<PAGE> 1
As filed with the Securities and Exchange Commission on April 24, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
MIDWAY GAMES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2906244
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3401 North California Avenue
Chicago, Illinois 60618
(773) 961-2222
(Address of principal executive offices)
-----------------------------------------------------
1996 STOCK OPTION PLAN
(Full title of the Plan)
-----------------------------------------------------
Neil D. Nicastro
President
Midway Games Inc.
3401 North California Avenue
Chicago, Illinois 60618
(773) 961-2222
(Name, address and telephone
number of agent for service)
Copy to:
Barbara M. Norman
Vice President, Secretary and General Counsel
Midway Games Inc.
3401 North California Avenue
Chicago, Illinois 60618
----------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Proposed Proposed
Amount To Be Maximum Offering Maximum Aggregate Amount of
Title of Securities To Be Registered Registered (1) Price Per Share (2) Offering Price (3) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 2,000,000 $20.00 $37,679,688 $11,418.08
shares
===================================================================================================================================
</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, the
number of shares of the issuer's Common Stock registered hereunder will be
adjusted in the event of stock splits, stock dividends or similar
transactions.
(2) Based on the price at which outstanding options to purchase Common Stock
may be exercised under the plan.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (h) on the basis of the price at which
outstanding options to purchase Common Stock may be exercised under the
plan and the average of the high and low prices of Common Stock on the New
York Stock Exchange on April 22, 1997 for options to purchase Common Stock
not yet granted under the plan.
================================================================================
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified by this Part I will be
sent or given to eligible participants as specified by Rule 428(b)(1)
promulgated under the Securities Act of 1933, as amended ("Securities Act"),
and are not being filed with the Securities and Exchange Commission (the
"Commission") either as part of this Registration Statement or as prospectuses
or prospectus supplements pursuant to Rule 424. These documents and the
documents incorporated by reference in this Registration Statement pursuant to
Item 3 of Part II herein, taken together, constitute a prospectus that meets
the requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant's Quarterly Reports on Form 10-Q for the fiscal quarters
ended September 30, 1996 and December 31, 1996, the prospectus dated October
29, 1996 contained in the registration statement on Form S-1 (file no.
333-11919) ("Form S-1") as filed with the Commission, and the information under
the caption "Description of Capital Stock", with respect to the Registrant's
common stock, par value $0.01 per share ("Common Stock"), contained in the Form
S-1 and incorporated by reference in the Registrant's registration statement on
Form 8-A (file no. 001-12367), dated October 25, 1996, as filed with the
Commission pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"), are incorporated herein by reference and made a part of this
Registration Statement as of the date hereof. All reports subsequently filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
effective date of this Registration Statement and prior to the termination of
the offering of the Common Stock offered hereby shall be deemed to be
incorporated by reference into this Registration Statement and be a part hereof
from the date of filing of such reports. Any statement contained herein or in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any document
which is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The legality of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Registrant by Shack & Siegel, P.C., 530 Fifth
Avenue, New York, New York 10036. Stockholders of Shack & Siegel, P.C. hold
options to purchase 25,000 shares of the Registrant's Common Stock at an
exercise price per share of $20.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's authority to indemnify its officers and directors is
governed by the provisions of Section 145 of the General Corporation Law of the
State of Delaware (the "DGCL") and by the Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") of the Registrant. The
Certificate of Incorporation of the Registrant provides that the Registrant
shall, to the fullest extent permitted by Section 145 of the DGCL, (i)
indemnify any and all persons whom it shall have power to indemnify under said
section from and against any and all of the expenses, liabilities or other
matters referred to in or covered by said section, and (ii) advance expenses to
any and all said persons, and that such indemnification and advances shall not
be deemed exclusive of any of the rights to which those indemnified may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in their official capacities and as
to action in another capacity while holding such offices, and shall continue as
to persons who have ceased to be directors, officers, employees or agents and
shall inure to the benefit of the heirs, executors and administrators of such
persons. In addition, the Certificate of Incorporation of the Registrant
provides for the elimination of personal liability of directors of the
Registrant to the Registrant or its stockholders for monetary damages for
breach of fiduciary duty as a director, to the fullest extent permitted by the
DGCL, as amended and supplemented.
The Registrant has entered into indemnity agreements with each of its
directors and executive officers whereby the Registrant will, in general,
indemnify such directors and executive officers, to the extent permitted by the
Registrant's Certificate of Incorporation and the laws of the State of
Delaware, against any expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement incurred in connection with any actual or
threatened action or proceeding to which such director or officer is made or
threatened to be made a party by reason of the fact that such person is or was
a director or officer of the Registrant.
The Registrant also maintains directors' and officers' liability insurance
providing for $10.0 million in coverage.
1
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ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4. (a) 1996 Stock Option Plan
(b) Form of Option Agreement under the 1996
Stock Option Plan
(c) Form of Option Agreement under the 1996
Stock Option Plan
5. Opinion of Shack & Siegel, P.C., counsel for
Registrant
23. (a) Consent of Shack & Siegel, P.C. (included
in Exhibit 5 hereof)
(b) Consent of Ernst & Young LLP
24. Power of Attorney (contained on the
signature page hereof)
ITEM 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) above do not apply
if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new Registration Statement relating to the securities offered
therein and the offering of such securities at that time shall he deemed to be
the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
2
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3
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois on the 23rd day of April,
1997.
