NVIDIA CORP/CA, S-1/A, 1998-04-24

NVIDIA CORP/CA
S-1/A, 1998-04-24
SEMICONDUCTORS & RELATED DEVICES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 1998

REGISTRATION NO. 333-47495
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

NVIDIA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

---------------
<TABLE>
<S> <C> <C>
DELAWARE 3674 94-3177549
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NUMBER)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
</TABLE>

1226 TIROS WAY
SUNNYVALE, CA 94086
(408) 617-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

JEN-HSUN HUANG
CHIEF EXECUTIVE OFFICER
NVIDIA CORPORATION
1226 TIROS WAY
SUNNYVALE, CA 94086
(408) 617-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:

JAMES C. GAITHER LARRY W. SONSINI
ERIC C. JENSEN JAMES N. STRAWBRIDGE
KARYN R. SMITH JON C. GONZALES
COOLEY GODWARD LLP WILSON SONSINI GOODRICH & ROSATI
ONE MARITIME PLAZA, 20TH FLOOR PROFESSIONAL CORPORATION
SAN FRANCISCO, CA 94111 650 PAGE MILL ROAD
(415) 693-2000 PALO ALTO, CA 94304
(650) 493-9300

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
number for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)

Issued April 24, 1998

[LOGO OF NVIDIA]

COMMON STOCK

-----------

ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE
COMPANY. PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE
COMMON STOCK OF THE COMPANY. IT IS CURRENTLY ESTIMATED THAT THE INITIAL
PUBLIC OFFERING PRICE WILL BE BETWEEN $ AND $ PER SHARE. SEE
"UNDERWRITERS" FOR A DISCUSSION OF THE FACTORS TO BE CONSIDERED IN
DETERMINING THE INITIAL PUBLIC OFFERING PRICE. THE SHARES OF COMMON STOCK
OFFERED HEREBY HAVE BEEN APPROVED FOR QUOTATION ON THE NASDAQ NATIONAL
MARKET UNDER THE SYMBOL "NVDA" SUBJECT TO OFFICIAL NOTICE OF ISSUANCE.

-----------

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON
PAGE 6 HEREOF.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

-----------

PRICE $ A SHARE

-----------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS (1) COMPANY (2)
-------- --------------- -----------
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total(3)................................... $ $ $
</TABLE>
- -----
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriters."
(2) Before deducting expenses payable by the Company estimated at $1,150,000.

(3) The Company has granted the Underwriters an option, exercisable within
30 days of the date hereof, to purchase up to an aggregate of
additional Shares at the price to public less underwriting discounts and
commissions for the purpose of covering over-allotments, if any. If the
Underwriters exercise such option in full, the total price to public,
underwriting discounts and commissions and proceeds to Company will be
$ , $ and $ , respectively. See "Underwriters."

-----------

The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the
Underwriters. It is expected that delivery of the Shares will be made on or
about , 1998 at the office of Morgan Stanley & Co. Incorporated,
New York, N.Y., against payment therefor in immediately available funds.

-----------

MORGAN STANLEY DEAN WITTER
HAMBRECHT & QUIST
CIBC OPPENHEIMER
, 1998
<PAGE>

[Description of illustration: four computer monitors depicting 3D rendering of
a building exterior, a game image, an anatomy illustration and the eye of a
frog. The caption is "Awesome 3D graphics-mainstream". The NVIDIA name and
logo also are depicted.]

Text to accompany artwork:

NVIDIA designs, develops and markets 3D graphics processors and related
software that provide high performance interactive 3D graphics to the
mainstream PC market.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, SHARES OF COMMON STOCK IN THE OPEN MARKET. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto appearing elsewhere
in this Prospectus. This Prospectus contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth under "Risk Factors" and
elsewhere in this Prospectus.

THE COMPANY

NVIDIA designs, develops and markets 3D graphics processors and related
software that provide high performance interactive 3D graphics to the
mainstream PC market. The Company's graphics processors are designed to deliver
a highly immersive, interactive 3D experience with realistic imagery and
stunning effects. The RIVA128 and RIVA128ZX graphics processors provide
superior processing power at competitive prices and are architected to take
advantage of mainstream industry standards such as Microsoft's Direct3D API.
The highly integrated design of the Company's graphics processors combines high
performance 3D and 2D graphics on a single chip and provides a simpler and
lower cost graphics solution relative to competing solutions, including multi-
chip or multi-board 2D/3D graphics subsystems.

NVIDIA designed the RIVA128 graphics processor to enable PC OEMs and add-in
board manufacturers to build award-winning products by delivering state-of-the-
art interactive 3D graphics capability to end users while maintaining
affordable prices. The Company believes that by developing 3D graphics
solutions that provide superior performance and address the key requirements of
the mainstream PC market, it will accelerate the adoption of 3D graphics
throughout this market. The benefits and performance of the RIVA128 graphics
processor have received significant industry validation and have enabled the
Company's customers to win over 80 industry awards. NVIDIA's graphics
processors currently are designed into products offered by five of the top ten
PC OEMs in the United States--Compaq, Dell, Gateway 2000, Micron and Packard
Bell NEC--and by leading add-in board manufacturers such as Diamond and STB.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered................. shares
Common Stock to be outstanding after
the offering........................ shares(1)
Use of proceeds...................... For general corporate purposes, including
capital expenditures and working capital.
See "Use of Proceeds."
Nasdaq National Market symbol........ NVDA
</TABLE>

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, QUARTER ENDED
PERIOD FROM INCEPTION ---------------------------------- -------------------
(APRIL 5, 1993) TO MARCH 30, MARCH 29,
DECEMBER 31, 1993 1994 1995 1996 1997 1997 1998
--------------------- ------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Total revenue........... $ -- $ -- $ 1,182 $ 3,912 $29,071 $ 65 $37,662
Gross profit (loss)..... -- -- (367) 874 7,845 (143) 10,103
Operating income (loss). (506) (1,351) (6,470) (2,993) (2,560) (1,144) 2,947
Net income (loss)....... (484) (1,361) (6,377) (3,077) (2,691) (1,176) 2,180
Basic net income (loss)
per share(2)........... $ (.07) $ (.19) $ (.56) $ (.27) $ (.21) $ (.10) $ .15
Diluted net income
(loss) per share(2).... $ (.07) $ (.19) $ (.56) $ (.27) $ (.21) $ (.10) $ .08
Shares used in basic per
share computation(2)... 6,784 7,048 11,365 11,383 12,677 11,578 14,142
Shares used in diluted
per share
computation(2)......... 6,784 7,048 11,365 11,383 12,677 11,578 25,729
</TABLE>

<TABLE>
<CAPTION>
MARCH 29, 1998
----------------------
ACTUAL AS ADJUSTED(3)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................ $ 8,640 $
Total assets............................................. 36,738
Capital lease obligations, less current portion.......... 2,143
Total stockholders' equity............................... 9,257
</TABLE>
- -------

(1) Based on the number of shares outstanding as of March 29, 1998. Excludes
(i) 6,066,833 shares of Common Stock issuable upon the exercise of options
outstanding at a weighted average exercise price of $3.91 per share, (ii)
158,806 shares of Common Stock issuable upon the exercise of warrants
outstanding at a weighted average exercise price of $2.10 per share, (iii)
3,911,457 shares of Common Stock reserved for future grants under the
Company's 1998 Equity Incentive Plan, (iv) 300,000 shares reserved for
future grants under the Company's 1998 Non-Employee Directors' Stock Option
Plan, (v) 500,000 shares of Common Stock reserved for issuance under the
Company's 1998 Employee Stock Purchase Plan and (vi) 131,750 shares of
Common Stock issuable upon exercise of options granted after March 29,
1998. See "Management--Employee Benefit Plans" and Notes 3 and 8 of Notes
to Financial Statements.
(2) See Note 1 of Notes to Financial Statements for an explanation of the
determination of the number of shares used in per share computations.

(3) Adjusted to reflect the sale of the shares of Common Stock offered
hereby at an assumed initial public offering price of $ per share and
after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by the Company. See "Use of Proceeds"
and "Capitalization."

3
<PAGE>

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES OR AN OFFER TO, OR A SOLICITATION OF, ANY
PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

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UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
The Company............................................................... 5
Risk Factors.............................................................. 6
Use of Proceeds........................................................... 20
Dividend Policy........................................................... 20
Capitalization............................................................ 21
Dilution.................................................................. 22
Selected Financial Data................................................... 23
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 24
Business.................................................................. 33
Management................................................................ 46
Certain Transactions...................................................... 55
Principal Stockholders.................................................... 56
Description of Capital Stock.............................................. 58
Shares Eligible for Future Sale........................................... 60
Underwriters.............................................................. 62
Legal Matters............................................................. 63
Experts................................................................... 63
Additional Information.................................................... 64
Index to Financial Statements............................................. F-1
</TABLE>

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

The Company intends to furnish to its stockholders annual reports containing
financial statements audited by an independent public accounting firm and
quarterly reports for the first three quarters of each year containing
unaudited interim financial information.

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

NVIDIA is a registered trademark of the Company and the Company has filed
for trademark protection for the NVIDIA logo. The Company and ST
Microelectronics, Inc. have filed jointly for trademark protection for
RIVA128. All other trademarks or service marks appearing in this Prospectus
are the property of their respective owners.

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

Except as set forth in the financial statements or as otherwise indicated
herein, information in this Prospectus (i) gives effect to the reincorporation
of the Company from California to Delaware in April 1998, (ii) gives effect to
the conversion of all of the Company's outstanding shares of Preferred Stock
into shares of Common Stock, which will occur automatically upon the closing
of this offering, and (iii) assumes that the Underwriters' over-allotment
option is not exercised. See "Description of Capital Stock" and
"Underwriters." The Company's fiscal years ended on December 31 from 1993 to
1997. Effective January 1, 1998, the Company changed its fiscal year end from
December 31 to a 52- or 53-week year ending on the last Sunday in December.
All general references to years relate to the above fiscal years unless
otherwise noted.

4
<PAGE>

THE COMPANY

NVIDIA designs, develops and markets 3D graphics processors and related
software that provide high performance interactive 3D graphics to the
mainstream PC market. The Company's graphics processors incorporate a "fast-
and-wide" 100 megahertz, 128-bit graphics architecture that is designed to
deliver a highly immersive, interactive 3D experience with realistic imaging
and stunning effects. The Company's RIVA128 and RIVA128ZX graphics processors
provide superior processing power at competitive prices and are architected to
take advantage of mainstream industry standards such as Microsoft
Corporation's ("Microsoft") Direct3D application programming interface
("API"). The highly integrated design of the RIVA128 and RIVA128ZX graphics
processors combines high performance 3D and 2D graphics on a single chip and
provides a simpler and lower cost graphics solution relative to competing
solutions, including multi-chip or multi-board 2D/3D graphics subsystems.

Interactive 3D graphics technology is emerging as one of the most
significant new computing developments since the introduction of the graphical
user interface. The visually engaging and interactive nature of 3D graphics
responds to consumers' demands for a convincing simulation of reality beyond
what is possible with traditional 2D graphics. The fundamental interactive
capability of 3D graphics is expected to make it a natural and compelling
medium for existing and emerging applications for entertainment, Internet,
business and education.

The Company believes that a PC's interactive 3D graphics capability
represents one of the primary means by which users differentiate among various
systems. PC users today can easily differentiate the quality of graphics and
prefer personal computers that provide a superior visual experience. These
factors have dramatically increased demand for 3D graphics processors; Mercury
Research estimates that 3D graphics will be standard in every PC unit shipped
by 2001. Mercury Research also estimates that 8.6 million 3D graphics
processors were sold in 1997 and 180 million will be sold in 2001.

The Company's products allow users to enjoy a highly immersive, interactive
3D experience with compelling visual quality, realistic motion and complex
object and scene interaction at real-time frame rates. By providing this level
of performance at an affordable price to OEMs and end users, the Company
believes that it will accelerate the adoption of interactive 3D graphics
throughout the mainstream PC market. The Company's objective is to be the
leading supplier of high performance 3D graphics processors for PCs. The
Company's strategy to achieve this objective includes focusing on the
mainstream PC market, targeting leading OEM customers, extending its
technological leadership in 3D graphics and increasing its market share by
leveraging strategic alliances.

NVIDIA's products are used by five of the top ten PC OEMs in the United
States--Compaq Computer Corporation ("Compaq"), Dell Computer Corporation
("Dell"), Gateway 2000, Inc. ("Gateway 2000"), Micron Technology, Inc.
("Micron") and Packard Bell NEC, Inc. ("Packard Bell NEC")--and leading add-in
board manufacturers such as Diamond Multimedia Systems, Inc. ("Diamond") and
STB Systems, Inc. ("STB"). The RIVA128 graphics processor has received
significant industry validation and has enabled the Company's customers to
receive over 80 awards from recognized industry publications, including PC
Magazine, PC Computing, PC World, Computer Gaming World, PC Games and CNET.

NVIDIA was incorporated in California in April 1993 and reincorporated in
Delaware in April 1998. The Company's executive offices are located at 1226
Tiros Way, Sunnyvale, California 94086, and its telephone number is (408) 617-
4000.

5
<PAGE>

RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
shares of Common Stock offered hereby. This Prospectus contains forward-
looking statements that involve risks and uncertainties. The Company's actual
results may differ materially from the results discussed in such forward-
looking statements. Factors that may cause such a difference include, but are
not limited to, those discussed below, in the sections entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business" and elsewhere in this Prospectus.

Unpredictable and Fluctuating Operating Results. Many of the Company's
revenue components fluctuate and are difficult to predict, and its operating
expenses are largely independent of revenue in any particular period. It is
therefore difficult for the Company to accurately forecast revenue and profits
or losses. The Company believes that, even if it does achieve significant
sales of its products, quarterly and annual results of operations will be
affected by a variety of factors that could materially adversely affect
revenue, gross profit and results of operations. Factors that have affected
the Company's results of operations in the past, and are likely to affect the
Company's results of operations in the future, include, among others, demand
and market acceptance for the Company's products; the successful development
of next-generation products; unanticipated delays or problems in the
introduction or performance of next-generation products; market acceptance of
the products of the Company's customers; new product announcements or product
introductions by the Company's competitors; the Company's ability to introduce
new products in accordance with OEM design requirements and design cycles;
changes in the timing of product orders due to unexpected delays in the
introduction of products of the Company's customers or due to the life cycles
of such customers' products ending earlier than anticipated; fluctuations in
the availability of manufacturing capacity or manufacturing yields;
competitive pressures resulting in lower than expected average selling prices;
the volume of orders that are received and that can be fulfilled in a quarter;
the rescheduling or cancellation of customer orders; the unanticipated
termination of a strategic relationship; seasonal fluctuations associated with
the tendency of PC sales to decrease in the second quarter and increase in the
second half of each calendar year; and the level of expenditures for research
and development and sales, general and administrative functions of the
Company. In addition, the Company believes that quarterly and annual results
of operations could be affected in the future by other factors, including
changes in the relative volume of sales of the Company's products; seasonality
in the PC market; the ability of the Company to reduce the process geometry of
its products; supply constraints for the other components incorporated into
its customers' products; the loss of a key customer; a reduction in the amount
of royalties received from ST Microelectronics, Inc. ("ST"); legal and other
costs related to defending intellectual property litigation; costs associated
with protecting the Company's intellectual property; inventory write-downs;
and foreign exchange rate fluctuations. Any one or more of these factors could
result in the Company failing to achieve its expectations as to future revenue
or net income.

Because most operating expenses are relatively fixed in the short term, the
Company may be unable to adjust spending sufficiently in a timely manner to
compensate for any unexpected sales shortfall, which could materially
adversely affect quarterly results of operations. The Company will 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 the Company to invest
significantly greater resources than anticipated in research and development
or sales and marketing efforts, the Company's business, financial condition
and results of operations could be materially adversely affected. Accordingly,
the Company believes that period-to-period comparisons of its 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. As a result of fluctuating operating
results or other factors discussed below, in certain future quarters the
Company's results of operations may be below the expectations of public market
analysts or investors. In such event, the market price of the Company's Common
Stock would be materially adversely affected. See "--Absence of Prior Trading
Market; Potential Volatility of Stock Price" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

6
<PAGE>

Limited Operating History; History of Losses; No Assurance of Profitability.
The Company has a limited operating history upon which investors may evaluate
the Company and its prospects. The Company's recent revenue growth may not be
sustainable and should not be considered indicative of future revenue growth,
if any. As of March 29, 1998, the Company's accumulated deficit was
approximately $11.8 million. Although the Company generated net income in the
quarters ended March 29, 1998 and December 31, 1997, it incurred significant
losses in each other quarter of fiscal 1997 and in each quarter of its prior
fiscal years. There can be no assurance that in the future the Company will be
profitable on a quarterly or annual basis. The Company's prospects must be
considered in light of the significant risks, challenges and difficulties
frequently encountered by companies in their early stage of development,
particularly companies in intensely competitive and rapidly evolving markets
such as the 3D graphics processor market and semiconductor industry. To
address these risks, the Company must, among other things, successfully
increase the scope of its operations, respond to competitive and technological
developments, continue to attract, retain and motivate qualified personnel and
continue to commercialize products incorporating innovative technologies.
There can be no assurance that the Company will be successful in addressing
these risks and challenges. See "--Highly Competitive Environment; Intel's
Entry into the Market," "--Dependence on New Product Development; Need to
Manage Product Transitions," "--Management of Growth," "--Dependence on Key
Personnel" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

Dependence on Emerging Mainstream PC 3D Graphics Market. The Company's
success will depend in part upon the demand for 3D graphics for mainstream PC
applications. The market for 3D graphics on mainstream PCs has only recently
begun to emerge and is dependent on the future development of, and substantial
end-user and OEM demand for, 3D graphics functionality. As a result, there can
be no assurance that the market for mainstream PC 3D graphics computing will
continue to develop or grow at a rate sufficient to support the Company's
business. The development of the market for 3D graphics on mainstream PCs will
in turn depend on the development and availability of a large number of
mainstream PC software applications that support or take advantage of 3D
graphics capabilities. Currently there are only a limited number of such
software applications, most of which are games, and there can be no assurance
that a broader base of software applications will develop in the near term or
at all. Until very recently, the majority of multimedia PCs incorporated only
2D graphics acceleration technology, and as a result, the majority of graphics
applications currently available for mainstream PCs are written for 2D
acceleration technology. Consequently, there can be no assurance that a broad
market for full function 3D graphics on mainstream PCs will develop. If the
market for mainstream PC 3D graphics fails to develop or develops more slowly
than expected, the Company's business, financial condition and results of
operations would be materially adversely affected. See "--Dependence on the PC
Market."

Dependence upon Acceptance of the Company's 3D Graphics Solution for the
Mainstream PC Market. The Company's success will depend in part upon broad
adoption of its 3D graphics processors for high performance 3D graphics in
mainstream 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, 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 such market acceptance, if achieved, is difficult to
sustain due to intense competition. Since the Company has no other product
line, the Company's business, financial condition and results of operations
would be materially adversely affected if for any reason its current or future
3D graphics processors do not achieve widespread acceptance in the mainstream
PC market. If the Company is unable to complete the timely development of or
successfully and cost-effectively manufacture and deliver products that meet
the requirements of the mainstream PC market, the Company's business,
financial condition and results of operations would be materially adversely
affected. In addition, the PC industry is seasonal, and the Company expects
that its financial results in the future will be affected by such seasonality.

The sub-$1,000 segment of the mainstream PC market has grown rapidly in
recent quarters. The Company currently does not have a product offering to
address this market segment. If the Company is unable to introduce a product
that addresses this market segment and the sub-$1,000 segment continues to
account for an increasing

7
<PAGE>

percentage of the units sold in the mainstream PC market, the Company's
business, financial condition or results of operations could be materially
adversely affected.

Highly Competitive Environment; Intel's Entry into the Market. The market
for 3D graphics processors for mainstream PCs in which the Company competes is
intensely competitive and is characterized by rapid technological change,
evolving industry standards and declining average selling prices. NVIDIA
believes that the principal factors of competition in this market are
performance, conformity to industry-standard APIs, software support, access to
customers and distribution channels, manufacturing capabilities, price of
graphics processors and total system costs of add-in boards. The Company
expects competition to increase both from existing competitors and new market
entrants with products that may be less costly than the Company's 3D graphics
processors or may provide better performance or additional features not
provided by the Company's products. There can be no assurance that the Company
will be able to compete successfully in the emerging mainstream PC 3D graphics
market.

NVIDIA's primary source of competition is from companies that provide or
intend to provide 3D graphics solutions for the mainstream PC market. These
include (i) new entrants in the 3D graphics processor market with existing
presence in the PC market, such as Intel Corporation ("Intel"), (ii) suppliers
of graphics add-in boards that utilize their internally developed graphics
chips, such as ATI Technologies, Inc. ("ATI") and Matrox Electronic Systems
Ltd. ("Matrox"), (iii) suppliers of 2D graphics chips that are introducing 3D
functionality as part of their existing solutions, such as S3 Incorporated
("S3") and Trident Microsystems, Inc. ("Trident"), (iv) companies that have
traditionally focused on the professional market and provide high end 3D
solutions for PCs and workstations, including 3Dlabs Inc., Ltd. ("3Dlabs"),
Real3D and Silicon Graphics, Inc. ("SGI"), and (v) companies with strength in
the interactive entertainment market, such as Chromatic Research, Inc.
("Chromatic"), 3Dfx Interactive, Inc. ("3Dfx") and Rendition, Inc.
("Rendition").

In March 1998, Intel began shipping the i740, a 3D graphics accelerator that
is targeted at the mainstream PC market. Intel has significantly greater
resources than the Company, and there can be no assurance that the Company's
products will compete effectively against the i740 or any future products
introduced by Intel, that the Company will be able to compete effectively
against Intel or that Intel will not introduce additional products that are
competitive with the Company's products in either performance or price or
both. NVIDIA expects Intel to continue to invest heavily in research and
development and new manufacturing facilities, to maintain its position as the
largest manufacturer of PC microprocessors and one of the largest
manufacturers of motherboards, to increasingly dominate the PC platform and to
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 using its i740 3D
graphics accelerators or other graphics accelerators, which could directly
compete with graphics add-in cards or graphics-enabled motherboards that the
Company's customers may develop. In addition, due to the widespread industry
acceptance of Intel's microprocessor architecture and interface architecture,
including its Accelerated Graphics Port ("AGP"), Intel exercises significant
influence over the PC industry generally, and any significant modifications by
Intel to the AGP, the microprocessor or other aspects of the PC microprocessor
architecture could result in incompatibility with the Company's technology,
which would have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, any delay in the
public release of information relating to such modifications could have a
material adverse effect on the Company's business, financial condition or
results of operations.

In April 1998, SGI and Intel announced a strategic relationship, which
includes a broad patent cross-license agreement. The Company believes that
this agreement will provide SGI with access to Intel processors for the
development of SGI workstations. In addition, the Company believes that under
the cross-license agreement Intel will have access to SGI graphics patents,
which may allow Intel to compete more effectively with the Company. SGI also
may compete directly with the Company as a result of this relationship with
Intel. There can be no assurance that the Company will be able to compete
successfully against SGI or Intel. SGI filed a patent infringement lawsuit
against the Company in April 1998. See "--Legal Proceedings" and "Business--
Legal Proceedings."

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<PAGE>

In addition to Intel, the Company competes with suppliers of graphics add-in
boards that utilize their internally developed graphics chips, such as ATI and
Matrox. NVIDIA also competes with companies that typically have operated in
the PC 2D graphics market and that now offer 3D graphics capability as an
enhancement to their 2D graphics solutions, such as S3 and Trident. Many of
these competitors have introduced 3D graphics functionality on new versions of
existing graphics chips. In addition, NVIDIA's competitors include companies
that traditionally have focused on the production of high end 3D graphics
systems targeted at the professional market, such as 3Dlabs and Real3D. While
these companies produce high performance 3D graphics systems, they
historically have done so at a significantly higher price point than the
Company and have focused on the professional and engineering market. Some of
these companies are developing lower cost versions of their 3D graphics
technology to bring workstation-like 3D graphics to mainstream PCs, and there
can be no assurance that the Company will be able to compete successfully
against them. For example, 3Dlabs markets the PERMEDIA 2, a graphics
accelerator designed for the mainstream PC market. NVIDIA also competes with
companies that have recently entered or are expected to enter the market with
an integrated 3D/2D graphics solution, but which have not traditionally
manufactured 2D graphics solutions, such as Chromatic, 3Dfx and Rendition. In
addition to the Company's known competitors, the Company anticipates that
there will be new entrants in the graphics processor market, and there can be
no assurance that the Company will compete effectively against any such new
competitors.

Several of the Company's current and potential competitors have
substantially greater financial, technical, manufacturing, marketing,
distribution and other resources, greater name recognition and market
presence, broader product lines for the PC market, longer operating histories,
lower cost structures and larger customer bases than the Company. As a result,
they may be able to adapt more quickly to new or emerging technologies and
changes in customer requirements. Regardless of the relative qualities of the
Company's products, the market power, product breadth and customer
relationships of its larger competitors, particularly Intel, can be expected
to provide such competitors with substantial competitive advantages. The
Company does not seek to compete on the basis of price alone, but may be
forced to lower prices to compete effectively. There can be no assurance that
the Company will be able to compete successfully in the emerging mainstream PC
3D graphics market.

Dependence on New Product Development; Need to Manage Product Transitions.
The Company's business, financial condition and results of operations will
depend to a significant extent on its ability to successfully develop new
products for the 3D graphics market. The Company'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, the Company's existing products must have competitive performance
levels or the Company must timely introduce new products with such performance
characteristics in order to be included in new system configurations. The
Company must 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,
price its products competitively and introduce the products to the market
within the limited window for PC OEM and add-in board manufacturer design
cycles. As a result, the Company 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
proper new product definition, timely completion and introduction of new
product designs, the ability of ST, Taiwan Semiconductor Manufacturing Co.
("TSMC") and any additional manufacturers to effectively manufacture new
products, the ability of the Company to design products that effectively
utilize the process technologies of ST, TSMC or any other third-party
manufacturers, the quality of any new products, differentiation of new
products from those of the Company's competitors and market acceptance of the
Company's and its customers' products. There can be no assurance that any new
products the Company expects to introduce will incorporate the features and
functionality demanded by PC OEMs, add-in board manufacturers and consumers of
3D graphics, will be successfully developed or will be introduced within the
appropriate time to meet both the PC OEMs' design cycles and market demand.
The failure by the Company to successfully develop, introduce or achieve
market acceptance for new 3D graphics products would have a material adverse
effect on the Company's business, financial condition and results of
operations.

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<PAGE>

As markets for the Company's 3D graphics processors develop and competition
increases, the Company anticipates that product life cycles will remain short
and average selling prices ("ASPs") will continue to decline. In particular,
ASPs and gross margins for the Company's 3D graphics processors are expected
to decline as each product matures and as per order unit volumes increase. As
a result, the Company will need to introduce new products and enhancements to
existing products to maintain overall average selling prices and gross
margins. In order for the Company's 3D graphics processors to achieve high
volumes, leading PC OEMs and add-in board manufacturers must select the
Company's 3D graphics processor for design into their products, and then
successfully complete the designs of their products and sell them. There can
be no assurance that the Company will successfully identify new product
opportunities, develop and bring to market in a timely fashion such new
products, that any such new products will be selected for design into PC OEMs'
and add-in board manufacturers' products, that such designs will be
successfully completed or that such products will be sold. In particular, the
Company expects to begin volume shipments of the RIVA128ZX graphics processor
in the second quarter of 1998 and there can be no assurance that the Company
will be able to successfully manage the production transition risks with
respect to that product. Failure to achieve any of the foregoing with respect
to the RIVA128ZX graphics processor, future products or product enhancements
could result in rapidly declining ASPs, reduced margins, reduced demand for
products or loss of market share, any of which could have a material adverse
effect on the Company's business, financial condition or results of
operations. In addition, there can be no assurance that technologies developed
by others will not render the Company's 3D graphics products non-competitive
or obsolete, which would have a material adverse effect on the Company's
business, financial condition and results of operations.

Legal Proceedings. On April 9, 1998, the Company was notified that SGI had
filed a patent infringement lawsuit against the Company in the United States
District Court for the District of Delaware. The suit alleges that the sale
and use of the Company's RIVA family of 3D graphics processors infringes a
United States patent held by SGI. The suit seeks unspecified damages
(including treble damages), an order permanently enjoining further alleged
infringement and attorneys' fees. The Company currently is investigating the
claims and has not responded to the suit. Based on its investigation to date,
the Company believes that it has meritorious defenses to the claims brought
and the Company intends to defend itself vigorously.

The Company expects that the litigation with SGI will likely result in
significant expense to the Company and divert the efforts of the Company's
technical and management personnel, whether or not such litigation results in
a favorable determination for the Company. In the event of an adverse result
in the SGI suit, the Company could be required to do one or more of the
following: pay substantial damages (including treble damages), cease the
manufacture, use and sale of any infringing products, expend significant
resources to develop non-infringing technology, or obtain a license from SGI
for any infringing technology. The SGI suit could result in limitations on the
Company's ability to market its products, delays and costs associated with
redesigning its products or payments of license fees or other payments to SGI,
any of which would have a material adverse effect on the Company's business,
financial condition and results of operations.

Importance of Design Wins. The Company'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 add-in board manufacturers. The
Company'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, the Company's existing
products must have competitive performance levels or the Company must timely
introduce new products with such performance characteristics in order to be
included in new system configurations. The failure to achieve one or more
design wins would have a material adverse effect on the Company's business,
financial condition and results of operations. The process of being qualified
for inclusion in a PC OEM's product can be lengthy and could cause the Company
to miss a cycle in the demand of end users for a particular product feature,
which also could materially adversely affect the Company's business, financial
condition or results of operations.

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<PAGE>

The Company's ability to achieve design wins will depend in part on its
ability to identify and ensure compliance with evolving industry standards.
Unanticipated changes in industry standards could render the Company's
products incompatible with products developed by major hardware manufacturers
and software developers, including Intel and Microsoft, which would require
the Company to invest significant time and resources to redesign its products
to ensure compliance with relevant standards. If the Company's products are
not in compliance with prevailing industry standards for a significant period
of time, the Company's ability to achieve design wins could be materially
adversely affected. The failure to achieve design wins, due to any of the
foregoing factors or otherwise, would result in the loss of any potential
sales volume that could be generated by such newly designed PC hardware
component or board subassembly and would give a competitive advantage to the
3D graphics processor manufacturer that achieved such design win.

Dependence on the PC Market. In 1997 and the first quarter of 1998, the
Company derived all of its revenue from the sale or license of products for
use in PCs, and the Company expects to continue to derive substantially all of
its revenue from the sale or license of products for use in PCs. The PC market
is characterized by rapidly changing technology, evolving industry standards,
frequent new product introductions and significant price competition,
resulting 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, there can be no assurance that such
growth will continue. A reduction in sales of PCs, or a reduction in the
growth rate of such sales, would likely reduce demand for the Company's
products. Moreover, such 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 such cases, PC manufacturers may
abruptly suspend substantially all purchases of additional inventory from
suppliers such as the Company until the excess inventory has been absorbed.
Any reduction in the demand for PCs generally, or for a particular product
that incorporates the Company's 3D graphic processors, could have a material
adverse effect on the Company's business, financial condition or results of
operations.

Customer Concentration; Risks of Order and Shipment Uncertainties. The
Company has only a limited number of customers and its sales are highly
concentrated. The Company primarily sells its products to add-in board
manufacturers, which incorporate graphics products in the boards they sell to
PC OEMs. Sales to STB and Diamond accounted for 63% and 31%, respectively, of
the Company's total revenue in 1997 and 49% and 39%, respectively, of the
Company's total revenue in the first quarter of 1998. Sales to add-in board
manufacturers primarily are dependent on achieving design wins with leading PC
OEMs, and the Company believes that the large majority of its revenue in its
most recent three quarters was attributable to products that ultimately were
incorporated into PCs sold by Compaq, Dell, Gateway 2000, Micron and Packard
Bell NEC. The number of add-in board manufacturers and leading PC OEMs is
limited, and the Company expects that a small number of add-in board
manufacturers directly, and a small number of PC OEMs indirectly, will
continue to account for a substantial portion of its revenue for the
foreseeable future. In particular, the Company expects that sales to STB and
Diamond will continue to account for a substantial portion of its revenue for
the foreseeable future. As a result, the Company's business, financial
condition and results of operations could be materially adversely affected by
the decision of a single PC OEM or add-in board manufacturer to cease using
the Company's products or by a decline in the number of products sold by a
single PC OEM or add-in board manufacturer or by a small number of customers.
In addition, there can be no assurance that revenue from add-in board
manufacturers or PC OEMs that have directly or indirectly accounted for
significant revenue in past periods, individually or as a group, will
continue, or if continued, will reach or exceed historical levels in any
future period.

Substantially all of the Company's sales are made on the basis of purchase
orders rather than long-term agreements. As a result, the Company may commit
resources to the production of products without having received advance
purchase commitments from customers. Any inability to sell products to which
the Company has devoted significant resources could have a material adverse
effect on the business, financial condition or results of operations of the
Company. In addition, cancellation or deferral of product orders could result
in the Company holding excess inventory, which could have a material adverse
effect on the Company's profit margins and restrict its ability to fund its
operations. The Company recognizes revenue upon shipment of products to the

11
<PAGE>

customer. Refusal by customers to accept shipped products, or delays or
difficulties in collecting accounts receivable could result in significant
charges against income, which could have a material adverse effect on the
Company's business, financial condition or results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Management of Growth. The Company's rapid growth has placed, and is expected
to continue to place, a significant strain on the Company's managerial,
operational and financial resources. As of March 29, 1998, the Company had 119
employees as compared to 44 employees as of March 30, 1997, and the Company
expects that the number of its employees will increase substantially over the
next 12 months. The Company's financial and management controls, reporting
systems and procedures are very limited and will need to be upgraded
significantly. Although some new controls, systems and procedures have been
implemented, the Company'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 its ability to
maintain effective cost controls, and any failure to do so effectively could
have a material adverse effect on the Company's business, financial condition
or results of operations. Further, the Company will be required to manage
multiple relationships with various customers and other third parties. There
can be no assurance that the Company's systems, procedures or controls will be
adequate to support the Company's operations or that the Company's management
will be able to achieve the rapid execution necessary to successfully
implement its strategy. The Company's inability to effectively manage any
future growth would have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company's
lease for its facilities will expire in August 1998, and the Company will be
required to secure larger facilities in order to accommodate its growth. An
inability of the Company to secure adequate facilities on reasonable terms, or
an inability to effectively manage the transition to larger facilities, could
have a material adverse effect on the Company's business, financial condition
or results of operations. See "Business--Employees," "--Facilities" and
"Management."

Dependence on Third-Party Manufacturers; Absence of Manufacturing Capacity;
Manufacturing Risks. The Company does not manufacture the semiconductor wafers
used for its products and does not own or operate a wafer fabrication
facility. The Company's products require wafers manufactured with state-of-
the-art fabrication equipment and techniques. Substantially all of the
Company's products currently are manufactured by ST in Crolles, France
pursuant to a strategic collaboration agreement (the "ST Agreement"), and the
Company has recently established a relationship with TSMC as a second
semiconductor manufacturer. The Company obtains manufacturing services from
both ST and TSMC on a purchase order basis, and neither ST nor TSMC has any
obligation to provide the Company with any specified minimum quantities of
product. Because the lead time needed to establish a strategic relationship
with a new manufacturing partner could be several months, there is no readily
available alternative source of supply for any specific product. A
manufacturing disruption experienced by ST or TSMC would impact the production
of the Company's products for a substantial period of time, which would have a
material adverse effect on the Company's business, financial condition and
results of operations. For example, in December 1997, the Company experienced
low manufacturing yields at ST. The Company believes that long-term market
acceptance for the Company's products will depend on reliable relationships
with ST, TSMC and any other manufacturers used by the Company to ensure
adequate product supply to respond to customer demand. ST has only recently
begun to manufacture the Company's products in commercial quantities, and
there can be no assurance that ST will be able to meet the Company's near-term
or long-term manufacturing requirements. In addition, the Company's
relationship with TSMC has only recently been established, and there can be no
assurance that this relationship will meet the business objectives of the
Company. Both ST and TSMC fabricate wafers for other companies, including
certain competitors of the Company, and ST also manufactures wafers for its
own needs, and either could choose to prioritize capacity for other uses or
reduce or eliminate deliveries to the Company on short notice.

There are many other risks associated with the Company's dependence upon
third-party manufacturers, including reduced control over delivery schedules,
quality assurance, manufacturing yields and cost; risks associated with
international operations; the potential lack of adequate capacity during
periods of excess demand;

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<PAGE>

limited warranties on wafers supplied to the Company; and potential
misappropriation of the Company's intellectual property. The Company is
dependent primarily on ST and, to a lesser extent, TSMC, and expects in the
future to continue to be dependent upon third-party manufacturers to produce
wafers of acceptable quality and with acceptable manufacturing yields, to
deliver those wafers to the Company and its independent assembly and testing
subcontractors on a timely basis and to allocate to the Company a portion of
their manufacturing capacity sufficient to meet the Company's needs. The
Company's wafer requirements represent a very small portion of the total
production capacity of ST. Although the Company's products are designed using
ST's process design rules, there can be no assurance that ST will be able to
achieve or maintain acceptable yields or deliver sufficient quantities of
wafers on a timely basis or at an acceptable cost. Additionally, there can be
no assurance that ST will continue to devote resources to the production of
the Company's products or continue to advance the process design technologies
on which the manufacturing of the Company's products are based. Any such
difficulties would have a material adverse effect on the Company's business,
financial condition and results of operations. See "--Dependence on Third-
Party Subcontractors for Assembly and Testing," "--Risks Associated with
International Operations" and "Business--Manufacturing."

Dependence on ST Microelectronics. In addition to the Company's reliance on
ST to manufacture the Company's products, the Company licenses certain
technology on a non-exclusive basis from ST for use with the Company's
products. The inability of the Company to continue to license this technology
could result in delays or cancellations in product shipments until equivalent
technology can be identified, licensed or developed, and integrated with the
Company's products. The ST Agreement also grants ST a worldwide license to
sell the RIVA128 and RIVA128ZX graphics processors. Royalty revenue from sales
of the RIVA128 graphics processor by ST represented 6% and 12% of the
Company's total revenue in 1997 and the first quarter of 1998, respectively.
The Company expects royalty revenue from ST to decrease in the second quarter
of 1998 and subsequent quarters. In February 1998, ST and 3Dlabs established a
supply relationship for the manufacture by ST of 3Dlabs' PERMEDIA 2 3D
graphics accelerator. There can be no assurance that ST will not establish
similar relationships with other competitors of the Company or that sales of
the Company's products by ST will not be adversely affected by ST's
relationship with 3Dlabs or any other competitor of the Company. Sales by ST
of products similar to the Company's products could result in a decrease in
the Company's revenue, which would have a material adverse effect on the
Company's business, financial condition and results of operations. See "--
Dependence on Third-Party Manufacturers; Absence of Manufacturing Capacity;
Manufacturing Risks," "--Dependence on Third-Party Subcontractors for Assembly
and Testing" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

Under the ST Agreement, ST also has a worldwide license to incorporate the
technology underlying the RIVA128 and RIVA128ZX graphics processors (including
the source code and architecture) (the "RIVA Technology") in its own products,
subject to certain limitations on the modification of such technology, and a
right to receive software engineering and quality support from the Company for
the RIVA Technology through December 31, 1998. There can be no assurance that
ST will not develop and market products competitive with those of the Company
that contain additional features, better functionality and lower pricing.
Because ST has substantially greater financial, technical, manufacturing,
marketing, distribution and other resources than the Company, there can be no
assurance that the Company will be able to compete successfully against any
such ST product. The failure of the Company to successfully compete against
any such ST product could have a material adverse effect on the Company's
business, financial condition or results of operations.

