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EXHIBIT 10.37
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") made as
of the 24th day of May, 1999, by and between MIDWAY GAMES INC., a Delaware
corporation (the "Corporation"), and XXXXXX X. XXXX, XX. ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is employed as the Executive Vice President - Finance,
Treasurer and Chief Financial Officer of the Corporation pursuant to that
certain Executive Employment Agreement dated as of July 1, 1998; and
WHEREAS, the parties desire to amend and restate in its entirety such
agreement; and
WHEREAS, the Corporation desires to employ Executive and Executive is
willing to undertake such employment on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT; DUTIES. The Corporation hereby employs Executive to perform
such duties on behalf of the Corporation and its affiliates as the President or
the Board of Directors of the Corporation may from time to time determine
relating to financial, accounting and other matters appropriate for a senior
executive of the Corporation. During Executive's employment hereunder he shall
not be required to move his place of residence from the Chicago, Illinois
metropolitan area.
2. ACCEPTANCE AND LOYALTY. Executive hereby accepts such employment and
agrees that throughout the period of his employment hereunder, he will devote
his full time, attention, knowledge and skills, faithfully, diligently and to
the best of his ability, in furtherance of the business of the Corporation and
will perform the duties assigned to him pursuant to Section 1 hereof. Executive
shall perform all duties and responsibilities in a professional manner
consistent with the skill, competence and efficiency expected of an executive
employee performing the duties assigned to Executive and subject to the
direction and control of the President and the Board of Directors of the
Corporation. Executive will do such traveling as may be reasonably required of
him in the performance of his obligations hereunder. Executive shall at all
times be subject to,
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observe and carry out such rules, regulations, policies, directions and
restrictions as the Corporation shall from time to time establish. During his
employment hereunder, Executive shall not, without the written approval of the
President or the Board of Directors of the Corporation first had and obtained in
each instance, directly or indirectly, accept employment or compensation from or
perform services of any nature for, any business enterprise other than the
Corporation or any of its subsidiaries or affiliates except that Executive may
continue to perform services to WMS Industries Inc. ("WMS") for such period as
shall be mutually agreeable to the Corporation, WMS and Executive. During
Executive's employment hereunder, Executive shall not be entitled to additional
compensation for serving in any office, including as a director, of the
Corporation or any of its subsidiaries or affiliates to which he may be elected.
3. TERM. The term of Executive's employment hereunder shall commence on the
date hereof and terminate on June 30, 2001 (the "Original Term"); provided,
however, that the term of Executive's employment shall be deemed automatically
extended from time to time such that the term of such employment, unless
terminated by Executive as set forth below in this Section 3, shall at no time
be less than three years (the "Extended Term"). Executive's services hereunder
may be terminated by the Corporation (i) effective upon expiration of the
Original Term or the Extended Term upon written notice from the Corporation to
the Executive dated and received at least three years prior to the termination
date or (ii) effective upon 30 days' prior written notice if such termination is
for "cause" as defined in subsection 8.3 of this Agreement. Executive's services
hereunder may be terminated by Executive upon written notice from Executive to
the Corporation dated and received at least two years prior to the termination
date. The Original Term and the Extended Term are hereafter collectively
referred to as the "Term" and each year of the Term is hereafter referred to as
an "Employment Year."
4. COMPENSATION AND BENEFITS.
4.1 The Corporation shall pay to Executive as compensation for his
services and agreements hereunder a base salary at the rate of $315,000 per
annum, or such greater amount as the Board of Directors of the Corporation shall
from time to time determine. Base salary shall be payable in equal installments
in accordance with the Corporation's normal payroll policy, subject to payroll
taxes and withholding requirements.
4.2 Executive shall be entitled to participate, to the extent he is
eligible under the terms and conditions thereof, in any bonus, pension,
retirement, disability, hospitalization, insurance, medical service, or other
employee benefit plan which is generally available to executive employees of the
Corporation and which may be in effect from time to time during the period of
his employment hereunder, including the Exec-U-Care insurance program. The
Corporation shall be under no obligation to institute or continue the existence
of any such employee benefit plan.
