Atari, Inc. Announces Further Restructuring Initiatives

Credit Line Increased to $14 million

NEW YORK, Dec. 10: Atari, Inc. (Nasdaq: ATAR), an interactive entertainment company, announced today the completion of several restructuring initiatives focused on repositioning Atari, Inc. as a publisher and distributor of interactive gaming software, transitioning Atari, Inc. out of the video game production business and potentially improving the financial position of the Company.

Atari, Inc. has entered into an amendment to the Senior Secured Credit Facility with BlueBay High Yield Investments (Luxembourg) S.A.R.L. that will increase its borrowing capacity under the facility from $10 million to $14 million. The additional $4 million in availability under the Credit Facility will enable Atari, Inc. to meet its holiday season financing needs. BlueBay is a significant shareholder of Infogrames Entertainment, S.A., Atari, Inc.'s majority stockholder.

Simultaneously with and as a condition to the increase in the availability under the Credit Facility, Atari, Inc. terminated its existing distribution agreements with Infogrames and has entered into a new distribution agreement covering the distribution by Atari, Inc. of interactive entertainment software games produced or acquired by Infogrames and its affiliates in North America. This new distribution agreement covers the distribution of Infogrames' products in North America for the next three years (subject to reduction to two years if certain performance targets are not met) and has provisions for automatic renewals on an annual basis unless terminated by either party in accordance with the agreement. The new distribution agreement provides that Atari, Inc. will retain 30% of the net receipts from the distribution of Infogrames' products as consideration for its services. The agreement also provides that the parties will enter into an agreement on the same terms for the distribution by Infogrames of Atari, Inc.'s products outside North America.

Additionally, as part of this agreement, Atari, Inc. has licensed back to Infogrames the use of the "Atari" trademark in North America in connection with the URL www.atari.com for the purposes of a global online initiative to be lead by Infogrames.

In light of the repositioning of Atari, Inc.'s business and the new distribution arrangements, Atari, Inc. has also terminated its existing corporate management and service contracts with Infogrames. This is anticipated to enable Atari, Inc. to further streamline its corporate structure. Atari, Inc. will continue to provide certain administrative functions to Infogrames on a transitional basis over an approximate 7 to 10 month period for an annualized fee of approximately $2.6 million. In addition, the parties terminated the agreement under which Infogrames provided certain management services to Atari, Inc. It is expected that the termination of this agreement will result in annualized cost savings to Atari, Inc. of approximately $3.0 million. As part of the termination of the corporate management service contracts and the reduction of production and development activities at Atari, Inc., Atari, Inc. agreed to the transfer of certain employees, with such employees' acceptance, from the production and development businesses of Atari, Inc. to Infogrames.

Atari, Inc. previously announced a reduction in its workforce, which included the production and development employees being transferred to Infogrames, that is expected to result in savings on current payroll and related costs of an estimated $5.3 million per year of which $1.3 million relates to the transfer of employees to Infogrames.

About Atari, Inc.

New York-based Atari, Inc. (Nasdaq: ATAR) publishes and distributes interactive entertainment software in the U.S. The Company's 1,000+ published titles that the Company distributes include hard-core, genre- defining franchises such as Test Drive ® ; and mass-market and children's franchises such Dragon Ball Z ® . Atari, Inc. is a majority-owned subsidiary of France- based Infogrames Entertainment SA (Euronext - ISIN: FR-0000052573), an interactive games publisher in Europe. For more information, visit http://www.atari.com.

Safe Harbor Statement

With the exception of the historical information contained in this release, the matters described herein contain certain "forward-looking statements" that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this release are not promises or guarantees and are subject to risks and uncertainties that could cause actual occurrences to differ materially from those anticipated. These statements are based on management's current expectations and assumptions and are naturally subject to uncertainty and changes in circumstances. We caution you not to place undue reliance upon any such forward-looking statements.

The Company undertakes no duty to update any forward-looking statements to conform the statement to actual results or changes in the Company's expectations.