Dependence on Key Personnel. The Company's performance will be substantially
dependent on the performance of its executive officers and key employees, many
of whom have worked together for only a short period of time. In particular,
each of the Company's Chief Financial Officer, Vice President, Product
Marketing and Vice President, Corporate Marketing joined the Company in
December 1997. None of the Company's officers or employees is bound by an
employment agreement, and the relationships of such officers and employees
with the Company are, therefore, at will. The Company does not have "key
person" life insurance policies on any of its employees. The loss of the
services of any of its executive officers, technical personnel or other key
employees, particularly Jen-Hsun Huang, the Company's President and Chief
Executive Officer, would

13
<PAGE>

have a material adverse effect on the Company's business, financial condition
and results of operations. The Company's success will depend on its ability to
identify, hire, train and retain highly qualified technical and managerial
personnel. Competition for such personnel is intense, and there can be no
assurance that the Company will be able to identify, attract, assimilate or
retain highly qualified technical and managerial personnel in the future. The
inability to attract and retain the necessary technical and managerial
personnel would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Employees" and
"Management."

Manufacturing Yields. The fabrication of semiconductors is a complex
process. Contaminants, defects in masks used to print circuits on wafers,
difficulties in the fabrication process and other factors can cause a
substantial percentage of wafers to be rejected or a significant number of die
on each wafer to be nonfunctional. These problems are difficult to diagnose
and time-consuming and expensive to remedy. As a result, semiconductor
companies frequently encounter difficulties in achieving acceptable product
yields. When production of a new product begins, as with the RIVA128ZX
graphics processor, the Company typically pays for wafers, which may or may
not have any functional products. Accordingly, the Company bears the financial
risk until production is stabilized. Once production is stabilized, the
Company pays for functional die only. The Company typically begins wafer
production in advance of stabilized yields. Failure to stabilize yields or
failure to achieve acceptable yields would materially adversely affect the
Company's revenue, gross profit and results of operations. For example, in
December 1997, the Company experienced low manufacturing yields at ST. Any
similar occurrences in the future could have a material adverse effect on the
Company's business, financial condition or results of operations.

Semiconductor manufacturing yields are a function both of product design,
which is developed largely by the Company, and process technology, which is
typically proprietary to the manufacturer. Since low yields may result from
either design or process technology failures, yield problems may not be
effectively determined or 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 Company and the
manufacturer. This risk is compounded by the offshore location of the
Company's manufacturers, increasing the effort and time required to identify,
communicate and resolve manufacturing yield problems. As the Company's
relationships with ST, TSMC and any additional manufacturing partners develop,
yields or product performance could be adversely affected due to difficulties
associated with adapting the Company's technology and product design to the
proprietary process technology and design rules of each manufacturer. Because
of the Company's potentially limited access to wafer fabrication capacity from
its manufacturers, any decrease in manufacturing yields could result in an
increase in the Company's per unit costs and force the Company to allocate its
available product supply among its customers, thus potentially adversely
impacting customer relationships as well as revenue and gross profit. There
can be no assurance that the Company's wafer manufacturers will achieve or
maintain acceptable manufacturing yields in the future. The inability of the
Company to achieve planned yields from its wafer manufacturers could have a
material adverse effect on the Company's business, financial condition or
results of operations. The Company also faces the risk of product recalls
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, the Company's business, financial
condition or results of operations could be materially adversely affected. See
"--Risks Associated with International Operations."

Transition to New Manufacturing Process Technologies. The Company's future
success will depend in part upon its ability to develop products that utilize
new manufacturing process technologies. Manufacturing process technologies are
subject to rapid change and require significant expenditures for research and
development. The Company continuously evaluates the benefits of migrating to
smaller geometry process technologies in order to improve performance and
reduce costs. The Company believes that the transition of its products to
increasingly smaller geometries will be important to its competitive position.
Other companies in the industry have experienced difficulty in migrating to
new manufacturing processes and, consequently, have suffered reduced

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<PAGE>

yields, delays in product deliveries and increased expense levels. Moreover,
the Company is dependent on its relationships with its third-party
manufacturers to migrate to smaller geometry processes successfully. No
assurance can be given that the Company will be able to migrate to new
manufacturing process technologies successfully or on a timely basis. Any such
failure by the Company could have a material adverse effect on its business,
financial condition or results of operations.

Dependence on Third-Party Subcontractors for Assembly and Testing.
Substantially all of the Company's products historically have been assembled
and tested by ST in Malta. The Company recently qualified Anam Semiconductor
("Anam"), which is located in Korea, to assemble and test the Company's
RIVA128ZX graphics processor. The Company does not have long-term agreements
with either of these suppliers. As a result of its dependence on third-party
subcontractors for assembly and testing of its products, the Company 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 the Company's products and could have a
material adverse effect on the Company's business, financial condition or
results of operation. Due to the amount of time typically required to qualify
assemblers and testers, the Company could experience significant delays in the
shipment of its products if it is required to find alternative third parties
to assemble or test the Company's products or components. Any delays in
delivery of the Company's products could have a material adverse effect on the
Company's business, financial condition or results of operations. See
"Business--Manufacturing."

Risks Relating to Intellectual Property. The Company relies primarily on a
combination of patent, mask work protection, trademarks, copyrights, trade
secret laws, employee and third-party nondisclosure agreements and licensing
arrangements to protect its intellectual property. The Company has 15 patents
issued and 25 patent applications pending in the United States. Such issued
patents have expiration dates from May 2015 to November 2016. The issued
patents and pending patent applications relate to technology developed by the
Company in connection with the development of its 3D graphics processors,
including the RIVA128 graphics processor. The Company has no foreign patents
or patent applications. There can be no assurance that the Company's pending
patent applications or any future applications will be approved, or that any
issued patents will provide the Company with competitive advantages or will
not be challenged by third parties, or that the enforcement of patents of
others will not have an adverse effect on the Company's ability to do
business. In addition, there can be no assurance that others will not
independently develop substantially equivalent intellectual property or
otherwise gain access to the Company's trade secrets or intellectual property,
or disclose such intellectual property or trade secrets, or that the Company
can meaningfully protect its intellectual property. A failure by the Company
to effectively protect its intellectual property could have a material adverse
effect on the Company's business, financial condition or results of
operations.

The Company attempts to protect its trade secrets and other proprietary
information through confidentiality agreements with manufacturers and other
partners, proprietary information agreements with employees and consultants
and other security measures. The Company also relies on trademarks and trade
secret laws to protect its intellectual property. Despite these efforts, there
can be no assurance that others will not gain access to the Company's trade
secrets, or that the Company can meaningfully protect its intellectual
property. In addition, effective trade secret protection may be unavailable or
limited in certain foreign countries. Although the Company intends to protect
its rights vigorously, there can be no assurance that such measures will be
successful.

15
<PAGE>

the Company and therefore the risk of a third-party claim of patent
infringement against the Company will increase. In the event infringement
claims are made against the Company, the Company may seek licenses under such
patents or other intellectual property rights. However, there can be no
assurance that licenses will be offered or that the terms of any offered
licenses will be acceptable to the Company. The failure to obtain a license
from a third party for technology used by the Company could cause the Company
to incur substantial liabilities and to suspend the manufacture of products.
Furthermore, the Company may initiate claims or litigation against third
parties for infringement of the Company's proprietary rights or to establish
the validity of the Company's proprietary rights. The Company has agreed to
indemnify certain customers for claims of infringement arising out of sale of
the Company's product. Litigation by or against the Company or such customers
concerning infringement would likely result in significant expense to the
Company and divert the efforts of the Company's technical and management
personnel, whether or not such litigation results in a favorable determination
for the Company. In the event of an adverse result in any such litigation, the
Company could be required to pay substantial damages (which could include
treble damages), cease the manufacture, use and sale of infringing products,
expend significant resources to develop non-infringing technology, discontinue
the use of certain processes or obtain licenses for the infringing technology.
There can be no assurance that the Company would be successful in such
development or that such licenses would be available on reasonable terms, or
at all, and any such development or license could require expenditures by the
Company of substantial time and other resources. Although patent disputes in
the semiconductor industry have often been settled through cross-licensing
arrangements, there can be no assurance that, in the event that any third
party makes a successful claim against the Company or its customers, a cross-
licensing arrangement could be reached. If a license is not made available to
the Company on commercially reasonable terms, the Company's business,
financial condition or results of operations could be materially adversely
affected.

There can be no assurance that infringement claims by third parties or
claims for indemnification by customers or end users of the Company's products
resulting from infringement claims will not be asserted in the future or that
such assertions, if proven to be true, will not materially adversely affect
the Company's business, financial condition or results of operations. Any
limitations on the Company's ability to market its products, or delays and
costs associated with redesigning its products or payments of license fees to
third parties, or any failure by the Company to develop or license a
substitute technology on commercially reasonable terms, could have a material
adverse effect on the Company's business, financial condition or results of
operations. See "Business--Patents and Proprietary Rights."

Risk of Product Defects and Incompatibilities; Product Liability. Products
as complex as those offered by the Company may contain defects or failures
when introduced or when new versions or enhancements to existing products are
released. The Company has in the past discovered software defects and
incompatibilities with customers' hardware in certain of its products and may
experience delays or lost revenue to correct any new defects in the future.
Although the Company has not experienced material adverse effects resulting
from any such bugs, defects, failures or incompatibilities to date, there can
be no assurance that, despite testing by the Company, errors will not be found
in new products or releases after commencement of commercial shipments in the
future, which could result in loss of market share or failure to achieve
market acceptance. In addition, the Company's products typically go through
only one verification cycle prior to beginning volume production and
distribution of such products. As a result, the Company's products may contain
defects or flaws that are undetected prior to volume production and
distribution. The widespread production and distribution of defective products
could have a material adverse impact on the Company's business, financial
condition or results of operations. See "Business--NVIDIA Architecture,
Products and Products under Development."

The Company's products are an integrated component of both PCs and business
workstations. Although the Company has not experienced any product liability
claims to date, the sale and support of products by the Company may entail the
risk of such claims. In addition, any failure by the Company's products or
software to properly perform could result in claims against the Company by its
customers. The Company maintains insurance to protect against certain claims
associated with the use of its products, but there can be no assurance that
its insurance coverage would adequately cover any claim asserted against the
Company. A successful claim brought

16
<PAGE>

against the Company that is in excess of, or excluded from, its insurance
coverage, could have a material adverse effect on the Company's business,
financial condition or results of operations. In addition, even claims that
are ultimately unsuccessful could result in the Company's expenditure of funds
in litigation and management time and resources. The Company has agreed to
indemnify certain of its customers against patent infringement, warranty and
certain product defect claims. There can be no assurance that the Company will
not be subject to material claims in the future, that such claims will not
result in liability in excess of its insurance coverage, that the Company's
insurance will cover such claims or that appropriate insurance will continue
to be available to the Company in the future at commercially reasonable rates.

Erosion of Average Selling Prices. The semiconductor industry, including the
3D graphics processor industry, has been characterized, and is likely to
continue to be characterized by, rapid erosion of average selling prices due
to a number of factors, including rapid technological change,
price/performance enhancements and product obsolescence. The Company
anticipates that ASPs and gross margins for its products will decrease over
product life cycles, due to competitive pressures and volume pricing
agreements. Decreasing ASPs could cause the Company to experience decreased
revenue even though the number of units sold is increasing. As a result, the
Company may experience substantial period-to-period fluctuations in future
operating results due to ASP erosion. Therefore, the Company must continue to
develop and introduce on a timely basis next-generation products and
enhancements to existing new products that incorporate additional or new
features and functionalities and that can be sold at higher ASPs. Failure to
achieve the foregoing could cause the Company's revenue and gross margins to
decline, which would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

Risks Associated with International Operations. The Company's reliance on
foreign third-party manufacturing, assembly and testing operations subjects it
to a number of risks associated with conducting business outside of the United
States. These risks include 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, potentially adverse
taxes, the burdens of complying with a variety of foreign laws and other
factors beyond the Company's control. The Company also is subject to general
political risks in connection with its international trade relationships.
Although the Company has not to date experienced any material adverse effect
on its business, financial condition or results of operations as a result of
such regulatory, political and other factors, there can be no assurance that
such factors will not have a material adverse effect on the Company's
business, financial condition or results of operations in the future or
require the Company to modify its current business practices. In addition, the
laws of certain foreign countries in which the Company's products are or may
be manufactured or sold, including various countries in Asia, may not protect
the Company's products or intellectual property rights to the same extent as
do the laws of the United States and thus make the possibility of piracy of
the Company's technology and products more likely. Currently, all of the
Company's arrangements with third-party manufacturers provide for pricing and
payment in U.S. dollars, and to date the Company has not engaged in any
currency hedging activities, although it may do so in the future. Although
currency fluctuations have been insignificant to date, there can be no
assurance that fluctuations in currency exchange rates will not have a
material adverse effect on the Company's business, financial condition or
results of operations in the future.

Cyclical Nature of the Semiconductor Industry. The semiconductor industry
historically has been characterized by rapid technological change, cyclical
market patterns, significant ASP erosion, fluctuating inventory levels,
alternating periods of overcapacity and capacity constraints, 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 ASPs. The Company may experience
substantial period-to-period fluctuations in results of operations due to
general semiconductor industry conditions.

17
<PAGE>

Future Capital Needs; Uncertainty of Additional Funding. If the Company
continues to increase production of its products, it will be required to
invest significant working capital in inventory and accounts receivable. The
Company also intends to continue to invest heavily in research and development
for its existing products and for new product development. The Company's
future liquidity and capital requirements will depend upon numerous factors,
including the costs and timing of expansion of research and product
development efforts and the success of these development efforts, the costs
and timing of expansion of sales and marketing activities, the extent to which
the Company's existing and new products gain market acceptance, competing
technological and market developments, the costs involved in maintaining and
enforcing patent claims and other intellectual property rights, available
borrowings under line of credit arrangements and other factors. The Company
believes that the proceeds from this offering, together with the Company's
current cash balances and cash generated from operations, will be sufficient
to meet the Company's operating and capital requirements for at least the next
12 months. However, there can be no assurance that the Company will not
require additional financing within this time frame. The Company may be
required to raise additional funds through public or private financing,
strategic relationships or other arrangements. There can be no assurance that
such additional funding, if needed, will be available on terms attractive to
the Company, or at all. Furthermore, any additional equity financing may be
dilutive to stockholders, and debt financing, if available, may involve
restrictive covenants. Strategic arrangements, if necessary to raise
additional funds, may require the Company to relinquish its rights to certain
of its technologies or products. The failure of the Company to raise capital
when needed could have a material adverse effect on the Company's business,
financial condition or results of operations. See "--Unpredictable and
Fluctuating Operating Results," "--Limited Operating History; History of
Losses; No Assurance of Profitability," "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Year 2000 Compliance. Many existing computer systems and applications and
other control devices use only two digits to identify a year in the date
field, without considering the impact of the upcoming change in the century.
As a result, in less than two years, computer systems and applications used by
many companies may need to be upgraded to comply with "Year 2000"
requirements. Significant uncertainty exists in the computer industry
concerning the potential effects associated with such compliance. The Company
relies on its systems in operating and monitoring many significant aspects of
its business, including financial systems (such as general ledger, accounts
payable, accounts receivable, inventory and order management), customer
services, infrastructure and network and telecommunications equipment. The
Company also relies directly and indirectly on the systems of external
business enterprises such as customers, suppliers, creditors, financial
organizations and domestic and international governments. The Company
currently estimates that its costs associated with Year 2000 compliance,
including any costs associated with the consequences of incomplete or untimely
resolution of Year 2000 compliance issues, will not have a material adverse
effect on the Company's business, financial condition or results of operations
in any given year. However, the Company has not extensively investigated and
does not believe that it has fully identified the impact of Year 2000
compliance and has not concluded that it can resolve any issues that may arise
in complying with Year 2000 without disruption of its business or without
incurring significant expense. In addition, even if the Company's internal
systems are not materially affected by Year 2000 compliance issues, the
Company could be affected through disruption in the operation of the
enterprises with which the Company interacts.

There can be no assurance that the Company's products will be Year 2000
compliant, that third-party products with which the Company's products
interface will be Year 2000 compliant or that any changes to third-party
products made in response to Year 2000 compliance issues will not render the
Company's products incompatible with such third-party products.

Control by Existing Stockholders. Upon completion of this offering, the
Company's executive officers and directors, together with entities affiliated
with such individuals, will beneficially own approximately % of the Company's
Common Stock (approximately % if the Underwriters' over-allotment option is
exercised in full). Accordingly, these stockholders will be able to exercise
control over matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. These
transactions include

18
<PAGE>

proxy contests, mergers involving the Company, tender offers, open market
purchase programs or other purchases of Common Stock that could give
stockholders of the Company the opportunity to realize a premium over the
then-prevailing market price for their shares of Common Stock. See "Principal
Stockholders."

Absence of Prior Trading Market; Potential Volatility of Stock Price. Prior
to this offering, there has been no public market for the Common Stock. There
can be no assurance that an active trading market will develop or, if one
develops, that it will be maintained. The initial public offering price of the
Common Stock will be established by negotiation among the Company and the
Underwriters. See "Underwriters" for factors to be considered in determining
the initial public offering price. The market price of the shares of Common
Stock could be subject to significant fluctuations in response to the
Company's operating results, announcements of new products by the Company or
its competitors, and other factors, including general economic and market
conditions. In addition, the stock market in recent years has experienced and
continues to experience extreme price and volume fluctuations, which have
affected the market price of the stock of many companies, and particularly
technology companies, and which have often been unrelated or disproportionate
to the operating performance of these companies. These fluctuations, as well
as a shortfall in sales or earnings compared to securities analysts
expectations, changes in analysts recommendations or projections or general
economic and market conditions, may adversely affect the market price of the
Common Stock. In the past, securities class action litigation has often been
instituted following periods of volatility in the market price for a company's
securities. Such litigation could result in substantial costs and a diversion
of management attention and resources, which could have a material adverse
effect on the Company's business, financial condition or results of
operations.

Anti-Takeover Provisions. The Company's Certificate of Incorporation (the
"Certificate") authorizes the Board of Directors to issue up to 2,000,000
shares of Preferred Stock and to determine the powers, designations,
preferences, rights, qualifications, limitations and restrictions, including
voting rights, of those shares without any further vote or action by the
stockholders. The rights of the holders of Common Stock will be subject to,
and may be adversely affected by, the rights of the holders of any Preferred
Stock that may be issued in the future. The Certificate and Bylaws, among
other things, provide for a classified Board of Directors, require that
stockholder actions occur at duly called meetings of the stockholders, limit
who may call special meetings of stockholders and require advance notice of
stockholder proposals and director nominations. These and other provisions
could have the effect of making it more difficult for a third party to acquire
a majority of the outstanding voting stock of the Company, discourage a
hostile bid or delay, prevent or deter a merger, acquisition or tender offer
in which the Company's stockholders could receive a premium for their shares,
or a proxy contest for control of the Company or other change in the Company's
management. See "Management" and "Description of Capital Stock."

Shares Eligible for Future Sale. The sale of a substantial number of shares
of Common Stock in the public market following this offering could adversely
affect the market price of the Common Stock. Upon the closing of this
offering, the Company will have outstanding an aggregate of shares of
Common Stock, assuming no exercise of outstanding options and warrants, of
which 23,468,797 shares of Common Stock are "Restricted Shares" subject to
restrictions under the Securities Act of 1933, as amended (the "Securities
Act"). Restricted Shares may be sold in the public market only if registered
or if they qualify for an exemption from registration under Rules 144, 144(k)
or 701 promulgated under the Securities Act. Holders of certain shares of the
Company's Common Stock, including all officers and directors, have agreed (the
"Lock-Up Agreements"), subject to certain exceptions, not to offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock (whether such shares or any such securities are then owned by
such person or are thereafter acquired directly from the Company), or to enter
into any swap or similar arrangement that transfers, in whole or in part, the
economic risks of ownership of the Common Stock (a "disposition"), without the
prior written consent of Morgan Stanley & Co. Incorporated for a period of 180
days after the date of this Prospectus. As a result of such contractual
restrictions and the provisions of Rule 144 and 701, the Restricted Shares
will be available for sale in the public market as follows: (i) 47,500 shares
will be eligible for immediate

19
<PAGE>

sale on the date of this Prospectus; (ii) 4,952,500 shares will be eligible
for sale 90 days after the date of this Prospectus; (iii) 17,365,771 shares
will be eligible for sale upon expiration of lock-up agreements 180 days after
the date of this Prospectus and (iv) the remaining shares will be eligible for
sale from time to time thereafter upon expiration of the Company's right to
repurchase such shares. In addition, certain stockholders of the Company have
the right to register shares of Common Stock for sale in the public market,
and the Company intends to register shares of Common Stock authorized for
issuance under the Company's equity incentive plans shortly following the
closing of this offering. See "Description of Capital Stock" and "Shares
Eligible for Future Sale."

Dilution; Absence of Cash Dividends. Purchasers of the shares of Common
Stock offered hereby will experience immediate and substantial dilution in the
net tangible book value of their investment from the initial public offering
price. Additional dilution will occur upon exercise of outstanding options and
warrants. See "Dilution" and "Shares Eligible for Future Sale." The Company
has never paid any dividends and does not anticipate paying dividends in the
foreseeable future. See "Dividend Policy."

20
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common
Stock offered by the Company hereby are estimated to be approximately $
($ if the Underwriters' over-allotment option is exercised in full), at an
assumed initial public offering price of $ per share and after deducting
estimated underwriting discounts and commissions and estimated offering
expenses payable by the Company. The Company intends to use approximately $10-
12 million of the net proceeds to repay certain accounts payable. The balance
of the net proceeds will be used for general corporate purposes, including
capital expenditures and working capital. The Company expects to spend
approximately $10 million for capital expenditures in 1998, primarily for
capital leases and the purchase of computer and engineering workstations. Such
capital expenditures are expected to be funded by a portion of the net
proceeds from this offering, together with existing cash balances and
anticipated cash flow from operations. The amounts and timing of the Company's
actual expenditures will depend upon numerous factors, including the status of
the Company's research and development efforts, the amount of cash generated
by the Company's operations, the level of the Company's sales and marketing
activities and the impact of competition. Pending such uses, the Company
intends to invest the net proceeds of this offering in short-term, investment-
grade, interest-bearing securities.

DIVIDEND POLICY

The Company has never paid any cash dividends on its capital stock and does
not anticipate paying cash dividends for the foreseeable future.

21
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
29, 1998 (i) on an actual basis, (ii) on a pro forma basis giving effect to
the conversion of all outstanding shares of Preferred Stock into shares of
Common Stock upon the closing of this offering and (iii) on a pro forma as
adjusted basis to reflect the receipt by the Company of the estimated net
proceeds from the sale of the shares of Common Stock offered by the
Company hereby at an assumed initial public offering price of $ per share
and after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by the Company.

<TABLE>
<CAPTION>
MARCH 29, 1998
--------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Capital lease obligations, less current
portion....................................... $ 2,143 $ 2,143 $
-------- -------- -----
Stockholders' equity:
Preferred Stock, $.001 par value; actual--
10,000,000 shares authorized, 9,327,087
shares issued and outstanding; pro forma and
pro forma as adjusted-- 2,000,000 shares
authorized, no shares issued and
outstanding................................. 9 -- --
Common Stock, $.001 par value; 200,000,000
shares authorized; actual--14,141,710 shares
issued and outstanding; pro forma--
23,468,797 shares issued and outstanding;
pro forma as adjusted-- shares issued
and outstanding(1).......................... 14 23
Additional paid-in capital................... 23,211 23,211
Deferred compensation........................ (2,166) (2,166)
Accumulated deficit.......................... (11,811) (11,811)
-------- -------- -----
Total stockholders' equity................. 9,257 9,257
-------- -------- -----
Total capitalization..................... $ 11,400 $ 11,400 $
======== ======== =====
</TABLE>
- --------

(1) Excludes (i) 6,066,833 shares of Common Stock issuable upon the exercise
of options outstanding at a weighted average exercise price of $3.91 per
share, (ii) 158,806 shares of Common Stock issuable upon the exercise of
warrants outstanding at a weighted average exercise price of $2.10 per
share, (iii) 3,911,457 shares reserved for future grants under the
Company's 1998 Equity Incentive Plan, (iv) 300,000 shares reserved for
future grants under the Company's 1998 Non-Employee Directors' Stock
Option Plan, (v) 500,000 shares reserved for issuance under the Company's
1998 Employee Stock Purchase Plan and (vi) 131,750 shares of Common Stock
issuable upon exercise of options granted after March 29, 1998. See
"Management--Employee Benefit Plans" and Notes 3 and 8 of Notes to
Financial Statements.

22
<PAGE>

DILUTION

The pro forma net tangible book value of the Company as of March 29, 1998
was approximately $9.3 million or $.39 per share of Common Stock. Pro forma
net tangible book value per share is equal to the Company's total tangible
assets less its total liabilities divided by the number of shares of Common
Stock outstanding (assuming the conversion of all outstanding shares of
Preferred Stock into Common Stock). After giving effect to the sale by the
Company of the shares of Common Stock offered hereby (at an assumed
initial public offering price of $ per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses payable
by the Company), the as adjusted net tangible book value of the Company as of
March 29, 1998 would have been $ million, or $ per share. This represents
an immediate increase in pro forma net tangible book value of $ per share to
existing stockholders and an immediate dilution of $ per share to new public
investors. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $
Pro forma net tangible book value per share as of March 29,
1998............................................................ $.39
Increase in pro forma net tangible book value per share
attributable to new public investors............................
----
As adjusted net tangible book value per share after the offering...
---
Dilution per share to new public investors......................... $
===
</TABLE>

The following table summarizes, on a pro forma basis as of March 29, 1998,
the difference between the number of shares of Common Stock purchased from the
Company (assuming the conversion of all outstanding shares of Preferred Stock
into Common Stock), the total cash consideration paid and the average price
per share paid by the existing stockholders and by the new public investors
(at an assumed initial public offering price of $ per share and before
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by the Company):

<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED TOTAL CONSIDERATION PRICE
------------------ ------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders............ 25,669,630 % $23,008,467 % $.90
New public investors.............
---------- ------ ----------- ------
Total.......................... 100.0% $ 100.0%
========== ====== =========== ======
</TABLE>

The immediately foregoing table includes 2,221,833 shares of Common Stock
issuable upon the exercise of outstanding stock options immediately
exercisable as of March 29, 1998 with a weighted average exercise price of
$1.05 per share. The foregoing excludes 3,845,000 shares issuable upon
exercise of outstanding options not immediately exercisable with a weighted
average exercise price of $5.56 per share and 158,806 shares of Common Stock
issuable upon the exercise of outstanding warrants with a weighted average
exercise price of $2.10 per share. To the extent that outstanding options or
warrants are exercised, there will be further dilution to new investors. See
"Management--Employee Benefit Plans" and Note 3 of Notes to Financial
Statements.

23
<PAGE>

SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with the
Company's financial statements and the notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included herein. The statement of operations data for the years ended December
31, 1995, 1996 and 1997 and the balance sheet data as of December 31, 1996 and
1997 have been derived from and should be read in conjunction with the audited
financial statements of the Company and the notes thereto included elsewhere
in this Prospectus that have been audited by KPMG Peat Marwick LLP,
independent auditors. The statement of operations data for the period from
inception (April 5, 1993) to December 31, 1993 and the year ended December 31,
1994 are derived from audited financial statements and the notes thereto not
included in this Prospectus. The balance sheet data as of December 31, 1993,
1994 and 1995 are derived from audited financial statements and the notes
thereto not included in this Prospectus. The selected statement of operations
data for the quarters ended March 30, 1997 and March 29, 1998 and the selected
balance sheet data as of March 29, 1998 are derived from unaudited financial
statements included elsewhere in this Prospectus that have been prepared on
the same basis as the audited financial statements and, in the opinion of
management, contain all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation as of such date. The operating
results for the quarter ended March 29, 1998 are not necessarily indicative of
the results to be expected for any other interim period or any future fiscal
year.

<TABLE>
<CAPTION>
PERIOD FROM YEAR ENDED DECEMBER 31, QUARTER ENDED
INCEPTION ---------------------------------- -------------------
(APRIL 5, 1993) TO MARCH 30, MARCH 29,
DECEMBER 31, 1993 1994 1995 1996 1997 1997 1998
------------------ ------- ------- ------- ------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenue........................... $ -- $ -- $ 1,182 $ 3,912 $29,071 $ 65 $ 37,662
Cost of revenue......................... -- -- 1,549 3,038 21,226 208 27,559
------- ------- ------- ------- ------- ------- --------
Gross profit (loss)..................... -- -- (367) 874 7,845 (143) 10,103
Operating expenses:
Research and development................ 204 361 2,426 1,218 6,632 616 3,815
Sales, general and administrative....... 302 990 3,677 2,649 3,773 385 3,341
------- ------- ------- ------- ------- ------- --------
Total operating expenses................ 506 1,351 6,103 3,867 10,405 1,001 7,156
------- ------- ------- ------- ------- ------- --------
Operating income (loss)................. (506) (1,351) (6,470) (2,993) (2,560) (1,144) 2,947
Interest and other income (expense), net 22 (10) 93 (84) (131) (32) (39)
------- ------- ------- ------- ------- ------- --------
Income (loss) before income tax expense. (484) (1,361) (6,377) (3,077) (2,691) (1,176) 2,908
Income tax expense...................... -- -- -- -- -- -- 728
------- ------- ------- ------- ------- ------- --------
Net income (loss)....................... $ (484) $(1,361) $(6,377) $(3,077) $(2,691) $(1,176) $ 2,180
======= ======= ======= ======= ======= ======= ========
Basic net income (loss) per share(1).... $ (.07) $ (.19) $ (.56) $ (.27) $ (.21) $ (.10) $ .15
======= ======= ======= ======= ======= ======= ========
Diluted net income (loss) per share..... $ (.07) $ (.19) $ (.56) $ (.27) $ (.21) $ (.10) $ .08
======= ======= ======= ======= ======= ======= ========
Shares used in basic and diluted per
share computation(1)................... 6,784 7,048 11,365 11,383 12,677 11,578 14,142
Shares used in diluted per share
computation(1)......................... 6,784 7,048 11,365 11,383 12,677 11,578 25,729
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------- MARCH 29,
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........ $1,605 $4,555 $3,872 $3,133 $ 6,551 $ 8,640
Total assets..................... 1,786 5,450 6,793 5,525 25,038 36,738
Capital lease obligations, less
current portion................. 76 249 1,137 617 1,891 2,143
Total stockholders' equity....... 1,659 4,629 4,013 1,037 6,896 9,257
</TABLE>
- --------
(1) See Note 1 of Notes to Financial Statements for an explanation of the
determination of the number of shares used in per share computations.

24
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion and analysis should be read in conjunction with the
Company's financial statements and notes thereto and the other financial
information included elsewhere in this Prospectus. Except for the historical
information contained herein, the discussions in this Prospectus contain
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed herein. Factors
that could cause or contribute to such differences include, but are not
limited to, those discussed below and in the section entitled "Risk Factors,"
as well as those discussed elsewhere in this Prospectus.

OVERVIEW

NVIDIA designs, develops and markets 3D graphics processors that provide
high performance interactive 3D graphics to the mainstream PC market. The
Company incurred losses in each quarter from inception through the third
quarter of 1997 and in each year. As of March 29, 1998, the Company had an
accumulated deficit of approximately $11.8 million. Since its inception in
April 1993 through the end of 1994, NVIDIA was in the development stage and
was primarily engaged in product development and product testing. The Company
introduced its first product, the NV1, in May 1995. The NV1 was a multimedia
accelerator that provided 3D graphics, video and audio for interactive
multimedia, and was targeted primarily to the game console market. The NV1 was
developed in the absence of industry standards with the goal of establishing
the Company's proprietary NV technology as a 3D graphics standard. By the end
of 1996, the PC industry had broadly adopted Microsoft's Direct3D and SGI's
OpenGL 3D APIs. As a result, the Company experienced a significant reduction
in revenue from sales of the NV1 and stopped selling the NV1 in the first
quarter of 1996. The Company also ceased development of the NV2, a product
designed for a game console platform, and began developing the RIVA128
graphics processor. In August 1997, the Company introduced the RIVA128
graphics processor, which is designed to be compatible with Microsoft's
Direct3D and is the first in a family of high performance graphics products
targeted at the mainstream PC market.

All of the Company's revenue in 1995 and 1996 was derived from the sale and
license of the NV1, and substantially all of the Company's revenue in 1997 and
the first quarter of 1998 was derived from the sale and license of the RIVA128
graphics processor. The Company expects that substantially all of its revenue
for the foreseeable future will be derived from the sale and license of its 3D
graphics processors in the mainstream PC market. The Company recognizes
product sales revenue upon shipment, net of allowances and recognizes royalty
revenue upon shipment of product to the licensee's customers. Since the
Company has no other product line, the Company's business, financial condition
and results of operations would be materially adversely affected if for any
reason its graphics processors do not achieve widespread acceptance in the
mainstream PC market.

A majority of the Company's sales have been to a limited number of customers
and its sales are highly concentrated. The Company sells its graphics
processors to add-in board manufacturers, primarily Diamond and STB, which
incorporate these processors in the boards they sell to PC OEMs, retail
outlets and systems integrators. The average selling prices for the Company's
products, as well as its customers' products, vary by distribution channel.
All of the Company's sales are made on the basis of purchase orders rather
than long-term agreements. Diamond accounted for 86% and 82% of the Company's
total revenue in 1995 and 1996, respectively. STB and Diamond accounted for
63% and 31%, respectively, of the Company's total revenue in 1997, and 49% and
39%, respectively, of the Company's total revenue in the first quarter of
1998. The number of potential customers for the Company's products is limited,
and the Company expects that sales to STB and Diamond will continue to account
for a substantial portion of its revenue for the foreseeable future.
Currently, all of the Company's product sales and its arrangements with its
third-party manufacturers provide for pricing and payment in U.S. dollars, and
the Company has not engaged in any foreign currency hedging activities,
although it may do so in the future.

As markets for the Company's 3D graphics processors develop and competition
increases, the Company anticipates that product life cycles will remain short
and ASPs will continue to decline. In particular, ASPs and

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<PAGE>

gross margins for the Company's 3D graphics processors are expected to decline
as each product matures. The Company'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, the
Company's existing products must have competitive performance levels in order
to be included in new system configurations, or the Company must timely
introduce new products with such performance characteristics. The Company's
RIVA128 graphics processor was designed into products introduced in the fall
of 1997. While the Company expects to continue to sell the RIVA128 graphics
processor, as a result of increased competition from new products introduced
by both the Company and its competitors for the 1998 design cycles, the
Company expects revenues from the RIVA128 graphics processor in future periods
to decline substantially from the levels in the first quarter of 1998. Thus,
the Company will need to introduce new products and enhancements to existing
products to maintain overall average selling prices and gross margins.
Furthermore, in order for the Company's 3D graphics processors to achieve high
volumes, leading PC OEMs and add-in board manufacturers must select the
Company's 3D graphics processor for design into their products, and then
successfully complete the designs of their products and sell them. In
particular, the Company expects to begin volume shipments of the RIVA128ZX
graphics processor in the second quarter of 1998, and there can be no
assurance that the Company will be able to successfully manage the production
transition risks with respect to that product. Failure to achieve any of the
foregoing with respect to the RIVA128ZX graphics processor, future products or
product enhancements could result in rapidly declining ASPs, reduced margins,
reduced demand for products or loss of market share, any of which could have a
material adverse effect on the Company's business, financial condition or
results of operations. See "Risk Factors--Dependence on New Product
Development; Need to Manage Product Transitions and "--Importance of Design
Wins."

The Company utilizes ST and TSMC to produce the Company's semiconductor
wafers and independent contractors to perform assembly, test and packaging.
The Company depends on these suppliers to allocate to the Company a portion of
their manufacturing capacity sufficient to meet the Company's needs, to
produce products of acceptable quality and at acceptable manufacturing yields
and to deliver those products to the Company on a timely basis. ST currently
is capacity constrained with respect to the manufacture of the Company's
products. ST has only recently begun to manufacture the Company's products in
commercial quantities, and there can be no assurance that ST will be able to
meet the Company's near-term or long-term manufacturing requirements. In
addition, the Company's relationship with TSMC has only recently been
established, and there can be no assurance that this relationship will meet
the business objectives of the Company. As the Company's relationships with
ST, TSMC and any additional manufacturing partners develop, yields or product
performance could be adversely affected due to difficulties associated with
adapting the Company's technology and product design to the proprietary
process technology and design rules of each manufacturer. A manufacturing
disruption experienced by either of these manufacturers would impact the
production of the Company's products, which would have a material adverse
effect on the Company's business, financial condition and results of
operations. The Company obtains manufacturing services from both ST and TSMC
on a purchase order basis, and neither ST nor TSMC has any obligation to
provide the Company with any specified minimum quantities of product. Both ST
and TSMC fabricate wafers for other companies, including certain competitors
of the Company, and ST also manufactures wafers for its own needs, and either
could choose to prioritize capacity for other uses or reduce or eliminate
deliveries to the Company on short notice. In addition, the Company purchases
wafers and dies and pays an agreed price for wafers meeting certain acceptance
criteria only after the production yields for a product stabilize. Once
production is stabilized, the Company will pay for functional die only.
Accordingly, because TSMC has only recently begun to manufacture products for
the Company, until the production yields of its product at TSMC stabilize, the
Company must pay an agreed price for wafers regardless of yield. See "Risk
Factors--Dependence on Third-Party Manufacturers; Absence of Manufacturing
Capacity; Manufacturing Risks" and "--Manufacturing Yields."

The Company has in the past entered into contractual agreements with third
parties to provide design, development and support services on a best efforts
basis. All amounts funded to the Company under these

agreements were non-refundable once paid. The Company recorded reductions to
research and development expense based on the percentage-of-completion method,
limited by the amounts funded, and recorded primarily as

26
<PAGE>

a reduction to research and development expenses. The Company developed the
NV2 under contract with a third party and recorded a credit to research and
development of $2.0 million in 1995 and $3.0 million in 1996. Also, as part of
a strategic collaboration agreement with ST, the Company received contract
funding in support of research and development and marketing efforts for the
RIVA128 and RIVA128ZX graphics processors. Accordingly, the Company recorded
$2.0 million in 1996 and approximately $2.3 million in 1997 as a reduction
primarily to research and development, and, to a lesser extent to sales,
general and administrative expenses. The Company is obligated to provide
continued development and support to ST through the end of 1998. The Company
recorded $625,000 for continued development and support in the first quarter
of 1998 and expects to record a similar amount in each of the remaining three
quarters of 1998. The Company does not have any plans to enter into
contractual development arrangements and does not expect contract funding in
the future.

