THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Midway Games Inc. (MWY)

4/28/2006 Proxy Information

Mr. Bach served as Chief Financial Officer and Executive Vice President of Midway Games Inc. (MWY) from 1996 until his retirement in September 2001.

Relationship with Former Parent Company

In 1996, Midway sold common stock in an initial public offering. After the offering, Midway’s parent company, WMS Industries Inc., continued to own 86.8% of Midway’s common stock until 1998, when WMS distributed all of its remaining Midway stock to its stockholders (the “Spinoff”). WMS has not owned any Midway common stock since the Spinoff. One of our directors, Mr. Sheinfeld, is also a director of WMS.

Until the Spinoff, Midway was a member of the consolidated group of corporations of which WMS was the common parent for federal income tax purposes. Therefore, Midway was jointly and severally liable for any federal tax liability of the WMS group for the period during which it was part of the WMS group. WMS and Midway entered into several agreements regarding the allocation of these tax liabilities between Midway and WMS. These agreements consisted of (w) a Tax Sharing Agreement dated July 1, 1996; (x) a Tax Separation Agreement dated April 6, 1998; (y) a Letter Agreement dated September 24, 2001; and (z) a Settlement Agreement dated August 11, 2003.

On November 19, 2004, the parties terminated these agreements in settlement of a disagreement between them concerning the interpretation of the “change of control” provisions in the agreements relating to Mr. Redstone’s accumulation of a majority interest in Midway common stock. Under the terms of the settlement, all four tax agreements were terminated, and Midway paid to WMS the amount of $1,500,000. Additional details of the terms of the four agreements were as follows:

The Tax Sharing Agreement provided a method for: (a) determining the amount that Midway must pay to WMS in respect of federal income taxes; (b) compensating any member of the WMS group for use of its net operating losses, tax credits and other tax benefits in arriving at the WMS group tax liability as determined under the federal consolidated return regulations; and (c) providing for the receipt of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years and for payments upon subsequent adjustments.

The Tax Separation Agreement set forth the parties’ respective liabilities for federal, state and local taxes, among other things, including: (a) the filing of tax returns with federal, state and local authorities; (b) the carryover of any tax benefits of Midway; (c) the treatment of the deduction attributable to the exercise of WMS stock options held by employees or former employees of Midway and any other similar compensation related tax deductions; (d) the treatment of net operating loss carrybacks; (e) the treatment of audit adjustments; and (f) procedures with respect to any claim made by any taxing authority with respect to a tax liability of Midway or any of its subsidiaries.

Under the 2001 letter agreement, WMS paid $2.8 million to Midway relating to the exercise of WMS stock options by Midway employees after the Spinoff, because Midway’s original benefit was extinguished by Midway’s post-Spinoff net operating loss carryback to its post-Spinoff profitable years. Under the 2003 settlement agreement, WMS paid a $4.0 million advance to Midway because net operating loss carry-backs of WMS from post-Spinoff years to pre-Spinoff years prevented Midway from realizing tax benefits of carrying back its post-Spinoff net operating losses to pre-Spinoff years. The $2.8 million, and $3.7 million of the $4.0 million, were repayable by Midway under the agreements upon a “change of control” of Midway, among other circumstances.

Other Related Party Transactions

William C. Bartholomay, a member of our Board of Directors, was President of Near North National Group, insurance brokers, which we retained to provide insurance brokerage services.

Sumner M. Redstone, our controlling shareholder, is Chairman of the board and Chief Executive Officer of NAI. NAI is the parent company of both Viacom and CBS, a company spun off from Viacom late in 2005. Mr. Redstone also serves as Chairman of the Board for both Viacom and CBS. Midway has historically conducted business with Viacom and companies affiliated with Viacom and Mr. Redstone. Mr. Redstone also is a controlling stockholder of Sumco, a corporation to which he transferred approximately 41% of his shares of our common stock in December 2005.

