The following interoffice memo was distributed to Tengen employees today
regarding the most recent developments in our lawsuits with Nintendo.

As matters develop we will keep you informed. As I indicated previously,
if you get any inquiries regarding the lawsuits, please direct them to me.

                CONFIDENTIAL - COMPANY PRIVATE
        NOT TO BE SHOWN OUTSIDE THE DISTRIBUTION LIST

There are various matters pending before the court in the lawsuits 
involving us and Nintendo, and the judge has taken these matters under
consideration.

The only verbal or written comment that any party may make in these
matters is "The matters have been taken under consideration by the court."

Any inquiries about the present lawsuits should be responded to with
the sentence within the quotes above.  Until otherwise notified, your
comments and activities must be strictly and simply limited to promoting
and selling TENGEN PRODUCTS ONLY!

MILPITAS, March 3, 1989 -- Atari Games and its wholly-owned subsidiary,
Tengen, today were granted a preliminary injunction which prohibits 
both Nintendo America and its Japanese parent company, Nintendo Co. Ltd.
from suing retailers who carry Tengen products for infringement of
Nintendo's patent.

     Atari Games and Tengen's motion, granted in the United States 
District Court in San Francisco, was hotly contested by Nintendo.  The
injunction prohibits the video game giant from filing suit against
Tengen retailers until patent infringement disputes between the 
companies are formally resolved.  The court decision places similar
conditions on Atari Games with respect to its claims of patent 
infringement against Nintendo.

     The motion was filed by Atari Games and Tengen after they had
learned that several of Tengen's retailers, including some of the
nation's largest toy chains, had received letters from Nintendo's
outside legal counsel insisting that they immediately remove all
Tengen products from their shelves.  The letters stated that failure
to comply would result in Nintendo taking legal action against
retailers for third-party patent infringement.

     "Nintendo has tried to wage this battle on the retail front,
rather than in the court where it belongs," said Hide Nakajima,
Atari Games president.  "This decision takes the retailer out of
the middle, and places matters in the appropriate forum.

     "Nintendo's intimidation tactics have created fear and 
confusion among our retailers," said Nakajima.  "We believe this
decision represents the first step towards creating the kind of
fair, open market we've been seeking."

     The motion was filed in connectionwith the anti-trust lawsuit
filed by Atari Games and Tengen against Nintendo claiming monopoly,
wrongful business interference and patent infringement.

     Tengen is the wholly-owned subsidiary of Atari Games
Corporation and is headquartered at 1901 McCarthy Blvd., Suite 210,
P. O. Box 360782, Milpitas, Calif, 95035; (408) 435-2650.  Atari
Games is a privately held company, is not affiliated with Atari
Corporation, and should be referred to as Atari Games.

For all Atari Games, Tengen and AOI employees, the following is a press
release that was sent out concerning the latest developments in the
ongoing litigation with Nintendo:

          ATARI GAMES FILES LAWSUIT AGAINST NINTENDO
     CHARGING COPYRIGHT INFRINGEMENT ON SOVIET-DEVELOPED GAME

MILPITAS, Calif., April 18, 1989 -- Tengen Inc., the wholly-owned
subsidiary of Atari Games Corporation, filed a lawsuit yesterday charging
Nintendo of America and its Japanese parent with infringing Tengen's
exclusive copyrights in its new home video game, Tetris.

     According to the lawsuit filed in U. S. District Court, Northern
District of California in San Francisco, Tengen has the exclusive right
to manufacture and distribute Tetris cartridges for play on the Nintendo
Entertainment System (NES).  In a news release last week, Nintendo
announced plans to manufacture its own version of Tetris, which Tengen
alleges infringes Tengen's copyrights.

     Tetris is an internationally acclaimed home computer game
originally developed by two Russian computer programmers.  The game
tests a player's dexterity and spatial perception.

     
     According to the lawsuit, Tengen acquired worldwide exclusive
rights to Tetris in May, 1988 from Mirrorsoft, one of Europe's largest
and most reputable software publishing companies.  Mirrorsoft is a
subsidiary of London-based Maxwell Communications, one of the world's
largest communications conglomerates.

     
     Under the licensing agreement with Mirrorsoft, Atari Games has
been manufacturing and marketing the arcade version of Tetris since
February 1989.