RESULTS OF OPERATIONS

The Company first generated revenue from sales of its current 3D graphics
processor product in the third quarter of 1997, when the Company began
commercial shipment of the RIVA128 graphics processor. Prior to that time, the
Company's revenue was derived from the sale of products that were targeted at
the game console market. These products were discontinued in 1996 due to their
proprietary standards and market changes. Moreover, expenses prior to the
third quarter of 1997 related primarily to product development and product
testing.

QUARTERS ENDED MARCH 30, 1997 AND MARCH 29, 1998

REVENUE

Product Revenue. Product revenue increased from $65,000 in the first quarter
of 1997 to $33.2 million in the first quarter of 1998, due to sales of the
RIVA128 graphics processor, which the Company introduced in August 1997.
Although the Company achieved substantial growth in product revenue from the
1997 period to the 1998 period, the Company does not expect to sustain this
rate of growth in future periods. In addition, the Company expects that the
average selling prices of its products will decline over the respective lives
of such products, and there can be no assurance that declines in average
selling prices of 3D graphics processors will not accelerate as the market
develops and competition increases. See "Risk Factors--Erosion of Average
Selling Prices."

Royalty Revenue. ST has a license from the Company to sell the NV1
multimedia accelerator and the RIVA128 and RIVA128ZX graphics processors.
Royalty revenue from ST's sales of the RIVA128 graphics processor increased to
$4.5 million in the first quarter of 1998 as a result of the Company's
introduction of the RIVA128 graphics processor in August 1997 and subsequent
sales of the RIVA128 graphics processor by ST. Although the Company achieved
substantial growth in royalty revenue from 1997 to 1998, the Company expects
royalty revenue from ST to decrease in the second quarter of 1998 and beyond.
If ST were to stop selling the Company's products, if there continued to be a
material decline in the number of units sold by ST in the future or if there
were a greater than expected decline in the ASPs of the Company's products
sold by ST, the Company's business, financial condition and results of
operations would be materially adversely affected. See "Risk Factors--
Dependence on ST Microelectronics."

GROSS PROFIT (LOSS)

Gross profit consists of total revenue less cost of revenue. Cost of revenue
consists primarily of the costs of semiconductors purchased from the Company's
contract manufacturers, manufacturing support costs (labor and overhead
associated with such purchases) and shipping costs. The Company had a gross
loss of $143,000 in the first quarter of 1997 compared to a gross profit of
$10.1 million in the first quarter of 1998. Excluding royalty revenue, gross
margin on product revenue improved from (219)% in the first quarter of 1997 to
17% in the first quarter of 1998 due to sales of the RIVA128 graphics
processor. Although the Company achieved substantial growth in gross profit
and gross margin from the 1997 period to the 1998 period, the Company does not
expect

27
<PAGE>

to sustain these rates of growth in future periods. Gross profit or gross
margin could be affected in the future by various factors, including changes
in the volume of the Company's products, competitive pressures resulting in
lower than expected ASPs, reduction in the amount of royalty revenue received
from ST and inventory write-downs.

OPERATING EXPENSES

Research and Development. Research and development expenses consist
primarily of salaries and benefits, cost of development tools and software,
and consultant costs, net of contract funding from ST. Research and
development expenses before adjustments for contract funding increased from
$616,000 in the first quarter of 1997 to $3.8 million in the first quarter of
1998, primarily due to additional personnel and related costs, such as
depreciation changes incurred on capital expenditures and software license and
maintenance fees. The Company anticipates that it will continue to devote
substantial resources to research and development and that these expenses will
increase in absolute dollars in the remaining three quarters of 1998.

Sales, General and Administrative. Sales, general and administrative
expenses consist primarily of salaries, commissions and bonuses earned by
sales, marketing and administrative personnel, promotional and advertising
expenses, and travel and entertainment, net of contract funding received from
ST. Sales, general and administrative expenses increased from $385,000 in the
first quarter of 1997 to $3.3 million in the first quarter of 1998, primarily
due to increased promotional expenses, additional personnel and commissions
and bonuses on sales of the RIVA128 graphics processor. The Company expects
that sales and marketing expenses will continue to increase in absolute
dollars as the Company expands its sales and marketing efforts and increases
promotional activities, and that general and administrative expenses will
increase in connection with expenses associated with being a public company
and the Company's expected move to a larger facility in the third quarter of
1998.

INTEREST AND OTHER INCOME (EXPENSE), NET

Interest expense primarily consists of interest incurred as a result of
capital lease obligations. Interest expense increased from $54,000 in the
first quarter of 1997 to $83,000 in the first quarter of 1998, primarily as a
result of additional equipment leased in support of the Company's development
activities. Interest income primarily consists of interest earned on the
Company's cash and cash equivalents. Interest income was $22,000 and $44,000
in the first quarter of 1997 and 1998, respectively. Interest income was
higher in the first quarter of 1998 due to higher average cash balances as a
result of the Company's receipt of net proceeds from the sale of preferred
stock in August 1997 and net cash provided by operating activities in the two
quarters ended March 29, 1998.

PROVISION FOR INCOME TAXES.

The Company recorded no provision for federal or state income taxes through
1997 because the Company experienced net losses from inception through 1997.
The Company expects to record a provision for income taxes in 1998, the amount
of which will depend on several factors, including the availability of net
operating loss carryforwards and research and development carryforwards.
Future equity offerings combined with sales of the Company's equity during the
preceding three years may constitute changes in ownership under the Internal
Revenue Code of 1986, and could limit the use of the Company's net operating
loss carryforwards existing as of the date of the ownership change.
Realization of the deferred tax assets also will depend on future taxable
income.

FISCAL YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

REVENUE

Product Revenue. Product revenue was $1.1 million, $3.7 million and $27.3
million in 1995, 1996 and 1997, respectively. Prior to 1997, product revenue
was derived from sales of the Company's NV1 processor. The

28
<PAGE>

substantial increase in product revenue from 1996 to 1997 was due to sales of
the RIVA128 graphics processor, which the Company introduced in August 1997.
Although the Company achieved substantial growth in product revenue in 1996
and 1997, the Company does not expect to sustain this rate of sequential
annual growth in future periods.

Royalty Revenue. Royalty revenue was $79,000, $202,000 and $1.8 million in
1995, 1996 and 1997, respectively. Royalty revenue increased in 1997 as a
result of the Company's introduction of the RIVA128 graphics processor in
August 1997 and subsequent sales of the RIVA128 graphics processor by ST.
Although the Company achieved substantial growth in royalty revenue from 1996
to 1997, the Company does not expect to sustain this rate of sequential annual
growth in future periods.

GROSS PROFIT (LOSS)

The gross loss of $367,000 in 1995 was attributable to fixed manufacturing
support costs in a period of low product sales. Increased sales and slightly
lower fixed manufacturing costs contributed to a gross profit of $874,000 in
1996. The introduction of the RIVA128 graphics processor in August 1997 and
subsequent sales contributed to a gross profit of $7.9 million in 1997.
Excluding royalty revenue, gross margin on product revenue was (40)%, 18% and
22% in 1995, 1996 and 1997, respectively. The increase in gross margin on
product revenue in 1997 was primarily due to sales of the RIVA128 graphics
processor. Although the Company achieved substantial growth in gross profit
and moderate growth in gross margin from 1996 to 1997, the Company does not
expect to sustain these rates of sequential annual growth in future periods.

OPERATING EXPENSES

Research and Development. Research and development expenses before
adjustments for contract funding were $4.4 million, $5.8 million and $8.6
million in 1995, 1996 and 1997, respectively. Research and development
expenses increased each year primarily due to additional personnel and related
costs.

Sales, General and Administrative. Sales, general and administrative
expenses decreased from $3.7 million in 1995 to $2.6 million in 1996 as the
Company curtailed promotional activities associated with the NV1. Sales,
general and administrative expenses increased to $3.8 million in 1997
primarily due to incremental promotional expenses, additional personnel and
commissions and bonuses on sales of the RIVA128 graphics processor.

INTEREST AND OTHER INCOME (EXPENSE), NET

Interest expense was $152,000, $216,000 and $267,000 in 1995, 1996 and 1997,
respectively. Interest expense increased each year as a result of additional
equipment leased in support of the Company's development activities. Interest
income was $245,000, $132,000 and $136,000 in 1995, 1996 and 1997,
respectively. Interest income was higher in 1995 due to higher average cash
balances during the year as a result of the Company's receipt of net proceeds
from the sale of preferred stock.

PROVISION FOR INCOME TAXES.

No provision for federal or state income tax was recorded because the
Company experienced net losses from inception through 1997. As of December 31,
1997, the Company had deferred tax assets for federal tax purposes of
approximately $6.3 million, primarily consisting of net operating loss
carryforwards that can be used to offset taxable income in future years. The
deferred tax assets are fully offset by a valuation allowance.

29
<PAGE>

QUARTERLY RESULTS OF OPERATIONS

The following table presents certain quarterly statement of operations data
for the five quarters ended March 29, 1998. This quarterly information is
unaudited, but has been prepared on the same basis as the audited annual
financial statements, and in the opinion of the Company's management includes
all adjustments, consisting only of normal recurring adjustments, necessary
for a fair presentation of the information for the periods presented. The
unaudited quarterly information should be read in conjunction with the
Company's audited financial statements and the notes thereto included
elsewhere herein. The growth in revenue and improvement in results of
operations experienced by the Company in recent quarters are not necessarily
indicative of future results. In addition, in light of its significant growth
in recent quarters, the Company believes that period-to-period comparisons of
its financial results should not be relied upon as an indication of future
performance.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------
MARCH 30, JUNE 29, SEPT. 28, DEC. 31, MARCH 29,
1997 1997 1997 1997 1998
--------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue:
Product...................... $ 65 $ 6 $ 5,154 $22,055 $33,210
Royalty...................... -- -- 312 1,479 4,452
------- ------- ------- ------- -------
Total revenue.............. 65 6 5,466 23,534 37,662
------- ------- ------- ------- -------
Cost of revenue................ 208 150 4,546 16,322 27,559
Gross profit (loss)........ (143) (144) 920 7,212 10,103
Operating expenses:
Research and development..... 616 512 2,312 3,192 3,815
Sales, general and
administrative.............. 385 569 991 1,828 3,341
------- ------- ------- ------- -------
Total operating expenses... 1,001 1,081 3,303 5,020 7,156
------- ------- ------- ------- -------
Operating income (loss)........ (1,144) (1,225) (2,383) 2,192 2,947
Interest and other income
(expense), net................ (32) (40) (30) (29) (39)
------- ------- ------- ------- -------
Income (loss) before tax
expense....................... (1,176) (1,265) (2,413) 2,163 2,908
Income tax expense............. -- -- -- -- 728
------- ------- ------- ------- -------
Net income (loss).......... $(1,176) $(1,265) $(2,413) $ 2,163 $ 2,180
======= ======= ======= ======= =======
Basic net income (loss) per
share......................... $ (.10) $ (.11) $ (.18) $ .15 $ .15
======= ======= ======= ======= =======
Diluted net income (loss) per
share......................... $ (.10) $ (.11) $ (.18) $ .09 $ .08
======= ======= ======= ======= =======
Shares used in basic per share
computation................... 11,578 11,662 13,328 14,074 14,142
Shares used in diluted per
share computation............. 11,578 11,662 13,328 24,942 25,729
</TABLE>

FACTORS AFFECTING OPERATING RESULTS

The Company's quarterly and annual results of operations will be affected by
a variety of factors that could materially adversely affect revenue, gross
profit and results of operations. Factors that have affected the Company's
results of operations in the past, and are likely to affect the Company's
results of operations in the future, include, among others, demand and market
acceptance of the Company's products; the successful development of next-
generation products; unanticipated delays or problems in the introduction or
performance of next-generation products; market acceptance of the products of
the Company's customers; new product announcements or product introductions by
the Company's competitors; the Company's ability to introduce new products in
accordance with OEM design requirements and design cycles; changes in the
timing of product orders due to unexpected delays in the introduction of
products of the Company's customers or due to the life cycles of such
customers' products ending earlier than anticipated; fluctuations in the
availability of manufacturing capacity or manufacturing yields; competitive
pressures resulting in lower than expected average selling prices; the volume
of orders that are received and that can be fulfilled in a quarter; the
rescheduling or

30
<PAGE>

cancellation of customer orders; the unanticipated termination of a strategic
relationship; seasonal fluctuations associated with the tendency of PC sales
to decrease in the second quarter and increase in the second half of each
calendar year; and the level of expenditures for research and development of
sales, general and administrative functions of the Company. In addition, the
Company believes that quarterly and annual results of operations could be
affected in the future by other factors, including changes in the relative
volume of sales of the Company's products; seasonality in the PC market; the
ability of the Company to reduce the process geometry of its products; supply
constraints for the other components incorporated into its customers'
products; the loss of a key customer; a reduction in the amount of royalties
received from ST; legal and other costs related to defending intellectual
property litigation; costs associated with protecting the Company's
intellectual property; inventory write-downs and foreign exchange rate
fluctuations. Any one or more of these factors could result in the Company
failing to achieve its expectations as to future revenue or net income. For
example, in December 1997, the Company's sales of the RIVA128 graphics
processor were negatively affected due to low manufacturing yields at ST, the
Company's sole manufacturer of the RIVA128 graphics processor. Any similar
manufacturing difficulties with ST or other third-party manufacturers in the
future could have a material adverse impact on the Company's business,
financial condition or results of operations.

Because most operating expenses are relatively fixed in the short term, the
Company may be unable to adjust spending sufficiently in a timely manner to
compensate for any unexpected sales shortfall, which could materially
adversely affect quarterly results of operations. The Company will 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 the Company to invest
significantly greater resources than anticipated in research and development
or sales and marketing efforts, the Company's business, financial condition
and results of operations could be materially adversely affected. Accordingly,
the Company believes that period-to-period comparisons of its 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. As a result of fluctuating operating
results or other factors discussed above, in certain future quarters the
Company's results of operations may be below the expectations of public market
analysts or investors. In such event, the market price of the Company's Common
Stock would be materially adversely affected.

In 1997 and the first quarter of 1998, the Company derived all of its
revenue from the sale or license of products for use in PCs, and the Company
expects to continue to derive substantially all of its revenue from the sale
or license of products for use in PCs. As a result, failure of the demand for
3D graphics in the mainstream PC market to increase, or reductions or
fluctuations in the demand for PCs, would have a material adverse effect on
the Company's business, financial condition and results of operations. The PC
industry is seasonal, and the Company expects that its financial results in
the future will be affected by such seasonality.

LEGAL PROCEEDINGS

SGI filed a patent infringement lawsuit against the Company in April 1998.
In the event of an adverse result in the SGI suit, the Company could be
required to do one or more of the following: pay substantial damages
(including treble damages), cease the manufacture, use and sale of any
infringing products, expend significant resources to develop non-infringing
technology, or obtain a license from SGI for any infringing technology. The
SGI suit could result in limitations on the Company's ability to market its
products, delays and costs associated with redesigning its products or
payments of license fees or other payments to SGI, any of which would have a
material adverse effect on the Company's business, financial condition and
results of operations.

STOCK-BASED COMPENSATION

With respect to certain stock options granted to employees, the Company
recorded deferred compensation of $2.1 million in 1997 and $305,000 in the
first quarter of 1998. The Company amortized approximately $62,000 of the
deferred compensation in the fourth quarter of 1997 and $177,000 in the first
quarter of 1998 and will amortize the remainder over the four-year vesting
periods of the options. See Note 3 of Notes to Financial Statements.

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<PAGE>

YEAR 2000 COMPLIANCE

Many existing computer systems and applications and other control devices
use only two digits to identify a year in the date field, without considering
the impact of the upcoming change in the century. As a result, in less than
two years, computer systems and applications used by many companies may need
to be upgraded to comply with "Year 2000" requirements. The Company relies on
its systems in operating and monitoring many significant aspects of its
business, including financial systems (such as general ledger, accounts
payable, accounts receivable, inventory and order management), customer
services, infrastructure and network and telecommunications equipment. The
Company also relies directly and indirectly on the systems of external
business enterprises such as customers, suppliers, creditors, financial
organizations and domestic and international governments. The Company
currently estimates that its costs associated with Year 2000 compliance,
including any costs associated with the consequences of incomplete or untimely
resolution of Year 2000 compliance issues, will not have a material adverse
effect on the Company's business, financial condition or results of
operations. However, the Company has not extensively investigated and does not
believe it has fully identified the impact of Year 2000 compliance and has not
concluded that it can resolve any issues that may arise in complying with Year
2000 without disruption of its business or without incurring significant
expense. In addition, even if the Company's internal systems are not
materially affected by Year 2000 compliance issues, the Company could be
affected through disruption in the operation of the enterprises with which the
Company interacts.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, the Company has financed its operations primarily through
private sales of convertible preferred stock totaling $19.7 million and, to a
lesser extent, equipment lease financing and proceeds received from the
exercise of employee stock options. As of March 29, 1998, the Company had $8.6
million in cash and cash equivalents and no outstanding bank indebtedness. The
Company has historically held its cash balances in cash equivalents such as
money market funds or as cash. The Company places its money market funds with
high credit quality financial institutions and limits the amount of exposure
with any one financial institution.

Net cash used in operating activities was $6.1 million in 1995, $300,000 in
1996 and $1.2 million in 1997. The decrease from 1995 to 1996 was a result of
a smaller operating loss and higher deferred contract funding in 1996, and the
increase from 1996 to 1997 was a result of substantial increases in accounts
receivable in 1997, partially offset by an increase in accounts payable. Net
cash provided by operating activities was $4.4 million in the first quarter of
1998, consisting of net income for the quarter and changes in working capital.
The Company's accounts receivable are highly concentrated and three customers
accounted for all accounts receivable in 1997 and the first quarter of 1998.
Although the Company has not experienced any bad debt write-offs to date,
there can be no assurance that the Company will not be required to write off
bad debt in the future, which would have a material adverse effect on the
Company's business, financial condition and results of operations.

To date, the Company's investing activities have consisted primarily of
purchases of property and equipment. As of March 29, 1998, the Company did not
have any material commitments other than commitments under operating and
capital leases. See Note 4 of Notes to Financial Statements. The Company's
capital expenditures, including capital leases, increased from $1.4 million in
1995 to $5.8 million in 1997, due to additional capital leases and purchases
of computer equipment, including workstations and servers to support the
Company's increased research and development activities. The Company invested
$2.8 million in capital expenditures in the first quarter of 1998, including
capital leases primarily on computer equipment and software, including
workstations and servers, in support of the Company's increased research and
development activities. The Company expects its capital expenditures to
increase as the Company further expands its research and development
initiatives and as its employee base grows. The timing and amount of future
capital expenditures will depend primarily on the Company's future growth. The
Company expects to spend approximately $10 million for capital expenditures in
1998, primarily for capital leases and the purchase of computer and
engineering workstations.

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<PAGE>

The Company believes that the net proceeds from this offering, together with
its existing cash balances, anticipated cash flows from operations and capital
lease financing, will be sufficient to meet the Company's operating and
capital requirements for at least the next 12 months, although the Company
could be required, or could elect, to raise additional funds during such
period. The Company's future liquidity and capital requirements will depend
upon numerous factors, including the costs and timing of expansion of research
and product development efforts and the success of these development efforts,
the costs and timing of expansion of sales and marketing activities, the
extent to which the Company's existing and new products gain market
acceptance, competing technological and market developments, the costs
involved in maintaining and enforcing patent claims and other intellectual
property rights, available borrowings under line of credit arrangements and
other factors. The Company expects that it may need to raise additional equity
or debt financing in the future. There can be no assurance that such
additional financing will be available at all, or that such financing, if
available will be obtainable on terms favorable to the Company and will not be
dilutive to the Company's then-current stockholders.

33
<PAGE>

BUSINESS

OVERVIEW

NVIDIA designs, develops and markets 3D graphics processors and related
software that provide high performance interactive 3D graphics to the
mainstream PC market. The Company's graphics processors incorporate a "fast-
and-wide" 100 megahertz, 128-bit graphics architecture that is designed to
deliver a highly immersive, interactive 3D experience with realistic imagery
and stunning effects. The Company's RIVA128 and RIVA128ZX graphics processors
provide superior processing power at competitive prices and are architected to
take advantage of mainstream industry standards such as Microsoft's Direct3D.
The highly integrated design of the RIVA128 and RIVA128ZX graphics processors
combines high performance 3D and 2D graphics on a single chip and provides a
simpler and lower cost graphics solution relative to competing solutions,
including multi-chip or multi-board 2D/3D graphics subsystems.

NVIDIA designed the RIVA128 graphics processor to enable PC OEMs and add-in
board manufacturers to build award-winning products by delivering state-of-
the-art interactive 3D graphics capability to end users while maintaining
affordable prices. The Company believes that by developing 3D graphics
solutions that provide superior performance and address the key requirements
of the mainstream PC market, it will accelerate the adoption of 3D graphics
throughout this market. The benefits and performance of the RIVA128 graphics
processor have received significant industry validation and have enabled the
Company's customers to win over 80 industry awards. NVIDIA's products
currently are designed into products offered by five of the top ten PC OEMs in
the United States--Compaq, Dell, Gateway 2000, Micron and Packard Bell NEC--
and by leading add-in board manufacturers such as Diamond and STB.

INDUSTRY BACKGROUND

Interactive 3D graphics is required across various computing and
entertainment platforms, such as workstations, specialized arcade systems and
home gaming consoles. However, the mainstream PC market has only recently
begun to transition from traditional 2D graphics to high quality, interactive
3D graphics. Continuing advancements in semiconductor manufacturing have made
available more powerful and affordable microprocessors and 3D graphics
processors, both of which are essential to deliver interactive 3D graphics to
the mainstream PC market. Additionally, the industry has broadly adopted
Microsoft's 3D API, Direct3D, which serves as a common and standard language
between software applications and 3D graphics processors. This has spurred the
development of numerous compelling 3D titles, and subsequently strong consumer
demand.

The Company believes that a PC's interactive 3D graphics capability
represents one of the primary means by which users differentiate among various
systems. PC users today can easily differentiate the quality of graphics and
prefer personal computers that provide a superior visual experience. These
factors have dramatically increased demand for 3D graphics processors. Mercury
Research estimates that 3D graphics will be standard in every PC unit shipped
by 2001. Mercury Research also estimates 8.6 million 3D graphics processors
were sold in 1997 and 180 million will be sold in 2001.

The technology required to create interactive and visually engaging 3D
graphics is algorithmically complex and computationally intensive. To deliver
high quality interactive 3D graphics, advanced 3D graphics processors require
millions of transistors to process billions of arithmetic operations per
second. Current 3D graphics processors are over ten times more complex than 2D
accelerators and comparable to the complexity of the

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Pentium microprocessor. Yet despite recent advances, PC 3D graphics available
today cannot deliver in real time the quality of graphics seen in the film
"Toy Story." Such 3D graphics required over 100 powerful workstations and over
800,000 computer hours to render the film's 114,000 frames, with each frame
requiring an average of seven hours to render. For mainstream PCs to provide
this level of 3D graphics capability, the performance of 3D graphics
processors will need to be improved by several more orders of magnitude. To
approach "real world" graphics performance even beyond that seen in "Toy
Story," graphics processors would require significant further improvement in
performance.

The demanding requirements of high performance 3D graphics present
significant new challenges for semiconductor graphics companies in the
mainstream PC market. Certain suppliers offer 3D graphics solutions that only
address specific niches of the market, such as the gaming or CAD/CAM markets.
These solutions typically have been relatively expensive, in some cases
involving multiple chips on an add-in card, with separate chips for 2D
graphics and 3D graphics processing. Furthermore, these niche 3D solutions
often require content providers to develop to proprietary APIs other than
Microsoft's Direct3D in order to achieve the necessary performance. The higher
product costs and API limitations have made it difficult for such targeted 3D
graphics solutions to achieve widespread acceptance in the mainstream PC
market. On the other end of the spectrum, traditional 2D graphics suppliers
have attempted to leverage their installed base by adding 3D graphics
functionality to their 2D graphics architectures. However, 3D graphics
algorithms and architectures are significantly more complex than those of 2D
graphics, and the traditional 2D graphics suppliers face many challenges to
develop and provide cost-effective high performance 3D graphics.

The Company believes that a substantial market opportunity exists for
providers of high performance 3D graphics products for the mainstream PC
market, particularly as high performance 3D graphics have become an
increasingly important requirement and point of differentiation for PC OEMs.
Consumer PC users demand a compelling visual experience and compatibility with
existing and next-generation 3D graphics applications at an affordable price.
Application developers require high performance, standards-based 3D
architectures with broad market penetration. Since graphics is a key point of
differentiation, PC OEMs continually seek to incorporate leading-edge cost-
effective 3D graphics solutions to build award-winning products. The Company
believes that providers of interactive 3D graphics solutions will compete
based on their ability to leverage their technology expertise to
simultaneously meet the needs of end users, application developers and OEMs.

THE NVIDIA SOLUTION

NVIDIA has developed a family of 3D graphics processors and related software
that provides high performance interactive 3D graphics to the mainstream PC
market. The Company's products allow users to enjoy a highly immersive,
interactive 3D experience with compelling visual quality, realistic motion and
complex object and scene interaction at real-time frame rates. By providing
this level of performance at an affordable price to OEMs and end users, the
Company believes that it will accelerate the adoption of interactive 3D
graphics throughout the mainstream PC market. The Company's products are used
by leading PC OEMs, such as Compaq, Dell, Gateway 2000, Micron and Packard
Bell NEC, and leading add-in board manufacturers, such as Diamond and STB. The
RIVA128 graphics processor has received significant industry validation and
has enabled the Company's customers to receive over 80 industry awards.

The key features and benefits of the Company's solution are as follows:

High Performance. The RIVA128 and RIVA128ZX graphics processors' 128-bit
architecture combined with a proprietary texture cache can process 1.5 million
polygons per second and maintain a fill rate of 100 million texture mapped
pixels per second. This performance is driven by the processing power of a 5
GFLOPS (billions of floating point operations per second) floating point
polygon setup engine and a 15 BOPS (billions of operations per second) integer
pixel processing engine. The RIVA128 and RIVA128ZX graphics processors also
include an extensive set of reference drivers that translate between the
software API and hardware. The software driver is designed to maximize
performance of the graphics processor and to maintain compatibility with each
successive generation of the Company's products. The software drivers have the
flexibility to be continually

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enhanced in order to further improve the performance of the processors. The
Company believes that the high performance of its graphics processors provides
a competitive advantage to the Company's OEM customers, enabling them to
differentiate their systems from those of other PC vendors.

Standards-Based. The RIVA128 and RIVA128ZX products are architected to take
full advantage of industry standards such as Microsoft's Direct3D. The
standards-compliant design of the Company's graphics processors provides OEMs
maximum flexibility in the design and use of the systems. In particular, the
Company believes that its focus on the Microsoft Direct3D API positions it
well in the mainstream PC market as this standard proliferates and supports
more advanced 3D visuals. Microsoft's Direct3D API has gained broad developer
support, with numerous 3D titles currently using this API.

Integrated Design. The RIVA128 and RIVA128ZX graphics processors' highly
integrated single-chip design supports high performance interactive 3D
graphics applications while simultaneously optimizing 2D graphics and
providing VGA compatibility and DVD playback. By integrating 2D graphics and
3D graphics on one chip, the Company believes that it has standardized the
platform for developers and provided a graphics solution that is simpler and
lower cost relative to competing solutions, including multi-chip or multi-
board 2D/3D graphics subsystems.

128-bit Architecture. The Company's 128-bit product architecture and leading
technology enable it to provide products with state-of-the-art interactive 3D
graphics performance and superior processing power. With a "fast-and-wide" 100
megahertz, 128-bit graphics architecture, the RIVA128 and RIVA128ZX graphics
processors deliver 3D graphics with great detail, smooth shading, high frame
rates and overall stunning effects, while maintaining volume pricing for
multimedia and entertainment applications.

STRATEGY

The Company's objective is to be the leading supplier of high performance 3D
graphics processors for PCs. The Company's strategy to achieve this objective
includes the following key elements:

Focus on the Mainstream PC Market. The Company's strategy is to achieve
market leadership in the high volume mainstream PC market by providing award-
winning performance at competitive prices. By developing 3D graphics solutions
that provide superior performance and address the key requirements of the
mainstream PC market, NVIDIA believes that it will accelerate the adoption of
3D graphics throughout the mainstream PC market. As part of its strategy to
address the broadest segment of the PC market, the Company has closely aligned
its product development with Microsoft's Direct3D API, rather than creating
and promoting a proprietary API. The Company believes this alignment with
Direct3D maximizes third-party software support.

Target Leading OEMs. The Company's strategy is to enable its leading OEM
customers to differentiate their products in a highly competitive marketplace
by using NVIDIA's high performance 3D graphics processors. NVIDIA believes
that design wins with these industry leaders provide market validation of its
products, increase brand awareness and enhance the Company's ability to
penetrate additional leading customer accounts. In addition, the Company
believes that close relationships with OEMs will allow the Company to better
anticipate and address customer needs with its future generation of products.
NVIDIA's products currently are designed into products offered by five of the
top ten PC OEMs in the United States--Compaq, Dell, Gateway 2000, Micron and
Packard Bell NEC--and by leading add-in board manufacturers such as Diamond
and STB.

Extend Technological Leadership in 3D Graphics. NVIDIA believes that its
products provide superior interactive 3D graphics to the mainstream PC market.
The Company is focused on leveraging its advanced engineering capabilities to
accelerate the quality and performance of 3D graphics in PCs. A fundamental
aspect of NVIDIA's strategy is to actively recruit the best 3D graphics
engineers in the industry, and NVIDIA believes that it has assembled an
exceptionally experienced and talented engineering team. The Company intends
to leverage this advantage to achieve new levels of graphics features and
performance, enabling customers to achieve award-winning performance in their
products.

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Increase Market Share by Leveraging Strategic Alliances. The Company
believes that substantial market share will be important to achieving success
in the 3D graphics business. The Company intends to achieve a leading share of
the market by devoting substantial resources towards establishing NVIDIA's
brand and leading product capabilities as the de facto graphics standard for
end users, application developers and OEMs. The Company has leveraged the
RIVA128 graphics processor architecture to achieve broader market penetration
by forming a strategic alliance with ST that gives ST the right to manufacture
products for sale.

NVIDIA ARCHITECTURE, PRODUCTS AND PRODUCTS UNDER DEVELOPMENT

3D PROCESSING TECHNOLOGY BACKGROUND
3D graphics processors create two-dimensional images, which can be displayed
on computer monitors or other output devices, from computer specifications of
three-dimensional objects or "models." These two-dimensional images are
typically the perspective view of the objects from an eye-point that changes
with time, and as such are computationally very intensive. The 3D effect
arises from a variety of visual cues, such as perspective, occlusion, surface
shading, shadows, focus and motion. Convincing realism arises from precise
calculation of these and other effects, and these calculations require
dedicated processors, which provide far more power and bandwidth than
microprocessors can deliver.

The 3D graphics process is a series of specialized steps, often referred to
as the 3D graphics pipeline. Typically, the microprocessor chooses an eye-
point and decides which objects should be displayed. These are commonly
communicated to the graphics subsystem via a software interface, such as
Microsoft's Direct3D or SGI's OpenGL. The processing itself occurs in several
steps, as depicted and described below:

GEOMETRY POLYGON
MODEL -- PROCESSING -- SETUP -- RASTERIZATION -- DISPLAY

Model. The model typically is expressed as a set of polygons, such as
triangles, that form the basic shape of a three-dimensional object and
have attributes such as position and color at each vertex.

Geometry processing. Geometry processing transforms the original
position and orientation of the polygons to their new position on the
screen. Based on their position and orientation, some aspects of their
surface color and lighting can be computed. The 3D visual cues of
perspective and motion are handled during this stage. These
calculations require very high floating-point computation power and are
performed by the host microprocessor.

Polygon setup. Polygon setup calculates the slopes of the polygon
sides and various other derivatives that greatly accelerate the
rasterization process. Although early graphics devices performed these
calculations in the host microprocessor, today's 3D graphics processor
perform these calculations, permitting significantly higher
performance.

Rasterization. Rasterization computes the color and other information
for every pixel (dot on the screen) that a transformed polygon touches.
A number of complex algorithms compute the color uniquely for each
pixel, as well as perform the remaining visual cues, such as shading,
shadows, focus and occlusion. This is the most computationally
intensive step of the graphics pipeline and the processors are required
to perform up to 1,000 calculations per pixel, with this number
increasing rapidly.

Display. Display consists of sequentially reading out the color of
each pixel at a rate matched to the monitor. Unlike the other stages in
the 3D graphics pipeline, which are purely digital, the signals to the
monitor are analog, and the frequencies are far higher.

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The complexity of the different steps in the 3D graphics pipeline requires
billions of floating-point and integer operations in real time to deliver a
realistic and interactive experience. Image quality determines whether 3D
computer representation looks realistic, and 3D performance determines whether
a 3D system conveys a sense of fluid motion in real time. If the performance
is below a certain threshold, a 3D system can in fact reduce the productivity
or the enjoyment of the user, even if the image quality is high. The challenge
with high quality 3D is to deliver the processing power required to perform
these computations without creating bottlenecks in the 3D graphics pipeline.

NVIDIA PROCESSOR ARCHITECTURE

The RIVA128 and RIVA128ZX graphics processors are highly integrated and
deliver high frame rate 3D graphics, as well as 2D graphics, VGA and video
processing in a single processor. The primary functional units of the RIVA128
and RIVA128ZX graphics processors are the 3D geometry processing unit, the 2D
engine, the 3D pixel processor, the texture cache and the Palette-DAC and
video processor. The following illustrates the primary components of the
RIVA128 graphics processor:

[Description of illustration: Depiction of RIVA128 3D graphics processor, with
the following functional areas labelled: 3D Geometry Processing Unit, Texture
Cache, Video Port, 2D Engine, 3D Pixel Processor, Palette-DAC and Video
Processor, VGA, Internal Bus, Memory Controller, PCI/AGP Interface.]

The RIVA128 3D Graphics Processor

3D Geometry Processing Unit. This engine performs the polygon setup
and lighting calculations and prepares data for pixel processing. This
5 GFLOPs floating point engine processes up to five million triangles
per second.

2D Engine. The 2D rendering engine provides high performance for 2D
applications. The 2D engine is necessary for applications such as those
used in a business environment where 2D objects are drawn to and moved
around on the computer monitor. Examples include Windows-based

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applications such as Microsoft Word, Powerpoint or Excel. The presence
of high performance 2D graphics is a critical function for 3D graphics
processors targeted for the mainstream PC market.

3D Pixel Processor. The 3D pixel processor calculates pixel colors
and other attributes to be rendered to the computer screen. It includes
advanced rendering capabilities, such as 32-bit RGB Gouraud shading,
alpha blending, perspective correct per pixel fog and perspective
correct specular highlights.

Texture Cache. The texture cache provides high performance, local
texture storage for the pixel processing engine.

Palette-DAC and Video Processor. The Palette-DAC pipeline accelerates
full-motion video playback, sustaining 30 frames per second while
retaining high quality color resolution, implementing true bilinear
filtering for scaled video, and compensating for filtering losses using
edge enhancement algorithms.

NVIDIA PRODUCTS

RIVA128 Graphics Processor

The RIVA128 graphics processor enables PC OEMs and add-in board
manufacturers to satisfy end-user performance requirements by providing visual
realism and real-time interactivity. The RIVA128 graphics processor
incorporates 3.5 million transistors and operates on 100 MHz clock speed,
enabling it to perform 20 billion operations per second. The RIVA128 graphics
processor breaks through bottlenecks created by the computationally intensive
requirements of 3D graphics by providing superior processing power.

The highly integrated RIVA128 graphics processor delivers high frame rate 3D
graphics, as well as 2D graphics, VGA and video processing in a single
processor. The RIVA128 graphics processor also includes a rich set of
reference drivers and tools that translate between software API and hardware.
These drivers also provide the ability to connect to and process data from
external video devices. The software driver is designed to maximize
performance of the graphics processor and to maintain compatibility with each
successive generation of the Company's products. The software drivers have the
flexibility to be continually enhanced in order to further improve the
performance of the processors. The RIVA128 graphics processor has received
significant industry validation and has enabled the Company's customers to
receive over 80 industry awards. Key features of the RIVA128 graphics
processor include the following:

Standard API Compatibility. The RIVA128 graphics processor supports
applications written for the two most widely accepted industry standard
graphics APIs, Microsoft's Direct3D and SGI's OpenGL.

5 GFLOPs Polygon Setup Engine. Polygon setup minimizes the number of
format conversions and other calculations performed by the host
microprocessor. The polygon setup engine can operate at a sustained
rate of 1.5 million triangles per second or a peak rate of five million
triangles per second.

Full 3D Feature Set. The full 3D feature set includes perspective
correct texturing, bi-linear filtering, Z-buffer, LOD MIP-mapping,
lighting and alpha blending.

128-bit Graphics Engine and Memory Interface. The "fast and wide"
128-bit memory interface provides 1.6 gigabytes per second bandwidth to
local frame buffer memory, which results in industry-leading
performance and graphics realism.

230 MHz Integrated RAMDAC. The 230 MHz integrated RAMDAC allows for
high resolution, high refresh rate output to computer monitors.

NTSC/PAL TV Output. NTSC/PAL television output allows connections to
television monitors.

Media Port. The media port allows direct input from television
signals and MPEG2/DVD devices.

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The RIVA128 graphics processor is produced using a .35 micron manufacturing
process. The Company introduced the RIVA128 graphics processor in April 1997
and began shipping in volume in August 1997.

RIVA128ZX Graphics Processor

The RIVA128ZX graphics processor extends the functionality and performance
of the RIVA128 graphics processor and includes two additional design features,
AGP 2X and an 8MB (megabyte) frame buffer. The AGP 2X, Intel's newest graphics
bus, doubles the available bandwidth between the microprocessor and the
graphics engine. With AGP 2X support, the RIVA128ZX graphics processor is
designed to process more complex 3D computer representations more efficiently.
Doubling the size of the frame buffer to 8MB provides the RIVA128ZX graphics
processor with the ability to support higher resolution displays with more
colors, resulting in a richer real-time experience.

The RIVA128ZX graphics processor is produced using a .35 micron
manufacturing process, began shipping in March 1998 and is scheduled for
volume shipment in the second quarter of 1998.

NVIDIA PRODUCTS UNDER DEVELOPMENT

RIVA TNT

The Company announced its second-generation product, the RIVA TNT, in March
1998. The RIVA TNT is currently under development. The Company believes the
RIVA TNT will supplant the RIVA128ZX graphics processor as NVIDIA's
"performance offering" during the second half of 1998. The RIVA TNT will be
designed to include a 16MB frame buffer, two pixels per clock to enable faster
and higher quality rendering, AGP 2X support, greater than 200 million pixel
per second fill rate and 8 million triangle peak set up.

SALES AND MARKETING

NVIDIA's sales strategy is a key part of its objective to become the leading
supplier of high performance 3D graphics processors for PCs. In order to meet
customer and end-user requirements and achieve design wins, the Company's
sales team works closely with PC OEMs, add-in board manufacturers and industry
trend setters to define product features, performance, price and timing of new
products. Members of the Company's sales team have a high level of technical
expertise and product and industry knowledge to support a competitive and
complex design win process. NVIDIA also employs a highly skilled team of
application engineers to assist PC OEMs and add-in board manufacturers in
designing, testing and qualifying system designs that incorporate NVIDIA
products. The Company believes that the depth and quality of this design
support are key to improving PC OEMs' and add-in board manufacturers' time-to-
market, maintaining a high level of customer satisfaction among PC OEMs and
add-in board manufacturers and fostering relationships that encourage its
customers to use the next-generation of NVIDIA's products.

