exv10w48



 





Exhibit 10.48




EXECUTION COPY




UNSECURED 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
	 	 	20	 
	2.1. Revolver Advances
	 	 	20	 
	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. Intentionally Omitted
	 	 	24	 
	2.8. Crediting Payments
	 	 	24	 
	2.9. Designated Accounts
	 	 	24	 
	2.10. Maintenance of Loan Account; Statements of Obligations
	 	 	24	 
	2.11. Fees
	 	 	25	 
	2.12. Intentionally Omitted
	 	 	25	 
	2.13. LIBOR Option
	 	 	25	 
	2.14. Intentionally Omitted
	 	 	27	 
	2.15. Intentionally Omitted
	 	 	27	 
	2.16. Servicing
	 	 	27	 
	 
	 	 	 	 
	III. CONDITIONS; TERM OF AGREEMENT
	 	 	27	 
	3.1. Conditions Precedent to the Extension of Credit on the Closing Date
	 	 	27	 
	3.2. Conditions Subsequent to the Initial Extension of Credit
	 	 	29	 
	3.3. Conditions Precedent to all Extensions of Credit
	 	 	29	 
	3.4. Term
	 	 	29	 
	3.5. Effect of Termination
	 	 	29	 
	3.6. Early Termination by Borrower
	 	 	30	 
	 
	 	 	 	 
	IV. INTENTIONALLY OMITTED
	 	 	30	 
	 
	 	 	 	 
	V. REPRESENTATIONS AND WARRANTIES
	 	 	30	 
	5.1. No Encumbrances
	 	 	30	 
	5.2. Intentionally Omitted
	 	 	30	 
	5.3. Intentionally Omitted
	 	 	30	 
	5.4. Intentionally Omitted
	 	 	30	 
	5.5. Intentionally Omitted
	 	 	30	 
	5.6. Intentionally Omitted
	 	 	31	 
	5.7. Intentionally Omitted
	 	 	31	 






 









 






	 	 	 	 	 
	5.8. Due Organization and Qualification; Subsidiaries
	 	 	31	 
	5.9. Due Authorization; No Conflict
	 	 	31	 
	5.10. Litigation
	 	 	32	 
	5.11. No Material Adverse Change
	 	 	32	 
	5.12. Fraudulent Transfer
	 	 	32	 
	5.13. Employee Benefits
	 	 	33	 
	5.14. Environmental Condition
	 	 	33	 
	5.15. Brokerage Fees
	 	 	33	 
	5.16. Intellectual Property
	 	 	33	 
	5.17. Leases
	 	 	34	 
	5.18. Intentionally Omitted
	 	 	34	 
	5.19. Complete Disclosure
	 	 	34	 
	5.20. Indebtedness
	 	 	34	 
	 
	 	 	 	 
	VI. AFFIRMATIVE COVENANTS
	 	 	34	 
	6.1. Accounting System
	 	 	34	 
	6.2. Company Reporting
	 	 	35	 
	6.3. Financial Statements, Reports, Certificates
	 	 	35	 
	6.4. Intentionally Omitted
	 	 	37	 
	6.5. Returns
	 	 	37	 
	6.6. Maintenance of Properties
	 	 	37	 
	6.7. Taxes
	 	 	37	 
	6.8. Insurance
	 	 	37	 
	6.9. Intentionally Omitted
	 	 	38	 
	6.10. Compliance with Laws
	 	 	38	 
	6.11. Leases
	 	 	38	 
	6.12. Existence
	 	 	38	 
	6.13. Environmental
	 	 	38	 
	6.14. Disclosure Updates
	 	 	39	 
	6.15. Intentionally Omitted
	 	 	39	 
	6.16. Intentionally Omitted
	 	 	39	 
	6.17. Registration of Intellectual Property
	 	 	39	 
	6.18. Mortal Kombat Intellectual Property
	 	 	39	 
	6.19. Excess Cash
	 	 	39	 
	 
	 	 	 	 
	VII. NEGATIVE COVENANTS
	 	 	40	 
	7.1. Indebtedness
	 	 	40	 
	7.2. Liens
	 	 	42	 
	7.3. Restrictions on Fundamental Changes
	 	 	42	 
	7.4. Disposal of Assets
	 	 	43	 
	7.5. Change Name
	 	 	43	 
	7.6. Nature of Business
	 	 	43	 
	7.7. Prepayments and Amendments
	 	 	43	 
	7.8. Change of Control
	 	 	44	 
	7.9. Consignments
	 	 	44	 
	7.10. Distributions
	 	 	44	 






 









 






	 	 	 	 	 
	7.11. Accounting Methods
	 	 	44	 
	7.12. Investments
	 	 	44	 
	7.13. Transactions with Affiliates
	 	 	45	 
	7.14. Suspension
	 	 	45	 
	7.15. Compensation
	 	 	45	 
	7.16. Use of Proceeds
	 	 	45	 
	7.17. Intentionally Omitted
	 	 	45	 
	7.18. Financial Covenant
	 	 	45	 
	7.19. Subsidiaries
	 	 	45	 
	7.20. Copyrights
	 	 	46	 
	 
	 	 	 	 
	VIII. EVENTS OF DEFAULT
	 	 	46	 
	 
	 	 	 	 
	IX. THE LENDER’S RIGHTS AND REMEDIES
	 	 	48	 
	9.1. Rights and Remedies
	 	 	48	 
	9.2. Remedies Cumulative
	 	 	48	 
	 
	 	 	 	 
	X. TAXES AND EXPENSES
	 	 	48	 
	 
	 	 	 	 
	XI. WAIVERS; INDEMNIFICATION
	 	 	49	 
	11.1. Demand; Protest; etc
	 	 	49	 
	11.2. Intentionally omitted
	 	 	49	 
	11.3. Indemnification
	 	 	49	 
	 
	 	 	 	 
	XII. NOTICES
	 	 	50	 
	 
	 	 	 	 
	XIII. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
	 	 	51	 
	 
	 	 	 	 
	XIV. ASSIGNMENTS; SUCCESSORS
	 	 	52	 
	14.1. Assignments
	 	 	52	 
	14.2. Successors
	 	 	53	 
	 
	 	 	 	 
	XV. AMENDMENTS; WAIVERS
	 	 	53	 
	15.1. Amendments and Waivers
	 	 	53	 
	15.2. Intentionally Omitted
	 	 	54	 
	15.3. No Waivers; Cumulative Remedies
	 	 	54	 
	 
	 	 	 	 
	XVI. Intentionally Omitted
	 	 	54	 
	 
	 	 	 	 
	XVII. GENERAL PROVISIONS
	 	 	54	 
	17.1. Effectiveness
	 	 	54	 
	17.2. Section Headings
	 	 	54	 
	17.3. Interpretation
	 	 	54	 
	17.4. Severability of Provisions
	 	 	54	 
	17.5. Amendments in Writing
	 	 	55	 
	17.6. Counterparts; Telefacsimile Execution
	 	 	55	 
	17.7. Revival and Reinstatement of Obligations
	 	 	55	 
	17.8. Confidentiality
	 	 	55	 






 









 






	 	 	 	 	 
	17.9. Integration
	 	 	56	 
	17.10. Intentionally omitted
	 	 	56	 






 









 






EXHIBITS AND SCHEDULES




	 	 	 
	Exhibit A-1

	 	Form of Assignment and Acceptance
	Exhibit B-1

	 	Form of Borrowing Notice
	Exhibit L-1

	 	Form of LIBOR Notice
	 
	 	 
	Schedule A-1

	 	Lender’s Accounts
	Schedule D-1

	 	Designated Accounts
	Schedule I-1

	 	Investment Accounts
	Schedule P-1

	 	Permitted Liens
	Schedule P-2

	 	Permitted Sales of Patents
	Schedule 5.8(b)

	 	Capitalization of Companies
	Schedule 5.8(c)

	 	Capitalization of Borrower’s Subsidiaries
	Schedule 5.8(d)

	 	Subscriptions, Options, Warrants or Calls
	Schedule 5.14

	 	Environmental Matters
	Schedule 5.16

	 	Intellectual Property
	Schedule 5.20

	 	Permitted Indebtedness
	Schedule 7.13

	 	Transactions with Affiliates






 









 





UNSECURED LOAN AGREEMENT




          THIS UNSECURED LOAN AGREEMENT (this “Agreement”), is entered into as of February 29,
2008, by and between, on the one hand, NATIONAL AMUSEMENTS, INC., a Maryland corporation, as Lender
(the “Lender”), and, on the other hand, MIDWAY GAMES INC., a Delaware corporation
(“Borrower”).




RECITALS:




          WHEREAS, Borrower has requested the Lender to make available a revolving line of credit for
loans, in an amount not to exceed $40,000,000 in the aggregate, which revolving line of credit will
be 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
subordinated loan facility with the Lender providing for an unsecured subordinated revolving line
of credit in an amount not to exceed $20,000,000 and (ii) Midway and MAG will enter into a senior
secured loan facility with the Lender providing for a combination of secured term and revolving
loans in an aggregate amount not to 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 or
indirectly through one or more intermediaries, controls, is controlled by, or is under common
control 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 management
and 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 Rate
Loans and Base Rate Loans, the percentages set forth below (on a per annum basis):




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	Base Rate Loans
	 	 	2.75	%
	LIBOR
Rate Loans
	 	 	5.00	%






          “Assignee” has the meaning set forth in Section 14.1(a).




          “Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially
in the form of Exhibit A-1.




          “Australia Companies” means collectively, the Australia Operating Company Australia
Subsidiary and the Australia Holding Company.




          “Australia Operating Company” means Ratbag Holdings Pty Ltd, an Australian limited
company registered with company number (ACN 066 942 890).




          “Australia Holding Company” means Midway Australia Holdings Pty Ltd, an Australian
limited 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 and
hereafter applying in Australia.




          “Authorized Person” means any officer or employee of Borrower.




          “Availability” means, as of any date of determination, the amount that Borrower is
entitled 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 in
effect from time to time, and, in respect of UK Company and Pitbull, UK Insolvency Laws, in respect
of German Company, German Insolvency Laws, in respect of Japan Company, Japan Insolvency Laws, in
respect of Australia Companies, Australian Insolvency Laws and in respect of French Company, French
Insolvency Laws.




          “Base Rate” means, the rate of interest announced, from time to time, within Bank of
America, N.A. at its principal office in Charlotte, North Carolina as its “prime rate”, with the
understanding that the “prime rate” is one of Bank of America, N.A.’s base rates (not necessarily
the lowest of such rates) and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto and is evidenced by the recording thereof after
its 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 rate
determined by reference to the Base Rate.




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          “Base Rate Margin” means the Applicable Margin pertaining to Base Rate Loans as set
forth in the definition of Applicable Margin.




          “Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of ERISA or
equivalent 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 six
years.




          “Board of Directors” means the board of directors (or comparable managers) of Borrower
or any committee thereof duly authorized to act on behalf of the board of directors (or comparable
managers).




          “Books” means all of the Companies’ and their Subsidiaries’ now owned or hereafter
acquired books and records (including all of their Records indicating, summarizing, or evidencing
their assets or liabilities, all of the Companies’ and its Subsidiaries’ Records relating to their
business 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 by
the Lender to Borrower.




