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EXECUTION COPY




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PageARTICLE IDefinitionsSECTION 1.01. Defined Terms
    
    
    1SECTION 1.02. Classification of Loans and Borrowings
    
    
    20SECTION 1.03. Terms Generally
    
    
    20SECTION 1.04. Accounting Terms; GAAP
    
    
    21ARTICLE IIThe CreditsSECTION 2.01. Commitments
    
    
    21SECTION 2.02. Loans and Borrowings
    
    
    22SECTION 2.03. Requests for Revolving Borrowings
    
    
    22SECTION 2.04. [Intentionally omitted]
    
    
    23SECTION 2.05. Letters of Credit
    
    
    23SECTION 2.06. Funding of Borrowings
    
    
    27SECTION 2.07. Interest Elections
    
    
    28SECTION 2.08. Termination and Reduction of Commitments
    
    
    29SECTION 2.09. Repayment of Loans; Evidence of Debt
    
    
    30SECTION 2.10. [Intentionally omitted]
    
    
    30SECTION 2.11. Prepayment of Loans
    
    
    30SECTION 2.12. Fees
    
    
    32SECTION 2.13. Interest
    
    
    33SECTION 2.14. Alternate Rate of Interest
    
    
    34SECTION 2.15. Increased Costs
    
    
    34SECTION 2.16. Break Funding Payments
    
    
    35SECTION 2.17. Taxes
    
    
    36SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs
    
    
    37SECTION 2.19. Mitigation Obligations; Replacement of Lenders
    
    
    39ARTICLE IIIRepresentations and WarrantiesSECTION 3.01. Organization; Powers
    
    
    40SECTION 3.02. Authorization; Enforceability
    
    
    40SECTION 3.03. Governmental Approvals; No Conflicts
    
    
    41SECTION 3.04. Financial Condition; No Material Adverse Change
    
    
    41SECTION 3.05. Properties
    
    
    41SECTION 3.06. Litigation, Labor Matters and Environmental Matters
    
    
    42
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PageSECTION 3.07. Compliance with Laws and Agreements; No Burdensome Restrictions
    
    
    43SECTION 3.08. Investment Company Status
    
    
    43SECTION 3.09. Taxes
    
    
    43SECTION 3.10. ERISA
    
    
    43SECTION 3.11. Disclosure
    
    
    43SECTION 3.12. No Default
    
    
    44SECTION 3.13. Liens
    
    
    44SECTION 3.14. Contingent Obligations
    
    
    44SECTION 3.15. Regulation U
    
    
    44SECTION 3.16. Solvency
    
    
    44SECTION 3.17. Insurance
    
    
    45SECTION 3.18. Collateral Documents
    
    
    45ARTICLE IVConditionsSECTION 4.01. Effective Date
    
    
    45SECTION 4.02. Each Credit Event
    
    
    47ARTICLE VAffirmative CovenantsSECTION 5.01. Financial Statements and Other Information
    
    
    47SECTION 5.02. Borrowing Base; Schedules
    
    
    48SECTION 5.03. Notices of Material Events
    
    
    49SECTION 5.04. Existence; Conduct of Business
    
    
    50SECTION 5.05. Payment of Obligations
    
    
    50SECTION 5.06. Maintenance of Properties; Insurance
    
    
    50SECTION 5.07. Books and Records; Inspection Rights
    
    
    51SECTION 5.08. Compliance with Laws
    
    
    51SECTION 5.09. Use of Proceeds and Letters of Credit
    
    
    51SECTION 5.10. Credit Parties Guaranty
    
    
    51SECTION 5.11. Collateral
    
    
    52SECTION 5.12. Employment Contracts
    
    
    53SECTION 5.13. Ratings
    
    
    53ARTICLE VINegative CovenantsSECTION 6.01. Indebtedness
    
    
    53SECTION 6.02. Liens
    
    
    54SECTION 6.03. Fundamental Changes
    
    
    55SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions
    
    
    56SECTION 6.05. Swap Agreements
    
    
    57
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PageSECTION 6.06. Restricted Payments
    
