Document:

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                                                                  Exhibit 4.1

                          FAROUDJA LABORATORIES, INC.

                            1995 STOCK OPTION PLAN
              Adopted by the Board of Directors on August 1, 1995
              and Approved by the Shareholders on August 1, 1995
                    Amended by the Board on August 19, 1996
             and Approved by the Shareholders on August 19, 1996.

  1.   PURPOSES OF THIS PLAN.  The purposes of this 1995 Stock Option Plan
are to attract and retain the best available personnel, to provide additional
incentive to the Employees of the Company and its Subsidiaries, to promote
the success of the Company's business and to enable the Employees to share in
the growth and prosperity of the Company by providing them with an
opportunity to purchase stock in the Company.

       Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected
in the terms of the written stock option agreement.

  2.   DEFINITIONS.  As used herein, the following definitions shall apply:

       (a)  "BOARD" shall mean the Board of Directors of the Company.

       (b)  "CODE" shall mean the Internal Revenue Code of the 1986, as
amended.

       (c)  "COMMON STOCK" shall mean the Common Stock of the Company,
without par value.

       (d)  "COMPANY" shall mean Faroudja Laboratories, Inc. a California
corporation.

       (e)  "COMMITTEE" shall mean the Committee appointed by the Board in
accordance with Section 4 of this Plan, if one is appointed.

       (f)  "CONTINUOUS EMPLOYMENT" or "Continuous Status as an Employee"
shall mean the absence of any interruption or termination of employment or
service as an Employee by or to the Company or any Parent or Subsidiary of
the Company which now exists or is hereafter organized or acquired by or
acquires the Company. Continuous Employment shall not be considered
interrupted in the case of sick leave, military leave or any other leave of
absence approved by the Board or in the event of transfers between locations
of the Company or between the Company, its Parent, any of its Subsidiaries or
its successors.

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       (g)  "DISINTERESTED PERSON" shall mean a director who is a
"disinterested person," as such term is defined pursuant to Rule
16b-3(c)(2)(i) promulgated pursuant to the Exchange Act and any applicable
releases and opinions or the Securities and Exchange Commission.

       (h)  "EMPLOYEE" shall mean any person, including officers and
directors, employed by the Company, its Parent, any of its Subsidiaries or
its successors; or, for purposes of eligibility for Nonstatutory Stock
Options, any person employed by the Company, including officers and
directors, or any consultant to, or director of, the Company, or any Parent
or Subsidiary of the Company, whether or not such consultant or director is
an employee of such entities.

       (i)  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any successor legislation.

       (j)  "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.

       (k)  "NONSTATUTORY STOCK OPTION" shall mean an Option which is not an
Incentive Stock Option.

       (l)  "OPTION" shall mean a stock option granted pursuant to this Plan.

       (m)  "OPTION AGREEMENT" shall mean a written agreement in such form or
forms as the Board (subject to the terms and conditions of this Plan) may
from time to time approve, evidencing an Option.

       (n)  "OPTIONED STOCK" shall mean the Common Stock subject to an Option.

       (o)  "OPTIONEE" shall mean an Employee who is granted an Option.

       (p)  "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Sections 425(e) and (g) of the Code.

       (q)  "PLAN" shall mean this 1995 Stock Option Plan.

       (r)  "REGISTRATION DATE" shall mean the effective date of the first
registration statement which is filed by the Company and declared effective
pursuant to Section 12(g) of the Exchange Act, with respect to any class of
the Company's securities.

       (s)  "SHARE" or "Shares" shall mean the Common Stock, as adjusted in
accordance with Section 11 of this Plan.

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       (t)  "STOCK PURCHASE AGREEMENT" shall mean an agreement in such form
or forms as the Board (subject to the terms and conditions of this Plan) may
from time to time approve, which is to be executed as a condition of
purchasing Optioned Stock upon exercise of an Option.

       (u)  "SUBSIDIARY" shall mean a subsidiary corporation, whether now or
hereafter existing, as defined in Sections 425(f) and (g) of the Code.

  3.   STOCK SUBJECT TO THIS PLAN.  Subject to the provisions of Section 11
of this Plan, the maximum aggregate number of Shares which may be optioned
and sold under this Plan shall not exceed in the aggregate of Two Million
Five Hundred Thousand (2,500,000) Shares.  The Shares may be authorized, but
unissued or reacquired Shares other than reacquired Shares delivered pursuant
to Section 7(c)(iv) hereof as payment of consideration in the exercise of an
option.

       If (a) an Option should expire or become unexercisable for any reason
without having been exercised in full or (b) if the Company repurchases
Shares from the Optionee pursuant to the terms of a Stock Purchase Agreement
(provided that the Optionee did not receive benefits of ownership, such as
dividends, which would destroy the exemption from the provisions of Section
16(b) of the Exchange Act provided by Rule 16b-3 promulgated pursuant to the
Exchange Act), the unpurchased Shares or repurchased Shares, respectively,
which were subject thereto shall, unless this Plan shall have been
terminated, return to this Plan and become available for other Options under
this Plan.

       The Company intends that as long as it is not subject to the reporting
requirements of Section 13 or l5(d) of the Exchange Act, and is not an
investment company registered or required to be registered under the
Investment Company Act of 1940, as amended, all offers and sales of Options
and Common Stock issuable upon exercise of any Option shall be exempt frown
registration under the provisions of Section 5 of the Securities Act, and
this Plan shall be administered in such a manner so as to preserve such
exemption. The Company intends for this Plan to constitute a written
compensatory benefit plan within the meaning of Rule 701(b) of 17 CFR Section
230.701 ("Rule 701") promulgated by the Securities and Exchange Commission
pursuant to such Act.  Unless otherwise designated by the Committee at the
time an Option is granted, all options granted under this Plan by the
Company, and the issuance of any Shares upon exercise thereof, are intended
to be granted in reliance on Rule 701.

  4.   ADMINISTRATION OF THIS PLAN.

       (a)  PROCEDURE.  This Plan shall be administered by the Board. The
Board may appoint a Committee consisting of two (2) or more members of the
Board (or such greater number as is required to qualify for the exemption
from the provisions of Section 16(b) of the Exchange Act provided by Rule
16b-3 promulgated pursuant to the Exchange Act) to administer this Plan on
behalf of the Board, subject to such terms and conditions as the Board may
prescribe. Once appointed, the Committee shall continue to serve until
otherwise directed by the

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Board. From time to time, the Board may increase the size of the Committee
and appoint additional members of the Board thereto, remove members (with or
without cause) and appoint new members of the Board in substitution therefor,
fill vacancies, however caused, and remove all members of the Committee and,
thereafter, directly administer this Plan.  Members of the Board or Committee
who are either eligible for Options or have been granted Options may vote on
any matters affecting the administration of this Plan or the grant of Options
pursuant to this Plan, except that no such member shall act upon the granting
of an Option to such person nor shall any such members presence at a meeting
of the Board of Directors establish the existence of a quorum at any meeting
of the Board or the Committee during which action is taken with respect to
the granting of an Option to him.

       (b)  PROCEDURE AFTER REGISTRATION DATE.  Notwithstanding the
provisions of subsection (a), after the Registration Date this Plan shall be
administered either by:  (i) the full Board, provided that at all times each
member of the Board is a Disinterested Person; or (ii) a Committee which at
all times consists solely of Board members who are Disinterested Persons.
After the Registration Date, the Board shall take all action necessary to
administer this Plan in accordance with the then-effective provisions of Rule
16b-3 promulgated under the Exchange Act, provided that any amendment to this
Plan required for compliance with such provisions shall be made in accordance
with Section 13 of this Plan.

