exv10w47



 





Exhibit 10.47




Execution Copy




INTERCOMPANY SUBORDINATION AGREEMENT




          THIS INTERCOMPANY SUBORDINATION AGREEMENT (this “Agreement”), dated as of February 29, 2008,
is made among the Obligors (as defined below) and National Amusements, Inc., a Maryland corporation
(“Lender”).




          WHEREAS, Obligors and Lender are parties to that (i) certain Loan and Security Agreement dated
as of even date herewith (as amended, modified, renewed, extended, or replaced from time to time,
the “Senior Loan Agreement”), (ii) that certain Unsecured Loan Agreement dated as of even date
herewith (as amended, modified, renewed, extended, or replaced from time to time, the “Unsecured
Loan Agreement”) and (iii) that certain Unsecured Subordinated Loan Agreement dated as of even date
herewith (as amended, modified, renewed, extended, or replaced from time to time, the “Subordinated
Loan Agreement”, and, together with the Senior Loan Agreement and the Unsecured Loan Agreement, the
“Loan Agreements”), pursuant to which Lender has agreed to make certain financial accommodations to
one or more of the Obligors;




          WHEREAS, each Obligor has made or may make certain loans or advances from time to time to one
or more other Obligors;




          WHEREAS, each Obligor has agreed to the subordination of such indebtedness of each other
Obligor to such Obligor, upon the terms and subject to the conditions set forth in this Agreement.




          NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions,
representations, and warranties set forth herein and for other good and valuable consideration, the
parties hereto agree as follows:




SECTION 1. Definitions; Interpretation.




          (a) Terms Defined in Secured Loan Agreement. All capitalized terms used in this
Agreement and not otherwise defined herein shall have the meanings assigned to them in the Secured
Loan Agreement.




          (b) Certain Defined Terms. As used in this Agreement, the following terms shall have
the following meanings:




          “Insolvency Event” has the meaning set forth in Section 3.




          “Lender” means National Amusements, Inc., a Maryland corporation, and any other Person made a
party thereto in accordance with the provisions of Section 14.1 of the applicable Loan Agreement
(together with their respective successors and assigns).






          “Obligors” means, individually and collectively, jointly and severally, Borrowers and the U.S.
Credit Parties.




 









 





          “Senior Debt” means the Obligations and other indebtedness and liabilities of Obligors to
Lender under or in connection with the Loan Agreements and the other Loan Documents, including all
unpaid principal of the Advances (as defined in each of the Loan Agreements), all interest accrued
thereon, all fees due under the Loan Agreements and the other Loan Documents, and all other amounts
payable by Obligors to Lender thereunder or in connection therewith, whether now existing or
hereafter arising, and whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined.




          “Subordinated Debt” means, with respect to each Obligor, all indebtedness, liabilities, and
other obligations of any other Obligor owing to such Obligor in respect of any and all loans or
advances made by such Obligor to such other Obligor whether now existing or hereafter arising, and
whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, including all fees and all other amounts payable by any other Obligor to such Obligor
under or in connection with any documents or instruments related thereto.




          “Subordinated Debt Payment” means any payment or distribution by or on behalf of Obligors,
directly or indirectly, of assets of Obligors of any kind or character, whether in cash, property,
or securities, including on account of the purchase, redemption, or other acquisition of
Subordinated Debt, as a result of any collection, sale, or other disposition of collateral, or by
setoff, exchange, or in any other manner, for or on account of the Subordinated Debt.




          (c) Interpretation. Unless the context of this Agreement clearly requires otherwise,
references to the plural include the singular, references to the singular include the plural, the
term “including” is not limiting, and the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Section, subsection, clause, schedule, and exhibit
references are to this Agreement unless otherwise specified. References to agreements and other
contractual instruments shall be deemed to include all subsequent amendments and other
modifications thereto. References to statutes or regulations are to be construed as including all
statutory and regulatory provisions consolidating, amending, or replacing the statute or regulation
referred to. The captions and headings are for convenience of reference only and shall not affect
the construction of this Agreement.




SECTION 2. Subordination to Payment of Senior Debt.




          As to each Obligor, all payments on account of the Subordinated Debt shall be subject,
subordinate, and junior, in right of payment and exercise of remedies, to the extent and in the
manner set forth herein, to the prior payment of the Senior Debt until the Senior Debt has been
Paid in Full (as defined in the Loan Agreements).




