Exhibit 10.6
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is dated as of
October 14, 2003 by and among Midway Games Inc., a Delaware corporation (the
"COMPANY"), and the purchasers identified on the signature pages hereto (each, a
"PURCHASER" and collectively, the "PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), the Company desires to sell to the Purchasers, and the
Purchasers, severally and not jointly, desire to purchase from the Company,
securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
"ADVICE" has the meaning set forth in SECTION 6.5.
"AFFILIATE" means any Person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by or is
under common control with a Person, as such terms are used in and
construed under Rule 144 under the Securities Act.
"BUSINESS DAY" means any day other than Saturday, Sunday or
other day on which commercial banks in either The City of New York or The
City of Chicago, Illinois are authorized or required by law to remain
closed.
"CLOSING" means the closing of the purchase and sale of the
Shares pursuant to SECTION 2.1.
"CLOSING DATE" means the date of the Closing, which shall
occur not later than the Business Day after the date of this Agreement (or
such other date as may be mutually agreed upon by the Company and the Lead
Purchasers.
"COMPANY COUNSEL" means Shack Xxxxxx Xxxx & Xxxxxxxx P.C.,
counsel to the Company.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the common stock, par value $0.01 per
share, of the Company.
"COMMON STOCK EQUIVALENTS" means, collectively, Options and
Convertible Securities.
"CONVERTIBLE SECURITIES" means any stock or securities (other
than Options) convertible into or exercisable or exchangeable for Common
Stock.
"DISCLOSURE MATERIALS" has the meaning set forth in SECTION
3.1.
"EFFECTIVE DATE" means the date that the Registration
Statement is first declared effective by the Commission.
"EFFECTIVENESS PERIOD" has the meaning set forth in SECTION
6.1.
"ELIGIBLE MARKET" means any of the NYSE, the American Stock
Exchange, the NASDAQ National Market, The NASDAQ SmallCap Market, or any
successor to any of the foregoing.
"EVENT" has the meaning set forth in SECTION 6.1.
"EVENT PAYMENTS" has the meaning set forth in SECTION 6.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED EVENTS" has the meaning set forth in SECTION 6.1.
"FILING DATE" means November 13, 2003.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 6.4.
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 6.4.
"INTELLECTUAL PROPERTY RIGHTS" has the meaning set forth in
SECTION 3.1.
"LIEN" means any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction.
"LEAD PURCHASERS" means Portside Growth and Opportunity Fund
and Smithfield Fiduciary LLC.
"LEAD PURCHASER COUNSEL" means Xxxxxxx Xxxx & Xxxxx LLP,
counsel to the Purchasers, or any other counsel selected by the Lead
Purchasers in place thereof.
"LOSSES" means any and all losses, third party claims,
damages, liabilities, settlement costs and expenses, including, without
limitation, reasonable attorneys' fees.
"MATERIAL ADVERSE EFFECT" has the meaning set forth in SECTION
3.1.
"MATERIAL PERMITS" has the meaning set forth in SECTION 3.1.
"NYSE" means The New York Stock Exchange, Inc.
"OPTIONS" means any rights, warrants or options to subscribe
for or purchase Common Stock or Convertible Securities.
"PERSON" means any individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or any court or other federal, state, local or other
governmental authority or other entity of any kind.
"PROCEEDING" means an action, third party claim, suit,
investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether
commenced or threatened.
"PROSPECTUS" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus including post
effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
"REGISTRABLE SECURITIES" means any Common Stock issued
pursuant to the Transaction Documents, together with any securities issued
or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing.
"REGISTRATION STATEMENT" means each registration statement
required to be filed under Article VI, including (in each case) the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
"RELATED PERSON" has the meaning set forth in SECTION 4.8.
"REQUIRED EFFECTIVENESS DATE" means January 12, 2004 or, if
the Registration Statement is subject to a "full review" by the
Commission, February 11, 2004.
"RULE 144," "RULE 415," and "RULE 424" means Rule 144, Rule
415 and Rule 424, respectively, promulgated by the Commission pursuant to
the Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SCHEDULES" means the schedules included in the Schedule of
Exceptions delivered by the Company pursuant to SECTION 3.1
"SEC REPORTS" has the meaning set forth in SECTION 3.1(g).
"SECURITIES ACT" has the meaning set forth in the preamble
hereto.
"SHARES" means an aggregate of 9,317,886 of Common Stock which
are being issued and sold by the Company to the Purchasers at the Closing,
subject to adjustment as provided herein.
"SUBSIDIARY" means any Person in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar interest
which ownership entitles the Company to elect a majority of the board of
directors or similar governing body of such entity.
"TRADING DAY" means (a) any day on which the Common Stock is
listed or quoted and traded on its primary Trading Market, or (b) if the
Common Stock is not then listed or quoted and traded on any Eligible
Market, any Business Day.
"TRADING MARKET" means any Eligible Market, or any national
securities exchange, market or trading or quotation facility on which the
Common Stock is then listed or quoted.
"TRANSACTION DOCUMENTS" means this Agreement, the Transfer
Agent Instructions and any other documents or agreements executed in
connection with the transactions contemplated hereunder. Transaction
Documents shall not include any documents or agreements executed with or
delivered to any Purchaser in his or its capacity as a holder of
securities of the Company other than the Shares and not in its or his
capacity as a Purchaser hereunder.
"TRANSFER AGENT" means The Bank of New York or any other
transfer agent specified to the Purchasers by the Company in writing after
the date of this Agreement.
"TRANSFER AGENT INSTRUCTIONS" means, with respect to the
Company, the Irrevocable Transfer Agent Instructions, in the form of
EXHIBIT E, executed by the Company and delivered to and acknowledged in
writing by the Transfer Agent.
ARTICLE II
PURCHASE AND SALE
2.1 CLOSING. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
such number of Shares set forth below such Purchaser's signature on its
signature page hereto. The Closing shall take place on the Closing Date at the
offices of Lead Purchaser Counsel, or at such other location or time as the
parties may agree.
2.2 CLOSING DELIVERIES.
(a) At the Closing, the Company shall deliver or cause to be delivered
to each Purchaser the following:
(i) one or more stock certificates, free and clear of all
restrictive and other legends (except as expressly provided in SECTION
4.1(b) hereof), evidencing such number of Shares equal to the number of
Shares set forth opposite such Purchaser's name on EXHIBIT A hereto under
the heading "Shares," registered in the name of such Purchaser;
(ii) a legal opinion of the general counsel of the Company,
in the form of EXHIBIT C, executed by such counsel and addressed to the
Purchasers;
(iii) a legal opinion of Company Counsel, in the form of
EXHIBIT D, executed by such counsel and addressed to the Purchasers; and
(iv) the duly executed Transfer Agent Instructions, in the
form of EXHIBIT E, acknowledged by the Transfer Agent.
(b) At the Closing, each Purchaser shall deliver or cause to be
delivered to (i) the Company the purchase price set forth opposite such
Purchaser's name on EXHIBIT A hereto under the heading "Purchase Price" in
United States dollars and in immediately available funds, by wire transfer to an
account designated in writing to such Purchaser by the Company for such purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth
on the Schedule of Exceptions provided by the Company to the Purchasers, the
Company hereby represents and warrants to the Purchasers as follows (which
representations and warranties shall be deemed to apply, where appropriate, to
each Subsidiary of the Company):
(a) SUBSIDIARIES. The Company has no direct or indirect
Subsidiaries other than those listed in SCHEDULE 3.1(a). Except as disclosed in
SCHEDULE 3.1(a), the Company owns, directly or indirectly, all of the capital
stock or comparable equity interests of each Subsidiary free and clear of any
Liens, and all the issued and outstanding shares of capital stock or comparable
equity interests of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
(b) ORGANIZATION AND QUALIFICATION. Each of the Company and
the Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be, do
not, individually or in the aggregate, (i) adversely affect the legality,
validity or enforceability of any Transaction Document, (ii) have or result in a
material adverse effect on the results of operations, assets, business or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a
whole on a consolidated basis, or (iii) adversely impair the Company's ability
to perform fully on a timely basis its obligations under any of the Transaction
Documents (any of (i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT").
(c) AUTHORIZATION; ENFORCEMENT. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents to which it is a
party and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents to which it is a
party by the Company and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the part
of the Company, and no further consent or action is required by the Company, its
Board of Directors or its stockholders. Each of the Transaction Documents to
which it is a party has been (or upon delivery will be) duly executed by the
Company and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
(d) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents to which it is a party by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of the Company's
or any Subsidiary's certificate or articles of incorporation, bylaws or other
organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is
bound or affected, except to the extent that such conflict, default or
termination right could not reasonably be expected to have a Material Adverse
Effect, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations and the rules and regulations of any
self-regulatory organization to which the Company or its securities are
subject), or by which any property or asset of the Company or a Subsidiary is
bound or affected.
(e) ISSUANCE OF THE SHARES. The Shares are duly authorized
and, when issued and paid for in accordance with the Transaction Documents, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens and shall not be subject to preemptive rights or similar rights of
stockholders.
(f) CAPITALIZATION. The number of shares and type of all
authorized, issued and outstanding capital stock, Options and other securities
of the Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is set forth in
SCHEDULE 3.1(f). All outstanding shares of capital stock are duly authorized,
validly issued, fully paid and nonassessable. Except as disclosed in SCHEDULE
3.1(f), there are no
outstanding options, warrants, script, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common
Stock, or securities or rights convertible or exchangeable into shares of Common
Stock. Except as set forth on SCHEDULE 3.1(f), there are no anti-dilution or
price adjustment provisions contained in any security issued by the Company (or
in any agreement providing rights to security holders) and the issue and sale of
the Shares will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchasers pursuant to the
transactions contemplated hereby) and will not result in a right of any holder
of securities of the Company to adjust the exercise, conversion, exchange or
reset price under such securities. To the knowledge of the Company, except as
specifically disclosed in SCHEDULE 3.1(f), no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act),
or has the right to acquire, by agreement with or by obligation binding upon the
Company, beneficial ownership of in excess of 5% of the outstanding Common
Stock, ignoring for such purposes any limitation on the number of shares of
Common Stock that may be owned at any single time.
(g) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed
all reports required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (the foregoing materials being collectively referred to herein as the
"SEC REPORTS" and, together with this Agreement and the Schedules to this
Agreement, the "DISCLOSURE MATERIALS") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. The Company has made available to each
Purchaser true, correct and complete copies of all SEC Reports filed within the
10 days preceding the date hereof. As of their respective dates, the SEC
Reports, as any of such filings may have been subsequently amended by filings
made by the Company with the Commission prior to the date hereof, complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, as of the date filed and as they may
have been subsequently amended by filings made by the Company with the
Commission prior to the date hereof, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of their respective
dates, the financial statements of the Company included in the SEC Reports
comply as to form in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved ("GAAP"),
except (i) as may be otherwise specified in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, year-end audit adjustments. Except as
set forth in SCHEDULE 3.1(g), the Company is not required to file any agreement,
note, lease, mortgage, deed
or other instrument entered into prior to the date hereof and to which the
Company is a party or by which the Company is bound which has not been
previously filed as an exhibit to its filings with the SEC under the 1934 Act.
(h) MATERIAL CHANGES. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports or in SCHEDULE 3.1(h), (i) there has been no event,
occurrence or development in the Company's business that, individually or in the
aggregate, has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any material liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting or the
identity of its auditors, except as disclosed in its SEC Reports, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock-based plans.
(i) ABSENCE OF LITIGATION. To the Company's knowledge,
except as disclosed in the SEC Reports or in SCHEDULE 3.1(i), there is no
action, suit, claim, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or threatened against or affecting the Company or any of its
Subsidiaries that could, individually or in the aggregate, have a Material
Adverse Effect.
(j) COMPLIANCE. Neither the Company nor any Subsidiary (i)
is in default under or in violation of (and no event has occurred that has not
been waived that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary thereunder), nor has the Company or any
Subsidiary received written notice of a claim that it is in default under or
that it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or governmental body,
or (iii) is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect.
(k) TITLE TO ASSETS. Except as set forth on SCHEDULE 3.1(k),
the Company and the Subsidiaries have good and marketable title in fee simple to
all real property owned by them that is material to the business of the Company
and the Subsidiaries and good and marketable title in all personal property
owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Liens that do
not materially affect the value of such property, do not materially interfere
with the use made and proposed to be made of such property by the Company and
the Subsidiaries and could not, individually or in the aggregate, have or result
in a Material Adverse Effect. Any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and the Subsidiaries are in compliance
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company and its
Subsidiaries.
(l) CERTAIN FEES. Other than Banc of America Securities LLC
and its subagents (the fees of each of which are payable by the Company), the
Company hereby represents that it has not engaged any brokers, finders or agents
who are entitled to compensation in connection with the sale of the Shares to
the Purchasers.
