EXHIBIT 1.1
3,500,000 SHARES
NVIDIA CORPORATION
COMMON STOCK, $0.001 PAR VALUE PER SHARE
UNDERWRITING AGREEMENT
__________, 1999
_____________, 1999
Morgan Stanley & Co. Incorporated
Hambrecht & Quist LLC
Prudential Securities Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
NVIDIA Corporation, a Delaware corporation (the "COMPANY"), proposes
to issue and sell to the several Underwriters named in Schedule I hereto (the
"UNDERWRITERS") an aggregate of 3,500,000 shares of the Common Stock, $0.001
par value, of the Company (the "FIRM SHARES").
The Company also proposes to issue and sell to the several
Underwriters not more than an additional 525,000 shares of its Common Stock,
$0.001 par value (the "ADDITIONAL SHARES") if and to the extent that you, as
Managers of the offering, shall have determined to exercise, on behalf of the
Underwriters, the right to purchase such shares of common stock granted to the
Underwriters in Section 2 hereof. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "SHARES." The shares of Common
Stock, $0.001 par value, of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the "COMMON STOCK."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "PROSPECTUS."
If the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference herein to the
term "REGISTRATION STATEMENT" shall be deemed to include such Rule 462
Registration Statement.
As part of the offering contemplated by this Agreement, Morgan Stanley
& Co. Incorporated ("MORGAN STANLEY") has agreed to reserve out of the Shares
set forth opposite its name on Schedule I to this Agreement, up to
________________ shares, for sale to the Company's employees,
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officers, directors and other parties associated with the Company (collectively,
"PARTICIPANTS") (the "DIRECTED SHARE PROGRAM"). The Shares to be sold by Morgan
Stanley pursuant to the Directed Share Program (the "DIRECTED SHARES") will be
sold by Morgan Stanley pursuant to this Agreement at the public offering price.
Any Directed Shares not orally confirmed for purchase by any Participants by the
end of the business day on which this Agreement is executed will be offered to
the public by Morgan Stanley as set forth in the Prospectus.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective under the
Securities Act; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose
are pending before or to its knowledge threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder (the "Rules") and (iii) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph do not apply to
statements or omissions in the Registration Statement or the Prospectus
based upon information relating to any Underwriter furnished to the Company
in writing by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the state of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the
Company.
(d) The Company does not own directly or indirectly, an interest in
any corporation, partnership, business, trust, joint venture, association
or other similar entity.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
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(g) The shares of Common Stock outstanding prior to the issuance of
the Shares have been duly authorized and are validly issued, fully paid and
non-assessable; except as set forth in the Prospectus, the Company does not
have outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares
of its capital stock or any such options, rights, convertible securities or
obligations; and all outstanding shares of capital stock and options and
other rights to acquire capital stock of the Company have been issued in
compliance with the registration and qualification provisions of all
applicable securities laws and were not issued in violation of any
preemptive rights, rights of first refusal or other similar rights.
(h) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive rights, rights of first refusal or similar
rights.
(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the certificate of incorporation or
bylaws of the Company or any agreement or other instrument binding upon the
Company that is material to the Company, or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the
Company, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of the various
states and jurisdictions in connection with the offer and sale of the
Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company, from that set forth in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement).
(k) There are no legal, regulatory or governmental proceedings
pending or to the knowledge of the Company threatened to which the Company
is a party or to which any of the properties of the Company is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations, contracts
or other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required.
(l) The Company has all necessary consents, authorizations,
approvals, orders, certificates and permits of and from, and has made all
declarations and filings with, all foreign, federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts
and other tribunals, to own, lease, license and use its properties and
assets and to conduct its business in the manner described in the
Prospectus, except to the extent that the failure to
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obtain or file would not, singly or in the aggregate, have a material
adverse effect on the Company.
(m) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(n) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(o) The Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (collectively,
"ENVIRONMENTAL LAWS"), (ii) has received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) is in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company.
(p) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company.
(q) There is no legal or beneficial owner of any securities of the
Company who has any rights, not effectively satisfied or waived, to require
registration of shares of capital stock of the Company in connection with
the filing of the Registration Statement.
(r) The Company has complied with all provisions of Section 517.075,
Florida Statute relating to issuers doing business with Cuba.