          “Borrowing Notice” means a written notice in the form of Exhibit B-1 which
shall be signed by both of the Chief Financial Officer of the Borrower and President of the
Borrower, or if the President is unavailable to sign such Borrowing Notice at such time, by any
Senior Vice President of the Borrower.




          “Business Day” means any day that is not a Saturday, Sunday, or other day on which
banks are authorized or required to close in the state of Illinois, except that, if a determination
of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also shall exclude any
day 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 that
are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid
in cash or financed, and (b) to the extent not covered by clause (a), the aggregate of all
expenditures by such Person and its Subsidiaries during such period to acquire by purchase or
otherwise 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 financial
reporting purposes in accordance with GAAP.




-3-









 








          “Capitalized Lease Obligation” means that portion of the obligations under a Capital
Lease that is required to be capitalized in accordance with GAAP.




          “Cash Equivalents” means (a) marketable direct obligations issued or unconditionally
guarantied by the United States or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one year from the date of acquisition
thereof, (b) marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof maturing within one
year from the date of acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors
Service, Inc. (“Moody’s”), (c) commercial paper maturing no more than 270 days from the date of
creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody’s, (d) certificates of deposit or bankers’ acceptances maturing within one
year from the date of acquisition thereof issued by any bank organized under the laws of the United
States or any state thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) demand Deposit Accounts maintained with any bank organized under
the laws of the United States or any state thereof so long as the amount maintained with any
individual bank is less than or equal to $100,000 and is insured by the Federal Deposit Insurance
Corporation, and (f) Investments in money market funds substantially all of whose assets are
invested 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 of
Sections 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, becomes the beneficial
owner (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 of
Directors, or (b) a majority of the members of the Board of Directors do not constitute Continuing
Directors, or (c) Borrower ceases to own, directly or indirectly, and control 100% of the
outstanding 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 years
2008, 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 Section
2.1(a).




-4-









 








          “Company” means Borrower and each U.S. Subsidiary.




          “Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Borrower on the Closing Date, and (b) any individual who
becomes a member of the Board of Directors after the Closing Date if such individual was appointed
or nominated for election to the Board of Directors by a majority of the Continuing Directors, but
excluding any such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election contest relating to the
election of the directors (or comparable managers) of Borrower and whose initial assumption of
office resulted from such contest or the settlement thereof.




          “Daily Balance” means, as of any date of determination and with respect to any
Obligation, 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, the
passage of time, or both, would be an Event of Default.




          “Designated Accounts” means any of the Deposit Accounts of the Companies or their
Subsidiaries 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 or
Intellectual Property licensed, sold or otherwise transferred to Companies by Sony Computer
Entertainment America Inc. (or its Affiliates), Microsoft Corporation (or its Affiliates), Nintendo
Co., Ltd (or its Affiliates) or Nintendo America Inc. (or its Affiliates) for use in the
development of videogames for platform manufactured by the foregoing entities.




          “Disbursement Letter” means an instructional letter executed and delivered by Borrower
to the Lender regarding the extensions of credit to be made on the Closing Date, the form and
substance 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 of
Default has occurred and is continuing, any Person approved by the Administrative Borrower (which
approval 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 of
Environmental Laws or releases of Hazardous Materials from




-5-









 







(a) any assets, properties, or businesses of any Company, any Subsidiary of a Company, or any
of their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto
any facilities which received Hazardous Materials generated by any Company, any Subsidiary of a
Company, or any of their predecessors in interest.




          “Environmental Law” means any applicable federal, state, provincial, foreign or local
statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and
enforceable written policy or rule of common law now or hereafter in effect and in each case as
amended, or any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on any Company or any
Subsidiary of a Company, relating to the environment, human health, employee health and safety, or
Hazardous Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC § 1251
et seq.; the Toxic Substances Control Act, 15 USC § 2601 et seq.;
the Clean Air Act, 42 USC § 7401 et seq.; the Safe Drinking Water Act, 42 USC
§ 3803 et seq.; the Oil Pollution Act of 1990, 33 USC § 2701 et
seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC § 11001
et seq.; the Hazardous Material Transportation Act, 49 USC § 1801 et
seq.; and the Occupational Safety and Health Act, 29 USC § 651 et seq. (to
the extent it regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts 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, costs
and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or
consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental Authority or any third
party, and which relate to any Environmental Action.




          “Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute thereto.




          “ERISA Affiliate” means (a) any Person subject to ERISA whose employees are treated as
employed by the same employer as the employees of a Company or a Subsidiary of a Company under IRC
Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed
by the same employer as the employees of a Company or a Subsidiary of a Company under IRC Section
414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of which a Company or
a Subsidiary of a Company is a member under IRC Section 414(m), or (d) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with a Company or a Subsidiary of a Company and whose employees are




-6-









 







aggregated with the employees of a Company or a Subsidiary of a Company under IRC Section
414(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 to
time.




          “FEIN” means Federal Employer Identification Number.




          “Foreign Companies” means collectively, the Australia Companies, UK Company, Canadian
Company, 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 hereafter
applying 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 time
in 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, as
now and hereafter in effect, any successor to such statute and any rules and regulations issued
thereunder.




          “Governing Documents” means, with respect to any Person, the certificate or articles
of incorporation, by-laws, or other organizational documents of such Person.




          “Governmental Authority” means any federal (including the federal government of Canada
and 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 otherwise
classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous
materials,” “hazardous wastes,” “toxic substances,” or any other




-7-









 







formulation intended to define, list, or classify substances by reason of deleterious properties
such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (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 flammable
substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls
in excess of 50 parts per million.




          “Hedge Agreement” means any and all agreements, or documents now existing or hereafter
entered into by Borrower or its Subsidiaries that provide for an interest rate, credit, commodity
or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross
currency rate swap, currency option, or any combination of, or option with respect to, these or
similar transactions, for the purpose of hedging Borrower’s or its Subsidiaries’ exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or currency valuations
or commodity prices.




          “Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other
obligations in respect of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations as a lessee under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Person or its Subsidiaries, irrespective
of whether such obligation or liability is assumed, (e) all obligations to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary course of business and
repayable in accordance with customary trade practices), (f) all obligations owing under Hedge
Agreements, and (g) any obligation guarantying or intended to guaranty (whether directly or
indirectly guarantied, endorsed, co-made, discounted, or sold with recourse) any obligation of any
other 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 under
any provision of the Bankruptcy Code or under any other state, provincial or federal bankruptcy or
insolvency 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, and
patent applications and all reissues, divisions, continuations, counterparts and extensions
thereof, and other inventions, utility models, industrial designs and designs subject to possible
protection under applicable patent or related laws and all rights relating thereto; (ii) all
trademark rights including any trademark and service mark registrations and applications and any
other word, name, symbol, device, design, trade name, business name and brand




-8-









 







name, whether registered or unregistered, subject to possible protection under applicable
trademark or related laws and all rights relating thereto including all goodwill pertaining
thereto; (iii) all copyright rights including any copyright registrations and applications and any
other works of authorship, and all derivative rights based thereon whether registered or
unregistered, subject to possible protection under applicable copyright or related laws and all
rights 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 marketing
know-how and also including any rights to use said Intellectual Property pursuant to license or
other express or implied consent or authorization, including each Platform License, and any rights
to enforce and license said Intellectual Property rights including all related damages and
royalties.




          “Intercompany Subordination Agreement” means the subordination agreement dated as of
February 29, 2008 by and among the Companies and the Lender, as amended, restated, supplemented or
otherwise modified and in effect from time to time.




          “Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing on
the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the
conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending on the last date of the Reference
Interest Period with respect to such LIBOR Rate Loan; provided, however interest
shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of
each Interest Period to, but excluding, the day on which any Interest Period expires.




          “Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing on
the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the
conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, 3 or 6 months or any number
of days less than one month thereafter; provided, however, that (a) if any Interest
Period 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
first day 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 the
next succeeding Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with respect to an
Interest Period one month or longer that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month at the end of such
Interest Period), the Interest Period shall end on the last Business Day of the calendar month that
is 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 any
other Person (including Affiliates) in the form of loans, guaranties, advances,




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or capital contributions (excluding (a) commission, travel, and similar advances to officers
and employees of such Person which advances are (i) in the aggregate less than $1,000,000 and
(ii) made in the ordinary course of business and, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other acquisitions of
Indebtedness, Stock, or all or substantially all of the assets of such other Person (or of any
division or business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.




          “Investment Accounts” means each of the Securities Accounts identified on Schedule
I-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 company
number 0200-01-038356.




          “Japan Insolvency Laws” means the bankruptcy and insolvency laws as now and hereafter
in effect in Japan.




          “Junior Notes” means (i) those certain six percent (6.00%) convertible senior notes
due September 30, 2025 in the principal amount of $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 due May 31,
2026 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.




          “Lender” has the meaning set forth in the preamble to this Agreement, and shall
include any permitted successor or assign in accordance with the provisions of Section
14.1.




          “Lender Expenses” means, without duplication of any “Lender Expenses” as defined under
each of the Secured Loan Facility and the Unsecured Subordinated 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
in connection with the Lender’s transactions with Borrower, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles), filing, recording,
publication and appraisal (including periodic collateral appraisals or business valuations to the
extent of the fees and




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charges (and up to the amount of any limitation) contained in this Agreement and environmental audits,
(c) costs and expenses incurred by the Lender in the disbursement of
funds to or for the account of Borrower (by wire transfer or otherwise), (d) charges paid or
incurred by the Lender resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by the Lender to correct any default or enforce any provision hereunder (f) audit
fees and expenses of the Lender related to audit examinations of the Books to the extent of the
fees 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 the
Lender in enforcing or defending this Agreement or in connection with the transactions contemplated
by this Agreement or the Lender’s relationship with Borrower, (h) Lender’s reasonable costs and
expenses (including attorneys fees) incurred in advising, structuring, drafting, reviewing,
conducting due diligence, administering (including engaging a third-party servicer or administrator
in accordance with Section 2.16) or amending this Agreement, and (i) Lender’s reasonable
costs and expenses (including attorneys, accountants, consultants, and other advisors fees 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 or remedies under this
Agreement), or defending this Agreement, irrespective of whether suit is brought.




          “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 Schedule
A-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 per
annum, provided by Bank of America, N.A. to the Borrower and reported to the Lender in accordance
with its customary procedures as it considers appropriate (rounded upwards, if necessary, to the
next 1/100%), to be the rate at which Dollar deposits (for delivery on the first day of the
requested Interest Period) are offered to major banks in the London interbank market 2 Business
Days prior to the commencement of the requested Interest Period, for a term and in an amount
comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of an extant LIBOR Rate Loan or as a conversion of a
Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance with this Agreement, which
determination 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 one
month, the LIBOR Rate with respect to such LIBOR Rate Loan shall be determined as if the term of
such LIBOR Rate Loan were one month.





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          “LIBOR Rate Loan” means each portion of an Advance or Term Loan that bears interest at
a rate determined by reference to the LIBOR Rate.