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SECTION 3. Subordination Upon Any Distribution of Assets of Obligors.




          As to each Obligor, in the event of any payment or distribution of assets of any other Obligor
of any kind or character, whether in cash, property, or securities, upon the dissolution, winding
up, or total or partial liquidation or reorganization, readjustment, arrangement, or similar
proceeding relating to such other Obligor or its property, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership, arrangement, or similar proceedings or upon an assignment for
the benefit of creditors, or upon any other marshaling or composition of the assets and liabilities
of such other Obligor, or otherwise (such events, collectively, the “Insolvency Events”): (i) all
amounts owing on account of the Senior Debt shall first be Paid in Full before any Subordinated
Debt Payment is made; and (ii) to the extent permitted by applicable law, any Subordinated Debt
Payment to which such Obligor would be entitled except for the provisions hereof, shall be paid or
delivered by the trustee in bankruptcy, receiver, assignee for the benefit of creditors, or other
liquidating agent making such payment or distribution directly to Lender for application to the
payment of the Senior Debt in accordance with clause (i), after giving effect to any concurrent
payment or distribution or provision therefor to Lender in respect of such Senior Debt.




SECTION 4. Payments on Subordinated Debt.




          (a) Permitted Payments. So long as no Event of Default has occurred and is
continuing, each Obligor may make, and each other Obligor shall be entitled to accept and receive,
payments on account of the Subordinated Debt in the ordinary course of business only to the extent
such payments are permitted under the Loan Agreements.




          (b) No Payment Upon Senior Debt Defaults. Upon the occurrence of any Event of Default
(as defined in each of the Loan Agreements), and until such Event of Default is cured or waived,
each Obligor shall not make, and each other Obligor shall not accept or receive, any Subordinated
Debt Payment.




SECTION 5. Subordination of Remedies.




          As long as any Senior Debt shall remain outstanding and unpaid, no Obligor shall, without the
prior written consent of Lender:




          (a) accelerate, make demand, or otherwise make due and payable prior to the original due date
thereof any Subordinated Debt or bring suit or institute any other actions or proceedings to
enforce its rights or interests in respect of the obligations of any other Obligor owing to such
Obligor;




          (b) exercise any rights under or with respect to guaranties of the Subordinated Debt, if any;




          (c) exercise any rights to set-offs and counterclaims in respect of any indebtedness,
liabilities, or obligations of such Obligor to any other Obligor against any of the Subordinated
Debt; or




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          (d) commence, or cause to be commenced, or join with any creditor other than Lender in
commencing, any bankruptcy, insolvency, or receivership proceeding against the other Obligor.




SECTION 6. Payment Over to Lender.




          In the event that, notwithstanding the provisions of Sections 3, 4, and
5, any Subordinated Debt Payments shall be received in contravention of such Sections
3, 4, and 5 by any Obligor before all Senior Debt is Paid in Full, such
Subordinated Debt Payments shall be held for the benefit of Lender and shall be paid over or
delivered to Lender for application to the payment of all Senior Debt remaining unpaid to the
extent necessary to give effect to such Sections 3, 4, and 5, after giving
effect to any concurrent payments or distributions to Lender in respect of the Senior Debt until
Senior Debt is Paid in Full.




SECTION 7. Authorization to Lender.




          If, while any Subordinated Debt is outstanding, any Insolvency Event shall occur and be
continuing with respect to another Obligor or its property which is not otherwise permitted under
the Loan Agreements: (i) Lender is hereby irrevocably authorized and empowered (in the name of
each Obligor or otherwise), but shall have no obligation, to demand, sue for, collect, and receive
every payment or distribution in respect of the Subordinated Debt and give acquittance therefor and
to file claims and proofs of claim and take such other action (including voting the Subordinated
Debt) as it may deem necessary or advisable for the exercise or enforcement of any of the rights or
interests of Lender; and (ii) each Obligor shall promptly take such action as Lender reasonably may
request (A) to collect the Subordinated Debt for the account of Lender and to file appropriate
claims or proofs of claim in respect of the Subordinated Debt, (B) to execute and deliver to Lender
such powers of attorney, assignments, and other instruments as it may reasonably request to enable
it to enforce any and all claims with respect to the Subordinated Debt, and (C) to collect and
receive any and all Subordinated Debt Payments.




