**Exhibit 10.2**

**ZORAN CORPORATION**

**1995 OUTSIDE DIRECTORS STOCK OPTION PLAN**

**(AsAmended Through June 18, 2000)**

             1.          **Establishment,Purpose and Term of Plan.**

                           1.1        ***Establishment***.  The Zoran Corporation 1995 Outside Directors Stock Option Plan(the “**Plan**”) is hereby establishedeffective as of the effective date of the initial registration by the Companyof its Stock under Section 12 of the Exchange Act (the “**Effective Date**”).

                           1.2        ***Purpose***. The purpose of the Plan is to advance the interests of the ParticipatingCompany Group and its stockholders by providing an incentive to attract andretain highly qualified persons to serve as Outside Directors of the Companyand by creating additional incentive for Outside Directors to promote thegrowth and profitability of the Participating Company Group.

                           1.3        ***Term of Plan***.  The Plan shall continue in effect until the earlier of itstermination by the Board or the date on which all of the shares of Stockavailable for issuance under the Plan have been issued and all restrictions onsuch shares under the terms of the Plan and the agreements evidencing Optionsgranted under the Plan have lapsed. However, all Options shall be granted, if at all, within ten (10) yearsfrom the Effective Date.

             2.          **Definitionsand Construction**.

                          2.1        ***Definitions***.  Whenever used herein, the following termsshall have their respective meanings set forth below:

                                        (a)         “**Board**”means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administerthe Plan, “Board” also means such Committee(s).

                                        (b)        “**Code**”means the Internal Revenue Code of 1986, as amended, and any applicableregulations promulgated thereunder.

                                        (c)         “**Committee**”means a committee of the Board duly appointed to administer the Plan and havingsuch powers as shall be specified by the Board.  Unless the powers of the Committee have been specificallylimited, the Committee shall have all of the powers of the Board grantedherein, including, without limitation, the power to amend or terminate the Planat any time, subject to the terms of the Plan and any applicable limitationsimposed by law.

                                        (d)        “**Company**”means Zoran Corporation, a Delaware corporation, or any successor corporationthereto.

                                        (e)         “**Consultant**”means any person, including an advisor, engaged by a Participating Company torender services other than as an Employee or a Director.

                                        (f)         “**Director**”means a member of the Board or the board of directors of any otherParticipating Company.

                                        (g)        “**Employee**”means any person treated as an employee (including an officer or a Director whois also treated as an employee) in the records of a Participating Company;provided, however, that neither service as a Director nor payment of adirector’s fee shall be sufficient to constitute employment for purposes of thePlan.

                                        (h)        “**ExchangeAct**” means the Securities Exchange Act of 1934, as amended.

                                        (i)          “**FairMarket Value**” means, as of any date, if there is then a publicmarket for the Stock, the closing price of the Stock (or the mean of theclosing bid and asked prices of the Stock if the Stock is so reported instead)as reported on the National Association of Securities Dealers AutomatedQuotation (“**NASDAQ**”) System, theNASDAQ National Market System or such other national or regional securitiesexchange or market system constituting the primary market for the Stock.  If the relevant date does not fall on a dayon which the Stock is trading on NASDAQ, the NASDAQ National Market System orother national or regional securities exchange or market system, the date onwhich the Fair Market Value shall be established shall be the last day on whichthe Stock was so traded prior to the relevant date.  If there is then no public market for the Stock, the Fair MarketValue on any relevant date shall be as determined by the Board without regardto any restriction other than a restriction which, by its terms, will neverlapse.

                                        (j)          “**Option**”means a right to purchase Stock (subject to adjustment as provided inSection 4.2) pursuant to the terms and conditions of the Plan.

                                        (k)         “**Optionee**”means a person who has been granted one or more Options.

                                        (l)          “**OptionAgreement**” means a written agreement between the Company and anOptionee setting forth the terms, conditions and restrictions of the Optiongranted to the Optionee.

                                        (m)        “**OutsideDirector**” means a Director of the Company who is not an Employee.

                                        (n)        “**ParentCorporation**” means any present or future “parent corporation” of theCompany, as defined in Section 424(e) of the Code.

                                        (o)        “**ParticipatingCompany**” means the Company or any Parent Corporation or SubsidiaryCorporation.

                                        (p)        “**ParticipatingCompany Group**” means, at any point in time, all corporationscollectively which are then Participating Companies.

                                        (q)        “**Rule16b-3**” means Rule 16b–3 as promulgated under the ExchangeAct, as amended from time to time, or any successor rule or regulation.

                                        (r)         “**Service**”means the Optionee’s service with the Participating Company Group, whether inthe capacity of an Employee, a Director or a Consultant.  The Optionee’s Service shall not be deemed tohave terminated merely because of a change in the capacity in which theOptionee renders Service to the Participating Company Group or a change in theParticipating Company for which the Optionee renders such Service, providedthat there is no interruption or termination of the Optionee’s Service.  The Optionee’s Service shall be deemed tohave terminated either upon an actual termination of Service or upon thecorporation for which the Optionee performs Service ceasing to be aParticipating Company.

                                        (s)         “**Stock**”means the common stock, par value $0.001, of the Company, as adjusted from timeto time in accordance with Section 4.2.

                                        (t)         “**SubsidiaryCorporation**” means any present or future “subsidiary corporation” ofthe Company, as defined in Section 424(f) of the Code.

                           2.2        ***Construction***.  Captions and titles contained herein are for convenience only andshall not affect the meaning or interpretation of any provision of thePlan.  Except when otherwise indicatedby the context, the singular shall include the plural, the plural shall includethe singular, and use of the term “or” shall include the conjunctive as well asthe disjunctive.

             3.          **Administration**.

                           3.1        ***Administration by the Board***.  The Plan shall be administered by the Board,including any duly appointed Committee of the Board.  All questions of interpretation of the Plan or of any Optionshall be determined by the Board, and such determinations shall be final andbinding upon all persons having an interest in the Plan or such Option.  Any officer of a Participating Company shallhave the authority to act on behalf of the Company with respect to any matter,right, obligation, determination or election which is the responsibility of orwhich is allocated to the Company herein, provided the officer has apparentauthority with respect to such matter, right, obligation, determination orelection.

                           3.2        ***Limitations on Authority of the Board***.  Notwithstanding any other provision hereinto the contrary, the Board shall have no authority, discretion, or power toselect the Outside Directors who will receive Options, to set the exerciseprice of the Options, to determine the number of shares of Stock to be subjectto an Option or the time at which an Option shall be granted, to establish theduration of an Option, or to alter any other terms or conditions specified inthe Plan, except in the sense of administering the Plan subject to theprovisions of the Plan.

             4.          **SharesSubject to Plan**.

                           4.1        ***Maximum Number of Shares Issuable***.  Subject to adjustment as provided inSection 4.2, the maximum aggregate number of shares of Stock that may beissued under the Plan shall be three hundred thousand (300,000) and shallconsist of authorized but unissued shares or reacquired shares of Stock or anycombination thereof.  If an outstandingOption for any reason expires or is terminated or canceled or shares of Stockacquired, subject to repurchase, upon the exercise of an Option are repurchasedby the Company, the shares of Stock allocable to the unexercised portion ofsuch Option, or such repurchased shares of Stock, shall again be available forissuance under the Plan.

                           4.2        ***Adjustments for Changes in Capital Structure***.  In the event of any stock dividend, stocksplit, reverse stock split, recapitalization, combination, reclassification orsimilar change in the capital structure of the Company, appropriate adjustmentsshall be made in the number and class of shares subject to the Plan, to the“Initial Option” and “Annual Option” (as defined in Section 6.1), and toany outstanding Options, and in the exercise price of any outstandingOptions.  If a majority of the shareswhich are of the same class as the shares that are subject to outstandingOptions are exchanged for, converted into, or otherwise become (whether or notpursuant to an Ownership Change Event as defined in Section 8.1) shares ofanother corporation (the “**New Shares**”),the Board may unilaterally amend the outstanding Options to provide that suchOptions are exercisable for New Shares. In the event of any such amendment, the number of shares subject to, andthe exercise price of, the outstanding Options shall be adjusted in a fair andequitable manner as determined by the Board, in its sole discretion.  Notwithstanding the foregoing, anyfractional share resulting from an adjustment pursuant to this Section 4.2shall be rounded down to the nearest whole number, and in no event may theexercise price of any Option be decreased to an amount less than the par value,if any, of the stock subject to the Option.

             5.          Eligibility and Type of Options.

                           5.1        ***Persons Eligible for Options***.  An Option shall be granted only to a personwho, at the time of grant, is an Outside Director.

                           5.2        ***Options Authorized***.  Options shall be nonstatutory stock options; that is, optionswhich are not treated as incentive stock options within the meaning ofSection 422(b) of the Code.