MIDWAY GAMES INC.
(Registrant)
By: /s/ Neil D. Nicastro
----------------------
Neil D. Nicastro
Chairman of the Board, President, Chief
Executive Officer and Chief Operating Officer
Each person whose signature to this Registration Statement appears below
hereby appoints Neil D. Nicastro and Harold H. Bach, Jr., and each of them
acting singly, as his attorney-in-fact to sign in his behalf individually and
in the capacity stated below and to file all amendments and post-effective
amendments to this Registration Statement, which amendment or amendments may
make such changes and additions to this Registration Statement as such
attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------- -------------------- ---------------
<S> <C> <C>
/s/ NEIL D. NICASTRO Chairman of the April 23, 1997
- ------------------------- Board, President,
Neil D. Nicastro Chief Executive
Officer and Chief
Operating Officer
(Principal
Executive Officer)
and Director
/s/ HAROLD H. BACH, JR. Executive Vice April 23, 1997
- ------------------------- President -
Harold H. Bach, Jr. Finance, Treasurer
and Chief Financial
Officer (Principal
Financial and
Principal
Accounting Officer)
and Director
/s/ BYRON C. COOK Executive Vice April 23, 1997
- -------------------------- President - Home
Byron C. Cook Video and Director
/s/ KENNETH J. FEDESNA Executive Vice April 23, 1997
- -------------------------- President - Coin-Op
Kenneth J. Fedesna Video and Director
/s/ LOUIS J. NICASTRO Director April 23, 1997
- --------------------------
Louis J. Nicastro
/s/ WILLIAM C.BARTHOLOMAY Director April 23, 1997
- --------------------------
William C. Bartholomay
/s/ WILLIAM E. MCKENNA Director April 23, 1997
- --------------------------
William E. McKenna
/s/ NORMAN J. MENELL Director April 23, 1997
- --------------------------
Norman J. Menell
/s/ HARVEY REICH Director April 23, 1997
- --------------------------
Harvey Reich
/s/ IRA S. SHEINFELD Director April 23, 1997
- --------------------------
Ira S. Sheinfeld
/s/ RICHARD D. WHITE Director April 23, 1997
- --------------------------
Richard D. White
/s/ GERALD O. SWEENEY JR. Director April 23, 1997
- --------------------------
Gerald O. Sweeney, Jr.
</TABLE>
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
4. (a) 1996 Stock Option Plan..........................................
(b) Form of Option Agreement under the 1996 Stock Option Plan.......
(c) Form of Option Agreement under the 1996 Stock Option Plan.......
5. Opinion of Shack & Siegel, P.C., counsel for Registrant.........
23. (a) Consent of Shack & Siegel, P.C. (included in Exhibit 5 hereof)..
(b) Consent of Ernst & Young LLP....................................
24. Power of Attorney (contained on the signature page hereof)......
5
<PAGE> 1
EX-4(A)
MIDWAY GAMES INC.
1996 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF THE PLAN (as amended)
The 1996 Stock Option Plan (the "Plan") is intended to provide a method
whereby "Employees," "Directors" and "Consultants and Advisers" of Midway
Games Inc. (the "Company") and its "Subsidiaries" (as such quoted terms are
hereinafter defined) may be encouraged to acquire a proprietary interest in
the Company and whereby such individuals may realize benefits from an increase
in the value of the shares of the Common Stock, $.01 par value (the "Common
Stock"), of the Company; to provide such Employees, Directors and Consultants
and Advisers with greater incentive and to encourage their continued provision
of services to the Company; and, generally, to promote the interests of the
Company and all of its stockholders. Under the Plan, from time to time on or
before October 31, 2006, options to purchase shares of Common Stock and
related Stock Appreciation Rights (as hereinafter defined) may be granted to
such persons as may be selected in the manner hereinafter provided on the
terms and subject to the conditions hereinafter set forth.
ARTICLE II
ADMINISTRATION OF THE PLAN
SECTION 1. Subject to the authority as described herein of the Board of
Directors (the "Board") of the Company, the Plan shall be administered by the
Compensation and Stock Option Committee of the Company's Board of Directors
(the "Committee") which is composed of at least two members of the Board who
are Non-Employee Directors (as hereinafter defined). The Committee is
authorized to interpret the Plan and may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. All
determinations by the Committee shall be made by the affirmative vote of a
majority of its members but any determination reduced to writing and signed by
a majority of its members shall be fully enforceable and effective as if it
had been made by a majority vote at a meeting duly called and held. Subject to
any applicable provisions of the Plan, all determinations by the Committee or
by the Board pursuant to the provisions of the Plan, and all related orders or
resolutions of the Committee or the Board, shall be final, conclusive and
binding on all persons, including the Company and its stockholders, employees,
directors and optionees.
SECTION 2. All authority delegated to the Committee pursuant to the Plan,
other than decisions relating to selection of individuals for participation
and decisions concerning the timing, pricing and the amount of a grant, may
also be exercised by the Board. No action of the Board taken pursuant to the
provisions of the Plan shall be effective unless at the time both a majority
of the Board and a majority of the directors acting in the manner are
Non-Employee
<PAGE> 2
Directors. In the event of any conflict or inconsistency between
determinations, orders, resolutions or other actions of the Committee and the
Board taken in connection with the Plan, other than with respect to those
decisions set forth in the first sentence hereof which may only be made by the
Committee, the actions of the Board shall control.
