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As filed with the Securities and Exchange Commission on March 4, 1999
Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
MIDWAY GAMES INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-2814522
(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, including zip code, and
telephone number, including area code, of
Registrant's principal executive offices)
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Orrin J. Edidin, Esq.
Vice President, Secretary and General Counsel
Midway Games Inc.
3401 North California Avenue, Chicago, Illinois 60618 (773) 961-2222
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Jeffrey N. Siegel, Esq. Howard L. Shecter, Esq.
Shack & Siegel, P.C. Morgan, Lewis & Bockius LLP
530 Fifth Avenue 101 Park Avenue
New York, New York 10036 New York, NY 10178
(212) 782-0700 (212) 309-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ______________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE FEE
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Common Stock, par value $.01(2) 250,000 shares $8.19 $2,047,500 $569.21
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) on the basis of the average of the high and low
prices of the common stock reported on the New York Stock Exchange on
March 2, 1999.
(2) In accordance with the Rights Agreement between the Registrant and The
Bank of New York, dated October 24, 1996, as amended on November 6,
1997, all shares of common stock are accompanied by certain stock
purchase rights.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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Subject to Completion, Dated March 4, 1999
The information contained in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
250,000 SHARES
[MIDWAY LOGO]
COMMON STOCK
$ PER SHARE
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Midway Games Inc. is offering 250,000 shares of common stock with this
prospectus. This is a firm commitment underwriting.
The common stock is listed on the New York Stock Exchange under the symbol
"MWY." On March 3, 1999, the last reported sale price of the common stock on the
New York Stock Exchange was $8 1/8 per share.
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
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Per Share Total
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Price to the public.................. $ $
Underwriting discount................
Proceeds to Midway ..................
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[CIBC OPPENHEIMER LOGO]
The date of this prospectus is _______________, 1999.
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TABLE OF CONTENTS
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PAGE
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Risk Factors 3
Forward-Looking Statements 10
Common Stock Market Price Data 10
Use of Proceeds 11
Underwriting 12
Legal Matters 13
Experts 13
Commission Position Indemnification for Securities Act Liabilities 13
Where You Can Find More Information 14
Documents Incorporated by Reference 14
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As used in this prospectus, the terms "we," "us," "our" and "Midway" mean
Midway Games Inc., a Delaware corporation, and its subsidiaries (unless the
context indicates a different meaning), and the term "common stock" means our
common stock, $0.01 par value.
Our principal executive offices are located at 3401 North California
Avenue, Chicago, IL 60618. Our telephone number is (773) 961-2222.
The underwriter is offering 250,000 shares of common stock subject to
various conditions and may reject all or part of any order. The shares should be
ready for delivery on or about ______________, 1999 against payment in
immediately available funds. See "Underwriting."
Most of the information about us that you need to know before you invest in
the shares is not included in this prospectus. You should read the information
identified under the headings "Where You Can Find More Information" and
"Documents Incorporated by Reference" in order to get all the important
information about us.
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RISK FACTORS
You should carefully consider the following factors and the other
information in this prospectus before deciding to invest in the shares.
OUR OPERATING RESULTS MAY FLUCTUATE FROM QUARTER TO QUARTER.
We have experienced and expect to continue to experience significant
quarterly fluctuations in net sales and other operating results due to a variety
of factors, including:
o variations in the level of market acceptance
of our products;
o delays and timing of product introductions;
o fluctuations in our mix of products with varying profit margins;
o the size and rate of growth of the consumer software market;
o market acceptance of our products and those of our competitors and
dedicated game platform manufacturers;
o development and promotional expenses relating to the introduction of new
products or enhancements of existing products;
o changes in our pricing policies and those of our competitors;
o the accuracy of our and retailers' forecasts of consumer demand; and
o the timing of orders from major customers, order cancellations and delays
in shipment.
Our expense levels are based, in part, on our expectations regarding future
sales and, as a result, operating results would be adversely affected by a
decrease in sales or a failure to meet our sales expectations.
On January 20, 1999, we announced the results of our second quarter for the
1999 fiscal year, and we indicated that the results for the second half of the
1999 fiscal year would be lower than the results for the same period in the 1998
fiscal year.
WE DEPEND ON MARKET ACCEPTANCE OF NEW PRODUCTS.
Our success depends on generating revenue from new products and from
enhancements of existing products. Video game products typically have market
life spans of only three to twelve months. In addition, the process of
developing software products like ours is extremely complex and is expected to
become more complex and expensive in the future as new interactive entertainment
platforms and technologies are introduced. Furthermore, consumer preferences for
video games are difficult to predict, and few video game products achieve
sustained market acceptance. We believe that the importance to our success of
developing "hit" products will continue and increase in the future. We cannot
assure you that the new products that we introduce will achieve any significant
degree of market acceptance, or that the acceptance will be sustained for any
meaningful period. For instance, we recently introduced some products which we
anticipated would enjoy market success when introduced and in subsequent
quarters. Some of these products, however, did not achieve market acceptance and
some of the products that achieved initial market acceptance did not do so for
any meaningful period of time. The failure of new products to gain market
acceptance could have a material adverse effect on our operating results and
financial condition.
WE MAY EXPERIENCE DELAYS IN INTRODUCING NEW PRODUCTS.