During 2005, we announced a strategic relationship with MTV Networks, a subsidiary of Viacom, to jointly market three video game titles, and collaborate on soundtrack development for two of these titles. Under the terms of the agreement, MTV has the option to provide us with varying levels of marketing and promotional support for these video games. We may then include various agreed-upon MTV properties and trademarks within the respective video games. Also, we will be required to then pay to MTV varying levels of marketing and production costs based upon the amount of support provided by MTV, as well as royalties from game sales based upon the amount of support provided by MTV and the number of units sold and profitability of the game. L.A. RUSH, released in October 2005 on the PlayStation 2 and Xbox, was the first of the three titles to be released under the relationship. Selling and marketing purchases from MTV totaled $4,679,000 in 2005. No royalties were yet owed to MTV based upon game sales of L.A. RUSH in 2005. At December 31, 2005, we had amounts outstanding of $362,000 due to MTV included in accounts payable.

Selling and marketing expenses incurred from advertising purchases with other Viacom affiliates totaled $5,228,000 during the year ended December 31, 2005. We also had amounts outstanding of $877,000 due to other Viacom affiliates included in accounts payable at December 31, 2005.

Two members of our Board of Directors also serve as directors for either NAI or companies that NAI controls. Shari E. Redstone (Mr. Redstone’s daughter) currently serves as President and a director of NAI, as well as vice chair of the board for both Viacom and CBS. Mr. Redstone also formed a new holding company late in 2005, Sumco, Inc., which is owned jointly by both NAI and Mr. Redstone. Ms. Redstone also serves as President of Sumco. Also, Joseph A. Califano, Jr., a member of our Board of Directors, serves as a director of CBS. Mr. Califano also served as a director of Viacom from 2003 until the split of Viacom and CBS in 2005. In addition, Robert J. Steele, a Board of Directors nominee, is the Vice President — Strategy and Corporate Development of NAI.

4/29/2005 Proxy Information

Mr. Bach served as Chief Financial Officer and Executive Vice President of Midway Games Inc. (MWY) from 1996 until his retirement in September 2001.

Ms. Redstone is the daughter of Sumner M. Redstone, our controlling stockholder.

In 1996, Midway sold common stock in an initial public offering. After the offering, Midway’s parent company, WMS Industries Inc., continued to own 86.8% of Midway’s common stock until 1998, when WMS distributed all of its remaining Midway stock to its stockholders (the “Spinoff”). WMS has not owned any Midway common stock since the Spinoff. Three of our directors, Messrs. Bach, Bartholomay and Sheinfeld, are also directors of WMS, but after the annual meeting, only Mr. Bartholomay and Mr. Sheinfeld will serve on both boards.

Until the Spinoff, Midway was a member of the consolidated group of corporations of which WMS was the common parent for federal income tax purposes. Therefore, Midway was jointly and severally liable for any federal tax liability of the WMS group for the period during which it was part of the WMS group. WMS and Midway entered into several agreements regarding the allocation of these tax liabilities between Midway and WMS. These agreements consisted of (w) a Tax Sharing Agreement dated July 1, 1996; (x) a Tax Separation Agreement dated April 6, 1998; (y) a Letter Agreement dated September 24, 2001; and (z) a Settlement Agreement dated August 11, 2003.

On November 19, 2004, the parties terminated these agreements in settlement of a disagreement between them concerning the interpretation of the “change of control” provisions in the agreements relating to Mr. Redstone’s accumulation of a majority interest in Midway common stock. Under the terms of the settlement, all four tax agreements were terminated, and Midway paid to WMS the amount of $1,500,000. Additional details of the terms of the four agreements were as follows:

The Tax Sharing Agreement provided a method for: (a) determining the amount that Midway must pay to WMS in respect of federal income taxes; (b) compensating any member of the WMS group for use of its net operating losses, tax credits and other tax benefits in arriving at the WMS group tax liability as determined under the federal consolidated return regulations; and (c) providing for the receipt of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years and for payments upon subsequent adjustments.

The Tax Separation Agreement set forth the parties’ respective liabilities for federal, state and local taxes, among other things, including: (a) the filing of tax returns with federal, state and local authorities; (b) the carryover of any tax benefits of Midway; (c) the treatment of the deduction attributable to the exercise of WMS stock options held by employees or former employees of Midway and any other similar compensation related tax deductions; (d) the treatment of net operating loss carrybacks; (e) the treatment of audit adjustments; and (f) procedures with respect to any claim made by any taxing authority with respect to a tax liability of Midway or any of its subsidiaries.

