PARTICIPATION AGREEMENT (this “Agreement”), dated on November 28, 2008 by and between National Amusements, Inc. (“Grantor”) and Acquisition Holdings Subsidiary I LLC (“Participant”).
Exhibit
99.3
PARTICIPATION
AGREEMENT (this “Agreement”), dated on
November 28, 2008 by and between National Amusements, Inc. (“Grantor”) and
Acquisition Holdings Subsidiary I LLC (“Participant”).
WHEREAS,
reference is made to (i) the Loan and Security Agreement, dated as of February
29, 2008 (as the same may be amended, modified or otherwise supplemented from
time to time, the “Secured Facility”),
by and among Midway Home Entertainment Inc. (“Midway Home”) and
Midway Amusement Games, LLC (“MAG”), as Borrowers,
Midway Games Inc. (“Midway”, and together
with Midway Home and MAG, collectively referred to herein as, the “Borrowers”), Midway
Games West Inc., Midway Interactive Inc., Midway Sales Company, LLC, Midway Home
Studios Inc., Surreal Software Inc., Midway Studios-Austin Inc. and Midway
Studios-Los Angeles Inc., as U.S. Credit Parties, and Grantor, as Lender and
(ii) the Unsecured Loan Agreement, dated as of February 29, 2008 (as the same
may be amended, modified or otherwise supplemented from time to time, the “Unsecured Facility”,
and together with the Secured Facility, the “Credit Agreements”),
between Midway, as Borrower, and Grantor, as Lender, copies of each of the
Credit Agreements have been furnished to Participant. Pursuant to
each of the Credit Agreements, Grantor, subject to the terms and conditions
thereof, agreed to make advances and loans (the “Loans”) to the
applicable Borrower or Borrowers under such Credit Agreement from time to time
in an aggregate amount not to exceed at any time outstanding (i) $30,000,000
under the Secured Facility and (ii) $40,000,000 under the Unsecured
Facility. Capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings assigned to them in the Secured Facility;
and
accountant,
financial advisor, or other entity arising under or in connection with the
Credit Agreements or the transactions related thereto or contemplated thereby,
and (f) all distributions or proceeds related to the foregoing (“Distributions”)
(clauses (a) through (f) above are hereinafter referred to as the “Participation”), on
the following terms and conditions:
1. Purchase of
Participation. (a) In
consideration of Grantor’s sale, grant, conveyance and transfer to Participant
of the Participation, Participant covenants and agrees to pay to Grantor, on the
date hereof, by wire transfer of immediately available funds to an account
designated by Grantor, the Purchase Price (as defined in the Stock Purchase
Agreement). The Purchase Price shall be paid in United States
dollars. For the avoidance of doubt, Participant hereby purchases,
assumes and shall be responsible for the obligations and liabilities of Grantor
relating to the Participation resulting from facts, events or circumstances
arising or occurring on or after the date hereof, other than in respect of the
Unfunded Commitments (as hereinafter defined). Participant shall not
be responsible for any obligations or liabilities of Grantor that (i) result
from facts, events or circumstances arising or occurring prior to the date
hereof, (ii) result from Grantor’s breach of its representations, warranties,
covenants, or agreements under this Agreement or the Credit Agreements (except
to the extent any such breach results from a breach by Participant of its
obligations hereunder), (iii) result from Grantor’s bad faith, gross negligence,
or willful misconduct or (iv) are attributable to Grantor’s actions or
obligations in any capacity other than as a Lender under the Credit
Agreements. For purposes of this Agreement, “Unfunded Commitments”
shall mean any unused Commitment (as defined in the applicable Credit Agreement)
under each of the Credit Agreements on the date hereof as set forth on Schedule
1.
(b) Grantor
shall, promptly upon receipt of notice of a proposed advance (a “Funding Advance”)
under any Credit Agreement, notify Participant of the facility under which such
proposed Funding Advance has been requested, the date and amount of such Funding
Advance as well as the Interest Period (as defined in the applicable Credit
Agreement) selected by the applicable Borrower and the interest rate basis and
rate applicable to the Participation pursuant this
Agreement. Participant shall, on the date of such Funding Advance,
pay to Grantor, by wire transfer in immediately available funds to an account
designated by Grantor, cash in an amount equal to 100% of such Funding Advance
in United States dollars; provided, however, that
Participant shall have no obligation to pay any Funding Advance, except from
funds on deposit in the Segregated Account or the Escrow Account (each as
defined below).