From time to time, we have experienced delays in product introductions. We
depend on a variety of design and technical personnel and other development
components to introduce our new products and enhancements. The timing of a
creative process is difficult to predict, and the increasingly complex products
that we and our competitors introduce require increasing development time. It
usually takes us six to 24 months to complete a new product's development from
the time we approve a concept, and the amount of development time required is
increasing as our products become more complex. We cannot assure you that we
will be able to introduce new products and enhancements on a timely basis. For
instance, some products that we expected to
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introduce during the second quarter of our 1999 fiscal year are now expected to
be introduced to the market during our third fiscal quarter. Unanticipated
delays could cause us to miss an important selling season for the delayed
products, and we could schedule product promotions incorrectly. This could also
affect our development schedule for other products. A significant delay in the
introduction of one or more new products or enhancements could have a material
adverse effect on our operating results and financial condition.
OUR MARKET IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE.
The video game market, both in the coin-operated and home segments,
experiences rapidly changing technology. We must continually anticipate and
adapt our products to emerging technologies, including new hardware platforms,
operating systems and media formats. When we choose to incorporate a new
technology into our products or to publish or develop a product for a new
platform, we may make a substantial development investment one to two years in
advance of initial shipment of these products. We cannot assure you that we will
be able to identify accurately which emerging technologies will gain widespread
acceptance.
If we invest in the development of a video game that does not achieve
significant commercial success, our revenues from that product will be adversely
affected, and we may not recover our development costs. If, on the other hand,
we do not choose to pursue the development of products incorporating new
technology or for new platforms that achieve significant commercial success, our
revenue growth may also be adversely affected. In addition, consumers may defer
purchasing home game software for use on existing platforms following the
announcement of an introduction date for hardware platforms incorporating new
technologies. We may not be able to obtain licenses to use new technologies.
Accordingly, these announcements could adversely affect sales of our existing
software products. We cannot assure you that we will be able to develop or
acquire the expertise necessary to enable us to develop or market products for
emerging technologies.
WE RELY ON OUR MORTAL KOMBAT PRODUCTS.
Revenues from Mortal Kombat products accounted for approximately 19.1% of
our total revenues during fiscal 1998, 22.0% during 1997 and 34.9% during 1996.
If Mortal Kombat products fail to continue to sell, or if we fail to replace the
Mortal Kombat products with additional products generating significant revenues,
our business, operating results and financial condition could be materially and
adversely affected.
OUR HOME VIDEO GAME BUSINESS EXPERIENCES SEASONAL VARIATIONS.
Our home video game business is highly seasonal. Sales of home video games
are typically significantly higher during the September and December quarters
due to the year-end holiday buying season. Sales in other quarters are generally
lower and vary significantly as a result of new product introductions and other
factors. We cannot assure you that we will achieve consistent profitability on a
quarterly or annual basis.
OUR MARKET IS HIGHLY COMPETITIVE.
The video game business is intensely competitive and experiences the
continuous introduction of new titles and the development of new technologies.
Our ability to compete successfully in this market is based, in large part, upon
our ability:
o to select and develop popular titles;
o to identify and obtain rights to commercially marketable intellectual
properties; and
o to adapt our products for use with new technologies.
In addition, successful competition in our market is also based upon:
o price;
o access to retail shelf space for home games;
o product enhancements;
o brand recognition;
o marketing support; and
o access to distribution channels.
Our competitors vary in size from very small companies with limited
resources to very large corporations with greater financial, marketing and
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product development resources than ours. We are often in competition with
platform manufacturers and companies that we depend upon for distribution or
other services. These companies may have an incentive to promote their own
products in preference to ours.
We believe that large diversified entertainment, cable and
telecommunications companies, in addition to large software companies such as
Microsoft, are increasing their focus on the interactive entertainment market,
which will result in greater competition for us. In particular, many of our
competitors are developing on-line interactive games and interactive networks
that will be competitive with our interactive products. We cannot assure you
that we will be able to compete successfully against current or future
competitors. Competitive pressures that we face could materially and adversely
affect our business and financial condition.
PRODUCT RETURNS AND PRICE ADJUSTMENTS COULD EXCEED OUR RESERVES.
In our home video game business, we accept product returns for defective
products and sometimes provide replacements, markdowns or other credits on
varying terms in the event that the customer holds slow-moving inventory of our
home games. At the time of product shipment, we establish reserves, including
reserves under our policies for price protection and returns of defective
products. These reserves are established according to estimates of the potential
for future returns of products based on historical return rates, seasonality of
sales, retailer inventories of our products and other factors. Product returns,
markdowns and credits that exceed our reserves could have a material adverse
effect on our business, operating results and financial condition. Although we
maintain reserves which we believe to be adequate with respect to product
returns and price reductions, we cannot assure you that the reserves established
will not be exceeded.
WE FACE RISKS ASSOCIATED WITH OUR ACQUISITION STRATEGY.
We have announced that our growth strategy may include acquiring other
companies. Our success with this strategy depends on our ability to identify and
negotiate attractive investments in businesses that we believe will complement
or enhance our business. We cannot assure you that we will be able to:
o properly identify and evaluate acquisition opportunities;
o control costs and liabilities incurred with the acquisition of the new
businesses or assets;
o effectively manage growth from acquisitions; or
o anticipate and evaluate the numerous risks involved in acquiring and
operating a new business or asset.
The focus on an acquisition strategy could divert our management's
resources from more valuable projects. The acquisition of a costly or
unproductive business or asset could materially and adversely affect our
business.