     "We have an air-tight, iron-clad agreement with one of the
largest and most reputable publishing companies in the world which
gives us exclusive rights to manufacture and market Tetris for the
NES," said Hideyuki Nakajima, president of Atari Games.  "Nintendo
is aware of the validity of our licensing agreement, and has known
that Tengen intended to exclusively market Tetris since we announced
the agreement over a year ago.

     "Tengen had presented Tetris as a potential title to Nintendo
when Tengen was a Nintendo licensee.  Nintendo never questioned the
validity of Tengen's rights when the game was presented to them for
approval, and was quite aware of Tengen's plans to bring the game to
market," Nakajima continued.  "This is another example of the kind 
of harrassment we have been facing from Nintendo since we decided to
challenge Nintendo's monopoly of the video game market."  Nakajima
was referring to an ongoingbattle between Nintendo and Atari Games/
Tengen.

     In 1988, Tengen and Atari Games introduced the first independently
manufactured Nintendo-compatible game cartridges and Atari Games
simultaneously filed an antitrust lawsuit against Nintendo claiming
monopoly and restraint of trade.  That lawsuit was expanded in
February to include allegations of wrongful business interference and
patent infringement.

     Atari Games and Tengen subsequently were granted a preliminary
injunction prohibiting Nintendo from suing retailers who were selling
the Tengen game cartridges for patent infringement.

     Yesterday's lawsuit charges that Nintendo has no right to manu-
facture or distribute NES-compatible Tetris games, and that to do so 
would infringe on two Tengen copyrights.  The suit seeks declaratory
relief and monetary damages, and asks that Nintendo be enjoined from 
selling products which infringe Tengen's copyrights.

     Tengen is the wholly-owned subsidiary of Atari Games Corporation
and is headquatered at 1901 McCarthy Blvd., Suite 210, P. O. Box 360782,
Milpitas, Calif., 95035; (408) 435-2650.  Atari Games is a privately
held company, is not affiliated with Atari Corp. and should be 
referred to as Atari Games.

On Thursday, May 25, we were successful in opposing a temporary
restraining order sought by Nintendo to prevent the sale of our Tetris
cartridges.  The press release we issued as follows:

         COURT DENIES NINTENDO RESTRAINING ORDER;
           TENGEN REASSERTS RIGHTS TO "TETRIS"

MILPITAS, Calif., May 26, 1989 -- Judge Fern Smith of the United States
District Court in San Francisco yesterday denied a motion by Nintendo
to temporarily restrain Tengen Inc., a wholly-owned subsidiary of
Atari Games Corp., from distributing its independently manufactured,
Nintendo-compatible version of the video game "Tetris."

     "Tetris," a highly popular video game developed by two Soviet
computer programmers, has been the object of an ongoing legel battle
between the companies over who owns the exclusive rights to distribute
the game for play on the Nintendo Entertainment System (NES).

     In her ruling, Judge Smith stated that "Nintendo has failed to
meet the high standard necessary for this Court to grant the relief
requested.  Although Nintendo claims that it has the exclusive rights
to the 'Tetris' video cartridge, the moving papers fail to fully
support this claim.  Further, Nintendo has failed to show that it 
will be irreparably injured by allowing Tengen to meet its existing 
commitments."

     On June 15, the Court will hear motions by both Tengen and
Nintendo, in which each will seek to enjoin the other from selling
its "Tetris" cartridges.

     The request for a temporary restraining order accompanied
Nintendo's response to a Tengen copyright infringement lawsuit
filed in April.  The lawsuit was filed after Tengen learned that
Nintendo was claiming it had negotiated the rights to "Tetris"
on the NES from the Soviet Foreign Trade Association, Elorg.

     According to Tengen, however, exclusive rights to "Tetris" 
for play on the NES and other computers had previously been granted
by Elorg to Andromeda Software Ltd., a London-based software 
company.  Those rights were transferred to Mirrorsoft, a U. K.
subsidiary of Maxwell Communications, one of the world's leading
publishers.  Tengen acquired the exclusive rights to develop and
market an NES version of the hit game from Mirrorsoft in May 1988.

     Atari Games released its highly successful arcade conversion
of "Tetris" last February.  Tengen began taking orders for its
NES-compatible "Tetris" cartridges at the Consumer Electronics
Show in January 1989 and began shipping the product earlier this
month.  "Tetris" is currently available in retail outlets 
nationwide.

