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<DESCRIPTION>FILED PURSUANT TO RULE 425
<TEXT>

<PAGE>

                                     Filed by 3dfx Interactive, Inc. Pursuant to
                                       Rule 425 under the Securities Act of 1933
                                     and deemed filed pursuant to Rule 14a-12(b)
                                       under the Securities Exchange Act of 1934

                                                 Subject: 3dfx Interactive, Inc.
                                                   Commission File No. 000-22651

3dfx Interactive, Inc. plans to distribute the following Prospectus/Proxy
Statement to its shareholders on or about February 16, 2001:


                                  [3DFX LOGO]


Dear 3dfx Shareholder:

   You are cordially invited to attend a special meeting of shareholders of
3dfx Interactive, Inc. to be held on Tuesday, March 27, 2001, at 8:00 a.m.
local time, at the Marriott Hotel, 2700 Mission College Boulevard, Santa Clara,
California 95054. At the special meeting, we are seeking your approval of the
winding up and dissolution of 3dfx as described in the plan of dissolution
attached to the prospectus/proxy statement as Annex A, as well as your approval
of the sale of certain of our assets to NVIDIA US Investment Company, an
indirect wholly-owned subsidiary of NVIDIA Corporation, as described in the
asset purchase agreement attached as Annex B to the prospectus/proxy statement.
Under the terms of the asset purchase agreement, 3dfx will sell certain of its
assets to NVIDIA US Investment Company and will receive a total consideration
of $70 million in cash and 1,000,000 shares of NVIDIA common stock, subject to
adjustment.

   3dfx began encountering financial difficulties in the fall of 2000 due to a
number of factors, including substantially reduced demand in the retail
channels for its products. At that time, we re-evaluated our business model and
decided that it was necessary to quickly reposition 3dfx to focus principally
on the development of graphics chips and related technologies, and to further
analyze the possible termination or sale of our graphics board business. In
seeking to implement this strategy, we entered into discussions with numerous
parties to whom we sought to sell our graphics board business or from whom we
sought to obtain financing necessary to the continuation of our business. None
of these discussions resulted in the execution of any definitive agreements,
and in the meantime our financial condition continued to deteriorate.

   In November 2000 we directed our financial advisor, Robertson Stephens, to
conduct a search to identify possible parties for either a strategic or
financial transaction. Both our management and Robertson Stephens contacted a
number of parties and discussed a variety of possible transactions. Your board
of directors considered a wide range of alternatives to address the challenges
that we faced, and determined that the alternatives were inferior to the
proposed NVIDIA transaction. We strongly believe that there is no better
alternative currently available to us, either as an independent company or in a
business combination transaction.

   Your board of directors also considered 3dfx's anticipated prospects
assuming completion of the asset sale, in which case 3dfx's remaining operating
assets would largely consist of proceeds from the asset sale and assets
relating to 3dfx's graphics board business. After consideration of all other
alternatives available to 3dfx, the board of directors concluded, in its
business judgment, that the liquidation, winding up and dissolution of 3dfx,
and the completion of the asset sale as part of that process, was the
alternative most reasonably likely to enable 3dfx to pay its creditors and to
maximize the return of value to its shareholders.

   Whether or not you plan to attend the special meeting, please take the time
to vote by completing the enclosed proxy card and returning it in the
accompanying postage-paid envelope or by voting by phone or over the Internet
as described in the instructions accompanying the enclosed proxy card. Both the
dissolution of 3dfx and the asset sale require the approval of a majority in
interest of 3dfx's shareholders. Please note that your failure to vote on these
matters will have the same effect as a vote against approval of the dissolution
of 3dfx and the asset sale. The other directors and I urge you to vote FOR each
of the proposals, which we have approved after careful consideration. Your vote
is extremely important, and your early response will be greatly appreciated.

                                      Sincerely,
                                      /s/ Alex Leupp
                                      Alex Leupp
February 13, 2001                     President and Chief Executive Officer
San Jose, California

   For a discussion of significant matters that should be considered before
voting at the 3dfx special meeting, see "Risk Factors" beginning on page 21.

   3dfx common stock is listed on the Nasdaq National Market under the symbol
"TDFX." NVIDIA common stock is listed on the Nasdaq National Market under the
symbol "NVDA."

   Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the NVIDIA common stock issuable as
part of the asset sale or determined whether the prospectus/proxy statement is
accurate or adequate. Any representation to the contrary is a criminal offense.

   The prospectus/proxy statement is dated February 13, 2001 and is first being
mailed to shareholders of 3dfx on or about February 16, 2001.


<PAGE>


                             ADDITIONAL INFORMATION

    The prospectus/proxy statement incorporates important business and
 financial information about NVIDIA and 3dfx that is not included in or
 delivered with the prospectus/proxy statement. This information is available
 without charge to 3dfx shareholders upon written or oral request.
 Shareholders should contact: 3dfx Interactive, Inc., 4435 Fortran Drive, San
 Jose, California 95134, Attention, Corporate Secretary, phone number: (408)
 935-4400, or NVIDIA Corporation, 3535 Monroe Street, Santa Clara, California
 95051, Attention, Corporate Secretary, phone number: (408) 615-2500.

    To obtain timely delivery of requested documents before the 3dfx special
 meeting, you must request them no later than March 20, 2001, which is five
 business days before the date of the special meeting.

    Please also see "Where You Can Find More Information" in the
 prospectus/proxy statement to obtain further information and learn about
 other ways that you can get this information.

<PAGE>

                             3DFX INTERACTIVE, INC.
                               4435 FORTRAN DRIVE
                           SAN JOSE, CALIFORNIA 95134

                               ----------------

                   NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

                   TO BE HELD ON TUESDAY, MARCH 27, 2001

                               ----------------

TO THE SHAREHOLDERS OF 3DFX INTERACTIVE, INC.:

   NOTICE IS HEREBY GIVEN that a special meeting of shareholders of 3dfx
Interactive, Inc., a California corporation, will be held on Tuesday, March 27,
2001 at 8:00 a.m. local time at the Marriott Hotel, 2700 Mission College
Boulevard, Santa Clara, California 95054, for the following purposes:

  1. To consider and vote upon the proposed liquidation, winding up and
     dissolution of 3dfx as described in the plan of dissolution attached to
     the prospectus/proxy statement as Annex A.

  2. If the plan of dissolution is approved, to consider and vote upon the
     principal terms of the asset purchase agreement, dated as of December
     15, 2000, among 3dfx, NVIDIA Corporation and NVIDIA US Investment
     Company attached to the prospectus/proxy statement as Annex B.

  3. To transact any other business as may properly come before this special
     meeting, including any motion to adjourn to a later time to permit
     further solicitation of proxies if necessary to establish a quorum or to
     obtain additional votes in favor of the proposals, or before any
     postponements or adjournments thereof.

   The foregoing proposals are more fully described in the accompanying
prospectus/proxy statement. The 3dfx board of directors recommends that you
vote in favor of each of the proposals listed above.

   The 3dfx board of directors fixed the close of business on February 12, 2001
as the record date for the determination of shareholders entitled to notice of
and to vote at this 3dfx special meeting and at any adjournments or
postponements thereof.

                                          By Order of the Board of Directors

                                          /s/ Alex Leupp
                                          Alex Leupp
                                          President and Chief Executive
                                           Officer

San Jose, California

February 13, 2001

To ensure that your shares are represented at the 3dfx special meeting, please
complete, date and sign the enclosed proxy and mail it promptly in the postage-
paid envelope provided or vote by phone or over the Internet as described in
the prospectus/proxy statement and in accordance with the instructions
accompanying the proxy card, whether or not you plan to attend the 3dfx special
meeting. You can revoke your proxy at any time before it is voted by following
the procedures described in the accompanying prospectus/proxy statement.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
QUESTIONS AND ANSWERS ABOUT THE ASSET SALE AND DISSOLUTION OF 3DFX........   1

FORWARD-LOOKING INFORMATION...............................................   5

SUMMARY...................................................................   6

RISK FACTORS..............................................................  21

  Risks Relating to the Asset Sale........................................  21
  Risks Relating to the Dissolution of 3dfx...............................  24
  Risks Relating to NVIDIA................................................  26

THE 3DFX SPECIAL MEETING..................................................  38

  When and Where the Meeting Will Be Held.................................  38
  What Will Be Voted Upon.................................................  38
  Which Shareholders May Vote.............................................  38
  How Do 3dfx Shareholders Vote...........................................  38
  How to Change Your Vote.................................................  39
  Vote Required to Approve Each Proposal..................................  39
  Quorum; Abstentions; Broker Non-Votes...................................  39
  Solicitation of Proxies and Expenses of Solicitation....................  39
  Deadline for Receipt of Shareholder Proposals at Annual Meeting.........  40

THE ASSET SALE............................................................  41

  General Description.....................................................  41
  Background..............................................................  41
  Reasons for the Asset Sale..............................................  45
  NVIDIA's and NVIDIA US Investment Company's Reasons for Entering Into
   the Asset Sale.........................................................  45
  3dfx's Reasons for the Asset Sale and Recommendation of 3dfx Board of
   Directors..............................................................  47
  Vote Required for the Asset Sale........................................  48
  Opinion of 3dfx's Financial Advisor.....................................  48
  Interests of Some 3dfx Officers in the Asset Sale.......................  53
  Governmental Approvals..................................................  54
  Material Federal Income Tax Consequences Relating to the Asset Sale.....  55
  Anticipated Accounting Treatment........................................  55
  Absence of Dissenters' Rights Related to the Asset Sale.................  55

THE DISSOLUTION OF 3DFX...................................................  56

  General Description.....................................................  56
  Reasons for the Dissolution of 3dfx.....................................  56
  Recommendation of the 3dfx Board of Directors...........................  58
  Vote Required for Dissolution of 3dfx...................................  58
  Description of the Plan of Dissolution..................................  58
  Operations of 3dfx......................................................  58
  Payment of Claims Related to 3dfx.......................................  59
  Directors and Officers of 3dfx..........................................  59
  Continued Indemnification of Directors and Officers of 3dfx.............  59
  Dissolution; No Transfers...............................................  59
  Expected Distributions..................................................  60
  Amendment or Delay of Implementation of the Plan of Dissolution.........  61
</TABLE>

                                       i
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
  Liquidating Trust.......................................................  61
  Nasdaq Listing..........................................................  62
  Material Federal Income Tax Consequences of the Liquidation and
   Dissolution of 3dfx....................................................  62
    Tax Consequences of the Liquidation to 3dfx...........................  62
    Tax Consequences of the Liquidation to 3dfx Shareholders..............  63
    Tax Consequences of the Liquidating Trust.............................  64
    Special Considerations Applicable to Non-U.S. Shareholders............  64
  State and Local Income Tax..............................................  65
  Absence of Dissenters' Rights Related to the Dissolution of 3dfx........  65

MATERIAL TERMS OF THE PURCHASE AGREEMENT..................................  66

  The Purchase Agreement..................................................  66
  Purchase Price..........................................................  66
  Expected Timing of the Transaction......................................  67
  Representations and Warranties..........................................  67
  Covenants and Agreements................................................  68
  Indemnification by 3dfx.................................................  68
  Conditions to Closing...................................................  69
  Limitation on 3dfx's Ability to Consider Other Acquisition Proposals....  70
  Termination of the Purchase Agreement...................................  72
  Termination Fees........................................................  73
  Expenses................................................................  74
  Amendment; Waiver.......................................................  74

VOTING AGREEMENTS.........................................................  75

OTHER RELATED AGREEMENTS..................................................  76

  Credit Agreement, Security Agreement and Trademark Assignment ..........  76
  Patent License Agreement................................................  76
  Patent Standstill Agreement.............................................  77

SECURITY OWNERSHIP OF 3DFX MANAGEMENT AND PRINCIPAL SHAREHOLDERS..........  79

SECURITY OWNERSHIP OF NVIDIA MANAGEMENT AND PRINCIPAL STOCKHOLDERS........  81

NVIDIA CORPORATION UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
 INFORMATION..............................................................  83

3DFX INTERACTIVE, INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
 (UNAUDITED)..............................................................  89

COMPARATIVE RIGHTS OF NVIDIA STOCKHOLDERS AND 3DFX SHAREHOLDERS...........  92

LEGAL MATTERS.............................................................  95

EXPERTS...................................................................  95

WHERE YOU CAN FIND MORE INFORMATION.......................................  95

TRADEMARKS................................................................  97

Annex A--Plan of Dissolution.............................................. A-1

Annex B--Asset Purchase Agreement......................................... B-1
</TABLE>

                                       ii
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Annex C--Opinion of 3dfx's Financial Advisor............................... C-1

Annex D--Credit Agreement.................................................. D-1

Annex E--Security Agreement................................................ E-1

Annex F--Trademark Assignment.............................................. F-1

Annex G--Patent License Agreement.......................................... G-1

Annex H--Patent Standstill Agreement....................................... H-1
</TABLE>

                                      iii
<PAGE>

       QUESTIONS AND ANSWERS ABOUT THE ASSET SALE AND DISSOLUTION OF 3DFX

1.Q:   What is 3dfx entitled to receive for the assets proposed to be sold to
       NVIDIA US Investment Company? (see pages 66 and 76)

  A: NVIDIA, NVIDIA US Investment Company, formerly known as Titan
     Acquisition Corp. No. 2, and 3dfx have signed a purchase agreement
     pursuant to which NVIDIA US Investment Company will purchase certain of
     the assets of 3dfx, including its core graphics processor assets. In
     return for these assets, NVIDIA US Investment Company will pay to 3dfx a
     total consideration of $70 million in cash and 1,000,000 shares of
     NVIDIA's common stock. The number of shares of NVIDIA common stock to be
     received by 3dfx in the asset sale could be reduced if, after the
     closing of the asset sale and prior to the dissolution of 3dfx, 3dfx
     requests that NVIDIA US Investment Company advance to it funds of up to
     $25 million to be used by 3dfx to pay its or its subsidiaries'
     creditors. If, upon satisfaction of various conditions, the advance is
     provided by NVIDIA US Investment Company, the number of NVIDIA shares to
     be received by 3dfx will be reduced by a number of shares determined by
     dividing the amount of the advance by $50, without regard to the value
     of NVIDIA's common stock at the time of any such advance. The number of
     shares of NVIDIA common stock to be received by 3dfx is also subject to
     adjustments in the event of a stock split or similar event by NVIDIA.
     Neither 3dfx nor NVIDIA has the right to terminate the purchase
     agreement or renegotiate the number of shares to be received by 3dfx as
     a result of market price fluctuations in the value of NVIDIA common
     stock.

    You should know that, on the day they signed the purchase agreement,
    3dfx, NVIDIA and NVIDIA US Investment Company entered into other
    agreements that are related to, but separate from, the asset sale.
    Because 3dfx did not have sufficient cash to continue its operations
    through the closing of the asset sale, 3dfx and NVIDIA US Investment
    Company entered into a credit agreement pursuant to which NVIDIA US
    Investment Company provided a $15 million loan to 3dfx, which is
    repayable out of the cash consideration that is to be received by 3dfx
    upon closing of the asset sale. In exchange for the loan, 3dfx: (i)
    assigned and transferred all of its trademarks, tradenames, service
    marks, trademark applications and service mark applications to NVIDIA
    US Investment Company pursuant to a trademark assignment; and (ii)
    granted NVIDIA US Investment Company a non-exclusive, fully-paid,
    royalty-free license for most of 3dfx's patents, patent applications
    and inventions pursuant to a patent license agreement. The patent
    license also contains a non-exclusive, fully-paid, royalty-free license
    to 3dfx from NVIDIA for most of NVIDIA's patents, patent applications
    and inventions. In addition, also on the same day as the purchase
    agreement, 3dfx and NVIDIA entered into a patent standstill agreement
    pursuant to which they both agreed to stay the pending patent lawsuits
    that each has filed against the other, and, if the asset sale closes or
    under other designated circumstances, to cause the dismissal of these
    suits with prejudice, and to refrain from bringing additional
    litigation against each other with respect to other patents, patent
    applications and inventions for a three-year period, unless terminated
    earlier. Under California law, 3dfx is not required to submit these
    related transactions to its shareholders for their approval.

2.Q:   What happens if the asset sale is not completed? (see page 21)

  A: If the asset sale is not completed, it is likely that 3dfx will file for
     or be forced to resort to bankruptcy protection. In this event, it is
     extremely unlikely that 3dfx will be able to satisfy all of its and its
     subsidiaries' debts and liabilities, and there would therefore be no
     assets available for distribution to 3dfx's shareholders.

    Even if the asset sale is not completed, in specific circumstances,
    including if 3dfx's shareholders fail to approve the asset sale, the
    patent license and patent standstill agreements would remain in place.
    This means that NVIDIA US Investment Company would retain the non-
    exclusive, fully-paid, royalty-free patent license to most of 3dfx's
    patents, patent applications and inventions and each of

                                       1
<PAGE>

    NVIDIA and 3dfx would still cause the pending patent litigation against
    the other to be dismissed with prejudice. In addition, 3dfx could be
    required to make one or more of the following payments to NVIDIA US
    Investment Company upon the occurrence of specific termination events
    under the purchase agreement: (i) repayment of $5 million of the $15
    million loaned to 3dfx under the credit agreement; (ii) payment of a
    termination fee of $3.3 million; and (iii) reimbursement of NVIDIA's
    and NVIDIA US Investment Company's transaction-related expenses.
    Further, regardless of whether the asset sale is completed or the
    reasons for the termination of the purchase agreement, NVIDIA US
    Investment Company will retain ownership of all of the 3dfx trademarks,
    tradenames, service marks, trademark applications and service mark
    applications that it received in connection with the credit agreement
    and trademark assignment.

3.Q:   When do you expect the asset sale to be completed? (see page 67)

  A: The parties are working toward completing the transaction as quickly as
     possible. In addition to 3dfx shareholder approval, the transaction must
     also receive clearance under the Hart-Scott-Rodino Antitrust
     Improvements Act of 1976, as amended, or HSR Act, and each of NVIDIA and
     3dfx must satisfy or waive, to the extent possible, all of the closing
     conditions contained in the purchase agreement. Under the purchase
     agreement, the transaction will close on a date to be designated by
     NVIDIA following shareholder approval.

4.Q:   What does the plan of dissolution entail? (see page 58)

  A: The plan of dissolution provides for the liquidation, winding up and
     dissolution of 3dfx by selling those assets of 3dfx that are part of the
     asset sale and, after the closing of the asset sale, proceeding with the
     orderly liquidation of its remaining assets and winding up of its
     business and operations. 3dfx will then pay, or provide for the payment
     of, all of its and its subsidiaries' debts and liabilities. If there are
     any remaining assets after the payment, or the provision for the
     payment, of all of its and its subsidiaries' debts and liabilities, 3dfx
     will distribute these remaining assets to its shareholders in one or
     more distributions.

5.Q:   Will any distributions be made to 3dfx's shareholders? (see page 60)

  A: At this time, 3dfx cannot determine if there will be any assets
     remaining after paying for, or providing for the payment of, all of its
     and its subsidiaries' debts and liabilities. 3dfx expects that following
     the closing of the asset sale it will request that NVIDIA US Investment
     Company provide all or a portion of the $25 million cash advance
     provided for in the purchase agreement in order to enable 3dfx to pay
     the debts owed to its and its subsidiaries' creditors that could not be
     paid from the cash consideration received by 3dfx at the closing. If a
     cash advance is made to 3dfx, then the number of NVIDIA shares
     receivable by 3dfx will be reduced by a number of shares determined by
     dividing the amount of the advance by $50. 3dfx expects that, upon
     receiving the cash consideration at the closing of the asset sale and
     after obtaining all or of a portion of the cash advance from NVIDIA US
     Investment Company, it will have sufficient cash to pay all of its and
     its subsidiaries' known current and determinable liabilities. However,
     the amount of unknown or contingent liabilities cannot be quantified and
     could decrease or eliminate any remaining assets available for
     distribution. Further, if 3dfx or its subsidiaries are subject to any
     substantial contingent liabilities, this could require that it establish
     reserves that could delay any distribution to 3dfx shareholders.

    Because of the uncertainties as to the precise net realizable value of
    3dfx's assets and the settlement amount of 3dfx's and its subsidiaries'
    debts and liabilities, 3dfx cannot at this time determine the amount of
    distributions that may be made to its shareholders, if any. Only if
    there are assets remaining at the time of the dissolution will you
    receive a portion of those assets, which will be equal to your pro rata
    share, based on the number of 3dfx shares you own.

                                       2
<PAGE>

6.Q:   When will any distributions be made to 3dfx's shareholders? (see page
       60)

  A: At this time, 3dfx cannot set a timetable for any distributions, and it
     is not certain whether any distributions will be made to its
     shareholders. The timetable will depend on the timing of the completion
     of the asset sale, the sale of 3dfx's remaining assets, and 3dfx's
     ability to pay, or provide for the payment of, its and its subsidiaries'
     debts and liabilities. If 3dfx is subject to any contingent liabilities,
     including any claims of NVIDIA or NVIDIA US Investment Company under the
     purchase agreement, this could require that it establish a reserve that
     could delay any distribution to 3dfx shareholders until the liabilities
     are resolved.

7.Q:   When will the dissolution of 3dfx be completed? (see page 59)

  A: The dissolution will be completed on the date that 3dfx's certificate of
     dissolution is filed with, and is accepted by, the Secretary of State of
     the State of California or the date that 3dfx files with the Secretary
     of State of the State of California a court order declaring 3dfx
     dissolved. 3dfx plans to make such filing after it has paid for, or
     provided for the payment of, all of its and its subsidiaries' debts and
     liabilities, and distributed any remaining assets to its shareholders.

8.Q:   What happens if 3dfx shareholders approve the dissolution of 3dfx but
       not the asset sale? (see pages 21, 22 and 72)

  A: If 3dfx's shareholders approve the dissolution of 3dfx but not the asset
     sale, then the asset sale will not close and it is likely that 3dfx will
     file for or be forced to resort to bankruptcy protection. In this event,
     it is extremely unlikely that 3dfx will be able to satisfy all of its
     and its subsidiaries' debts and liabilities, and there would therefore
     be no assets available for distribution to 3dfx's shareholders. Under
     the purchase agreement, NVIDIA is not obligated to close the asset sale
     if 3dfx's shareholders do not approve the dissolution of 3dfx.

9.Q:   What do I need to do now? (see page 38)

  A: You should read this prospectus/proxy statement carefully in its
     entirety, including its Annexes, to consider how the matters discussed
     will affect you. You should mail your signed proxy card in the enclosed
     return envelope or otherwise vote in a manner described in this
     prospectus/proxy statement as soon as possible so that your shares will
     be represented at the 3dfx special meeting.

10.Q:  Can I submit my proxy by telephone or over the Internet? (see page 38)

  A: Only beneficial holders who hold shares in street name may submit their
     proxies by telephone or over the Internet. If you are a beneficial
     holder, you should refer to the proxy card included with your proxy
     materials for instructions about how to vote. If you vote by telephone
     or over the Internet, you do not need to complete and mail your proxy
     card.

11.Q:  What happens if I do not return a proxy card or vote by phone or over
       the Internet?

  A: The failure to return your proxy card or vote by phone or over the
     Internet will have the same effect as voting AGAINST approval of the
     asset sale and dissolution of 3dfx.

12.Q:  What happens if I return a signed proxy card but do not indicate how to
       vote my proxy? (see page 38)

  A: If you do not include instructions on how to vote your properly signed
     and dated proxy, your shares will be voted FOR approval of the asset
     sale and dissolution of 3dfx.

13.Q:  May I vote in person? (see page 39)

  A: Yes. You may attend the 3dfx special meeting and vote your shares in
     person, rather than signing and returning your proxy card or voting by
     phone or over the Internet.

                                       3
<PAGE>

14.Q:  May I change my vote after I have mailed my signed proxy card or voted
       by phone or over the Internet? (see page 39)

  A: Yes. You may change your vote at any time before your proxy card or
     phone or Internet vote is voted at the 3dfx special meeting. You can do
     this in one of three ways. First, you can send a written, dated notice
     stating that you would like to revoke your proxy or similarly do so by
     phone or over the Internet. Second, you can complete, date and submit a
     new proxy card. Third, you can attend the meeting and vote in person.
     Your attendance alone will not revoke your proxy. If you have instructed
     a broker to vote your shares, you must follow directions received from
     your broker to change those instructions.

15.Q:  If my shares are held in "street name" by my broker, will my broker vote
       my shares for me?

  A: Your broker will not be able to vote your shares without instructions
     from you. You should instruct your broker to vote your shares by
     following the procedure provided by your broker. The failure to provide
     such voting instructions to your broker will have the same effect as
     voting AGAINST approval of the asset sale and plan of dissolution.

16.Q:  Should I send in my 3dfx stock certificates?

  A: No. Please do not mail in your 3dfx stock certificates. If the asset
     sale and dissolution of 3dfx are approved, 3dfx will provide
     instructions regarding surrendering your stock certificates.

17.Q:  What are the material U.S. federal income tax consequences of the asset
       sale and the liquidation to 3dfx shareholders? (see pages 55 and 62)

  A: The asset sale will have no direct U.S. federal income tax consequences
     to 3dfx shareholders. However, the asset sale will have tax consequences
     to 3dfx and the liquidation of 3dfx and possible distribution of assets
     to 3dfx shareholders will have tax consequences to 3dfx shareholders.
     The fair market value of any assets distributed to a 3dfx shareholder in
     the liquidation (including any assets transferred to a liquidating
     trust), less such shareholder's cost basis in its shares, will be
     taxable as capital gains (or loss), assuming that such shareholder held
     the shares as a capital asset. The gain (or loss) will be taxable as
     long-term capital gain (or loss) if the shares were held for more than
     one year. Tax consequences to shareholders may differ depending on their
     circumstances. You are urged to consult your own tax advisor to
     determine your particular tax consequences resulting from the asset sale
     and dissolution.

18.Q:  Can I still sell my shares of 3dfx common stock? (see pages 26 and 62)

  A: Yes, 3dfx's common stock is currently traded on the Nasdaq National
     Market. However, 3dfx has received a delisting notice from Nasdaq due to
     its failure to maintain a minimum bid of at least $1.00 per share. The
     notice provides that the 3dfx common stock may be delisted as early as
     May 7, 2001. 3dfx expects that it will be unable to satisfy the
     requirement for the continued listing of its common stock on the Nasdaq
     National Market. If 3dfx's common stock is delisted, trading would
     thereafter be conducted on the over-the-counter market in the so-called
     "pink sheets" or on the "electronic bulletin board" of the National
     Association of Securities Dealers, Inc. In this event, the ability to
     buy and sell shares of 3dfx common stock may be materially impaired,
     which may have an adverse effect on the price and liquidity of 3dfx
     common stock.

19.Q:  How will the dissolution of 3dfx affect my status as a shareholder?

  A: Your rights as a 3dfx shareholder will terminate upon the dissolution of
     3dfx. 3dfx will not dissolve until its remaining assets, if any, are
     either distributed to its shareholders or transferred to a liquidating
     trust, and 3dfx files a certificate of dissolution that is accepted by
     the Secretary of State of the State of California or files with the
     Secretary of State of the State of California a court order declaring
     3dfx dissolved. 3dfx may establish a liquidating trust for the sole
     purpose of liquidating any remaining assets of 3dfx, paying or providing
     for the payment of 3dfx's and its subsidiaries'

                                       4
<PAGE>

     remaining debts and liabilities, and making distributions to 3dfx
     shareholders. If a liquidating trust is established, you will receive
     beneficial interests in the assets transferred to the liquidating trust
     in proportion to the number of 3dfx shares owned by you.

20.Q: Am I entitled to dissenters' rights? (see pages 55 and 65)

  A: No, 3dfx shareholders are not entitled to dissenters' rights, either in
     connection with the asset sale or the dissolution of 3dfx.

21.Q: Is NVIDIA stockholder approval required?

  A: No, such approval is not required in connection with the asset sale or
     the dissolution of 3dfx.

22.Q: Who can help answer my additional questions? (see page 97)

  A: 3dfx shareholders who would like additional copies, without charge, of
     this prospectus/proxy statement or have additional questions about the
     transaction, including the procedures for voting 3dfx shares, should
     contact:

    3dfx Interactive, Inc.
    Attn: Corporate Secretary
    4435 Fortran Drive
    San Jose, CA 95134
    Telephone: (408) 935-4400

     3dfx shareholders should contact the following proxy solicitor with any
     additional questions about the solicitation of shareholder proxies:

    Morrow & Co., Inc.

    445 Park Avenue

    New York, New York 10022

    Telephone: (800) 607-0088

                          FORWARD-LOOKING INFORMATION

   Certain of the information relating to NVIDIA and 3dfx contained in this
prospectus/proxy statement is forward-looking in nature. All statements
included in this prospectus/proxy statement other than statements of
historical fact are forward-looking statements. Examples of forward-looking
statements include statements regarding NVIDIA's or 3dfx's future financial
results, operating results, product successes, business strategies, projected
costs, future products, competitive positions and plans and objectives of
management for future operations. In some cases, you can identify forward-
looking statements by terminology such as "may," "will," "should," "would,"
"expect," "plan," "anticipate," "believe," "estimate," "predict," "project,"
"opportunity," "could," "intend," "potential" or "continue" or the negative of
these terms or other comparable terminology. Any expectations based on these
forward-looking statements are subject to risks and uncertainties and other
important factors, including those discussed in the Risk Factors section of
this prospectus/proxy statement. These and many other factors could affect the
future financial and operating results of NVIDIA or 3dfx. These factors could
cause actual results to differ materially from expectations based on forward-
looking statements made in this document or elsewhere by or on behalf of
NVIDIA or 3dfx.

                                       5
<PAGE>

                                    SUMMARY

   This summary highlights selected information from this prospectus/proxy
statement and may not contain all of the information that is important to you.
You should read carefully this entire prospectus/proxy statement and the
documents referred to in this prospectus/proxy statement for a more complete
description of the matters on which you are being asked to vote. The plan of
dissolution is attached as Annex A to this prospectus/proxy statement and you
are encouraged to read it. The purchase agreement is attached as Annex B to
this prospectus/proxy statement. You are encouraged to read the purchase
agreement as it is the legal document that governs the asset sale on which you
are being asked to vote. Also attached in Annex D through Annex H are
agreements pertaining to the related transactions entered into on the same day
as the purchase agreement. You are encouraged to read those agreements as well.
In addition, NVIDIA and 3dfx incorporate by reference important business and
financial information into this prospectus/proxy statement. You may obtain the
information incorporated by reference into this prospectus/proxy statement
without charge by following the instructions in the section entitled "Where You
Can Find More Information." This summary is qualified in its entirety by the
more detailed information appearing elsewhere in this document or that is
incorporated by reference. This summary includes page references in parentheses
to direct you to a more complete description of the topics presented in this
summary.

   NVIDIA has supplied all information contained in this prospectus/proxy
statement relating to NVIDIA or NVIDIA US Investment Company and 3dfx has
supplied all information contained in this prospectus/proxy statement relating
to 3dfx. Neither NVIDIA or NVIDIA US Investment Company on the one hand, or
3dfx on the other, is responsible for the information supplied by the other.
For example, all information in this prospectus/proxy statement relating to or
concerning 3dfx and its business and operations, including, but not limited to,
the descriptions of its business, its reasons for entering into the asset sale
and related transactions, the dissolution of 3dfx, the possible distribution to
its shareholders, the rights of its shareholders, the 3dfx special meeting, the
recommendations to its shareholders, the description of events at 3dfx leading
up to the decision of its board of directors to approve the purchase agreement
and the plan of dissolution, and other information relating to 3dfx, its
business and operations and the actions and decisions of its executive officers
and directors, have been supplied by 3dfx. All of the information in this
prospectus/proxy statement relating to NVIDIA or NVIDIA US Investment Company
and the business and operations of NVIDIA, including but not limited to, the
description of NVIDIA's business and NVIDIA's reasons for entering into the
asset sale and related transactions, has been supplied by NVIDIA.

The Companies

NVIDIA Corporation
3535 Monroe Street
Santa Clara, CA 95051
(408) 615-2500

   NVIDIA designs, develops and markets graphics processors and related
software for personal computers and digital entertainment platforms. NVIDIA
provides a "top-to-bottom" family of award-winning performance 3D graphics
processors and graphics processing units, or GPUs, which set the standard for
performance, quality and features for a broad range of desktop PCs, from
professional workstations to low-cost PCs. NVIDIA's 3D graphics processors are
used in a wide variety of applications, including games, business productivity,
the Internet and industrial design.

   NVIDIA maintains a site on the Internet at www.NVIDIA.com. Information found
at NVIDIA's Web site is not a part of this document. NVIDIA was incorporated in
California in April 1993 and reincorporated in Delaware in April 1998.


                                       6
<PAGE>

3dfx Interactive, Inc.
4435 Fortran Drive
San Jose, CA 95134
Telephone: (408) 935-4400

   3dfx develops high performance, cost-effective graphics chips, graphics
boards, software and related technology that enables an interactive and
realistic 3D experience across multiple hardware platforms. 3dfx develops
products with 2D and 3D functionality that optimize both entertainment and
general personal computer graphics applications and that are well suited to the
PC retail channel.

   Since 3dfx entered the purchase agreement on December 15, 2000 providing for
the sale of certain of its assets to NVIDIA US Investment Company, it has
substantially reduced its costs in order to conserve its resources. These cost-
cutting measures include a reduction of a significant portion of 3dfx's
workforce, reduction in office space and other efforts to reduce non-essential
expenses. 3dfx has also been providing manufacturing services to third parties
to help cover the overhead associated with its Juarez, Mexico manufacturing
facility pending the sale of that facility. Due to these cost-cutting measures,
3dfx's operations have been substantially curtailed.

   3dfx has maintained sites on the Internet at www.3dfx.com and
www.3dfxgamers.com. Information found on 3dfx's Web sites is not a part of this
document. 3dfx was incorporated in the State of California in August 1994.

Asset Sale and Related Transactions (Pages 66 and 76)

   NVIDIA US Investment Company, an indirect wholly-owned subsidiary of NVIDIA,
will purchase certain of 3dfx's assets, including its core graphics processor
assets, pursuant to the purchase agreement. In consideration of the transfer of
these assets and the other matters set forth in the purchase agreement, NVIDIA
US Investment Company will pay to 3dfx a total consideration of $70 million in
cash at closing and, upon the dissolution of 3dfx, 1,000,000 shares of NVIDIA
common stock. The purchase and sale of certain of the assets of 3dfx pursuant
to the purchase agreement is referred to throughout this prospectus/proxy
statement as the "asset sale." 3dfx is required under California law to obtain
the approval of its shareholders to complete the asset sale.

   The number of shares of NVIDIA common stock to be received by 3dfx pursuant
to the purchase agreement could be reduced if, after the closing of the asset
sale and prior to the dissolution of 3dfx, 3dfx requests that NVIDIA US
Investment Company advance it funds of up to $25 million to be used by 3dfx to
pay its and its subsidiaries' creditors. If, upon satisfaction of various
conditions, the advance is provided by NVIDIA US Investment Company, the number
of NVIDIA shares receivable by 3dfx will be reduced by a number of shares
determined by dividing the amount of the advance by $50, without regard to the
value of NVIDIA's common stock at the time of any advance. The number of shares
of NVIDIA common stock to be received by 3dfx is also subject to adjustments in
the event of a stock split or similar event by NVIDIA. Neither 3dfx nor NVIDIA
has the right to terminate the purchase agreement or renegotiate the number of
shares issuable by NVIDIA as a result of market price fluctuations in the value
of NVIDIA common stock. You are encouraged to obtain current market quotations
of NVIDIA common stock.

   On the day they signed the purchase agreement, 3dfx, NVIDIA and NVIDIA US
Investment Company entered into other agreements that are related to, but
separate from, the asset sale. Because 3dfx did not have sufficient cash to
continue its operations through the closing of the asset sale, 3dfx and NVIDIA
US Investment Company entered into a credit agreement pursuant to which NVIDIA
US Investment Company provided 3dfx a

                                       7
<PAGE>

$15 million loan, which is repayable out of the cash consideration that 3dfx
will receive upon the closing of the asset sale, and received in exchange:

  . the assignment and transfer of all of 3dfx's trademarks, tradenames,
    service marks, trademark applications and service mark applications
    pursuant to a trademark assignment; and

  . a non-exclusive, fully-paid, royalty-free license for most of 3dfx's
    patents, patent applications and inventions pursuant to a patent license
    agreement.

   The patent license also contains a non-exclusive, fully-paid, royalty-free
license to 3dfx from NVIDIA for most of NVIDIA's patents, patent applications
and inventions. In addition, on the day they signed the purchase agreement,
3dfx and NVIDIA entered a patent standstill agreement pursuant to which they
both agreed to stay the pending patent lawsuits that each has filed against the
other, and, if the asset sale closes and under other designated circumstances,
to cause the dismissal of these suits with prejudice, and to refrain from
bringing additional litigation against each other with respect to other
patents, patent applications and inventions for a three-year period. These
transactions entered into contemporaneously with the purchase agreement are
referred to throughout this prospectus/proxy statement as the "related
transactions." Under California law, 3dfx is not required to obtain shareholder
approval to complete these related transactions.

Dissolution of 3dfx (Page 56)

   The plan of dissolution provides for the liquidation, winding up and
dissolution of 3dfx. The plan of dissolution provides that, following approval
by 3dfx's shareholders, 3dfx will proceed with the closing of the asset sale
and the liquidation of its other assets, and will wind up its business and
operations and dissolve. To the extent that there are any remaining assets
after the payment of, or the provision for the payment of 3dfx's and its
subsidiaries' debts and liabilities, 3dfx will distribute such assets to its
shareholders in one or more distributions.

   The plan of dissolution grants broad discretion and authority to 3dfx's
board of directors in the administration of the plan of dissolution, including
the engagement of employees and consultants to facilitate the dissolution of
3dfx, the provision for indemnification of 3dfx's directors and officers,
payment of all of its and its subsidiaries' debts and liabilities,
establishment of a liquidating trust and the determination of the timing and
amount of distributions. In addition, the plan of dissolution provides that
3dfx's board of directors may amend or delay implementation of the plan of
dissolution, unless the board of directors determines that such amendment or
delay would materially and adversely affect shareholders' interests.

   The actual amount of, timing of, and record dates for, any distributions to
3dfx's shareholders are not known at this time. These matters will be
determined after the commencement of liquidation proceedings in the sole
discretion of the 3dfx board of directors or the trustees of the liquidating
trust, as the case may be, and will depend upon a variety of factors, including
the timing of the closing of the asset sale, the net proceeds received in the
asset sale, the value of 3dfx's other assets, the ultimate amount of known and
unknown debts and liabilities of 3dfx and its subsidiaries and the amount of
liquidation-related expenses that must be satisfied out of 3dfx's assets.
Claims, liabilities and expenses will continue to accrue following approval of
the plan of dissolution, and 3dfx anticipates that expenses for professional
fees and other expenses of dissolution will be significant. These expenses will
reduce the amount of the assets available for distribution to 3dfx
shareholders.

   At this time, 3dfx cannot determine if there will be any assets remaining
after paying for, or providing for the payment of, all of its and its
subsidiaries' debts and liabilities. 3dfx expects that following the closing of
the asset sale it will request that NVIDIA US Investment Company provide all or
a portion of the $25 million cash advance provided for in the purchase
agreement in order to enable 3dfx to pay the debts owed to its and its
subsidiaries' creditors. If a cash advance is made to 3dfx, then the number of
NVIDIA shares receivable by

                                       8
<PAGE>

3dfx will be reduced by a number of shares determined by dividing the amount of
the advance by $50. 3dfx expects that, upon receiving the cash consideration at
the closing of the asset sale and after obtaining all or a portion of the cash
advance from NVIDIA US Investment Company, it will have sufficient cash to pay
all of its and its subsidiaries' known current and determinable liabilities.
However, the amount of unknown or contingent liabilities cannot be quantified
and could decrease or eliminate any remaining assets available for
distribution. Further, if 3dfx or its subsidiaries are subject to any
contingent liabilities, this could require that it establish reserves that
could delay any distribution to 3dfx shareholders.

   Because of the uncertainties as to the precise net realizable value of
3dfx's assets and the settlement amount of 3dfx's and its subsidiaries' debts
and liabilities, 3dfx cannot at this time determine the amount of distributions
that may be made to its shareholders, if any. Only if there are assets
remaining at the time of the dissolution will you receive a portion of those
assets, which will be equal to your pro rata share, based on the number of 3dfx
shares you own.

   3dfx expects to receive a combination of cash and shares of NVIDIA common
stock in connection with the asset sale. 3dfx may distribute the shares of
NVIDIA common stock received by it at or about the time of its dissolution
directly to its shareholders, or it may sell these shares in the open market or
contribute the shares to a liquidating trust for the benefit of 3dfx's
shareholders. Further, 3dfx may elect to directly distribute shares of NVIDIA
common stock to some of its shareholders, while distributing an equivalent per
share value in cash to others who would otherwise be entitled to receive a
fractional amount or small number of shares of NVIDIA common stock. At this
time, 3dfx is unable to provide specifics about the type or types of assets
that 3dfx's shareholders may receive or what the value of those assets might be
at the time of distribution, if a distribution is made to 3dfx's shareholders
by 3dfx or a liquidating trust at all.

   The liquidation of 3dfx's assets and the distribution of its remaining
assets, if any, to 3dfx shareholders will have tax consequences to 3dfx
shareholders. For more information about these consequences, see "The
Dissolution of 3dfx--Material Federal Income Tax Consequences of the
Liquidation and Dissolution of 3dfx."

Reasons for the Purchase and Sale of 3dfx Assets

   NVIDIA and NVIDIA US Investment Company (Page 45). The boards of directors
of NVIDIA and NVIDIA US Investment Company approved the asset sale based on a
number of factors, including their belief that it may allow them to:

  . accelerate innovation and time-to-market and thereby better meet customer
    needs for next-generation graphics processors;

  . accelerate expansion into existing and new market segments for graphics
    processors;

  . be more competitive with other leading graphics processor companies,
    including, but not limited to, Intel Corporation, ATI Technologies Inc.,
    3Dlabs, Inc. Ltd., Matrox Electronic Systems, Ltd., Silicon Integrated
    Systems Corp., and VIA Technologies, Inc.;

  . add to their intellectual property portfolio in the field of graphics
    processors;

  . stay, and dismiss with prejudice upon closing of the asset sale or under
    other designated circumstances, the pending patent lawsuits between
    NVIDIA and 3dfx; and

  . have the opportunity to add qualified engineers and other technical
    employees from the former 3dfx workforce to NVIDIA US Investment Company
    and thereby enhance its expertise in graphics processor technology.

                                       9
<PAGE>


   3dfx (Page 47). The 3dfx board of directors approved the asset sale based on
a number of factors, including the following:

  . 3dfx's weakened financial position, which is attributable to a number of
    factors, including decreased demand in the retail PC market and in the
    add-in graphics segment;

  . the evaluation by 3dfx's board of directors of its business plan and the
    conclusion by the 3dfx board that 3dfx could not operate effectively in
    light of the significant losses it was incurring under its present
    business model, and that 3dfx would not be able to timely raise the
    capital necessary to successfully implement its revised business plan;

  . the terms and conditions of the purchase agreement, including the amount
    and form of consideration to be extended in the form of a $15 million
    loan immediately upon execution of the purchase agreement, the amount of
    cash and shares of NVIDIA common stock to be received on or after
    closing, and the financial ability of NVIDIA to provide funding for the
    asset sale so that the asset sale is not conditioned on financing, all of
    which led the 3dfx directors to conclude that it was reasonably likely
    that the asset sale would be completed and that as a result 3dfx would be
    able to satisfy the claims of its creditors and be in a position to
    maximize the return of value to its shareholders;

  . the efforts made by Robertson Stephens and 3dfx management to contact and
    determine the level of interest of third parties in a business
    combination or financial transaction; and

  . the financial presentation of Needham & Company, Inc. to the 3dfx board
    of directors, including Needham & Company, Inc.'s written opinion dated
    December 15, 2000, to the effect that, as of the date of the opinion and
    based upon and subject to the matters stated in the opinion, the
    consideration to be received by 3dfx in the asset sale was fair, from a
    financial point of view, to 3dfx.

Reasons for the Dissolution of 3dfx (Page 56)

   The 3dfx board of directors approved the liquidation, winding up and
dissolution of 3dfx based on a number of factors, including the following:

  . an assessment of the likely net proceeds from the asset sale remaining
    after the payment, or provision for payment, of all of the debts and
    liabilities owing to 3dfx's and its subsidiaries' creditors;

  . the questionable viability of a business based on 3dfx's remaining
    assets, which largely related to its graphics board business, and the
    possible applicability of 3dfx's remaining expertise in other areas;

  . the lack of success that 3dfx had already experienced in finding
    strategic buyers or sources of financing for the assets relating to its
    graphics board business;

  . the financial analysis conducted by Robertson Stephens, one of 3dfx's
    financial advisors, regarding the anticipated performance of a stand-
    alone graphics board business following closing of the asset sale;


  . the attractiveness of potentially being in a position to make a
    distribution to 3dfx's shareholders compared to the board of directors'
    assessment of 3dfx's expected future financial condition, earnings,
    business opportunities, strategies and competitive position; and

  . the comprehensive but unsuccessful efforts of 3dfx to locate alternative
    purchasers for its graphics board assets.

Opinion of 3dfx's Financial Advisor (Page 48)

   The board of directors of 3dfx received an opinion from Needham & Company,
Inc. as to the fairness, from a financial point of view, to 3dfx of the
consideration to be received by 3dfx in connection with the asset

                                       10
<PAGE>

sale. The full text of Needham & Company, Inc.'s written opinion dated December
15, 2000 is attached to this prospectus/proxy statement as Annex C. You are
encouraged to read this opinion carefully in its entirety for a description of
the assumptions made, matters considered and limitations on the review
undertaken. Needham & Company, Inc.'s opinion is addressed to the 3dfx board of
directors and relates only to the fairness of the consideration to 3dfx from a
financial point of view as of the date of the opinion. The opinion does not
address any other aspect of the asset sale and does not constitute a
recommendation to any 3dfx shareholder as to any matters relating to the asset
sale.

Recommendations to 3dfx Shareholders (Pages 47 and 58)

   The 3dfx board of directors has determined that the liquidation, winding up
and dissolution of 3dfx pursuant to the plan of dissolution and the sale of
certain of 3dfx's assets pursuant to the purchase agreement with NVIDIA and
NVIDIA US Investment Company are in the best interests of the creditors and
shareholders of 3dfx. The 3dfx board of directors has approved the dissolution
of 3dfx and the asset sale, and recommends that the shareholders of 3dfx vote
in favor of the dissolution of 3dfx and the asset sale.

The 3dfx Special Meeting of Shareholders (Page 38)

   Time, Date and Place. A 3dfx special meeting will be held on Tuesday, March
27, 2001, at the Marriott Hotel, 2700 Mission College Boulevard, Santa Clara,
California at 8:00 a.m., local time.

   Record Date and Voting Power. You are entitled to vote at the 3dfx special
meeting if you owned shares of 3dfx common stock at the close of business on
February 12, 2001, the record date for the 3dfx special meeting. You will have
one vote at the 3dfx special meeting for each share of 3dfx common stock you
owned at the close of business on the record date. There are 39,776,502
outstanding shares of 3dfx common stock entitled to be voted at the 3dfx
special meeting.

   3dfx Required Vote. The approval of both the plan of dissolution of 3dfx and
the asset sale requires the affirmative vote of a majority of the shares of
3dfx common stock outstanding at the close of business on the record date. The
proposal to approve the plan of dissolution will first be presented to 3dfx's
shareholders and, if approved, the proposal to approve the asset sale will then
be presented to 3dfx's shareholders.

   Share Ownership of Management. As of February 12, 2001, the directors and
executive officers of 3dfx and their affiliates owned approximately 2.2% of the
shares entitled to vote at the 3dfx special meeting. All of the directors and
executive officers of 3dfx that own 3dfx stock have agreed to vote their shares
in favor of approval of the asset sale and the dissolution of 3dfx.

Interests of Some 3dfx Officers in the Asset Sale (Page 53)

   Several officers of 3dfx have personal interests in the asset sale and the
dissolution of 3dfx that are different from, or in addition to, the interests
of most 3dfx shareholders. 3dfx is a party to employment agreements with some
of its senior executive officers, including Alex Leupp, Scott Sellers, Stephen
Lapinski, Richard Burns and Al Woodhull. These agreements, which were recently
amended, provide for a lump sum severance payment and COBRA premium
reimbursement benefits. Except with respect to Mr. Burns, who is entitled to
receive a lump sum severance benefit immediately upon termination of his
employment, the lump sum severance benefits to be paid to the other senior
executive officers are not payable until after 3dfx's payment of all of its
fixed and ascertainable debts and liabilities.

                                       11
<PAGE>


Conditions to the Asset Sale (Page 69)

   The obligations of each of NVIDIA, NVIDIA US Investment Company and 3dfx to
complete the asset sale are subject to the satisfaction of specified conditions
in addition to the approval of a majority in interest of 3dfx's shareholders.

Termination of the Purchase Agreement (Page 72)

   Any of NVIDIA, NVIDIA US Investment Company or 3dfx is entitled to terminate
the purchase agreement under specified conditions, including, among others,
mutual written consent of the parties; if the asset sale has not been completed
by May 15, 2001; if a court issues a final and nonappealable order that
prohibits the asset sale; if the 3dfx shareholders do not approve the
dissolution of 3dfx or the asset sale; or if a triggering event occurs, such as
the failure of the board of directors of 3dfx to unanimously recommend approval
of the dissolution of 3dfx or the asset sale to 3dfx shareholders or the
approval or endorsement by the board of directors of 3dfx of an alternative
acquisition proposal.

Some Consequences of Termination (Page 73)

   Further, if the purchase agreement is terminated in some circumstances,
including as a result of the 3dfx shareholders failing to approve the
dissolution of 3dfx and the asset sale; or the occurrence of a triggering event
under the purchase agreement, 3dfx may be obligated to pay a fee of $3.3
million to NVIDIA US Investment Company and to reimburse NVIDIA and NVIDIA US
Investment Company for some of the fees incurred by them in connection with the
negotiation and preparation of the purchase agreement and related transaction
agreements. 3dfx also would be required to repay $5 million of the $15 million
loaned to it under the credit agreement.

   In some circumstances, even if the asset sale is not completed, including if
3dfx's shareholders fail to approve both the dissolution of 3dfx and the asset
sale, the patent license and patent standstill agreements would remain in
place. This means that NVIDIA and NVIDIA US Investment Company would retain a
non-exclusive, fully-paid, royalty-free license to most of 3dfx's patents,
patent applications and inventions and each of NVIDIA and 3dfx would still
cause the pending patent litigation against the other to be dismissed with
prejudice. Further, regardless of whether the asset sale is completed, NVIDIA
US Investment Company will retain ownership of all of the 3dfx trademarks,
tradenames, service marks, trademark applications and service market
applications that it received in connection with the credit agreement and
trademark assignment.

Limitation on Considering other Acquisition Proposals (Page 70)

   3dfx has agreed not to consider a business combination or other similar
transaction with another party while the asset sale is pending unless the other
party has made an unsolicited, bona fide written offer to the 3dfx board of
directors to purchase all or some of the outstanding shares of 3dfx common
stock or all or substantially all of the assets of 3dfx on terms that the 3dfx
board of directors determines to be more favorable to its shareholders than the
terms of the asset sale and dissolution of 3dfx.

Expenses (Page 74)

   The purchase agreement provides that regardless of whether the asset sale is
completed, all expenses incurred by the parties shall be borne by the party
incurring such expenses, except in limited expressly defined instances where
the expenses are to be shared and except upon certain termination events as
referenced above.

Governmental Approvals (Page 54)

   The asset sale is subject to review by the Department of Justice and the
Federal Trade Commission, or FTC, to determine whether it complies with
applicable antitrust laws. Under the provisions of the HSR Act, the

                                       12
<PAGE>


asset sale may not be completed until the waiting period requirement of the HSR
Act has been satisfied. The waiting period under the HSR Act has expired.

Material Federal Income Tax Consequences (Pages 55 and 62)

   The asset sale and liquidation are taxable events to 3dfx. While 3dfx cannot
determine at this time its tax liability attributable to the asset sale and
liquidation, 3dfx expects that it may incur some alternative minimum tax
liability as a result of such events. The liquidation of 3dfx and the receipt
of any liquidating distributions by 3dfx shareholders will cause each
shareholder to recognize a gain or loss for federal income tax purposes.

   Tax matters can be complicated, and the tax consequences of the transactions
discussed in this prospectus/proxy statement to you will depend on the facts of
your own situation. You should consult your own tax advisor to fully understand
the tax consequences of the asset sale and dissolution of 3dfx to you.

Anticipated Accounting Treatment (Page 55)

   The asset sale is expected to be accounted for by NVIDIA as a "purchase" for
financial reporting purposes.

Absence of Dissenters' Rights (Pages 55 and 65)

   3dfx shareholders do not have dissenters' rights in connection with the
asset sale or the dissolution of 3dfx.


                                       13
<PAGE>

                         MARKET PRICE AND DIVIDEND DATA

NVIDIA's Market Price Data

   NVIDIA common stock is listed on the Nasdaq National Market under the symbol
"NVDA." This table sets forth, for the periods indicated, the range of high and
low per-share closing sales prices for NVIDIA common stock as reported on the
Nasdaq National Market, adjusted to reflect a two-for-one stock split effected
in June 2000. NVIDIA's fiscal year ends on the last Sunday in January of each
year.

<TABLE>
<CAPTION>
                                                                     NVIDIA
                                                                  Common Stock
                                                                  -------------
                                                                   Low    High
                                                                  ------ ------
   <S>                                                            <C>    <C>
   Fiscal Year Ended January 30, 2000
   First quarter................................................. $ 8.00 $13.13
   Second quarter................................................   8.19  11.56
   Third quarter.................................................   8.38  14.19
   Fourth quarter................................................  10.88  24.13
   Fiscal Year Ended January 28, 2001
   First quarter.................................................  17.50  75.00
   Second quarter................................................  37.75  88.00
   Third quarter.................................................  54.00  85.38
   Fourth quarter ...............................................  27.88  76.75
   Fiscal Year Ending January 27, 2002
   First quarter (through February 12, 2001).....................  43.13  52.19

3dfx's Market Price Data

   3dfx common stock is listed on the Nasdaq National Market under the symbol
"TDFX." This table sets forth, for the periods indicated, the range of high and
low per-share closing sales prices for 3dfx common stock as reported on the
Nasdaq National Market. 3dfx's fiscal year ends on January 31 of each year.

<CAPTION>
                                                                      3dfx
                                                                  Common Stock
                                                                  -------------
                                                                   Low    High
                                                                  ------ ------
   <S>                                                            <C>    <C>
   Fiscal Year Ended January 31, 2000
   First quarter................................................. $10.81 $21.88
   Second quarter................................................  13.13  21.25
   Third quarter.................................................   7.53  15.19
   Fourth quarter................................................   8.50  10.56
   Fiscal Year Ended January 31, 2001
   First quarter.................................................   8.13  13.44
   Second quarter................................................   6.69  10.38
   Third quarter.................................................   2.97   7.75
   Fourth quarter ...............................................    .09   4.52
   Fiscal Year Ending January 31, 2002
   First quarter (through February 12, 2001).....................    .25    .34
</TABLE>

                                       14
<PAGE>


Recent Closing Prices

   The following table sets forth the closing per-share sales prices of NVIDIA
common stock and 3dfx common stock, as reported on the Nasdaq National Market,
on December 15, 2000, the last full trading day before the public announcement
of the asset sale and the dissolution of 3dfx, and on February 12, 2001, the
most recent practicable date prior to the printing of this prospectus/proxy
statement:

<TABLE>
<CAPTION>
                                                          NVIDIA        3dfx
                                                       Common Stock Common Stock
                                                       ------------ ------------
   <S>                                                 <C>          <C>
   December 15, 2000..................................    $37.44       $1.78
   February 12, 2001..................................    $43.13       $ .25
</TABLE>

   Following the transaction, NVIDIA common stock will continue to be listed on
the Nasdaq National Market. 3dfx has received a delisting notice from Nasdaq
due to its failure to maintain a minimum bid of at least $1.00 per share. The
notice provides that the 3dfx common stock may be delisted as early as May 7,
2001. 3dfx expects that it will be unable to satisfy the requirement for the
continued listing of its common stock on the Nasdaq National Market. After
delisting, trading would be conducted on the over-the-counter market and the
ability to buy and sell shares of 3dfx common stock may be materially impaired,
which would likely have an adverse affect on the price and liquidity of 3dfx
common stock.

   Neither NVIDIA nor 3dfx has ever declared or paid cash dividends on its
common stock. The policy of NVIDIA is to retain earnings for use in its
businesses. While 3dfx intends to make one or more distributions to its
shareholders in connection with its dissolution, 3dfx cannot determine at this
time if it will be able to make any distributions.

                                       15
<PAGE>

                               NVIDIA CORPORATION

            SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

   The following summary selected historical consolidated financial data should
be read in conjunction with NVIDIA's consolidated financial statements and
related notes and NVIDIA's "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which are incorporated by reference in
this prospectus/proxy statement. The statement of operations data for the year
ended December 31, 1997, the month ended January 31, 1998 and each of the years
in the two-year period ended January 30, 2000 and the balance sheet data as of
January 31, 1999 and January 30, 2000 have been derived from and should be read
in conjunction with NVIDIA's audited financial statements and the related
notes, which are incorporated by reference in this prospectus/proxy statement.
The statement of operations data for the years ended December 31, 1995 and 1996
are derived from NVIDIA's audited financial statements and the related notes,
which are not included in this prospectus/proxy statement. The balance sheet
data as of December 31, 1995, 1996 and 1997 and January 31, 1998 are derived
from the audited financial statements of NVIDIA which are not included or
incorporated by reference in this prospectus/proxy statement. The historical
results presented below are not necessarily indicative of future results.

   The statement of operations data for the nine months ended October 31, 1999
and October 29, 2000 and the balance sheet data as of October 29, 2000 are
derived from NVIDIA's unaudited financial statements which are incorporated by
reference in this prospectus/proxy statement. The unaudited financial
statements have been prepared on the same basis as the audited financial
statements and, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation. The interim results for the nine months ended October 29, 2000
are not necessarily indicative of results to be expected for the year ended
January 28, 2001.

<TABLE>
<CAPTION>
                          Year Ended December 31,                      Years Ended          Nine Months Ended
                          -------------------------  Month ended ----------------------- -----------------------
                                                     January 31, January 31, January 30, October 31, October 29,
                           1995     1996     1997       1998        1999        2000        1999        2000
                          -------  -------  -------  ----------- ----------- ----------- ----------- -----------
                                                                                               (unaudited)
                                                 (in thousands, except per-share data)
<S>                       <C>      <C>      <C>      <C>         <C>         <C>         <C>         <C>
Statement of Operations
 Data:
Revenue:
 Product................  $ 1,103  $ 3,710  $27,280    $11,420    $151,413    $374,505    $246,050    $517,046
 Royalty................       79      202    1,791      1,911       6,824         --          --          --
                          -------  -------  -------    -------    --------    --------    --------    --------
 Total revenue..........    1,182    3,912   29,071     13,331     158,237     374,505     246,050     517,046
Cost of revenue.........    1,549    3,038   21,244     10,071     109,746     235,575     155,766     324,249
                          -------  -------  -------    -------    --------    --------    --------    --------
Gross profit (loss).....     (367)     874    7,827      3,260      48,491     138,930      90,284     192,797
Operating expenses:
 Research and
  development...........    2,426    1,218    7,103      1,121      25,073      47,439      32,018      59,994
 Sales, general and
  administrative........    3,677    2,649    4,183        640      18,902      37,079      24,693      41,569
                          -------  -------  -------    -------    --------    --------    --------    --------
 Total operating
  expenses..............    6,103    3,867   11,286      1,761      43,975      84,518      56,711     101,563
                          -------  -------  -------    -------    --------    --------    --------    --------
Operating income
 (loss).................   (6,470)  (2,993)  (3,459)     1,499       4,516      54,412      33,573      91,234
Interest and other
 income (expense), net..       93      (84)    (130)       (18)        (29)      1,754       1,141      10,056
                          -------  -------  -------    -------    --------    --------    --------    --------
Income (loss) before
 income tax expense.....   (6,377)  (3,077)  (3,589)     1,481       4,487      56,166      34,714     101,290
Income tax expense......      --       --       --         134         357      18,068      11,203      32,413
                          -------  -------  -------    -------    --------    --------    --------    --------
 Net income (loss)......  $(6,377) $(3,077) $(3,589)   $ 1,347    $  4,130    $ 38,098    $ 23,511    $ 68,877
                          =======  =======  =======    =======    ========    ========    ========    ========
Basic net income (loss)
 per share..............  $  (.28) $  (.14) $  (.14)   $   .05    $    .14    $    .64    $    .40    $   1.07
                          =======  =======  =======    =======    ========    ========    ========    ========
Diluted net income
 (loss) per share.......  $  (.28) $  (.14) $  (.14)   $   .03    $    .08    $    .53    $    .33    $    .87
                          =======  =======  =======    =======    ========    ========    ========    ========
Shares used in basic per
 share computation......   22,730   22,766   25,354     28,282      29,130      59,744      59,090      64,660
Shares used in diluted
 per share computation..   22,730   22,766   25,354     52,200      54,786      72,196      71,226      79,234
</TABLE>

<TABLE>
<CAPTION>
                                                    As of
                          As of December 31,     January 31,       As of       As of
                         --------------------- ---------------- January 30, October 29,
                          1995   1996   1997    1998     1999      2000        2000
                         ------ ------ ------- ------- -------- ----------- -----------
                                                                            (unaudited)
<S>                      <C>    <C>    <C>     <C>     <C>      <C>         <C>
Balance Sheet Data:
Cash and cash
 equivalents............ $3,872 $3,133 $ 6,551 $ 7,984 $ 50,257  $ 61,560    $694,883
Total assets............  6,793  5,525  25,039  30,172  113,332   202,250     983,346
Capital lease
 obligations, less
 current portion........  1,137    617   1,891   1,756    1,995       962         644
Total stockholders'
 equity.................  4,013  1,037   6,897   8,610   64,209   124,563     361,473
</TABLE>

                                       16
<PAGE>

                             3DFX INTERACTIVE, INC.

            SUMMARY SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

   The following summary selected historical consolidated financial data should
be read in conjunction with 3dfx's consolidated financial statements and
related notes and 3dfx's "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which are incorporated by reference in
this prospectus/proxy statement. The consolidated statement of operations data
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, and the
consolidated balance sheet data as of January 31, 2000 and December 31, 1998,
are derived from 3dfx's audited consolidated financial statements (as updated
in 3dfx's Current Report on Form 8-K dated January 26, 2001, the audit report
on which contains an explanatory paragraph relating to 3dfx's ability to
continue as a going concern as described in Note 14 to the consolidated
financial statements), which are incorporated by reference in this
prospectus/proxy statement. The consolidated statement of operations data for
the years ended December 31, 1996 and December 31, 1995, and the consolidated
balance sheet data as of January 31, 1999, December 31, 1997, December 31,
1996, and December 31, 1995, are derived from 3dfx's audited consolidated
financial statements, which are not included or incorporated by reference in
this prospectus/proxy statement. The consolidated statement of operations data
for the nine months ended October 31, 2000 and October 31, 1999, and the
consolidated balance sheet data as of October 31, 2000, are derived from 3dfx's
unaudited financial statements, which are incorporated by reference in this
prospectus/proxy statement and which, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the results for the unaudited interim periods. The historical
results presented below are not necessarily indicative of future results.

   Effective as of February 1, 1999, 3dfx changed its fiscal year from a fiscal
year beginning January 1 and ending December 31 to a fiscal year beginning
February 1 and ending January 31. The consolidated statement of operations data
below and consolidated balance sheet and other data below reflects 3dfx's
operations, including the following:

  .  In the quarter ended October 31, 2000, 3dfx took a $117.1 million charge
     for the impairment of goodwill and other intangible assets. 3dfx's
     results of operations for the nine months ended October 31, 2000 and
     financial position at October 31, 2000 reflect the impact of this
     charge.

  .  3dfx's merger with GigaPixel Corporation, which was consummated in July
     2000, was treated as a purchase for financial reporting and accounting
     purposes. 3dfx's results of operations for the nine months ended October
     31, 2000 and financial position at October 31, 2000 reflect the impact
     of the GigaPixel merger.

  .  3dfx's merger with STB Systems, Inc., which was consummated in May 1999,
     was treated as a purchase for financial reporting and accounting
     purposes. 3dfx's results of operations for the year ended January 31,
     2000 and financial position at January 31, 2000 reflect the impact of
     the STB merger.

  .  In July 1998, 3dfx reached a settlement with Sega in conjunction with a
     lawsuit which 3dfx filed against Sega in August 1997. Fiscal 1998
     includes a one-time recognition of income based on the settlement.

  .  Fiscal 1997 includes $1.8 million of development contract revenues
     recognized under the Technology License and Development Agreement with
     Sega Enterprises, Ltd. No amount was recognized in any other period.


                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                                 Month      Year     Nine Months Ended
                               Year Ended December 31,           Ended     Ended        October 31,
                          ------------------------------------- January   January   ---------------------
                           1995      1996      1997      1998   31, 1999  31, 2000    1999       2000
                          -------  --------  --------  -------- --------  --------  --------  -----------
                                            (in thousands, except per share data)
                                                                                        (unaudited)
<S>                       <C>      <C>       <C>       <C>      <C>       <C>       <C>       <C>
Statement of Operations Data:
Revenues................  $   --   $  6,390  $ 44,069  $202,601 $ 17,048  $360,523  $251,135   $ 214,757
Cost of revenues........      --      5,123    22,611   119,618   14,527   287,872   191,122     199,903
                          -------  --------  --------  -------- --------  --------  --------   ---------
Gross profit............      --      1,267    21,458    82,983    2,521    72,651    60,013      14,854
                          -------  --------  --------  -------- --------  --------  --------   ---------
Operating expenses:
 Research and
  development...........    2,940     9,435    12,412    34,045    3,340    66,062    46,373      54,830
 Selling, general and
  administrative........    2,166     6,642    11,390    35,441    4,614    63,468    43,954      50,750
 In process R & D.......      --        --        --        --       --      4,302     4,302      66,250
 Restructuring expense..      --        --        --        --       --      4,382     1,830         --
 Amortization of
  goodwill and
  intangibles...........      --        --        --        --       --     10,228     6,601      17,993
 Impairment of goodwill
  and intangibles.......      --        --        --        --       --        --        --      117,065
                          -------  --------  --------  -------- --------  --------  --------   ---------
  Total operating
   expenses.............    5,106    16,077    23,802    69,486    7,954   148,442   103,060     306,888
                          -------  --------  --------  -------- --------  --------  --------   ---------
Income (loss) from
 operations.............   (5,106)  (14,810)   (2,344)   13,497   (5,433)  (75,791)  (43,047)   (292,034)
Interest and other
 income, net............       67        59       630    15,869      322     2,180     1,988         215
                          -------  --------  --------  -------- --------  --------  --------   ---------
Income (loss) before
 income taxes...........   (5,039)  (14,751)   (1,714)   29,366   (5,111)  (73,611)  (41,059)   (291,819)
Provision (benefit) for
 income taxes...........      --        --        --      7,663   (1,636)  (10,324)   (9,658)       (313)
                          -------  --------  --------  -------- --------  --------  --------   ---------
Net income (loss).......  $(5,039) $(14,751) $ (1,714) $ 21,703 $ (3,475) $(63,287) $(31,401)  $(291,506)
                          =======  ========  ========  ======== ========  ========  ========   =========
Basic net income (loss)
 per share..............  $ (0.82) $  (1.74) $  (0.16) $   1.45 $  (0.22) $  (2.81) $  (1.48)  $   (9.69)
                          =======  ========  ========  ======== ========  ========  ========   =========
Diluted net income
 (loss) per share.......  $ (0.82) $  (1.74) $  (0.16) $   1.33 $  (0.22) $  (2.81) $  (1.48)  $   (9.69)
                          =======  ========  ========  ======== ========  ========  ========   =========
Shares used in basic net
 income (loss)
 calculation............    6,173     8,467    10,767    14,917   15,641    22,536    21,163      30,077
Shares used in diluted
 net income (loss)
 calculation............    6,173     8,467    10,767    16,353   15,641    22,536    21,163      30,077
<CAPTION>
                                  As of December 31,            As of January 31,                As of
                          ------------------------------------- ------------------            October 31,
                           1995      1996      1997      1998     1999      2000                 2000
                          -------  --------  --------  -------- --------  --------            -----------
                                                                                              (unaudited)
<S>                       <C>      <C>       <C>       <C>      <C>       <C>       <C>       <C>
Balance Sheet Data:
Cash, cash equivalents
 and short-term
 investments............  $   865  $  5,291  $ 34,921  $ 95,980 $ 94,957  $ 65,830             $  33,606
Working capital
 (deficit)..............     (307)    6,637    37,456   110,871  106,924    98,466                (3,907)
Total assets............    2,440    15,581    61,917   184,121  168,870   296,111               189,267
Long-term liabilities...      544       632       546       284      416     1,881                   701
Retained earnings
 (accumulated deficit)..   (5,039)  (19,790)  (21,504)      199   (3,276)  (66,563)             (358,068)
Total shareholders'
 equity.................      552     9,621    44,274   126,313  123,018   187,234                70,007
</TABLE>

                                       18
<PAGE>

                               NVIDIA CORPORATION

 SUMMARY SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

   The following summary selected unaudited pro forma combined condensed
financial information for NVIDIA has been derived from the unaudited pro forma
condensed combined financial statements which are included elsewhere in this
prospectus/proxy statement, which give effect to the acquisition of the 3dfx
assets under purchase accounting, and should be read in conjunction with the
unaudited pro forma condensed combined financial statements and the related
notes. For pro forma purposes, (1) NVIDIA's unaudited pro forma combined
condensed statements of operations for the nine months ended October 29, 2000
and the fiscal year ended January 30, 2000 are presented as if the purchase had
occurred at the beginning of the earliest period presented, and (2) NVIDIA's
unaudited pro forma combined condensed balance sheet as of October 29, 2000 is
presented as if the purchase had occurred as of that date.