       (c)  POWERS OF THE BOARD AND/OR COMMITTEE.  Subject to the provisions
of this Plan, the Committee or the Board, as appropriate, shall have the
authority, in its discretion:  (i) to grant Incentive Stock Options and
Nonstatutory Stock Options; (ii) to determine, upon review of relevant
information and in accordance with Section 7 of this Plan, the fair market
value per Share; (iii) to determine the exercise price of the Options, which
exercise price and type of consideration shall be determined in accordance
with Section 7 of this Plan; (iv) to determine the Employees to whom, and the
time or times at which, Options shall be granted, and the number of Shares to
be subject to each Option; (v) to prescribe, amend and rescind rules and
regulations relating to this Plan; (vi) to determine the terms and provisions
of each Option Agreement and each Stock Purchase Agreement (each of which
need not be identical with the terms of other Option Agreements and Stock
Purchase Agreements) and, with the consent of the holder thereof, to modify
or amend each Option Agreement and Stock Purchase Agreement; (vii) to
determine whether a stock repurchase agreement or other agreement will be
required to be executed by any Employee as a condition to the exercise of an
Option, and to determine the terms and provisions of any such agreement
(which need not be identical with the terms of any other such agreement) and,
with the consent of the Optionee, to amend any such agreement; (viii) to
interpret this Plan, the option Agreements, the Stock Purchase Agreements or
any agreement entered into with respect to the grant or exercise of Options;
(ix) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted
by the Board or to take such other actions as may be necessary or appropriate
with respect to the Company's rights pursuant to Options or agreements
relating to the grant or exercise thereof; and (x) to make such other
determinations and establish such other procedures as it deems necessary or
advisable for the administration of this Plan.

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       (d)  EFFECT OF THE BOARD'S OR COMMITTEE'S DECISION.  All decisions,
determinations and interpretations of the Board or the Committee shall be
final and binding on all Optionees and any other holders of Options.

  5.   ELIGIBILITY.  Options may be granted only to Employees. An Employee
who has been granted an Option may, if such Employee is otherwise eligible,
be granted additional Options.

  6.   TERM OF PLAN.  This Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by vote of a majority of
the outstanding shares of the Company's capital stock entitled to vote on the
adoption of this Plan. This Plan shall continue in effect for a term often
(10) years unless sooner terminated in accordance with the terms and
provisions of this Plan.

  7.   OPTION PRICE AND CONSIDERATION.

       (a)  EXERCISE PRICE.  The exercise price per Share for the Shares to
be issued pursuant to the exercise of an Option shall be such price as is
determined by the Board; provided, however, that such price shall in no event
be less than eighty-five percent (85%) with respect to Nonstatutory Stock
Options, and one hundred percent (100%) with respect to Incentive Stock
Options, of the fair market value per Share on the date of grant. In the case
of an Option granted to an Employee who, at the time the Option is granted,
owns stock (as determined under Section 425(d) of the Code) constituting more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or its Parent or Subsidiaries, the exercise price per
Share shall be no less than one hundred ten percent (110%) of the fair market
value per Share on the date of grant.

       (b)  FAIR MARKET VALUE.  The fair market value per Share on the date
of grant shall be determined by the Board in its sole discretion, exercised
in good faith; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the average of the
closing bid and asked prices of the Common Stock on the date of grant, as
reported in The Wall Street Journal (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated
Quotations ("NASDAQ") System), or, in the event the Common Stock is listed on
a stock exchange or on the NASDAQ System, the fair market value per Share
shall be the closing price on the exchange or on the NASDAQ System as of the
date of grant of the Option, as reported in The Wall Street Journal.

       (c)  PAYMENT OF CONSIDERATION.  The consideration to be
paid for the Shares to be issued upon exercise of an Option,
including the method of payment, shall be determined by the Board
and may consist entirely of cash, check, promissory notes, Shares
held by the Optionee for the requisite period necessary to avoid a
charge to the Company's earnings for financial reporting purposes
which have a fair market value on the date of surrender equal to
the aggregate exercise price of the Shares as to which said Option
shall be exercised, or any combination of such methods of payment.
Subject to subparagraphs (i) through (iv) hereto,

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utilization of Shares as the method of payment may be completed by either (a)
the tender of Shares then held by the Optionee, or (b) the withholding of
Shares which would otherwise be issued pursuant to an Option pursuant to
broker-dealer sale and remittance procedure described in subparagraph (iii)
hereto.  In making its determination as to the type of consideration to
accept, the Board shall consider if acceptance of such consideration is
deemed to be such as may be reasonably expected to benefit the Company.

            (i)   If the consideration for the exercise of an Option is a
promissory note, it shall be a full recourse promissory note executed by the
Optionee, bearing interest at a rate which shall be sufficient to preclude
the imputation of interest under the applicable provisions of the Code.
Until such time as the promissory note has been paid in full, the Company may
retain the Shares purchased upon exercise of the Option in escrow as security
for payment of the promissory note.

            (ii)  If the consideration for the exercise of an Option is the
surrender of previously acquired and owned Shares, the Optionee will be
required to make representations and warranties satisfactory to the Company
regarding his title to the Shares used to effect the purchase, including,
without limitation, representations and warranties that the Optionee has good
and marketable title to such Shares free and clear of any and all liens,
encumbrances, charges, equities, claims, security interests, options or
restrictions and has full power to deliver such Shares without obtaining the
consent or approval of any person or governmental authority other than those
which have already given consent or approval in a form satisfactory to the
Company.  The value of the Shares used to effect the purchase shall be the
fair market value of those Shares as determined by the Board in its sole
discretion, exercised in good faith.

            (iii) If the consideration for the exercise of an Option is
to be paid through a broker-dealer sale and remittance procedure, the
Optionee shall provide (1) irrevocable written instructions to a designated
brokerage firm to effect the immediate sale of the purchased Shares and to
remit to the Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate option price payable for the
purchased Shares plus all applicable Federal and State income and employment
taxes required to be withheld by the Company in connection with such purchase
and (2) written instructions to the Company to deliver the certificates for
the purchased shares directly to such brokerage firm in order to complete the
sale transaction. Notwithstanding the foregoing, Optionees subject to the
short-swing profit limitation of Section 16 of the Exchange Act shall have
the right to deliver irrevocable written instructions to effect the exercise
of an option through the foregoing broker-dealer sale and remittance
procedure (a) six months or more prior to the date such transaction is to be
effected, and/or (b) prior to the date such transaction is to be effected and
within a "window period" specified in Rule 16b-3(3)(iii) promulgated pursuant
to the Exchange Act.

            (iv)  If an Optionee is permitted to exercise an Option by
delivering shares of the Company's Common Stock, the option agreement
covering such Option may include provisions authorizing the Optionee to
exercise the Option, in whole or in part, by:  (1) delivering whole shares of
the Company's Common Stock previously owned by such

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Optionee (whether or not acquired through the prior exercise of a stock
option) having a fair market value equal to the option price; and/or (2)
directing the Company to withhold from the Shares that would otherwise be
issued upon exercise of the Option that number of whole Shares having a fair
market value equal to the option price.  Shares of the Company's Common Stock
so delivered or withheld shall be valued at their fair market value on the
date of exercise of the Option, as determined by the Committee and/or the
Board, as appropriate.  Any balance of the exercise price shall be paid in
cash or by check or a promissory note, each in accordance with the terms of
this Section 7.  Any shares delivered or withheld in accordance with this
provision shall again become available for purposes of this Plan and for
Options subsequently granted thereunder to the extent permissible pursuant to
Section 3 of this Plan.

  8.   OPTIONS.

       (a)  TERMS AND PROVISIONS OF OPTIONS.  As provided in Section 4 of
this Plan and subject to any Imitations specified herein, the Board and/or
Committee shall have the authority to determine the terms and provisions of
any Option granted under this Plan or any agreement required to be executed
in connection with the grant or exercise of an Option.  Each Option granted
pursuant to this Plan shall be evidenced by an Option Agreement.  Options
granted pursuant to this Plan are conditioned upon the Company obtaining any
required permit or order from appropriate governmental agencies authorizing
the Company to issue such Options and Shares issuable upon exercise thereof.