WE DEPEND ON DEDICATED GAME PLATFORM MANUFACTURERS.
We depend heavily on the manufacturers of dedicated video game platforms,
who are our competitors. In fiscal 1998, 86% of our unit sales of software
products for the home market were for use on the following 32- and 64-bit game
platforms: Nintendo 64, Sony PlayStation and Sega Saturn. The balance of our
home video game unit sales were primarily for the 16-bit Super Nintendo
Entertainment System and Sega Genesis platforms, as well as for portable game
systems. We expect that an increasing portion of our revenues in the coming
years will be from games for 32- and 64-bit game platforms or new generations of
game platforms. If the popularity of home video games on dedicated hardware
platforms materially declines, or if we were to lose our license to publish
software from Nintendo or Sony, our business would be materially and adversely
affected.
We are generally obligated to submit new games to the dedicated platform
manufacturers for approval prior to development and manufacturing. Rejection or
substantial delay by a dedicated platform manufacturer could have a material
adverse effect on our financial condition and results of operations. We have not
experienced any
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significant delays in the approval process for any of our games in the past. We
cannot assure you, however, that we will not experience these delays in the
future. The dedicated platform manufacturers may also limit the number of titles
that we can release in any year, which may limit any future growth in sales.
We depend on Nintendo, Sony and Sega for:
o the protection of the intellectual property rights to their respective
hardware platforms and technology;
o their ability to control the proliferation of new titles by licensees and
others; and
o their ability to discourage unauthorized persons from producing software
for the Nintendo, Sony and Sega platforms.
WE DEPEND ON THIRD PARTIES TO MANUFACTURE OUR PRODUCTS.
We depend on third parties to manufacture the game cartridges and CD-ROMs
for our home games. The manufacturing of our coin-operated games is performed
for us by WMS Industries Inc. and its subsidiaries under contracts. We have not
experienced any material delays or interruptions in the delivery of our products
due to manufacturing delays or interruptions. It is possible, however, that
manufacturing delays or interruptions could cause delays or interruptions in
product delivery. If any significant delays occur, and we cannot substitute
another manufacturer in time, delays could materially and adversely affect our
business, operating results and financial condition. Unanticipated price
increases from these manufacturers also could adversely affect our business.
WE RELY ON THIRD PARTIES TO DEVELOP SOME OF OUR HOME VIDEO GAME TITLES.
Some of our home video games are designed by third parties. The number of
titles developed by third parties varies from quarter to quarter. We cannot
assure you that the number of titles that we acquired in any previous period
will be sustained in the future. For instance, fewer titles developed by third
party designers are expected to be released in the second half of the 1999
fiscal year than in the same period in the previous year. The failure to
identify and acquire suitable titles from third party designers could adversely
affect our revenues and business.
WE MAY BE UNABLE TO OBTAIN LICENSES FOR INTELLECTUAL PROPERTY.
Some of our games are based on properties or trademarks owned by third
parties, such as the National Basketball Association, National Football League,
National Hockey League or their respective players' associations. Our future
success may also depend upon our ability to obtain licenses for additional
popular intellectual properties. There is competition for such licenses, and we
cannot assure you that we will be successful in acquiring additional
intellectual property rights with significant commercial value.
Our intellectual property licenses generally require that we submit new
products developed under licenses to the licensor for approval prior to release.
Such approval is generally discretionary. Rejection or delay in approval of a
product by a licensor could have a material adverse effect on our business,
operating results and financial condition. While we have not experienced any
significant delays in obtaining new product approvals from our licensors in the
past, we cannot assure you that we will not experience delays in the future. The
owners of intellectual property licensed by us generally reserve the right to
protect such intellectual property against infringement.
WE DEPEND ON OUR KEY PERSONNEL.
Our success depends to a significant extent upon the performance of senior
management and on our ability to continue to attract, motivate and retain highly
qualified software developers. The loss of services of senior management, highly
qualified software developers or other key personnel could have a material
adverse effect on us. Competition for highly skilled employees with technical,
management, marketing, sales, product development and other specialized training
is intense, and we cannot assure you that we will be successful in attracting
and retaining such personnel. Specifically, we may experience increased costs in
order to attract and retain skilled employees.
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WE MAY HAVE CONFLICTS OF INTEREST WITH WMS INDUSTRIES INC.
Some of our officers and directors are also officers, directors and
stockholders of WMS and may be subject to various conflicts of interest. These
conflicts include, among others, the performance by the two companies under
their existing agreements with each other, as well as the negotiation of any
agreements required to be entered into in the future between these two parties.
We may also be subject to conflicts of interest arising from the relationship
among us and WMS and our respective affiliates.
Mr. Neil D. Nicastro, Midway's Chairman of the Board, President, Chief
Executive Officer and Chief Operating Officer is also a director of and a
consultant to WMS. Mr. Louis J. Nicastro, one of Midway's directors, is also the
Chairman of the Board, President and Chief Executive Officer of WMS. Mr. Neil D.
Nicastro is the son of Mr. Louis J. Nicastro. Mr. Harold H. Bach, Jr., Mr.
Kenneth J. Fedesna and Mr. Orrin J. Edidin, officers of WMS and various of its
affiliates, are also officers and employees of Midway. Mr. Bach and Mr. Fedesna
are also directors of Midway. Each of Messrs. Bach, Fedesna and Edidin has
duties and responsibilities with WMS that may conflict with time which might
otherwise be devoted to his duties with Midway.
