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MIDWAY GAMES INC.
4,500,000 Shares
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
December , 2001
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UNDERWRITING AGREEMENT
December __, 2001
UBS Warburg LLC
Gerard Klauer Mattison & Co., Inc.
Jefferies & Company, Inc.
SWS Securities, Inc.
As representatives of the several underwriters
named in SCHEDULE A hereto
c/o UBS Warburg LLC
as Managing Underwriter
299 Park Avenue
New York, New York 10171-0026
Ladies and Gentlemen:
Midway Games Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to the underwriters named in SCHEDULE A annexed hereto (the
"Underwriters") an aggregate of 4,500,000 shares (the "Firm Shares") of common
stock, $.01 par value (the "Common Stock"), of the Company. In addition, solely
for the purpose of covering over-allotments, the Company proposes to grant to
the Underwriters the option to purchase from the Company up to an additional
675,000 shares of Common Stock (the "Additional Shares"). The Firm Shares and
the Additional Shares are hereinafter collectively sometimes referred to as the
"Shares". The Shares are described in the Prospectus which is referred to below.
The Company has filed, in accordance with the provisions of the Securities
Act of 1933, as amended, and the rules and regulations thereunder (collectively
called the "Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-74028)
including a prospectus, relating to the Shares, which incorporates by reference
documents which the Company has filed in accordance with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively called the "Exchange Act"). The Company has furnished
to you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses and the documents incorporated by reference therein
(each thereof, including the documents incorporated therein by reference, being
herein called a "Preliminary Prospectus") relating to the Shares. Except where
the context otherwise requires, the registration statement, as amended when it
becomes effective, including all documents filed as a part thereof and
incorporated by reference therein, and including any
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information contained in a prospectus subsequently filed with the Commission
pursuant to Rule 424(b) under the Act and deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430(A) under the Act and
also including any registration statement filed pursuant to Rule 462(b) under
the Act, is herein called the Registration Statement, and the prospectus,
including all documents incorporated therein by reference, in the form filed by
the Company with the Commission pursuant to Rule 424(b) under the Act on or
before the second business day after the date hereof (or such earlier time as
may be required under the Act) or, if no such filing is required, the form of
final prospectus included in the Registration Statement at the time it became
effective, is herein called the Prospectus.
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company the
aggregate number of Firm Shares set forth opposite the name of such Underwriter
in SCHEDULE A attached hereto in each case at a purchase price of $_____ per
Share. The Company is advised by you that the Underwriters intend (i) to make a
public offering of their respective portions of the Firm Shares as soon after
the effective date of the Registration Statement as in your judgment is
advisable and (ii) initially to offer the Firm Shares upon the terms set forth
in the Prospectus.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company, ratably
in accordance with the number of Firm Shares to be purchased by each of them,
all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised by you on behalf of the several
Underwriters at any time (but not more than once) on or before the thirtieth day
following the date hereof, by written notice to the Company. Such notice shall
set forth the aggregate number of Additional Shares as to which the option is
being exercised, and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the Additional Time of
Purchase); PROVIDED, HOWEVER, that the Additional Time of Purchase shall not be
earlier than the Time of Purchase (as defined below) nor earlier than the second
business day after the date on which the option shall have been exercised nor
later than the tenth business day after the date on which the option shall have
been exercised. The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same proportion to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter on SCHEDULE A hereto bears to the total
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number of Firm Shares (subject, in each case, to such adjustment as you may
determine to eliminate fractional shares).
2. PAYMENT AND DELIVERY. Payment of the purchase price for the Firm
Shares shall be made to the Company by Federal Funds wire transfer, against
delivery of the certificates for the Firm Shares to you through the facilities
of the Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on December __, 2001 (unless another time shall be agreed to by you
and the Company or unless postponed in accordance with the provisions of Section
8 hereof). The time at which such payment and delivery are actually made is
hereinafter sometimes called the Time of Purchase. Certificates for the Firm
Shares shall be delivered to you in definitive form in such names and in such
denominations as you shall specify on the second business day preceding the Time
of Purchase. For the purpose of expediting the checking of the certificates for
the Firm Shares by you, the Company agrees to make such certificates available
to you for such purpose at least one full business day preceding the Time of
Purchase.
Payment of the purchase price for the Additional Shares shall be made
at the Additional Time of Purchase in the same manner and to the same account of
the Company as the payment for the Firm Shares. Certificates for the Additional
Shares shall be delivered to you in definitive form in such names and in such
denominations as you shall specify no later than the second business day
preceding the Additional Time of Purchase. For the purpose of expediting the
checking of the certificates for the Additional Shares by you, the Company
agrees to make such certificates available to you for such purpose at least one
full business day preceding the Additional Time of Purchase.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters that:
(a) the Company has not received, and has no notice of, any order of
the Commission preventing or suspending the use of any Preliminary
Prospectus, or instituting or threatening proceedings for that purpose, and
each Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act and did not 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; and when the Registration Statement became or becomes
effective, the Registration Statement, and the Prospectus complied in all
material respects with the provisions of the Act, and the Registration
Statement did not or will not contain an
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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
not misleading, and the Prospectus does not or will not 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 light of
the circumstances under which they were made, not misleading; any contracts
or other documents that are required to be filed as exhibits to the
Registration Statement have been filed; PROVIDED, HOWEVER, that the Company
makes no warranty or representation with respect to any statement contained
in the Registration Statement, the Preliminary Prospectus or the Prospectus
in reliance upon and in conformity with information concerning the
Underwriters and furnished in writing by or on behalf of any Underwriter
through you to the Company expressly for use in the Registration Statement,
the Preliminary Prospectus or the Prospectus; and the Company has not
distributed any offering material in connection with the offering or sale
of the Shares other than the Registration Statement, the Preliminary
Prospectus or the Prospectus.
