At the end of October we reported that Atari was in a dispute with FUNimation over the Dragon Ball Z license, one of the few lucrative properties in Atari's portfolio. Today, however, Atari announced that it settled its dispute with the company.

Under the terms of the settlement, Atari paid FUNimation $3.5 million, which was comprised of a cash payment of approximately $2.7 million and a reduction of $0.8 million in the amount of the recoupable royalty advance made to FUNimation. The publisher had originally paid FUNimation $10 million back in January 2004 to secure the exclusive video game U.S. rights for the Dragon Ball Z franchise through January 2010.

"With this dispute behind Atari, Inc. we look forward to continuing our relationship with FUNimation and continuing to deliver to our consumers exciting products from the Dragon Ball Z franchise," said Curtis G. Solsvig III, Chief Restructuring Officer of Atari.

In related news, the beleaguered publisher also slightly strengthened its financial position today by increasing its borrowing capacity with BlueBay High Yield Investments (a significant shareholder of Infogrames Entertainment, Atari's parent) from $10 million to $14 million. Atari says that this additional $4 million will allow the company "to meet its holiday season financing needs."

Atari also said it's completed its previously announced restructuring that sees it reposition as a publisher and distributor of video games while exiting the video game production business. Therefore, as part of the agreement to be granted more credit, Atari has terminated its existing distribution agreements with Infogrames and has entered into a new distribution agreement for the next three years, which sees it distribute games produced or acquired by Infogrames and its affiliates in North America. Under the new agreement Atari will retain 30% of the net receipts from the distribution of Infogrames' products. In addition, the agreement stipulates that the parties will enter into an agreement on the same terms for the distribution by Infogrames of Atari's products outside North America.

As part of the restructuring and the new agreement, Atari has also 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."

Finally, Atari also said it terminated its existing corporate management and service contracts with Infogrames, which is "anticipated to enable Atari, Inc. to further streamline its corporate structure." The publisher 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, Atari and Infogrames terminated an agreement under which Infogrames provided management services to Atari. It's expected that this will net Atari an annualized cost savings of about $3.0 million.