REGISTRATION RIGHTS AGREEMENT
The parties to this Registration Rights Agreement (the "Agreement"),
effective as of March 7, 1997, are Faroudja, Inc., a Delaware corporation
("FI"), and Faroudja Images Investors, LLC.
WHEREAS, certain investors ("Investors") entered into that certain
Subscription Agreement ("Subscription Agreement") with Faroudja Images, Inc.,
a Delaware corporation ("FII") wherein those Investors purchased FII Common
Stock and were granted, among other things, registration rights in the event
that FII, including all successors and assigns of FII by way of merger or
otherwise, completes an initial public offering of its stock prior to March
8, 1999;
WHEREAS, concurrent with the merger of Faroudja Research Enterprises,
Inc., a California corporation ("FRE") with and into Faroudja Laboratories,
Inc., a California corporation ("FLI"), and the merger of Faroudja
Acquisition, Inc., a California corporation and indirect wholly-owned
subsidiary of FLI, with and into FLI (collectively, the "Mergers"), with FLI
surviving the Mergers as a wholly-owned subsidiary of FI, Faroudja Images,
Inc., a Delaware corporation ("FII") liquidated effective December 31, 1996
and the assets of FII, including options to purchase certain shares of FLI
and FRE held by Y&I, were distributed to Xxxxx X. Xxxxxxxxxx as the
Liquidating Trustee for FII (the "Liquidating Trustee") to be distributed at
a later date to the FII shareholders;
WHEREAS, Yves Faroudja and Xxxxxxx Faroudja (collectively, "Y&I"), FI,
FII, Xxxxxxx Investors, LLC, Images Partners, LP, and the Liquidating Trustee
(Xxxxxxx Investors, LLC, Images Partners, LP and the Liquidating Trustee are
collectively, known herein as the "FI Shareholders") entered into that
certain Amended and Restated Option to Purchase Shares of Common Stock of
Faroudja, Inc. as of December 31, 1996, restating certain rights of FII and
Y&I, and confirming the transfer of assets by FII to the Liquidating Trustee,
which assets will be distributed at a later date to the FII shareholders;
WHEREAS Y&I, FI and the FI Shareholders entered into that certain
Registration and Shareholders Right Agreement of even date, restating certain
registration rights of Y&I that were originally set forth in that certain
Shareholders Agreement entered into on March 8, 1996, by and between FII,
FLI, FRE and Y&I, which agreement was terminated pursuant to that certain
Mutual Termination of Shareholders Agreement, dated December 30, 1996, by and
between FII, FLI, FRE and Y&I; and
WHEREAS, the parties desire to enter into this Agreement to restate and
amend certain registration and other rights granted to Faroudja Images
Investors, LLC, as a successor to the Investors, which rights were originally
set forth in the Subscription Agreement;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. REGISTRATION RIGHTS.
1.1 DEFINITIONS. As used in this Section 1, the following terms
shall have the following meanings:
(a) "register", "registered" and "registrations refer to a
registration effected by preparing and filing a registration statement or
statements or similar documents in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement or
document by the SEC;
(b) "Registrable Securities" means (i) the common stock held by
Faroudja Images Investors, LLC, and (ii) any common stock of FI issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of such common stock, excluding in all cases, however, any
Registrable Securities sold by Faroudja Images Investors, LLC in a
transaction in which its registration rights under this Agreement are not
assigned;
(c) "SEC" shall mean the Securities and Exchange Commission; and
(d) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time.
1.2 REGISTRATION.
(a) FI shall use all reasonable efforts to effect an initial
registered public offering of its stock pursuant to a registration statement
filed with the SEC under the Securities Act ("IPO"), and the parties shall
cooperate in structuring any such public offering.