SECTION 8. Certain Agreements of Each Obligor.




          (a) No Benefits. Each Obligor understands that there may be various agreements
between Lender and any other Obligor evidencing and governing the Senior Debt, and each Obligor
acknowledges and agrees that such agreements are not intended to confer any benefits on such
Obligor and that Lender shall have no obligation to such Obligor or any other Person to exercise
any rights, enforce any remedies, or take any actions which may be available to them under such
agreements.




          (b) No Interference. Each Obligor acknowledges that each other Obligor has granted to
Lender security interests in certain of such other Obligor’s assets as set forth in the Loan
Agreements and the other Loan Documents, and agrees not to interfere with or in any manner oppose a
disposition of any Collateral by Lender in accordance with the Loan Documents and applicable law.




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          (c) Reliance by Lender. Each Obligor acknowledges and agrees that Lender will have
relied upon and will continue to rely upon the subordination provisions provided for herein and the
other provisions hereof in entering into the Loan Documents and making or issuing the Term Loans
and Advances thereunder.




          (d) Waivers. Except as provided under the Loan Agreements, each Obligor hereby waives
any and all notice of the incurrence of the Senior Debt or any part thereof and any right to
require marshaling of assets.




          (e) Obligations of Each Obligor Not Affected. Each Obligor hereby agrees that at any
time and from time to time, without notice to or the consent of such Obligor except as otherwise
provided in the Loan Documents, without incurring responsibility to such Obligor, and without
impairing or releasing the subordination provided for herein or otherwise impairing the rights of
Lender hereunder: (i) the time for any other Obligor’s performance of or compliance with any of its
agreements contained in the Loan Documents may be extended or such performance or compliance may be
waived by Lender; (ii) the agreements of any other Obligor with respect to the Loan Documents may
from time to time be modified by such other Obligor and Lender for the purpose of adding any
requirements thereto or changing in any manner the rights and obligations of such other Obligor or
Lender thereunder; (iii) the manner, place, or terms for payment of Senior Debt or any portion
thereof may be altered or the terms for payment extended, or the Senior Debt may be renewed in
whole or in part; (iv) the maturity of the Senior Debt may be accelerated in accordance with the
terms of any present or future agreement by any other Obligor and Lender; (v) any Collateral may be
sold, exchanged, released, or substituted and any Lien in favor of Lender may be terminated,
subordinated, or fail to be perfected or become unperfected; (vi) any Person liable in any manner
for Senior Debt may be discharged, released, or substituted; and (vii) all other rights against any
other Obligor, any other Person, or with respect to any Collateral may be exercised (or Lender may
waive or refrain from exercising such rights).




          (f) Rights of Lender Not to Be Impaired. No right of Lender to enforce the
subordination provided for herein or to exercise its other rights hereunder shall at any time in
any way be prejudiced or impaired by any act or failure to act by any other Obligor or Lender
hereunder or under or in connection with the other Loan Documents or by any noncompliance by any
other Obligor with the terms and provisions and covenants herein or in any other Loan Document,
regardless of any knowledge thereof Lender may have or otherwise be charged with.




          (g) Financial Condition of Obligors. Except as provided under the Loan Agreements,
each Obligor shall not have any right to require Lender to obtain or disclose any information with
respect to: (i) the financial condition or character of any other Obligor or the ability of the
other Obligor to pay and perform Senior Debt; (ii) the Senior Debt; (iii) the Collateral or other
security for any or all of the Senior Debt; (iv) the existence or nonexistence of any guarantees
of, or any other subordination agreements with respect to, all or any part of the Senior Debt; (v)
any action or inaction on the part of Lender or any other Person; or (vi) any other matter, fact,
or occurrence whatsoever.




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          (h) Acquisition of Liens or Guaranties. Except as otherwise permitted under the Loan
Agreements, no Obligor shall, without the prior consent of Lender, acquire any right or interest in
or to any Collateral not owned by such Obligor or accept any guaranties for the Subordinated Debt.




SECTION 9. Subrogation.