          “LIBOR Rate Margin” means the Applicable Margin pertaining to LIBOR Rate Loans as set
forth 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 interest is based on
the common law, statute, or contract, (b) such interest is recorded or perfected, and (c) such
interest is contingent upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances. Without limiting the generality of the 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, deposit arrangement, 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 exceptions and
encumbrances affecting Real Property.




          “Liquidated Damages Premium” means, as of any date of determination, an amount equal
to (a) during the period from and after the date of the execution and delivery of this Agreement up
to the date that is the first anniversary of the Closing Date, 2.0% times the Maximum Revolver
Amount and (b) during the period from and including the date that is the first anniversary of the
Closing 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 or
otherwise) of the Companies, taken as a whole or (b) a material impairment of Borrower’s ability to
perform its obligations hereunder or of the Lender’s ability to enforce the Obligations.




          “Material Videogame” means any videogame title sold by a Company that generated
revenues for the most recent calendar quarter in excess of 10% of all consolidated revenues of
Companies for such calendar quarter; provided that for purposes of Section 8.9 “Material
Videogame” shall mean any videogame sku sold by a Company that generated revenues for the most
recent calendar quarter in excess of 10% of all consolidated revenues of Companies for such
calendar quarter.




          “Maturity Date” has the meaning set forth in Section 3.4.




          “Maximum Revolver Amount” means (a) $40,000,000 minus (b) an amount by which the
Lender determines, in consultation with the Borrower, that exceeds the maximum




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amount Borrower
shall require to finance the anticipated aggregate cash expenditures of Borrower and its
Subsidiaries as reflected on the most recent Projections delivered pursuant to Section
6.3(c)(i) for the current fiscal year as such Projections appear after giving effect to
any reductions to the maximum available amount under the Unsecured Subordinated Loan Facility;
provided, however, that, solely for the purposes of this definition, such Projections shall
not include any reserves or sinking funds, however denominated, toward the repayment of amounts due
under the Junior Notes.




          “Midway” means Midway Home Entertainment Inc.




          “Mortal Kombat Franchise” means the “Mortal Kombat: Deadly Alliance,” and “Mortal
Kombat: Deception” videogames each of them created for use on Sony’s PlayStation 2 computer
entertainment 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 any
interest 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 fees
or expenses that, but for the commencement of an Insolvency Proceeding, would have accrued), lease
payments, guaranties, covenants, and duties of any kind and description owing by Borrower to the
Lender hereunder (but, for the absence of doubt, expressly excluding any obligations under the
Unsecured Subordinated Loan Facility and the Secured Loan Documents and all documents and
instruments entered into by the Companies in connection therewith) and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all interest not paid when due and all Lender Expenses
that Borrower 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 principal
of the Advances, interest thereon and all other Obligations shall have been paid in full in cash or
otherwise satisfied in a manner acceptable to the Lender in its sole discretion and (iii) the
Lender shall have received cash collateral (or, at the Lender’s option, a letter of credit issued
for the account of Borrower and at Borrower’s expense, in form and substance reasonably
satisfactory to the Lender, by an issuer reasonably acceptable to the Lender and payable to the
Lender as beneficiary) in such amounts as the Lender determines are reasonably necessary to secure
the 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 credited
to the obligations and/or as to which the Lender has not yet received final payment in full and in
cash.





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          “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 to
acquire the Target (so long as such wholly-owned Subsidiary is merged with and
into the Target upon consummation of the Permitted Acquisition) in which (a) the Target is
incorporated or otherwise organized in the United States, located in the United States and its
business consists of developing videogames for Companies, (b) immediately before and after giving
effect to such acquisition, no Default or Event of Default exists (and, with respect to the
financial covenant included in Section 7.18, the Lender has been provided with calculations
showing compliance with such financial covenant on a pro forma basis as of the most recent month
end for which financial statements have been delivered, after giving effect to such acquisition),
(c) the Lender shall have received projections from Borrower reflecting such acquisition, (d) the
aggregate consideration to be paid in connection with such acquisition does not exceed $5,000,000,
all of which shall be paid in common stock of Borrower, (e) the acquisition is consensual and has
been approved by the board of directors of the Target, (f) prior to such acquisition, the Lender
shall have received a description of such acquisition and such due diligence as is customarily
required by the Lender (including engaging third parties to review the transaction), (g) at least 3
days prior to the consummation of such acquisition, the Lender has received drafts of the material
documentation to be executed in connection with such acquisition in such form as such documentation
exists at such time, (h) consents have been obtained in favor of the Lender to the collateral
assignment of rights and indemnities under the material acquisition documents, (i) any contingent
liabilities (other than those set forth in (k) below) or Indebtedness retained by Target or
otherwise acquired in excess of $600,000 shall have been approved by the Lender, (j) any employment
agreements entered into in connection with such acquisition shall only compensate employees for
future services provided to the Target and shall not constitute “disguised consideration” for the
acquisition and (k) continuing obligations of the Target to its employees, if applicable, under the
Target’s royalty compensation plan shall not exceed the amount of royalties Borrower would have
been contractually obligated to pay the Target following the date of the acquisition in respect of
games developed by the Target prior to the date of the acquisition plus any royalties the Target
receives from third parties after the acquisition.




          “Permitted Discretion” means a determination made in the exercise of reasonable
business judgment.




          “Permitted Dispositions” means (a) sales or other dispositions of assets (including
Intellectual Property) that is uneconomic, no longer useful, substantially worn, damaged, or
obsolete in the ordinary course of business, (b) sales of Inventory to buyers in the ordinary
course of business, (c) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited 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 of
Directors of the Borrower and (ii) the Company or Affiliate which owns such patent is not at such
time using such patent to generate revenue by the licensing thereof in and of itself (other than
through the sale thereof), (f) transactions permitted under Section 7.12, (g) sales,
transfers or other dispositions of assets by Borrower or any




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Subsidiary of Borrower to Borrower or
any Subsidiary of Borrower, (h) the discount or sale, in each case without recourse and in the
ordinary course of business, of receivables more than 90 days overdue and arising in the ordinary
course of business, but only in connection with the compromise or collection thereof consistent
with 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 with the business of Borrower or any
Subsidiary of Borrower, (j) transactions permitted under Section 7.10, (k) licenses of
patents, copyrights, trademarks, trade secrets and other Intellectual Property of Borrower and its
Subsidiaries entered into in the ordinary course of business, and (l) sales, transfers or other
dispositions of assets for consideration consisting of at least 75% cash and for fair value in an
aggregate amount not to exceed $50,000 in any fiscal year.




          “Permitted Holders” means Sumner M. Redstone, Phyllis Redstone, Paula Redstone, any
lineal descendent of any of the foregoing or any trust or other arrangement established for their
benefit 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 in
connection with purchases of goods or services in the ordinary course of business, (d) Investments
received in settlement of amounts due to a Company effected in the ordinary course of business or
owing to a Company as a result of Insolvency Proceedings involving an Account Debtor or upon the
foreclosure or enforcement of any Lien in favor of a Company, (e) acquisition of Stock of a Target
in connection with a Permitted Acquisition, (f) capital contribution (not to exceed $1,000 in cash
plus common stock of Borrower sufficient to pay purchase price of the applicable Permitted
Acquisition) to a wholly owned Subsidiary of Borrower formed to acquire the Stock of a Target (so
long as such wholly owned Subsidiary is merged into such Target upon consummation of such Permitted
Acquisition), (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 such
Foreign Company made during each year after the date hereof does not exceed an amount equal to the
ordinary course expenses of such Foreign Company during such year, (j) Investments in Hedge
Agreements permitted under this Agreement, (k) Investments consisting of non-cash consideration
received from the purchaser of assets in connection with a sale of such assets permitted under this
Agreement, (l) Investments, including debt obligations and equity securities, received in
connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and
disputes with, clients and suppliers, (m) deposits of cash in favor of banks or other depository
institutions, solely to the extent incurred in connection with the maintenance of such deposit
accounts in the ordinary course of business, (n) Investments constituting guaranteed Indebtedness
otherwise 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 Loan
Documents, (b) Liens for unpaid taxes that either (i) are not yet delinquent, or (ii) do not
constitute an Event of Default hereunder and are the subject of Permitted Protests, (c) Liens set
forth on Schedule P-1, (d) the interests of lessors under operating leases,




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(e) purchase
money Liens or the interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien attaches only to
the asset purchased or acquired and the proceeds thereof, (f) Liens arising by operation of law (or
embodied in related agreements) in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary
course of the Companies’ business and not in connection with the borrowing of money, and which
Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests,
(g) Liens arising from deposits made in connection with obtaining worker’s compensation or other
unemployment insurance, (h) Liens or deposits to secure performance of bids, tenders, or leases
incurred in the ordinary course of business and not in connection with the borrowing of money,
(i) Liens granted as security for surety or appeal bonds in connection with obtaining such bonds in
the ordinary course of business, (j) Liens resulting from any judgment or award that is not an
Event of Default hereunder, (k) with respect to any Real Property, easements, rights of way, and
zoning restrictions that do not materially interfere with or impair the use or operation thereof,
(l) Liens existing on the date a Permitted Acquisition is consummated (and not incurred in
connection with such Permitted Acquisition) on Equipment of a Target securing Indebtedness of a
Target to the extent such Indebtedness is permitted in connection with such Permitted Acquisition,
(m) Liens on cash and Cash Equivalents in favor of the provider of any letter of credit to any
Company and securing such Company’s reimbursement obligations in respect of such Letter of Credit
and (n) landlord liens related to leases acquired in connection with a Permitted Acquisition to the
extent such Liens only cover Equipment located on such leased premises.




          “Permitted Protest” means the right of any Company to protest any Lien (other than any
Lien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subject
of 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 is
required under GAAP and (b) any such protest is instituted promptly and prosecuted diligently on
behalf 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, limited
partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land
trusts, 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 liability
private company, registered with company number 3292274.




          “Platform License” means each of those certain Licensed Publisher Agreement, dated
April 1, 2000, between Midway and Sony Computer Entertainment





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America, Inc., Licensed Publisher Agreement, dated November 14, 2000, between UK Company and
Sony Computer Entertainment Europe Limited, Xbox Publisher License Agreement, dated October 30,
2000, between Midway and Microsoft Licensing 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 October 25, 2006 between Midway and Microsoft Licensing, GP, each
as amended, modified or supplemented from time to time.




          “Projections” means Borrower’s forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a consistent basis with Borrower’s
historical financial statements, together with appropriate supporting details and a statement of
underlying assumptions.




          “Purchase Money Indebtedness” means Indebtedness (other than the Obligations, but
including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the
acquisition of any fixed assets for the purpose of financing all or any part of the acquisition
cost thereof.




          “Real Property” means any estates or interests in real property (exclusive of
leasehold 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 stored
in 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 to
redeem 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 or
outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials
so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor
or outdoor environment, (c) perform any pre-remedial studies, investigations, or post-remedial
operation 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 of
outstanding Advances.




          “Sale Leaseback Transaction” means the sale of the Real Property commonly known as
3289 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 any
Company on terms and conditions approved by the Board of Directors of Borrower in connection with
the sale-leaseback of such Real Property so long as no Event of Default exists.




