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<TEXT>

<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                              --------------------


                                    FORM 8-K

                                 CURRENT REPORT
                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


       Date of Report (Date of earliest event reported): January 26, 2001


                             3DFX INTERACTIVE, INC.
               (Exact name of registrant as specified in charter)


<TABLE>
<S>                                <C>                    <C>
         CALIFORNIA                 000-22651                 77-0390421
(State or other jurisdiction       (Commission              (IRS Employer
      of incorporation)            File Number)           Identification No.)
</TABLE>



                               4435 FORTRAN DRIVE
                           SAN JOSE, CALIFORNIA 95134
                    (Address of principal executive offices)

                                 (408) 935-4400
              (Registrant's telephone number, including area code)



Item 5. Other Events.

        Executive Employment Agreements

        Several of the officers of 3dfx Interactive, Inc. entered into
employment agreements with 3dfx Interactive, Inc., which were amended to be
effective February 1, 2001. Such employment agreements and the amended versions
thereof are attached hereto as exhibits.

        Amendment to Audit Report

        The report of PricewaterhouseCoopers LLP on 3dfx Interactive, Inc.'s
fiscal 2000 consolidated financial statements was amended on December 15, 2000,
to add an explanatory paragraph regarding 3dfx Interactive, Inc.'s ability to
continue as a going concern. The amended report and consolidated financial
statements as of January 31, 2000 and December 31, 1998 and for each of the
three fiscal years ended January 31, 2000, December 31, 1998 and December 31,
1997, and for the month ended January 31, 1999 are attached hereto as Exhibit
99.1 and are incorporated herein by reference.

Item 7. Financial Statements and Exhibits.

        (c)     Exhibits

                10.1    Employment Agreement dated November 10, 2000, by and
                        between 3dfx Interactive, Inc. and Alex M. Leupp.

                10.2    Employment Agreement dated November 10, 2000, by and
                        between 3dfx Interactive, Inc. and Scott D. Sellers.

                10.3    Employment Agreement dated October 20, 2000, by and
                        between 3dfx Interactive, Inc. and Richard Burns.

                10.4    Employment Agreement dated November 10, 2000, by and
                        between 3dfx Interactive, Inc. and Stephen A. Lapinski.

                10.5    Employment Agreement dated November 10, 2000, by and
                        between 3dfx Interactive, Inc. and Alfred R. Woodhull.

                10.6    Employment Agreement by and between 3dfx Interactive,
                        Inc. and Alex M. Leupp, as amended effective February 1,
                        2001.

                10.7    Employment Agreement by and between 3dfx Interactive,
                        Inc. and Scott D. Sellers, as amended effective February
                        1, 2001.

                10.8    Amendment to Employment Agreement by and between 3dfx
                        Interactive, Inc. and Richard Burns, effective as of
                        February 1, 2000.

                10.9    Employment Agreement by and between 3dfx Interactive,
                        Inc. and Stephen A. Lapinski, as amended effective
                        February 1, 2001.

               10.10    Employment Agreement by and between 3dfx Interactive,
                        Inc. and Alfred R. Woodhull, as amended effective
                        February 1, 2001.

                23.1    Consent of PricewaterhouseCoopers LLP.

                99.1    Consolidated Financial Statements for 3dfx Interactive,
                        Inc. as of January 31, 2000 and December 31, 1998 and
                        for each of the three fiscal years ended January 31,
                        2000, December 31, 1998 and December 31, 1997, and for
                        the month ended January 31, 1999.

                        Schedule II, Valuation and Qualifying Accounts for the
                        years ended January 31, 2000 and December 31, 1998 and
                        1997 and month ended January 31, 1999.


<PAGE>   2

                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Date: January 26, 2001

                                3DFX INTERACTIVE, INC.


                                By:    /s/ RICHARD A. HEDDLESON
                                   ---------------------------------------------
                                   Richard A. Heddleson, Chief Financial Officer


                                  EXHIBIT INDEX

10.1    Employment Agreement dated November 10, 2000, by and between 3dfx
        Interactive, Inc. and Alex M. Leupp.

10.2    Employment Agreement dated November 10, 2000, by and between 3dfx
        Interactive, Inc. and Scott D. Sellers.

10.3    Employment Agreement dated October 20, 2000, by and between 3dfx
        Interactive, Inc. and Richard Burns.

10.4    Employment Agreement dated November 10, 2000, by and between 3dfx
        Interactive, Inc. and Stephen A. Lapinski.

10.5    Employment Agreement dated November 10, 2000, by and between 3dfx
        Interactive, Inc. and Alfred R. Woodhull.

10.6    Employment Agreement by and between 3dfx Interactive, Inc. and Alex M.
        Leupp, as amended effective February 1, 2001.

10.7    Employment Agreement by and between 3dfx Interactive, Inc. and Scott D.
        Sellers, as amended effective February 1, 2001.

10.8    Amendment to Employment Agreement by and between 3dfx Interactive, Inc.
        and Richard Burns, effective as of February 1, 2000.

10.9    Employment Agreement by and between 3dfx Interactive, Inc. and
        Stephen A. Lapinski, as amended effective February 1, 2001.

10.10   Employment Agreement by and between 3dfx Interactive, Inc. and Alfred R.
        Woodhull, as amended effective February 1, 2001.

23.1    Consent of PricewaterhouseCoopers LLP.

99.1    Consolidated Financial Statements for 3dfx Interactive, Inc. as of
        January 31, 2000 and December 31, 1998 and for each of the three fiscal
        years ended January 31, 2000, December 31, 1998 and December 31, 1997,
        and for the month ended January 31, 1999.

        Schedule II, Valuation and Qualifying Accounts for the years ended
        January 31, 2000 and December 31, 1998 and 1997 and month ended January
        31, 1999.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>f68798ex10-1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         This AGREEMENT is entered into as of November 10, 2000 (the "Effective
Date"), by and between Alex M. Leupp ("Executive") and 3dfx Interactive, Inc., a
California corporation (the "Company"). In consideration of the mutual covenants
and agreements hereinafter set forth, the parties agree as follows:

         1. Duties and Scope of Employment.

              (a) Position and Duties. For the term of his employment under this
Agreement, the Company agrees to employ Executive as its President and Chief
Executive Officer, reporting directly to the Board of Directors (the "Board").
Executive shall have such duties and authority as are commensurate with one
employed in the position of President and Chief Executive Officer, as may be
customarily incident to such position, and as may be assigned to Executive from
time to time. Executive shall diligently, to the best of his ability, and with
the highest degree of good faith and loyalty, perform all such duties incident
to his position and use his best efforts to promote the interests of the
Company.

              (b) Obligations to the Company. During the Employment Term,
Executive shall devote his full time and energy to the business of the Company
and shall not be engaged in any competitive business activity without the
express written consent of the Chairman of the Board. Executive shall comply
with the Company's policies and rules, as they may be in effect from time to
time during the term of his employment.

              (c) No Conflicting Obligations. Executive represents and warrants
to the Company that he is under no obligations or commitments, whether
contractual or otherwise, that are inconsistent with his obligations under this
Agreement. Executive represents and warrants that he will not use or disclose,
in connection with his employment by the Company, any trade secrets or other
proprietary information or intellectual property in which Executive or any other
person has any right, title or interest and that his employment by the Company
as contemplated by this Agreement will not infringe or violate the rights of any
other person or entity. Executive represents and warrants to the Company that he
has returned all property and confidential information belonging to any prior
employers.

         2. Term of Employment.

              (a) Basic Rule. The Company agrees to continue Executive's
employment, and Executive agrees to remain in employment with the Company, from
the Effective Date until the date when Executive's employment terminates
pursuant to Subsection 2(b) below (the "Employment Period"). Executive's
employment with the Company shall be "at will," which means that either
Executive or the Company may terminate Executive's employment at any time, for
any reason, with "Cause" or "Without Cause." Any contrary representations, which
may have been made to Executive shall be superseded by this Agreement. This
Agreement shall constitute the full and complete agreement between Executive and
the


<PAGE>   2

Company regarding the "at will" nature of Executive's employment, which may only
be changed in an express written agreement signed by Executive and the Chairman
of the Board.

              (b) Termination. The Company or Executive may terminate
Executive's employment at any time for any reason (or no reason), and with
"Cause" or "Without Cause," by giving the other party fourteen (14) days' notice
in writing. Executive's employment shall terminate automatically in the event of
his death.

         3. Cash and Incentive Compensation.

              (a) Base Salary. The Company shall pay Executive as compensation
for his services an annualized base salary of Three Hundred Seventy Five
Thousand Dollars ($375,000), less applicable deductions and withholdings,
payable in accordance with the Company's standard payroll schedule. The
compensation specified in this Subsection (a), together with any increases in
such compensation that the Company may grant from time to time, are referred to
in this Agreement as "Base Salary." The Base Salary will be reviewed at least
annually and shall be subject to change from time-to-time at the sole discretion
of the Compensation Committee of the Board.

              (b) Bonus. Executive will be eligible to earn an annualized bonus
(the "Target Bonus") for each fiscal year equal to at least fifty percent (50%)
of his Base Salary, less applicable deductions and withholdings. The Target
Bonus shall be based upon performance criteria to be established by the Board in
consultation with Executive. If any part of the Target Bonus is earned for a
given fiscal year, it will be paid on or before March 31 of the following fiscal
year.

              (c) Stock Options. As of the Effective Date of this Agreement,
Executive has been granted stock options pursuant to the Company's Stock Option
Plan (the "Plan"), which are summarized in Exhibit A to this Agreement (the
"Options"). Executive's Options shall continue to vest in accordance with the
Plan and the stock option agreements between the Company and Executive
evidencing such Options.

              (d) Vacation and Executive Benefits. During the term of his
employment, Executive shall be eligible for vacation each year, in accordance
with the Company's standard policy for senior executives, as it may be amended
from time to time. Executive shall be eligible during his employment term to
participate in any employee benefit plans generally available to the other
senior executives of the Company, subject in each case to the generally
applicable terms and conditions of the plan in question and to the
determinations of any person or committee administering such plan. The Company
reserves the right to amend, modify or terminate any employee benefits at any
time for any reason.

              (e) Business Expenses. During the term of his employment,
Executive shall be authorized to incur necessary and reasonable travel and other
business expenses in connection with his duties hereunder, pursuant to and
consistent with policies and procedures as established by the Company and as may
be modified from time-to-time. The Company shall reimburse Executive for such
expenses upon presentation of an itemized account and appropriate supporting
documentation, in accordance with Company policy and procedures.


                                       2
<PAGE>   3

         4. Payments, Benefits and Acceleration Following Termination.

              (a) Termination Following Change of Control. If, within one year
following a "Change of Control," Executive resigns for "Good Reason" or the
Company terminates Executive's employment "Without Cause," then Executive shall
receive:

                   (i) A lump sum severance payment equal to 1.25 times
         Executive's Base Salary, less applicable deductions and withholdings;

                   (ii) A lump sum payment equal to 1.25 times Executive's
         Target Bonus for the fiscal year in which Executive is terminated, less
         applicable deductions and withholdings;

                   (iii) Immediate vesting of the unvested shares under all
         outstanding stock options then held by Executive; and

                   (iv) Should Executive be eligible for and elect to continue
         his health insurance pursuant to COBRA, payment of COBRA premiums for
         fifteen (15) months following the termination date of Executive's
         employment.

              (b) Termination Outside Change of Control. Subject to Section 4(e)
of this Agreement, if the Company terminates Executive's employment "Without
Cause" when no Change of Control has occurred in the prior year, then Executive
shall receive:

                   (i) Base Salary continuation payments in accordance with the
         Company's standard payroll practices for a period of twelve (12) months
         following the termination of Executive's employment (the "Continuation
         Period");

                   (ii) Immediate vesting of all then unvested shares (if any)
         under Executive's "October 2000 Option," and, in the case of any
         outstanding stock option other than the October 2000 Option, immediate
         vesting of each outstanding stock option then held by Executive in an
         amount equal to the greater of: (1) fifty percent (50%) of the
         then-unvested shares under each of Executive's stock options; or (2)
         the number of shares that would have vested as if Executive had
         remained an employee through the Continuation Period; and

                   (iii) Should Executive be eligible for and elect to continue
         his health insurance pursuant to COBRA following the termination date,
         payment of COBRA premiums during the Continuation Period.

              (c) Resignation or Termination for "Cause." In the event that: (i)
Executive's employment is terminated by the Company at any time for "Cause;"
(ii) Executive resigns his employment for any reason when no Change of Control
has taken place within the prior twelve (12) months; or (iii) Executive resigns
his employment without "Good Reason" within twelve (12) months following a
Change of Control; then upon the termination of Executive's employment,
Executive will be paid his Base Salary and for all unused vacation earned
through the date of termination, but nothing else, and all stock vesting and
benefits will cease on Executive's date of termination.


                                       3
<PAGE>   4

              (d) Release Required. As a prior condition to Executive receiving
any payment, benefit or stock acceleration under Sections 4(a) and/or 4(b) of
this Agreement, Executive shall execute a full release of known and unknown
claims against the Company, its successors, affiliates, employees, agents,
advisors and representatives, in a form designated by the Company.

              (e) Condition of Non-competition.

                  (i) Termination Following a Change of Control. If required by
         a successor company, Executive will not engage in any Competitive
         Activity for a period of one (1) year following a Change in Control.

                  (ii) Termination Outside a Change of Control. During the
         Continuation Period Executive shall not engage in any "Competitive
         Activity" without first notifying the Company of the contemplated
         activity. Executive agrees that if there is any reasonable question
         regarding whether or not a contemplated activity would be a Competitive
         Activity, Executive will consult with the Board before engaging in the
         contemplated activity. The Compensation Committee of the Board will
         determine in its sole discretion whether the activity contemplated by
         Executive is a Competitive Activity and, if it so determines, Executive
         will forfeit his right to any and all continued payments and benefits
         under Section 4(b) of this Agreement if he proceeds to engage in the
         Competitive Activity during the Continuation Period.

              (f) Termination Due to Death or Disability. If Executive's
employment is terminated due to death or Disability, then Executive, or
Executive's estate, will receive: (i) payment for all Base Salary and accrued
but unused vacation earned through the date of termination; and (ii) a lump-sum
payment equal to the pro-rata portion of Executive's full Target Bonus, based on
Executive's length of service during the year in which Executive's employment is
terminated due to death or Disability.

              (g) Definitions.

                  (i) "Change of Control." For all purposes under this
         Agreement, "Change of Control" shall exist in any of the following
         circumstances:

                       (a)   the acquisition, directly or indirectly, by any
                             person or related group of persons (other than the
                             Company or a person that directly or indirectly
                             controls, is controlled by, or is under common
                             control with, the Company) of beneficial ownership
                             (within the meaning of Rule 13d-3 of the Securities
                             Exchange Act of 1934, as amended) of securities
                             possessing more than fifty percent (50%) of the
                             total combined voting power of the Company's
                             outstanding securities pursuant to a tender or
                             exchange offer made directly to the Company's
                             stockholders;

                       (b)   a change in the composition of the Board over a
                             period of thirty-six (36) consecutive months or
                             less such that a



                                       4
<PAGE>   5

                             majority of the Board members ceases by reason of
                             one or more contested elections for Board
                             membership, to be comprised of individuals who
                             either (A) have been Board members continuously
                             since the beginning of such period, or (B) have
                             been elected or nominated for election as Board
                             members during such period by at least a majority
                             of the Board members described in clause (A) who
                             were still in office at the time such election or
                             nomination was approved by the Board, or

                       (c)   a merger or consolidation in which securities
                             possessing at least fifty percent (50%) of the
                             total combined voting power of the Company's
                             outstanding securities are transferred to a person
                             or persons different from the persons holding those
                             securities immediately prior to such transaction,
                             or the sale, transfer or other disposition of all
                             or substantially all of the Corporation's assets in
                             complete liquidation or dissolution of the
                             Corporation.

                  (ii) "Good Reason." For all purposes under this Agreement,
         "Good Reason" for Executive's resignation will exist if he resigns
         within sixty (60) days of any of the following events: (1) any
         reduction in his Base Salary; (2) a change in his position with the
         Company or a successor company which substantially reduces his duties
         or level of responsibility; (3) any requirement that he relocate his
         place of employment by more than fifty (50) miles from his then current
         office, provided such reduction, change or relocation is effected by
         the Company without his written consent; or (4) a significant change in
         the Company's business direction affecting a substantial reduction in
         sales. . A resignation by Executive under any other circumstance or for
         any other reason will be a resignation without "Good Reason."

                  (iii) Termination for "Cause." For all purposes under this
         Agreement, a termination for "Cause" shall mean a termination of
         Executive's employment for any of the following reasons: (1)
         misconduct; (2) misappropriation of the assets of the Company; (3)
         conviction of, or a plea of "guilty" or "no contest" to a felony under
         the laws of the United States or any state thereof; (4) committing an
         act of fraud against, or the misappropriation of property belonging to,
         the Company; (5) a material breach of any confidentiality or
         proprietary information agreement between Executive and the Company; or
         (6) continued unsatisfactory performance after being given a written
         warning and at least thirty (30) days to improve performance. A
         termination of Executive's employment in any other circumstance or for
         any other reason will be a termination "Without Cause."

                  (iv) "Disability." For all purposes under this Agreement,
         "Disability" means Executive's inability to carry out his material
         duties under this Agreement for more than six (6) months in any twelve
         (12) consecutive month period as a result of incapacity due to mental
         or physical illness or injury.



                                       5
<PAGE>   6

                  (v) "Competitive Activity." For the purposes of this
         Agreement, a "Competitive Activity" means any activity in which
         Executive directly or indirectly provides services of any kind or
         nature (whether or not Executive is compensated for such services),
         including, but not limited to, Executive working in an employment,
         advisory or consulting capacity, for any Competitor of the Company.

                  (vi) "Competitor." For purposes of this Agreement,
         "Competitor" is defined as any company involved in the design and
         creation of 3D graphics, animation and/or effects for use in
         entertainment, or educational environments. Currently, the Competitor's
         list includes, but is not limited to, 3d Labs, ATI, Nvidia, S3, Maxtrox
         and any of their successors or affiliates. During the Continuation
         Period, the Company may reasonably add other companies to the
         Competitors list.

                  (vii) "October 2000 Option". For the purposes of this
         Agreement, Executive's "October 2000 Option" refers solely to that
         particular option to purchase 400,000 shares of Company Common Stock
         which was granted by the Board to Executive on October 13, 2000.

         5. Non-Solicitation and Non-Disclosure.

              (a) Non-Solicitation. During the period commencing on the
Effective Date of this Agreement and continuing until the second anniversary of
the date when Executive's employment terminates for any reason, Executive shall
not directly or indirectly, personally or through others, solicit or encourage,
or attempt to solicit or encourage (on Executive's own behalf or on behalf of
any other person or entity) for hire any employee or consultant of the Company
or any of the Company's affiliates.

              (b) Non-Disclosure. As a condition of employment, Executive will
execute the Company's standard Proprietary Information Agreement, a copy of
which is attached.

         6. Successors.

              (a) Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.

              (b) Executive's Successors. This Agreement and all rights of
Executive hereunder shall inure to the benefit of, and be enforceable by,
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

         7. Arbitration. Executive and the Company agree to arbitrate before a
neutral arbitrator any and all disputes or claims arising from or relating to
Executive's employment with the Company, or the termination of that employment,
including disputes or claims against any current or former agent or employee of
the Company.


                                       6
<PAGE>   7

              (a) Arbitrable Claims. Arbitrable disputes or claims include those
which arise in tort, contract, or pursuant to a statute, regulation, or
ordinance now in existence or which may in the future be enacted or recognized,
including, but not limited to, the following claims:

                  (i) claims for fraud, promissory estoppel, fraudulent
         inducement of contract or breach of contract or contractual obligation,
         whether such alleged contract or obligation be oral, written, or
         express or implied by fact or law;

                  (ii) claims for wrongful termination of employment, violation
         of public policy and constructive discharge, infliction of emotional
         distress, misrepresentation, interference with contract or prospective
         economic advantage, defamation, unfair business practices, and any
         other tort or tort-like causes of action relating to or arising from
         the employment relationship or the formation or termination thereof;

                  (iii) claims of discrimination, harassment, or retaliation
         under any and all federal, state, or municipal statutes, regulations,
         or ordinances that prohibit discrimination, harassment, or retaliation
         in employment, as well as claims for violation of any other federal,
         state, or municipal statute, regulation, or ordinance, except as set
         forth herein; and

                  (iv) claims for non-payment or incorrect payment of wages,
         commissions, bonuses, severance, employee fringe benefits, stock
         options and the like, whether such claims be pursuant to alleged
         express or implied contract or obligation, equity, the California Labor
         Code, the Fair Labor Standards Act, the Employee Retirement Income
         Securities Act, and any other federal, state, or municipal laws
         concerning wages, compensation or employee benefits.

              (b) Non-Arbitrable Claims. Executive and the Company further
understand and agree that the following disputes and claims are not covered by
the arbitration agreement contained in this Section 7 and shall therefore be
resolved as required by the law then in effect:

                  (i) claims for workers' compensation benefits, unemployment
         insurance, or state or federal disability insurance;

                  (ii) claims concerning the validity, infringement,
         enforceability, or misappropriation of any trade secret, patent right,
         copyright, trademark, or any other intellectual or confidential
         property held or sought by Employee or the Company; and

                  (iii) any other dispute or claim that has been expressly
         excluded from arbitration by statute.

              (c) Relief and Review. The Arbitrator shall have the authority to
award any relief authorized by law in connection with the asserted claims or
disputes and shall issue a written Award that sets forth the essential findings
and conclusions on which the Award


                                       7
<PAGE>   8

is based. The Arbitrator's Award shall be final and binding on both the Company
and Employee and it shall provide the exclusive remedy(ies) for resolving any
and all disputes and claims subject to arbitration under this Agreement. The
Arbitrator's Award shall be subject to correction, confirmation, or vacation, as
provided by California Code of Civil Procedure Section 1285.8 et seq and any
applicable California case law setting forth the standard of judicial review of
arbitration Awards.

              (d) Location and Rules. The arbitration shall be conducted in
Santa Clara County, California, or such location as is mutually agreeable to the
parties, in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association; provided, however, that the
Arbitrator shall allow the discovery authorized by California Code of Civil
Procedure Section 1283.05 or any other discovery required by California law.
Also, to the extent that any of the National Rules for the Resolution of
Employment Disputes or anything in this Agreement conflicts with any arbitration
procedures required by California law, the arbitration procedures required by
California law shall govern.

              (e) Costs and Attorneys' Fees. The Company will bear the
arbitrator's fee and any other type of expense or cost that Executive would not
be required to bear if he were free to bring the dispute(s) or claim(s) in court
as well as any other expense or cost that is unique to arbitration. Executive
and the Company shall each bear their own attorneys' fees incurred in connection
with the arbitration, and the arbitrator will not have authority to award
attorneys' fees unless a statute or contract at issue in the dispute authorizes
the award of attorneys' fees to the prevailing party, in which case the
arbitrator shall have the authority to make an award of attorneys' fees as
required or permitted by applicable law. If there is a dispute as to whether the
Company or Executive is the prevailing party in the arbitration, the Arbitrator
will decide this issue.

              (f) WAIVER OF RIGHT TO JURY. EXECUTIVE AND THE COMPANY UNDERSTAND
AND AGREE THAT THE ARBITRATION OF Disputes and claims under this Agreement shall
be instead of a trial before a court or jury or a hearing before a government
agency.

         8. Miscellaneous Provisions.

              (a) Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by overnight courier, U.S. registered
or certified mail, return receipt requested and postage prepaid. Mailed notices
shall be addressed to Executive at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.

              (b) Modifications and Waivers. No provision of this Agreement
shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by Executive and by an authorized
officer of the Company (other than Executive). No waiver by either party of any
breach of, or of compliance with, any condition or


                                       8
<PAGE>   9

provision of this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or provision at
another time.

              (c) Whole Agreement. No other agreements, representations or
understandings (whether oral or written) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter of this Agreement. This Agreement, the Proprietary
Information Agreement, and applicable stock option agreements and stock plans,
contain the entire understanding of the parties with respect to the subject
matter hereof.

              (d) Taxes. All payments made under this Agreement shall be subject
to reduction to reflect taxes or other charges required to be withheld by law.

              (e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (except provisions governing the choice of law).

              (f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

              (g) No Assignment. This Agreement and all rights and obligations
of Executive hereunder are personal to Executive and may not be transferred or
assigned by Executive at any time. The Company may assign its rights under this
Agreement to any entity that assumes the Company's obligations hereunder in
connection with any sale or transfer of all or a substantial portion of the
Company's assets to such entity.

              (h) 280G. Executive understands and acknowledges that certain
benefits provided for under this Agreement may constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended, (the "Code"). Such parachute payments may be subject to the excise tax
imposed by Section 4999 of the Code. Executive acknowledges and agrees that he
has and will review any tax consequences which may arise as the result of any
such parachute payments with his own tax advisors and that he is relying and
will rely solely on such advisors and not on any representations of the Company
or any of its agent with regard to the possible tax implications of receiving
such parachute payments. Executive further acknowledges and agrees that he is
responsible for his own tax liability which may arise as the result of any such
payments.

              (i) Headings. The headings of the paragraphs contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of any provision of this Agreement.

              (j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


                                       9
<PAGE>   10

         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

                                       EXECUTIVE

                                       /s/ ALEX M. LEUPP
                                       ------------------------------------
                                       Alex M. Leupp


                                       3DFX INTERACTIVE, INC.

                                       By: /s/ GORDON CAMPBELL
                                          ----------------------------------
                                          Gordon Campbell
                                          Chairman of the Board





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>f68798ex10-2.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

         This AGREEMENT is entered into as of November 10, 2000 (the "Effective
Date"), by and between Scott D. Sellers ("Executive") and 3dfx Interactive,
Inc., a California corporation (the "Company"). In consideration of the mutual
covenants and agreements hereinafter set forth, the parties agree as follows:

         1. Duties and Scope of Employment.

              (a) Position and Duties. For the term of his employment under this
Agreement, the Company agrees to employ Executive as its Chief Technical Officer
and Founder, reporting directly to the Chief Executive Officer ("CEO"), or
person designated by the CEO. Executive shall have such duties and authority as
are commensurate with one employed in his position, as may be customarily
incident to such position, and as may be assigned to Executive from time to
time. Executive shall diligently, to the best of his ability, and with the
highest degree of good faith and loyalty, perform all such duties incident to
his position and use his best efforts to promote the interests of the Company.

              (b) Obligations to the Company. During the Employment Term,
Executive shall devote his full time and energy to the business of the Company
and shall not be engaged in any competitive business activity without the
express written consent of the CEO. Executive shall comply with the Company's
policies and rules, as they may be in effect from time to time during the term
of his employment.

              (c) No Conflicting Obligations. Executive represents and warrants
to the Company that he is under no obligations or commitments, whether
contractual or otherwise, that are inconsistent with his obligations under this
Agreement. Executive represents and warrants that he will not use or disclose,
in connection with his employment by the Company, any trade secrets or other
proprietary information or intellectual property in which Executive or any other
person has any right, title or interest and that his employment by the Company
as contemplated by this Agreement will not infringe or violate the rights of any
other person or entity. Executive represents and warrants to the Company that he
has returned all property and confidential information belonging to any prior
employers.

         2. Term of Employment.

              (a) Basic Rule. The Company agrees to continue Executive's
employment, and Executive agrees to remain in employment with the Company, from
the Effective Date until the date when Executive's employment terminates
pursuant to Subsection 2(b) below (the "Employment Period"). Executive's
employment with the Company shall be "at will," which means that either
Executive or the Company may terminate Executive's employment at any time, for
any reason, with "Cause" or "Without Cause." Any contrary representations, which
may have been made to Executive shall be superseded by this Agreement. This
Agreement shall constitute the full and complete agreement between Executive and
the


<PAGE>   2

Company regarding the "at will" nature of Executive's employment, which may only
be changed in an express written agreement signed by Executive and the Chief
Executive Officer.

              (b) Termination. The Company or Executive may terminate
Executive's employment at any time for any reason (or no reason), and with
"Cause" or "Without Cause," by giving the other party fourteen (14) days' notice
in writing. Executive's employment shall terminate automatically in the event of
his death.

         3. Cash and Incentive Compensation.

              (a) Base Salary. The Company shall pay Executive as compensation
for his services an annualized base salary of Two Hundred Sixty Thousand Dollars
($260,000), less applicable deductions and withholdings, payable in accordance
with the Company's standard payroll schedule. The compensation specified in this
Subsection (a), together with any increases in such compensation that the
Company may grant from time to time, are referred to in this Agreement as "Base
Salary." The Base Salary will be reviewed at least annually and shall be subject
to change from time-to-time at the sole discretion of the Chief Executive
Officer and/or the Compensation Committee of the Board of Directors (the
"Board").

              (b) Bonus. Executive will be eligible to earn an annualized bonus
(the "Target Bonus") for each fiscal year equal to at least forty percent (40%)
of his Base Salary, less applicable deductions and withholdings. The Target
Bonus shall be based upon performance criteria to be established by the CEO, in
consultation with Executive, and approved by the Compensation Committee of the
Board. If any part of the Target Bonus is earned for a given fiscal year, it
will be paid on or before March 31 of the following fiscal year.

              (c) Stock Options. As of the Effective Date of this Agreement,
Executive has been granted stock options pursuant to the Company's Stock Option
Plan (the "Plan"), which are summarized in Exhibit A to this Agreement (the
"Options"). Executive's Options shall continue to vest in accordance with the
Plan and the stock option agreements between the Company and Executive
evidencing such Options.

              (d) Vacation and Executive Benefits. During the term of his
employment, Executive shall be eligible for vacation each year, in accordance
with the Company's standard policy for senior executives, as it may be amended
from time to time. Executive shall be eligible during his employment term to
participate in any employee benefit plans generally available to the other
senior executives of the Company, subject in each case to the generally
applicable terms and conditions of the plan in question and to the
determinations of any person or committee administering such plan. The Company
reserves the right to amend, modify or terminate any employee benefits at any
time for any reason.

              (e) Business Expenses. During the term of his employment,
Executive shall be authorized to incur necessary and reasonable travel and other
business expenses in connection with his duties hereunder, pursuant to and
consistent with policies and procedures as established by the Company and as may
be modified from time-to-time. The Company shall reimburse Executive for such
expenses upon presentation of an itemized account and appropriate supporting
documentation, in accordance with Company policy and procedures.


                                       2
<PAGE>   3

         4. Payments, Benefits and Acceleration Following Termination.

              (a) Termination Following Change of Control. If, within one year
following a "Change of Control," Executive resigns for "Good Reason" or the
Company terminates Executive's employment "Without Cause," then Executive shall
receive:

                  (i) A lump sum severance payment equal to one hundred percent
         (100%) of Executive's Base Salary, less applicable deductions and
         withholdings;

                  (ii) The full amount of Executive's Target Bonus for the
         fiscal year in which Executive is terminated, less applicable
         deductions and withholdings;

                  (iii) Immediate vesting of the unvested shares under all
         outstanding stock options then held by Executive; and

                  (iv) Should Executive be eligible for and elect to continue
         his health insurance pursuant to COBRA, payment of COBRA premiums for
         twelve (12) months following the termination date of Executive's
         employment.

              (b) Termination Outside Change of Control. Subject to Section 4(e)
of this Agreement, if the Company terminates Executive's employment "Without
Cause" when no Change of Control has occurred in the prior year, then Executive
shall receive:

                  (i) Base Salary continuation payments in accordance with the
         Company's standard payroll practices until the earlier of (a) twelve
         (12) months following the termination of Executive's employment; or (b)
         the date on which Executive commences full-time employment for any
         person, venture, partnership or corporate entity (the "Continuation
         Period");

                  (ii) Immediate vesting of all then unvested shares, if any,
         under Executive's "October 2000 Option"; and

                  (iii) Should Executive be eligible for and elect to continue
         his health insurance pursuant to COBRA following the termination date,
         payment of COBRA premiums during the Continuation Period.

              (c) Resignation or Termination for "Cause." In the event that: (i)
Executive's employment is terminated by the Company at any time for "Cause;"
(ii) Executive resigns his employment for any reason when no Change of Control
has taken place within the prior twelve (12) months; or (iii) Executive resigns
his employment without "Good Reason" within twelve (12) months following a
Change of Control; then upon the termination of Executive's employment,
Executive will be paid his Base Salary and for all unused vacation earned
through the date of termination, but nothing else, and all stock vesting and
benefits will cease on Executive's date of termination.

              (d) Release Required. As a prior condition to Executive receiving
any payment, benefit or stock acceleration under Sections 4(a) and/or 4(b) of
this Agreement, Executive shall execute a full release of known and unknown
claims against the Company, its


                                       3
<PAGE>   4

successors, affiliates, employees, agents, advisors and representatives, in a
form designated by the Company.

              (e) Condition of Non-competition.

                  (i) Termination Following a Change of Control. In required by
         a successor company, Executive will not engage in any Competitive
         Activity for a period of one (1) year following a Change in Control.

                  (ii) Termination Outside a Change of Control. During the
         Continuation Period Executive shall not engage in any "Competitive
         Activity" without first notifying the Company of the contemplated
         activity. Executive agrees that if there is any reasonable question
         regarding whether or not a contemplated activity would be a Competitive
         Activity, Executive will consult with the Board before engaging in the
         contemplated activity. The Compensation Committee of the Board will
         determine in its sole discretion whether the activity contemplated by
         Executive is a Competitive Activity and, if it so determines, Executive
         will forfeit his right to any and all continued payments and benefits
         under Section 4(b) of this Agreement if he proceeds to engage in the
         Competitive Activity during the Continuation Period.

              (f) Termination Due to Death or Disability. If Executive's
employment is terminated due to death or Disability, then Executive, or
Executive's estate, will receive: (i) payment for all Base Salary and accrued
but unused vacation earned through the date of termination; and (ii) a lump-sum
payment equal to the pro-rata portion of Executive's full Target Bonus, based on
Executive's length of service during the year in which Executive's employment is
terminated due to death or Disability.

