EXHIBIT 4.4
STOCK OPTION AGREEMENT
Faroudja, Inc., a Delaware corporation (the "Company"), has granted to
Xxxxx X. Xxxxxxxx, Xx. (the "Grantee"), an option to purchase shares of the
Company's common stock, $.001 par value (the "Common Stock") effective as of
October 6, 1998 (the "Effective Date"), on the terms and subject to the
conditions set forth in this Stock Option Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the promises and of the mutual
agreements contained in this Agreement, the parties hereto agree as follows:
SECTION 1. OPTION; OPTION PRICE. On the terms and subject to this
Agreement, the Grantee shall have the option (the "Option") to purchase up to
the number of shares of Common Stock (the "Option Shares") indicated on the
schedule set forth at the end of this Stock Option Agreement (the "Grantee
Schedule") at the price per Option Share set forth on the Grantee Schedule
(the "Option Price") at the times and in the manner provided herein. The
Option does not qualify for federal income tax purposes as an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended. Options may only be exercised to purchase whole shares.
SECTION 2. TERM. The term of the Option (the "Option Term") shall
commence on the Effective Date and expire on the tenth anniversary
thereof,unless the Option shall have sooner been terminated in accordance
with this Agreement.
SECTION 3. VESTING. The Option Shares shall vest ("Vested Shares") in
the manner set forth on the Grantee Schedule. Upon the dissolution or
liquidation of the Company, or upon any reorganization, merger or
consolidation of the Company with one or more corporations where the Company
is the surviving corporation and the stockholders of the Company immediately
prior to such transaction do not own at least eighty percent (80%) of the
Company's Common Stock immediately after such transaction, or upon any
reorganization, merger or consolidation of the Company with one or more
corporations where the Company is not the surviving corporation, or upon a
sale of substantially all of the assets or eighty percent (80%) or more of
the then outstanding shares of Common Stock of the Company to another
corporation or entity, (any reorganization, merger, consolidation, sale of
assets, or sale of share of Common Stock being hereinafter referred to as the
"Transaction"), any Option Shares that have not yet vested shall become
immediately exercisable in full and shall remain exercisable until the
effective date of such Transaction. The accelerated vesting of the Options
Shares shall be subject to and conditioned upon the consummation of the
Transaction to which such acceleration relates. If for any reason, such
Transaction is abandoned, exercise of the Option shall be void and this
Option will thereafter be exercisable only as permitted by its original
terms. If the Transaction is consummated, the Option shall terminate on the
day after the consummation of the Transaction.
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SECTION 4. RESTRICTION ON TRANSFER. The Option may not be
transferred, pledged, assigned, hypothecated or otherwise disposed of in any
way by the Grantee other than by will or by the laws of descent and
distribution and as provided in this Agreement. The Option Shares will be
"restricted securities" under the Securities Act of 1933, as amended (the
"Act") and may not be resold absent registration under the Act or an
available exemption thereunder. In the event that Grantee effects a sale or
transfer of such Option Shares under an available exemption under the Act,
such Grantee shall, before effecting such sale or transfer, notify the
Company in writing of the proposed disposition, and furnish the Company with
an opinion of counsel satisfactory in form and content to the Company. The
Option Shares, once exercised into Common Stock, will be subject to a lock-up
for 180 days following the date immediately subsequent to the first date of
the effectiveness of the first underwritten public offering of any of the
Company's securities.
If the Grantee dies, the Option shall thereafter be exercisable for a
period of twelve (12) months by his executors or administrators to the full
extent to which the Option was exercisable by the Grantee at the time of his
death. The Option shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof, and the levy of
any execution, attachment or similar process upon the Option, shall be null
and void and without effect.
SECTION 5. PIGGYBACK REGISTRATION. If at any time after the date of
this Agreement until the expiration of this Agreement, the Company proposes
to register any of its shares of common stock under the Securities Act of
1933, as amended (other than in connection with a merger or pursuant to Form
S-4 or a comparable registration statement) it will promptly give notice to
Grantee of its intention to do so. If Grantee notifies the Company within
twenty (20) days after receipt of any such notice of its desire to include
any Option Shares in such proposed registration, the Company shall afford the
Holder the opportunity to have such Option Shares registered under such
registration statement.
