exv10w2



 






Exhibit 10.2




CONSENT AND TWELFTH AMENDMENT TO

LOAN AND SECURITY AGREEMENT




          THIS CONSENT AND TWELFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is
entered into as of August 4, 2005, by and among Lenders, WELLS FARGO FOOTHILL, INC., a California
corporation, as the arranger and administrative agent for the Lenders (“Agent”) and MIDWAY
HOME ENTERTAINMENT INC., a Delaware corporation (“Midway”), MIDWAY AMUSEMENT GAMES, LLC, a
Delaware limited liability company (“MAG”; Midway and MAG are referred to hereinafter each
individually as a “Borrower”, and individually and collectively, jointly and severally, as
the “Borrowers”), MIDWAY GAMES INC., a Delaware corporation (“Parent”), MIDWAY
GAMES WEST INC., a California corporation (“MGW”), MIDWAY INTERACTIVE INC., a Delaware
corporation (“MI”), MIDWAY SALES COMPANY, LLC, a Delaware limited liability company
(“MSC”), MIDWAY HOME STUDIOS INC., a Delaware corporation (“MHS”), SURREAL SOFTWARE
INC., a Washington corporation (“Surreal”), MIDWAY STUDIOS – AUSTIN INC., a Texas
corporation (“MSA”), MIDWAY STUDIOS – LOS ANGELES INC., a California corporation (“MSLA”), MIDWAY
STUDIO – DALLAS INC., a Texas corporation, (“MSD”; Parent, MGW, MI, MSC, MHS, Surreal, MSA and
MSLA, are referred to hereinafter each individually as a “U.S. Credit Party” and
individually and collectively, jointly and severally, as the “U.S. Credit Parties”)




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




          WHEREAS, Borrowers have advised Agent and Lenders that Parent desires to acquire all of the
equity of Ratbag Holdings Pty Ltd, an Australian limited company (“Australia Operating
Company”), pursuant to the terms of an Acquisition Agreement (the “Acquisition
Agreement”), among Midway, Midway Australia Holdings Pty Ltd, an Australian limited liability
company (“Australia Holding Company”), Australia Operating Company, Trevor Martin Siegel,
Trustee for the G.P. Siegele Trust, Fluidform Pty Ltd., Trustee for the R.M. Harrison Trust and Mr.
Martin Cooper as Vendors and Messrs. Gregory Peter Siegele and Richard Harrison as Guarantors in
substantially the form of the draft agreement delivered to Agent dated July 29, 2005 (the
“Ratbag Acquisition”);




          WHEREAS, Australia Operating Company owns Ratbag Services Pty Ltd., Ratbag Games Pty Ltd.,
Ratbag Development Pty Ltd., Ratbag Productions Pty Ltd. and Ratbag Studios Pty Ltd.;




          WHEREAS, Borrowers have advised Agent and Lenders that they desire (i) to create Australia
Holding Company as a direct subsidiary of Parent and (ii) for Australia Holding Company to acquire
shares of Australia Operating Company pursuant to the terms of the Acquisition Agreement and the
transactions contemplated thereby (collectively, with the Ratbag Acquisition, the “Australia
Transactions”).




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




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




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




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




          2. Consent. Subject to the satisfaction of the conditions set forth in Section 5
below, Agent and Required Lenders hereby consent to (a) the Ratbag Acquisition in accordance with
the terms of the Acquisition














 







Agreement and (b) consent to the Australia Transactions provided that (i) the closing of the
Ratbag Acquisition and Australia Transactions are completed within one day of the date hereof and
(ii) the net amount of Investments in Australia Operating Company, Australia Subsidiaries and
Australia Holding Company shall not at any time exceed the applicable amounts set forth in the
definition of Permitted Investment in Section 1.1 of the Loan Agreement. This is a limited consent
and shall not be deemed to constitute a waiver of, or consent to, any other future breach of the
Loan Agreement (as amended by this Amendment).