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In the 3D graphics market, the sales process involves influencing leading PC
OEMs' and add-in board manufacturers' graphics processor purchasing decisions,
achieving key design wins and supporting the product design into high volume
production. These design wins in turn influence the retail and system
integrator channel that is serviced by add-in board manufacturers. The
Company's distribution strategy is to work with a relatively small number of
leading add-in board manufacturers that have relationships with a broad range
of major PC OEMs and/or strong brand name recognition in the retail channel.
Currently, the Company sells the RIVA128 graphics processor directly to add-in
board manufacturers, Diamond and STB, which in turn sell boards with the
RIVA128 graphics processor to leading OEMs, such as Compaq, Dell, Gateway
2000, Micron and Packard Bell NEC, to retail outlets, such as BestBuy and
CompUSA, and to a large number of system integrators. Sales to STB and Diamond
accounted for 63% and 31%, respectively, of the Company's total revenue in
1997, and 49% and 39%, respectively, of the Company's total revenue in the
first quarter of 1998.

The Company also has a strategic collaboration agreement with ST (the "ST
Agreement"), pursuant to which ST manufactures the RIVA128 graphics processor,
sells it to the Company and distributes the RIVA128 graphics processor on the
Company's behalf. ST is entitled under the ST Agreement to sell the RIVA128
and RIVA128ZX graphics processors in consideration for a royalty payment to
the Company. ST also is entitled under this agreement to manufacture the
RIVA128ZX graphics processor. Under the ST Agreement, ST also has a worldwide
license to incorporate the technology underlying the RIVA128 and RIVA128ZX
graphics processors (including the source code and architecture) (the "RIVA
Technology") in its own products, subject to certain limitations on the
modification of such technology, and a right to receive software engineering
and quality assurance support from the Company for the RIVA Technology through
December 31, 1998. The Company believes that its relationship with ST allows
it to realize broad market penetration, increase sales leverage and achieve
greater brand awareness. Royalty revenue received from ST pursuant to the ST
Agreement represented 6% and 12% of the Company's total revenue in 1997 and
the first quarter of 1998, respectively. The Company expects royalty revenue
from ST to decrease in the second quarter of 1998 and subsequent quarters.

The NVIDIA sales effort is accompanied by a variety of product and corporate
marketing activities, including technical support and product launches. As
part of the product launch effort, the Company demonstrates new products to
highlight their capabilities. NVIDIA believes these demonstrations help
position its products favorably relative to products of its competitors. The
Company also maintains close relationships with key industry analysts and
trade press, conducts frequent press tours and participates, with its add-in
board manufacturers and OEM customers, in benchmark tests executed by key
trade publications. In addition, the Company sponsors and participates in
industry tradeshows, marketing communications and market development
activities designed to generate awareness of the Company and its products. The
Company intends to continue to devote significant resources toward
establishing brand recognition, including advertising in key newspapers and
trade magazines and participation in graphics newsgroups and web sites. The
Company also uses its corporate web site to promote the Company and its
products.

To encourage software title developers and publishers to develop games
optimized for platforms utilizing the Company's products, the Company seeks to
establish and maintain strong relationships in the software development
community. Engineering and marketing personnel interact with and visit key
software developers to promote and discuss the Company's products, seeking
product requirements and solving technical problems. The Company's developer
program makes products available to partners prior to volume availability to
encourage the development of software titles that are optimized for the
Company's products.

MANUFACTURING

The Company has a "fabless" manufacturing strategy whereby the Company
employs world class suppliers for all phases of the manufacturing process,
including fabrication, assembly and testing. This strategy leverages the
expertise of industry-leading, ISO-certified suppliers in such areas as
fabrication, assembly, quality control and assurance, reliability and testing,
and allows the Company to avoid the significant costs and risks associated
with owning and operating such manufacturing operations. These suppliers also
are responsible for procurement of raw materials used in the production of the
Company's products. As a result, the Company can focus its resources on
product design, quality assurance, marketing and customer support.

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The RIVA128 graphics processor is fabricated for the Company by ST, which is
one of the ten largest semiconductor manufacturers in the world. ST currently
produces the semiconductor die for the Company using a .35 micron
Complementary Metal-Oxide Semiconductor (CMOS) process technology. ST then
assembles and packages the semiconductor die, tests the finished product, and
ships the finished product to the Company. ST has fabrication operations
located in Crolles, France and assembly and testing operations located in
Malta. The Company has recently begun using TSMC to manufacture the RIVA128ZX
graphics processor, although it has not yet received volume quantities of any
products from TSMC. The Company recently qualified Anam for assembly and
testing and intends to have volume testing performed by Anam in the future.
The Company currently is seeking an additional source of supply for both
assembly and test.

The fabrication of semiconductors is a complex process. Contaminants,
defects in masks used to print circuits on wafers, difficulties in the
fabrication process and other factors can cause a substantial percentage of
wafers to be rejected or a significant number of die on each wafer to be
nonfunctional. These problems are difficult to diagnose and time-consuming and
expensive to remedy. As a result, semiconductor companies frequently encounter
difficulties in achieving acceptable product yields. When production of a new
product begins, as with the RIVA128ZX graphics processor, the Company
typically pays for wafers, which may or may not have any functional products.
Accordingly, the Company bears the financial risk until production is
stabilized. Once production is stabilized, the Company pays for functional die
only. Because TSMC has only recently begun to manufacture products for the
Company, until the production yields of its product at TSMC stabilize, the
Company must pay an agreed price for wafers regardless of yield. Failure to
stabilize yields or failure to achieve acceptable yields from any current or
future third-party manufacturer would materially adversely affect the
Company's business, financial condition and results of operations. For
example, in December 1997, the Company experienced low manufacturing yields at
ST.

The Company receives semiconductor products from its subcontractors,
performs incoming quality assurance and ships them to its add-in board
manufacturer customers, such as Diamond and STB, from its location in
Sunnyvale. The add-in board manufacturers then produce boards, combine NVIDIA
software with their own software and ship the product to the retail market as
add-in boards or to OEMs, such as Compaq, Dell Gateway 2000, Micron and
Packard Bell NEC, for inclusion in the OEMs' products.

In the event of production difficulties, shortages or delays experienced by
any one of its suppliers, the Company's business, financial condition or
results of operation may be adversely impacted. Furthermore, although quality
assurance measures have been taken, there can be no guarantee against defects
affecting the quality, performance or reliability of the Company's products.
Any such defects could require costly product recalls or cessation of
shipments, adversely affecting the Company's business, financial condition and
results of operations, and resulting in a decline of revenues, increased costs
(associated with return, repair, replacement and shrinkage associated with
such defects), cancellations or rescheduling of customer orders and shipments.
See "Risk Factors--Dependence on Third-Party Manufacturers; Absence of
Manufacturing Capacity; Manufacturing Risks," "--Dependence on ST
Microelectronics," "--Manufacturing Yields," "--Transition to New
Manufacturing Process Technologies," "--Dependence on Third-Party
Subcontractors for Assembly and Testing" and "--Risks of Product Defects and
Incompatibilities; Product Liability."

RESEARCH AND DEVELOPMENT

The Company believes that the continued introduction of new and enhanced
products designed to deliver leading 3D graphics performance will be essential
to its future success. NVIDIA's research and development strategy is to focus
on concurrently developing multiple generations of devices using independent
design teams. The Company's research and development team has enabled NVIDIA
to deliver award-winning products to its OEM customers. The RIVA128 graphics
processor has enabled its customers to win over 80 awards from recognized
industry publications, including PC Magazine, PC Computing, PC World, Computer
Gaming World, PC Games and CNET.

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NVIDIA's research and development efforts are performed within specialized
groups consisting of software engineering, hardware engineering, VLSI design
engineering, process engineering, and architecture and algorithms. These
groups act as a pipeline designed to allow the efficient simultaneous
development of new products. The software engineering group is responsible for
the development of drivers for the various software APIs. The hardware
engineering group designs and develops new product hardware. The VLSI design
engineering group maps the Company's design ideas to specific silicon
structures, and the process engineering group determines how these devices
will be fabricated and communicates with the Company's manufacturers. The
architecture and algorithms group is responsible for maintaining and further
developing what the Company believes is an extensible product architecture,
allowing the Company to continually add features to its products without
sacrificing compatibility or incurring significant redesign costs.

A critical component of the Company's product development effort is its
partnerships with leaders in the CAD industry. The Company has invested
significant resources to develop relationships with industry leaders,
including Avant! Corporation, Cadence Design Systems, Inc. and Synopsys, Inc.
The Company believes that by forming these relationships, and utilizing next-
generation development tools to design, simulate and verify its products,
NVIDIA will be able to remain at the forefront of the 3D graphics market and
to continue to develop products on a rapid basis that utilize leading-edge
technology.

The Company has substantially increased its engineering and technical
resources and has 77 full-time employees engaged in research and development.
Expenditures for research and development before adjustments for contract
funding were $2.4 million, $1.2 million and $6.6 million in 1995, 1996 and
1997, respectively.

COMPETITION

The market for 3D graphics processors for mainstream PCs in which the
Company competes is intensely competitive and is characterized by rapid
technological change, evolving industry standards and declining average
selling prices. NVIDIA believes that the principal factors of competition in
this market are performance, conformity to industry-standard APIs, software
support, access to customers and distribution channels, manufacturing
capabilities, price of graphics processors and total system costs of add-in
boards. The Company expects competition to increase both from existing
competitors and new market entrants with products that may be less costly than
the Company's 3D graphics processors or may provide better performance or
additional features not provided by the Company's products. There can be no
assurance that the Company will be able to compete successfully in the
emerging mainstream PC graphics market.

NVIDIA's primary source of competition is from companies that provide or
intend to provide 3D graphics solutions for the mainstream PC market. These
include (i) new entrants in the 3D graphics processor market with existing
presence in the PC market, such as Intel, (ii) suppliers of graphics add-in
boards that utilize their internally developed graphics chips, such as ATI and
Matrox, (iii) suppliers of 2D graphics chips that are introducing 3D
functionality as part of their existing solutions, such as S3 and Trident,
(iv) companies that have traditionally focused on the professional market and
provide high end 3D solutions for PCs and workstations, including 3Dlabs,
Real3D and SGI, and (v) companies with strength in the interactive
entertainment market, such as Chromatic, 3Dfx and Rendition.

43
<PAGE>

could directly compete with graphics add-in cards or graphics-enabled
motherboards that the Company's customers may develop. In addition, due to the
widespread industry acceptance of Intel's microprocessor architecture and
interface architecture, including its AGP, Intel exercises significant
influence over the PC industry generally, and any significant modifications by
Intel to the AGP, the microprocessor or other aspects of the PC microprocessor
architecture could result in incompatibility with the Company's technology,
which would have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, any delay in the
public release of information relating to such modifications could have a
material adverse effect on the Company's business, financial condition or
results of operations.

In addition to Intel, the Company competes with suppliers of graphics add-in
boards that utilize their internally developed graphics chips, such as ATI and
Matrox. NVIDIA also competes with companies that typically have operated in
the PC 2D graphics market and that now offer 3D graphics capability as an
enhancement to their 2D graphics solutions, such as S3 and Trident. Many of
these competitors have introduced 3D graphics functionality on new versions of
existing graphics chips. In addition, the Company's competitors include
companies that traditionally have focused on the production of high-end 3D
graphics systems targeted at the professional market, such as 3Dlabs,
Intergraph, Real3D and SGI. While these companies produce high performance 3D
graphics systems, they historically have done so at a significantly higher
price point than the Company and have focused on the professional and
engineering market. Some of these companies are developing lower cost versions
of their 3D graphics technology to bring workstation-like 3D graphics to
mainstream PCs, and there can be no assurance that the Company will be able to
compete successfully against them. For example, 3Dlabs markets the PERMEDIA 2,
a graphics accelerator designed for the mainstream PC market. NVIDIA also
competes with companies that have recently entered or are expected to enter
the market with an integrated 3D/2D graphics solution, but which have not
traditionally manufactured 2D graphics solutions, such as Chromatic, 3Dfx and
Rendition. In addition to the Company's known competitors, the Company
anticipates that there will be new entrants in the graphics processor market,
and there can be no assurance that the Company will compete effectively
against any such new competitors.

PATENTS AND PROPRIETARY RIGHTS

The Company relies primarily on a combination of patent, mask-work
protection, trademarks, copyrights, trade secret laws, employee and third-
party nondisclosure agreements and licensing arrangements to protect its
intellectual property. The Company has 15 issued patents and 25 patent
applications pending in the United States. Such issued patents have expiration
dates from May 2015 to November 2016. The issued patents and pending patent
applications relate to technology developed by the Company in connection with
the development of its

44
<PAGE>

3D graphics processors, including the RIVA128 graphics processor. The Company
has no foreign patents or patent applications. The Company seeks to file for
patents that have broad application in the semiconductor industry and that
would provide a competitive advantage. However, there can be no assurance that
the Company's pending patent application or any future applications will be
approved, that any issued patents will provide the Company with competitive
advantages or will not be challenged by third parties, or that the patents of
others will not have an adverse effect on the Company's ability to do
business. In addition, there can be no assurance that others will not
independently develop substantially equivalent intellectual property or
otherwise gain access to the Company's trade secrets or intellectual property,
or disclose such intellectual property or trade secrets, or that the Company
can effectively protect its intellectual property. A failure by the Company to
meaningfully protect its intellectual property could have a material adverse
effect on the Company's business, financial condition or results of
operations.

The semiconductor industry is characterized by vigorous protection and
pursuit of intellectual property rights or positions, which has resulted in
significant and often protracted and expensive litigation. The 3D graphics
market in particular has been characterized recently by the aggressive pursuit
of intellectual property positions, and the Company expects its competitors to
continue to pursue aggressive intellectual property positions. In April 1998,
SGI filed a patent infringement lawsuit against the Company. See "--Legal
Proceedings." In addition, the Company from time to time has received notices
alleging that the Company has infringed patents or other intellectual property
rights owned by third parties. ST has certain patent licenses that in some
cases may allow ST to manufacture the Company's products without infringing
third-party patents. As the Company's products are manufactured by TSMC or
other manufacturers, such licenses will no longer benefit the Company and
therefore the risk of a third-party claim of patent infringement against the
Company will increase. In the event infringement claims are made against the
Company, the Company may seek licenses under such patents or other
intellectual property rights. However, there can be no assurance that licenses
will be offered or that the terms of any offered licenses will be acceptable
to the Company. The failure to obtain a license from a third party for
technology used by the Company could cause the Company to incur substantial
liabilities and to suspend the manufacture of products. Furthermore, the
Company may initiate claims or litigation against third parties for
infringement of the Company's proprietary rights or to establish the validity
of the Company's proprietary rights. The Company has agreed to indemnify
certain customers for claims of infringement arising out of sale of the
Company's product. Litigation by or against the Company or such customers
concerning infringement would likely result in significant expense to the
Company and divert the efforts of the Company's technical and management
personnel, whether or not such litigation results in a favorable determination
for the Company. In the event of an adverse result in any such litigation, the
Company could be required to pay substantial damages, (which could include
treble damages) cease the manufacture, use and sale of infringing products,
expend significant resources to develop non-infringing technology, discontinue
the use of certain processes or obtain licenses for the infringing technology.
There can be no assurance that the Company would be successful in such
development or that such licenses would be available on reasonable terms, or
at all, and any such development or license could require expenditures by the
Company of substantial time and other resources. Although patent disputes in
the semiconductor industry have often been settled through cross-licensing
arrangements, there can be no assurance that, in the event that any third
party makes a successful claim against the Company or its customers, a cross-
licensing arrangement could be reached. If a license is not made available to
the Company on commercially reasonable terms, the Company's business,
financial condition or results of operations could be materially adversely
affected.

45
<PAGE>

There can be no assurance that infringement claims by third parties or
claims for indemnification by other customers or end users of the Company's
products resulting from infringement claims will not be asserted in the future
or that such assertions, if proven to be true, will not materially adversely
affect the Company's business, financial condition or results of operations.
Any limitations on the Company's ability to market its products, or delays and
costs associated with redesigning its products or payments of license fees to
third parties, or any failure by the Company to develop or license a
substitute technology on commercially reasonable terms could have a material
adverse effect on the Company's business, financial condition and results of
operations.

EMPLOYEES

As of March 29, 1998, the Company had 119 employees, 77 of whom were engaged
in engineering and 42 of whom were engaged in sales, marketing, operations and
administrative positions. No employee of the Company is covered by collective
bargaining agreements, and the Company believes that its relationship with its
employees is good.

The Company's ability to operate successfully will depend in significant
part upon the continued service of certain key technical and managerial
personnel, and its continuing ability to attract and retain additional highly
qualified technical and managerial personnel. Competition for such personnel
is intense, and there can be no assurance that the Company can retain such
personnel or that it can attract or retain other highly qualified technical
and managerial personnel in the future, including key sales and marketing
personnel. The loss of key personnel or the inability to hire and retain
qualified personnel could have a material adverse effect on the Company's
business, financial condition or results of operations. See "Risk Factors--
Dependence on Key Personnel."

FACILITIES

The Company leases approximately 34,000 square feet in one building in
Sunnyvale, California, pursuant to a lease that expires in August 1998.
Although, the Company believes that it will be able to secure facilities
adequate to meet its needs for the foreseeable future, an inability of the
Company to timely secure adequate facilities on reasonable terms, or an
inability to effectively manage the transition to larger facilities, could
have a material adverse effect on the Company's business, financial condition
or results of operations.

LEGAL PROCEEDINGS

On April 9, 1998, the Company was notified that SGI had filed a patent
infringement lawsuit against the Company in the United States District Court
for the District of Delaware. The suit alleges that the sale and use of the
Company's RIVA family of 3D graphics processors infringes a United States
patent held by SGI. The suit seeks unspecified damages (including treble
damages), an order permanently enjoining further alleged infringement and
attorneys' fees. The Company currently is investigating the claims and has not
responded to the suit. Based on its investigation to date, the Company
believes that it has meritorious defenses to the claims brought and the
Company intends to defend itself vigorously.

46
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS

Certain information regarding the Company's executive officers, key
employees and directors as of March 29, 1998 is set forth below.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jen-Hsun Huang.......... 35 President, Chief Executive Officer and Director
Jeffrey D. Fisher....... 39 Vice President, Sales
David B. Kirk........... 37 Chief Scientist
Chris A. Malachowsky.... 38 Vice President, Engineering
Lewis R. Paceley........ 42 Vice President, Corporate Marketing
Curtis R. Priem......... 38 Chief Technical Officer
Geoffrey G. Ribar....... 39 Chief Financial Officer
Daniel F. Vivoli........ 37 Vice President, Product Marketing
Richard J. Whitacre..... 42 Vice President, Operations and Corporate Engineering
Tench Coxe (1).......... 40 Director
Harvey C. Jones, Jr.(1). 45 Director
William J. Miller....... 52 Director
A. Brooke Seawell(2).... 50 Director
Mark A. Stevens(2)...... 38 Director
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

Jen-Hsun Huang co-founded the Company in April 1993 and has served as
President, Chief Executive Officer and a member of the Board of Directors of
the Company since its inception. From 1985 to 1993, Mr. Huang was employed at
LSI Logic Corporation, a computer chip manufacturer, where he held a variety
of positions, most recently as Director of Coreware business unit responsible
for LSI's "system-on-a-chip" strategy. From 1983 to 1985, Mr. Huang was a
microprocessor designer for Advanced Micro Devices, a semiconductor company.
Mr. Huang holds a B.S.E.E. degree from Oregon State University and an M.S.E.E.
degree from Stanford University.

Jeffrey D. Fisher has been Vice President, Sales for the Company since July
1994. From September 1988 to July 1994, Mr. Fisher held various positions at
Weitek Corporation, a semiconductor technology company, where his last
position was as Director of World Wide Sales. Mr. Fisher holds a B.S.E.E.
degree from Purdue University and an M.B.A. degree from Santa Clara
University.

David B. Kirk has been Chief Scientist for the Company since January 1997.
From June 1996 to January 1997, Dr. Kirk was a software and technical
management consultant. From 1993 to 1996, Dr. Kirk was Chief Scientist, Head
of Technology for Crystal Dynamics, a video game manufacturing company. From
1989 to 1991, Dr. Kirk was an engineer for Apollo Systems Division of Hewlett-
Packard Company. Dr. Kirk has authored seven patents relating to graphics
design and has authored more than 50 articles on graphics technology. Dr. Kirk
holds B.S. and M.S. degrees in Mechanical Engineering from the Massachusetts
Institute of Technology and M.S. and Ph.D. degrees in Computer Science from
the California Institute of Technology.

Chris A. Malachowsky co-founded the Company in April 1993 and has been Vice
President, Engineering for the Company since that time. From 1987 until April
1993, Mr. Malachowsky was a Senior Staff Engineer for Sun Microsystems, Inc.,
a supplier of enterprise network computing products. From 1980 to 1986, Mr.
Malachowsky was a manufacturing design engineer at Hewlett-Packard Company.
Mr. Malachowsky was a co-inventor of Sun Microsystems' GX graphics
architecture and has authored 38 patents, most of which relate to graphics.
Mr. Malachowsky holds a B.S.E.E. degree from the University of Florida and an
M.S.C.S. degree from Santa Clara University.

47
<PAGE>

Lewis R. Paceley has been Vice President, Corporate Marketing for the
Company since December 1997. From January 1996 until September 1997, Mr.
Paceley was Vice President, Marketing for Cyrix Corporation, a computer
processor manufacturer. From 1982 until December 1995, Mr. Paceley held
various positions at Intel, where his last position was as Marketing Director,
Pentium Pro. Mr. Paceley holds a B.E. degree from Vanderbilt University and an
M.S.E. degree from the University of Michigan.

Curtis R. Priem co-founded the Company in April 1993 and has been Chief
Technical Officer for the Company since that time. From 1986 to January 1993,
Mr. Priem was Senior Staff Engineer at Sun Microsystems where he architected
the GX graphics products, including the world's first single chip GUI
accelerator. From 1984 to 1986, Mr. Priem was a hardware engineer at GenRad,
Inc., a supplier of diagnostic equipment for electronic products. From 1982 to
1984, Mr. Priem was a staff engineer for Vermont Microsystems, Inc., a
personal computer company, where he architected IBM's Professional Graphics
Adapter, the PC industry's first graphics processor. Mr. Priem has authored 65
patents, all of which relate to graphics and I/O. Mr. Priem holds a B.S.E.E.
degree from Rensselaer Polytechnic Institute.

Geoffrey G. Ribar joined the Company as Chief Financial Officer in December
1997. From 1982 to December 1997, Mr. Ribar served in various positions at
AMD, where his last position was Vice President and Corporate Controller. Mr.
Ribar holds a B.S. degree in Chemistry and an M.B.A. degree from the
University of Michigan.

Daniel F. Vivoli has been Vice President, Product Marketing for the Company
since December 1997. From October 1988 to December 1997, Mr. Vivoli held
various positions at Silicon Graphics, Inc., a computing technology company,
including Product Marketing Director, Director of Marketing--Advanced Graphics
Division and --Interactive Systems Division, and finally Vice President of
Marketing. From 1983 to 1988, Mr. Vivoli held various marketing positions at
Hewlett-Packard Company. Mr. Vivoli holds a B.S.E.E. degree from the
University of Illinois at Champaign-Urbana.

Richard J. Whitacre has been Vice President, Operations and Corporate
Engineering for the Company since July 1994. From 1990 to July 1994, Mr.
Whitacre was Director of Engineering and then Vice President of Operations for
SEEQ Technology Incorporated, a semiconductor company. From 1977 to 1990, Mr.
Whitacre held various engineer and management positions at National
Semiconductor Corporation, a semiconductor company. Mr. Whitacre holds a
B.S.E.E. degree from the University of Illinois.

Tench Coxe has been a director of the Company since June 1993. Mr. Coxe is a
general partner of Sutter Hill Ventures, a venture capital investment firm.
Prior to joining Sutter Hill Ventures in 1987, Mr. Coxe was Director of
Marketing and MIS at Digital Communication Associates. Mr. Coxe holds a B.A.
degree in Economics from Dartmouth College and an M.B.A. degree from the
Harvard Business School. Mr. Coxe also serves on the Board of Directors of
Avant! Corporation, Edify Corporation and SQL Financials International, Inc.

Harvey C. Jones, Jr. has served as a director of the Company since November
1993. Since December 1987, Mr. Jones has held various positions at Synopsys,
Inc., a developer of electronic design automation products, where he served as
President through December 1992, as Chief Executive Officer until January 1994
and as Chairman of the Board until February 1998. Prior to joining Synopsys,
Mr. Jones served as President and Chief Executive Officer of Daisy Systems
Corporation, an electronic design automation company that Mr. Jones co-founded
in 1981. Mr. Jones currently serves on the Board of Directors of Synopsys and
Remedy Corporation, a client/server applications software company. Mr. Jones
holds a B.S. degree in Mathematics and Computer Sciences from Georgetown
University and an M.S. degree in Management from the Massachusetts Institute
of Technology.

William J. Miller has served as a director of the Company since November
1994. Mr. Miller has been Chief Executive Officer and Chairman of the Board of
Avid Technology, Inc., a provider of digital tools for multimedia, since April
1996 and has served as President of Avid Technology since September 1996. From

48
<PAGE>

March 1992 to October 1995, Mr. Miller served as Chief Executive Officer of
Quantum Corporation, a developer of information storage products. He was a
member of the Board of Directors, and Chairman thereof, from, respectively,
May 1992 and September 1993 to August 1995. From 1981 to March 1992, he served
in various positions at Control Data Corporation, a supplier of computer
hardware, software and services, most recently as Executive Vice President and
President, Information Services. Mr. Miller holds a B.A. and a J.D. degree
from the University of Minnesota. Mr. Miller serves on the Board of Directors
of Innovex, Inc. and Waters Corporation.

A. Brooke Seawell has served as a director of the Company since December
1997. Since January 1997, Mr. Seawell has been Executive Vice President and
Chief Financial Officer for NetDynamics, Inc., an Internet applications server
company. From 1991 to January 1997, Mr. Seawell was Senior Vice President and
Chief Financial Officer of Synopsys. Mr. Seawell holds a B.A. degree in
Economics and an M.B.A. degree in Finance and Accounting from Stanford
University. Mr. Seawell serves on the Board of Directors of several privately
held companies.

Mark A. Stevens has served as a director of the Company since June 1993. Mr.
Stevens has been a general partner of Sequoia Capital, a venture capital
investment firm, since March 1993. Prior to that time, beginning in July 1989,
he was an associate at Sequoia Capital. Prior to joining Sequoia, he held
technical sales and marketing positions at Intel. Mr. Stevens holds a B.S.E.E.
degree, a B.A. degree in Economics and an M.S. degree in Computer Engineering
from the University of Southern California and an M.B.A. degree from Harvard
Business School. Mr. Stevens currently serves on the Board of Directors of
Aspect Development, Inc., a client/server applications software company, and
several privately held companies.

The Company's Board of Directors (the "Board") is currently comprised of six
directors. Directors are elected by the stockholders at each annual meeting of
stockholders to serve until the next annual meeting of stockholders or until
their successors are duly elected and qualified. The Company's Certificate of
Incorporation, which will become effective upon the completion of this
offering, provide that the Board will be divided into two classes, Class I and
Class II, with each class serving staggered two-year terms. The Class I
directors, initially Messrs. Coxe, Huang and Jones, will stand for reelection
or election at the 1999 annual meeting of stockholders. The Class II
directors, initially Messrs. Miller, Seawell and Stevens will stand for
reelection or election at the 2000 annual meeting of stockholders.

BOARD COMMITTEES

The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee, which currently consists of Messrs. Seawell and Stevens,
reviews the internal accounting procedures of the Company and consults with
and reviews the services provided by the Company's independent auditors. The
Compensation Committee, which currently consists of Messrs. Coxe and Jones,
reviews and recommends to the Board the compensation and benefits of the
Company. The Compensation Committee also administers the issuance of stock
options and other awards under the Company's 1998 Equity Incentive Plan, 1998
Employee Stock Purchase Plan and 1998 Non-Employee Directors' Stock Option
Plan. See "--Employee Benefit Plans."

DIRECTOR COMPENSATION

Directors currently do not receive any cash compensation for their services
as members of the Board of Directors, although they are reimbursed for certain
expenses in connection with attendance at Board and Committee meetings. In
July 1996, each of Messrs. Coxe and Stevens were granted an option to purchase
50,000 shares of the Company's Common Stock at an exercise price of $.36 per
share. In November 1993 and August 1996, Mr. Jones was granted options to
purchase 75,000 and 70,000 shares of the Company's Common Stock at exercise
prices of $.05 and $.36 per share, respectively. In November 1994 and June
1996, Mr. Miller was granted options to purchase 75,000 and 50,000 shares of
the Company's Common Stock at exercise prices of $.05 and $.36 per share,
respectively. In December 1997, Mr. Seawell was granted an option to purchase
50,000

49
<PAGE>

shares of the Company's Common Stock at an exercise price of $3.15 per share.
Non-employee directors also are eligible to participate in the Company's 1998
Non-Employee Directors' Stock Option Plan (the "Director's Plan").

On March 30, 1998, each of Messrs. Coxe, Jones, Miller and Stevens was
automatically granted an option to purchase 20,000 shares of the Company's
Common Stock; Mr. Seawell was automatically granted an option to purchase
5,000 shares of the Company's Common Stock; each of Messrs. Coxe and Jones was
automatically granted an option to purchase 2,500 shares of the Company's
Common Stock; and each of Messrs. Miller, Seawell and Stevens was
automatically granted an option to purchase 1,250 shares of the Company's
Common Stock. Each of the foregoing options was granted under the Directors'
Plan at fair market value on the date of grant. See "--Employee Benefit
Plans--1998 Non-Employee Directors' Stock Option Plan."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to October 1997, the Company did not have a Compensation Committee of
the Board of Directors, and the entire Board participated in all compensation
decisions, except that Mr. Huang did not participate in decisions relating to
his compensation. In October 1997, the Board formed the Company's Compensation
Committee to review and recommend to the Board the compensation and benefits
for the Company's executive officers and administer the Company's stock
purchase and stock option plans. Certain of the Company's directors, or
affiliated entities, have purchased securities of the Company. See "Certain
Transactions" and "Principal Stockholders."

EXECUTIVE COMPENSATION

The following table sets forth the compensation awarded or paid by the
Company during the fiscal year ended December 31, 1997 to (i) the Company's
Chief Executive Officer and (ii) the four other most highly compensated
officers receiving compensation in excess of $100,000 in fiscal 1997
hereinafter (the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE(/1/)

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------ ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION SALARY ($) OPTIONS (#)
--------------------------- ------------ ------------
<S> <C> <C>
Jen-Hsun Huang........................................ $149,134 0
President and Chief Executive Officer
Jeffrey D. Fisher..................................... 202,122 75,000
Vice President, Sales
Richard J. Whitacre................................... 138,750 175,000
Vice President, Operations and Corporate Engineering
Chris A. Malachowsky.................................. 135,721 0
Vice President, Engineering
Curtis R. Priem....................................... 133,125 0
Chief Technical Officer
</TABLE>
- --------
(1) In accordance with the rules of the Securities and Exchange Commission
(the "Commission"), the compensation described in this table does not
include medical, group life insurance or other benefits received by the
Named Executive Officers which are available generally to all salaried
employees of the Company and certain perquisites and other personal
benefits received by the Named Executive Officers, which do not exceed the
lesser of $50,000 or 10% of any such officers salary and bonus disclosed
in this table.

50
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth each grant of stock options made during the
fiscal year ended December 31, 1997 to each of the Named Executive Officers:

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED
ANNUAL RATES
OF STOCK PRICE
NUMBER OF APPRECIATION FOR
SECURITIES PERCENTAGE OF OPTION TERM
UNDERLYING TOTAL OPTIONS ($)(4)
OPTIONS GRANTED IN EXERCISE PRICE EXPIRATION ------------------
NAME GRANTED(1) FISCAL 1997(2) ($/SHARE)(3) DATE 5% 10%
---- ---------- -------------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Jen-Hsun Huang.......... 0 --% $ -- -- --% --%
Jeffrey D. Fisher....... 50,000 1.0 .36 3/23/07
25,000 .5 .36 5/12/07
Richard J. Whitacre..... 175,000 3.6 .36 3/23/07
Chris A. Malachowsky.... 0 -- -- -- -- --
Curtis R. Priem......... 0 -- -- -- -- --
</TABLE>
- --------
(1) Options generally vest at a rate of 25% on the first anniversary of the
vesting commencement date and 6.25% each quarter thereafter and have a
term of 10 years. Options are immediately exercisable; however, the shares
purchasable under such options are subject to repurchase by the Company at
the original exercise price paid per share upon the optionee's cessation
of service prior to the vesting of such shares.
(2) Based on an aggregate of 4,841,232 shares subject to options granted to
persons who were employees of the Company in the fiscal year ended
December 31, 1997, including the Named Executive Officers.

(3) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant as determined by the Board
of Directors.

(4) The potential realizable value is calculated based on the term of the
option at the time of grant (10 years) and an assumed initial public
offering price of $ per share. Stock price appreciation of 5% and 10%
is assumed pursuant to rules promulgated by the Securities and Exchange
Commission and does not represent the Company's prediction of its stock
price performance. The potential realizable value is calculated based on
the deemed value at the date of grant and assumes that the deemed value
appreciates from the date of grant at the indicated annual rate compounded
annually for the entire term of the option and that the option is
exercised at the exercise price and sold on the last day of its term at
the appreciated price.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND 1997 YEAR-END OPTION
VALUES

The following table sets forth for each of the Named Executive Officers the
number and value of securities underlying unexercised options held by the
Named Executive Officers at December 31, 1997:

<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED ON UNEXERCISED OPTIONS AT DECEMBER IN-THE-MONEY OPTIONS AT
EXERCISE VALUE 31, 1997 (#) DECEMBER 31, 1997 ($)(2)
NAME (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE
- ---- ----------- ------------ ------------------------------- -------------------------
<S> <C> <C> <C> <C>
Jen-Hsun Huang.......... 0 $ -- -- $ --
Jeffrey D. Fisher....... 0 0 135,000/0 376,650/0
Richard J. Whitacre..... 30,000 0 205,000/0 571,950/0
Chris A. Malachowsky.... 0 -- -- --
Curtis R. Priem......... 0 -- -- --
</TABLE>
- --------
(1) Options are immediately exercisable; however, the shares purchasable under
such options are subject to repurchase by the Company at the original
exercise price paid per share upon the optionee's cessation of service
prior to the vesting of such shares.
(2) Based on the difference between the fair market value of the Common Stock
at December 31, 1997 as determined by the Board of Directors and the
exercise price.

51
<PAGE>

EMPLOYEE BENEFIT PLANS

1998 EQUITY INCENTIVE PLAN

The Company's 1998 Equity Incentive Plan (the "Incentive Plan") was adopted
in February 1998 and amended in March 1998 and replaces the Company's Equity
Incentive Plan adopted in May 1993 (as amended in March 1995, January 1996 and
December 1997). An aggregate of 15,000,000 shares of Common Stock currently
are authorized for issuance under the Incentive Plan. However, each year on
January 1, starting with January 1, 1999, the aggregate number of shares of
Common Stock that are available for issuance under the Incentive Plan will
automatically be increased to that number of shares of Common Stock that is
equal to 5% of the Company's outstanding shares of Common Stock on such date.

The Incentive Plan provides for the grant of incentive stock options, as
defined under the Internal Revenue Code of 1986, as amended (the "Code"), to
employees (including officers and employee directors) and nonstatutory stock
options, restricted stock purchase awards and stock bonuses to employees
(including officers and employee directors), directors and consultants of the
Company and its affiliates. The Incentive Plan is administered by the
Compensation Committee, which determines the recipients and types of awards to
be granted, including the exercise price, number of shares subject to the
award and the exercisability thereof.

The terms of options granted under the Incentive Plan may not exceed 10
years. The Compensation Committee determines the exercise price of options
granted under the Incentive Plan. However, the exercise price for an incentive
stock option cannot be less than 100% of the fair market value of the Common
Stock on the date of the option grant, and the exercise price for a
nonstatutory stock option cannot be less than 85% of the fair market value of
the Common Stock on the date of the option grant. Options granted under the
Incentive Plan vest at the rate specified in the option agreement. Generally,
the optionee may not transfer a stock option other than by will or the laws of
descent or distribution. However, an optionee may designate a beneficiary who
may exercise the option following the optionee's death. An optionee whose
service relationship with the Company or any affiliate ceases for any reason
may exercise vested options for the term provided in the option agreement.

No incentive stock option (and prior to the Company's stock being publicly
traded, no nonstatutory stock option) may be granted to any person who, at the
time of the grant, owns (or is deemed to own) stock possessing more than 10%
of the total combined voting power of the Company or any affiliate of the
Company, unless the option exercise price is at least 110% of the fair market
value of the stock subject to the option on the date of grant and the term of
the option does not exceed five years from the date of grant. In addition, the
aggregate fair market value, determined at the time of grant, of the shares of
Common Stock with respect to which incentive stock options are exercisable for
the first time by an optionee during any calendar year (under the Incentive
Plan and all other stock plans of the Company and its affiliates) may not
exceed $100,000.

When the Company becomes subject to Section 162(m) of the Code (which denies
a deduction to publicly held corporations for certain compensation paid to
specified employees in a taxable year to the extent that the compensation
exceeds $1,000,000), no person may be granted options under the Incentive Plan
covering more than 1,000,000 shares of Common Stock in any calendar year.

Shares subject to stock awards that have expired or otherwise terminated
without having been exercised in full again become available for the grant of
awards under the Incentive Plan. The Compensation Committee has the authority
to reprice outstanding options or to offer optionees the opportunity to
replace outstanding options with new options for the same or a different
number of shares. Both the original and new options will count toward the Code
Section 162(m) limitation set forth above.

Restricted stock purchase awards granted under the Incentive Plan may be
granted pursuant to a repurchase option in favor of the Company in accordance
with a vesting schedule and at a price determined by the Compensation
Committee. Stock bonuses may be awarded in consideration of past services
without a purchase payment. Rights under a stock bonus or restricted stock
bonus agreement generally may not be transferred other than by will or the
laws of descent and distribution during such period as the stock awarded
pursuant to such an agreement remains subject to the agreement.

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<PAGE>

If there is any sale of substantially all of the Company's assets, any
merger or any consolidation in which the Company is not the surviving
corporation, all outstanding awards under the Incentive Plan either will be
assumed or substituted for by any surviving entity. If the surviving entity
determines not to assume or substitute for such awards, the time during which
awards held by persons still serving the Company or an affiliate may be
exercised will be accelerated and the awards terminated if not exercised prior
to the sale of assets, merger or consolidation.

As of March 29, 1998, 4,682,110 shares of Common Stock had been issued upon
the exercise of options granted under the Incentive Plan, options to purchase
5,996,833 shares of Common Stock were outstanding and 3,911,457 shares
remained available for future grant. The Incentive Plan will terminate in
February 2008 unless terminated by the Board before then. As of March 29,
1998, stock awards or restricted stock covering 647,932 shares of the
Company's Common Stock had been granted under the Incentive Plan. Of such
shares, 238,332 shares have been repurchased by the Company and returned to
the Incentive Plan.

