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                                                                    EXHIBIT 10.2

                       1989 STOCK PLAN OF S3 INCORPORATED

                        INCENTIVE STOCK OPTION AGREEMENT


INCENTIVE STOCK         This option is intended to be an incentive stock option
OPTION                  under section 422 of the Internal Revenue Code and will
                        be interpreted accordingly. Nevertheless, to the extent
                        that it exceeds the $100,000 rule of section 422(d) of
                        the Internal Revenue Code, this option will be treated
                        as a nonstatutory stock option.

VESTING                 Your right to exercise this Option vests daily over the
                        four year period beginning on the Grant Date ("Effective
                        Date") shown on the cover sheet. In addition, if your
                        Service terminates due to your death or Total and
                        Permanent Disability, your right to exercise this Option
                        will vest as to an additional 50% of the Shares subject
                        to this Option at that time (or, if less, the entire
                        remaining unvested Shares). All vested Share
                        calculations will be rounded up to the nearest whole
                        number. No additional Shares vest after your Company
                        Service has terminated for any reason.

                        Notwithstanding the foregoing, if your Service
                        terminates within one year of the Effective Date you
                        will not be entitled to exercise any portion of this
                        Option, unless your Service terminates due to your death
                        or Total and Permanent Disability. If your Service
                        terminates within one year of the Effective Date due to
                        your death or Total and Permanent Disability, then your
                        right to exercise this Option shall vest as to the
                        number of Shares subject to the Option calculated under
                        the daily vesting schedule set forth above, plus an
                        additional 50% of the Shares subject to this Option.

TERM                    Your Option will expire in any event at the close of
                        business at Company headquarters on the day before the
                        10th anniversary of the Date of Grant, as shown on the
                        cover sheet. (It will expire earlier if your Company
                        Service terminates, as described below.)

REGULAR TERMINATION     If your Service terminates for any reason except death
                        or Total and Permanent Disability, then your Option will
                        expire at the close of business at Company headquarters
                        three months after your termination date. During that
                        three-month period, you may exercise the portion of your
                        Option that was vested on the termination date.


                        Subject to the vesting rules above, in the event that
                        your Service terminates within one year from the
                        Effective Date for any reason, all rights to purchase
                        Shares under this Option shall immediately terminate,
                        unless your Service terminates within one year from the
                        Effective Date due to your death or your Total and
                        Permanent Disability.

                        The Company determines when your Service terminates for
                        all purposes under the Plan and this Agreement.

DEATH                   If you die prior to termination of Service, then your
                        Option will expire at the close of business at Company
                        headquarters on the date six months 


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                        after the date of death. During that six-month period,
                        your estate or heirs may exercise the portion of your
                        Option that was vested on the date of death as set forth
                        above.

DISABILITY              If your Service terminates because of your Total and
                        Permanent Disability, then your Option will expire at
                        the close of business at Company headquarters on the
                        date six months after your termination date. During that
                        six-month period, you may exercise the portion of your
                        Option that was vested on the date of termination as set
                        forth above.

                        "Total and Permanent Disability" means that you are
                        unable to engage in any substantial gainful activity by
                        reason of any medically determinable physical or mental
                        impairment which can be expected to result in death or
                        which has lasted, or can be expected to last, for a
                        continuous period of not less than six months.

LEAVES OF ABSENCE       For purposes of this option, your Service does not
                        terminate when you go on a military leave, a sick leave
                        or another bona fide leave of absence, if the leave was
                        approved by the Company in writing, if the terms of the
                        leave provide for continued service crediting, or when
                        continued service crediting is required by applicable
                        law. However, your Service will be treated as
                        terminating 90 days after you went on leave, unless your
                        right to return to active work is guaranteed by law or
                        by a contract. Your Service terminates in any event when
                        the approved leave ends, unless you immediately return
                        to active work.

                        The Company determines which leaves count for this
                        purpose and the extent to which the vested portion of an
                        Option may be exercised during a leave of absence..

