<PAGE>
                                                                     Exhibit 4.3

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


                                    Faroudja, Inc.

                    1997 Non-Employee Directors Stock Option Plan

                                  December 31, 1996


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

<PAGE>

                                  TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

ARTICLE I -   Purpose.......................................................  1

ARTICLE II -  Definitions...................................................  1

ARTICLE III - Shares Subject to Plan........................................  3

ARTICLE IV -  Administration................................................  4

ARTICLE V -   Eligibility...................................................  6

ARTICLE VI -  Options.......................................................  7

ARTICLE VII - Effect of Certain Changes..................................... 11

ARTICLE VIII -Amendment and Termination..................................... 13

ARTICLE IX -  Issuance of Shares and Compliance with Securities Regulations. 14

ARTICLE X -   Application of Funds.......................................... 15

ARTICLE XI -  Notice........................................................ 15

ARTICLE XII - Term of Plan.................................................. 15

ARTICLE XIII -Effectiveness of the Plan..................................... 16

ARTICLE XIV - Captions...................................................... 16

ARTICLE XV -  Governing Law................................................. 16


                                          i

<PAGE>

                                    FAROUDJA, INC.

                     1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

                                      ARTICLE I

                                       PURPOSE

         The purpose of the FAROUDJA, INC. 1997 NON-EMPLOYEE DIRECTOR STOCK
OPTION PLAN (the "Plan") is to promote the interest of the Company and its
stockholders by increasing the proprietary and vested interest of non-employee
directors in the growth and performance of the Company.  The Plan provides for
awards of non-qualified options (the "Options") to non-employee directors of the
Company, as set forth in Section 5.1, below, in accordance with Rule 16-b,
promulgated under the Securities Exchange Act of 1934, as amended (the "1934
Act").  The Options shall be exercisable in whole or in part at all times during
the period beginning on the date of grant until the earlier of (i) ten years
from the date of grant, and (ii) one year form the date on which a Grantee
ceases to be an Eligible Director.  In this Plan, the terms "Parent" and
"Subsidiary" mean "Parent Corporation" and "Subsidiary Corporation,"
respectively, as such terms are defined in Sections 424(e) and (f) of the Code.

                                      ARTICLE II

                                     DEFINITIONS

         The following words and terms as used herein shall have that meaning
set forth therefor in this Article II, unless a different meaning is clearly
required by the context.


                                          1

<PAGE>

Whenever appropriate, words used in the singular shall be deemed to include the
plural and vice versa, and the masculine gender shall be deemed to include the
feminine gender.

         2.1  BOARD shall mean the Board of Directors of the Company.

         2.2  CODE shall mean the Internal Revenue Code of 1986, as now in
effect or as hereafter amended.

         2.3  COMMITTEE shall mean the Compensation Committee which may be
appointed by the Board in accordance with the provisions of Article IV to
administer the Plan.

         2.4  COMMON STOCK shall mean the shares of common stock, .001 par
value, of the Company, and any other securities of the Company to the extent
provided in Article VIII.

         2.5  COMPANY shall mean Faroudja, Inc., a Delaware corporation, and
any successor to it.

         2.6  EFFECTIVE DATE shall mean the day upon which the Plan is approved
by the stockholders of the Company.

         2.7  ELIGIBLE DIRECTOR shall have the meaning set forth in Section 5.1
herein.

         2.8  FAIR MARKET VALUE shall have the meaning set forth in Section 6.2
herein.

         2.9  GRANTEE shall mean a Non-Employee Director who is granted an
Option by the Board under this Plan.

         2.10 NON-EMPLOYEE DIRECTOR shall have the meaning set forth in Rule
16b-3 promulgated under the 1934 Act, as amended.


                                          2

<PAGE>

         2.11 OPTION shall mean an option granted under this Plan.

         2.12 OPTION AGREEMENT shall mean a written agreement evidencing the
right to purchase shares of Common Stock pursuant to the terms of this Plan
which agreement shall be in the form described in Article VI.

         2.13 PLAN shall mean the Faroudja, Inc. 1997 Non-Employee Director
Stock Option Plan, as set forth herein and as amended from time to time.