   The pro forma combined condensed financial statements should be read in
conjunction with NVIDIA's unaudited combined condensed financial statements and
related notes included in NVIDIA's Quarterly Report on Form 10-Q for the period
ended October 29, 2000 and the audited and consolidated financial statements
and related notes incorporated by reference in NVIDIA's Annual Report on Form
10-K for the fiscal year ended January 30, 2000. The pro forma information is
based on estimates and assumptions and may not necessarily be indicative of
what NVIDIA's results of operations or financial position would have been had
the asset sale been effected as of and for the periods presented, nor is such
information necessarily indicative of NVIDIA's results of operations or
financial position for any future period or date.
<TABLE>
<CAPTION>
                                                                   Nine Months
                                                       Year Ended     Ended
                                                       January 30, October 29,
                                                          2000        2000
                                                       ----------- -----------
                                                        (in thousands, except
                                                           per share data)
<S>                                                    <C>         <C>
Pro Forma Combined Condensed Statement of Operations
 Data:
Revenues..............................................  $374,505   $  517,046
Cost of revenues......................................   235,575      324,249
                                                        --------   ----------
Gross profit..........................................   138,930      192,797
                                                        --------   ----------
Operating Expenses:
  Research and development............................    63,252       71,853
  Sales, general and administrative...................    38,057       42,302
  Amortization of goodwill and other intangibles......    21,948       16,461
                                                        --------   ----------
    Total operating expenses..........................   123,257      130,616
Operating income......................................    15,673       62,181
Interest and other income, net........................    (1,571)       7,562
                                                        --------   ----------
Income before income tax expense......................    14,102       69,743
Income tax expense....................................     4,513       22,318
                                                        --------   ----------
Net income............................................  $  9,589   $   47,425
                                                        ========   ==========
Basic net income per share............................  $   0.16   $     0.72
                                                        ========   ==========
Diluted net income per share..........................  $   0.13   $     0.59
                                                        ========   ==========
Shares used in basic per share computation............    60,744       65,660
Shares used in diluted per share computation..........    73,196       80,234
<CAPTION>
                                                                      As of
                                                                   October 29,
                                                                      2000
                                                                   -----------
<S>                                                    <C>         <C>
Pro Forma Combined Condensed Balance Sheet Data:
Cash and cash equivalents......................................... $  624,883
Total assets......................................................  1,029,346
Long-term obligations, less current portion.......................    300,000
</TABLE>

                                       19
<PAGE>


                                 PER SHARE DATA

   The information below reflects the historical net income and the book value
per share of NVIDIA common stock and the historical net loss and the book value
per share of 3dfx common stock, as well as the unaudited NVIDIA pro forma
combined net income and the October 29, 2000 NVIDIA pro forma combined book
value per share after giving effect to the asset sale. You should read the
following tables in conjunction with the unaudited pro forma combined condensed
financial statements of NVIDIA, the historical consolidated financial
statements and related notes of NVIDIA and the historical consolidated
financial statements of 3dfx and related notes which are included elsewhere in
this document or incorporated by reference.

                             NVIDIA Per Share Data

<TABLE>
<CAPTION>
                                                                     Nine Months
                                                         Year Ended     Ended
                                                         January 30, October 29,
                                                            2000        2000
                                                         ----------- -----------
<S>                                                      <C>         <C>
Historical per common share data:
  Income per share--basic...............................    $0.64       $1.07
  Income per share--diluted.............................    $0.53       $0.87
  Book value per share (1)..............................    $2.00       $5.32
</TABLE>

                              3dfx Per Share Data

<TABLE>
<CAPTION>
                                                                     Nine Months
                                                         Year Ended     Ended
                                                         January 31, October 31,
                                                            2000        2000
                                                         ----------- -----------
<S>                                                      <C>         <C>
Historical per common share data:
  Net loss per share--basic and diluted.................   $(2.81)     $(9.69)
  Book value per share (1)..............................   $ 7.66      $ 1.77
</TABLE>

               Unaudited NVIDIA Pro Forma Combined Per Share Data

<TABLE>
<CAPTION>
                                                                     Nine Months
                                                         Year Ended     Ended
                                                         January 30, October 29,
                                                            2000        2000
                                                         ----------- -----------
<S>                                                      <C>         <C>
NVIDIA Pro forma combined net income per share:
  Income per share--basic...............................    $0.16       $0.72
  Income per share--diluted.............................    $0.13       $0.59
</TABLE>

<TABLE>
<CAPTION>
                                                                     October 29,
                                                                        2000
                                                                     -----------
<S>                                                                  <C>
Pro forma combined book value per NVIDIA share (2)..................    $4.24
</TABLE>
--------
(1)  The historical book value per share is computed by dividing stockholders'
     equity by the number of common shares outstanding at the end of each
     period presented.
(2)  The pro forma combined book value per share is computed by dividing pro
     forma stockholders' equity, less intangible assets, by the pro forma
     number of shares outstanding at the end of the period.

                                       20
<PAGE>

                                  RISK FACTORS

   When you decide whether to vote for approval of the dissolution of 3dfx and
the asset sale, you should consider the following factors in conjunction with
the other information included or incorporated by reference in this
prospectus/proxy statement. By voting to approve the dissolution of 3dfx and
the asset sale, you may be choosing to invest in NVIDIA common stock, although
there can be no assurance that following the completion of the dissolution of
3dfx any NVIDIA common stock will remain available for distribution to 3dfx
shareholders.

Risks Relating to the Asset Sale

If the purchase agreement were terminated under a number of circumstances,
including the failure of a majority in interest of 3dfx's shareholders to
approve the dissolution of 3dfx and the asset sale, 3dfx would incur costs and
NVIDIA would retain significant benefits related to 3dfx's assets.

   If the purchase agreement was terminated because 3dfx was unable to obtain
the approval of a majority in interest of its shareholders with respect to
either the dissolution of 3dfx or the asset sale, the asset sale is not
completed by May 15, 2001, or other circumstances arise entitling NVIDIA to
terminate the purchase agreement, 3dfx would be obligated to reimburse NVIDIA
US Investment Company for all reasonable fees and expenses, including
reasonable attorneys' fees, accountants' fees, financial advisory fees and
filing fees, that have been paid or that may become payable by or on behalf of
NVIDIA or NVIDIA US Investment Company in connection with the preparation and
negotiation of the asset sale and related transactions.

   In addition, if a triggering event as defined under the purchase agreement
has occurred or if upon specific termination events there is in existence
another acquisition proposal, 3dfx would be obligated to pay NVIDIA US
Investment Company a nonrefundable fee of $3.3 million.

   Moreover, even if the purchase agreement was terminated for the reasons
mentioned above, NVIDIA and NVIDIA US Investment Company would retain
significant benefits related to 3dfx's assets, such as:

  .  NVIDIA US Investment Company would still own all of 3dfx's trademarks,
     tradenames, service marks, trademark applications and service mark
     applications received in connection with the credit agreement;

  .  3dfx would still be obligated to dismiss with prejudice its pending
     patent infringement lawsuit against NVIDIA;

  .  NVIDIA US Investment Company would retain the non-exclusive, royalty-
     free, fully-paid license to most of 3dfx's patents, patent applications
     and inventions pursuant to the patent license agreement; and

  .  3dfx and NVIDIA would be prevented from suing each other, or their
     respective subsidiaries, customers, distributors, users or others for
     infringement of most of their respective patents for a period of three
     years following December 15, 2000 pursuant to the patent standstill
     agreement.

Even if 3dfx's shareholders approve the asset sale, the asset sale may not be
completed and the value of 3dfx could be significantly diminished.

   The completion of the asset sale is subject to numerous conditions. Even if
a majority in interest of the shareholders of 3dfx vote to approve the asset
sale, 3dfx cannot guarantee that the asset sale will be completed. If it is not
completed, 3dfx would likely not be able to sell its assets to another buyer on
terms as favorable as those provided in the purchase agreement, or at all,
which would mean that less or no assets would be available for distribution to
3dfx's shareholders than if the asset sale had been completed. Further, the
termination of the purchase agreement under various circumstances would result
in 3dfx being obligated to pay various expenses and fees to NVIDIA. In
addition, even if the asset sale is not completed, NVIDIA would still own all
of 3dfx's trademarks, trade names, service marks, trademark applications, and
service mark applications and, in some circumstances, the 3dfx patent
infringement lawsuit against NVIDIA would be dismissed with prejudice,

                                       21
<PAGE>

NVIDIA would continue to benefit from a non-exclusive, fully-paid, royalty-free
license to most of 3dfx's patents, patent applications and inventions, and 3dfx
would be prevented from suing NVIDIA for infringement of some of its patents,
patent applications and inventions for a period of three years, with the result
of the foregoing being that the value of 3dfx's remaining assets would be
significantly diminished.

Whether or not the asset sale is completed, 3dfx may not be able to satisfy its
and its subsidiaries' debts and liabilities, and if the sale is not completed,
it is likely that 3dfx will file for or be forced into bankruptcy by its
creditors and no assets may be available for distribution to 3dfx shareholders.

   If the asset sale is not completed, 3dfx believes that it is likely that it
will file for or be forced to resort to bankruptcy protection. In this event,
it is extremely unlikely that 3dfx would be able to satisfy all of its and its
subsidiaries' debts and liabilities, and there would therefore be no assets
available for distribution to 3dfx's shareholders. Even if the parties complete
the asset sale, the proceeds provided by the transaction may not be sufficient
to satisfy all of 3dfx's and its subsidiaries' known and unknown debts and
liabilities. If the proceeds from the asset sale are insufficient to pay 3dfx's
and its subsidiaries' debts and other liabilities, it is likely that it will
file for or be forced to resort to bankruptcy protection. Further, if there are
insufficient proceeds from the asset sale to pay or otherwise provide for the
debts and liabilities of 3dfx and its subsidiaries, there will be no assets
available for distribution to 3dfx's shareholders.

The number and value of shares of NVIDIA common stock receivable in the asset
sale are uncertain.

   3dfx believes that if it is able to pay or provide for the payment of all of
its and its subsidiaries' debts and liabilities, 3dfx shareholders may receive
a portion of the 1,000,000 shares of NVIDIA common stock that are to be
delivered to 3dfx upon its dissolution. The number of shares deliverable to
3dfx may be reduced, however, if, after the closing of the asset sale, 3dfx
needs to receive additional funds of up to $25 million from NVIDIA US
Investment Company to pay, in full, all of the debts and liabilities of 3dfx
and its subsidiaries to their creditors. If NVIDIA US Investment Company
advances these additional funds to 3dfx, the 1,000,000 shares of NVIDIA common
stock would be reduced automatically by the number of shares equal to the
quotient determined by dividing the amount of the advances made by NVIDIA US
Investment Company by $50, regardless of the actual stock price of NVIDIA
common stock at the time of the advance.

   The purchase agreement does not provide for any adjustments in the number of
shares of NVIDIA common stock deliverable to 3dfx as a result of fluctuations
in the price of NVIDIA common stock. Accordingly, the number of shares that
3dfx will receive in the asset sale will not change, even if the market price
of NVIDIA common stock changes, except as set forth above with respect to the
potential $25 million advance. Recently, the stock market and, in particular,
the securities of technology companies like NVIDIA, have experienced extreme
price and volume fluctuations. These market fluctuations may adversely affect
the market price of NVIDIA common stock. The market price of NVIDIA common
stock at the time of any distribution to 3dfx's shareholders could be lower
than the market price on the date of the purchase agreement or the current
market price. A substantial amount of time may elapse before 3dfx makes a
distribution, if any, to its shareholders in connection with its dissolution.

If 3dfx's and its subsidiaries' debts and liabilities substantially exceed the
cash proceeds from the asset sale, NVIDIA US Investment Company would not be
required to make an advance to 3dfx or deliver the stock consideration.

   Under the terms of the purchase agreement, NVIDIA US Investment Company is
only obligated to deliver shares of NVIDIA common stock to 3dfx upon 3dfx's
payment, or provision for the payment, of its and its subsidiaries' debts and
liabilities. If after the closing of the asset sale, 3dfx has expended all or
substantially all of the cash received from NVIDIA US Investment Company and
3dfx and its subsidiaries have over $25 million of remaining debts and
liabilities, NVIDIA US Investment Company would not be obligated to make the
advance to 3dfx of up to $25 million. In addition, if 3dfx is unable to confirm
to NVIDIA that it has paid,

                                       22
<PAGE>

or otherwise provided for, its and its subsidiaries' debts and liabilities,
NVIDIA US Investment Company would not be obligated under the purchase
agreement to deliver to 3dfx any shares of NVIDIA common stock.

If NVIDIA is not successful in integrating the 3dfx graphics business, NVIDIA's
operations may be affected.

   NVIDIA's ability to realize some of the anticipated benefits of the asset
sale will depend in part on NVIDIA's ability to integrate the assets purchased
from 3dfx into NVIDIA's current operations in a timely and efficient manner.
This integration may be difficult and unpredictable because NVIDIA's current
products are highly complex and have been developed independently from those of
3dfx. Successful integration requires coordination of different development and
engineering teams, as well as sales and marketing efforts and personnel. If
NVIDIA cannot successfully integrate the 3dfx assets with its operations,
NVIDIA may not realize some of the expected benefits of the asset sale.

Failure to hire and retain key employees could diminish the benefits of the
asset sale to NVIDIA.

   The successful integration of the 3dfx assets into NVIDIA's current business
operations will depend in part on the hiring and retention of personnel
critical to the business and operations of NVIDIA and the 3dfx graphics
business. Prior to its workforce reduction, 3dfx had personnel with technical
and engineering expertise which is in high demand and short supply. NVIDIA has
already added a number of 3dfx's former technical and engineering personnel to
its workforce. NVIDIA may be unable to retain management and technical and
engineering personnel that are critical to the successful integration of the
3dfx assets, which may result in loss of key information, expertise or know-how
and unanticipated additional recruiting and training costs and otherwise
diminishing anticipated benefits of the asset sale for NVIDIA and its
shareholders.

Failure to complete the asset sale could cause 3dfx's stock price to decline.

   If the asset sale is not completed, 3dfx's stock price may decline due to
any or all of the following potential consequences:

  . 3dfx may not be able to dispose of its assets for values equaling or
    exceeding those currently estimated by 3dfx; in particular, the assets
    that are the subject of the asset sale will likely be substantially
    diminished in value;

  . 3dfx may file for or be forced into bankruptcy;

  . 3dfx may become obligated to pay NVIDIA's and NVIDIA US Investment
    Company's expenses relating to the asset sale, plus a termination fee of
    $3.3 million;

  . 3dfx may still be obligated to continue the patent license granted to
    NVIDIA, to dismiss the pending patent litigation with NVIDIA with
    prejudice and be prevented from suing NVIDIA for infringement of its
    patents or other rights;

  . 3dfx's costs related to the asset sale, such as legal, accounting and
    financial advisor fees, must be paid even if the asset sale is not
    completed; and

  . 3dfx may have difficulty retaining its key remaining personnel.

In addition, if the asset sale is not completed, 3dfx's stock price may decline
to the extent that the current market price of 3dfx common stock reflects a
market assumption that the asset sale will be completed.



                                       23
<PAGE>

Risks Relating to the Dissolution of 3dfx

3dfx cannot determine at this time the amount of distributions to its
shareholders, or whether any distributions will be made, because there are a
variety of factors, some of which are outside of 3dfx's control, that could
affect the ability of 3dfx to make distributions to its shareholders.

   3dfx cannot determine at this time the amount of or whether there will be
any distributions to its shareholders because that determination depends on a
variety of factors, including, but not limited to, the likelihood of closing
the asset sale, the net proceeds received in the asset sale, the value of
3dfx's other assets, the amount of 3dfx's and its subsidiaries' unknown debts
and liabilities to be paid in the future, the resolution of pending litigation
and other contingent liabilities, general business and economic conditions and
other matters. The amount of proceeds from the asset sale and the amount to be
distributed to 3dfx shareholders, if any, are subject to various significant
uncertainties, many of which are beyond 3dfx's control. See "The Plan of
Dissolution-Estimated Distributions" and "3dfx Interactive, Inc. Pro Forma
Condensed Consolidated Balance Sheet (Unaudited)." Examples of uncertainties
that could reduce the value or eliminate distributions to 3dfx shareholders
include the following:

  . Changes in the anticipated net proceeds from the asset sale and the
    amount of 3dfx's and its subsidiaries' debts and liabilities and the
    estimate of the costs and expenses of the asset sale and 3dfx's
    dissolution, including any resulting tax liabilities. If actual debts,
    liabilities, costs and expenses exceed 3dfx's expectations, actual net
    proceeds will be reduced and may result in no distributions to
    shareholders at all.

  . If liabilities of 3dfx or its subsidiaries that are unknown or contingent
    later arise or become fixed in amount and must be satisfied or reserved
    for as part of the dissolution.

  . If the net cash proceeds from the asset sale are insufficient to satisfy
    3dfx's and its subsidiaries' debts and liabilities, 3dfx may receive an
    advance of up to $25 million from NVIDIA US Investment Company only if
    the advance will pay the remaining debts and liabilities. It is expected
    that 3dfx will need to request this advance to pay, or provide for the
    payment of, its known current and determinable debts and liabilities in
    full. If the advance is made, the number of shares of NVIDIA common stock
    receivable by 3dfx in the asset sale will be reduced.

  . Delays in completing the asset sale or the dissolution of 3dfx could
    result in additional expenses and result in no distributions to 3dfx
    shareholders. See "The Anticipated Timing of the Dissolution of 3dfx May
    Not Be Achieved."

  . A decline in the value of NVIDIA common stock.

   For the foregoing reasons, there can be no assurance that there will be any
distribution to shareholders, even if the asset sale is completed. See
"Forward-Looking Information."

The timing of the dissolution of 3dfx is not known and therefore 3dfx cannot
determine the timing of any distributions to its shareholders.

   Several factors affect the timing of 3dfx's ability to dissolve, including
the timing of the completion of the asset sale, the timing of the sale of
3dfx's remaining assets and 3dfx's ability to determine the amount of its and
its subsidiaries' known and unknown debts and liabilities. The purchase
agreement provides that the asset sale will close as soon as practicable, and
provides the parties with termination rights if the closing does not occur by
May 15, 2001. However, 3dfx cannot guarantee that the closing of the asset sale
will occur by that date, or at all. NVIDIA is not obligated to complete the
asset sale if a majority in interest of 3dfx shareholders do not approve the
dissolution of 3dfx. Any delay in the dissolution of 3dfx will result in a
delay in making distributions, if any, to 3dfx shareholders.

                                       24
<PAGE>

3dfx is unable to specify the type of assets that may be distributed to 3dfx's
shareholders, if any distribution is made.

   At the closing of the asset sale and upon the dissolution of 3dfx, 3dfx
expects to receive a combination of cash and shares of NVIDIA common stock.
Following the closing of the asset sale, 3dfx also expects to sell its
remaining assets, although it may not be successful in doing so. 3dfx may
distribute the shares of NVIDIA common stock received by it upon its
dissolution directly to its shareholders, or it may sell these shares in the
open market or contribute the shares to a liquidating trust for the benefit of
3dfx's shareholders. Further, 3dfx may elect to directly distribute shares of
NVIDIA common stock to some of its shareholders, while distributing an
equivalent per share value in cash to others who would otherwise be entitled to
receive a fractional amount or small number of shares of NVIDIA common stock.
At this time, 3dfx is unable to provide specifics about the type of assets that
3dfx's shareholders may receive or what the value of those assets might be at
the time of distribution.

3dfx's shareholders could be required to return distributions if contingent
reserves are insufficient to satisfy 3dfx's liabilities.

   If 3dfx (or a liquidating trust to which 3dfx's assets are transferred)
makes a distribution to its shareholders but maintains inadequate reserves for
the payment of its and its subsidiaries debts and liabilities, each shareholder
could be required to return any additional amounts owed, up to the amount of
the total distribution that the shareholder received.

A distribution to 3dfx's shareholders could be delayed or diminished due to the
need to make adequate provisions for 3dfx's and its subsidiaries' debt and
liabilities, including contingent liabilities associated with lawsuits and
threatened claims against 3dfx and its subsidiaries.

   The determination of whether a distribution is made and the amount of the
distribution depends on 3dfx's ability to pay, or provide for the payment of,
its and its subsidiaries' debts and liabilities, including contingent
liabilities related to lawsuits and threatened claims. If these contingent
liabilities later arise or become fixed in amount, 3dfx will be required to
pay, or provide for the payment of, such liabilities from any remaining assets.
This could result in the delay of distributions to 3dfx shareholders and the
substantial reduction or elimination of any distributions.

   If 3dfx's or its subsidiaries' creditors believe that 3dfx has not
adequately reserved assets for the payment of its or its subsidiaries' debts
and liabilities, these creditors may be able to obtain from a court an
injunction that prohibits 3dfx from making distributions to its shareholders.
This action could delay or substantially diminish the distributions to be made
to 3dfx's shareholders or holders of beneficial interests of the liquidating
trust, as the case may be.

3dfx may not be able to dispose of its remaining assets for values equaling or
exceeding those currently desired by 3dfx.

   Many factors affect the prices that 3dfx may receive for the assets not
being sold pursuant to the purchase agreement, including availability of buyers
for these assets and perceived quality of these assets. Many of these factors
are beyond 3dfx's control. In addition, if the asset sale does not close, the
value of the assets that were the subject of the purchase agreement will likely
be substantially diminished from the price agreed to by NVIDIA due to 3dfx's
termination of most of its employees, the general loss in value of intellectual
property in the graphics industry over time and the fact that 3dfx already sold
to NVIDIA US Investment Company its trademarks, tradenames, services marks and
related applications and, under some circumstances, the patent license granted
to NVIDIA would continue in effect and 3dfx's patent infringement lawsuit
against NVIDIA would be dismissed with prejudice. As a result of the foregoing,
3dfx may not be able to sell or otherwise dispose of its assets for prices
equaling or exceeding those desired by 3dfx or currently offered in the asset
sale.

                                       25
<PAGE>

3dfx's board of directors may amend or delay implementation of the plan of
dissolution even if it is approved by 3dfx's shareholders.

   3dfx's board of directors has adopted a plan of dissolution for the
liquidation, winding up and dissolution of 3dfx following the completion of the
asset sale. Even if the dissolution is approved by 3dfx's shareholders, 3dfx's
board of directors has reserved the right, in its sole discretion, to amend or
delay implementation of the plan of dissolution unless it determines that the
amendment or delay would materially and adversely affect 3dfx's shareholders'
interests.

If the dissolution of 3dfx is approved by a majority in interest of 3dfx
shareholders, sales of the remaining assets would not be subject to shareholder
approval.

   If a majority of the 3dfx shareholders approve of the dissolution of 3dfx
and sale of the assets that are the subject of the asset sale, the 3dfx board
of directors would have broad authority to sell any or all of the remaining
assets of 3dfx on such terms as the board of directors determines advisable or
appropriate, even if those terms may not be acceptable to 3dfx shareholders.
3dfx shareholders would have no subsequent opportunity to vote on any
disposition of the remaining assets.

3dfx common stock may be delisted from the Nasdaq National Market.

   The trading price of 3dfx's common stock has declined significantly in
recent periods. 3dfx has received a delisting notice from Nasdaq due to its
failure to maintain a minimum bid of at least $1.00 per share. The notice
provides that the 3dfx common stock may be delisted as early as May 7, 2001.
3dfx expects that it will be unable to satisfy the requirement for the
continued listing of its common stock on the Nasdaq National Market. If
delisting occurs, the 3dfx common stock will likely be traded in the over-the-
counter bulletin board of the National Association of Securities Dealers, Inc.
or in the so-called "pink sheets." The delisting of 3dfx's common stock would
mean that, among other things, fewer investors would have access to trade
3dfx's common stock, thus reducing demand for the stock. In addition, 3dfx's
common stock would be subject to penny stock regulations, which could cause
fewer brokers and market makers to execute trades in 3dfx's common stock. These
factors would likely cause 3dfx's common stock price to further decrease.

   The penny stock regulations require that broker-dealers who recommend penny
stocks to persons other than institutional accredited investors must make a
special suitability determination for the purchaser, receive the purchaser's
written agreement to the transaction prior to the sale and provide the
purchaser with risk disclosure documents that identify risks associated with
investing in penny stocks. Furthermore, the broker-dealer must obtain a signed
and dated acknowledgement from the purchaser demonstrating that the purchaser
has actually received the required risk disclosure document before effecting a
transaction in penny stock. These requirements have historically resulted in
reducing the level of trading activity in securities that become subject to the
penny stock rules. Holders of 3dfx's common stock would likely find it more
difficult to sell their shares of common stock, which would likely have an
adverse effect of the market price of the common stock.

3dfx is at risk of securities class action litigation due to its stock price
volatility.

   Historically, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. 3dfx may be the target of litigation like this. Securities
litigation would result in substantial costs and divert management's attention
and resources, which would seriously harm 3dfx's ability to complete the asset
sale and the dissolution and may reduce or eliminate the assets available for
distribution to 3dfx shareholders.

Risks Relating to NVIDIA

NVIDIA's operating results are unpredictable and may fluctuate.

   Many of NVIDIA's revenue components fluctuate and are difficult to predict,
and NVIDIA's operating expenses are largely independent of revenue in any
particular period. It is therefore difficult for NVIDIA to

                                       26
<PAGE>

accurately forecast revenue and profits or losses. As a result, it is possible
that in some quarters NVIDIA's operating results could be below the
expectations of securities analysts and investors, which could cause the
trading price of NVIDIA's common stock to decline, perhaps substantially.
NVIDIA believes that its quarterly and annual results of operations will be
affected by a variety of factors that could adversely affect its revenue, gross
profit and results of operations.

   Factors that have affected NVIDIA's results of operations in the past, and
are likely to affect NVIDIA's results of operations in the future, include the
following:

  . demand and market acceptance for NVIDIA's products and/or NVIDIA's
    customers' products;

  . the successful development and volume production of next-generation
    products;

  . new product announcements or product introductions by NVIDIA's
    competitors;

  . NVIDIA's ability to introduce new products in accordance with original
    equipment manufacturer, or OEM, design requirements and design cycles;

  . changes in the timing of product orders due to unexpected delays in the
    introduction of NVIDIA's customers' products;

  . fluctuations in the availability of manufacturing capacity or
    manufacturing yields;

  . competitive pressures resulting in lower than expected average selling
    prices;

  . rates of product return in excess of that forecasted or expected due to
    quality issues;

  . the rescheduling or cancellation of customer orders;

  . the loss of a key customer or the termination of a strategic
    relationship;

  . seasonal fluctuations associated with the PC market;

  . substantial disruption in NVIDIA's suppliers' operations, either as a
    result of a natural disaster, equipment failure or other cause;

  . supply constraints for and changes in the cost of the other components
    incorporated into NVIDIA's customers' products, including memory devices;

  . NVIDIA's ability to reduce the manufacturing costs of its products;

  . legal and other costs related to defending intellectual property;

  . bad debt write-offs;

  . costs associated with the repair and replacement of defective products;

  . unexpected inventory write-downs; and

  . introductions of enabling technologies to keep pace with faster
    generations of processors and controllers.

   Any one or more of the factors discussed above could prevent NVIDIA from
achieving its expected future revenue or net income.

   Because most operating expenses are relatively fixed in the short term,
NVIDIA may be unable to adjust spending sufficiently in a timely manner to
compensate for any unexpected sales shortfall. NVIDIA may be required to reduce
prices in response to competition or to pursue new market opportunities. If new
competitors, technological advances by existing competitors or other
competitive factors require NVIDIA to invest significantly greater resources
than anticipated in research and development or sales and marketing efforts,
NVIDIA's business could suffer. Accordingly, NVIDIA believes that period-to-
period comparisons of NVIDIA's results of operations should not be relied upon
as an indication of future performance. In addition, the results of any
quarterly period are not indicative of results to be expected for a full fiscal
year.

                                       27
<PAGE>

NVIDIA's 3D graphics solution may not continue to be accepted by the PC market.

   NVIDIA's success will depend in part upon continued broad adoption of
NVIDIA's 3D graphics processors for high performance 3D graphics in PC
applications. The market for 3D graphics processors has been characterized by
unpredictable and sometimes rapid shifts in the popularity of products, often
caused by the publication of competitive industry benchmark results, changes in
dynamic random memory devices pricing and other changes in the total system
cost of add-in boards, as well as by severe price competition and by frequent
new technology and product introductions. Only a small number of products have
achieved broad market acceptance and this market acceptance, if achieved, is
difficult to sustain due to intense competition. Since NVIDIA has no other
product line, NVIDIA's business would suffer if for any reason its current or
future 3D graphics processors do not continue to achieve widespread acceptance
in the PC market. If NVIDIA is unable to complete the timely development of or
successfully and cost-effectively manufacture and deliver products that meet
the requirements of the PC market, NVIDIA's business would be harmed.

NVIDIA's integrated graphics product may not be accepted by the PC market.

   NVIDIA expects that integrated graphics chipset products will become an
increasing part of the lower cost segment of the PC graphics market. NVIDIA is
currently developing integrated chipset products. If these products are not
competitive in this segment and the integrated chipset segment continues to
account for an increasing percentage of the units sold in the PC market,
NVIDIA's business may suffer.

NVIDIA needs to develop new products and to manage product transitions in order
to succeed.

   NVIDIA's business will depend to a significant extent on NVIDIA's ability to
successfully develop new products for the 3D graphics market. NVIDIA's add-in
board manufacturers and major OEM customers typically introduce new system
configurations as often as twice per year, typically based on spring and fall
design cycles. Accordingly, NVIDIA's existing products must have competitive
performance levels or NVIDIA must introduce new products on a timely basis with
such performance characteristics in order to be included in new system
configurations. This requires that NVIDIA do the following:

  . anticipate the features and functionality that consumers will demand;

  . incorporate those features and functionality into products that meet the
    exacting design requirements of PC OEMs and add-in board manufacturers or
    contract equipment manufacturers, or CEMs,

  . price its products competitively; and

  . introduce the products to the market within the limited window for PC
    OEMs and add-in board manufacturers.

   As a result, NVIDIA believes that significant expenditures for research and
development will continue to be required in the future. The success of new
product introductions will depend on several factors, including the following:

  . proper new product definition;

  . timely completion and introduction of new product designs;

  . the ability of Taiwan Semiconductor Manufacturing Co., or TSMC, NVIDIA's
    primary manufacturer, and any additional third-party manufacturers to
    effectively manufacture NVIDIA's new products in a timely manner;

  . the quality of any new products;

  . differentiation of new products from those of NVIDIA's competitors;

  . market acceptance of NVIDIA's and NVIDIA's customers' products; and

  . availability of adequate quantity and configurations of various types of
    memory products.

                                       28
<PAGE>

   NVIDIA's strategy is to utilize the most advanced semiconductor process
technology appropriate for its products and available from commercial third-
party foundries. Use of advanced processes has in the past resulted in initial
yield problems. New products that NVIDIA introduces may not incorporate the
features and functionality demanded by PC OEMs, add-in board manufacturers and
consumers of 3D graphics. In addition, NVIDIA may not successfully develop or
introduce new products in sufficient volumes within the appropriate time to
meet both the PC OEMs' design cycles and market demand. NVIDIA has in the past
experienced delays in the development of some new products. NVIDIA's failure to
successfully develop, introduce or achieve market acceptance for new 3D
graphics products would harm NVIDIA's business.

NVIDIA's failure to identify new product opportunities or to develop new
products could harm its business.

   As markets for NVIDIA's 3D graphics processors develop and competition
increases, NVIDIA anticipates that product life cycles at the high end will
remain short and average selling prices will continue to decline. In
particular, NVIDIA expects average selling prices and gross margins for
NVIDIA's 3D graphics processors to decline as each product matures and as unit
volume increases. As a result, NVIDIA will need to introduce new products and
enhancements to existing products to maintain overall average selling prices
and gross margins. In order for NVIDIA's 3D graphics processors to achieve high
volumes, leading PC OEMs and add-in board manufacturers must select NVIDIA's 3D
graphics processor for design into their products and then successfully
complete the designs of their products and sell them. NVIDIA may be unable to
successfully identify new product opportunities or to develop and bring to
market in a timely fashion any new products. In addition, NVIDIA cannot
guarantee that any new products it develops will be selected for design into PC
OEMs' and add-in board manufacturers' products, that any new designs will be
successfully completed or that any new products will be sold. As the complexity
of NVIDIA's products and the manufacturing process for products increases,
there is an increasing risk that it will experience problems with the
performance of products and that there will be delays in the development,
introduction or volume shipment of its products. NVIDIA may experience
difficulties related to the production of current or future products or other
factors may delay the introduction or volume sale of new products it develops.
In addition, NVIDIA may be unable to successfully manage the production
transition risks with respect to future products. Failure to achieve any of the
foregoing with respect to future products or product enhancements could result
in rapidly declining average selling prices, reduced margins, and reduced
demand for products or loss of market share. In addition, technologies
developed by others may render NVIDIA's 3D graphics products non-competitive or
obsolete or result in NVIDIA's holding excess inventory, either of which would
harm NVIDIA's business.

NVIDIA relies on third-party vendors to supply tools for the development of
NVIDIA's new products and NVIDIA may be unable to obtain the tools necessary to
develop these products.

   In the design and development of new products and product enhancements,
NVIDIA relies on third-party software development tools. While NVIDIA currently
is not dependent on any one vendor for the supply of these tools, some or all
of these tools may not be readily available in the future. For example, NVIDIA
has experienced delays in the introduction of products in the past as a result
of the inability of then available software development tools to fully simulate
the complex features and functionalities of NVIDIA's products. The design
requirements necessary to meet consumer demands for more features and greater
functionality from 3D graphics products in the future may exceed the
capabilities of the software development tools available to NVIDIA. If the
software development tools NVIDIA uses become unavailable or fail to produce
designs that meet consumer demands, NVIDIA's business could suffer.

NVIDIA's industry is characterized by vigorous protection and pursuit of
intellectual property rights or positions that could result in substantial
costs to NVIDIA.

   The semiconductor industry is characterized by vigorous protection and
pursuit of intellectual property rights or positions, which has resulted in
protracted and expensive litigation. The 3D graphics market in particular has
been characterized recently by the aggressive pursuit of intellectual property
positions, and

                                       29
<PAGE>

NVIDIA expects NVIDIA's competitors to continue to pursue aggressive
intellectual property positions. In addition, from time to time NVIDIA receives
notices alleging that NVIDIA has infringed patents or other intellectual
property rights owned by third parties. NVIDIA expects that, as the number of
issued hardware and software patents increases, and as competition in NVIDIA's
markets intensifies, the volume of intellectual property infringement claims
will increase. If infringement claims are made against NVIDIA, NVIDIA may seek
licenses under the claimant's patents or other intellectual property rights.
However, licenses may not be offered at all or on terms acceptable to NVIDIA.
The failure to obtain a license from a third party for technology used by
NVIDIA could cause it to incur substantial liabilities and to suspend the
manufacture of products. Furthermore, NVIDIA may initiate claims or litigation
against third parties for infringement of NVIDIA's proprietary rights or to
establish the validity of NVIDIA's proprietary rights. NVIDIA has agreed to
indemnify certain customers for claims of infringement arising out of sale of
NVIDIA's products.

Litigation by or against NVIDIA or NVIDIA's customers concerning infringement
would likely result in significant expense to NVIDIA and divert the efforts of
NVIDIA's technical and management personnel, whether or not the litigation
results in a favorable determination for NVIDIA.

   3dfx and NVIDIA have filed patent infringement lawsuits against the other,
and, pursuant to the purchase agreement and patent standstill agreement, the
lawsuits were stayed as of January 5, 2001. The lawsuits will both be dismissed
with prejudice upon the closing of the asset sale, and may be dismissed with
prejudice even if the purchase agreement is terminated under specific
circumstances, including the failure of 3dfx's shareholders to approve the
asset sale.

   The amended complaint filed by 3dfx alleges that NVIDIA's RIVA TNT, RIVA
TNT2 and RIVA TNT2 Ultra products infringe some of 3dfx's patents and seeks
unspecified compensatory and trebled damages and attorneys' fees, as well as
injunctive relief. NVIDIA's current generation of products is not identified as
infringing any of the patents in suit. On August 28, 2000, NVIDIA filed a
patent infringement lawsuit against 3dfx in the United States District Court
for the Northern District of California. The NVIDIA lawsuit alleges that 3dfx's
graphics chip and card products, which are used to accelerate 3D graphics on
personal computers, infringe five of NVIDIA's patents and seeks an injunction
restraining 3dfx from manufacturing, selling or importing infringing graphics
chip and card products including its Voodoo 3, Voodoo 4, Voodoo 5 and VSA-100
family of products, as well as monetary damages.

   NVIDIA has in the past been subject to patent infringement suits with SGI
and S3 Incorporated, both of which were settled and resulted in cross-licenses
and, in the case of SGI, payments by NVIDIA. In addition, NVIDIA may be subject
to patent infringement suits brought by other parties in the future. For
example, NVIDIA has been advised by Rambus Inc. that it believes NVIDIA's
products infringe certain patents owned by Rambus and Rambus has requested that
NVIDIA agree to certain licensing terms, including royalty payments. NVIDIA
believes the Rambus patents are invalid, not infringed and unenforceable.
Although NVIDIA currently is having discussions with Rambus regarding potential
business alternatives to Rambus' proposed licensing terms, NVIDIA cannot
guarantee that it will be able to reach a satisfactory agreement with Rambus.
If NVIDIA is unable to do so, Rambus may sue NVIDIA or NVIDIA's customers for
patent infringement at any time.

   NVIDIA could be subject to future lawsuits that could divert NVIDIA's
resources and result in the payment of substantial damages.

NVIDIA may be unable to adequately protect NVIDIA's intellectual property.

   NVIDIA relies primarily on a combination of patents, trademarks, copyrights,
trade secrets, employee and third-party nondisclosure agreements and licensing
arrangements to protect NVIDIA's intellectual property. NVIDIA owns 33 issued
United States patents, and has 57 United States patent applications pending.
NVIDIA's issued patents have expiration dates from April 2015 to June 2018.
NVIDIA's issued patents and pending patent applications relate to technology
developed by NVIDIA in connection with the development of NVIDIA's former and
current products, including its 3D graphics processors. NVIDIA's pending patent

                                       30
<PAGE>

applications and any future applications may not be approved. In addition, any
issued patents may not provide NVIDIA with competitive advantages or may be
challenged by third parties. The enforcement of patents of others may harm
NVIDIA's ability to conduct NVIDIA's business. Others may independently develop
substantially equivalent intellectual property or otherwise gain access to
NVIDIA's trade secrets or intellectual property, or disclose NVIDIA's
intellectual property or trade secrets. NVIDIA's failure to effectively protect
NVIDIA's intellectual property could harm NVIDIA's business. NVIDIA has
licensed technology from third parties for incorporation in NVIDIA's graphics
processors, and expect to continue to enter into license agreements for future
products. These licenses may result in royalty payments to third parties, the
cross-license of technology by NVIDIA or payment of other consideration. If
these arrangements are not concluded on commercially reasonable terms, NVIDIA's
business could suffer.

NVIDIA's failure to achieve one or more design wins would harm NVIDIA's
business.

   NVIDIA's future success will depend in large part on achieving design wins,
which entails having its existing and future products chosen as the 3D graphics
processors for hardware components or subassemblies designed by PC OEMs and
motherboard and add-in board manufacturers. NVIDIA's add-in board manufacturers
and major OEM customers typically introduce new high-end system configurations
as often as twice per year, generally based on spring and fall design cycles.
Accordingly, NVIDIA's existing products must have competitive performance
levels or NVIDIA must timely introduce new products with such performance
characteristics in order to be included in new system configurations. NVIDIA's
failure to achieve one or more design wins would harm NVIDIA's business. The
process of being qualified for inclusion in a PC OEM's product can be lengthy
and could cause NVIDIA to miss a cycle in the demand of end users for a
particular product feature, which also could harm NVIDIA's business.

   NVIDIA's ability to achieve design wins also depends in part on its ability
to identify and ensure compliance with evolving industry standards.
Unanticipated changes in industry standards could render NVIDIA's products
incompatible with products developed by major hardware manufacturers and
software developers, including Intel and Microsoft. This would require NVIDIA
to invest significant time and resources to redesign its products to ensure
compliance with relevant standards. If NVIDIA's products are not in compliance
with prevailing industry standards for a significant period of time, its
ability to achieve design wins could suffer.

NVIDIA is dependent on the PC market, which may not continue to grow.

   In fiscal 2000, NVIDIA derived all of its revenue from the sale of products
for use in PCs. In the first three quarters of fiscal 2001, NVIDIA derived most
of its revenue from the sale of products for use in the entire desktop PC
market, from professional workstations to low-cost PCs. NVIDIA expects to
continue to derive most of its revenue from the sale or license of products for
use in PCs in the next several years. The PC market is characterized by rapidly
changing technology, evolving industry standards, frequent new product
introductions and significant price competition. These factors result in short
product life cycles and regular reductions of average selling prices over the
life of a specific product. Although the PC market has grown substantially in
recent years, this growth may not continue. A reduction in sales of PCs, or a
reduction in the growth rate of PC sales, would likely reduce demand for
NVIDIA's products. Moreover, changes in demand could be large and sudden. Since
PC manufacturers often build inventories during periods of anticipated growth,
they may be left with excess inventories if growth slows or if they have
incorrectly forecast product transitions. In these cases, PC manufacturers may
abruptly suspend substantially all purchases of additional inventory from
suppliers like NVIDIA until the excess inventory has been absorbed. Any
reduction in the demand for PCs generally, or for a particular product that
incorporates NVIDIA's 3D graphic processors, could harm NVIDIA's business.

The acceptance of next generation products in business PC 3D graphics may not
continue to develop.

   NVIDIA's success will depend in part upon the demand for performance 3D
graphics for business PC applications. The market for performance 3D graphics
on business PCs has only recently begun to emerge and

                                       31
<PAGE>

is dependent on the future development of, and substantial end-user and OEM
demand for, 3D graphics functionality. As a result, the market for business PC
3D graphics computing may not continue to develop or may not grow at a rate
sufficient to support NVIDIA's business. The development of the market for
performance 3D graphics on business PCs will in turn depend on the development
and availability of a large number of business PC software applications that
support or take advantage of performance 3D graphics capabilities. Currently
there are only a limited number of software applications like this, most of
which are games, and a broader base of software applications may not develop in
the near term or at all. Consequently, a broad market for full function
performance 3D graphics on business PCs may not develop. NVIDIA's business
prospects will suffer if the market for business PC 3D graphics fails to
develop or develops more slowly than expected.

NVIDIA is dependent on a small number of customers and NVIDIA is subject to
order and shipment uncertainties.

   NVIDIA has only a limited number of customers and its sales are highly
concentrated. NVIDIA primarily sells its products to add-in board and
motherboard manufacturers and CEMs, which incorporate graphics products in the
boards they sell to PC OEMs. Sales to add-in board manufacturers and CEMs are
primarily dependent on achieving design wins with leading PC OEMs. The number
of add-in board manufacturers and CEMs and leading PC OEMs is limited. NVIDIA
expects that a small number of add-in board manufacturers and CEMs directly,
and a small number of PC OEMs indirectly, will continue to account for a
substantial portion of NVIDIA's revenue for the foreseeable future. As a
result, NVIDIA's business could be harmed by the loss of business from PC OEMs
or add-in board manufacturers and CEMs. In addition, revenue from add-in board
manufacturers, motherboard manufacturers, CEMs and PC OEMs that have directly
or indirectly accounted for significant revenue in past periods, individually
or as a group, may not continue, or may not reach or exceed historical levels
in any future period.

   NVIDIA's business may be harmed by instability in Asia due to the
concentration of customers who are located or have substantial operations in
Asia, including Taiwan. The People's Republic of China and Taiwan have in the
past experienced and currently are experiencing strained relations. A worsening
of these relations or the development of hostilities between the two could
result in disruptions in Taiwan and possibly other areas of Asia, which could
harm NVIDIA's business. While NVIDIA believes political instability in Asia has
not adversely affected NVIDIA's business, because of NVIDIA's reliance on
companies with operations in Asia, continued economic and political instability
in Asia might harm it.

NVIDIA may be unable to manage its growth and, as a result, may be unable to
successfully implement NVIDIA's strategy.

   NVIDIA's rapid growth has placed, and is expected to continue to place, a
significant strain on NVIDIA's managerial, operational and financial resources.
As of January 1, 2001, NVIDIA had 765 employees as compared to 392 employees as
of January 30, 2000. NVIDIA expects that the number of its employees will
increase substantially over the next 12 months. NVIDIA's future growth, if any,
will depend on its ability to continue to implement and improve operational,
financial and management information and control systems on a timely basis, as
well as NVIDIA's ability to maintain effective cost controls. Further, NVIDIA
will be required to manage multiple relationships with various customers and
other third parties. NVIDIA's systems, procedures or controls may not be
adequate to support its operations and NVIDIA's management may be unable to
achieve the rapid execution necessary to successfully implement NVIDIA's
strategy.

NVIDIA is dependent on key personnel and the loss of these employees could harm
NVIDIA's business.

   NVIDIA's performance will be substantially dependent on the performance of
NVIDIA's executive officers and key employees. None of NVIDIA's officers or
employees is bound by an employment agreement, and NVIDIA's relationships with
these officers and employees are, therefore, at will. NVIDIA does not have "key
person" life insurance policies on any of NVIDIA's employees. The loss of the
services of any of

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<PAGE>

NVIDIA's executive officers, technical personnel or other key employees,
particularly Jen-Hsun Huang, NVIDIA's President and Chief Executive Officer,
would harm NVIDIA's business. NVIDIA's success will depend on NVIDIA's ability
to identify, hire, train and retain highly qualified technical and managerial
personnel. NVIDIA's failure to attract and retain the necessary technical and
managerial personnel would harm its business.

NVIDIA depends on third-party fabrication to produce NVIDIA's products.

   NVIDIA does not manufacture the semiconductor wafers used for NVIDIA's
products and does not own or operate a wafer fabrication facility. NVIDIA's
products require wafers manufactured with state-of-the-art fabrication
equipment and techniques. NVIDIA utilizes TSMC and WaferTech to produce its
semiconductor wafers and utilizes independent contractors to perform assembly,
testing and packaging. NVIDIA depends on these suppliers to allocate to it a
portion of their manufacturing capacity sufficient to meet NVIDIA's needs, to
produce products of acceptable quality and at acceptable manufacturing yields,
and to deliver those products to it on a timely basis. These manufacturers may
be unable to meet NVIDIA's near-term or long-term manufacturing requirements.
NVIDIA obtains manufacturing services on a purchase order basis and TSMC has no
obligation to provide it with any specified minimum quantities of product. TSMC
fabricates wafers for other companies, including certain of NVIDIA's
competitors, and could choose to prioritize capacity for other users or reduce
or eliminate deliveries to it on short notice. Because the lead time needed to
establish a strategic relationship with a new manufacturing partner could be
several quarters, there is no readily available alternative source of supply
for any specific product. NVIDIA believes that long-term market acceptance for
NVIDIA's products will depend on reliable relationships with TSMC and any other
manufacturers used by NVIDIA to ensure adequate product supply to respond to
customer demand.

   In September 1999, a significant earthquake in Taiwan contributed to a
temporary shortage of graphics processors in the third and fourth quarters of
fiscal 2000. Because of NVIDIA's reliance on TSMC, NVIDIA's business may be
harmed by political instability in Taiwan, including the worsening of the
strained relations between The People's Republic of China and Taiwan.
Furthermore, any substantial disruption in NVIDIA's suppliers' operations,
either as a result of a natural disaster, political unrest, economic
instability, equipment failure or other cause, could harm NVIDIA's business.

   NVIDIA is dependent primarily on TSMC and NVIDIA expects in the future to
continue to be dependent upon third-party manufacturers to do the following:

  .  produce wafers of acceptable quality and with acceptable manufacturing
     yields;

  .  deliver those wafers to NVIDIA and its independent assembly and testing
     subcontractors on a timely basis; and

  .  allocate to NVIDIA a portion of their manufacturing capacity sufficient
     to meet NVIDIA's needs.

   NVIDIA's wafer requirements represent a significant portion of the total
production capacity of TSMC. Although NVIDIA's products are designed using
TSMC's process design rules, TSMC may be unable to achieve or maintain
acceptable yields or deliver sufficient quantities of wafers on a timely basis
and/or at an acceptable cost. Additionally, TSMC may not continue to devote
resources to the production of NVIDIA's products, or to advance the process
design technologies on which the manufacturing of NVIDIA's products is based.
Any difficulties like these would harm NVIDIA's business.

Failure to achieve expected manufacturing yields would reduce NVIDIA's product
supply and harm NVIDIA's business.

   Semiconductor manufacturing yields are a function both of product design,
which is developed largely by NVIDIA, and process technology, which typically
is proprietary to the manufacturer. Since low yields may result from either
design or process technology failures, yield problems may not be effectively
determined or

                                       33
<PAGE>

resolved until an actual product exists that can be analyzed and tested to
identify process sensitivities relating to the design rules that are used. As a
result, yield problems may not be identified until well into the production
process, and resolution of yield problems would require cooperation by and
communication between the manufacturer and NVIDIA.

   The risk of low yields is compounded by the offshore location of most of
NVIDIA's manufacturers, increasing the effort and time required to identify,
communicate and resolve manufacturing yield problems. Because of NVIDIA's
potentially limited access to wafer fabrication capacity from NVIDIA's
manufacturers, any decrease in manufacturing yields could result in an increase
in NVIDIA's per unit costs and force NVIDIA to allocate its available product
supply among its customers. This could potentially harm customer relationships
as well as revenue and gross profit. NVIDIA's wafer manufacturers may be unable
to achieve or maintain acceptable manufacturing yields in the future. NVIDIA's
inability to achieve planned yields from NVIDIA's wafer manufacturers could
harm NVIDIA's business. NVIDIA also faces the risk of product recalls or
product returns resulting from design or manufacturing defects that are not
discovered during the manufacturing and testing process. In the event of a
significant number of product returns due to a defect or recall, NVIDIA's
business could suffer.

Failure to transition to new manufacturing process technologies could affect
NVIDIA's ability to compete effectively.

   NVIDIA's strategy is to utilize the most advanced semiconductor process
technology appropriate for NVIDIA's products and available from commercial
third-party foundries. Use of advanced processes may have greater risk of
initial yield problems. Manufacturing process technologies are subject to rapid
change and require significant expenditures for research and development.
NVIDIA continuously evaluates the benefits of migrating to smaller geometry
process technologies in order to improve performance and reduce costs. NVIDIA
has migrated to the .18 micron technology with the GeForce2 GTS GPUs, and
NVIDIA believes that the transition of its products to increasingly smaller
geometries will be important to NVIDIA's competitive position. NVIDIA intends
to migrate to the .15 micron technology for future products. Other companies in
the industry have experienced difficulty in migrating to new manufacturing
processes and, consequently, have suffered reduced yields, delays in product
deliveries and increased expense levels. NVIDIA may experience similar
difficulties and the corresponding negative effects. Moreover, NVIDIA is
dependent on NVIDIA's relationships with NVIDIA's third-party manufacturers to
migrate to smaller geometry processes successfully. NVIDIA may be unable to
migrate to new manufacturing process technologies successfully or on a timely
basis.

The 3D graphics industry is highly competitive, and NVIDIA may be unable to
compete.

   The market for 3D graphics processors for PCs in which NVIDIA competes is
intensely competitive and is characterized by rapid technological change,
evolving industry standards and declining average selling prices. NVIDIA
believes that the principal competitive factors in this market are performance,
breadth of product offerings, access to customers and distribution channels,
backward-forward software support, conformity to industry standard APIs,
manufacturing capabilities, price of graphics processors and total system costs
of add-in boards and motherboards. NVIDIA expects competition to increase both
from existing competitors and new market entrants with products that may be
less costly than NVIDIA's 3D graphics processors or may provide better
performance or additional features not provided by NVIDIA's products.

   NVIDIA's primary source of competition is from companies that provide or
intend to provide 3D graphics solutions for the PC market. NVIDIA's competitors
include the following:

  .  suppliers of graphics add-in boards that utilize their internally
     developed graphics chips, such as ATI Technologies Inc. and Matrox
     Electronics Systems Ltd.;

  .  suppliers of integrated core logic chipsets that incorporate 2D and 3D
     graphics functionality as part of their existing solutions, such as
     Intel, Silicon Integrated Systems and VIA Technologies;

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<PAGE>

  .  companies that have traditionally focused on the professional market and
     provide high end 3D solutions for PCs and workstations, including 3DLabs
     Inc., SGI and Evans and Sutherland Computer Corporation; and

  .  companies that focus on the video game market, such as VideoLogic Group
     plc.

   If and to the extent NVIDIA offers products outside of the 3D graphics
processor market, NVIDIA may face competition from some of NVIDIA's existing
competitors as well as from companies with which NVIDIA currently does not
compete. NVIDIA cannot accurately predict if it will compete successfully in
any new markets it may enter.

NVIDIA may compete with Intel in the integrated low-cost chipset market.

   In June 2000, Intel began shipping the Intel 815 and 815e 3D graphics
chipsets that are targeted at the low-cost PC market. Intel has significantly
greater resources than NVIDIA does, and NVIDIA's products may not compete
effectively against future products introduced by Intel. In addition, NVIDIA
may be unable to compete effectively against Intel or Intel may introduce
additional products that are competitive with NVIDIA's products in either
performance or price or both. NVIDIA expects Intel to continue to do the
following:

  .  invest heavily in research and development and new manufacturing
     facilities;

  .  maintain its position as the largest manufacturer of PC microprocessors;

  .  increasingly dominate the PC platform; and

  .  promote its product offerings through advertising campaigns designed to
     engender brand loyalty among PC users.

   Intel may in the future develop graphics add-in cards or graphics-enabled
motherboards that could directly compete with graphics add-in cards or
graphics-enabled motherboards based on NVIDIA's product. In addition, due to
the widespread industry acceptance of Intel's microprocessor architecture and
interface architecture, including its AGP, and Intel's intellectual property
position with respect to such architecture, Intel exercises significant
influence over the PC industry generally. Any significant modifications by
Intel to the AGP, the microprocessor or core logic components or other aspects
of the PC microprocessor architecture could result in incompatibility with
NVIDIA's technology, which would harm NVIDIA's business. In addition, any delay
in the public release of information relating to modifications like this could
harm NVIDIA's business.

NVIDIA is dependent on third parties for assembly and testing of NVIDIA's
products.

   NVIDIA's graphics processors are assembled and tested by Advance
Semiconductor Engineering, Inc., ChipPAC Incorporated and Siliconware Precision
Industries Company Ltd., all of which are based in Asia. Because NVIDIA relies
on Asian assembly and test subcontractors, NVIDIA's business may be harmed by
political instability in Asia, including the worsening of the strained
relations between The People's Republic of China and Taiwan. NVIDIA does not
have long-term agreements with any of these subcontractors. As a result of
NVIDIA's dependence on third-party subcontractors for assembly and testing of
NVIDIA's products, NVIDIA does not directly control product delivery schedules
or product quality. Any product shortages or quality assurance problems could
increase the costs of manufacture, assembly or testing of NVIDIA's products and
could harm NVIDIA's business. Due to the amount of time typically required to
qualify assemblers and testers, NVIDIA could experience significant delays in
the shipment of its products if it is required to find alternative third
parties to assemble or test NVIDIA's products or components. Any delays in
delivery of NVIDIA's products could harm its business.

NVIDIA is subject to risks associated with product defects and
incompatibilities.

   Products as complex as NVIDIA's may contain defects or failures when
introduced or when new versions or enhancements to existing products are
released. NVIDIA has in the past discovered software defects and

                                       35
<PAGE>


incompatibilities with customers' hardware in certain of its products and may
experience delays or lost revenue to correct any new defects in the future.
Errors in new products or releases after commencement of commercial shipments
could result in loss of market share or failure to achieve market acceptance.
NVIDIA's products typically go through only one verification cycle prior to
beginning volume production and distribution. As a result, NVIDIA's products
may contain defects or flaws that are undetected prior to volume production and
distribution. If these defects or flaws exist and are not detected prior to
volume production and distribution, NVIDIA may be required to reimburse
customers for costs to repair or replace the affected products in the field.
These costs could be significant and could adversely affect NVIDIA's business
and operating results. The production and distribution of defective products
could harm NVIDIA's business.

NVIDIA is subject to risks associated with international operations.

   NVIDIA's reliance on foreign third-party manufacturing, assembly and testing
operations subjects NVIDIA to a number of risks associated with conducting
business outside of the United States, including the following:

  . unexpected changes in, or impositions of, legislative or regulatory
    requirements;

  . delays resulting from difficulty in obtaining export licenses for certain
    technology, tariffs, quotas and other trade barriers and restrictions;

  . longer payment cycles;

  . imposition of additional taxes and penalties;

  . the burdens of complying with a variety of foreign laws; and

  . other factors beyond NVIDIA's control.

   NVIDIA also is subject to general political risks in connection with
NVIDIA's international trade relationships. In addition, the laws of certain
foreign countries in which NVIDIA's products are or may be manufactured or
sold, including various countries in Asia, may not protect NVIDIA's products or
intellectual property rights to the same extent as do the laws of the United
States. This makes the possibility of piracy of NVIDIA's technology and
products more likely. Currently, all of NVIDIA's arrangements with third-party
manufacturers provide for pricing and payment in U.S. dollars and to date
NVIDIA has not engaged in any currency hedging activities, although NVIDIA may
do so in the future. Fluctuations in currency exchange rates could harm
NVIDIA's business in the future.

The semiconductor industry is cyclical in nature.

   The semiconductor industry historically has been characterized by the
following factors:

  . rapid technological change;

  . cyclical market patterns;

  . significant average selling price erosion;

  . fluctuating inventory levels;

  . alternating periods of overcapacity and capacity constraints; and

  . variations in manufacturing costs and yields and significant expenditures
    for capital equipment and product development.

   In addition, the industry has experienced significant economic downturns at
various times, characterized by diminished product demand and accelerated
erosion of average selling prices. NVIDIA may experience substantial period-to-
period fluctuations in results of operations due to general semiconductor
industry conditions.

                                       36
<PAGE>

Failure in implementation of NVIDIA's enterprise resource planning system could
adversely affect NVIDIA's operations.

   In December 1999, NVIDIA began the implementation of an SAP A.G. system as
NVIDIA's enterprise resource planning, or ERP, system to replace NVIDIA's
information systems in business, finance, operations and service. The first
phase of the implementation was successfully completed in June 2000 and
NVIDIA's operations are fully functioning under the new ERP system. Future
phases of the implementation are expected to occur throughout fiscal 2001 and
fiscal 2002. NVIDIA is heavily dependent upon the proper functioning of
NVIDIA's internal systems to conduct NVIDIA's business. System failure or
malfunctioning may result in disruptions of operations and inability to process
transactions. NVIDIA's results of operations and financial position could be
adversely affected if NVIDIA encounters unforeseen problems with respect to
system operations or future implementation.

Some provisions in NVIDIA's certificate of incorporation, NVIDIA's bylaws and
NVIDIA's agreement with Microsoft could delay or prevent a change in control.

   NVIDIA's certificate of incorporation and bylaws contain provisions that
could make it more difficult for a third party to acquire a majority of
NVIDIA's outstanding voting stock. These provisions include the following:

  . the ability of the board of directors to create and issue preferred stock
    without prior shareholder approval;

  . the prohibition of shareholder action by written consent;

  . a classified board of directors; and

  . advance notice requirements for director nominations and shareholder
    proposals.

   On March 5, 2000, NVIDIA entered into a licensing and development agreement
with Microsoft that included a grant to Microsoft of first and last rights of
refusal over any offer NVIDIA receives to purchase 30% or more of the
outstanding shares of NVIDIA's common stock. This provision could also delay or
prevent a change in control of NVIDIA.

NVIDIA's stock price may continue to experience large short-term fluctuations.

   The price of NVIDIA's common stock has fluctuated greatly. These price
fluctuations have been rapid and severe. The price of NVIDIA's common stock may
continue to fluctuate greatly in the future due to factors related to the
general volatility that currently exists in the market or due to a variety of
company specific factors, including quarter to quarter variations in NVIDIA's
operating results, shortfalls in revenue or earnings from levels expected by
securities analysts and the other factors discussed above in these risk
factors. In the past, following periods of volatility in the market price of a
company's stock, securities class action litigation has been initiated against
the issuing company. This type of litigation could result in substantial cost
and a diversion of management's attention and resources, which could have an
adverse effect on NVIDIA's revenues and earnings. Any adverse determination in
this type of litigation could also subject NVIDIA to significant liabilities.
See "Risks Relating to NVIDIA--NVIDIA's operating results are unpredictable and
may fluctuate."

                                       37
<PAGE>

                            THE 3DFX SPECIAL MEETING

When and Where the Meeting Will Be Held

   This prospectus/proxy statement is being furnished to 3dfx shareholders as
part of the solicitation of proxies by the 3dfx board of directors for use at
the 3dfx special meeting to be held on Tuesday, March 27, 2001 at 8:00 a.m.,
local time at the Marriott Hotel, 2700 Mission College Boulevard, Santa Clara,
California, and at any adjournments or postponements thereof.

   This prospectus/proxy statement, and the accompanying proxy card, are first
being mailed to holders of 3dfx common stock on or about February 16, 2001.

What Will Be Voted Upon

   The purpose of the 3dfx special meeting is to consider and vote upon the
following proposals:

  . to approve the liquidation, winding up and dissolution of 3dfx as
    described in the plan of dissolution; and

  . if the dissolution of 3dfx is approved, to approve the principal terms of
    the purchase agreement under which 3dfx will sell certain of its assets
    to NVIDIA US Investment Company.

   The proposal to approve the plan of dissolution will first be presented to
3dfx's shareholders. If it is approved, the proposal to approve the asset sale
will then be presented to 3dfx's shareholders.

   The 3dfx board of directors does not presently intend to bring any business
before the 3dfx meeting other than the specific proposals referred to above and
specified in the notice of the 3dfx special meeting. The 3dfx board of
directors knows of no other matters that are to be brought before the 3dfx
special meeting. If any other business properly comes before the 3dfx special
meeting, including the consideration of a motion to adjourn such meeting
(including for purposes of soliciting additional votes), it is the intention of
the persons named in the enclosed form of proxy to vote the shares they
represent as the 3dfx board of directors may recommend.

Which Shareholders May Vote

   Only holders of record of 3dfx common stock at the close of business on
February 12, 2001, the record date, are entitled to notice of and to vote at
the 3dfx special meeting. As of the close of business on the 3dfx record date,
there were 39,776,502 shares of 3dfx common stock outstanding and entitled to
vote, held of record by 458 shareholders. A majority, or 19,888,252 of these
shares, present in person or represented by proxy, will constitute a quorum for
the transaction of business.

How Do 3dfx Shareholders Vote

   The 3dfx proxy card accompanying this prospectus/proxy statement is
solicited on behalf of the 3dfx board of directors for use at the 3dfx special
meeting. 3dfx shareholders are requested to complete, date and sign the
accompanying proxy and promptly return it in the accompanying envelope or
otherwise mail it to 3dfx. If your shares of 3dfx common stock are held in
street name through a broker or other custodian, you may also vote by telephone
or by using the Internet by following the instructions included with your proxy
card. All proxies that are properly executed and returned, and that are not
revoked, will be voted at the 3dfx meeting in accordance with the instructions
indicated thereon. Executed but unmarked proxies will be voted for approval and
adoption of all of the matters listed on the proxy card.

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<PAGE>

How to Change Your Vote

   A 3dfx shareholder who has given a proxy may revoke it at any time before it
is exercised at the 3dfx special meeting, by doing one of the following:

  . delivering a written notice of revocation to Mr. Richard A. Heddleson,
    Chief Financial Officer, 3dfx Interactive, Inc., 4435 Fortran Drive, San
    Jose, California 95134,

  . executing a subsequently dated proxy and delivering it to Mr. Richard A.
    Heddleson, Chief Financial Officer, 3dfx Interactive, Inc., 4435 Fortran
    Drive, San Jose, California 95134,

  . delivering different instructions by phone or Internet, or

  . attending the 3dfx special meeting and voting in person.

   Attending the 3dfx special meeting will not, by itself, revoke a proxy. In
order to revoke a proxy, the 3dfx shareholder must also vote at the meeting.

Vote Required to Approve Each Proposal

   Under California law and the charter documents of 3dfx, approval of the
liquidation, winding up and dissolution of 3dfx as described in the plan of
dissolution, as well as the asset sale pursuant to the purchase agreement,
requires the affirmative vote of a majority of the outstanding shares of 3dfx
common stock. Each 3dfx shareholder is entitled to one vote for each share
held, on each matter properly submitted for the vote of shareholders at the
3dfx special meeting. The right to vote is exercisable at the close of business
on the record date, in person or by properly executed proxy.

   The matters to be considered at the 3dfx special meeting are of great
importance to the shareholders of 3dfx. Accordingly, shareholders are urged to
read and carefully consider the information presented in this prospectus/proxy
statement, and to complete, date, sign and promptly return the enclosed proxy
in the enclosed postage-paid envelope.

   Pursuant to voting agreements and related irrevocable proxies executed by
all of 3dfx's executive officers and directors, 887,313 outstanding shares of
3dfx common stock (which excludes shares subject to stock options) beneficially
owned by them and their affiliates on February 12, 2001 (representing
approximately 2.2% of the total number of shares of 3dfx common stock
outstanding at that date), will be voted for approval of the dissolution of
3dfx as well as the asset sale.

Quorum; Abstentions; Broker Non-Votes

   The presence, in person or by properly executed proxy, of the holders of at
least a majority of the outstanding shares of 3dfx common stock entitled to
vote at the 3dfx special meeting shall constitute a quorum. Broker non-votes
and shares held by persons abstaining will be counted in determining whether a
quorum is present at the 3dfx special meeting. Because the affirmative vote of
at least a majority of the outstanding 3dfx common stock is required for the
approval of the proposals presented at the 3dfx special meeting, the failure of
a holder of shares of 3dfx common stock to submit a proxy or to vote in person
at the 3dfx special meeting (including abstentions and "broker non-votes") will
have the same effect as a vote against the approval of the dissolution of 3dfx
and the asset sale.