       (b)  TERM OF OPTION.  The term of each Option may be up to ten (10)
years from the date of grant thereof as determined by the Board upon the
grant of the Option and specified in the Option Agreement, except that the
term of an Option granted to an Employee who, at the time the Option is
granted, owns stock comprising more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or its Parent or
Subsidiaries, shall be five (5) years from the date of grant thereof or such
shorter term as may be provided in the Option Agreement.

       (c)  EXERCISE OF OPTION.

            (i)  PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER.  Any Option
shall be exercisable at such times, in such installments and under such
conditions as may be determined by the Board and specified in the Option
Agreement, including performance criteria with respect to the Company and/or
the Optionee, and as shall be permissible under the terms of this Plan.

            An option may be exercised in accordance with the provisions of
this Plan as to all or any portion of the Shares then exercisable under an
option, from time to time during the term of the Option.  An Option may not
be exercised for a fraction of a Share.

            An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company at its principal business office
in accordance with the

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terms of the option Agreement by the person entitled to exercise the option
and, except when the broker-dealer sale and remittance procedure described in
Section 7(c)(iii) hereto is used, full payment for the Shares with respect to
which the Option is exercised has been received by the Company, accompanied
by an executed Stock Purchase Agreement and any other agreements required by
the terms of this Plan and/or the option Agreement.  Full payment may consist
of such consideration and method of payment allowable under Section 7 of this
Plan. Until the option is properly exercised in accordance with the terms of
this paragraph, no right to vote or receive dividends or any other rights as
a stockholder exist with respect to the optioned Stock. No adjustment shall
be made for a dividend or other right for which the record date is prior to
the date the Option is exercised, except as provided in Section 11 of this
Plan.

            As soon as practicable after any proper exercise of an Option in
accordance with the provisions of this Plan, the Company shall, without
transfer or issue tax to the Optionee, deliver to the Optionee at the
principal executive office of the Company or such other place as shall be
mutually agreed upon between the Company and the Optionee, a certificate or
certificates representing the Shares for which the Option shall have been
exercised.  The time of issuance and delivery of the certificate(s)
representing the Shares for which the Option shall have been exercised may be
postponed by the Company for such period as may be required by the Company,
with reasonable diligence, to comply with any applicable listing requirements
of any national or regional securities exchange or any law or regulation
applicable to the issuance or delivery of such Shares.  No Option may be
exercised unless this Plan has been duly approved by the shareholders of the
Company in accordance with applicable law.  Notwithstanding anything to the
contrary herein, the terms of a Stock Purchase Agreement required to be
executed and delivered in connection with the exercise of an Option may
require the certificate or certificates representing the Shares purchased
upon exercise of an Option to be delivered and deposited with the Company as
security for the Optionee's faithful performance of the terms of his Stock
Purchase Agreement.

            Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of
this Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.

            (ii) TERMINATION OF STATUS AS AN EMPLOYEE.  If an Optionee ceases
to serve as an Employee for any reason other than death or disability and
thereby terminates his Continuous Status as an Employee, such Optionee shall
have the right to exercise the Option at any time within thirty (30) days (or
such other period of time not exceeding three (3) months as is determined by
the Board at the time of granting the Option), following the date such
Optionee ceases his Continuous Status as an Employee of the Company to the
extent that such Optionee was entitled to exercise the Option at the date of
such termination; provided, however, that no Option shall be exercisable
after the expiration of the term set forth in the Option Agreement.  To the
extent that such Optionee was not entitled to exercise the Option at the date
of such termination, or if such Optionee does not exercise such Option (which
such Optionee was entitled to exercise) within the time specified herein, the
Option shall terminate.

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            (iii)  DEATH OR DISABILITY OF OPTIONEE.  If an Optionee ceases to
serve as an Employee due to death or disability and thereby terminates his
Continuous Status as an Employee, the Option may be exercised at any time
within six (6) months following the date of death or termination of
employment due to disability, in the case of death, by the Optionee's estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, or, in the case of disability, by the Optionee, but in any case
only to the extent the Optionee was entitled to exercise the Option at the
date of his termination of employment by death or disability; provided,
however, that no Option shall be exercisable after the expiration of the
Option term set forth in the Option Agreement.  To the extent that such
Optionee was not entitled to exercise such Option at the date of his
termination of employment by death or disability or if such Option is not
exercised (to the extent it could be exercised) within the time specified
herein, the Option shall terminate.

            (iv) EXTENSION OF TIME TO EXERCISE.  Notwithstanding anything to
the contrary in this Section 8, the Board may at any time and from time to
time prior to the termination of a Nonstatutory Stock Option, with the
consent of the Optionee, extend the period of time during which the Optionee
may exercise his Nonstatutory Stock Option following the date the Optionee
ceases such Optionee's Continuous Status as an Employee; provided, however,
that (1) the maximum period of time during which a Nonstatutory Stock Option
shall be exercisable following such termination date shall not exceed an
aggregate of six (6) months, (2) the Nonstatutory Stock Option shall not
become exercisable after the expiration of the term of such Option as set
forth in the Option Agreement as a result of such extension, and (3)
notwithstanding any extension of time during which the Nonstatutory Stock
Option may be exercised, such Option, unless otherwise amended by the Board,
shall only be exercisable to the extent to which the Optionee was entitled to
exercise it on the date Optionee ceased Continuous Status as an Employee.  To
the extent that such Optionee was not entitled to exercise the Option at the
date of such termination, or if such Optionee does not exercise an Option
which Optionee was entitled to exercise within the time specified herein, the
Option shall terminate.

  9.   LIMIT ON VALUE OF OPTIONED STOCK.  No Incentive Stock Option may be
granted to an Employee if, as a result of such grant, the aggregate fair
market value (determined at the time an Incentive Stock Option is granted) of
the Shares with respect to which Incentive Stock Options are exercisable for
the first time by an Optionee during any calendar year under all incentive
stock option plans of the Company, its Parents or its Subsidiaries, if any,
exceeds One Hundred Thousand Dollars ($100.000).

  10.  NONTRANSFERABILITY OF OPTIONS.  Options granted under this Plan may
not be sold, pledged, assigned, hypothecated, gifted, transferred or disposed
of in any manner, either voluntarily or involuntarily by operation of law,
other than by will or by the laws of descent or distribution, and may be
exercised during the lifetime of the Optionee only by such Optionee.

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  11.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.

       (a)  Subject to any required action by the shareholders of the
Company, the number of Shares covered by each outstanding Option, and the
number of Shares which have been authorized for issuance under this Plan but
as to which no Options have yet been granted or which have been returned to
this Plan upon cancellation or expiration of an Option or repurchase of
shares from an Optionee upon termination of employment or service, as well as
the exercise or purchase price per Share covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a stock split, reverse stock split,
combination or reclassification of the Common Stock, or the payment of a
stock dividend (but only on the Common Stock) or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company (other than stock bonuses to
Employees, including, without limitation, officers and directors); provided,
however, that the conversion of any convertible securities of the Company
shall not be deemed to have been effected without the receipt of
consideration.  Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.  Except
as expressly provided herein, no issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to this Plan or an Option.

       (b)  In the event of the merger, consolidation or reorganization of
the Company with or into another corporation as a result of which the Company
is not the surviving corporation or as a result of which the outstanding
Shares are exchanged for or converted into cash or property or securities not
of the Company, the Board may (i) make provision for the assumption of all
outstanding Options by the successor corporation or a Parent or a Subsidiary
thereof, or (ii) declare that outstanding Options shall terminate as of a
date fixed by the Board which is at least thirty (30) days after the notice
thereof to the Optionee, unless such thirty (30) day period is waived by the
Optionee.  In the event of a dissolution or liquidation of the Company or the
sale of all or substantially all of the assets of the Company, the Company's
outstanding options shall terminate as to an Optionee upon termination of
Continuous Status as an Employee.

       (c)  No fractional shares of Common Stock shall be issuable on account
of any action described in this Section, and the aggregate number of Shares
into which Shares then covered by the Option, when changed as the result of
such action, shall be reduced to the largest number of whole shares resulting
from such action, unless the Board, in its sole discretion, shall determine
to issue scrip certificates in respect to any fractional shares, which scrip
certificates, in such event, shall be in a form and have such terms and
conditions as the Board in its discretion shall prescribe.

