<PAGE>
                                                                   Exhibit 10.2


                                ZORAN CORPORATION

                    1995 OUTSIDE DIRECTORS STOCK OPTION PLAN

                       (AS AMENDED THROUGH JULY 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 established effective as of
the effective date of the initial registration by the Company of 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 Participating Company Group and its stockholders by providing
an incentive to attract and retain highly qualified persons to serve as Outside
Directors of the Company and by creating additional incentive for Outside
Directors to promote the growth and profitability of the Participating Company
Group.

                  1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Options
shall be granted, if at all, within ten (10) years from the Effective Date.

         2.       DEFINITIONS AND CONSTRUCTION.

                  2.1 DEFINITIONS. Whenever used herein, the following terms
shall 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
administer the Plan, "Board" also means such Committee(s).

                      (b) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.

                      (c) "COMMITTEE" means a committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified
by the Board. Unless the powers of the Committee have been specifically
limited, the Committee shall have all of the powers of the Board granted
herein, including, without limitation, the power to amend or terminate the
Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law.

                      (d) "COMPANY" means Zoran Corporation, a Delaware
corporation, or any successor corporation thereto.

<PAGE>

                      (e) "CONSULTANT" means any person, including an
advisor, engaged by a Participating Company to render services other than as
an Employee or a Director.

                      (f) "DIRECTOR" means a member of the Board or the board
of directors of any other Participating Company.

                      (g) "EMPLOYEE" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in
the records of a Participating Company; provided, however, that neither
service as a Director nor payment of a director's fee shall be sufficient to
constitute employment for purposes of the Plan.

                      (h) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.

                      (i) "FAIR MARKET VALUE" means, as of any date, if there
is then a public market for the Stock, the closing price of the Stock (or the
mean of the closing 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 NASDAQ National Market
System or such other national or regional securities exchange or market
system constituting the primary market for the Stock. If the relevant date
does not fall on a day on which the Stock is trading on NASDAQ, the NASDAQ
National Market System or other national or regional securities exchange or
market system, the date on which the Fair Market Value shall be established
shall be the last day on which the Stock was so traded prior to the relevant
date. If there is then no public market for the Stock, the Fair Market Value
on any relevant date shall be as determined by the Board without regard to
any restriction other than a restriction which, by its terms, will never
lapse.

                      (j) "OPTION" means a right to purchase Stock (subject
to adjustment as provided in Section 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) "OPTION AGREEMENT" means a written agreement
between the Company and an Optionee setting forth the terms, conditions and
restrictions of the Option granted to the Optionee.

                      (m) "OUTSIDE DIRECTOR" means a Director of the Company
who is not an Employee.

                      (n) "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.

                      (o) "PARTICIPATING COMPANY" means the Company or any
Parent Corporation or Subsidiary Corporation.

                      (p) "PARTICIPATING COMPANY GROUP" means, at any point
in time, all corporations collectively which are then Participating Companies.

<PAGE>

                      (q) "RULE 16b-3" means Rule 16b-3 as promulgated under
the Exchange Act, 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 in the capacity of an Employee, a
Director or a Consultant. The Optionee's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided
that there is no interruption or termination of the Optionee's Service. The
Optionee's Service shall be deemed to have terminated either upon an actual
termination of Service or upon the corporation for which the Optionee
performs Service ceasing to be a Participating Company.

                      (s) "STOCK" means the common stock, par value $0.001,
of the Company, as adjusted from time to time in accordance with Section 4.2.

                      (t) "SUBSIDIARY CORPORATION" means any present or
future "subsidiary corporation" of the Company, as defined in Section 424(f)
of the Code.

                  2.2 CONSTRUCTION. Captions and titles contained herein are
for convenience only and shall not affect the meaning or interpretation of
any provision of the Plan. Except when otherwise indicated by the context,
the singular shall include the plural, the plural shall include the singular,
and use of the term "or" shall include the conjunctive as well as the
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 Option shall be determined
by the Board, and such determinations shall be final and binding upon all
persons having an interest in the Plan or such Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, determination or election which
is the responsibility of or which is allocated to the Company herein, provided
the officer has apparent authority with respect to such matter, right,
obligation, determination or election.

