exv10w3



 







EXHIBIT 10.3




CONSENT AND SEVENTEENTH AMENDMENT TO

LOAN AND SECURITY AGREEMENT




     THIS CONSENT AND SEVENTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is
entered into as of May 24 , 2006, by and among Lenders, WELLS FARGO FOOTHILL, INC., a
California corporation, as the arranger and administrative agent for the Lenders (“Agent”)
and MIDWAY HOME ENTERTAINMENT INC., a Delaware corporation (“Midway”), MIDWAY AMUSEMENT
GAMES, LLC, a Delaware limited liability company (“MAG”; Midway and MAG are referred to hereinafter
each individually as a “Borrower”, and individually and collectively, jointly and
severally, as the “Borrowers”), MIDWAY GAMES INC., a Delaware corporation
(“Parent”), MIDWAY GAMES WEST INC., a California corporation (“MGW”), MIDWAY
INTERACTIVE INC., a Delaware corporation (“MI”), MIDWAY SALES COMPANY, LLC, a Delaware
limited liability company (“MSC”), MIDWAY HOME STUDIOS INC., a Delaware corporation
(“MHS”), SURREAL SOFTWARE INC., a Washington corporation (“Surreal”), MIDWAY
STUDIOS – AUSTIN INC., a Texas corporation (“MSA”), MIDWAY STUDIOS – LOS ANGELES INC., a California
corporation (“MSLA”) (“MSD”; Parent, MGW, MI, MSC, MHS, Surreal, MSA and MSLA, are referred to
hereinafter each individually as a “U.S. Credit Party” and individually and collectively,
jointly and severally, as the “U.S. Credit Parties”).



     WHEREAS, Borrowers, U.S. Credit Parties, Agent, and Lenders are parties to that certain Loan
and Security Agreement dated as of March 3, 2004 (as amended, modified or supplemented from time to
time, the “Loan Agreement”);



     WHEREAS, Borrowers have advised Agent and Lenders that Parent desires to issue $75,000,000
convertible senior notes (the “Note Issuance”) pursuant to the terms set forth in that
certain Offering Memorandum, dated May 30, 2006, and attached hereto as Exhibit A (the
“Offering Memorandum”) and that certain term sheet, dated May 24, 2006 and attached hereto
as Exhibit B (the “Term Sheet”);



     WHEREAS, Borrowers and U.S. Credit Parties desire for Agent and Required Lenders to consent to
the Note Issuance as set forth herein; and



     WHEREAS, Borrowers, U.S. Credit Parties, Agent and Lenders have agreed to amend the Loan
Agreement in certain respects, subject to the terms and conditions contained herein.



     NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the
parties hereto agree as follows:



     1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Loan Agreement.



     2. Consent. Subject to the satisfaction of the conditions set forth in Section 5
below, Agent and Required Lenders hereby consent to the Note Issuance in



 









 







accordance with the terms of the Offering Memorandum and the Term Sheet. This is a limited
consent and shall not be deemed to constitute a waiver of, or consent to, any other future breach
of the Loan Agreement (as amended by this Amendment).



     3. Amendment to Loan Agreement. Subject to the satisfaction of the conditions set
forth in Section 5 hereof, the Loan Agreement is amended as follows:



     (a) The definition of “Junior Notes” in Section 1.1 of the Loan Agreement is hereby amended
and restated in its entirety as follows:




     “Junior Notes” means (i) those certain six percent (6.00%) convertible
senior notes in the principal amount of at $75,000,000, issued pursuant to that
certain Offering Memorandum dated as of September 13, 2005 and governed by that
certain Indenture dated as of September 19, 2005 including the obligation to pay
additional interest on the notes under the registration 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 in the principal amount of
at $75,000,000, issued pursuant to that certain Offering Memorandum dated as of May
30, 2006 and governed by that certain Indenture dated as of May 30, 2006 including
the obligation to pay additional interest on the notes under the registration rights
agreement described in the Offering Memorandum as in effect on May 30, 2006.



     (b) Section 7.18(a) of the Loan Agreement is hereby amended by deleting the reference to “Such
amount as is agreed to by Borrowers and Required Lenders based upon the Projections most recently
delivered to Agent pursuant to Section 6.3(c) and approved by Required Lenders (but if not approved
by Required Lenders or if Borrowers and Required Lenders cannot agree, the applicable amount shall
be $20,000,000)” and inserting “$20,000,000” in lieu thereof.



     (c) Section 7.18(b) of the Loan Agreement is hereby amended and restated in its entirety as
follows:



     (b) Make capital expenditures in any fiscal year in excess of the amount set forth in the
following table for the applicable period:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Fiscal Year 2004

	 	 	Fiscal Year 2005
	 	 	Fiscal Year 2006
	 	 	Fiscal Year 2007 and
each subsequent Fiscal
Year	 
	 	$4,500,000

	 	 	$10,000,000	 	 	 	 	$14,000,000	 	 	 	 	125% of the capital
expenditure plan
delivered pursuant to
Section 6.3 hereof.	 
	 





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     4. Ratification. This Amendment, subject to satisfaction of the conditions provided
below, shall constitute an amendment to the Loan Agreement and all of the Loan Documents as
appropriate to express the agreements contained herein. In all other respects, the Loan Agreement
and the Loan Documents shall remain unchanged and in full force and effect in accordance with their
original terms.