         2.14 SECURITIES ACT means the Securities Act of 1933, as amended.

         2.15 SUBSIDIARY shall mean any corporation that at the time qualifies
as a subsidiary of the Company under the definition of "subsidiary corporation"
contained in Section 424(f) of the Code, as that section may be amended from
time to time.


                                     ARTICLE III

                                SHARES SUBJECT TO PLAN

         3.1  TOTAL NUMBER OF SHARES AVAILABLE.  The maximum number of shares
of Common Stock in respect of which awards may be granted under the Plan is One
Hundred Thousand (100,000) (subject to adjustment as provided below in
Section 3.3 and in Article VII hereof).

         3.2  SOURCE OF SHARES.  The shares of Common Stock issued upon the
exercise of an Option shall be made available, in the discretion of the Board,
either from the authorized but


                                          3

<PAGE>

unissued shares of Common Stock or from any outstanding shares of Common Stock
which have been reacquired by the Company.

         3.3  SHARES SUBJECT TO EXPIRED OR OTHERWISE TERMINATED OPTIONS.
Shares of Common Stock subject to awards that are expired, forfeited,
terminated, canceled or settled without the delivery of Common Stock will again
be available for awards.  Also, shares tendered to the Company in satisfaction
or partial satisfaction of the exercise price of any award will increase the
number of shares available for awards to the extent permitted by Rule 16b-3
promulgated under the 1934 Act.

                                      ARTICLE IV

                                    ADMINISTRATION

         4.1  COMMITTEE TO ADMINISTER PLAN.  The Board shall delegate the
exclusive control and management of the operations of the Plan to the Committee.
The Board may, however, at any  time or times either (i) terminate any such
delegation of authority and assume the exclusive control and management of the
Plan, or (ii) having terminated such a delegation of authority may again
delegate the exclusive control and management of the Plan to the Committee.  In
the event that and for so long as this Plan is controlled and managed by the
Board, the terms and provisions of this Plan, other than Sections 2.1, 2.3, 4.1,
4.2, shall be applied by substituting the term "Board" for "Committee" therein.

         4.2  APPOINTMENT OF A COMMITTEE.  In the event that the Board appoints
a Committee:  (i) the Committee shall be



                                          4

<PAGE>

composed solely of two or more Non-Employee Directors; (ii) all vacancies
occurring on the Committee shall be filled with Non-Employee Directors by
appointment of the Board; (iii) the members of the Committee shall serve at the
pleasure of the Board; (iv) the Committee shall adopt such rules and regulations
as it shall deem appropriate concerning the holding of meetings and the
administration of the Plan; and (v) the entire Committee shall constitute a
quorum and the actions of the entire Committee present at a meeting, or actions
approved in writing by the entire Committee, shall be the accounts of the
Committee.

         4.3  DETERMINATIONS TO BE MADE BY THE COMMITTEE.  Subject to the
provisions of this Plan, the Committee shall determine:  (i) the Grantees;
(ii) the number of shares of Common Stock subject to an Option; (iii) the date
or dates upon which an Option may be exercised or granted; (iv) the manner in
which an Option may be exercised; (v) such other terms to which an Option is
subject (including the manner in which it vests); and (vi) the form of any
Option Agreements (as defined in Section 6.1 below).  In determining the amount
and terms of options granted under the Plan, the Committee shall review
performance measures which shall influence the number of Options granted and the
vesting of such Options.

         4.4  INTERPRETATION OF PLAN.  The Committee shall interpret the Plan
and from time to time may adopt such rules and regulations for carrying out the
terms and purposes of the Plan and may take such other actions in the
administration of


                                          5

<PAGE>

the Plan as it deems advisable.  The interpretation and construction by the
Committee of any provision of this Plan or any Option Agreement and the
determination of any question arising under this Plan, any such rule or
regulation, or any Option Agreement shall be final and binding on all persons
interested in the Plan.