LITIGATION AGAINST US MAY HAVE UNFAVORABLE RESULTS.
From time to time, we may be sued by third parties. Litigation against us,
with or without merit, or instituted by us to enforce our licenses or to protect
our trade secrets or know-how, is costly and time consuming. An adverse
determination in a judicial or administrative proceeding could divert the
attention of our management from more productive activities and could have a
materially adverse effect on our business, financial condition and results of
operations.
On January 25, 1999, GT Interactive Software Corp., or GTIS, filed a
lawsuit against us alleging breach of contract, tortious interference with
prospective business relations, defamation and other related claims arising from
the licensing arrangements between GTIS and us. In its complaint, GTIS sought
compensatory and punitive damages and injunctive relief. On February 24, 1999,
we filed motions to dismiss the suit. While we intend to defend ourselves
vigorously against this suit, we cannot assure you that we will prevail.
WE MAY EXPERIENCE ADVERSE EFFECTS OF THE YEAR 2000 COMPUTER PROBLEM.
Many currently installed software programs and embedded programs in
electronic systems will not work properly when processing dates later than
December 31, 1999. This problem results from using only two digits in a computer
program to represent the year in a date and assuming 19 to be the first two
digits of the year. Methods of correcting the problem include replacing the
system or rewriting the program to provide four digits to express the year in
any dates.
Readiness and Costs. Since 1996, we have worked with WMS, which provides
our Chicago information services, to make our hardware and software systems year
2000 compliant. We have made the systems used by one of our subsidiaries, Atari
Games Corporation, compliant with a software upgrade, and we expect to complete
testing of the systems by June 1999 at a nominal cost. Also, we have made the
accounting and finance systems used by our other major subsidiary, Midway Home
Entertainment, Inc., year 2000 compliant at a nominal cost. We plan to make the
remaining systems, such as the customer interface and shipping systems,
compliant by July 1999 with a software upgrade at a nominal cost.
We believe that there are no year 2000 issues with the functionality of any
of our products that we have sold in the past or will sell in the future.
WMS provides contract manufacturing services to us. WMS has assured us in
writing that the systems used in their contract manufacturing are year 2000
compliant. WMS also has notified us that the assembly of our coin-operated video
games should not be affected by malfunctioning tools or equipment using embedded
microprocessors, because the assembly process does not heavily rely on these
tools or equipment.
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We may be exposed to year 2000 problems because we rely on distributors,
large customers, utilities and coin-operated video game component suppliers. We
are in the process of contacting our suppliers and major customers to assess the
potential problem, if any. We have not determined our customers' or suppliers'
levels of year 2000 readiness at this time.
Risks and Contingency Plans. If any of our systems should fail as a result
of any undetected year 2000 problems, we do not have an advance contingency
plan. We intend to correct any problems resulting from these failures
immediately, if they occur. We cannot determine the effect of any unforeseen
failure. If any of our suppliers experience a year 2000 problem affecting us, at
worst we would expect a short-term delay in shipments of affected products. In
addition, our large customers are sophisticated, and we believe that they would
quickly remedy any year 2000 problems. Therefore, we do not believe that orders
would be delayed significantly.
This discussion of year 2000 readiness and exposure contains some
forward-looking statements concerning future conditions and our business outlook
based on currently available information that involve risks and uncertainties.
The actual state of our year 2000 readiness and exposure could differ materially
from that anticipated in the forward-looking statements as a result of these
risks and uncertainties, among others:
o our ability to obtain parts and essential utilities;
o our ability to make deliveries;
o our ability to communicate with business partners;
o the level of year 2000 readiness of suppliers, customers and other
business partners; and
o the other risks described elsewhere in this Risk Factors section.
EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT THE ACQUISITION OF MIDWAY.
Midway's management could use several charter or statutory provisions and
agreements as anti-takeover devices to discourage, delay or prevent a change in
control of Midway. The use of these provisions and agreements could adversely
affect the market price of the common stock:
Blank Check Preferred Stock. Our certificate of incorporation, as amended,
authorizes the issuance of 5,000,000 shares of preferred stock with
designations, rights and preferences that may be determined from time to time by
the board of directors. Accordingly, our board has broad power, without
stockholder approval, to issue preferred stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting power
or other rights of the holders of the common stock. Our board has no current
plans, agreements or commitments to issue any shares of preferred stock.
Rights Plan. Under a rights agreement with The Bank of New York, each share
of our common stock has an accompanying right to purchase, upon acquisitions of
beneficial ownership of 15% or more of the common stock, convertible preferred
stock that permits each holder to receive common stock at half price. We can
redeem the rights at $0.01 per right, subject to certain conditions, at any
time. The rights expire in 2007.
Classified Board. Our certificate of incorporation provides for a
classified board of directors. Upon the expiration of staggered terms,
approximately one third of Midway's directors are elected for three year terms
to succeed those directors whose terms expire. This means that a person could
not obtain control of our board until the second annual stockholders' meeting
after acquiring a majority of the voting stock.