     5. Conditions to Effectiveness. This Amendment shall become effective as of the date
hereof and upon the satisfaction of the following conditions precedent:



     (a) Each party hereto shall have executed and delivered this Amendment to Agent;



     (b) Companies shall have delivered to Agent such documents, agreements and instruments as may
be requested or required by Agent in connection with this Amendment, each in form and content
acceptable to Agent, including, without limitation, a certified copy of each of the Offering
Memorandum and Indenture;



     (c) No Default or Event of Default shall have occurred and be continuing on the date hereof or
as of the date of the effectiveness of this Amendment; and



     (d) All proceedings taken in connection with the transactions contemplated by this Amendment
and all documents, instruments and other legal matters incident thereto shall be satisfactory to
Agent and its legal counsel.



     6. Miscellaneous.



     (a) Warranties and Absence of Defaults. In order to induce Agent to enter into this
Amendment, each Company hereby warrants to Agent, as of the date hereof, that the representations
and warranties of Companies contained in the Loan Agreement are true and correct as of the date
hereof as if made on the date hereof (other than those which, by their terms, specifically are made
as of certain dates prior to the date hereof).



     (b) Expenses. Companies, jointly and severally, agree to pay on demand all costs and
expenses of Agent (including the reasonable fees and expenses of outside counsel for Agent) in
connection with the preparation, negotiation, execution, delivery and administration of this
Amendment and all other instruments or documents provided for herein or delivered or to be
delivered hereunder or in connection herewith. All obligations provided herein shall survive any
termination of this Amendment and the Loan Agreement as amended hereby.



     (c) Governing Law. This Amendment shall be a contract made under and governed by the
internal laws of the State of Illinois.



     (d) Counterparts. This Amendment may be executed in any number of counterparts, and
by the parties hereto on the same or separate counterparts, and each such counterpart, when
executed and delivered, shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same Amendment.



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     7. Release.



     (a) In consideration of the agreements of Agent and Lenders contained herein and for other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each
Company, on behalf of itself and its successors, assigns, and other legal representatives, hereby
absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and
Lenders, and their successors and assigns, and their present and former shareholders, affiliates,
subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other
representatives (Agent, each Lender and all such other Persons being hereinafter referred to
collectively as the “Releasees” and individually as a “Releasee”), of and from all demands,
actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums
of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims,
defenses, rights of set-off, demands and liabilities whatsoever (individually, a “Claim” and
collectively, “Claims”) of every name and nature, known or unknown, suspected or unsuspected, both
at law and in equity, which such Company or any of its successors, assigns, or other legal
representatives may now or hereafter own, hold, have or claim to have against the Releasees or any
of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises
at any time on or prior to the day and date of this Amendment, including, without limitation, for
or on account of, or in relation to, or in any way in connection with any of the Loan Agreement, or
any of the other Loan Documents or transactions thereunder or related thereto.



     (b) Each Company understands, acknowledges and agrees that the release set forth above may be
pleaded as a full and complete defense and may be used as a basis for an injunction against any
action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the
provisions of such release.



     (c) Each Company agrees that no fact, event, circumstance, evidence or transaction which could
now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute
and unconditional nature of the release set forth above.



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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized and delivered as of the date first above written.



	 	 	 
	 
	 	 
	 

	 	MIDWAY HOME ENTERTAINMENT INC.,
	 

	 	a Delaware corporation
	 
	 	 
	 

	 	MIDWAY AMUSEMENT GAMES, LLC,
	 

	 	a Delaware limited liability company
	 
	 	 
	 

	 	MIDWAY GAMES INC.,
	 

	 	a Delaware corporation
	 
	 	 
	 

	 	MIDWAY GAMES WEST INC.,
	 

	 	a California corporation
	 
	 	 
	 

	 	MIDWAY INTERACTIVE INC.,
	 

	 	a Delaware corporation
	 
	 	 
	 

	 	MIDWAY SALES COMPANY, LLC,
	 

	 	a Delaware limited liability company
	 
	 	 
	 

	 	MIDWAY HOME STUDIOS INC.,
	 

	 	a Delaware corporation
	 
	 	 
	 

	 	SURREAL SOFTWARE INC.,
	 

	 	a Washington corporation
	 
	 	 
	 

	 	MIDWAY STUDIOS – AUSTIN INC.,
	 

	 	a Texas corporation
	 
	 	 
	 

	 	MIDWAY STUDIOS – LOS ANGELES INC.,
	 

	 	a California corporation
	 
	 	 
	 

	 	Each By /s/ Thomas E. Powell
	 

	 	Title EVP-Finance, CFO and Treasurer






Signature
page to Consent and Seventeenth Amendment to Loan and Security Agreement




 









 





	 	 	 
	 

	 	WELLS FARGO FOOTHILL, INC.,
	 

	 	a California corporation, as Agent, as UK Security Trustee and as a Lender
	 
	 	 
	 

	 	By /s/ Bruce Rivers
	 

	 	Title Senior Vice President






Signature
page to Consent and Seventeenth Amendment to Loan and Security Agreement




 









 





Exhibit A




 









 








Exhibit B