     Tengen is the wholly-owned subsidiary of Atari Games
Corporation and is headquartered at 1901 McCarthy Blvd., Suite
210, P. O. Box 360782, Milpitas, Calif. 95035; (408) 435-2650.
Atari Games is a privately held companyy, is not affiliated with
Atari Corporation and should be referred to as Atari Games.

The following press release was issued by Atari Games and Tengen
on Friday, June 16:

         COURT HEARS TENGEN AND NINTENDO TETRIS MOTIONS;
                        RULING DUE JUNE 21

MILPITAS, Calif., June 15, 1989 -- Judge Fern Smith of the United
States District Court in San Francisco said today that she will rule
on cross-motions for preliminary injunction filed by Tengen Inc., a
wholly-owned subsidiary of Atari Games, and Nintendo against the
sale of the popular Russian-developed video game Tetris by Wednesday,
June 21.  In the interim, both sides voluntarily agreed to refrain
from shipping Tetris cartridges until the court has made its ruling.

     Both Tengen and Nintendo filed cross-motions last month, in which
each side is seeking to enjoin the other from selling Tetris for play
on the NES.

     Tengen is the wholly-owned subsidiary of Atari Games Corporation
and is headquartered at 1901 McCarthy Blvd., Suite 210, P. O. Box 360782,
Milpitas, Calif. 95035; (408) 435-2650.  Atari Games is a privately
held company, is not affiliated with Atari Corporation and should be
referrred to as Atari Games.

The following press release was issued yesterday by Atari Games
and Tengen:

            TENGEN REASSERTS RIGHTS TO SOVIET VIDEO GAME;
       INJUNCTION HAS NO IMPACT ON POPULAR TENGEN PRODUCT LINE

MILPITAS, Calif., June 21, 1989 -- Tengen Inc., the wholly-owned
subsidiary of Atari Games Corporation, reasserted its claim to the
popular Soviet video game, Tetris, despite the awarding today of a
preliminary injunction against Tengen.

    Judge Fern Smith of the United States District Court in San
Francisco issued an order prohibiting further distribution by
Tengen of the Tengen-manufactured Nintendo-compatible version of
the game pending the outcome of litigation currently before the
Court between Tengen and Nintendo regarding the ownership of the
Tetris video game rights.

    "Tengen believes it has legitimate rights to Tetris," said
Dan Van Elderen, Tengen chief operating officer and executive
vice president.  "We have a valid and binding agreement for 
Tetris which we believe will be upheld in the Court's final decision.
While we are disappointed that we must temporarily refrain from
shipping additional Tetris cartridges, we are confident that we
will eventually prevail."  Tengen has been distributing its 
highly popular NES-compatible version of Tetris since early May.

    The Tetris matter is one of many legal issues between Tengen
and Nintendo, and is completely separate from the $100 million
lawsuit filed by Tengen against Nintendo last December.  That
complaint concerns larger issues such as Nintendo's alleged
monopolization of the home video game industry, its wrongful
business practices and Tengen's rights to manufacture and
distribute its full line of Nintendo-compatible products.

    "This preliminary decision over Tetris is not related in
any way to the other, more significant charges facing Nintendo,
and has no legal affect on our ability to manufacture and 
market our other Nintendo-compatible titles," said Van Elderen.
"Tengen products have been extremely in demand and well received
by both our consumers and our dealers.  We willl continue to 
provide our customres with the highest quality home video games."

    Tengen is the wholly-owned subsidiary of Atari Games 
Corporation and is headquartered at 1623 Buckeye Drive, P. O.
Box 360782, Milpitas, Calif.; (408) 435-2650.  Atari Games is
a privately held company, is not affiliated with Atari
Corporation and should be referred to as Atari Games.

@SYS$MAIL:JUNK
Subj:  Litigation Update

There has been a change in schedule by the court of our Nintendo patent trial.  

The matter was originally scheduled for November 14, 1989.  The court has 
re-scheduled the trial date for January 29, 1990

The matter was originally scheduled for November 14, 1989.  The court has
rescheduled the trial date for January 29, 1990.  With the next week or so 
we should have further information as to the scheduling of the Tetris trial.

If you, or any other current or former Atari employee you know, has saved
articles or studies published on the video game industry from 1976 through
1984, I would appreciate knowing about it,  I'm interested in articles 
discussing general conditions, as well as profiles on specific companies
and products.

Please call me at x-1791 with and questions.  Thanks for your help.