(m) PRIVATE PLACEMENT. Neither the Company nor, any Person
acting on the Company's behalf and with its authorization, has sold or offered
to sell or solicited any offer to buy the Shares by means of any form of general
solicitation or advertising. Neither the Company nor any of its Affiliates nor,
any Person acting on the Company's behalf and with its authorization, has,
directly or indirectly, at any time within the past six months, made any offer
or sale of any security or solicitation of any offer to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale by the Company of the Shares as contemplated hereby or (ii) cause
the offering of the Shares pursuant to the Transaction Documents to be
integrated with prior offerings by the Company such that the sale of the Shares
to the Purchasers as contemplated hereby would require registration under the
Securities Act or that would require stockholder approval under the rules and
regulations of any Trading Market. The Company is not, and is not an Affiliate
of, an "investment company" within the meaning of the Investment Company Act of
1940, as amended. The Company is not a United States real property holding
corporation within the meaning of the Foreign Investment in Real Property Tax
Act of 1980. No consent, license, permit, waiver, approval or authorization of,
or designation, declaration, registration or filing with, the Commission or any
state securities regulatory authority is required by the Company in connection
with the offer, sale, issuance or delivery of the Shares other than the filing
of a Form D with the Commission.
(n) FORM S-3 ELIGIBILITY. The Company is eligible to
register the Shares for resale by the Purchasers using Form S-3 promulgated
under the Securities Act.
(o) LISTING AND MAINTENANCE REQUIREMENTS. The Company has
not, in the two years preceding the date hereof, received notice (written or
oral) from any Trading Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is in compliance
with all such listing and maintenance requirements.
(p) REGISTRATION RIGHTS. Except as described in SCHEDULE
3.1(p), the Company has not granted or agreed to grant to any Person any rights
(including "piggy-back" registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority that
have not been satisfied.
(q) APPLICATION OF TAKEOVER PROTECTIONS. There is no control
share acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Company's charter documents or the laws of its state of incorporation that is or
could become applicable to any of the Purchasers as a result of the Purchasers
and the Company fulfilling their obligations or exercising their rights under
the
Transaction Documents, including, without limitation, as a result of the
Company's issuance of the Shares and the Purchasers' ownership of the Shares.
(r) DISCLOSURE. The Company confirms that it has not and it
has not authorized any Person acting on its behalf to provide any of the
Purchasers or their agents or counsel with any information that constitutes or
might constitute material, nonpublic information. The Company understands and
confirms that each of the Purchasers will rely on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided
to the Purchasers in this Agreement regarding the Company, its business and the
transactions contemplated hereby, including the Schedules to this Agreement, are
true and correct in all material respect and do not contain any untrue statement
of a material fact or omit to state a material fact, necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. Except as set forth in SCHEDULE 3.1(r), no event or
circumstance has occurred or information exists with respect to the Company or
any of its Subsidiaries or its or their business, properties, prospects,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed. The Company acknowledges and
agrees that no Purchaser makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 or the Exhibits hereto which are signed by
such Purchaser.
(s) ACKNOWLEDGMENT REGARDING PURCHASERS' PURCHASE OF SHARES.
The Company acknowledges and agrees that each of the Purchasers is acting solely
in the capacity of an arm's length purchaser with respect to this Agreement and
the other Transaction Documents and the transactions contemplated hereby and
thereby. The Company further acknowledges that no Purchaser is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby, and any
advice given by any Purchaser or any of their respective representatives or
agents to the Company in connection with this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to the Purchasers' purchase of the Shares. The Company further
represents to each Purchaser that the Company's decision to enter into this
Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby and thereby by
the Company and its representatives.
(t) PATENTS AND TRADEMARKS. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are necessary or material for use in connection with
their respective businesses as described in the SEC Reports and which the
failure to so have could reasonably be expected to have a Material Adverse
Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS"). Neither the Company
nor any Subsidiary has received a written notice that the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes upon the
rights of any Person, except as could not reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights, except as could not
reasonably be expected to have a Material Adverse Effect.
(u) INSURANCE. The Company and the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses and location
in which the Company and the Subsidiaries are engaged. Neither the Company nor
any Subsidiary has any knowledge that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost which would result in a Material Adverse
Effect.
(v) REGULATORY PERMITS. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except where the
failure to possess such permits could not, individually or in the aggregate,
have or result in a Material Adverse Effect ("MATERIAL PERMITS"), and neither
the Company nor any Subsidiary has received any written notice of Proceedings
relating to the revocation or modification of any Material Permit.
(w) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as
set forth in SEC Reports filed at least ten days prior to the date hereof or as
set forth in SCHEDULE 3.1(w), none of the officers or directors of the Company
is presently a party to any transaction with the Company or any Subsidiary
(other than for services as employees, officers and directors) exceeding
$75,000, including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
(x) SOLVENCY. Based on the financial condition of the
Company as of the date of this Agreement, (i) the Company's fair saleable value
of its assets exceeds the amount that will be required to be paid on or in
respect of the Company's existing debts and other liabilities (including known
contingent liabilities) as they mature; (ii) the Company's assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
(y) INTERNAL ACCOUNTING CONTROLS. The Company and the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:
(a) ORGANIZATION; AUTHORITY. Such Purchaser is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization as set forth on EXHIBIT A hereto with the
requisite power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The purchase by such Purchaser of the
Shares as set forth on EXHIBIT A hereto has been duly authorized by all
necessary action on the part of such Purchaser. This Agreement has been duly
executed and delivered by such Purchaser and constitutes the valid and binding
obligation of such Purchaser, enforceable against it in accordance with its
terms.
(b) INVESTMENT INTENT. Such Purchaser is acquiring the
Shares as principal for its own account, in the ordinary course of its business,
for investment purposes only and not with a view to or for distributing or
reselling such Shares or any part thereof, without prejudice, however, to such
Purchaser's right, subject to the provisions of this Agreement, at all times to
sell or otherwise dispose of all or any part of such Shares pursuant to an
effective registration statement under the Securities Act or under an exemption
from such registration and in compliance with applicable federal and state
securities laws. Nothing contained herein shall be deemed a representation or
warranty by such Purchaser to hold Shares for any period of time. Such Purchaser
does not have any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Shares.
(c) PURCHASER STATUS. At the time such Purchaser was offered
the Shares, it was, and at the date hereof it is, an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Upon execution of this
Agreement, the Purchaser is not a beneficial owner of five percent (5%) or more
(calculated for these purposes in accordance with any limitations on ownership
that may be included in any securities owned by such Purchaser that are
exercisable convertible or exchangeable into shares of Common Stock) of the
Company's outstanding Common Stock.
(d) EXPERIENCE OF SUCH PURCHASER. Such Purchaser, either
alone or together with its representatives has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the Shares, and
has so evaluated the merits and risks of such investment. Such Purchaser is able
to bear the economic risk of an investment in the Shares and, at the present
time, is able to afford a complete loss of such investment. Such Purchaser is
knowledgeable about the Federal and applicable state and local securities laws,
rules and regulations as they apply to such Purchaser's purchase of the Shares
under this Agreement and the inclusion of any Registrable Securities of such
Purchaser in the Registration Statement and is knowledgeable of how such laws,
rules and regulations and this Agreement may affect the such Purchaser's ability
to buy or sell securities of the Company.
(e) ACCESS TO INFORMATION. Such Purchaser acknowledges that
it has reviewed the Disclosure Materials and has been afforded: (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Shares and the merits and risks of investing in the
Shares; (ii) access to information about the Company and the Subsidiaries and
their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser's right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company's representations and
warranties contained in the Transaction Documents.
(f) NO GOVERNMENTAL REVIEW. Each Purchaser understands that
no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Shares or
the fairness or suitability of the investment in the Shares nor have such
authorities passed upon or endorsed the merits of the offering of the Shares.
(g) RELIANCE ON EXEMPTIONS. Such Purchaser understands that
the Shares are being offered and sold to it in reliance on specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and such Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of such Purchaser set forth
herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Shares.
(h) TRANSFER OR RESALE. Such Purchaser understands that
except as otherwise provided in this Agreement, the Shares have not been and are
not being registered under the Securities Act or any state securities laws, and
may not be offered for sale, sold, assigned or transferred unless subsequently
registered thereunder or pursuant to an available exemption from such
registration, and such Purchaser shall have complied with the provisions of
ARTICLE IV.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) Each Purchaser shall only transfer, pledge or otherwise
dispose of the Shares in compliance with all federal, state, local and foreign
laws, rules and regulations. Shares may only be disposed of pursuant to an
effective registration statement under the Securities Act or pursuant to an
available exemption from the registration requirements of the Securities Act,
and in compliance with any applicable state securities laws. In connection with
any transfer of Shares other than pursuant to an effective registration
statement or to the Company or pursuant to Rule 144(k), except as otherwise set
forth herein, the Company may require the transferor to provide to the Company
an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration under the Securities Act.
(b) The Purchasers agree to the imprinting, so long as is
required by this SECTION 4.1(b), of the following legend on any certificate
evidencing Shares:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE
SKY LAWS. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY SUCH SECURITIES IN ACCORDANCE WITH THE TERMS OF THE
STOCK PURCHASE AGREEMENT PURSUANT TO WHICH THESE SECURITIES WERE
ISSUED.
Certificates evidencing Shares shall not be required to contain such legend or
any other legend (i) while a Registration Statement covering the resale of such
Shares is effective under the Securities Act, or (ii) following any sale of such
Shares pursuant to Rule 144, or (iii) if such Shares are eligible for sale under
Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company shall cause
its counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Transfer Agent on the Effective Date. Following the
Effective Date or at such earlier time as a legend is no longer required for
certain Shares, the Company will no later than three Trading Days following the
delivery by a Purchaser to the Company or the Transfer Agent of a legended
certificate representing such Shares and an opinion of counsel to the extent
required by SECTION 4.1(a), deliver or cause to be delivered to such Purchaser a
certificate representing such Shares that is free from all restrictive and other
legends. Except as may be required by a pledgee under SECTION 4.1(c), the
Company may not make any notation on its records or give instructions to any
Transfer Agent that enlarge the restrictions on transfer set forth in this
Agreement.
(c) The Company acknowledges and agrees that, subject to
compliance with all applicable federal, state and local laws, rules and
regulations, a Purchaser may from time to time pledge or grant a security
interest in some or all of the Shares in connection with a bona fide margin
agreement or other loan or financing arrangement secured by the Shares and, if
required under the terms of such agreement, loan or arrangement, such Purchaser
may transfer pledged or secured Shares to the pledgees or secured parties. Such
a pledge or transfer (other than a transfer of the record holder recorded on the
stock records of the Company) would not be subject to approval of the Company
and no legal opinion of the pledgee, secured party or pledgor shall be
required in connection therewith. Further, no notice shall be required of such
pledge. At the appropriate Purchaser's expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of Shares
may reasonably request in connection with a pledge or transfer of the Shares,
including the preparation and filing of any required prospectus supplement under
Rule 424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder.
4.2 FURNISHING OF INFORMATION. As long as any Purchaser owns Shares, for
a period of two years from the date hereof, the Company covenants to timely file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act, and, if the Company is not required to file
reports pursuant to the Exchange Act, it will prepare and furnish to the
Purchasers who continue to own Shares and make publicly available in accordance
with paragraph (c) of Rule 144, such information as is required for such
Purchasers to sell the Shares under Rule 144. Upon the request of any Purchaser,
the Company shall deliver to such Purchaser a written certification of a duly
authorized officer as to whether it has complied with the preceding sentence.
The Company further covenants that it will take such further action as such
Purchaser may reasonably request to satisfy the provisions of Rule 144
applicable to it relating to the sale of the Shares pursuant to Rule 144.
4.3 INTEGRATION. The Company shall not, and shall use its commercially
reasonable efforts to ensure that no Affiliate thereof shall, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in Section 2 of the Securities Act) that would be integrated with
the offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the sale of the Shares to the Purchasers or that
would be integrated with the offer or sale of the Shares for purposes of the
rules and regulations of any Trading Market such that stockholder approval would
be required under such rules and regulations.
4.4 RESERVATION OF SECURITIES. The Company shall maintain a reserve from
its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents.
4.5 SUBSEQUENT PLACEMENTS.
(a) From the date hereof until 75 days after the Effective
Date (the "BLOCKOUT PERIOD"), the Company will not, directly or indirectly,
offer, sell, grant any option to purchase, or otherwise dispose of (or announce
any offer, sale, grant or any option to purchase or other disposition of) any of
its equity or equity equivalent securities, including, without limitation, any
debt, preferred stock or other instrument or security that is, at any time
during its life and under any circumstances, convertible into or exchangeable or
exercisable for Common Stock or Common Stock Equivalents (any such offer, sale,
grant, disposition or announcement being referred to as a "SUBSEQUENT
PLACEMENT"), except as set forth in Section 4.5(c).
(b) Following the Effective Date, the Blockout Period set
forth in Section 4.5(a) above shall be extended for the number of Trading Days
during such period in which (i) trading in the Common Stock is suspended by any
Trading Market, (ii) the Registration Statement is not effective, or (iii) the
prospectus included in the Registration Statement may not be used by the
Purchasers for the resale of Registrable Securities thereunder.
