**Exhibit 10.49**EXECUTION COPY**UNSECURED SUBORDINATED LOAN AGREEMENT****by and between****MIDWAY GAMES INC.,****as Borrower,****and****NATIONAL AMUSEMENTS, INC.,****as the Lender****Dated as of February 29, 2008**
 

 
**TABLE OF CONTENTS**         I. DEFINITIONS AND CONSTRUCTION  1   1.1. Definitions  1   1.2. Accounting Terms  19   1.3. Code  19   1.4. Construction  19   1.5. Schedules and Exhibits  19          II. LOAN AND TERMS OF PAYMENT  19   2.1. Revolver Advances  19   2.2. Intentionally Omitted  20   2.3. Borrowing Procedures  20   2.4. Payments  21   2.5. Intentionally Omitted  22   2.6. Interest Rates:  Rates, Payments, and Calculations  22   2.7. Subordination  24   2.8. Crediting Payments  25   2.9. Designated Accounts  25   2.10. Maintenance of Loan Account; Statements of Obligations  25   2.11. Fees  26   2.12. Intentionally Omitted  26   2.13. LIBOR Option  26   2.14. Intentionally Omitted  28   2.15. Intentionally Omitted  28   2.16. Servicing  28          III. CONDITIONS; TERM OF AGREEMENT  28   3.1. Conditions Precedent to the Extension of Credit on the Closing Date  28   3.2. Conditions Subsequent to the Initial Extension of Credit  30   3.3. Conditions Precedent to all Extensions of Credit  30   3.4. Term  30   3.5. Effect of Termination  30   3.6. Early Termination by Borrower  31          IV. INTENTIONALLY OMITTED  31          V. REPRESENTATIONS AND WARRANTIES  31   5.1. No Encumbrances  31   5.2. Intentionally Omitted  31   5.3. Intentionally Omitted  31   5.4. Intentionally Omitted  31   5.5. Intentionally Omitted  31   5.6. Intentionally Omitted  31   5.7. Intentionally Omitted  31 
 

 
           5.8. Due Organization and Qualification; Subsidiaries  31   5.9. Due Authorization; No Conflict  32   5.10. Litigation  33   5.11. No Material Adverse Change  33   5.12. Fraudulent Transfer  33   5.13. Employee Benefits  34   5.14. Environmental Condition  34   5.15. Brokerage Fees  34   5.16. Intellectual Property  34   5.17. Leases  34   5.18. Intentionally Omitted  35   5.19. Complete Disclosure  35   5.20. Indebtedness  35          VI. AFFIRMATIVE COVENANTS  35   6.1. Accounting System  35   6.2. Company Reporting  35   6.3. Financial Statements, Reports, Certificates  36   6.4. Intentionally Omitted  38   6.5. Returns  38   6.6. Maintenance of Properties  38   6.7. Taxes  38   6.8. Insurance  38   6.9. Intentionally Omitted  39   6.10. Compliance with Laws  39   6.11. Leases  39   6.12. Existence  39   6.13. Environmental  39   6.14. Disclosure Updates  40   6.15. Intentionally Omitted  40   6.16. Intentionally Omitted  40   6.17. Registration of Intellectual Property  40   6.18. Mortal Kombat Intellectual Property  40   6.19. Excess Cash  40          VII. NEGATIVE COVENANTS  41   7.1. Indebtedness  41   7.2. Liens  43   7.3. Restrictions on Fundamental Changes  43   7.4. Disposal of Assets  44   7.5. Change Name  44   7.6. Nature of Business  44   7.7. Prepayments and Amendments  44   7.8. Change of Control  44   7.9. Consignments  45   7.10. Distributions  45 
 

 
           7.11. Accounting Methods  45   7.12. Investments  45   7.13. Transactions with Affiliates  45   7.14. Suspension  46   7.15. Compensation  46   7.16. Use of Proceeds  46   7.17. Intentionally Omitted  46   7.18. Financial Covenant  46   7.19. Subsidiaries  46   7.20. Copyrights  46          VIII. EVENTS OF DEFAULT  47          IX. THE LENDER’S RIGHTS AND REMEDIES  49   9.1. Rights and Remedies  49   9.2. Remedies Cumulative  49          X. TAXES AND EXPENSES  49          XI. WAIVERS; INDEMNIFICATION  50   11.1. Demand; Protest; etc  50   11.2. Intentionally omitted  50   11.3. Indemnification  50          XII. NOTICES  51          XIII. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER  52          XIV. ASSIGNMENTS; SUCCESSORS  53   14.1. Assignments  53   14.2. Successors  54          XV. AMENDMENTS; WAIVERS  54   15.1. Amendments and Waivers  55   15.2. Intentionally Omitted  55   15.3. No Waivers; Cumulative Remedies  55          XVI. Intentionally Omitted  55          XVII. GENERAL PROVISIONS  55   17.1. Effectiveness  55   17.2. Section Headings  55   17.3. Interpretation  55   17.4. Severability of Provisions  55   17.5. Amendments in Writing  56   17.6. Counterparts; Telefacsimile Execution  56   17.7. Revival and Reinstatement of Obligations  56   17.8. Confidentiality  56 
 

 
           17.9. Integration  57   17.10. Intentionally omitted  57 
 

 
**EXHIBITS AND SCHEDULES**   Exhibit A-1 Form of Assignment and AcceptanceExhibit B-1 Form of Borrowing NoticeExhibit L-1 Form of LIBOR Notice   Schedule A-1 Lender’s AccountsSchedule D-1 Designated AccountsSchedule I-1 Investment AccountsSchedule P-1 Permitted LiensSchedule P-2 Permitted Sales of PatentsSchedule 5.8(b) Capitalization of CompaniesSchedule 5.8(c) Capitalization of Borrower’s SubsidiariesSchedule 5.8(d) Subscriptions, Options, Warrants or CallsSchedule 5.14 Environmental MattersSchedule 5.16 Intellectual PropertySchedule 5.20 Permitted IndebtednessSchedule 7.13 Transactions with Affiliates
 

 
**UNSECURED SUBORDINATED LOAN AGREEMENT**          **THIS UNSECURED SUBORDINATED LOAN AGREEMENT**(this “Agreement”), is entered into as ofFebruary 29, 2008, by and between, on the one hand, **NATIONAL AMUSEMENTS, INC.**, a Marylandcorporation, as Lender (the “Lender”), and, on the other hand, **MIDWAY GAMES INC.**, aDelaware corporation (“Borrower”).**RECITALS:**          WHEREAS, Borrower has requested the Lender to make available a revolving line of credit forloans, in an amount not to exceed $20,000,000 in the aggregate, which revolving line of credit willbe used to provide funds for general business purposes of Borrower and certain of its Subsidiaries;          WHEREAS, Midway Home Entertainment Inc. (“Midway”) and Midway Amusement Games, LLC(“MAG”) are wholly owned subsidiaries of the Borrower; and          WHEREAS, concurrent with this Agreement, (i) Borrower will enter into an unsecured loanfacility with the Lender providing for an unsecured revolving line of credit in an amount not toexceed $40,000,000 and (ii) Midway and MAG will enter into a senior secured loan facility with theLender providing for a combination of secured term and revolving loans in an aggregate amount notto exceed $30,000,000;          NOW THEREFORE, the parties agree as follows:I. **DEFINITIONS AND CONSTRUCTION.**     1.1. **Definitions.**          As used in this Agreement, the following terms shall have the following definitions:          “Advances” has the meaning set forth in Section 2.1(a).          “Affiliate” means, as applied to any Person, any other Person who, directly orindirectly through one or more intermediaries, controls, is controlled by, or is under commoncontrol with, such Person. For purposes of this definition, “control” means the possession,directly or indirectly through one or more intermediaries, of the power to direct the managementand policies of a Person, whether through the ownership of Stock, by contract, or otherwise.          “Agreement” has the meaning set forth in the preamble to this Agreement.          “Applicable Margin” means with respect to Advances that are LIBOR RateLoans and Base Rate Loans, the percentages set forth below (on a per annum basis):
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   Base Rate Loans 5.75%LIBOR Rate Loans 8.00%          “Assignee” has the meaning set forth in Section 14.1(a).          “Assignment and Acceptance” means an Assignment and Acceptance Agreement substantiallyin the form of Exhibit A-1.          “Australia Companies” means collectively, the Australia Operating Company AustraliaSubsidiary and the Australia Holding Company.          “Australia Operating Company” means Ratbag Holdings Pty Ltd, an Australian limitedcompany registered with company number (ACN 066 942 890).          “Australia Holding Company” means Midway Australia Holdings Pty Ltd, an Australianlimited company registered with company number (ACN 114 895 849).          “Australia Subsidiary” means Midway Studios — Australia Pty Ltd. (ACN 066 907 266).          “Australian Insolvency Laws” means the bankruptcy and insolvency laws as now andhereafter applying in Australia.          “Authorized Person” means any officer or employee of Borrower.          “Availability” means, as of any date of determination, the amount that Borrower isentitled to borrow as Advances hereunder, after giving effect to all then outstanding Advances.          “Bankruptcy Code” means title 11 of the United States Code, as applicable, and as ineffect from time to time, and, in respect of UK Company and Pitbull, UK Insolvency Laws, in respectof German Company, German Insolvency Laws, in respect of Japan Company, Japan Insolvency Laws, inrespect of Australia Companies, Australian Insolvency Laws and in respect of French Company, FrenchInsolvency Laws.          “Base Rate” means, the rate of interest announced, from time to time, within Bank ofAmerica, N.A. at its principal office in Charlotte, North Carolina as its “prime rate”, with theunderstanding that the “prime rate” is one of Bank of America, N.A.’s base rates (not necessarilythe lowest of such rates) and serves as the basis upon which effective rates of interest arecalculated for those loans making reference thereto and is evidenced by the recording thereof afterits announcement in such internal publications as Bank of America, N.A. may designate.          “Base Rate Loan” means the portion of the Advances that bears interest at a ratedetermined by reference to the Base Rate.
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          “Base Rate Margin” means the Applicable Margin pertaining to Base Rate Loans as setforth in the definition of Applicable Margin.          “Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of ERISA orequivalent legislation) for which any Company or ERISA Affiliate of any Company has been an“employer” (as defined in Section 3(5) of ERISA or equivalent legislation) within the past sixyears.          “Board of Directors” means the board of directors (or comparable managers) of Borroweror any committee thereof duly authorized to act on behalf of the board of directors (or comparablemanagers).          “Books” means all of the Companies’ and their Subsidiaries’ now owned or hereafteracquired books and records (including all of their Records indicating, summarizing, or evidencingtheir assets or liabilities, all of the Companies’ and its Subsidiaries’ Records relating to theirbusiness operations or financial condition).          “Borrower” has the meaning set forth in the preamble to this Agreement.          “Borrowing” means a borrowing hereunder consisting of Advances made on the same day bythe Lender to Borrower.          “Borrowing Notice” means a written notice in the form of Exhibit B-1 whichshall be signed by both of the Chief Financial Officer of the Borrower and President of theBorrower, or if the President is unavailable to sign such Borrowing Notice at such time, by anySenior Vice President of the Borrower.          “Business Day” means any day that is not a Saturday, Sunday, or other day on whichbanks are authorized or required to close in the state of Illinois, except that, if a determinationof a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also shall exclude anyday on which banks are closed for dealings in Dollar deposits in the London interbank market.          “Canadian Company” means Midway Games Canada Corp., a Nova Scotia corporation.          “Capital Expenditures” means, with respect to any Person for any period, the sum of(a) the aggregate of all expenditures by such Person and its Subsidiaries during such period thatare capital expenditures as determined in accordance with GAAP, whether such expenditures are paidin cash or financed, and (b) to the extent not covered by clause (a), the aggregate of allexpenditures by such Person and its Subsidiaries during such period to acquire by purchase orotherwise the business or capitalized assets of, or the capital stock of, any other Person.          “Capital Lease” means a lease that is required to be capitalized for financialreporting purposes in accordance with GAAP.
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          “Capitalized Lease Obligation” means that portion of the obligations under a CapitalLease that is required to be capitalized in accordance with GAAP.          “Cash Equivalents” means (a) marketable direct obligations issued or unconditionallyguarantied by the United States or issued by any agency thereof and backed by the full faith andcredit of the United States, in each case maturing within one year from the date of acquisitionthereof, (b) marketable direct obligations issued by any state of the United States or anypolitical subdivision of any such state or any public instrumentality thereof maturing within oneyear from the date of acquisition thereof and, at the time of acquisition, having one of the twohighest ratings obtainable from either Standard & Poor’s Rating Group (“S&P”) or Moody’s InvestorsService, Inc. (“Moody’s”), (c) commercial paper maturing no more than 270 days from the date ofcreation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or atleast P-1 from Moody’s, (d) certificates of deposit or bankers’ acceptances maturing within oneyear from the date of acquisition thereof issued by any bank organized under the laws of the UnitedStates or any state thereof having at the date of acquisition thereof combined capital and surplusof not less than $250,000,000, (e) demand Deposit Accounts maintained with any bank organized underthe laws of the United States or any state thereof so long as the amount maintained with anyindividual bank is less than or equal to $100,000 and is insured by the Federal Deposit InsuranceCorporation, and (f) Investments in money market funds substantially all of whose assets areinvested in the types of assets described in clauses (a) through (e) above.          “Change of Control” means that (a) any “person” or “group” (within the meaning ofSections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, becomes the beneficialowner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 35%, or more,of the Stock of Borrower having the right to vote for the election of members of the Board ofDirectors, or (b) a majority of the members of the Board of Directors do not constitute ContinuingDirectors, or (c) Borrower ceases to own, directly or indirectly, and control 100% of theoutstanding Stock of each of its Subsidiaries extant as of the Closing Date.          “Closing Date” means February 29, 2008.          “Closing Date Projections” means the set of Projections of Companies for fiscal years2008, 2009 and 2010 (on a year by year basis, and for fiscal year 2008, on a month by month basis),delivered to the Lender on or prior to the Closing Date.          “Code” means the Illinois Uniform Commercial Code as in effect from time to time.          “Collections” means all cash, checks, notes, instruments, and other items of payment(including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds).          “Commitment” means the Lender’s commitment to make Advances pursuant to Section2.1(a).