SECTION 3. With respect to Section 16 of the Securities Exchange Act of
1934, as amended (the " 1934 Act"), transactions under the Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successors under
the 1934 Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee.
ARTICLE III
STOCK SUBJECT TO THE PLAN
SECTION 1. The shares to be issued or delivered upon exercise of options
or rights granted under the Plan shall be made available, at the discretion of
the Board, either from the authorized but unissued shares of Common Stock of
the Company or from shares of Common Stock reacquired by the Company,
including shares purchased by the Company in the open market or otherwise
obtained.
SECTION 2. Subject to the provisions of Section 2 of this Article X, the
aggregate number of shares of Common Stock which may be purchased pursuant to
options granted at any time under the Plan shall not exceed 2,000,000. Such
number shall be reduced by the aggregate number of shares covered by options
in respect of which Stock Appreciation Rights are exercised. Shares subject to
any options which are canceled, lapse or are otherwise terminated shall be
immediately available for reissuance under the Plan.
ARTICLE IV
PURCHASE PRICE OF OPTIONED SHARES
Unless the Committee shall fix a greater purchase price, the purchase
price per share of Common Stock under each option granted to Employees,
Directors, Consultants and Advisers shall not be less than one hundred percent
(100%) of the Fair Market Value (as hereinafter defined) of the Common Stock
at the time such option is granted, but in no case shall such price be less
than the par value of the Common Stock, provided, however, that in the case of
an incentive stock option (as hereinafter defined) granted to an Employee who,
at the time of the grant, owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company (a
"Ten Percent Stockholder"), such purchase price per share shall be at least one
hundred and ten percent (110%) of the Fair Market Value.
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ARTICLE V
ELIGIBILITY OF RECIPIENTS
Options will be granted only to persons who are Employees, Directors,
Consultants or Advisers of the Company or a Subsidiary.
ARTICLE VI
DURATION OF THE PLAN
Unless previously terminated by the Committee or the Board, the Plan will
terminate on October 31, 2006. Such termination will not terminate any option
then outstanding.
ARTICLE VII
GRANT OF OPTIONS TO EMPLOYEES, DIRECTORS, CONSULTANTS AND ADVISERS
SECTION 1. Each option granted under the Plan to Employees shall
constitute either an option intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") ("incentive stock
option"), or an option not intended to qualify under such Section 422
("nonqualified stock option"), as determined in each case by the Committee and
each option granted to Directors, Consultants and Advisers shall constitute a
nonqualified stock option. With respect to incentive stock options granted to
Employees, to the extent that the aggregate Fair Market Value (determined at
the time an option is granted) of Common Stock of the Company with respect to
which such incentive stock options are exercisable for the first time by any
individual during any calendar year (under the Plan and any other stock
option plan of the Company) exceeds $100,000, such incentive stock options
shall be treated as nonqualified stock options. The foregoing rule shall be
applied by taking incentive stock options into account in the order in which
they were granted. In the event outstanding incentive stock options become
immediately exercisable under the terms hereof, such incentive stock options
will, to the extent the aggregate Fair Market Value thereof exceeds $100,000,
be treated as nonqualified stock options.
SECTION 2. The Committee shall from time to time determine the Employees,
Directors, Consultants and Advisers to be granted options, it being understood
that options may be granted at different times to the same person, provided,
however, that no one person may receive an option or options under the Plan
covering more than fifty percent (50%) of the total number of shares subject
to the Plan. In addition, the Committee shall determine subject to the terms
of the Plan: (a) the number of shares subject to each option, (b) the time or
times when the options will be granted, (c) whether such options shall be
incentive stock options, nonqualified stock options or both, (d) whether
Stock Appreciation Rights will be granted in connection with the grant of
options, (e) the purchase price of the shares subject to each option, which
price shall be not less than that specified in Article IV, (f) the time or
times when each option and any
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related Stock Appreciation Rights may be exercised and (g) the terms and
conditions pursuant to which each grant shall be issued.
SECTION 3. All instruments evidencing options granted to Employees,
Directors, Consultants and Advisers under the Plan shall be in such form,
which shall be consistent with the Plan and any applicable determinations,
orders, resolutions or other actions of the Committee or the Board.
