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Exhibit 1
250,000 Shares
MIDWAY GAMES INC.
Common Stock
UNDERWRITING AGREEMENT
March __, 1999
CIBC Oppenheimer Corp.
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Midway Games Inc., a Delaware corporation (the "Company"), proposes to
sell to CIBC Xxxxxxxxxxx Corp. (the "Underwriter") an aggregate of 250,000
shares (the "Shares") of the Company's Common Stock, $0.01 par value (the
"Common Stock").
1. Sale and Purchase of the Shares.
On the basis of the representations, warranties and agreements
contained in, and subject to the terms and conditions of, this Agreement, the
Company agrees to sell to the Underwriter, and the Underwriter agrees to
purchase from the Company, at $_____ per share (the "Initial Price"), the
Shares.
2. Delivery and Payment. Delivery by the Company of the Shares to the
Underwriter for its account, and payment of the purchase price by certified or
official bank check or checks payable in New York Clearing House (next day)
funds to the Company, shall take place at the offices of Xxxxxx, Xxxxx & Xxxxxxx
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York City
time, on the third business day following the date of this Agreement, or at such
time on such date, not later than 10 business days after the date of this
Agreement, as shall be agreed upon by the Company and the Underwriter (such time
and date of delivery and payment are called the "Shares Closing Date").
Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Underwriter shall request at least two
full business days before the Shares Closing Date and shall be made available to
the Underwriter for checking and packaging, at such place as is designated by
the Underwriter, on the full business day before the Shares Closing Date.
3. Registration Statement and Prospectus; Public Offering. The Company
has prepared in conformity with the requirements of the Securities Act of 1933,
as amended (the "Securities Act"), and the published rules and regulations
thereunder (the "Rules") adopted by the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-73347), including a
preliminary prospectus relating to the Shares, and has filed with the Commission
the Registration Statement (as hereinafter defined)
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and such amendments thereto as may have been required to the date of this
Agreement. Copies of such Registration Statement (including all amendments
thereto) and of the related preliminary prospectus have heretofore been
delivered by the Company to the Underwriter. The term "preliminary prospectus"
means any preliminary prospectus (as described in Rule 430 of the Rules)
included at any time as a part of the Registration Statement. The Registration
Statement as amended at the time and on the date it becomes effective (the
"Effective Date"), including all exhibits and information, if any, deemed to be
part of the Registration Statement through incorporation by reference or
otherwise pursuant to Rule 424(b) and Rule 430A of the Rules, is called the
"Registration Statement." The term "Prospectus" means the prospectus in the form
first used to confirm sales of the Shares (whether such prospectus was included
in the Registration Statement at the time of effectiveness or was subsequently
filed with the Commission pursuant to Rule 424(b) of the Rules).
The Company understands that the Underwriter proposes to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as it deems advisable.
The Company hereby confirms that the Underwriter has been authorized to
distribute or cause to be distributed each prospectus and is authorized to
distribute the Prospectus (as from time to time amended or supplemented if the
Company furnishes amendments or supplements thereto to the Underwriter).
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Underwriter as follows:
a. On the Effective Date the Registration Statement complied, and on the date of
the Prospectus, on the date any post-effective amendment to the Registration
Statement shall become effective, on the date any supplement or amendment to the
Prospectus is filed with the Commission and on the Shares Closing Date, the
Registration Statement and the Prospectus (and any amendment thereof or
supplement thereto) will comply, in all material respects, with the applicable
provisions of the Securities Act and the Rules and the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder; the Registration Statement did not, as of the Effective
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and on the other dates referred to above
neither the Registration Statement nor the Prospectus, nor any amendment thereof
or supplement thereto, will contain any untrue statement of a material fact or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading. When any related
preliminary prospectus was first filed with the Commission (whether filed as
part of the Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement thereto was
first filed with the Commission, such preliminary prospectus as amended or
supplemented complied in all material respects with the applicable provisions of
the Securities Act and the Rules and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
as to the statements contained under the caption "Underwriting" in any
preliminary prospectus or the Prospectus. The Company acknowledges that the
statements referred to in the previous sentence constitute the only information
furnished in writing by the Underwriter specifically for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus.
b. All contracts and other documents required to be filed as exhibits to the
Registration Statement have been filed with the Commission as exhibits to the
Registration Statement or incorporated by reference therein.
