exv10w5



 





Exhibit 10.5




GUARANTEE




     THIS GUARANTEE (“Guarantee”), dated November 20, 2007, is by Saitek Industries Limited, a
Delaware corporation (“Guarantor”), with its chief executive office at 2295 Jefferson Street,
Torrance, California, in favor of Wachovia Capital Finance Corporation (Central), an Illinois
corporation (“Lender”), having an office at 150 South Wacker Drive, Suite 2200, Chicago, Illinois
60606-4202.



WITNESSETH:




     WHEREAS, Lender and Mad Catz, Inc., a Delaware corporation (“Borrower”) have entered or are
about to enter into financing arrangements pursuant to which Lender may make loans and advances and
provide other financial accommodations to Borrower as set forth in the Second Amended and Restated
Loan Agreement, dated October 30, 2006, by and among Lender and Borrower (as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the
“Second Amended and Restated Loan Agreement”), as amended by the First Amending Agreement (as the
same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced), dated November ___, 2007 by and among Lender and Borrower and other agreements, documents
and instruments referred to therein or at any time executed and/or delivered in connection
therewith or related thereto, including, but not limited to, this Guarantee (all of the foregoing,
together with the Second Amended and Restated Loan Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the “Financing Agreements”); and



     WHEREAS, due to the close business and financial relationships between Borrower and Guarantor,
in consideration of the benefits which will accrue to Guarantor and as an inducement for and in
consideration of Lender making loans and advances and providing other financial accommodations to
Borrower pursuant to the Second Amended and Restated Loan Agreement and the other Financing
Agreements, the Guarantor wishes to guarantee the obligations of the Borrower to the Lender
pursuant to the terms hereof;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby
agrees in favor of Lender as follows:



     1. Guarantee.



          (a) Guarantor absolutely and unconditionally, jointly and severally, guarantees and agrees to
be liable for the full and indefeasible payment and performance when due of the following (all of
which are collectively referred to herein as the “Guaranteed Obligations”): (i) all obligations,
liabilities and indebtedness of any kind, nature and description of Borrower to Lender and/or its
affiliates, including principal, interest, charges, fees, costs and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, whether arising under the Second
Amended and Restated Loan Agreement, the other Financing Agreements or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the initial or any renewal
term of the Second Amended and Restated Loan Agreement or after the commencement of any case with
respect to Borrower under the United



 









 







States Bankruptcy Code or any similar statute (including, without limitation, the payment of
interest and other amounts, which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part in any such case and
including loans, interest, fees, charges and expenses related thereto and all other obligations of
Borrower or its successors to Lender arising after the commencement of such case), whether direct
or indirect, absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, and however acquired by Lender and (ii) all
expenses (including, without limitation, attorneys’ fees and legal expenses) incurred by Lender in
connection with the preparation, execution, delivery, recording, administration, collection,
liquidation, enforcement and defense of Borrower’s obligations, liabilities and indebtedness as
aforesaid to Lender, the rights of Lender in any collateral or under this Guarantee and all other
Financing Agreements or in any way involving claims by or against Lender directly or indirectly
arising out of or related to the relationships between Borrower, Guarantor or any other Obligor (as
hereinafter defined) and Lender, whether such expenses are incurred before, during or after the
initial or any renewal term of the Second Amended and Restated Loan Agreement and the other
Financing Agreements or after the commencement of any case with respect to Borrower or Guarantor
under the United States Bankruptcy Code or any similar statute.



          (b) This Guarantee is a guaranty of payment and not of collection. Guarantor agrees that
Lender need not attempt to collect any Guaranteed Obligations from Borrower, any one Guarantor or
any other Obligor or to realize upon any collateral, but may require any one Guarantor to make
immediate payment of all of the Guaranteed Obligations to Lender when due, whether by maturity,
acceleration or otherwise, or at any time thereafter. Lender may apply any amounts received in
respect of the Guaranteed Obligations to any of the Guaranteed Obligations, in whole or in part
(including attorneys’ fees and legal expenses incurred by Lender with respect thereto or otherwise
chargeable to Borrower or Guarantor) and in such order as Lender may elect.