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          “Company” means Borrower and each U.S. Subsidiary.          “Continuing Director” means (a) any member of the Board of Directors who was adirector (or comparable manager) of Borrower on the Closing Date, and (b) any individual whobecomes a member of the Board of Directors after the Closing Date if such individual was appointedor nominated for election to the Board of Directors by a majority of the Continuing Directors, butexcluding any such individual originally proposed for election in opposition to the Board ofDirectors in office at the Closing Date in an actual or threatened election contest relating to theelection of the directors (or comparable managers) of Borrower and whose initial assumption ofoffice resulted from such contest or the settlement thereof.          “Daily Balance” means, as of any date of determination and with respect to anyObligation, the amount of such Obligation owed at the end of such day.          “Default” means an event, condition, or default that, with the giving of notice, thepassage of time, or both, would be an Event of Default.          “Designated Accounts” means any of the Deposit Accounts of the Companies or theirSubsidiaries identified on Schedule D-1.          “Designated Account Banks” has the meaning ascribed thereto on Schedule D-1.          “Development Kits” means the hardware, software, firmware, documentation orIntellectual Property licensed, sold or otherwise transferred to Companies by Sony ComputerEntertainment America Inc. (or its Affiliates), Microsoft Corporation (or its Affiliates), NintendoCo., Ltd (or its Affiliates) or Nintendo America Inc. (or its Affiliates) for use in thedevelopment of videogames for platform manufactured by the foregoing entities.          “Disbursement Letter” means an instructional letter executed and delivered by Borrowerto the Lender regarding the extensions of credit to be made on the Closing Date, the form andsubstance of which is satisfactory to the Lender.          “Dollars” or “$” means United States dollars.          “Eligible Transferee” means (a) any Affiliate of NAI, (b) so long as no Event ofDefault has occurred and is continuing, any Person approved by the Administrative Borrower (whichapproval of Administrative Borrower shall not be unreasonably withheld, delayed, or conditioned),and (c) during the continuation of an Event of Default, any other Person approved by the Lender.          “Environmental Actions” means any complaint, summons, citation, notice, directive,order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter,or other communication from any Governmental Authority, or any third party involving violations ofEnvironmental Laws or releases of Hazardous Materials from
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(a) any assets, properties, or businesses of any Company, any Subsidiary of a Company, or anyof their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or ontoany facilities which received Hazardous Materials generated by any Company, any Subsidiary of aCompany, or any of their predecessors in interest.          “Environmental Law” means any applicable federal, state, provincial, foreign or localstatute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding andenforceable written policy or rule of common law now or hereafter in effect and in each case asamended, or any judicial or administrative interpretation thereof, including any judicial oradministrative order, consent decree or judgment, to the extent binding on any Company or anySubsidiary of a Company, relating to the environment, human health, employee health and safety, orHazardous Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC § 1251etseq.; the Toxic Substances Control Act, 15 USC § 2601 etseq.;the Clean Air Act, 42 USC § 7401 etseq.; the Safe Drinking Water Act, 42 USC §3803 etseq.; the Oil Pollution Act of 1990, 33 USC § 2701 etseq.;the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC § 11001 etseq.; the Hazardous Material Transportation Act, 49 USC § 1801 etseq.; andthe Occupational Safety and Health Act, 29 USC § 651 etseq. (to the extent itregulates occupational exposure to Hazardous Materials); any state and local or foreigncounterparts or equivalents, in each case as amended from time to time.          “Environmental Liabilities and Costs” means all liabilities, monetary obligations,Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costsand expenses (including all reasonable fees, disbursements and expenses of counsel, experts, orconsultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, andinterest incurred as a result of any claim or demand by any Governmental Authority or any thirdparty, and which relate to any Environmental Action.          “Environmental Lien” means any Lien in favor of any Governmental Authority forEnvironmental Liabilities and Costs.          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and anysuccessor statute thereto.          “ERISA Affiliate” means (a) any Person subject to ERISA whose employees are treated asemployed by the same employer as the employees of a Company or a Subsidiary of a Company under IRCSection 414(b), (b) any trade or business subject to ERISA whose employees are treated as employedby the same employer as the employees of a Company or a Subsidiary of a Company under IRC Section414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, anyorganization subject to ERISA that is a member of an affiliated service group of which a Company ora Subsidiary of a Company is a member under IRC Section 414(m), or (d) solely for purposes ofSection 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party to anarrangement with a Company or a Subsidiary of a Company and whose employees are
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aggregated with the employees of a Company or a Subsidiary of a Company under IRC Section414(o).          “Event of Default” has the meaning set forth in Section 8.          “Exchange Act” means the Securities Exchange Act of 1934, as in effect from time totime.          “FEIN” means Federal Employer Identification Number.          “Foreign Companies” means collectively, the Australia Companies, UK Company, CanadianCompany, German Company, Japan Company, Pitbull and French Company.          “French Company” means Midway Games SAS, a French *société par actions simplifiée*,registered with company number 484 780 333 R.C.S. Paris.          “French Insolvency Laws” means the bankruptcy and insolvency laws as now and hereafterapplying in France.          “Funding Date” means the date on which a Borrowing occurs.          “Funding Losses” has the meaning set forth in Section 2.13(b)(ii).          “GAAP” means generally accepted accounting principles as in effect from time to timein the United States, consistently applied.          “German Company” means Midway Games GmbH, a German limited liability company,registered under the commercial registry of the Local Court (*Amtsgericht*) of Munich under reg. no.HRB 155 321.          “German Insolvency Laws” means the Insolvency Code (*Insolvenzordnung*) of Germany, asnow and hereafter in effect, any successor to such statute and any rules and regulations issuedthereunder.          “Governing Documents” means, with respect to any Person, the certificate or articlesof incorporation, by-laws, or other organizational documents of such Person.          “Governmental Authority” means any federal (including the federal government of Canadaand the United Kingdom), state, provincial, local, or other governmental or administrative body,instrumentality, department, or agency or any court, tribunal, administrative hearing body,arbitration panel, commission, or other similar dispute-resolving panel or body.          “Hazardous Materials” means (a) substances that are defined or listed in, or otherwiseclassified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardousmaterials,” “hazardous wastes,” “toxic substances,” or any other
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formulation intended to define,list, or classify substances by reason of deleterious propertiessuch as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EPtoxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids,synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration,development, or production of crude oil, natural gas, or geothermal resources, (c) any flammablesubstances or explosives or any radioactive materials, and (d) asbestos in any form or electricalequipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenylsin excess of 50 parts per million.          “Hedge Agreement” means any and all agreements, or documents now existing or hereafterentered into by Borrower or its Subsidiaries that provide for an interest rate, credit, commodityor equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, crosscurrency rate swap, currency option, or any combination of, or option with respect to, these orsimilar transactions, for the purpose of hedging Borrower’s or its Subsidiaries’ exposure tofluctuations in interest or exchange rates, loan, credit exchange, security or currency valuationsor commodity prices.          “Indebtedness” means (a) all obligations for borrowed money, (b) all obligationsevidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or otherobligations in respect of letters of credit, bankers acceptances, interest rate swaps, or otherfinancial products, (c) all obligations as a lessee under Capital Leases, (d) all obligations orliabilities of others secured by a Lien on any asset of a Person or its Subsidiaries, irrespectiveof whether such obligation or liability is assumed, (e) all obligations to pay the deferredpurchase price of assets (other than trade payables incurred in the ordinary course of business andrepayable in accordance with customary trade practices), (f) all obligations owing under HedgeAgreements, and (g) any obligation guarantying or intended to guaranty (whether directly orindirectly guarantied, endorsed, co-made, discounted, or sold with recourse) any obligation of anyother Person that constitutes Indebtedness under any of clauses (a) through (f)above.          “Indemnified Liabilities” has the meaning set forth in Section 11.3.          “Indemnified Person” has the meaning set forth in Section 11.3.          “Insolvency Proceeding” means any proceeding commenced by or against any Person underany provision of the Bankruptcy Code or under any other state, provincial or federal bankruptcy orinsolvency law, assignments for the benefit of creditors, formal or informal moratoria,compositions, extensions generally with creditors, or proceedings seeking reorganization,arrangement, or other similar relief.          “Intellectual Property” shall mean (i) all patent rights including any patents, andpatent applications and all reissues, divisions, continuations, counterparts and extensionsthereof, and other inventions, utility models, industrial designs and designs subject to possibleprotection under applicable patent or related laws and all rights relating thereto; (ii) alltrademark rights including any trademark and service mark registrations and applications and anyother word, name, symbol, device, design, trade name, business name and brand
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name, whetherregistered or unregistered, subject to possible protection under applicabletrademark or related laws and all rights relating thereto including all goodwill pertainingthereto; (iii) all copyright rights including any copyright registrations and applications and anyother works of authorship, and all derivative rights based thereon whether registered orunregistered, subject to possible protection under applicable copyright or related laws and allrights relating thereto; and (iv) technology including all technical information, knowledge,research and development and software, including any trade secrets, confidential information,customer lists, inventions, know-how, formulae, processes, procedures, data, research records,drawings, blueprints, records of inventions, test information, market surveys and marketingknow-how and also including any rights to use said Intellectual Property pursuant to license orother express or implied consent or authorization, including each Platform License, and any rightsto enforce and license said Intellectual Property rights including all related damages androyalties.          “Intercompany Subordination Agreement” means the subordination agreement dated as ofFebruary 29, 2008 by and among the Companies and the Lender, as amended, restated, supplemented orotherwise modified and in effect from time to time.          “Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing onthe date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or theconversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, 3 or 6 months or any numberof days less than one month thereafter; provided, however, that (a) if any InterestPeriod would end on a day that is not a Business Day, such Interest Period shall be extended(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)interest shall accrue at the applicable rate based upon the LIBOR Rate from and including the firstday of each Interest Period to, but excluding, the day on which any Interest Period expires, (c)any Interest Period that would end on a day that is not a Business Day shall be extended to thenext succeeding Business Day unless such Business Day falls in another calendar month, in whichcase such Interest Period shall end on the next preceding Business Day, (d) with respect to anInterest Period one month or longer that begins on the last Business Day of a calendar month (or ona day for which there is no numerically corresponding day in the calendar month at the end of suchInterest Period), the Interest Period shall end on the last Business Day of the calendar month thatis 1, 2, 3 or 6 months after the date on which the Interest Period began, as applicable, and (e)Borrower may not elect an Interest Period which will end after the Maturity Date.          “Investment” means, with respect to any Person, any investment by such Person in anyother Person (including Affiliates) in the form of loans, guaranties, advances, or capitalcontributions (excluding (a) commission, travel, and similar advances to officers and employees ofsuch Person which advances are (i) in the aggregate less than $1,000,000 and (ii) made in theordinary course of business and, and (b) *bona fide*Accounts arising in the ordinary course ofbusiness consistent with past practice), purchases or other acquisitions of Indebtedness, Stock, orall or substantially all of the assets of such other Person (or of any division or business line ofsuch other Person), and any other items that are or would be classified as investments on a balancesheet prepared in accordance with GAAP.
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          “Investment Accounts” means each of the Securities Accounts identified on ScheduleI-1.          “IRC” means the Internal Revenue Code of 1986, as in effect from time to time.          “Japan Company” means K.K. Midway Games, a Japanese company, registered with companynumber 0200-01-038356.          “Japan Insolvency Laws” means the bankruptcy and insolvency laws as now and hereafterin effect in Japan.          “Junior Notes” means (i) those certain six percent (6.00%) convertible senior notesdue September 30, 2025 in the principal amount of $75,000,000, issued pursuant to that certainOffering Memorandum dated as of September 13, 2005 and governed by that certain Indenture dated asof September 19, 2005 including the obligation to pay additional interest on the notes under theregistration rights agreement described in the Offering Memorandum as in effect on September 19,2005 and (ii) those certain seven and 1/8th percent (7.125%) convertible senior notes due May 31,2026 in the principal amount of at $75,000,000, issued pursuant to that certain Offering Memorandumdated as of May 30, 2006 and governed by that certain Indenture dated as of May 30, 2006 includingthe obligation to pay additional interest on the notes under the registration rights agreementdescribed in the Offering Memorandum as in effect on May 30, 2006.          “Lender” has the meaning set forth in the preamble to this Agreement, and shallinclude any permitted successor or assign in accordance with the provisions of Section14.1.          “Lender Expenses” means, without duplication of any “Lender Expenses” as defined undereach of the Secured Loan Facility and the Unsecured Loan Facility, all (a) costs or expenses(including taxes, and insurance premiums) required to be paid by Borrower hereunder that are paid,advanced, or incurred by the Lender, (b) fees or charges paid or incurred by the Lender inconnection with the Lender’s transactions with Borrower, including, fees or charges forphotocopying, notarization, couriers and messengers, telecommunication, public record searches(including tax lien, litigation, and UCC searches and including searches with the patent andtrademark office, the copyright office, or the department of motor vehicles), filing, recording,publication and appraisal (including periodic collateral appraisals or business valuations to theextent of the fees and charges (and up to the amount of any limitation) contained in this Agreementand environmental audits, (c) costs and expenses incurred by the Lender in the disbursement offunds to or for the account of Borrower (by wire transfer or otherwise), (d) charges paid orincurred by the Lender resulting from the dishonor of checks, (e) reasonable costs and expensespaid or incurred by the Lender to correct any default or enforce any provision hereunder (f) auditfees and expenses of the Lender related to audit examinations of the Books to the extent of thefees and charges (and up to the amount of any limitation) contained in this Agreement, (g)reasonable costs and expenses of third party claims or any other suit paid or incurred by
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the Lender in enforcing or defending this Agreement or in connection with the transactionscontemplated by this Agreement or the Lender’s relationship with Borrower, (h) Lender’s reasonablecosts and expenses (including attorneys fees) incurred in advising, structuring, drafting,reviewing, conducting due diligence, administering (including engaging a third-party servicer oradministrator in accordance with Section 2.16) or amending this Agreement, and (i) Lender’sreasonable costs and expenses (including attorneys, accountants, consultants, and other advisorsfees and expenses) incurred in terminating, enforcing (including attorneys, accountants,consultants, and other advisors fees and expenses incurred in connection with a “workout,” a“restructuring,” or an Insolvency Proceeding concerning Borrower or in exercising rights orremedies under this Agreement), or defending this Agreement, irrespective of whether suit isbrought.          “Lender-Related Person” means, the Lender, together with the Lender’s Affiliates,officers, directors, employees, attorneys, and agents.          “Lender’s Account” means the Deposit Account of the Lender identified on ScheduleA-1.          “LIBOR Deadline” has the meaning set forth in Section 2.13(b)(i).          “LIBOR Notice” means a written notice in the form of Exhibit L-1.          “LIBOR Option” has the meaning set forth in Section 2.13(a).          “LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the rate perannum, provided by Bank of America, N.A. to the Borrower and reported to the Lender in accordancewith its customary procedures as it considers appropriate (rounded upwards, if necessary, to thenext 1/100%), to be the rate at which Dollar deposits (for delivery on the first day of therequested Interest Period) are offered to major banks in the London interbank market 2 BusinessDays prior to the commencement of the requested Interest Period, for a term and in an amountcomparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as aninitial LIBOR Rate Loan or as a continuation of an extant LIBOR Rate Loan or as a conversion of aBase Rate Loan to a LIBOR Rate Loan) by Borrower in accordance with this Agreement, whichdetermination shall be conclusive in the absence of manifest error; provided,however, that if the term of the Interest Period for such LIBOR Rate Loan is less than onemonth, the LIBOR Rate with respect to such LIBOR Rate Loan shall be determined as if the term ofsuch LIBOR Rate Loan were one month.          “LIBOR Rate Loan” means each portion of an Advance or Term Loan that bears interest ata rate determined by reference to the LIBOR Rate.          “LIBOR Rate Margin” means the Applicable Margin pertaining to LIBOR Rate Loans as setforth in the definition of Applicable Margin.          “Lien” means any interest in an asset securing an obligation owed to, or a claim by,any Person other than the owner of the asset, irrespective of whether (a) such
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interest is based on the common law, statute, or contract, (b) such interest is recorded orperfected, and (c) such interest is contingent upon the occurrence of some future event or eventsor the existence of some future circumstance or circumstances. Without limiting the generality ofthe foregoing, the term “Lien” includes the lien or security interest (whether legal or equitable)arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, depositarrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment,or bailment for security purposes and also includes reservations, exceptions, encroachments,easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptionsand encumbrances affecting Real Property.          “Liquidated Damages Premium” means, as of any date of determination, an amount equalto (a) during the period from and after the date of the execution and delivery of this Agreement upto the date that is the first anniversary of the Closing Date, 2.0% *times*the Maximum RevolverAmount and (b) during the period from and including the date that is the first anniversary of theClosing Date up to but not including the Maturity Date, 1.0% *times*the Maximum Revolver Amount.          “Loan Account” has the meaning set forth in Section 2.10.          “MAG” means Midway Amusement Games, LLC, a Delaware limited liability company.          “Material Adverse Change” means (a) a material adverse change in the business,prospects, operations, results of operations, assets, liabilities or condition (financial orotherwise) of the Companies, taken as a whole or (b) a material impairment of Borrower’s ability toperform its obligations hereunder or of the Lender’s ability to enforce the Obligations.          “Material Videogame” means any videogame title sold by a Company that generatedrevenues for the most recent calendar quarter in excess of 10% of all consolidated revenues ofCompanies for such calendar quarter; provided that for purposes of Section 8.9 “MaterialVideogame” shall mean any videogame sku sold by a Company that generated revenues for the mostrecent calendar quarter in excess of 10% of all consolidated revenues of Companies for suchcalendar quarter.          “Maturity Date” has the meaning set forth in Section 3.4.          “Maximum Revolver Amount” means (a) $20,000,000 *minus*(b) an amount by which theLender determines, in consultation with the Borrower, that exceeds the maximum amount Borrowershall require to finance the anticipated aggregate cash expenditures of Borrower and itsSubsidiaries as reflected on the most recent Projections delivered pursuant to Section6.3(c)(i) for the current fiscal year; provided, however, that, solely for the purposesof this definition, such Projections shall not include any reserves or sinking funds, howeverdenominated, toward the repayment of amounts due under the Junior Notes.          “Midway” means Midway Home Entertainment Inc.