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




          (a) The definition of the term “Bankruptcy Code” that is set forth in Section 1.1 of the Loan
Agreement is amended and restated in its entirety, as follows:





     “Bankruptcy Code” means title 11 of the United States Code, as
applicable, and as in effect from time to time, and, in respect of UK Company, UK
Insolvency Laws, in respect of German Company, German Insolvency Laws, in respect of
Japan Company, Japan Insolvency Laws and in respect of Australia Companies,
Australian Insolvency Laws.



          (b) The definition of “Loan Document” in Section 1.1 is amended by replacing the words “a
Company” and with “a Company, UK Company, German Company Japan Company or an Australian Company”.




          (c) The definition of “Permitted Investment” in Section 1.1 is amended by deleting the word
“and” at the end of clause (h) thereof, amending clause (i) thereof so that it is now a reference
to clause (k) thereof, and adding new clauses (i), (j) and (k) thereto, as follows:




          (i) Investments in German Company so long as the net additional amount of such Investments
made does not exceed $2,500,000 at any time, (j) Investments in Japan Company so long as the net
additional amount of such Investments made does not exceed $500,000 in any fiscal year”, (k)
Investments in Australia Companies equal to the purchase consideration for the Australia
Transactions plus additional Investments so long as the net additional amount of such additional
Investments made does not exceed (i) an amount equal to $1,500,000 plus the ordinary course
expenses of the Australia Companies at any time prior to December 31, 2005 and (ii) an amount equal
to the ordinary course expenses of the Australia Companies at any time on or after December 31,
2005.




          (d) The following definitions are added to Section 1.1 of the Loan Agreement, each in their
appropriate alphabetical order:





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




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




     “Australia Holding Company” means Midway Australia Holdings Pty Ltd, an
Australian limited company registered with company number (CAN) 114 8954 840.




     “Australia Subsidiaries” means Ratbag Services Pty Ltd. (CAN 066 907
266), Ratbag Games Pty Ltd. (CAN 100 780 989), Ratbag Development Pty Ltd. (CAN 101
413 745), Ratbag Productions Pty Ltd. (CAN 096 392 362) and Ratbag Studios Pty Ltd.
(CAN 106 892 906).




     “Australian Insolvency Laws” means the bankruptcy and insolvency laws
as now and hereafter applying in Australia.



          (e) The preface to Article 7 of the Loan Agreement is hereby amended and restated as follows:



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     Each Company covenants and agrees that, until termination of all of the
Commitments and payment in full of the Obligations, Companies will not, and will not
permit any of UK Company, German Company, Japan Company, or Australia Companies to,
do any of the following:



          (f) Section 7.1 of the Loan Agreement shall be amended by deleting the word “and” at the end
of clause (i) thereof, amending clause (j) thereof so that it is now a reference to clause (k)
thereof, and adding new clause (j) thereto, as follows:




          (j) Indebtedness consisting of inter-company loans between one Australia Company and another
Australia Company;




          (g) Section 7.1(d) of the Loan Agreement shall be amended as follows:





     (i) The reference in clause (i) to “UK Company’s, German Company’s, Japan Company’s”
shall be replaced with “UK Company’s, German Company’s, Japan Company’s, Australia
Companies’”;




     (ii) Both references in clause (ii) to “UK Company, German Company, Japan Company “
shall be replaced with “UK Company, German Company, Japan Company, Australia Companies”; and




     (iii) The reference in clause (iii) to “UK Company, German Company, Japan Company “
shall be replaced with “UK Company, German Company, Japan Company, Australia Companies”.



          (h) Section 7.4 of the Loan Agreement shall be amended by replacing the reference to “UK
Company, German Company, Japan Company “ with “UK Company, German Company, Japan Company, Australia
Companies”.