SECTION 4. The Committee, in its sole discretion, on the granting of an
option to an Employee, Director, Consultant or Adviser under the Plan may also
grant Stock Appreciation Rights relating to any number of shares but, except
as hereinafter provided, not more than fifty percent (50%) of the number of
shares covered by such option shall include Stock Appreciation Rights. Such
options shall be subject to such terms and conditions, not inconsistent with
the Plan, that the Committee shall impose, including the following:
(i) Stock Appreciation Rights may be granted only in writing and only
attached to an underlying option at the time of the grant of the option;
(ii) Stock Appreciation Rights may be exercised only at the time when
the option to which it is attached is exercisable;
(iii) Stock Appreciation Rights shall entitle the optionee (or any
person entitled to act under the provisions of the Plan) to surrender
unexercised all or part of the then exercisable portion of the option to
which the Stock Appreciation Rights are attached to the Company and to
receive from the Company in exchange therefor a payment in cash equal to
the excess, if any, of the then value of one share covered by such portion
over the option price per share specified in such option, multiplied by
the number of shares covered by the portion of the option so surrendered
(which excess is herein called the "Appreciated Value"). For purposes of
computation of the Appreciated Value, the value of one share shall be
deemed to be the average Fair Market Value of such share during the
four-week period immediately preceding the date of notice of exercise of
the Stock Appreciation Rights;
(iv) if Stock Appreciation Rights attached to an option are
exercised, such option shall be deemed to have been canceled to the extent
of the number of shares surrendered on exercise of the Stock Appreciation
Rights and no further options may be granted covering such shares; and
(v) if an option to which Stock Appreciation Rights are attached is
exercised, such Stock Appreciation Rights shall be canceled to the extent
necessary to cause the number of shares to which such Stock Appreciation
Rights relate not to exceed the number of remaining shares subject to such
option.
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ARTICLE VIII
NON-TRANSFERABILITY OF OPTIONS
No incentive stock option or any related Stock Appreciation Rights
granted under the Plan shall be transferable by the optionee otherwise than by
will or by the laws of descent and distribution, and any such incentive stock
option or any related Stock Appreciation Rights shall be exercised during the
lifetime of the optionee solely by him or her. Nonqualified stock options
granted under the Plan shall be transferable, if at all, as set forth in the
individual agreements pursuant to which each grant shall be issued.
ARTICLE IX
EXERCISE OF OPTIONS
SECTION 1. Each option (and any related Stock Appreciation Rights)
granted under the Plan shall terminate not later than the expiration of ten
years from the date on which it was granted; provided, however, that in the
case of an incentive stock option granted to an Employee who, at the time of
the grant is a Ten Percent Stockholder, such period shall not exceed five (5)
years from the date of grant.
SECTION 2. Except in the cases provided for in Article XII hereof, each
option (and any related Stock Appreciation Rights) granted under the Plan may
be exercised only while the optionee is an Employee or Non-Employee Director
of the Company.
SECTION 3. A person electing to exercise an option or Stock Appreciation
Rights then exercisable shall give written notice to the Company of such
election and, if electing to exercise an option, of the number of shares of
Common Stock such person has elected to purchase. A person exercising an
option shall at the time of purchase tender the full purchase price of such
shares, which tender, except as provided in Section 4 of this Article IX, shall
be made in cash or cash equivalent (which may be such person's personal check)
or, to the extent permitted by applicable law, in shares of Common Stock
already owned by such person (which shares shall be valued for such purpose on
the basis of their Fair Market Value on the date of exercise), or in any
combination thereof. In the event of payment in shares of Common Stock already
owned, such shares shall be appropriately endorsed for transfer to the Company.
The Company shall have no obligation to deliver shares of Common Stock pursuant
to the exercise of any option, in whole or in part, until such payment in full
of the purchase price therefor is received by the Company. No optionee, or
legal representative, legatee or distributee of such optionee, shall be or be
deemed to be a holder of any shares of Common stock subject to such option or
entitled to any rights of a stockholder of the Company in respect of any shares
of Common Stock covered by such option until such shares have been paid for in
full and issued or delivered by the Company.
5
<PAGE> 6
SECTION 4. In order to assist an optionee in the exercise of an option
granted under the Plan, the Committee or Board may, in its discretion,
authorize, either at the time for the grant of the option or thereafter (a)
the extension of a loan to the optionee by the Company, (b) the payment by the
optionee of the purchase price of the Common Stock in installments, (c) the
guarantee by the Company of a loan obtained by the optionee from a third party
or (d) make such other reasonable arrangements to facilitate the exercise of
options in accordance with applicable law. The Committee or Board shall
authorize the terms of any such loan, installment payment arrangement or
guarantee, including the interest rate (which, in the case of incentive
stock options, shall be not less than the higher of (i) the "prime rate" as
from time to time in effect at a commercial bank of recognized standing, and
(ii) the rate of interest from time to time imputed under Section 483 of the
Code and terms of repayment thereof, and shall cause the instrument evidencing
any such option to be amended, if required, to provide for any such extension
of credit. Loans, installment payment arrangements and guarantees may be
authorized without security, and the maximum amount of any such loan or
guarantee shall be the purchase price of the Common Stock being acquired, plus
related interest payments.
SECTION 5. Each option shall be subject to the requirement that if at
any time the Board shall in its discretion determine that the listing,
registration or qualification of the shares of Common Stock subject to such
option upon any securities exchange or under any state or Federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of or in connection with, the granting of such option
or the issuance or purchase of shares thereunder, such option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free
from any conditions not reasonably acceptable to the Board. Unless at the time
of exercise of an option and the issuance of Common Stock so purchased, there
shall be in effect as to such Common Stock a registration statement under the
Securities Act of 1933, as amended (the "Act"), the holder of such option
shall deliver a certification (a) acknowledging that such shares of Common
Stock may be "restricted securities" as defined in Rule 144 promulgated under
the Act; and (b) containing such optionee's agreement that such Common Stock
may not be sold or otherwise disposed of except in compliance with applicable
provisions of the Act. In the event that the Common Stock is then listed on a
national securities exchange, the Company shall use its best efforts to cause
the listing of the shares of Common Stock subject to options upon such
exchange.
