EXHIBIT 10.54
INTERCOMPANY SUBORDINATION AGREEMENT
THIS INTERCOMPANY SUBORDINATION AGREEMENT (this "Agreement"), dated
as of March 3, 2004, is made among the Obligors (as defined below), and XXXXX
FARGO FOOTHILL, INC., a California corporation ("Foothill"), as agent for the
Lender Group (in such capacity, together with its successors, if any, in such
capacity, "Agent").
WHEREAS, Obligors and the Lender Group are parties to that certain
Loan and Security Agreement dated as of even date herewith (as amended,
modified, renewed, extended, or replaced from time to time, the "Loan
Agreement"), pursuant to which the Lender Group has agreed to make certain
financial accommodations to one or more of the Obligors;
WHEREAS, each Obligor has made or may make certain loans or advances
from time to time to one or more other Obligors;
WHEREAS, each Obligor has agreed to the subordination of such
indebtedness of each other Obligor to such Obligor, upon the terms and subject
to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
conditions, representations, and warranties set forth herein and for other good
and valuable consideration, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
(a) TERMS DEFINED IN LOAN AGREEMENT. All capitalized terms used in
this Agreement and not otherwise defined herein shall have the meanings assigned
to them in the Loan Agreement.
(b) CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"Insolvency Event" has the meaning set forth in Section 3.
"Lender Group" shall mean, individually and collectively, each of
the Lenders and Foothill, in its capacity as "Agent" (as such term is defined in
the Loan Agreement) for the Lenders.
"Lenders" means, individually and collectively, each of the
financial institutions (including Foothill) listed on the signature pages of the
Loan Agreement and any other Person made a party thereto in accordance with the
provisions of Section 14.1 thereof (together with their respective successors
and assigns).
"Obligors" means, individually and collectively, jointly and
severally, Borrowers and the U.S. Credit Parties.
"Senior Debt" means the Obligations and other indebtedness and
liabilities of Obligors to Lender Group under or in connection with the Loan
Agreement and the other Loan Documents, including all unpaid principal of the
Advances, all interest accrued thereon, all fees due under the Loan Agreement
and the other Loan Documents, and all other amounts payable by Obligors to the
Lender Group thereunder or in connection therewith, whether now existing or
hereafter arising, and whether due or to become due, absolute or contingent,
liquidated or unliquidated, determined or undetermined.
"Subordinated Debt" means, with respect to each Obligor, all
indebtedness, liabilities, and other obligations of any other Obligor owing to
such Obligor in respect of any and all loans or
Intercompany Subordination Agreement - Signature Page
advances made by such Obligor to such other Obligor whether now existing or
hereafter arising, and whether due or to become due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, including all fees and
all other amounts payable by any other Obligor to such Obligor under or in
connection with any documents or instruments related thereto.
"Subordinated Debt Payment" means any payment or distribution by or
on behalf of Obligors, directly or indirectly, of assets of Obligors of any kind
or character, whether in cash, property, or securities, including on account of
the purchase, redemption, or other acquisition of Subordinated Debt, as a result
of any collection, sale, or other disposition of collateral, or by setoff,
exchange, or in any other manner, for or on account of the Subordinated Debt.
(c) INTERPRETATION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section,
subsection, clause, schedule, and exhibit references are to this Agreement
unless otherwise specified. References to agreements and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto. References to statutes or regulations are to be construed
as including all statutory and regulatory provisions consolidating, amending, or
replacing the statute or regulation referred to. The captions and headings are
for convenience of reference only and shall not affect the construction of this
Agreement.
SECTION 2. SUBORDINATION TO PAYMENT OF SENIOR DEBT.
As to each Obligor, all payments on account of the Subordinated Debt
shall be subject, subordinate, and junior, in right of payment and exercise of
remedies, to the extent and in the manner set forth herein, to the prior payment
of the Senior Debt until the Senior Debt has been Paid in Full (as defined in
the Credit Agreement).
SECTION 3. SUBORDINATION UPON ANY DISTRIBUTION OF ASSETS OF OBLIGORS.