(c) The restrictions contained in paragraph (a) of this
Section 4.5 shall not apply to (i) any issuance of Common Stock or grant of
Options to employees, officers, directors of or consultants or advisors to the
Company, in each case, pursuant to a stock-based plan duly approved by the
Company's board of directors; (ii) upon exercise, conversion, exchange of or the
payment of any dividend on any Common Stock Equivalents described in SCHEDULE
3.1(f) (provided that such exercise, conversion, exchange or payment occurs in
accordance with the terms thereof, without amendment or modification); (iii) the
issuance of securities pursuant to the Company's bona fide acquisition of
another corporation, or all or a portion of its assets, by merger, purchase of
assets or other corporate reorganization in each case, as approved by the
Company's board of directors and not for the principal purpose of raising cash,
or (iv) the issuance of securities in connection with a bona fide joint venture
or development agreement or strategic partnership or similar agreement approved
by the Company's board of directors, a primary purpose of which is not to raise
equity capital.
4.6 SECURITIES LAWS DISCLOSURE; PUBLICITY. On the Closing Date or such
later time as shall be agreed between the Company and the Lead Purchasers (but
in any event no later than 8:30 a.m., New York local time, on the first Trading
Day following the Closing Date), the Company shall issue a press release
reasonably acceptable to the Lead Purchasers disclosing all material terms of
the transactions contemplated hereby. As promptly as practicable but in any
event not later than 5:30 p.m., New York local time, on the first Trading Day
following the Closing Date, the Company shall file a Current Report on Form 8-K
with the Commission describing the terms of the transactions contemplated by the
Transaction Documents and including as exhibits to such Current Report on Form
8-K this Agreement, in the form required by the Exchange Act (the "8-K FILING").
Nothwithstanding the foregoing, the preceding sentence is not intended to impose
any greater disclosure obligation on the Company than is imposed by the Exchange
Act and the rules promulgated thereunder. The Company shall provide the Lead
Purchasers with a copy of the 8-K Filing as early as practicable prior to the
filing. Thereafter, for a period of two years the Company shall provide
Purchasers promptly after filing with copies of all filings made by the Company
with the Commission pursuant to Section 13 or 15 of the Exchange Act. The
Company and the Lead Purchasers shall consult with each other in issuing any
press releases or otherwise in making public statements or filings with the
Commission or any regulatory agency or Trading Market with respect to the
transactions contemplated hereby. Except as set forth above, no Purchaser nor
the Company shall issue any press release or otherwise make any public
statement, filing or other communication about the transactions contemplated
hereby without the prior consent of the Company and the Lead Purchasers, except
if such disclosure is required by law or the rules and regulations of any
Trading Market, in which case the disclosing party shall promptly provide the
other parties with prior notice of such public statement, filing or other
communication. The Company shall not, and shall use its reasonable best efforts
to cause each of its officers, directors, employees and agents not to, provide
any Purchaser with any material nonpublic information regarding the Company or
any of its Subsidiaries from and after the filing of the 8-K Filing without the
express written consent of such Purchaser.
4.7 USE OF PROCEEDS. The Company will use the net proceeds from the sale
of the Shares for working capital and general corporate purposes. Pending these
uses, the Company intends to invest the net proceeds from this offering in
short-term, interest-bearing, investment-grade securities.
4.8 REIMBURSEMENT. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling person, employee or agent of a Purchaser
or any of its Affiliates (a "RELATED PERSON") becomes involved in any capacity
in any Proceeding brought by or against any Person in connection with or as a
result of the transactions contemplated by the Transaction Documents, the
Company will indemnify and hold harmless such Purchaser or Related Person for
its reasonable legal and other expenses (including the costs of any
investigation, preparation and travel) and for any Losses incurred in connection
therewith, as such expenses or Losses are incurred, excluding only Losses that
result directly from such Purchaser's or Related Person's gross negligence,
willful misconduct or any representation or warranty of such Purchaser contained
in any Transaction Document being untrue or incorrect in any material respect.
In addition, (i) the Company shall indemnify and hold harmless each Purchaser
and Related Person from and against any and all Losses, as incurred, arising out
of or relating to any breach by the Company of any of the representations,
warranties or covenants made by the Company in this Agreement or any other
Transaction Document, or any allegation by a third party that, if true, would
constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by SECTION
6.4(c) below. The indemnification obligations of the Company under this
paragraph shall be in addition to any liability that the Company may otherwise
have and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. The Company also agrees that neither the Purchasers nor any
Related Persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company in connection with or as a result
of the transactions contemplated by the Transaction Documents, except to the
extent that any Losses incurred by the Company result from the gross negligence
or willful misconduct of the applicable Purchaser or Related Person in
connection with such transactions or any representation or warranty made by the
applicable Purchaser contained in any of the Transaction Documents being untrue
or incorrect in any material respect. If the Company breaches its respective
obligations under any Transaction Document, then, in addition to any other
liabilities the Company may have under any Transaction Document or applicable
law, the Company shall pay or promptly reimburse the Purchasers on demand and
presentation of appropriate invoices therefor for all costs of collection and
enforcement (including reasonable attorneys fees and expenses). Without limiting
the generality of the foregoing, the Company specifically agrees to promptly
reimburse the Purchasers on demand for all costs of enforcing the
indemnification obligations in this paragraph. In the event the Company paid for
Losses which it is ultimately determined (by a court of competent jurisdiction
in a final judgment not subject to appeal or review) resulted from the gross
negligence, willful misconduct or breach of representation in any material
respect by an applicable Purchaser or Related Party, then the Company shall be
entitled to recover such payments from such Purchaser and/or Related Party.
ARTICLE V
CONDITIONS
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS. The
obligation of each Purchaser to acquire Shares at the Closing is subject to the
satisfaction or waiver by such Purchaser, at or before the Closing, of each of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
on and as of such date; and
(b) PERFORMANCE. The Company and each other Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligation of the Company to sell the Shares at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchasers contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made on and as of such date; and
(b) PERFORMANCE. The Purchasers shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Purchasers at or prior to the Closing including, without
limitation, having returned duly completed and signed copies of the applicable
documents included in EXHIBIT B.
ARTICLE VI
REGISTRATION RIGHTS
6.1 SHELF REGISTRATION
(a) The Company shall prepare and, as promptly as possible,
and in any event on or prior to the Filing Date, the Company shall file with the
Commission a "shelf" Registration Statement covering the resale of all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate
form in accordance herewith as the Purchasers may consent) and shall contain
(except if otherwise directed by the Purchasers) the "Plan of Distribution"
attached hereto as EXHIBIT F. The Company shall only be obligated to include a
Purchaser as a selling securityholder in the registration statement in the event
such Purchaser has furnished a signed and completed Registration Statement
Questionnaire in the form of EXHIBIT B-2. Each Purchaser included in such
Registration Statement shall promptly advise the Company of any change to the
approved plan of distribution or any change in the information relation to the
Purchaser included in the Registration Statement which would require the Company
to file a pre- or post-effective amendment to the Registration Statement or
amend or supplement the Prospectus.
(b) The Company shall use its reasonable best efforts to
cause the Registration Statement to be declared effective by the Commission as
promptly as practicable, including, without limitation, submitting to the
Commission as promptly as practicable after the Company learns that no review of
the Registration Statement will be made by the staff of the Commission
or that the staff of the Commission has no further comments on the Registration
Statement, as the case may be, a request for acceleration of effectiveness of
the Registration Statement, after the filing thereof, but in any event prior to
the Required Effectiveness Date, and shall use its reasonable best efforts to
keep the Registration Statement continuously effective under the Securities Act
until the earlier of the date that all Registrable Securities covered by such
Registration Statement have been sold or can be sold publicly under Rule 144(k)
by persons who are not affiliates of the Company (the "EFFECTIVENESS PERIOD").
Each Purchaser shall use commercially reasonable efforts to provide such other
and additional information that the Company may reasonably request to respond to
comments from the SEC or the Trading Market, to make appropriate disclosures in
the Registration Statement or to otherwise fulfill its obligations hereunder in
connection with the Registration Statement.
(c) The Company shall notify each Purchaser in writing
promptly (and in any event within one Business Day) after receiving notification
from the Commission that the Registration Statement has been declared effective.
(d) Upon the occurrence of any Event (as defined below), the
Company shall pay in cash, as liquidated damages and not as a penalty, the
following:
(i) In the case of an Event under clause (i),
the Company shall pay each Purchaser on every monthly anniversary of the
occurrence of such Event during the Effectiveness Period until the Event
has been cured by the filing of the Registration Statement or the
occurrence of the Effectiveness Date, as applicable, an amount equal to
0.5% for the first month and 1% monthly thereafter of the aggregate
purchase price paid by such Purchaser for the Shares owned by such
Purchaser until the Event is so cured.
(ii) In the case of an Event under clause (ii),
the Company shall pay each Purchaser an amount equal to 0.5% for the first
month and 1% monthly thereafter of the purchase price paid by each such
Purchaser for the Shares then owned by such Purchaser. Such amount shall
be paid monthly to each such Purchaser on the monthly anniversary of such
Event and the period for which payment is due shall be each day in excess
of such five Trading Days that each Purchaser is unable to sell such
Registrable Securities.
(iii) In the case of an Event under clause (iii),
the Company shall pay each Purchaser an amount equal to 0.5% for the first
month and 1% monthly thereafter of the aggregate purchase price paid by
each such Purchaser for the Shares then owned by such Purchaser. The
payment shall apply only to the affected Shares and shall be paid monthly
to each such Purchaser on the monthly anniversary date of such Event and
the period for which payment is due shall be for every day during the
Effectiveness Period that the Common Stock is not so listed or quoted.
The amounts payable hereunder shall be paid for partial relief for the damages
suffered from any Event by a Purchaser (which remedy shall not be exclusive of
any other remedies available under this Agreement, at law or in equity). The
payments to which a Purchaser shall be entitled pursuant to this SECTION 6.1(d)
are referred to herein as "EVENT PAYMENTS". Any Event Payments payable pursuant
to the terms hereof shall apply on a pro-rata basis for any portion of a month
prior to the cure of an Event. In the event the Company fails to make Event
Payments in
a timely manner, such Event Payments shall bear interest at the rate of 1.0% per
month (prorated for partial months) until paid in full.
For such purposes, each of the following shall constitute an "EVENT":
(i) the Registration Statement is not filed on
or prior to the Filing Date or is not declared effective on or prior to
the Required Effectiveness Date; PROVIDED, HOWEVER, that for the purposes
of the Event Payment under this Section 6.1(d) only, the Company shall
have an additional 30 days to cure the failure to declare the Registration
Statement effective on or prior to the Required Effectiveness Date before
any Event Payment is due to the Purchasers under this Section 6.1(d);
(ii) except (A) as provided for in SECTION
6.1(e), (B) if the Company is involved in a "Rule 13e-3 transaction" as
defined in Rule 13e-3 under the Exchange Act, or (C) a merger or
consolidation of the Company or a sale of more than one-half of the assets
of the Company in one or a series of related transactions, unless
following such transaction or series of transactions, the holders of the
Company's securities prior to the first such transaction continue to hold
at least 50% of the voting rights and equity interests of the surviving
entity or acquirer (clauses (B) and (C), collectively, the "EXCLUDED
EVENTS"), after the Effective Date and during the Effectiveness Period, a
Purchaser who desires to sell Registrable Securities is not permitted to
sell Registrable Securities under the Registration Statement (or a
subsequent Registration Statement filed in replacement thereof) or under
Rule 144(k) for any reason for five or more Trading Days (whether or not
consecutive); or
(iii) except as a result of the Excluded Events,
the Common Stock is not listed or quoted on an Eligible Market for a
period of three consecutive Trading Days or a total of five Trading Days
(which need not be consecutive Trading Days) during any 365 day period
during the Effectiveness Period.
(e) Notwithstanding anything in this Agreement to the
contrary, the Company may, by written notice to the Purchasers, suspend sales
under a Registration Statement after the Effective Date thereof and/or require
that the Purchasers immediately cease the sale of the Registrable Securities
pursuant thereto and/or defer the filing of any subsequent Registration
Statement if the Company is engaged in a material transaction, merger,
acquisition or sale and the Board of Directors determines in good faith, by
appropriate resolutions, that, as a result of such activity, (A) it would be
materially detrimental to the Company (other than as relating solely to the
price of the Common Stock) to file a Registration Statement at such time and (B)
it is in the best interests of the Company to defer proceeding with such
registration at such time. Upon receipt of such notice, each Purchaser shall
immediately discontinue any sales of Registrable Securities pursuant to such
registration until such Purchaser has received copies of a supplemented or
amended Prospectus or until such Purchaser is advised in writing by the Company
that the then-current Prospectus may be used and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in such Prospectus. In no event, however, shall this right be
exercised to suspend sales or registration beyond the period during which (in
the good faith determination of the Company's Board of Directors) the failure to
require such suspension or proceeding with such registration would be
materially detrimental to the Company. The Company's rights under this SECTION
6.1(e) may be exercised for a period of no more than 30 days in any twelve-month
period, of which no more than 10 days may be consecutive. Immediately after the
end of any suspension period under this SECTION 6.1(e), the Company shall take
all necessary actions (including filing any required supplemental prospectus) to
restore the effectiveness of the applicable Registration Statement and the
ability of the Purchasers to publicly resell their Registrable Securities
pursuant to such effective Registration Statement.
(f) Except as required by this Agreement or as set forth on
SCHEDULE 6.1(f), the Company shall not, prior to the Effective Date of the
Registration Statement, prepare and file with the Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity or equity-linked securities (other
than post-effective amendments of previously filed registration statements and
registration statements on Form S-8).