c. The financial statements of the Company (including all notes and schedules
thereto) included or incorporated by reference in the Registration Statement and
Prospectus present fairly the financial position, the results of operations and
cash flows and the stockholders' equity and the other information purported to
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be shown therein of the Company at the respective dates and for the respective
periods to which they apply; and such financial statements have been prepared in
conformity with generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a fair
presentation of the results for such periods have been made.
x. Xxxxx & Young LLP, whose reports are filed with the Commission as a part of
the Registration Statement, are and, during the periods covered by their
reports, were independent public accountants as required by the Securities Act
and the Rules.
e. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or properties
(owned, leased or licensed) or the nature of its business makes such
qualification necessary except for such jurisdictions where the failure to so
qualify would not have a material adverse effect on the assets or properties,
business, results of operations or financial condition of the Company. The
Company has delivered to the Underwriter documents in a form satisfactory to the
Underwriter providing that the Company and each of its subsidiaries is duly
qualified as a foreign corporation in each jurisdiction in which the character
or location of its assets or properties (owned, leased or licensed) or the
nature of its businesses makes such qualification necessary, except for such
jurisdictions where the failure to so qualify would not have a material adverse
effect on the assets or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Company or any of the subsidiaries
of the Company. Except as disclosed in the Registration Statement and the
Prospectus, and except for its marketing office in London, its investment in an
arcade in China through its Hong Kong and Chinese subsidiaries and Nintendo's
manufacture of cartridges for its games in Japan, the Company does not own,
lease or license any asset or property or conduct any business outside the
United States of America. The Company has all requisite corporate power and
authority, and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or regulatory
bodies or any other person or entity, to own, lease and license its assets and
properties and conduct its businesses as now being conducted and as described in
the Registration Statement and the Prospectus except for such authorizations,
approvals, consents, orders, material licenses, certificates and permits the
failure to so obtain would not have a material adverse effect upon the assets or
properties, business, results of operations, prospects or condition (financial
or otherwise) of the Company; no such authorization, approval, consent, order,
license, certificate or permit contains a materially burdensome restriction
other than as disclosed in the Registration Statement and the Prospectus; and
the Company has all such corporate power and authority, and such authorizations,
approvals, consents, orders, licenses, certificates and permits to enter into,
deliver and perform this Agreement and to issue and sell the Shares (except as
may be required under the Securities Act and state and foreign Blue Sky laws).
f. The Company owns or possesses adequate and enforceable rights to use all
trademarks, trademark applications, trade names, service marks, copyrights,
copyright applications, patents, licenses, know-how and other similar rights and
proprietary knowledge (collectively, "Intangibles") necessary for the conduct of
its business as described in the Registration Statement and the Prospectus. The
Company has not received any notice of, or to its best knowledge is not aware
of, any infringement of or conflict with asserted rights of others with respect
to any Intangibles which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse effect
upon the assets or properties, business, results of operations, prospects or
condition (financial or otherwise) of the Company.
g. The Company has good title to each of the items of personal property which
are reflected in the financial statements referred to in Section 4(c) or are
referred to in the Registration Statement and the Prospectus as being owned by
it and valid and enforceable leasehold interests in each of the items of real
and personal property which are referred to in the Registration Statement and
the Prospectus as being leased by
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it, in each case free and clear of all liens, encumbrances, claims, security
interests and defects, other than those described in the Registration Statement
and the Prospectus, and those which do not and will not have a material adverse
effect upon the assets or properties, business, results of operations or
financial condition of the Company.
h. Except as set forth in the next sentence, there is no litigation or
governmental or other proceeding or investigation before any court or before or
by any public body or board pending or, to the Company's best knowledge,
threatened (and the Company does not know of any basis therefor) against, or
involving the assets, properties or business of, the Company which would
adversely affect the value or the operation of any such material assets or
properties or the business, results of operations, prospects or condition
(financial or otherwise) of the Company. As set forth in the Registration
Statement, on January 25, 1999, GT Interactive Software Corp. ("GTIS") filed a
lawsuit against the Company in connection with certain licensing arrangements
between the Company and GTIS. The Company does not believe that this lawsuit is
material in any respect.
i. Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as described therein, (i)
there has not been any material adverse change in the assets or properties,
business, results of operations, prospects or condition (financial or
otherwise), of the Company, whether or not arising from transactions in the
ordinary course of business; (ii) the Company has not sustained any material
loss or interference with its assets, businesses or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree; and (iii) and since the date of
the latest balance sheet included in the Registration Statement and the
Prospectus, except as reflected in such balance sheet, Registration Statement
and the Prospectus, the Company has not (a) issued any securities or incurred
any liability or obligation, direct or contingent, for borrowed money, except
such liabilities or obligations incurred in the ordinary course of business, (b)
entered into any transaction not in the ordinary course of business or (c)
declared or paid any dividend or made any distribution on any shares of its
stock or redeemed, purchased or otherwise acquired or agreed to redeem, purchase
or otherwise acquire any shares of its stock.
j. There is no document or contract of a character required to be described in
the Registration Statement or Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required. Each
agreement listed in the Exhibits to the Registration Statement or incorporated
by reference thereto is in full force and effect (with the exception of Exhibit
No. 10.1 (the Manufacturing and Services Agreement dated July 1, 1996 between
WMS Industries, Inc. and the Company) and Exhibit No. 10.5 (Employment Agreement
dated April 29, 1994 between Xxxxx X. Xxxx and Midway Home Entertainment Inc.),
each incorporated by reference in Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1998), and is valid and enforceable by and against
the Company in accordance with its terms, assuming the due authorization,
execution and delivery thereof by each of the other parties thereto, except (A)
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles and (B) to the
extent that rights to indemnity or contribution thereunder may be limited by
Federal and state securities laws or the public policy underlying such laws.
Neither the Company, nor to the best of the Company's knowledge, any other party
is in default in the observance or performance of any term or obligation to be
performed by it under any such agreement, with the exception of the performance
by GTIS under those certain GTIS Master Option and License Agreements, each as
amended, and no event has occurred which with notice or lapse of time or both
would constitute such a default, in any case in which such default or event
would have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of the
Company. No default exists, and no event has occurred which with notice or lapse
of time or both would constitute a default, in the due performance and
observance
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of any term, covenant or condition, by the Company of any other agreement or
instrument to which the Company is a party or by which it or its properties or
business may be bound or affected which default or event would have a material
adverse effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
k. The Company is not in violation of any term or provision of its charter or
by-laws or of any franchise, license, permit, judgment, decree, order, statute,
rule or regulation, where the consequences of such violation would have a
material adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company.
l. Neither the execution, delivery and performance of this Agreement by the
Company nor the consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale by the Company of the
Shares) will give rise to a right to terminate or accelerate the due date of any
payment due under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with notice or lapse of
time or both would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge or
encumbrance upon any material properties or assets of the Company pursuant to
the terms of, any indenture, mortgage, deed of trust or other material agreement
or instrument to which the Company is a party or by which it or any of its
properties or businesses is bound, or any material franchise, license, permit,
judgment, decree, order, statute, rule or regulation applicable to the Company
or violate any provision of the charter or by-laws of the Company, each as
amended to date, except for such consents or waivers which have already been
obtained and are in full force and effect.
m. All of the authorized and outstanding shares of Common Stock of the Company
have been duly and validly issued and are fully paid and nonassessable and none
of them was issued in violation of any preemptive or other similar right. The
Shares, when issued and sold pursuant to this Agreement, will be duly and
validly issued, fully paid and nonassessable and none of them will be issued in
violation of any preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and there is no commitment,
plan or arrangement to issue, any share of stock of the Company or any security
convertible into, or exercisable or exchangeable for, such stock. The Common
Stock and the Shares conform in all material respects to all statements in
relation thereto contained in the Registration Statement and the Prospectus.
n. No holder of any security of the Company has the right to have any security
owned by such holder included in the Registration Statement or to demand
registration of any security owned by such holder during the period ending 180
days after the date of this Agreement.
o. All necessary corporate action has been duly and validly taken by the Company
to authorize the execution, delivery and performance of this Agreement and the
issuance and sale of the Shares by the Company. This Agreement has been duly and
validly authorized, executed and delivered by the Company and constitutes and
will constitute the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (A) as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (B) to the extent that rights
to indemnity or contribution under this Agreement may be limited by Federal and
state securities laws or the public policy underlying such laws.
p. The Company is not involved in any labor dispute nor, to the knowledge of the
Company, is any such dispute threatened, which dispute would have a material
adverse effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
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q. No transaction has occurred between or among the Company and any of its
officers or directors or any affiliate or affiliates of any such officer or
director that is required to be described in and is not described in the
Registration Statement and the Prospectus.
r. The Company has not taken, nor will it take, directly or indirectly, any
action designed to or which might reasonably be expected to cause or result in,
or which has constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of any of the Shares.
s. The Company has filed all Federal, state, local and foreign tax returns which
are required to be filed through the date hereof, or has received extensions
thereof, and has paid all taxes shown on such returns and all assessments
received by it to the extent that the same are material and have become due.
t. The Shares have been duly authorized for listing on the New York Stock
Exchange ("NYSE").