Solicitation of Proxies and Expenses of Solicitation

   3dfx will bear the cost of the solicitation of proxies in the enclosed form
from its shareholders. In addition to solicitation by mail, the directors,
officers and employees of 3dfx may solicit proxies from shareholders by
telephone, telegram, letter, facsimile, email or in person. Following the
original mailing of the proxies and

                                       39
<PAGE>


other soliciting materials, 3dfx will request that brokers, custodians,
nominees and other record holders forward copies of the proxy and other
soliciting materials to persons for whom they hold shares of 3dfx common stock
and request authority for the exercise of proxies. 3dfx has retained Morrow &
Co., Inc. to assist in the solicitation of proxies at a cost of approximately
$8,500 plus reasonable expenses.

Deadline for Receipt of Shareholder Proposals at Annual Meeting

   Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, a shareholder intending to present a proposal to be included in 3dfx's
proxy statement for its 2001 Annual Meeting of Shareholders, if an annual
meeting is held, must have delivered a proposal in writing to its executive
offices no later than February 6, 2001. If a shareholder does not seek to have
a proposal included in the proxy statement, but nevertheless wishes to present
a proposal or nomination at the annual meeting, written notice of the proposal
or nomination must be received by the secretary of 3dfx at its principal
executive offices not later than the close of business on the 60th day nor
earlier than the close of business on the 90th day before that meeting and must
satisfy other detailed requirements specified in 3dfx's bylaws. However, in the
event that fewer than 65 days prior notice of the 2001 Annual Meeting of
Shareholders is given to shareholders, notice of any shareholder proposals to
be presented at that meeting must be delivered to 3dfx's secretary not later
than the close of business on the seventh day following the day on which the
notice to shareholders was mailed.


                                       40
<PAGE>

                                 THE ASSET SALE

   This section of the prospectus/proxy statement describes material aspects of
the asset sale. While NVIDIA and 3dfx believe that the description covers the
material terms of the asset sale, this summary may not contain all of the
information that is important to you. You should carefully read this entire
prospectus/proxy statement and the other documents referred to in this
prospectus/proxy statement for a more complete understanding of the asset sale.

General Description

   In the asset sale, an indirect wholly-owned subsidiary of NVIDIA, NVIDIA US
Investment Company, has agreed to purchase certain of the assets of 3dfx,
including its core graphics processor assets, pursuant to the purchase
agreement. In return for these assets, NVIDIA US Investment Company has agreed
to pay to 3dfx a total consideration of $70 million in cash at the closing of
the asset sale and, upon the dissolution of 3dfx, to deliver 1,000,000 shares
of NVIDIA common stock.

   The number of shares of NVIDIA stock deliverable to 3dfx will not change
between now and the date that the dissolution of 3dfx is completed, unless,
after the closing of the asset sale and prior to the dissolution of 3dfx, 3dfx
requests that NVIDIA US Investment Company advance to it funds of up to $25
million to be used by 3dfx to pay its or its subsidiaries' creditors. If, upon
satisfaction of various conditions, the advance is provided by NVIDIA US
Investment Company, the number of NVIDIA shares to be delivered to 3dfx will be
reduced by the number of shares equal to the quotient determined by dividing
the amount of the advance by $50. Neither 3dfx nor NVIDIA has the right to
terminate the purchase agreement or renegotiate the number of shares to be
received by 3dfx as a result of market price fluctuations. You are encouraged
to obtain current market quotations of 3dfx and NVIDIA common stock.

   Concurrent with the execution of the purchase agreement, 3dfx, NVIDIA and
NVIDIA US Investment Company entered into other agreements that are related to,
but separate from, the asset sale. Because 3dfx had insufficient cash to
continue operations through the closing of the asset sale, 3dfx and NVIDIA US
Investment Company entered into a credit agreement pursuant to which NVIDIA US
Investment Company provided a $15 million loan to 3dfx, which is repayable out
of the cash consideration that 3dfx will receive upon the closing of the asset
sale, and received in exchange:

  . the assignment and transfer of all of 3dfx's trademarks, tradenames,
    service marks, trademark applications and service mark applications
    pursuant to the trademark assignment; and

  . a non-exclusive, fully-paid, royalty-free license for most of 3dfx's
    patents, patent applications and inventions pursuant to the patent
    license agreement.

   In addition, 3dfx and NVIDIA entered into the patent standstill agreement
pursuant to which they both agreed to stay the pending patent lawsuits that
each has filed against the other, and, if the asset sale closed and under other
designated circumstances, to cause the dismissal of these suits with prejudice,
and to refrain from bringing additional litigation against each other with
respect to other patents, patent applications and inventions. See "Other
Related Agreements."

Background

   3dfx develops high performance, cost-effective graphics chips, graphics
boards, software and related technology that enable an interactive and
realistic 3D experience across multiple hardware platforms. In the fall of
2000, 3dfx began experiencing financial difficulties due in part to
substantially reduced demand in the retail channel for its products. This
reduced demand is attributable to a number of factors, including, in part, its
failure to introduce products in a timely manner and from disappointing
customer response to its existing products, as well as reduced demand in the
retail channel in general and the add-in graphics segment in particular. By
September 2000, 3dfx had a negative working capital balance. In addition,
3dfx's high research

                                       41
<PAGE>

and development costs and substantial debt burden, together with the loss of
several large customers due to 3dfx's May 1999 acquisition of STB Systems and
its inability to refinance its debt on commercially reasonable terms,
aggravated its financial difficulties. In July 2000, 3dfx began to explore
opportunities to sell its Juarez, Mexico graphics board manufacturing facility
to reduce its fixed costs. In September 2000, the 3dfx board of directors
evaluated 3dfx's business model and concluded that 3dfx could not continue to
operate as a manufacturer of both graphics chips and graphics boards in light
of the losses that 3dfx continued to incur in its graphics board business
segment, and that to maximize shareholder value it would be necessary to
quickly reposition 3dfx to focus principally on the development of graphics
chips and related technologies, and to further analyze the possible termination
or sale of the graphics board business. 3dfx began to explore opportunities to
sell its graphics board assets and transfer the liabilities related to this
business and to obtain an equity investment from a strategic partner to enable
3dfx to implement its revised business strategy. On September 26, 2000, 3dfx
engaged Houlihan Lokey Howard & Zukin to assist 3dfx in its efforts to sell the
assets and related liabilities of its graphics board manufacturing facility in
Juarez, Mexico, and in November, 2000, 3dfx requested it to explore
opportunities to sell all of its graphics board assets.

   Beginning in September 2000, 3dfx began exploring strategic alternatives for
implementing its revised business model. Between September 2000 and December
2000, 3dfx provided summary information packets and had preliminary discussions
with approximately 17 parties who had expressed an interest in considering a
business transaction with 3dfx or an equity investment in 3dfx. Subsequently,
3dfx entered into confidentiality agreements, provided more detailed
information and had more extensive discussions with several of these parties
relating to a possible transaction.

   During this period, 3dfx also engaged in detailed discussions with a
potential strategic investor with respect to a minority investment in 3dfx to
be evidenced by notes or convertible preferred stock, with a subsequent
investment of an additional amount to be made by the investor upon satisfaction
of specific conditions, including shareholder approval of an increase in 3dfx's
authorized common stock to permit the issuance of additional shares of 3dfx
common stock, significant changes in the composition of 3dfx's management and
board of directors, the disposition of 3dfx's graphics board business and
related liabilities and the achievement of various engineering milestones. 3dfx
and its advisors worked with this potential strategic investor with respect to
the preparation of a non-binding term sheet and draft documentation. The
parties continued to discuss various terms of this transaction through early
December 2000 without reaching final agreement.

   On October 6, 2000, 3dfx requested the assistance of Robertson Stephens to
advise 3dfx in connection with the terms of the foregoing minority investment.
Robertson Stephens had provided financial advisory services to 3dfx in the past
and was familiar with 3dfx's business and operations. In light of 3dfx's
concern regarding the timing of any disposition of its graphics board business
and related liabilities and its conclusion that the proposed strategic
investment would not provide 3dfx with sufficient capital for it to implement
its new business model, on November 16, 2000, 3dfx requested Robertson Stephens
to conduct a search to identify parties interested in either a strategic or
financial transaction with 3dfx.

   Following 3dfx's request, in November and early December 2000, Robertson
Stephens identified and contacted potential interested parties. Members of
3dfx's management also contacted possible interested parties. Of those parties
that were contacted by Robertson Stephens, several signed confidentiality
agreements with 3dfx and were provided confidential financial information in
order to assist them in evaluating a potential transaction with 3dfx. At the
same time, Dr. Alex Leupp, President and Chief Executive Officer of 3dfx, and
Mr. Stephen Lapinski, Senior Vice President of Marketing of 3dfx, as well as
Mr. Scott D. Sellers, 3dfx's Chief Technology Officer, continued to meet with
representatives of the interested strategic investor concerning the terms of
the proposed strategic minority investment in 3dfx in an effort to reach
agreement on the outstanding issues related to that transaction.

   On October 25, 2000, Mr. Phil Carmack, Senior Vice President of Engineering
of 3dfx, and Mr. Sellers met with Mr. Jen-Hsun Huang, Chief Executive Officer
of NVIDIA, and discussed 3dfx's future prospects and

                                       42
<PAGE>

the possibility of mutually beneficial opportunities involving 3dfx and NVIDIA.
Later in October and in November these individuals held further discussions
regarding potential business opportunities involving 3dfx and NVIDIA.

   On November 20, 2000, members of 3dfx management, including Mr. Richard A.
Heddleson, Chief Financial Officer, and Mr. Glenn Schuster, Vice President of
Strategic Marketing, met with Ms. Christine B. Hoberg, Chief Financial Officer
of NVIDIA, Mr. Stephen Pettigrew, chief patent counsel at NVIDIA, and Ms. Kelly
Perez, Forecast, Planning and Analysis Manager of NVIDIA, representatives of
Robertson Stephens and representatives of NVIDIA's financial advisor, Morgan
Stanley Dean Witter, in Santa Clara, California. At the meeting, a
confidentiality agreement was signed and an overview of 3dfx's business was
conducted. Later that day, the 3dfx board of directors met to be updated by
3dfx's management and Locke Liddell & Sapp LLP, 3dfx's legal advisors, with
respect to a number of matters under consideration, including the status of
discussions with NVIDIA, the proposed strategic minority investor and other
prospective investors and business combination partners.

   On November 21, 2000, NVIDIA submitted a further request for business
information to Robertson Stephens and conducted further business discussions
regarding 3dfx. NVIDIA then commenced its financial due diligence regarding
3dfx's business. Between November 24 and 26, 2000, the parties engaged in
discussions and a review of 3dfx's financial situation, business and workforce.
During this period, representatives of 3dfx and its legal advisors continued
negotiating with the potential strategic investor with respect to the terms and
amount of the minority investment. Also during this period, management of 3dfx
determined that, based on its anticipated cash flow, its cash would be
exhausted by mid-December 2000, and 3dfx engaged bankruptcy counsel to advise
the company.

   On November 30, 2000, the NVIDIA board of directors met to discuss the
potential transaction.

   The 3dfx board of directors also met on November 30, 2000 with members of
3dfx management and 3dfx's financial and legal advisors to assess the status of
the identification of, and discussions with, parties interested in an
investment or business combination transaction with 3dfx, including NVIDIA and
the proposed strategic minority investor. At this meeting, 3dfx's board of
directors authorized Robertson Stephens to establish a bid deadline in an
auction process. Robertson Stephens then contacted potential interested
parties, including NVIDIA, and requested that interested parties submit bids
for a transaction on or before December 4, 2000. Of those parties contacted by
Robertson Stephens or 3dfx management, only NVIDIA presented an acquisition
proposal.

   On December 1, 2000, members of 3dfx management, including Messrs. Heddleson
and Lapinski, representatives of Robertson Stephens, members of NVIDIA
management, including Mr. Huang and Ms. Hoberg, and representatives of Morgan
Stanley met in San Jose, California. NVIDIA presented a term sheet and the
parties engaged in a discussion of a potential sale of 3dfx assets to NVIDIA.

   On December 2-3, 2000, the 3dfx management team and 3dfx's financial and
legal advisors analyzed the proposed term sheet and prepared a revised term
sheet that was submitted to the 3dfx board of directors for its consideration
at a meeting on December 4, 2000. The 3dfx board of directors authorized the
submission of the revised term sheet to NVIDIA, and during the meeting also
assessed the status of discussions with other parties. Also, during that
meeting, the 3dfx board of directors preliminarily concluded, following lengthy
discussions, that if the proposed asset sale to NVIDIA were to be completed,
the subsequent dissolution of 3dfx was the alternative most likely to protect
3dfx's creditors and maximize the return of value to its shareholders.

   From December 4 through December 8, 2000, the management teams of 3dfx and
NVIDIA and their respective financial and legal advisors negotiated the terms
of the proposed transaction and reached a tentative understanding as to the
terms of the asset sale on December 8, 2000. 3dfx's management then distributed
a package of information concerning the proposed transaction with NVIDIA
together with the latest draft of the term sheet with the potential strategic
investor to the 3dfx board of directors for review and consideration.

                                       43
<PAGE>

   Following receipt of this information, on Saturday, December 9, 2000, the
board of directors of 3dfx and 3dfx's financial and legal advisors held a
meeting to formally discuss the terms of the proposed asset sale and the
strategic minority investment proposal and their respective merits. After a
lengthy discussion of each proposed transaction, the 3dfx board of directors
preliminarily concluded that the proposed transaction with the potential
strategic minority investor appeared to be in the best interests of 3dfx, its
creditors and its shareholders. The 3dfx board of directors' determination was
based on the respective consideration offered by the parties and a comparison
of the conditions to closing of the two proposals. The 3dfx board determined
that several closing conditions in NVIDIA's first proposal made it unlikely
that the transaction would close without a significant reduction in the
consideration. Upon communication of this conclusion to NVIDIA, NVIDIA
requested an opportunity to submit a revised proposal relating to the asset
sale by Sunday, December 10, 2000, and the board of directors of 3dfx agreed to
this request.

   Following discussions among Mr. Heddleson, Mr. Huang and Ms. Hoberg during
the evening of Saturday, December 9, 2000, and the morning of Sunday, December
10, 2000, as well as discussions between Mr. Sellers and Mr. Huang on December
10, 2000, NVIDIA submitted a revised proposal with respect to the asset sale on
December 10, 2000.

   Later on Sunday, December 10, 2000, the 3dfx board of directors held a
meeting with its legal advisors present to discuss the revised proposal
submitted by NVIDIA. After extensive discussions concerning the revised NVIDIA
proposal as compared to the strategic minority investment proposal, as well as
3dfx's financial situation and prospects, and the absence of other proposals
notwithstanding the efforts of 3dfx's management and financial advisors, the
3dfx board of directors concluded that the revised proposal submitted by NVIDIA
for the asset sale, to be closed in connection with the implementation of a
plan of dissolution, was the proposal most likely to permit 3dfx to pay debts
owed to its and its subsidiaries' creditors and to permit 3dfx shareholders to
realize value for their investment in 3dfx. In reaching this conclusion, the
3dfx board of directors particularly noted that the size of the investment
proposed by the strategic investor was, at its maximum amount and assuming all
funding conditions were met, less than half of the amount of financing that
3dfx management believed to be necessary to repay its outstanding debts and
implement its new business plan. Moreover, the availability of additional
financing was substantially in doubt, and there was a strong likelihood that
the pursuit of the strategic investment could result in 3dfx not being able to
pay its creditors or provide any return to its shareholders. Upon Mr.
Lapinski's communication of the board's determination to the proposed minority
investor, the party elected not to continue negotiations or to submit a new
proposal. The 3dfx directors then present at the meeting unanimously authorized
the preparation of definitive documentation for the proposed asset sale and
dissolution of 3dfx and directed 3dfx's officers and legal and financial
advisors to proceed with the preparation of definitive transaction documents.

   During the evening of December 11, 2000, Cooley Godward llp, legal advisors
to NVIDIA, delivered the initial draft of the purchase agreement to 3dfx and
its legal and financial advisors.

   During the week of December 11 through December 15, 2000, discussions and
negotiations proceeded between the senior management and financial and legal
advisors of 3dfx and NVIDIA regarding the terms of the proposed asset sale and
related transactions. At the same time, the parties conducted financial and
legal due diligence. As Robertson Stephens had advised 3dfx that its position
as a creditor for past services rendered to 3dfx presented a possible conflict
of interest, 3dfx engaged Needham & Company, Inc. to advise 3dfx as to the
fairness of the transaction to 3dfx, from a financial point of view. At the
conclusion of these discussions and negotiations, on December 14, 2000, the
parties reached an agreement on the key terms of the transaction. Later that
evening, NVIDIA convened a telephonic meeting of its board of directors. The
board of directors of NVIDIA approved the proposed asset sale and related
transactions to which it is a party, subject to there not being any material
changes in the terms outlined during their meeting. The board of directors of
NVIDIA US Investment Company also approved the asset sale and related
transactions to which it is a party by unanimous written consent.

   On the morning of December 15, 2000, the board of directors and senior
management of 3dfx held a meeting at which 3dfx senior management reported that
an agreement had been reached with respect to the key

                                       44
<PAGE>

terms of the proposed asset sale and related transactions. The 3dfx board of
directors discussed with 3dfx's management and its legal and financial advisors
the structure of the asset sale and related transactions. In addition, the
senior management and financial and legal advisors to 3dfx reported to the 3dfx
board of directors the results of the due diligence investigation of NVIDIA and
the potential benefits and risks to 3dfx's creditors and shareholders of the
proposed transaction, and responded to questions from members of the 3dfx board
of directors. Locke Liddell & Sapp presented to the 3dfx board of directors a
detailed description of the proposed terms of the asset sale and related
transactions, together with a legal analysis of other issues for the board's
consideration. Needham discussed with the 3dfx board of directors various
analyses relating to the asset sale and related transactions and responded to
questions regarding such analyses. At the conclusion of these presentations,
Needham delivered its oral opinion, subsequently confirmed in writing, that, as
of that date, the consideration to be received by 3dfx in the asset sale was
fair to 3dfx from a financial point of view. The board of directors discussed
the asset sale in light of its decision to approve the implementation of a plan
of dissolution, a description of which is set forth under the caption "The
Dissolution of 3dfx--Reasons for the Dissolution of 3dfx."

   During the discussions and presentations outlined above, and prior to
submitting any matter to a vote, Messrs. George Haber and Andrei Manoliu
submitted their resignations as members of 3dfx's board of directors to be
effective immediately, which resignations were accepted by the 3dfx board of
directors. After further discussion, the remaining 3dfx directors unanimously
approved both the asset sale and related transactions and the dissolution of
3dfx, subject to satisfaction of 3dfx's management and legal advisors with the
form and substance of the definitive transaction documents, and the remaining
directors of 3dfx executed a written consent unanimously approving the asset
sale and related transactions and the dissolution of 3dfx and directing
submission, with the recommendations of the board of directors for their
approval, of the matters to the shareholders of 3dfx for their approval.

   During the afternoon of December 15, 2000, the parties finalized the
transaction agreements. The purchase agreement and the documents for the
related transactions were executed by NVIDIA, NVIDIA US Investment Company and
3dfx, and public announcement of the proposed transactions was made.

Reasons for the Asset Sale

   The following discussion of the reasons for the asset sale contains a number
of forward-looking statements that reflect the current views of NVIDIA or 3dfx
with respect to future events that may have an effect on their financial
performance. Forward-looking statements are subject to risks and uncertainties.
Actual results and outcomes may differ materially from the results and outcomes
discussed in the forward-looking statements. Cautionary statements that
identify important factors that could cause or contribute to differences in
results and outcomes include those discussed in "Forward-Looking Information"
and "Risk Factors."

NVIDIA's and NVIDIA US Investment Company's Reasons for Entering Into the Asset
Sale

   On December 14, 2000, NVIDIA's and NVIDIA US Investment Company's boards of
directors determined that the terms of the purchase agreement are fair to, and
in the best interests of, NVIDIA, NVIDIA US Investment Company and NVIDIA's
stockholders.

   NVIDIA's and NVIDIA US Investment Company's boards of directors consulted
with NVIDIA's senior management, as well as NVIDIA's financial advisors and
legal counsel, in reaching their decisions to approve the purchase agreement.
NVIDIA's and NVIDIA US Investment Company's primary reasons for entering into
the purchase agreement with 3dfx are the beliefs of their respective boards of
directors and the management of NVIDIA that the purchase agreement could result
in a number of benefits, including their belief that it may allow them to:

  . accelerate innovation and time-to-market and thereby better meet customer
    needs for next-generation graphics processors;

  . accelerate expansion into existing and new market segments for graphics
    processors;

                                       45
<PAGE>

  . be more competitive with other leading graphics processor companies,
    including, but not limited to, Intel Corporation, ATI Technologies Inc.,
    3Dlabs, Inc. Ltd., Matrox Electronic Systems Ltd., Silicon Integrated
    Systems Corp., and VIA Technologies, Inc.;

  . add to their intellectual property portfolio in the field of graphics
    processors;

  . stay, and dismiss with prejudice upon closing of the asset purchase or
    under other designated circumstances, the pending patent lawsuits between
    NVIDIA and 3dfx; and

  . have the opportunity to add qualified engineers and other technical
    employees from the former 3dfx workforce to NVIDIA US Investment Company
    and thereby enhance its expertise in graphics processor technology.

   In reaching the determination that the purchase agreement is in the best
interests of NVIDIA, NVIDIA US Investment Company and NVIDIA's stockholders,
the respective boards of directors of NVIDIA and NVIDIA US Investment Company
considered a number of factors, including the factors discussed above and
listed below. The conclusions reached by the boards of directors of NVIDIA and
NVIDIA US Investment Company with respect to these factors supported the
determination that the purchase by NVIDIA US Investment Company of certain of
3dfx's assets, including 3dfx's core graphics processor assets, and the
issuance of shares of NVIDIA common stock in the purchase agreement, was fair
to, and in the best interests of, NVIDIA and NVIDIA US Investment Company:

  . the judgment, advice and analyses of NVIDIA's management with respect to
    the potential strategic, financial and operational benefits of the
    purchase, including NVIDIA management's favorable recommendation of the
    purchase agreement;

  . the terms of the purchase agreement, including price and structure, which
    were considered by both boards of directors and by the management of
    NVIDIA to provide a fair and equitable basis for the overall transaction;

  . the cash position and balance sheet liquidity of NVIDIA following
    completion of the transaction, especially during periods of volatility in
    the financial markets; and

  . the cash position and balance sheet liquidity of 3dfx following
    completion of the transaction, especially taking into consideration
    3dfx's winding up of its business.

   The boards of directors of NVIDIA and NVIDIA US Investment Company also
considered a number of potentially negative factors in their respective
deliberations concerning the overall transaction. The potentially negative
factors considered by the boards of directors of NVIDIA and NVIDIA US
Investment Company included:

  . the risk that the transaction might not be completed in a timely manner
    or at all;

  . the potential negative impact of any vendor or partner confusion after
    announcement of the proposed transaction;

  . the potential negative reaction of the financial community after
    announcement of the proposed transaction;

  . the risk that the potential benefits of the transaction may not be
    realized, including the inability of NVIDIA US Investment Company to hire
    the former technical and engineering employees of 3dfx;

  . the risk of insolvency of 3dfx;

  . the costs associated with the transaction, including transaction-related
    costs and costs associated with renegotiating or terminating marketing
    agreements; and

  . the other risks and uncertainties discussed above under "Risk Factors."

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<PAGE>

   The foregoing discussion of information and factors considered by NVIDIA's
and NVIDIA US Investment Company's boards of directors is not intended to be
exhaustive, but is believed to include all material factors considered by the
boards. In view of the wide variety of factors considered by NVIDIA's and
NVIDIA US Investment Company's boards of directors, NVIDIA's and NVIDIA US
Investment Company's boards of directors did not find it practicable to
quantify or otherwise assign relative weights to the specific factors
considered. In addition, the boards did not reach any specific conclusions on
each factor considered, or any aspect of any particular factor, but conducted
an overall analysis of these factors. Individual members of NVIDIA's and NVIDIA
US Investment Company's boards of directors may have given different weights to
different factors. After taking into account all of the factors set forth
above, however, NVIDIA's and NVIDIA US Investment Company's boards of directors
agreed that the purchase agreement was fair to, and in the best interests of,
NVIDIA and NVIDIA US Investment Company and their respective shareholders and
that NVIDIA and NVIDIA US Investment Company should proceed with the purchase
and to enter into the purchase agreement.

   There can be no assurance that the benefits of the potential growth,
synergies or opportunities considered by the boards will be achieved through
completion of the purchase. See "Risk Factors."

3dfx's Reasons for the Asset Sale and Recommendation of 3dfx Board of Directors

   3dfx's board of directors has unanimously determined that the asset sale and
the purchase agreement are fair to and in the best interests of 3dfx and its
creditors and shareholders, and has unanimously approved the purchase agreement
and the asset sale. Accordingly, 3dfx's board of directors unanimously
recommends that its shareholders vote "FOR" the asset sale.

   In reaching its determination, the 3dfx board of directors considered a
number of factors, including, without limitation, the following:

  . the present and anticipated environment of the graphics chip and board
    industries, particularly in the retail markets where 3dfx concentrates
    its efforts. The graphics board add-in business has diminished
    substantially as a result of the increased integration of the graphics
    boards directly into the PCs by the manufacturers prior to delivery into
    the retail channel. Further, to date the efforts of 3dfx to dispose of
    its graphics board business assets and related liabilities had been
    unsuccessful;

  . the conclusion of the 3dfx board of directors that 3dfx would not be able
    to operate effectively in light of the significant losses that it was
    incurring and expected to continue to incur under its present business
    model, nor would it be able to raise the capital necessary in a timely
    manner to permit it to implement its new business model to reposition
    itself as a graphics chip company and to dispose of its graphics board
    business assets and liabilities in light of 3dfx's increasingly
    precarious cash flow position and mounting liabilities;

  . the terms and conditions of the purchase agreement, including the amount
    and form of consideration to be extended in the form of a $15 million
    loan immediately upon execution of the purchase agreement, the amount of
    cash and shares of NVIDIA common stock to be received on or after
    closing, and of the financial ability of NVIDIA to provide funding for
    the asset sale so that the asset sale is not conditioned on financing,
    all of which led the 3dfx directors to conclude that it was reasonably
    likely that the asset sale would be completed and that as a result 3dfx
    would be most likely to be able to satisfy the liabilities owed to its
    and its subsidiaries' creditors and be in a position to maximize the
    return of value to its shareholders;

  . the efforts made by Robertson Stephens and 3dfx management to contact and
    determine the level of interest of third parties in a business
    combination or financial transaction; and

  . the financial presentation of Needham & Company, Inc. to the 3dfx board
    of directors, including Needham & Company, Inc.'s written opinion dated
    December 15, 2000, to the effect that, as of the date of the opinion and
    based upon and subject to the matters stated in the opinion, the
    consideration to be received by 3dfx in the asset sale was fair, from a
    financial point of view, to 3dfx.

                                       47
<PAGE>

   The 3dfx board of directors also considered a number of potentially negative
factors in its deliberations concerning the overall transaction. The
potentially negative factors considered by the 3dfx board included:

  . the risk that the transaction might not be completed in a timely manner
    or at all;

  . the fact that 3dfx could lose other transaction opportunities during the
    period it is precluded under the terms of the purchase agreement from
    soliciting other transaction proposals;

  . the fact that even if the asset sale did not close, 3dfx would have
    already assigned to NVIDIA US Investment Company all of its trademarks,
    tradenames, services and related applications, and under some
    circumstances, the patent license granted to NVIDIA US Investment Company
    would continue in effect and the pending patent lawsuits between 3dfx and
    NVIDIA would be dismissed with prejudice;

  . the potential negative impact of any vendor or creditor confusion after
    announcement of the proposed transaction;

  . the fact that 3dfx would not be able to continue as an independent going
    concern in its present form;

  . the potential negative reaction of the financial community after
    announcement of the proposed transaction; and

  . the other risks and uncertainties discussed above under "Risk Factors."

   The foregoing discussion of the information and the factors considered by
the 3dfx board of directors is not meant to be exhaustive, but includes the
material factors considered by the 3dfx board of directors. The board of
directors of 3dfx did not quantify or attach any particular weight to the
various factors that they considered in reaching their determination that the
purchase agreement and the asset sale are fair to and in the best interests of
3dfx, its creditors and shareholders. Rather, the 3dfx board of directors
viewed its recommendation as being based upon its business judgment in light of
3dfx's financial position and the totality of the information presented and
considered, and the overall effect of the asset sale and the dissolution of
3dfx described below on the creditors and shareholders of 3dfx compared to
continuing the business of 3dfx or seeking other potential parties to effect an
investment in or other business combination with 3dfx.

   There can be no assurance that the benefits of the asset sale will be
realized by 3dfx's shareholders. See "Risk Factors."

Vote Required for the Asset Sale

   The affirmative vote of the holders of a majority of the outstanding shares
of 3dfx common stock is required to approve its sale of certain of 3dfx's
assets pursuant to the terms of the purchase agreement. Pursuant to voting
agreements and related irrevocable proxies executed by all of 3dfx's executive
officers and directors, 887,313 outstanding shares of 3dfx common stock (which
excludes shares subject to stock options) beneficially owned by them and their
affiliates on February 12, 2001 (representing approximately 2.2% of the total
number of shares of 3dfx common stock outstanding at that date), will be voted
for approval of the asset sale.

Opinion of 3dfx's Financial Advisor

   3dfx retained Needham & Company, Inc. to render an opinion as to the
fairness to 3dfx, from a financial point of view, of the consideration to be
received by 3dfx in the asset sale. The amount of consideration to be paid in
the asset sale was determined through arm's length negotiations between 3dfx
and NVIDIA and not by Needham.

   At a meeting of the 3dfx board of directors on December 15, 2000, Needham
delivered its oral opinion, which it subsequently confirmed in writing, that,
as of that date and based upon and subject to the assumptions and other matters
described in the written Needham opinion, the proposed consideration is fair to
3dfx from a

                                       48
<PAGE>

financial point of view. The Needham opinion is addressed to the 3dfx board of
directors, is directed only to the financial terms of the purchase agreement,
and does not constitute a recommendation to any 3dfx shareholder as to how that
shareholder should vote at the 3dfx special meeting.

   The complete text of the Needham opinion, which sets forth the assumptions
made, matters considered, limitations on and scope of the review undertaken by
Needham, is attached to this document as Annex C, and the summary of the
Needham opinion set forth in this document is qualified in its entirety by
reference to the Needham opinion. 3dfx shareholders are urged to read the
Needham opinion carefully and in its entirety for a description of the
procedures followed, the factors considered, and the assumptions made by
Needham.

   In arriving at its opinion, Needham, among other things:

  . reviewed a draft of the purchase agreement dated December 15, 2000;

  . reviewed selected publicly available information concerning 3dfx and
    selected other relevant financial and operating data of 3dfx furnished to
    it by 3dfx, including management's draft financial statements as of and
    for the quarter ended October 31, 2000;

  . held discussions with members of 3dfx's management concerning 3dfx's
    current and future business prospects;

  . reviewed and discussed with 3dfx's management various financial forecasts
    and projections prepared by management;

  . reviewed the historical stock prices and trading volumes of 3dfx common
    stock and NVIDIA common stock;

  . compared publicly available financial data of companies whose securities
    are traded in the public markets and that Needham deemed generally
    relevant to similar data for 3dfx and NVIDIA;

  . reviewed the financial terms of selected other business combinations that
    Needham deemed generally relevant; and

  . performed and/or considered such other studies, analyses, inquiries and
    investigations as Needham deemed appropriate.

   In addition, Needham held discussions with members of 3dfx's management and
its representatives concerning 3dfx's views as to:

  . the anticipated adverse effects on 3dfx's business, assets, liabilities,
    operations and prospects that 3dfx believes would occur if 3dfx were not
    to enter into the purchase agreement and the credit agreement;

  . 3dfx's liquidity position and its ability to continue as a going concern;

  . 3dfx's anticipated inability to remedy its liquidity shortfall and the
    substantial risk of 3dfx becoming insolvent and seeking the protection of
    state insolvency or federal bankruptcy law;

  . the anticipated substantial adverse effects on 3dfx's shareholders and
    present and potential employees, business partners and lenders that would
    result from insolvency or concerns about the potential for it; and

  . the anticipated benefits that would arise from entering into the purchase
    agreement and credit agreement, including the substantial lessening of
    those liquidity and solvency concerns.

   Needham also held discussions with Robertson Stephens as to its efforts to
solicit third party indications of interest for the acquisition of 3dfx or all
or some of its assets and for financing of 3dfx. Needham was not authorized by
3dfx or its board of directors to solicit, and did not solicit, any such
indications of interest.

   Needham assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by or discussed with it
for purposes of rendering its opinion. Needham assumed that the

                                       49
<PAGE>

financial forecasts provided to Needham by 3dfx's management were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of management, at the time of preparation, of 3dfx's future operating
and financial performance. Needham also assumed that the cash consideration to
be paid pursuant to the purchase agreement will be sufficient to pay all of
3dfx's liabilities, including taxes due and other amounts owed as a result of
the asset sale. Needham did not assume any responsibility for or make or obtain
any independent evaluation, appraisal or physical inspection of the assets or
liabilities of 3dfx. The Needham opinion states that it was based on economic,
monetary and market conditions existing as of its date. Needham expressed no
opinion as to the prices at which the 3dfx common stock or NVIDIA common stock
will trade at any time. In addition, Needham was not asked to consider, and the
Needham opinion did not address:

  . 3dfx's underlying business decision to engage in the asset sale or
    dissolution,

  . the consideration to be received by any individual shareholder in the
    dissolution,

  . the relative merits of the asset sale and dissolution as compared to any
    alternative business strategies that might exist for 3dfx, or

  . the effect of any other transaction in which 3dfx might engage.

   Needham expressed no opinion on 3dfx's solvency and expressed no opinion on
3dfx's ability to continue as a going concern should the asset sale and
dissolution not be completed.

   No limitations were imposed by 3dfx on Needham with respect to the
investigations made or procedures followed by Needham in rendering its opinion.

   Based on this information, Needham performed a variety of financial analyses
of the asset sale and the consideration to be received by 3dfx in the asset
sale. The following paragraphs summarize the material financial analyses
performed by Needham in arriving at its opinion.

   Needham's analyses were based upon the closing price per share of NVIDIA
common stock of $41.56 on December 14, 2000 and assumed two scenarios based
upon 3dfx management's estimates as to potential liabilities at the closing of
the asset sale:

  . an "upside" liquidation scenario in which 3dfx would have a cash
    deficiency of $5.27 million at closing, which would result in 894,600
    shares of NVIDIA common stock being issued to 3dfx, after deduction of
    the amount required to offset the extra cash paid by NVIDIA in accordance
    with the terms of the purchase agreement, and

  . a "downside" liquidation scenario in which 3dfx would have a cash
    deficiency of $25.17 million at closing, which would result in 500,000
    shares of NVIDIA common stock being issued to 3dfx, after deduction of
    the amount required to offset the extra cash paid by NVIDIA in accordance
    with the terms of the purchase agreement.

   While the two scenarios represent 3dfx management's reasonable estimates, at
the time they were made, of the potential amounts required to satisfy the debts
and liabilities of 3dfx following the asset sale, actual amounts could vary
significantly. The actual amounts required to satisfy 3dfx's debts and
liabilities upon liquidation of 3dfx could be greater than those estimated in
the downside scenario.

   Going Concern/Liquidation Analysis. Based on 3dfx management's estimates,
Needham prepared a going concern analysis comparing the results to the upside
and downside liquidation scenarios described above. The going concern analysis
assumed that following the closing of the NVIDIA transaction, 3dfx would
continue as a board company and would, among other things, invest $5.75 million
to $7.5 million per month in chips and materials for manufacturing of boards,
with first boards being available for sale in May 2001 and cash collection from
initial board sales beginning in June 2001. This analysis showed that 3dfx's
cash deficiency and liquidity problems would increase significantly as compared
with the scenario in which 3dfx would reduce expenses as rapidly as possible
following the closing of the NVIDIA transaction and seek to

                                       50
<PAGE>

generate additional cash from the sale of remaining assets in anticipation of
the dissolution of 3dfx and providing for payment in full of all remaining
liabilities.

   Needham reviewed 3dfx's historical financial results, including management's
draft financial statements as of and for the quarter ended October 31, 2000,
and noted that 3dfx's current and quick ratios deteriorated significantly and
were both less than 1.0 as of October 31, 2000. The current ratio is the ratio
of current assets to current liabilities, and the quick ratio is the ratio of
current assets, net of inventories, to current liabilities. These ratios are
indicators of a company's liquidity and ability to meet its debts as they
become due. Needham noted that 3dfx's financial advisors had informed 3dfx that
they were unable to obtain any indications of interest for alternative
acquisition transactions other than from NVIDIA and had received indications
for financing transactions only with respect to minority investments that were
substantially less than the amount 3dfx's management had determined would
permit 3dfx to satisfy the claims of its creditors and implement its revised
business model. Needham further noted management's assessment that this
inability to raise sufficient financing, coupled with 3dfx's liquidity
position, raised substantial doubts as to 3dfx's ability to continue as a going
concern.

   Value Sensitivity Analysis. Because a significant portion of the
consideration for the asset sale is shares of NVIDIA common stock, Needham
analyzed the effects of changes in the value of NVIDIA common stock on the
potential per share amounts available to 3dfx shareholders upon dissolution.
Needham's analysis used the upside and downside dissolution scenarios described
above, and assumed that all amounts in excess of management's estimates of 3dfx
liabilities would be available for distribution to 3dfx shareholders upon
dissolution of 3dfx. The analysis considered various stock prices for NVIDIA
common stock ranging from $20.00 per share to $80.00 per share. The analysis
showed that the potential amount distributable per 3dfx per share ranged from
$0.25 to $0.99 in the downside scenario, and from $0.44 to $1.78 in the upside
scenario. This analysis was based on a number of specific assumptions as to,
among other things, the amount of liabilities of 3dfx upon closing of the asset
sale and to be incurred prior to dissolution of 3dfx, and the actual amount of
assets available to 3dfx shareholders in liquidation. These factors are subject
to significant business, economic and competitive uncertainties and
contingencies, many of which are beyond the control of 3dfx. Accordingly, this
analysis should not be relied upon by 3dfx shareholders as being indicative of
amounts they will receive upon liquidation and dissolution of 3dfx.

   Selected Company Analysis. Using publicly available information, Needham
compared selected historical and projected financial and market data ratios for
3dfx to the corresponding data and ratios of other publicly traded fabless
semiconductor graphics companies that Needham deemed relevant because their
lines of businesses are similar to 3dfx's line of business. These companies,
referred to as the selected companies, consisted of:

       ATI Technologies, Inc.        NeoMagic Corporation
       3dlabs Inc., Ltd.             Trident Microsystems, Inc.

   The following table sets forth information, for the selected companies,
NVIDIA and 3dfx, concerning multiples of total market capitalization to last
twelve months' revenues. Needham calculated multiples for the selected
companies and NVIDIA based on the closing stock prices on December 14, 2000 and
for 3dfx based on the two scenarios described above. The table also sets forth
comparative information regarding gross margins based on last twelve months'
revenues for the selected companies, NVIDIA and 3dfx. Needham also noted that
of those companies, only NVIDIA had positive operating margins based on last
twelve months' revenues.

<TABLE>
<CAPTION>
                                                             3dfx       3dfx
                                                            Upside    Downside
                              Selected Companies          Implied by Implied by
                             ---------------------        the Asset  the Asset
                             High Low  Mean Median NVIDIA    Sale       Sale
                             ---- ---- ---- ------ ------ ---------- ----------
<S>                          <C>  <C>  <C>  <C>    <C>    <C>        <C>
Total market capitalization
 to last twelve months'
 revenues..................  1.4x 0.6x 0.6x  0.6x   5.2x     0.3x       0.4x
Last twelve months' gross
 margin....................   44%  21%  30%   27%    37%       8%         8%
</TABLE>


                                       51
<PAGE>

   Needham calculated the market value of common stock as a multiple of
earnings per share, or price/earnings multiple, for the last twelve months and
projected calendar 2000 and 2001, and market capitalization to projected 2001
revenues, but determined that the results were not meaningful because of 3dfx's
historical and projected net losses and absence of forecast revenues for
calendar 2001 due to 3dfx's severe liquidity shortfall.

   Selected Transaction Analysis. Needham also analyzed publicly available
financial information for selected mergers and acquisitions involving graphics
chip companies since January 1, 1997. Of the seven transactions reviewed, only
three had meaningful available financial information:

<TABLE>
<CAPTION>
      Acquirer                Target
      --------                ------
      <S>                     <C>
      Intel Corporation       Chips and Technologies, Inc.
      3dfx Interactive, Inc.  STB Systems, Inc.
      VIA Technologies, Inc.  S3 Incorporated (graphics business)
</TABLE>

In examining these transactions, referred to as the selected transactions,
Needham analyzed

  . the premium of consideration offered to the acquired company's stock
    price one day prior to the announcement of the transaction;

  . the premium of consideration offered to the acquired company's stock
    price four weeks prior to the announcement of the transaction;

  . the aggregate transaction value as a multiple of the acquired company's
    sales for the last twelve months' sales; and

  . market value as a multiple of the acquired company's historical book
    value.

   Needham also analyzed, for the selected transactions,

  . the aggregate transaction value as a multiple of the acquired company's
    earnings before interest and taxes for the last twelve months;

  . the aggregate transaction value as a multiple of the acquired company's
    earnings before interest, taxes, depreciation and amortization for the
    last twelve months; and

  . market value as a multiple of the acquired company's net income for the
    last twelve months.

but determined that the results were not meaningful because of 3dfx's net
losses.

   The following table sets forth information concerning the stock price
premiums in the selected transactions and the stock price premiums implied by
the asset sale in the upside and downside scenarios.

<TABLE>
<CAPTION>
                                                               NVIDIA/ NVIDIA/
                                       Selected Transactions    3dfx     3dfx
                                      ------------------------ Upside  Downside
                                      High   Low  Mean  Median  Case     Case
                                      ----- ----- ----- ------ ------- --------
<S>                                   <C>   <C>   <C>   <C>    <C>     <C>
One day stock price premium.......... 81.2% 25.0% 44.7% 27.8%   44.0 %  49.2 %
Four week stock price premium........ 73.8% 55.4% 66.0% 68.7%  (25.6)% (22.9)%
</TABLE>

   The following table sets forth information concerning the multiples of
aggregate transaction value to last twelve months' sales and market value to
historical book value for the selected transactions and the same multiples
implied by the asset sale. The multiples for the asset sale were the same for
both the upside and downside scenarios described above.

<TABLE>
<CAPTION>
                                                 Selected Transactions
                                                 --------------------- NVIDIA/
                                                 High Low  Mean Median  3dfx
                                                 ---- ---- ---- ------ -------
<S>                                              <C>  <C>  <C>  <C>    <C>
Aggregate transaction value to last twelve
 months' sales.................................. 2.4x 0.4x 1.2x  0.8x   0.4x
Market value to book value...................... 3.2x 0.4x 1.7x  1.4x   0.6x
</TABLE>


                                       52
<PAGE>

   Needham placed relatively less emphasis on the "Selected Company Analysis"
and "Selected Transaction Analysis" due to 3dfx's severe liquidity constraints
and lack of alternatives. No company, transaction or business used in the
"Selected Company Analysis" or "Selected Transaction Analysis" as a comparison
is identical to 3dfx, NVIDIA or the asset sale. Accordingly, these analyses are
not simply mathematical; rather, they involve complex considerations and
judgments concerning differences in the financial and operating characteristics
and other factors that could affect the acquisition, public trading or other
values of the selected companies, selected transactions, or the business
segment, company or transaction to which they are being compared.

   Other Analyses. In rendering its opinion, Needham considered various other
analyses, including, among other things, a history of trading prices and
volumes for NVIDIA and 3dfx, noting that, in general, NVIDIA common stock
outperformed the Nasdaq composite and S&P 500 indices over the one-year period
ended December 14, 2000 while 3dfx common stock under-performed those indices.

   The summary set forth above does not purport to be a complete description of
the analyses performed by Needham in connection with the rendering of its
opinion. The preparation of a fairness opinion involves various determinations
as to the most appropriate and relevant quantitative and qualitative methods of
financial analyses and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. Accordingly, Needham believes that its analyses must be
considered as a whole and that considering any portion of its analyses or the
factors considered, without considering all analyses and factors, could create
a misleading or incomplete view of the process underlying its opinion. In its
analyses, Needham made numerous assumptions with respect to industry
performance, general business and economic and other matters, many of which are
beyond the control of 3dfx or NVIDIA. Any estimates contained in these analyses
are not necessarily indicative of actual values or predictive of future results
or values, which may be significantly more or less favorable. Additionally,
analyses relating to the values of business or assets do not purport to be
appraisals or necessarily reflect the prices at which businesses or assets may
actually be sold. Accordingly, these analyses and estimates are inherently
subject to substantial uncertainty. The Needham opinion and Needham's related
analyses were only one of many factors considered by 3dfx's board of directors
in its evaluation of the asset sale and should not be viewed as determinative
of the views of 3dfx's board of directors or management with respect to the
asset sale or the consideration to be received by 3dfx in the asset sale.

   Under the terms of Needham's engagement letter with 3dfx, 3dfx has paid
Needham fees for rendering the Needham opinion that 3dfx and Needham believe
are customary in transactions of this nature. None of Needham's fees are
contingent on completion of the asset sale or dissolution. 3dfx has also agreed
to reimburse Needham for its reasonable out-of-pocket expenses and to indemnify
it against specified liabilities relating to or arising out of the rendering of
the opinion or other services performed under the engagement letter by Needham
as financial advisor to 3dfx.

   Needham is a nationally recognized investment banking firm. As part of its
investment banking services, Needham is frequently engaged in the evaluation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of securities, private
placements and other purposes. Needham was retained by the 3dfx board of
directors to act as a financial advisor in connection with the asset sale based
on Needham's experience as a financial advisor in mergers and acquisitions as
well as Needham's familiarity with the semiconductor industry. Needham has had
no other investment banking relationship with 3dfx during the past two years.
In the normal course of its business, Needham may actively trade the equity
securities of 3dfx or NVIDIA for its own account or for the account of its
customers and, therefore, may at any time hold a long or short position in
those securities.

Interests of Some 3dfx Officers in the Asset Sale

   Several executive officers of 3dfx have personal interests in the asset sale
that are different from, or in addition to, the interests of most 3dfx
shareholders. As a result, these executive officers may have conflicts of
interest that influenced their support of the asset sale.

                                       53
<PAGE>

   3dfx is a party to employment agreements with the following 3dfx senior
executive officers: Alex Leupp, Scott Sellers, Stephen Lapinski, Richard Burns
and Al Woodhull. These employment agreements were recently amended. Prior to
their amendment, these agreements provided for limited severance and other
benefits (continued payment of base pay for up to one year and reimbursement of
COBRA premiums for group medical coverage) if 3dfx terminated the executive's
employment without cause, and before the occurrence of a change of control.
Following a change of control, which was defined to include the closing of
certain types of transactions that would include the asset sale, the agreements
provided for a lump sum severance payment equal to one times the executive's
base salary (1.25x in the case of 3dfx's chief executive officer, Dr. Leupp)
plus one times the executive's targeted bonus for the year (1.25x in the case
of Dr. Leupp).

   Upon the announcement of the proposed asset sale and dissolution of 3dfx,
3dfx laid off a substantial portion of its workforce in order to conserve its
resources. In order to assure the dedication and continued efforts of 3dfx's
executives through the critical transition period up to the closing of the
asset sale, the independent members of the 3dfx board of directors and 3dfx's
executives negotiated amendments to the employment agreements. The purpose of
the amendments was twofold: first, to create an incentive for each executive to
continue his employment until the closing of the asset sale, and during this
period to devote substantially all of his efforts to the enhancement of
shareholder value; and second, to conserve resources by reducing the amount of
the severance benefit to which the executive would be entitled if he continued
in the employment of 3dfx through the closing of the asset sale. The amended
agreements are effective as of February 1, 2001.

   For all executives except Mr. Burns, the amended agreements provide, in lieu
of the prior severance arrangements, that lump sum severance and COBRA premium
reimbursement benefits will be paid to the executive if (i) the closing of the
asset sale occurs within 12 months following the amendment, and (ii) the
executive remains employed through the closing of the asset sale. The amount of
the lump sum severance benefit is equal to one times (1.25x in the case of Dr.
Leupp) the sum of the executive's base salary and 50% of his targeted bonus,
reduced by the base salary paid to the executive during the period from
February 1 through the closing date of the asset sale. The lump sum severance
benefit is not payable to the executives until after 3dfx's payment of all of
its fixed and ascertainable debts and liabilities. The amended agreements also
specify the board of directors' expectations for each executive to devote his
efforts to collection of outstanding receivables, negotiation of favorable
terms for the settlement of 3dfx liabilities, increasing cash recovered in the
sale of remaining inventories, and other specific duties.

   In the case of Mr. Burns, the amended agreement provides, in lieu of the
prior severance arrangement, that he will receive a lump sum severance benefit
equal to one times his base salary upon termination of his employment. His
employment duties are limited to collecting or resolving certain outstanding
retail accounts receivable for which he is principally responsible. Upon
substantial completion of these duties (expected to occur on or before February
28, 2001), his employment will terminate.

   The independent members of the 3dfx board of directors determined that the
amended agreements are in the best interests of 3dfx because of the enhanced
shareholder value achievable through the targeted efforts of its executives.
The amended agreements create an incentive on the part of 3dfx's executives to
work toward achieving increased cash liquidity for 3dfx's creditors and
shareholders, while also reducing the severance obligation triggered by the
closing of the asset sale.

Governmental Approvals

   Under the HSR Act and the rules promulgated thereunder, the asset sale may
not be completed until notifications have been given and certain information
has been furnished to the FTC and the Antitrust Division of the U.S. Department
of Justice and specified waiting period requirements have been satisfied or
early termination of the waiting period is granted at the request of NVIDIA and
3dfx. NVIDIA and 3dfx filed notification and report forms under the HSR Act
with the FTC and the Antitrust Division on January 10, 2001. The requisite
waiting period under the HSR Act has expired.

                                       54
<PAGE>


Material Federal Income Tax Consequences Relating to the Asset Sale

   3dfx has determined that even though the asset sale contemplates that a
portion of the consideration to be received by 3dfx could consist of NVIDIA
common stock, the asset sale will not constitute a reorganization within the
meaning of Section 368 of the Internal Revenue Code. 3dfx will recognize gain
as a result of the asset sale equal to the excess of the amount realized by
3dfx over its basis in the assets sold pursuant to the asset sale. The amount
realized by 3dfx will include the cash consideration and the fair market value
of the consideration consisting of NVIDIA common stock. 3dfx expects that it
will have significant operating losses and losses attributable to the
liquidation for the year of the asset sale which will offset a portion of the
asset sale gain. In addition, 3dfx has significant net operating losses that it
may utilize to offset a portion of its gain attributable to the asset sale.
While 3dfx cannot determine at this time its tax liability for the year of the
asset sale, 3dfx expects that it will incur some alternative minimum tax
liability for such year. See also "Dissolution of 3dfx--Material Federal Income
Tax Consequences of the Liquidation and Dissolution of 3dfx."

Anticipated Accounting Treatment

   For purposes of financial reporting, NVIDIA expects to account for the
transaction as a "purchase."

Absence of Dissenters' Rights Related to the Asset Sale

   California law does not provide dissenters' rights with respect to the asset
sale.

                                       55
<PAGE>

                            THE DISSOLUTION OF 3DFX

   This section of the prospectus/proxy statement describes material aspects
and implications of the dissolution of 3dfx. While 3dfx believes that the
description covers the material aspects of the dissolution of 3dfx, this
summary may not contain all of the information that is important to you. You
should carefully read this entire prospectus/proxy statement and the other
documents referred to in this prospectus/proxy statement for a more complete
understanding of the proposed dissolution of 3dfx.

General Description

   The 3dfx board of directors has approved the dissolution of 3dfx as
described in the plan of dissolution attached to this prospectus/proxy
statement as Annex A. If the plan of dissolution is approved by the
shareholders, the board of directors, without further action by the
shareholders (except those actions as may be required by law or as the 3dfx
board of directors may deem appropriate), may elect at any time to dissolve
3dfx after payment of, or provision for the payment of, all debts and
liabilities of 3dfx and its subsidiaries. Any remaining assets would be
distributed to 3dfx shareholders. Approval by the holders of a majority of the
outstanding shares of common stock is required to approve the liquidation,
winding up and dissolution of 3dfx pursuant to the plan of dissolution. In the
event that the shareholders of 3dfx fail to approve both the asset sale and the
dissolution, NVIDIA and 3dfx would each have the option to terminate the
purchase agreement.

Reasons for the Dissolution of 3dfx

   The following discussion of the reasons for the dissolution of 3dfx contains
a number of forward-looking statements that reflect the current views of 3dfx
with respect to future events. Forward-looking statements are subject to risks
and uncertainties. Actual results and outcomes may differ materially from the
results and outcomes discussed in the forward-looking statements. Cautionary
statements that identify important factors that could cause or contribute to
differences in results and outcomes include those discussed in "Forward-Looking
Information" and "Risk Factors."

   Beginning in mid-November 2000, 3dfx, with the assistance of its financial
advisor Robertson Stephens, undertook a review of 3dfx's strategic
alternatives, including obtaining new sources of financing and consideration of
a merger, reorganization or sale of some or all of the assets of 3dfx, and
Robertson Stephens contacted both strategic and financial parties to determine
their interest in such transactions. After discussions with selected parties
and an extensive exploration and evaluation of possible strategic alternatives
to best protect 3dfx's creditors and maximize shareholder value, the 3dfx board
of directors determined that the asset sale to NVIDIA was the only alternative
available to 3dfx that 3dfx believed would best permit 3dfx a reasonable
likelihood of satisfying the claims of its creditors and of placing it in a
position to provide a return to its shareholders. A more complete description
of the background and reasons for the 3dfx board of directors' approval of the
asset sale is set forth under "The Asset Sale--Background" and "--Reasons for
the Asset Sale."

   In the course of the 3dfx board of directors' consideration of the asset
sale in early December 2000, it also considered 3dfx's anticipated prospects
following completion of the asset sale, at which time 3dfx's remaining
operating assets would largely consist of its graphics board business. Although
the board of directors had already decided to exit the business in November
2000, the board re-examined the prospects for this business as well as the
possible application of 3dfx's remaining expertise in other areas, in light of
the proposed asset sale.

   In addition, during this period members of 3dfx management worked with
Robertson Stephens, 3dfx's financial advisor, to assess the strategic and
financial viability of 3dfx continuing as an independent concern following
completion of the proposed asset sale. Following its re-examination of the
stand-alone graphics business, 3dfx's outstanding liabilities and its
consideration of all other available alternatives, the 3dfx board of directors
preliminarily concluded on December 4, 2000 that the liquidation, winding up
and dissolution of 3dfx was the alternative most reasonably likely to allow
payment of its debts and liabilities to its creditors and to maximize the
return of value to its shareholders.

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<PAGE>

   The 3dfx board of directors met on December 15, 2000 with 3dfx's senior
management and its legal and financial advisors. After discussing the structure
and terms of the asset sale and related transactions, the board of directors
again considered 3dfx's alternatives assuming the closing of the asset sale.
During the board of directors' discussions, George Haber and Andrei Manoliu
submitted their resignations as members of 3dfx's board of directors effective
immediately, which resignations were accepted by the 3dfx board of directors.
After further discussion, the 3dfx board of directors concluded in its business
judgment that no other alternative available to 3dfx was reasonably likely to
protect 3dfx's creditors and to provide equal or greater value to 3dfx's
shareholders than the liquidation, winding up and dissolution of 3dfx. The
board of directors' conclusion was based on a variety of factors that had been
discussed over the course of several meetings, including the following:

  .  an assessment of the likely net proceeds from the asset sale remaining
     after the payment or provision for payment of debts and liabilities owed
     to 3dfx's and its subsidiaries' creditors;

  .  the questionable viability of a business based on 3dfx's remaining
     assets, namely its graphics board business, and the possible
     applicability of 3dfx's remaining expertise in other areas;

  .  the lack of success that 3dfx had already experienced in finding
     strategic buyers or sources of financing for its graphics board
     business;

  .  the financial analysis conducted by Robertson Stephens based on various
     assumptions and data provided to it by 3dfx's management regarding the
     anticipated performance of a stand-alone graphics board business
     following closing of the asset sale, which concluded that the proceeds
     from the asset sale would likely be consumed before the business could
     reach a cash flow positive position or otherwise be in a position to
     obtain new financing;

  .  the attractiveness of potentially being in a position to make a
     distribution to 3dfx's shareholders compared to the board of directors'
     assessment of 3dfx's current and expected future financial condition,
     earnings, business opportunities, strategies and competitive position
     without giving effect to the asset sale and dissolution; and

  .  the comprehensive but unsuccessful efforts of 3dfx to locate alternative
     purchasers for its graphics board assets.

   The 3dfx board of directors also considered potentially negative factors in
its deliberations concerning the dissolution of 3dfx, including the following:

  .  currently existing or future claims against 3dfx, as well as the
     administrative costs of implementing the plan of dissolution, could
     substantially reduce or eliminate any distribution to 3dfx's
     shareholders;

  .  the resolution of currently existing or future claims against 3dfx,
     including any claims of NVIDIA arising out of the purchase agreement,
     may substantially lengthen the time before which any distribution can be
     made to 3dfx's shareholders;

  .  the likelihood that before making any distribution to 3dfx's
     shareholders, 3dfx's common stock would be delisted from the Nasdaq
     National Market, which would likely have an adverse impact on the
     liquidity and price of 3dfx common stock;

  .  the value of NVIDIA common stock may decrease before 3dfx is able to
     make any distribution to its shareholders;

  .  upon completion of the dissolution, 3dfx's shareholders will no longer
     participate in any future earnings or growth of 3dfx's assets or benefit
     from any increases in the value of 3dfx's assets, except possibly in an
     indirect manner as a result of any future appreciation in NVIDIA common
     stock;

  .  the potential for there to be a significant decline in the market price
     of 3dfx common stock as a result of announcement of the dissolution; and

  .  3dfx's shareholders may, depending on their tax basis in their stock,
     recognize a taxable gain upon the completion of the dissolution.

                                       57
<PAGE>

   Based upon the discussion above, the 3dfx board of directors believes that
it has fully explored all of its strategic alternatives. On December 15, 2000,
as a result of that process, the board of directors approved the liquidation,
winding up and dissolution of 3dfx pursuant to the plan of dissolution based
upon its determination that this course of action provided the best protection
to 3dfx's creditors and was in the best interests of 3dfx and its shareholders.
The 3dfx board of directors also directed that the plan of dissolution be
submitted, with the board of director's unanimous recommendation for its
approval, for consideration by 3dfx's shareholders. A copy of the plan of
dissolution is attached to this prospectus/proxy statement as Annex A.

   There can be no assurance that the benefits of the plan of dissolution will
be realized by 3dfx's shareholders. See "Risk Factors."

Recommendation of the 3dfx Board of Directors

   The 3dfx board of directors unanimously recommends that the shareholders
vote FOR the proposal to approve the liquidation, winding up and dissolution of
3dfx pursuant to the plan of dissolution.

Vote Required for Dissolution of 3dfx

   The affirmative vote of the holders of a majority of the outstanding shares
of 3dfx common stock is required to approve the liquidation, winding up and
dissolution of 3dfx pursuant to the plan of dissolution.

   Pursuant to voting agreements and related irrevocable proxies, 887,313
outstanding shares of 3dfx common stock (which excludes shares subject to stock
options) beneficially owned by executive officers and directors of 3dfx and
their affiliates on February 12, 2001, representing approximately 2.2% of the
total number of shares of 3dfx common stock outstanding at that date, will be
voted for approval of the liquidation, winding up and dissolution of 3dfx as
described in the plan of dissolution.

Description of the Plan of Dissolution

   The plan of dissolution provides for the dissolution, winding up and
dissolution of 3dfx pursuant to the California Corporations Code. The plan of
dissolution provides that, following approval by 3dfx's shareholders, 3dfx will
proceed with the closing of the asset sale and the liquidation of its other
assets, and will wind up its business and operations and dissolve. To the
extent that there are any remaining assets after the payment of, or the
provision for the payment of, 3dfx's and its subsidiaries' debts and
liabilities, 3dfx will distribute such assets to its shareholders in one or
more distributions. See "--Expected Distributions."

   The plan of dissolution grants broad discretion and authority to 3dfx's
board of directors in the administration of the plan of dissolution, including
the engagement of employees and consultants to facilitate the dissolution of
3dfx, the provision for indemnification of 3dfx's directors and officers,
payment of all of its and its subsidiaries' debts and liabilities,
establishment of a liquidating trust and the determination of the timing and
amount of distributions. In addition, the plan of dissolution provides that
3dfx's board of directors may amend or delay implementation of the plan of
dissolution even if it is approved by a majority of 3dfx shareholders.

Operations of 3dfx

   After the closing of the asset sale, 3dfx will cease business operations,
other than managing its investments in cash, cash equivalents and other
marketable securities. Its corporate existence will continue thereafter, but
solely for the purpose of managing such investments, completing work in
process, disposing of its assets, providing for the satisfaction of its and its
subsidiaries' debts and liabilities, adjusting and winding up its business and
affairs, and distributing any remaining assets to shareholders. It is unlikely
that any further approvals by 3dfx shareholders will be sought in connection
with any action relating to the liquidation process. One or more liquidating
distributions from any remaining assets will be conditioned upon setting aside
sufficient assets for the purpose of meeting any debts and liabilities that
3dfx and/or its subsidiaries have not otherwise met.

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<PAGE>

Payment of Claims Related to 3dfx

   3dfx intends to satisfy, or provide for the satisfaction of, all of its
debts and liabilities. The plan of dissolution also authorizes the board of
directors to pay or provide for the payment of the debts and liabilities of
3dfx's subsidiaries, if such debts and liabilities are enforceable against 3dfx
or if the board of directors in the exercise of its business judgment believes
the payment or provision for these debts and liabilities will ultimately result
in the maximization of assets available for distribution to 3dfx's
shareholders.

   The 3dfx board of directors, in the exercise of its business judgment, will
likely determine to pay the debts and liabilities of 3dfx's subsidiaries in
accordance with the plan of dissolution. Under principles of corporate
separateness, an argument can be made that 3dfx is not required to pay such
claims. Nonetheless, the 3dfx board of directors elected to provide for the
payment of the claims of creditors of its subsidiaries in the plan of
dissolution mainly for three reasons: first, 3dfx and its subsidiaries have
made intercompany cash transfers; second, payment will diminish costly
litigation by subsidiary creditors who might seek to disregard the corporate
separateness between 3dfx and its subsidiaries, leading perhaps to a reduction
in the distributions that may be made to 3dfx's shareholders; and third, the
terms of the purchase agreement require that the claims of subsidiaries be
paid.

   3dfx believes that the cash proceeds from the asset sale received at closing
will be insufficient to satisfy all of 3dfx's and its subsidiaries' debts and
liabilities. As a consequence, 3dfx expects that it will request that NVIDIA US
Investment Company advance to it up to $25 million to be used by 3dfx to pay
the remaining debts owed to its or its subsidiaries' creditors. If, upon
satisfaction of various conditions, the advance is made by NVIDIA US Investment
Company, the number of shares of NVIDIA common stock deliverable to 3dfx will
be reduced by the quotient determined by dividing the amount of the advance by
$50. 3dfx expects that, upon receiving the cash consideration at the closing of
the asset sale and after obtaining the cash advance from NVIDIA US Investment
Company, it will have sufficient cash to pay all of its and its subsidiaries'
known current and determinable liabilities.

Directors and Officers of 3dfx

   3dfx anticipates that its current directors, and one or more of its current
officers, will continue to serve in such capacities after adoption of the plan
of dissolution for such purposes as are set forth under the California
Corporations Code, including implementing the plan of dissolution. The board of
directors will be given broad powers to take whatever action is necessary or
desirable in order to carry out the provisions of the plan of dissolution to
effect the complete liquidation, winding up and dissolution of 3dfx.

Continued Indemnification of Directors and Officers of 3dfx

   3dfx expects to reserve assets and/or obtain and maintain insurance to
provide for the continued indemnification of the directors, officers, agents
and representatives of 3dfx, and any other parties whom 3dfx has agreed to
indemnify, as provided by the charter documents of 3dfx, any existing
indemnification agreements between 3dfx and any of such persons, and applicable
law. The establishment or application of any assets dedicated to these reserves
will delay, and may reduce, the assets available for distribution to 3dfx's
shareholders. At the discretion of the board of directors, insurance may
include coverage for periods after the dissolution of 3dfx, including periods
after the termination of any liquidating trust and coverage for trustees,
employees and agents of such liquidating trust.

Dissolution; No Transfers

   After all of 3dfx's assets have been sold, all of its and its subsidiaries'
known and contingent debts and liabilities have been paid and discharged, or
adequate provision has otherwise been made for such debts and liabilities, and
all net proceeds have been distributed to or for the benefit of 3dfx
shareholders, 3dfx will file a certificate of dissolution with the Secretary of
State of the State of California or obtain a court order declaring 3dfx
dissolved and file that order with the Secretary of State of California. Upon
filing of the certificate of

                                       59
<PAGE>

dissolution or court order, 3dfx will cease to exist as a legal entity and will
be dissolved. The stock transfer books of 3dfx will be closed as of the close
of business on the date the Secretary of State of the State of California
accepts the filing of 3dfx's certificate of dissolution or court order.
Thereafter, no assignments or transfers of 3dfx common stock will be recorded.

Expected Distributions

   The actual amount of, timing of, and record dates for, any distributions to
3dfx's shareholders are not known at this time. These matters will be
determined after the commencement of liquidation proceedings, in the sole
discretion of the 3dfx board of directors or the trustees of the liquidating
trust, as the case may be, and will depend upon a variety of factors, including
the timing of the closing of the asset sale, the net proceeds received in the
asset sale, the value of 3dfx's other assets, the ultimate amount of known and
unknown debts and liabilities of 3dfx and its subsidiaries and the amount of
liquidation-related expenses that must be satisfied out of 3dfx's assets.
Claims, liabilities and expenses will continue to accrue following approval of
the plan of dissolution, and 3dfx anticipates that expenses for professional
fees and other expenses of dissolution will be significant. These expenses will
reduce the amount of the assets available for distribution to 3dfx
shareholders.

   At this time, 3dfx cannot determine if there will be any assets remaining
after paying for, or providing for the payment of, all of its and its
subsidiaries' debts and liabilities. 3dfx expects that following the closing of
the asset sale it will request that NVIDIA US Investment Company provide a cash
advance of all or a portion of the $25 million provided for in the purchase
agreement in order to enable 3dfx to pay its or its subsidiaries creditors. If
a cash advance is made to 3dfx, then the number of NVIDIA shares receivable by
3dfx will be reduced by a number of shares determined by dividing the amount of
the advance by $50. 3dfx expects that, upon receiving the cash consideration at
the closing of the asset sale and after obtaining the cash advance from NVIDIA
US Investment Company, it will have sufficient cash to pay all of its and its
subsidiaries' known current and determinable liabilities. However, the amount
of unknown or contingent liabilities cannot be quantified and could decrease or
eliminate any remaining assets available for distribution. Further, if 3dfx or
its subsidiaries are subject to any contingent liabilities, this could require
that it establish reserves that could delay any distribution to 3dfx
shareholders.

   Because of the uncertainties as to the precise net realizable value of
3dfx's assets and the settlement amount of 3dfx's and its subsidiaries' debts
and liabilities, 3dfx cannot at this time determine the amount of distributions
that may be made to its shareholders, if any. Only if there are assets
remaining at the time of the dissolution will you receive a portion of those
assets, which will be equal to your pro rata share, based on the number of 3dfx
shares you own.

   3dfx expects to receive a combination of cash and shares of NVIDIA common
stock in connection with the asset sale. 3dfx may distribute the shares of
NVIDIA common stock received by it following its dissolution directly to its
shareholders, or it may sell these shares in the open market or contribute the
shares to a liquidating trust for the benefit of 3dfx's shareholders. Further,
3dfx may elect to directly distribute shares of NVIDIA common stock to some of
its shareholders, while distributing an equivalent per share value in cash to
others who would otherwise be entitled to receive a fractional amount or small
number of shares of NVIDIA common stock. At this time, 3dfx is unable to
provide specifics about the type or types of assets that 3dfx's shareholders
may receive or what the value of those assets might be at the time of
distribution, if a distribution is made to 3dfx's shareholders by 3dfx or a
liquidating trust at all.