             6.          **Termsand Conditions of Options**. Options shall be evidenced by Option Agreements specifying the number ofshares of Stock covered thereby, in such form as the Board shall from time totime establish.  Option Agreements mayincorporate all or any of the terms of the Plan by reference and shall complywith and be subject to the following terms and conditions:

                           6.1        ***Automatic Grant of Options***.  Subject to execution by an Outside Directorof the appropriate Option Agreement, Options shall be granted automatically andwithout further action of the Board, as follows:

                                        (a)         **InitialOption**.  Each person who is(i) an Outside Director on the Effective Date, or (ii) first elected orappointed as an Outside Director after the Effective Date shall be granted anOption to purchase twenty thousand (20,000) shares of Stock on the EffectiveDate or the date of such initial election or appointment, respectively (an “**Initial Option**”).  Notwithstanding anything herein to the contrary, a Director ofthe Company who previously did not qualify as an Outside Director shall notreceive an Initial Option in the event that such Director subsequently becomesan Outside Director.

                                        (b)        **AnnualOption**.  Each OutsideDirector (including any Director of the Company who previously did not qualifyas an Outside Director but who subsequently becomes an Outside Director) shallbe granted, on the date immediately following the date of each annual meetingof the stockholders of the Company (an “**AnnualMeeting**”) following which such person remains an Outside Director,an Option to purchase four thousand eight hundred (4,800) shares of Stock (an “**Annual Option**”).  Notwithstanding the foregoing, an Outside Director who has notserved continuously as a Director of the Company for at least six (6) months asof the date immediately following such Annual Meeting shall not receive anAnnual Option on such date.

                                        (c)         **Rightto Decline Option**. Notwithstanding the foregoing, any person may elect not to receive anOption by delivering written notice of such election to the Board no later thanthe day prior to the date such Option would otherwise be granted.  A person so declining an Option shallreceive no payment or other consideration in lieu of such declined Option.  A person who has declined an Option mayrevoke such election by delivering written notice of such revocation to theBoard no later than the day prior to the date such Option would be grantedpursuant to Section 6.1(a) or (b), as the case may be.

                           6.2        ***Exercise Price***.  The exercise price per share of Stock subject to an Option shallbe the Fair Market Value of a share of Stock on the date the Option is granted.

                           6.3        ***Exercise Period***.  Each Option shall terminate and cease to be exercisable on thedate ten (10) years after the date of grant of the Option unless earlierterminated pursuant to the terms of the Plan or the Option Agreement.

                           6.4        ***Right to Exercise Options***.

                                        (a)         **InitialOption**.  Except as otherwiseprovided in the Plan or in the Option Agreement, an Initial Option shall (i)first become exercisable on the date which is one (1) year after the date onwhich the Initial Option was granted (the “**InitialOption Vesting Date**”); and (ii) be exercisable on and after theInitial Option Vesting Date and prior to the termination thereof in an amountequal to the number of shares of Stock initially subject to the Initial Optionmultiplied by the Vested Ratio as set forth below, less the number of sharespreviously acquired upon exercise thereof. The Vested Ratio described in the preceding sentence shall be determinedas follows:

                                                                                                                                                                

|   |                                                                                                                                                                       | **Vested  Ratio** |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|
|   |                                                                                                                                                                       | ****              |
|   | Prior  to Initial Option Vesting Date                                                                                                                                      | 0                 |
|   | On  Initial Option Vesting Date,  provided the Optionee’s Service  is continuous from the date of grant  of the Initial Option until the  Initial Option Vesting Date | 1/4               |
|   |                                                                                                                                                                       |              |
|   | Plus                                                                                                                                                                       |              |
|   | For  each full year of  of the Optionee’s continuous  Service from the Initial Option  Vesting Date until the Vested  Ratio equals 1/1, an additional                 | 1/4               |

                                        (b)        **AnnualOption**.  Except as otherwiseprovided in the Plan or in the Option Agreement, an Annual Option shall firstbecome exercisable on the date which is one (1) year after the date on whichthe Annual Option was granted (the “**AnnualOption Vesting Date**”), provided the Optionee’s Service is continuousfrom the date of grant of the Annual Option until the Annual Option VestingDate.  The Annual Option shall beexercisable on and after the Annual Option Vesting Date and prior to thetermination thereof in an amount equal to the number of shares of Stockinitially subject to the Annual Option, less the number of shares previouslyacquired upon exercise thereof.

                           6.5        ***Payment of Exercise Price***.

                                        (a)         **Formsof Consideration Authorized.** Except as otherwise provided below, payment of the exercise price forthe number of shares of Stock being purchased pursuant to any Option shall bemade (i) in cash, by check, or cash equivalent, (ii) by tender to theCompany of shares of Stock owned by the Optionee having a Fair Market Value notless than the exercise price, (iii) by the assignment of the proceeds of asale or loan with respect to some or all of the shares being acquired upon theexercise of the Option (including, without limitation, through an exercisecomplying with the provisions of Regulation T as promulgated from time totime by the Board of Governors of the Federal Reserve System) (a “**Cashless Exercise**”), or (iv) by anycombination thereof.

                                        (b)        **Tenderof Stock.**  Notwithstandingthe foregoing, an Option may not be exercised by tender to the Company ofshares of Stock to the extent such tender of Stock would constitute a violationof the provisions of any law, regulation or agreement restricting theredemption of the Company’s stock. Unless otherwise provided by the Board, an Option may not be exercisedby tender to the Company of shares of Stock unless such shares either have beenowned by the Optionee for more than six (6) months or were not acquired,directly or indirectly, from the Company.

                                        (c)         **CashlessExercise.**  The Companyreserves, at any and all times, the right, in the Company’s sole and absolutediscretion, to establish, decline to approve or terminate any program orprocedures for the exercise of Options by means of a Cashless Exercise.

                           6.6        ***Tax Withholding.***  The Company shall have the right, but not the obligation, todeduct from the shares of Stock issuable upon the exercise of an Option, or toaccept from the Optionee the tender of, a number of whole shares of Stockhaving a Fair Market Value equal to all or any part of the federal, state,local and foreign taxes, if any, required by law to be withheld by theParticipating Company Group with respect to such Option or the shares acquiredupon exercise thereof.  Alternatively orin addition, in its sole discretion, the Company shall have the right torequire the Optionee to make adequate provision for any such tax withholdingobligations of the Participating Company Group arising in connection with theOption or the shares acquired upon exercise thereof.  The Company shall have no obligation to deliver shares of Stockuntil the Participating Company Group’s tax withholding obligations have beensatisfied.

             7.          **StandardForm of Option Agreement**.

                           7.1        ***Initial Option***.  Unless otherwise provided for by the Board at the time an InitialOption is granted, each Initial Option shall comply with and be subject to theterms and conditions set forth in the form of Nonstatutory Stock Option Agreementfor Outside Directors (Initial Option) adopted by the Board concurrently withits adoption of the Plan and as amended from time to time.

                           7.2        ***Annual Option***.  Unless otherwise provided for by the Board at the time an AnnualOption is granted, each Annual Option shall comply with and be subject to theterms and conditions set forth in the form of Nonstatutory Stock OptionAgreement for Outside Directors (Annual Option) adopted by the Boardconcurrently with its adoption of the Plan and as amended from time to time.

                           7.3        ***Authority to Vary Terms***.  Subject to the limitations set forth inSection 3.2, the Board shall have the authority from time to time to varythe terms of any of the standard forms of Option Agreement described in thisSection 7 either in connection with the grant or amendment of anindividual Option or in connection with the authorization of a new standardform or forms; provided, however, that the terms and conditions of any suchnew, revised or amended standard form or forms of Option Agreement are notinconsistent with the terms of the Plan. Such authority shall include, but not by way of limitation, theauthority to grant Options which are immediately exercisable subject to theCompany’s right to repurchase any unvested shares of Stock acquired by theOptionee upon the exercise of an Option in the event such Optionee’s Service isterminated for any reason.  In no event,however, shall the Board be permitted to vary the terms of any standard form ofOption Agreement if such change would cause the Plan to cease to qualify as aformula plan pursuant to Rule 16b-3 at any such time as any class of equitysecurity of the Company is registered pursuant to Section 12 of theExchange Act.

             8.          **Transferof Control**.

                           8.1        ***Definitions***.

                                        (a)         An “**OwnershipChange Event**” shall be deemed to have occurred if any of thefollowing occurs with respect to the Company:

                                                     (i)          the direct or indirect sale orexchange in a single or series of related transactions by the stockholders ofthe Company of more than fifty percent (50%) of the voting stock of theCompany;

                                                     (ii)         a merger or consolidation in which theCompany is a party;

                                                     (iii)        the sale, exchange, or transfer of allor substantially all of the assets of the Company; or

                                                     (iv)       a liquidation or dissolution of theCompany.