(s) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) the Company has
not incurred any material liability or obligation, direct or contingent,
nor entered into any material transaction in each case not in the ordinary
course of business; (ii) the Company has not purchased any of its
outstanding capital stock other than unvested shares from former employees,
directors or consultants in accordance with the applicable governing terms
of agreements existing as of the date hereof, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock; and (iii) there has not been any material change in the capital
stock, short-term debt or long-term debt of the Company, except as
described in the Prospectus.
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(t) The Company has good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned
by it that is material to the business of the Company, in each case free
and clear of any security interest, lien, encumbrance, claim, defect or
adverse interest of any nature except such as are described in the
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company; and any real property and buildings held under
lease by the Company is held by it under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company, except as described in the Prospectus.
(u) The Company owns or possesses adequate licenses or other rights
to use all patents, patent rights, inventions, trade secrets, copyrights,
trademarks, service marks, trade names, technology and know-how necessary
to conduct its business in the manner currently employed and as described
in the Prospectus; the Company is not obligated to pay a royalty, grant a
license, or provide other consideration to any third party in connection
with its patents, copyrights, trademarks, service marks, trade names, or
technology other than as disclosed in the Prospectus, and, except as
disclosed in the Prospectus, the Company has not received any notice of
infringement or conflict with (and the Company does not know of any
infringement or conflict with) asserted rights of others with respect to
any patents, patent rights, inventions, trade secrets, copyrights,
trademarks, service marks, trade names or know-how which could result in
any material adverse effect upon the Company; and, except as disclosed in
the Prospectus, the discoveries, inventions, products or processes of the
Company referred to in the Prospectus do not, to the best knowledge of the
Company, infringe or conflict with any right or patent of any third party,
or any discovery, invention, product or process which is the subject of a
patent application filed by any third party, known to the Company which
could have a material adverse effect on the Company. Except as disclosed in
the Prospectus, no third party, including any academic or governmental
organization, possesses rights to the Company's patents, copyrights,
trademarks, service marks, trade names, or technology which, if exercised,
could enable such third party to develop products that could have a
material adverse effect on the ability of the Company to conduct its
business in the manner described in the Prospectus.
(v) No material labor dispute with the employees of the Company
exists, except as described in the Prospectus, or, to the knowledge of the
Company, is imminent; and the Company is not aware of any existing,
threatened or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that could have a
material adverse effect on the Company.
(w) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
prudent and customary in the business in which the Company is engaged; the
Company has not been refused any insurance coverage sought or applied for;
and the Company does not have any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a material
adverse effect on the Company, except as described in the Prospectus.
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(x) The Company possesses all certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct its business, and the Company has not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company, except as
described in the Prospectus
(y) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (1) transactions are
executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (3) access to
assets is permitted only in accordance with management's general or
specific authorization; and (4) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(z) The Nasdaq Stock Market, Inc. has approved the Common Stock for
listing on the Nasdaq National Market, subject only to official notice of
issuance.
(aa) Except for the Shares or as disclosed in the Prospectus, all
outstanding shares of Common Stock, and all securities convertible into or
exercisable or exchangeable for Common Stock, are subject to valid and
binding agreements (collectively, the "LOCK-UP AGREEMENTS") that, subject
to certain exceptions, restrict the holders thereof from selling, making
any short sale of, granting any option for the purchase of, or otherwise
transferring or disposing of, any of such shares of Common Stock, or any
such securities convertible into or exercisable or exchangeable for Common
Stock, for a period of 180 days after the date of the Prospectus without
the prior written consent of the Company or Morgan Stanley.
(bb) The Company (i) has notified each holder of a currently
outstanding option issued under the 1998 Equity Incentive Plan and the 1998
Non-Employee Directors' Stock Option Plan (the "OPTION PLANS") and each
person who has acquired shares of Common Stock pursuant to the exercise of
any option granted under the Option Plans that, subject to certain
exceptions, pursuant to the terms of the Option Plans, none of such options
or shares may be sold or otherwise transferred or disposed of for a period
of 180 days after the date of the Prospectus, without the prior written
consent of the Company or Morgan Stanley and (ii) has imposed a stop-
transfer instruction with the Company's transfer agent in order to enforce
the foregoing lock-up provision imposed pursuant to the Option Plans.