    
    57SECTION 6.07. Transactions with Affiliates
    
    
    57SECTION 6.08. Restrictive Agreements
    
    
    57SECTION 6.09. Changes in Fiscal Year
    
    
    58SECTION 6.10. Asset Sales
    
    
    58SECTION 6.11. Sale and Leaseback Transactions
    
    
    59SECTION 6.12. Minimum Consolidated EBITDA
    
    
    59SECTION 6.13. Liquidity
    
    
    59SECTION 6.14. Capital Expenditures
    
    
    59SECTION 6.15. Net Revenues
    
    
    59SECTION 6.16. Subsidiaries
    
    
    60ARTICLE VIIEvents of DefaultARTICLE VIIIThe Administrative AgentARTICLE IXMiscellaneousSECTION 9.01. Notices
    
    
    66SECTION 9.02. Waivers; Amendments
    
    
    67SECTION 9.03. Expenses; Indemnity; Damage Waiver
    
    
    68SECTION 9.04. Successors and Assigns
    
    
    70SECTION 9.05. Survival
    
    
    73SECTION 9.06. Counterparts; Integration; Effectiveness
    
    
    73SECTION 9.07. Severability
    
    
    73SECTION 9.08. Right of Setoff
    
    
    74SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process
    
    
    74SECTION 9.10. WAIVER OF JURY TRIAL
    
    
    74SECTION 9.11. Headings
    
    
    75SECTION 9.12. Confidentiality
    
    
    75SECTION 9.13. USA PATRIOT Act
    
    
    76SECTION 9.14. Subordination of Intercompany Indebtedness
    
    
    76SCHEDULES:Schedule 2.01   CommitmentsSchedule 3.01   Subsidiaries
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PageSchedule 3.03   Conflicting AgreementsSchedule 3.05   Owned and Leased PropertiesSchedule 3.06   Disclosed MattersSchedule 3.17   InsuranceSchedule 6.01   Existing IndebtednessSchedule 6.02   Existing LiensSchedule 6.07   Affiliate TransactionsSchedule 6.08   Existing RestrictionsEXHIBITS:Exhibit A    Form of Assignment and AssumptionExhibit B    Form of Borrowing Base CertificateExhibit C    Form of Revolving Credit NoteExhibit D    Form of Opinion of Borrowers CounselExhibit E    Form of Compliance CertificateExhibit F    List of Closing Documents
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Definitions
 Defined Terms
 ABR
 Acquisition
 Administrative Agent
 Administrative Questionnaire
 Advances
 Affected Foreign Subsidiary
 Affiliate
 Aggregate Letter of Credit Commitment
 Aggregate Revolving Commitment




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Aggregate Term Loan Commitment
 Alternate Base Rate plus 1 2
 Applicable Percentage
 Applicable Rate
 APPLICABLE RATEFOR EURODOLLAR
    
    FOR ABRTYPE OF OBLIGATION
    
    BORROWING
    
    BORROWINGRevolving Loan
    
    
    5.00
    %
    
    
    2.25
    %Participation Fee for Letters of Credit
    
    
    5.00
    %
 plus
 Approved Fund
 Assignment and Assumption Exhibit A
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Availability Period
 Board
 Borrower
 Borrowing
 Borrowing Base Certificate Exhibit B
 Borrowing Request
 Business Day provided Business
Day
 Capital Expenditures
 Capital Lease Obligations
 Change in Control
 Change in Law
 3




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Class
 Code
 Collateral
 Collateral Documents
 Commitment
 Consolidated Capital Expenditures
 Consolidated EBITDA plus minus
 Consolidated Interest Expense
 4




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Consolidated Net Income
 Control Controlling Controlled
 Credit Parties Guaranty
 Credit Party
 Customer
 Customs
 Deemed Dividend Problem
 Default
 Disclosed Matters Schedule 3.06
 Dollars dollars $
 5




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Domestic Subsidiary
 Effective Date
 Eligible Receivables
        6




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et seq et seq
        Environmental Laws
 Environmental Liability
 7




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Equity Interests
 ERISA
 ERISA Affiliate
 ERISA Event
 Eurodollar
 Event of Default
 Excluded Taxes
 8




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Federal Funds Effective Rate
 Financial Assistance Problem
 Financial Officer
 Financials
 Foreign Lender
 Foreign Subsidiary
 Formula Amount
 GAAP
 9




