BUSINESS LOAN AGREEMENT

BORROWER: SIGMA DESIGNS, INC.                    LENDER: SILICON VALLEY BANK
          46501 Landing Parkway                          Santa Clara/Pacific Rim
          Fremont, CA 94538                              3000 Lakeside Drive
                                                         Santa Clara, CA 95054

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THIS BUSINESS  LOAN  AGREEMENT  between SIGMA  DESIGNS,  INC.  ("Borrower")  and
Silicon Valley Bank  ("Lender") is made and executed on the following  terms and
conditions.  Borrower has  received  prior  commercial  loans from Lender or has
applied  to  Lender  for  a  commercial   loan  or  loans  and  other  financial
accommodations,  including  those  which  may be  described  on any  exhibit  or
schedule   attached   to  this   Agreement.   All  such   loans  and   financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the "Loan"
and  collectively as the "Loans".  Borrower  understands and agrees that: (a) in
granting,  renewing,  or extending any Loan,  Lender is relying upon  Borrower's
representations, warranties, and agreements, as set forth in this Agreement; (b)
the granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender's sole judgment and  discretion;  and (c) all such Loans shall
be and shall  remain  subject  to the  following  terms and  conditions  of this
Agreement.

TERM.  This Agreement shall be effective as of June 20, 1995, and shall continue
thereafter  until all  Indebtedness  of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.

DEFINITIONS.  The following words shall have the following meanings when used in
this  Agreement.  Terms not otherwise  defined in this Agreement  shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar  amounts  shall mean amounts in lawful  money of the United  States of
America.

    Agreement.  The word "Agreement" means this Business Loan Agreement, as this
    Business  Loan  Agreement  may be  amended  or  modified  from time to time,
    together  with all exhibits and  schedules  attached to this  Business  Loan
    Agreement from time to time.

    Borrower.  The word "Borrower" means SIGMA DESIGNS, INC. The word "Borrower"
    also includes, as applicable, all subsidiaries and affiliates of Borrower as
    provided below in the paragraph titled "Subsidiaries and Affiliates".

    CERCLA.  The word "CERCLA" means the Comprehensive  Environmental  Response,
    Compensation, and Liability Act of 1980, as amended.

    Cash Flow. The words "Cash Flow" mean net income after taxes,  and exclusive
    of extraordinary gains and income, plus depreciation and amortization.

    Collateral.  The word "Collateral" means and includes without limitation all
    property and assets granted as collateral  security for a Loan, whether real
    or  personal  property,  whether  granted  directly or  indirectly,  whether
    granted now or in the future,  and whether granted in the form of a security
    interest,  mortgage,  deed of trust,  assignment,  pledge, chattel mortgage,
    chattel trust,  factor's lien,  equipment  trust,  conditional  sale,  trust
    receipt,   lien,  charge,  lien  or  title  retention  contract,   lease  or
    consignment  intended as a security  device,  or any other  security or lien
    interest whatsoever, whether created by law, contract, or otherwise.

    Debt.  The  word  "Debt"  means  all  of  Borrower's  liabilities  excluding
    Subordinated Debt.

    ERISA. The word "ERISA" means the Employee Retirement Income Security Act of
    1974, as amended.

    Event of  Default.  The words  "Event of Default"  mean and include  without
    limitation  any of the  Events of  Default  set forth  below in the  section
    titled "EVENTS OF DEFAULT."

    Grantor.  The word "Grantor" means and includes without  limitation each and
    all  of  the  persons  or  entities  granting  a  Security  Interest  in any
    Collateral for the Indebtedness,  including without limitation all Borrowers
    granting such a Security Interest.

    Guarantor.  The word "Guarantor" means and includes without  limitation each
    and all of the guarantors, sureties, and accommodation parties in connection
    with any Indebtedness.

    Indebtedness.  The word "Indebtedness" means and includes without limitation
    all Loans,  together with all other  obligations,  debts and  liabilities of
    Borrower  to  Lender,  or any one or more of them,  as well as all claims by
    Lender  against  Borrower,  or any  one or  more  of  them;  whether  now or
    hereafter  existing,  voluntary or involuntary,  due or not due, absolute or
    contingent,  liquidated  or  unliquidated;  whether  Borrower  may be liable
    individually or jointly with others;  whether Borrower may be obligated as a
    guarantor, surety, or otherwise; whether recovery upon such Indebtedness may
    be or hereafter may become barred by any statute of limitations; and whether
    such Indebtedness may be or hereafter may become otherwise unenforceable.

    Lender.  The word "Lender"  means Silicon  Valley Bank,  its  successors and
    assigns.

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                            BUSINESS LOAN AGREEMENT
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    Liquid Assets.  The words "Liquid  Assets" mean Borrower's cash on hand plus
    Borrowers receivables.

    Loan. The word "Loan" or "Loans" means and includes  without  limitation any
    and all  commercial  loans  and  financial  accommodations  from  Lender  to
    Borrower,   whether  now  or  hereafter  existing,  and  however  evidenced,
    including  without  limitation  those  loans  and  financial  accommodations
    described  herein or described  on any exhibit or schedule  attached to this
    Agreement from time to time.

    Note.  The word  "Note"  means and  includes  without  limitation  Borrowers
    promissory note or notes, if any,  evidencing  Borrowers Loan obligations in
    favor of Lender, as well as any substitute,  replacement or refinancing note
    or notes therefor.

    Related  Documents.  The words "Related  Documents" mean and include without
    limitation  all  promissory  notes,  credit  agreements,   loan  agreements,
    environmental agreements,  guaranties, security agreements, mortgages, deeds
    of trust, and all other instruments,  agreements and documents,  whether now
    or hereafter existing, executed in connection with the Indebtedness.

