Exhibit 10.28

             
 
  DATED       2009  

MAD CATZ INTERACTIVE, INC
 
AMENDMENT TO
CONSIDERATION LOAN NOTE INSTRUMENT
AND
PROMISSORY NOTE
 

 

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

 

THIS AMENDMENT is made on June 24, 2009 (“the Amendment”) to (a) that certain
Consideration Loan Note Instrument, dated as of 20 November 2007 (“the
Instrument”) issued by MAD CATZ INTERACTIVE, INC a company incorporated and
existing under the laws of Canada with incorporation number 294869-9 having its
registered office at Brookfield Place 181 Bay Street Suite 2500 Toronto Ontario
M5J 2T7 (“the Company”) to GUYMONT SERVICES SA as trustee of The Winkler
Atlantic Trust c/o: HSBC Guyerzeller Trust Company AG Splugenstrasse 6 CH-8027
Zurich Switzerland (“the Holder”) and (b) that certain Promissory Note dated as
of August 1, 2008 (“the Completion Note”) issued by the Company to THE WINKLER
ATLANTIC TRUST aforesaid (“Winkler”)
WHEREAS

(A)   The Company and the Holder are parties to the Acquisition Agreement (as
defined in the Instrument) which provides for the purchase by the Company of all
the issued shares in the capital of Winkler Atlantic Holdings Limited   (B)  
Pursuant to the Acquisition Agreement, the Company agreed to issue and allot to
the Holder as part of the consideration payable under the Acquisition Agreement
loan notes in a principal amount equal to $14,500,000 and the loan notes
constituted by the Instrument were issued by the Company to the Holder to
satisfy such obligation   (C)   Pursuant to the terms of an agreement between
the Company and the Holder effective as of August 1, 2008 the Company issued the
Completion Note to Winkler   (D)   the Company and the Holder desire to amend
the Instrument in the manner described below

NOW THIS AMENDMENT WITNESSES that:

1.   PRELIMINARY       Capitalized terms used in this Amendment which are not
otherwise defined shall have the same meaning as set forth in the Instrument  
2.   ENTRY INTO EFFECT AND PERFORMANCE

  2.1.1   This Amendment is conditional and shall become effective upon both the
following being fulfilled:

  (a)   the Company entering into with the Senior Lender and other obligors a
Third Amended and Restated Loan Agreement and the same becoming effective
(subject only to this Amendment becoming effective); and

1

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

 

  (b)   receipt by the Holder of evidence that funds of the $20,000 payable by
the Company pursuant to clause 8 below have been transmitted by wire transfer to
an account requested by Holder

  2.1.2   Simultaneously with and effective upon this Amendment becoming
effective under clause 2.1.1:

  (a)   that original Certificate issued by the Company to the Holder on 20
November 2007 in respect of Loan Notes for the original principal amount of
$14,500,000 shall be delivered to the Company by the Holder for cancellation and
the Company shall simultaneously with the execution of this Amendment deliver to
the Holder a new Certificate for the principal amount of $14,500,000 under the
Instrument as amended hereby, dated with the date upon which this Amendment
becomes effective pursuant to clause 2.1.1; the cancellation of such original
Certificate and issue of such new Certificate do not constitute redemption and
reissue of the Loan Notes and are merely for the purpose of evidencing the
amendments of the Instrument effected by this Amendment;     (b)   the Holder
shall execute and deliver to the Company and the Senior Lender without charge
therefor a counterpart of an Amended and Restated Intercreditor Agreement with
the Senior Lender (being an Instrument and Agreement evidencing its
subordination to the Senior Lender) on the terms already agreed between the
parties

3.   AMENDMENTS TO INSTRUMENT   3.1   Title       Clause 2.1 of the Instrument
shall be deemed to be deleted and replaced with the following wording:

“The Loan Notes shall be known as Convertible Unsecured Loan Notes 2019 and
shall constitute a single series”

