Exhibit 10.21

SUBORDINATION AND INTERCREDITOR AGREEMENT

This Subordination and Intercreditor Agreement (this “Agreement”) dated as of
June 30, 2015, among NEWSTAR BUSINESS CREDIT, LLC, as administrative and
collateral agent for Lenders (as defined below) (in such capacity, “Agent”),
FAUNUS GROUP INTERNATIONAL, INC., a Delaware corporation (as further defined
below “Foreign Lender”), MAD CATZ, INC., a Delaware corporation (together with
its successors and assigns, “MCI”), 1328158 ONTARIO INC., a Canadian corporation
(together with its successors and assigns, “MCC”), MAD CATZ INTERACTIVE, INC., a
Canada corporation (together with its successors and assigns, “Parent”), and MAD
CATZ INTERACTIVE ASIA LTD., organized under the laws of Hong Kong (together with
its successors and assigns, “Mad Catz Asia”; MCI, MCC, and Mad Catz Asia called
“Company”).

BACKGROUND

As an inducement for Lenders and Agent to consent to the extension of a secured
credit facility to Mad Catz Europe Ltd. by Foreign Lender and the issuance of
the Subordinated Limited Guaranty by the Company, Foreign Lender has agreed to
enter into this Agreement to provide for the subordination of (i) the “Guaranty
Indebtedness” to the “NewStar Indebtedness” and (ii) the “Liens” in the assets
of Company granted to Foreign Lender to the “Liens” in such assets of Company
granted to Agent for its benefit and for the ratable benefit of Lenders.

AGREEMENTS

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:

1. Definitions.

1.1 General Terms. For purposes of this Agreement, the following terms shall
have the following meanings:

“Agent” shall have the meaning set forth in the introductory paragraph of this
Agreement.

“Collateral” shall mean all of the real property, personal property and
interests in real property or personal property, tangible or intangible, now
owned or hereafter acquired by Company (including, without limitation, all
Junior Collateral) in or upon which either (a) Agent for its benefit and for the
ratable benefit of Lenders or (b) Foreign Lender, at any time has a Lien, and
including, without limitation, all proceeds and products of such property and
interests in property. The Collateral does not include any Foreign Collateral.

“Credit Agreement” shall mean the Loan and Security Agreement dated as of
June 30, 2015, among Company, Lenders and Agent, as the same may be amended,
supplemented, modified or restated from time to time.

 

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“Creditor Agreements” shall mean, collectively, the NewStar Lending Agreements
and the Foreign Lending Agreements.

“Creditors” shall mean, collectively, Agent and Foreign Lender and their
respective successors and assigns.

“Distribution” shall mean any payment, whether in cash, in kind, securities or
any other property, or security for any such Distribution.

“Documents” shall have the meaning given to the term “Loan Documents” in the
Credit Agreement.

“Event” shall have the meaning set forth in Section 2.2(c) hereof.

“Foreign Collateral” shall mean (a) all of the real property, personal property
and interests in real property or personal property, tangible or intangible, now
owned or hereafter acquired by Mad Catz Europe Ltd. in or upon which Foreign
Lender at any time has a Lien (the “Mad Catz UK Collateral”), and including,
without limitation, all proceeds and products of such property and interests in
property and (b) deposit account numbers 7775013522 and 775013530 of Mad Catz,
Inc. maintained at Wells Fargo Bank, National Association, and all proceeds of
Mad Catz UK Collateral on deposit in or payable or withdrawable from such
deposit accounts.

“Foreign Lending Agreements” shall mean, collectively, each Subordinated Limited
Guaranty and all promissory notes, agreements, documents and instruments now or
at any time hereafter executed and/or delivered by Company with or in favor of
Foreign Lender in connection therewith or related thereto, as all of the
foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.

“Guaranty Indebtedness” shall mean all principal, interest and other amounts
payable or chargeable by Company in connection with the Subordinated Limited
Guaranty or any other credit or collateral support (whether primary, secondary,
direct, indirect or contingent) extended by the Company for the benefit of Mad
Catz Europe Ltd. and in favor of Foreign Lender.

“Holder of Guaranty Indebtedness” or “Foreign Lender” shall mean Faunus Group
International, Inc., a Delaware corporation, and any other Person(s) at any time
or in any manner acquiring any right or interest in any of the Guaranty
Indebtedness, and any successor and assigns of such Person(s).

“Junior Collateral” shall mean all personal property or interests in personal
property, tangible or intangible, now owned or hereafter acquired by Company in
or upon which Foreign Lender at any time has a Lien, and including, without
limitation, all proceeds and products of such property.

“Lenders” shall mean each lender from time to time a party to the Credit
Agreement in such capacity.

 

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“Lien” shall mean any pledge, mortgage, deed of trust, hypothecation,
assignment, deposit arrangement, security interest, encumbrance (including, but
not limited to, easements, rights of way and the like), lien (statutory or
other), security agreement or transfer intended as security including, without
limitation, any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease or any financing lease having
substantially the same economic effect as any of the foregoing.