  12.  TIME OF GRANTING OPTIONS.  The date of grant of an Option shall be the
date on which the Board makes the determination granting such Option;
provided, however, that if the Board determines that such grant shall be as
of some future date, the date of grant shall be such

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future date.  Notice of the determination shall be given to each Employee to
whom an Option is so granted within a reasonable time after the date of such
grant.

  13.  AMENDMENT AND TERMINATION OF THIS PLAN.

       (a)  AMENDMENT AND TERMINATION.  The Board may amend or terminate this
Plan from time to time in such respects as the Board may deem advisable and
shall make any amendments which may be required so that Options intended to
be Incentive Stock Options shall at all times continue to be Incentive Stock
Options for the purpose of the Code, except that, without approval of the
holders of a majority of the outstanding shares of the Company's capital
stock, no such revision or amendment shall:

            (i)   Increase the number of Shares subject to this Plan, other
than in connection with an adjustment under Section 11 of this Plan;

            (ii)  Materially change the designation of the class of Employees
eligible to be granted Options;

            (iii) Remove the administration of this Plan from the Board
(other than to the Committee);

            (iv)  Materially increase the benefits accruing to participants
under this Plan; or

            (v)   Extend the term of this Plan.

       (b)  EFFECT OF AMENDMENT OR TERMINATION. Except as otherwise provided
in Section 11, any amendment or termination of this Plan shall not affect
Options already granted and such Options shall remain in full force and
effect as if this Plan had not been amended or terminated, unless mutually
agreed otherwise between the Optionee and the Company, which agreement must
be in writing and signed by the Optionee and the Company.

  14.  CONDITIONS UPON ISSUANCE OF SHARES.

       (a)  Shares shall not be issued pursuant to the exercise of an option
unless the exercise of such option and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, applicable state securities laws, the rules and regulations
promulgated thereunder, and the requirement of any stock exchange upon which
the Shares may then be listed, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.

       (b)  As a condition to the exercise of an Option, the Board may
require the person

                                      11

<PAGE>

exercising such Option to execute an agreement with, and/or may require the
person exercising such Option to make any representation and warranty to, the
Company as may in the judgment of counsel to the Company be required under
applicable law or regulation, including but not limited to a representation
and warranty that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is appropriate
under any of the aforementioned relevant provisions of law.

  15.  RESERVATION OF SHARES.  The Company, during the term of this Plan, at
all times shall reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of this Plan.

       The Company, during the term of this Plan, shall use diligent efforts
to seek to obtain from appropriate regulatory agencies any requisite
authorization in order to issue and sell such number of Shares as shall be
sufficient to satisfy the requirements of this Plan.  The inability of the
Company to obtain the requisite authorization(s) deemed by the Company's
counsel to be necessary for the lawful issuance and sale of any Shares
hereunder, or the inability of the Company to confirm to its satisfaction
that any issuance and sale of any Shares hereunder will meet applicable legal
requirements, shall relieve the Company of any liability in respect to the
failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

  16.  STOCK OPTION AND STOCK PURCHASE AGREEMENTS.  Options shall be
evidenced by written stock option agreements in such form or forms as the
Board shall approve from time to time.  Upon the exercise of an Option, the
Optionee shall sign and deliver to the Company a Stock Purchase Agreement (if
required to be executed and delivered to the Company by an Optionee as a
condition to the exercise of an option) in such form or forms as the Board
shall approve from time to time.

  17.  SHAREHOLDER APPROVAL.  Continuance of this Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before
or after the date this Plan is adopted by the Board.  If such shareholder
approval is obtained at a duly held shareholders' meeting, it may be obtained
by the affirmative vote of the holders of a majority of the outstanding
shares of the Company entitled to vote thereon.  All Options granted prior to
shareholder approval of this Plan are subject to such approval, and if such
approval is not obtained within twelve (12) months before or after the date
this Plan is adopted by the Board all such Options shall expire and shall be
of no further force or effect.

  18.  TAXES, FEES, EXPENSES AND WITHHOLDING OF TAXES.

       (a)  The Company shall pay all original issue and transfer taxes (but
not income taxes, if any) with respect to the grant of Options and/or the
issue and transfer of Shares pursuant to the exercise thereof, and all other
fees and expenses necessarily incurred by the Company in connection
therewith, and will from time to time use diligent efforts to comply with

                                      12

<PAGE>

all laws and regulations which, in the opinion of counsel for the Company,
shall be applicable thereto.

       (b)  The grant of Options hereunder and the issuance of Shares
pursuant to the exercise thereof is conditioned upon the Company's
reservation of the right to withhold, in accordance with any applicable law,
from any compensation payable to the Optionee any taxes required to be
withheld by federal, state or local law as a result of the grant or exercise
of such Option or the sale of the Shares issued upon exercise thereof.  To
the extent that compensation or other amounts, if any, payable to the
Optionee are insufficient to pay any taxes required to be so withheld, the
Company may, in its sole discretion, require the Optionee, as a condition of
the exercise of an option, to pay in cash to the Company an amount sufficient
to cover such tax liability or otherwise to make adequate provision for the
Company's satisfaction of its withholding obligations under federal and state
law.

       (c)  The Board or any Committee may, in its discretion and upon such
terms and conditions as it may deem appropriate (including the applicable
safe-harbor provisions of SEC Rule 16b-3 and interpretations thereof by the
staff of the Securities and Exchange Commission) provide any or all holders
of outstanding option grants under this Plan with the election (a
"Withholding Election") to have the Company withhold, from the shares of
Common Stock otherwise issuable upon the exercise of such options, one or
more of such shares with an aggregate fair market value equal to the
designated percentage (any multiple of 5% specified by the Optionee) of the
Federal and State income taxes ("Taxes") incurred in connection with the
acquisition of such Shares.  In lieu of such direct withholding, one or more
Optionees may also be granted the right to deliver shares of Common Stock to
the Company in satisfaction of such Taxes.  The withheld or delivered shares
shall be valued at the Fair Market Value on the applicable determination date
for such Taxes (the "Tax Date") or such other date required by the applicable
safe-harbor provisions of SEC Rule 16b-3. Notwithstanding the foregoing,
Optionees subject to the short-swing profit limitations of Section 16 of the
Exchange Act shall have the right to elect to deliver previously owned stock
or make a Withholding Election:  (a) six months or more prior to the Tax Date
and/or (b) prior to the Tax Date and within a "window period"' specified in
Rule 16(b)-3(e)(iii) promulgated pursuant to the Exchange Act.

  19.  LIABILITY OF COMPANY.  The Company, its Parent or any Subsidiary which
is in existence or hereafter comes into existence shall not be liable to an
Optionee or other person if it is determined for any reason by the Internal
Revenue Service or any court having jurisdiction that any Options intended to
be Incentive Stock Options granted hereunder do not qualify as incentive
stock options within the meaning of Section 422 of the Code.

  20.  INFORMATION TO OPTIONEE.  The Company shall provide without charge at
least annually to each Optionee during the period his option is outstanding a
balance sheet and income statement of the Company.  In the event that the
Company provides annual reports or periodic reports to its shareholders
during the period in which an Optionee's Option is outstanding, the Company
shall provide to each Optionee a copy of each such report.

                                      13

<PAGE>

  21.  NOTICES.  Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail, as first class, registered or certified
mail, with postage and fees prepaid and addressed (i) if to the Company, at
its principal place of business, attention:  Secretary, or (ii) if to the
Optionee at his address as set forth on the signature page of his option
Agreement, or at such other address as either party may from time to time
designate in writing to other.  It shall be the obligation of each Optionee
and each transferee holding Shares purchased upon exercise of an Option to
provide the Secretary of the Company, by letter mailed as provided
hereinabove, with written notice of his direct mailing address.

