<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2000
-------------------------------------------------
Commission file number 001-12367
---------
MIDWAY GAMES INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-2906244
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
3401 North California Ave., Chicago, IL 60618
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (773) 961-2222
-----------------------------
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by |X| whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 37,707,803 shares of common
stock, $.01 par value, were outstanding at April 28, 2000 after deducting
1,178,500 shares held as treasury shares.
<PAGE> 2
MIDWAY GAMES INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO
-------
<S> <C>
PART I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements:
Condensed Consolidated Statements of Income -
Three and nine months ended March 31, 2000 and 1999.................. 2
Condensed Consolidated Balance Sheets -
March 31, 2000 and June 30, 1999..................................... 3-4
Condensed Consolidated Statements of Cash Flows -
Nine months ended March 31, 2000 and 1999............................ 5
Notes to Condensed Consolidated Financial Statements................. 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................ 7-9
ITEM 3. Quantitative and Qualitative Disclosures
About Market Risk.................................................... 10
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings.................................................... 10
ITEM 4. Submission of Matters to a Vote of Security-Holders.................. 10
ITEM 6. Exhibits and Reports on Form 8-K..................................... 10-11
SIGNATURE ..................................................................... 12
</TABLE>
<PAGE> 3
PART I
FINANCIAL INFORMATION:
MIDWAY GAMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Home video ....................................... $ 26,902 $ 39,870 $ 221,512 $ 198,672
Coin-operated video .............................. 28,043 40,460 87,629 96,658
--------- --------- --------- ---------
Total revenues ....................................... 54,945 80,330 309,141 295,330
COST OF SALES
Home video ....................................... 17,375 19,978 97,953 92,934
Coin-operated video .............................. 19,607 27,926 59,012 60,760
--------- --------- --------- ---------
Total cost of sales .................................. 36,982 47,904 156,965 153,694
--------- --------- --------- ---------
Gross profit ......................................... 17,963 32,426 152,176 141,636
Research and development expense ..................... 18,110 17,210 62,309 55,416
Selling expense ...................................... 13,867 8,909 45,264 37,311
Administrative expense ............................... 4,985 4,891 16,445 15,002
--------- --------- --------- ---------
Operating (loss) income .............................. (18,999) 1,416 28,158 33,907
Interest and other, net .............................. 712 387 1,753 1,077
--------- --------- --------- ---------
(Loss) income before tax ............................. (18,287) 1,803 29,911 34,984
Credit (provision) for income taxes .................. 6,806 (747) (11,217) (13,431)
--------- --------- --------- ---------
Net (loss) income .................................... $ (11,481) $ 1,056 $ 18,694 $ 21,553
========= ========= ========= =========
Net (loss) income per common share - basic and diluted $ (0.30) $ 0.03 $ 0.49 $ 0.58
========= ========= ========= =========
Weighted average common shares outstanding ........... 37,783 37,546 37,922 37,446
========= ========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 4
MIDWAY GAMES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
--------- ---------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents ............................................ $ 51,328 $ 51,546
Receivables, less allowances of $8,590 and $4,954 .................... 53,331 46,244
Inventories, at lower of cost (Fifo) or market:
Raw materials and work in progress ................................ 9,569 9,437
Finished goods .................................................... 33,734 22,841
--------- ---------
43,303 32,278
Prepaid income taxes ................................................. 2,772 7,272
Deferred income taxes ................................................ 6,882 9,132
Other current assets ................................................. 13,331 10,757
--------- ---------
Total current assets .............................................. 170,947 157,229
Property and equipment .................................................... 33,828 26,637
Less: accumulated depreciation ........................................... (18,065) (16,409)
--------- ---------
15,763 10,228
Excess of purchase cost over amount assigned to net assets acquired, net of
accumulated amortization of $15,635 and $12,693 ...................... 38,365 41,307
Other assets .............................................................. 10,205 10,495
--------- ---------
$ 235,280 $ 219,259
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 5
MIDWAY GAMES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
--------- ---------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable ........................................................ $ 18,625 $ 13,457
Accrued compensation and related benefits ............................... 6,865 5,601
Accrued litigation settlement ........................................... - 8,500
