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Complaint Includes Charges of Breach of Contract, Contract Interference, Possible Misappropriation of Trade Secrets and Unfair Competition Related to Innovative 3D Graphics Chipset

San Jose, CA, September 2, 1997 -- 3Dfx Interactive, Inc., a leading developer of high performance 3D media processors, software and related technology, announced today that it has filed a multimillion-dollar lawsuit against Sega Enterprises Ltd., Sega of America and NEC Corporation.

The complaint was filed after Sega breached its contract with 3Dfx Interactive to develop a customized 3D graphics chipset for the next generation Sega home game console. "Sega terminated our contract without justification," said Greg Ballard, president and CEO of 3Dfx Interactive. "We lived up to all of our commitments, yet they terminated the agreement. It's a clear breach of contract."

The 3Dfx complaint alleges that under the contract Sega gained access to 3Dfx's confidential technology and then canceled the contract in favor of NEC, a rival chipset manufacturer. The complaint also alleges claims against NEC for interfering with the contract between Sega and 3Dfx. The complaint states that there is a threat that 3Dfx's confidential design and technology will be used to develop the NEC chipset.

"We believe that Sega and NEC clearly acted improperly and we took the action we needed to respond," Ballard said. "We filed this suit to protect our rights and to protect our property."

3Dfx Interactive Inc., which is based in San Jose, is seeking millions of dollars in damages against the defendants, and it also seeks an immediate end to the defendants' improper conduct. The suit was filed on Aug. 29 in the California Superior Court in Santa Clara County. The claims include breach of contract, interference with contract, threatened misappropriation of trade secrets and unfair competition.

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3Dfx Interactive, a publicly traded company (Nasdaq:TDFX), develops high performance, cost-effective 3D media processors, software and related technology that are designed to enable a highly immersive, interactive and realistic 3D experience across interactive electronic entertainment platforms - personal computers, coin-operated arcade systems and location-based entertainment ("LBE"). Current 3Dfx Interactive products include the Voodoo family of accelerator chipsets, Voodoo Graphics and Voodoo Rush.

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