Under the 2001 letter agreement, WMS paid $2.8 million to Midway relating to the exercise of WMS stock options by Midway employees after the Spinoff, because Midway’s original benefit was extinguished by Midway’s post-Spinoff net operating loss carryback to its post-Spinoff profitable years. Under the 2003 settlement agreement, WMS paid a $4.0 million advance to Midway because net operating loss carry-backs of WMS from post-Spinoff years to pre-Spinoff years prevented Midway from realizing tax benefits of carrying back its post-Spinoff net operating losses to pre-Spinoff years. The $2.8 million, and $3.7 million of the $4.0 million, were repayable by Midway under the agreements upon a “change of control” of Midway, among other circumstances.

Other Related Party Transactions

Mr. Bartholomay, a member of our Board of Directors, is Group Vice Chairman of Willis Group Holdings, Ltd. and Vice Chairman of Willis North America, Inc., insurance brokers which we retain to provide insurance brokerage services.

Our controlling stockholder, Sumner M. Redstone, is the controlling stockholder, Chairman and Chief Executive Officer of Viacom and a director of Blockbuster, formerly a majority-owned subsidiary of Viacom. National Amusements is the parent company of Viacom. Shari E. Redstone, one of our directors, is Mr. Redstone’s daughter, President of National Amusements and a director of National Amusements and Viacom. Mr. Califano, one of our directors, is also a director of Viacom. During fiscal 2004, Blockbuster purchased approximately $9.2 million of videogames from us, we paid approximately $6.6 million for advertisements on various cable networks owned by Viacom and we paid $0.1 million for in-theater advertising to National Amusements. We believe that all of these transactions were on terms no less favorable to Midway than we would have obtained from parties who have no ownership interest in us.

Mr. Sheinfeld, a member of our Board of Directors, is a member of the law firm of Hogan & Hartson L.L.P., which we retained in fiscal 2004 to provide tax services.

Mr. Brown, a nominee for election to our Board of Directors at the annual meeting, is the Chairman of the Board, Chief Executive Officer and President of AMC Entertainment Inc., which operates movie theater chains. He is also the Co-Chairman of the Board and Co-Chief Executive Officer of Movietickets.com, Inc., together with Ms. Redstone. National Amusements and AMC Entertainment entered into a joint venture agreement in February 2000 with another company to form MovieTickets.com. Viacom also own interests in MovieTickets.com. National Amusements and MovieTickets.com each transact business with Viacom.

5/11/2004 Proxy Information

Louis Nicastro is father of Neil Nicastro.

Relationship with WMS

Until October 29, 1996, we were wholly owned by WMS Industries. On that date, we sold common stock in an initial public offering, but WMS continued to own 86.8% of our common stock. On April 6, 1998, WMS distributed all of its shares of our common stock to its stockholders. Eight of our directors are also directors of WMS, including our Chairman of the Board, Neil D. Nicastro, and his father, Louis J. Nicastro. Louis J. Nicastro is the Chairman of the Board of WMS. Neil D. Nicastro is also a consultant to WMS.

In 2002 we purchased the 2704 West Roscoe Street office building and 3289 N. California Ave. parking lot in Chicago, Illinois from WMS at an aggregate price of $2.3 million. Each of WMS and we obtained separate appraisals of the real property included in the transaction from Illinois State Certified General Real Estate Appraisers. There was substantial difference between the appraisals, with the appraisers engaged by WMS valuing the property at over $2.6 million (with potential for increase based on local zoning trends) and the appraisers engaged by us valuing the property at somewhat over $1.6 million. Attempts by the respective appraisers to reconcile their valuations were unavailing. We and WMS ultimately agreed to use WMS' book value of the asset, which was between the two professional valuations, as the price in the transaction. The other terms of the transaction were freely negotiated by the parties' respective counsel using forms of agreement supplied by a general commercial real estate practitioner. We believe that the terms of this transaction are not less favorable than what would have been obtainable in an arm's length transaction from an unaffiliated third party. In connection with the purchase, the parties also entered into agreements regarding the use of various parking lot areas near their Chicago facilities.

