RESTRICTED STOCK AGREEMENT
Exhibit 4.4
THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made and entered into as of the 23rd day of November, 2004 by and between Midway Games Inc., a Delaware corporation, having its principal executive offices at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (the “Corporation”) and Xxxxxxxxx Xxx residing at 00000 Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (“Employee”).
W I T N E S S E T H:
WHEREAS, Employee, who has not previously been employed by the Corporation or its subsidiaries, is accepting an offer of employment to serve the Corporation as an employee at the Corporation’s wholly-owned subsidiary; and
WHEREAS, simultaneously herewith Employee and Midway Studios-Los Angeles Inc., a California corporation, are entering into an Employment Agreement (the “Employment Agreement”); and
WHEREAS, simultaneously herewith Employee is entering into that certain Agreement and Plan of Reorganization (“Merger Agreement”) dated November 23, 2004 by and among Corporation, MCWSP Acquisition, Inc., CWS Entertainment Ltd. d/b/a Paradox Development and Employee (“Target”), whereby Employee is receiving shares of the Corporation’s common stock, $.01 par value (“Common Stock”) in exchange for her shares of Target.
NOW, THEREFORE, in consideration of the foregoing, and the mutual agreements herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, as a material inducement for Corporation to enter into the Merger Agreement and, on the terms and conditions, and subject to the restrictions, herein set forth:
Section 1. Definitions.
As used in this Agreement, the following terms shall have the following meanings:
A. “Date of Merger” means November 23, 2004, the date on which the reorganization contemplated by the Merger Agreement is consummated.
B. “Period of Restriction” means, with respect to Restricted Shares, the period of time between the Date of Merger and the dates set forth in Section 3 hereof.
C. “Restricted Shares” means 71,429 shares of Common Stock that Employee may forfeit pursuant to Sections 2 and 3 below.
Section 2. Forfeiture of Shares upon Termination of Employment during Period of Restriction. Employee shall immediately forfeit to the Corporation all Restricted Shares that have not previously been released from the restrictions under Section 3 hereof, without any consideration paid to Employee, and, thereafter, Employee shall have no further rights with respect to such Restricted Shares upon either (i) the voluntary termination by Employee of
her employment under the Employment Agreement during the Period of Restriction, or (ii) if the services of Employee under the Employment Agreement shall be terminated by the Corporation during the Period of Restriction for Cause (as such term is defined in the Employment Agreement).
Section 3. Lapse of the Period of Restriction. The Period of Restriction shall lapse, and the forfeiture provisions of Section 2 hereof shall no longer be applicable as to Restricted Shares held by
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or on behalf of Employee according to the following schedule, if Employee shall have been continuously employed by the Corporation from the Date of Merger through the date of such lapse: (i) as to 23,810 shares of the Restricted Shares, on or after the date which is twelve months after the Date of Merger; (ii) as to 23,810 shares of the Restricted Shares, on or after the date which is twenty-four months after the Date of Merger; and (iii) as to the remaining 23,809 shares of the Restricted Shares, on or after the date which is thirty-six months after the Date of Merger. The forfeiture provisions under Section 2 above will lapse (a) upon the termination by the Corporation of Employee’s services to the Corporation without “cause” (as such term is defined in the Employment Agreement), (b) upon
the termination by the Employee of her services with the Corporation for “good reason” (as such term is defined in the Employment Agreement), or (c) upon the death or disability of Employee (upon the death of the Employee, the Employee’s estate shall receive the remaining Restricted Shares without restriction under this Agreement).
Section 4. Limitations on Transfer during Period of Restriction. Restricted Shares may not be sold, assigned, transferred, exchanged, pledged, hypothecated, or otherwise encumbered during the Period of Restriction, and no such sale, assignment, transfer, exchange, pledge, hypothecation, or encumbrance, whether made or created by voluntary act of Employee or of any agent of Employee or by operation of law, shall be recognized by, or be binding upon, or shall in any manner affect the rights of, the Corporation or any agent or any
custodian holding certificates for such Restricted Shares during the Period of Restriction.