Accrued royalties ....................................................... 5,889 2,210
Other accrued liabilities ............................................... 9,163 7,422
--------- ---------
Total current liabilities ............................................ 40,542 37,190
Deferred income taxes ........................................................ 3,937 4,493
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued - -
Common stock, $.01 par value, 100,000,000 shares authorized, 38,884,803
and 38,750,000 shares issued ......................................... 388 388
Additional paid-in capital .............................................. 97,658 96,407
Retained earnings ....................................................... 108,858 90,164
--------- ---------
206,904 186,959
Treasury stock, at cost (1,178,500 and 713,000 shares) .................. (16,103) (9,383)
--------- ---------
Total stockholders' equity ........................................... 190,801 177,576
--------- ---------
$ 235,280 $ 219,259
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 6
MIDWAY GAMES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
March 31,
--------------------
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................................... $ 18,694 $ 21,553
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ..................................... 7,002 8,340
Receivables provision ............................................. 15,838 11,851
Deferred income taxes ............................................. 1,694 (781)
Tax benefit from exercise of common stock options ................. 380 -
Decrease resulting from changes in operating assets and liabilities (30,072) (17,053)
-------- --------
Net cash provided by operating activities ................................ 13,536 23,910
INVESTING ACTIVITIES:
Purchase of property and equipment ....................................... (7,905) (3,843)
Net change in short-term investments ..................................... - 12,000
-------- --------
Net cash provided (used) by investing activities ......................... (7,905) 8,157
FINANCING ACTIVITIES:
Proceeds from the sale of common stock ................................... - 6,000
Cash received on exercise of stock options ............................... 871 -
Purchase of treasury stock ............................................... (6,720) (12,848)
-------- --------
Net cash (used) by financing activities .................................. (5,849) (6,848)
-------- --------
(Decrease) increase in cash and cash equivalents ......................... (218) 25,219
Cash and cash equivalents at beginning of period ......................... 51,546 26,136
-------- --------
Cash and cash equivalents at end of period ............................... $ 51,328 $ 51,355
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 7
MIDWAY GAMES INC.
-----------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information, the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Due to the seasonality of the Company's business, operating
results for the quarter and nine months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the
fiscal year ending June 30, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended June 30, 1999.
2. EARNINGS PER SHARE
At March 31, 2000, options were outstanding for 6,058,829 shares of
common stock. The incremental share effect of those options were not
utilized in the calculation of net loss per share for the three months
ended March 31, 2000. The net income per share calculation for the nine
months ended March 31, 2000 did not utilize the average incremental
shares of 583,000 for the three quarters ended March 31, 2000 because
they had no effect on rounded earnings per share. Accordingly, the
weighted average common shares outstanding for the nine-month period
were used.
6
<PAGE> 8
MIDWAY GAMES INC.
-----------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This quarterly report on Form 10-Q contains certain forward looking statements
concerning future business conditions and the outlook for the Company based on
currently available information that involve risks and uncertainties. The
Company's actual results could differ materially from those anticipated in the
forward looking statements as a result of certain risks and uncertainties,
including, without limitation, the financial strength of the amusement games
industry, dependence on new product introductions and the ability to maintain
the scheduling of such introductions, technological changes, dependence on
dedicated platform manufacturers and other risks more fully described under
"Business - Risk Factors" in the Company's Annual Report on Form 10-K.
FINANCIAL CONDITION
During the nine months ended March 31, 2000 cash used by operating, investing
and financing activities was $218,000 compared with cash provided of $25,219,000
in the nine months ended March 31, 1999.
Cash provided by operating activities before changes in operating assets and
liabilities was $43,608,000 in the nine months ended March 31, 2000 compared to
$40,963,000 in the nine months ended March 31, 1999.
The changes in the operating assets and liabilities, as shown in the condensed
statements of cash flows on page 5, resulted in a cash outflow of $30,072,000 in
the nine months ended March 31, 2000, compared with a cash outflow of
$17,053,000 in the nine months ended March 31, 1999. The outflows were primarily
due to the increase in receivables and inventories in both periods from their
comparable balances at the respective June 30 year ends.