4.   AMENDMENT OF FORM OF LOAN NOTE CERTIFICATE AND CONDITIONS   4.1  
Certificate       The form of certificate set out in Schedule 1 to the
Instrument is hereby amended in its entirety so as to be in the form attached
hereto as Schedule 1   4.2   Preliminary       Condition 1.1 is deemed to be
deleted in its entirety and replaced with the following wording:

2

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

 

“The Loan Notes the subject of this certificate have been constituted by an
Instrument executed as a deed by Mad Catz Interactive, Inc dated 20 November
2007, as amended by an Amendment dated {   insert date upon which this Amendment
becomes effective under clause 2.1.1        } 2009 (“the Instrument”) and a copy
of the Instrument may be obtained from the Company free of charge upon written
request to it at its registered office”

4.3   Definitions       Condition 1.2 is hereby amended to take the following
actions:

  4.3.1   The definition of “Interest Rate” is deemed to be deleted in its
entirety and replaced with the following wording:

“means through March 31, 2014 the rate of seven decimal point five per cent
(7.5%) per annum and from and after April 1, 2014 the rate of nine per cent
(9.0%) per annum”

  4.3.2   The definition of “Emergency Credit Interest Rate” is deemed to be
deleted in its entirety and replaced with the following wording:

“means the Interest Rate plus three decimal point five per cent (3.5%) per
annum”

  4.3.3   The definition of “Second Maturity Date” is deemed to be deleted in
its entirety and replaced with the following wording:

“means March 31, 2019 or such earlier date on which the Loan Notes have been
repaid in full”

  4.3.4   The following definitions are deemed to be added in the appropriate
alphabetical order:

         
 
  ““Additional Payment”   means a prepayment pursuant to Condition 4.1.5;”
 
       
 
  ““Additional Payment Date”   means the date that is thirty (30) days after the
Company has filed its Annual Report on Form 10-K with the United States
Securities and Exchange Commission with respect to any fiscal year triggering an
Additional Payment”
 
       
 
  ““Annual Payment Date”   means the last Business Day of each fiscal year of
the Company, the first Annual Payment Date being 31 March 2010 and the last
Annual Payment Date being on the Second Maturity Date”

3

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

 

         
 
  ““EBITDA”   means, with respect to any fiscal year, an amount equal to the
Company’s net income for such fiscal year determined in accordance with United
States generally accepted accounting principles, plus or minus, to the extent
deducted or added in determining such net income for such fiscal year, and
without duplication: (a) interest paid or payable or received or receivable;
(b) income taxes paid or payable or refunds received or receivable in respect of
income taxes; and (c) depreciation and amortization expenses.”
 
       
 
  ““Net Proceeds”   means the aggregate proceeds received by the Noteholders in
respect of any sale of Conversion Shares less all costs and expenses incurred in
connection with such sale of Conversion Shares (including without limitation
legal fees and expenses, accounting fees and expenses, investment banking fees,
brokerage and sales commissions and registration or other regulatory fees)”
 
       
 
  ““Quarterly Payment Date”   means the last Business Day of each fiscal quarter
of the Company, the first Quarterly Payment Date being 30 June 2009 and the last
Quarterly Payment Date being the Second Maturity Date”

4.4   Principal and Interest       Condition 3.1 is deemed to be deleted and
replaced with the following wording:

“Subject to and in accordance with the Conditions the Company shall pay to the
Noteholders entitled to the same:

  3.1.1   the principal nominal amount of the Loan Notes or any part of the Loan
Notes as and when the same falls due for payment under the Conditions

4

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

 

      3.1.2 subject to Condition 3.3, interest accrued under the Conditions as
and when the same is required under Condition 4.1”

4.5   Scheduled Payments       The title to Condition 4 (“REPAYMENT”) shall be
deleted and replaced by “SCHEDULED PAYMENTS” and Conditions 4.1, 4.2 and 4.3 are
deemed to be deleted and replaced with the following wording:

“4.1 Repayment Dates and Circumstances

Subject to these Conditions, the Company shall make the following payments,
which shall be applied to outstanding interest and to outstanding principal in
accordance with Condition 4.1.8:

  4.1.1   Following Serious Event: The Company shall redeem the Loan Notes at
par by payment to the Noteholders if and as so required and permitted by
Condition 5.3, together with interest accrued under the Conditions upon the
amount so repaid up to and including the actual date of payment     4.1.2  
First Maturity Date: Subject to any election to the contrary pursuant to
condition 7.2.2(c) and subject to the statement contained in a Conversion Notice
pursuant to Condition 9.1.1, on the First Maturity Date the Company shall pay
$500,000     4.1.3   Quarterly Payment Date: Subject to any election to the
contrary pursuant to condition 7.2.2(c) and subject to the statement contained
in a Conversion Notice pursuant to Condition 9.1.1, on each Quarterly Payment
Date the Company shall pay $44,880.71 (or such less amount as is then
outstanding)     4.1.4   Annual Payment Date: Subject to any election to the
contrary pursuant to condition 7.2.2(c) and subject to the statement contained
in a Conversion Notice pursuant to Condition 9.1.1, on each Annual Payment Date
the Company shall pay $2,400,000 (or such less amount as is then outstanding)
except that the amount paid on the first such Annual Payment Date (March 31,
2010) shall be $551,154.12     4.1.5   Additional Prepayments: Subject to any
election to the contrary pursuant to condition 7.2.2(c) and subject to the
statement contained in a Conversion Notice pursuant to Condition 9.1.1, if the
Company has EBITDA of greater than $12,500,000 a year in each of two
(2) consecutive fiscal years the Company shall pay on the Additional Payment
Date with respect to the second such fiscal year $2,000,000

5

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

 

      provided that any such payment shall not be required unless approved in
writing by the Senior Lender (and there shall be no penalties incurred by the
Company if such approval is not provided by the Senior Lender) and provided
further that the Company shall not be obligated to make more than one such
additional payment in any two (2) year period and that the amount of such
additional payment shall be reduced by the amount of any voluntary prepayment(s)
made pursuant to Condition 4.1.6 during the two (2) year period immediately
prior to the payment under this Condition 4.1.5     4.1.6   Voluntary
Prepayments: Notwithstanding anything to the contrary herein, the Company shall
be permitted to prepay from time to time and on any day any amount without
premium or penalty     4.1.7   Second Maturity Date: Subject to any election to
the contrary pursuant to condition 7.2.2(c) and subject to the statement
contained in a Conversion Notice pursuant to Condition 9.1.1, on the Second
Maturity Date the Company shall repay at par the remaining principal and accrued
interest (accrued up to and including the date of payment) on the Loan Notes
then outstanding     4.1.8   Application of Payments: All payments made under
this Condition 4:

  (a)   shall be applied to outstanding interest and outstanding principal only
and only in that order unless (solely with respect to payments made pursuant to
Condition 4.1.6) the Company provides notice that payment is to be applied to
outstanding principal first and outstanding interest second;     (b)   in the
case of Additional Payments and voluntary prepayments pursuant to
Conditions 4.1.5 or 4.1.6, the same shall be applied in or towards discharge of
the payments required to be made by the Company under the foregoing provisions
of this Condition 4.1 in inverse order to that in which they fall due for
payment (ie latest first)”

  4.1.9   Payment Schedule: By way of explanation but without any binding effect
and so that the provisions of Conditions 4.1.1 to 4.1.8 shall have effect in
priority to such schedule, there is attached as Annex A a schedule of the
payments to be made under this Condition 4.1     4.2   Surrender of
Certificate(s) upon Redemption

Intentionally Omitted

6

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

 

  4.3   Balance Certificate

Intentionally Omitted”

