**Exhibit 10.18**

**ZORAN CORPORATION**

**1995 OUTSIDE DIRECTORS STOCK OPTION PLAN**

(As AmendedThrough April 21, 2002)

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

1.1                                 ***Establishment***.  The Zoran Corporation 1995 Outside DirectorsStock Option Plan (the “**Plan**”) is herebyestablished effective as of the effective date of the initial registration bythe 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 theinterests of the Participating Company Group and its stockholders by providingan incentive to attract and retain highly qualified persons to serve as OutsideDirectors of the Company and by creating additional incentive for OutsideDirectors to promote the growth and profitability of the Participating CompanyGroup.

1.3                                 ***Term of Plan***.  The Plan shall continue in effect until theearlier of its termination by the Board or the date on which all of the sharesof Stock available for issuance under the Plan have been issued and allrestrictions on such shares under the terms of the Plan and the agreementsevidencing Options granted under the Plan have lapsed.  However, all Options shall be granted, if atall, within ten (10) years from 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 appointedby 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 toadminister the Plan and having such powers as shall be specified by theBoard.  Unless the powers of theCommittee have been specifically limited, the Committee shall have all of thepowers of the Board granted herein, including, without limitation, the power toamend or terminate the Plan at any time, subject to the terms of the Plan andany applicable limitations imposed by law.

(d)                                 “**Company**” means Zoran Corporation, a Delaware corporation, orany successor corporation thereto.

----

(e)                                  “**Consultant**” means any person, including an advisor, engagedby a Participating Company to render services other than as an Employee or aDirector.

(f)                                    “**Director**” means a member of the Board or the board ofdirectors of any other Participating Company.

(g)                                 “**Employee**” means any person treated as an employee (includingan officer or a Director who is also treated as an employee) in the records ofa Participating Company; provided, however, that neither service as a Directornor payment of a director’s fee shall be sufficient to constitute employmentfor purposes of the Plan.

(h)                                 “**Exchange Act**” means the Securities Exchange Act of 1934, asamended.

(i)                                     “**Fair Market Value**” means, as of any date, if there is then apublic market 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, 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 theStock, the Fair Market Value on any relevant date shall be as determined by theBoard without regard to any restriction other than a restriction which, by itsterms, will never lapse.

(j)                                     “**Option**” means a right to purchase Stock (subject toadjustment as provided in Section 4.2) pursuant to the terms and conditionof the Plan.

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

(l)                                     “**Option Agreement**” means a written agreement between theCompany and an Optionee setting forth the terms, conditions and restrictions ofthe Option granted to the Optionee.

(m)                               “**Outside Director**” means a Director of the Company who is notan Employee.

(n)                                 “**Parent Corporation**” means any present or future “parentcorporation” of the Company, as defined in Section 424(e) of the Code.

(o)                                 “**Participating Company**” means the Company or any ParentCorporation or Subsidiary Corporation.

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

2

----

(q)                                 “**Rule 16b–3**” means Rule 16b–3 as promulgated underthe Exchange Act, as amended from time to time, or any successor rule orregulation.

(r)                                    “**Service**” means the Optionee’s service with the ParticipatingCompany Group, whether in the capacity of an Employee, a Director or aConsultant.  The Optionee’s Service shallnot be deemed to have terminated merely because of a change in the capacity inwhich the Optionee renders Service to the Participating Company Group or achange in the Participating Company for which the Optionee renders suchService, provided that there is no interruption or termination of the Optionee’sService.  The Optionee’s Service shall bedeemed to have terminated either upon an actual termination of Service or uponthe corporation for which the Optionee performs Service ceasing to be aParticipating Company.

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

(t)                                    “**Subsidiary Corporation**” means any present or future “subsidiarycorporation” of the Company, as defined in Section 424(f) of the Code.

2.2                                 ***Construction***.  Captions and titles contained herein are forconvenience only and shall not affect the meaning or interpretation of anyprovision of the Plan.  Except whenotherwise indicated by the context, the singular shall include the plural, theplural shall include the singular, and use of the term “or” shall include theconjunctive 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 Planor of any Option shall be determined by the Board, and such determinationsshall be final and binding upon all persons having an interest in the Plan orsuch Option.  Any officer of aParticipating Company shall have the authority to act on behalf of the Companywith respect to any matter, right, obligation, determination or election whichis the responsibility of or which is allocated to the Company herein, providedthe 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 provisionherein to the contrary, the Board shall have no authority, discretion, or powerto select 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 in Section 4.2,the maximum aggregate number of shares of Stock that may be issued under thePlan shall be three hundred fifty thousand (350,000) and shall consist ofauthorized but unissued shares or reacquired shares of Stock or any combinationthereof.  If an outstanding Option forany reason expires or is terminated or canceled or shares of Stock acquired,subject to 