              (g) Definitions.

                  (i) "Change of Control." For all purposes under this
         Agreement, "Change of Control" shall mean (1) a merger or consolidation
         in which securities possessing at least fifty percent (50%) of the
         total combined voting power of the Company's outstanding securities are
         transferred to a person or persons different from the persons holding
         those securities immediately prior to such transaction, or (2) the
         sale, transfer or other disposition of all or substantially all of the
         Company's assets in complete liquidation or dissolution of the Company.

                  (ii) "Good Reason." For all purposes under this Agreement,
         "Good Reason" for Executive's resignation will exist if he resigns
         within sixty (60) days of any of the following events: (1) any
         reduction in his Base Salary or Target Bonus; (2) a change in his
         position with the Company or a successor company which substantially
         reduces his duties or level of responsibility; (3) change in his title
         without the express written consent of Executive; (4) any requirement
         that he relocate his place of employment by more than fifty (50) miles
         from his then current office, provided such reduction, change or
         relocation is effected by the Company without his written consent. A
         resignation by Executive under any other circumstance or for any other
         reason will be a resignation without "Good Reason."

                                       4
<PAGE>   5

                  (iii) Termination for "Cause." For all purposes under this
         Agreement, a termination for "Cause" shall mean a termination of
         Executive's employment for any of the following reasons: (1)
         misconduct; (2) misappropriation of the assets of the Company; (3)
         conviction of, or a plea of "guilty" or "no contest" to a felony under
         the laws of the United States or any state thereof; (4) committing an
         act of fraud against, or the misappropriation of property belonging to,
         the Company; (5) a material breach of any confidentiality or
         proprietary information agreement between Executive and the Company; or
         (6) continued unsatisfactory performance after being given a written
         warning and at least thirty (30) days to improve performance. A
         termination of Executive's employment in any other circumstance or for
         any other reason will be a termination "Without Cause."

                  (iv) "Disability." For all purposes under this Agreement,
         "Disability" means Executive's inability to carry out his material
         duties under this Agreement for more than six (6) months in any twelve
         (12) consecutive month period as a result of incapacity due to mental
         or physical illness or injury.

                  (v) "Competitive Activity." For the purposes of this
         Agreement, a "Competitive Activity" means any activity in which
         Executive directly or indirectly provides services of any kind or
         nature (whether or not Executive is compensated for such services),
         including, but not limited to, Executive working in an employment,
         advisory or consulting capacity, for any Competitor of the Company.

                  (vi) "Competitor." For purposes of this Agreement,
         "Competitor" is defined as any company involved in the design and
         creation of 3D graphics, animation and/or effects for use in
         entertainment, or educational. Currently, the Competitor's list
         includes, but is not limited to, 3d Labs, ATI, Nvidia, S3, Maxtrox and
         any of their successors or affiliates. During the Continuation Period,
         the Company may reasonably add other companies to the Competitors list.

                  (vii) "October 2000 Option". For the purposes of this
         Agreement, Executive's "October 2000 Option" refers solely to that
         particular option to purchase 186,000 shares of Company Common Stock
         which was granted by the Board to Executive on October 13, 2000.

         5. Non-Solicitation and Non-Disclosure.

              (a) Non-Solicitation. During the period commencing on the
Effective Date of this Agreement and continuing until the second anniversary of
the date when Executive's employment terminates for any reason, Executive shall
not directly or indirectly, personally or through others, solicit or encourage,
or attempt to solicit or encourage (on Executive's own behalf or on behalf of
any other person or entity) for hire any employee or consultant of the Company
or any of the Company's affiliates.

              (b) Non-Disclosure. As a condition of employment, Executive will
execute the Company's standard Proprietary Information Agreement, a copy of
which is attached.

                                       5
<PAGE>   6

         6. Successors.

              (a) Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.

              (b) Executive's Successors. This Agreement and all rights of
Executive hereunder shall inure to the benefit of, and be enforceable by,
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

         7. Arbitration. Executive and the Company agree to arbitrate before a
neutral arbitrator any and all disputes or claims arising from or relating to
Executive's employment with the Company, or the termination of that employment,
including disputes or claims against any current or former agent or employee of
the Company.

              (a) Arbitrable Claims. Arbitrable disputes or claims include those
which arise in tort, contract, or pursuant to a statute, regulation, or
ordinance now in existence or which may in the future be enacted or recognized,
including, but not limited to, the following claims:

                  (i) claims for fraud, promissory estoppel, fraudulent
         inducement of contract or breach of contract or contractual obligation,
         whether such alleged contract or obligation be oral, written, or
         express or implied by fact or law;

                  (ii) claims for wrongful termination of employment, violation
         of public policy and constructive discharge, infliction of emotional
         distress, misrepresentation, interference with contract or prospective
         economic advantage, defamation, unfair business practices, and any
         other tort or tort-like causes of action relating to or arising from
         the employment relationship or the formation or termination thereof;

                  (iii) claims of discrimination, harassment, or retaliation
         under any and all federal, state, or municipal statutes, regulations,
         or ordinances that prohibit discrimination, harassment, or retaliation
         in employment, as well as claims for violation of any other federal,
         state, or municipal statute, regulation, or ordinance, except as set
         forth herein; and

                  (iv) claims for non-payment or incorrect payment of wages,
         commissions, bonuses, severance, employee fringe benefits, stock
         options and the like, whether such claims be pursuant to alleged
         express or implied contract or obligation, equity, the California Labor
         Code, the Fair Labor Standards Act, the Employee Retirement Income
         Securities Act, and any other federal, state, or municipal laws
         concerning wages, compensation or employee benefits.

              (b) Non-Arbitrable Claims. Executive and the Company further
understand and agree that the following disputes and claims are not covered by
the arbitration


                                       6
<PAGE>   7

agreement contained in this Section 7 and shall therefore be resolved as
required by the law then in effect:

                  (i) claims for workers' compensation benefits, unemployment
         insurance, or state or federal disability insurance;

                  (ii) claims concerning the validity, infringement,
         enforceability, or misappropriation of any trade secret, patent right,
         copyright, trademark, or any other intellectual or confidential
         property held or sought by Employee or the Company; and

                  (iii) any other dispute or claim that has been expressly
         excluded from arbitration by statute.

              (c) Relief and Review. The Arbitrator shall have the authority to
award any relief authorized by law in connection with the asserted claims or
disputes and shall issue a written Award that sets forth the essential findings
and conclusions on which the Award is based. The Arbitrator's Award shall be
final and binding on both the Company and Employee and it shall provide the
exclusive remedy(ies) for resolving any and all disputes and claims subject to
arbitration under this Agreement. The Arbitrator's Award shall be subject to
correction, confirmation, or vacation, as provided by California Code of Civil
Procedure Section 1285.8 et seq and any applicable California case law setting
forth the standard of judicial review of arbitration Awards.

              (d) Location and Rules. The arbitration shall be conducted in
Santa Clara County, California, or such location as is mutually agreeable to the
parties, in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association; provided, however, that the
Arbitrator shall allow the discovery authorized by California Code of Civil
Procedure Section 1283.05 or any other discovery required by California law.
Also, to the extent that any of the National Rules for the Resolution of
Employment Disputes or anything in this Agreement conflicts with any arbitration
procedures required by California law, the arbitration procedures required by
California law shall govern.

              (e) Costs and Attorneys' Fees. The Company will bear the
arbitrator's fee and any other type of expense or cost that Executive would not
be required to bear if he were free to bring the dispute(s) or claim(s) in court
as well as any other expense or cost that is unique to arbitration. Executive
and the Company shall each bear their own attorneys' fees incurred in connection
with the arbitration, and the arbitrator will not have authority to award
attorneys' fees unless a statute or contract at issue in the dispute authorizes
the award of attorneys' fees to the prevailing party, in which case the
arbitrator shall have the authority to make an award of attorneys' fees as
required or permitted by applicable law. If there is a dispute as to whether the
Company or Executive is the prevailing party in the arbitration, the Arbitrator
will decide this issue.

              (f) WAIVER OF RIGHT TO JURY. EXECUTIVE AND THE COMPANY UNDERSTAND
AND AGREE THAT THE ARBITRATION OF DISPUTES AND CLAIMS UNDER THIS AGREEMENT SHALL
BE INSTEAD OF A TRIAL BEFORE A COURT OR JURY OR A HEARING BEFORE A GOVERNMENT
AGENCY.

                                       7
<PAGE>   8

         8. Miscellaneous Provisions.

              (a) Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by overnight courier, U.S. registered
or certified mail, return receipt requested and postage prepaid. Mailed notices
shall be addressed to Executive at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.

              (b) Modifications and Waivers. No provision of this Agreement
shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by Executive and by an authorized
officer of the Company (other than Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of this Agreement
by the other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.

              (c) Whole Agreement. No other agreements, representations or
understandings (whether oral or written) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter of this Agreement. This Agreement, the Proprietary
Information Agreement, and applicable stock option agreements and stock plans,
contain the entire understanding of the parties with respect to the subject
matter hereof.

              (d) Taxes. All payments made under this Agreement shall be subject
to reduction to reflect taxes or other charges required to be withheld by law.

              (e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (except provisions governing the choice of law).

              (f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

              (g) No Assignment. This Agreement and all rights and obligations
of Executive hereunder are personal to Executive and may not be transferred or
assigned by Executive at any time. The Company may assign its rights under this
Agreement to any entity that assumes the Company's obligations hereunder in
connection with any sale or transfer of all or a substantial portion of the
Company's assets to such entity.

              (h) 280G. Executive understands and acknowledges that certain
benefits provided for under this Agreement may constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended, (the "Code"). Such parachute payments may be subject to the excise tax
imposed by Section 4999 of the Code. Executive acknowledges and agrees that he
has and will review any tax consequences which may arise as the result of any
such parachute payments with his own tax advisors and that he is relying and
will rely solely on such advisors and not on any representations of the Company
or any of its


                                       8
<PAGE>   9

agent with regard to the possible tax implications of receiving such parachute
payments. Executive further acknowledges and agrees that he is responsible for
his own tax liability which may arise as the result of any such payments.

              (i) Headings. The headings of the paragraphs contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of any provision of this Agreement.

              (j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                                       9
<PAGE>   10

         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

                                       EXECUTIVE

                                       /s/ SCOTT D. SELLERS
                                       ------------------------------------
                                       Scott D. Sellers


                                       3DFX INTERACTIVE, INC.

                                       By: /s/ ALEX M. LEUPP
                                          ---------------------------------
                                       Title: PRESIDENT AND CHIEF
                                              EXECUTIVE OFFICER
                                              -----------------------------


                                       10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>f68798ex10-3.txt
<DESCRIPTION>EXHIBIT 10.3
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

         This AGREEMENT is entered into as of October 20, 2000 (the "Effective
Date"), by and between Richard Burns ("Executive") and 3dfx Interactive, Inc., a
California corporation (the "Company"). In consideration of the mutual covenants
and agreements hereinafter set forth, the parties agree as follows:

         1. Duties and Scope of Employment.

              (a) Position and Duties. For the term of his employment under this
Agreement, the Company agrees to employ Executive as its Executive Vice
President of Worldwide Sales reporting directly to the Chief Executive Officer
("CEO"), or person designated by the CEO. Executive shall have such duties and
authority as are commensurate with one employed in his position, as may be
customarily incident to such position, and as may be assigned to Executive from
time to time. Executive shall diligently, to the best of his ability, and with
the highest degree of good faith and loyalty, perform all such duties incident
to his position and use his best efforts to promote the interests of the
Company.

              (b) Obligations to the Company. During the Employment Term,
Executive shall devote his full time and energy to the business of the Company
and shall not be engaged in any competitive business activity without the
express written consent of the CEO. Executive shall comply with the Company's
policies and rules, as they may be in effect from time to time during the term
of his employment.

              (c) No Conflicting Obligations. Executive represents and warrants
to the Company that he is under no obligations or commitments, whether
contractual or otherwise, that are inconsistent with his obligations under this
Agreement. Executive represents and warrants that he will not use or disclose,
in connection with his employment by the Company, any trade secrets or other
proprietary information or intellectual property in which Executive or any other
person has any right, title or interest and that his employment by the Company
as contemplated by this Agreement will not infringe or violate the rights of any
other person or entity. Executive represents and warrants to the Company that he
has returned all property and confidential information belonging to any prior
employers.

         2. Term of Employment.

              (a) Basic Rule. The Company agrees to continue Executive's
employment, and Executive agrees to remain in employment with the Company, from
the Effective Date until the date when Executive's employment terminates
pursuant to Subsection 2(b) below (the "Employment Period"). Executive's
employment with the Company shall be "at will," which means that either
Executive or the Company may terminate Executive's employment at any time, for
any reason, with "Cause" or "Without Cause." Any contrary representations, which
may have been made to Executive shall be superseded by this Agreement. This
Agreement shall constitute the full and complete agreement between Executive and
the



<PAGE>   2

Company regarding the "at will" nature of Executive's employment, which may only
be changed in an express written agreement signed by Executive and the Chief
Executive Officer.

              (b) Termination. The Company or Executive may terminate
Executive's employment at any time for any reason (or no reason), and with
"Cause" or "Without Cause," by giving the other party fourteen (14) days' notice
in writing. Executive's employment shall terminate automatically in the event of
his death.

         3. Cash and Incentive Compensation.

              (a) Base Salary. The Company shall pay Executive as compensation
for his services an annualized base salary of $210,000, less applicable
deductions and withholdings, payable in accordance with the Company's standard
payroll schedule. The compensation specified in this Subsection (a), together
with any increases in such compensation that the Company may grant from time to
time, are referred to in this Agreement as "Base Salary." The Base Salary will
be reviewed at least annually and shall be subject to change from time-to-time
at the sole discretion of the Chief Executive Officer and/or the Compensation
Committee of the Board of Directors (the "Board").

              (b) Bonus. Executive will be eligible to earn an annualized bonus
(the "Target Bonus") for each fiscal year equal to at least $140,000 (67%) of
his Base Salary, less applicable deductions and withholdings. The Target Bonus
shall be based upon performance criteria to be established by the CEO, in
consultation with Executive, and approved by the Compensation Committee of the
Board. If any part of the Target Bonus is earned for a given fiscal year, it
will be paid on or before March 31 of the following fiscal year.

              (c) Stock Options. As of the Effective Date of this Agreement,
Executive has been granted stock options pursuant to the Company's Stock Option
Plan (the "Plan"), which are summarized in Exhibit A to this Agreement (the
"Options"). Executive's Options shall continue to vest in accordance with the
Plan and the stock option agreements between the Company and Executive
evidencing such Options.

              (d) Vacation and Executive Benefits. During the term of his
employment, Executive shall be eligible for vacation each year, in accordance
with the Company's standard policy for senior executives, as it may be amended
from time to time. Executive shall be eligible during his employment term to
participate in any employee benefit plans generally available to the other
senior executives of the Company, subject in each case to the generally
applicable terms and conditions of the plan in question and to the
determinations of any person or committee administering such plan. The Company
reserves the right to amend, modify or terminate any employee benefits at any
time for any reason.

              (e) Business Expenses. During the term of his employment,
Executive shall be authorized to incur necessary and reasonable travel and other
business expenses in connection with his duties hereunder, pursuant to and
consistent with policies and procedures as established by the Company and as may
be modified from time-to-time. The Company shall reimburse Executive for such
expenses upon presentation of an itemized account and appropriate supporting
documentation, in accordance with Company policy and procedures.


                                       2
<PAGE>   3

         4. Payments, Benefits and Acceleration Following Termination.

              (a) Termination Following Change of Control. If, within one year
following a "Change of Control," Executive resigns for "Good Reason" or the
Company terminates Executive's employment "Without Cause," then Executive shall
receive:

                  (i) A lump sum severance payment equal to one hundred percent
         (100%) of Executive's Base Salary, less applicable deductions and
         withholdings;

                  (ii) The full amount of Executive's Target Bonus for the
         fiscal year in which Executive is terminated, less applicable
         deductions and withholdings;

                  (iii) Immediate vesting of the unvested shares under all
         outstanding stock options then held by Executive; and

                  (iv) Should Executive be eligible for and elect to continue
         his health insurance pursuant to COBRA, payment of COBRA premiums for
         twelve (12) months following the termination date of Executive's
         employment.

              (b) Termination Outside Change of Control. Subject to Section 4(e)
of this Agreement, if the Company terminates Executive's employment "Without
Cause" when no Change of Control has occurred in the prior year, then Executive
shall receive:

                  (i) Base Salary continuation payments in accordance with the
         Company's standard payroll practices until the earlier of (a) twelve
         (12) months following the termination of Executive's employment; or (b)
         the date on which Executive commences full-time employment for any
         person, venture, partnership or corporate entity (the "Continuation
         Period");

                  (ii) Immediate vesting of each outstanding stock option then
         held by Executive in an amount equal to the greater of: (1) fifty
         percent (50%) of the then-unvested shares under each of Executive's
         stock options; or (2) the number of shares that would have vested as if
         Executive had remained an employee through the Continuation Period; and

                  (iii) Should Executive be eligible for and elect to continue
         his health insurance pursuant to COBRA following the termination date,
         payment of COBRA premiums during the Continuation Period.

              (c) Resignation or Termination for "Cause." In the event that: (i)
Executive's employment is terminated by the Company at any time for "Cause;"
(ii) Executive resigns his employment for any reason when no Change of Control
has taken place within the prior twelve (12) months; or (iii) Executive resigns
his employment without "Good Reason" within twelve (12) months following a
Change of Control; then upon the termination of Executive's employment,
Executive will be paid his Base Salary and for all unused vacation earned
through the date of termination, but nothing else, and all stock vesting and
benefits will cease on Executive's date of termination.

                                       3
<PAGE>   4

              (d) Release Required. As a prior condition to Executive receiving
any payment, benefit or stock acceleration under Sections 4(a) and/or 4(b) of
this Agreement, Executive shall execute a full release of known and unknown
claims against the Company, its successors, affiliates, employees, agents,
advisors and representatives, in a form designated by the Company.

              (e) Condition of Non-competition.

                  (i) Termination Following a Change of Control. In required by
         a successor company, Executive will not engage in any Competitive
         Activity for a period of one (1) year following a Change in Control.

                  (ii) Termination Outside a Change of Control. During the
         Continuation Period Executive shall not engage in any "Competitive
         Activity" without first notifying the Company of the contemplated
         activity. Executive agrees that if there is any reasonable question
         regarding whether or not a contemplated activity would be a Competitive
         Activity, Executive will consult with the Board before engaging in the
         contemplated activity. The Compensation Committee of the Board will
         determine in its sole discretion whether the activity contemplated by
         Executive is a Competitive Activity and, if it so determines, Executive
         will forfeit his right to any and all continued payments and benefits
         under Section 4(b) of this Agreement if he proceeds to engage in the
         Competitive Activity during the Continuation Period.

              (f) Termination Due to Death or Disability. If Executive's
employment is terminated due to death or Disability, then Executive, or
Executive's estate, will receive: (i) payment for all Base Salary and accrued
but unused vacation earned through the date of termination; and (ii) a lump-sum
payment equal to the pro-rata portion of Executive's full Target Bonus, based on
Executive's length of service during the year in which Executive's employment is
terminated due to death or Disability.

              (g) Definitions.

                  (i) "Change of Control." For all purposes under this
         Agreement, "Change of Control" shall mean: (1) a merger or
         consolidation in which securities possessing at least fifty percent
         (50%) of the total combined voting power of the Company's outstanding
         securities are transferred to a person or persons different from the
         persons holding those securities immediately prior to such transaction;
         (2) the sale, transfer or other disposition of all or substantially all
         of the Company's assets in complete liquidation or dissolution of the
         Company; or (3) the sale, transfer or disposition or the dissolution of
         the Company's board operations retail sales business.

                  (ii) "Good Reason." For all purposes under this Agreement,
         "Good Reason" for Executive's resignation will exist if he resigns
         within sixty (60) days of any of the following events: (1) any
         reduction in his Base Salary; (2) a change in his position with the
         Company or a successor company which substantially reduces his duties
         or level of responsibility; (3) any requirement that he relocate his
         place of employment by more than fifty (50) miles from his then current
         office, provided such reduction, change


                                       4
<PAGE>   5

         or relocation is effected by the Company without his written consent. A
         resignation by Executive under any other circumstance or for any other
         reason will be a resignation without "Good Reason."

                  (iii) Termination for "Cause." For all purposes under this
         Agreement, a termination for "Cause" shall mean a termination of
         Executive's employment for any of the following reasons: (1)
         misconduct; (2) misappropriation of the assets of the Company; (3)
         conviction of, or a plea of "guilty" or "no contest" to a felony under
         the laws of the United States or any state thereof; (4) committing an
         act of fraud against, or the misappropriation of property belonging to,
         the Company; (5) a material breach of any confidentiality or
         proprietary information agreement between Executive and the Company; or
         (6) continued unsatisfactory performance after being given a written
         warning and at least thirty (30) days to improve performance. A
         termination of Executive's employment in any other circumstance or for
         any other reason will be a termination "Without Cause."

                  (iv) "Disability." For all purposes under this Agreement,
         "Disability" means Executive's inability to carry out his material
         duties under this Agreement for more than six (6) months in any twelve
         (12) consecutive month period as a result of incapacity due to mental
         or physical illness or injury.

                  (v) "Competitive Activity." For the purposes of this
         Agreement, a "Competitive Activity" means any activity in which
         Executive directly or indirectly provides services of any kind or
         nature (whether or not Executive is compensated for such services),
         including, but not limited to, Executive working in an employment,
         advisory or consulting capacity, for any Competitor of the Company.

                  (vi) "Competitor." For purposes of this Agreement,
         "Competitor" is defined as any company involved in the design and
         creation of 3D graphics, animation and/or effects for use in
         entertainment, or educational environments. Currently, the Competitor's
         list includes, but is not limited to, 3d Labs, ATI, Nvidia, S3, Maxtrox
         and any of their successors or affiliates. During the Continuation
         Period, the Company may reasonably add other companies to the
         Competitors list.

         5. Non-Solicitation and Non-Disclosure.

              (a) Non-Solicitation. During the period commencing on the
Effective Date of this Agreement and continuing until the second anniversary of
the date when Executive's employment terminates for any reason, Executive shall
not directly or indirectly, personally or through others, solicit or encourage,
or attempt to solicit or encourage (on Executive's own behalf or on behalf of
any other person or entity) for hire any employee or consultant of the Company
or any of the Company's affiliates.

              (b) Non-Disclosure. As a condition of employment, Executive will
execute the Company's standard Proprietary Information Agreement, a copy of
which is attached.


                                       5
<PAGE>   6

         6. Successors.

              (a) Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.

              (b) Executive's Successors. This Agreement and all rights of
Executive hereunder shall inure to the benefit of, and be enforceable by,
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

         7. Arbitration. Executive and the Company agree to arbitrate before a
neutral arbitrator any and all disputes or claims arising from or relating to
Executive's employment with the Company, or the termination of that employment,
including disputes or claims against any current or former agent or employee of
the Company.

              (a) Arbitrable Claims. Arbitrable disputes or claims include those
which arise in tort, contract, or pursuant to a statute, regulation, or
ordinance now in existence or which may in the future be enacted or recognized,
including, but not limited to, the following claims:

                  (i) claims for fraud, promissory estoppel, fraudulent
         inducement of contract or breach of contract or contractual obligation,
         whether such alleged contract or obligation be oral, written, or
         express or implied by fact or law;

                  (ii) claims for wrongful termination of employment, violation
         of public policy and constructive discharge, infliction of emotional
         distress, misrepresentation, interference with contract or prospective
         economic advantage, defamation, unfair business practices, and any
         other tort or tort-like causes of action relating to or arising from
         the employment relationship or the formation or termination thereof;

                  (iii) claims of discrimination, harassment, or retaliation
         under any and all federal, state, or municipal statutes, regulations,
         or ordinances that prohibit discrimination, harassment, or retaliation
         in employment, as well as claims for violation of any other federal,
         state, or municipal statute, regulation, or ordinance, except as set
         forth herein; and

                  (iv) claims for non-payment or incorrect payment of wages,
         commissions, bonuses, severance, employee fringe benefits, stock
         options and the like, whether such claims be pursuant to alleged
         express or implied contract or obligation, equity, the California Labor
         Code, the Fair Labor Standards Act, the Employee Retirement Income
         Securities Act, and any other federal, state, or municipal laws
         concerning wages, compensation or employee benefits.

              (b) Non-Arbitrable Claims. Executive and the Company further
understand and agree that the following disputes and claims are not covered by
the arbitration


                                       6
<PAGE>   7

agreement contained in this Section 7 and shall therefore be resolved as
required by the law then in effect:

                  (i) claims for workers' compensation benefits, unemployment
         insurance, or state or federal disability insurance;

                  (ii) claims concerning the validity, infringement,
         enforceability, or misappropriation of any trade secret, patent right,
         copyright, trademark, or any other intellectual or confidential
         property held or sought by Employee or the Company; and

                  (iii) any other dispute or claim that has been expressly
         excluded from arbitration by statute.

              (c) Relief and Review. The Arbitrator shall have the authority to
award any relief authorized by law in connection with the asserted claims or
disputes and shall issue a written Award that sets forth the essential findings
and conclusions on which the Award is based. The Arbitrator's Award shall be
final and binding on both the Company and Employee and it shall provide the
exclusive remedy(ies) for resolving any and all disputes and claims subject to
arbitration under this Agreement. The Arbitrator's Award shall be subject to
correction, confirmation, or vacation, as provided by California Code of Civil
Procedure Section 1285.8 et seq and any applicable California case law setting
forth the standard of judicial review of arbitration Awards.

              (d) Location and Rules. The arbitration shall be conducted in
Santa Clara County, California, or such location as is mutually agreeable to the
parties, in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association; provided, however, that the
Arbitrator shall allow the discovery authorized by California Code of Civil
Procedure Section 1283.05 or any other discovery required by California law.
Also, to the extent that any of the National Rules for the Resolution of
Employment Disputes or anything in this Agreement conflicts with any arbitration
procedures required by California law, the arbitration procedures required by
California law shall govern.

              (e) Costs and Attorneys' Fees. The Company will bear the
arbitrator's fee and any other type of expense or cost that Executive would not
be required to bear if he were free to bring the dispute(s) or claim(s) in court
as well as any other expense or cost that is unique to arbitration. Executive
and the Company shall each bear their own attorneys' fees incurred in connection
with the arbitration, and the arbitrator will not have authority to award
attorneys' fees unless a statute or contract at issue in the dispute authorizes
the award of attorneys' fees to the prevailing party, in which case the
arbitrator shall have the authority to make an award of attorneys' fees as
required or permitted by applicable law. If there is a dispute as to whether the
Company or Executive is the prevailing party in the arbitration, the Arbitrator
will decide this issue.

              (f) WAIVER OF RIGHT TO JURY. EXECUTIVE AND THE COMPANY UNDERSTAND
AND AGREE THAT THE ARBITRATION OF DISPUTES AND CLAIMS UNDER THIS AGREEMENT SHALL
BE INSTEAD OF A TRIAL BEFORE A COURT OR JURY OR A HEARING BEFORE A GOVERNMENT
AGENCY.

                                       7
<PAGE>   8

         8. Miscellaneous Provisions.

              (a) Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by overnight courier, U.S. registered
or certified mail, return receipt requested and postage prepaid. Mailed notices
shall be addressed to Executive at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.

              (b) Modifications and Waivers. No provision of this Agreement
shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by Executive and by an authorized
officer of the Company (other than Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of this Agreement
by the other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.

              (c) Whole Agreement. No other agreements, representations or
understandings (whether oral or written) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter of this Agreement. This Agreement, the Proprietary
Information Agreement, and applicable stock option agreements and stock plans,
contain the entire understanding of the parties with respect to the subject
matter hereof.

              (d) Taxes. All payments made under this Agreement shall be subject
to reduction to reflect taxes or other charges required to be withheld by law.

              (e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (except provisions governing the choice of law).

              (f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

              (g) No Assignment. This Agreement and all rights and obligations
of Executive hereunder are personal to Executive and may not be transferred or
assigned by Executive at any time. The Company may assign its rights under this
Agreement to any entity that assumes the Company's obligations hereunder in
connection with any sale or transfer of all or a substantial portion of the
Company's assets to such entity.

              (h) 280G. Executive understands and acknowledges that certain
benefits provided for under this Agreement may constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended, (the "Code"). Such parachute payments may be subject to the excise tax
imposed by Section 4999 of the Code. Executive acknowledges and agrees that he
has and will review any tax consequences which may arise as the result of any
such parachute payments with his own tax advisors and that he is relying and
will rely solely on such advisors and not on any representations of the Company
or any of its


                                       8
<PAGE>   9

agent with regard to the possible tax implications of receiving such parachute
payments. Executive further acknowledges and agrees that he is responsible for
his own tax liability which may arise as the result of any such payments.

              (i) Headings. The headings of the paragraphs contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of any provision of this Agreement.

              (j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                                       9
<PAGE>   10

         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

                                       EXECUTIVE

                                       /s/ RICHARD BURNS
                                       ------------------------------------
                                       NAME


                                       3DFX INTERACTIVE, INC.

                                       By: /s/ ALEX M. LEUPP
                                          ---------------------------------
                                       Title: PRESIDENT AND CHIEF
                                              EXECUTIVE OFFICER


                                       10



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>f68798ex10-4.txt
<DESCRIPTION>EXHIBIT 10.4
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.4

                              EMPLOYMENT AGREEMENT

         This AGREEMENT is entered into as of November 10, 2000 (the "Effective
Date"), by and between Stephen A. Lapinski ("Executive") and 3dfx Interactive,
Inc., a California corporation (the "Company"). In consideration of the mutual
covenants and agreements hereinafter set forth, the parties agree as follows:

         1. Duties and Scope of Employment.

              (a) Position and Duties. For the term of his employment under this
Agreement, the Company agrees to employ Executive as its Executive Vice
President Worldwide Marketing reporting directly to the Chief Executive Officer
("CEO"), or person designated by the CEO. Executive shall have such duties and
authority as are commensurate with one employed in his position, as may be
customarily incident to such position, and as may be assigned to Executive from
time to time. Executive shall diligently, to the best of his ability, and with
the highest degree of good faith and loyalty, perform all such duties incident
to his position and use his best efforts to promote the interests of the
Company.

              (b) Obligations to the Company. During the Employment Term,
Executive shall devote his full time and energy to the business of the Company
and shall not be engaged in any competitive business activity without the
express written consent of the CEO. Executive shall comply with the Company's
policies and rules, as they may be in effect from time to time during the term
of his employment.

              (c) No Conflicting Obligations. Executive represents and warrants
to the Company that he is under no obligations or commitments, whether
contractual or otherwise, that are inconsistent with his obligations under this
Agreement. Executive represents and warrants that he will not use or disclose,
in connection with his employment by the Company, any trade secrets or other
proprietary information or intellectual property in which Executive or any other
person has any right, title or interest and that his employment by the Company
as contemplated by this Agreement will not infringe or violate the rights of any
other person or entity. Executive represents and warrants to the Company that he
has returned all property and confidential information belonging to any prior
employers.

         2. Term of Employment.

              (a) Basic Rule. The Company agrees to continue Executive's
employment, and Executive agrees to remain in employment with the Company, from
the Effective Date until the date when Executive's employment terminates
pursuant to Subsection 2(b) below (the "Employment Period"). Executive's
employment with the Company shall be "at will," which means that either
Executive or the Company may terminate Executive's employment at any time, for
any reason, with "Cause" or "Without Cause." Any contrary representations, which
may have been made to Executive shall be superseded by this Agreement. This
Agreement shall constitute the full and complete agreement between Executive and
the


<PAGE>   2

Company regarding the "at will" nature of Executive's employment, which may only
be changed in an express written agreement signed by Executive and the Chief
Executive Officer.

              (b) Termination. The Company or Executive may terminate
Executive's employment at any time for any reason (or no reason), and with
"Cause" or "Without Cause," by giving the other party fourteen (14) days' notice
in writing. Executive's employment shall terminate automatically in the event of
his death.

         3. Cash and Incentive Compensation.

              (a) Base Salary. The Company shall pay Executive as compensation
for his services an annualized base salary of Two Hundred Forty Thousand Dollars
($240,000), less applicable deductions and withholdings, payable in accordance
with the Company's standard payroll schedule. The compensation specified in this
Subsection (a), together with any increases in such compensation that the
Company may grant from time to time, are referred to in this Agreement as "Base
Salary." The Base Salary will be reviewed at least annually and shall be subject
to change from time-to-time at the sole discretion of the Chief Executive
Officer and/or the Compensation Committee of the Board of Directors (the
"Board").

              (b) Bonus. Executive will be eligible to earn an annualized bonus
(the "Target Bonus") for each fiscal year equal to at least forty percent (40%)
of his Base Salary, less applicable deductions and withholdings. The Target
Bonus shall be based upon performance criteria to be established by the CEO, in
consultation with Executive, and approved by the Compensation Committee of the
Board. For the 2001 fiscal year (which runs from February 1, 2000 through
January 31, 2001), your Target Bonus shall be guaranteed provided you remain in
continuous service to the Company through the end of fiscal year 2001. If any
part of the Target Bonus is earned for a given fiscal year, it will be paid on
or before March 31 of the following fiscal year.

              (c) Stock Options. As of the Effective Date of this Agreement,
Executive has been granted stock options pursuant to the Company's Stock Option
Plan (the "Plan"), which are summarized in Exhibit A to this Agreement (the
"Options"). Executive's Options shall continue to vest in accordance with the
Plan and the stock option agreements between the Company and Executive
evidencing such Options.

              (d) Vacation and Executive Benefits. During the term of his
employment, Executive shall be eligible for vacation each year, in accordance
with the Company's standard policy for senior executives, as it may be amended
from time to time. Executive shall be eligible during his employment term to
participate in any employee benefit plans generally available to the other
senior executives of the Company, subject in each case to the generally
applicable terms and conditions of the plan in question and to the
determinations of any person or committee administering such plan. The Company
reserves the right to amend, modify or terminate any employee benefits at any
time for any reason.

