THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Atari, Inc. (ATAR)

11/8/2005 Proxy Information

Mr. Coppee is the Deputy Chief Operating Officer of Infogrames Entertainment S.A., Atari's majority stockholder.

7/29/2005 Proxy Information

The Company has entered into a licensing transaction with iFone Limited (“iFone”), a producer and publisher of entertainment content for current and future mobile devices. David C. Ward, a member of our Board of Directors, is the Chairman of the Board of iFone. Pursuant to a three year license agreement with iFone, the Company granted to iFone a worldwide, exclusive license of the rights to certain games for development and exploitation on the mobile phone platform. In consideration for such license, iFone paid the Company a $100,000 non-refundable advance against royalties and will make royalty payments. Such license is subject to reversion rights if, after 18 months, iFone has failed to make a game available as a mobile game in all major regions of the world and for a majority of enumerated wireless technologies.

Consultation Agreement with Ann Kronen

On July 1, 2004, we entered into the Kronen Agreement. The Kronen Agreement engages Ms. Kronen to provide creative and editorial direction for the projects and game development undertaken by us as reasonably requested and for advisory services to the Compensation Committee. The term of the Kronen Agreement began on July 1, 2004 and remained in effect until December 31, 2004. On January 1, 2005, the term of the Kronen agreement was extended through July 31, 2005. Ms. Kronen was compensated $0.15 million for services performed and miscellaneous expenses under the Kronen Agreement in fiscal 2005. In addition, Ms. Kronen was reimbursed for any reasonable and pre-approved travel expenses incurred in connection with the rendering of her services.

Proposed Transactions with Related Parties

At its July 28, 2005 meeting, the Company’s Board of Directors approved in principle certain transactions between the Company and IESA and/or one or more of its subsidiaries which will: (1) settle an intercompany payable through the issuance to Atari UK of approximately 610,000 shares of common stock of the Company (based on current market price and subject to change), (2) fund specific product development projects at studios owned by IESA and/or its subsidiaries through the issuance to the respective IESA entities of approximately 1,762,000 shares of common stock of the Company (based on current market price and subject to change), and (3) sell certain non-core assets of the Company to a subsidiary of IESA for cash. The final terms of these transactions have not yet been agreed.

7/29/2004 Proxy Information

2003 Recapitalization and Offering

Recapitalization

In September 2003, the Company, IESA, and CUSH entered into an agreement (the “Recapitalization Agreement”) resulting in the exchange of all of the Company’s net related party debt with IESA and certain of its wholly-owned subsidiaries totaling $165.9 million into 39,029,877 shares of the Company’s Common Stock immediately prior to the offering of Common Stock of the Company described below (the “Offering”). The conversion price was consistent with the Offering price of $4.25 per share. The converted debt consisted of the following outstanding amounts at September 18, 2003: $48.3 million of a medium-term loan, $44.8 million of a revolving credit agreement with IESA, $46.3 million of non-interest bearing subordinated convertible notes and $73.1 million of 5% subordinated convertible notes. The Recapitalization Agreement provided for an offset of previously provided advances to Atari Interactive and Atari Australia Pty. Ltd. (“Atari Australia”) of $44.7 million and $1.9 million, respectively. Accordingly, at March 31, 2004, none of those previously outstanding amounts remain outstanding. However, the Company has $8.6 million in related party notes receivable outstanding at March 31, 2004, which arose after the Recapitalization and are related to certain other transactions. Such notes are permitted by the GECC Senior Credit Facility.

In connection with the Recapitalization Agreement, the Company issued stock at a more favorable rate than was available, at the holder’s option, under the original terms of the five percent (5%) subordinated convertible notes. The incremental value of the additional stock issued was reported as a dividend to IESA for $39.4 million, which had no impact on total stockholders’ equity and has been reported as a charge in computing (loss) income attributable to common stockholders.

Atari License

In connection with the Recapitalization Agreement, Atari Interactive extended the term of the license under which the Company uses the Atari name to ten years expiring on December 31, 2013. The Company issued 2,000,000 shares of its Common Stock to Atari Interactive for the extended license and will pay a royalty equal to one percent (1%) of the Company’s net revenues during years six through ten of the extended license. The Company recorded a deferred charge of $8.5 million, which is being amortized at the rate of approximately $0.3 million per month. The monthly amortization is based on the total estimated cost to be incurred by the Company over the ten-year license period. At March 31, 2004, $3.4 million of this charge is included in Prepaid Expenses and Other Current Assets with the remaining $3.4 million, net of $1.7 million of amortization, included in Other Assets.

Offering

On September 24, 2003, the Company offered to the public 9,820,588 new shares of the Company’s Common Stock at an offering price of $4.25 per share. The net proceeds to the Company after all costs were $34.9 million. The Company used $3.9 million of the net proceeds to repay indebtedness outstanding under its credit facility with GECC. The remaining proceeds were used to pay costs of developing video game software and to meet general working capital needs.

Additionally, on September 24, 2003, IESA sold 17,179,412 shares of the Company’s Common Stock as part of the Offering. The Company did not receive any proceeds from the sale of IESA’s Common Stock in the Company. Finally, on October 21, 2003, the underwriters exercised their over-allotment option, purchasing 3,855,400 shares at a purchase price of $4.25 per share. The option shares were purchased from IESA, reducing IESA’s direct and indirect ownership to approximately 67% of the Company (which percentage ownership is, as of the date hereof, 58.8%, due to subsequent transactions). See “Security Ownership of Certain Beneficial Owners and Management” above. The Company did not receive any of the proceeds from the exercise of the over-allotment option.

