UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 8, 2015
MAD CATZ INTERACTIVE, INC.
(Exact Name of Registrant as Specified in Charter)
Canada | 001-14944 | N/A | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
10680 Treena Street, Suite 500
San Diego, California 92131
(Address of Principal Executive Offices)
(858) 790-5008
(Registrants telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14.a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement
On September 8, 2015, Mad Catz Interactive, Inc. (the Company) and its subsidiaries Mad Catz Inc. (MCI) and 1328158 Ontario Inc. (MCC), entered into a First Amendment (the Amendment) to that certain Loan and Security Agreement (the Loan Agreement) between the Company, MCI, MCC, the Lenders party thereto and NewStar Business Credit LLC (NSBC), dated June 30, 2015. The Amendment, which is effective September 1, 2015, provides for the following:
| adjusts the Borrowing Base of the Loan Agreement, from September 1, 2015 through December 31, 2015, establishes an advance rate for Eligible Rock Band Accounts, as defined, at eighty-one percent (81%) representing an increase for Eligible Rock Band Accounts from the current advance rate for other Eligible Accounts of seventy-six percent (76%) (which represents the advance rate of eighty-five percent (85%) reduced by current dilution); |
| increases the Inventory Sublimit, as defined, from August 31, 2015 through November 6, 2015, from 2.3333 times to 5.55 times; and |
| provides for an additional one million dollars ($1,000,000.00) of availability from September 1, 2015 through September 25, 2015. |
This Amendment was entered into to provide additional working capital to facilitate the launch of the Rock Band 4 video game in early October. The Amendment contains other conditions, including payment of a twenty thousand dollar ($20,000) amendment fee to NSBC, representations and warranties, and provisions that the Company believes are usual and customary for credit arrangements similar to those contemplated by the Amendment.
The foregoing description of the material terms of the Amendment is qualified in its entirety by reference to the full text of such Amendment, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) | Exhibits |
10.1 | First Amendment to Loan and Security Agreement, dated September 8, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MAD CATZ INTERACTIVE, INC. | ||||||
Date: September 8, 2015 | By: | /s/ KAREN MCGINNIS | ||||
Name: | Karen McGinnis | |||||
Its: | Chief Financial Officer |
Exhibit 10.1
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this Amendment) executed as of September 8, 2015, and effective at the Effective Time, is by and among: (a) MAD CATZ, INC., a Delaware corporation (together with its successors and permitted assigns, the Borrower), (b) MAD CATZ INTERACTIVE INC., a Canadian corporation, and 1328158 ONTARIO INC., an Ontario corporation, each as a Guarantor and collectively with the Borrower, the Credit Parties (c) the undersigned lenders party hereto (collectively, the Lenders and each a Lender) and (d) NEWSTAR BUSINESS CREDIT, LLC, a Delaware limited liability company, as administrative agent for the Lenders (in such capacity, and including its successors and permitted assigns, the Administrative Agent).
W I T N E S S E T H:
WHEREAS, the Credit Parties, the Lenders and Administrative Agent entered into that certain Loan and Security Agreement dated as of June 30, 2015 (as heretofore amended, supplemented or otherwise modified, the Original Loan Agreement, and as amended hereby, the Loan Agreement), for the purposes and consideration therein expressed, pursuant to which the Lenders became obligated to make Loans to the Borrowers as therein provided; and
WHEREAS, the Credit Parties, the Lenders and the Administrative Agent desire to amend the Original Loan Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Original Loan Agreement, in consideration of the loans which may hereafter be made by the Lenders to the Borrowers, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
Definitions and References
Section 1.1 Terms Defined in the Original Loan Agreement. Unless the context otherwise requires or unless otherwise expressly defined herein, the terms defined in the Original Loan Agreement shall have the same meanings whenever used in this Amendment.
ARTICLE II
Amendments to Original Loan Agreement; Waiver
Section 2.1 New Definition. The following definition is hereby added to Section 1.1 of the Original Loan Agreement to read as follows:
Eligible Rock Band Accounts means Eligible Accounts owed by an Account Debtor organized and located in the United States that arise from invoices relating solely to the Rock Band 4 software, any bundled product sold with such software and stand-alone product designed specifically for such software.
Section 2.2 Amendments to Current Definitions.
(a) Section (a) of the definition of Borrowing Base is hereby amended to read as follows:
(a) the sum of (i) eighty-five percent (85%) (as reduced by the proviso at the end of this definition due to dilution) of the Net Amount of Eligible Accounts (except during the period from September 1, 2015 through December 31, 2015, Eligible Accounts shall not include Eligible Rock Band Accounts) plus (ii) the lesser of (1) eighty-five percent (85%) of the Net Amount of Eligible Inventory (2) sixty percent (60%) of the lower of cost or market value of Eligible Inventory or (3) the Inventory Sublimit; provided, that the aggregate amount of Borrowing Base availability under this clause (a)(ii) with respect to Eligible In-Transit Inventory shall not at any time exceed the In-Transit Limit plus (iii) for the period from September 1, 2015 through December 31, 2015, eighty-one percent (81%) of the Net Amount of Eligible Rock Band Accounts plus (iv) for the period from September 1, 2015 through September 25, 2015, One Million Dollars ($1,000,000.00), minus
(b) The definition of Inventory Sublimit is hereby amended to read as follows:
Inventory Sublimit means 2.3333 times the amount determined pursuant to clause (a)(i) of the definition of Borrowing Base, except that for the period beginning on August 31, 2015 and ending on November 6, 2015, such term shall mean 5.5 times the amount determined pursuant to clause (a)(i) of the definition of Borrowing Base.
