Exhibit 10.4
CONSENT AND THIRTEENTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT
          THIS CONSENT AND THIRTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
(this “Amendment”) is entered into as of September 19 , 2005, by and among
Lenders, WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger
and administrative agent for the Lenders (“Agent”) and MIDWAY HOME ENTERTAINMENT
INC., a Delaware corporation (“Midway”), MIDWAY AMUSEMENT GAMES, LLC, a Delaware
limited liability company (“MAG”; Midway and MAG are referred to hereinafter
each individually as a “Borrower”, and individually and collectively, jointly
and severally, as the “Borrowers”), MIDWAY GAMES INC., a Delaware corporation
(“Parent”), MIDWAY GAMES WEST INC., a California corporation (“MGW”), MIDWAY
INTERACTIVE INC., a Delaware corporation (“MI”), MIDWAY SALES COMPANY, LLC, a
Delaware limited liability company (“MSC”), MIDWAY HOME STUDIOS INC., a Delaware
corporation (“MHS”), SURREAL SOFTWARE INC., a Washington corporation
(“Surreal”), MIDWAY STUDIOS – AUSTIN INC., a Texas corporation (“MSA”), MIDWAY
STUDIOS – LOS ANGELES INC., a California corporation (“MSLA”) (“MSD”; Parent,
MGW, MI, MSC, MHS, Surreal, MSA and MSLA, are referred to hereinafter each
individually as a “U.S. Credit Party” and individually and collectively, jointly
and severally, as the “U.S. Credit Parties”).
          WHEREAS, Borrowers, U.S. Credit Parties, Agent, and Lenders are
parties to that certain Loan and Security Agreement dated as of March 3, 2004
(as amended, modified or supplemented from time to time, the “Loan Agreement”);
          WHEREAS, Borrowers have advised Agent and Lenders that Parent desires
to issue $75,000,000 convertible senior notes (the “Note Issuance”) pursuant
that certain Offering Memorandum, dated September 13, 2005, and attached hereto
as Exhibit A (the “Offering Memorandum”) and that certain Indenture, dated
September 19, 2005 and attached hereto as Exhibit B (the “Indenture”);
          WHEREAS, Borrowers and U.S. Credit Parties desire for Agent and
Required Lenders to consent to Note Issuance as set forth herein; and
          WHEREAS, Borrowers, U.S. Credit Parties, Agent and Lenders have agreed
to amend the Loan Agreement in certain respects, subject to the terms and
conditions contained herein.
          NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:
          1. Defined Terms. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to such terms in the Loan
Agreement.
          2. Consent. Subject to the satisfaction of the conditions set forth in
Section 5 below, Agent and Required Lenders hereby consent to the Note Issuance
in

 

