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                                                                    EXHIBIT 10.1

                                INTERVIDEO, INC.

                             1998 STOCK OPTION PLAN
                             ----------------------

                           Amended as of October, 2000

     1.  Purposes of this Plan. The purposes of this 1998 Stock Option Plan are
         ---------------------
to attract and retain the best available personnel, to provide additional
incentive to the Employees of the Company and its Subsidiaries, to promote the
success of the Company's business and to enable the Employees to share in the
growth and prosperity of the Company by providing them with an opportunity to
purchase stock in the Company.

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

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

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

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

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

         (d) "Company" shall mean InterVideo, Inc. a California corporation.

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

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

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

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

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         (i) "Non Employee Director" shall mean a director who is a "Non
Employee Director", as such term is defined under Rule 16b 3(b)3(i) promulgated
pursuant to the Exchange Act and any applicable releases and opinions or the
Securities and Exchange Commisions.

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

         (k) "Nonstatutory Stock Option" shall mean an Option which is not an
Incentive Stock Option.

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

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

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

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

         (p) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Sections 424(e) and (g) of the Code.

         (q) "Plan" shall mean this 1998 Stock Option Plan.

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

         (s) "Securities Act" shall mean the Securities Act of 1933, as amended,
or any successor legislation.

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

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

         (v) "Subsidiary" shall mean a subsidiary corporation, whether now or
hereafter existing, as defined in Sections 424(f) and (g) of the Code.

     3.  Stock Subject to this Plan. Subject to the provisions of Section 11 of
         --------------------------
this Plan, the maximum aggregate number of Shares which may be optioned and sold
under this Plan is Ten Million (10,000,000) Shares. The Shares may be
authorized, but unissued or reacquired

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Shares other than reacquired shares delivered pursuant to Section 7(c)(iv)
hereof as payment of consideration in the exercise of an option.

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

     The Company intends that as long as it is not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, and is not an
investment company registered or required to be registered under the Investment
Company Act of 1940, as amended, all offers and sales of Options and Common
Stock issuable upon exercise of any Option shall be exempt from registration
under the provisions of Section 5 of the Securities Act, and this Plan shall be
administered in such a manner so as to preserve such exemption. The Company
intends for this Plan to constitute a written compensatory benefit plan within
the meaning of Rule 701(b) of 17 CFR Section 230.701 ("Rule 701") promulgated by
the Securities and Exchange Commission pursuant to the Securities Act. Unless
otherwise designated by the Committee at the time an Option is granted, all
options granted under this Plan by the Company, and the issuance of any Shares
upon exercise thereof, are intended to be granted in reliance on Rule 701.

     4.  Administration of this Plan.
         ---------------------------

         (a) Procedure. This Plan shall be administered by the Board. The Board
             ---------
may appoint a Committee consisting of two (2) or more members of the Board (or
such greater number as is required to qualify for the exemption from the
provisions of Section 16(b) of the Exchange Act provided by Rule 16b-3
promulgated pursuant to the Exchange Act) to administer this Plan on behalf of
the Board, subject to such terms and conditions as the Board may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board. From time to time, the Board may increase the size of the Committee and
appoint additional members of the Board thereto, remove members (with or without
cause) and appoint new members of the Board in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and,
thereafter, directly administer this Plan. Members of the Board or Committee who
are either eligible for Options or have been granted Options may vote on any
matters affecting the administration of this Plan or the grant of Options
pursuant to this Plan, except that no such member shall act upon the granting of
an Option to such person nor shall any such members presence at a meeting of the
Board of Directors establish the existence of a quorum at any meeting of the
Board or the Committee during which action is taken with respect to the granting
of an Option to him.

         (b) Procedure After Registration Date. Notwithstanding the provisions
             ---------------------------------
of Section 4(a) above, after the Registration Date this Plan shall be
administered either by: (i) the full Board, provided that at all times each
member of the Board is a Non-Employee Director; or

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(ii) a Committee which at all times consists solely of Board members who are Non
Employee Directors. After the Registration Date, the Board shall take all action
necessary to administer this Plan in accordance with the then-effective
provisions of Rule 16b-3 promulgated under the Exchange Act, provided that any
amendment to this Plan required for compliance with such provisions shall be
made in accordance with Section 13 of this Plan.

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

         (d) Effect of the Board's or Committee's Decision. All decisions,
             ---------------------------------------------
determinations and interpretations of the Board or the Committee shall be final
and binding on all Optionees and any other holders of Options.