5. Conditions of the Underwriter's Obligations. The obligations of the
Underwriter to purchase the Shares are subject to each of the following terms
and conditions:
a. The Prospectus shall have been timely filed with the Commission in accordance
with Section 6(A)(a) of this Agreement.
b. No order preventing or suspending the use of any preliminary prospectus or
the Prospectus shall have been or shall be in effect and no order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the Underwriter.
c. The representations and warranties of the Company contained in this Agreement
and in the certificates delivered pursuant to Section 5(d) shall be true and
correct when made and on and as of the Shares Closing Date as if made on such
date and the Company shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required to be
performed or satisfied by it at or before the Shares Closing Date.
d. The Underwriter shall have received on the Shares Closing Date a certificate,
addressed to the Underwriter and dated as of the Shares Closing Date, of the
chief executive or chief operating officer and the chief financial officer or
chief accounting officer of the Company to the effect that the signers of such
certificate have carefully examined the Registration Statement, the Prospectus
and this Agreement and that the representations and warranties of the Company in
this Agreement are true and correct on and as of the Shares Closing Date with
the same effect as if made on the Shares Closing Date and the Company has
performed all covenants and agreements and satisfied all conditions contained in
this Agreement required to be performed or satisfied by it at or prior to the
Shares Closing Date. The Underwriter shall also have received on the Shares
Closing Date a certificate, addressed to the Underwriter and dated as of the
Shares Closing Date, of the chief financial officer of the Company to the effect
that the signer of such certificate has carefully examined the unaudited
financial statements set forth in the Company's Quarterly Reports on Form 10-Q
for the fiscal quarters ended September 30, 1998, and December 31, 1998, each as
set forth in the Registration Statement (and, to the extent this Agreement is
executed after March 31, 1999, for the fiscal quarter ended March 31, 1999) and
that such unaudited financial statements comply as to form in all material
respects with the applicable accounting requirements of the Securities Act and
the Rules.
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e. The Underwriter shall have received at the time this Agreement is executed
and on the Shares Closing Date a signed letter from Ernst & Young LLP addressed
to the Underwriter and dated, respectively, the date of this Agreement and the
Shares Closing Date, in form and substance reasonably satisfactory to the
Underwriter, confirming that they are independent accountants within the meaning
of the Securities Act and the Rules, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them and stating in
effect that:
i. in their opinion the audited financial statements and
financial statement schedules included in the
Registration Statement and the Prospectus and
reported on by them comply as to form in all material
respects with the applicable accounting requirements
of the Securities Act and the Rules;
ii. carrying out certain procedures (but not an
examination in accordance with generally accepted
auditing standards) which would not necessarily
reveal matters of significance with respect to the
comments set forth in such letter, a reading of the
minutes of the meetings of the stockholders and
directors of the Company, and inquiries of certain
officials of the Company who have responsibility
for financial and accounting matters of the Company
as to transactions and events subsequent to the date
of the latest audited financial statements, except
as disclosed in the Registration Statement and the
Prospectus, nothing came to their attention which
caused them to believe that with respect to the
Company, there were, at a specified date not more
than five business days prior to the date of the
letter, any increases in the current liabilities and
long-term liabilities of the Company or any decreases
in working capital or the stockholders' equity in
the Company, as compared with the amounts shown on
the Company's audited balance sheet for the fiscal
year ended June 30, 1998 incorporated by reference
in the Registration Statement, or any decreases in
net income in the first six months (or nine months
if this Agreement is executed after March 31, 1999)
of the fiscal year ending June 30, 1999 as compared
to the same period in the fiscal year ended June 30,
1998; and
iii. they have performed certain other procedures as a
result of which they determined that certain
information of an accounting, financial or
statistical nature (which is limited to accounting,
financial or statistical information derived from the
general accounting records of the Company) set forth
in the Registration Statement and the Prospectus and
reasonably specified by the Underwriter agrees with
the accounting records of the Company.