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accordance with the terms of the Offering Memorandum and the Indenture. This is
a limited consent and shall not be deemed to constitute a waiver of, or consent
to, any other future breach of the Loan Agreement (as amended by this
Amendment).
          3. Amendment to Loan Agreement. Subject to the satisfaction of the
conditions set forth in Section 5 hereof, the Loan Agreement is amended as
follows:
          (a) The following definition is added to Section 1.1 of the Loan
Agreement, in its appropriate alphabetical order:
     “Junior Notes” means those certain six percent (6.00%) convertible senior
notes in the principal amount of at $75,000,000, issued pursuant that certain
Offering Memorandum dated as of September 13, 2005 and governed by that certain
Indenture dated as of September 19, 2005 including the obligation to pay
additional interest on the notes under the registration rights agreement
described in the Offering Memorandum as in effect on September 19, 2005.
          (b) Section 7.1 of the Loan Agreement shall be amended by deleting the
word “and” at the end of clause (j) thereof, amending clause (k) thereof so that
it is now a reference to clause (l) thereof, and adding new clause (k) thereto,
as follows:
          (j) Indebtedness consisting of the Junior Notes; and
          (c) Section 7.7(b) of the Loan Agreement shall be amended by replacing
the reference to “or the Preferred Stock” with “, the Junior Notes or the
Preferred Stock”
          (d) Section 7.10 of the Loan Agreement shall be amended and restated
in its entirety as follows:
          7.10 Distributions
          Other than distributions or declaration and payment of dividends by UK
Company, German Company, Japan Company, Australia Companies or a Company to any
Company (other than Parent), make any distribution or declare or pay any
dividends (in cash or other property, other than common Stock) on, or purchase,
acquire, redeem, or retire any of UK Company’s, German Company’s, Japan
Company’s, Australia Companies or any Company’s Stock, of any class, whether now
or hereafter outstanding; provided that UK Company, German Company, Japan
Company, Australia Companies or any Company may make any distributions or
declaration and payment of dividends to Parent to allow Parent to
(a) immediately pay dividends on its Initial Preferred Stock at the stated rate
applicable thereto in an amount not to exceed $525,000 per calendar quarter and
on its Additional Preferred Stock at the stated rate applicable thereto in an
amount not to exceed $190,000 in any calendar quarter, in each case so long as
after giving effect thereto no Event of Default exists, (b) immediately redeem
the Preferred Stock on a Redemption Date on or after March 15, 2006 pursuant to
the terms thereof so long as prior to any such redemption, Parent exercises its
option to convert the maximum amount of such Preferred Stock to common Stock
(except that Parent shall not be obligated to

 

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exercise such right of conversion and may use such amount of cash as Parent
elects in connection with such redemption so long as after giving effect to such
redemption the sum of Qualified Cash plus Excess Availability exceeds
$25,000,000), (c) immediately make regularly scheduled payments of interest on
the Junior Notes, in each case so long as no Event of Default exists,
(d) immediately pay when due taxes owing by Parent to any Governmental Authority
and (e) maintain cash not to exceed $7,500,000 at any time for the purpose of
paying ordinary course expenses (which expenses shall not include the
obligations set forth in clauses (a), (b) and (c) of this proviso).
          (e) A new Section 8.15 is hereby added to the Loan Agreement to read
as follows:
          8.15 Delisting. If the common Stock of the Parent or any Stock into
which the Junior Notes are convertible is neither listed for trading on a U.S.
national securities exchange nor quoted on the Nasdaq National Market.
          4. Ratification. This Amendment, subject to satisfaction of the
conditions provided below, shall constitute an amendment to the Loan Agreement
and all of the Loan Documents as appropriate to express the agreements contained
herein. In all other respects, the Loan Agreement and the Loan Documents shall
remain unchanged and in full force and effect in accordance with their original
terms.
          5. Conditions to Effectiveness. This Amendment shall become effective
as of the date hereof and upon the satisfaction of the following conditions
precedent:
          (a) Each party hereto shall have executed and delivered this Amendment
to Agent;
          (b) Companies shall have delivered to Agent such documents, agreements
and instruments as may be requested or required by Agent in connection with this
Amendment, each in form and content acceptable to Agent, including, without
limitation, a certified copy of each of the Offering Memorandum and Indenture;
          (c) No Default or Event of Default shall have occurred and be
continuing on the date hereof or as of the date of the effectiveness of this
Amendment; and
          (d) All proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be satisfactory to Agent and its legal counsel.

 