4.6   Serious Events       Condition 5.1.1 is deemed to be deleted and replaced
with the following wording:

“if the Company fails to make any payment when required to be made under
Condition 4.1 and such failure is not remedied or cured within five Business
Days after notice thereof to the Company is given by any Noteholder”

4.7   Immediate Repayment on Notice       Condition 5.3 is deemed to be deleted
and replaced with the following wording:

“Subject to and only to the extent permitted by the terms of the Senior Lender
Agreement or any successor agreement between the Senior Lender and the
Noteholders, the Noteholders shall be entitled to require immediate repayment of
all or any of the Loan Notes at any time during the continuance of a Serious
Event Provided That during the continuance of the Senior Lender Agreement the
Noteholders may not require such immediate repayment on the grounds of a Serious
Event under condition 5.1.1 unless the Senior Lender grants consent for such
requirement or itself takes steps to enforce any security granted to it by the
Company or such requirement for immediate repayment is not prohibited by the
terms of the Senior Lender Agreement or any successor agreement between the
Senior Lender and the Noteholders”

4.8   Senior Lender Agreement       Condition 5.4 is deemed amended by adding
the following wording:

“Each Noteholder further agrees to execute and deliver to the Company and each
Senior Lender without charge therefor but upon reimbursement before delivery of
the same of up to $20,000 for professional costs reasonably incurred in relation
to the same such further instruments and agreements evidencing its subordination
to such Senior Lender on terms no more onerous to such Noteholder than contained
in the Amended and Restated Intercreditor Agreement entered into by such
Noteholder on the date of this Amendment”

4.9   Undertakings by the Company       Condition 8.1 is deemed to be amended by
adding the following wording to the end thereof:

“8.1.10 subject to receipt from the Noteholders of an agreement in form and
substance acceptable to the Company to maintain the confidentiality of such
information and to comply with applicable securities laws, the Company will
provide to the Noteholders until the Loan Notes

7

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

 

are repaid in full (a) at the same time it is sent to the Senior Lender the
annual Board-approved forecast provided by the Company to the Senior Lender
(b) a quarterly cash flow forecast and (c) a quarterly update by telephone of
the Company’s performance against the forecast”

4.10   Notice of Conversion       Condition 9.1.1 shall be amended by deleting
therefrom the words “it shall state whether the Loan Notes to be converted are
those due for repayment on the First Maturity Date or the Second Maturity Date”
and there shall be inserted in the place of the words so deleted the words “it
shall identify the Loan Notes to be converted by reference to their due date for
repayment under Condition 4.1”

4.11   Agreements Regarding Conversion       A new Condition 9.7 is hereby added
to the Loan Note to read as follows:

      “9.7 Sale of Conversion Shares

  9.7.1   In the event that the market price of the Conversion Shares exceeds
the Conversion Rate, the Company will use reasonable commercial efforts to
identify potential purchasers of the Conversion Shares and to introduce such
purchasers to the Noteholders     9.7.2   The Noteholders agree to convert
pursuant to Condition 9 such portion of the principal amount of the Loan Notes
into Conversion Shares as any purchaser desires to purchase in a transaction
that will provide to the Noteholders Net Proceeds per Conversion Share in excess
of the Conversion Rate and to sell such Conversion Shares to such purchaser    
9.7.3   The Company shall manage the sale process of any Conversion Shares
pursuant to this Condition 9.7 and shall deduct the expenses of such actions
from the gross sale proceeds in determining the Net Proceeds to be provided to
the Noteholders     9.7.4   Neither the Company nor any Noteholder shall have
any obligation to incur any out-of-pocket expenses in connection with such
conversion and sale transaction as such transaction must be self funding (i.e.
all expenses of such transaction shall be paid from the proceeds of the sale and
leave Net Proceeds per Conversion Share in excess of the Conversion Rate)

8

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

 

