AMENDED AND RESTATED OPTION
TO PURCHASE SHARES OF COMMON STOCK OF FAROUDJA, INC.
THIS AMENDED AND RESTATED OPTION TO PURCHASE SHARES OF COMMON STOCK OF
FAROUDJA, INC. dated as of March 7, 1997 (the "Option"), is made and entered
into by and among Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx ("Y&I"), Xxxxxxxx, Inc., a
Delaware corporation ("FI"), Xxxxxxx Investors, LLC ("Holder") and Faroudja
Images, Inc., a Delaware corporation ("FII").
WHEREAS, Y&I granted separate options to purchase 2,120,192 shares of
common stock of Faroudja Laboratories ("FLI"), Inc., a California corporation
("FLI Option") and 480,264 shares of common stock of Faroudja Research
Enterprises ("FRE"), Inc., a California corporation ("FRE Option") to FII on
March 8, 1996.
WHEREAS, pursuant to the merger of FRE with and into FLI ("FLI/FRE
Merger"), all of the common stock of FRE was converted into FLI common stock at
the conversion ratio of .2125782 of a share of FLI common stock for each
outstanding FRE share of common stock;
WHEREAS, pursuant to the merger ("FLI/FAI Merger") of Faroudja Acquisition,
Inc., a California corporation and indirect wholly-owned subsidiary of FLI, with
and into FLI following the FLI/FRE Merger, all of the common stock of FLI was
converted into common stock of FI at the conversion ratio of .6918552 of a share
of FI common stock for each outstanding FLI share of common stock, which
resulted in an aggregate of 1,537,500 shares of common stock of FI at an
aggregate exercise price of $6,000,000 subject to the FLI Option and FRE Option;
WHEREAS, pursuant to the FLI/FRE Merger and the FLI/FAI Merger
(collectively, the "Mergers"), FLI became a wholly-owned subsidiary of FI;
WHEREAS, FII liquidated effective December 31, 1996 (the "FII Liquidation")
and the assets, including the FLI Option and FRE Option, were distributed to
Xxxxx X. Xxxxxxxxxx as liquidating trustee ("Liquidating Trustee") for Faroudja
Images, Inc., which are subsequently being distributed to the parties named in
the table below (collectively, the "Option Holders"), whose names, the number of
shares of Common Stock of FI subject to the portion of the FLI Option and FRE
Option being distributed to such Option Holder, as amended and restated ("FI
Option") and the aggregate exercise price of each such FI Option to be held by
each Option Holder, is set forth in the table below:
OPTION HOLDER NO. OF FI EXERCISE PRICE
------------- SHARES --------------
---------
Xxxxxxx Investors, LLC 486,875 $1,900,000
Images Partners, LP 384,375 $1,500,000
Faroudja Images Investors, LLC 666,250 $2,600,000
--------- ----------
1,537,500 $6,000,000
WHEREAS, Y&I are concurrently entering into options ("Other Options") with
holders of the Other Options ("Other Holders") on the same terms as the Holder
to reflect the grant of separate options for the number of FI shares and at the
exercise price set forth in the preceding table;
WHEREAS, Y&I, FII and Holder want to amend and restate and confirm the
distribution from FII of the FLI Option and the FRE Option by entering into this
Agreement to reflect transactions resulting from the FLI/FRE Merger, the FLI/FAI
Merger (collectively, the "Mergers") and the FII Liquidation;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
Y&I (collectively, the "Sellers") hereby grant to the Holder an option to
purchase from the Sellers, at any time or from time to time on or after
December 31, 1996 (the "Commencement Date") but not later than the earlier of
(i) the initial closing date of the sale of shares by FI to the public pursuant
to a registration statement filed with the SEC in compliance with the Securities
Act of 1933, as amended ("IPO") or (ii) September 5, 1997 (the "Expiration
Date"), for a price of $1,900,000 (the "Stock Purchase Price"), 486,875 shares
of common stock of FI (the "Shares"), free and clear of all claims, liens,
security interests, restrictions, rights and other encumbrances ("Liens"). The
Sellers are granting this option pursuant to the letter agreement dated
November 13, 1995 among the Sellers and Xxxxxxx Xxxxx Holdings, Inc. ("ST"), as
amended by the amendment to letter agreement dated February 9, 1996 among the
Sellers, ST and FII and pursuant to the Mergers and the FII Liquidation.