6.2 REGISTRATION PROCEDURES. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Not less than two Trading Days prior to the filing of
the Registration Statement or any related Prospectus and as early as practicable
prior to the filing of any amendment or supplement thereto, the Company shall
furnish to the Lead Purchasers and Lead Purchaser Counsel copies of all such
documents proposed to be filed, which documents will be subject to the review of
such Lead Purchasers and Lead Purchaser Counsel. The Company shall not file the
Registration Statement or any such Prospectus or any amendments or supplements
thereto containing information regarding the plan of distribution and the
selling securityholders to which the Lead Purchasers holding a majority of the
Registrable Securities shall reasonably object prior to such filing.
(b) (i) Subject to SECTION 6.1(e) prepare and file with the
Commission such amendments, including post-effective amendments, to the
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep the Registration Statement continuously effective, as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424; and (iii) respond as promptly as reasonably possible to any comments
received from the Commission with respect to the Registration Statement or any
amendment thereto.
(c) Notify the Purchasers of Registrable Securities to be
sold and the Lead Purchaser Counsel as promptly as reasonably possible, and (if
requested by any such Person) confirm such notice in writing no later than one
Trading Day thereafter, of any of the following events: (i) the Commission
notifies the Company whether there will be a "review" of any Registration
Statement; (ii) the Commission comments in writing on any Registration
Statement; (iii) any Registration Statement or any post-effective amendment is
declared effective; (iv) the Commission or any other Federal or state
governmental authority requests any amendment or supplement to any Registration
Statement or Prospectus or requests additional information
related thereto; (v) the Commission issues any stop order suspending the
effectiveness of any Registration Statement or initiates any Proceedings for
that purpose; (vi) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities for
sale in any jurisdiction, or the initiation or threat of any Proceeding for such
purpose; or (vii) the financial statements included in any Registration
Statement become ineligible for inclusion therein or any statement made in any
Registration Statement or Prospectus or any document incorporated or deemed to
be incorporated therein by reference is untrue in any material respect or any
revision to a Registration Statement, Prospectus or other document is required
so that it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The Company shall furnish Lead Purchaser Counsel with
copies of all comment letters on the Registration Statement from the Commission
(and shall furnish the Purchasers with all portions of such comment letters
related to the "Plan of Distribution" or "Selling Shareholders" section of such
Registration Statement); shall keep Lead Purchaser Counsel fully apprised of the
scope and status of any responses to the Commission and shall otherwise
cooperate with Lead Purchaser Counsel in keeping Lead Purchasers appraised of
the status of the Registration Statement. The Company shall not make any
amendments to the Registration Statement or make any response to any comment
letter relating to the "Plan of Distribution" or the "Selling Shareholders"
sections without the prior approval of the Lead Purchasers.
(d) Use its reasonable best efforts to avoid the issuance of
or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of any Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as soon as possible.
(e) If requested by the Lead Purchasers, furnish to each
Lead Purchaser and the Lead Purchaser Counsel, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission.
(f) Promptly deliver to each Purchaser and the Lead
Purchaser Counsel, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request. The Company hereby
consents to the use of such Prospectus as amended or supplemented by each of the
selling Purchasers in connection with the resale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto to the extent
permitted by federal and state securities laws and regulations.
(g) (i) In the time and manner required by each Trading
Market, prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities; (ii) take all reasonable
steps necessary to cause such Registrable Securities to be approved for listing
on each Trading Market as soon as possible thereafter; (iii) provide to the
Purchasers evidence of such listing; and (iv) except as a result of the Excluded
Events, during the
Effectiveness Period, maintain the listing of such Registrable Securities on
each such Trading Market or another Eligible Market.
(h) Prior to any public offering of Registrable Securities
by the Purchasers, use its reasonable best efforts to register or qualify or
cooperate with the selling Purchasers and the Lead Purchaser Counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Purchaser requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; PROVIDED, HOWEVER, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(i) Cooperate with the Purchasers to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by this Agreement and under
law, of all restrictive legends, and to enable such Registrable Securities to be
in such denominations and registered in such names as any such Purchasers may
reasonably request.
(j) Upon the occurrence of any event described in
SECTION 6.2(c)(vii), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(k) Cooperate with any due diligence investigation
undertaken by the Purchasers in connection with the sale of Registrable
Securities, including, without limitation, subject to appropriate
confidentiality agreements, by making available any documents and information;
provided that the Company will not deliver or make available to any Purchaser
material, nonpublic information and (ii) causing its officers and directors,
counsel and independent certified public accountants to respond to such
inquiries, , unless such Purchaser specifically requests in advance to receive
material, nonpublic information in writing and executes an appropriate form of
confidentiality agreement.
(l) Comply with all applicable rules and regulations of the
Commission.
6.3 REGISTRATION EXPENSES. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with ARTICLE VI of this Agreement by the Company, including without
limitation (a) all registration and filing fees and expenses, including without
limitation those related to filings with the Commission, any Trading Market and
in connection with applicable state securities or Blue Sky laws, (b) printing
expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing Prospectuses requested by the
Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and
disbursements of counsel for the Company, (e) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, and (f) all listing fees to be paid
by the Company to the Trading Market.
6.4 Indemnification
(a) INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Purchaser, the officers, directors, partners, members, agents, investment
advisors and employees of each of them, each Person who controls any such
Purchaser (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, partners, members, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all Losses, as incurred, arising out of
or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (i)
such untrue statements, alleged untrue statements, omissions or alleged
omissions are based solely upon information regarding such Purchaser furnished
in writing to the Company by such Purchaser expressly for use therein, or to the
extent that such information relates to such Purchaser or such Purchaser's
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (ii) in the case of an occurrence of an event
of the type specified in SECTION 6.2(c)(v)-(vii), the use by such Purchaser of
an outdated or defective Prospectus after the Company has notified such
Purchaser in writing that the Prospectus is outdated or defective and prior to
the receipt by such Purchaser of the Advice contemplated in SECTION 6.5. The
Company shall notify the Purchasers promptly of the institution of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) INDEMNIFICATION BY PURCHASERS. Each Purchaser shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses (as determined by a court of competent jurisdiction in a
final judgment not subject to appeal or review) arising solely out of any untrue
statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of any omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading to the extent, but only
to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Purchaser to the
Company specifically for inclusion in such Registration Statement or such
Prospectus or to the extent that (i) such untrue statements or omissions are
based solely upon information regarding such Purchaser furnished in writing to
the Company by such Purchaser expressly for use therein, or to the extent that
such information relates to such Purchaser or such Purchaser's proposed method
of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Purchaser expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (ii) in the case of an occurrence of an event of the type
specified in SECTION 6.2(c)(v)-(vii), the use by such Purchaser of an outdated
or defective Prospectus after the Company has notified such Purchaser in writing
that the Prospectus is outdated or defective and prior to the receipt by such
Purchaser of the Advice contemplated in SECTION 6.5. In no event shall the
liability of any selling Purchaser hereunder be greater in amount than the
dollar amount of the net proceeds received by such Purchaser upon the sale of
the Registrable Securities giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify
the Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). It being understood, however, that the Indemnifying
Party shall not, in connection with any one such Proceeding be liable for the
fees and expenses of more than one separate firm of attorneys at any time for
all Indemnified Parties, which firm shall be appointed by a majority of the
Indemnified Parties; provided, however, that in the case a single firm of
attorneys would be inappropriate due to actual or potential differing interests
or conflicts between such Indemnified Parties and any other party represented by
such counsel in such Proceeding or otherwise, then the Indemnifying Party shall
be liable for the fees and expenses of one additional firm of attorneys with
respect to such
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder, provided that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).
(d) CONTRIBUTION. If a claim for indemnification under
SECTION 6.4(a) or (b) is unavailable to an Indemnified Party (by reason of
public policy or otherwise), THEN each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in SECTION 6.4(c), any reasonable attorneys' or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this SECTION 6.4(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this SECTION 6.4(d), no Purchaser
shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Purchaser from the sale
of the Registrable Securities subject to the Proceeding exceeds the amount of
any damages that such Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6.5 DISPOSITIONS. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in SECTIONS
6.2(c)(v), (vi) or (vii), such Purchaser will discontinue disposition of such
Registrable Securities under the Registration Statement until such Purchaser's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by SECTION 6.2(j), or until it is advised in writing (the
"ADVICE") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
6.6 NO PIGGYBACK ON REGISTRATIONS. Neither the Company nor any of its
security holders (other than the Purchasers in such capacity pursuant hereto
with respect to the Registrable Securities) may include securities of the
Company in the Registration Statement other than the Registrable Securities, and
the Company shall not after the date hereof enter into any agreement providing
any such right to any of its security holders.
ARTICLE VII
MISCELLANEOUS
7.1 TERMINATION. This Agreement may be terminated by the Company or any
Purchaser (with respect to itself), by written notice to the other parties, if
the Closing has not been consummated by the third Business Day following the
date of this Agreement; provided that no such termination will affect the right
of any party to xxx for any breach by the other party (or parties).
7.2 FEES AND EXPENSES. At the Closing, the Company shall reimburse to
Lead Purchasers up to an aggregate of $25,000 of the fees and expenses of the
Lead Purchaser Counsel incurred in connection with its due diligence and the
preparation and negotiation of the Transaction Documents. In lieu of the
foregoing payment, Smithfield Fiduciary LLC (as a Lead Purchaser) may retain
such amount at the Closing or require the Company to pay such amount directly to
the Lead Purchaser Counsel. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
sale and issuance of the Shares to Purchasers.
7.3 ENTIRE AGREEMENT. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. At or
after the Closing, and without further consideration, the Company
will execute and deliver to the Purchasers such further documents as may be
reasonably requested in order to give practical effect to the intention of the
parties under the Transaction Documents.
7.4 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 12:00 p.m. (noon) (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 12:00
p.m. (noon) (New York City time) on any Trading Day, (c) the Trading Day
following the date of deposit for overnight delivery with a nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The addresses and facsimile numbers
for such notices and communications are those set forth on the signature pages
hereof, or such other address or facsimile number as may be designated in
writing hereafter, in the same manner, by any such Person.
7.5 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Purchasers under ARTICLE VI may
be given by Purchasers holding at least a majority of the Registrable Securities
to which such waiver or consent relates.
7.6 CONSTRUCTION. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language CHOSEN by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
7.7 SUCCESSORS AND ASSIGNS. Except as otherwise set forth herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Lead Purchasers. Any Purchaser may assign its rights under this
Agreement to any Person to whom such Purchaser assigns or transfers all Shares
held by it, provided such transferee agrees in writing to be bound, with respect
to the transferred SHARES, by the provisions hereof that apply to the
"Purchasers." Subject to compliance with applicable federal and state laws,
rules and regulations, and this Agreement, Shares may be assigned to any Person
in connection with a bona fide margin account or other loan or financing
arrangement secured by such Shares.
7.8 NO THIRD-PARTY BENEFICIARIES. Except as otherwise set forth herein,
this Agreement is intended for the benefit of the parties hereto and their
respective successors and permitted assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person, except that each
Related Person is an intended third party beneficiary of SECTION 4.8 and each
Indemnified Party is an intended third party beneficiary of SECTION 6.4 and (in
each case) may enforce the provisions of such Sections directly against the
parties with obligations thereunder.
7.9 GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. THE CORPORATE LAWS OF
THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF
THE COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THE COMPANY AND PURCHASERS HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK,
BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY
OR ANY PURCHASER HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE
ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE,
AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY
OR ANY PURCHASER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
(WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD
AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW. THE COMPANY AND PURCHASERS HEREBY WAIVE ALL RIGHTS TO A TRIAL
BY JURY.
7.10 SURVIVAL. The representations, warranties, agreements and covenants
contained herein shall SURVIVE the Closing.
7.11 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become EFFECTIVE when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
7.12 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
7.13 RESCISSION AND WITHDRAWAL RIGHT. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
7.14 REPLACEMENT OF SHARES. If any certificate or instrument evidencing
any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Shares.
7.15 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the COMPANY will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation the defense that a remedy
at law would be adequate.
7.16 PAYMENT SET ASIDE. To the extent that the Company makes a payment or
payments to any Purchaser hereunder or any Purchaser enforces or exercises its
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company
by a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
7.17 ADJUSTMENTS IN SHARE NUMBERS AND PRICES. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or INDIRECTLY shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.
7.18 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Shares pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
MIDWAY GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
Address for Notice:
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile No.: 773/961-2299
Telephone No.: 773/000-0000
Attn: General Counsel
With a copy to: Shack Xxxxxx Xxxx & Xxxxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: 212/730-1964
Telephone No.: 212/000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
Columbia Ventures Corp.
-------------------------------------------------
By: /s/ Kipling X. Xxxxxxxx
---------------------------------------------
Print Name: Kipling X. Xxxxxxxx
Title: Chief Investment Strategist
Address: 00000 XX XxXxxxxxxxx, #000
----------------------------------------
Xxxxxxxxx, XX 00000
-------------------------------------------
Attention: Kipling X. Xxxxxxxx
---------------------------------------
Facsimile No.: (000) 000-0000
----------------------------------
Telephone No.: (000) 000-0000
----------------------------------
Number of Shares: 132,077
-------------------------------
Aggregate Purchase Price: $350,004.05
----------------------
Jurisdiction of Organization: Washington
--------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
Cranshire Capital, L.P.
