Exhibit 10.12

 

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GUARANTY AGREEMENT

This Guaranty Agreement (as may be amended, restated, or otherwise modified from
time to time, this “Guaranty Agreement”), is executed and delivered by the
undersigned Guarantor in favor of NEWSTAR BUSINESS CREDIT, LLC, a Delaware
limited liability company, in its capacity as administrative and collateral
agent for the Lender Parties (in such capacity, together with its successors and
assigns, the “Administrative Agent”), effective as of June 30, 2015 as provided
herein below:

Definitions:

The following terms shall have the following meanings where used in this
Guaranty Agreement:

“Borrower” means Mad Catz, Inc., a Delaware corporation, and its successors and
assigns, including without limitation as debtor or debtor-in-possession in any
bankruptcy proceedings.

“Guaranteed Obligations” means all indebtedness and obligations now or hereafter
owing by Borrower to Administrative Agent and Lenders, whether or not evidenced
by any note, or other instrument or document, whether arising from or in
connection with a loan, extension of credit, issuance of a letter of credit,
acceptance, guaranty, indemnification, or otherwise, whether direct or indirect,
absolute or contingent, due or to become due, primary or secondary, as principal
or guarantor, and including all principal, interest, charges, costs, fees,
expenses, including costs, fees and expenses of attorneys employed or engaged by
Administrative Agent and/or Lenders in connection with any of the foregoing,
filing fees, and any other sums chargeable to Borrower under this Guaranty
Agreement or any of the other Loan Documents. Without limiting the foregoing,
“Guaranteed Obligations” includes all “Obligations” as defined by the Loan and
Security Agreement and also includes any of the foregoing arising during any
bankruptcy proceedings of Borrower and any interest or costs, fees expenses
that, but for the existence of any such bankruptcy proceedings, would arise or
accrue under the Loan Documents.

“Guarantor” means Mad Catz Interactive Asia Limited and its successors and
assigns.

“Lenders” means each Lender under and as defined in the Loan and Security
Agreement, and their permitted successors and assigns.

“Loan and Security Agreement” means the certain Loan and Security Agreement
dated as of June 30, 2015, among the Borrower, 1328158 Ontario Inc. (“MCC”), Mad
Catz Interactive, Inc. (“Parent”), the Lenders from time to time party thereto
and Administrative Agent, as such agreement has been and hereafter may be
renewed, amended, restated, or otherwise modified from time to time.

Terms defined in the Loan and Security Agreement, wherever used herein, unless
otherwise defined herein, shall have the same meanings in this Guaranty
Agreement as are set forth in the Loan and Security Agreement, and each of such
definitions is incorporated herein by reference. Guarantor expressly

 

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acknowledges that it has read and is familiar with all such incorporated
definitions and agrees that they shall have the same effect and enforceability
in this Guaranty Agreement as though set forth herein at length.

Recitals:

Concurrently herewith, Borrower, MCC, Parent, Lenders and Administrative Agent
have executed and entered into the Loan and Security Agreement, which provides
for Loans and extensions of credit by Lenders to Borrower. This Guaranty
Agreement is required by the Loan and Security Agreement, and Guarantor’s
execution and delivery hereof is a condition (among other conditions) to
Lenders’ obligation to make Loans and extensions of credit under the Loan and
Security Agreement. Guarantor has determined that (a) it will directly and
indirectly benefit from the availability of extensions of credit to Borrower
under the Loan and Security Agreement and from the other transactions evidenced
by and contemplated in the Loan Documents, (b) it will benefit, directly and
indirectly, from executing and delivering this Guaranty Agreement, (c) it is in
Guarantor’s best interest, and within its organizational purpose, to execute and
deliver and, if called upon to do so, to perform its obligations under this
Guaranty Agreement, and (d) execution and delivery of this Guaranty Agreement
and the other Loan Documents to which Guarantor is a party is necessary or
convenient to the conduct, promotion, and attainment of the business of
Guarantor.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor hereby agrees as follows:

1. Guaranty of Guaranteed Obligations.  As an inducement to Lenders to make the
Loans or otherwise extend credit and other financial accommodations to Borrower
under the Loan and Security Agreement, Guarantor, for value received, does
hereby unconditionally, irrevocably, and absolutely guarantee to Administrative
Agent and the other Lender Parties the prompt and full payment and performance
of the Guaranteed Obligations when due, whether at stated maturity, by
acceleration or otherwise. This Guaranty Agreement is and shall be an absolute,
unconditional, irrevocable, and continuing unlimited guaranty of payment, and
not solely of collection. Notwithstanding anything in this Agreement to the
contrary, the amount of the Guaranteed Obligations shall be limited to a maximum
aggregate amount equal to the largest amount that would not render this Guaranty
subject to avoidance as a fraudulent transfer or conveyance under any Applicable
Laws, after giving effect to all other liabilities of Guarantor, contingent or
otherwise, that are relevant under such laws, and after giving effect to the
value, as assets (as determined under the applicable provisions of such laws) of
any rights of Guarantor to contribution, indemnity, and/or subrogation from
Borrower or any other Person.

2. Representations and Warranties.  Guarantor hereby represents and warrants to
Administrative Agent and Lenders as follows: Guarantor is owned 1% by Borrower
and the remainder by an Affiliate of Borrower, with operations that are
dependent on the Borrower and the Borrower’s business and will receive a direct
and indirect material benefit from the transactions evidenced by and
contemplated in the Loan and Security Agreement and the other Loan Documents.
This Guaranty Agreement is given by Guarantor in furtherance of the direct and
indirect business interests, and is necessary to the conduct, promotion, and
attainment of the businesses of Borrower. The value of the consideration
received and to be received by Guarantor is reasonably worth at least as much as
the liability and obligation of Guarantor hereunder. Guarantor is currently
informed of the financial condition of Borrower and of all other circumstances
which a diligent inquiry would reveal and which bear upon the risk of nonpayment
of the Guaranteed Obligations. Guarantor has read and understands the terms and
conditions of the Loan Documents. Guarantor is familiar with, and has had an
opportunity to review the books and records regarding, the financial condition
of Borrower and is familiar with the value

 

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of any and all property intended to be security for the payment of all or any
part of the Guaranteed Obligations; provided, that Guarantor is not relying on
such financial condition or the existence or value of any such security as an
inducement to enter into this Guaranty Agreement. Guarantor has adequate means
to obtain, on a continuing basis, information concerning the financial condition
of Borrower. Guarantor has not been induced to enter into this Guaranty
Agreement on the basis of a contemplation, belief, understanding, or agreement
that any Person other than Borrower or Guarantor will be liable to pay the
Guaranteed Obligations. Administrative Agent and Lenders have not made any
representation, warranty, or statement to Guarantor in order to induce Guarantor
to execute this Guaranty Agreement.

3. Covenants.  Guarantor shall (a) promptly notify Administrative Agent of any
legal action against Guarantor or its property that would be treated as a
contingent liability of Guarantor under GAAP and is in an amount in excess of
$500,000 or which could have or cause a Material Adverse Effect, (b) preserve
and maintain its existence, good standing and authority to transact business in
the state of its organization, and also in all other jurisdictions where
necessary for the proper conduct of its business except where the failure to
qualify could not reasonably be expected to materially and adversely affect
Guarantor or its business, and maintain all of its properties, rights,
privileges and franchises necessary or desirable in the normal conduct of its
business, (c) keep and maintain adequate insurance by insurers reasonably
acceptable to Administrative Agent with respect to its business and properties,
(d) file all tax reports and returns required to be filed by it in the manner
and at the times required by Applicable Law, and shall pay all federal, state
and local taxes and charges imposed upon Guarantor when due, other than taxes,
fees or charges the amount or validity of which are currently being contested by
Guarantor in good faith by appropriate proceedings and with respect to which
reserves in accordance with GAAP have been provided on the books of Guarantor,
(e) conduct its business in material compliance with Applicable Laws, and
(f) furnish promptly to Administrative Agent upon request such information and
statements as Administrative Agent shall request from time to time regarding
Guarantor’s business affairs, financial condition and results of its operations.
Guarantor shall not (a) change its mailing address, chief executive office,
principal place of business or place where such records are maintained, or state
of organization, or change the location of any of its Collateral without
providing Administrative Agent at least 30 days prior, written notice thereof,
(b) discontinue, or make any material change in, its business as currently
established, or enter any new or different line of business not related to
Guarantor’s existing line of business, or (c) dissolve or liquidate or become a
party to any merger or consolidation with any Person.