Section 5. Stockholder Rights during Period of Restriction. Unless and until the Restricted Shares are forfeited as set forth in Section 2 hereof, Employee shall have all of the rights of a stockholder of the Corporation with respect to Restricted Shares, including the right to vote and to receive dividends on the Restricted Shares, during the Period of Restriction.
Section 6. Registration Rights. The Corporation, at its cost, shall promptly prepare and file a registration statement under the Securities Act of 1933, as amended (the “Act”) with respect to the resale of the Restricted Shares and shall cause such registration statement to become effective as promptly as practical and shall cause such registration statement to remain in effect (together with a resale prospectus at all times meeting the requirements of the Act) until such registration statement is no longer required for
Employee to publicly offer and sell the Restricted Shares.
Section 7. Restricted Shares as Investment. Employee agrees that all Restricted Shares awarded hereunder are being acquired in good faith for investment purposes only and not for sale or distribution, except pursuant to a registration statement or an applicable exemption from registration under the Act. The Corporation may place a “stop transfer” order with respect to the Restricted Shares with its transfer agent unless the Restricted Shares are registered under the Act.
Section 8. Legend. Each certificate evidencing the Restricted Shares shall bear a legend referring to this Agreement and to the fact that such Restricted Shares are subject to the forfeiture provisions of Section 2 hereof during the Period of Restriction. The Corporation shall cause certificates without such legend to be issued for any of the Restricted Shares as and when the Period of Restriction lapses. Each certificate may also bear a restrictive legend, in the discretion of the Corporation, until registered. The form of such
legends shall be as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN A RESTRICTED STOCK AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.
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THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION OR QUALIFICATION THEREOF UNDER SUCH ACT AND SUCH APPLICABLE STATE OR OTHER JURISDICTION'S SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED.
Employee agrees to deliver to the Corporation for cancellation, upon request of the Corporation, any certificate representing Restricted Shares that have been forfeited.
Section 9. Adjustment in Certain Events. If there is any change in the Common Stock by reason of stock dividends, split-ups, mergers, consolidations, reorganizations, combinations or exchanges of shares or the like, each Restricted Share under this Agreement shall be adjusted in the same manner as any other share of the Common Stock and the provisions of this Agreement shall extend not only to the number of Restricted Shares awarded hereunder, but also to all additional shares of Common Stock or other securities received by Employee
pursuant to any such change with respect to the Restricted Shares granted hereunder, which additional shares of Common Stock or other securities shall be deemed to be Restricted Shares for purposes of this Agreement.
Section 10. Enforceability. Should a court of competent jurisdiction deem any of the provisions in this Agreement to be unenforceable in any respect, it is the intention of the parties to this Agreement that this Agreement be enforced to the greatest extent deemed to be enforceable.
Section 11. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Illinois, without giving effect to any conflicts of law rule or principle that might require the application of the laws of another jurisdiction.
Section 12. Withholding. The Corporation may withhold, and establish from time to time appropriate procedures to provide for payment or withholding of, such income or other taxes as may be required by law to be paid or withheld in connection with the Restricted Shares. Employee shall comply with any procedures established from time to time by the Corporation to ensure that the Corporation receives prompt notice of the occurrence of any event which may create, or affect the timing or amount of, any obligation to pay or withhold any
such taxes or which may make available to the Corporation any tax deduction resulting from the occurrence of such event.
Section 13. Section 83(b) Tax Election. Employee understands that he may elect to be taxed at the time the Restricted Shares are acquired rather than when such shares cease to be subject to forfeiture restrictions by filing an election under Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), with the Internal Revenue Service within thirty (30) days after the Date of Merger. A form for making this election is attached as Exhibit 1 hereto. Employee understands that the failure to make this filing
within the thirty (30) day period will result in the recognition of ordinary income by Employee as the forfeiture restrictions on the Restricted Shares lapse measured by the value of the Restricted Shares at that time. Employee agrees that he is relying on his own tax advisors and is not relying on the Corporation with respect to any election that he may make under Section 83(b) of the Code.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day first written above.
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President - Finance,
CFO and Treasurer
AGREED AND ACCEPTED:
By: /s/ Xxxxxxxxx Xxx
Xxxxxxxxx Xxx
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