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          6. Additional Affirmative Covenant. On or before October 31, 2005
Parent shall transfer all funds except for $7,500,000 in the Investment Account
to a Securities Account at Wells Fargo Brokerage Services held by Midway.
          7. Miscellaneous.
          (a) Warranties and Absence of Defaults. In order to induce Agent to
enter into this Amendment, each Company hereby warrants to Agent, as of the date
hereof, that the representations and warranties of Companies contained in the
Loan Agreement are true and correct as of the date hereof as if made on the date
hereof (other than those which, by their terms, specifically are made as of
certain dates prior to the date hereof).
          (b) Expenses. Companies, jointly and severally, agree to pay on demand
all costs and expenses of Agent (including the reasonable fees and expenses of
outside counsel for Agent) in connection with the preparation, negotiation,
execution, delivery and administration of this Amendment and all other
instruments or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith. All obligations provided herein shall
survive any termination of this Amendment and the Loan Agreement as amended
hereby.
          (c) Governing Law. This Amendment shall be a contract made under and
governed by the internal laws of the State of Illinois.
          (d) Counterparts. This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each such counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Amendment.
          8. Release.
          (a) In consideration of the agreements of Agent and Lenders contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each Company, on behalf of itself
and its successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably releases, remises and forever discharges Agent
and Lenders, and their successors and assigns, and their present and former
shareholders, affiliates, subsidiaries, divisions, predecessors, directors,
officers, attorneys, employees, agents and other representatives (Agent, each
Lender and all such other Persons being hereinafter referred to collectively as
the “Releasees” and individually as a “Releasee”), of and from all demands,
actions, causes of action, suits, covenants, contracts, controversies,
agreements, promises, sums of money, accounts, bills, reckonings, damages and
any and all other claims, counterclaims, defenses, rights of set-off, demands
and liabilities whatsoever (individually, a “Claim” and collectively, “Claims”)
of every name and nature, known or unknown, suspected or unsuspected, both at
law and in equity, which such Company or any of its successors, assigns, or
other legal representatives may now or hereafter own, hold, have or claim to
have against the Releasees or any of them for, upon, or by reason of any
circumstance, action, cause or thing whatsoever which arises at any time on or
prior to the day and date of this

 

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Amendment, including, without limitation, for or on account of, or in relation
to, or in any way in connection with any of the Loan Agreement, or any of the
other Loan Documents or transactions thereunder or related thereto.
          (b) Each Company understands, acknowledges and agrees that the release
set forth above may be pleaded as a full and complete defense and may be used as
a basis for an injunction against any action, suit or other proceeding which may
be instituted, prosecuted or attempted in breach of the provisions of such
release.
          (c) Each Company agrees that no fact, event, circumstance, evidence or
transaction which could now be asserted or which may hereafter be discovered
shall affect in any manner the final, absolute and unconditional nature of the
release set forth above.

 

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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized and delivered as
of the date first above written.

              MIDWAY HOME ENTERTAINMENT INC.,     a Delaware corporation
 
            MIDWAY AMUSEMENT GAMES, LLC,     a Delaware limited liability
company
 
            MIDWAY GAMES INC.,     a Delaware corporation
 
            MIDWAY GAMES WEST INC.,     a California corporation
 
            MIDWAY INTERACTIVE INC.,     a Delaware corporation
 
            MIDWAY SALES COMPANY, LLC,     a Delaware limited liability company
 
            MIDWAY HOME STUDIOS INC.,     a Delaware corporation
 
            SURREAL SOFTWARE INC.,     a Washington corporation
 
            MIDWAY STUDIOS — AUSTIN INC.,     a Texas corporation
 
            MIDWAY STUDIOS — LOS ANGELES INC.,     a California corporation
 
       
 
  Each By   /s/ Thomas E. Powell
 
       
 
  Title   EVP - Finance CFO & Treasurer
 
       

Signature page to Consent and Thirteenth Amendment to Loan and Security
Agreement

 

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              WELLS FARGO FOOTHILL, INC.,     a California corporation, as
Agent, as UK Security     Trustee and as a Lender
 
       
 
  By   /s/ John Leonard
 
       
 
  Title   Vice President
 
       

Signature page to Consent and Thirteenth Amendment to Loan and Security
Agreement

 

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Exhibit A
Signature page to Consent and Thirteenth Amendment to Loan and Security
Agreement

 

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Exhibit B
Signature page to Consent and Thirteenth Amendment to Loan and Security
Agreement