                                        (b)        A “**Transferof Control**” shall mean an Ownership Change Event or a series ofrelated Ownership Change Events (collectively, the “**Transaction**”) wherein the stockholders of the Companyimmediately before the Transaction do not retain immediately after theTransaction, in substantially the same proportions as their ownership of sharesof the Company’s voting stock immediately before the Transaction, direct orindirect beneficial ownership of more than fifty percent (50%) of the totalcombined voting power of the outstanding voting stock of the Company or thecorporation or corporations to which the assets of the Company were transferred(the “**Transferee Corporation**(s)”),as the case may be.  For purposes of thepreceding sentence, indirect beneficial ownership shall include, withoutlimitation, an interest resulting from ownership of the voting stock of one ormore corporations which, as a result of the Transaction, own the Company or theTransferee Corporation(s), as the case may be, either directly or through oneor more subsidiary corporations.  TheBoard shall have the right to determine whether multiple sales or exchanges ofthe voting stock of the Company or multiple Ownership Change Events arerelated, and its determination shall be final, binding and conclusive.

                           8.2        ***Effect of Transfer of Control on Options.***  In the event of a Transfer of Control, thesurviving, continuing, successor, or purchasing corporation or parentcorporation thereof, as the case may be (the “**AcquiringCorporation**”), may either assume the Company’s rights andobligations under outstanding Options or substitute for outstanding Optionssubstantially equivalent options for the Acquiring Corporation’s stock.  In the event the Acquiring Corporationelects not to assume or substitute for outstanding Options in connection with aTransfer of Control, any unexercisable or unvested portion of the outstandingOptions shall be immediately exercisable and vested in full as of the date ten(10) days prior to the date of the Transfer of Control.  The exercise or vesting of any Option thatwas permissible solely by reason of this Section 8.2 shall be conditionedupon the consummation of the Transfer of Control.  Any Options which are neither assumed or substituted for by theAcquiring Corporation in connection with the Transfer of Control nor exercisedas of the date of the Transfer of Control shall terminate and cease to beoutstanding effective as of the date of the Transfer of Control.  Notwithstanding the foregoing, sharesacquired upon exercise of an Option prior to the Transfer of Control and anyconsideration received pursuant to the Transfer of Control with respect to suchshares shall continue to be subject to all applicable provisions of the OptionAgreement evidencing such Option except as otherwise provided in such OptionAgreement.  Furthermore, notwithstandingthe foregoing, if the corporation the stock of which is subject to theoutstanding Options immediately prior to an Ownership Change Event described inSection 8.1(a)(i) constituting a Transfer of Control is the surviving orcontinuing corporation and immediately after such Ownership Change Event lessthan fifty percent (50%) of the total combined voting power of its voting stockis held by another corporation or by other corporations that are members of anaffiliated group within the meaning of Section 1504(a) of the Code withoutregard to the provisions of Section 1504(b) of the Code, the outstandingOptions shall not terminate.

             9.          **Nontransferabilityof Options**.  During thelifetime of the Optionee, an Option shall be exercisable only by the Optioneeor the Optionee’s guardian or legal representative.  No Option shall be assignable or transferable by the Optionee,except by will or by the laws of descent and distribution.

             10.        **Indemnification**.  In addition to such other rights ofindemnification as they may have as members of the Board or officers oremployees of the Participating Company Group, members of the Board and anyofficers or employees of the Participating Company Group to whom authority toact for the Board is delegated shall be indemnified by the Company against allreasonable expenses, including attorneys’ fees, actually and necessarilyincurred in connection with the defense of any action, suit or proceeding, orin connection with any appeal therein, to which they or any of them may be aparty by reason of any action taken or failure to act under or in connectionwith the Plan, or any right granted hereunder, and against all amounts paid by themin settlement thereof (provided such settlement is approved by independentlegal counsel selected by the Company) or paid by them in satisfaction of ajudgment in any such action, suit or proceeding, except in relation to mattersas to which it shall be adjudged in such action, suit or proceeding that suchperson is liable for gross negligence, bad faith or intentional misconduct induties; provided, however, that within sixty (60) days after the institution ofsuch action, suit or proceeding, such person shall offer to the Company, inwriting, the opportunity at its own expense to handle and defend the same.

             11.        **Terminationor Amendment of Plan**. The Board may terminate or amend the Plan at any time.  However, subject to changes in the law orother legal requirements that would permit otherwise, without the approval ofthe Company’s stockholders, there shall be (a) no increase in the totalnumber of shares of Stock that may be issued under the Plan (except byoperation of the provisions of Section 4.2), and (b) no expansion inthe class of persons eligible to receive Options.  Furthermore, to the extent required by Rule 16b-3, provisions ofthe Plan addressing eligibility to participate in the Plan and the amount,price and timing of Options shall not be amended more than once every six (6)months, other than to comport with changes in the Code, the Employee RetirementIncome Security Act of 1974, as amended, or the rules thereunder.  In any event, no termination or amendment ofthe Plan may adversely affect any then outstanding Option, or any unexercisedportion thereof, without the consent of the Optionee, unless such terminationor amendment is necessary to comply with any applicable law or governmentregulation.

             IN WITNESS WHEREOF, the undersigned Secretary of theCompany certifies that the foregoing sets forth the Zoran Corporation 1995Outside Directors Stock Option Plan was duly adopted and amended by the Boardthrough June 18, 2000.

 

|   | ___________________________________ |
|--------|-------------------------------------|
|   | Secretary                           |

PLAN HISTORY

 
| October 13, 1995 | Board adopts Plan, with an initial reserve of  200,000 shares.                                                                                                              |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                        |
| February 9, 1996 | Date of notice of stockholder action by  consent without meeting, approving Plan with an initial reserve of 200,000  shares (post the 1:3 reverse stock split on 12/14/95). |
|             |                                                                                                                                                                        |
| June 18, 2000    | Board amends Plan to increase share reserve by  100,000 shares to 300,000 shares.                                                                                           |
|             |                                                                                                                                                                        |
| July __, 2000    | Stockholders approve share reserve increase to  300,000 shares.                                                                                                             |

 

** **

** **

** **

**STANDARD FORM OF**

**ZORAN CORPORATION**

**NONSTATUTORY STOCK OPTION AGREEMENT**

**FOR OUTSIDE DIRECTORS**

**(INITIAL OPTION)**

 

**ZORAN CORPORATION**

**NONSTATUTORY STOCK OPTION AGREEMENT**

**FOR OUTSIDE DIRECTORS**

**(INITIAL OPTION)**

 

             THISNONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS (INITIAL OPTION) (the“**Option Agreement**”) is made andentered into as of the Date of Option Grant, by and between Zoran Corporationand ___________________________ (the “**Optionee**”).

The Company has granted to the Optioneean option to purchase certain shares of Stock, upon the terms and conditionsset forth in this Option Agreement (the “**Option**”).

             1.          **Definitionsand Construction**.

                           1.1        ***Definitions***. Whenever used herein, the following terms shall have their respectivemeanings set forth below:

                                        (a)         “**Dateof Option Grant**” means _________________ , 200_.

                                        (b)        “**Numberof Option Shares**” means twenty thousand (20,000) shares ofStock, as adjusted from time to time pursuant to Section 9.

                                        (c)         “**ExercisePrice**” means $_________________ per share of Stock, as adjusted fromtime to time pursuant to Section 9.

                                        (d)        “**InitialExercise Date**” means the Initial Vesting Date.

                                        (e)         “**InitialVesting Date**” means the date occurring one (1) year after the Dateof Option Grant.

                                        (f)         “**VestedRatio**” means, on any relevant date, the ratio determined as follows:
|   |                                                                                                                                           | Vested Ratio |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
|   |                                                                                                                                           |              |
|   | Prior  to Initial Vesting Date                                                                                                                 | 0            |
|   |                                                                                                                                           |         |
|   | On  Initial Vesting Date, provided the  Optionee’s Service is continuous from the  Date of Option Grant until the Initial Vesting Date    | 1/4          |
|   |                                                                                                                                           |         |
|   | Plus                                                                                                                                           |         |
|   |                                                                                                                                           |         |
|   | For  each full year of the Optionee’s continuous  Service from the Initial Vesting Date  until the Vested Ratio equals 1/1, an additional | 1/4          |

**                                       **(g)**       **“**Option Expiration Date**” means the date ten (10) years after the Date ofOption Grant.

                                        (h)        “**Board**”means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administerthe Plan, “Board” shall also mean such Committee(s).

                                        (i)          “**Code**”means the Internal Revenue Code of 1986, as amended, and any applicableregulations promulgated thereunder.

                                        (j)          “**Committee**”means a committee of the Board duly appointed to administer the Plan and havingsuch powers as shall be specified by the Board.  Unless the powers of the Committee have been specificallylimited, the Committee shall have all of the powers of the Board granted in thePlan, including, without limitation, the power to amend or terminate the Planat any time, subject to the terms of the Plan and any applicable limitationsimposed by law.

                                        (k)         “**Company**”means Zoran Corporation, a Delaware corporation, or any successor corporationthereto.

                                        (l)          “**Consultant**”means any person, including an advisor, engaged by a Participating Company torender services other than as an Employee or a Director.

                                        (m)        “**Director**”means a member of the Board or of the board of directors of any otherParticipating Company.