(c) Each of
Grantor and Participant hereby agree to establish an escrow account (the “Escrow Account”)
pursuant to an escrow agreement, which shall be on terms and conditions to be
mutually agreed, with an escrow agent (the “Escrow Agent”) to be
mutually agreed, as promptly as reasonably practicable after the date
hereof. Grantor and Participant hereby agree that the escrow
agreement shall provide that upon termination of any of the Credit Agreements
(i) any amounts on deposit in the Escrow Account which relate to the Unfunded
Commitments under such Credit Agreement shall be returned to Grantor and (ii)
all other amounts on deposit in the Escrow Account relating to such Credit
Agreement shall be returned to Participant. From and after the date
the Escrow Account has been established, all Distributions shall be deposited
into the Escrow Account and such funds shall be applied to pay any Funding
Advances required hereunder. Grantor hereby agrees to deposit an
amount equal to the aggregate Unfunded Commitments into the Escrow Account upon
the establishment thereof.
Prior to
the date the Escrow Account is established, Grantor and Participant hereby agree
that all Distributions shall be deposited into a segregated account (the “Segregated Account”)
to be held by Grantor in trust for Participant and all such funds shall be
applied to pay any Funding Advances required hereunder.
(d) Grantor
shall, promptly upon receipt of notice of the applicable Borrower’s selection of
a new Interest Period (as defined in the applicable Credit Agreement) for any
LIBOR Rate Loan (as defined in the applicable Credit Agreement), notify
Participant of such Interest Period selected by the applicable Borrower(s) and
of the interest rate basis and rate applicable to the Participation in such
LIBOR Rate Loan.
(e) If, for
any reason, Participant fails to make timely payment to Grantor with respect to
any Funding Advance under any Credit Agreement pursuant to Section 1(b) above,
Grantor shall be entitled to (i) collect interest from Participant on the
amount of such Funding Advance for the period from the date when payment was due
until payment is made at the overnight rate for Federal funds transactions
between member banks of the Federal Reserve System, as published by the Federal
Reserve Bank of New York (the “Federal Funds Rate”)
for each day during that period, (ii) withhold or set-off any amounts received
by Grantor, and to apply to such amounts to the payment of such Funding Advance
and any related interest, (iii) withhold from Participant any right of consent
provided to Participant pursuant to Section 8 of this Agreement and (iv) bring
an action or suit against Participant in a court of competent jurisdiction to
recover such Funding Advance and any related interest.
(e) Grantor
hereby authorizes Participant to file UCC financing statements naming Grantor as
seller reflecting the sale, conveyance and transfer effected by this
Agreement.
2. Payments. (a) Whenever
Grantor receives a payment of principal, interest, commitment fee or premium (if
any) or other payment, or whenever Grantor makes an application of funds, in
connection with the Loans outstanding under a Credit Agreement (including,
without limitation, any Distribution), Grantor shall promptly pay such
Distribution to Participant to an account designated by Participant, in United
States dollars (or, if another currency was received or applied by Grantor in
such other currency) and in the kind of funds so received or applied by Grantor,
an amount equal to such payment or application. If, for any reason,
Grantor fails to pay such Distribution to Participant within two business days
of receipt of such Distribution (the “Delayed Payment
Date”), Grantor shall pay interest to Participant on such amount thereof
for the period from the Delayed Payment Date until the date such Distribution is
received by Participant at the Federal Funds Rate.
(b) All
computations of interest and fees shall be made on the basis of a 360-day year,
for the actual number of days elapsed. Any determination made by
Grantor as to the allocation of payments received or amounts applied to the
Participation in the Loans shall be conclusive and binding for all purposes,
absent manifest error.
(c) If, for
any reason, Grantor makes any Distribution to Participant before receipt of the
corresponding Distribution (it being understood that Grantor is under no
obligation to do so), and Grantor does not receive the corresponding
Distribution within five business days of its payment to Participant,
Participant shall, at Grantor’s request, promptly return such
Distribution
to Grantor (together with interest on that Distribution at the Federal Funds
Rate for each day from the making of that Distribution to Participant until its
return to Grantor).