Cash used for the purchase of property and equipment during the nine months
ended March 31, 2000 was $7,905,000 compared with $3,843,000 for the nine months
ended March 31, 1999.
During the nine months ended March 31, 2000 and 1999, $6,720,000 and
$12,848,000, respectively, of cash was used to acquire 465,500 and 984,800
shares, respectively, of the Company's common stock held in the treasury. The
Board of Directors authorized the purchase of up to two million shares of which
1,928,500 had been purchased as of March 31, 2000. During the nine months ended
March 31, 2000 the Company received $871,000 for the issuance of 134,803 common
shares from the exercise of common stock options. During the nine months ended
March 31, 1999, $6,000,000 of proceeds was received from the sale of 750,000
shares of common stock under an employee stock incentive plan which were from
treasury shares.
The home video game business is highly seasonal and significant working capital
is required to finance high levels of inventories and accounts receivable during
certain months of the fiscal year. In addition, certain platform manufacturers
that manufacture home video games for the Company require letters of credit for
the full purchase price at the time a purchase order is accepted.
The Company has established a line of credit for $50,000,000 and an additional
letter of credit line of up to $30,000,000. The revolving credit agreement
extends to October 31, 2000 and contains usual bank line of credit terms. There
were no borrowings under the credit line at March 31, 2000 and $1,227,552 of
letters of credit were outstanding. Management believes that cash and cash
equivalents, cash flow from operations and amounts available under the line of
credit will be adequate to fund the anticipated levels of inventories and
accounts receivable required in the operation of the business and the Company's
other presently anticipated needs including any purchase of shares of the
Company's common stock.
7
<PAGE> 9
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH
THREE MONTHS ENDED MARCH 31, 1999
Revenues decreased $25,385,000 from $80,330,000 in the quarter ended March 31,
1999 to $54,945,000 in the quarter ended March 31, 2000.
Home video game revenues decreased 33% to $26,902,000 in the March 31, 2000
quarter compared to $39,870,000 in the prior year period. Unit sales decreased
12% and average unit sales price decreased 23%. The Company believes that these
decreases are primarily due to deteriorating home console market conditions and
the player acceptance of the products offered compared to other available
products.
During the fiscal 2000 third quarter the Company released five new home video
games on three platforms. New products shipped included three games for Sony
PlayStation, one game for Nintendo 64 and one game for Color Gameboy. Midway's
best selling home video games during the quarter were Hydro Thunder and Gauntlet
Legends.
Coin-operated video game revenues decreased 31% to $28,043,000 in the March 31,
2000 quarter compared to $40,460,000 in the prior year period. The Company
believes that the decrease in coin-op revenue was the result of weak industry
market conditions and the market acceptance of Midway's products offered in the
fiscal 2000 third quarter compared with the prior year's offerings. The current
year third quarter included sales of Cruis'n Exotica, Skins Game and Gauntlet:
Dark Legacy. The third quarter of the prior fiscal year included sales of NBA
Showtime: the NBA on NBC as well as Hydro Thunder, which was one of the
top-selling coin-op games of 1999.
Gross profit decreased to $17,963,000 (32.7% of revenues) in the quarter ended
March 31, 2000 from $32,426,000 (40.3% of revenues) in the quarter ended March
31, 1999. The decrease in gross profit was primarily due to the decrease in
revenues and lower gross profit margins on home video revenues. Home video game
gross profit decreased to 35.4% of revenues in the quarter ended March 31, 2000
compared to 49.9% in the prior year third quarter because of the decline in unit
sales price of home video games when unit costs did not decline.
Research and development expenses increased $900,000 from $17,210,000 (21.4% of
revenues) in the quarter ended March 31, 1999 to $18,110,000 (33% of revenues)
in the quarter ended March 31, 2000. The increased research and development
expense is primarily due to the development of additional home video games for
the new platforms being introduced in the future by the platform manufacturers.