                                        (n)        “**Disability**”means the inability of the Optionee, in the opinion of a qualified physicianacceptable to the Company, to perform the major duties of the Optionee’sposition with the Participating Company Group because of the sickness or injuryof the Optionee.

                                        (o)        “**Employee**”means any person treated as an employee (including an officer or a Director whois also treated as an employee) in the records of a Participating Company;provided, however, that neither service as a Director nor payment of adirector’s fee shall be sufficient to constitute employment for purposes of thePlan.

                                        (p)        “**ExchangeAct**” means the Securities Exchange Act of 1934, as amended.

                                        (q)        “**FairMarket Value**” means, as of any date, if there is then a publicmarket for the Stock, the closing price of the Stock (or the mean of theclosing bid and asked prices of the Stock if the Stock is so reported instead)as reported on the National Association of Securities Dealers Automated Quotation(“**NASDAQ**”) System, the NASDAQNational Market System or such other national or regional securities exchangeor market system constituting the primary market for the Stock.  If the relevant date does not fall on a dayon which the Stock is trading on NASDAQ, the NASDAQ National Market System orother national or regional securities exchange or market system, the date onwhich the Fair Market Value shall be established shall be the last day on whichthe Stock was so traded prior to the relevant date.  If there is then no public market for the Stock, the Fair MarketValue on any relevant date shall be as determined by the Board without regardto any restriction other than a restriction which, by its terms, will neverlapse.

                                        (r)         “**ParentCorporation**” means any present or future “parent corporation” of theCompany, as defined in Section 424(e) of the Code.

                                        (s)         “**ParticipatingCompany**” means the Company or any Parent Corporation or SubsidiaryCorporation.

                                        (t)         “**ParticipatingCompany Group**” means, at any point in time, all corporationscollectively which are then Participating Companies.

                                        (u)        “**Plan**”means the Zoran Corporation 1995 Outside Directors Stock Option Plan.

                                        (v)        “**Retirement**”means a termination of the Optionee’s Service as a result of either of thefollowing, provided that the Optionee has served continuously on the Board forat least 2 years: (i) the Optionee’s resignation from the Board or (ii) theexpiration of the Optionee’s term as a Director of the Company after theOptionee has declined to stand for reelection.

                                        (w)        “**Rule16b-3**” means Rule 16b–3 as promulgated under the ExchangeAct, as amended from time to time, or any successor rule or regulation.

                                        (x)         “**SecuritiesAct**” means the Securities Act of 1933, as amended.

                                        (y)        “**Service**”means the Optionee’s service with the Participating Company Group, whether inthe capacity of an Employee, a Director or a Consultant.  The Optionee’s Service shall not be deemedto have terminated merely because of a change in the capacity in which theOptionee renders Service to the Participating Company Group or a change in theParticipating Company for which the Optionee renders such Service, providedthat there is no interruption or termination of the Optionee’s Service.  The Optionee’s Service shall be deemed tohave terminated either upon an actual termination of Service or upon thecorporation for which the Optionee performs Service ceasing to be aParticipating Company.

                                        (z)         “**Stock**”means the common stock, par value $0.001, of the Company, as adjusted from timeto time in accordance with Section 9.

                                        (aa)       “**SubsidiaryCorporation**” means any present or future “subsidiary corporation” ofthe Company, as defined in Section 424(f) of the Code.

                           1.2        ***Construction.***  Captions and titles contained herein are for convenience only andshall not affect the meaning or interpretation of any provision of this OptionAgreement.  Except when otherwiseindicated by the context, the singular shall include the plural, the pluralshall include the singular, and the term “or” shall include the conjunctive aswell as the disjunctive.

             2.          **TaxStatus of the Option**. This Option is intended to be a nonstatutory stock option and shall notbe treated as an incentive stock option within the meaning ofSection 422(b) of the Code.

             3.          **Administration**.  All questions of interpretation concerningthis Option Agreement shall be determined by the Board, including any dulyappointed Committee of the Board.  Alldeterminations by the Board shall be final and binding upon all persons havingan interest in the Option.  Any officerof a Participating Company shall have the authority to act on behalf of theCompany with respect to any matter, right, obligation, or election which is theresponsibility of or which is allocated to the Company herein, provided theofficer has apparent authority with respect to such matter, right, obligation,or election.

             4.          **Exerciseof the Option**.

                           4.1        ***Right to Exercise***.

                                        (a)         Except as otherwise provided herein,the Option shall be exercisable on and after the Initial Exercise Date andprior to the termination of the Option (as provided in Section 6) in anamount not to exceed the Number of Option Shares multiplied by the Vested Ratioless the number of shares previously acquired upon exercise of the Option.  In no event shall the Option be exercisablefor more shares than the Number of Option Shares.

                                        (b)        Notwithstanding the foregoing, in theevent that the adoption of the Plan or any amendment of the Plan is subject tothe approval of the Company’s stockholders in order for the Plan or the grantof the Option to comply with the requirements of Rule 16b-3, the Optionshall not be exercisable prior to such stockholder approval.

                           4.2        ***Method of Exercise***.  Exercise of the Option shall be by written notice to the Companywhich must state the election to exercise the Option, the number of wholeshares of Stock for which the Option is being exercised and such otherrepresentations and agreements as to the Optionee’s investment intent withrespect to such shares as may be required pursuant to the provisions of thisOption Agreement.  The written noticemust be signed by the Optionee and must be delivered in person, by certified orregistered mail, return receipt requested, by confirmed facsimile transmission,or by such other means as the Company may permit, to the Chief FinancialOfficer of the Company, or other authorized representative of the ParticipatingCompany Group, prior to the termination of the Option as set forth inSection 6, accompanied by full payment of the aggregate Exercise Price forthe number of shares of Stock being purchased. The Option shall be deemed to be exercised upon receipt by the Companyof such written notice and the aggregate Exercise Price.

                           4.3        ***Payment of Exercise Price****.*

                                        (a)         **Formsof Consideration Authorized.** Except as otherwise provided below, payment of the aggregate ExercisePrice for the number of shares of Stock for which the Option is being exercisedshall be made (i) in cash, by check, or cash equivalent, (ii) bytender to the Company of whole shares of Stock owned by the Optionee having aFair Market Value not less than the aggregate Exercise Price, (iii) by means ofa Cashless Exercise, as defined in Section 4.3(c), or (iv) by anycombination of the foregoing.

                                        (b)        **Tenderof Stock.**  Notwithstandingthe foregoing, the Option may not be exercised by tender to the Company ofshares of Stock to the extent such tender of Stock would constitute a violationof the provisions of any law, regulation or agreement restricting theredemption of the Company’s stock.  TheOption may not be exercised by tender to the Company of shares of Stock unlesssuch shares either have been owned by the Optionee for more than six (6) monthsor were not acquired, directly or indirectly, from the Company.

                                        (c)         **CashlessExercise.**  A “**Cashless Exercise**” means the assignment ina form acceptable to the Company of the proceeds of a sale or loan with respectto some or all of the shares of Stock acquired upon the exercise of the Optionpursuant to a program or procedure approved by the Company (including, withoutlimitation, through an exercise complying with the provisions ofRegulation T as promulgated from time to time by the Board of Governors ofthe Federal Reserve System).  TheCompany reserves, at any and all times, the right, in the Company’s sole andabsolute discretion, to decline to approve or terminate any such program orprocedure.

                           4.4        ***Tax Withholding.***  At the time the Option is exercised, in whole or in part, or atany time thereafter as requested by the Company, the Optionee agrees to makeadequate provision for any sums required to satisfy the federal, state, localand foreign tax withholding obligations of the Participating Company Group, ifany, which arise in connection with the Option, including, without limitation,obligations arising upon (i) the exercise, in whole or in part, of theOption, (ii) the transfer, in whole or in part, of any shares acquiredupon exercise of the Option, or (iii) the lapsing of any restriction withrespect to any shares acquired upon exercise of the Option.  The Optionee is cautioned that the Option isnot exercisable unless the tax withholding obligations of the ParticipatingCompany Group are satisfied. Accordingly, the Optionee may not be able to exercise the Option whendesired even though the Option is vested, and the Company shall have noobligation to issue a certificate for such shares.

                           4.5        ***Certificate Registration.***  Except in the event the Exercise Price ispaid by means of a Cashless Exercise, the certificate for the shares as towhich the Option is exercised shall be registered in the name of the Optionee,or, if applicable, the heirs of the Optionee.