This Option is subject to the following terms and conditions:
1. TERM AND EXERCISE. The Holder shall have the right, at any time or
from time to time on or after the Commencement Date but not later than the
Expiration Date, to give notice to the Sellers, of the purchase of all, but not
fewer than all, the Shares, upon written notice (the "Option Exercise Notice")
given to the Sellers on one occasion; provided, however, that such right to
exercise this Option is conditioned upon all Other Holders simultaneously
providing an Option Exercise Notice under the Other Options and
2
closing the purchase and sale under the Other Options on the same date,
unless Y&I waive this condition as to this Option and/or either or both of
the Other Options.
2. PAYMENT; DELIVERY OF SHARES. If the Holder exercises the Option prior
to the Expiration Date, the Holder and the Sellers shall consummate the purchase
and sale at FI's office at 10:00 a.m. (California time) on the business day
designated by, and mutually agreeable to, the Holder and the Other Holders by
written notice given to the Sellers, which shall not be fewer than five or more
than ten business days after the delivery of the Option Exercise Notice. At the
closing (the "Option Closing"):
(a) the Sellers shall deliver or cause to be delivered to the Buyer
certificates representing all the Shares, free and clear of all Liens, together
with duly executed stock powers, with all required stock transfer tax stamps
attached and all appropriate estate tax waivers; and
(b) the Holder shall deliver, to an account or accounts designated by
both Sellers, the Stock Purchase Price.
3. NO ISSUANCES OR OTHER DILUTIVE ACTIONS.
3.1 Prior to the Expiration Date, neither Seller nor Holder (either
as a shareholder or through directors elected to represent such parties) shall
take any action to permit FI, without the prior written consent of (i) Xxxx
Xxxxxxxx and (ii) the Holder and Other Holders holding in aggregate Options and
Other Options exercisable for a majority of the shares of FI subject to this
Option and the Other Options, to issue any securities to any person, other than
upon the exercise or conversion of options, warrants or other rights outstanding
on the date of this Option, or to distribute any securities or other property to
its securityholders, or to consolidate or merge with or into another entity or
to sell all or substantially all of its assets.
3.2 Prior to an initial public offering of the common stock of FI (at
some later date) the parties hereto agree that the capitalization of FI and the
respective share ownership of the parties to this Option and other listed
shareholders and/or categories shall remain the same as set forth in Exhibit "A"
attached hereto, except that the FI Options may be exercised, and further agree
that the share capitalization of FI cannot be changed without the prior written
consent of (i) Xxxx Xxxxxxxx and (ii) the Holder and Other Holders holding in
aggregate Options and Other Options exercisable for a majority of the shares of
FI subject to this Option and the Other Options.
4. ESCROW AGREEMENTS. Subject to the terms and conditions of the escrow
agreement among FII and to add the Holder and Other Holders as parties in
substitution for FII, the Sellers and Bank of the West Trust and Investment
Services Division, as successor escrow agent (the "Escrow Agreement"), as
amended, the Sellers are authorizing the
3
Escrow Agent to exchange the shares of FLI and FRE held pursuant to the FLI
Option and FRE Option for the Shares and shares subject to the Other Options.
5. MISCELLANEOUS.
5.1 NOTICES. All notices and other communications under this Option
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
5.1):
if to either Seller, to him or her at:
Faroudja, Inc.
c/o Faroudja Laboratories, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Bank of the West Trust and Investment
Services Division
00 Xxxx Xxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Fax: (000) 000-0000
Xxxxxxxxx, Xxxxx, Fields & Younger
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Coudert Brothers
Four Embarcadero Center, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
4
if to the Holder, to it at:
the address set forth on the signature page of this Option
with a copy to:
Xxxxxxx Xxxxx Securities, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
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 the
number of pages constituting the notice having 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 above. However, such mailing shall in no way alter the time at which
the facsimile notice is deemed received.
5.2 AMENDMENT. This Option may be modified or amended or the
provisions of this Option may be waived only with the written consent of the
Sellers and the Holder (it being understood that the Sellers shall, at the
request of the Holder, cooperate with the Holder to modify this Option or to
restructure this Option in any manner that does not adversely affect the
Sellers).
5.3 GOVERNING LAW. This Option shall be governed by the law of the
State of California, without regard to provisions thereof relating to conflicts
of laws.
5
5.4 ASSIGNMENT. This Option may not be assigned, in any manner,
without the written consent of Sellers.
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Option to be duly executed as of the date first hereinabove written
above.
