<PAGE>
                                                                    EXHIBIT 10.1



                               1989 STOCK PLAN OF

                             SONICblue INCORPORATED

                    (Amended and Restated as of May 16, 2001)

SECTION 1. ESTABLISHMENT AND PURPOSE

        The Plan was established in 1989 to offer selected employees, directors,
advisers and consultants an opportunity to acquire a proprietary interest in the
success of the Company, or to increase such interest, by purchasing Shares of
the Company's Common Stock. The Plan provides both for the direct award or sale
of Shares and for the grant of Options to purchase Shares. Options granted under
the Plan may include Nonstatutory Options as well as ISOs intended to qualify
under Code section 422.

        The Plan was amended and restated as of December 14, 1998 to incorporate
prior amendments, to amend the provisions governing grants to Outside Directors,
to increase the number of shares which may be issued upon the exercise of ISOs
and to extend the term of the Plan. The Plan was amended and restated as of May
16, 2001 to incorporate prior amendments and to reflect the change of the
Company's name to SONICblue Incorporated.

SECTION 2. DEFINITIONS

        (a)    "Board of Directors" shall mean the Board of Directors of the
               Company, as constituted from time to time.

        (b)    "Change in Control" means the occurrence of either of the
               following events:

               (i)    a change in the composition of the Board of Directors, as
                      a result of which fewer than one-half of the incumbent
                      directors are directors who either:

                      (A)    Had been directors of the Company twenty-four (24)
                             months prior to such change; or

                      (B)    Were elected, or nominated for election, to the
                             Board of Directors with the affirmative votes of at
                             least a majority of the directors who had been
                             directors of the Company twenty-four (24) months
                             prior to such change and who were still in office
                             at the time of the election or nomination; or

               (ii)   Any "person" (as such term is used in sections 13(d) and
                      14(d) of the Exchange Act) by the acquisition or
                      aggregation of securities is or becomes the beneficial
                      owner, directly or indirectly, of securities of the
                      Company representing twenty percent (20%) or more of the
                      combined voting power of the Company's then outstanding
                      securities ordinarily (and apart from rights accruing
                      under special circumstances) having the right to vote at
                      elections of directors (the "Base Capital Stock"): except
                      that any change in the relative beneficial ownership of
                      the Company's securities, shall be disregarded until such
                      person increases in any manner, directly or indirectly,
                      such person's beneficial ownership of any securities of
                      the Company. For purposes of this Subsection (ii), the
                      term "person" shall not include an employee benefit plan
                      maintained by the Company.

        (c)    "Code" shall mean the Internal Revenue Code of 1986, as amended.

        (d)    "Committee" shall mean the committee designated by the Board of
               Directors, which is authorized to administer the Plan under
               Section 3 hereof. The Committee shall have membership composition
               which enables the Options or other rights granted under the Plan
               to qualify for exemption under Rule 16b-3 with respect to persons
               who are subject to Section 16 of the Exchange Act.

        (e)    "Company" shall mean SONICblue Incorporated, a Delaware
               corporation formerly known as S3 Incorporated.

        (f)    "Employee" shall mean (I) any individual who is a common-law
               employee of the Company or of a Subsidiary, (ii) a member of the
               Board of Directors and (iii) an independent contractor or advisor
               who performs services for the Company or a Subsidiary. Service as
               a member of the Board of Directors or as an independent
               contractor or advisor shall be considered employment for all
               purposes of the Plan except the second sentence of Section 4(a)
               and Section 4(b).

        (g)    "Exchange Act" shall mean the Securities Exchange Act of 1934, as
               amended.

        (h)    "Exercise Price" shall mean the amount for which one Share may be
               purchased upon exercise of an Option, as specified by the
               Committee in the applicable Stock Option Agreement.

        (i)    "Fair Market Value" shall mean (i) THE CLOSING PRICE OF A Share
               on the principal exchange which the Shares are trading, on the
               date on which the Fair Market Value is determined (if Fair Market
               Value is determined on a date which the principal exchange is
               closed, Fair Market Value shall be determined on the last
               immediately preceding trading day), or (ii) if the Shares are not
               traded on an exchange but are quoted on the Nasdaq National
               Market or a successor quotation system, the closing price on the
               date on which the Fair Market Value is determined, or (iii) if
               the Shares are not traded on an exchange or quoted on the Nasdaq
               National Market or a successor quotation system, the fair market
               value of a Share, as determined by the Committee in good faith.
               Such determination shall be conclusive and binding on all
               persons.