              (e) Business Expenses. During the term of his employment,
Executive shall be authorized to incur necessary and reasonable travel and other
business expenses in connection with his duties hereunder, pursuant to and
consistent with policies and procedures as


                                       2
<PAGE>   3

established by the Company and as may be modified from time-to-time. The Company
shall reimburse Executive for such expenses upon presentation of an itemized
account and appropriate supporting documentation, in accordance with Company
policy and procedures.

         4. Payments, Benefits and Acceleration Following Termination.

              (a) Termination Following Change of Control. If, within one year
following a "Change of Control," Executive resigns for "Good Reason" or the
Company terminates Executive's employment "Without Cause," then Executive shall
receive:

                  (i) A lump sum severance payment equal to one hundred percent
         (100%) of Executive's Base Salary, less applicable deductions and
         withholdings;

                  (ii) The full amount of Executive's Target Bonus for the
         fiscal year in which Executive is terminated, less applicable
         deductions and withholdings;

                  (iii) Immediate vesting of the unvested shares under all
         outstanding stock options then held by Executive; and

                  (iv) Should Executive be eligible for and elect to continue
         his health insurance pursuant to COBRA, payment of COBRA premiums for
         twelve (12) months following the termination date of Executive's
         employment.

              (b) Termination Outside Change of Control. Subject to Section 4(e)
of this Agreement, if the Company terminates Executive's employment "Without
Cause" when no Change of Control has occurred in the prior year, then Executive
shall receive:

                  (i) Base Salary continuation payments in accordance with the
         Company's standard payroll practices for a period of twelve (12) months
         following the termination of Executive's employment (the "Continuation
         Period");

                  (ii) Immediate vesting of all then unvested shares (if any)
         under Executive's "October 2000 Option," and, in the case of any
         outstanding stock option other than the October 2000 Option, immediate
         vesting of each outstanding stock option then held by Executive in an
         amount equal to the greater of: (1) fifty percent (50%) of the
         then-unvested shares under each of Executive's stock options; or (2)
         the number of shares that would have vested as if Executive had
         remained an employee through the Continuation Period; and

                  (iii) Should Executive be eligible for and elect to continue
         his health insurance pursuant to COBRA following the termination date,
         payment of COBRA premiums during the Continuation Period.

              (c) Resignation or Termination for "Cause." In the event that: (i)
Executive's employment is terminated by the Company at any time for "Cause;"
(ii) Executive resigns his employment for any reason when no Change of Control
has taken place within the prior twelve (12) months; or (iii) Executive resigns
his employment without "Good Reason" within twelve (12) months following a
Change of Control; then upon the termination of


                                       3
<PAGE>   4

Executive's employment, Executive will be paid his Base Salary and for all
unused vacation earned through the date of termination, but nothing else, and
all stock vesting and benefits will cease on Executive's date of termination.

              (d) Release Required. As a prior condition to Executive receiving
any payment, benefit or stock acceleration under Sections 4(a) and/or 4(b) of
this Agreement, Executive shall execute a full release of known and unknown
claims against the Company, its successors, affiliates, employees, agents,
advisors and representatives, in a form designated by the Company.

              (e) Condition of Non-competition.

                  (i) Termination Following a Change of Control. If required by
         a successor company, Executive will not engage in any Competitive
         Activity for a period of one (1) year following a Change in Control.

                  (ii) Termination Outside a Change of Control. During the
         Continuation Period Executive shall not engage in any "Competitive
         Activity" without first notifying the Company of the contemplated
         activity. Executive agrees that if there is any reasonable question
         regarding whether or not a contemplated activity would be a Competitive
         Activity, Executive will consult with the Board before engaging in the
         contemplated activity. The Compensation Committee of the Board will
         determine in its sole discretion whether the activity contemplated by
         Executive is a Competitive Activity and, if it so determines, Executive
         will forfeit his right to any and all continued payments and benefits
         under Section 4(b) of this Agreement if he proceeds to engage in the
         Competitive Activity during the Continuation Period.

              (f) Termination Due to Death or Disability. If Executive's
employment is terminated due to death or Disability, then Executive, or
Executive's estate, will receive: (i) payment for all Base Salary and accrued
but unused vacation earned through the date of termination; and (ii) a lump-sum
payment equal to the pro-rata portion of Executive's full Target Bonus, based on
Executive's length of service during the year in which Executive's employment is
terminated due to death or Disability.

              (g) Definitions.

                  (i) "Change of Control." For all purposes under this
         Agreement, "Change of Control" shall exist in any of the following
         circumstances:

                       (a)   the acquisition, directly or indirectly, by any
                             person or related group of persons (other than the
                             Company or a person that directly or indirectly
                             controls, is controlled by, or is under common
                             control with, the Company) of beneficial ownership
                             (within the meaning of Rule 13d-3 of the Securities
                             Exchange Act of 1934, as amended) of securities
                             possessing more than fifty percent (50%) of the
                             total combined voting power of the Company's


                                       4
<PAGE>   5

                             outstanding securities pursuant to a tender or
                             exchange offer made directly to the Company's
                             stockholders;

                       (b)   a change in the composition of the Board over a
                             period of thirty-six (36) consecutive months or
                             less such that a majority of the Board members
                             ceases by reason of one or more contested elections
                             for Board membership, to be comprised of
                             individuals who either (A) have been Board members
                             continuously since the beginning of such period, or
                             (B) have been elected or nominated for election as
                             Board members during such period by at least a
                             majority of the Board members described in clause
                             (A) who were still in office at the time such
                             election or nomination was approved by the Board,
                             or

                       (c)   a merger or consolidation in which securities
                             possessing at least fifty percent (50%) of the
                             total combined voting power of the Company's
                             outstanding securities are transferred to a person
                             or persons different from the persons holding those
                             securities immediately prior to such transaction,
                             or the sale, transfer or other disposition of all
                             or substantially all of the Corporation's assets in
                             complete liquidation or dissolution of the
                             Corporation.

                  (ii) "Good Reason." For all purposes under this Agreement,
         "Good Reason" for Executive's resignation will exist if he resigns
         within sixty (60) days of any of the following events: (1) any
         reduction in his Base Salary; (2) a change in his position with the
         Company or a successor company which substantially reduces his duties
         or level of responsibility; (3) any requirement that he relocate his
         place of employment by more than fifty (50) miles from his then current
         office, provided such reduction, change or relocation is effected by
         the Company without his written consent; or (4) a significant change in
         the Company's business direction affecting a substantial reduction in
         sales. . A resignation by Executive under any other circumstance or for
         any other reason will be a resignation without "Good Reason."

                  (iii) Termination for "Cause." For all purposes under this
         Agreement, a termination for "Cause" shall mean a termination of
         Executive's employment for any of the following reasons: (1)
         misconduct; (2) misappropriation of the assets of the Company; (3)
         conviction of, or a plea of "guilty" or "no contest" to a felony under
         the laws of the United States or any state thereof; (4) committing an
         act of fraud against, or the misappropriation of property belonging to,
         the Company; (5) a material breach of any confidentiality or
         proprietary information agreement between Executive and the Company; or
         (6) continued unsatisfactory performance after being given a written
         warning and at least thirty (30) days to improve performance. A
         termination of Executive's employment in any other circumstance or for
         any other reason will be a termination "Without Cause."


                                       5
<PAGE>   6

                  (iv) "Disability." For all purposes under this Agreement,
         "Disability" means Executive's inability to carry out his material
         duties under this Agreement for more than six (6) months in any twelve
         (12) consecutive month period as a result of incapacity due to mental
         or physical illness or injury.

                  (v) "Competitive Activity." For the purposes of this
         Agreement, a "Competitive Activity" means any activity in which
         Executive directly or indirectly provides services of any kind or
         nature (whether or not Executive is compensated for such services),
         including, but not limited to, Executive working in an employment,
         advisory or consulting capacity, for any Competitor of the Company.

                  (vi) "Competitor." For purposes of this Agreement,
         "Competitor" is defined as any company involved in the design and
         creation of 3D graphics, animation and/or effects for use in
         entertainment, or educational environments. Currently, the Competitor's
         list includes, but is not limited to, 3d Labs, ATI, Nvidia, S3, Maxtrox
         and any of their successors or affiliates. During the Continuation
         Period, the Company may reasonably add other companies to the
         Competitors list.

                  (vii) "October 2000 Option". For the purposes of this
         Agreement, Executive's "October 2000 Option" refers solely to that
         particular option to purchase 175,000 shares of Company Common Stock
         which was granted by the Board to Executive on October 13, 2000.

         5. Non-Solicitation and Non-Disclosure.

              (a) Non-Solicitation. During the period commencing on the
Effective Date of this Agreement and continuing until the second anniversary of
the date when Executive's employment terminates for any reason, Executive shall
not directly or indirectly, personally or through others, solicit or encourage,
or attempt to solicit or encourage (on Executive's own behalf or on behalf of
any other person or entity) for hire any employee or consultant of the Company
or any of the Company's affiliates.

              (b) Non-Disclosure. As a condition of employment, Executive will
execute the Company's standard Proprietary Information Agreement, a copy of
which is attached.


                                       6
<PAGE>   7

         6. Successors.

              (a) Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.

              (b) Executive's Successors. This Agreement and all rights of
Executive hereunder shall inure to the benefit of, and be enforceable by,
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

         7. Arbitration. Executive and the Company agree to arbitrate before a
neutral arbitrator any and all disputes or claims arising from or relating to
Executive's employment with the Company, or the termination of that employment,
including disputes or claims against any current or former agent or employee of
the Company.

              (a) Arbitrable Claims. Arbitrable disputes or claims include those
which arise in tort, contract, or pursuant to a statute, regulation, or
ordinance now in existence or which may in the future be enacted or recognized,
including, but not limited to, the following claims:

                  (i) claims for fraud, promissory estoppel, fraudulent
         inducement of contract or breach of contract or contractual obligation,
         whether such alleged contract or obligation be oral, written, or
         express or implied by fact or law;

                  (ii) claims for wrongful termination of employment, violation
         of public policy and constructive discharge, infliction of emotional
         distress, misrepresentation, interference with contract or prospective
         economic advantage, defamation, unfair business practices, and any
         other tort or tort-like causes of action relating to or arising from
         the employment relationship or the formation or termination thereof;

                  (iii) claims of discrimination, harassment, or retaliation
         under any and all federal, state, or municipal statutes, regulations,
         or ordinances that prohibit discrimination, harassment, or retaliation
         in employment, as well as claims for violation of any other federal,
         state, or municipal statute, regulation, or ordinance, except as set
         forth herein; and

                  (iv) claims for non-payment or incorrect payment of wages,
         commissions, bonuses, severance, employee fringe benefits, stock
         options and the like, whether such claims be pursuant to alleged
         express or implied contract or obligation, equity, the California Labor
         Code, the Fair Labor Standards Act, the Employee Retirement Income
         Securities Act, and any other federal, state, or municipal laws
         concerning wages, compensation or employee benefits.

              (b) Non-Arbitrable Claims. Executive and the Company further
understand and agree that the following disputes and claims are not covered by
the arbitration agreement contained in this Section 7 and shall therefore be
resolved as required by the law then in effect:

                  (i) claims for workers' compensation benefits, unemployment
         insurance, or state or federal disability insurance;

                  (ii) claims concerning the validity, infringement,
         enforceability, or misappropriation of any trade secret, patent right,
         copyright, trademark, or any other intellectual or confidential
         property held or sought by Employee or the Company; and


                                       7
<PAGE>   8

                  (iii) any other dispute or claim that has been expressly
         excluded from arbitration by statute.

              (c) Relief and Review. The Arbitrator shall have the authority to
award any relief authorized by law in connection with the asserted claims or
disputes and shall issue a written Award that sets forth the essential findings
and conclusions on which the Award is based. The Arbitrator's Award shall be
final and binding on both the Company and Employee and it shall provide the
exclusive remedy(ies) for resolving any and all disputes and claims subject to
arbitration under this Agreement. The Arbitrator's Award shall be subject to
correction, confirmation, or vacation, as provided by California Code of Civil
Procedure Section 1285.8 et seq and any applicable California case law setting
forth the standard of judicial review of arbitration Awards.

              (d) Location and Rules. The arbitration shall be conducted in
Santa Clara County, California, or such location as is mutually agreeable to the
parties, in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association; provided, however, that the
Arbitrator shall allow the discovery authorized by California Code of Civil
Procedure Section 1283.05 or any other discovery required by California law.
Also, to the extent that any of the National Rules for the Resolution of
Employment Disputes or anything in this Agreement conflicts with any arbitration
procedures required by California law, the arbitration procedures required by
California law shall govern.

              (e) Costs and Attorneys' Fees. The Company will bear the
arbitrator's fee and any other type of expense or cost that Executive would not
be required to bear if he were free to bring the dispute(s) or claim(s) in court
as well as any other expense or cost that is unique to arbitration. Executive
and the Company shall each bear their own attorneys' fees incurred in connection
with the arbitration, and the arbitrator will not have authority to award
attorneys' fees unless a statute or contract at issue in the dispute authorizes
the award of attorneys' fees to the prevailing party, in which case the
arbitrator shall have the authority to make an award of attorneys' fees as
required or permitted by applicable law. If there is a dispute as to whether the
Company or Executive is the prevailing party in the arbitration, the Arbitrator
will decide this issue.

              (f) WAIVER OF RIGHT TO JURY. EXECUTIVE AND THE COMPANY UNDERSTAND
AND AGREE THAT THE ARBITRATION OF DISPUTES AND CLAIMS UNDER THIS AGREEMENT SHALL
BE INSTEAD OF A TRIAL BEFORE A COURT OR JURY OR A HEARING BEFORE A GOVERNMENT
AGENCY.

         8. Miscellaneous Provisions.

              (a) Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by overnight courier, U.S. registered
or certified mail, return receipt requested and postage prepaid. Mailed notices
shall be addressed to Executive at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.


                                       8
<PAGE>   9

              (b) Modifications and Waivers. No provision of this Agreement
shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by Executive and by an authorized
officer of the Company (other than Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of this Agreement
by the other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.

              (c) Whole Agreement. No other agreements, representations or
understandings (whether oral or written) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter of this Agreement. This Agreement, the Proprietary
Information Agreement, and applicable stock option agreements and stock plans,
contain the entire understanding of the parties with respect to the subject
matter hereof.

              (d) Taxes. All payments made under this Agreement shall be subject
to reduction to reflect taxes or other charges required to be withheld by law.

              (e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (except provisions governing the choice of law).

              (f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

              (g) No Assignment. This Agreement and all rights and obligations
of Executive hereunder are personal to Executive and may not be transferred or
assigned by Executive at any time. The Company may assign its rights under this
Agreement to any entity that assumes the Company's obligations hereunder in
connection with any sale or transfer of all or a substantial portion of the
Company's assets to such entity.

              (h) 280G. Executive understands and acknowledges that certain
benefits provided for under this Agreement may constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended, (the "Code"). Such parachute payments may be subject to the excise tax
imposed by Section 4999 of the Code. Executive acknowledges and agrees that he
has and will review any tax consequences which may arise as the result of any
such parachute payments with his own tax advisors and that he is relying and
will rely solely on such advisors and not on any representations of the Company
or any of its agent with regard to the possible tax implications of receiving
such parachute payments. Executive further acknowledges and agrees that he is
responsible for his own tax liability which may arise as the result of any such
payments.

              (i) Headings. The headings of the paragraphs contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of any provision of this Agreement.


                                       9
<PAGE>   10

              (j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

                                        EXECUTIVE

                                        /s/ STEPHEN A. LAPINSKI
                                        ------------------------------------
                                        Stephen A. Lapinski


                                        3DFX INTERACTIVE, INC.

                                        By: /s/ ALEX M. LEUPP
                                           ---------------------------------

                                        Title: PRESIDENT AND CHIEF
                                               EXECUTIVE OFFICER
                                              ------------------------------



                                       10

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>f68798ex10-5.txt
<DESCRIPTION>EXHIBIT 10.5
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

         This AGREEMENT is entered into as of November 10, 2000 (the "Effective
Date"), by and between Alfred R. Woodhull ("Executive") and 3dfx Interactive,
Inc., a California corporation (the "Company"). In consideration of the mutual
covenants and agreements hereinafter set forth, the parties agree as follows:

         1. Duties and Scope of Employment.

              (a) Position and Duties. For the term of his employment under this
Agreement, the Company agrees to employ Executive as its Senior Vice President
of Operations, reporting directly to the Chief Executive Officer ("CEO"), or
person designated by the CEO. Executive shall have such duties and authority as
are commensurate with one employed in his position, as may be customarily
incident to such position, and as may be assigned to Executive from time to
time. Executive shall diligently, to the best of his ability, and with the
highest degree of good faith and loyalty, perform all such duties incident to
his position and use his best efforts to promote the interests of the Company.

              (b) Obligations to the Company. During the Employment Term,
Executive shall devote his full time and energy to the business of the Company
and shall not be engaged in any competitive business activity without the
express written consent of the CEO. Executive shall comply with the Company's
policies and rules, as they may be in effect from time to time during the term
of his employment.

              (c) No Conflicting Obligations. Executive represents and warrants
to the Company that he is under no obligations or commitments, whether
contractual or otherwise, that are inconsistent with his obligations under this
Agreement. Executive represents and warrants that he will not use or disclose,
in connection with his employment by the Company, any trade secrets or other
proprietary information or intellectual property in which Executive or any other
person has any right, title or interest and that his employment by the Company
as contemplated by this Agreement will not infringe or violate the rights of any
other person or entity. Executive represents and warrants to the Company that he
has returned all property and confidential information belonging to any prior
employers.

         2. Term of Employment.

              (a) Basic Rule. The Company agrees to continue Executive's
employment, and Executive agrees to remain in employment with the Company, from
the Effective Date until the date when Executive's employment terminates
pursuant to Subsection 2(b) below (the "Employment Period"). Executive's
employment with the Company shall be "at will," which means that either
Executive or the Company may terminate Executive's employment at any time, for
any reason, with "Cause" or "Without Cause." Any contrary representations, which
may have been made to Executive shall be superseded by this Agreement. This
Agreement shall constitute the full and complete agreement between Executive and
the


<PAGE>   2

Company regarding the "at will" nature of Executive's employment, which may only
be changed in an express written agreement signed by Executive and the Chief
Executive Officer.

              (b) Termination. The Company or Executive may terminate
Executive's employment at any time for any reason (or no reason), and with
"Cause" or "Without Cause," by giving the other party fourteen (14) days' notice
in writing. Executive's employment shall terminate automatically in the event of
his death.

         3. Cash and Incentive Compensation.

              (a) Base Salary. The Company shall pay Executive as compensation
for his services an annualized base salary of One Hundred Ninety Thousand
Dollars ($190,000), less applicable deductions and withholdings, payable in
accordance with the Company's standard payroll schedule. The compensation
specified in this Subsection (a), together with any increases in such
compensation that the Company may grant from time to time, are referred to in
this Agreement as "Base Salary." The Base Salary will be reviewed at least
annually and shall be subject to change from time-to-time at the sole discretion
of the Chief Executive Officer and/or the Compensation Committee of the Board of
Directors (the "Board").

              (b) Bonus. Executive will be eligible to earn an annualized bonus
(the "Target Bonus") for each fiscal year equal to at least thirty percent (30%)
of his Base Salary, less applicable deductions and withholdings. The Target
Bonus shall be based upon performance criteria to be established by the CEO, in
consultation with Executive, and approved by the Compensation Committee of the
Board. If any part of the Target Bonus is earned for a given fiscal year, it
will be paid on or before March 31 of the following fiscal year.

              (c) Stock Options. As of the Effective Date of this Agreement,
Executive has been granted stock options pursuant to the Company's Stock Option
Plan (the "Plan"), which are summarized in Exhibit A to this Agreement (the
"Options"). Executive's Options shall continue to vest in accordance with the
Plan and the stock option agreements between the Company and Executive
evidencing such Options.

              (d) Vacation and Executive Benefits. During the term of his
employment, Executive shall be eligible for vacation each year, in accordance
with the Company's standard policy for senior executives, as it may be amended
from time to time. Executive shall be eligible during his employment term to
participate in any employee benefit plans generally available to the other
senior executives of the Company, subject in each case to the generally
applicable terms and conditions of the plan in question and to the
determinations of any person or committee administering such plan. The Company
reserves the right to amend, modify or terminate any employee benefits at any
time for any reason.

              (e) Business Expenses. During the term of his employment,
Executive shall be authorized to incur necessary and reasonable travel and other
business expenses in connection with his duties hereunder, pursuant to and
consistent with policies and procedures as established by the Company and as may
be modified from time-to-time. The Company shall reimburse Executive for such
expenses upon presentation of an itemized account and appropriate supporting
documentation, in accordance with Company policy and procedures.


                                       2
<PAGE>   3

         4. Payments, Benefits and Acceleration Following Termination.

              (a) Termination Following Change of Control. If, within one year
following a "Change of Control," Executive resigns for "Good Reason" or the
Company terminates Executive's employment "Without Cause," then Executive shall
receive:

                  (i) A lump sum severance payment equal to one hundred percent
         (100%) of Executive's Base Salary, less applicable deductions and
         withholdings;

                  (ii) The full amount of Executive's Target Bonus for the
         fiscal year in which Executive is terminated, less applicable
         deductions and withholdings;

                  (iii) Immediate vesting of the unvested shares under all
         outstanding stock options then held by Executive; and

                  (iv) Should Executive be eligible for and elect to continue
         his health insurance pursuant to COBRA, payment of COBRA premiums for
         twelve (12) months following the termination date of Executive's
         employment.

              (b) Termination Outside Change of Control. Subject to Section 4(e)
of this Agreement, if the Company terminates Executive's employment "Without
Cause" when no Change of Control has occurred in the prior year, then Executive
shall receive:

                  (i) Base Salary continuation payments in accordance with the
         Company's standard payroll practices until the earlier of (a) twelve
         (12) months following the termination of Executive's employment; or (b)
         the date on which Executive commences full-time employment for any
         person, venture, partnership or corporate entity (the "Continuation
         Period");

                  (ii) Immediate vesting of all then unvested shares, if any,
         under Executive's "October 2000 Option"; and

                  (iii) Should Executive be eligible for and elect to continue
         his health insurance pursuant to COBRA following the termination date,
         payment of COBRA premiums during the Continuation Period.

              (c) Resignation or Termination for "Cause." In the event that: (i)
Executive's employment is terminated by the Company at any time for "Cause;"
(ii) Executive resigns his employment for any reason when no Change of Control
has taken place within the prior twelve (12) months; or (iii) Executive resigns
his employment without "Good Reason" within twelve (12) months following a
Change of Control; then upon the termination of Executive's employment,
Executive will be paid his Base Salary and for all unused vacation earned
through the date of termination, but nothing else, and all stock vesting and
benefits will cease on Executive's date of termination.

              (d) Release Required. As a prior condition to Executive receiving
any payment, benefit or stock acceleration under Sections 4(a) and/or 4(b) of
this Agreement, Executive shall execute a full release of known and unknown
claims against the Company, its


                                       3
<PAGE>   4

successors, affiliates, employees, agents, advisors and representatives, in a
form designated by the Company.

              (e) Condition of Non-competition.

                  (i) Termination Following a Change of Control. In required by
         a successor company, Executive will not engage in any Competitive
         Activity for a period of one (1) year following a Change in Control.

                  (ii) Termination Outside a Change of Control. During the
         Continuation Period Executive shall not engage in any "Competitive
         Activity" without first notifying the Company of the contemplated
         activity. Executive agrees that if there is any reasonable question
         regarding whether or not a contemplated activity would be a Competitive
         Activity, Executive will consult with the Board before engaging in the
         contemplated activity. The Compensation Committee of the Board will
         determine in its sole discretion whether the activity contemplated by
         Executive is a Competitive Activity and, if it so determines, Executive
         will forfeit his right to any and all continued payments and benefits
         under Section 4(b) of this Agreement if he proceeds to engage in the
         Competitive Activity during the Continuation Period.

              (f) Termination Due to Death or Disability. If Executive's
employment is terminated due to death or Disability, then Executive, or
Executive's estate, will receive: (i) payment for all Base Salary and accrued
but unused vacation earned through the date of termination; and (ii) a lump-sum
payment equal to the pro-rata portion of Executive's full Target Bonus, based on
Executive's length of service during the year in which Executive's employment is
terminated due to death or Disability.

              (g) Definitions.

                  (i) "Change of Control." For all purposes under this
         Agreement, "Change of Control" shall mean (1) a merger or consolidation
         in which securities possessing at least fifty percent (50%) of the
         total combined voting power of the Company's outstanding securities are
         transferred to a person or persons different from the persons holding
         those securities immediately prior to such transaction, or (2) the
         sale, transfer or other disposition of all or substantially all of the
         Company's assets in complete liquidation or dissolution of the Company.

                  (ii) "Good Reason." For all purposes under this Agreement,
         "Good Reason" for Executive's resignation will exist if he resigns
         within sixty (60) days of any of the following events: (1) any
         reduction in his Base Salary; (2) a change in his position with the
         Company or a successor company which substantially reduces his duties
         or level of responsibility; (3) any requirement that he relocate his
         place of employment by more than fifty (50) miles from his then current
         office, provided such reduction, change or relocation is effected by
         the Company without his written consent. A resignation by Executive
         under any other circumstance or for any other reason will be a
         resignation without "Good Reason."

                                       4
<PAGE>   5

                  (iii) Termination for "Cause." For all purposes under this
         Agreement, a termination for "Cause" shall mean a termination of
         Executive's employment for any of the following reasons: (1)
         misconduct; (2) misappropriation of the assets of the Company; (3)
         conviction of, or a plea of "guilty" or "no contest" to a felony under
         the laws of the United States or any state thereof; (4) committing an
         act of fraud against, or the misappropriation of property belonging to,
         the Company; (5) a material breach of any confidentiality or
         proprietary information agreement between Executive and the Company; or
         (6) continued unsatisfactory performance after being given a written
         warning and at least thirty (30) days to improve performance. A
         termination of Executive's employment in any other circumstance or for
         any other reason will be a termination "Without Cause."

                  (iv) "Disability." For all purposes under this Agreement,
         "Disability" means Executive's inability to carry out his material
         duties under this Agreement for more than six (6) months in any twelve
         (12) consecutive month period as a result of incapacity due to mental
         or physical illness or injury.

                  (v) "Competitive Activity." For the purposes of this
         Agreement, a "Competitive Activity" means any activity in which
         Executive directly or indirectly provides services of any kind or
         nature (whether or not Executive is compensated for such services),
         including, but not limited to, Executive working in an employment,
         advisory or consulting capacity, for any Competitor of the Company.

                  (vi) "Competitor." For purposes of this Agreement,
         "Competitor" is defined as any company involved in the design and
         creation of 3D graphics, animation and/or effects for use in
         entertainment, or educational. Currently, the Competitor's list
         includes, but is not limited to, 3d Labs, ATI, Nvidia, S3, Maxtrox and
         any of their successors or affiliates. During the Continuation Period,
         the Company may reasonably add other companies to the Competitors list.

                  (vii) "October 2000 Option". For the purposes of this
         Agreement, Executive's "October 2000 Option" refers solely to that
         particular option to purchase 50,000 shares of Company Common Stock
         which was granted by the Board to Executive on October 13, 2000.

         5. Non-Solicitation and Non-Disclosure.

              (a) Non-Solicitation. During the period commencing on the
Effective Date of this Agreement and continuing until the second anniversary of
the date when Executive's employment terminates for any reason, Executive shall
not directly or indirectly, personally or through others, solicit or encourage,
or attempt to solicit or encourage (on Executive's own behalf or on behalf of
any other person or entity) for hire any employee or consultant of the Company
or any of the Company's affiliates.

              (b) Non-Disclosure. As a condition of employment, Executive will
execute the Company's standard Proprietary Information Agreement, a copy of
which is attached.


                                       5
<PAGE>   6

         6. Successors.

              (a) Company's Successors. This Agreement shall be binding upon any
successor (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.

              (b) Executive's Successors. This Agreement and all rights of
Executive hereunder shall inure to the benefit of, and be enforceable by,
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.

         7. Arbitration. Executive and the Company agree to arbitrate before a
neutral arbitrator any and all disputes or claims arising from or relating to
Executive's employment with the Company, or the termination of that employment,
including disputes or claims against any current or former agent or employee of
the Company.

              (a) Arbitrable Claims. Arbitrable disputes or claims include those
which arise in tort, contract, or pursuant to a statute, regulation, or
ordinance now in existence or which may in the future be enacted or recognized,
including, but not limited to, the following claims:

                  (i) claims for fraud, promissory estoppel, fraudulent
         inducement of contract or breach of contract or contractual obligation,
         whether such alleged contract or obligation be oral, written, or
         express or implied by fact or law;

                  (ii) claims for wrongful termination of employment, violation
         of public policy and constructive discharge, infliction of emotional
         distress, misrepresentation, interference with contract or prospective
         economic advantage, defamation, unfair business practices, and any
         other tort or tort-like causes of action relating to or arising from
         the employment relationship or the formation or termination thereof;

                  (iii) claims of discrimination, harassment, or retaliation
         under any and all federal, state, or municipal statutes, regulations,
         or ordinances that prohibit discrimination, harassment, or retaliation
         in employment, as well as claims for violation of any other federal,
         state, or municipal statute, regulation, or ordinance, except as set
         forth herein; and

                  (iv) claims for non-payment or incorrect payment of wages,
         commissions, bonuses, severance, employee fringe benefits, stock
         options and the like, whether such claims be pursuant to alleged
         express or implied contract or obligation, equity, the California Labor
         Code, the Fair Labor Standards Act, the Employee Retirement Income
         Securities Act, and any other federal, state, or municipal laws
         concerning wages, compensation or employee benefits.

              (b) Non-Arbitrable Claims. Executive and the Company further
understand and agree that the following disputes and claims are not covered by
the arbitration


                                       6
<PAGE>   7

agreement contained in this Section 7 and shall therefore be resolved as
required by the law then in effect:

                  (i) claims for workers' compensation benefits, unemployment
         insurance, or state or federal disability insurance;

                  (ii) claims concerning the validity, infringement,
         enforceability, or misappropriation of any trade secret, patent right,
         copyright, trademark, or any other intellectual or confidential
         property held or sought by Employee or the Company; and

                  (iii) any other dispute or claim that has been expressly
         excluded from arbitration by statute.

              (c) Relief and Review. The Arbitrator shall have the authority to
award any relief authorized by law in connection with the asserted claims or
disputes and shall issue a written Award that sets forth the essential findings
and conclusions on which the Award is based. The Arbitrator's Award shall be
final and binding on both the Company and Employee and it shall provide the
exclusive remedy(ies) for resolving any and all disputes and claims subject to
arbitration under this Agreement. The Arbitrator's Award shall be subject to
correction, confirmation, or vacation, as provided by California Code of Civil
Procedure Section 1285.8 et seq and any applicable California case law setting
forth the standard of judicial review of arbitration Awards.

              (d) Location and Rules. The arbitration shall be conducted in
Santa Clara County, California, or such location as is mutually agreeable to the
parties, in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association; provided, however, that the
Arbitrator shall allow the discovery authorized by California Code of Civil
Procedure Section 1283.05 or any other discovery required by California law.
Also, to the extent that any of the National Rules for the Resolution of
Employment Disputes or anything in this Agreement conflicts with any arbitration
procedures required by California law, the arbitration procedures required by
California law shall govern.

              (e) Costs and Attorneys' Fees. The Company will bear the
arbitrator's fee and any other type of expense or cost that Executive would not
be required to bear if he were free to bring the dispute(s) or claim(s) in court
as well as any other expense or cost that is unique to arbitration. Executive
and the Company shall each bear their own attorneys' fees incurred in connection
with the arbitration, and the arbitrator will not have authority to award
attorneys' fees unless a statute or contract at issue in the dispute authorizes
the award of attorneys' fees to the prevailing party, in which case the
arbitrator shall have the authority to make an award of attorneys' fees as
required or permitted by applicable law. If there is a dispute as to whether the
Company or Executive is the prevailing party in the arbitration, the Arbitrator
will decide this issue.

              (F) WAIVER OF RIGHT TO JURY. EXECUTIVE AND THE COMPANY UNDERSTAND
AND AGREE THAT THE ARBITRATION OF DISPUTES AND CLAIMS UNDER THIS AGREEMENT SHALL
BE INSTEAD OF A TRIAL BEFORE A COURT OR JURY OR A HEARING BEFORE A GOVERNMENT
AGENCY.


                                       7
<PAGE>   8

         8. Miscellaneous Provisions.

              (a) Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by overnight courier, U.S. registered
or certified mail, return receipt requested and postage prepaid. Mailed notices
shall be addressed to Executive at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.

              (b) Modifications and Waivers. No provision of this Agreement
shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by Executive and by an authorized
officer of the Company (other than Executive). No waiver by either party of any
breach of, or of compliance with, any condition or provision of this Agreement
by the other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.

              (c) Whole Agreement. No other agreements, representations or
understandings (whether oral or written) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter of this Agreement. This Agreement, the Proprietary
Information Agreement, and applicable stock option agreements and stock plans,
contain the entire understanding of the parties with respect to the subject
matter hereof.

              (d) Taxes. All payments made under this Agreement shall be subject
to reduction to reflect taxes or other charges required to be withheld by law.

              (e) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (except provisions governing the choice of law).

              (f) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

              (g) No Assignment. This Agreement and all rights and obligations
of Executive hereunder are personal to Executive and may not be transferred or
assigned by Executive at any time. The Company may assign its rights under this
Agreement to any entity that assumes the Company's obligations hereunder in
connection with any sale or transfer of all or a substantial portion of the
Company's assets to such entity.