   After the closing of the asset sale, the prices at which 3dfx will seek to
sell its remaining assets will be determined by 3dfx management and board of
directors in their sole discretion. The assets could be sold to one or more
purchasers, in one or more transactions over a period of time. The amount of
proceeds received from the disposition of individual assets is dependent on a
number of conditions, many of which are beyond 3dfx's power to control.

   3dfx shareholders will be advised at the time of any such distribution as to
the details of the mechanics of distribution and the procedures as to
dissolution.

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<PAGE>

   In the event that 3dfx were to make distributions to its shareholders
without payment or adequate provision for payment of its or its subsidiary's
debts and liabilities, each shareholder could be required to return up to the
amount of total distributions such shareholder received.

Amendment or Delay of Implementation of the Plan of Dissolution

   The 3dfx board of directors may amend or delay implementation of the plan of
dissolution without the necessity of further shareholder approval, unless the
board of directors determines that such amendment or delay would materially and
adversely affect shareholders' interests.

Liquidating Trust

   If deemed necessary or desirable by the 3dfx board of directors, 3dfx may
during the course of the liquidation process transfer some or all of its then
remaining assets to a liquidating trust for the benefit of the shareholders of
3dfx. The liquidating trust would also likely assume some or all of the
liabilities of 3dfx and its subsidiaries remaining at the time of the transfer
of assets. Any such liquidating trust would be administered by one or more
trustees selected by the board of directors and appointed pursuant to a
liquidating trust agreement. In the event a liquidating trust is established,
3dfx would distribute to its then current holders of common stock beneficial
interests in the liquidating trust in proportion to the number of shares of
common stock owned by such holders. The sole purpose of the liquidating trust
would be to liquidate the assets transferred to the liquidating trust on terms
satisfactory to the liquidating trustees, to pay any liabilities of 3dfx
assumed by the liquidating trust, and to distribute to the holders of the
common stock of 3dfx any assets remaining in the liquidating trust after the
completion of this process. The liquidating trust would be obligated to pay any
debts and liabilities of 3dfx and its subsidiaries assumed by it. Approval of
the plan of dissolution will constitute the approval by 3dfx shareholders of
the board of directors' establishment of such a liquidating trust, its
appointment of one or more individuals (who may or may not be former directors)
or corporate persons to act as trustee or trustees and the terms of any
liquidating trust agreement adopted by the board of directors. It is
anticipated that the beneficial interests in the liquidating trust would not be
freely transferable. Therefore, the recipients of the beneficial interests
would not realize any value from the interests unless and until the liquidating
trust distributes cash or other assets to them, which would be solely in the
discretion of the trustees.

   The board of directors may utilize a liquidating trust to reserve assets of
3dfx for the future satisfaction of contingent liabilities. This might enable
3dfx to complete its dissolution and, potentially, to distribute assets to its
shareholders without delaying those actions until the validity and amounts of
the contingent liabilities have been determined. If it appears that the
disposition of particular assets held by 3dfx will require substantial time or
substantial attention on the part of an administrator with particular skills or
experience, a liquidating trust could be used so that those assets could be
disposed of in an orderly fashion by one or more trustees with the requisite
skills and experience. Using a liquidating trust for this purpose might enable
3dfx to complete its dissolution and, potentially, to make an initial
distribution of assets to its shareholders without delaying such actions until
3dfx could dispose of these particular assets on a favorable basis.

   From and after the date of 3dfx's transfer of its remaining assets to the
liquidating trust, 3dfx would no longer have an interest of any character in
and to these assets, which would thereafter be held by the liquidating trust
for the purposes set forth in the plan of dissolution.

   The activities of the liquidating trust would be limited to selling the
assets it receives from 3dfx, using the proceeds of such asset sales to
discharge 3dfx's and its subsidiaries' debts and liabilities, and distributing
any remaining assets to 3dfx's shareholders. Because 3dfx's shareholders would
be considered the owners of the liquidating trust's assets for tax purposes,
each shareholder would be required to take into account in computing his own
taxable income his pro rata share of each item of the trust's income, gain,
loss and deduction. Distributions received from the trust would not be
separately taxable. See "--Material Tax Consequences of the Liquidation and
Dissolution of 3dfx."

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<PAGE>

Nasdaq Listing

   3dfx has received a delisting notice from Nasdaq due to its failure to
maintain a minimum bid of at least $1.00 per share. The notice provides that
the 3dfx common stock may be delisted as early as May 7, 2001. 3dfx expects
that it will be unable to satisfy the requirement for the continued listing of
its common stock on the Nasdaq National Market. After delisting, the ability to
buy and sell shares of 3dfx common stock may be materially impaired, which
would likely have an adverse effect on the price and liquidity of 3dfx common
stock.

Material Federal Income Tax Consequences of the Liquidation and Dissolution of
3dfx

   The following discussion summarizes the material U.S. federal income tax
consequences of 3dfx's adoption and implementation of the plan of dissolution.
This discussion is not exhaustive of all possible tax considerations and does
not include a discussion of any state, local or foreign tax considerations. In
addition, the discussion is intended to address only those federal income tax
considerations that are generally applicable to all United States shareholders
and does not discuss all of the aspects of federal income taxation that may be
relevant to certain types of 3dfx shareholders (including insurance companies,
tax-exempt entities, financial institutions, broker-dealers, foreign
corporations, persons who are not citizens or residents of the United States,
shareholders who acquired their shares in connection with stock option or stock
purchase plans or in other compensatory transactions, shareholders whose shares
are "qualified small business stock" for purposes of Section 1202 of the
Internal Revenue Code or are "section 1244 stock" for purposes of Section 1244
of the Internal Revenue Code, shareholders who hold their shares as part of an
integrated investment such as a hedge, straddle, constructive sale or other
risk reduction strategy or as part of a conversion transaction, and
shareholders who do not hold their shares as capital assets) who are subject to
special treatment under the federal income tax laws.

   This discussion is based on current provisions of the Internal Revenue Code
and its legislative history, existing, temporary and currently proposed
Treasury Regulations, existing administrative rulings and practices of the
Internal Revenue Service or IRS, and judicial decisions. No assurance can be
given that legislative, judicial or administrative changes will not affect the
accuracy of this discussion, possibly on a retroactive basis. In addition, 3dfx
has not requested and does not plan to request any rulings from the IRS with
respect to the tax consequences of the adoption and implementation of the plan
of dissolution. Accordingly, no assurance can be given that the statements
contained in this discussion (which do not bind the IRS or the courts) will not
be challenged by the IRS or sustained by the courts if so challenged.

   This discussion is not intended as a substitute for careful tax planning.
Each shareholder is urged to consult with its own tax advisor regarding the
specific tax consequences of the adoption and implementation of the plan of
dissolution, including the federal, state, local, and foreign tax consequences
that may be applicable to such shareholder.

Tax Consequences of the Liquidation to 3dfx

   Even though the liquidation of 3dfx could involve a distribution
predominantly of NVIDIA common stock, the liquidation will not constitute a
reorganization within the meaning of Section 368 of the Internal Revenue Code
with respect to 3dfx. In addition to the possible distribution of NVIDIA common
stock, the liquidation could also involve a distribution of cash or of 3dfx
property directly or through a liquidating trust. See discussion below under
"Tax Consequences of the Liquidating Trust." 3dfx will recognize gain or loss
on its distribution of property (NVIDIA stock or other property) to its
shareholders in complete liquidation of 3dfx, as if it sold the distributed
property to its distributee--shareholders for the fair market value of such
property on the date of the distribution. If the property distributed in the
liquidation is subject to a liability or the distributee shareholder assumes a
liability of the liquidating corporation in connection with the distribution,
the fair market value of the property is treated as not less than the amount of
the liability. The 3dfx gain or loss recognized pursuant to its liquidation
will be in addition to the gain or loss recognized by 3dfx pursuant to the a
    sset sale. See "The Asset Sale--Material Federal Income Tax Consequences
Relating to the Asset Sale."

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<PAGE>

3dfx will be obligated to file Form 966 with the Internal Revenue Service
within 30 days after the shareholders approve the plan of dissolution. In
addition, 3dfx will be obligated to satisfy certain reporting requirements with
respect to the distributions to its shareholders.

Tax Consequences of the Liquidation to 3dfx Shareholders

   Even though the liquidation of 3dfx could involve a distribution
predominantly of NVIDIA common stock, the liquidation will not constitute a
reorganization within the meaning of Section 368 of the Internal Revenue Code
with respect to the 3dfx shareholders. Distributions in complete liquidation of
3dfx pursuant to the plan of dissolution generally will be treated by each 3dfx
shareholder as amounts received in full payment in exchange for its stock under
Section 331(a) of the Internal Revenue Code. The distributions will not be
treated as dividends received by each shareholder, but rather as if the
shareholder sold its shares. Each shareholder receiving such liquidating
distributions will recognize gain or loss equal to the difference between (i)
the sum of the amount of cash and the net fair market value of other property
received (including the fair market value of an interest in any liquidating
trust, as described below) and (ii) the shareholder's basis in its 3dfx shares.
A shareholder who recognizes gain may not receive any cash from 3dfx with which
to satisfy the resulting tax liability.

   A shareholder's gain or loss attributable to the liquidation of 3dfx
generally will be capital gain or loss if the shareholder's shares are held as
a "capital asset" within the meaning of Section 1221 of the Internal Revenue
Code. Presently, capital gains generally are taxed to individual taxpayers at a
maximum rate of 20% with respect to capital assets held for more than one year.
Individual shareholders may deduct capital losses to the extent of their
capital gains, plus $3,000 ($1,500 in the case of a married individual filing a
separate return). Any unused capital loss may be carried forward indefinitely
by individual taxpayers until the individual recognizes sufficient capital
gains to absorb them or recognizes such losses at the rate of up to $3,000 per
year ($1,500 in the case of a married individual filing a separate return).
Capital losses may not be carried back by an individual. Corporate shareholders
may deduct capital losses in the year recognized only to the extent of capital
gains recognized during such year. Unused capital losses of a corporation may
be carried back three years and forward for five years, but may not be carried
to any year in which they would create or increase a net operating loss.

   If there is a distribution to 3dfx shareholders, the distribution could
consist of one or more liquidating distributions. Each liquidating distribution
will be applied first against the adjusted tax basis of each of a shareholder's
shares, and gain will be recognized with respect to a share only after an
amount equal to the adjusted tax basis of such share has been fully recovered.
Any loss with respect to a share may be recognized only after 3dfx makes its
final liquidating distribution, if any, or after the last substantial
liquidating distribution is determinable with reasonable certainty. Gain or
loss is computed on a share by share basis. If a shareholder owns several
blocks of shares with different tax bases and holding periods, each liquidating
distribution must be allocated ratably among the several blocks of shares in
the proportion that the number of shares in a particular block bears to the
total number of shares owned by the shareholder.

   In summary, each shareholder should not recognize any gain associated with
each liquidating distribution until the aggregate amount of these distributions
exceeds such shareholder's basis in its shares. At such time that the aggregate
amount of liquidating distributions exceed a shareholder's basis in its shares,
such shareholder will recognize gain equal to such excess. Such gain will
qualify for capital gain treatment (long-term if the shares have been held for
more than one year) if the shareholder's shares are held as a "capital asset."
Otherwise, this gain will represent ordinary income to the shareholder. In the
event that a shareholder's basis in its shares exceeds the aggregate
liquidating distributions such shareholder receives for these shares pursuant
to the plan of dissolution, such shareholder will be entitled to claim a loss.
A shareholder will be allowed to recognize such loss only after 3dfx makes its
final liquidating distribution.

   As each shareholder will have a different basis in its shares, each
shareholder will be responsible for calculating its own gain or loss in
connection with liquidating distributions it receives from 3dfx. Each
shareholder is advised to consult with its own tax advisor as to these gain and
loss calculations.

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Tax Consequences of the Liquidating Trust

   If deemed advisable by the 3dfx board of directors, it may cause 3dfx to
establish a liquidating trust to which 3dfx could distribute in kind its
remaining assets. Under the Internal Revenue Code, a trust will be treated as a
liquidating trust if it is organized for the primary purpose of liquidating and
distributing the assets transferred to it, and if its activities are all
reasonably necessary to and consistent with the accomplishment of that purpose.
However, if the liquidation is prolonged or if the liquidation purpose becomes
so obscured by business activities that the declared purpose of the liquidation
can be said to be lost or abandoned, it will no longer be considered a
liquidating trust. Although neither the Internal Revenue Code nor the
regulations thereunder provide any specific guidance as to the length of time a
liquidating trust may last, the Internal Revenue Service's guidelines for
issuing rulings with respect to liquidating trust status call for a term not to
exceed three years, which period may be extended to cover the collection of
installment obligations.

   An entity classified as a liquidating trust may receive assets, including
cash, from the liquidating entity without the trust incurring any tax. It will
be treated as a grantor trust, and accordingly, will also not be subject to tax
on any income or gain recognized by it. Instead, each beneficiary will be
treated as the owner of its pro rata portion of each asset, including cash,
received by and held by the liquidating trust. Accordingly, if the plan of
dissolution is approved and if 3dfx ultimately employs a liquidating trust,
each shareholder would, at the time of the distribution of the interests in the
liquidating trust, be treated as having received a liquidating distribution
equal to its share of the amount of cash and the fair market value of any asset
distributed to the liquidating trust. This distribution will be taken into
account in computing a shareholder's gain or loss attributable to the
liquidation. In addition, each shareholder would be required to take into
account in computing its own taxable income its pro rata share of each item of
income, gain and loss of the liquidating trust. Since shareholders would be
treated as owning their respective shares of the liquidating trust's assets,
they would be treated as directly engaging in the operations of the trust. As
such, shareholders that are tax-exempt entities may realize "unrelated business
taxable income" with respect to the trust's activities and foreign investors
may be considered to receive income that is "effectively connected" with a U.S.
trade or business. A full discussion of the consequences to tax-exempt and
foreign shareholders of using a liquidating trust is beyond the scope of this
document and 3dfx shareholders should consult their own tax advisors.

   An individual shareholder who itemizes deductions would be entitled to
deduct its pro rata share of fees and expenses of the liquidating trust only to
the extent that such amount, together with the shareholder's other
miscellaneous deductions, exceeded 2% of its adjusted gross income. A
shareholder would also recognize taxable gain or loss when all or part of its
pro rata portion of an asset is disposed of for an amount greater or less than
its pro rata portion of the fair market value of such asset at the time it was
transferred to the liquidating trust. Any such gain or loss would be capital
gain or loss so long as the shareholder held its interest in the assets as a
capital asset.

   If a liquidating trust fails to qualify as such, its treatment will depend
upon, among other things, the reasons for its failure to so qualify. It most
likely would be taxable as a corporation. In such case, the liquidating trust
itself would be subject to tax, and shareholders could also be subject to tax
upon the receipt of certain distributions from the liquidating trust. If the
board determines to make use of a liquidating trust, it is anticipated that
commercially reasonable efforts will be made to ensure that the trust will be
classified as a grantor trust for federal income tax purposes.

Special Considerations Applicable to Non-U.S. Shareholders

   Because distributions to 3dfx shareholders following adoption of the plan of
dissolution will be treated as payments in exchange for their stock and not as
dividends, 3dfx will not be required to withhold any amounts with respect to
such distributions to a non-U.S. shareholder unless the non-U.S. shareholder's
shares are treated as "United States real property interests" under the
provisions of the Foreign Investment in Real Property Tax Act of 1980, as
amended, or FIRPTA. If 3dfx's shares were to constitute United States real
property interests in the hands of a non-U.S. shareholder, 3dfx would be
required under Section 1445(e)(3) of the Internal Revenue

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Code to withhold 10% of the gross amount of each liquidating distribution to
such shareholder (even if the shareholder recognizes a loss on the
distribution). In addition, the non-U.S. shareholder would be subject to
regular U.S. income tax with respect to any gain or loss realized on the deemed
sale of such shares resulting from the receipt of liquidating distributions.
However, the shares of 3dfx should not be treated as "United States real
property interests."

   Although 3dfx will not be required to withhold against liquidating
distributions to any non-U.S. shareholder unless its shares constitute United
States real property interests with respect to such shareholder, a non-U.S.
shareholder who is not subject to withholding nevertheless will be subject to
U.S. federal income tax with respect to liquidating distributions from 3dfx
under the following circumstances. First, if a non-U.S. shareholder's
investment in 3dfx's shares is effectively connected with the non-U.S.
shareholder's U.S. trade or business, the non-U.S. shareholder will be subject
to the same treatment as U.S. shareholders with respect to liquidating
distributions from 3dfx, and if the non-U.S. shareholder is a corporation, it
may also be subject to the branch profits tax. Second, if the non-U.S.
shareholder is a nonresident alien individual who is present in the United
States for 183 days or more during the taxable year in which the liquidating
distributions are received and certain other conditions apply, the nonresident
alien individual will be subject to a 30% tax on the individual's capital
gains.

   Non-U.S. shareholders should consult their own tax advisors regarding the
U.S. federal income tax consequences of receiving liquidating distributions
from 3dfx, including the consequences that would apply if 3dfx were to
contribute its assets to a liquidating trust.

State and Local Income Tax

   Shareholders also may be subject to state or local income taxes with respect
to distributions received by them pursuant to the plan of dissolution and
should consult their tax advisors regarding such taxes.

   The above discussion of tax matters does not attempt to discuss all tax
matters that may affect 3dfx or its shareholders in the course of the
liquidation, winding up and dissolution, or to consider various facts or
limitations applicable to any particular shareholder. Shareholders are urged to
consult their own tax advisers with respect to the tax consequences to them of
the liquidation, winding up and dissolution of 3dfx.

Absence of Dissenters' Rights Related to the Dissolution of 3dfx

   California law does not provide dissenters' rights with respect to the
dissolution, winding up and liquidation of 3dfx.

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                    MATERIAL TERMS OF THE PURCHASE AGREEMENT

   The following description of the purchase agreement describes the material
terms of the purchase agreement. The full text of the purchase agreement is
attached as Annex B to, and is included as part of, this prospectus/proxy
statement. You are encouraged to read the entire purchase agreement carefully.

The Purchase Agreement

   The purchase agreement provides that NVIDIA US Investment Company will
purchase certain of the assets of 3dfx, including the core graphics processor
assets of 3dfx. Specifically, the purchase agreement provides that 3dfx will
sell the following assets:

  . patent and patent applications;

  . trademarks, trademark applications, trade names, service marks and
    service mark applications;

  . other proprietary assets such as trade secrets, copyrights, inventions,
    designs, drawings and research;

  . inventory and equipment related to 3dfx's core graphics processor assets,
    including the entire inventory of graphics chips;

  . rights under certain contracts; and

  . other assets, rights and proceeds from the sale of assets related to the
    graphics business.

   Contemporaneously with the purchase agreement, NVIDIA, NVIDIA US Investment
Company and 3dfx entered into other agreements which provided for the transfer
or licensing of certain of 3dfx's assets. For example, in connection with a $15
million loan to 3dfx pursuant to a credit agreement, 3dfx assigned all of its
trademarks, tradenames, trademark applications, service marks and service mark
applications to NVIDIA US Investment Company pursuant to a trademark assignment
agreement. NVIDIA US Investment Company will own these marks regardless of
whether the asset sale closes. See "Other Related Agreements--Credit Agreement,
Security Agreement and Trademark Assignment." In addition, pursuant to a patent
license agreement, 3dfx licensed most of its patents, patent applications and
inventions to NVIDIA US Investment Company and NVIDIA licensed most of its
patents, patent applications and inventions to 3dfx. The license to NVIDIA will
remain in force even if the purchase agreement is terminated as a result of
shareholders voting against the asset sale and dissolution of 3dfx. See "Other
Related Agreements--Patent License." In the event of termination of the
purchase agreement, 3dfx will be obligated to repay $5 million of the $15
million loan made pursuant to the credit agreement.

Purchase Price

   The terms of the purchase agreement provide that NVIDIA US Investment
Company will pay 3dfx $70 million in cash and, subject to specified conditions,
1,000,000 shares of common stock of NVIDIA. NVIDIA US Investment Company must
deliver the shares of common stock of NVIDIA to 3dfx only upon NVIDIA US
Investment Company's receipt of a certificate from the chief executive officer
or chief financial officer of 3dfx certifying that (i) the shareholders of 3dfx
duly adopted resolutions approving the liquidation, winding up and dissolution
of 3dfx in accordance with the California Corporations Code; (ii) all debts and
liabilities of 3dfx and its subsidiaries' were satisfied or paid in full or
otherwise provided for from sources other than the stock consideration; and
(iii) 3dfx has been (or upon only the filing of a certificate of dissolution or
court order will be) validly dissolved under the California Corporations Code.
NVIDIA US Investment Company is not obligated to deliver these shares, however,
unless it is satisfied that 3dfx has paid in full or otherwise adequately
provided for payment of all of its and its subsidiaries' debts and liabilities.

   3dfx may request, after the closing of the asset sale and prior to the
payment of the common stock consideration, that NVIDIA US Investment Company
make a one-time advance to 3dfx up to $25 million if

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3dfx determines that assets of 3dfx, including the $70 million delivered at the
closing, are or will be insufficient to pay in full any remaining liabilities
of 3dfx or its subsidiaries, and that these remaining debts and liabilities
would be paid in full if 3dfx had access to funds not exceeding $25 million.
NVIDIA US Investment Company is not required to provide 3dfx with the advance
if it determines in good faith that the funds requested would not permit 3dfx
to pay in full the then-remaining liabilities of 3dfx. If NVIDIA US Investment
Company does make the payment of up to $25 million, the number of shares of
common stock of NVIDIA to be paid to 3dfx would be reduced by a number of
shares determined by dividing the amount of the advance by $50.

Expected Timing of the Transaction

   Under the purchase agreement, the transaction will close on a date to be
designated by NVIDIA following shareholder approval. The purchase agreement
further provides that if the closing has not occurred by May 15, 2001, then,
subject to certain conditions described more fully in this prospectus/proxy
statement, either party may terminate the agreement.

Representations and Warranties

   The purchase agreement contains representations and warranties by 3dfx to
NVIDIA and NVIDIA US Investment Company regarding aspects of 3dfx's and its
subsidiaries' assets, business, financial condition, structure and other facts
pertinent to the asset sale. The representations and warranties will expire one
year following the closing, provided, however, that NVIDIA and NVIDIA US
Investment Company's representations and warranties will expire no later than
the date that the shares of common stock of NVIDIA are paid to 3dfx, and the
representations and warranties of 3dfx may expire longer than one year after
the closing if a valid claim has been made against 3dfx relating to a possible
breach of 3dfx's representations and warranties prior to the first anniversary
of the closing. If such a claim is made, then the representation or warranty
that is the subject of the claim will survive until there is a final resolution
of the claim. The representations and warranties made by 3dfx cover the
following topics, among others, as they relate to 3dfx and its subsidiaries:

  . 3dfx's and its subsidiaries' corporate organization and good standing;

  . the articles of incorporation and bylaws of 3dfx and its subsidiaries;

  . 3dfx's filings and reports with the Securities and Exchange Commission
    and its financial statements;

  . the absence of undisclosed adverse changes in 3dfx's and its
    subsidiaries' business;

  . title to the assets being conveyed;

  . receivables, inventory, equipment and real property and environmental
    matters;

  .  the scope of proprietary assets and contracts;

  . 3dfx's and its subsidiaries' liabilities;

  . compliance with legal requirements and applicable laws, including
    governmental authorizations;

  . tax matters;

  . employment and labor matters, including benefits and ERISA;

  . the sale of products and performance of services by 3dfx;

  . insurance;

  . litigation and legal proceedings;

  . the authorization, execution, delivery, performance and enforceability of
    the purchase agreement and related matters;

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<PAGE>

  . the absence of conflicts between the purchase agreement and related
    matters with agreements and orders or governmental authorizations;

  . transactions with affiliates of 3dfx;

  . the absence of discussions between 3dfx and other potential acquirors;

  . the opinion of 3dfx's financial advisor; and

  . the sufficiency of the cash portion of the consideration to pay in full
    the liabilities of 3dfx and its subsidiaries.

   The purchase agreement also contains limited representations and warranties
made by NVIDIA and NVIDIA US Investment Company to 3dfx which cover the
following topics, among others:

  . corporate organization and good standing;

  . the authorization, execution, delivery, performance and enforceability of
    the purchase agreement and related matters;

  . the absence of conflicts with the certificate of incorporation and
    bylaws; and

  . the validity of the shares of NVIDIA common stock to be issued.

Covenants and Agreements

   The purchase agreement also contains covenants and agreements by the
parties.

   3dfx made the following covenants, among others, that, from the date of the
purchase agreement through the closing date of the asset sale, it would, unless
expressly provided in the purchase agreement:

  . preserve its business relating to the assets being sold to NVIDIA US
    Investment Company;

  . maintain good relations and goodwill with all individuals and entities
    that have business relationships with 3dfx that relate to the assets
    being sold to NVIDIA US Investment Company;

  . not take any action that causes any representation or warranty contained
    in the purchase agreement to be materially incorrect;

  . not materially impair 3dfx's ability to satisfy any conditions contained
    in the purchase agreement;

  . use its best efforts to develop a plan of dissolution for the assets not
    sold to NVIDIA US Investment Company and carry out such plan of
    dissolution;

  . pay in full or otherwise satisfy all indebtedness, liabilities,
    obligations and amounts owed by 3dfx and its subsidiaries; and

  . hold a shareholders' meeting to approve the plan of dissolution and the
    asset sale.

   3dfx also agreed to file a consolidated federal income tax return covering
3dfx and its subsidiaries.

   All parties agreed to use their best efforts to file a Registration
Statement on Form S-4 and prospectus/proxy statement as soon as practicable
after the execution of the purchase agreement and to make all necessary filings
for governmental approvals, including the approvals required under the HSR Act.

Indemnification by 3dfx

   The purchase agreement provides that 3dfx will indemnify NVIDIA and NVIDIA
US Investment Company (including their current and future affiliates, officers,
directors, employees, agents, attorneys, accountants, advisors and
representatives of NVIDIA and NVIDIA US Investment Company, and their current

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and future affiliates, and any of the successors and assigns of these parties)
from any damages incurred in connection with:

  . any breach of the representations or warranties made by 3dfx in the
    purchase agreement;

  . any breach of any representation, warranty, statement, information or
    provision contained in the disclosure schedule or any other document
    delivered or otherwise made available to NVIDIA or NVIDIA US Investment
    Company or any of their representatives;

  . any breach of any covenant or obligation of 3dfx in the purchase
    agreement or the related agreements;

  . any liability of 3dfx or its officers, other than liabilities under
    assumed contracts arising after the closing of the asset sale;

  . any liability to which NVIDIA, NVIDIA US Investment Company and their
    representatives or affiliates may become subject and that arises directly
    or indirectly from or relates directly or indirectly to:

   . any product produced or sold or any services performed by or on behalf
     of 3dfx;

   . the presence of any hazardous materials at any site owned, leased,
     occupied or controlled by 3dfx on or at any time prior to the closing
     of the asset sale or the generation, manufacture, production,
     transportation, importation, use, treatment, refinement, processing,
     handling, storage, discharge, release or disposal of any hazardous
     materials by or on behalf of 3dfx;

   . the operation by 3dfx of its business; or

   . the failure to comply with any bulk transfer law or similar legal
     requirement in connection with the asset sale and related transactions;
     or

  . any proceeding relating directly or indirectly to any breach, alleged
    breach, liability or matter of the type referred to above (including any
    proceeding commenced by NVIDIA, NVIDIA US Investment Company or any of
    their affiliates or representatives for the purpose of enforcing any of
    their indemnification rights).

   The purchase agreement also provides that 3dfx is not obligated to make any
indemnification payment for any inaccuracy in or breach of any of the
representations and warranties made by 3dfx until the total amount of damages
that have been directly or indirectly suffered or incurred by NVIDIA, NVIDIA US
Investment Company or any of their affiliates or representatives, or to which
any of the above described indemnitees has or have otherwise become subject,
exceeds $1 million in the aggregate. If the total amount of the damages exceeds
$1 million, then the above-described indemnitees are entitled to be indemnified
for the full amount of the damages.

Conditions to Closing

   NVIDIA's and 3dfx's respective obligations to close the asset sale are
subject to the satisfaction of the following conditions:

  . 3dfx's shareholders must approve the asset sale and the plan of
    dissolution;

  . no injunction or order preventing the completion of the asset sale may be
    in effect;

  . the waiting period applicable to the completion of the asset sale and
    related transactions under the HSR Act must have expired or been
    terminated;

  . the registration statement with respect to the shares of NVIDIA common
    stock to be issued in the asset sale must be effective; and

  . the dismissal with prejudice of the NVIDIA and 3dfx patent infringement
    suits against each other must have occurred.

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<PAGE>

   3dfx's obligations to close the asset sale are subject to the satisfaction
or waiver of each of the following additional conditions, each of which may be
waived by 3dfx, in whole or in part, in writing or by otherwise effecting the
closing:

  . NVIDIA must perform in all material respects its obligations under the
    purchase agreement; and

  . NVIDIA's representations and warranties contained in the purchase
    agreement must be accurate in all material respects as of the closing of
    the asset sale and as of the date of the purchase agreement, without
    giving effect to any update to the disclosure schedule, and except for
    any such representations and warranties that are made as of a specific
    date, which, in such case, must be accurate in all material respects as
    of such date.

   NVIDIA US Investment Company's and NVIDIA's obligations to close the asset
sale are subject to the satisfaction of each of the following additional
conditions, each of which may be waived by NVIDIA and NVIDIA US Investment
Company, in whole or in part, in writing or by otherwise effecting the closing:

  . 3dfx must perform in all material respects its obligations under the
    purchase agreement;

  . any consents or approvals required to complete the asset sale must have
    been received;

  . 3dfx's representations and warranties contained in the purchase agreement
    must be accurate in all material respects as of the closing of the asset
    sale and as of the date of the purchase agreement, without giving effect
    to any update to the disclosure schedule, and except for any such
    representations and warranties that are made as of a specific date,
    which, in such case, must be accurate in all material respects as of such
    date;

  . NVIDIA must have received the written legal opinion of Locke Liddell &
    Sapp LLP and, if requested by NVIDIA, the written opinion of a nationally
    recognized investment bank regarding 3dfx's solvency;

  . 3dfx must repay amounts outstanding under the credit facility, subject to
    the terms of the credit agreement; and

  . NVIDIA US Investment Company must receive evidence satisfactory to it of
    the release of encumbrances on the assets being purchased.

Limitation on 3dfx's Ability to Consider Other Acquisition Proposals

   3dfx has agreed that it will not directly or indirectly, and will not
authorize or permit any of its representatives directly or indirectly to:

  . solicit, initiate, encourage, induce or facilitate the making, submission
    or announcement of any acquisition proposal or take any action that could
    reasonably be expected to lead to an acquisition proposal;

  . furnish any information regarding 3dfx or its subsidiaries to any person
    in connection with or in response to an acquisition proposal or an
    inquiry or indication of interest that could lead to an acquisition
    proposal;

  . engage in discussions or negotiations with any person with respect to any
    acquisition proposal;

  . approve, endorse or recommend any acquisition proposal; or

  . enter into any letter of intent or similar document or any contract
    contemplating or otherwise relating to any acquisition transaction.

   However, these restrictions shall not be deemed to prevent 3dfx or its board
of directors from complying with its legal obligations under Rules 14d-9 and
14e-2 of the Exchange Act of 1934, as amended, with regard to an acquisition
proposal. Furthermore, these restrictions will not prohibit 3dfx from
furnishing nonpublic

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information regarding 3dfx or its subsidiaries to, or entering into discussion
with, any person in response to a superior offer that is submitted by that
person if:

  . neither 3dfx nor any representative of 3dfx has breached or taken any
    action inconsistent with the restrictions described above;

  . the board of directors of 3dfx concludes in good faith, after having
    consulted with 3dfx's outside legal counsel, that such action is required
    in order for the board of directors of 3dfx to comply with its fiduciary
    obligations to 3dfx's shareholders under applicable law;

  . at least five business days prior to furnishing any such nonpublic
    information to, or entering into discussions with, that person, 3dfx
    gives NVIDIA and NVIDIA US Investment Company written notice of the
    identity of that person and of 3dfx's intention to furnish nonpublic
    information to, or enter into discussions with, that person, and 3dfx
    receives from that person an executed confidentiality agreement
    containing customary limitations on the use and disclosure of all
    nonpublic written and oral information furnished to that person by or on
    behalf of 3dfx and containing provisions no less favorable to 3dfx than
    certain provisions contained in the confidentiality agreement between
    NVIDIA and 3dfx; and

  . at least five business days prior to furnishing any such nonpublic
    information to such person, 3dfx furnishes such nonpublic information to
    NVIDIA and NVIDIA US Investment Company (to the extent such nonpublic
    information has not been previously furnished by 3dfx to NVIDIA and
    NVIDIA US Investment Company).

   A superior offer means an unsolicited, bona fide written offer by a third
party, which has either a firm financing commitment or is otherwise capable of
providing financing, to purchase all of the outstanding shares of common stock
of 3dfx or certain of the assets of 3dfx on terms the board of directors of
3dfx determines, in its reasonable judgment, based upon a written opinion of an
independent financial advisor of nationally recognized reputation, to be more
favorable to the shareholders of 3dfx than the terms of the asset sale and
dissolution of 3dfx.

   If prior to closing of the asset sale, 3dfx's board of directors receives an
acquisition proposal, any inquiry or indication of interest that could
reasonably be expected to lead to an acquisition proposal or any request for
nonpublic information, then 3dfx must, within 48 hours of receipt of such
acquisition proposal or inquiry, advise NVIDIA and NVIDIA US Investment Company
orally and in writing of such matter (including the identity of the person
making or submitting such acquisition proposal, inquiry, indication of interest
or request, and the terms thereof). 3dfx must keep NVIDIA and NVIDIA US
Investment Company fully informed with respect to the status of any such
acquisition proposal, inquiry, indication of interest or request and any
modification or proposed modification thereto.

   3dfx has agreed not to release or permit the release of any person from, or
to waive or permit the waiver of any provision of, any confidentiality,
"standstill," nonsolicitation or similar agreement to which 3dfx is a party or
under which 3dfx has any rights, and will use its best efforts to enforce or
cause to be enforced each such agreement at the request of NVIDIA and NVIDIA US
Investment Company 3dfx also agreed to promptly request each person that has
executed a confidentiality agreement in connection with its consideration of a
possible acquisition transaction or equity investment to return all
confidential information heretofore furnished to such person by or on behalf of
3dfx.

   3dfx is still obligated to call a shareholder meeting on the asset sale and
dissolution of 3dfx that is the subject of this prospectus/proxy statement even
if it has a superior offer, although in certain circumstances the board of
directors of 3dfx may withdraw or modify their board recommendation for certain
superior offers.

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<PAGE>

Termination of the Purchase Agreement

   NVIDIA, 3dfx and NVIDIA US Investment Company can agree by mutual written
consent to terminate the purchase agreement at any time prior to the closing of
the asset sale. In addition, either NVIDIA and NVIDIA US Investment Company or
3dfx may terminate the purchase agreement if:

  . the purchase agreement and related agreements have not been completed by
    May 15, 2001, unless the failure to complete the purchase agreement and
    related agreements is attributable to a failure on the part of the party
    seeking to terminate the purchase agreement to perform any covenant
    required to be performed by such party at or prior to the closing of the
    asset sale;

  . a court of competent jurisdiction or other governmental body issues a
    final and nonappealable order, decree or ruling or shall have taken any
    other action having the effect of permanently restraining, enjoining or
    otherwise prohibiting the asset sale and related transactions;

  . the 3dfx shareholders fail to approve both the asset sale and the
    dissolution of 3dfx, unless the failure to obtain the approval is
    attributable to a failure on the part of the party seeking to terminate
    the purchase agreement to perform any covenant required to be performed
    by such party at or prior to the closing of the asset sale; or

  . the representations and warranties of the other party in the purchase
    agreement are or become inaccurate, or the other party breaches its
    covenants, such that a condition to the obligation of the party to which
    such representations and warranties or covenants are made would not be
    satisfied and the inaccuracy or breach is not curable through the
    exercise of reasonable efforts or the other party is not using reasonable
    efforts to cure the breach.

   In addition, NVIDIA and NVIDIA US Investment Company, at any time prior to
the approval by the 3dfx shareholders of the asset sale and plan of
dissolution, may terminate the purchase agreement if any of the following
events, which constitute triggering events under the purchase agreement,
occurs:

  . the 3dfx board of directors fails to recommend that the 3dfx shareholders
    vote to approve the asset sale and plan of dissolution, or withdraws or
    modifies its recommendation or takes any other action that becomes
    generally known to the 3dfx shareholders and that would be reasonably
    construed to suggest that the 3dfx board or directors does not support
    the asset sale or plan of dissolution and does not believe the asset sale
    and plan of dissolution are in the best interests of the 3dfx
    shareholders;

  . 3dfx fails to include in this prospectus/proxy statement a statement to
    the effect that the board of directors of 3dfx unanimously determined and
    believes that the asset sale and plan of dissolution are in the best
    interests of the 3dfx shareholders;

  . the 3dfx board of directors fails to reaffirm the board of directors
    recommendation or fails to reaffirm its determination that the asset sale
    and the plan of dissolution are in the best interests of the 3dfx
    shareholders within five business days after NVIDIA or NVIDIA US
    Investment Company reasonably requests in writing that such
    recommendation or determination be reaffirmed;

  . a tender or exchange offer relating to the securities of 3dfx has
    commenced and 3dfx has not sent to its shareholders, within 10 business
    days after the commencement of the tender or exchange offer, a statement
    disclosing that 3dfx recommends rejection of the tender or exchange
    offer; or

  . the 3dfx board of directors approves an acquisition proposal which
    includes approving, endorsing or recommending any offer, proposal,
    inquiry or indication of interest contemplating or otherwise relating to
    any of the following or entering into any letter of intent or similar
    document or any contract providing for or otherwise contemplating the
    following events, which constitute acquisition transactions under the
    purchase agreement:

   . the issuance, sale or other disposition of:

    . any capital stock or other securities of 3dfx other than as the
      result of the exercise of stock options previously granted;

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    . any option, call, warrant or right to acquire any capital stock or
      other securities of 3dfx (whether or not immediately exercisable); or

    . any security, instrument or obligation that is or may become
      convertible into or exchangeable for any capital stock or other
      securities of 3dfx;

   . the sale or other disposition of all or a material portion of the
     business or assets of 3dfx or any direct or indirect subsidiary or
     division of 3dfx, excluding any assets not being sold to NVIDIA US
     Investment Company in the asset sale; or

  . any merger, consolidation, business combination, share exchange,
    reorganization or similar transaction involving 3dfx or any direct or
    indirect subsidiary of 3dfx.

   If the purchase agreement is terminated, all further obligations of the
parties to the purchase agreement will terminate, except for the payment of
certain fees and expenses by 3dfx referenced below, as applicable, and except
that, upon termination both NVIDIA and 3dfx shall immediately file a proposed
order to dismiss with prejudice the pending patent lawsuits that each have
filed against the other, provided, however, that no filing to dismiss the
pending patent lawsuits shall be made if the purchase agreement is terminated
as a result of:

  . a mutual decision by the parties;

  . the failure of NVIDIA or NVIDIA US Investment Company to comply with
    their obligations under the purchase agreement;

  . the inaccuracy of any representations and warranties or covenants by
    NVIDIA and NVIDIA US Investment Company that either cannot be or are not
    being cured; or

  . a final and nonappealable order, decree or ruling by a court of competent
    jurisdiction or a governmental body that permanently restrains, enjoins
    or otherwise prohibits the asset sale.

   In some situations, termination of the purchase agreement may have
implications on the patent license agreement, patent standstill agreement and
the credit agreement. See "Other Related Agreements."

Termination Fees

   The purchase agreement provides that if it is terminated because the asset
sale was not completed by May 15, 2001, then 3dfx would be required to pay:

  . fees to reimburse NVIDIA and NVIDIA US Investment Company for their
    reasonable fees and expenses that have been paid or that may become
    payable by and on behalf of NVIDIA and NVIDIA US Investment Company in
    connection with the preparation and negotiation of the purchase agreement
    and the documents concerning the related transactions and otherwise in
    connection with the asset sale and related transactions, if at or prior
    to the time of the termination of the purchase agreement, an acquisition
    proposal for 3dfx has been disclosed, announced, commenced, submitted or
    made and has not been withdrawn or terminated pursuant to a public
    announcement at least five days before the special shareholders' meeting;
    and

  . a fee of $3.3 million if at or prior to the termination of the purchase
    agreement, an acquisition proposal for 3dfx had been disclosed,
    announced, commenced, submitted or made.

   The purchase agreement also provides that if the agreement is terminated
because the 3dfx shareholders did not approve the dissolution of 3dfx and asset
sale, then 3dfx would be required to pay:

  . fees to reimburse NVIDIA and NVIDIA US Investment Company for their
    reasonable fees and expenses that have been paid or that may become
    payable by and on behalf of NVIDIA and NVIDIA US Investment Company in
    connection with the preparation and negotiation of the purchase agreement

                                       73
<PAGE>

   and the documents concerning the related transactions and otherwise in
   connection with the asset sale and related transactions; and

  . a fee of $3.3 million if at or prior to the termination of the purchase
    agreement, an acquisition proposal for 3dfx had been disclosed,
    announced, commenced, submitted or made.

   If the purchase agreement is terminated by NVIDIA or NVIDIA US Investment
Company because a triggering event, as described above, occurs, then 3dfx would
be required to pay:

  . fees to reimburse NVIDIA and NVIDIA US Investment Company for their
    reasonable fees and expenses that have been paid or that may become
    payable by and on behalf of NVIDIA and NVIDIA US Investment Company in
    connection with the preparation and negotiation of the purchase agreement
    and the documents concerning the related transactions and otherwise in
    connection with the asset sale and related transactions; and

  . a fee of $3.3 million.

Expenses

   The purchase agreement provides that, subject to the provisions regarding
termination fees as described above, NVIDIA, NVIDIA US Investment Company and
3dfx will pay their own respective costs and expenses incurred in connection
with the purchase agreement and the transactions contemplated by the purchase
agreement.

Amendment; Waiver

   The purchase agreement may only be amended by a written instrument signed on
behalf of all parties to the purchase agreement.

                                       74
<PAGE>

                               VOTING AGREEMENTS

   The following description of the voting agreements sets forth the material
terms of the voting agreements.

   All of the directors and executive officers of 3dfx have entered into
voting agreements with NVIDIA dated December 15, 2000. They have agreed in the
voting agreements to vote all shares of 3dfx common stock owned by them as of
the record date in favor of the approval of the asset sale pursuant to the
purchase agreement and the liquidation, winding up and dissolution of 3dfx as
described in the plan of dissolution. They have also granted NVIDIA an
irrevocable proxy to vote their shares of 3dfx common stock in favor of the
asset sale and the dissolution. Approximately 887,313 outstanding shares of
3dfx common stock, or 2.2% of the total number of shares of 3dfx common stock
outstanding on February 12, 2001, are subject to voting agreements and
irrevocable proxies. The 3dfx executive officers and directors who signed the
voting agreements have also agreed that, before the termination of the voting
agreements, they will not transfer, assign, convey or dispose of any shares of
3dfx common stock, or any option to purchase shares of 3dfx common stock,
owned by them unless each person to whom any shares or options are transferred
executes a voting agreement and agrees to hold those shares or options subject
to all of the terms and provisions of the voting agreement.

   The voting agreements also provide that these directors and executive
officers must vote against the following actions, other than the asset sale or
dissolution:

  . any extraordinary corporate transaction, such as a merger, consolidation
    or other business combination involving 3dfx;

  . any sale, lease or transfer of a material amount of assets of 3dfx;

  . any reorganization, recapitalization, dissolution or liquidation of 3dfx;

  . any change in a majority of the board of directors of 3dfx;

  . any amendment to 3dfx's certificate of incorporation or bylaws;

  .  any material change in the capitalization of 3dfx or 3dfx's corporate
     structure; and

  .  any other action which is intended, or could reasonably be expected, to
     impede, interfere with, delay, postpone, discourage or adversely affect
     the asset sale.

                                      75
<PAGE>

                            OTHER RELATED AGREEMENTS

   The following are descriptions of other agreements entered into by the
parties, and these descriptions set forth what we believe are the material
terms of these agreements. Each of these agreements is attached in Annex D
through Annex H and included as part of this prospectus/proxy statement. You
are urged to read each of these agreements carefully.

Credit Agreement, Security Agreement and Trademark Assignment

   Contemporaneously with the execution of the purchase agreement, NVIDIA US
Investment Company and 3dfx entered into a credit agreement pursuant to which
NVIDIA US Investment Company loaned to 3dfx $15 million. In consideration of
this loan, 3dfx:

  .  granted a non-exclusive, fully-paid, royalty-free license to NVIDIA US
     Investment Company for most of the patents, patent applications and
     inventions held by 3dfx pursuant to a patent license agreement,
     described in more detail below; and

  .  assigned and transferred to NVIDIA US Investment Company all trademarks,
     trademark applications, trade names, service marks and service mark
     applications held by 3dfx and its related entities pursuant to a
     trademark assignment.

   In addition, as collateral security for the credit facility, 3dfx granted
NVIDIA US Investment Company a security interest in 3dfx's assets pursuant to a
security agreement. The patent license agreement, trademark assignment
agreement and security agreement were contemporaneously executed with the
credit agreement.

   The loan extended by NVIDIA to 3dfx pursuant to the credit agreement is
repayable by 3dfx at the closing of the asset sale from the cash consideration
received from NVIDIA at closing. In the event of the termination of the
purchase agreement, the loan must be repaid within ten business days; provided
that the outstanding amount due shall be reduced by $10 million in
consideration of 3dfx's assignment of its trademarks and related assets
pursuant to the trademark assignment.

   In connection with the trademark assignment, NVIDIA US Investment Company
agreed to grant 3dfx a license that would allow 3dfx to continue to use its
trademarks and tradenames until the closing or termination of the asset sale.

Patent License Agreement

   Pursuant to the patent license agreement, entered into by NVIDIA, NVIDIA US
Investment Company and 3dfx, 3dfx granted a non-exclusive, fully-paid, royalty-
free license to NVIDIA US Investment Company for most of the patents, patent
applications and inventions held by 3dfx and NVIDIA granted a non-exclusive,
fully-paid, royalty-free license to 3dfx for most of the patents, patent
applications and inventions held by NVIDIA. In conjunction with these license
grants by NVIDIA and 3dfx and pursuant to the terms of this patent license
agreement, 3dfx released NVIDIA and its affiliates from certain claims and
liability relating to those patents held by 3dfx and NVIDIA released 3dfx and
its affiliates from certain claims and liability relating to those patents held
by NVIDIA, in each case, other than those that are the subject of the ongoing
litigation between NVIDIA and 3dfx. In addition, both NVIDIA and 3dfx agreed
not to commence any additional patent infringement litigation against the other
party or its affiliates.

   The patent license agreement went into effect on December 15, 2000, and will
remain in effect unless one of the following occurs:

  .  3dfx and NVIDIA or NVIDIA US Investment Company mutually consent to
     terminate the purchase agreement;

                                       76
<PAGE>

  .  either 3dfx or NVIDIA or NVIDIA US Investment Company terminates the
     purchase agreement because a court of competent jurisdiction or other
     government body issues a final and nonappealable order permanently
     restraining, enjoining or otherwise prohibiting the asset sale;

  .  3dfx terminates the purchase agreement because the closing of the asset
     sale does not occur by May 15, 2001 as a result of the failure of NVIDIA
     or NVIDIA US Investment Company to meet its obligations under the
     purchase agreement;

  .  3dfx elects to terminate the purchase agreement because any of the
     representations and warranties of NVIDIA or NVIDIA US Investment Company
     made in the purchase agreement (a) either (i) is inaccurate on the date
     of the purchase agreement or (ii) becomes inaccurate prior to the
     closing of the asset sale, subject to a right to cure such inaccuracies,
     and (b) such inaccuracies in the aggregate constitute a material adverse
     effect on NVIDIA;

  .  3dfx terminates the purchase agreement because NVIDIA or NVIDIA US
     Investment Company fails to comply with or perform in all material
     respects all of its covenants and obligations under the purchase
     agreement required to be complied with or performed at or prior to the
     closing of the asset sale; or

  .  NVIDIA or NVIDIA US Investment Company terminates the purchase agreement
     because of an inaccuracy in the representations and warranties made by
     3dfx in the purchase agreement or a breach of the covenants of 3dfx in
     the purchase agreement, but only if such inaccuracy or breach would not
     deprive NVIDIA and NVIDIA US Investment Company of the material benefits
     of the purchase agreement.

   In addition, the patent license granted by NVIDIA to 3dfx, and the
accompanying release and covenant not to sue, will terminate if any of the
following events occurs:

  .  there is a change in control of 3dfx;

  .  3dfx dissolves, liquidates or ceases to conduct business;

  .  3dfx admits in writing its inability to pay its debts as they become
     due, files for bankruptcy, has an involuntary bankruptcy petition filed
     against it or makes an assignment for the benefit of creditors;

  .  the asset sale closes; or

  .  the purchase agreement terminates for any reason.

   While these events would terminate the license from NVIDIA to 3dfx, they
would not terminate the license from 3dfx to NVIDIA US Investment Company
unless the entire patent license agreement is terminated for one of the reasons
enumerated earlier in this section.

Patent Standstill Agreement

   Under the terms of the patent standstill agreement, NVIDIA and 3dfx agreed
not to bring, file or prosecute any action relating to patents, patent
applications and inventions of either party, other than existing patents in
dispute. In addition, NVIDIA and 3dfx agreed to stay, dismiss with prejudice
and/or seek a continuance of litigation that the parties currently have ongoing
with the other.

   The term of the patent standstill agreement began on December 15, 2000, and
remains effective for three years unless sooner terminated for one of the
following reasons:

  .  3dfx and NVIDIA or NVIDIA US Investment Company mutually consent to
     terminate the purchase agreement;

  .  either 3dfx or NVIDIA or NVIDIA US Investment Company terminates the
     purchase agreement because a court of competent jurisdiction or other
     government body issues a final and nonappealable order permanently
     restraining, enjoining or otherwise prohibiting the asset sale;

                                       77
<PAGE>

  .  3dfx terminates the purchase agreement because the closing of the asset
     sale does not occur by May 15, 2001 as a result of the failure of NVIDIA
     or NVIDIA US Investment Company to meet its obligations under the
     purchase agreement;

  .  3dfx terminates the purchase agreement because any of the
     representations and warranties of NVIDIA or NVIDIA US Investment Company
     made in the purchase agreement (a) either (i) is inaccurate on the date
     of the purchase agreement or (ii) becomes inaccurate prior to the
     closing of the asset sale, subject to a right to cure such inaccuracies,
     and (b) such inaccuracies in the aggregate constitute a material adverse
     effect on NVIDIA; or

  .  3dfx elects to terminate the purchase agreement because NVIDIA or NVIDIA
     US Investment Company fails to comply with or perform in all material
     respects all of its covenants and obligations under the purchase
     agreement required to be complied with or performed at or prior to the
     closing of the asset sale.

   The parties have requested a stay order with respect to their pending
lawsuits against each other in accordance with this agreement and the stay
order was granted on January 5, 2001.

                                       78
<PAGE>

                     SECURITY OWNERSHIP OF 3DFX MANAGEMENT
                           AND PRINCIPAL SHAREHOLDERS

   The following table sets forth as of February 12, 2001 information regarding
the beneficial ownership of 3dfx's common stock by:

  . Each person known by 3dfx to own beneficially more than five percent of
    the outstanding common stock.

  . Each director, the chief executive officer and the four other most highly
    compensated executive officers for fiscal 2001.

  . All directors and executive officers of 3dfx as a group as of February
    12, 2001.

  . The following calculations of the percentage of outstanding shares are
    based on 39,776,502 shares of 3dfx's common stock outstanding as of
    February 12, 2001.

  . Beneficial ownership is determined in accordance with the rules of the
    Securities Exchange Commission and generally includes voting or
    investment power with respect to securities, subject to community
    property laws, where applicable. With respect to 3dfx's indicated five
    percent shareholders, share data is derived from information provided by
    them to 3dfx.

  . Shares of the common stock subject to options that are presently
    exercisable or exercisable within 60 days of February 12, 2001 are deemed
    outstanding and beneficially owned by the person holding such options for
    the purpose of computing the percentage of ownership of such person but
    are not treated as outstanding for the purpose of computing the
    percentage of any other person. These options are separately set forth
    below in the column titled "Options."

<TABLE>
<CAPTION>
                                  Number Beneficially Owned
                                -----------------------------------
      Name and Address(1)        Shares          Options    Total   Percentage
      -------------------       ---------       --------- --------- ----------
<S>                             <C>             <C>       <C>       <C>
Five Percent Shareholders:
David A. Rocker(2)............. 3,587,590             --        --     9.0%
 c/o Rocker Partners, L.P.
 45 Rockefeller Plaza, Suite
  1759
 New York, New York 10111
CTI Limited.................... 2,772,973(3)          --  2,772,973    7.0
 1901 McCarthy Boulevard
 Milpitas, California 95035
George T. Haber................ 2,430,973(3)(4)     2,063 2,433,036    6.1
 890 Robb Road
 San Jose, California 94306
Directors and Officers:
Richard Burns..................     3,740          46,042    49,782      *
Gordon A. Campbell.............   381,665(5)       88,417   470,082    1.2
Philip J. Carmack(6)...........   290,710(3)          --    290,710      *
James L. Hopkins...............     2,498         100,485   102,983      *
Stephen A. Lapinski............       --              --        --     --
Alex M. Leupp..................     4,100         264,293   268,393      *
Scott D. Sellers...............   202,200         479,896   682,096    1.7
James Whims....................     2,400          71,500    73,900      *
All executive officers and
 directors as a group
 (10 persons)..................   887,313       1,050,633 1,937,946    4.9
</TABLE>
--------
*  Less than 1%.
(1) Except as otherwise noted, address is c/o 3dfx Interactive, Inc., 4435
    Fortran Drive, San Jose, CA 95134.

                                       79
<PAGE>


(2) Information with respect to David A. Rocker was obtained from a Schedule
    13G filed with the Securities and Exchange Commission, which indicates that
    Mr. Rocker has sole voting and dispositive power over all of the shares
    indicated by virtue of his positions as the sole managing partner of Rocker
    Partners, L.P., and as the president of Rocker Offshore Management Company,
    Inc., an investment advisor to Compass Holdings, Ltd.

(3) Ten percent of these shares are being held in escrow pursuant to the terms
    of an Indemnity Escrow Agreement dated July 20, 2000, by and among 3dfx,
    GigaPixel Corporation, Galapagos Acquisition Corp., George T. Haber, as
    Securityholder Representative, and U.S. Trust Company, as Escrow Agent,
    which arose out of the July 2000 merger between 3dfx and GigaPixel
    Corporation. This escrow arrangement expires in August 2001 and the related
    shares will be released from its terms at that time assuming that no claims
    are made on the shares held by the Escrow Agent under the arrangement.

(4) George T. Haber and Cornelia Haber are co-trustees of the Haber Children's
    Trust dated October 28, 1998 and the Haber Revocable Trust dated September
    4, 1998, and share both voting and investment power over the shares held in
    these trusts. The Children's Trust holds 524,440 shares and the Revocable
    Trust holds 1,906,533 shares. These shares are subject to a Lock-Up
    Agreement dated July 20, 2000 between 3dfx and George T. Haber which
    provides for restrictions on their transfer through December 20, 2001,
    except that during each quarterly period which commenced on November 1,
    2000, 10 percent of the shares may be sold. In the event designated
    directors and officers of 3dfx sell during any quarter more than 836,005
    3dfx shares as a group, all restrictions associated with the Lock-Up
    Agreement will lapse. This figure excludes 1,212,401 shares over which Mr.
    Haber has voting control pursuant to an Indemnity Escrow Agreement dated
    July 20, 2000, by and among 3dfx, GigaPixel Corporation, Galapagos
    Acquisition Corp., Mr. Haber, as Securityholder Representative, and U.S.
    Trust Company, as Escrow Agent. This voting power will expire in August
    2001, assuming that no claims are made on the shares prior to that date, in
    which case the voting power could terminate earlier.

(5) Includes 77,084 shares held by Techfarm, L.P., 3,854 held by Techfarm
    Management Inc. (d.b.a. Techfarm, Inc.) and 300,727 shares held by Gordon
    A. Campbell. Mr. Campbell is President of Techfarm, Inc., the general
    partner of Techfarm, L.P. and Mr. Campbell disclaims beneficial ownership
    of the shares held by Techfarm, L.P. and Techfarm Management Inc.

(6) Mr. Carmack's employment with 3dfx terminated effective December 19, 2000.

                                       80
<PAGE>

       SECURITY OWNERSHIP OF NVIDIA MANAGEMENT AND PRINCIPAL STOCKHOLDERS

   The following table sets forth as of January 1, 2001 certain information
regarding beneficial ownership of NVIDIA's common stock by:

  . Each of NVIDIA's executive officers and directors.

  . All of NVIDIA's executive officers and directors as a group.

  . Each stockholder known by NVIDIA to be the beneficial owner of more than
    five percent of NVIDIA's common stock.

<TABLE>
<CAPTION>
                                                      Number of    Percentage
                                                        Shares     of Shares
                                                     Beneficially Beneficially
Name                                                   Owned(1)      Owned
----                                                 ------------ ------------
<S>                                                  <C>          <C>
Jen-Hsun Huang(2)(3)................................   5,604,186       8.1%
Curtis R. Priem(2)(4)...............................   6,165,000       9.0
Chris A. Malachowsky(2)(5)..........................   4,122,937       6.0
Jeffrey D. Fisher(6)................................     360,728         *
Christine B. Hoberg(7)..............................      42,094         *
Tench Coxe(8).......................................     586,918         *
James C. Gaither(9).................................     169,902         *
Harvey C. Jones, Jr.(10)............................     484,602         *
William J. Miller(11)...............................     257,500         *
A. Brooke Seawell(12)...............................     177,500         *
Mark A. Stevens(13).................................     326,436         *
All directors and executive officers as a group (11
 persons)(14).......................................  18,297,803      26.0
FMR Corp.(15).......................................   6,952,165      10.6
 82 Devonshire Street
 Boston, Massachusetts 02109
</TABLE>
--------
 (1) This table is based upon information supplied by officers, directors and
     principal stockholders and Schedules 13D and 13G filed with the Securities
     and Exchange Commission. Unless otherwise indicated in the footnotes to
     this table and subject to community property laws where applicable, we
     believe that each of the stockholders named in this table has sole voting
     and investment power with respect to the shares indicated as beneficially
     owned. Applicable percentages are based on 68,099,401 shares of common
     stock outstanding on December 31, 2000. In computing the number of shares
     beneficially owned by a person and the percentage ownership of that
     person, shares of common stock subject to options held by that person that
     are exercisable within 60 days are deemed outstanding. These shares,
     however, are not deemed outstanding for the purpose of computing the
     percentage ownership of any other person.

 (2) The address for Messrs. Huang, Malachowsky and Priem is c/o NVIDIA
     Corporation, 3535 Monroe Street, Santa Clara, California 95051.

 (3) Includes 4,342,800 shares of common stock held by The Jen-Hsun and Lori
     Huang Living Trust dated May 1, 1995, of which Mr. Huang is the trustee,
     and 501,200 shares held by J. and L. Huang Investments, L.P., of which Mr.
     Huang and his wife are general partners. Also includes 760,000 shares of
     common stock issuable upon the exercise of vested options within 60 days
     of January 1, 2001.

 (4) Includes 54,000 shares of common stock held by The Priem Family CRT and
     4,446,000 shares held by The Priem Family Foundation. Mr. Priem disclaims
     beneficial ownership over the shares of common stock held by the Priem
     Family Foundation. Also includes 375,000 shares of common stock issuable
     upon the exercise of vested options within 60 days of January 1, 2001.

 (5) Includes 3,270,000 shares of common stock held by The Chris and Melody
     Malachowsky Living Trust dated October 20, 1994, of which Mr. Malachowsky
     is the trustee, and 477,000 shares of common stock

                                       81
<PAGE>

    held by C. and M. Malachowsky Investments, L.P., of which Mr. Malachowsky
    and his wife are general partners. Also includes 375,937 shares of common
    stock issuable upon exercise of vested options within 60 days of January
    1, 2001.

 (6) Includes 39,000 shares held by Jeffrey D. Fisher, as custodian for his
     three minor children under the Uniform Gifts to Minors Act. Also includes
     43,146 shares of common stock issuable upon exercise of vested options
     within 60 days of January 1, 2001.

 (7) Includes 36,876 shares of common stock issuable upon exercise of vested
     options within 60 days of January 1, 2001.

 (8) Includes 20,526 shares of common stock held in a retirement trust over
     which Mr. Coxe exercises voting and investing power. Also includes 95,000
     shares of common stock issuable upon exercise of vested options within 60
     days of January 1, 2001.

 (9) Includes 75,000 shares of common stock held by Cooley Godward LLP, of
     which Mr. Gaither is senior counsel. Mr. Gaither disclaims beneficial
     ownership of such shares held by such entity, except to the extent of his
     pecuniary interest therein. Also includes 60,000 shares of common stock
     issuable upon exercise of vested options within 60 days of January 1,
     2001.

(10) Includes 95,000 shares of common stock issuable upon exercise of vested
     options within 60 days of January 1, 2001.

(11) Includes 82,500 shares of common stock issuable upon exercise of vested
     options within 60 days of January 1, 2001.

(12) Includes 177,500 shares of common stock issuable upon exercise of vested
     options within 60 days of January 1, 2001.

(13) Includes 92,500 shares of common stock issuable upon exercise of vested
     options within 60 days of January 1, 2001.

(14) Includes 2,193,459 shares of common stock issuable upon exercise of
     options held by all current directors and executive officers within 60
     days of January 1, 2001.

(15) Based on information set forth in the Form 13G dated October 10, 2000,
     filed with the Securities and Exchange Commission.

                                      82
<PAGE>

                               NVIDIA CORPORATION

          UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

   On December 15, 2000, NVIDIA and its indirect wholly-owned subsidiary NVIDIA
US Investment Company signed a definitive agreement with 3dfx pursuant to which
NVIDIA US Investment Company agreed to acquire certain of 3dfx's assets,
including its core graphics processor assets.

   Under the terms of the agreement, NVIDIA US Investment Company will pay to
3dfx a total consideration of $70 million in cash and 1,000,000 shares of
NVIDIA common stock. This acquisition will be accounted for as a purchase.

   The following unaudited pro forma combined condensed financial statements
present financial information giving effect to the acquisition under purchase
accounting. The unaudited pro forma combined condensed balance sheet as of
October 29, 2000 is presented as if the purchase had occurred as of that date.
The unaudited pro forma combined condensed statements of operations for the
nine month period ended October 29, 2000 and the fiscal year ended January 30,
2000 are presented as if the purchase had occurred at the beginning of the
earliest period presented.

   The financial information reflects certain assumptions deemed probable by
NVIDIA management regarding the purchase. The total estimated purchase cost of
the acquisition was allocated on a preliminary basis to assets based upon
management's best estimates of their fair value with the excess cost over the
net assets acquired allocated to goodwill. The adjustments to the unaudited pro
forma combined condensed financial information are subject to change pending a
final analysis of the total purchase cost and the fair value of the assets
assumed. The impact of these changes could be material.

   The pro forma combined condensed financial statements should be read in
conjunction with NVIDIA's unaudited combined condensed financial statements and
notes thereto included in NVIDIA's quarterly report on Form 10-Q for the period
ended October 29, 2000 and the audited and consolidated financial statements
and notes thereto incorporated by reference in NVIDIA's annual report on Form
10-K for the fiscal year ended January 30, 2000. The pro forma information is
based on estimates and assumptions and may not necessarily be indicative of
what NVIDIA's results of operations or financial position would have been had
the transaction been in effect as of and for the periods presented, nor is such
information necessarily indicative of NVIDIA's results of operations or
financial position for any future period or date.

                                       83
<PAGE>

                               NVIDIA CORPORATION

             PRO FORMA COMBINED CONDENSED BALANCE SHEET (UNAUDITED)
                                  (Thousands)

<TABLE>
<CAPTION>
                                 Historical
                         --------------------------
                         NVIDIA as of                (A) Pro
                           Oct. 29,    3dfx as of     forma
                             2000     Oct. 31, 2000 adjustment     Pro forma
                         ------------ ------------- ----------     ----------
<S>                      <C>          <C>           <C>            <C>
ASSETS
Current assets:
  Cash and cash
   equivalents..........   $694,883     $  33,606   $(103,606)(B)  $  624,883
  Accounts receivable
   net..................    104,352        30,177     (30,177)        104,352
  Inventory.............     93,192        45,794     (39,294)(B)      99,692
  Prepaid expenses and
   other current
   assets...............     33,313         5,075      (5,075)         33,313
                           --------     ---------   ---------      ----------
    Total current
     assets.............    925,740       114,652    (178,152)        862,240
Property and equipment,
 net....................     37,425        36,961     (36,961)         37,425
Deposits and other
 assets.................     20,181        10,433     (10,433)         20,181
Goodwill and other
 intangibles............        --         27,221      82,279 (B)     109,500
                           --------     ---------   ---------      ----------
                           $983,346     $ 189,267   $(143,267)     $1,029,346
                           ========     =========   =========      ==========
    LIABILITIES AND
  STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable......   $ 86,716     $  62,678   $ (62,678)     $   86,716
  Accrued liabilities...     33,828        17,499     (11,499)(B)      39,828
  Current portion of
   capital lease
   obligations..........        685           --          --              685
  Short term debt.......        --         30,983     (30,983)            --
  Current portion of
   long term
   liabilities..........        --          1,324      (1,324)            --
  Deferred revenue......        --          6,075      (6,075)            --
                           --------     ---------   ---------      ----------
    Total current
     liabilities........    121,229       118,559    (112,559)        127,229
Capital lease
 obligations, less
 current portion........        644           --          --              644
Deferred revenue........    200,000           --          --          200,000
Long-term debt..........    300,000           701        (701)        300,000
Stockholders' equity:
  Common stock..........         68       440,816    (440,815)(B)          69
  Warrants..............        --            242        (242)            --
  Additional paid-in
   capital..............    263,857           --       39,999 (B)     303,856
  Deferred
   compensation.........        (15)      (11,000)     11,000             (15)
  Unrealized loss on
   equity securities....        --         (1,983)      1,983             --
  Retained earnings.....     97,563      (358,068)    358,068          97,563
                           --------     ---------   ---------      ----------
    Total stockholders'
     equity.............    361,473        70,007     (30,007)        401,473
                           --------     ---------   ---------      ----------
                           $983,346     $ 189,267   $(143,267)     $1,029,346
                           ========     =========   =========      ==========
</TABLE>

   See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
                                   Statements

                                       84
<PAGE>

                               NVIDIA CORPORATION

        PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
                     (Thousands, except per share amounts)

<TABLE>
<CAPTION>
                                       Historical
                                -------------------------
                                NVIDIA Nine   3dfx Nine
                                Months Ended Months Ended    (C)
                                  Oct. 29,     Oct. 31,   Pro forma        Pro
                                    2000         2000     adjustment      forma
                                ------------ ------------ ----------     --------
<S>                             <C>          <C>          <C>            <C>
Revenues......................    $517,046    $ 214,757   $(214,757)     $517,046
Cost of revenues..............     324,249      199,903    (199,903)      324,249
                                  --------    ---------   ---------      --------
Gross profit..................     192,797       14,854     (14,854)      192,797
                                  --------    ---------   ---------      --------
Operating expenses:
  Research and development....      59,994       54,830     (42,971)(D)    71,853
  Sales, general and
   administrative.............      41,569       50,750     (50,017)(D)    42,302
  Amortization of goodwill and
   other intangibles..........         --       201,308    (184,847)(D)    16,461
                                  --------    ---------   ---------      --------
    Total operating expenses..     101,563      306,888    (277,835)      130,616
                                  --------    ---------   ---------      --------
Operating income/(Loss).......      91,234     (292,034)    262,981        62,181
Interest and other income,
 net..........................      10,056          215      (2,709)(E)     7,562
                                  --------    ---------   ---------      --------
Income/(Loss) before income
 tax expense..................     101,290     (291,819)    260,272        69,743
Income tax expense............      32,413         (313)     (9,782)(F)    22,318
                                  --------    ---------   ---------      --------
Net income....................    $ 68,877    $(291,506)  $ 270,054      $ 47,425
                                  ========    =========   =========      ========
Basic net income/loss per
 share........................    $   1.07    $   (9.69)  $    9.34      $   0.72
                                  ========    =========   =========      ========
Diluted net income/loss per
 share........................    $   0.87    $   (9.69)  $    9.41      $   0.59
                                  ========    =========   =========      ========
Shares used in basic per share
 computation..................      64,660       30,077     (29,077)(G)    65,660
Shares used in diluted per
 share computation............      79,234       30,077     (29,077)(G)    80,234
</TABLE>


   See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
                                   Statements

                                       85
<PAGE>

                               NVIDIA CORPORATION

        PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
                     (Thousands, except per share amounts)

<TABLE>
<CAPTION>
                                     Historical
                             ---------------------------
                              NVIDIA Year      3dfx         (C)
                                 Ended      Year Ended   Pro forma        Pro
                             Jan. 30, 2000 Jan. 31, 2000 adjustment      forma
                             ------------- ------------- ----------     --------
<S>                          <C>           <C>           <C>            <C>
Revenues...................    $374,505      $360,523    $(360,523)     $374,505
Cost of revenues...........     235,575       287,872     (287,872)      235,575
                               --------      --------    ---------      --------
Gross profit...............     138,930        72,651      (72,651)      138,930
                               --------      --------    ---------      --------
Operating expenses:
  Research and
   development.............      47,439        66,062      (50,249)(D)    63,252
  Sales, general and
   administrative..........      37,079        63,468      (62,490)(D)    38,057
  Amortization of goodwill
   and other intangibles ..         --         18,912        3,036 (D)    21,948
                               --------      --------    ---------      --------
    Total operating
     expenses..............      84,518       148,442     (109,703)      123,257
                               --------      --------    ---------      --------
Operating income/(Loss)....      54,412       (75,791)      37,052        15,673
Interest and other income,
 net.......................       1,754         2,180       (5,505)(E)    (1,571)
                               --------      --------    ---------      --------
Income/(Loss) before income
 tax expense...............      56,166       (73,611)      31,547        14,102
Income tax
 expense/(benefit).........      18,068       (10,324)      (3,231)(F)     4,513
                               --------      --------    ---------      --------
Net income/(loss)..........    $ 38,098      $(63,287)   $  34,778      $  9,589
                               ========      ========    =========      ========
Basic net income/(loss) per
 share.....................    $   0.64      $  (2.81)   $    2.33      $   0.16
                               ========      ========    =========      ========
Diluted net income/(loss)
 per share.................    $   0.53      $  (2.81)   $    2.41      $   0.13
                               ========      ========    =========      ========
Shares used in basic per
 share computation.........      59,744        22,536      (21,536)(G)    60,744
Shares used in diluted per
 share computation.........      72,196        22,536      (21,536)(G)    73,196
</TABLE>


   See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
                                   Statements

                                       86
<PAGE>

                              NVIDIA CORPORATION

     NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

Note 1. Unaudited Pro Forma Combined Condensed Balance Sheet

   The unaudited pro forma combined condensed balance sheet gives effect to
the purchase as if it had occurred on October 29, 2000 with respect to the
balance sheets of NVIDIA and 3dfx.

