Exhibit 10.2

ZORAN CORPORATION

1995 OUTSIDE DIRECTORS STOCK OPTION PLAN

(As Amended Through June 18, 2000)

             1.          Establishment, Purpose and Term of Plan.

                           1.1        Establishment.  The Zoran Corporation 1995
Outside Directors Stock Option Plan (the “Plan”) is hereby established effective
as of the effective date of the initial registration by the Company of its Stock
under Section 12 of the Exchange Act (the “Effective Date”).

                           1.2        Purpose.  The purpose of the Plan is to
advance the interests of the Participating Company Group and its stockholders by
providing an incentive to attract and retain highly qualified persons to serve
as Outside Directors of the Company and by creating additional incentive for
Outside Directors to promote the growth and profitability of the Participating
Company Group.

                           1.3        Term of Plan.  The Plan shall continue in
effect until the earlier of its termination by the Board or the date on which
all of the shares of Stock available for issuance under the Plan have been
issued and all restrictions on such shares under the terms of the Plan and the
agreements evidencing Options granted under the Plan have lapsed.  However, all
Options shall be granted, if at all, within ten (10) years from the Effective
Date.

             2.          Definitions and Construction.

                          2.1        Definitions.  Whenever used herein, the
following terms shall have their respective meanings set forth below:

                                        (a)         “Board” means the Board of
Directors of the Company.  If one or more Committees have been appointed by the
Board to administer the Plan, “Board” also means such Committee(s).

                                        (b)        “Code” means the Internal
Revenue Code of 1986, as amended, and any applicable regulations promulgated
thereunder.

                                        (c)         “Committee” means a
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board.  Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

                                        (d)        “Company” means Zoran
Corporation, a Delaware corporation, or any successor corporation thereto.

                                        (e)         “Consultant” means any
person, including an advisor, engaged by a Participating Company to render
services other than as an Employee or a Director.

                                        (f)         “Director” means a member of
the Board or the board of directors of any other Participating Company.

                                        (g)        “Employee” means any person
treated as an employee (including an officer or a Director who is also treated
as an employee) in the records of a Participating Company; provided, however,
that neither service as a Director nor payment of a director’s fee shall be
sufficient to constitute employment for purposes of the Plan.

                                        (h)        “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

                                        (i)          “Fair Market Value” means,
as of any date, if there is then a public market for the Stock, the closing
price of the Stock (or the mean of the closing bid and asked prices of the Stock
if the Stock is so reported instead) as reported on the National Association of
Securities Dealers Automated Quotation (“NASDAQ”) System, the NASDAQ National
Market System or such other national or regional securities exchange or market
system constituting the primary market for the Stock.  If the relevant date does
not fall on a day on which the Stock is trading on NASDAQ, the NASDAQ National
Market System or other national or regional securities exchange or market
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded prior to the relevant date.  If
there is then no public market for the Stock, the Fair Market Value on any
relevant date shall be as determined by the Board without regard to any
restriction other than a restriction which, by its terms, will never lapse.

                                        (j)          “Option” means a right to
purchase Stock (subject to adjustment as provided in Section 4.2) pursuant to
the terms and conditions of the Plan.

                                        (k)         “Optionee” means a person
who has been granted one or more Options.

                                        (l)          “Option Agreement” means a
written agreement between the Company and an Optionee setting forth the terms,
conditions and restrictions of the Option granted to the Optionee.

                                        (m)        “Outside Director” means a
Director of the Company who is not an Employee.

                                        (n)        “Parent Corporation” means
any present or future “parent corporation” of the Company, as defined in
Section 424(e) of the Code.

                                        (o)        “Participating Company” means
the Company or any Parent Corporation or Subsidiary Corporation.

                                        (p)        “Participating Company Group”
means, at any point in time, all corporations collectively which are then
Participating Companies.

                                        (q)        “Rule 16b-3” means Rule 16b–3
as promulgated under the Exchange Act, as amended from time to time, or any
successor rule or regulation.

                                        (r)         “Service” means the
Optionee’s service with the Participating Company Group, whether in the capacity
of an Employee, a Director or a Consultant.  The Optionee’s Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionee renders Service to the Participating Company Group or a change in
the Participating Company for which the Optionee renders such Service, provided
that there is no interruption or termination of the Optionee’s Service.  The
Optionee’s Service shall be deemed to have terminated either upon an actual
termination of Service or upon the corporation for which the Optionee performs
Service ceasing to be a Participating Company.

                                        (s)         “Stock” means the common
stock, par value $0.001, of the Company, as adjusted from time to time in
accordance with Section 4.2.

                                        (t)         “Subsidiary Corporation”
means any present or future “subsidiary corporation” of the Company, as defined
in Section 424(f) of the Code.

                           2.2        Construction.  Captions and titles
contained herein are for convenience only and shall not affect the meaning or
interpretation of any provision of the Plan.  Except when otherwise indicated by
the context, the singular shall include the plural, the plural shall include the
singular, and use of the term “or” shall include the conjunctive as well as the
disjunctive.

             3.          Administration.

                           3.1        Administration by the Board.  The Plan
shall be administered by the Board, including any duly appointed Committee of
the Board.  All questions of interpretation of the Plan or of any Option shall
be determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Option.  Any officer of
a Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, determination or election which
is the responsibility of or which is allocated to the Company herein, provided
the officer has apparent authority with respect to such matter, right,
obligation, determination or election.

                           3.2        Limitations on Authority of the Board. 
Notwithstanding any other provision herein to the contrary, the Board shall have
no authority, discretion, or power to select the Outside Directors who will
receive Options, to set the exercise price of the Options, to determine the
number of shares of Stock to be subject to an Option or the time at which an
Option shall be granted, to establish the duration of an Option, or to alter any
other terms or conditions specified in the Plan, except in the sense of
administering the Plan subject to the provisions of the Plan.

             4.          Shares Subject to Plan.

                           4.1        Maximum Number of Shares Issuable. 
Subject to adjustment as provided in Section 4.2, the maximum aggregate number
of shares of Stock that may be issued under the Plan shall be three hundred
thousand (300,000) and shall consist of authorized but unissued shares or
reacquired shares of Stock or any combination thereof.  If an outstanding Option
for any reason expires or is terminated or canceled or shares of Stock acquired,
subject to repurchase, upon the exercise of an Option are repurchased by the
Company, the shares of Stock allocable to the unexercised portion of such
Option, or such repurchased shares of Stock, shall again be available for
issuance under the Plan.

                           4.2        Adjustments for Changes in Capital
Structure.  In the event of any stock dividend, stock split, reverse stock
split, recapitalization, combination, reclassification or similar change in the
capital structure of the Company, appropriate adjustments shall be made in the
number and class of shares subject to the Plan, to the “Initial Option” and
“Annual Option” (as defined in Section 6.1), and to any outstanding Options, and
in the exercise price of any outstanding Options.  If a majority of the shares
which are of the same class as the shares that are subject to outstanding
Options are exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event as defined in Section 8.1) shares of
another corporation (the “New Shares”), the Board may unilaterally amend the
outstanding Options to provide that such Options are exercisable for New
Shares.  In the event of any such amendment, the number of shares subject to,
and the exercise price of, the outstanding Options shall be adjusted in a fair
and equitable manner as determined by the Board, in its sole discretion. 
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 4.2 shall be rounded down to the nearest whole number,
and in no event may the exercise price of any Option be decreased to an amount
less than the par value, if any, of the stock subject to the Option.

             5.          Eligibility and Type of Options.

                           5.1        Persons Eligible for Options.  An Option
shall be granted only to a person who, at the time of grant, is an Outside
Director.