(cc) The Company (i) has notified each shareholder who is party to the
Second Amended and Restated Investor Rights Agreement dated August 19,
1997, as amended (the "INVESTOR RIGHTS AGREEMENT"), that, subject to
certain exceptions, pursuant to the terms of the Investor Rights Agreement,
none of the shares of the Company's capital stock held by such shareholder
may be sold or otherwise transferred or disposed of for a period of 180
days after the date of the Prospectus, without the prior written consent of
the Company or Morgan Stanley and
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(ii) has imposed a stop-transfer instruction with the Company's transfer
agent in order to enforce the foregoing lock-up provision imposed pursuant
to the Investor Rights Agreement.
(dd) The Company has not offered, or caused the Underwriters to offer,
Shares to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business
with the Company, or (ii) a trade journalist or publication to write or
publish favorable information about the Company or its products.
Furthermore, the Company represents and warrants to Morgan Stanley
that (i) the Registration Statement, the Prospectus and any preliminary
prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or
supplemented, if applicable, are distributed in connection with the
Directed Share Program, and that (ii) no authorization, approval, consent,
license, order, registration or qualification of or with any government,
governmental instrumentality or court, other than such as have been
obtained, is necessary under the securities laws and regulations of foreign
jurisdictions in which the Directed Shares are offered outside the United
States.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to
purchase from the Company at $______ a share (the "PURCHASE PRICE") the
respective number of Firm Shares set forth in Schedule I hereto opposite
the name of such Underwriter.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to
issue and sell to the Underwriters the Additional Shares, and the
Underwriters shall have a one-time right to purchase, severally and not
jointly, up to 525,000 Additional Shares at the Purchase Price. If you,
on behalf of the Underwriters, elect to exercise such option, you shall so
notify the Company in writing not later than 30 days after the date of this
Agreement, which notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Such date may be the same as the Closing Date (as defined
below) but not earlier than the Closing Date nor later than ten business
days after the date of such notice. Additional Shares may be purchased as
provided in Section 4 hereof solely for the purpose of covering over-
allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each Underwriter agrees, severally
and not jointly, to purchase the number of Additional Shares (subject to
such adjustments to eliminate fractional shares as you may determine) that
bears the same proportion to the total number of Additional Shares to be
purchased as the number of Firm Shares set forth in Schedule I hereto
opposite the name of such Underwriter bears to the total number of Firm
Shares.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley on behalf of the Underwriters, it will not, during the
period ending 180 days after the date of the
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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, lend, 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
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. The foregoing sentence shall not apply
to (A) the Shares to be sold hereunder, (B) the issuance by the Company of
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing or (C) the grant or exercise of
options to purchase Common Stock under the Company's employee benefit
plans.
3. TERMS OF PUBLIC OFFERING. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement
have become effective as in your judgment is advisable. The Company is
further advised by you that the Shares are to be offered to the public
initially at $_____________ a share (the "PUBLIC OFFERING PRICE") and to
certain dealers selected by you at a price that represents a concession not
in excess of $______ a share under the Public Offering Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in
excess of $_____ a share, to any Underwriter or to certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Firm Shares shall be made
to the Company in federal or other funds immediately available in New York
City against delivery of such Firm Shares for the respective accounts of
the several Underwriters at 10:00 a.m., New York City time, on
____________, 1999, or at such other time on the same or such other date,
not later than _________, 1999, as shall be designated in writing by you.
The time and date of such payment are hereinafter referred to as the
"CLOSING DATE."
Payment for any Additional Shares shall be made to the Company in
federal or other funds immediately available in New York City against
delivery of such Additional Shares for the respective accounts of the
several Underwriters at 10:00 a.m., New York City time, on the date
specified in the notice described in Section 2 or at such other time on the
same or on such other date, in any event not later than _______, 1999, as
shall be designated in writing by you. The time and date of such payment
are hereinafter referred to as the "OPTION CLOSING DATE."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as
you shall request in writing not later than one full business day prior to
the Closing Date or the Option Closing Date, as the case may be. The
certificates evidencing the Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or the Option Closing Date, as the
case may be, for the respective accounts of the several Underwriters, with
any transfer taxes payable in connection with the transfer of the Shares to
the Underwriters duly paid, against payment of the Purchase Price therefor.
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5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Company to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement
shall have become effective not later than [__________] (New York City
time) on the date hereof.