(b) In the event that FI (which, for all purposes of this
section 1 (including, without limitation, section 1.2(c)), includes all
successors and assigns of FI by way of merger or otherwise) completes an IPO
prior to Xxxxx 0, 0000, XX shall prepare and file, not later than 180 days
after the closing date of the IPO, a registration statement under the
Securities Act to permit resales of the Registrable Securities; provided,
however that Faroudja Images Investors, LLC may inform the Company in writing
that it wishes to exclude all or a portion of its Registrable Securities from
such registration. If Faroudja Images Investors, LLC elects to exclude its
Registrable Securities from such registration it will have no further rights
to have such Registrable Securities registered by the Company.
(c) If FI does not complete an IPO prior to Xxxxx 0, 0000, XX
shall prepare and file, upon the request of the holders of a majority of the
common stock
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of FI, a registration statement under the Securities Act to permit resales of
all the shares of common stock of FI; PROVIDED, HOWEVER, that Faroudja Images
Investors, LLC may inform FI in writing that it wishes to exclude all or a
portion of its Registrable Securities from such registration.
(d) FI is obligated to effect only one registration pursuant to
this Agreement.
(e) In connection with an IPO, Faroudja Images Investors, LLC
agrees that, without the prior written consent of FI, Faroudja Images
Investors, LLC shall not offer, sell, contract to sell or otherwise dispose
of any Registrable Securities for and during the period beginning on the date
that an underwriting agreement is executed with respect to such offering and
continuing to and including 180 days after the date of the prospectus
included in the registration statement under the Securities Act for such
offering.
1.3 OBLIGATIONS OF FI. When required under this Agreement to effect
the registration of the Registrable Securities, FI shall, as expeditiously as
reasonably possible:
(a) prepare and file with the SEC a registration statement or
similar documents (the "Registration Statement') with respect to all
Registrable Securities, other than any Registrable Securities excluded
pursuant to section 1.2(b), and use its best efforts to keep the Registration
Statement effective at all times until March 8, 1999, which Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall 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, in light of the circumstances in which they
were made, not misleading;
(b) prepare and file with the SEC such amendments (including
post effective amendments) and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until
March 8, 1999, and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement;
(c) furnish promptly to Faroudja Images Investors, LLC such
numbers of copies of a prospectus, including a preliminary prospectus, and
all amendments and supplements thereto, in conformity with the requirements
of the Securities Act, and such other documents as Faroudja Images Investors,
LLC may reasonably request in writing in order to facilitate the disposition
of the Registrable Securities;
(d) use its best efforts to register and qualify the securities
covered by the Registration Statement under such securities or Blue Sky laws
of such jurisdictions as shall be reasonably requested by Faroudja Images
Investors, LLC, and to prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements and to take
such other actions as may be necessary to maintain such registration
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and qualification in effect at all times until March 8, 1999, and to take all
other actions necessary or advisable to enable the disposition of such
securities in such jurisdictions, provided that FI shall not be required in
connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions or to provide any undertaking or make any change in its charter
or bylaws that its Board of Directors determines to be contrary to the best
interests of FI and its stockholders;
(e) enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering. Faroudja Images Investors, LLC hereby
agrees to enter into and perform its customary obligations under any such
agreement, including, without limitation, customary indemnification and
contribution obligations;
(f) notify Faroudja Images Investors, LLC at any time when a
prospectus relating to Registrable Securities covered by the Registration
Statement is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing. FI shall promptly amend or supplement the
Registration Statement to correct any such untrue statement or omission;
(g) notify Faroudja Images Investors, LLC of the issuance by
the SEC of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. FI shall
make every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible time;
(h) permit a single firm of counsel designated as selling
stockholders' counsel by the holders of a majority in interest of the
Registrable Securities and other FI shares included in such registration to
review the Registration Statement and all amendments and supplements thereto
a reasonable period of time prior to their filing, and shall not file any
document in a form to which such counsel reasonably objects;
(i) at the request of Faroudja Images Investors, LLC, furnish
on the date that Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this Agreement (i) an
opinion, dated such date, of the counsel representing FI for the purposes of
such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the
underwriters and (ii) a letter, dated such date, from the independent
certified public accountants of FI, in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters;
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(j) make available for inspection by Faroudja Images Investors,
LLC, any underwriters participating in the offering pursuant to the
registration and the counsel, accountants or other agents retained by
Faroudja Images Investors, LLC or any such underwriter, all pertinent
financial and other records, corporate documents and properties of FI and
cause FI's officers, directors and employees to supply all information
reasonably requested by Faroudja Images Investors, LLC or any such
underwriters in connection with the registration;
(k) if the common stock is then listed on a national securities
exchange, use its best efforts to cause the Registrable Securities to be
listed on such exchange. If the common stock is not then listed on a
national securities exchange, use its best efforts to facilitate the
reporting of the Registrable Securities on NASDAQ;
(l) provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective
date of the Registration Statement;
(m) take all actions reasonably necessary to facilitate the
timely preparation and delivery of certificates (not bearing any legend
restricting the sale or transfer of such securities) representing the
Registrable Securities to be sold pursuant to the Registration Statement and
to enable such certificates to be in such denominations and registered in
such names as Faroudja Images Investors, LLC or any underwriters may
reasonably request; and
(n) take all other reasonable actions necessary to expedite and
facilitate the registration of the Registrable Securities pursuant to the
Registration Statement.