         4.5  LIMITED LIABILITY.  Neither the Board nor any member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan.

                                      ARTICLE V

                                     ELIGIBILITY

         5.1  ELIGIBLE DIRECTORS.  Options may be granted under the Plan only
to non-employee directors of the Company, in accordance with Rule 16-b,
promulgated under the 1934 Act, as amended, who (i) are not officers of, or
otherwise employed by, the Company, its affiliates, its parent, or its
subsidiaries, if any, (ii) do not receive compensation, either directly or
indirectly, from the Company, its affiliates, its parent, or its subsidiaries,
if any, for services rendered as a consultant or in any capacity other than as a
director, except for an amount that does not exceed the dollar amount for which
disclosure would be required as set forth in Rule 16b-3(b)(3)(i)(B), (iii) do
not possess an interest in any other transaction for which disclosure would be
required as set forth in Rule 16b-3(b)(3)(i)(C), and (iv) are not engaged in a
business relationship for which disclosure would be


                                          6

<PAGE>

required as set forth in Rule 16b-3(b)(3)(i)(D) (collectively, the "Eligible
Directors").

                                      ARTICLE VI

                                       OPTIONS

         6.1  TERMS AND CONDITIONS OF OPTIONS. Each Option shall specify the
number of shares of Common Stock for which such Option shall be exercisable and
the exercise price for each such shares of Common Stock.  In addition, each
Option shall be evidenced by a written agreement (an "Option Agreement"), in
substantially the form of EXHIBIT A, with such changes thereto as are consistent
with the Plan as the Board (or Committee, if one is appointed) shall deem
appropriate and shall provide in substance as follows:

         6.2  NUMBER OF SHARES AND PURCHASE PRICE.  Each Option Agreement shall
specify the number of shares of Common Stock covered by such Option and the
purchase price per share.  The price (the "Option Price") at which each share of
Common Stock may be purchased shall be 100% of the Fair Market Value of the
shares of Common Stock on the date of the grant (as determined in accordance
with this Article VI).

         For purposes of the Plan, the "Fair Market Value" of shares of Common
Stock shall be equal to:

              6.2.1     if such shares are publicly traded, (x) the
    closing price on the business day immediately preceding the date of
    grant if any trades were made on such business day and such
    information is available, otherwise the average of


                                          7

<PAGE>

    the last bid and asked prices on the business day immediately preceding the
    date of grant, in the over-the-counter market as reported by the National
    Association of Securities Dealers Automated Quotations System ("THOUSAND")
    or (y) if such shares are then traded on a national securities exchange,
    the closing price on the business day immediately preceding the date of
    grant, if any trades were made on such business day and such information is
    available, otherwise the average of the high and low prices on the business
    day immediately preceding the date of grant, on the principal national
    securities exchange on which it is so traded; or

              6.2.2     if there is no public trading market for such
    shares, the fair value of such shares on the date of grant as
    reasonably determined in good faith by the Board (or Committee, if
    applicable, and with the consent of a majority of the Board) after
    taking into consideration all factors which it deems appropriate,
    including, without limitation, recent sale and offer prices of such
    shares in private transactions negotiated at arms' length.

         Notwithstanding anything contained in the Plan to the contrary, all
determinations pursuant to Article VI hereof shall be made without regard to any
restriction other than a restriction which, by its terms, will never lapse.


                                          8

<PAGE>

         6.3  PAYMENT OF OPTION PRICE.  The Option Price of the Options may be
satisfied in cash, by a certified or cashier's check, or unless otherwise
determined by the Board, by exchanging shares of Common Stock owned by the
Grantee at their Fair Market Value, or by a combination of cash and shares of
Common Stock.  The ability to pay the Option Price in shares of Common Stock
would enable a Grantee to engage in a series of successive stock-for-stock
exercises of an Option (sometimes referred to as "pyramiding") and thereby fully
exercise an Option with little or no cash investment.  However, the Board's
current policy is to require any shares tendered in satisfaction of the Option
Price to have been owned by the exercising Grantee for a minimum of six (6)
months.

