated
Subsidiaries for goods sold in the ordinary course of their
respective businesses to third parties that are not
Subsidiaries of the Borrower, determined on a consolidated
basis as of such date.";
(c) restating the definition of "Financing Documents" contained in
Section 1.01 of the Credit Agreement to read in its entirety
as follows:
"'FINANCING DOCUMENTS' means this Agreement, the Notes and the
Security Agreements.";
(d) inserting immediately after the definition of "Sale-Leaseback
Transaction" contained in Section 1.01 of the Credit Agreement
a definition of "Security Agreements" reading as follows:
"'SECURITY AGREEMENTS' means, collectively, the Security
Agreement between each of the Borrower, Humongous
Entertainment, Inc., WizardWorks Group, Inc., Formgen Inc., GT
Interactive Software Germany GmbH, Renegade Interactive France
S.A., G.T. Interactive Software (Europe) Limited and One Stop
Direct Limited, and the Agent, respectively, for the benefit
of the Banks, as at any time amended, pursuant to which the
Borrower and each such Subsidiary granted the Agent a security
interest in its accounts receivables and related collateral as
described therein to secure the obligations of the Borrower
hereunder and under the Notes as described therein.";
(e) inserting immediately before the period at the end of the
first sentence of Section 2.01 of the Credit Agreement a
proviso reading in its entirety as follows:
"; and the aggregate principal amount of the Loans plus the
Standby Letter of Credit Liabilities at any time outstanding
shall not exceed the Borrowing Base.";
(f) adding new subsections (c) and (d) to Section 2.10 of the
Credit Agreement reading in their entireties as follows:
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"(c) If at any time the aggregate principal amount of all
Loans and Standby Letter of Credit Liabilities outstanding
hereunder shall exceed the Borrowing Base, the Borrower shall
promptly prepay the portion of the aggregate principal amount
of the Loans then outstanding, if any, equal to such excess at
such time.";
(g) deleting the reference to "$15,000,000" in Section 2.13(b)
of the Credit Agreement and by substituting "$35,000,000 (of which Standby
Letter of Credit Liabilities shall not exceed $10,000,000)" therefor and by
inserting immediately before the period at the end of such sentence the
following:
"provided further that after each Letter of Credit is issued,
the aggregate amount of the Standby Letters of Credit
Liabilities plus the aggregate outstanding amount of all Loans
shall not exceed the Borrowing Base";
(h) inserting immediately after reference to "(c)" in Section
3.02(c) of the Credit Agreement the following:
"The Agent shall have received the most recent Receivables
Statement deliverable pursuant to Section 5.01(l) and other
information necessary to permit the computation of the
Borrowing Base and";
(i) inserting before the semicolon in Section 3.02(c)
of the Credit Agreement the following:
"and the sum of the aggregate outstanding principal amount of
the Loans and the aggregate principal amount of the Standby
Letter of Credit Liabilities shall not exceed the Borrowing
Base";
(j) deleting reference to "and" at the end of Section 5.01(j)
of the Credit Agreement, deleting the reference to "." at the end of Section
5.01(k) of the Credit Agreement and by substituting "; and" therefor and by
adding a new clause (l) to Section 5.01 reading in its entirety as follows:
"(l) Before the 25th day of each month Borrower shall deliver
to the Agent a statement (a 'Receivables Statement'), in the
form attached hereto as Exhibit C, certified by a duly
authorized officer of the Borrower and setting forth, on a
consolidating basis,
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the (i) Consolidated Accounts Receivable of the Borrower and
(ii) the sales made in the prior month of the Borrower and
each Consolidated Subsidiary, as at and as of the last
Domestic Business Day of the prior month, which Receivables
Statement shall set forth the age of each account receivable
and the respective owner thereof.";
(k) deleting the reference to "and" at the end of Section 5.09
(l) of the Credit Agreement, by deleting reference to "1,000,000" contained in
Section 5.09(m) of the Credit Agreement and by substituting "$2,000,000"
therefor, by deleting the "." at the end of Section 5.09(m) of the Credit
Agreement and by substituting "; and" therefor and by adding a new subsection
(n) to Section 5.09 of the Credit Agreement reading in its entirety as follows:
"(n) Liens under the Security Agreements in favor of the Agent
for the benefit of the Banks.";
(l) restating Sections 5.11 and 5.12 of the Credit Agreement
to read in their entireties as follows:
"SECTION 5.11. Minimum Tangible Net Worth. The Borrower will
not permit Consolidated Tangible Net Worth as at December 31,
1996 to be less than $106,500,000, as at June 30, 1997 to be
less than $106,500,000 plus 25% of Consolidated Net Income for
the six-month period ending on June 30, 1997, as at December
31, 1997 to be less than $106,500,000 plus 25% of Consolidated
Net Income for the 12-month period ending on December 31,
1997, as at June 30, 1998 to be less than such December 31,
1997 required minimum amount plus 25% of Consolidated Net
Income for the six-month period ending on June 30, 1998 and as
at December 31, 1998 such December 31, 1997 required minimum
amount plus 25% of the Consolidated Net Income for the
12-month period ending on December 31, 1998.