1.4 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of FI to take any action pursuant to this Section 1 with respect
to Faroudja Images Investors, LLC that Faroudja Images Investors, LLC shall
furnish to FI such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of such securities as
shall be reasonably required to effect the registration of the Registrable
Securities and shall execute such documents in connection with such
registration as FI may reasonably request.
1.5 EXPENSES OF REGISTRATION. All expenses other than underwriting
discounts and commissions incurred in connection with registration filings or
qualifications pursuant to this Section 1, including, without limitation, all
registration, listing, filing and qualification fees, printers and accounting
fees, the fees and disbursements of counsel for FI and the reasonable fees
and disbursements of the firm of counsel designated in accordance with
Section 1.3(h) shall be borne by FI.
1.6 INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
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(a) To the extent permitted by law, FI shall indemnify and hold
harmless Faroudja Images Investors, LLC, the directors, if any, of Faroudja
Images Investors, LLC, the officers, if any, of Faroudja Images Investors,
LLC who sign the Registration Statement, each person, if any, who controls
Faroudja Images Investors, LLC, any underwriter (as defined in the Securities
Act) for Faroudja Images Investors, LLC and each person, if any, who controls
any such underwriter within the meaning of the Securities Act or the
Securities Exchange Act of 1934 (the "1934 Act"), against any losses, claims,
damages, expenses or liabilities (joint or several) to which any of them may
become subject under the Securities Act, the 1934 Act or otherwise, insofar
as such losses, claims, damages, expenses or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof arise out of
or are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary
to make the statements therein, in light of the circumstances in which they
were made, not misleading or (iii) any violation or alleged violation by FI
of the Securities Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the 1934 Act or any state
securities law, and FI shall reimburse Faroudja Images Investors, LLC and
each such underwriter or controlling person, promptly as such expenses are
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; PROVIDED, HOWEVER, that the indemnity
agreement contained in this Section 1.6(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action, if such
settlement is effected without the consent of FI, which consent shall not be
unreasonably withheld, conditioned or delayed, nor shall FI be liable in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of is based upon a Violation that occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by Faroudja Images Investors, LLC,
directors and officers of Faroudja Images Investors, LLC or any such
underwriter or controlling person, as the case may be. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of Faroudja Images Investors, LLC or any such underwriter or
controlling person or FI and shall survive the transfer of the Registrable
Securities by Faroudja Images Investors, LLC.