(d) If, after
Grantor has paid to Participant any Distribution received by Grantor,
Distribution is rescinded or must otherwise be returned or must be paid over by
Grantor to any other person or entity, whether pursuant to any bankruptcy or
insolvency law or otherwise, Participant shall, at Grantor’s request, promptly
return such payment to Grantor (together with interest on that Distribution at
the Federal Funds Rate for each day from the making of that Distribution to
Participant until its return to Grantor).
3. Elevation. Subject
to the terms and provisions of the Credit Agreements, other than as permitted by
an occurrence of an Event of Default (as defined in the applicable Credit
Agreement) that is caused solely by the sale of Grantor’s equity interest in
Midway pursuant to the Stock Purchase Agreement, at the request of Participant,
each of Grantor and Participant shall use commercially reasonable efforts to, as
soon as reasonably practicable, cause Participant to become a Lender under the
Credit Agreements with respect to the Loans (the “Elevation”). In
connection with the Elevation, Grantor and Participant shall execute and deliver
an Assignment and Acceptance Agreement, the form of which is attached as Exhibit
A-1 to each of the Credit Agreements. Upon the effective date of an Elevation,
this Agreement shall be deemed to be an agreement for the outright assignment of
the Loans from Grantor to Participant, and the terms and conditions hereof shall
be construed accordingly.
4. Responsibilities of
Seller. Grantor shall exercise the same degree of care with respect to
the administration of the Participation as it would exercise for
the extension of credit in which it had not granted a participation interest;
provided, that, Grantor will not be liable for any error of judgment, or for any
Act (as defined in Section 8 below) or any action omitted to be taken by Grantor
at the direction of Participant, except for as a result of Grantor’s gross
negligence or willful misconduct. Without limitation of the
generality of the foregoing, Grantor (a) may consult with legal counsel
(including counsel for the Borrowers), independent public accountants and other
experts selected by Grantor and shall not be liable for any action taken or
omitted to be taken in good faith by Grantor in accordance with the advice of
such counsel, accountants or experts; (b) makes no warranty or
representation and shall not be responsible for any statements, warranties or
representations (whether written or oral) made in or in connection with any of
the Credit Agreements or any document relating thereto or for the financial
condition of any of the Borrowers or any guarantor or for the value of any
collateral; (c) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any of the Credit Agreements or any document relating thereto on the part of any
of the Borrowers or to inspect the property (including the books and records) of
any of the Borrowers; (d) shall not be responsible for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any of
the Credit Agreements or any document relating thereto or any collateral
therefor; and (e) shall incur no liability under or in respect of any of
the Credit Agreements or any such document or collateral by acting upon any
notice, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by Grantor to be genuine and signed or sent
by the proper party or parties.
5. Representations and
Warranties. (a) Grantor represents and warrants to
Participant, and Participant represents and warrants to Grantor, as of the date
hereof, that:
(i) it
has full power and authority and has taken all action necessary to execute and
deliver this Agreement and to fulfill its obligations hereunder and to
consummate the transactions contemplated hereby;
(ii) the
making and performance by it of this Agreement do not and will not violate any
law or regulation of the jurisdiction under which it exists, any other law or
regulation applicable to it or any other agreement to which it is a party or by
which it is bound.
(iii) this
Agreement has been duly executed and delivered by it and constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms (except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws of general applicability affecting
the enforcement of creditors’ rights generally and by a court’s discretion in
relation to equitable remedies); and
(iv) all
approvals, authorizations or other actions by, or filings with, any governmental
authority necessary for the validity or enforceability of its obligations under
this Agreement have been obtained.
(b) Grantor
further represents and warrants to Participant, as of the date hereof,
that:
(i) it
has not pledged, encumbered, assigned, transferred, participated, conveyed,
disposed of, terminated or granted any security interest in, in whole or in
part, any of its right, title and interest in and to the Loans and is not a
party to any agreement (other than this Agreement) that would result in the
foregoing; it is the sole legal and beneficial owner and holder of the Loans,
free and clear of all liens, charges, encumbrances or other security
interests;
(ii) no
litigation, arbitration or adversarial proceeding is pending against it or, to
the best of its knowledge, threatened against it, that will have a material
adverse effect on Participant’s rights or remedies hereunder; and
(iii) the
outstanding principal amounts of each of the Loans under the Credit Agreements
as of the date hereof are accurately set forth on Schedule 1 hereto and as of
the date hereof, Grantor has Unfunded Commitments under the Credit Agreements as
set forth on Schedule 1; and
(iv)
Grantor is not a party to, or bound by, any document or agreement other than the
Credit Agreements that could materially and adversely affect the Participation,
the Loans or Participant’s rights and remedies under this
Agreement.