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Governmental Authority
 Guarantee guarantor primary
obligor provided
 Hazardous Materials
 Holders of Obligations
 Hostile Acquisition
 Indebtedness
 10




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Indemnified Taxes
 Insolvency Event
 Intercompany Indebtedness
 Interest Election Request
 Interest Payment Date
 Interest Period provided
 Issuing Lender
 11




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LC Disbursement
 LC Exposure plus
 Lenders Schedule 2.01
 Letter of Credit
 LIBO Rate LIBO Rate
 Lien
 Loan Documents
 12




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Loans
 Material Adverse Effect
 Material Indebtedness
 Maturity Date
 Moodys
 Multiemployer Plan
 Net Debt minus
 Net Proceeds
 13




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Obligations
 Off-Balance Sheet Liabilities
 Other Taxes
 Parent
 Participant
 PBGC
 Permitted Acquisition
 14




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Permitted Encumbrances
        15




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provided
 Permitted Investments
        Person
 Plan
 16




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Pledge and Security Agreement
 Prime Rate
 Pro Forma EBITDA Initial Pro Forma EBITDA
 Receivables
 Receivables Advance Rate
 Register
 17




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Regulation U
 Related Parties
 Required Lenders
 Reserves
 Restricted Payment
 Revolving Commitment Schedule 2.01
 Revolving Credit Exposure
 Revolving Credit Note
 Revolving Loan
 S&P
 Sale and Leaseback Transaction
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subsidiary parent
 Subsidiary
 Subsidiary Guarantor
 Swap Agreement provided
 Taxes
 Term Loan
 Term Loan Commitment Schedule 2.01
 Total Consideration
 Transactions
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Type
 Underlying Issuer
 Unrestricted Liquid Assets plus
 Withdrawal Liability
 Classification of Loans and Borrowings e.g. e.g. e.g. e.g. e.g. e.g.
 Terms Generally
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Accounting Terms; GAAP
  The Credits
 Commitments
  Receivables Advance Rate minus
 minus
  minus Formula Amount Revolving Credit Note Exhibit C
 Discretionary Rights
 21




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Term Loans
 Loans and Borrowings
 provided
 provided
 provided provided
  Requests for Revolving Borrowings
 22




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provided
        Letters of Credit
 General
 Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions 23
        Expiration Date provided
 Participations
 24




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Reimbursement provided mutatis mutandis
 Obligations Absolute
     25




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Disbursement Procedures provided
 Interim Interest provided
 Replacement of the Issuing Lender
 26




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Cash Collateralization provided
 Funding of Borrowings
 provided
 27




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Interest Elections
     28




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Termination and Reduction of Commitments
  provided
  29




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provided
 Repayment of Loans; Evidence of Debt
    prima facie provided
   Prepayment of Loans
 30




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31




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Fees
 provided provided
  32




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Interest
 plus
 plus
 plus plus
 provided
  33




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Alternate Rate of Interest
    provided
 Increased Costs
     34




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provided provided further
 Break Funding Payments
     35




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Taxes
 provided
      36




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Payments Generally; Pro Rata Treatment; Sharing of Set-offs
  37




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provided
   38




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Mitigation Obligations; Replacement of Lenders
   39




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provided
     Representations and Warranties
  Organization; Powers Schedule 3.01 Schedule 3.01
 Authorization; Enforceability
 40




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Governmental Approvals; No Conflicts Schedule 3.03
     Financial Condition; No Material Adverse Change
    41




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Properties
   Schedule 3.05
 Litigation, Labor Matters and Environmental Matters
        Schedule 3.06 Schedule 3.06
 42




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Compliance with Laws and Agreements; No Burdensome Restrictions
    Investment Company Status
 Taxes
 ERISA
 Disclosure
 43




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provided
 No Default
 Liens
 Contingent Obligations
 Regulation U
   Solvency
 44




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Insurance Schedule 3.17
 Collateral Documents
  Conditions
 Effective Date
  Exhibit D
   45




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Exhibit F
  46




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Each Credit Event
      Affirmative Covenants
  Financial Statements and Other Information
  47




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Exhibit E
   Borrowing Base; Schedules
 48




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Notices of Material Events
      49