(b) To the extent permitted by law, Faroudja Images Investors,
LLC shall indemnify and hold harmless FI, each of its directors, each of its
officers who have signed the Registration Statement, each person, if any, who
controls FI within the meaning of the Securities Act or the 1934 Act, any
underwriter and any other stockholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person who
controls such holder or underwriter, against any losses, claims, damages or
liabilities (jointly or severally) to which any of them may become subject
under the Securities Act, the 1934 Act or other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any
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Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by Faroudja Images Investors, LLC expressly for use in connection
with such registration; and Faroudja Images Investors, LLC shall reimburse
any legal or other expense reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action; PROVIDED, HOWEVER, that the indemnity agreement contained in this
Section 1.6(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action, if such settlement is effected
without the consent of Faroudja Images Investor, LLC, which consent shall not
be unreasonably withheld, conditioned or delayed; and PROVIDED, FURTHER, that
Faroudja Images Investors, LLC shall be liable under this Section 1.6(b) for
only that amount of losses, claims, damages and liabilities as does not
exceed the proceeds to Faroudja Images Investors, LLC as a result of the sale
of Registrable Securities pursuant to such registration.
(c) Promptly after receipt by an indemnified party under this
Section 1.6 of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.6,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in,
and, to the extent that the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel,
with the fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel for the indemnifying party, representation of
such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel in
such proceeding. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall
relieve such indemnifying party of any liability to the indemnified party
under this Section 1.6 only to the extent prejudicial to its ability to
defend such action, but the omission so to deliver written notice to the
indemnifying party shall not relieve it of any liability that it may have to
any indemnified party otherwise than under this Section 1.6. The
indemnification required by this Section 1.6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, promptly as such expense, loss, damage or liability is incurred, and
upon receipt by the indemnifying party of such documentation as it may
reasonably request.
(d) To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise
be liable under this Section 1.6 to the extent permitted by law, PROVIDED
that (i) no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault standards set
forth in this Section 1.6, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty
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of such fraudulent misrepresentation and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
1.7 ASSIGNABILITY. This Agreement is not transferable or assignable
by Faroudja Images Investors, LLC; PROVIDED, THAT, the rights to have FI
register Faroudja Images Investors, LLC's Registrable Securities pursuant to
section 1 of this Agreement may be assigned by Faroudja Images Investors, LLC
to transferees or assignees of such securities provided FI is, within a
reasonable time after such transfer, furnished with written notice of the
name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; PROVIDED,
FURTHER, that such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and the
transferee agrees that the further transfer or assignment of the securities
shall be made only in accordance with all applicable laws.
2. NOTICES. All notices and other communications under this Agreement
shall be in writing and may be given by any of the following methods: (a)
personal delivery, (b) facsimile transmission, (c) registered or certified
mail, postage prepaid, return receipt requested or (d) overnight delivery
service. Notices shall be sent to the appropriate party at its, his or her
address or facsimile number given below (or at such other address or
facsimile number for that party as shall be specified by notice given under
this section 2):
if to FI, to it at:
Faroudja, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, President
Fax: (000) 000-0000
with a copy to:
Buchalter, Nemer, Fields & Younger
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
if to Faroudja Images Investors, LLC, to it at:
the address of such party set
forth on the signature page of
this Agreement
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All such notices and communications shall be deemed received upon (a)
actual receipt by the addressee, (b) actual delivery to the appropriate
address or (c) in the case of a facsimile transmission, upon transmission by
the sender and issuance by the transmitting machine of a confirmation slip
confirming that the number of pages constituting the notice have been
transmitted without error. In the case of notices sent by facsimile
transmission, the sender shall contemporaneously mail a copy of the notice to
the addressee at the address provided for above. However, such mailing shall
in no way alter the time at which the facsimile notice is deemed received.
3. GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the law of the State of California applicable to agreements
made and to be performed wholly in California.
4. SEPARABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of this agreement shall remain in effect, and if
any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
5. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be considered an original, but all of which together shall
constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
FAROUDJA, INC.,
a Delaware corporation
By:/S/ XXXXXXX XXXXX
------------------------------
Xxxxxxx Xxxxx,
President
FAROUDJA IMAGES INVESTORS, LLC
By:/S/ XXXXX X. XXXXXXXXXX
------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Manager
Address: 000 Xxxxxxx Xxx.,
00xx Xxxxx
XX, XX 00000
Fax: (000) 000-0000
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