SECOND AMDT.TO LOAN & SECURITY LOAN

SECOND AMENDMENT AND LIMITED WAIVER TO

LOAN AND SECURITY AGREEMENT



THIS SECOND AMENDMENT AND LIMITED WAIVER TO LOAN AND SECURITY AGREEMENT dated as of December 9, 1997 (the "Amendment"), is entered into by and among 3DFX INTERACTIVE, INC., a California corporation ("Borrower"), and SILICON VALLEY BANK, ("Bank"). Capitalized terms used herein without definition shall have the same meanings herein as given to them in the Loan Agreement (defined below).





A. The Borrower and the Bank have entered into that certain Loan and Security Agreement dated as of August 19, 1996 and amended by that certain Loan Modification Agreement dated as of August 18, 1997 (as so amended, the "Loan Agreement") pursuant to which the Bank has agreed to extend and make available to the Borrower certain advances of money.



B. The Borrower desires that the Bank further amend and waive certain terms under the Loan Agreement upon the terms and conditions more fully set forth herein.



C. Subject to the representations and warranties of the Borrower herein and upon the terms and conditions set forth in this Amendment, the Bank is willing to so amend the Loan Agreement.





NOW, THEREFORE, in consideration of the foregoing Recitals and intending to be legally bound, the parties hereto agree as follows:



SECTION 1. THE BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants that, immediately before and immediately after giving effect to this Amendment, no event shall have occurred and be continuing which constitutes an Event of Default.



SECTION 2. AMENDMENTS TO THE LOAN AGREEMENT.



2.1 Section 1.1 of the Loan Agreement, "Definitions", is hereby amended by replacing certain definitions and adding new definitions of the following terms to read as follows:



"'ADVANCE' or 'ADVANCES' means an Advance under the Committed

Revolving Line, the Committed Equipment Line-A, or the

Committed Equipment Line-B."



"'COMMITTED EQUIPMENT LINE-B' means Three Million Dollars

($3,000,000)."









"'COMMITTED REVOLVING LINE' means Seven Million Dollars

($7,000,000)."



Subparagraph (i) of "ELIGIBLE ACCOUNTS" is hereby

deleted and replaced in its entirety as follows: "(I) Accounts

with respect to an account debtor, including Subsidiaries and

Affiliates, whose total obligations to Borrower exceed

twenty-five percent (25%) of all Accounts, to the extent such

obligations exceed the aforementioned percentage, provided

however, (i) a thirty-five percent (35%) concentration limit

is allowed for Diamond Multimedia, (ii) a thirty-five percent

(35%) concentration limit is allowed for any single account

debtor during any one month, or (iii) as otherwise approved in

writing by Bank;"



"'EQUIPMENT LINE-B MATURITY DATE' means December 9, 2001."



"'EXCHANGE CONTRACT' has the meaning set forth in SECTION

2.1.3."



"'OUTSTANDING BALANCE' means any outstandings, including

Letters of Credit and Exchange Contracts, under the Committed

Equipment Line-A, the Committed Equipment Line-B, or the

Committed Revolving Line."



A new subparagraph (c) is hereby added to the

definition of Permitted Investments" as follows: "(C) Other

investments for the acquisition of assets, intellectual

property, or other products complementary to Borrower's

business in an aggregate amount not to exceed Five Million

Dollars ($5,000,000) during the term of this Agreement."



"'REVOLVING MATURITY DATE' means December 8, 1998."



2.2 The definitions of "COMMITTED EQUIPMENT LINE" and "EQUIPMENT MATURITY DATE" under Section 1.1 of the Loan Agreement, "Definitions", are hereby deleted and replaced in their entirety to read as follows:



"'COMMITTED EQUIPMENT LINE-A' means Two Million Dollars

($2,000,000)."



"'EQUIPMENT LINE-A MATURITY DATE' means August 18, 1998."



All references in the Loan Agreement to "Committed Equipment Line" and the "Equipment Maturity Date" shall be replaced with "Committed Equipment Line-A" and "Equipment Line-A Maturity Date", respectively.