   On December 15, 2000, NVIDIA and NVIDIA US Investment Company signed a
definitive purchase agreement with 3dfx pursuant to which NVIDIA US Investment
Company agreed to acquire certain of 3dfx's assets, including its core
graphics processor assets. Under the terms of the purchase agreement, NVIDIA
US Investment Company will pay to 3dfx a total consideration of $70 million in
cash and 1,000,000 shares of NVIDIA common stock. This purchase of assets will
be accounted for under the purchase method of accounting.

   The following adjustments were reflected in the unaudited pro forma
combined condensed balance sheet:

  (A) To remove the impact of 3dfx assets not acquired and 3dfx liabilities
      not assumed.

  (B) To record common stock and cash issued to 3dfx and the application of
      purchase accounting. The total purchase price consists of cash of $70
      million and 1,000,000 shares of NVIDIA's common stock with an estimated
      fair value of $40 million and estimated direct transaction costs of
      approximately $6 million. The fair value of NVIDIA's common stock was
      determined as the average market price from December 13, 2000 to
      December 19, 2000, which includes two trading days prior and two
      trading days subsequent to the public announcement of the purchase.

   The amounts and components of the estimated purchase price are presented
below.

<TABLE>
<CAPTION>
                                                                  (In thousands)
<S>                                                               <C>
  Common stock...................................................    $      1
  Additional paid-in capital.....................................      39,999
  Transaction costs..............................................       6,000
  Cash...........................................................      70,000
                                                                     --------
  Total purchase price...........................................    $116,000
                                                                     ========
</TABLE>

   NVIDIA has assumed that all of 3dfx's debts and liabilities can be
satisfied or paid in full with the total cash consideration of $70 million. If
the debts and liabilities cannot be satisfied, 3dfx could receive a cash
advance from NVIDIA of up to $25 million and this advance would reduce the
number of shares receivable by 3dfx by up to 500,000 shares. Consequently the
components of the estimated purchase price could differ from that presented
above.

   Under purchase accounting, the total purchase price will be allocated to
the acquired assets based upon their fair values. Allocations are subject to
valuations as of the date of the completion of the purchase. NVIDIA expects to
allocate the total purchase price to goodwill and other identifiable
intangible and tangible assets. NVIDIA expects to amortize goodwill over five
years and to amortize other identifiable intangible and tangible assets over
their estimated useful lives.

   The actual allocation of the purchase price will depend upon the
composition of 3dfx assets acquired on the closing date and NVIDIA's
evaluation of the fair value of the net assets as of the date indicated.
Consequently, the actual allocation of the purchase price could differ from
that presented above.

                                      87
<PAGE>

Note 2. Unaudited Pro Forma Combined Condensed Statements of Operations

   The unaudited pro forma combined condensed statements of operations give
effect to the purchase as if it had occurred at the beginning of the earliest
period presented. The following adjustments have been reflected in the
unaudited pro forma combined condensed statements of operations:

  (C) Adjustment to remove the 3dfx statements of operations in order to
      reflect only the ongoing impact of assets acquired.

  (D) To record the application of purchase accounting, the amortization of
      goodwill and other intangible and tangible assets and employee-related
      expenses. The pro forma adjustments assume that the purchase price of
      $116 million will be allocated to goodwill and other identifiable
      intangible and tangible assets. The goodwill will be amortized on a
      straight-line basis over five years and the other identifiable
      intangible and tangible assets will be amortized over their estimated
      useful lives. The ultimate lives assigned will be determined at the
      date of closing based on the facts and circumstances existing at that
      date. Employee-related expense includes salaries and benefits for
      former 3dfx employees assumed to be hired by NVIDIA and does not
      include one-time non-recurring bonus expenses of up to $7 million.

  (E) To record the impact of interest expense related to the cash
      consideration of $70 million. For pro forma purposes the source of cash
      was assumed to have been a loan with an interest rate of 4 3/4%.

  (F) To reduce income tax expense for the effect of the pro forma
      adjustments.

  (G) To reflect the estimated shares to be issued as consideration for the
      purchase.

                                       88
<PAGE>

                             3DFX INTERACTIVE, INC.

           PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)

   The following unaudited pro forma condensed consolidated balance sheet of
3dfx as of October 31, 2000 presents the financial position of 3dfx assuming
the asset sale and dissolution of 3dfx had occurred on October 31, 2000. All
material adjustments required to reflect the sale of assets and dissolution are
set forth in the columns labeled "NVIDIA Sale Adjustments" and "Dissolution
Adjustments." The data contained in the column labeled "Historical 3dfx" is
derived from 3dfx's historical unaudited consolidated balance sheet as of
October 31, 2000.

   The following unaudited pro forma condensed consolidated balance sheet of
3dfx should be read in conjunction with the audited historical consolidated
financial statements of 3dfx for the year ended January 31, 2000 (as updated in
3dfx's Current Report on Form 8-K dated January 26, 2001, the audit report on
which contains an explanatory paragraph relating to 3dfx's ability to continue
as a going concern as described in Note 14 to the consolidated financial
statements). The pro forma data is for informational purposes only and may not
necessarily reflect 3dfx's financial position or what 3dfx's financial position
would have been had 3dfx been dissolved on October 31, 2000. There can be no
assurance that the estimated net assets indicated below would be realized if
3dfx were liquidated, wound up and dissolved. 3dfx believes that there is a
likelihood that certain risks related to the liquidation, winding up and
dissolution of 3dfx may result in holders of common stock realizing less than
the estimated net asset value shown in the pro forma condensed consolidated
balance sheet. These risks include, without limitation, the ultimate outcome of
known and unknown claims, litigation, debts and liabilities.

   The valuation of assets and liabilities necessarily requires estimates and
assumptions by management and there are substantial uncertainties in carrying
out any plan of dissolution. The actual value of any liquidating distributions
to 3dfx's shareholders will depend upon a variety of factors including, but not
limited to, the actual net proceeds from the sale of 3dfx's assets (including
those subject to the NVIDIA asset sale), the ultimate settlement amounts of
3dfx's liabilities and obligations (including the settlement of known and
unknown claims or litigation), actual costs incurred in connection with
carrying out the liquidation, winding up and dissolution of 3dfx, including
costs of liquidation and establishing reserves, and the actual timing of the
final dissolution of 3dfx. The asset values and liability settlements
ultimately realized in the liquidation, winding up and dissolution of 3dfx
could materially differ from the amounts shown in the pro forma condensed
consolidated balance sheet below. No assurance can be given that the amount of
any liquidating distributions to 3dfx shareholders will equal the estimated
amounts included in the pro forma condensed consolidated balance sheet below.

   No pro forma statement of operations data has been presented due to 3dfx's
intention to liquidate, wind up and dissolve.

                                       89
<PAGE>

                             3DFX INTERACTIVE, INC.

           PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)

                                October 31, 2000
                                 (In thousands)

<TABLE>
<CAPTION>
                          Historical  NVIDIA Sale   Dissolution
                             3dfx     Adjustments   Adjustments       As Adjusted
                          ----------  -----------   -----------       -----------
<S>                       <C>         <C>           <C>               <C>
         ASSETS
Current Assets:
  Cash and cash
   equivalents........... $  33,606    $ 95,000(A)         --          $ 128,606
  Short-term
   investments...........       --          --             --                --
  Accounts receivable,
   net...................    30,177         --       $ (12,677)(B)        17,500
  Inventories, net.......    45,794         --         (29,747)(B)        16,047
  Investment in NVIDIA
   Common Stock..........       --       20,000(A)         --             20,000
  Other current assets...     5,075         --          (1,868)(B)         3,207
                          ---------    --------      ---------         ---------
    Total current
     assets..............   114,652     115,000        (44,292)          185,360
  Property and equipment,
   net...................    36,961         --         (35,116)(B)         1,845
  Investment in
   Subsidiaries..........       --          --             --                --
  Goodwill and
   intangibles...........    27,221         --         (27,221)(B)           --
  Other assets...........    10,433         --          (9,533)(B)           900
                          ---------    --------      ---------         ---------
    Total assets......... $ 189,267    $115,000      $(116,162)        $ 188,105
                          =========    ========      =========         =========
     LIABILITIES AND
   SHAREHOLDERS' EQUITY
Current Liabilities:
  Short-term debt........ $  30,983    $    --       $     --          $  30,983
  Accounts payable.......    62,678         --             --             62,678
  Accrued liabilities....    17,499         --          47,214 (C)        64,713
  Current portion of
   long-term
   liabilities...........     1,324         --             --              1,324
  Deferred Revenue.......     6,075         --          (6,075)              --
                          ---------    --------      ---------         ---------
    Total current
     liabilities.........   118,559         --          41,139           159,698
                          ---------    --------      ---------         ---------
Long-Term Liabilities:...       701         --             --                701
Shareholders' equity:
  Common stock...........   440,816         --             --            440,816
  Warrants...............       242         --             --                242
  Deferred Compensation..   (11,000)        --          11,000 (B)           --
  Unrealized gain on
   equity securities.....    (1,983)        --           1,983 (B)           --
  Retained earnings......  (358,068)    115,000(A)    (170,284)(B)(C)   (413,352)
                          ---------    --------      ---------         ---------
  Total shareholders'
   equity................    70,007     115,000(A)    (157,301)           27,706
                          ---------    --------      ---------         ---------
    Total liabilities and
     shareholders'
     equity.............. $ 189,267    $115,000      $(116,162)        $ 188,105
                          =========    ========      =========         =========
</TABLE>

Note 1. Unaudited Pro Forma Consolidated Balance Sheet

   The unaudited pro forma condensed balance sheet gives effect to the asset
sale and dissolution of 3dfx as if they had occurred on October 31, 2000.

Asset Sale

   On December 15, 2000, 3dfx entered into a definitive purchase agreement with
NVIDIA and NVIDIA US Investment Company pursuant to which NVIDIA US Investment
Company will acquire some of the assets of

                                       90
<PAGE>

3dfx, including its core graphics processor assets. Under the terms of the
purchase agreement, NVIDIA US Investment Company has agreed to pay 3dfx $70
million in cash and one million shares of NVIDIA common stock. Upon signing
the purchase agreement, NVIDIA US Investment Company loaned to 3dfx $15
million for working capital, which will be repaid from the cash portion of the
purchase price at closing. In addition, upon signing the purchase agreement,
3dfx transferred to NVIDIA US Investment Company its "3dfx," "Voodoo" and
other 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 HSR Act, and
receipt of all necessary consents of third parties. There is no assurance that
3dfx can successfully consummate the sale of its assets, secure additional
financing or otherwise increase its liquidity. 3dfx 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 3dfx by its creditors.

Plan of Dissolution

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

   The following adjustments are reflected in the unaudited pro forma
condensed consolidated balance sheet:

  (A) To record cash and NVIDIA common stock received. The total sale price
      of approximately $115 million consists of cash of $95 million and
      500,000 shares of NVIDIA common stock with an estimated fair value of
      $20 million, assuming 3dfx receives $25 million in advances from nVidia
      following the close of the sale. The fair value of NVIDIA common stock
      was determined as the average market price from December 13, 2000 to
      December 19, 2000, which included two days prior and two days
      subsequent to the public announcement of the sale.

  (B) To record adjustments to state net assets at estimated liquidation
      value.

  (C) To record accrual for estimated costs of liquidation and dissolution,
      which include severance payments to employees of $22 million and other
      liabilities of $25.2 million.

                                      91
<PAGE>

        COMPARATIVE RIGHTS OF NVIDIA STOCKHOLDERS AND 3DFX SHAREHOLDERS

   NVIDIA is a Delaware corporation governed by the Delaware General
Corporation Law. 3dfx is a California corporation governed by the California
Corporations Code. The rights of NVIDIA stockholders are governed by NVIDIA's
amended and restated certificate of incorporation and the bylaws, as amended,
and the rights of 3dfx shareholders are governed by 3dfx's amended and restated
articles of incorporation and bylaws, as amended. The following is a summary of
some of the rights of NVIDIA stockholders and 3dfx shareholders, which is
provided in light of the possibility that 3dfx may distribute to its
shareholders shares of NVIDIA common stock in connection with the dissolution
of 3dfx. This summary does not purport to be a complete discussion of, and is
qualified in its entirety by reference to, Delaware law and California law as
well as to NVIDIA's amended and restated certificate of incorporation, NVIDIA's
bylaws, as amended, 3dfx's amended and restated articles of incorporation and
3dfx's bylaws, as amended.

Authorized Capital Stock

   3dfx. The authorized capital stock of 3dfx consists of 50,000,000 shares of
common stock and 5,000,000 shares of preferred stock.

   NVIDIA. The authorized capital stock of NVIDIA consists of 200,000,000
shares of common stock and 2,000,000 shares of preferred stock.

Number of Directors

   3dfx. 3dfx's board of directors currently consists of five members.

   NVIDIA. NVIDIA's board of directors currently consists of seven members.

Changes in the Number of Directors

   3dfx. 3dfx's bylaws provide that the exact number of directors is to be
seven until changed, within a range of five to nine, by a bylaw duly adopted by
the board of directors or by the shareholders. An amendment reducing the
minimum number of directors to a number less than five cannot be adopted if the
votes cast against its adoption at a meeting, or the shares not consenting in
the case of an action by written consent, are equal to more than 16 2/3% of the
outstanding shares entitled to vote on the amendment. No amendment may change
the stated maximum number of authorized directors to a number greater than two
times the stated minimum number of directors minus one. No reduction of the
authorized number of directors has the effect of removing any director before
the director's term of office expires. Any director may resign effective upon
giving written notice to the chairman of the board, the president, the
secretary or the board of directors of the corporation, unless the notice
specifies a later time for the effectiveness of the resignation. If the board
of directors accepts the resignation of a director tendered to take effect at a
future time, the board or the shareholders have the power to elect a successor
to take office when the resignation is to become effective.

   NVIDIA. NVIDIA's amended and restated certificate of incorporation and
bylaws as amended provide that the setting of the authorized number of
directors and any changes to the authorized number of directors may be effected
only by resolution of the board of directors. NVIDIA's bylaws as amended
further provide that no decrease in the number of directors shall have the
effect of shortening the term of an incumbent director.

Election of Directors

   3dfx. 3dfx's bylaws provide that members of the 3dfx board of directors are
to be elected at each annual meeting of shareholders, but if an annual meeting
is not held, or the directors are not elected at an annual meeting, the
directors may be elected at any special meeting of shareholders held for that
purpose. Each director, including a director elected to fill a vacancy, holds
office until his successor is elected, except as otherwise provided by the
California Corporations Code.

                                       92
<PAGE>

   NVIDIA. All members of the NVIDIA board of directors serve on a staggered
board that is divided into three classes, with each class serving a three-year
term. As a result, a portion of the board of directors is elected each year by
a majority vote of outstanding stockholders.

Removal of Directors

   3dfx. Under the California Corporations Code, any or all of 3dfx's directors
may be removed with or without cause if the removal is approved by a majority
of the shares entitled to vote, subject to some exceptions for (i) a
corporation having a classified board of directors, (ii) the entitlement of
some classes or series of shares to elect a director voting as a class or
series, or (iii) by order of a court pursuant to the applicable provisions of
the California Corporations Code. However, no single director may be removed
unless the entire board of directors is removed if the votes cast against the
removal of the single director would be sufficient to elect that director if
voted cumulatively at an election at which the same total number of votes were
cast and the entire number of directors authorized at the time of the
director's most recent election were being elected. Shareholders holding at
least 10% of the outstanding shares in any class may sue in superior county
court to remove from office any officer or director for fraud, dishonest acts
or gross abuse of authority or discretion.

   NVIDIA. NVIDIA's amended and restated certificate of incorporation and
bylaws state that a director may be removed with cause by the holders of a
majority of the shares then entitled to vote at an election of directors or
without cause by a vote of 66 2/3% of the outstanding shares of voting stock of
the corporation entitled to vote at an election of directors.

Special Meeting of Shareholders

   3dfx. Under the California Corporations Code and the 3dfx bylaws, as
amended, a special meeting of the shareholders may be called by the board of
directors, the chairman of the board, the president, the holders of shares
entitled to cast not less than 10% of the votes at the meeting or any
additional persons as may be designated in the corporation's articles of
incorporation or bylaws. 3dfx's bylaws, as amended, state that special meetings
of the shareholders, for purposes consistent with the California Corporations
Code, may be called at any time by the Board or the Chairman of the Board, and
by the President or one or more shareholders holding not less than 10% of the
votes entitled to be cast at the meeting if certain notice requirements are
satisfied.

   NVIDIA. Under the Delaware General Corporation Law, a special meeting of
stockholders may be called by the board of directors or any other person
authorized to do so in the corporation's certificate of incorporation or
bylaws. NVIDIA's bylaws as amended state that a special meeting of
stockholders, for any purpose or purposes, may be called by the chairman of the
board of directors, the chief executive officer or the board of directors
pursuant to a resolution adopted by a majority of the total number of
authorized directors whether or not board vacancies in previously authorized
directorships exist.

Action by Written Consent of Shareholders

   3dfx. 3dfx's bylaws, as amended, allow any action requiring shareholder
approval to be taken without a meeting, and without notice, if a consent in
writing setting forth the action taken is signed by the holders of the
outstanding shares having not less than the minimum number of votes that would
be necessary to take the action at a shareholders' meeting.

   NVIDIA. NVIDIA's amended and restated certificate of incorporation provides
that any action required or permitted to be taken by stockholders must be
effected at a duly called annual or special meeting of stockholders and may not
be effected by written consent.

Amendments to Bylaws

   3dfx. The California Corporations Code states that a majority of the
outstanding shares entitled to vote or the board of directors may amend the
bylaws of a corporation, unless prohibited from doing so by the corporation's
articles of incorporation or bylaws. The 3dfx bylaws, as amended, allow an
amendment by the board of directors, unless the amendment would change the
authorized maximum or minimum number of directors.

                                       93
<PAGE>

   NVIDIA. The Delaware General Corporation Law states that stockholders
entitled to vote have the power to adopt, amend or repeal the bylaws of a
corporation. A corporation, in its certificate, may also confer this power on
the board of directors in addition to the stockholders. NVIDIA's amended and
restated certificate of incorporation and bylaws confer the power to adopt,
amend or repeal bylaws upon the board of directors. NVIDIA's amended and
restated certificate of incorporation and bylaws as amended also provide that
the bylaws may be amended by the affirmative vote of holders of at least 66
2/3% of the voting power of all of the then-outstanding shares of voting stock.

Voting Stock

   3dfx. The outstanding voting stock of 3dfx consists solely of common stock
of 3dfx.

   NVIDIA. The outstanding voting stock of NVIDIA consists solely of common
stock of NVIDIA.

Shareholder Rights Plan

   3dfx. 3dfx has adopted a shareholder rights plan that, among other things,
discourages some types of transactions that may involve an actual or threatened
change of control of 3dfx. Holders of shares of 3dfx common stock issued and
outstanding are entitled to purchase one-thousandth of a share of 3dfx's
preferred stock. The purchase right is exercisable upon the acquisition of, or
the notification of an intent to acquire, a beneficial ownership of 12% or more
of 3dfx's outstanding common stock. Although the asset sale does not trigger
the purchase right in any event, the asset sale was specifically exempted from
the provisions of the shareholder rights plan through a clarifying amendment to
the shareholder rights plan executed by 3dfx and Fleet National Bank in
December 2000.

   NVIDIA. NVIDIA does not currently have a stockholder rights plan.

Issuance of Additional Stock

   3dfx. Subject to limitations prescribed by California law, 3dfx's board of
directors has the authority to issue up to 5,000,000 shares of preferred stock
and up to a total of 50,000,000 shares of common stock of 3dfx (including
shares of common stock of 3dfx currently issued and outstanding). 3dfx's board
of directors have fixed the rights, preferences, privileges and restrictions of
60,000 of the unissued preferred shares, designating them as Series A
Participating Preferred Stock.

   NVIDIA. Subject to limitations prescribed by Delaware law, NVIDIA's board of
directors has the authority to issue up to 2,000,000 shares of preferred stock
and to fix the designation, powers, preferences and rights of those shares and
the qualifications, limitations or restrictions of any wholly unissued shares,
and to issue up to a total of 200,000,000 shares of common stock of NVIDIA
(including shares of common stock of NVIDIA currently issued and outstanding).

Preemptive Rights

   3dfx. Neither 3dfx's amended and restated articles of incorporation nor its
bylaws, as amended, contain any provisions relating to preemptive rights.

   NVIDIA. NVIDIA's amended and restated certificate of incorporation and
bylaws do not contain any provisions relating to preemptive rights.

Compliance with California Law

   3dfx. 3dfx is a California corporation governed by the California
Corporations Code.

   NVIDIA. NVIDIA is a Delaware corporation and is not subject to California
corporate law under Section 2115 of the California Corporations Code.

                                       94
<PAGE>

                                 LEGAL MATTERS

   The validity of NVIDIA's common stock to be issued in the purchase agreement
will be passed upon for NVIDIA by Cooley Godward LLP, San Francisco,
California. Mr. Gaither, one of NVIDIA's directors and senior counsel of Cooley
Godward LLP, owns 34,902 shares of NVIDIA common stock and options to purchase
160,000 shares of NVIDIA common stock. In addition, Cooley Godward LLP owns
75,000 shares of NVIDIA common stock and attorneys with Cooley Godward LLP own
an aggregate of 15,032 shares of common stock of NVIDIA.

                                    EXPERTS

   The consolidated financial statements of 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 incorporated in this Prospectus/proxy statement by
reference to 3dfx's Current Report on Form 8-K dated January 26, 2001, have
been so incorporated in reliance on the report (which contains an explanatory
paragraph relating to 3dfx's ability to continue as a going concern as
described in Note 14 to the consolidated financial statements) of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

   The consolidated financial statements of NVIDIA Corporation as of January
31, 1999 and January 30, 2000 and for the year ended December 31, 1997, the
one-month period ended January 31, 1998 and each of the years in the two-year
period ended January 30, 2000 and related schedule, have been so included in
reliance on the report of KPMG LLP, independent certified public accountants,
and upon the authority of said firm as experts in auditing and accounting.

                      WHERE YOU CAN FIND MORE INFORMATION

   3dfx Interactive, Inc. is a California corporation. 3dfx's principal
executive offices are located at 4545 Fortran Drive, San Jose, California
95134, and its telephone number is (408) 935-4400.

   NVIDIA Corporation is a Delaware corporation. NVIDIA's principal executive
offices are located at 3535 Monroe Street, Santa Clara, CA 95051, and its
telephone number is (408) 615-2500.

   3dfx and NVIDIA each file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information that the companies file at the SEC's
public reference room in 459 Fifth Street, Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference
rooms. 3dfx's and NVIDIA's public filings are also available to the public from
commercial document retrieval services and at the Internet Web site maintained
by the SEC at http://www.sec.gov.

   If you would like to request documents, please do so by March 20, 2001 to
receive them before the 3dfx special meeting. If you request any documents that
have been incorporated by reference herein, the appropriate company will mail
them to you by first-class mail, or other equally prompt means.

   3dfx common stock is currently listed on the Nasdaq National Market under
the symbol "TDFX." NVIDIA common stock is listed on the Nasdaq National Market
under the symbol "NVDA." You may inspect reports and other information
concerning 3dfx and NVIDIA at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.

   NVIDIA has filed a Form S-4 registration statement to register with the SEC
the offering and sale of the shares of NVIDIA common stock to be issued to 3dfx
and possibly distributed to 3dfx shareholders in

                                       95
<PAGE>

connection with the asset sale and dissolution of 3dfx. This prospectus/proxy
statement is a part of that registration statement and constitutes a prospectus
of NVIDIA and a proxy statement of 3dfx for the 3dfx special meeting. This
prospectus/proxy statement does not contain all of the information set forth in
the registration statement because certain parts of the registration statement
are omitted as provided by the rules and regulations of the SEC. You may
inspect and copy the registration statement at any of the SEC's public
reference rooms.

   You should rely only on the information contained in this prospectus/proxy
statement to vote your shares at the 3dfx special meeting. Neither NVIDIA nor
3dfx has authorized anyone to provide you with information that differs from
that contained or incorporated by reference in this prospectus/proxy statement.
This prospectus/proxy statement is dated February 13, 2001. You should not
assume that the information comprising this prospectus/proxy statement is
accurate as of any date other than that date, and neither the mailing of this
prospectus/proxy statement to shareholders nor the issuance of shares of NVIDIA
common stock in connection with the asset sale shall create any implication to
the contrary.

   The SEC allows NVIDIA and 3dfx to "incorporate by reference" information
contained in documents that they file with the SEC, which means that NVIDIA and
3dfx can disclose important information to you be referring you to those
documents. The information incorporated by reference is deemed to be a part of
this prospectus/proxy statement, except for any information superseded by
information in this document. This prospectus/proxy statement and the
information that NVIDIA and 3dfx file later with the SEC may update and
supersede the information incorporated by reference. NVIDIA and 3dfx
incorporate by reference the documents listed below and any future filings
NVIDIA or 3dfx make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 between the date of this prospectus/proxy
statement and the date of the 3dfx special meeting:

  . The description of 3dfx common stock contained in the Registration
    Statement on Form 8-A filed with the SEC on June 4, 1997;

  . The description of 3dfx's Rights Agreement contained in the Registration
    Statement on Form 8-A filed with the SEC on November 11, 1998, as
    amended;

  . 3dfx's Annual Report on Form 10-K, as well as 3dfx's Annual Report on
    Form 10-K/A (Amendment No. 1), for the fiscal year ended January 31,
    2000, for which the consolidated financial statements included in Item 8
    and 14a have been updated in the current report on Form 8-K dated January
    26, 2001;

  . 3dfx's Quarterly Reports on Form 10-Q for the fiscal quarters ended April
    30, 2000, July 31, 2000 and October 31, 2000;

  . 3dfx's Current Reports on Form 8-K filed with the SEC on June 2, 2000,
    June 23, 2000 and July 28, 2000;

  . 3dfx's Current Report on Form 8-K filed with the SEC on January 26, 2001
    (which includes 3dfx's updated consolidated financial statements for the
    fiscal year ended January 31, 2000, the audit report on which contains an
    explanatory paragraph relating to 3dfx's ability to continue as a going
    concern as described in Note 14 to the consolidated financial
    statements);

  . NVIDIA's Current Reports on Form 8-K filed with the SEC on September 28,
    2000 and October 5, 2000;

  . NVIDIA's Quarterly Reports on Form 10-Q for the quarterly periods ended
    October 29, 2000, July 30, 2000 and April 30, 2000;

  . NVIDIA's Annual Report on Form 10-K for the year ended January 30, 2000;
    and

  . The description of NVIDIA's common stock contained in its registration
    statement on Form 8-A filed with the SEC on January 12, 1999.

                                       96
<PAGE>

   You may request a copy of these filings related to NVIDIA, at no cost, by
writing or telephoning NVIDIA at the following address:

                              Corporate Secretary
                               NVIDIA Corporation
                               3535 Monroe Street
                         Santa Clara, California 95051
                                 (408) 615-2500

   You may request a copy of these filings related to 3dfx, at no cost, by
writing or telephoning 3dfx at the following address:

                              Corporate Secretary
                             3dfx Interactive, Inc.
                               4435 Fortran Drive
                           San Jose, California 95134
                                 (408) 935-4400

   You should rely only on the information contained or incorporated by
reference in this prospectus/proxy statement to vote your shares at the 3dfx
special meeting. NVIDIA and 3dfx have not authorized anyone to provide you with
information that differs from that contained in this prospectus/proxy
statement. This prospectus/proxy statement is dated February 13, 2001. You
should not assume that the information contained in this prospectus/proxy
statement is accurate as of any date other than that date, and neither the
mailing of this prospectus/proxy statement to 3dfx shareholders nor the
issuance of shares of NVIDIA common stock in the transaction shall create any
implication to the contrary.

                                   TRADEMARKS

   NVIDIA Corporation, the NVIDIA Corporation logos and all other NVIDIA
product and service names are registered trademarks or trademarks of NVIDIA
Corporation in the United States and in other select countries. 3dfx
Interactive, Inc., the 3dfx logos and all other 3dfx product and service names
are, or will be, registered trademarks or trademarks of NVIDIA US Investment
Company in the United States and in other select countries. "(R)" and
"(TM)"indicate United States registration and United States trademark,
respectively. Other third party logos and product/trade names are registered
trademarks or trade names of their respective companies.

                                       97
<PAGE>

                                                                         ANNEX A

                              PLAN OF DISSOLUTION

   This Plan of Dissolution (this "Plan") is for the purpose of effecting the
complete liquidation and dissolution of 3dfx Interactive, Inc., a California
corporation (the "Company").

   1. Approval of this Plan. In accordance with Section 1900(a) of the
California Corporations Code, this Plan shall be submitted to the shareholders
of the Company for approval at the Special Meeting of Shareholders to be held
for that purpose. This Plan shall become effective and voluntary proceedings
for winding up shall commence on such date, after the approval of the holders
of a majority of the Company's outstanding shares of stock, as the Board of
Directors (the "Board") may designate (the "Effective Date").

   2. Consummation of the Purchase Agreement Transaction; Cessation of
Business. Following the effectiveness of this Plan, and in the event the
Company's shareholders approve the transaction (the "Asset Sale") contemplated
by that certain Asset Purchase Agreement dated as of December 15, 2000, between
the Company, nVidia Corporation and a subsidiary of nVidia Corporation (as it
may be amended, the "Purchase Agreement"), the Company shall consummate the
Asset Sale, and then continue with its winding up pursuant to this Plan and
shall not engage in any further business activities, except for the purpose of
managing its investments in cash, cash equivalents and other marketable
securities, completing work in process, disposing of its assets, providing for
satisfaction of its obligations, adjusting and winding up its business and
affairs, and distributing the proceeds from the disposition of its assets in
accordance with this Plan. The Board then in office shall continue in office
solely for that purpose. The Board shall dissolve the Company as soon as it
deems feasible.

   3. Continuing Employees and Consultants. For the purpose of effecting the
liquidation of the Company's assets, the Company shall hire or retain, at the
discretion of the Board, such employees and consultants as the Board deems
necessary or advisable to supervise the liquidation.

   4. Expenses of Liquidation. The Board shall provide, from the assets of the
Company, reasonable funds for payment of the expenses of the dissolution and
liquidation of the Company, including filing fees and other expenses relating
to the holding of the Special Meeting of Shareholders to consider this Plan and
other documentation required in connection with this Plan, continuation of
employees and/or consultants engaged in the liquidation process, accountants'
and attorneys' fees and expenses, and other reasonable fees and expenses
incurred in connection with the liquidation process.

   5. Payment of Legally Enforceable Claims. The Company shall satisfy, or
adequately provide for the satisfaction of, all its legally enforceable debts
and liabilities in an orderly manner (as well as the debts and liabilities of
its subsidiaries that are legally enforceable against the Company or which in
the opinion of the board should be paid or provided for in order to maximize
assets ultimately available to the Company's shareholders).

   6. Provision for Continued Indemnification of Board and Officers. The
Company may reserve sufficient assets and/or obtain and maintain such insurance
as shall be necessary to provide for continued indemnification of the members
of the Board, officers and agents of the Company, and other parties whom the
Company has agreed to indemnify, to the full extent provided by the articles of
incorporation and bylaws of the Company, any existing indemnification
agreements between the Company and any of such persons, and applicable law. At
the discretion of the Board, such insurance may include coverage for periods
after the dissolution of the Company, including periods after the termination
of any Liquidating Trust (as defined below), and may include coverage for
trustees, employees and agents of such Liquidating Trust.

                                      A-1
<PAGE>

   7. Distributions to Shareholders. After paying or adequately providing for
the expenses of liquidation and lawful debts and liabilities and reserving
sufficient assets and/or obtaining insurance as set forth in Section 6, the
Board is authorized to make a distribution to shareholders from the proceeds of
the Asset Sale. Any remaining assets will thereafter be distributed to the
shareholders of the Company in accordance with their respective shareholdings.

   8. Liquidating Trust. If it is deemed advisable by the Board for any reason,
the Board may cause the Company to create a liquidating trust (the "Liquidating
Trust") and to distribute beneficial interests in the Liquidating Trust to the
shareholders as part of the liquidation process. The Liquidating Trust shall be
constituted pursuant to a liquidating trust agreement in such form as the Board
may approve, it being intended that the transfer and assignment to the
Liquidating Trust pursuant hereto and the distribution to shareholders of the
beneficial interests therein shall constitute a part of the final liquidating
distribution by the Company to the shareholders of their pro rata interests in
the remaining amount of cash and other property held by or for the account of
the Company. From and after the date of the Company's transfer of cash and
property to the Liquidating Trust, the Company shall have no interest of any
character in and to any such cash and property and all of such cash and
property shall thereafter be held by the Liquidating Trust solely for the
benefit of and ultimate distribution to the shareholders, subject to any
unsatisfied debts, liabilities and expenses.

   9. Authorization. The Board or the trustees of the Liquidating Trust, and
such officers of the Company as the Board may direct shall have the powers and
duties specified in Section 2001 of the California Corporations Code and are
hereby authorized to interpret the provisions of this Plan and are hereby
authorized and directed to take such further actions, to execute such
agreements, conveyances, assignments, transfers, certificates and other
documents, as may in their judgment be necessary or desirable in order to wind
up expeditiously the affairs of the Company and complete the liquidation
thereof, including, without limitation, (i) the execution of any contracts,
deeds, assignments or other instruments necessary or appropriate to sell or
otherwise dispose of, any and all property of the Company remaining after the
consummation of the Asset Sale, whether real or personal, tangible or
intangible, (ii) the appointment of other persons to carry out any aspect of
this Plan, (iii) the temporary investment of funds in such medium as the Board
may deem appropriate, and (iv) the modification of this Plan as may be
necessary to implement this Plan. The death, resignation or other disability of
any director or officer of the Company shall not impair the authority of the
surviving or remaining directors or officers of the Company (or any persons
appointed as substitutes therefor) to exercise any of the powers provided for
in this Plan. Upon such death, resignation or other disability, the surviving
or remaining directors shall have the authority to fill the vacancy or
vacancies so created, but the failure to fill such vacancy or vacancies shall
not impair the authority of the surviving or remaining directors or officers to
exercise any of the powers provided for in this Plan.

   10. Amendment or Delay of Implementation of this Plan. The Board may, by
vote of the majority of the Board then in office, amend this Plan or delay the
implementation of this Plan, whether or not a vote of the shareholders has
previously occurred, unless the Board determines that such amendment or delay
would materially and adversely affect the shareholders' interests.

                                      A-2
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                                                         ANNEX B
                            ASSET PURCHASE AGREEMENT

                                 by and among:

                            3dfx Interactive, Inc.,
                           a California corporation,

                              NVIDIA Corporation,
                            a Delaware corporation,

                                      and

                         Titan Acquisition Corp. No. 2
                            a Delaware corporation,

                               ----------------

                         Dated as of December 15, 2000

                               ----------------

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

 Note: Subsequent to the execution of this agreement, Titan Acquisition Corp.
 No. 2 changed its name to NVIDIA US Investment Company.

<PAGE>

                               Table Of Contents

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
 <C>     <S>                                                                <C>
 1. Sale of Specified Assets; Related Transactions.........................  B-1


    1.1  Sale of Specified Assets.........................................   B-1

    1.2  Consideration....................................................   B-2

    1.3  Payment of Stock Consideration; Adjustment.......................   B-2

    1.4  No Assumed Liabilities...........................................   B-3

    1.5  Credit Facility..................................................   B-4

    1.6  Stay Order; Standstill Agreement.................................   B-4

    1.7  Taxes............................................................   B-4

    1.8  Allocation.......................................................   B-4

    1.9  Closing..........................................................   B-5

    1.10 Dissenting Shares................................................   B-6

    1.11 Further Action...................................................   B-6

 2. Representations and Warranties of the Seller...........................  B-6

    2.1  Subsidiaries; Due Organization; Etc..............................   B-6

    2.2  Articles of Incorporation and Bylaws; Records....................   B-6

    2.3  SEC Filings; Financial Statements................................   B-7

    2.4  Absence Of Changes...............................................   B-7

    2.5  Title To Specified Assets........................................   B-8

    2.6  Receivables......................................................   B-8

    2.7  Inventory........................................................   B-9

    2.8  Equipment, Etc...................................................   B-9

    2.9  Real Property; Environmental Matters.............................   B-9

    2.10 Proprietary Assets...............................................   B-9

    2.11 Contracts........................................................  B-11

    2.12 Liabilities; Major Suppliers.....................................  B-11

    2.13 Compliance with Legal Requirements...............................  B-12

    2.14 Governmental Authorizations......................................  B-13

    2.15 Tax Matters......................................................  B-13

    2.16 Employee And Labor Matters.......................................  B-13

    2.17 Benefit Plans; ERISA.............................................  B-14

    2.18 Sale of Products.................................................  B-15

    2.19 Performance Of Services..........................................  B-15


    2.20 Insurance........................................................  B-16
</TABLE>



                                       i
<PAGE>

                         Table Of Contents--(Continued)

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
 <C>     <S>                                                                <C>
    2.21 Proceedings; Orders..............................................  B-16


    2.22 Authority; Binding Nature Of Agreements..........................  B-17

    2.23 Non-Contravention; Consents......................................  B-17

    2.24 Transactions with Affiliates.....................................  B-18

    2.25 No Discussions...................................................  B-18

    2.26 Opinion of Financial Advisor.....................................  B-18

    2.27 Brokers..........................................................  B-18

    2.28 Full Disclosure..................................................  B-18

    2.29 Sufficiency of Cash Consideration................................  B-19

 3. Representations and Warranties of Parent and the Purchaser............. B-19

    3.1  Due Organization; Etc............................................  B-19

    3.2  Authority; Binding Nature Of Agreements..........................  B-19

    3.3  SEC Filings......................................................  B-19

    3.4  Non-Contravention; Consents......................................  B-19

    3.5  Valid Issuance...................................................  B-19

    3.6  Brokers..........................................................  B-19

 4. Pre-Closing Covenants of the Seller.................................... B-20

    4.1  Access And Investigation.........................................  B-20

    4.2  Operation Of Business............................................  B-20

    4.3  Filings and Consents.............................................  B-21

    4.4  Notification; Updates to Disclosure Schedule.....................  B-21

    4.5  No Solicitation..................................................  B-22

    4.6  Shareholders' Meeting............................................  B-23

    4.7  Confidentiality..................................................  B-24

    4.8  Satisfaction of Liabilities......................................  B-24

 5. Additional Covenants of the Parties.................................... B-24

    5.1  Registration Statement; Prospectus/Proxy Statement...............  B-24

    5.2  Regulatory Approvals.............................................  B-25

    5.3  Additional Agreements............................................  B-25

    5.4  Certain Employment Arrangements..................................  B-26

    5.5  Consolidated Tax Return..........................................  B-26


    5.6  Delivery of Additional Documents.................................  B-26
</TABLE>

                                       ii
<PAGE>

                         Table Of Contents--(Continued)

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
 <C>     <S>                                                                <C>
 6. Conditions Precedent to the Purchaser's Obligation to Close............ B-26


    6.1  Accuracy Of Representations......................................  B-26

    6.2  Performance Of Obligations.......................................  B-26

    6.3  Shareholder Approval.............................................  B-27

    6.4  Consents.........................................................  B-27

    6.5  No Material Adverse Change.......................................  B-27

    6.6  Additional Documents.............................................  B-27

    6.7  Repayment of Credit Facility.....................................  B-27

    6.8  No Prohibition...................................................  B-27

    6.9  Effectiveness of Registration Statement..........................  B-27

    6.10 HSR Act..........................................................  B-27

    6.11 Governmental Litigation..........................................  B-28

    6.12 Release of Liens.................................................  B-28

 7. Conditions Precedent to the Seller's Obligation to Close............... B-28

    7.1  Accuracy Of Representations......................................  B-28

    7.2  Purchaser's Performance..........................................  B-28

    7.3  Shareholder Approval.............................................  B-28

    7.4  Effectiveness of Registration Statement..........................  B-28

    7.5  HSR Act..........................................................  B-28

    7.6  Stipulation and Proposed Order to Dismiss........................  B-28

    7.7  Purchaser Closing Certificate....................................  B-28

    7.8  Governmental Litigation..........................................  B-29

 8. Termination............................................................ B-29

    8.1  Termination Events...............................................  B-29

    8.2  Termination Procedures...........................................  B-30

    8.3  Effect of Termination............................................  B-30

    8.4  Termination Fees.................................................  B-30

    8.5  Nonexclusivity Of Termination Rights.............................  B-31

 9. Indemnification, Etc................................................... B-32

    9.1  Survival Of Representations And Covenants........................  B-32

    9.2  Indemnification By The Seller....................................  B-32

    9.3  Setoff...........................................................  B-33


    9.4  Nonexclusivity Of Indemnification Remedies.......................  B-33
</TABLE>

                                      iii
<PAGE>

                         Table Of Contents--(Continued)

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
 <C>      <S>                                                             <C>
    9.5   Defense Of Third Party Claims.................................  B-33


    9.6   Threshold.....................................................  B-34

          Exercise Of Remedies By Indemnitees Other Than Parent or the
    9.7   Purchaser.....................................................  B-34

 10. Certain Post-Closing Covenants...................................... B-34

    10.1  Further Actions...............................................  B-34

    10.2  Publicity.....................................................  B-35

    10.3  Plan of Dissolution...........................................  B-35

    10.4  Continued Payment of Liabilities..............................  B-35

    10.5  Change Of Name................................................  B-35

 11. Miscellaneous Provisions............................................ B-35

    11.1  Further Assurances............................................  B-35

    11.2  Fees and Expenses.............................................  B-35

    11.3  Attorneys' Fees...............................................  B-36

    11.4  Notices.......................................................  B-36

    11.5  Time Of The Essence...........................................  B-36

    11.6  Headings......................................................  B-36

    11.7  Counterparts..................................................  B-36

    11.8  Governing Law; Venue..........................................  B-36

    11.9  Successors And Assigns; Parties In Interest...................  B-37

    11.10 Remedies Cumulative; Specific Performance.....................  B-37

    11.11 Waiver........................................................  B-37

    11.12 Amendments....................................................  B-38

    11.13 Severability..................................................  B-38

    11.14 Entire Agreement..............................................  B-38

    11.15 Knowledge.....................................................  B-38

    11.16 Construction..................................................  B-38
</TABLE>


                                       iv
<PAGE>

                            ASSET PURCHASE AGREEMENT

   This Asset Purchase Agreement is entered into as of December 15, 2000, by
and among 3dfx Interactive, Inc. a California corporation (the "Seller"), and
NVIDIA Corporation, a Delaware corporation ("Parent") and Titan Acquisition
Corp. No. 2, a Delaware corporation and an indirect wholly-owned subsidiary of
Parent (the "Purchaser"). Certain capitalized terms used in this Agreement are
defined in Exhibit A.

                                    Recitals

   A. Parent, the Purchaser and the Seller wish to provide for the sale by the
Seller to the Purchaser of the Specified Assets (as defined in Section 1.1),
the stay and ultimate settlement of certain patent infringement litigation
between Parent and the Seller, and certain other related transactions among the
parties, all on the terms and subject to the conditions set forth in this
Agreement.

   B. In order to induce Parent and the Purchaser to enter into this Agreement
and to consummate the transactions contemplated by this Agreement, concurrently
with the execution and delivery of this Agreement, certain shareholders of the
Seller are entering into Voting Agreements and related proxies in favor of
Parent and the Purchaser (the "Voting Agreements").

   C. Concurrently with the execution and delivery of this Agreement, the
Seller and the Purchaser are entering into a Credit Agreement (as defined in
Section 1.5) pursuant to which the Purchaser is providing a $15 million credit
facility to the Seller.

   D. The board of directors of the Seller has adopted a plan of dissolution
("Plan of Dissolution") which contemplates that the Seller will, subject to the
approval of its shareholders at the Shareholders' Meeting (as defined herein),
elect voluntarily to wind up and dissolve pursuant to the California
Corporations Code.

                                   Agreement

   The parties to this Agreement, intending to be legally bound, agree as
follows:

1. Sale of Specified Assets; Related Transactions.

   1.1 Sale of Specified Assets. The Seller shall cause to be sold, assigned,
transferred, conveyed and delivered to the Purchaser, at the Closing (as
defined in Section 1.9), good and valid title to the Specified Assets (as
defined below), free and clear of any Encumbrances, on the terms and subject to
the conditions set forth in this Agreement. For purposes of this Agreement, the
term "Specified Assets" shall mean and include all of the properties, rights,
interests and other tangible and intangible assets (wherever located and
whether or not required to be reflected on a balance sheet prepared in
accordance with GAAP), including any such assets acquired by the Seller
Corporations during the Pre-Closing Period, that are or were used in, needed
for the conduct of or material to, or that otherwise directly or indirectly
relate to, the graphics business of the Seller Corporations (the "Graphics
Business"); provided, however, that the Specified Assets shall not include any
Excluded Assets. Without limiting the generality of the foregoing, the
Specified Assets shall include the following:

     (a) Patents and Patent Applications; Trademarks: All of the patents,
  patent applications, trademarks, trademark applications, trade names,
  service marks and service mark applications of the Seller Corporations,
  including those identified on Exhibit B, and any counterparts, reissues,
  extensions, continuations and continuations in part related to the
  foregoing;

     (b) Other Proprietary Assets: All Proprietary Assets and goodwill of the
  Seller Corporations (including the right to use the names "3dfx," "Voodoo,"
  "GigaPixel Corporation," "STB Systems,"

                                      B-1
<PAGE>

  "STB Assembly" and "Symmetric Simulation Systems" and variations thereof,
  and the Proprietary Assets identified in Part 2.10 of the Disclosure
  Schedule), all of the copyrights, trade secrets, know-how, computer
  software, inventions, designs, drawings, existing and in-development chip
  designs and related specifications, source codes, verification and
  validation environments, manufacturing specifications and databases, in
  process research and development, product reviews and other Proprietary
  Assets identified on Exhibit B;

     (c) Inventory; Equipment; Other Tangible Assets: The inventories
  (including raw materials, work-in-progress and finished goods), equipment,
  materials, prototypes, tools, supplies, vehicles, furniture, fixtures,
  improvements and other tangible assets of the Seller Corporations
  identified on Exhibit B, including the tangible assets identified in Part
  2.8 of the Disclosure Schedule, the entire inventory of graphics chips of
  the Seller Corporations as of the date hereof and all advertising and
  promotional materials of the Seller Corporations relating to its Graphics
  Business;

     (d) Contracts: All rights of the Seller Corporations under the Seller
  Contracts (including the Seller Contracts identified in Part 2.11 of the
  Disclosure Schedule) relating to the Graphics Business;

     (e) Governmental Authorizations: All Governmental Authorizations held by
  the Seller Corporations (including the Governmental Authorizations
  identified in Part 2.14 of the Disclosure Schedule) relating to the
  Graphics Business;

     (f) Claims: All claims (including claims for past infringement of
  Proprietary Assets) and causes of action of the Seller Corporations against
  other Persons relating to the Graphics Business (regardless of whether or
  not such claims and causes of action have been asserted by the Seller
  Corporations), and all rights of indemnity, warranty rights, rights of
  contribution, rights to refunds, rights of reimbursement and other rights
  of recovery possessed by the Seller Corporations relating to the Graphics
  Business (regardless of whether such rights are currently exercisable);

     (g) Other Assets: All of the Seller Corporations' existing and in-
  development chip designs and related specifications, source codes,
  verification and validation environments, manufacturing specifications and
  databases and customer lists;

     (h) Books and Records: All books, records, files and data of the Seller
  Corporations relating directly or indirectly to the Graphics Business; and

     (i) Proceeds: Without limiting any restriction contained herein on any
  such sale or other disposition, an amount of cash and receivables equal to
  the gross proceeds from the sale or other disposition of any of the
  foregoing after the date hereof.

   1.2 Consideration. As consideration for the sale of the Specified Assets to
the Purchaser, the Purchaser has agreed (a) to pay to the Seller at the Closing
(as defined herein) cash in the amount of $70,000,000 (the "Cash
Consideration"), (b) subject to Section 1.3, to deliver to the Seller (but only
upon and subject to the conditions set forth in Section 1.3, and subject to
adjustment as provided therein) one million shares of the common stock, par
value $.001 per share ("Parent Common Stock"), of Parent (the "Stock
Consideration"), and (c) to assume at the Closing the Designated Contractual
Obligations (as defined in Section 1.4(b)) of the Seller by entering into with
the Seller (and, if applicable, other Seller Corporations) an Assignment and
Assumption Agreement in substantially the form of Exhibit D (the "Assignment
and Assumption Agreement").

   1.3 Payment of Stock Consideration; Adjustment.

     (a) The Stock Consideration will be issued by Parent promptly following
  the Closing and contributed by Parent to the Purchaser, but shall only
  become deliverable by the Purchaser to the Seller upon and subject to the
  completion of the winding up of the business of the Seller pursuant to the
  Plan of Dissolution, and delivery to the Purchaser of a certificate
  executed by the Chief Executive Officer or Chief Financial Officer of the
  Seller certifying that the shareholders of the Seller have duly adopted
  resolutions

                                      B-2
<PAGE>

  approving the wind-up and dissolution of the Seller pursuant to the
  California Corporations Code, that all Liabilities of the Seller
  Corporations have been paid in full or otherwise provided for (in a manner
  satisfactory to the Purchaser) from sources other than the Stock
  Consideration and that the Seller has been validly dissolved (or will upon
  the filing of a Certificate of Dissolution and subject to no other
  conditions be dissolved) under the California Corporations Code.
  Notwithstanding the foregoing, in no event will any portion of the Stock
  Consideration become payable unless and until the Purchaser is satisfied
  that the Seller shall have first paid in full or otherwise provided for (in
  a manner satisfactory to the Purchaser) all Liabilities of the Seller
  Corporations that are not included among the Designated Contractual
  Obligations (as defined below).

     (b) Following and subject to the Closing, and prior to any payment to
  the Seller of the Stock Consideration, in the event that the Seller is not
  in breach of this Agreement (excluding Section 2.29 for purposes of the
  foregoing), has expended all or substantially all of the Cash Consideration
  in payment of Liabilities of the Seller Corporations, and reasonably and in
  good faith determines (i) that the then-remaining Cash Consideration is or
  will be insufficient to enable the Seller Corporations to pay in full all
  then-remaining Liabilities of the Seller Corporations, and (ii) that all
  then-remaining Liabilities of the Seller Corporations could and would be
  paid in full if Seller had access to additional funds in an amount not in
  excess of $25,000,000 and applied such funds exclusively to the payment of
  such Liabilities, the Seller shall be entitled to request in writing that
  the Purchaser advance to the Seller up to a maximum of $25,000,000 (the
  "Post-Closing Advance"). Subject to the foregoing conditions, the Purchaser
  shall be obligated to make the Post-Closing Advance, within ten business
  days after receipt of such written request, unless it determines in good
  faith that the funds requested would not permit the Seller to pay in full
  all then-remaining Liabilities of the Seller Corporations. A maximum of one
  Post-Closing Advance shall ever be required to be made by the Purchaser. In
  the event that the Purchaser makes a Post-Closing Advance to the Seller,
  the number of shares of Parent Common Stock constituting the Stock
  Consideration shall be reduced automatically (and without any action on the
  part of any party) by the number of shares equal to the quotient determined
  by dividing (1) the amount of the Post-Closing Advance by (2) $50.00.

     (c) If, between the date of this Agreement and the date on which the
  Stock Consideration (or any portion thereof) is issued to the Seller, the
  outstanding shares of Parent Common Stock are changed into a different
  number or class of shares by reason of any stock split, division or
  subdivision of shares, stock dividend, reverse stock split, consolidation
  of shares, reclassification, recapitalization or other similar transaction,
  then the number of shares of Parent Common Stock constituting the Stock
  Consideration, and the dollar amount set forth in clause (2) of the last
  sentence of Section 1.3(b), shall be appropriately adjusted.

   1.4 No Assumed Liabilities.

     (a) Subject to Section 1.4(b), neither Parent nor the Purchaser shall
  assume any Liabilities of the Seller whatsoever, whether relating to the
  Specified Assets, the Graphics Business or otherwise.

     (b) Notwithstanding Section 1.4(a), pursuant to the Assignment and
  Assumption Agreement, at and following the Closing the Purchaser will
  become obligated to perform the obligations of the Seller under any Assumed
  Contracts, but only to the extent such obligations: (i) arise after the
  Closing Date; (ii) do not arise from or relate to any Breach by the Seller
  of any provision of any of the Assumed Contracts; (iii) do not arise from
  or relate to any event, circumstance or condition occurring or existing on
  or prior to the Closing Date that, with notice or lapse of time, would
  constitute or result in a Breach of any of the Assumed Contracts; and (iv)
  are ascertainable (in nature and amount) solely by reference to the express
  terms of the Assumed Contracts (the "Designated Contractual Obligations");
  provided, however, that notwithstanding the foregoing, and notwithstanding
  anything to the contrary contained in this Agreement, the "Designated
  Contractual Obligations" shall not include, and neither Parent nor the
  Purchaser shall be required to assume or to perform or discharge:

       (1) any Liability of any Person under the Assumed Contracts, except
    for the Seller Corporations;


                                      B-3
<PAGE>

       (2) any Liability of the Seller Corporations arising from or
    relating to any action taken by the Seller Corporations, or any failure
    on the part of the Seller Corporations to take any action, at any time
    prior to the Closing Date;

       (3) any Liability of the Seller Corporations for the payment of any
    Tax;

       (4) any Liability of the Seller Corporations to any employee or
    former employee of the Seller Corporations under the WARN Act, or under
    or with respect to any Employee Benefit Plan, profit sharing plan or
    dental plan or for severance pay, or for accrued vacation pay or wages;

       (4) any Liability of the Seller Corporations to any Related Party;

       (5) any Liability under any Assumed Contract, if the Seller shall
    not have obtained, prior to the Closing Date, any Consent required to
    be obtained from any Person with respect to the assignment or
    delegation to the Purchaser of any rights or obligations under such
    Assumed Contract;

       (6) any Liability that is inconsistent with or constitutes an
    inaccuracy in, or that arises or exists by virtue of any Breach of, (x)
    any representation or warranty made by the Seller in any of the
    Transactional Agreements, or (y) any covenant or obligation of the
    Seller contained in any of the Transactional Agreements; or

       (7) any other Liability of the Seller Corporations not expressly
    assumed by the Purchaser pursuant to the provisions of any of the
    Transactional Agreements.

   1.5 Credit Facility. Contemporaneously with the execution and delivery of
this Agreement, the Purchaser and the Seller are entering into a Credit
Agreement (the "Credit Agreement") pursuant to which the Purchaser is providing
the Seller with immediate borrowing availability in the amount of $15,000,000
(the "Credit Facility"). In consideration of the execution of the Credit
Agreement and the establishment of the Credit Facility, (a) the Seller is
granting to the Purchaser a non-exclusive, perpetual, fully-paid license for
all of the Seller's patents, patent applications and inventions, which are held
by Seller free and clear of any Encumbrances (other than as may be asserted by
virtue of the Parent Pending Litigation), pursuant to a patent license
agreement (the "Patent License Agreement") of even date herewith, and (b) the
Seller is causing to be sold, assigned, transferred, conveyed and delivered to
the Purchaser good and valid title, free and clear of any Encumbrances, to all
of the trademarks, trademark applications, trade names, service marks and
service mark applications of the Seller Corporations.

   1.6 Stay Order; Standstill Agreement.

     (a) Contemporaneously with the execution hereof, the Seller has agreed
  to stay the Seller Pending Litigation, and Parent has agreed to stay the
  Parent Pending Litigation, pursuant to and by executing and filing with the
  court the Stay Order.

     (b) Contemporaneously with the execution hereof, the Seller and Parent
  have agreed to refrain from bringing litigation against the other with
  respect to certain patents, patent applications and inventions, pursuant to
  the Patent Standstill Agreement.

   1.7 Taxes. The Seller shall bear and pay, and shall reimburse the Purchaser
and the Purchaser's affiliates for, any sales taxes, use taxes, transfer taxes,
income taxes, documentary charges, filing fees, recording fees or similar
taxes, charges, fees or expenses that may become payable in connection with the
sale of the Specified Assets to the Purchaser or in connection with any of the
other Transactions. The Seller shall cooperate with the Purchaser to file all
requests for certifications of sales and use tax due, including, without
limitation, pursuant to Section 6812 of the California Revenue and Taxation
Code.

   1.8 Allocation. At or prior to the Closing, the Purchaser shall deliver to
the Seller a statement setting forth the Purchaser's good faith determination
of the manner in which the consideration referred to in Section 1.2 is to be
allocated among the Specified Assets. The allocation prescribed by such
statement shall be conclusive and binding upon the Seller for all purposes. The
Seller and the Purchaser acknowledge that the

                                      B-4
<PAGE>

Transactions do not constitute a reorganization described in Section 368 of the
Code. The Seller shall not file any Tax Return or other document with, or make
any statement or declaration to, any Governmental Body that is inconsistent
with such allocation or that is inconsistent with the Transactions not
constituting a reorganization.

   1.9 Closing.

     (a) The closing of the sale of the Specified Assets and the other
  Transactions to be consummated contemporaneously therewith to the Purchaser
  (the "Closing") shall take place at the offices of Cooley Godward llp in
  Palo Alto, California, at 10:00 a.m. on such date (after the expiration of
  the applicable waiting period under the HSR Act and the satisfaction or
  waiver of the other conditions to the Closing set forth herein) as the
  Purchaser may designate in a written notice delivered to the Seller;
  provided, however, that if any condition set forth in Section 6 has not
  been satisfied as of the date designated by the Purchaser, then the
  Purchaser may, at its election, unilaterally postpone the Closing to such
  other date prior to the Termination Date as it reasonably deems
  appropriate.

     (b) At the Closing, without limiting any of the conditions to the
  Closing set forth in Section 6 or Section 7:

       (i) the Seller shall execute and deliver, or shall cause to be
    executed and delivered, to the Purchaser such bills of sale,
    endorsements, assignments (including patent assignments) and other
    documents as may (in the reasonable judgment of the Purchaser or its
    counsel) be necessary or appropriate to assign, convey, transfer and
    deliver to the Purchaser good and valid title to the Specified Assets
    free of any Encumbrances;

       (ii) the Purchaser shall pay to the Seller the Cash Consideration,
    subject to Section 4.8, and provided that the Purchaser will be entitled
    to set off, subject to the terms of the Credit Agreement, against the
    Cash Consideration any amount outstanding under the Credit Facility at
    the Closing;

       (iii) the parties hereto shall execute and deliver the Assignment and
    Assumption Agreement;

       (iv) the Seller shall execute and deliver to Parent and the Purchaser
    a certificate (the "Seller Closing Certificate"), executed by the Chief
    Executive Officer or the Chief Financial Officer of the Seller,
    certifying that (A) each of the representations and warranties made by
    the Seller in this Agreement was accurate in all material respects as of
    the date of this Agreement, (B) except as expressly set forth in the
    Seller Closing Certificate, each of the representations and warranties
    made by the Seller in this Agreement is accurate in all material
    respects as of the Closing Date as if made on the Closing Date, (C) each
    of the covenants and obligations that the Seller is required to have
    complied with or performed pursuant to this Agreement at or prior to the
    Closing has been duly complied with and performed in all material
    respects, and (D) except as expressly set forth in the Seller Closing
    Certificate, each of the conditions set forth in Sections 6.3 and 6.4
    has been satisfied in all material respects;

       (v) the Purchaser and Parent shall execute and deliver to the Seller
    a certificate (the "Purchaser Closing Certificate"), executed by the
    Chief Executive Officer or the Chief Financial Officer of the Purchaser
    and Parent, certifying that (A) each of the representations and
    warranties made by the Purchaser and Parent in this Agreement was
    accurate in all material respects as of the date of this Agreement, (B)
    except as expressly set forth in the Purchaser Closing Certificate, each
    of the representations and warranties made by the Purchaser and Parent
    in this Agreement is accurate in all material respects as of the Closing
    Date as if made on the Closing Date, and (C) each of the covenants and
    obligations that the Purchaser and Parent are required to have complied
    with or performed pursuant to this Agreement at or prior to the Closing
    has been duly complied with and performed in all material respects; and


                                      B-5
<PAGE>

       (vi) Parent shall dismiss with prejudice the Parent Pending
    Litigation and the Seller shall dismiss with prejudice the Seller
    Pending Litigation, each by executing and filing with the court the
    Stipulation and Proposed Order to Dismiss with Prejudice in
    substantially the form of Exhibit F.

   1.10 Dissenting Shares.

     (a) Notwithstanding anything to the contrary contained in this Agreement
  (but without limiting the effect of Section 6.3), to the extent that the
  provisions of Chapter 13 of the California Corporations Code are applicable
  to the Acquisition, the holders of any shares of Seller Common Stock that,
  as of the Closing Date, are or may become "dissenting shares" within the
  meaning of Section 1300(b) of the California Corporations Code shall be
  entitled to such rights as may be granted to such holder or holders in
  Chapter 13 of the California Corporations Code.

     (b) The Seller shall give the Purchaser (i) prompt notice of any written
  demand received by the Seller to require the Seller to purchase shares of
  Seller Common Stock pursuant to Chapter 13 of the California Corporations
  Code and of any other demand, notice or instrument delivered to the Seller
  pursuant to the California Corporations Code, and (ii) full information
  concerning all communications between the Seller and any shareholder which
  has delivered any such demand. The Seller shall not make any payment or
  settlement offer with respect to any such demand unless the Seller shall
  first have notified the Purchaser in writing of such payment or settlement
  offer.

   1.11 Further Action. If, at any time after the Closing Date, any further
action is determined by Parent or the Purchaser to be necessary or desirable to
carry out the purposes of this Agreement or to vest the Purchaser with full
right, title and possession of and to all of the Specified Assets and the
Assumed Contracts, the officers and directors of Parent and the Purchaser shall
be fully authorized (in the name of the Seller and otherwise) to take such
action.

2. Representations and Warranties of the Seller.

   The Seller represents and warrants, to and for the benefit of Parent and the
Purchaser, as follows:

   2.1 Subsidiaries; Due Organization; Etc.

     (a) The Seller has no subsidiaries, except for the Entities identified
  in Part 2.1 of the Disclosure Schedule; and neither the Seller nor the
  other Entity identified in Part 2.1 of the Disclosure Schedule owns any
  capital stock of, or any equity interest of any nature in, any other
  Entity, other than the Entities identified in Part 2.1(a) of the Disclosure
  Schedule.

     (b) The Seller is a corporation duly organized, validly existing and in
  good standing under the laws of the State of California, and each of its
  subsidiaries is a corporation duly organized, validly existing and in good
  standing under the laws of the jurisdiction of its incorporation. The
  Seller is not required to be qualified, authorized, registered or licensed
  to do business as a foreign corporation in any jurisdiction other than the
  jurisdictions listed in Part 2.1 of the Disclosure Schedule, and is in good
  standing as a foreign corporation in each of the jurisdictions listed in
  Part 2.1 of the Disclosure Schedule. The Seller Corporations have never
  conducted any business under or otherwise used, for any purpose or in any
  jurisdiction, any fictitious name, assumed name, trade name or other name,
  other than "3dfx" and "Voodoo."

   2.2 Articles of Incorporation and Bylaws; Records. The Seller has delivered
to Parent accurate and complete copies of: (a) the articles of incorporation
and bylaws of the Seller Corporations, including all amendments thereto; (b)
the stock records of the Seller Corporations; and (c) the minutes and other
records of the meetings and other proceedings (including any actions taken by
written consent or otherwise without a meeting) of the shareholders of the
Seller Corporations, the boards of directors of the Seller Corporations and all
committees of the board of directors of the Seller Corporations. There have
been no meetings or other proceedings of the shareholders of the Seller
Corporations, the board of directors of the Seller Corporations or

                                      B-6
<PAGE>

any committee of the board of directors of the Seller Corporations that are not
fully reflected in such minutes or other records, other than the meeting of the
board of directors of Seller held immediately prior to the execution of, and to
approve, this Agreement. The books of account, stock records, minute books and
other records of the Seller Corporations are accurate, up-to-date and complete,
and have been maintained in accordance with sound and prudent business
practices. All of the records of the Seller Corporations are in the actual
possession and direct control of the Seller.

   2.3 SEC Filings; Financial Statements.

     (a) The Seller has delivered or made available to Parent accurate and
  complete copies of all registration statements, proxy statements and other
  statements, reports, schedules, forms and other documents filed by the
  Seller with the SEC since July 1, 1999, and all amendments thereto (the
  "Seller SEC Documents"), as well as the Unaudited Interim Financial
  Statements. The Seller SEC Documents have been filed by the Seller with the
  SEC on a timely basis. As of the time it was filed with the SEC (or, if
  amended or superseded by a filing prior to the date of this Agreement, then
  on the date of such filing): (i) each of the Seller SEC Documents complied
  in all material respects with the applicable requirements of the Securities
  Act or the Exchange Act (as the case may be); and (ii) none of the Seller
  SEC Documents contained any untrue statement of a material fact or omitted
  to state a material fact required to be stated therein or necessary in
  order to make the statements therein, in the light of the circumstances
  under which they were made, not misleading.