“NewStar Indebtedness” shall mean all “Obligations” (as defined in the Credit
Agreement) of any kind owed by Company to Lenders and/or Agent from time to time
under or pursuant to any of the NewStar Lending Agreements including, without
limitation, all principal, interest accruing thereon, charges, expenses, fees
and other sums (including all interest, charges, expenses, fees and other sums
accruing after commencement of any case, proceeding or other action relating to
the bankruptcy, insolvency or reorganization of Company) chargeable to Company
by Lenders and/or Agent, and reimbursement, indemnity or other obligations due
and payable to Lenders and/or Agent. NewStar Indebtedness shall continue to
constitute NewStar Indebtedness, notwithstanding the fact that such NewStar
Indebtedness or any claim for such NewStar Indebtedness is subordinated, avoided
or disallowed under the federal Bankruptcy Code or other applicable law. NewStar
Indebtedness shall also include any indebtedness of Company incurred in
connection with a refinancing of the NewStar Indebtedness under the NewStar
Lending Agreements if the terms and conditions of the agreements, documents and
instruments related to such refinancing, taken as a whole, are not materially
more onerous to the Holder of Guaranty Indebtedness than those set forth in the
NewStar Lending Agreements, as in effect on the date hereof, as reasonably
determined by Agent and Foreign Lender.

“NewStar Lending Agreements” shall mean collectively the Credit Agreement and
the other Documents, each as from time to time in effect.

“Person” shall mean an individual, a partnership, a corporation (including a
business trust), a joint stock company, a trust, an unincorporated association,
a joint venture, a limited liability company, a limited liability partnership or
other entity, or a government or any agency, instrumentality or political
subdivision thereof.

“Secured Lender Remedies” shall mean any action which results in the sale,
foreclosure, realization upon, or a liquidation of any of the Collateral
including, without limitation, the exercise or any of the rights or remedies of
a “secured party” under Article 9 of the UCC, such as, without limitation, the
notification of account debtors.

“Subordinated Limited Guaranty” shall mean that certain Subordinated Limited
Guaranty issued by the Company in favor of Foreign Lender and dated on or about
the date hereof.

“UCC” shall mean the Uniform Commercial Code, as from time to time in effect in
the State of New York.

1.2 Other Terms.  Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Credit Agreement.

 

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1.3 Certain Matters of Construction.  The terms “herein”, “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. Except as expressly set forth
herein, all references to any instruments or agreements, including, without
limitation, references to any of the Creditor Agreements shall include any and
all modifications or amendments thereto and any and all extensions or renewals
thereof.

2. Covenants.  Company and each Holder of Guaranty Indebtedness hereby covenant
that until the NewStar Indebtedness shall have been indefeasibly paid in full
and satisfied in cash and the Credit Agreement shall have been irrevocably
terminated, all in accordance with the terms of the Credit Agreement, each will
comply with such of the following provisions as are applicable to it:

2.1 Transfers.  Each Holder of Guaranty Indebtedness covenants that any
transferee from it of any Guaranty Indebtedness shall, prior to acquiring such
interest, execute and deliver a counterpart of this Agreement to each other
party hereto.

2.2 Subordination Provisions.  To induce Lenders and Agent to enter into the
Credit Agreement and to make loans and advances thereunder, notwithstanding any
other provision of the Guaranty Indebtedness to the contrary, the Guaranty
Indebtedness is and shall be expressly junior and subordinated in right of
payment and performance to all NewStar Indebtedness outstanding from time to
time. Specifically, but not by way of limitation:

(a) Payments. Company shall make no Distribution on the Guaranty Indebtedness
until such time as the NewStar Indebtedness shall have been indefeasibly paid in
full in cash and the Credit Agreement (and Lenders’ commitment to lend
thereunder) shall have been irrevocably terminated.

(b) Limitation on Acceleration. No Holder of Guaranty Indebtedness shall be
entitled to make demand upon Company for the payment of the Guaranty
Indebtedness, exercise any Secured Lender Remedies or commence any other action
or proceeding against Company to recover any amounts due or to become due with
respect to Guaranty Indebtedness prior to the indefeasible payment in full in
cash of all NewStar Indebtedness and the irrevocable termination (including
Lenders’ commitment to lend thereunder) of the Credit Agreement.

(c) Prior Payment of NewStar Indebtedness in Bankruptcy, etc. In the event of
any insolvency or bankruptcy proceedings relative to Company or its property, or
any receivership, liquidation, reorganization or other similar proceedings in
connection therewith, or, in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of Company or distribution or
marshalling of its assets or any composition with creditors of Company, whether
or not involving insolvency or bankruptcy, or if Company shall cease its
operations, call a meeting of its creditors or no longer do business as a going
concern (each individually or collectively, an “Event”), then all NewStar
Indebtedness shall be indefeasibly paid in full and satisfied in cash and the
Credit Agreement (and Lender’s commitment to lend

 

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thereunder) irrevocably terminated before any Distribution shall be made on
account of any Guaranty Indebtedness. Any such Distribution which would, but for
the provisions hereof, be payable or deliverable in respect of the Guaranty
Indebtedness, shall be paid or delivered directly to Agent or its
representatives, in the proportions in which they hold the same, until amounts
owing upon NewStar Indebtedness shall have been indefeasibly paid in full in
cash and the Credit Agreement (and Lenders’ commitment to lend thereunder)
irrevocably terminated.