                           4.6        ***Restrictions on Grant of the Option and Issuance of Shares.***  The grant of the Option and the issuance ofshares of Stock upon exercise of the Option shall be subject to compliance withall applicable requirements of federal, state or foreign law with respect tosuch securities.  The Option may not beexercised if the issuance of shares of Stock upon exercise would constitute aviolation of any applicable federal, state or foreign securities laws or otherlaw or regulations or the requirements of any stock exchange or market systemupon which the Stock may then be listed. In addition, the Option may not be exercised unless (i) aregistration statement under the Securities Act shall at the time of exerciseof the Option be in effect with respect to the shares issuable upon exercise ofthe Option or (ii) in the opinion of legal counsel to the Company, theshares issuable upon exercise of the Option may be issued in accordance withthe terms of an applicable exemption from the registration requirements of theSecurities Act.  THE OPTIONEE ISCAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONSARE SATISFIED.  ACCORDINGLY, THEOPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THEOPTION IS VESTED.  The inability of theCompany to obtain from any regulatory body having jurisdiction the authority,if any, deemed by the Company’s legal counsel to be necessary to the lawfulissuance and sale of any shares subject to the Option shall relieve the Companyof any liability in respect of the failure to issue or sell such shares as towhich such requisite authority shall not have been obtained.  As a condition to the exercise of theOption, the Company may require the Optionee to satisfy any qualifications thatmay be necessary or appropriate, to evidence compliance with any applicable lawor regulation and to make any representation or warranty with respect theretoas may be requested by the Company.

                           4.7        ***Fractional Shares.*** The Company shall not be required to issue fractional shares uponthe exercise of the Option.

             5.          **Nontransferabilityof the Option**.  The Optionmay be exercised during the lifetime of the Optionee only by the Optionee orthe Optionee’s guardian or legal representative and may not be assigned ortransferred in any manner except by will or by the laws of descent anddistribution.  Following the death ofthe Optionee, the Option, to the extent provided in Section 7, may beexercised by the Optionee’s legal representative or by any person empowered todo so under the deceased Optionee’s will or under the then applicable laws ofdescent and distribution.

             6.          **Terminationof the Option**.  TheOption shall terminate and may no longer be exercised on the first to occur of(a) the Option Expiration Date, (b) the last date for exercising theOption following termination of the Optionee’s Service as described inSection 7, or (c) a Transfer of Control to the extent provided inSection 8.

             7.          **Effectof Termination of Service.**

                           7.1        ***Option Exercisability.***

                                        (a)         **Disability.**  If the Optionee’s Service with theParticipating Company Group is terminated because of the Disability of theOptionee, the Option, to the extent unexercised and exercisable on the date onwhich the Optionee’s Service terminated, may be exercised by the Optionee (orthe Optionee’s guardian or legal representative) at any time prior to the expirationof one (1) year after the date on which the Optionee’s Service terminated,but in any event no later than the Option Expiration Date; provided, however,that if the Optionee has served continuously on the Board for at least 2 yearsprior to such termination of Service, the Option, to the extent unexercised andexercisable on the date on which the Optionee's Service terminated, may beexercised by the Optionee (or the Optionee’s guardian or legal representative)at any time prior to the Option Expiration Date.

                                        (b)        **Death.**  If the Optionee’s Service with theParticipating Company Group is terminated because of the death of the Optionee,the Option, to the extent unexercised and exercisable on the date on which theOptionee’s Service terminated, may be exercised by the Optionee (or theOptionee’s legal representative or other person who acquired the right toexercise the Option by reason of the Optionee’s death) at any time prior to theexpiration of one (1) year after the date on which the Optionee’s Serviceterminated, but in any event no later than the Option Expiration Date;provided, however, that if the Optionee has served continuously on the Boardfor at least 2 years prior to such termination of Service, the Option, to theextent unexercised and exercisable on the date on which the Optionee’s Serviceterminated, may be exercised by the Optionee (or the Optionee’s legalrepresentative or other person who acquired the right to exercise the Option byreason of the Optionee’s death) at any time prior to the Option ExpirationDate.  The Optionee’s Service shall bedeemed to have terminated on account of death if the Optionee dies within three(3) months after the Optionee’s termination of Service.

                                        (c)         **Retirement.** If the Optionee’s Servicewith the Participating Company Group is terminated because of the Retirement ofthe Optionee, the Option, to the extent unexercised and exercisable on the dateon which the Optionee’s Service terminated, may be exercised at any time priorto the Option Expiration Date.

                                        (d)        **OtherTermination of Service.**  Ifthe Optionee’s Service with the Participating Company Group terminates for anyreason, except Disability, death or Retirement, the Option, to the extentunexercised and exercisable by the Optionee on the date on which the Optionee’sService terminated, may be exercised by the Optionee within three (3) monthsafter the date on which the Optionee’s Service terminated, but in any event nolater than the Option Expiration Date.

                           7.2        ***Extension if Exercise Prevented by Law.***  Notwithstanding the foregoing, if theexercise of the Option within the applicable time periods set forth inSection 7.1 is prevented by the provisions of Section 4.6, the Optionshall remain exercisable until three (3) months after the date the Optionee isnotified by the Company that the Option is exercisable, but in any event nolater than the Option Expiration Date.

                           7.3        ***Extension if Optionee Subject to Section 16(b).***  Notwithstanding the foregoing, if a sale,within the applicable time periods set forth in Section 7.1, of sharesacquired upon the exercise of the Option would subject the Optionee to suitunder Section 16(b) of the Exchange Act, the Option shall remainexercisable until the earliest to occur of (i) the tenth (10th) dayfollowing the date on which a sale of such shares by the Optionee would nolonger be subject to such suit, (ii) the one hundred and ninetieth (190th)day after the Optionee’s termination of Service, or (iii) the OptionExpiration Date.

             8.          **OwnershipChange and Transfer of Control**.

                           8.1        ***Definitions.***

                                        (a)         An “**OwnershipChange Event**” shall be deemed to have occurred if any of thefollowing occurs with respect to the Company:

                                                     (i)          the direct or indirect sale orexchange in a single or series of related transactions by the stockholders ofthe Company of more than fifty percent (50%) of the voting stock of theCompany;

                                                     (ii)         a merger or consolidation in which theCompany is a party;

                                                     (iii)        the sale, exchange, or transfer of allor substantially all of the assets of the Company; or

                                                     (iv)       a liquidation or dissolution of theCompany.

                                        (b)        A “**Transferof Control**” shall mean an Ownership Change Event or a series ofrelated Ownership Change Events (collectively, the “**Transaction**”) wherein the stockholders of the Companyimmediately before the Transaction do not retain immediately after theTransaction, in substantially the same proportions as their ownership of sharesof the Company’s voting stock immediately before the Transaction, direct orindirect beneficial ownership of more than fifty percent (50%) of the totalcombined voting power of the outstanding voting stock of the Company or thecorporation or corporations to which the assets of the Company were transferred(the “**Transferee Corporation**(s)”),as the case may be.  For purposes of thepreceding sentence, indirect beneficial ownership shall include, withoutlimitation, an interest resulting from ownership of the voting stock of one ormore corporations which, as a result of the Transaction, own the Company or theTransferee Corporation(s), as the case may be, either directly or through oneor more subsidiary corporations.  TheBoard shall have the right to determine whether multiple sales or exchanges ofthe voting stock of the Company or multiple Ownership Change Events arerelated, and its determination shall be final, binding and conclusive.

                           8.2        ***Effect of Transfer of Control on Option.***  In the event of a Transfer of Control, thesurviving, continuing, successor, or purchasing corporation or parent corporationthereof, as the case may be (the “**AcquiringCorporation**”), may either assume the Company’s rights andobligations under the Option or substitute for the Option a substantiallyequivalent option for the Acquiring Corporation’s stock.  In the event the Acquiring Corporationelects not to assume the Company’s rights and obligations under the Option orsubstitute for the Option in connection with the Transfer of Control, anyunexercised portion of the Option shall be immediately exercisable and vested infull as of the date ten (10) days prior to the date of the Transfer ofControl.  Any exercise of the Optionthat was permissible solely by reason of this Section 8.2 shall beconditioned upon the consummation of the Transfer of Control.  The Option shall terminate and cease to beoutstanding effective as of the date of the Transfer of Control to the extentthat the Option is neither assumed or substituted for by the AcquiringCorporation in connection with the Transfer of Control nor exercised as of the dateof the Transfer of Control. Notwithstanding the foregoing, shares acquired upon exercise of theOption prior to the Transfer of Control and any consideration received pursuantto the Transfer of Control with respect to such shares shall continue to be subjectto all applicable provisions of this Option Agreement except as otherwiseprovided herein.  Furthermore,notwithstanding the foregoing, if the corporation the stock of which is subjectto the Option immediately prior to an Ownership Change Event described inSection 8.1(a)(i) constituting a Transfer of Control is the surviving orcontinuing corporation and immediately after such Ownership Change Event lessthan fifty percent (50%) of the total combined voting power of its voting stockis held by another corporation or by other corporations that are members of anaffiliated group within the meaning of Section 1504(a) of the Code withoutregard to the provisions of Section 1504(b) of the Code, the Option shallnot terminate.

