**TABLE OF CONTENTS**       PageSECTION 1 DEFINITIONS  2 1.1 “Acceptable Liquidation Agreement”  3 1.2 “Accounts”  3 1.3 “Acquisition”  3 1.4 “Adjusted Libor Rate”  3 1.5 “Agent”  4 1.6 “Amendment to Consideration Loan Note Instrument and Promissory Note”  4 1.7 “Approved In-Transit Inventory”  4 1.8 “Availability Reserves”  4 1.9 “Bankruptcy Code”  4 1.10 “Blocked Accounts”  4 1.11 “Borrower General Security Agreement”  5 1.12 “Business Day”  5 1.13 “Canadian Collateral Agent”  5 1.14 “Code”  5 1.15 “Collateral”  5 1.16 “Completion Note”  5 1.17 “Consideration Loan Note Instrument”  5 1.18 “Default”  6 1.19 “EBITDA”  6 1.20 “Eligible Accounts”  6 1.21 “Eligible Inventory”  8 1.22 “EMU Legislation”  9 1.23 “Environmental Laws”  9 1.24 “Equipment”  9 1.25 “ERISA”  9 1.26 “ERISA Affiliate”  9 1.27 “Euro”  9 1.28 “Event of Default”  9 1.29 “Excess Availability”  10 1.30 “Financing Agreements”  10 1.31 “Fiscal Quarter”  10 1.32 “Fixed Charge Coverage Ratio”  10 1.33 “Funding Bank”  11 1.34 “GAAP”  11 1.35 “Gameshark Software”  11 1.36 “Governmental Authority”  11 1.37 “Hazardous Materials”  11 1.38 “High Selling Period”  12 1.39 “HK Hive Up Deed”  12 THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- ii -       Page1.40 “Inactive Subsidiaries”  12 1.41 “Information Certificates”  12 1.42 “Intellectual Property”  12 1.43 “Intellectual Property Security Agreements”  12 1.44 “Intercreditor Agreement”  13 1.45 “Interest Period”  13 1.46 “Interest Rate”  13 1.47 “Inventory”  14 1.48 “Letter of Credit Accommodations”  14 1.49 “Libor Rate”  14 1.50 “Libor Rate Loans”  14 1.51 “License Agreements”  14 1.52 “Lien”  14 1.53 “Low Selling Period”  15 1.54 “Material Adverse Change”  15 1.55 “Material Adverse Effect”  15 1.56 “Maximum Credit”  15 1.57 “Maximum Letter of Credit Facility”  15 1.58 “MCC”  15 1.59 “MCE”  15 1.60 “MCII”  15 1.61 “MCIA”  16 1.62 “Merger”  16 1.63 “Net Amount of Eligible Accounts”  16 1.64 “Net Orderly Liquidation Value”  16 1.65 “Obligations”  16 1.66 “Obligor”  17 1.67 “Participating Member State”  17 1.68 “Payment Account”  17 1.69 “Permitted Inter-Company Debt”  17 1.70 “Person”  17 1.71 “Pounds Sterling”  17 1.72 “PPSA”  17 1.73 “Prime Rate”  18 1.74 “Prime Rate Loans”  18 1.75 “Priority Payables Reserve”  18 1.76 “Records”  18 1.77 “Revolving Loans”  18 1.78 “Royalty Reserve”  18 1.79 “Royalty Reserve Report”  19 1.80 “Saitek HK”  19 1.81 “Secured Parties”  19 1.82 “Software”  19 1.83 “Software Inventory”  19 1.84 “Solvent”  19 1.85 “Swap Agreement”  20 THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- iii -       Page1.86 “Termination Date”  20 1.87 “Testing Period”  20 1.88 “UCC”  20 1.89 “UK Hive Up Agreement”  20 1.90 “United Kingdom”  20 1.91 “US Collateral Agent”  20 1.92 “US Reference Bank”  20 1.93 “Value”  21 1.94 “WAHL”  21      SECTION 2 CREDIT FACILITIES  21 2.1 Revolving Loans  21 2.2 Letter of Credit Accommodations  23 2.3 Availability Reserves  25      SECTION 3 INTEREST AND FEES  25 3.1 Interest  25 3.2 Intentionally Deleted  27 3.3 Closing Fee  27 3.4 Servicing Fee  27 3.5 Unused Line Fee  27 3.6 Currency of Payments  27 3.7 Increased Costs and Changes in Law  27      SECTION 4 CONDITIONS PRECEDENT  30 4.1 Conditions Precedent to Revolving Loans and Letter of CreditAccommodations  30      SECTION 5 COLLECTION AND ADMINISTRATION  30 5.1 Borrower’s Loan Account  30 5.2 Statements  31 5.3 Collection of Accounts  31 5.4 Payments  32 5.5 Authorization to Make Revolving Loans  33 5.6 Use of Proceeds  33      SECTION 6 COLLATERAL REPORTING AND COVENANTS  33 6.1 Collateral Reporting  33 6.2 Accounts Covenants  34 6.3 Inventory Covenants  35 6.4 Equipment Covenants  36 6.5 Power of Attorney  36 6.6 Right to Cure  37 6.7 Access to Premises  38      SECTION 7 REPRESENTATIONS AND WARRANTIES  38 7.1 Corporate Existence, Power and Authority; Subsidiaries  38 THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- iv -       Page7.2 Financial Statements; No Material Adverse Change  39 7.3 Chief Executive Office; Collateral Locations  39 7.4 Priority of Liens; Title to Properties  39 7.5 Tax Returns  39 7.6 Litigation  40 7.7 Compliance with Other Agreements and Applicable Laws  40 7.8 Bank Accounts  40 7.9 Accuracy and Completeness of Information  40 7.10 Employee Benefits  41 7.11 Environmental Compliance  41 7.12 Survival of Warranties; Cumulative  42 7.13 Inactive Subsidiaries  42 7.14 Intellectual Property  42 7.15 Solvent  43 7.16 Transfer of Assets of Saitek HK  43 7.17 Transfer of Assets of Saitek PLC  43      SECTION 8 AFFIRMATIVE AND NEGATIVE COVENANTS  44 8.1 Maintenance of Existence  44 8.2 New Collateral Locations  44 8.3 Compliance with Laws, Regulations, Etc.  44 8.4 Payment of Taxes and Claims  46 8.5 Insurance  46 8.6 Financial Statements and Other Information  46 8.7 Sale of Assets, Consolidation, Merger, Amalgamation, Dissolution, Etc.  49 8.8 Encumbrances  49 8.9 Indebtedness  50 8.10 Loans, Investments, Guarantees, Etc.  51 8.11 Dividends and Redemptions  52 8.12 Transactions with Affiliates  52 8.13 Fixed Charge Coverage Ratio  53 8.14 Intellectual Property  53 8.15 Additional Bank Accounts  53 8.16 Compliance with ERISA  53 8.17 Costs and Expenses  54 8.18 Further Assurances  55 8.19 Change of Control  55 8.20 Software Expenditures  55 8.21 Inactive Subsidiaries  55 8.22 Corporate Structure Chart  55 8.23 Swap Agreements  56      SECTION 9 EVENTS OF DEFAULTS AND REMEDIES  56 9.1 Events of Default  56 9.2 Remedies  58 THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- v -       PageSECTION 10 JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW  60 10.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver  60 10.2 Waiver of Notices  62 10.3 Amendments and Waivers  62 10.4 Waiver of Counterclaims  62 10.5 Indemnification  62      SECTION 11 TERM OF AGREEMENT; MISCELLANEOUS  63 11.1 Term  63 11.2 Notices  64 11.3 Partial Invalidity  64 11.4 Successors  64 11.5 Entire Agreement  65 11.6 Headings  65 11.7 Judgment Currency  65 11.8 Amended and Restatement; No Novation  65 11.9 Confirmation of Existing Security and Existing Security held for Obligations  66 THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 **INDEX TO EXHIBITS AND SCHEDULES**   Exhibit A Fixed Charge Coverage Ratio   Exhibit B Information Certificates of Borrower and Obligors   Exhibit C Closing Checklist   Exhibit D Corporate Structure Chart   Schedule 7.4 Existing Liens   Schedule 7.7 Non-Compliance with Agreements   Schedule 7.8 Bank Accounts   Schedule 7.14 License Agreements and Material Intellectual Property   Schedule 7.16 MCIA Fixed Assets   Schedule 8.6(g) Form of Compliance Certificate   Schedule 8.9 Existing Indebtedness   Schedule 8.10 Existing Loans, Advances and GuaranteesTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 **THIRD AMENDED AND RESTATED LOAN AGREEMENT**          This Third Amended and Restated Loan Agreement dated as of June 23, 2009 (this “**Agreement**”) isentered into by and between Wachovia Capital Finance Corporation (Central), formerly known asCongress Financial Corporation (Central), an Illinois corporation (as lender, “**Lender**”; and as UScollateral agent for and on behalf of the Secured Parties, “**US Collateral Agent**”), Mad Catz, Inc.,a Delaware corporation (“**Borrower**”), and the Obligors signatories to this Agreement.**W I T N E S S E T H:**          **WHEREAS**Lender entered into certain financing arrangements with Borrower pursuant to whichLender made loans and provided other financial accommodations to Borrower on the terms andconditions set forth in a loan agreement dated September 25, 2000 (the “**Original Loan Agreement**”)made between Lender, US Collateral Agent and Borrower;          **AND WHEREAS**Lender, US Collateral Agent and Borrower amended the Original Loan Agreement and,for ease of reference, restated such amended Original Loan Agreement in a first amended andrestated loan agreement dated September 5, 2001 (the “**First Amended and Restated Loan Agreement**”)between Lender, US Collateral Agent and Borrower;          **AND WHEREAS**Lender, US Collateral Agent and Borrower amended or extended, as the case may be,the First Amended and Restated Loan Agreement pursuant to: (a) an amending agreement dated June 18, 2002;  (b) a second amending agreement dated January 22, 2003;  (c) a renewal/extension letter dated July 23, 2003;  (d) an acknowledgment letter dated September 22, 2003;  (e) a renewal/extension letter dated July 27, 2004;  (f) an amending and extension letter dated August 31, 2005;  (g) a third amending agreement dated August 9, 2006;  (h) an extension letter dated September 20, 2006;  (i) an extension letter dated September 28, 2006; and  (j) an extension letter dated October 16, 2006,(the foregoing amendments and extensions together with the First Amended and Restated LoanAgreement, the “**Amended First Amended and Restated Loan Agreement**”);THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 2 -           **AND WHEREAS**Lender, US Collateral Agent and Borrower amended and restated, without novation,the Amended First Amended and Restated Loan Agreement in a second amended and restated loanagreement dated October 30, 2006 (as amended in a first amending agreement dated November 20, 2007and in a letter dated March 18, 2009, the “**Second Amended and Restated Loan Agreement**”) madebetween Lender, US Collateral Agent and Borrower;          **AND WHEREAS**pursuant to an agreement of merger dated April 3, 2008 Saitek Industries Ltd. andBorrower effected the Merger;          **AND WHEREAS**Lender, US Collateral Agent, Borrower and Obligors have, without novation, agreedto amend and restate the Second Amended and Restated Loan Agreement as hereinafter provided;          **AND WHEREAS**Lender, US Collateral Agent, Borrower and each Obligor have confirmed to eachother that the security, guarantees and other agreements previously provided by Borrower and eachObligor in connection with the Original Loan Agreement, the First Amended and Restated LoanAgreement, the Amended First Amended and Restated Loan Agreement and the Second Amended andRestated Loan Agreement remain in full force and effect, and continue as security for theindebtedness and the obligations of Borrower and each Obligor to Lender under this Agreement andthe other Financing Agreements;          **NOW, THEREFORE**, in consideration of the mutual conditions and agreements set forth herein, andfor other good and valuable consideration, the receipt and sufficiency of which is herebyacknowledged, the parties hereto agree as follows:**SECTION 1****DEFINITIONS**          All terms used herein which are defined in Article 1 or Article 9 of the UCCshall have the meanings given therein unless otherwise defined in this Agreement. All referencesto the plural herein shall also mean the singular and to the singular shall also mean the pluralunless the context otherwise requires. All references to Borrower, Lender and Agents pursuant tothe definitions set forth in the recitals hereto, or to any other person herein, shall includetheir respective successors and assigns. The words “**hereof**”, “**herein**”, “**hereunder**”, “**thisAgreement**” and words of similar import when used in this Agreement shall refer to this Agreement asa whole and not any particular provision of this Agreement and as this Agreement now exists or mayhereafter be amended, modified, supplemented, extended, renewed, restated or replaced. The word“**including**” when used in this Agreement shall mean “**including, without limitation**”. Referencesherein to any statute or any provision thereof include such statute or provision as amended,revised, re-enacted, and/or consolidated from time to time and any successor statute theretotogether with all rules, regulations and interpretations thereunder or related thereto. An Eventof Default shall exist or continue or be continuing until such Event of Default is waived inaccordance with Section 10.3 hereof or is cured in a manner satisfactory to Lender, if suchEvent of Default is capable of being cured as determined by Lender. Any accounting term usedherein unless otherwise defined in this Agreement shall have the meanings customarily given to suchterm in accordance with GAAP. The term “**US Dollars**” and the signTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 3 - “**$**” mean lawful money of the United States of America. The term “**Canadian Dollars**” and thesign “**CDN$**” mean lawful money of Canada. For purposes of this Agreement, the following terms shallhave the respective meanings given to them below:**1.1 “Acceptable Liquidation Agreement”**“**Acceptable Liquidation Agreement**” shall mean, with respect to any license of Intellectual Propertybetween Borrower or any Obligor, as licensee, and the licensor of such Intellectual Property whichpertains to any Collateral, (i) an agreement in form and substance satisfactory to Lender or(ii) an amendment to such license agreement in form and substance satisfactory to Lender, in eachcase permitting Lender to exercise its rights under the Financing Agreements with respect to suchCollateral.**1.2 “Accounts”**“**Accounts**” shall mean all present and future rights of Borrower, MCE and MCC to payment for goodssold or leased or for services rendered, which are not evidenced by instruments or chattel paper,and whether or not earned by performance.**1.3 “Acquisition”**“**Acquisition**” shall mean any transaction whereby Borrower will acquire assets, shares or otherequity interests, or a combination thereof, of a business identified by Borrower as a strategicacquisition target pursuant to terms and conditions acceptable to Lender and in respect of whichBorrower has received the prior written consent of Lender.**1.4 “Adjusted Libor Rate”**“**Adjusted Libor Rate**” shall mean, with respect to each Interest Period for any Libor Rate Loan, therate per annum (rounded upwards, if necessary, to the next one-sixteenth (1/16th) of onepercent (1%)) determined by dividing: (a) the Libor Rate for such Interest Period by:  (b) a fraction equal to: (i) one (1); minus  (ii) the Reserve Percentage.For purposes hereof, “**Reserve Percentage**” shall mean the reserve percentage, expressed as adecimal, prescribed by any United States or foreign banking authority for determining the reserverequirement which is or would be applicable to deposits of US Dollars in a non-United States or aninternational banking office of the US Reference Bank, used to fund a Libor Rate Loan or any LiborRate Loan made with the proceeds of such deposit, whether or not the US Reference Bank actuallyholds or has made any such deposits or loans. The Adjusted Libor Rate shall be adjusted on and asof the effective day of any change in the Reserve Percentage.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 4 - **1.5 “Agent”**“**Agent**” shall collectively mean Canadian Collateral Agent and US Collateral Agent.**1.6 “Amendment to Consideration Loan Note Instrument and Promissory Note”**“**Amendment to Consideration Loan Note Instrument and Promissory Note**” shall mean the amendment toconsideration loan note instrument and promissory note dated June 23, 2009 between MCII and GuymontServices SA as trustee of The Winkler Atlantic Trust.**1.7 “Approved In-Transit Inventory”**“**Approved In-Transit Inventory**” shall mean Inventory that is owned and insured by Borrower or MCEand is in transit from and is under the control of MCIA to premises located in North America orEurope that are owned or controlled by Borrower and in respect of which Lender has receivedsufficient documentation, including bills of lading and shipping contracts, in each case assignedto Lender, to confirm the foregoing; providedthat the maximum value of suchInventory that is Eligible Inventory does not exceed $6,000,000 at any time during the High SellingPeriod and does not exceed $4,000,000 at any time during the Low Selling Period.**1.8 “Availability Reserves”**“**Availability Reserves**” shall mean, as of any date of determination, the Royalty Reserve and suchamounts as Lender may from time to time establish and revise reducing the amount of Revolving Loansand Letter of Credit Accommodations which would otherwise be available to Borrower under thelending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks(including anticipated seasonal variations in dilution of Accounts) which, as determined by Lender,do or may affect either (i) the Collateral or any other property which is security for theObligations or its value, (ii) the assets, business or prospects of Borrower or any Obligor or(iii) the Liens and other rights of Lender and/or Agents in the Collateral (including theenforceability, perfection and priority thereof) or (b) to reflect Lender’s belief that anycollateral report or financial information furnished by or on behalf of Borrower or any Obligor toLender is or may have been incomplete, inaccurate or misleading in any material respect or (c) toreflect outstanding Letter of Credit Accommodations as provided in Section 2.2 hereof or(d) in respect of any state of facts which Lender determines constitutes an Event of Default ormay, with notice or passage of time or both, constitute an Event of Default (including rents orother payments due and unpaid or which Lender reasonably expects will not be paid when due) or (e)to reflect Lender’s estimate of the amount of any Priority Payables Reserve.**1.9 “Bankruptcy Code”**“**Bankruptcy Code**” shall mean the United States Bankruptcy Code (11 U.S.C. § 101, et seq.).**1.10 “Blocked Accounts”**“**Blocked Accounts**” shall have the meaning set forth in Section 5.3 hereof.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 5 - **1.11 “Borrower General Security Agreement”**“**Borrower General Security Agreement**” shall mean the amended and restated general securityagreement dated November 30, 2001 given by Borrower (and certain U.S. affiliates of Borrower namedtherein) in favor of US Collateral Agent in respect of the Obligations, as it now exists or mayhereafter be amended, modified, supplemented, extended, renewed, restated or replaced.**1.12 “Business Day”**“**Business Day**” shall mean a day (other than a Saturday, Sunday or statutory holiday in Ontario,Illinois, New York or London) on which Lender’s Chicago and Toronto office, the U.S. ReferenceBank’s main office and banks in New York City, Toronto and London are open for business in thenormal course.**1.13 “Canadian Collateral Agent”**“**Canadian Collateral Agent**” shall mean Wachovia Capital Finance Corporation (Canada), formerlyknown as Congress Financial Corporation (Canada), in its capacity as collateral agent for theSecured Parties.**1.14 “Code”**“**Code**” shall mean the *Internal Revenue Code of 1986*.**1.15 “Collateral”**“**Collateral**” shall mean, collectively, “**Collateral**” as such term is defined in the Borrower GeneralSecurity Agreement and in the Intellectual Property Security Agreements and all assets andproperties of Borrower and each Obligor in respect of which Lender and/or an Agent is or has beengranted a Lien pursuant to any Financing Agreement.**1.16 “Completion Note”**“**Completion Note**” shall mean the completion note dated August 1, 2008 issued by MCII in favour ofThe Winkler Atlantic Trust in the principal amount of $847,286 as amended by the Amendment toConsideration Loan Note Instrument and Promissory Note and as hereafter amended, modified,supplemented, extended, renewed, restated or replaced.**1.17 “Consideration Loan Note Instrument”**“**Consideration Loan Note Instrument**” shall mean the consideration loan note instrument constituting$14,500,000 7.5% convertible unsecured loan notes 2010 and certificate no. 1 representing$14,500,000 nominal amount of loan notes issued thereunder each dated November 20, 2007 made byMCII in favour of Guymont Services SA as trustee of The Winkler Atlantic Trust as amended by theAmendment to Consideration Loan Note Instrument and Promissory Note and as hereafter amended,modified, supplemented, extended, renewed, restated or replaced.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 6 - **1.18 “Default”**“**Default**” shall mean an event, circumstance or omission which, with any of the giving of notice, alapse of time or a failure to remedy the event, circumstance or omission within a lapse of time,would constitute an Event of Default.**1.19 “EBITDA”**“**EBITDA**” shall mean, as to any Person, with respect to any period, an amount equal to the netincome or net loss of such Person before interest, taxes, depreciation, amortization, goodwillimpairment and any other non-cash non-operating charges as approved by Lender.**1.20 “Eligible Accounts”**“**Eligible Accounts**” shall mean Accounts created by Borrower, MCE or MCC which are and continue tobe acceptable to Lender based on the criteria set forth below. In general, Accounts shall beEligible Accounts if:     (a) such Accounts arise from the actual and *bona fide*sale and delivery of goods by Borrower,MCE or MCC or rendition of services by Borrower, MCE or MCC in the ordinary course of theirrespective businesses which transactions are completed in accordance with the terms and provisionscontained in any documents related thereto;     (b) such Accounts are not unpaid more than ninety (90) days after the date of the originalinvoice for them and are not unpaid more than sixty (60) days past the due date thereof;     (c) such Accounts comply with the terms and conditions contained in Section 6.2(c) ofthis Agreement;     (d) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return,sale on approval, or other terms under which payment by the account debtor may be conditional orcontingent;     (e) the chief executive office of the account debtor with respect to such Accounts is locatedin Canada, the United States of America or the United Kingdom or, if the chief executive office ofthe account debtor is not located in Canada, the United States of America or the United Kingdom,the Account is payable in Canadian Dollars, US Dollars, Pounds Sterling or Euro, and, at Lender’soption, if: (i) the account debtor has delivered to Borrower, MCE or MCC, as applicable, anirrevocable letter of credit issued or confirmed by a bank satisfactory to Lender and payable onlyin the United States of America in the currency in which the Account is denominated, sufficient tocover such Account, in form and substance satisfactory to Lender and, if required by Lender, theoriginal of such letter of credit has been delivered to Lender or Lender’s agent and the issuerthereof notified of the assignment of the proceeds of such letter of credit to Lender, or (ii) suchAccount is subject to credit insurance payable to Lender issued by an insurer and on terms and inan amount acceptable to Lender, or (iii) such Account is otherwise acceptable in all respects toLender (subject to such lending formula with respect thereto as Lender may determine);THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 7 -      (f) such Accounts do not consist of progress billings, bill and hold invoices or retainageinvoices, except as to bill and hold invoices, unless Lender shall have received an agreement inwriting from the account debtor, in form and substance satisfactory to Lender, confirming theunconditional obligation of the account debtor to take the goods related thereto and pay suchinvoice;     (g) the account debtor with respect to such Accounts has not asserted a counterclaim, defenseor dispute and does not have, and does not engage in transactions which may give rise to, any rightof setoff against such Accounts (but the portion of the Accounts of such account debtor in excessof the amount at any time and from time to time owed by Borrower, MCE or MCC, as applicable, tosuch account debtor or claimed owed by such account debtor may be deemed Eligible Accounts);     (h) there are no facts, events or occurrences which would impair the validity, enforceabilityor collectability of such Accounts or reduce the amount payable or delay payment thereunder;     (i) such Accounts are subject to the first priority, valid and perfected Lien of Lender and/orAgents and any goods giving rise thereto are not, and were not at the time of the sale thereof,subject to any Liens except those permitted in this Agreement;     (j) neither the account debtor nor any officer or employee of the account debtor with respectto such Accounts is an officer, employee or agent of or affiliated with Borrower, MCE or MCCdirectly or indirectly by virtue of family membership, ownership, control, management or otherwise;     (k) the account debtors with respect to such Accounts are not any foreign government, theUnited States of America, any State, political subdivision, department, agency or instrumentalitythereof, unless, if the account debtor is the United States of America, any State, politicalsubdivision, department, agency or instrumentality thereof, upon Lender’s request, the *FederalAssignment of Claims Act of 1940*, as amended or any similar State or local law, if applicable, hasbeen complied with in a manner satisfactory to Lender or a letter of credit has been provided withrespect thereto on terms and conditions satisfactory to Lender;     (l) there are no proceedings or actions which are threatened or pending against the accountdebtors with respect to such Accounts which might result in any material adverse change in any suchaccount debtor’s financial condition;     (m) such Accounts of a single account debtor or its affiliates do not constitute more thantwenty-five percent (25%) of all otherwise Eligible Accounts or, with respect to each of Gamestopand Walmart, such Accounts do not constitute more than forty-five percent (45%) and forty percent(40%), respectively, or such higher percentage as may be agreed by Lender, of all otherwiseEligible Accounts or, with respect to such other account debtors as may from time to time beapproved in writing by Lender on a case by case basis, such Accounts do not constitute more thansuch percentage in excess of twenty-five percent (25%) as may be agreed by Lender of all otherwiseEligible Accounts (but in each case the portion of the Accounts not in excess of such percentagemay be deemed Eligible Accounts);THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 8 -      (n) such Accounts are not owed by an account debtor who has Accounts unpaid more than ninety(90) days after the date of the original invoice for them which constitute more than fifty percent(50%) of the total Accounts of such account debtor;     (o) such Accounts are owed by account debtors whose total indebtedness to Borrower, MCE or MCCdoes not exceed the credit limit with respect to such account debtors as determined by Lender fromtime to time (but the portion of the Accounts not in excess of such credit limit may still bedeemed Eligible Accounts); and     (p) such Accounts are owed by account debtors deemed creditworthy at all times by Lender, asdetermined by Lender.General criteria for Eligible Accounts may be established and revised from time to time by Lender.Any Accounts which are not Eligible Accounts shall nevertheless be part of the Collateral andsubject to the Lien of Lender and/or Agents.