4. Obligations Not Impaired.  Guarantor agrees that its obligations under this
Guaranty Agreement shall not be released, diminished, impaired, reduced, or
affected by the occurrence of any one or more of the following events: (a) lack
of organizational authority of any Borrower; (b) any receivership, insolvency,
bankruptcy, or other proceedings affecting any Borrower or their property;
(c) partial or total release or discharge of any Borrower or any other Person
from the performance of any obligation contained in any instrument or agreement
evidencing, governing, or securing all or any part of the Guaranteed
Obligations, whether occurring pursuant to any Applicable Law or otherwise;
(d) any change in the time, manner, or place of payment of, or in any other term
of, or any increase or decrease in the amount of, all the Guaranteed
Obligations, or any portion thereof, or any other amendment or waiver of any
term of, or any consent to departure from any requirement of, any of the Loan
Documents; (e) the taking or accepting of any collateral security for all or any
part of the Guaranteed Obligations, this Guaranty Agreement, or any other
guaranty; (f) the taking or accepting of any other guaranty for all or any part
of the Guaranteed Obligations; (g) any failure to acquire, perfect, or continue
any security interest or lien on Collateral securing all or any part of the
Guaranteed Obligations or on any property securing this Guaranty Agreement;
(h) any exchange, release, or subordination of any security interest or lien on
any Collateral, or any release, amendment, waiver, or subordination of any term
of any guaranty of the Guaranteed Obligations or any other impairment of any
collateral security or guaranty now or hereafter securing all or any part of the
Guaranteed Obligations; (i) any failure to dispose of any collateral security at
any time securing all or any part of the Guaranteed Obligations or this Guaranty
Agreement in

 

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a commercially reasonable manner or as otherwise may be required by any
Applicable Law; (j) any merger, reorganization, consolidation, or dissolution of
any Borrower or any other Person at any time liable for any of the Obligations,
any sale, lease, or transfer of any or all of the assets of any Borrower or any
other Person at any time liable for any of the Obligations, or any change in
name, business, organization, location, composition, structure, or organization
of Borrower or any other Person at any time liable for any of the Obligations;
(k) any change of control or any other change in the capitalization or Equity
Interest ownership of any Borrower or any other Person at any time liable for
any of the Obligations; (l) any invalidity or unenforceability of or defect or
deficiency in any of the Loan Documents; (m) avoidance or subordination of the
Guaranteed Obligations, or any portion thereof, (n) the unenforceability of all
or any part of the Guaranteed Obligations against any Borrower because any
interest contracted for, charged, or received in respect of the Guaranteed
Obligations exceeds the amount permitted by any Applicable Law; (o) any waiver,
consent, extension, forbearance, or granting of any indulgence by Administrative
Agent or any other Lender Party with respect to the Guaranteed Obligations or
any provision of any of the Loan Documents; (p) any delay in or lack of
enforcement of any remedies under the Loan Documents; (q) the act of creating
all or any part of the Guaranteed Obligations is ultra vires, or the officers or
other representatives creating all or any part of the Guaranteed Obligations
acted in excess of their authority; (r) any election of remedies by
Administrative Agent or any other Lender Party; (s) any of the Loan Documents
were forged; (t) the election by Administrative Agent or any other Lender Party
in any proceeding under the Bankruptcy Code of the application of
Section 1111(b)(2) thereof; (u) any borrowing or grant of a security interest by
Borrower as debtor-in-possession, under Section 364 of the Bankruptcy Code;
(v) any use by any Borrower (whether with the consent of Administrative Agent or
any Lender or otherwise) of cash collateral during the pendency of any
bankruptcy proceeding; (w) the making of post-petition loans or any other
provision for the extension of post-petition credit to any Borrower as
debtor-in-possession in any bankruptcy proceedings; (x) the disallowance in
bankruptcy of all or any portion of the claims of Administrative Agent or any
Lender for payment of any of the Guaranteed Obligations; or (y) any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense available to any Borrower or Guarantor (other than that the Guaranteed
Obligations shall have been indefeasibly paid and performed in full).