As to each Obligor, in the event of any payment or distribution of
assets of any other Obligor of any kind or character, whether in cash, property,
or securities, upon the dissolution, winding up, or total or partial liquidation
or reorganization, readjustment, arrangement, or similar proceeding relating to
such other Obligor or its property, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership, arrangement, or similar proceedings or
upon an assignment for the benefit of creditors, or upon any other marshaling or
composition of the assets and liabilities of such other Obligor, or otherwise
(such events, collectively, the "Insolvency Events"): (i) all amounts owing on
account of the Senior Debt shall first be Paid in Full before any Subordinated
Debt Payment is made; and (ii) to the extent permitted by applicable law, any
Subordinated Debt Payment to which such Obligor would be entitled except for the
provisions hereof, shall be paid or delivered by the trustee in bankruptcy,
receiver, assignee for the benefit of creditors, or other liquidating agent
making such payment or distribution directly to the Agent for application to the
payment of the Senior Debt in accordance with clause (i), after giving effect to
any concurrent payment or distribution or provision therefor to the Agent in
respect of such Senior Debt.
SECTION 4. PAYMENTS ON SUBORDINATED DEBT.
(a) PERMITTED PAYMENTS. So long as no Event of Default has
occurred and is continuing, each Obligor may make, and each other Obligor shall
be entitled to accept and receive, payments on account of the Subordinated Debt
in the ordinary course of business only to the extent such payments are
permitted under the Loan Agreement.
(b) NO PAYMENT UPON SENIOR DEBT DEFAULTS. Upon the occurrence of
any Event of Default, and until such Event of Default is cured or waived, each
Obligor shall not make, and each other Obligor shall not accept or receive, any
Subordinated Debt Payment.
SECTION 5. SUBORDINATION OF REMEDIES.
As long as any Senior Debt shall remain outstanding and unpaid, no
Obligor shall, without the prior written consent of the Agent:
(a) accelerate, make demand, or otherwise make due and payable
prior to the original due date thereof any Subordinated Debt or bring suit or
institute any other actions or proceedings to enforce its rights or interests in
respect of the obligations of any other Obligor owing to such Obligor;
(b) exercise any rights under or with respect to guaranties of the
Subordinated Debt, if any;
(c) exercise any rights to set-offs and counterclaims in respect
of any indebtedness, liabilities, or obligations of such Obligor to any other
Obligor against any of the Subordinated Debt; or
(d) commence, or cause to be commenced, or join with any creditor
other than the Agent on behalf thereof in commencing, any bankruptcy,
insolvency, or receivership proceeding against the other Obligor.
SECTION 6. PAYMENT OVER TO THE AGENT.
In the event that, notwithstanding the provisions of SECTIONS 3, 4,
and 5, any Subordinated Debt Payments shall be received in contravention of such
SECTIONS 3, 4, and 5 by any Obligor before all Senior Debt is Paid in Full, such
Subordinated Debt Payments shall be held for the benefit of the Agent and shall
be paid over or delivered to the Agent for application to the payment of all
Senior Debt remaining unpaid to the extent necessary to give effect to such
SECTIONS 3, 4, and 5, after giving effect to any concurrent payments or
distributions to the Agent in respect of the Senior Debt until Senior Debt is
Paid in Full.
SECTION 7. AUTHORIZATION TO THE AGENT.
If, while any Subordinated Debt is outstanding, any Insolvency Event
shall occur and be continuing with respect to another Obligor or its property
which is not otherwise permitted under the Loan Agreement: (i) the Agent is
hereby irrevocably authorized and empowered (in the name of each Obligor or
otherwise), but shall have no obligation, to demand, xxx for, collect, and
receive every payment or distribution in respect of the Subordinated Debt and
give acquittance therefor and to file claims and proofs of claim and take such
other action (including voting the Subordinated Debt) as it may deem necessary
or advisable for the exercise or enforcement of any of the rights or interests
of the Lender Group; and (ii) each Obligor shall promptly take such action as
the Agent reasonably may request (A) to collect the Subordinated Debt for the
account of the Lender Group and to file appropriate claims or proofs of claim in
respect of the Subordinated Debt, (B) to execute and deliver to the Agent such
powers of attorney, assignments, and other instruments as it may reasonably
request to enable it to enforce any and all claims with respect to the
Subordinated Debt, and (C) to collect and receive any and all Subordinated Debt
Payments.
SECTION 8. CERTAIN AGREEMENTS OF EACH OBLIGOR.