    Security Agreement.  The words "Security Agreement" mean and include without
    limitation any agreements, promises, covenants, arrangements, understandings
    or  other  agreements,  whether  created  by law,  contract,  or  otherwise,
    evidencing, governing, representing, or creating a Security Interest.

    Security  Interest.  The words "Security  Interest" mean and include without
    limitation any type of collateral  security,  whether in the form of a lien,
    charge,  mortgage,  deed of trust,  assignment,  pledge,  chattel  mortgage,
    chattel trust,  factor's lien,  equipment  trust,  conditional  sale,  trust
    receipt, lien or title retention contract,  lease or consignment intended as
    a  security  device,  or any other  security  or lien  interest  whatsoever,
    whether created by law, contract, or otherwise.

    SARA. The word "SARA" means the Superfund Amendments and Reauthorization Act
    of 1986 as now or hereafter amended.

    Subordinated  Debt.  The words  "Subordinated  Debt" mean  indebtedness  and
    liabilities of Borrower which have been subordinated by written agreement to
    indebtedness owed by Borrower to Lender in form and substance  acceptable to
    Lender.

    Tangible Net Worth.  The words  "Tangible Net Worth" mean  Borrower's  total
    assets excluding all intangible assets (i.e., goodwill, trademarks, patents,
    copyrights,  organizational  expenses,  and similar  intangible  items,  but
    including leaseholds and leasehold improvements) less total Debt.

    Working Capital.  The words Working Capital mean Borrower's  current assets,
    excluding prepaid expenses, less Borrower's current liabilities.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender as of
the  date of this  Agreement  and as of the  date of each  disbursement  of Loan
proceeds:

    Organization.  Borrower is a corporation  which is duly  organized,  validly
    existing,  and in good standing  under the laws of the State of  California.
    Borrower  has the full  power and  authority  to own its  properties  and to
    transact  the  businesses  in which it is  presently  engaged  or  presently
    proposes to engage. Borrower also is duly qualified as a foreign corporation
    and is in good  standing  in all  states in which the  failure to so qualify
    would  have a  material  adverse  effect  on  its  businesses  or  financial
    condition.

    Authorization.  The execution,  delivery,  and performance of this Agreement
    and all  Related  Documents  by  Borrower,  to the  extent  to be  executed,
    delivered  or  performed  by  Borrower,  have  been duly  authorized  by all
    necessary action by Borrower;  do not require the consent or approval of any
    other person, regulatory authority or governmental body; and do not conflict
    with,  result in a  violation  of,  or  constitute  a default  under (a) any
    provision of its articles of incorporation or  organization,  or bylaws,  or
    any  agreement or other  instrument  binding  upon  Borrower or (b) any law,
    governmental regulation, court decree, or order applicable to Borrower.

    Financial  Information.  Each  financial  statement of Borrower  supplied to
    Lender truly and completely  disclosed  Borrower's financial condition as of
    the date of the statement,  and there has been no material adverse change in
    Borrower's  financial  condition  subsequent  to the date of the most recent
    financial statement supplied to Lender.  Borrower has no material contingent
    obligations except as disclosed in such financial statements.

    Legal Effect.  This Agreement  constitutes,  and any instrument or agreement
    required  hereunder to be given by Borrower when delivered will  constitute,
    legal,  valid  and  binding  obligations  of  Borrower  enforceable  against
    Borrower in accordance with their respective terms.

    Properties.  Except  as  contemplated  by this  Agreement  or as  previously
    disclosed in Borrower's  financial statements or in writing to Lender and as
    accepted  by  Lender,  and  except  for  property  tax  liens  for taxes not
    presently  due and  payable,  Borrower  owns  and has  good  title to all of
    Borrower's properties free and clear of all Security Interests,  and has not
    executed any security  documents  or financing  statements  relating to such
    properties.  All of Borrower's  properties  are titled in  Borrower's  legal
    name, and Borrower has not used, or filed a financing  statement  under, any
    other name for at least the last five (5) years.

    Hazardous  Substances.  The terms "hazardous waste," "hazardous  substance,"
    "disposal,"  "release," and "threatened release," as used in this Agreement,
    shall  have the same  meanings  as set  forth in the  "CERCLA"  "SARA,"  the
    Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
    Resource  Conservation  and Recovery  Act, 49 U.S.C.  Section 6901, et seq.,
    Chapters 6.5 through 7.7 of Division 20 of the California  Health and Safety
    Code,  Section 25100,  et seq., or other  applicable  state or Federal laws,
    rules, or regulations  adopted  pursuant to any of the foregoing.  Except as
    disclosed to and acknowledged by Lender in writing,  Borrower represents and
    warrants  that:  (a)  During  the  period  of  Borrower's  ownership  of the
    properties,  there  has  been  no  use,  generation,  manufacture,  storage,
    treatment, disposal, release or threatened release of any hazardous waste or
    substance  by any  person on,  under,  or about any of the  properties.  (b)
    Borrower has no  knowledge  of, or reason to believe that there has been (i)
    any use, generation,  manufacture, storage, treatment, disposal, release, or
    threatened release of any hazardous waste or substance