         6.4  NON-TRANSFERABILITY OF OPTIONS.  Each Option Agreement shall
provide that the Option granted therein shall be non-transferable and
non-assignable by the Grantee other than by will or the laws of descent and
distribution pursuant to a qualified domestic relations order, and that during
the lifetime of the Grantee such Option may be exercised only by the Grantee or
such Grantee's legal representative.

         6.5  MAXIMUM TERM; DATE OF EXERCISE; TERMINATION. Each Option
Agreement shall provide that the Options shall be exercisable in whole or in
part at all times during the period beginning on the date of grant until the
earlier of (i) ten years from the date of grant, and (ii) one year form the date
on which a Grantee ceases to be an Eligible Director.


                                          9

<PAGE>

         6.6  EXERCISE OF OPTIONS.  Each Option Agreement shall provide that
Options shall be exercised by delivering a written notice of exercise to the
Company.  Each such notice shall state the number of shares of Common Stock with
respect to which the Option is being exercised and shall be signed by the person
(or persons) exercising the Option and, in the event the Option is being
exercised by any person other than the Grantee, shall be accompanied by proof,
satisfactory to counsel for the Company, of the right of such person to exercise
the Option.  The exercise price for each Option shall be paid in full for the
number of shares of Common Stock specified in the notice as provided in this
Section 6.6.

         The date of exercise of an Option shall be the date on which written
notice of exercise shall have been delivered to the Company, but the exercise of
an Option shall not be effective until the person (or persons) exercising the
Option shall have complied with all the provisions of the Option Agreement
governing the exercise of the Option.  The Company shall deliver as soon as
practicable after receipt of notice and payment, certificates for the shares of
Common Stock subject to the Option.  No one shall be deemed to be the holder of
any shares of Common Stock subject to an Option, or have any other rights as a
stockholder, unless and until certificates for the shares of such Common Stock
are issued to that person.

         6.7  OTHER PROVISIONS.  The Option Agreement may include such other
terms and conditions, not inconsistent with


                                          10

<PAGE>

this Plan, as the Board in its sole discretion shall determine.

                                     ARTICLE VII

                              EFFECT OF CERTAIN CHANGES

         7.1  ANTI-DILUTION.  If there is any change in the number of shares of
Common Stock through the declaration of stock dividends or through a
recapitalization which results in stock splits or reverse stock splits, the
Board shall make corresponding adjustments to the number of shares of Common
Stock available for Options, the number of such shares covered by outstanding
Options, and the price per share of such Options in order to appropriately
reflect any increase or decrease in the number of issued shares of Common Stock;
provided, however, that any fractional shares of Common Stock resulting from
such adjustment shall be eliminated.  Any determination made by the Board
relating to such adjustments shall be final, binding and conclusive.

         7.2  CHANGE IN PAR VALUE.  In the event of a change in the Common
Stock of the Company, as constituted as of the date of this Plan, which is
limited to a change of all of its authorized shares with par value into the same
number of shares with a different par value or without par value, the shares
resulting from any such change shall be deemed to be the Common Stock within the
meaning of the Plan.

         7.3  MERGERS AND CONSOLIDATIONS.  Notwithstanding the other Sections
of this Article VII, upon the dissolution or liquidation of the Company, or upon
any reorganization,


                                          11

<PAGE>

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 such reorganization, merger, consolidation, sale of assets, or sale
of shares of Common Stock being hereinafter referred to as the "Transaction"),
the Plan shall terminate; provided however, that

              (i)  any Options theretofore granted and outstanding under the
         Plan shall become immediately exercisable in full and shall remain
         exercisable until the effective date of such Transaction;

            (ii)   the termination of the Plan, and any exercise of any Option
         (to the extent that the holder's right to exercise such Option has
         been accelerated by the operation of Section 7.3(i)), shall be subject
         to and conditioned upon the consummation of the Transaction to which
         such termination and acceleration relates, and if, for any reason,
         such Transaction is abandoned, exercise of the Option shall be void
         and such Option shall thereafter be exercisable only as permitted by
         the Plan and the Option Agreement, which shall remain in full force
         and effect.