5. BUSINESS EXPENSES. The Corporation shall reimburse Executive for all
authorized expenses reasonably incurred by him in accordance with the
Corporation's "Travel and Entertainment Policy and Procedure," and any
amendments thereof that the Corporation may adopt during the Term hereof.
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6. VACATION. Executive shall be entitled to four weeks paid vacation during
each Employment Year. Any such vacations are to be taken at times mutually
agreeable to Executive and the President of the Corporation. Vacation time shall
not be accumulated from year to year, unless Executive is requested by the
President of the Corporation to forego a vacation during any Employment Year.
7. KEY-MAN LIFE INSURANCE. The Corporation may purchase and maintain life
insurance covering the life of Executive ("Key-man Insurance") in an amount
determined by the Corporation. The Corporation shall be the sole owner and
beneficiary of the Key-man Insurance and may apply to the payment of premiums
thereunder any dividends declared and paid thereon. Executive shall submit
himself to such physical examinations as the President of the Corporation may
deem necessary or desirable in connection with the purchase and maintenance of
the Key-man Insurance.
8. NON-COMPETITION AND NON-RAIDING. In consideration of the Corporation's
entering into this Agreement:
8.1 Executive agrees that during the Term hereof and for a period of
one year after termination for "cause" or after Executive terminates his
employment without the written consent of the Corporation, he will not, directly
or indirectly, without the prior written consent of the Corporation, own,
manage, operate, join, control, participate in, perform any services for, invest
in, or otherwise be connected with, in any manner, whether as an officer,
director, employee, consultant, partner, investor or otherwise, any business
entity which is engaged in the design, importation, manufacture and/or sale of
coin-operated video games, home video games or any business entity which is
engaged in any other business in which the Corporation or any affiliate of the
Corporation is engaged. Nothing herein contained shall be deemed to prohibit
Executive from investing his funds in securities of a company if the securities
of such company are listed for trading on a national stock exchange or traded in
the over-the-counter market and Executive's holdings therein represent less than
five percent of the total number of shares or principal amount of other
securities of such company outstanding.
8.2 Executive agrees that during the Term hereof and for a period of
one year thereafter, he will not, directly or indirectly, without the prior
written consent of the Corporation, induce or influence, or seek to induce or
influence, any person who is engaged by the Corporation or any affiliate of the
Corporation as an employee, agent, independent contractor or otherwise, to
terminate his employment or engagement, nor shall Executive directly or
indirectly, through any other person, firm or corporation, employ or engage, or
solicit for employment or engagement, or advise or recommend to any other person
or entity that such person or entity employ or engage or solicit for employment
or engagement, any person or entity employed or engaged by the Corporation or
any affiliate of the Corporation.
8.3 For purposes of this Agreement, "cause" means (i) conviction
(pursuant to a final or non-appealable judgment) of a felony or any other
crime involving fraud, larceny or dishonesty; (ii) failure and refusal to follow
a reasonable direction of the Chief Executive Officer, the President or the
Board of Directors of the Corporation after notice in writing of such failure or
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refusal and a cure period of ten days thereafter; or (iii) commission of any
dishonest, willful or grossly negligent act which has or is reasonably likely to
have a material adverse effect on the Corporation or its customer or trade
relationships.
8.4 In the event that Executive is terminated for reasons other than
"cause," then, for such period (not to exceed one year after termination)
as the Corporation either continues to pay the Executive's base salary to him or
has made a lump-sum payment to him pursuant to Section 12 hereof, Executive
agrees that he will not, directly or indirectly, without the prior written
consent of the Corporation, take any of the actions prohibited under subsection
8.1 of this Agreement.
8.5 Executive acknowledges that the provisions of this Paragraph 8 are
reasonable and necessary for the protection of the Corporation. In the event
that any provision of this Paragraph 8, including any sentence, clause or part
hereof, shall be deemed contrary to law or invalid or unenforceable in any
respect by a court of competent jurisdiction, the remaining provisions shall not
be affected, but shall, subject to the discretion of such court, remain in full
force and effect and any invalid and unenforceable provisions shall be deemed,
without further action on the part of the parties hereto, modified, amended and
limited to the extent necessary to render the same valid and enforceable.