  22.  NO ENLARGEMENT OF EMPLOYEE RIGHTS.  This Plan is purely voluntary on
the part of the Company, and the continuance of this Plan shall not be deemed
to constitute a contract between the Company and any Employee, or to be
consideration for or a condition of the employment or service of any
Employee.  Nothing contained in this Plan shall be deemed to give any
Employee the right to be retained in the employ or service of the Company,
its Parent, Subsidiary or a successor corporation, or to interfere with the
right of the Company or any such corporations to discharge or retire any
Employee at any time with or without cause and with or without notice.  No
Employee shall have any right to or interest in Options authorized hereunder
prior to the grant thereof to such Employee, and upon such grant such
Employee shall have only such rights and interests as are expressly provided
herein, subject, however, to all applicable provisions of the Company's
Articles of Incorporation, as the same may be amended from time to time.

  23.  LEGENDS ON CERTIFICATES.

       (a)  FEDERAL LAW.  Unless an appropriate registration statement is
filed pursuant to the Securities Act of 1933, as amended, with respect to the
Options and Shares issuable under this Plan, each document or certificate
representing such Options or Shares shall be endorsed thereon with a legend
substantially as follows:

         "THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED
         UPON EXERCISE OF THIS SECURITY HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE
         BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
         IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
         SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
         EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN
         OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
         REGISTRATION IS NOT REQUIRED."

                                      14

<PAGE>

       (b)  CALIFORNIA LEGEND.  If required by the California Commissioner of
Corporations, each document or certificate representing the Options or Shares
issuable under this Plan shall be endorsed thereon with a legend
substantially as follows:

         "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
         OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON
         EXERCISE OF THIS OPTION, OR ANY INTEREST THEREIN, OR TO
         RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
         WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF
         THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE
         COMMISSIONER'S RULES."

       (c)  ADDITIONAL LEGENDS.  Each document or certificate representing
the Options or Shares issuable under this Plan shall also contain legends as
may be required under applicable blue sky laws or by any Stock Purchase
Agreement or other agreement the execution of which is a condition to the
exercise of an Option under this Plan.

  24.  AVAILABILITY OF PLAN.  A copy of this Plan shall be delivered to the
Secretary of the Company and shall be shown by him to any eligible person
making reasonable inquiry concerning it.

  25.  COMPLIANCE WITH EXCHANGE ACT RULE 16b-3.  With respect to persons
subject to Section 16 of the Exchange Act, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3, promulgated
pursuant to the Exchange Act, or its successors.  To the extent any provision
of this Plan or action by the Board or any Committee fails so to comply, it
shall be deemed null and void to the extent permitted by law and deemed
advisable by the Board or any Committee.

  26.  INVALID PROVISIONS.  In the event that any provision of this Plan is
found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein as invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though
the invalid or unenforceable provision was not contained herein.

  27.  APPLICABLE LAW.  This Plan shall be governed by and construed in
accordance with the laws of the State of California.

                                      15

<PAGE>

                SECOND AMENDMENT TO THE 1995 STOCK OPTION PLAN
                               OF FAROUDJA, INC.

       The first sentence of the first paragraph of Section 3 of the 1995
Stock Option Plan of Faroudja, Inc., as adopted on August 1, 1995 and amended
on August 19, 1996, is amended and restated in its entirety to read as
follows:

              "3.  STOCK SUBJECT TO THIS PLAN.  Subject to the provisions of
       Section 11 of this Plan, the maximum aggregate number of Shares which
       may be optioned and sold under this Plan shall not exceed the aggregate
       of One Million Four Hundred Thousand (1,400,000) Shares . . . "

       IN WITNESS WHEREOF, the undersigned has executed this Second Amendment
to the 1995 Stock Option Plan of Faroudja, Inc. as of February 11, 1997.

                                       FAROUDJA, INC.

                                       By:/s/ Michael Hoberg
                                          -------------------------------------
                                       Michael Hoberg, Chief Financial Officer

<PAGE>

                 THIRD AMENDMENT TO THE 1995 STOCK OPTION PLAN
                               OF FAROUDJA, INC.

       Section 11 of the 1995 Stock Option Plan of Faroudja, Inc., as adopted
on August 1, 1995 and amended on August 19, 1996 and on February 11, 1997, is
amended and restated in its entirety to read as follows:

    "11. EFFECT OF CERTAIN CHANGES.

         (a)  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, or
through the combination or reclassification of such shares, 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.

         (b)  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 in 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.

         (c)  MERGERS AND CONSOLIDATIONS.  Notwithstanding the other Sections
of this Section 11, 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 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;

<PAGE>

              (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 11(c)(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 Section 11(c):  (x) the fair market value
of shares of Common Stock underlying the Incentive Stock Options shall be
determined as of the time the Option with respect to such shares is granted;
(y) the Incentive Stock Options shall be transformed, to the extent required,
into Nonstatutory Stock Options in reverse chronological order, such that the
last-granted Incentive Stock Option shall be the first Option transformed
into a Nonstatutory Stock Option and the first granted Incentive Stock Option
shall be the last Option so transformed; and (z) the terms and conditions of
each Nonstatutory Stock Option so created shall be identical, to the extent
possible, in all respects to those of the Incentive Stock Option that it
replaces including but not limited to the fact that it shall be immediately
exercisable in full and shall remain exercisable until the time at which the
Transaction becomes effective.  In the event that Incentive Stock Options are
transformed into Nonstatutory Stock Options by operation of this Section
11(c), the Board may in its discretion issue replacement Option Agreements
that reflect the adjusted number of Incentive Stock Options and Nonstatutory
Stock Options.  The Company shall use its best efforts to give each Optionee
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.

         (d)  RIGHTS OF PARTICIPANTS.  Except as hereinbefore expressly
provided in this Section 11, the Optionee 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

                                       2

<PAGE>

consolidate or to dissolve, liquidate or sell or transfer all or part of its
business or assets."

    IN WITNESS WHEREOF, the undersigned has executed this Third Amendment to
the 1995 Stock Option Plan of Faroudja, Inc. as of April 30, 1997.

                                       FAROUDJA, INC.

                                       By:/s/ Michael Hoberg
                                          ------------------------------------
                                       Michael Hoberg, Chief Financial Officer

                                       3

<PAGE>

                FOURTH AMENDMENT TO THE 1995 STOCK OPTION PLAN
                               OF FAROUDJA, INC.

       The first sentence of the first paragraph of Section 3 of the 1995
Stock Option Plan of Faroudja, Inc., as adopted on August 1, 1995 and as
amended on August 19, 1996, February 11, 1997 and April 30, 1997, is amended
and restated in its entirety to read as follows:

       "3.  STOCK SUBJECT TO THIS PLAN.  Subject to the provisions of Section
11 of this Plan, the maximum aggregate number of Shares which may be optioned
and sold under this Plan shall not exceed the aggregate of One Million Two
Hundred Twenty Five Thousand (1,225,000) Shares . . . "

       IN WITNESS WHEREOF, the undersigned has executed this Fourth Amendment
to the 1995 Stock Option Plan of Faroudja, Inc. as of June 13, 1997.

                                       FAROUDJA, INC.

                                       By:/s/ Michael Hoberg
                                          ------------------------------------
                                       Michael Hoberg, Chief Financial Officer<PAGE>
                                                                    Exhibit 4.2

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

                                  Faroudja, Inc.