2.3 Section 2.1, "Advances", is hereby deleted and replaced in its entirety as follows:



"2.1 ADVANCES. Subject to and upon the terms and

conditions of this Agreement, Bank agrees to make Advances to

Borrower in an aggregate amount not to exceed (i) the

Committed Revolving Line or the Borrowing Base, whichever







is less, minus (ii) the face amount of all outstanding Letters

of Credit (including drawn but unreimbursed Letters of Credit)

and minus (iii) the Foreign Exchange Reserve. For purposes of

this Agreement, "BORROWING BASE" shall mean an amount equal to

(i) eighty percent (80%) of Eligible Accounts, provided,

however, that such Borrowing Base shall only apply when

Outstanding Balances under the Committed Revolving Line exceed

Two Million Five Hundred Thousand Dollars ($2,500,000).

Subject to the terms and conditions of this Agreement, amounts

borrowed pursuant to this SECTION 2.1 may be repaid and

reborrowed at any time during the term of this Agreement."



2.4 Section 2.1.1(a), "Letters of Credit", is hereby deleted and replaced in its entirety as follows:



"(a) Subject to the terms and conditions of this

Agreement, Bank agrees to issue or cause to be issued letters

of credit for the account of Borrower in an aggregate face

amount not to exceed (i) the lesser of the Committed Revolving

Line or the Borrowing Base minus (ii) the then outstanding

principal balance of the Advances minus (iii) the Foreign

Exchange Reserve, provided that the face amount of outstanding

Letters of Credit (including drawn but unreimbursed Letters of

Credit) shall not in any case exceed Seven Million Dollars

($7,000,000). Each such letter of credit shall have an expiry

date no later than ninety (90) days after the Revolving

Maturity Date provided that Borrower's letter of credit

reimbursement obligation shall be secured by cash on terms

acceptable to Bank at any time after the Revolving Maturity

Date if the term of this Agreement is not extended by Bank.

All such letters of credit shall be, in form and substance,

acceptable to Bank in its sole discretion and shall be subject

to the terms and conditions of Bank's form of application and

letter of credit agreement."



2.5 Section 2.1.2, "Equipment Advances" is hereby re-numbered and renamed to Section 2.1.4, "Equipment Line-A Advances".



2.6 A new Section 2.1.3, "Foreign Exchange Contract; Foreign Exchange Settlements", is hereby added in its entirety as follows:



"2.1.3 FOREIGN EXCHANGE CONTRACT; FOREIGN EXCHANGE



(a) Subject to the terms of this Agreement, Borrower

may enter into foreign exchange contracts (the "Exchange

Contracts") not to exceed an aggregate amount of Seven Million

Dollars ($7,000,000) (the "Contract Limit"), pursuant to which

Bank shall sell to or purchase from Borrower foreign currency

on a spot or future basis. Borrower shall not request any

Exchange Contracts at any time it is out of compliance with

any of the provisions of this Agreement. All Exchange

Contracts must provide for delivery of settlement on or before

December 4, 1998. The amount available under the Committed

Revolving Line at any time shall be reduced by the following

amounts (the "Foreign Exchange Reserve") on any given







day (the "Determination Date"): (i) on all outstanding

Exchange Contracts on which delivery is to be effected or

settlement allowed more than two business days after the

Determination Date, 10% of the gross amount of the Exchange

Contracts; plus (ii) on all outstanding Exchange Contracts on

which delivery is to be effected or settlement allowed within

two business days after the Determination Date, 100% of the

gross amount of the Exchange Contracts.



(b) Bank may, in its discretion, terminate the

Exchange Contracts at any time (i) that an Event of Default

occurs or (ii) that there is no sufficient availability under

the Committed Revolving Line and Borrower does not have

available funds in its bank account to satisfy the Foreign

Exchange Reserve. If Bank terminates the Exchange Contracts,

and without limitation of any applicable indemnities, Borrower

agrees to reimburse Bank for any and all fees, costs and

expenses relating thereto or arising in connection therewith.



(c) Borrower shall not permit the total gross amount

of all Exchange Contracts on which delivery is to be effected

and settlement allowed in any two business day period to be

more than Seven Hundred Thousand Dollars ($700,000) (the

"Settlement Limit") nor shall Borrower permit the total gross

amount of all Exchange Contracts to which Borrower is a party,

outstanding at any one time, to exceed the Contract Limit.