9. CONFIDENTIALITY AGREEMENT.
9.1 As used herein, the term "Confidential Information" shall mean
any and all information of the Corporation and of its affiliates (for purposes
of this paragraph, the Corporation's affiliates shall be deemed included within
the meaning of "Corporation"), including, but not limited to, all data,
compilations, programs, devices, strategies, or methods concerning or related to
(i) the Corporation's finances, financial condition, results of operations,
employee relations, amounts of compensation paid to officers and employees and
any other data or information relating to the internal affairs of the
Corporation and its operations; (ii) the terms and conditions (including prices)
of sales and offers of sales of the Corporation's products and services; (iii)
the terms, conditions and current status of the Corporation's agreements and
relationship with any customer or supplier; (iv) the customer and supplier lists
and the identities and business preferences of the Corporation's actual and
prospective customers and suppliers or any employee or agent thereof with whom
the Corporation communicates; (v) the trade secrets, manufacturing and operating
techniques, price data, costs, methods, systems, plans, procedures, formulas,
processes, hardware, software, machines, inventions, designs, drawings, artwork,
blueprints, specifications, tools, skills, ideas, and strategic plans possessed,
developed, accumulated or acquired by the Corporation; (vi) any communications
between the Corporation, its officers, directors, stockholders, or employees,
and any attorney retained by the Corporation for any purpose, or any person
retained or employed by such attorney for the purpose of assisting such attorney
in his or her representation of the Corporation; (vii) any other information and
knowledge with respect to all products developed or in any stage of development
by the Corporation; (viii) the abilities and specialized training or experience
of others who as employees or consultants of the Corporation during the Term
hereof have engaged in the design or development of any such products; and (ix)
any other matter or thing, whether or not recorded on any medium, (a) by which
the Corporation derives actual or potential economic value from such matter or
thing being not generally known to other persons or entities who might obtain
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economic value from its disclosure or use, or (b) which gives the Corporation an
opportunity to obtain an advantage over its competitors who do not know or use
the same.
9.2 Executive acknowledges and agrees that the Corporation is
engaged in highly competitive businesses and has expended, or will expend,
significant sums of money and has invested, or will invest, a substantial amount
of time to develop and maintain the secrecy of the Confidential Information. The
Corporation has thus obtained, or will obtain, a valuable economic asset which
has enabled, or will enable, it to develop an extensive reputation and to
establish long-term business relationships with its suppliers and customers. If
such Confidential Information were disclosed to another person or entity or used
for the benefit of anyone other than the Corporation, the Corporation would
suffer irreparable harm, loss and damage. Accordingly, Executive acknowledges
and agrees that, unless the Confidential Information becomes publicly known
through legitimate origins not involving an act or omission by Executive:
(i) the Confidential Information is, and at all times hereafter
shall remain, the sole property of the Corporation;
(ii) Executive shall use his best efforts and the utmost
diligence to guard and protect the Confidential Information from
disclosure to any competitor, customer or supplier of the Corporation
or any other person, firm, corporation or other entity;
(iii) unless the Corporation gives Executive prior express
written permission, during his employment and thereafter, Executive
shall not use for his own benefit, or divulge to any competitor or
customer or any other person, firm, corporation, or other entity, any
of the Confidential Information which Executive may obtain, learn
about, develop or be entrusted with as a result of Executive's
employment by the Corporation; and
(iv) except in the ordinary course of the Corporation's business,
Executive shall not seek or accept any Confidential Information from
any former, present or future employee of the Corporation.
9.3 Executive also acknowledges and agrees that all documentary
and tangible Confidential Information including, without limitation, such
Confidential Information as Executive has committed to memory, is supplied or
made available by the Corporation to the Executive solely to assist him in
performing his services under this Agreement. Executive further agrees that
after his employment with the Corporation is terminated for any reason:
(i) Executive shall not remove from the property of the
Corporation and shall immediately return to the Corporation, all
documentary or tangible Confidential Information in his possession,
custody, or control and not make or keep any copies, notes, abstracts,
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summaries, tapes or other record of any type of Confidential
Information; and
(ii) Executive shall immediately return to the Corporation any
and all other property of the Corporation in his possession, custody
or control, including, without limitation, any and all keys, security
cards, passes, credit cards and marketing literature.