                           5.2        Options Authorized.  Options shall be
nonstatutory stock options; that is, options which are not treated as incentive
stock options within the meaning of Section 422(b) of the Code.

             6.          Terms and Conditions of Options.  Options shall be
evidenced by Option Agreements specifying the number of shares of Stock covered
thereby, in such form as the Board shall from time to time establish.  Option
Agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and conditions:

                           6.1        Automatic Grant of Options.  Subject to
execution by an Outside Director of the appropriate Option Agreement, Options
shall be granted automatically and without further action of the Board, as
follows:

                                        (a)         Initial Option.  Each person
who is (i) an Outside Director on the Effective Date, or (ii) first elected or
appointed as an Outside Director after the Effective Date shall be granted an
Option to purchase twenty thousand (20,000) shares of Stock on the Effective
Date or the date of such initial election or appointment, respectively (an
“Initial Option”).  Notwithstanding anything herein to the contrary, a Director
of the Company who previously did not qualify as an Outside Director shall not
receive an Initial Option in the event that such Director subsequently becomes
an Outside Director.

                                        (b)        Annual Option.  Each Outside
Director (including any Director of the Company who previously did not qualify
as an Outside Director but who subsequently becomes an Outside Director) shall
be granted, on the date immediately following the date of each annual meeting of
the stockholders of the Company (an “Annual Meeting”) following which such
person remains an Outside Director, an Option to purchase four thousand eight
hundred (4,800) shares of Stock (an “Annual Option”).  Notwithstanding the
foregoing, an Outside Director who has not served continuously as a Director of
the Company for at least six (6) months as of the date immediately following
such Annual Meeting shall not receive an Annual Option on such date.

                                        (c)         Right to Decline Option. 
Notwithstanding the foregoing, any person may elect not to receive an Option by
delivering written notice of such election to the Board no later than the day
prior to the date such Option would otherwise be granted.  A person so declining
an Option shall receive no payment or other consideration in lieu of such
declined Option.  A person who has declined an Option may revoke such election
by delivering written notice of such revocation to the Board no later than the
day prior to the date such Option would be granted pursuant to Section 6.1(a) or
(b), as the case may be.

                           6.2        Exercise Price.  The exercise price per
share of Stock subject to an Option shall be the Fair Market Value of a share of
Stock on the date the Option is granted.

                           6.3        Exercise Period.  Each Option shall
terminate and cease to be exercisable on the date ten (10) years after the date
of grant of the Option unless earlier terminated pursuant to the terms of the
Plan or the Option Agreement.

                           6.4        Right to Exercise Options.

                                        (a)         Initial Option.  Except as
otherwise provided in the Plan or in the Option Agreement, an Initial Option
shall (i) first become exercisable on the date which is one (1) year after the
date on which the Initial Option was granted (the “Initial Option Vesting
Date”); and (ii) be exercisable on and after the Initial Option Vesting Date and
prior to the termination thereof in an amount equal to the number of shares of
Stock initially subject to the Initial Option multiplied by the Vested Ratio as
set forth below, less the number of shares previously acquired upon exercise
thereof.  The Vested Ratio described in the preceding sentence shall be
determined as follows:

                                                                                                                                                               

    Vested Ratio    

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

  Prior to Initial Option Vesting Date 0   On Initial Option Vesting Date,
provided the Optionee’s Service
is continuous from the date of grant
of the Initial Option until the
Initial Option Vesting Date 1/4         Plus     For each full year of
of the Optionee’s continuous
Service from the Initial Option
Vesting Date until the Vested
Ratio equals 1/1, an additional 1/4

                                        (b)        Annual Option.  Except as
otherwise provided in the Plan or in the Option Agreement, an Annual Option
shall first become exercisable on the date which is one (1) year after the date
on which the Annual Option was granted (the “Annual Option Vesting Date”),
provided the Optionee’s Service is continuous from the date of grant of the
Annual Option until the Annual Option Vesting Date.  The Annual Option shall be
exercisable on and after the Annual Option Vesting Date and prior to the
termination thereof in an amount equal to the number of shares of Stock
initially subject to the Annual Option, less the number of shares previously
acquired upon exercise thereof.

                           6.5        Payment of Exercise Price.

                                        (a)         Forms of Consideration
Authorized.  Except as otherwise provided below, payment of the exercise price
for the number of shares of Stock being purchased pursuant to any Option shall
be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company
of shares of Stock owned by the Optionee having a Fair Market Value not less
than the exercise price, (iii) by the assignment of the proceeds of a sale or
loan with respect to some or all of the shares being acquired upon the exercise
of the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a “Cashless Exercise”), or (iv) by any
combination thereof.

                                        (b)        Tender of Stock. 
Notwithstanding the foregoing, an Option may not be exercised by tender to the
Company of shares of Stock to the extent such tender of Stock would constitute a
violation of the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock.  Unless otherwise provided by the Board, an
Option may not be exercised by tender to the Company of shares of Stock unless
such shares either have been owned by the Optionee for more than six (6) months
or were not acquired, directly or indirectly, from the Company.

                                        (c)         Cashless Exercise.  The
Company reserves, at any and all times, the right, in the Company’s sole and
absolute discretion, to establish, decline to approve or terminate any program
or procedures for the exercise of Options by means of a Cashless Exercise.

                           6.6        Tax Withholding.  The Company shall have
the right, but not the obligation, to deduct from the shares of Stock issuable
upon the exercise of an Option, or to accept from the Optionee the tender of, a
number of whole shares of Stock having a Fair Market Value equal to all or any
part of the federal, state, local and foreign taxes, if any, required by law to
be withheld by the Participating Company Group with respect to such Option or
the shares acquired upon exercise thereof.  Alternatively or in addition, in its
sole discretion, the Company shall have the right to require the Optionee to
make adequate provision for any such tax withholding obligations of the
Participating Company Group arising in connection with the Option or the shares
acquired upon exercise thereof.  The Company shall have no obligation to deliver
shares of Stock until the Participating Company Group’s tax withholding
obligations have been satisfied.

             7.          Standard Form of Option Agreement.

                           7.1        Initial Option.  Unless otherwise provided
for by the Board at the time an Initial Option is granted, each Initial Option
shall comply with and be subject to the terms and conditions set forth in the
form of Nonstatutory Stock Option Agreement for Outside Directors (Initial
Option) adopted by the Board concurrently with its adoption of the Plan and as
amended from time to time.

                           7.2        Annual Option.  Unless otherwise provided
for by the Board at the time an Annual Option is granted, each Annual Option
shall comply with and be subject to the terms and conditions set forth in the
form of Nonstatutory Stock Option Agreement for Outside Directors (Annual
Option) adopted by the Board concurrently with its adoption of the Plan and as
amended from time to time.

                           7.3        Authority to Vary Terms.  Subject to the
limitations set forth in Section 3.2, the Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement are not
inconsistent with the terms of the Plan.  Such authority shall include, but not
by way of limitation, the authority to grant Options which are immediately
exercisable subject to the Company’s right to repurchase any unvested shares of
Stock acquired by the Optionee upon the exercise of an Option in the event such
Optionee’s Service is terminated for any reason.  In no event, however, shall
the Board be permitted to vary the terms of any standard form of Option
Agreement if such change would cause the Plan to cease to qualify as a formula
plan pursuant to Rule 16b-3 at any such time as any class of equity security of
the Company is registered pursuant to Section 12 of the Exchange Act.

             8.          Transfer of Control.

                           8.1        Definitions.

                                        (a)         An “Ownership Change Event”
shall be deemed to have occurred if any of the following occurs with respect to
the Company:

                                                     (i)          the direct or
indirect sale or exchange in a single or series of related transactions by the
stockholders of the Company of more than fifty percent (50%) of the voting stock
of the Company;

                                                     (ii)         a merger or
consolidation in which the Company is a party;

                                                     (iii)        the sale,
exchange, or transfer of all or substantially all of the assets of the Company;
or

                                                     (iv)       a liquidation or
dissolution of the Company.