IESA Credit Facilities and Debt with the Company

Credit Agreement

The Company maintained a Credit Agreement which provided for an aggregate commitment of $75.0 million which bore interest at LIBOR plus 2.5%. Effective December 31, 2002, the maturity date of the Credit Agreement was extended to April 1, 2004. This agreement required that the Company comply with certain financial covenants and, among other items, restricted capital expenditures. As of September 30, 2003, all outstanding borrowings were exchanged for 10,541,105 newly issued common shares under the terms of the Recapitalization Agreement. As of March 31, 2004, no accrued interest or fees remain outstanding.

Medium-Term Loan

In connection with the acquisition of Shiny Entertainment, Inc., the Company obtained a $50.0 million medium-term loan from IESA. Interest was based on the three month LIBOR rate plus 2.75% and payable on a quarterly basis, in arrears. An unused commitment fee of 0.50% per annum was based on the aggregate amount of the facility less outstanding loans. As of September 30, 2003, all outstanding borrowings have been exchanged for 11,359,319 newly issued common shares under the terms of the Recapitalization Agreement. Additionally, as of March 31, 2004, no accrued interest remains outstanding.

Long-Term Related Party Debt

0% Notes

In conjunction with the 1999 purchase of the Company by IESA, the Company issued to General Atlantic Partners, LLC (“GAP”) the 0% Notes in exchange for 600,000 shares of Series A Preferred Stock and $20.0 million of subordinated notes of the Company. The 0% Notes were to mature in December 2004 and had a redemption value of $50.0 million at maturity. In lieu of payment at maturity, the 0% Notes were convertible at any time, at the holder’s option, into shares of the Company’s Common Stock at $20.00 per share. On December 28, 2001, IESA assumed the 0% Notes from GAP in exchange for shares of IESA common stock. IESA did not change any of the terms of the 0% Notes (renamed the “IESA 0% subordinate convertible note”) as they relate to the Company. Interest on the IESA 0% subordinate convertible note was accreted at the rate of 7% per annum.

Under the terms of the Recapitalization Agreement, the IESA 0% subordinated convertible note has been fully offset against the advances to related parties.

5% Notes

In conjunction with the 1999 purchase of the Company by IESA, the Company issued to CUSH, 5% subordinated convertible notes (“5% CUSH Notes”) in exchange for $25.0 million in cash and $35.6 million in debt and accrued interest. The 5% CUSH Notes were to mature in December 2004 and had a principal amount of $60.6 million. In lieu of payment at maturity, the 5% CUSH Notes were convertible at any time, at the holder’s option, into shares of the Company’s Common Stock at $9.25 per share.

Under the terms of the Recapitalization Agreement, the 5% CUSH Notes, net of the remaining advances to related parties, have been fully converted to 17,129,453 of the Company’s newly issued common shares at a fair-market value of $4.25 per share. The common shares issued by the Company were at a more favorable rate than that available under the original terms of the 5% CUSH Notes. The resulting incremental value of the additional stock issued was recorded as a dividend to IESA of $39.4 million.

In September 2003, the Company expensed the full $1.3 million of remaining deferred financing fees related to the IESA 0% subordinated convertible note and the 5% CUSH Notes as a result of the Recapitalization Agreement.

Transactions with Current and Former Officers

Employment Agreements

For details related to the Company’s Employment Agreements with each of Bruno Bonnell and Harry M. Rubin, see “Employment Contracts, Termination of Employment and Change-in-Control Arrangements” above.

Humongous Loan

The Company extended a demand promissory note to the former President of Humongous Entertainment, a division of the Company. The note bore interest at a rate of 8.75% per annum and was secured by security interest in all shares of Common Stock of the Company owned beneficially by such individual. The balance outstanding, including interest, at March 31, 2000 was approximately $2.5 million. During June 2000, the Company exchanged the shares owned by the former President and reduced the amount outstanding to approximately $1.5 million. As part of the exchange, the Company negotiated a repayment schedule for this outstanding loan which provided for a first installment of approximately $37,000 to be paid on July 1, 2001. During the year ended June 30, 2001, the Company recorded a reserve against this loan of approximately $0.7 million. Payment of the loan was not received and the Company pursued collection of the outstanding loan by exploring various available legal remedies. After further negotiations during the year ended June 30, 2002, the amount outstanding was reduced to $0.8 million with the remaining balance forgiven by the Company, resulting in a nominal charge to operations. Payments were received during February and April of 2002 for a total of $0.8 million. As of March 31, 2003 and March 31, 2004, there were no amounts due the Company in connection with this loan.

Transactions with Directors and Nominees

iFone Licensing Transaction

The Company has entered into a licensing transaction with iFone Limited (“iFone”), a producer and publisher of entertainment content for current and future mobile devices. David C. Ward, a member of our Board of Directors, is the Chairman of the Board of iFone. Pursuant to a three year license agreement with iFone, the Company granted to iFone a worldwide, exclusive license of the rights to certain games for development and exploitation on the mobile phone platform. In consideration for such license, iFone paid the Company a $100,000 non-refundable advance against royalties and will make royalty payments. Such license is subject to reversion rights if, after 18 months, iFone has failed to make a game available as a mobile game in all major regions of the world and for a majority of enumerated wireless technologies.

See pages 25 - 31 in the proxy for additional Related Party Transactions.