                        1997 Performance Stock Option Plan

                                  January 2, 1997

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

<PAGE>

<TABLE>
<CAPTION>

                                    TABLE OF CONTENTS

                                                                               Page
                                                                               ----

<S>               <C>                                                          <C>
  ARTICLE I.      Purpose.......................................................  1

  ARTICLE II.     Definitions...................................................  2

  ARTICLE III.    Shares Subject to Plan........................................  4

  ARTICLE IV.     Administration................................................  5

  ARTICLE V.      Eligibility...................................................  8

  ARTICLE VI.     Annual Limitation on Value of Incentive Stock Options.........  9

  ARTICLE VII.    Terms and Conditions of Options...............................  9

  ARTICLE VIII.   Effect of Certain Changes..................................... 16

  ARTICLE IX.     Amendment and Termination..................................... 20

  ARTICLE X.      Issuance of Shares and Compliance with Securities Regulations. 21

  ARTICLE XI.     Application of Funds.......................................... 21

  ARTICLE XII.    Notice........................................................ 21

  ARTICLE XIII.   Term of Plan.................................................. 22

  ARTICLE XIV.    No Contract of Employment..................................... 22

  ARTICLE XV.     Effectiveness of the Plan..................................... 22

  ARTICLE XVI.    Captions...................................................... 23

  ARTICLE XVII.   Disqualifying Dispositions.................................... 23

  ARTICLE XVIII.  Withholding Taxes............................................. 24

  ARTICLE XIX.    Governing Law................................................. 24

  ARTICLE XX.     Financial Statements.......................................... 25
</TABLE>

                                           i

<PAGE>

                                 FAROUDJA, INC.

                       1997 PERFORMANCE STOCK OPTION PLAN

                                   ARTICLE I.

                                    PURPOSE

          The purpose of the FAROUDJA, INC. 1997 PERFORMANCE STOCK OPTION PLAN
(the "Plan") is (i) to further the growth and success of FAROUDJA, INC., a
Delaware corporation (the "Company"), and its Subsidiaries (as hereinafter
defined) by enabling employees of, or consultants to, the Company or any of
its Subsidiaries to acquire shares of the Company's Common Stock thereby
increasing their personal interest in such growth and success, and (ii) to
provide a means of rewarding outstanding performance by such persons to the
Company and/or its Subsidiaries.  Options granted under the Plan (the
"Options") may be either "incentive stock options," intended to qualify as such
under the provisions of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or "non-qualified stock options."  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.  Unless the context otherwise requires, any Incentive Stock
Option or Nonqualified Stock Option is referred to in this Plan as an "Option."

                                           1

<PAGE>

                                   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.  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 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  DISABILITY shall have the meaning set forth in Section 22(e)(3)
of the Code, as that section may be amended from time to time.  The
determination under the Plan that a Grantee's employment terminated as the
result of Disability shall not be and shall not be construed as an admission by
the

                                           2
<PAGE>

  Company of the Disability of the Grantee for any other purpose.

         2.7  DISQUALIFYING DISPOSITION shall have the meaning set forth in
  Article XVII hereof.

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

         2.9  EMPLOYEE shall mean any individual employed by and receiving
  compensation from the Company or any Subsidiary.

         2.10 FAIR MARKET VALUE shall have the meaning set forth in
  Section 7.2 herein.

         2.11 GRANTEE shall mean an Employee who is granted an Option by the
  Committee under this Plan.

         2.12 INCENTIVE STOCK OPTION shall mean any Option designated as an
  "incentive stock option" within the meaning of Code Section 422.

         2.13 INVOLUNTARY TERMINATION shall have the meaning set forth in
  Section 7.4 hereof.

         2.14 NON-EMPLOYEE DIRECTOR shall have the meaning set forth in Rule
  16b-3 promulgated by the Securities and Exchange Commission under the
  Securities Exchange Act of 1934 ("Exchange Act"), as such rule may be amended
  from time to time, or any successor definition adopted by the Securities and
  Exchange Commission.

         2.15 NONQUALIFIED STOCK OPTION shall mean any Option that is not an
  Incentive Stock Option, including any Option

                                           3

<PAGE>

  that provides at the time of grant that it will not be treated as an
  Incentive Stock Option.

         2.16 OPTION shall mean both an Incentive Stock Option and a
  Nonqualified Stock Option.

         2.17 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 VII.

         2.18 PLAN shall mean the Faroudja, Inc. 1997 Performance Stock
  Option Plan, as set forth herein and as amended from time to time.

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

         2.20 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.

         2.21 TERMINATION FOR CAUSE shall have the meaning set forth in
  Section 7.4 hereof.

                                  ARTICLE III.

                             SHARES SUBJECT TO PLAN

         3.1  NUMBER OF SHARES AVAILABLE.  The total number of shares of
  Common Stock which are available for granting Options hereunder shall be Three
  Hundred Thousand (300,000)

                                           4

<PAGE>

  (subject to adjustment as provided below in Section 3.3 and in Article VIII
  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 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 OPTIONS.  In the event that any
  Option expires or otherwise terminates for any reason (whether such Option is
  vested or non-vested at the time of termination), without having been
  exercised in full, the unpurchased shares of Common Stock subject to that
  Option shall once again become available for the granting of Options.

                                   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,

                                           5

<PAGE>

  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 composed solely of two or
  more directors; however, if the Plan is required to comply with Rule 16b-3 of
  the Exchange Act in order to permit officers and directors of the Company to
  be exempt from the provisions of Section 16(b) of the Exchange Act with
  respect to transactions effected pursuant to the Plan, the Committee shall be
  composed solely of two or more Non-Employee Directors; (ii) all vacancies
  occurring on the Committee shall be filled 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 actions 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 is granted; (iv) the
  manner in which an Option may be exercised; (v) such other

                                           6

<PAGE>

  terms to which an Option is subject (including the manner in which it vests);
  (vi) the form of any Option Agreements; and (vii) whether the Option is an
  Incentive Stock Option or a Nonqualified Stock Option.  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.  All Options issued under the Plan shall vest at
  the rate of at least 20% per year over 5 years from the date the Option is
  granted.

         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 the Plan as it deems advisable.  The interpretation and
  construction by the Committee of any provisions 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.

                                           7

<PAGE>

                                    ARTICLE V.

                                   ELIGIBILITY

         5.1  GENERAL.  Options may be granted under the Plan only to persons
  who are employees of, or consultants to, the Company or any of its
  Subsidiaries on the date of grant.  Options granted to consultants shall be
  Nonqualified Stock Options.  Options granted to employees of the Company or
  any of its Subsidiaries shall be, in the discretion of the Committee, either
  Incentive Stock Options or Nonqualified Stock Options on the date of grant.

         5.2  EXCEPTIONS.  Notwithstanding anything contained in Article V
  and this Plan to the contrary:

                   5.2.1     no Option may be granted under the Plan to an
      employee or consultant who owns, directly or indirectly (within the
      meaning of Sections 422(b)(6) and 424(d) of the Code), stock
      possessing more than 10% of the total combined voting power of all
      classes of stock of the Company or of its Parent, if any, or any of
      its Subsidiaries, unless (a) the Option Price (as defined in Article
      VII hereof) of the shares of Common Stock subject to such Option is
      fixed at not less than 110% of the Fair  Market Value on the date of
      grant (as determined in accordance with Article VII hereof) of such
      shares and (b) such Option by

                                           8

<PAGE>

      its terms is not exercisable after the expiration of five years from the
      date it is granted;

                   5.2.2     no Option may be granted to any Person
      serving on the Committee for so long as such Person serves on the
      Committee; and

                   5.2.3     no Options may be granted to any Person in
      any one taxable year of the Company in excess of 25% of the Options
      issued or issuable under the Plan.

                                  ARTICLE VI.

             ANNUAL LIMITATION ON VALUE OF INCENTIVE STOCK OPTIONS

         To the extent that the aggregate Fair Market Value of the shares of
  Common Stock (determined at the time the Incentive Stock Option is granted)
  with respect to which Incentive Stock Options are exercisable for the first
  time in any calendar year, together with options granted under all other
  incentive stock option plans of the Company and any parent corporation (as
  defined in Section 424(e) of the Code) or any Subsidiary exceeds one hundred
  thousand dollars ($100,000) for any one Grantee, such Options shall be
  treated as Nonqualified Stock Options.

                                  ARTICLE VII.