5. Consent and Waiver.

(a) Guarantor hereby waives: (i) notice of acceptance of this Guaranty
Agreement; (ii) notice of any Loans or other financial accommodations or the
creation or existence of any Guaranteed Obligations; (iii) notice of the amount
of the Guaranteed Obligations; (iv) notice of any adverse change in the
financial condition of any Borrower or any other Person or of any other fact
that might increase or otherwise change Guarantor’s risk with respect to the
Guaranteed Obligations, any Borrower or any other Person under or in connection
with this Guaranty Agreement; (v) notice of presentment for payment, demand,
protest and notice thereof, notice of intent to accelerate, notice of
acceleration, notice of dishonor, diligence or promptness in enforcement, and
indulgences of every kind as to any promissory notes or other instruments;
(vi) notice of any of the events or circumstances enumerated in Section 4, and
all other notices and demands to which Guarantor might otherwise be entitled
(except if such notice is specifically required to be given to Guarantor
hereunder or under any other Loan Documents); (vii) any requirement that
Administrative Agent protect, secure, perfect, or insure its security interest
and liens on any Collateral or other property as security for the Guaranteed
Obligations or exhaust any right or take any action against Administrative Agent
or any other Lender Party or any other Person or any Collateral or any other
property subject to a security interest or lien; (viii) the benefit of any
statute of limitation applicable to enforcement of the Guaranteed Obligations,
or any portion thereof, or any security interests or liens in the Collateral or
other property as security for the Guaranteed Obligations or this Guaranty
Agreement; (ix) all rights by which Guarantor might be entitled to require suit
on an accrued right of action in respect of any of

 

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the Guaranteed Obligations or require suit against any Borrower or any other
Person, whether arising pursuant to Section 17.001 or Section 43.002 of the
Texas Civil Practice and Remedies Code, as amended,, or Rule 31 of the Texas
Rules of Civil Procedure, as amended, or otherwise; or (x) any other defense of
any Borrower or any other Person (other than that the Guaranteed Obligations
shall have been indefeasibly paid and performed in full, or in part, to the
extent of any such partial payment or performance).

(b) Guarantor hereby waives and agrees not to assert against Administrative
Agent or any Lender, to the extent allowed by any Applicable Law: (i) any
defense, setoff, counterclaim, or claim of any kind or nature available to
Borrower or any other Person against Administrative Agent or any other Lender
Party arising directly or indirectly from the present or future lack of
perfection, sufficiency, validity, or enforceability of the Guaranteed
Obligations or any security interest or lien in the Collateral or any other
property as security for the Guaranteed Obligations; or (ii) any right or
defense arising by reason of any claim or defense based upon an election of
remedies by Administrative Agent or any other Lender Party under any Applicable
Law.

(c) Administrative Agent and any other Lender Party shall have the right to seek
recourse against Guarantor to the fullest extent provided for herein, and no
election by Administrative Agent or any other Lender Party to proceed in one
form of action or proceeding, or against any party, or on any obligation, shall
constitute a waiver of Administrative Agent’s or such other Lender Party’s right
to proceed in any other form of action or proceeding or against other parties
unless Administrative Agent has expressly waived such right in writing. Without
limiting the foregoing, no action or proceeding by Administrative Agent or any
other Lender Party under any document or instrument evidencing the Guaranteed
Obligations shall serve to diminish the liability of Guarantor under this
Guaranty Agreement except to the extent that Administrative Agent or such other
Lender Party finally and unconditionally shall have realized indefeasible
payment in full of the Guaranteed Obligations.