(d) Acceleration.  In the event of any NewStar Indebtedness becoming due and
payable, whether by acceleration, maturity or otherwise, no Distribution shall
thereafter be made on account of the Guaranty Indebtedness until all NewStar
Indebtedness shall be indefeasibly paid in full in cash and the Credit Agreement
(and Lenders’ commitment to lend thereunder) shall have been irrevocably
terminated.

(e) Power of Attorney.  To enable Agent to assert and enforce its rights
hereunder in any proceeding referred to in Section 2.2(c) or upon the happening
of any Event, Agent or any person whom it may designate is hereby irrevocably
appointed attorney in fact for Foreign Lender with full power to act in the
place and stead of Foreign Lender including the right to make, present, file and
vote such proofs of claim against Company on account of all or any part of the
Guaranty Indebtedness as Agent may deem advisable and to receive and collect any
and all dividends or other payments made thereon and to apply the same on
account of the NewStar Indebtedness. Foreign Lender will execute and deliver to
Agent such instruments as may be required by Agent to enforce any and all
Guaranty Indebtedness, to effectuate the aforesaid power of attorney and to
effect collection of any and all dividends or other payments which may be made
at any time on account thereof, and Foreign Lender hereby irrevocably appoints
Agent as the lawful attorney and agent of Foreign Lender to execute financing
statements on behalf of Foreign Lender and hereby further authorizes Agent to
file such financing statements in any appropriate public office.

(f) Payments Held in Trust.  Should any Distribution or the proceeds thereof, in
respect of the Guaranty Indebtedness, be collected or received by Foreign Lender
or any Affiliate (as such term is defined in Rule 405 of Regulation C adopted by
the Securities and Exchange Commission pursuant to the Securities Act of 1933)
of Foreign Lender at a time when Foreign Lender is not permitted to receive any
such Distribution or proceeds thereof, then Foreign Lender will forthwith
deliver, or cause to be delivered, the same to Agent in precisely the form held
by Foreign Lender (except for any necessary endorsement) and until so delivered,
the same shall be held in trust by Foreign Lender, or any such Affiliate, as the
property of Agent and shall not be commingled with other property of the Foreign
Lender or any such Affiliate.

(g) Subrogation.  Subject to the prior indefeasible payment in full in cash of
the NewStar Indebtedness and the irrevocable termination of the Credit
Agreement, to the extent that Agent has received any Distribution on the NewStar
Indebtedness which, but for this Agreement, would have been applied to the
Guaranty Indebtedness, Foreign Lender shall be subrogated to the then or
thereafter rights of Agent including, without limitation, the right to receive
any Distribution made on the NewStar Indebtedness until the principal of,
interest on and other charges due under the Guaranty Indebtedness shall be paid
in full; and, for the purposes of such subrogation, no Distribution to Agent to
which Foreign Lender would be entitled except for the provisions of this
Agreement shall, as between Company, its creditors (other than Agent) and

 

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Foreign Lender, be deemed to be a Distribution by Company to or on account of
NewStar Indebtedness, it being understood that the provisions hereof are and are
intended solely for the purpose of defining the relative rights of Foreign
Lender on the one hand, and Agent on the other hand.

(h) Scope of Subordination. The provisions of this Agreement are solely to
define the relative rights of any Holder of Guaranty Indebtedness and Agent.
Nothing in this Agreement shall impair, as between Company and Foreign Lender
the unconditional and absolute obligation of Company to punctually pay the
principal, interest and any other amounts and obligations owing under the
Subordinated Limited Guaranty and Foreign Lending Agreements in accordance with
the terms thereof, subject to the rights of Agent under this Agreement.

(i) Mad Catz Europe Ltd. Nothing contained in this Agreement, or in any other
agreement or instrument binding upon any of the parties hereto, shall in any
manner limit or restrict the ability of Foreign Lender from receiving
Distributions from Mad Catz Europe Ltd.

3. Security.

3.1 Acknowledgment of Lien.  Foreign Lender hereby agrees and acknowledges that
the Agent, for its benefit and the benefit of Lenders, has been granted a Lien
upon the Collateral. Agent hereby agrees and acknowledges that Foreign Lender
has been granted a Lien upon the Junior Collateral. The Guaranty Indebtedness
shall at no time be secured by, and Foreign Lender shall not accept, a Lien upon
any Collateral or other assets of the Company other than the Junior Collateral,
unless approved by Agent. In the event a Lien is granted to Foreign Lender in
contravention of the preceding sentence, without limiting Agent’s other rights
and remedies with respect thereto, such Lien shall be subordinated as set forth
herein and subject to the other terms hereof.

3.2 Priority.  Notwithstanding the order or time of attachment, or the order,
time or manner of perfection, or the order or time of filing or recordation of
any document or instrument, or other method of perfecting a Lien in favor of
each Creditor in any Collateral and notwithstanding any conflicting terms or
conditions which may be contained in any of the Creditor Agreements, the Liens
upon the Collateral of Agent have and shall have priority over the Liens upon
the Collateral of Foreign Lender and such Liens of Foreign Lender are and shall
be, in all respects, subject and subordinate to the Liens of Agent therein to
the full extent of the NewStar Indebtedness outstanding from time to time.
Foreign Lender and its designee shall not take any action (enforcement or
otherwise) or initiate any proceeding or suit against the Company or to
foreclose or realize upon any Collateral until such time as the NewStar
Indebtedness shall have been indefeasibly paid in full in cash and the Credit
Agreement irrevocably terminated.