     (b) The financial statements (including any related notes) contained in
  the Seller SEC Documents (at the time they were filed with the SEC or, if
  amended or superseded by a filing prior to the date of this Agreement, then
  on the date of such filing) and the Unaudited Interim Financial Statements
  (as of the date of this Agreement): (i) complied as to form in all material
  respects with the published rules and regulations of the SEC applicable
  thereto (other than the Unaudited Interim Financial Statements); (ii) were
  prepared in accordance with generally accepted accounting principles
  applied on a consistent basis throughout the periods covered (except as may
  be indicated in the notes to such financial statements or, in the case of
  unaudited financial statements, as permitted by Form 10-Q of the SEC, and
  except that the unaudited financial statements may not contain footnotes
  and are subject to normal and recurring year-end adjustments that will not,
  individually or in the aggregate, be material in amount), and (iii) fairly
  present the consolidated financial position of the Seller and its
  consolidated subsidiaries as of the respective dates thereof and the
  consolidated results of operations and cash flows of the Seller and its
  consolidated subsidiaries for the periods covered thereby.

   2.4 Absence Of Changes. Except as set forth in Part 2.4 of the Disclosure
Schedule and except as expressly contemplated by this Agreement, since July 31,
2000:

     (a) there has not been any adverse change in, and no event has occurred
  that could reasonably be expected to have an adverse effect on, the
  business, condition, assets, liabilities, operations, financial performance
  or net income of the Seller Corporations;

     (b) there has not been any loss, damage or destruction to, or any
  interruption in the use of, any of the assets of the Seller Corporations
  (whether or not covered by insurance);

     (c) the Seller Corporations have not (i) declared, accrued, set aside or
  paid any dividend or made any other distribution in respect of any shares
  of capital stock or other securities, or (ii) repurchased, redeemed or
  otherwise reacquired any shares of capital stock or other securities;

     (d) the Seller Corporations have not purchased or otherwise acquired any
  asset from any other Person, except for supplies acquired by the Seller
  Corporations in the Ordinary Course of Business;

     (e) the Seller Corporations have not leased or licensed any asset from
  any other Person;

     (f) the Seller Corporations have not made any capital expenditure;


                                      B-7
<PAGE>

     (g) the Seller Corporations have not sold or otherwise transferred, or
  leased or licensed, any asset to any other Person;

     (h) the Seller Corporations have not written off as uncollectible, or
  established any extraordinary reserve with respect to, any account
  receivable or other indebtedness;

     (i) the Seller Corporations have not made any loan or advance to any
  other Person;

     (j) the Seller Corporations have not (i) established or adopted any
  Employee Benefit Plan, or (ii) paid any bonus or made any profit-sharing or
  similar payment to, or increased the amount of the wages, salary,
  commissions, fees, fringe benefits or other compensation or remuneration
  payable to, any of its directors, officers, employees or independent
  contractors;

     (k) no Contract by which the Seller Corporations or any of the assets
  owned or used by the Seller Corporations is or was bound, or under which
  the Seller Corporations have or had any rights or interest, has been
  amended or terminated;

     (l) the Seller Corporations have not incurred, assumed or otherwise
  become subject to any Liability, other than accounts payable (of the type
  required to be reflected as current liabilities in the "liabilities" column
  of a balance sheet prepared in accordance with GAAP) incurred by the Seller
  Corporations in bona fide transactions entered into in the Ordinary Course
  of Business;

     (m) the Seller Corporations have not discharged any Encumbrance or
  discharged or paid any indebtedness or other Liability, except for accounts
  payable that (i) are reflected as current liabilities in the "liabilities"
  column of the Unaudited Interim Balance Sheet or have been incurred by the
  Seller Corporations since July 31, 2000, in bona fide transactions entered
  into in the Ordinary Course of Business, and (ii) have been discharged or
  paid in the Ordinary Course of Business;

     (n) the Seller Corporations have not forgiven any debt or otherwise
  released or waived any right or claim;

     (o) the Seller Corporations have not changed any of its methods of
  accounting or accounting practices in any respect;

     (p) the Seller Corporations have not entered into any transaction or
  taken any other action outside the Ordinary Course of Business; and

     (q) the Seller Corporations have not agreed, committed or offered (in
  writing or otherwise) to take any of the actions referred to in clauses
  "(c)" through "(p)" above.

   2.5 Title To Specified Assets. The Seller owns (and will own as of the
Closing Date), and has (and will have as of the Closing Date) good and valid
title to, all of the Specified Assets. Except as set forth on Part 2.5 of the
Disclosure Schedule, all of the Specified Assets are owned (and will be owned
as of the Closing Date) by the Seller free and clear of any Encumbrances. The
Specified Assets collectively constitute, as of the date hereof, and will
collectively constitute, as of the Closing Date, all of the properties, rights,
interests and other tangible and intangible assets necessary to enable the
Seller to conduct the Graphics Business in the manner in which the Graphics
Business is currently being conducted and in the manner in which the Graphics
Business is proposed to be conducted.

   2.6 Receivables. Part 2.6 of the Disclosure Schedule provides an accurate
and complete breakdown and aging of all accounts receivable, notes receivable
and other receivables of the Seller Corporations as of November 30, 2000.
Except as set forth in Part 2.6 of the Disclosure Schedule, all existing
accounts receivable of the Seller Corporations (including those accounts
receivable reflected on the Unaudited Interim Balance Sheet that have not yet
been collected and those accounts receivable that have arisen since October 31,
2000, and have not yet been collected): (i) represent valid obligations of
customers of the Seller Corporations arising from bona fide transactions
entered into in the Ordinary Course of Business; and (ii) are current.


                                      B-8
<PAGE>

   2.7 Inventory. All of the Seller's existing inventory included within the
Specified Assets (including all such inventory that is reflected on the
Unaudited Interim Balance Sheet and that has not been disposed of by the Seller
since October 31, 2000): (a) is of such quality and quantity as to be usable
and saleable by the Seller in the Ordinary Course of Business; and (b) is free
of any defect or deficiency that would impair its intended use in any material
respect.

   2.8 Equipment, Etc. Part 2.8 of the Disclosure Schedule accurately
identifies all equipment, materials, prototypes, tools, supplies, vehicles,
furniture, fixtures, improvements and other tangible assets owned by the Seller
and included within the Specified Assets, and accurately sets forth the date of
acquisition, original cost and book value of each of said assets. Part 2.8 of
the Disclosure Schedule also accurately identifies all tangible assets leased
to the Seller and included within the Specified Assets. Each asset identified
or required to be identified in Part 2.8 of the Disclosure Schedule: (i) is
structurally sound, free of defects and deficiencies and in good condition and
repair (ordinary wear and tear excepted); (ii) complies in all material
respects with, and is being operated and otherwise used in full compliance
with, all applicable Legal Requirements; and (iii) is adequate and appropriate
for the uses to which it is being put. The assets identified in Part 2.8 of the
Disclosure Schedule and included within the Specified Assets are adequate for
the conduct of the Graphics Business of the Seller in the manner in which the
Graphics Business is currently being conducted.

   2.9 Real Property; Environmental Matters.

     (a) The Seller does not own any real property or any interest in real
  property, except for the leaseholds created under the real property leases
  identified in Part 2.9 of the Disclosure Schedule (the "Leased Real
  Property"). Part 2.9 of the Disclosure Schedule provides an accurate and
  complete description of the premises covered by said leases and the
  facilities located on such premises. The Seller enjoys peaceful and
  undisturbed possession of such premises.

     (b) To the Seller's knowledge, the Leased Real Property (i) is free of
  any Hazardous Material and any harmful chemical or physical conditions and
  (ii) is free of any environmental contamination of any nature.

   2.10 Proprietary Assets.

     (a) Part 2.10(a) of the Disclosure Schedule lists all Seller Proprietary
  Assets included within the Specified Assets.

     (b) Part 2.10(b) of the Disclosure Schedule (i) lists each Seller
  Proprietary Asset that (A) is owned by any other Person, (B) is licensed to
  or used by the Seller as of the date of this Agreement and (C) is or was
  used in or material to (or that relates to) the Graphics Business (except
  for any Seller Proprietary Asset that is licensed to the Seller under any
  third party software license that (1) is generally available to the public,
  and (2) imposes no future monetary obligation on the Seller) and (ii)
  identifies the license agreement or other agreement under which such Seller
  Proprietary Asset is being licensed to or used by the Seller.

     (c) The Seller has good and valid title to all of the Seller Proprietary
  Assets identified in Part 2.10(a) of the Disclosure Schedule, free and
  clear of any Encumbrances, and has a valid right to use and otherwise
  exploit, and to license others to use and otherwise exploit, all Seller
  Proprietary Assets identified in Part 2.10(b) of the Disclosure Schedule
  except as set forth in Part 2.10(c) of the Disclosure Schedule. Except as
  set forth in Part 2.10(c) of the Disclosure Schedule, the Seller is not
  obligated to make any payment to any Person for the use or other
  exploitation of any Seller Proprietary Asset included within the Specified
  Assets. Except as set forth in Part 2.10(c) of the Disclosure Schedule, the
  Seller is free to use, modify, copy, distribute, sell, license or otherwise
  exploit each of the Seller Proprietary Assets included within the Specified
  Assets on an exclusive basis (other than Seller Proprietary Assets
  consisting of software licensed to the Seller under third party licenses
  generally available to the public, with respect to which the Seller's
  rights are not exclusive). No current or former employee, officer,
  director, shareholder, consultant or

                                      B-9
<PAGE>

  independent contractor has any valid right, claim or interest in or with
  respect to any Seller Proprietary Asset included within the Specified
  Assets.

     (d) The Seller has taken all reasonable measures and precautions
  necessary to protect and maintain the confidentiality and secrecy of all
  Seller Proprietary Assets included within the Specified Assets and
  otherwise to maintain and protect the value of all Seller Proprietary
  Assets included within the Specified Assets. Except as set forth in Part
  2.l0(d) of the Disclosure Schedule, the Seller has not disclosed or
  delivered or permitted to be disclosed or delivered to any Person, and no
  Person (other than the Seller) has access to or has any rights with respect
  to, the source code, or any portion or aspect of the source code, of any
  such Seller Proprietary Asset. Without limiting the generality of the
  foregoing, (i) each current or former employee of the Seller who is or was
  involved in, or who has contributed to, the creation or development of any
  Seller Proprietary Asset has executed and delivered to the Seller an
  agreement (containing no exceptions to or exclusions from the scope of its
  coverage) that is substantially identical to the form of Confidential
  Information and Invention Assignment Agreement previously delivered by the
  Seller to Parent, and (ii) each current and former consultant and
  independent contractor to the Seller who is or was involved in, or who has
  contributed to, the creation or development of any material Proprietary
  Asset has executed and delivered to the Seller or one of the Seller
  Corporations an agreement (containing no exceptions to or exclusions from
  the scope of its coverage) that is substantially identical to the form of
  Consultant Confidential Information and Invention Assignment Agreement
  previously delivered to Parent.

     (e) Except as set forth in Part 2.10(e) of the Disclosure Schedule, with
  respect to each patent, patent application and copyright held or purported
  to be held by the Seller: (i) no Proceeding is pending or, to the best of
  the knowledge of the Seller, threatened, nor has any claim or demand been
  made, which challenges or challenged the legality, validity, enforceability
  or use by the Seller of such patent, patent application or copyright; and
  (ii) all maintenance, annuity and other fees have been fully paid and all
  filings have been properly made.

     (f) All patents, trademarks, service marks and copyrights that are
  registered with any Governmental Body and held by the Seller Corporations
  are valid and subsisting (without reference to the Parent Pending
  Litigation or the Seller Pending Litigation). None of the Seller
  Proprietary Assets infringes, misappropriates, or conflicts with any
  Proprietary Asset owned or used by any other Person (without reference to
  the Parent Pending Litigation or the Seller Pending Litigation). To the
  best of the knowledge of the Seller, no other Person is infringing,
  misappropriating or making any unlawful use of, and no Proprietary Asset
  owned or used by any other Person infringes or conflicts with, any Seller
  Proprietary Asset (without reference to the Parent Pending Litigation or
  the Seller Pending Litigation). The Seller has never misappropriated or, to
  the best of the knowledge of the Seller, made unlawful use of any
  Proprietary Asset. The Seller has never received any notice or other
  communication that any of the Seller Proprietary Assets, or its use or
  ownership thereof, infringed upon, misappropriated or made unlawful use of,
  any Proprietary Asset owned or used by any other Person.

     (g) Except as set forth in Part 2.10(g) of the Disclosure Schedule, the
  Seller has not disclosed or delivered to any Person, or permitted the
  disclosure or delivery to any Person, of the source code, or any portion or
  aspect of the source code, or any proprietary information or algorithm
  contained in any source code, of any Seller Proprietary Asset. No event has
  occurred, and no circumstance or condition exists, that (with or without
  notice or lapse of time) will, or could reasonably be expected to, result
  in the disclosure or delivery to any Person of the source code, or any
  portion or aspect of the source code, or any proprietary information or
  algorithm contained in any source code, of any Seller Proprietary Asset.

     (h) Each computer program and other item of software that is or was used
  in or material to (or that relates to) the Graphics Business is Year 2000
  Compliant. The Seller has conducted sufficient Year 2000 compliance testing
  for each computer program and item of software referred to in the preceding
  sentence to be able to determine whether such computer program and item of
  software is Year 2000 Compliant. For purposes of this Section 2.10, a
  computer program or other item of software shall be deemed to be "Year 2000
  Compliant" only if (i) the functions, calculations and other computing
  processes of such program or

                                      B-10
<PAGE>

  software perform in a consistent and correct manner without interruption
  regardless of the date on which such functions, calculations and processes
  are actually performed and regardless of the date input to the applicable
  computer system (whether before, on or after January 1, 2000); (ii) such
  program or software accepts and responds to year input in a manner that
  resolves any ambiguities as to century in a defined, predetermined and
  appropriate manner; and (iii) such program or software determines leap
  years in accordance with the following standard: (A) if dividing the year
  by 4 yields an integer, it is a leap year, except for years ending in 00,
  but (B) a year ending in 00 is a leap year if dividing it by 400 yields an
  integer.

     (i) Except with respect to demonstration or trial copies, no product,
  system, program or software module that is or was used in or material to
  (or that relates to) the Graphics Business contains any "back door," "time
  bomb," "Trojan horse," "worm," "drop dead device," "virus" or other
  software routines or hardware components designed to permit unauthorized
  access or to disable or erase software, hardware or data without the
  consent of the user.

   2.11 Contracts.

     (a) Part 2.11(a) of the Disclosure Schedule identifies each Contract
  directly or indirectly relating to the Specified Assets or the Graphics
  Business (the "Seller Contracts"). The Seller has delivered to Parent
  accurate and complete copies of all Seller Contracts, including all
  amendments thereto. Each Seller Contract is valid and in full force and
  effect.

     (b) Except as set forth in Part 2.11(b) of the Disclosure Schedule: (i)
  no Person has violated or breached, or declared or committed any default
  under, any Seller Contract; (ii) the consummation of the Acquisition shall
  not, and no event has occurred, and no circumstance or condition exists,
  that could reasonably be expected to (with or without notice or lapse of
  time) (A) result in a violation or breach of any of the provisions of any
  Seller Contract, (B) give any Person the right to declare a default or
  exercise any remedy under any Seller Contract, (C) give any Person the
  right to accelerate the maturity or performance of any Seller Contract, or
  (D) give any Person the right to cancel, terminate or modify any Seller
  Contract; (iii) the Seller has not received any notice or other
  communication (in writing or otherwise) regarding any actual, alleged,
  possible or potential violation or breach of, or default under, any Seller
  Contract; and (iv) the Seller has not waived any right under any Seller
  Contract.

     (c) To the best of the knowledge of the Seller, each Person against
  which the Seller has or may acquire any rights under any Seller Contract is
  solvent and is able to satisfy all of such Person's current and future
  monetary obligations and other obligations and Liabilities thereunder.

     (d) No Person is renegotiating, or has the right to renegotiate, any
  amount paid or payable to the Seller under any Seller Contract or any other
  term or provision of any Seller Contract.

     (e) The Seller has no knowledge of any basis upon which any party to any
  Seller Contract may object to (i) the assignment to the Purchaser of any
  right under such Seller Contract, or (ii) the delegation to or performance
  by the Purchaser of any obligation under such Seller Contract.

   2.12 Liabilities; Major Suppliers.

     (a) The Seller is not now insolvent, and will not be rendered insolvent
  by any of the Transactions. As used in this section, "insolvent" means that
  the sum of the present fair saleable value of the Seller's assets does not
  and will not exceed its debts and other probable Liabilities.

     (b) Immediately after giving effect to the consummation of the
  Transactions, (i) the Seller will be able to pay its Liabilities as they
  become due in the usual course of its business, (ii) the Seller will not
  have unreasonably small capital with which to conduct its present or
  proposed business, (iii) the Seller will have assets (calculated at fair
  market value) that exceed its Liabilities, and (iv) taking into account all
  pending and threatened litigation, final judgments against the Seller in
  actions for money damages are not reasonably anticipated to be rendered at
  a time when, or in amounts such that, the Seller will be unable to

                                      B-11
<PAGE>

  satisfy any such judgments promptly in accordance with their terms (taking
  into account the maximum probable amount of such judgments in any such
  actions and the earliest reasonable time at which such judgments might be
  rendered) as well as all other obligations of the Seller. The cash
  available to the Seller, after taking into account all other anticipated
  uses of the cash, will be sufficient to pay all such debts and judgments
  promptly in accordance with their terms.

     (c) Except as set forth in Part 2.12 of the Disclosure Schedule, the
  Seller Corporations have no material Liabilities, except for: (i)
  liabilities identified as such in the "liabilities" column of the Unaudited
  Interim Balance Sheet; (ii) accounts payable (of the type required to be
  reflected as current liabilities in the "liabilities" column of a balance
  sheet prepared in accordance with GAAP) incurred by the Seller Corporations
  in bona fide transactions entered into in the Ordinary Course of Business
  since July 31, 2000; and (iii) obligations under the Contracts listed in
  Part 2.11 of the Disclosure Schedule, to the extent that the existence of
  such obligations is ascertainable solely by reference to such Contracts.

     (d) Part 2.12 of the Disclosure Schedule: (i) provides an accurate and
  complete breakdown and aging of the accounts payable of the Seller
  Corporations as of July 31, 2000; (ii) provides an accurate and complete
  breakdown of any customer deposits or other deposits held by the Seller
  Corporations as of the date of this Agreement; and (iii) provides an
  accurate and complete breakdown of all notes payable and all other
  indebtedness of the Seller Corporations as of the date of this Agreement.

     (e) Except as set forth in Part 2.12 of the Disclosure Schedule, the
  Seller Corporations have not paid, and the Seller Corporations are not and
  will not become liable for the payment of, any fees, costs or expenses of
  the type referred to in Section 2.27.

     (f) None of the Seller Corporations has, at any time, (i) made a general
  assignment for the benefit of creditors, (ii) filed, or had filed against
  it, any bankruptcy petition or similar filing, (iii) suffered the
  attachment or other judicial seizure of all or a substantial portion of its
  assets, (iv) admitted in writing its inability to pay its debts as they
  become due, (v) been convicted of, or pleaded guilty or no contest to, any
  felony, or (vi) taken or been the subject of any action that could
  reasonably be expected to have an adverse effect on its ability to comply
  with or perform any of its covenants or obligations under any of the
  Transactional Agreements.

   2.13 Compliance with Legal Requirements. Except as set forth in Part 2.13 of
the Disclosure Schedule: (a) the Seller Corporations are in compliance in all
material respects with each Legal Requirement that is applicable to them or to
the conduct of their businesses or the ownership or use of any of their assets;
(b) the Seller Corporations have at all times been in compliance in all
material respects with each Legal Requirement that is or was applicable to them
or to the conduct of their business or the ownership or use of any of their
assets; (c) no event has occurred, and, to the knowledge of the Seller, no
condition or circumstance exists, that could reasonably be expected to (with or
without notice or lapse of time) constitute or result directly or indirectly in
a violation by the Seller Corporations of, or a failure on the part of the
Seller Corporations to comply with, any material Legal Requirement applicable
to them; and (d) the Seller Corporations have not received, at any time, any
notice or other communication (in writing or otherwise) from any Governmental
Body or any other Person regarding (i) any actual, alleged, possible or
potential violation of, or failure to comply with, any material Legal
Requirement, or (ii) any actual, alleged, possible or potential obligation on
the part of the Seller Corporations to undertake, or to bear all or any portion
of the cost of, any cleanup or any remedial, corrective or response action of
any nature. The Seller Corporations have delivered to Parent an accurate and
complete copy of each report, study, survey or other document to which the
Seller Corporations have access that addresses or otherwise relates to the
compliance of the Seller Corporations with, or the applicability to the Seller
Corporations of, any Legal Requirement. To the best of the knowledge of the
Seller, no Governmental Body has proposed or is considering any Legal
Requirement that, if adopted or otherwise put into effect, (i) could reasonably
be expected to have an adverse effect on the business, condition, assets,
liabilities, operations, financial performance, net income or prospects of
either of the Seller Corporations or on the ability of the Seller to comply
with or perform any covenant or obligation under any of the Transactional

                                      B-12
<PAGE>

Agreements, or (ii) could reasonably be expected to have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
Transactions.

   2.14 Governmental Authorizations. Part 2.14 of the Disclosure Schedule
identifies: (a) each Governmental Authorization that is held by the Seller and
that relates directly or indirectly to the Graphics Business; and (b) each
other Governmental Authorization that, to the best of the knowledge of the
Seller, is held by any employee of the Seller and relates to or is useful in
connection with the Graphics Business of the Seller. The Seller has delivered
to Parent accurate and complete copies of all of the Governmental
Authorizations identified in Part 2.14 of the Disclosure Schedule, including
all renewals thereof and all amendments thereto. Each Governmental
Authorization identified or required to be identified in Part 2.14 of the
Disclosure Schedule is valid and in full force and effect. Except as set forth
in Part 2.14 of the Disclosure Schedule: (i) the Seller is and has at all times
been in full compliance in all material respects with all of the terms and
requirements of each Governmental Authorization identified or required to be
identified in Part 2.14 of the Disclosure Schedule; (ii) no event has occurred,
and no condition or circumstance exists, that could reasonably be expected to
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or
requirement of any Governmental Authorization identified or required to be
identified in Part 2.14 of the Disclosure Schedule, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, termination
or modification of any Governmental Authorization identified or required to be
identified in Part 2.14 of the Disclosure Schedule; (iii) the Seller has never
received any notice or other communication (in writing or otherwise) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization; and (iv) all
applications required to have been filed for the renewal of the Governmental
Authorizations required to be identified in Part 2.14 of the Disclosure
Schedule have been duly filed on a timely basis with the appropriate
Governmental Bodies, and each other notice or filing required to have been
given or made with respect to such Governmental Authorizations has been duly
given or made on a timely basis with the appropriate Governmental Body. The
Governmental Authorizations identified in Part 2.14 of the Disclosure Schedule
constitute all of the Governmental Authorizations necessary (i) to enable the
Seller to conduct the Graphics Business in the manner in which such business is
currently being conducted and in the manner in which such business is proposed
to be conducted, and (ii) to permit the Seller to own and use the Specified
Assets in the manner in which they are currently owned and used.

   2.15 Tax Matters.

     (a) Each Tax required to have been paid, or claimed by any Governmental
  Body to be payable, by the Seller Corporations has been duly paid in full
  on a timely basis. Except as set forth in Part 2.15 of the Disclosure
  Schedule, no claim or other Proceeding is pending or has been threatened
  against or with respect to the Seller Corporations in respect of any Tax.
  There are no unsatisfied Liabilities for Taxes (including liabilities for
  interest, additions to tax and penalties thereon and related expenses) with
  respect to any notice of deficiency or similar document received by or on
  behalf of the Seller Corporations. The Seller has delivered to (or made
  available for inspection by) Parent accurate and complete copies of all Tax
  Returns that have been filed on behalf of or with respect to the Seller
  Corporations since December 31, 1997. The information contained in such Tax
  Returns is accurate and complete in all respects.

     (b) The Seller has sufficient tax attributes, including, without
  limitation, adjusted basis in its assets and net operating loss carryovers,
  such that any Taxes incurred by the Seller as a result of the Transactions
  shall not have an adverse effect on the Seller.

   2.16 Employee And Labor Matters.

     (a) Part 2.16 of the Disclosure Schedule accurately sets forth, with
  respect to each current employee of the Seller Corporations who performs or
  has performed any services or who engages in or has engaged

                                      B-13
<PAGE>

  in any activity related to the Specified Assets or the Graphics Business
  (including any employee who is on a leave of absence or on layoff status):
  (i) the name and title of such employee; (ii) the aggregate dollar amounts
  of the compensation (including wages, salary, commissions, director's fees,
  fringe benefits, bonuses, profit-sharing payments and other payments or
  benefits of any type) received by such employee from the Seller
  Corporations with respect to services performed in or activities engaged in
  1999 or 2000; and (iii) such employee's annualized compensation as of the
  date of this Agreement.

     (b) Except as set forth in Part 2.16 of the Disclosure Schedule, the
  Seller Corporations are not a party to or bound by, and have never been a
  party to or bound by, any employment contract or any union contract,
  collective bargaining agreement or similar Contract.

     (c) The employment of the employees of the Seller Corporations is
  terminable by the Seller Corporations at will, and no employee is entitled
  to severance pay or other benefits upon or following termination or
  resignation, except as otherwise provided by law. The Seller has delivered
  to Parent accurate and complete copies of all employee manuals and
  handbooks, disclosure materials, policy statements and other materials
  relating to the employment of the current and former employees of the
  Seller Corporations.

     (d) To the best of the knowledge of the Seller: (i) no employee of the
  Seller Corporations intends to terminate his or her employment and (ii) no
  employee of the Seller Corporations is a party to or is bound by any
  confidentiality agreement, noncompetition agreement or other Contract (with
  any Person) that could reasonably be expected to have an adverse effect on
  (A) the performance by such employee of any of his or her duties or
  responsibilities as an employee of the Seller Corporations or as a
  prospective employee of the Purchaser, or (B) the business of the Seller
  Corporations or the Purchaser.

     (e) The Seller Corporations are not engaged in any unfair labor practice
  of any nature. There has never been any slowdown, work stoppage, labor
  dispute or union organizing activity, or any similar activity or dispute,
  affecting the Seller Corporations or any of their employees, and no Person
  has threatened to commence any such slowdown, work stoppage, labor dispute
  or union organizing activity or any similar activity or dispute.

     (f) Except as set forth in Part 2.16 of the Disclosure Schedule, (i) the
  execution of this Agreement and the consummation of the transactions
  contemplated hereby will not (either alone or upon the occurrence of any
  additional or subsequent events other than events occurring after the
  Closing that are caused by acts or omissions of the Seller Corporations)
  constitute an event under any Employee Benefit Plan that will or may result
  in any payment (whether of severance pay or otherwise), acceleration,
  forgiveness of indebtedness, vesting, distribution, increase in benefits or
  obligation to fund benefits with respect to any employee and (ii) no
  payment or benefit that will or may be made by the Seller Corporations with
  respect to any employee will be characterized as an "excess parachute
  payment," within the meaning of Section 280G(b)(1) of the Code.

   2.17 Benefit Plans; ERISA.

     (a) Part 2.17 of the Disclosure Schedule identifies and provides an
  accurate and complete description of each Employee Benefit Plan. The Seller
  Corporations have never established, adopted, maintained, sponsored,
  contributed to, participated in or incurred any Liability with respect to
  any Employee Benefit Plan, except for the Employee Benefit Plans identified
  in Part 2.17 of the Disclosure Schedule; and the Seller Corporations have
  never provided or made available any fringe benefit or other benefit of any
  nature to any of its employees, except as set forth in Part 2.17 of the
  Disclosure Schedule.

     (b) The Seller has caused to be delivered to Parent, with respect to
  each Employee Benefit Plan: (i) an accurate and complete copy of such
  Employee Benefit Plan and all amendments thereto (including any amendment
  that is scheduled to take effect in the future); (ii) an accurate and
  complete copy of each Contract (including any trust agreement, funding
  agreement, service provider agreement, insurance agreement, investment
  management agreement or recordkeeping agreement) relating to such Employee
  Benefit Plan; (iii) an accurate and complete copy of any description,
  summary, notification, report or other

                                      B-14
<PAGE>

  document that has been furnished to any employee of the Seller with respect
  to such Employee Benefit Plan; (iv) an accurate and complete copy of any
  form, report, registration statement or other document that has been filed
  with or submitted to any Governmental Body with respect to such Employee
  Benefit Plan; and (v) an accurate and complete copy of any determination
  letter, notice or other document that has been issued by, or that has been
  received by the Seller from, any Governmental Body with respect to such
  Employee Benefit Plan.

     (c) Each Employee Benefit Plan is being and has at all times been
  operated and administered in full compliance with the provisions thereof.
  Each contribution or other payment that is required to have been accrued or
  made under or with respect to any Employee Benefit Plan has been duly
  accrued and made on a timely basis. Each Employee Benefit Plan has at all
  times complied and been operated and administered in full compliance with
  all applicable reporting, disclosure and other requirements of ERISA and
  the Code and all other applicable Legal Requirements. The Seller
  Corporations have never incurred any Liability to the Internal Revenue
  Service or any other Governmental Body with respect to any Employee Benefit
  Plan; and no event has occurred, and no condition or circumstance exists,
  that could reasonably be expected to (with or without notice or lapse of
  time) give rise directly or indirectly to any such material Liability.
  Neither the Seller Corporations nor any Person that is or was an
  administrator or fiduciary of any Employee Benefit Plan (or that acts or
  has acted as an agent of the Seller Corporations or any such administrator
  or fiduciary) has engaged in any transaction or has otherwise acted or
  failed to act in a manner that has subjected or may subject the Seller to
  any material Liability for breach of any fiduciary duty or any other duty.
  No Employee Benefit Plan, and no Person that is or was an administrator or
  fiduciary of any Employee Benefit Plan (or that acts or has acted as an
  agent of any such administrator or fiduciary): (i) has engaged in a
  "prohibited transaction" within the meaning of Section 406 of ERISA or
  Section 4975 of the Code; (ii) has failed to perform any of the
  responsibilities or obligations imposed upon fiduciaries under Title I of
  ERISA; or (iii) has taken any action that (A) may subject such Employee
  Benefit Plan or such Person to any Tax, penalty or Liability relating to
  any "prohibited transaction," or (B) may directly or indirectly give rise
  to or serve as a basis for the assertion (by any employee or by any other
  Person) of any claim under, on behalf of or with respect to such Employee
  Benefit Plan.

     (d) No inaccurate or misleading representation, statement or other
  communication has been made or directed (in writing or otherwise) to any
  current or former employee of the Seller Corporations (i) with respect to
  such employee's participation, eligibility for benefits, vesting, benefit
  accrual or coverage under any Employee Benefit Plan or with respect to any
  other matter relating to any Employee Benefit Plan, or (ii) with respect to
  any proposal or intention on the part of the Seller Corporations to
  establish or sponsor any Employee Benefit Plan or to provide or make
  available any fringe benefit or other benefit of any nature.

     (e) The Seller Corporations have not advised any of their employees (in
  writing or otherwise) that they intend or expect to establish or sponsor
  any Employee Benefit Plan or to provide or make available any fringe
  benefit or other benefit of any nature in the future.

   2.18 Sale of Products. Each product that has been sold by the Seller
Corporations to any Person: (i) conformed and complied in all respects with the
terms and requirements of any applicable warranty or other Contract and with
all applicable Legal Requirements; and (ii) was free of any material design
defects, construction defects or other defects or deficiencies at the time of
sale. No product manufactured or sold by the Seller Corporations has been the
subject of any recall or other similar action; and no event has occurred, and
no condition or circumstance exists, that could reasonably be expected to (with
or without notice or lapse of time) directly or indirectly give rise to or
serve as a basis for any such recall or other similar action relating to any
such product.

   2.19 Performance Of Services. All services that have been performed on
behalf of the Seller Corporations were performed properly and in conformity in
all material respects with the terms and requirements of all applicable
warranties and other Contracts and with all applicable Legal Requirements.
Neither Parent nor the Purchaser will incur or otherwise become subject to any
Liability arising directly or

                                      B-15
<PAGE>

indirectly from any services performed by the Seller Corporations. There is no
claim pending or, to the knowledge of the Seller, threatened against the Seller
Corporations relating to any services performed by the Seller Corporations,
and, to the best of the knowledge of the Seller, there is no basis for the
assertion of any such claim.

   2.20 Insurance.

     (a) Part 2.20 of the Disclosure Schedule accurately sets forth, with
  respect to each insurance policy maintained by or at the expense of, or for
  the direct or indirect benefit of, the Seller Corporations: (i) the name of
  the insurance carrier that issued such policy and the policy number of such
  policy; (ii) whether such policy is a "claims made" or an "occurrences"
  policy; (iii) a description of the coverage provided by such policy and the
  material terms and provisions of such policy (including all applicable
  coverage limits, deductible amounts and co-insurance arrangements and any
  non-customary exclusions from coverage); (iv) the annual premium payable
  with respect to such policy, and the cash value (if any) of such policy;
  and (v) a description of any claims pending, and any claims that have been
  asserted since January 1, 1998, with respect to such policy or any
  predecessor insurance policy. Part 2.20 of the Disclosure Schedule also
  identifies (1) each pending application for insurance that has been
  submitted by or on behalf of the Seller Corporations, (2) each self-
  insurance or risk-sharing arrangement affecting the Seller Corporations or
  any of the assets of the Seller Corporations, and (3) all material risks
  (of the type customarily insured by Comparable Entities) for which the
  Seller Corporations do not maintain insurance coverage. The Seller has
  delivered to Parent accurate and complete copies of all of the insurance
  policies identified in Part 2.20 of the Disclosure Schedule (including all
  renewals thereof and endorsements thereto) and all of the pending
  applications identified in Part 2.20 of the Disclosure Schedule. Each of
  the policies identified in Part 2.20 of the Disclosure Schedule is valid,
  enforceable and in full force and effect, and has been issued by an
  insurance carrier that, to the best of the knowledge the Seller, is
  solvent, financially sound and reputable. All of the information contained
  in the applications submitted in connection with said policies was (at the
  times said applications were submitted) accurate and complete, and all
  premiums and other amounts owing with respect to said policies have been
  paid in full on a timely basis.

     (b) Part 2.20 of the Disclosure Schedule identifies each insurance claim
  made by the Seller Corporations since January 31, 1999. No event has
  occurred, and no condition or circumstance exists, that could reasonably be
  expected to (with or without notice or lapse of time) directly or
  indirectly give rise to or serve as a basis for any such insurance claim.
  The Seller Corporations have not received: (i) any notice or other
  communication (in writing or otherwise) regarding the actual or possible
  cancellation or invalidation of any of the policies identified in Part 2.20
  of the Disclosure Schedule or regarding any actual or possible adjustment
  in the amount of the premiums payable with respect to any of said policies;
  (ii) any notice or other communication (in writing or otherwise) regarding
  any actual or possible refusal of coverage under, or any actual or possible
  rejection of any claim under, any of the policies identified in Part 2.20
  of the Disclosure Schedule; or (iii) any indication that the issuer of any
  of the policies identified in Part 2.20 of the Disclosure Schedule may be
  unwilling or unable to perform any of its obligations thereunder.

   2.21 Proceedings; Orders. Except as set forth in Part 2.21 of the Disclosure
Schedule, there is no pending Proceeding, and, to the knowledge of the Seller,
no Person has threatened in writing to commence any Proceeding: (i) that
involves the Seller Corporations or that otherwise relates to or could
reasonably be expected to affect the business of the Seller Corporations or any
of the Specified Assets or the Graphics Business (whether or not any Seller
Corporation is named as a party thereto); or (ii) that challenges, or that
could reasonably be expected to have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the Transactions. Except as set
forth in Part 2.21 of the Disclosure Schedule, no event has occurred, and no
claim, dispute or other condition or circumstance exists, that could reasonably
be expected to directly or indirectly give rise to or serve as a basis for the
commencement of any such Proceeding. Except as set forth in Part 2.21 of the
Disclosure Schedule, since January 1, 1998, no Proceeding has been commenced by

                                      B-16
<PAGE>

or against the Seller Corporations. The Seller has delivered to Parent accurate
and complete copies of all pleadings, correspondence and other written
materials (to which the Seller has access) that relate to the Proceedings
identified in Part 2.21 of the Disclosure Schedule. There is no Order to which
the Seller Corporations, or any of the assets owned or used by the Seller
Corporations, is subject, and no Related Party is subject to any Order that
relates to the Seller Corporations' businesses or to any of the assets of the
Seller Corporations. To the best of the knowledge of the Seller, no employee of
the Seller Corporations is subject to any Order that may prohibit employee from
engaging in or continuing any conduct, activity or practice relating to the
business of the Seller Corporations. There is no proposed Order that, if issued
or otherwise put into effect, (i) could reasonably be expected to have an
adverse effect on the business, condition, assets, liabilities, operations,
financial performance, net income or prospects of the Seller or on the ability
of the Seller to comply with or perform any covenant or obligation under any of
the Transactional Agreements, or (ii) could reasonably be expected to have the
effect of preventing, delaying, making illegal or otherwise interfering with
any of the Transactions.

   2.22 Authority; Binding Nature Of Agreements.

     (a) The Seller has the absolute and unrestricted right, power and
  authority to enter into and (subject to the approval of the Acquisition and
  the Plan of Dissolution by the Required Shareholder Vote) to perform its
  obligations under each of the Transactional Agreements to which it is or
  may become a party; and, subject to the approval of the Acquisition and the
  Plan of Dissolution by the Required Shareholder Vote (as defined in Section
  2.22(b)), the execution, delivery and performance by the Seller of the
  Transactional Agreements to which it is or may become a party have been
  duly authorized by all necessary action on the part of the Seller and its
  board of directors and officers. This Agreement constitutes the legal,
  valid and binding obligation of the Seller, enforceable against the Seller
  in accordance with its terms, subject to (i) laws of general application
  relating to bankruptcy, insolvency and the relief of debtors, and (ii)
  rules of law governing specific performance, injunctive relief and other
  equitable remedies. Upon the execution of each of the other Transactional
  Agreements at the Closing, each of such other Transactional Agreements to
  which the Seller is a party will constitute the legal, valid and binding
  obligation of the Seller and will be enforceable against the Seller in
  accordance with its terms, subject to (i) laws of general application
  relating to bankruptcy, insolvency and the relief of debtors, and (ii)
  rules of law governing specific performance, injunctive relief and other
  equitable remedies.

     (b) The affirmative vote of the holders of a majority of the shares of
  capital stock of the Seller outstanding on the record date for the Persons
  entitled to vote on the Acquisition are the only votes of the holders of
  any class or series of the Seller's capital stock necessary to approve the
  Acquisition and the Plan of Dissolution (the "Required Shareholder Vote.")

   2.23 Non-Contravention; Consents. Neither the execution and delivery by the
Seller of any of the Transactional Agreements, nor the consummation or
performance by the Seller of any of the Transactions, will directly or
indirectly (with or without notice or lapse of time):

     (a) contravene, conflict with or result in a violation of, or give any
  Governmental Body or other Person the right to challenge any of the
  Transactions or to exercise any remedy or obtain any relief under, any
  Legal Requirement or any Order to which the Seller, or any of the assets of
  the Seller, is subject;

     (b) cause the Purchaser or any affiliate of the Purchaser to become
  subject to, or to become liable for the payment of, any Tax;

     (c) cause any of the Specified Assets to be reassessed or revalued by
  any taxing authority or other Governmental Body;

     (d) contravene, conflict with or result in a violation of any of the
  terms or requirements of, or give any Governmental Body the right to
  revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
  Authorization that is to be included in the Specified Assets or is held by
  the Seller Corporations or any employee of the Seller Corporations;


                                      B-17
<PAGE>

     (e) except as set forth on Part 2.11(b) of the Disclosure Schedule,
  contravene, conflict with or result in a violation or breach of, or result
  in a default under, any provision of any Contract;

     (f) except as set forth on Part 2.11(b) of the Disclosure Schedule, give
  any Person the right to (i) declare a default or exercise any remedy under
  any Contract, (ii) accelerate the maturity or performance of any Contract,
  or (iii) cancel, terminate or modify any Contract; or

     (g) result in the imposition or creation of any Encumbrance upon or with
  respect to any of the Specified Assets.

   Except as may be required by the Exchange Act, the California Corporations
Code, the HSR Act, any foreign antitrust law or regulation, the WARN Act and
the NASD Bylaws (as they relate to the Form S-4 Registration Statement and the
Prospectus/Proxy Statement), the Seller neither was, is or will be required to
make any filing with or give any notice to, or to obtain any Consent from, any
Person in connection with the execution and delivery of any of the
Transactional Agreements or the consummation or performance of any of the
Transactions.

   2.24 Transactions with Affiliates. Except as set forth in the Seller SEC
Documents filed prior to the date of this Agreement, between the date of the
Seller's last proxy statement filed with the SEC and the date of this
Agreement, no event has occurred that would be required to be reported by the
Seller pursuant to Item 404 of Regulation S-K promulgated by the SEC.

   2.25 No Discussions. Neither the Seller Corporations nor any Representative
of the Seller Corporations is engaged, directly or indirectly, in any
discussions or negotiations with any other Person relating to any Acquisition
Proposal. The Seller Corporations have not waived, and will not waive, any
rights under any confidentiality, "standstill", nonsolicitation or similar
agreement with any third party to which any of the Seller Corporations is a
party or under which the Seller Corporations have any rights.

   2.26 Opinion of Financial Advisor. The Seller's board of directors has
received the written opinion of Needham & Co., Inc., financial advisor to the
Seller, dated the date of this Agreement, to the effect that, as of such date,
the terms of the Transactions are fair, from a financial point of view, to the
Seller. The Seller has furnished an accurate and complete copy of such written
opinion to Parent.

   2.27 Brokers. Except for Robertson Stephens & Co. and Needham & Co., Inc.,
whose fees and expenses shall be the responsibility of the Seller, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of any of the Seller Corporations or any of their
Representatives. The total of all fees, commissions and other amounts that have
been paid by the Seller Corporations with respect to the Transactions to
Robertson Stephens & Co. and Needham & Co., Inc., and all fees, commissions and
other amounts that may become payable to Robertson Stephens & Co. and Needham &
Co., Inc. by the Seller Corporations if the Transactions are consummated will
not exceed $2,500,000 plus reasonable out-of-pocket expenses. The Seller has
furnished to Parent accurate and complete copies of all agreements under which
any such fees, commissions or other amounts have been paid to may become
payable and all indemnification and other agreements related to the engagement
of Robertson Stephens & Co. and Needham & Co., Inc.

   2.28 Full Disclosure. None of the Transactional Agreements contains or will
contain any untrue statement of material fact; and none of the Transactional
Agreements omits or will omit to state any material fact necessary to make any
of the representations, warranties or other statements or information contained
therein not misleading. All of the information set forth in the Disclosure
Schedule, and all other information regarding the Seller Corporations and their
respective businesses, condition, assets, liabilities, operations, financial
performance, net income and prospects that has been furnished to Parent or any
of Parent's Representatives by or on behalf of the Seller or by any
Representative of the Seller, is accurate and complete in all material
respects.


                                      B-18
<PAGE>

   2.29 Sufficiency of Cash Consideration. The Cash Consideration will be
sufficient to enable the Seller Corporations to pay in full all Liabilities of
the Seller Corporations (other than the Designated Contractual Obligations),
including, without limitation, any Taxes due and other amounts owed as a result
of the Transactions and any amounts due with respect to dissenting shares as
described in Section 1.10, and to otherwise satisfy in full all actual or
potential claims of creditors of the Seller Corporations.

3. Representations and Warranties of Parent and the Purchaser.

   Parent and the Purchaser represent and warrant, to and for the benefit of
the Seller, as follows:

   3.1 Due Organization; Etc. Each of Parent and the Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.

   3.2 Authority; Binding Nature Of Agreements. Each of Parent and the
Purchaser has the absolute and unrestricted right, power and authority to enter
into and to perform its obligations under each of the Transactional Agreements
to which it is or may become a party; and the execution, delivery and
performance by each of Parent and the Purchaser of the Transactional Agreements
to which it is or may become a party have been duly authorized by all necessary
action on the part of Parent and the Purchaser and their respective boards of
directors and officers. This Agreement constitutes the legal, valid and binding
obligation of each of Parent and the Purchaser, enforceable against Parent and
the Purchaser in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies. Upon the execution of each of the other Transactional
Agreements at the Closing, each of such other Transactional Agreements to which
each of Parent and the Purchaser is a party will constitute the legal, valid
and binding obligation of Parent or the Purchaser (as the case may be) and will
be enforceable against Parent or the Purchaser (as the case may be) in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.

   3.3 SEC Filings. Parent has delivered or made available to the Seller
accurate and complete copies of all registration statements, proxy statements
and other statements, reports, schedules, forms and other documents filed by
Parent with the SEC since July 1, 1999, and all amendments thereto.

   3.4 Non-Contravention; Consents. Neither the execution and delivery by
Parent and the Purchaser of any of the Transactional Agreements, nor the
consummation or performance by Parent and the Purchaser of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time) conflict with or result in any breach of any provision of the certificate
of incorporation or bylaws of Parent or the Purchaser. Except as may be
required by the Exchange Act, the California Corporations Code, the HSR Act,
any foreign antitrust law or regulation and the NASD Bylaws (as they relate to
the Form S-4 Registration Statement and the Prospectus/Proxy Statement),
neither Parent nor the Purchaser was, is or will be required to make any filing
with or give any notice to, or to obtain any Consent from, any Person in
connection with the execution and delivery of any of the Transactional
Agreements or the consummation or performance of any of the Transactions.

   3.5 Valid Issuance. The Parent Common Stock to be issued in connection with
the Transactions will, when issued in accordance with the provisions of this
Agreement, be validly issued, fully paid and nonassessable.

   3.6 Brokers. Except for Morgan Stanley & Co. Incorporated, whose fees and
expenses shall be the responsibility of Parent, neither Parent nor the
Purchaser has become obligated to pay, and has not taken any action that might
result in any Person claiming to be entitled to receive, any brokerage
commission, finder's fee or similar commission or fee in connection with any of
the Transactions.


                                      B-19
<PAGE>

4. Pre-Closing Covenants of the Seller.

   4.1 Access And Investigation. The Seller shall ensure that, at all times
during the Pre-Closing Period: (a) the Seller and its Representatives provide
Parent, the Purchaser and their Representatives with free and complete access
to the Seller's Representatives, personnel and assets and to all existing
books, records, Tax Returns, work papers and other documents and information
relating to the Seller Corporations, the Graphics Business, the Specified
Assets and such other information as Parent or the Purchaser may reasonably
request; (b) the Seller and its Representatives provide the Purchaser and its
Representatives with such copies of existing books, records, Tax Returns, work
papers and other documents and information relating to the Seller and its
business as Parent or the Purchaser may request in good faith; and (c) the
Seller and its Representatives compile and provide the Purchaser and its
Representatives with such additional financial, operating and other data and
information relating to the Seller and its business as Parent or the Purchaser
may request in good faith.

   4.2 Operation Of Business. The Seller shall ensure that, except as otherwise
expressly contemplated by the Transactional Agreements, during the Pre-Closing
Period:

     (a) the Seller Corporations conduct their respective businesses and
  operations in accordance with prudent practices and in compliance with all
  applicable Legal Requirements and the requirements of all Seller Contracts,
  and except as expressly contemplated by this Agreement, they (i) preserve
  intact the current business organization relating to the Specified Assets
  and the Graphics Business, (ii) keep available the services of the current
  officers and employees relating to the Specified Assets and the Graphics
  Business, (iii) maintain good relations and goodwill with all suppliers,
  customers, landlords, creditors, licensors, licensees, employees,
  independent contractors and other Persons having business relationships
  with them relating to the Specified Assets and the Graphics Business, and
  (iv) promptly repair, restore or replace any Specified Assets that are
  destroyed or damaged;

     (b) the Seller shall use its best efforts to (i) develop a Plan of
  Dissolution, (ii) comply in all respects with, and carry out in accordance
  with its terms, the Plan of Dissolution, (iii) not take any action
  prohibited by the Plan of Dissolution or omit to take any action required
  to be taken by the Plan of Dissolution, and (iv) obtain the approval of the
  shareholders of the Seller with respect to the Plan of Dissolution;

     (c) the Seller keeps in full force all insurance policies identified in
  Part 2.21 of the Disclosure Schedule;

     (d) the officers of the Seller confer regularly with the Purchaser
  concerning operational matters and otherwise report regularly to the
  Purchaser concerning the status of the Seller's business, condition,
  assets, liabilities, operations, financial performance and prospects;

     (e) the Purchaser is notified within forty-eight hours of any inquiry,
  proposal or offer from any Person relating to any Acquisition Transaction;

     (f) the Seller Corporations do not effect or become a party to any
  Acquisition Transaction;

     (g) the Seller Corporations do not form any subsidiary or acquire any
  equity interest or other interest in any other Entity;

     (h) the Seller Corporations do not make any capital expenditure;

     (i) the Seller Corporations do not enter into or permit any of the
  Specified Assets or the Graphics Business to become bound by any Contract
  other than in the Ordinary Course of Business;

     (j) the Seller Corporations do not incur, assume or otherwise become
  subject to any Liability, except for current liabilities (of the type
  required to be reflected in the "liabilities" column of a balance sheet
  prepared in accordance with GAAP) incurred in the Ordinary Course of
  Business (taking into account the wind-up and dissolution of the Seller);


                                      B-20
<PAGE>

     (k) the Seller Corporations do not establish or adopt any Employee
  Benefit Plan, or pay any bonus or make any profit-sharing or similar
  payment to, or increase the amount of the wages, salary, commissions, fees,
  fringe benefits or other compensation or remuneration payable to, any of
  their directors, officers, employees or independent contractors;

     (l) the Seller Corporations do not change any of their methods of
  accounting or accounting practices in any respect;

     (m) except for the stay of the Seller Pending Litigation and the Parent
  Pending Litigation pursuant to the Stay Order, the Seller Corporations do
  not commence or settle any Proceeding;

     (n) the Seller Corporations do not enter into any transaction or take
  any other action of the type referred to in Section 2.4;

     (o) except as expressly contemplated by the Plan of Dissolution, the
  Seller Corporations do not enter into any transaction or take any other
  action outside the Ordinary Course of Business;

     (p) the Seller Corporations pay in full all indebtedness, liabilities,
  obligations and other amounts when due;

     (q) none of the Seller Corporations shall (i) make a general assignment
  for the benefit of creditors, (ii) file, or consent to the filing against
  it, any bankruptcy or insolvency petition or similar filing, (iii) suffer
  the attachment or other judicial seizure of all or a substantial portion of
  its assets, (iv) admit in writing its inability to pay its debts as they
  become due, (v) become convicted of, or plead guilty or no contest to, any
  felony, (vi) take or become the subject of any action that may have an
  adverse effect on its ability to comply with or perform any of its
  covenants or obligations under any of the Transactional Agreements, or
  (vii) except as contemplated by the Plan of Dissolution, voluntarily wind
  up and dissolve;

     (r) the Seller Corporations do not directly or indirectly assign,
  transfer, sell or convey to any third party, or otherwise dispose of, any
  graphics chips described in the Disclosure Schedule or otherwise owned by
  any of the Seller Corporations on the date of this Agreement (including by
  combining any such graphics chips with any other materials or inventory of
  the Seller Corporations or by installing any such graphics chips on any
  board), and the Seller takes reasonable and responsible security measures
  to safeguard the entire inventory of the Seller's graphics chips;

     (s) the Seller Corporations do not enter into any transaction or take
  any other action that causes or constitutes a Breach of any representation,
  warranty or covenant made by the Seller in this Agreement or in the Seller
  Closing Certificate; and

     (t) the Seller Corporations do not agree, commit or offer (in writing or
  otherwise) to take any of the actions described in clauses "(i)" through
  "(s)" of this Section 4.2.

   4.3 Filings and Consents. The Seller shall ensure that: (a) as soon as
possible after the date of this Agreement, the Seller files with the
appropriate Governmental Bodies the notification form required to be filed by
the Seller under the HSR Act with respect to the Transactions, together with a
request for early termination of the applicable waiting period; (b) all
filings, notices and Consents required to be made, given and obtained in order
to consummate the Transactions are made, given and obtained on a timely basis;
and (c) during the Pre-Closing Period, the Seller and its respective
Representatives cooperate with Parent and the Purchaser and with their
Representatives, and prepare and make available such documents and take such
other actions as Parent or the Purchaser may request in good faith, in
connection with any filing, notice or Consent that Parent or the Purchaser is
required or elects to make, give or obtain.

   4.4 Notification; Updates to Disclosure Schedule. During the Pre-Closing
Period, the Seller shall promptly notify Parent and the Purchaser in writing
of: (a) the discovery by the Seller of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that causes or constitutes a Breach of any representation or warranty made
by the Seller in this Agreement; (b) any event, condition, fact or circumstance
that occurs, arises or exists after the date of this Agreement and that would

                                      B-21
<PAGE>

cause or constitute a Breach of any representation or warranty made by the
Seller in this Agreement if (i) such representation or warranty had been made
as of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (ii) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement; (c) any Breach of any covenant or obligation of the Seller; and (d)
any event, condition, fact or circumstance that may make the timely
satisfaction of any of the conditions set forth in Section 6 or Section 7
impossible or unlikely. If any event, condition, fact or circumstance that is
required to be disclosed pursuant to this Section 4.4 requires any change in
the Disclosure Schedule, or if any such event, condition, fact or circumstance
would require such a change assuming the Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then the Seller shall promptly deliver to Parent and the
Purchaser an update to the Disclosure Schedule specifying such change. No such
update shall be deemed to supplement or amend the Disclosure Schedule for the
purpose of (i) determining the accuracy of any representation or warranty made
by the Seller in this Agreement or in the Seller Closing Certificate, or (ii)
determining whether any of the conditions set forth in Section 6 has been
satisfied.

   4.5 No Solicitation.

     (a) The Seller Corporations shall not directly or indirectly, and shall
  not authorize or permit any of their Representatives directly or indirectly
  to, (i) solicit, initiate, encourage, induce or facilitate the making,
  submission or announcement of any Acquisition Proposal or take any action
  that could reasonably be expected to lead to an Acquisition Proposal, (ii)
  furnish any information regarding any of the Seller Corporations to any
  Person in connection with or in response to an Acquisition Proposal or an
  inquiry or indication of interest that could lead to an Acquisition
  Proposal, (iii) engage in discussions or negotiations with any Person with
  respect to any Acquisition Proposal, (iv) approve, endorse or recommend any
  Acquisition Proposal or (v) enter into any letter of intent or similar
  document or any Contract contemplating or otherwise relating to any
  Acquisition Transaction; provided, however, that this Section 4.5 shall not
  be deemed to prevent the Seller or its board of directors from complying
  with its legal obligations under Rules 14d-9 and 14e-2 as promulgated under
  the Exchange Act with regard to an Acquisition Proposal (it being
  understood that such compliance may constitute a Triggering Event under
  certain circumstances); and provided, further, that prior to the approval
  of the Acquisition and the Plan of Dissolution by the Required Shareholder
  Vote, this Section 4.5(a) shall not prohibit the Seller from furnishing
  nonpublic information regarding the Seller to, or entering into discussions
  with, any Person in response to a Superior Offer that is submitted to the
  Seller by such Person (and not withdrawn) if (1) neither the Seller nor any
  Representative of the Seller shall have breached or taken any action
  inconsistent with any of the provisions set forth in this Section 4.5, (2)
  the board of directors of the Seller concludes in good faith, after having
  consulted with its outside legal counsel, that such action is required in
  order for the board of directors of the Seller to comply with its fiduciary
  obligations to the Seller's shareholders under applicable law, (3) at least
  five business days prior to furnishing any such nonpublic information to,
  or entering into discussions with, such Person, the Seller gives Parent and
  the Purchaser written notice of the identity of such Person and of the
  Seller's intention to furnish nonpublic information to, or enter into
  discussions with, such Person, and the Seller receives from such Person an
  executed confidentiality agreement containing customary limitations on the
  use and disclosure of all nonpublic written and oral information furnished
  to such Person by or on behalf of the Seller and containing provisions no
  less favorable to the Seller than the provisions contained in Sections 1, 2
  or 4 of that certain Confidentiality Agreement dated November 20, 2000
  between the Seller and Parent (the "Confidentiality Agreement"), and (4) at
  least five business days prior to furnishing any such nonpublic information
  to such Person, the Seller furnishes such nonpublic information to Parent
  and the Purchaser (to the extent such nonpublic information has not been
  previously furnished by the Seller to Parent and the Purchaser). Without
  limiting the generality of the foregoing, the Seller acknowledges and
  agrees that any action inconsistent with any of the provisions set forth in
  the preceding sentence by any Representative of the Seller, whether or not
  such Representative is purporting to act on behalf of the Seller, shall be
  deemed to constitute a breach of this Section 4.5 by the Seller.


                                      B-22
<PAGE>

     (b) The Seller shall promptly (and in no event later than 48 hours after
  receipt of any Acquisition Proposal, any inquiry or indication of interest
  that could reasonably be expected to lead to an Acquisition Proposal or any
  request for nonpublic information) advise Parent and the Purchaser orally
  and in writing of any Acquisition Proposal, any inquiry or indication of
  interest that could reasonably be expected to lead to an Acquisition
  Proposal or any request for nonpublic information relating to the Seller
  (including the identity of the Person making or submitting such Acquisition
  Proposal, inquiry, indication of interest or request, and the terms
  thereof) that is made or submitted by any Person during the Pre-Closing
  Period. The Seller shall keep Parent and the Purchaser fully informed with
  respect to the status of any such Acquisition Proposal, inquiry, indication
  of interest or request and any modification or proposed modification
  thereto.

     (c) The Seller shall immediately cease and cause to be terminated any
  discussions existing at the time of this Agreement with any Person that
  relate to any Acquisition Proposal.

     (d) The Seller agrees not to release or permit the release of any Person
  from, or to waive or permit the waiver of any provision of, any
  confidentiality, "standstill", nonsolicitation or similar agreement to
  which the Seller is a party or under which the Seller has any rights, and
  will use its best efforts to enforce or cause to be enforced each such
  agreement at the request of Parent or the Purchaser. The Seller also will
  promptly request each Person that has executed a confidentiality agreement
  in connection with its consideration of a possible Acquisition Transaction
  or equity investment to return all confidential information heretofore
  furnished to such Person by or on behalf of the Seller.

   4.6 Shareholders' Meeting.

     (a) The Seller shall, in accordance with its articles of incorporation
  and bylaws and the applicable provisions of the California Corporations
  Code, call and hold a special meeting of its shareholders (on a date
  selected by the Seller in consultation with the Purchaser) as promptly as
  reasonably practicable after the Form S-4 Registration Statement is
  declared effective under the Securities Act for the purpose of permitting
  them to consider and to vote upon and approve the Acquisition and the Plan
  of Dissolution (the "Shareholders' Meeting"). The Seller shall ensure that
  all proxies solicited in connection with the Shareholders' Meeting are
  solicited in compliance with all applicable Legal Requirements.

     (b) Subject to Section 4.6(c): (i) the Prospectus/Proxy Statement shall
  include a statement to the effect that the board of directors of the Seller
  unanimously recommends that the Seller's shareholders vote to approve the
  Acquisition and the Plan of Dissolution at the Shareholders' Meeting (the
  recommendation of the Seller's board of directors that the Seller's
  shareholders vote to approve the Acquisition and the Plan of Dissolution
  being referred to as the "Seller Board Recommendation"); and (ii) the
  Seller Board Recommendation shall not be withdrawn or modified in a manner
  adverse to Parent or the Purchaser, and no resolution by the board of
  directors of the Seller or any committee thereof to withdraw or modify the
  Seller Board Recommendation in a manner adverse to Parent or the Purchaser
  shall be adopted or proposed.

     (c) Notwithstanding anything to the contrary contained in Section
  4.6(b), at any time prior to the approval of the Acquisition and the Plan
  of Dissolution by the Required Shareholder Vote, the Seller Board
  Recommendation may be withdrawn or modified in a manner adverse to Parent
  or the Purchaser if: (i) an unsolicited, bona fide written offer to
  purchase all of the outstanding shares of Seller Common Stock or
  substantially of the assets of the Seller is made to the Seller and is not
  withdrawn; (ii) the Seller provides Parent and the Purchaser with at least
  two business days' prior notice of any meeting of the Seller's board of
  directors at which such board of directors will consider and determine
  whether such offer is a Superior Offer; (iii) the Seller's board of
  directors determines in good faith (based upon a written opinion of an
  independent financial advisor of nationally recognized reputation) that
  such offer constitutes a Superior Offer; (iv) the Seller's board of
  directors determines in good faith, after having taken into account the
  written advice of the Seller's outside legal counsel, that, in light of
  such Superior Offer, and taking into account any offer made by Parent or
  the Purchaser pursuant to clause (vii) below, the withdrawal or
  modification of the Seller Board Recommendation is required in order for
  the Seller's board of directors to comply with its fiduciary obligations to
  the Seller's shareholders under applicable law; (v)

                                      B-23
<PAGE>

  the Seller Board Recommendation is not withdrawn or modified in a manner
  adverse to Parent or the Purchaser at any time within two business days
  after Parent or the Purchaser receives written notice from the Seller
  confirming that the Seller's board of directors has determined that such
  offer is a Superior Offer; (vi) neither the Seller nor any of its
  affiliates or Representatives shall have breached or taken any action
  inconsistent with any of the provisions set forth in this Section 4.6; and
  (vii) prior to the withdrawal or modification of the Seller Board
  Recommendation, neither Parent nor the Purchaser submits a written proposal
  to the Seller's board of directors that is at least as favorable to the
  Seller in the aggregate as such Superior Offer.

     (d) The Seller's obligation to call, give notice of and hold the
  Shareholders' Meeting in accordance with Section 4.6(a) shall not be
  limited or otherwise affected by the commencement, disclosure, announcement
  or submission of any Superior Offer or other Acquisition Proposal, or by
  any withdrawal or modification of the Seller Board Recommendation.

   4.7 Confidentiality. The Seller shall ensure that, except with respect to
the press release announcing the execution of this Agreement, during the Pre-
Closing Period: (a) neither the Seller Corporations nor any Representative of
the Seller Corporations, issues or disseminates any press release or other
publicity or otherwise makes any disclosure of any nature (to any supplier,
customer, landlord, creditor or employee of the Seller Corporations or to any
other Person) regarding any of the Transactions or the existence or terms of
this Agreement, except to the extent that the Seller is required by law to make
any such disclosure; and (b) if the Seller is required by law to make any such
disclosure, the Seller shall advise Parent and the Purchaser, at least two
business days (or such shorter notice as necessary to comply with applicable
law requiring such disclosure) before making such disclosure, of the nature and
content of the intended disclosure.

   4.8 Satisfaction of Liabilities. The Seller Corporations shall pay in full
or otherwise satisfy all indebtedness, liabilities, obligations and all amounts
owed by the Seller Corporations that are not Designated Contractual Obligations
(whether or not such indebtedness or amounts are then due).

5. Additional Covenants of the Parties.

   5.1 Registration Statement; Prospectus/Proxy Statement. As promptly as
practicable after the date of this Agreement, Parent and the Seller shall
prepare and cause to be filed with the SEC a prospectus/proxy statement with
respect to the Transactions (the "Prospectus/Proxy Statement") and Parent shall
prepare and cause to be filed with the SEC a Form S-4 registration statement
with respect to the registration of the Stock Consideration (the "Form S-4
Registration Statement"), in which the Prospectus/Proxy Statement will be
included as a prospectus. Each of Parent and the Seller shall use all
reasonable efforts to cause the Form S-4 Registration Statement and the
Prospectus/Proxy Statement to comply with the rules and regulations promulgated
by the SEC, to respond promptly to any comments of the SEC or its staff and to
have the Form S-4 Registration Statement declared effective under the
Securities Act as promptly as practicable after it is filed with the SEC. The
Seller will use all reasonable efforts to cause the Prospectus/Proxy Statement
to be mailed to the Seller's shareholders as promptly as practicable after the
Form S-4 Registration Statement is declared effective under the Securities Act.
The Seller shall promptly furnish to Parent all information concerning the
Seller Corporations and the Seller's shareholders that may be required or
reasonably requested in connection with any action contemplated by this Section
5.1. The Seller shall ensure that: (1) none of the information supplied or to
be supplied by or on behalf of the Seller for inclusion or incorporation by
reference in the Form S-4 Registration Statement will, at the time the Form S-4
Registration Statement is filed with the SEC or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading; (2) none of the
information supplied or to be supplied by or on behalf of the Seller for
inclusion or incorporation by reference in the Prospectus/Proxy Statement will,
at the time the Prospectus/Proxy Statement is mailed to the shareholders of the
Seller or at the time of the Shareholders' Meeting (or any adjournment or
postponement thereof), contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make

                                      B-24
<PAGE>

the statements therein, in the light of the circumstances under which they are
made, not misleading; and (3) the Prospectus/Proxy Statement will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations promulgated by the SEC thereunder. If any event relating
to any of the Seller Corporations or Parent occurs, or if either the Seller or
Parent becomes aware of any information, that should be disclosed in an
amendment or supplement to the Form S-4 Registration Statement or the
Prospectus/Proxy Statement, then the Seller or Parent shall promptly inform the
other party thereof and the parties shall cooperate with each other in filing
such amendment or supplement with the SEC and, if appropriate, in mailing such
amendment or supplement to the shareholders of Seller.

   5.2 Regulatory Approvals. Each party shall (i) use all reasonable efforts to
file, as soon as practicable after the date of this Agreement, all notices,
reports and other documents required to be filed by such party with any
Governmental Body with respect to the Transactions, and to submit promptly any
additional information requested by any such Governmental Body and (ii)
cooperate with the other parties hereto and, subject to Section 5.3(b), use its
reasonable efforts to take or cause to be taken all actions, and do or cause to
be done all things, necessary, proper or advisable on its part under this
Agreement and applicable Legal Requirements to consummate and make effective
the Transactions. Without limiting the generality of the foregoing, the Seller
and Parent shall, promptly after the date of this Agreement, prepare and file
the notifications required under the HSR Act and any applicable foreign
antitrust laws or regulations in connection with the Transactions. The Seller
and Parent shall respond as promptly as practicable to (i) any inquiries or
requests received from the Federal Trade Commission or the Department of
Justice for additional information or documentation and (ii) any inquiries or
requests received from any state attorney general, foreign antitrust authority
or other Governmental Body in connection with antitrust or related matters.
Each of the Seller and Parent shall (1) give the other party prompt notice of
the commencement or known threat of commencement of any Legal Proceeding by or
before any Governmental Body with respect to the Transactions, (2) keep the
other party informed as to the status of any such Legal Proceeding or threat,
and (3) promptly inform the other party of any communication to or from the
Federal Trade Commission, the Department of Justice or any other Governmental
Body regarding the Transactions. Except as may be prohibited by any
Governmental Body or by any Legal Requirement, (a) the Seller and Parent will
consult and cooperate with one another, and will consider in good faith the
views of one another, in connection with any analysis, appearance,
presentation, memorandum, brief, argument, opinion or proposal made or
submitted in connection with any Legal Proceeding under or relating to the HSR
Act or any other foreign, federal or state antitrust or fair trade law, and (b)
in connection with any such Legal Proceeding, each of the Seller and Parent
will permit authorized Representatives of the other party to be present at each
meeting or conference with governmental representatives relating to any such
Legal Proceeding and to have access to and be consulted in connection with any
document, opinion or proposal made or submitted to any Governmental Body in
connection with any such Legal Proceeding. The Seller and Parent may, as each
reasonably deems advisable and necessary, reasonably designate any
competitively sensitive material provided to the other under this Section as
"outside counsel only." Such materials and the information contained therein
shall be given only to the outside legal counsel to the recipient and will not
be disclosed by such outside counsel to employees, officers or directors of the
recipient unless express permission is obtained in advance from the source of
the materials (the Seller or Parent, as the case may be) or its legal counsel.
At the request of Parent, the Seller shall agree to divest, sell, dispose of,
hold separate or otherwise take or commit to take any action that limits its
freedom of action with respect to its ability to operate or retain any of the
businesses, product lines or assets of the Seller Corporations, provided that
any such action is conditioned upon the consummation of the Transactions.