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

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

     7.  Option Price and Consideration.
         ------------------------------

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         (a) Exercise Price. The exercise price per Share for the Shares to be
             --------------
issued pursuant to the exercise of an Option shall be such price as is
determined by the Board; provided, however, that such price shall in no event be
                         --------  -------
less than eighty-five percent (85%) with respect to Nonstatutory Stock Options,
and one hundred percent (100%) with respect to Incentive Stock Options, of the
fair market value per Share on the date of grant. In the case of an Option
granted to an Employee who, at the time the Option is granted, owns stock (as
determined under Section 424(d) of the Code) constituting more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or its Parent or Subsidiaries, the exercise price per Share shall be no less
than one hundred ten percent (110%) of the fair market value per Share on the
date of grant.

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

         (c) Payment of Consideration. The consideration to be paid for the
             ------------------------
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Board and may consist entirely of cash, check,
promissory notes, Shares held by the Optionee for the requisite period necessary
to avoid a charge to the Company's earnings for financial reporting purposes
which have a fair market value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised, or any
combination of such methods of payment. Subject to subparagraphs (i) through
(iv) hereto, utilization of Shares as the method of payment may be completed by
either (a) the tender of Shares then held by the Optionee, or (b) the
withholding of Shares which would otherwise be issued pursuant to an Option
pursuant to broker-dealer sale and remittance procedure described in
subparagraph (iii) hereto. In making its determination as to the type of
consideration to accept, the Board shall consider if acceptance of such
consideration is deemed to be such as may be reasonably expected to benefit the
Company.

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

             (ii) If the consideration for the exercise of an Option is the
surrender of previously acquired and owned Shares, the Optionee will be required
to make representations and warranties satisfactory to the Company regarding his
title to the Shares used to effect the purchase, including, without limitation,
representations and warranties that the Optionee has

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good and marketable title to such Shares free and clear of any and all liens,
encumbrances, charges, equities, claims, security interests, options or
restrictions and has full power to deliver such Shares without obtaining the
consent or approval of any person or governmental authority other than those
which have already given consent or approval in a form satisfactory to the
Company. The value of the Shares used to effect the purchase shall be the fair
market value of those Shares as determined by the Board in its sole discretion,
exercised in good faith.

               (iii) If the consideration for the exercise of an Option is to be
paid through a broker-dealer sale and remittance procedure, the Optionee shall
provide (1) irrevocable written instructions to a designated brokerage firm to
effect the immediate sale of the purchased shares and to remit to the Company,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate option price payable for the purchased Shares plus all
applicable Federal and State income and employment taxes required to be withheld
by the Company in connection with such purchase and (2) written instructions to
the Company to deliver the certificates for the purchased Shares directly to
such brokerage firm in order to complete the sale transaction.

               (iv)  If an Optionee is permitted to exercise an Option by
delivering shares of the Company's Common Stock, the option agreement covering
such Option may include provisions authorizing the Optionee to exercise the
Option, in whole or in part, by: (1) delivering whole shares of the Company's
Common Stock previously owned by such Optionee (whether or not acquired through
the prior exercise of a stock option) having a fair market value equal to the
option price; and/or (2) directing the Company to withhold from the Shares that
would otherwise be issued upon exercise of the Option that number of whole
Shares having a fair market value equal to the option price. Shares of the
Company's Common Stock so delivered or withheld shall be valued at their fair
market value on the date of exercise of the Option, as determined by the
Committee and/or the Board, as appropriate. Any balance of the exercise price
shall be paid in cash or by check or a promissory note, each in accordance with
the terms of this Section 7. Any Shares delivered or withheld in accordance with
this provision shall again become available for purposes of this Plan and for
Options subsequently granted thereunder to the extent permissible pursuant to
Section 3 of this Plan.

     8.   Options.
          -------

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

          (b) Term of Option. The term of each Option may be up to ten (10)
              ---------------------
years from the date of grant thereof as determined by the Board upon the grant
of the Option and specified in the Option Agreement, except that the term of an
Option granted to an Employee

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who, at the time the Option is granted, owns stock comprising more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or its Parent or Subsidiaries, shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.