                  3.2 LIMITATIONS ON AUTHORITY OF THE BOARD. Notwithstanding any
other provision herein to the contrary, the Board shall have no authority,
discretion, or power to select the Outside Directors who will receive Options,
to set the exercise price of the Options, to determine the number of shares of
Stock to be subject to an Option or the time at which an Option shall be
granted, to establish the duration of an Option, or to alter any other terms or
conditions specified in the Plan, except in the sense of administering the Plan
subject to the provisions of the Plan.

         4.       SHARES SUBJECT TO PLAN.

                  4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment
as provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be three hundred thousand (300,000) and shall
consist of authorized but unissued shares or reacquired shares of Stock or any
combination thereof. If an outstanding

<PAGE>

Option for any reason expires or is terminated or canceled or shares of Stock
acquired, subject to repurchase, upon the exercise of an Option are
repurchased by the Company, the shares of Stock allocable to the unexercised
portion of such Option, or such repurchased shares of Stock, shall again be
available for issuance under the Plan.

                  4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event
of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall 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 to any outstanding Options, and in the exercise price of any
outstanding Options. If a majority of the shares which are of the same class as
the shares that are subject to outstanding Options are exchanged for, converted
into, or otherwise become (whether or not pursuant to an Ownership Change Event
as defined in Section 8.1) shares of another corporation (the "NEW SHARES"), the
Board may unilaterally amend the outstanding Options to provide that such
Options are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to, and the exercise price of, the outstanding Options
shall be adjusted in a fair and equitable manner as determined by the Board, in
its sole discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be rounded down
to the nearest whole number, and in no event may the exercise 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 person who, at the time of grant, is an Outside Director.

                  5.2 OPTIONS AUTHORIZED. Options shall be nonstatutory stock
options; that is, options which are not treated as incentive stock options
within the meaning of Section 422(b) of the Code.

         6.       TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced
by Option Agreements specifying the number of shares of Stock covered
thereby, in such form as the Board shall from time to time establish. Option
Agreements may incorporate all or any of the terms of the Plan by reference
and shall comply with and be subject to the following terms and conditions:

                  6.1 AUTOMATIC GRANT OF OPTIONS. Subject to execution by an
Outside Director of the appropriate Option Agreement, Options shall be granted
automatically and without further action of the Board, as follows:

                      (a) INITIAL OPTION.  Each person who is (i) an Outside
Director on the Effective Date, or (ii) first elected or appointed as an
Outside Director after the Effective Date shall be granted an Option to
purchase twenty thousand (20,000) shares of Stock on the Effective Date or
the date of such initial election or appointment, respectively (an "INITIAL
OPTION"). Notwithstanding anything herein to the contrary, a Director of the
Company who previously did

<PAGE>

not qualify as an Outside Director shall not receive an Initial Option in the
event that such Director subsequently becomes an Outside Director.

                      (b) ANNUAL OPTION.  Each Outside Director (including
any Director of the Company who previously did not qualify as an Outside
Director but who subsequently becomes an Outside Director) shall be granted,
on the date immediately following the date of each annual meeting of the
stockholders of the Company (an "ANNUAL MEETING") 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 not served continuously as a Director
of the Company for at least six (6) months as of the date immediately
following such Annual Meeting shall not receive an Annual Option on such date.

                      (c) RIGHT TO DECLINE OPTION.  Notwithstanding the
foregoing, any person may elect not to receive an Option by delivering
written notice of such election to the Board no later than the day prior to
the date such Option would otherwise be granted. A person so declining an
Option shall receive no payment or other consideration in lieu of such
declined Option. A person who has declined an Option may revoke such election
by delivering written notice of such revocation to the Board no later than
the day prior to the date such Option would be granted pursuant 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 shall be 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 the date ten (10) years after the date of grant of the Option
unless earlier terminated pursuant to the terms of the Plan or the Option
Agreement.