1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

The Directors' Plan was adopted in February 1998 and amended in March 1998
and provides for the automatic grant of options to purchase shares of Common
Stock to non-employee directors of the Company who are not employees of or
consultants to the Company or an affiliate of the Company (a "Non-Employee
Director"). The Compensation Committee administers the Directors' Plan. The
aggregate number of shares of Common Stock that may be issued pursuant to
options granted under the Directors' Plan is 300,000 shares.

Pursuant to the terms of the Directors' Plan, after the effective date of
the initial public offering of the Company's Common Stock, each person who is
elected or appointed for the first time to be a Non-Employee Director
automatically shall, upon the date of his or her initial election or
appointment to be a Non-Employee Director by the Board or stockholders of the
Company, be granted an option to purchase Fifty Thousand (50,000) shares of
Common Stock (an "Initial Grant").

On March 30, 1998 and on the day following each Annual Meeting of
Stockholders of the Company ("Annual Meeting"), commencing with the Annual
Meeting in 1999, each person who is then a Non-Employee Director automatically
shall be granted one or more options to purchase shares of Common Stock as
follows: (i) Each Non-Employee Director shall be granted an option to purchase
Twenty Thousand (20,000) shares of Common Stock of the Company (an "Annual
Grant"); provided, however, that if the person has not been serving as a Non-
Employee Director for the entire period since the prior Annual Meeting (or
since March 30, 1997 for the grant on March 30, 1998), then the number of
shares granted shall be reduced pro rata for each full quarter prior to the
date of grant during which such person did not serve as a Non-Employee
Director; and (ii) each Non-Employee Director who is a member of a committee
of the Board shall be granted an option to purchase Five Thousand (5,000)
shares of Common Stock of the Company for each such committee (a "Committee
Grant"); provided, however, that if the person has not been serving on such
committee since the prior Annual Meeting (or since March 30, 1997 for the
grant on March 30, 1998), then the number of shares granted shall be reduced
pro rata for each full quarter prior to the date of grant during which such
person did not serve as a Non-Employee Director.

Initial Grants will vest monthly over the four-year period following the
date of grant such that the entire Initial Grant shall become exercisable on
the fourth anniversary of the date of grant. With respect to Annual Grants and
Committee Grants, if the optionee has attended at least 75% of the regularly
scheduled meetings of the Board or the committee, as applicable, held between
the date of grant of the option and the one-year anniversary of the date of
grant of the option, then such option shall vest and become exercisable in
full on the one-year anniversary of the date of grant. If the optionee's
service as a director or committee member, as the case may be, terminates
between the date of grant of the option and the one-year anniversary of the
date of grant of the option due to the disability or death of the optionee,
then the option shall immediately vest and become exercisable on a monthly pro
rata basis. If the director fails to attend at least 75% of the regularly
scheduled meetings of the Board or the committee, as applicable, then such
optionee's option shall vest annually over the four-year period following the
date of grant at the rate of 10% per year for the first three years and 70%
for the

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<PAGE>

fourth year, such that the entire option shall become exercisable on the four-
year anniversary of the date of grant of the option.

The exercise price of the options granted under the Directors' Plan will be
equal to the fair market value of the Common Stock on the date of grant. No
option granted under the Directors' Plan may be exercised after the expiration
of ten years from the date it was granted. Options granted under the
Directors' Plan generally are non-transferable except to family members, a
family trust, a family partnership or a family limited liability company.
However, an optionee may designate a beneficiary who may exercise the option
following the optionee's death. An optionee whose service relationship with
the Company or any affiliate (whether as a Non-Employee Director of the
Company or subsequently as an employee, director or consultant of either the
Company or an affiliate) ceases for any reason may exercise vested options for
the term provided in the option agreement (12 months generally, 18 months in
the event of death).

If there is any sale of substantially all of the Company's assets, any
merger or any consolidation in which the Company is not the surviving
corporation or other change in control of the Company, all outstanding awards
under the Directors' Plan either will be assumed or substituted for by any
surviving entity. If the surviving entity determines not to assume or
substitute for such awards, the awards shall terminate if not exercised prior
to such sale of assets, merger or consolidation.

As of March 31, 1998, options to purchase 93,750 shares of Common Stock were
outstanding and 206,250 shares remained available for future grant under the
Directors' Plan. Unless terminated sooner, the Directors' Plan will terminate
in February 2008.

EMPLOYEE STOCK PURCHASE PLAN
In February 1998, the Board approved the Employee Stock Purchase Plan (the
"Purchase Plan"), covering an aggregate of 500,000 shares of Common Stock. The
Purchase Plan is intended to qualify as an "employee stock purchase plan"
within the meaning of Section 423 of the Code. Under the Purchase Plan, the
Board may authorize participation by eligible employees, including officers,
in periodic offerings following the adoption of the Purchase Plan. The
offering period for any offering will be no longer than 27 months.

Employees are eligible to participate if they are employed by the Company or
an affiliate of the Company designated by the Board. Employees who participate
in an offering generally can have up to 10% of their earnings withheld
pursuant to the Purchase Plan and applied, on specified dates determined by
the Board, to the purchase of shares of Common Stock. The Board may increase
this percentage in its discretion, up to 15%. The price of Common Stock
purchased under the Purchase Plan will be equal to 85% of the lower of the
fair market value of the Common Stock on the commencement date of each
offering period or the relevant purchase date. Employees may end their
participation in the offering at any time during the offering period, and
participation ends automatically on termination of employment with the
Company.

In the event of certain changes of control, the Board has discretion to
provide that each right to purchase Common Stock will be assumed or an
equivalent right substituted by the successor corporation, or the Board may
shorten the offering period and provide for all sums collected by payroll
deductions to be applied to purchase stock immediately prior to the change in
control. The Purchase Plan will terminate at the Board's direction or when all
of the shares reserved for issuance under the Purchase Plan have been issued.

401(k) PLAN
The Company maintains the NVIDIA Corporation 401(k) Retirement Plan (the
"401(k) Plan") for eligible employees ("Participants"). A Participant may
contribute up to 20% of his or her total annual compensation to the 401(k)
Plan, up to a statutorily prescribed annual limit. The annual limit for 1998
is $10,000. Each Participant is fully vested in his or her deferred salary
contributions. Participant contributions are held and invested by the

54
<PAGE>

401(k) Plan's trustee. The Company may make discretionary contributions as a
percentage of Participant contributions, subject to established limits. To
date, the Company has made no contributions to the 401(k) Plan on behalf of
the Participants. The 401(k) Plan is intended to qualify under Section 401 of
the Code, so that contributions by employees or by the Company to the 401(k)
Plan, and income earned on the 401(k) Plan contributions, are not taxable to
employees until withdrawn from the 401(k) Plan, and so that contributions by
the Company, if any, will be deductible by the Company when made.

55
<PAGE>

CERTAIN TRANSACTIONS

In August 1997, Harvey C. Jones, Jr., a director of the Company, purchased
24,334 shares of the Company's Series D Preferred Stock for an aggregate
purchase price of $127,997. The Company sold these securities pursuant to a
preferred stock purchase agreement and an investors' rights agreement on
substantially the same terms as the other investors of Series D Preferred
Stock, including registration rights, information rights and a right of first
refusal, among other provisions standard in venture capital financings.

Pursuant to an agreement between the Company and certain stockholders of the
Company, in August 1997, the Company granted certain rights with respect to
the registration of shares held by Messrs. Coxe, Jones and Miller, each of
whom is a director of the Company, and shares held by and Sequoia Capital VI
and its related entities and Sutter Hill Ventures and its related entities,
both of which are holders of more than 5% of the Company's Common Stock. Mr.
Stevens, a director of the Company, is a general partner of Sequoia Capital,
and Mr. Coxe is a general partner of Sutter Hill Ventures. See "Description of
Capital Stock--Registration Rights."

INDEMNIFICATION AND LIMITATION OF DIRECTOR AND OFFICER LIABILITY

In February 1998, the Board authorized the Company to enter into indemnity
agreements with each of the Company's directors and executive officers. The
form of indemnity agreement provides that the Company will indemnify against
any and all expenses of the director or executive officer who incurred such
expenses because of his or her status as a director or executive officer, to
the fullest extent permitted by the Company's Bylaws and Delaware law.

The Company's Certificate of Incorporation (the "Certificate") and Bylaws
contain certain provisions relating to the limitation of liability and
indemnification of directors and officers. The Certificate provides that
directors of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for any breach of fiduciary duty as a
director, except for liability (i) for any breach of the directors' duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) in respect of certain unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the director
derives any improper personal benefit. The Certificate also provides that if
the Delaware General Corporation Law is amended after the approval by the
Company's stockholders of the Certificate to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of the Company's directors shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law. The
foregoing provisions of the Certificate are not intended to limit the
liability of directors or officers for any violation of applicable federal
securities laws. In addition, as permitted by Section 145 of the Delaware
General Corporation Law, the Bylaws of the Company provide that (i) the
Company is required to indemnify its directors and executive officers to the
fullest extent permitted by the Delaware General Corporation Law, (ii) the
Company may, in its discretion, indemnify other officers, employees and agents
as set forth in the Delaware General Corporation Law, (iii) to the fullest
extent permitted by the Delaware General Corporation Law, the Company is
required to advance all expenses incurred by its directors and executive
officers in connection with a legal proceeding (subject to certain
exceptions), (iv) the rights conferred in the Bylaws are not exclusive, (v)
the Company is authorized to enter into indemnification agreements with its
directors, officers, employees and agents and (vi) the Company may not
retroactively amend the Bylaws provisions relating to indemnity.

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<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of March 29, 1998, and
as adjusted to reflect the sale of the shares of Common Stock offered hereby
by (i) each of the Company's Named Executive Officers, (ii) each of the
Company's directors, (iii) each holder of more than 5% of the Company's Common
Stock and (iv) all current directors and executive officers as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED(1)
SHARES ------------------------
BENEFICIALLY PRIOR TO AFTER
BENEFICIAL OWNERS OWNED(1) OFFERING OFFERING
- ----------------- ------------ ---------- ----------
<S> <C> <C> <C>
Entities associated with Sequoia
Capital VI(2)........................ 3,095,902 13.2% %
3000 Sand Hill Road
Suite 280, Building 4
Menlo Park, California 94025
Jen-Hsun Huang(3)(4).................. 3,000,000 12.8
Chris A. Malachowsky(3)(5)............ 3,000,000 12.8
Curtis R. Priem(3).................... 3,000,000 12.8
Entities associated with Sutter Hill
Ventures(6)(9)....................... 2,786,090 11.9
755 Page Mill Road, Suite A-200
Palo Alto, California 94304
Jeffrey D. Fisher(7).................. 360,200 1.5
Richard J. Whitacre(8)................ 387,800 1.6
Tench Coxe(6)(9)...................... 2,786,090 12.1
Harvey C. Jones, Jr.(10).............. 269,334 1.1
William J. Miller(11)................. 181,844 *
A. Brooke Seawell..................... -- *
Mark A. Stevens(2)(12)................ 3,145,902 13.4
All directors and executive officers
as a group(10 persons)(13)........... 16,131,170 68.0
</TABLE>
- --------
*Less than 1%.

(1) Percentage of beneficial ownership is based on 23,468,797 shares of
Common Stock outstanding on an as-converted basis as of March 29, 1998
and on shares of Common Stock outstanding after the completion of
this offering. Shares of Common Stock subject to options currently
exercisable or exercisable within 60 days of March 29, 1998 are deemed
outstanding for the purpose of computing the percentage ownership of the
person holding such options but are not deemed outstanding for computing
the percentage ownership of any other person. Unless otherwise indicated
below, the persons and entities named in the table have sole voting and
sole investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.

(2) Includes (i) 2,566,589 shares held by Sequoia Capital VI, (ii) 258,947
shares held by Sequoia Capital Growth Fund, (iii) 141,021 shares held by
Sequoia Technology Partners VI, (iv) 81,237 shares held by Sequoia XXIII,
(v) 27,778 shares held by Sequoia XXIV, (vi) 16,528 shares held by
Sequoia Technology Partners III, (vii) 2,433 shares held by SQP 1997 and
(viii) 1,369 shares held by Sequoia 1997. Mr. Stevens, a director of the
Company, is a general partner of Sequoia Capital VI and a general partner
of Sequoia Technology Partners VI, and therefore may be deemed to
beneficially own the shares currently owned by such entities. Mr. Stevens
disclaims beneficial ownership of the shares held by such entities,
except to the extent of his pecuniary interest therein.

57
<PAGE>

(3) The address for Messrs. Huang, Malachowsky and Priem is: c/o NVIDIA
Corporation, 1226 Tiros Way, Sunnyvale, California 94086.

(4) Includes 2,308,900 shares held by The Jen-Hsun and Lori Huang Living
Trust dated May 1, 1995, of which Mr. Huang is the trustee and 250,600
shares held by J. and L. Huang Investments, L.P., of which Mr. Huang and
his wife are general partners. Also includes 220,000 shares held by Karen
Mills Gambee, as Trustee of The Jen-Hsun Huang and Lori Lynn Huang 1995
Irrevocable Children's Trust and 220,500 shares held by various family
members, as to which Mr. Huang does not have voting or dispositive power
or beneficial ownership thereof.
(5) Includes 2,052,000 shares held by The Chris and Melody Malachowsky Living
Trust dated October 20, 1994, of which Mr. Malachowsky is the trustee and
238,500 shares held by Malachowsky Investments L.P., of which Mr.
Malachowsky and his wife are general partners. Also includes 660,000
shares held by John M. Scott, as Trustee of The Chris Malachowsky and
Melody Malachowsky 1994 Irrevocable Trust and 49,500 shares held by
various family members, as to which Mr. Malachowsky does not have voting
or dispositive power thereof.

(6) Includes 1,813,275 shares held by Sutter Hill Ventures, a California
Limited Partnership ("Sutter Hill"). Mr. Coxe, a director of the Company,
shares voting and investing power with four other managing directors of
Sutter Hill Ventures LLC, the general partner of Sutter Hill. Includes
972,815 shares held of record by the five managing directors of Sutter
Hill Ventures LLC and their related family entities. Mr. Coxe disclaims
beneficial ownership of the shares held by the other persons and entities
associated with Sutter Hill, except to the extent of his pecuniary
interest therein.
(7) Includes 225,200 shares subject to a right of repurchase that expires
ratably through July 1998. Includes 135,000 shares of Common Stock
issuable upon the early exercise of options vesting through May 2001.
(8) Includes 152,800 and 30,000 shares subject to rights of repurchase that
expire ratably through July 1998 and August 2000, respectively. Includes
205,000 shares of Common Stock issuable upon the early exercise of
options vesting through May 2001.
(9) Includes 50,000 shares subject to a right of repurchase that expires
ratably through July 2000.
(10) Includes 70,000 shares subject to a right of repurchase that expires
ratably through August 2000.
(11) Includes 75,000 and 50,000 shares subject to rights of repurchase that
expire ratably through November 1998 and June 2000, respectively.
(12) Includes 50,000 shares subject to a right of repurchase that expires
ratably through July 2000.

(13) Includes 340,000 shares issuable upon exercise of options held by all
directors and executive officers within 60 days of March 29, 1998. See
footnotes (7) and (8).

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

Upon the closing of this offering, the authorized capital stock of the
Company will consist of 200,000,000 shares of Common Stock, par value $.001
per share, and 2,000,000 shares of Preferred Stock, par value $.001 per share
("Preferred Stock").

COMMON STOCK

As of March 29, 1998, there were 23,468,797 shares of Common Stock
(including shares of Preferred Stock that will be converted into Common Stock
upon completion of this offering) outstanding held of record by 196
stockholders.

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Subject to
preferences that may be applicable to any outstanding shares of the Preferred
Stock, the holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. See "Dividend Policy." In the event of a liquidation,
dissolution, or winding up of the Company, holders of the Common Stock are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preferences of any outstanding shares of Preferred Stock.
Holders of Common Stock have no preemptive rights and no right to convert
their Common Stock into any other securities. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are, and all shares of Common Stock to be outstanding upon the
completion of this offering will be, fully paid and non-assessable.

PREFERRED STOCK

Pursuant to the Restated Certificate the Board of Directors has the
authority, without further action by the stockholders, to issue up to
2,000,000 shares of Preferred Stock in one or more series and to fix the
designations, powers, preferences, privileges, and relative participating,
optional, or special rights and the qualifications, limitations, or
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption and liquidation preferences, any or all of which
may be greater than the rights of the Common Stock. The Board of Directors,
without stockholder approval, can issue Preferred Stock with voting,
conversion, or other rights that could adversely affect the voting power and
other rights of the holders of Common Stock. Preferred Stock could thus be
issued quickly with terms calculated to delay or prevent a change in control
of the Company or make removal of management more difficult. Additionally, the
issuance of Preferred Stock may have the effect of decreasing the market price
of the Common Stock, and may adversely affect the voting and other rights of
the holders of Common Stock. Upon the completion of this offering, there will
be no shares of Preferred Stock outstanding and the Company has no current
plans to issue any of the authorized Preferred Stock.

REGISTRATION RIGHTS

Pursuant to an agreement between the Company and the holders (or their
permitted transferees) ("Holders") of approximately 9,327,087 shares of Common
Stock (assuming the conversion of all outstanding Preferred Stock upon the
completion of this offering) and warrants to purchase 29,706 shares of Common
Stock, the Holders are entitled to certain rights with respect to the
registration of such shares under the Securities Act. If the Company proposes
to register its Common Stock, subject to certain exceptions, under the
Securities Act, the Holders are entitled to notice of the registration and are
entitled at the Company's expense to include such shares therein, provided
that the managing underwriters have the right to limit the number of such
shares included in the registration. The registration rights with respect to
this offering have been waived. In addition, certain of the Holders may
require the Company, at its expense, on no more than one occasion, to file a
registration statement under the Securities Act with respect to their shares
of Common Stock. Such rights may not be exercised until 60 days after the
completion of this offering. Further, certain Holders may require the Company,
once every 12 months and, on no more than two occasions, at the Company's
expense to register the

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<PAGE>

shares on Form S-3 when such form becomes available to the Company, subject to
certain conditions and limitations. Such right expires on the fifth
anniversary of completion of this offering.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF CHARTER DOCUMENTS AND DELAWARE LAW

CHARTER DOCUMENTS

The Company's Certificate of Incorporation (the "Certificate") and Bylaws
include a number of provisions that may have the effect of deterring hostile
takeovers or delaying or preventing changes in control or management of the
Company. First, the Certificate provides that all stockholder action must be
effected at a duly called meeting of holders and not by a consent in writing.
Second, the Bylaws provide that special meetings of the holders may be called
only by (i) the Chairman of the Board of Directors, (ii) the Chief Executive
Officer, or (iii) the Board of Directors pursuant to a resolution adopted by
the Board of Directors. Third, the Certificate and the Bylaws provide for a
classified Board of Directors. The Certificate includes a provision requiring
cumulative voting for directors only if required by applicable California law.
Under cumulative voting, a minority stockholder holding a sufficient
percentage of a class of shares may be able to ensure the election of one or
more directors. As a result of the provisions of the Certificate and
applicable California and Delaware law, at any annual meeting whereby the
Company had at least 800 stockholders as of the end of the fiscal year prior
to the record date for such annual meeting, stockholders will not be able to
cumulate votes for directors. Finally, the Bylaws establish procedures,
including advance notice procedures with regard to the nomination of
candidates for election as directors and stockholder proposals. These
provisions of the Certificate and Bylaws could discourage potential
acquisition proposals and could delay or prevent a change in control or
management of the Company. Such provisions also may have the effect of
preventing changes in the management of the Company. See "Risk Factors--
Effects of Certain Charter and Bylaw Provisions" and "Management."

DELAWARE TAKEOVER STATUTE
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). In general, Section 203 prohibits a
publicly held Delaware corporation, such as the Company shall become upon the
completion of this offering from engaging in a "business combination" with a
person characterized as an "interested stockholder" for a period of three
years after the date of the transaction pursuant to which such person became
an interested stockholder, unless the business combination is approved in a
manner prescribed by Delaware law. For purposes of Section 203, a business
combination includes a merger, asset sale or other transaction resulting in a
financial benefit to the interested stockholder, and an "interested
stockholder" is a person who, together with affiliates and associates, owns
(or within three years prior, did own) 15% or more of the Company's voting
stock.

TRANSFER AGENT AND REGISTRAR

ChaseMellon Shareholder Services, L.L.C. has been appointed as the transfer
agent and registrar for the Company's Common Stock.

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<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the Common Stock
of the Company. Future sales of substantial amounts of Common Stock in the
public market could adversely affect prevailing market prices from time to
time. Furthermore, since only a limited number of shares will be available for
sale following this offering as a result of certain contractual and legal
restrictions on resale (as described below), sales of substantial amounts of
Common Stock of the Company in the public market after these restrictions
lapse could adversely affect the prevailing market price and the ability of
the Company to raise equity capital in the future.

Upon the completion of this offering, the Company will have outstanding an
aggregate of shares of Common Stock, assuming no exercise of the
Underwriters' over-allotment option and no exercise of outstanding options and
warrants. Of these shares, all of the shares sold in this offering will be
freely tradable without restrictions or further registration under the
Securities Act, unless such shares are purchased by "affiliates" of the
Company as that term is defined in Rule 144 under the Securities Act (the
"Affiliates"). The remaining 23,468,797 shares of Common Stock held by
existing stockholders are "restricted securities" as that term is defined in
Rule 144 under the Securities Act ("Restricted Shares"). Restricted Shares may
be sold in the public market only if registered or if they qualify for an
exemption from registration pursuant to Rules 144, 144(k) or 701 promulgated
under the Securities Act, which are summarized below. All officers and
directors and certain stockholders holding an aggregate of 23,352,560 shares
of the Company's Common Stock have agreed, subject to certain exceptions, not
to offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly of
indirectly (or enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership
of), any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for shares of Common Stock, for a period of 180
days after the date of this Prospectus, without the prior written consent of
Morgan Stanley & Co. Incorporated. Morgan Stanley & Co. Incorporated may in
its sole discretion choose to release a certain number of these shares from
such restrictions prior to the expiration of such 180-day period.
Approximately 5,000,000 shares of Common Stock of the Company (less shares
available for sale within 90 days following the date of this Prospectus),
which does not include any shares held by officers and directors, will be
released from such contractual restrictions following 90 days after the date
of this Prospectus. As a result of such contractual restrictions and the
provisions of Rule 144 and 701, the Restricted Shares will be available for
sale in the public market as follows: (i) 47,500 shares will be eligible for
immediate sale on the date of this Prospectus; (ii) 4,952,500 shares will be
eligible for sale 90 days after the date of this Prospectus; (iii) 17,365,771
shares will be eligible for sale upon expiration of lock-up agreements 180
days after the date of this Prospectus and (iv) the remaining shares will be
eligible for sale from time to time thereafter upon expiration of the
Company's right to repurchase such shares .

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned Restricted Shares for at least one year (including
the holding period of any prior owner except an Affiliate) would be entitled
to sell within any three-month period a number of shares that does not exceed
the greater of: (i) 1% of the number of shares of Common Stock then
outstanding (which will equal approximately shares immediately after this
offering); or (ii) the average weekly trading volume of the Common Stock on
the Nasdaq National Market during the four calendar weeks preceding the filing
of a notice on Form 144 with respect to such sale. Sales under Rule 144 are
also subject to certain manner of sale provisions and notice requirements and
to the availability of current public information about the Company. Under
Rule 144(k), a person who is not deemed to have been an Affiliate of the
Company at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years
(including the holding period of any prior owner except an Affiliate), is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144; therefore,
unless otherwise contractually restricted, shares which qualify as "144(k)
shares" on the date of this Prospectus may be sold immediately upon the
completion of this offering. Subject to certain limitations on the aggregate
offering price of a transaction and other conditions, employees, directors,
officers, consultants or advisors may rely on Rule 701 with respect to the
resale of securities originally

61
<PAGE>

purchased from the Company prior to the date the issuer becomes subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), pursuant to written compensatory benefit plans or written
contracts relating to the compensation of such persons. In addition, the
Securities and Exchange Commission has indicated that Rule 701 will apply to
typical stock options granted by an issuer before it becomes subject to the
reporting requirements of the Exchange Act, along with the shares acquired
upon exercise of such options (including exercises after the date of this
Prospectus). Securities issued in reliance on Rule 701 are restricted
securities and, subject to the contractual restrictions described above,
beginning 90 days after the date of this Prospectus, may be sold by persons
other than Affiliates subject only to the manner of sale provisions of Rule
144, and by Affiliates under Rule 144 without compliance with its holding
period requirements.

Upon completion of this offering, the holders of approximately 9,356,793
shares of Common Stock currently outstanding or issuable upon conversion of
Preferred Stock, or their transferees, will be entitled to certain rights with
respect to the registration of such shares under the Securities Act. See
"Description of Capital Stock--Registration Rights." Registration of such
shares under the Securities Act would result in such shares becoming freely
tradable without restriction under the Securities Act (except for share
purchases by affiliates) immediately upon the effectiveness of such
registration.

The Company intends to file a registration statement under the Securities
Act covering 10,708,290 shares of Common Stock reserved or to be reserved for
issuance under the Equity Incentive Plan, the Purchase Plan and the Directors'
Plan. See "Management--Employee Benefit Plans." Such registration statement is
expected to be filed and become effective as soon as practicable after the
effective date of this offering. Accordingly, shares registered under such
registration statement will, subject to Rule 144 volume limitations applicable
to Affiliates, be available for sale in the open market, beginning 180 days
after the date of the Prospectus, unless such shares are subject to vesting
restrictions with the Company.

62
<PAGE>

UNDERWRITERS

Under the terms and subject to the conditions contained in an Underwriting
Agreement (the "Underwriting Agreement"), the Underwriters named below (the
"Underwriters"), for whom Morgan Stanley & Co. Incorporated, Hambrecht & Quist
LLC and CIBC Oppenheimer Corp. are acting as representatives (the
"Representatives"), have agreed severally to purchase, and the Company has
agreed to sell to them, severally, the respective number of shares of Common
Stock set forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER
OF
NAME SHARES
- ---- ------
<S> <C>
Morgan Stanley & Co. Incorporated........................................
Hambrecht & Quist LLC....................................................
CIBC Oppenheimer Corp....................................................
----
Total................................................................
====
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are obligated to
take and pay for all of the shares of Common Stock offered hereby (other than
those covered by the over-allotment option described below) if any such shares
are taken.

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the initial public offering price set forth on
the cover page hereof and part to certain dealers at a price that represents a
concession not in excess of $ per share under the public offering price.
Any Underwriter may allow, and such dealers may reallow, a concession not in
excess of $ per share to other Underwriters or to certain dealers. After
the initial offering of the shares of Common Stock, the offering price and
other selling terms may from time to time be varied by the Representatives.

The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to an aggregate of
additional shares of Common Stock at the initial public offering price set
forth on the cover page hereof, less underwriting discounts and commissions.
The Underwriters may exercise such option solely for the purpose of covering
over-allotments, if any, made in connection with the offering of the shares of
Common Stock offered hereby. To the extent such option is exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares of Common Stock as
the number set forth next to such Underwriter's name in the preceding table
bears to the total number of shares of Common Stock set forth next to the
names of all Underwriters in the preceding table.

The Underwriters have informed the Company that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
Common Stock offered by them.

Each of the Company and the directors, executive officers, certain other
stockholders and option holders of the Company has agreed, subject to certain
exceptions that, without the prior written consent of Morgan Stanley & Co.
Incorporated on behalf of the Underwriters, it will not during the period
ending 180 days after the date of this Prospectus (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer, lend or dispose of, directly

63
<PAGE>

or indirectly, any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise, except under
certain limited circumstances. The restrictions described in this paragraph do
not apply to (a) the sale of Shares to the Underwriters, (b) the issuance by
the Company of shares of Common Stock upon exercise of an option or a warrant
outstanding on the date of this Prospectus and described as such in the
Prospectus, (c) the issuance by the Company of shares of Common Stock under
the Equity Incentive Plan, the Directors' Plan and the Purchase Plan or (d)
transactions by any person other than the Company relating to shares of Common
Stock or other securities acquired in open market transactions after the
completion of the offering of the Shares. See "Shares Eligible for Future
Sale."

In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the offering, creating a short position in the Common Stock
for their own account. In addition, to cover over-allotments or to stabilize
the price of the Common Stock, the Underwriters may bid for, and purchase,
shares of Common Stock in the open market. Finally, the underwriting syndicate
may reclaim selling concessions allowed to an Underwriter or a dealer for
distributing the Common Stock in the offering, if the syndicate repurchases
previously distributed Common Stock in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Common Stock above
independent market levels. The Underwriters are not required to engage in
these activities, and may end any of these activities at any time.

The Company and the Underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.

PRICING OF THE OFFERING

Prior to this offering, there has been no public market for the Common Stock
or any other securities of the Company. The initial public offering price for
the Common Stock will be determined by negotiations among the Company and the
Representatives. Among the factors to be considered in determining the initial
public offering price will be the future prospects of the Company and its
industry in general, sales, earnings and certain other financial and operating
information of the Company in recent periods, and the price-earnings ratios,
price-sales ratios, market prices of securities and certain financial and
operating information of companies engaged in activities similar to those of
the Company. The estimated initial public offering price range set forth on
the cover page of this Preliminary Prospectus is subject to change as a result
of market conditions and other factors.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Cooley Godward llp ("Cooley Godward"), San Francisco, California.
Certain legal matters related to the offering will be passed upon for the
Underwriters by Wilson Sonsini Goodrich & Rosati, Professional Corporation,
Palo Alto, California. As of the date of this Prospectus, certain partners and
associates of Cooley Godward own through investment partnerships an aggregate
of 124,591 shares of Common Stock of the Company. James C. Gaither, a partner
of Cooley Godward, owns 44,289 shares of Common Stock of the Company and has
an option to purchase 50,000 shares of the Company's Common Stock.

EXPERTS

The financial statements of the Company as of December 31, 1996 and 1997,
and for each of the years in the three-year period ended December 31, 1997,
have been included in the Registration Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent auditors, appearing elsewhere herein,
and upon the authority of said firm as experts in accounting and auditing.

64
<PAGE>

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form S-1
under the Securities Act with respect to the shares of Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and such Common Stock, reference is
made to the Registration Statement and to the exhibits and schedules filed
therewith. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. A copy of the Registration
Statement may be inspected by anyone without charge at the Commission's
principal office in Washington, D.C., and copies of all or any part of the
Registration Statement may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at the Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048, and copies of all or any part of
the Registration Statement may be obtained from such offices upon payment of
the fees prescribed by the Commission. The Commission maintains a World Wide
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the
Commission. The address of the site is http://www.sec.gov.

65
<PAGE>

NVIDIA CORPORATION

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of KPMG Peat Marwick LLP, Independent Auditors..................... F-2
Balance Sheets as of December 31, 1996 and 1997 and March 29, 1998
(unaudited).............................................................. F-3
Statements of Operations for the Years Ended December 31, 1995, 1996 and
1997 and Three Months Ended March 30, 1997 (unaudited) and March 29, 1998
(unaudited).............................................................. F-4
Statements of Stockholders' Equity for the Years Ended December 31, 1995,
1996 and 1997 and Three Months Ended March 29, 1998 (unaudited).......... F-5
Statements of Cash Flows for the Years Ended December 31, 1995, 1996 and
1997 and Three Months Ended March 30, 1997 (unaudited) and March 29, 1998
(unaudited).............................................................. F-6
Notes to Financial Statements............................................. F-7
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
NVIDIA Corporation:

We have audited the accompanying balance sheets of NVIDIA Corporation (the
Company) as of December 31, 1996 and 1997, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of NVIDIA Corporation as of
December 31, 1996 and 1997, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1997,
in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Mountain View, California

February 17, 1998 Except as to

Note 8 which is as of April 16, 1998

F-2
<PAGE>

NVIDIA CORPORATION

BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
MARCH 29,
1996 1997 1998
-------- -------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents.................... $ 3,133 $ 6,551 $ 8,640
Accounts receivable.......................... 1,041 12,487 16,665
Inventory.................................... -- -- 2,523
Prepaid expenses and other current assets.... 104 303 1,101
-------- -------- --------
Total current assets..................... 4,278 19,341 28,929
Property and equipment, net.................... 1,144 5,536 7,648
Deposits and other assets...................... 103 161 161
-------- -------- --------
$ 5,525 $ 25,038 $ 36,738
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable............................. $ 277 $ 11,572 $ 19,331
Accrued liabilities.......................... 2,872 3,245 3,654
Income taxes payable......................... -- -- 728
Current portion of capital lease obligations. 722 1,434 1,625
-------- -------- --------
Total current liabilities................ 3,871 16,251 25,338
-------- -------- --------
Capital lease obligations, less current
portion....................................... 617 1,891 2,143
-------- -------- --------
Commitments.................................... -- -- --
Stockholders' equity:
Convertible preferred stock, $.001 par value;
10,000,000 shares authorized;
Shares issued and outstanding 7,888,275 in
1996, 9,327,087 in 1997 and 9,327,087 on
March 29, 1998; aggregate liquidation
preference of $19,827 in 1997 and 1998..... 8 9 9
Common stock, $.001 par value; 200,000,000
shares authorized; 11,567,374, 14,140,585
and 14,141,710 shares issued and outstanding
in 1996, 1997 and March 29, 1998,
respectively................................ 12 14 14
Additional paid-in capital................... 12,317 22,902 23,211
Deferred compensation........................ -- (2,038) (2,166)
Accumulated deficit.......................... (11,300) (13,991) (11,811)
-------- -------- --------
Total stockholders' equity............... 1,037 6,896 9,257
-------- -------- --------
$ 5,525 $ 25,038 $ 36,738
======== ======== ========
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE>

NVIDIA CORPORATION

STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
------------------------- -------------------
MARCH 30, MARCH 29,
1995 1996 1997 1997 1998
------- ------- ------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Product................... $ 1,103 $ 3,710 $27,280 $ 65 $33,210
Royalty................... 79 202 1,791 -- 4,452
------- ------- ------- ------- -------
Total revenue........... 1,182 3,912 29,071 65 37,662
Cost of revenue............. 1,549 3,038 21,226 208 27,559
------- ------- ------- ------- -------
Gross profit (loss)......... (367) 874 7,845 (143) 10,103
------- ------- ------- ------- -------
Operating expenses:
Research and development.. 2,426 1,218 6,632 616 3,815
Sales, general and
administrative........... 3,677 2,649 3,773 385 3,341
------- ------- ------- ------- -------
Total operating
expenses............... 6,103 3,867 10,405 1,001 7,156
------- ------- ------- ------- -------
Operating income (loss). (6,470) (2,993) (2,560) (1,144) 2,947
Interest and other income
(expense), net............. 93 (84) (131) (32) (39)
------- ------- ------- ------- -------
Income (loss) before tax
expense.................... (6,377) (3,077) (2,691) (1,176) 2,908
Income tax expense.......... -- -- -- -- 728
------- ------- ------- ------- -------
Net income (loss)....... (6,377) (3,077) (2,691) (1,176) 2,180
======= ======= ======= ======= =======
Basic net income (loss) per
share...................... $ (.56) $ (.27) $ (.21) $ (.10) $ .15
======= ======= ======= ======= =======
Diluted net income (loss)
per share.................. $ (.56) $ (.27) $ (.21) $ (.10) $ .08
======= ======= ======= ======= =======
Shares used in basic per
share computation.......... 11,365 11,383 12,677 11,578 14,142
Shares used in diluted per
share computation.......... 11,365 11,383 12,677 11,578 25,729
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE>

NVIDIA CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
TOTAL
PREFERRED STOCK COMMON STOCK ADDITIONAL DEFERRED ACCUMU- STOCK-
---------------- ----------------- PAID-IN COMPEN- LATED HOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL SATION DEFICIT EQUITY
--------- ------ ---------- ------ ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31,
1994................... 6,693,831 $ 7 11,365,300 $11 $ 6,456 $ -- $ (1,846) $ 4,628
Issuance of Series B
preferred stock........ 416,667 -- -- -- 750 -- -- 750
Exercise of Series B
warrants............... 13,888 -- -- -- 25 -- -- 25
Issuance of Series C
preferred stock, net of
issuance costs of $14.. 750,000 1 -- -- 4,985 -- -- 4,986
Net loss................ -- -- -- -- -- -- (6,377) (6,377)
--------- --- ---------- --- ------- ------- -------- -------
Balances, December 31,
1995................... 7,874,386 8 11,365,300 11 12,216 -- (8,223) 4,012
Exercise of Series B
warrants............... 13,889 -- -- -- 25 -- -- 25
Issuance of common stock
and stock options for
services............... -- -- 2,200 -- 25 -- -- 25
Issuance of common stock
upon exercise of stock
options................ -- -- 199,874 1 51 -- -- 52
Net loss................ -- -- -- -- -- -- (3,077) (3,077)
--------- --- ---------- --- ------- ------- -------- -------
Balances, December 31,
1996................... 7,888,275 8 11,567,374 12 12,317 -- (11,300) 1,037
Issuance of Series D
preferred stock, net of
issuance costs of $30.. 1,438,812 1 -- -- 7,537 -- -- 7,538
Grant of common stock
options for lease
financing and
consulting services.... -- -- -- -- 120 -- -- 120
Issuance of common stock
upon exercise of stock
options................ -- -- 2,573,211 2 828 -- -- 830
Deferred compensation
related to grant of
common stock options... -- -- -- -- 2,100 (2,100) -- --
Amortization of deferred
compensation........... -- -- -- -- -- 62 -- 62
Net loss................ -- -- -- -- -- -- (2,691) (2,691)
--------- --- ---------- --- ------- ------- -------- -------
Balances, December 31,
1997................... 9,327,087 9 14,140,585 14 22,902 (2,038) (13,991) 6,896
Issuance of common stock
upon exercise of stock
options(1)............. -- -- 1,125 -- 4 -- -- 4
Deferred compensation
related to grant of
common stock
options (1) ........... -- -- -- -- 305 (305) -- --
Amortization of deferred
compensation (1)....... -- -- -- -- -- 177 -- 177
Net income (1).......... -- -- -- -- -- -- 2,180 2,180
--------- --- ---------- --- ------- ------- -------- -------
Balances, March 29, 1998 9,327,087 $ 9 14,141,710 $14 $23,211 $(2,166) $(11,811) $ 9,257
========= === ========== === ======= ======= ======== =======
</TABLE>
- --------

(1) Unaudited

See accompanying notes to financial statements.