References to the Registration Statement and the Prospectus in
this paragraph (e) are to such documents as amended and
supplemented at the date of the letter.
f. The Underwriter shall have received on the Shares Closing Date from Shack &
Xxxxxx, P.C., counsel for the Company, an opinion, addressed to the Underwriter
and dated as of the Shares Closing Date, and stating in effect that:
i. The Company and each of its United States
subsidiaries has been duly organized and is validly
existing as a corporation in good standing under the
laws of the state of its incorporation.
ii. The Company has all requisite corporate power and
authority to own, lease and license its assets and
properties and conduct its business as now being
conducted and
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as described in the Registration Statement and the
Prospectus; and the Company has all requisite
corporate power and authority and all necessary
authorizations, approvals, consents, orders,
licenses, certificates and permits to enter into,
deliver and perform this Agreement and to issue and
sell the Shares other than those required under the
Securities Act, the rules of the National Association
of Securities Dealers, Inc. ("NASD") and state and
foreign Blue Sky laws.
iii. The Company has authorized and outstanding capital
stock as set forth in the Registration Statement and
the Prospectus; the certificates evidencing the
Shares are in due and proper legal form and have
been duly authorized for issuance by the Company;
[all of the outstanding shares of Common Stock of
the Company have been duly and validly authorized
and have been duly and validly issued and are
fully paid and nonassessable and none of them was
issued in violation of any preemptive or other
similar right]. The Shares when issued and sold
pursuant to this Agreement will be duly and validly
issued, outstanding, fully paid and nonassessable
and none of them will have been issued in
violation of any preemptive or other similar right.
To the best of such counsel's knowledge, except as
disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant
or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any share
of stock of the Company or any security convertible
into, exercisable for, or exchangeable for stock
of the Company. The Common Stock and the Shares
conform in all material respects to the descriptions
thereof contained in the Registration Statement
and the Prospectus.
iv. All necessary corporate action has been duly and
validly taken by the Company to authorize the
execution, delivery and performance of this
Agreement and the issuance and sale of the Shares.
This Agreement has been duly and validly authorized,
executed and delivered by the Company and this
Agreement constitutes the legal, valid and binding
obligation of the Company enforceable against the
Company in accordance with its terms except (A) as
such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable
principles and (B) to the extent that rights to
indemnity or contribution under this Agreement may
be limited by Federal or state securities laws or
the public policy underlying such laws.
v. Neither the execution, delivery and performance of
this Agreement by the Company nor the consummation
of any of the transactions contemplated hereby
(including, without limitation, the issuance and
sale by the Company of the Shares) will give rise
to a right to terminate or accelerate the due date
of any payment due under, or conflict with or result
in the breach of any term or provision of, or
constitute a default (or any event which with notice
or lapse of time, or both, would constitute a
default) under, or require consent or waiver under,
or result in the execution or imposition of any
lien, charge or encumbrance upon any properties or
assets of the Company pursuant to the terms of any
indenture, mortgage, deed trust, note or other
material agreement or instrument of which such
counsel is aware and to which the Company is a party
or by which it or any of its properties or
businesses is bound, or any material franchise,
license, permit, judgment, decree, order, statute,
rule or regulation of which such counsel is aware
or violate any provision of the charter or by-laws
of the Company, each as amended to date.
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vi. With the exception of the performance by GTIS under
those certain GTIS Master Option and License
Agreements, each as amended, to the best of such
counsel's knowledge, no default exists, and no event
has occurred which with notice or lapse of time, or
both, would constitute a default, in the due
performance and observance of any term, covenant or
condition by the Company of any indenture, mortgage,
deed of trust, note or any other agreement or
instrument to which the Company is a party or by
which it or any of its assets or properties or
businesses may be bound or affected, where the
consequences of such default would have a material
and adverse effect on the assets, properties,
business, results of operations, prospects or
condition (financial or otherwise) of the Company.
vii. To the best of such counsel's knowledge, the Company
is not in violation of any term or provision of its
charter or by-laws or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation,
where the consequences of such violation would have a
material and adverse effect on the assets or
properties, businesses, results of operations,
prospects or condition (financial or otherwise) of
the Company.
viii. No consent, approval, authorization or order of any
court or governmental agency or body is required for
the performance of this Agreement by the Company or
the consummation of the transactions contemplated
hereby or thereby, except such as have been obtained
under the Securities Act or the rules of the NASD and
such as may be required under state securities or
Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriter.