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          “Mortal Kombat Franchise” means the “Mortal Kombat: Deadly Alliance,” and “MortalKombat: Deception” videogames each of them created for use on Sony’s PlayStation 2 computerentertainment system, Microsoft’s Xbox and Nintendo’s GameCube and Game Boy Advance.          “NAI” means National Amusements, Inc., a Maryland corporation.          “Obligations” means all loans, Advances, debts, principal, interest (including anyinterest that, but for the commencement of an Insolvency Proceeding, would have accrued), premiums,liabilities (including all amounts charged to Borrower’s Loan Account pursuant hereto), obligations(including indemnification obligations), fees, charges, costs, Lender Expenses (including any feesor expenses that, but for the commencement of an Insolvency Proceeding, would have accrued), leasepayments, guaranties, covenants, and duties of any kind and description owing by Borrower to theLender hereunder (but, for the absence of doubt, expressly excluding any obligations under theUnsecured Loan Facility and the Secured Loan Documents and all documents and instruments enteredinto by the Companies in connection therewith) and irrespective of whether for the payment ofmoney, whether direct or indirect, absolute or contingent, due or to become due, now existing orhereafter arising, and including all interest not paid when due and all Lender Expenses thatBorrower is required to pay or reimburse hereunder, by law, or otherwise; provided, that.Any reference in this Agreement to the Obligations shall include all extensions, modifications,renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.          “Paid in Full” means (i) the Commitment shall have been terminated, (ii) all principalof the Advances, interest thereon and all other Obligations shall have been paid in full in cash orotherwise satisfied in a manner acceptable to the Lender in its sole discretion and (iii) theLender shall have received cash collateral (or, at the Lender’s option, a letter of credit issuedfor the account of Borrower and at Borrower’s expense, in form and substance reasonablysatisfactory to the Lender, by an issuer reasonably acceptable to the Lender and payable to theLender as beneficiary) in such amounts as the Lender determines are reasonably necessary to securethe Lender from loss, cost, damage or expense, including reasonable attorneys’ fees and expenses,in connection with any contingent obligations and checks or other payments provisionally creditedto the obligations and/or as to which the Lender has not yet received final payment in full and incash.          “Permitted Acquisition” means each acquisition of the Stock or assets of a Person(such Person, the “Target”) by Borrower or a wholly-owned Subsidiary of Borrower formed toacquire the Target (so long as such wholly-owned Subsidiary is merged with and into the Target uponconsummation of the Permitted Acquisition) in which (a) the Target is incorporated or otherwiseorganized in the United States, located in the United States and its business consists ofdeveloping videogames for Companies, (b) immediately before and after giving effect to suchacquisition, no Default or Event of Default exists (and, with respect to the financial covenantincluded in Section 7.18, the Lender has been provided with calculations showing compliancewith such financial covenant on a pro forma basis as of the most recent month end for whichfinancial statements have been delivered, after giving effect
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to such acquisition), (c) the Lender shall have received projections from Borrower reflectingsuch acquisition, (d) the aggregate consideration to be paid in connection with such acquisitiondoes not exceed $5,000,000, all of which shall be paid in common stock of Borrower, (e) theacquisition is consensual and has been approved by the board of directors of the Target, (f) priorto such acquisition, the Lender shall have received a description of such acquisition and such duediligence as is customarily required by the Lender (including engaging third parties to review thetransaction), (g) at least 3 days prior to the consummation of such acquisition, the Lender hasreceived drafts of the material documentation to be executed in connection with such acquisition insuch form as such documentation exists at such time, (h) consents have been obtained in favor ofthe Lender to the collateral assignment of rights and indemnities under the material acquisitiondocuments, (i) any contingent liabilities (other than those set forth in (k) below) orIndebtedness retained by Target or otherwise acquired in excess of $600,000 shall have beenapproved by the Lender, (j) any employment agreements entered into in connection with suchacquisition shall only compensate employees for future services provided to the Target and shallnot constitute “disguised consideration” for the acquisition and (k) continuing obligations of theTarget to its employees, if applicable, under the Target’s royalty compensation plan shall notexceed the amount of royalties Borrower would have been contractually obligated to pay the Targetfollowing the date of the acquisition in respect of games developed by the Target prior to the dateof the acquisition plus any royalties the Target receives from third parties after the acquisition.          “Permitted Discretion” means a determination made in the exercise of reasonablebusiness judgment.          “Permitted Dispositions” means (a) sales or other dispositions of assets (includingIntellectual Property) that is uneconomic, no longer useful, substantially worn, damaged, orobsolete in the ordinary course of business, (b) sales of Inventory to buyers in the ordinarycourse of business, (c) the use or transfer of money or Cash Equivalents in a manner that is notprohibited by the terms of this Agreement, (d) the Sale Leaseback Transaction, (e) the sale of (1)any patents listed on Schedule P-2 or (2) the to the extent (i) approved by the Board ofDirectors of the Borrower and (ii) the Company or Affiliate which owns such patent is not at suchtime using such patent to generate revenue by the licensing thereof in and of itself (other thanthrough the sale thereof), (f) transactions permitted under Section 7.12, (g) sales,transfers or other dispositions of assets by Borrower or any Subsidiary of Borrower to Borrower orany Subsidiary of Borrower, (h) the discount or sale, in each case without recourse and in theordinary course of business, of receivables more than 90 days overdue and arising in the ordinarycourse of business, but only in connection with the compromise or collection thereof consistentwith customary industry practice (and not as part of any bulk sale or financing of receivables),(i) leases, subleases or licenses of real property to other Persons not materially interfering withthe business of Borrower or any Subsidiary of Borrower, (j) transactions permitted underSection 7.10, (k) licenses of patents, copyrights, trademarks, trade secrets and otherIntellectual Property of Borrower and its Subsidiaries entered into in the ordinary course ofbusiness, and (l) sales, transfers or other
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dispositions of assets for consideration consisting ofat least 75% cash and for fair value in an aggregate amount not to exceed $50,000 in any fiscalyear.          “Permitted Holders” means Sumner M. Redstone, Phyllis Redstone, Paula Redstone, anylineal descendent of any of the foregoing or any trust or other arrangement established for theirbenefit and National Amusements, Inc. and any entities owned or controlled, directly or indirectly,by any of them.          “Permitted Investments” means (a) Investments in cash and Cash Equivalents, (b)receiving negotiable instruments from Account Debtors for collection, (c) advances made inconnection with purchases of goods or services in the ordinary course of business, (d) Investmentsreceived in settlement of amounts due to a Company effected in the ordinary course of business orowing to a Company as a result of Insolvency Proceedings involving an Account Debtor or upon theforeclosure or enforcement of any Lien in favor of a Company, (e) acquisition of Stock of a Targetin connection with a Permitted Acquisition, (f) capital contribution (not to exceed $1,000 in cashplus common stock of Borrower sufficient to pay purchase price of the applicable PermittedAcquisition) to a wholly owned Subsidiary of Borrower formed to acquire the Stock of a Target (solong as such wholly owned Subsidiary is merged into such Target upon consummation of such PermittedAcquisition), (g) loans among the Companies, (h) Investments in the Investment Accounts, (i)Investments in any Foreign Company so long as the net amount of Investments by any Company in suchForeign Company made during each year after the date hereof does not exceed an amount equal to theordinary course expenses of such Foreign Company during such year, (j) Investments in HedgeAgreements permitted under this Agreement, (k) Investments consisting of non-cash considerationreceived from the purchaser of assets in connection with a sale of such assets permitted under thisAgreement, (l) Investments, including debt obligations and equity securities, received inconnection with the bankruptcy or reorganization of, or settlement of delinquent accounts anddisputes with, clients and suppliers, (m) deposits of cash in favor of banks or other depositoryinstitutions, solely to the extent incurred in connection with the maintenance of such depositaccounts in the ordinary course of business, (n) Investments constituting guaranteed Indebtednessotherwise permitted under this Agreement, and (o) additional Investments in an amount not to exceed$50,000.          “Permitted Liens” means (a) Liens securing the obligations under the Secured LoanDocuments, (b) Liens for unpaid taxes that either (i) are not yet delinquent, or (ii) do notconstitute an Event of Default hereunder and are the subject of Permitted Protests, (c) Liens setforth on Schedule P-1, (d) the interests of lessors under operating leases, (e) purchasemoney Liens or the interests of lessors under Capital Leases to the extent that such Liens orinterests secure Permitted Purchase Money Indebtedness and so long as such Lien attaches only tothe asset purchased or acquired and the proceeds thereof, (f) Liens arising by operation of law (orembodied in related agreements) in favor of warehousemen, landlords, carriers, mechanics,materialmen, laborers, or suppliers, incurred in the ordinary course of the Companies’ business andnot in connection with the borrowing of money, and which Liens either (i) are for sums not yetdelinquent, or (ii) are the subject of Permitted Protests, (g) Liens arising from deposits made inconnection with obtaining worker’s compensation or other unemployment insurance, (h) Liens ordeposits to secure performance
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of bids, tenders, or leases incurred in the ordinary course ofbusiness and not in connection with the borrowing of money, (i) Liens granted as security forsurety or appeal bonds in connection with obtaining such bonds in the ordinary course of business,(j) Liens resulting from anyjudgment or award that is not an Event of Default hereunder, (k) with respect to any RealProperty, easements, rights of way, and zoning restrictions that do not materially interfere withor impair the use or operation thereof, (l) Liens existing on the date a Permitted Acquisition isconsummated (and not incurred in connection with such Permitted Acquisition) on Equipment of aTarget securing Indebtedness of a Target to the extent such Indebtedness is permitted in connectionwith such Permitted Acquisition, (m) Liens on cash and Cash Equivalents in favor of the provider ofany letter of credit to any Company and securing such Company’s reimbursement obligations inrespect of such Letter of Credit and (n) landlord liens related to leases acquired in connectionwith a Permitted Acquisition to the extent such Liens only cover Equipment located on such leasedpremises.          “Permitted Protest” means the right of any Company to protest any Lien (other than anyLien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subjectof a United States, United Kingdom or Canadian federal tax lien), or rental payment, provided that(a) a reserve with respect to such obligation is established on the Books in such amount as isrequired under GAAP and (b) any such protest is instituted promptly and prosecuted diligently onbehalf of such Company, as applicable, in good faith.          “Permitted Purchase Money Indebtedness” means, as of any date of determination,Purchase Money Indebtedness in an aggregate amount outstanding at any one time not in excess of$200,000.          “Person” means natural persons, corporations, limited liability companies, limitedpartnerships, general partnerships, limited liability partnerships, joint ventures, trusts, landtrusts, business trusts, or other organizations, irrespective of whether they are legal entities,and governments and agencies and political subdivisions thereof.          “PIK Interest” has the meaning set forth in Section 2.6(g).          “Pitbull” means Midway Studios — Newcastle Limited, an English limited liabilityprivate company, registered with company number 3292274.          “Platform License” means each of those certain Licensed Publisher Agreement, datedApril 1, 2000, between Midway and Sony Computer Entertainment America, Inc., Licensed PublisherAgreement, dated November 14, 2000, between UK Company and Sony Computer Entertainment EuropeLimited, Xbox Publisher License Agreement, dated October 30, 2000, between Midway and MicrosoftLicensing Inc., Confidential License Agreement for the Wii Console between Nintendo of America Inc.and Midway effective November 19, 2006 and the Xbox 360 Publisher License Agreement dated October25, 2006 between Midway and Microsoft Licensing, GP, each as amended, modified or supplemented fromtime to time.