We also have the following material agreements with WMS:

Tax Separation Agreement. This agreement is dated April 6, 1998. Until April 1998, we were a member of the consolidated group of corporations of which WMS was the common parent for federal income tax purposes. Therefore, we are jointly and severally liable for any federal tax liability of the WMS group for the period that we were part of the WMS group. The agreement sets forth the parties' respective liabilities for federal, state and local taxes as well as other agreements regarding the separation of Midway and its subsidiaries from WMS. The agreement governs, among other things:

• the filing of tax returns with federal, state and local authorities;

• the carryover of any tax benefits of Midway;

• the treatment of the deduction attributable to the exercise of stock options to purchase WMS common stock which are held by employees or former employees of Midway and any other similar compensation related tax deductions;

• the treatment of specified net operating loss carrybacks;

• the treatment of audit adjustments; and

• procedures with respect to any proposed audit adjustment or other claim made by any taxing authority with respect to a tax liability of Midway or any of its subsidiaries. On September 24, 2001, WMS and Midway amended the agreement. Under the amendment, during 2001, WMS paid us $2.8 million relating to the exercise of WMS stock options (including adjustments) by or for Midway employees. Subsequently, in August 2003, we received $4.0 million from WMS under a settlement agreement dated August 11, 2003 relating to the tax separation agreement described above and the tax sharing agreement described below. Under the tax sharing and tax separation agreements, we are required to reimburse WMS for the majority of these amounts under circumstances related to our use of our net operating loss carryforwards or if there is a change in control of Midway, which includes, among other things, any person or group becoming the beneficial owner, directly or indirectly, of more than 50% of our outstanding voting stock.

Tax Sharing Agreement. This agreement is dated July 1, 1996 and remains in effect, except to the extent described in the Tax Separation Agreement referred to above. Under this agreement, WMS and we have agreed upon a method for:

• determining the amount that we must pay to WMS in respect of federal income taxes;

• compensating any member of the WMS Group for use of its net operating losses, tax credits and other tax benefits in arriving at the WMS Group tax liability as determined under the federal consolidated return regulations; and

• providing for the receipt of any refund arising from a carryback of net operating losses or tax credits from subsequent taxable years and for payments upon subsequent adjustments. Other Related Party Transactions

Under his employment agreement with us, Neil D. Nicastro received $984,000 of advances for a bonus accrued in the first six months of fiscal 2000 and later reversed. Mr. Nicastro has repaid these advances in full through deductions from his salary.

Mr. Ira S. Sheinfeld, a member of our Board of Directors, is a member of the law firm of Hogan & Hartson L.L.P., which we retain to provide tax services.

Mr. Gerald O. Sweeney, Jr., was a member of our Board of Directors from 1996 until June 12, 2003. Mr. Sweeney is a member of the law firm of Lord, Bissell & Brook, which performs legal services for Midway from time to time.

William C. Bartholomay, a member of our Board of Directors, was President of Near North National Group, insurance brokers, which we retained to provide insurance brokerage services. He is currently is Group Vice Chairman of Willis Group Holdings, Inc. and Vice Chairman of Willis North America, Inc., insurance brokers which we retain to provide insurance brokerage services.

On October 14, 2003, Richard D. White purchased 37,736 shares of our common stock in a private placement. We have agreed to register the resale of these shares with the SEC.

Mr. Redstone and National Amusements owned as of May 7, 2004 an aggregate of 49.9% of our common stock and have stated their intention to acquire at least 60% of our common stock. Mr. Redstone is Chairman of the Board and Chief Executive Officer of Viacom Inc. and a director of Blockbuster Inc., a majority owned subsidiary of Viacom. National Amusements is the parent company of Viacom. Ms. Redstone, a nominee as director, is Mr. Redstone's daughter, President of National Amusements and a director of Viacom. During fiscal 2003, Blockbuster purchased approximately $4.7 million of home video games from us in North America, and we paid approximately $3.6 million for advertisements on various cable networks owned by Viacom. We believe that all of these transactions were on terms no more or less favorable to Midway than we would have obtained from parties who have no ownership interest in us.

4/28/2003 Proxy Information

No related party transactions or special relationships reported for this company. Director relationships marked "Outside Related" at this firm will most often be former executives of the company. Additional information regarding these relationships will be added during our regular updates.