-17-









 








          “SEC” means the United States Securities and Exchange Commission and any successor
thereto.




          “SEC Reports” means (i) each Annual Report of Borrower on Form 10-K filed with the
SEC, (ii) each Quarterly Report of the Borrower on Form 10-Q filed with the SEC and (iii) each of
Borrower’s current Reports on Form 8-K filed with the SEC.




          “Secured Loan Facility” means that certain Loan and Security Agreement dated as of
February 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 other
agreements entered into, now or in the future in connection therewith, in each case as the same may
be amended, restated, supplemented or otherwise modified from time to time.




          “Solvent” means, with respect to any Person on a particular date, that, at fair
valuations, 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 other
equivalents (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 in
Rule 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 Stock
having ordinary voting power to elect a majority of the board of directors (or appoint other
comparable 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 and
hereafter 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., a
California corporation, Midway Interactive Inc., a Delaware corporation, Midway Sales Company, LLC,
a Delaware limited liability company, and Midway Home Studios Inc., a Delaware corporation, Surreal
Software Inc., a Washington




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corporation, Midway Studios — Austin Inc., a Texas corporation, Midway Studios — Los Angeles
Inc., a California corporation.




          “Unsecured Subordinated Loan Facility” means that certain Unsecured Subordinated Loan
Agreement dated as of February 29, 2008, by and between the Borrower and the Lender, as amended,
restated, supplemented or otherwise modified and in effect.




          “Voidable Transfer” has the meaning set forth in Section 17.7.




     1.2. Accounting Terms.



          All accounting terms not specifically defined herein shall be construed in accordance with
GAAP. When used herein, the term “financial statements” shall include the notes and schedules
thereto. Whenever the term “Companies” or the term “Borrower” is used in respect of a financial
covenant or a related definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated 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 defined
as 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, 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 or any other Loan Document refer to this Agreement
or such other Loan Document, as the case may be, as a whole and not to any particular provision of
this 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. Any
reference in this Agreement to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to the repayment in full of the
Obligations shall mean the repayment in full in cash of all Obligations other than contingent
indemnification Obligations. Any reference herein to any Person shall be construed to include such
Person’s successors and assigns. Any requirement of a writing contained herein shall be satisfied
by the transmission of a Record.




     1.5. Schedules and Exhibits.



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          All of the schedules and exhibits attached to this Agreement shall be deemed incorporated
herein 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 this
Agreement, the Lender agrees to make advances (“Advances”) to Borrower in an amount
at any one time outstanding not to exceed the Maximum Revolver Amount.




     (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 the
Maximum Revolver Amount;




          (ii) if, as of the date of such additional Advance, the Borrower and its Subsidiaries
shall have more than $12,000,000 in available cash on hand or in available deposit accounts
in the aggregate unless the Borrower shall have notified and certified to the Lender that
the Borrower reasonably anticipates expenditures in excess of such amount, stating the
reason, in which event, subject to the terms and conditions of this Agreement, the Lender
shall 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 in
respect of all or any part thereof); or




          (iv) at any time the aggregate outstanding principal balance of “Advances” under and as
defined in the Secured Loan Facility is less than the “Maximum Revolver Amount” as defined
therein.




     (c) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the term of this
Agreement.




     (d) The outstanding unpaid principal balance and all accrued and unpaid interest under
the Advances shall be due and payable on the date of termination of this Agreement, whether
by its terms, by prepayment, or by acceleration. All amounts outstanding under the Advances
shall constitute Obligations.



     2.2. Intentionally Omitted.



     2.3. Borrowing Procedures.



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     (a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable duly
executed Borrowing Notice delivered to the Lender (which notice must be received by the
Lender no later than 10:00 a.m. (Chicago time) on the second Business Day prior to the date
that is the requested Funding Date specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day). At the Lender’s election, in lieu
of delivering the above-described Borrowing Notice, any Authorized Person may give the
Lender telephonic notice of such request by the required time. In such circumstances,
Borrower agrees that any such telephonic notice will be confirmed with a Borrowing Notice
within 24 hours of the giving of such notice and the failure to provide such Borrowing
Notice shall not affect the validity of the request.




     (b) Intentionally Omitted.




     (c) Making of Loans. After receipt of a request for a Borrowing pursuant to
Section 2.3(a), Lender shall, by not later than 10:00 a.m. (Chicago time) on the
applicable Funding Date, make available to Borrower by transferring immediately available
funds equal to such requested Borrowing to the Designated Accounts designated by the
Borrower for such purpose; provided, however, that the Lender shall have no
obligation to make any Advance if the Lender shall have actual knowledge that (1) one or
more of the applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (2) the requested Borrowing would exceed the Availability on such
Funding Date.



     2.4. Payments.




     (a) Payments by Borrower. Except as otherwise expressly provided herein, all payments
by Borrower shall be made to the Lender in immediately available funds, no later than 11:00
a.m. (Chicago time) on the date specified herein. Any payment received by the Lender later
than 11:00 a.m. (Chicago time), shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue until such
following Business Day.




     (b) Application.




          (i) Payments shall be remitted to the Lender and all such payments shall be applied as
follows (such application shall be no later than the first Business Day after receipt
thereof in accordance with Section 2.8):




          (A) first, to pay any Lender Expenses or any other indemnities, fees or
premiums then due to the Lender hereunder, until paid in full,




          (B) second, ratably to pay interest due in respect of the Advances
until paid in full,



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          (C) third, to pay the principal of all Advances until paid in full,




          (D) fourth, to pay any other Obligations, and




          (E) fifth, to Borrower (to be wired to the Investment Accounts) or such
other 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 Borrower
specified by Borrower to be for the payment of specific Obligations then due and payable (or
prepayable) 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 Insolvency
Proceeding), default interest, interest on interest, and expense reimbursements, whether or
not any of the foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.




          (v) In the event of a direct conflict between the priority provisions of this
Section 2.4 and other provisions contained in any other Loan Document, it is the
intention of the parties hereto that such priority provisions in such documents shall be
read together and construed, to the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.4 shall control and govern.



          (c) Voluntary Prepayment. Borrower shall not make any voluntary prepayments of any amounts
borrowed hereunder so long as any amount remains outstanding under the Unsecured Subordinated Loan
Facility at such time.




     2.5. Intentionally Omitted.



     2.6. Interest Rates: Rates, Payments, and Calculations.




     (a) Interest Rates. Except as provided in clause (c) below, all Obligations
that have been charged to the Loan Account pursuant to the terms hereof shall bear interest
on 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 interest
on the Daily Balance thereof at a per annum rate less than 4%. To the extent that interest accrued
hereunder at the rate set forth herein would be less than the foregoing




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minimum daily rate, the interest rate chargeable hereunder for such day automatically shall be
deemed increased to the minimum rate.





     (b) Intentionally Omitted.




     (c) Default Rate. Upon the occurrence and during the continuation of an Event of
Default (and at the election of the Lender), all Obligations that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof
at a per annum rate equal to 2 percentage points above the per annum rate otherwise
applicable hereunder.




     (d) Payment. Except as provided to the contrary in Section 2.13(a), interest
and all other fees payable hereunder shall be due and payable, in arrears, on the first
Business Day of each month at any time that any Obligations or the Commitment are
outstanding. Borrower hereby authorizes the Lender, from time to time, without prior notice
to 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’s
Loan Account, which amounts thereafter shall constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances hereunder. Any interest not paid when due
shall be compounded by being charged to Borrower’s Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then applicable to
Advances that are Base Rate Loans hereunder.




     (e) Computation. All interest and fees chargeable hereunder shall be computed on the
basis of a 360 day year for the actual number of days elapsed. In the event the Base Rate
is changed from time to time hereafter, the rates of interest hereunder based upon the Base
Rate automatically and immediately shall be increased or decreased by an amount equal to
such change in the Base Rate.




     (f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest
rate or rates payable under this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law that a court of competent
jurisdiction shall, in a final determination, deem applicable. Borrower and the Lender, in
executing and delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates of interest
or 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 maximum
as 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 to
the extent of such excess.




     (g) PIK Interest. The Borrower may elect to increase the then outstanding principal
amount of the Advances by the amount of all accrued and unpaid interest as



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of the date any such interest is due and payable under Section 2.6(d) (an
“Interest Payment Date”, and such interest being the “PIK Interest”) and the
principal amount of the Advances shall be deemed so increased by such amount as of such
Interest Payment Date; provided, that at no time shall the Borrower be permitted to
elect to increase the Advances by the PIK Interest amount if after giving effect thereto the
sum of the aggregate outstanding principal amount of the Advances plus the PIK
Interest amount shall exceed $40,000,000. The Borrower shall be deemed to have given the
Lender irrevocable notice of its election to increase the Advances by the PIK Interest
amount with respect to each Interest Payment Date unless it notifies the Lender otherwise by
not later than 10:00 a.m. (Chicago time) on such Interest Payment Date.



     2.7. Intentionally Omitted.



     2.8. Crediting Payments.



          The receipt of any payment item by the Lender shall not be considered a payment on account
unless such payment item is a wire transfer of immediately available federal funds made to the
Lender’s Account. Should any payment item not be honored when presented for payment, then Borrower
shall 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 deemed
received by the Lender only if it is received into the Lender’s Account on a Business Day on or
before 11:00 a.m. (Chicago time). If any payment item is received into the Lender’s Account on a
non-Business Day or after 11:00 a.m. (Chicago time) on a Business Day, it shall be deemed to have
been received by the Lender as of the opening of business on the immediately following Business
Day.




     2.9. Designated Accounts.



          The Lender is authorized to make the Advances under this Agreement based upon telephonic or
other instructions received from anyone purporting to be an Authorized Person, or without
instructions if pursuant to Section 2.6(d). Borrower agrees to establish and maintain the
Designated Accounts with the Designated Account Banks for the purpose of receiving the proceeds of
the Advances requested by Borrower and made by the Lender hereunder. Unless otherwise agreed by
the Lender and Borrower, any Advance requested by Borrower and made by the Lender hereunder shall
be 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 “Loan
Account”) on which Borrower will be charged with all Advances made by the Lender to Borrower or
for 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 for
Borrower’s account. The Lender shall render




-24-









 







statements regarding the Loan Account to Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender Expenses owing, and such
statements, absent manifest error, shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and the Lender unless, within 30 days after receipt
thereof by Borrower, Borrower shall deliver to the Lender written objection thereto 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 shall
be 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, an
unused line fee in the amount equal to 0.50% per annum times the result of (i) the Maximum
Revolver Amount, less (ii) the average Daily Balance of Advances that were outstanding
during 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 the
rate 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 based
upon 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 Interest
Period and (2) the last day of such Interest Period applicable thereto or (B) if the
Interest 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 of
Default in consequence of which the Lender has elected to accelerate the maturity of all or
any portion of the Obligations, or (iii) termination of this Agreement pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless Borrower properly has
exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR
Rate Loan automatically shall convert to the rate of interest then applicable to Base Rate
Loans of the same type hereunder. At any time that an Event of Default has occurred and is
continuing, Borrower no longer shall have the option to request that Advances bear interest
at the LIBOR Rate and the Lender shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder.