ix. To the best of such counsel's knowledge, there is
no litigation or governmental or other proceeding
or investigation, before any court or before or by
any public body or board pending or threatened
against, or involving the assets, properties or
businesses of, the Company which would have a
material adverse effect upon the assets or
properties, business, results of operations,
prospects or condition (financial or otherwise) of
the Company. As set forth in the Registration
Statement, on January 25, 1999, GTIS filed a
lawsuit against the Company in connection with
certain licensing arrangements between the Company
and GTIS.
x. All contracts and other documents of which such
counsel is aware required to be filed as exhibits to,
or described in, the Registration Statement have been
so filed with the Commission or are fairly described
in the Registration Statement, as the case may be.
xi. The Registration Statement and the Prospectus and
each amendment or supplement thereto (except for the
financial statements and schedules and other
financial and statistical data included therein, as
to which such counsel expresses no opinion) comply as
to form in all material respects with the
requirements of the Securities Act and the Rules.
xii. The Registration Statement has become effective under
the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been
instituted or are threatened, pending or
contemplated.
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To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Underwriter as to matters which are governed by laws other than the laws of the
State of New York, the General Corporation Law of the State of Delaware and the
Federal laws of the United States; [provided that such counsel shall state that
in their opinion the Underwriter and they are justified in relying on such other
opinions.] Copies of such certificates and other opinions shall be furnished to
the Underwriter and counsel for the Underwriter.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Underwriter and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except as
specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to believe
that the Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and other
financial data, as to which such counsel need express no belief) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus as amended or supplemented (except with respect to the
financial statements and notes schedules thereto and other financial data, as to
which such counsel need make no statement) on the date thereof contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
g. All proceedings taken in connection with the sale of the Shares as
herein contemplated shall be reasonably satisfactory in form and substance to
the Underwriter and their counsel and the Underwriter shall have received from
Xxxxxx, Xxxxx & Xxxxxxx LLP a favorable opinion, addressed to the Underwriter
and dated as of the Shares Closing Date, with respect to the Shares, the
Registration Statement and the Prospectus, and such other related matters, as
the Underwriter may reasonably request, and the Company shall have furnished to
Xxxxxx, Xxxxx & Bockius LLP such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
6. Covenants of the Company.
(A) The Company covenants and agrees as follows:
a. The Company shall prepare the Prospectus in a form approved by the
Underwriter and file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act, and shall promptly advise the Underwriter (i) when any amendment
to the Registration Statement shall have become effective, (ii) of any request
by the Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (iii) of the prevention or
suspension of the use of any preliminary prospectus or the Prospectus or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company shall not file any amendment of the Registration Statement
or supplement to the Prospectus unless the Company has furnished the Underwriter
a copy for its review prior to filing and shall not file any such proposed
amendment or supplement to which the Underwriter reasonably objects. The Company
shall use
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its best efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof.
b. If, at any time when a prospectus relating to the Shares is required
to be delivered under the Securities Act and the Rules, any event occurs as a
result of which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under which
they were made not misleading, or if it shall be necessary to amend or
supplement the Prospectus to comply with the Securities Act or the Rules, the
Company promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 6(A), an amendment or
supplement which shall correct such statement or omission or an amendment which
shall effect such compliance.
c. The Company shall make generally available to its security holders
and to the Underwriter as soon as practicable its Annual Report on Form 10-K for
the fiscal year ended June 30, 2000, which shall satisfy the provisions of
Section 11(a) of the Securities Act or Rule 158 of the Rules.
d. The Company shall furnish to the Underwriter and counsel for the
Underwriter, without charge, signed copies of the Registration Statement
(including all exhibits thereto and amendments thereof), so long as delivery of
a prospectus by an Underwriter or dealer may be required by the Securities Act
or the Rules, as many copies of any preliminary prospectus and the Prospectus
and any amendments thereof and supplements thereto as the Underwriter may
reasonably request.
e. The Company shall cooperate with the Underwriter and its counsel in
endeavoring to qualify the Shares for offer and sale under the laws of such
jurisdictions as the Underwriter may designate and shall maintain such
qualifications in effect so long as required for the distribution of the Shares;
provided, however, that the Company shall not be required in connection
therewith, as a condition thereof, to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
f. Without the prior written consent of the Underwriter, for a period of
180 days after the date of this Agreement, the Company shall not issue, sell or
register with the Commission (other than on Form S-8 or on any successor form),
or otherwise dispose of, directly or indirectly, any equity securities of the
Company (or any securities convertible into or exercisable or exchangeable for
equity securities of the Company), except for the issuance of the Shares
pursuant to the Registration Statement and the issuance of shares pursuant to
the Company's existing stock option plans or incentive plan or in connection
with an acquisition or similar transaction to which the Company is a party.
g. On or before completion of this offering, the Company shall make all
filings required under applicable securities laws and by the New York Stock
Exchange (including any required registration under the Exchange Act).