F-5
<PAGE>

NVIDIA CORPORATION

STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
-------------------------- -------------------
MARCH 30, MARCH 29,
1995 1996 1997 1997 1998
------- ------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss)............ $(6,377) $(3,077) $ (2,691) $(1,176) $ 2,180
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and
amortization.............. 524 802 1,363 235 677
Stock options granted in
exchange for lease
financing and services.... 25 50 120 -- --
Amortization of deferred
compensation.............. -- -- 62 -- 177
Changes in operating assets
and liabilities:
Accounts receivable...... (458) (24) (11,446) (1,067) (4,178)
Inventory................ -- -- -- -- (2,523)
Prepaid expenses and
other current assets.... (592) 44 (199) (41) (798)
Deposits and other
assets.................. (65) (19) (58) -- --
Accounts payable......... 510 (506) 11,295 (18) 7,759
Accrued liabilities...... 300 2,451 373 1,132 409
Income taxes payable..... -- -- -- -- 728
------- ------- -------- ------- -------
Net cash provided by
(used in) operating
activities............ (6,133) (279) (1,181) (935) 4,431
------- ------- -------- ------- -------
Cash flows used in investing
activities--purchases of
property and equipment........ (5) (9) (2,732) (60) (2,024)
------- ------- -------- ------- -------
Cash flows from financing
activities:
Net proceeds from sale of
common stock................ -- 51 830 6 4
Net proceeds from sale of
preferred stock............. 5,762 -- 7,538 -- --
Payments under capital
leases...................... (307) (502) (1,037) (210) (322)
------- ------- -------- ------- -------
Net cash provided by
(used in) financing
activities............ 5,455 (451) 7,331 (204) (318)
------- ------- -------- ------- -------
Change in cash and cash
equivalents................... (683) (739) 3,418 (1,199) 2,089
Cash and cash equivalents at
beginning of period........... 4,555 3,872 3,133 3,133 6,551
------- ------- -------- ------- -------
Cash and cash equivalents at
end of period................. $ 3,872 $ 3,133 $ 6,551 $ 1,934 $ 8,640
======= ======= ======== ======= =======
Cash paid for interest......... $ 152 $ 215 $ 267 $ 54 $ 84
======= ======= ======== ======= =======
Noncash financing and investing
activity--assets recorded
under capital lease........... $ 1,430 $ 265 $ 3,023 $ 544 $ 765
======= ======= ======== ======= =======
</TABLE>

See accompanying notes to financial statements.

F-6
<PAGE>

NVIDIA CORPORATION

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997

(UNAUDITED AS TO MARCH 29, 1998 DATA)

(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization

NVIDIA Corporation (the "Company") designs, develops and markets 3D
interactive graphics processors and related software for the mainstream PC
market. The Company operates primarily in one business segment in the United
States.

Interim Financial Information

The financial information presented as of and for the three months ended
March 30, 1997 and March 29, 1998 is unaudited. In the opinion of management,
this unaudited financial information contains all adjustments (which consist
only of normal, recurring adjustments) necessary for a fair presentation.
Operating results for the three months ended March 29, 1998 are not
necessarily indicative of results that may be expected for the full year.

Fiscal Year

The Company's fiscal years ended on December 31 prior to December 31, 1997.
Effective January 1, 1998, the Company changed its fiscal year end from
December 31 to a 52- or 53-week year ending on the last Sunday in December.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with a
maturity of three months or less at the time of purchase to be cash
equivalents.

Inventories

Inventories are stated at the lower of first-in, first-out cost or market.
Inventories at March 29, 1998 primarily consisted of finished goods.
Inventories were immaterial as of December 31, 1996 and 1997.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using
the straight-line method based on estimated useful lives, generally three to
four years. Depreciation expense includes the amortization of assets recorded
under capital leases. Leasehold improvements and assets recorded under capital
leases are amortized over the shorter of the lease term or the estimated
useful life of the asset.

Software Development Costs

Software development costs are expensed as incurred until the technological
feasibility of the related product has been established. After technological
feasibility is established, any additional software development costs would be
capitalized in accordance with Financial Accounting Standards Board Statement
of Financial Accounting Standards ("SFAS") No. 86, Capitalization of Software
Development Costs. Through December 31, 1997, the Company's process for
developing software was essentially completed concurrently with the
establishment of technological feasibility, and, accordingly, no software
costs have been capitalized to date. Software development costs incurred prior
to achieving technological feasibility are charged to research and development
expense as incurred.

Revenue Recognition

Revenue from product sales to original equipment manufacturers are
recognized upon shipment, net of any allowances for returns. While the Company
has not yet sold products through distributors, the Company's policy on sales
to distributors will be to defer recognition of sales and related gross profit
until the distributors resell the product. Royalty revenue is recognized upon
shipment of product by the licensee to its customers.

F-7
<PAGE>

NVIDIA CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Research and Development Arrangements

The Company enters into contractual agreements to provide design,
development and support services on a best efforts basis. All amounts funded
to the Company under these agreements are non-refundable once paid. The
Company recorded reductions to research and development expense based on the
percentage-of-completion method, limited by the amounts funded.

Accounting for Stock-Based Compensation

The Company uses the intrinsic value method to account for its stock-based
employee compensation plans.

Income Taxes

The Company records income taxes using the asset and liability method.
Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates in effect for the year in which those temporary differences are expected
to be recorded or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted average
number of common shares outstanding during the period. Diluted net income
(loss) per share is computed using the weighted average number of common and
dilutive common equivalent shares outstanding during the period, using either
the as-if-converted method for convertible preferred stock or the treasury
stock method for options and warrants. The effect of including convertible
preferred stock, options and warrants would have been antidilutive during all
periods presented and, as a result, such effect has been excluded from the
computation of diluted net loss per share. See Note 3 for information
regarding potentially dilutive outstanding shares of, and warrants to
purchase, convertible preferred stock and outstanding options to purchase
common stock. Pursuant to SEC Staff Accounting Bulletin No. 98, common stock
and convertible preferred stock issued for nominal consideration and options
and warrants granted for nominal consideration prior to the anticipated
effective date of the initial public offering (IPO) are included in the
calculation of basic and diluted net income (loss) per share, as if they were
outstanding for all periods presented. To date, the Company has not had any
issuances or grants for nominal consideration. The following is a
reconciliation of the numerators and denominators of the basic and diluted
earnings per share (EPS) computations for the periods presented:

<TABLE>
<CAPTION>
PER
INCOME SHARES SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
Basic and Diluted EPS:
Net loss..................................... $(6,377) 11,365 $(0.56)
======= ====== ======
YEAR ENDED DECEMBER 31, 1996
Basic and Diluted EPS:
Net loss..................................... $(3,077) 11,383 $(0.27)
======= ====== ======
YEAR ENDED DECEMBER 31, 1997
Basic and Diluted EPS:
Net loss..................................... $(2,691) 12,677 $(0.21)
======= ====== ======
THREE MONTHS ENDED MARCH 30, 1998
Basic EPS:
Net income................................... $22,108 14,142 $ 0.15
Effect of dilutive securities:
Stock options outstanding.................. -- 2,260 (0.02)
Convertible................................ -- 9,327 (0.05)
------- ------ ------
Diluted EPS:
Net income................................... $22,108 25,729 $ 0.08
======= ====== ======
</TABLE>

F-8
<PAGE>

NVIDIA CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Fair Value of Financial Instruments

The carrying value of cash, cash equivalents, accounts receivable, accounts
payable and accrued liabilities approximate fair value due to the short
maturity of those instruments.

Use of Estimates

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

(2) BALANCE SHEET COMPONENTS

Certain balance sheet components are as follows:

Property and Equipment

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
MARCH 29,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Purchased engineering software............... $ -- $ 3,158 $ 3,313
Test equipment............................... 187 1,467 1,484
Computer equipment........................... 2,209 3,264 5,750
Leasehold improvements....................... 69 74 74
Office furniture and equipment............... 159 259 358
Assets held for lease........................ -- 157 188
------- ------- -------
2,624 8,379 11,167
Accumulated depreciation and amortization.... (1,480) (2,843) (3,519)
------- ------- -------
Property and equipment, net................ $ 1,144 $ 5,536 $ 7,648
======= ======= =======

Accrued Liabilities

<CAPTION>
DECEMBER 31,
----------------
MARCH 29,
1996 1997 1998
------- ------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Advances on development agreement............ $ 2,500 $ 2,500 $ 1,875
Other........................................ 372 745 1,779
------- ------- -------
$ 2,872 $ 3,245 $ 3,654
======= ======= =======
</TABLE>

(3) STOCKHOLDERS' EQUITY

Convertible Preferred Stock

In 1993, the Company sold 4,303,000 shares of Series A preferred stock at
$0.50 per share, net of $22,000 of issuance costs. In 1994, the Company sold
2,390,831 shares of Series B preferred stock at $1.80 per share, net of
$57,000 of issuance costs. In 1995, the Company sold 416,667 shares of Series
B preferred stock at $1.80

F-9
<PAGE>

NVIDIA CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

per share. In 1995, the Company sold 750,000 shares of Series C preferred
stock at $6.67 per share, net of $14,000 of issuance costs. On August 19 and
September 12, 1997, the Company sold an aggregate of 1,438,812 shares of
Series D preferred stock at $5.26 per share, net of $30,000 of issuance costs.

The rights, preferences, and privileges of the holders of Series A, B, C and
D convertible preferred stock are as follows:

. Dividends are noncumulative and payable only upon declaration by the
Board of Directors at a rate of $.04, $.144, $.533 and $.42 per share
for Series A, B, C and D preferred stock, respectively.

. Holders of Series A, B, C and D preferred stock have a liquidation
preference of $.50, $1.80, $6.67, and $5.26 per share, respectively,
plus any declared but unpaid dividends over holders of common stock.

. Each holder of preferred stock has voting rights equal to common stock
on an "as-if-converted" basis.

. Each share of preferred stock may be converted into common stock at the
option of the holder on a one-for-one basis, subject to adjustment to
protect against dilution. Automatic conversion will occur upon the
earlier of a vote of holders of at least two-thirds of the shares of
preferred stock then outstanding or upon the closing of an initial
public offering of common stock in which the aggregate proceeds exceed
$15,000,000 and the offering price equals or exceeds $10.00 per share.

Warrants

During the period 1993 through 1997, the Company granted warrants to
purchase 80,000; 66,877; 10,000 and 29,706 of Series A, B, C and D preferred
stock, respectively, in connection with lease financing and services. These
warrants are exercisable at $.50, $1.80, $6.67 and $5.26 for shares of Series
A, B, C and D preferred stock, respectively, and expire from 2003 to 2007. At
December 31, 1997, warrants to purchase 80,000, 39,100, 10,000 and 29,706
shares of Series A, B, C and D preferred stock, respectively, were
outstanding.

The fair value of all warrant issuances calculated using the Black-Scholes
option pricing model was not material, using the following assumptions:
dividend yield - none; expected life - contractual term; risk free interest
rates - 6.0% to 6.5%; volatility - 60%.

Options

The Equity Incentive Plan (the "Plan"), as amended and restated on February
17, 1998, provides for the issuance of up to 15,000,000 shares of the
Company's common stock to directors, employees and consultants. The Plan
provides for the issuance of stock bonuses, restricted stock purchase rights,
incentive stock options or nonstatutory stock options.

Pursuant to the Plan, the exercise price for incentive stock options is at
least 100% of the fair market value on the date of grant or for employees
owning in excess of 10% of the voting power of all classes of stock, 110% of
the fair market value on the date of grant. For nonstatutory stock options,
the exercise price is no less than 85% of the fair market value on the date of
grant.

Options generally expire in 10 years. Vesting periods are determined by the
Board of Directors; however, options generally vest ratably over four years
beginning one year after the date of grant. Options may be exercised prior to
full vesting. Any unvested shares so purchased are subject to a repurchase
right in favor of the Company with the repurchase price to be equal to the
original purchase price of the stock. The right to repurchase at the original
price shall lapse at a minimum rate of 20% per year over five years from the
date the option was granted. As of December 31, 1997, there were 1,942,897
such shares subject to repurchase.

F-10
<PAGE>

NVIDIA CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The Company accounts for the plan using the intrinsic value method. As such,
compensation expense is recorded if on the date of grant the current fair
value per share of the underlying stock exceeds the exercise price per share.
With respect to certain options granted during 1997, the Company has recorded
deferred compensation of $2,100,000 for the difference at the grant date
between the exercise price per share and the fair value per share, based upon
independent valuations and management's estimate of the fair value of the
Company's stock on the various grant dates of the common stock underlying the
options. This amount is being amortized on a straight line basis over the
vesting period of the individual options, generally four years.

Had compensation cost for the Company's stock-based compensation plan been
determined consistent with SFAS No. 123, the Company's net loss would have
increased and net income would have decreased to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
1995 1996 1997 MARCH 29, 1998
------- ------- ------- ------------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C>
Net income (loss):
As reported.................... $(6,377) $(3,077) $(2,691) $2,180
Pro forma...................... (6,389) (3,109) (2,796) 2,140
Net income (loss) per share:
As reported and pro forma basic
net income (loss) per share... $ (.56) $ (.27) $ (.21) $ .15
As reported and pro forma
diluted net income (loss) per
share......................... (.56) (.27) (.21) .08
Shares used in computing
reported and pro forma basic
net income (loss) per share... 11,365 11,383 12,677 14,142
Shares used in computing
reported and pro forma diluted
net income (loss) per share... 11,365 11,383 12,677 25,729
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the minimum value method with the following weighted-average assumptions: no
dividend yield; risk free interest rate of 6.5%; and expected life for the
option of five years.

F-11
<PAGE>

NVIDIA CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

A summary of option transactions under the Plan follows:

<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
AVAILABLE SHARES UNDER PRICE PER
FOR GRANT OPTION SHARE
----------- ------------ ---------
<S> <C> <C> <C>
Balances, December 31, 1994............ 459,707 143,000 $ .09
Authorized........................... 1,500,000 -- --
Granted.............................. (1,490,375) 1,490,375 .18
Exercised............................ -- (12,500) .18
----------- ----------
Balances, December 31, 1995............ 469,332 1,620,875 .17
Authorized........................... 4,000,000 -- --
Granted.............................. (1,756,860) 1,756,860 .31
Exercised............................ -- (407,581) .20
Canceled............................. 794,134 (794,134) .19
----------- ----------
Balances, December 31, 1996............ 3,506,606 2,176,020 .27
Authorized........................... 2,000,000 -- --
Granted.............................. (4,950,857) 4,950,857 1.43
Exercised............................ -- (2,573,211) .32
Canceled............................. 868,208 (868,208) .29
----------- ----------
Balances, December 31, 1997............ 1,423,957 3,685,458 .28
Authorized (unaudited)............... 4,800,000 -- --
Granted (unaudited).................. (2,327,500) 2,327,500 6.93
Exercised (unaudited)................ -- (1,125) 3.15
Canceled (unaudited)................. 15,000 (15,000) 5.67
----------- ----------
Balances, March 29, 1998 (unaudited)... 3,911,457 5,996,833 $3.90
=========== ==========
</TABLE>

During 1997, the Company granted Common Stock options within the Plan to
consultants for services rendered. The fair value of all option grants to non-
employees calculated using the Black-Scholes option pricing model was
$120,000, using the following assumptions: dividend yield--none; expected
life--contractual term; risk free interest rates--6.0% to 6.5%; volatility--
60%. Options to purchase 50,000 shares of Common Stock were granted to an
outside investor during the Series D preferred stock offering.

The weighted-average fair value of options granted during 1995, 1996 and
1997 was $.05, $.08 and $.79, respectively. At December 31, 1997, 2,230,458
shares were exercisable.

The following table summarizes information about stock options outstanding
as of December 31, 1997:

<TABLE>
<CAPTION>
OUTSTANDING
---------------------
WEIGHTED-
AVERAGE
REMAINING NUMBER
EXERCISE NUMBER CONTRACTUAL OF SHARES
PRICES OF SHARES LIFE EXERCISABLE
-------- --------- ----------- -----------
<S> <C> <C> <C>
$ .05.................................... 3,000 6.50 3,000
.18.................................... 50,000 7.08 50,000
.36.................................... 1,034,833 9.07 1,034,833
1.30.................................... 796,000 9.70 781,000
2.64.................................... 1,155,500 9.91 345,500
3.15.................................... 696,125 9.98 16,125
--------- ---- ---------
$ .05 - $3.15............................ 3,735,458 9.60 2,230,458
========= =========
</TABLE>

F-12
<PAGE>

NVIDIA CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(4) COMMITMENTS

The Company leases a facility in Sunnyvale, California under operating lease
agreements that expire in August 1998. The Company is committed to pay
approximately $499,000 of future minimum lease payments under this agreement
during 1998. Rent expense for 1995, 1996 and 1997 was approximately $325,000,
$408,000 and $426,000, respectively.

In addition to the facility lease, the Company also leases certain computers
and equipment under capital leases with the option to purchase the assets upon
termination of the leases. As of December 31, 1997, future minimum lease
payments, including costs to exercise buyout options under capital leases,
were as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Year ending December 31:
1998.......................................................... $1,589
1999.......................................................... 1,442
2000.......................................................... 934
2001.......................................................... 7
------
Total lease payments........................................ 3,972
Less amount representing interest, at rates ranging from 9% to
12%............................................................ 647
------
Present value of minimum lease payments......................... 3,325
Less current portion............................................ 1,434
------
Long-term portion........................................... $1,891
======
</TABLE>

Assets recorded under capital leases included in property and equipment were
$2,314,000 and $4,765,000 as of December 31, 1996 and 1997, respectively.
Accumulated amortization thereon was $1,233,000 and $2,137,000 as of December
31, 1996 and 1997, respectively.

(5) INCOME TAXES

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities are presented below:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards....................... $ 3,374 $ 3,743
Plant and equipment--depreciation differences.......... 127 173
Advances on development contract....................... 996 996
Research credit carryforwards.......................... 617 1,058
Stock options.......................................... -- 72
Other reserves and accruals............................ 107 229
------- -------
Total gross deferred tax assets...................... 5,221 6,271
Less valuation allowance............................... (5,221) (6,271)
------- -------
Net deferred tax assets.............................. $ -- $ --
======= =======
</TABLE>

The net increase in the valuation allowance was approximately $1,800,000 and
$1,050,000 for the years ended December 31, 1996 and 1997, respectively. The
Company believes that sufficient uncertainty exists with

F-13
<PAGE>

NVIDIA CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

respect to future realization of these deferred tax assets; therefore, it has
established a valuation allowance against all net deferred tax assets.

The Company has net operating loss carryforwards for federal income tax
return purposes of approximately $10,000,000, which can be used to reduce
future taxable income. These carryforwards expire in 2008 through 2012. As of
December 31, 1997, the Company had California operating loss carryforwards of
approximately $5,000,000 available to offset future income subject to
California franchise tax. The difference between the federal loss
carryforwards and the California loss carryforwards results primarily from a
50% limitation on California loss carryforwards, and certain research and
development costs that were deferred for California tax purposes. The
California net operating loss carryforwards expire in various amounts from
1998 through 2002. The Company also has federal and California tax credit
carryforwards of approximately $600,000 and $450,000, respectively, as of
December 31, 1997. These tax credits expire through 2012.

Under the Tax Reform Act of 1986, the amounts of any benefit from net
operating losses and credits that can be carried forward may be limited in the
event of an ownership change as defined in the Internal Revenue Code, Section
382.

(6) DEVELOPMENT AGREEMENTS

The Company has a strategic collaboration agreement with ST
Microelectronics, Inc. ("ST") for the manufacture, marketing, and sale of
certain of the Company's products. In 1996, ST paid the Company $2,500,000 for
advanced royalty payments and agreed to partially support the research and
development and marketing efforts for certain of the Company's products. In
connection with this agreement the Company recorded royalty income of $79,000,
$202,000 and $1,791,000 in 1995, 1996 and 1997, respectively; a reduction to
research and development cost of $1,580,000 and $1,936,000 in 1996 and 1997,
respectively, and a reduction to sales, general and administrative expense of
$495,000 and $420,000 in 1996 and 1997, respectively. In January of 1998, ST
agreed to forgive the $2,500,000 in advanced royalty payments in exchange for
the Company's obligation to provide ST continued development and support on
certain products developed through the end of 1998. Accordingly, $2,500,000 is
included in accrued liabilities at December 31, 1996 and 1997.

In May 1995, the Company entered into a five year strategic alliance
agreement (the "Agreement") with a third party to develop a product, the NV2,
using the Company's technology with the purpose of incorporating the NV2 into
such third party's products. The third party made nonrefundable payments to
the Company to develop the NV2. The Company recorded a reduction to research
and development of $2,000,000 in 1995 and $3,000,000 in 1996. As part of this
agreement, the third party also purchased in July 1995, 750,000 shares of
Series C convertible preferred stock for $5,000,000. The third party revised
its product development plans, and the Company terminated the development of
this particular technology in 1996.

The costs incurred under the development agreements approximated the amounts
recorded as reduction to expenses.

(7) RISK AND UNCERTAINTIES

Product Concentration. The Company designs, develops and markets 3D graphics
processors for the mainstream PC market. Substantially all of the Company's
revenue from product sales in 1997 was derived from sales of one product, the
RIVA128 graphics processor. Since the Company has no other product line, the
Company's business, financial condition and results of operations would be
materially adversely affected if for any reason its current or future 3D
graphics processors do not achieve widespread acceptance in the mainstream PC
market.

F-14
<PAGE>

NVIDIA CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Customer Concentration. The Company has only a limited number of customers
and its sales are highly concentrated. The Company primarily sells its
products to add-in board manufacturers, which incorporate graphics products in
the boards they sell to PC OEMs. Product revenue from STB Systems, Inc.
("STB") and Diamond Multimedia Systems, Inc. ("Diamond") accounted for 63% and
31%, respectively, of the Company's 1997 revenue and in 1996 and 1995 Diamond
accounted for 82% and 86%, respectively, of revenue. Sales to add-in board
manufacturers are primarily dependent on achieving design wins with leading PC
OEMs, and the Company believes that the large majority of its 1997 revenue was
attributable to products that ultimately were incorporated into PCs sold by
Compaq, Dell, Gateway, Micron and Packard Bell NEC. As a result, the Company's
business, financial condition and results of operations could be materially
adversely affected by the decision of a single PC OEM or add-in board
manufacturer to cease using the Company's products or by a decline in the
number of PCs or boards sold by a single PC OEM or add-in board manufacturers
or by a small number of customers.

Accounts receivable as of December 31, 1997 were $6,261,000 and $5,768,000
from STB and Diamond, respectively.

Markets. In 1997, the Company derived all of its revenue from the sale or
license of products for use in PCs. The PC market is characterized by rapidly
changing technology, evolving industry standards, frequent new product
introductions and significant price competition, resulting in short product
life cycles and regular reductions in average selling prices over the life of
a specific product. In addition, the Company's success will depend in part
upon the emerging mainstream PC 3D graphics market. This market has only
recently begun to emerge and is dependent on future development of a
substantial customer and computer manufacturer demand for 3D graphics
functionality. If the market for mainstream PC 3D graphics fails to develop or
develops more slowly than expected, the Company's business, financial
condition and results of operations could be materially adversely affected.

Intellectual Property. The Company relies primarily on a combination of
patent, mask work protection, trademarks, copyrights, trade secret laws,
employee and third-party nondisclosure agreements and licensing arrangements
to protect its intellectual property. Vigorous protection and pursuit of
intellectual property rights or positions characterize the semiconductor
industry, which in turn has resulted in significant and often protracted and
expensive litigation. The 3D graphics market in particular has been
characterized recently by the aggressive pursuit of intellectual property
positions. Infringement claims by third parties or claims for indemnification
by customers or end users of the Company's products resulting from
infringement claims could be asserted in the future and such assertions, of
proven to be true, could materially adversely affect the Company's business,
financial condition and results of operations. Any limitations on the
Company's ability to market its products, or delays and costs associated with
redesigning its products or payments of license fees to third parties, or any
failure by the Company to develop or license a substitute technology on
commercially reasonable terms, could have a material adverse effect on the
Company's business, financial condition and results of operations.

(8) SUBSEQUENT EVENTS

Reincorporation

On April 16, 1998, the Company was reincorporated in the state of Delaware.
The Certificate of Incorporation of the Delaware corporation authorizes
200,000,000 shares of common stock, $.001 par value per share, and 10,000,000
shares of preferred stock, $.001 par value per share. The accompanying
financial statements have been retroactively restated to give effect to the
reincorporation.

Employee Stock Purchase Plan.

In February 1998, the Board approved the 1998 Employee Stock Purchase Plan
(the "Purchase Plan"), covering an aggregate of 500,000 shares of Common
Stock. The Purchase Plan is intended to qualify as an

F-15
<PAGE>

NVIDIA CORPORATION

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

"employee stock purchase plan" within the meaning of Section 423 of the Code.
Under the Purchase Plan, the Board may authorize participation by eligible
employees, including officers, in periodic offerings following the adoption of
the Purchase Plan. The offering period for any offering will be no longer than
27 months.

Non-Employee Directors' Stock Option Plan

In February 1998, the Board adopted the 1998 Non-Employee Directors' Stock
Option Plan (the "Directors' Plan") to provide for the automatic grant of
options to purchase shares of Common Stock to non-employee directors of the
Company who are not employees of or consultants to the Company or an affiliate
of the Company (a "Non-Employee Director"). The Compensation Committee
administers the Directors' Plan. The aggregate number of shares of Common
Stock that may be issued pursuant to options granted under the Directors' Plan
is 300,000 shares.

LEGAL PROCEEDINGS

Silicon Graphics, Inc. ("SGI") filed a patent infringement lawsuit against
the Company in April 1998. In the event of an adverse result in the SGI suit,
the Company could be required to do one or more of the following: pay
substantial damages (including treble damages), cease the manufacture, use and
sale of any infringing products, expend significant resources to develop non-
infringing technology, or obtain a license from SGI for any infringing
technology. The SGI suit could result in limitations on the Company's ability
to market its products, delays and costs associated with redesigning its
products or payments of license fees or other payments to SGI, any of which
would have a material adverse effect on the Company's business, financial
condition and results of operations.

F-16
<PAGE>

[LOGO OF NVIDIA]

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the
sale of the shares of Common Stock being registered. All the amounts shown are
estimates except for the SEC registration fee, the NASD filing fee and the
Nasdaq National Market application fee.

<TABLE>
<S> <C>
SEC Registration fee.......................................... $ 11,800
NASD filing fee............................................... 4,500
Nasdaq National Market listing fee............................ 95,000
Blue sky qualification fees and expenses...................... 5,000
Printing and engraving expenses............................... 150,000
Legal fees and expenses....................................... 400,000
Accounting fees and expenses.................................. 175,000
Transfer agent and registrar fees............................. 10,000
Miscellaneous................................................. 298,700
----------
Total..................................................... $1,150,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

As permitted by Section 145 of the Delaware General Corporation Law, the
Bylaws of the Company provide that (i) the Company is required to indemnify
its directors and executive officers to the fullest extent permitted by the
Delaware General Corporation Law, (ii) the Company may, in its discretion,
indemnify other officers, employees and agents as set forth in the Delaware
General Corporation Law, (iii) to the fullest extent not prohibited by the
Delaware General Corporation Law, the Company is required to advance all
expenses incurred by its directors and executive officers in connection with a
legal proceeding (subject to certain exceptions), (iv) the rights conferred in
the Bylaws are not exclusive, (v) the Company is authorized to enter into
indemnification agreements with its directors, officers, employees and agents
and (vi) the Company may not retroactively amend the Bylaws provisions
relating to indemnity.

The Company has entered into agreements with its directors and executive
officers that require the Company to indemnify such persons against expenses,
judgments, fines, settlements and other amounts that such person becomes
legally obligated to pay (including expenses of a derivative action) in
connection with any proceeding, whether actual or threatened, to which any
such person may be made a party by reason of the fact that such person is or
was a director or officer of the Company or any of its affiliated enterprises,
provided such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Company. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.

The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant
and its officers and directors for certain liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act"), or otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since March 1, 1995, the Registrant has sold and issued the following
unregistered securities:

(1) In July 1995, the Company sold 750,000 shares of the Company's Series
C Preferred Stock for an aggregate purchase price of $5,000,000.

II-1
<PAGE>

(2) In October 1995, the Company issued, in connection with an equipment
lease, a warrant to purchase 5,400 shares of Series C Preferred Stock at an
exercise price of $6.67 per share.

(3) In October 1996, the Company issued, in connection with equipment
leases, a warrant to purchase 200 shares of Series B Preferred Stock at an
exercise price of $1.80 per share and a warrant to purchase 4,600 shares of
Series C Preferred Stock at an exercise price of $6.67.

(4) In August and September 1997, the Company sold an aggregate of
1,438,812 shares of Series D Preferred Stock to certain investors for an
aggregate purchase price of $7,568,151.

(5) In August 1997, the Company issued, in connection with an equipment
lease, a warrant to purchase 7,843 shares of Series D Preferred Stock at an
exercise price of $5.26 per share.

(6) In October 1997, the Company issued, in connection with an equipment
leases, warrants to purchase an aggregate of 21,863 shares of Series D
Preferred Stock at an exercise price of $5.26 per share.

(7) In October 1997, the Company issued an option to purchase 50,000
shares of Common Stock at an exercise price of $2.64 per share.

(8) From March 1, 1995 to April 17, 1998, the Company granted stock
options to employees, directors and consultants covering an aggregate of
10,474,110 shares of the Company's Common Stock, at exercise prices varying
from $0.18 to $9.00. Of such shares, 2,996,810 shares have been issued and
sold pursuant to the exercise of such options. Options to purchase
1,659,217 shares of Common Stock have been canceled or have lapsed without
being exercised or otherwise been canceled. Stock awards for an aggregate
of 17,932 shares were issued at purchase prices varying from $0.18 to
$0.36.

The Company claimed exemptions under the Securities Act from registration
under the Securities Act for the sale and issuance of securities in the
transaction described in paragraphs (1) through (7) by virtue of Section 4(2)
or Regulation D promulgated thereunder as transactions not involving public
offering. The purchasers in each case represented their intention to acquire
the securities for investment only and not with a view to the distribution
thereof. Appropriate legends are affixed to the stock certificates issued in
such transactions. All recipients either received adequate information about
the Registrant or had access, through employment or other relationships, to
such information.

The sales and issuances in the transactions described in paragraph (8) above
were deemed to be exempt from registration under the Securities Act by virtue
of Rule 701 promulgated thereunder, in that they were issued pursuant to a
written compensatory benefit plan, as provided by Rule 701.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS.

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.4+ Form of Nonstatutory Stock Option Agreement under the 1998
Equity Incentive Plan.
10.5+ 1998 Employee Stock Purchase Plan.
10.6+ Form of Employee Stock Purchase Plan Offering.
10.7 1998 Non-Employee Directors' Stock Option Plan.
10.8+ Form of Nonstatutory Stock Option Agreement under the 1998 Non-
Employee Directors' Stock Option Plan (Initial Grant).
10.9 Form of Nonstatutory Stock Option Agreement under the 1998 Non-
Employee Directors' Stock Option Plan (Annual Grant).
10.10* Amended and Restated Strategic Collaboration Agreement, dated
April , 1998, between the Company and ST Microelectronics,
Inc.
10.11+ Sublease Agreement, dated February 16, 1995, between Amdahl
Corporation and the Company, as amended on March 1, 1995 and
September 1, 1995.
10.12 Form of Nonstatutory Stock Option Agreement under the 1998 Non-
Employee Directors' Stock Option Plan (Committee Grant).
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.
23.2* Consent of Cooley Godward LLP (reference is made to Exhibit
5.1).
24.1+ Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>
- --------
*To be filed by amendment.

+Previously filed

(b) FINANCIAL STATEMENT SCHEDULES.

Schedules not listed above are omitted because they are not required, they
are not applicable or the information is already included in the financial
statements or notes thereto.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide the Underwriters at
the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item 14, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.

The undersigned Registrant hereby undertakes that: (1) for purposes of
determining any liability under the Act, the information omitted from the form
of prospectus as filed as part of the registration statement in reliance upon
Rule 430A and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to
be part of the registration statement as of the time it was declared
effective, (2) for the purpose of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and this offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof, and (3) to remove from registration
by means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.

II-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SUNNYVALE, STATE OF
CALIFORNIA, ON THE 24TH DAY OF APRIL 1998.

NVIDIA Corporation

Jen-Hsun Huang*
By: _________________________________
Jen-Hsun Huang
President, Chief Executive Officer
and Director

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----

<S> <C> <C>
Jen-Hsun Huang* President, Chief Executive April 24, 1998
____________________________________ Officer and Director
Jen-Hsun Huang (Principal Executive
Officer)

/s/ Geoffrey G. Ribar Chief Financial Officer April 24, 1998
____________________________________ (Principal Financial and
Geoffrey G. Ribar Accounting Officer)

Tench Coxe* Director April 24, 1998
____________________________________
Tench Coxe

Harvey C. Jones, Jr.* Director April 24, 1998
____________________________________
Harvey C. Jones, Jr.

William J. Miller* Director April 24, 1998
____________________________________
William J. Miller

A. Brooke Seawell* Director April 24, 1998
____________________________________
A. Brooke Seawell

Mark A. Stevens* Director April 24, 1998
____________________________________
Mark A. Stevens

/s/ Geoffrey G. Ribar
*By: _______________________________
Geoffrey G. Ribar
As Attorney-In-Fact
</TABLE>

II-4
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1+ Certificate of Incorporation of the Company.
3.2 Bylaws of the Company.
3.3+ Form of Amended and Restated Certificate of Incorporation to be
filed upon completion of this offering.
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Stock Certificate.
4.3+ Second Amended and Restated Investors' Rights Agreement, dated
August 19, 1997 between the Company and the parties indicated
thereto.
5.1* Opinion of Cooley Godward LLP.
10.1+ Form of Indemnity Agreement between Registrant and each of its
directors and officers.
10.2 1998 Equity Incentive Plan.
10.3+ Form of Incentive Stock Option Agreement under the 1998 Equity
Incentive Plan.
10.4+ Form of Nonstatutory Stock Option Agreement under the 1998 Equity
Incentive Plan.
10.5+ 1998 Employee Stock Purchase Plan.
10.6+ Form of Employee Stock Purchase Plan Offering.
10.7 1998 Non-Employee Directors' Stock Option Plan.
10.8+ Form of Nonstatutory Stock Option Agreement under the 1998 Non-
Employee Directors' Stock Option Plan (Initial Grant).
10.9 Form of Nonstatutory Stock Option Agreement under the 1998 Non-
Employee Directors' Stock Option Plan (Annual Grant).
10.10* Amended and Restated Strategic Collaboration Agreement, dated April
, 1998, between the Company and ST Microelectronics, Inc.
10.11+ Sublease Agreement, dated February 16, 1995, between Amdahl
Corporation and the Company, as amended on March 1, 1995 and
September 1, 1995.
10.12 Form of Nonstatutory Stock Option Agreement under the 1998 Non-
Employee Directors' Stock Option Plan (Committee Grant).
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors.
23.2* Consent of Cooley Godward LLP (reference is made to Exhibit 5.1).
24.1+ Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>
- --------
*To be filed by amendment.

+Previously filed.

<PAGE>

EXHIBIT 3.2

BYLAWS

NVIDIA CORPORATION

(A DELAWARE CORPORATION)

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Article I Offices............................................................................. 1
Section 1. Registered Office.............................................................. 1
Section 2. Other Offices.................................................................. 1
Article II Corporate Seal..................................................................... 1
Section 3. Corporate Seal................................................................. 1
Article III Stockholders' Meetings............................................................ 1
Section 4. Place Of Meetings.............................................................. 1
Section 5. Annual Meetings................................................................ 1
Section 6. Special Meetings............................................................... 3
Section 7. Notice Of Meetings............................................................. 4
Section 8. Quorum......................................................................... 4
Section 9. Adjournment And Notice Of Adjourned Meetings................................... 4
Section 10. Voting Rights.................................................................. 5
Section 11. Joint Owners Of Stock.......................................................... 5
Section 12. List Of Stockholders........................................................... 5
Section 13. Action Without Meeting......................................................... 5
Section 14. Organization................................................................... 6
Article IV Directors.......................................................................... 7
Section 15. Number And Term Of Office...................................................... 7
Section 16. Powers......................................................................... 7
Section 17. Classes Of Directors........................................................... 7
Section 18. Vacancies...................................................................... 7
Section 19. Resignation.................................................................... 8
Section 20. Removal........................................................................ 8
Section 21. Meetings....................................................................... 8
(a) Annual Meetings........................................................................ 8
(b) Regular Meetings....................................................................... 8
(c) Special Meetings....................................................................... 8
(d) Telephone Meetings..................................................................... 9
</TABLE>

i.
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

<TABLE>
<CAPTION>
PAGE
<S> <C>
(e) Notice Of Meetings..................................................................... 9
(f) Waiver Of Notice....................................................................... 9
Section 22. Quorum And Voting.............................................................. 9
Section 23. Action Without Meeting......................................................... 9
Section 24. Fees And Compensation.......................................................... 10
Section 25. Committees..................................................................... 10
(a) Executive Committee.................................................................... 10
(b) Other Committees....................................................................... 10
(c) Term................................................................................... 10
(d) Meetings............................................................................... 11
Section 26. Organization................................................................... 11
Article V Officers............................................................................ 11
Section 27. Officers Designated............................................................ 11
Section 28. Tenure And Duties Of Officers.................................................. 12
(a) General................................................................................ 12
(b) Duties Of Chairman Of The Board Of Directors........................................... 12
(c) Duties Of President.................................................................... 12
(d) Duties Of Vice Presidents.............................................................. 12
(e) Duties Of Secretary.................................................................... 12
(f) Duties Of Chief Financial Officer...................................................... 12
Section 29. Delegation Of Authority........................................................ 13
Section 30. Resignations................................................................... 13
Section 31. Removal........................................................................ 13
Article VI Execution Of Corporate Instruments And Voting Of Securities Owned By The
Corporation............................................................................ 13
Section 32. Execution Of Corporate Instruments............................................. 13
Section 33. Voting Of Securities Owned By The Corporation.................................. 14
Article VII Shares Of Stock................................................................... 14
Section 34. Form And Execution Of Certificates............................................. 14
</TABLE>

ii.
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 35. Lost Certificates.............................................................. 15
Section 36. Transfers...................................................................... 15
Section 37. Fixing Record Dates............................................................ 15
Section 38. Registered Stockholders........................................................ 15
Article VIII Other Securities Of The Corporation.............................................. 16
Section 39. Execution Of Other Securities.................................................. 16
Article IX Dividends.......................................................................... 16
Section 40. Declaration Of Dividends....................................................... 16
Section 41. Dividend Reserve............................................................... 16
Article X Fiscal Year......................................................................... 17
Section 42. Fiscal Year.................................................................... 17
Article XI Indemnification.................................................................... 17
Section 43. Indemnification Of Directors, Executive Officers, Other Officers,
Employees And Other Agents............................................................. 17
(a) Directors And Executive Officers....................................................... 17
(b) Other Officers, Employees and Other Agents............................................. 17
(c) Expenses............................................................................... 17
(d) Enforcement............................................................................ 18
(e) Non-Exclusivity Of Rights.............................................................. 18
(f) Survival Of Rights..................................................................... 19
(g) Insurance.............................................................................. 19
(h) Amendments............................................................................. 19
(i) Saving Clause.......................................................................... 19
(j) Certain Definitions.................................................................... 19
Article XII Notices........................................................................... 20
Section 44. Notices........................................................................ 20
(a) Notice To Stockholders................................................................. 20
(b) Notice To Directors.................................................................... 20
(c) Affidavit Of Mailing................................................................... 20
</TABLE>

iii.
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

<TABLE>
<CAPTION>
PAGE
<S> <C>
(d) Time Notices Deemed Given.............................................................. 20
(e) Methods Of Notice...................................................................... 20
(f) Failure To Receive Notice.............................................................. 21
(g) Notice To Person With Whom Communication Is Unlawful................................... 21
(h) Notice To Person With Undeliverable Address............................................ 21
Article XIII Amendments....................................................................... 21
Section 45. Amendments..................................................................... 21
Right Of First Refusal......................................................................... 22
Section 46. Right Of First Refusal......................................................... 22
Article XIV Loans To Officers................................................................. 24
Section 47. Loans To Officers.............................................................. 24
</TABLE>

iv.
<PAGE>

BYLAWS

NVIDIA CORPORATION

(A DELAWARE CORPORATION)

ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE. The registered office of the corporation in
the State of Delaware shall be in the City of Dover, County of Kent.