     (b) LIBOR Election.



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          (i) Borrower may, at any time and from time to time, so long as no Event of Default has
occurred and is continuing, elect to exercise the LIBOR Option by notifying the Lender prior
to 11:00 a.m. (Chicago time) at least 3 Business Days prior to the commencement of the
proposed Interest Period (the “LIBOR Deadline”). Notice of Borrower’s election of
the LIBOR Option for a permitted portion of the Advances or Term Loan and an Interest Period
pursuant to this Section shall be made by delivery to the Lender of a LIBOR Notice received
by the Lender before the LIBOR Deadline, or by telephonic notice received by the Lender
before the LIBOR Deadline (to be confirmed by delivery to the Lender of a LIBOR Notice
received by the Lender prior to 5:00 p.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 given
time. Borrower only may exercise the LIBOR Option for LIBOR Rate Loans of at least $100,000
and integral multiples of $100,000 in excess thereof.




     (c) Prepayments. Borrower may prepay LIBOR Rate Loans at any time, subject to the
terms and conditions of this Agreement (including Section 2.4(c)).




     (d) Special Provisions Applicable to LIBOR Rate.




          (i) The LIBOR Rate may be adjusted by the Lender on a prospective basis to take into
account any additional or increased costs to the Lender of maintaining or obtaining any
eurodollar deposits or increased costs due to changes in applicable law occurring subsequent
to 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 or
increased 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 and
adjustment and, upon its receipt of the notice from the Lender, Borrower may, by notice to
the Lender (y) require the Lender to furnish to Borrower a statement setting forth the basis
for 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, shall
at any time after the Closing Date, in the reasonable opinion of the Lender, make it
unlawful or impractical for the Lender to fund or maintain Advances as LIBOR Rate Loans or
to continue such funding or maintaining, or to determine or charge interest rates at the
LIBOR 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
specified in the Lender’s notice shall be deemed to be the last day of the Interest Period
of such LIBOR Rate Loans,



-26-









 







and interest upon the LIBOR Rate Loans of the Lender thereafter shall accrue interest
at the rate then applicable to Base Rate Loans, and (z) Borrower shall not be entitled to
elect the LIBOR Option until the Lender determines that it would no longer be unlawful or
impractical to do so.




     (e) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, the Lender is not required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate. The
provisions of this Section shall apply as if the Lender had match funded any Obligation as
to which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits for each
Interest Period in the amount of the LIBOR Rate 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 or
administrator for the purpose of reviewing reports and borrowing requests delivered hereunder, to
conduct visitations of the Companies premises to review the operations and business of the
Companies and to engage in further communications with the Companies, in each case to the extent
the Lender shall be permitted hereunder to receive such reports or requests or conduct such
visitations; provided, that such servicer or administrator shall be approved by the
Borrower, which approval shall not be unreasonably withheld or delayed, and the Borrower shall
provide 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 Section
2.2 (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 (unless
waived 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 and
substance satisfactory to the Lender, duly executed, and each such document shall be in full
force and effect:




          (i) Secured Loan Facility,




          (ii) Unsecured Subordinated Loan Facility, and



-27-









 






          (iii) the Disbursement Letter;




     (c) the Lender shall have received a certificate from the Secretary of Borrower
attesting to the resolutions of Borrower’s Board of Directors authorizing its execution,
delivery, and performance of this Agreement and authorizing specific officers of Borrower to
execute the same;




     (d) the Lender shall have received copies of Borrower’s Governing Documents, as
amended, modified, or supplemented to the Closing Date, certified by the Secretary of
Borrower;




     (e) the Lender shall have received a certificate of status with respect to Borrower
such certificate to be issued by the appropriate officer of the jurisdiction of organization
of Borrower, which certificate shall indicate that Borrower is in good standing in such
jurisdiction;




     (f) the Lender shall have received opinions of Borrower’s counsel in form and substance
satisfactory to the Lender;




     (g) the Lender shall have received consolidated federal tax returns for the Borrower
for the years 2004, 2005 and 2006;




     (h) the Lender shall have received satisfactory evidence (including a certificate of
the chief financial officer of the Borrower) that all tax returns required to be filed by
Companies 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) have
been paid prior to delinquency, except such taxes that are the subject of a Permitted
Protest;




     (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’s
representations and warranties to the Lender, the results of which shall be satisfactory to
the Lender, and (ii) a legal review of all material contracts and litigation matters, the
results of which shall be satisfactory to the Lender;




     (j) the Borrower have paid all Lender Expenses incurred in connection with the
transactions evidenced by this Agreement for which an invoice shall have been presented to
the Borrower on or prior to the Closing Date;




     (k) the Lender shall have received copies of each of Platform Licenses covering the
North American Market (which may be redacted copies) and other material contracts, together
with a certificate of the Secretary, President, Chief Executive Officer or Senior Vice
President of the Borrower certifying each such document as being a true, correct, and
complete copy thereof;




     (l) Borrower shall have received all licenses, approvals or evidence of other actions
required by any Governmental Authority in connection with the



-28-









 







execution and delivery by Borrower of the Loan Document or with the consummation of the
transactions contemplated thereby; and




     (m) all other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded and shall be
in 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 credit
hereunder) is subject to the fulfillment, on or before the date applicable thereto (or such later
date as the Lender may determine in light of the circumstances), of each of the conditions
subsequent set forth in Section 3.2 of the Secured Loan Facility (the failure by Companies to so
perform 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 any
other credit hereunder) shall be subject to the following conditions precedent:





     (a) the representations and warranties contained in this Agreement shall be true and
correct in all material respects on and as of the date of such extension of credit, as
though made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);




     (b) no Default or Event of Default shall have occurred and be continuing on the date of
such extension of credit, nor shall either result from the making thereof;




     (c) no injunction, writ, restraining order, or other order of any nature restricting or
prohibiting, directly or indirectly, the extending of such credit shall have been issued and
remain in force by any Governmental Authority against Borrower, the Lender, or any of their
Affiliates; and




     (d) no Material Adverse Change with respect to Companies shall have occurred since the
date of the latest financial statements submitted to the Lender pursuant to Section
6.2.



     3.4. Term.



          This Agreement shall continue in full force and effect for a term ending on March 31, 2009
(the “Maturity Date”). The foregoing notwithstanding, the Lender shall have the right to
terminate its obligations under this Agreement immediately and without notice upon the occurrence
and during the continuation of an Event of Default.




     3.5. Effect of Termination.



-29-









 





          On the date of termination of this Agreement, all Obligations immediately shall become due and
payable without notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrower of its duties, Obligations, or covenants hereunder.




     3.6. Early Termination by Borrower.



          Subject to Section 2.4(c), Borrower has the option, at any time upon 15 days prior
written notice by Borrower to the Lender, to terminate this Agreement by paying to the Lender the
Obligations. In the event of the termination of this Agreement and repayment of the Obligations at
any time prior to the Maturity Date, for any other reason than the payment by the Borrower of the
Obligations, including (a) termination upon the election of the Lender to terminate after 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, or any other plan
of compromise, restructure, or arrangement in any Insolvency Proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of damages to the Lender
or profits lost by the Lender as a result of such early termination, and by mutual agreement of the
parties as to a reasonable estimation and calculation of the lost profits or damages of the Lender,
Borrower shall pay the Liquidated Damages Premium to the Lender, measured as of 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 following
representations and warranties to the Lender which shall be true, correct, and complete, in all
material 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 such
Advance (or other extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and warranties shall survive
the execution and delivery of this Agreement:




     5.1. No Encumbrances.



          Each Company has good and indefeasible title to its personal property assets and good and
marketable title to its Real Property, in each case, free and clear of Liens except for Permitted
Liens.




     5.2. Intentionally Omitted.



     5.3. Intentionally Omitted.



     5.4. Intentionally Omitted.



     5.5. Intentionally Omitted.



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     5.6. Intentionally Omitted.



     5.7. Intentionally Omitted.



     5.8. Due Organization and Qualification; Subsidiaries.




     (a) Each Company is duly organized and existing and in good standing under the laws of
the jurisdiction of its organization and qualified to do business in any state where the
failure 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 the
authorized capital Stock of each Company, by class, and, as of the Closing Date, a
description 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 from
time to time by the Borrower), there are no subscriptions, options, warrants, or calls
relating to any shares of each Company’s (other than the Borrower) capital Stock, including
any 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 to
time by the Borrower), no Company is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital Stock or any security
convertible 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 to
time by the Borrower), is a complete and accurate list of each Company’s direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their organization; (ii) the number of
shares 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 owned
directly or indirectly by the applicable Company. All of the outstanding capital Stock of
each 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 updated
from time to time by the Borrower), there are no subscriptions, options, warrants, or calls
relating to any shares of any Companies’ Subsidiaries’ capital Stock, including any right of
conversion or exchange under any outstanding security or other instrument. No Company or
any of its respective Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of any Companies’ capital Stock or any
security 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 been
duly authorized by all necessary action on the part of Borrower.



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     (b) The execution, delivery, and performance by Borrower of this Agreement does not and
will not (i) violate any provision of federal, national, state, provincial or local law or
regulation 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, or constitute (with due notice or lapse of time
or both) a default under any material contractual obligation of Borrower, including the
Junior Notes, (iii) result in or require the creation or imposition of any Lien of any
nature whatsoever 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
Person under any material contractual obligation of Borrower, other than consents or
approvals that have been obtained and that are still in force and effect.




     (c) The execution, delivery, and performance by Borrower of this Agreement does not and
will not require any registration with, consent, or approval of, or notice to, or other
action with or by, any Governmental Authority, other than consents or approvals that have
been obtained and that are still in force and effect.




     (d) This Agreement, and all other documents contemplated hereby, when executed and
delivered by Borrower will be the legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors’ rights
generally.



     5.10. Litigation.



          Other than those matters disclosed on the SEC Reports, there are no actions, suits, or
proceedings pending or, to the best knowledge of Borrower, threatened against the Companies, except
for (a) matters that exist as of the Closing Date that Borrower has no knowledge of, (b) matters
that exist as of the Closing Date that could not reasonably be expected to result in a Material
Adverse 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 a
Material Adverse Change.




     5.11. No Material Adverse Change.



          All financial statements relating to the Companies that have been delivered by Borrower to the
Lender have been prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit adjustments) and present
fairly in all material respects, the Companies’ financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material Adverse Change with
respect to the Companies since the date of the latest financial statements submitted to the Lender
pursuant to Section 6.2.




     5.12. Fraudulent Transfer.



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     (a) the Companies taken as a whole are Solvent.




     (b) No transfer of property is being made by Borrower and no obligation is being
incurred by Borrower in connection with the transactions contemplated by this Agreement with
the 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 any
Benefit Plan.




     5.14. Environmental Condition.



          Except as set forth on Schedule 5.14 (as such Schedule may be updated from time to
time by the Borrower), (a) to Borrower’s knowledge, none of the Companies’ properties or assets has
ever 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, of
applicable Environmental Law, (b) to Borrower’s knowledge, none of Companies’ properties or assets
has ever been designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) Borrower has never received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real Property owned or
operated by the Companies, and (d) Borrower has never received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by any Company resulting in the releasing or disposing of
Hazardous Materials into the environment.




