8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 23, 2004

MIDWAY GAMES INC.

(Exact Name of Registrant as Specified in Charter)

Delaware (State or Other Jurisdiction of Incorporation) 1-12367 (Commission File Number) 22-2906244 (I.R.S. Employer Identification Number)

2704 West Roscoe Street, Chicago, Illinois 60618

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (773) 961-2222

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01Entry Into a Material Definitive Agreement.

In connection with the transaction described in Item 8.01 below, as of November 23, 2004, the Registrant and several of its subsidiaries entered into the seventh amendment to the Loan and Security Agreement among the Registrant, such subsidiaries, specified lenders and Wells Fargo Foothill (as the arranger and administrative agent for the various lenders) dated March 3, 2004, as amended. The amendment was necessary to permit the transaction. A copy of the amendment is attached to this report as Exhibit 99.1. Exhibit 99.1 is incorporated herein by this reference.

Item 3.02Unregistered Sales of Equity Securities.

On November 23, 2004, we issued 247,620 shares of our common stock to Christine Hsu, as consideration for all of the shares of capital stock of CWS Entertainment Ltd., doing business as Paradox Development (“Paradox”). See Item 8.01 below. 31,905 of these shares will be held in escrow until November 23, 2007 to cover potential indemnification obligations of Ms. Hsu to Midway. In addition, on November 23, 2004, we issued 85,714 shares of our common stock to Interactive Studio Management, LLC (“ISM”), a party unrelated to Midway, in respect of an obligation of Paradox. Ms. Hsu agreed not to sell her Midway shares except in accordance with the following vesting schedule: 9,524 of Ms. Hsu’s shares may be sold immediately; an additional 123,810 shares may be sold as of May 23, 2005; an additional 38,095 may be sold as of each of November 23, 2005 and November 23, 2006; and the balance of 38,096 shares may be sold as of November 23, 2007. All of ISM’s shares may be sold immediately, subject to the Securities Act of 1933, as amended, including the registration provisions thereof. The issuance of the shares of common stock in this transaction was exempt from registration under the Securities Act of 1933 by reason of Section 4(2) thereof and Rule 506 of Regulation D promulgated thereunder. We did not offer the shares to any other prospective purchasers. We agreed to register all of the shares described above for resale. Under rules of the SEC, however, we will initially file a registration statement which only registers the number of shares that the stockholders may reasonably be expected to sell within two years.

In addition, on November 23, 2004, we issued 261,906 shares of our common stock to 15 employees of Paradox, including 71,429 shares to Ms. Hsu, as retention incentives. These shares have restrictions on sale that lapse as to a total of 99,993 shares as of November 23, 2005, a total of 80,945 shares as of November 23, 2006, and the balance of 80,968 shares as of November 23, 2007. We agreed to register all of the shares described above for sale by the holders. Under rules of the SEC, however, we will initially file a registration statement which only registers the number of shares that the holders may reasonably be expected to sell within two years. The issuance of these shares of common stock was exempt from registration under the Securities Act of 1933 by reason of Section 4(2) thereof. The securities were issued to the employees without consideration.

Item 8.01Other Events.

On November 30, 2004, we issued a press release announcing our acquisition, on November 23, 2004, of CWS Entertainment Ltd., doing business as Paradox Development. A copy of the press release is attached to this report as Exhibit 99.2. Exhibit 99.2 is incorporated herein by this reference. Other details of the transaction are described under Item 3.02 above.

Item 9.01Financial Statements and Exhibits.

(c)Exhibits

Exhibit No.	Description
99.1	Amendment, dated November 23, 2004, to Loan and Security Agreement among the Registrant, specified lenders and Wells Fargo Foothill
99.2	Press Release of Midway Games Inc. dated November 30, 2004

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MIDWAY GAMES INC.
November 30, 2004	By:	/s/ David F. Zucker
		David F. Zucker President and Chief Executive Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Amendment, dated November 23, 2004, to Loan and Security Agreement among the Registrant, specified lenders and Wells Fargo Foothill.
99.2	Press Release of Midway Games Inc. dated November 30, 2004.