10. INVENTION DISCLOSURE. Any invention, improvement, design, development
or discovery conceived, developed, created or made by Executive alone or with
others, during the period of his employment hereunder and applicable to the
business of the Corporation or its affiliates, whether or not patentable or
registrable, shall become the sole and exclusive property of the Corporation.
Executive hereby assigns to the Corporation, all of his rights to any
"intellectual material" created or developed by him during the course of his
employment. As used herein, "intellectual material" shall include, but shall not
be limited to, ideas, titles, themes, production ideas, methods of presentation,
artistic renderings, sketches, plots, music, lyrics, dialogue, phrases, slogans,
catch words, characters, names and similar literary, dramatic and musical
material, trade names, trademarks and service marks and all copyrightable
expressions in audio visual works, computer software, electronic circuitry and
all mask works for integrated circuits. Executive shall disclose the
intellectual material promptly and completely to the Corporation and shall,
during the period of his employment hereunder and at any time and from time to
time hereafter (a) execute all documents requested by the Corporation for
vesting in the Corporation or any of its affiliates the entire right, title and
interest in and to the same, (b) execute all documents requested by the
Corporation for filing and prosecuting such applications for patents, trademarks
and/or copyrights as the Corporation, in its sole discretion, may desire to
prosecute, and (c) give the Corporation all assistance it reasonably requires,
including the giving of testimony in any suit, action or proceeding, in order to
obtain, maintain and protect the Corporation's right therein and thereto. If any
such assistance is required following the termination of this Agreement, the
Corporation shall reimburse Executive for his time and the reasonable expenses
incurred by him in rendering such assistance. Anything contained in this
paragraph to the contrary notwithstanding, this paragraph does not apply to an
invention for which no equipment, supplies, facilities, or trade secret
information of the Corporation or its affiliates was used and which was
developed entirely on the Executive's own time, unless (d) the invention
relates: (i) to the business of the Corporation or its affiliates, or (ii) to
the Corporation's or any of its affiliates' actual or demonstrably anticipated
research or development, or (e) the invention results from any work performed by
the Executive for the Corporation or its affiliates.
11. REMEDIES. Executive acknowledges and agrees that the business of the
Corporation is highly competitive and that violation of any of the covenants
provided for in Paragraphs 8, 9 and 10 of this Agreement would cause immediate,
immeasurable and irreparable harm, loss and damage to the Corporation not
adequately compensable by a monetary award. Accordingly, Executive agrees,
without limiting any of the other remedies available to the Corporation, that
any violation of said covenants, or any one of them, may be enjoined or
restrained by any court of competent jurisdiction, and that any temporary
restraining order or emergency, preliminary or final injunctions may be issued
by any court of competent jurisdiction, without notice and without bond. In the
event
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any proceedings are commenced by the Corporation against Executive for any
actual or threatened violation of any of said covenants and if the Corporation
prevails in such litigation, then, Executive shall be liable to the Corporation
for, and shall pay to the Corporation, all costs and expenses of any kind,
including reasonable attorneys' fees, which the Corporation may incur in
connection with such proceedings.
12. CHANGE OF CONTROL.
12.1 If at any time during the term of this Agreement, individuals who
presently constitute the Board of Directors of the Corporation, or who have been
recommended for election to the Board by two-thirds of the Board consisting of
individuals who are either presently on the Board or such recommended successors
cease for any reason to constitute at least a majority of such Board (such event
being hereafter referred to as a "Change of Control") and Executive gives
written notice to the Corporation within 60 days after such Change of Control of
his election to terminate his employment hereunder, the Corporation shall pay to
Executive within 15 days after Executive's delivery of such notice, as severance
pay and liquidated damages, in lieu of any other rights or remedies which might
otherwise be available to him under this Agreement, and without mitigation of
any kind or amount, whether or not Executive shall seek or accept other
employment, a lump sum payment equal in amount three times the annual base
salary payable to Executive pursuant to subsection 4.1 of this Agreement. In
addition, all unexpired options to purchase securities of the Corporation
granted to Executive before the Change of Control shall, if unvested, vest fully
on the date of the Change of Control, notwithstanding any vesting provisions of
such options. The payments provided for in this Section 12 shall be paid in
full, without discount to present value.