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          “Projections” means Borrower’s forecasted (a) balance sheets, (b) profit and lossstatements, and (c) cash flow statements, all prepared on a consistent basis with Borrower’shistorical financial statements, together with appropriate supporting details and a statement ofunderlying assumptions.          “Purchase Money Indebtedness” means Indebtedness (other than the Obligations, butincluding Capitalized Lease Obligations), incurred at the time of, or within 20 days after, theacquisition of any fixed assets for the purpose of financing all or any part of the acquisitioncost thereof.          “Real Property” means any estates or interests in real property (exclusive ofleasehold interests) now owned or hereafter acquired by any Company and the improvements thereto.          “Record” means information that is inscribed on a tangible medium or which is storedin an electronic or other medium and is retrievable in perceivable form.          “Redemption Date” means any date that a holder of the Junior Notes is permitted toredeem or otherwise obligate Borrower to purchase all or any portion of such holder’s Junior Notes.          “Remedial Action” means all actions taken to (a) clean up, remove, remediate, contain,treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor oroutdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materialsso they do not migrate or endanger or threaten to endanger public health or welfare or the indooror outdoor environment, (c) perform any pre-remedial studies, investigations, or post-remedialoperation and maintenance activities, or (d) conduct any other actions authorized by 42 USC § 9601.          “Revolver Usage” means, as of any date of determination, the then extant amount ofoutstanding Advances.          “Sale Leaseback Transaction” means the sale of the Real Property commonly known as3289 North California, Chicago, Illinois, 2623 W. Roscoe, Chicago, Illinois, and 2704 West Roscoe,Chicago, Illinois in an arm’s length transaction to a Person that is not an Affiliate of anyCompany on terms and conditions approved by the Board of Directors of Borrower in connection withthe sale-leaseback of such Real Property so long as no Event of Default exists.          “SEC” means the United States Securities and Exchange Commission and any successorthereto.          “SEC Reports” means (i) each Annual Report of Borrower on Form 10-K filed with theSEC, (ii) each Quarterly Report of the Borrower on Form 10-Q filed with the SEC and (iii) each ofBorrower’s current Reports on Form 8-K filed with the SEC.
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          “Secured Loan Facility” means that certain Loan and Security Agreement dated as ofFebruary 29, 2008, by and among Borrower, the U.S. Subsidiaries and the Lender, as amended,restated, supplemented or otherwise modified and in effect.          “Secured Loan Documents” means, collectively, (i) the Secured Loan Facility, (ii) the“Loan Documents” as defined in the Secured Loan Facility and (iii) any notes, instruments or otheragreements entered into, now or in the future in connection therewith, in each case as the same maybe amended, restated, supplemented or otherwise modified from time to time.          “Solvent” means, with respect to any Person on a particular date, that, at fairvaluations, the sum of such Person’s assets is greater than all of such Person’s debts.          “Stock” means all shares, options, warrants, interests, participations, or otherequivalents (regardless of how designated) of or in a Person, whether voting or nonvoting,including common stock, preferred stock, or any other “equity security” (as such term is defined inRule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).          “Subsidiary” of a Person means a corporation, partnership, limited liability company,or other entity in which that Person directly or indirectly owns or controls the shares of Stockhaving ordinary voting power to elect a majority of the board of directors (or appoint othercomparable managers) of such corporation, partnership, limited liability company, or other entity.          “UK Company” means Midway Games Limited, an English limited liability private company,registered with company number 03801663.          “UK Insolvency Laws” means the Insolvency Act 1986 of England and Wales, as now andhereafter in effect, any successor to such statute and any rules and regulations issued thereunder.          “United States” means the United States of America.          “U.S. Subsidiaries” means Midway Home Entertainment Inc**.**, a Delaware corporation,Midway Amusement Games, LLC, a Delaware limited liability company, Midway Games West Inc**.**, aCalifornia corporation, Midway Interactive Inc., a Delaware corporation, Midway Sales Company, LLC,a Delaware limited liability company, and Midway Home Studios Inc., a Delaware corporation, SurrealSoftware Inc., a Washington corporation, Midway Studios — Austin Inc., a Texas corporation, MidwayStudios — Los Angeles Inc., a California corporation.          “Unsecured Loan Facility” means that certain Unsecured Loan Agreement dated as ofFebruary 29, 2008, by and between the Borrower and the Lender, as amended, restated, supplementedor otherwise modified and in effect.          “Voidable Transfer” has the meaning set forth in Section 17.7.
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     1.2. **Accounting Terms.**          All accounting terms not specifically defined herein shall be construed in accordance withGAAP. When used herein, the term “financial statements” shall include the notes and schedulesthereto. Whenever the term “Companies” or the term “Borrower” is used in respect of a financialcovenant or a related definition, it shall be understood to mean Borrower and its Subsidiaries on aconsolidated basis unless the context clearly requires otherwise.     1.3. **Code.**          Any terms used in this Agreement that are defined in the Code shall be construed and definedas set forth in the Code unless otherwise defined herein.     1.4. **Construction.**          Unless the context of this Agreement or any other Loan Document clearly requires otherwise,references to the plural include the singular, references to the singular include the plural, theterm “including” is not limiting, and the term “or” has, except where otherwise indicated, theinclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,”“hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreementor such other Loan Document, as the case may be, as a whole and not to any particular provision ofthis Agreement or such other Loan Document, as the case may be. Section, subsection, clause,schedule, and exhibit references herein are to this Agreement unless otherwise specified. Anyreference in this Agreement to any agreement, instrument, or document shall include allalterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions,joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on suchalterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions,joinders, and supplements set forth herein). Any reference herein to the repayment in full of theObligations shall mean the repayment in full in cash of all Obligations other than contingentindemnification Obligations. Any reference herein to any Person shall be construed to include suchPerson’s successors and assigns. Any requirement of a writing contained herein shall be satisfiedby the transmission of a Record.     1.5. **Schedules and Exhibits.**          All of the schedules and exhibits attached to this Agreement shall be deemed incorporatedherein by reference.II. **LOAN AND TERMS OF PAYMENT.**     2.1. **Revolver Advances.**     (a) Subject to the terms and conditions of this Agreement, and during the term of thisAgreement, the Lender agrees to make advances (“Advances”) to
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Borrower in an amount at any one time outstanding not to exceed the Maximum RevolverAmount (excluding any PIK Interest).     (b) The Lender shall have no obligation to make additional Advances hereunder:          (i) to the extent such additional Advances would cause the Revolver Usage to exceed theMaximum Revolver Amount;          (ii) if, as of the date of such additional Advance, the Borrower and its Subsidiariesshall have more than $12,000,000 in available cash on hand or in available deposit accountsin the aggregate unless the Borrower shall have notified and certified to the Lender thatthe Borrower reasonably anticipates expenditures in excess of such amount, stating thereason, in which event, subject to the terms and conditions of this Agreement, the Lendershall make additional Advances in an amount equal to the excess plus an amount up to$7,500,000;          (iii) at any time a Person other than the Lender hereunder (or any Affiliate thereof)is the lender under the Secured Loan Facility (or any replacement or refinancing facility inrespect of all or any part thereof);          (iv) at any time the aggregate outstanding principal balance of “Advances” under and asdefined in the Secured Loan Facility is less than the “Maximum Revolver Amount” as definedtherein; or          (v) at any time the aggregate outstanding principal balance of “Advances” under and asdefined in the Unsecured Loan Facility is less than the “Maximum Revolver Amount” as definedtherein.     (c) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject tothe terms and conditions of this Agreement, reborrowed at any time during the term of thisAgreement.     (d) The outstanding unpaid principal balance and all accrued and unpaid interest underthe Advances shall be due and payable on the date of termination of this Agreement, whetherby its terms, by prepayment, or by acceleration. All amounts outstanding under the Advancesshall constitute Obligations.     2.2. **Intentionally Omitted.**     2.3. **Borrowing Procedures.**     (a) **Procedure for Borrowing**. Each Borrowing shall be made by an irrevocable dulyexecuted Borrowing Notice delivered to the Lender (which notice must be received by theLender no later than 10:00 a.m. (Chicago time) on the second Business Day prior to the datethat is the requested Funding Date specifying (i) the amount of such Borrowing, and (ii) therequested Funding Date, which shall be a
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Business Day). At the Lender’s election, in lieu of delivering the above-describedBorrowing Notice, any Authorized Person may give the Lender telephonic notice of suchrequest by the required time. In such circumstances, Borrower agrees that any suchtelephonic notice will be confirmed with a Borrowing Notice within 24 hours of the giving ofsuch notice and the failure to provide such Borrowing Notice shall not affect the validityof the request.     (b) **Intentionally Omitted.**     (c) **Making of Loans**. After receipt of a request for a Borrowing pursuant toSection 2.3(a), Lender shall, by not later than 10:00 a.m. (Chicago time) on theapplicable Funding Date, make available to Borrower by transferring immediately availablefunds equal to such requested Borrowing to the Designated Accounts designated by theBorrower for such purpose; provided, however, that the Lender shall have noobligation to make any Advance if the Lender shall have actual knowledge that (1) one ormore of the applicable conditions precedent set forth in Section 3 will not besatisfied on the requested Funding Date for the applicable Borrowing unless such conditionhas been waived, or (2) the requested Borrowing would exceed the Availability on suchFunding Date.     2.4. **Payments.**     (a) **Payments by Borrower**. Except as otherwise expressly provided herein, all paymentsby Borrower shall be made to the Lender in immediately available funds, no later than 11:00a.m. (Chicago time) on the date specified herein. Any payment received by the Lender laterthan 11:00 a.m. (Chicago time), shall be deemed to have been received on the followingBusiness Day and any applicable interest or fee shall continue to accrue until suchfollowing Business Day.     (b) **Application**.          (i) Subject to the provisions of Section 2.7, payments shall be remitted to theLender and all such payments shall be applied as follows (such application shall be nolater than the first Business Day after receipt thereof in accordance with Section2.8):          (A) first, to pay any Lender Expenses or any other indemnities, fees orpremiums then due to the Lender hereunder, until paid in full,          (B) second, ratably to pay interest due in respect of the Advancesuntil paid in full,          (C) third, to pay the principal of all Advances until paid in full,          (D) fourth, to pay any other Obligations, and
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          (E) fifth, to Borrower (to be wired to the Investment Accounts) or suchother Person entitled thereto under applicable law.     (ii) **Intentionally omitted**.     (iii) In each instance, so long as no Event of Default has occurred and is continuing,this Section 2.4(b) shall not be deemed to apply to any payment by Borrowerspecified by Borrower to be for the payment of specific Obligations then due and payable (orprepayable) under any provision of this Agreement.     (iv) For purposes of the foregoing, “paid in full” means payment of all Obligations(and specifically including interest accrued after the commencement of any InsolvencyProceeding), default interest, interest on interest, and expense reimbursements, whether ornot any of the foregoing would be or is allowed or disallowed in whole or in part in anyInsolvency Proceeding.     (v) In the event of a direct conflict between the priority provisions of thisSection 2.4 and other provisions contained in any other Loan Document, it is theintention of the parties hereto that such priority provisions in such documents shall beread together and construed, to the fullest extent possible, to be in concert with eachother. In the event of any actual, irreconcilable conflict that cannot be resolved asaforesaid, the terms and provisions of Section 2.7 shall control and govern, andthereafter this Section 2.4 shall control and govern.     2.5. **Intentionally Omitted.**     2.6. **Interest Rates: Rates, Payments, and Calculations.**     (a) **Interest Rates**. Except as provided in clause (c) below, all Obligationsthat have been charged to the Loan Account pursuant to the terms hereof shall bear intereston the Daily Balance thereof as follows (i) if the relevant Obligation is a LIBOR Rate Loan,at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin and (ii) otherwise,at a per annum rate equal to the Base Rate plus the Base Rate Margin.          The foregoing notwithstanding, at no time shall any portion of the Obligations bear intereston the Daily Balance thereof at a per annum rate less than 4%. To the extent that interest accruedhereunder at the rate set forth herein would be less than the foregoing minimum daily rate, theinterest rate chargeable hereunder for such day automatically shall be deemed increased to theminimum rate.     (b) **Intentionally Omitted.**     (c) **Default Rate**. Upon the occurrence and during the continuation of an Event ofDefault (and at the election of the Lender), all Obligations that have been charged to theLoan Account pursuant to the terms hereof shall bear interest on the
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Daily Balance thereof at a per annum rate equal to 2 percentage points above the perannum rate otherwise applicable hereunder.     (d) **Payment**. Except as provided to the contrary in Section 2.13(a), interestand all other fees payable hereunder shall be due and payable, in arrears, on the firstBusiness Day of each month at any time that any Obligations or the Commitment areoutstanding. Borrower hereby authorizes the Lender, from time to time, without prior noticeto Borrower, to charge such interest and fees, all Lender Expenses (as and when incurred)and all other payments as and when due and payable under any Loan Document to Borrower’sLoan Account, which amounts thereafter shall constitute Advances hereunder and shall accrueinterest at the rate then applicable to Advances hereunder. Any interest not paid when dueshall be compounded by being charged to Borrower’s Loan Account and shall thereafterconstitute Advances hereunder and shall accrue interest at the rate then applicable toAdvances that are Base Rate Loans hereunder.     (e) **Computation**. All interest and fees chargeable hereunder shall be computed on thebasis of a 360 day year for the actual number of days elapsed. In the event the Base Rateis changed from time to time hereafter, the rates of interest hereunder based upon the BaseRate automatically and immediately shall be increased or decreased by an amount equal tosuch change in the Base Rate.     (f) **Intent to Limit Charges to Maximum Lawful Rate**. In no event shall the interestrate or rates payable under this Agreement, plus any other amounts paid in connectionherewith, exceed the highest rate permissible under any law that a court of competentjurisdiction shall, in a final determination, deem applicable. Borrower and the Lender, inexecuting and delivering this Agreement, intend legally to agree upon the rate or rates ofinterest and manner of payment stated within it; provided, however, that,anything contained herein to the contrary notwithstanding, if said rate or rates of interestor manner of payment exceeds the maximum allowable under applicable law, then, *ipso facto,*as of the Closing Date, Borrower is and shall be liable only for the payment of such maximumas allowed by law, and payment received from Borrower in excess of such legal maximum,whenever received, shall be applied to reduce the principal balance of the Obligations tothe extent of such excess.     (g) **PIK Interest**. The Borrower may elect to increase the then outstanding principalamount of the Advances by the amount of all accrued and unpaid interest as of the date anysuch interest is due and payable under Section 2.6(d) (an “Interest PaymentDate”, and such interest being the “PIK Interest”) and the principal amount ofthe Advances shall be deemed so increased by such amount as of such Interest Payment Date.The Borrower shall be deemed to have given the Lender irrevocable notice of its election toincrease the Advances by the PIK Interest amount with respect to each Interest Payment Dateunless it notifies the Lender otherwise by not later than 10:00 a.m. (Chicago time) on suchInterest Payment Date.