          (c) Payment by Guarantor shall be made to Lender at the office of Lender from time to time on
demand as Guaranteed Obligations become due. Guarantor shall make all payments to Lender on the
Guaranteed Obligations free and clear of, and without deduction or withholding for or on account
of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. One or more successive or concurrent actions
may be brought hereon against Guarantor either in the same action in which Borrower or any other
Guarantor or any other Obligor is sued or in separate actions. In the event any claim or action,
or action on any judgment, based on this Guarantee is brought against Guarantor, Guarantor agrees
not to deduct, set-off, or seek any counterclaim for or recoup any amounts which are or may be owed
by Lender to Guarantor.



          (d) Notwithstanding anything to the contrary contained herein, the amount of the obligations
payable by Guarantor under this Guarantee shall be the aggregate amount of the Guaranteed
Obligations unless a court of competent jurisdiction adjudicates Guarantor’s obligations to be
invalid, avoidable or unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or transfers), in which case the
amount of the Guaranteed Obligations payable by Guarantor hereunder shall be limited to the maximum
amount that could be guaranteed by Guarantor



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without rendering such Guarantor’s obligations under this Guarantee invalid, avoidable or
unenforceable under such applicable law.



     2. Waivers and Consents. Notice of acceptance of this Guarantee, the making of loans
and advances and providing other financial accommodations to Borrower and presentment, demand,
protest, notice of protest, notice of nonpayment or default and all other notices to which Borrower
or Guarantor are entitled are hereby waived by Guarantor. Guarantor also waives notice of and
hereby consents to, (i) any amendment, modification, supplement, extension, renewal, or restatement
of the Second Amended and Restated Loan Agreement and any of the other Financing Agreements,
including, without limitation, extensions of time of payment of or increase or decrease in the
amount of any of the Guaranteed Obligations, the interest rate, fees, other charges, or any
collateral, and the guarantee made herein shall apply to the Second Amended and Restated Loan
Agreement and the other Financing Agreements and the Guaranteed Obligations as so amended,
modified, supplemented, renewed, restated or extended, increased or decreased, (ii) the taking,
exchange, surrender and releasing of collateral or guarantees now or at any time held by or
available to Lender for the obligations of Borrower or any other party at any time liable on or in
respect of the Guaranteed Obligations or who is the owner of any property which is security for the
Guaranteed Obligations (individually, an “Obligor” and collectively, the “Obligors”), including,
without limitation, the surrender or release by Lender of any one Guarantor hereunder,(iii) the
exercise of, or refraining from the exercise of any rights against Borrower, Guarantor or any other
Obligor or any collateral, (iv) the settlement, compromise or release of, or the waiver of any
default with respect to, any of the Guaranteed Obligations and (v) any financing by Lender of
Borrower under Section 364 of the United States Bankruptcy Code or consent to the use of cash
collateral by Lender under Section 363 of the United States Bankruptcy Code. Guarantor agrees that
the amount of the Guaranteed Obligations shall not be diminished and the liability of Guarantor
hereunder shall not be otherwise impaired or affected by any of the foregoing.



          (b) No invalidity, irregularity or unenforceability of all or any part of the Guaranteed
Obligations shall affect, impair or be a defense to this Guarantee, nor shall any other
circumstance which might otherwise constitute a defense available to or legal or equitable
discharge of Borrower in respect of any of the Guaranteed Obligations, or any one Guarantor in
respect of this Guarantee, affect, impair or be a defense to this Guarantee. Without limitation of
the foregoing, the liability of Guarantor hereunder shall not be discharged or impaired in any
respect by reason of any failure by Lender to perfect or continue perfection of any lien or
security interest in any collateral or any delay by Lender in perfecting any such lien or security
interest. As to interest, fees and expenses, whether arising before or after the commencement of
any case with respect to Borrower under the United States Bankruptcy Code or any similar statute,
Guarantor shall be liable therefor, even if Borrower’s liability for such amounts does not, or
ceases to, exist by operation of law. Guarantor acknowledges that Lender has not made any
representations to Guarantor with respect to Borrower, any other Obligor or otherwise in connection
with the execution and delivery by Guarantor of this Guarantee and Guarantor are not in any respect
relying upon Lender or any statements by Lender in connection with this Guarantee.