12.2 If it shall be determined that any amount payable under Section
12.1 by the Corporation to or for the benefit of Executive (a "Base Payment")
would be subject to the excise tax (the "Excise Tax") imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), then
Executive shall be entitled to receive an additional payment (the "Gross-Up
Payment") in an amount such that the net amount retained by Executive, after the
calculation and deduction of any Excise Tax on the Base Payment shall be equal
to the Base Payment, less any federal, state and local income taxes. The
Gross-Up Payment shall be reduced by income or Excise Tax withholding payments
made by the Corporation to any federal, state, or local taxing authority with
respect to the Gross-Up Payment that was not deducted from compensation payable
to the Executive. All determinations required to be made under this Section
12.2, including whether and when a Gross-Up Payment is required, the amount of
such Gross-Up Payment, and the assumptions to be utilized in arriving at such
determination, except as specified above, shall be made by the Corporation's
auditors (the "Accounting Firm"), which shall provide detailed supporting
calculations both to the Corporation and Executive within fifteen business days
after the receipt of notice from Executive that there should be a Gross-Up
Payment. The determination of tax liability made by the Accounting Firm shall be
subject to review by Executive's tax advisor, and, if Executive's tax advisor
does not agree with the determination reached by the Accounting Firm, then the
Accounting Firm and Executive's tax advisor shall jointly designate a nationally
recognized public accounting firm, which shall make the determination. All fees
and expenses of the accountants retained by the Corporation or jointly
designated and retained shall be borne by the Corporation. Any determination by
a jointly designated public accounting firm shall be binding upon the
Corporation and Executive.
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13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties hereto with respect to Executive's employment with the Company and
no amendment or modification hereof shall be valid or binding unless made in
writing and signed by the party against whom enforcement thereof is sought. All
prior agreements relating to Executive's employment with the Company or WMS or
any affiliate of the Company or WMS are hereby terminated and of no further
force and effect.
14. NOTICES. Any notice required, permitted or desired to be given pursuant
to any of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if delivered in person or sent by
telephone facsimile or sent by certified mail, return receipt requested, or sent
by responsible overnight delivery service, postage and fees prepaid, to the
parties hereto at their respective addresses set forth below. Either of the
parties hereto may at any time and from time to time change the address to which
notice shall be sent hereunder by notice to the other party given under this
Section 14. The date of the giving of any notice sent by mail shall be three
business days following the date of the posting of the mail, if delivered in
person, the date delivered in person, if sent by overnight delivery service, the
next business day following delivery to an overnight delivery service or if sent
by telephone facsimile, the date sent by telephone facsimile.
If to the Corporation:
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xx. Xxxx X. Xxxxxxxx, President
If to Executive:
0000 Xxxxx Xxxxxx, Xxxx 00X
Xxxxxxx, XX 00000
15. No Assignment. Neither this Agreement nor the right to receive any
payments hereunder may be assigned by Executive. This Agreement shall be binding
upon Executive, his heirs, executors and administrators and upon the
Corporation, its successors and assigns.
16. No Waiver. No course of dealing nor any delay on the part of the
Corporation in exercising any rights hereunder shall operate as a waiver of any
such rights. No waiver of any default or breach of this Agreement shall be
deemed a continuing waiver or a waiver of any other breach or default.
17. Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the substantive laws of the State of Illinois
applicable to agreements entered into and to be performed entirely therein.
18. Severability. If any clause, paragraph, section or part of this
Agreement shall be held or declared to be void, invalid or illegal, for any
reason, by any arbitrator or court of competent jurisdiction, such provision
shall be ineffective but shall not in any way invalidate or affect any other
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clause, paragraph, section or part of this Agreement. The parties intend that
all clauses, paragraphs, sections or parts of this Agreement shall be
enforceable to the fullest extent permitted by law.
19. Affiliate. As used in this Agreement, "affiliate" means any person or
entity controlled by or under common control with the Corporation.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which counterparts, when taken together, shall constitute
but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
MIDWAY GAMES INC.
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx, President
/s/ Xxxxxx X. Xxxx, Xx.
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Xxxxxx X. Xxxx, Xx.
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