                  6.4 RIGHT TO EXERCISE OPTIONS.

                      (a) INITIAL OPTION.  Except as otherwise provided 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 on which the
Initial Option was granted (the "INITIAL OPTION VESTING DATE"); and (ii) be
exercisable on and after the Initial Option Vesting Date and prior to the
termination thereof in an amount equal to the number of shares of Stock
initially subject to the Initial Option multiplied by the Vested Ratio as set
forth below, less the number of shares previously acquired upon exercise
thereof. The Vested Ratio described in the preceding sentence shall be
determined as follows:

<PAGE>

<TABLE>
<CAPTION>
                                                                                  Vested Ratio
                                                                                  ------------
<S>                                                                               <C>

                           Prior to Initial Option Vesting Date                         0

                           On Initial Option Vesting Date, provided the               1/4
                           Optionee's Service is continuous from the date of
                           grant of the Initial Option until the Initial Option
                           Vesting Date

                           Plus
                           ----

                           For each full year of of the Optionee's                    1/4
                           continuous Service from the Initial Option Vesting
                           Date until the Vested Ratio equals 1/1, an additional
</TABLE>

                           (b) ANNUAL OPTION.  Except as otherwise provided
in the Plan or in the Option Agreement, an Annual Option shall first become
exercisable on the date which is one (1) year after the date on which the
Annual Option was granted (the "ANNUAL OPTION VESTING DATE"), provided the
Optionee's Service is continuous from the date of grant of the Annual Option
until the Annual Option Vesting Date. The Annual Option shall be exercisable
on and after the Annual Option Vesting Date and prior to the termination
thereof in an amount equal to the number of shares of Stock initially subject
to the Annual Option, less the number of shares previously acquired upon
exercise thereof.

                  6.5      PAYMENT OF EXERCISE PRICE.

                           (a) FORMS OF CONSIDERATION AUTHORIZED.  Except as
otherwise provided below, payment of the exercise price for the number of
shares of Stock being purchased pursuant to any Option shall be made (i) in
cash, by check, or cash equivalent, (ii) by tender to the Company of shares
of Stock owned by the Optionee having a Fair Market Value not less than the
exercise price, (iii) by the assignment of the proceeds of a sale or loan
with respect to some or all of the shares being acquired upon the exercise of
the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board
of Governors of the Federal Reserve System) (a "CASHLESS EXERCISE"), or (iv)
by any combination thereof.

                           (b) TENDER OF STOCK.  Notwithstanding the
foregoing, an Option may not be exercised by tender to the Company of shares
of Stock to the extent such tender of Stock would constitute a violation of
the provisions of any law, regulation or agreement restricting the redemption
of the Company's stock. Unless otherwise provided by the Board, an Option may
not be exercised by tender to the Company of shares of Stock unless such
shares either have been owned by the Optionee for more than six (6) months or
were not acquired, directly or indirectly, from the Company.

<PAGE>

                      (c) CASHLESS EXERCISE.  The Company reserves, at any
and all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures 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, to deduct from the shares of Stock issuable upon the exercise of
an Option, or to accept from the Optionee the tender of, a number of whole
shares of Stock having 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 the Participating Company Group with respect to such Option or the shares
acquired upon exercise thereof. Alternatively or in addition, in its sole
discretion, the Company shall have the right to require the Optionee to make
adequate provision for any such tax withholding obligations of the Participating
Company Group arising in connection with the Option or the shares acquired upon
exercise thereof. The Company shall have no obligation to deliver shares of
Stock until the Participating Company Group's tax withholding obligations have
been satisfied.