3.3 No Alteration of Priority.  The Lien priorities provided in Section 3.2
hereof shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement or refinancing of any
NewStar Indebtedness or the Guaranty

 

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Indebtedness, nor by any action or inaction which either Creditor or Lenders may
take or fail to take in respect of the Collateral.

3.4 Perfection.  Each Creditor shall be solely responsible for perfecting and
maintaining the perfection of its Lien in and to each item constituting the
Collateral in which such Creditor has been granted a Lien. The foregoing
provisions of this Agreement are intended solely to govern the respective lien
priorities as between the Creditors and shall not impose on Agent any
obligations in respect of the disposition of proceeds of foreclosure on any
Collateral which would conflict with prior perfected claims therein in favor of
any other Person. Foreign Lender agrees that it will not contest the validity,
perfection, priority or enforceability of the Liens of Agent in the Collateral
and that as between Agent and Foreign Lender, the terms of this Agreement shall
govern even if part or all of the NewStar Indebtedness or the Liens of Agent
securing payment and performance thereof are avoided, disallowed, set aside or
otherwise invalidated in any judicial proceeding or otherwise.

3.5 Management of Collateral.  Agent shall have the exclusive right to manage,
perform and enforce the terms of the NewStar Lending Agreements with respect to
the Collateral and to exercise and enforce all privileges and rights thereunder
according to its discretion and exercise of its business judgment, including,
without limitation, the exclusive right to enforce or settle insurance claims,
take or retake control or possession of the Collateral and to hold, prepare for
sale, process, sell, lease, dispose of, or liquidate the Collateral. In
connection therewith, Foreign Lender waives any and all rights it may now or
hereafter possess to affect the method or challenge the appropriateness of any
action by Agent so long as Agent acts in accordance with applicable law
(including the UCC).

3.6 Sale of Collateral; Acquisition of Collateral from Mad Catz Europe
Ltd.  Notwithstanding anything to the contrary contained in any of the Creditor
Agreements, only Agent shall have the right to restrict or permit, or approve or
disapprove, the sale, transfer or other disposition of Collateral. Such Holder
of Guaranty Indebtedness agrees to and shall immediately release or otherwise
terminate all Liens on, rights to and interests in such Collateral and all such
Liens on, rights to and interests in such Collateral shall be deemed to be
automatically released and terminated on any such sale, transfer or other
disposition, and such Collateral shall be transferred free and clear of all
Liens in favor of such Holder of Guaranty Indebtedness including, without
limitation, in the event that such Collateral is sold or otherwise disposed of
either by Agent, its agents, or Company with the consent of Agent, and each
Holder of Guaranty Indebtedness will immediately deliver such release documents
as Agent may require in connection therewith. Additionally, each Holder of
Guaranty Indebtedness agrees to and shall immediately release or otherwise
terminate all Liens on, rights to and interests in any Collateral acquired by
the Company from Mad Catz Europe Ltd. and all such Liens on, rights to and
interests in such Collateral shall be deemed to be automatically released and
terminated at the time of acquisition (and, for the avoidance of doubt, the
Company, Mad Catz Europe Ltd., Agent and Foreign Lender each agree and
acknowledge, that acquisition occurs at the earlier of (i) the point of shipment
of such Collateral to the Company, (ii) possession of the Collateral by the
Company, or (iii) such Collateral is documented in the name of the Company under
any bills of lading, other documents of title or other shipping documents) and
such Collateral shall be deemed acquired by the Company free and clear of all
Liens in favor of such Holder of Guaranty Indebtedness, and each Holder of
Guaranty Indebtedness will immediately deliver such release

 

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documents as Agent may require in connection therewith. Each Holder of Guaranty
Indebtedness hereby irrevocably appoints Agent and any officer or duly
authorized person of Agent, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power of attorney in the place and
stead of such Holder of Guaranty Indebtedness and in the name of such Holder of
Guaranty Indebtedness or in Agent’s own name, from time to time, in Agent’s sole
discretion for the purposes of carrying out the terms of this Section 3.6, to
take any and all appropriate action and to execute and deliver any and all
documents and instruments as may be necessary or desirable to accomplish the
purposes of this Section 3.6, including without limitation, any financing
statements, endorsements, assignments, releases or other documents or
instruments of transfer (this appointment as power of attorney is coupled with
an interest and is irrevocable until the NewStar Indebtedness is indefeasibly
paid in full in cash and the NewStar Lending Agreements (and Lenders’ commitment
to lend thereunder) are irrevocably terminated). Foreign Lender shall not object
to or oppose (or support any other Person in objecting or opposing) any sale or
other disposition of all or any portion of the Collateral free and clear of
Liens or other claims of Foreign Lender under Section 363 of the Bankruptcy Code
or any other provision of the Bankruptcy Code or any other applicable law if
Agent has consented to such sale or other disposition.