             9.          **Adjustmentsfor Changes in Capital Structure**.  In the event of any stock dividend, stock split, reverse stocksplit, recapitalization, combination, reclassification, or similar change inthe capital structure of the Company, appropriate adjustments shall be made inthe number, Exercise Price and class of shares of stock subject to theOption.  If a majority of the shareswhich are of the same class as the shares that are subject to the Option areexchanged for, converted into, or otherwise become (whether or not pursuant toan Ownership Change Event) shares of another corporation (the “**New Shares**”), the Board may unilaterallyamend the Option to provide that the Option is exercisable for New Shares.  In the event of any such amendment, theNumber of Option Shares and the Exercise Price shall be adjusted in a fair andequitable manner, as determined by the Board, in its sole discretion.  Notwithstanding the foregoing, anyfractional share resulting from an adjustment pursuant to this Section 9shall be rounded down to the nearest whole number, and in no event may theExercise Price be decreased to an amount less than the par value, if any, ofthe stock subject to the Option.

             10.        **Rightsas a Stockholder**. The Optionee shall have no rights as a stockholder with respect to anyshares covered by the Option until the date of the issuance of a certificatefor the shares for which the Option has been exercised (as evidenced by theappropriate entry on the books of the Company or of a duly authorized transferagent of the Company).  No adjustmentshall be made for dividends, distributions or other rights for which the recorddate is prior to the date such certificate is issued, except as provided inSection 9.

             11.        **Legends**.  The Company may at any time place legendsreferencing any applicable federal, state or foreign securities lawrestrictions on all certificates representing shares of stock subject to theprovisions of this Option Agreement. The Optionee shall, at the request of the Company, promptly present tothe Company any and all certificates representing shares acquired pursuant tothe Option in the possession of the Optionee in order to carry out theprovisions of this Section.

             12.        **BindingEffect**.  Subject to therestrictions on transfer set forth herein, this Option Agreement shall inure tothe benefit of and be binding upon the parties hereto and their respectiveheirs, executors, administrators, successors and assigns.

             13.        **Terminationor Amendment**.  The Boardmay terminate or amend the Plan or the Option at any time; provided, however,that no such termination or amendment may adversely affect the Option or anyunexercised portion hereof without the consent of the Optionee unless suchtermination or amendment is necessary to comply with any applicable law orgovernment regulation.  No amendment oraddition to this Option Agreement shall be effective unless in writing.

             14.        **IntegratedAgreement**.  This OptionAgreement constitutes the entire understanding and agreement of the Optioneeand the Participating Company Group with respect to the subject mattercontained herein, and there are no agreements, understandings, restrictions,representations, or warranties among the Optionee and the Participating CompanyGroup with respect to such subject matter other than those as set forth or providedfor herein.  To the extent contemplatedherein, the provisions of this Option Agreement shall survive any exercise ofthe Option and shall remain in full force and effect.

             15.        **ApplicableLaw**.  This OptionAgreement shall be governed by the laws of the State of California as such lawsare applied to agreements between California residents entered into and to beperformed entirely within the State of California.
|   | ZORAN  CORPORATION |
|--------|--------------------|
|   |               |
|   | By:                |
|   |                    |
|   | Title:             |
|   |                    |

             TheOptionee represents that the Optionee is familiar with the terms and provisionsof this Option Agreement and hereby accepts the Option subject to all of theterms and provisions thereof.  TheOptionee hereby agrees to accept as binding, conclusive and final all decisionsor interpretations of the Board upon any questions arising under this OptionAgreement.
|   |                       |
|--------|----------------------------|
|   |    OPTIONEE |
|   |                       |
|   |                       |
|   |                       |
| Date:  |                       |
|        |                            |

 

**STANDARD FORM OF**

**ZORAN CORPORATION**

**NONSTATUTORY STOCK OPTION AGREEMENT**

**FOR OUTSIDE DIRECTORS**

**(ANNUAL OPTION)**
**ZORAN CORPORATION**

**NONSTATUTORY STOCK OPTION AGREEMENT**

**FOR OUTSIDE DIRECTORS**

**(ANNUAL OPTION)**

 

             THISNONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS (ANNUAL OPTION) (the“**Option Agreement**”) is made andentered into as of the Date of Option Grant, by and between Zoran Corporationand ___________________________ (the “**Optionee**”).

             TheCompany has granted to the Optionee an option to purchase certain shares ofStock, upon the terms and conditions set forth in this Option Agreement (the “**Option**”).

             1.          **Definitionsand Construction.**

                           1.1        ***Definitions****.*  Whenever used herein, the following termsshall have their respective meanings set forth below:

                                        (a)         “**Dateof Option Grant**” means _________________, 200_.

                                        (b)        “**Numberof Option Shares**” means four thousand eight hundred(4,800) shares of Stock, as adjusted from time to time pursuant toSection 9.

                                        (c)         “**ExercisePrice**” means $_______________ per share of Stock, as adjusted fromtime to time pursuant to Section 9.

                                        (d)        “**OptionExpiration Date**” means the date ten (10) years after the Date of OptionGrant.

                                        (e)         “**Board**”means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administerthe Plan, “Board” shall also mean such Committee(s).

                                        (f)         “**Code**”means the Internal Revenue Code of 1986, as amended, and any applicableregulations promulgated thereunder.

                                        (g)        “**Committee**”means a committee of the Board duly appointed to administer the Plan and havingsuch powers as shall be specified by the Board.  Unless the powers of the Committee have been specificallylimited, the Committee shall have all of the powers of the Board granted in thePlan, including, without limitation, the power to amend or terminate the Planat any time, subject to the terms of the Plan and any applicable limitations imposedby law.

                                        (h)        “**Company**”means Zoran Corporation, a Delaware corporation, or any successor corporationthereto.

                                        (i)          “**Consultant**”means any person, including an advisor, engaged by a Participating Company torender services other than as an Employee or a Director.

                                        (j)          “**Director**”means a member of the Board or of the board of directors of any otherParticipating Company.

                                        (k)         “**Disability**”means the inability of the Optionee, in the opinion of a qualified physicianacceptable to the Company, to perform the major duties of the Optionee’sposition with the Participating Company Group because of the sickness or injuryof the Optionee.

                                        (l)          “**Employee**”means any person treated as an employee (including an officer or a Director whois also treated as an employee) in the records of a Participating Company;provided, however, that neither service as a Director nor payment of adirector’s fee shall be sufficient to constitute employment for purposes of thePlan.

                                        (m)        “**ExchangeAct**” means the Securities Exchange Act of 1934, as amended.

                                        (n)        “**FairMarket Value**” means, as of any date, if there is then a publicmarket for the Stock, the closing price of the Stock (or the mean of theclosing bid and asked prices of the Stock if the Stock is so reported instead)as reported on the National Association of Securities Dealers AutomatedQuotation (“**NASDAQ**”) System, theNASDAQ National Market System or such other national or regional securitiesexchange or market system constituting the primary market for the Stock.  If the relevant date does not fall on a dayon which the Stock is trading on NASDAQ, the NASDAQ National Market System orother national or regional securities exchange or market system, the date onwhich the Fair Market Value shall be established shall be the last day on whichthe Stock was so traded prior to the relevant date.  If there is then no public market for the Stock, the Fair MarketValue on any relevant date shall be as determined by the Board without regardto any restriction other than a restriction which, by its terms, will neverlapse.

                                        (o)        “**ParentCorporation**” means any present or future “parent corporation” of theCompany, as defined in Section 424(e) of the Code.

                                        (p)        “**ParticipatingCompany**” means the Company or any Parent Corporation or SubsidiaryCorporation.

                                        (q)        “**ParticipatingCompany Group**” means, at any point in time, all corporationscollectively which are then Participating Companies.

                                        (r)         “**Plan**”means the Zoran Corporation 1995 Outside Directors Stock Option Plan.

                                        (s)         “**Retirement**”means a termination of the Optionee’s Service as a result of either of thefollowing, provided that the Optionee has served continuously on the Board forat least 2 years: (i) the Optionee’s resignation from the Board or (ii) theexpiration of the Optionee’s term as a Director of the Company after theOptionee has declined to stand for reelection.

                                        (t)         “**Rule16b-3**” means Rule 16b–3 as promulgated under the ExchangeAct, as amended from time to time, or any successor rule or regulation.

                                        (u)        “**SecuritiesAct**” means the Securities Act of 1933, as amended.

                                        (v)        “**Service**”means the Optionee’s service with the Participating Company Group, whether inthe capacity of an Employee, a Director or a Consultant.  The Optionee’s Service shall not be deemedto have terminated merely because of a change in the capacity in which theOptionee renders Service to the Participating Company Group or a change in theParticipating Company for which the Optionee renders such Service, providedthat there is no interruption or termination of the Optionee’s Service.  The Optionee’s Service shall be deemed tohave terminated either upon an actual termination of Service or upon thecorporation for which the Optionee performs Service ceasing to be aParticipating Company.

                                        (w)        “**Stock**”means the common stock, par value $0.001, of the Company, as adjusted from timeto time in accordance with Section 9.

                                        (x)         “**SubsidiaryCorporation**” means any present or future “subsidiary corporation” ofthe Company, as defined in Section 424(f) of the Code.

