AKLM Acclaim Entertainment (MM)

Acclaim Entertainment, Inc. Raises $15.0 Million Through Sale of 9% Senior Subordinated Convertible Notes Company May Raise Up to an Additional $10.0 Million Dependent upon Trading Price of Stock GLEN COVE, N.Y., Feb. 17 /PRNewswire-FirstCall/ -- Acclaim Entertainment, Inc. , a global video entertainment software developer and publisher, today announced that it had raised gross proceeds of $15.0 million in connection with the private placement of its 9% Senior Subordinated Convertible Notes (the "9% Notes"), due in 2007, to an investor. The 9% Notes are convertible into shares of the Company's common stock, at a conversion price equal to $0.65 (the "Initial Conversion Price"). Additionally, the investor shall receive warrants to purchase a number of shares of Acclaim's common stock equal to 20% of the number of shares underlying the 9% Notes, with an exercise price equal to the Initial Conversion Price. The warrants will be exercisable for five years from February 17, 2004 (the "Initial Closing Date"). Interest due on the 9% Notes is payable semi-annually commencing October 1, 2004. The 9% Notes will be collateralized by a second mortgage on Acclaim's headquarters building in Glen Cove, New York, and other assets, subject to the Company's primary lender's (GMAC Commercial Credit LLP) consent and an inter-creditor agreement to be entered into post-closing. The 9% Notes contain certain restrictive covenants, including restrictions on Acclaim's incurrence of additional indebtedness. The securities offered have not been registered under the Securities Act of 1933, as amended or state securities laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission ("SEC") under the Securities Act of 1933, or an applicable exception there from. Acclaim has agreed to file a registration statement for the Notes and register the shares of its common stock underlying the 9% Notes and the warrants within 45 days following the Initial Closing Date. Acclaim has a first option, for a nine month period following the Initial Closing Date (the "First Option Period"), to require the investor to purchase $5.0 million of additional 9% Notes (the "First Additional Notes") at the Initial Conversion Price, if during that period the closing bid price of its common stock exceeds 125% of the Initial Conversion Price for twenty consecutive trading days, the registration statement covering the shares underlying the 9% Notes is effective and its common stock continues to be listed on a qualified securities exchange. The investor likewise has the option, during the First Option Period, to purchase the First Additional Notes from the Company at the Initial Conversion Price. Acclaim has a second option, for a six month period commencing one year following the Initial Closing Date (the "Second Option Period"), to purchase $5.0 million of additional 9% Notes (the "Second Additional Notes") at the Initial Conversion Price, if during the three month period commencing one year from the Initial Closing Date, the closing bid price of its common stock exceeds 200% of the Initial Conversion Price for twenty consecutive trading days or, if during the three month period commencing one year and three monthsfrom the Initial Closing Date, the closing bid price of its common stock exceeds 150% of the Initial Conversion Price for twenty consecutive trading days. The investor likewise has the option, during the Second Option Period, to purchase the Second Additional Notes from the Company at the Initial Conversion Price. In connection with any purchase of First Additional Notes or Second Additional Notes, the investor would receive additional warrants to purchase a number of shares of Acclaim's common stock equal to 20% of the number of shares underlying those additional notes, with an exercise price equal to the Initial Conversion Price. About Acclaim Entertainment Based in Glen Cove, N.Y., Acclaim Entertainment, Inc., is a worldwide developer, publisher and mass marketer of software for use with interactive entertainment game consoles including those manufactured by Nintendo, Sony Computer Entertainment and Microsoft Corporation as well as personal computer hardware systems. Acclaim owns and operates five studios located in the United States and the United Kingdom, and publishes and distributes its software through its subsidiaries in North America, the United Kingdom, Australia, Germany, France and Spain. The Company uses regional distributors worldwide. Acclaim also distributes entertainment software for other publishers worldwide, publishes software gaming strategy guides and issues "special edition" comic magazines periodically. Acclaim's corporate headquarters are in Glen Cove, New York and Acclaim's common stock is publicly traded on NASDAQ.SC under the symbol AKLM. For more information please visit our website at http://www.acclaim.com/. The statements contained in this release which are not historical facts are "forward-looking statements." Acclaim cautions readers of this press release that a number of important factors could cause Acclaim's actual future results to differ materially from those expressed in any such forward-looking statements. These important factors, including, without limitation, the financial strength of the interactive entertainment industry, dependence on new product introductions and the ability to maintain the scheduling of such introductions, technological changes, dependence on major platform manufacturers and other factors that could affect Acclaim, are described in Acclaim's Annual Report on Form 10-K for the fiscal year ended March 31, 2003, and Acclaim's subsequent Quarterly Reports on Form 10-Q, all of which were filed with the United StatesSecurities and Exchange Commission. Readers of this press release are referred to such filings. Financial: Media: Gerard F. Agoglia Alan B. Lewis Acclaim Entertainment Acclaim Entertainment (516) 656-5000 (516) 656-5000 DATASOURCE: Acclaim Entertainment, Inc. CONTACT: Financial: Gerard F. Agoglia, , Media: Alan B. Lewis, , both of Acclaim Entertainment, +1-516-656-5000 Web site: http://www.acclaim.com/

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