              (h) 280G. Executive understands and acknowledges that certain
benefits provided for under this Agreement may constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended, (the "Code"). Such parachute payments may be subject to the excise tax
imposed by Section 4999 of the Code. Executive acknowledges and agrees that he
has and will review any tax consequences which may arise as the result of any
such parachute payments with his own tax advisors and that he is relying and
will rely solely on such advisors and not on any representations of the Company
or any of its


                                       8
<PAGE>   9

agent with regard to the possible tax implications of receiving such parachute
payments. Executive further acknowledges and agrees that he is responsible for
his own tax liability which may arise as the result of any such payments.

              (i) Headings. The headings of the paragraphs contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of any provision of this Agreement.

              (j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


                                       9
<PAGE>   10

         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

                                        EXECUTIVE

                                        /s/ ALFRED R. WOODHULL
                                        ------------------------------------
                                        Alfred R. Woodhull


                                        3DFX INTERACTIVE, INC.

                                        By: /s/ ALEX M. LEUPP
                                           ---------------------------------
                                        Title: PRESIDENT AND CHIEF
                                               EXECUTIVE OFFICER
                                              ------------------------------


                                       10


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>7
<FILENAME>f68798ex10-6.txt
<DESCRIPTION>EXHIBIT 10.6
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 10.6



                              EMPLOYMENT AGREEMENT


                     (AS AMENDED EFFECTIVE FEBRUARY 1, 2001)


        This AGREEMENT amends, replaces, and supersedes the Employment Agreement
entered into as of November 10, 2000 (the "Effective Date"), by and between Alex
M. Leupp ("Executive") and 3dfx Interactive, Inc., a California corporation (the
"Company"), and is effective as of February 1, 2001 (the "Amendment Date"). In
consideration of the mutual covenants and agreements hereinafter set forth, the
parties agree as follows:

        1.      Duties and Scope of Employment.

                (a)     Position and Duties. For the term of his employment
                        under this Agreement, the Company agrees to employ
                        Executive as its President and Chief Executive Officer,
                        reporting directly to the Board of Directors (the
                        "Board"). Executive shall have such duties and authority
                        as are commensurate with one employed in the position of
                        President and Chief Executive Officer, as may be
                        customarily incident to such position, and as may be
                        assigned to Executive from time to time. Executive shall
                        diligently, to the best of his ability, and with the
                        highest degree of good faith and loyalty, perform all
                        such duties incident to his position and use his best
                        efforts to promote the interests of the Company.
                        Executive agrees that, until the closing of the Asset
                        Sale, he will devote substantially all of his business
                        efforts toward enhancing shareholder return through
                        performing those duties set forth on Schedule 1 to this
                        Agreement.

                (b)     Obligations to the Company. During the Employment Term,
                        Executive shall devote his full time and energy to the
                        business of the Company and shall not be engaged in any
                        competitive business activity without the express
                        written consent of the Chairman of the Board. Executive
                        shall comply with the Company's policies and rules, as
                        they may be in effect from time to time during the term
                        of his employment.

                (c)     No Conflicting Obligations. Executive represents and
                        warrants to the Company that he is under no obligations
                        or commitments, whether contractual or otherwise, that
                        are inconsistent with his obligations under this
                        Agreement. Executive represents and warrants that he
                        will not use or disclose, in connection with his
                        employment by the Company, any trade secrets or other
                        proprietary information or intellectual property in
                        which Executive or any other person has any right, title
                        or interest and that his employment by the Company as
                        contemplated by this Agreement will not infringe or
                        violate the rights of any other person or entity.
                        Executive



                                                                          PAGE 1
<PAGE>   2

                        represents and warrants to the Company that he has
                        returned all property and confidential information
                        belonging to any prior employers.

        2.      Term of Employment.

                (a)     Basic Rule. The Company agrees to continue Executive's
                        employment, and Executive agrees to remain in employment
                        with the Company, from the Effective Date until the date
                        when Executive's employment terminates pursuant to
                        Subsection 2(b) below (the "Employment Period").
                        Executive's employment with the Company shall be "at
                        will," which means that either Executive or the Company
                        may terminate Executive's employment at any time, for
                        any reason, with "Cause" or "Without Cause." Any
                        contrary representations, which may have been made to
                        Executive shall be superseded by this Agreement. This
                        Agreement shall constitute the full and complete
                        agreement between Executive and the Company regarding
                        the "at will" nature of Executive's employment, which
                        may only be changed in an express written agreement
                        signed by Executive and the Chairman of the Board.

                (b)     Termination. The Employment Period shall end on the
                        earlier of (i) the closing of the Asset Sale, (ii) upon
                        Executive's death or Disability, (iii) the date on which
                        Executive resigns his employment for any reason pursuant
                        to this Subsection 2(b), or (iv) the date on which the
                        Company terminates Executive's employment pursuant to
                        this Subsection 2(b). Subject to the terms of this
                        Agreement, either Executive or the Company may terminate
                        Executive's employment, with or without Cause, for any
                        reason or no reason, upon giving fourteen (14) days'
                        notice in writing.

        3.      Cash and Incentive Compensation.

                (a)     Base Salary. The Company shall pay Executive as
                        compensation for his services an annualized base salary
                        of Three Hundred Seventy Five Thousand Dollars
                        ($375,000), less applicable deductions and withholdings,
                        payable in accordance with the Company's standard
                        payroll schedule. The compensation specified in this
                        Subsection (a), together with any increases in such
                        compensation that the Company may grant from time to
                        time, are referred to in this Agreement as "Base
                        Salary."

                (b)     Bonus. Executive will be eligible to earn an annualized
                        bonus (the "Target Bonus") for the 2001 fiscal year
                        equal to fifty percent (50%) of his Base Salary, less
                        applicable deductions and withholdings.

                (c)     Stock Options. As of the Effective Date of this
                        Agreement, Executive has been granted stock options
                        pursuant to the Company's Stock Option Plan (the
                        "Plan"), which are summarized in Exhibit A to this
                        Agreement (the "Options"). Executive's Options shall
                        continue to vest in accordance with



                                                                          PAGE 2
<PAGE>   3

                        the Plan and the stock option agreements between the
                        Company and Executive evidencing such Options.

                (d)     Vacation and Executive Benefits. During the term of his
                        employment, Executive shall be eligible for vacation
                        each year, in accordance with the Company's standard
                        policy for senior executives, as it may be amended from
                        time to time. Executive shall be eligible during his
                        employment term to participate in any employee benefit
                        plans generally available to the other senior executives
                        of the Company, subject in each case to the generally
                        applicable terms and conditions of the plan in question
                        and to the determinations of any person or committee
                        administering such plan. The Company reserves the right
                        to amend, modify or terminate any employee benefits at
                        any time for any reason.

                (e)     Business Expenses. During the term of his employment,
                        Executive shall be authorized to incur necessary and
                        reasonable travel and other business expenses in
                        connection with his duties hereunder, pursuant to and
                        consistent with policies and procedures as established
                        by the Company and as may be modified from time-to-time.
                        The Company shall reimburse Executive for such expenses
                        upon presentation of an itemized account and appropriate
                        supporting documentation, in accordance with Company
                        policy and procedures.

        4.      Payments and Benefits Following Termination.

                (a)     Termination without Cause. If the Executive remains
                        employed through the closing of the Asset Sale (or if
                        the Company terminates his employment without Cause
                        prior to such date), the Executive shall receive:

                        (i)     continued severance pay (the "Severance Pay") in
                                an amount equal to his Base Salary in accordance
                                with the Company's standard payroll practices
                                until the earlier of (A) the Lump Sum Payment
                                Date, or (B) the date that is twelve (12) months
                                following the termination of Executive's
                                employment; and

                        (ii)    a payment of $600 per month, less applicable
                                deductions and withholdings (for Executive's
                                payment of premiums for medical coverage),
                                through the date that is fifteen (15) months
                                following termination of his employment.

                (b)     Lump Sum Payment. If the Executive remains employed
                        through the closing of the Asset Sale (or if the Company
                        terminates his employment without Cause prior to such
                        date), and if the closing of the Asset Sale occurs
                        within twelve (12) months following the Amendment Date,
                        then the Executive shall be entitled to receive a lump
                        sum payment (the "Lump Sum Payment") equal to 1.25 times
                        the sum of (i) Executive's Base Salary



                                                                          PAGE 3
<PAGE>   4

                        and (ii) 50% of Executive's Target Bonus, less
                        applicable deductions and withholdings; reduced by the
                        Base Salary and Severance Pay paid to the Executive
                        during the period from the Amendment Date through the
                        Lump Sum Payment Date. The Lump Sum Payment Date shall
                        be the date that the Company shall have fully paid or
                        caused to be paid or otherwise provided for (in a manner
                        satisfactory to NVIDIA) all Liquidated Claims. Upon the
                        Lump Sum Payment Date, Executive's Severance Pay under
                        Section 4(a)(i) shall cease, and he shall receive the
                        Lump Sum Payment.

                (c)     Resignation or Termination for "Cause." If Executive
                        terminates his employment for any reason or no reason,
                        or if the Company terminates Executive's employment for
                        "Cause," Executive will be paid his Base Salary and for
                        all unused vacation earned through the date of
                        termination, but nothing else, and all stock vesting and
                        benefits will cease on Executive's date of termination.

                (d)     Release Required. As a prior condition to Executive
                        receiving any payment or benefit under Sections 4(a)
                        and/or 4(b) of this Agreement, Executive shall execute a
                        full release of known and unknown claims against the
                        Company, its successors, affiliates, employees, agents,
                        advisors and representatives, in a form designated by
                        the Company.

                (e)     Condition of Non-competition.

                        (i)     Termination Following a Change of Control. If
                                required by a successor company, Executive will
                                not engage in any Competitive Activity for a
                                period of one (1) year following a Change in
                                Control.

                        (ii)    Termination Outside a Change of Control. During
                                the twelve month period following the
                                termination of Executive's employment (the
                                "Continuation Period"), Executive shall not
                                engage in any "Competitive Activity" without
                                first notifying the Company of the contemplated
                                activity. Executive agrees that if there is any
                                reasonable question regarding whether or not a
                                contemplated activity would be a Competitive
                                Activity, Executive will consult with the Board
                                before engaging in the contemplated activity.
                                The Compensation Committee of the Board will
                                determine in its sole discretion whether the
                                activity contemplated by Executive is a
                                Competitive Activity and, if it so determines,
                                Executive will forfeit his right to any and all
                                continued payments and benefits under Section
                                4(b) of this Agreement if he proceeds to engage
                                in the Competitive Activity during the
                                Continuation Period.

                (f)     Termination Due to Death or Disability. If Executive's
                        employment is terminated due to death or Disability,
                        then Executive, or Executive's estate, will receive: (i)
                        payment for all Base Salary and accrued but



                                                                          PAGE 4
<PAGE>   5

                        unused vacation earned through the date of termination;
                        and (ii) a lump-sum payment equal to the pro-rata
                        portion of Executive's full Target Bonus, based on
                        Executive's length of service during the year in which
                        Executive's employment is terminated due to death or
                        Disability.

                (g)     Definitions.

                        (i)     "Asset Sale." The sale of certain assets of the
                                Company pursuant to the Asset Purchase Agreement
                                dated as of December 15, 2000 with NVIDIA
                                Corporation.

                        (ii)    Change of Control." The parties agree that the
                                closing of the sale of certain assets of the
                                Company pursuant to the Asset Purchase Agreement
                                dated as of December 15, 2000 with NVIDIA
                                Corporation will constitute a Change of Control.
                                For all purposes under this Agreement, "Change
                                of Control" shall exist in any of the following
                                circumstances:

                                (a)     the acquisition, directly or indirectly,
                                        by any person or related group of
                                        persons (other than the Company or a
                                        person that directly or indirectly
                                        controls, is controlled by, or is under
                                        common control with, the Company) of
                                        beneficial ownership (within the meaning
                                        of Rule 13d-3 of the Securities Exchange
                                        Act of 1934, as amended) of securities
                                        possessing more than fifty percent (50%)
                                        of the total combined voting power of
                                        the Company's outstanding securities
                                        pursuant to a tender or exchange offer
                                        made directly to the Company's
                                        stockholders;

                                (b)     a change in the composition of the Board
                                        over a period of thirty-six (36)
                                        consecutive months or less such that a
                                        majority of the Board members ceases by
                                        reason of one or more contested
                                        elections for Board membership, to be
                                        comprised of individuals who either (A)
                                        have been Board members continuously
                                        since the beginning of such period, or
                                        (B) have been elected or nominated for
                                        election as Board members during such
                                        period by at least a majority of the
                                        Board members described in clause (A)
                                        who were still in office at the time
                                        such election or nomination was approved
                                        by the Board, or

                                (c)     a merger or consolidation in which
                                        securities possessing at least fifty
                                        percent (50%) of the total combined
                                        voting power of the Company's
                                        outstanding securities are transferred
                                        to a person or persons different from
                                        the persons holding those securities
                                        immediately prior to such transaction,
                                        or the sale, transfer or other
                                        disposition of all or



                                                                          PAGE 5
<PAGE>   6

                                        substantially all of the Corporation's
                                        assets in complete liquidation or
                                        dissolution of the Corporation.

                        (iii)   Termination for "Cause." For all purposes under
                                this Agreement, a termination for "Cause" shall
                                mean a termination of Executive's employment for
                                any of the following reasons: (1) misconduct;
                                (2) misappropriation of the assets of the
                                Company; (3) conviction of, or a plea of
                                "guilty" or "no contest" to a felony under the
                                laws of the United States or any state thereof;
                                (4) committing an act of fraud against, or the
                                misappropriation of property belonging to, the
                                Company; (5) a material breach of any
                                confidentiality or proprietary information
                                agreement between Executive and the Company; or
                                (6) continued unsatisfactory performance after
                                being given a written warning and at least
                                thirty (30) days to improve performance. A
                                termination of Executive's employment in any
                                other circumstance or for any other reason will
                                be a termination "Without Cause."

                        (iv)    "Disability." For all purposes under this
                                Agreement, "Disability" means Executive's
                                inability to carry out his material duties under
                                this Agreement for more than six (6) months in
                                any twelve (12) consecutive month period as a
                                result of incapacity due to mental or physical
                                illness or injury.

                        (v)     "Competitive Activity." For the purposes of this
                                Agreement, a "Competitive Activity" means any
                                activity in which Executive directly or
                                indirectly provides services of any kind or
                                nature (whether or not Executive is compensated
                                for such services), including, but not limited
                                to, Executive working in an employment, advisory
                                or consulting capacity, for any Competitor of
                                the Company.

                        (vi)    "Competitor." For purposes of this Agreement,
                                "Competitor" is defined as any company involved
                                in the design and creation of 3D graphics,
                                animation and/or effects for use in
                                entertainment, or educational environments.
                                Currently, the Competitor's list includes, but
                                is not limited to, 3d Labs, ATI, S3, Maxtrox and
                                any of their successors or affiliates. During
                                the Continuation Period, the Company may
                                reasonably add other companies to the
                                Competitors list.

                        (vii)   "Liquidated Claims." For purposes of this
                                Agreement, "Liquidated Claims" mean debts,
                                obligations or liabilities of any nature that
                                are fixed and ascertainable in amount, of the
                                type that would be required to be disclosed on a
                                balance sheet prepared in accordance with GAAP,
                                but regardless of whether such debt, obligation
                                or liability is immediately due and payable. Any
                                unknown,



                                                                          PAGE 6
<PAGE>   7

                                undisclosed, unasserted, contingent,
                                conditional, vicarious or derivative claims
                                shall not be considered "Liquidated Claims."

        5.      Non-Solicitation and Non-Disclosure.

                (a)     Non-Solicitation. During the period commencing on the
                        Effective Date of this Agreement and continuing until
                        the second anniversary of the date when Executive's
                        employment terminates for any reason, Executive shall
                        not directly or indirectly, personally or through
                        others, solicit or encourage, or attempt to solicit or
                        encourage (on Executive's own behalf or on behalf of any
                        other person or entity) for hire any employee or
                        consultant of the Company or any of the Company's
                        affiliates.

                (b)     Non-Disclosure. As a condition of employment, Executive
                        will execute the Company's standard Proprietary
                        Information Agreement, a copy of which is attached.

        6.      Successors.

                (a)     Company's Successors. This Agreement shall be binding
                        upon any successor (whether direct or indirect and
                        whether by purchase, lease, merger, consolidation,
                        liquidation or otherwise) to all or substantially all of
                        the Company's business and/or assets. For all purposes
                        under this Agreement, the term "Company" shall include
                        any successor to the Company's business and/or assets
                        which becomes bound by this Agreement.

                (b)     Executive's Successors. This Agreement and all rights of
                        Executive hereunder shall inure to the benefit of, and
                        be enforceable by, Executive's personal or legal
                        representatives, executors, administrators, successors,
                        heirs, distributees, devisees and legatees.

        7.      Arbitration. Executive and the Company agree to arbitrate before
                a neutral arbitrator any and all disputes or claims arising from
                or relating to Executive's employment with the Company, or the
                termination of that employment, including disputes or claims
                against any current or former agent or employee of the Company.

                (a)     Arbitrable Claims. Arbitrable disputes or claims include
                        those which arise in tort, contract, or pursuant to a
                        statute, regulation, or ordinance now in existence or
                        which may in the future be enacted or recognized,
                        including, but not limited to, the following claims:

                        (i)     claims for fraud, promissory estoppel,
                                fraudulent inducement of contract or breach of
                                contract or contractual obligation, whether such
                                alleged contract or obligation be oral, written,
                                or express or implied by fact or law;



                                                                          PAGE 7
<PAGE>   8

                        (ii)    claims for wrongful termination of employment,
                                violation of public policy and constructive
                                discharge, infliction of emotional distress,
                                misrepresentation, interference with contract or
                                prospective economic advantage, defamation,
                                unfair business practices, and any other tort or
                                tort-like causes of action relating to or
                                arising from the employment relationship or the
                                formation or termination thereof;

                        (iii)   claims of discrimination, harassment, or
                                retaliation under any and all federal, state, or
                                municipal statutes, regulations, or ordinances
                                that prohibit discrimination, harassment, or
                                retaliation in employment, as well as claims for
                                violation of any other federal, state, or
                                municipal statute, regulation, or ordinance,
                                except as set forth herein; and

                        (iv)    claims for non-payment or incorrect payment of
                                wages, commissions, bonuses, severance, employee
                                fringe benefits, stock options and the like,
                                whether such claims be pursuant to alleged
                                express or implied contract or obligation,
                                equity, the California Labor Code, the Fair
                                Labor Standards Act, the Employee Retirement
                                Income Securities Act, and any other federal,
                                state, or municipal laws concerning wages,
                                compensation or employee benefits.

                (b)     Non-Arbitrable Claims. Executive and the Company further
                        understand and agree that the following disputes and
                        claims are not covered by the arbitration agreement
                        contained in this Section 7 and shall therefore be
                        resolved as required by the law then in effect:

                        (i)     claims for workers' compensation benefits,
                                unemployment insurance, or state or federal
                                disability insurance;

                        (ii)    claims concerning the validity, infringement,
                                enforceability, or misappropriation of any trade
                                secret, patent right, copyright, trademark, or
                                any other intellectual or confidential property
                                held or sought by Employee or the Company, and
                                in which injunctive relief is sought; and

                        (iii)   any other dispute or claim that has been
                                expressly excluded from arbitration by statute.

                (c)     Relief and Review. The Arbitrator shall have the
                        authority to award any relief authorized by law in
                        connection with the asserted claims or disputes and
                        shall issue a written Award that sets forth the
                        essential findings and conclusions on which the Award is
                        based. The Arbitrator's Award shall be final and binding
                        on both the Company and Employee and it shall provide
                        the exclusive remedy(ies) for resolving any and all
                        disputes and



                                                                          PAGE 8
<PAGE>   9

                        claims subject to arbitration under this Agreement. The
                        Arbitrator's Award shall be subject to correction,
                        confirmation, or vacation, as provided by California
                        Code of Civil Procedure Section 1285.8 et seq and any
                        applicable California case law setting forth the
                        standard of judicial review of arbitration Awards.

                (d)     Location and Rules. The arbitration shall be conducted
                        in Santa Clara County, California, or such location as
                        is mutually agreeable to the parties, in accordance with
                        the National Rules for the Resolution of Employment
                        Disputes of the American Arbitration Association;
                        provided, however, that the Arbitrator shall allow the
                        discovery authorized by California Code of Civil
                        Procedure Section 1283.05 or any other discovery
                        required by California law. Also, to the extent that any
                        of the National Rules for the Resolution of Employment
                        Disputes or anything in this Agreement conflicts with
                        any arbitration procedures required by California law,
                        the arbitration procedures required by California law
                        shall govern.

                (e)     Costs and Attorneys' Fees. The Company will bear the
                        arbitrator's fee and any other type of expense or cost
                        that Executive would not be required to bear if he were
                        free to bring the dispute(s) or claim(s) in court as
                        well as any other expense or cost that is unique to
                        arbitration. Executive and the Company shall each bear
                        their own attorneys' fees incurred in connection with
                        the arbitration, and the arbitrator will not have
                        authority to award attorneys' fees unless a statute or
                        contract at issue in the dispute authorizes the award of
                        attorneys' fees to the prevailing party, in which case
                        the arbitrator shall have the authority to make an award
                        of attorneys' fees as required or permitted by
                        applicable law. If there is a dispute as to whether the
                        Company or Executive is the prevailing party in the
                        arbitration, the Arbitrator will decide this issue.

                (f)     WAIVER OF RIGHT TO JURY. EXECUTIVE AND THE COMPANY
                        UNDERSTAND AND AGREE THAT THE ARBITRATION OF DISPUTES
                        AND CLAIMS UNDER THIS AGREEMENT SHALL BE INSTEAD OF A
                        TRIAL BEFORE A COURT OR JURY OR A HEARING BEFORE A
                        GOVERNMENT AGENCY.

        8.      Miscellaneous Provisions.

                (a)     Notice. Notices and all other communications
                        contemplated by this Agreement shall be in writing and
                        shall be deemed to have been duly given when personally
                        delivered or when mailed by overnight courier, U.S.
                        registered or certified mail, return receipt requested
                        and postage prepaid. Mailed notices shall be addressed
                        to Executive at the home address which he most recently
                        communicated to the Company in writing. In the case of
                        the Company, mailed notices shall be addressed to its
                        corporate headquarters, and all notices shall be
                        directed to the attention of its Secretary.



                                                                          PAGE 9
<PAGE>   10

                (b)     Modifications and Waivers. No provision of this
                        Agreement shall be modified, waived or discharged unless
                        the modification, waiver or discharge is agreed to in
                        writing and signed by Executive and by an authorized
                        officer of the Company (other than Executive). No waiver
                        by either party of any breach of, or of compliance with,
                        any condition or provision of this Agreement by the
                        other party shall be considered a waiver of any other
                        condition or provision or of the same condition or
                        provision at another time.

                (c)     Whole Agreement. No other agreements, representations or
                        understandings (whether oral or written) which are not
                        expressly set forth in this Agreement have been made or
                        entered into by either party with respect to the subject
                        matter of this Agreement. This Agreement, the
                        Proprietary Information Agreement, and applicable stock
                        option agreements and stock plans, contain the entire
                        understanding of the parties with respect to the subject
                        matter hereof.

                (d)     Taxes. All payments made under this Agreement shall be
                        subject to reduction to reflect taxes or other charges
                        required to be withheld by law.

                (e)     Choice of Law. The validity, interpretation,
                        construction and performance of this Agreement shall be
                        governed by the laws of the State of California (except
                        provisions governing the choice of law).

                (f)     Severability. The invalidity or unenforceability of any
                        provision or provisions of this Agreement shall not
                        affect the validity or enforceability of any other
                        provision hereof, which shall remain in full force and
                        effect.

                (g)     No Assignment. This Agreement and all rights and
                        obligations of Executive hereunder are personal to
                        Executive and may not be transferred or assigned by
                        Executive at any time. The Company may assign its rights
                        under this Agreement to any entity that assumes the
                        Company's obligations hereunder in connection with any
                        sale or transfer of all or a substantial portion of the
                        Company's assets to such entity.

                (h)     280G. Executive understands and acknowledges that
                        certain benefits provided for under this Agreement may
                        constitute "parachute payments" within the meaning of
                        Section 280G of the Internal Revenue Code of 1986, as
                        amended, (the "Code"). Such parachute payments may be
                        subject to the excise tax imposed by Section 4999 of the
                        Code. Executive acknowledges and agrees that he has and
                        will review any tax consequences which may arise as the
                        result of any such parachute payments with his own tax
                        advisors and that he is relying and will rely solely on
                        such advisors and not on any representations of the
                        Company or any of its agent with regard to the possible
                        tax implications of receiving such parachute payments.
                        Executive further acknowledges and agrees that



                                                                         PAGE 10
<PAGE>   11

                        he is responsible for his own tax liability which may
                        arise as the result of any such payments.

                (i)     Headings. The headings of the paragraphs contained in
                        this Agreement are for reference purposes only and shall
                        not in any way affect the meaning or interpretation of
                        any provision of this Agreement.

                (j)     Counterparts. This Agreement may be executed in two or
                        more counterparts, each of which shall be deemed an
                        original, but all of which together shall constitute one
                        and the same instrument.

                IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.

                                       EXECUTIVE



                                       /s/ Alex M. Leupp
                                       -----------------------------------------
                                       ALEX M. LEUPP


                                       3DFX INTERACTIVE, INC.



                                       By: /s/ Gordon Campbell
                                          --------------------------------------
                                          GORDON CAMPBELL
                                          CHAIRMAN OF THE BOARD



                                                                         PAGE 11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>8
<FILENAME>f68798ex10-7.txt
<DESCRIPTION>EXHIBIT 10.7
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.7


                              EMPLOYMENT AGREEMENT


                          (AS AMENDED FEBRUARY 1, 2001)


        This AGREEMENT amends, replaces and supercedes that certain Employment
Agreement entered into as of November 10, 2000 (the "Effective Date"), by and
between Scott D. Sellers ("Executive") and 3dfx Interactive, Inc., a California
corporation (the "Company"), and is effective as of February 1, 2001 (the
"Amendment Date"). In consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:

        1.      Duties and Scope of Employment.

                (a)     Position and Duties. For the term of his employment
                        under this Agreement, the Company agrees to employ
                        Executive as its Chief Technical Officer and Founder,
                        reporting directly to the Chief Executive Officer
                        ("CEO"), or person designated by the CEO. Executive
                        shall have such duties and authority as are commensurate
                        with one employed in his position, as may be customarily
                        incident to such position, and as may be assigned to
                        Executive from time to time. Executive shall diligently,
                        to the best of his ability, and with the highest degree
                        of good faith and loyalty, perform all such duties
                        incident to his position and use his best efforts to
                        promote the interests of the Company. Executive agrees
                        that, until the closing of the Asset Sale, he will
                        devote substantially all of his business efforts toward
                        enhancing shareholder return through performing those
                        duties set forth on Schedule 1 to this Agreement.

                (b)     Obligations to the Company. During the Employment Term,
                        Executive shall devote his full time and energy to the
                        business of the Company and shall not be engaged in any
                        competitive business activity without the express
                        written consent of the CEO. Executive shall comply with
                        the Company's policies and rules, as they may be in
                        effect from time to time during the term of his
                        employment.

                (c)     No Conflicting Obligations. Executive represents and
                        warrants to the Company that he is under no obligations
                        or commitments, whether contractual or otherwise, that
                        are inconsistent with his obligations under this
                        Agreement. Executive represents and warrants that he
                        will not use or disclose, in connection with his
                        employment by the Company, any trade secrets or other
                        proprietary information or intellectual property in
                        which Executive or any other person has any right, title
                        or interest and that his employment by the Company as
                        contemplated by this Agreement will not infringe or
                        violate the rights of any other person or entity.
                        Executive



                                                                          PAGE 1
<PAGE>   2

                        represents and warrants to the Company that he has
                        returned all property and confidential information
                        belonging to any prior employers.

        2.      Term of Employment.

                (a)     Basic Rule. The Company agrees to continue Executive's
                        employment, and Executive agrees to remain in employment
                        with the Company, from the Effective Date until the date
                        when Executive's employment terminates pursuant to
                        Subsection 2(b) below (the "Employment Period").
                        Executive's employment with the Company shall be "at
                        will," which means that either Executive or the Company
                        may terminate Executive's employment at any time, for
                        any reason, with "Cause" or "Without Cause." Any
                        contrary representations, which may have been made to
                        Executive shall be superseded by this Agreement. This
                        Agreement shall constitute the full and complete
                        agreement between Executive and the Company regarding
                        the "at will" nature of Executive's employment, which
                        may only be changed in an express written agreement
                        signed by Executive and the Chief Executive Officer.

                (b)     Termination. The Employment Period shall end on the
                        earlier of (i) the closing of the Asset Sale; (ii) upon
                        Executive's death or Disability; (iii) the date on which
                        Executive resigns his employment for any reason in
                        accordance with this subsection 2(b); or (iv) the date
                        on which the Company terminates Executive's employment
                        in accordance with this subsection 2(b). Subject to the
                        provisions contained within this Agreement, either
                        Executive or the Company may terminate Executive's
                        employment at any time for any reason (or no reason),
                        and with or without Cause upon giving fourteen (14)
                        days' notice in writing.

        3.      Cash and Incentive Compensation.

                (a)     Base Salary. The Company shall pay Executive as
                        compensation for his services an annualized base salary
                        of Two Hundred Sixty Thousand Dollars ($260,000), less
                        applicable deductions and withholdings, payable in
                        accordance with the Company's standard payroll schedule.
                        The compensation specified in this Subsection (a),
                        together with any increases in such compensation that
                        the Company may grant from time to time, are referred to
                        in this Agreement as "Base Salary."

                (b)     Bonus. Executive will be eligible to earn an annualized
                        bonus (the "Target Bonus") for the 2001 fiscal year
                        equal to forty percent (40%) of his Base Salary, less
                        applicable deductions and withholdings.

                (c)     Stock Options. As of the Effective Date of this
                        Agreement, Executive has been granted stock options
                        pursuant to the Company's Stock Option Plan (the
                        "Plan"), which are summarized in Exhibit A to this
                        Agreement (the "Options"). Executive's Options shall
                        continue to vest in accordance with



                                                                          PAGE 2
<PAGE>   3

                        the Plan and the stock option agreements between the
                        Company and Executive evidencing such Options.

                (d)     Vacation and Executive Benefits. During the term of his
                        employment, Executive shall be eligible for vacation
                        each year, in accordance with the Company's standard
                        policy for senior executives, as it may be amended from
                        time to time. Executive shall be eligible during his
                        employment term to participate in any employee benefit
                        plans generally available to the other senior executives
                        of the Company, subject in each case to the generally
                        applicable terms and conditions of the plan in question
                        and to the determinations of any person or committee
                        administering such plan. The Company reserves the right
                        to amend, modify or terminate any employee benefits at
                        any time for any reason.

                (e)     Business Expenses. During the term of his employment,
                        Executive shall be authorized to incur necessary and
                        reasonable travel and other business expenses in
                        connection with his duties hereunder, pursuant to and
                        consistent with policies and procedures as established
                        by the Company and as may be modified from time-to-time.
                        The Company shall reimburse Executive for such expenses
                        upon presentation of an itemized account and appropriate
                        supporting documentation, in accordance with Company
                        policy and procedures.

        4.      Payments and Benefits Following Termination.

                (a)     Termination without Cause. If the Executive remains
                        employed through the closing of the Asset Sale (or if
                        the Company terminates his employment without Cause
                        prior to such date), the Executive shall receive:

                        (i)     continued severance pay (the "Severance Pay") in
                                an amount equal to his Base Salary in accordance
                                with the Company's standard payroll practices
                                until the earlier of (A) the Lump Sum Payment
                                Date, (B) the date that is twelve (12) months
                                following the termination of Executive's
                                employment, or (C) the date on which Executive
                                commences full-time employment for any person,
                                venture, partnership or corporate entity; and

                        (ii)    payment (or reimbursement) of COBRA premiums
                                (or, if COBRA coverage is not available,
                                reimbursement of premiums paid for other medical
                                insurance in an amount not to exceed the COBRA
                                premium) for twelve (12) months following the
                                termination date of Executive's employment.

                (b)     Lump Sum Payment. If the Executive remains employed
                        through the closing of the Asset Sale (or if the Company
                        terminates his employment without Cause prior to such
                        date), and if the closing of the Asset Sale occurs
                        within twelve (12) months following the Amendment Date,
                        then



                                                                          PAGE 3
<PAGE>   4

                        the Executive shall be entitled to receive a Lump Sum
                        payment (the "Lump Sum Payment") equal to the sum of (i)
                        Executive's Base Salary and (ii) 50% of Executive's
                        Target Bonus, less applicable deductions and
                        withholdings; reduced by the Base Salary and Severance
                        Pay paid to the Executive during the period from the
                        Amendment Date through the Lump Sum Payment Date. The
                        Lump Sum Payment Date shall be the date that the Company
                        shall have fully paid or caused to be paid or otherwise
                        provided for (in a manner satisfactory to NVIDIA) all
                        Liquidated Claims. Upon the Lump Sum Payment Date,
                        Executive's Severance Pay under Section 4(a)(i) shall
                        cease, and he shall receive the Lump Sum Payment.

                (c)     Resignation or Termination for "Cause." If Executive
                        terminates his employment for any reason or no reason,
                        or if the Company terminates Executive's employment for
                        "Cause," Executive will be paid his Base Salary and for
                        all unused vacation earned through the date of
                        termination, but nothing else, and all stock vesting and
                        benefits will cease on Executive's date of termination.

                (d)     Release Required. As a prior condition to Executive
                        receiving any payment or benefit under Sections 4(a)
                        and/or 4(b) of this Agreement, Executive shall execute a
                        full release of known and unknown claims against the
                        Company, its successors, affiliates, employees, agents,
                        advisors and representatives, in a form designated by
                        the Company.

                (e)     Condition of Non-competition.

