EX-10.1



 





Exhibit 10.1




[ATARI, INC. LETTERHEAD]




DAVID R. PIERCE

President and Chief Executive Officer

Atari, Inc.

417 Fifth Avenue, 7th Floor

New York, NY 10016

Direct Dial: 212-726-6981






October 1, 2007




Guggenheim Corporate Funding, LLC,
     as
Administrative Agent

135 East 57th Street

7th Floor

New York, New York 10022

Attention: Tony Minella



Re: Second Waiver under Credit Agreement (this “Waiver”)



Ladies and Gentlemen:




     We refer to the Credit Agreement dated as of November 3, 2006 (as amended, restated,
supplemented, or otherwise modified from time to time, the “Credit Agreement”) among Atari,
Inc. (the “Borrower”), the lenders party thereto (the “Lenders”) and Guggenheim
Corporate Funding, LLC, in its capacity as administrative agent for the Lenders thereunder (the
“Administrative Agent”). Capitalized terms used herein and not defined herein are used
herein as defined in the Credit Agreement.



     Pursuant to Section 3.16 of the Credit Agreement, the Borrower represents that immediately
following the making of each Loan and after giving effect to the application of the proceeds of
such Loan (a) the fair value (measured on a going concern basis) of the assets of the Credit
Parties, taken as a whole, will exceed their debts and liabilities, subordinated, contingent or
otherwise; (b) the present fair saleable value (measured on a going concern basis) of the property
of the Credit Parties, taken as a whole, will be greater than the amount that will be required to
pay the probable liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured in the ordinary course
of business; (c) the Credit Parties, taken as a whole, will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute
and matured;




 









 





and (d) the Credit Parties, taken as a whole, will not have unreasonably small capital
with which to conduct the business in which they are engaged as such business is now conducted and
is proposed to be conducted following the Effective Date (the “Solvency Representation”).





     The Borrower hereby requests that the Lenders waive, effective as of May 31, 2007 and until the end
of business on the date on which Borrower draws the one-time Revolving Loan contemplated below, the
requirement that the Borrower make the Solvency Representation.



     Pursuant to Section 5.01 of the Credit Agreement, the Borrower is required to deliver certain
financial statements and other information to the Administrative Agent and each Lender within
specified periods of time (the “Financial Reporting Requirements”). The Borrower has not
yet filed its Quarterly Report for the quarter ended June 30, 2007 and the Borrower was late in
filing its Annual Report for the fiscal year ended March 31, 2007 (collectively, the
“Delinquent Reports”). As such, the Borrower did not timely deliver the required financial
information and is therefore in default of Clause (e) of Article VII of the Credit Agreement. The
Borrower hereby requests that the Administrative Agent and the Lenders waive compliance with the
Financial Reporting Requirements for the year, quarters and months ending March 31, 2007 through
and including June 30, 2007, as applicable.



     Pursuant to Section 5.08, Borrower is required to comply with all laws, rules, regulations and
orders of any Governmental Authority. As noted above, Borrower did not timely file the Delinquent
Reports with the Securities and Exchange Commission (“SEC”), as mandated by SEC and NASDAQ
rules and regulations, which may have violated Section 5.08. The Borrower hereby requests that the
Administrative Agent and Lenders waive compliance with Section 5.08 with respect to the timely
filing of the Delinquent Reports.



     Pursuant to Section 6.12 of the Credit Agreement, the Borrower covenanted and agreed with the
Lenders not to permit Consolidated EBITDA for the fiscal quarter ending June 30, 2007 to be less
than -$8,150,000. The Borrower’s Consolidated EBITDA for the fiscal quarter ended June 30, 2007
was less than -$8,150,000, accordingly, the failure of the Borrower to have Consolidated EBITDA for
the fiscal quarter ended June 30, 2007 of not less than -$8,150,000 has constituted an Event of
Default pursuant to Clause (d) of Article VII of the Credit Agreement since June 30, 2007 (the
“Specified EBITDA Default”). The Borrower hereby requests that the Required Lenders waive,
effective as of June 30, 2007, the Specified EBITDA Default.



     Pursuant to Section 6.13 of the Credit Agreement, the Borrower covenanted and agreed with the
Lenders not to permit its and its Domestic Subsidiaries’ Unrestricted Liquid Assets to be below
$3,000,000 at any time after January 1, 2007 (the “$3 Million Liquidity Covenant”). The
Borrower hereby requests that the Lenders waive the $3 Million Liquidity Covenant of Section 6.13
until the end of business on the date on which Borrower draws the one-time Revolving Loan
contemplated below.



