QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 10.2

STOCK OPTION AGREEMENT

        AGREEMENT, made as of the 6th day of May, 2003, by and between Midway
Games Inc., a Delaware corporation, with its principal executive offices at 2704
West Roscoe Street, Chicago, Illinois 60618 ("the Corporation"), and David
Zucker, residing at                        Illinois ("Optionee").

W I T N E S S E T H:

        WHEREAS, Optionee, who has not previously been employed by the
Corporation, is accepting an offer of employment to serve the Corporation as its
President and Chief Executive Officer; and

        WHEREAS, on May 6, 2003 Optionee and the Corporation entered into an
Executive Employment Agreement (the "Employment Agreement") that, among other
matters, requires the Corporation to grant the options provided for in this
Agreement and in a separate Stock Option Agreement under the Corporation's 2002
Stock Option Plan (the "2002 Plan Option Agreement") of even date herewith.

        NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, as a material inducement to
Optionee's entering into the Employment Agreement the Corporation is hereby
granting to Optionee an option to purchase common stock of the Corporation, par
value $.01 per share ("Common Stock") on the following terms and conditions:

        1.     Option. The Corporation hereby grants to Optionee an option (the
"Option") to purchase, at any time prior to 5:00 p.m. on May 5, 2013, up to One
Million (1,000,000) fully paid and non-assessable shares of Common Stock (the
"Initial Shares") at a price of $3.57 per share. Under applicable provisions of
the Internal Revenue Code of 1986, as amended, the Option is treated as a
non-qualified stock option. The Optionee shall have the right to receive options
(the "Additional Options") to purchase additional shares of Common Stock (the
"Additional Shares"), as described in Paragraph 9 hereof. The term "Shares", as
used hereafter, shall refer to the Initial Shares with respect to the Option and
to Additional Shares with respect to any Additional Options.

        2.     Vesting. (a) Subject to paragraph 4 hereof, the Option may be
exercised for up to 62,500 Initial Shares on or after November 1, 2004 and the
remaining 937,500 Initial Shares shall become exercisable in ten equal quarterly
installments on the first day of each February, May, August and November
thereafter.

        (b)   In the event of the occurrence of a Change of Control, as provided
in Section 15 of the Employment Agreement, the Option shall immediately become
vested and fully exercisable with respect to all Shares issuable under the
Option and any Additional Options.

        3.     Exercise of Option. Optionee may exercise the Option in whole or
in part (but not as to fractional shares), to the extent vested, by delivering
to the Corporation a written notice of exercise in the form attached hereto as
Exhibit 1, together with payment of the exercise price for the Shares to be
purchased and any taxes required to be paid upon exercise. As soon as
practicable thereafter, but in no event later than 30 days, the Corporation
shall cause to be delivered to or at the order of Optionee certificates
evidencing the Shares purchased.

        4.     Option Conditioned on Continued Service. If the services of
Optionee to the Corporation shall be terminated for "cause", or if Optionee
terminates services to the Corporation without "good reason", as such terms are
defined in the Employment Agreement, the Option shall expire immediately upon
such termination. If such services shall terminate for any other reason, the
Option may be exercised at any time within three (3) months after such
termination (or within one year after death by Optionee's executor or
administrator); provided that the Option may not be exercised pursuant to this
Paragraph except to the extent that Optionee was entitled to exercise the Option
at the time of termination of services or death; and in any event, the Option
may not be exercised after the original expiration date of the Option.

--------------------------------------------------------------------------------

        5.     Reservation and Listing. The Corporation shall cause to be
reserved and kept available out of authorized and unissued shares of Common
Stock, from time to time, the number of Shares then issuable upon exercise of
the Option (collectively the "Reserved Shares"). So long as any shares of Common
Stock are listed on any national securities exchange or automated quotation
system, the Corporation will use its best efforts to cause all of the Reserved
Shares to be listed on such exchange or quotation system upon official notice of
issuance.