-------------------------------------------------
By: /s/ Xxxxxxxx X. Xxxxx
---------------------------------------------
Print Name: Xxxxxxxx X. Xxxxx
Title: President - Downsview Capital
The General Partner
Address: 000 Xxxxxx Xxxx, Xxxxx 0000
----------------------------------------
Xxxxxxxxxx, XX 00000
------------------------------------------
Attention: Xxxxxxxx X. Xxxxx
--------------------------------------
Facsimile No.: (000) 000-0000
----------------------------------
Telephone No.: (000) 000-0000
----------------------------------
Number of Shares: 94,345
-------------------------------
Aggregate Purchase Price: $250,014.25
----------------------
Jurisdiction of Organization: Illinois
--------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
Deephaven Small Cap Growth Fund, LLC
-------------------------------------------------
By: /s/ Xxxxx Xxxxxxxxx
---------------------------------------------
Print Name: Xxxxx Xxxxxxxxx
Title: Director of Private Placements
Address: 000 Xxxxxxxx Xxxx, Xxxxx 000
----------------------------------------
Xxxxxxxxxx, XX 00000
------------------------------------------
Attention: Xxxxx Xxxxxxxxx
--------------------------------------
Facsimile No.: (000) 000-0000
----------------------------------
Telephone No.: (000) 000-0000
----------------------------------
Number of Shares: 184,997
-------------------------------
Aggregate Purchase Price: $490,242.05
----------------------
Jurisdiction of Organization: Minnesota
--------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
Mainfield Enterprises Inc.
----------------------------------------------------
By: /s/ Avi Vigder
------------------------------------------------
Print Name: Avi Vigder
Title: Authorized Signatory
Address: c/o Sage Capital Growth Inc.
-------------------------------------------
000 Xxxxxxx Xxx., 00xx Xxxxx, Xxx Xxxx, XX 00000
----------------------------------------------------
Attention: Eldad Gal
------------------------------------------
Facsimile No.: (000) 000-0000
-------------------------------------
Telephone No.: (000) 000-0000
-------------------------------------
Number of Shares: 660,378
----------------------------------
Aggregate Purchase Price: $1,750,001.70
-------------------------
Jurisdiction of Organization: British Virgin Islands
-----------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
Master Small Cap Value Trust
-------------------------------------------------
By: /s/ R. Xxxxx Xxxx
---------------------------------------------
Print Name: R. Xxxxx Xxxx
Title: Portfolio Manager
Address: 000 Xxxxxxxx Xxxx Xxxx
----------------------------------------
Xxxxxxxxxx, XX 00000
------------------------------------------
Attention: Xxxxxxx Xxxxxxx
--------------------------------------
Facsimile No.: (000) 000-0000
----------------------------------
Telephone No.: (000) 000-0000
----------------------------------
Number of Shares: 2,953,006
-------------------------------
Aggregate Purchase Price: $7,825,465.90
----------------------
Jurisdiction of Organization: Delaware
--------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
Xxxxxxx Xxxxx Variable Series Funds, Inc. - Small
-------------------------------------------------
Cap Value V.I. Fund
--------------------------------------------
By: /s/ R. Xxxxx Xxxx
---------------------------------------------
Print Name: R. Xxxxx Xxxx
Title: Portfolio Manager
Address: 000 Xxxxxxxx Xxxx Xxxx
----------------------------------------
Xxxxxxxxxx, XX 00000
-----------------------------------------
Attention: Xxxxxxx Xxxxxxx
---------------------------------------
Facsimile No.: (000) 000-0000
----------------------------------
Telephone No.: (000) 000-0000
----------------------------------
Number of Shares: 631,900
-------------------------------
Aggregate Purchase Price: $1,674,535
----------------------
Jurisdiction of Organization: Maryland
--------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
Portside Growth and Opportunity Fund
-------------------------------------------------
By: /s/ Xxxxxxx Xxxxx
---------------------------------------------
Print Name: Xxxxxxx Xxxxx
Title: Authorized Signatory
Address: c/o Ramius Capital Group, LLC
----------------------------------------
000 Xxxxx Xxx., 00xx Xxxxx, Xxx Xxxx, XX 00000
----------------------------------------------
Attention: Xxxxxxx Xxxxx
--------------------------------------
Facsimile No.: (000) 000-0000
----------------------------------
Telephone No.: (000) 000-0000
----------------------------------
Number of Shares: 1,622,643
-------------------------------
Aggregate Purchase Price: $4,300,003.95
----------------------
Jurisdiction of Organization: Cayman Islands
--------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
S.A.C. Capital Associates, LLC
By: S.A.C. Capital Advisors, LLC
-------------------------------------------------
By: /s/ Xxxxx X Xxxxxxxx
----------------------------------------------
Print Name: Xxxxx X. Xxxxxxxx
Title: General Counsel
Address: c/o S.A.C. Capital Advisors, LLC
00 Xxxxxxxx Xxxxx Xxxx
----------------------------------------
Xxxxxxxx, XX 00000
------------------------------------------
Attention: General Counsel
---------------------------------------
Facsimile No.: (000) 000-0000
-----------------------------------
Telephone No.: (000) 000-0000
-----------------------------------
Number of Shares: 981,933 at $2.65 per share
-------------------------------
Aggregate Purchase Price: $2,602,122.45
----------------------
Jurisdiction of Organization: Anguilla, British
West Indies
--------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
SF Capital Partners Ltd.
----------------------------------------------------
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------------
Print Name: Xxxxx X. Xxxxxxxx
Title: Authorized Signatory
Address: 0000 Xxxxx Xxxx Xxxxx
-------------------------------------------
Xx. Xxxxxxx, XX 00000
------------------------------------------------
Attention: Xxxxx Xxxxxxxx
-----------------------------------------
Facsimile No.: (000) 000-0000
-------------------------------------
Telephone No.: (000) 000-0000
-------------------------------------
Number of Shares: 188,680
----------------------------------
Aggregate Purchase Price: $500,002
-------------------------
Jurisdiction of Organization: British Virgin Islands
-----------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
Smithfield Fiduciary LLC
-------------------------------------------------
By: /s/ Xxxx X. Chill
---------------------------------------------
Print Name: Xxxx X. Chill
Title: Authorized Signatory
Address: c/o Highbridge Capital Management, LLC
----------------------------------------
0 Xxxx 00xx Xxxxxx, 27th Floor
---------------------------------------------
Xxx Xxxx, Xxx Xxxx 00000
---------------------------------------------
Attention: Xxx X. Xxxxxx/ Xxxx X. Chill
---------------------------------------
Facsimile No.: (000) 000-0000
----------------------------------
Telephone No.: (000) 000-0000
----------------------------------
Number of Shares: 1,622,643
-------------------------------
Aggregate Purchase Price: $4,300,003.95
----------------------
Jurisdiction of Organization: Cayman Islands
--------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
Xxxxx, Xxxx & Xxxxx Investments, a Division of
----------------------------------------------
Robeco USA, L.L.C.
-------------------------------------------
By: /s/ Xxxxxxxx Xxxxx Xxxxxx & /s/ Xxxxx Xxxxxxx
---------------------------------------------
Print Name: Xxxxxxxx Xxxxx Xxxxxx &
Xxxxx Xxxxxxx
Title: Managing Director &
Deputy General Counsel
Address: 000 Xxxxxxx Xxxxxx, 00xx Floor
----------------------------------------
Xxx Xxxx, XX 00000
---------------------------------------------
Attention: Xxxx Xxxxxxxxx
--------------------------------------
Facsimile No.: (000) 000-0000
----------------------------------
Telephone No.: (000) 000-0000
----------------------------------
Number of Shares: 207,548
-------------------------------
Aggregate Purchase Price: $550,002.20
----------------------
Jurisdiction of Organization: Delaware
-------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
PURCHASER SIGNATURE PAGE
By its execution and delivery of this signature page, the undersigned
Purchaser represents and warrants that the information about the Purchaser set
forth on this signature page and documents furnished by such Purchaser herewith
is true and correct and hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of October 14, 2003
(the "Purchase Agreement") by and among Midway Games Inc. and the Purchasers (as
defined therein), as to the number of Shares set forth below, and authorizes
this signature page to be attached to the Purchase Agreement or counterparts
thereof.
Name of Purchaser:
Xxxxxxx X. Xxxxx
-------------------------------------------------
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Print Name: Xxxxxxx X. Xxxxx
Title:
Address: 0 Xxx Xxxxx Xxxxx
----------------------------------------
Xxxxxxxx, XX 00000
-------------------------------------------
Attention: Xxxxxxx X. Xxxxx
---------------------------------------
Facsimile No.: (000) 000-0000
----------------------------------
Telephone No.: (000) 000-0000
----------------------------------
Number of Shares: 37,736
--------------------------------
Aggregate Purchase Price: $100,000.00
----------------------
Jurisdiction of Organization: New York
--------------------
Agreed to and accepted this
14th day of October, 0000
XXXXXX GAMES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
EXHIBITS TO SECURITIES PURCHASE AGREEMENT
A. Schedule of Investors
B. Instruction Sheet For Purchaser and related certificates and
Questionnaire
C. Opinion of Company General Counsel
D. Opinion of Company Corporate Counsel
E. Transfer Agent Instructions
F. Plan of Distribution
EXHIBIT A
SCHEDULE OF INVESTORS
Jurisdiction of
Purchaser Organization Shares Purchase Price
--------- ---------------- ------ --------------
Cranshire Capital, L.P. Illinois 94,345 $ 250,014.25
Deephaven Small Cap Growth Fund LLC Minnesota 184,997 $ 490,242.05
Columbia Ventures Corp. Washington 132,077 $ 350,004.05
Smithfield Fiduciary LLC Cayman Islands 1,622,643 $ 4,300,003.95
Master Small Cap Value Trust Delaware 2,943,006 $ 7,825,465.90
Xxxxxxx Xxxxx Variable Series Funds, Maryland 631,900 $ 1,674,535.00
Inc. - Small Cap Value X.X. Xxxx
Xxxxxxxx Xxxxxx & Xxxxxxxxxxx Xxxx Xxxxxx Xxxxxxx 1,622,643 $ 4,300,003.95
S.A.C. Capital Associates, LLC British West Indies 981,933 $ 2,602,122.45
Mainfield Enterprises Inc. British Virgin 660,378 $ 1,750,001.70
Islands
SF Capital Partners Ltd. British Virgin 188,680 $ 500,002.00
Islands
Xxxxx, Xxxx & Xxxxx Investments, a Delaware 207,548 $ 550,002.20
division of Robeco USA, L.L.C.
Xxxxxxx Xxxxx 37,736 $ 100,000.40
TOTAL 9,317,885 $ 24,692,397.90
A-1
EXHIBIT B
INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Securities Purchase Agreement)
A. Complete the following items in the Securities Purchase Agreement:
1. Complete and execute the Purchaser Signature Page. The Agreement
must be executed by an individual authorized to bind the Purchaser.
2. Exhibit B-1 - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate Questionnaire.
3. Exhibit B-2 - Registration Statement Questionnaire:
Complete and execute the Registration Statement Questionnaire.
4. Exhibit B-3 /B-4 - Purchaser Certificate:
Provide the information requested by the Certificate for Individual
Purchasers (B-3) or the Certificate for Corporate, Partnership, Limited
Liability Company, Trust, Foundation and Joint Purchasers (B-4), as
applicable.
5. Return, via facsimile, the signed Securities Purchase Agreement
including the properly completed Exhibits B-1 through B-4, to:
Midway Games Inc.
Facsimile: 646/366-3724
Telephone: 212/000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
6. After completing instruction number five (5) above, deliver the
original signed Securities Purchase Agreement including the properly
completed Exhibits B-1 through B-4 by overnight delivery to:
Midway Games Inc.
c/o Shack Xxxxxx Xxxx & Xxxxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile:: 646/366-3724
Telephone: 212/000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
B-1
B. Instructions regarding the transfer of funds for the purchase of Shares
will be telecopied to the Purchaser by the Company separately.
C. Upon the resale of any Shares by the Purchaser after the Registration
Statement covering any Shares is effective, as described in the Securities
Purchase Agreement, the Purchaser must deliver a current Prospectus to the
buyer.
EXHIBIT B-1
MIDWAY GAMES INC.
STOCK CERTIFICATE QUESTIONNAIRE*
Please provide us with the following information:
1. The name of the Purchaser: _________________
2. The name of the Beneficial Owner if different from
Purchaser: _________________
3. The exact name that the Shares are to be registered in
(this is the name that will appear on the stock
certificate(s)) ("Registered Holder"), and the
applicable denominations. You may use a nominee name if
appropriate: _________________
4. The relationship between the Purchaser/Beneficial Owner
of the Shares and the Registered Holder: _________________
5. The mailing address, telephone and facsimile number of
the Registered Holder: _________________
_________________
_________________
_________________
6. The Tax Identification Number of the Registered Holder
listed in response to item 3 above: _________________
7. Attach to this Questionnaire a properly completed IRS
Form W-9 or W-8, as applicable: _________________
----------
* Certain definitions used in this Questionnaire are included in the Appendix
to Exhibit B-2.