Notwithstanding anything in this section 5 to the contrary, the Company
shall have the right at any time after it shall have given any notice
pursuant to this section 5 (irrespective of whether a written request for
inclusion of any Option Shares shall have been made), to elect to postpone or
not to file such proposed registration statement or to withdraw the same
after filing but prior to the Effective Date thereof.
SECTION 6. UNDERWRITING REQUIREMENTS. In connection with any
offering involving an underwriting of shares being sold by the Company, the
Company shall not be required under this Section 6 to include any Option
Shares in such underwriting unless the Holder accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company. If the
total number of shares, including the Option Shares, requested by
stockholders, including the Grantee, to be included in the offering exceeds
the number of shares sold other than by the Company that the underwriters
reasonably believe compatible with the success of the offering, then the
number of selling stockholders' shares that may be included in the offering
shall be apportioned pro rata
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among the selling stockholders according to the total number of shares entitled
to be included in the offering owned by each selling stockholder or in such
other proportions as shall mutually be agreed to by the selling stockholders.
SECTION 7. GRANTEE'S EMPLOYMENT. Nothing in this Option shall
confer upon the Grantee any right to continue to be employed by the Company or
any of its affiliates or to interfere in any way with the right of the Company
or its affiliates or stockholders, as the case may be, to terminate the
Grantee's employment or to increase or decrease the Grantee's compensation at
any time.
SECTION 8. NOTICES. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
(a) if to the Company:
Faroudja, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel;
(b) if to the Grantee, to him/her at the address set forth on the
Grantee Schedule;
or to such other address as the party to whom notice is to be given has
furnished to the other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) in the case of
personal delivery, on the date of such delivery (or if such date is not a
business day, on the next business day after the date of delivery), (ii) in the
case of nationally-recognized overnight courier, on the next business day after
the date sent, (iii) in the case of telecopy transmission, when received (or if
not sent on a business day, on the next business day after the date sent), and
(iv) in the case of mailing, on the third business day following that date on
which the piece of mailing containing such communication is posted.
SECTION 9. WAIVER OF BREACH. The waiver by either party of a
breach of any provision of this Agreement must be in writing and shall not
operate or be construed as a waiver of any other or subsequent breach.
SECTION 10. GRANTEE'S UNDERTAKING. The Grantee hereby agrees to
take whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Grantee pursuant to the express provisions of this Agreement.
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SECTION 11. MODIFICATION OF RIGHTS. The rights of the Grantee are
subject to modification and termination in certain events as provided in this
Agreement.
SECTION 12. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE
STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF
THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE
INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH
JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF
SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and each such counterpart shall be deemed to be an original,
but all such counterparts together shall constitute but one agreement.
SECTION 14. ENTIRE AGREEMENT. This Agreement (and the other
writings referred to herein) constitute the entire agreement between the parties
with respect to the subject matter hereof and thereof and supersede all prior
written or oral negotiations, commitments, representations and agreements with
respect thereto.
SECTION 15. SEVERABILITY. It is the desire and intent of the
parties hereto that the provisions of this Agreement be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated by a court of competent
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
SECTION 16. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND
EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING
HEREUNDER.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Option
Agreement as of the Effective Date.
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FAROUDJA, INC.
By: ____________________________
Name:
Title: Vice President
________________________________
Grantee Signature
GRANTEE SCHEDULE
Grantee: Xxxxx X. Xxxxxxxx, Xx.
Grantee Address: 0000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Effective Date: October 6, 1998
Number of Option Shares: 118,750
Option Price: $3.75 per Option Share
Termination: 30 days to exercise if terminated for cause;
90 days to exercise if employment ends for other
reason; and 365 days to exercise if employment ends
due to death or disability change
Vesting Schedule: 100,000 options are exercisable immediately; 18,750
vest 1/36 per month. If any of the 100,000 options
which vest immediately are exercised within 12 months
after the grant date, the shares acquired may not be
sold until 12 months from the Effective Date without
prior Board Consent.