SECTION 6. All payments made by the Company pursuant to Section 4 of this
Article IX shall be subject to withholding in respect of such income or other
taxes as may be required by law to be paid or withheld. The Company may
establish appropriate procedures to provide for payment or withholding of such
income or other taxes as may be required by law to be paid or withheld in
connection with the exercise of options under the Plan, and to ensure that the
Company receives prompt advice concerning the occurrence of any event which
may create, or affect the timing or amount of, any obligation to pay or
withhold any such taxes or which may make available to the Company any tax
deduction resulting from the occurrence of such event.
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ARTICLE X
ADJUSTMENTS
SECTION 1. New option rights may be substituted for the options granted
under the Plan, or the Company's duties as to options outstanding under the
Plan may be assumed, by a corporation other than the Company, or by a parent
or subsidiary of the Company or such corporation, in connection with any
merger, consolidation, acquisition, separation, reorganization, liquidation or
other similar corporate transaction in which the Company is involved.
Notwithstanding the foregoing or the provisions of this Article X, in the
event such corporation, or parent or subsidiary of the Company or such
corporation, does not substitute new option rights for, and substantially
equivalent to, the options granted hereunder, or assume the options granted
hereunder, the options granted hereunder shall terminate and thereupon become
null and void (i) upon dissolution or liquidation of the Company, or similar
occurrence, (ii) upon any merger, consolidation, acquisition, separation,
reorganization, or similar occurrence, where the Company will not be a
surviving entity or (iii) upon a transfer of substantially all of the assets
of the Company or more than 80% of the outstanding shares in a single
transaction; provided, however, that each optionee shall have the right
immediately prior to or concurrently with such dissolution, liquidation,
merger, consolidation, acquisition, separation, reorganization or similar
occurrence, to exercise any unexpired option granted hereunder whether or not
then exercisable.
SECTION 2. In the event that the Committee determines that any dividend
or other distribution (whether in the form of cash, shares, other securities,
or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of shares or other securities of the Company, issuance
of warrants or other rights to purchase shares or other securities of the
Company, or other corporate transaction or event affects the shares such that
an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then, the Committee shall, in such manner
as it may deem equitable, adjust any or all of (i) the number of shares or
other securities of the Company (or number and kind of other securities or
property) with respect to which options may be granted and any limitations set
forth in the Plan, (ii) the number of shares of Common Stock or other
securities of the Company (or number and kind of other securities or property)
subject to outstanding options and (iii) the grant or exercise or target price
with respect to any option or, if deemed appropriate, make provision for a
cash payment to the holder of an outstanding option including, if necessary,
the termination of such an option; provided, in each case, that with respect
to incentive stock options no such adjustment shall be authorized to the
extent that such authority would cause the Plan to violate Section 422 of the
Code. Without limiting the generality of the foregoing, any such adjustment
shall be deemed to have prevented any dilution and enlargement of an
optionee's rights if such optionee receives in any such adjustment rights
which are substantially similar (after taking into account the fact that the
optionee has not paid the applicable exercise price) to the rights the
optionee would have
7
<PAGE> 8
received had he or she exercised his or her outstanding options and become a
stockholder of the Company immediately prior to the event giving rise to such
adjustment.
SECTION 3. Adjustments and elections under this Article X shall be made
by the Committee whose determination as to what adjustments, if any, shall be
made and the extent thereof shall be final, binding and conclusive.
Adjustments required under this Article X shall also be deemed to increase by
a like number the aggregate number of shares authorized for purchase pursuant
to options granted under the Plan as set forth in Section 2 of Article III
hereof.
ARTICLE XI
PRIVILEGES OF STOCK OWNERSHIP
No optionee shall be entitled to the privileges of stock ownership as to
any shares of Common Stock not actually issued and delivered to him or her.
ARTICLE XII
TERMINATION OF SERVICE OR EMPLOYMENT
SECTION 1. In the event that an optionee shall cease his or her
relationship with the Company or a Subsidiary by voluntarily terminating such
relationship without the written consent of the Company or a Subsidiary, or if
the Company or a Subsidiary shall terminate for cause such relationship, the
option held by such optionee shall terminate forthwith.
SECTION 2. If the holder of an option shall voluntarily terminate his or
her relationship with the Company or a Subsidiary with the written consent of
the Company, which written consent expressly sets forth a statement to the
effect that options which are exercisable on the date of such termination
shall remain exercisable, or if the optionee's relationship with the Company
or a Subsidiary shall have terminated by the Company or a Subsidiary for
reasons other than cause, except as may be provided in the terms and
conditions pursuant to which each option is granted, such optionee may
exercise his or her option to the extent exercisable at the time of such
termination, at any time prior to the expiration of three months after such
termination or the date of expiration of the option as fixed at the time of
grant, whichever shall first occur. Options granted under the Plan to
Employees shall not be affected by any change in the position of employment so
long as the holder thereof continues to be an Employee.
SECTION 3. Should an optionee die during the existence of his or her
relationship with the Company, all of the optionee's options shall be
terminated except that any option (and any related Stock Appreciation Rights)
to the extent exercisable by the optionee at the time of such death, may be
exercised within one year after the date of such death but not later than the
expiration date of the option solely in accordance with all of the terms and
conditions of the Plan
8
<PAGE> 9
by the optionee's personal representatives or by the person or persons to whom
the optionee's rights under the option shall pass by will or by the applicable
laws of descent and distribution.