3.7 Secured Lender Remedies.  In no event shall Foreign Lender exercise any
Secured Lender Remedies until such time as the NewStar Indebtedness shall have
been indefeasibly paid in full in cash and the NewStar Lending Agreements
irrevocably terminated; nor shall Foreign Lender (a) seek the appointment of a
receiver for the affairs or property of the Company or (b) initiate or prosecute
or join or encourage any other person or entity to initiate or prosecute any
claim, action or other proceeding or case involving the Company or any
Collateral (x) under any state or federal bankruptcy or insolvency laws or
(y) which otherwise (i) challenges the enforceability of Agent’s or any Lender’s
claim or opposes any action by Agent or any Lender to enforce any of their
rights or remedies relating to the NewStar Indebtedness, (ii) challenging the
enforceability, validity, priority or perfected status of any security interests
or liens on any assets, properties or capital stock from time to time securing,
or purported to secure, the NewStar Indebtedness or (iii) asserting any claims
which Company may hold with respect to Agent or any Lender, in each case, until
such time as the NewStar Indebtedness shall have been indefeasibly paid in full
in cash and the NewStar Lending Agreements shall have been irrevocably
terminated. In the event Foreign Lender shall receive any payment or
distribution of any kind representing proceeds of any Collateral as to which its
Lien in the Collateral is or is required to be subordinated to the Lien of Agent
before the Obligations shall have been indefeasibly paid in full in cash and the
NewStar Lending Agreements irrevocably terminated, such sums shall be held in
trust by Foreign Lender for the benefit and on account of Agent and such amounts
shall be paid to Agent for application to the then unpaid Obligations under the
NewStar Lending Agreements.

3.8 Section 9-611 Notice and Waiver of Marshaling.  Foreign Lender and Agent
acknowledge that this Agreement shall constitute notice of their respective
interests in the Collateral as provided by Section 9-611 of the UCC and each
hereby waive any right to compel any marshaling of any of the Collateral.

3.9 Mad Catz Europe Ltd.  Nothing contained in this Agreement, or in any other
agreement or instrument binding upon any of the parties hereto, shall in any
manner limit

 

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or restrict the ability of Foreign Lender from taking any action which results
in the sale, foreclosure, realization upon, or a liquidation of any of the
Foreign Collateral including, without limitation, the exercise or any of the
rights or remedies of a “secured party” under Article 9 of the UCC, such as,
without limitation, the notification of account debtors of Mad Catz Europe Ltd.;
provided, that in the event any account debtor of Mad Catz Europe Ltd. is also
an account debtor of the Company, Foreign Lender shall only discuss the affairs
and Receivables of Mad Catz Europe Ltd. and not the affairs or any Receivables
of the Company.

4. Miscellaneous.

4.1 Provisions of Subordinated Limited Guaranty.    From and after the date
hereof, Company and Foreign Lender shall cause the Subordinated Limited Guaranty
to contain a provision to the following effect:

“Guarantor’s obligations, and all of FGI’s rights and remedies under this
Subordinated Limited Guaranty (including but not limited to the priority and
enforcement of any liens and security interests securing the payment and
enforcement thereof), are subject to the terms, provisions and limitations set
forth in the Subordination and Intercreditor Agreement dated June 30, 2015,
among NewStar Business Credit, LLC, FGI, Guarantor and certain affiliates of
Guarantor.”

Proof of compliance with the foregoing shall be promptly given to Agent.

4.2 Additional Agreements.    In the event that the NewStar Indebtedness is
refinanced in full, Foreign Lender agrees at the request of such refinancing
party to enter into a subordination and intercreditor agreement on terms
substantially similar to this Agreement so long as the terms and conditions of
the agreements, documents and instruments related to such refinancing, taken as
a whole, are not materially more onerous to the Holder of Guaranty Indebtedness
than those set forth in the NewStar Lending Agreements, as in effect on the date
hereof, as reasonably determined by Agent and Foreign Lender, and in all other
circumstances, Foreign Lender agrees to negotiate a replacement subordination
and intercreditor agreement in good faith and in a commercially reasonable
manner with such potential lender based upon then prevailing market conditions.

4.3 Survival of Rights.    The right of Agent to enforce the provisions of this
Agreement shall not be prejudiced or impaired by any act or omitted act of
Company, Lenders or Agent including forbearance, waiver, consent, compromise,
amendment, extension, renewal, or taking or release of security in respect of
any NewStar Indebtedness or noncompliance by Company with such provisions,
regardless of the actual or imputed knowledge of Lenders or Agent.

4.4 Bankruptcy; Bankruptcy Financing Issues.    This Agreement shall continue in
full force and effect after the filing of any petition (“Petition”) by or
against Company under the United States Bankruptcy Code (the “Code”) and all
converted or succeeding cases in respect

 

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thereof. All references herein to Company shall be deemed to apply to Company as
debtor-in-possession and to a trustee for Company. If Company shall become
subject to a proceeding under the Code, and if Agent and/or Lenders shall desire
to permit the use of cash collateral or to provide post-Petition financing from
Agent and/or Lenders to Company under the Code, Foreign Lender agrees as
follows: (1) adequate notice to Foreign Lender shall be deemed to have been
provided for such consent or post-Petition financing if Foreign Lender receives
notice thereof three (3) Business Days (or such shorter notice as is given to
Agent) prior to the earlier of (a) any hearing on a request to approve such
post-petition financing or (b) the date of entry of an order approving same and
(2) no objection will be raised by Foreign Lender to any such use of cash
collateral or such post-Petition financing from Agent and/or Lenders. Until such
time as the NewStar Indebtedness shall have been indefeasibly paid in full in
cash and the NewStar Lending Agreements shall have been irrevocably terminated,
the Foreign Lender agrees that it shall not seek (or support any other Person
seeking) relief from the automatic stay or any other stay in any insolvency
proceeding, bankruptcy proceeding or similar action in respect of the
Collateral, without the prior written consent of Agent.