"SECTION 5.12. Debt: Tangible Net Worth. The Borrower will not
permit the ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth at the end of (a) any fiscal
quarter in 1997 (other than its first fiscal quarter) to
exceed 2.3 to 1.0 and (b) any fiscal quarter in 1998 to
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exceed 2.0 to 1.0.";
(m) restating Sections 5.14 and 5.15 of the Credit Agreement
to read in their entireties as follows:
"SECTION 5.14. Working Capital. The Borrower will not permit
Consolidated Working Capital (which term for the purpose of
this Section 5.14 shall be computed on a basis which excludes
the current portion of all outstanding Loans from Consolidated
Current Liabilities) at June 30, 1997 to be less than
$5,000,000, at September 30, 1997 to be less than $25,000,000,
at December 31, 1997 to be less than $50,000,000, at March 31,
1998 to be less than $15,000,000, at June 30, 1998 to be less
than $10,000,000, at September 30, 1998 to be less than
$25,000,000, and at December 31, 1998 to be less than
$50,000,000.
"SECTION 5.15. Current Ratio. The Borrower will not permit the
ratio of Consolidated Current Assets to Consolidated Current
Liabilities (which term, Consolidated Current Liabilities, for
the purposes of the computation of such ratio in clause (a)
below, shall exclude the current portion of all outstanding
Loans and which term, for the purposes of the computation of
such ratio in clause (b) below, shall include the amount of
all outstanding Loans and Standby Letter of Credit
Liabilities) (a) as at June 30, 1997 to be less than 1.0 to
1.0, as at September 30, 1997 and as at December 31, 1997 to
be less than 1.1 to 1.0, as at March 31, 1998 and June 30,
1998 to be less than 1.05 to 1.0, as at September 30, 1998 and
as at December 31, 1998 to be less than 1.1 to 1.0 and (b) as
at December 31, 1997 and as at December 31, 1998 to be less
than 1.0 to 1.0.";
(n) restating Section 5.17 of the Credit Agreement to read in
its entirety as follows:
"SECTION 5.17. Minimum Net Income. The Borrower will not
permit its Consolidated Net Income (which term for the
purposes of this Section shall be increased by the amount of
any deductions received by the Borrower and/or its
Subsidiaries which arise from the
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acquisition of research and development and all other
intangibles) for its fiscal years ending December 31, 1997 and
December 31, 1998 to be less than $25,000,000, and will not
permit its Consolidated Net Income for any two consecutive
quarters (whether or not in the same fiscal year) to be less
than $5,000,000.";
(o) inserting "except under the Security Agreements or"
immediately after the penultimate reference to "Affiliate" contained in Section
5.19 of the Credit Agreement;
(p) restating Sections 7.01 through 7.09 of the Credit
Agreement to read in their entireties as follows:
"SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers
under this Agreement, the Notes and the Security Agreements as
are delegated to the Agent by the terms hereof or thereof
together with all such powers as are reasonably incidental
thereto.
SECTION 7.02. Agent and Affiliates. RNB shall have the same
rights and powers under this Agreement as any other Bank and
may exercise or refrain from exercising the same as though it
were not the Agent, and RNB and its affiliates may accept
deposits from, lend money to, and generally engage in any kind
of business with the Borrower or any Subsidiary or affiliate
of the Borrower as if it were not the Agent.