B-1-1
Name of Purchaser:
____________________________
By:
---------------------------
Print Name:
Title:
EXHIBIT B-2
MIDWAY GAMES INC.
REGISTRATION STATEMENT QUESTIONNAIRE
By signing and completing this questionnaire, the undersigned holder of
Shares (the "Selling Security holder") of Registrable Securities hereby elects
to include in the Registration Statement the Registrable Securities beneficially
owned by it and listed in Item (7) below. The undersigned, by signing and
returning this Questionnaire, confirms its agreement to be bound with respect to
such Registrable Securities by the terms of the Securities Purchase Agreement
relating to the registration of such Registrable Securities. In connection with
the Registration Statement, the undersigned Selling Securityholder provide
Midway Games, Inc. with the following information regarding such Selling
Securityholder.
1. Please state your organization's name exactly as it should appear in the
Registration Statement:
_________________________________________________________________________
2. Please specify the type of organization of Selling Securityholder (i.e.,
individual, corporation, partnership, limited liability company, etc.):
_________________________________________________________________________
3. Please state your organization's jurisdiction of organization:
_________________________________________________________________________
4. Full legal name of Registered Holder (if not the same as in Item 1 above)
of Registrable Securities listed in Item 8 below:
_________________________________________________________________________
5. Address for Notices to Selling Securityholder:
________________________________
________________________________
________________________________
________________________________
Telephone No.:___________________
Facsimile No.: __________________
Contact Person: _________________
B-2-1
E-mail: _________________________
6. Beneficial Ownership of Shares by Another Person:
(a) Is another person the Beneficial Owner of any of the Registrable
Securities?
_______ Yes (Answer questions (b) through (e) below)
_______ No
(b) What is the full legal name of such Beneficial Owner?
_______________________________________________________________
(c) Is such Beneficial Owner a:
[ ] Corporation [ ] General Partnership
[ ] Individual [ ] Limited Partnership
[ ] Limited Liability Company [ ] Other (please specify) ___________
(d) In what state is such Beneficial Owner organized or domiciled?
_______________________________________________________________
(e) Please provide the name, address and telephone number of a contact
person for such Beneficial Owner:
_______________________________________________________________
7. Beneficial Ownership of Registrable Securities:
EXCEPT AS SET FORTH BELOW IN THIS ITEM (7), THE UNDERSIGNED IS NOT A
BENEFICIAL OWNER OF ANY REGISTRABLE SECURITIES.
(1) Amount of Registrable Securities Beneficially Owned:
_______ Shares of Common Stock
(2) Amount of Registrable Securities to be included in the Registration
Statement:
_______ Shares of Common Stock
8. Beneficial Ownership of Other Securities of the Company:
EXCEPT AS SET FORTH BELOW IN THIS ITEM (8), THE UNDERSIGNED SELLING
SECURITYHOLDER IS NOT A BENEFICIAL OWNER OF ANY SHARES OF COMMON STOCK OR
ANY OTHER SECURITIES OF THE COMPANY, OTHER THAN THE SHARES AND SHARES OF
COMMON STOCK LISTED ABOVE IN ITEM (7).
State any exceptions here:
9. Relationships with the Company:
EXCEPT AS SET FORTH BELOW, NEITHER THE SELLING SECURITYHOLDER NOR ANY OF
ITS AFFILIATES, OFFICERS, DIRECTORS OR PRINCIPAL EQUITY HOLDERS (5% OR
MORE) HAS HELD ANY POSITION OR OFFICE OR HAS HAD ANY OTHER MATERIAL
RELATIONSHIP WITH THE COMPANY (OR ITS PREDECESSORS OR AFFILIATES) DURING
THE PAST THREE YEARS.
State any exceptions here:
10. Plan of Distribution:
EXCEPT AS SET FORTH BELOW, THE UNDERSIGNED SELLING SECURITYHOLDER INTENDS
TO DISTRIBUTE THE REGISTRABLE SECURITIES LISTED ABOVE IN ITEM (7) ONLY IN
ACCORDANCE WITH THE PLAN OF DISTRIBUTION SET FORTH AS EXHIBIT F TO THE
SECURITIES PURCHASE AGREEMENT. THE UNDERSIGNED SELLING SECURITYHOLDER
REPRESENTS THAT IT HAS REVIEWED SUCH PLAN OF DISTRIBUTION AND EXPRESSLY
APPROVES SUCH PLAN OF DISTRIBUTION FOR USE IN THE REGISTRATION STATEMENT
AND PROSPECTUS AND ANY AMENDMENTS THERETO.
State any exceptions here:
11. Are you a Member, an affiliate of a Member, or a person associated with a
Member, of the National Association of Securities Dealers, Inc. (the "NASD")?
Yes _____ No _____
If the answer to Question 11 is "yes", state (a) the name of any such
NASD Member, (b) the nature of your affiliation or association with such
NASD Member, (c) information as to such NASD Member's participation in any
capacity in the Offering or the original placement of the Shares, (d) the
number of shares of equity securities or face value of debt securities of
the Company owned by you, (e) the date such securities were acquired and
(f) the price paid for such securities.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
12. If you answered "yes" to Question 11 above, please fill out the following
table with respect to any purchases from the Company or any of its Affiliates in
a private placement within twelve months prior to the date hereof (excluding
your purchase of the Shares).
Amount and Name Price or Other
Date of Purchase Seller of Securities Consideration
----------------------------------------------------------------------
Note: In no event may the method(s) of your distribution take the form of an
underwritten offering of the Registrable Securities without the prior agreement
of the Company.
By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the Exchange Act and the rules and regulations thereunder, particularly
Regulation M. The Selling Securityholder also acknowledges that it understands
that the answers to this Questionnaire are furnished for use in connection with
the Registration Statement and any amendments or supplements thereto filed with
the SEC pursuant to the Securities Act of 1933, as amended.
In the event that the Selling Securityholder transfers all or any portion of the
Registrable Securities listed in Item (7) above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Questionnaire and the Securities Purchase Agreement.
By signing below, the Selling Securityholder consents to the disclosure of the
information contained herein in its answers and the inclusion of such
information in the Registration Statement and related Prospectus. The Selling
Securityholder understands that such information will be relied upon by the
Company in connection with the preparation of the Shelf Registration Statement
and related Prospectus.
The Selling Securityholder acknowledges that material misstatements and
omissions of material facts in the Registration Statement and any amendments or
supplement thereto may give rise to civil and criminal liabilities to the
Company and to each officer and director of the Company signing the Registration
Statement and to other persons signing such document. As a result, in accordance
with the Selling Securityholder's obligation under Section 6.4(b) of the
Securities Purchase Agreement to provide such information as may be required by
law for inclusion in the Registration Statement, the Selling Securityholder
agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein which may occur subsequent to the date hereof at any
time while the Registration Statement remains in effect. All notices hereunder
and pursuant to the Securities Purchase Agreement shall be made in writing, by
hand-delivery, first-class mail, or air courier guaranteeing overnight delivery
as follows:
(i) to the Company:
Midway Games, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
(ii) with a copy to:
Shack Xxxxxx Xxxx & Xxxxxxxx P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Phone: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Once this Questionnaire is executed by the Selling Securityholder and received
by the Company's counsel, the terms of this Questionnaire, and the
representations and warranties contained herein, shall be binding on, shall
inure to the benefit of and shall be enforceable by the respective successors,
heirs, personal representatives, and assigns of the Company and the Selling
Securityholder (with respect to the Registrable Securities Beneficially Owned by
such Selling Securityholder and the Registrable Securities listed in Item 7
above). This Agreement shall be governed in all respects by the laws of the
State of New York.
I confirm that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Questionnaire) are correct.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
Dated:
------------------
-------------------------------------------
Selling Securityholder
(Print/type full legal name of beneficial
owner of Registrable Securities)
By:
----------------------------------------
Name:
Title:
APPENDIX TO EXHIBIT B-2
DEFINITIONS
For the purpose of this Questionnaire, the following definitions apply:
1. AFFILIATE. As used in Questions 1 - 11 and Question 13, a person is an
"Affiliate" of a person if such person controls, is controlled by, or is
under common control with, another person. Please assume that an
"Affiliate" of the Company includes without limitation, any 5% stockholder
of the Company (including any person who owns, controls, or holds or holds
an option to acquire, and has the power to vote, 5% or more of the
Company's outstanding voting securities). "Control" is the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of an entity, whether through the ownership of
voting securities, by contract or otherwise.
As used in Question 12 of this Questionnaire, an "affiliate" of an NASD member
has the following meaning:
(1) a company which controls, is controlled by or is under common
control with a member;
(2) the term affiliate is presumed to include, but is not limited to,
the following:
(a) a company will be presumed to control a member if the company
beneficially owns 10% or more of the outstanding voting
securities of a member which is a corporation, or beneficially
owns a partnership interest in 10% or more of the
distributable profits or losses of a member which is a
partnership;
(b) a member will be presumed to control a company if the member
and persons associated with the member beneficially own (i)
10% or more of the outstanding subordinated debt of a company,
(ii) 10% or more of the outstanding voting securities of a
company which is a corporation or (iii) a partnership interest
in 10% or more of the distributable profits or losses of a
company which is a partnership;
(c) a company will be presumed to be under common control with a
member if:
(i) the same natural person or company controls both the
member and company by beneficially owning 10% or more of
the outstanding voting securities of a member or company
which is a corporation, or by beneficially owning a
partnership interest in 10% or more of
the distributable profits or losses of a member or
company which is a partnership; or
(ii) a person having the power to direct or cause the
direction of the management or policies of the member or
the company also has the power to direct or cause the
direction of the management or policies of the other
entity in question.
2. BENEFICIAL OWNER. A "Beneficial Owner" of a security includes any person
who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power
and/or investment power with respect to such security. Voting power
includes "the power to vote, or to direct the voting, of such security"
and investment power includes "the power to dispose, or to direct the
disposition, of such security."
A person is also a Beneficial Owner of a security if he has the right to acquire
beneficial ownership of such security, at any time within sixty days, including
but not limited to, any right to acquire through: (a) the exercise of an option,
warrant or right, (b) the conversion of a convertible security, (c) the power to
revoke a trust, discretionary account or similar arrangement, or (d) the
automatic termination of a trust, discretionary account or similar arrangement;
provided, however, that if the acquisition of an option, warrant, right,
convertible security or power described in (a), (b) or (c) is for the purpose of
maintaining or obtaining control over the issuer of the security, the holder of
the option, warrant, right, convertible security or power shall, immediately
upon such acquisition and regardless of when it is exercisable, be deemed a
beneficial owner of the underlying securities.
The possession of the legal power to vote and/or direct the disposition of
securities, absent unusual circumstances, will be sufficient to confer
beneficial ownership. Such power may be held directly, or indirectly, through
one or more controlled entities.
3. MATERIAL RELATIONSHIP. The term "material relationship" has not been
defined by the Securities and Exchange Commission (the "SEC"). The SEC, however,
is likely to construe as material any relationship which tends to impact arm's
length bargaining in dealings with a company, whether arising from a close
business connection, family relationship, a relationship of control or
otherwise. For example, you should conclude that you have such a relationship
with any organization of which you own, directly or indirectly, 10% more of the
outstanding voting stock, or in which you have some other substantial interest,
and with any person or organization with whom you have, or with whom any
relative (or any other person or organization as to which you have any of the
foregoing other relationships) has, a contractual relationship.
4. MEMBER. Rule 0120 of the NASD's Rules of Fair Practice defines the term
"member" to mean any individual, partnership, corporation or other legal entity
admitted to membership in the NASD, and Article l of the NASD's By-Laws defines
the term "person associated with a member" to mean every sole proprietor,
partner, officer, director, or branch manager of any
member, or any natural person occupying a similar status or performing similar
functions, or any natural person engaged in the investment banking or securities
business who is directly or indirectly controlling or controlled by such member
(for example, any employee), whether or not such person is registered or exempt
from registration with the NASD.
EXHIBIT B-3
MIDWAY GAMES INC.
CERTIFICATE FOR INDIVIDUAL PURCHASERS
If the investor is an individual (or married couple) the investor must
complete, date and sign this Certificate.
CERTIFICATE
I certify that the representations and responses below are true and
accurate:
In order for the Company to offer and sell the Shares in conformance with
state and federal securities laws, the following information must be obtained
regarding your investor status. Please INITIAL EACH CATEGORY applicable to you
as an investor in the Company.
___ (1) A natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds $1,000,000;
___ (2) A natural person who had an individual income in excess of
$200,000 in each of the two most recent years, or joint income with that
person's spouse in excess of $300,000, in each of those years, and has a
reasonable expectation of reaching the same income level in the current year;
___ (3) An executive officer or director of the Company.
Set forth in the space provided below the state(s), if any, in the U.S. in
which you maintained your residence during the past two years and the dates
during which you resided in each state: ________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________.
Dated: Name(s) of Purchaser
-------------------- --------------------------
--------------------------
Signature
-------------------------------------
Signature
-------------------------------------
Dated , 2003
-------------------
B-3-1
EXHIBIT B-4
MIDWAY GAMES INC.