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     2.7. **Subordination.**     (a) Anything in this Agreement, in the Unsecured Loan Facility or in the Secured LoanDocuments to the contrary notwithstanding, the Obligations hereunder shall be subordinateand junior in right of payment, to the extent and in the manner hereinafter set forth, to(w) all “Obligations” of the Borrower under and as defined in the Unsecured Loan Facility,(x) all “Obligations” of the Borrower under and as defined in the Secured Loan Facility, (y)all amounts owing under and in respect of the Junior Notes and (z) the Borrower’s guaranteeof the “Obligations” under the Secured Loan Facility (such obligations and otherindebtedness and obligations in connection with any renewal, refunding, restructuring orrefinancing thereof, including interest thereon accruing after the commencement of anyproceedings referred to in clause (i) below, whether or not such interest is anallowed claim in such proceeding, being hereinafter collectively referred to as “SeniorIndebtedness”):          (i) in the event of any insolvency or bankruptcy proceedings, and any receivership,liquidation, reorganization or other similar proceedings in connection therewith, relativeto the Borrower or to its creditors, as such, or to its property, and in the event of anyproceedings for voluntary liquidation, dissolution or other winding up of the Borrower,whether or not involving insolvency or bankruptcy, then (x) the holders of SeniorIndebtedness shall be paid in full in cash in respect of all amounts constituting SeniorIndebtedness before the Lender is entitled to receive (whether directly or indirectly), ormake any demands for, any payment on account of the Obligations hereunder and (y) until theholders of Senior Indebtedness are paid in full in cash in respect of all amountsconstituting Senior Indebtedness, any payment or distribution to which the Lender wouldotherwise be entitled shall be made to the holders of Senior Indebtedness; and          (ii) if any payment or distribution of any character, whether in cash, securities orother property, in respect of this Agreement shall (despite these subordination provisions)be received by the Lender (unless solely in its capacity as a holder of Senior Indebtedness)in violation of clause (i) before all Senior Indebtedness shall have been paid infull in cash, such payment or distribution shall be held in trust for the benefit of, andshall be paid over or delivered to, the holders of Senior Indebtedness (or theirrepresentatives), ratably according to the respective aggregate amounts remaining unpaidthereon, to the extent necessary to pay all Senior Indebtedness in full in cash.     (b) To the fullest extent permitted by law, no present or future holder of SeniorIndebtedness shall be prejudiced in its right to enforce the subordination of this Agreementby any act or failure to act on the part of the Borrower or by any act or failure to act onthe part of such holder or any trustee or agent for such holder. The Lender and theBorrower hereby agree that the subordination of this Agreement is for the benefit of theholders of Senior Indebtedness and the holders of the Senior Indebtedness are obligees underthis Agreement to the same extent as if their names
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were written herein as such and each of the holders of the Senior Indebtedness may, onbehalf of the itself, proceed to enforce the subordination provisions herein.     (c) Nothing contained in the subordination provisions set forth above is intended to orwill impair, as between the Borrower and the Lender, the obligations of the Borrower, whichare absolute and unconditional, to pay to the Lender the Obligations hereunder as and whendue and payable in accordance with the terms of this Agreement, or is intended to or willaffect the relative rights of the Lender and other creditors of the Borrower other than theholders of Senior Indebtedness.     2.8. **Crediting Payments.**          The receipt of any payment item by the Lender shall not be considered a payment on accountunless such payment item is a wire transfer of immediately available federal funds made to theLender’s Account. Should any payment item not be honored when presented for payment, then Borrowershall be deemed not to have made such payment and interest shall be calculated accordingly.Anything to the contrary contained herein notwithstanding, any payment item shall be deemedreceived by the Lender only if it is received into the Lender’s Account on a Business Day on orbefore 11:00 a.m. (Chicago time). If any payment item is received into the Lender’s Account on anon-Business Day or after 11:00 a.m. (Chicago time) on a Business Day, it shall be deemed to havebeen received by the Lender as of the opening of business on the immediately following BusinessDay.     2.9. **Designated Accounts.**          The Lender is authorized to make the Advances under this Agreement based upon telephonic orother instructions received from anyone purporting to be an Authorized Person, or withoutinstructions if pursuant to Section 2.6(d). Borrower agrees to establish and maintain theDesignated Accounts with the Designated Account Banks for the purpose of receiving the proceeds ofthe Advances requested by Borrower and made by the Lender hereunder. Unless otherwise agreed bythe Lender and Borrower, any Advance requested by Borrower and made by the Lender hereunder shallbe made to the Designated Accounts designated by the Borrower for such purpose.     2.10. **Maintenance of Loan Account; Statements of Obligations.**          The Lender shall maintain an account on its books in the name of Borrower (the “LoanAccount”) on which Borrower will be charged with all Advances made by the Lender to Borrower orfor Borrower’s account, and with all other payment Obligations hereunder or hereunder, including,accrued interest, fees and expenses, and Lender Expenses. In accordance with Section 2.8,the Loan Account will be credited with all payments received by the Lender from Borrower or forBorrower’s account. The Lender shall render statements regarding the Loan Account to Borrower,including principal, interest, fees, and including an itemization of all charges and expensesconstituting Lender Expenses owing, and such statements, absent manifest error, shall beconclusively presumed to be correct and accurate and constitute an account stated between Borrowerand the Lender unless, within 30
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days after receipt thereof by Borrower, Borrower shall deliver to the Lender written objectionthereto describing the error or errors contained in any such statements.     2.11. **Fees.**          Borrower shall pay to the Lender the following fees and charges, which fees and charges shallbe non-refundable when paid (irrespective of whether this Agreement is terminated thereafter):**Unused Line Fee**. On the first day of each month during the term of this Agreement, anunused line fee in the amount equal to 0.50% per annum times the result of (i) the MaximumRevolver Amount, less (ii) the average Daily Balance of Advances that were outstandingduring the immediately preceding month.     2.12. **Intentionally Omitted.**     2.13. **LIBOR Option.**     (a) **Interest and Interest Payment Dates**. In lieu of having interest charged at therate based upon the Base Rate, Borrower shall have the option (the “LIBOR Option”)to have interest on all or a portion of the Advances be charged at a rate of interest basedupon the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i)(A) if the Interest Period with respect to such LIBOR Rate Loan has a duration of 6 months,each of (1) the first Business Day 90 or more days following the first day of such InterestPeriod and (2) the last day of such Interest Period applicable thereto or (B) if theInterest Period with respect to such LIBOR Rate Loan has a duration of less than 6 months,the last day of the Interest Period applicable thereto, (ii) the occurrence of an Event ofDefault in consequence of which the Lender has elected to accelerate the maturity of all orany portion of the Obligations, or (iii) termination of this Agreement pursuant to the termshereof. On the last day of each applicable Interest Period, unless Borrower properly hasexercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBORRate Loan automatically shall convert to the rate of interest then applicable to Base RateLoans of the same type hereunder. At any time that an Event of Default has occurred and iscontinuing, Borrower no longer shall have the option to request that Advances bear interestat the LIBOR Rate and the Lender shall have the right to convert the interest rate on alloutstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder.     (b) **LIBOR Election**.          (i) Borrower may, at any time and from time to time, so long as no Event of Default hasoccurred and is continuing, elect to exercise the LIBOR Option by notifying the Lender priorto 11:00 a.m. (Chicago time) at least 3 Business Days prior to the commencement of theproposed Interest Period (the “LIBOR Deadline”). Notice of Borrower’s election ofthe LIBOR Option for a permitted portion of the
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Advances or Term Loan and an Interest Periodpursuant to this Section shall be madeby delivery to the Lender of a LIBOR Notice received by the Lender before the LIBORDeadline, or by telephonic notice received by the Lender before the LIBOR Deadline (to beconfirmed by delivery to the Lender of a LIBOR Notice received by the Lender prior to 5:00p.m. (Chicago time) on the same day).          (ii) Each LIBOR Notice shall be irrevocable and binding on Borrower.          (iii) Borrowers shall have not more than 10 LIBOR Rate Loans in effect at any giventime. Borrower only may exercise the LIBOR Option for LIBOR Rate Loans of at least $100,000and integral multiples of $100,000 in excess thereof.     (c) **Prepayments**. Borrower may prepay LIBOR Rate Loans at any time.     (d) **Special Provisions Applicable to LIBOR Rate**.          (i) The LIBOR Rate may be adjusted by the Lender on a prospective basis to take intoaccount any additional or increased costs to the Lender of maintaining or obtaining anyeurodollar deposits or increased costs due to changes in applicable law occurring subsequentto the commencement of the then applicable Interest Period, including changes in tax laws(except changes of general applicability in corporate income tax laws), which additional orincreased costs would increase the cost of funding loans bearing interest at the LIBOR Rate.In any such event, the Lender shall give Borrower notice of such a determination andadjustment and, upon its receipt of the notice from the Lender, Borrower may, by notice tothe Lender (y) require the Lender to furnish to Borrower a statement setting forth the basisfor adjusting such LIBOR Rate and the method for determining the amount of such adjustment,or (z) repay the LIBOR Rate Loans with respect to which such adjustment is made.          (ii) In the event that any change in market conditions or any law, regulation, treaty,or directive, or any change therein or in the interpretation of application thereof, shallat any time after the Closing Date, in the reasonable opinion of the Lender, make itunlawful or impractical for the Lender to fund or maintain Advances as LIBOR Rate Loans orto continue such funding or maintaining, or to determine or charge interest rates at theLIBOR Rate, the Lender shall give notice of such changed circumstances to Borrower and (y)in the case of any LIBOR Rate Loans of the Lender that are outstanding, the date specifiedin the Lender’s notice shall be deemed to be the last day of the Interest Period of suchLIBOR Rate Loans, and interest upon the LIBOR Rate Loans of the Lender thereafter shallaccrue interest at the rate then applicable to Base Rate Loans, and (z) Borrower shall notbe entitled to elect the LIBOR Option until the Lender determines that it would no longer beunlawful or impractical to do so.
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     (e) **No Requirement of Matched Funding**. Anything to the contrary contained hereinnotwithstanding, the Lender is not required actually to acquire eurodollar deposits to fundor otherwise match fund any Obligation as to whichinterest accrues at the LIBOR Rate. The provisions of this Section shall apply as ifthe Lender had match funded any Obligation as to which interest is accruing at the LIBORRate by acquiring eurodollar deposits for each Interest Period in the amount of the LIBORRate Loans.     2.14. **Intentionally Omitted.**     2.15. **Intentionally Omitted.**     2.16. **Servicing.**          The Borrower hereby acknowledges that the Lender may engage a third-party servicer oradministrator for the purpose of reviewing reports and borrowing requests delivered hereunder, toconduct visitations of the Companies premises to review the operations and business of theCompanies and to engage in further communications with the Companies, in each case to the extentthe Lender shall be permitted hereunder to receive such reports or requests or conduct suchvisitations; provided, that such servicer or administrator shall be approved by theBorrower, which approval shall not be unreasonably withheld or delayed, and the Borrower shallprovide appropriate details with respect to any disapproval.III. **CONDITIONS; TERM OF AGREEMENT.**     3.1. **Conditions Precedent to the Extension of Credit on the Closing Date.**          The obligation of the Lender to make Advances on the Closing Date pursuant to Section2.2 (or otherwise to extend any credit provided for hereunder), is subject to the fulfillment,to the satisfaction of the Lender, of each of the conditions precedent set forth below (unlesswaived in accordance with Section 15.1):     (a) the Closing Date shall occur on or before February 29, 2008;     (b) the Lender shall have received each of the following documents, in form andsubstance satisfactory to the Lender, duly executed, and each such document shall be in fullforce and effect:               (i) Secured Loan Facility,               (ii) Unsecured Loan Facility, and               (iii) the Disbursement Letter;     (c) the Lender shall have received a certificate from the Secretary of Borrowerattesting to the resolutions of Borrower’s Board of Directors authorizing its
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execution,delivery, and performance of this Agreement and authorizing specific officers of Borrower toexecute the same;     (d) the Lender shall have received copies of Borrower’s Governing Documents, asamended, modified, or supplemented to the Closing Date, certified by the Secretary ofBorrower;     (e) the Lender shall have received a certificate of status with respect to Borrowersuch certificate to be issued by the appropriate officer of the jurisdiction of organizationof Borrower, which certificate shall indicate that Borrower is in good standing in suchjurisdiction;     (f) the Lender shall have received opinions of Borrower’s counsel in form and substancesatisfactory to the Lender;     (g) the Lender shall have received consolidated federal tax returns for the Borrowerfor the years 2004, 2005 and 2006;     (h) the Lender shall have received satisfactory evidence (including a certificate ofthe chief financial officer of the Borrower) that all tax returns required to be filed byCompanies have been timely filed and all taxes upon Companies or their properties, assets,income, and franchises (including Real Property taxes, sales taxes, and payroll taxes) havebeen paid prior to delinquency, except such taxes that are the subject of a PermittedProtest;     (i) the Lender shall have completed its business and legal due diligence, including (i)an audit and review of Borrower’s books and records and verification of Borrower’srepresentations and warranties to the Lender, the results of which shall be satisfactory tothe Lender, and (ii) a legal review of all material contracts and litigation matters, theresults of which shall be satisfactory to the Lender;     (j) the Borrower have paid all Lender Expenses incurred in connection with thetransactions evidenced by this Agreement for which an invoice shall have been presented tothe Borrower on or prior to the Closing Date;     (k) the Lender shall have received copies of each of Platform Licenses covering theNorth American Market (which may be redacted copies) and other material contracts, togetherwith a certificate of the Secretary, President, Chief Executive Officer or Senior VicePresident of the Borrower certifying each such document as being a true, correct, andcomplete copy thereof;     (l) Borrower shall have received all licenses, approvals or evidence of other actionsrequired by any Governmental Authority in connection with the execution and delivery byBorrower of the Loan Document or with the consummation of the transactions contemplatedthereby; and
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     (m) all other documents and legal matters in connection with the transactionscontemplated by this Agreement shall have been delivered, executed, or recorded and shall bein form and substance satisfactory to the Lender.     3.2. **Conditions Subsequent to the Initial Extension of Credit.**          The obligation of the Lender to continue to make Advances (or otherwise extend credithereunder) is subject to the fulfillment, on or before the date applicable thereto (or such laterdate as the Lender may determine in light of the circumstances), of each of the conditionssubsequent set forth in Section 3.2 of the Secured Loan Facility (the failure by Companies to soperform or cause to be performed constituting an Event of Default).     3.3. **Conditions Precedent to all Extensions of Credit.**          The obligation of the Lender to make any Advances hereunder at any time (or to extend anyother credit hereunder) shall be subject to the following conditions precedent:     (a) the representations and warranties contained in this Agreement shall be true andcorrect in all material respects on and as of the date of such extension of credit, asthough made on and as of such date (except to the extent that such representations andwarranties relate solely to an earlier date);     (b) no Default or Event of Default shall have occurred and be continuing on the date ofsuch extension of credit, nor shall either result from the making thereof;     (c) no injunction, writ, restraining order, or other order of any nature restricting orprohibiting, directly or indirectly, the extending of such credit shall have been issued andremain in force by any Governmental Authority against Borrower, the Lender, or any of theirAffiliates; and     (d) no Material Adverse Change with respect to Companies shall have occurred since thedate of the latest financial statements submitted to the Lender pursuant to Section6.2.     3.4. **Term.**          This Agreement shall continue in full force and effect for a term ending on May 31, 2010 (the“Maturity Date”). The foregoing notwithstanding, the Lender shall have the right toterminate its obligations under this Agreement immediately and without notice upon the occurrenceand during the continuation of an Event of Default.     3.5. **Effect of Termination.**          On the date of termination of this Agreement, all Obligations immediately shall become due andpayable without notice or demand. No termination of this Agreement, however, shall relieve ordischarge Borrower of its duties, Obligations, or covenants hereunder.