ARTICLE XIII
AMENDMENTS TO PLAN
The Board may at any time terminate or from time to time amend, modify or
suspend the Plan; provided, however, that no such amendment or modification
without the approval of the stockholders of the Company shall:
(i) materially increase the benefits accruing to participants under
the Plan;
(ii) materially increase the maximum number (determined as provided in
the Plan) of shares of Common Stock which may be purchased pursuant to
options granted under the Plan; or
(iii) materially modify the requirements as to eligibility for
participation in the Plan.
The amendment or termination of the Plan shall not, without the written consent
of an optionee, adversely affect any rights or obligations under any option
therefore granted to such optionee under the Plan.
ARTICLE XIV
EFFECTIVE DATE OF PLAN
The Plan shall be effective on October 24, 1996.
ARTICLE XV
DEFINITIONS
For the purposes of this Plan, the following terms shall have the meanings
indicated:
Consultants and Advisers: Such term shall include any third party
retained or engaged by the Company or any Subsidiary to provide services to
the Company or such Subsidiary, including any employee of such third party
providing such services.
Director: Such term shall include any director of the Company.
Employee: Such term shall include any officer as well as any full-time
salaried key executive, managerial, professional, administrative, or key
employee of the Company or a
9
<PAGE> 10
Subsidiary. Such term shall also include an employee on approved leave of
absence provided such employee's right to continue employment with the Company
or a Subsidiary upon expiration of such employee's leave of absence is
guaranteed either by statute or by contract with or by a policy of the Company
or a Subsidiary.
Fair Market Value: The closing sale price of a share of Common Stock on
the date in question (or, if there is no reported sale on such date, on the
last preceding date on which any reported sale occurred) on the consolidated
tape for New York Stock Exchange-listed stocks or, if on such date the Common
Stock is not quoted on such consolidated tape, on the New York Stock Exchange,
or if on such date the Common Stock is not listed on the New York Stock
Exchange, such value as shall be determined by the Committee or Board in a
manner consistent with the provisions of the Code.
Non-Employee Director: Such term shall have the meaning ascribed thereto
in Rule 16b-3 promulgated under the 1934 Act.
Person: Such term shall have the meaning ascribed to it under the 1934 Act.
Stock Appreciation Rights: Means the rights granted by the Committee
pursuant to Section 4 of Article VI hereof.
Subsidiary: Means and includes a "Subsidiary Corporation" of the Company
(as defined in Section 424 of the Code).
10
<PAGE> 1
Exhibit-4(B)
FORM OF MIDWAY GAMES INC.
OPTION AGREEMENT
----------------
TO: ________________________
Re: [Non-Qualified Stock Option] [Incentive Stock Option]
Midway Games Inc. 1996 Stock Option Plan
This letter will evidence the grant to you on ("Grant Date") by the
Compensation and Stock Option Committee of the Board of Directors of Midway
Games Inc. (the "Company") of an option pursuant to the Company's 1996 Stock
Option Plan (the "Plan") to purchase ____ (__) shares of the common stock, per
value $.01 per share ("Common Stock"), of the Company at a price of $___ per
share (the "Option"). Under applicable provisions of the Internal Revenue Code
of 1986, as amended, the Option is treated as [a non-qualified stock option] [an
incentive stock option].
This Option is issued in accordance with and is subject to and
conditioned upon all of the terms and conditions of this Agreement and of the
Plan as from time to time amended, provided, however, that no future amendment
or termination of the Plan shall, without your consent, alter or impair any of
your rights or obligations under the Plan, all of which are incorporated by
reference in this Agreement as if fully set forth herein.
In consideration of the granting of this Option by the Company, you
hereby agree to render faithful and efficient service to the Company or to the
subsidiary of the Company which is your primary "Employer," with such duties
and responsibilities as your Employer shall from time to time prescribe, for a
period of at least one (1) year from the date this Option is granted and you
further agree that for a period of one (1) year after your termination of
employment, you will not own, manage, control or associate with -- as an
agent, officer, employee, investor, lender, or otherwise -- any business
entity in the United States which is a "Competitor" of your Employer. The
terms "Employer" and "Competitor" are defined on Exhibit A. You hereby
specifically agree that the scope of the above covenant is reasonable and
fair. Should, however, a court of competent jurisdiction deem it to be
impermissibly overbroad, it is the intention of the parties to this Agreement
that the covenant be enforced as to the greatest extent deemed to be
enforceable. Further, you hereby agree that during your employment and
thereafter, you will not disclose, discuss, copy or otherwise use or allow to
be used, in any manner, in competition with or contrary to the interests of
the Company or any of its subsidiaries, the customer lists, product research,
engineering data or other trade secrets of the Company or any of its
subsidiaries. Nothing in this Agreement or in the Plan shall confer upon you
any right to continue in the employ of the Company or any subsidiary of the
Company or shall interfere with or restrict in any way the rights of the
Company and its subsidiaries, which are hereby expressly reserved.