                         TERMS AND CONDITIONS OF OPTIONS

         7.1  Each Option granted under the Plan shall be designated as an
  Incentive Stock Option or an Nonqualified Stock Option and shall be subject to
  the terms and conditions

                                           9

<PAGE>

  applicable to Incentive Stock Options and/or Nonqualified Stock Options (as
  the case may be) set forth in the Plan.  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 for an Incentive Stock Option and EXHIBIT
  B for an Nonqualified Stock Option, with such changes thereto as are
  consistent with the Plan as the Committee shall deem appropriate, and shall
  provide in substance as follows:

         7.2  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 the Fair Market Value (or such
  lesser amount (but not less than 85% of the Fair Market Value) approved by
  the Board) of the shares of Common Stock on the date of the grant (as
  determined in accordance with this Article VII); PROVIDED, HOWEVER, that in
  the case of an Incentive Stock Option, such Option Price shall in no event be
  less than 100% of the Fair Market Value on the date of grant of the shares of
  Common Stock; and PROVIDED, FURTHER, that the Option Price shall comply with
  Section 5.2.1 herein.

         Subject to the requirements of Section 422 of the Code regarding
  Incentive Stock Options, for purposes of the

                                          10

<PAGE>

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

                   7.2.1     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 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
      ("NASDAQ") 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

                   7.2.2     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 Committee (with the consent
      of a majority of the Board) after taking into consideration all
      factors which it deems

                                          11

<PAGE>

    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 VII hereof shall be made without regard to
  any restriction other than a restriction which, by its terms, will never
  lapse.

         Subsequent to the date of grant of any Nonqualified Stock Options, the
  Committee may, at its discretion and with the written consent of the Grantee
  and the prior approval of the Board, establish a new Option Price for such
  Nonqualified Stock Options so as to increase or decrease the Option Price of
  such Nonqualified Stock Options.

         7.3  NON-TRANSFERABILITY OF OPTIONS.  Each Option Agreement shall
  provide that the Option granted therein shall be non-transferable and
  non-assignable by the Grantee except by will or by the laws of descent and
  distribution.  During the lifetime of the Grantee such Option may be exercised
  only by the Grantee or such Grantee's legal representative.

         7.4  MAXIMUM TERM; DATE OF EXERCISE; TERMINATION.  Each Option
  Agreement shall set forth the period during which it may be exercised.  Each
  Option granted under the Plan shall automatically terminate and shall become
  null and void and be of no further force or effect upon the first to occur of
  the following:

                                          12
<PAGE>

                   7.4.1     the tenth anniversary of the date on which such
    Option is granted or, in the case of any Option granted to a person
    described in Section 5.2.1, the fifth anniversary of the date on which such
    Option is granted;

                   7.4.2     within 90 days after the date that the Grantee
    ceases to be an employee of the Company or any of it Subsidiaries (other
    than as a result of an Involuntary Termination (as defined in clause (iii)
    below)) or a Termination For Cause (as defined in clause (iv) below));

                   7.4.3     within 365 days after the date that the Grantee
    ceases to be an employee of the Company or any of its Subsidiaries, if such
    termination is due to such Grantee's death or permanent and total
    disability (within the meaning of Section 22(e) (3)  of the Code) (an
    "Involuntary Termination");

                   7.4.4     within 30 days if the Grantee ceases to be an
    employee of the Company or any of its Subsidiaries, if such termination is
    determined by the Committee to be for Cause (a "Termination For Cause");
    and

                   7.4.5     simultaneously with the consummation of a sale of
    the Company if prior to such time the Grantees are given the opportunity to

                                          13
<PAGE>

    exercise their Options with respect to all shares of Common Stock available
    for award pursuant to the Options.

         The Committee shall have the power to determine what constitutes a
Termination For Cause for purposes of the Plan, and the date upon which such
Termination For Cause shall occur.  All such determinations shall be final and
conclusive and binding upon the Grantee.

         Any shares of Common Stock available for award pursuant to the Options
that are not acquired as a result of an Option expiring without being fully
exercised shall be available for award by the Committee to another eligible
person.

         7.5  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 by a certified or
cashier's check or by transfer to the Company of shares of Common Stock valued

                                          14
<PAGE>

for this purpose at their Fair Market Value, or a combination of both.  In
addition, in the event that the Option being exercised is a Nonqualified Stock
Option, a certified or cashier's check in full payment of the aggregate amount
of any federal, state or local withholding taxes, if any, attributable to the
transfer of stock pursuant to the exercise of the Option must accompany such
notice.

         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.

         7.6  CONDITIONS ON RIGHT OF EXERCISE.  The Option Agreement may
provide for such conditions on the right of exercise as the Committee, in its
sole discretion, deems appropriate, which conditions may, without limitation, be
based upon either (i) the completion of a further period of continued employment
or (ii) the performance of the Company,

                                          15
<PAGE>

of any Subsidiary or of any division thereof, or of the Grantee.  Without
limiting the foregoing, an Option Agreement may provide that the Committee may,
in its sole discretion, terminate in whole or in part any portion of the Option
which has not yet become exercisable if it determines that the Grantee is not
satisfactorily performing the duties to which he or she was assigned on the date
the Option was granted or duties of at least equal responsibility.  The
Committee shall have the right at any time or times to waive any condition on
the exercise of any Option whenever it deems such a waiver to be appropriate.

         7.7  CHARACTER OF OPTION GRANTED.  Each Option Agreement shall
specifically provide whether the Option granted thereby is an Incentive Stock
Option or a Nonqualified Stock Option.

         7.8  OTHER PROVISIONS.  The Option Agreement may include such other
terms and conditions, not inconsistent with this Plan, as the Committee in its
sole discretion shall determine.

                                    ARTICLE VIII.

                              EFFECT OF CERTAIN CHANGES

         8.1  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, or
through the combination or reclassification of such shares, the Board

                                          16
<PAGE>

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.

         8.2  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 in 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.

         8.3  MERGERS AND CONSOLIDATIONS.  Notwithstanding the other Sections
of this Article VIII, 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

                                          17
<PAGE>

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 8.3(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 Section 8.3:  (A) the Fair Market Value of
shares of Common Stock underlying the Incentive Stock Options shall be
determined as of the time the Option with respect to such shares is granted; (B)
the Incentive Stock Options shall be transformed, to the extent required, into
Nonqualified Stock Options in reverse chronological order, such that the
last-granted Incentive Stock Option shall be the first Option transformed into a
Nonqualified Stock Option and the first granted Incentive Stock Option shall be
the last Option so transformed; and (C)

                                          18
<PAGE>

the terms and conditions of each Nonqualified Stock Option so created shall be
identical, to the extent possible, in all respects to those of the Incentive
Stock Option that it replaces including but not limited to the fact that it
shall be immediately exercisable in full and shall remain exercisable until the
time at which the Transaction becomes effective.  In the event that Incentive
Stock Options are transformed into Nonqualified Stock Options by operation of
this Section 8.3, the Board may in its discretion issue replacement Option
Agreements that reflect the adjusted number of Incentive Stock Options and
Nonqualified Stock Options.  The Company shall use its best 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.

         8.4  RIGHTS OF PARTICIPANTS.  Except as hereinbefore expressly
provided in this Article VIII, 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

                                          19
<PAGE>

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 IX.

                              AMENDMENT AND TERMINATION

         The Board shall have the right to amend, suspend or terminate this
Plan at any time, provided that unless first 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) materially modifies the eligibility requirements of Article V, (ii)
increases the total number of shares of Common Stock which may be issued under
the Plan, (iii) changes the purchase price for Incentive Stock Options specified
in Article VII, (iv) lengthens the term of the Plan as set forth in Article XIII
during which Incentive Stock Options may be granted, or (v) otherwise materially
increases the benefits accruing to Grantees under the Plan.  No amendment to the
Plan shall be made by the Board that materially changes the terms of the Plan so
as to impair or

                                          20
<PAGE>

adversely alter the rights of a Grantee or other Option holder without such
person's consent.

                                      ARTICLE X.

                          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.

                                     ARTICLE XI.

                                 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 XII.

                                        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 the Company at its offices at

                                          21
<PAGE>

750 Palomar Avenue, Sunnyvale, California 94086, Attention:  Michael Hoberg,
Chief Financial Officer.

                                    ARTICLE XIII.