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EX-99.1

EXHIBIT 99.1

CONSENT AND SEVENTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT

THIS CONSENT AND SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") is entered into as of November 23, 2004, by and among Lenders, WELLS FARGO FOOTHILL, INC., a California corporation, as the arranger and administrative agent for the Lenders ("Agent") and, on the other hand, MIDWAY HOME ENTERTAINMENT INC., a Delaware corporation ("Midway"), MIDWAY AMUSEMENT GAMES, LLC, a Delaware limited liability company ("MAG"; Midway and MAG are referred to hereinafter each individually as a "Borrower", and individually and collectively, jointly and severally, as the "Borrowers"), MIDWAY GAMES INC., a Delaware corporation ("Parent"), MIDWAY GAMES WEST INC., a California corporation ("MGW"), MIDWAY INTERACTIVE INC., a Delaware corporation ("MI"), MIDWAY SALES COMPANY, LLC, a Delaware limited liability company ("MSC"), MIDWAY HOME STUDIOS INC., a Delaware corporation ("MHS"), SURREAL SOFTWARE INC., a Washington corporation ("Surreal"), MIDWAY STUDIOS - AUSTIN INC., a Texas corporation ("MSA"), MIDWAY STUDIOS - LOS ANGELES INC., a California corporation, ("MSLA"; Parent, MGW, MI, MSC, MHS, Surreal, MSA and MSLA, are referred to hereinafter each individually as a "U.S.Credit Party" and individually and collectively, jointly and severally, as the "U.S. Credit Parties")

WHEREAS, Borrowers, U.S. Credit Parties, Agent, and Lenders are parties to that certain Loan and Security Agreement dated as of March 3, 2004 (as amended, modified or supplemented from time to time, the "Loan Agreement");

WHEREAS, Parent desires to acquire all of the outstanding capital stock of CWS Entertainment, Ltd., a California corporation (the "Target"), via a merger with a newly formed subsidiary of Parent (the "Acquisition");

WHEREAS, Borrowers and U.S. Credit Parties desire for Agent and Required Lenders to consent to Acquisition as set forth herein; and

WHEREAS, Borrowers, U.S. Credit Parties, Agent and Lenders have agreed to amend the Loan Agreement in certain respects, subject to the terms and conditions contained herein.

NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:

1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Loan Agreement.

2. Consent. Subject to the satisfaction of the conditions set forth in Section 5 below, Agent and Required Lenders hereby consent to the acquisition of Target; provided that (i) all of the conditions set forth in clauses (a) through (d) and (f) through (m) of the definition of "Permitted Acquisition" in the Loan Agreement have been satisfied and (ii) the aggregate consideration to be paid in connection with such acquisition does not exceed $6,250,000, all of which shall be paid in common stock of Parent. This is a limited consent and shall not be deemed to constitute a waiver of, or consent to, any other future breach of the Loan Agreement (as amended by this Amendment).

3. Amendment to Loan Agreement. Subject to the satisfaction of the conditions set forth in Section 5 hereof, the Loan Agreement is amended as follows:

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(a) Section 3.2(d) of the Loan Agreement is hereby amended and restated in its entirety as follows:

"(d) on or prior to March 15, 2005, Borrower shall (i) obtain the consent of the City of Chicago to the execution and delivery of a mortgage of the Boat Yard Property to Agent, which mortgage shall be in form substantially the same as the other mortgages delivered to Agent, (ii) upon receipt of such consent, execute and deliver such mortgage to Agent, and (iii) deliver a title insurance policy to Agent, in form and substance satisfactory to Agent, insuring the lien of such mortgage;"

(b) Schedules 5.4, 5.5, 5.7(a), 5.7(b), 5.7(d), 5.8(b), 5.8(c), 5.8(d), 5.14 and 5.18 to the Loan Agreement are amended and replaced with the schedules set forth on Exhibit A hereto.