(d) Guarantor waives, and agrees that its liability hereunder shall not be
affected by, any neglect, delay, omission, failure, or refusal of Administrative
Agent or any other Lender Party to (i) exercise or properly or diligently
exercise any right or remedy with respect to any or all of the Guaranteed
Obligations or the collection thereof or any security interests or liens or
other security for or Guaranty of the Guaranteed Obligations, or any portion
thereof, (ii) take or prosecute, or properly or diligently take or prosecute,
any action for the collection of any or all of the Guaranteed Obligations
against Borrower, Guarantor or any other Person in respect of any or all of the
Guaranteed Obligations, (iii) foreclose or prosecute, or properly or diligently
foreclose or prosecute, any action in connection with any agreement, document or
instrument or arrangement evidencing, securing, or otherwise affecting all or
any part of the Guaranteed Obligations, or (iv) mitigate damages or take any
other action to reduce, collect, or enforce the Guaranteed Obligations;

(e) Administrative Agent, on behalf of Lender Parties, may at any time, without
the consent of or notice to Guarantor, without incurring responsibility to
Guarantor and without impairing, releasing, reducing, or affecting the
obligations of Guarantor hereunder: (i) change the manner, place, or terms of
payment of all or any part of the Guaranteed Obligations, or renew, extend,
modify, rearrange, refinance, refund, increase or alter all or any part of the
Guaranteed Obligations; (ii) sell, exchange, release, surrender, subordinate,
realize upon, or otherwise deal with in any manner and in any order any
Collateral and any security interest or lien securing all or any part of the
Guaranteed Obligations or this Guaranty Agreement or setoff against all or any
part of the Guaranteed Obligations; (iii) neglect, delay, omit, fail, or refuse
to take or prosecute

 

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any action for the collection of all or any part of the Guaranteed Obligations
or this Guaranty Agreement or to take or prosecute any action in connection with
any of the Loan Documents; (iv) exercise or refrain from exercising any rights
against Borrower or other Person, or otherwise act or refrain from acting;
(v) settle or compromise all or any part of the Guaranteed Obligations and
subordinate the payment of all or any part of the Guaranteed Obligations to the
payment of any indebtedness, liabilities, or obligations which may be due or
become due to Lender Parties; (vi) release all or any one or more parties to any
one or more of the Loan Documents or grant forbearance or other indulgences to
Borrower or any other Person in respect thereof; (vii) amend or modify in any
manner and at any time (or from time to time) any of the Loan Documents; or
(viii) partially or fully release or substitute Guarantor, or enforce, exchange,
release, or waive any security for the Guaranteed Obligations, or any portion
thereof; (ix) bring suit against any and all Persons liable or obligated in
respect of the Guaranteed Obligations, collectively together, jointly and
severally or separately, and apply any amounts obtained by Administrative Agent
in such manner as Administrative Agent may elect, subject to the Loan Documents;
and (x) apply to the Guaranteed Obligations any sums paid to Administrative
Agent or any other Lender Party by Borrower, Guarantor or any other Person as
provided by the Loan Documents.

(f) Should Administrative Agent, on behalf of Lender Parties, seek to enforce
this Guaranty Agreement by action in any court or otherwise, Guarantor waives
any requirement, substantive or procedural, that (i) rights or remedies be
enforced first against Borrower or any other Person liable for all or any part
of the Guaranteed Obligations, including, without limitation, that a judgment
first be rendered against Borrower or any such Person, or that Borrower or any
such Person should be joined in such cause or (ii) enforcement shall first be
made against any Collateral or other property which shall ever have been given
to secure all or any part of the Guaranteed Obligations or this Guaranty
Agreement.

(g) Guarantor’s obligations under this Guaranty Agreement shall not be impaired
by any action, if any, which results in the denial or impairment of any right to
seek a deficiency against Borrower.

(h) Guarantor agrees that it has the sole responsibility for keeping itself
informed of the financial condition of Borrower and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations or any part
thereof, and that Administrative Agent and Lenders shall not have any obligation
or duty to advise Guarantor of information known to it regarding such condition
or any such circumstance.

(i) Guarantor consents and agrees that neither Administrative Agent nor any
other Lender Party shall have any obligation to marshal assets securing the
Guaranteed Obligations in favor of Guarantor.

(j) Administrative Agent may, at any time and from time to time in its
discretion (subject to the Loan and Security Agreement) and with or without
valuable consideration, allow substitution or withdrawal of Collateral or other
security and release Collateral or other security without impairing or
diminishing the indebtedness, liabilities, or obligations of Guarantor under
this Guaranty Agreement.