(b) the Company has authorized capital stock as set forth in the
section of the Registration Statement and the Prospectus entitled
"Capitalization." As of September 30, 2001, the Company had issued and
outstanding capital stock as set forth under the heading entitled
"Actual" in such section. Other than any issuances pursuant to the
Company's stock option plans or upon exercise of outstanding options or
warrants, which options and warrants are described in the Prospectus, the
issued and outstanding capital stock of the Company as of the Time of
Purchase shall be as set forth under the heading entitled "As Adjusted"
in the section of the Registration Statement and the Prospectus entitled
"Capitalization"; other than as described in the Prospectus, no options,
warrants or other rights to purchase, agreements or other obligations to
issue or other rights to convert any obligation into shares of capital
stock or ownership interests in the Company are outstanding; all of the
issued and outstanding shares of capital stock including Common Stock
and Preferred Stock of the Company have been duly and validly authorized
and issued and are fully paid and non-assessable, have been issued in
compliance with all federal and state securities laws and were not
issued in violation of any preemptive right, resale right, right of
first refusal or similar right;
(c) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with the requisite corporate power and authority to own, lease and operate
its properties and conduct its business as described in the Registration
Statement;
(d) the Company is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a
material adverse effect on the business, properties, financial condition or
results of operation of the Company and its Subsidiaries (as hereinafter
defined) taken as a whole (a "Material Adverse Effect"). The Company has no
subsidiaries (as defined in the Act) other than K.K. Midway Games, Midway
Amusement Games, LLC, Midway Games (Europe)
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GmbH, Midway Games Sales Corporation, Midway Games West Inc., Midway Home
Entertainment Inc., Midway Home Studios, Inc., Midway Interactive Inc.,
Midway/Nintendo Inc., Midway Games Limited and Midway Sales Company, LLC
(collectively, the "Subsidiaries"); the Company owns all of the outstanding
capital stock and ownership interests of each of the Subsidiaries, except
for Midway/Nintendo, Inc. of which the Company owns 50% of the outstanding
capital stock; other than the Subsidiaries, the Company does not own,
directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in
any firm, partnership, joint venture, association or other entity; complete
and correct copies of the certificates of incorporation and of the bylaws
or other organizational documents of the Company and the Subsidiaries and
all amendments thereto have been made available to you, and except as set
forth in the exhibits to the Registration Statement no changes therein will
be made subsequent to the date hereof and prior to the Time of Purchase or,
if later, the Additional Time of Purchase; each Subsidiary has been duly
organized and is validly existing as a corporation or limited liability
company in good standing under the laws of the jurisdiction of its
organization, with the requisite corporate or limited liability company, as
applicable, power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement;
each Subsidiary is duly qualified to do business as a foreign corporation
or limited liability company, as applicable, in good standing in each
jurisdiction where the ownership or leasing of the properties or the
conduct of its business requires such qualification, except where the
failure to so qualify would not have a Material Adverse Effect; all of the
outstanding shares of capital stock and other ownership interests of each
of the Subsidiaries have been duly authorized and validly issued, are fully
paid and non-assessable and (except as otherwise described in this Section
3(d)) are owned by the Company subject to no security interest, other
encumbrance or adverse claims; no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligation into shares of capital stock or ownership interests
in the Subsidiaries are outstanding.
(e) the Company and each of its Subsidiaries are duly qualified or
licensed by and are in good standing in each jurisdiction in which they
conduct their respective businesses and in which the failure, individually
or in the aggregate, to be so licensed or qualified would have a Material
Adverse Effect; and the Company and each of its Subsidiaries are in
compliance in all material respects with the laws, orders, rules,
regulations and directives issued or administered by such jurisdictions;
(f) neither the Company nor any of its Subsidiaries is in breach of,
or in default under (nor has any event occurred which with notice, lapse of
time, or both would result in any breach of, or constitute a default
under), its respective charter or by-laws or other organizational documents
or, other than that which would not have a Material Adverse
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Effect in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of indebtedness, or any
lease, contract or other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which any of them or any of their
properties is bound and the execution, delivery and performance of this
Agreement, the issuance and sale of the Shares and the consummation of the
transactions contemplated hereby will not conflict with, or result in any
breach of or constitute a default under (nor constitute any event which
with notice, lapse of time, or both would result in any breach of, or
constitute a default under), any provisions of the charter or by-laws or
other organizational documents of the Company or any of its Subsidiaries,
or under any provision of any license, indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of indebtedness, or any
lease, contract or other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which any of them or their
respective properties may be bound or affected, or under any federal,
state, local or foreign law, regulation or rule or any decree, judgment or
order applicable to the Company or any of its Subsidiaries;
(g) this Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as rights to
indemnification and contribution hereunder may be limited by applicable law
and except as enforceability may be limited by bankruptcy, insolvency or
other laws affecting the rights of creditors generally or by general
equitable principles;
(h) the capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and Prospectus and the certificates for the Shares
are in due and proper form and the holders of the Shares will not be
subject to personal liability by reason of being such holders;
(i) the issuance of the Shares has been duly and validly authorized
and, when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and non-assessable;
(j) no approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the issuance and
sale of the Shares or the consummation by the Company of the transactions
as contemplated hereby other than registration of the Shares under the Act
and any necessary qualification under the securities or blue sky laws of
the various jurisdictions in which the Shares are being offered by the
Underwriters or under the
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rules and regulations of the National Association of Securities Dealers,
Inc. ("NASD") or the New York Stock Exchange ("NYSE");
(k) no person has the right, contractual or otherwise, to cause the
Company to issue to it, or register pursuant to the Act, any shares of
capital stock of the Company upon the issue and sale of the Shares to the
Underwriters hereunder, nor does any person have preemptive rights, co-sale
rights, rights of first refusal or other rights to purchase any of the
Shares other than those that have been expressly waived prior to the date
hereof;
(l) Ernst & Young LLP, whose report on the consolidated financial
statements of the Company and its Subsidiaries is filed with the Commission
as part of the Registration Statement and Prospectus, is the Company's
independent public accountant as required by the Act;
(m) each of the Company and its Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state, local or foreign law, regulation
or rule, and has obtained all necessary authorizations, consents and
approvals from other persons, in order to conduct its respective business;
neither the Company nor any of its Subsidiaries is in violation of, or in
default under, any such license, authorization, consent or approval or any
federal, state, local or foreign law, regulation or rule or any decree,
order or judgment applicable to the Company or any of its Subsidiaries the
effect of which would have a Material Adverse Effect;
(n) all legal or governmental proceedings, contracts, leases or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required;
(o) except as set forth in the Prospectus, there are no actions,
suits, claims, investigations or proceedings pending or, to the Company's
knowledge, threatened to which the Company or any of its Subsidiaries or
any of their respective officers is a party or of which any of their
respective properties is subject at law or in equity, or before or by any
federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency which, if determined adversely to the
Company or any of its Subsidiaries, would have a Material Adverse Effect or
prevent consummation of the transactions contemplated hereby;
(p) the audited financial statements included in the Registration
Statement and the Prospectus present fairly the consolidated financial
position of the Company and its Subsidiaries as of the dates indicated and
the consolidated results of operations and cash flows of the Company and
its Subsidiaries for the periods specified; such financial
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statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis during the periods
involved;
(q) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
(i) any material adverse change, or any development which, in the Company's
reasonable judgment, is likely to cause a material adverse change, in the
business, properties or assets described or referred to in the Registration
Statement, or the results of operations, condition (financial or
otherwise), business or operations of the Company and its Subsidiaries
taken as a whole, (ii) any transaction which is material to the Company and
its Subsidiaries taken as a whole, except transactions in the ordinary
course of business, (iii) any obligation, direct or contingent, which is
material to the Company and its Subsidiaries taken as a whole, incurred by
the Company or its Subsidiaries, except obligations incurred in the
ordinary course of business, (iv) except as contemplated in the Prospectus,
any change in the capital stock or outstanding indebtedness of the Company
or its Subsidiaries or (v) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company. Neither the
Company nor its Subsidiaries has any contingent obligation which is
material to the Company and it Subsidiaries taken as a whole and which is
not disclosed in the Registration Statement.