SECTION 7.03. Action by Agent. The obligations of the Agent
hereunder and under the Security Agreements are only those
expressly set forth herein or therein. Without limiting the
generality of the foregoing, the Agent shall not be required
to take any action with respect to any Default hereunder,
except as expressly provided in Article 6, or with respect to
any Event of Default under any of the Security Agreements.
SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for the Borrower),
independent public accountants and other experts selected
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by it and shall not be liable for any action taken or omitted
to be taken by it hereunder or under the Security Agreements
in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its affiliates nor any of their respective directors,
officers, agents or employees shall be liable for any action
taken or not taken by it as Agent in connection herewith or
the Security Agreements (i) with the consent or at the request
of the Required Banks or (ii) in the absence of its own gross
negligence or willful misconduct. Neither the Agent nor any of
its affiliates nor any of their respective directors,
officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with
this Agreement or the Security Agreements or any borrowing
hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Borrower hereunder or of the
Borrower or any Subsidiary under the Security Agreement to
which it is a party; (iii) the satisfaction of any condition
specified in Article 3, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes, the Security
Agreements or any other instrument or writing furnished in
connection herewith or therewith. The Agent shall not incur
any liability hereunder or under the Security Agreements by
acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex,
facsimile transmission or similar writing) believed by it to
be genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its
affiliates and their respective directors, officers, agents
and employees (to the extent not reimbursed by the Borrower)
against any cost, expense (including counsel fees and
disbursements incurred by such indemnitees in
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any action; suit or proceeding between such indemnitees and
such indemnifying Bank or between such indemnitees and any
third party or otherwise), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross
negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with this Agreement or the
Security Agreements or any action taken or omitted by such
indemnitees hereunder or thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance
upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not
taking any action under this Agreement or the Security
Agreements.
SECTION 7.08. Successor Agent. The Agent may resign as agent
hereunder or under the Security Agreements at any time by
giving notice thereof to the Banks and the Borrower. Upon any
such resignation, the Required Banks shall have the right to
appoint a successor Agent reasonably acceptable to Borrower.
If no successor Agent shall have been so appointed by the
Required Banks, and shall have accepted such appointment,
within 30 days after the retiring Agent gives notice of
resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent reasonably acceptable to
Borrower, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of
at least $100,000,000. Upon the acceptance of its appointment
as Agent hereunder or under the Security Agreements by a
successor Agent, such successor Agent shall thereupon succeed
to and become vested with all the rights and
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duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder and
thereunder. After any retiring Agent's resignation hereunder
or under the Security Agreements as Agent, the provisions of
this Article shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall pay to the Agent
for its own account fees in the amounts and at the times
previously agreed upon between the Borrower and the Agent.";
(q) deleting "or" at the end of Section 9.05(iii) of the
Credit Agreement and by deleting the "." at the end of Section 9.05(iv) of the
Credit Agreement and by substituting the following therefor:
"or (v) release any security interest created under the
Security Agreements.";
(r) adding a new Section 9.13 to the Credit Agreement
reading in its entirety as follows:
"SECTION 9.13. Further Actions. Although the Agent may not
initially have a perfected security interest pursuant to the
Security Agreements in and to accounts receivable of any
Subsidiary of the Borrower organized in a jurisdiction outside
of the United States of America (a "Foreign Subsidiary"), upon
the request of the Agent (which request the Agent shall make
upon the written demand of the Required Banks), the Borrower
shall, and shall cause each of the Foreign Subsidiaries to, at
its sole cost and expense, make execute, endorse, acknowledge,
file or refile and/or deliver to the Agent from time to time
such lists, descriptions and designations of the collateral
covered by the Security Agreement to which such Foreign
Subsidiary is a party, vouchers, invoices, schedules,
confirmatory assignments, supplements, additional security
agreements, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take such further steps
relating to the collateral covered by such Security Agreement
and other
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property or rights covered by the security interest thereby
granted, which the Agent deems appropriate or advisable to
exercise and enforce its rights and remedies thereunder with
respect to any collateral subject thereto and to perfect,
preserve or protect the security interest in the collateral
created and granted by such Security Agreement, including such
opinion of counsel of such Foreign Subsidiary regarding such
matters as the Agent may request (at the sole cost and expense
of the Borrower)."; and
(s) deleting the reference to "$25,000,000" contained on the
signature page of the Credit Agreement opposite the name of RNB and substituting
"$22,500,000" therefor; and
(t) adding Exhibit C hereto as Exhibit C to the Credit
Agreement.