**1.21 “Eligible Inventory”**“**Eligible Inventory**” shall mean Inventory consisting of finished goods held for resale in theordinary course of the business of Borrower or MCE and raw materials (including electronic chips)for such finished goods, in each case which are acceptable to Lender in its absolute discretionbased on the criteria set forth below. In general, Eligible Inventory shall not include(a) work-in-process; (b) components which are not part of finished goods; (c) spare parts forequipment; (d) packaging and shipping materials; (e) supplies used or consumed in Borrower’s orMCE’s business; (f) Inventory at premises which are not owned and controlled by Borrower or MCE,unless Lender has received an agreement in writing from the person in possession of such Inventoryand/or the owner or operator of such premises in form and substance satisfactory to Lenderacknowledging Agents’ first priority Lien in the Inventory, waiving or subordinating Liens by suchperson against the Inventory and permitting Lender and/or Agents access to, and the right to remainon, the premises so as to exercise Lender’s and/or Agents’ rights and remedies and otherwise dealwith the Collateral, or unless such Inventory is Approved In-Transit Inventory; (g) Inventorysubject to a Lien in favor of any person other than Agents and/or Lender except those permitted inthis Agreement; (h) bill and hold goods; (i) unserviceable, obsolete or slow moving Inventory;(j) Inventory which is not subject to the first priority, valid and perfected Lien of Agents and/orLender; (k) damaged and/or obsolete and/or defective Inventory; (l) Inventory purchased or sold onconsignment and (m) Inventory subject to a license agreement or other arrangement with a thirdparty which, in Lender’s determination, restricts the ability of Lender and/or Agents to exercisetheir rights under this Agreement and the Financing Agreements with respect to such Inventoryunless such third party has entered into an Acceptable Liquidation Agreement or Lender hasotherwise agreed to allow such Inventory to be eligible in Lender’s sole discretion. Generalcriteria for Eligible Inventory may be established and revised from time to time by Lender. AnyInventory which is not Eligible Inventory shall nevertheless be part of the Collateral and subjectto the Lien of Lender and/or Agents.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 9 - **1.22 “EMU Legislation”**“**EMU Legislation**” shall mean legislative measures of the Council of European Union for theintroduction of, change over to or operation of the Euro.**1.23 “Environmental Laws”**“**Environmental Laws**” shall mean with respect to any Person all federal (United States of Americaand Canada), state, provincial, district, local, municipal and foreign laws, statutes, rules,regulations, ordinances, orders, directives, permits, licenses and consent decrees relating tohealth, safety, hazardous, dangerous or toxic substances, waste or material, pollution andenvironmental matters, as now or at any time hereafter in effect, applicable to such Person and/orits business and facilities (whether or not owned by it), including laws relating to emissions,discharges, releases or threatened releases of pollutants, contamination, chemicals, or hazardous,toxic or dangerous substances, materials or wastes into the environment (including ambient air,surface water, ground water, land surface or subsurface strata) or otherwise relating to thegeneration, manufacture, processing, distribution, use, treatment, storage, disposal, transport orhandling of pollutants, contaminants, chemicals, or hazardous, toxic or dangerous substances,materials or wastes.**1.24 “Equipment”**“**Equipment**” shall mean all of Borrower’s now owned and hereafter acquired equipment, machinery,computers and computer hardware and software (whether owned or licensed), vehicles, tools,furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto orused in connection therewith, and substitutions and replacements thereof, wherever located.**1.25 “ERISA”**“**ERISA**” shall mean the *United States Employee Retirement Income Security Act of 1974*.**1.26 “ERISA Affiliate”**“**ERISA Affiliate**” shall mean any person required to be aggregated with Borrower or any of itsaffiliates under Sections 414(b), 414(c), 414(m) or 414(o) of theCode.**1.27 “Euro”**“**Euro**” means the single currency to which the Participating Member States of the European Unionhave converted.**1.28 “Event of Default”**“**Event of Default**” shall mean the occurrence or existence of any event or condition described inSection 9.1 hereof.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 10 - **1.29 “Excess Availability”**“**Excess Availability**” shall mean the amount in US Dollars, as determined by Lender, calculated atany time, equal to: (a) the lesser of: (i) the amount of the Revolving Loans available to Borrower as ofsuch time (based on the applicable lending formulas multiplied by the NetAmount of Eligible Accounts, the Value of Eligible Inventory (excludingSoftware Inventory), the Net Orderly Liquidation Value of Eligible Inventory(excluding Software Inventory), the Value of Software Inventory and the NetOrderly Liquidation Value of Software Inventory, all as determined by Lender)and subject to the sublimits and Availability Reserves from time to timeestablished by Lender hereunder; and  (ii) the Maximum Credit; minus      (b)     the sum of: (i) the amount of all then outstanding and unpaid Obligations with respect toRevolving Loans and Letter of Credit Accommodations, plus (ii) the aggregate amount of alldue but unpaid tax obligations, and trade payables of Borrower, MCE, MCC and MCII that are past duemore than sixty (60) days.**1.30 “Financing Agreements”**“**Financing Agreements**” shall mean, collectively, this Agreement, the Borrower General SecurityAgreement, the Intellectual Property Security Agreements and all notes, guarantees, securityagreements and other agreements, documents and instruments previously executed or now or at anytime hereafter executed and/or delivered by Borrower or any Obligor in connection with thisAgreement, the Original Loan Agreement, the First Amended and Restated Loan Agreement, the AmendedFirst Amended and Restated Loan Agreement and the Second Amended and Restated Loan Agreementexcluding any Swap Agreements, as the same now exist or may hereafter be amended, modified,supplemented, extended, renewed, restated or replaced.**1.31 “Fiscal Quarter”**“**Fiscal Quarter**” shall mean any of the following three (3) month periods in any fiscal year ofBorrower: April 1 to June 30, July 1 to September 30, October 1 to December 31 and January 1 toMarch 31.**1.32 “Fixed Charge Coverage Ratio”**“**Fixed Charge Coverage Ratio**” shall mean, with respect to MCII and its subsidiaries on aconsolidated basis for any Testing Period, determined in accordance with GAAP, the quotient of, foreach Testing Period:     (a) EBITDA minus unfunded capital expenditures minus the sum of taxes paid in the period forwhich the test relates and taxes due in the period for which the test relates but whichTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 11 - have not been paid at the time of the test (less tax refunds in cash received by MCII and itssubsidiaries in the period for which the test relates) minus distributions and dividends;divided by:     (b) interest paid and interest due within the period that the test is being done but which hasnot been paid at the time of the test plus any principal due, excluding any balance outstandingunder this Agreement.For the avoidance of doubt, Lender and Borrower agree that the compliance certificate attachedhereto as Exhibit A accurately details the method for calculating the Fixed Charge CoverageRatio.**1.33 “Funding Bank”****“Funding Bank**” shall have the meaning set forth in Section 3.7 hereof.**1.34 “GAAP”**“**GAAP**” shall mean generally accepted accounting principles in Canada or the United States ofAmerica, as applicable, as in effect from time to time as set forth in the opinions andpronouncements of the relevant Canadian or American public and private accounting boards andinstitutes which are applicable to the circumstances as of the date of determination consistentlyapplied.**1.35 “Gameshark Software”**“**Gameshark Software**” shall mean the video game enhancement software sold by Borrower and certainObligors that enables video game players to access and take full advantage of the secret codes,short cuts, hints and cheats incorporated by video game publishers into their video game offerings.**1.36 “Governmental Authority”**“**Governmental Authority**” shall mean any government, parliament, legislature, municipal or localgovernment, or any regulatory authority, agency, commission or board of any government, parliament,legislature, municipal or local government or any court or (without limitation to the foregoing)any other law, regulation or rule-making entity (including any central bank, fiscal or monetaryauthority regulating banks), having jurisdiction in the relevant circumstances, or any Personacting under the authority of any of the foregoing (including any arbitrator).**1.37 “Hazardous Materials”**“**Hazardous Materials**” shall mean any hazardous, toxic or dangerous substances, materials andwastes, including hydrocarbons (including naturally occurring or man-made petroleum andhydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials,biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/ortype of pollutants or contaminants (including materials which include hazardous constituents),sewage, sludge, industrial slag, solvents and/or any other similar substances,THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 12 - materials, or wastes and including any other substances, materials or wastes that are or becomeregulated under any Environmental Law (including any that are or become classified as hazardous ortoxic under any Environmental Law).**1.38 “High Selling Period”**“**High Selling Period**” shall mean the period from and including July 1 through and includingNovember 30.**1.39 “HK Hive Up Deed”**“**HK Hive Up Deed**” shall mean the Hive Up Deed relating to the transfer of the business and assetsof Saitek Industries Limited dated October 1, 2008 between MCIA and Saitek HK.**1.40 “Inactive Subsidiaries”**“**Inactive Subsidiaries**” shall mean collectively Xencet US Inc., Singapore Holdings Inc., SaitekPLC, Saitek HK and Mad Catz Limited and “**Inactive Subsidiary**” shall mean any one of them.**1.41 “Information Certificates”**“**Information Certificates**” shall mean, collectively, the Information Certificates of Borrower andeach Obligor constituting Exhibit B hereto as updated or provided from time to time, eachcontaining material information with respect to such Person, its business, assets and propertiesprovided by or on behalf of such Persons to Lender in connection with the preparation of thisAgreement and amendments, modifications, supplements, extensions, renewals, restatements andreplacements thereof from time to time and the other Financing Agreements and the financingarrangements provided for herein.**1.42 “Intellectual Property”**“**Intellectual Property**” shall mean Borrower’s and each Obligor’s now owned and hereafter arising oracquired: patents, patent rights, patent applications, copyrights, works which are the subjectmatter of copyrights, copyright applications, copyright registrations, trademarks, trade names,trade styles, trademark and service mark applications, and licenses and rights to use any of theforegoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-partof any of the foregoing; all rights to sue for past, present and future infringement, if any, ofthe foregoing; all rights to inventories, trade secrets, formulae, processes, compounds, drawings,designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (includinggoodwill associated with any trademark or the license of any trademark); customer and other listsin whatever form maintained; trade secret rights, copyright rights, rights in works of authorship,domain names and domain name registration and software and contract rights relating to computersoftware programs, in whatever form created or maintained.**1.43 “Intellectual Property Security Agreements”**“**Intellectual Property Security Agreements**” shall mean, collectively, (i) the Trademark SecurityAgreement dated as of September 25, 2000 and executed by Borrower in favor of USTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 13 - Collateral Agent, (ii) the Patent Security Agreement dated as of September 25, 2000 and executed byBorrower in favor of US Collateral Agent, and (iii) the Copyright Security Agreement dated as ofSeptember 25, 2000 and executed by Borrower in favor of US Collateral Agent, as each now exists ormay hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.**1.44 “Intercreditor Agreement”**“**Intercreditor Agreement**” shall mean the intercreditor agreement dated November 14, 2007 betweenGuymont Services SA as trustee of The Winkler Atlantic Trust, MCII and Lender as amended andrestated pursuant to the amended and restated intercreditor agreement dated June 23, 2009, as thesame now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated orreplaced.**1.45 “Interest Period”**“**Interest Period**” shall mean, for any Libor Rate Loan, a period of one (1), two (2), three (3) orsix (6) months duration as Borrower may elect, the exact duration to be determined in accordancewith the customary practice of Lender; provided, that, Borrower may not elect anInterest Period which will end after the Termination Date or the then current term of thisAgreement.**1.46 “Interest Rate”**“**Interest Rate**” shall mean:     (a) for Prime Rate Loans, the Prime Rate plus two percent (2%) per annum;     (b) for Libor Rate Loans, the Adjusted Libor Rate for the applicable Interest Period plusthree and one-half percent (3.5%) per annum;providedthat the Interest Rate shall mean, at Lender’s option, without notice:     (a) for Prime Rate Loans, the Prime Rate plus five percent (5%) per annum; and     (b) for Libor Rate Loans, the Adjusted Libor Rate for the applicable Interest Period plus sixand one-half percent (6.5%) per annum,(i) on the non-contingent Obligations for (A) the period from and after the date of terminationhereof until such time as Lender has received full and final payment of all such Obligations, and(B) the period from and after the date of the occurrence of an Event of Default for so long as suchEvent of Default is continuing as determined by Lender (notwithstanding entry of any judgmentagainst Borrower) and (ii) on the Revolving Loans at any time outstanding in excess of the amountsavailable to Borrower under Section 2 hereof (whether or not such excess(es), arise or aremade with or without Lender’s knowledge or consent and whether made before or after an Event ofDefault).THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 14 - **1.47 “Inventory”**“**Inventory**” shall mean all of Borrower’s and MCE’s now owned and hereafter existing or acquired rawmaterials, work in process, finished goods and all other inventory of whatsoever kind or nature,wherever located.**1.48 “Letter of Credit Accommodations”**“**Letter of Credit Accommodations**” shall mean the letters of credit, merchandise purchase or otherguarantees denominated in Canadian Dollars or US Dollars which are from time to time either(a) issued or opened by Lender for the account of Borrower or any Obligor or (b) with respect towhich Lender has agreed to indemnify the issuer or guaranteed to the issuer the performance byBorrower or any Obligor of its obligations to such issuer.**1.49 “Libor Rate”**“**Libor Rate**” shall mean, with respect to the Interest Period for a Libor Rate Loan, the rate ofinterest per annum (expressed as a percentage on the basis of a 360-day year) being the ratepublished as the London interbank offered rate in The Wall Street Journal, Eastern Edition, on theday which is two (2) Business Days before the first day of such Interest Period for offeringdeposits in US Dollars for a period comparable to the applicable Interest Period and, if for anyreason, the London interbank offered rate is not available in the Wall Street Journal, EasternEdition, then the Libor Rate will be the rate of interest per annum (expressed as a percentagecalculated on the basis of a 360-day year) equal to the average (rounded upward to the nearestwhole multiple of 1/16 of one percent (1%) per annum) of the rates per annum which leading banks inthe London interbank markets are offering deposits in US Dollars and for a comparable amount of theproposed Libor Rate Loan and for a period equal to the relevant Interest Period appearing on theReuters Screen LIBO Page (at or about 11:00 a.m. London time) on the day which is two (2) BusinessDays before the first day of such Interest Period; providedhoweverthatthe Libor Rate shall at no time be less than one and one-half percent (1.5%) per annum**1.50 “Libor Rate Loans”**“**Libor Rate Loans**” shall mean any Revolving Loans or portions thereof denominated in US Dollars andupon which interest is payable based on the Libor Rate in accordance with the terms hereof.**1.51 “License Agreements”**“**License Agreements**” shall have the meaning set forth in Section 7.14 hereof.**1.52 “Lien”**“**Lien**” shall mean any mortgage, deed of trust, pledge, fixed or floating charge, lien, securityinterest, hypothec or encumbrance or security arrangement of any nature whatsoever, whether arisingby written or oral agreement or by operation of law, including any conditional sale or titleretention arrangement, and any assignment, deposit arrangement or lease intended as, or having theeffect of, security.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 15 - **1.53 “Low Selling Period”**“**Low Selling Period**” shall mean the period from and including December 1 through and including June30.**1.54 “Material Adverse Change”**“**Material Adverse Change**” shall mean, where used in relation to the affairs of Borrower or anyObligor, a change in the business, operations or capital of Borrower or such Obligor, asapplicable, that, in the opinion of Lender, has or could be expected to have a Material AdverseEffect.**1.55 “Material Adverse Effect”**“**Material Adverse Effect**” shall mean (i) a material adverse effect on the assets or property ofBorrower, any Obligor, their respective subsidiaries or the business or operations of any of themor all of them, taken as a whole, (ii) a material adverse effect on the condition or prospects,financial or otherwise, of Borrower, any Obligor and their respective subsidiaries or any of themor all of them, taken as a whole, (iii) a material adverse effect on the ability of Borrower or anyObligor to perform and discharge any of its obligations under the Financing Agreements, or (iv) amaterial adverse effect on the priority, effectiveness or enforceability of any Lien granted byBorrower or any Obligor in favor of Agents and/or Lender or the ability of Lender and/or Agents toenforce any Obligation or realize upon any Collateral or any other property securing theObligations.**1.56 “Maximum Credit”**“**Maximum Credit**” shall mean the amount of $30,000,000.**1.57 “Maximum Letter of Credit Facility”**“**Maximum Letter of Credit Facility**” shall mean the amount of $1,000,000.**1.58 “MCC”**“**MCC**” shall mean 1328158 Ontario Inc., a corporation incorporated under the laws of the Province ofOntario.**1.59 “MCE”**“**MCE**” shall mean Mad Catz Europe Limited, a company incorporated and existing under the laws ofEngland and Wales.**1.60 “MCII”**“**MCII**” means Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 16 - **1.61 “MCIA”**“**MCIA**” shall mean Mad Catz Interactive Asia Limited, a company incorporated under the laws of HongKong.**1.62 “Merger”**“**Merger**” means the merger of Saitek Industries Ltd. with Borrower to continue as Borrower effectiveApril 3, 2008.**1.63 “Net Amount of Eligible Accounts”**“**Net Amount of Eligible Accounts**” shall mean the gross amount in US Dollars of Eligible Accountsless (a) sales, excise or similar taxes included in the amount thereof and (b) returns, discounts,claims, credits and allowances of any nature at any time issued, owing, granted, outstanding,available or claimed with respect to such Eligible Accounts; providedthat theamounts deducted under clause (a) shall not duplicate items for which Availability Reserves havebeen established by Lender.**1.64 “Net Orderly Liquidation Value”**“**Net Orderly Liquidation Value**” shall mean the amount in US Dollars to be realized from any orderlyliquidation of Inventory, net of all liquidation costs, including deductions for all commissionsand taxes, as evidenced by an appraisal of such Inventory conducted, at the cost of Borrower byHilco Appraisal Services, LLC or such other appraiser as is acceptable to Lender, such appraisal tobe in form, scope and methodology acceptable to Lender and addressed to Lender or upon which Lenderis permitted to rely.**1.65 “Obligations”**“**Obligations**” shall mean any and all Revolving Loans, Letter of Credit Accommodations and all otherobligations, liabilities and indebtedness of every kind, nature and description owing by Borroweror any Obligor to Lender, any Agent, their respective affiliates and/or owing to any financialinstitution under or in connection with a Swap Agreement, including principal, interest, charges,fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor orotherwise, arising under this Agreement, the other Financing Agreements and any Swap Agreement,whether now existing or hereafter arising, whether arising before, during or after the initial orany renewal term of this Agreement or after the commencement of any proceeding with respect toBorrower or any Obligor under the Bankruptcy Code or any similar statute in any jurisdiction(including the payment of interest and other amounts which would accrue and become due but for thecommencement of such proceeding, whether or not such amounts are allowed or allowable in whole orin part in such proceeding), whether direct or indirect, absolute or contingent, joint or several,due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, and howeveracquired by Lender, any Agent, their respective affiliates and/or any financial institution underor in connection with a Swap Agreement.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 17 - **1.66 “Obligor”**“**Obligor**” shall mean any guarantor, endorser, acceptor, surety or other person liable on or withrespect to the Obligations or who is the owner of any property which is security for theObligations including MCII, MCC, MCE, FX Unlimited, Inc., MCIA, WAHL and Saitek ElecktronikVertriebs GmbH, other than Borrower.**1.67 “Participating Member State”**“**Participating Member State**” shall mean each state so described in any EMU Legislation.**1.68 “Payment Account”**“**Payment Account**” shall have the meaning set forth in Section 5.3 hereof.**1.69 “Permitted Inter-Company Debt”**“**Permitted Inter-Company Debt**” shall mean indebtedness owing by Borrower to any Obligor, by anyObligor to Borrower and/or by any Obligor to another Obligor provided that:     (a) such indebtedness is incurred in the ordinary course of business of Borrower and/or suchObligor, as applicable, consistent with past practice;     (b) all promissory notes and security agreements (if any) executed by Borrower or any Obligorin respect of such indebtedness shall be assigned to Agents in form and content satisfactory toAgents; and     (c) if requested by Lender, such indebtedness is subordinated and postponed pursuant tosubordination agreements in form and content satisfactory to Lender.**1.70 “Person”**“**Person**” or “**person**” shall mean any individual, sole proprietorship, partnership, limitedpartnership, corporation (including any corporation which elects subchapter S status under theCode), limited liability company, limited liability partnership, business trust, unincorporatedassociation, joint stock corporation, trust, joint venture or other entity or any government or anyagency or instrumentality or political subdivision thereof.**1.71 “Pounds Sterling”**“**Pounds Sterling**” shall mean, at any time of determination, the then official currency of theUnited Kingdom.**1.72 “PPSA”**“**PPSA**” shall mean the *Personal Property Security Act*(Ontario).THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 18 - **1.73 “Prime Rate”**“**Prime Rate**” shall mean the rate from time to time publicly announced by the US Reference Bank, orits successors, as its prime rate, whether or not such announced rate is the best rate available atsuch bank.**1.74 “Prime Rate Loans”**“**Prime Rate Loans**” shall mean any Revolving Loans or portions thereof denominated in US Dollars andon which interest is payable based on the Prime Rate in accordance with the terms hereof.