(c) Participant
further represents and warrants to Grantor, as of the date hereof,
that:
(i) no
litigation, arbitration or adversarial proceeding is pending against it or, to
the best of its knowledge, threatened against it, that will have a material
adverse effect on any action taken or to be taken by Participant under this
Agreement.
6. Agreements of
Seller. (a) Grantor has furnished Participant with copies of
each of the Credit Agreements and the financial statements and other documents
delivered to Grantor in connection with each of the Credit Agreements and
requested by Participant. Upon Participant’s request, Grantor will
furnish to Participant copies of the publicly-available financial statements and
other publicly-available documents, and (subject to any duty of confidentiality
to which Grantor is subject) such other documents as Grantor shall receive
pursuant to any of the Credit Agreements, but Grantor assumes no responsibility
with respect to the authenticity, validity, accuracy or completeness
thereof. Participant agrees to maintain the confidentiality of any
confidential information included in this documentation.
(b)
Grantor shall give Participant prompt notice of the occurrence of any Event of
Default under any of the Credit Agreements of which Grantor has actual
knowledge; but no failure to give Participant any such notice shall result in
any liability on Grantor’s part to Participant.
7. Agreements of
Purchaser. Participant acknowledges that it has, independently
and without reliance upon Grantor and based on the financial statements referred
to in each of the Credit Agreements and such other documents and information as
Participant has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement. Participant acknowledges that it will,
independently and without reliance upon Grantor and based on such documents and
information as Participant shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement. Participant further acknowledges that except as expressly
set forth in this Agreement, Grantor and its respective directors, officers,
employees, representatives and controlling persons, make no representation or
warranty to Participant, express or implied, with respect to the Borrowers or
the accuracy, completeness or adequacy of the information disclosed by Grantor,
or of any other information relating to the Borrowers, nor shall any of the
foregoing persons be liable for any loss or damages of any kind suffered or
incurred by Participant resulting from the use of any such information provided
to Participant or otherwise reviewed and/or utilized by
Participant.
8. Administration by
Seller. (a) Subject to any prohibition or restriction
contained in any applicable law, regulation or court order or in the Credit
Agreements, Grantor agrees that it shall act or refrain from acting in respect
of any request, act, decision or vote with respect to the Participation (each
such request, act, decision or vote, an “Act”) in accordance with Participant’s
written directions; provided that if Grantor has requested direction from
Participant with respect to any Act, and Participant has failed to provide such
direction within five Business Days, Participant shall be deemed to have
consented to such Act and Grantor may Act in its reasonable determination under
the circumstances, subject in all respects to the terms of this
Agreement. Grantor shall promptly after its having actual notice
thereof notify Participant in writing of any matter in respect of which Grantor
may Act in connection with the Participation.
(b) Grantor
shall not, without Participant’s prior written consent, agree to the amendment,
modification or waiver of any of the terms of the Credit Agreements or any
agreement or document relating thereto or any collateral therefor, consent to
any action or failure to act by the Borrowers or any other party, or exercise
any rights Grantor may have in respect thereof. If Grantor shall
request Participant’s written consent to any of the actions described in this
paragraph (b), and shall not receive such consent or a denial thereof in writing
within ten days of the making of such request, Participant shall be deemed to
have given its consent.
(c) Participant
shall indemnify, defend and hold Grantor harmless from and against all losses,
damages, liabilities, claims, costs and reasonable attorneys fees and expenses
incurred by Grantor arising out of or resulting from any action or failure to
act by Grantor at Participant’s direction or on its behalf in connection with
any Act, except for any losses, damages, liabilities, costs or expenses arising
out of or relating to Grantor’s gross negligence or willful
misconduct.
9. Reimbursement of
Expenses. From and after the date hereof, Participant shall
reimburse Grantor for any and all reasonable out-of-pocket costs, expenses and
disbursements which may be incurred by Grantor in connection with the
Participation and the Credit Agreements. Any costs and expenses
incurred in connection with the establishment and maintenance of the Escrow
Account, including, without limitation, any fees to be paid to the Escrow Agent,
shall be paid by Participant and Grantor equally.