Other Charter Provisions. Our certificate of incorporation also provides
that:
o directors may be removed only for cause and only by an affirmative vote
of at least 80% of outstanding common stock;
o any vacancy on the board may be filled only by a vote of a majority of
the remaining directors then in office;
o there may be no stockholder action by written consent;
o only the President, the Chairman of the Board or the board may call
special meetings of stockholders, and the only business permitted to be
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conducted at stockholder meetings is business brought before the meeting by or
at the direction of the board;
o stockholders must follow an advance notice procedure for the submission
of director nominations and other business to be considered at an annual
meetings of stockholders;
o either a majority vote of the board or an affirmative vote of at least
80% of outstanding common stock is needed in order to adopt, amend or repeal our
bylaws; and
o an affirmative vote of 80% of outstanding common stock is needed in order
to adopt, amend or repeal the above provisions.
Section 203 of the Delaware General Corporation Law. In general, this
statute prohibits a publicly-held Delaware corporation from engaging in a
business combination with anyone who owns at least 15% of its common stock for a
period of three years after that person has acquired the 15% ownership, unless
the business combination is approved by the board before the person acquires the
15% ownership or later by the board and two-thirds of the stockholders of the
public corporation.
VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT THE PRICE OF OUR STOCK.
As reflected under the heading "Common Stock Market Price Data" in this
prospectus, the market price of our common stock has experienced and may
continue to experience wide fluctuations. Factors affecting our stock price may
include:
o actual or anticipated variations in our operating results;
o variations in the level of market acceptance of our products;
o delays and timing of product introductions;
o changes in recommendations or earning estimates by securities analysts;
o conditions and trends in our industry;
o general market or economic conditions; or
o other factors.
SHARES AVAILABLE FOR SALE IN THE FUTURE COULD HAVE AN ADVERSE EFFECT ON THE
MARKET PRICE OF OUR COMMON STOCK.
We have 100,000,000 authorized shares of common stock, of which 37,802,000
shares were issued and outstanding as of March 3, 1999, excluding 698,000
treasury shares. If all of our issued and outstanding stock options were
exercised as of that date, approximately 42,510,000 shares of common stock would
be outstanding. Our board of directors has broad discretion with respect to the
issuance of the remaining authorized but unissued shares, including discretion
to issue such shares in compensatory and acquisition transactions. If we seek
financing through the sale of our securities, our then current stockholders may
suffer dilution in their percentage ownership of our common stock. In addition,
the future issuance, or even the potential issuance, of shares at a price below
the then current market price may have a depressive effect on the future market
price of our common stock.
OUTSTANDING STOCK OPTIONS MAY DILUTE OUR COMMON STOCK AND DEPRESS ITS MARKET
PRICE.
As of March 3, 1999, we had outstanding options to purchase an aggregate of
approximately 4,700,000 shares of common stock exercisable at an average
exercise price of approximately $13.60 per share. Our stock option and stock
incentive plans also authorize the grant of options to purchase approximately an
additional 2,000,000 shares of common stock. During the terms of our outstanding
options, the holders are given the opportunity to profit from a rise in the
market price of the common stock. The terms of our outstanding options currently
average approximately nine years. The holders of options would be most likely to
exercise them and purchase the common stock at a time when we could obtain
capital by a new offering of securities on terms more favorable to us than those
provided by the options. Consequently, the terms on which we could obtain
additional capital during such periods may be adversely affected.
-9-
<PAGE> 12
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus contains "forward-looking
statements" within the meaning of the federal securities laws. These statements
may be found under the headings "Risk Factors" and "Use of Proceeds," as well as
in the information incorporated by reference in this prospectus. These
statements describe our beliefs concerning future business conditions and our
business outlook based on currently available information. We do not intend to
update the forward-looking statements included in this prospectus.
Forward-looking statements typically are identified by use of terms such as
"may," "will," "expect," "anticipate," "believe," "estimate," and similar words,
although some forward-looking statements are expressed differently. You should
be aware that our actual results could differ materially from those contained in
the forward-looking statements due to a number of factors. These factors include
the following:
o our ability to design and introduce new game titles on schedule;
o market acceptance of new products;
o the financial strength of the amusement games industry;
o our ability to adapt to technological change;
o our dependence on dedicated platforms; and
o the success of planned advertising, marketing and promotional campaigns.
You should also consider carefully the statements under the caption "Risk
Factors" and other sections of this prospectus, which address additional factors
that could cause our actual results to differ from those set forth in the
forward-looking statements.
COMMON STOCK MARKET PRICE DATA
Our common stock has traded publicly on the New York Stock Exchange under
the symbol "MWY" since October 30, 1996, following our initial public offering.
The following table shows the high and low sale prices of our common stock for
the periods indicated as reported on the NYSE:
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
Fiscal Year Ended June 30, 1997
Section Quarter (commencing October 30, 1996) $ 25 1/2 $ 18 3/8
Third Quarter 21 15
Fourth Quarter 23 1/2 15 1/8
Fiscal Year Ended June 30, 1998
First Quarter 26 13/16 18 3/8
Second Quarter 26 3/4 16 1/2
Third Quarter 25 1/4 17 1/8
Fourth Quarter 25 11/16 12
Fiscal Year Ending June 30, 1999
First Quarter 17 1/4 9 5/16
Second Quarter 13 1/16 9
Third Quarter (through March 3, 1999) 11 5/16 7 5/8
</TABLE>
On March 3, 1999, the last reported sale price of the common stock on the
NYSE was $8 1/8 per share. On that date, there were approximately 1,300 holders
of record of the common stock.