(r) the Company has obtained the agreement of each of its directors
and executive officers not to directly or indirectly, (i) offer, sell,
pledge, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant for the
sale of, or otherwise dispose of or transfer any shares of the Common Stock
or any securities convertible into or exchangeable or exercisable for
Common Stock, whether now owned or hereafter acquired by such party or with
respect to which such party has or hereafter acquires the power of
disposition, or cause to be filed any registration statement under the Act
with respect to any of the foregoing, or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of any shares
of the Common Stock, whether any such swap or transaction is to be settled
by delivery of Common Stock or other securities, in cash or property or
otherwise, for a period of 90 days after the date of this Agreement without
the prior written consent of UBS Warburg LLC, subject to the exceptions set
forth in such agreements;
(s) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
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(t) the Company and its Subsidiaries have good and marketable title to
all property (real and personal) described in the Prospectus as being owned
by them, and have valid and enforceable leasehold interests in all property
(real and personal) described in the Prospectus as being leased by them, in
each case, free and clear of all liens, claims, security interests or other
encumbrances or defects except such as are described in the Registration
Statement and the Prospectus and except as would not individually or in the
aggregate have a Material Adverse Effect;
(u) each of the Company and its Subsidiaries is insured by insurers of
recognized financial responsibility against such losses and risks and in
such amount as are customary in the business in which it is engaged. All
policies of insurance insuring the Company, the Subsidiaries or any of
their businesses, material assets, employees, officers and directors are in
full force and effect except as would not have a Material Adverse Effect,
and each of the Company and each of its Subsidiaries is in compliance with
the terms of such policies in all material respects. There are no claims by
the Company or any of its Subsidiaries under any such policy or instrument
as to which any insurance company is denying liability or defending under a
reservation of rights clause, except as would not have a Material Adverse
Effect;
(v) all statistical and market-related data included in the Prospectus
are based on or derived from sources that the Company believes to be
reliable and accurate;
(w) neither the Company nor any of its affiliates has taken, directly
or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares;
(x) the Company owns or has obtained licenses (which licenses are
enforceable against the Company and, to the best knowledge of the Company,
the other parties thereto) for the patents, patent applications,
inventions, technology, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information
systems or procedures), trademarks, trademark registrations, service marks,
service mark registrations, mask work rights, trade names, copyrights, and
other rights described in the Prospectus as being owned or used by or
licensed to the Company or its Subsidiaries or necessary for the conduct of
their respective businesses as currently conducted (collectively, the
"Intellectual Property").
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Except to the extent that would not cause a Material Adverse Effect, the
Company has taken all customary and commercially reasonable steps to
protect the Company's trade secrets and to ensure that it will own, or
have rights sufficient for the conduct of its business in, the work
product (and all Intellectual Property relating thereto) of its
employees and consultants produced in the course of their work for the
Company. Except as set forth in the Prospectus: (i) to the best
knowledge of the Company, there are no rights of third parties to any
such Intellectual Property inconsistent with the rights of the Company
related to such Intellectual Property which would cause a Material
Adverse Effect; (ii) to the best knowledge of the Company, there is no
infringement by third parties of any such Intellectual Property owned or
exclusively licensed by the Company which would cause a Material Adverse
Effect; (iii) there is no pending or, to the knowledge of the Company,
threatened action, suit, proceeding or claim by others challenging the
Company's rights in or to any Intellectual Property which would cause a
Material Adverse Effect; (iv) there is no pending or, to the knowledge
of the Company, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Intellectual Property which
would cause a Material Adverse Effect; (v) there is no pending or, to
the knowledge of the Company, threatened action, suit, proceeding or
claim by others that the Company or any of its Subsidiaries infringes or
otherwise violates, or would infringe or otherwise violate upon
commercialization of its products and product candidates described in
the Prospectus, any patent, trademark, copyright, trade secret or other
proprietary rights of others which would cause a Material Adverse
Effect; and (vi) to the best knowledge of the Company there is no patent
or patent application which contains claims that conflict or interfere
with or may conflict or interfere with any Intellectual Property which
would cause a Material Adverse Effect;
(y) neither the Company nor any of its Subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants, nor any federal or
state law relating to discrimination in the hiring, promotion or pay of
employees nor any applicable federal or state wages and hours laws, nor any
provisions of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, which violation individually or in the
aggregate could reasonably be expected to result in a Material Adverse
Effect;
(z) the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) records (including sales contracts) are kept
in accordance with management's general or specific authorization and true
and accurate copies are provided to the Company's independent auditors;
(iii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iv) access to assets
is permitted only in accordance with management's general or specific
authorization; and (v) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences; and
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(aa) each of the Company and its Subsidiaries has filed all federal,
state, local and foreign tax returns and tax forms required to be filed.
Such returns and forms are complete and correct in all material respects,
and all taxes shown by such returns or otherwise assessed that are due or
payable have been paid, except such taxes as are being contested in good
faith and as to which adequate reserves have been provided. All payroll
withholdings required to be made by the Company and each of its
Subsidiaries with respect to employees have been made. The charges,
accruals and reserves on the books of the Company and each of its
Subsidiaries in respect of any tax liability for any year not finally
determined are, in management's determination, adequate to meet any
assessments or reassessments for additional taxes. There have been no tax
deficiencies asserted and, to the best knowledge of the Company, no tax
deficiency might be reasonably asserted or threatened against the Company
or any of its Subsidiaries which individually or in the aggregate would
have a Material Adverse Effect.
In addition, any certificate signed by any executive officer of the
Company delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the Shares shall be deemed to be a
representation and warranty by the Company, as to matters covered thereby, to
each Underwriter.