         For purposes of applying this Section 7.3, the Fair Market Value of
shares of Common Stock underlying the Options shall be determined as of the time
the Option with respect to such shares is granted.  The Company shall use its
best


                                          12

<PAGE>


efforts to give each Grantee written notice of any proposed Transaction at least
thirty (30) days prior to the effective date of any such Transaction.  Any
Option not exercised by the time the Transaction legally becomes effective shall
thereupon terminate.

         7.4  RIGHTS OF PARTICIPANTS.  Except as hereinbefore expressly
provided in this Article VII, the Grantee shall have no rights by reason of any
subdivision or consolidation of shares of stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class or by reason of any dissolution, liquidation, merger, or
consolidation or spin-off of assets or stock of another corporation, and any
issue by the Company of shares of stock of any class, or securities convertible
into  shares of stock of any class, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an Option.  The grant of an Option shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structures or to merge or to consolidate or to dissolve, liquidate or sell or
transfer all or part of its business or assets.

                                     ARTICLE VIII

                              AMENDMENT AND TERMINATION

         The Board shall have the right to amend, suspend or terminate this
Plan at any time, provided that unless first


                                          13

<PAGE>

approved by the stockholders of the Company, no amendment shall be made to the
Plan (except to conform the Plan and the Option Agreements thereunder to changes
in the Code or governing law) which:  (i) increases the number of shares of
Common Stock which may be purchased pursuant to the Options, either individually
or in the aggregate, (ii) changes the requirement that Option grants be priced
at Fair Market Value, (iii) modifies in any respect the class of individuals who
constitute Eligible Directors or (iv) materially increases benefits.  The
provisions governing eligibility and the grant, terms and conditions of the
Options may not be amended more often than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act,
or the rules under either such statute.

                                      ARTICLE IX

                          ISSUANCE OF SHARES AND COMPLIANCE
                             WITH SECURITIES REGULATIONS

         The obligation of the Company to sell and deliver the shares of Common
Stock pursuant to Options granted under this Plan shall be subject to all
applicable laws, regulations, rules and approvals, including, but not by way of
limitation, the effectiveness of a registration statement under the Securities
Act of 1933, as amended, if deemed necessary or appropriate by the Board, to
register the shares of Common Stock reserved for issuance upon exercise of
Options under such Act.


                                          14

<PAGE>

                                      ARTICLE X

                                 APPLICATION OF FUNDS

         Any proceeds received by the Company as a result of the exercise of
Options granted under the Plan may be used for any valid corporate purpose.

                                      ARTICLE XI

                                        NOTICE

         Any notice to the Company required under this Plan shall be in writing
and shall either be delivered in person or sent by registered or certified mail,
return receipt requested, postage prepaid, to:

                        Faroudja, Inc.
                        750 Palomar Avenue
                        Sunnyvale, California  94086
                        Attention:  Michael Hoberg, CFO


                                     ARTICLE XII

                                     TERM OF PLAN

         The Plan shall terminate ten (10) years from the date upon which it is
approved by the stockholders of the Company or on such earlier date as may be
determined by the Board.  In any event, termination shall be deemed to be
effective as of the close of business on the day of termination.  No Options may
be granted after such termination.  Termination of the Plan, however, shall not
affect the rights of Grantees under Options previously granted to them, and all
unexpired Options shall continue in full


                                          15

<PAGE>

force and operation after termination of the Plan until they lapse or terminate
by their own terms and conditions.

                                     ARTICLE XIII

                              EFFECTIVENESS OF THE PLAN

         The Plan shall become effective upon adoption by the Board; provided,
however, that the Plan shall be submitted for approval by the holders of a
majority of the voting stock of the Company at the Company's next Annual Meeting
of Stockholders to be held in 1997.  In the event the stockholders shall fail to
approve the Plan, it and all Options granted thereunder shall be and become null
and void.  Notwithstanding any other provision of the Plan to the contrary, no
Options granted under the Plan may be exercised until after such stockholder
approval.

                                     ARTICLE XIV

                                       CAPTIONS

         The use of captions in this Plan is for convenience.  The captions are
not intended to provide substantive rights.