        6.     Non-Assignability of the Option. Optionee may not sell, assign or
otherwise encumber or dispose of the Option or any interest therein, except by
Will or the laws of descent and distribution.

        7.     Registration or Exemption. The Corporation shall not be obligated
to issue any Shares if, in the opinion of counsel to the Corporation, the Shares
to be so issued are required to be registered or otherwise qualified under the
Securities Act of 1933, as amended, or under any other applicable statute,
regulation or ordinance affecting the sale of securities, unless and until such
shares have been so registered or otherwise qualified. The Corporation shall
promptly prepare and file a registration statement under the Securities Act of
1933, as amended (the "Act") with respect to the issuance of the Shares and
shall cause such registration statement to become effective as promptly as
practical but in no event later than 180 days following the date hereof and
shall cause such registration statement to remain in effect (together with a
resale prospectus at all times meeting the requirements of the Act) until all of
the Shares have been issued to Optionee or his right to receive any Shares
terminates or expires, and, with respect to the resale prospectus, until such
registration statement is no longer required for Optionee to publicly offer and
sell such Shares.

        8.     Adjustments; Merger or Consolidation. (a) New option rights may
be substituted for the Option, or the Corporation's duties under the Option may
be assumed by a corporation other than the Corporation, or by a parent or
subsidiary of the Corporation or such corporation, in connection with any
merger, consolidation, acquisition, separation, reorganization, liquidation or
other similar corporate transaction in which the Corporation is involved.
Notwithstanding the foregoing or the provisions of this Paragraph 8, in the
event such corporation, or parent or subsidiary of the Corporation or such
corporation, does not substitute new option rights for, and substantially
equivalent to, the Option, or assume the Option, the Option shall terminate and
thereupon become null and void (i) upon dissolution or liquidation of the
Corporation, or similar occurrence, (ii) upon any merger, consolidation,
acquisition, separation, reorganization, or similar occurrence, where the
Corporation will not be a surviving entity or (iii) upon a transfer of
substantially all of the assets of the Corporation or more than 80% of the
outstanding Common Stock in a single transaction; provided, however, that
Optionee shall have the right immediately prior to or concurrently with such
dissolution, liquidation, merger, consolidation, acquisition, separation,
reorganization or other similar corporate transaction, to exercise any unexpired
Option whether or not then exercisable.

        (b)   In the event that the Corporation determines that any dividend or
other distribution (whether in the form of cash, shares, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of shares or other securities of the Corporation,
issuance of warrants or other rights to purchase shares or other securities of
the Corporation, or other corporate transaction or event affects the Shares such
that an adjustment is determined by the Corporation to be appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Option, then the Corporation shall, in
such manner as it may deem equitable, adjust any or all of (i) the number of
Shares or other securities of the Corporation (or number and kind of other
securities or property) subject to the Option and (ii) the purchase or other
price with respect to the Option or, if deemed appropriate by the Corporation,
make provision for a cash payment to Optionee including, if necessary, the
termination of the Option. Without limiting the generality of the foregoing, any
such adjustment shall be deemed to have prevented any dilution and enlargement
of Optionee's rights if Optionee

2

--------------------------------------------------------------------------------

receives in any such adjustment rights which are substantially similar (after
taking into account the fact that Optionee has not paid the applicable exercise
price) to the rights that Optionee would have received had he exercised the
Option and become a stockholder of the Corporation immediately prior to the
event giving rise to such adjustment.

        (c)   Adjustments and elections under this Paragraph 8 shall be made by
the Corporation's Stock Option Committee, whose determination as to what
adjustments, if any, shall be made and the extent thereof shall be final,
binding and conclusive.

        (d)   In applying the provisions of this Paragraph 8, actions taken or
determinations made by the Corporation or the Stock Option Committee shall be
taken or made reasonably and in good faith, in accordance with the terms of this
Paragraph 8, and such actions or determinations shall be made in the same manner
as they are made for other executive officers of the Corporation.

        9.     Right to Acquire Additional Options. (a) If the Corporation
issues additional shares of Common Stock to persons other than Optionee after
the date hereof under any circumstances whatsoever, whether pursuant to the
exercise of options, warrants or similar rights or otherwise, but prior to the
second anniversary of the date hereof, and Optionee remains employed pursuant to
the Employment Agreement at the time of such issuance, then, on each such
occasion, the Corporation shall promptly grant to Optionee an option to
purchase, at any time prior to 5:00 p.m. on May 5, 2013, Additional Shares in an
amount (a) equal to 3.23% of the shares so issued if such issuance occurs prior
to the first anniversary of the date hereof, and (b) equal to the percentage of
such shares so issued (but not to exceed 3.23%) determined by dividing (i) the
number of Shares then issuable under unexercised options to purchase Common
Stock held by Optionee granted under this Agreement or under the 2002 Plan
Option Agreement (collectively, the "Original Option Agreements") immediately
prior to such issuance by (ii) the number of outstanding shares of Common Stock
immediately prior to such issuance. In each case, the exercise price of each
such Additional Option shall be the closing price on the New York Stock Exchange
on the date of issue of such Additional Shares. The number of Additional Shares
so issued shall be rounded up (if it includes a fraction that equals or exceeds
.5 shares) or down (if it includes a fraction that is less than .5 shares) to
the nearest whole number of shares. In no event will the aggregate number of
Additional Shares exceed 2,250,000 shares of Common Stock (subject to adjustment
as provided in Paragraph 8 hereof). If prior to the second anniversary of the
date hereof, Optionee's employment under the Employment Agreement is terminated
by the Corporation without "cause", as such term is defined in the Employment
Agreement, or Optionee resigns his employment for "good reason" under clauses
(i), (ii) or (iii) of Section 14.4 of the Employment Agreement, Optionee's right
to receive Additional Options hereunder shall continue until the earlier of
(i) 90 days after such termination or resignation, and (ii) the second
anniversary of the date hereof.

        (b)   Each Additional Option shall become vested and may be exercised in
accordance with the provisions of this Paragraph 9(b). If none of the options
granted under the Original Option Agreements have been exercised, then each
Additional Option may be exercised for up to 25% of the Shares subject thereto
on or after May 6, 2004, and the remaining 75% of such Shares shall become
exercisable in twelve equal quarterly installments on the first day of each
August, November, February and May thereafter. If any options granted under the
Original Option Agreements have been exercised, then each Additional Option may
be exercised on the vesting dates of the remaining unexercised Shares issuable
under the Original Option Agreements in the proportion that the remaining
unexercised Shares issuable under the Original Option Agreements on such vesting
dates bear to the total remaining unexercised Shares. For example, if of the
1,500,000 Shares issuable under the Original Option Agreements, 300,000 have
been exercised leaving 1,200,000 Shares remaining unexercised, and if under the
vesting schedule for the Original Options 375,000 Shares would have been
exercisable on May 6, 2004, and the balance would have become exercisable as to
93,750 Shares on the first day of each August, November, February and

3

--------------------------------------------------------------------------------

May thereafter, then with respect to the Original Options, 75,000 (or 6.25%) of
the 1,200,000 remaining Shares would have become exercisable on May 6, 2004, and
93,750 (or 7.8125%) of the 1,200,000 remaining Shares would have become
exercisable on each August, November, February and May thereafter. Accordingly,
with respect to Additional Options, 6.25% would be exercisable on or after
May 6, 2004, and the remaining 93.75% would become exercisable in twelve equal
quarterly installments of 7.8125% on each August, November, February and May
thereafter. If any installment includes a fraction of a share, such fraction
shall be carried forward to subsequent installments. In the event of a "Change
of Control," as such term is defined in the Employment Agreement, all Additional
Options shall immediately become fully exercisable.

        (c)   Other than as specified in this Paragraph 9, Optionee shall have
the same rights under each Additional Option as he has under this Agreement.

        10.   No Rights in Option Stock. Optionee shall have no rights as a
stockholder in respect of Shares as to which the Option shall not have been
exercised and payment made as herein provided.

        11.   Representations of the Corporation. The Corporation represents and
warrants as follows:

        (a)   The entering into and performance of this Agreement by the
Corporation has been duly authorized by all necessary corporate action, and this
Agreement represents the valid and binding obligation of the Corporation
enforceable in accordance with its terms.

        (b)   The Shares have been duly authorized and reserved for issuance in
accordance with the terms of this Agreement.

        12.   Enforceability. Should a court of competent jurisdiction deem any
of the provisions in this Agreement to be unenforceable in any respect, it is
the intention of the parties to this Agreement that this Agreement be enforced
to the greatest extent deemed to be enforceable.

        13.   Governing Law; Attorneys Fees to Prevailing Party. This Agreement
shall be governed, interpreted and construed in accordance with the substantive
laws of the State of Illinois applicable to agreements entered into and to be
performed entirely therein. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts located in Cook County,
Illinois and waives any claims based on forum non-conveniens. In the event any
legal proceedings are commenced by the Corporation against the Executive or by
the Executive against the Corporation for any actual or threatened violation of
this Agreement, the prevailing party in such proceeding shall be entitled to
recover from the losing party all costs and expenses of any kind, including
reasonable attorneys fees, incurred in connection with such proceedings.

        14.   Withholding. The Corporation may establish, from time to time,
appropriate procedures to provide for payment or withholding of such income or
other taxes as may be required by law to be paid or withheld in connection with
the exercise of the Option. Optionee shall pay to the Corporation all such
amounts requested by the Corporation to permit the Corporation to take any tax
deduction available to it resulting from the exercise of the Option. Optionee
shall also comply with any procedures established from time to time by the
Corporation to ensure that the Corporation receives prompt notice of the
occurrence of any event which may create, or affect the timing or amount of, any

4

--------------------------------------------------------------------------------

obligation to pay or withhold any such taxes or which may make available to the
Corporation any tax deduction resulting from the occurrence of such event.

    MIDWAY GAMES INC.
 
 
By:
 
/s/  NEIL D. NICASTRO      

--------------------------------------------------------------------------------

    Name:   Neil D. Nicastro     Title:   Chief Executive Officer
ACCEPTED AND AGREED TO
this 6th day of May, 2003.
 
 
 
 
/s/  DAVID ZUCKER      

--------------------------------------------------------------------------------

David Zucker
 
 
 
 

5

--------------------------------------------------------------------------------

EXHIBIT 1

Dated:                        

MIDWAY GAMES INC.
2704 West Roscoe Street
Chicago, IL 60618
Attn: Deborah K. Fulton, Esq.

Ladies and Gentlemen:

        Notice is hereby given of my election to purchase            shares of
common stock, par value $.01 per share, of Midway Games Inc. (the "Corporation")
at a price of                         per share under the provisions of the
stock option ("Option") granted to me on May            , 2003.

        Enclosed is my check made payable to Midway Games Inc. in the amount of
$                        in payment of the exercise price of the Option and my
check in the amount of $                        also made payable to Midway
Games Inc. in payment of the tax due on exercise of the Option.

        The following information is supplied for use in issuing and registering
the shares purchased:

    Number of certificates requested:

--------------------------------------------------------------------------------

    Denomination of each certificate:

--------------------------------------------------------------------------------

    Full Name:

--------------------------------------------------------------------------------

    Name to be printed on each certificate, if different:

--------------------------------------------------------------------------------

    Address:

--------------------------------------------------------------------------------

    Address of holder, if different:

--------------------------------------------------------------------------------

    Social Security Number of holder:

--------------------------------------------------------------------------------

    Very truly yours,
 
 

--------------------------------------------------------------------------------

6

--------------------------------------------------------------------------------

QuickLinks

EXHIBIT 10.2

EXHIBIT 1