(B) The Company agrees to pay, or reimburse if paid by the Underwriter,
whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the public offering
of the Shares and the performance of the obligations of the Company under this
Agreement including those relating to: (i) the preparation, printing, filing and
distribution of the Registration Statement including all exhibits thereto, each
preliminary prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriter; (iii) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the various jurisdictions referred to in Section 6(A)(e), including the
reasonable fees and disbursements of counsel for the
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Underwriter in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Underwriter and to the Underwriter of copies of
each preliminary prospectus, the Prospectus and all amendments or supplements to
the Prospectus, and of the several documents required by this Section to be so
furnished, as may be reasonably requested for use in connection with the
offering and sale of the Shares by the Underwriter or by dealers to whom Shares
may be sold; (v) the filing fees of the National Association of Securities
Dealers, Inc. in connection with its review of the terms of the public offering;
(vi) inclusion of the Shares for listing on the New York Stock Exchange; (vii)
all transfer taxes, if any, with respect to the sale and delivery of the Shares
by the Company to the Underwriter; and (xiii) all reasonable legal fees and
disbursements incurred by counsel to the Underwriter in connection with this
offering. Subject to the provisions of Section 9, the Underwriter agrees to pay,
whether or not the transactions contemplated hereby are consummated or this
Agreement is terminated, all costs and expenses incident to the performance of
the obligations of the Underwriter under this Agreement not payable by the
Company pursuant to the preceding sentence, including, without limitation, the
fees and disbursements of counsel for the Underwriter.
7. Indemnification.
a. The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all losses, claims, damages and liabilities (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment thereof or supplement thereto, or
arise out of or are based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that such indemnity shall
not inure to the benefit of the Underwriter (or any person controlling the
Underwriter) on account of any losses, claims, damages or liabilities arising
from the sale of the Shares to any person by the Underwriter if such untrue
statement or omission or alleged untrue statement or omission was made in such
preliminary prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with information
furnished in writing to the Company by the Underwriter specifically for use
therein. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
b. The Underwriter agrees to indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of the Company,
and each officer of the Company who signs the Registration Statement, to the
same extent as the foregoing indemnity from the Company to the Underwriter, but
only insofar as such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or omission or alleged untrue statement or
omission which was made in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment thereof or supplement thereto,
contained under the caption "Underwriting" in the Prospectus; provided, however,
that the obligation of the Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) shall be limited to the net
proceeds received by the Company from the Underwriter.
c. Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made by such party against an indemnifying party under this Section, notify
such indemnifying party of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served. No
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indemnification provided for in Section 7(a) or 7(b) shall be available to any
party who shall fail to give notice as provided in this Section 7(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was prejudiced by the failure to give such notice,
but the omission so to notify such indemnifying party of any such action, suit
or proceeding shall not relieve it from any liability that it may have to any
indemnified party for contribution or otherwise than under this Section. In case
any such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnified party of such counsel, the indemnifying party shall
not be liable to such indemnified party for any legal or other expenses, except
as provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof. The indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized in writing by the indemnifying parties,
(ii) the indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
parties shall not have the right to direct the defense of such action on behalf
of the indemnified party) or (iii) the indemnifying parties shall not have
employed counsel to assume the defense of such action within a reasonable time
after notice of the commencement thereof, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action, suit,
proceeding or claim effected without its written consent.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7(a) is due in accordance with its terms but for any reason is held to
be unavailable from the Company, the Company and the Underwriter shall
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting any contribution received by the
Company from persons other than the Underwriter, such as persons who control the
Company within the meaning of the Securities Act, officers of the Company who
signed the Registration Statement and directors of the Company, who may also be
liable for contribution) to which the Company and the Underwriter may be subject
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriter on the other from the
offering of the Shares or, if such allocation is not permitted by applicable law
or indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 7 hereof, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company on the one hand and the Underwriter on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Underwriter shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts but before deducting
expenses) received by the Company, as set forth in the table on the cover page
of the Prospectus, bear to (y) the underwriting discounts received by the
Underwriter, as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company or the Underwriter shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact related to information supplied by the Company or the
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriter agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this
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Section 8, (i) in no case shall the Underwriter be liable or responsible for any
amount in excess of the underwriting discount applicable to the Shares purchased
by the Underwriter hereunder, and (ii) the Company shall be liable and
responsible for any amount in excess of such underwriting discount; provided,
however, that 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. For purposes of this Section 8, each person, if any, who
controls the Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act shall have the same rights to contribution
as the Underwriter, and each person, if any, who controls the Company within the
meaning of the Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to clauses (i) and (ii) in the
immediately preceding sentence of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent.
