The cheque that took the Amiga away from Atari

Amiga started in 1982, in Santa Clara, under another name: Hi-Toro. The founders were Larry Kaplan, one of the creators of Activision, and Dave Morse, from marketing at Tonka Toys. The first million dollars came from Houston investors with ties to oil; the next 5 million or so came mostly from dentists and other doctors, thanks to the contacts of Bert Braddock, of the chip maker Zymos. When Kaplan left, that same year, Morse invited Jay Miner to do the hardware, and Miner accepted on one condition: that he could bring his dog Mitchy to the office every day ^[1].

In 1983 the money ran out. The video game crash sank the Atari 2600 accessories that paid the bills, and nobody wanted to invest in a new console. After the January 1984 CES, where Lorraine impressed but was still a heap of boards, Morse, with no other realistic options, negotiated with Atari, which did not want a finished machine: it only wanted the chipset ^[1].

The day before the deadline, Morse handed Atari a Commodore cheque and left two minutes later.

The letter of intent, signed on 7 March 1984, gave Amiga $500,000. It was, in practice, a bridging loan: if Amiga did not pay the money back, with interest, by 30 June, Atari would get a royalty-free licence to the chips. The chip designs were deposited as security ^[1].

Meanwhile, Atari changed hands. Jack Tramiel, who had left Commodore in January 1984, bought Atari's computer and console divisions from Warner on 1 July. Commodore, which had lost many of its engineers to Tramiel, first wanted to license the chips and ended up wanting the whole of Amiga. On 29 June, the day before the deadline, Morse walked into Atari's headquarters unannounced, handed a cheque for the $500,000 plus interest to John Farrand, his contact, and left two minutes later. The cheque was from Commodore ^[2].

Six weeks later, Commodore bought Amiga for $27 million, according to Jimmy Maher ^[2] and heise ^[4]; some sources speak of an offer of 24 million ^[3]. Amiga became a Commodore subsidiary and the team was able to finish the computer its own way ^{[2] [3]}.

Tramiel's Atari did not sit still. On 13 August 1984 it sued Amiga, and Morse personally, in the Santa Clara court for contractual fraud, and asked for the work to be halted, without success. In early 1985 it added Commodore as a co-defendant, for conspiracy, and added patent claims linked to the Atari 400 and 800, which Miner had designed, putting him in the dock as well. On the other side, Commodore had already sued the engineers who had gone over to Tramiel, accusing them of taking technical documents ^[2].

It all ended in March 1987, in an out-of-court settlement whose terms were never made public ^{[2] [3]}. It's said that Commodore ended up paying Atari's costs and damages, but the amounts were never known. Maher, who read the original letter of intent, concludes that Morse kept to the letter of the agreement ^[2].