3

----

repurchase, upon the exercise of an Option arerepurchased by the Company, the shares of Stock allocable to the unexercisedportion of such Option, or such repurchased shares of Stock, shall again beavailable for issuance 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 “InitialOption” and “Annual Option” (as defined in Section 6.1), and to anyoutstanding Options, and in the exercise price of any outstanding Options.  If a majority of the shares which are of thesame class as the shares that are subject to outstanding Options are exchangedfor, converted into, or otherwise become (whether or not pursuant to anOwnership Change Event as defined in Section 8.1) shares of anothercorporation (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, any fractionalshare resulting from an adjustment pursuant to this Section 4.2 shall berounded down to the nearest whole number, and in no event may the exerciseprice of any Option be decreased to an amount less than the par value, if any,of the stock subject to the Option.

**5.****                                      Eligibilityand 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, options which are not treated as incentive stock options within themeaning of Section 422(b) of the Code.

**6.****                                      Termsand Conditions of Options.**  Optionsshall be evidenced by Option Agreements specifying the number of shares ofStock covered thereby, in such form as the Board shall from time to time establish.  Option Agreements may incorporate all or anyof the terms of the Plan by reference and shall comply with and be subject tothe 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)                                  **Initial Option**.  Eachperson who is (i) an Outside Director on the Effective Date, or (ii) firstelected or appointed as an Outside Director after the Effective Date shall begranted an Option to purchase twenty thousand (20,000) shares of Stock on theEffective Date or the date of such initial election or appointment,respectively (an “**Initial Option**”).  Notwithstanding anything herein to thecontrary, a Director of the Company who previously did not qualify as anOutside Director shall not receive an Initial Option in the event that suchDirector subsequently becomes an Outside Director.

4

----

(b)                                 **Annual Option**.  EachOutside Director (including any Director of the Company who previously did notqualify as an Outside Director but who subsequently becomes an OutsideDirector) shall be granted, on the date immediately following the date of eachannual meeting of the stockholders of the Company (an “**AnnualMeeting**”) following which such person remains an Outside Director,an Option to purchase ten thousand (10,000) shares of Stock (an “**Annual Option**”). Notwithstanding the foregoing, an Outside Director who has not servedcontinuously as a Director of the Company for at least six (6) months as of thedate immediately following such Annual Meeting shall not receive an AnnualOption on such date.

(c)                                  **Right to Decline Option**. Notwithstanding the foregoing, any person may elect not to receive an Optionby delivering written notice of such election to the Board no later than theday prior to the date such Option would otherwise be granted.  A person so declining an Option shall receiveno 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 subjectto an Option shall be the Fair Market Value of a share of Stock on the date theOption is granted.

6.3                                 ***Exercise Period.***  Each Option shall terminate and cease to beexercisable on the date ten (10) years after the date of grant of the Optionunless earlier terminated pursuant to the terms of the Plan or the OptionAgreement.

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

(a)                                  **Initial Option**. Except as otherwise provided in the Plan or in the Option Agreement, an InitialOption shall (i) first become exercisable on the date which is one (1) yearafter the date on which the Initial Option was granted (the “**Initial Option Vesting Date**”); and (ii) be exercisableon and after the Initial Option Vesting Date and prior to the terminationthereof in an amount equal to the number of shares of Stock initially subjectto the Initial Option multiplied by the Vested Ratio as set forth below, lessthe number of shares previously acquired upon exercise thereof.  The Vested Ratio described in the precedingsentence shall be determined as 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 the Optionee’s continuous Service from the Initial   Option Vesting Date until the Vested Ratio equals 1/1, an additional                      | 1/4              |

 

5

----

(b)                                 **Annual Option**.  Exceptas otherwise provided in the Plan or in the Option Agreement, an Annual Optionshall first become exercisable on the date which is one (1) year after thedate on which the 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 Stock initiallysubject to the Annual Option, less the number of shares previously acquiredupon exercise thereof.