ARTICLE III
Conditions of Effectiveness
Section 3.1 Effective Time. This Amendment is effective as of September 1, 2015 once the following conditions precedent have been satisfied in full (the Effective Time):
(a) Administrative Agent shall have received, at Administrative Agents office, a duly executed counterpart of this Amendment from each Credit Party;
(b) Administrative Agent shall have received, in immediately available funds, an amendment fee equal to $20,000; and
(c) No Default or Event of Default shall have occurred and be continuing.
ARTICLE IV
Representations and Warranties
Section 4.1 Representations and Warranties of Credit Parties. In order to induce Administrative Agent and the Lenders to enter into this Amendment, each Credit Party hereby represents and warrants to Administrative Agent and the Lenders that:
(a) The representations and warranties contained in Article VII of the Original Loan Agreement are true and correct in all material respects at and as of the Effective Time; provided, however, those representations and warranties containing a reference to a particular date shall continue to be qualified by reference to such date;
(b) It is duly authorized to execute and deliver this Amendment and is duly authorized to borrow and perform its obligations under the Loan Agreement and the other Loan Documents. It has duly taken all corporate action necessary to authorize the execution and delivery of this Amendment and to authorize the performance of the obligations of such Credit Party hereunder;
(c) The execution and delivery by it of this Amendment, the performance by it of its obligations hereunder and the consummation of the transactions contemplated hereby do not and will not conflict with, violate or constitute a breach or default under (i) any provision of Applicable Law applicable or binding upon it, except where such conflict, violation, breach or default reasonably would not be expected to result in a Material Adverse Effect, (ii) its organizational documents, (iii) any agreement or instrument to which it is a party or which is otherwise binding upon it, or (iv) any material judgment, license, order or permit applicable to or binding upon it;
(d) Except for those which have been duly obtained, no consent, approval, exemption, authorization or other action by, notice to, or filing with any Governmental Authority or third party is required in connection with the execution and delivery by such Credit Party of this Amendment or to consummate the transactions contemplated hereby; and
(e) When duly executed and delivered, this Amendment will constitute a legal, valid and binding obligation of each Credit Party, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to enforcement of creditors rights.
ARTICLE V
Miscellaneous
Section 5.1 Ratification of Agreement. The Original Loan Agreement as hereby amended is hereby ratified and confirmed in all respects. Any reference to the Loan Agreement in any Loan Document shall be deemed to refer to the Original Loan Agreement, as amended by this Amendment. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Administrative Agent or Lenders under the Loan Agreement or any other Loan Document nor constitute a waiver of any provision of the Loan Agreement or any other Loan Document.
Section 5.2 Survival of Agreements. All representations, warranties, covenants and agreements of the Credit Parties herein shall survive the execution and delivery of this Amendment and the performance hereof, and shall further survive until all of the Obligations are paid in full. All statements and agreements contained in any certificate or instrument delivered by any Credit Party hereunder or under the Loan Agreement to Administrative Agent shall be
deemed to constitute representations and warranties by, or agreements and covenants of, such Credit Party under this Amendment and under the Loan Agreement.
Section 5.3 Loan Document. This Amendment is a Loan Document, and all provisions in the Loan Agreement pertaining to Loan Documents apply hereto.
Section 5.4 Governing Law. THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.
Section 5.5 Counterparts; Fax. This Amendment may be executed in any number of counterparts and signature pages may be detached from multiple separate counterparts and attached to the same document. A telecopy or other electronic transmission of any such executed counterpart signature page shall be deemed valid as an original.
THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, this Amendment is executed as of the date first above written.
CREDIT PARTIES:
MAD CATZ, INC., as Borrower | ||
By: | /s/ Darren Richardson | |
Name: | Darren Richardson | |
Title: | President & CEO |
1328158 ONTARIO INC., as a Guarantor and a Credit Party | ||
By: | /s/ Darren Richardson | |
Name: | Darren Richardson | |
Title: | President & CEO |
MAD CATZ INTERACTIVE, INC. as a Guarantor and a Credit Party | ||
By: | /s/ Darren Richardson | |
Name: | Darren Richardson | |
Title: | President & CEO |
ADMINISTRATIVE AGENT, SWING LENDER AND LENDER:
NEWSTAR BUSINESS CREDIT, LLC | ||
By: | /s/ Greg Gentry | |
Name: | Greg Gentry | |
Title: | Senior Vice President |