     5.15. Brokerage Fees.



          Borrower has not utilized the services of any broker or finder in connection with obtaining
financing from the Lender under this Agreement and no brokerage commission or finders fee is
payable by Borrower in connection herewith.




     5.16. Intellectual Property.



          Each Company owns, or holds licenses in, Intellectual Property that is necessary to the
conduct of its business as currently conducted. Attached hereto as Schedule 5.16 (as such
Schedule is updated within 30 days of the end of each fiscal quarter of Borrower or more frequently
as the Borrower may elect) is a true, correct, and complete listing of all United States patents,
patent applications, registered trademarks, trademark applications, copyright registrations, and
copyright applications as to which each Company is the owner and all material license agreements
giving the Company the right to use third party Intellectual Property. Except as set forth on
Schedule 5.16 (as such Schedule is updated within 30 days of the end of each fiscal quarter
of Borrower or more frequently as the




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Borrower may elect), all Intellectual Property owned by any of the Companies or any of their
Affiliates and which are related solely to the Mortal Kombat Franchise are owned by MAG.




     5.17. Leases.



          Companies enjoy peaceful and undisturbed possession under all leases material to their
business and to which they are parties or under which they are operating. All of such leases are
valid 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 to
the Lender (including all information contained in the Schedules hereto) for purposes of or in
connection with this Agreement or any transaction contemplated herein is, and all other such
factual information (taken as a whole) hereafter furnished by or on behalf of Borrower in writing
to the Lender will be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect at such time in
light of the circumstances under which such information was provided. The Closing Date Projections
represented as of the date on which they were delivered to the Lender, and any other Projections
shall represent as of the date on which they are delivered to the Lender, the Companies’ good faith
best 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 each
Company outstanding on the Closing Date that is to remain outstanding after the Closing Date and
such Schedule accurately reflects the aggregate principal amount of such Indebtedness and the
principal terms thereof.




VI. AFFIRMATIVE COVENANTS.




          Borrower covenants and agrees that, until the Obligations have been Paid in Full, Borrower
shall do all of the following:




     6.1. Accounting System.



          Maintain a system of accounting that enables Borrower to produce financial statements in
accordance with GAAP and maintain records pertaining to the Collateral that contain information as
from time to time reasonably may be requested by the Lender. Borrower also shall keep an inventory
reporting system that shows all additions, sales, claims, returns, and allowances with respect to
its Inventory.




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     6.2. Company Reporting.



          Borrower shall deliver to Lender copies of all reports delivered to the lender or its designee
under and pursuant to the Secured Loan Facility.




     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 a
month that is one of Borrower’s fiscal quarters or 90 days in the case of a month that is
the Borrower’s fiscal year end) after the end of each month during each of Borrower’s fiscal
years,




          (i) Borrower-prepared consolidated balance sheet, income statement, and statement of
cash 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 the
effect that:




          (A) the financial statements delivered hereunder have been prepared in
accordance with GAAP (except for the lack of footnotes and being subject to
quarterly (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 and
its Subsidiaries, and




          (B) there does not exist any condition or event that constitutes a Default or
Event of Default (or, to the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and what action Companies
have 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 of
Borrower’s fiscal years, consolidated financial statements of Borrower and its Subsidiaries
for each such fiscal year, audited by independent certified public accountants reasonably
acceptable to the Lender and certified, without any qualifications, by such accountants to
have been prepared in accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if prepared, such
accountants’ letter to management),




     (c) as soon as available, but in any event prior to the start of each of Borrower’s
fiscal years,




          (i) copies of Borrower’s annual Projections which have been presented to the Board of
Directors of the Borrower, in form and substance (including



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as to scope and underlying assumptions) 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 and signed by the chief financial officer of Borrower as being
such Borrower’s good faith best estimate of the financial performance of Borrower and its
Subsidiaries during the period covered thereby,




          (ii) a copy of Capital Expenditure budget for the forthcoming year, which budget shall
be in the form and substance acceptable to the Lender, and




          (iii) a schedule of the projected release dates for videogames, which schedule shall
include for each videogame, the title of the game, the release date, projected net sales by
unit and projected net sales by quarter,




          (iv) a schedule of (A) the projected revenue by fiscal quarter generated from the top 5
videogames to be sold by the Companies during the upcoming fiscal year (or the top 5
videogames and Mortal Kombat if Mortal Kombat is not in the top 5 videogames by revenue
generated) and (B) the videogame titles comprising 70% of projected total annual revenue
from videogame sales during the upcoming fiscal year,




     (d) as soon as available but in any event within 45 days after the end of each month
that is one of Borrower’s fiscal quarters (or within 90 days in the case of a month that is
the Borrower’s fiscal year end), revised annual Projections (if any) which have been
presented to the Board of Directors of the Borrower, in form and substance (including as to
scope and underlying assumptions) satisfactory to the Lender, in its discretion, for the
current fiscal year, month by month, incorporating the actual results of all prior months of
such fiscal year as well as a comparison of actual year to date results versus the
Projections 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 a
Default or an Event of Default, notice thereof and a statement of the curative action that
the Companies propose to take with respect thereto,




     (f) promptly after the commencement thereof, but in any event within 5 days after the
service of process with respect thereto on any Company, notice of all actions (including a
copy of the relevant complaint), suits, or proceedings brought by or against any Company
before any Governmental Authority which, (i) reasonably could be expected to result in a
Material Adverse Change or (ii) sets forth a claim that if the Government were to prevail
would 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 of
the Junior Notes delivered by Borrower to any holder of the Junior Notes,




-36-












 






          (h) as soon as Borrower has knowledge of or receipt of any notice from a holder of a
Junior Note with respect to a Redemption Date, telephonic and telefacsimile or electronic
mail 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.



          In addition to the financial statements referred to above, Borrower agrees to deliver
unaudited balance sheets and income statements prepared on a consolidating basis and agree that no
Subsidiary of Borrower (other than the Australia Companies) will have a fiscal year different from
that of Borrower. Borrower agree to cooperate with the Lender to allow the Lender to consult with
its independent certified public accountants if the Lender reasonably requests the right to do so
and that, in such connection, its independent certified public accountants are authorized to
communicate with the Lender and to release to the Lender whatever financial information concerning
Borrower 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 less
favorable basis to the Companies than in accordance with the usual customary practices of
Companies, 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 proper
conduct to its business in good working order and condition, ordinary wear and tear excepted, and
comply at all times with the provisions of all leases to which it is a party as lessee, so as to
prevent any loss or forfeiture thereof or thereunder.




     6.7. Taxes.



          Cause all assessments and taxes, whether real, personal, or otherwise, due or payable by, or
imposed, levied, or assessed against Companies, or any of their respective assets to be paid in
full, before delinquency or before the expiration of any extension period, except to the extent
that the validity of such assessment or tax shall be the subject of a Permitted Protest. Borrower
will make timely payment or deposit of all tax payments and withholding taxes required of it by
applicable 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 proof
satisfactory to the Lender indicating that the applicable Company has made such payments or
deposits.




     6.8. Insurance.



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     (a) At Borrower’ expense, maintain insurance respecting Borrower and its Subsidiaries’
assets wherever located, covering loss or damage by fire, theft, explosion, and all other
hazards and risks as ordinarily are insured against by other Persons engaged in the same or
similar businesses. Borrower also shall maintain business interruption, public liability,
and product liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation and directors and officers liability insurance. All such policies
of insurance shall be in such 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 any
Governmental Authority, including the Fair Labor Standards Act and the Americans With Disabilities
Act (and, in each case, any Canadian or United Kingdom equivalent, as the case may be, for each
jurisdiction 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 not
reasonably 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 which
Borrower is a party or by which any of Borrower’s properties and assets are bound, unless such
payments 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 good
standing 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 or
post bonds or other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to the Lender documentation of such compliance which the Lender reasonably
requests, (c) promptly notify the Lender of any release of a Hazardous Material of any reportable
quantity from or onto property owned or operated by Borrower and take any Remedial Actions required
to abate said release or otherwise to come into compliance with applicable Environmental Law, and
(d) promptly,




 -38- 









 







but in any event within 5 days of its receipt thereof, provide the Lender with written notice
of any of the following: (i) notice that an Environmental Lien has been filed against any of the
real or personal property of Borrower, (ii) commencement of any Environmental Action or notice that
an Environmental Action will be filed against Borrower, and (iii) notice of a violation, citation,
or other administrative order which reasonably could be expected to result in a Material Adverse
Change.




     6.14. Disclosure Updates.



          Promptly and in no event later than 5 Business Days after obtaining knowledge thereof, notify
the Lender if any written information, exhibit, or report furnished to the Lender contained any
untrue statement of a material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in which made. The
foregoing to the contrary notwithstanding, any notification pursuant to the foregoing provision
will not cure or remedy the effect of the prior untrue statement of a material fact or omission of
any material fact nor shall any such notification have the affect of amending or modifying this
Agreement 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 any
non-Affiliate, appropriate documents to cause the software, trademarks and other Intellectual
Property associated with such videogame (other than intellectual property not material or integral
to the operation or value of such videogame) released by a Company for sale to its customers to be
registered 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 the
Companies or any of their Affiliates and which is related solely to the Mortal Kombat Franchise to
be owned by MAG including but not limited to obtaining such assignments from independent
consultants and such other assignments of copyright rights as may be required under the “Work for
Hire” doctrine under United States Copyright law.




     6.19. Excess Cash.




     (a) Unless otherwise agreed by the Lender, in the event that the aggregate outstanding
principal amount of all “Term Loans” and “Advances” under and as defined in the Secured Loan
Facility plus the aggregate outstanding principal amount of all Advances hereunder shall
equal or exceed $40,000,000 as of the close of business on the Business Day immediately
preceding the last Business Day of any calendar week (each such day, a “Testing
Date”), on or before the close of business



 -39- 









 







on the Business Day following such Testing Date the Borrower shall issue instructions
to each depository bank or other financial institution at which the Borrower or any of its
Subsidiaries maintains deposit accounts (other than deposit accounts maintained in Japan or
Australia and excluding any amounts on deposit to cash collateralize any letter of credit
reimbursement obligations) to cause an amount equal to any excess in increments of
$1,000,000 of:




          (i) the then available cash balances in such accounts as of such Testing Date after
giving effect to all receipts and other payments due or owing to or from such accounts, over




          (ii) $10,000,000




to be transferred to the Lender’s Account on or before the Business Day after such Testing
Date (or, in the case of funds transferred from an account located outside of the United
States, the second Business Day after such Testing Date) for application (i) first, to the
outstanding obligations under the Unsecured Subordinated Loan Facility in accordance with
the terms thereof, and (ii) second, to the outstanding Obligations hereunder in accordance
with the terms hereof; provided that after giving effect to such application the
aggregate outstanding principal amount of the Advances hereunder shall not be less than
$10,000,000.