FAROUDJA, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
------------------------
Xxxxxxx Xxxxx, President
/s/ Xxxx Xxxxxxxx
------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
------------------------
Xxxxxxx Xxxxxxxx
Accepted and Agreed:
XXXXXXX INVESTORS, LLC
By: /s/ Xxxx Xxxxx
-----------------------------
Address: 00000 Xxxxxxxx Xxxx., #000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
FAROUDJA IMAGES, INC.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------
Xxxxx Xxxxxxxxx, Secretary
6
EXHIBIT "A"
FI CAPITALIZATION
SECURITY HOLDER FI C/S PERCENT
--------------- ------ -------
Stock Option Plans(1) 1,800,000 17.86%
Y&I Direct Ownership 2,050,000 20.34%
Y&I Option Shares 1,537,500
Xxxxxxx Investors, LLC 486,875 4.83%
Images Partners, LP 384,375 3.81%
Faroudja Images Investors, LLC 666,250 6.61%
FII Direct Ownership 4,612,500 45.76%
Xxxxxxx Contingent Warrant 65,152 0.65%
Xxxx Xxx Warrant 14,449 0.14%
---------- ------
TOTAL 10,079,960 100%
(1) The Stock Option Plans for FI break down as follows:
STOCK OPTION PLAN RESERVED C/S GRANTED OPTIONS
----------------- ------------ ---------------
1995 Stock Option Plan 1,400,000 1,386,578
1997 Performance Stock Option Plan 300,000 0
1997 Non-Employee Director Stock 100,000 26,060
Option Plan
7
AMENDED AND RESTATED OPTION
TO PURCHASE SHARES OF COMMON STOCK OF FAROUDJA, INC.
THIS AMENDED AND RESTATED OPTION TO PURCHASE SHARES OF COMMON STOCK OF
FAROUDJA, INC. dated as of March 7, 1997 (the "Option"), is made and entered
into by and among Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx ("Y&I"), Faroudja, Inc., a
Delaware corporation ("FI"), Faroudja Images Investors, LLC ("Holder") and
Faroudja Images, Inc., a Delaware corporation ("FII").
WHEREAS, Y&I granted separate options to purchase 2,120,192 shares of
common stock of Faroudja Laboratories ("FLI"), Inc., a California corporation
("FLI Option") and 480,264 shares of common stock of Faroudja Research
Enterprises ("FRE"), Inc., a California corporation ("FRE Option") to FII on
March 8, 1996.
WHEREAS, pursuant to the merger of FRE with and into FLI ("FLI/FRE
Merger"), all of the common stock of FRE was converted into FLI common stock at
the conversion ratio of .2125782 of a share of FLI common stock for each
outstanding FRE share of common stock;
WHEREAS, pursuant to the merger ("FLI/FAI Merger") of Faroudja Acquisition,
Inc., a California corporation and indirect wholly-owned subsidiary of FLI, with
and into FLI following the FLI/FRE Merger, all of the common stock of FLI was
converted into common stock of FI at the conversion ratio of .6918552 of a share
of FI common stock for each outstanding FLI share of common stock, which
resulted in an aggregate of 1,537,500 shares of common stock of FI at an
aggregate exercise price of $6,000,000 subject to the FLI Option and FRE Option;
WHEREAS, pursuant to the FLI/FRE Merger and the FLI/FAI Merger
(collectively, the "Mergers"), FLI became a wholly-owned subsidiary of FI;
WHEREAS, FII liquidated effective December 31, 1996 (the "FII Liquidation")
and the assets, including the FLI Option and FRE Option, were distributed to
Xxxxx X. Xxxxxxxxxx as liquidating trustee ("Liquidating Trustee") for Faroudja
Images, Inc., which are subsequently being distributed to the parties named in
the table below (collectively, the "Option Holders"), whose names, the number of
shares of Common Stock of FI subject to the portion of the FLI Option and FRE
Option being distributed to such Option Holder, as amended and restated ("FI
Option") and the aggregate exercise price of each such FI Option to be held by
each Option Holder, is set forth in the table below:
OPTION HOLDER NO. OF FI EXERCISE PRICE
------------- SHARES --------------
---------
Xxxxxxx Investors, LLC 486,875 $1,900,000
Images Partners, LP 384,375 $1,500,000
Faroudja Images Investors, LLC 666,250 $2,600,000
--------- ----------
1,537,500 $6,000,000
WHEREAS, Y&I are concurrently entering into options ("Other Options") with
holders of the Other Options ("Other Holders") on the same terms as the Holder
to reflect the grant of separate options for the number of FI shares and at the
exercise price set forth in the preceding table;
WHEREAS, Y&I, FII and Holder want to amend and restate and confirm the
distribution from FII of the FLI Option and the FRE Option by entering into this
Agreement to reflect transactions resulting from the FLI/FRE Merger, the FLI/FAI
Merger (collectively, the "Mergers") and the FII Liquidation;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