The several obligations of the Underwriters hereunder are subject to
the following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company,
from that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement) that, in
your judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of the Company, to the effect set
forth in Section 5(a)(i) above and to the effect that the representations
and warranties of the Company contained in this Agreement are true and
correct as of the Closing Date and that the Company has complied with all
of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officers signing and delivering such certificate may rely upon the
best of their knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Cooley Godward LLP, outside counsel for the Company, dated the
Closing Date, substantially to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the state of
Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of
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property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company;
(ii) the Company has no subsidiaries;
(iii) the Agreement and Plan of Merger dated April 16, 1998
(the "PLAN OF MERGER") by and between the Company and NVIDIA
Corporation, a California corporation ("NVIDIA CALIFORNIA"), has been
duly authorized by all necessary board of directors and stockholder
action on part of the Company and NVIDIA California and has been duly
executed and delivered by each of the parties thereto. The execution
and delivery of the Plan of Merger and the consummation of the merger
contemplated thereby (the "MERGER") did not contravene any provision
of applicable law or the certificate of incorporation or bylaws of the
Company or the articles of incorporation or bylaws of NVIDIA
California or any agreement or other instrument binding upon the
Company that is material to the Company, and that is set forth as an
exhibit to the Registration Statement, or, any judgment or decree of
any governmental body, agency or court having jurisdiction over the
Company or NVIDIA California, except for any such contravention that
would not have a material adverse effect on the Company, and no
consent, approval, authorization or order of qualification with any
governmental body or agency was required for the performance by the
Company and NVIDIA California of its obligations under the Plan of
Merger except such as were obtained and except such consent, approval,
authorization, order or qualification, which if not obtained, would
not have a material adverse effect on the Company. The Merger is
effective under the laws of the State of California and the State of
Delaware.
(iv) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus
under the caption "Description of Capital Stock";
(v) the shares of Common Stock outstanding prior to the
issuance of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable; except as set forth in the
Prospectus, the Company has no outstanding options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations; and all
outstanding shares of capital stock and options and other rights to
acquire capital stock have been issued in compliance with the
registration and qualification provisions of all applicable securities
laws and were not issued in violation of any preemptive rights, rights
of first refusal or other similar rights;
(vi) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of
such Shares will not be subject to any preemptive rights, rights of
first refusal or similar rights;
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(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or bylaws of the Company or, to the best of such
counsel's knowledge, any agreement or other instrument binding upon
the Company that has been filed as an exhibit to the Registration
Statement, or, to such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over the Company, and no consent, approval, authorization or order of,
or qualification with, any governmental body or governmental agency is
required for the performance by the Company of its obligations under
this Agreement, except such as have been obtained under the Securities
Act and such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of the
Shares;
(ix) the statements (A) in the Prospectus under the captions
"Risk Factors--Legal Proceedings," "Dividend Policy," "Business--Legal
Proceedings," "Management--Employee Benefit Plans," "Certain
Transactions," "Description of Capital Stock," "Shares Eligible for
Future Sale" and "Underwriters" (to the extent of the description of
this Agreement) and (B) in the Registration Statement in Items 14 and
15, in each case insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters
referred to therein;
(x) such counsel does not know of any legal, regulatory or
governmental proceedings pending or overtly threatened to which the
Company is a party or to which any of the properties of the Company is
subject that are required under the Securities Act and the Rules to be
described in the Registration Statement or the Prospectus and are not
so described or of any statutes, regulations, contracts or other
documents to which the Company is a party or to which any of the
properties of the Company is subject that are required to be described
in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed
as required under the Securities Act and the Rules;
(xi) the Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xii) to such counsel's knowledge there is no legal or
beneficial owner of any securities of the Company who has any rights,
not effectively satisfied or waived, to require registration of any
shares of capital stock of the Company in connection with the filing
of the Registration Statement;
-12-
(xiii) such counsel is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules and other financial and statistical data derived therefrom,
as to which such counsel need not express any opinion) comply as to
form in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder;
(xiv) such counsel (A) has no reason to believe that (except for
financial statements and schedules and other financial and statistical
data derived therefrom, as to which such counsel need not express any
belief) the Registration Statement and the prospectus included therein
at the time the Registration Statement became effective contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading and (B) has no reason to believe that (except
for financial statements and schedules and other financial and
statistical data derived therefrom, as to which such counsel need not
express any belief) the Prospectus contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(xv) to the best of such counsel's knowledge: (A) the
Registration Statement has become effective under the Securities Act,
no stop order proceedings with respect thereto have been instituted or
are pending or threatened under the Securities Act and nothing has
come to such counsel's attention to lead it to believe that such
proceedings are contemplated; and (B) any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under
the Securities Act has been made in the manner and within the time
period required by Rule 424(b); and
(xvi) the Shares to be sold under this Agreement to the
Underwriters are duly authorized for listing on the Nasdaq National
Market.