3. The Borrower shall pay to the Agent, for the account of the New Banks,
ratably in proportion to their Commitments, on the First Amendment
Effective Date, a non-refundable facility fee in an amount equal to 1/4
of 1% of the aggregate amount of the Commitments of the New Banks.
There will be no adjustment in respect of facility fees heretofore
paid.
(a) The New Banks shall participate in fees payable under Sections
2.06(a), (b) and (d) of the Credit Agreement from and after
the First Amendment Effective Date.
(b) The Borrower shall pay to the Agent on the First Amendment
Effective Date a completion fee in accordance with a letter
agreement between the Borrower and the Agent.
4. Except as modified hereby, the Credit Agreement remains unmodified and
in full force and effect.
5. In addition to its obligations under the Credit Agreement the Borrower
agrees to pay all reasonable out-of-pocket expenses of the Banks and
the Agent, including the reasonable fees and disbursements of Kronish,
Lieb, Weiner & Xxxxxxx, LLP, special counsel to the Banks and the
Agent, in connection with the preparation of this letter agreement, the
Security Agreements, the UCC Financing Statements and the filing
thereof and any additional legal fees of such firm or any foreign
counsel to the Agent in connection with matters referred to in Section
9.13 to the Credit Agreement, as herein amended.
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6. This letter agreement shall become effective (the "First Amendment
Effective Date") upon the execution and delivery to the Agent by the
Borrower of a copy of this letter agreement, countersigned by the
Borrower as indicated below, the Security Agreements, the Notes payable
to each New Bank dated the First Amendment Effective Date and an
opinion of Messrs. Kramer, Levin, Naftalis & Xxxxxxx, counsel to the
Borrower and its Subsidiaries and local counsel satisfactory to the
Agent, dated the First Amendment Effective Date in form and substance
satisfactory to the Agent.
7. On the First Amendment Effective Date, (a) the Borrower shall be deemed
to have prepaid the Loans made by the Banks (other than the New Banks),
without any prepayment penalty or premium or cost under Section 2.11 of
the Credit Agreement, and the New Banks shall be deemed to have made
Loans, in such amount that after giving effect to such deemed
transactions the Loans by the Banks shall be proportionate to their
Commitments and (b) the Banks (other than the New Banks) shall be
deemed, without further action by any party hereto, to have sold to the
New Banks, and the New Banks shall be deemed, without further action by
any party hereto, to have purchased from the Banks (other than the New
Banks), a participation in the Letters of Credit and the related Letter
of Credit Liabilities in such amount that after giving effect to such
deemed transactions the participations of the Banks in such Letters of
Credit and the related Letter of Credit Liabilities shall be
proportionate to their Commitments.
8. This letter agreement may be executed in two or more counterparts, each
of which shall constitute an original, but all of which, when taken
together, shall constitute but one agreement.
9. This letter agreement shall be governed in all respects by the laws of
the State of New York.
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REPUBLIC NATIONAL BANK OF NEW YORK
as a Lender and as Issuing Bank
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Senior Vice President
THE FIRST NATIONAL BANK OF CHICAGO
(as successor in interest to NBD BANK)
as Authorized Agent
By: /s/ Xxxxxx X. X'Xxxxxxx
-------------------------------------
Name: Xxxxxx X. X'Xxxxxxx
Title: Vice President
REPUBLIC NATIONAL BANK OF NEW YORK, as
Agent
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Senior Vice President
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$15,000,000 FIRST UNION NATIONAL BANK
By: /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
Domestic Lending Office:
00 Xxxx Xxxxxx
00xx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Middle Market Lending
Attn: Xxxxx Xxxx, Vice President
Facsimile: (000) 000-0000
EuroDollar Lending Office
London, England
$12,500,000 EUROPEAN AMERICAN BANK
By: /s/ Xxxxx X. XxXxxxxx
----------------------------------
Name: Xxxxx X. XxXxxxxx
Title: Vice President
Domestic Lending Office:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: NYC Corporate Division
Attn: Xxxxx X. XxXxxxxx, Vice
President
Facsimile: (000) 000-0000
ACCEPTED AND AGREED TO:
GT INTERACTIVE SOFTWARE CORP.
BY: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