4. CERTAIN COVENANTS OF THE COMPANY. The Company hereby agrees:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as you may designate and to
maintain such qualifications in effect so long as required for the
distribution of the Shares; PROVIDED that the Company shall not be required
to qualify as a foreign corporation or to consent to the service of process
under the laws of any such state (except service of process with respect to
the offering and sale of the Shares); and to promptly advise you 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;
(b) to make available to the Underwriters in New York City, as soon as
practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Underwriters, as many copies
of the Prospectus (or of the Prospectus as amended or supplemented if the
Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) as the Underwriters may
reasonably request for the purposes contemplated by the Act; in case any
Underwriter is required to deliver a prospectus beyond the nine-month
period referred to in Section 10(a)(3) of the Act in connection with the
sale of the Shares, the Company will prepare promptly upon request, but at
the expense of such Underwriter, such amendment or
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amendments to the Registration Statement and such prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of
the Act;
(c) to advise you promptly and (if requested by you) to confirm such
advice in writing, (i) when the Registration Statement has become effective
and when any post-effective amendment thereto becomes effective and (ii) if
Rule 430A under the Act is used, when the Prospectus is filed with the
Commission pursuant to Rule 424(b) under the Act (which the Company agrees
to file in a timely manner under such Rules);
(d) to advise you promptly, confirming such advice in writing, of any
request by the Commission for amendments or supplements to the Registration
Statement or Prospectus or for additional information with respect thereto,
or of notice of institution of proceedings for, or the entry of a stop
order suspending the effectiveness of the Registration Statement and, if
the Commission should enter a stop order suspending the effectiveness of
the Registration Statement, to make every reasonable effort to obtain the
lifting or removal of such order as soon as possible; to advise you
promptly of any proposal to amend or supplement the Registration Statement
or Prospectus including by filing any documents that would be incorporated
therein by reference and to file no such amendment or supplement to which
you shall reasonably object in writing;
(e) to file promptly all reports and any definitive proxy or
information statement required to be filed by the Company with the
Commission in order to comply with the Exchange Act subsequent to the date
of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Shares, and to
promptly notify you of such filing;
(f) if necessary or appropriate, to file a registration statement
pursuant to Rule 462(b) under the Act;
(g) to furnish to you and, upon request, to each of the other
Underwriters for a period of five years from the date of this Agreement (i)
copies of any reports or other communications which the Company shall send
to its stockholders or shall from time to time publish or publicly
disseminate, (ii) copies of all annual, quarterly and current reports filed
with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar form
as may be designated by the Commission, (iii) copies of documents or
reports filed with any national securities exchange on which any class of
securities of the Company is listed, and (iv) such other information as you
may reasonably request regarding the Company or its Subsidiaries, in each
case as soon as reasonably practicable after such reports, communications,
documents or information becomes available;
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(h) to advise you promptly of the happening of any event known to the
Company within the time during which a Prospectus relating to the Shares is
required to be delivered under the Act which, in the judgment of the
Company, would require the making of any change in the Prospectus then
being used, or in the information incorporated therein by reference, so
that the Prospectus would not include an untrue statement of material fact
or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they are made, not
misleading, and, during such time, to prepare and furnish, at the Company's
expense, to the Underwriters promptly such amendments or supplements to
such Prospectus as may be necessary to reflect any such change and to
furnish you a copy of such proposed amendment or supplement before filing
any such amendment or supplement with the Commission;
(i) to make generally available to its security holders, and to
deliver to you, an earnings statement of the Company (which will satisfy
the provisions of Section 11(a) of the Act) covering a period of twelve
months beginning after the effective date of the Registration Statement (as
defined in Rule 158(c) of the Act) as soon as is reasonably practicable
after the termination of such twelve-month period but not later than
eighteen months after such effective date;
(j) to furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, shareholders' equity and of cash flow of the Company
for such fiscal year) accompanied by a copy of the certificate or report
thereon of nationally recognized independent certified public accountants;
(k) to furnish to you five (5) copies of the Registration Statement at
least one of which is a manually signed original, as initially filed with
the Commission, and of all amendments thereto (including all exhibits
thereto and documents incorporated by reference therein) and sufficient
conformed copies of the foregoing (other than exhibits) for distribution of
a copy to each of the other Underwriters;
(l) to furnish to you as early as practicable prior to the Time of
Purchase and the Additional Time of Purchase, as the case may be, but not
later than two business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements, if any, of the Company
and its Subsidiaries which have been read by the Company's independent
certified public accountants, as stated in their letter to be furnished
pursuant to Section 6(b) hereof;
(m) to apply the net proceeds from the sale of the Shares in the
manner set forth under the caption "Use of Proceeds" in the Prospectus;
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(n) to pay all costs, expenses, fees and taxes (other than any
transfer taxes and fees and disbursements of counsel for the Underwriters
except as set forth under Section 5 hereof and (iii), (iv) and (vi) below)
in connection with (i) the preparation and filing of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and any amendments
or supplements thereto, and the printing and furnishing of copies of each
thereof to the Underwriters and to dealers (including costs of mailing and
shipment) other than any amendment or supplement required as a result of
inaccurate information provided by or information omitted by the
Underwriters and required to be contained in the Registration Statement or
Prospectus (which costs and expenses will be for the account of the
Underwriters), (ii) the registration, issue, sale and delivery of the
Shares, (iii) the producing, word processing and/or printing of this
Agreement, any agreement among Underwriters, any dealer agreements, any
powers of attorney and any closing documents (including compilations
thereof) and the reproduction and/or printing and furnishing of copies of
each thereof to the Underwriters and (except closing documents) to dealers
(including costs of mailing and shipment), (iv) the qualification of the
Shares for offering and sale under state laws and the determination of
their eligibility for investment under state law as aforesaid (including
the legal fees and filing fees and other disbursements of counsel for the
Underwriters) and the printing and furnishing of copies of any blue sky
surveys or legal investment surveys to the Underwriters and to dealers, (v)
any listing of the Shares on any securities exchange or qualification of
the Shares for quotation on the NYSE and any registration thereof under the
Exchange Act, (vi) any filing for review of the public offering of the
Shares by the NASD and (vii) the performance of the Company's other
obligations hereunder;
(o) to furnish to you, before filing with the Commission, subsequent
to the effective date of the Registration Statement and for so long as the
delivery of a Prospectus is required in connection with the offering or
sale of the Shares, a copy of any document proposed to be filed pursuant to
Section 13, 14 or 15(d) of the Exchange Act;
(p) not to directly or indirectly (i) offer, sell, pledge, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of (or enter into any transaction or device that is
designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock or
securities convertible into or exchangeable for Common Stock (other than
the Shares) owned by the Company on the date hereof or on the date of the
completion of the offering of the Shares by the Underwriters to the public,
or (ii) enter into any swap or other derivatives transaction that transfers
to another, in whole or in part, any of the economic benefits or risks of
ownership of such shares of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, for a period of 90
days after the
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date hereof, without the prior written consent of UBS Warburg LLC;
provided, however, that, notwithstanding the foregoing, the Company may
issue securities pursuant to its 1996 Stock Option Plan, 1998 Non-Qualified
Stock Option Plan, 1998 Stock Incentive Plan, 1999 Stock Option Plan, and
2000 Non-Qualified Stock Option Plan in accordance with the terms of those
plans; and
(q) to use its best efforts to cause the Common Stock to be listed on
the NYSE.
5. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Shares are not
delivered for any reason other than the default by one or more of the
Underwriters in its or their respective obligations hereunder, the Company
shall, in addition to paying the amounts described in Section 4(n) hereof,
reimburse the Underwriters for all of their reasonable, actual accountable
out-of-pocket expenses, including the reasonable fees and disbursements of
their counsel.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Company on the date hereof and at the Time of
Purchase (and the several obligations of the Underwriters at the Additional Time
of Purchase are subject to the accuracy of the representations and warranties on
the part of the Company on the date hereof and at the Time of Purchase (unless
previously waived) and at the Additional Time of Purchase, as the case may be),
the performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
(a) The Company shall furnish to you at the Time of Purchase and at
the Additional Time of Purchase, as the case may be, an opinion of Shack
Siegel Katz Flaherty & Goodman P.C., counsel for the Company, addressed to
the Underwriters, and dated the Time of Purchase or the Additional Time of
Purchase, as the case may be, with reproduced copies for each of the other
Underwriters and in form satisfactory to Brobeck, Phleger & Harrison LLP,
counsel for the Underwriters, stating that:
(i) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Delaware, with the requisite corporate power and authority to own,
lease and operate its properties and conduct its business as described
in the Registration Statement and the Prospectus and any amendment or
supplement thereto, to execute and deliver this Agreement and to
issue, sell and deliver the Shares as herein contemplated;
(ii) each of the Subsidiaries organized in a jurisdiction within the
United States (the "U.S. Subsidiaries") has been duly organized and is
validly existing as a corporation or a limited liability company, as
the case may be, in good standing under the laws of its respective
jurisdiction of organization with full corporate or limited
liability company, as the case may be, power
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and authority to own, lease and operate its respective properties and
to conduct its respective business;
(iii) the Company and its U.S. Subsidiaries are duly qualified or
licensed by each United States jurisdiction in which they conduct
their respective businesses and in which the failure, individually or
in the aggregate, to be so licensed or qualified could have a Material
Adverse Effect;
(iv) this Agreement has been duly authorized, executed and delivered
by the Company and is a legal, valid and binding agreement of the
Company enforceable by you in accordance with its terms except as
rights to indemnification and contribution hereunder may be limited by
applicable law and except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting the rights of creditors
generally or by general equitable principles;
(v) as of the Time of Purchase, the authorized capital stock of the
Company is as set forth in the section of the Prospectus entitled
"Capitalization" and, as of September 30, 2001, the issued and
outstanding capital stock of the Company is as set forth under the
heading entitled "Actual" in such section, and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and to such counsel's knowledge are fully
paid and non-assessable;
(vi) the outstanding shares of capital stock of the Company are free
of statutory and contractual preemptive rights, resale rights, rights
of first refusal and similar rights and have been issued in compliance
with all state, federal and foreign securities laws; to such counsel's
knowledge, except as described in the Registration Statement and the
Prospectus, there are no outstanding securities of the Company
convertible or exchangeable into, or evidencing the right to purchase
or subscribe for, any shares of capital stock of the Company and there
are no outstanding or authorized options, warrants or rights of a
similar character obligating the Company to issue any shares of its
capital stock or any securities convertible or exchangeable into, or
evidencing the right to purchase or subscribe for, any shares of such
stock;
(vii) the Shares to be sold by the Company have been duly authorized,
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable;
(viii) the Shares, when issued, will be free of statutory and
contractual preemptive rights, resale rights, rights of first refusal
and similar rights; the certificates for the Shares are in due and
proper form and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
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(ix) the statements set forth under the captions "Risk Factors--Risks
related to this offering -- Effects of anti-takeover provisions could
inhibit the acquisition of Midway;" "Business -- Legal Proceedings;"
"Management--Stock Options;" and "Certain relationships and related
transactions" in the Prospectus and in the Registration Statement in
Item 15, in each case insofar as such statements constitute summaries
of the legal matters, documents or legal proceedings referred to
therein, have been reviewed by us, are correct in all material
respects and fairly summarize the matters referred to therein to the
extent required by the Act or the Exchange Act;
(x) other than as set forth in the Registration Statement or
Prospectus, such counsel has no knowledge of any persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement;
(xi) the Registration Statement and the Prospectus, and any
supplements or amendments thereto, as of their respective effective or
issue dates (except as to the financial statements and related notes
and schedules and other financial and accounting data contained or
incorporated by reference therein or omitted therefrom, as to which
such counsel need express no opinion) complied as to form in all
material respects with the requirements of the Act and, to such
counsel's knowledge, no amendment to the Registration Statement is
required to be filed which has not been filed;
(xii) the Registration Statement and all post-effective amendments, if
any, have become effective under the Act and, to such counsel's
knowledge, no stop order proceedings with respect thereto are pending
or threatened under the Act and any required filing of the Prospectus
and any supplement thereto pursuant to Rule 424 under the Act has been
made in the manner and within the time period required by such Rule
424;
(xiii) no approval, authorization, consent or order of or filing with
any national or state governmental or regulatory commission, board,
body, court, authority or agency is required in connection with the
issuance and sale of the Shares and consummation by the Company of the
transactions contemplated hereby other than registration of the Shares
under the Act and the listing of the Shares on the NYSE (except such
counsel need express no opinion as to any necessary qualification
under the state securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the
Underwriters);
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(xiv) the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated thereby do not result in any breach or violation of, or
constitute a default under (nor constitute any event which with
notice, lapse of time, or both, would result in any breach of or
constitute a default under), (a) any provisions of the charter or
bylaws or other organizational documents of the Company, (b) any
provision of any license, indenture, mortgage, deed of trust, bank
loan, credit agreement or other evidence of indebtedness, or any
lease, contract or other agreement or instrument which is filed as an
exhibit to the Registration Statement and to which the Company is a
party or by which any of its properties may be bound, (c) any federal
or state law, regulation or rule of the United States or Delaware
Corporate Law or the State of New York existing or in effect as of
the Time of Purchase or the Additional Time of Purchase, as
applicable, or (d) any decree, judgment or order of which such
counsel has knowledge and which names the Company;
(xv) the Company is not in violation of its charter or bylaws or other
organizational documents and is not in breach of, or, to such
counsel's knowledge, in default under (nor has any event occurred
which with notice, lapse of time, or both would result in any breach
of, or constitute a default under), any license, indenture, mortgage,
deed of trust, bank loan or any other agreement or instrument to which
the Company is a party or by which it or its properties may be bound
or affected and which is filed as an exhibit to the Registration
Statement or under any federal, state, local or foreign law,
regulation or rule or any decree, judgment or order applicable to the
Company;
(xvi) to such counsel's knowledge, there are no contracts, licenses,
agreements, leases or documents of a character which are required to
be filed as exhibits to the Registration Statement or to be summarized
or described in the Prospectus which have not been so filed,
summarized or described;
(xvii) except as set forth in the Prospectus, to such counsel's
knowledge, there are no actions, suits, claims, investigations or
proceedings pending, threatened or contemplated to which the Company
or any of its Subsidiaries is subject or of which any of their
respective properties, is subject at law or in equity or before or by
any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency which are required to be
described in the Prospectus but are not so described;
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(xviii) the Company is not and, after giving effect to the offering
and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act;
(xix) the Shares have been approved for listing on the NYSE upon
issuance as contemplated by this Agreement; and
(xx) the documents incorporated by reference in the Registration
Statement and Prospectus, when they were filed (or, if an amendment
with respect to any such document was filed when such amendment was
filed) with the Commission, complied as to form in all material
respects with the Act or Exchange Act (except as to the financial
statements and schedules and other financial and statistical data
contained or incorporated by reference therein as to which such
counsel need express no opinion).