   5.3 Additional Agreements.

     (a) Subject to Section 5.3(b), the Seller, Parent and the Purchaser
  shall use all reasonable efforts to take, or cause to be taken, all actions
  necessary to consummate the Transactions. Without limiting the generality
  of the foregoing, but subject to Section 5.3(b), each party to this
  Agreement (i) shall make all filings (if any) and give all notices (if any)
  required to be made and given by such party in connection with the
  Transactions, (ii) shall use all reasonable efforts to obtain each Consent
  (if any) required to be obtained (pursuant to any applicable Legal
  Requirement or Contract, or otherwise) by such party in

                                      B-25
<PAGE>

  connection with the Transactions, and (iii) shall use all reasonable
  efforts to lift any restraint, injunction or other legal bar to the
  consummation of the Transactions. Each party shall promptly deliver to the
  other party a copy of each such filing made, each such notice given and
  each such Consent obtained by the first party during the Pre-Closing
  Period.

     (b) Notwithstanding anything to the contrary contained in this
  Agreement, neither Parent nor the Purchaser shall have any obligation under
  this Agreement: (i) to dispose of or transfer or cause any of its
  subsidiaries to dispose of or transfer any assets; (ii) to discontinue or
  cause any of its subsidiaries to discontinue offering any product or
  service; (iii) to license or otherwise make available, or cause any of its
  subsidiaries to license or otherwise make available, to any Person, any
  technology, software or other Proprietary Asset; (iv) to hold separate or
  cause any of its subsidiaries to hold separate any assets or operations
  (either before or after the Closing Date), or to commit to cause any of the
  Acquired Corporations to hold separate any assets or operations; (v) to
  make or cause any of its subsidiaries to make any commitment (to any
  Governmental Body or otherwise) regarding its future operations; or (vi) to
  contest any Legal Proceeding relating to the Transactions if Parent or the
  Purchaser determines in good faith that contesting such Legal Proceeding
  may, if adversely determined, have a material adverse effect on the
  business, operations, financial condition or prospects of Parent or the
  Purchaser.

   5.4 Certain Employment Arrangements.

     (a) The Seller shall be solely responsible for ensuring compliance with
  the WARN Act (to the extent applicable), payment of accrued vacation or
  paid time off, and all other Legal Requirements in connection with any
  reductions in force or other terminations of employees of any of the Seller
  Corporations.

     (b) The Seller hereby covenants and agrees that except to the extent
  legally or contractually obligated, it will not pay or permit to be paid to
  any officers, directors or members of senior management of any of the
  Seller Corporations any bonuses otherwise payable upon a change of control
  of Seller or termination unless and until Seller shall have fully paid or
  cause to be paid or otherwise provided for (in a manner satisfactory to the
  Purchaser) all other Liabilities of the Seller Corporations.

   5.5 Consolidated Tax Return. The Seller hereby agrees that it shall file a
consolidated federal income tax return covering the Seller and its subsidiaries
for the fiscal year ending January 31, 2001.

   5.6 Delivery of Additional Documents. On or before December 18, 2000, the
Seller shall deliver to the Purchaser and Parent all proposed schedules and
exhibits under this Agreement, none of which shall be deemed to be a part
hereof without the written consent of the Purchaser and Parent.

6. Conditions Precedent to the Purchaser's Obligation to Close.

   The Purchaser's obligation to purchase the Specified Assets and the
obligation of Parent and the Purchaser to take the other actions required to be
taken by them at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Parent and the Purchaser, in whole or in part, in writing or by otherwise
effecting the Closing):

   6.1 Accuracy Of Representations. The representations and warranties made by
the Seller in this Agreement shall have been accurate in all material respects
as of the date of this Agreement and shall be accurate in all material respects
as of the Closing Date as if made on the Closing Date, without giving effect to
any update to the Disclosure Schedule, except for any such representations and
warranties made as of a specific date, which shall have been accurate in all
material respects as of such date.

   6.2 Performance Of Obligations. All of the covenants and obligations that
the Seller is required to comply with or to perform at or prior to the Closing
shall have been duly complied with and performed in all material respects.

                                      B-26
<PAGE>

   6.3 Shareholder Approval. The Acquisition and the Plan of Dissolution shall
have been duly approved by the Required Shareholder Vote.

   6.4 Consents. Each of the Consents identified in Part 6.4 of the Disclosure
Schedule, and all other Consents required or which Parent or the Purchaser
reasonably determines it appropriate to be obtained in connection with the
Transactions, shall have been obtained and shall be in full force and effect.

   6.5 No Material Adverse Change. There shall have been no material adverse
change in the business, condition, assets, liabilities, operations, financial
performance, net income or prospects of the Seller Corporations (taken as a
whole) or the Specified Assets and the Graphics Business (taken as a whole)
since October 31, 2000, and no event shall have occurred and no condition or
circumstance shall exist that could reasonably be expected to give rise to any
such material adverse change, with the exception of the decision of the board
of directors of the Seller to adopt the Plan of Dissolution.

   6.6 Additional Documents. Parent and the Purchaser shall have received the
following documents:

     (a) the Assignment and Assumption Agreement in substantially the form of
  Exhibit D, executed by the Seller;

     (b) such bills of sale, endorsements, assignments (including patent
  assignments) and other documents as may (in the reasonable judgment of the
  Purchaser or its counsel) be necessary or appropriate to assign, convey,
  transfer and deliver to the Purchaser good and valid title to the Specified
  Assets free of any Encumbrances;

     (c) a legal opinion from Locke, Liddell & Sapp LLP, dated the Closing
  Date, in form and substance reasonably satisfactory to the Purchaser (which
  legal opinion may rely, with respect to certain matters of California law,
  on the opinion of California counsel reasonably acceptable to the
  Purchaser);

     (d) upon the written request of the Purchaser, a solvency opinion with
  respect to the Seller from a nationally-recognized investment banking firm
  in form and substance satisfactory to the Purchaser;

     (e) the Stipulation and Proposed Order to Dismiss with Prejudice in
  substantially the form of Exhibit F, executed by the Seller (as well as any
  other Seller Corporations which are parties to the subject litigation);

     (f) the Seller Closing Certificate; and

     (g) such other documents as Parent or the Purchaser may request in good
  faith for the purpose of (i) evidencing the accuracy of any representation
  or warranty made by the Seller, (ii) evidencing the compliance by the
  Seller with, or the performance by the Seller of, any covenant or
  obligation set forth in this Agreement, (iii) evidencing the satisfaction
  of any condition set forth in this Section 6, or (iv) otherwise
  facilitating the consummation or performance of any of the Transactions.

   6.7 Repayment of Credit Facility. The Seller shall have repaid or shall
repay at Closing all amounts outstanding under the Credit Facility (subject to
the terms of the Credit Agreement).

   6.8 No Prohibition. Neither the consummation nor the performance of any the
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of, or cause Parent
or the Purchaser or any Person affiliated with either of them to suffer any
adverse consequence under, any applicable Legal Requirement or Order.

   6.9 Effectiveness of Registration Statement. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued and still be pending,
and no proceeding for that purpose shall have been initiated or be threatened,
by the SEC with respect to the Form S-4 Registration Statement.

                                      B-27
<PAGE>

   6.10 HSR Act. The waiting period applicable to the consummation of the
Transactions under the HSR Act shall have expired or been terminated; any
similar waiting period under any applicable foreign antitrust law or
regulation or other Legal Requirement shall have expired or been terminated;
and any Consent required under any applicable foreign antitrust law or
regulation or other Legal Requirement shall have been obtained.

   6.11 Governmental Litigation. There shall not be pending or threatened any
Legal Proceeding in which a Governmental Body is or is threatened to become a
party or is otherwise involved: (a) challenging or seeking to restrain or
prohibit the consummation of the Transactions; (b) relating to the
Transactions and seeking to obtain from Parent or the Purchaser any damages or
other relief that may be material to the Purchaser; (c) that could materially
and adversely affect the right of the Purchaser to own or use the Specified
Assets; or (e) seeking to compel the Purchaser to dispose of or hold separate
any material assets as a result of the Transactions.

   6.12 Release of Liens. The Purchaser shall have received evidence
satisfactory to it of the release by any Person who held any Encumbrance on
the Specified Assets of all Encumbrances on the Specified Assets.

7. Conditions Precedent to the Seller's Obligation to Close

   The Seller's obligation to sell the Specified Assets and to take the other
actions required to be taken by the Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Seller, in whole or in part, in writing or
by otherwise effecting the Closing):

   7.1 Accuracy Of Representations. The representations and warranties made by
Parent and the Purchaser in this Agreement shall have been accurate in all
material respects as of the date of this Agreement and shall be accurate in
all material respects as of the Closing Date as if made on the Closing Date,
except for any such representations and warranties made as of a specific date,
which shall have been accurate in all material respects as of such date, and
except that any inaccuracies in such representations and warranties will be
disregarded if, after aggregating all inaccuracies of such representations and
warranties (without duplication), such inaccuracies and the circumstances
giving rise to all such inaccuracies do not constitute a material adverse
effect on Parent.

   7.2 Purchaser's Performance. All of the covenants and obligations that
Parent and the Purchaser is required to comply with or to perform at or prior
to the Closing shall have been duly complied with and performed in all
material respects.

   7.3 Shareholder Approval. The Acquisition and the Plan of Dissolution
contemplated by this Agreement shall have been duly approved by the Required
Shareholder Vote.

   7.4 Effectiveness of Registration Statement. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued and still be pending,
and no proceeding for that purpose shall have been initiated or be threatened,
by the SEC with respect to the Form S-4 Registration Statement.

   7.5 HSR Act. The waiting period applicable to the consummation of the
Transactions under the HSR Act shall have expired or been terminated; any
similar waiting period under any applicable foreign antitrust law or
regulation or other Legal Requirement shall have expired or been terminated;
and any Consent required under any applicable foreign antitrust law or
regulation or other Legal Requirement shall have been obtained.

   7.6 Stipulation and Proposed Order to Dismiss. The Seller shall have
received the Stipulation and Proposed Order to Dismiss with Prejudice in
substantially the form of Exhibit F, executed by Parent.

   7.7 Purchaser Closing Certificate. The Seller shall have received the
Purchaser Closing Certificate.

                                     B-28
<PAGE>

   7.8 Governmental Litigation. There shall not be pending or threatened any
Legal Proceeding in which a Governmental Body is or is threatened to become a
party or is otherwise involved: (a) challenging or seeking to restrain or
prohibit the consummation of the Transactions or (b) relating to the
Transactions and seeking to obtain from the Seller any damages or other relief
that may be material to the Seller.

8. Termination.

   8.1 Termination Events. This Agreement may be terminated prior to the
Closing:

     (a) by mutual written consent of Parent, the Purchaser and the Seller;

     (b) by either Parent and the Purchaser or the Seller if the Transactions
  shall not have been consummated by May 15, 2001 (the "Termination Date");
  provided, however, that (i) a party shall not be permitted to terminate
  this Agreement pursuant to this Section 8.1(b) if the failure to consummate
  the Transactions by the Termination Date is attributable to a failure on
  the part of such party to perform any covenant in this Agreement required
  to be performed by such party at or prior to the Closing Date, and (ii) the
  Seller shall not be permitted to terminate this Agreement pursuant to this
  Section 8.1(b) unless the Seller shall have made any payment required to be
  made to the Purchaser pursuant to Section 8.4(a) and shall have paid to the
  Purchaser any fee required to be paid to the Purchaser pursuant to Section
  8.4(c);

     (c) by either Parent and the Purchaser or the Seller if a court of
  competent jurisdiction or other Governmental Body shall have issued a final
  and nonappealable order, decree or ruling, or shall have taken any other
  action, having the effect of permanently restraining, enjoining or
  otherwise prohibiting the Transactions;

     (d) by either Parent and the Purchaser or the Seller if (i) the
  Shareholders' Meeting (including any adjournments and postponements
  thereof) shall have been held and completed and the Seller's shareholders
  shall have taken a final vote on a proposal to approve the Acquisition and
  the Plan of Dissolution, and (ii) the Acquisition and the Plan of
  Dissolution shall not both have been approved at the Shareholders' Meeting
  (or at any adjournment or postponement thereof) by the Required Shareholder
  Vote; provided, however, that (A) a party shall not be permitted to
  terminate this Agreement pursuant to this Section 8.1(d) if the failure to
  have the Acquisition and the Plan of Dissolution approved by the Required
  Shareholder Vote is attributable to a failure on the part of such party to
  perform any covenant in this Agreement required to be performed by such
  party at or prior to the Closing Date, and (B) the Seller shall not be
  permitted to terminate this Agreement pursuant to this Section 8.1(d)
  unless the Seller shall have made the payment required to be made to the
  Purchaser pursuant to Section 8.4(a) and shall have paid to the Purchaser
  the fee required to be paid to the Purchaser pursuant to Section 8.4(c);

     (e) by Parent and the Purchaser (at any time prior to the approval of
  the Acquisition and the Plan of Dissolution by the Required Shareholder
  Vote) if a Triggering Event shall have occurred;

     (f) by Parent and the Purchaser if (i) any of the Seller's
  representations and warranties contained in this Agreement shall be
  inaccurate as of the date of this Agreement, or shall have become
  inaccurate as of a date subsequent to the date of this Agreement (as if
  made on such subsequent date), such that the condition set forth in Section
  6.1 would not be satisfied (it being understood that, for purposes of
  determining the accuracy of such representations and warranties as of the
  date of this Agreement or as of any subsequent date, any update of or
  modification to the Disclosure Schedule made or purported to have been made
  after the date of this Agreement shall be disregarded), or (ii) any of the
  Seller's covenants contained in this Agreement shall have been breached
  such that the condition set forth in Section 6.2 would not be satisfied;
  provided, however, that if an inaccuracy in any of the Seller's
  representations and warranties as of a date subsequent to the date of this
  Agreement or a breach of a covenant by the Seller is curable by the Seller
  and the Seller is continuing to exercise all reasonable efforts to cure
  such inaccuracy or breach, then Parent and the Purchaser may not terminate
  this Agreement under this Section 8.1(f) on account of such inaccuracy or
  breach; or

                                      B-29
<PAGE>

     (g) by the Seller if (i) any of the representations and warranties of
  Parent and the Purchaser contained in this Agreement shall be inaccurate as
  of the date of this Agreement, or shall have become inaccurate as of a date
  subsequent to the date of this Agreement (as if made on such subsequent
  date), such that the condition set forth in Section 7.1 would not be
  satisfied, or (ii) if any of the covenants of Parent and the Purchaser
  contained in this Agreement shall have been breached such that the
  condition set forth in Section 7.2 would not be satisfied; provided,
  however, that if an inaccuracy in any of the representations and warranties
  of Parent and the Purchaser as of a date subsequent to the date of this
  Agreement or a breach of a covenant by Parent or the Purchaser is curable
  by Parent or the Purchaser and Parent or the Purchaser is continuing to
  exercise all reasonable efforts to cure such inaccuracy or breach, then the
  Seller may not terminate this Agreement under this Section 8.1(g) on
  account of such inaccuracy or breach.

   8.2 Termination Procedures. If Parent and the Purchaser wishes to terminate
this Agreement pursuant to Section 8.1(a), Section 8.1(b), Section 8.1(c),
Section 8.1(d) or Section 8.1(f), Parent and the Purchaser shall deliver to the
Seller a written notice stating that they are terminating this Agreement and
setting forth a brief description of the basis on which they are terminating
this Agreement. If the Seller wishes to terminate this Agreement pursuant to
Section 8.1(b), Section 8.1(c), Section 8.1(d) or Section 8.1(g), the Seller
shall deliver to Parent and the Purchaser a written notice stating that the
Seller is terminating this Agreement and setting forth a brief description of
the basis on which the Seller is terminating this Agreement.

   8.3 Effect of Termination.

     (a) Except as expressly provided elsewhere in this Agreement or in any
  of the other Transactional Agreements, and subject to Section 8.3(b), if
  this Agreement is terminated pursuant to Section 8.1, all further
  obligations of the parties under this Agreement shall terminate; provided,
  however, that: (a) no party shall be relieved of any obligation or other
  Liability arising from any Breach by such party of any provision of this
  Agreement; and (b) the parties shall, in all events, remain bound by and
  continue to be subject to the provisions set forth in Section 11 that
  continue pursuant to their terms.

     (b) If this Agreement is terminated pursuant to any provision of Section
  8.1, other than (i) by the parties pursuant to Section 8.1(a), (ii) by the
  Seller pursuant to Section 8.1(b) by reason of the failure of the Closing
  to occur by the date set forth therein solely as a result of the failure of
  Parent or the Purchaser to comply with its obligations under this
  Agreement, (iii) by the parties pursuant to Section 8.1(c), or (iv) by the
  Seller pursuant to Section 8.1(g), then immediately upon such termination
  Parent shall dismiss with prejudice the Parent Pending Litigation and the
  Seller shall dismiss with prejudice the Seller Pending Litigation, each by
  executing and filing with the court the Stipulation and Proposed Order to
  Dismiss with Prejudice in substantially the form of Exhibit F.

   8.4 Termination Fees.

     (a) Except as set forth in this Section 8.4, all fees and expenses
  incurred in connection with this Agreement and the transactions
  contemplated by this Agreement shall be paid by the party incurring such
  expenses, whether or not the Transactions are consummated; provided,
  however, that:

       (i) Parent and the Purchaser (on the one hand) and the Seller (on
    the other hand) shall share equally all fees and expenses, other than
    attorneys' fees and securities registration fees, incurred in
    connection with (A) the filing, printing and mailing of the Form S-4
    Registration Statement and the Prospectus/Proxy Statement and any
    amendments or supplements thereto and (B) the filing by the parties
    hereto of the premerger notification and report forms relating to the
    Transactions under the HSR Act and the filing of any notice or other
    document under any applicable foreign antitrust law or regulation; and

       (ii) if this Agreement is terminated by Parent and the Purchaser or
    the Seller pursuant to Section 8.1(b) and at or prior to the time of
    the termination of this Agreement an Acquisition Proposal shall have
    been disclosed, announced, commenced, submitted or made (and shall not
    have

                                      B-30
<PAGE>

    been withdrawn or terminated pursuant to a public announcement at least
    five days before the Shareholders' Meeting), or if this Agreement is
    terminated by Parent and the Purchaser or the Seller pursuant to
    Section 8.1(d) or by Parent and the Purchaser pursuant to Section
    8.1(e), then (without limiting any obligation of the Seller to pay any
    fee payable pursuant to Section 8.4(c)), the Seller shall make a
    nonrefundable cash payment to the Purchaser, at the time specified in
    Section 8.4(b), in an amount equal to the aggregate amount of all
    reasonable fees and expenses (including all reasonable attorneys' fees,
    accountants' fees, financial advisory fees and filing fees) that have
    been paid or that may become payable by or on behalf of Parent or the
    Purchaser in connection with the preparation and negotiation of this
    Agreement and the other Transactional Agreements and otherwise in
    connection with the Transactions.

     (b) In the case of termination of this Agreement by the Seller pursuant
  to Section 8.1(b) or Section 8.1(d), any nonrefundable payment required to
  be made pursuant to clause "(ii)" of the proviso to Section 8.4(a) shall be
  made, by the Seller prior to the time of such termination; and in the case
  of termination of this Agreement by the Purchaser pursuant to Section
  8.1(b), Section 8.1(d) or Section 8.1(e), any nonrefundable payment
  required to be made pursuant to clause "(ii)" of the proviso to Section
  8.4(a) shall be made by the Seller within two business days after such
  termination.

     (c) If (i) this Agreement is terminated by the Purchaser or the Seller
  pursuant to Section 8.1(b) or Section 8.1(d) and at or prior to the time of
  the termination of this Agreement an Acquisition Proposal shall have been
  disclosed, announced, commenced, submitted or made, or (ii) this Agreement
  is terminated by Parent and the Purchaser pursuant to Section 8.1(e), then
  the Seller shall pay to the Purchaser, in cash at the time specified in the
  next sentence (and in addition to the amounts payable pursuant to
  Section 8.4(a)), a nonrefundable fee in an amount equal to $3,300,000. In
  the case of termination of this Agreement by the Seller pursuant to Section
  8.1(b) or Section 8.1(d), the fee referred to in the preceding sentence
  shall be paid by the Seller prior to the time of such termination; and in
  the case of termination of this Agreement by Parent and the Purchaser
  pursuant to Section 8.1(b), Section 8.1(d) or Section 8.1(e), the fee
  referred to in the preceding sentence shall be paid by the Seller within
  two business days after such termination.

     (d) If the Seller fails to pay when due any amount payable under this
  Section 8.4, then (i) the Seller shall reimburse Parent and the Purchaser
  for all reasonable costs and expenses (including reasonable fees and
  disbursements of counsel) incurred in connection with the collection of
  such overdue amount and the enforcement by Parent or the Purchaser of its
  rights under this Section 8.4, and (ii) the Seller shall pay to Parent or
  the Purchaser interest on such overdue amount (for the period commencing as
  of the date such overdue amount was originally required to be paid and
  ending on the date such overdue amount is actually paid to Parent or the
  Purchaser in full) at a rate per annum equal to the "prime rate" (as
  announced by Bank of America or any successor thereto) in effect on the
  date such overdue amount was originally required to be paid.

   8.5 Nonexclusivity Of Termination Rights. The termination rights provided in
Section 8.1 shall not be deemed to be exclusive. Accordingly, the exercise by
any party of its right to terminate this Agreement pursuant to Section 8.1
shall not be deemed to be an election of remedies and shall not be deemed to
prejudice, or to constitute or operate as a waiver of, any other right or
remedy that such party may be entitled to exercise (whether under this
Agreement, under any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).

                                      B-31
<PAGE>

9. Indemnification, Etc.

   9.1 Survival Of Representations And Covenants.

     (a) The representations, warranties, covenants and obligations of each
  party to this Agreement shall survive (without limitation): (i) the Closing
  and the sale of the Specified Assets to the Purchaser; (ii) any sale or
  other disposition of any or all of the Specified Assets by the Purchaser;
  and (iii) the dissolution or liquidation of any party to this Agreement.
  Except as set forth in Section 9.1(c), all of said representations,
  warranties, covenants and obligations shall remain in full force and effect
  and shall survive for a period of one year following the distribution of
  the Stock Consideration to the shareholders of the Seller pursuant to the
  Plan of Dissolution.

     (b) The representations, warranties, covenants and obligations of the
  Seller, and the rights and remedies that may be exercised by the
  Indemnitees, shall not be limited or otherwise affected by or as a result
  of any information furnished to, or any investigation made by or any
  knowledge of, any of the Indemnitees or any of their Representatives.

     (c) The representations and warranties set forth in Sections 2 and 3
  shall expire on the first anniversary of the Closing Date; provided,
  however, that notwithstanding the foregoing, the representations and
  warranties of Parent and the Purchaser shall expire not later than the date
  on which the Stock Consideration is paid to the Seller; and provided
  further, that if a Claim Notice (as defined below) relating to any
  representation or warranty set forth in any of said Sections is given to
  the Seller on or prior to the first anniversary of the Closing Date, then,
  notwithstanding anything to the contrary contained in this Section 9.1(c),
  such representation or warranty shall not so expire, but rather shall
  remain in full force and effect until such time as each and every claim
  (including any indemnification claim asserted by any Indemnitee under
  Section 9.2) that is based directly or indirectly upon, or that relates
  directly or indirectly to, any Breach or alleged Breach of such
  representation or warranty has been fully and finally resolved, either by
  means of a written settlement agreement executed on behalf of the Seller,
  Parent and the Purchaser or by means of a final, non-appealable judgment
  issued by a court of competent jurisdiction.

     (d) For purposes of this Agreement, a "Claim Notice" relating to a
  particular representation or warranty shall be deemed to have been given if
  any Indemnitee, acting in good faith, delivers to the Seller a written
  notice stating that such Indemnitee believes that there is or has been a
  possible Breach of such representation or warranty and containing (i) a
  brief description of the circumstances supporting such Indemnitee's belief
  that there is or has been such a possible Breach, and (ii) a non-binding,
  preliminary estimate of the aggregate dollar amount of the actual and
  potential Damages that have arisen and may arise as a direct or indirect
  result of such possible Breach.

     (e) For purposes of this Agreement, each statement or other item of
  information set forth in the Disclosure Schedule or in any update to the
  Disclosure Schedule shall be deemed to be a representation and warranty
  made by the Seller in this Agreement.

   9.2 Indemnification By The Seller. The Seller shall hold harmless and
indemnify each of the Indemnitees from and against, and shall compensate and
reimburse each of the Indemnitees for, any Damages that are directly or
indirectly suffered or incurred by any of the Indemnitees or to which any of
the Indemnitees may otherwise become subject at any time (regardless of whether
or not such Damages relate to any third-party claim) and that arise directly or
indirectly from or as a direct or indirect result of, or are directly or
indirectly connected with:

     (i) any Breach of any of the representations or warranties made by the
  Seller in this Agreement (without giving effect to any update to the
  Disclosure Schedule), both as of the date of this Agreement and as of the
  Closing Date as if made on and as of the Closing Date, or in the Seller
  Closing Certificate or any of the other Transactional Agreements;

     (ii) any Breach of any representation, warranty, statement, information
  or provision contained in the Disclosure Schedule or in any other document
  delivered or otherwise made available to Parent or the Purchaser or any of
  their Representatives by or on behalf of the Seller or any Representative
  of the Seller;

                                      B-32
<PAGE>

     (iii) any Breach of any covenant or obligation of the Seller contained
  in any of the Transactional Agreements;

     (iv) any Liability of the Seller or of any Related Party, other than the
  Designated Contractual Obligations;

     (v) any Liability (other than the Designated Contractual Obligations) to
  which Parent, the Purchaser or any of the other Indemnitees may become
  subject and that arises directly or indirectly from or relates directly or
  indirectly to (A) any product produced or sold or any services performed by
  or on behalf of the Seller, (B) the presence of any Hazardous Material at
  any site owned, leased, occupied or controlled by the Seller on or at any
  time prior to the Closing Date, (C) the generation, manufacture,
  production, transportation, importation, use, treatment, refinement,
  processing, handling, storage, discharge, release or disposal of any
  Hazardous Material (whether lawfully or unlawfully) by or on behalf of the
  Seller, (D) the operation by the Seller of its business, or (E) any failure
  to comply with any bulk transfer law or similar Legal Requirement in
  connection with any of the Transactions; or

     (vi) any Proceeding relating directly or indirectly to any Breach,
  alleged Breach, Liability or matter of the type referred to in clause
  "(i)," "(ii)," "(iii)," "(iv)," "(v)" or "(vi)" above (including any
  Proceeding commenced by any Indemnitee for the purpose of enforcing any of
  its rights under this Section 9).

   9.3 Setoff. In addition to any rights of setoff or other rights that Parent,
the Purchaser or any of the other Indemnitees may have at common law or
otherwise, Parent and the Purchaser shall have the right to withhold and deduct
any sum that may be owed to any Indemnitee under this Section 9 from any amount
(including all or any portion of the Stock Consideration) otherwise payable by
any Indemnitee to the Seller. The withholding and deduction of any such sum
shall operate for all purposes as a complete discharge (to the extent of such
sum) of the obligation to pay the amount from which such sum was withheld and
deducted and a release of the Seller from further liability with respect to
such obligation to the extent of such setoff. The exercise of such right of
setoff by Parent or the Purchaser in good faith, whether or not ultimately
determined to be justified, will not constitute an event of default under this
Agreement or any of the other Transactional Agreements.

   9.4 Nonexclusivity Of Indemnification Remedies. The indemnification remedies
and other remedies provided in this Section 9 shall not be deemed to be
exclusive. Accordingly, the exercise by any Person of any of its rights under
this Section 9 shall not be deemed to be an election of remedies and shall not
be deemed to prejudice, or to constitute or operate as a waiver of, any other
right or remedy that such Person may be entitled to exercise (whether under
this Agreement, under any other Contract, under any statute, rule or other
Legal Requirement, at common law, in equity or otherwise).

   9.5 Defense Of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against Parent
or the Purchaser, against any other Indemnitee or against any other Person)
with respect to which the Seller may become obligated to indemnify, hold
harmless, compensate or reimburse any Indemnitee pursuant to this Section 9,
Parent and the Purchaser shall have the right, at its election, to designate
the Seller to assume the defense of such claim or Proceeding at the sole
expense of the Seller. If Parent or the Purchaser so elects to designate the
Seller to assume the defense of any such claim or Proceeding:

     (a) the Seller shall proceed to defend such claim or Proceeding in a
  diligent manner with counsel satisfactory to Parent and the Purchaser;

     (b) Parent and the Purchaser shall make available to the Seller any non-
  privileged documents and materials in the possession of Parent or the
  Purchaser that may be necessary to the defense of such claim or Proceeding;

     (c) the Seller shall keep Parent and the Purchaser informed of all
  material developments and events relating to such claim or Proceeding;

                                      B-33
<PAGE>

     (d) Parent and the Purchaser shall have the right to participate in the
  defense of such claim or Proceeding;

     (e) the Seller shall not settle, adjust or compromise such claim or
  Proceeding without the prior written consent of the Purchaser, which shall
  not be unreasonably withheld or delayed; and

     (f) Parent and the Purchaser may at any time (notwithstanding the prior
  designation of the Seller to assume the defense of such claim or
  Proceeding) assume the defense of such claim or Proceeding.

If Parent and the Purchaser does not elect to designate the Seller to assume
the defense of any such claim or Proceeding (or if, after initially designating
the Seller to assume such defense, Parent or the Purchaser elects to assume
such defense), Parent or the Purchaser may proceed with the defense of such
claim or Proceeding on its own. If Parent or the Purchaser so proceeds with the
defense of any such claim or Proceeding on its own:

     (i) all expenses relating to the defense of such claim or Proceeding
  (whether or not incurred by Parent or the Purchaser) shall be borne and
  paid exclusively by the Seller;

     (ii) the Seller shall make available to Parent or the Purchaser any
  documents and materials in the possession or control of the Seller that may
  be necessary to the defense of such claim or Proceeding;

     (iii) Parent and the Purchaser shall keep the Seller informed of all
  material developments and events relating to such claim or Proceeding; and

     (iv) Parent and the Purchaser shall have the right to settle, adjust or
  compromise such claim or Proceeding with the consent of the Seller;
  provided, however, that the Seller shall not unreasonably withhold or delay
  such consent.

   9.6 Threshold. The Seller shall not be required to make any indemnification
payment pursuant to Section 9.2 for any inaccuracy in or breach of any of the
representations and warranties made by the Seller set forth in this Agreement
until such time as the total amount of all Damages (including, without
limitation, the Damages arising from such inaccuracy or breach and all other
Damages arising from any other inaccuracies in or breaches of any
representations or warranties) that have been directly or indirectly suffered
or incurred by any one or more of the Indemnitees, or to which any one or more
of the Indemnitees has or have otherwise become subject, exceeds $1,000,000 in
the aggregate. (If the total amount of such Damages exceeds $1,000,000, then
the Indemnitees shall be entitled to be indemnified against and compensated and
reimbursed for the full amount of such Damages).

   9.7 Exercise Of Remedies By Indemnitees Other Than Parent or the
Purchaser. No Indemnitee (other than Parent or the Purchaser or any successor
thereto or assign thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Parent or the
Purchaser (or any successor thereto or assign thereof) shall have consented to
the assertion of such indemnification claim or the exercise of such other
remedy.

10. Certain Post-Closing Covenants.

   10.1 Further Actions. From and after the Closing Date, the Seller shall
cooperate with the Purchaser and their affiliates and Representatives, and
shall execute and deliver such documents and take such other actions as the
Purchaser may reasonably request, for the purpose of evidencing the
Transactions and putting the Purchaser in possession and control of all of the
Specified Assets. Without limiting the generality of the foregoing, from and
after the Closing Date, the Seller shall promptly remit to the Purchaser any
funds that are received by the Seller and that are included in, or that
represent payment of receivables included in, the Specified Assets. The Seller:
(a) hereby irrevocably authorizes the Purchaser, at all times on and after the
Closing Date, to endorse in the name of the Seller any check or other
instrument that is made payable to the Seller and that represents funds
included in, or that represents the payment of any receivable included in, the
Specified Assets; and (b) hereby irrevocably nominates, constitutes and
appoints the Purchaser as the true and lawful attorney-in-fact of the Seller
(with full power of substitution) effective as of the Closing Date, and

                                      B-34
<PAGE>

hereby authorizes the Purchaser, in the name of and on behalf of the Seller, to
execute, deliver, acknowledge, certify, file and record any document, to
institute and prosecute any Proceeding and to take any other action (on or at
any time after the Closing Date) that the Purchaser may deem appropriate for
the purpose of (i) collecting, asserting, enforcing or perfecting any claim,
right or interest of any kind that is included in or relates to any of the
Specified Assets, (ii) defending or compromising any claim or Proceeding
relating to any of the Specified Assets, or (iii) otherwise carrying out or
facilitating any of the Transactions. The power of attorney referred to in the
preceding sentence is and shall be coupled with an interest and shall be
irrevocable, and shall survive the dissolution or insolvency of the Seller.

   10.2 Publicity. Unless otherwise permitted by this Agreement, the Seller,
Parent and the Purchaser shall consult with each other before issuing any press
release or otherwise making any public statement or making any other public (or
nonconfidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the Transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior written consent of the other (which approval shall
not be unreasonably withheld), except as may be required by law. If either the
Seller, Parent or the Purchaser is required to make any such public disclosure,
the party required to make the disclosure shall use its reasonable efforts to
give the other party prior notice and an opportunity to review the disclosure
prior to the public release of information.

   10.3 Plan of Dissolution. The Seller shall comply in all respects with ,and
carry out in accordance with its terms, the Plan of Dissolution, and shall not
take any action prohibited by the Plan of Dissolution or omit to take any
action required to be taken by the Plan of Dissolution.

   10.4 Continued Payment of Liabilities. Following the Closing, without
limiting the provisions of Section 10.3, the Seller shall promptly pay in full
all indebtedness, obligations, amounts owed by the Seller and other Liabilities
that are not expressly assumed by the Purchaser under this Agreement.

   10.5 Change Of Name. Immediately after the Closing, the Seller shall change
its name to a name that does not include the word "3dfx" or the word "Voodoo"
or any variation of either of the foregoing and that is reasonably satisfactory
to Purchaser.

11. Miscellaneous Provisions.

   11.1 Further Assurances. Each party hereto shall execute and/or cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the Transactions.

   11.2 Fees and Expenses.

     (a) The Seller shall bear and pay all fees, costs and expenses
  (including all legal fees and expenses payable to Locke, Liddell & Sapp LLP
  and Crosby, Heafey, Roach & May) that have been incurred or that are in the
  future incurred by, on behalf of or for the benefit of the Seller in
  connection with: (i) the negotiation, preparation and review of any letter
  of intent or similar document relating to any of the Transactions; (ii) the
  investigation and review conducted by Parent and the Purchaser and its
  Representatives with respect to the business of the Seller (and the
  furnishing of information to Parent, the Purchaser and their
  Representatives in connection with such investigation and review); (iii)
  the negotiation, preparation and review of this Agreement (including the
  Disclosure Schedule), the other Transactional Agreements and all bills of
  sale, assignments, certificates, opinions and other instruments and
  documents delivered or to be delivered in connection with the Transactions;
  (iv) the preparation and submission of any filing or notice required to be
  made or given in connection with any of the Transactions, and the obtaining
  of any Consent required to be obtained in connection with any of the
  Transactions; and (v) the consummation and performance of the Transactions.

                                      B-35
<PAGE>

     (b) Subject to the reimbursement and indemnity provisions of Sections 8
  and 9, Parent and the Purchaser shall bear and pay all fees, costs and
  expenses (including all legal fees and expenses payable to Cooley Godward
  llp) that have been incurred or that are in the future incurred by or on
  behalf of Parent or the Purchaser in connection with: (i) the negotiation,
  preparation and review of any letter of intent or similar document relating
  to any of the Transactions; (ii) the investigation and review conducted by
  Parent or the Purchaser and their Representatives with respect to the
  business of the Seller; (iii) the negotiation, preparation and review of
  this Agreement, the other Transactional Agreements and all bills of sale,
  assignments, certificates, opinions and other instruments and documents
  delivered or to be delivered in connection with the Transactions; (iv) the
  preparation and filing of documents under the HSR Act in connection with
  the Transactions; and (v) the consummation and performance of the
  Transactions.

   11.3 Attorneys' Fees. If any legal action or other legal proceeding relating
to any of the Transactional Agreements or the enforcement of any provision of
any of the Transactional Agreements is brought against any party to this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements (in addition to any other relief to
which the prevailing party may be entitled).

   11.4 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):

     if to the Seller:

       3dfx Interactive, Inc.
       4435 Fortran Drive
       San Jose, CA 95134
       Facsimile: (408) 262-5551
       Attn: Chief Executive Officer

     if to Parent or the Purchaser:

       NVIDIA Corporation
       3535 Monroe Street
       Santa Clara, CA 95051
       Facsimile: (408) 615-2800
       Attn: Chief Executive Officer

   11.5 Time Of The Essence. Time is of the essence of this Agreement.

   11.6 Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.

   11.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.

   11.8 Governing Law; Venue.

     (a) This Agreement shall be construed in accordance with, and governed
  in all respects by, the internal laws of the State of Delaware (without
  giving effect to principles of conflicts of laws).

     (b) In any action between any of the parties arising out of or relating
  to this Agreement or any of the transactions contemplated by this
  Agreement, each of the parties irrevocably and unconditionally consents

                                      B-36
<PAGE>

  and submits to the exclusive jurisdiction and venue of the state and
  federal courts located in Santa Clara County, California. Each party to
  this Agreement:

       (i) expressly and irrevocably consents and submits to the
    jurisdiction of each state and federal court located in Santa Clara
    County, California (and each appellate court located in the State of
    California) in connection with any such legal proceeding;

       (ii) agrees that each state and federal court located in Santa Clara
    County, California shall be deemed to be a convenient forum; and

       (iii) agrees not to assert (by way of motion, as a defense or
    otherwise), in any such legal proceeding commenced in any state or
    federal court located in Santa Clara County, California, any claim that
    such party is not subject personally to the jurisdiction of such court,
    that such legal proceeding has been brought in an inconvenient forum,
    that the venue of such proceeding is improper or that this Agreement or
    the subject matter of this Agreement may not be enforced in or by such
    court.

     (c) Parent, the Purchaser and the Seller agree that, if any Proceeding
  is commenced against any Indemnitee by any Person in or before any court or
  other tribunal anywhere in the world, then such Indemnitee may proceed
  against the Seller in or before such court or other tribunal with respect
  to any indemnification claim or other claim arising directly or indirectly
  from or relating directly or indirectly to such Proceeding or any of the
  matters alleged therein or any of the circumstances giving rise thereto.

   11.9 Successors And Assigns; Parties In Interest.

     (a) This Agreement shall be binding upon: the Seller and its successors
  and assigns (if any) and Parent, the Purchaser and their successors and
  assigns (if any). This Agreement shall inure to the benefit of: the Seller;
  Parent; the Purchaser; the other Indemnitees (subject to Section 9.6); and
  the respective successors and assigns (if any) of the foregoing.

     (b) Parent and the Purchaser may freely assign any or all of their
  respective rights under this Agreement (including their indemnification
  rights under Section 9), in whole or in part, to any other Person without
  obtaining the consent or approval of any other Person. The Seller shall not
  be permitted to assign any of its rights or delegate any of its obligations
  under this Agreement without the prior written consent of Parent and the
  Purchaser.

     (c) Except for the provisions of Section 9 hereof, none of the
  provisions of this Agreement is intended to provide any rights or remedies
  to any Person other than the parties to this Agreement and their respective
  successors and assigns (if any). Without limiting the generality of the
  foregoing, (i) no employee of the Seller shall have any rights under this
  Agreement or under any of the other Transactional Agreements, and (ii) no
  creditor of the Seller shall have any rights under this Agreement or any of
  the other Transactional Agreements.

   11.10 Remedies Cumulative; Specific Performance. The rights and remedies of
the parties hereto shall be cumulative (and not alternative). The Seller agrees
that: (a) in the event of any Breach or threatened Breach by the Seller of any
covenant, obligation or other provision set forth in this Agreement, Parent and
the Purchaser shall be entitled (in addition to any other remedy that may be
available to it) to (i) a decree or order of specific performance or mandamus
to enforce the observance and performance of such covenant, obligation or other
provision, and (ii) an injunction restraining such Breach or threatened Breach;
and (b) neither Parent, the Purchaser nor any other Indemnitee shall be
required to provide any bond or other security in connection with any such
decree, order or injunction or in connection with any related action or
Proceeding.

   11.11 Waiver.

     (a) No failure on the part of any Person to exercise any power, right,
  privilege or remedy under this Agreement, and no delay on the part of any
  Person in exercising any power, right, privilege or remedy

                                      B-37
<PAGE>

  under this Agreement, shall operate as a waiver of such power, right,
  privilege or remedy; and no single or partial exercise of any such power,
  right, privilege or remedy shall preclude any other or further exercise
  thereof or of any other power, right, privilege or remedy.

     (b) No Person shall be deemed to have waived any claim arising out of
  this Agreement, or any power, right, privilege or remedy under this
  Agreement, unless the waiver of such claim, power, right, privilege or
  remedy is expressly set forth in a written instrument duly executed and
  delivered on behalf of such Person; and any such waiver shall not be
  applicable or have any effect except in the specific instance in which it
  is given.

   11.12 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Parent, the Purchaser and the Seller.

   11.13 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.

   11.14 Entire Agreement. The Transactional Agreements set forth the entire
understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof, including without limitation
that certain letter regarding confidentiality and nonsolicitation of employees
from the Seller to Parent dated November 20, 2000, which shall be deemed to
have been terminated as of the date of this Agreement and shall be of no
further force or effect.

   11.15 Knowledge. For purposes of this Agreement, a Person shall be deemed to
have "knowledge" of a particular fact or other matter if any Representative of
such Person has actual knowledge of such fact or other matter.

   11.16 Construction.

     (a) For purposes of this Agreement, whenever the context requires: the
  singular number shall include the plural, and vice versa; the masculine
  gender shall include the feminine and neuter genders; the feminine gender
  shall include the masculine and neuter genders; and the neuter gender shall
  include the masculine and feminine genders.

     (b) The parties hereto agree that any rule of construction to the effect
  that ambiguities are to be resolved against the drafting party shall not be
  applied in the construction or interpretation of this Agreement.

     (c) As used in this Agreement, the words "include" and "including," and
  variations thereof, shall not be deemed to be terms of limitation, but
  rather shall be deemed to be followed by the words "without limitation."

     (d) Except as otherwise indicated, all references in this Agreement to
  "Sections" and "Exhibits" are intended to refer to Sections of this
  Agreement and Exhibits to this Agreement.

                                      B-38
<PAGE>


   The parties to this Agreement have caused this Agreement to be executed and
delivered as of the date first set forth above.

                                          3dfx Interactive, Inc.,
                                          a California corporation

                                              /s/ Alex Leupp
                                          By: ________________________________

                                               President & CEO
                                          Title: _____________________________

                                          NVIDIA Corporation,
                                          a Delaware corporation

                                              /s/ Jen-Hsun-Huang
                                          By: ________________________________

                                               President & CEO
                                          Title: _____________________________

                                          Titan Acquisition Corp. No. 2,
                                          a Delaware corporation

                                              /s/ Jen-Hsun Huang
                                          By: ________________________________

                                               President & CEO
                                          Title: _____________________________


                                      B-39
<PAGE>

                                                                       Exhibit A

                              CERTAIN DEFINITIONS

   For purposes of the Agreement (including this Exhibit A):

     Acquisition Proposal. "Acquisition Proposal" shall mean any offer,
  proposal, inquiry or indication of interest (other than an offer, proposal,
  inquiry or indication of interest made or submitted by Parent or the
  Purchaser) contemplating or otherwise relating to any Acquisition
  Transaction.

     Acquisition Transaction. "Acquisition Transaction" shall mean any
  transaction involving: (a) the sale or other disposition of all or a
  material portion of the business or assets of the Seller or any direct or
  indirect subsidiary or division of the Seller; (b) the issuance, sale or
  other disposition of (i) any capital stock or other securities of the
  Seller other than as a result of the exercise of stock options previously
  granted, (ii) any option, call, warrant or right (whether or not
  immediately exercisable) to acquire any capital stock or other securities
  of the Seller, or (iii) any security, instrument or obligation that is or
  may become convertible into or exchangeable for any capital stock or other
  securities of the Seller; or (c) any merger, consolidation, business
  combination, share exchange, reorganization or similar transaction
  involving the Seller or any direct or indirect subsidiary of the Seller;
  provided, however, that "Acquisition Transaction" shall not include the
  disposition by any Seller Corporation of any Excluded Asset.

     Agreement. "Agreement" shall mean the Asset Purchase Agreement to which
  this Exhibit A is attached (including the Disclosure Schedule), as it may
  be amended from time to time.

     Acquisition. "Acquisition" shall mean (a) the sale of the Specified
  Assets by the Seller to the Purchaser in accordance with the Agreement; (b)
  the assumption of the Designated Contractual Obligations by the Purchaser
  pursuant to the Assignment and Assumption Agreement; and (c) the
  performance by the Seller and the Purchaser of their respective obligations
  under the Agreement, and the exercise by the Seller and the Purchaser of
  their respective rights under the Agreement, with respect to the Specified
  Assets.

     Assumed Contracts. "Assumed Contracts" shall mean the Seller Contracts
  (if any) identified during the Pre-Closing Period by the Purchaser, in its
  sole discretion, and which the Purchaser agrees in writing to assume at the
  Closing.

     Breach. There shall be deemed to be a "Breach" of a representation,
  warranty, covenant, obligation or other provision if there is or has been
  (a) any inaccuracy in or breach (including any inadvertent or innocent
  breach) of, or any failure (including any inadvertent failure) to comply
  with or perform, such representation, warranty, covenant, obligation or
  other provision, or (b) any claim (by any Person) or other circumstance
  that is inconsistent with such representation, warranty, covenant,
  obligation or other provision; and the term "Breach" shall be deemed to
  refer to any such inaccuracy, breach, failure, claim or circumstance.

     CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
  Compensation and Liability Act.

     Closing Date. "Closing Date" shall mean the time and date as of which
  the Closing actually takes place.

     Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.

     Comparable Entities. "Comparable Entities" shall mean Entities (other
  than the Seller) that are engaged in businesses similar to the business of
  the Seller.

     Consent. "Consent" shall mean any approval, consent, ratification,
  permission, waiver or authorization (including any Governmental
  Authorization).

     Contract. "Contract" shall mean any written, oral, implied or other
  agreement, contract, understanding, arrangement, instrument, note,
  guaranty, indemnity, representation, warranty, deed,

                                      B-40
<PAGE>

  assignment, power of attorney, certificate, purchase order, work order,
  insurance policy, benefit plan, commitment, covenant, assurance or
  undertaking of any nature.

     Credit Agreement. "Credit Agreement" shall mean the credit agreement
  entered into contemporaneously with the execution and delivery of the
  Agreement by the Purchaser and the Seller pursuant to which the Purchaser
  is providing the Seller with the Credit Facility.

     Credit Facility. "Credit Facility" shall mean the immediate borrowing
  availability in the amount of $15,000,000 provided by the Purchaser to the
  Seller pursuant to the Credit Agreement.

     Damages. "Damages" shall include any loss, damage, injury, decline in
  value, Liability, claim, demand, settlement, judgment, award, fine,
  penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
  advisory fee), charge, cost (including any cost of investigation) or
  expense of any nature.

     Disclosure Schedule. "Disclosure Schedule" shall mean the schedule
  (dated as of the date of the Agreement) delivered to Parent and the
  Purchaser on behalf of the Seller, a copy of which is attached to the
  Agreement and incorporated in the Agreement by reference.

     Employee Benefit Plan. "Employee Benefit Plan" shall mean any plan,
  program, policy, practice, contract, agreement or other arrangement
  providing for compensation, severance, termination pay, deferred
  compensation, retirement benefits, performance awards, stock or stock-
  related awards, fringe benefits or other employee benefits or remuneration
  of any kind, whether written or unwritten or otherwise, funded or unfunded,
  including each "employee benefit plan," within the meaning of Section 3(3)
  of ERISA (whether or not ERISA is applicable thereto), which is or has been
  maintained, contributed to, or required to be contributed to, by the Seller
  Corporations or any affiliate of the Seller Corporations for the benefit of
  any employee of the Seller Corporations, or with respect to which the
  Seller Corporations have or may have any liability or obligation.

     Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
  charge, mortgage, security interest, encumbrance, equity, trust, equitable
  interest, claim, preference, right of possession, lease, tenancy, license,
  encroachment, covenant, infringement, interference, Order, proxy, option,
  right of first refusal, preemptive right, community property interest,
  legend, defect, impediment, exception, reservation, limitation, impairment,
  imperfection of title, condition or restriction of any nature (including
  any restriction on the transfer of any asset, any restriction on the
  receipt of any income derived from any asset, any restriction on the use of
  any asset and any restriction on the possession, exercise or transfer of
  any other attribute of ownership of any asset).

     Entity. "Entity" shall mean any corporation (including any non-profit
  corporation), general partnership, limited partnership, limited liability
  partnership, joint venture, estate, trust, cooperative, foundation,
  society, political party, union, company (including any limited liability
  company or joint stock company), firm or other enterprise, association,
  organization or entity.

     ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
  1974.

     ERISA Affiliate. "ERISA Affiliate" shall mean any Person that is, was or
  would be treated as a single employer with any of the Specified Entities
  under Section 414 of the Code.

     Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
  1934, as amended.

     Excluded Assets. "Excluded Assets" shall mean the assets identified on
  Exhibit C that are (a) owned by the Seller on the Closing Date, and (b)
  directly and exclusively related to the graphics board business of the
  Seller.

     GAAP. "GAAP" shall mean generally accepted accounting principles.

     Governmental Authorization. "Governmental Authorization" shall mean any:
  (a) permit, license, certificate, franchise, concession, approval, consent,
  ratification, permission, clearance, confirmation, endorsement, waiver,
  certification, designation, rating, registration, qualification or
  authorization issued,

                                     B-41
<PAGE>

  granted, given or otherwise made available by or under the authority of any
  Governmental Body or pursuant to any Legal Requirement; or (b) right under
  any Contract with any Governmental Body.

     Governmental Body. "Governmental Body" shall mean any: (a) nation,
  principality, state, commonwealth, province, territory, county,
  municipality, district or other jurisdiction of any nature; (b) federal,
  state, local, municipal, foreign or other government; (c) governmental or
  quasi-governmental authority of any nature (including any governmental
  division, subdivision, department, agency, bureau, branch, office,
  commission, council, board, instrumentality, officer, official,
  representative, organization, unit, body or Entity and any court or other
  tribunal); (d) multi-national organization or body; or (e) individual,
  Entity or body exercising, or entitled to exercise, any executive,
  legislative, judicial, administrative, regulatory, police, military or
  taxing authority or power of any nature.

     Hazardous Material. "Hazardous Material" shall include: (a) any
  petroleum, waste oil, crude oil, asbestos, urea formaldehyde or
  polychlorinated biphenyl; (b) any waste, gas or other substance or material
  that is explosive or radioactive; (c) any "hazardous substance,"
  "pollutant," "contaminant," "hazardous waste," "regulated substance,"
  "hazardous chemical" or "toxic chemical" as designated, listed or defined
  (whether expressly or by reference) in any statute, regulation or other
  Legal Requirement (including CERCLA and any other so-called "superfund" or
  "superlien" law and the respective regulations promulgated thereunder); (d)
  any other substance or material (regardless of physical form) or form of
  energy that is subject to any Legal Requirement which regulates or
  establishes standards of conduct in connection with, or which otherwise
  relates to, the protection of human health, plant life, animal life,
  natural resources, property or the enjoyment of life or property from the
  presence in the environment of any solid, liquid, gas, odor, noise or form
  of energy; and (e) any compound, mixture, solution, product or other
  substance or material that contains any substance or material referred to
  in clause "(a)", "(b)", "(c)" or "(d)" above.

     Indemnitees. "Indemnitees" shall mean the following Persons: (a) Parent;
  (b) the Purchaser; (c) Parent's and the Purchaser's current and future
  affiliates; (d) the respective Representatives of the Persons referred to
  in clauses "(a)", "(b)" and "(c)" above; and (e) the respective successors
  and assigns of the Persons referred to in clauses "(a)", "(b)", "(c)" and
  "(d)" above.

     Legal Requirement. "Legal Requirement" shall mean any federal, state,
  local, municipal, foreign or other law, statute, legislation, constitution,
  principle of common law, resolution, ordinance, code, edict, decree,
  proclamation, treaty, convention, rule, regulation, ruling, directive,
  pronouncement, requirement, specification, determination, decision, opinion
  or interpretation issued, enacted, adopted, passed, approved, promulgated,
  made, implemented or otherwise put into effect by or under the authority of
  any Governmental Body.

     Liability. "Liability" shall mean any debt, obligation, duty or
  liability of any nature (including any unknown, undisclosed, unmatured,
  unaccrued, unasserted, contingent, indirect, conditional, implied,
  vicarious, derivative, joint, several or secondary liability), regardless
  of whether such debt, obligation, duty or liability would be required to be
  disclosed on a balance sheet prepared in accordance with GAAP and
  regardless of whether such debt, obligation, duty or liability is
  immediately due and payable.

     Order. "Order" shall mean any: (a) order, judgment, injunction, edict,
  decree, ruling, pronouncement, determination, decision, opinion, verdict,
  sentence, subpoena, writ or award issued, made, entered, rendered or
  otherwise put into effect by or under the authority of any court,
  administrative agency or other Governmental Body or any arbitrator or
  arbitration panel; or (b) Contract with any Governmental Body entered into
  in connection with any Proceeding.

     Ordinary Course of Business. An action taken by or on behalf of the
  Seller shall not be deemed to have been taken in the "Ordinary Course of
  Business" unless:

       (a) such action is recurring in nature, is consistent with the past
    practices of the Seller and is taken in the ordinary course of the
    normal day-to-day operations of the Seller;

                                      B-42
<PAGE>

       (b) such action is taken in accordance with sound and prudent
    business practices;

       (c) such action is not required to be authorized by the shareholders
    of the Seller, the board of directors of the Seller or any committee of
    the board of directors of the Seller and does not require any other
    separate or special authorization of any nature; and

       (d) such action is similar in nature and magnitude to actions
    customarily taken, without any separate or special authorization, in
    the ordinary course of the normal day-to-day operations of Comparable
    Entities.

     Parent Pending Litigation. "Parent Pending Litigation" shall mean
  Parent's existing patent infringement lawsuit against the Seller in Civil
  Action No. C-00-3373 VRW pending in the United States District Court for
  the Northern District of California.

     Patent Standstill Agreement. "Patent Standstill Agreement" shall mean
  that certain Patent Standstill Agreement of even date herewith between
  Parent and the Purchaser.

     Person. "Person" shall mean any individual, Entity or Governmental Body.

     Pre-Closing Period. "Pre-Closing Period" shall mean the period from the
  date of the Agreement through the Closing Date.

     Proceeding. "Proceeding" shall mean any action, suit, litigation,
  arbitration, proceeding (including any civil, criminal, administrative,
  investigative or appellate proceeding and any informal proceeding),
  prosecution, contest, hearing, inquiry, inquest, audit, examination or
  investigation commenced, brought, conducted or heard by or before, or
  otherwise involving, any Governmental Body or any arbitrator or arbitration
  panel.

     Proprietary Asset. "Proprietary Asset" shall mean any patent, patent
  application, trademark (whether registered or unregistered and whether or
  not relating to a published work), trademark application, trade name,
  fictitious business name, service mark (whether registered or
  unregistered), service mark application, copyright (whether registered or
  unregistered), copyright application, maskwork, maskwork application, trade
  secret, know-how, customer list, franchise, system, computer software,
  invention, design, blueprint, engineering drawing, proprietary product,
  technology, proprietary right or other intellectual property right or
  intangible asset.

     Related Party. Each of the following shall be deemed to be a "Related
  Party": (a) each individual who is, or who since January 1, 1999 has been,
  an officer of any of the Seller Corporations; (b) each member of the family
  of each of the individuals referred to in clause "(a)" above; and (c) any
  Entity (other than the Seller Corporations) in which any one of the
  individuals referred to in clauses "(a)" and "(b)" above holds or held (or
  in which more than one of such individuals collectively hold or held),
  beneficially or otherwise, a controlling interest or a material voting,
  proprietary or equity interest.

     Representatives. "Representatives" shall mean officers, directors,
  employees, agents, attorneys, accountants, advisors and representatives.

     SEC. "SEC" shall mean the Securities and Exchange Commission.

     Securities Act. "Securities Act" shall mean the Securities Act of 1933,
  as amended.

     Seller Common Stock. "Seller Common Stock" shall mean the Common Stock,
  no par value, of the Seller.

     Seller Contract. "Seller Contract" shall mean any Contract: (a) to which
  any Seller Corporation is a party; (b) by which any Seller Corporation or
  any of its assets is or may become bound or under which any Seller
  Corporation has, or may become subject to, any obligation; or (c) under
  which any Seller Corporation has or may acquire any right or interest.

     Seller Corporations. "Seller Corporations" shall mean Seller and its
  subsidiaries.

                                      B-43
<PAGE>

     Seller Pending Litigation. "Seller Pending Litigation" shall mean
  Seller's existing patent infringement lawsuit against Parent in combined
  Civil Actions No. C-98-03627 MHP and No. C-99-2460 MHP pending in the
  United States District Court for the Northern District of California.

     Seller Proprietary Asset. "Seller Proprietary Asset" shall mean any
  Proprietary Asset owned by or licensed to the Seller or otherwise used by
  the Seller Corporations.

     Stay Order. "Stay Order" shall mean the Stipulation and Proposed Order
  to Stay being filed by Parent and the Seller immediately following the
  execution of this Agreement in the Seller Pending Litigation and the Parent
  Pending Litigation.

     Superior Offer. "Superior Offer" shall mean an unsolicited, bona fide
  written offer made by a third party to purchase all of the outstanding
  shares of common stock of the Seller or substantially all of the assets of
  the Seller on terms that the board of directors of the Seller determines,
  in its reasonable judgment, based upon a written opinion of an independent
  financial advisor of nationally recognized reputation, to be more favorable
  to the Seller's shareholders than the terms of the Transactions; provided,
  however, that any such offer shall not be deemed to be a "Superior Offer"
  if any financing required to consummate the transaction contemplated by
  such offer is not committed or is not reasonably capable of being obtained
  by such third party.

     Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
  capital gains tax, estimated tax, gross receipts tax, value-added tax,
  surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use
  tax, property tax, business tax, occupation tax, inventory tax, occupancy
  tax, withholding tax or payroll tax), levy, assessment, tariff, impost,
  imposition, toll, duty (including any customs duty), deficiency or fee, and
  any related charge or amount (including any fine, penalty or interest),
  that is, has been or may in the future be (a) imposed, assessed or
  collected by or under the authority of any Governmental Body, or (b)
  payable pursuant to any tax-sharing agreement or similar Contract.

     Tax Return. "Tax Return" shall mean any return (including any
  information return), report, statement, declaration, estimate, schedule,
  notice, notification, form, election, certificate or other document or
  information that is, has been or may in the future be filed with or
  submitted to, or required to be filed with or submitted to, any
  Governmental Body in connection with the determination, assessment,
  collection or payment of any Tax or in connection with the administration,
  implementation or enforcement of or compliance with any Legal Requirement
  relating to any Tax.

     Transactional Agreements. "Transactional Agreements" shall mean: (a) the
  Agreement; (b) the Assignment and Assumption Agreement; (c) the Voting
  Agreements; (d) the Credit Agreement; (e) the Patent License Agreement; (f)
  the Patent Standstill Agreement; and (g) the Stay Orders.

     Transactions. "Transactions" shall mean (a) the execution and delivery
  of the respective Transactional Agreements, and (b) all of the transactions
  contemplated by the respective Transactional Agreements, including: (i) the
  sale of the Specified Assets by the Seller to the Purchaser in accordance
  with the Agreement; (ii) the assumption of the Designated Contractual
  Obligations by the Purchaser pursuant to the Assignment and Assumption
  Agreement; and (iii) the performance by the Seller, Parent and the
  Purchaser of their respective obligations under the Transactional
  Agreements, and the exercise by the Seller, Parent and the Purchaser of
  their respective rights under the Transactional Agreements.

     Triggering Event. "Triggering Event" shall be deemed to have occurred
  if: (i) the board of directors of the Seller shall have failed to
  unanimously recommend that the Seller's shareholders vote to approve the
  Acquisition or the Plan of Dissolution, or shall have withdrawn or modified
  the recommendation of the board of directors of the Seller, or shall have
  taken any other action that becomes generally known to the shareholders of
  the Seller and that would be reasonably construed to suggest that the board
  of directors of the Seller does not support the Acquisition and the Plan of
  Dissolution or does not believe that the Acquisition and the Plan of
  Dissolution are in the best interests of the shareholders of the Seller;
  (ii) the Seller shall have failed to include in the Prospectus/Proxy
  Statement a statement to the effect that the board of directors of the
  Seller has unanimously determined and believes that the

                                      B-44
<PAGE>

  Acquisition and the Plan of Dissolution are in the best interests of the
  shareholders of the Seller; (iii) the board of directors of the Seller
  fails to reaffirm the Seller Board Recommendation, or fails to reaffirm its
  determination that the Acquisition and the Plan of Dissolution are in the
  best interests of the Seller's shareholders, within five business days
  after Parent or the Purchaser reasonably requests in writing that such
  recommendation or determination be reaffirmed; (iv) the board of directors
  of the Seller shall have approved, endorsed or recommended any Acquisition
  Proposal; (v) the Seller shall have entered into any letter of intent or
  similar document or any Contract providing for or otherwise contemplating
  an Acquisition Transaction; or (vi) a tender or exchange offer relating to
  securities of the Seller shall have been commenced and the Seller shall not
  have sent to its shareholders, within ten business days after the
  commencement of such tender or exchange offer, a statement disclosing that
  the Seller recommends rejection of such tender or exchange offer.

     Unaudited Interim Balance Sheet. "Unaudited Interim Balance Sheet" shall
  mean the unaudited consolidated balance sheet of the Seller included in the
  Unaudited Interim Financial Statements.

     Unaudited Interim Financial Statements. "Unaudited Interim Financial
  Statements" shall mean the unaudited consolidated balance sheet of the
  Seller as of October 31, 2000, and the related unaudited consolidated
  income statement of the Seller for the three-month period ended October 31,
  2000, together with the notes (if any) thereto, in substantially the form
  attached as Exhibit E.

                                      B-45
<PAGE>

                                                                         ANNEX C

                          NEEDHAM & COMPANY, INC.

                            3000 Sand Hill Road

                            Bldg. 2, Suite 190

                       Menlo Park, California 94025

                                          December 15, 2000


Board of Directors
3dfx Interactive, Inc.
4435 Fortran Drive
San Jose, CA 95134

Gentlemen:

   We understand that 3dfx Interactive, Inc. (the "Company") and NVIDIA
Corporation ("Nvidia") propose to enter into an Asset Purchase Agreement (the
"Agreement"), pursuant to which, subject to the terms and conditions of the
Agreement, the Company will sell certain assets related to its graphics
business to Nvidia in exchange for (i) $70 million in cash, (ii) subject to
reduction as set forth in the Agreement, 1,000,000 shares of common stock of
Nvidia ("Nvidia Common Stock"), and (iii) the assumption by Nvidia of certain
specified contractual obligations of the Company (the "Acquisition"). The
shares of Nvidia Common Stock to be issued pursuant to the Acquisition will be
payable only upon the winding up of the business of the Company pursuant to a
plan of dissolution adopted by the board of directors of the Company (the
"Dissolution"), and will be subject to a right of setoff in favor of Nvidia
with respect to claims for indemnification under the Agreement. After the
closing of the Acquisition but prior to any payment of Nvidia Common Stock, the
Company, should it need additional cash to pay its liabilities, may request
that Nvidia provide up to an additional $25 million in cash, subject to certain
conditions (the "Post-Closing Advance"), and the number of shares of Nvidia
Common Stock deliverable will be accordingly reduced, based upon a per share
price of $50.00. Concurrently with the execution of the Agreement, we
understand that the Company and Nvidia will enter into a credit agreement (the
"Credit Agreement") pursuant to which Nvidia will provide to the Company a $15
million credit facility, and the parties will settle certain patent litigation
between them. Under the Agreement, amounts outstanding under the credit
facility are required to be repaid at the closing of the Acquisition. The terms
of the Acquisition will be set forth more fully in the Agreement.

   You have asked us to advise you as to the fairness, from a financial point
of view, to the Company of the consideration to be received by the Company in
the Acquisition. Needham & Company, Inc., as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of securities, private placements and
other purposes. We have been engaged by the Company as financial advisor to
render this opinion in connection with the Acquisition and will receive a fee
for our services, none of which is contingent on the consummation of the
Acquisition. In addition, the Company has agreed to indemnify us for certain
liabilities arising from our role as financial advisor and out of the rendering
of this opinion.

   For purposes of this opinion we have, among other things: (i) reviewed a
draft of the Agreement dated December 15, 2000, (ii) reviewed certain publicly
available information concerning the Company and certain other relevant
financial and operating data of the Company furnished to us by the Company,
including Company management's draft financial statements as of and for the
quarter ended October 31, 2000; (iii) held discussions with members of
management of the Company concerning the current and future business prospects

                                      C-1
<PAGE>

of the Company; (iv) reviewed and discussed with the management of the Company
certain financial forecasts and projections prepared by such management; (v)
reviewed the historical stock prices and trading volumes of common stock of the
Company ("Company Common Stock") and Nvidia Common Stock; (vi) compared certain
publicly available financial data of companies whose securities are traded in
the public markets and that we deemed generally relevant to similar data for
the Company and Nvidia; (vii) reviewed the financial terms of certain other
business combinations that we deemed generally relevant; and (viii) performed
and/or considered such other studies, analyses, inquiries and investigations as
we deemed appropriate. In addition, we have held discussions with certain
members of the Company's management and its representatives concerning the
Company's views as to: the anticipated adverse effects on the Company's
business, assets, liabilities, operations and prospects that the Company
believes would occur if the Company were not to enter into the Agreement and
the Credit Agreement; the liquidity position of the Company and its ability to
continue as a going concern; the Company's anticipated inability to remedy its
liquidity shortfall and the substantial risk of the Company becoming insolvent
and seeking the protection of state insolvency or federal bankruptcy law; the
anticipated substantial adverse effects on the Company's shareholders and
present and potential employees, business partners and lenders that would
result from such insolvency or concerns about the potential for it; and the
anticipated benefits that would arise from entering into the Agreement and
Credit Agreement, including the substantial lessening of such liquidity and
solvency concerns. We have also held discussions with the Company's financial
advisors, Robertson Stephens, Inc., as to their efforts to solicit third-party
indications of interest for the acquisition of the Company or all or
substantially all of its assets and for financing of the Company. We have not
been authorized by the Company or its Board of Directors to solicit, nor have
we solicited, any such indications of interest.

   In connection with our review and in arriving at our opinion, we have
assumed and relied on the accuracy and completeness of all of the financial and
other information reviewed by us for purposes of this opinion and have neither
attempted to verify independently nor assumed responsibility for verifying any
of such information. In addition, we have assumed, with your consent, (i) that
any material liabilities (contingent or otherwise, known or unknown) of the
Company are as set forth in the financial statements of the Company, (ii) that
the terms set forth in the executed Agreement will not differ materially from
the proposed terms provided to us in the draft Agreement dated December 15,
2000, (iii) that, other than as set forth in the Company's financial
statements, no asset or liability value should be attributed to the litigation
between the Company and Nvidia, and (iv) the accuracy of the Company's
representation in the Agreement that the cash consideration to be paid pursuant
to the Agreement will be sufficient to pay all of the Company's liabilities
other than those to be assumed by Nvidia, including taxes due and other amounts
owed as a result of the Acquisition. With respect to the Company's financial
forecasts provided to us by its management, we have assumed for purposes of our
opinion that such forecasts have been reasonably prepared on bases reflecting
the best currently available estimates and judgments of such management, at the
time of preparation, of the future operating and financial performance of the
Company. We express no opinion with respect to such forecasts or the
assumptions on which they were based. The Company's management has estimated,
and we have for purposes of our analysis assumed, with your consent, that, in
the aggregate, the amount of the liabilities to be retained by the Company
after the Acquisition, including any liabilities incurred prior to the
Dissolution, will result in a cash deficiency, prior to any cash received
pursuant to the Post-Closing Advance, of between $5.27 million and $25.17
million. We have not assumed any responsibility for or made or obtained any
independent evaluation, appraisal or physical inspection of the assets or
liabilities of the Company. Further, our opinion is based on economic, monetary
and market conditions as they exist and can be evaluated as of the date hereof.