                           1.2        ***Construction.***  Captions and titles contained herein are for convenience only andshall not affect the meaning or interpretation of any provision of this OptionAgreement.  Except when otherwiseindicated by the context, the singular shall include the plural, the pluralshall include the singular, and the term “or” shall include the conjunctive aswell as the disjunctive.

             2.          **TaxStatus of the Option.** This Option is intended to be a nonstatutory stock option and shall notbe treated as an incentive stock option within the meaning ofSection 422(b) of the Code.

             3.          **Administration.**  All questions of interpretation concerningthis Option Agreement shall be determined by the Board, including any dulyappointed Committee of the Board.  Alldeterminations by the Board shall be final and binding upon all persons havingan interest in the Option.  Any officerof a Participating Company shall have the authority to act on behalf of theCompany with respect to any matter, right, obligation, or election which is theresponsibility of or which is allocated to the Company herein, provided theofficer has apparent authority with respect to such matter, right, obligation,or election.

             4.          **Exerciseof the Option**.

                           4.1        ***Right to Exercise.***

                                        (a)         Except as otherwise provided herein,the Option shall first become exercisable on the date occurring one (1) yearafter the Date of Option Grant (the “**FullVesting Date**”), provided that the Optionee’s Service is continuousfrom the Date of Option Grant to the Full Vesting Date.  The Option shall be exercisable on and afterthe Full Vesting Date and prior to the termination of the Option (as providedin Section 6) in an amount equal to the Number of Option Shares less thenumber of shares previously acquired upon exercise of the Option.  In no event shall the Option be exercisablefor more shares than the Number of Option Shares.

                                        (b)        Notwithstanding the foregoing, in theevent that the adoption of the Plan or any amendment of the Plan is subject tothe approval of the Company’s stockholders in order for the Plan or the grantof the Option to comply with the requirements of Rule 16b-3, the Optionshall not be exercisable prior to such stockholder approval.

                           4.2        ***Method of Exercise.***  Exercise of the Option shall be by written notice to the Companywhich must state the election to exercise the Option, the number of wholeshares of Stock for which the Option is being exercised and such otherrepresentations and agreements as to the Optionee’s investment intent with respectto such shares as may be required pursuant to the provisions of this OptionAgreement.  The written notice must besigned by the Optionee and must be delivered in person, by certified orregistered mail, return receipt requested, by confirmed facsimile transmission,or by such other means as the Company may permit, to the Chief FinancialOfficer of the Company, or other authorized representative of the ParticipatingCompany Group, prior to the termination of the Option as set forth in Section 6,accompanied by full payment of the aggregate Exercise Price for the number ofshares of Stock being purchased.  TheOption shall be deemed to be exercised upon receipt by the Company of suchwritten notice and the aggregate Exercise Price.

                           4.3        ***Payment of Exercise Price.***

                                        (a)         **Formsof Consideration Authorized.** Except as otherwise provided below, payment of the aggregate ExercisePrice for the number of shares of Stock for which the Option is being exercisedshall be made (i) in cash, by check, or cash equivalent, (ii) bytender to the Company of whole shares of Stock owned by the Optionee having aFair Market Value not less than the aggregate Exercise Price, (iii) by means ofa Cashless Exercise, as defined in Section 4.3(c), or (iv) by any combinationof the foregoing.

                                        (b)        **Tenderof Stock.**  Notwithstandingthe foregoing, the Option may not be exercised by tender to the Company ofshares of Stock to the extent such tender of Stock would constitute a violationof the provisions of any law, regulation or agreement restricting theredemption of the Company’s stock.  TheOption may not be exercised by tender to the Company of shares of Stock unlesssuch shares either have been owned by the Optionee for more than six (6) monthsor were not acquired, directly or indirectly, from the Company.

                                        (c)         **CashlessExercise.**  A “**Cashless Exercise**” means the assignment ina form acceptable to the Company of the proceeds of a sale or loan with respectto some or all of the shares of Stock acquired upon the exercise of the Optionpursuant to a program or procedure approved by the Company (including, withoutlimitation, through an exercise complying with the provisions ofRegulation T as promulgated from time to time by the Board of Governors ofthe Federal Reserve System).  TheCompany reserves, at any and all times, the right, in the Company’s sole andabsolute discretion, to decline to approve or terminate any such program orprocedure.

                           4.4        ***Tax Withholding.***  At the time the Option is exercised, in whole or in part, or at anytime thereafter as requested by the Company, the Optionee agrees to makeadequate provision for any sums required to satisfy the federal, state, localand foreign tax withholding obligations of the Participating Company Group, ifany, which arise in connection with the Option, including, without limitation,obligations arising upon (i) the exercise, in whole or in part, of theOption, (ii) the transfer, in whole or in part, of any shares acquiredupon exercise of the Option, or (iii) the lapsing of any restriction withrespect to any shares acquired upon exercise of the Option.  The Optionee is cautioned that the Option isnot exercisable unless the tax withholding obligations of the ParticipatingCompany Group are satisfied. Accordingly, the Optionee may not be able to exercise the Option whendesired even though the Option is vested, and the Company shall have noobligation to issue a certificate for such shares.

                           4.5        ***Certificate Registration.***  Except in the event the Exercise Price ispaid by means of a Cashless Exercise, the certificate for the shares as towhich the Option is exercised shall be registered in the name of the Optionee,or, if applicable, the heirs of the Optionee.

                           4.6        ***Restrictions on Grant of the Option and Issuance of Shares.***  The grant of the Option and the issuance ofshares of Stock upon exercise of the Option shall be subject to compliance withall applicable requirements of federal, state or foreign law with respect tosuch securities.  The Option may not beexercised if the issuance of shares of Stock upon exercise would constitute aviolation of any applicable federal, state or foreign securities laws or otherlaw or regulations or the requirements of any stock exchange or market systemupon which the Stock may then be listed. In addition, the Option may not be exercised unless (i) aregistration statement under the Securities Act shall at the time of exerciseof the Option be in effect with respect to the shares issuable upon exercise ofthe Option or (ii) in the opinion of legal counsel to the Company, theshares issuable upon exercise of the Option may be issued in accordance withthe terms of an applicable exemption from the registration requirements of theSecurities Act.  THE OPTIONEE ISCAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONSARE SATISFIED.  ACCORDINGLY, THEOPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THEOPTION IS VESTED.  The inability of theCompany to obtain from any regulatory body having jurisdiction the authority,if any, deemed by the Company’s legal counsel to be necessary to the lawfulissuance and sale of any shares subject to the Option shall relieve the Companyof any liability in respect of the failure to issue or sell such shares as towhich such requisite authority shall not have been obtained.  As a condition to the exercise of theOption, the Company may require the Optionee to satisfy any qualifications thatmay be necessary or appropriate, to evidence compliance with any applicable lawor regulation and to make any representation or warranty with respect theretoas may be requested by the Company.

                           4.7        ***Fractional Shares.***  The Company shall not be required to issue fractional shares uponthe exercise of the Option.

             5.          **Nontransferabilityof the Option.**  TheOption may be exercised during the lifetime of the Optionee only by theOptionee or the Optionee’s guardian or legal representative and may not beassigned or transferred in any manner except by will or by the laws of descentand distribution.  Following the deathof the Optionee, the Option, to the extent provided in Section 7, may beexercised by the Optionee’s legal representative or by any person empowered todo so under the deceased Optionee’s will or under the then applicable laws ofdescent and distribution.

             6.          **Terminationof the Option.**  TheOption shall terminate and may no longer be exercised on the first to occur of(a) the Option Expiration Date, (b) the last date for exercising theOption following termination of the Optionee’s Service as described inSection 7, or (c) a Transfer of Control to the extent provided inSection 8.

             7.          **Effectof Termination of Service.**

                           7.1        ***Option Exercisability.***

                                        (a)         **Disability.**  If the Optionee’s Service with theParticipating Company Group is terminated because of the Disability of theOptionee, the Option, to the extent unexercised and exercisable on the date onwhich the Optionee’s Service terminated, may be exercised by the Optionee (orthe Optionee’s guardian or legal representative) at any time prior to theexpiration of one (1) year after the date on which the Optionee’s Serviceterminated, but in any event no later than the Option Expiration Date;provided, however, that if the Optionee has served continuously on the Boardfor at least 2 years prior to such termination of Service, the Option, to theextent unexercised and exercisable on the date on which the Optionee's Serviceterminated, may be exercised by the Optionee (or the Optionee’s guardian orlegal representative) at any time prior to the Option Expiration Date.