In addition, such counsel shall state that in the course of
preparation of the Registration Statement and the Prospectus such counsel has
participated in conferences with certain officers and other representatives of
the Company, representatives of the independent public accountants of the
Company and representatives of the Underwriters and their counsel at which the
contents of the Registration Statement and Prospectus were discussed and,
although such counsel is not passing upon and does not assume responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or Prospectus (except as and to the extent stated in
subparagraphs (v) and (ix) above), on the basis of the foregoing nothing has
come to the attention of such counsel that causes them to believe that the
Registration Statement or any amendment thereto at the time such Registration
Statement or amendment became effective contained an 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 or any supplement thereto at the date of such Prospectus or such
supplement, and at all times up to and including the Time of Purchase or
Additional Time of Purchase, as the case may be, contained an 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, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and schedules and other financial and statistical data included in
the Registration Statement or Prospectus).
(b) You shall have received from Ernst & Young, LLP, letters dated,
respectively, the date of this Agreement and the Time of Purchase and
Additional Time of Purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the
forms heretofore approved by UBS Warburg LLC.
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(c) The Company shall have complied with the provisions of Section
4(b) hereof with respect to the furnishing of copies of the Prospectus as
soon as practicable after the Registration Statement becomes effective.
(d) You shall have received at the Time of Purchase and at the
Additional Time of Purchase, as the case may be, the favorable opinion of
Brobeck, Phleger & Harrison LLP, counsel for the Underwriters, dated the
Time of Purchase or the Additional Time of Purchase, as the case may be,
with respect to the Shares, the Registration Statement and the Prospectus,
and such other related matters, as the Underwriters may reasonably request,
and the Company shall have furnished to Brobeck, Phleger & Harrison LLP
such documents as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(e) No amendment or supplement to the Registration Statement or
Prospectus, including documents deemed to be incorporated by reference
therein, shall be filed prior to the time the Registration Statement
becomes effective to which you reasonably object in writing.
(f) The Registration Statement shall become effective, or if Rule 430A
under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act, at or before 5:00 P.M.,
New York City time, on the date of this Agreement, unless a later time (but
not later than 5:00 P.M., New York City time, on the second full business
day after the date of this Agreement) shall be agreed to by the Company and
you in writing or by telephone, confirmed in writing; PROVIDED, HOWEVER,
that the Company and you and any group of Underwriters, including you, who
have agreed hereunder to purchase in the aggregate at least 50% of the Firm
Shares may from time to time agree on a later date.
(g) Prior to the Time of Purchase or the Additional Time of Purchase,
as the case may be, (i) no stop order with respect to the effectiveness of
the Registration Statement shall have been issued under the Act or
proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the
Registration Statement and all amendments thereto, or modifications
thereof, if any, shall not 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 not misleading; and (iii) the Prospectus and
all amendments or supplements thereto, or modifications thereof, if any,
shall not 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 are
made, not misleading.
(h) Between the time of execution of this Agreement and the Time of
Purchase or the Additional Time of Purchase, as the case may be, (i) no
material and unfavorable change,
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financial or otherwise (other than as referred to in the Registration
Statement and Prospectus), in the business, condition or prospects of the
Company and its Subsidiaries taken as a whole shall occur or become known;
and (ii) no transaction which is material and unfavorable to the Company
shall have been entered into by the Company or any of its Subsidiaries.
(i) The Company will, at the Time of Purchase or Additional Time of
Purchase, as the case may be, deliver to you a certificate of two of its
executive officers to the effect that the representations and warranties of
the Company as set forth in this Agreement are true and correct as of each
such date, that the Company shall perform such of its obligations under
this Agreement as are to be performed at or before the Time of Purchase and
at or before the Additional Time of Purchase, as the case may be and the
conditions set forth in paragraphs (f) and (g) of this Section 6 have been
met.
(j) You shall have received signed letters, dated on or prior to the
date of this Agreement, referred to in Section 3(r) hereof, from each of
the directors and executive officers of the Company.
(k) The Company shall have furnished to you such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the Time of Purchase and
the Additional Time of Purchase, as the case may be, as you may reasonably
request.
(l) The Shares shall have been approved for listing on the NYSE,
subject only to notice of issuance at or prior to the Time of Purchase or
the Additional Time of Purchase, as the case may be.
(m) Deborah K. Fulton, General Counsel of the Company, shall furnish
to you at the Time of Purchase and at the Additional Time of Purchase, as
the case may be, an opinion, addressed to the Underwriters, and dated the
Time of Purchase or the Additional Time of Purchase, as the case may be,
with reproduced copies for each of the other Underwriters and in form
satisfactory to Brobeck, Phleger & Harrison LLP, counsel for the
Underwriters, stating that:
(i) other than the Subsidiaries, the Company does not own or control,
directly or indirectly, any corporation, association or other entity;
all of the outstanding shares of capital stock and other ownership
interests of each of the Subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and, except as
otherwise stated in the Registration Statement or Section 3(d) hereof,
are owned, directly or indirectly, by the Company, in each case
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subject to no security interest, other encumbrance or adverse claim;
to such counsel's knowledge, other than as such may be held by other
Subsidiaries, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert
any obligation into shares of capital stock or ownership interests in
the Subsidiaries are outstanding;
(ii) the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated thereby do not result in any breach or violation of, or
constitute a default under (nor constitute any event which with
notice, lapse of time, or both, would result in any breach of or
constitute a default under), (a) any provisions of the charter or
bylaws or other organizational documents of any of the Subsidiaries,
(b) any provision of any license, indenture, mortgage, deed of trust,
bank loan, credit agreement or other evidence of indebtedness, or any
lease, contract or other agreement or instrument which is filed as an
exhibit to the Registration Statement and to which any of the
Subsidiaries is a party or by which any of them or their respective
properties may be bound, (c) any federal or state law, regulation or
rule of the State of Illinois existing or in effect as of the Time of
Purchase or the Additional Time of Purchase, as applicable, or (d) any
decree, judgment or order of which such counsel has knowledge and
which names any of the Subsidiaries; and
(iii) No Subsidiary is in violation of its charter or bylaws or other
organizational documents or is in breach of, or, to such counsel's
knowledge, in default under (nor has any event occurred which with
notice, lapse of time, or both would result in any breach of, or
constitute a default under), any license, indenture, mortgage, deed of
trust, bank loan or any other agreement or instrument to which any of
the Subsidiaries is a party or by which any of them or their
respective properties may be bound or affected and which is filed as
an exhibit to the Registration Statement or under any federal, state,
local or foreign law, regulation or rule or any decree, judgment or
order applicable to any Subsidiary.