     By their respective signatures below, the Administrative Agent and Lenders hereby waive:




     (1) effective as of May 31, 2007 and until the end of business on the date on
which Borrower draws the one-time Revolving Loan contemplated below,



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the requirement
to make the Solvency Representation contained in Section 3.16 of the Credit
Agreement;




     (2) effective as of March 31, 2007, the Financial Reporting Requirements of
Section 5.01 with respect to the year, quarters, and months ending March 31, 2007
through and including June 30, 2007, as applicable;




     (3) effective as of June 29, 2007, compliance with Section 5.08 of the Credit
Agreement with respect to Borrower’s failure to comply with SEC and Nasdaq rules and
regulations requiring timely filing of the Delinquent Reports;




     (4) effective as of June 30, 2007, the Specified EBITDA Defaults;




     (5) effective as of August 31, 2007 and continuing through the date on which
Borrower draws the one-time Revolving Loan contemplated below, the $3 Million
Liquidity Covenant of Section 6.13.



     This waiver shall be made for the sole purpose of making a one-time Revolving Loan under the
Revolving Commitments in an amount not to exceed $3,000,000 provided, however, that in no event
shall the Aggregate Revolving Commitment of the Lenders under the Credit Agreement exceed
$3,000,000. As consideration for this waiver the Borrower hereby agrees to pay the Lenders the sum
of $100,000 on or before 5:00 P.M. (New York time) on the effective date of this letter.



     The Borrower hereby certifies that, other than with respect to the defaults that are being
expressly waived pursuant to this Waiver, all of the representations and warranties of the Borrower
set forth in the Credit Agreement and each other Loan Document are true and correct in all material
respects on and as of the date hereof (except to the extent such representations or warranties were
made with respect to a specific date).



     Except as expressly set forth herein with respect to the defaults, covenants and
representations that are being expressly waived pursuant to this Waiver, (i) the execution,
delivery and effectiveness of this Waiver shall neither operate as a waiver of any rights, power or
remedy of the Administrative Agent or the Lenders under the Credit Agreement or any other documents
executed in connection with the Credit Agreement, nor constitute a waiver of any provision of the
Credit Agreement nor any other document executed in connection therewith and (ii) the Credit
Agreement and each Loan Document shall remain in full force and effect in accordance with its
original terms. Without limiting the generality of the foregoing, the making of a Loan or issuance
of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.



     The foregoing waivers shall be effective as of the respective dates set forth in Paragraphs
(1) through (5) above when the Administrative Agent shall have received counterparts of this Waiver
executed by the Borrower and the Lenders. This Waiver may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument. Delivery of an executed counterpart of a signature page




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of
this Waiver by facsimile shall be effective as delivery of a manually executed counterpart of this
Waiver. Except as specifically waived above, all of the terms of the Credit Agreement shall remain
unchanged and in full force and effect. On and after the date hereof, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import, and each
reference in the other Loan Documents to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as modified hereby.



     This Waiver is a Loan Document and shall be governed by, and shall be construed and enforced
in accordance with, the laws of the State of New York.



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If the Lenders agree that the foregoing accurately sets forth our understanding, please transmit to
the Borrower counterparts of this Waiver executed by the Required Lenders and the Administrative
Agent.




	 	 	 	 	 
	 	Very truly yours,



ATARI, INC.

 	 
	 	By:  	/s/
David R. Pierce
 	 
	 	 	Name:  	David R. Pierce 	 
	 	 	Title:  	President & CEO 	 
	 



Signature Page to Waiver




 









 








	 	 	 	 	 
	Consented and Agreed to:	 	 
	 
	 	 	 	 
	MIDLAND NATIONAL LIFE INSURANCE COMPANY,

     as a Lender
	 
	 	 	 	 
	By:

	 	Guggenheim Partners Advisory Company
	 	 
	 
	 	 	 	 
	By:

	 	/s/ Michael Damaso	 	 
	 

	 	 	 	 
	Name:

	 	Michael Damaso	 	 
	Title:

	 	Senior Managing Director	 	 
	 
	 	 	 	 
	NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE,

     as a Lender
	 
	 	 	 	 
	By:

	 	Guggenheim Partners Advisory Company	 	 
	 
	 	 	 	 
	By:

	 	/s/ Michael Damaso	 	 
	 

	 	 	 	 
	Name:

	 	Michael Damaso	 	 
	Title:

	 	Senior Managing Director	 	 
	 
	 	 	 	 
	GUGGENHEIM CORPORATE FUNDING, LLC,

     as Administrative Agent
	 
	 	 	 	 
	By:

	 	/s/ Stephen D. Sautel	 	 
	 

	 	 	 	 
	Name:

	 	Stephen D. Sautel	 	 
	Title:

	 	Senior Managing Director	 	 





 

 



Signature Page to Waiver