(a) NO BENEFITS. Each Obligor understands that there may be
various agreements between the Lender Group and any other Obligor evidencing and
governing the Senior Debt, and each Obligor acknowledges and agrees that such
agreements are not intended to confer any benefits on such
Obligor and that the Lender Group and Agent on behalf thereof shall have no
obligation to such Obligor or any other Person to exercise any rights, enforce
any remedies, or take any actions which may be available to them under such
agreements.
(b) NO INTERFERENCE. Each Obligor acknowledges that each other
Obligor has granted to Agent for the benefit of the Lender Group security
interests in certain of such other Obligor's assets as set forth in the Loan
Agreement and the other Loan Documents, and agrees not to interfere with or in
any manner oppose a disposition of any Collateral by the Lender Group or Agent
on behalf thereof in accordance with the Loan Documents and applicable law.
(c) RELIANCE BY THE LENDER GROUP. Each Obligor acknowledges and
agrees that the Lender Group will have relied upon and will continue to rely
upon the subordination provisions provided for herein and the other provisions
hereof in entering into the Loan Documents and making or issuing the Loans
thereunder.
(d) WAIVERS. Except as provided under the Loan Agreement, each
Obligor hereby waives any and all notice of the incurrence of the Senior Debt or
any part thereof and any right to require marshaling of assets.
(e) OBLIGATIONS OF EACH OBLIGOR NOT AFFECTED. Each Obligor hereby
agrees that at any time and from time to time, without notice to or the consent
of such Obligor except as otherwise provided in the Loan Documents, without
incurring responsibility to such Obligor, and without impairing or releasing the
subordination provided for herein or otherwise impairing the rights of the
Lender Group hereunder: (i) the time for any other Obligor's performance of or
compliance with any of its agreements contained in the Loan Documents may be
extended or such performance or compliance may be waived by the Lender Group or
Agent on behalf thereof; (ii) the agreements of any other Obligor with respect
to the Loan Documents may from time to time be modified by such other Obligor
and the Lender Group or Agent on behalf thereof for the purpose of adding any
requirements thereto or changing in any manner the rights and obligations of
such other Obligor or the Lender Group thereunder; (iii) the manner, place, or
terms for payment of Senior Debt or any portion thereof may be altered or the
terms for payment extended, or the Senior Debt may be renewed in whole or in
part; (iv) the maturity of the Senior Debt may be accelerated in accordance with
the terms of any present or future agreement by any other Obligor and the Lender
Group or Agent on behalf thereof; (v) any Collateral may be sold, exchanged,
released, or substituted and any Lien in favor of Agent for the benefit of the
Lender Group may be terminated, subordinated, or fail to be perfected or become
unperfected; (vi) any Person liable in any manner for Senior Debt may be
discharged, released, or substituted; and (vii) all other rights against any
other Obligor, any other Person, or with respect to any Collateral may be
exercised (or the Lender Group or Agent on behalf thereof may waive or refrain
from exercising such rights).
(f) RIGHTS OF THE LENDER GROUP NOT TO BE IMPAIRED. No right of the
Lender Group or Agent on behalf thereof to enforce the subordination provided
for herein or to exercise its other rights hereunder shall at any time in any
way be prejudiced or impaired by any act or failure to act by any other Obligor,
the Lender Group, or Agent hereunder or under or in connection with the other
Loan Documents or by any noncompliance by any other Obligor with the terms and
provisions and covenants herein or in any other Loan Document, regardless of any
knowledge thereof the Lender Group or Agent on behalf thereof may have or
otherwise be charged with.
(g) FINANCIAL CONDITION OF OBLIGORS. Except as provided under the
Loan Agreement, each Obligor shall not have any right to require the Lender
Group to obtain or disclose any information with respect to: (i) the financial
condition or character of any other Obligor or the ability of the other Obligor
to pay and perform Senior Debt; (ii) the Senior Debt; (iii) the Collateral or
other security for any or all of the Senior Debt; (iv) the existence or
nonexistence of any guarantees of, or any other subordination agreements with
respect to, all or any part of the Senior Debt; (v) any action or inaction on
the part of the Lender Group or any other Person; or (vi) any other matter,
fact, or occurrence whatsoever.
SECTION 9. SUBROGATION.