          (c)  Exercise of Option.
               ------------------

               (i)    Procedure for Exercise; Rights as a Shareholder. Any
                      -----------------------------------------------
Option shall be exercisable at such times, in such installments and under such
conditions as may be determined by the Board and specified in the Option
Agreement, including performance criteria with respect to the Company and/or the
Optionee, and as shall be permissible under the terms of this Plan.

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

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

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

                                       7

<PAGE>

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

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

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

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

                                       8

<PAGE>

     9.   Limit on Value of Optioned Stock. No Incentive Stock Option may be
          --------------------------------
granted to an Employee if, as a result of such grant, the aggregate fair market
value (determined at the time an Incentive Stock Option is granted) of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by an Optionee during any calendar year under all incentive stock
option plans of the Company, its Parents or its Subsidiaries, if any, exceeds
One Hundred Thousand Dollars ($100,000).

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

     11.  Adjustments Upon Changes in Capitalization or Merger.
          ----------------------------------------------------

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

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

          (c) No fractional shares of Common Stock shall be issuable on account
of any

                                        9

<PAGE>

action described in this Section, and the aggregate number of shares into which
Shares then covered by the Option, when changed as the result of such action,
shall be reduced to the largest number of whole shares resulting from such
action, unless the Board, in its sole discretion, shall determine to issue scrip
certificates in respect to any fractional shares, which scrip certificates, in
such event, shall be in a form and have such terms and conditions as the Board
in its discretion shall prescribe.

     12.  Time of Granting Options. The date of grant of an Option shall be the
          ------------------------
date on which the Board makes the determination granting such Option; provided,
                                                                      --------
however, that if the Board determines that such grant shall be as of some future
-------
date, the date of grant shall be such future date. Notice of the determination
shall be given to each Employee to whom an Option is so granted within a
reasonable time after the date of such grant.

     13.  Amendment and Termination of this Plan.
          --------------------------------------

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

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

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

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

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

               (v)    Extend the term of this Plan.

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

     14.  Conditions Upon Issuance of Shares.
          ----------------------------------

          (a)  Shares shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall

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<PAGE>

comply with all relevant provisions of law, including, without limitation, the
Securities Act as amended, the Exchange Act, applicable state securities laws,
the rules and regulations promulgated thereunder, and the requirement of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

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

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

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

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

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

     18.  Taxes, Fees, Expenses and Withholding of Taxes.
          ----------------------------------------------

                                       11

<PAGE>

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

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

          (c) The Board or the Committee may, in its discretion and upon such
terms and conditions as it may deem appropriate (including the applicable
safe-harbor provisions of SEC Rule 16b-3 and interpretations thereof by the
staff of the Securities and Exchange Commission) provide any or all holders of
outstanding option grants under this Plan with the election to have the Company
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such options, one or more of such shares with an aggregate fair market value
equal to the designated percentage (any multiple of 5% specified by the
optionee) of the Federal and State income taxes ("Taxes") incurred in connection
with the acquisition of such Shares. In lieu of such direct withholding, one or
more optionees may also be granted the right to deliver shares of Common Stock
to the Company in satisfaction of such Taxes. The withheld or delivered shares
shall be valued at the Fair Market Value on the applicable determination date
for such Taxes or such other date required by the applicable safe-harbor
provisions of SEC Rule 16b-3.

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

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

     21. Notices. Any notice required or permitted hereunder shall be given in
         -------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States

                                       12

<PAGE>

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

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

     23.  Legends on Certificates.
          -----------------------

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

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

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

                                       13

<PAGE>

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

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

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

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

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

     27.  Applicable Law. This Plan shall be governed by and construed in
          --------------
accordance with the laws of the State of California.

                                       14



<PAGE>

                                INTERVIDEO, INC.

                        INCENTIVE STOCK OPTION AGREEMENT
                        --------------------------------
                                 (Standard Form)

     InterVideo, Inc., a California corporation (the "Company") hereby grants to
__________(the "Optionee") an option to purchase a total of____________ shares
of Common Stock (the "Shares") of the Company, at the price and on the terms set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1998 Stock Option Plan, as amended (the "Plan") applicable to
incentive stock options, which terms and provisions hereby are incorporated by
reference herein. Unless the context herein otherwise requires, the terms
defined in the Plan shall have the same meanings herein.

     1.   Nature of the Option. This Option is intended to be an incentive stock
          --------------------
option within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").

     2.   Date of Grant; Term of Option. This Option is granted as of the grant
          -----------------------------
date set forth on the signature page of this Agreement, and it may not be
exercised later than ten (10) years from such date.