                        (i)     Termination Following a Change of Control. If
                                required by a successor company, Executive will
                                not engage in any Competitive Activity for a
                                period of one (1) year following a Change in
                                Control.

                        (ii)    Termination Outside a Change of Control. During
                                the one (1) year following termination of his
                                employment (the "Continuation Period"),
                                Executive shall not engage in any "Competitive
                                Activity" without first notifying the Company of
                                the contemplated activity. Executive agrees that
                                if there is any reasonable question regarding
                                whether or not a contemplated activity would be
                                a Competitive Activity, Executive will consult
                                with the Board before engaging in the
                                contemplated activity. The Compensation
                                Committee of the Board will determine in its
                                sole discretion whether the activity
                                contemplated by Executive is a Competitive
                                Activity and, if it so determines, Executive
                                will forfeit his right to any and all continued
                                payments and benefits under Section 4(a) of this
                                Agreement if he proceeds to engage in the
                                Competitive Activity during the Continuation
                                Period.



                                                                          PAGE 4
<PAGE>   5

                (f)     Termination Due to Death or Disability. If Executive's
                        employment is terminated due to death or Disability,
                        then Executive, or Executive's estate, will receive: (i)
                        payment for all Base Salary and accrued but unused
                        vacation earned through the date of termination; and
                        (ii) a lump-sum payment equal to the pro-rata portion of
                        Executive's full Target Bonus, based on Executive's
                        length of service during the year in which Executive's
                        employment is terminated due to death or Disability.

                (g)     Definitions.

                        (i)     "Asset Sale." The sale of certain assets of the
                                Company pursuant to the Asset Purchase Agreement
                                dated as of December 15, 2000 with NVIDIA
                                Corporation.

                        (ii)    "Change of Control." The parties agree that the
                                closing of the sale of certain assets of the
                                Company pursuant to the Asset Purchase Agreement
                                dated as of December 15, 2000 with NVIDIA
                                Corporation will constitute a Change of Control.
                                For all purposes under this Agreement, "Change
                                of Control" shall mean (1) a merger or
                                consolidation in which securities possessing at
                                least fifty percent (50%) of the total combined
                                voting power of the Company's outstanding
                                securities are transferred to a person or
                                persons different from the persons holding those
                                securities immediately prior to such
                                transaction, or (2) the sale, transfer or other
                                disposition of all or substantially all of the
                                Company's assets in complete liquidation or
                                dissolution of the Company.

                        (iii)   Termination for "Cause." For all purposes under
                                this Agreement, a termination for "Cause" shall
                                mean a termination of Executive's employment for
                                any of the following reasons: (1) misconduct;
                                (2) misappropriation of the assets of the
                                Company; (3) conviction of, or a plea of
                                "guilty" or "no contest" to a felony under the
                                laws of the United States or any state thereof;
                                (4) committing an act of fraud against, or the
                                misappropriation of property belonging to, the
                                Company; (5) a material breach of any
                                confidentiality or proprietary information
                                agreement between Executive and the Company; or
                                (6) continued unsatisfactory performance after
                                being given a written warning and at least
                                thirty (30) days to improve performance. A
                                termination of Executive's employment in any
                                other circumstance or for any other reason will
                                be a termination "Without Cause."

                        (iv)    "Disability." For all purposes under this
                                Agreement, "Disability" means Executive's
                                inability to carry out his material duties under
                                this Agreement for more than six (6) months in
                                any twelve (12) consecutive month period as a
                                result of incapacity due to mental or physical
                                illness or injury.



                                                                          PAGE 5
<PAGE>   6

                        (v)     "Competitive Activity." For the purposes of this
                                Agreement, a "Competitive Activity" means any
                                activity in which Executive directly or
                                indirectly provides services of any kind or
                                nature (whether or not Executive is compensated
                                for such services), including, but not limited
                                to, Executive working in an employment, advisory
                                or consulting capacity, for any Competitor of
                                the Company.

                        (vi)    "Competitor." For purposes of this Agreement,
                                "Competitor" is defined as any company involved
                                in the design and creation of 3D graphics,
                                animation and/or effects for use in
                                entertainment, or educational. Currently, the
                                Competitor's list includes, but is not limited
                                to, 3d Labs, ATI, S3, Maxtrox and any of their
                                successors or affiliates. During the
                                Continuation Period, the Company may reasonably
                                add other companies to the Competitors list.

                        (vii)   "Liquidated Claims." For purposes of this
                                Agreement, "Liquidated Claims" mean debts,
                                obligations or liabilities of any nature that
                                are fixed and ascertainable in amount, of the
                                type that would be required to be disclosed on a
                                balance sheet prepared in accordance with GAAP,
                                but regardless of whether such debt, obligation
                                or liability is immediately due and payable. Any
                                unknown, undisclosed, unasserted, contingent,
                                conditional, vicarious or derivative claims
                                shall not be considered "Liquidated Claims."

        5.      Non-Solicitation and Non-Disclosure.

                (a)     Non-Solicitation. During the period commencing on the
                        Effective Date of this Agreement and continuing until
                        the second anniversary of the date when Executive's
                        employment terminates for any reason, Executive shall
                        not directly or indirectly, personally or through
                        others, solicit or encourage, or attempt to solicit or
                        encourage (on Executive's own behalf or on behalf of any
                        other person or entity) for hire any employee or
                        consultant of the Company or any of the Company's
                        affiliates.

                (b)     Non-Disclosure. As a condition of employment, Executive
                        will execute the Company's standard Proprietary
                        Information Agreement, a copy of which is attached.

        6.      Successors.

                (a)     Company's Successors. This Agreement shall be binding
                        upon any successor (whether direct or indirect and
                        whether by purchase, lease, merger, consolidation,
                        liquidation or otherwise) to all or substantially all of
                        the Company's business and/or assets. For all purposes
                        under this Agreement, the term "Company" shall include
                        any successor to the



                                                                          PAGE 6
<PAGE>   7

                        Company's business and/or assets which becomes bound by
                        this Agreement.

                (b)     Executive's Successors. This Agreement and all rights of
                        Executive hereunder shall inure to the benefit of, and
                        be enforceable by, Executive's personal or legal
                        representatives, executors, administrators, successors,
                        heirs, distributees, devisees and legatees.

        7.      Arbitration. Executive and the Company agree to arbitrate before
                a neutral arbitrator any and all disputes or claims arising from
                or relating to Executive's employment with the Company, or the
                termination of that employment, including disputes or claims
                against any current or former agent or employee of the Company.

                (a)     Arbitrable Claims. Arbitrable disputes or claims include
                        those which arise in tort, contract, or pursuant to a
                        statute, regulation, or ordinance now in existence or
                        which may in the future be enacted or recognized,
                        including, but not limited to, the following claims:

                        (i)     claims for fraud, promissory estoppel,
                                fraudulent inducement of contract or breach of
                                contract or contractual obligation, whether such
                                alleged contract or obligation be oral, written,
                                or express or implied by fact or law;

                        (ii)    claims for wrongful termination of employment,
                                violation of public policy and constructive
                                discharge, infliction of emotional distress,
                                misrepresentation, interference with contract or
                                prospective economic advantage, defamation,
                                unfair business practices, and any other tort or
                                tort-like causes of action relating to or
                                arising from the employment relationship or the
                                formation or termination thereof;

                        (iii)   claims of discrimination, harassment, or
                                retaliation under any and all federal, state, or
                                municipal statutes, regulations, or ordinances
                                that prohibit discrimination, harassment, or
                                retaliation in employment, as well as claims for
                                violation of any other federal, state, or
                                municipal statute, regulation, or ordinance,
                                except as set forth herein; and

                        (iv)    claims for non-payment or incorrect payment of
                                wages, commissions, bonuses, severance, employee
                                fringe benefits, stock options and the like,
                                whether such claims be pursuant to alleged
                                express or implied contract or obligation,
                                equity, the California Labor Code, the Fair
                                Labor Standards Act, the Employee Retirement
                                Income Securities Act, and any other federal,
                                state, or municipal laws concerning wages,
                                compensation or employee benefits.



                                                                          PAGE 7
<PAGE>   8

                (b)     Non-Arbitrable Claims. Executive and the Company further
                        understand and agree that the following disputes and
                        claims are not covered by the arbitration agreement
                        contained in this Section 7 and shall therefore be
                        resolved as required by the law then in effect:

                        (i)     claims for workers' compensation benefits,
                                unemployment insurance, or state or federal
                                disability insurance;

                        (ii)    claims concerning the validity, infringement,
                                enforceability, or misappropriation of any trade
                                secret, patent right, copyright, trademark, or
                                any other intellectual or confidential property
                                held or sought by Employee or the Company, and
                                in which injunctive relief is sought; and

                        (iii)   any other dispute or claim that has been
                                expressly excluded from arbitration by statute.

                (c)     Relief and Review. The Arbitrator shall have the
                        authority to award any relief authorized by law in
                        connection with the asserted claims or disputes and
                        shall issue a written Award that sets forth the
                        essential findings and conclusions on which the Award is
                        based. The Arbitrator's Award shall be final and binding
                        on both the Company and Employee and it shall provide
                        the exclusive remedy(ies) for resolving any and all
                        disputes and claims subject to arbitration under this
                        Agreement. The Arbitrator's Award shall be subject to
                        correction, confirmation, or vacation, as provided by
                        California Code of Civil Procedure Section 1285.8 et seq
                        and any applicable California case law setting forth the
                        standard of judicial review of arbitration Awards.

                (d)     Location and Rules. The arbitration shall be conducted
                        in Santa Clara County, California, or such location as
                        is mutually agreeable to the parties, in accordance with
                        the National Rules for the Resolution of Employment
                        Disputes of the American Arbitration Association;
                        provided, however, that the Arbitrator shall allow the
                        discovery authorized by California Code of Civil
                        Procedure Section 1283.05 or any other discovery
                        required by California law. Also, to the extent that any
                        of the National Rules for the Resolution of Employment
                        Disputes or anything in this Agreement conflicts with
                        any arbitration procedures required by California law,
                        the arbitration procedures required by California law
                        shall govern.

                (e)     Costs and Attorneys' Fees. The Company will bear the
                        arbitrator's fee and any other type of expense or cost
                        that Executive would not be required to bear if he were
                        free to bring the dispute(s) or claim(s) in court as
                        well as any other expense or cost that is unique to
                        arbitration. Executive and the Company shall each bear
                        their own attorneys' fees incurred in connection with
                        the arbitration, and the arbitrator will not have
                        authority to award attorneys' fees unless a statute or
                        contract at issue in the dispute authorizes



                                                                          PAGE 8
<PAGE>   9

                        the award of attorneys' fees to the prevailing party, in
                        which case the arbitrator shall have the authority to
                        make an award of attorneys' fees as required or
                        permitted by applicable law. If there is a dispute as to
                        whether the Company or Executive is the prevailing party
                        in the arbitration, the Arbitrator will decide this
                        issue.

                (f)     WAIVER OF RIGHT TO JURY. EXECUTIVE AND THE COMPANY
                        UNDERSTAND AND AGREE THAT THE ARBITRATION OF DISPUTES
                        AND CLAIMS UNDER THIS AGREEMENT SHALL BE INSTEAD OF A
                        TRIAL BEFORE A COURT OR JURY OR A HEARING BEFORE A
                        GOVERNMENT AGENCY.

        8.      Miscellaneous Provisions.

                (a)     Notice. Notices and all other communications
                        contemplated by this Agreement shall be in writing and
                        shall be deemed to have been duly given when personally
                        delivered or when mailed by overnight courier, U.S.
                        registered or certified mail, return receipt requested
                        and postage prepaid. Mailed notices shall be addressed
                        to Executive at the home address which he most recently
                        communicated to the Company in writing. In the case of
                        the Company, mailed notices shall be addressed to its
                        corporate headquarters, and all notices shall be
                        directed to the attention of its Secretary.

                (b)     Modifications and Waivers. No provision of this
                        Agreement shall be modified, waived or discharged unless
                        the modification, waiver or discharge is agreed to in
                        writing and signed by Executive and by an authorized
                        officer of the Company (other than Executive). No waiver
                        by either party of any breach of, or of compliance with,
                        any condition or provision of this Agreement by the
                        other party shall be considered a waiver of any other
                        condition or provision or of the same condition or
                        provision at another time.

                (c)     Whole Agreement. No other agreements, representations or
                        understandings (whether oral or written) which are not
                        expressly set forth in this Agreement have been made or
                        entered into by either party with respect to the subject
                        matter of this Agreement. This Agreement, the
                        Proprietary Information Agreement, and applicable stock
                        option agreements and stock plans, contain the entire
                        understanding of the parties with respect to the subject
                        matter hereof.

                (d)     Taxes. All payments made under this Agreement shall be
                        subject to reduction to reflect taxes or other charges
                        required to be withheld by law.

                (e)     Choice of Law. The validity, interpretation,
                        construction and performance of this Agreement shall be
                        governed by the laws of the State of California (except
                        provisions governing the choice of law).



                                                                          PAGE 9
<PAGE>   10

                (f)     Severability. The invalidity or unenforceability of any
                        provision or provisions of this Agreement shall not
                        affect the validity or enforceability of any other
                        provision hereof, which shall remain in full force and
                        effect.

                (g)     No Assignment. This Agreement and all rights and
                        obligations of Executive hereunder are personal to
                        Executive and may not be transferred or assigned by
                        Executive at any time. The Company may assign its rights
                        under this Agreement to any entity that assumes the
                        Company's obligations hereunder in connection with any
                        sale or transfer of all or a substantial portion of the
                        Company's assets to such entity.

                (h)     280G. Executive understands and acknowledges that
                        certain benefits provided for under this Agreement may
                        constitute "parachute payments" within the meaning of
                        Section 280G of the Internal Revenue Code of 1986, as
                        amended, (the "Code"). Such parachute payments may be
                        subject to the excise tax imposed by Section 4999 of the
                        Code. Executive acknowledges and agrees that he has and
                        will review any tax consequences which may arise as the
                        result of any such parachute payments with his own tax
                        advisors and that he is relying and will rely solely on
                        such advisors and not on any representations of the
                        Company or any of its agent with regard to the possible
                        tax implications of receiving such parachute payments.
                        Executive further acknowledges and agrees that he is
                        responsible for his own tax liability which may arise as
                        the result of any such payments.

                (i)     Headings. The headings of the paragraphs contained in
                        this Agreement are for reference purposes only and shall
                        not in any way affect the meaning or interpretation of
                        any provision of this Agreement.

                (j)     Counterparts. This Agreement may be executed in two or
                        more counterparts, each of which shall be deemed an
                        original, but all of which together shall constitute one
                        and the same instrument.



                                                                         PAGE 10
<PAGE>   11

        IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.


                                       EXECUTIVE



                                          /s/ Scott D. Sellers
                                       -----------------------------------------
                                       SCOTT D. SELLERS


                                       3DFX INTERACTIVE, INC.



                                       By:     /s/ Alex M. Leupp
                                          --------------------------------------
                                       Name:   ALEX M. LEUPP
                                            ------------------------------------
                                       Title:  PRESIDENT AND CHIEF EXECUTIVE
                                               OFFICER
                                             -----------------------------------



                                                                         PAGE 11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>9
<FILENAME>f68798ex10-8.txt
<DESCRIPTION>EXHIBIT 10.8
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.8



                       AMENDMENT TO EMPLOYMENT AGREEMENT


        This Amendment to Employment Agreement ("Amendment") is entered into as
of February 1, 2001 (the "Amendment Date"), by and between Richard Burns
("Executive") and 3dfx Interactive, Inc., a California corporation (the
"Company"). In consideration of the mutual covenants and agreements hereinafter
set forth, the parties agree as follows:

        WHEREAS, the Company has discontinued its board operations retail sales
business, and will, following the sale by the Company to NVIDIA Corporation of
certain specified assets, wind up its affairs and liquidate; and

        WHEREAS, the Company and the Executive have agreed to amend that certain
Employment Agreement dated as of October 20, 2000 (the "Agreement");

        NOW, THEREFORE, the parties agree as follows:

        1.      Section 1(a) of the Agreement is amended by adding the
                following:

                Executive agrees that he will devote substantially all of his
                business efforts toward enhancing shareholder return through
                performing those duties set forth on Schedule 1 to this
                Agreement.

        2.      Section 2(a) of the Agreement is amended by deleting therefrom
                the second and third sentences. Section 2(b) of the Agreement is
                deleted and replaced with the following:

                (b)     Termination. The Executive's employment shall terminate
                        on the earlier of (i) February 28, 2001, (ii) the date
                        on which the Executive has provided written notice to
                        the Company that his duties set forth on Schedule 1 have
                        been substantially completed, and upon which the Company
                        has provided written consent (which shall not be
                        unreasonably withheld), to early-terminate the
                        Executive's employment, (iii) the date that the Company
                        terminates Executive's employment without Cause, (iv)
                        the date of Executive's death or Disability, (v) the
                        date on which the Executive voluntarily resigns his
                        employment not in accordance with Subsection 2(b)(ii)
                        hereof, or (vi) the date on which Executive's employment
                        is terminated for Cause (the "Termination Date"). Prior
                        to the Termination Date, the Executive may terminate his
                        employment for any reason (or no reason) by giving the
                        Company fourteen (14) days' notice in writing.
                        Executive's employment shall terminate automatically in
                        the event of his death.



<PAGE>   2

        3.      Section 3(a) of the Agreement is amended by deleting therefrom
                the last sentence. Section 3(b) of the Agreement is deleted.

        4.      Section 4(b) of the Agreement is deleted. Section 4(a) is
                deleted and replaced with the following:

                (a)     Payments and Benefits Upon Termination Date. If
                        Executive's employment is terminated in accordance with
                        Subsections 2(b)(i), (ii) or (iii), then upon the
                        Termination Date, Executive shall receive a lump sum
                        severance payment equal to $210,000 (less applicable
                        deductions and withholdings) plus payment or
                        reimbursement of COBRA premiums (or, if COBRA coverage
                        is not available, reimbursement of premiums paid for
                        other medical insurance in an amount not to exceed the
                        COBRA premium) through the date that is twelve (12)
                        months following the Termination Date.

        5.      Section 4(c) of the Agreement is deleted and replaced with a new
                Section 4(b), as follows:

                (b)     Resignation or Termination for Cause. If Executive's
                        employment terminates in accordance with Subsections
                        2(b)(v) or (vi), Executive will be paid his Base Salary
                        and for all unused vacation earned through the
                        Termination Date, but nothing else, and all stock
                        vesting and benefits will cease on Executive's date of
                        termination.

        6.      Section 4(d) of the Agreement is deleted and replaced with a new
                Section 4(c), as follows:

                (c)     Release Required. As a prior condition to Executive
                        receiving any payment or benefit under Section 4(a) of
                        this Agreement, Executive shall execute a full release
                        of known and unknown claims against the Company, its
                        successors, affiliates, employees, agents, advisors and
                        representatives, in a form designated by the Company.

        7.      Section 4(e)(ii) of the Agreement is deleted.

        8.      Section 4(g)(ii) of the Agreement (defining "Good Reason") is
                deleted.



<PAGE>   3

        IN WITNESS WHEREOF, each of the parties has executed this Amendment, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.


                                            EXECUTIVE



                                            /s/ Richard Burns
                                            ------------------------------------
                                            RICHARD BURNS


                                            3DFX INTERACTIVE, INC.



                                            By:/s/ Alex M. Leupp
                                               ---------------------------------
                                               ALEX M. LEUPP
                                               PRESIDENT AND CHIEF EXECUTIVE
                                               OFFICER


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>10
<FILENAME>f68798ex10-9.txt
<DESCRIPTION>EXHIBIT 10.9
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 10.9



                              EMPLOYMENT AGREEMENT


        This AGREEMENT amends, replaces and supercedes that certain Employment
Agreement entered into as of November 10, 2000 (the "Effective Date"), by and
between Stephen A. Lapinski ("Executive") and 3dfx Interactive, Inc., a
California corporation (the "Company") and is effective as of February 1, 2001
(the "Amendment Date"). In consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:

        1.      Duties and Scope of Employment.

                (a)     Position and Duties. For the term of his employment
                        under this Agreement, the Company agrees to employ
                        Executive as its Executive Vice President Worldwide
                        Marketing reporting directly to the Chief Executive
                        Officer ("CEO"), or person designated by the CEO.
                        Executive shall have such duties and authority as are
                        commensurate with one employed in his position, as may
                        be customarily incident to such position, and as may be
                        assigned to Executive from time to time. Executive shall
                        diligently, to the best of his ability, and with the
                        highest degree of good faith and loyalty, perform all
                        such duties incident to his position and use his best
                        efforts to promote the interests of the Company.
                        Executive agrees that, until the closing of the Asset
                        Sale, he will devote substantially all of his business
                        efforts toward enhancing shareholder return through
                        performing those duties set forth on Schedule 1 to this
                        Agreement.

                (b)     Obligations to the Company. During the Employment Term,
                        Executive shall devote his full time and energy to the
                        business of the Company and shall not be engaged in any
                        competitive business activity without the express
                        written consent of the CEO. Executive shall comply with
                        the Company's policies and rules, as they may be in
                        effect from time to time during the term of his
                        employment.

                (c)     No Conflicting Obligations. Executive represents and
                        warrants to the Company that he is under no obligations
                        or commitments, whether contractual or otherwise, that
                        are inconsistent with his obligations under this
                        Agreement. Executive represents and warrants that he
                        will not use or disclose, in connection with his
                        employment by the Company, any trade secrets or other
                        proprietary information or intellectual property in
                        which Executive or any other person has any right, title
                        or interest and that his employment by the Company as
                        contemplated by this Agreement will not infringe or
                        violate the rights of any other person or entity.
                        Executive represents and warrants to the Company that he
                        has returned all property and confidential information
                        belonging to any prior employers.

        2.      Term of Employment.



                                                                          PAGE 1
<PAGE>   2

                (a)     Basic Rule. The Company agrees to continue Executive's
                        employment, and Executive agrees to remain in employment
                        with the Company, from the Effective Date until the date
                        when Executive's employment terminates pursuant to
                        Subsection 2(b) below (the "Employment Period").
                        Executive's employment with the Company shall be "at
                        will," which means that either Executive or the Company
                        may terminate Executive's employment at any time, for
                        any reason, with "Cause" or "Without Cause." Any
                        contrary representations, which may have been made to
                        Executive shall be superseded by this Agreement. This
                        Agreement shall constitute the full and complete
                        agreement between Executive and the Company regarding
                        the "at will" nature of Executive's employment, which
                        may only be changed in an express written agreement
                        signed by Executive and the Chief Executive Officer.

                (b)     Termination. The Employment Period shall end on the
                        earlier of (i) the closing of the Asset Sale; (ii) upon
                        Executive's death or Disability; (iii) the date on which
                        Executive resigns his employment for any reason in
                        accordance with this Subsection 2(b); or (iv) the date
                        on which the Company terminates Executive's employment
                        in accordance with this Subsection 2(b). Subject to the
                        provisions contained within this Agreement, either
                        Executive or the Company may terminate Executive's
                        employment with or without Cause, for any reason (or no
                        reason), upon giving fourteen (14) days' notice in
                        writing.

        3.      Cash and Incentive Compensation.

                (a)     Base Salary. The Company shall pay Executive as
                        compensation for his services an annualized base salary
                        of Two Hundred Forty Thousand Dollars ($240,000), less
                        applicable deductions and withholdings, payable in
                        accordance with the Company's standard payroll schedule.
                        The compensation specified in this Subsection (a),
                        together with any increases in such compensation that
                        the Company may grant from time to time, are referred to
                        in this Agreement as "Base Salary."

                (b)     Bonus. Executive will be eligible to earn an annualized
                        bonus (the "Target Bonus") for the 2001 fiscal year
                        equal to at least forty percent (40%) of his Base
                        Salary, less applicable deductions and withholdings.

                (c)     Stock Options. As of the Effective Date of this
                        Agreement, Executive has been granted stock options
                        pursuant to the Company's Stock Option Plan (the
                        "Plan"), which are summarized in Exhibit A to this
                        Agreement (the "Options"). Executive's Options shall
                        continue to vest in accordance with the Plan and the
                        stock option agreements between the Company and
                        Executive evidencing such Options.

                (d)     Vacation and Executive Benefits. During the term of his
                        employment, Executive shall be eligible for vacation
                        each year, in accordance with the



                                                                          PAGE 2
<PAGE>   3

                        Company's standard policy for senior executives, as it
                        may be amended from time to time. Executive shall be
                        eligible during his employment term to participate in
                        any employee benefit plans generally available to the
                        other senior executives of the Company, subject in each
                        case to the generally applicable terms and conditions of
                        the plan in question and to the determinations of any
                        person or committee administering such plan. The Company
                        reserves the right to amend, modify or terminate any
                        employee benefits at any time for any reason.

                (e)     Business Expenses. During the term of his employment,
                        Executive shall be authorized to incur necessary and
                        reasonable travel and other business expenses in
                        connection with his duties hereunder, pursuant to and
                        consistent with policies and procedures as established
                        by the Company and as may be modified from time-to-time.
                        The Company shall reimburse Executive for such expenses
                        upon presentation of an itemized account and appropriate
                        supporting documentation, in accordance with Company
                        policy and procedures.

        4.      Payments and Benefits Following Termination.

                (a)     Termination Without Cause. If the Executive remains
                        employed through the closing of the Asset Sale (or if
                        the Company terminates his employment without Cause
                        prior to such date), the Executive shall receive:


                        (i)     continued severance pay (the "Severance Pay") in
                                an amount equal to his Base Salary in accordance
                                with the Company's standard payroll practices
                                until the earlier of (A) the Lump Sum Payment
                                Date or (B) the date that is twelve (12) months
                                following the termination of Executive's
                                employment; and

                        (ii)    payment (or reimbursement) of COBRA premiums
                                (or, if COBRA coverage is not available,
                                reimbursement of premiums paid for other medical
                                insurance in an amount not to exceed the COBRA
                                premium) for twelve (12) months following the
                                termination date of Executive's employment.

                (b)     Lump Sum Payment. If the Executive remains employed
                        through the closing of the Asset Sale (or if the Company
                        terminates his employment without Cause prior to such
                        date), and if the closing of the Asset Sale occurs
                        within twelve (12) months following the Amendment Date,
                        then the Executive shall be entitled to receive a lump
                        sum payment (the "Lump Sum Payment") equal to the sum of
                        (i) Executive's Base Salary and (ii) 50% of Executive's
                        Target Bonus, less applicable deductions and
                        withholdings; reduced by the Base Salary and Severance
                        Pay paid to the Executive during the period from the
                        Amendment Date through the Lump Sum Payment Date. The
                        Lump Sum Payment Date shall be the date that



                                                                          PAGE 3
<PAGE>   4

                        the Company shall have fully paid or caused to be paid
                        or otherwise provided for (in a manner satisfactory to
                        NVIDIA) all Liquidated Claims. Upon the Lump Sum Payment
                        Date, Executive's Severance Pay under Section 4(a)(i)
                        shall cease, and he shall receive the Lump Sum Payment.

                (c)     Resignation or Termination for "Cause." If Executive
                        terminates his employment for any reason or no reason,
                        or if the Company terminates Executive's employment for
                        "Cause," Executive will be paid his Base Salary and for
                        all unused vacation earned through the date of
                        termination, but nothing else, and all stock vesting and
                        benefits will cease on Executive's date of termination.

                (d)     Release Required. As a prior condition to Executive
                        receiving any payment or benefit under Sections 4(a)
                        and/or 4(b) of this Agreement, Executive shall execute a
                        full release of known and unknown claims against the
                        Company, its successors, affiliates, employees, agents,
                        advisors and representatives, in a form designated by
                        the Company.

                (e)     Condition of Non-competition.

                        (i)     Termination Following a Change of Control. If
                                required by a successor company, Executive will
                                not engage in any Competitive Activity for a
                                period of one (1) year following a Change in
                                Control.

                        (ii)    Termination Outside a Change of Control. During
                                the one (1) year following termination of his
                                employment (the "Continuation Period"),
                                Executive shall not engage in any "Competitive
                                Activity" without first notifying the Company of
                                the contemplated activity. Executive agrees that
                                if there is any reasonable question regarding
                                whether or not a contemplated activity would be
                                a Competitive Activity, Executive will consult
                                with the Board before engaging in the
                                contemplated activity. The Compensation
                                Committee of the Board will determine in its
                                sole discretion whether the activity
                                contemplated by Executive is a Competitive
                                Activity and, if it so determines, Executive
                                will forfeit his right to any and all continued
                                payments and benefits under Section 4(a) of this
                                Agreement if he proceeds to engage in the
                                Competitive Activity during the Continuation
                                Period.

                (f)     Termination Due to Death or Disability. If Executive's
                        employment is terminated due to death or Disability,
                        then Executive, or Executive's estate, will receive: (i)
                        payment for all Base Salary and accrued but unused
                        vacation earned through the date of termination; and
                        (ii) a lump-sum payment equal to the pro-rata portion of
                        Executive's full Target Bonus, based on Executive's
                        length of service during the year in which Executive's
                        employment is terminated due to death or Disability.



                                                                          PAGE 4
<PAGE>   5

                (g)     Definitions.

                        (i)     "Asset Sale." The sale of certain assets of the
                                Company pursuant to the Asset Purchase Agreement
                                dated as of December 15, 2000 with NVIDIA
                                Corporation.

                        (ii)    "Change of Control." The parties agree that the
                                closing of the sale of certain assets of the
                                Company pursuant to the Asset Purchase Agreement
                                dated as of December 15, 2000 with NVIDIA
                                Corporation will constitute a Change of Control.
                                For all purposes under this Agreement, "Change
                                of Control" shall exist in any of the following
                                circumstances:

                                (a)     the acquisition, directly or indirectly,
                                        by any person or related group of
                                        persons (other than the Company or a
                                        person that directly or indirectly
                                        controls, is controlled by, or is under
                                        common control with, the Company) of
                                        beneficial ownership (within the meaning
                                        of Rule 13d-3 of the Securities Exchange
                                        Act of 1934, as amended) of securities
                                        possessing more than fifty percent (50%)
                                        of the total combined voting power of
                                        the Company's outstanding securities
                                        pursuant to a tender or exchange offer
                                        made directly to the Company's
                                        stockholders;

                                (b)     a change in the composition of the Board
                                        over a period of thirty-six (36)
                                        consecutive months or less such that a
                                        majority of the Board members ceases by
                                        reason of one or more contested
                                        elections for Board membership, to be
                                        comprised of individuals who either (A)
                                        have been Board members continuously
                                        since the beginning of such period, or
                                        (B) have been elected or nominated for
                                        election as Board members during such
                                        period by at least a majority of the
                                        Board members described in clause (A)
                                        who were still in office at the time
                                        such election or nomination was approved
                                        by the Board, or

                                (c)     a merger or consolidation in which
                                        securities possessing at least fifty
                                        percent (50%) of the total combined
                                        voting power of the Company's
                                        outstanding securities are transferred
                                        to a person or persons different from
                                        the persons holding those securities
                                        immediately prior to such transaction,
                                        or the sale, transfer or other
                                        disposition of all or substantially all
                                        of the Company's assets in complete
                                        liquidation or dissolution of the
                                        Company.

                        (iii)   Termination for "Cause." For all purposes under
                                this Agreement, a termination for "Cause" shall
                                mean a termination of Executive's



                                                                          PAGE 5
<PAGE>   6

                                employment for any of the following reasons: (1)
                                misconduct; (2) misappropriation of the assets
                                of the Company; (3) conviction of, or a plea of
                                "guilty" or "no contest" to a felony under the
                                laws of the United States or any state thereof;
                                (4) committing an act of fraud against, or the
                                misappropriation of property belonging to, the
                                Company; (5) a material breach of any
                                confidentiality or proprietary information
                                agreement between Executive and the Company; or
                                (6) continued unsatisfactory performance after
                                being given a written warning and at least
                                thirty (30) days to improve performance. A
                                termination of Executive's employment in any
                                other circumstance or for any other reason will
                                be a termination "Without Cause."

                        (iv)    "Disability." For all purposes under this
                                Agreement, "Disability" means Executive's
                                inability to carry out his material duties under
                                this Agreement for more than six (6) months in
                                any twelve (12) consecutive month period as a
                                result of incapacity due to mental or physical
                                illness or injury.

                        (v)     "Competitive Activity." For the purposes of this
                                Agreement, a "Competitive Activity" means any
                                activity in which Executive directly or
                                indirectly provides services of any kind or
                                nature (whether or not Executive is compensated
                                for such services), including, but not limited
                                to, Executive working in an employment, advisory
                                or consulting capacity, for any Competitor of
                                the Company.

                        (vi)    "Competitor." For purposes of this Agreement,
                                "Competitor" is defined as any company involved
                                in the design and creation of 3D graphics,
                                animation and/or effects for use in
                                entertainment, or educational environments.
                                Currently, the Competitor's list includes, but
                                is not limited to, 3d Labs, ATI, S3, Maxtrox and
                                any of their successors or affiliates. During
                                the Continuation Period, the Company may
                                reasonably add other companies to the
                                Competitors list.

                        (vii)   "Liquidated Claims." For purposes of this
                                Agreement, "Liquidated Claims" mean debts,
                                obligations or liabilities of any nature that
                                are fixed and ascertainable in amount, of the
                                type that would be required to be disclosed on a
                                balance sheet prepared in accordance with GAAP,
                                but regardless of whether such debt, obligation
                                or liability is immediately due and payable. Any
                                unknown, undisclosed, unasserted, contingent,
                                conditional, vicarious or derivative claims
                                shall not be considered "Liquidated Claims."

        5.      Non-Solicitation and Non-Disclosure.



                                                                          PAGE 6
<PAGE>   7

                (a)     Non-Solicitation. During the period commencing on the
                        Effective Date of this Agreement and continuing until
                        the second anniversary of the date when Executive's
                        employment terminates for any reason, Executive shall
                        not directly or indirectly, personally or through
                        others, solicit or encourage, or attempt to solicit or
                        encourage (on Executive's own behalf or on behalf of any
                        other person or entity) for hire any employee or
                        consultant of the Company or any of the Company's
                        affiliates.