(a) SUBROGATION. Until all Senior Debt is Paid in Full and the
termination of the Loan Agreement, no Obligor shall have, or shall directly or
indirectly exercise, any rights that it may acquire by way of subrogation under
this Agreement, by any payment or distribution to the Lender Group hereunder or
otherwise. Upon the date all Senior Debt is Paid in Full, each Obligor shall be
entitled to exercise in full any subrogated rights it may possess with respect
to the rights of the Lender Group to receive payments or distributions
applicable to the Senior Debt until the Subordinated Debt shall be paid in full.
For the purposes of the foregoing subrogation, no payments or distributions to
the Lender Group of any cash, property, or securities to which any Obligor would
be entitled except for the provisions of SECTION 3, 4, or 5 shall, as among such
Obligor, its creditors (other than the Lender Group), and the other Obligors, be
deemed to be a payment by the other Obligors to or on account of the Senior
Debt.
(b) PAYMENTS OVER TO OBLIGORS. If any payment or distribution to
which any Obligor would otherwise have been entitled but for the provisions of
SECTION 3, 4, OR 5 shall have been applied pursuant to the provisions of SECTION
3, 4, OR 5 to the payment of all amounts payable under the Senior Debt, such
Obligor shall be entitled to receive from the Lender Group any payments or
distributions received by the Lender Group in excess of the amount sufficient to
pay in full all amounts payable under or in respect of the Senior Debt. If any
such excess payment is made to the Lender Group, the Lender Group shall promptly
remit such excess to such Obligor and until so remitted shall hold such excess
payment for the benefit of such Obligor. If more than one Obligor is entitled to
receive such payments, payments shall be made to each Obligor, pro rata based
upon the ratio that the total amount to which such Obligor may be entitled to
receive bears to the total amount to which all Obligors are entitled to receive.
SECTION 10. CONTINUING AGREEMENT; REINSTATEMENT.
(a) CONTINUING AGREEMENT. This Agreement is a continuing agreement
of subordination and shall continue in effect and be binding upon each Obligor
until the Senior Debt is Paid in Full. The subordinations, agreements, and
priorities set forth herein shall remain in full force and effect regardless of
whether any party hereto in the future seeks to rescind, amend, terminate, or
reform, by litigation or otherwise, its respective agreements with the other
Obligors.
(b) REINSTATEMENT. This Agreement shall continue to be effective
or shall be reinstated, as the case may be, if, for any reason, any payment of
the Senior Debt by or on behalf of any Obligor shall be rescinded or must
otherwise be restored by the Lender Group, whether as a result of an Insolvency
Event or otherwise.
SECTION 11. TRANSFER OF SUBORDINATED DEBT.
No Obligor may assign or transfer its rights and obligations in
respect of the Subordinated Debt without the prior written consent of Agent and
any such transferee or assignee, as a condition to acquiring an interest in the
Subordinated Debt shall agree to be bound hereby, in form reasonably
satisfactory to Agent.
SECTION 12. OBLIGATIONS OF OBLIGORS NOT AFFECTED.
The provisions of this Agreement are intended solely for the purpose
of defining the relative rights of each Obligor against the other Obligors, on
the one hand, and of the Lender Group and Agent on behalf thereof against the
other Obligors, on the other hand. Nothing contained in this Agreement shall (i)
impair, as between each Obligor and the other Obligors, the obligation of the
other Obligors to pay their respective obligations with respect to the
Subordinated Debt as and when the same shall become due and payable, or (ii)
otherwise affect the relative rights of each Obligor against the other Obligors,
on the one hand, and of the creditors (other than the Lender Group) of the other
Obligors against the other Obligors, on the other hand.
SECTION 13. ENDORSEMENT OF OBLIGOR DOCUMENTS; FURTHER ASSURANCES AND
ADDITIONAL ACTS.
(a) ENDORSEMENT OF OBLIGOR DOCUMENTS. At the request of Agent, all
documents and instruments evidencing any of the Subordinated Debt, if any, shall
be endorsed with a legend noting that such documents and instruments are subject
to this Agreement, and each Obligor shall promptly deliver to Agent evidence of
the same.
(b) FURTHER ASSURANCES AND ADDITIONAL ACTS. Each Obligor shall
execute, acknowledge, deliver, file, notarize, and register at its own expense
all such further agreements, instruments, certificates, financing statements,
documents, and assurances, and perform such acts as Agent reasonably shall deem
necessary or appropriate to effectuate the purposes of this Agreement, and
promptly provide Agent with evidence of the foregoing reasonably satisfactory in
form and substance to Agent.