     3.   Option Exercise Price. The exercise price for this Option is $2.00 per
          ---------------------
Share, which price is not less than one hundred percent (100%) of the fair
market value thereof on the date this Option was granted (or not less than one
hundred ten percent (110%) of the fair market value thereof on the date this
Option was granted, if the Optionee owns stock representing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or its parents or subsidiaries).

     4.   Exercise of Option. This Option shall be exercisable during its term
          ------------------
only in accordance with the terms and provisions of the Plan and this Option as
follows:

          (a)  Right to Exercise. This Option shall vest and be exercisable,
               -----------------
cumulatively, during its term as to one fourth (1/4) of the Shares at the end of
the first full twelve months of Continuous Status as an Employee of the Company
following the Vesting Commencement Date (as set forth on the signature page
hereof) and thereafter as to 1/48 of the Shares at the end of each successive
one-month period of Continuous Status as an Employee of the Company after such
initial twelve month period until the Shares are fully vested.

          (b)  Method of Exercise. This Option shall be exercisable by written
               ------------------
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to Optionee's investment intent with respect
to such Shares as may be required by the Company hereunder or pursuant to the
provisions of the Plan. Such written notice shall be signed by Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company or such other person as may be designated by the Company. The written
notice shall be accompanied by payment of

                                       1

<PAGE>

the purchase price and, at the Company's option, either (i) an executed
investment representation statement acceptable to the Company (the "Investment
Representation Statement") or (ii) an executed stock purchase agreement
acceptable to the Company (the "Stock Purchase Agreement"). Payment of the
purchase price shall be made by check or such other consideration and method of
payment authorized by the Board pursuant to the Plan. The certificate or
certificates for the Shares as to which this Option shall be exercised shall be
registered in the name of Optionee and shall carry the legends set forth in the
Plan, the Stock Purchase Agreement or the Investment Representation Statement,
as applicable, and/or as required under applicable law.

          (c)  Restrictions on Exercise. This Option may not be exercised if the
               ------------------------
issuance of the Shares upon such exercise would constitute a violation of any
applicable federal or state securities laws or other laws or regulations. As a
condition to the exercise of this Option, the Company may require Optionee to
make any representation and warranty to the Company as may be required by any
applicable law or regulation.

     5.   Investment Representations. In connection with the acquisition of this
          --------------------------
Option, Optionee represents and warrants as follows:


          (a)  Investment Intent. Optionee is acquiring this Option, and upon
               -----------------
exercise of this Option, Optionee will be acquiring the Shares for investment
for Optionee's own account, not as a nominee or agent, and not with a view to,
or for resale in connection with, any distribution thereof.

          (b)  Protection of Interests. Optionee, by reason of Optionee's
               -----------------------
business or financial experience, has the capacity to evaluate the merits and
risks of purchasing Common Stock of the Company and to make an informed
investment decision with respect thereto and to protect Optionee's interests in
connection with the acquisition of this Option and the Shares.

     6.   Termination of Status as an Employee. If Optionee ceases to serve as
          ------------------------------------
an Employee for any reason other than death or disability and thereby terminates
Optionee's Continuous Status as an Employee, Optionee shall have the right to
exercise this Option at any time within thirty (30) days after the date of such
termination to the extent that Optionee was entitled to exercise this Option at
the date of such termination. If Optionee ceases to serve as an Employee due to
death or disability, this Option may be exercised at any time within six (6)
months after the date of death or termination of employment due to disability,
in the case of death, by Optionee's estate or by a person who acquired the right
to exercise this Option by bequest or inheritance, or, in the case of
disability, by Optionee, but in any case only to the extent Optionee was
entitled to exercise this Option at the date of such termination. To the extent
that Optionee was not entitled to exercise this Option at the date of
termination, or to the extent this Option is not exercised within the time
specified herein, this Option shall terminate. Notwithstanding the foregoing,
this Option shall not be exercisable after the expiration of the term set forth
in paragraph 2 hereof.

     7.   Withholding Tax Liability. The Company reserves the right to withhold,
          -------------------------
in accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee any taxes required to be withheld by
federal, state or local law as a result of the

                                       2

<PAGE>

grant or exercise of this Option or the sale or other disposition of the Shares
issued upon exercise of this Option, and if such compensation or consideration
is insufficient, the Company may require Optionee to pay to the Company an
amount sufficient to cover such withholding tax liability. The Optionee agrees
to notify the Company immediately in the event of any disqualifying disposition
(within the meaning of Section 421(b) of the Code) of the Shares acquired upon
exercise of an incentive stock option.