Y&I (collectively, the "Sellers") hereby grant to the Holder an option to
purchase from the Sellers, at any time or from time to time on or after
December 31, 1996 (the "Commencement Date") but not later than the earlier of
(i) the initial closing date of the sale of shares by FI to the public pursuant
to a registration statement filed with the SEC in compliance with the Securities
Act of 1933, as amended ("IPO") or (ii) September 5, 1997 (the "Expiration
Date"), for a price of $2,600,000 (the "Stock Purchase Price"), 666,250 shares
of common stock of FI (the "Shares"), free and clear of all claims, liens,
security interests, restrictions, rights and other encumbrances ("Liens"). The
Sellers are granting this option pursuant to the letter agreement dated
November 13, 1995 among the Sellers and Xxxxxxx Xxxxx Holdings, Inc. ("ST"), as
amended by the amendment to letter agreement dated February 9, 1996 among the
Sellers, ST and FII and pursuant to the Mergers and the FII Liquidation.
This Option is subject to the following terms and conditions:
1. TERM AND EXERCISE. The Holder shall have the right, at any time or
from time to time on or after the Commencement Date but not later than the
Expiration Date, to give notice to the Sellers, of the purchase of all, but not
fewer than all, the Shares, upon written notice (the "Option Exercise Notice")
given to the Sellers on one occasion; provided, however, that such right to
exercise this Option is conditioned upon all Other Holders simultaneously
providing an Option Exercise Notice under the Other Options and
2
closing the purchase and sale under the Other Options on the same date,
unless Y&I waive this condition as to this Option and/or either or both of
the Other Options.
2. PAYMENT; DELIVERY OF SHARES. If the Holder exercises the Option prior
to the Expiration Date, the Holder and the Sellers shall consummate the purchase
and sale at FI's office at 10:00 a.m. (California time) on the business day
designated by, and mutually agreeable to, the Holder and the Other Holders by
written notice given to the Sellers, which shall not be fewer than five or more
than ten business days after the delivery of the Option Exercise Notice. At the
closing (the "Option Closing"):
(a) the Sellers shall deliver or cause to be delivered to the Buyer
certificates representing all the Shares, free and clear of all Liens, together
with duly executed stock powers, with all required stock transfer tax stamps
attached and all appropriate estate tax waivers; and
(b) the Holder shall deliver, to an account or accounts designated by
both Sellers, the Stock Purchase Price.
3. NO ISSUANCES OR OTHER DILUTIVE ACTIONS.
3.1 Prior to the Expiration Date, neither Seller nor Holder (either
as a shareholder or through directors elected to represent such parties) shall
take any action to permit FI, without the prior written consent of (i) Xxxx
Xxxxxxxx and (ii) the Holder and Other Holders holding in aggregate Options and
Other Options exercisable for a majority of the shares of FI subject to this
Option and the Other Options, to issue any securities to any person, other than
upon the exercise or conversion of options, warrants or other rights outstanding
on the date of this Option, or to distribute any securities or other property to
its securityholders, or to consolidate or merge with or into another entity or
to sell all or substantially all of its assets.
3.2 Prior to an initial public offering of the common stock of FI (at
some later date) the parties hereto agree that the capitalization of FI and the
respective share ownership of the parties to this Option and other listed
shareholders and/or categories shall remain the same as set forth in Exhibit "A"
attached hereto, except that the FI Options may be exercised, and further agree
that the share capitalization of FI cannot be changed without the prior written
consent of (i) Xxxx Xxxxxxxx and (ii) the Holder and Other Holders holding in
aggregate Options and Other Options exercisable for a majority of the shares of
FI subject to this Option and the Other Options.
4. ESCROW AGREEMENTS. Subject to the terms and conditions of the escrow
agreement among FII and to add the Holder and Other Holders as parties in
substitution for FII, the Sellers and Bank of the West Trust and Investment
Services Division, as successor escrow agent (the "Escrow Agreement"), as
amended, the Sellers are authorizing the
3
Escrow Agent to exchange the shares of FLI and FRE held pursuant to the FLI
Option and FRE Option for the Shares and shares subject to the Other Options.