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     3.6. **Early Termination by Borrower.**          Borrower has the option, at any time upon 15 days prior written notice by Borrower to theLender, to terminate this Agreement by paying to the Lender theObligations. In the event of the termination of this Agreement and repayment of theObligations at any time prior to the Maturity Date, for any other reason than the payment by theBorrower of the Obligations, including (a) termination upon the election of the Lender to terminateafter the occurrence and during the continuation of an Event of Default or (b) restructure,reorganization or compromise of the Obligations by the confirmation of a plan of reorganization, orany other plan of compromise, restructure, or arrangement in any Insolvency Proceeding, then, inview of the impracticability and extreme difficulty of ascertaining the actual amount of damages tothe Lender or profits lost by the Lender as a result of such early termination, and by mutualagreement of the parties as to a reasonable estimation and calculation of the lost profits ordamages of the Lender, Borrower shall pay the Liquidated Damages Premium to the Lender, measured asof the date of such termination.IV. **INTENTIONALLY OMITTED.**V. **REPRESENTATIONS AND WARRANTIES.**          In order to induce the Lender to enter into this Agreement, Borrower makes the followingrepresentations and warranties to the Lender which shall be true, correct, and complete, in allmaterial respects, as of the Closing Date, and at and as of the date of the making of each Advance(or other extension of credit) made thereafter, as though made on and as of the date of suchAdvance (or other extension of credit) (except to the extent that such representations andwarranties relate solely to an earlier date) and such representations and warranties shall survivethe execution and delivery of this Agreement:     5.1. **No Encumbrances.**          Each Company has good and indefeasible title to its personal property assets and good andmarketable title to its Real Property, in each case, free and clear of Liens except for PermittedLiens.     5.2. **Intentionally Omitted.**     5.3. **Intentionally Omitted.**     5.4. **Intentionally Omitted.**     5.5. **Intentionally Omitted.**     5.6. **Intentionally Omitted.**     5.7. **Intentionally Omitted.**     5.8. **Due Organization and Qualification; Subsidiaries.**
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     (a) Each Company is duly organized and existing and in good standing under the laws ofthe jurisdiction of its organization and qualified to do business in any state where thefailure to be so qualified reasonably could be expected to have a Material Adverse Change.     (b) Set forth on Schedule 5.8(b), is a complete and accurate description of theauthorized capital Stock of each Company, by class, and, as of the Closing Date, adescription of the number of shares of each such class that are issued and outstanding.Other than as described on Schedule 5.8(b) (as such Schedule may be updated fromtime to time by the Borrower), there are no subscriptions, options, warrants, or callsrelating to any shares of each Company’s (other than the Borrower) capital Stock, includingany right of conversion or exchange under any outstanding security or other instrument.Except as described on Schedule 5.8(b) (as such Schedule may be updated from time totime by the Borrower), no Company is subject to any obligation (contingent or otherwise) torepurchase or otherwise acquire or retire any shares of its capital Stock or any securityconvertible into or exchangeable for any of its capital Stock.     (c) Set forth on Schedule 5.8(c) (as such Schedule may be updated from time totime by the Borrower), is a complete and accurate list of each Company’s direct and indirectSubsidiaries, showing: (i) the jurisdiction of their organization; (ii) the number ofshares of each class of common and preferred Stock authorized for each of such Subsidiaries;and (iii) the number and the percentage of the outstanding shares of each such class owneddirectly or indirectly by the applicable Company. All of the outstanding capital Stock ofeach such Subsidiary has been validly issued and is fully paid and non-assessable.     (d) Except as set forth on Schedule 5.8(d) (as such Schedule may be updatedfrom time to time by the Borrower), there are no subscriptions, options, warrants, or callsrelating to any shares of any Companies’ Subsidiaries’ capital Stock, including any right ofconversion or exchange under any outstanding security or other instrument. No Company orany of its respective Subsidiaries is subject to any obligation (contingent or otherwise) torepurchase or otherwise acquire or retire any shares of any Companies’ capital Stock or anysecurity convertible into or exchangeable for any such capital Stock.     5.9. **Due Authorization; No Conflict.**     (a) The execution, delivery, and performance by Borrower of this Agreement has beenduly authorized by all necessary action on the part of Borrower.     (b) The execution, delivery, and performance by Borrower of this Agreement does not andwill not (i) violate any provision of federal, national, state, provincial or local law orregulation applicable to Borrower, the Governing Documents of Borrower, or any order,judgment, or decree of any court or other Governmental Authority binding on Borrower, (ii)conflict with, result in a breach of,
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or constitute (with due notice or lapse of time orboth) a default under any material contractual obligation of Borrower, including the JuniorNotes, (iii) result in or require the creation or imposition of any Lien of any naturewhatsoever upon any properties or assets of Borrower, other than Permitted Liens, or (iv)require any approval of Borrower’s shareholders or any approval or consent of any Personunderany material contractual obligation of Borrower, other than consents or approvals thathave been obtained and that are still in force and effect.     (c) The execution, delivery, and performance by Borrower of this Agreement does not andwill not require any registration with, consent, or approval of, or notice to, or otheraction with or by, any Governmental Authority, other than consents or approvals that havebeen obtained and that are still in force and effect.     (d) This Agreement, and all other documents contemplated hereby, when executed anddelivered by Borrower will be the legally valid and binding obligations of Borrower,enforceable against Borrower in accordance with their respective terms, except asenforcement may be limited by equitable principles or by bankruptcy, insolvency,reorganization, moratorium, or similar laws relating to or limiting creditors’ rightsgenerally.     5.10. **Litigation.**          Other than those matters disclosed on the SEC Reports, there are no actions, suits, orproceedings pending or, to the best knowledge of Borrower, threatened against the Companies, exceptfor (a) matters that exist as of the Closing Date that Borrower has no knowledge of, (b) mattersthat exist as of the Closing Date that could not reasonably be expected to result in a MaterialAdverse Change, (c) matters that are fully covered by insurance (subject to customary deductibles),and (d) matters arising after the Closing Date that reasonably could not be expected to result in aMaterial Adverse Change.     5.11. **No Material Adverse Change.**          All financial statements relating to the Companies that have been delivered by Borrower to theLender have been prepared in accordance with GAAP (except, in the case of unaudited financialstatements, for the lack of footnotes and being subject to year-end audit adjustments) and presentfairly in all material respects, the Companies’ financial condition as of the date thereof andresults of operations for the period then ended. There has not been a Material Adverse Change withrespect to the Companies since the date of the latest financial statements submitted to the Lenderpursuant to Section 6.2.     5.12. **Fraudulent Transfer.**     (a) the Companies taken as a whole are Solvent.     (b) No transfer of property is being made by Borrower and no obligation is beingincurred by Borrower in connection with the transactions contemplated by this
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Agreement withthe intent to hinder, delay, or defraud either present or future creditors of Borrower.     5.13. **Employee Benefits.**          None of the Companies nor any of their ERISA Affiliates maintains or contributes to anyBenefit Plan.     5.14. **Environmental Condition.**          Except as set forth on Schedule 5.14 (as such Schedule may be updated from time totime by the Borrower), (a) to Borrower’s knowledge, none of the Companies’ properties or assets hasever been used by Companies, or by previous owners or operators in the disposal of, or to produce,store, handle, treat, release, or transport, any Hazardous Materials, where such production,storage, handling, treatment, release or transport was in violation, in any material respect, ofapplicable Environmental Law, (b) to Borrower’s knowledge, none of Companies’ properties or assetshas ever been designated or identified in any manner pursuant to any environmental protectionstatute as a Hazardous Materials disposal site, (c) Borrower has never received notice that a Lienarising under any Environmental Law has attached to any revenues or to any Real Property owned oroperated by the Companies, and (d) Borrower has never received a summons, citation, notice, ordirective from the Environmental Protection Agency or any other federal or state governmentalagency concerning any action or omission by any Company resulting in the releasing or disposing ofHazardous Materials into the environment.     5.15. **Brokerage Fees.**          Borrower has not utilized the services of any broker or finder in connection with obtainingfinancing from the Lender under this Agreement and no brokerage commission or finders fee ispayable by Borrower in connection herewith.     5.16. **Intellectual Property.**          Each Company owns, or holds licenses in, Intellectual Property that is necessary to theconduct of its business as currently conducted. Attached hereto as Schedule 5.16 (as suchSchedule is updated within 30 days of the end of each fiscal quarter of Borrower or more frequentlyas the Borrower may elect) is a true, correct, and complete listing of all United States patents,patent applications, registered trademarks, trademark applications, copyright registrations, andcopyright applications as to which each Company is the owner and all material license agreementsgiving the Company the right to use third party Intellectual Property. Except as set forth onSchedule 5.16 (as such Schedule is updated within 30 days of the end of each fiscal quarterof Borrower or more frequently as the Borrower may elect), all Intellectual Property owned by anyof the Companies or any of their Affiliates and which are related solely to the Mortal KombatFranchise are owned by MAG.     5.17. **Leases.**
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          Companies enjoy peaceful and undisturbed possession under all leases material to theirbusiness and to which they are parties or under which they are operating. All of such leases arevalid and subsisting and no material default by Companies exists under any of them.     5.18. **Intentionally Omitted.**     5.19. **Complete Disclosure.**          All factual information (taken as a whole) furnished by or on behalf of Borrower in writing tothe Lender (including all information contained in the Schedules hereto) for purposes of or inconnection with this Agreement or any transaction contemplated herein is, and all other suchfactual information (taken as a whole) hereafter furnished by or on behalf of Borrower in writingto the Lender will be, true and accurate in all material respects on the date as of which suchinformation is dated or certified and not incomplete by omitting to state any fact necessary tomake such information (taken as a whole) not misleading in any material respect at such time inlight of the circumstances under which such information was provided. The Closing Date Projectionsrepresented as of the date on which they were delivered to the Lender, and any other Projectionsshall represent as of the date on which they are delivered to the Lender, the Companies’ good faithbest estimate of their future performance for the periods covered thereby.     5.20. **Indebtedness.**          Set forth on Schedule 5.20 is a true and complete list of all Indebtedness of eachCompany outstanding on the Closing Date that is to remain outstanding after the Closing Date andsuch Schedule accurately reflects the aggregate principal amount of such Indebtedness and theprincipal terms thereof.VI. **AFFIRMATIVE COVENANTS.**          Borrower covenants and agrees that, until the Obligations have been Paid in Full, Borrowershall do all of the following:     6.1. **Accounting System.**          Maintain a system of accounting that enables Borrower to produce financial statements inaccordance with GAAP and maintain records pertaining to the Collateral that contain information asfrom time to time reasonably may be requested by the Lender. Borrower also shall keep an inventoryreporting system that shows all additions, sales, claims, returns, and allowances with respect toits Inventory.     6.2. **Company Reporting.**          Borrower shall deliver to Lender copies of all reports delivered to the lender or its designeeunder and pursuant to the Secured Loan Facility.
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     6.3. **Financial Statements, Reports, Certificates.**     Deliver to the Lender:     (a) as soon as available, but in any event within 30 days (or 45 days in the case of amonth that is one of Borrower’s fiscal quarters or 90 days in the case of amonth that is the Borrower’s fiscal year end) after the end of each month during eachof Borrower’s fiscal years,          (i) Borrower-prepared consolidated balance sheet, income statement, and statement ofcash flow covering Borrower’s and its Subsidiaries’ operations during such period, and          (ii) a certificate of Borrower signed by the chief financial officer of Borrower to theeffect that:          (A) the financial statements delivered hereunder have been prepared inaccordance with GAAP (except for the lack of footnotes and being subject toquarterly (or more frequent) adjustments for reserves for price protection,warranties and returns consistent with past practices year-end audit adjustments)and fairly present in all material respects the financial condition of Borrower andits Subsidiaries, and          (B) there does not exist any condition or event that constitutes a Default orEvent of Default (or, to the extent of any non-compliance, describing suchnon-compliance as to which he or she may have knowledge and what action Companieshave taken, are taking, or propose to take with respect thereto), and     (b) as soon as available, but in any event within 90 days after the end of each ofBorrower’s fiscal years, consolidated financial statements of Borrower and its Subsidiariesfor each such fiscal year, audited by independent certified public accountants reasonablyacceptable to the Lender and certified, without any qualifications, by such accountants tohave been prepared in accordance with GAAP (such audited financial statements to include abalance sheet, income statement, and statement of cash flow and, if prepared, suchaccountants’ letter to management),     (c) as soon as available, but in any event prior to the start of each of Borrower’sfiscal years,          (i) copies of Borrower’s annual Projections which have been presented to the Board ofDirectors of the Borrower, in form and substance (including as to scope and underlyingassumptions) satisfactory to the Lender, in its discretion, for the forthcoming three years,year by year, and for the forthcoming fiscal year, month by month, certified by Borrower andsigned by the chief financial officer of Borrower as being such Borrower’s good faith bestestimate of the financial performance of Borrower and its Subsidiaries during the periodcovered thereby,
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          (ii) a copy of Capital Expenditure budget for the forthcoming year, which budget shallbe in the form and substance acceptable to the Lender, and          (iii) a schedule of the projected release dates for videogames, which schedule shallinclude for each videogame, the title of the game, the release date, projected net sales byunit and projected net sales by quarter,          (iv) a schedule of (A) the projected revenue by fiscal quarter generated from the top 5videogames to be sold by the Companies during the upcoming fiscal year (or the top 5videogames and Mortal Kombat if Mortal Kombat is not in the top 5 videogames by revenuegenerated) and (B) the videogame titles comprising 70% of projected total annual revenuefrom videogame sales during the upcoming fiscal year,     (d) as soon as available but in any event within 45 days after the end of each monththat is one of Borrower’s fiscal quarters (or within 90 days in the case of a month that isthe Borrower’s fiscal year end), revised annual Projections (if any) which have beenpresented to the Board of Directors of the Borrower, in form and substance (including as toscope and underlying assumptions) satisfactory to the Lender, in its discretion, for thecurrent fiscal year, month by month, incorporating the actual results of all prior months ofsuch fiscal year as well as a comparison of actual year to date results versus theProjections delivered for such fiscal year pursuant Section 6.3(c) hereof,     (e) as soon as Borrower has knowledge of any event or condition that constitutes aDefault or an Event of Default, notice thereof and a statement of the curative action thatthe Companies propose to take with respect thereto,     (f) promptly after the commencement thereof, but in any event within 5 days after theservice of process with respect thereto on any Company, notice of all actions (including acopy of the relevant complaint), suits, or proceedings brought by or against any Companybefore any Governmental Authority which, (i) reasonably could be expected to result in aMaterial Adverse Change or (ii) sets forth a claim that if the Government were to prevailwould result in monetary damages or loss to the Company in excess of $5,000,000     (g) promptly upon delivery thereof, copies of any notice with respect to redemption ofthe Junior Notes delivered by Borrower to any holder of the Junior Notes,     (h) as soon as Borrower has knowledge of or receipt of any notice from a holder of aJunior Note with respect to a Redemption Date, telephonic and telefacsimile or electronicmail notice thereof, and     (i) upon the request of the Lender, any other report (including Accounts reports)reasonably requested relating to the financial condition of the Companies.