**1.75 “Priority Payables Reserve”**“**Priority Payables Reserve**” shall mean, at any time, the full amount of the liabilities at suchtime which have a trust imposed to provide for payment or Lien ranking or capable of ranking seniorto or *pari passu*with Liens securing the Obligations on any of the Collateral under Federal,provincial, State, county, municipal, or local law including to claims for unremitted andaccelerated rents, taxes, wages, vacation pay, workers’ compensation obligations, governmentroyalties or pension fund obligations, together with the aggregate value, determined in accordancewith GAAP, of all Eligible Inventory which Lender considers may be or may become subject to a rightof a supplier to recover possession thereof under any Federal, provincial, State, county, municipalor local law, where such supplier’s right may have priority over the Liens securing the Obligationsincluding Eligible Inventory subject to a right of a supplier to repossess goods pursuant to theBankruptcy Code or any applicable bankruptcy, reorganization or insolvency legislation.**1.76 “Records”**“**Records**” shall mean all of Borrower’s and each Obligor’s present and future books of account ofevery kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading andother shipping evidence, statements, correspondence, memoranda, credit files and other datarelating to the Collateral or any account debtor, together with the tapes, disks, diskettes andother data and software storage media and devices, file cabinets or containers in or on which theforegoing are stored (including any rights of Borrower or any Obligor with respect to the foregoingmaintained with or by any other person).**1.77 “Revolving Loans”**“**Revolving Loans**” shall mean the loans now or hereafter made by Lender to or for the benefit ofBorrower on a revolving basis (involving advances, repayments and readvances) as set forth inSection 2.1 hereof.**1.78 “Royalty Reserve”**“**Royalty Reserve**” shall mean an amount equal to all accrued and unpaid royalty obligations owing byBorrower and MCE as set forth on the most recent Royalty Reserve Report, adjusted up or down as ofany date of determination by Lender in its sole discretion based on Lender’sTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 19 - findings that such royalty obligations owing by Borrower and/or MCE have increased or decreasedsince the date of such Royalty Reserve Report.**1.79 “Royalty Reserve Report”**“**Royalty Reserve Report**” shall mean a report for the period since the date of the last such reportdelivered in accordance with Section 6.1 hereof which shall set forth (i) each license ofIntellectual Property for which Borrower and/or MCE is licensee and for which it pays royalties,(ii) the licensor of each such license, (iii) the aggregate accrued and unpaid royalty obligationsowing under each such license and (iv) the date such accrued and unpaid royalty obligations are dueunder each such license. Each Royalty Reserve Report shall be certified by the chief financialofficer of the Borrower as being complete and accurate.**1.80 “Saitek HK”**“**Saitek HK**” shall mean Saitek Industries Limited, a corporation incorporated in Hong Kong.**1.81 “Secured Parties”**“**Secured Parties**” shall collectively mean Lender, Agents, their respective affiliates, anyfinancial institution under or in connection with a Swap Agreement and any other person to whichObligations are owed or who is the beneficiary of or under a guarantee of the Obligations.**1.82 “Software”**“**Software**” shall mean all software and computer programs (regardless of form or format, DVD, discor otherwise) and all packaging, containers, artwork, end-user guides or instructions, user manualsand related materials concerning the use and operation of such software and computer programs otherthan Gameshark Software.**1.83 “Software Inventory”**“**Software Inventory**” shall mean all Eligible Inventory consisting of Software.**1.84 “Solvent”**“**Solvent**” shall mean, with respect to any Person on a particular date, that on such date (a) thefair value of the assets and property of such Person is greater than the total amount ofliabilities, including contingent liabilities, of such Person; (b) the present fair salable valueof the assets and properties of such Person is not less than the amount that will be required topay the probable liability of such Person on its debts as they become absolute and matured;(c) such Person does not intend to, and does not believe that it will, incur debts or liabilitiesbeyond such Person’s ability to pay as such debts and liabilities mature; and (d) such Person isnot engaged in a business or transaction, and is not about to engage in a business or transaction,for which such Person’s property would constitute an unreasonably small capital. The amount ofcontingent liabilities (such as litigation, guarantees and pension plan liabilities) at any timeshall be computed as the amount which, in light of all the facts and circumstances existing at thetime,THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 20 - represents the amount which can be reasonably be expected to become an actual or matured liability.**1.85 “Swap Agreement”**“**Swap Agreement**” shall mean any swap agreement (as defined in 11 U.S.C. §101), interest rate swap,cap or collar agreement, interest rate future or option contract, currency swap agreement, currencyfuture or option contract and other similar hedge or swap agreement between Borrower or any Obligor(or, with the prior written consent of Lender, in its sole discretion, Agents, or Lender or any oftheir respective affiliates on behalf of Borrower or any Obligor) as one counterparty and Agents,Lender or any of their respective affiliates (even if that counterparty should subsequently ceaseto be Agents, Lender or an affiliate thereof) and/or another financial institution as to the othercounterparty; providedthat the prior written consent of Lender is obtained (suchconsent to be provided in Lender’s sole discretion) as to such other financial institution and theSwap Agreement entered into with such other financial institution.**1.86 “Termination Date”**“**Termination Date**” shall have the meaning set forth in Section 11.1(a).**1.87 “Testing Period”**“**Testing Period**” shall mean any trailing four (4) Fiscal Quarters.**1.88 “UCC”**“**UCC**” shall mean the Uniform Commercial Code.**1.89 “UK Hive Up Agreement”**“**UK Hive Up Agreement**” shall mean the Hive Up Agreement relating to the transfer of the businessand assets of Saitek PLC dated August 1, 2008 between MCE and Saitek PLC.**1.90 “United Kingdom”**“**United Kingdom**” shall mean the United Kingdom of Great Britain and Northern Ireland.**1.91 “US Collateral Agent”**“**US Collateral Agent**” shall mean Wachovia Capital Finance Corporation (Central), formerly known asCongress Financial Corporation (Central), in its capacity as collateral agent for itself, asLender.**1.92 “US Reference Bank”**“**US Reference Bank**” shall mean Wachovia Bank, National Association or such other major bank in theUnited States as Lender may from time to time designate in its discretion.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 21 - **1.93 “Value”**“**Value**” shall mean, as determined by Lender, with respect to Inventory, the lower of (a) costcomputed on a first-in-first-out basis in accordance with GAAP and (b) net realizable value.**1.94 “WAHL”**“**WAHL**” shall mean Winkler Atlantic Holdings Limited, a company incorporated under the laws of theBritish Virgin Islands.**SECTION 2  CREDIT FACILITIES****2.1 Revolving Loans**     (a) Subject to and upon the terms and conditions contained herein, Lender agrees to makeRevolving Loans to Borrower from time to time in amounts requested by Borrower up to the amountequal to the lesser of: (i) the Maximum Credit; and  (ii) the sum of: (A) seventy-five percent (75%) of the Net Amount ofEligible Accounts;plus (B) the lesser of : (1) (X) for any date of determinationduring the Low Selling Period, the lesser of (i) eighty-fivepercent (85%) of the Net Orderly Liquidation Value of EligibleInventory (excluding Software Inventory) and (ii) fifty-fivepercent (55%) of the Value of Eligible Inventory (excludingSoftware Inventory); or (Y) for any date of determination duringthe High Selling Period, the lesser of (i) eighty-five percent(85%) of the Net Orderly Liquidation Value of Eligible Inventory(excluding Software Inventory) and (ii) sixty percent (60%) ofthe Value of Eligible Inventory (excluding Software Inventory);and  (2) $15,000,000 (less the amount, ifany, determined in accordance with Section 2.1(a)(ii)(C)below),plusTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 22 -  (C) the lesser of (i) twenty-five percent (25%) ofthe Value of Software Inventory, (ii) eighty-five percent (85%) of theNet Orderly Liquidation Value of Software Inventory and (iii)$1,000,000,minus (D) any Availability Reserves.     (b) Lender may, in its discretion, from time to time, upon not less than five (5) days priorwritten notice to Borrower, (i) reduce the lending formula with respect to Eligible Accounts to theextent that Lender determines that: (A) the dilution with respect to the Accounts for any period(based on the ratio of (1) the aggregate amount of reductions in Accounts other than as a result ofpayments in cash to (2) the aggregate amount of total sales) has increased in any material respector may be reasonably anticipated to increase in any material respect above historical levels or asa result of seasonal variations, or (B) the general creditworthiness of account debtors hasdeclined or (ii) reduce the lending formula(s) with respect to Eligible Inventory to the extentthat Lender determines that: (A) the number of days of the turnover of the Inventory for any periodhas changed in any material respect or (B) the Net Orderly Liquidation Value of the EligibleInventory, or any category thereof, has decreased, or (C) the nature and quality of the Inventoryhas deteriorated. In determining whether to reduce the lending formula(s), Lender may considerevents, conditions, contingencies or risks which are also considered in determining EligibleAccounts, Eligible Inventory or in establishing Availability Reserves.     (c) Except in Lender’s discretion, the aggregate amount of the Revolving Loans and the Letterof Credit Accommodations outstanding at any time shall not exceed the Maximum Credit. In the eventthat the outstanding amount of any component of the Revolving Loans, or the aggregate amount of theoutstanding Revolving Loans and Letter of Credit Accommodations, exceeds the amounts availableunder the lending formulas, the sublimits for Letter of Credit Accommodations set forth inSection 2.2(d) hereof or the Maximum Credit, as applicable, such event shall not limit,waive or otherwise affect any rights of Lender in that circumstance or on any future occasions andBorrower shall, upon demand by Lender, which may be made at any time or from time to time,immediately repay to Lender the entire amount of any such excess(es) for which payment is demanded.     (d) For purposes only of applying the sublimit on Revolving Loans based on Eligible Inventorypursuant to Section 2.1(a)(ii)(B)(2) hereof, Lender may treat the then undrawn amounts ofoutstanding Letter of Credit Accommodations for the purpose of purchasing Eligible Inventory asRevolving Loans to the extent Lender is in effect basing the issuance of the Letter of CreditAccommodations on the Value of the Eligible Inventory being purchased with such Letter of CreditAccommodations. In determining the actual amounts of such Letter of Credit Accommodations to be sotreated for purposes of the sublimit, the outstanding Revolving Loans and Availability Reservesshall be attributed first to any components of the lending formulas in Section 2.1(a)hereof that are not subject to such sublimit, before being attributed to the components of thelending formulas subject to such sublimit.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 23 - **2.2 Letter of Credit Accommodations**     (a) Subject to and upon the terms and conditions contained herein, at the request of Borrower,Lender agrees to provide or arrange for Letter of Credit Accommodations for the account of Borrowercontaining terms and conditions acceptable to Lender and the issuer thereof. Any payments made byLender to any issuer thereof and/or related parties in connection with the Letter of CreditAccommodations shall constitute additional Revolving Loans to Borrower pursuant to this Section2.2.     (b) In addition to any charges, fees or expenses charged by any bank or issuer in connectionwith the Letter of Credit Accommodations, Borrower shall pay to Lender a letter of credit fee at arate equal to two and one-half percent (2.5%) per annum on the daily outstanding balance of theLetter of Credit Accommodations for the immediately preceding month (or part thereof), payable inarrears as of the first day of each succeeding month, except that Borrower shall pay to Lender suchletter of credit fee, at Lender’s option, without notice, at a rate equal to five and one-halfpercent (5.5%) per annum on such daily outstanding balance for: (i) the period from and after thedate of termination hereof until Lender has received full and final payment of all Obligations(notwithstanding entry of a judgment against Borrower) and (ii) the period from and after the dateof the occurrence of an Event of Default for so long as such Event of Default is continuing asdetermined by Lender. Such letter of credit fee shall be calculated on the basis of a threehundred sixty (360) day year and actual days elapsed and the obligation of Borrower to pay such feeshall survive the termination of this Agreement.     (c) No Letter of Credit Accommodations shall be available unless on the date of the proposedissuance of any Letter of Credit Accommodations, the Revolving Loans available to Borrower (subjectto the Maximum Credit, the Maximum Letter of Credit Facility and any Availability Reserves) areequal to or greater than: (i) if the proposed Letter of Credit Accommodation is for the purpose ofpurchasing Eligible Inventory and all negotiable documents of title with respect to such EligibleInventory have been consigned to the issuer of the Letter of Credit Accommodation, the sum of(A) the percentage equal to one hundred (100%) percent minus the then applicable percentage setforth in Section 2.1(a)(ii)(B) above of the Value of such Eligible Inventory, plus(B) freight, taxes, duty and other amounts which Lender estimates must be paid in connection withsuch Inventory upon arrival and for delivery to one of Borrower’s locations for Eligible Inventorywithin the United States of America and (ii) if the proposed Letter of Credit Accommodation is forany other purpose, an amount equal to one hundred (100%) percent of the face amount thereof and allother commitments and obligations made or incurred by Lender with respect thereto. Effective onthe issuance of each Letter of Credit Accommodation, an Availability Reserve shall be establishedin the applicable amount set forth in Section 2.2(c)(i) or Section 2.2(c)(ii)hereof.     (d) Except in Lender’s discretion, the amount of all outstanding Letter of CreditAccommodations and all other commitments and obligations made or incurred by Lender in connectiontherewith shall not at any time exceed the Maximum Letter of Credit Facility. At any time an Eventof Default exists or has occurred and is continuing, upon Lender’s request, Borrower will eitherfurnish cash collateral to secure the reimbursement obligations to the issuer in connection withany Letter of Credit Accommodations or furnish cash collateral to Lender and/or US Collateral Agentfor the Letter of Credit Accommodations, and in either case, theTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 24 - Revolving Loans otherwise available to Borrower shall not be reduced as provided inSection 2.2(c) hereof to the extent of such cash collateral.     (e) Borrower shall indemnify and hold Lender harmless from and against any and all losses,claims, damages, liabilities, costs and expenses which Lender may suffer or incur in connectionwith any Letter of Credit Accommodations and any documents, drafts or acceptances relating thereto,including any losses, claims, damages, liabilities, costs and expenses due to any action taken byany issuer or correspondent with respect to any Letter of Credit Accommodation. Borrower assumesall risks with respect to the acts or omissions of the drawer under or beneficiary of any Letter ofCredit Accommodation and for such purposes the drawer or beneficiary shall be deemed Borrower’sagent. Borrower assumes all risks for, and agrees to pay, all foreign, Federal, State and localtaxes, duties and levies relating to any goods subject to any Letter of Credit Accommodations orany documents, drafts or acceptances thereunder. Borrower hereby releases and holds Lenderharmless from and against any acts, waivers, errors, delays or omissions, whether caused byBorrower, by any issuer or correspondent or otherwise with respect to or relating to any Letter ofCredit Accommodation. The provisions of this Section 2.2(e) shall survive the payment ofObligations and the termination of this Agreement.     (f) Nothing contained herein shall be deemed or construed to grant Borrower any right orauthority to pledge the credit of Lender in any manner. Lender shall have no liability of any kindwith respect to any Letter of Credit Accommodation provided by an issuer other than Lender unlessLender has duly executed and delivered to such issuer the application or a guarantee orindemnification in writing with respect to such Letter of Credit Accommodation. Borrower shall bebound by any interpretation made by Lender, or any other issuer or correspondent under or inconnection with any Letter of Credit Accommodation or any documents, drafts or acceptancesthereunder, notwithstanding that such interpretation may be inconsistent with any instructions ofBorrower. Lender shall have the sole and exclusive right and authority to, and Borrower shall notat any time while an Event of Default exists, (A) approve or resolve any questions ofnon-compliance of documents, (B) give any instructions as to acceptance or rejection of anydocuments or goods, (C) execute any and all applications for steamship or airway guarantees,indemnities or delivery orders, (D) grant any extensions of the maturity of, time of payment for,or time of presentation of, any drafts, acceptances, or documents, or (E) agree to any amendments,renewals, extensions, modifications, changes or cancellations of any of the terms or conditions ofany of the applications, Letter of Credit Accommodations, or documents, drafts or acceptancesthereunder or any letters of credit included in the Collateral. Lender may take such actionseither in its own name or in Borrower’s name.     (g) Any rights, remedies, duties or obligations granted or undertaken by Borrower to anyissuer or correspondent in any application for any Letter of Credit Accommodation, or any otheragreement in favor of any issuer or correspondent relating to any Letter of Credit Accommodation,shall be deemed to have been granted or undertaken by Borrower to Lender. Any duties orobligations undertaken by Lender to any issuer or correspondent in any application for any Letterof Credit Accommodation, or any other agreement by Lender in favor of any issuer or correspondentrelating to any Letter of Credit Accommodation, shall be deemed to have been undertaken by Borrowerto Lender and to apply in all respects to Borrower.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 25 - **2.3 Availability Reserves**          All Revolving Loans otherwise available to Borrower pursuant to the lending formulas andsubject to the Maximum Credit, the Maximum Letter of Credit Facility and other applicable limitshereunder shall be subject to Lender’s continuing right to establish and revise AvailabilityReserves, upon not less than five (5) days’ prior written notice to Borrower.**SECTION 3****INTEREST AND FEES****3.1 Interest**     (a) Borrower shall pay to Lender interest on the outstanding principal amount of thenon-contingent Obligations at the applicable Interest Rate.     (b) Interest shall be payable by Borrower to Lender monthly in arrears not later than thefirst day of each calendar month and shall be calculated on the basis of a three hundred sixty(360) day year and actual days elapsed. The interest rate shall increase or decrease by an amountequal to each increase or decrease in the Prime Rate effective on the first day of the month afterany change in such Prime Rate is announced. The increase or decrease shall be based on the PrimeRate in effect on the last day of the month in which any such change occurs. All interest accruinghereunder on and after an Event of Default or termination hereof shall be payable on demand. In noevent shall charges constituting interest payable by Borrower to Lender exceed the maximum amountor the rate permitted under any applicable law or regulation, and if any part or provision of thisAgreement is in contravention of any such law or regulation, such part or provision shall be deemedamended to conform thereto.     (c) A certificate of an authorized signing officer of Lender as to each amount and/or eachrate of interest payable hereunder from time to time shall be conclusive evidence of such amountand of such rate, absent manifest error.     (d) For greater certainty, whenever any amount is payable under this Agreement or anyFinancing Agreement by Borrower as interest or as a fee which requires the calculation of an amountusing a percentage per annum, each party to this Agreement acknowledges and agrees that such amountshall be calculated as of the date payment is due without application of the “**deemed reinvestmentprinciple**” or the “**effective yield method**”. As an example, when interest is calculated and payablemonthly, the rate of interest payable per month is one-twelfth (1/12th) of the stated rate ofinterest per annum.     (e) Any Libor Rate Loans shall automatically convert to Prime Rate Loans upon the last day ofthe applicable Interest Period unless Lender has received and approved a request to continue suchLibor Rate Loan at least three (3) Business Days prior to such last day in accordance with theterms hereof. Any Libor Rate Loans shall, at Lender’s option, upon notice by Lender to Borrower,be subsequently converted to Prime Rate Loans upon the occurrence of any Default or Event ofDefault which is continuing and otherwise upon the Termination Date. Borrower shall pay to Lender,upon demand by Lender (or Lender may, at its option, charge any loan account of Borrower), anyamounts required to compensate Lender for any loss, costs or expense incurred by Lender as a resultof the conversion of Libor Rate Loans to Prime RateTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 26 - Loans pursuant to any of the foregoing. Upon the occurrence of a Default or an Event ofDefault that is continuing, or if Borrower repays or prepays a Libor Rate Loan on a day other thanthe last day of the applicable Interest Period, Borrower shall indemnify Lender for any loss orexpense suffered or incurred by Lender including any loss of profit or expenses Lender incurs byreason of the liquidation or redeployment of deposits or other funds acquired by it to effect ormaintain any and all Libor Rate Loans or any interest or other charges payable to lenders of fundsborrowed by Lender in order to maintain such Libor Rate Loans together with any other charges,costs or expenses incurred by Lender relative thereto.     (f) So long as no Default or Event of Default shall have occurred and be continuing, Borrowermay from time to time request Libor Rate Loans or may request that Prime Rate Loans be converted toLibor Rate Loans or that any existing Libor Rate Loans continue for an additional Interest Period.Such request from Borrower shall specify the amount of the Libor Rate Loans or the amount of thePrime Rate Loans to be converted to Libor Rate Loans or the amount of the Libor Rate Loans to becontinued (subject to the limits set forth below) and the Interest Period to be applicable to suchLibor Rate Loans. Subject to the terms and conditions contained herein, three (3) Business Daysafter receipt by Lender of such a request from Borrower, such Libor Rate Loans shall be made orPrime Rate Loans shall be converted to Libor Rate Loans or such Libor Rate Loans shall continue, asapplicable; provided, that: (i) no Default or Event of Default shall exist or have occurred andbe continuing;  (ii) no party hereto shall have sent any notice of termination ofthis Agreement;  (iii) Borrower shall have complied with such customary procedures asare generally established by Lender for all customers and specified by Lenderto Borrower from time to time for requests by Borrower for Libor Rate Loans;  (iv) no more than six (6) Interest Periods (for all outstandingLibor Rate Loans) may be in effect at any one time;  (v) the aggregate amount of the Libor Rate Loans must be in anamount not less than Five Million US Dollars ($5,000,000) or an integralmultiple of One Million US Dollars ($1,000,000) in excess thereof;  (vi) not more than eighty percent (80%) of the Obligations may becomprised of Libor Rate Loans at any time; and  (vii) Lender shall have determined that the Interest Period orAdjusted Libor Rate is available to Lender and can be readily determined as ofthe date of the request for such Libor Rate Loan by Borrower.     Any request by Borrower for Libor Rate Loans or to convert Prime Rate Loans to Libor RateLoans or to continue any existing Libor Rate Loans shall be irrevocable. Notwithstanding anythingto the contrary contained herein, Lender shall not be required toTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 27 - purchase US Dollar deposits in the London interbank market to fund any Libor Rate Loans, butthe provisions hereof shall be deemed to apply as if the Lender had purchased such deposits to fundthe Libor Rate Loans.**3.2 Intentionally Deleted****3.3 Closing Fee**          Borrower shall pay to Lender as a closing fee the amount of $150,000, which shall be fullyearned as of and payable on the date hereof.**3.4 Servicing Fee**          Borrower shall pay to Lender a monthly servicing fee in an amount equal to $2,000 per month inrespect of Lender’s services for each month (or part thereof) while this Agreement remains ineffect and for so long thereafter as any of the Obligations are outstanding, which monthly feeshall be fully earned as of and payable in advance on the date of closing hereof and on the firstday of each month thereafter.