**Exhibit 10.30**
**ACCELERATION AGREEMENT**
This Acceleration Agreement (the “Agreement”) is entered into as of _______, 2005 (the“Effective Date”), by and between _______ (the “Optionee”) and ESS Technology, Inc., aCalifornia corporation (the “Company”).
1.  Definitions. The following definitions shall apply for all purposes under thisAgreement:
     (a) Cause. “Cause” means the determination by the Company’s Board of Directors of anyof the following: (i) the Optionee’s willful failure to perform substantially his or her dutiesand responsibilities to the Company; (ii) the Optionee’s commission of any act of fraud,embezzlement, dishonesty or any other willful misconduct that has caused, or is reasonably expectedto result in, injury to the Company; (iii) the Optionee’s commission of, conviction of, or a pleaof “guilty” or “no contest” to, a felony under the laws of the United States or any state; (iv) theOptionee’s unauthorized use or disclosure of any proprietary information or trade secrets of theCompany or any other party to whom the Optionee owes an obligation of nondisclosure as a result ofhis or her relationship with the Company; or (v) the Optionee’s material breach of any or his orher obligations under any written agreement or covenant with the Company.
     (b) Change in Control. “Change in Control” means:
            (i) the occurrence of any of the events described in Section 18.1 of the 1995 Plan forCovered Options granted thereunder; or
            (ii) a “Change of Control” as defined in Section 2(f) of the 1997 Plan for CoveredOptions granted thereunder.
     (c) Covered Option. “Covered Option” means any stock option granted to the Optioneepursuant to one of the Covered Plans, whether such stock option was granted before, on, or afterthe Effective Date.
     (d) Covered Plans. “Covered Plans” means the 1995 Equity Incentive Plan (as amendedand restated January 25, 2003) (the “1995 Plan”) or the ESS Technology, Inc. 1997 Equity IncentivePlan (as amended and restated April 26, 2003) (the “1997 Plan”).
     (e) Good Reason. “Good Reason” means any one or more of the following, without theOptionee’s prior written consent: (i) a change in the Optionee’s position such that he or she isnot a corporate officer of the Company or the assignment to the Optionee of any duties orresponsibilities which are substantially inconsistent with Optionee’s duties and responsibilitiesto the Company on the Effective Date; (ii) the relocation of the principal place of the Optionee’sservice to a location that is more than 50 miles from the Optionee’s principal place of service onthe Effective Date, or the imposition of travel requirements that are substantially more demandingthan the travel requirements existing on the Effective Date; (iii) any failure by the Company topay, or any material reduction by the Company of the Optionee’s base salary or bonus compensation(subject to applicable performance requirements with respect to the actual amount of bonuscompensation earned by the Optionee); (iv) any failure by the Company to provide the Optionee withthe
 

 

opportunity to participate, on terms no less favorable than those in effect for the benefit ofany other employee who holds a comparable position with the Company, in any benefit or compensationplans and programs or other fringe benefits (or their equivalent) from time to time in effect forthe benefit of any other employee who holds a comparable position with the Company; or (v) therefusal of any successor or assign of the Company to assume this Agreement.
     (f) Involuntary Termination. “Involuntary Termination” means (i) the Optionee’sservice is terminated by the Company without Cause or (ii) the Optionee’s resignation for GoodReason.
2.  Benefits.
     (a) Change in Control.
            (i) Notwithstanding anything to the contrary in the Covered Plans or applicable stock optionagreements, in the event of the Optionee’s Involuntary Termination within 2 months before a Changein Control, the vesting schedule for all Covered Options that are outstanding as of such Change inControl shall be accelerated to provide that all such Covered Options shall be immediately vestedupon the effective date of such Change in Control and exercisable in full.
            (ii) Notwithstanding anything to the contrary in the Covered Plans or applicable stock optionagreements, the vesting schedule for all Covered Options that are outstanding as of the effectivedate of a Change in Control shall be accelerated to provide that 50% of the unvested shares subjectto such Covered Options (determined as of the effective date of the Change in Control) shall vestimmediately upon the effective date of such Change in Control and become exercisable. For purposesof the foregoing provision, the unvested shares subject to acceleration shall be determined *prorata*such that 50% of the shares that would have otherwise vested on each vesting date absent aChange in Control shall vest immediately upon the effective date of such Change in Control (e.g.,if prior to a Change in Control 50 shares vest on each monthly anniversary of the option grant dateand 2 years remain on the vesting schedule, then after a Change in Control 25 shares will vest oneach monthly anniversary of the option grant date for the 2 years remaining on the vestingschedule). Further, in the event of the Optionee’s Involuntary Termination within 12 months aftera Change in Control, the balance of the unvested shares subject to the Covered Options shall vestimmediately upon Optionee’s Involuntary Termination and become exercisable in full.
     (b) Death. Notwithstanding Section 2(a) of this Agreement or anything to the contraryin the Covered Plans or applicable stock option agreements, in the event of the Optionee’s death atany time on or after the Effective Date, the vesting schedule for all Covered Options that areoutstanding as of the Optionee’s death shall be accelerated to provide that all such CoveredOptions shall be immediately vested and exercisable in full.
     (c) Conditions. All benefits provided under this Section 2 are conditioned on (i) theOptionee’s continuing compliance with this Agreement, any employment agreement and the Company’spolicies and by-laws, and (ii) the Optionee’s execution of a general release of all claims in aform prescribed by the Company.
 

