Exhibit 10.39
WAIVER AND SECOND AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
          THIS WAIVER AND SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (this “Amendment”) is entered into as of January 2, 2008, 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”; 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 Amended and Restated Loan and Security Agreement dated
as of June 29, 2007 (as amended, modified or supplemented from time to time, the
“Loan Agreement”);
          WHEREAS, an Event of Default may exist under Section 8.2(a) of the
Loan Agreement for Borrowers’ failure to comply with Section 7.18(a) of the Loan
Agreement for the time period of January 1 through January 2, 2008 (the
“Potential Event of Default”);
          WHEREAS, Borrowers have requested that Agent and Lenders waive the
Potential Event of Default and Agent and Lenders have agreed to waive the
Potential Event of Default (to the extent the Potential Event of Default exists)
subject to the terms and conditions contained 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. Waiver. Subject to the satisfaction of the conditions set forth in
Section 5 hereof and in reliance upon the representations and warranties set
forth in this

 

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Amendment, if and to the extent the Potential Event of Default exists, Agent and
Lenders hereby waive the Potential Event of Default. Agent’s and Lenders’ waiver
of the Potential Event of Default shall not be deemed to be a waiver of any
other existing or hereafter arising Events of Default or any other deviation
from the express terms of the Loan Agreement including without limitation any
further breach of Section 7.18(a).
          3. Amendments to Loan Agreement. Subject to the satisfaction of the
conditions set forth in Section 5 hereof, Section 7.18(a) of the Loan Agreement
is hereby amended and restated in its entirety as follows:
(a) Fail to maintain (i) at all times from the Closing Date through July 31,
2007, Qualified Cash plus Excess Availability of at least $20,000,000, (ii) at
all times from August 1, 2007, through September 30, 2007, Qualified Cash plus
Excess Availability of at least $5,000,000, (iii) at all times from October 1,
2007 through February 29, 2008, Liquidity of at least $10,000,000 and (iv) at
all times thereafter, Qualified Cash plus Excess Availability of at least
$20,000,000.
          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 (as amended prior to the date hereof).
          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;
          (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.
          6. 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

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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.
          7. 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 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.

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          (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 Executive Vice President – Finance, Treasurer
 
       and Chief Financial Officer

Signature page to Waiver and Second Amendment to Amended and Restated 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 SVP

Signature page to Waiver and Second Amendment to Amended and Restated Loan and
Security Agreement