MESSAGE FROM THE PRESIDENT:

"Late this afternoon Judge Fern Smith of the Federal Court in
San Francisco granted a preliminary injunction to Nintendo which
alleged a violation of its copyright by Tengen and Atari.  The
Court order provides a very one-sided and prejudiced opinion and
determined as if we are unlawful copiers of Nintendo's NES console
chips, which is definitely far from the truth.  However, the 
decision was given, and the damage caused by the decision and its
impact will not be small.  As a matter of course, Tengen and Atari
are prepared to appeal after having meetings with our attorneys.

"Ladies and Gentlemen, it looks as though we lost a major battle.
Let us accept the fact and maintain to be calm and strong.  We
will continue to be in business, so sit tight and wait for
further comment to be announced by me shortly.  Thank you for 
your cooperation, understanding and further support."

Hide Nakajima, President

MESSAGE FROM THE PRESIDENT:

As I mentioned yesterday, the Federal Court in San Francisco issued
a written decision in favor of Nintendo in the ongoing lawsuit. 
That order granted Nintendo's motion for a preliminary injunction
prohibiting us from manufacturing or selling our Nintendo Entertain-
ment System game cartridges.

In its written order, the Court found that our cartridges infringed
Nintendo's copyright on the computer program contained in Nintendo's
lockout chips contained in the NES base units.  The Court found that
Tengen cartridges and the means by which they were developed went
too far in incorporating similarities to Nintendo's program which
we believe are necessary for Tengen cartridges to be compatible
with the NES.  We believe that the Court's opinion makes it 
impractical, if not impossible, to produce cartridges compatible
with the NES.

Given the proliferation of compatible computer products throughout
the electronics industry, we find the Court's opinion to be a 
highly unusual result and an incorrect interpretation of the
copyright laws which we intend to appeal.  We expect to be taking
the first step to pursue an appeal early next week.

Hide Nakajima, President

To:	Employees of Atari Games and Tengen            4/12/91
From:   Hide Nakajima, President

On March 27 the District Court issued a preliminary injunction preventing
Tengen from the further manufacturing or marketing of its NES-compatible game 
cartridges. As a result of the Court's order, many newspaper and industry 
press articles appeared that portrayed our company in a negative lights. We 
strongly disagree with the Court's position and steps were taken immediately 
to appeal the decision.

One of the legal procedures taken was to ask the Court to stay its order 
pending an outcome of the litigation.  We believe that the denial of a stay 
would result in grave consequences for Tengen.  Yesterday, the Court asked 
for additional information in considering Tengen's request for a stay.  We 
anticipate the Court's answer shortly, but for now, Tengen and retailers can 
continue their NES-compatible game cartridge business.

However, it was necessary to have a staff reduction at Tengen because of the 
considerable commercial damage done by the preliminary injunction order.  
This was a painful process for all involved and I deeply appreciate the 
loyalty and efforts of all affected employees.

At present, the Company's attorneys continue to vigorously pursue our 
antitrust and other claims against Nintendo as well as continue the appeal 
of the preliminary injunction.  We strongly believe our position is as 
correct today as when the lawsuit began.  Thank you for your continued 
efforts for, and belief in our Company.  I am pround of you.

Regards,

Hide Nakajima

P.S. Further information will be provided regarding the status of the 
     lawsuit as it becomes available. 
send

Please provide me with any documents you have regarding the old
Atari 2600 or 400/800 machines.  Contact me at extension 1791 if
you have any questions.  Thanks for your help.

                            Berry Kane

TO:  All Atari/Tengen Employees
RE:  Atari Games v. Nintendo Lawsuit

Today we received news that the Court of Appeals has rejected our appeal
of the copyright injunction previously issued against Atari Games and
Tengen in our Nintendo lawsuit.  We are, obviously, disappointed at the
outcome of the appeal, as we believe our position to be the right one.  
There are still multiple legal issues yet to be decided in the future.

I would like you to know that the decision does not have an effect on
Atari's core business of coin-operated games nor does the decision have
much of an effect on Tengen's business.  Tengen's business has been
concentrated in providing software products for the Sega Genesis and
related Sega software products for the last twelve months or more.

While I am disappointed about the outcome of this ruling, you should
not be discouraged, as we had anticipated this as a potential result
and are, therefore, well positioned to move forward.  Let's work for
the future together.

I'll keep you further informed when new developments occur in the lawsuit.

                       Hide Nakajima