**3.5 Unused Line Fee**          Borrower shall pay to Lender a monthly unused line fee at a rate equal to one-half of onepercent (0.5%) per annum calculated on the amount by which the Maximum Credit exceeds the averagedaily principal balance of the outstanding Revolving Loans and Letter of Credit Accommodationsduring the immediately preceding month (or part thereof) during which this Agreement is in effectand for so long thereafter as any of the Obligations are outstanding, which fee shall be payable onthe first day of each month.**3.6 Currency of Payments**          Unless otherwise specified by Lender, all interest, fees and other payments by Borrowerhereunder shall be in the currency in which such Obligations are denominated.**3.7 Increased Costs and Changes in Law** (a) If, after the date hereof, either: (i) any change in, or in the interpretation of, any law orregulation is introduced, including with respect to reserve requirements,applicable to Lender or any banking or financial institution from whom Lenderborrows funds or obtains credit (a “**Funding Bank**”);  (ii) a Funding Bank or Lender complies with any future guideline orrequest from any central bank or other Governmental Authority;  (iii) a Funding Bank or Lender determines that the adoption of anyapplicable law, rule or regulation regarding capital adequacy, or any changetherein, or any change in the interpretation or administration thereof by anyTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 28 -    Governmental Authority, central bank or comparable agency charged with theinterpretation or administration thereof has or would have the effectdescribed below or a Funding Bank or Lender complies with any request ordirective regarding capital adequacy (whether or not having the force of lawwhere customarily complied with by responsible financial institutions) ofany such Governmental Authority, central bank or comparable agency, and suchadoption, change or compliance has, or would have, the direct or indirecteffect of reducing the rate of return on Lender’s capital as a consequenceof its obligations hereunder to a level below that which Lender could haveachieved but for such adoption, change or compliance (taking intoconsideration the Funding Bank’s or Lender’s policies with respect tocapital adequacy) by an amount deemed by Lender to be material,and the result of any of the foregoing events described in clauses (i),(ii) and (iii) is, or results in, an increase in the cost to Lenderof funding or maintaining the Loans and/or Letter of Credit Accommodations, thenBorrower shall from time to time upon demand by Lender pay to Lender additionalamounts sufficient to indemnify Lender against such increased cost on an after-taxbasis (after taking into account applicable deductions and credits in respect of theamount indemnified). A certificate as to the amount of such increased cost shall besubmitted to Borrower by Lender and shall be conclusive, absent manifest error. (b) If, prior to the first day of any Interest Period: (i) Lender shall have determined (which determination shall beconclusive and binding upon Borrower) that, by reason of circumstancesaffecting the relevant market, adequate and reasonable means do not exist forascertaining the Adjusted Libor Rate for such Interest Period;  (ii) Lender has determined that the Adjusted Libor Rate determinedor to be determined for such Interest Period will not adequately and fairlyreflect the cost to Lender of making or maintaining Libor Rate Loans duringsuch Interest Period; or  (iii) US Dollar deposits in the principal amounts of the Libor RateLoans to which such Interest Period is to be applicable are not generallyavailable in the London interbank market,          Lender shall give notice thereof to Borrower as soon as practicable thereafter (which noticeshall be withdrawn whenever such circumstances no longer exist). If such notice is given: (A) anyLibor Rate Loans requested to be made on the first day of such Interest Period shall be made asPrime Rate Loans; (B) any Revolving Loans that were to have been converted on the first day of suchInterest Period to or continue as Libor Rate Loans shall be converted to or continued as Prime RateLoans; and (C) each outstanding Libor Rate Loan shall be converted, on the last day of thethen-current Interest Period thereof, to Prime Rate Loans. Until such notice has been withdrawn byLender, no further Libor Rate Loans shall be made orTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 29 - continued as such, nor shall Borrower have the right to convert Prime Rate Loans to Libor RateLoans.     (c) Notwithstanding any other provision herein, if the adoption of, or any change in, any law,treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court orother Governmental Authority or in the interpretation or application thereof occurring after thedate hereof shall make it unlawful for Lender to make or maintain Libor Rate Loans as contemplatedby this Agreement: (i) Lender shall promptly give written notice of such circumstancesto Borrower (which notice shall be withdrawn whenever such circumstances nolonger exits);  (ii) the commitment of Lender hereunder to make Libor Rate Loans,continue Libor Rate Loans as such and convert Prime Rate Loans to Libor RateLoans shall forthwith be cancelled and, until such time as it shall no longerbe unlawful for Lender to make or maintain Libor Rate Loans, Lender shall thenonly have a commitment to make Prime Rate Loans when a Libor Rate Loan isrequested; and  (iii) the Revolving Loans then outstanding as Libor Rate Loans, ifany, shall be converted automatically to Prime Rate Loans on the respectivelast days of the then current Interest Periods with respect to such RevolvingLoans or within such earlier period as required by law.          If any such conversion of a Libor Rate Loan occurs on a day which is not the last day of thethen current Interest Period with respect thereto, Borrower shall pay to Lender such amounts, ifany, as may be required pursuant to Section 3.7(d) below.     (d) Borrower shall indemnify Lender and shall hold Lender harmless from any loss or expensewhich Lender may sustain or incur as a consequence of: (i) default by Borrower in making a borrowing of, conversion intoor extension of Libor Rate Loans after Borrower has given a notice requestingthe same in accordance with the provisions of this Agreement;  (ii) the making of a prepayment or conversion of any Libor RateLoans on a day which is not the last day of an Interest Period with respectthereto.          With respect to Libor Rate Loans such indemnification may include an amount equal to thegreater of: (i) the excess, if any, of (1) the amount of interest which would have accrued on theamount so prepaid or converted, or not so borrowed, converted or extended, for the period from thedate of such prepayment or conversion or of such failure to borrow, convert or extend to the lastday of the applicable Interest Period (or, in the case of a failure to borrow, convert or extend,the Interest Period that would have commenced on the date of such failure), in each case at theapplicable rate of interest for such Libor Rate Loans provided for herein over (2) theamount of interest (as determined by Lender) which would have accrued to Lender on such amount byplacing such amount on deposit for a comparable period with leading banks in theTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 30 - London interbank market and (ii) an amount equal to the interest that would have been payableif the Libor Rate Loans had been a Prime Rate Loan. This covenant shall survive the termination ornon-renewal of this Agreement and the payment of the Obligations.     (e) In the event that Borrower has hedged a Libor Rate Loan with an interest rate swap withLender or any of its affiliates under which Borrower is to make its payments based on a fixed rateand Lender or any of its affiliates is to make its payments based on a rate equal to the LiborRate, then the fallback rate (being the Prime Rate in the circumstances described in thisSection 3) on any given day while the swap with Lender or any of its affiliates is ineffect will be the sum of (i) the fallback floating rate payable by Lender or any of its affiliatesthat is in effect under the interest rate swap for that day (without regard to any interest ratespread added thereto under the terms of the interest rate swap) plus (ii) the percentage spread inthe definition of Interest Rate applicable to Libor Rate Loans.**SECTION 4****CONDITIONS PRECEDENT****4.1 Conditions Precedent to Revolving Loans and Letter of Credit Accommodations**          This Agreement shall not be effective until each of the agreements or actions set out in theClosing Checklist attached hereto as Exhibit C have been executed, delivered or completed,as the case may be, to the satisfaction of Lender or waived in writing (in whole or in part) byLender in its sole discretion and each of the following is a condition precedent to Lendercontinuing to make Revolving Loans and/or provide Letter of Credit Accommodations to Borrowerhereunder:     (a) all representations and warranties contained in this Agreement and in the other FinancingAgreements shall be true and correct in all material respects with the same effect as though suchrepresentations and warranties had been made on and as of the date of the making of each suchRevolving Loan or providing each such Letter of Credit Accommodation and after giving effectthereto, except with respect to those representations and warranties that were or are expresslymade as of a particular date and except to the extent that there are changes with respect tomatters referenced in such representations and warranties after the date thereof that do not andwill not otherwise cause a Default or Event of Default hereunder, and     (b) no Default or Event of Default shall exist or have occurred and be continuing on and as ofthe date of the making of such Revolving Loan or providing each such Letter of Credit Accommodationor after giving effect thereto.**SECTION 5  COLLECTION AND ADMINISTRATION****5.1 Borrower’s Loan Account**          Lender shall maintain one or more loan account(s) on its books in which shall be recorded(a) all Revolving Loans, Letter of Credit Accommodations and other Obligations and the Collateral,(b) all payments made by or on behalf of Borrower and (c) all other appropriateTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 31 - debits and credits as provided in this Agreement, including fees, charges, costs, expenses andinterest. All entries in the loan account(s) shall be made in accordance with Lender’s customarypractices as in effect from time to time.**5.2 Statements**          Lender shall render to Borrower each month a statement setting forth the balance in Borrower’sloan account(s) maintained by Lender for Borrower pursuant to the provisions of this Agreement,including principal, interest, fees, costs and expenses. Each such statement shall be subject tosubsequent adjustment by Lender but shall, absent manifest errors or omissions, be consideredcorrect and deemed accepted by Borrower and conclusively binding upon Borrower as an account statedexcept to the extent that Lender receives a written notice from Borrower of any specific exceptionsof Borrower thereto within thirty (30) days after the date such statement has been mailed byLender. Until such time as Lender shall have rendered to Borrower a written statement as providedabove, the balance in Borrower’s loan account(s) shall be presumptive evidence of the amounts dueand owing to Lender by Borrower.**5.3 Collection of Accounts**     (a) Borrower shall establish and maintain, at its expense, blocked accounts (“**BlockedAccounts**”) with such banks as are acceptable to Lender into which Borrower and Obligors shall, inaccordance with Lender’s instructions, promptly deposit all payments on Accounts and all paymentsconstituting proceeds of Inventory or other Collateral; providedthat, prior to theoccurrence and continuation of an Event of Default, Obligors agreement to deposit hereunder shallbe limited to payments and proceeds received by such Obligor in Canada, the United States and theUnited Kingdom. Upon the occurrence and during the continuation of an Event of Default, Lendermay, and Borrower and each Obligor shall upon Lender’s request, direct Borrower’s, and eachObligor’s account debtors to directly remit all payment on Accounts to the Blocked Accounts. Thebanks at which the Blocked Accounts are established shall enter into an agreement, in form andsubstance satisfactory to Lender, providing that all items received or deposited in the BlockedAccounts are the property of Lender, that the depository bank has no lien upon, or right to setoffagainst, the Blocked Accounts, the items received for deposit therein, or the funds from time totime on deposit therein and that the depository bank will wire, or otherwise transfer, inimmediately available funds, on a daily basis, all funds received or deposited into the BlockedAccounts to such bank account of Lender as Lender may from time to time designate for such purpose(“**Payment Account**”). Borrower and each Obligor agrees that all payments made to such BlockedAccounts or other funds received and collected by Lender, whether on the Accounts or as proceeds ofInventory or other Collateral or otherwise shall be subject to the security of Lender and/orAgents.     (b) For purposes of calculating the amount of the Revolving Loans available to Borrower, suchpayments will be applied (conditional upon final collection) to the Obligations on the Business Dayof receipt by Lender of immediately available funds in a Payment Account provided such payments andnotice thereof are received in accordance with Lender’s usual and customary practices as in effectfrom time to time and within sufficient time to credit Borrower’s loan account on such day, and ifnot, then on the next Business Day. For the purposes of calculating interest on the Obligations,such payments or other funds received will be appliedTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 32 - (conditional upon final collection) to the Obligations on the date of receipt of immediatelyavailable funds by Lender in the applicable Payment Account provided such payments or other fundsand notice thereof are received in accordance with Lender’s usual and customary practices as ineffect from time to time and within sufficient time to credit Borrower’s loan account on such day,and if not, then on the next Business Day. If Lender receives funds in a Payment Account at anytime at which no Obligations are outstanding or in excess of such outstanding Obligations, Lendershall transfer such funds to Borrower at such account as Borrower may direct; providedthat Borrower shall, at Lender’s request, deposit such funds to an account maintained atthe bank at which the Payment Accounts are maintained and, prior to such transfer, shall executeand deliver to Lender a cash collateral agreement in form and substance satisfactory to Lenderproviding to Lender and/or Agents a first priority Lien over such account.     (c) Borrower and each Obligor and the shareholders, directors, employees and/or agents ofBorrower and each Obligor shall, acting as trustee for Lender, receive, as the security of Lenderand/or Agents, any monies, checks, notes, drafts or any other payment relating to and/or proceedsof Accounts or other Collateral which come into their possession or under their control andimmediately upon receipt thereof, shall deposit or cause the same to be deposited in the BlockedAccounts, or remit the same or cause the same to be remitted, in kind, to Lender, but in no eventshall any of the foregoing monies, checks, notes, drafts or any other such payment be commingledwith Borrower’s or an Obligor’s other funds; providedthat, prior to the occurrenceand continuation of an Event of Default, Obligors (and the shareholders, directors, employeesand/or agents of such Obligor) agreement to deposit and remit hereunder shall be limited to monies,checks, notes, drafts or any other payment and proceeds received by such Obligor in Canada, theUnited States and the United Kingdom. Borrower agrees to reimburse Lender on demand for anyamounts owed or paid to any bank at which a Blocked Account is established or any other bank orperson involved in the transfer of funds to or from the Blocked Accounts arising out of Lender’spayments to, or indemnification of, such bank or person (other than to the extent that such amountarises directly from Lender’s or such other party’s negligence or willful misconduct). Theobligation of Borrower to reimburse Lender for such amounts pursuant to this Section 5.3shall survive the termination of this Agreement.**5.4 Payments**          All Obligations shall be payable to the Payment Accounts as provided in Section 5.3 orsuch other place as Lender may designate from time to time. Lender may apply payments received orcollected from Borrower or for the account of Borrower (including the monetary proceeds ofcollections or of realization upon any Collateral) to such of the Obligations, whether or not thendue, in such order and manner as Lender determines. Payments and collections received in anycurrency other than US Dollars or Canadian Dollars will be accepted and/or applied at the solediscretion of Lender. At Lender’s option, all principal, interest, fees, costs, expenses and othercharges provided for in this Agreement or the other Financing Agreements may be charged directly tothe loan account(s) of Borrower. Borrower shall make all payments to Lender on the Obligationsfree and clear of, and without deduction or withholding for or on account of, any setoff,counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, withholding, restrictionsor conditions of any kind. If after receipt of any payment of, or proceeds of Collateral appliedto the payment of, any of the Obligations, Lender is required to surrender or return such paymentor proceeds to any Person for any reason, then the ObligationsTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 33 - intended to be satisfied by such payment or proceeds shall be reinstated and continue and thisAgreement shall continue in full force and effect as if such payment or proceeds had not beenreceived by Lender. Borrower shall be liable to pay to Lender, and does hereby indemnify and holdLender harmless for the amount of any payments or proceeds surrendered or returned. ThisSection 5.4 shall remain effective notwithstanding any contrary action which may be takenby Lender in reliance upon such payment or proceeds. This Section 5.4 shall survive thepayment of the Obligations and the termination of this Agreement. Any payment of the Obligationsor termination of this Agreement shall not affect Borrower’s or an Obligor’s obligation to continuemaking payments under any Swap Agreement, which shall remain in full force and effectnotwithstanding such payment or termination, subject to the terms of such Swap Agreement.**5.5 Authorization to Make Revolving Loans**          Lender is authorized to make the Revolving Loans and provide the Letter of CreditAccommodations based upon telephonic instructions or instructions sent by courier, telecopier or bye-mail received from anyone purporting to be an officer of Borrower or other authorized person or,at the discretion of Lender, if such Revolving Loans are necessary to satisfy any Obligations. Allrequests for Revolving Loans or Letter of Credit Accommodations hereunder shall specify the date onwhich the requested advance is to be made or Letter of Credit Accommodations established (which dayshall be a Business Day) and the amount of the requested Revolving Loan or Letter of CreditAccommodations. Requests received after 11:00 a.m. Chicago time on any day shall be deemed to havebeen made as of the opening of business on the immediately following Business Day. All RevolvingLoans and Letter of Credit Accommodations under this Agreement shall be conclusively presumed tohave been made to, and at the request of and for the benefit of, Borrower when deposited to thecredit of Borrower or otherwise disbursed or established in accordance with the instructions ofBorrower or in accordance with the terms and conditions of this Agreement.**5.6 Use of Proceeds**          All Revolving Loans made or Letter of Credit Accommodations provided by Lender to Borrowerpursuant to the provisions hereof shall be used by Borrower only for general operating, workingcapital and other proper corporate purposes of Borrower not otherwise prohibited by the termshereof.**SECTION 6****COLLATERAL REPORTING AND COVENANTS****6.1 Collateral Reporting**          Borrower shall provide Lender with the following documents in a form satisfactory to Lender:(a) on a regular basis as required by Lender, a schedule of Accounts, sales made, credits issuedand cash received; (b) on a monthly basis within twenty (20) days after each month end or morefrequently as Lender may request, (i) perpetual inventory reports, (ii) inventory reports bycategory, including a separate itemized detailed breakdown of all Inventory that is in transit,(iii) agings of accounts payable and (iv) a Royalty Reserve Report; (c) upon Lender’s request,(i) copies of customer statements and credit memos, remittance advices and reports, and copies ofdeposit slips and bank statements, (ii) copies of shipping andTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 34 - delivery documents, and (iii) copies of purchase orders, invoices and delivery documents forInventory and Equipment acquired by Borrower and MCE; (d) agings of accounts receivable on amonthly basis within twenty (20) days after each month end or more frequently as Lender mayrequest; (e) no later than thirty (30) days after the end of each fiscal year of Borrower,financial projections for the next fiscal year, prepared on a monthly basis; and (f) such otherreports as to the Collateral as Lender or Agents shall reasonably request from time to time. Ifany of Borrower’s or any Obligor’s records or reports of the Collateral are prepared or maintainedby an accounting service, contractor, shipper or other agent, Borrower and each Obligor herebyirrevocably authorizes such service, contractor, shipper or agent to deliver such records, reports,and related documents to Lender and to follow Lender’s instructions with respect to furtherservices at any time that an Event of Default exists.**6.2 Accounts Covenants**     (a) Borrower shall notify Lender promptly of: (i) any material delay in any of Borrower’s,MCE’s or MCC’s performance of any of its obligations to any account debtor or the assertion of anyclaims, offsets, defenses or counterclaims by any account debtor, or any disputes with accountdebtors, or any settlement, adjustment or compromise thereof, (ii) all material adverse informationin Borrower’s knowledge relating to the financial condition of any account debtor and (iii) anyevent or circumstance which, to Borrower’s knowledge, would cause Lender to consider any thenexisting Accounts as no longer constituting Eligible Accounts. No credit, discount, allowance orextension or agreement for any of the foregoing shall be granted to any account debtor withoutLender’s consent, except in the ordinary course of Borrower’s, MCE’s or MCC’s business inaccordance with practices and policies previously disclosed in writing to Lender. So long as noEvent of Default exists, Borrower, MCE or MCC shall settle, adjust or compromise any claim, offset,counterclaim or dispute with any account debtor. At any time that an Event of Default exists,Lender shall, at its option, have the exclusive right to settle, adjust or compromise any claim,offset, counterclaim or dispute with account debtors or grant any credits, discounts or allowances.     (b) Without limiting the obligation of Borrower to deliver any other information to Lender,Borrower shall promptly report to Lender any return of Inventory by any one account debtor if theInventory so returned in such case has a value in excess of $250,000. At any time that Inventoryis returned, reclaimed or repossessed, the Account (or portion thereof) which arose from the saleof such returned, reclaimed or repossessed Inventory shall not be deemed an Eligible Account. Inthe event any account debtor returns Inventory when an Event of Default exists, Borrower and eachObligor shall, upon Lender’s request, (i) hold the returned Inventory in trust for Lender,(ii) segregate all returned Inventory from all of its other property, (iii) dispose of the returnedInventory solely according to Lender’s instructions, and (iv) not issue any credits, discounts orallowances with respect thereto without Lender’s prior written consent.     (c) With respect to each Account: (i) the amounts shown on any invoice delivered to Lender orschedule thereof delivered to Lender shall be true and complete in all material respects, (ii) nopayments shall be made thereon except payments immediately delivered to Lender pursuant to theterms of this Agreement, (iii) no credit, discount, allowance or extension or agreement for any ofthe foregoing shall be granted to any account debtor except as reported to Lender in accordancewith this Agreement and except for credits, rebates, price protectionTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 35 - programs, early payment incentives, discounts, allowances or extensions made or given in theordinary course of Borrower’s, MCE’s or MCC’s business in accordance with practices and policiespreviously disclosed to Lender, (iv) there shall be no setoffs, deductions, contras, defenses,counterclaims or disputes existing or asserted with respect thereto except as reported to Lender inaccordance with the terms of this Agreement, (v) none of the transactions giving rise thereto willviolate any applicable federal, state or provincial laws or regulations applicable to Borrower orany Obligor, all documentation relating thereto will be legally sufficient under such laws andregulations and all such documentation will be legally enforceable in accordance with its terms,except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors’rights and the discretion of the court as to the granting of equitable remedies.     (d) Lender shall have the right at any time or times, in Lender’s name or in the name of anominee of Lender, to verify the validity, amount or any other matter relating to any Account orother Collateral, by mail, telephone, facsimile transmission or otherwise.     (e) Borrower and each Obligor shall deliver or cause to be delivered to Agents, withappropriate endorsement and assignment, with full recourse to Borrower, all chattel paper andinstruments which such Person now owns or may at any time acquire immediately upon such Person’sreceipt thereof, except as Lender may otherwise agree.     (f) Lender and/or Agents may, at any time or times that an Event of Default exists, (i) notifyany or all account debtors that the Accounts have been assigned to Agents and that Agents have aLien therein and Lender may direct any or all accounts debtors to make payment of Accounts directlyto Lender, (ii) extend the time of payment of, compromise, settle or adjust for cash, credit,return of merchandise or otherwise, and upon any terms or conditions, any and all Accounts or otherobligations included in the Collateral and thereby discharge or release the account debtor or anyother party or parties in any way liable for payment thereof without affecting any of theObligations, (iii) demand, collect or enforce payment of any Accounts or such other obligations,but without any duty to do so, and Lender and/or Agents shall not be liable for their failure tocollect or enforce the payment thereof nor for the negligence of their agents or attorneys withrespect thereto and (iv) take whatever other action Lender and/or Agents may deem necessary ordesirable for the protection of their interests. At any time that an Event of Default exists, atLender’s and/or an Agent’s request, all invoices and statements sent to any account debtor shallstate that the Accounts and such other obligations have been assigned to Agents and are payabledirectly and only to Lender and Borrower, MCE and MCC shall deliver to Lender such originals ofdocuments evidencing the sale and delivery of goods or the performance of services giving rise toany Accounts as Lender and/or Agents may require.**6.3 Inventory Covenants**          With respect to the Inventory: (a) Borrower shall at all times maintain inventory recordssatisfactory to Lender, keeping correct and accurate records itemizing and describing the kind,type, quality and quantity of Inventory, Borrower’s or MCE’s cost therefor and daily withdrawalstherefrom and additions thereto; (b) Borrower shall conduct a physical count of the Inventory atleast once each year, but at any time or times as Lender may request while an Event of Defaultexists, and promptly following such physical inventory shall supply Lender with a report in theform and with such specificity as may be satisfactory to Lender concerning suchTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 36 - physical count; (c) Borrower and MCE shall not remove any Inventory from the locations setforth or permitted herein, without the prior written consent of Lender, except for sales ofInventory in the ordinary course of Borrower’s or MCE’s business and except to move Inventorydirectly from one location set forth or permitted herein to another such location; (d) Borrowershall, at its expense, at Lender’s request, but no more than once in any three (3) month period ifan Event of Default does not exist, and at any time or times as Lender may request after and whileEvent of Default exists, deliver or cause to be delivered to Lender written reports or appraisalsas to the Inventory in form, scope and methodology acceptable to Lender and by an appraiseracceptable to Lender, addressed to Lender or upon which Lender is expressly permitted to rely;(e) Borrower and MCE shall produce, use, store and maintain the Inventory, with all reasonable careand caution and in accordance with applicable standards of any insurance and in conformity withapplicable laws (including the requirements of the *Federal Fair Labor Standards Act of 1938*);(f) Borrower and MCE assume all responsibility and liability arising from or relating to theproduction, use, sale or other disposition of the Inventory; (g) Borrower and MCE shall not sellInventory to any customer on approval, or any other basis which entitles the customer to return ormay obligate Borrower or MCE to repurchase such Inventory, except in the ordinary course ofbusiness or unless such Inventory is not Eligible Inventory; (h) Borrower and MCE shall keep theInventory in good and marketable condition; and (i) Borrower and MCE shall not, without priorwritten notice to Lender, acquire or accept any Inventory on consignment or approval.**6.4 Equipment Covenants**          With respect to the Equipment: (a) upon Lender’s request, Borrower shall, at its expense, atany time or times as Lender may request while an Event of Default exists, deliver or cause to bedelivered to Lender written reports or appraisals as to the Equipment in form, scope andmethodology reasonably acceptable to Lender and by an appraiser acceptable to Lender; (b) Borrowershall keep the Equipment in good order, repair, running and marketable condition (ordinary wear andtear excepted); (c) Borrower shall use the Equipment with all reasonable care and caution and inaccordance with applicable standards of any insurance and in conformity with all applicable laws;(d) the Equipment is and shall be used in Borrower’s business and not for personal, family,household or farming use; (e) Borrower shall not remove any Equipment from the locations set forthor permitted herein, except to the extent necessary to have any Equipment repaired or maintained inthe ordinary course of the business of Borrower or to move Equipment directly from one location setforth or permitted herein to another such location and except for the movement of motor vehiclesused by or for the benefit of Borrower in the ordinary course of business; (f) the Equipment is nowand shall remain personal property and Borrower shall not permit any of the Equipment to be orbecome a part of or affixed to real property; and (g) Borrower assumes all responsibility andliability arising from the use of the Equipment.**6.5 Power of Attorney**          Borrower and each Obligor hereby irrevocably designates and appoints Lender and Agents (andall persons designated by Lender and Agents) as Borrower’s and such Obligor’s true and lawfulattorney-in-fact, and authorizes Lender and Agents, in Borrower’s, such Obligor’s, Lender’s or anAgent’s name, to:THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 37 -      (a) at any time while an Event of Default exists (i) demand payment on Accounts or otherproceeds of Inventory or other Collateral, (ii) enforce payment of Accounts by legal proceedings orotherwise, (iii) exercise all of Borrower’s and such Obligor’s rights and remedies to collect anyAccount or other Collateral, (iv) sell or assign any Account upon such terms, for such amount andat such time or times as Lender and Agents deem advisable, (v) settle, adjust, compromise, extendor renew an Account, (vi) discharge and release any Account, (vii) prepare, file and signBorrower’s or such Obligor’s name on any proof of claim in bankruptcy or other similar documentagainst an account debtor, (viii) notify the post office authorities to change the address fordelivery of Borrower’s or such Obligor’s mail to an address designated by Lender and/or Agents, andopen and dispose of all mail addressed to Borrower and Obligors, and (ix) do all acts and thingswhich are necessary, in Lender’s or Agents’ determination, to fulfill Borrower’s and Obligors’obligations under this Agreement and the other Financing Agreements; and     (b) at any time (i) take control in any manner of any item of payment or proceeds thereof,(ii) have access to any lockbox or postal box into which Borrower’s or such Obligor’s mail isdeposited, (iii) endorse Borrower’s or such Obligor’s name upon any items of payment or proceedsthereof and deposit the same in Lender’s account for application to the Obligations, (iv) endorseBorrower’s or such Obligor’s name upon any chattel paper, document, instrument, invoice, or similardocument or agreement relating to any Account or any goods pertaining thereto or any otherCollateral, (v) sign Borrower’s or such Obligor’s name on any verification of Accounts and noticesthereof to account debtors and (vi) execute in Borrower’s or such Obligor’s name and file any UCC,PPSA or other financing statements or amendments thereto.          Borrower and each Obligor hereby releases Lender and Agents and their officers, employees anddesignees from any liabilities arising from any act or acts under this power of attorney and infurtherance thereof, whether of omission or commission, except as a result of Lender’s or anAgent’s own gross negligence or willful misconduct as determined pursuant to a final non-appealableorder of a court of competent jurisdiction.**6.6 Right to Cure**          Lender may, at its option, (a) cure any default by Borrower or any Obligor under any agreementwith a third party or pay or bond on appeal any judgment entered against Borrower or any Obligor,(b) discharge taxes or Liens at any time levied on or existing with respect to the Collateral and(c) pay any amount, incur any expense or perform any act which, in Lender’s judgment, is necessaryor appropriate to preserve, protect, insure or maintain the Collateral and the rights of Agentsand/or Lender with respect thereto. Lender may add any amounts so expended to the Obligations andcharge Borrower’s account therefor, such amounts to be repayable by Borrower on demand. Lendershall be under no obligation to effect such cure, payment or bonding and shall not, by doing so, bedeemed to have assumed any obligation or liability. Any payment made or other action taken byLender under this Section 6.6 shall be without prejudice to any right to assert an Event ofDefault hereunder and to proceed accordingly.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 38 - **6.7 Access to Premises**          From time to time as requested by Lender, at the cost and expense of Borrower or any Obligor,(a) Lender or its designee including Agents shall have complete access to all of Borrower’s andeach Obligor’s premises during normal business hours and after reasonable notice to Borrower andsuch Obligor, or at any time and without notice to Borrower or such Obligor if an Event of Defaultexists, for the purposes of inspecting, verifying and auditing the Collateral and all of Borrower’sor such Obligor’s books and records including the Records, and (b) Borrower and each Obligor shallpromptly furnish to Lender such copies of such books and records including the Records or extractstherefrom as Lender may request, and (c) Lender or its designee including Agents may use duringnormal business hours such of Borrower’s or any Obligor’s personnel, equipment, supplies andpremises as may be necessary for the foregoing and, if an Event of Default exists, for thecollection of Accounts and realization of other Collateral.**SECTION 7****REPRESENTATIONS AND WARRANTIES**          Borrower and each Obligor hereby represents and warrants to Lender the following (which shallsurvive the execution and delivery of this Agreement), the truth and accuracy of which are acontinuing condition of the making of Revolving Loans and providing Letter of Credit Accommodationsby Lender to Borrower:**7.1 Corporate Existence, Power and Authority; Subsidiaries**          Borrower and each Obligor has been duly incorporated or organized and is validly existingunder the laws of its jurisdiction of incorporation or organization, as the case may be, and isduly qualified or registered as a foreign or extra-provincial corporation in all provinces, statesor other jurisdictions where the nature and extent of the business transacted by it or theownership of assets or properties makes such qualification necessary, except for thosejurisdictions in which the failure to so qualify or register would not have a Material AdverseEffect. The execution, delivery and performance of this Agreement, the other Financing Agreementsand the transactions contemplated hereunder and thereunder are all within Borrower’s and eachObligor’s corporate powers, have been duly authorized and are not in contravention of law or theterms of Borrower’s or any Obligor’s certificate of incorporation, by-laws, or other organizationaldocumentation, or any indenture, agreement or undertaking to which Borrower or any Obligor is aparty or by which Borrower or any Obligor or their respective property are bound except to theextent that certain Collateral may not be assignable by law. This Agreement and the otherFinancing Agreements to which it is a party constitute legal, valid and binding obligations ofBorrower and each Obligor enforceable in accordance with their respective terms, except as the sameis limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally, and thediscretion of a court as to the granting of equitable remedies. Borrower does not have anysubsidiaries or affiliates except as set forth on the corporate structure chart attached hereto asExhibit D, which corporate structure chart is accurate and complete. The exact legal nameof Borrower and each Obligor is as set forth on the signature page of this Agreement and itsInformation Certificate. Other than the acquisition by MCII of the entire share capital of WAHL inNovember 2007, the Merger and the transactionsTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 39 - effected as set out in Sections 7.15 and 7.16, Borrower and each Obligor hasnot, during the past five (5) years, been known by or used any other corporate or fictitious nameor been a party to any merger or consolidation, or acquired all of substantially all of the assetsand properties of any Person, or acquired any of its assets and properties out of the ordinarycourse of business, except as set forth in its Information Certificate. Borrower and each Obligoris an organization of the type and organized in the jurisdiction set forth in its InformationCertificate.**7.2 Financial Statements; No Material Adverse Change**          All financial statements relating to Borrower or any Obligor which have been or may hereafterbe delivered by or on behalf of Borrower or such Obligor to Lender have been or will be prepared inaccordance with GAAP (when identified as such) and fairly present in all material respects thefinancial condition and the results of operations of Borrower or such Obligor as at the dates andfor the periods set forth therein. Except as disclosed in any interim financial statementsfurnished by or on behalf of Borrower or any Obligor to Lender prior to the date of this Agreement,there has been no Material Adverse Change with respect to Borrower or any Obligor since the date ofthe most recent audited financial statements furnished by or on behalf of Borrower or any Obligorto Lender prior to the date of this Agreement.**7.3 Chief Executive Office; Collateral Locations**          The chief executive office of Borrower and Borrower’s Records concerning Accounts are locatedonly at the address set forth below and its only other places of business and the only otherlocations of Collateral, if any, are the addresses set forth in its Information Certificate,subject to the right of Borrower to establish new locations in accordance with Section 8.2below. The Information Certificates correctly identify the chief executive office of each Obligorand all other places of business and other locations, if any, at which each Obligor maintains anyCollateral. The Information Certificates also correctly identify any of such locations which arenot owned by Borrower or any Obligor and sets forth the owners and/or operators thereof and to thebest of Borrower’s and each Obligor’s knowledge, the holders of any mortgages on such locations.**7.4 Priority of Liens; Title to Properties**          The Liens granted to Agents and/or Lender under this Agreement and the other FinancingAgreements constitute valid and perfected first priority Liens in and upon the Collateral subjectonly to the Liens indicated on Schedule 7.4 hereto (except to the extent that Lenderrequires the discharge thereof prior to the advance of the initial Revolving Loans hereunder) andthe other Liens permitted under Section 8.8 hereof. Borrower and each Obligor has good andmarketable title to all of its assets and properties subject to no Liens of any kind, except thosegranted to Agents and/or Lender and such others as are specifically listed on Schedule 7.4hereof (except to the extent that Lender requires the discharge thereof prior to the advance of theinitial Revolving Loans hereunder) or permitted under Section 8.8 hereto.**7.5 Tax Returns**          Borrower and each Obligor has filed, or caused to be filed, in a timely manner all taxreturns, reports and declarations which are required to be filed by it (without requests forTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 40 - extension except as previously disclosed in writing to Lender). All information in such taxreturns, reports and declarations is complete and accurate in all material respects. Borrower andeach Obligor has paid or caused to be paid all taxes due and payable or claimed due and payable inany assessment received by it, except taxes the validity of which are being contested in good faithby appropriate proceedings diligently pursued and available to Borrower and each Obligor and withrespect to which adequate reserves have been set aside on its books. Adequate provision has beenmade for the payment of all accrued and unpaid federal, state, county, local, foreign and othertaxes whether or not yet due and payable and whether or not disputed.**7.6 Litigation**          Except as set forth on the Information Certificates, there is no present investigation by anyGovernmental Authority pending, or to the best of Borrower’s and each Obligor’s knowledgethreatened, against or affecting Borrower or any Obligor, their assets, properties or business andthere is no action, suit, proceeding or claim by any Person pending, or to the best of Borrower’sknowledge threatened, against Borrower or any Obligor or their assets, properties or goodwill, oragainst or affecting any transactions contemplated by this Agreement, which if adversely determinedagainst Borrower or any such Obligor would result in any Material Adverse Change in, or would havea Material Adverse Effect on, Borrower or any Obligor.**7.7 Compliance with Other Agreements and Applicable Laws**          Except as disclosed in Schedule 7.7 hereto, neither Borrower nor any Obligor is indefault in any material respect under, or in violation in any material respect of any of the termsof, any agreement, contract, instrument, lease or other commitment to which it is a party or bywhich it or any of its assets or properties are bound and Borrower and each Obligor is incompliance in all material respects with all applicable provisions of laws, rules, regulations,licenses, permits, approvals and orders of any foreign, federal, state, provincial or localGovernmental Authority.**7.8 Bank Accounts**          All of the deposit accounts, investment accounts or other accounts in the name of or used byBorrower or any Obligor maintained at any bank or other financial institution are set forth onSchedule 7.8 hereto, subject to the right of Borrower or any Obligor to establish newaccounts in accordance with Section 8.15 hereof.**7.9 Accuracy and Completeness of Information**          All information furnished in writing by or on behalf of Borrower or any Obligor to Lender inconnection with this Agreement or any of the other Financing Agreements or any transactioncontemplated hereby or thereby including all information on the Information Certificates is trueand correct in all material respects on the date as of which such information is dated or certifiedand does not omit any material fact necessary in order to make such information not misleading.Since March 31, 2009, no event or circumstance has occurred which has had or could reasonably beexpected to have a Material Adverse Effect on Borrower or any Obligor which has not been fully andaccurately disclosed to Lender in writing.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 41 - **7.10 Employee Benefits**     (a) Borrower has not engaged in any transaction in connection with which Borrower or any ofits ERISA Affiliates could be subject to either a civil penalty assessed pursuant to Section502(i) of ERISA or a tax imposed by Section 4975 of the Code, including any accumulatedfunding deficiency described in Section 7.10(c) hereof and any deficiency with respect tovested accrued benefits described in Section 7.10(d) hereof.     (b) No liability to the Pension Benefit Guaranty Corporation has been or is expected byBorrower to be incurred with respect to any employee benefit plan of Borrower or any of its ERISAAffiliates. There has been no reportable event (within the meaning of Section 4043(b) ofERISA) or any other event or condition with respect to any employee pension benefit plan ofBorrower or any of its ERISA Affiliates which presents a risk of termination of any such plan bythe Pension Benefit Guaranty Corporation.     (c) Full payment has been made of all amounts which Borrower or any of its ERISA Affiliates isrequired under Section 302 of ERISA and Section 412 of the Code to have paid underthe terms of each employee benefit plan as contributions to such plan as of the last day of themost recent fiscal year of such plan ended prior to the date hereof, and no accumulated fundingdeficiency (as defined in Section 302 of ERISA and Section 412 of the Code),whether or not waived, exists with respect to any employee benefit plan, including any penalty ortax described in Section 7.10(a) hereof and any deficiency with respect to vested accruedbenefits described in Section 7.10(d) hereof.     (d) The current value of all vested accrued benefits under all employee benefit plansmaintained by Borrower that are subject to Title IV of ERISA does not exceed the current value ofthe assets of such plans allocable to such vested accrued benefits, including any penalty or taxdescribed in Section 7.10(a) hereof and any accumulated funding deficiency described inSection 7.10(c) hereof. The terms “current value” and “accrued benefit” have the meaningsspecified in ERISA.     (e) Neither Borrower nor any of its ERISA Affiliates is or has ever been obligated tocontribute to any “multiemployer plan” (as such term is defined in Section 4001(a)(3) ofERISA) that is subject to Title IV of ERISA.**7.11 Environmental Compliance**     (a) Neither Borrower nor any Obligor has generated, used, stored, treated, transported,manufactured, handled, produced or disposed of any Hazardous Materials, on or off its premises(whether or not owned by it) in any manner which at any time violates in any material respect anyapplicable Environmental Law or any license, permit, certificate, approval or similar authorizationthereunder and the operations of Borrower and each Obligor comply in all material respects with allEnvironmental Laws and all licenses, permits, certificates, approvals and similar authorizationsthereunder.     (b) There has been no investigation, proceeding, complaint, order, directive, claim, citationor notice by any Governmental Authority or any other person nor is any pending, or to the best ofBorrower’s and each Obligor’s knowledge threatened, with respect to any non-THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 42 - compliance with or violation of the requirements of any Environmental Law by Borrower or anyObligor or the release, spill or discharge, threatened or actual, of any Hazardous Material or thegeneration, use, storage, treatment, transportation, manufacture, handling, production or disposalof any Hazardous Materials or any other environmental, health or safety matter, which affectsBorrower or any Obligor or their business, operations or assets or any properties at which Borroweror any Obligor has transported, stored or disposed of any Hazardous Materials.     (c) Neither Borrower nor any Obligor has any material liability (contingent or otherwise) inconnection with a release, spill or discharge, threatened or actual, of any Hazardous Materials orthe generation, use, storage, treatment, transportation, manufacture, handling, production ordisposal of any Hazardous Materials.     (d) Borrower and each Obligor has all licenses, permits, certificates, approvals or similarauthorizations required to be obtained or filed in connection with the operations of Borrower andeach Obligor under any Environmental Law and all of such licenses, permits, certificates, approvalsor similar authorizations are valid and in full force and effect.**7.12 Survival of Warranties; Cumulative**          All representations and warranties contained in this Agreement or any of the other FinancingAgreements shall survive the execution and delivery of this Agreement and shall be deemed to havebeen made again to Lender on the date of each additional borrowing or other credit accommodationhereunder, except with respect to, and to the extent that, such representations and warranties areexpressly made as of a particular date or there are changes with respect to the matters referencedin such representations and warranties after the date made that do not and will not otherwise causea Default or Event of Default hereunder and such representations and warranties shall beconclusively presumed to have been relied on by Lender regardless of any investigation made orinformation possessed by Lender. The representations and warranties set forth herein shall becumulative and in addition to any other representations or warranties which Borrower or any Obligorshall now or hereafter give, or cause to be given, to Lender.**7.13 Inactive Subsidiaries**          No Inactive Subsidiary has (a) any assets (other than Xencet US Inc. which owns all of theissued and outstanding shares of Singapore Holdings Inc.), (b) has any liabilities or (c) engagesin any material business activities. Borrower and each applicable Obligor has taken action towind-up and dissolve Saitek PLC, Saitek HK and Mad Catz Limited in accordance with applicable law.