   Our opinion as expressed herein is limited to the fairness, from a financial
point of view, to the Company of the consideration to be received by the
Company in the Acquisition, and does not address the Company's underlying
business decision to engage in the Acquisition or Dissolution, the
consideration to be received by any individual shareholder in the Dissolution,
the relative merits of the Acquisition and Dissolution as compared to any
alternative business strategies that might exist for the Company, or the effect
of any other transaction in which the Company might engage. Our opinion does
not constitute a recommendation to any shareholder of the Company as to how
such shareholder should vote on the proposed Acquisition or

                                      C-2
<PAGE>

Dissolution. We are not expressing any opinion as to the prices at which the
Company Common Stock or Nvidia Common Stock will actually trade at any time. We
are expressing no opinion on the Company's solvency nor are we expressing any
opinion on the Company's ability to continue as a going concern should the
Acquisition and Dissolution not be consummated.

   In the ordinary course of our business, we may actively trade the equity
securities of the Company and Nvidia for our own account or for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.

   This letter and the opinion expressed herein are provided at the request and
for the information of the Board of Directors of the Company and may not be
quoted or referred to or used for any purpose without our prior written
consent, except that this letter may be disclosed in connection with any
information statement or proxy statement used in connection with the
Acquisition so long as this letter is quoted in full in such information
statement or proxy statement.

   Based upon and subject to the foregoing, it is our opinion that as of the
date hereof the consideration to be received by the Company in the Acquisition
is fair to the Company from a financial point of view.

                                          Very truly yours,

                                          /s/ Needham & Company, Inc.
                                          Needham & Company, Inc.

                                      C-3
<PAGE>

                                                                         ANNEX D

                                CREDIT AGREEMENT

   This Credit Agreement dated as of December 15, 2000 (the "Agreement"), is
between Titan Acquisiton Corp. No. 2 ("Lender") and 3dfx Interactive, Inc
("Borrower").

                                    Recitals

   A. This Agreement is the Credit Agreement referred to in and is executed and
delivered in connection with that certain Security Agreement of even date
herewith and executed by the undersigned in favor of Lender (as the same may
from time to time be amended, modified, supplemented or restated, the "Security
Agreement"). Additional rights of Lender are set forth in the Security
Agreement. All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings given to them in the Security Agreement.

   B. Contemporaneously with the execution of this Agreement and in
consideration of the establishment of the Facility hereunder, (i) Borrower,
Lender and NVIDIA Corporation have agreed to grant one another non-exclusive,
perpetual, fully-paid licenses for certain of each party's patents, patent
applications and inventions pursuant to a Patent License Agreement of even date
herewith and (ii) Borrower has agreed to sell, assign, transfer, convey and
deliver to Lender good and valid title, free and clear of any Encumbrances, to
all of Borrower's trademarks and trade names pursuant to a Trademark Assignment
Agreement of even date herewith.

                                   Agreement

1. Line Of Credit Amount and Terms

   1.1 Facility Amount.

     (a) During the availability period described below, Lender will provide
  a line of credit (the "Facility") to Borrower. The amount of the Facility
  is Fifteen Million Dollars ($15,000,000) (the "Commitment").

     (b) The Facility shall be available to Borrower in such advances as
  Borrower requests. Each advance will be made available to Borrower within
  three (3) Business Days following Borrower's request therefor in accordance
  with Section 2.1.

   1.2 Availability Period. The Facility is available between the date of this
Agreement and the earlier of (i) the closing of the acquisition (the "Closing")
contemplated by that certain Asset Purchase Agreement between the parties dated
the date hereof (the "Asset Purchase Agreement") and (ii) the termination of
the Asset Purchase Agreement in accordance with Section 8 thereof (the earlier
of such dates being referred to herein as the "Expiration Date"), so long as no
Event of Default, or event or condition with the giving of notice or passage of
time or both would constitute an Event of Default shall have occurred and is
continuing.Repayment Terms.

   1.3 Repayment Terms.

     (a) Repayment. The outstanding principal amount requested and made
  available to Borrower pursuant to this Agreement shall be due and payable
  on the Expiration Date; provided that, in the event that the Expiration
  Date occurs because the Asset Purchase Agreement is terminated in
  accordance with Section 8 thereof, the principal amount required to be
  repaid under the Facility shall be reduced by Ten Million Dollars
  ($10,000,000). In the event the Expiration Date occurs as a result of the
  Closing, the outstanding principal amount requested by and made available
  to Borrower pursuant to this Agreement shall be applied toward the Cash
  Consideration (as defined in the Asset Purchase Agreement) to be paid

                                      D-1
<PAGE>

  by Lender to Borrower, and the cash paid by Lender to Borrower at the
  Closing shall be correspondingly reduced.

     (b) Interest Rate. Borrower shall pay interest on the outstanding
  principal amount hereof from the date each respective portion of the
  Facility is made available to Borrower until payment in full of such
  portion, which interest shall be payable at the rate of 6.1% per annum or
  the maximum rate permissible by law (which under the laws of the State of
  California shall be deemed to be the laws relating to permissible rates of
  interest on commercial loans), whichever is less. Interest shall be due and
  payable annually in arrears not later than the first business day of each
  calendar year for the preceding year and shall be calculated on the basis
  of a 360-day year for the actual number of days elapsed. In the event the
  Closing occurs, all interest due and payable shall be applied toward the
  Cash Consideration and the cash paid by Lender to Borrower at the Closing
  shall be correspondingly reduced.

     (c) Place of Payment. All amounts payable hereunder shall be payable to
  Lender, at 3535 Monroe Street, Santa Clara, CA 95051, unless another place
  of payment shall be specified in writing by Lender.

     (d) Application of Payment. Payment on the amounts outstanding hereunder
  shall be applied first to accrued interest, and thereafter to the
  outstanding principal balance hereof.

     (e) Prepayment. Borrower may, upon one (1) Business Days' notice, prepay
  the advances in full or in part at any time without any prepayment penalty
  or premium.

   1.4 Collateral. The full amount of the Facility is secured by the Collateral
identified and described as security therefor in the Security Agreement. The
undersigned shall not, directly or indirectly, create, permit or suffer to
exist, and shall defend the Collateral against and take such other action as is
necessary to remove, any Lien on or in the Collateral, or in any portion
thereof, except as permitted pursuant to the Security Agreement.

2. Disbursements, Payments and Costs

   2.1 Requests for Credit. Each request for an advance must be in writing and
received by Lender at least three (3) Business Days prior to the Business Day
of the requested advance.

   2.2 Business Days. Unless otherwise provided in this Agreement, a Business
Day is a day other than a Saturday or a Sunday on which commercial banks are
open for business in California. All payments and disbursements which would be
due on a day which is not a Business Day will be due on the next Business Day.
All payments received on a day which is not a Business Day will be applied to
the credit of Borrower on the next Business Day.

   2.3 Interest Calculation. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. Principal not paid when due under this
Agreement shall continue to bear interest until paid.

   2.4 Default Rate. Upon the occurrence and during the continuation of any
Event of Default under this Agreement, principal amounts (and interest to the
extent allowed by applicable law) shall bear interest at a rate which is two
(2) percentage points higher than the rate of interest otherwise provided under
this Agreement. This will not constitute a waiver of any Event of Default.

   3. Representations and Warranties. When Borrower signs this Agreement and
until Lender is repaid in full, Borrower makes the following representations
and warranties. Each request for an advance constitutes a renewed
representation:

     3.1 Authorization. This Agreement, and any instrument or agreement
  required hereunder or executed or delivered in connection herewith, are
  within Borrower's powers, have been duly authorized, and do not conflict
  with any provision of any agreement to which Borrower is a party or any
  order or judgment to which it is subject.

                                      D-2
<PAGE>

     3.2 Enforceable Agreement. This Agreement is a legal, valid and binding
  agreement of Borrower, enforceable against Borrower in accordance with its
  terms, except as enforcement may be limited by bankruptcy, insolvency or
  other laws affecting the enforcement of creditors' rights generally, and
  any instrument or agreement required hereunder or executed or delivered in
  connection herewith, when executed and delivered, will be similarly legal,
  valid, binding and enforceable.

   4. Default. If any of the following events (each an "Event of Default")
occurs, Lender may do one or more of the following: declare Borrower in
default, terminate the Commitment, stop making any additional credit available
to Borrower, and require Borrower to repay its entire debt (subject to Section
1.3(a) hereof) immediately and without prior notice.

     4.1 Failure to Pay. Borrower fails to make a payment under this
  Agreement within ten (10) business days of the date when due.

     4.2 Other Breach Under Agreement. Borrower fails to meet the conditions
  of, or fails to perform any obligation under, any term of this Agreement
  not specifically referred to in this Section 4 and fails to cure such
  failure within fifteen (15) days of receipt of Lender's notice of such
  failure.

     4.3 Breach Under Asset Purchase Agreement. Borrower fails to meet the
  conditions of, or fails to perform any obligation under, any term of the
  Asset Purchase Agreement and fails to cure such failure within fifteen (15)
  days of receipt of Lender's notice of such failure.

     4.4 Bankruptcy. Borrower files a bankruptcy petition, a bankruptcy
  petition is filed against Borrower or Borrower makes a general assignment
  for the benefit of creditors. The Event of Default will be deemed cured if
  any petition filed against Borrower is dismissed or stayed within a period
  of 45 days after the filing; provided, however, that Lender will not be
  obligated to extend any additional credit to Borrower during that period.

5. Miscellaneous

   5.1 Governing Law; Jurisdiction. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of California,
excluding any conflict of laws principles that would cause the application of
laws of any other jurisdiction.

   This Agreement is executed as of the date stated at the top of the first
page.

                                          Borrower:

                                          /s/ Alex Leupp
                                          -------------------------------------
                                          3dfx Interactive, Inc.

                                          Lender:

                                          /s/ Jen-Hsun-Huang
                                          -------------------------------------
                                          Titan Acquisition Corp. No. 2

                                      D-3
<PAGE>

                                                                         ANNEX E

                               SECURITY AGREEMENT

   This Security Agreement dated as of December 15, 2000 ("Security
Agreement"), is made by 3dfx Interactive, Inc., a California corporation
("Grantor"), in favor of Titan Acquisition Corp. No. 2, a Delaware corporation
("Secured Party").

                                    Recitals

   A. Secured Party has made and has agreed to make certain advances of money
to Grantor as evidenced by that certain Credit Agreement dated the date between
Grantor and Secured Party (the "Credit Agreement").

   B. Secured Party is willing to advance funds to Grantor pursuant to the
Credit Agreement, but only upon the condition, among others, that Grantor shall
have executed and delivered to Secured Party this Security Agreement.

                                   Agreement

   Now, Therefore, in order to induce Secured Party to advance funds to Grantor
and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound, Grantor
hereby represents, warrants, covenants and agrees as follows:

   1. Defined Terms. Unless otherwise defined herein the following terms shall
have the following meanings (such meanings being equally applicable to both the
singular and plural forms of the terms defined):

     (a) "Collateral" shall have the meaning assigned to such term in Section
  2 of this Security Agreement.

     (b) "Contracts" means all contracts, undertakings, franchise agreements
  or other agreements in or under which Grantor may now hold or hereafter
  acquires any right, title or interest.

     (c) "Copyright License" means any agreement, in which Grantor now holds
  or hereafter acquires any interest, granting any right in or to any
  copyright or copyright registration (whether Grantor is the licensee or the
  licensor thereunder) including, without limitation, licenses pursuant to
  which Grantor has obtained the exclusive right to use a copyright owned by
  a third party.

     (d) "Copyrights" means all of the following in which Grantor now holds
  or hereafter acquires any interest: (i) all copyrights, whether registered
  or unregistered, held pursuant to the laws of the United States, any State
  thereof or any other country; (ii) registrations, applications, recordings
  and proceedings in the United States Copyright Office or in any similar
  office or agency of the United States, any State thereof or any other
  country; (iii) any continuations, renewals or extensions thereof; (iv) any
  registrations to be issued in any pending applications; (v) prior versions
  of works covered by copyright and all works based upon, derived from, or
  incorporating such works; (vi) income, royalties, damages, claims, and
  payments now and hereafter due and payable with respect to copyrights
  including, without limitation, damages and payments for past, present, or
  future infringement; (vii) rights to sue for past, present and future
  infringements of copyright; and (viii) any other rights corresponding to
  any of the foregoing rights throughout the world.

     (e) "Event of Default" has the meaning given such term in the Credit
  Agreement.

     (f) "License" means any Copyright License, Patent License, Trademark
  License or other license of rights or interests now held or hereafter
  acquired by Grantor.

     (g) "Patent License" means any written agreement, in which Grantor now
  holds or hereafter acquires any interest, granting any right with respect
  to any invention on which a patent is in existence (whether Grantor is the
  licensee or the licensor thereunder).

                                      E-1
<PAGE>

     (h) "Patents" means all of the following in which Grantor now holds or
  hereafter acquires any interest: (i) letters patent of the United States or
  any other country, all registrations and recordings thereof, and all
  applications for letters patent of the United States or any other country
  and all rights corresponding thereto, including, without limitation,
  registrations, recordings and applications in the United States Patent and
  Trademark Office or in any similar office or agency of the United States,
  any State thereof or any other country, (ii) all reissues, divisions,
  continuations, renewals, continuations-in-part or extensions thereof; (iii)
  all petty patents, divisionals and patents of addition; and (iv) all
  patents to issue in any such applications.

     (i) "Permitted Lien" means an interest in the Collateral securing an
  obligation of Grantor which is existing on the date of this Security
  Agreement and listed on the attached Schedule A.

     (j) "Secured Obligations" means all loans, advances, debts, liabilities
  and obligations (including reimbursement obligations), for monetary amounts
  owing by the Grantor to the Secured Party, whether due or to become due,
  matured or unmatured, liquidated or unliquidated, contingent or non-
  contingent, of any kind or nature, present or future, arising under or in
  respect of the Credit Agreement. This term includes all principal, interest
  (including interest that accrues after the commencement against the Grantor
  of any action under the Bankruptcy Code), reasonable fees, including any
  and all arrangement fees, delivery fees, loan fees, commitment fees, agent
  fees and any and all other reasonable fees, expenses, costs or other sums
  (including attorney costs) chargeable to the Grantor under the Credit
  Agreement or under Section 6(b) hereof.

     (k) "Trademark License" means any written agreement, in which Grantor
  now holds or hereafter acquires any interest, granting any right in and to
  any trademark or trademark registration (whether Grantor is the licensee or
  the licensor thereunder).

     (l) "Trademarks" means any of the following now owned or hereafter
  acquired by Grantor: (i) any trademarks, tradenames, corporate names,
  company names, business names, trade styles, service marks, logos, other
  source or business identifiers, prints and labels on which any of the
  foregoing have appeared or appear, designs and general intangibles of like
  nature, now existing or hereafter adopted or acquired, all registrations
  and recordings thereof, and any applications in connection therewith,
  including, without limitation, registrations, recordings and applications
  in the United States Patent and Trademark Office or in any similar office
  or agency of the United States, any State thereof or any other country (the
  "Marks"), (ii) any reissues, extensions or renewals thereof, (iii) the
  goodwill of the business symbolized by or associated with the Marks, (iv)
  income, royalties, damages and payments now and hereafter due and/or
  payable with respect to the Marks, including, without limitation, damages,
  claims and recoveries for past, present or future infringement,
  misappropriation, or dilution, and (v) rights to sue for past, present and
  future infringements of the Marks.

     (m) "UCC" means the Uniform Commercial Code as the same may, from time
  to time, be in effect in the State of California; provided, however, in the
  event that, by reason of mandatory provisions of law, any or all of the
  attachment, perfection or priority of Secured Party's security interest in
  any Collateral is governed by the Uniform Commercial Code as in effect in a
  jurisdiction other than the State of California, the term "UCC" shall mean
  the Uniform Commercial Code as in effect in such other jurisdiction for
  purposes of the provisions hereof relating to such attachment, perfection
  of priority and for purposes of definitions related to such provisions.

   In addition, the following terms shall be defined terms having the meaning
set forth for such terms in the UCC (definition sections of the UCC are noted
parenthetically) and such terms (including their corresponding sections) as
they are defined in Revised Article 9 of the UCC, which has been adopted by the
State of California and shall become effective in the State of California on
July 1, 2001: "Account Debtor" (9105(1)(a)); "Accounts" (9106); "Chattel Paper"
(9105(1)(b)); "Deposit Accounts" (9105(e)); "Documents" (9105(1)(f));
"Equipment" (9109(2)); "Financial Assets" (8102(a)(9)); "Fixtures"
(9313(1)(a)); "General Intangibles" (9106); "Goods" (9105(1)(h)); "Instruments"
(9105(1)(i); "Inventory"

                                      E-2
<PAGE>

(9109(4)); "Investment Property" (9115(1)(f)); "Proceeds" (9306(1)). Each of
the foregoing defined terms shall include all of such items now owned, or
hereafter acquired, by Grantor.

   2. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all the Secured Obligations and in order to
induce Secured Party to cause the Credit Agreement to be made, Grantor hereby
assigns, conveys, mortgages, pledges, hypothecates and transfers to Secured
Party, and hereby grants to Secured Party, a security interest in all of
Grantor's right, title and interest in, to and under the following (all of
which being herein collectively called the "Collateral"):

     (a) All Accounts of Grantor;

     (b) All Chattel Paper of Grantor;

     (c) All Contracts of Grantor;

     (d) All Deposit Accounts of Grantor;

     (e) All Documents of Grantor;

     (f) All Equipment of Grantor;

     (g) All Financial Assets of Grantor;

     (h) All Fixtures of Grantor;

     (i) All General Intangibles of Grantor including, without limitation,
  all Copyrights, Patents, Trademarks, Licenses, designs, drawings, technical
  information, marketing plans, customer lists, trade secrets, proprietary or
  confidential information, inventions (whether or not patentable),
  procedures, know-how, models and data;

     (j) All Goods of Grantor;

     (k) All Instruments of Grantor;

     (l) All Inventory of Grantor;

     (m) All Investment Property of Grantor;

     (n) All Licenses of Grantor;

     (o) All property of Grantor held by Secured Party, or any other party
  for whom Secured Party is acting as agent hereunder, including, without
  limitation, all property of every description now or hereafter in the
  possession or custody of or in transit to Secured Party or such other party
  for any purpose, including, without limitation, safekeeping, collection or
  pledge, for the account of Grantor, or as to which Grantor may have any
  right or power;

     (p) All other goods and personal property of Grantor whether tangible or
  intangible and whether now or hereafter owned or existing, leased,
  consigned by or to, or acquired by, Grantor and wherever located; and

     (q) To the extent not otherwise included, all Proceeds of each of the
  foregoing and all accessions to, substitutions and replacements for, and
  rents, profits and products of each of the foregoing.

   3. Rights of Secured Party; Collection of Accounts.

     (a) Notwithstanding anything contained in this Security Agreement to the
  contrary, Grantor expressly agrees that it shall remain liable under each
  of its Contracts and each of its Licenses to observe and perform all the
  conditions and obligations to be observed and performed by it thereunder.
  Secured Party shall not have any obligation or liability under any Contract
  or License by reason of or arising out of this Security Agreement or the
  granting to Secured Party of a lien therein or the receipt by Secured Party
  of

                                      E-3
<PAGE>

  any payment relating to any Contract or License pursuant hereto, nor shall
  Secured Party be required or obligated in any manner to perform or fulfill
  any of the obligations of Grantor under or pursuant to any Contract or
  License, or to make any payment, or to make any inquiry as to the nature or
  the sufficiency of any payment received by it or the sufficiency of any
  performance by any party under any Contract or License, or to present or
  file any claim, or to take any action to collect or enforce any performance
  or the payment of any amounts which may have been assigned to it or to
  which it may be entitled at any time or times.

     (b) Secured Party authorizes Grantor to collect its Accounts, provided
  that such collection is performed in a prudent and businesslike manner, and
  Secured Party may, upon the occurrence and during the continuation of any
  Event of Default and without notice, limit or terminate said authority at
  any time. If an Event of Default has occurred and is continuing, at the
  request of Secured Party, Grantor shall deliver all original and other
  documents evidencing and relating to, the performance of labor or service
  which created such Accounts, including, without limitation, all original
  orders, invoices and shipping receipts.

     (c) Secured Party may at any time, upon the occurrence and during the
  continuation of any Event of Default, after first notifying Grantor of its
  intention to do so, notify Account Debtors of Grantor, parties to the
  Contracts of Grantor, obligors in respect of Instruments of Grantor and
  obligors in respect of Chattel Paper of Grantor that the Accounts and the
  right, title and interest of Grantor in and under such Contracts,
  Instruments, and Chattel Paper have been assigned to Secured Party and that
  payments shall be made directly to Secured Party. Upon the request of
  Secured Party, Grantor shall so notify such Account Debtors, parties to
  such Contracts, obligors in respect of such Instruments and obligors in
  respect of such Chattel Paper. Upon the occurrence and during the
  continuation of an Event of Default, Secured Party may, in its name, or in
  the name of others communicate with such Account Debtors, parties to such
  Contracts, obligors in respect of such Instruments and obligors in respect
  of such Chattel Paper to verify with such parties, to Secured Party's
  satisfaction, the existence, amount and terms of any such Accounts,
  Contracts, Instruments or Chattel Paper.

   4. Representations and Warranties. Grantor hereby represents and warrants
to Secured Party that:

     (a) Except for the security interest granted to Secured Party under this
  Security Agreement and Permitted Liens, Grantor is the sole legal and
  equitable owner of each item of the Collateral in which it purports to
  grant a security interest hereunder, having good and marketable title
  thereto free and clear of any and all liens except for Permitted Liens.

     (b) No effective security agreement, financing statement, equivalent
  security or lien instrument or continuation statement covering all or any
  part of the Collateral exists, except such as may have been filed by
  Grantor in favor of Secured Party pursuant to this Security Agreement
  except for Permitted Liens.

     (c) This Security Agreement creates a legal and valid security interest
  on and in all of the Collateral in which Grantor now has rights, and all
  filings and other actions necessary or desirable to perfect and protect
  such security interest have been duly taken. Accordingly, Secured Party has
  a fully perfected first priority security interest in all of the Collateral
  in which Grantor now has rights subject only to Permitted Liens. This
  Security Agreement will create a legal and valid and fully perfected first
  priority security interest in the Collateral in which Grantor later
  acquires rights, when Grantor acquires those rights.

   5. Covenants. Grantor covenants and agrees with Secured Party that from and
after the date of this Security Agreement and until the Secured Obligations
have been performed and paid in full:

     (a) Further Assurances; Pledge of Instruments. At any time and from time
  to time, upon the written request of Secured Party, and at the sole expense
  of Grantor, Grantor shall promptly and duly execute and deliver any and all
  such further instruments and documents and take such further action as
  Secured Party may reasonably deem desirable to obtain the full benefits of
  this Security Agreement.

     (b) Maintenance of Records. Grantor shall keep and maintain at its own
  cost and expense satisfactory and complete records of the Collateral.

                                      E-4
<PAGE>

   6. Rights and Remedies Upon Default.

     (a) Upon the occurrence and during the continuation of an Event of
  Default, Secured Party may exercise, in addition to all other rights and
  remedies granted to it under this Security Agreement, all rights and
  remedies of a secured party under the UCC.

     (b) Grantor also agrees to pay all fees, costs and expenses of Secured
  Party, including, without limitation, reasonable attorneys' fees, incurred
  in connection with the enforcement of any of its rights and remedies
  hereunder and the Credit Agreement.

     (c) Grantor hereby waives presentment, demand, protest or any notice (to
  the maximum extent permitted by applicable law) of any kind in connection
  with this Security Agreement or any Collateral.

     (d) The proceeds of any sale, disposition or other realization upon all
  or any part of the Collateral shall be distributed by Secured Party in the
  following order of priorities:

       First, to Secured Party in an amount sufficient to pay in full the
    reasonable costs of Secured Party in connection with such sale,
    disposition or other realization, including all fees, costs, expenses,
    liabilities and advances incurred or made by Secured Party in
    connection therewith, including, without limitation, reasonable
    attorneys' fees;

       Second, to Secured Party in an amount equal to the then unpaid
    Secured Obligations; and

       Finally, upon payment in full of the Secured Obligations, to Grantor
    or its representatives or as a court of competent jurisdiction may
    direct.

   7. Limitation on Secured Party's Duty in Respect of Collateral. Secured
Party shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it takes such action as Grantor
requests in writing, but failure of Secured Party to comply with any such
request shall not in itself be deemed a failure to act reasonably, and no
failure of Secured Party to do any act not so requested shall be deemed a
failure to act reasonably.

   8. Reinstatement. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Grantor for liquidation or reorganization, should Grantor become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of Grantor's property and assets,
and shall continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.

   9. Miscellaneous.

     (a) No Waiver; Cumulative Remedies.

       (i) Secured Party shall not by any act, delay, omission or otherwise
    be deemed to have waived any of its respective rights or remedies
    hereunder, nor shall any single or partial exercise of any right or
    remedy hereunder on any one occasion preclude the further exercise
    thereof or the exercise of any other right or remedy.

       (ii) The rights and remedies hereunder provided are cumulative and
    may be exercised singly or concurrently, and are not exclusive of any
    rights and remedies provided by law.

       (iii) None of the terms or provisions of this Security Agreement may
    be waived, altered, modified or amended except by an instrument in
    writing, duly executed by Grantor and Secured Party.

                                      E-5
<PAGE>

     (b) Termination of this Security Agreement. Subject to Section 8 hereof,
  this Security Agreement shall terminate upon the full, final and complete
  payment and performance of the Secured Obligations.

     (c) Successor and Assigns. This Security Agreement and all obligations
  of Grantor hereunder shall be binding upon the successors and assigns of
  Grantor, and shall, together with the rights and remedies of Secured Party
  hereunder, inure to the benefit of Secured Party, any future holder of any
  of the indebtedness and their respective successors and assigns. No sales
  of participations, other sales, assignments, transfers or other
  dispositions of any agreement governing or instrument evidencing the
  Secured Obligations or any portion thereof or interest therein shall in any
  manner affect the lien granted to Secured Party hereunder.

     (d) Governing Law. In all respects, including all matters of
  construction, interpretation, validity and performance, this Security
  Agreement and the Secured Obligations shall be governed by, and construed
  and enforced in accordance with, the laws of the State of California
  applicable to contracts entered into by California residents within
  California and performed entirely in California, without regard to the
  principles thereof regarding conflict of laws.

   In Witness Whereof, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer on the
date first set forth above.

                                          Grantor:

                                          3dfx Interactive, Inc.

                                              /s/ Alex Leupp
                                          By: ________________________________

                                                        Alex Leupp
                                          Printed Name: ______________________

                                                 President & CEO
                                          Title: _____________________________

                                          Accepted and acknowledged by:

                                          Titan Acquisition Corp. No. 2

                                              /s/ Jen-Hsun Huang
                                          By: ________________________________

                                                        Jen-Hsun Huang
                                          Printed Name: ______________________

                                                 President & CEO
                                          Title: _____________________________

                                      E-6
<PAGE>

                                                                         ANNEX F

                              TRADEMARK ASSIGNMENT

   WHEREAS, 3dfx Interactive, Inc., a California corporation having its
principal offices at 4435 Fortran Drive, San Jose, CA 95134 ("Assignor"), owns
the registrations and/or pending applications for the marks identified in
Exhibit A attached hereto (the "Marks");

   WHEREAS, Assignor and Titan Acquisition Corp. No. 2, a Delaware corporation
having its principal offices at 3535 Monroe Street, Santa Clara, California
95051 ("Assignee") have entered into a certain Credit Agreement (the "Credit
Agreement") concurrently with the execution of this Agreement; and

   WHEREAS, Assignee desires to acquire the Marks.

   NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration (including the
execution and delivery of the Credit Agreement and Assignee's extension of
credit to Assignor thereunder), the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:

     1. Assignor hereby assigns, transfers and conveys to Assignee all right,
  title and interest in the Marks in the United States and throughout the
  world, together with any goodwill of the business symbolized by the Marks
  or that portion of the business in connection with which Assignor has a
  bona fide intent to use the Marks; as well as any and all reports,
  interests, claims and demands for recovery in law or equity that Assignor
  has or may have in profits and damages for infringements of the Marks which
  may have arisen in connection with any of the foregoing prior to the
  effective date of this instrument, including but not limited to the right
  to compromise, sue for and collect such profits and damages; the same to be
  held and enjoyed by Assignee, its successors and assigns or their legal
  representatives, as fully and entirely as the same would have been held and
  enjoyed by Assignor if this assignment had not been made.

     2. Assignee agrees to and does hereby accept the assignment as set forth
  above.

     3. Upon execution of this Agreement, Assignor will take all steps
  necessary to effectuate the recordation of the assignment of the Marks with
  relevant foreign jurisdictions by March 30, 2001. For example, Assignor
  agrees to secure the appropriate legalization in the form of (1) an
  Apostille from the Office of the Secretary of State in the appropriate
  jurisdiction, or (2) legalization from the local Embassy or Consulate of
  the country in which the Assignment will be filed. Assignor further agrees
  that it will cooperate with Assignee in executing all other documents that
  Assignee considers necessary to further the purposes of this Agreement.

     4. This assignment is made pursuant to the terms of the Credit Agreement
  and does not create any additional obligations, covenants, representations
  and warranties or alter or amend any of the obligations, covenants,
  representations and warranties contained in the Credit Agreement.

     5. All capitalized terms used herein shall have the meanings given such
  terms in the Credit Agreement, unless otherwise defined herein.

     6. This assignment may be signed in one or more counterparts, and all
  counterparts so executed shall constitute one agreement, binding on the
  parties hereto, notwithstanding that the parties are not signatory to the
  same counterpart. Executed copies of this assignment transmitted by
  telecopier shall be valid and binding.

                                      F-1
<PAGE>

   Signed at Santa Clara, California on this 15th day of December 2000

                                          Assignor:

                                          3dfx Interactive, Inc.

                                              /s/ Alex Leupp
                                          By: _________________________________

                                                Alex Leupp
                                          Name: _______________________________

                                                 President & CEO
                                          Title: ______________________________

                                          Assignee:

                                          Titan Acquisition Corp. No. 2

                                              /s/ Jen-Hsun Huang
                                          By: _________________________________

                                                Jen-Hsun Huang
                                          Name: _______________________________

                                                 President & CEO
                                          Title: ______________________________

                                      F-2
<PAGE>

                                   EXHIBIT A

   The Seller either has been granted, or has applied for, registration for the
following trademarks:

<TABLE>
<CAPTION>
Mark/                                      Reg.
Country              Filed     Appl. #     Date    Reg. #     Status   Classes
-------             -------- ----------- -------- --------- ---------- -------
<S>                 <C>      <C>         <C>      <C>       <C>        <C>
3DFX
United States        3/30/99  75/671,697                       Pending  9, 28
3DFX and design
Argentina            10/6/99   2.245.161                       Pending     09
Brazil               11/3/99   822167557                       Pending     09
Mexico               4/26/00      422616                       Pending     09
United States        6/28/99  75/738,025  10/3/00 2,391,376 Registered      9
3DFX INTERACTIVE
Argentina            10/6/99   2.245.162                       Pending     09
Argentina            10/6/99   2.245.163                       Pending     28
Australia            6/26/98      765854  3/12/99    765854 Registered  9, 28
Benelux              6/26/98      918514   2/2/99    634209 Registered  9, 28
Brazil              11/12/99   822188473                       Pending     09
Brazil              11/12/99   822188481                       Pending     28
France                7/9/98    98741164 12/18/98  98741164 Registered  9, 28
Germany              12/1/95   395491258  7/22/96  39549125 Registered      9
Italy                8/28/98 TO98COO2587                       Pending  9, 28
Japan                12/1/95    12526795  12/5/97   4089737 Registered      9
Mexico              10/13/99      394931                       Pending     09
Mexico              10/13/99      394932                       Pending     28
Singapore             7/6/98  T99/067181                       Pending     28
Singapore             7/6/98  T98/06717J                       Pending      9
Taiwan               7/23/98    87035885  9/16/99  00868596 Registered     28
Taiwan               7/23/98    87035884                       Pending      9
United Kingdom       12/1/98     2183408                       Pending      9
United States         6/1/95  74/683,246   7/8/97 2,076,764 Registered  9, 28
GAME-FRAME
United States        4/17/96  75/089,746  7/29/97 2,083,430 Registered     28
GLIDE
United States        12/6/95  75/028,228  5/12/98 2,157,234 Registered      9
LCDfx
United States         5/3/99  75/697,512                       Pending      9
M-BUFFER
United States        3/15/99  75/660,228                       Allowed      9
RAMPAGE
United States         8/3/98  75/533,230                     Abandoned      9
SLI
United States        3/15/99  75/660,721                     Abandoned      9
SO POWERFUL, IT'S
KIND OF RIDICULOUS
United States        2/16/99  75/641,172                       Allowed  9, 28
T-BUFFER
United States        3/15/99  75/660,227                       Allowed      9
VOODOO
Australia            8/11/98      769931  1/15/99    769931 Registered      9
European Union       8/11/98      907600                       Pending      9
</TABLE>

                                      F-3
<PAGE>

<TABLE>
<CAPTION>
Mark/                                      Reg.
Country               Filed    Appl. #     Date    Reg. #     Status   Classes
-------              -------- ---------- -------- --------- ---------- -------
<S>                  <C>      <C>        <C>      <C>       <C>        <C>
Japan                 8/12/98   98-68509  3/17/00 4,368,015 Registered     9
Singapore             8/12/98 T98/08048G                       Pending     9
Taiwan                8/12/98   87039378   1/1/00  00878273 Registered     9
United States         2/12/98 75/432,892                       Allowed     9
VOODOO BANSHEE
Australia             8/17/98     770543  1/15/99    770543 Registered     9
European Union        8/18/98     912477                       Pending     9
Japan                 8/18/98   98-69760 12/17/99 4,344,599 Registered     9
Singapore             8/21/98    S840498                       Pending     9
Taiwan                8/19/98  87-040642   9/1/00  00903131 Registered     9
United States          3/6/98 75/446,251                       Allowed     9
VOODOO GRAPHICS
United States         12/6/95 75/028,229  9/23/97 2,100,112 Registered     9
VOODOO 2
Australia             8/11/98     769932  1/15/99    769932 Registered     9
European Union        8/11/98     907675                       Pending     9
Japan                 8/12/98   98-68510  4/17/00 4,368,016 Registered     9
Singapore             8/12/98    S804798                       Pending     9
Taiwan                8/12/98   87039379   2/1/00  00881525 Registered     9
VOODOO 2 (stylized)
United States         2/12/98 75/432,891                       Pending     9
VOODOO 3
Argentina             10/6/99  2,245,160                       Pending    09
Brazil               11/12/99  822188490                       Pending    09
Mexico               10/13/99     394933                       Pending    09
United States         12/3/98 75/599,341                       Pending     9
VOODOO CREW
United States         9/22/00 78/027,340                       Pending    41
</TABLE>

   The Seller also has common law rights to various trademarks and service
marks relating to its products.

   In addition, the Seller has acquired the following trademarks from
Gigapixel:

  .  A mark referred to as "GIGA3D" in the form of a drawing, filed February
     18, 2000, for computer software and hardware for use in designing three
     dimensional computer graphic displays; International Class 9.

  .  A mark referred to as "GIGADUDE" in the form of a drawing, filed
     February 18, 2000, computer software and hardware for use in designing
     three dimensional computer graphic displays; International Class 9.

  .  Gigapixel (common law; unregistered)

  .  Gigapixel Corp. (common law; unregistered)

  .  Gigapixel Corporation (common law; unregistered)

  .  3D Are Us (common law; unregistered)

  .  SmartTile (common law; unregistered)

  .  GP-1 3D Core (common law; unregistered)

  .  Gigapixel (Logo) (common law; unregistered)

                                      F-4
<PAGE>

                                                                         ANNEX G

                            PATENT LICENSE AGREEMENT

   This Patent License Agreement (this "Agreement") is entered into as of
December 15, 2000 (the "Effective Date"), by and among Titan Acquisition Corp.
No. 2, a Delaware corporation having an office at 3535 Monroe Street, Santa
Clara, California 95051 (the "Purchaser"); Nvidia Corporation, a Delaware
corporation having an office at 3535 Monroe Street, Santa Clara, California
95051 ("Parent"); and 3dfx Interactive, Inc., a California corporation having
an office at 4435 Fortran Drive, San Jose, California 95134 ("3dfx"). In this
Agreement, the Purchaser and Parent are referred to collectively as "NVIDIA".

   In consideration of the mutual covenants and promises contained herein and
other good and valuable consideration (including the execution and delivery of
that certain Credit Agreement (the "Credit Agreement") between the Purchaser
and 3dfx of even date herewith and the Purchaser's extension of credit to 3dfx
thereunder), the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

     1. DEFINITIONS. As used in and for purposes of this Agreement:

       1.1. "Affiliate" means, with respect to a party to this Agreement,
    any person or entity that now or hereafter directly or indirectly
    controls, is controlled by, or is under common control with such party,
    where "control" means ownership of more than fifty percent (50%) of the
    outstanding shares or securities entitled to vote for the election of
    directors or similar managing authority of such party, person, or
    entity (as the case may be) or, if there are no outstanding shares or
    securities, more than fifty percent (50%) of the ownership interests
    representing the right to make the decisions for such party, person, or
    entity.

       1.2. "Asset Purchase Agreement" means that certain Asset Purchase
    Agreement among the Purchaser, Parent, and 3dfx of even date herewith.

       1.3. "Capture Period" means any time on or prior to the Effective
    Date.

       1.4. "Change in Control" means, with respect to a party to this
    Agreement, the occurrence of any of following:

         (a) a sale of assets representing more than fifty percent (50%)
      of the net book value or of the fair market value (whichever is
      lower) of such party's consolidated assets (in a single transaction
      or in a series of related transactions), other than a sale of some
      or all of the Excluded Assets (as such term is defined in the Asset
      Purchase Agreement) in the course of liquidating and dissolving
      3dfx;

         (b) a merger or consolidation involving such party or any
      subsidiary of such party after the completion of which: (i) in the
      case of a merger (other than a triangular merger) or a consolidation
      involving such party, the shareholders of such party immediately
      prior to the completion of such merger or consolidation beneficially
      own (within the meaning of Rule 13d-3 promulgated under the
      Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
      comparable successor rules), directly or indirectly, outstanding
      voting securities representing less than fifty percent (50%) of the
      combined voting power of the surviving entity in such merger or
      consolidation, and (ii) in the case of a triangular merger involving
      such party or a subsidiary of such party, the shareholders of such
      party immediately prior to the completion of such merger
      beneficially own (within the meaning of Rule 13d-3 promulgated under
      the Exchange Act, or comparable successor rules), directly or
      indirectly, outstanding voting securities representing less than
      fifty percent (50%) of the combined voting power of the surviving
      entity in such merger and less than fifty percent (50%) of the
      combined voting power of the parent of the surviving entity in such
      merger; or

         (c) an acquisition by any person, entity, or "group" (within the
      meaning of Section 13(d) or 14(d) of the Exchange Act or any
      comparable successor provisions), other than in a merger or
      consolidation of the type referred to in clause "(b)" of this
      sentence, of beneficial ownership

                                      G-1
<PAGE>

      (within the meaning of Rule 13d-3 promulgated under the Exchange
      Act, or comparable successor rules) of outstanding voting securities
      of such party representing at least fifty percent (50%) of the
      combined voting power of such party (in a single transaction or
      series of related transactions).

       1.5 "NVIDIA Licensed Products" means any and all products sold by
    NVIDIA or an Affiliate of NVIDIA.

       1.6. "NVIDIA Patents" means all classes or types of patents, utility
    models and design patents (including, without limitation, originals,
    divisions, continuations, continuations-in-part, extensions,
    counterparts, reexaminations, and reissues thereof), applications, and
    rights to file applications for these classes or types of patent rights
    in all countries of the world that (a) are assigned to or otherwise
    owned or controlled by Parent or any of its Affiliates or have been
    licensed to Parent or any of its Affiliates with the right to
    sublicense (but only to the extent that NVIDIA has the right to grant a
    sublicense without the requirement to pay consideration to any
    independent third party other than employees of Parent or its
    Affiliates), and (b) have claimed or are entitled to claim the benefit
    of any effective filing date or date of invention conceived or
    occurring during the Capture Period. The term NVIDIA Patents includes
    the Specified Patents, subject to Section 3.5 below.

       1.7. "Specified Patents" means, with respect to 3dfx Patents, United
    States patents nos. 5,740,343; 5,870,102; and 5,831,624, and with
    respect to NVIDIA Patents, United States patent nos. 5,687,357;
    5,721,947; 5,758,182; 6,023,738; and 6,092,124.

       1.8. "Suit" means, with respect to 3dfx Specified Patents, combined
    Civil Actions No. C-98-3626 and No. C-99-2460 now pending in the United
    States District Court for the Northern District of California, and with
    respect to NVIDIA Specified Patents, Civil Action No. C-00-3373 VRW now
    pending in the United States District Court for the Northern District
    of California.

       1.9. "3dfx Licensed Products" means any and all products sold by
    3dfx.

       1.10. "3dfx Patents" means all classes or types of patents, utility
    models and design patents (including, without limitation, originals,
    divisions, continuations, continuations-in-part, extensions,
    counterparts, reexaminations, and reissues thereof), applications, and
    rights to file applications for these classes or types of patent rights
    in all countries of the world that (a) are assigned to or otherwise
    owned or controlled by 3dfx or any of its Affiliates or have been
    licensed to 3dfx or any of its Affiliates with the right to sublicense,
    and (b) have claimed or are entitled to claim the benefit of any
    effective filing date or date of invention conceived or occurring
    during the Capture Period. The term 3dfx Patents includes the Specified
    Patents, subject to Section 3.5 below, and also includes, without
    limitation, all patents, patent applications, and inventions identified
    or listed in Exhibit B to the Asset Purchase Agreement.

     2. RELEASES

       2.1. 3dfx, on behalf of itself and its Affiliates and their
    respective successors and assigns, hereby irrevocably (except as
    provided in Section 5.2 below) releases, acquits and forever discharges
    NVIDIA, their Affiliates, and their respective suppliers,
    manufacturers, distributors, and customers, direct and indirect, from
    any and all claims, demands, rights of action, and liability, whether
    known or unknown, relating to any one or more of the 3dfx Patents and
    relating to any act, event, or circumstance that occurred on or prior
    to the Effective Date, to the extent such act, event, or circumstance
    would have been permitted under the licenses granted to Purchaser in
    this Agreement if such license had been in existence at the time of
    such act, event, or circumstance. 3dfx further waives all rights under
    Section 1542 of the California Civil Code, and any law or legal
    principle of similar effect in any jurisdiction, as such rights may
    relate to any claims released pursuant to this Agreement.

       2.2. Purchaser and Parent, on behalf of themselves and their
    Affiliates and their respective successors and assigns, hereby
    irrevocably (except as provided in Sections 5.1 and 5.2 below) release,

                                      G-2
<PAGE>

    acquit and forever discharge 3dfx and its suppliers, manufacturers,
    distributors, and customers, direct and indirect, from any and all
    claims, demands, rights of action, and liability, whether known or
    unknown, relating to any one or more of the NVIDIA Patents and relating
    to any act, event, or circumstance that occurred on or prior to the
    Effective Date, to the extent such act, event, or circumstance would
    have been permitted under the licenses granted to 3dfx in this
    Agreement if such license had been in existence at the time of such
    act, event, or circumstance. Purchaser and Parent further waive all
    rights under Section 1542 of the California Civil Code, and any law or
    legal principle of similar effect in any jurisdiction, as such rights
    may relate to any claims released pursuant to this Agreement.

       2.3. Each party acknowledges that it has consulted with legal
    counsel regarding the import of Section 1542, which provides as
    follows:

      A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
      NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
      THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
      SETTLEMENT WITH THE DEBTOR.

     3. GRANT OF RIGHTS

       3.1 License Grant to NVIDIA. 3dfx hereby grants to the Purchaser a
    non-exclusive, non-transferable (except as provided below), fully-paid
    and royalty-free, worldwide, irrevocable (except as provided in Section
    5.2 below) license, without the right to sublicense except as provided
    below, under the 3dfx Patents to:

         (a) make, have made, use, and import, and directly or indirectly
      sell, offer to sell and otherwise dispose of, NVIDIA Licensed
      Products; and

         (b) make, have made, use, and import any equipment, and practice
      any method or process, used in the manufacture of NVIDIA Licensed
      Products.

      Notwithstanding anything to the contrary in this Agreement, the
      Purchaser may assign, sublicense, or otherwise transfer any or all
      of its rights under this license to any one or more of its present
      or future Affiliates.

       3.2. License Grant to 3dfx. Parent hereby grants to 3dfx a non-
    exclusive, non-transferable, fully-paid and royalty-free, worldwide,
    irrevocable (except as expressly provided in this Agreement) license,
    without the right to sublicense, under the NVIDIA Patents to:

         (a) make, have made, use, and import, and directly or indirectly
      sell, offer to sell and otherwise dispose of, 3dfx Licensed
      Products; and

         (b) make, have made, use, and import any equipment, and practice
      any method or process, used in the manufacture of 3dfx Licensed
      Products.

       3.3. Covenants Not to Sue

      3dfx covenants and agrees, for itself and on behalf of its
      Affiliates and their respective successors and assigns, that neither
      3dfx nor any of its Affiliates shall commence, maintain, prosecute
      or voluntarily aid in any action at law, equity or any other
      proceeding against users, customers, manufacturers, suppliers, and
      distributors of NVIDIA Licensed Products based in whole or in part
      on any claim of infringement of any 3dfx Patent arising from the
      use, promotion, sale, offer for sale, importation or other
      distribution or transfer of NVIDIA Licensed Products, either alone
      or in combination with other products.

      Purchaser and Parent covenant and agree, for themselves and on
      behalf of their Affiliates and their respective successors and
      assigns, that neither NVIDIA nor any of their Affiliates shall
      commence, maintain, prosecute or voluntarily aid in any action at
      law, equity or any other

                                      G-3
<PAGE>

      proceeding against users, customers, manufacturers, suppliers, and
      distributors of 3dfx Licensed Products based in whole or in part on
      any claim of infringement of any NVIDIA Patent arising from the use,
      promotion, sale, offer for sale, importation or other distribution
      or transfer of 3dfx Licensed Products, either alone or in
      combination with other products.

       3.4. Full Rights. In the event that neither 3dfx nor any of its
    Affiliates has the right to grant a license under any particular 3dfx
    Patent of the scope set forth herein, then the license granted herein
    under such 3dfx Patent shall be of the broadest scope within the scope
    set forth herein which 3dfx or any of its Affiliates has the right to
    grant. In the event that neither Parent nor any of its Affiliates has
    the right to grant a license under any particular NVIDIA Patent of the
    scope set forth herein, then the license granted herein under such
    NVIDIA Patent shall be of the broadest scope within the scope set forth
    herein which Parent or any of its Affiliates has the right to grant.

       3.5. Specified Patents and Pending Claims. No rights, licenses,
    releases, or covenants (expressly including those set forth in Sections
    2.1, 2.2, 2.3, 3.1, 3.2, 3.3, and 3.4 herein) are granted to NVIDIA or
    to 3dfx under the Infringed Claims (as defined below) for the
    Infringing Products (as defined below). As used above, the term
    "Infringed Claims" means those claims of the Specified Patents that are
    currently alleged in the Suit to have been infringed by the
    manufacture, use, or sale of the Infringing Products, and the term
    "Infringing Products" means the products that are currently accused of
    infringing the Specified Patents in the Suit.

     4. DISCLAIMER

       4.1. Nothing in this Agreement shall be construed as:

         (a) a warranty or representation by 3dfx as to the validity,
      enforceability, or scope of any 3dfx Patent, or a warranty or
      representation by NVIDIA as to the validity, enforceability, or
      scope of any NVIDIA Patent;

         (b) a warranty or representation by 3dfx that any manufacture,
      sale, lease, use, or other disposition of NVIDIA Licensed Products
      hereunder will be free from infringement of any patents other than
      the 3dfx Patents, or a warranty or representation by NVIDIA that any
      manufacture, sale, lease, use, or other disposition of 3dfx Licensed
      Products hereunder will be free from infringement of any patents
      other than the NVIDIA Patents;

         (c) an agreement by either party to bring or prosecute actions or
      suits against third parties for infringement or conferring any right
      to bring or prosecute actions or suits against third parties for
      infringement; or

         (d) an obligation on the part of any party or any Affiliate of
      any party to furnish any technical information or know-how.

    The foregoing disclaimers shall not be construed to limit, modify, or
    in other way affect any representations or warranties made by 3dfx in
    the Credit Agreement or that certain Asset Purchase Agreement or any
    other agreement or document entered into or delivered in connection
    with the Credit Agreement or the Asset Purchase Agreement.

     5. TERMINATION

       5.1. Termination of 3dfx Licenses. All licenses, rights, releases,
    and covenants granted to 3dfx in this Agreement will immediately and
    automatically terminate (except only to the extent expressly provided
    below), without the requirement of notice from NVIDIA or any other
    action on the part of NVIDIA, upon the earliest to occur of the
    following events:

         (a) a Change in Control of 3dfx;

         (b) 3dfx admits in writing its inability to pay its debts as they
      become due, files for any form of bankruptcy, has an involuntary
      bankruptcy petition filed against it; or makes an assignment for the
      benefit of creditors;

                                      G-4
<PAGE>

         (c) 3dfx dissolves, liquidates, or ceases to conduct business;

         (d) the Closing (as such term is defined in the Asset Purchase
      Agreement); or

         (e) the termination of the Asset Purchase Agreement for any
      reason.

    Upon termination of 3dfx's licenses and other rights as a result of a
    Change in Control of 3dfx, 3dfx (or its successor) will retain, for a
    period of one year from the date on which such Change in Control
    occurs, the rights licensed to 3dfx in Section 3.2, subject to the
    restrictions and limitations set forth in Sections 3.2, 3.4, and 3.5
    and other applicable provisions of this Agreement, solely with respect
    to those 3dfx Licensed Products being manufactured, marketed, and sold
    at the time of such termination. The termination of 3dfx's licenses and
    other rights pursuant to this Section 5.1 will have no effect on the
    other provisions of this Agreement, which will remain in full force and
    effect in accordance with their terms.

       5.2. Termination of Agreement. Without limiting Section 5.1, this
    Agreement will terminate and be of no further force or effect if and
    only if the Asset Purchase Agreement is terminated in any of the
    following ways:

         (i) by the parties pursuant to Section 8.1(a) of the Asset
      Purchase Agreement;

         (ii) by 3dfx pursuant to Section 8.1(b) of the Asset Purchase
      Agreement by reason of the failure of the Closing to occur by the
      date set forth therein solely as a result of the failure of Parent
      and the Purchaser to comply with their obligations under the Asset
      Purchase Agreement;

         (iii) by the parties pursuant to Section 8.1(c) of the Asset
      Purchase Agreement;

         (iv) by Parent and the Purchaser pursuant to Section 8.1(f) of
      the Asset Purchase Agreement on the basis of an inaccuracy in the
      representations and warranties made by 3dfx in the Asset Purchase
      Agreement, or on the basis of a breach of the covenants of 3dfx in
      the Asset Purchase Agreement, if such inaccuracy or breach would not
      deprive the Purchaser and Parent of the material benefits of the
      Asset Purchase Agreement; or

         (v) by 3dfx pursuant to Section 8.1(g) of the Asset Purchase
      Agreement.

    Unless and until terminated pursuant to this Section 5.2, this
    Agreement will remain in effect indefinitely.

     6. MISCELLANEOUS PROVISIONS

       6.1 Authority. 3dfx represents and warrants that it has the right to
    grant NVIDIA the licenses granted to NVIDIA hereunder. The Purchaser
    and Parent represent and warrant that they have the right to grant 3dfx
    the licenses granted to 3dfx hereunder.

       6.2. Assignment. Subject to Section 3.1, this Agreement, and any
    rights or obligations hereunder, may not be assigned or delegated by
    any party without the prior written consent of the other parties,
    except that NVIDIA may assign this Agreement, or any of its rights
    under this Agreement, (a) to any of its Affiliates and (b) in
    connection with the transfer of all or substantially all of its
    business or assets (whether by sale, change in ownership, merger, or
    otherwise) with or without the consent of 3dfx. Any attempted
    assignment, delegation, or other transfer of this Agreement, or rights
    or obligations under this Agreement, by 3dfx in violation of this
    Section 6.2 will be null and void and will result in the immediate and
    automatic termination of all licenses granted to 3dfx, all releases and
    covenants made for the benefit of 3dfx or its suppliers, manufacturers,
    distributors, and customers, and all other rights of 3dfx under this
    Agreement. Subject to the foregoing, this Agreement shall be binding
    upon and inure to the benefit of the parties and their successors and
    permitted assigns.

       6.3. Patent Assignments. Neither 3dfx nor any of its Affiliates
    shall assign or transfer any of the 3dfx Patents to any third party
    unless such third party expressly agrees in writing that such
    assignment is made subject to the terms and conditions of this
    Agreement. Unless and until 3dfx's

                                      G-5
<PAGE>

    licenses and other rights have been terminated pursuant to Section 5.1,
    neither NVIDIA nor any of their Affiliates shall assign or transfer any
    of the NVIDIA Patents to any third party unless such third party
    expressly agrees in writing that such assignment is made subject to the
    terms and conditions of this Agreement.

       6.4. Notice. All notices required or permitted to be given hereunder
    shall be in writing and shall be delivered by hand, or if dispatched by
    prepaid air courier or by registered or certified airmail, postage
    prepaid, addressed as follows:

     If to NVIDIA:

                                        If to 3dfx:

     NVIDIA Corporation                 3dfx Interactive, Inc.
     3535 Monroe Street                 4435 Fortran Drive
     Santa Clara, CA 95051              San Jose, CA 95134
     Attn.: Chief Patent Counsel        Attn:

       Such notices shall be deemed to have been served when received by
    addressee or, if delivery is not accomplished by reason of some fault
    of the addressee, when tendered for delivery. Any party may give
    written notice of a change of address and, after notice of such change
    has been received, any notice or request shall thereafter be given to
    such party as above provided at such changed address.

       6.5. No Rule of Strict Construction. Regardless of which party may
    have drafted this Agreement, no rule of strict construction shall be
    applied against any party. If any provision of this Agreement is
    determined by a court to be unenforceable, the parties shall deem the
    provision to be modified to the extent necessary to allow it to be
    enforced to the extent permitted by law, or if it cannot be modified,
    the provision will be severed and deleted from this Agreement, and the
    remainder of the Agreement will continue in effect.

       6.6. Modification; Waiver. No modification or amendment to this
    Agreement, nor any waiver of any rights, will be effective unless
    assented to in writing by the party to be charged, and the waiver of
    any breach or default will not constitute a waiver of any other right
    hereunder or any subsequent breach or default.

       6.7. Governing Law. This Agreement and matters connected with the
    performance thereof shall be construed, interpreted, applied and
    governed in all respects in accordance with the laws of the United
    States of America and the State of California, without reference to
    conflict of laws principles.

       6.8. Jurisdiction. All disputes and litigation regarding this
    Agreement and matters connected with its performance shall be subject
    to the exclusive jurisdiction of the courts of the State of California
    or of the Federal courts sitting in Santa Clara County, California.

       6.9. Bankruptcy Code. The parties acknowledge and agree that this
    Agreement is a contract under which each party is a licensor of
    intellectual property as provided in Section 365(n) of Title 11, United
    States Code (the "Bankruptcy Code"). Each party acknowledges that if
    the licensor, as a debtor in possession or a trustee in bankruptcy in a
    case under the Bankruptcy Code, rejects this Agreement, the licensee
    may elect to retain its rights under this Agreement as provided in
    Section 365(n) of the Bankruptcy Code. Upon written request of the
    licensee to the licensor or the bankruptcy trustee, the licensor or
    such bankruptcy trustee will not interfere with the rights of the
    licensee as provided in this Agreement.

       6.10. Confidentiality of Terms. The parties hereto shall keep the
    terms of this Agreement confidential and shall not now or hereafter
    divulge these terms to any third party except:

         (a) with the prior written consent of the other parties;

         (b) to any governmental body having the power to require such
      disclosure;

                                      G-6
<PAGE>

         (c) to the extent a party determines such divulgation may be
      required by regulation, law, or legal process, including to legal
      and financial advisors in their capacity of advising a party in such
      matters, provided that the disclosing party informs the other
      parties in writing at least ten (10) days in advance of the
      disclosure and cooperates with the other parties in seeking
      confidential treatment or a protective order for portions of this
      Agreement designated by the other parties;

         (d) during the course of litigation so long as the disclosure of
      such terms and conditions are restricted in the same manner as is
      the confidential information of other litigating parties and so long
      as (i) the restrictions are embodied in a court-entered protective
      order; and (ii) the disclosing party informs the other parties in
      writing at least ten (10) days in advance of the disclosure; or

         (e) in confidence to legal counsel, accountants, and other
      advisors under a duty of confidentiality.

       6.11. Entire Agreement. This Agreement (along with the Credit
    Agreement and the Asset Purchase Agreement and the other agreements and
    documents entered into or delivered in connection with the execution of
    the Credit Agreement or the Asset Purchase Agreement) embodies the
    entire understanding of the parties with respect to the subject matter
    hereof, and merges all prior and contemporaneous discussions between
    them. No oral explanation or oral information by any party hereto shall
    alter the meaning or interpretation of this Agreement.

                                      G-7
<PAGE>

   In Witness Whereof, the parties hereto have executed this Patent License
Agreement as of the Effective Date.

TITAN ACQUISITION CORP. NO. 2

    /s/ Jen-Hsun Huang
By: _________________________________

Jen-Hsun Huang
_____________________________________
Printed Name

President & CEO
_____________________________________
Title


NVIDIA CORPORATION                       3DFX INTERACTIVE, INC.


    /s/ Jen-Hsun Huang                       /s/ Alex Leupp
By: _________________________________    By: __________________________________


Jen-Hsun Huang                           Alex Leupp
_____________________________________    ______________________________________
Printed Name                             Printed Name


President & CEO                          President & CEO
_____________________________________    ______________________________________
Title                                    Title


                                      G-8
<PAGE>

                                                                         ANNEX H

                          PATENT STANDSTILL AGREEMENT

   This Patent Standstill Agreement (this "Agreement") is entered into as of
December 15, 2000 (the "Effective Date") by and between NVIDIA Corporation, a
Delaware corporation having an office at 3535 Monroe Street, Santa Clara,
California 95051 ("NVIDIA"), and 3dfx Interactive, Inc., a California
corporation having an office at 4435 Fortran Drive, San Jose, California 95134
("3dfx").

   In consideration of the mutual covenants and promises contained herein and
other good and valuable consideration (including the execution and delivery of
that certain Asset Purchase Agreement (the "Asset Purchase Agreement") being
entered into among NVIDIA, Titan Acquisition Corp. No. 2 and 3dfx concurrently
with the execution of this Agreement, and NVIDIA's extension of credit to 3dfx
thereunder) the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

     1. DEFINITIONS. As used in and for purposes of this Agreement:

       1.1 "Capture Period" means any time on or prior to the Effective
    Date.

       1.2 "Patents" means all classes or types of inventions, patents,
    utility models and design patents (including, without limitation,
    originals, divisions, continuations, continuations-in-part, extensions,
    counterparts, reexaminations, and reissues thereof), applications, and
    rights to file applications for these classes or types of patent rights
    in all countries of the world that (a) are assigned to or otherwise
    owned or controlled by either party or any of its Subsidiaries or have
    been licensed to either party or any of its Subsidiaries with the right
    to sublicense, and (b) have claimed or are entitled to claim the
    benefit of any effective filing date or date of invention conceived or
    occurring during the Capture Period.

       1.3 "Purchaser Pending Litigation" and "Seller Pending Litigation"
    have the meanings given in the Asset Purchase Agreement.

       1.4 "Subsidiary" means, with respect to a party to this Agreement,
    any corporation, partnership or other entity, now or hereafter: (i)
    more than fifty percent (50%) of whose outstanding shares or securities
    entitled to vote for the election of directors or similar managing
    authority is directly or indirectly owned or controlled by such party
    hereto; or (ii) that does not have outstanding shares or securities but
    more than fifty percent (50%) of whose ownership interest representing
    the right to make the decisions for such entity is directly or
    indirectly owned or controlled by such party.

     2. COVENANT NOT TO SUE AND EXCEPTION

       2.1 Each party, on behalf of itself and its Subsidiaries, successors
    and assigns, hereby covenants not to bring, file or prosecute against
    the other party, its Subsidiaries and permitted successors and assigns,
    and any and all customers, users and/or distributors of the products of
    the other party to the extent said customers, users and/or distributors
    are using or selling the products of the other party, any action, in
    any forum whatsoever, relating to any of the Patents (except as set
    forth in Section 2.2) for the period set forth in Section 3.1, subject
    to Section 3.2.

       2.2 The parties agree that the Seller Pending Litigation and
    Purchaser Pending Litigation shall be stayed, dismissed with prejudice,
    and/or continued only as set forth in the Asset Purchase Agreement.

     3. TERM AND SURVIVAL

       3.1 Term. This Agreement and the rights and licenses granted
    hereunder shall become effective on the Effective Date, and except as
    otherwise provided in Section 3.2 shall continue in effect until the
    expiration of three years from the Effective Date.

       3.2 Early Termination. This Agreement and the rights granted
    hereunder shall terminate prior to the period described in Section 3.1
    upon any termination of the Asset Purchase Agreement (A) by the parties
    pursuant to Section 8.1(a) thereof, (B) by 3dfx pursuant to Section
    8.1(b) thereof by reason

                                      H-1
<PAGE>

    of the failure of the Closing (as defined therein) to occur by the date
    set forth therein as a result of the failure of NVIDIA to comply with
    its obligations under the Asset Purchase Agreement, (C) by either 3dfx
    or NVIDIA pursuant to Section 8.1(c) thereof, or (D) by 3dfx pursuant
    to Section 8.1(g) thereof.

     4. MISCELLANEOUS PROVISIONS

       4.1 Assignment. This Agreement, and any rights or obligations
    hereunder, may not be assigned or delegated without the prior written
    consent of the other party. This Agreement shall be binding upon and
    inure to the benefit of the parties and their permitted successors and
    assigns.

       4.2 Patent Assignments. Neither Party nor its Subsidiaries shall
    assign or transfer any of the Patents to any third party unless such
    third party expressly agrees in writing that such assignment is made
    subject to the terms and conditions of this Agreement.

       4.3 Notice. All notices required or permitted to be given hereunder
    shall be in writing and shall be delivered by hand, or if dispatched by
    prepaid air courier or by registered or certified airmail, postage
    prepaid, addressed as follows:

<TABLE>
       <S>                                              <C>
       If to NVIDIA:                                    If to 3dfx:

       NVIDIA Corporation                               3dfx Interactive, Inc.
       3535 Monroe Street                               4435 Fortran Drive
       Santa Clara, CA 95051                            San Jose, CA 95134
       Attn.: Chief Patent Counsel                      Attn: General Counsel
</TABLE>

       Such notices shall be deemed to have been served when received by
    addressee or, if delivery is not accomplished by reason of some fault
    of the addressee, when tendered for delivery. Either party may give
    written notice of a change of address and, after notice of such change
    has been received, any notice or request shall thereafter be given to
    such party as above provided at such changed address.

       4.4 No Rule of Strict Construction. Regardless of which party may
    have drafted this Agreement, no rule of strict construction shall be
    applied against either party. If any provision of this Agreement is
    determined by a court to be unenforceable, the parties shall deem the
    provision to be modified to the extent necessary to allow it to be
    enforced to the extent permitted by law, or if it cannot be modified,
    the provision will be severed and deleted from this Agreement, and the
    remainder of the Agreement will continue in effect.

       4.5 Modification; Waiver. No modification or amendment to this
    Agreement, nor any waiver of any rights, will be effective unless
    assented to in writing by the party to be charged, and the waiver of
    any breach or default will not constitute a waiver of any other right
    hereunder or any subsequent breach or default.

       4.6 Governing Law. This Agreement and matters connected with the
    performance thereof shall be construed, interpreted, applied and
    governed in all respects in accordance with the laws of the United
    States of America and the State of California, without reference to
    conflict of laws principles.

       4.7 Jurisdiction. 3dfx and NVIDIA agree that all disputes and
    litigation regarding this Agreement and matters connected with its
    performance shall be subject to the exclusive jurisdiction of the
    courts of the State of California or of the Federal courts sitting in
    Santa Clara County, California.

                                      H-2
<PAGE>

       4.8 Confidentiality of Terms. The parties hereto shall keep the
    terms of this Agreement confidential and shall not now or hereafter
    divulge these terms to any third party except:

         (a) with the prior written consent of the other party;

         (b) to any governmental body having the power to require such
      disclosure;

         (c) to the extent a party determines such divulgation may be
      required by regulation, law or legal process, including to legal and
      financial advisors in their capacity of advising a party in such
      matters, provided that the disclosing party informs the other party
      in writing at least ten (10) days in advance of the disclosure and
      cooperates with the other party in seeking confidential treatment or
      a protective order for portions of this Agreement designated by the
      other party;

         (d) during the course of litigation so long as the disclosure of
      such terms and conditions are restricted in the same manner as is
      the confidential information of other litigating parties and so long
      as (i) the restrictions are embodied in a court-entered protective
      order; and (ii) the disclosing party informs the other party in
      writing at least ten (10) days in advance of the disclosure; or

         (e) in confidence to legal counsel, accountants, and other
      advisors under a duty of confidentiality.

       4.9 Entire Agreement. This Agreement (along with the Asset Purchase
    Agreement and the other agreements and documents entered into or
    delivered in connection with the execution of the Asset Purchase
    Agreement) embodies the entire understanding of the parties with
    respect to the subject matter hereof, and merges all prior and
    contemporaneous discussions between them. No oral explanation or oral
    information by either party hereto shall alter the meaning or
    interpretation of this Agreement.

   In Witness Whereof, the parties hereto have executed this Patent Standstill
Agreement as of the Effective Date.

                                          3dfx Interactive, Inc.

                                              /s/ Alex Leupp
                                          By: ________________________________

                                          Alex Leupp
                                          _____________________________________
                                          Printed Names

                                          President & CEO
                                          _____________________________________
                                          Title

                                          NVIDIA Corporation

                                              /s/ Jen-Hsun Huang
                                          By: ________________________________

                                          Jen-Hsun Huang
                                          _____________________________________
                                          Printed Name

                                          President & CEO
                                          _____________________________________
                                          Title

                                      H-3
<PAGE>


                                                                 1645-PS-01
<PAGE>

You are urged to read the Prospectus/Proxy Statement when you receive it and any
other relevant documents filed with the Securities and Exchange Commission
("SEC") because they contain important information. You may obtain the documents
free of charge at the SEC's web site, http://www.sec.gov. In addition, documents
filed by 3dfx with the SEC can be obtained by contacting 3dfx at the following
address and telephone number: Shareholder Relations, 4435 Fortran Drive, San
Jose, California 95134, telephone: (408) 935-4400. Please read the
Prospectus/Proxy Statement carefully before making a decision concerning the
dissolution of 3dfx and the sale of 3dfx assets to NVIDIA US Investment Company.
3dfx, its officers, directors, employees and agents may be soliciting proxies
from 3dfx shareholders in connection with the asset sale. Information
concerning the participants in the solicitation is set forth in the
Prospectus/Proxy Statement.
</TEXT>
</DOCUMENT>
</SUBMISSION>