                                        (b)        A “Transfer of Control” shall
mean an Ownership Change Event or a series of related Ownership Change Events
(collectively, the “Transaction”) wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the
Transaction, in substantially the same proportions as their ownership of shares
of the Company’s voting stock immediately before the Transaction, direct or
indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the outstanding voting stock of the Company or the
corporation or corporations to which the assets of the Company were transferred
(the “Transferee Corporation(s)”), as the case may be.  For purposes of the
preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting stock of one or
more corporations which, as a result of the Transaction, own the Company or the
Transferee Corporation(s), as the case may be, either directly or through one or
more subsidiary corporations.  The Board shall have the right to determine
whether multiple sales or exchanges of the voting stock of the Company or
multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive.

                           8.2        Effect of Transfer of Control on Options. 
In the event of a Transfer of Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
“Acquiring Corporation”), may either assume the Company’s rights and obligations
under outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation’s stock.  In the event the
Acquiring Corporation elects not to assume or substitute for outstanding Options
in connection with a Transfer of Control, any unexercisable or unvested portion
of the outstanding Options shall be immediately exercisable and vested in full
as of the date ten (10) days prior to the date of the Transfer of Control.  The
exercise or vesting of any Option that was permissible solely by reason of this
Section 8.2 shall be conditioned upon the consummation of the Transfer of
Control.  Any Options which are neither assumed or substituted for by the
Acquiring Corporation in connection with the Transfer of Control nor exercised
as of the date of the Transfer of Control shall terminate and cease to be
outstanding effective as of the date of the Transfer of Control. 
Notwithstanding the foregoing, shares acquired upon exercise of an Option prior
to the Transfer of Control and any consideration received pursuant to the
Transfer of Control with respect to such shares shall continue to be subject to
all applicable provisions of the Option Agreement evidencing such Option except
as otherwise provided in such Option Agreement.  Furthermore, notwithstanding
the foregoing, if the corporation the stock of which is subject to the
outstanding Options immediately prior to an Ownership Change Event described in
Section 8.1(a)(i) constituting a Transfer of Control is the surviving or
continuing corporation and immediately after such Ownership Change Event less
than fifty percent (50%) of the total combined voting power of its voting stock
is held by another corporation or by other corporations that are members of an
affiliated group within the meaning of Section 1504(a) of the Code without
regard to the provisions of Section 1504(b) of the Code, the outstanding Options
shall not terminate.

             9.          Nontransferability of Options.  During the lifetime of
the Optionee, an Option shall be exercisable only by the Optionee or the
Optionee’s guardian or legal representative.  No Option shall be assignable or
transferable by the Optionee, except by will or by the laws of descent and
distribution.

             10.        Indemnification.  In addition to such other rights of
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys’ fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan, or any right granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such person
is liable for gross negligence, bad faith or intentional misconduct in duties;
provided, however, that within sixty (60) days after the institution of such
action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.

             11.        Termination or Amendment of Plan.  The Board may
terminate or amend the Plan at any time.  However, subject to changes in the law
or other legal requirements that would permit otherwise, without the approval of
the Company’s stockholders, there shall be (a) no increase in the total number
of shares of Stock that may be issued under the Plan (except by operation of the
provisions of Section 4.2), and (b) no expansion in the class of persons
eligible to receive Options.  Furthermore, to the extent required by Rule 16b-3,
provisions of the Plan addressing eligibility to participate in the Plan and the
amount, price and timing of Options shall not be amended more than once every
six (6) months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.  In
any event, no termination or amendment of the Plan may adversely affect any then
outstanding Option, or any unexercised portion thereof, without the consent of
the Optionee, unless such termination or amendment is necessary to comply with
any applicable law or government regulation.

             IN WITNESS WHEREOF, the undersigned Secretary of the Company
certifies that the foregoing sets forth the Zoran Corporation 1995 Outside
Directors Stock Option Plan was duly adopted and amended by the Board through
June 18, 2000.

 

  ___________________________________   Secretary

PLAN HISTORY

 

October 13, 1995 Board adopts Plan, with an initial reserve of 200,000 shares.  
  February 9, 1996 Date of notice of stockholder action by consent without
meeting, approving Plan with an initial reserve of 200,000 shares (post the 1:3
reverse stock split on 12/14/95).     June 18, 2000 Board amends Plan to
increase share reserve by 100,000 shares to 300,000 shares.     July __, 2000
Stockholders approve share reserve increase to 300,000 shares.

 

 

 

 

STANDARD FORM OF

ZORAN CORPORATION

NONSTATUTORY STOCK OPTION AGREEMENT

FOR OUTSIDE DIRECTORS

(INITIAL OPTION)

 

ZORAN CORPORATION

NONSTATUTORY STOCK OPTION AGREEMENT

FOR OUTSIDE DIRECTORS

(INITIAL OPTION)

 

             THIS NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS
(INITIAL OPTION) (the “Option Agreement”) is made and entered into as of the
Date of Option Grant, by and between Zoran Corporation and
___________________________ (the “Optionee”).

The Company has granted to the Optionee an option to purchase certain shares of
Stock, upon the terms and conditions set forth in this Option Agreement (the
“Option”).

             1.          Definitions and Construction.

                           1.1        Definitions.  Whenever used herein, the
following terms shall have their respective meanings set forth below:

                                        (a)         “Date of Option Grant” means
_________________ , 200_.

                                        (b)        “Number of Option Shares”
means twenty thousand (20,000) shares of Stock, as adjusted from time to time
pursuant to Section 9.

                                        (c)         “Exercise Price” means
$_________________ per share of Stock, as adjusted from time to time pursuant to
Section 9.

                                        (d)        “Initial Exercise Date” means
the Initial Vesting Date.

                                        (e)         “Initial Vesting Date” means
the date occurring one (1) year after the Date of Option Grant.

                                        (f)         “Vested Ratio” means, on any
relevant date, the ratio determined as follows:

    Vested Ratio    

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

  Prior to Initial Vesting Date 0         On Initial Vesting Date, provided the
Optionee’s Service is continuous from the
Date of Option Grant until the Initial Vesting Date 1/4         Plus          
For each full year of the Optionee’s continuous
Service from the Initial Vesting Date
until the Vested Ratio equals 1/1, an additional 1/4

                                        (g)        “Option Expiration Date”
means the date ten (10) years after the Date of Option Grant.

                                        (h)        “Board” means the Board of
Directors of the Company.  If one or more Committees have been appointed by the
Board to administer the Plan, “Board” shall also mean such Committee(s).

                                        (i)          “Code” means the Internal
Revenue Code of 1986, as amended, and any applicable regulations promulgated
thereunder.

                                        (j)          “Committee” means a
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board.  Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted in the Plan, including, without limitation, the power to amend
or terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

                                        (k)         “Company” means Zoran
Corporation, a Delaware corporation, or any successor corporation thereto.

                                        (l)          “Consultant” means any
person, including an advisor, engaged by a Participating Company to render
services other than as an Employee or a Director.

                                        (m)        “Director” means a member of
the Board or of the board of directors of any other Participating Company.

                                        (n)        “Disability” means the
inability of the Optionee, in the opinion of a qualified physician acceptable to
the Company, to perform the major duties of the Optionee’s position with the
Participating Company Group because of the sickness or injury of the Optionee.