4. Ratification. This Amendment, subject to satisfaction of the conditions provided below, shall constitute an amendment to the Loan Agreement and all of the Loan Documents as appropriate to express the agreements contained herein. In all other respects, the Loan Agreement and the Loan Documents shall remain unchanged and in full force and effect in accordance with their original terms.

5. Conditions to Effectiveness. This Amendment shall become effective as of the date hereof and upon the satisfaction of the following conditions precedent:

(a) Each party hereto shall have executed and delivered this Amendment to Agent;

(b) Companies shall have delivered to Agent such documents, agreements and instruments as may be requested or required by Agent in connection with this Amendment, each in form and content acceptable to Agent;

(c) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment; and

(d) All proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto shall be satisfactory to Agent and its legal counsel.

6. Miscellaneous.

(a) Warranties and Absence of Defaults. In order to induce Agent to enter into this Amendment, each Company hereby warrants to Agent, as of the date hereof, that the representations and warranties of Companies contained in the Loan Agreement are true and correct as of the date hereof as if made on the date hereof (other than those which, by their terms, specifically are made as of certain dates prior to the date hereof).

(b) Expenses. Companies, jointly and severally, agree to pay on demand all costs and expenses of Agent (including the reasonable fees and expenses of outside counsel for Agent) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith. All obligations provided herein shall survive any termination of this Amendment and the Loan Agreement as amended hereby.

(c) Governing Law. This Amendment shall be a contract made under and governed by the internal laws of the State of Illinois.

(d) Counterparts. This Amendment may be executed in any number of counterparts, and by the parties hereto on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment.

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Release.

(a) In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Company, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the "Releasees" and individually as a "Releasee"), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a "Claim" and collectively, "Claims") of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which such Company or any of its successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the day and date of this Amendment, including, without limitation, for or on account of, or in relation to, or in any way in connection with any of the Loan Agreement, or any of the other Loan Documents or transactions thereunder or related thereto.

(b) Each Company understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.

(c) Each Company agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized and delivered as of the date first above written.

MIDWAY HOME ENTERTAINMENT INC.,

a Delaware corporation

MIDWAY AMUSEMENT GAMES, LLC,

a Delaware limited liability company

MIDWAY GAMES INC.,

a Delaware corporation

MIDWAY GAMES WEST INC.,

a California corporation

MIDWAY INTERACTIVE INC.,

a Delaware corporation

MIDWAY SALES COMPANY, LLC,

a Delaware limited liability company

MIDWAY HOME STUDIOS INC.,

a Delaware corporation

SURREAL SOFTWARE INC.,

a Washington corporation

MIDWAY STUDIOS - AUSTIN INC., a Texas corporation

MIDWAY STUDIOS - LOS ANGELES INC., a California corporation

Each By: /s/ Thomas Powell

Title: Executive Vice President—Finance, Chief Financial Officer and Treasurer

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent, as UK Security Trustee and as a Lender

By: John Leonard

Title: Vice President

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EX-99.2

Exhibit 99.2

FOR IMMEDIATE RELEASE

MIDWAY ACQUIRES PARADOX DEVELOPMENT

Developer of Highly-Anticipated Mortal Kombat^®: Shaolin Monks^™

Strengthens Midway’s Internal Product Development

CHICAGO, IL - November 30, 2004 - Midway Games Inc. (NYSE: MWY) announced today that it has acquired Paradox Development, the studio now developing Midway’s upcoming videogame, Mortal Kombat: Shaolin Monks. Midway acquired privately-held Paradox in an all-stock transaction for 333,334 Midway common shares. The acquisition further strengthens the Company’s internal development capabilities as it brings two talented development teams to Midway. This marks the third acquisition in recent months to bolster Midway’s high quality game development. In October, 2004 Midway acquired Austin, Texas-based Inevitable Entertainment Inc., the development studio working on Midway’s upcoming new videogame, AREA 51. In April, 2004 Midway acquired Seattle, Washington-based Surreal Software Inc., the highly accomplished video game developer behind the successful videogame, The Suffering.