The Company shall not be obligated to issue any shares pursuant to this
Option if, in the opinion of counsel to the Company, the shares to be so
issued are required to be registered or
<PAGE> 2
otherwise qualified under the Securities Act of 1933, as amended, or under any
other applicable statute, regulation or ordinance affecting the sale of
securities, unless and until such shares have been so registered or otherwise
qualified.
It is understood that the Company may establish, from time to time,
appropriate procedures to provide for payment or withholding of such income or
other taxes as may be required by law to be paid or withheld in connection
with the exercise of this Option. By the execution hereof, you hereby agree to
pay to the Company or your Employer all such amounts requested by the Company
to permit the Company to take any tax deduction available to it resulting from
the exercise of this Option. You also agree to comply with any procedures
established, from time to time, by the Company to ensure that the Company
receives prompt advice concerning the occurrence of any event which may
create, or affect the timing or amount of, any obligation to pay or withhold
any such taxes or which may make available to the Company any tax deduction
resulting from the occurrence of such event.
This Option may be exercised as follows: [up to __% of the total number of
shares granted to you ("Total Grant") shall be exercisable commencing on the
first anniversary of the Grant Date; up to __% of the Total Grant shall be
exercisable commencing on the second anniversary of the Grant Date; up to __%
of the Total Grant shall be exercisable commencing on the third anniversary of
the Grant Date; and up to 100% of the Total Grant shall be exercisable
commencing on the fourth anniversary of the Grant Date] [100% of the Total
Grant shall be exercisable on the Grant Date]. This Option, to the extent not
previously exercised, shall expire on the day preceding the tenth anniversary
of the Grant Date.
This Option is to be exercised by delivering to the Company a written
notice of exercise in the form attached hereto as Exhibit B, together with
payment as provided in the Plan. ---------
Would you kindly evidence your acceptance of this Option and your
agreement to comply with the provisions of this Agreement and of the Plan by
executing the enclosed copy of the Agreement under the words "ACCEPTED AND
AGREED TO" and returning a copy to Barbara M. Norman, Vice President and
Secretary of the Company.
Very truly yours,
MIDWAY GAMES INC.
By:_______________________
Name:
Title:
Attachments
ACCEPTED AND AGREED TO
this____day of____, 199_.
_________________________
Name:
2
<PAGE> 3
EXHIBIT A
---------
If your "Employer" is: A "Competitor" is an entity engaged in:
- ---------------------- ---------------------------------------
Midway Games Inc. The designing, manufacturing or selling
Midway Home Entertainment Inc. of coin-operated video games or the
Midway Interactive Inc. designing, publishing and/or marketing
Midway/Nintendo Inc. of interactive entertainment software
Atari Games Corporation for use on dedicated video game
Tengen, Inc. platforms and personal computers.
K.K. Atari Interactive
3
<PAGE> 4
EXHIBIT B
---------
Dated: _______________
Vice President and Secretary
MIDWAY GAMES INC.
3401 North California Avenue
Chicago, IL 60618
Gentlemen:
Notice is hereby given of my election to purchase ___ shares of common
stock, par value $.01 per share (the "Common Stock"), of Midway Games Inc. (the
"Company") at a price of $___ per share pursuant to the provisions of the stock
option ("Option") granted to me on ____ under the terms of the Midway Games Inc.
1996 Stock Option Plan.
Enclosed is my check made payable to the Company in the amount of $____ in
payment of the exercise price of the Option and my check in the amount of $____
made payable to the subsidiary of the Company which is my employer (or to the
Company as my employer) in payment of the tax due on exercise of the Option.
The following information is supplied for use in issuing and registering
the shares purchased hereby:
Number of certificates: ___________________________________
Denomination of each
certificate: ___________________________________
Name: ___________________________________
Address: ___________________________________
___________________________________
Social Security Number: ___________________________________
Very truly yours,
_____________________
4
<PAGE> 1
Exhibit - 4(C)
FORM OF MIDWAY GAMES INC.
OPTION AGREEMENT
----------------
TO: _____________________________
Re: [Non-Qualified Stock Option] [Incentive Stock Option]
Midway Games Inc. 1996 Stock Option Plan
This letter will evidence the grant to you on ("Grant Date") by the
Compensation and Stock Option Committee of the Board of Directors of Midway
Games Inc. (the "Company") of an option pursuant to the Company's 1996 Stock
Option Plan (the "Plan") to purchase ___ (___) shares of the common stock, par
value $.01 per share ("Common Stock"), of the Company at a price of $___ per
share (the "Option"). Under applicable provisions of the Internal Revenue Code
of 1986, as amended, the Option is treated as [a non-qualified stock option]
[an incentive stock option].
This Option is issued in accordance with and is subject to and
conditioned upon all of the terms and conditions of this Agreement and of the
Plan as from time to time amended, provided, however, that no future amendment
or termination of the Plan shall, without your consent, alter or impair any of
your rights or obligations under the Plan, all of which are incorporated by
reference in this Agreement as if fully set forth herein.
The Company shall not be obligated to issue any shares pursuant to this
Option if, in the opinion of counsel to the Company, the shares to be so
issued are required to be registered or otherwise qualified under the
Securities Act of 1933, as amended, or under any other applicable statute,
regulation or ordinance affecting the sale of securities, unless and until
such shares have been so registered or otherwise qualified.