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                            BUSINESS LOAN AGREEMENT
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    by any  prior  owners or  occupants  of any of the  properties,  or (ii) any
    actual or threatened litigation or claims of any kind by any person relating
    to such matters. (c) Neither Borrower nor any tenant,  contractor,  agent or
    other  authorized  user  of any  of  the  properties  shall  use,  generate,
    manufacture,  store,  treat,  dispose of, or release any hazardous  waste or
    substance on, under, or about any of the  properties;  and any such activity
    shall be conducted in compliance  with all applicable  federal,  state,  and
    local laws, regulations, and ordinances,  including without limitation those
    laws, regulations and ordinances described above. Borrower authorizes Lender
    and its agents to enter upon the  properties  to make such  inspections  and
    tests  as  Lender  may  deem  appropriate  to  determine  compliance  of the
    properties with this section of the Agreement. Any inspections or tests made
    by Lender shall be at Borrower's  expense and for Lender's purposes only and
    shall not be construed to create any responsibility or liability on the part
    of Lender  to  Borrower  or to any other  person.  The  representations  and
    warranties  contained  herein  are  based on  Borrower's  due  diligence  in
    investigating  the  properties  for  hazardous  waste.  Borrower  hereby (a)
    releases  and waives any  future  claims  against  Lender for  indemnity  or
    contribution in the event Borrower becomes liable for cleanup or other costs
    under any such laws,  and (b) agrees to indemnify and hold  harmless  Lender
    against any and all claims, losses,  liabilities,  damages,  penalties,  and
    expenses which Lender may directly or indirectly sustain or suffer resulting
    from a breach of this section of the  Agreement or as a  consequence  of any
    use,  generation,  manufacture,  storage,  disposal,  release or  threatened
    release  occurring  prior  to  Borrower's   ownership  or  interest  in  the
    properties,  whether  or not the  same  was or  should  have  been  known to
    Borrower.  The  provisions of this section of the  Agreement,  including the
    obligation to indemnify,  shall survive the payment of the  Indebtedness and
    the termination or expiration of this Agreement and shall not be affected by
    Lender's  acquisition of any interest in any of the  properties,  whether by
    foreclosure or otherwise.

    Litigation and Claims. No litigation,  claim, investigation,  administrative
    proceeding or similar  action  (including  those for unpaid  taxes)  against
    Borrower is pending or threatened, and no other event has occurred which may
    materially  adversely affect Borrower's  financial  condition or properties,
    other than  litigation,  claims,  or other  events,  if any,  that have been
    disclosed to and acknowledged by Lender in writing.

    Taxes. To the best of Borrower's  knowledge,  all tax returns and reports of
    Borrower  that are or were  required to be filed,  have been filed,  and all
    taxes,  assessments and other  governmental  charges have been paid in full,
    except those presently being or to be contested by Borrower in good faith in
    the ordinary  course of business and for which  adequate  reserves have been
    provided.

    Lien Priority.  Unless otherwise  previously disclosed to Lender in writing,
    Borrower  has not  entered  into or  granted  any  Security  Agreements,  or
    permitted the filing or attachment of any Security Interests on or affecting
    any  of  the  Collateral   directly  or  indirectly  securing  repayment  of
    Borrower's  Loan  and  Note,  that  would be prior or that may in any way be
    superior  to  Lender's  Security   Interests  and  rights  in  and  to  such
    Collateral.

    Binding  Effect.  This  Agreement,  the  Note  and all  Security  Agreements
    directly or indirectly  securing  repayment of Borrower's  Loan and Note are
    binding upon Borrower as well as upon Borrower's successors, representatives
    and assigns, and are legally enforceable in accordance with their respective
    terms.

    Commercial  Purposes.  Borrower  intends to use the Loan proceeds solely for
    business or commercial related purposes.

    Employee Benefit Plans.  Each employee benefit plan as to which Borrower may
    have any liability  complies in all material  respects  with all  applicable
    requirements  of law  and  regulations,  and  (i) no  Reportable  Event  nor
    Prohibited  Transaction  (as defined in ERlSA) has occurred  with respect to
    any such  plan,  (ii)  Borrower  has not  withdrawn  from  any such  plan or
    initiated  steps to do so, and (iii) no steps  have been taken to  terminate
    any such plan.

    Location of Borrower's  Offices and Records.  The chief place of business of
    Borrower  and the  office  or  offices  where  Borrower  keeps  its  records
    concerning the Collateral is located at 46501 Landing Parkway,  Fremont,  CA
    94538.

    Information.   All  information  heretofore  or  contemporaneously  herewith
    furnished  by Borrower to Lender for the purposes of or in  connection  with
    this  Agreement  or  any  transaction   contemplated   hereby  is,  and  all
    information  hereafter  furnished by or on behalf of Borrower to Lender will
    be, true and accurate in every material respect on the date as of which such
    information is dated or certified;  and none of such  information is or will
    be incomplete by omitting to state any material fact  necessary to make such
    information not misleading.

    Survival of Representation and Warranties.  Borrower  understands and agrees
    that Lender is relying  upon the above  representations  and  warranties  in
    extending  Loan  Advances  to  Borrower.  Borrower  further  agrees that the
    foregoing  representations  and warranties shall be continuing in nature and
    shall remain in full force and effect until such time as Borrower's Loan and
    Note shall be paid in full, or until this  Agreement  shall be terminated in
    the manner provided above, whichever is the last to occur.

AFFIRMATIVE  COVENANTS.  Borrower  covenants and agrees with Lender that,  while
this Agreement is in effect, Borrower will:

    Litigation.  Promptly  inform Lender in writing of (a) all material  adverse
    changes in Borrower's financial condition, and (b) all litigation and claims
    and all threatened litigation and claims affecting Borrower or any Guarantor
    which could  materially  affect the  financial  condition of Borrower or the
    financial condition of any Guarantor.

    Financial  Records.  Maintain  its  books and  records  in  accordance  with
    generally accepted accounting principles, applied on a consistent basis, and
    permit  Lender to  examine  and audit  Borrower's  books and  records at all
    reasonable times.

    Financial Statements.  Furnish Lender with, as soon as available,  but in no
    event  later  than  ninety  (90)  days  after the end of each  fiscal  year,
    Borrower's balance sheet and income statement, audited by a certified public
    accountant  satisfactory  to  Lender  and  10K  Reports,  and,  as  soon  as
    available,  but in no  event  later  than  15 days  after  filing  with  the
    Securities and Exchange  Commission,  Borrower's 1OQ Reports.  All financial
    reports  required to be provided under this  Agreement  shall be prepared in
    accordance  with  generally  accepted  accounting  principles,  applied on a
    consistent basis, and certified by Borrower as being true and correct.

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    Additional Information.  Furnish such additional information and statements,
    lists of  assets  and  liabilities,  agings  of  receivables  and  payables,
    inventory schedules, budgets, forecasts, tax returns, and other reports with
    respect to Borrower's  financial condition and business operations as Lender
    may request from time to time.

    Insurance.   Maintain  fire  and  other  risk  insurance,  public  liability
    insurance,  and such other  insurance  as Lender may require with respect to
    Borrower's properties and operations,  in form, amounts,  coverages and with
    insurance companies reasonably acceptable to Lender.  Borrower, upon request
    of  Lender,  will  deliver  to  Lender  from  time to time the  policies  or
    certificates  of  insurance  in  form  satisfactory  to  Lender,   including
    stipulations  that coverages  will not be canceled or diminished  without at
    least ten (10) days prior written notice to Lender.  Each  insurance  policy
    also shall include an endorsement providing that coverage in favor of Lender
    will not be impaired in any way by any act,  omission or default of Borrower
    or any other person.  In  connection  with all policies  covering  assets in
    which Lender holds or is offered a security interest for the Loans, Borrower
    will provide Lender with such loss payable or other  endorsements  as Lender
    may require.

    Insurance  Reports.  Furnish to Lender,  upon request of Lender,  reports on
    each  existing  insurance  policy  showing  such  information  as Lender may
    reasonably request, including without limitation the following: (a) the name
    of the insurer; (b) the risks insured; (c) the amount of the policy; (d) the
    properties  insured;  (e) the then current  property  values on the basis of
    which  insurance  has been  obtained,  and the manner of  determining  those
    values; and (f) the expiration date of the policy. In addition, upon request
    of Lender  (however  not more often than  annually),  Borrower  will have an
    independent appraiser satisfactory to Lender determine,  as applicable,  the
    actual cash value or replacement cost of any Collateral.

    Other  Agreements.  Comply  with  all  terms  and  conditions  of all  other
    agreements,  whether now or  hereafter  existing,  between  Borrower and any
    other  party and notify  Lender  immediately  in  writing of any  default in
    connection with any other such agreements.

    Loan  Proceeds.  Use  all  Loan  proceeds  solely  for  Borrower's  business
    operations,  unless  specifically  consented  to the  contrary  by Lender in
    writing.

    Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness
    and  obligations,  including  without  limitation  all  assessments,  taxes,
    governmental  charges,  levies and liens, of every kind and nature,  imposed
    upon Borrower or its properties,  income,  or profits,  prior to the date on
    which penalties would attach,  and all lawful claims that, if unpaid,  might
    become  a lien or  charge  upon any of  Borrower's  properties,  income,  or
    profits.  Provided  however,  Borrower  will  not be  required  to  pay  and
    discharge any such assessment,  tax, charge,  levy, lien or claim so long as
    (a) the legality of the same shall be contested in good faith by appropriate
    proceedings,  and (b) Borrower shall have  established on its books adequate
    reserves with respect to such contested assessment, tax, charge, levy, lien,
    or  claim  in  accordance  with  generally  accepted  accounting  practices.
    Borrower,  upon demand of Lender, will furnish to Lender evidence of payment
    of the  assessments,  taxes,  charges,  levies,  liens and  claims  and will
    authorize the appropriate  governmental official to deliver to Lender at any
    time a written statement of any assessments,  taxes, charges,  levies, liens
    and claims against Borrower's properties, income, or profits.

    Performance.  Perform and comply with all terms, conditions,  and provisions
    set forth in this  Agreement  and in all other  instruments  and  agreements
    between  Borrower and Lender in a timely manner,  and promptly notify Lender
    if Borrower learns of the occurrence of any event which constitutes an Event
    of Default under this Agreement.

    Operations.  Substantially  maintain its present  executive  and  management
    personnel;  conduct its business  affairs in a reasonable and prudent manner
    and in compliance  with all applicable  federal,  state and municipal  laws,
    ordinances,  rules and  regulations  respecting  its  properties,  charters,
    businesses and operations, including without limitation, compliance with the
    Americans With  Disabilities Act and with all minimum funding  standards and
    other requirements of ERISA and other laws applicable to Borrower's employee
    benefit plans.

    Inspection.  Permit  employees or agents of Lender at any reasonable time to
    inspect any and all Collateral  for the Loan or Loans and  Borrower's  other
    properties and to examine or audit Borrower's books,  accounts,  and records
    and to make copies and memoranda of Borrower's books, accounts, and records.
    If Borrower now or at any time  hereafter  maintains any records  (including
    without limitation computer generated records and computer software programs
    for the  generation  of such  records) in the  possession  of a third party,
    Borrower,  upon request of Lender,  shall notify such party to permit Lender
    free access to such records at all  reasonable  times and to provide  Lender
    with copies of any records it may request, at all Borrower's expense.

    Environmental Compliance and Reports.  Borrower shall comply in all respects
    with all environmental  protection federal,  state and local laws, statutes,
    regulations and ordinances;  not cause or permit to exist, as a result of an
    intentional or  unintentional  action or omission on its part or on the part
    of any third  party,  on property  owned and/or  occupied by  Borrower,  any
    environmental  activity where damage may result to the  environment,  unless
    such  environmental  activity  is  pursuant  to and in  compliance  with the
    conditions of a permit  issued by the  appropriate  federal,  state or local
    governmental authorities;  shall furnish to Lender promptly and in any event
    within thirty (30) days after receipt thereof a copy of any notice, summons,
    lien,   citation,   directive,   letter  or  other  communication  from  any
    governmental  agency  or  instrumentality   concerning  any  intentional  or
    unintentional  action or omission on Borrower's  part in connection with any
    environmental  activity  whether  or not there is damage to the  environment
    and/or other natural resources.

    Additional  Assurances.  Make, execute and deliver to Lender such promissory
    notes, mortgages, deeds of trust, security agreements, financing statements,
    instruments,  documents and other  agreements as Lender or its attorneys may
    reasonably  request to  evidence  and  secure  the Loans and to perfect  all
    Security Interests.

NEGATIVE  COVENANTS.  Borrower  covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

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                            BUSINESS LOAN AGREEMENT
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    Continuity   of   Operations.   (a)  Engage  in  any   business   activities
    substantially  different than those in which Borrower is presently  engaged,
    (b) cease operations,  liquidate,  merge,  transfer,  acquire or consolidate
    with any other  entity,  change  ownership,  dissolve  or  transfer  or sell
    Collateral out of the ordinary course of business.

CESSATION OF  ADVANCES.  If Lender has made any  commitment  to make any Loan to
Borrower,  whether  under this  Agreement or under any other  agreement,  Lender
shall have no  obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the  Related  Documents  or any  other  agreement  that  Borrower  or any
Guarantor has with Lender; (b) Borrower becomes  insolvent,  files a petition in
bankruptcy or similar proceedings, or is adjudged a bankrupt; (c) there occurs a
material  adverse  change in Borrower's  financial  condition,  in the financial
condition of any Guarantor, or in the value of any Collateral securing any Loan;
or (d) any Guarantor  seeks,  claims or otherwise  attempts to limit,  modify or
revoke such Guarantor's guaranty of the Loan or any other loan with Lender.

LOAN  ADVANCES.  Lender,  in its  discretion,  will make loans to  Borrower,  in
amounts  determined by Lender, up to the amounts as defined and permitted in the
Agreement and Related  Documents,  including  but not limited to any  Promissory
Notes,  executed by Borrower (the "Credit  Limit").  The Borrower is responsible
for monitoring the total amount of Loans and Indebtedness  outstanding from time
to time,  and  Borrower  shall not  permit  the same,  at any time to exceed the
Credit Limit. If at any time the total of all outstanding Loans and Indebtedness
exceeds the Credit Limit,  the Borrower shall  immediately pay the amount of the
excess to Lender, without notice or demand.

LETTER OF  CREDIT  SUBLIMIT.  Subject  to the  terms of the Loan  Agreement,  as
amended  from time to time,  Lender  shall issue or cause to be issued under the
Note standby and commercial  letters of credit for the account of Borrower in an
aggregate  face amount not to exceed  $4,000,000.00.  Each such letter of credit
shall have an expiry date of no later than June 19,  1996.  All such  letters of
credit  shall  be,  in form and  substance,  acceptable  to  Lender  in its sole
discretion  and shall be subject  to the terms and  conditions  of Lender's form
application and letter of credit agreement

DEFAULT  RATE.  Upon  default,  including  failure to pay upon  final  maturity,
Lender,  at its option,  may do one or both of the  following:  (a) increase the
variable  interest rate on the Note to five percentage  points (5.000%) over the
Interest  Rate  otherwise  payable  thereunder,  and (b) add any unpaid  accrued
interest to principal  and such sum will bear interest  therefrom  until paid at
the rate provided in the Note.

EVENTS OF DEFAULT.  Each of the following  shall  constitute an Event of Default
under this Agreement:

    Default on Indebtedness. Failure of Borrower to make any payment when due on
    the Loans.

    Other  Defaults.  Failure of  Borrower  or any  Grantor to comply with or to
    perform when due any other term, obligation, covenant or condition contained
    in this Agreement or in any of the Related Documents, or failure of Borrower
    to  comply  with or to  perform  any other  term,  obligation,  covenant  or
    condition contained in any other agreement between Lender and Borrower.

    Default in Favor of Third Parties.  Should  Borrower or any Grantor  default
    under any loan, extension of credit,  security agreement,  purchase or sales
    agreement,  or any other agreement, in favor of any other creditor or person
    that may materially  affect any of Borrower's  property or Borrower's or any
    Grantor's ability to repay the Loans or perform their respective obligations
    under this Agreement or any of the Related Documents.

    False  Statements.  Any  warranty,   representation  or  statement  made  or
    furnished  to Lender by or on behalf of Borrower  or any Grantor  under this
    Agreement or the Related  Documents is false or  misleading  in any material
    respect, either now or at the time made or furnished.

    Defective Collateralization.  This Agreement or any of the Related Documents
    ceases to be in full force and  effect  (including  failure of any  Security
    Agreement to create a valid and perfected Security Interest) at any time and
    for any reason.

    Insolvency.  The  dissolution or  termination  of Borrower's  existence as a
    going  business,  the insolvency of Borrower,  the appointment of a receiver
    for any part of  Borrower's  property,  any  assignment  for the  benefit of
    creditors,  any  type  of  creditor  workout,  or  the  commencement  of any
    proceeding under any bankruptcy or insolvency laws by or against Borrower.

    Creditor  or  Forfeiture   Proceedings.   Commencement   of  foreclosure  or
    forfeiture   proceedings,   whether  by  judicial   proceeding,   self-help,
    repossession or any other method, by any creditor of Borrower,  any creditor
    of any Grantor against any collateral  securing the Indebtedness,  or by any
    governmental agency. This includes a garnishment,  attachment, or levy on or
    of any of Borrower's deposit accounts with Lender.

    Events Affecting Guarantor.  Any of the preceding events occurs with respect
    to any  Guarantor  of any of the  Indebtedness  or  such  Guarantor  dies or
    becomes   incompetent   or  any  Guarantor   revokes  any  guaranty  of  the
    Indebtedness.

    Change In Ownership. Any change in ownership of twenty-five percent (25%) or
    more of the common stock of Borrower.

EFFECT  OF AN  EVENT OF  DEFAULT.  If any  Event of  Default  shall  occur,  all
commitments  and  obligations  of Lender  under this  Agreement  or the  Related
Documents or any other  agreement  immediately  will  terminate  (including  any
obligation to make Loan Advances or disbursements), and, at Lender's option, all
Loans immediately will become due and payable, all without notice of any kind to
Borrower,  except that in the case of an Event of Default of the type  described
in the "Insolvency"  subsection above, such acceleration  shall be automatic and
not optional.

MISCELLANEOUS  PROVISlONS.  The following miscellaneous provisions are a part of
this Agreement:

    Amendments. This Agreement, together with any Related Documents, constitutes
    the entire  understanding and agreement of the parties as to the matters set
    forth in this  Agreement.  No alteration  of or amendment to this  Agreement
    shall be  effective  unless  given in  writing  and  signed  by the party or
    parties sought to be charged or bound by the alteration or amendment.

                                       5

<PAGE>

                            BUSINESS LOAN AGREEMENT
                                   CONTINUED




    Applicable  Law. This Agreement has been delivered to Lender and accepted by
    Lender in the State of California.  If there is a lawsuit,  Borrower  agrees
    upon Lender's  request to submit to the  jurisdiction of the courts of Santa
    Clara County, the State of California.  (Initial  Here__________) Lender and
    Borrower hereby waive the right to any jury trial in any action, proceeding,
    or counterclaim brought by either Lender or Borrower against the other. This
    Agreement  shall be governed by and construed in accordance with the laws of
    the State of California.



    Caption  Headings.  Caption  headings in this Agreement are for  convenience
    purposes  only and are not to be used to interpret or define the  provisions
    of this Agreement.

    Multiple  Parties;  Corporate  Authority.  All obligations of Borrower under
    this  Agreement  shall be joint and several,  and all references to Borrower
    shall mean each and every  Borrower.  This  means  that each of the  persons
    signing below is responsible for all obligations in this Agreement.

    Consent to Loan Participation. Borrower agrees and consents to Lender's sale
    or transfer, whether now or later, of one or more participation interests in
    the Loans to one or more purchasers, whether related or unrelated to Lender.
    Lender may provide,  without any limitation  whatsoever,  to any one or more
    purchasers, or potential purchasers, any information or knowledge Lender may
    have about  Borrower or about any other  matter  relating  to the Loan,  and
    Borrower  hereby  waives any  rights to privacy it may have with  respect to
    such matters.  Borrower  additionally  waives any and all notices of sale of
    participation  interests,  as well as all notices of any  repurchase of such
    participation  interests.  Borrower  also agrees that the  purchasers of any
    such  participation  interests will be considered as the absolute  owners of
    such  interests in the Loans and will have all the rights  granted under the
    participation   agreement  or   agreements   governing   the  sale  of  such
    participation  interests.  Borrower  further  waives all rights of offset or
    counterclaim  that it may have now or later  against  Lender or against  any
    purchaser of such a participation  interest and unconditionally  agrees that
    either Lender or such purchaser may enforce Borrower's  obligation under the
    Loans  irrespective  of the  failure  or  insolvency  of any  holder  of any
    interest in the Loans.  Borrower  further  agrees that the  purchaser of any
    such participation  interests may enforce its interests  irrespective of any
    personal claims or defenses that Borrower may have against Lender.

    Costs and  Expenses.  Borrower  agrees to pay upon  demand  all of  Lender's
    out-of-pocket  expenses,   including  without  limitation  attorneys'  fees,
    incurred in connection  with the  preparation,  execution,  enforcement  and
    collection of this  Agreement or in connection  with the Loans made pursuant
    to this Agreement. Lender may pay someone else to help collect the Loans and
    to enforce this Agreement, and Borrower will pay that amount. This includes,
    subject to any limits under  applicable  law,  Lender's  attorneys' fees and
    Lender's  legal  expenses,  whether  or not  there is a  lawsuit,  including
    attorneys' fees for bankruptcy  proceedings  (including efforts to modify or
    vacate any  automatic  stay or  injunction),  appeals,  and any  anticipated
    post-judgment  collection services.  Borrower also will pay any court costs,
    in addition to all other sums provided by law.

    Notices.  All notices  required to be given  under this  Agreement  shall be
    given in writing and shall be  effective  when  actually  delivered  or when
    deposited with a nationally recognized overnight courier or deposited in the
    United States mail, first class, postage prepaid,  addressed to the party to
    whom the notice is to be given at the  address  shown  above.  Any party may
    change its address for notices under this Agreement by giving formal written
    notice to the other parties, specifying that the purpose of the notice is to
    change the party's  address.  To the extent  permitted by applicable law, if
    there is more than one  Borrower,  notice to any  Borrower  will  constitute
    notice to all Borrowers. For notice purposes, Borrower agrees to keep Lender
    informed at all times of Borrower's current address(es).

    Severability.  If a court of competent  jurisdiction  finds any provision of
    this  Agreement  to  be  invalid  or  unenforceable  as  to  any  person  or
    circumstance,  such  finding  shall not  render  that  provision  invalid or
    unenforceable  as to any other persons or  circumstances.  If feasible,  any
    such  offending  provision  shall be deemed to be  modified to be within the
    limits of enforceability or validity;  however,  if the offending  provision
    cannot be so modified, it shall be stricken and all other provisions of this
    Agreement in all other respects shall remain valid and enforceable.

    Subsidiaries  and  Affiliates of Borrower.  To the extent the context of any
    provisions  of  this  Agreement  makes  it  appropriate,  including  without
    limitation any representation,  warranty or covenant, the word "Borrower" as
    used herein  shall  include all  subsidiaries  and  affiliates  of Borrower.
    Notwithstanding  the foregoing  however,  under no circumstances  shall this
    Agreement be construed to require Lender to make any Loan or other financial
    accommodation to any subsidiary or affiliate of Borrower.

    Successors  and Assigns.  All  covenants and  agreements  contained by or on
    behalf of Borrower  shall bind its successors and assigns and shall inure to
    the benefit of Lender,  its  successors  and  assigns.  Borrower  shall not,
    however,  have the right to assign its rights  under this  Agreement  or any
    interest therein, without the prior written consent of Lender.

    Survival. All warranties, representations, and covenants made by Borrower in
    this  Agreement  or in any  certificate  or other  instrument  delivered  by
    Borrower to Lender under this  Agreement  shall be  considered  to have been
    relied upon by Lender and will  survive the making of the Loan and  delivery
    to Lender of the Related Documents,  regardless of any investigation made by
    Lender or on Lender's behalf.

    Time Is of the Essence.  Time is of the essence in the  performance  of this
    Agreement.

    Waiver.  Lender  shall not be deemed to have  waived any  rights  under this
    Agreement  unless such  waiver is given in writing and signed by Lender.  No
    delay or  omission  on the part of Lender  in  exercising  any  right  shall
    operate as a waiver of such right or any other right.  A waiver by Lender of
    a provision of this Agreement  shall not prejudice or constitute a waiver of
    Lender's right otherwise to demand strict  compliance with that provision or
    any other  provision of this Agreement.  No prior waiver by Lender,  nor any
    course of dealing  between  Lender and Borrower,  or between  Lender and any
    Grantor,  shall  constitute  a waiver  of any of  Lender's  rights or of any
    obligations  of Borrower  or of any  Grantor as to any future  transactions.
    Whenever  the  consent  of Lender is  required  under  this  Agreement,  the
    granting  of such  consent by Lender in any  instance  shall not  constitute
    continuing  consent in subsequent  instances where such consent is required,
    and in all  cases  such  consent  may be  granted  or  withheld  in the sole
    discretion of Lender.

                                       6

<PAGE>

                            BUSINESS LOAN AGREEMENT
                                   CONTINUED






BORROWER  ACKNOWLEDGES  HAVING READ ALL THE  PROVISIONS  OF THIS  BUSINESS  LOAN
AGREEMENT,  AND BORROWER AGREES TO ITS TERMS. THlS AGREEMENT IS DATED AS OF JUNE
20, 1995.

BORROWER:

SIGMA DESIGNS, INC.


By: /s/ Q. Binh Trinh
   --------------------------------------------
Name:   Q. Binh Trinh
     ------------------------------------------
Title:  Vice President of Finance & CFO
      -----------------------------------------

LENDER:

Silicon Valley Bank


By: /s/ Daniel Quon
    -------------------------------------------
Name:   Daniel Quon
      -----------------------------------------
Title:  Vice President / Manager
       ----------------------------------------

<PAGE>


                          LOAN MODIFICATION AGREEMENT

This Loan  Modification  Agreement is entered into as of April 23, 1998,  by and
between Sigma Designs, Inc. ("Borrower") whose address is 46501 Landing Parkway,
Fremont,  CA 94538,  and Silicon  Valley Bank  ("Lender")  whose address is 3003
Tasman Drive, Santa Clara, CA 95054.

1. DESCRIPTION OF EXISTING  INDEBTEDNESS:  Among other indebtedness which may be
owing by Borrower to Lender,  Borrower is indebted to Lender  pursuant to, among
other  documents,  a  Promissory  Note,  dated June 20,  1995,  in the  original
principal amount of Ten Million and 00/100 Dollars ($10,000,000.00),  as amended
from time to time (the "Cash Secured Note") and a Promissory Note, dated October
1, 1996,  in the  original  principal  amount of Six Million and 00/100  Dollars
($6,000,000.00)  (the "Accounts Receivable Note"). The Cash Secured Note and the
Account Receivable Note are collectively  referred to herein as the "Notes." The
Cash Secured Note has been modified  pursuant to, among other documents,  a Loan
Modification  Agreement dated September 17, 1996, pursuant to which, among other
things,  the principal amount was increased to Twelve Million and 00/100 Dollars
($12,000,000.00).  The Notes, together with other promissory notes from Borrower
to Lender,  are governed by the terms of an Amended and Restated  Business  Loan
Agreement,  dated October 1, 1996, as such agreement may be amended from time to
time, between Borrower and Lender (the "Loan Agreement"). Defined terms used but
not  otherwise  defined  herein  shall  have  the same  meanings  as in the Loan
Agreement.

Hereinafter,  all indebtedness  owing by Borrower to Lender shall be referred to
as the "Indebtedness."

2.  DESCRIPTION OF COLLATERAL AND GUARANTIES.  Repayment of the  Indebtedness is
secured by a Commercial Security Agreement,  dated October 1, 1996, a Collateral
Assignment,  Patent  Mortgage  and  Security  Agreement,  dated  October 1, 1996
(collectively, the "Security Agreements"), and an Assignment of Deposit Account,
dated June 20, 1995 (the "Assignment").

    Hereinafter, the above-described security documents and guaranties, together
    with all other documents  securing  repayment of the  Indebtedness  shall be
    referred  to  as  the  "Security  Documents."   Hereinafter,   the  Security
    Documents,  together  with all other  documents  evidencing  or securing the
    Indebtedness shall be referred to as the "Existing Loan Documents."

3. DESCRIPTION OF CHANGE IN TERMS.

A.      Waiver of Default.

        1.  Lender  hereby  waives  Borrower's  existing  default under the Loan
            Agreement  by  virtue  of  Borrower's  failure  to  comply  with the
            profitability  covenant as of the quarter  ended  January 31,  1998.
            Lender's  waiver of Borrower's  compliance  of this  covenant  shall
            apply only to the  foregoing  period.  Accordingly,  for the quarter
            ending April 30, 1998,  Borrower  shall be in  compliance  with this
            covenant

        Lender's  agreement to waive the  above-described  default (1) in no way
            shall be  deemed an  agreement  by the  Lender  to waive  Borrower's
            compliance with the  above-described  covenant as of all other dates
            and (2)  shall  not limit or  impair  the  Lender's  right to demand
            strict  performance  of this  covenant as of all other dates and (3)
            shall not  limit or  impair  the  Lender's  right to  demand  strict
            performance of all other covenants as of any date.

B.      Modification(s) to Cash Secured Note.

        1.  The paragraph entitled "Variable Interest Rate" is hereby amended in
            its entirety to read as follows:

                                       1

<PAGE>

            The interest rate on the Cash Secured Note is subject to change from
            time to time based on changes in the Index  which is the LIBOR Rate,
            as described in that certain Supplement to Promissory Note, attached
            hereto as Exhibit  "A" and  incorporated  herein,  plus forty  (.40)
            basis points,  effective as of this date. The interest rate shall be
            determined by the timing of the request for advance and the pledging
            of the Treasury Bill to Lender.

        2.  The  paragraph  entitled "Advance Rate" is hereby amended to read as
            follows:

            Funds shall be advanced under the Note according to Advance Rate, as
            determined  by  Lender,  defined  as  follows:  the  lesser  of  (i)
            $12,000,000.00  or (ii)  one  hundred  percent  (100%)  against  the
            discounted amount of the Treasury Bill at the time of issuance, (not
            the face value), minus the face amount of all outstanding Letters of
            Credit,  (including drawn but unreimbursed  Letters of Credit).  The
            obligation  of Lender to make each  advance is  subject to  Borrower
            pledging to Lender a three month  Treasury Bill equal to one hundred
            percent (100%) of such advance.

        3.  The  following  definition  is  hereby  incorporated  into  the Cash
            Secured Note:

            "Maturity Date" is October 30, 1998.

C.      Modification(s) to Loan Agreement.

        1.  The paragraph entitled "Borrowing Base Formula" is hereby amended in
            part to provide  that (i)  cash-in-advance  and (ii)  "debit  memos"
            shall be deemed ineligible under the Borrowing Base.

D.      Modification(s) to Assignment of Deposit Account.

        1.  The  paragraph  entitled  Collateral  is hereby  amended  in part to
            described the following Collateral:

            All three month  Treasury Bills pledged to Lender and held by Lender
            in an amount not less than (i)  $12,000,000.00  or (ii) the  current
            outstanding balance of the Cash Secured Note.

E.      Modification(s) to the Notes.

        1.  For purposes of  determining  the priority of advances and principal
            payments,  any and all  advances  requested  from the Notes shall be
            first  advanced  from the Cash Secured Note and then,  once the Cash
            Secured Note is fully disbursed then advances shall be made from the
            Accounts  Receivable  Note. Any and all principal  payments shall be
            applied  first to the Accounts  Receivable  Note and then,  once the
            Accounts  Receivable Note is fully paid to zero,  principal payments
            shall be applied to the Cash Secured Note.

4. CONSISTENT  CHANGES.  The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

5. PAYMENT OF LOAN FEE.  Borrower shall pay to Lender a fee in the amount of One
Thousand Five Hundred and 00/100 Dollars ($1,500.00) (the "Loan Fee"), plus all
out-of-pocket expenses.

                                       2

<PAGE>

6. NO DEFENSES OF BORROWER.  Borrower (and each  guarantor  and pledgor  signing
below) agrees that it has no defenses against the obligations to pay any amounts
under the Indebtedness.

7. CONTINUING VALIDITY.  Borrower (and each guarantor and pledgor signing below)
understands  and agrees that in modifying the existing  indebtedness,  Lender is
relying upon Borrower's  representations,  warranties,  and  agreements,  as set
forth in the Existing Loan Documents.  Except as expressly  modified pursuant to
this Loan Modification Agreement the terms of the Existing Loan Documents remain
unchanged and in full force and effect Lender's  agreement to  modifications  to
the existing Indebtedness pursuant to this Loan Modification Agreement in no way
shall  obligate  Lender to make any future  modifications  to the  Indebtedness.
Nothing in this Loan  Modification  Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Lender and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Lender in writing. No maker,  endorser,  or guarantor will
be released  by virtue of this Loan  Modification  Agreement.  The terms of this
paragraph apply not only to this Loan  Modification  Agreement,  but also to all
subsequent loan modification agreements.

8.  CONDITIONS.  The  effectiveness  of  this  Loan  Modification  Agreement  is
conditioned  upon (i)  Lenders  receipt  of the  Loan  Fee and  (ii)  Borrower's
execution and Lender's receipt of the Supplement to Promissory Note.

    This Loan  Modification  Agreement is executed as of the date first  written
above.


BORROWER:                                     LENDER:

SIGMA DESIGNS, INC.                           SILICON VALLEY BANK


By:           Kit Tsui                        By:         Ellen Chao
   -----------------------------                 -----------------------------
Name:         Kit Tsui                        Name:       Ellen Chao
     ---------------------------                   ---------------------------
Title:         CFO                            Title:          VP
      --------------------------                    --------------------------

                                       3