VII. NEGATIVE COVENANTS.




          Borrower covenants and agrees that, until the Obligations have been Paid in Full, Borrower
will 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 or
indirectly, 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 Liens
associated 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 the
prospects of repayment of the Obligations by Borrower or materially impair Borrower, any
Foreign Company’s or any Company’s creditworthiness, (ii) such refinancings, renewals, or
extensions do not result in an increase in the then extant principal amount of, or interest
rate with respect to, the



 -40- 









 







Indebtedness so refinanced, renewed, or extended or add one or more of the Foreign
Companies or Companies as liable with respect thereto if such additional Foreign Companies
or Companies, as applicable, were not liable with respect to the original Indebtedness,
(iii) such refinancings, renewals, or extensions do not result in a shortening of 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 burdensome or
restrictive to the applicable Foreign Company or the applicable Company, (iv) if the
Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment
to the Obligations, then the terms and conditions of the refinancing, renewal, or extension
Indebtedness must be include subordination terms and conditions that are at least as
favorable to the Lender as those that were applicable to the refinanced, renewed, or
extended Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or extended is
not recourse to any Person that is liable on account of the Obligations other than those
Persons which were obligated with respect to the Indebtedness 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 is
consummated (but not incurred in connection with such Permitted Acquisition) to the extent
such Indebtedness was permitted in connection with such Permitted Acquisition;




     (h) Indebtedness consisting of an obligation of Borrower to issue common stock as the
purchase price in connection with a Permitted Acquisition;




     (i) Indebtedness consisting of the Junior Notes;




     (j) Lease payment obligations incurred in connection with the Sale Leaseback
Transaction;




     (k) Indebtedness in respect of Hedge Agreements designed to hedge against fluctuations
in interest rates and exchange rates incurred in the ordinary course of business and
consistent with prudent business practice, so long as a hedging program related thereto has
been approved by the Board of Directors of the Borrower;




     (l) Indebtedness pursuant to the Unsecured Subordinated Loan Facility, the Secured Loan
Documents;




     (m) Indebtedness owed to the Borrower or any of its Subsidiaries;




     (n) Indebtedness under performance bonds, surety bonds and letter of credit obligations
to provide security for worker’s compensation claims and Indebtedness in respect of bank
overdrafts not more than two days overdue, in each case, incurred in the ordinary course of
business;



 -41- 









 






     (o) to the extent the same constitutes Indebtedness, obligations in respect of net
capital adjustments and/or earn-out arrangements permitted pursuant to a purchase or
acquisition otherwise permitted under this Agreement;




     (p) Indebtedness of Borrower or any of its Subsidiaries owing to the seller in any
purchase or acquisition otherwise permitted under this Agreement;




     (q) to the extent constituting Indebtedness, indemnification obligations and other
similar obligations of Borrower and its Subsidiaries in favor of directors, officers,
employees, consultants or agents of Borrower or any of its Subsidiaries extended in the
ordinary 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 in
the ordinary course of business.



     7.2. Liens.



          Create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect
to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or
profits therefrom, except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or extended under
Section 7.1(d) and so long as the replacement Liens only encumber those assets that secured
the refinanced, renewed, or extended Indebtedness, after-acquired property that is affixed or
incorporated 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, or
reclassify its outstanding Stock.




     (b) Except for Permitted Acquisitions, acquire all or substantially all of the business
of 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 one
transaction 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 the
following:



 -42- 









 






          (i) any Subsidiary of Borrower may merge into or consolidate with Borrower or any other
Subsidiary of Borrower; provided that in the case of any such merger or consolidation to
which Borrower is a party, Borrower shall be the surviving entity;




          (ii) as part of any Permitted Acquisition, Borrower or any Subsidiary of Borrower may
merge into or consolidate with any other Person or permit any other Person to merge into or
consolidate with it; provided that in the case of any such merger or consolidation to which
Borrower is a party, Borrower shall be the surviving entity;




          (iii) as part of any sale or other disposition permitted under this Agreement, any
Subsidiary of Borrower may merge into or consolidate with any other Person or permit any
other Person to merge into or consolidate with it; and




          (iv) upon prior notice to the Lender, any Subsidiary of Borrower may liquidate or
dissolve if Borrower determines in good faith that such liquidation or dissolution is in the
best 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, or
otherwise dispose of any of the assets (including any Capital Stock of any Subsidiary) of any
Foreign Company or any Company.




     7.5. Change Name.



          Change Borrower’s name, any Foreign Company’s name or any Company’s name, FEIN, organizational
identification number, state or nation of organization, or organizational identity;
provided, however, that (a) a Company (other than German Company) may change its
name 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 such
change.




     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 any
Company, other than the Obligations in accordance with this Agreement, the Unsecured
Subordinated Loan Facility or the Secured Loan Documents, or



 -43- 









 






     (b) directly or indirectly, amend, modify, alter, increase, or change any of the
material terms or conditions of any agreement, instrument, document, indenture, or other
writing 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.




     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 Company
may consign Inventory with a value (based upon the cost of such Inventory to Midway or the
applicable 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 a
Company 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 retire
any 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 payment
of dividends to Borrower to allow Borrower to (a) immediately make regularly scheduled payments of
interest on the Junior Notes, in each case so long as after giving effect thereto no Event of
Default 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 no
such distribution or dividend shall be made prior to one Business Day prior to the Redemption
Date), (c) immediately pay when due taxes owing by Borrower to any Governmental Authority, (d) make
any payment due or owing hereunder or with respect to the Unsecured Subordinated Loan Facility, and
(e) maintain cash not to exceed $7,500,000 at any time for the purpose of paying ordinary course
expenses (which expenses 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 required
to conform to GAAP or SEC) or enter into, modify, or terminate any agreement currently existing, or
at any time hereafter entered into with any third party accounting firm or service bureau for the
preparation or storage of Companies’ or Foreign Companies’ accounting records without said
accounting firm or service bureau agreeing to provide the Lender information regarding Companies’
or Foreign Companies’ financial condition.




     7.12. Investments.



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          Except for Permitted Investments, directly or indirectly, make or acquire any Investment, or
incur 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 to
exist any transaction with any Affiliate (other than a wholly-owned Subsidiary of the Borrower) of
any Foreign Company or any Company except for transactions that are in the ordinary course of
Companies’ business, upon fair and reasonable terms and that are no less favorable to any Foreign
Company or Companies, as applicable, than would be obtained in an arm’s length 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 Securities
Exchange Act of 1934, increase the annual fee or per-meeting fees paid to the members of its Board
of Directors during any year by more than 15% over the prior year; pay or accrue total cash
compensation, during any year, to its officers and senior management employees in an aggregate
amount 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 pay
transactional fees, costs, and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby, and (b) thereafter, consistent with the terms and
conditions hereof, for its lawful and permitted purposes. For the avoidance of doubt, the Borrower
shall not use the proceeds of any Advance to repay any principal amount owing in respect of the
Junior 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 new
Subsidiary without the Lender’s prior written consent.




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     7.20. Copyrights.



          Register with the applicable federal filing office or other appropriate registry (a) any works
protectable by copyrights (including the initial versions thereof and all derivative works based
thereon) or (b) any changes to copyrights that have already been registered by such Person with the
applicable federal filing office, unless, in each case, Borrower shall provide at least 15 days
prior written notice to the Lender of any such registration.




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 or
any portion of the Obligations (whether of principal, interest (including any interest which, but
for the provisions of the Bankruptcy Code, would have accrued on such amounts), fees and charges
due 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 agreement
contained in Sections 2.7, 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 agreement
contained in Sections 6.2, 6.3, 6.5, 6.6, 6.7,
6.10, 6.11, and 6.14 of this Agreement and such failure continues for a
period of 5 Business Days; or




          (c) fails or neglects to perform, keep, or observe any other term, provision, covenant, or
agreement contained in this Agreement (giving effect to any grace periods, cure periods, or
required 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 Section
8 (in which event such other provision of this Section 8 shall govern), and such
failure continues for a period of 10 Business Days;



provided that, during any period of time that any such failure or neglect referred to in
this paragraph exists, even if such failure or neglect is not yet an Event of Default, Lender shall
be 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 writ
or distress warrant, levied upon, or comes into the possession of any third Person;



     8.4. If an Insolvency Proceeding is commenced by any Company;



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     8.5. If an Insolvency Proceeding is commenced against any Company, and any of the following
events occur: (a) the applicable Company consents to the institution of the Insolvency Proceeding
against 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 its
obligations to extend credit hereunder, (c) the petition commencing the Insolvency Proceeding is
not 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 credit
hereunder, (d) an interim trustee, administrator, receiver or other similar officer is appointed to
take possession of all or any substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, any Company, or (e) an order for relief shall have
been entered therein;



     8.6. If any Company is enjoined, restrained, or in any way prevented by court order from
continuing 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’s
assets by the United States, Canada or the UK, or any department, agency, or instrumentality
thereof, or by any state, province, county, municipal, or governmental agency, or if any taxes or
debts owing at any time hereafter to any one or more of such entities becomes a Lien, whether
choate or otherwise, upon any Company’s assets and the same is not paid before such payment is
delinquent;



     8.8. If a judgment or other claim becomes a Lien or encumbrance upon any material portion of
any 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 Company
and the expiration of any applicable cure period pursuant to the terms of such Material Platform
License or a Material Platform License is terminated; if Borrower has breached a license (other
than 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 not
been cured after notice to such Company and the expiration of any applicable cure period pursuant
to the terms of such Material Videogame License or a Material Videogame License is terminated; if
there is a default in any material agreement to which any Company is a party (including the Junior
Notes, the Secured Loan Facility and the Unsecured Subordinated Loan Facility) and such default has
not been cured after the notice thereof and the expiration of any applicable cure period and
thereafter results in a right by the other party thereto, irrespective of whether exercised, to
accelerate the maturity of the applicable Company’s payment obligations thereunder, or to terminate
such agreement;



     8.10. If Borrower makes any payment on account of Indebtedness that has been contractually
subordinated in right of payment to the payment of the Obligations, except to the extent such
payment is permitted by the terms of the subordination provisions applicable to such Indebtedness;



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     8.11. If any misstatement or misrepresentation in any material respects exists now or
hereafter 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 and
void, or the validity or enforceability thereof shall be contested by Borrower, or a proceeding
shall be commenced by Borrower, or by any Governmental Authority having 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 any Loan Document; or



     8.15. If the common Stock of Borrower or any Stock into which the Junior Notes are convertible
is neither listed for trading on a U.S. national securities exchange nor quoted on the Nasdaq
National Market.



IX. THE LENDER’S RIGHTS AND REMEDIES.




     9.1. Rights and Remedies.



          Upon the occurrence, and during the continuation, of an Event of Default, the Lender may do
any one or more of the following, all of which 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 under
this 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 be
cumulative. The Lender shall have all other rights and remedies not inconsistent herewith as
provided by law, or in equity. No exercise by the Lender of one right or remedy shall be deemed an
election, 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, in
the case of leased properties or assets, rents or other amounts payable under




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such leases) due to third 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 and without prior notice to Borrower, may do any or all of the following: (a) make
payment of the same or any part thereof, (b) set up such reserves in Borrower’s Loan Account as the
Lender deems necessary to protect the Lender from the exposure created by such failure, or (c) in
the case of the failure to comply with Section 6.8 hereof, obtain and maintain insurance
policies of the type described in Section 6.8 and take any action with respect to such
policies as the Lender deems prudent. Any such amounts paid by the Lender shall constitute Lender
Expenses and any such payments shall not constitute an agreement by the Lender to make similar
payments in the future or a waiver by the Lender of any Event of Default under this Agreement. The
Lender need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the
receipt of the usual official notice for the payment 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, Borrower
waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of
documents, instruments, chattel paper, and guaranties at any time held by the Lender on which
Borrower may in any way be liable.