SECTION 14. NOTICES.
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including by facsimile
transmission) and shall be mailed, sent, or delivered in accordance with the
notice provisions contained in the Loan Agreement.
SECTION 15. NO WAIVER; CUMULATIVE REMEDIES.
No failure on the part of the Lender Group or Agent on behalf
thereof to exercise, and no delay in exercising, any right, remedy, power, or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, remedy, power, or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power, or privilege. The rights and remedies under this Agreement are cumulative
and not exclusive of any rights, remedies, powers, and privileges that may
otherwise be available to the Lender Group.
SECTION 16. [INTENTIONALLY OMITTED]
SECTION 17. SURVIVAL.
All covenants, agreements, representations and warranties made in
this Agreement shall, except to the extent otherwise provided herein, survive
the execution and delivery of this Agreement, and shall continue in full force
and effect so long as any Senior Debt remains unpaid.
SECTION 18. BENEFITS OF AGREEMENT.
This Agreement is entered into for the sole protection and benefit
of the parties hereto and their successors and assigns, and no other Person
shall be a direct or indirect beneficiary of, or shall have any direct or
indirect cause of action or claim in connection with, this Agreement.
SECTION 19. BINDING EFFECT.
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by each Obligor and the Lender Group and their respective successors
and permitted assigns.
SECTION 20. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF ILLINOIS.
SECTION 21. SUBMISSION TO JURISDICTION.
EACH OBLIGOR HEREBY (i) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS AND THE FEDERAL COURTS OF THE UNITED STATES
SITTING IN THE COUNTY OF XXXX, STATE OF ILLINOIS, FOR THE PURPOSE OF ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH COURTS, OR AT THE SOLE OPTION OF AGENT, IN ANY OTHER COURT IN WHICH
AGENT SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY (iii) IRREVOCABLY WAIVES (TO THE
EXTENT PERMITTED BY APPLICABLE LAW) ANY OBJECTION WHICH IT NOW OR HEREAFTER MAY
HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY OF
THE FOREGOING COURTS, AND ANY OBJECTION ON THE GROUND THAT ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (iv)
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 22. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS.
(a) ENTIRE AGREEMENT. This Agreement and the other Loan Documents
constitutes the entire agreement of each of the Obligors and the Lender Group
with respect to the matters set forth herein and supersedes any prior
agreements, commitments, drafts, communications, discussions, and
understandings, oral or written, with respect thereto.
(b) AMENDMENTS AND WAIVERS. No amendment to any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by each of the Obligors and Agent; and no waiver of any provision of
this Agreement, or consent to any departure by any Obligor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Agent.
Any such amendment, waiver, or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 23. CONFLICTS.
In case of any conflict or inconsistency between any terms of this
Agreement, on the one hand, and any documents or instruments in respect of the
Subordinated Debt, on the other hand, then the terms of this Agreement shall
control.
SECTION 24. SEVERABILITY.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under all applicable
laws and regulations. If, however, any provision of this Agreement shall be
prohibited by or invalid under any such law or regulation in any jurisdiction,
it shall, as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed
so modified, it shall be ineffective and invalid only to the extent of such
prohibition or invalidity without affecting the remaining provisions of this
Agreement or the validity or effectiveness of such provision in any other
jurisdiction.
SECTION 25. INTERPRETATION.
This Agreement is the result of negotiations between, and have been
reviewed by the respective counsel to, Obligors and the several members of the
Lender Group and is the product of all
parties hereto. Accordingly, this Agreement shall not be construed against the
Lender Group merely because of the Lender Group's involvement in the preparation
hereof.
SECTION 26. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.
SECTION 27. TERMINATION OF AGREEMENT.
Upon the date the Senior Debt is Paid in Full and the termination of
the Loan Agreement, this Agreement shall terminate and Agent on behalf of the
Lender Group shall promptly execute and deliver to each Obligor such documents
and instruments as shall be necessary to evidence such termination.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Agreement as of the date first written above.
OBLIGORS:
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
By Xxxxxx X. Xxxxxx
Title Executive Vice President--Finance,
Treasurer and Chief Financial Officer
AGENT:
XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent
By: Xxxx X. Xxxxxx
Vice President