          (c) Unless and until the indefeasible payment and satisfaction in full of all of the
Guaranteed Obligations in immediately available funds and the termination of the financing



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arrangements of Lender with Borrower, Guarantor hereby irrevocably and unconditionally waives
and relinquishes (i) all statutory, contractual, common law, equitable and all other claims against
Borrower, any collateral for the Guaranteed Obligations or other assets of Borrower or any other
Obligor, for subrogation, reimbursement, exoneration, contribution, indemnification, setoff or
other recourse in respect to sums paid or payable to Lender by Guarantor hereunder and (ii) any and
all other benefits which Guarantor might otherwise directly or indirectly receive or be entitled to
receive by reason of any amounts paid by or collected or due from Guarantor, Borrower or any other
Obligor upon the Guaranteed Obligations or realized from their property.



     3. Subordination. Payment of all amounts now or hereafter owed to Guarantor by
Borrower or any other Obligor is hereby subordinated in right of payment to the indefeasible
payment in full to Lender of the Guaranteed Obligations and all such amounts and any security and
guarantees therefor are hereby assigned to Lender as security for the Guaranteed Obligations.



     4. Acceleration. Notwithstanding anything to the contrary contained herein or any of
the terms of any of the other Financing Agreements, the liability of Guarantor for the entire
Guaranteed Obligations shall mature and become immediately due and payable, even if the liability
of Borrower or any other Obligor therefor does not, upon the occurrence of any act, condition or
event which constitutes an Event of Default as such term is defined in the Second Amended and
Restated Loan Agreement.



     5. Account Stated. The books and records of Lender showing the account between Lender
and Borrower shall be admissible in evidence in any action or proceeding against or involving
Guarantor as prima facie proof of the items therein set forth, and the monthly
statements of Lender rendered to Borrower, to the extent to which no written objection is made
within thirty (30) days from the date of sending thereof to Borrower, shall be deemed conclusively
correct and constitute an account stated between Lender and Borrower and be binding on Guarantor.



     6. Termination. This Guarantee is continuing, unlimited, absolute and unconditional.
All Guaranteed Obligations shall be conclusively presumed to have been created in reliance on this
Guarantee. Guarantor shall continue to be liable hereunder until one of Lender’s officers actually
receives a written termination notice from a Guarantor sent to Lender at its address set forth
above by certified mail, return receipt requested and thereafter as set forth below. Such notice
received by Lender from any one Guarantor shall not constitute a revocation or termination of this
Guarantee as to any other Guarantor. Revocation or termination hereof by Guarantor shall not
affect, in any manner, the rights of Lender or any obligations or duties of Guarantor (including
the Guarantor which may have sent such notice) under this Guarantee with respect to (a) Guaranteed
Obligations which have been created, contracted, assumed or incurred prior to the receipt by Lender
of such written notice of revocation or termination as provided herein, including, without
limitation, (i) all amendments, extensions, renewals and modifications of such Guaranteed
Obligations (whether or not evidenced by new or additional agreements, documents or instruments
executed on or after such notice of revocation or termination), (ii) all interest, fees and similar
charges accruing or due on and after revocation or termination, and (iii) all attorneys’ fees and
legal expenses, costs and other expenses paid or incurred on or after such notice of revocation or
termination in attempting to collect or enforce any of the Guaranteed Obligations against Borrower,
Guarantor or any other Obligor (whether or not suit be brought),



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or (b) Guaranteed Obligations which have been created, contracted, assumed or incurred after
the receipt by Lender of such written notice of revocation or termination as provided herein
pursuant to any contract entered into by Lender prior to receipt of such notice. The sole effect
of such revocation or termination by Guarantor shall be to exclude from this Guarantee the
liability of such Guarantor for those Guaranteed Obligations arising after the date of receipt by
Lender of such written notice which are unrelated to Guaranteed Obligations arising or transactions
entered into prior to such date. Without limiting the foregoing, this Guarantee may not be
terminated and shall continue so long as the Second Amended and Restated Loan Agreement shall be in
effect (whether during its original term or any renewal, substitution or extension thereof).