     11.2. Intentionally omitted.



     11.3. Indemnification.



          Borrower shall pay, indemnify, defend, and hold the Lender-Related Persons (each, an
“Indemnified Person”) harmless (to the fullest extent permitted by law) from and against
any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all
reasonable attorneys fees and disbursements and other costs and expenses actually incurred in
connection therewith (as and when they are incurred and irrespective of whether suit is brought),
at any time asserted against, imposed upon, or incurred 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 with respect hereto) of this Agreement or the transactions
contemplated hereby or the monitoring of Borrower’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 provided hereunder or the use and registration or attempted registration
of the Intellectual Property subject to this Agreement (irrespective of whether any Indemnified
Person is a party thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the “Indemnified Liabilities”). The foregoing to
the contrary notwithstanding, Borrower shall have no obligation to any Indemnified Person under
this Section 11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of
such Indemnified Person.




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This provision shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrower was required to indemnify the Indemnified
Person receiving such payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN
WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED
PERSON OR OF ANY OTHER PERSON.



XII. NOTICES.




          Unless otherwise provided in this Agreement, all notices or demands by Borrower or the Lender
to the other relating to this Agreement or any other Loan Document shall be in writing and (except
for financial statements and other informational documents which may be sent by first-class mail,
postage prepaid) shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as
Borrower or the Lender, as applicable, may designate to each other in accordance herewith), or
telefacsimile 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
	 

	 	 	 	Fax No. (781) 461-2955
	 

	 	 	 	with copies to:
	 

	 	 	 	Attn.: Tad Jankowski, General Counsel
	 

	 	 	 	Fax No. (781) 461-1412






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	 	with copies to:
	 	NORDQUIST & STERN PLLC
	 

	 	 	 	909 Third Avenue, Fifth Floor
	 

	 	 	 	New York, NY 10022
	 

	 	 	 	Attn: Sandra Stern
	 

	 	 	 	Ph. (212) 207-8150
	 

	 	 	 	Fax No. (212) 223-3406
	 
	 	 	 	 
	 

	 	 	 	and
	 
	 	 	 	 
	 

	 	 	 	Each designee notified by the Lender to the Borrower in
	 

	 	 	 	advance in writing.






          The Lender and Borrower may change the address at which they are to receive notices hereunder,
by notice in writing in the foregoing manner given to the other party. All notices or demands sent
in accordance with this Section 12 shall be deemed received on the earlier of the date of
actual receipt or 3 Business Days after the deposit thereof in the mail.




XIII. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.





     (a) THE VALIDITY OF THIS AGREEMENT (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN
ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF ILLINOIS.



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




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          BORROWER AND THE LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR OUT OF ANY OF THE OF THE TRANSACTIONS
CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. COMPANIES AND THE LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.




XIV. ASSIGNMENTS; SUCCESSORS.




     14.1. Assignments.




     (a) The Lender may assign and delegate to any assignee (an “Assignee”) that is
an Eligible Transferee all, but not less than all, of the Obligations, the Commitment and
the other rights and obligations of the Lender hereunder; provided, however,
that Borrower may continue to deal solely and directly with the Lender in connection with
the interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses, and related information with respect to the
Assignee, have been given to Borrower by the Lender and the Assignee, and (ii) the Lender
and its Assignee have delivered to Borrower an Assignment and Acceptance. Anything
contained herein to the contrary notwithstanding, the payment of any fees shall not be
required and the Assignee need not be an Eligible Transferee if such assignment is in
connection with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of the Lender.




     (b) From and after the date that the Lender notifies the Borrower that it has received
an executed Assignment and Acceptance, (i) the Assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of the Lender
hereunder, and (ii) the Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except with respect to Section 11.3 hereof) and be released from any future
obligations under this Agreement (and in the case of an Assignment and Acceptance covering
all or the remaining portion of the Lender’s rights and obligations under this Agreement,
the Lender shall cease to be a party hereto), and such assignment shall effect a novation
between Borrower and the Assignee; provided, however, that nothing contained
herein shall release the Lender from obligations that survive the termination of this
Agreement, including the Lender’s obligations under Section 17.8 of this Agreement.



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     (c) By executing and delivering an Assignment and Acceptance, the Lender and the
Assignee thereunder confirm to and agree with each other and the other parties hereto as
follows: (1) other than as provided in such Assignment and Acceptance, the Lender makes no
representation or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other Loan Document furnished pursuant hereto, (2) the Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition of Companies
or the performance or observance by Borrower of any of their obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (3) such Assignee confirms
that it has received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon the Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement, and (5) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by it as the
Lender.




     (d) Immediately upon the Lender’s receipt of the fully executed Assignment and
Acceptance (with a copy to the Borrower), this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the addition of the Assignee.




     (e) Intentionally omitted.




     (f) In connection with any such assignment or proposed assignment, the Lender may,
subject to the provisions of Section 17.8, disclose all documents and information
which it now or hereafter may have relating to Borrower and its respective businesses.



     14.2. Successors.



          This Agreement shall bind and inure to the benefit of the respective successors and assigns of
each of the parties; provided, however, that Borrower may not assign this Agreement
or any rights or duties hereunder without the Lender’s prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the Lender shall
release Borrower from its Obligations. The Lender may assign this Agreement and its rights and
duties hereunder pursuant to Section 14.1 hereof and, except as expressly required pursuant
to Section 14.1 hereof, no consent or approval by Borrower is required in connection with
any such assignment.




XV. AMENDMENTS; WAIVERS.




     15.1. Amendments and Waivers.



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No amendment or waiver of any provision of this Agreement or any other Loan Document, and no
consent with respect to any departure by Borrower therefrom, shall be effective unless the same
shall be in writing and signed by the Lender and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for which given.




     15.2. Intentionally Omitted.



     15.3. No Waivers; Cumulative Remedies.



          No failure by the Lender to exercise any right, remedy, or option under this Agreement or, any
other Loan Document, or delay by the Lender in exercising the same, will operate as a waiver
thereof. No waiver by the Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by the Lender on any occasion shall affect or diminish the
Lender’s rights thereafter to require strict performance by Borrower of any provision of this
Agreement. The Lender’s rights under this Agreement will be cumulative and not exclusive of any
other right or remedy that the Lender may have.



XVI. Intentionally Omitted.



XVII. GENERAL PROVISIONS.




     17.1. Effectiveness.



          This Agreement shall be binding and deemed effective when executed by Borrower and the Lender.




     17.2. Section Headings.



          Headings and numbers have been set forth herein for convenience only. Unless the contrary is
compelled by the context, everything contained in each Section applies equally to this entire
Agreement.




     17.3. Interpretation.



          Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved
against the Lender or Borrower, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.




     17.4. Severability of Provisions.



          Each provision of this Agreement shall be severable from every other provision of this
Agreement for the purpose of determining the legal enforceability of any specific provision.




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     17.5. Amendments in Writing.



          This Agreement only can be amended by a writing in accordance with Section 15.1.




     17.6. Counterparts; Telefacsimile Execution.



          This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be deemed to be an
original, and all of which, when taken together, shall constitute but one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any party delivering
an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall
apply to each other Loan Document mutatis mutandis.




     17.7. Revival and Reinstatement of Obligations.



          If the incurrence or payment of the Obligations by Borrower or the transfer to the Lender of
any property should for any reason subsequently be declared to be void or voidable under any state
or federal law relating to creditors’ rights, including provisions of the Bankruptcy Code relating
to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a “Voidable Transfer”), and if the Lender is required
to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof
that the Lender is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender related thereto, the liability of Borrower automatically
shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.




     17.8. Confidentiality.



          The Lender agrees that material, non-public information regarding Borrower, its operations,
assets, and existing and contemplated business plans shall be treated by the Lender in a
confidential manner, and shall not be disclosed by the Lender to Persons who are not parties to
this Agreement, except: (a) to attorneys for and other advisors, accountants, auditors, and
consultants to the Lender, (b) to Subsidiaries and Affiliates of the Lender, provided that any such
Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the
terms of this Section 17.8, (c) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation, (d) as may be agreed to in advance by Borrower or its
Subsidiaries or as required by any Governmental Authority pursuant to any subpoena or other legal
process, (e) as to any such information that is or becomes generally available to the public (other
than as a result of prohibited disclosure by the Lender), (f) in connection with any assignment,
prospective assignment, sale, prospective




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sale, participation or prospective participations, or pledge or prospective pledge of the
Lender’s interest under this Agreement, provided that any such assignee, prospective assignee,
purchaser, prospective purchaser, participant, prospective participant, pledgee, or prospective
pledgee shall have agreed in writing to receive such information hereunder subject to the terms of
this Section, and (g) in connection with any litigation or other adversary proceeding involving
parties hereto which such litigation or adversary proceeding involves claims related to the rights
or duties of such parties under this Agreement. The provisions of this Section 17.8 shall
survive the payment in full of the Obligations. Anything contained herein or in any other Loan
Document to the contrary notwithstanding, the obligations of confidentiality contained herein and
therein, as they relate to the transactions contemplated hereby, shall not apply to the federal tax
structure or federal tax treatment of such transactions, and each party hereto (and any employee,
representative, or Lender of any party hereto) may disclose to any and all Persons, without
limitation of any kind, the federal tax structure and federal tax treatment of such transactions
(including all written materials related to such tax structure and tax treatment). The preceding
sentence is intended to cause the transactions contemplated hereby to not be treated as having been
offered under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or any
successor provision) of the Treasury Regulations promulgated under Section 6011 of the IRC, and
shall be construed in a manner consistent with such purpose. In addition, each party hereto
acknowledges that it has no proprietary or exclusive rights to the tax structure of the
transactions contemplated hereby or any tax matter or tax idea related thereto.




     17.9. Integration.



          This Agreement reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by any other agreement,
oral or written, before the Closing Date.




     17.10. Intentionally omitted.



[Signature pages to follow.]




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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered
as of the date first above written.




	 	 	 	 	 	 	 
	 	 	MIDWAY GAMES INC.,	 	 
	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Ryan O’Desky	 	 
	 

	 	Title
	 	 

Interim CFO
	 	 





Unsecured Loan Agreement Signature Page



 









 






	 	 	 	 	 	 	 
	 

	 	NATIONAL AMUSEMENTS, INC.,
	 	 
	 

	 	a Maryland corporation, as Lender
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 /s/ Richard J. Sherman	 	 
	 

	 	Title:
	 	 

Vice President
	 	 
	 

	 	 	 	 

	 	 






Unsecured Loan Agreement Signature Page