Selling expense increased $4,958,000 from $8,909,000 (11.1% of revenues) in the
quarter ended March 31, 1999 to $13,867,000 (25.2% of revenues) in the quarter
ended March 31, 2000. The increase in selling expense was primarily from a
higher level of advertising dollars expended based on an expected sales volume
higher than the sales volume actually experienced. The increase in selling
expense was also in part due to an increase in the marketing staff.
Administrative expense increased $94,000 from $4,891,000 (6.1% of revenues) in
the quarter ended March 31, 1999 to $4,985,000 (9.1% of revenues) in the quarter
ended March 31, 2000.
Operating (loss) income in the quarter ended March 31, 2000 decreased from
income of $1,416,000 in the quarter ended March 31, 1999 to an operating loss of
$18,999,000 in the quarter ended March 31,2000. The decrease results primarily
from lower revenues coupled with a lower gross profit percentage and increased
selling and research and development expense.
Net loss was $11,481,000, $0.30 per share, in the quarter ended March 31, 2000,
compared with net income of $1,056,000, $0.03 per share, in the prior year
period.
8
<PAGE> 10
NINE MONTHS ENDED MARCH 31, 2000 COMPARED WITH
NINE MONTHS ENDED MARCH 31, 1999
Revenues increased $13,811,000 from $295,330,000 in the nine months ended March
31, 1999 to $309,141,000 in the nine months ended March 31, 2000.
Home video game revenues increased to $221,512,000 in the March 31, 2000
nine-month period from $198,672,000 in the prior year period. Revenues for the
March 31, 2000 nine-month period included $59,890,000 from the sale of video
games for the Sega Dreamcast platform introduced in the United States by Sega in
September 1999. The increase in home video game revenues is due to the sale of
Sega Dreamcast video games and higher sales of Sony Playstation home video
games, partly offset by lower sales of Nintendo 64, when compared to sales in
the March 1999 nine-month period.
During the March 31, 2000 nine-month period, the Company released twenty-five
new home video game products on four platforms. New products shipped included
six for Nintendo 64, seven for Sony Playstation, seven for Color Game Boy and
five for Sega Dreamcast. Midway's best selling video games during the nine-month
period were NFL Blitz 2000, Ready 2 Rumble Boxing, Hydro Thunder, NBA Showtime,
Gauntlet Legends, Mortal Kombat Gold and Paperboy.
Coin-operated video game revenues in the March 31, 2000 nine-month period
decreased to $87,629,000 compared to $96,658,000 in the prior year nine-month
period. The decrease was due to weak market conditions and lower market
acceptance of the Company's coin-operated product offerings. The current
nine-month period included initial sales of NFL Blitz 2000 Gold, San Francisco
Rush 2049, Off Road Thunder and Touchmaster Infinity, Cruisi'n Exotica, Skins
Game, Gauntlet: Dark Legacy and continuing sales of Hydro Thunder, Road Burners
and Touchmaster.
Gross profit increased to $152,176,000 (49.2% of revenues) in the nine months
ended March 31, 2000 from $141,636,000 (48% of revenues) in the nine months
ended March 31, 1999. The increase in gross profit was primarily due to the
increase in home video game revenues. Home video game gross profit increased to
55.8% of revenues in the nine months ended March 31, 2000 compared to 53.2% in
the prior year nine-month period due to an increase in sales of disc-based units
which carry a higher gross profit percentage. Lower home video games unit
selling prices precipitated by unsettled market conditions in the later part of
the nine-month period ended March 31, 2000 decreased the growth in gross profit.
Coin-operated video game gross profit for the March 31, 1999 nine-month period
included a $4,225,000 cost reduction due to a net recovery relating to previous
years purchased parts overcharges from certain coin-operated game suppliers.
Research and development expense increased $6,893,000 from $55,416,000 (18.8% of
revenues) in the nine months ended March 31, 1999 to $62,309,000 (20.2% of
revenues) in the nine months ended March 31, 2000.
Selling expense increased $7,953,000 from $37,311,000 (12.6% of revenues) in the
nine months ended March 31, 1999 to $45,264,000 (14.6% of revenues) in the nine
months ended March 31, 2000. The increase in selling expense was primarily from
a higher level of advertising dollars expended based on an expected sales volume
higher than the sales volume actually experienced. The increase in selling
expense was also in part due to an increase in the marketing staff.