7. EFFECTIVE DATE OF AGREEMENT; TERMINATION. This Agreement shall
become effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of you or any group of Underwriters
(which may include you) which has
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agreed to purchase in the aggregate at least 50% of the Firm Shares, if, since
the time of execution of this Agreement or the respective dates as of which
information is given in the Registration Statement and Prospectus, (i) there has
been any material adverse and unfavorable change, financial or otherwise (other
than as referred to in the Registration Statement and Prospectus), in the
operations, business, condition or prospects of the Company and its Subsidiaries
taken as a whole, which would, in your judgment or in the judgment of such group
of Underwriters, make it impracticable to market the Shares, or (ii) there shall
have occurred any downgrading, or any notice shall have been given of (x) any
intended or potential downgrading or (z) any review or possible change that does
not indicate an improvement, in the rating accorded any securities of or
guaranteed by the Company or any Subsidiary by any "nationally recognized
statistical rating organization," as that term is defined in Rule 436(g)(2)
under the Act or, (iii) if, at any time prior to the Time of Purchase or, with
respect to the purchase of any Additional Shares, the Additional Time of
Purchase, as the case may be, trading in securities on the NYSE, the American
Stock Exchange or the Nasdaq National Market shall have been suspended or
limitations or minimum prices shall have been established on the NYSE, the
American Stock Exchange or the Nasdaq National Market, or if a banking
moratorium shall have been declared either by the United States or New York
State authorities, or (iv) if the United States shall have declared war in
accordance with its constitutional processes or there shall have occurred any
material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on the
financial markets of the United States as, in your judgment or in the judgment
of such group of Underwriters, to make it impracticable to market the Shares.
If you or any group of Underwriters elects to terminate this Agreement
as provided in this Section 7, the Company and each other Underwriter shall be
notified promptly by letter, facsimile or email.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 4(n), 5 and 9 hereof), and the Underwriters shall be under
no obligation or liability to the Company under this Agreement (except to the
extent provided in Section 9 hereof) or to one another hereunder.
8. INCREASE IN UNDERWRITERS' COMMITMENTS. Subject to Sections 6 and 7,
if any Underwriter shall default in its obligation to take up and pay for the
Firm Shares to be purchased by it hereunder (otherwise than for a reason
sufficient to justify the termination of this Agreement under the provisions of
Section 7 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to take up and pay for does not exceed
10% of the total number of Firm Shares, the non-defaulting Underwriters shall
take up and pay for (in addition to the
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aggregate number of Firm Shares they are obligated to purchase pursuant to
Section 1 hereof) the number of Firm Shares agreed to be purchased by all such
defaulting Underwriters, as hereinafter provided. Such Shares shall be taken up
and paid for by such non-defaulting Underwriter or Underwriters in such amount
or amounts as you may designate with the consent of each Underwriter so
designated or, in the event no such designation is made, such Shares shall be
taken up and paid for by all non-defaulting Underwriters pro rata in proportion
to the aggregate number of Firm Shares set opposite the names of such
non-defaulting Underwriters in SCHEDULE A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Firm Shares hereunder unless all of the Firm Shares are purchased
by the Underwriters (or by substituted Underwriters selected by you with the
approval of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the Time of Purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with like effect as if
such substituted Underwriter had originally been named in SCHEDULE A.
If the aggregate number of Shares which the defaulting Underwriter or
Underwriters agreed to purchase exceeds 10% of the total number of Shares which
all Underwriters agreed to purchase hereunder, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the five business
day period stated above for the purchase of all the Shares which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall
be terminated without further act or deed and without any liability on the part
of the Company to any Underwriter and without any liability on the part of any
non-defaulting Underwriter to the Company. Nothing in this paragraph, and no
action taken hereunder, shall relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
9. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons
from and against any loss, damage, expense, liability or
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claim (including the reasonable cost of investigation) which, jointly or
severally, any such Underwriter or any such person may incur under the Act, the
Exchange Act, the common law or otherwise, insofar as such loss, damage,
expense, liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term Prospectus for
the purpose of this Section 9 being deemed to include any Preliminary
Prospectus, the Prospectus and the Prospectus as amended or supplemented by the
Company), or arises out of or is based upon any omission or alleged omission to
state a material fact required to be stated in either such Registration
Statement or Prospectus or necessary to make the statements made therein not
misleading, except insofar as any such loss, damage, expense, liability or claim
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in and in conformity with information furnished in
writing by or on behalf of any Underwriter through you to the Company expressly
for use with reference to such Underwriter in such Registration Statement or
such Prospectus or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information required
to be stated in such Registration Statement or such Prospectus or necessary to
make such information not misleading.
If any action, suit or proceeding (together, a "Proceeding") is
brought against an Underwriter or any such person in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
Underwriter or such person shall promptly notify the Company in writing of the
institution of such Proceeding and the Company shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses; PROVIDED, HOWEVER, that
the omission to so notify the Company shall not relieve the Company from any
liability which the Company may have to any Underwriter or any such person or
otherwise. Such Underwriter or such person shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Underwriter or of such person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such Proceeding or the Company shall not have,
within a reasonable period of time in light of the circumstances, employed
counsel to have charge of the defense of such Proceeding or such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from, additional to or in conflict
with those available to the Company (in which case the Company shall not have
the right to direct the defense of such Proceeding on behalf of the indemnified
party or parties, but the Company may employ counsel and participate in the
defense thereof but the fees and expenses of such counsel shall be at the
expense of the Company), in any of which events such fees and expenses shall be
borne by the Company and paid as incurred (it being understood, however, that
the Company shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified
parties who are parties to
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such Proceeding). The Company shall not be liable for any settlement of any
Proceeding effected without its written consent but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Underwriter and any such person from and against any loss or liability by reason
of such settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the indemnifying party agrees that it shall be
liable for any settlement of any Proceeding effected without its written consent
if (i) such settlement is entered into more than 60 business days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such indemnified party
shall have given the indemnifying party at least 30 days' prior notice of its
intention to settle. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
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 and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, its directors and officers, and any person who controls
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons
from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, the Company or
any such person may incur under the Act, the Exchange Act, the common law or
otherwise, insofar as such loss, damage, expense, liability or claim arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information furnished in
writing by or on behalf of such Underwriter through you to the Company expressly
for use with reference to such Underwriter in the Registration Statement (or in
the Registration Statement as amended by any post-effective amendment thereof by
the Company) or in a Prospectus, or arises out of or is based upon any omission
or alleged omission to state a material fact in connection with such information
required to be stated in such Registration Statement or such Prospectus or
necessary to make such information not misleading.