5. MISCELLANEOUS.
5.1 NOTICES. All notices and other communications under this Option
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
5.1):
if to either Seller, to him or her at:
Faroudja, Inc.
c/o Faroudja Laboratories, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Bank of the West Trust and Investment
Services Division
00 Xxxx Xxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Fax: (000) 000-0000
Xxxxxxxxx, Xxxxx, Fields & Younger
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Coudert Brothers
Four Embarcadero Center, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
4
if to the Holder, to it at:
the address set forth on the signature page of this Option
with a copy to:
Xxxxxxx Xxxxx Securities, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
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 the
number of pages constituting the notice having 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 above. However, such mailing shall in no way alter the time at which
the facsimile notice is deemed received.
5.2 AMENDMENT. This Option may be modified or amended or the
provisions of this Option may be waived only with the written consent of the
Sellers and the Holder (it being understood that the Sellers shall, at the
request of the Holder, cooperate with the Holder to modify this Option or to
restructure this Option in any manner that does not adversely affect the
Sellers).
5.3 GOVERNING LAW. This Option shall be governed by the law of the
State of California, without regard to provisions thereof relating to conflicts
of laws.
5
5.4 ASSIGNMENT. This Option may not be assigned, in any manner,
without the written consent of Sellers.
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Option to be duly executed as of the date first hereinabove written
above.
FAROUDJA, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
------------------------
Xxxxxxx Xxxxx, President
/s/ Xxxx Xxxxxxxx
------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
------------------------
Xxxxxxx Xxxxxxxx
Accepted and Agreed:
FAROUDJA IMAGES INVESTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------------
Address: 000 Xxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
FAROUDJA IMAGES, INC.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------
Xxxxx Xxxxxxxxx, Secretary
6
EXHIBIT "A"
FI CAPITALIZATION
SECURITY HOLDER FI C/S PERCENT
--------------- ------ -------
Stock Option Plans(1) 1,800,000 17.86%
Y&I Direct Ownership 2,050,000 20.34%
Y&I Option Shares 1,537,500
Xxxxxxx Investors, LLC 486,875 4.83%
Images Partners, LP 384,375 3.81%
Faroudja Images Investors, LLC 666,250 6.61%
FII Direct Ownership 4,612,500 45.76%
Xxxxxxx Contingent Warrant 65,152 0.65%
Xxxx Xxx Warrant 14,449 0.14%
---------- ------
TOTAL 10,079,960 100%
(1) The Stock Option Plans for FI break down as follows:
STOCK OPTION PLAN RESERVED C/S GRANTED OPTIONS
----------------- ------------ ---------------
1995 Stock Option Plan 1,400,000 1,386,578
1997 Performance Stock Option Plan 300,000 0
1997 Non-Employee Director Stock 100,000 26,060
Option Plan
7
AMENDED AND RESTATED OPTION
TO PURCHASE SHARES OF COMMON STOCK OF FAROUDJA, INC.
THIS AMENDED AND RESTATED OPTION TO PURCHASE SHARES OF COMMON STOCK OF
FAROUDJA, INC. dated as of March 7, 1997 (the "Option"), is made and entered
into by and among Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx ("Y&I"), Faroudja, Inc., a
Delaware corporation ("FI"), Images Partners, LP ("Holder") and Faroudja Images,
Inc., a Delaware corporation ("FII").
WHEREAS, Y&I granted separate options to purchase 2,120,192 shares of
common stock of Faroudja Laboratories ("FLI"), Inc., a California corporation
("FLI Option") and 480,264 shares of common stock of Faroudja Research
Enterprises ("FRE"), Inc., a California corporation ("FRE Option") to FII on
March 8, 1996.