(k) Any determination by a court of competent jurisdiction of the amount of any
principal and/or interest or other amount constituting any of the Guaranteed
Obligations shall be conclusive and binding on Guarantor irrespective of whether
Guarantor was a party to the suit or action in which such determination was
made.

 

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6. Default.  Upon the occurrence and during the continuation of an Event of
Default, Guarantor agrees to pay to Administrative Agent, on behalf of Lender
Parties, at its office located in Dallas County, Texas, or at such other place
as Administrative Agent may specify to Guarantor in writing, on demand by
Administrative Agent and without further notice of dishonor and without notice
of any kind to Borrower, Guarantor, or any other Person, the full unpaid amount
of the Guaranteed Obligations, in immediately available funds, or such lesser
amount, if any, as may then be due and payable and demanded by Administrative
Agent, on behalf of Lender Parties, from time to time. If acceleration of the
time for payment of any amount payable by Borrower under or with respect to any
of the Guaranteed Obligations is stayed or otherwise delayed upon the
insolvency, bankruptcy, or reorganization of Borrower, all such amounts
otherwise subject to acceleration under the terms of the Guaranteed Obligations
shall nonetheless be payable by Guarantor hereunder promptly on demand by
Administrative Agent, and Guarantor, expressly and unconditionally agrees to
make such payment to Administrative Agent, on behalf of Lenders, in full.

7. No Waiver.  No failure on the part of either Administrative Agent or any
other Lender Party to exercise, and no forbearance, delay or omission by either
Administrative Agent or any other Lender Party in exercising, any right or
remedy hereunder shall impair such right or remedy or operate or be construed as
a waiver thereof or any acquiescence therein, nor shall any single or partial
exercise of any right or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right or remedy hereunder.

8. Notice of Sale.  In the event that Guarantor is entitled to receive any
notice under the UCC, as it exists in the state governing any such notice, of
the sale or other disposition of any Collateral or other property securing all
or any part of the Guaranteed Obligations or this Guaranty Agreement, it is
agreed that at least ten (10) days notice to Guarantor of the time and place of
any public sale, or the time after which any private sale or other disposition
may be made of any such Collateral or other property, shall be deemed to be
reasonable notice in conformity with such requirements.

9. Payment by Guarantor.  Whenever Guarantor pays any sum which is or may become
due under this Guaranty Agreement, written notice must be delivered to
Administrative Agent contemporaneously with such payment.

10. Binding Effect.  This Guaranty Agreement is for the benefit of
Administrative Agent, each other Lender Party and their successors and assigns,
and in the event of an assignment by any Lender Party, or such Lender Party’s
successors or assigns, of the Guaranteed Obligations, or any part thereof, the
rights and benefits hereunder, to the extent applicable to the indebtedness,
liabilities, and obligations so assigned, shall be deemed transferred with such
indebtedness, liabilities, and obligations without necessity of further express
action. This Guaranty Agreement is binding upon Guarantor and its successors and
assigns.

11. Subordination of Indebtedness and Liens.  The payment of any and all
principal of and interest on all indebtedness of Borrower to the Guarantor,
whether direct, indirect, fixed, contingent, liquidated, unliquidated, joint,
several, or joint and several, now or hereafter existing, due or to become due
to Guarantor under any and all circumstances, including, without limitation, any
rights of subrogation of Guarantor in respect of any payment by Guarantor under
this Guaranty Agreement (herein called the “Subordinated Debt”), shall in all
respects be subordinate and junior in right of payment and enforcement to the
prior payment and enforcement in full of the Guaranteed Obligations as provided
in this Section. Except to the extent, if any, as may be expressly permitted by
the Loan and Security Agreement, no payment shall be made on or with respect to
the Subordinated Debt unless and until the Guaranteed Obligations shall have
been paid and performed in full. In the event that Guarantor shall receive any
payment on account of the Subordinated Debt in violation of this Section,
Guarantor will hold, or cause to

 