-10-
<PAGE> 13
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the shares of common
stock we are offering will be approximately $1.9 million. "Net proceeds" is what
we expect to receive after paying the underwriting discount and the other
expenses of this offering. For the purpose of estimating net proceeds, we are
assuming that the public offering price will be $8 1/8 per share.
We will use these net proceeds for our general corporate purposes. These
general corporate purposes may include, among other things, financing for future
acquisitions of companies or other properties in accordance with our business
objectives and strategy, capital expenditures and working capital. The timing
and amount of our actual expenditures will be based on many factors, including
the identification and availability of satisfactory acquisition opportunities
and the level of cash flow from operations. Until we use the net proceeds of the
offering, we will invest the net proceeds in money market securities or other
appropriate short-term investments.
-11-
<PAGE> 14
UNDERWRITING
We have entered into an underwriting agreement with CIBC Oppenheimer Corp.
The underwriting agreement provides for a firm commitment underwriting. This
means that the underwriter has agreed to purchase all of the shares offered by
this prospectus if any are purchased.
The underwriter has advised us that it proposes to offer the shares
directly to the public at the public offering price that appears on the cover
page of this prospectus. In addition, the underwriter may offer some of the
shares to securities dealers at the same price less a concession of $_____ per
share. The underwriter may also allow, and those dealers may reallow, a
concession not in excess of $____ per share to certain other dealers. After the
shares are released for sale to the public, the underwriter may change the
offering price and other selling terms at various times.
The underwriter will purchase the shares offered by this prospectus at the
public offering price that appears on the cover page of this prospectus, less
the underwriting discount of $__________ per share. We estimate that our total
expenses of the offering, excluding the underwriting discount, will be
approximately $35,000. We have also agreed to indemnify the underwriter against
some liabilities, including liabilities under the Securities Act.
Any shares offered by this prospectus will be listed on the New York Stock
Exchange, subject to official notice of issuance.
Each share is sold together with certain stock purchase rights. These
rights are described in a registration statement on Form 8-A (File No. 1-12367)
which we filed with the SEC on October 30, 1996 and amended on Form 8-A/A filed
April 20, 1998. See "Documents Incorporated by Reference."
Rules of the Securities and Exchange Commission may limit the ability of
the underwriter to bid for or purchase shares before the distribution of the
shares is completed. However, the underwriter may engage in the following
activities in accordance with the rules:
o Stabilizing transactions -- The underwriter may make bids or purchases
for the purpose of pegging, fixing or maintaining the price of the shares, so
long as stabilizing bids do not exceed a specified maximum.
o Syndicate covering transactions -- The underwriter may create a short
position in the common stock by selling more shares than are set forth on the
cover page of this prospectus. If a short position is created in connection with
the offering, the underwriter may engage in syndicate covering transactions by
purchasing the common stock in the open market.
o Penalty bids -- If the underwriter purchases shares in the open market in
a stabilizing transaction or syndicate covering transaction, it may reclaim a
selling concession from the selling group members who sold those shares as part
of this offering.
Stabilization and syndicate covering transactions may cause the price of
the common stock to be higher than it would be in the absence of these
transactions. The imposition of a penalty bid might also have an effect on the
price of the common stock if it discourages resales of the shares.
Neither we nor the underwriter makes any representation or prediction as to
the effect that the transactions described above may have on the price of the
common stock. These transactions may occur on the NYSE or otherwise. If these
transactions are commenced, they may be discontinued without notice at any time.
In the ordinary course of their business, the underwriter has provided
investment and commercial banking and financial advisory services to us and to
WMS, for which it has received customary compensation and expense reimbursement,
and it may do so again in the future. Richard D. White, a managing director of
the underwriter and of CIBC Wood Gundy Capital Corp., an affiliate of the
underwriter, is a director of Midway and a member of our audit and negotiating
committees. Mr. White holds options to purchase 35,000 shares of common stock.
-12-
<PAGE> 15
LEGAL MATTERS
The validity of the shares offered by this prospectus has been passed upon
by our counsel, Shack & Siegel, P.C., New York, New York. As of March 3, 1999,
shareholders of Shack & Siegel, P.C. hold a total of 10,990 shares of common
stock and options to purchase 35,000 shares of common stock. Certain legal
matters in connection with this offering will be passed upon for the underwriter
by Morgan, Lewis & Bockius LLP, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended June 30, 1998, as set forth in their report, which is
incorporated in this prospectus by reference. We incorporated our consolidated
financial statements by reference in reliance on their report, given on their
authority as experts in accounting and auditing.
COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Under the provisions of agreements, our directors and officers have the
right to indemnification for some liabilities arising under the Securities Act.
In addition, our certificate of incorporation and our by-laws provide that we
must, to the fullest extent permitted by the Delaware General Corporation Law,
indemnify and advance certain expenses to any and all persons whom we have power
to indemnify under section 145 of the Delaware General Corporation Law from the
expenses, liabilities or other matters referred to in or covered by that
section. Insofar as indemnification under the provisions described above for
liabilities arising under the Securities Act may be permitted to directors,
officers or persons considered to control us, the SEC has informed us that, in
its opinion, this indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
-13-
<PAGE> 16
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the Securities and
Exchange Commission in connection with this offering (File No. 333- ). In
addition, we file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy the registration statement
and any other documents we have filed at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, DC 20549. Please call the SEC at 1-800-SEC-0330
for further information on the Public Reference Room. Our SEC filings are also
available to the public at the SEC's Internet site found at "http://www.sec.gov"
and can be inspected at the offices of the NYSE, 20 Broad Street, New York, NY
10005.