     8.   Nontransferability of Option. This Option may not be sold, pledged,
          ----------------------------
assigned, hypothecated, gifted, transferred or disposed of in any manner either
voluntarily or involuntarily by operation of law or otherwise, other than by
will or by the laws of descent or distribution, and may be exercised during the
lifetime of Optionee only by such Optionee. Subject to the foregoing and the
terms of the Plan, the terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of Optionee.

     9.   Continuation of Employment. Neither this Option or the Plan nor any
          --------------------------
Option granted thereunder shall confer upon any Optionee any right to continue
in the employment of the Company, its Parent, Subsidiary or a successor
corporation or limit in any respect the right of the Company or any such
corporations to discharge the Optionee at any time, with or without cause and
with or without notice.

     10.  Limitations on Transfer. In addition to any other limitation on
          -----------------------
transfer created by applicable securities laws, Optionee will not sell,
transfer, assign, encumber or otherwise dispose of (including, without
limitation by operation of law) any of Optionee's right, title or interest in
and to all or any portion of the Shares except as provided in this Section:

          (a)  Right of First Refusal. In the event Optionee desires (or is
               ----------------------
required) to sell or transfer in any manner all or a portion of the Shares, the
Optionee shall first offer such Shares for sale to the Company (or its assignee)
at the same price, and upon the same terms (or reasonably similar terms) as
those on which the Optionee is disposing of said Shares ("Right of First
Refusal"). Optionee shall offer such Shares to the Company by delivering a
written notice (the "Notice") to the Company stating (i) Optionee's bona fide
intention to sell or otherwise transfer such Shares, (ii) the number of such
Shares to be sold or otherwise transferred, (iii) the price for which Optionee
proposes to sell such Shares and all additional terms and conditions, if any, of
the sale or transfer and (iv) the name of the proposed buyer or transferee.
Optionee shall attach to the Notice a copy of the written offer, if any, of the
sale or transfer. In the event of a transfer not involving a sale of such Shares
for a specific sum of money, or if, in the sole judgment of the Company's Board
of Directors, the proposed transfer does not involve a price for the Shares
negotiated by the Optionee and Optionee's proposed transferee in a bona fide
"arm's length transaction," the price of the Shares shall be determined by the
Company's Board of Directors in the manner specified in Section 10(c) below.

          Within thirty (30) days after the Company's receipt of the Notice (the
"Acceptance Period"), the Company (or its assignee) may elect to purchase all of
the Shares (or, with the consent of the Optionee, a portion thereof) to which
the Notice refers, at the price per share (or at the fair market value of such
Shares determined pursuant to paragraph 10(c) hereof in the case of a transfer
other than a bona fide arms-length transaction) and on the same terms and
conditions (or terms and conditions as similar as reasonably possible) as set
forth in the

                                       3

<PAGE>

Notice. If the Company (or its assignee) elects to purchase such Shares
hereunder, it shall notify Optionee either orally or in writing during the
Acceptance Period of its intention to purchase all of such Shares (or, with the
consent of Optionee, a portion thereof) and either (i) set a date and location
for the closing of the transaction on or prior to the last day of the Acceptance
Period, or at such later date as the parties may otherwise agree, at which time
the Company (or its assignee) shall tender payment for the Shares or (ii)
include payment for the Shares with the Company's notice to Optionee, if in
writing, or deliver it to Optionee under separate cover. At such closing, the
certificates representing the Shares so purchased shall be delivered to the
Company and canceled or, in the case of payment by the Company by mail, such
certificates shall be deemed to be canceled upon the date of such mailing of the
Company's payment and, thereafter, shall be promptly returned by Optionee to the
Company by certified or registered mail. Optionee hereby authorizes and directs
the Secretary or Transfer Agent of the Company to transfer the Shares as to
which the Right of First Refusal has been exercised from Optionee to the Company
(or its assignee). Optionee further authorizes the Company to refuse, or to
cause its Transfer Agent to refuse, to transfer or record any Shares to be
transferred in violation of this Agreement. If the Company (or its assignee)
does not elect to purchase the Shares to which the Notice refers, Optionee may
sell or otherwise transfer the Shares to the third party named in the Notice at
the price and on the terms and conditions specified in the Notice or at a higher
price, provided that such sale or transfer is consummated within sixty (60) days
from either (i) the lapse of the Acceptance Period or (ii) the date of the
Company's notice, whether written or oral, advising Optionee that it does not
intend to purchase the Shares hereunder, whichever occurs first in time and
provided, further, that any such sale or transfer is in accordance with all of
the terms and conditions set forth in this Agreement. In the event the Shares
are not disposed of by the Optionee within said 60-day period, such Shares shall
once again be subject to the Right of First Refusal herein provided.