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Existence; Conduct of Business provided
 Payment of Obligations
 Maintenance of Properties; Insurance
 50




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Books and Records; Inspection Rights
 Compliance with Laws
 Use of Proceeds and Letters of Credit
 Credit Parties Guaranty
 51




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Collateral
   52




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Employment Contracts
 Ratings
  Negative Covenants
  Indebtedness
  Schedule 6.01
    53




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provided
  provided
 Liens
  Schedule 6.02 provided
 provided
   54




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provided
      Fundamental Changes
   provided however
   55




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Investments, Loans, Advances, Guarantees and Acquisitions
          56




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Swap Agreements
   Restricted Payments provided
 Transactions with Affiliates
   Schedule 6.07(c)
   Restrictive Agreements
 57




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provided
  Schedule 6.08
    Changes in Fiscal Year
 Asset Sales
     58




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provided
 Sale and Leaseback Transactions
 Minimum Consolidated EBITDA
 Quarter ending December 31, 2006
    
     $
    4,950,000Quarter ending March 31, 2007
    
    $
    1,600,000Quarter ending June 30, 2007
    
     $
    8,150,000Quarter ending September 30, 2007
    
     $
    9,800,000Quarter ending December 31, 2007
    
    $
    17,150,000Quarter ending March 31, 2008
    
    $
    725,000Quarter ending June 30, 2008
    
     $
    3,500,000Quarter ending September 30, 2008
    
    $
    3,725,000Quarter ending December 31, 2008
    
     $
    750,000Quarter ending March 31, 2009
    
     $
    5,750,000Quarter ending June 30, 2009
    
     $
    5,000,000Quarter ending September 30, 2009
    
     $
    5,000,000
 Liquidity
 Capital Expenditures
 Net Debt
 October 31, 2006
    
    $
    6,000,000November 30, 2006
    
    $
    15,000,000December 31, 2006
    
    $
    13,000,000January 31, 2007
    
    $
    13,500,000February 28, 2007
    
    $
    13,000,000March 31, 2007
    
    $
    4,000,000June 30, 2007
    
     $
    1,000,000
 59




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September 30, 2007
    
    
     $10,000,000December 31, 2007
    
    
     $  2,000,000March 31, 2008
    
    
     $20,000,000June 30, 2008
    
    
     $25,000,000September 30, 2008
    
    
     $25,000,000December 31, 2008
    
    
     $25,000,000March 31, 2009
    
    
     $25,000,000June 30, 2009
    
    
     $25,000,000September 30, 2009
    
    
     $25,000,000
 Subsidiaries
  Events of Default
 Events of Default
      60




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provided
         61




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62




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The Administrative Agent
        63




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provided however
  Miscellaneous
 Notices
 nd
 th th
   66




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Waivers; Amendments
  provided
    67




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provided further
 Expenses; Indemnity; Damage Waiver
     68




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Indemnitee
    provided
 provided
  69




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Successors and Assigns
  provided
    provided
 70




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provided
   Approved Fund
 Approved Fund
  Register
 71




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provided
 Participant provided provided
  72




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provided
 Survival
 Counterparts; Integration; Effectiveness
 Severability
 73




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Right of Setoff
 Governing Law; Jurisdiction; Consent to Service of Process
 THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK.
    WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED
 74




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HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
 Headings
 Confidentiality
           75




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Information provided
  USA PATRIOT Act Act
 Subordination of Intercompany Indebtedness provided Insolvency
Event Intercompany
Indebtedness
 76




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77




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ATARI, INC.By

/s/
David R. PierceName:
    David R. PierceTitle:
    President and Chief Executive Officer




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MIDLAND NATIONAL LIFE INSURANCE COMPANY, as a LenderBy: Guggenheim Partners Advisory CompanyBy:
    
    /s/ Todd BoehlyName: Todd BoehlyTitle:    Managing PartnerNORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE,
as a LenderBy: Guggenheim Partners Advisory CompanyBy:
    
    /s/ Todd BoehlyName: Todd BoehlyTitle:    Managing PartnerGUGGENHEIM CORPORATE FUNDING, LLC,
individually and as Administrative AgentBy:
    
    /s/ WR HagnerName: William HagnerTitle:    Director and
Counsel