                (b)     Non-Disclosure. As a condition of employment, Executive
                        will execute the Company's standard Proprietary
                        Information Agreement, a copy of which is attached.

        6.      Successors.

                (a)     Company's Successors. This Agreement shall be binding
                        upon any successor (whether direct or indirect and
                        whether by purchase, lease, merger, consolidation,
                        liquidation or otherwise) to all or substantially all of
                        the Company's business and/or assets. For all purposes
                        under this Agreement, the term "Company" shall include
                        any successor to the Company's business and/or assets
                        which becomes bound by this Agreement.

                (b)     Executive's Successors. This Agreement and all rights of
                        Executive hereunder shall inure to the benefit of, and
                        be enforceable by, Executive's personal or legal
                        representatives, executors, administrators, successors,
                        heirs, distributees, devisees and legatees.

        7.      Arbitration. Executive and the Company agree to arbitrate before
                a neutral arbitrator any and all disputes or claims arising from
                or relating to Executive's employment with the Company, or the
                termination of that employment, including disputes or claims
                against any current or former agent or employee of the Company.

                (a)     Arbitrable Claims. Arbitrable disputes or claims include
                        those which arise in tort, contract, or pursuant to a
                        statute, regulation, or ordinance now in existence or
                        which may in the future be enacted or recognized,
                        including, but not limited to, the following claims:

                        (i)     claims for fraud, promissory estoppel,
                                fraudulent inducement of contract or breach of
                                contract or contractual obligation, whether such
                                alleged contract or obligation be oral, written,
                                or express or implied by fact or law;

                        (ii)    claims for wrongful termination of employment,
                                violation of public policy and constructive
                                discharge, infliction of emotional distress,
                                misrepresentation, interference with contract or
                                prospective economic advantage, defamation,
                                unfair business practices, and any other tort or
                                tort-like causes of action relating to



                                                                          PAGE 7
<PAGE>   8

                                or arising from the employment relationship or
                                the formation or termination thereof;

                        (iii)   claims of discrimination, harassment, or
                                retaliation under any and all federal, state, or
                                municipal statutes, regulations, or ordinances
                                that prohibit discrimination, harassment, or
                                retaliation in employment, as well as claims for
                                violation of any other federal, state, or
                                municipal statute, regulation, or ordinance,
                                except as set forth herein; and

                        (iv)    claims for non-payment or incorrect payment of
                                wages, commissions, bonuses, severance, employee
                                fringe benefits, stock options and the like,
                                whether such claims be pursuant to alleged
                                express or implied contract or obligation,
                                equity, the California Labor Code, the Fair
                                Labor Standards Act, the Employee Retirement
                                Income Securities Act, and any other federal,
                                state, or municipal laws concerning wages,
                                compensation or employee benefits.

                (b)     Non-Arbitrable Claims. Executive and the Company further
                        understand and agree that the following disputes and
                        claims are not covered by the arbitration agreement
                        contained in this Section 7 and shall therefore be
                        resolved as required by the law then in effect:

                        (i)     claims for workers' compensation benefits,
                                unemployment insurance, or state or federal
                                disability insurance;

                        (ii)    claims concerning the validity, infringement,
                                enforceability, or misappropriation of any trade
                                secret, patent right, copyright, trademark, or
                                any other intellectual or confidential property
                                held or sought by Employee or the Company, and
                                in which injunctive relief is sought; and

                        (iii)   any other dispute or claim that has been
                                expressly excluded from arbitration by statute.

                (c)     Relief and Review. The Arbitrator shall have the
                        authority to award any relief authorized by law in
                        connection with the asserted claims or disputes and
                        shall issue a written Award that sets forth the
                        essential findings and conclusions on which the Award is
                        based. The Arbitrator's Award shall be final and binding
                        on both the Company and Employee and it shall provide
                        the exclusive remedy(ies) for resolving any and all
                        disputes and claims subject to arbitration under this
                        Agreement. The Arbitrator's Award shall be subject to
                        correction, confirmation, or vacation, as provided by
                        California Code of Civil Procedure Section 1285.8 et seq
                        and any applicable California case law setting forth the
                        standard of judicial review of arbitration Awards.



                                                                          PAGE 8
<PAGE>   9

                (d)     Location and Rules. The arbitration shall be conducted
                        in Santa Clara County, California, or such location as
                        is mutually agreeable to the parties, in accordance with
                        the National Rules for the Resolution of Employment
                        Disputes of the American Arbitration Association;
                        provided, however, that the Arbitrator shall allow the
                        discovery authorized by California Code of Civil
                        Procedure Section 1283.05 or any other discovery
                        required by California law. Also, to the extent that any
                        of the National Rules for the Resolution of Employment
                        Disputes or anything in this Agreement conflicts with
                        any arbitration procedures required by California law,
                        the arbitration procedures required by California law
                        shall govern.

                (e)     Costs and Attorneys' Fees. The Company will bear the
                        arbitrator's fee and any other type of expense or cost
                        that Executive would not be required to bear if he were
                        free to bring the dispute(s) or claim(s) in court as
                        well as any other expense or cost that is unique to
                        arbitration. Executive and the Company shall each bear
                        their own attorneys' fees incurred in connection with
                        the arbitration, and the arbitrator will not have
                        authority to award attorneys' fees unless a statute or
                        contract at issue in the dispute authorizes the award of
                        attorneys' fees to the prevailing party, in which case
                        the arbitrator shall have the authority to make an award
                        of attorneys' fees as required or permitted by
                        applicable law. If there is a dispute as to whether the
                        Company or Executive is the prevailing party in the
                        arbitration, the Arbitrator will decide this issue.

                (f)     WAIVER OF RIGHT TO JURY. EXECUTIVE AND THE COMPANY
                        UNDERSTAND AND AGREE THAT THE ARBITRATION OF DISPUTES
                        AND CLAIMS UNDER THIS AGREEMENT SHALL BE INSTEAD OF A
                        TRIAL BEFORE A COURT OR JURY OR A HEARING BEFORE A
                        GOVERNMENT AGENCY.

        8.      Miscellaneous Provisions.

                (a)     Notice. Notices and all other communications
                        contemplated by this Agreement shall be in writing and
                        shall be deemed to have been duly given when personally
                        delivered or when mailed by overnight courier, U.S.
                        registered or certified mail, return receipt requested
                        and postage prepaid. Mailed notices shall be addressed
                        to Executive at the home address which he most recently
                        communicated to the Company in writing. In the case of
                        the Company, mailed notices shall be addressed to its
                        corporate headquarters, and all notices shall be
                        directed to the attention of its Secretary.

                (b)     Modifications and Waivers. No provision of this
                        Agreement shall be modified, waived or discharged unless
                        the modification, waiver or discharge is agreed to in
                        writing and signed by Executive and by an authorized
                        officer of the Company (other than Executive). No waiver
                        by either party of any breach of, or of compliance with,
                        any condition or



                                                                          PAGE 9
<PAGE>   10

                        provision of this Agreement by the other party shall be
                        considered a waiver of any other condition or provision
                        or of the same condition or provision at another time.

                (c)     Whole Agreement. No other agreements, representations or
                        understandings (whether oral or written) which are not
                        expressly set forth in this Agreement have been made or
                        entered into by either party with respect to the subject
                        matter of this Agreement. This Agreement, the
                        Proprietary Information Agreement, and applicable stock
                        option agreements and stock plans, contain the entire
                        understanding of the parties with respect to the subject
                        matter hereof.

                (d)     Taxes. All payments made under this Agreement shall be
                        subject to reduction to reflect taxes or other charges
                        required to be withheld by law.

                (e)     Choice of Law. The validity, interpretation,
                        construction and performance of this Agreement shall be
                        governed by the laws of the State of California (except
                        provisions governing the choice of law).

                (f)     Severability. The invalidity or unenforceability of any
                        provision or provisions of this Agreement shall not
                        affect the validity or enforceability of any other
                        provision hereof, which shall remain in full force and
                        effect.

                (g)     No Assignment. This Agreement and all rights and
                        obligations of Executive hereunder are personal to
                        Executive and may not be transferred or assigned by
                        Executive at any time. The Company may assign its rights
                        under this Agreement to any entity that assumes the
                        Company's obligations hereunder in connection with any
                        sale or transfer of all or a substantial portion of the
                        Company's assets to such entity.

                (h)     280G. Executive understands and acknowledges that
                        certain benefits provided for under this Agreement may
                        constitute "parachute payments" within the meaning of
                        Section 280G of the Internal Revenue Code of 1986, as
                        amended, (the "Code"). Such parachute payments may be
                        subject to the excise tax imposed by Section 4999 of the
                        Code. Executive acknowledges and agrees that he has and
                        will review any tax consequences which may arise as the
                        result of any such parachute payments with his own tax
                        advisors and that he is relying and will rely solely on
                        such advisors and not on any representations of the
                        Company or any of its agent with regard to the possible
                        tax implications of receiving such parachute payments.
                        Executive further acknowledges and agrees that he is
                        responsible for his own tax liability which may arise as
                        the result of any such payments.

                (i)     Headings. The headings of the paragraphs contained in
                        this Agreement are for reference purposes only and shall
                        not in any way affect the meaning or interpretation of
                        any provision of this Agreement.



                                                                         PAGE 10
<PAGE>   11

                (j)     Counterparts. This Agreement may be executed in two or
                        more counterparts, each of which shall be deemed an
                        original, but all of which together shall constitute one
                        and the same instrument.

                IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.


                                       EXECUTIVE


                                         /s/ STEPHEN A. LAPINSKI
                                       -----------------------------------------
                                       STEPHEN A. LAPINSKI


                                       3DFX INTERACTIVE, INC.


                                       By:     /s/ ALEX M. LEUPP
                                          --------------------------------------
                                       Name:   ALEX M. LEUPP
                                            ------------------------------------
                                       Title:  PRESIDENT AND CHIEF EXECUTIVE
                                               OFFICER
                                             -----------------------------------


                                                                         PAGE 11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>11
<FILENAME>f68798ex10-10.txt
<DESCRIPTION>EXHIBIT 10.10
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.10

                              EMPLOYMENT AGREEMENT


        This AGREEMENT amends, replaces and supercedes that certain Employment
Agreement entered into as of November 10, 2000 (the "Effective Date"), by and
between Alfred R. Woodhull ("Executive") and 3dfx Interactive, Inc., a
California corporation (the "Company") and is effective as of February 1, 2001
(the "Amendment Date"). In consideration of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:

        1.      Duties and Scope of Employment.

                (a)     Position and Duties. For the term of his employment
                        under this Agreement, the Company agrees to employ
                        Executive as its Senior Vice President of Operations,
                        reporting directly to the Chief Executive Officer
                        ("CEO"), or person designated by the CEO. Executive
                        shall have such duties and authority as are commensurate
                        with one employed in his position, as may be customarily
                        incident to such position, and as may be assigned to
                        Executive from time to time. Executive shall diligently,
                        to the best of his ability, and with the highest degree
                        of good faith and loyalty, perform all such duties
                        incident to his position and use his best efforts to
                        promote the interests of the Company. Executive agrees
                        that, until the closing of the Asset Sale, he will
                        devote substantially all of his business efforts toward
                        enhancing shareholder return through performing those
                        duties set forth on Schedule 1 to this Agreement.

                (b)     Obligations to the Company. During the Employment Term,
                        Executive shall devote his full time and energy to the
                        business of the Company and shall not be engaged in any
                        competitive business activity without the express
                        written consent of the CEO. Executive shall comply with
                        the Company's policies and rules, as they may be in
                        effect from time to time during the term of his
                        employment.

                (c)     No Conflicting Obligations. Executive represents and
                        warrants to the Company that he is under no obligations
                        or commitments, whether contractual or otherwise, that
                        are inconsistent with his obligations under this
                        Agreement. Executive represents and warrants that he
                        will not use or disclose, in connection with his
                        employment by the Company, any trade secrets or other
                        proprietary information or intellectual property in
                        which Executive or any other person has any right, title
                        or interest and that his employment by the Company as
                        contemplated by this Agreement will not infringe or
                        violate the rights of any other person or entity.
                        Executive represents and warrants to the Company that he
                        has returned all property and confidential information
                        belonging to any prior employers.



                                                                          PAGE 1
<PAGE>   2

        2.      Term of Employment.

                (a)     Basic Rule. The Company agrees to continue Executive's
                        employment, and Executive agrees to remain in employment
                        with the Company, from the Effective Date until the date
                        when Executive's employment terminates pursuant to
                        Subsection 2(b) below (the "Employment Period").
                        Executive's employment with the Company shall be "at
                        will," which means that either Executive or the Company
                        may terminate Executive's employment at any time, for
                        any reason, with "Cause" or "Without Cause." Any
                        contrary representations, which may have been made to
                        Executive shall be superseded by this Agreement. This
                        Agreement shall constitute the full and complete
                        agreement between Executive and the Company regarding
                        the "at will" nature of Executive's employment, which
                        may only be changed in an express written agreement
                        signed by Executive and the Chief Executive Officer.

                (b)     Termination. The Employment Period shall end on the
                        earlier of (i) the closing of the Asset Sale; (ii) upon
                        Executive's death or Disability; (iii) the date on which
                        Executive resigns his employment for any reason in
                        accordance with this subsection 2(b); or (iv) the date
                        on which the Company terminates Executive's employment
                        in accordance with this subsection 2(b). Subject to the
                        provisions contained within this Agreement, either
                        Executive or the Company may terminate Executive's
                        employment with or without Cause, for any reason (or no
                        reason) upon giving fourteen (14) days' notice in
                        writing.

        3.      Cash and Incentive Compensation.

                (a)     Base Salary. The Company shall pay Executive as
                        compensation for his services an annualized base salary
                        of One Hundred Ninety Thousand Dollars ($190,000), less
                        applicable deductions and withholdings, payable in
                        accordance with the Company's standard payroll schedule.
                        The compensation specified in this Subsection (a),
                        together with any increases in such compensation that
                        the Company may grant from time to time, are referred to
                        in this Agreement as "Base Salary."

                (b)     Bonus. Executive will be eligible to earn an annualized
                        bonus (the "Target Bonus") for the 2001 fiscal year
                        equal to at least thirty percent (30%) of his Base
                        Salary, less applicable deductions and withholdings.

                (c)     Stock Options. As of the Effective Date of this
                        Agreement, Executive has been granted stock options
                        pursuant to the Company's Stock Option Plan (the
                        "Plan"), which are summarized in Exhibit A to this
                        Agreement (the "Options"). Executive's Options shall
                        continue to vest in accordance with the Plan and the
                        stock option agreements between the Company and
                        Executive evidencing such Options.



                                                                          PAGE 2
<PAGE>   3

                (d)     Vacation and Executive Benefits. During the term of his
                        employment, Executive shall be eligible for vacation
                        each year, in accordance with the Company's standard
                        policy for senior executives, as it may be amended from
                        time to time. Executive shall be eligible during his
                        employment term to participate in any employee benefit
                        plans generally available to the other senior executives
                        of the Company, subject in each case to the generally
                        applicable terms and conditions of the plan in question
                        and to the determinations of any person or committee
                        administering such plan. The Company reserves the right
                        to amend, modify or terminate any employee benefits at
                        any time for any reason.

                (e)     Business Expenses. During the term of his employment,
                        Executive shall be authorized to incur necessary and
                        reasonable travel and other business expenses in
                        connection with his duties hereunder, pursuant to and
                        consistent with policies and procedures as established
                        by the Company and as may be modified from time-to-time.
                        The Company shall reimburse Executive for such expenses
                        upon presentation of an itemized account and appropriate
                        supporting documentation, in accordance with Company
                        policy and procedures.

        4.      Payments and Benefits Following Termination.

                (a)     Termination Without Cause; Following Employment Period.
                        If the Executive remains employed through the closing of
                        the Asset Sale (or if the Company terminates his
                        employment "without Cause," prior to such date), the
                        Executive shall receive:

                        (i)     continued severance pay (the "Severance Pay") in
                                an amount equal to his Base Salary in accordance
                                with the Company's standard payroll practices
                                until the earlier of (A) the Lump Sum Payment
                                Date, (B) the date that is twelve (12) months
                                following the termination of Executive's
                                employment, or (C) the date on which Executive
                                commences full-time employment for any person,
                                venture, partnership or corporate entity;

                        (ii)    payment (or reimbursement) of COBRA premiums
                                (or, if COBRA coverage is not available,
                                reimbursement of premiums paid for other medical
                                insurance in an amount not to exceed the COBRA
                                premium) for twelve (12) months following the
                                termination date of Executive's employment.

                (b)     Lump Sum Payment. If the Executive remains employed
                        through the closing of the Asset Sale (or if the Company
                        terminates his employment without Cause prior to such
                        date), and if the Closing of the Asset Sale occurs
                        within twelve (12) months following the Amendment Date,
                        then the Executive shall be entitled to receive a Lump
                        Sum payment (the "Lump Sum Payment") equal to the sum of
                        (i) Executive's Base Salary and (ii) 50% of Executive's
                        Target Bonus, less applicable deductions and



                                                                          PAGE 3
<PAGE>   4

                        withholdings; reduced by the Base Salary and Severance
                        Pay paid to the Executive during the period from the
                        Amendment Date through the Lump Sum Payment Date. The
                        Lump Sum Payment Date shall be the date that the Company
                        shall have fully paid or caused to be paid or otherwise
                        provided for (in a manner satisfactory to NVIDIA) all
                        Liquidated Claims. Upon the Lump Sum Payment Date,
                        Executive's Severance Pay under Section 4(a)(i) shall
                        cease, and he shall receive the Lump Sum Payment;

                (c)     Resignation or Termination for "Cause". If Executive
                        terminates his employment for any reason or no reason,
                        or if the Company terminates Executive's employment for
                        "Cause," Executive will be paid his Base Salary and for
                        all unused vacation earned through the date of
                        termination, but nothing else, and all stock vesting and
                        benefits will cease on Executive's date of termination.

                (d)     Release Required. As a prior condition to Executive
                        receiving any payment or benefit under Sections 4(a)
                        and/or 4(b) of this Agreement, Executive shall execute a
                        full release of known and unknown claims against the
                        Company, its successors, affiliates, employees, agents,
                        advisors and representatives, in a form designated by
                        the Company.

                (e)     Condition of Non-competition.

                        (i)     Termination Following a Change of Control. If
                                required by a successor company, Executive will
                                not engage in any Competitive Activity for a
                                period of one (1) year following a Change in
                                Control.

                        (ii)    Termination Outside a Change of Control. During
                                the one (1) year following termination of his
                                employment (the "Continuation Period"),
                                Executive shall not engage in any "Competitive
                                Activity" without first notifying the Company of
                                the contemplated activity. Executive agrees that
                                if there is any reasonable question regarding
                                whether or not a contemplated activity would be
                                a Competitive Activity, Executive will consult
                                with the Board before engaging in the
                                contemplated activity. The Compensation
                                Committee of the Board will determine in its
                                sole discretion whether the activity
                                contemplated by Executive is a Competitive
                                Activity and, if it so determines, Executive
                                will forfeit his right to any and all continued
                                payments and benefits under Section 4(a) of this
                                Agreement if he proceeds to engage in the
                                Competitive Activity during the Continuation
                                Period.

                (f)     Termination Due to Death or Disability. If Executive's
                        employment is terminated due to death or Disability,
                        then Executive, or Executive's estate, will receive: (i)
                        payment for all Base Salary and accrued but unused
                        vacation earned through the date of termination; and
                        (ii) a lump-



                                                                          PAGE 4
<PAGE>   5

                        sum payment equal to the pro-rata portion of Executive's
                        full Target Bonus, based on Executive's length of
                        service during the year in which Executive's employment
                        is terminated due to death or Disability.

                (g)     Definitions.

                        (i)     "Asset Sale." The sale of certain assets of the
                                Company pursuant to the Asset Purchase Agreement
                                dated as of December 15, 2000 with NVIDIA
                                Corporation.

                        (ii)    "Change of Control." The parties agree that the
                                closing of the sale of certain assets of the
                                Company pursuant to the Asset Purchased
                                Agreement dated as of December 15, 2000 with
                                NVIDIA Corporation will constitute a Change of
                                Control. For all purposes under this Agreement,
                                "Change of Control" shall mean (1) a merger or
                                consolidation in which securities possessing at
                                least fifty percent (50%) of the total combined
                                voting power of the Company's outstanding
                                securities are transferred to a person or
                                persons different from the persons holding those
                                securities immediately prior to such
                                transaction, or (2) the sale, transfer or other
                                disposition of all or substantially all of the
                                Company's assets in complete liquidation or
                                dissolution of the Company.

                        (iii)   Termination for "Cause." For all purposes under
                                this Agreement, a termination for "Cause" shall
                                mean a termination of Executive's employment for
                                any of the following reasons: (1) misconduct;
                                (2) misappropriation of the assets of the
                                Company; (3) conviction of, or a plea of
                                "guilty" or "no contest" to a felony under the
                                laws of the United States or any state thereof;
                                (4) committing an act of fraud against, or the
                                misappropriation of property belonging to, the
                                Company; (5) a material breach of any
                                confidentiality or proprietary information
                                agreement between Executive and the Company; or
                                (6) continued unsatisfactory performance after
                                being given a written warning and at least
                                thirty (30) days to improve performance. A
                                termination of Executive's employment in any
                                other circumstance or for any other reason will
                                be a termination "Without Cause."

                        (iv)    "Disability." For all purposes under this
                                Agreement, "Disability" means Executive's
                                inability to carry out his material duties under
                                this Agreement for more than six (6) months in
                                any twelve (12) consecutive month period as a
                                result of incapacity due to mental or physical
                                illness or injury.

                        (v)     "Competitive Activity." For the purposes of this
                                Agreement, a "Competitive Activity" means any
                                activity in which Executive directly or
                                indirectly provides services of any kind or
                                nature



                                                                          PAGE 5
<PAGE>   6

                                (whether or not Executive is compensated for
                                such services), including, but not limited to,
                                Executive working in an employment, advisory or
                                consulting capacity, for any Competitor of the
                                Company.

                        (vi)    "Competitor." For purposes of this Agreement,
                                "Competitor" is defined as any company involved
                                in the design and creation of 3D graphics,
                                animation and/or effects for use in
                                entertainment, or educational. Currently, the
                                Competitor's list includes, but is not limited
                                to, 3d Labs, ATI, S3, Maxtrox and any of their
                                successors or affiliates. During the
                                Continuation Period, the Company may reasonably
                                add other companies to the Competitors list.

                        (vii)   "Liquidated Claims." For purposes of this
                                Agreement "Liquidated Claims" mean debts,
                                obligations or liabilities of any nature that
                                are fixed and ascertainable in amount, of the
                                type that would be required to be disclosed on a
                                balance sheet prepared in accordance with GAAP,
                                but regardless of whether such debt, obligation
                                or liability is immediately due and payable. Any
                                unknown, undisclosed, unasserted, contingent,
                                conditional, vicarious or derivative claims
                                shall not be considered "Liquidated Claims."

        5.      Non-Solicitation and Non-Disclosure.

                (a)     Non-Solicitation. During the period commencing on the
                        Effective Date of this Agreement and continuing until
                        the second anniversary of the date when Executive's
                        employment terminates for any reason, Executive shall
                        not directly or indirectly, personally or through
                        others, solicit or encourage, or attempt to solicit or
                        encourage (on Executive's own behalf or on behalf of any
                        other person or entity) for hire any employee or
                        consultant of the Company or any of the Company's
                        affiliates.

                (b)     Non-Disclosure. As a condition of employment, Executive
                        will execute the Company's standard Proprietary
                        Information Agreement, a copy of which is attached.

        6.      Successors.

                (a)     Company's Successors. This Agreement shall be binding
                        upon any successor (whether direct or indirect and
                        whether by purchase, lease, merger, consolidation,
                        liquidation or otherwise) to all or substantially all of
                        the Company's business and/or assets. For all purposes
                        under this Agreement, the term "Company" shall include
                        any successor to the Company's business and/or assets
                        which becomes bound by this Agreement.

                (b)     Executive's Successors. This Agreement and all rights of
                        Executive hereunder shall inure to the benefit of, and
                        be enforceable by, Executive's



                                                                          PAGE 6
<PAGE>   7

                        personal or legal representatives, executors,
                        administrators, successors, heirs, distributees,
                        devisees and legatees.

        7.      Arbitration. Executive and the Company agree to arbitrate before
                a neutral arbitrator any and all disputes or claims arising from
                or relating to Executive's employment with the Company, or the
                termination of that employment, including disputes or claims
                against any current or former agent or employee of the Company.

                (a)     Arbitrable Claims. Arbitrable disputes or claims include
                        those which arise in tort, contract, or pursuant to a
                        statute, regulation, or ordinance now in existence or
                        which may in the future be enacted or recognized,
                        including, but not limited to, the following claims:

                        (i)     claims for fraud, promissory estoppel,
                                fraudulent inducement of contract or breach of
                                contract or contractual obligation, whether such
                                alleged contract or obligation be oral, written,
                                or express or implied by fact or law;

                        (ii)    claims for wrongful termination of employment,
                                violation of public policy and constructive
                                discharge, infliction of emotional distress,
                                misrepresentation, interference with contract or
                                prospective economic advantage, defamation,
                                unfair business practices, and any other tort or
                                tort-like causes of action relating to or
                                arising from the employment relationship or the
                                formation or termination thereof;

                        (iii)   claims of discrimination, harassment, or
                                retaliation under any and all federal, state, or
                                municipal statutes, regulations, or ordinances
                                that prohibit discrimination, harassment, or
                                retaliation in employment, as well as claims for
                                violation of any other federal, state, or
                                municipal statute, regulation, or ordinance,
                                except as set forth herein; and

                        (iv)    claims for non-payment or incorrect payment of
                                wages, commissions, bonuses, severance, employee
                                fringe benefits, stock options and the like,
                                whether such claims be pursuant to alleged
                                express or implied contract or obligation,
                                equity, the California Labor Code, the Fair
                                Labor Standards Act, the Employee Retirement
                                Income Securities Act, and any other federal,
                                state, or municipal laws concerning wages,
                                compensation or employee benefits.

                (b)     Non-Arbitrable Claims. Executive and the Company further
                        understand and agree that the following disputes and
                        claims are not covered by the arbitration agreement
                        contained in this Section 7 and shall therefore be
                        resolved as required by the law then in effect:



                                                                          PAGE 7
<PAGE>   8

                        (i)     claims for workers' compensation benefits,
                                unemployment insurance, or state or federal
                                disability insurance;

                        (ii)    claims concerning the validity, infringement,
                                enforceability, or misappropriation of any trade
                                secret, patent right, copyright, trademark, or
                                any other intellectual or confidential property
                                held or sought by Employee or the Company, and
                                in which injunctive relief is sought; and

                        (iii)   any other dispute or claim that has been
                                expressly excluded from arbitration by statute.

                (c)     Relief and Review. The Arbitrator shall have the
                        authority to award any relief authorized by law in
                        connection with the asserted claims or disputes and
                        shall issue a written Award that sets forth the
                        essential findings and conclusions on which the Award is
                        based. The Arbitrator's Award shall be final and binding
                        on both the Company and Employee and it shall provide
                        the exclusive remedy(ies) for resolving any and all
                        disputes and claims subject to arbitration under this
                        Agreement. The Arbitrator's Award shall be subject to
                        correction, confirmation, or vacation, as provided by
                        California Code of Civil Procedure Section 1285.8 et seq
                        and any applicable California case law setting forth the
                        standard of judicial review of arbitration Awards.

                (d)     Location and Rules. The arbitration shall be conducted
                        in Santa Clara County, California, or such location as
                        is mutually agreeable to the parties, in accordance with
                        the National Rules for the Resolution of Employment
                        Disputes of the American Arbitration Association;
                        provided, however, that the Arbitrator shall allow the
                        discovery authorized by California Code of Civil
                        Procedure Section 1283.05 or any other discovery
                        required by California law. Also, to the extent that any
                        of the National Rules for the Resolution of Employment
                        Disputes or anything in this Agreement conflicts with
                        any arbitration procedures required by California law,
                        the arbitration procedures required by California law
                        shall govern.

                (e)     Costs and Attorneys' Fees. The Company will bear the
                        arbitrator's fee and any other type of expense or cost
                        that Executive would not be required to bear if he were
                        free to bring the dispute(s) or claim(s) in court as
                        well as any other expense or cost that is unique to
                        arbitration. Executive and the Company shall each bear
                        their own attorneys' fees incurred in connection with
                        the arbitration, and the arbitrator will not have
                        authority to award attorneys' fees unless a statute or
                        contract at issue in the dispute authorizes the award of
                        attorneys' fees to the prevailing party, in which case
                        the arbitrator shall have the authority to make an award
                        of attorneys' fees as required or permitted by
                        applicable law. If there is a dispute as to whether the
                        Company or Executive is the prevailing party in the
                        arbitration, the Arbitrator will decide this issue.



                                                                          PAGE 8
<PAGE>   9

                (f)     WAIVER OF RIGHT TO JURY. EXECUTIVE AND THE COMPANY
                        UNDERSTAND AND AGREE THAT THE ARBITRATION OF DISPUTES
                        AND CLAIMS UNDER THIS AGREEMENT SHALL BE INSTEAD OF A
                        TRIAL BEFORE A COURT OR JURY OR A HEARING BEFORE A
                        GOVERNMENT AGENCY.

        8.      Miscellaneous Provisions.

                (a)     Notice. Notices and all other communications
                        contemplated by this Agreement shall be in writing and
                        shall be deemed to have been duly given when personally
                        delivered or when mailed by overnight courier, U.S.
                        registered or certified mail, return receipt requested
                        and postage prepaid. Mailed notices shall be addressed
                        to Executive at the home address which he most recently
                        communicated to the Company in writing. In the case of
                        the Company, mailed notices shall be addressed to its
                        corporate headquarters, and all notices shall be
                        directed to the attention of its Secretary.

                (b)     Modifications and Waivers. No provision of this
                        Agreement shall be modified, waived or discharged unless
                        the modification, waiver or discharge is agreed to in
                        writing and signed by Executive and by an authorized
                        officer of the Company (other than Executive). No waiver
                        by either party of any breach of, or of compliance with,
                        any condition or provision of this Agreement by the
                        other party shall be considered a waiver of any other
                        condition or provision or of the same condition or
                        provision at another time.

                (c)     Whole Agreement. No other agreements, representations or
                        understandings (whether oral or written) which are not
                        expressly set forth in this Agreement have been made or
                        entered into by either party with respect to the subject
                        matter of this Agreement. This Agreement, the
                        Proprietary Information Agreement, and applicable stock
                        option agreements and stock plans, contain the entire
                        understanding of the parties with respect to the subject
                        matter hereof.

                (d)     Taxes. All payments made under this Agreement shall be
                        subject to reduction to reflect taxes or other charges
                        required to be withheld by law.

                (e)     Choice of Law. The validity, interpretation,
                        construction and performance of this Agreement shall be
                        governed by the laws of the State of California (except
                        provisions governing the choice of law).

                (f)     Severability. The invalidity or unenforceability of any
                        provision or provisions of this Agreement shall not
                        affect the validity or enforceability of any other
                        provision hereof, which shall remain in full force and
                        effect.

                (g)     No Assignment. This Agreement and all rights and
                        obligations of Executive hereunder are personal to
                        Executive and may not be transferred



                                                                          PAGE 9
<PAGE>   10

                        or assigned by Executive at any time. The Company may
                        assign its rights under this Agreement to any entity
                        that assumes the Company's obligations hereunder in
                        connection with any sale or transfer of all or a
                        substantial portion of the Company's assets to such
                        entity.

                (h)     280G. Executive understands and acknowledges that
                        certain benefits provided for under this Agreement may
                        constitute "parachute payments" within the meaning of
                        Section 280G of the Internal Revenue Code of 1986, as
                        amended, (the "Code"). Such parachute payments may be
                        subject to the excise tax imposed by Section 4999 of the
                        Code. Executive acknowledges and agrees that he has and
                        will review any tax consequences which may arise as the
                        result of any such parachute payments with his own tax
                        advisors and that he is relying and will rely solely on
                        such advisors and not on any representations of the
                        Company or any of its agent with regard to the possible
                        tax implications of receiving such parachute payments.
                        Executive further acknowledges and agrees that he is
                        responsible for his own tax liability which may arise as
                        the result of any such payments.

                (i)     Headings. The headings of the paragraphs contained in
                        this Agreement are for reference purposes only and shall
                        not in any way affect the meaning or interpretation of
                        any provision of this Agreement.

                (j)     Counterparts. This Agreement may be executed in two or
                        more counterparts, each of which shall be deemed an
                        original, but all of which together shall constitute one
                        and the same instrument.

                IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.


                                       EXECUTIVE



                                         /s/ Alfred R. Woodhull
                                       -----------------------------------------
                                       ALFRED R. WOODHULL



                                       3DFX INTERACTIVE, INC.



                                       By:    /s/ Alex M. Leupp
                                          --------------------------------------
                                       Name:  ALEX M. LEUPP
                                            ------------------------------------
                                       Title  PRESIDENT AND CHIEF
                                              EXECUTIVE OFFICER
                                            ------------------------------------



                                                                         PAGE 10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>12
<FILENAME>f68798ex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 23.1

                     CONSENT OF PRICEWATERHOUSECOOPERS LLP

     We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (Nos. 333-39109, 333-58207, 333-78905, 333-79037,
333-86661, 333-42152 and 333-95017) of 3dfx Interactive, Inc. of our report
dated February 29, 2000, except for Note 13, which is as of March 27, 2000, and
Note 14 relating to 3dfx Interactive, Inc.'s ability to continue as a going
concern, which is as of December 15, 2000, relating to the financial statements
and financial statement schedule, which appears in this Current Report on Form
8-K dated January 26, 2001.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
San Jose, California
January 26, 2001
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>13
<FILENAME>f68798ex99-1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 99.1

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of 3dfx Interactive, Inc.