          (b)  Involuntary Transfer. In the event of any transfer by operation
               --------------------
of law or other involuntary transfer (the "Involuntary Transfer"), of all, or a
portion, of the Shares, the Company shall have an option to purchase all of the
Shares transferred (the "Involuntary Transfer Option"). Upon such transfer, the
Optionee and person acquiring the Shares shall promptly notify in writing the
Secretary of the Company of such transfer. The Company (or its assignee) shall
notify Optionee and the person acquiring the Shares as to whether the Company
(or its assignee) wishes to purchase the Shares pursuant to the Involuntary
Transfer Option within thirty (30) days after receipt by the Company of the
written notice of the involuntary transfer of the Shares. If the Company (or its
assignee) elects to purchase said Shares hereunder, it shall set a date for the
closing of the transaction at a place specified by the Company (or its assignee)
not later than thirty (30) days after receipt by the Company of the written
notice of the involuntary transfer of the Shares, or at such later date as the
parties may otherwise agree. At such closing, the Company (or its assignee)
shall tender payment for the Shares and the certificates representing the Shares
so purchased shall be canceled. Optionee hereby authorizes and directs the
Secretary or Transfer Agent of the Company to transfer the Shares as to which
the Involuntary Transfer Option has been exercised from the Optionee to the
Company (or its assignee). Optionee further authorizes the Company to refuse, or
to cause its Transfer Agent to refuse, to transfer or record any Shares to be
transferred in violation of this Agreement.

          (c)  Determination of Price. With respect to Shares to be transferred
               ----------------------
pursuant to the Right of First Refusal where the price is not determined as a
result of a bona fide arms-

                                       4

<PAGE>

length transaction by the Optionee under paragraph 10(a) or the Involuntary
Transfer Option, the price per share shall be a price set by the Board of
Directors of the Company that will reflect the then current fair market value of
the Shares, as determined by the Board of Directors in good faith after giving
consideration to the factors set forth in Section 260.140.50 of Title 10 of the
California Code of Regulations or, upon the request of the Optionee, by an
independent appraiser acceptable to both the Company and the Optionee; provided,
that the Optionee shall be required to bear one-half of the cost of such
independent appraiser.

          (d)  Intra-family Transfers. Notwithstanding anything to the contrary
               ----------------------
contained herein, Optionee shall have the right, at any time and from time to
time during Optionee's lifetime or upon Optionee's death, to transfer all or any
portion of Optionee's Shares (the "Transferred Family Shares") to Optionee's
spouse, any of Optionee's issue, ancestors or descendants, or a trust for the
sole benefit of Optionee, Optionee's spouse, any of Optionee's issue, ancestors
or descendants (any such individual or trust is hereinafter referred to as an
"Intra-family Transferee"), provided that the Intra-family Transferee receiving
the Transferred Family Shares executes a consent to be bound by the terms of
this Agreement with respect to the Transferred Family Shares. The Transferred
Family Shares shall be and remain subject to all of the terms and conditions of
this Agreement as were applicable to such Shares immediately prior to their
transfer pursuant to this Section 10(e); without limiting the foregoing, the
obligations hereunder arising out of the possession or ownership of such
Transferred Family Shares shall be binding upon the respective Intra-family
Transferees. For purposes of exercising any rights under this Agreement, the
Company's right to purchase the Shares of Optionee shall extend to any Shares
owned by an Intra-family Transferee.

          (e)  Restriction on Alienation. Any sale, transfer, encumbrance, or
               -------------------------
other disposition or purported sale, transfer, encumbrance or disposition of any
of the Shares by Optionee, whether voluntarily, by operation of law or
otherwise, shall be null and void unless the terms, conditions and provisions of
this Agreement are strictly complied with. Optionee further authorizes the
Company to refuse, or cause its Transfer Agent to refuse, to transfer or record
any Shares to be transferred in violation of this Agreement.