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be held (as the case may be), any amount so received in trust for the benefit of
Administrative Agent and the other Lender Parties and will forthwith deliver, or
cause to be delivered (as the case may be), such payment to Administrative
Agent, in the form received, to be applied to the Guaranteed Obligations. All
security interests and liens, if any, at any time securing payment of all or any
part of the Subordinated Debt (herein called the “Subordinated Liens”) shall be
and remain inferior and subordinate to the security interests and liens securing
payment of all or any part of the Guaranteed Obligations, regardless of whether
such Subordinated Liens presently exist or are hereafter created or when such
Subordinated Liens were created, perfected, filed, or recorded (provided that
the foregoing shall not be interpreted or deemed to allow the existence of any
security interests or liens that are prohibited by the Loan Documents).
Guarantor shall not exercise or enforce any creditors’ rights or remedies that
it may have against Borrower, or foreclose, repossess, sequester, or otherwise
institute any action or proceeding (whether judicial or otherwise, including,
without limitation, the commencement of, or joinder in, any bankruptcy,
insolvency, reorganization, liquidation, receivership, or other debtor relief
law) to enforce the Subordinated Debt or any Subordinated Lien on any assets of
Borrower unless and until the Guaranteed Obligations shall have been paid and
performed in full. The terms and provisions of this Section are given by
Guarantor as additional rights and benefits to any and all other subordination
agreements heretofore, concurrently herewith, or hereafter executed by Guarantor
to or in favor of Administrative Agent and the Lenders, and nothing in this
Guaranty Agreement shall be deemed to in any way negate or replace any other
such previous, concurrent, or subsequent subordination agreements.

12. Right of Setoff.  Guarantor hereby grants to Administrative Agent, for the
benefit of Lender Parties, a right of setoff against any Guaranteed Obligations
then due and payable upon any and all monies, securities, or other property of
Guarantor, and the proceeds therefrom, now or hereafter held or received by or
in transit to Administrative Agent or such other Lender Party from or for the
account of Guarantor, whether for safekeeping, custody, pledge, transmission,
collection, or otherwise, and also upon any and all general or special deposits
(to the extent not prohibited by any Applicable Law) and credits of Guarantor,
and any and all claims of Guarantor against Administrative Agent and such other
Lender Party at any time existing.

13. Invalid Provisions.  If any provision of this Guaranty Agreement is held to
be illegal, invalid, or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable, this Guaranty
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision was not a part hereof, and the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance herefrom.
Notwithstanding any language to the contrary contained herein, no provision
herein or in any other Loan Document evidencing the Guaranteed Obligations shall
require the payment or permit the collection of interest in excess of the
maximum permitted by any Applicable Law.

14. Modification in Writing.  No modification, consent, amendment, or waiver of
any provision of this Guaranty Agreement, and no consent to any departure by
Guarantor herefrom, shall be effective unless the same shall be in writing and
signed by a duly authorized officer of Administrative Agent and, as to any
modification or amendment, Guarantor, and then shall be effective only in the
specific instance and for the specific purpose for which given.

15. Limited Effect of Notices; Consents.  No notice to or demand on, or consent
by, Guarantor in any case shall, of itself, entitle Guarantor to any other or
further notice or demand, or right to grant or refuse consent, in similar or
other circumstances.

16. Cumulative Rights.  All rights and remedies of Administrative Agent and
Lenders under this Guaranty Agreement are cumulative of each other and of every
other right or remedy which

 

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Administrative Agent and Lenders may otherwise have under any applicable law or
under any other agreement.

17. Expenses.  Guarantor agrees to pay, without duplication of any amounts paid
under Section 14.5 of the Loan and Security Agreement, on demand all reasonable
costs and expenses incurred by Administrative Agent or any Lender in connection
with the negotiation, preparation, execution, and performance of this Guaranty
Agreement and any and all amendments, modifications, renewals, restatements,
and/or supplements hereto from time to time, including, without limitation,
reasonable attorneys fees. If Guarantor should breach or fail to perform any
provision of this Guaranty Agreement, Guarantor agrees to pay to Administrative
Agent and Lender Parties all reasonable costs and expenses incurred by
Administrative Agent and Lender Parties in the enforcement of this Guaranty
Agreement from time to time, including, without limitation, reasonable attorneys
fees.

18. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.