4.5 Post-Petition Interest.

(a) Foreign Lender shall not oppose or seek to challenge any claim by the Agent
or any Lender for allowance in any insolvency proceeding, bankruptcy proceeding
or similar action of NewStar Indebtedness consisting of post-petition interest,
fees or expenses to the extent of the value of any Lien of Agent or any Lender
in the Collateral, without regard to the existence of the Lien of the Foreign
Lender on the Collateral.

(b) Foreign Lender may seek post-petition interest, fees or expenses in respect
of the Guaranty Indebtedness so long as Foreign Lender’s receipt of, and
entitlement to, such interest, fees and expenses shall by fully subordinated to
the NewStar Indebtedness in accordance with the terms of this Agreement,
including Section 2.2 hereof, until the NewStar Indebtedness shall have been
satisfied or indefeasibly paid in full in cash and the Credit Agreement (and
Lenders’ commitment to lend thereunder) shall have been irrevocably terminated.

4.6 Insurance Proceeds.    Proceeds of the Collateral include insurance
proceeds, and therefore, notwithstanding the terms set forth in the NewStar
Lending Agreements or Foreign Lender Agreements, the priorities set forth in
Section 3.2 govern the ultimate disposition of casualty insurance proceeds.
Agent, as the holder of a senior security interest on the Collateral insured
shall have the sole and exclusive right, as against Foreign Lender, to adjust
settlement of insurance claims in the event of any covered loss, theft or
destruction of such Collateral. All proceeds of such insurance shall inure to
Agent, to the extent of Lenders’ and Agent’s claim, and Foreign Lender shall
cooperate (if necessary) in a reasonable manner in effecting the payment of
insurance proceeds to Lenders and Agent. In the event Agent, in its sole
discretion or pursuant to agreement with Company, permits Company to utilize the
proceeds of insurance to replace Collateral, the consent of Agent thereto shall
be deemed to include the consent of Foreign Lender.

4.7 Receipt of Agreements.    Foreign Lender hereby acknowledges that it has
delivered to Agent a correct and complete copy of the Foreign Lending Agreements
as in effect

 

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on the date hereof. Foreign Lender, solely for the purposes of this Agreement,
hereby acknowledges receipt of a correct and complete copy of each of the
NewStar Lending Agreements as in effect on the date hereof.

4.8 No Amendment of Foreign Lending Agreements.  So long as the Credit Agreement
remains in effect, neither Company nor any Holder of Guaranty Indebtedness shall
enter into any amendment to or modification of any Foreign Lending Agreements,
without the prior written consent of Agent. Nothing contained in this Agreement,
or in any other agreement or instrument binding upon any of the parties hereto,
shall in any manner limit or restrict the ability of Foreign Lender from
increasing or changing the terms of the loans under the documents, instruments
and agreements with Mad Catz Europe Ltd., or to otherwise waive, amend or modify
the terms and conditions of the documents, instruments and agreements with Mad
Catz Europe Ltd., in such manner as Foreign Lender and Mad Catz Europe Ltd.
shall mutually determine. Agent hereby consents to any and all such waivers,
amendments, modifications and compromises, and any other renewals, extensions,
indulgences, releases of collateral or other accommodations granted by Foreign
Lender to Mad Catz Europe Ltd.

4.9 Amendments to NewStar Lending Agreements.  Nothing contained in this
Agreement, or in any other agreement or instrument binding upon any of the
parties hereto, shall in any manner limit or restrict the ability of Lenders and
Agent from increasing or changing the terms of the loans under the NewStar
Lending Agreements, or to otherwise waive, amend or modify the terms and
conditions of the NewStar Lending Agreements, in such manner as Lenders, Agent
and Company shall mutually determine. Each Holder of Guaranty Indebtedness
hereby consents to any and all such waivers, amendments, modifications and
compromises, and any other renewals, extensions, indulgences, releases of
collateral or other accommodations granted by Lenders and Agent to Company from
time to time, and agrees that none of such actions shall in any manner affect or
impair the subordination established by this Agreement in respect of the
Guaranty Indebtedness.