                                        (o)        “Employee” means any person
treated as an employee (including an officer or a Director who is also treated
as an employee) in the records of a Participating Company; provided, however,
that neither service as a Director nor payment of a director’s fee shall be
sufficient to constitute employment for purposes of the Plan.

                                        (p)        “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

                                        (q)        “Fair Market Value” means, as
of any date, if there is then a public market for the Stock, the closing price
of the Stock (or the mean of the closing bid and asked prices of the Stock if
the Stock is so reported instead) as reported on the National Association of
Securities Dealers Automated Quotation (“NASDAQ”) System, the NASDAQ National
Market System or such other national or regional securities exchange or market
system constituting the primary market for the Stock.  If the relevant date does
not fall on a day on which the Stock is trading on NASDAQ, the NASDAQ National
Market System or other national or regional securities exchange or market
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded prior to the relevant date.  If
there is then no public market for the Stock, the Fair Market Value on any
relevant date shall be as determined by the Board without regard to any
restriction other than a restriction which, by its terms, will never lapse.

                                        (r)         “Parent Corporation” means
any present or future “parent corporation” of the Company, as defined in
Section 424(e) of the Code.

                                        (s)         “Participating Company”
means the Company or any Parent Corporation or Subsidiary Corporation.

                                        (t)         “Participating Company
Group” means, at any point in time, all corporations collectively which are then
Participating Companies.

                                        (u)        “Plan” means the Zoran
Corporation 1995 Outside Directors Stock Option Plan.

                                        (v)        “Retirement” means a
termination of the Optionee’s Service as a result of either of the following,
provided that the Optionee has served continuously on the Board for at least 2
years: (i) the Optionee’s resignation from the Board or (ii) the expiration of
the Optionee’s term as a Director of the Company after the Optionee has declined
to stand for reelection.

                                        (w)        “Rule 16b-3” means Rule 16b–3
as promulgated under the Exchange Act, as amended from time to time, or any
successor rule or regulation.

                                        (x)         “Securities Act” means the
Securities Act of 1933, as amended.

                                        (y)        “Service” means the
Optionee’s service with the Participating Company Group, whether in the capacity
of an Employee, a Director or a Consultant.  The Optionee’s Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionee renders Service to the Participating Company Group or a change in
the Participating Company for which the Optionee renders such Service, provided
that there is no interruption or termination of the Optionee’s Service.  The
Optionee’s Service shall be deemed to have terminated either upon an actual
termination of Service or upon the corporation for which the Optionee performs
Service ceasing to be a Participating Company.

                                        (z)         “Stock” means the common
stock, par value $0.001, of the Company, as adjusted from time to time in
accordance with Section 9.

                                        (aa)       “Subsidiary Corporation”
means any present or future “subsidiary corporation” of the Company, as defined
in Section 424(f) of the Code.

                           1.2        Construction.  Captions and titles
contained herein are for convenience only and shall not affect the meaning or
interpretation of any provision of this Option Agreement.  Except when otherwise
indicated by the context, the singular shall include the plural, the plural
shall include the singular, and the term “or” shall include the conjunctive as
well as the disjunctive.

             2.          Tax Status of the Option.  This Option is intended to
be a nonstatutory stock option and shall not be treated as an incentive stock
option within the meaning of Section 422(b) of the Code.

             3.          Administration.  All questions of interpretation
concerning this Option Agreement shall be determined by the Board, including any
duly appointed Committee of the Board.  All determinations by the Board shall be
final and binding upon all persons having an interest in the Option.  Any
officer of a Participating Company shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, or election which is
the responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.

             4.          Exercise of the Option.

                           4.1        Right to Exercise.

                                        (a)         Except as otherwise provided
herein, the Option shall be exercisable on and after the Initial Exercise Date
and prior to the termination of the Option (as provided in Section 6) in an
amount not to exceed the Number of Option Shares multiplied by the Vested Ratio
less the number of shares previously acquired upon exercise of the Option.  In
no event shall the Option be exercisable for more shares than the Number of
Option Shares.

                                        (b)        Notwithstanding the
foregoing, in the event that the adoption of the Plan or any amendment of the
Plan is subject to the approval of the Company’s stockholders in order for the
Plan or the grant of the Option to comply with the requirements of Rule 16b-3,
the Option shall not be exercisable prior to such stockholder approval.

                           4.2        Method of Exercise.  Exercise of the
Option shall be by written notice to the Company which must state the election
to exercise the Option, the number of whole shares of Stock for which the Option
is being exercised and such other representations and agreements as to the
Optionee’s investment intent with respect to such shares as may be required
pursuant to the provisions of this Option Agreement.  The written notice must be
signed by the Optionee and must be delivered in person, by certified or
registered mail, return receipt requested, by confirmed facsimile transmission,
or by such other means as the Company may permit, to the Chief Financial Officer
of the Company, or other authorized representative of the Participating Company
Group, prior to the termination of the Option as set forth in Section 6,
accompanied by full payment of the aggregate Exercise Price for the number of
shares of Stock being purchased.  The Option shall be deemed to be exercised
upon receipt by the Company of such written notice and the aggregate Exercise
Price.

                           4.3        Payment of Exercise Price.

                                        (a)         Forms of Consideration
Authorized.  Except as otherwise provided below, payment of the aggregate
Exercise Price for the number of shares of Stock for which the Option is being
exercised shall be made (i) in cash, by check, or cash equivalent, (ii) by
tender to the Company of whole shares of Stock owned by the Optionee having a
Fair Market Value not less than the aggregate Exercise Price, (iii) by means of
a Cashless Exercise, as defined in Section 4.3(c), or (iv) by any combination of
the foregoing.

                                        (b)        Tender of Stock. 
Notwithstanding the foregoing, the Option may not be exercised by tender to the
Company of shares of Stock to the extent such tender of Stock would constitute a
violation of the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock.  The Option may not be exercised by tender to
the Company of shares of Stock unless such shares either have been owned by the
Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.

                                        (c)         Cashless Exercise.  A
“Cashless Exercise” means the assignment in a form acceptable to the Company of
the proceeds of a sale or loan with respect to some or all of the shares of
Stock acquired upon the exercise of the Option pursuant to a program or
procedure approved by the Company (including, without limitation, through an
exercise complying with the provisions of Regulation T as promulgated from time
to time by the Board of Governors of the Federal Reserve System).  The Company
reserves, at any and all times, the right, in the Company’s sole and absolute
discretion, to decline to approve or terminate any such program or procedure.

                           4.4        Tax Withholding.  At the time the Option
is exercised, in whole or in part, or at any time thereafter as requested by the
Company, the Optionee agrees to make adequate provision for any sums required to
satisfy the federal, state, local and foreign tax withholding obligations of the
Participating Company Group, if any, which arise in connection with the Option,
including, without limitation, obligations arising upon (i) the exercise, in
whole or in part, of the Option, (ii) the transfer, in whole or in part, of any
shares acquired upon exercise of the Option, or (iii) the lapsing of any
restriction with respect to any shares acquired upon exercise of the Option. 
The Optionee is cautioned that the Option is not exercisable unless the tax
withholding obligations of the Participating Company Group are satisfied. 
Accordingly, the Optionee may not be able to exercise the Option when desired
even though the Option is vested, and the Company shall have no obligation to
issue a certificate for such shares.

                           4.5        Certificate Registration.  Except in the
event the Exercise Price is paid by means of a Cashless Exercise, the
certificate for the shares as to which the Option is exercised shall be
registered in the name of the Optionee, or, if applicable, the heirs of the
Optionee.