Administrative expense increased $1,443,000 from $15,002,000 (5.1% of revenues)
in the nine months ended March 31, 1999 to $16,445,000 (5.3% of revenues) in the
nine months ended March 31, 2000.
Operating income in the nine months ended March 31, 2000 decreased $5,749,000
from $33,907,000 (11.5% of revenues) in the nine months ended March 31, 1999 to
$28,158,000 (9.1% of revenues) in the nine months ended March 31, 2000. The
decrease results primarily from higher research and development expense coupled
with higher selling expense as discussed above. Operating income for the nine
months ended March 31, 1999 was increased by $4,225,000 (1.4% of revenues) from
the coin-operated games net recovery described above.
Net income was $18,694,000, $0.49 per share, in the nine months ended March 31,
2000, compared with net income of $21,553,000, $0.58 per share, in the prior
year period. Net income for the March 31, 1999 nine-month period includes a
benefit of $2,620,000, $0.07 per share, on an after tax basis, from the net
recovery described above.
9
<PAGE> 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information concerning the wrongful death action brought against us and
other companies entitled James, et al. v. Meow Media, et al. as set forth in
"Item 3. Legal Proceedings" in our Annual Report on Form 10-K for the year ended
June 30, 1999 is herein incorporated by this reference. By order entered April
6, 2000, the case was dismissed against all defendants.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
We held our Annual Meeting of Stockholders on January 25, 2000. The matters
submitted to a stockholder vote were:
1) the election of four Class II directors to the Board of Directors; and
2) the ratification of the appointment of Ernst & Young LLP as independent
auditors for the 2000 fiscal year.
The voting results were as follows:
1) Our stockholders re-elected each of the four incumbent Class II directors, as
follows:
Nominee For Withheld
------- --- --------
Kenneth J. Fednesa 35,396,493 749,449
William E. McKenna 35,476,745 669,197
Harvey Reich 35,479,215 666,727
Ira S. Scheinfeld 35,002,744 1,143,198
2) Stockholders voted 36,083,050 shares (99.8% of the shares represented at the
meeting) in favor of the ratification of the appointment of Ernst & Young LLP as
independent auditors for the 2000 fiscal year; 40,329 shares (0.2% of the shares
represented at the meeting) voted against approval, and 22,563 shares (less than
0.1% of the shares represented at the meeting) abstained from voting or were
unmarked and not voted.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated Certificate of Incorporation of the Registrant,
incorporated by reference to Exhibit 3.1 to the S-1 Registration
Statement.
3.2 Certificate of Amendment to the Amended and Restated Certificate of
Incorporation of the Registrant, incorporated by reference to Exhibit
2 to the Registrant's Registration Statement on Form 8-A/A, Amendment
No. 1, filed on April 20, 1998 (the "8-A Registration Statement").
10
<PAGE> 12
3.3 Form of Certificate of Designations of Series A Preferred Stock
(included as Exhibit A to Exhibit 2.1 hereof), incorporated by
reference to Exhibit 2.2 to the Registrant's Registration Statement on
Form S-1, File No. 333-11919, filed on September 13, 1996 (the "S-1
Registration Statement").
3.4 Amended and Restated By-laws of the Registrant, incorporated by
reference to Exhibit 3 to the 8-A Registration Statement.
10.1 Amendments dated November 5, 1999 to the Employment agreement between
the registrant and Neil D. Nicastro Dated as of July 1,1996
10.2 Employment agreement between the registrant and Michael A. Ribero
27 Financial Data Schedule
(b) Reports on Form 8-K
None
11
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MIDWAY GAMES INC.
(Registrant)
Dated: May 10, 2000 By: /s/ Harold H. Bach, Jr.
----------------------------
Harold H. Bach, Jr.
Executive Vice President-Finance
Principal Financial and
Chief Accounting Officer
12
<PAGE> 14
EXHIBIT INDEX
No. Description
--- -----------
3.1 Amended and Restated Certificate of Incorporation of
the Registrant, incorporated by reference to Exhibit
3.1 to the S-1 Registration Statement.