In our opinion, the accompanying balance sheets and the related statements of
operations, shareholders' equity and cash flows present fairly, in all material
respects, the financial position of 3dfx Interactive, Inc. ("3dfx"), at December
31, 1998 and January 31, 2000 and the results of its operations and its cash
flows for each of the years ended December 31, 1997, 1998 and January 31, 2000,
and for the month ended January 31, 1999, in conformity with accounting
principles generally accepted in the United States. In addition, in our opinion,
the accompanying financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of 3dfx's management; our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

The accompanying consolidated financial statements have been prepared assuming
3dfx will continue as a going concern. As discussed in Note 14 to the
consolidated financial statements, 3dfx has incurred losses and negative cash
flows from operations which raise substantial doubt about 3dfx's ability to
continue as a going concern. Management's plans in regards to these matters are
also described in Note 14. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

PricewaterhouseCoopers LLP

San Jose, California
February 29, 2000 except for Note 13, which is as of March 27, 2000 and Note 14,
which is as of December 15, 2000



<PAGE>   2

                             3DFX INTERACTIVE, INC.

                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                      JANUARY 31,     DECEMBER 31,
                                                                         2000            1998
                                                                      -----------     ------------
<S>                                                                   <C>             <C>
ASSETS
Current Assets:
  Cash and cash equivalents .....................................      $  41,818       $  92,922
  Short-term investments ........................................         24,012           3,058
  Accounts receivable less allowance for doubtful accounts
     of $6,681 and $2,280 .......................................         66,160          36,335
  Inventory .....................................................         45,065          23,991
  Other current assets ..........................................         28,407          12,089
                                                                       ---------       ---------
  Total current assets ..........................................        205,462         168,395
Property and equipment, net .....................................         40,269          15,629
Intangibles .....................................................         12,942              --
Goodwill ........................................................         32,709              --
Other assets ....................................................          4,729              97
                                                                       ---------       ---------
                                                                       $ 296,111       $ 184,121
                                                                       =========       =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Line of credit ................................................      $  25,000       $      --
  Accounts payable ..............................................         60,879          41,104
  Accrued liabilities ...........................................         20,385          16,031
  Current portion of capitalized lease obligations ..............            732             389
                                                                       ---------       ---------
          Total current liabilities .............................        106,996          57,524
                                                                       ---------       ---------
Capitalized lease obligations, less current portion .............          1,881             284
                                                                       ---------       ---------
Commitments (Note 10)
Shareholders' Equity:
  Preferred stock, no par value, 5,000,000 shares
     authorized; none issued and outstanding ....................             --              --
  Common stock, no par value, 50,000,000 shares authorized;
     24,442,370 and 15,671,067 shares issued and
     outstanding ................................................        251,883         126,569
  Warrants ......................................................            242             242
  Deferred compensation .........................................           (172)           (697)
  Accumulated other comprehensive income ........................          1,844              --
  Accumulated deficit ...........................................        (66,563)            199
                                                                       ---------       ---------
          Total shareholders' equity ............................      $ 187,234         126,313
                                                                       ---------       ---------
                                                                       $ 296,111       $ 184,121
                                                                       =========       =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.



                                      F-2
<PAGE>   3

                             3DFX INTERACTIVE, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                            FOR YEAR            FOR YEAR ENDED            FOR THE
                                                                             ENDED                DECEMBER 31,          MONTH ENDED
                                                                           JANUARY 31,      ------------------------    JANUARY 31,
                                                                              2000            1998           1997           1999
                                                                           -----------      ---------      ---------    -----------
<S>                                                                        <C>              <C>            <C>          <C>
Revenues .............................................................      $ 360,523       $ 202,601      $  44,069      $  17,048
Cost of revenues .....................................................        287,872         119,618         22,611         14,527
                                                                            ---------       ---------      ---------      ---------
Gross profit .........................................................         72,651          82,983         21,458          2,521
                                                                            ---------       ---------      ---------      ---------
Operating expenses:
  Research and development ...........................................         66,062          34,045         12,412          3,340
  Selling, general and administrative ................................         63,468          35,441         11,390          4,614
  In-process research and development ................................          4,302              --             --             --
  Restructuring expense ..............................................          4,382              --             --             --
  Amortization of goodwill and intangibles ...........................         10,228              --             --             --
                                                                            ---------       ---------      ---------      ---------
          Total operating expenses ...................................        148,442          69,486         23,802          7,954
                                                                            ---------       ---------      ---------      ---------
Income (loss) from operations ........................................        (75,791)         13,497         (2,344)        (5,433)
Interest and other income, net .......................................          2,180          15,869            630            322
                                                                            ---------       ---------      ---------      ---------
Income (loss) before income taxes ....................................        (73,611)         29,366         (1,714)        (5,111)
Provision (benefit) for income taxes .................................        (10,324)          7,663             --         (1,636)
                                                                            ---------       ---------      ---------      ---------
Net income (loss) ....................................................      $ (63,287)      $  21,703      $  (1,714)     $  (3,475)
                                                                            =========       =========      =========      =========
Net income (loss) per share:
  Basic ..............................................................      $   (2.81)      $    1.45      $   (0.16)     $    (.22)
                                                                            =========       =========      =========      =========
  Diluted ............................................................      $   (2.81)      $    1.33      $   (0.16)     $    (.22)
                                                                            =========       =========      =========      =========
Shares used in net income (loss) per share calculations (Note 1):
  Basic ..............................................................         22,536          14,917         10,767         15,641
                                                                            ---------       ---------      ---------      ---------
  Diluted ............................................................         22,536          16,353         10,767         15,641
                                                                            ---------       ---------      ---------      ---------
</TABLE>


   The accompanying notes are an integral part of these financial statements.



                                      F-3
<PAGE>   4

                             3DFX INTERACTIVE, INC.
                       STATEMENTS OF SHAREHOLDERS' EQUITY
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                       CONVERTIBLE
                                                     PREFERRED STOCK                 COMMON STOCK
                                              ----------------------------    ---------------------------
                                                 SHARES          AMOUNT         SHARES          AMOUNT          WARRANTS
                                              ------------    ------------    -----------     -----------     ------------
<S>                                           <C>             <C>             <C>             <C>             <C>
Balance at December 31, 1996 .............       6,951,692    $     28,701      1,890,013     $     1,626     $        353
Issuance of Series C Convertible
 Preferred Stock in January 1997 at
 $7.50 per share, less issuance
 costs ...................................          70,167             521             --              --               --
Conversion of preferred stock to
 common stock ............................      (7,021,859)        (29,222)     7,021,859          29,222               --
Issuance of common stock in
 connection with the initial public
 offering, less issuance costs ...........              --              --      3,450,000          34,336               --
Issuance of common stock under
 stock option and purchase plans .........              --              --        214,757             413               --
Common stock repurchased .................              --              --       (104,246)             (9)              --
Exercise of warrants to purchase
 common stock ............................              --              --         94,247             714             (329)
Issuance of warrant to purchase
 common stock ............................              --              --             --              --              218
Repayment of notes receivable from
 shareholders ............................              --              --             --              --               --
Deferred compensation ....................              --              --             --             415               --
Amortization of deferred
 compensation ............................              --              --             --              --               --
Net loss .................................              --              --             --              --               --
                                              ------------    ------------    -----------     -----------     ------------
Balance at December 31, 1997 .............              --              --     12,566,630          66,717              242
Issuance of common stock in
 connection with public offering,
 less issuance costs .....................              --              --      2,463,140          54,752               --
Issuance of common stock under
 stock option and purchase plans .........              --              --        643,451           2,301               --
Common stock repurchased .................              --              --         (2,154)             (1)              --
Tax benefit related to exercise of
 stock options ...........................              --              --             --           2,800               --
Amortization of deferred
 compensation ............................              --              --             --              --               --
Net income ...............................              --              --             --              --               --
                                              ------------    ------------    -----------     -----------     ------------
Balance at December 31, 1998 .............              --              --     15,671,067         126,569              242
Issuance of common stock under
 stock option plan .......................              --              --         44,815             140               --
Amortization of deferred
 compensation ............................              --              --             --              --               --
Net loss .................................              --              --             --              --               --
                                              ------------    ------------    -----------     -----------     ------------
Balance at January 31, 1999 ..............              --              --     15,715,882         126,709              242
Issuance of common stock under
 stock option and purchase plans .........              --              --        977,235           4,899               --
Common stock repurchased .................              --              --       (517,501)         (6,775)              --
Amortization of deferred
 compensation ............................              --              --             --              --               --
STB acquisition ..........................              --              --      8,266,754         127,050               --
Components of comprehensive income (loss):
   Net loss ..............................              --              --             --              --               --
   Unrealized gain on
     investments
Total comprehensive income
 (loss) ..................................              --              --             --              --               --
                                              ------------    ------------    -----------     -----------     ------------
Balance at January 31, 2000 ..............              --              --     24,442,370     $   251,883     $        242
                                              ============    ============    ===========     ===========     ============
</TABLE>

<TABLE>
<CAPTION>
                                                                               ACCUMULATED       RETAINED
                                                                                  OTHER          EARNINGS/
                                                 NOTES          DEFERRED      COMPREHENSIVE    (ACCUMULATED
                                               RECEIVABLE     COMPENSATION        INCOME         DEFICIT)          TOTAL
                                              ------------    ------------    -------------    ------------     -----------
<S>                                           <C>             <C>             <C>              <C>              <C>
Balance at December 31, 1996 .............    $        (19)   $     (1,250)              --    $    (19,790)    $     9,621
Issuance of Series C Convertible
 Preferred Stock in January 1997 at
 $7.50 per share, less issuance
 costs ...................................              --              --               --              --             521
Conversion of preferred stock to
 common stock ............................              --              --               --              --              --
Issuance of common stock in
 connection with the initial public
 offering, less issuance costs ...........              --              --               --              --          34,336
Issuance of common stock under
 stock option and purchase plans .........              --              --               --              --             413
Common stock repurchased .................              --              --               --              --              (9)
Exercise of warrants to purchase
 common stock ............................              --              --               --              --             385
Issuance of warrant to purchase
 common stock ............................              --              --               --              --             218
Repayment of notes receivable from
 shareholders ............................              19              --               --              --              19
Deferred compensation ....................              --            (415)              --              --              --
Amortization of deferred
 compensation ............................              --             484               --              --             484
Net loss .................................              --              --               --          (1,714)         (1,714)
                                              ------------    ------------     ------------    ------------     -----------
Balance at December 31, 1997 .............              --          (1,181)              --         (21,504)         44,274
Issuance of common stock in
 connection with public offering,
 less issuance costs .....................              --              --               --              --          54,752
Issuance of common stock under
 stock option and purchase plans .........              --              --               --              --           2,301
Common stock repurchased .................              --              --               --              --              (1)
Tax benefit related to exercise of
 stock options ...........................              --              --               --              --           2,800
Amortization of deferred
 compensation ............................              --             484               --              --             484
Net income ...............................              --              --               --          21,703          21,703
                                              ------------    ------------     ------------    ------------     -----------
Balance at December 31, 1998 .............              --            (697)              --             199         126,313
Issuance of common stock under
 stock option plan .......................              --              --               --              --             140
Amortization of deferred
 compensation ............................              --              40               --              --              40
Net loss .................................              --              --               --          (3,475)         (3,475)
                                              ------------    ------------     ------------    ------------     -----------
Balance at January 31, 1999 ..............              --            (657)              --          (3,276)        123,018
Issuance of common stock under
 stock option and purchase plans .........              --              --               --              --           4,899
Common stock repurchased .................              --              --               --              --          (6,775)
Amortization of deferred
 compensation ............................              --             484               --              --             484
STB acquisition ..........................              --              --               --              --         127,050
Components of comprehensive income (loss):
   Net loss ..............................              --              --               --         (63,287)        (63,287)
   Unrealized gain on
     investments .........................              --              --            1,844              --           1,844
Total comprehensive income
 (loss) ..................................              --              --               --              --         (61,443)
                                               ------------    ------------     ------------    ------------     -----------
Balance at January 31, 2000 ..............    $         --    $       (172)    $      1,844    $    (66,563)    $   187,234
                                              ============    ============     ============    ============     ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.



                                      F-4
<PAGE>   5

                             3DFX INTERACTIVE, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                                                      ONE
                                                                             FISCAL YEAR ENDED                       MONTH
                                                               ----------------------------------------------        ENDED
                                                               JANUARY 31,      DECEMBER 31,     DECEMBER 31,     JANUARY 31,
                                                                  2000             1998             1997             1999
                                                               -----------      ------------     ------------     -----------
<S>                                                            <C>              <C>              <C>              <C>
Cash flows from operating activities:
Net income (loss) ......................................        $(63,287)        $ 21,703         $ (1,714)        $ (3,475)
Adjustments to reconcile net loss to net cash used
  in operating activities:
  Depreciation .........................................          14,930            5,249            2,238              675
  Amortization .........................................          10,228               --               --               --
  Write-off of acquired in-process R&D .................           4,302               --               --               --
  Stock compensation ...................................             484              484              484               40
  Increase (decrease) in allowance for doubtful
    accounts ...........................................            (646)           1,972              230            4,449
  Changes in assets and liabilities:
    Accounts receivable ................................           7,087          (24,920)         (12,224)           4,341
    Inventory ..........................................           5,339          (20,146)           1,115            6,008
    Other assets .......................................          (5,318)          (9,456)          (2,275)             327
    Accounts payable ...................................           1,765           28,531           10,337          (11,195)
    Accrued and other long-term liabilities ............          (8,340)          13,346            1,554             (869)
                                                                --------         --------         --------         --------
  Net cash provided by/(used in) operating
    activities .........................................         (33,456)          16,763             (255)             301
                                                                --------         --------         --------         --------
Cash flows from investing activities:
  Maturities (purchases) of short-term investments,
    net ................................................            (893)           2,926           (5,984)         (18,330)
  Acquisition of STB Systems ...........................          21,243               --               --               --
  Purchases of property and equipment ..................         (25,733)         (13,844)          (4,730)          (1,459)
                                                                --------         --------         --------         --------
  Net cash used in investing activities ................          (5,383)         (10,918)         (10,714)         (19,789)
                                                                --------         --------         --------         --------
Cash flows from financing activities:
  Proceeds from issuance of convertible
    preferred stock, net ...............................              --               --              521               --
  Proceeds from initial public offerings, net ..........              --           54,752           34,336               --
  Proceeds from issuance (repurchase) of
    common stock, net ..................................          (1,876)           2,300              423              140
  Tax benefit related to exercise of stock
    options ............................................              --            2,800               --               --
  Proceeds from exercise of warrants ...................              --               --              385               --
  Principal payments of capitalized lease
    obligations, net ...................................            (358)            (935)            (751)             108
  Proceeds (payments) on line of credit, net ...........           9,209             (777)            (299)              --
                                                                --------         --------         --------         --------
  Net cash provided by financing activities ............           6,975           58,140           34,615              248
                                                                --------         --------         --------         --------
Net increase in cash and cash equivalents ..............         (31,864)          63,985           23,646          (19,240)
Cash and cash equivalents at beginning of period .......          73,682           28,937            5,291           92,922
                                                                --------         --------         --------         --------
Cash and cash equivalents at end of period .............        $ 41,818         $ 92,922         $ 28,937         $ 73,682
                                                                ========         ========         ========         ========
SUPPLEMENTAL INFORMATION:
  Cash paid during the period for interest .............        $  1,289         $    141         $    263         $      3
  Cash paid during the period for income taxes .........           2,361            6,200               --               --
  Acquisition of property and equipment under
    capitalized lease obligations ......................              --               --              842               --
</TABLE>


The accompanying notes are an integral part of these financial statements.



                                      F-5
<PAGE>   6

                             3DFX INTERACTIVE, INC.


                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 -- 3DFX AND ITS SIGNIFICANT ACCOUNTING POLICIES:

    3dfx

        3dfx Interactive Inc. ("3dfx") was incorporated in California on August
24, 1994. 3dfx develops high performance, cost-effective graphics chips,
graphics boards, software and related technology that enables a highly
immersive, interactive and realistic 3D experience across multiple hardware
platforms. 3dfx has subsidiaries in the United States, Mexico, and other key
markets in the world. The consolidated financial statements include the
financial statements of 3dfx and its wholly owned subsidiaries. All significant
intercompany transactions and accounts have been eliminated.

        In March 1999, the Board of Directors determined that it would be in the
best interests of 3dfx and its shareholders to change its fiscal year from a
December fiscal year to a year beginning on February 1 and ending on January 31
("January fiscal year"), beginning on February 1, 1999. Accordingly, 3dfx has
separately presented the results of operations and cash flows for the one month
period ended January 31, 1999.

    Use of estimates

        The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

    Revenue recognition

        Revenue from product sales is generally recognized upon product
shipment. Revenue resulting from development contracts is recognized under the
percentage of completion method based upon costs incurred relative to total
contract costs or when the related contractual obligations have been fulfilled
and fees are billable. Costs associated with development contracts are included
in research and development. Fiscal 1997 includes $1.7 million of development
revenue and no amounts were recognized in the other periods presented.

    Cash equivalents and investments

        3dfx considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. At January 31, 2000 and
December 31, 1998, approximately $42,444,000 and $85,299,000, respectively, of
money market funds and commercial paper instruments, the fair value of which
approximate cost, are included in cash and cash equivalents.

        Investments in debt securities are classified as "available for sale"
and have maturities greater than three months from the date of acquisition.
Investments classified as "available for sale" are reported at fair value with
unrealized gains and losses, net of related tax, if any, reported as a separate
component of shareholders' equity. Unrealized gains were $1.8 million during
fiscal year ended January 31, 2000. Unrealized gains and losses were not
material during the years ended December 31, 1998 and 1997 or during the one
month period ended January 31, 1999.

   Concentration of credit risk

        Financial instruments that potentially subject 3dfx to significant
concentrations of credit risk consist principally of cash equivalents,
short-term investments and accounts receivable.



                                      F-6
<PAGE>   7

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


        3dfx invests primarily in money market accounts, commercial paper
instruments and term notes. Cash equivalents and short-term investments are
maintained with high quality institutions and their composition and maturities
are regularly monitored by management.

        3dfx performs ongoing credit evaluations of its customers' financial
condition and maintains an allowance for uncollectible accounts receivable based
upon the expected collectibility of all accounts receivable. One customer
accounted for 11.4% of accounts receivable at January 31, 2000. Four customers
account for 25%, 24%, 11% and 10% of accounts receivable at December 31, 1998.

        The following table summarizes the revenues from customers in excess of
10% of the total revenues:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED
                                                      ------------------------------------        ONE MONTH
                                                                           DECEMBER 31,             ENDED
                                                      JANUARY 31,      -------------------       JANUARY 31,
                                                         2000          1998           1997           1999
                                                      -----------      ----           ----       -----------
<S>                                                   <C>              <C>            <C>        <C>
A ...........................................              13%           --             --             --
B ...........................................              --            32%            37%            --
C ...........................................              --            26%             0%            24%
D ...........................................              --            16%            16%            25%
E ...........................................              --            --             --             12%
</TABLE>


    Inventory

        Inventory is stated at the lower of cost or market, cost being
determined under the first-in, first-out method.

    Property and equipment

        Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, generally three years or less. Assets held under
capital leases are amortized using the straight-line method over the term of the
lease or estimated useful lives, whichever is shorter.

        Long-lived assets held and used by 3dfx are reviewed for impairment
whenever events or changes in circumstances indicate that their net book value
may not be recoverable. An impairment loss is recognized if the sum of the
expected future cash flows (undiscounted and before interest) from the use of
the asset is less than the net book value of the asset. The amount of the
impairment loss will generally be measured as the difference between net book
values of the assets and their estimated fair values. 3dfx believes that no
long-lived assets were impaired at January 31, 2000 and December 31, 1998.

    Research and software development costs

        Research and development costs are charged to operations as incurred.
Software development and prototype costs incurred prior to the establishment of
technological feasibility are included in research and development and are
expensed as incurred. Software development costs incurred subsequent to the
establishment of technological feasibility through the period of general market
availability of the product are capitalized, if material. To date, all software
development costs incurred subsequent to the establishment of technological
feasibility have been expensed as incurred due to their immateriality.

    Stock-based compensation

        3dfx accounts for stock-based compensation in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." In
January 1996, 3dfx adopted the disclosure



                                      F-7
<PAGE>   8

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


requirements of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock Based Compensation" (see Note 8).

    Comprehensive Income

        Other comprehensive income for the fiscal year ended January 31, 2000
was $1.8 million, primarily representing unrealized gains from investing
activities, resulting in comprehensive income (loss) of $(61.4) million. There
was no comprehensive income for the fiscal year ended December 31, 1998 nor for
the one month period ended January 31, 1999.

    Earnings (loss) per share

        Basic earnings (loss) per share is computed using the weighted average
number of common shares outstanding during the periods. Diluted earnings (loss)
per share is computed using the weighted average number of common and
potentially dilutive common shares during the periods, except those that are
antidilutive. Reconciliations of the numerators and denominators of the basic
and diluted per share computations are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                          ONE MONTH
                                                                         FISCAL YEAR ENDED                  ENDED
                                                             ---------------------------------------     JANUARY 31,
                                                               2000           1998           1997           1999
                                                             ---------       --------      ---------     -----------
<S>                                                          <C>             <C>           <C>             <C>
Net income (loss) available to common
  shareholders (numerator) ............................      $ (63,287)      $ 21,703      $  (1,714)      $ (3,475)
                                                             ---------       --------      ---------       --------
Weighted average shares outstanding (denominator
  for basic computations) .............................         22,536         14,917         10,767         15,641
                                                             =========       ========      =========       ========
Effect of dilutive securities-common stock
  equivalents .........................................             --          1,436             --             --
Weighted average shares outstanding (denominator
  for diluted computation) ............................         22,536         16,353         10,767         15,641
                                                             =========       ========      =========       ========
Basic income (loss) per share .........................      $   (2.81)      $   1.45      $   (0.16)      $  (0.22)
                                                             =========       ========      =========       ========
Diluted income (loss) per share .......................      $   (2.81)      $   1.33      $   (0.16)      $  (0.22)
                                                             =========       ========      =========       ========
</TABLE>


        During the fiscal year ended January 31, 2000, the one month period
ended January 31, 1999 and the fiscal years ended December 31, 1998 and 1997,
options to purchase approximately 6,484,389, 3,499,000, 560,392 and 2,505,984
shares and warrants to purchase approximately 36,960, 36,960, 36,960 and 93,636
shares, respectively, were outstanding but are not included in the computation
because they are antidilutive.

    Recent accounting pronouncements

        In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for
Derivative Instruments and Hedging Activities." SFAS 133, as amended, requires
that all derivative instruments be recorded on the balance sheet at their fair
market value. Changes in the fair market value of derivatives are recorded each
period in current earnings or comprehensive income, depending on whether a
derivative is designed as part of a hedge transaction, and if so, the type of
hedge transaction. Substantially all of 3dfx's revenues and the majority of its
costs are denominated in U.S. dollars, and to date 3dfx has not entered into any
derivative contracts. 3dfx does not expect that the adoption of SFAS 133 will
have a material effect on its financial statements.



                                      F-8
<PAGE>   9

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


The effective date of SFAS 133, as amended, is for fiscal quarters of fiscal
years beginning after June 15, 2000.

        In December 1999, the Securities and Exchange Commission staff released
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statement," which provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. The application of SAB No. 101
did not have a material impact on 3dfx's financial statements.

NOTE 2 -- ACQUISITION OF STB SYSTEMS, INC.

        In May 1999, 3dfx completed the STB merger. As a result of the merger,
STB is now a wholly owned subsidiary of 3dfx. The merger was accounted for under
the purchase method of accounting. The purchase price of $139.3 million included
$116.1 million of stock issued at fair value (fair value being determined as the
average price of the 3dfx stock for a period of three days before and after the
announcement of the merger), $9.9 million in STB stock option costs (being
determined under both the Black Sholes formula and in accordance with the merger
agreement) and $13.3 million in estimated expenses of the transaction. The
purchase price was allocated as follows: $85.6 million to the estimated fair
value of STB net tangible assets purchased (as of May 13, 1999), $(7.6) million
to establish deferred tax liabilities associated with the certain intangibles
acquired, $4.3 million to purchased in-process research and development, $11.4
million to purchased existing technology, $4.4 million to trademarks, $2.3
million to workforce-in-place, $1.0 million to executive covenants and $37.9
million to goodwill. The allocation of the purchase price to intangibles was
based upon an independent, third party appraisal and management's estimates. The
intangible assets and goodwill acquired have estimated useful lives and
estimated first year amortization, as follows:

<TABLE>
<CAPTION>
                                                                         ESTIMATED     FISCAL 2000
                                                           AMOUNT       USEFUL LIFE    AMORTIZATION
                                                         -----------    -----------    ------------
<S>                                                      <C>            <C>            <C>
Purchased existing technology:
  1.5 year life......................................    $ 6,475,000     1.5 years      $3,540,000
  3 year life........................................      4,966,000       3 years       1,357,000
Trademarks...........................................      4,406,000       5 years         722,000
Workforce-in-place...................................      2,250,000       5 years         369,000
Executive covenants..................................      1,000,000       5 years         164,000
Goodwill.............................................     37,900,000       5 years       5,190,000
</TABLE>

        The value assigned to purchased in-process research and development
("IPR&D") was determined by identifying research projects in areas for which
technological feasibility had not been established. These include projects for
Voodoo3 as well as other specialized technologies totaling $4.3 million. The
value was determined by estimating the expected cash flows from the projects
once commercially viable, discounting the net cash flows back to their present
value and then applying a percentage of completion to the calculated value as
defined below.

        Net Cash Flows. The net cash flows from the identified projects are
based on 3dfx's estimates of revenues, cost of sales, research and development
costs, selling, general and administrative costs, royalty costs and income taxes
from those projects. These estimates are based on the assumptions mentioned
below. The research and development costs included in the model reflect costs to
sustain projects, but exclude costs to bring in-process projects to
technological feasibility. The estimated revenues are based on management
projections of each in-process project and the business projections were
compared and found to be in line with industry analysts' forecasts of growth in
substantially all of the relevant markets. Estimated total revenues from the
IPR&D product areas are expected to peak in the year ending December 31, 1999
and decline from 2000 into 2001 as other new products are expected to become



                                      F-9
<PAGE>   10

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


available. These projections are based on our estimates of market size and
growth, expected trends in technology and the nature and expected timing of new
project introductions of our competitors and us.

        Gross Margins. Projected gross margins associated with the identified
projects approximate STB's recent historical performance and are in line with
comparable industry margins. The estimated selling, general and administrative
costs are consistent with STB's historical cost structure, which is in line with
industry averages at approximately 10% of revenues. Research and development
costs are consistent with STB's historical cost structure.

        Royalty Rate. 3dfx applied a royalty charge of 25% of operating income
for each in-process project to attribute value for dependency on predecessor
core technologies.

        Discount Rate. Discounting the net cash flows back to their present
value is based on the industry weighted average cost of capital ("WACC"). The
industry WACC is approximately 14%. The discount rate used in discounting the
net cash flows from IPR&D is 20%, a 600 basis point increase from the industry
WACC. This discount rate is higher than the industry WACC due to inherent
uncertainties surrounding the successful development of the IPR&D, market
acceptance of the technology, the useful life of such technology and the
uncertainty of technological advances which could potentially impact the
estimates described above.

        Percentage of Completion. The percentage of completion for each project
was determined using costs incurred to date on each project as compared to the
remaining research and development to be completed to bring each project
technological feasibility. The percentage of completion varied by individual
project ranging from 50% to 91%. If the projects discussed above are not
successfully developed, the sales and profitability of the combined company may
be adversely affected in future periods.

        The following represents the unaudited pro forma results of operations
of 3dfx for fiscal 2000 and 1998 as if the acquisition was consummated on
January 1, 1998. The unaudited pro forma results of operations include certain
pro forma adjustments, including the amortization of intangible assets relating
to the acquisition. The unaudited pro forma results of operations are prepared
for comparative purposes only and do not necessarily reflect the results that
would have occurred had the acquisition occurred at January 1, 1998 or the
results that may occur in the future.

<TABLE>
<CAPTION>
                                                                JANUARY 31,    DECEMBER 31,
                                                                   2000            1998
                                                                -----------    ------------
<S>                                                             <C>            <C>
Revenues....................................................     $441,312        $467,441
Net income (loss)...........................................     $(81,061)       $  9,110
Basic net income (loss) per share...........................     $  (3.39)       $   0.40
Diluted net income (loss) per share.........................     $  (3.39)       $   0.37
</TABLE>



                                      F-10
<PAGE>   11

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


NOTE 3 -- BALANCE SHEET COMPONENTS (IN THOUSANDS):

<TABLE>
<CAPTION>
                                                               JANUARY 31,    DECEMBER 31,
                                                                  2000            1998
                                                               -----------    ------------
<S>                                                            <C>            <C>
Inventory:
  Raw material..............................................     $ 26,708        $ 2,891
  Work-in-progress..........................................        8,940         16,565
  Finished goods............................................     $  9,417          4,535
                                                                 --------        -------
                                                                 $ 45,065        $23,991
                                                                 --------        -------
Property and equipment:
  Computer equipment........................................     $ 27,108        $15,539
  Purchased computer software...............................       18,035          5,253
  Furniture and equipment...................................       28,113          3,350
                                                                 --------        -------
                                                                   73,256         24,142
  Less: Accumulated depreciation and amortization...........      (32,987)        (8,513)
                                                                 --------        -------
                                                                 $ 40,269        $15,629
                                                                 ========        =======
</TABLE>


        Assets acquired under capitalized lease obligations are included in
property and equipment and totaled $5,529,000 and $2,529,000 with related
accumulated amortization of $4,120,000 and $2,146,000 at January 31, 2000 and
December 31, 1998, respectively.

<TABLE>
<CAPTION>
                                                               JANUARY 31,    DECEMBER 31,
                                                                  2000            1998
                                                               -----------    ------------
<S>                                                            <C>            <C>
Accrued liabilities:
  Income taxes payable......................................     $  4,807        $ 5,788
  Accrued salaries, wages and benefits......................        4,150          2,839
  Sales returns reserves....................................        1,245          2,938
  Accrued marketing costs...................................        3,104             --
  Other accrued liabilities.................................        7,079          4,466
                                                                 --------        -------
                                                                 $ 20,385        $16,031
                                                                 ========        =======
</TABLE>


NOTE 4 -- RESTRUCTURING CHARGES:

        During the fiscal year ended January 31, 2000, 3dfx incurred
restructuring expenses totaling approximately $4,382,000. Approximately
$2,552,000 of this amount related to downsizing the expense levels of 3dfx given
the 3dfx's current financial losses, and $1,830,000 related to a one-time
reduction in workforce related to the merger with STB.

NOTE 5 -- DEBT:

        3dfx has a line of credit agreement with a bank, which provides for
maximum borrowings in an amount up to the lesser of 80% of eligible accounts
receivable or $25,000,000. Borrowings under the line are secured by $25,000,000
of cash and short-term investments and all of 3dfx's owned assets and bear
interest at Libor plus 100 basis points (6.82% as of January 31, 2000). The
agreement requires that 3dfx maintain certain levels of tangible net worth and
generally prohibits 3dfx from paying cash dividends. As of January 31, 2000,
3dfx was in compliance with its covenants. The line of credit expires on
December 19, 2000. At January 31, 2000, $25,000,000 was outstanding under this
line of credit.



                                      F-11
<PAGE>   12

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


        3dfx has a $3,000,000 term loan which is payable in 60 monthly
installments of principal and interest beginning on November 1, 1997. The term
loan bears interest at Libor plus 250 basis points (8.32% as of January 31,
2000). At January 31, 2000, $1,944,000 was outstanding under the term loan.

        3dfx has a lease line of credit with a bank, which provides for the
purchase of up to $5,000,000 of property and equipment. Borrowings under this
line is secured by all of 3dfx's owned assets and bears interest at the bank's
prime rate plus 0.75% per annum. The agreement requires that 3dfx maintain
certain financial ratios and levels of tangible net worth, profitability and
liquidity. As of December 31, 1998, 3dfx was in compliance with its covenants.
The equipment line of credit expires in December 2001. At January 31, 2000,
there were no borrowings outstanding under this equipment line of credit.

NOTE 6 -- DEVELOPMENT CONTRACT:

        In February 1997, 3dfx entered into a development and license agreement
with Sega Enterprises, Ltd., under which 3dfx is entitled to receive development
contract revenues and royalties based upon a cumulative volume of units sold by
Sega which include 3dfx's product. 3dfx recognized development contract revenues
of $1,817,000 in the year ended December 31, 1997, representing a non-refundable
amount due for the delivery of certain engineering designs and revenue
recognized under the percentage of completion method of accounting. 3dfx has no
further obligations to Sega with regard to the $1,817,000 of development
contract revenue recognized. 3dfx did not earn any royalty revenue in the year
ended December 31, 1997. Costs incurred during the period relating to this
contract are included in research and development expense.

        In July 1997, Sega terminated the development and license agreement with
3dfx. In August 1997, 3dfx filed a lawsuit against Sega alleging breach of
contract, interference with the contract, misrepresentation, unfair competition
and threatened misappropriation of trade secrets. In September 1998, 3dfx
settled its lawsuit relating to this agreement and has accounted for this
settlement in its Consolidated Statements of Operations in the category,
Interest and Other Income, net.

NOTE 7 -- SHAREHOLDERS' EQUITY:

    Common stock

        3dfx has issued 1,646,250 shares of its common stock to founders and
investors. The shares either vested immediately or vested on various dates
through 1999. 3dfx can buy back unvested shares at the original price paid by
the purchasers in the event the purchasers' employment with 3dfx is terminated
for any reason. There were no such repurchases in fiscal 2000 or 1998.