10. Taxes. (a) For
all tax purposes from and after the date hereof, the parties
agree to treat the Participant as the owner of the Loans, Credit
Agreements and all of the rights, title and interests referred
to in the Participation and not take any position that is
inconsistent with such agreed tax treatment.
(b) Participant
represents and warrants to Grantor, as of the date hereof, that Participant and,
if Participant is a disregarded entity, its member, are U.S. persons
as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended. Participant covenants that it shall not assign or transfer
the Participation or any portion thereof to a person other than a
U.S. person as defined in Section 7701(a)(30) of the Internal Revenue Code
of 1986, as amended.
(c) Participant
agrees to provide to Grantor, from time to time, completed and signed copies of
any forms that may be required by the United States Internal Revenue Service in
order to certify Participant’s exemption from United States withholding taxes
with respect to payments to be made to Participant under this
Agreement.
11. Assignments;
Subparticipations. Participant
shall not, assign or transfer the Participation without the prior written
consent of Grantor, which consent shall not be unreasonably withheld or
delayed. Participant may, upon prior written notice to Grantor, but
without Grantor’s consent, subparticipate all or any part of the Participation,
provided, that,
(i) Participant’s obligations under this Agreement shall remain unchanged
and Participant shall remain solely responsible for the performance of its
obligations under this Agreement and (ii) Grantor shall continue to deal
solely and directly with Participant in connection with Participant’s rights and
obligations under this Agreement.
12. Termination. This
Agreement is a continuing agreement and shall remain in full force and effect
until the later of (a) such time when all amounts under each Credit Agreement
have been paid in full in cash and (b) such time when each of the Credit
Agreements has been terminated or otherwise assigned to Participant pursuant to
an Elevation in accordance with Section 3 hereof.
13. Notices and
Payments. All
notices and other communications provided for under this Agreement shall be in
writing (including telecopier or electronic mail communications, together with a
copy delivered by certified mail), unless otherwise specified, and shall be sent
to the parties hereto at the addresses set forth below (or such other address as
Participant or Grantor may designate in writing).
14. Governing
Law. This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to any conflicts of law provisions
thereof that would require the application of the laws of any other
jurisdiction.
15. Jurisdiction. The
parties irrevocably and unconditionally submit to and accept the exclusive
jurisdiction of the United States District Court for the Southern District of
New York located in the Borough of Manhattan or the courts of the State of New
York located in the County of New York for any action, suit or proceeding
arising out of or based upon this Agreement or any matter relating to it and
waive any objection that they may have to the laying of venue in any such court
or that any such court is an inconvenient forum or does not have personal
jurisdiction over them.
16. Successors and
Assigns. The representations and warranties contained herein
shall survive the execution of this Agreement. The terms of this
Agreement shall be binding upon, and shall inure to the benefit of, Participant
and Grantor and their respective successors and permitted
assigns.
17.
Participant
Liability. Notwithstanding anything contained in this
Agreement to the contrary, Grantor and Participant agree that (i) no member of
Participant shall be personally liable for any obligation or liability of
Participant under this Agreement and (ii) all obligations and liabilities of
Participant under this Agreement are enforceable solely against Participant and
Participant’s assets and not against any member of Participant.
[Remainder of Page Intentionally Left
Blank]
GRANTOR
NATIONAL AMUSEMENTS,
INC.
By_____________________
Name:
Title:
Address:
PARTICIPANT
ACQUISITION HOLDINGS
SUBSIDIARY I LLC
By: MT Acquisition Holdings
LLC, its sole member
By:_____________________
Name: Xxxx
Xxxxxx
Title:
President
Address:
SCHEDULE
I
LOANS
|
Loan Name:
|
Secured Facility (Term)
|
Secured Facility (Revolver)
|
Unsecured Facility
|
Total
|
|
Availability:
|
$20,000,000
|
$10,000,000
|
$40,000,000
|
$70,000,000
|
|
Loans Outstanding:
|
$19,100,000
|
$9,852,381
|
$40,000,000
|
$68,952,380
|
|
L/C Usage:
|
$900,000
|
$147,619
|
$0
|
$1,047,619
|
|
Unfunded Commitment
|
$0
|
$0
|
$0
|
$0
|