                           4.6        Restrictions on Grant of the Option and
Issuance of Shares.  The grant of the Option and the issuance of shares of Stock
upon exercise of the Option shall be subject to compliance with all applicable
requirements of federal, state or foreign law with respect to such securities. 
The Option may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed.  In addition,
the Option may not be exercised unless (i) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act.  THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS
ARE SATISFIED.  ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED.  The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company’s legal counsel to be necessary to the lawful issuance and
sale of any shares subject to the Option shall relieve the Company of any
liability in respect of the failure to issue or sell such shares as to which
such requisite authority shall not have been obtained.  As a condition to the
exercise of the Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.

                           4.7        Fractional Shares.  The Company shall not
be required to issue fractional shares upon the exercise of the Option.

             5.          Nontransferability of the Option.  The Option may be
exercised during the lifetime of the Optionee only by the Optionee or the
Optionee’s guardian or legal representative and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution.  Following the death of the Optionee, the Option, to the extent
provided in Section 7, may be exercised by the Optionee’s legal representative
or by any person empowered to do so under the deceased Optionee’s will or under
the then applicable laws of descent and distribution.

             6.          Termination of the Option.  The Option shall terminate
and may no longer be exercised on the first to occur of (a) the Option
Expiration Date, (b) the last date for exercising the Option following
termination of the Optionee’s Service as described in Section 7, or (c) a
Transfer of Control to the extent provided in Section 8.

             7.          Effect of Termination of Service.

                           7.1        Option Exercisability.

                                        (a)         Disability.  If the
Optionee’s Service with the Participating Company Group is terminated because of
the Disability of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee’s Service terminated, may be
exercised by the Optionee (or the Optionee’s guardian or legal representative)
at any time prior to the expiration of one (1) year after the date on which the
Optionee’s Service terminated, but in any event no later than the Option
Expiration Date; provided, however, that if the Optionee has served continuously
on the Board for at least 2 years prior to such termination of Service, the
Option, to the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee (or the
Optionee’s guardian or legal representative) at any time prior to the Option
Expiration Date.

                                        (b)        Death.  If the Optionee’s
Service with the Participating Company Group is terminated because of the death
of the Optionee, the Option, to the extent unexercised and exercisable on the
date on which the Optionee’s Service terminated, may be exercised by the
Optionee (or the Optionee’s legal representative or other person who acquired
the right to exercise the Option by reason of the Optionee’s death) at any time
prior to the expiration of one (1) year after the date on which the Optionee’s
Service terminated, but in any event no later than the Option Expiration Date;
provided, however, that if the Optionee has served continuously on the Board for
at least 2 years prior to such termination of Service, the Option, to the extent
unexercised and exercisable on the date on which the Optionee’s Service
terminated, may be exercised by the Optionee (or the Optionee’s legal
representative or other person who acquired the right to exercise the Option by
reason of the Optionee’s death) at any time prior to the Option Expiration
Date.  The Optionee’s Service shall be deemed to have terminated on account of
death if the Optionee dies within three (3) months after the Optionee’s
termination of Service.

                                        (c)         Retirement.  If the
Optionee’s Service with the Participating Company Group is terminated because of
the Retirement of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee’s Service terminated, may be
exercised at any time prior to the Option Expiration Date.

                                        (d)        Other Termination of
Service.  If the Optionee’s Service with the Participating Company Group
terminates for any reason, except Disability, death or Retirement, the Option,
to the extent unexercised and exercisable by the Optionee on the date on which
the Optionee’s Service terminated, may be exercised by the Optionee within three
(3) months after the date on which the Optionee’s Service terminated, but in any
event no later than the Option Expiration Date.

                           7.2        Extension if Exercise Prevented by Law. 
Notwithstanding the foregoing, if the exercise of the Option within the
applicable time periods set forth in Section 7.1 is prevented by the provisions
of Section 4.6, the Option shall remain exercisable until three (3) months after
the date the Optionee is notified by the Company that the Option is exercisable,
but in any event no later than the Option Expiration Date.

                           7.3        Extension if Optionee Subject to
Section 16(b).  Notwithstanding the foregoing, if a sale, within the applicable
time periods set forth in Section 7.1, of shares acquired upon the exercise of
the Option would subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of
(i) the tenth (10th) day following the date on which a sale of such shares by
the Optionee would no longer be subject to such suit, (ii) the one hundred and
ninetieth (190th) day after the Optionee’s termination of Service, or (iii) the
Option Expiration Date.

             8.          Ownership Change and Transfer of Control.

                           8.1        Definitions.

                                        (a)         An “Ownership Change Event”
shall be deemed to have occurred if any of the following occurs with respect to
the Company:

                                                     (i)          the direct or
indirect sale or exchange in a single or series of related transactions by the
stockholders of the Company of more than fifty percent (50%) of the voting stock
of the Company;

                                                     (ii)         a merger or
consolidation in which the Company is a party;

                                                     (iii)        the sale,
exchange, or transfer of all or substantially all of the assets of the Company;
or

                                                     (iv)       a liquidation or
dissolution of the Company.

                                        (b)        A “Transfer of Control” shall
mean an Ownership Change Event or a series of related Ownership Change Events
(collectively, the “Transaction”) wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the
Transaction, in substantially the same proportions as their ownership of shares
of the Company’s voting stock immediately before the Transaction, direct or
indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the outstanding voting stock of the Company or the
corporation or corporations to which the assets of the Company were transferred
(the “Transferee Corporation(s)”), as the case may be.  For purposes of the
preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting stock of one or
more corporations which, as a result of the Transaction, own the Company or the
Transferee Corporation(s), as the case may be, either directly or through one or
more subsidiary corporations.  The Board shall have the right to determine
whether multiple sales or exchanges of the voting stock of the Company or
multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive.

                           8.2        Effect of Transfer of Control on Option. 
In the event of a Transfer of Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
“Acquiring Corporation”), may either assume the Company’s rights and obligations
under the Option or substitute for the Option a substantially equivalent option
for the Acquiring Corporation’s stock.  In the event the Acquiring Corporation
elects not to assume the Company’s rights and obligations under the Option or
substitute for the Option in connection with the Transfer of Control, any
unexercised portion of the Option shall be immediately exercisable and vested in
full as of the date ten (10) days prior to the date of the Transfer of Control. 
Any exercise of the Option that was permissible solely by reason of this
Section 8.2 shall be conditioned upon the consummation of the Transfer of
Control.  The Option shall terminate and cease to be outstanding effective as of
the date of the Transfer of Control to the extent that the Option is neither
assumed or substituted for by the Acquiring Corporation in connection with the
Transfer of Control nor exercised as of the date of the Transfer of Control. 
Notwithstanding the foregoing, shares acquired upon exercise of the Option prior
to the Transfer of Control and any consideration received pursuant to the
Transfer of Control with respect to such shares shall continue to be subject to
all applicable provisions of this Option Agreement except as otherwise provided
herein.  Furthermore, notwithstanding the foregoing, if the corporation the
stock of which is subject to the Option immediately prior to an Ownership Change
Event described in Section 8.1(a)(i) constituting a Transfer of Control is the
surviving or continuing corporation and immediately after such Ownership Change
Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are
members of an affiliated group within the meaning of Section 1504(a) of the Code
without regard to the provisions of Section 1504(b) of the Code, the Option
shall not terminate.

             9.          Adjustments for Changes in Capital Structure.  In the
event of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification, or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number, Exercise Price and
class of shares of stock subject to the Option.  If a majority of the shares
which are of the same class as the shares that are subject to the Option are
exchanged for, converted into, or otherwise become (whether or not pursuant to
an Ownership Change Event) shares of another corporation (the “New Shares”), the
Board may unilaterally amend the Option to provide that the Option is
exercisable for New Shares.  In the event of any such amendment, the Number of
Option Shares and the Exercise Price shall be adjusted in a fair and equitable
manner, as determined by the Board, in its sole discretion.  Notwithstanding the
foregoing, any fractional share resulting from an adjustment pursuant to this
Section 9 shall be rounded down to the nearest whole number, and in no event may
the Exercise Price be decreased to an amount less than the par value, if any, of
the stock subject to the Option.