         7.       STANDARD FORM OF OPTION AGREEMENT.

                  7.1 INITIAL OPTION. Unless otherwise provided for by the Board
at the time an Initial Option is granted, each Initial Option shall comply with
and be subject to the terms and conditions set forth in the form of Nonstatutory
Stock Option Agreement for Outside Directors (Initial Option) adopted by the
Board concurrently with its 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 Annual Option is granted, each Annual Option shall comply with
and be subject to the terms and conditions set forth in the form of Nonstatutory
Stock Option Agreement for Outside Directors (Annual Option) adopted by the
Board concurrently 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 in Section 3.2, the Board shall have the authority from time to time to
vary the terms of any of the standard forms of Option Agreement described in
this Section 7 either in connection with the grant or amendment of an individual
Option or in connection with the authorization of a new standard form or forms;
provided, however, that the terms and conditions of any such new, revised or
amended standard form or forms of Option Agreement are not inconsistent with the
terms of the Plan. Such authority shall include, but not by way of limitation,
the authority to grant Options which are immediately exercisable subject to the
Company's right to repurchase any unvested shares of Stock acquired by the
Optionee upon the exercise of an Option in the event such Optionee's Service is
terminated for any reason. In no event, however, shall the Board be permitted to
vary the terms of any standard form of Option Agreement if such change would
cause the Plan to cease to qualify as a formula plan pursuant to Rule 16b-3 at
any such time as any class of equity security of the Company is registered
pursuant to Section 12 of the Exchange Act.

<PAGE>

         8.       TRANSFER OF CONTROL.

                  8.1      DEFINITIONS.

                           (a)      An "OWNERSHIP CHANGE EVENT" shall be
deemed to have occurred if any of the following occurs with respect to the
Company:

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

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

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

                                    (iv)    a liquidation or dissolution of
the Company.

                           (b)      A "TRANSFER OF CONTROL" shall mean an
Ownership Change Event or a series of related Ownership Change Events
(collectively, the "TRANSACTION") wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the
Transaction, in substantially the same proportions as their ownership of
shares of the Company's voting stock immediately before the Transaction,
direct or indirect beneficial ownership of more than fifty percent (50%) of
the total combined voting power of the outstanding voting stock of the
Company or the corporation or corporations to which the assets of the Company
were transferred (the "TRANSFEREE CORPORATION(S)"), as the case may be. For
purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the
voting stock of one or more corporations which, as a result of the
Transaction, own the Company or the Transferee Corporation(s), as the case
may be, either directly or through one or more subsidiary corporations. The
Board shall have the right to determine whether multiple sales or exchanges
of the voting stock of the Company or multiple Ownership Change Events are
related, 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, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may either assume the Company's rights and
obligations under outstanding Options or substitute for outstanding Options
substantially equivalent options for the Acquiring Corporation's stock. In
the event the Acquiring Corporation elects not to assume or substitute for
outstanding Options in connection with a Transfer of Control, any
unexercisable or unvested portion of the outstanding Options 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
that was permissible solely by reason of this Section 8.2 shall be
conditioned upon the consummation of the Transfer of Control. Any Options
which are neither assumed or substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control shall terminate and cease to be outstanding effective as
of the date of the Transfer of Control. Notwithstanding the foregoing, shares
acquired upon exercise of an Option

<PAGE>

prior to the Transfer of Control and any consideration received pursuant to
the Transfer of Control with respect to such shares shall continue to be
subject to all applicable provisions of the Option Agreement evidencing such
Option except as otherwise provided in such Option Agreement. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is
subject to the outstanding Options immediately prior to an Ownership Change
Event described in Section 8.1(a)(i) constituting a Transfer of Control is
the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power
of its voting stock is held by another corporation or by other corporations
that are members of an affiliated group within the meaning of Section 1504(a)
of the Code without regard to the provisions of Section 1504(b) of the Code,
the outstanding Options shall not terminate.

         9. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or 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 of
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan, or any right granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such person
is liable for gross negligence, bad faith or intentional misconduct in duties;
provided, however, that within sixty (60) days after the institution of such
action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.

         11. TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or amend
the Plan at any time. However, subject to changes in the law or other legal
requirements that would permit otherwise, without the approval of the Company's
stockholders, there shall be (a) no increase in the total number of shares of
Stock that may be issued under the Plan (except by operation of the provisions
of Section 4.2), and (b) no expansion in the class of persons eligible to
receive Options. Furthermore, to the extent required by Rule 16b-3, provisions
of the 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 Retirement
Income Security Act of 1974, as amended, or the rules thereunder. In any event,
no termination or amendment of the Plan may adversely affect any then
outstanding Option, or any unexercised portion thereof, without the consent of
the Optionee, unless such termination or amendment is necessary to comply with
any applicable law or government regulation.

<PAGE>

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



                                         _____________________________________
                                         Secretary