9. Termination. This Agreement may be terminated with respect
to the Shares to be purchased on the Shares Closing Date by the Underwriter by
notifying the Company at any time:
a. in the absolute discretion of the Underwriter at or before the
Shares Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Underwriter will in the future materially disrupt, the securities
markets; (ii) if there has occurred any new outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment of the
Underwriter, inadvisable to proceed with the offering; (iii) if there shall be
such a material adverse change in general financial, political or economic
conditions or the effect of international conditions on the financial markets in
the United States is such as to make it, in the judgment of the Underwriter,
inadvisable or impracticable to market the Shares; (iv) if trading in the Shares
has been suspended by the Commission or trading generally on the New York Stock
Exchange, Inc. or on the American Stock Exchange, Inc. has been suspended or
limited, or minimum or maximum ranges for prices for securities shall have been
fixed, or maximum ranges for prices for securities have been required, by said
exchanges or by order of the Commission, the National Association of Securities
Dealers, Inc., or any other governmental or regulatory authority; or (v) if a
banking moratorium has been declared by any state or Federal authority, or
b. at or before the Shares Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as required by
this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to the Underwriter, and the Underwriter
shall not be under any liability to the Company, except that (y) if this
Agreement is terminated by the Underwriter because of any failure, refusal or
inability on the part of the Company to comply with the terms or to fulfill any
of the conditions of this Agreement, the Company will reimburse the Underwriter
for all out-of-pocket expenses (including the reasonable fees and disbursements
of their counsel) incurred by them in connection with the proposed purchase and
sale of the Shares or in contemplation of performing their obligations hereunder
and (z) the Underwriter, failing or refusing to purchase the Shares, without
some reason sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall not be relieved of liability to the
Company for damages occasioned by its failure or refusal.
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10. Substitution of Underwriter. If the Underwriter shall fail
(other than for a reason sufficient to justify the cancellation or termination
of this Agreement under Section 9) to purchase on the Shares Closing Date the
Shares agreed to be purchased on the Shares Closing Date by the Underwriter, the
Underwriter may find one or more substitute underwriters to purchase such Shares
or make such other arrangements as the Underwriter may deem advisable, upon the
terms set forth in this Agreement. In such case, either the Underwriter or the
Company shall have the right to postpone the applicable Shares Closing Date for
a period of not more than five business days in order that necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or Prospectus) may be effected by the Underwriter and the
Company. A substitute underwriter hereunder shall become an Underwriter for all
purposes of this Agreement.
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriter set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(B), 7, 8
and 9 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriter
and the Company and their respective successors and assigns, and, to the extent
expressed herein, for the benefit of persons controlling the Underwriter, or the
Company, and directors and officers of the Company, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser of Shares from any Underwriter merely because of such
purchase.
All notices and communications hereunder shall be in writing and mailed
or delivered, or sent by facsimile transmission, or by telephone if subsequently
confirmed in writing, (a) if to the Underwriter, c/o CIBC Xxxxxxxxxxx Corp.,
Xxxxxxxxxxx Tower, World Financial Center, New York, New York 10281 Attention:
Xxxxxxx Xxxxx, and (b) if to the Company, to its agent for service as such
agent's address appears on the cover page of the Registration Statement, and in
each case, with a copy to the respective attorney listed on the cover page of
the Registration Statement.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
MIDWAY GAMES INC.
By:
----------------------------------
Name:
Title:
Confirmed:
CIBC Xxxxxxxxxxx Corp.
By:
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