          (i) Section 7.5 of the Loan Agreement shall be amended and restated as follows:





     Change UK Company’s, German Company’s, Japan Company’s, any Australia
Companies’ or any Company’s name, FEIN, organizational identification number, state
or nation of organization, or organizational identity; provided,
however, that (a) a Company (other than German Company) may change its name
upon at least 30 days prior written notice by Administrative Borrower to Agent of
such change and so long as, at the time of such written notification, such Company
provides any financing statements necessary to perfect and continue perfected
Agent’s Liens and (b) German Company may change its name upon prior written notice
by Administrative Borrower to Agent of such change.



          (j) Section 7.10 of the Loan Agreement shall be amended by replacing the reference to “UK
Company, German Company, Japan Company “ with “UK Company, German Company, Japan Company, Australia
Companies” and replacing the reference to “ UK Company’s, German Company’s, Japan Company’s “ with
“UK Company’s, German Company’s, Japan Company’s, Australia Companies’”.




          (k) Section 7.11 of the Loan Agreement shall be amended by replacing both references to “UK
Company’s, German Company’s, Japan Company’s “ with “UK Company’s, German Company’s, Japan
Company’s, Australia Companies’” .




          (l) Section 7.13 of the Loan Agreement shall be amended by replacing all references to “UK
Company, German Company, Japan Company “ with “UK Company, German Company, Japan Company, Australia
Companies”.




          (m) Subsection 7.18(b)(i) shall be amended by replacing the reference to “$4,000,000” with
“$4,500,000”.




          4. Ratification. This Amendment, subject to satisfaction of the conditions provided
below, shall constitute an amendment to the Loan Agreement and all of the Loan Documents as
appropriate to express the




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agreements contained herein. In all other respects, the Loan Agreement and the Loan Documents
shall remain unchanged and in full force and effect in accordance with their original terms.




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




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




          (b) Companies shall have delivered to Agent such documents, agreements and instruments as may
be requested or required by Agent in connection with this Amendment, each in form and content
acceptable to Agent, including, without limitation, a perfected pledge of the equity interests of
Australian Holding Company, effective under Australian law;




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




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




          6. Miscellaneous.




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




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




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




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




          7. Release.




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




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way in connection with any of the Loan Agreement, or any of the other Loan Documents or
transactions thereunder or related thereto.




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




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




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



	 	 	 
	 

	 	MIDWAY HOME ENTERTAINMENT INC.,
	 

	 	a Delaware corporation
	 
	 	 
	 

	 	MIDWAY AMUSEMENT GAMES, LLC,
	 

	 	a Delaware limited liability company
	 
	 	 
	 

	 	MIDWAY GAMES INC.,
	 

	 	a Delaware corporation
	 
	 	 
	 

	 	MIDWAY GAMES WEST INC.,
	 

	 	a California corporation
	 
	 	 
	 

	 	MIDWAY INTERACTIVE INC.,
	 

	 	a Delaware corporation
	 
	 	 
	 

	 	MIDWAY SALES COMPANY, LLC,
	 

	 	a Delaware limited liability company
	 
	 	 
	 

	 	MIDWAY HOME STUDIOS INC.,
	 

	 	a Delaware corporation
	 
	 	 
	 

	 	SURREAL SOFTWARE INC.,
	 

	 	a Washington corporation
	 
	 	 
	 

	 	MIDWAY STUDIOS – AUSTIN INC.,
	 

	 	a Texas corporation
	 
	 	 
	 

	 	MIDWAY STUDIOS – LOS ANGELES INC.,
	 

	 	a California corporation
	 
	 	 
	 

	 	MIDWAY STUDIOS – DALLAS INC.,
	 

	 	a Texas corporation
	 
	 	 
	 

	 	Each By /s/ Thomas E. Powell
	 	 	 

	 

	 	Title
       Executive Vice President – Finance and Chief Financial Officer
	 	 	 

	 
	 	 
	 

	 	WELLS FARGO FOOTHILL, INC.,
	 

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

	 	By /s/ John Leonard
	 	 	 

	 

	 	Title Vice President
	 	 	 







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





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