Notwithstanding the above, however, the amount which may be

settled in any two (2) business day period may be increased

above the Settlement Limit up to, but in no event to exceed,

the amount of the Contract Limit under either of the following

circumstances:



(i) if there is sufficient availability

under the Committed Revolving Line in the amount of

the Foreign Exchange Reserve as of each Determination

Date, provided that Bank in advance shall reserve the

full amount of the Foreign Exchange Reserve against

the Committed Revolving Line; or



(ii) if there is insufficient availability

under the Committed Revolving Line, as to settlements

within any two (2) business day period, provided that

Bank, in its sole discretion, may: (A) verify good

funds overseas prior to crediting Borrower's deposit

account with Bank (in the case of Borrower's sale of

foreign currency); or (B) debit Borrower's deposit

account with Bank prior to delivering foreign

currency overseas (in the case of Borrower's purchase

of foreign currency).



(d) In the case of Borrower's purchase of foreign

currency, Borrower in advance shall instruct Bank upon

settlement either to treat the settlement amount as an advance

under the Committed Revolving Line, or to debit Borrower's

account for the amount settled.







(e) Borrower shall execute all standard from

applications and agreements of Bank in connection with the

Exchange Contracts and, without limiting any of the terms of

such applications and agreements, Borrower will pay all

standard fees and charges of Bank in connection with the

Exchange Contracts.



(f) Without limiting any of the other terms of this

Agreement or any such standard form applications and agreement

of Bank, Borrower agrees to indemnify Bank and hold it

harmless, from and against any and all claims, debts,

liabilities, demands, obligations, actions, costs and expenses

(including, without limitation, attorneys' fees of counsel of

Bank's choice), of every nature and description which it may

sustain or incur, based upon, arising out of, or in any way

relating to any of the Exchange Contracts or any transactions

relating thereto or contemplated thereby."



2.7 A new section 2.1.5, "Equipment Line-B Advances" is hereby added in its entirety as follows:



"2.1.5 EQUIPMENT LINE-B ADVANCES.



(a) Subject to and upon the terms and conditions of

this Agreement, at any time from the date hereof through

December 9, 1998 (the "Equipment-B Availability End Date"),

Bank agrees to make advances (each an "Equipment-B Advance"

and collectively, the "Equipment-B Advances") to Borrower in

an aggregate outstanding amount not to exceed the Committed

Equipment Line-B. To evidence the Equipment Advance or

Equipment Advances, Borrower shall deliver to Bank, at the

time of each Equipment Advance request, an invoice for the

equipment to be purchased. The Equipment Advances shall be

used only to purchase Equipment and shall not exceed One

Hundred Percent (100%) of the invoice amount of such equipment

approved from time to time by Bank, excluding taxes, shipping,

warranty charges, freight discounts and installation expense.

Software and leaseholds may, however, constitute up to Fifty

Percent (50%) of aggregate Equipment Line-B Advances.



(b) Interest shall accrue from the date of each

Equipment Advance at the rate specified in SECTION 2.3(A), and

shall be payable monthly for each month through the month in

which the Equipment Availability End Date falls. Any Equipment

Advances that are outstanding on the Equipment Availability

End Date will be payable in thirty-six (36) equal monthly

installments of principal, and all accrued interest, beginning

on the Payment Date of each month following the Equipment

Availability End Date and ending on the Equipment Line-B

Maturity Date. Equipment Advances, once repaid, my not be



(c) When Borrower desires to obtain an Equipment

Advance, Borrower shall notify Bank (which notice shall be

irrevocable) by facsimile transmission to be received no later

than 3:00 p.m. Pacific time one (1) Business Day before the











day on which the Equipment Advance is to be made. Such notice

shall be substantially in the form of Exhibit B. The notice

shall be signed by a Responsible Officer or its designee and

include a copy of the invoice for the Equipment to be

financed."



2.8 Section 2.3.1, "Interest Rate", is hereby deleted and replaced in its entirety as follows:



"2.3.1 INTEREST RATE. The interest rate on all Advances shall

be applied as follows:



(a) Any Advances under the Committed Revolving Line

shall bear interest, on the average Daily Balance, at a rate

equal to one-quarter of one (0.25) percentage point above the

Prime Rate.



(b) Any Advances under the Committed Equipment Line-A

shall bear interest, on the average Daily Balance, at a rate

equal to one and one-half (1.50) percen ...