SECTION 2. OTHER OFFICES. The corporation shall also have and maintain an
office or principal place of business at such place as may be fixed by the Board
of Directors, and may also have offices at such other places, both within and
without the State of Delaware as the Board of Directors may from time to time
determine or the business of the corporation may require.

ARTICLE II

CORPORATE SEAL

SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate Seal-
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.

ARTICLE III

STOCKHOLDERS' MEETINGS

SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.

SECTION 5. ANNUAL MEETINGS.

(A) The annual meeting of the stockholders of the corporation, for
the purpose of election of directors and for such other business as may lawfully
come before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors.

(B) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To
be properly brought before an annual meeting, business must be: (A) specified
in the notice of meeting (or any

1.
<PAGE>

supplement thereto) given by or at the direction of the Board of Directors, (B)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (C) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation not later than the close of business on the sixtieth (60th) day nor
earlier than the close of business on the ninetieth (90th) day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that no annual meeting was held in the previous year or the
date of the annual meeting has been changed by more than thirty (30) days from
the date contemplated at the time of the previous year's proxy statement, notice
by the stockholder to be timely must be so received not earlier than the close
of business on the ninetieth (90th) day prior to such annual meeting and not
later than the close of business on the later of the sixtieth (60th) day prior
to such annual meeting or, in the event public announcement of the date of such
annual meeting is first made by the corporation fewer than seventy (70) days
prior to the date of such annual meeting, the close of business on the tenth
(10th) day following the day on which public announcement of the date of such
meeting is first made by the corporation. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to bring
before the annual meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, (iii) the class
and number of shares of the corporation which are beneficially owned by the
stockholder, (iv) any material interest of the stockholder in such business and
(v) any other information that is required to be provided by the stockholder
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), in his capacity as a proponent to a stockholder proposal.
Notwithstanding the foregoing, in order to include information with respect to a
stockholder proposal in the proxy statement and form of proxy for a
stockholder's meeting, stockholders must provide notice as required by the
regulations promulgated under the 1934 Act. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at any annual meeting
except in accordance with the procedures set forth in this paragraph (b). The
chairman of the annual meeting shall, if the facts warrant, determine and
declare at the meeting that business was not properly brought before the meeting
and in accordance with the provisions of this paragraph (b), and, if he should
so determine, he shall so declare at the meeting that any such business not
properly brought before the meeting shall not be transacted.

(C) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (c) shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the corporation
may be made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder of the corporation entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the corporation in accordance with the provisions
of paragraph (b) of this Section 5. Such stockholder's notice shall set forth
(i) as to each person, if any, whom the stockholder proposes

2.
<PAGE>

to nominate for election or re-election as a director: (A) the name, age,
business address and residence address of such person, (B) the principal
occupation or employment of such person, (C) the class and number of shares of
the corporation which are beneficially owned by such person, (D) a description
of all arrangements or understandings between the stockholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nominations are to be made by the stockholder, and (E) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the 1934 Act (including without
limitation such person's written consent to being named in the proxy statement,
if any, as a nominee and to serving as a director if elected); and (ii) as to
such stockholder giving notice, the information required to be provided pursuant
to paragraph (b) of this Section 5. At the request of the Board of Directors,
any person nominated by a stockholder for election as a director shall furnish
to the Secretary of the corporation that information required to be set forth in
the stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph (c). The chairman
of the meeting shall, if the facts warrant, determine and declare at the meeting
that a nomination was not made in accordance with the procedures prescribed by
these Bylaws, and if he should so determine, he shall so declare at the meeting,
and the defective nomination shall be disregarded.

(D) For purposes of this Section 5, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the 1934 Act.

SECTION 6. SPECIAL MEETINGS.

(A) Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption) or (iv) by the holders of shares entitled to cast not
less than 50% of the votes at the meeting, and shall be held at such place, on
such date, and at such time as the Board of Directors, shall fix.

(B) If a special meeting is called by any person or persons other
than the Board of Directors, the request shall be in writing, specifying the
general nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the Chairman of the Board of Directors, the Chief Executive
Officer, or the Secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The Board of
Directors shall determine the time and place of such special meeting, which
shall be held not less than thirty-five (35) nor more than one hundred twenty
(120) days after the date of the receipt of the request. Upon determination of
the time and place of the meeting, the officer receiving the request shall cause
notice to be given to the stockholders entitled to vote, in accordance with the
provisions of Section 7 of these Bylaws. If the notice is not given within
sixty (60) days after the receipt of the

3.
<PAGE>

request, the person or persons requesting the meeting may set the time and place
of the meeting and give the notice. Nothing contained in this paragraph (b)
shall be construed as limiting, fixing, or affecting the time when a meeting of
stockholders called by action of the Board of Directors may be held.

Section 7. NOTICE OF MEETINGS. Except as otherwise provided by law or the
Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.

SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. In the absence of a quorum,
any meeting of stockholders may be adjourned, from time to time, either by the
chairman of the meeting or by vote of the holders of a majority of the shares
represented thereat, but no other business shall be transacted at such meeting.
The stockholders present at a duly called or convened meeting, at which a quorum
is present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws, all
action taken by the holders of a majority of the vote cast, excluding
abstentions, at any meeting at which a quorum is present shall be valid and
binding upon the corporation; provided, however, that directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of directors. Where a
separate vote by a class or classes or series is required, except where
otherwise provided by the statute or by the Certificate of Incorporation or
these Bylaws, a majority of the outstanding shares of such class or classes or
series, present in person or represented by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter and, except
where otherwise provided by the statute or by the Certificate of Incorporation
or these Bylaws, the affirmative vote of the majority (plurality, in the case of
the election of directors) of the votes cast, including abstentions, by the
holders of shares of such class or classes or series shall be the act of such
class or classes or series.

SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes, excluding abstentions. When a meeting is adjourned to another
time or place, notice need not be given of

4.
<PAGE>

the adjourned meeting if the time and place thereof are announced at the meeting
at which the adjournment is taken. At the adjourned meeting, the corporation may
transact any business which might have been transacted at the original meeting.
If the adjournment is for more than thirty (30) days or if after the adjournment
a new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.

SECTION 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Delaware law.
An agent so appointed need not be a stockholder. No proxy shall be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period.

SECTION 11. JOINT OWNERS OF STOCK. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the General Corporation Law of Delaware, Section 217(b).
If the instrument filed with the Secretary shows that any such tenancy is held
in unequal interests, a majority or even-split for the purpose of subsection (c)
shall be a majority or even-split in interest.

SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time thereof
and may be inspected by any stockholder who is present.

SECTION 13. ACTION WITHOUT MEETING.

(A) Unless otherwise provided in the Certificate of Incorporation,
any action required by statute to be taken at any annual or special meeting of
the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a

5.
<PAGE>

meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.

(B) Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the earliest dated consent delivered to the corporation in the manner herein
required, written consents signed by a sufficient number of stockholders to take
action are delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.

(C) Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is
consented to is such as would have required the filing of a certificate under
any section of the General Corporation Law of the State of Delaware if such
action had been voted on by stockholders at a meeting thereof, then the
certificate filed under such section shall state, in lieu of any statement
required by such section concerning any vote of stockholders, that written
consent has been given in accordance with Section 228 of the General Corporation
Law of Delaware.

(D) Notwithstanding the foregoing, no such action by written consent
may be taken following the closing of the initial public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act"), covering the offer and sale of Common Stock of the corporation
(the "Initial Public Offering").

SECTION 14. ORGANIZATION.

(A) At every meeting of stockholders, the Chairman of the Board of
Directors, or, if a Chairman has not been appointed or is absent, the President,
or, if the President is absent, a chairman of the meeting chosen by a majority
in interest of the stockholders entitled to vote, present in person or by proxy,
shall act as chairman. The Secretary, or, in his absence, an Assistant
Secretary directed to do so by the President, shall act as secretary of the
meeting.

(B) The Board of Directors of the corporation shall be entitled to
make such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and

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constituted proxies and such other persons as the chairman shall permit,
restrictions on entry to the meeting after the time fixed for the commencement
thereof, limitations on the time allotted to questions or comments by
participants and regulation of the opening and closing of the polls for
balloting on matters which are to be voted on by ballot. Unless and to the
extent determined by the Board of Directors or the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with
rules of parliamentary procedure.

ARTICLE IV

DIRECTORS

SECTION 15. NUMBER AND TERM OF OFFICE. The authorized number of directors
of the corporation shall be fixed in accordance with the Certificate of
Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.

SECTION 16. POWERS. The powers of the corporation shall be exercised, its
business conducted and its property controlled by the Board of Directors, except
as may be otherwise provided by statute or by the Certificate of Incorporation.

Section 17. CLASSES OF DIRECTORS. Subject to the rights of the holders of
any series of Preferred Stock to elect additional directors under specified
circumstances, following the closing of the Initial Public Offering, the
directors shall be divided into three classes designated as Class I and Class
II. Directors shall be assigned to each class in accordance with a resolution or
resolutions adopted by the Board of Directors. At the first annual meeting of
stockholders following the closing of the Initial Public Offering, the term of
office of the Class I directors shall expire and Class I directors shall be
elected for a full term of two years. At the second annual meeting of
stockholders following the Closing of the Initial Public Offering, the term of
office of the Class II directors shall expire and Class II directors shall be
elected for a full term of two years. At each succeeding annual meeting of
stockholders, directors shall be elected for a full term of two years to succeed
the directors of the class whose terms expire at such annual meeting.

Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.

SECTION 18. VACANCIES. Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of

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the Board of Directors. Any director elected in accordance with the preceding
sentence shall hold office for the remainder of the full term of the director
for which the vacancy was created or occurred and until such director's
successor shall have been elected and qualified. A vacancy in the Board of
Directors shall be deemed to exist under this Bylaw in the case of the death,
removal or resignation of any director.

SECTION 19. RESIGNATION. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When one
or more directors shall resign from the Board of Directors, effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified.

SECTION 20. REMOVAL. Subject to the rights of the holders of any series
of Preferred Stock, the Board of Directors or any individual director may be
removed from office at any time (i) with cause by the affirmative vote of the
holders of a majority of the voting power of all the then-outstanding shares of
voting stock of the corporation entitled to vote at an election of directors
(the "Voting Stock") or (ii) without cause by the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all the then-outstanding shares of the Voting Stock.

SECTION 21. MEETINGS.

(A) ANNUAL MEETINGS. The annual meeting of the Board of Directors
shall be held immediately before or after the annual meeting of stockholders and
at the place where such meeting is held. No notice of an annual meeting of the
Board of Directors shall be necessary and such meeting shall be held for the
purpose of electing officers and transacting such other business as may lawfully
come before it.

(B) REGULAR MEETINGS. Except as hereinafter otherwise provided,
regular meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the State
of Delaware which has been designated by resolution of the Board of Directors or
the written consent of all directors.

(C) SPECIAL MEETINGS. Unless otherwise restricted by the Certificate
of Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
Chairman of the Board, the President or any two of the directors.

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(D) TELEPHONE MEETINGS. Any member of the Board of Directors, or of
any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.

(E) NOTICE OF MEETINGS. Notice of the time and place of all special
meetings of the Board of Directors shall be orally or in writing, by telephone,
including a voice messaging system or other system or technology designed to
record and communicate messages, facsimile, telegraph or telex, or by electronic
mail or other electronic means, during normal business hours, at least twenty-
four (24) hours before the date and time of the meeting, or sent in writing to
each director by first class mail, charges prepaid, at least three (3) days
before the date of the meeting. Notice of any meeting may be waived in writing
at any time before or after the meeting and will be waived by any director by
attendance thereat, except when the director attends the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened.

(F) WAIVER OF NOTICE. The transaction of all business at any meeting
of the Board of Directors, or any committee thereof, however called or noticed,
or wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or after
the meeting, each of the directors not present shall sign a written waiver of
notice. All such waivers shall be filed with the corporate records or made a
part of the minutes of the meeting.

SECTION 22. QUORUM AND VOTING.

(A) Unless the Certificate of Incorporation requires a greater number
and except with respect to indemnification questions arising under Section 43
hereof, for which a quorum shall be one-third of the exact number of directors
fixed from time to time in accordance with the Certificate of Incorporation, a
quorum of the Board of Directors shall consist of a majority of the exact number
of directors fixed from time to time by the Board of Directors in accordance
with the Certificate of Incorporation; provided, however, at any meeting whether
a quorum be present or otherwise, a majority of the directors present may
adjourn from time to time until the time fixed for the next regular meeting of
the Board of Directors, without notice other than by announcement at the
meeting.

(B) At each meeting of the Board of Directors at which a quorum is
present, all questions and business shall be determined by the affirmative vote
of a majority of the directors present, unless a different vote be required by
law, the Certificate of Incorporation or these Bylaws.

SECTION 23. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing,

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and such writing or writings are filed with the minutes of proceedings of the
Board of Directors or committee.

SECTION 24. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.

SECTION 25. COMMITTEES.

(A) EXECUTIVE COMMITTEE. The Board of Directors may appoint an
Executive Committee to consist of one (1) or more members of the Board of
Directors. The Executive Committee, to the extent permitted by law and provided
in the resolution of the Board of Directors shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by
Delaware the General Corporation Law to be submitted to stockholders for
approval, or (ii) adopting, amending or repealing any bylaw of the corporation.

(B) OTHER COMMITTEES. The Board of Directors may, from time to time,
appoint such other committees as may be permitted by law. Such other committees
appointed by the Board of Directors shall consist of one (1) or more members of
the Board of Directors and shall have such powers and perform such duties as may
be prescribed by the resolution or resolutions creating such committees, but in
no event shall any such committee have the powers denied to the Executive
Committee in these Bylaws.

(C) TERM. Each member of a committee of the Board of Directors shall
serve a term on the committee coexistent with such member's term on the Board of
Directors. The Board of Directors, subject to the provisions of subsections (a)
or (b) of this Bylaw may at any time increase or decrease the number of members
of a committee or terminate the existence of a committee. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of
Directors may at any time for any reason remove any individual committee member
and the Board of Directors may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.

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(D) MEETINGS. Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 25 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter. Special meetings of any such
committee may be held at any place which has been determined from time to time
by such committee, and may be called by any director who is a member of such
committee, upon written notice to the members of such committee of the time and
place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after the meeting and
will be waived by any director by attendance thereat, except when the director
attends such special meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. A majority of the authorized number of
members of any such committee shall constitute a quorum for the transaction of
business, and the act of a majority of those present at any meeting at which a
quorum is present shall be the act of such committee.

SECTION 26. ORGANIZATION. At every meeting of the directors, the Chairman
of the Board of Directors, or, if a Chairman has not been appointed or is
absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.

ARTICLE V

OFFICERS

SECTION 27. OFFICERS DESIGNATED. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the officers
of the corporation shall be fixed by or in the manner designated by the Board of
Directors.

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SECTION 28. TENURE AND DUTIES OF OFFICERS.

(A) GENERAL. All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors.

(B) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. If there is no President, then the Chairman
of the Board of Directors shall also serve as the Chief Executive Officer of the
corporation and shall have the powers and duties prescribed in paragraph (c) of
this Section 28.

(C) DUTIES OF PRESIDENT. The President shall preside at all meetings
of the stockholders and at all meetings of the Board of Directors, unless the
Chairman of the Board of Directors has been appointed and is present. Unless
some other officer has been elected Chief Executive Officer of the corporation,
the President shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business and officers of the corporation. The
President shall perform other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.

(D) DUTIES OF VICE PRESIDENTS. The Vice Presidents may assume and
perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.

(E) DUTIES OF SECRETARY. The Secretary shall attend all meetings of
the stockholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.

(F) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall keep or cause to be kept the books of account of the corporation in a
thorough and proper manner and shall render statements of the financial affairs
of the corporation in such form and as often as

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required by the Board of Directors or the President. The Chief Financial
Officer, subject to the order of the Board of Directors, shall have the custody
of all funds and securities of the corporation. The Chief Financial Officer
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time. The President may direct the
Treasurer or any Assistant Treasurer, or the Controller or any Assistant
Controller to assume and perform the duties of the Chief Financial Officer in
the absence or disability of the Chief Financial Officer, and each Treasurer and
Assistant Treasurer and each Controller and Assistant Controller shall perform
other duties commonly incident to his office and shall also perform such other
duties and have such other powers as the Board of Directors or the President
shall designate from time to time.

SECTION 29. DELEGATION OF AUTHORITY. The Board of Directors may from time
to time delegate the powers or duties of any officer to any other officer or
agent, notwithstanding any provision hereof.

SECTION 30. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.

SECTION 31. REMOVAL. Any officer may be removed from office at any time,
either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.

ARTICLE VI

EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE
CORPORATION

SECTION 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.

Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by

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the Chairman of the Board of Directors, or the President or any Vice President,
and by the Secretary or Treasurer or any Assistant Secretary or Assistant
Treasurer. All other instruments and documents requiring the corporate
signature, but not requiring the corporate seal, may be executed as aforesaid or
in such other manner as may be directed by the Board of Directors.

All checks and drafts drawn on banks or other depositaries on funds to the
credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.

Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.

SECTION 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President.

ARTICLE VII

SHARES OF STOCK

SECTION 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Any or all of the signatures on the certificate may be
facsimiles. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the powers,
designations, preferences, and rights, and the limitations or restrictions of
the shares authorized to be issued or shall, except as otherwise required by
law, set forth on the face or back a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional, or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Within a reasonable time after
the issuance or transfer of uncertificated stock, the corporation shall send to
the registered owner thereof a written notice containing the information
required to be set forth or stated on certificates pursuant to this section or
otherwise required by law or with respect to this section a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers,

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designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.

SECTION 35. LOST CERTIFICATES. A new certificate or certificates shall be
issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.

SECTION 36. TRANSFERS.

(A) Transfers of record of shares of stock of the corporation shall
be made only upon its books by the holders thereof, in person or by attorney
duly authorized, and upon the surrender of a properly endorsed certificate or
certificates for a like number of shares.

(B) The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the General Corporation Law of Delaware.

SECTION 37. FIXING RECORD DATES. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix, in
advance, a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty (60) nor less than ten (10) days
before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.

SECTION 38. REGISTERED STOCKHOLDERS. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Delaware.

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ARTICLE VIII

OTHER SECURITIES OF THE CORPORATION

SECTION 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 34), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature, or where permissible facsimile signature, of a trustee under an
indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.

ARTICLE IX

DIVIDENDS

SECTION 40. DECLARATION OF DIVIDENDS. Dividends upon the capital stock of
the corporation, subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors pursuant to law at any regular
or special meeting. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the Certificate of
Incorporation.

SECTION 41. DIVIDEND RESERVE. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.

16.
<PAGE>

ARTICLE X

FISCAL YEAR

SECTION 42. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.

ARTICLE XI

INDEMNIFICATION

SECTION 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER
OFFICERS, EMPLOYEES AND OTHER AGENTS.

(A) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall
indemnify its directors and executive officers (for the purposes of this Article
XI, "executive officers" shall have the meaning defined in Rule 3b-7 promulgated
under the 1934 Act) to the fullest extent not prohibited by the Delaware General
Corporation Law; provided, however, that the corporation may modify the extent
of such indemnification by individual contracts with its directors and executive
officers; and, provided, further, that the corporation shall not be required to
indemnify any director or executive officer in connection with any proceeding
(or part thereof) initiated by such person unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by the
Board of Directors of the corporation, (iii) such indemnification is provided by
the corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the Delaware General Corporation Law or (iv) such
indemnification is required to be made under subsection (d).

(B) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation
shall have power to indemnify its other officers, employees and other agents as
set forth in the Delaware General Corporation Law.

(C) EXPENSES. The corporation shall advance to any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or executive
officer, of the corporation, or is or was serving at the request of the
corporation as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Bylaw or otherwise.

Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (e) of this Bylaw, no advance shall be made by the corporation to an
executive officer of the corporation (except by reason of the fact that such
executive officer is or was a director of the corporation in which event this
paragraph shall not apply) in any action, suit or proceeding,

17.
<PAGE>

whether civil, criminal, administrative or investigative, if a determination is
reasonably and promptly made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to the proceeding, or (ii)
if such quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, that the facts known to the decision-making party at the time such
determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.

(D) ENFORCEMENT. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and executive
officers under this Bylaw shall be deemed to be contractual rights and be
effective to the same extent and as if provided for in a contract between the
corporation and the director or executive officer. Any right to indemnification
or advances granted by this Bylaw to a director or executive officer shall be
enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct that make it permissible under the
Delaware General Corporation Law for the corporation to indemnify the claimant
for the amount claimed. In connection with any claim by an executive officer of
the corporation (except in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
executive officer is or was a director of the corporation) for advances, the
corporation shall be entitled to raise a defense as to any such action clear and
convincing evidence that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation, or with respect to any criminal action or proceeding that such
person acted without reasonable cause to believe that his conduct was lawful.
Neither the failure of the corporation (including its Board of Directors,
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the corporation (including its Board of Directors, independent
legal counsel or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that claimant has not met the applicable standard of conduct.

(E) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this Bylaw shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Delaware General Corporation Law.

18.
<PAGE>

(F) SURVIVAL OF RIGHTS. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.

(G) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.

(H) AMENDMENTS. Any repeal or modification of this Bylaw shall only
be prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.

(I) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.

(J) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:

(1) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation, prosecution,
defense, settlement, arbitration and appeal of, and the giving of testimony in,
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative.

(2) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness fees, fines,
amounts paid in settlement or judgment and any other costs and expenses of any
nature or kind incurred in connection with any proceeding.

(3) The term the "corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Bylaw with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.

(4) References to a "director," "executive officer," "officer,"
"employee," or "agent" of the corporation shall include, without limitation,
situations where such person is serving at the request of the corporation as,
respectively, a director, executive officer,

19.
<PAGE>

officer, employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.

(5) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Bylaw.

ARTICLE XII

NOTICES

SECTION 44. NOTICES.

(A) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of these
Bylaws, notice is required to be given to any stockholder, it shall be given in
writing, timely and duly deposited in the United States mail, postage prepaid,
and addressed to his last known post office address as shown by the stock record
of the corporation or its transfer agent.

(B) NOTICE TO DIRECTORS. Any notice required to be given to any
director may be given by the method stated in subsection (a), or by facsimile,
telex or telegram, except that such notice other than one which is delivered
personally shall be sent to such address as such director shall have filed in
writing with the Secretary, or, in the absence of such filing, to the last known
post office address of such director.

(C) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall in the absence of fraud, be prima
facie evidence of the facts therein contained.

(D) TIME NOTICES DEEMED GIVEN. All notices given by mail, as above
provided, shall be deemed to have been given as at the time of mailing, and all
notices given by facsimile, telex or telegram shall be deemed to have been given
as of the sending time recorded at time of transmission.

(E) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.

20.
<PAGE>

(F) FAILURE TO RECEIVE NOTICE. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such director to receive such
notice.

(G) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL. Whenever
notice is required to be given, under any provision of law or of the Certificate
of Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate shall state, if such is the
fact and if notice is required, that notice was given to all persons entitled to
receive notice except such persons with whom communication is unlawful.

(H) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever notice is
required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate need not
state that notice was not given to persons to whom notice was not required to be
given pursuant to this paragraph.

ARTICLE XIII

AMENDMENTS

SECTION 45. AMENDMENTS. Subject to paragraph (h) of Section 43 of the
Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then-outstanding shares of the Voting Stock. The
Board of Directors shall also have the power to adopt, amend, or repeal Bylaws.

21.
<PAGE>

ARTICLE XIII

RIGHT OF FIRST REFUSAL

SECTION 46. RIGHT OF FIRST REFUSAL. No stockholder shall sell, assign,
pledge, or in any manner transfer any of the shares of stock of the corporation
or any right or interest therein, whether voluntarily or by operation of law, or
by gift or otherwise, except by a transfer which meets the requirements
hereinafter set forth in this bylaw:

(A) If the stockholder desires to sell or otherwise transfer any of
his shares of stock, then the stockholder shall first give written notice
thereof to the corporation. The notice shall name the proposed transferee and
state the number of shares to be transferred, the proposed consideration, and
all other terms and conditions of the proposed transfer.

(B) For thirty (30) days following receipt of such notice, the
corporation shall have the option to purchase all (but not less than all) of the
shares specified in the notice at the price and upon the terms set forth in such
notice; provided, however, that, with the consent of the stockholder, the
corporation shall have the option to purchase a lesser portion of the shares
specified in said notice at the price and upon the terms set forth therein. In
the event of a gift, property settlement or other transfer in which the proposed
transferee is not paying the full price for the shares, and that is not
otherwise exempted from the provisions of this Section 46, the price shall be
deemed to be the fair market value of the stock at such time as determined in
good faith by the Board of Directors. In the event the corporation elects to
purchase all of the shares or, with consent of the stockholder, a lesser portion
of the shares, it shall give written notice to the transferring stockholder of
its election and settlement for said shares shall be made as provided below in
paragraph (d).

(D) In the event the corporation and/or its assignee(s) elect to
acquire any of the shares of the transferring stockholder as specified in said
transferring stockholder's notice, the Secretary of the corporation shall so
notify the transferring stockholder and settlement thereof shall be made in cash
within thirty (30) days after the Secretary of the corporation receives said
transferring stockholder's notice; provided that if the terms of payment set
forth in said transferring stockholder's notice were other than cash against
delivery, the corporation and/or its assignee(s) shall pay for said shares on
the same terms and conditions set forth in said transferring stockholder's
notice.

(E) In the event the corporation and/or its assignees(s) do not elect
to acquire all of the shares specified in the transferring stockholder's notice,
said transferring stockholder may, within the sixty-day period following the
expiration of the option rights granted to the corporation and/or its
assignees(s) herein, transfer the shares specified in said transferring
stockholder's notice which were not acquired by the corporation and/or its
assignees(s) as specified in said transferring stockholder's notice. All shares
so sold by said transferring stockholder shall continue to be subject to the
provisions of this bylaw in the same manner as before said transfer.

22.
<PAGE>

(F) Anything to the contrary contained herein notwithstanding, the
following transactions shall be exempt from the provisions of this bylaw:

(1) A stockholder's transfer of any or all shares held either
during such stockholder's lifetime or on death by will or intestacy to such
stockholder's immediate family or to any custodian or trustee for the account of
such stockholder or such stockholder's immediate family or to any limited
partnership of which the shareholder, members of such shareholder's immediate
family or any trust for the account of such shareholder or such shareholder's
immediate family will be the general of limited partner(s) of such partnership.
"Immediate family" as used herein shall mean spouse, lineal descendant, father,
mother, brother, or sister of the stockholder making such transfer.

(2) A stockholder's bona fide pledge or mortgage of any shares
with a commercial lending institution, provided that any subsequent transfer of
said shares by said institution shall be conducted in the manner set forth in
this bylaw.

(3) A stockholder's transfer of any or all of such stockholder's
shares to the corporation or to any other stockholder of the corporation.

(4) A stockholder's transfer of any or all of such stockholder's
shares to a person who, at the time of such transfer, is an officer or director
of the corporation.

(5) A corporate stockholder's transfer of any or all of its
shares pursuant to and in accordance with the terms of any merger,
consolidation, reclassification of shares or capital reorganization of the
corporate stockholder, or pursuant to a sale of all or substantially all of the
stock or assets of a corporate stockholder.

(6) A corporate stockholder's transfer of any or all of its
shares to any or all of its stockholders.

(7) A transfer by a stockholder which is a limited or general
partnership to any or all of its partners or former partners.

In any such case, the transferee, assignee, or other recipient shall receive and
hold such stock subject to the provisions of this bylaw, and there shall be no
further transfer of such stock except in accord with this bylaw.

(G) The provisions of this bylaw may be waived with respect to any
transfer either by the corporation, upon duly authorized action of its Board of
Directors, or by the stockholders, upon the express written consent of the
owners of a majority of the voting power of the corporation (excluding the votes
represented by those shares to be transferred by the transferring stockholder).
This bylaw may be amended or repealed either by a duly authorized action of the
Board of Directors or by the stockholders, upon the express written consent of
the owners of a majority of the voting power of the corporation.

23.
<PAGE>

(H) Any sale or transfer, or purported sale or transfer, of
securities of the corporation shall be null and void unless the terms,
conditions, and provisions of this bylaw are strictly observed and followed.

(I) The foregoing right of first refusal shall terminate on either of
the following dates, whichever shall first occur:

(1) On February 16, 2008; or

(2) Upon the date securities of the corporation are first
offered to the public pursuant to a registration statement filed with, and
declared effective by, the United States Securities and Exchange Commission
under the Securities Act of 1933, as amended.

(J) The certificates representing shares of stock of the corporation
shall bear on their face the following legend so long as the foregoing right of
first refusal remains in effect:

"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION
AND/OR ITS ASSIGNEE(S), AS PROVIDED IN THE BYLAWS OF THE
CORPORATION."

ARTICLE XIV

LOANS TO OFFICERS

SECTION 47. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in these Bylaws shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.

24.

<PAGE>

EXHIBIT 4.2

===============================================================================
COMMON STOCK [LOGO OF NVIDIA] COMMON STOCK

NUMBER SHARES
NVDA
NVIDIA

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

SEE REVERSE FOR
CERTAIN DEFINITIONS
AND A STATEMENT AS TO
THE RIGHTS, PREFERENCES
AND PRIVILEGES OF SHARES

CUSIP 67066G 10 4

THIS CERTIFIES THAT

IS THE OWNER OF

FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK,
PAR VALUE OF $0.001 PER SHARE, OF

NVIDIA CORPORATION

transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.

Dated:

/s/ Geoffrey Ribar [NVIDIA CORPORATE SEAL] /s/ Jen Hsun Huang

SECRETARY AND PRESIDENT AND
CHIEF FINANCIAL OFFICER CHIEF EXECUTIVE OFFICER

COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE

================================================================================
AMERICAN BANK NOTE COMPANY
<PAGE>

NVIDIA CORPORATION

A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights as established, from time to time, by the Certificate of
Incorporation of the Corporation and by any certificate of designation, and the
number of shares constituting each class and series and the designations
thereof, may be obtained by the holder hereof upon request and without charge
from the Corporation at its principal office.

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common UNIF GIFT MIN ACT-.........Custodian.........
TEN ENT - as tenants by the (Cust) (Minor)
entireties under Uniform Gifts to
JP TEN - as joint tenants with Minors Act..................
right of survivorship (State)
and not as tenants in UNIF TRF MIN ACT- .....Custodian (until age..)
common (Cust)
......under Uniform Transfer
(Minor)
to Minors Act...............
(State)

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, _____________________________ hereby sell, assign and
transfer unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

_____________________________

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE

________________________________________________________________________________

_________________________________________________________________________ Shares
of the common stock represented by the within Certificate,
and do hereby irrevocably constitute and appoint

________________________________________________________________________Attorney
to transfer the said stock on the books of the within named
Corporation with full power of substitution in the premises.

Dated ____________________________

__________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed

By_________________________________
THE SIGNATURE(S) MUST BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE MEDALLION GUARANTEE PROGRAM,
PURSUANT TO S.E.C. RULE 17Ad-15.

<PAGE>

EXHIBIT 10.2

NVIDIA CORPORATION
1998 EQUITY INCENTIVE PLAN

ADOPTED FEBRUARY 17, 1998
AMENDED MARCH 17, 1998
APPROVED BY SHAREHOLDERS _______________, 1998
TERMINATION DATE: FEBRUARY 16, 2008

1. PURPOSES.

(A) The Plan is an amendment and restatement of the Company's existing
Equity Incentive Plan adopted May 21, 1993 (the "Prior Plan"). The Prior Plan
hereby is amended and restated in its entirety as the 1998 Equity Incentive Plan
and shall become effective on the date of approval of the Plan by the Board (the
"Effective Date"). No options shall be granted under the Prior Plan from and
after the Effective Date. The terms of the Prior Plan (other than the aggregate
number of shares issuable thereunder) shall remain in effect and apply to all
options granted pursuant to the Prior Plan.

(B) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to benefit from increases in value of the stock of
the Company through the granting of (i) Incentive Stock Options, (ii)
Nonstatutory Stock Options, (iii) stock bonuses, and (iv) rights to purchase
restricted stock.

(C) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.

(D) The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and in such form as issued pursuant to Section 6,
and a separate certificate or certificates will be issued for shares purchased
on exercise of each type of Option.

2. DEFINITIONS.

(A) Affiliate means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.

(B) Board means the Board of Directors of the Company.

(D) Common Stock means the common stock of the Company.

1.
<PAGE>

(E) Committee means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.

(F) Company means NVIDIA Corporation.

(G) Consultant means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors. The term "Consultant" shall include
members of the Board of Directors of an Affiliate.

(H) Continuous Service means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant or a Director of an Affiliate will not
constitute an interruption of Continuous Service as an Employee. The Board or
the chief executive officer of the Company, in that party's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of: (i) any leave of absence approved by the Board or the chief executive
officer of the Company, including sick leave, military leave, or any other
personal leave; or (ii) transfers between the Company, its Affiliates or their
successors.

(I) Covered Employee means the Chief Executive Officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to shareholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.

(J) Director means a member of the Board.

(K) Employee means any person, including an Officer or Director, employed
by the Company or any Affiliate. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.

(L) Exchange Act means the Securities Exchange Act of 1934, as amended.

(M) Fair Market Value means, as of any date, the value of the Common Stock
determined as follows:

(I) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such system or exchange (or the exchange with the greatest volume of
trading in Common Stock) on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;

2.
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(II) If the Common Stock is quoted on the Nasdaq Small-Cap Market or
is regularly quoted by a recognized securities dealer but selling prices are not
reported, the Fair Market Value of a share of Common Stock shall be the mean
between the bid and asked prices for the Common Stock on the last market trading
day prior to the day of determination, as reported in the Wall Street Journal or
such other source as the Board deems reliable;

(III) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the Board.

(IV) Prior to the Listing Date, the value of the Common Stock shall
be determined in a manner consistent with Section 260.140.50 of Title 10 of the
California Code of Regulations.

(N) Listing Date means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968.

(O) Incentive Stock Option means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

(P) Non-Employee Director means a Director of the Company who either (i)
is not a current Employee or Officer of the Company or its parent or a
subsidiary, does not receive compensation (directly or indirectly) from the
Company or its parent or subsidiary for services rendered as a consultant or in
any capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act Regulation S-K)), does not possess an interest in
any other transaction as to which disclosure would be required under Item 404(a)
of Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.

(Q) Nonstatutory Stock Option means an Option not intended to qualify as
an Incentive Stock Option.

(R) Officer means (i) before the Listing Date, any person designated by
the Company as an officer and (ii) on and after the Listing Date, a person who
is an officer of the Company within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder.

(S) Option means a stock option granted pursuant to the Plan.

(T) Option Agreement means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. Each
Option Agreement shall be subject to the terms and conditions of the Plan.

3.
<PAGE>

(U) Optionee means an Employee, Director or Consultant who holds an
outstanding Option.

(V) Outside Director means a Director of the Company who either (i) is not
a current employee of the Company or an "affiliated corporation" (within the
meaning of Treasury regulations promulgated under Section 162(m) of the Code),
is not a former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

(W) Plan means this NVIDIA Corporation 1998 Equity Incentive Plan.

(X) Rule 16b-3 means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.

(Y) Stock Award means any right granted under the Plan, including any
Option, any stock bonus, and any right to purchase restricted stock.

(Z) Stock Award Agreement means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

(AA) Ten Percent Shareholder means a person who owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates.

3. ADMINISTRATION.

(A) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).

(B) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:

(I) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock,
or a combination of the foregoing; the provisions of each Stock Award granted
(which need not be identical), including the time or times when a person shall
be permitted to receive stock pursuant to a Stock Award; and the number of
shares with respect to which a Stock Award shall be granted to each such person.

(II) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any

4.
<PAGE>

Stock Award Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.

(III) To amend the Plan or a Stock Award as provided in Section 13.

(IV) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

(C) The Board may delegate administration of the Plan to a Committee or
Committees of one or more members of the Board, and the term "Committee" shall
apply to any person or persons to whom such authority has been delegated. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan. In the discretion of the Board, a Committee may consist solely of two
or more Outside Directors, in accordance with Code Section 162(m), or solely of
two or more Non-Employee Directors, in accordance with Rule 16b-3. Within the
scope of such authority, the Board or the Committee may (1) delegate to a
committee of one or more members of the Board who are not Outside Directors the
authority to grant Stock Awards to eligible persons who are either (a) not then
Covered Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award, or (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code,
and/or (2) delegate to a committee of one or more members of the Board who are
not Non-Employee Directors the authority to grant Stock Awards to eligible
persons who are not then subject to Section 16 of the Exchange Act.

4. SHARES SUBJECT TO THE PLAN.

(A) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate fifteen million (15,000,000) shares of the Company's
Common Stock. Notwithstanding the foregoing, on each January 1, commencing with
January 1, 1999, if the aggregate number of shares of Common Stock that equals
five percent (5%) of the Company's outstanding Common Stock is greater than the
aggregate number of shares of Common Stock that may be issued pursuant to Stock
Awards, then the aggregate number of shares of Common Stock that may be issued
pursuant to Stock Awards under the Plan shall automatically be increased to that
number of shares of Common Stock that is equal to five percent (5%) of the
Company's outstanding shares of Common Stock on that date. If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the stock not acquired under such Stock Award
shall revert to and again become available for issuance under the Plan.

5.
<PAGE>

(B) Except as adjusted pursuant to Section 12 of the Plan, however, no
more than fifteen million (15,000,000) of the shares eligible for issuance under
the Plan shall be issued upon the exercise of Incentive Stock Options under the
Plan.

(D) Prior to the Listing Date, at no time shall the total number of shares
issuable upon exercise of all outstanding Options and the total number of shares
provided for under any stock bonus or similar plan of the Company exceed the
applicable percentage as calculated in accordance with the conditions and
exclusions of Section 260.140.45 of Title 10 of the California Code of
Regulations, based on the shares of the Company which are outstanding at the
time the calculation is made.

5. ELIGIBILITY.

(A) Incentive Stock Options may be granted only to Employees. Stock Awards
other than Incentive Stock Options may be granted only to Employees, Directors
or Consultants.

(B) No person shall be eligible for the grant of an Option or an award of
purchase of restricted stock if, at the time of grant, such person owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or of any of its Affiliates unless the exercise price of such Option
is at least one hundred ten percent (110%) of the Fair Market Value of such
stock at the date of grant, the exercise price of such restricted stock award is
at least one hundred percent (100%) of the Fair Market Value of such stock at
the date of grant and the Stock Award is not exercisable after the expiration of
five years from the date of grant. After the Listing Date, this provision shall
apply only to Incentive Stock Options.

(C) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, no employee shall be eligible to be granted Options covering
more than one million (1,000,000) shares of the Common Stock during any calendar
year. This subsection shall not apply prior to the Listing Date and, following
the Listing Date, this subsection shall not apply until (i) the earliest of: (A)
the first material modification of the Plan (including any increase to the
number of shares reserved for issuance under the Plan in accordance with Section
4); (B) the issuance of all of the shares of Common Stock reserved for issuance
under the Plan; (C) the expiration of the Plan; or (D) the first meeting of
shareholders at which Directors of the Company are to be elected that occurs
after the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security under Section 12 of the
Exchange Act; or (ii) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder.