(a) THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO THE RULES
THEREOF RELATING TO CONFLICTS OF LAW. GUARANTOR HEREBY IRREVOCABLY SUBMITS
ITSELF TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN DALLAS
COUNTY, TEXAS AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON
HIM IN ANY LEGAL PROCEEDING RELATING TO THIS GUARANTY AGREEMENT OR ANY OTHER
RELATIONSHIP BETWEEN ADMINISTRATIVE AGENT, ANY OTHER LENDER PARTY AND GUARANTOR
BY ANY MEANS ALLOWED UNDER STATE OR FEDERAL LAW. ANY LEGAL PROCEEDING ARISING
OUT OF OR IN ANY WAY RELATED TO THIS GUARANTY AGREEMENT OR ANY OTHER
RELATIONSHIP BETWEEN ADMINISTRATIVE AGENT, ANY OTHER LENDER PARTY AND GUARANTOR
MAY BE BROUGHT AND LITIGATED IN ANY ONE OF THE STATE OR FEDERAL COURTS LOCATED
IN DALLAS COUNTY, TEXAS HAVING JURISDICTION. THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS
IMPROPER.

(b) GUARANTOR (AND ADMINISTRATIVE AGENT AND EACH OTHER LENDER PARTY BY ITS
ACCEPTANCE OF THIS GUARANTY AGREEMENT) HEREBY (i) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH; (ii) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES;
(iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL
FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS; AND (D) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
GUARANTY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.

 

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19. NO ORAL AGREEMENTS.  THIS GUARANTY AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN GUARANTOR, ADMINISTRATIVE AGENT AND LENDERS RELATING TO THE SUBJECT
MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN GUARANTOR AND ADMINISTRATIVE AGENT. THIS GUARANTY AGREEMENT
SUPERSEDES ALL PRIOR (IF ANY) ORAL AGREEMENTS, ARRANGEMENTS, OR UNDERSTANDINGS
RELATING TO THE SUBJECT MATTER HEREOF.

20. Notices.  All notices or demands by any party relating to this Guaranty
Agreement shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be (a) personally delivered, (b) sent by registered or certified mail,
postage prepaid, return receipt requested, or (c) sent by receipted overnight
delivery service or (d) sent by telecopy, to Guarantor or to Administrative
Agent, as the case may be, at their addresses and fax numbers set forth below:

 

If to Guarantor:     

Mad Catz Asia Interactive Limited

     c/o Mad Catz, Inc.      10680 Treena Street, Suite 500      San Diego,
California 92131      Attn: Legal and Finance Department      Telephone No.:
  858-790-5008      Facsimile No.:   858-790-5018

If to Administrative Agent:

    

NewStar Business Credit, LLC

     8401 N. Central Expressway, Suite 600      Dallas, TX 75225      Attn:
Portfolio Manager, URGENT      Facsimile No.: 214-242-5840      With a copy to:
     Greenberg Traurig, LLP      2200 Ross Avenue, Suite 5200      Dallas, TX
75201      Attn: Heather Moulder, Esq.      Telephone No.: 214-655-3614     
Facsimile No.: 214-665-3601

Any such address or fax number may be changed by notice in writing in the
foregoing manner given to the other. All notices or demands sent in accordance
with this Section 21 shall be deemed received on the earlier of (y) the date of
actual receipt or (z) three (3) business days after the deposit thereof in the
mail or one (1) business day after deposit thereof with an overnight delivery
service.

21. Survival.  All representations, warranties, covenants, and agreements of
Guarantor in this Guaranty Agreement shall survive the execution of this
Guaranty Agreement.

 

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22. Counterparts.  This Guaranty Agreement may be executed in any number of
counterparts and a telecopy or other electronic transmission of any such
executed counterpart shall be deemed valid as an original.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE TO FOLLOW

 

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IN WITNESS WHEREOF, the undersigned has executed this Guaranty Agreement as of
the effective date specified in the introductory paragraph hereinabove.

 

GUARANTOR:

MAD CATZ INTERACTIVE ASIA LIMITED

By:

 

/s/ Darren Richardson

Name:

 

Darren Richardson

Title:

 

Director

 

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