          (a) Subrogation. Until all Senior Debt is Paid in Full and the termination of the
Loan Agreements, no Obligor shall have, or shall directly or indirectly exercise, any rights that
it may acquire by way of subrogation under this Agreement, by any payment or distribution to Lender
hereunder or otherwise. Upon the date all Senior Debt is Paid in Full, each Obligor shall be
entitled to exercise in full any subrogated rights it may possess with respect to the rights of
Lender to receive payments or distributions applicable to the Senior Debt until the Subordinated
Debt shall be paid in full. For the purposes of the foregoing subrogation, no payments or
distributions to Lender of any cash, property, or securities to which any Obligor would be entitled
except for the provisions of Section 3, 4, or 5 shall, as among such
Obligor, its creditors (other than Lender), and the other Obligors, be deemed to be a payment by
the other Obligors to or on account of the Senior Debt.




          (b) Payments Over to Obligors. If any payment or distribution to which any Obligor
would otherwise have been entitled but for the provisions of Section 3, 4, or 5 shall have
been applied pursuant to the provisions of Section 3, 4, or 5 to the payment of all amounts
payable under the Senior Debt, such Obligor shall be entitled to receive from Lender any payments
or distributions received by Lender in excess of the amount sufficient to pay in full all amounts
payable under or in respect of the Senior Debt. If any such excess payment is made to Lender,
Lender shall promptly remit such excess to such Obligor and until so remitted shall hold such
excess payment for the benefit of such Obligor. If more than one Obligor is entitled to receive
such payments, payments shall be made to each Obligor, pro rata based upon the ratio that the total
amount to which such Obligor may be entitled to receive bears to the total amount to which all
Obligors are entitled to receive.




SECTION 10. Continuing Agreement; Reinstatement.




          (a) Continuing Agreement. This Agreement is a continuing agreement of subordination
and shall continue in effect and be binding upon each Obligor until the Senior Debt is Paid in
Full. The subordinations, agreements, and priorities set forth herein shall remain in full force
and effect regardless of whether any party hereto in the future seeks to rescind, amend, terminate,
or reform, by litigation or otherwise, its respective agreements with the other Obligors.




          (b) Reinstatement. This Agreement shall continue to be effective or shall be
reinstated, as the case may be, if, for any reason, any payment of the Senior Debt by or on behalf
of any Obligor shall be rescinded or must otherwise be restored by Lender, whether as a result of
an Insolvency Event or otherwise.




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SECTION 11. Transfer of Subordinated Debt.




          No Obligor may assign or transfer its rights and obligations in respect of the Subordinated
Debt without the prior written consent of Lender and any such transferee or assignee, as a
condition to acquiring an interest in the Subordinated Debt shall agree to be bound hereby, in form
reasonably satisfactory to Lender.




SECTION 12. Obligations of Obligors Not Affected.




          The provisions of this Agreement are intended solely for the purpose of defining the relative
rights of each Obligor against the other Obligors, on the one hand, and of Lender against the other
Obligors, on the other hand. Nothing contained in this Agreement shall (i) impair, as between each
Obligor and the other Obligors, the obligation of the other Obligors to pay their respective
obligations with respect to the Subordinated Debt as and when the same shall become due and
payable, or (ii) otherwise affect the relative rights of each Obligor against the other Obligors,
on the one hand, and of the creditors (other than Lender) of the other Obligors against the other
Obligors, on the other hand.




SECTION 13. Endorsement of Obligor Documents; Further Assurances and Additional Acts.




          (a) Endorsement of Obligor Documents. At the request of Lender, all documents and
instruments evidencing any of the Subordinated Debt, if any, shall be endorsed with a legend noting
that such documents and instruments are subject to this Agreement, and each Obligor shall promptly
deliver to Lender evidence of the same.




          (b) Further Assurances and Additional Acts. Each Obligor shall execute, acknowledge,
deliver, file, notarize, and register at its own expense all such further agreements, instruments,
certificates, financing statements, documents, and assurances, and perform such acts as Lender
reasonably shall deem necessary or appropriate to effectuate the purposes of this Agreement, and
promptly provide Lender with evidence of the foregoing reasonably satisfactory in form and
substance to Lender.




SECTION 14. Notices.




          All notices and other communications provided for hereunder shall, unless otherwise stated
herein, be in writing (including by facsimile transmission) and shall be mailed, sent, or delivered
in accordance with the notice provisions contained in the Loan Agreements.