6.
<PAGE>

6. OPTION PROVISIONS.

Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

(A) TERM. No Option shall be exercisable after the expiration of ten years
from the date it was granted.

(B) PRICE. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the fair market value of the stock
subject to the Option on the date the Option is granted. The exercise price of
each Nonstatutory Stock Option shall be not less than eighty five percent (85%)
of the Fair Market Value of the stock subject to the Option on the date the
Option is granted.

(C) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (a) by delivery to the Company of other Common Stock, (b) according to a
deferred payment or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other Common Stock) with the person to
whom the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may be
acceptable to the Board; provided, however, that at any time that the Company is
incorporated in Delaware, then payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment. In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

(D) TRANSFERABILITY. An Incentive Stock Option and, prior to the Listing
Date, a Nonstatutory Stock Option shall not be transferable except by will or by
the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the Incentive Stock Option is granted only by
such person. After the Listing Date, a Nonstatutory Stock Option shall be
transferable to the extent provided in the Option Agreement. If the Nonstatutory
Stock Option does not provide for transferability, then the Nonstatutory Stock
Option shall not be transferable except by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the person to whom
the Option is granted only by such person. Notwithstanding the foregoing
provisions of subsection 6(f), the person to whom the Option is granted may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionee, shall
thereafter be entitled to exercise the Option.

(E) VESTING. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the

7.
<PAGE>

Option may become exercisable ("vest") with respect to some or all of the shares
allotted to that period, and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which the Option
became vested but was not fully exercised. The Option may be subject to such
other terms and conditions on the time or times when it may be exercised which
may be based upon performance or other criteria as the Board may deem
appropriate. The provisions of this subsection 6(e) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.

(F) MINIMUM VESTING PRIOR TO THE LISTING DATE. Notwithstanding the
foregoing subsection, Options granted prior to the Listing Date shall provide
for vesting of the total number of shares at a rate of at least twenty percent
(20%) per year over five (5) years from the date the Option was granted, subject
to reasonable conditions such as continued employment. However, in the case of
such Options granted to officers, directors or consultants (within the meaning
of Section 260.140.41 of Title 10 of the California Code of Regulations), the
Option may become fully exercisable, subject to reasonable conditions such as
continued employment, at any time or during any period established by the
Company; for example, the vesting provision of the Option may provide for
vesting of less than twenty percent (20%) per year of the total number of shares
subject to the Option.

(G) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionee's
Continuous Service terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination) but only within
such period of time ending on the earlier of (i) the date three (3) months after
the termination of the Optionee's Continuous Service (or such longer or shorter
period specified in the Option Agreement, which, for Options granted prior to
the Listing Date, shall not be less than thirty (30) days unless such
termination is for cause), or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, after termination, the Optionee does not
exercise his or her Option within the time specified in the Option Agreement,
the Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.

(H) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Service
terminates as a result of the Optionee's disability, the Optionee may exercise
his or her Option, (to the extent such Optionee was entitled to exercise it at
the date of termination) but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination (or such
longer or shorter period specified in the Option Agreement, which, for Options
granted prior to the Listing Date, shall not be less than six (6) months) or
(ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.

(I) DEATH OF OPTIONEE. In the event of the death of an Optionee during, or
within a period specified in the Option after the termination of, the Optionee's
Continuous Status as an Employee, Director, or Consultant, the Option may be
exercised (to the extent the Optionee was

8.
<PAGE>

entitled to exercise the Option at the date of death) by the Optionee's estate,
by a person who acquired the right to exercise the Option by bequest or
inheritance or by a person designated to exercise the option upon the Optionee's
death pursuant to subsection 6(d), but only within the period ending on the
earlier of (i) the date eighteen (18) months following the date of death (or
such longer or shorter period specified in the Option Agreement, which, for
Options granted prior to the Listing Date, shall not be less than six (6)
months), or (ii) the expiration of the term of such Option as set forth in the
Option Agreement. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.

(J) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time before the Optionee's Continuous
Service terminates to exercise the Option as to any part or all of the shares
subject to the Option prior to the full vesting of the Option. Subject to the
repurchase option limitations specified in subsection 11(h), any unvested shares
so purchased may be subject to a repurchase right in favor of the Company or to
any other restriction the Board determines to be appropriate.

(K) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder, the Board
or Committee shall have the authority (but not an obligation) to include as part
of any Option Agreement a provision entitling the Optionee to a further Option
(a "Re-Load Option") in the event the Optionee exercises the Option evidenced by
the Option agreement, in whole or in part, by surrendering other shares of
Common Stock in accordance with this Plan and the terms and conditions of the
Option Agreement. Any such Re-Load Option (i) shall be for a number of shares
equal to the number of shares surrendered as part or all of the exercise price
of such Option; (ii) shall have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-Load
Option; and (iii) shall have an exercise price which is equal to one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the Re-
Load Option on the date of exercise of the original Option or, in the case of a
Re-Load Option which is an Incentive Stock Option and which is granted to a ten
percent (10%) shareholder (as described in subsection 5(c)), shall have an
exercise price which is equal to one hundred ten percent (110%) of the Fair
Market Value of the stock subject to the Re-Load Option on the date of exercise
of the original Option.

Any such Re-Load Option may be an Incentive Stock Option or a Nonstatutory
Stock Option, as the Board or Committee may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollars ($100,000) annual limitation on exercisability of Incentive Stock
Options described in subsection 11(d) of the Plan and in Section 422(d) of the
Code. There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load
Option shall be subject to the availability of sufficient shares under
subsection 4(a) and shall be subject to such other terms and conditions as the
Board or Committee may determine.

9.
<PAGE>

7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate. The terms and conditions of stock bonus or restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate agreements need not be identical, but each stock bonus or
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions as appropriate:

(A) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement but in no event shall the purchase
price be less than eighty five percent (85%) of the stock's Fair Market Value on
the date such award is made. Notwithstanding the foregoing, the Board or the
Committee may determine that eligible participants in the Plan may be awarded
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company or for its benefit. For grants prior to the
Listing Date, the purchase price under each restricted stock purchase agreement
shall not be less than eighty-five percent (85%) of the stock's Fair Market
Value on the date such award is made or at the time the purchase is consummated.

(B) TRANSFERABILITY. Rights to purchase shares under a stock bonus or
restricted stock purchase agreement granted prior to the Listing Date shall not
be transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Stock Award
is granted only by such person. Rights to purchase shares under a stock bonus or
restricted stock purchase agreement granted on or after the Listing Date shall
be transferable by the grantee only upon such terms and conditions as are set
forth in the applicable Stock Award Agreement, as the Board shall determine in
its discretion, so long as stock awarded under such Stock Award Agreement
remains subject to the terms of the agreement.

(C) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment or other arrangement with the person to whom the stock is sold;
or (iii) in any other form of legal consideration that may be acceptable to the
Board or the Committee in their discretion. Notwithstanding the foregoing, the
Board or the Committee to which administration of the Plan has been delegated
may award stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company or for its benefit.

(D) VESTING. Subject to the repurchase option limitations specified in
subsection 11(h), shares of stock sold or awarded under the Plan may, but need
not, be subject to a repurchase option in favor of the Company in accordance
with a vesting schedule to be determined by the Board or the Committee.

(E) TERMINATION OF CONTINUOUS SERVICE. Subject to the repurchase option
limitations specified in subsection 11(h), in the event a Participant's
Continuous Service

10.
<PAGE>

terminates, the Company may repurchase or otherwise reacquire any or all of the
shares of stock held by that person which have not vested as of the date of
termination under the terms of the stock bonus or restricted stock purchase
agreement between the Company and such person.

8. CANCELLATION AND RE-GRANT OF OPTIONS.

The Board or the Committee shall have the authority to effect, at any time
and from time to time, (i) the repricing of any outstanding Options, and (ii)
with the consent of the affected holders of Options, the cancellation of any
outstanding Options under the Plan and the grant in substitution therefor of new
Options under the Plan covering the same or different numbers of shares of
stock, but having an exercise price per share not less than eighty five percent
(85%) of the Fair Market Value (one hundred percent (100%) of the Fair Market
Value in the case of an Incentive Stock Option or, in the case of an Incentive
Stock Option granted to a ten percent (10%) shareholder (as described in
subsection 5(c)), not less than one hundred ten percent (110%) of the Fair
Market Value) per share of stock on the new grant date.

9. COVENANTS OF THE COMPANY.

(A) During the terms of the Stock Awards, the Company shall keep available
at all times the number of shares of stock required to satisfy such Stock
Awards.

(B) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such Stock Awards
unless and until such authority is obtained.

10. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.

11. MISCELLANEOUS.

(A) The Board shall have the power to accelerate the time at which a Stock
Award may first be exercised or the time during which a Stock Award or any part
thereof will vest in accordance with the Plan, notwithstanding the provisions in
the Stock Award stating the time at which it may first be exercised or the time
during which it will vest.

(B) Neither an Employee, Director or Consultant nor any person to whom a
Stock Award is transferred under subsection 6(d) or 7(b) shall be deemed to be
the holder of, or to have any of the rights of a holder with respect to, any
shares subject to such Stock Award unless and until such person has satisfied
all requirements for exercise of the Stock Award pursuant to its terms.

11.
<PAGE>

(C) Prior to the Listing Date, as required by Section 260.140.46 of Title
10 of the California Code of Regulations, the Company shall deliver financial
statements to Participants at least annually. This subsection shall not apply to
key Employees whose duties in connection with the Company assure them access to
equivalent information.

(D) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Employee, Director, Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or any
Affiliate (or to continue acting as a Director or Consultant) or shall affect
the right of the Company or any Affiliate to terminate the employment or
relationship as a Director or Consultant of any Employee, Director, Consultant
or other holder of Stock Awards with or without cause.

(E) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.

(F) The Company may require any person to whom a Stock Award is granted,
or any person to whom a Stock Award is transferred pursuant to subsection 6(d)
or 7(b), as a condition of exercising or acquiring stock under any Stock Award,
(i) to give written assurances satisfactory to the Company as to such person's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Stock Award for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (1) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(2) as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.

(G) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the Common Stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(3) delivering to the Company owned and unencumbered shares of Common Stock.

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(H) The terms of any repurchase option shall be specified in the Stock
Award and may be either at fair market value or at not less than the original
purchase price. As required by Section 260.140.41 and Section 260.140.42 of
Title 10 of the California Code of Regulations, any repurchase option in a Stock
Award granted prior to the Listing Date and held by a person other than an
Officer, Director or Consultant shall be upon the terms described below :

(I) If repurchase option gives the Company the right to repurchase
the shares upon termination of employment at not less than the fair market value
of the shares to be purchased on the date of termination of employment, then (1)
the right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares within ninety (90) days of termination of
employment (or in the case of shares issued upon exercise of Stock Awards after
the date of termination, within ninety (90) days after the date of the exercise)
or such longer period as may be agreed to by the Company and the Participant
(for example, for purposes of satisfying the requirements of Section 1202(c)(3)
of the Code regarding "qualified small business stock"), and (2) the right
terminates when the shares become publicly traded.

(II) If repurchase option gives the Company the right to repurchase
the shares upon termination of employment at the original purchase price, then
(1) the right to repurchase at the original purchase price shall lapse at the
rate of at least twenty percent (20%) of the shares per year over five (5) years
from the date the Stock Award is granted (without respect to the date the Stock
Award was exercised or became exercisable) and (2) the right to repurchase shall
be exercised for cash or cancellation of purchase money indebtedness for the
shares within ninety (90) days of termination of employment (or in the case of
shares issued upon exercise of Options after the date of termination, within
ninety (90) days after the date of the exercise) or such longer period as may be
agreed to by the Company and the Participant (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the Code regarding
"qualified small business stock").

12. ADJUSTMENTS UPON CHANGES IN STOCK.

(A) If any change is made in the stock subject to the Plan, or subject to
any Stock Award (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan will be appropriately adjusted in
the class(es) and maximum number of shares subject to the Plan pursuant to
subsection 4(a) and the outstanding Stock Awards will be appropriately adjusted
in class(es) and number of shares and price per share of stock subject to such
outstanding Stock Awards.

(B) In the event of a dissolution or liquidation of the Company, then,
upon advance written notice by the Company of at least ten (10) business days to
the holders of any Stock Awards outstanding under the Plan, such Stock Awards
shall be terminated if not exercised (if applicable) prior to such event.

(C) In the event of (1) a sale of substantially all of the assets of the
Company, (2) a merger or consolidation in which the Company is not the surviving
corporation or (3) a reverse merger in which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other

13.
<PAGE>

property, whether in the form of securities, cash or otherwise, then any
surviving corporation or acquiring corporation shall assume any Stock Awards
outstanding under the Plan or shall substitute similar stock awards (including
an award to acquire the same consideration paid to the shareholders in the
transaction described in this subsection for those outstanding under the Plan.
In the event any surviving corporation or acquiring corporation refuses to
assume such Stock Awards or to substitute similar stock awards for those
outstanding under the Plan, then with respect to Stock Awards held by persons
whose Continuous Service has not terminated, the vesting of such Stock Awards
(and, if applicable, the time during which such Stock Awards may be exercised)
shall be accelerated upon prior written notice by the Company to the holders of
such Stock Awards at least five (5) business days prior to such event and the
Stock Awards shall terminate if not exercised (if applicable) at or prior to
such event. With respect to any other Stock Awards outstanding under the Plan,
upon advance written notice by the Company of at least five (5) business days to
the holders of such Stock Awards, such Stock Awards shall terminate if not
exercised (if applicable) prior to such event.

13. AMENDMENT OF THE PLAN AND STOCK AWARDS.

(A) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders of
the Company to the extent shareholder approval is necessary to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities
exchange listing requirements.

(B) The Board may in its sole discretion submit any other amendment to the
Plan for shareholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.

(C) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible Employees,
Directors or Consultants with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.

(D) Rights and obligations under any Stock Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.

(E) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however that the rights and obligations
under any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.

14.
<PAGE>

14. TERMINATION OR SUSPENSION OF THE PLAN.

(A) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate at the close of business on February 16,
2008, which shall be within ten (10) years from the date the Plan is adopted by
the Board or approved by the shareholders of the Company, whichever is sooner.
Notwithstanding the foregoing, all Incentive Stock Options shall be granted, if
at all, no later than the last day preceding the tenth (10th) anniversary of the
earlier of (i) the date on which the latest increase in the maximum number of
shares issuable under the Plan was approved by the shareholders of the Company
or (ii) the date such amendment was adopted by the Board. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.

(B) Rights and obligations under any Stock Award granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Stock Award was granted.

15. EFFECTIVE DATE OF PLAN.

The Plan shall become effective on the date adopted by the Board, but no
Options or rights to purchase restricted stock shall be exercised, and no stock
bonuses shall be granted under the Plan, unless and until the Plan has been
approved by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted by the Board.

15.

<PAGE>

EXHIBIT 10.7

NVIDIA CORPORATION
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

ADOPTED FEBRUARY 17, 1998
AMENDED MARCH 17, 1998
APPROVED BY SHAREHOLDERS _________________, 1998
TERMINATION DATE: FEBRUARY 16, 2008

1. PURPOSE.

(a) The purpose of the 1998 Non-Employee Directors' Stock Option Plan
(the "Plan") is to provide a means by which each director of NVIDIA
Corporation (the "Company") who is not otherwise at the time of grant an
employee of or consultant to the Company or of any Affiliate of the Company
(each such person being hereafter referred to as a "Non-Employee Director")
will be given an opportunity to purchase stock of the Company.

(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are
defined in Sections 424(e) and (f), respectively, of the Internal Revenue
Code of 1986, as amended from time to time (the "Code").

(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the
success of the Company.

2. ADMINISTRATION.

(a) The Board of Directors of the Company (the "Board") shall
administer the Plan unless and until the Board delegates administration to
a committee, as provided in subparagraph 2(b).

(b) The Board may delegate administration of the Plan to a committee
composed of two (2) or more members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time
to time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan.

3. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of paragraph 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options
granted under the Plan shall not exceed in the aggregate Three Hundred
Thousand (300,000) shares of the Company's common stock. If any option
granted under the Plan shall for any reason expire or otherwise

1.
<PAGE>

terminate without having been exercised in full, the stock not purchased
under such option shall again become available for the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

4. ELIGIBILITY.

Options shall be granted only to Non-Employee Directors of the Company.

5. NON-DISCRETIONARY GRANTS.

(a) After the effective date of the initial public offering of the
Company's common stock (the "IPO Date"), each person who is elected or
appointed for the first time to be a Non-Employee Director automatically
shall, upon the date of his or her initial election or appointment to be a
Non-Employee Director by the Board or shareholders of the Company, be
granted an option to purchase Fifty Thousand (50,000) shares of common
stock of the Company on the terms and conditions set forth herein (an
"Initial Grant").

(b) On March 30, 1998 and on the day following each Annual Meeting of
Shareholders of the Company ("Annual Meeting"), commencing with the Annual
Meeting in 1999, each person who is then a Non-Employee Director
automatically shall be granted an option to purchase Twenty Thousand
(20,000) shares of common stock of the Company (an "Annual Grant");
provided, however, that if the person has not been serving as a Non-
Employee Director for the entire period since the preceding Annual Meeting
(or since March 30, 1997 for the grant on March 30, 1998) , then the number
of shares subject to the Annual Grant shall be reduced pro rata for each
full quarter prior to the date of grant during which such person did not
serve as a Non-Employee Director.

(c) On March 30, 1998 and on the day following each Annual Meeting
commencing with the Annual Meeting in 1999, each Non-Employee Director who
is then a member of a committee of the Board automatically shall be
granted, for each such committee, an option to purchase Five Thousand
(5,000) shares of common stock of the Company (a "Committee Grant");
provided, however, that if the person has not been serving as a Non-
Employee Director for the entire period since the preceding Annual Meeting
(or since March 30, 1997 for the grant on March 30, 1998), then the number
of shares subject to the Committee Grant shall be reduced pro rata for each
full quarter prior to the date of grant during which such person did not
serve as a Non-Employee Director.

6. OPTION PROVISIONS.

Each option shall be subject to the following terms and conditions:

(a) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ten (10)
years from the date of grant ("Expiration Date"). If the optionee's service
as a Non-Employee Director of the Company or an employee, member of the
Board of Directors or consultant to the Company or any Affiliate terminates
for any reason or for no reason, the option shall terminate on the

2.
<PAGE>

earlier of the Expiration Date or the date twelve (12) months following the
date of termination of all such service; provided, however, that if such
termination of service is due to the optionee's death, the option shall
terminate on the earlier of the Expiration Date or eighteen (18) months
following the date of the optionee's death.

(b) The exercise price of each option shall be equal to one hundred
percent (100%) of the Fair Market Value of the stock (as such term is
defined in subparagraph 9(d)) subject to such option on the date such
option is granted.

(i) Payment of the exercise price per share in cash at the time of
exercise;

(ii) Provided that at the time of the exercise the Company's common
stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of shares of common stock of the Company already owned
by the optionee, held for the period required to avoid a charge to the
Company's reported earnings, and owned free and clear of any liens, claims,
encumbrances or security interest, which common stock shall be valued at
its Fair Market Value on the date preceding the date of exercise; or

(iii) Payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which results in the receipt of
cash (or check) by the Company either prior to the issuance of shares of
the Company's common stock or pursuant to the terms of irrevocable
instructions issued by the optionee prior to the issuance of shares of the
Company's common stock.

(iv) Payment by a combination of the methods of payment specified in
subparagraph 6(c)(i) through 6(c)(iii) above.

(d) An option shall be transferable only to the extent specifically
provided in the option agreement; provided, however, that if the option
agreement does not specifically provide for the transferability of an
option, then the option shall not be transferable except by will or by the
laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the option is granted only by such person
(or by his guardian or legal representative) or transferee pursuant to such
an order. Notwithstanding the foregoing, the optionee may, by delivering
written notice to the Company in a form satisfactory to the Company,
designate a third party who, in the event of the death of the optionee,
shall thereafter be entitled to exercise the option.

(e) The options granted pursuant to Section 5 shall vest and become
exercisable as follows:

(i) The Initial Grant shall vest monthly over the four (4)-year
period following the date of grant such that the entire Initial Grant shall
become exercisable on the four (4)-year anniversary of the date of grant of
the option, provided that the optionee has, during the entire period prior
to each such vesting installment date, continuously served as a director or
employee of or consultant to the Company or any Affiliate of the Company,

3.
<PAGE>

whereupon such option shall become fully vested and exercisable in
accordance with its terms with respect to that portion of the shares
represented by that installment.

(ii) With respect to an Annual Grant, if the optionee has attended
at least seventy-five percent (75%) of the regularly scheduled meetings of
the Board held between the date of grant of the option and the one (1)-year
anniversary of the date of grant of the option, then the Annual Grant shall
vest and become exercisable in full on the one (1)-year anniversary of the
date of grant. If the optionee's service as a Director terminates between
the date of grant of the option and the one (1)-year anniversary of the
date of grant of the option due to the disability or death of the optionee,
then the Annual Grant shall immediately vest and become exercisable on a
monthly pro rata basis. Unless the Annual Grant sooner vests and becomes
exercisable as provided in this subsection 6(e)(ii), the Annual Grant shall
vest shall vest annually over the four (4)-year period following the date
of grant at the rate of ten percent (10%) per year for the first three (3)
years and seventy percent (70%) for the fourth (4th) year such that the
entire Annual Grant shall become exercisable on the four (4)-year
anniversary of the date of grant of the option, provided that the optionee
has, during the entire period prior to each such vesting installment date,
continuously served as a director or employee of or consultant to the
Company or any Affiliate of the Company, whereupon such option shall become
fully vested and exercisable in accordance with its terms with respect to
that portion of the shares represented by that installment.

(iii) With respect to each Committee Grant, if the optionee has
attended at least seventy-five percent (75%) of the regularly scheduled
meetings of the committee held between the date of grant of the option and
the one (1)-year anniversary of the date of grant of the option, then the
Committee Grant shall vest and become exercisable in full on the one (1)-
year anniversary of the date of grant. If the optionee's service as a
committee member terminates between the date of grant of the option and the
one (1)-year anniversary of the date of grant of the option due to the
disability or death of the optionee, then the Committee Grant shall
immediately vest and become exercisable on a monthly pro rata basis. Unless
the Committee Grant sooner vests and becomes exercisable as provided in
this subsection 6(e)(iii), the Committee Grant shall vest annually over the
four (4)-year period following the date of grant at the rate of ten percent
(10%) per year for the first three (3) years and seventy percent (70%) for
the fourth (4th) year such that the entire Committee Grant shall become
exercisable on the four (4)-year anniversary of the date of grant of the
option, provided that the optionee has, during the entire period prior to
each such vesting installment date, continuously served as a director or
employee of or consultant to the Company or any Affiliate of the Company,
whereupon such option shall become fully vested and exercisable in
accordance with its terms with respect to that portion of the shares
represented by that installment.

(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising
any such option: (i) to give written assurances satisfactory to the Company
as to the optionee's knowledge and experience in financial and business
matters; and (ii) to give written assurances satisfactory to the Company
stating that such person is acquiring the stock subject to the option for
such person's own account and not with any present intention of selling or
otherwise distributing

4.
<PAGE>

the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon
the exercise of the option has been registered under a then currently-
effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need
not be met in the circumstances under the then applicable securities laws.
The Company may require any optionee to provide such other representations,
written assurances or information that the Company shall determine is
necessary, desirable or appropriate to comply with applicable securities
laws as a condition of granting an option to the optionee or permitting the
optionee to exercise the option. The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as
such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.

(g) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of
such option are then registered under the Securities Act or, if such shares
are not then so registered, the Company has determined that such exercise
and issuance would be exempt from the registration requirements of the
Securities Act.

7. COVENANTS OF THE COMPANY.

(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.

(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required
to issue and sell shares of stock upon exercise of the options granted
under the Plan; provided however, that this undertaking shall not require
the Company to register under the Securities Act either the Plan, any
option granted under the Plan, or any stock issued or issuable pursuant to
any such option. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such options.

8. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.

9. MISCELLANEOUS.

(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any
of the rights of a holder with respect to, any shares subject to such
option unless and until such person has satisfied all requirements for
exercise of the option pursuant to its terms.

5.
<PAGE>

(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the
service of the Company or any Affiliate in any capacity or shall affect any
right of the Company, its Board or shareholders or any Affiliate, to remove
any Non-Employee Director pursuant to the Company's Bylaws and the
provisions of Delaware general corporation law.

(c) In connection with each option made pursuant to the Plan, it shall
be a condition precedent to the Company's obligation to issue or transfer
shares to a Non-Employee Director, or to evidence the removal of any
restrictions on transfer, that such Non-Employee Director make arrangements
satisfactory to the Company to insure that the amount of any federal, state
or local withholding tax required to be withheld with respect to such sale
or transfer, or such removal or lapse, is made available to the Company for
timely payment of such tax.

(d) As used in this Plan, "Fair Market Value" means, as of any date,
the value of the common stock of the Company determined as follows:

(i) If the common stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap, the Fair Market Value of a share of
common stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or
exchange (or the exchange with the greatest volume of trading in common
stock) on the last market trading day prior to the day of determination, as
reported in the Wall Street Journal or such other source as the Board deems
reliable; or

(ii) In the absence of an established market for the common stock,
the Fair Market Value shall be determined in good faith by the Board.

10. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property
other than cash, stock split, liquidating dividend, combination of shares,
exchange of shares, change in corporate structure or other transaction not
involving the receipt of consideration by the Company), the Plan and
outstanding options will be appropriately adjusted in the class(es) and
maximum number of shares subject to the Plan and the class(es) and number
of shares and price per share of stock subject to outstanding options. Such
adjustments shall be made by the Board, the determination of which shall be
final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction not
involving the receipt of consideration by the Company.")

(b) In the event of: (1) a dissolution, liquidation, or sale of all or
substantially all of the assets of the Company; (2) a merger or
consolidation in which the Company is not the surviving corporation; (3) a
reverse merger in which the Company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether
in

6.
<PAGE>

the form of securities, cash or otherwise; or (4) the acquisition by any
person, entity or group within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or any
comparable successor provisions (excluding any employee benefit plan, or
related trust, sponsored or maintained by the Company or any Affiliate of
the Company) of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors, then
to the extent not prohibited by applicable law, (i) any surviving or
acquiring corporation shall assume any options outstanding under the Plan
or shall substitute similar options (including an option to acquire the
same consideration paid to the shareholders in the transaction described in
this subparagraph 10(b)) for those outstanding under the Plan, or (ii) such
options shall continue in full force and effect. In the event any surviving
or acquiring corporation refuses to assume such options, or to substitute
similar options for those outstanding under the Plan, then such options
shall be terminated if not exercised prior to such event.

11. AMENDMENT OF THE PLAN.

(a) The Board at any time, and from time to time, may amend the Plan
and/or some or all outstanding options granted under the Plan. However,
except as provided in paragraph 10 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the shareholders
of the Company to the extent shareholder approval is necessary for the Plan
to satisfy the requirements of Rule 16b-3 under the Exchange Act or any
Nasdaq or securities exchange listing requirements.

(b) Rights and obligations under any option granted before any
amendment of the Plan shall not be impaired by such amendment unless (i)
the Company requests the consent of the person to whom the option was
granted and (ii) such person consents in writing.

12. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years after the date
adopted by the Board. No options may be granted under the Plan while the
Plan is suspended or after it is terminated.

(b) Suspension or termination of the Plan shall not impair rights and
obligations under any option granted while the Plan is in effect, except
with the consent of the person to whom the option was granted.

13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.

(a) The Plan shall become effective on the same day that the Company's
initial public offering of shares of common stock becomes effective,
subject to the condition subsequent that the shareholders of the Company
approve the Plan.

(b) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.

<PAGE>

EXHIBIT 10.9

NVIDIA Corporation
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

NONSTATUTORY STOCK OPTION
(ANNUAL GRANT)

_______________, Optionee:

On __________________, 199___, an option was automatically granted to you
(the "Optionee") pursuant to the NVIDIA Corporation (the "Company") 1998 Non-
Employee Directors' Stock Option Plan (the "Plan") to purchase shares of the
Company's common stock ("Common Stock"). This option is not intended to qualify
and will not be treated as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for Non-Employee Directors (as defined in
the Plan).

The details of your option are as follows:

1. The total number of shares of Common Stock subject to this option is
_________ (______) shares./1/

2. The exercise price of this option is _________________________
($________) per share, such amount being equal to the Fair Market Value (as
defined in the Plan) of the Common Stock on the date of grant of this option.

3. (a) This option shall vest and become exercisable in full on the one
(1)-year anniversary of the date of grant, provided that, during the entire
period prior to such vesting, you have continuously served as a member of the
Board of Directors of the Company and you have attended at least seventy-five
percent (75%) of the regularly scheduled meetings of the Board of Directors of
the Company.

(b) If your service as a Director terminates between the date of grant
of this option and the one (1)-year anniversary of the date of grant of this
option due to your disability or death, then this option shall immediately vest
and become exercisable on a monthly pro rata basis, provided that, during the
entire period prior to such vesting, you have continuously served as a member of
the Board of Directors of the Company.

______________
/1/ The total number of shares subject to an Annual Grant shall be twenty
thousand (20,000) shares unless the Optionee has not served as a Non-Employee
Director for the entire period since the preceding Annual Meeting of
Shareholders of the Company (or since March 30, 1997 if the Annual Grant was
granted on March 30, 1998), in which event the number of shares subject to the
Annual Grant shall be reduced pro rata for each full quarter prior to the date
of grant of the Annual Grant during which the Optionee did not serve as a Non-
Employee Director.

-1-
<PAGE>

(c) Unless this option sooner vests and becomes exercisable as
provided in subsection 3(a) or subsection 3(b), this option shall vest annually
over the four (4)-year period following the date of grant at the rate of ten
percent (10%) per year for the first three (3) years and seventy percent (70%)
for the fourth (4th) year such that this option shall become fully vested and
exercisable on the four (4)-year anniversary of the date of grant of this
option, provided that, during the entire period prior to each such vesting
installment date, you have continuously served as a Non-Employee Director or
employee or member of the Board of Directors of or consultant to the Company or
any Affiliate of the Company, whereupon this option shall become fully vested
and exercisable in accordance with its terms with respect to that portion of the
shares represented by that installment.

(d) If your service as a Non-Employee Director or employee or member
of the Board of Directors of or consultant to the Company or any Affiliate of
the Company terminates for any reason or for no reason, this option shall be
exercisable only to the extent vested on such termination date, and shall
terminate to the extent not exercised on the earlier of the Expiration Date (as
defined below) or the date twelve (12) months following the date of termination
of all such service; provided, however, that if such termination of service is
due to your death, this option shall terminate on the earlier of the Expiration
Date or eighteen (18) months following the date of your death.

4. (a) You may exercise this option, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to Section 6 of
the Plan. You may exercise this option only for whole shares.

(b) You may elect to pay the exercise price under one of the following
alternatives:

(i) Payment in cash or check at the time of exercise;

(ii) Provided that at the time of the exercise the Common Stock
is publicly traded and quoted regularly in the Wall Street Journal, payment by
delivery of shares of Common Stock already owned by you, held for the period
required to avoid a charge to the Company's reported earnings, and owned free
and clear of any liens, claims, encumbrances or security interest, which Common
Stock shall be valued at its Fair Market Value on the date preceding the date of
exercise;

(iii) Payment pursuant to a program developed under Regulation T
as promulgated by the Federal Reserve Board which results in the receipt of cash
(or check) by the Company either prior to the issuance of shares of the Common
Stock or pursuant to the terms of irrevocable instructions issued by you prior
to the issuance of shares of the Common Stock; or

(iv) Payment by a combination of the methods of payment specified
in subparagraphs (i) through (iii) above.

(c) By exercising this option you agree that the Company may require
you to enter an arrangement providing for the cash payment by you to the Company
of any tax-withholding obligation of the Company arising by reason of the
exercise of this option.

-2-
<PAGE>

Notwithstanding anything to the contrary contained herein, you may not exercise
this option unless the shares issuable upon exercise of this option are then
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or, if such shares are not then so registered, the Company has determined that
such exercise and issuance would be exempt from the registration requirements of
the Securities Act.

5. This option is not transferable except (i) by will or by the laws of
descent and distribution, (ii) by written designation which takes effect upon
your death, (iii) by written instruction, in a form accepted by the Company, to
your spouse, children, stepchildren, or grandchildren (whether adopted or
natural), to a trust, family limited liability company or family partnership
created solely for the benefit of you and the foregoing persons, or (iv) to your
former spouse (if transfer is pursuant to a judicial decree dissolving your
marriage). During your life this option is exercisable only by you or a
transferee satisfying the above conditions. The right of a transferee to
exercise the transferred portion of this option after your termination of
employment with the Company shall terminate in accordance with your right of
exercise under Section 5 of this option, and after your death under Section 6 of
this option (treating the transferee as a person who acquired the right to
exercise this option by bequest or inheritance. The terms of this option shall
be binding upon the transferees, executors, administrators, heirs, successors,
and assigns of the Optionee. Notwithstanding the foregoing, by delivering
written notice to the Company, in a form satisfactory to the Company, you may
designate a third party who, in the event of your death, shall thereafter be
entitled to exercise this option.

6. The term of this option ("Expiration Date") is ten (10) years measured
from the grant date, subject, however, to earlier termination upon your
termination of service, as set forth in Section 6 of the Plan.

7. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.

8. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto, and its provisions are hereby made a part of this
option, including without limitation the provisions of Section 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.

-3-
<PAGE>

9. Notwithstanding anything to the foregoing, this option shall not be
exercisable in whole or in part unless and until the Company's shareholders have
approved the Plan.

Dated the ____ day of ______________, 19___.

Very truly yours,

NVIDIA CORPORATION

By:____________________________________________
Duly authorized on behalf of the Board of
Directors

ATTACHMENT:

1998 Non-Employee Directors' Stock Option Plan

* * * * *

The Undersigned:

(a) Acknowledges receipt of the foregoing option and the attachment
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and

(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its Affiliates regarding the acquisition of Common Stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options and any other stock awards previously granted and
delivered to the undersigned under stock award plans of the Company and (ii) the
following agreements only:

NONE:__________________________________

OTHER:_________________________________

_________________________________

_______________________________________
Optionee

-4-
<PAGE>

NOTICE OF EXERCISE

NVIDIA Corporation
1226 Tiros Way
Sunnyvale, CA 94085 Date of Exercise:______________________

Ladies and Gentlemen:

This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.

Stock option dated: _______________

Number of shares as to which
option is exercised: _______________

Certificates to be
issued in name of: _______________

Total exercise price: $______________

Cash payment delivered
herewith: $______________

Value of __________ shares
of common stock delivered
herewith/1/: _______________

By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the Company's 1998 Non-Employee Directors'
Stock Option Plan and (ii) to provide for the payment by me to you (in the
manner designated by you) of your withholding obligation, if any, relating to
the exercise of this option.

Very truly yours,

_________________________________________

___________________
/1/ Shares must meet the public trading requirements set forth in the option.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.

-5-

<PAGE>

EXHIBIT 10.12

NVIDIA CORPORATION
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

NONSTATUTORY STOCK OPTION
(COMMITTEE GRANT)

_______________, Optionee:

The grant hereunder is intended to reward you for your forthcoming service
on the _______________ Committee (the "Committee") of the Board of Directors of
the Company in connection with and in furtherance of the Company's compensatory
benefit plan for Non-Employee Directors (as defined in the Plan).

The details of your option are as follows:

1. The total number of shares of Common Stock subject to this option is
_________ (______) shares./1/

3. (a) This option shall vest and become exercisable in full on the one
(1)-year anniversary of the date of grant, provided that, during the entire
period prior to such vesting, you have continuously served as a member of the
Committee and you have attended at least seventy-five percent (75%) of the
regularly scheduled meetings of the Committee.

(b) If your service as a member of the Committee terminates between
the date of grant of this option and the one (1)-year anniversary of the date of
grant of this option due to your disability or death, then this option shall
immediately vest and become exercisable on a monthly pro rata basis, provided
that, during the entire period prior to such vesting, you have continuously
served as a member of the Committee.

_________________
/1/ The total number of shares subject to a Committee Grant shall be five
thousand (5,000) shares unless the Optionee has not served as a Non-Employee
Director for the entire period since the preceding Annual Meeting of
Shareholders of the Company (or since March 30, 1997 if the Committee Grant was
granted on March 30, 1998), in which event the number of shares subject to the
Committee Grant shall be reduced pro rata for each full quarter prior to the
date of grant of the Committee Grant during which the Optionee did not serve as
a Non-Employee Director.
<PAGE>

(b) You may elect to pay the exercise price under one of the following
alternatives:

(i) Payment in cash or check at the time of exercise;

(iii) Payment pursuant to a program developed under Regulation T
as promulgated by the Federal Reserve Board which results in the receipt of cash
(or check) by the Company either prior to the issuance of shares of the Common
Stock or pursuant to the terms of irrevocable instructions issued by you prior
to the issuance of shares of the Common Stock; or

(iv) Payment by a combination of the methods of payment specified
in subparagraphs (i) through (iii) above.

9. Notwithstanding anything to the foregoing, this option shall not be
exercisable in whole or in part unless and until the Company's shareholders have
approved the Plan.

Dated the ____ day of ___________, 19___.

Very truly yours,

NVIDIA CORPORATION

By:____________________________________________
Duly authorized on behalf of the Board of
Directors

ATTACHMENT:

1998 Non-Employee Directors' Stock Option Plan

* * * * *

The Undersigned:

NONE:__________________________________________

OTHER:_________________________________________

_________________________________________

____________________________________________
Optionee
<PAGE>

NOTICE OF EXERCISE

NVIDIA Corporation
1226 Tiros Way
Sunnyvale, CA 94085 Date of Exercise:______________________

Ladies and Gentlemen:

This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.

Stock option dated: _______________

Number of shares as to which
option is exercised: _______________

Certificates to be
issued in name of: _______________

Total exercise price: $______________

Cash payment delivered
herewith: $______________

Value of __________ shares
of common stock delivered
herewith/1/: _______________

Very truly yours,

______________________________________

_______________
/1/ Shares must meet the public trading requirements set forth in the option.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the
option, and must be owned free and clear of any liens, claims, encumbrances
or security interests. Certificates must be endorsed or accompanied by an
executed assignment separate from certificate.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
NVIDIA Corporation:

We consent to the use of our form of report included herein and to the
reference of our firm under the headings "Selected Financial Data" and
"Experts" in the prospectus.

KPMG Peat Marwick LLP

Mountain View, California
March 6, 1998

<PAGE>

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<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> JAN-01-1997 JAN-01-1998
<PERIOD-END> DEC-31-1997 MAR-30-1998
<CASH> 6,551 8,640
<SECURITIES> 0 0
<RECEIVABLES> 12,587 16,865
<ALLOWANCES> (100) (200)
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<PP&E> 8,379 11,167
<DEPRECIATION> (2,843) (3,519)
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9 9
0 0
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<INTEREST-EXPENSE> (266) (83)
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<INCOME-TAX> 0 (728)
<INCOME-CONTINUING> (2,691) 2,180
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<CHANGES> 0 0
<NET-INCOME> (2,691) 2,180
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