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EXHIBIT 10.25
SPARE PARTS SALES AND SERVICE AGREEMENT
AGREEMENT dated as of the 6th day of April 1998 among XXXXXXXX ELECTRONICS
GAMES, INC. ("WEG"), a Delaware corporation with an address at 0000 Xxxxx
Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, MIDWAY GAMES INC. ("Midway"), a
Delaware corporation with an address at 0000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, and ATARI GAMES CORPORATION ("Atari"), a Delaware corporation
with an address at 000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000.
W I T N E S S E T H :
WHEREAS, on the date hereof, WMS Industries Inc. ("WMS") is distributing
(the "Distribution") all of its shares of Midway's common stock to holders of
the shares of WMS' common stock outstanding on March 31, 1998;
WHEREAS, prior to the Distribution, Midway has been a majority-owned
subsidiary of WMS;
WHEREAS, WEG is an indirect, wholly-owned subsidiary of WMS, and Atari is
an indirect, wholly-owned subsidiary of Midway;
WHEREAS, the parties formerly provided for certain arrangements whereby
WEG has been selling spare parts to Midway and Atari customers and to other
end-users of Midway and Atari products (collectively, the "Customers"); and
WHEREAS, the parties desire to set forth the terms of continuing
arrangements under which WEG shall continue to sell spare parts to the
Customers following the Distribution.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound, the parties hereby agree as
follows:
1. CERTAIN DEFINITIONS. The following terms as used in this Agreement shall
have the meanings set forth below:
1.1 "Proprietary Parts" means those parts, used in video games, that are
subject to any
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Midway patent, trademark, copyright or other intellectual property rights or
manufactured on a tool or die designed for and/or paid for by Midway.
1.2 "Non-Proprietary Parts" means parts, used in video games, that are not
Proprietary Parts.
2. PURCHASE, INVENTORY AND SALE OF SPARE PARTS.
2.1 WEG shall purchase and maintain an adequate inventory of spare parts
needed by the Customers with respect to all Midway and Atari products. Midway
shall sell or arrange for the sale of Proprietary Parts to WEG at such cost as
the parties shall agree. WEG shall purchase Non-Proprietary Parts through its
usual vendor sources or through Midway at negotiated prices.
2.2 Midway and Atari shall refer the Customers exclusively to WEG for
spare parts purchases during the term hereof. Notwithstanding the foregoing,
Midway and Atari may directly sell spare parts to Customers.
2.3 Notwithstanding any other provision in this Agreement, Midway shall
service all of its own warranty customers, and this Agreement shall not include
any warranty service.
3. EFFECTIVE DATE AND TERM. This Agreement is effective as of April 6, 1998
and shall continue in effect for a period of five years and for successive
renewal periods of six months each; provided, however, that either party may
terminate this Agreement for any reason upon six months' prior written notice
or otherwise pursuant to Section 5 hereof.
4. PRODUCT LIABILITY INSURANCE; DUTY OF CARE; INDEMNIFICATION.
4.1 WEG shall maintain product liability insurance which includes Midway
and Atari in amounts mutually agreeable to the parties.
4.2 WEG shall not be liable for any loss, damage, claim, action or
proceeding ("Loss") suffered by Midway or Atari arising from the sale of spare
parts hereunder unless such Loss arises from or is caused by a manufacturing
defect in the supplied part, or by WEG's negligence, fraud or willful
misconduct, and WEG agrees to indemnify, defend and hold
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harmless Midway and Atari (and their directors, officers, employees and agents)
from any Loss arising from such negligence, fraud or willful misconduct.
4.3 Midway agrees to indemnify, defend and hold harmless WEG (and its
directors, officers, employees and agents) from any Loss asserted by or on
behalf of third parties relating to the provision of services hereunder other
than any Loss caused by a manufacturing defect in the supplied part or by WEG's
negligence, fraud or willful misconduct.
4.4 The party required to indemnify hereunder (the "Indemnitor"), upon
demand by the other party (the "Indemnitee"), at the Indemnitor's sole cost and
expense, shall resist or defend against any Loss arising from this Agreement
that is asserted against the Indemnitee (in the Indemnitee's name, if
necessary), using such attorneys as the Indemnitee shall approve, which approval
shall not be unreasonably withheld or delayed. The Indemnitor shall not settle
or compromise any Loss on behalf of the Indemnitee without the written consent
of the Indemnitee, which consent shall not be unreasonably withheld or delayed.
If, in the Indemnitee's reasonable opinion there exists a conflict of interest
which would make it inadvisable to be represented by counsel for the Indemnitor,
the Indemnitor and the Indemnitee shall jointly select acceptable attorneys, and
the Indemnitor shall pay the reasonable fees and disbursements of such
attorneys.
