**Exhibit 10.38**

ZORAN CORPORATIONAMENDMENT OFNONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS

                THISAMENDMENT OF NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS is madeby and between Zoran Corporation, a Delaware corporation (the “Company”), and______________ (the “Optionee”).

RECITALS

                WHEREAS, on__________, the Company granted the Optionee an option to purchase __________shares of the Company’s common stock at a price of $_____ per share (the“Option”), which was evidenced by a form of Nonstatutory Stock Option Agreementfor Outside Directors (the “Option Agreement”);

                WHEREAS, theOption Agreement currently provides for a one year post-termination exerciseperiod following the Optionee’s termination of service if the termination wasdue to the Optionee’s death or Disability (as defined in the OptionAgreement)  and a 3 monthpost-termination exercise period following the Optionee’s termination ofservice for terminations due to other reasons; and

                WHEREAS, theCompany and the Optionee wish to amend the Option to provide that if theOptionee ceases to be a director due to the Optionee’s retirement, or if, afterthe Optionee has continuously served on the Board for two years, the Optionee’sservice terminates because of the Optionee’s death or disability, the Option,to the extent unexercised and exercisable, shall be exercisable at any timeprior to the Option Expiration Date (as defined in the Option Agreement)pursuant to the terms and conditions set forth below;

AGREEMENT

                NOW, THEREFORE,the Company and the Optionee agree as follows:

                1.             EffectiveDate.  This Amendment is effectiveas of ___________ ___, 2001.

                2.             ExercisePeriod Upon Retirement. Notwithstanding any provisions of the Option Agreement to the contrary,the Option Agreement shall be amended as follows:

     a.             Section 7.1(a) is restated in itsentirety to read as follows:

“(a) **Disability.**  If the Optionee’s Service with the Participating Company Group isterminated because of the Disability of the Optionee, the Option, to the extentunexercised 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 expiration of one (1) yearafter the date on which the Optionee’s Service terminated, but in any event nolater than the Option Expiration Date; provided, however, that if the Optioneehas served continuously on the Board for at least 2 years prior to suchtermination of Service, the Option, to the extent unexercised and exercisableon the date on which the Optionee's Service terminated, may be exercised by theOptionee (or the Optionee’s guardian or legal representative) at any time priorto the Option Expiration Date.”

     b.             Section 7.1(b) is restated in itsentirety to read as follows:

“(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 the extentunexercised 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.             Section 7.1 (c) is restated in itsentirety to read as follows:

“(c) **Retirement**.  If the Optionee’s Service with theParticipating Company Group is terminated because of the “Retirement” (asdefined below) of the Optionee, the Option, to the extent unexercised andexercisable on the date on which the Optionee’s Service terminated, may beexercised at any time prior to the Option Expiration Date.  For purposes of this Option Agreement,“Retirement” shall mean a termination of the Optionee’s Service as a result ofeither of the following, provided that the Optionee has served continuously onthe Board for at least 2 years: (i) the Optionee’s resignation from the Boardor (ii) the expiration of the Optionee’s term as a Director of the Companyafter the Optionee has declined to stand for reelection.”

 

   d.             Section 7.1(c) shall be redesignated as Section 7.1(d)of the Option Agreement and shall read as follows:

“(d) **Other Termination of Service.**  If the Optionee’s Service with theParticipating Company Group terminates for any reason, except Disability, deathor Retirement, the Option, to the extent unexercised and exercisable by theOptionee on the date on which the Optionee’s Service terminated, may beexercised by the Optionee within three (3) months after the date on which theOptionee’s Service terminated, but in any event no later than the OptionExpiration Date.”

                3.             Continuationof Other Terms.  Except as set forthherein, all other terms and conditions of the Option Agreement shall remain infull force and effect.

                4.             ApplicableLaw.  This Agreement shall begoverned by the laws of the State of California as such laws are applied toagreements between California residents entered into and to be performedentirely within the State of California.

 

|   | ZORAN  CORPORATION |
|--------|--------------------|
|   |               |
|   | By:                |
|   | Title:             |
|   | OPTIONEE:          |
|   |               |
|   |                    |