             10.        Rights as a Stockholder.  The Optionee shall have no
rights as a stockholder with respect to any shares covered by the Option until
the date of the issuance of a certificate for the shares for which the Option
has been exercised (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company).  No adjustment
shall be made for dividends, distributions or other rights for which the record
date is prior to the date such certificate is issued, except as provided in
Section 9.

             11.        Legends.  The Company may at any time place legends
referencing any applicable federal, state or foreign securities law restrictions
on all certificates representing shares of stock subject to the provisions of
this Option Agreement.  The Optionee shall, at the request of the Company,
promptly present to the Company any and all certificates representing shares
acquired pursuant to the Option in the possession of the Optionee in order to
carry out the provisions of this Section.

             12.        Binding Effect.  Subject to the restrictions on transfer
set forth herein, this Option Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

             13.        Termination or Amendment.  The Board may terminate or
amend the Plan or the Option at any time; provided, however, that no such
termination or amendment may adversely affect the Option or any unexercised
portion hereof without the consent of the Optionee unless such termination or
amendment is necessary to comply with any applicable law or government
regulation.  No amendment or addition to this Option Agreement shall be
effective unless in writing.

             14.        Integrated Agreement.  This Option Agreement constitutes
the entire understanding and agreement of the Optionee and the Participating
Company Group with respect to the subject matter contained herein, and there are
no agreements, understandings, restrictions, representations, or warranties
among the Optionee and the Participating Company Group with respect to such
subject matter other than those as set forth or provided for herein.  To the
extent contemplated herein, the provisions of this Option Agreement shall
survive any exercise of the Option and shall remain in full force and effect.

             15.        Applicable Law.  This Option Agreement shall be governed
by the laws of the State of California as such laws are applied to agreements
between California residents entered into and to be performed entirely within
the State of California.

  ZORAN CORPORATION       By:  

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  Title:  

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             The Optionee represents that the Optionee is familiar with the
terms and provisions of this Option Agreement and hereby accepts the Option
subject to all of the terms and provisions thereof.  The Optionee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Board upon any questions arising under this Option Agreement.

         OPTIONEE             Date:  

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STANDARD FORM OF

ZORAN CORPORATION

NONSTATUTORY STOCK OPTION AGREEMENT

FOR OUTSIDE DIRECTORS

(ANNUAL OPTION)

ZORAN CORPORATION

NONSTATUTORY STOCK OPTION AGREEMENT

FOR OUTSIDE DIRECTORS

(ANNUAL OPTION)

 

             THIS NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS
(ANNUAL OPTION) (the “Option Agreement”) is made and entered into as of the Date
of Option Grant, by and between Zoran Corporation and
___________________________ (the “Optionee”).

             The Company has granted to the Optionee an option to purchase
certain shares of Stock, upon the terms and conditions set forth in this Option
Agreement (the “Option”).

             1.          Definitions and Construction.

                           1.1        Definitions.  Whenever used herein, the
following terms shall have their respective meanings set forth below:

                                        (a)         “Date of Option Grant” means
_________________, 200_.

                                        (b)        “Number of Option Shares”
means four thousand eight hundred (4,800) shares of Stock, as adjusted from time
to time pursuant to Section 9.

                                        (c)         “Exercise Price” means
$_______________ per share of Stock, as adjusted from time to time pursuant to
Section 9.

                                        (d)        “Option Expiration Date”
means the date ten (10) years after the Date of Option Grant.

                                        (e)         “Board” means the Board of
Directors of the Company.  If one or more Committees have been appointed by the
Board to administer the Plan, “Board” shall also mean such Committee(s).

                                        (f)         “Code” means the Internal
Revenue Code of 1986, as amended, and any applicable regulations promulgated
thereunder.

                                        (g)        “Committee” means a committee
of the Board duly appointed to administer the Plan and having such powers as
shall be specified by the Board.  Unless the powers of the Committee have been
specifically limited, the Committee shall have all of the powers of the Board
granted in the Plan, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

                                        (h)        “Company” means Zoran
Corporation, a Delaware corporation, or any successor corporation thereto.

                                        (i)          “Consultant” means any
person, including an advisor, engaged by a Participating Company to render
services other than as an Employee or a Director.

                                        (j)          “Director” means a member
of the Board or of the board of directors of any other Participating Company.

                                        (k)         “Disability” means the
inability of the Optionee, in the opinion of a qualified physician acceptable to
the Company, to perform the major duties of the Optionee’s position with the
Participating Company Group because of the sickness or injury of the Optionee.

                                        (l)          “Employee” means any person
treated as an employee (including an officer or a Director who is also treated
as an employee) in the records of a Participating Company; provided, however,
that neither service as a Director nor payment of a director’s fee shall be
sufficient to constitute employment for purposes of the Plan.

                                        (m)        “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

                                        (n)        “Fair Market Value” means, as
of any date, if there is then a public market for the Stock, the closing price
of the Stock (or the mean of the closing bid and asked prices of the Stock if
the Stock is so reported instead) as reported on the National Association of
Securities Dealers Automated Quotation (“NASDAQ”) System, the NASDAQ National
Market System or such other national or regional securities exchange or market
system constituting the primary market for the Stock.  If the relevant date does
not fall on a day on which the Stock is trading on NASDAQ, the NASDAQ National
Market System or other national or regional securities exchange or market
system, the date on which the Fair Market Value shall be established shall be
the last day on which the Stock was so traded prior to the relevant date.  If
there is then no public market for the Stock, the Fair Market Value on any
relevant date shall be as determined by the Board without regard to any
restriction other than a restriction which, by its terms, will never lapse.

                                        (o)        “Parent Corporation” means
any present or future “parent corporation” of the Company, as defined in
Section 424(e) of the Code.

                                        (p)        “Participating Company” means
the Company or any Parent Corporation or Subsidiary Corporation.

                                        (q)        “Participating Company Group”
means, at any point in time, all corporations collectively which are then
Participating Companies.

                                        (r)         “Plan” means the Zoran
Corporation 1995 Outside Directors Stock Option Plan.

                                        (s)         “Retirement” means a
termination of the Optionee’s Service as a result of either of the following,
provided that the Optionee has served continuously on the Board for at least 2
years: (i) the Optionee’s resignation from the Board or (ii) the expiration of
the Optionee’s term as a Director of the Company after the Optionee has declined
to stand for reelection.

                                        (t)         “Rule 16b-3” means
Rule 16b–3 as promulgated under the Exchange Act, as amended from time to time,
or any successor rule or regulation.

                                        (u)        “Securities Act” means the
Securities Act of 1933, as amended.

                                        (v)        “Service” means the
Optionee’s service with the Participating Company Group, whether in the capacity
of an Employee, a Director or a Consultant.  The Optionee’s Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionee renders Service to the Participating Company Group or a change in
the Participating Company for which the Optionee renders such Service, provided
that there is no interruption or termination of the Optionee’s Service.  The
Optionee’s Service shall be deemed to have terminated either upon an actual
termination of Service or upon the corporation for which the Optionee performs
Service ceasing to be a Participating Company.

                                        (w)        “Stock” means the common
stock, par value $0.001, of the Company, as adjusted from time to time in
accordance with Section 9.

                                        (x)         “Subsidiary Corporation”
means any present or future “subsidiary corporation” of the Company, as defined
in Section 424(f) of the Code.