RESTRICTIONS ON 
EXERCISE                The Company will not permit you to exercise this Option
                        if the issuance of Shares at that time would violate any
                        law or regulation.

NOTICE OF EXERCISE      When you wish to exercise this Option, you must notify
                        the Company by filing the proper "Notice of Exercise"
                        form at the address given on the form. Your Notice of
                        Exercise must specify how many Shares you wish to
                        purchase. Your Notice of Exercise must also specify how
                        your Shares should be registered (in your name only, in
                        your and your spouse's names as community property or as
                        joint tenants with right of survivorship or in a trust
                        for your benefit). The Notice of Exercise will be
                        effective when it is received by the Company.

                        If someone else wants to exercise this Option after your
                        death, that person must prove to the Company's
                        satisfaction that he or she is entitled to do so.

FORM OF PAYMENT         When you submit your Notice of Exercise, you must
                        include payment of the Exercise Price for the Shares you
                        are purchasing. Payment may be made in one (or a
                        combination) of the following forms:


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                        o  Your personal check, a cashier's check or a money
                           order.

                        o  Irrevocable directions to a securities broker 
                           approved by the Company to sell the Shares acquired 
                           upon exercise of your Option and to deliver all or a 
                           portion of the sale proceeds to the Company in 
                           payment of the Exercise Price. The balance of the 
                           sale proceeds, if any, will be delivered to you. The 
                           directions must be given by signing a special "Notice
                           of Exercise" form provided by the Company.

                        o  Shares which have already been owned by you for more
                           than twelve months and which are surrendered to the
                           Company. The value of the Shares, determined as of 
                           the effective date of the Option exercise, will be 
                           applied to the Exercise Price.

WITHHOLDING TAXES       You will not be allowed to exercise this Option unless
                        you make acceptable arrangements to pay any withholding
                        taxes that may be due as a result of the Option
                        exercise.

RESTRICTIONS ON RESALE  By signing this Agreement, you agree not to sell any
                        Shares acquired upon exercise of this Option at a time
                        when applicable laws, regulations or Company or
                        underwriter trading policies prohibit a sale.

TRANSFER OF OPTIONS     Prior to your death, only you may exercise this Option.
                        You cannot transfer or assign this Option. For instance,
                        you may not sell this Option or use it as security for a
                        loan. If you attempt to do any of these things, this
                        Option will immediately become invalid. You may,
                        however, dispose of this Option in your will.

                        Regardless of any marital property settlement agreement,
                        the Company is not obligated to honor a Notice of
                        Exercise from your former spouse, nor is the Company
                        obligated to recognize your former spouse's interest in
                        your Option in any other way.

RETENTION RIGHTS        Neither your Option nor this Agreement give you the
                        right to be retained by the Company in any capacity. The
                        Company reserves the right to terminate your Service at
                        any time and for any reason.

STOCKHOLDER RIGHTS      Neither you, nor your estate or heirs, have any rights
                        as a stockholder of the Company until a certificate for
                        the Shares acquired upon exercise of your Option has
                        been issued. No adjustments are made for dividends or
                        other rights if the applicable record date occurs before
                        your stock certificate is issued, except as described in
                        the Plan.

ADJUSTMENTS             In the event of a stock split, a stock dividend or a
                        similar change in the Company Stock, the number of
                        Shares covered by this Option and the Exercise Price per
                        Share may be adjusted pursuant to the Plan. Your Option
                        shall be subject to the terms of the agreement of
                        merger, liquidation or reorganization in the event the
                        Company is subject to such corporate activity.


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APPLICABLE LAW          This Agreement will be interpreted and enforced under
                        the laws of the State of California.

THE PLAN AND OTHER      The text of the Plan is incorporated in this Agreement
                        by reference. Capitalized terms that are used in this
                        Agreement but not defined, herein are defined in the
                        Plan as such may be amended from time to time.

     This Agreement and the Plan constitute the entire understanding between you
and the Company regarding this Option. Any prior agreements, commitments or
negotiations concerning this Option are superseded.

     BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS
AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.


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