CERTIFICATE FOR CORPORATE, PARTNERSHIP,
TRUST, FOUNDATION AND JOINT PURCHASERS
If the investor is a corporation, partnership, trust, pension plan,
foundation, joint purchaser (other than a married couple) or other entity, an
authorized officer, partner, trustee or all joint purchasers must complete, date
and sign this Certificate.
CERTIFICATE
The undersigned certifies that the representations and responses below are
true and accurate:
(a) The investor has been duly formed and is validly existing and has
full power and authority to invest in the Company. The person signing on behalf
of the undersigned has the authority to execute and deliver the Securities
Purchase Agreement on behalf of the Purchaser and to take other actions with
respect thereto.
(b) Indicate the form of entity of the undersigned:
____ Limited Partnership
____ General Partnership
____ Corporation
____ Revocable Trust (identify each grantor and indicate
under what circumstances the trust is revocable by the grantor): _______________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________.
(Continue on a separate piece of paper, if necessary.)
____ Other type of Trust (indicate type of trust and, for
trusts other than pension trusts, name the grantors and beneficiaries):_________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________.
(Continue on a separate piece of paper, if necessary.)
B-4-1
____ Other form of organization (indicate form of
organization (__________________________________________________________________
______________________________________________________________________________).
(c) Indicate the approximate date the undersigned entity was formed:____
___________.
(d) In order for the Company to offer and sell the Shares in conformance
with state and federal securities laws, the following information must be
obtained regarding your investor status. Please INITIAL EACH CATEGORY applicable
to you as an investor in the Company.
___ 1. A bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan association or other institution
as defined in Section 3(a)(5)(A) of the Securities Act whether
acting in its individual or fiduciary capacity;
___ 2. A broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934;
___ 3. An insurance company as defined in Section 2(13) of the
Securities Act;
___ 4. An investment company registered under the Investment
Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that Act;
___ 5. A Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958;
___ 6. A plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a
state or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of
$5,000,000;
___ 7. An employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company, or registered investment
advisor, or if the employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are
accredited investors;
___ 8. A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
___ 9. An organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring the Shares, with total assets in excess
of $5,000,000;
___ 10. A trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Shares, whose
purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of the Exchange Act;
___ 11. An entity in which ALL of the equity owners qualify
under any of the above subparagraphs. If the undersigned
belongs to this investor category only, list the equity owners
of the undersigned, and the investor category which each such
equity owner satisfies:
______________________________________________________________
______________________________________________________________
______________________________________________________.
(Continue on a separate piece of paper, if necessary.)
Please set forth in the space provided below the (i) states, if any, in
the U.S. in which you maintained your principal office during the past two years
and the dates during which you maintained your office in each state, (ii)
state(s), if any, in which you are incorporated or otherwise organized and (iii)
state(s), if any, in which you pay income taxes.
______________________________________________________________
______________________________________________________________
______________________________________________________________
Dated: , 2003
------------
--------------------------
Name of Purchaser
--------------------------
Signature and title of authorized officer, partner or trustee
EXHIBIT C
OPINION OF COMPANY GENERAL COUNSEL
October 14, 2003
To the Purchasers Listed
on Schedule A hereto:
Re: Securities Purchase Agreement dated as of October 14, 2003
by and among Midway Games Inc. and the Purchasers
listed on Schedule A hereto (the "Purchase Agreement")
----------------------------------------------------------
Ladies and Gentlemen:
I am the general counsel of Midway Games Inc., a Delaware corporation (the
"Company"). This opinion is being furnished to you in connection with the sale
of shares of Common Stock of the Company pursuant to the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to such terms in the Purchase Agreement.
In such capacity, I have examined a copy of the Purchase Agreement and the
Transfer Agent Instructions (collectively, the "Transaction Documents"), the
Company's Certificate of Incorporation, as amended to date, and By-laws, as
amended to date, the proceedings of the Company's Board of Directors taken in
connection with the transactions contemplated by the Transaction Documents and
such other documents, instruments, records of the Company and certificates of
public officials, and I have made such investigations of law, as I have deemed
necessary or appropriate for the purposes of rendering the opinions expressed
herein.
In making such examination, I have assumed (i) the genuineness of all
signatures (other than the signatures on behalf of the Company), the legal
capacity of natural persons, the authenticity and accuracy of all documents
submitted to me as originals, the conformity to the original documents of all
documents submitted to me as copies and the authenticity of the originals of
such latter documents, (ii) that the Transaction Documents have been duly and
validly authorized, executed and delivered by the party or parties thereto other
than the Company, and (iii) that each of the Transaction Documents constitutes
the valid and binding agreement of the party or parties thereto other than the
Company, enforceable against such party or parties in accordance with the terms
of such agreement. As to any facts material to this opinion which I did not
independently establish or verify, I have relied upon statements and
representations of officers and other representatives of the Company and public
officials.
D-1
This opinion is limited to the laws of the State of Illinois. Without
limitation, I am not opining as to (i) any laws, rules or regulations of any
other jurisdiction; (ii) the applicability of the laws of any other jurisdiction
to the transactions contemplated by the Transaction Documents; (iii) any
requirements of any governmental body, agency, instrumentality or court of any
other jurisdiction not covered by this opinion; or (iv) any waiver of stay or
other rights, waiver of redemption, set off, extension or usury laws or
regulations or as to any laws or regulations limiting rights to indemnification
(including, without limitation, securities or environmental laws) or the public
policy underlying such laws.
Based upon the foregoing, I am of the opinion that, except as disclosed in
the Purchase Agreement or the Schedule of Exceptions thereto:
1. None of the Company's Common Stock is subject to preemptive rights
or other rights of the stockholders of the Company under law, the Company's
Certificate of Incorporation or pursuant to any agreement, note, lease,
mortgage, deed or other instrument to which the Company is a party or by which
the Company is bound.
2. To my knowledge, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body or any governmental
agency or self-regulatory organization that is pending or threatened against the
Company or any of its subsidiaries or any of the properties or assets of the
Company or any of its subsidiaries which could reasonably be expected to result
in a Material Adverse Effect.
3. The execution, delivery and performance by the Company of the
Transaction Documents, the consummation by the Company of the transactions
contemplated by the Transaction Documents and the compliance by the Company with
the terms thereof, except as would not have a Material Adverse Effect, do not
violate, conflict with or constitute a default (or an event which, with the
giving of notice or lapse of time or both, constitutes or would constitute a
default) under, give rise to any right of termination, cancellation or
acceleration under, or result in the creation of any lien, charge or encumbrance
on or against any of the properties of the Company pursuant to (i) any
agreement, note, lease, mortgage, deed or other instrument to which the Company
is a party or by which the Company is bound; or (ii) any statute, law, rule or
regulation applicable to the Company or any order, writ, injunction or decree of
which I have knowledge.
Please be advised that I am an officer and stockholder of the Company.
This opinion is being rendered solely for your benefit in connection with
the transactions contemplated by the Transaction Documents. This opinion may not
be relied upon by you for any other purpose, or quoted to or relied upon by any
other person, firm or corporation for any purpose without my prior written
consent.
Very truly yours,
-------------------------------------------
Xxxxxxx X. Xxxxxx, Senior Vice President,
Secretary and General Counsel
cc: Xxxxxx X. Xxxxxxxx, Esq.
SCHEDULE A
CRANSHIRE CAPITAL, L.P.
C/O Xxxxxxxx X. Xxxxx
000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
COLUMBIA VENTURES CORP.
00000 XX XxXxxxxxxxx, #000
Xxxxxxxxx, XX 00000
DEEPHAVEN SMALL CAP GROWTH FUND LLC
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
MAINFIELD ENTERPRISES INC.
c/o Sage Capital Growth Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
PORTSIDE GROWTH & OPPORTUNITY FUND
c/o Ramius Capital Group, L.L.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
SMITHFIELD FIDUCIARY LLC
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
SF CAPITAL PARTNERS LTD.
0000 Xxxxx Xxxx Xxxxx
Xx. Xxxxxxx, XX 00000
MASTER SMALL CAP VALUE TRUST
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
XXXXXXX XXXXX VARIABLE SERIES FUNDS, INC. -SMALL CAP VALUE V.I. FUND
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
S.A.C CAPITAL ASSOCIATES, LLC
00 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
XXXXX, XXXX & XXXXX INVESTMENTS, A DIVISION OF ROBECO USA, L.L.C
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
XXXXXXX XXXXX
0 Xxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
EXHIBIT D
OPINION OF COMPANY CORPORATE COUNSEL
October 14, 2003
To the Investors Listed on
Schedule A hereto
Re: Private Placement of [9,317,886] shares
of Common Stock of Midway Games Inc.
Ladies and Gentlemen:
We have acted as counsel to Midway Games Inc., a Delaware corporation
(the "Company"), in connection with the issuance and sale of [9,317,886] shares
of the Company's common stock, $.01 par value per share pursuant to the
Securities Purchase Agreement (the "Purchase Agreement") of even date herewith
among the Company and you. This opinion is being furnished to you pursuant to
Section 2.2(2)(iv) of the Purchase Agreement. Capitalized terms used herein and
not otherwise defined shall have the respective meanings assigned to such terms
in the Purchase Agreement.
In connection with rendering the opinion set forth herein, we have
examined the Purchase Agreement, the documents contained in Exhibit B of the
Purchase Agreement that have been executed and delivered by each Purchaser, and
the other Transaction Documents, the SEC Reports and other filings made by the
Company with the Commission during the preceding twelve months, the Company's
Certificate of Incorporation, as amended to date, and By-laws, as amended to
date, the proceedings of the Company's Board of Directors taken in connection
with the sale and issuance of the Securities, and such other documents,
instruments, records of the Company and its subsidiaries and certificates of
public officials and officers of the Company, and we have made such
investigations of law, as we have deemed necessary or appropriate for the
purpose of rendering the opinion expressed herein. We have reviewed the "good
standing" certificates of the Company and its subsidiaries for the jurisdictions
set forth on Schedule B attached hereto.
In conducting such examination, we have assumed the following: (i) the
genuineness of all signatures (other than the signatures on behalf of the
Company), the legal capacity of natural persons, the authenticity and accuracy
of all documents submitted to us as originals, the conformity to the original
documents of all documents submitted to us as copies and the authenticity of the
originals of such latter documents; (ii) that the Transaction Documents have
been duly and validly authorized, executed and delivered by the party or parties
thereto other
than the Company; and (iii) that each of the Transaction Documents constitutes
the valid and binding agreement of the party or parties thereto other than the
Company, enforceable against such party or parties in accordance with the terms
of such agreement. As to any facts material to this opinion which we did not
independently establish or verify, we have relied upon statements and
representations of officers and other representatives of the Company, including
those contained in the Purchase Agreement, and public officials.
This opinion is limited to the laws of the State of New York, the Delaware
General Corporation Law (the "DGCL") and, as to matters of federal
jurisprudence, the applicable laws of the United States of America. In addition,
the opinion expressed in Paragraph 1 below as it relates to good standing of the
Company and its Subsidiaries is based solely upon our review of the certificates
issued by their respective jurisdictions of organization or qualification, as
set forth on Schedule B. Without limitation, we are not opining as to (i) any
laws, rules or regulations of any other jurisdiction; (ii) the applicability of
the laws of any other jurisdiction to the transactions contemplated by the
Transaction Documents; (iii) any requirements of any governmental body, agency,
instrumentality or court of any other jurisdiction not covered by this opinion;
or (iv) any waiver of stay or other rights, waiver of redemption, set off,
extension or usury laws or regulations or as to any laws or regulations limiting
rights to indemnification (including, without limitation, securities or
environmental laws) or the public policy underlying such laws. We are not
opining on any tax law. To the extent that the enforceability of any document or
instrument referred to or examined in connection with rendering the opinion
expressed herein is governed by any law other than the laws upon which this
opinion is based, we express no opinion as to such enforceability.
Based upon the foregoing, we are of the opinion that:
1. The Company and each of the Subsidiaries listed on Schedule B hereto
is a corporation or limited liability company duly organized, validly existing
and in good standing under the laws of the state of its organization as set
forth in Schedule B and has the requisite corporate power to own, lease and
operate its properties and to conduct its business as described in the SEC
Reports.
2. The Company has the requisite corporate power and authority to
execute, deliver and perform all of its obligations under the Transaction
Documents, including the issuance of the Shares in accordance with the terms
thereof. The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated therein have been duly authorized
by the Company's Board of Directors, and no further consent or authorization of
the Company, its Board of Directors or its stockholders is required therefor.
The Transaction Documents have been duly executed and delivered by the Company.
The Transaction Documents constitute valid and binding agreements or obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
3. When issued in accordance with the terms of the Purchase Agreement,
the Shares will be validly issued, fully paid and non-assessable and free of all
liens, charges and preemptive rights with respect to the issuance thereof.
4. As of the date hereof, the authorized capital stock of the Company
consists of (i) 100,000,000 shares of Common Stock, par value $.01 per share;
and (ii) 5,000,000 shares of Preferred Stock, par value $.01 per share, of which
(a) 4,750 shares of Preferred Stock have been designated Series C Preferred
Stock, stated value $10,000 per share, of which no shares are issued and
outstanding and 4,750 shares of Preferred Stock have been designated Series D
Preferred Stock, 3,500 of which are issued and outstanding and 1,250 of which
are reserved for issuance.