                           1.2        Construction.  Captions and titles
contained herein are for convenience only and shall not affect the meaning or
interpretation of any provision of this Option Agreement.  Except when otherwise
indicated by the context, the singular shall include the plural, the plural
shall include the singular, and the term “or” shall include the conjunctive as
well as the disjunctive.

             2.          Tax Status of the Option.  This Option is intended to
be a nonstatutory stock option and shall not be treated as an incentive stock
option within the meaning of Section 422(b) of the Code.

             3.          Administration.  All questions of interpretation
concerning this Option Agreement shall be determined by the Board, including any
duly appointed Committee of the Board.  All determinations by the Board shall be
final and binding upon all persons having an interest in the Option.  Any
officer of a Participating Company shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, or election which is
the responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.

             4.          Exercise of the Option.

                           4.1        Right to Exercise.

                                        (a)         Except as otherwise provided
herein, the Option shall first become exercisable on the date occurring one (1)
year after the Date of Option Grant (the “Full Vesting Date”), provided that the
Optionee’s Service is continuous from the Date of Option Grant to the Full
Vesting Date.  The Option shall be exercisable on and after the Full Vesting
Date and prior to the termination of the Option (as provided in Section 6) in an
amount equal to the Number of Option Shares less the number of shares previously
acquired upon exercise of the Option.  In no event shall the Option be
exercisable for more shares than the Number of Option Shares.

                                        (b)        Notwithstanding the
foregoing, in the event that the adoption of the Plan or any amendment of the
Plan is subject to the approval of the Company’s stockholders in order for the
Plan or the grant of the Option to comply with the requirements of Rule 16b-3,
the Option shall not be exercisable prior to such stockholder approval.

                           4.2        Method of Exercise.  Exercise of the
Option shall be by written notice to the Company which must state the election
to exercise the Option, the number of whole shares of Stock for which the Option
is being exercised and such other representations and agreements as to the
Optionee’s investment intent with respect to such shares as may be required
pursuant to the provisions of this Option Agreement.  The written notice must be
signed by the Optionee and must be delivered in person, by certified or
registered mail, return receipt requested, by confirmed facsimile transmission,
or by such other means as the Company may permit, to the Chief Financial Officer
of the Company, or other authorized representative of the Participating Company
Group, prior to the termination of the Option as set forth in Section 6,
accompanied by full payment of the aggregate Exercise Price for the number of
shares of Stock being purchased.  The Option shall be deemed to be exercised
upon receipt by the Company of such written notice and the aggregate Exercise
Price.

                           4.3        Payment of Exercise Price.

                                        (a)         Forms of Consideration
Authorized.  Except as otherwise provided below, payment of the aggregate
Exercise Price for the number of shares of Stock for which the Option is being
exercised shall be made (i) in cash, by check, or cash equivalent, (ii) by
tender to the Company of whole shares of Stock owned by the Optionee having a
Fair Market Value not less than the aggregate Exercise Price, (iii) by means of
a Cashless Exercise, as defined in Section 4.3(c), or (iv) by any combination of
the foregoing.

                                        (b)        Tender of Stock. 
Notwithstanding the foregoing, the Option may not be exercised by tender to the
Company of shares of Stock to the extent such tender of Stock would constitute a
violation of the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock.  The Option may not be exercised by tender to
the Company of shares of Stock unless such shares either have been owned by the
Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.

                                        (c)         Cashless Exercise.  A
“Cashless Exercise” means the assignment in a form acceptable to the Company of
the proceeds of a sale or loan with respect to some or all of the shares of
Stock acquired upon the exercise of the Option pursuant to a program or
procedure approved by the Company (including, without limitation, through an
exercise complying with the provisions of Regulation T as promulgated from time
to time by the Board of Governors of the Federal Reserve System).  The Company
reserves, at any and all times, the right, in the Company’s sole and absolute
discretion, to decline to approve or terminate any such program or procedure.

                           4.4        Tax Withholding.  At the time the Option
is exercised, in whole or in part, or at any time thereafter as requested by the
Company, the Optionee agrees to make adequate provision for any sums required to
satisfy the federal, state, local and foreign tax withholding obligations of the
Participating Company Group, if any, which arise in connection with the Option,
including, without limitation, obligations arising upon (i) the exercise, in
whole or in part, of the Option, (ii) the transfer, in whole or in part, of any
shares acquired upon exercise of the Option, or (iii) the lapsing of any
restriction with respect to any shares acquired upon exercise of the Option. 
The Optionee is cautioned that the Option is not exercisable unless the tax
withholding obligations of the Participating Company Group are satisfied. 
Accordingly, the Optionee may not be able to exercise the Option when desired
even though the Option is vested, and the Company shall have no obligation to
issue a certificate for such shares.

                           4.5        Certificate Registration.  Except in the
event the Exercise Price is paid by means of a Cashless Exercise, the
certificate for the shares as to which the Option is exercised shall be
registered in the name of the Optionee, or, if applicable, the heirs of the
Optionee.

                           4.6        Restrictions on Grant of the Option and
Issuance of Shares.  The grant of the Option and the issuance of shares of Stock
upon exercise of the Option shall be subject to compliance with all applicable
requirements of federal, state or foreign law with respect to such securities. 
The Option may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed.  In addition,
the Option may not be exercised unless (i) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act.  THE OPTIONEE IS
CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS
ARE SATISFIED.  ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED.  The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company’s legal counsel to be necessary to the lawful issuance and
sale of any shares subject to the Option shall relieve the Company of any
liability in respect of the failure to issue or sell such shares as to which
such requisite authority shall not have been obtained.  As a condition to the
exercise of the Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.

                           4.7        Fractional Shares.  The Company shall not
be required to issue fractional shares upon the exercise of the Option.

             5.          Nontransferability of the Option.  The Option may be
exercised during the lifetime of the Optionee only by the Optionee or the
Optionee’s guardian or legal representative and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution.  Following the death of the Optionee, the Option, to the extent
provided in Section 7, may be exercised by the Optionee’s legal representative
or by any person empowered to do so under the deceased Optionee’s will or under
the then applicable laws of descent and distribution.

             6.          Termination of the Option.  The Option shall terminate
and may no longer be exercised on the first to occur of (a) the Option
Expiration Date, (b) the last date for exercising the Option following
termination of the Optionee’s Service as described in Section 7, or (c) a
Transfer of Control to the extent provided in Section 8.

             7.          Effect of Termination of Service.

                           7.1        Option Exercisability.

                                        (a)         Disability.  If the
Optionee’s Service with the Participating Company Group is terminated because of
the Disability of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee’s Service terminated, may be
exercised by the Optionee (or the Optionee’s guardian or legal representative)
at any time prior to the expiration of one (1) year after the date on which the
Optionee’s Service terminated, but in any event no later than the Option
Expiration Date; provided, however, that if the Optionee has served continuously
on the Board for at least 2 years prior to such termination of Service, the
Option, to the extent unexercised and exercisable on the date on which the
Optionee's Service terminated, may be exercised by the Optionee (or the
Optionee’s guardian or legal representative) at any time prior to the Option
Expiration Date.

                                        (b)        Death.  If the Optionee’s
Service with the Participating Company Group is terminated because of the death
of the Optionee, the Option, to the extent unexercised and exercisable on the
date on which the Optionee’s Service terminated, may be exercised by the
Optionee (or the Optionee’s legal representative or other person who acquired
the right to exercise the Option by reason of the Optionee’s death) at any time
prior to the expiration of one (1) year after the date on which the Optionee’s
Service terminated, but in any event no later than the Option Expiration Date;
provided, however, that if the Optionee has served continuously on the Board for
at least 2 years prior to such termination of Service, the Option, to the extent
unexercised and exercisable on the date on which the Optionee’s Service
terminated, may be exercised by the Optionee (or the Optionee’s legal
representative or other person who acquired the right to exercise the Option by
reason of the Optionee’s death) at any time prior to the Option Expiration
Date.  The Optionee’s Service shall be deemed to have terminated on account of
death if the Optionee dies within three (3) months after the Optionee’s
termination of Service.