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          In addition to the financial statements referred to above, Borrower agrees to deliverunaudited balance sheets and income statements prepared on a consolidating basis and agree that noSubsidiary of Borrower (other than the Australia Companies) will have a fiscal year different fromthat of Borrower. Borrower agree to cooperate with the Lender to allow the Lender to consult withits independent certified public accountants if the Lender reasonably requests the right to do soand that, in such connection, its independent certified public accountants are authorized tocommunicate with the Lender and to release to the Lender whatever financial information concerningBorrower that the Lender reasonably may request.     6.4. **Intentionally Omitted.**     6.5. **Returns.**          Cause returns and allowances as between Companies and their Account Debtors, to be on no lessfavorable basis to the Companies than in accordance with the usual customary practices ofCompanies, as they exist at the time of the execution and delivery of this Agreement.     6.6. **Maintenance of Properties.**          Maintain and preserve all of its properties which are necessary or useful in the properconduct to its business in good working order and condition, ordinary wear and tear excepted, andcomply at all times with the provisions of all leases to which it is a party as lessee, so as toprevent any loss or forfeiture thereof or thereunder.     6.7. **Taxes.**          Cause all assessments and taxes, whether real, personal, or otherwise, due or payable by, orimposed, levied, or assessed against Companies, or any of their respective assets to be paid infull, before delinquency or before the expiration of any extension period, except to the extentthat the validity of such assessment or tax shall be the subject of a Permitted Protest. Borrowerwill make timely payment or deposit of all tax payments and withholding taxes required of it byapplicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local,state, provincial and federal income taxes, and will, upon request, furnish the Lender with proofsatisfactory to the Lender indicating that the applicable Company has made such payments ordeposits.     6.8. **Insurance.**     (a) At Borrower’ expense, maintain insurance respecting Borrower and its Subsidiaries’assets wherever located, covering loss or damage by fire, theft, explosion, and all otherhazards and risks as ordinarily are insured against by other Persons engaged in the same orsimilar businesses. Borrower also shall maintain business interruption, public liability,and product liability insurance, as well as insurance against larceny, embezzlement, andcriminal misappropriation and directors and officers liability insurance. All such policiesof insurance shall be in such
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amounts and with such insurance companies as are reasonably satisfactory to the Lender.     (b) Borrower shall give the Lender prompt notice of any loss covered by such insurance.     6.9. **Intentionally Omitted.**     6.10. **Compliance with Laws.**          Comply with the requirements of all applicable laws, rules, regulations, and orders of anyGovernmental Authority, including the Fair Labor Standards Act and the Americans With DisabilitiesAct (and, in each case, any Canadian or United Kingdom equivalent, as the case may be, for eachjurisdiction in which such Company conducts business) and the PATRIOT Act, other than laws, rules,regulations, and orders the non-compliance with which, individually or in the aggregate, could notreasonably be expected to result in a Material Adverse Change.     6.11. **Leases.**          Pay when due all material rents and other material amounts payable under any leases to whichBorrower is a party or by which any of Borrower’s properties and assets are bound, unless suchpayments are the subject of a Permitted Protest.     6.12. **Existence.**          At all times preserve and keep in full force and effect Borrower’s valid existence and goodstanding and any rights and franchises material to the businesses of Borrower taken as a whole.     6.13. **Environmental.**          (a) Keep any property either owned or operated by Borrower free of any Environmental Liens orpost bonds or other financial assurances sufficient to satisfy the obligations or liabilityevidenced by such Environmental Liens, (b) comply, in all material respects, with EnvironmentalLaws and provide to the Lender documentation of such compliance which the Lender reasonablyrequests, (c) promptly notify the Lender of any release of a Hazardous Material of any reportablequantity from or onto property owned or operated by Borrower and take any Remedial Actions requiredto abate said release or otherwise to come into compliance with applicable Environmental Law, and(d) promptly, but in any event within 5 days of its receipt thereof, provide the Lender withwritten notice of any of the following: (i) notice that an Environmental Lien has been filedagainst any of the real or personal property of Borrower, (ii) commencement of any EnvironmentalAction or notice that an Environmental Action will be filed against Borrower, and (iii) notice of aviolation, citation, or other administrative order which reasonably could be expected to result ina Material Adverse Change.
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     6.14. **Disclosure Updates.**          Promptly and in no event later than 5 Business Days after obtaining knowledge thereof, notifythe Lender if any written information, exhibit, or report furnished to the Lender contained anyuntrue statement of a material fact or omitted to state any material fact necessary to make thestatements contained therein not misleading in light of the circumstances in which made. Theforegoing to the contrary notwithstanding, any notification pursuant to the foregoing provisionwill not cure or remedy the effect of the prior untrue statement of a material fact or omission ofany material fact nor shall any such notification have the affect of amending or modifying thisAgreement or any of the Schedules hereto.     6.15. **Intentionally Omitted.**     6.16. **Intentionally Omitted.**     6.17. **Registration of Intellectual Property.**          File, within 60 days after any the initial date of sale any videogame by any Company to anynon-Affiliate, appropriate documents to cause the software, trademarks and other IntellectualProperty associated with such videogame (other than intellectual property not material or integralto the operation or value of such videogame) released by a Company for sale to its customers to beregistered in the appropriate federal filing office.     6.18. **Mortal Kombat Intellectual Property.**          Cause all copyrights, trademarks, patents and other Intellectual Property owned by any of theCompanies or any of their Affiliates and which is related solely to the Mortal Kombat Franchise tobe owned by MAG including but not limited to obtaining such assignments from independentconsultants and such other assignments of copyright rights as may be required under the “Work forHire” doctrine under United States Copyright law.     6.19. **Excess Cash.**     (a) Unless otherwise agreed by the Lender, in the event that the aggregate outstandingprincipal amount of all “Term Loans” and “Advances” under and as defined in the Secured LoanFacility plus the aggregate outstanding principal amount of all “Advances” under and asdefined in the Unsecured Loan Facility shall equal or exceed $40,000,000 as of the close ofbusiness on the Business Day immediately preceding the last Business Day of any calendarweek (each such day, a “Testing Date”), on or before the close of business on theBusiness Day following such Testing Date the Borrower shall issue instructions to eachdepository bank or other financial institution at which the Borrower or any of itsSubsidiaries maintains deposit accounts (other than deposit accounts maintained in Japan orAustralia and excluding any amounts on deposit to cash collateralize any letter of creditreimbursement obligations) to cause an amount equal to any excess in increments of$1,000,000 of:
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     (i) the then available cash balances in such accounts as of such Testing Date aftergiving effect to all receipts and other payments due or owing to or from such accounts, over     (ii) $10,000,000to be transferred to the Lender’s Account on or before the Business Day after such TestingDate (or, in the case of funds transferred from an account located outside of the UnitedStates, the second Business Day after such Testing Date) for application to the outstandingObligations hereunder in accordance with the terms hereof; provided that aftergiving effect to such application the aggregate outstanding principal amount of the Advanceshereunder shall not be less than $10,000,000.VII. **NEGATIVE COVENANTS.**          Borrower covenants and agrees that, until the Obligations have been Paid in Full, Borrowerwill not, and will not permit any Company or Foreign Company to, do any of the following:     7.1. **Indebtedness.**     Create, incur, assume, suffer to exist, guaranty, or otherwise become or remain, directly orindirectly, liable with respect to any Indebtedness, except:     (a) Indebtedness evidenced by this Agreement;     (b) Indebtedness set forth on Schedule 5.20;     (c) Permitted Purchase Money Indebtedness;     (d) refinancings, renewals, or extensions of Indebtedness permitted under clauses (b)and (c) of this Section 7.1 (and continuance or renewal of any Permitted Liensassociated therewith) so long as: (i) the terms and conditions of such refinancings,renewals, or extensions do not, in the Lender’s reasonable judgment, materially impair theprospects of repayment of the Obligations by Borrower or materially impair Borrower, anyForeign Company’s or any Company’s creditworthiness, (ii) such refinancings, renewals, orextensions do not result in an increase in the then extant principal amount of, or interestrate with respect to, the Indebtedness so refinanced, renewed, or extended or add one ormore of the Foreign Companies or Companies as liable with respect thereto if such additionalForeign Companies or Companies, as applicable, were not liable with respect to the originalIndebtedness, (iii) such refinancings, renewals, or extensions do not result in a shorteningof the average weighted maturity of the Indebtedness so refinanced, renewed, or extended,nor are they on terms or conditions, that, taken as a whole, are materially more burdensomeor restrictive to the applicable Foreign Company or the applicable Company, (iv) if theIndebtedness that is refinanced, renewed, or extended was subordinated in right of paymentto the Obligations, then the terms and conditions
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of the refinancing, renewal, or extension Indebtedness must be include subordinationterms and conditions that are at least as favorable to the Lender as those that wereapplicable to the refinanced, renewed, or extended Indebtedness, and (v) the Indebtednessthat is refinanced, renewed, or extended is not recourse to any Person that is liable onaccount of the Obligations other than those Persons which were obligated with respect to theIndebtedness that was refinanced, renewed, or extended;          (e) endorsement of instruments or other payment items for deposit;          (f) Indebtedness composing Permitted Investments;          (g) Indebtedness of a Target existing on the date of a Permitted Acquisition isconsummated (but not incurred in connection with such Permitted Acquisition) to the extentsuch Indebtedness was permitted in connection with such Permitted Acquisition;          (h) Indebtedness consisting of an obligation of Borrower to issue common stock as thepurchase price in connection with a Permitted Acquisition;          (i) Indebtedness consisting of the Junior Notes;          (j) Lease payment obligations incurred in connection with the Sale LeasebackTransaction;          (k) Indebtedness in respect of Hedge Agreements designed to hedge against fluctuationsin interest rates and exchange rates incurred in the ordinary course of business andconsistent with prudent business practice, so long as a hedging program related thereto hasbeen approved by the Board of Directors of the Borrower;          (l) Indebtedness pursuant to the Unsecured Loan Facility and the Secured LoanDocuments;          (m) Indebtedness owed to the Borrower or any of its Subsidiaries;          (n) Indebtedness under performance bonds, surety bonds and letter of credit obligationsto provide security for worker’s compensation claims and Indebtedness in respect of bankoverdrafts not more than two days overdue, in each case, incurred in the ordinary course ofbusiness;          (o) to the extent the same constitutes Indebtedness, obligations in respect of netcapital adjustments and/or earn-out arrangements permitted pursuant to a purchase oracquisition otherwise permitted under this Agreement;          (p) Indebtedness of Borrower or any of its Subsidiaries owing to the seller in anypurchase or acquisition otherwise permitted under this Agreement;
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          (q) to the extent constituting Indebtedness, indemnification obligations and othersimilar obligations of Borrower and its Subsidiaries in favor of directors, officers,employees, consultants or agents of Borrower or any of its Subsidiaries extended in theordinary course of business;          (r) guarantees with respect to payment obligations of Borrower or any Subsidiary; and          (s) Indebtedness owing to insurance companies to finance insurance premiums incurred inthe ordinary course of business.     7.2. **Liens.**          Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respectto any of its assets, of any kind, whether now owned or hereafter acquired, or any income orprofits therefrom, except for Permitted Liens (including Liens that are replacements of PermittedLiens to the extent that the original Indebtedness is refinanced, renewed, or extended underSection 7.1(d) and so long as the replacement Liens only encumber those assets that securedthe refinanced, renewed, or extended Indebtedness, after-acquired property that is affixed orincorporated into the property covered by such Lien and the proceeds thereof).     7.3. **Restrictions on Fundamental Changes.**     (a) Effect any merger, consolidation, reorganization, or recapitalization, orreclassify its outstanding Stock.     (b) Except for Permitted Acquisitions, acquire all or substantially all of the businessof any Person.     (c) Liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution).     (d) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in onetransaction or a series of transactions, all or any substantial part of its assets.     Notwithstanding the foregoing, nothing in this Section 7.3 shall restrict any of thefollowing:          (i) any Subsidiary of Borrower may merge into or consolidate with Borrower or any otherSubsidiary of Borrower; provided that in the case of any such merger or consolidation towhich Borrower is a party, Borrower shall be the surviving entity;          (ii) as part of any Permitted Acquisition, Borrower or any Subsidiary of Borrower maymerge into or consolidate with any other Person or permit any other Person to merge into orconsolidate with it; provided that in the case
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of any such merger or consolidation to which Borrower is a party, Borrower shall be thesurviving entity;          (iii) as part of any sale or other disposition permitted under this Agreement, anySubsidiary of Borrower may merge into or consolidate with any other Person or permit anyother Person to merge into or consolidate with it; and          (iv) upon prior notice to the Lender, any Subsidiary of Borrower may liquidate ordissolve if Borrower determines in good faith that such liquidation or dissolution is in thebest interest of Borrower and is not materially disadvantageous to the Lender;     7.4. **Disposal of Assets.**          Other than Permitted Dispositions, convey, sell, lease, license, assign, transfer, orotherwise dispose of any of the assets (including any Capital Stock of any Subsidiary) of anyForeign Company or any Company.     7.5. **Change Name.**          Change Borrower’s name, any Foreign Company’s name or any Company’s name, FEIN, organizationalidentification number, state or nation of organization, or organizational identity;provided, however, that (a) a Company (other than German Company) may change itsname upon at least 30 days prior written notice by Borrower to the Lender of such change and (b)German Company may change its name upon prior written notice by Borrower to the Lender of suchchange.     7.6. **Nature of Business.**          Make any change in the principal nature of its business.     7.7. **Prepayments and Amendments.**          Except in connection with a refinancing permitted by Section 7.1(d),          (a) prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of anyCompany, other than the Obligations in accordance with this Agreement, the Unsecured LoanFacility or the Secured Loan Documents, or          (b) directly or indirectly, amend, modify, alter, increase, or change any of thematerial terms or conditions of any agreement, instrument, document, indenture, or otherwriting evidencing or concerning Indebtedness permitted under Section 7.1(b) or(c) or the Junior Notes.     7.8. **Change of Control.**          Cause, permit, or suffer, directly or indirectly, any Change of Control.