**7.14 Intellectual Property**          To the best of Borrower’s or any Obligor’s knowledge, Borrower and each Obligor owns orlicences or otherwise has the right to use all Intellectual Property necessary for the operation ofits business as presently conducted. As of the date hereof, neither Borrower nor any Obligor hasany Intellectual Property registered, or subject to pending applications, in the United StatesPatent and Trademark Office, the Canadian Intellectual Property Office or any similar office oragency in the United States of America or Canada, any State or ProvinceTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 43 - thereof, any political subdivision thereof or in any other country, other than those describedin the Information Certificates. To the best of Borrower’s or any Obligor’s knowledge, no eventhas occurred which permits or would permit after notice or passage of time or both, the revocation,suspension or termination of such rights. To the best of Borrower’s or any Obligor’s knowledge, noslogan or other advertising device, product, process, method, substance or other IntellectualProperty or goods bearing or using any Intellectual Property presently contemplated to be sold byor employed by Borrower or any Obligor infringes any patent, trademark, service mark, trade name,copyright, license or other Intellectual Property owned by any other Person presently and no claimor litigation is pending or threatened against or affecting Borrower or any Obligor contesting itsright to sell or use any such Intellectual Property (other than those claims or litigation thatBorrower has notified Lender of in writing or otherwise disclosed in publicly required filings).The Information Certificates and Schedule 7.14 attached hereto set forth all of thematerial agreements or other material arrangements of Borrower and any Obligors pursuant to whichBorrower or any Obligor has a license or other right to use any trademarks, logos, designs,representations or other Intellectual Property owned by another Person as in effect on the datehereof and the dates of the expiration of such agreement or other arrangements of Borrower and anyObligor as in effect on the date hereof (collectively, together with such agreement or otherarrangement as may be entered into by Borrower or any Obligor after the date hereof, collectively,the “**License Agreements**” and individually, a “**License Agreement**”) other than over-the-countershrink-wrapped or “click-wrapped” software. No trademark, service mark, copyright or otherIntellectual Property at any time used by Borrower or any Obligor which is owned by another Person,or owned by Borrower or any Obligor but subject to any Lien in favour of any Person other thanLender, is affixed to any Eligible Inventory, except (a) to the extent permitted under the terms ofthe License Agreements; and (b) to the extent the sale of Inventory to which such IntellectualProperty is affixed is permitted to be sold by Borrower or any Obligor under applicable law. Thematerial intellectual property of Borrower and Obligors is the Saitek, Mad Catz and Joytech namesregistered in China, Hong Kong, the United States of America, Canada, Germany, France and theUnited Kingdom.**7.15 Solvent**          Borrower and each Obligor is Solvent.**7.16 Transfer of Assets of Saitek HK**          Saitek HK transferred all of its assets and properties to MCIA and MCIA acquired all of suchassets and properties on October 1, 2008 pursuant to the terms and conditions of the HK Hive UPDeed free and clear of all Liens and all conditions to such transfer and acquisition have beensatisfied. Schedule 7.16 attached hereto is an accurate and complete description of thefixed assets of MCIA as of the date hereof.**7.17 Transfer of Assets of Saitek PLC**          Saitek PLC transferred all of its assets and properties to MCE and MCE acquired all of suchassets and properties on August 1, 2008 pursuant to the terms and conditions of the UK Hive UPAgreement free and clear of all Liens and all conditions to such transfer and acquisition have beensatisfied.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 44 - **SECTION 8  AFFIRMATIVE AND NEGATIVE COVENANTS****8.1 Maintenance of Existence**          Borrower and each Obligor shall at all times preserve, renew and keep in full, force andeffect its corporate existence and rights and franchises with respect thereto and maintain in fullforce and effect all permits, licenses, trademarks, tradenames, approvals, authorizations, leasesand contracts necessary to carry on the business as presently or proposed to be conducted.Borrower and each Obligor shall give Lender thirty (30) days prior written notice of any proposedchange in its corporate name, which notice shall set forth the new name and Borrower or suchObligor shall deliver to Lender a certified copy of the Articles of Amendment (or other similardocument appropriate for the particular jurisdiction) of Borrower or such Obligor providing for thename change immediately following its filing. Borrower and each Obligor shall not change its chiefexecutive office or its mailing address or organizational identification number (or it does nothave one, shall not acquire one) unless Lender shall have received not less than thirty (30) daysprior written notice of such proposed change, which notice shall set forth such information withrespect thereto as Lender may require and Lender shall have received such agreements and opinionsas Lender may reasonably require in connection therewith. Borrower and each Obligor shall notchange its type of organization, jurisdiction or organization or other legal structure.**8.2 New Collateral Locations**          Borrower or any Obligor may open any new location within Canada and continental United Statesof America provided Borrower or such Obligor (a) gives Lender thirty (30) days prior written noticeof the intended opening of any such new location and (b) Borrower or such Obligor, as applicable,executes and delivers, or causes to be executed and delivered, to Lender such agreements,documents, and instruments as Lender may deem necessary or desirable to protect its and Agents’interests in the Collateral at such location, including UCC, PPSA and other financing statementsand such other evidence as Lender may require for the perfection of Agents’ or Lender’s firstpriority Liens where required by Lender.**8.3 Compliance with Laws, Regulations, Etc.**     (a) Borrower and each Obligor shall, at all times, comply in all material respects with alllaws, rules, regulations, licenses, permits, approvals and orders applicable to it and duly observeall requirements of any federal, state, provincial or local Governmental Authority, including allstatutes, rules, regulations, orders, permits and stipulations relating to environmental pollutionand employee health and safety, including all of the Environmental Laws except for any matter thatBorrower or an Obligor is contesting in good faith by appropriate proceedings diligently pursuedand which is not reasonably expected to have a Material Adverse Effect on Borrower or any Obligor.     (b) Borrower and each Obligor shall establish and maintain, at its expense, a system to assureand monitor its continued compliance with all Environmental Laws in all of its operations, whichsystem shall include annual reviews of such compliance by employees or agents of Borrower or suchObligor, as applicable, who are familiar with the requirements of theTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 45 - Environmental Laws. Copies of all environmental surveys, audits, assessments, feasibilitystudies and results of remedial investigations shall be promptly furnished, or caused to befurnished, by Borrower and each Obligor to Lender. Borrower and each Obligor shall take prompt andappropriate action to respond to any non-compliance with any of the Environmental Laws and shallregularly report to Lender on such response.     (c) Borrower and each Obligor shall give both oral and written notice to Lender immediatelyupon its receipt of any notice of, or its otherwise obtaining knowledge of, (i) the occurrence ofany event involving the release, spill or discharge, threatened or actual, of any HazardousMaterial or (ii) any investigation, proceeding, complaint order, directive, claims, citation ornotice with respect to: (A) any non-compliance with or violation of any Environmental Law byBorrower or any Obligor or (B) the release, spill or discharge, threatened or actual, of anyHazardous Material or (C) the generation, use, storage, treatment, transportation, manufacture,handling, production or disposal of any Hazardous Materials that does not comply with EnvironmentalLaws, or (D) the violation of any other environmental, health or safety matter, which may have aMaterial Adverse Effect on Borrower or any Obligor or their business, operations or assets or anyproperties at which Borrower or any Obligor transported, stored or disposed of any HazardousMaterials.     (d) Without limiting the generality of the foregoing, whenever Lender determines that there isnon-compliance, or any condition which requires any action by or on behalf of Borrower or anyObligor in order to avoid any material non-compliance, with any Environmental Law, Borrower andeach Obligor shall, at Lender’s request and Borrower’s or each Obligor’s expense: (i) cause anindependent environmental engineer acceptable to Lender to conduct such tests of the site whereBorrower’s or such Obligor’s non-compliance or alleged non-compliance with such Environmental Lawshas occurred and prepare and deliver to Lender a report as to such non-compliance setting forth theresults of such tests, a proposed plan for responding to any environmental problems describedtherein, and an estimate of the costs thereof and (ii) provide to Lender a supplemental report ofsuch engineer whenever the scope of such non-compliance, or Borrower’s or such Obligor’s responsethereto or the estimated costs thereof, shall change in any material respect.     (e) Borrower and each Obligor shall indemnify and hold harmless Lender and Agents and theirrespective directors, officers, employees, agents, invitees, representatives, successors andassigns (collectively, “**Indemnified Persons**”), from and against any and all losses, claims,damages, liabilities, costs, and expenses (including legal fees and expenses) incurred by anyIndemnified Person, directly or indirectly arising out of or attributable to the use, generation,manufacture, reproduction, storage, release, threatened release, spill, discharge, disposal orpresence of a Hazardous Material, including the costs of any required or necessary repair, cleanupor other remedial work with respect to any property of Borrower or any Obligor and the preparationand implementation of any closure, remedial or other required plans; providedthatsuch indemnity shall not apply to the extent that any such cost incurred by an Indemnified Personarises from the willful misconduct or gross negligence of any Indemnified Person.     (f) All covenants and indemnifications in this Section 8.3 shall survive the paymentof the Obligations and the termination of this Agreement.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

 - 46 - **8.4 Payment of Taxes and Claims**          Borrower and each Obligor shall duly pay and discharge all taxes, assessments, contributionsand governmental charges upon or against it or its assets or properties, except for taxes,assessments, contributions or governmental charges the validity of which are being contested ingood faith by appropriate proceedings diligently pursued and available to Borrower or such Obligorand with respect to which adequate reserves have been set aside on its books. Borrower shall beliable for any tax or penalties imposed on Lender as a result of the financing arrangementsprovided for herein and Borrower agrees to indemnify and hold Lender harmless with respect to theforegoing, and to repay to Lender on demand the amount thereof, and until paid by Borrower suchamount shall be added and deemed part of the Revolving Loans; provided, that,nothing contained herein shall be construed to require Borrower to pay any income or franchisetaxes attributable to the income of Lender from any amounts charged or paid hereunder to Lender.The foregoing indemnity shall survive the payment of the Obligations and the termination of thisAgreement.**8.5 Insurance**          Borrower and each Obligor shall, at all times, maintain with financially sound and reputableinsurers insurance with respect to the Collateral against loss or damage and all other insurance ofthe kinds and in the amounts customarily insured against or carried by corporations of establishedreputation engaged in the same or similar businesses and similarly situated. Said policies ofinsurance shall be satisfactory to Lender as to form, amount and insurer. Borrower and eachObligor shall furnish certificates, policies or endorsements to Lender as Lender shall require asproof of such insurance, and, if Borrower or an Obligor fails to do so, Lender is authorized, butnot required, to obtain such insurance at the expense of Borrower and such Obligor. All policiesshall provide for at least thirty (30) days prior written notice to Lender of any cancellation orreduction of coverage and that Lender may act as attorney for Borrower and each Obligor inobtaining, and at any time an Event of Default exists or has occurred and is continuing, adjusting,settling, amending and canceling such insurance. Borrower and each Obligor shall cause Lender tobe named as a loss payee and an additional insured (but without any liability for any premiums)under such insurance policies and Borrower and each Obligor shall obtain non-contributory lender’sloss payable endorsements to all insurance policies in form and substance satisfactory to Lender.Such lender’s loss payable endorsements shall specify that the proceeds of such insurance shall bepayable to Lender as its interests may appear and further specify that Lender shall be paidregardless of any act or omission by Borrower, any Obligor or any of their respective affiliates.At its option, Lender may apply any insurance proceeds received by Lender at any time to the costof repairs or replacement of Collateral and/or to payment of the Obligations, whether or not thendue, in any order and in such manner as Lender may determine or hold such proceeds as cashcollateral for the Obligations.**8.6 Financial Statements and Other Information**     (a) Borrower and each Obligor shall keep proper books and records in which true and completeentries shall be made of all dealings or transactions of or in relation to the Collateral and thebusiness of Borrower, each Obligor and their respective subsidiaries (if any) in accordance withGAAP and Borrower shall furnish or cause to be furnished to Lender:THIRD AMENDED AND RESTATED LOAN AGREEMENT

 
 - 47 -  (i) within forty-five (45) days after the end of each fiscalmonth: (A) monthly unaudited financial statements of eachof Borrower, MCE and MCC;  (B) monthly unaudited consolidated financialstatements of MCII (which shall include Borrower, Obligors and theirrespective subsidiaries),   (including in each case balance sheets, statements of income and loss,statements of cash flow and statements of shareholders’ equity), all inreasonable detail, fairly presenting in all material respects the financialposition and the results of the operations of MCII, Borrower, MCE, MCC,Obligors and their respective subsidiaries, if any, as of the end of andthrough such fiscal month;  (ii) within one hundred and twenty (120) days after the end of eachfiscal year of MCII, audited consolidated financial statements of MCII (whichshall include Borrower, Obligors and their respective subsidiaries) (includingin each case balance sheets, statements of income and loss, statements ofchanges in financial position and statements of shareholders’ equity), and theaccompanying notes thereto, all in reasonable detail, fairly presenting in allmaterial respects the financial position and the results of the operations ofthe applicable Person and its subsidiaries as of the end of and for such fiscalyear, together with the unqualified opinion of independent charteredaccountants, which accountants shall be an independent accounting firm selectedby MCII and reasonably acceptable to Lender, that such financial statementshave been prepared in accordance with GAAP, and present fairly in all materialrespects the results of operations and financial condition of the applicablePerson and its subsidiaries as of the end of and for the fiscal year of MCIIthen ended; and  (iii) no later than thirty (30) days after the end of each fiscalyear of Borrower, annual financial projections for the next fiscal year ofBorrower, which shall be approved by Lender (which approval shall not beunreasonably withheld or delayed) and shall include a projected balance sheet,income statement and statement of cash flow, prepared on a monthly basis forsuch fiscal year, proposed budgets for operating and capital expenditures,acquisitions and related financing costs for Borrower, details of allmanagement salaries and bonuses, projections with respect to projected totalconsolidated EBITDA of MCII for such fiscal year and such other information asmay be requested by Lender.     (b) Borrower shall promptly notify Lender in writing of the details of (i) any material loss,damage, investigation, action, suit, proceeding or claim relating to the Collateral or any otherassets or property which is security for the Obligations or any loss, damage, investigation,THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 48 -action, suit, proceeding or claim which would result in any Material Adverse Change inBorrower or any Obligor and (ii) the occurrence of any Default or Event of Default.     (c) Borrower shall promptly after the sending or filing thereof furnish or cause to befurnished to Lender copies of all reports which Borrower or any Obligor sends to its shareholdersgenerally and copies of all reports and registration statements which Borrower or any Obligor fileswith any securities commission or securities exchange.     (d) Borrower shall furnish or cause to be furnished to Lender such budgets, forecasts,projections and other information respecting the Collateral and the business of Borrower or anyObligor, as Lender may, from time to time, reasonably request and Lender is hereby authorized todeliver a copy of any financial statement or any other information relating to the business ofBorrower or any Obligor to any court or other Governmental Authority as required by law or to anyparticipant or assignee or prospective participant or assignee, provided that each such participantor assignee executes a confidentiality agreement acceptable to Lender which confidentialityagreement shall in any event provide that such participant or assignee shall maintain theconfidential nature of such information in the same manner as such information is required to bemaintained by Lender. Borrower and each Obligor hereby irrevocably authorizes and directs allaccountants or auditors to deliver to Lender, at Borrower’s or such Obligor’s expense, copies ofthe financial statements of Borrower or such Obligor and any reports or management letters preparedby such accountants or auditors on behalf of Borrower or such Obligor and to disclose to Lendersuch information as they may have regarding the business of Borrower or such Obligor, subject toany applicable confidentiality restrictions in favor of third parties or any legal privileges thathave not been waived and which are not within the control of Borrower or such Obligor to waive.Any documents, schedules, invoices or other papers delivered to Lender may be destroyed orotherwise disposed of by Lender one (1) year after the same are delivered to Lender, except asotherwise designated by Borrower or any Obligor to Lender in writing.     (e) Borrower shall within five (5) days after the end of each month provide a certificate ofthe chief financial officer of Borrower, in form and content satisfactory to Lender, certifyingthat Borrower has paid in full (i) all rent and other amounts due and payable with respect to anypremises leased or occupied by Borrower or any Obligor during such month; and (ii) all payments andother amounts due and payable with respect to any employee benefit plan or pursuant to any materialcontract during such month.     (f) Notwithstanding the foregoing, or any other provision in any Financing Agreement, Borrowerand Obligors shall not be required to disclose any information reports or other documents ormaterial to the extent that such disclosure would breach any applicable laws and the ability toavoid such breach is not within the control of Borrower or any Obligor.     (g) Borrower shall, within thirty (30) days after the end of each month, provide a compliancecertificate, in substantially the form attached hereto as Schedule 8.6(g), to Lender withrespect to compliance by Borrower with the financial covenants set forth in Sections 8.13and 8.20 and such other matters relating to Borrower and Obligors as Lender may from timeto time request.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 49 -**8.7 Sale of Assets, Consolidation, Merger, Amalgamation, Dissolution, Etc.**          Borrower and each Obligor shall not, directly or indirectly, without the prior written consentof Lender:     (a) merge or amalgamate with any other Person or permit any other Person to merge oramalgamate with it;     (b) sell, assign, lease, transfer, abandon or otherwise dispose of any shares or indebtednessto any other Person or any of its assets to any other Person except for: (i) sales of Inventory in the ordinary course of business; and  (ii) the disposition of worn-out or obsolete Equipment or Equipmentno longer used in its business so long as (A) if an Event of Default exists,any proceeds are paid to Lender and (B) such sales do not involve Equipmenthaving an aggregate fair market value in excess of $250,000 for all suchEquipment disposed of in any fiscal year);     (c) form or acquire any subsidiaries;     (d) wind up, liquidate or dissolve; or     (e) agree to do any of the foregoing.     Notwithstanding the foregoing, nothing in this Agreement or in any of the Financing Agreementsshall prohibit MCII from selling or issuing its securities, and unless an Event of Default hasoccurred and is continuing, none of the proceeds resulting from any such sale or issuance ofsecurities, whether in the form of cash or otherwise, shall constitute security for any of theObligations or any obligation of any Obligor under any Financing Agreement.**8.8 Encumbrances**          Borrower and each Obligor shall not create, incur, assume or suffer to exist any Lien of anynature whatsoever on any of its assets or properties, including the Collateral, except:     (a) Liens of Agents and Lender;     (b) Liens securing the payment of taxes, either not yet overdue or the validity of which arebeing contested in good faith by appropriate proceedings diligently pursued and available toBorrower or any Obligor, as applicable, and with respect to which adequate reserves have been setaside on its books;     (c) non-consensual statutory Liens (other than Liens securing the payment of taxes) arising inthe ordinary course of Borrower’s or any Obligor’s business, as applicable, to the extent: (i) suchLiens secure indebtedness which is not overdue or (ii) such Liens secure indebtedness relating toclaims or liabilities which are fully insured and being defended at the sole cost and expense andat the sole risk of the insurer or being contested in good faith byTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 50 -appropriate proceedings diligently pursued and available to Borrower or such Obligor, asapplicable, in each case prior to the commencement of foreclosure or other similar proceedings andwith respect to which adequate reserves have been set aside on its books;     (d) zoning restrictions, easements, licenses, covenants and other restrictions affecting theuse of real property which do not interfere in any material respect with the use of such realproperty or ordinary conduct of the business of Borrower or such Obligor, as applicable, aspresently conducted thereon or materially impair the value of the real property which may besubject thereto;     (e) purchase money security interests in Equipment (including capital leases) and purchasemoney mortgages on real estate not to exceed, individually, $250,000 and, in the aggregate,$1,000,000 at anytime outstanding for Borrower and Obligors so long as such security interests andmortgages do not apply to any assets or property of Borrower or any Obligor other than theEquipment or real estate so acquired, and the indebtedness secured thereby does not exceed the costof the Equipment or real estate so acquired, as the case may be;     (f) the Liens set forth on Schedule 7.4 hereto (except to the extent that Lenderrequires the discharge thereof prior to the advance of the initial Revolving Loans pursuant to thisAgreement); and     (g) Liens to secure Permitted Inter-Company Debt.