                                        (c)         Retirement.  If the
Optionee’s Service with the Participating Company Group is terminated because of
the Retirement of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee’s Service terminated, may be
exercised at any time prior to the Option Expiration Date.

                                        (d)        Other Termination of
Service.  If the Optionee’s Service with the Participating Company Group
terminates for any reason, except Disability, death or Retirement, the Option,
to the extent unexercised and exercisable by the Optionee on the date on which
the Optionee’s Service terminated, may be exercised by the Optionee within three
(3) months after the date on which the Optionee’s Service terminated, but in any
event no later than the Option Expiration Date.

                           7.2        Extension if Exercise Prevented by Law. 
Notwithstanding the foregoing, if the exercise of the Option within the
applicable time periods set forth in Section 7.1 is prevented by the provisions
of Section 4.6, the Option shall remain exercisable until three (3) months after
the date the Optionee is notified by the Company that the Option is exercisable,
but in any event no later than the Option Expiration Date.

                           7.3        Extension if Optionee Subject to
Section 16(b).  Notwithstanding the foregoing, if a sale, within the applicable
time periods set forth in Section 7.1, of shares acquired upon the exercise of
the Option would subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of
(i) the tenth (10th) day following the date on which a sale of such shares by
the Optionee would no longer be subject to such suit, (ii) the one hundred and
ninetieth (190th) day after the Optionee’s termination of Service, or (iii) the
Option Expiration Date.

             8.          Ownership Change and Transfer of Control.

                           8.1        Definitions.

                                        (a)         An “Ownership Change Event”
shall be deemed to have occurred if any of the following occurs with respect to
the Company:

                                                     (i)          the direct or
indirect sale or exchange in a single or series of related transactions by the
stockholders of the Company of more than fifty percent (50%) of the voting stock
of the Company;

                                                     (ii)         a merger or
consolidation in which the Company is a party;

                                                     (iii)        the sale,
exchange, or transfer of all or substantially all of the assets of the Company;
or

                                                     (iv)       a liquidation or
dissolution of the Company.

                                        (b)        A “Transfer of Control” shall
mean an Ownership Change Event or a series of related Ownership Change Events
(collectively, the “Transaction”) wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the
Transaction, in substantially the same proportions as their ownership of shares
of the Company’s voting stock immediately before the Transaction, direct or
indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the outstanding voting stock of the Company or the
corporation or corporations to which the assets of the Company were transferred
(the “Transferee Corporation(s)”), as the case may be.  For purposes of the
preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting stock of one or
more corporations which, as a result of the Transaction, own the Company or the
Transferee Corporation(s), as the case may be, either directly or through one or
more subsidiary corporations.  The Board shall have the right to determine
whether multiple sales or exchanges of the voting stock of the Company or
multiple Ownership Change Events are related, and its determination shall be
final, binding and conclusive.

                           8.2        Effect of Transfer of Control on Option.
 In the event of a Transfer of Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
“Acquiring Corporation”), may either assume the Company’s rights and obligations
under the Option or substitute for the Option a substantially equivalent option
for the Acquiring Corporation’s stock.  In the event the Acquiring Corporation
elects not to assume the Company’s rights and obligations under the Option or
substitute for the Option in connection with the Transfer of Control, any
unexercised portion of the Option shall be immediately exercisable and vested in
full as of the date ten (10) days prior to the date of the Transfer of Control. 
Any exercise of the Option that was permissible solely by reason of this
Section 8.2 shall be conditioned upon the consummation of the Transfer of
Control.  The Option shall terminate and cease to be outstanding effective as of
the date of the Transfer of Control to the extent that the Option is neither
assumed or substituted for by the Acquiring Corporation in connection with the
Transfer of Control nor exercised as of the date of the Transfer of Control. 
Notwithstanding the foregoing, shares acquired upon exercise of the Option prior
to the Transfer of Control and any consideration received pursuant to the
Transfer of Control with respect to such shares shall continue to be subject to
all applicable provisions of this Option Agreement except as otherwise provided
herein.  Furthermore, notwithstanding the foregoing, if the corporation the
stock of which is subject to the Option immediately prior to an Ownership Change
Event described in Section 8.1(a)(i) constituting a Transfer of Control is the
surviving or continuing corporation and immediately after such Ownership Change
Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are
members of an affiliated group within the meaning of Section 1504(a) of the Code
without regard to the provisions of Section 1504(b) of the Code, the Option
shall not terminate.

             9.          Adjustments for Changes in Capital Structure.  In the
event of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification, or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number, Exercise Price and
class of shares of stock subject to the Option.  If a majority of the shares
which are of the same class as the shares that are subject to the Option are
exchanged for, converted into, or otherwise become (whether or not pursuant to
an Ownership Change Event) shares of another corporation (the “New Shares”), the
Board may unilaterally amend the Option to provide that the Option is
exercisable for New Shares.  In the event of any such amendment, the Number of
Option Shares and the Exercise Price shall be adjusted in a fair and equitable
manner, as determined by the Board, in its sole discretion.  Notwithstanding the
foregoing, any fractional share resulting from an adjustment pursuant to this
Section 9 shall be rounded down to the nearest whole number, and in no event may
the Exercise Price be decreased to an amount less than the par value, if any, of
the stock subject to the Option.

             10.        Rights as a Stockholder.  The Optionee shall have no
rights as a stockholder with respect to any shares covered by the Option until
the date of the issuance of a certificate for the shares for which the Option
has been exercised (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company).  No adjustment
shall be made for dividends, distributions or other rights for which the record
date is prior to the date such certificate is issued, except as provided in
Section 9.

             11.        Legends.  The Company may at any time place legends
referencing any applicable federal, state or foreign securities law restrictions
on all certificates representing shares of stock subject to the provisions of
this Option Agreement.  The Optionee shall, at the request of the Company,
promptly present to the Company any and all certificates representing shares
acquired pursuant to the Option in the possession of the Optionee in order to
carry out the provisions of this Section.

             12.        Binding Effect.  Subject to the restrictions on transfer
set forth herein, this Option Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

             13.        Termination or Amendment.  The Board may terminate or
amend the Plan or the Option at any time; provided, however, that no such
termination or amendment may adversely affect the Option or any unexercised
portion hereof without the consent of the Optionee unless such termination or
amendment is necessary to comply with any applicable law or government
regulation.  No amendment or addition to this Option Agreement shall be
effective unless in writing.

             14.        Integrated Agreement.  This Option Agreement constitutes
the entire understanding and agreement of the Optionee and the Participating
Company Group with respect to the subject matter contained herein, and there are
no agreements, understandings, restrictions, representations, or warranties
among the Optionee and the Participating Company Group with respect to such
subject matter other than those as set forth or provided for herein.  To the
extent contemplated herein, the provisions of this Option Agreement shall
survive any exercise of the Option and shall remain in full force and effect.

             15.        Applicable Law.  This Option Agreement shall be governed
by the laws of the State of California as such laws are applied to agreements
between California residents entered into and to be performed entirely within
the State of California.

  ZORAN CORPORATION       By:

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             The Optionee represents that the Optionee is familiar with the
terms and provisions of this Option Agreement and hereby accepts the Option
subject to all of the terms and provisions thereof.  The Optionee hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of
the Board upon any questions arising under this Option Agreement.

     OPTIONEE         Date:  

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