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     7.9. **Consignments.**          Consign any of its Inventory or sell any of its Inventory on bill and hold, sale or return,sale on approval, or other conditional terms of sale; provided that Midway and any Foreign Companymay consign Inventory with a value (based upon the cost of such Inventory to Midway or theapplicable Foreign Company) not to exceed $1,000,000 in the aggregate at any time.     7.10. **Distributions.**          Other than distributions or declaration and payment of dividends by a Foreign Company or aCompany to any Company (other than Borrower), make any distribution or declare or pay any dividends(in cash or other property, other than Common stock) on, or purchase, acquire, redeem, or retireany Foreign Company’s or any Company’s Stock, of any class, whether now or hereafter outstanding;provided that a Foreign Company or any Company may make any distribution or declaration and paymentof dividends to Borrower to allow Borrower to (a) immediately make regularly scheduled payments ofinterest on the Junior Notes, in each case so long as after giving effect thereto no Event ofDefault exists, (b) on a Redemption Date, redeem Junior Notes redeemable on such Redemption Date,in each case so long as after giving effect thereto, no Event of Default exists (provided that nosuch distribution or dividend shall be made prior to one Business Day prior to the RedemptionDate), (c) immediately pay when due taxes owing by Borrower to any Governmental Authority, (d) makeany payment due or owing hereunder or with respect to the Unsecured Loan Facility, and (e) maintaincash not to exceed $7,500,000 at any time for the purpose of paying ordinary course expenses (whichexpenses shall not include the obligations set forth in clause (a), (b),(c) or (d) of this proviso).     7.11. **Accounting Methods.**          Modify or change its fiscal year or their method of accounting (other than as may be requiredto conform to GAAP or SEC) or enter into, modify, or terminate any agreement currently existing, orat any time hereafter entered into with any third party accounting firm or service bureau for thepreparation or storage of Companies’ or Foreign Companies’ accounting records without saidaccounting firm or service bureau agreeing to provide the Lender information regarding Companies’or Foreign Companies’ financial condition.     7.12. **Investments.**          Except for Permitted Investments, directly or indirectly, make or acquire any Investment, orincur any liabilities (including contingent obligations) for or in connection with any Investment.     7.13. **Transactions with Affiliates.**          Except as set forth in Schedule 7.13, directly or indirectly enter into or permit toexist any transaction with any Affiliate (other than a wholly-owned Subsidiary of the
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Borrower) of any Foreign Company or any Company except for transactions that are in theordinary course of Companies’ business, upon fair and reasonable terms and that are no lessfavorable to any Foreign Company or Companies, as applicable, than would be obtained in an arm’slength transaction with a non-Affiliate.     7.14. **Suspension.**          Cease to maintain the home video game business as its principal business.     7.15. **Compensation.**          For all time periods after Borrower ceases to be a reporting company under the SecuritiesExchange Act of 1934, increase the annual fee or per-meeting fees paid to the members of its Boardof Directors during any year by more than 15% over the prior year; pay or accrue total cashcompensation, during any year, to its officers and senior management employees in an aggregateamount in excess of 115% of that paid or accrued in the prior year.     7.16. **Use of Proceeds.**          Use the proceeds of the Advances for any purpose other than (a) on the Closing Date, to paytransactional fees, costs, and expenses incurred in connection with this Agreement and thetransactions contemplated hereby and thereby, and (b) thereafter, consistent with the terms andconditions hereof, for its lawful and permitted purposes. For the avoidance of doubt, the Borrowershall not use the proceeds of any Advance to repay any principal amount owing in respect of theJunior Notes without the prior consent of the Lender.     7.17. **Intentionally Omitted.**     7.18. **Financial Covenant.**          (a) Make Capital Expenditures in any fiscal year in excess of $10,000,000.     7.19. **Subsidiaries.**          Except in connection with a Permitted Acquisition, establish, create or acquire any newSubsidiary without the Lender’s prior written consent.     7.20. **Copyrights.**          Register with the applicable federal filing office or other appropriate registry (a) any worksprotectable by copyrights (including the initial versions thereof and all derivative works basedthereon) or (b) any changes to copyrights that have already been registered by such Person with theapplicable federal filing office, unless, in each case, Borrower shall provide at least 15 daysprior written notice to the Lender of any such registration.
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VIII. **EVENTS OF DEFAULT.**          Any one or more of the following events shall constitute an event of default (each, an“Event of Default”) under this Agreement:     8.1. If Borrower fails to pay when due and payable or when declared due and payable, all orany portion of the Obligations (whether of principal, interest (including any interest which, butfor the provisions of the Bankruptcy Code, would have accrued on such amounts), fees and chargesdue the Lender, reimbursement of Lender Expenses, or other amounts constituting Obligations);     8.2. If Borrower:          (a) fails or neglects to perform, keep, or observe any term, provision, covenant, or agreementcontained in Sections2.7, 3.2, 6.8, 6.12, 6.15,6.17, 6.18, 6.19 and 7.1 through 7.20 of this Agreement;          (b) fails or neglects to perform, keep, or observe any term, provision, covenant, or agreementcontained in Sections 6.26.3, 6.5, 6.6, 6.7, 6.10,6.11, and 6.14 of this Agreement and such failure continues for a period of5 Business Days; or          (c) fails or neglects to perform, keep, or observe any other term, provision, covenant, oragreement contained in this Agreement (giving effect to any grace periods, cure periods, orrequired notices, if any, expressly provided hereunder), in each case, other than any such term,provision, covenant, or agreement that is the subject of another provision of this Section8 (in which event such other provision of this Section 8 shall govern), and suchfailure continues for a period of 10 Business Days;provided that, during any period of time that any such failure or neglect referred to inthis paragraph exists, even if such failure or neglect is not yet an Event of Default, Lender shallbe relieved of its obligation to extend credit hereunder;     8.3. If any material portion of any Company’s assets is attached, seized, subjected to a writor distress warrant, levied upon, or comes into the possession of any third Person;     8.4. If an Insolvency Proceeding is commenced by any Company;     8.5. If an Insolvency Proceeding is commenced against any Company, and any of the followingevents occur: (a) the applicable Company consents to the institution of the Insolvency Proceedingagainst it, (b) the petition commencing the Insolvency Proceeding is not timely controverted;provided, however, that, during the pendency of such period, the Lender shall be relieved of itsobligations to extend credit hereunder, (c) the petition commencing the Insolvency Proceeding isnot dismissed within 45 calendar days of the date of the filing thereof; provided, however, that,during the pendency of such period, the Lender shall be relieved of its obligation to extend credithereunder, (d) an interim trustee, administrator, receiver or other similar officer is appointed totake possession of all or any
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substantial portion of the properties or assets of, or to operate all or any substantialportion of the business of, any Company, or (e) an order for relief shall have been enteredtherein;     8.6. If any Company is enjoined, restrained, or in any way prevented by court order fromcontinuing to conduct all or any material part of its business affairs;     8.7. If a notice of Lien, levy, or assessment is filed of record with respect to any Company’sassets by the United States, Canada or the UK, or any department, agency, or instrumentalitythereof, or by any state, province, county, municipal, or governmental agency, or if any taxes ordebts owing at any time hereafter to any one or more of such entities becomes a Lien, whetherchoate or otherwise, upon any Company’s assets and the same is not paid before such payment isdelinquent;     8.8. If a judgment or other claim becomes a Lien or encumbrance upon any material portion ofany Company’s properties or assets;     8.9. If any Company has breached any Platform License with respect to a Material Videogame (a“Material Platform License”) which breach has not been cured after notice to such Companyand the expiration of any applicable cure period pursuant to the terms of such Material PlatformLicense or a Material Platform License is terminated; if Borrower has breached a license (otherthan a license not material or integral to the operation or value of a Material Videogame)associated with a Material Videogame (a “Material Videogame License”) which breach has notbeen cured after notice to such Company and the expiration of any applicable cure period pursuantto the terms of such Material Videogame License or a Material Videogame License is terminated; ifthere is a default in any material agreement to which any Company is a party (including the JuniorNotes, the Secured Loan Facility and the Unsecured Loan Facility) and such default has not beencured after the notice thereof and the expiration of any applicable cure period and thereafterresults in a right by the other party thereto, irrespective of whether exercised, to accelerate thematurity of the applicable Company’s payment obligations thereunder, or to terminate suchagreement;     8.10. If Borrower makes any payment on account of Indebtedness that has been contractuallysubordinated in right of payment to the payment of the Obligations, except to the extent suchpayment is permitted by the terms of the subordination provisions applicable to such Indebtedness;     8.11. If any misstatement or misrepresentation in any material respects exists now orhereafter in any warranty, representation, statement, or Record made to the Lender by any Company,or any officer, employee, agent, or director of any Company;     8.12. Intentionally omitted;     8.13. Intentionally omitted;     8.14. Any provision of hereunder shall at any time for any reason be declared to be null andvoid, or the validity or enforceability thereof shall be contested by Borrower, or a proceedingshall be commenced by Borrower, or by any Governmental Authority having
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jurisdiction over Borrower, seeking to establish the invalidity or unenforceability thereof,or Borrower shall deny that it has any liability or obligation purported to be created under anyLoan Document; or     8.15. If the common Stock of Borrower or any Stock into which the Junior Notes are convertibleis neither listed for trading on a U.S. national securities exchange nor quoted on the NasdaqNational Market.IX. **THE LENDER’S RIGHTS AND REMEDIES.**     9.1. **Rights and Remedies.**          Subject to the provisions of Section 2.7, upon the occurrence, and during thecontinuation, of an Event of Default, the Lender may do any one or more of the following, all ofwhich are authorized by **Borrower**:          (a) Declare all Obligations immediately due and payable;          (b) Cease advancing money or extending credit to or for the benefit of Borrower underthis Agreement;          (c) Terminate this Agreement as to any future liability or obligation of the Lender.     9.2. **Remedies Cumulative.**          The rights and remedies of the Lender under this Agreement and all other agreements shall becumulative. The Lender shall have all other rights and remedies not inconsistent herewith asprovided by law, or in equity. No exercise by the Lender of one right or remedy shall be deemed anelection, and no waiver by the Lender of any Event of Default shall be deemed a continuing waiver.No delay by the Lender shall constitute a waiver, election, or acquiescence by it.X. **TAXES AND EXPENSES.**          If Borrower fails to pay any monies (whether taxes, assessments, insurance premiums, or, inthe case of leased properties or assets, rents or other amounts payable under such leases) due tothird Persons, or fails to make any deposits or furnish any required proof of payment or deposit,all as required under the terms of this Agreement, then, the Lender, in its sole discretion andwithout prior notice to Borrower, may do any or all of the following: (a) make payment of the sameor any part thereof, (b) set up such reserves in Borrower’s Loan Account as the Lender deemsnecessary to protect the Lender from the exposure created by such failure, or (c) in the case ofthe failure to comply with Section 6.8 hereof, obtain and maintain insurance policies ofthe type described in Section 6.8 and take any action with respect to such policies as theLender deems prudent. Any such amounts paid by the Lender shall constitute Lender Expenses and anysuch payments shall not constitute an agreement by the Lender to make similar payments in thefuture or a waiver by the Lender of
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any Event of Default under this Agreement. The Lender need not inquire as to, or contest thevalidity of, any such expense, tax, or Lien and the receipt of the usual official notice for thepayment thereof shall be conclusive evidence that the same was validly due and owing.XI. **WAIVERS; INDEMNIFICATION.**     11.1. **Demand; Protest; etc.**          To the fullest extent permitted by law and except as otherwise provided hereunder, Borrowerwaives demand, protest, notice of protest, notice of default or dishonor, notice of payment andnonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal ofdocuments, instruments, chattel paper, and guaranties at any time held by the Lender on whichBorrower may in any way be liable.     11.2. **Intentionally omitted.**     11.3. **Indemnification.**          Subject to the provisions of Section 2.7, Borrower shall pay, indemnify, defend, andhold the Lender-Related Persons (each, an “Indemnified Person”) harmless (to the fullestextent permitted by law) from and against any and all claims, demands, suits, actions,investigations, proceedings, and damages, and all reasonable attorneys fees and disbursements andother costs and expenses actually incurred in connection therewith (as and when they are incurredand irrespective of whether suit is brought), at any time asserted against, imposed upon, orincurred by any of them (a) in connection with or as a result of or related to the execution,delivery, enforcement, performance, or administration (including any restructuring or workout withrespect hereto) of this Agreement or the transactions contemplated hereby or the monitoring ofBorrower’s compliance with the terms hereof, and (b) with respect to any investigation, litigation,or proceeding related to this Agreement, or the use of the proceeds of the credit providedhereunder or the use and registration or attempted registration of the Intellectual Propertysubject to this Agreement (irrespective of whether any Indemnified Person is a party thereto), orany act, omission, event, or circumstance in any manner related thereto (all the foregoing,collectively, the “Indemnified Liabilities”). The foregoing to the contrarynotwithstanding, Borrower shall have no obligation to any Indemnified Person under this Section11.3 with respect to any Indemnified Liability that a court of competent jurisdiction finallydetermines to have resulted from the gross negligence or willful misconduct of such IndemnifiedPerson. This provision shall survive the termination of this Agreement and the repayment of theObligations. If any Indemnified Person makes any payment to any other Indemnified Person withrespect to an Indemnified Liability as to which Borrower was required to indemnify the IndemnifiedPerson receiving such payment, the Indemnified Person making such payment is entitled to beindemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOINGINDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH INWHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIEDPERSON OR OF ANY OTHER PERSON.
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XII. **NOTICES.**          Unless otherwise provided in this Agreement, all notices or demands by Borrower or the Lenderto the other relating to this Agreement or any other Loan Document shall be in writing and (exceptfor financial statements and other informational documents which may be sent by first-class mail,postage prepaid) shall be personally delivered or sent by registered or certified mail (postageprepaid, return receipt requested), overnight courier, electronic mail (at such email addresses asBorrower or the Lender, as applicable, may designate to each other in accordance herewith), ortelefacsimile to Borrower or to the Lender, as the case may be, at its address set forth below:       If to Borrower: **MIDWAY GAMES INC.**    2704 West Roscoe Street    Chicago, Illinois 60618    Attn: Chief Financial Officer and General Counsel    Fax No. 773-961-2299       with copies to: **SIDLEY AUSTIN LLP**    One South Dearborn Street    Chicago, Illinois 60603    Attn: Robert J. Lewis, Esq.    Fax No. 312-853-7036       If to the Lender: **NATIONAL AMUSEMENTS, INC.**    200 Elm Street    Dedham MA 02026    Attn: Jerome Magner,    Fax No. (781) 329-5175    with copies to:    Attn: Vice President, Richard Sherman