(d) The Underwriters shall have received on the Closing Date an
opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
counsel for the Underwriters, dated the Closing Date, covering the
matters referred to in Sections 5(c)(vi), 5(c)(vii), 5(c)(ix) (but only
as to the statements in the Prospectus under "Description of Capital
Stock" and "Underwriters"), 5(c)(xiii) and 5(c)(xiv) above.
With respect to Section 5(c)(xiv) above, Cooley Godward LLP and Wilson
Sonsini Goodrich & Rosati, Professional Corporation may state that their
belief is based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, but are without
independent check or verification, except as specified.
The opinion of Cooley Godward LLP described in Section 5(c) above shall
be rendered to the Underwriters at the request of the Company and shall so
state therein.
-13-
(e) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from KPMG Peat Marwick LLP, independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus; provided, however, that the letter delivered on the
Closing Date shall use a "cut-off date" not earlier than the date hereof.
(f) The "lock-up" agreements, each substantially in the form attached
hereto as Exhibit A, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the Closing
Date.
All of the agreements, opinions, certificates and letters mentioned
above or elsewhere in this Agreement shall be deemed in compliance with the
provisions hereof only if Wilson Sonsini Goodrich & Rosati, Professional
Corporation, counsel for the Underwriters, shall be reasonably satisfied that
they comply in form and scope.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional Shares and an
opinion or opinions of Cooley Godward LLP in form and substance reasonably
satisfactory to Wilson Sonsini Goodrich & Rosati, Professional Corporation,
counsel for the Underwriters.
6. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, four signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day
immediately following the date of this Agreement and during the period
mentioned in Section 6(c) below, as many copies of the Prospectus and any
supplements and amendments thereto or to the Registration Statement as you
may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
-14-
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earnings statement covering the
twelve-month period ending January 31, 2000 that satisfies the provisions
of Section 11(a) of the Securities Act and the Rules thereunder.
(f) That in connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. Morgan Stanley will notify
the Company as to which Participants will need to be so restricted. The
Company will direct the transfer agent to place stop transfer restrictions
upon such securities for such period of time.
(g) To pay all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
(h) To (i) enforce the terms of each Lock-up Agreement, (ii) issue
stop-transfer instructions to the transfer agent for the Common Stock with
respect to any transaction or contemplated transaction that would
constitute a breach of or default under the applicable Lock-up Agreement
and (iii) upon written request of Morgan Stanley, to release from the Lock-
up Agreements those shares of Common Stock held by those holders set forth
in such request. In addition, except with the prior written consent of
Morgan Stanley, the Company agrees (i) not to amend or terminate, or waive
any right under, any Lock-up Agreement, or take any other action that would
directly or indirectly have the same effect as an amendment or termination,
or waiver of any right under, any Lock-up Agreement, that would permit any
holder of shares of Common Stock, or securities convertible into or
exercisable or exchangeable for Common Stock,
-15-
to sell, make any short sale of, grant any option for the purchase of, or
otherwise transfer or dispose of, any of such shares of Common Stock or
other securities prior to the expiration of 180 days after the date of the
Prospectus, and (ii) not to consent to any sale, short sale, grant of an
option for the purchase of, or other disposition or transfer of shares of
Common Stock, or securities convertible into or exercisable or exchangeable
for Common Stock, subject to a Lock-up Agreement.
(i) To place a restrictive legend on any shares of Common Stock
acquired pursuant to the exercise, after the date hereof and prior to the
expiration of the 180-day period after the date of the Prospectus, of any
option granted under the Option Plan, which legend shall restrict the
transfer of such shares prior to the expiration of such 180-day period. In
addition, the Company agrees that, without the prior written consent of
Morgan Stanley, it will not release any shareholder or option holder from
the market standoff provision imposed by the Company pursuant to the terms
of the Option Plan earlier than 180 days after the date of the Prospectus.
(j) Prior to issuing any press release regarding the operating
results or financial condition with respect to any of the Company's first
three fiscal quarters in fiscal year 2000, and prior to filing a
Quarterly Report on Form 10-Q relating to any of such fiscal quarters, to
retain KPMG Peat Marwick LLP or other independent public accountants of
recognized national standing who shall review, in accordance with AICPA
Statement on Auditing Standards No. 71, the Company's unaudited
consolidated financial statements at the end of each such fiscal quarter;
provided, however, that the Company's obligations under this covenant may
terminate after the third quarter of fiscal year 2000 at the discretion
of the Company's Board of Directors if the Company's Board of Directors
determines in good faith that adequate financial controls are in place.
Furthermore, the Company covenants with Morgan Stanley that the
Company will comply with all applicable securities and other applicable
laws, rules and regulations in each foreign jurisdiction in which the
Directed Shares are offered in connection with the Directed Share Program.
7. EXPENSES. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under securities laws of
various states and other jurisdictions and all expenses in
-16-
connection with the qualification of the Shares for offer and sale under state
securities laws as provided in paragraph (d) of Section 6 hereof, including
filing fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky or Legal Investment memorandum, (iv) all filing fees and the reasonable
fees and disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the NASD, (v)
all fees and expenses in connection with the preparation and filing of the
registration statement on Form 8-A relating to the Common Stock and all costs
and expenses incident to listing the Shares on the Nasdaq National Market, (vi)
the cost of printing certificates representing the Shares, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the costs and
expenses of the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show, (ix) all expenses in connection with any offer
and sale of the Shares outside of the United States, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection with offers and sales outside of the United States, and (x) all other
costs and expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section 7. It is
understood, however, that except as otherwise provided in this Section 7,
Section 8 entitled "Indemnity and Contribution", and the last paragraph of
Section 10 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes payable
on resale of any of the Shares by them, and any advertising expenses connected
with any offers they may make.
8. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein; provided, however, that
-------- -------
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured
-17-
the defect giving rise to such losses, claims, damages or liabilities, unless
such failure is the result of noncompliance by the Company with Section 6(a)
hereof.
(b) The Company agrees to indemnify and hold harmless Morgan Stanley
and each person, if any, who controls, is controlled by, or is under common
control with Morgan Stanley within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act ("MORGAN STANLEY ENTITIES"),
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) (i) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the prospectus wrapper material prepared by or with the consent of the
Company for distribution in foreign jurisdictions in connection with the
Directed Share Program attached to the Prospectus or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement therein, when
considered in conjunction with the Prospectus or any applicable preliminary
prospectus, not misleading; (ii) caused by the failure of any Participant to pay
for and accept delivery of the shares which, immediately following the
effectiveness of the Registration Statement, were subject to a properly
confirmed agreement to purchase; provided that the Morgan Stanley Entities shall
use all reasonable efforts to mitigate such damages; or (iii) related to,
arising out of, or in connection with the Directed Share Program, provided that,
the Company shall not be responsible under this subparagraph (iii) for any
losses, claim, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of Morgan Stanley Entities.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the directors of the Company, the officers of the
Company who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a), 8(b) or 8(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing and the Indemnifying Party, upon
request of the Indemnified Party, shall retain counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such
-18-
counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
It is understood that the Indemnifying Party shall not, in respect of the legal
expenses of any Indemnified Party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (i) the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act and (ii) the fees and expenses of more than one separate firm (in addition
to any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Underwriters and such control persons of any Underwriters, such firm shall be
designated in writing by Morgan Stanley. In the case of any such separate firm
for the Company, and such directors, officers and control persons of the
Company, such firm shall be designated in writing by the Company.
Notwithstanding anything contained herein to the contrary, if indemnity may be
sought pursuant to Section 8(b) hereof in respect of such action or proceeding,
then in addition to such separate firm for the Indemnified Parties, the
Indemnifying Party shall be liable for the reasonable fees and expenses of not
more than one separate firm (in addition to any local counsel) for Morgan
Stanley and all persons, if any, who control Morgan Stanley within the meaning
of either Section 15 of the Act or Section 20 of the Exchange Act for the
defense of any losses, claims, damages and liabilities arising out of the
Directed Share Program. The Indemnifying Party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Party shall have requested
an Indemnifying Party to reimburse the Indemnified Party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Party of the
aforesaid request and (ii) such Indemnifying Party shall not have reimbursed the
Indemnified Party in accordance with such request prior to the date of such
settlement. No Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such
proceeding.