Midway President and Chief Executive Officer David F. Zucker commented, “In acquiring Paradox Development, we have added a talented and established developer that not only deepens our internal product development organization but also brings incremental fighting-genre expertise to Midway. We have made great strides in improving our overall quality of games, and the industry and our customers have recognized this accomplishment. Today’s acquisition further strengthens our ability to expand on our current portfolio of games and produce new high quality, top-selling games for the future. Furthermore, the Paradox teams’ expertise in the fighting genre is an excellent fit with Midway’s product strengths and will help us extend the Mortal Kombat franchise into the action-adventure genre and release a highly engaging title in the Mortal Kombat universe annually.”

Based in Moorpark, California, Paradox Development is a successful creator of high-quality interactive entertainment products, with an emphasis on games within the fighting genre. Founded in 1994 by Christine Hsu, the former COO/CFO of Malibu Comics, Paradox Development has developed 13 titles, including seven fighting games, across multiple platforms.

In addition to shares issued for the acquisition of Paradox Development, a total of 261,906 restricted shares of Midway common stock were issued to key Paradox employees as retention incentives. The restrictions on the stock will lapse in stages over a period of three years, provided the employee remains at the Company. The Paradox employees who received restricted shares were: Teresa Chang, Damon Dubois, David Gautrey, James Guintu, Christine Hsu, Paul Interrante, Peter Jefferies, Ben Kutcher, Mark Lappin, James Maxwell, David Ollman, Adam Phul, Richie Romero, Barclay Smith and Paul Stapley.

About Mortal Kombat: Shaolin Monks

Mortal Kombat: Shaolin Monks is an Action-Adventure title driven by both intense single and multi-player action. Similar to the recently released Mortal Kombat: Deception, background interactions (i.e., acid pits, living trees, spiked ceilings, etc.), multiple new fatalities, and action-based puzzles will also play an important role in the player’s quest for an “outstanding” victory. Mortal Kombat: Shaolin Monks will feature an impressive line-up of Mortal Kombat characters as well, that make frequent appearances as enemies, in boss battles and during several additional in-game interactions.

About Mortal Kombat

One of the most well-known and best-selling franchises in videogame history - with more than 22 million home games sold - the Mortal Kombat series has generated over $1 billion in retail sales through games, movies, music, toys and other merchandise since it was first released in 1992.

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About Midway

Midway Games Inc. is a leading developer, publisher and marketer of interactive entertainment software. Midway videogames are available for play on all major videogame platforms including the PlayStation^®2 computer entertainment system, Xbox^®, Nintendo GameCube^TM and Game Boy^® Advance.

For more information about Midway Games visit www.midway.com.

MORTAL KOMBAT, MORTAL KOMBAT: SHAOLIN MONKS and MIDWAY are trademarks of Midway Amusement Games, LLC.

This press release contains forward-looking statements concerning future business conditions and the outlook for Midway Games Inc. (the "Company") based on currently available information that involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in the forward-looking statements as a result of these risks and uncertainties, including, without limitation, the financial strength of the interactive entertainment industry, dependence on new product introductions and the ability to maintain the scheduling of such introductions, technological changes, including the upcoming console platform transition, dependence on major platform manufacturers and other risks more fully described under "Item 1. Business - Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2003, and in the more recent filings made by the Company with the Securities and Exchange Commission.

For More Information Contact:

Reilly Brennan	Chris Kooluris
Midway - Media Relations	HighWater Group - Media Relations
773-961-2557 rbrennan@midwaygames.com	212-338-0077 chris@highwatergroup.com

Miguel Iribarren

Midway - Investor Relations

773.961.2222

miribarren@midwaygames.com

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