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                                                                   EXHIBIT 10.59

                          CATALYST SEMICONDUCTOR, INC.
                               Severance Agreement


This Severance Agreement ("Agreement") is made as of this 1st day of June 1998
between Thomas E. Gay III ("Employee") and Catalyst Semiconductor, Inc.
("Corporation").


                                   WITNESSETH


WHEREAS, Employee is employed by the Corporation.

WHEREAS, the Corporation and Employee mutually desire to enter into a severance
agreement with respect to Employee's employment by the Corporation.

NOW, THEREFORE, in consideration of the mutual convents hereinafter contained,
the Corporation and Employee agree as follows:

1)     INVOLUNTARY TERMINATION. If Employee's employment is terminated as a
       result of Involuntary Termination other than for cause, at any time prior
       to three years from this date, Employee will be entitled to consideration
       as defined below:

2)     SEVERANCE BENEFITS FOR INVOLUNTARY TERMINATION FOLLOWING A CHANGE OF
       CONTROL.

       a)    Employee shall be entitled to fifty percent (50%) of his annual
             base salary payable in six equal monthly installments, commencing
             one month after the termination date.

       b)    All outstanding unvested stock options shall immediately vest as of
             the date of termination and shall remain exercisable for a period
             of three years after said date.

       c)    In addition, as of the termination date, Employee shall be entitled
             to receive any unpaid salary and accrued vacation.

       d)    Change of control is defined as any sale of substantially all of
             the Company's assets, a sale of a majority of its shares or a
             merger or consolidation where the existing shareholders do not
             control at least 50% of the total voting power after the event.
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3)     SEVERANCE BENEFITS FOR INVOLUNTARY TERMINATION APART FROM A CHANGE OF
       CONTROL.

       a)    Employee will be entitled to twenty-five percent (25%) of his
             annual his base salary as of the termination date. Such payment
             shall be paid in six equal monthly amounts commencing one month
             after the termination date.

       b)    All outstanding vested options as of this date shall remain
             exercisable for a period of one year after termination date.

       c)    In addition, as of the termination date, Employee shall be entitled
             to receive any unpaid salary and accrued vacation pay.

4)     CONFIDENTIAL INFORMATION. Employee shall continue to maintain the
       confidentiality of all confidential and proprietary information of the
       Corporation and shall continue to comply with the terms and conditions of
       the Confidentiality Agreement(s) between Employee and Corporation.

5)     NON-DISPARGEMENT. Employee agrees not to disparage the Corporation or any
       of its officers, directors, employees, products, vendors or customers.

6)     RELEASE OF CLAIMS. Both parties agree that the foregoing consideration
       represents settlement in full of all outstanding obligations owed by
       Corporation to the Employee. Employee and his respective heirs,
       executors, assigns and agents hereby fully and forever releases
       Corporation and its officers, directors, employees, assigns and agents
       from any claim, duty, obligation or cause of action relating to any
       matters, known or unknown, arising from any omissions, acts or facts that
       have occurred up until the termination date, including without
       limitation:

       a)     Any claims relating to Employee's employment relationship with the
              Corporation.

       b)     Any claims relating to Employee's receipt of options and/or
              purchase or sales of shares of stock of the Corporation.

       c)     Any claims for violation of state, federal or municipal law.

7)     CONFIDENTIALITY. The parties agree to use their best efforts to maintain
       in confidence the existence, contents and terms of this Agreement except
       as disclosure may be required by law.

8)     TAX CONSEQUENCES. The Corporation makes no representations or warranties
       with respect to the tax consequences of any consideration received by
       Employee under the terms of this Agreement. Employee agrees that he is
       solely responsible for payment, if any, of local, state or federal taxes
       on all consideration received. Employee further agrees to indemnify the
       Corporation for any claims due to his failure to pay any such taxes.


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9)     ENTIRE AGREEMENT. This Agreement represents the entire agreement and
       understanding between the Corporation and Employee concerning Employee's
       relationships with the Corporation and supersedes any prior written or
       oral agreements concerning Employee relationship with and compensation
       from the Corporation and may not be changed except in written form signed
       by both parties.

10)    GOVERNING LAW: JURISDICTION. This Agreement shall be governed by the laws
       of the State of California. Any disputes shall be resolved by binding
       arbitration by JAMSENDISPUTE in Santa Clara County, to which binding
       arbitration both parties consent.

11)    NO LEGAL REPRESENTATION. Employee is advised to seek his own legal advice
       in this matter and acknowledges that Venture Law Group and Lionel M.
       Allan are acting solely as counsel for the Corporation and not for
       Employee.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

Catalyst Semiconductor, Inc.
By:

 /s/ Radu Vanco                               /s/ Thomas E. Gay III
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Radu Vanco                                   In his individual capacity
President & CEO                              Thomas E. Gay III





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