3.2 Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Registrant,
incorporated by reference to Exhibit 2 to the
Registrant's Registration Statement on Form 8-A/A,
Amendment No. 1, filed on April 20, 1998 (the "8-A
Registration Statement").
3.3 Form of Certificate of Designations of Series A
Preferred Stock (included as Exhibit A to Exhibit 2.1
hereof), incorporated by reference to Exhibit 2.2 to
the Registrant's Registration Statement on Form S-1,
File No. 333-11919, filed on September 13, 1996 (the
"S-1 Registration Statement").
3.4 Amended and Restated By-laws of the Registrant,
incorporated by reference to Exhibit 3 to the 8-A
Registration Statement.
10.1 Amendment to the Employment agreement between the
registrant and Neil D. Nicastro Dated as of July 1,
1996
10.2 Employment agreement between the registrant and
Michael A. Ribero
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
November 5, 1999
Mr. Neil D. Nicastro
999 N. Sheridan Road
Lake Forrest, IL 60045
Dear Mr. Nicastro:
Reference is made to your Employment Agreement with Midway Games Inc.
dated July 1, 1996, as amended March 15, 1998, (the "Midway Employment
Agreement").
This letter reflects our agreement that the Midway Employment Agreement
will be deemed amended, effective immediately as follows:
1. The date "June 30, 2001" appearing in paragraph 2 of the Midway
Employment Agreement is changed to "October 30, 2004".
2. Your base salary referred to in paragraph 3(a) of the Midway
Employment Agreement is $600,000 per annum.
3. Paragraphs 6(a) and 6(b) of the Midway Employment Agreement are
amended in their entireties to read as follows:
"(a) In the event Nicastro shall die during the term of this
Agreement but prior to his "Retirement Date" (as hereinafter
defined), Midway shall, in addition to the benefits which may
become payable pursuant to subparagraph 3(c), pay death
benefits as hereinafter provided to such person or persons as
Nicastro shall, at his option, from time to time designate by
written instrument delivered to Midway, each subsequent
designation to be deemed to revoke all prior designations, or
if no such designation is made to his estate, for a period of
ten (10) years, in equal monthly payments commencing the
first day of the month following death. Such annual death
benefits shall be equal to one-half (1/2) of the aggregate of
(a) the annual base salary payable to Nicastro as of the date
of death and (b) the average annual bonus payable to Nicastro
during the three full fiscal years of his employment prior to
the date of death, but in no event shall the annual death
benefit be less than Three Hundred Thousand Dollars
($300,000) per annum or greater than the amount of the annual
base salary payable to Nicastro as of the date of death."
<PAGE> 2
"(b) The Retirement Date shall mean the later to occur of (i)
the date on which Nicastro shall become forty-five (45) years
old or (ii) the date of the termination of Nicastro's
employment by Midway. Midway will pay to Nicastro on the
first day of the first month following his Retirement Date,
and on the first day of each month thereafter for a period of
ten (10) years in equal monthly payments, an annual
retirement income benefit equal to one-half (1/2) of the
aggregate of (a) the annual base salary payable to Nicastro
as of the date of termination of his employment by Midway and
(b) the average annual bonus payable to Nicastro during the
three full fiscal years of his employment prior to the date
of termination of his employment by Midway, but in no event
shall the annual retirement income benefit be less than Three
Hundred Thousand Dollars ($300,000) per annum or greater than
the amount of the annual base salary payable to Nicastro as
of the date of termination of his employment by Midway. In
the event that Nicastro shall die after his Retirement Date
but before the retirement benefits provided for herein shall
be fully paid, the balance thereof shall thereafter be paid
in monthly installments to his estate."
In all other respects, the Midway Employment Agreement is hereby
confirmed and is in full force and effect.
Please indicate your agreement to the foregoing by signing this letter
in the place provided below.
Very truly yours,
Midway Games Inc.
By: /s/ Harold H. Bach, Jr.
-------------------------------------
Harold H. Bach, Jr.