        In addition, during the fiscal years ended January 31, 2000 and December
31, 1998, certain employees exercised options to purchase 22,041 and 44,640
shares of common stock, respectively, which are subject to a right of repurchase
by 3dfx at the original share issuance price. The repurchase right lapses over a
period generally ranging from two to four years. During the fiscal years ended
January 31, 2000 and December 31, 1998, 12,501 and 2,154 shares of common stock,
respectively, were repurchased.

        On June 16, 1999, 3dfx announced a stock repurchase program, whereby
3dfx was authorized by its board of directors to repurchase shares of its common
stock in the open market. In accordance with the program, 3dfx subsequently
repurchased 505,000 shares of its common stock for approximately $6.8 million.

        As of January 31, 2000 and December 31, 1998, approximately 8,917 and
44,640 shares, respectively, of common stock were subject to these repurchase
rights.



                                      F-12
<PAGE>   13

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


        In June 1997, 3dfx completed its initial public offering and issued
3,000,000 shares of its common stock to the public at a price of $11.00 per
share. 3dfx received cash of approximately $30,400,000, net of underwriting
discounts and commissions. Upon the closing of initial public offering, all
outstanding shares of 3dfx's then outstanding convertible preferred stock were
automatically converted into shares of common stock. On July 25, 1997, 3dfx's
underwriter exercised an option to purchase an additional 450,000 shares of
common stock at a price of $11.00 per share to cover over-allotments. 3dfx
received cash of approximately $3,900,000, net of underwriting discounts and
commissions.

        In March 1998, 3dfx completed its secondary public offering of 2,900,000
shares of common stock at a price of $23.75 per share. Of the 2,900,000 shares
offered, 2,028,140 were sold by 3dfx and 871,860 were sold by selling
shareholders. 3dfx received cash of approximately $45,500,000, net of
underwriting discounts and commissions and other offering costs. 3dfx did not
receive any of the proceeds from the sale of shares by the selling shareholders.
On March 23, 1998, the 3dfx's underwriters exercised an option to purchase an
additional 435,000 shares of common stock at a price of $23.75 per share to
cover over-allotments. 3dfx received cash of approximately $9,300,000, net of
underwriting discounts and commissions and other offering costs.

    Convertible preferred stock

        At December 31, 1996, the aggregate authorized number of preferred
shares was 7,269,018, of which 2,794,742, 2,818,412 and 1,655,864 were
designated as Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock, and Series C Convertible Preferred Stock, respectively.

        Each share of Series A, B and C Convertible Preferred Stock outstanding
was converted into one share of common stock upon the completion of the
underwritten initial public offering (IPO) of common stock in June 1997. The
holders of Series A, B and C Convertible Preferred Stock had voting rights equal
to common stock on an if-converted basis.

    Warrants

        In March 1995, 3dfx issued a warrant to a vendor to purchase 43,750
shares of Series A Convertible Preferred Stock at $2.00 per share. The warrant
was deemed by management to have a nominal value at the date of grant. Upon
completion of 3dfx's IPO, this warrant was exchanged for a warrant to purchase
common stock. This warrant has been exercised in full and exchanged for 43,750
shares of common stock.

        In January 1996, 3dfx entered into a line of credit. To secure the line,
3dfx issued to the lessor a warrant to purchase 19,886 shares of Series B
Convertible Preferred Stock at an exercise price of $4.40. The warrant expires
on January 1, 2003. The warrant was deemed by management to have a nominal value
at the date of grant. Upon completion of 3dfx' IPO, this warrant was exchanged
for a warrant to purchase common stock. A portion of this warrant has been
executed and exchanged for 12,926 shares of 3dfx common stock. 3dfx has reserved
6,960 shares of common stock for the exercise of this warrant.

        In 1996, 3dfx issued to a university a warrant to purchase 5,000 shares
of Series C Convertible Preferred Stock at an exercise price of $7.50 per share.
This warrant was deemed to have a value of approximately $40,285 at the date of
grant and the related cost was recognized as other expense and research and
development expense, respectively, during 1996. The warrant for 5,000 shares
expires on December 31, 2001. Upon completion of 3dfx's IPO, the warrant for
5,000 shares was exchanged for a warrant to purchase common stock. 3dfx has
reserved 5,000 shares of common stock for the exercise of this warrant.

        On December 3, 1997, 3dfx issued a warrant to purchase 25,000 shares of
common stock at a exercise price of $13.875 per share in conjunction with
developing a relationship with another company. The



                                      F-13
<PAGE>   14

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


warrant is fully exercisable and expires December 3, 2002. 3dfx valued the
warrant under the "Black-Scholes" formula at approximately $218,000. The warrant
value will be amortized over a one-year period as a cost of revenue. 3dfx has
reserved 25,000 shares of common stock for the exercise of this warrant.

        As of January 31, 2000, 3dfx had reserved 36,960 shares of common stock
for the exercise of warrants.

NOTE 8 -- STOCK OPTION PLANS:

    The 1995 Plan

        In May 1995, 3dfx adopted a Stock Plan (the "1995 Plan") which provides
for granting of incentive and nonqualified stock options to employees,
consultants and directors of 3dfx. In May 1998 and May 1999, 3dfx's shareholders
approved an increase of 1,700,000 and 2,000,000 shares, respectively, of Common
Stock to be reserved for issuance under the 1995 Plan. As of January 31, 2000,
6,375,000 shares of Common Stock have been reserved for issuance under the 1995
Plan.

        Options granted under the 1995 Plan are generally for periods not to
exceed ten years, and are granted at prices not less than 100% and 85%, for
incentive and nonqualified stock options, respectively, of the fair market value
on the date of grant. Incentive stock options granted to shareholders who own
greater than 10% of the outstanding stock are for periods not to exceed five
years, and must be issued at prices not less than 110% of the fair market value
of the stock on the date of grant. Options granted under the 1995 Plan generally
vest 25% on the first anniversary of the grant date and 1/48th of the option
shares each month thereafter, with full vesting occurring on the fourth
anniversary of the grant date.

    The 1997 Plan

        In October 1997, 3dfx adopted the 1997 Supplementary Stock Plan (the
"1997 Plan"), which provides for granting of nonqualified stock options to
employees (excluding officers, consultants and directors) of 3dfx. Under the
1997 Plan, 1,200,000 shares of Common Stock have been reserved for issuance at
January 31, 2000.

        Options granted under the 1997 Plan are generally for periods not to
exceed ten years and are granted at the fair market value of the stock on the
date of grant. Options granted under the 1997 Plan generally vest 25% on the
first anniversary of the grant date and 1/48th of the option shares each month
thereafter, with full vesting occurring on the fourth anniversary of the grant
date.

    The 1999 Plan

        In July 1999, 3dfx adopted the 1999 Supplementary Stock Plan (the "1999
Plan"), which provides for granting of nonqualified stock options to employees
(excluding officers, consultants and directors) of 3dfx and reserved 1,000,000
shares of Common Stock for issuance under the 1999 Plan. At January 31, 2000,
1,000,000 shares of Common Stock have been reserved for issuance under the 1999
Plan.

        Options granted under the 1999 Plan are generally for periods not to
exceed ten years and are granted at the fair market value of the stock on the
date of grant. Options granted under the 1999 Plan generally vest 25% on the
first anniversary of the grant date and 1/48th of the option shares each month
thereafter, with full vesting occurring on the fourth anniversary of the grant
date.



                                      F-14
<PAGE>   15

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


    Directors' Option Plan

        In March 1997, 3dfx adopted a 1997 Directors' Option Plan. Under this
plan options to purchase 150,000 shares of Common Stock may be granted. The plan
provides that options may be granted at a price not less than fair value of a
share at the date of grant. The Director's Option Plan provides for an initial
option grant to purchase 12,500 shares of Common Stock to each new non-employee
director of 3dfx at the date he or she becomes a director. Each non-employee
director and Chairman of the Board of Directors will annually be granted an
option to purchase 5,000 and 10,000 shares of Common Stock, respectively,
beginning with the 1998 annual meeting of shareholders. If a director serves on
either the Audit Committee or Compensation Committee, he or she will annually be
granted an option to purchase 1,000 shares of Common Stock, respectively,
beginning with the 1997 annual meeting of shareholders. Options granted under
the Director' Plan are generally for ten years and are granted at the fair
market value of the stock on the date of grant. The initial 12,500 option grant
vests at a rate of 1/48 per month following the date of grant. The annual option
grant of 5,000, 10,000 or 1,000 vests at a rate of 1/12 per month following the
date of grant.

        The following is a summary of activity under the 1995 Plan, the 1997
Plan, the 1999 Plan and the Directors' Option Plan during the periods ended
December 31, 1997 and 1998, January 31, 1999, and January 31, 2000:

<TABLE>
<CAPTION>
                                                     OPTIONS                       WEIGHTED
                                                  AVAILABLE FOR      OPTIONS        AVERAGE
                                                      GRANT        OUTSTANDING   EXERCISE PRICE
                                                  -------------    -----------   --------------
<S>                                               <C>              <C>           <C>
Balance at December 31, 1996 ................         218,157        1,538,509       $ 0.54
Additional shares authorized ................       1,274,992               --           --
  Granted ...................................      (1,306,244)       1,306,244       $12.15
  Exercised .................................              --         (180,015)      $ 0.49
  Canceled ..................................         158,754         (158,754)      $ 3.86
  Repurchased ...............................          20,391               --       $ 0.08
                                                   ----------       ----------
Balance at December 31, 1997 ................         366,050        2,505,984       $ 6.38
Additional shares authorized ................       2,400,000               --           --
  Granted ...................................      (3,617,765)       3,617,765       $15.72
  Exercised .................................              --         (478,104)      $ 1.34
  Canceled ..................................       2,098,488       (2,098,488)      $19.16
  Repurchased ...............................           2,154               --       $ 0.27
                                                   ----------       ----------
Balance at December 31, 1998 ................       1,248,927        3,547,157       $ 9.02
  Grants in January 1999 ....................         (83,850)          83,850       $12.38
  Exercises in January 1999 .................              --          (44,815)      $ 3.13
  Cancellations in January 1999 .............          87,192          (87,192)      $ 7.80
                                                   ----------       ----------
Balance at January 31, 1999 .................       1,252,269        3,499,000       $ 9.21
Additional shares authorized ................       3,000,000               --
  Options related to acquisition of STB .....        (566,913)         566,913       $10.72
  Grants ....................................      (4,800,897)       4,800,897       $11.68
  Exercised .................................              --         (692,088)      $ 3.60
  Cancelled .................................       1,690,333       (1,690,333)      $12.46
                                                   ----------       ----------
Balance at January 31, 2000 .................         574,792        6,484,389       $10.92
                                                   ==========       ==========
</TABLE>


        At fiscal 2000, 1998 and 1997, 1,129,810, 768,183 and 471,937
respectively, Common Stock options were vested.



                                      F-15
<PAGE>   16

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


        Prior to 3dfx completing its IPO, 3dfx granted options for the purchase
of 2,460,307 shares of Common Stock to employees at exercise prices ranging from
$0.20 to $12.00 per share. Management calculated deferred compensation of
approximately $1,900,000 related to options granted prior to the completion of
3dfx's IPO. Such deferred compensation will be amortized over the vesting period
of which relating to these options, of which $196,000, $484,000, $484,000 and
$484,000 has been amortized during the years ended December 31, 1996, 1997 and
1998 and January 31, 2000, respectively. Deferred compensation of $40,000 was
amortized for the one month period ended January 31, 1999.

        In October 1998, substantially all outstanding options with an exercise
price in excess of $10.88 per share were canceled and replaced with new options
having an exercise price of $10.88, the fair market value on the date that the
employees accepted the repricing. A total of 1,409,790 options were repriced.
This repricing excluded executive officers. In December 1998, a repricing for
executive officers occurred where substantially all outstanding options with an
exercise price in excess of $13.13 per share were canceled and replaced with new
options having an exercise price of $13.13, the fair market value on the date
that the executive officers accepted the repricing. A total of 330,000 options
were repriced. In both the October and December repricings, any option holder
accepting such offer was not permitted to exercise the repriced option (both
vested and unvested shares) in the first twelve months following the date of the
applicable repricing.

        Information relating to stock options outstanding under the 1995 Plan,
the 1997 Plan, the 1999 Plan and the Directors' Plan at January 31, 2000 is as
follows:

<TABLE>
<CAPTION>
                             OPTIONS OUTSTANDING
                  ------------------------------------------
                                 WEIGHTED                            OPTIONS VESTED
                                  AVERAGE                      --------------------------
                                 REMAINING       WEIGHTED                     WEIGHTED
   RANGE OF         NUMBER      CONTRACTUAL      AVERAGE        NUMBER        AVERAGE
EXERCISE PRICES   OUTSTANDING      LIFE       EXERCISE PRICE    VESTED     EXERCISE PRICE
---------------   -----------   -----------   --------------   ---------   --------------
<S>               <C>           <C>           <C>              <C>         <C>
$ 0.20 -  0.90       227,337       6.53           $ 0.57         195,763       $ 0.55
$ 6.83 -  8.50       398,687       7.05             8.23         238,500         8.09
$         8.88     1,232,250       9.83             8.88              --           --
$         8.91     1,113,200       9.74             8.91              --           --
$ 9.05 - 10.77       472,144       9.27             9.70          78,995        10.24
$        10.88       866,153       8.16            10.88         270,673        10.88
$11.00 - 16.00     1,109,556       8.20            12.74         323,414        12.98
$        17.00       978,750       9.28            17.00              --           --
$17.37 - 23.25        86,312       8.56            20.90          22,465        22.50
--------------     ---------       ----           ------       ---------       ------
         Total     6,484,389       8.89           $10.92       1,129,810       $ 9.29
                   =========       ====           ======       =========       ======
</TABLE>


    Employee Stock Purchase Plan

        In March 1997, 3dfx's board of directors approved an Employee Stock
Purchase Plan. Under this plan, employees of 3dfx can purchase common stock
through payroll deductions. A total of 750,000 shares have been reserved for
issuance under this plan. As of January 31, 2000, 485,228 shares have been
purchased under the Employee Stock Purchase Plan.



                                      F-16
<PAGE>   17

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


    Certain Pro Forma Disclosures

        3dfx accounts for its stock option plans and the Employee Stock Purchase
Plan in accordance with the provisions of APB 25. Had 3dfx recorded compensation
costs based on the estimated grant date fair value, as defined by SFAS 123, for
awards granted under its stock option plans and the Employee Stock Purchase
Plan, 3dfx's net income (loss) and net income (loss) per share would have been:

<TABLE>
<CAPTION>
                                                         YEAR           YEAR ENDED        ONE MONTH
                                                         ENDED         DECEMBER 31,         ENDED
                                                      JANUARY 31,   ------------------    JANUARY 31,
                                                         2000        1998       1997         1999
                                                      -----------   -------    -------    -----------
<S>                                                   <C>           <C>       <C>         <C>
Pro forma net income (loss)........................    $(75,915)    $16,067    $(3,705)    $(3,913)
Pro forma basic net income (loss) per share........    $  (3.37)    $  1.08    $ (0.32)    $ (0.25)
Pro forma diluted net income (loss) per share......    $  (3.37)    $  0.98    $ (0.32)    $ (0.25)
</TABLE>

        The pro forma effect on net income (loss) and net income (loss) per
share for fiscal 2000, 1998 and 1997 is not representative of the pro forma
effect on net income (loss) and net income (loss) per share in future years
because it does not take into consideration pro forma compensation expense
related to grants made prior to 1995.

        For the years ended January 31, 2000, December 31, 1998 and 1997, the
fair value of each option on the date of grant was determined utilizing the
Black-Scholes model.

        The following assumptions were used for the stock option plans and the
Employee Stock Purchase Plan for the years ended January 31, 2000, December 31,
1998 and 1997:

<TABLE>
<CAPTION>
                                           YEAR ENDED      YEAR ENDED
                                           JANUARY 31,    DECEMBER 31,
                                           -----------    -------------
                                              2000        1998     1997
                                           -----------    ----     ----
<S>                                        <C>            <C>      <C>
Stock option plans:
Expected dividend yield ................        --         --         --
Expected stock price volatility ........        70%        70%        70%
Risk free interest rate ................       5.7%       5.1%       5.7%
Expected life (years) ..................       6.5        5.9        4.0
Employee stock purchase plan:
Expected dividend yield ................        --         --         --
Expected stock price volatility ........        70%        70%        70%
Risk free interest rate ................       5.2%       4.8%       5.4%
Expected life (years) ..................       0.5        0.5        0.5
</TABLE>


        The weighted average fair value of stock options granted in the years
ended January 31, 2000, December 31, 1998 and 1997 was $8.04, $13.12 and $12.15
per share, respectively.

    Benefit Plan

        As of January 31, 2000, 3dfx had two 401(k) Savings Plans which plans
allow all United States employees to participate by making salary deferral
contributions to the 401(k) Savings Plans. 3dfx may make discretionary
contributions to the 401(k) Savings Plans upon approval by the board of
directors. As of January 31, 2000, 3dfx has contributed to one of the 401(k)
Savings Plans but not the other.



                                      F-17
<PAGE>   18

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


NOTE 9 -- INCOME TAXES:

        Income before income taxes and the significant components of the
provision for income taxes comprise:

<TABLE>
<CAPTION>
                                                       YEAR ENDED
                                                ---------------------------    MONTH ENDED
                                                JANUARY 31,    DECEMBER 31,    JANUARY 31,
                                                   2000            1998           1999
                                                -----------    ------------    -----------
<S>                                             <C>            <C>             <C>
Income before income taxes ..................      $(73,611)      $ 29,366       $ (5,111)
                                                   ========       ========       ========
Provision for income taxes
   Current:
     Federal ................................      $ (8,936)      $ 12,309       $ (1,513)
     State ..................................        (1,558)         2,525           (124)
                                                   --------       --------       --------
                                                    (10,494)        14,834         (1,637)
                                                   --------       --------       --------
  Deferred:
     Federal ................................           148         (6,252)             1
     State ..................................            22           (919)            --
                                                   --------       --------       --------
                                                        170         (7,171)             1
                                                   --------       --------       --------
Total provision for income taxes ............      $(10,324)      $  7,663       $ (1,636)
                                                   ========       ========       ========
</TABLE>


The components of net deferred income tax assets are as follows:

<TABLE>
<CAPTION>
                                                     JANUARY 31,    DECEMBER 31,
                                                        2000            1998
                                                     -----------    ------------
<S>                                                  <C>            <C>
Net operating losses .............................      $  9,876       $  4,337
Expenses not currently deductible ................        11,866          7,172
Tax credit carryforwards .........................         2,422            186
                                                        --------       --------
Deferred tax assets ..............................        24,164         11,695
Less: valuation allowance ........................       (17,164)        (4,524)
                                                        --------       --------
Net deferred income tax assets ...................      $  7,000       $  7,171
                                                        ========       ========
</TABLE>


        3dfx's actual provision differs from the provision(benefit) computed by
applying the statutory federal income tax rate to income(loss) before income
taxes as follows:

<TABLE>
<CAPTION>
                                                                     YEAR ENDED
                                                      ----------------------------------------  MONTH ENDED
                                                      JANUARY 31,   DECEMBER 31,  DECEMBER 31,  JANUARY 31,
                                                         2000          1998          1997          1999
                                                      -----------   -----------   ------------  -----------
<S>                                                   <C>           <C>           <C>           <C>
Tax (benefit) at statutory federal tax rate ......      (25,028)       10,278          (600)       (1,738)
State taxes, net of federal tax benefit ..........       (3,959)        1,687           (98)         (147)
R&D credit .......................................           --          (692)           --            --
In process research and development ..............        1,723            --            --            --
Goodwill amortization ............................        4,097            --            --            --
Change in valuation allowance ....................       12,577        (4,299)          698            --
Other, net .......................................          266           689            --           249
                                                        -------       -------       -------       -------
Total provision for taxes ........................      (10,324)        7,663            --        (1,636)
                                                        =======       =======       =======       =======
</TABLE>



                                      F-18
<PAGE>   19

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


        At January 31, 2000, 3dfx had net operating loss carryforwards for
federal and state income tax purposes of approximately $23,700,000 and
$34,100,000, respectively. If not utilized, the federal and state net operating
losses will begin to expire beginning in 2011 and 2001, respectively.

        Deferred tax assets of approximately $1,500,000 as of January 31, 2000
relate to certain net operating loss carryforwards resulting from the
disqualifying sale of employee stock options and stock purchase plans. When
recognized, the tax benefit of these loss carryforwards are accounted for as a
credit to additional paid-in capital rather than a reduction of the income tax
provision.

        Management regularly assesses the realizability of deferred tax assets
recorded based upon the weight of available evidence, including such factors as
the recent earnings history and expected future taxable income. Management
believes that it is more likely than not that the Company will not realize a
portion of its deferred tax assets and, accordingly, a valuation allowance of
$17,164,000 has been established for such amounts at January 31, 2000.

NOTE 10 -- COMMITMENTS AND CONTINGENCIES:

        3dfx leases under noncancelable operating leases for certain of its
facilities and equipment in addition to equipment capital leases. Rent expense
on the operating leases for fiscal 2000, 1998 and 1999 was approximately
$6,679,000, $1,657,000 and $658,000, respectively.

        Future minimum lease payments under the operating and capitalized leases
are as follows (in thousands):

<TABLE>
<CAPTION>
                                                               OPERATING    CAPITALIZED
                                                                LEASES        LEASES
                                                               ---------    -----------
<S>                                                            <C>          <C>
2001 .......................................................       8,857         900
2002 .......................................................       8,773         720
2003 .......................................................       8,366         540
2004 .......................................................       6,419          --
2005 .......................................................       5,836          --
Thereafter .................................................      42,877          --
                                                                  ------      ------
  Total minimum lease payments .............................      81,128       2,160
                                                                  ======
Less: amount representing interest .........................                      79
                                                                              ------
Present value of minimum lease payments ....................                   2,081
Less: current portion ......................................                     732
                                                                              ------
Noncurrent portion of capitalized lease obligations ........                   1,349
                                                                              ======
</TABLE>


        The non current portion of capitalized lease obligations does not
include $532,000, representing long-term lease liabilities to be amortized
ratably over 3dfx's existing leases primarily in connection with its
headquarters facilities located in San Jose, Ca.

    Purchase Commitments

        3dfx's manufacturing relationship with Taiwan Semiconductor
Manufacturing Corporation ("TSMC") allows 3dfx to cancel all outstanding
purchase orders, but requires the repayment of all expenses incurred to date. As
of January 31, 2000, TSMC had incurred approximately $30,845,000 of
manufacturing expenses on 3dfx's outstanding purchase orders. 3dfx does not
expect to cancel any of its outstanding purchase orders.



                                      F-19
<PAGE>   20

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


    Contingencies

        A securities class action lawsuit was filed October 9, 1998 in Dallas
County, Texas against STB, which 3dfx acquired by merger in May, 1999. The suit
was brought against STB and some of its officers and directors and the
underwriters who participated in the STB secondary offering on March 20, 1998.
The petition alleges that the registration statement for the secondary public
offering contained false and misleading statements of material facts and omitted
to state material facts. The petition asserts claims under Sections 11, 12(a)(2)
and 15 of the Securities Act of 1933, as amended, and Sections 581-33A of the
Texas Securities Act on behalf of a purported class of persons who purchased or
otherwise acquired STB common stock in the public offering. The petition seeks
recission and/or unspecified damages. STB denies the allegations in the petition
and intends to defend the lawsuit vigorously.

        On December 17, 1999, a similar securities class action lawsuit was also
filed in the United States District Court for the Northern District of Texas,
Dallas Division, against STB and three of its officers and directors. The action
asserts claims against Sections 10 and 20 of the Securities Exchange Act of 1934
and Rule 10b-5 of the Securities and Exchange Commission. STB denies the
allegations in the petition and intends to defend the lawsuit vigorously. On
February 8, 2000 another similar securities class action lawsuit was filed in
the United States District Court for the Northern District of Texas, Dallas
Division against STB and three of its officers and directors. STB denies
allegations in the action and intends to vigorously defend the lawsuit. These
two actions have now been consolidated.

        3dfx is a party from time to time to some other legal proceedings
arising in the ordinary course of business. Although the amount of any liability
that could arise with respect to these proceedings cannot be predicted
accurately, 3dfx believes that any liability that might result from such claims
will not have a material adverse effect on its financial position.

NOTE 11 -- RELATED PARTY TRANSACTIONS:

        Since April 1995, a consulting company has been providing management
services to 3dfx for which 3dfx pays a monthly fee of $5,000 for consulting
services. The Chairman and a director of the board of directors of 3dfx are also
officers of the consulting company. Total payments for such management services
during fiscal year 2000, calendar years 1998, and 1997 were $55,000, $60,000 and
$60,000, respectively.

        During fiscal year 2000, calendar years 1998, and 1997 a member of the
board of directors provided consulting services to 3dfx. Total payments for such
consulting services in fiscal year 2000, calendar years 1998, and 1997 were
$45,000, $60,000 and $45,000, respectively.

        In April 1997, an officer of 3dfx resigned and subsequently founded
Quantum3D, Inc., a supplier of advanced graphic subsystems based on 3dfx
technology. Sales to Quantum3D, Inc. during fiscal years 2000, 1998, and 1997
totaled $1,588,000, $670,000 and $949,000, respectively. As of January 31, 2000,
3dfx has an outstanding trade receivable from Quantum3D, Inc. of approximately
$360,000.

        In April 1999, 3dfx invested an amount of $3.1 million in exchange for a
minority interest in Quantum 3D in the form of Convertible Preferred Shares in
connection with Quantum 3D's private round of financing. These terms and pricing
of these shares was equivalent to other unaffiliated third participants in the
financing round.

        In connection with the termination of an employee's employment with
3dfx, and its Chief Financial Officer and Vice President, Administration on
January 31, 1998, 3dfx entered into a Separation Agreement pursuant to which the
employee will remain a temporary employee through August 1, 2000. In addition,
all options granted to the employee pursuant to 3dfx's stock plans will continue
to vest through August 1, 2000. In the event of a Change of Control (as defined
in the Separation Agreement), 3dfx will (i) waive its right to repurchase any
unvested shares of common stock owned by the employee and (ii) accelerate



                                      F-20
<PAGE>   21

                             3DFX INTERACTIVE, INC.


                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)


the vesting of all unvested stock options granted to the employee pursuant to
3dfx's stock plans. For purposes of the separation agreement, a "Change of
Control" occurs, subject to some conditions and exceptions, upon (i) the
acquisition, directly or indirectly, by any person (other than existing
beneficial owners) of securities of 3dfx representing 50% or more of the total
voting power represented by 3dfx's then outstanding voting securities; (ii) the
merger or consolidation of 3dfx with another corporation in which the voting
securities of 3dfx outstanding immediately prior to such merger or consolidation
ceased to represent at least 50% of the voting power represented by the voting
securities of 3dfx thereafter, or (iii) the liquidation of 3dfx or the sale or
disposition of all or substantially all of 3dfx's assets.

NOTE 12 -- SEGMENT AND GEOGRAPHIC INFORMATION:

        3dfx has adopted Statement of Financial Accounting Standards No. 131
"Disclosure about Segments of an Enterprise and Related Information"
("SFAS 131"). Based on its operating management and financial reporting
structure, 3dfx has determined that it has one reportable business segment: the
design, development and sale of graphics boards incorporating 3dfx's proprietary
graphics chips. The following is a summary of product revenue by geographic area
based on the location of shipments (in thousands):

<TABLE>
<CAPTION>
                                                         FISCAL YEAR ENDED
                                                 ----------------------------------       MONTH
                                                                    DECEMBER 31,           ENDED
                                                 JANUARY 31,     -------------------    JANUARY 31,
                                                    2000           1998       1997         1999
                                                 -----------     --------    -------    -----------
<S>                                              <C>             <C>         <C>        <C>
United States..................................    $193,941      $141,415    $29,835      $ 9,325
International..................................     166,582        61,186     14,234        7,723
                                                   --------      --------    -------      -------
Total..........................................    $360,523      $202,601    $44,069      $17,048
                                                   ========      ========    =======      =======
</TABLE>


        All sales are denominated in United States dollars. For all periods
presented, substantially all of 3dfx's long-lived assets were located in the
United States.

NOTE 13 -- SUBSEQUENT EVENTS

        In March 2000, 3dfx entered into a Merger Agreement with Gigapixel
Corporation, a Delaware Corporation ("Gigapixel"). The Merger Agreements
provides for the Merger of a newly formed, wholly owned subsidiary of 3dfx with
and into Gigapixel (the "Merger"). Gigapixel will be the surviving corporation
of the Merger and, upon consummation will become a wholly owned subsidiary of
3dfx. 3dfx intends to account for this merger under the purchase method of
accounting. The Merger is contingent upon approval of both 3dfx's and
Gigapixel's shareholders, among other conditions.

        In March 2000, 3dfx sold the Specialized Technology Group (STG), a
business unit that provides digital video products, multi-output MPEG decoder
cards and multi-monitor display adapters to a company of which Vanessa Ogle is
President. Ms. Ogle is a former employee of 3dfx and is the daughter of William
E. Ogle. Mr. Ogle served as Executive Vice President and Vice Chairman of the
Board of Directors of 3dfx until he resigned these positions in January 2000.
The transaction was accounted for as an asset sale, comprised primarily of
inventory and accounts receivable, in a leveraged buyout by the STG management
group. 3dfx will maintain a minority equity interest of less than 15% in STG
following the sale. The amount of the transaction was $5.1 million, and as a
result, 3dfx recorded a note receivable in the amount of $3.0 million. The note
is payable in accordance with a payment schedule, beginning February 1, 2001 and
concluding November 1, 2004.



                                      F-21
<PAGE>   22

NOTE - 14 ASSET SALE AND PLAN OF DISSOLUTION

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. In recent months, the Company has been experiencing a decline in
demand for its products due to significant economic downturns in the PC market
and sluggish retail chip market. The Company had negative cash flow from
operations of $33.5 million for the year ended January 31, 2000 and $31.5
million (unaudited) in the nine months ended October 31, 2000. The Company
incurred losses of $63.3 million for the year ended January 31, 2000, incurred
an additional loss of $291.5 million (unaudited), which includes charges of
$117.1 million (unaudited) for the impairment of goodwill and other intangibles,
for the nine months ended October 31, 2000, and had an accumulated deficit of
$358.1 million (unaudited) as of October 31, 2000. This raises substantial doubt
about the Company's ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

     In light of the Company's deteriorating financial condition, management
believes the asset sale and plan of dissolution described below is the option
that will best protect the Company's creditors and maximize shareholder value.
Both the asset sale and plan of dissolution described below are subject to
shareholder approval. The accompanying financial statements do not reflect the
impact of the asset sale or plan of dissolution described below.


ASSET SALE

On December 15, 2000, the Company entered into a definitive agreement with
nVidia Corporation under which nVidia will purchase the Company's core graphics
processor assets, including the Company's intellectual property, chip inventory
as well as other assets (the "Asset Sale"). Under the terms of the purchase
agreement, nVidia has agreed to pay the Company $70 million in cash and 1.0
million shares of registered nVidia common stock subject to adjustment in
accordance with the terms of the purchase agreement. Upon signing the purchase
agreement, nVidia has agreed to loan to the Company $15 million for working
capital, which will be credited to the cash portion of the purchase price to be
paid at closing. In addition, upon signing the purchase agreement, the Company
transferred to nVidia its "3dfx" and "Voodoo" trademarks and both 3dfx and
nVidia agreed to stay the patent infringement litigation between them through
closing of the transaction, at which time it will be jointly dismissed. The
closing of the transaction is subject to a variety of conditions, including 3dfx
shareholder approval, receipt of governmental approval including approval under
the Hart-Scott Rodino Antitrust Improvement Act of 1976, and receipt of all
necessary consents of third parties. There is no assurance that the Company can
successfully consummate the sale of its assets to nVidia Corporation, secure
additional financing or otherwise increase its liquidity. The Company may seek
the protection of state insolvency or federal bankruptcy law for the orderly
liquidation of its assets, or the same may be imposed upon the Company by its
creditors.

PLAN OF DISSOLUTION

On December 15, 2000, the board of directors of the Company approved a plan of
dissolution and is recommending that its shareholders also approve this plan.
Assuming 3dfx's shareholders approve the plan of dissolution, following the
closing of the Asset Sale, 3dfx will proceed to wind up its affairs. The
proceeds from the Asset Sale and the sale of the Company's remaining assets will
be used to pay or adequately provide for the Company's debts and liabilities.
Any remaining assets will thereafter be distributed to the Company's
shareholders in one or more distributions, and the Company will then dissolve.



<PAGE>   23

                                   SCHEDULE II

                             3DFX INTERACTIVE, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
      FOR THE YEARS ENDED JANUARY 31, 2000 AND DECEMBER 31, 1998, AND 1997
                        AND MONTH ENDED JANUARY 31, 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                             CHARGED TO     ASSUMED
                                                 BEGINNING   COSTS AND     FROM STB                    ENDING
                                                  BALANCE     EXPENSES    ACQUISITION   DEDUCTIONS     BALANCE
                                                 ---------   ----------   -----------   ----------     -------
<S>                                              <C>         <C>          <C>           <C>            <C>
Allowance for Doubtful Accounts:
  Year ended January 31, 2000 ...............      $ 6,729      $ 2,392      $   598      $ 3,038      $ 6,681
  Month ended January 31, 1999 ..............      $ 2,280      $ 4,449      $    --      $    --      $ 6,729
  Year ended December 31, 1998 ..............      $   308      $ 2,561      $    --      $   589      $ 2,280
  Year ended December 31, 1997 ..............      $    78      $   250      $    --      $    20      $   308
Inventory Reserves:
  Year ended January 31, 2000 ...............      $ 7,828      $   909      $18,000      $ 8,241      $18,496
  Month ended January 31, 1999 ..............      $ 7,828      $    --      $    --      $    --      $ 7,828
  Year ended December 31, 1998 ..............      $   661      $10,817      $    --      $ 3,650      $ 7,828
  Year ended December 31, 1997 ..............      $   632      $    40      $    --      $    11      $   661
</TABLE>




</TEXT>
</DOCUMENT>
</SUBMISSION>