  9.7.5   Notwithstanding the foregoing:

  (a)   the conversion of Loan Notes into Conversion Shares, the issue of the
resultant Conversion Shares, the sale and transfer of the Conversion Shares to
the purchaser and the receipt by the Noteholders of the Net Proceeds shall be
effected simultaneously and if and to the extent that the Noteholders do not
receive any Net Proceeds the corresponding conversion of Loan Notes into
Conversion Shares shall not have effect;     (b)   the Company shall indemnify
the Noteholders against all expenses of sale incurred by or with the agreement
of the Company; provided that the Noteholders acknowledge and agree that such
expenses shall be fully satisfied from the gross proceeds of the sale of
Conversion Shares so long as the Net Proceeds per Conversion Share exceed the
Conversion Rate”

5.   AMENDMENTS TO THE COMPLETION NOTE       The Completion Note is hereby
amended such that the maturity date thereunder shall be March 31, 2010 and all
principal and interest outstanding on such date, which the parties agree shall
be $948,845.88, shall be paid on such date (and upon and by such payment the
Completion Note will be cancelled). If the Company defaults in payment of the
said sum it shall pay to Winkler Interest upon so much of the same as remains
unpaid after such due date from time to time, at the Emergency Credit Interest
Rate Subject to the foregoing the terms of the Completion Note remain in full
force and effect and in the event of any conflict between the terms of the
Completion Note and this Amendment the terms of this Amendment shall control  
6.   NO OTHER AMENDMENTS       Except as expressly amended by this Amendment,
the terms of the Instrument remain in full force and effect. In the event of any
conflict between the terms of the Instrument and this Amendment the term of this
Amendment shall control   7.   RELEVANT COMMITMENTS       The Company
acknowledges its continuing liability under clause 6.4 of the Acquisition
Agreement in respect of Relevant Commitments

9

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

 

8.   EXPENSES OF THIS AMENDMENT       The Company agrees to pay to the
Noteholders a fixed fee of $20,000 at execution of this Amendment to pay the
Noteholders’ expenses in connection with the negotiation and execution of this
Amendment, including legal and consulting fees   9.   MISCELLANEOUS       This
Amendment may be executed in any number of counterparts with the same effect as
if all Parties hereto had signed the same document. All counterparts shall be
construed together and shall constitute one agreement. This Amendment and any
signed agreement or instrument entered into in connection with this Agreement or
contemplated hereby, and any amendments hereto or thereto, to the extent signed
and delivered by means of a facsimile machine or other electronic means, shall
be treated in all manner and respects as an original agreement or instrument and
shall be considered to have the same binding legal effect as if it were the
original signed version thereof delivered in person   10.   GOVERNING LAW      
This Amendment shall be governed and construed in all respects by the laws of
England and the parties irrevocably submit to the non-exclusive jurisdiction of
the courts of England

10

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

 

                 
SIGNED BY
    )     /s/ Werner Schweiter    
 
    )     Werner Schweiter    
for and on behalf of
    )          
GUYMONT SERVICES SA (in Liqu.)
    )     /s/ Marzell Beck    
in the presence of:
    )     Marzell Beck    
 
               
Witness Signature: /s/ D. Eggenberger
               
Name: David Eggenberger
               
 
               
Address: Bawargs 8, 7204 Unkvaz
               
 
               
Occupation: Secretary
               
 
               
SIGNED BY
    )          
 
    )     /s/ Darren Richardson    
for and on behalf of MAD
    )          
CATZ INTERACTIVE, INC.
    )          
in the presence of:
    )          
 
               
Witness Signature: /s/ Michael Guerero
               
Name: Michael Guerero
               

Address:   7480 Mission Valley Rd.
Suite 101
San Diego, CA 92108

Occupation:   Contracts Manager

11

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

 