**8.9 Indebtedness**          Borrower and each Obligor shall not incur, create, assume, become or be liable in any mannerwith respect to, or permit to exist, any obligations or indebtedness except:     (a) the Obligations;     (b) trade obligations and normal accruals in the ordinary course of business not past due morethan sixty (60) days, or with respect to which Borrower or such Obligor, as applicable, iscontesting in good faith the amount or validity thereof by appropriate proceedings diligentlypursued and available to Borrower or such Obligor, as applicable, and with respect to whichadequate reserves have been set aside on its books;     (c) purchase money indebtedness (including capital leases) to the extent not incurred orsecured by Liens (including capital leases) in violation of any other provision of this Agreement;     (d) the indebtedness set forth on Schedule 8.9 hereto;     (e) Permitted Inter-Company Debt;     (f) the indebtedness pursuant to the Consideration Loan Note Instrument;     (g) the indebtedness pursuant to the Completion Note; andTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 51 -     (h) the indebtedness under or in connection with any Swap Agreement consented to in writing byLender pursuant to Section 8.23;providedthat:     (i) with respect to such indebtedness in Sections 8.9(d) and (e), Borrower orObligors, as applicable, may only make regularly scheduled payments of principal and interest inrespect of such indebtedness in accordance with the terms of the agreement or instrument evidencingor giving rise to such indebtedness as in effect on the date of this Agreement, subject to anysubordination agreement among Lender, Borrower, Obligors and the holder of any such indebtedness,as applicable;     (j) with respect to the indebtedness pursuant to the Consideration Loan Note Instrument andthe Completion Note, Borrower or Obligors, as applicable, may only make payments of principal andinterest in respect of such indebtedness in accordance with the terms of the IntercreditorAgreement; providedthat Lender consents to Borrower or Obligors, as applicable,making up to $50,000 (not $44,880.71 as set out in the Intercreditor Agreement) under Section1(b) of the Intercreditor Agreement subject to all the other terms of such section and theIntercreditor Agreement;     (k) other than with respect to Swap Agreements, Borrower or Obligors, as applicable, shall notdirectly or indirectly, (A) amend, modify, alter or change the terms of such indebtedness or anyagreement, document or instrument related thereto as in effect on the date hereof, or (B) redeem,retire, defease, purchase or otherwise acquire such indebtedness, or set aside or otherwise depositor invest any sums for such purpose; and     (l) Borrower shall furnish to Lender all notices or demands in connection with suchindebtedness received by or on behalf of Borrower or any Obligor, as applicable, promptly after thereceipt thereof, or sent by or on behalf of Borrower or any Obligor, as applicable, concurrentlywith the sending thereof, as the case may be.**8.10 Loans, Investments, Guarantees, Etc.**          Borrower and each Obligor shall not, directly or indirectly, make any loans or advance moneyor property to any person, or invest in (by capital contribution, dividend or otherwise) orpurchase or repurchase the shares or indebtedness or all or a substantial part of the assets orproperty of any person, or guarantee, assume, endorse, or otherwise become responsible for(directly or indirectly) the indebtedness, performance, obligations or dividends of any Person oragree to do any of the foregoing, except:     (a) endorsement of instruments for collection or deposit in the ordinary course of business;     (b) investments in: (i) short-term direct obligations of the Canadian Government or the UnitedStates Government, (ii) negotiable certificates of deposit issued by any bank satisfactory toLender, payable to the order of Borrower or such Obligor or to bearer and delivered to Lender, and(iii) commercial paper rated Al or P1; provided, that, as to any of the foregoing,unless waived in writing by Lender, Borrower and each Obligor shall take suchTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 52 -actions as are deemed necessary by Lender and Agents to perfect the Lien of Agents and/orLender in such investments;     (c) Acquisitions;     (d) travel advances, employee relocation loans and other employee loans and advances in theordinary course of business of Borrower;     (e) the loans, advances and other guarantees set forth on Schedule 8.10 hereto;     (f) any unsecured guarantees issued in the ordinary course of business by Borrower or Obligorsto their suppliers, vendors and lessors with respect to the obligations of Borrower or Obligors, asthe case may be, to such suppliers, vendors and lessors; and     (g) loans that constitute Permitted Inter-Company Debt;provided, that, as to such loans, advances and guarantees, (i) Borrower and eachObligor shall not, directly or indirectly, (A) amend, modify, alter or change the terms of suchloans, advances or guarantees or any agreement, document or instrument related thereto, or (B) asto such guarantees, redeem, retire, defease, purchase or otherwise acquire the obligations arisingpursuant to such guarantees, or set aside or otherwise deposit or invest any sums for such purpose,and (ii) Borrower and each Obligor shall furnish to Lender all notices or demands in connectionwith such loans, advances or guarantees or other indebtedness subject to such guarantees eitherreceived by Borrower, each Obligor or on its behalf, promptly after the receipt thereof, or sent byBorrower, each Obligor or on its behalf, concurrently with the sending thereof, as the case may be.**8.11 Dividends and Redemptions**          Borrower shall be entitled from time to time to pay such dividends or redeem or repurchaseshares if Borrower has Excess Availability of not less than $500,000 after giving effect to eachsuch payment of dividends, redemption amount or repurchase amount and if no Event of Default existsat the time of, or will occur as a result of, any such payment of dividends, redemption amount orrepurchase amount. Except as expressly permitted pursuant to the preceding sentence, Borrower andeach Obligor shall not, directly or indirectly, declare or pay any dividends on account of any ofits shares now or hereafter outstanding, or set aside or otherwise deposit or invest any sums forsuch purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of any class (orset aside or otherwise deposit or invest any sums for such purpose) for any consideration otherthan common shares or apply or set apart any sum, or make any other distribution (by reduction ofcapital or otherwise) in respect of any such shares or agree to do any of the foregoing.**8.12 Transactions with Affiliates**          Borrower and each Obligor shall not, directly or indirectly, (a) purchase, acquire or leaseany asset or property from, or sell, transfer or lease any asset or property to, any officer,director, agent or other person affiliated with Borrower or such Obligor, except in the ordinarycourse of and pursuant to the reasonable requirements of Borrower’s or such Obligor’s businessTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 53 -and upon fair and reasonable terms no less favorable to Borrower or such Obligor than Borroweror such Obligor would obtain in a comparable arm’s length transaction with an unaffiliated personor (b) make any payments of management, consulting or other fees for management or similarservices, or of any indebtedness owing to any officer, employee, shareholder, director or otherperson affiliated with Borrower or such Obligor except (i) payments in respect of PermittedInter-Company Debt provided that such payments are permitted pursuant to, and made in accordancewith, the terms of the applicable subordination agreement executed by Borrower and/or such Obligor,as applicable, in favor of Lender in respect thereof and (ii) reasonable compensation to officers,employees and directors for services rendered to Borrower or such Obligor in the ordinary course ofbusiness.**8.13 Fixed Charge Coverage Ratio**          MCII shall maintain a Fixed Charge Coverage Ratio of not less than 1.5:1.0 for each TestingPeriod calculated at the end of each Fiscal Quarter; providedthat, for the FiscalQuarters ending June 30, 2009 and September 30, 2009 only, the amount of $676,000, being theaggregate amounts related to the Walmart pricing adjustment issue ($376,000) and the Immersionroyalty settlement ($300,000), will be included in the EBITDA calculation when determiningcompliance with this Section 8.13.**8.14 Intellectual Property**          In the event Borrower or any Obligor obtains or applies for any material Intellectual Propertyrights or obtains any material licenses with respect thereto, Borrower and such Obligor shallimmediately notify Lender thereof and shall provide to Lender copies of all written materialsincluding applications and licenses with respect to such Intellectual Property rights. At Lender’srequest, Borrower and such Obligor shall promptly execute and deliver to Lender and Agents anintellectual property security agreement granting to Agents a perfected Lien in such intellectualproperty rights in form and substance satisfactory to Lender.**8.15 Additional Bank Accounts**          Borrower and each Obligor shall not, directly or indirectly, open, establish or maintain anydeposit account, investment account or any other account with any bank or other financialinstitution, other than the Blocked Accounts and the accounts set forth in Schedule 7.8hereto, except: (a) as to any new or additional Blocked Accounts and other such new or additionalaccounts which contain any Collateral or proceeds thereof, with the prior written consent of Lenderand subject to such conditions thereto as Lender may establish, and (b) as to any accounts used byBorrower or any Obligor to make payments of payroll, taxes or other obligations to third parties,after prior written notice to Lender.**8.16 Compliance with ERISA**          (a) Borrower shall not with respect to any “employee benefit plans” maintained by Borrower orany of its ERISA Affiliates: (i) terminate any of such employee benefit plans so as to incur anyliability to the Pension Benefit Guaranty Corporation established pursuant to ERISA, (ii) allow orsuffer to exist any prohibited transaction involving any of such employee benefit plans or anytrust created thereunder which would subject Borrower or such ERISATHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 54 -Affiliate to a tax or penalty or other liability on prohibited transactions imposed underSection 4975 of the Code or ERISA, (iii) fail to pay to any such employee benefit plan anycontribution which it is obligated to pay under Section 302 of ERISA, Section 412of the Code or the terms of such plan, (iv) allow or suffer to exist any accumulated fundingdeficiency, whether or not waived, with respect to any such employee benefit plan, (v) allow orsuffer to exist any occurrence of a reportable event or any other event or condition which presentsa material risk of termination by the Pension Benefit Guaranty Corporation of any such employeebenefit plan that is a single employer plan, which termination could result in any liability to thePension Benefit Guaranty Corporation or (vi) incur any withdrawal liability with respect to anymultiemployer pension plan.     (b) As used in this Section 8.16, the terms “employee benefit plans”, “accumulatedfunding deficiency” and “reportable event” shall have the respective meanings assigned to them inERISA, and the term “prohibited transaction” shall have the meaning assigned to it in Section4975 of the Code and ERISA.**8.17 Costs and Expenses**          Borrower shall pay to Lender on demand all costs, expenses, filing fees and taxes paid orpayable in connection with the preparation, negotiation, execution, delivery, recording,administration, collection, liquidation, enforcement and defense of the Obligations, Lender’s andAgents’ rights in the Collateral, this Agreement, the other Financing Agreements and all otherdocuments related hereto or thereto, including any amendments, supplements or consents which mayhereafter be contemplated (whether or not executed) or entered into in respect hereof and thereof,including: (a) all costs and expenses of filing or recording (including UCC and PPSA financingstatement and other similar filing and recording fees and taxes, documentary taxes, intangiblestaxes and mortgage recording taxes and fees, if applicable); (b) all insurance premiums, appraisalfees and search fees; (c) costs and expenses of remitting loan proceeds, collecting checks andother items of payment, and establishing and maintaining the Blocked Accounts and Payment Accounts,together with Lender’s customary charges and fees with respect thereto; (d) charges, fees orexpenses charged by any bank or issuer in connection with the Letter of Credit Accommodations; (e)costs and expenses of preserving and protecting the Collateral; (f) costs and expenses paid orincurred in connection with obtaining payment of the Obligations, enforcing the Liens of Agentsand/or Lender, selling or otherwise realizing upon the Collateral, and otherwise enforcing theprovisions of this Agreement and the other Financing Agreements or defending any claims made orthreatened against Agents and/or Lender arising out of the transactions contemplated hereby andthereby (including preparations for and consultations concerning any such matters); (g) allout-of-pocket expenses and costs heretofore and from time to time hereafter incurred by Lenderduring the course of periodic field examinations of the Collateral and Borrower’s operations, plusa per diem charge at the rate of $1,200 per person per day for Lender’s examiners in the field andoffice; providedthat such field examinations shall be limited to no more than oncein any four (4) month period if an Event of Default does not exist with no such restriction if anEvent of Default exists; and (h) the fees and disbursements of counsel (including legal assistants)to Lender and Agents in connection with any of the foregoing.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 55 -**8.18 Further Assurances**          At the request of Lender at any time and from time to time, Borrower and each Obligor shall,at its expense, duly execute and deliver, or cause to be duly executed and delivered, such furtheragreements, documents and instruments, and do or cause to be done such further acts as may benecessary or proper to evidence, perfect, maintain and enforce the Liens of Agents and Lender andthe priority thereof in the Collateral and to otherwise effectuate the provisions or purposes ofthis Agreement or any of the other Financing Agreements. Lender may at any time and from time totime request a certificate from an officer of Borrower representing that all conditions precedentto the making of Revolving Loans and providing Letter of Credit Accommodations contained herein aresatisfied. In the event of such request by Lender, Lender may, at its option, cease to make anyfurther Revolving Loans or provide any further Letter of Credit Accommodations until Lender hasreceived such certificate and, in addition, Lender has determined that such conditions aresatisfied. Where permitted by law, Borrower and each Obligor hereby authorizes Lender to executeand file one or more UCC, PPSA or other financing statements or notices signed only by Lender orAgents’ representative.**8.19 Change of Control**          Borrower shall promptly provide Lender with written notice if, at any time, any person shallown more than twenty percent (20%) of the outstanding voting securities of MCII.**8.20 Software Expenditures**          Borrower and each Obligor shall not make or incur any expenditures with respect to thedevelopment of Software during any fiscal year of Borrower in the aggregate in respect of Borrowerand each Obligor in excess of $1,000,000 without the prior written consent of Lender.**8.21 Inactive Subsidiaries**          (a) Borrower and each Obligor shall not allow or permit any Inactive Subsidiary to, and shallensure that each Inactive Subsidiary does not (a) acquire any assets or properties, (b) incur anyliabilities or (c) engage in any material business activities.          (b) Borrower and each Obligor shall diligently cause Saitek PLC, Saitek HK and Mad CatzLimited to wind-up and dissolve and Borrower shall provide evidence of same to Lender promptly uponeach such wind-up and dissolution.**8.22 Corporate Structure Chart**          Borrower and each Obligor shall not allow or permit any change to the ownership structure ofBorrower and its affiliates from that set out in the corporate structure chart attached hereto asExhibit D other than the dissolution and winding-up of Saitek PLC, Saitek HK and Mad CatzLimited in accordance with Section 8.21(b).THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 56 -**8.23 Swap Agreements**          Borrower and each Obligor shall not enter into any Swap Agreement without the prior writtenconsent of Lender (such consent to be provided in Lender’s sole discretion).**SECTION 9****EVENTS OF DEFAULTS AND REMEDIES****9.1 Events of Default**          The occurrence or existence of any one or more of the following events are referred to hereinindividually as an “**Event of Default**”, and collectively as “**Events of Default**”:     (a) (i) Borrower fails to pay when due any of the Obligations or the Borrower or any Obligorfails to pay when due any amount owing under any Financing Agreement, or (ii) Borrower or anyObligor fails to perform any of the material terms, covenants, conditions or provisions containedin this Agreement or any of the other Financing Agreements (other than as described in Section9.1(a)(i)), or (iii) Borrower or any Obligor fails to perform any of the terms, covenants,conditions or provisions contained in this Agreement or any other Financing Agreement (other thanas described in Section 9.1(a)(i) or Section 9.1(a)(ii)) and such failure continuesfor more than ten (10) days after the Borrower receives written notice thereof from Lender;     (b) any representation, warranty or statement of fact made by Borrower or any Obligor toLender or Agents in this Agreement, the other Financing Agreements or any other agreement,schedule, confirmatory assignment or otherwise shall when made or deemed made be false ormisleading in any material respect;     (c) any Obligor (i) revokes, terminates or fails to perform any of the material terms,covenants, conditions or provisions of any guarantee, endorsement or other agreement of such partyin favor of Lender or Agents; or (ii) revokes, terminates or fails to perform any of the terms,covenants, conditions or provisions of any guarantee, endorsement or other agreement of such partyin favor of Lender or Agents (other than as described in Section 9.1(c)(i)) and suchdefault continues for more than ten (10) days after Borrower receives written notice thereof fromLender;     (d) any judgment for the payment of money is rendered against Borrower or any Obligor inexcess of $2,000,000 in the aggregate and shall remain undischarged or unvacated for a period inexcess of thirty (30) days or execution shall at any time not be effectively stayed, or anyjudgment other than for the payment of money, or injunction, attachment, garnishment or executionis rendered against Borrower or any Obligor or any of their assets or properties;     (e) any Obligor (being a natural person or a general partner of an Obligor which is apartnership) dies or Borrower or any Obligor, which is a partnership, limited liability company,limited partnership, limited liability partnership or a corporation, dissolves or suspends ordiscontinues doing business;THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 57 -     (f) Borrower or any Obligor becomes insolvent, makes an assignment for the benefit ofcreditors proposes to make, makes or sends notice of a bulk sale (as defined by applicable laws ofthe United States of America or Canada) or calls a meeting of its creditors or principal creditors;     (g) a petition, case or proceeding under the bankruptcy laws of the United States, Canada orsimilar laws of any foreign jurisdiction now or hereafter in effect or under any insolvency,arrangement, reorganization, moratorium, receivership, readjustment of debt, dissolution orliquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or inequity) is filed or commenced against Borrower or any Obligor or all or any part of its assets orproperties and such petition or application is not dismissed within sixty (60) days after the dateof its filing or Borrower or any Obligor shall file any answer admitting or not contesting suchpetition or application or indicates its consent to, acquiescence in or approval of, any suchaction or proceeding or the relief requested is granted sooner;     (h) a petition, case or proceeding under the bankruptcy laws of the United States, Canada orsimilar laws of any foreign jurisdiction now or hereafter in effect or under any insolvency,arrangement, reorganization, moratorium, receivership, readjustment of debt, dissolution orliquidation law or statute of any jurisdiction now or hereafter in effect (whether at a law orequity) is filed or commenced by Borrower or any Obligor for all or any part of its assets orproperties including if Borrower or any Obligor shall: (i) apply for or consent to the appointment of a receiver, trusteeor liquidator of it or of all or a substantial part of its assets orproperties; or  (ii) be unable, or admit in writing its inability, to pay its debtsas they mature, or commit any other act of bankruptcy; or  (iii) make a general assignment for the benefit of creditors; or  (iv) file a voluntary petition or assignment in bankruptcy or aproposal seeking a reorganization, compromise, moratorium or arrangement withits creditors; or  (v) take advantage of any insolvency or other similar lawpertaining to arrangements, moratoriums, compromises or reorganizations, oradmit the material allegations of a petition or application filed in respect ofit in any bankruptcy, reorganization or insolvency proceeding; or  (vi) take any corporate action for the purpose of effecting any ofthe foregoing;     (i) any default by Borrower or any Obligor under any agreement, document or instrumentrelating to any indebtedness for borrowed money owing to any person other than Lender or under theConsideration Loan Note Instrument or the Completion Note, or any capitalized lease obligations,contingent indebtedness in connection with any guarantee, letter of credit, indemnity or similartype of instrument in favor of any person other than Lender, in any case in an amount in excess of$1,000,000, which is not remedied within ten (10) days after Borrower receives written noticethereof from Lender;THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 58 -     (j) any material default by Borrower or any Obligor under any material contract, lease,license or other obligation to any person other than Lender, any other default by Borrower or anyObligor under any material contract, lease, license or other obligation to any person other thanLender if such default continues for more than ten (10) days after Borrower receives written noticethereof from Lender, or any termination of, or failure to renew or extend, any material lease forreal property occupied by Borrower or any Obligor;     (k) any change in the ownership of Borrower or any Obligor (other than MCII) unless previouslyapproved in writing by Lender;     (l) the charging of Borrower or any Obligor under any criminal statute, or commencement orthreatened commencement of criminal or civil proceedings against Borrower or any Obligor, pursuantto which statute or proceedings the penalties or remedies sought or available include forfeiture ofany of the assets or properties of Borrower or such Obligor;     (m) a Material Adverse Change in Borrower or any Obligor after the date hereof;     (n) an event of default under any of the other Financing Agreements;     (o) a breach of, or failure to comply with, any material term of any intercreditor agreementor subordination agreement (including the Intercreditor Agreement) with respect to Borrower or anyObligor by any party thereto other than Lender, or any breach of, or failure to comply with, anyother term of any intercreditor agreement or subordination agreement (including the IntercreditorAgreement) with respect to Borrower or any Obligor by any party thereto other than Lender if suchdefault continues for more than ten (10) days after Borrower receives notice thereof from Lender;     (p) a Serious Event (as defined in the Consideration Loan Note Instrument) occurs under theConsideration Loan Note Instrument or any default under the Completion Note; providedthat there shall be no Event of Default under this subparagraph (p) if the SeriousEvent (as defined in the Consideration Loan Note Instrument) arises under Condition 5.1.1of the Consideration Loan Note Instrument; or     (q) there shall be a default under any Swap Agreement.**9.2 Remedies**     (a) At any time while an Event of Default exists Lender and Agents shall have all rights andremedies provided in this Agreement, the other Financing Agreements, the UCC, PPSA and otherapplicable law, all of which rights and remedies may be exercised without notice to or consent byBorrower or any Obligor, except as such notice or consent is expressly provided for hereunder orrequired by applicable law. All rights, remedies and powers granted to Lender and Agentshereunder, under any of the other Financing Agreements, the UCC, PPSA or other applicable law, arecumulative, not exclusive and enforceable, in Lender’s and Agents’ discretion, alternatively,successively, or concurrently on any one or more occasion, and shall include the right to apply toa court of equity for an injunction to restrain a breach or threatened by Borrower or any Obligorof this Agreement or any of the other Financing Agreements. Lender and/or Agents may, at any timeor times, proceed directly against Borrower or any Obligor to collect theTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 59 -Obligations (except under or in connection with any Swap Agreement) without prior recourse tothe Collateral.     (b) Without limiting the foregoing, at any time an Event of Default exists, Lender and Agentsmay, in their discretion and without limitation, (i) Lender may accelerate the payment of allObligations (except under or in connection with any Swap Agreement) and demand immediate paymentthereof to Lender (provided, that, upon the occurrence of any Event of Defaultdescribed in Sections 9.1(g) and 9.1(h), all Obligations (except under or inconnection with any Swap Agreement) shall automatically become immediately due and payable), (ii)with or without judicial process or the aid or assistance of others, enter upon any premises on orin which any of the Collateral may be located and take possession of the Collateral or completeprocessing, manufacturing and repair of all or any portion of the Collateral and carry on thebusiness of Borrower and each Obligor, (iii) require Borrower and each Obligor, at its expense, toassemble and make available to Lender and Agents any part or all of the Collateral at any place andtime designated by Lender and Agents, (iv) collect, foreclose, receive, appropriate, setoff andrealize upon any and all Collateral, (v) remove any or all of the Collateral from any premises onor in which the same may be located for the purpose of effecting the sale, foreclosure or otherdisposition thereof or for any other purpose, (vi) sell, lease, transfer, assign, deliver orotherwise dispose of any and all Collateral (including entering into contracts with respectthereto, public or private sales at any exchange, broker’s board, at any office of Lender, Agentsor elsewhere) at such prices or terms as Lender and Agents may deem reasonable, for cash, uponcredit or for future delivery, with Lender and Agents having the right to purchase the whole or anypart of the Collateral at any such public sale, all of the foregoing being free from any right orequity of redemption of Borrower or any Obligor, which right or equity of redemption is herebyexpressly waived and released by Borrower and each Obligor, (vii) borrow money and use theCollateral directly or indirectly in carrying on Borrower’s or each Obligor’s business or assecurity for loans or advances for any such purposes, (viii) grant extensions of time and otherindulgences, take and give up security, accept compositions, grant releases and discharges, andotherwise deal with Borrower and Obligors, debtors of Borrower and Obligors, sureties and others asLender and Agents may see fit without prejudice to the liability of Borrower or Obligors orLender’s or Agents’ right to hold and realize the Lien created under any Financing Agreement,and/or (ix) terminate this Agreement. If any of the Collateral is sold or leased by Lender orAgents upon credit terms or for future delivery, the Obligations shall not be reduced as a resultthereof until payment therefor is finally collected by Lender or Agents. If notice of dispositionof Collateral is required by law, five (5) days prior notice by Lender or Agents to Borrower andObligors designating the time and place of any public sale or the time after which any private saleor other intended disposition of Collateral is to be made, shall be deemed to be reasonable noticethereof and Borrower and each Obligor waives any other notice. In the event Lender or Agentsinstitute an action to recover any Collateral or seek recovery of any Collateral by way ofpre-judgment remedy, Borrower and each Obligor waives the posting of any bond which might otherwisebe required.     (c) Lender may apply the cash proceeds of Collateral actually received by Lender or Agentsfrom any sale, lease, foreclosure or other disposition of the Collateral to payment of theObligations, in whole or in part and in such order as Lender may elect, whether or not then due.Borrower and each Obligor shall remain liable to Lender for the payment of any deficiency withTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 60 -interest at the highest rate provided for herein and all costs and expenses of collection orenforcement, including legal costs and expenses.     (d) Without limiting the foregoing, upon the occurrence of a Default or an Event of Default,and while such Default or Event of Default or event is continuing, Lender may, at its option,without notice, (i) cease making Revolving Loans or arranging Letter of Credit Accommodations orreduce the lending formulas or amounts of Revolving Loans and Letter of Credit Accommodationsavailable to Borrower and/or (ii) terminate any provision of this Agreement providing for anyfuture Revolving Loans or Letter of Credit Accommodations to be made by Lender to Borrower.     (e) Borrower shall pay all costs, charges and expenses incurred by Lender, Agents or anynominee or agent of Lender or Agents, whether directly or for services rendered (includingreasonable auditor’s costs and legal expenses) in enforcing this Agreement or any other FinancingAgreement and in enforcing or collecting Obligations and all such expenses together with any moneyowing as a result of any borrowing permitted hereby shall be a charge on the proceeds ofrealization and shall be secured hereby.**SECTION 10****JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW****10.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver**     (a) The validity, interpretation and enforcement of this Agreement and the other FinancingAgreements and any dispute arising out of the relationship between the parties hereto, whether incontract, tort, equity or otherwise, shall be governed by the internal laws of the State ofIllinois (without giving effect to principles of conflicts of law) except to the extent that thelaw of another jurisdiction is specified in a Financing Agreement to be the governing law for thatFinancing Agreement.     (b) Borrower, Obligors, Lender and US Collateral Agent irrevocably consent and submit to thenon-exclusive jurisdiction of the courts of Illinois and waive any objection based on venue or*forum non conveniens*with respect to any action instituted therein arising under this Agreement orany of the other Financing Agreements or in any way connected with or related or incidental to thedealings of the parties hereto in respect of this Agreement or any of the other FinancingAgreements or the transactions related hereto or thereto, in each case whether now existing orhereafter arising, and whether in contract, tort, equity or otherwise, and agree that any disputewith respect to any such matters shall be heard only in the courts described above (except thatLender and/or Agents shall have the right to bring any action or proceeding against Borrower,Obligors or their property in the courts of any other jurisdiction which Lender and/or Agents deemsnecessary or appropriate in order to realize on the Collateral or to otherwise enforce their rightsagainst Borrower, Obligors or their property).     (c) To the extent permitted by law, Borrower and each Obligor hereby waives personal serviceof any and all process upon it and consents that all such service of process may be made bycertified mail (return receipt requested) directed to its address set forth on the signature pageshereof and service so made shall be deemed to be completed five (5) days afterTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 61 -the same shall have been so deposited in the US mails, or, at Lender’s or Agents’option, by service upon Borrower or any Obligor in any other manner provided under the rules of anysuch courts. Within thirty (30) days after such service, Borrower and applicable Obligor shallappear in answer to such process, failing which Borrower and such Obligor shall be deemed indefault and judgment may be entered by Lender or Agents against Borrower or such Obligor for theamount of the claim and other relief requested.     (d) BORROWER, OBLIGORS, LENDER AND US COLLATERAL AGENT EACH HEREBY WAIVES ANY RIGHT TO TRIALBY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OFTHE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THEDEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCINGAGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING ORHEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER, OBLIGORS, LENDERAND US COLLATERAL AGENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION ORCAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER, OBLIGORS, LENDERAND/OR US COLLATERAL AGENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANYCOURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TOTRIAL BY JURY.     (e) Neither Lender nor Agents shall have any liability to Borrower or any Obligor (whether intort, contract, equity or otherwise) for losses suffered by Borrower or any Obligor in connectionwith, arising out of, or in any way related to the transactions or relationships contemplated bythis Agreement or any other Financing Agreement, or any act, omission or event occurring inconnection herewith, unless it is determined by a final and non-appealable judgment or court orderbinding on Lender and Agents, that the losses were the result of acts or omissions constitutinggross negligence or willful misconduct. In any such litigation, each of Lender and Agents shall beentitled to the benefit of the rebuttable presumption that it acted in good faith and with theexercise of ordinary care in the performance by it of the terms of this Agreement or any otherFinancing Agreement.     (f) Borrower and each Obligor hereby expressly waives all rights and notice and hearing of anykind prior to the exercise of rights by Lender or Agents while an Event of Default exists, torepossess the Collateral with judicial process or to replevy, attach or levy upon the Collateral orother security for the Obligations. Borrower and each Obligor waives the posting of any bondotherwise required of Lender or Agents in connection with any judicial process or proceeding toobtain possession of, replevy, attach or levy upon the Collateral or other security for theObligations, to enforce any judgment or other court order entered in favor of Lender or Agents, orto enforce by specific performance, temporary restraining order, preliminary or permanentinjunction, this Agreement or any other Financing Agreement.THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 62 -**10.2 Waiver of Notices**          Borrower and each Obligor hereby expressly waives demand, presentment, protest and notice ofprotest and notice of dishonor with respect to any and all instruments and commercial paper,included in or evidencing any of the Obligations or the Collateral, and any and all other demandsand notices of any kind or nature whatsoever with respect to the Obligations, the Collateral andthis Agreement, except such as are expressly provided for herein. No notice to or demand onBorrower or any Obligor which Lender or Agents may elect to give shall entitle Borrower or anyObligor to any other or further notice or demand in the same, similar or other circumstances.**10.3 Amendments and Waivers**          Neither this Agreement nor any provision hereof shall be amended, modified, waived ordischarged orally or by course of conduct, but only by a written agreement signed by an authorizedofficer of Lender and US Collateral Agent, and as to amendments, as also signed by an authorizedofficer of Borrower and each Obligor. Neither Lender nor Agents shall, by any act, delay, omissionor otherwise be deemed to have expressly or impliedly waived any of their rights, powers and/orremedies unless such waiver shall be in writing and signed by an authorized officer of Lender or anAgent, as applicable. Any such waiver shall be enforceable only to the extent specifically setforth therein. A waiver by Lender or an Agent of any right, power and/or remedy on any oneoccasion shall not be construed as a bar to or waiver of any such right, power and/or remedy whichLender or an Agent would otherwise have on any future occasion, whether similar in kind orotherwise.**10.4 Waiver of Counterclaims**          Borrower and each Obligor waives all rights to interpose any claims, deductions, setoffs orcounterclaims of any nature (other than compulsory counterclaims) in any action or proceeding withrespect to this Agreement, the Obligations, the Collateral or any matter arising therefrom orrelating hereto or thereto.**10.5 Indemnification**          Borrower and each Obligor shall indemnify and hold Lender, Agents and their respectivedirectors, agents, employees and counsel, harmless from and against any and all losses, claims,damages, liabilities, costs or expenses imposed on, incurred by or asserted against any of them inconnection with any litigation, investigation, claim or proceeding commenced or threatened relatedto the negotiation, preparation, execution, delivery, enforcement, performance or administration ofthis Agreement, any other Financing Agreements, or any undertaking or proceeding related to any ofthe transactions contemplated hereby or any act, omission, event or transaction related orattendant thereto, including amounts paid in settlement, court costs, and the fees and expenses ofcounsel. To the extent that the undertaking to indemnify, pay and hold harmless set forth in thisSection may be unenforceable because it violates any law or public policy, Borrower and eachObligor shall pay the maximum portion which it is permitted to pay under applicable law to Lenderand Agents in satisfaction of indemnified matters under this Section. The foregoing indemnityshall survive the payment of the Obligations and theTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 63 -termination of this Agreement. To the extent that any person that is entitled to the benefitof the indemnity set forth in this Section is not a party hereto, Lender shall hold the benefit towhich such person is entitled hereunder in trust for and on behalf of such person. Notwithstandingthe foregoing, Borrower and each Obligor shall have no obligation hereunder to the extent of anyliability resulting from the negligence or willful misconduct of Lender or other Person referred toherein or with respect to Hazardous Materials deposited on any property after it is no longerowned, possessed or controlled by Borrower or any Obligor.**SECTION 11 TERM OF AGREEMENT; MISCELLANEOUS****11.1 Term**     (a) This Agreement and the other Financing Agreements are effective as of the respective datesthereof set forth on the respective first pages thereof and shall continue in full force and effectfor a term ending on October 31, 2012 (the “**Termination Date**”), unless sooner terminated pursuantto the terms hereof. Lender or Borrower may terminate this Agreement and the other FinancingAgreements effective on the Termination Date by giving to the other party prior written notice;provided, that, this Agreement and all other Financing Agreements must beterminated simultaneously. Upon the effective date of termination of the Financing Agreements,Borrower shall pay to Lender, in full, all outstanding and unpaid Obligations (except under or inconnection with any Swap Agreement) and shall furnish cash collateral to Lender in such amounts asLender determines are necessary to secure Lender from loss, cost, damage or expense, includinglegal fees and expenses, in connection with any contingent Obligations, including issued andoutstanding Letter of Credit Accommodations, outstanding Swap Agreements and checks or otherpayments provisionally credited to the Obligations and/or as to which Lender has not yet receivedfinal and indefeasible payment. Such payments in respect of the Obligations and cash collateralshall be remitted by wire transfer in US Dollars to such bank account of Lender, as Lender may, inits discretion, designate in writing to Borrower for such purpose. Interest shall be due until andincluding the next Business Day, if the amounts so paid by Borrower to the bank account designatedby Lender are received in such bank account later than 12:00 noon, Chicago time.     (b) No termination of this Agreement or the other Financing Agreements shall relieve ordischarge Borrower and each Obligor of its respective duties, obligations and covenants under thisAgreement, the other Financing Agreements and outstanding Swap Agreements until all Obligationshave been fully and finally discharged and paid, and Agents’ and/or Lender’s continuing Lien in theCollateral and the rights and remedies of Lender and Agents hereunder, under the other FinancingAgreements and applicable law, shall remain in effect until all such Obligations have been fullyand finally discharged and paid.     (c) If for any reason this Agreement is terminated prior to the end of the then current termof this Agreement, in view of the impracticality and extreme difficulty of ascertaining actualdamages and by mutual agreement of the parties as to a reasonable calculation of Lender’s lostprofits as a result thereof, Borrower agrees to pay to Lender, upon the effective date of suchtermination, an early termination fee in the amount set forth below if such termination iseffective in the period indicated:THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 64 -   Amount Period   1.00% of Maximum Credit From the date hereof to and including the first anniversary of the datehereof   0.50% of Maximum Credit After the first anniversary of the date hereof to and including the secondanniversary of the date hereof   0.25% of Maximum Credit At any time after the second anniversary of the date hereof          Such early termination fee shall be presumed to be the amount of damages sustained by Lenderas a result of such early termination and Borrower agrees that it is reasonable under thecircumstances currently existing. In addition, Lender shall be entitled to such early terminationfee upon the occurrence of any Event of Default described in Section 9.1(g) and Section9.1(h) hereof, even if Lender does not exercise its right to terminate this Agreement, butelects, at its option, to provide financing to Borrower or permit the use of cash collateral underany applicable reorganization or insolvency legislation. The early termination fee provided for inthis Section 11.1 shall be deemed included in the Obligations.**11.2 Notices**          All notices, requests and demands hereunder shall be in writing and (a) made to US CollateralAgent and/or Lender at its address set forth below and to Borrower and each Obligor at its chiefexecutive office set forth below, or to such other address as one party may designate by writtennotice to the others in accordance with this provision, and (b) deemed to have been given or made:if delivered in person, immediately upon delivery; if by facsimile transmission, immediately uponsending and upon confirmation of receipt; if by nationally recognized overnight courier servicewith instructions to deliver the next business day, one (1) Business Day after sending; and if bycertified mail, return receipt requested, five (5) days after mailing.**11.3 Partial Invalidity**          If any provision of this Agreement is held to be invalid or unenforceable, such invalidity orunenforceability shall not invalidate this Agreement as a whole, but this Agreement shall beconstrued as though it did not contain the particular provision held to be invalid or unenforceableand the rights and obligations of the parties shall be construed and enforced only to such extentas shall be permitted by applicable law.**11.4 Successors**          This Agreement and the other Financing Agreements shall be binding upon and inure to thebenefit of and be enforceable by Agents, Lender, Borrower, Obligors and their respective successorsand assigns, except that Borrower and each Obligor may not assign its rights under this Agreementor the other Financing Agreements without the prior written consent of Lender. Agents and/orLender may, after written notice to Borrower, assign its rights and delegate its obligations underthis Agreement and the other Financing Agreements and furtherTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 65 -may assign, or sell participations in, all or any part of the Revolving Loans, the Letter ofCredit Accommodations or any other interest herein to another financial institution or otherperson, provided that such assignment or participation, as applicable, does not create anywithholding tax obligations of Borrower; and upon the completion of any such assignment orparticipation, as applicable, such assignee or participant shall have, to the extent of suchassignment or participation, the same rights and benefits as it would have if it were Lender and/orAgent, as applicable, hereunder, subject to the terms of such assignment or participation.**11.5 Entire Agreement**          This Agreement, the other Financing Agreements, any supplements hereto or thereto, and anyinstruments or documents delivered or to be delivered in connection herewith or therewithrepresents the entire agreement and understanding concerning the subject matter hereof and thereofbetween the parties hereto, and supersede all other prior agreements, understandings, negotiationsand discussions, representations, warranties, commitments, proposals, offers and contractsconcerning the subject matter hereof, whether oral or written. In the event of any inconsistencybetween the terms of this Agreement and any schedule or exhibit hereto, the terms of this Agreementshall govern.**11.6 Headings**          The division of this Agreement into Sections and the insertion of headings and a table ofcontents are for convenience of reference only and shall not affect the construction orinterpretation of this Agreement.**11.7 Judgment Currency**          To the extent permitted by applicable law, the obligations of Borrower in respect of anyamount due under this Agreement shall, notwithstanding any payment in any other currency (the“**Other Currency**”) (whether pursuant to a judgment or otherwise), be discharged only to the extentof the amount in the currency in which it is due (the “**Agreed Currency**”) that Lender may, inaccordance with normal banking procedures, purchase with the sum paid in the Other Currency (afterany premium and costs of exchange) on the Business Day immediately after the day on which Lenderreceives the payment. If the amount in the Agreed Currency that may be so purchased for any reasonfalls short of the amount originally due, Borrower shall pay all additional amounts, in the AgreedCurrency, as may be necessary to compensate for the shortfall. Any obligation of Borrower notdischarged by that payment shall, to the extent permitted by applicable law, be due as a separateand independent obligation and, until discharged as provided in this Section, continue in fullforce and effect.**11.8 Amended and Restatement; No Novation**          This Agreement amends and restates the Second Amended and Restated Loan Agreement. Anyprovision hereof which differs from or is inconsistent with a provision of the Second Amended andRestated Loan Agreement constitutes an amendment to the Second Amended and Restated Loan Agreementwith each such amendment being effective as and from the date hereof. The provisions of the SecondAmended and Restated Loan Agreement as amended hereby have been consolidated and restated in thisAgreement. This Agreement willTHIRD AMENDED AND RESTATED LOAN AGREEMENT

 

- 66 -not discharge or constitute a novation of any debt, obligation, covenant or agreementcontained in the Second Amended and Restated Loan Agreement or any of the other FinancingAgreements but same shall remain in full force and effect save to the extent same are amended bythe provisions in this Agreement.**11.9 Confirmation of Existing Security and Existing Security held for Obligations**     (a) Borrower and each Obligor acknowledges and confirms that, notwithstanding the execution ofthis Agreement, the Merger, the terms of any Financing Agreements or any other matter, each of theFinancing Agreements to which it is a party remains in full force and effect and has not beenterminated, discharged or released and constitutes its legal, valid and binding obligation to theextent a party thereto enforceable against it to the extent a party thereto in accordance with itsterms except as the same is limited by bankruptcy, insolvency or similar laws affecting creditors’rights generally and the discretion of the court as to the granting of equitable remedies.     (b) Borrower and each Obligor agrees that Agents, as applicable, holds the security interests,mortgages and charges created and granted under the Financing Agreements for and on behalf of theSecured Parties to secure the Obligations and Lender shall apply the monetary proceeds ofcollections or of realization upon any Collateral in accordance with Section 5.4 hereof.     **IN WITNESS WHEREOF**, US Collateral Agent, Lender, Borrower and Obligors have caused thesepresents to be duly executed as of the day and year first above written.           US COLLATERAL AGENT and LENDER   BORROWER             **WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL)**   **MAD CATZ, INC.**             By: /s/ Bruno Mello   By: /s/ Darren Richardson               Bruno Mello                   Title: Assistant Vice President   Title:       Wachovia Capital Finance ofCanada           Address: Chief Executive Office:   141 Adelaide Street West 7480 Mission Valley RoadSuite 1500 Suite 101Toronto, ON M5H 3L5 San Diego, California 92108Canada USA   Fax: (416) 364-8165 Fax: (619) 683-6839THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

            OBLIGOR   OBLIGOR             **MAD CATZ INTERACTIVE, INC.**   **1328158 ONTARIO INC.**             By: /s/ Darren Richardson   By: /s/ Darren Richardson                        Title:     Title:                  Address: Address:   PO Box 747 PO Box 747BCE Place BCE Place181 Bay Street 181 Bay StreetSuite 2500 Suite 2500Toronto, Ontario M5J 2T7 Toronto, Ontario M5J 2T7Canada CanadaFax: (619) 683-6839 Fax: (619) 683-6839           OBLIGOR   OBLIGOR             **WINKLER ATLANTIC HOLDINGS LIMITED**   **MAD CATZ EUROPE LIMITED**             By: /s/ Darren Richardson   By: /s/ Darren Richardson                        Title:     Title:                  Address: Address:   7480 Mission Valley Road Suite 1ESuite 101 Gledhow Mount MansionSan Diego, California 92108 Roxholme GroveUSA Leeds, West Yorkshire LS7 4JJFax: (619) 683-6839 United Kingdom  Fax: (619) 683-6839THIRD AMENDED AND RESTATED LOAN AGREEMENT

 

            OBLIGOR   OBLIGOR             **MAD CATZ INTERACTIVE ASIA LIMITED**   **FX UNLIMITED, INC.**             By: /s/ Darren Richardson   By: /s/ Darren Richardson                        Title:     Title:                  Address: Address:   Unit Nos. 1717-1721 7480 Mission Valley RoadLevel 17, Tower II Suite 101Grand Central Plaza San Diego, California 92108138 Shatin Rural Committee Road USAShatin, New Territories, Hong Kong Fax: (619) 683-6839Fax: (619) 683-6839       OBLIGOR       **SAITEK ELEKTRONIK VERTRIEBS GMBH**       By: /s/ Stefan Woger            Title:         Address:Landsberger Strasse 400