This prospectus is part of the registration statement and does not contain
all of the information included in the registration statement. Whenever a
reference is made in this prospectus to any contract or other document of
Midway, the reference may not be complete, and you should refer to the exhibits
that are a part of the registration statement for a copy of the contract or
document.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. Information incorporated
by reference is part of this prospectus. Later information filed with the SEC
will update and supersede this information.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until this offering is terminated:
Our annual report on Form 10-K for the year ended June 30, 1998, including
the exhibits.
Our quarterly reports on Form 10-Q for the fiscal quarters ended September
30, 1998 and December 31, 1998.
The description of our common stock and accompanying rights contained in
our registration statement on Form 8-A (File No. 1-12367) filed on October 30,
1996 and amended on Form 8-A/A filed on April 20, 1998.
We will provide to each person, including any beneficial owner, to whom a
copy of this prospectus is delivered, a copy of any or all of the information
that we have incorporated by reference in this prospectus. You may request
copies of this information in writing or orally, and we will provide it at no
cost. You may contact us at:
Midway Games Inc.
3401 North California Avenue
Chicago, IL 60618
Attention: Vice President--Finance.
Telephone: (773) 961-2222
-14-
<PAGE> 17
- --------------------------------------------------------------------------------
[MIDWAY LOGO]
MIDWAY GAMES INC.
[CIBC OPPENHEIMER LOGO]
250,000 SHARES
COMMON STOCK
- ---------------------------
PROSPECTUS
- ---------------------------
, 1999
- --------------------------------------------------------------------------------
You should rely only on the information contained in this prospectus. No dealer,
salesperson or other person is authorized to give information that is not
contained in this prospectus. This prospectus is not an offer to sell nor is it
seeking an offer to buy these securities in any jurisdiction where the offer or
sale is not permitted. The information contained in this prospectus is correct
only as of the date of this prospectus, regardless of the time of the delivery
of this prospectus or any sale of these securities.
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table itemizes the expenses payable by the Registrant in
connection with the registration and issuance of the securities being registered
hereunder, excluding underwriting discounts and commission. As indicated below,
all amounts shown are estimates except for the Commission and NASD registration
fee.
<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission $ 569.21
NASD Filing Fee ...................................... $ 704.75
Accounting Fees and Expenses ......................... $ 7,500.00
Legal Fees and Expenses .............................. $ 18,000.00
NYSE Listing Fees .................................... $ 1,500.00
Blue Sky Fees and Expenses ........................... $ 1,500.00
Miscellaneous ........................................ $ 5,226.04
Total ....................................... $ 35,000.00
</TABLE>
ITEM 15. 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"), by the Amended and Restated Bylaws of the
Registrant, as amended (the "Bylaws"), by the Restated Certificate of
Incorporation, as amended, of the Registrant (the "Certificate of
Incorporation") and by indemnification agreements entered into with each of its
directors (the "Indemnity Agreements").
Under Section 145 of the DGCL, directors and officers as well as other
employees and individuals may be indemnified against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement in connection
with specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation (a "derivative action")) if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best interests of the
Registrant, and with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard of
care is applicable in the case of derivative actions, except that
indemnification only extends to expenses (including attorneys' fees) incurred in
connection with defense or settlement of such an action and the DGCL requires
court approval before there can be any indemnification where the person seeking
indemnification has been found liable to the Registrant.
The Certificate of Incorporation and Bylaws provide 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 related
thereto to any and all said persons. The indemnification and advancement of
expenses provided for therein shall not be deemed to be exclusive of any other
rights to which those indemnified may be entitled under any bylaw, 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 person. In addition, the Certificate of
Incorporation 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.
II-1
<PAGE> 19
The Indemnity Agreements provide for the indemnification of officers
and directors to the fullest extent permitted by the laws of the State of
Delaware, and obligate the Registrant to provide the maximum protection allowed
under Delaware law. In addition, the Indemnity Agreements supplement and
increase such protection in certain respects.
The Underwriting Agreement between CIBC Oppenheimer Corp. and the
Registrant filed as Exhibit 1 hereto provides for the indemnification of
officers and directors by CIBC Oppenheimer Corp. under certain circumstances.
The Registrant has an insurance policy that provides coverage to
directors and officers with respect to certain claims for which indemnity is not
available pursuant the foregoing provisions described in this Item 15.
ITEM 16. EXHIBITS.
The following exhibits are being furnished herewith or incorporated by reference
herein:
Exhibit Number Description
- -------------- -----------
1* Form of Underwriting Agreement
4.1 Specimen Certificate of Common Stock, incorporated by
reference to Exhibit 4.1 to the Registrant's Registration
Statement on Form S-1, as amended, effective October 29, 1996
(File No. 333-11919) (the "Form S-1").
4.2 Rights Agreement, dated as of October 24, 1996, between the
Registrant and The Bank of New York, as Rights Agent,
incorporated by reference to Exhibit 2.1 to the Form S-1.
4.3 First Amendment to Rights Agreement, dated as of November 6,
1997, between the Registrant and The Bank of New York, as
Rights Agent, incorporated by reference to Exhibit 8 to the
Registrant's Registration Statement on Form 8-A/A, Amendment
No. 1, filed with the Commission on April 20, 1998.