                                        (b)        **Death.**  If the Optionee’s Service with theParticipating Company Group is terminated because of the death of the Optionee,the Option, to the extent unexercised and exercisable on the date on which theOptionee’s Service terminated, may be exercised by the Optionee (or theOptionee’s legal representative or other person who acquired the right toexercise the Option by reason of the Optionee’s death) at any time prior to theexpiration of one (1) year after the date on which the Optionee’s Serviceterminated, but in any event no later than the Option Expiration Date;provided, however, that if the Optionee has served continuously on the Boardfor at least 2 years prior to such termination of Service, the Option, to theextent unexercised and exercisable on the date on which the Optionee’s Serviceterminated, may be exercised by the Optionee (or the Optionee’s legalrepresentative or other person who acquired the right to exercise the Option byreason of the Optionee’s death) at any time prior to the Option ExpirationDate.  The Optionee’s Service shall bedeemed to have terminated on account of death if the Optionee dies within three(3) months after the Optionee’s termination of Service.

                                        (c)         **Retirement.**  If the Optionee’s Service with theParticipating Company Group is terminated because of the Retirement of theOptionee, the Option, to the extent unexercised and exercisable on the date onwhich the Optionee’s Service terminated, may be exercised at any time prior tothe Option Expiration Date.

                                        (d)        **OtherTermination of Service.**  Ifthe Optionee’s Service with the Participating Company Group terminates for anyreason, except Disability, death or Retirement, the Option, to the extentunexercised and exercisable by the Optionee on the date on which the Optionee’sService terminated, may be exercised by the Optionee within three (3) monthsafter the date on which the Optionee’s Service terminated, but in any event nolater than the Option Expiration Date.

                           7.2        ***Extension if Exercise Prevented by Law.***  Notwithstanding the foregoing, if theexercise of the Option within the applicable time periods set forth inSection 7.1 is prevented by the provisions of Section 4.6, the Optionshall remain exercisable until three (3) months after the date the Optionee isnotified by the Company that the Option is exercisable, but in any event nolater than the Option Expiration Date.

                           7.3        ***Extension if Optionee Subject to Section 16(b).***  Notwithstanding the foregoing, if a sale,within the applicable time periods set forth in Section 7.1, of sharesacquired upon the exercise of the Option would subject the Optionee to suitunder Section 16(b) of the Exchange Act, the Option shall remainexercisable until the earliest to occur of (i) the tenth (10th) dayfollowing the date on which a sale of such shares by the Optionee would nolonger be subject to such suit, (ii) the one hundred and ninetieth (190th)day after the Optionee’s termination of Service, or (iii) the OptionExpiration Date.

             8.          **OwnershipChange and Transfer of Control.**

                           8.1        ***Definitions.***

                                        (a)         An “**OwnershipChange Event**” shall be deemed to have occurred if any of thefollowing occurs with respect to the Company:

                                                     (i)          the direct or indirect sale orexchange in a single or series of related transactions by the stockholders ofthe Company of more than fifty percent (50%) of the voting stock of theCompany;

                                                     (ii)         a merger or consolidation in which theCompany is a party;

                                                     (iii)        the sale, exchange, or transfer of allor substantially all of the assets of the Company; or

                                                     (iv)       a liquidation or dissolution of theCompany.

                                        (b)        A “**Transferof Control**” shall mean an Ownership Change Event or a series ofrelated Ownership Change Events (collectively, the “**Transaction**”) wherein the stockholders of the Companyimmediately before the Transaction do not retain immediately after theTransaction, in substantially the same proportions as their ownership of sharesof the Company’s voting stock immediately before the Transaction, direct orindirect beneficial ownership of more than fifty percent (50%) of the totalcombined voting power of the outstanding voting stock of the Company or thecorporation or corporations to which the assets of the Company were transferred(the “**Transferee Corporation(s)**”),as the case may be.  For purposes of thepreceding sentence, indirect beneficial ownership shall include, withoutlimitation, an interest resulting from ownership of the voting stock of one ormore corporations which, as a result of the Transaction, own the Company or theTransferee Corporation(s), as the case may be, either directly or through oneor more subsidiary corporations.  TheBoard shall have the right to determine whether multiple sales or exchanges ofthe voting stock of the Company or multiple Ownership Change Events arerelated, and its determination shall be final, binding and conclusive.

                           8.2        ***Effect of Transfer of Control on Option.*** In the event of a Transfer of Control, thesurviving, continuing, successor, or purchasing corporation or parentcorporation thereof, as the case may be (the “**AcquiringCorporation**”), may either assume the Company’s rights andobligations under the Option or substitute for the Option a substantiallyequivalent option for the Acquiring Corporation’s stock.  In the event the Acquiring Corporationelects not to assume the Company’s rights and obligations under the Option orsubstitute for the Option in connection with the Transfer of Control, anyunexercised portion of the Option shall be immediately exercisable and vestedin full as of the date ten (10) days prior to the date of the Transfer ofControl.  Any exercise of the Optionthat was permissible solely by reason of this Section 8.2 shall beconditioned upon the consummation of the Transfer of Control.  The Option shall terminate and cease to beoutstanding effective as of the date of the Transfer of Control to the extentthat the Option is neither assumed or substituted for by the AcquiringCorporation in connection with the Transfer of Control nor exercised as of thedate of the Transfer of Control. Notwithstanding the foregoing, shares acquired upon exercise of theOption prior to the Transfer of Control and any consideration received pursuantto the Transfer of Control with respect to such shares shall continue to besubject to all applicable provisions of this Option Agreement except asotherwise provided herein.  Furthermore,notwithstanding the foregoing, if the corporation the stock of which is subjectto the Option immediately prior to an Ownership Change Event described inSection 8.1(a)(i) constituting a Transfer of Control is the surviving orcontinuing corporation and immediately after such Ownership Change Event lessthan fifty percent (50%) of the total combined voting power of its voting stockis held by another corporation or by other corporations that are members of anaffiliated group within the meaning of Section 1504(a) of the Code withoutregard to the provisions of Section 1504(b) of the Code, the Option shallnot terminate.

             9.          **Adjustmentsfor Changes in Capital Structure**.  In the event of any stock dividend, stock split, reverse stocksplit, recapitalization, combination, reclassification, or similar change inthe capital structure of the Company, appropriate adjustments shall be made inthe number, Exercise Price and class of shares of stock subject to theOption.  If a majority of the shareswhich are of the same class as the shares that are subject to the Option areexchanged for, converted into, or otherwise become (whether or not pursuant toan Ownership Change Event) shares of another corporation (the “**New Shares**”), the Board may unilaterallyamend the Option to provide that the Option is exercisable for New Shares.  In the event of any such amendment, theNumber of Option Shares and the Exercise Price shall be adjusted in a fair andequitable manner, as determined by the Board, in its sole discretion.  Notwithstanding the foregoing, anyfractional share resulting from an adjustment pursuant to this Section 9shall be rounded down to the nearest whole number, and in no event may theExercise Price be decreased to an amount less than the par value, if any, ofthe stock subject to the Option.

             10.        **Rightsas a Stockholder**. The Optionee shall have no rights as a stockholder with respect to anyshares covered by the Option until the date of the issuance of a certificatefor the shares for which the Option has been exercised (as evidenced by theappropriate entry on the books of the Company or of a duly authorized transferagent of the Company).  No adjustmentshall be made for dividends, distributions or other rights for which the recorddate is prior to the date such certificate is issued, except as provided inSection 9.

             11.        **Legends**.  The Company may at any time place legendsreferencing any applicable federal, state or foreign securities lawrestrictions on all certificates representing shares of stock subject to theprovisions of this Option Agreement. The Optionee shall, at the request of the Company, promptly present tothe Company any and all certificates representing shares acquired pursuant tothe Option in the possession of the Optionee in order to carry out theprovisions of this Section.
             12.        **BindingEffect**.  Subject to therestrictions on transfer set forth herein, this Option Agreement shall inure tothe benefit of and be binding upon the parties hereto and their respectiveheirs, executors, administrators, successors and assigns.

             13.        **Terminationor Amendment**.  The Boardmay terminate or amend the Plan or the Option at any time; provided, however,that no such termination or amendment may adversely affect the Option or anyunexercised portion hereof without the consent of the Optionee unless suchtermination or amendment is necessary to comply with any applicable law orgovernment regulation.  No amendment oraddition to this Option Agreement shall be effective unless in writing.

             14.        **IntegratedAgreement**.  This OptionAgreement constitutes the entire understanding and agreement of the Optioneeand the Participating Company Group with respect to the subject mattercontained herein, and there are no agreements, understandings, restrictions,representations, or warranties among the Optionee and the Participating CompanyGroup with respect to such subject matter other than those as set forth orprovided for herein.  To the extentcontemplated herein, the provisions of this Option Agreement shall survive anyexercise of the Option and shall remain in full force and effect.

             15.        **ApplicableLaw**.  This OptionAgreement shall be governed by the laws of the State of California as such lawsare applied to agreements between California residents entered into and to beperformed entirely within the State of California.
 ZORAN  CORPORATION   By: Title:
 

             TheOptionee represents that the Optionee is familiar with the terms and provisionsof this Option Agreement and hereby accepts the Option subject to all of theterms and provisions thereof.  TheOptionee hereby agrees to accept as binding, conclusive and final all decisionsor interpretations of the Board upon any questions arising under this OptionAgreement.
    OPTIONEE    Date: