Exhibit 10.3
EXECUTION COPY
WAIVER, CONSENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT
          WAIVER, CONSENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of
April 30, 2008 (this “Amendment”), among ATARI, INC., a Delaware corporation, as
borrower (the “Borrower”), the lenders party to the Credit Agreement referred to
below (the “Lenders”), and BLUEBAY HIGH YIELD INVESTMENTS (LUXEMBOURG) S.A.R.L.,
as successor administrative agent (in such capacity, the “Administrative
Agent”). Capitalized terms used and not otherwise defined herein shall have the
meanings given them in the Credit Agreement referred to below.
W I T N E S S E T H:
          WHEREAS, the parties hereto are parties to that certain Credit
Agreement, dated as of November 3, 2006 (as amended, supplemented or otherwise
modified to, but not including, the date hereof, the “Credit Agreement”);
          WHEREAS, the Events of Default specified on Schedule 1 hereto have
occurred prior to and are continuing as of the date hereof (the “Existing
Defaults”); and
          WHEREAS, the Borrower has requested that the Lenders (i) waive the
Existing Defaults, (ii) consent to a revised Budget and to the incurrence by the
Borrower of one or more loans from IESA in an aggregate principal amount not to
exceed $20,000,000, and (iii) amend the Credit Agreement, and the Lenders have
agreed to such waiver, consents and amendments, in all cases on the terms and
conditions set forth herein.
          NOW, THEREFORE, it is agreed:
I. Waiver. Subject to the terms and conditions of this Amendment, and in
reliance on the representations, warranties and covenants of the Borrower
contained herein, from and after the Fourth Amendment Effective Date (as defined
below), the Lenders waive the Existing Defaults. Nothing herein shall be deemed
to constitute a waiver of compliance by the Borrower with its representations,
warranties, covenants or obligations under, or compliance with any other term,
provision or condition of, the Credit Agreement (as amended hereby) or any other
Loan Document from and after the Fourth Amendment Effective Date.
II. Consent. Subject to the terms and conditions of this Amendment, and in
reliance on the representations, warranties and covenants of the Borrower
contained herein, from and after the Fourth Amendment Effective Date, and
notwithstanding anything to the contrary contained in any Loan Document, the
Lenders hereby consent to (i) the updated Budget attached hereto as Exhibit A,
which shall constitute the current Budget for all purposes under the Loan
Documents (as it may be updated in accordance with the terms of the Credit
Agreement, as amended hereby) and (ii) Borrower entering into and consummating
the transactions contemplated by the Temporary Liquidity Facility Credit
Agreement, including the incurrence thereunder by the Borrower of one or more
loans from IESA in an aggregate principal amount not to exceed $20,000,000 and
(iii) the Borrower entering into and consummating the transactions contemplated
by the Merger Agreement (as defined below).

 

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III. Amendments to the Credit Agreement. Subject to the terms and conditions of
this Amendment, and in reliance on the representations, warranties and covenants
of the Borrower contained herein, from and after the Fourth Amendment Effective
Date, the Credit Agreement is amended as follows:
          1. Section 1.01 is amended as follows:
          (a) the definition of “Budget” is amended by deleting ”, which shall
not be unreasonably withheld or delayed” and substituting “which consent shall
be given or withheld in the Agent’s commercially reasonable discretion” in lieu
thereof;
          (b) the definition of “Intercreditor Agreement” is amended and
restated as follows:
     “‘Intercreditor Agreements’ shall mean, collectively, the TDU License
Intercreditor Agreement and the Temporary Liquidity Facility Intercreditor
Agreement.”;
          (c) the definition of “Material Adverse Deviation” is amended by
deleting the reference to “10%” contained therein and substituting “20%” in lieu
thereof; and
          (d) the following new defined terms are inserted in their appropriate
alphabetical order:
     “‘Certified Variance Report’ has the meaning assigned to such term in
Section 5.01(e).”;
     “‘Fourth Amendment Effective Date’ shall have the meaning given such term
in that certain Waiver, Consent and Fourth Amendment to Credit Agreement, dated
as of April 30, 2008, among the Borrower, the Lenders and the Administrative
Agent.”;
     “‘Merger Agreement’ shall mean that certain Agreement and Plan of Merger
dated as of the Fourth Amendment Effective Date by and among IESA, IRATA
Acquisition Corp, a Delaware corporation, and the Borrower.”;
     “‘TDU License Intercreditor Agreement’ shall mean that certain
Intercreditor Agreement, dated as of November 21, 2007, among the Administrative
Agent, IESA and the Borrower, as amended, restated, supplemented, or otherwise
modified from time to time.”;
     “‘Temporary Liquidity Facility Credit Agreement’ shall mean that certain
Credit Agreement, dated as of the Fourth Amendment Effective Date, between the
Borrower and IESA, as amended, restated, supplemented, or otherwise modified
from time to time with the prior written consent of the Administrative Agent (to

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the extent required in accordance with the Temporary Liquidity Facility
Intercreditor Agreement).’; and
     “‘Temporary Liquidity Facility Intercreditor Agreement’ shall mean that
certain Temporary Liquidity Facility Intercreditor Agreement, dated as of the
Fourth Amendment Effective Date, among the Administrative Agent, IESA and the
Borrower, as amended, restated, supplemented, or otherwise modified from time to
time in accordance with the terms thereof.”.
          2. Section 2.11 is amended by (i) deleting “Section 6.01(h)” from
subsection (d) and substituting “Section 6.01(f)” therefor, (ii) relettering
subsection (g) as subsection (i), and (iii) adding the following new subsections
(g) and (h):
“(g) On the last Business Day of each calendar month, the Borrower shall make a
mandatory prepayment of the Loans in an amount equal to the amount by which the
Borrower’s cash receipts (excluding proceeds of Loans under and as defined in
the Temporary Liquidity Facility Credit Agreement) exceeded the Borrower’s cash
disbursements during the most recently ended four-week period, as determined
with reference to the most recently delivered Certified Variance Report; the
Aggregate Revolving Commitment shall be permanently reduced by the amount of
such prepayments and the amount of such prepayments may not be reborrowed.
(h) Notwithstanding anything to the contrary contained in this Agreement, the
application of amounts prepaid pursuant to subsections (a), (c), (d), (e),
(f) and (g) of this Section 2.11 are subject to the terms of the Temporary
Liquidity Facility Intercreditor Agreement.”.
          (a) Section 5.01(e) is amended by inserting “(a “Certified Variance
Report”)” immediately after the “report” in the first place it appears.
          3. Section 6.01(f) is amended and restated in its entirety as follows:
     “(f) Subject to the terms of the Temporary Liquidity Facility Intercreditor
Agreement, Indebtedness of the Credit Parties arising under the Temporary
Liquidity Facility Credit Agreement;”.
          4. Subsection 6.02 is amended by (i) deleting “Intercreditor
Agreement” from subsection (c) and substituting “TDU License Intercreditor
Agreement” therefor, (ii) deleting “and” from the end of subsection (c),
(iii) relettering subsection (d) as subsection (e), and (iv) inserting a new
subsection (d) as follows:
     “(d) Liens created to secure obligations arising under the Temporary
Liquidity Facility Credit Agreement; provided that such Liens are in accordance
with and subject to the terms of the Temporary Liquidity Facility Intercreditor
Agreement; and”.

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          5. Section 6.07(e) is amended by inserting “and the Temporary
Liquidity Facility Credit Agreement” immediately before the period at the end
thereof.
          6. Article VII is amended by (i) inserting “an Event of Default under
the Temporary Liquidity Facility Credit Agreement shall occur, or any party
thereto elects to terminate the Merger Agreement, or” in subsection
(m) immediately before “a Change in Control”, and (ii) deleting “the
Intercreditor Agreement” from subsection (n) and substituting “either of the
Intercreditor Agreements” therefor.
IV. Acknowledgments and Agreements.
          1. The Borrower acknowledges and agrees that each of the Loan
Documents to which it is a party (i) constitutes its legal, valid and binding
obligation, and is enforceable against it in accordance with its terms, except
to the extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally affecting
creditors’ rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law), and (ii) is hereby reaffirmed and ratified,
including without limitation, each of the waiver of claims and defenses granted
by the Borrower under the Loan Documents. Without limiting the generality of the
foregoing, the Borrower unconditionally and irrevocably waives any claim or
defense in respect of the Obligations, including, without limitation, any claim
or defense based on any right of setoff or counterclaim.
          2. As of the Fourth Amendment Effective Date, the Borrower
acknowledges and agrees that it is indebted to the Lenders in the aggregate
principal amount of $14,000,000, which is the outstanding principal amount of
the Revolving Loans plus accrued and unpaid and accruing interest and fees,
including default rate interest. Nothing contained herein shall alter, amend,
modify or extinguish the obligation of the Borrower to repay the Obligations,
and neither this Amendment nor any of the other documents, agreements or
instruments executed or delivered in connection herewith or related hereto
constitutes a novation or, except as expressly provided herein, modification of
any of the Loan Documents.
          3. The Borrower acknowledges and agrees that all of its assets
pledged, assigned, conveyed, mortgaged, hypothecated or transferred to the
Administrative Agent for the benefit of the Lenders pursuant to the Collateral
Documents including, without limitation, the Collateral, are (and shall continue
to be) subject to the fully perfected first priority liens and security
interests of the Administrative Agent for the benefit of the Lenders (subject
only to Permitted Encumbrances), as collateral security for all of the
Obligations. Without limiting the other provisions of the Loan Documents, the
Borrower will, and will cause its Subsidiaries to, promptly take all actions and
execute or deliver all documents, agreements and instruments, including any
Uniform Commercial Code financing statement amendments, U.S. Patent and
Trademark filings and/or amendments to or new control agreements in respect of
any of the Borrower’s Deposit Accounts (as defined in the Waiver and Amendment
to Credit Agreement), required by the Administrative Agent to implement the
transactions contemplated by the Amendment and the documents, agreements and/or
instruments executed or delivered in connection herewith. The Borrower hereby
respectively reaffirms and ratifies its prior conveyance to the Administrative
Agent for the benefit of the Lenders of a continuing security interest in and
lien on the Collateral described in the instrument conveying such security
interest.

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          4. If any of the rights of any Grantor (under and as defined in the
Pledge and Security Agreement) under any contract that would otherwise be
included in the definition of Collateral therein are excluded from such
definition because they fall within the scope of Section (i) of the second
sentence of such definition, then, at the request of the Agent, such Grantor
shall use commercially reasonable efforts to cause the other parties to such
contract to execute a written consent and waiver consenting to the inclusion of
such Grantor’s rights under such contract in the Collateral and waiving the
effect of any provisions of such contract to the contrary.
V. Representations and Warranties. In order to induce the Lenders to enter into
this Amendment, the Borrower hereby represents and warrants as follows:
          1. After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing, and all of the representations and
warranties contained in the Credit Agreement and in the other Loan Documents are
true and correct in all material respects on and as of the Fourth Amendment
Effective Date, it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be true and
correct in all material respects only as of such specified date.
          2. It has the power, and has been duly authorized by all requisite
action, to execute and deliver this Amendment and the other documents,
agreements and instruments executed or delivered in connection herewith to which
it is a party, and to perform its obligations hereunder and thereunder. This
Amendment and the other documents, agreements and instruments executed and
delivered in connection herewith have been duly executed and delivered by it.
This Amendment and the other documents, agreements and instruments executed and
delivered in connection herewith are its legal, valid and binding obligations,
enforceable against it in accordance with their respective terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors’ rights generally
(regardless of whether enforcement is sought at equity or at law).
          3. Neither the execution, delivery or performance by the Borrower of
this Amendment or of the other documents, agreements or instruments executed and
delivered in connection herewith to which it is a party, nor compliance by it
with the terms and provisions hereof or thereof, will (i) contravene any
provision of any law, statute, rule or regulation or any order, writ, injunction
or decree of any court or governmental instrumentality, except for those set
forth on Schedule 3.03 to the Credit Agreement or for immaterial such
contraventions arising as a result of the execution, delivery or performance of
this Amendment or the other documents, agreements or instruments executed and
delivered in connection herewith, (ii) conflict with or result in any breach of
any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien (except pursuant to the Loan Documents and the
Temporary Liquidity Facility Credit Agreement) upon any of the property or
assets of the Borrower or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, deed to secure debt, credit agreement or
loan agreement, or any other material agreement, contract or instrument (other
than

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those set forth on Schedule 3.03 of the Credit Agreement), in each case to which
the Borrower or any of its Subsidiaries is a party or by which it or any of its
property or assets is bound or to which it may be subject, or (iii) violate any
provision of the certificate or articles of incorporation, certificate of
formation, limited liability company agreement or by-laws (or equivalent
organizational documents), as applicable, of the Borrower or any of its
Subsidiaries.
          4. Except as set forth on Schedule 3.06 of the Credit Agreement, no
order, consent, approval, license, authorization or validation of, or filing,
recording or registration with (except for (x) those that have otherwise been
obtained or made on or prior to the Fourth Amendment Effective Date and which
remain in full force and effect on the Fourth Amendment Effective Date,
(y) those filings which are necessary to perfect the security interests created
under the Collateral Documents, and (z) those disclosure filings to be made with
the Securities and Exchange Commission or any successor thereto (the “SEC”),
provided that such filings are made within the required time periods or are
waived (as specified by applicable laws)), or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to be obtained
or made by, or on behalf of, the Borrower to authorize, or is required to be
obtained or made by, or on behalf of, the Borrower in connection with, (i) the
execution, delivery and performance of this Amendment or any document, agreement
or instrument executed or delivered in connection herewith to which it is a
party, or (ii) the legality, validity, binding effect or enforceability of this
Amendment or any document, agreement or instrument executed or delivered in
connection herewith to which it is a party.
          5. There are no pending or, to the best knowledge of the Borrower
after due inquiry, threatened, actions suits or proceedings (i) with respect to
this Amendment or any document, agreement or instrument executed or delivered in
connection herewith, or (ii) other than those previously disclosed to the
Administrative Agent in writing, that would reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect.
          6. Set forth on Schedule 2 hereto is a correct and complete list of
all Subsidiaries of the Borrower and their respective jurisdictions of
organization. To the Knowledge of the Borrower, (a) each of the Subsidiaries of
the Borrower is directly or indirectly wholly owned by the Borrower, and the
equity of each such Subsidiary is owned free and clear of any Liens, (b) the
Borrower does not own, directly or indirectly, any capital stock of, or any
other securities convertible or exchangeable into or exercisable for capital
stock of, any Person other than the Subsidiaries of the Borrower, and (c) each
of the Subsidiaries does not conduct any business or other activities, is
inactive, is not party to any contracts and has no employees, minimal assets and
no liabilities. As used in this section only, “Knowledge” means the actual
knowledge of Jim Wilson, Kristina Pappa and Arturo Rodriguez.
VI. Conditions to Effectiveness. This Amendment shall become effective on the
date (the “Fourth Amendment Effective Date”) when (i) the Borrower and the
Lenders shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Administrative Agent; and (ii) the Administrative
Agent shall have received the following:

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     (a) from the Borrower, in immediately available funds, the unpaid fees and
expenses of White & Case LLP incurred in connection with this Amendment;
     (b) from the Borrower, in immediately available funds, a wavier and
amendment fee in the amount of $75,000, which shall be fully earned and
nonrefundable when paid;
     (c) an updated Budget for the Budget Period commencing with the week
immediately following the Fourth Amendment Effective Date, in the form of
Exhibit A hereto;
     (d) the Temporary Liquidity Facility Intercreditor Agreement in the form of
Exhibit B hereto, duly executed by IESA and the Borrower;
     (e) copies of the Temporary Liquidity Facility Credit Agreement, and of all
documents, agreements and instruments executed or delivered in connection
therewith, together with a certificate of the Borrower’s secretary or assistant
secretary certifying that such copies are true, complete and correct, and that
all conditions precedent to the effectiveness thereof have been satisfied or
waived in writing;
     (f) copies of the Agreement and Plan of Merger, dated as of the Fourth
Amendment Effective Date (the “Merger Agreement”), by and between the Borrower
and IESA, and of all documents, agreements and instruments executed or delivered
in connection therewith, together with a certificate of the Borrower’s secretary
or assistant secretary certifying that such copies are true, complete and
correct, and that all conditions precedent to the effectiveness thereof have
been satisfied or waived in writing;
     (g) a certificate of the Borrower’s secretary or assistant secretary
certifying the identity, authority, capacity and signatures of its officers who
are authorized to execute this Amendment and, as the case may be, the other
documents, agreements and instruments executed or delivered in connection
herewith to which it is a party;
     (h) copies, certified by the secretary or assistant secretary of the
Borrower, of the resolutions of its board of directors or similar governing
body, approving this Amendment and, as the case may be, the documents,
agreements and instruments executed or delivered in connection herewith to which
it is a party, and the transactions contemplated hereby and thereby;
     (i) an opinion of counsel to the Borrower addressed to each of the
Administrative Agent and Lenders, dated as of the Fourth Amendment Effective
Date, in form and substance satisfactory to the Administrative Agent; and
     (j) such other documents, instruments, and agreements reasonably requested
by the Administrative Agent.
VII. RELEASE. IN CONSIDERATION OF THE ADMINISTRATIVE AGENT’S AND EACH LENDER’S
EXECUTION OF THIS AMENDMENT, AND OF EACH BORROWING FROM TIME TO TIME AFTER THE
FOURTH AMENDMENT EFFECTIVE DATE, THE