WHEREAS, pursuant to the merger of FRE with and into FLI ("FLI/FRE
Merger"), all of the common stock of FRE was converted into FLI common stock at
the conversion ratio of .2125782 of a share of FLI common stock for each
outstanding FRE share of common stock;
WHEREAS, pursuant to the merger ("FLI/FAI Merger") of Faroudja Acquisition,
Inc., a California corporation and indirect wholly-owned subsidiary of FLI, with
and into FLI following the FLI/FRE Merger, all of the common stock of FLI was
converted into common stock of FI at the conversion ratio of .6918552 of a share
of FI common stock for each outstanding FLI share of common stock, which
resulted in an aggregate of 1,537,500 shares of common stock of FI at an
aggregate exercise price of $6,000,000 subject to the FLI Option and FRE Option;
WHEREAS, pursuant to the FLI/FRE Merger and the FLI/FAI Merger
(collectively, the "Mergers"), FLI became a wholly-owned subsidiary of FI;
WHEREAS, FII liquidated effective December 31, 1996 (the "FII Liquidation")
and the assets, including the FLI Option and FRE Option, were distributed to
Xxxxx X. Xxxxxxxxxx as liquidating trustee ("Liquidating Trustee") for Faroudja
Images, Inc., which are subsequently being distributed to the parties named in
the table below (collectively, the "Option Holders"), whose names, the number of
shares of Common Stock of FI subject to the portion of the FLI Option and FRE
Option being distributed to such Option Holder, as amended and restated ("FI
Option") and the aggregate exercise price of each such FI Option to be held by
each Option Holder, is set forth in the table below:
OPTION HOLDER NO. OF FI EXERCISE PRICE
------------- SHARES --------------
---------
Xxxxxxx Investors, LLC 486,875 $1,900,000
Images Partners, LP 384,375 $1,500,000
Faroudja Images Investors, LLC 666,250 $2,600,000
--------- ----------
1,537,500 $6,000,000
WHEREAS, Y&I are concurrently entering into options ("Other Options") with
holders of the Other Options ("Other Holders") on the same terms as the Holder
to reflect the grant of separate options for the number of FI shares and at the
exercise price set forth in the preceding table;
WHEREAS, Y&I, FII and Holder want to amend and restate and confirm the
distribution from FII of the FLI Option and the FRE Option by entering into this
Agreement to reflect transactions resulting from the FLI/FRE Merger, the FLI/FAI
Merger (collectively, the "Mergers") and the FII Liquidation;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
Y&I (collectively, the "Sellers") hereby grant to the Holder an option to
purchase from the Sellers, at any time or from time to time on or after
December 31, 1996 (the "Commencement Date") but not later than the earlier of
(i) the initial closing date of the sale of shares by FI to the public pursuant
to a registration statement filed with the SEC in compliance with the Securities
Act of 1933, as amended ("IPO") or (ii) September 5, 1997 (the "Expiration
Date"), for a price of $1,500,000 (the "Stock Purchase Price"), 384,375 shares
of common stock of FI (the "Shares"), free and clear of all claims, liens,
security interests, restrictions, rights and other encumbrances ("Liens"). The
Sellers are granting this option pursuant to the letter agreement dated November
13, 1995 among the Sellers and Xxxxxxx Xxxxx Holdings, Inc. ("ST"), as amended
by the amendment to letter agreement dated February 9, 1996 among the Sellers,
ST and FII and pursuant to the Mergers and the FII Liquidation.
This Option is subject to the following terms and conditions:
1. TERM AND EXERCISE. The Holder shall have the right, at any time or
from time to time on or after the Commencement Date but not later than the
Expiration Date, to give notice to the Sellers, of the purchase of all, but not
fewer than all, the Shares, upon written notice (the "Option Exercise Notice")
given to the Sellers on one occasion; provided, however, that such right to
exercise this Option is conditioned upon all Other Holders simultaneously
providing an Option Exercise Notice under the Other Options and
2
closing the purchase and sale under the Other Options on the same date,
unless Y&I waive this condition as to this Option and/or either or both of
the Other Options.
2. PAYMENT; DELIVERY OF SHARES. If the Holder exercises the Option prior
to the Expiration Date, the Holder and the Sellers shall consummate the purchase
and sale at FI's office at 10:00 a.m. (California time) on the business day
designated by, and mutually agreeable to, the Holder and the Other Holders by
written notice given to the Sellers, which shall not be fewer than five or more
than ten business days after the delivery of the Option Exercise Notice. At the
closing (the "Option Closing"):
(a) the Sellers shall deliver or cause to be delivered to the Buyer
certificates representing all the Shares, free and clear of all Liens, together
with duly executed stock powers, with all required stock transfer tax stamps
attached and all appropriate estate tax waivers; and
(b) the Holder shall deliver, to an account or accounts designated by
both Sellers, the Stock Purchase Price.