5. Assuming (i) each Purchaser is an "accredited investor" within the
meaning of Rule 501(a) promulgated under the Securities Act, (ii) the accuracy
of the representations and warranties and compliance with the covenants of the
Purchasers in the Purchase Agreement and other Transaction Documents, the offer
and sale of the Shares in the manner contemplated by the Purchase Agreement and
in accordance with the Transaction Documents are exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) of such Act and Rule
501(c) promulgated thereunder and the securities laws of New York State.
6. Except as disclosed in the Purchase Agreement or Schedules thereto,
no authorization, approval, consent, license, filing, recording, registration or
other order of any federal or state governmental body, regulatory agency,
self-regulatory organization or stock exchange or market, or the stockholders of
the Company, or any court, or, with respect to any agreement filed as an Exhibit
to the SEC Reports, including the Company's Amended and Restated Rights
Agreement dated October __, 2003, or any third party, is required to be obtained
by the Company to enter into and perform its obligations under the Transaction
Documents or for the issuance and sale of the Shares in accordance with the
Transaction Documents, except as contemplated in the Transaction Documents.
7. Except as disclosed in the Disclosure Materials, the execution,
delivery and performance by the Company of the Transaction Documents and the
compliance by the Company with the terms thereof do not violate, conflict with
or constitute a default (or an event which, with the giving of notice or lapse
of time or both, constitutes or would constitute a default) under, give rise to
any right of termination, cancellation or acceleration under, or result in the
creation of any lien, charge or encumbrance on or against any of the properties
of the Company pursuant to (i) the Certificate of Incorporation or By-laws of
the Company; (ii) any agreement or other document executed in connection with
the issuance of the Company's Series D Preferred Stock; (iii) any agreement
filed as an Exhibit to the SEC Reports, including the Company's Third Amended
and Restated Rights Agreement dated October 14, 2003; or (iv) any statute, law,
rule or regulation applicable to the Company or any order, writ, injunction or
decree of which we have knowledge.
8. The Company is not an "investment company" or any entity controlled
by an "investment company," as such term is defined in the Investment Company
Act of 1940, as amended.
In the process of our review of the Company's Annual Report on Form 10-K
for the year ended December 31, 2002, and all other reports and amendments
thereto thereafter filed by the Company pursuant to Section 13 of the 1934 Act,
no facts have come to our attention that lead us to believe that, except as set
forth in any amendments to such reports, which amendments have been filed with
the Commission, (except with respect to the financial statements and notes and
schedules thereto and other financial and statistical data, as to which we make
no statement) any of such reports contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, as of its filing date with the Commission.
Please be advised that shareholders of Shack Xxxxxx Xxxx & Xxxxxxxx P.C.
own 3,570 shares of Common Stock and hold options to purchase an aggregate of
85,000 shares of Common Stock.
This opinion is being rendered solely for your benefit in connection with
the transactions contemplated by the Transaction Documents. This opinion may not
be relied upon by you for any other purpose, or quoted to or relied upon by any
other person, firm or corporation for any purpose without our prior written
consent.
Very truly yours,
SHACK XXXXXX XXXX &
XXXXXXXX P.C.
By:
-----------------------------------
Xxxxxx X. Xxxxxxxx
cc: Xxxxxxx X. Xxxxxx, Esq.
SCHEDULE A
SCHEDULE B
LIST OF SUBSIDIARIES JURISDICTION OF ORGANIZATION
-------------------- ----------------------------
Midway Games Inc. Delaware
Midway Amusement Games, LLC Delaware
Midway Games West Inc. California
Midway Home Entertainment Inc. Delaware
Midway Home Studios Inc. Delaware
Midway Interactive Inc. Delaware
Midway/Nintendo Inc. (50% owned) Delaware
Midway Sales Company, LLC Delaware
EXHIBIT E
TRANSFER AGENT INSTRUCTIONS
MIDWAY GAMES INC.
October __, 2003
The Bank of New York
000 Xxxxxxx Xxxxxx, 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Ladies and Gentlemen:
Reference is made to the Securities Purchase Agreement (the "PURCHASE
AGREEMENT"), dated as of October __, 2003, by and among Midway Games Inc., a
Delaware corporation (the "COMPANY") and the purchasers named therein (the
"HOLDERS") pursuant to which the Company is issuing an aggregate of __________
shares (the "SHARES") of the Company's common stock, $0.01 par value per share
(the "COMMON STOCK").
The Company has agreed with the Holders that it will instruct you to: (A) issue
the Shares free of all restrictive and other legends if, at the time of such
issue, (i) a registration statement covering the resale of the Shares has been
declared and is effective by the Securities and Exchange Commission (the
"COMMISSION") under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), (ii) the Shares are eligible for sale under Rule 144(k) under the
Securities Act or (iii) such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission); or (B) reissue the
certificates representing the Shares (if such certificates were originally
issued with a restrictive legend) free of all restrictive and other legends (i)
upon the effectiveness of a registration statement covering the resale of the
Shares or (ii) following any sale of the Shares pursuant to Rule 144 under the
Securities Act or (iii) the Shares are eligible for sale under Rule 144(k) or
(iv) if such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the Staff of the Commission).
In furtherance of this instruction, upon the effectiveness of the Registration
Statement (as defined in the Purchase Agreement) we have instructed our counsel
to deliver to you their opinion letter in the form attached hereto as EXHIBIT 1
to the effect that the Registration Statement has been declared effective by the
Commission and that the Shares are freely transferable by the Holders
E-1
and accordingly may be issued (or certificates reissued, as applicable) and
delivered to the Holders free of all restrictive and other legends.
You need not require further letters from us or our counsel to effect any future
issuance of or reissuance of the certificates representing the Shares to the
Holders as contemplated by the Purchase Agreement and this letter. This letter
shall serve as our standing irrevocable instructions with regard to this matter.
Please be advised that the Holders have relied upon this instruction letter as
an inducement to enter into the Purchase Agreement and, accordingly, each Holder
is a third party beneficiary of this instruction letter.
The Company shall indemnify and hold harmless you from and against any and all
third party claims, costs, demands, expenses and liabilities, including
reasonable attorney's fees as set forth in Article VIII of the Stock Transfer
Agency Agreement between the Company and The Bank of New York dated as of
October 28, 1996 in connection with the above instructions and the transactions
contemplated hereby and thereby.
Please execute this letter in the space indicated to acknowledge your agreement
to act in accordance with these instructions.
Very truly yours,
MIDWAY GAMES INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ACKNOWLEDGED AND AGREED:
THE BANK OF NEW YORK
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
E-2
EXHIBIT 1 TO EXHIBIT E
[Counsel's Letterhead]
The Bank of New York
000 Xxxxxxx Xxxxxx, 00X
Xxx Xxxx, Xxx Xxxx 00000
Re: Midway Games Inc.
-----------------
Ladies and Gentlemen:
We are counsel to Midway Games Inc., a Delaware corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Securities Purchase Agreement dated as of October __, 2003 (the "PURCHASE
AGREEMENT") entered into by and among the Company and the purchasers named
therein (collectively, the "HOLDERS") pursuant to which the Company issued to
the Holders [ # ] shares (the "SHARES") of the Company's Common Stock, par
value $0.01 per share (the "COMMON STOCK"). Pursuant to the Purchase Agreement,
the Company agreed, among other things, to register the Registrable Securities
(as defined in the Purchase Agreement), including the Shares under the
Securities Act of 1933, as amended (the "SECURITIES ACT"). In connection with
the Company's obligations under the Purchase Agreement, on ____________ ___,
2003, the Company filed a Registration Statement on Form S-3 (File No.
333-_____________) (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the Securities Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the Securities Act
pursuant to the Registration Statement.
This letter shall serve as our standing opinion to you that the Shares are
freely transferable by the Holders pursuant to the Registration Statement. You
need not require further letters from us to effect any future legend-free
issuance or reissuance of shares of Common Stock to the Holders as
E-3
contemplated by the Company's Irrevocable Transfer Agent Instructions dated
October __, 2003. This letter shall serve as our standing opinion with regard to
this matter.
If you have any questions relating to the foregoing, please feel
free to call us at (212) _______________.
Very truly yours,
E-4
EXHIBIT F
PLAN OF DISTRIBUTION
The shares of common stock to be sold in this offering have been listed on
the NYSE, subject to official notice of issuance.
The selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this Prospectus. We will not
receive any of the proceeds from the sale by the selling stockholders of the
shares of common stock. We will bear all fees and expenses incident to our
obligation to register the shares of common stock.
The selling stockholders may sell all or a portion of the common stock
beneficially owned by them and offered through this prospectus from time to time
directly through one or more underwriters, broker-dealers or agents. If the
common stock is sold through underwriters or broker-dealers, the selling
stockholder will be responsible for underwriting discounts or commissions or
agent's commissions. The common stock may be sold in one or more transactions at
fixed prices, at prevailing market prices at the time of the sale, at varying
prices determined at the time of sale, or at negotiated prices. These sales may
be effected in transactions, which may involve crosses or block transactions,
(1) on any national securities exchange or quotation service on which
the securities may be listed or quoted at the time of sale,
(2) in the over-the-counter market,
(3) in transactions otherwise than on these exchanges or systems or in
the over-the-counter market,
(4) through the writing of options, whether such options are listed on
an options exchange or otherwise,
(5) through the settlement of short sales,
(6) privately negotiated transactions,
(7) a combination of any such methods of sale, and
(8) any other method permitted pursuant to applicable law.
In connection with sales of the common stock or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers, which may
in turn engage in short sales of the common stock in the course of hedging in
positions they assume. The selling stockholders may also sell shares of common
stock short and deliver shares of common stock to close out
F-1
short positions, or loan or pledge shares of common stock to broker-dealers that
in turn may sell those shares. If the selling stockholders effect such
transactions by selling shares of common stock to or through underwriters,
broker-dealers or agents, those underwriters, brokers-dealers or agents may
receive commissions in the form of discounts, concessions or commissions from
the selling stockholders or commissions from purchasers of the shares of common
stock for whom they may act as agent or to whom they may sell as principal. Any
such discounts, concessions or commissions as to particular underwriters,
brokers-dealers or agents may be in excess of those customary in the types of
transactions involved.
The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them. If the
selling stockholders default in the performance of their secured obligations,
the pledgees or secured parties may offer and sell the shares of common stock
from time to time under this prospectus or an amendment to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act of 1933
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus. The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
This prospectus may not be used by any pledgee, transferee or other
successor in interest to sell shares of common stock unless and until this
prospectus has been amended or supplemented to include information about the
pledgee, transferee or other successor in interest under the heading "Selling
Stockholders" and any information about the plan of distribution by any pledgee,
transferee or successor which varies materially from the description in this
prospectus under the heading "Plan of Distribution".
The selling stockholders and any broker-dealer participating in the
distribution of shares of common stock may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, and any commission paid, or any
discounts allowed to the broker-dealer may be deemed to be underwriting
discounts or commissions under the Securities Act. At the time a particular
offering of the shares of common stock is made, a prospectus supplement, if
required, will be distributed which will set forth the aggregate amount of
shares of common stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling stockholder and any
discounts, commissions or concessions allowed or reallowed or paid to
broker-dealers.
Under the securities laws of some states, the shares of common stock may
be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the shares of common stock may not be sold unless
the shares have been registered or qualified for sale in the state or an
exemption from registration or qualification is available and is complied with.
We do not know whether any selling stockholder will sell any or all of the
shares of common stock registered by the shelf registration statement of which
this prospectus forms a part.
F-2
The selling stockholders have advised us that they have acquired their
securities in the ordinary course of business and they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If the selling
stockholders use this prospectus for any sale of the shares of common stock,
they will be subject to the prospectus delivery requirements of the Securities
Act. The selling stockholders have advised that they are aware that the
anti-manipulation rules of Regulation M under the Securities Exchange Act of
1934 may apply to sales of our common stock and activities of the selling
stockholders and they have advised that they intend to comply with those rules.
We will pay all expenses of the registration of the shares of common stock
under the securities purchase agreement, including SEC filing fees and expenses
of compliance with state securities or "blue sky" laws, except that the selling
stockholders will pay any underwriting discounts and selling commissions. We
expect that our expenses for this offering, including primarily filing fees and
legal expenses, will be approximately $[__________].
We will indemnify the selling stockholders against liabilities, including
some liabilities under the Securities Act, in accordance with the securities
purchase agreement, or the selling stockholders will be entitled to
contribution. We will be indemnified by the selling stockholders against civil
liabilities, including liabilities under the Securities Act, that may arise from
any written information furnished to us by the selling stockholders for use in
this prospectus, in accordance with the related securities purchase agreement or
we will be entitled to contribution.
Once sold under the shelf registration statement, of which this prospectus
forms a part, the shares of common stock will be freely tradable in the hands of
persons other than our affiliates.
Each share of common stock is sold together with certain stock purchase
rights. These rights are described in a registration statement on Form 8-A/A,
Amendment No. 4 (File No. 001-12367) which we filed with the SEC on October__,
2003. See "Documents Incorporated by Reference" below.
F-3