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BORROWER UNCONDITIONALLY AND IRREVOCABLY ACQUITS AND FULLY FOREVER RELEASES AND
DISCHARGES THE ADMINISTRATIVE AGENT AND EACH LENDER, AND THEIR MANAGEMENT
COMPANY AND ALL AFFILIATED FUNDS UNDER THE MANAGEMENT OF SUCH MANAGEMENT
COMPANY, AND EACH OF THEIR RESPECTIVE PARTNERS, SUBSIDIARIES, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS, FINANCIAL ADVISORS, PRINCIPALS, DIRECTORS AND
SHAREHOLDERS OF SUCH PERSONS, AND THEIR RESPECTIVE HEIRS, LEGAL REPRESENTATIVES,
SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “RELEASEES”), FROM ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION, OBLIGATIONS, REMEDIES, SUITS, DAMAGES AND LIABILITIES
OF ANY NATURE WHATSOEVER, WHETHER OR NOT NOW KNOWN, SUSPECTED OR CLAIMED,
WHETHER ARISING UNDER COMMON LAW, IN EQUITY OR UNDER STATUTE, WHICH THE BORROWER
EVER HAD OR NOW HAS AGAINST ANY OF THE RELEASEES AND WHICH MAY HAVE ARISEN AT
ANY TIME PRIOR TO THE DATE HEREOF AND WHICH WERE IN ANY MANNER RELATED TO THIS
AMENDMENT, THE CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY RELATED
DOCUMENTS, INSTRUMENTS OR AGREEMENTS, OR THE ENFORCEMENT OR ATTEMPTED OR
THREATENED ENFORCEMENTS BY ANY OF THE RELEASEES OF ANY OF THEIR RESPECTIVE
RIGHTS, REMEDIES OR RECOURSE RELATED THERETO.
VIII. Miscellaneous.
          1. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
          2. This Amendment is limited as specified and, except as expressly set
forth herein, shall not constitute a modification, acceptance or waiver of any
other provision of the Credit Agreement or any Loan Document.
          3. THIS AMENDMENT, AND THE DOCUMENTS, AGREEMENTS AND INSTRUMENTS
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS
PRINCIPLES THEREOF. Each of the parties hereto agrees that the provisions of
Section 9.09 of the Credit Agreement shall apply to any action with respect to
this Amendment, and the documents, agreements and the instruments, executed or
delivered in connection herewith.
          4. All notices and other communications provided for hereunder shall
be made or given to the parties hereto in the manner and at the address and
telecopier numbers specified in Section 9.01 of the Credit Agreement and shall
be deemed made or given, and effective, as set forth in such section.

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          5. From and after the Fourth Amendment Effective Date, all references
in the Credit Agreement and each of the other Loan Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement as modified
hereby. This Amendment shall constitute a Loan Document for all purposes under
the Credit Agreement and the other Loan Documents.
* * *

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          IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.

            ATARI, INC., as Borrower
      By:   /s/ Eugene I. Davis         Name:   Eugene I. Davis        Title:  
Chairman of the Board of Directors     

     
 
  BLUEBAY HIGH YIELD INVESTMENTS (LUXEMBOURG) S.A.R.L.,
 
  as administrative agent and lender
 
   
 
  By: BlueBay Asset Management PLC,
 
  acting as agent for BlueBay High Yield Investments
 
  (Luxembourg) S.a.r.l.

                  By:   /s/ Frederic Nada         Name:   Frederic Nada       
Title:   Vice President