SECTION 15. No Waiver; Cumulative Remedies.




          No failure on the part of Lender to exercise, and no delay in exercising, any right, remedy,
power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power, or privilege preclude any other or further exercise
thereof or the exercise of any other right, remedy, power, or privilege. The




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rights and remedies under this Agreement are cumulative and not exclusive of any rights,
remedies, powers, and privileges that may otherwise be available to Lender.




SECTION 16. [Intentionally Omitted]




SECTION 17. Survival.




          All covenants, agreements, representations and warranties made in this Agreement shall, except
to the extent otherwise provided herein, survive the execution and delivery of this Agreement, and
shall continue in full force and effect so long as any Senior Debt remains unpaid.




SECTION 18. Benefits of Agreement.




          This Agreement is entered into for the sole protection and benefit of the parties hereto and
their successors and assigns, and no other Person shall be a direct or indirect beneficiary of, or
shall have any direct or indirect cause of action or claim in connection with, this Agreement.




SECTION 19. Binding Effect.




          This Agreement shall be binding upon, inure to the benefit of and be enforceable by each
Obligor and Lender and their respective successors and permitted assigns.




SECTION 20. GOVERNING LAW.




          THIS AGREEMENT ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF ANY
OBLIGOR AND LENDER SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.




SECTION 21. SUBMISSION TO JURISDICTION.




          EACH PARTY TO THIS AGREEMENT SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF (1) THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF COOK, STATE OF ILLINOIS AND (2) THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK,
NEW YORK (OR TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT), FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR BY THE OTHER LOAN DOCUMENTS. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A




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COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN IN AN
INCONVENIENT FORUM.




SECTION 22. Entire Agreement; Amendments and Waivers.




          (a) Entire Agreement. This Agreement and the other Loan Documents constitutes the
entire agreement of each of the Obligors and Lender with respect to the matters set forth herein
and supersedes any prior agreements, commitments, drafts, communications, discussions, and
understandings, oral or written, with respect thereto.




          (b) Amendments and Waivers. No amendment to any provision of this Agreement shall in
any event be effective unless the same shall be in writing and signed by each of the Obligors and
Lender; and no waiver of any provision of this Agreement, or consent to any departure by any
Obligor therefrom, shall in any event be effective unless the same shall be in writing and signed
by Lender. Any such amendment, waiver, or consent shall be effective only in the specific instance
and for the specific purpose for which given.




SECTION 23. Conflicts.




          In case of any conflict or inconsistency between any terms of this Agreement, on the one hand,
and any documents or instruments in respect of the Subordinated Debt, on the other hand, then the
terms of this Agreement shall control.




SECTION 24. Severability.




          Whenever possible, each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under all applicable laws and regulations. If, however, any provision of
this Agreement shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed so modified, it
shall be ineffective and invalid only to the extent of such prohibition or invalidity without
affecting the remaining provisions of this Agreement or the validity or effectiveness of such
provision in any other jurisdiction.




SECTION 25. Interpretation.




          This Agreement is the result of negotiations between, and have been reviewed by the respective
counsel to, Obligors and Lender and is the product of all parties hereto. Accordingly, this
Agreement shall not be construed against Lender merely because of Lender’s involvement in the
preparation hereof.




SECTION 26. Counterparts.




          This Agreement may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be an original and all
of which taken together shall constitute but one and the same agreement.




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SECTION 27. Termination of Agreement.




          Upon the date the Senior Debt is Paid in Full and the termination of the Loan Agreements, this
Agreement shall terminate and Lender shall promptly execute and deliver to each Obligor such
documents and instruments as shall be necessary to evidence such termination.




[Signature pages follow]




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     IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Agreement as of the
date first written above.



	 	 	 
	 

	 	OBLIGORS:
	 
	 	 
	 

	 	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/ Ryan
O’Desky 

	 

	 	Title Interim
CFO
	








Intercompany Subordination Agreement

Signature Page




 









 





	 	 	 	 	 	 	 
	 

	 	LENDER:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	NATIONAL AMUSEMENTS, INC.,	 	 
	 	 	a Maryland corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By

Name
	 	/s/ Richard J. Sherman
 

Richard J. Sherman
	 	 
	 

	 	Title
	 	Vice President	 	 






Intercompany Subordination Agreement

Signature Page