     7. Reinstatement. If after receipt of any payment of, or proceeds of collateral
applied to the payment of, any of the Guaranteed Obligations, Lender is required to surrender or
return such payment or proceeds to any Person for any reason, then the Guaranteed Obligations
intended to be satisfied by such payment or proceeds shall be reinstated and continue and this
Guarantee shall continue in full force and effect as if such payment or proceeds had not been
received by Lender. Guarantor shall be liable to pay to Lender, and does indemnify and hold Lender
harmless for the amount of any payments or proceeds surrendered or returned. This Section 7 shall
remain effective notwithstanding any contrary action which may be taken by Lender in reliance upon
such payment or proceeds. This Section 7 shall survive the termination or revocation of this
Guarantee.



     8. Amendments and Waivers. Neither this Guarantee nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct, but only by a written
agreement signed by an authorized officer of Lender. Lender shall not by any act, delay, omission
or otherwise be deemed to have expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed by an authorized officer of Lender. Any
such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by
Lender of any right, power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Lender would otherwise have on any future
occasion, whether similar in kind or otherwise.



     9. Corporate Existence, Power and Authority. Guarantor is a corporation duly
organized and in good standing under the laws of its state or other jurisdiction of incorporation
and is duly qualified as a foreign corporation and in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the financial condition, results of
operation or businesses of any of Guarantor or the rights of Lender hereunder or under any of the
other Financing Agreements. The execution, delivery and performance of this Guarantee is within
the corporate powers of Guarantor, have been duly authorized and are not in contravention of law or
the terms of the certificates of incorporation, by-laws, or other organizational documentation of
Guarantor, or any indenture, agreement or undertaking to which Guarantor is a party or by which
Guarantor or its property are bound. This Guarantee constitutes the legal, valid and binding
obligation of Guarantor enforceable in accordance with its terms. Any one Guarantor signing this
Guarantee shall be bound hereby whether or not any other Guarantor or any other person signs this
Guarantee at any time.



     10. Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.



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          (a) The validity, interpretation and enforcement of this Guarantee and any dispute arising out
of the relationship between Guarantor and Lender, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of California but excluding any principles of
conflicts of law or other rule of law that would result in the application of the law of any
jurisdiction other than the laws of the State of California.



          (b) Guarantor hereby irrevocably consents and submits to the non-exclusive jurisdiction of the
California State Courts located in the District of San Diego and the United States District Court
for the Southern District of California, whichever Lender elects and waives any objection based on
venue or forum non conveniens with respect to any action instituted therein
arising under this Guarantee or any of the other Financing Agreements or in any way connected with
or related or incidental to the dealings of Guarantor and Lender in respect of this Guarantee or
any of the other Financing Agreements or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising and whether in contract, tort, equity or otherwise, and
agrees that any dispute arising out of the relationship between Guarantor or Borrower and Lender or
the conduct of any such persons in connection with this Guarantee, the other Financing Agreements
or otherwise shall be heard only in the courts described above (except that Lender shall have the
right to bring any action or proceeding against Guarantor or its property in the courts of any
other jurisdiction which Lender deems necessary or appropriate in order to realize on collateral at
any time granted by Borrower or Guarantor to Lender or to otherwise enforce its rights against
Guarantor or its property).



          (c) Guarantor hereby waives personal service of any and all process upon it and consents that
all such service of process may be made by certified mail (return receipt requested) directed to
its address set forth on the signature pages hereof and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at
Lender’s option, by service upon Guarantor in any other manner provided under the rules of any such
courts. Within thirty (30) days after such service, Guarantor so served shall appear in answer to
such process, failing which Guarantor shall be deemed in default and judgment may be entered by
Lender against Guarantor for the amount of the claim and other relief requested.