                                     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 adopted by the Board, whichever
is earlier, 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 force and operation after termination of the Plan until they lapse or
terminate by their own terms and conditions.

                                     ARTICLE XIV.

                              NO CONTRACT OF EMPLOYMENT

         Neither the adoption of this Plan nor the grant of any option shall be
deemed to obligate the Company or any Subsidiary to continue the employment of
any Employee.

                                     ARTICLE XV.

                              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

                                          22
<PAGE>

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 within 12
months before or after the Plan is adopted by the Board, 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 XVI.

                                       CAPTIONS

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

                                    ARTICLE XVII.

                              DISQUALIFYING DISPOSITIONS

         If securities acquired by exercise of an Incentive Stock Option
granted under this Plan are disposed of within two years following the date of
grant of the Incentive Stock Option or one year following the issuance of the
securities to the Grantee (a "Disqualifying Disposition"), the holder of such
securities shall, immediately prior to such Disqualifying Disposition, notify
the Company in writing of the date and terms of such Disqualifying Disposition
and provide such other information regarding the Disqualifying Disposition as
the Company may reasonably require.

                                          23
<PAGE>

                                    ARTICLE XVIII.

                                  WITHHOLDING TAXES

         Whenever under the Plan securities are to be delivered by an Grantee
upon exercise of a Nonqualified Stock Option, the Company shall be entitled to
require as a condition of delivery that the Grantee remit or, in appropriate
cases, agree to remit when due, an amount sufficient to satisfy all current or
estimated future federal, state and local withholding tax and employment tax
requirements relating thereto.  At the time of a Disqualifying Disposition, the
Grantee shall remit to the Company in cash the amount of any applicable federal,
state and local withholding taxes and employment taxes.

                                     ARTICLE XIX.

                                    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 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

                                          24
<PAGE>

such jurisdiction's choice of law or conflict of law analysis, the substantive
law of some other jurisdiction would ordinarily apply.

                                     ARTICLE XX.

                                 FINANCIAL STATEMENTS

         The Company shall provide all Grantees under the Plan with financial
statements of the Company at least annually.  Such financial statements shall
include, at a minimum, an income statement, balance sheet and cash flow
statement for the Company.

         As adopted by the Board of Directors of FAROUDJA, INC. on January 2,
1997.

                                          25
  <PAGE>

                                      EXHIBIT A

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

         The Company, acting through a Committee (as defined in the Plan) with
the consent of the Company's Board of Directors (the "Board") has granted to the
Grantee, effective as of the date of this Agreement, an option under the
Company's 1997 Performance 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 VII of the Plan.  The Option is 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 tenth anniversary of the date
hereof, unless the Option shall have sooner been terminated in accordance with
the terms of the Plan (including, without limitation, Section 7.4 of the Plan)
or this Agreement.

         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

                                          1

<PAGE>

will or by the laws of descent and distribution, and may be exercised during
the lifetime of the Grantee only by the Grantee.  If the Grantee dies, the
Option shall thereafter be exercisable, during the period specified in
Article VII of the Plan, 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.  GRANTEE'S EMPLOYMENT.  Nothing in the Option shall confer
upon the Grantee any right to continue in the employ of 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 6.  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:

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

                                           2

<PAGE>

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

         SECTION 7.  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 8.  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 9.  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 10.  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 11.  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 12.  ENTIRE AGREEMENT.  This Agreement and the Plan (and the
other writings referred to herein) constitute the entire agreement between
the parties with

                                           3
<PAGE>

respect to the subject matter hereof and thereof and supersede all
prior written or oral negotiations, commitments, representations and agreements
with respect thereto.

         SECTION 13.  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 14.  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 Incentive
Stock Option Agreement as of the date first written above.

                   FAROUDJA, INC.

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

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

                                           4

<PAGE>

                                      EXHIBIT B

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

         The Company, acting through a Committee (as defined in the Plan) with
the consent of the Company's Board of Directors (the "Board") has granted to the
Grantee, effective as of the date of this Agreement, an option under the
Company's 1997 Performance 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 VII 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 tenth anniversary of the Effective
Date, unless the Option shall have sooner been terminated in accordance with the
terms of the Plan (including, without limitation, Section 7.4 of the Plan) or
this Agreement.

         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

                                           1
<PAGE>

will or by the laws of descent and distribution, and may be exercised during
the lifetime of the Grantee only by the Grantee.  If the Grantee dies, the
Option shall thereafter be exercisable, during the period specified in
Article VII of the Plan, 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.  GRANTEE'S EMPLOYMENT.  Nothing in the Option shall confer
upon the Grantee any right to continue in the employ of 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 6.  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:

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

                                           2

<PAGE>

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

         SECTION 7.  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 8.  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 9.  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 10.  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 11.  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 12.  ENTIRE AGREEMENT.  This Agreement and the Plan (and the
other writings referred to herein) constitute the entire agreement between
the parties with

                                           3
<PAGE>

respect to the subject matter hereof and thereof and supersede all prior
written or oral negotiations, commitments, representations and agreements
with respect thereto.

         SECTION 13.  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 14.  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

<PAGE>

              FIRST AMENDMENT TO THE 1997 PERFORMANCE STOCK OPTION PLAN
                                  OF FAROUDJA, INC.

    Article III, Paragraph 3.1 of the 1997 Performance Stock Option Plan of
Faroudja, Inc., as adopted on January 2, 1997, is amended and restated in its
entirety to read as follows:

    "3.1  NUMBER OF SHARES AVAILABLE.  "The total number of shares of Common
Stock which are available for granting Options hereunder shall be Seven Hundred
Fifty Thousand (725,000) (subject to adjustment as provided below in Section 3.3
and in Article VIII hereof)."
    IN WITNESS WHEREOF, the undersigned has executed this First Amendment to
the 1997 Performance Stock Option Plan of Faroudja, Inc. as of June 13, 1997.

                         FAROUDJA, INC.

                         By:/s/ Michael Hoberg
                            ---------------------------------------
                         Michael Hoberg, Chief Financial Officer

<PAGE>

     Amendment to the Faroudja, Inc. Performance Stock Option Plan, dated
January 2, 1997 and amended on June 13, 1997 (the "1997 Plan"), approved at
the Faroudja, Inc. Annual Meeting of Stockholders on June 10, 1998.

     Article III, Paragraph 3.1 of the 1997 Plan is amended and restated in
its entirety, to read as follows:

     "3.1 NUMBER OF SHARES:  The total number of shares of Common Stock which
are available for granting Options hereunder shall be one million one hundred
and twenty-five thousand (1,125,000) (subject to adjustment as provided below
in Section 3.3 and in Article VII hereof)."

     Article III of the 1997 Plan is amended by adding Paragraph 3.4, to read
as follows:

     "3.4  LIMITATION ON GRANTS:  In no event shall Options be granted to any
Grantee in any one fiscal year to purchase more than an aggregate of 500,000
shares of Common Stock."

<PAGE>

                              SECOND AMENDMENT TO THE
                       1997 PERFORMANCE STOCK OPTION PLAN OF
                                   FAROUDJA, INC.

     The 1997 Performance Stock Option Plan of Faroudja, Inc. as adopted on
January 2, 1997 and amended on June 13, 1997 is amended as provided herein
and except as so amended, the 1997 Performance Stock Option Plan remains in
full force and effect.

     1.  Article III Paragraph 3.1 is amended and restated in its entirety to
read as follows:

         3.1 NUMBER OF SHARES AVAILABLE. The total number of shares of Common
         Stock which are available for granting Options hereunder shall be One
         Million One Hundred Twenty-Five Thousand (1,125,000) (subject to
         adjustment as provided below in Section 3.3 and in Article VIII
         hereof)."

     2.  Article V, Paragraph 5.2.4 shall be added in its entirety to read
as follows:

         "5.2.4 no Options may be granted to any Person in any one taxable year
         of the Company in excess of 500,000 shares of Common Stock."

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