5. DEFAULT; DISCONTINUANCE OF BUSINESS.
5.1 If either party materially defaults hereunder, the non-defaulting
party may terminate this Agreement effective immediately (subject to the cure
periods set forth below) upon written notice to the defaulting party. The
non-defaulting party shall be entitled to all remedies provided by law or
equity (including reasonable attorneys' fees and costs of suit incurred),
except as specifically limited by the provisions of Section 4 hereof. The
following events shall be deemed to be material defaults hereunder:
(a) Failure by WEG to have an adequate inventory of spare parts or to
respond promptly to Customer requests for spare parts, which failure is not
remedied within ten days after receipt of written notice thereof; provided,
however, that WEG shall not be required to sell spare parts to Customers who
are unable to satisfy WEG's standard credit criteria. In such a case,
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WEG shall immediately notify Midway and Atari that it has refused shipment to
the Customer;
(b) Except as otherwise provided herein, failure by either party
substantially to perform in accordance with the terms and conditions of this
Agreement, which failure is not remedied within 20 days after receipt of
written notice from the other party specifying the nature of such default; or
(c) (i) Filing of a voluntary bankruptcy petition by either party; (ii)
filing of an involuntary bankruptcy petition against either party which is not
stayed or dismissed within 60 days; (iii) assignment for the benefit of
creditors made by either party; or (iv) appointment of a receiver for either
party or any material part of its property.
5.2 If WEG discontinues its business of selling spare parts, this
Agreement shall terminate, and Midway shall have the option to purchase such of
WEG's spare parts inventory, at WEG's cost, as Midway wishes.
6. INSPECTION. Midway and Atari shall have the right to inspect WEG's
inventory for quality defects during reasonable business hours no more
frequently than once per quarter or after receiving repeated Customer complaints
concerning a specified part or parts.
7. FORCE MAJEURE. Except as specifically set forth in this Agreement, the
parties incur no liability to each other, and no default shall be deemed to
occur, due to a failure to perform under the terms and conditions of this
Agreement resulting from fire, flood, war, strike, lock-out, work stoppage or
slow-down, labor disturbance, power failure, major equipment breakdown, riot,
acts of God, acts of United States' enemies, laws, orders or at the insistence
or result of any governmental authority or any other delay beyond each other's
reasonable control.
8. MISCELLANEOUS.
8.1 No waiver by either party of any default shall be effective unless in
writing, nor shall any such waiver operate as a waiver of any other default or
of the same default on any future occasion.
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8.2 Each party warrants and represents that proceeding herewith is not
inconsistent in any material way with any contractual obligations, expressed or
implied, undertaken with any third party.
8.3 In the event that any term or provision of this Agreement shall
violate any applicable statute, ordinance or rule of law in any jurisdiction in
which it is used, or otherwise be unenforceable, such provision shall be
ineffective in such jurisdiction only to the extent of such violation without
invalidating any other provision hereof.
8.4 Neither party shall, without the prior written consent of the other,
assign any rights or delegate any obligations under this Agreement, such
consent not to be unreasonably withheld, conditioned or delayed, except that
WEG may assign any such rights or delegate any such obligations to WMS or any
of its subsidiaries.
8.5 The headings used in this Agreement are inserted only for the purpose
of convenience and reference, and in no way define or limit the scope or intent
of any provision or part hereof.
8.6 This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Nothing
herein, expressed or implied, shall be construed to give any other person any
legal or equitable rights hereunder. No person shall be deemed to be a third
party beneficiary of this Agreement. Nothing herein shall be construed to be
an admission or waiver of any rights, claims and defenses the parties may have
against third parties, which rights, claims and defense the parties
specifically reserve.
8.7 All notices and other communications hereunder shall be in writing and
shall be delivered by hand, by facsimile or mailed by registered or certified
mail (return receipt requested) to the parties at the addresses set forth on
the first page of this Agreement (or at such other addresses for a party as
shall be specified by like notice) and shall be deemed given on the date on
which such notice is received.
8.8 Each party hereto shall take such actions and execute such documents
and instruments as may be reasonably requested by the other party to implement
the terms and provisions of this Agreement.
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8.9 All controversies and disputes arising out of or under this Agreement
shall be determined pursuant to the laws of the State of Illinois, United
States of America, regardless of the laws that might be applied under
applicable principles of conflicts of laws.
8.10 This Agreement constitutes the entire understanding between the
parties hereto (and supersedes all prior written or oral communications)
relating to the subject matter covered in this Agreement. No amendment,
modification, extension or failure to enforce any condition of this Agreement
by either party shall be deemed a waiver of any of its rights herein. This
Agreement shall not be amended except by a writing executed by all the parties
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXXXX ELECTRONICS GAMES, INC.
By: /s/ Xxxxxx X. Xxxx, Xx.
___________________________________
Name: Xxxxxx X. Xxxx, Xx.
Title: Sr. Vice President-Finance
MIDWAY GAMES INC.
By: /s/ Xxxx X. Xxxxxxxx
___________________________________
Name: Xxxx X. Xxxxxxxx
Title: President
ATARI GAMES CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
___________________________________
Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
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GUARANTY
WMS Industries Inc. does hereby guaranty all of the performance and
financial obligations of WEG under this Agreement to which this Guaranty is
affixed. This Guaranty is unconditional, irrevocable, continuing and without
limitation, and shall be binding upon the successors and assigns of the
undersigned.
WMS INDUSTRIES INC.
By: /s/ Xxxxxx X. Xxxx, Xx.
__________________________________
Name: Xxxxxx X. Xxxx, Xx.
Title: Vice President-Finance
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