          (f)  Assignment by Company. The Company's Right of First Refusal and
               ---------------------
Involuntary Transfer Option may be assigned in whole or in part to any
shareholder or shareholders of the Company.

          (g)  Obligations Binding Upon Transferees. All transferees of Shares
               ------------------------------------
or any interest therein will receive and hold such Shares or interests subject
to the provisions of this Agreement, including the Company's Right of First
Refusal and Involuntary Transfer Option. Any sale or transfer of the Shares
shall be void unless the provisions of this Agreement are met.

          (h)  Termination of Rights. The Right of First Refusal and Involuntary
               ---------------------
Transfer Option granted the Company by this paragraph 10 shall terminate at such
time as a public market exists for the Company's Common Stock (or any other
stock issued to purchasers in exchange for the Shares purchased under this
Agreement). For the purpose of this Agreement, a "public market" shall be deemed
to exist if the Common Stock is listed on a national securities exchange (as
that term is used in the Securities Exchange Act of 1934, as amended), or the

                                       5

<PAGE>

Common Stock is traded on the over-the-counter market and prices are published
on business days in a recognized financial journal.

          (i)  Indebtedness. Any payment by the Company for purchase of shares
               ------------
from Optionee, may be made by cancellation of any indebtedness to Company from
Optionee.

          (j)  Legends. All certificates representing any Shares of the Company
               -------
purchased upon exercise of the Options shall have endorsed thereon the following
legends, or substantially similar legends, in addition to any legends required
by state securities laws, unless in the opinion of counsel such legends are no
longer necessary:

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

(2)  THESE SECURITIES ARE SUBJECT TO CERTAIN RESTRICTIONS, INCLUDING A RIGHT OF
     FIRST REFUSAL OF THE COMPANY, AND MAY BE TRANSFERRED ONLY IN ACCORDANCE
     WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE SHAREHOLDER, A
     COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

          (k)  Market Standoff Agreement. The Optionee, if requested by the
               -------------------------
Company and an underwriter of Common Stock (or other securities) of the Company,
agrees not to sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by Optionee during the period not to
exceed one hundred and eighty (180) days as requested by the managing
underwriter following the effective date of a registration statement of the
Company filed under the Securities Act (as hereafter defined), provided that all
officers and directors of the Company are required to enter into similar
agreements. Such agreement shall be in writing in a form satisfactory to the
Company and such underwriter. The Company may impose stop-transfer instructions
with respect to the shares (or other securities) subject to the foregoing
restriction until the end of such period.

     11.  The Plan. This Option is subject to, and the Company and Optionee
          --------
agree to be bound by, all of the terms and conditions of the Plan as such Plan
may be amended from time to time in accordance with the terms thereof, provided
that no such amendment shall deprive Optionee, without Optionee's consent, of
this Option or any rights hereunder. Pursuant to the Plan, the Board of
Directors of the Company is authorized to adopt rules and regulations not
inconsistent with the Plan as it shall deem appropriate and proper. A copy of
the Plan in its present form is available for inspection during business hours
by Optionee or the persons entitled to exercise this Option at the Company's
principal office.

                                       6

<PAGE>

     12.  Entire Agreement; Amendment. This Agreement contains the entire
          ---------------------------
understanding between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous written or oral negotiations and
agreements between them regarding the subject matter hereof. This Agreement may
be amended only in writing signed by each of the parties hereto.

Grant Date: ____________

Vesting
Commencement Date: _____________

                                            INTERVIDEO, INC.

                                            By:    _____________________________

                                            Title: _____________________________

                                       7

<PAGE>

     Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that Optionee has read and is familiar with the
terms and provisions thereof, and hereby accepts this Option subject to all of
the terms and provisions thereof. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board of Directors
or the Committee upon any questions arising under the Plan.

Date:  _______________                    ______________________________________
                                          Signature of Optionee

                                          ______________________________________
                                          Address

                                          ______________________________________
                                          City          State           Zip Code

                                       8

<PAGE>

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

     THE SHARES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT TO
BE ENTERED INTO BETWEEN THE HOLDER OF THIS OPTION AND THE COMPANY UPON EXERCISE
OF THIS OPTION, A COPY OF WHICH AGREEMENT IS ON FILE WITH THE SECRETARY OF THE
COMPANY.

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