If any Proceeding is brought against the Company or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; PROVIDED, HOWEVER, that the omission to so
notify such Underwriter shall not relieve
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such Underwriter from any liability which such Underwriter may have to the
Company or any such person or otherwise. The Company or such person shall have
the right to employ its own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of the Company or such person unless the
employment of such counsel shall have been authorized in writing by such
Underwriter in connection with the defense of such Proceeding or such
Underwriter shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense of such Proceeding
or such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from or additional
to or in conflict with those available to such Underwriter (in which case such
Underwriter shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties, but such Underwriter may employ
counsel and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that such Underwriter shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel) in
any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such Proceeding effected
without the written consent of such Underwriter but if settled with the written
consent of such Underwriter, such Underwriter agrees to indemnify and hold
harmless the Company and any such person from and against any loss or liability
by reason of such settlement. Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second sentence of this paragraph, then the indemnifying party agrees
that it shall be liable for any settlement of any Proceeding effected without
its written consent if (i) such settlement is entered into more than 60 business
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least 30 days'
prior notice of its intention to settle. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified 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 and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, damages, expenses, liabilities or claims
referred to therein, then each applicable 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, damages, expenses,
liabilities or claims (i) in such
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proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
damages, expenses, liabilities or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
respective proportions as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the total underwriting discounts and commissions received by
the Underwriters, bear to the aggregate public offering price of the Shares. The
relative fault of the Company on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, damages, expenses,
liabilities and claims referred to in this subsection shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating, preparing to defend or defending any Proceeding.
(d) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 9, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by such Underwriter and distributed to the public were offered to
the public exceeds the amount of any damage which such Underwriter has otherwise
been required to pay by reason of such untrue statement or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of the Company
contained in this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any Underwriter, its partners,
directors or officers or any person (including each partner, officer or director
of such person) who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, or by or on behalf of the Company,
its directors or officers or
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any person who controls the Company within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. The Company and each
Underwriter agree promptly to notify each other of the commencement of any
Proceeding against it and, in the case of the Company, against any of the
Company's officers or directors in connection with the issuance and sale of the
Shares, or in connection with the Registration Statement or Prospectus.
10. NOTICES. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing and sent by hand delivery,
facsimile, nationally recognized overnight courier or certified U.S. mail,
return receipt requested and, if to the Underwriters, shall be sufficient in all
respects if delivered or sent to UBS Warburg LLC, 299 Park Avenue, New York,
N.Y. 10171-0026, Attention: Syndicate Department and, if to the Company, shall
be sufficient in all respects if delivered or sent to the Company at the offices
of the Company at 2704 West Roscoe Street, Chicago, Illinois 60618, Attention:
General Counsel.
11. GOVERNING LAW; CONSTRUCTION. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
12. SUBMISSION TO JURISDICTION. Except as set forth below, no Claim
may be commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York, which courts
shall have jurisdiction over the adjudication of such matters, and the Company
and each of the Underwriters consents to the jurisdiction of such courts and
personal service with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any Claim arising out of
or in any way relating to this Agreement is brought by any third party against
UBS Warburg LLC or any indemnified party. Each of the Underwriters and the
Company (on its behalf and, to the extent permitted by applicable law, on behalf
of its stockholders and affiliates) waives all right to trial by jury in any
action, proceeding or counterclaim (whether based upon contract, tort or
otherwise) in any way arising out of or relating to this Agreement. The Company
agrees that a final judgment in any such action, proceeding or counterclaim
brought in any such court shall be conclusive and binding upon the Company and
the Underwriters and may be enforced in any other courts in the jurisdiction of
which the Company and the Underwriters is or may be subject, by suit upon such
judgment.
13. PARTIES AT INTEREST. The Agreement herein set forth has been and
is made solely for the benefit of the Underwriters and the Company and to the
extent provided in Section 9 hereof the controlling persons, directors and
officers referred to in such section, and their respective
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successors, assigns, heirs, personal representatives and executors and
administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters) shall
acquire or have any right under or by virtue of this Agreement.
14. COUNTERPARTS. This Agreement may be signed by the parties in two
or more counterparts which together shall constitute one and the same agreement
among the parties.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Underwriters and the Company and their successors and assigns and any successor
or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
16. MISCELLANEOUS. UBS Warburg LLC, an indirect, wholly owned
subsidiary of UBS AG, is not a bank and is separate from any affiliated bank,
including any U.S. branch or agency of UBS AG. Because UBS Warburg LLC is a
separately organized entity, it is solely responsible for its own contractual
obligations and commitments, including obligations with respect to sales and
purchases of securities. Securities sold, offered or recommended by UBS Warburg
LLC are not deposits, are not insured by the Federal Deposit Insurance
Corporation, are not guaranteed by a branch or agency, and are not otherwise an
obligation or responsibility of a branch or agency.
A lending affiliate of UBS Warburg LLC may have lending relationships
with issuers of securities underwritten or privately placed by UBS Warburg LLC.
To the extent required under the securities laws, prospectuses and other
disclosure documents for securities underwritten or privately placed by UBS
Warburg LLC will disclose the existence of any such lending relationships and
whether the proceeds of the issue will be used to repay debts owed to affiliates
of UBS Warburg LLC.
* * * * * *
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If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
MIDWAY GAMES INC.
By:
---------------------------------
Name: Neil D. Nicastro
Title: President
Accepted and agreed to as of the
date first above written, on
behalf of themselves and the other several
Underwriters named in SCHEDULE A
UBS WARBURG LLC
GERARD KLAUER MATTISON & CO., INC.
JEFFERIES & COMPANY, INC.
SWS SECURITIES, INC.
By: UBS WARBURG LLC
By:
------------------------------
Title:
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SCHEDULE A
<Table>
<Caption>
Underwriter Number of Firm Shares
- ----------- ---------------------
UBS WARBURG LLC _____________________
GERARD KLAUER MATTISON & CO., INC. _____________________
JEFFERIES & COMPANY, INC. _____________________
SWS SECURITIES, INC. _____________________
_____________________
Total.................. 4,500,000
=====================
</Table>