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

(a)                                  **Forms of Consideration Authorized**.  Except as otherwise provided below, paymentof the exercise price for the number of shares of Stock being purchasedpursuant to any Option shall be made (i) in cash, by check, or cashequivalent, (ii) by tender to the Company of shares of Stock owned by theOptionee having a Fair Market Value not less than the exercise price, (iii) bythe assignment of the proceeds of a sale or loan with respect to some or all ofthe shares being acquired upon the exercise of the Option (including, withoutlimitation, through an exercise complying with the provisions of Regulation Tas promulgated from time to time by the Board of Governors of the FederalReserve System) (a “**Cashless Exercise**”),or (iv) by any combination thereof.

(b)                                 **Tender of Stock**. Notwithstanding the foregoing, an Option may not be exercised by tenderto the Company of shares of Stock to the extent such tender of Stock wouldconstitute a violation of the provisions of any law, regulation or agreementrestricting the redemption of the Company’s stock.  Unless otherwise provided by the Board, anOption 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)                                  **Cashless Exercise**. The Company reserves, at any and all times, the right, in the Company’ssole and absolute discretion, to establish, decline to approve or terminate anyprogram or procedures for the exercise of Options by means of a CashlessExercise.

6.6                                 ***Tax Withholding.***  The Company shall have the right, but not theobligation, to deduct from the shares of Stock issuable upon the exercise of anOption, or to accept from the Optionee the tender of, a number of whole sharesof 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 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 to requirethe 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 todeliver shares of Stock until the Participating Company Group’s tax withholdingobligations have been satisfied.

6

----

**7.****                                      StandardForm of Option Agreement.**

7.1                                 ***Initial Option***.  Unless otherwise provided for by the Board atthe time an Initial Option is granted, each Initial Option shall comply withand be subject to the terms and conditions set forth in the form ofNonstatutory Stock Option Agreement for Outside Directors (Initial Option)adopted by the Board concurrently with its adoption of the Plan and as amendedfrom time to time.

7.2                                 ***Annual Option***.  Unless otherwise provided for by the Board atthe time an Annual Option is granted, each Annual Option shall comply with andbe subject to the terms and conditions set forth in the form of NonstatutoryStock Option Agreement for Outside Directors (Annual Option) adopted by theBoard concurrently with its adoption of the Plan and as amended from time totime.

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“**Ownership Change Event**” shall be deemedto have occurred if any of the following occurs with respect to the Company:

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

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

(iii)                               thesale, exchange, or transfer of all or substantially all of the assets of theCompany; or

(iv)                              aliquidation or dissolution of the Company.

7

----

(b)                                 A“**Transfer of Control**” shall mean anOwnership Change Event or a series of related Ownership Change Events(collectively, the “**Transaction**”)wherein the stockholders of the Company immediately before the Transaction donot retain immediately after the Transaction, in substantially the sameproportions as their ownership of shares of the Company’s voting stockimmediately before the Transaction, direct or indirect beneficial ownership ofmore than fifty percent (50%) of the total combined voting power of theoutstanding voting stock of the Company or the corporation or corporations towhich the assets of the Company were transferred (the “**TransfereeCorporation(s)**”), as the case may be.  For purposes of the preceding sentence,indirect beneficial ownership shall include, without limitation, an interestresulting from ownership of the voting stock of one or more corporations which,as a result of the Transaction, own the Company or the TransfereeCorporation(s), as the case may be, either directly or through one or moresubsidiary corporations.  The Board shallhave the right to determine whether multiple sales or exchanges of the votingstock of the Company or multiple Ownership Change Events are related, and itsdetermination shall be final, binding and conclusive.

8.2                                 ***Affect 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 Corporation electsnot 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 any Option that waspermissible solely by reason of this Section 8.2 shall be conditioned uponthe 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 be outstandingeffective 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 the lifetimeof the Optionee, an Option shall be exercisable only by the Optionee or theOptionee’s guardian or legal representative. No Option shall be assignable or transferable by the Optionee, except bywill or by the laws of descent and distribution.

8

----

**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 bythem in 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 Boardmay terminate or amend the Plan at any time. However, subject to changes in the law or other legal requirements thatwould permit otherwise, without the approval of the Company’s stockholders,there shall be (a) no increase in the total number of shares of Stock thatmay 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 andthe amount, price and timing of Options shall not be amended more than onceevery six (6) months, other than to comport with changes in the Code, theEmployee Retirement Income Security Act of 1974, as amended, or the rulesthereunder.  In any event, no terminationor amendment of the Plan may adversely affect any then outstanding Option, orany unexercised portion thereof, without the consent of the Optionee, unlesssuch termination or amendment is necessary to comply with any applicable law orgovernment regulation.

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 April 21, 2002.
|        |      |
|--------|-----------|
|   |      |
|   | Secretary |

 

9

----