4.10 Notice of Default and Certain Events.  Agent and the Holders of Guaranty
Indebtedness shall undertake in good faith to notify the other of the occurrence
of any of the following as applicable:

(a) the obtaining of actual knowledge of the occurrence of any default under
(i) the Subordinated Limited Guaranty and any default by Mad Catz Europe Ltd. in
the performance of any obligation owed to Foreign Lender or (ii) the NewStar
Lending Agreements, as applicable;

(b) (i) the acceleration of any Guaranty Indebtedness by any Holder of Guaranty
Indebtedness or (ii) the acceleration of the obligations owing under the NewStar
Lending Agreements, as applicable;

(c) (i) the granting by any Holder of Guaranty Indebtedness of any waiver of any
“default” or “event of default” under the Foreign Lending Agreements or (ii) the
granting by Agent and/or Lender of any waiver of any “default” or “event of
default” under the NewStar Lending Agreements, as applicable;

 

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(d) the payment in full by Company (whether as a result of refinancing or
otherwise) of all NewStar Indebtedness; or

(e) the sale or liquidation of, or realization upon, the Collateral so long as
Agent has provided notices, if any, to Foreign Lender as required under
applicable law (including the UCC);

provided, however, (i) Foreign Lender shall have no right of action whatsoever
against Agent for, and Agent shall not be liable for any damages resulting from,
the failure of Agent to provide the notice contemplated in this Section and
(ii) Agent shall have no right of action whatsoever against Foreign Lender for,
and Foreign Lender shall not be liable for any damages resulting from, the
failure of Foreign Lender to provide the notice contemplated in this Section.
The failure of any party to give such notice shall not affect the subordination
of the Guaranty Indebtedness or the relative Lien priorities as provided in this
Agreement.

4.11 Notices.  Any notice or other communication required or permitted pursuant
to this Agreement shall be deemed given (a) when personally delivered to any
officer of the party to whom it is addressed, (b) on the earlier of actual
receipt thereof or three (3) days following posting thereof by certified or
registered mail, postage prepaid, (c) upon actual receipt thereof when sent by a
recognized overnight delivery service or (d) upon actual receipt thereof when
sent by telecopier to the number set forth below with electronic confirmation of
receipt, in each case addressed to each party at its address or telecopier
number set forth below or at such other address or telecopier number as has been
furnished in writing by a party to the other by like notice:

 

If to Agent:

NewStar Business Credit, LLC

8401 North Central Expressway, Suite 600

Dallas, Texas 75225

Attention:        Portfolio Manager, URGENT

Facsimile:       (214) 242-5840

with a copy to:

Greenberg Traurig LLP

2200 Ross Avenue, Suite 5200

Dallas, Texas 75201

Attention: Heather E. Moulder

Facsimile: (214) 665-3614

If to Foreign Lender:

Faunus Group International, Inc.

80 Broad St, 22nd Floor

New York, NY 10004

Attention: Sami Altaher

Telephone: (212) 248-3400

Facsimile: (212) 248-3403

If to Company:

c/o Mad Catz, Inc.

10680 Treena St., Suite 500

San Diego, California 92131

 

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Telephone: (858) 790-5008

Fax No.: (858) 790-5018

Attention: Whitney Petersen, General Counsel

4.12 Books and Records.  Foreign Lender shall make notations on the books of
Foreign Lender beside all accounts or on other statements evidencing or
recording any Guaranty Indebtedness to the effect that such Guaranty
Indebtedness is subject to the provisions of this Agreement.

4.13 Binding Effect; Other.  This Agreement shall be a continuing agreement,
shall be binding upon and shall inure to the benefit of the parties hereto from
time to time and their respective successors and assigns, shall be irrevocable
and shall remain in full force and effect until the NewStar Indebtedness shall
have been satisfied or indefeasibly paid in full in cash and the Credit
Agreement (and Lenders’ commitment to lend thereunder) shall have been
irrevocably terminated, but shall continue to be effective, or be reinstated, as
the case may be, if at any time payment, or any part thereof, of any amount paid
by or on behalf of Company with regard to the NewStar Indebtedness is rescinded
or must otherwise be restored or returned upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Company, or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee,
custodian, or similar officer, for Company or any substantial part of its
property, or otherwise, all as though such payments had not been made. No action
which Lenders, Agent or Company may take or refrain from taking with respect to
the NewStar Indebtedness, including any amendments thereto, shall affect the
provisions of this Agreement or the obligations of any Foreign Lender hereunder.
Any waiver or amendment hereunder must be evidenced by a signed writing of the
party to be bound thereby, and shall only be effective in the specific instance.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York. The headings in this Agreement are for convenience of
reference only, and shall not alter or otherwise affect the meaning hereof.

5. Representations and Warranties.

(a) Foreign Lender represents and warrants to Agent that Foreign Lender is the
holder of the Guaranty Indebtedness and Liens which secure or will secure the
Guaranty Indebtedness. Foreign Lender agrees that it shall not assign or
transfer any of the Guaranty Indebtedness or Liens without (i) prior notice
being given to Agent and (ii) such assignment or transfer being made expressly
subject to the terms of this Agreement. Foreign Lender agrees upon Agent’s
request to execute and file an amendment to any financing statement or mortgage,
trust deed or other encumbrance now on file which covers Collateral to the
effect that the same is subject to the terms of this Agreement, and agrees to so
mark any extension of such financing statements, or any financing statement or
mortgage, trust deed or other encumbrance filed by Foreign Lender on Collateral
in the future. Foreign Lender further warrants to Agent that it has full right,
power and authority to enter into this Agreement and, to the extent Foreign
Lender is an agent or trustee for other parties, that this Agreement shall fully
bind all such other parties.