          (d) GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION (i) ARISING UNDER THIS GUARANTEE OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY OF GUARANTORS AND LENDER IN
RESPECT OF THIS GUARANTEE OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE. GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY OF GUARANTORS
OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF GUARANTORS AND LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.



          (e) Lender shall not have any liability to Guarantor (whether in tort, contract, equity



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or otherwise) for losses suffered by Guarantor in connection with, arising out of, or in any
way related to the transactions or relationships contemplated by this Guarantee, or any act,
omission or event occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender that the losses were the result of acts or
omissions constituting gross negligence or willful misconduct. In any such litigation, Lender
shall be entitled to the benefit of the rebuttable presumption that it acted in good faith and with
the exercise of ordinary care in the performance by it of the terms of the Second Amended and
Restated Loan Agreement and the other Financing Agreements.



     11. Notices. All notices, requests and demands hereunder shall be in writing and (a)
made to Lender at its address set forth above and to Guarantor at 7480 Mission Valley Road, Suite
101, San Diego, California, 92108, or to such other address as either party may designate by
written notice to the other in accordance with this provision, and (b) deemed to have been given or
made: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next business day, one (1)
business day after sending; and if by certified mail, return receipt requested, five (5) days after
mailing.



     12. Partial Invalidity. If any provision of this Guarantee is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this Guarantee as a whole,
but this Guarantee shall be construed as though it did not contain the particular provision held to
be invalid or unenforceable and the rights and obligations of the parties shall be construed and
enforced only to such extent as shall be permitted by applicable law.



     13. Entire Agreement. This Guarantee represents the entire agreement and
understanding of this parties concerning the subject matter hereof, and supersedes all other prior
agreements, understandings, negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether oral or written.



     14. Successors and Assigns. This Guarantee shall be binding upon Guarantor and its
successors and assigns and shall inure to the benefit of Lender and its successors, endorsees,
transferees and assigns. The liquidation, dissolution or termination of the Guarantor shall not
terminate this Guarantee as to such entity or as to any of the other Obligors.



     15. Construction. All references to the term “Guarantor” wherever used herein shall
mean the Guarantor and its respective successors and assigns, individually and collectively,
jointly and severally (including, without limitation, any receiver, trustee or custodian for the
Guarantor or any of its respective assets or the Guarantor in its capacity as debtor or
debtor-in-possession under the United States Bankruptcy Code). All references to the term “Lender”
wherever used herein shall mean Lender and its successors and assigns and all references to the
term “Borrower” wherever used herein shall mean Borrower and its successors and assigns (including,
without limitation, any receiver, trustee or custodian for Borrower or any of its assets or
Borrower in its capacity as debtor or debtor-in-possession under the United States Bankruptcy
Code). All references to the term “Person” or “person” wherever used herein shall mean any
individual, sole proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Internal Revenue Code of 1986, as amended),
limited liability company, limited liability partnership, business trust, unincorporated



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association, joint stock corporation, trust, joint venture or other entity or any government
or any agency or instrumentality of political subdivision thereof. All references to the plural
shall also mean the singular and to the singular shall also mean the plural.



     16. Counterparts, etc. This Guarantee may be executed in any number of counterparts,
each of which shall be an original, but all of which taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of this Guarantee by telefacsimile or other
electronic means shall have the same force and effect as the delivery of an original executed
counterpart of this Guarantee. Any party delivering an executed counterpart of this Guarantee by
telefacsimile or other electronic means shall also deliver an original executed counterpart, but
the failure to do so shall not affect the validity, enforceability or binding effect of this
Guarantee.



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     IN WITNESS WHEREOF, Guarantor has executed and delivered this Guarantee as of the day and year
first above written.



	 	 	 	 	 
	 	SAITEK INDUSTRIES LIMITED

 	 
	 	/s/ Stewart Halpern
 	 
	 	By:	Stewart Halpern 	 
	 	Title:  	Chief Financial Officer