SCHEDULE 1
Clause 1 : Form of Loan Note Certificate and Conditions
Certificate No.             representing $     Nominal Amount of Loan Notes
MAD CATZ INTERACTIVE, INC
A company incorporated in Canada
corporate ID number 294869-9
(“the Company”)
ISSUE OF $14,500,000 CONVERTIBLE
UNSECURED LOAN NOTES 2019
(“the Loan Notes”)
Issued under the authority of the statutes and by-laws of the Company and
pursuant to a Resolution of the Board of Directors of the Company passed on
{                           } 2009
THIS IS TO CERTIFY THAT                                                      of
                                                                              
is the registered holder of                                          US DOLLARS
($     ) nominal amount of the Loan Notes which Loan Notes are constituted by an
Instrument entered into by the Company on November 20, 2007 as amended by an
Amendment entered into by the Company with Guymont Services SA and The Winkler
Atlantic Trust on {          } 2009 (“the Instrument”) and are issued with the
benefit of and subject to the provisions contained in the Instrument and the
Conditions endorsed on or attached to this certificate (“the Conditions”)

             
DATED
    2009      

             
DULY EXECUTED
    )      
by MAD CATZ INTERACTIVE, INC
    )      
acting by its authorised officer
    )      

Name:
Status:

             
Notes:
    (1 )   The Company will not register any transfer of any Loan Notes unless
the Certificate or a suitable indemnity is produced relating to such Loan Notes.
The Certificate or a suitable indemnity must be surrendered before any transfer,
whether for the whole or any part of the Loan Notes represented hereby, can be
registered or a new certificate issued in exchange.
 
           
 
    (2 )   The Loan Notes are transferable in part in amounts of not less than
$1,000 nominal or as a whole, subject to the restrictions on transfer contained
in the Conditions.
 
           
 
    (3 )   The Loan Notes are not and will not be the subject of any listing,
permission to deal or registration on any investment exchange or with any other
authority.
 
           
 
    (4 )   The Loan Notes shall not be offered to the public for purchase.
 
           
 
    (5 )   The address of the Transfer Office is 7840 Mission Valley Road
Suite 101 San Diego 92108.
 
           
 
    (6 )   The Loan Notes are subject to set-off of any Provisional Claims and
any Substantiated Claims as provided in the Conditions and amounts of the Loan
Notes the subject of this Certificate may be cancelled to the extent necessary
to satisfy such Substantiated Claims
 
           
 
    (7 )   Accelerated payment of the Loan Notes following the occurrence of a
Serious Event under the Conditions is restricted under the terms of the Senior
Lender Agreement (as those terms are defined in the Conditions).

 

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

 

Annex A

         
June 30, 2009
    44,881  
September 30, 2009
    44,881  
October 31, 2009
    500,000  
December 31, 2009
    44,881  
March 31, 2010*
    1,544,881    
June 30, 2010
    44,881  
September 30, 2010
    44,881  
December 31, 2010
    44,881  
March 31, 2011
    2,444,881    
June 30, 2011
    44,881  
September 30, 2011
    44,881  
December 31, 2011
    44,881  
March 31, 2012
    2,444,881    
June 30, 2012
    44,881  
September 30, 2012
    44,881  
December 31, 2012
    44,881  
March 31, 2013
    2,444,881    
June 30, 2013
    44,881  
September 30, 2013
    44,881  
December 31, 2013
    44,881  
March 31, 2014
    2,444,881    
June 30, 2014
    44,881  
September 30, 2014
    44,881  
December 31, 2014
    44,881  
March 31, 2015
    2,444,881    
June 30, 2015
    44,881  
September 30, 2015
    44,881  
December 31, 2015
    44,881  
March 31, 2016
    2,444,881    
June 30, 2016
    44,881  
September 30, 2016
    44,881  
December 31, 2016
    44,881  
March 31, 2017
    2,444,881    
June 30, 2017
    44,881  
September 30, 2017
    44,881  
December 31, 2017
    44,881  
March 31, 2018
    2,444,881    
June 30, 2018
    44,881  
September 30, 2018
    44,881  
December 31, 2018
    44,881  
March 31, 2019
    2,444,877    

*   Includes payment under the Completion Note in the amount of $948,845.88