5 Opinion of Shack & Siegel, P.C., counsel for Registrant.
23.1 Consent of Shack & Siegel, P.C. (contained in the Opinion
filed as Exhibit 5 hereto).
23.2 Consent of Ernst & Young LLP.
24 Power of Attorney (contained on the signature page hereof).
- -------------------
* To be filed by amendment
ITEM 17. UNDERTAKINGS.
1. 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 be deemed to be
the initial bona fide offering thereof.
2. The undersigned Registrant hereby undertakes that: (a) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this
II-2
<PAGE> 20
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and (b) for the purpose of
determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus 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.
II-3
<PAGE> 21
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-3 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 this 3rd day of March,
1999.
MIDWAY GAMES INC.
By: /s/ Neil D. Nicastro
-------------------------------------
Neil D. Nicastro,
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears below
hereby appoints Neil J. Nicastro, Harold H. Bach, Jr. and Orrin J. Edidin, and
each of them acting singly, as his attorney-in-fact, to sign on 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>
SIGNATURE DATE TITLE
- --------- ---- -----
<S> <C> <C>
/s/ Neil D. Nicastro March 3, 1999 Chairman of the Board of Directors,
- ------------------------------- President, Chief Executive Officer (Principal
Neil D. Nicastro Executive Officer) and Chief Operating Officer
/s/ Harold H. Bach, Jr. March 3, 1999 Executive Vice President - Finance,
- ------------------------------- Treasurer (Principal Financial and Principal
Harold H. Bach, Jr. Accounting Officer) and Director
/s/ Byron C. Cook March 3, 1999 Executive Vice President - Home Video
- ------------------------------- and Director
Byron C. Cook
/s/ Kenneth J. Fedesna March 3, 1999 Executive Vice President - Coin-Op Video
- ------------------------------- and Director
Kenneth J. Fedesna
/s/ Louis J. Nicastro March 3, 1999 Director
- -------------------------------
Louis J. Nicastro
/s/ William C. Bartholomay March 3, 1999 Director
- -------------------------------
William C. Bartholomay
/s/ William E. McKenna March 3, 1999 Director
- -------------------------------
William E. McKenna
/s/ Norman J. Menell March 3, 1999 Director
- -------------------------------
Norman J. Menell
/s/ Harvey Reich March 3, 1999 Director
- -------------------------------
Harvey Reich
/s/ Ira S. Sheinfeld March 3, 1999 Director
- -------------------------------
Ira S. Sheinfeld
/s/ Gerald O. Sweeney, Jr. March 3, 1999 Director
- -------------------------------
Gerald O. Sweeney, Jr.
/s/ Richard D. White March 3, 1999 Director
- -------------------------------
Richard D. White
</TABLE>
<PAGE> 22
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
1* Form of Underwriting Agreement
4.1 Specimen Certificate of Common Stock, incorporated by reference to
Exhibit 4.1 to the Registrant's Registration Statement on Form S-1,
as amended, effective October 29, 1996 (File No. 333-11919) (the
"Form S-1").
4.2 Rights Agreement, dated as of October 24, 1996, between the
Registrant and The Bank of New York, as Rights Agent, incorporated
by reference to Exhibit 2.1 to the Form S-1.
4.3 First Amendment to Rights Agreement, dated as of November 6, 1997,
between the Registrant and The Bank of New York, as Rights Agent,
incorporated by reference to Exhibit 8 to the Registrant's
Registration Statement on Form 8-A/A, Amendment No. 1, filed with
the Commission on April 20, 1998.
5 Opinion of Shack & Siegel, P.C., counsel for Registrant.
23.1 Consent of Shack & Siegel, P.C. (contained in the Opinion filed as
Exhibit 5 hereto).
23.2 Consent of Ernst & Young LLP.
24 Power of Attorney (contained on the signature page hereof).
- -------------------
* To be filed by amendment
<PAGE> 1
EXHIBIT 5
Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
(212) 782-0700
March 3, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Midway Games Inc. Form S-3 Registration Statement
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 under the Securities Act of 1933, as amended, of a registration
statement on Form S-3 (the "Registration Statement") registering the sale of
250,000 shares (the "Shares") of the Company's common stock, par value $.01 per
share (the "Common Stock").
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 Registration Statement; (ii) the Company's Restated Certificate of
Incorporation, as amended; (iii) the Company's Amended and Restated Bylaws; (iv)
proceedings of the Board of Directors 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
sale and issuance of the Shares has been duly authorized and that such Shares,
assuming full payment therefor, when issued and delivered, will be validly
issued, fully paid and non-assessable.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement, and we further consent to the reference made to us under
the caption "Legal Matters" in the prospectus included in the Registration
Statement. Please note that shareholders of this firm hold, in the aggregate,
10,990 shares of Common Stock and options to purchase an aggregate of 35,000
shares.
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 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-3 (File No. 333-_______) and the related
Prospectus of Midway Games Inc. and to the incorporation by reference therein of
our reports dated August 17, 1998, with respect to the financial statements of
Midway Games Inc. and subsidiaries incorporated by reference in its Annual
Report (Form 10-K) for the year ended June 30, 1998 and the related financial
statement schedule included therein, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Chicago, Illinois
March 2, 1999