It is understood that the Company may establish, from time to time,
appropriate procedures to provide for payment or withholding of such income or
other taxes as may be required by law to be paid or withheld in connection
with the exercise of this Option. By the execution hereof, you hereby agree to
pay to the Company or your Employer all such amounts requested by the Company
to permit the Company to take any tax deduction available to it resulting from
the exercise of this Option. You also agree to comply with any procedures
established, from time to time, by the Company to ensure that the Company
receives prompt advice concerning the occurrence of any event which may
create, or affect the timing or amount of, any obligation to pay or withhold
any such taxes or which may make available to the Company any tax deduction
resulting from the occurrence of such event.
This Option may be exercised as follows: [up to ___% of the total number of
shares granted to you ("Total Grant") shall be exercisable commencing on the
first anniversary of the Grant Date; up to ___% of the Total Grant shall be
exercisable commencing on the second anniversary of the Grant Date; up to ___%
of the Total Grant shall be exercisable commencing on the third anniversary of
the Grant Date; and up to 100% of the Total Grant shall be exercisable
commencing on the fourth anniversary of the Grant Date] [100% of the Total
Grant shall be exercisable on the Grant Date]. This Option, to the extent not
previously exercised, shall expire on the day preceding the tenth anniversary
of the Grant Date.
<PAGE> 2
This Option is to be exercised by delivering to the Company a written
notice of exercise in the form attached hereto as Exhibit A, together with
payment as provided in the Plan. ---------
Would you kindly evidence your acceptance of this Option and your
agreement to comply with the provisions of this Agreement and of the Plan by
executing the enclosed copy of this Agreement under the words "ACCEPTED AND
AGREED TO" and returning a copy to Barbara M. Norman, Vice President and
Secretary of the Company.
Very truly yours,
MIDWAY GAMES INC.
By:_______________________
Name:
Title:
Attachment
ACCEPTED AND AGREED TO
this____ day of________, 199_.
______________________________
Name:
2
<PAGE> 3
EXHIBIT A
---------
Dated:___________
Vice President and Secretary
MIDWAY GAMES INC.
3401 North California Avenue
Chicago, IL 60618
Gentlemen:
Notice is hereby given of my election to purchase ___ shares of common
stock, par value $.01 per share (the "Common Stock"), of Midway Games Inc.
(the "Company") at a price of $___ per share pursuant to the provisions of the
stock option ("Option") granted to me on ___ under the terms of the Midway Games
Inc. 1996 Stock Option Plan.
Enclosed is my check made payable to the Company in the amount of $_____ in
payment of the exercise price of the Option and my check in the amount of $___
made payable to the subsidiary of the Company which is my employer (or to the
Company as my employer) in payment of the tax due on exercise of the Option.
The following information is supplied for use in issuing and registering
the shares purchased hereby:
Number of certificates:___________________________________
Denomination of each
certificate: ___________________________________
Name: ___________________________________
Address: ___________________________________
___________________________________
Social Security Number:___________________________________
Very truly yours,
_________________
<PAGE> 1
EX-5
SHACK & SIEGEL, P.C
530 Fifth Avenue
New York, New York 10036
TEL: (212) 782-0700
FAX: (212) 730-1964
April 24, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form S-8 Registration Statement
2,000,000 shares of common stock of
Midway Games Inc.
Ladies and Gentlemen:
We have acted as counsel to Midway Games Inc., a Delaware corporation (the
"Company"), in connection with the filing with the Securities and Exchange
Commission of a registration statement on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), relating to 2,000,000 shares of the Company's common stock, par value
$.01 per share ("Common Stock"), which may be issued and sold pursuant to the
Company's 1996 Stock Option Plan (the "1996 Plan").
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the 1996 Plan; (ii) the Registration Statement; (iii) the Certificate of
Incorporation, as amended and restated, of the Company; (iv) the By-Laws, as
amended and restated, of the Company; and (v) such other documents as we have
deemed necessary or appropriate as a basis for the opinion set forth below. In
our examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to the original documents of all documents
submitted to us as certified or photostatic copies and the authenticity of the
originals of such latter documents. As to any facts material to this opinion
that we did not independently establish or verify, we have relied upon
statements and representations of officers and other representatives of the
Company and others.
Based upon and subject to the foregoing, we are of the opinion that the
shares of Common Stock reserved for issuance upon the exercise of options have
been duly authorized and that such shares of Common Stock, when issued and
delivered upon exercise of the options granted in accordance with the terms of
the 1996 Plan, and assuming full payment for the shares of Common Stock thereby
issued, will be validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5 to the Registration
Statement.
The law covered by the opinions expressed herein is limited to the
corporate laws of the State of Delaware.
Very truly yours,
SHACK & SIEGEL, P.C.
By: /s/ Jeffrey N. Siegel
----------------------
Jeffrey N. Siegel
<PAGE> 1
Exhibit 23(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the 1996 Stock Option Plan of Midway Games Inc. of our
report dated September 12, 1996, with respect to the combined balance sheets of
Midway Games Inc. at June 30, 1996 and 1995, and the related combined statements
of income, changes in stockholder's net investment and cash flows for each of
the three years in the period ended June 30, 1996 included in Registration
Statement (Form S-1) and related Prospectus of Midway Games Inc., filed with
the Securities and Exchange Commission.
Ernst & Young LLP
Chicago, Illinois
April 22, 1997