 

     (d) Excise Taxes. In the event that any benefit received by Optionee pursuant to thisAgreement would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Codeof 1986, as amended (the “Excise Tax”), then Optionee shall be entitled to either the full amountof the benefits or such lesser amount that would result in no portion of the benefits being subjectto the Excise Tax, whichever of the foregoing amounts results in the receipt by Optionee, on anafter-tax basis, of the greater benefit. Unless the Company and Optionee agree otherwise inwriting, any calculation required under this Section 2(d) shall be made in writing by independentpublic accountants agreed to by the Company and Optionee, whose calculation shall be conclusive andbinding upon the Company and Optionee for all purposes. The Company and Optionee shall furnish tothe accountants such information and documents as the accountants may reasonably request in orderto make a determination under this Section 2(d). All fees and expenses of the accounting firmshall be borne solely by the Company.
3.  Successors.
     (a) Company’s Successors. Any successor to all or substantially all of the Company’sbusiness and/or assets (whether direct or indirect and whether by purchase, lease, merger,consolidation, liquidation or otherwise), shall be obligated to perform this Agreement in the samemanner and to the same extent as the Company would be required to perform it in the absence of asuccession.
     (b) Optionee’s Successors. This Agreement and all rights of the Optionee hereundershall inure to the benefit of, and be enforceable by, the Optionee’s personal or legalrepresentatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
4.  Miscellaneous Provisions.
     (a) Notice. Notices and all other communications contemplated by this Agreement shallbe in writing and shall be deemed to have been duly given when personally delivered or when mailedby U.S. registered or certified mail, return receipt requested and postage prepaid. In the case ofthe Optionee, mailed notices shall be addressed to him or her at the home address which he or shemost recently communicated to the Company in writing. In the case of the Company, mailed noticesshall be addressed to its corporate headquarters, and all notices shall be directed to theattention of its Chief Financial Officer.
     (b) Waiver. No provision of this Agreement shall be modified, waived or dischargedunless the modification, waiver or discharge is agreed to in writing and signed by the Optionee andby an authorized officer of the Company (other than the Optionee). No waiver by either party ofany breach of, or of compliance with, any condition or provision of this Agreement by the otherparty shall be considered a waiver of any other condition or provision or of the same condition orprovision at another time.
     (c) Whole Agreement. This Agreement contains all the legally binding understandingsand agreements between Optionee and the Company pertaining to the subject matter of this Agreementand supersedes all such agreements, whether oral or in writing, previously entered into between theparties. Any and all stock option agreements regarding the Covered Options are hereby modified andamended as necessary to comport with this Agreement. To the extent that any
 

 

such stock option agreement is inconsistent with this Agreement or conflicts with thisAgreement, then the terms of this Agreement shall control.
     (d) Choice of Law. The validity, interpretation, construction and performance of thisAgreement shall be governed by the laws of the State of California without regard to the conflictsof laws principles thereof.
     (e) Severability. The invalidity or unenforceability of any provision or provisionsof this Agreement shall not affect the validity or enforceability of any other provision hereof,which shall remain in full force and effect.
     (f) No Assignment. The rights of the Optionee to benefits under this Agreement shallnot be made subject to option or assignment, either by voluntary or involuntary assignment or byoperation of law, including (without limitation) bankruptcy, garnishment, attachment or othercreditor’s process, and any action in violation of this subsection (f) shall be void.
     (g) Retention Rights. This Agreement does not give the Optionee the right to beretained by the Company in any capacity. The Company reserves the right to terminate Optionee’sengagement at any time and for any reason.
5.  Term of Agreement. This Agreement shall continue in effect until the Company shall havegiven the Optionee written notice of cancellation. This Agreement shall terminate automatically inthe event the Optionee ceases to provide services to Company prior to a Change in Control orOptionee’s death. Notwithstanding the foregoing, this Agreement shall remain effective in theevent of Optionee’s Involuntary Termination within 2 months before a Change in Control.
     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of theCompany by its duly authorized officer, as of the day and year first above written.      Optionee