(e) To the extent the indemnification provided for in Section 8(a),
8(b) or 8(c) is unavailable to an Indemnified Party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Party under such paragraph, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Indemnifying Party or parties on the one hand and the
Indemnified
-19-
Party or parties on the other hand from the offering of the Shares or (ii) if
the allocation provided by clause 8(e)(i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(e)(i) above but also the relative fault of the
Indemnifying Party or parties on the one hand and of the Indemnified Party or
parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand in connection
with the offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before
deducting expenses) received by the Company and the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate Public Offering
Price of the Shares. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 8 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.
(f) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 8(e). The amount paid or
payable by an Indemnified Party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Party at law or in equity.
(g) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
-20-
9. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the NASD, the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either federal or New York State authorities or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in your judgment, is material and
adverse and (b) in the case of any of the events specified in clauses 9(a)(i)
through 9(a)(iv), such event, singly or together with any other such event,
makes it, in your judgment, impracticable to market the Shares on the terms and
in the manner contemplated in the Prospectus.
10. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; provided, however, that in no event
shall the number of Shares that any Underwriter has agreed to purchase pursuant
to this Agreement be increased pursuant to this Section 10 by an amount in
excess of one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased, and arrangements satisfactory
to you and the Company for the purchase of such Firm Shares are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case,
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. If, on the Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
-21-
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part the Company to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
13. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
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Very truly yours,
NVIDIA CORPORATION
By:___________________________
Name:
Title:
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Hambrecht & Quist LLC
Prudential Securities Incorporated
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By:__________________________________
Name:
Title:
[UNDERWRITING AGREEMENT]
SCHEDULE I
UNDERWRITER NUMBER OF FIRM SHARES
TO BE PURCHASED
- ---------------------------- ------------------------
Morgan Stanley & Co. Incorporated
Hambrecht & Quest LLC
Prudential Securities Incorporated
[NAMES OF OTHER UNDERWRITERS]
---------
Total...........3,500,000
=========
EXHIBIT A
***Confirm that the Form below is the one sent to stockholders***
FORM OF LOCK-UP AGREEMENT
________________, 1998
Morgan Stanley & Co. Incorporated
Hambrecht & Quist LLC
Prudential Securities Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with NVIDIA Corporation, a California corporation
(together with any successor Delaware corporation, the "COMPANY"), providing for
the public offering (the "PUBLIC OFFERING") by the several Underwriters,
including Morgan Stanley (the "UNDERWRITERS"), of __________ shares (the
"SHARES") of the Common Stock, $0.001 par value per share, of the Company (the
"COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Morgan
Stanley on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 180 days after the date of the final prospectus
relating to the Public Offering (the "PROSPECTUS"), (1) 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, lend, 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 or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (a) the sale of any
Shares to the Underwriters pursuant to the Underwriting Agreement or (b)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Public Offering, (c) as a
bona fide gift or gifts, (d) by will or intestacy to the undersigned's immediate
family or to a trust the beneficiaries of which are exclusively the undersigned
and/or a member or members of his or her immediate family and/or a charity, (e)
as a distribution to limited partners or shareholders of the undersigned, in
each case provided that any gift, transfer or distribution pursuant to clause
(c), (d) or (e) above shall in each case be conditioned upon such donee,
transferee or distributee executing and delivering a copy of a Lock-up Agreement
to Morgan Stanley & Co. Incorporated. In addition, the undersigned agrees that,
without the prior written consent
Morgan Stanley & Co. Incorporated
Page 2
of Morgan Stanley on behalf of the Underwriters, it will not, during the period
commencing on the date hereof and ending 180 days after the date of the
Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
The undersigned hereby acknowledges that this agreement is valid and
binding notwithstanding any prior agreements relating to any shares of the
Company owned by the undersigned and further agrees and consents to the entry of
stop-transfer instructions with the Company's transfer agent against the
transfer shares of Common Stock held by the undersigned except in compliance
with the terms and conditions of this lock-up agreement. The undersigned also
understands that the Company and the Underwriters will proceed with the Public
Offering in reliance on this lock-up agreement. Whether or not the Public
Offering actually occurs depends on a number of factors, including market
conditions. Any Public Offering will only be made pursuant to an Underwriting
Agreement, the terms of which are subject to negotiation between the Company and
the Underwriters.
Very truly yours,
_____________________________________
(Name of Stockholder)
_____________________________________
(Signature of Authorized Signatory)
_____________________________________
(Print Name and Title, if Stockholder
is not an individual)
[LOCK-UP AGREEMENT]