                                      ARTICLE XV

                                    GOVERNING LAW

         All questions concerning the construction, interpretation and validity
of this Plan and the instruments evidencing the Options granted hereunder shall
be governed by and construed and enforced in accordance with the domestic laws
of the State of Delaware, without giving effect to any choice or conflict of law
provision or rule (whether in the State of Delaware or any other jurisdiction)
that would cause


                                          16

<PAGE>

the application of the laws of any jurisdiction other than the State of
Delaware.  In furtherance of the foregoing, the internal law of the State of
Delaware will control the interpretation and construction of this Plan, even if
under such jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.

         As adopted by the Board of Directors of FAROUDJA, INC. on December 31,
1996.


                                          17
<PAGE>


                                      EXHIBIT A

                         NONQUALIFIED STOCK OPTION AGREEMENT
                          dated as of [____________] between
                                   FAROUDJA, INC.,
                       a Delaware corporation (the "Company"),
                          and [__________] (the "Grantee").


         The Company, acting through its Board of Directors (the "Board") or
through a Committee (as defined in the Plan), has granted to the Grantee,
effective as of the date of this Agreement, an option under the Company's 1997
Non-Employee Director Stock Option Plan (the "Plan") to purchase shares of
Common Stock, on the terms and subject to the conditions set forth in this
Agreement and the Plan.

         NOW, THEREFORE, in consideration of the promises and of the mutual
agreements contained in this Agreement, the parties hereto agree as follows:

         SECTION 1.  THE PLAN.  The terms and provisions of the Plan are hereby
incorporated into this Agreement as if set forth herein in their entirety.  In
the event of a conflict between any provision of this Agreement and the Plan,
the provisions of the Plan shall control.  A copy of the Plan may be obtained
from the Company by the Grantee upon request.  Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed thereto in the Plan.

         SECTION 2.  OPTION; OPTION PRICE.  On the terms and subject to the
conditions of the Plan and this Agreement, the Grantee shall have the option
(the "Option") to purchase up to [__] shares of Common Stock (the "Option
Shares") at the price of $[______] per Option Share (the "Option Price") at the
times and in the manner provided herein.  Payment of the Option Price may be
made in the manner specified by Article VI of the Plan.  The Option is not
intended to 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.

         SECTION 3.  TERM.  The term of the Option (the "Option Term") shall
commence on the date hereof and expire on the earlier of (i) the tenth
anniversary of the Effective Date and (ii) one year from the date on which a
Grantee ceases to be an Eligible Director.

         SECTION 4.  RESTRICTION ON TRANSFER.  The Option may not be
transferred, pledged, assigned, hypothecated or otherwise disposed of in any way
by the Grantee and may be exercised during the lifetime of the Grantee only by
the


                                          1
<PAGE>

Grantee.  If the Grantee dies, the Option shall thereafter be exercisable, in
accordance with Section 6.4 of the Plan.  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.  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, to it at:

              Faroudja, Inc.
              750 Palomar Avenue
              Sunnyvale, California  94086
              Attention:  Michael Hoberg, CFO

              with copies to:

              Buchalter, Nemer, Fields & Younger
              601 South Figueroa Street, Suite 2400
              Los Angeles, California 90017-5704
              Attention:  Mark Bonenfant, Esq.
              Telephone:  (213) 891-0700
              Telecopier: (213) 896-0400;

         (b)  if to the Grantee, to him at:

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


or to such other address as the party to whom notice is to be given may have
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


                                          2
<PAGE>

business day following that date on which the piece of mail containing such
communication is posted.

         SECTION 6.  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 7.  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 and the Plan.

         SECTION 8.  MODIFICATION OF RIGHTS.  The rights of the Grantee are
subject to modification and termination in certain events as provided in this
Agreement and the Plan.

         SECTION 9.  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 10.  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 11.  ENTIRE AGREEMENT.  This Agreement and the Plan (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 12.  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


                                          3
<PAGE>

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 13.  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 Nonqualified
Stock Option Agreement as of the date first written above.

                             FAROUDJA, INC.



                             By:
                                -----------------------------------
                                  Name:
                                  Title:


                             --------------------------------------
                                            [GRANTEE]


                                          4