Executive Vice President - Finance
Accepted and Agreed to:
/s/ Neil D. Nicastro
- ------------------------------
Neil D. Nicastro
<PAGE> 1
EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of March, 2000, by and between MIDWAY
GAMES INC., a Delaware corporation (the "Corporation"), and MICHAEL A. RIBERO
("Executive").
W I T N E S S E T H:
WHEREAS, Executive has been employed as the Executive Vice President of
the Corporation; 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 the Corporation's interactive video game business 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 San Francisco Bay and San Jose, California combined
metropolitan areas.
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, 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. 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.
<PAGE> 2
3. TERM.
3.1 The term of Executive's employment hereunder shall commence on
the date hereof and terminate on January 31, 2002 (the "Term"); provided, that
Executive's services hereunder may be terminated effective upon 30 days' prior
written notice (i) from the Corporation if such termination is for "cause" as
defined in Section 8.3 of this Agreement; or (ii) from Executive if such
termination is for "good reason" as defined in Section 3.3 hereof. Each year of
the Term is hereafter referred to as an "Employment Year."
3.2 Notwithstanding the provisions of Section 3.1 hereof, if
Executive is unable substantially to perform the duties of his position with the
Corporation for any prolonged period by reason of physical or mental illness or
injury, Corporation may terminate this Agreement upon 30 days' written notice,
but only after the period of Executive's illness or injury has lasted
continuously for ninety (90) days within any fiscal year during the Term. Until
any such termination by the Corporation, Corporation shall continue to be
obligated to provide to Executive all of the cash and other compensation
provided for in this Agreement, including his bonus, as if he were continuing to
perform all the duties of his position.
3.3 Executive may terminate this Agreement and his services to the
Corporation for "good reason", if, among other things, without his prior
consent: Executive is placed in any position of lesser stature than that of
Executive Vice President of the Corporation or he is assigned duties
inconsistent with such position or duties which, if performed, would result in a
significant change in the nature or scope of powers, authority, functions or
duties inherent in such position on the date hereof.
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 $380,000 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. In addition, the Corporation shall provide
Executive with Four Hundred Thousand Dollars ($400,000) in additional life
insurance coverage, payable to such beneficiary as Executive shall designate
from time to time, in such form and manner as the Corporation and Executive
shall determine as appropriate in order to minimize the income tax consequences
of such coverage to Executive. If such insurance is not available at an annual
premium of $3,000 or
-2-
<PAGE> 3
less, then the Corporation shall provide such lesser amount of insurance as is
available at an annual premium of $3,000.
4.3 Executive acknowledges that the Corporation has agreed to advance
to Executive the amount of $500,000, which advance is evidenced by Executive's
Promissory Note to the Corporation dated March 8, 2000 (the "Note"), and which
is secured by that certain Junior Deed of Trust, Security Agreement, Fixture
Filing and Financing Statement made by Executive, as Trustor, to First American
Title Company, as Trustee, for the benefit of the Corporation, as beneficiary.
In accordance with the terms of the Note, Executive agrees that the Corporation
may withhold from any bonus otherwise payable to Executive pursuant to Section
4.2 hereof, in full or partial satisfaction of unpaid principal and accrued
interest under the Note, such amounts at such times as are prescribed under the
Note.
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;
provided that Executive will be reimbursed for first or business class air
travel accommodations when travelling on business for the Corporation.
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
-3-
<PAGE> 4
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
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 Executive 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
-4-
<PAGE> 5
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
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; (1)
(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
-5-
<PAGE> 6
(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, 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
-6-
<PAGE> 7
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 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 two 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
-7-
<PAGE> 8
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.
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 any
affiliate of the Company 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:
3401 North California Avenue
Chicago, IL 60618
Facsimile: 312-961-1099
Attn: Mr. Neil D. Nicastro, President
If to Executive:
675 Sycamore Drive
Milpitas, CA 95035
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
-8-
<PAGE> 9
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
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/ Neil D. Nicastro
-----------------------------
Neil D. Nicastro, President
EXECUTIVE
/s/ Michael A. Ribero
-----------------------------
Michael A. Ribero
-9-
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