 

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(b) Agent represents and warrants to Foreign Lender that Lenders and Agent are
the holders of the NewStar Indebtedness and Liens which secure or will secure
the NewStar Indebtedness. Agent agrees that neither it nor any Lender shall
assign or transfer any of the NewStar Indebtedness or Liens without (i) prior
notice being given to Foreign Lender and (ii) such assignment or transfer being
made expressly subject to the terms and provisions of this Agreement. Agent
further warrants to Foreign Lender that it has full right, power and authority
to enter into this Agreement and, to the extent Agent is an agent or trustee for
other parties, that this Agreement shall fully bind all such other parties
(including Lenders).

6. Proceedings.  ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST FOREIGN LENDER OR
COMPANY WITH RESPECT TO THIS AGREEMENT OR ANY RELATED AGREEMENT MAY BE BROUGHT
IN ANY COURT OF COMPETENT JURISDICTION IN MANHATTAN, NEW YORK COUNTY, NEW YORK,
UNITED STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH
PARTY THERETO ACCEPTS FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF AGENT
OR LENDERS TO BRING PROCEEDINGS AGAINST FOREIGN LENDER OR COMPANY IN ANY COURTS
OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY FOREIGN LENDER OR COMPANY
AGAINST AGENT OR LENDERS INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER OR CLAIM
IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR ANY
RELATED AGREEMENT, SHALL BE BROUGHT ONLY IN A COURT LOCATED IN MANHATTAN, NEW
YORK COUNTY, NEW YORK; PROVIDED THAT NOTWITHSTANDING THE FOREGOING, IF IN ANY
JUDICIAL PROCEEDING BY OR AGAINST FOREIGN LENDER OR COMPANY THAT IS BROUGHT IN
ANY OTHER COURT SUCH COURT DETERMINES THAT AGENT IS AN INDISPENSABLE PARTY,
FOREIGN LENDER OR COMPANY SHALL BE ENTITLED TO JOIN OR INCLUDE EACH PARTY HERETO
IN SUCH PROCEEDINGS IN SUCH OTHER COURT. FOREIGN LENDER AND COMPANY WAIVE ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND SHALL
NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON
FORUM NON CONVENIENS.

7. Waiver Of Jury Trial.  EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF ANY CREDITOR, LENDERS OR COMPANY OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS OR AGREEMENT
EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR

 

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THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY AGREES
AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT JURY, AND THAT ANY OF THEM MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF
THEIR CONSENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

8. Company Acknowledgement.  Company agrees that (i) nothing contained in this
Agreement shall be deemed to amend, modify, supercede or otherwise alter the
terms of the respective agreements between Company and each Creditor and
(ii) this Agreement is solely for the benefit of the Creditors and shall not
give Company, its successors or assigns or any other person any rights vis-à-vis
any Creditor.

9. Consent.  Notwithstanding any provision to the contrary contained in the
Foreign Lending Agreements or in any document, instrument or agreement which
evidence any indebtedness owed by the Company to Foreign Lender in effect prior
to the date hereof (including, without limitation, any prohibition on the
incurrence of additional indebtedness or the creation of any liens contained
therein), Foreign Lender hereby consents to (i) the execution and delivery of
the NewStar Lending Agreements and the Other Documents by the Company and
(ii) the transactions, Liens and obligations contemplated by the NewStar Lending
Agreements and the Other Documents. Notwithstanding any provision to the
contrary contained in the NewStar Lending Agreements or in any document,
instrument or agreement which evidence any indebtedness owed by the Company to
Agent and Lenders in effect prior to the date hereof (including, without
limitation, any prohibition on the incurrence of additional indebtedness or the
creation of any liens contained therein), Agent, on behalf of itself and
Lenders, hereby consents to (i) the execution and delivery of the Foreign
Lending Agreements by the Company and (ii) the transactions, Liens (so long as
consistent with the terms and provisions of this Agreement) and obligations
contemplated by the Foreign Lending Agreements.

10. Counterparts; Facsimile.  This Agreement may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an original
and all of which when taken together shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission or by
attachment to an e-mail by “pdf’ shall be deemed to be an original signature
hereto.

[SIGNATURES FOLLOW]

 

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IN WITNESS WHEREOF, the undersigned have entered into this Agreement as of the
date first written above.

 

AGENT:

NEWSTAR BUSINESS CREDIT, LLC

By:

 

 /s/ Greg Gentry

Name:

 

 Greg Gentry

Title:

 

 Senior Vice President

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FOREIGN LENDER:

FAUNUS GROUP INTERNATIONAL, INC.

By:

 

 /s/ Joe Albertelli

Name:

 

 Joe Albertelli

Title:

 

 Vice President

--------------------------------------------------------------------------------

COMPANY:

MAD CATZ, INC.

By:

 

 /s/ Darren Richardson

Name:

 

 Darren Richardson

Title:

 

 President & CEO

 

MAD CATZ INTERACTIVE, INC.

By:

 

 /s/ Darren Richardson

Name:

 

 Darren Richardson

Title:

 

 President & CEO

 

1328158 ONTARIO INC.

By:

 

 /s/ Darren Richardson

Name:

 

 Darren Richardson

Title:

 

 President & CEO

 

FX UNLIMITED INC.

By:

 

 /s/ Darren Richardson

Name:

 

 Darren Richardson

Title:

 

 President & CEO

 

MAD CATZ INTERACTIVE ASIA LTD.

By:

 

 /s/ Darren Richardson

Name:

 

 Darren Richardson

Title:

 

 Director