3. NO ISSUANCES OR OTHER DILUTIVE ACTIONS.
3.1 Prior to the Expiration Date, neither Seller nor Holder (either
as a shareholder or through directors elected to represent such parties) shall
take any action to permit FI, without the prior written consent of (i) Xxxx
Xxxxxxxx and (ii) the Holder and Other Holders holding in aggregate Options and
Other Options exercisable for a majority of the shares of FI subject to this
Option and the Other Options, to issue any securities to any person, other than
upon the exercise or conversion of options, warrants or other rights outstanding
on the date of this Option, or to distribute any securities or other property to
its securityholders, or to consolidate or merge with or into another entity or
to sell all or substantially all of its assets.
3.2 Prior to an initial public offering of the common stock of FI (at
some later date) the parties hereto agree that the capitalization of FI and the
respective share ownership of the parties to this Option and other listed
shareholders and/or categories shall remain the same as set forth in Exhibit "A"
attached hereto, except that the FI Options may be exercised, and further agree
that the share capitalization of FI cannot be changed without the prior written
consent of (i) Xxxx Xxxxxxxx and (ii) the Holder and Other Holders holding in
aggregate Options and Other Options exercisable for a majority of the shares of
FI subject to this Option and the Other Options.
4. ESCROW AGREEMENTS. Subject to the terms and conditions of the escrow
agreement among FII and to add the Holder and Other Holders as parties in
substitution for FII, the Sellers and Bank of the West Trust and Investment
Services Division, as successor escrow agent (the "Escrow Agreement"), as
amended, the Sellers are authorizing the
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Escrow Agent to exchange the shares of FLI and FRE held pursuant to the FLI
Option and FRE Option for the Shares and shares subject to the Other Options.
5. MISCELLANEOUS.
5.1 NOTICES. All notices and other communications under this Option
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
5.1):
if to either Seller, to him or her at:
Faroudja, Inc.
c/o Faroudja Laboratories, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Bank of the West Trust and Investment
Services Division
00 Xxxx Xxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Fax: (000) 000-0000
Xxxxxxxxx, Xxxxx, Fields & Younger
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Coudert Brothers
Four Embarcadero Center, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
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if to the Holder, to it at:
the address set forth on the signature page of this Option
with a copy to:
Xxxxxxx Xxxxx Securities, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
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 the
number of pages constituting the notice having 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 above. However, such mailing shall in no way alter the time at which
the facsimile notice is deemed received.
5.2 AMENDMENT. This Option may be modified or amended or the
provisions of this Option may be waived only with the written consent of the
Sellers and the Holder (it being understood that the Sellers shall, at the
request of the Holder, cooperate with the Holder to modify this Option or to
restructure this Option in any manner that does not adversely affect the
Sellers).
5.3 GOVERNING LAW. This Option shall be governed by the law of the
State of California, without regard to provisions thereof relating to conflicts
of laws.
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5.4 ASSIGNMENT. This Option may not be assigned, in any manner,
without the written consent of Sellers.
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Option to be duly executed as of the date first hereinabove written
above.
FAROUDJA, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
------------------------
Xxxxxxx Xxxxx, President
/s/ Xxxx Xxxxxxxx
------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
------------------------
Xxxxxxx Xxxxxxxx
Accepted and Agreed:
IMAGES PARTNERS, LP
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------
Address: 000 Xxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No.: (000) 000-0000
FAROUDJA IMAGES, INC.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------
Xxxxx Xxxxxxxxx, Secretary
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EXHIBIT "A"
FI CAPITALIZATION
SECURITY HOLDER FI C/S PERCENT
--------------- ------ -------
Stock Option Plans(1) 1,800,000 17.86%
Y&I Direct Ownership 2,050,000 20.34%
Y&I Option Shares 1,537,500
Xxxxxxx Investors, LLC 486,875 4.83%
Images Partners, LP 384,375 3.81%
Faroudja Images Investors, LLC 666,250 6.61%
FII Direct Ownership 4,612,500 45.76%
Xxxxxxx Contingent Warrant 65,152 0.65%
Xxxx Xxx Warrant 14,449 0.14%
---------- ------
TOTAL 10,079,960 100%
(1) The Stock Option Plans for FI break down as follows:
STOCK OPTION PLAN RESERVED C/S GRANTED OPTIONS
----------------- ------------ ---------------
1995 Stock Option Plan 1,400,000 1,386,578
1997 Performance Stock Option Plan 300,000 0
1997 Non-Employee Director Stock 100,000 26,060
Option Plan
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