        (j)    "ISO" shall mean an employee incentive stock option described in
               Code section 422.


                                       32
<PAGE>

        (k)    "Nonstatutory Option" shall mean an employee stock option that is
               not an ISO.

        (l)    "Offeree" shall mean an individual to whom the Committee has
               offered the right to acquire Shares under the Plan (other than
               upon exercise of an Option).

        (m)    "Option" shall mean an ISO or Nonstatutory Option granted under
               the Plan and entitling the holder to purchase Shares.

        (n)    "Optionee" shall mean an individual who holds an Option.

        (o)    "Outside Director" shall mean a member of the Board of Directors
               who is not a common-law employee of the Company or of a
               Subsidiary.

        (p)    "Plan" shall mean this 1989 Stock Pan of SONICblue Incorporated,
               as amended from time to time.

        (q)    "Purchase Price" shall mean the consideration for which one Share
               may be acquired under the Plan (other than upon exercise of an
               Option), as specified by the Committee.

        (r)    "Service" shall mean service as an Employee.

        (s)    "Share" shall mean one share of Stock, as adjusted in accordance
               with Section 9 (if applicable).

        (t)    "Stock" shall mean the Common Stock of the Company.

        (u)    "Stock Option Agreement" shall mean the agreement between the
               Company and an Optionee which contains the terms, conditions and
               restrictions pertaining to his Option.

        (v)    "Stock Purchase Agreement" shall mean the agreement between the
               Company and an Offeree who acquires Shares under the Plan which
               contains the terms, conditions and restrictions pertaining to the
               acquisition of such Shares.

        (w)    "Subsidiary" shall mean any corporation, if the Company and/or
               one or more other Subsidiaries own not less than 50 percent of
               the total combined voting power of all classes of outstanding
               stock of such corporation. A corporation that attains the status
               of a Subsidiary on a date after the adoption of the Plan shall be
               considered a Subsidiary commencing as of such date.

        (x)    "Total and Permanent Disability" shall mean that the Optionee is
               unable to engage in any substantial gainful activity by reason of
               any medically determinable physical or mental impairment which
               can be expected to result in death or which has lasted, or can be
               expected to last, for a continuous period of not less than six
               (6) months.

SECTION 3. ADMINISTRATION.

        (a)    Committee Procedures. The Board of Directors shall designate one
               of the members of the Committee as chairman. The Committee may
               hold meetings at such times and places as it shall determine. The
               acts of a majority of the Committee members present at meetings
               at which a quorum exists, or acts reduced to or approved in
               writing by all Committee members, shall be valid acts of the
               Committee.

        (b)    Committee Responsibilities. Subject to the provisions of the
               Plan, the committee shall have full authority and discretion to
               take the following actions;

               (i)    To interpret the Plan and to apply its provisions;

               (ii)   To adopt, amend or rescind rules, procedures and forms
                      relating to the Plan;

               (iii)  To authorize any person to execute, on behalf of the
                      Company, any instrument required to carry out the purposes
                      of the Plan;

               (iv)   To determine when Shares are to be awarded or offered for
                      sale and when Options are to be granted under the Plan;

               (v)    To select the Offerees and Optionees;

               (vi)   To determine the number of Shares to be offered to each
                      Offeree or to be made subject to each Option;

               (vii)  To prescribe the terms and conditions of each award or
                      sale of Shares, including (without limitation) the
                      Purchase Price, the vesting of the award (including
                      accelerating the vesting of awards) and to specify the
                      provisions of the Stock Purchase Agreement relating to
                      such award or sale;

               (viii) To prescribe the terms and conditions of each Option,
                      including (without limitation) the Exercise Price, the
                      vesting or duration of the Option (including accelerating
                      the vesting of the Option), to determine whether such
                      Option is to be classified as an ISO or as a Nonstatutory
                      Option, and to specify the provisions of the Stock Option
                      Agreement relating to such Option;

               (ix)   To amend any outstanding Stock Purchase Agreement or Stock
                      Option Agreement, subject to applicable legal restrictions
                      and to the consent of the Offeree or Optionee who entered
                      into such agreement;


                                       33
<PAGE>

               (x)    To prescribe the consideration for the grant of each
                      Option or other right under the Plan and to determine the
                      sufficiency of such consideration;

               (xi)   To determine the disposition of each Option or other right
                      under the Plan in the event of an Optionee's or Offeree's
                      divorce or dissolution of marriage;

               (xii)  To determine whether Options or other rights under the
                      Plan will be granted in replacement of other grants under
                      an incentive or other compensation plan of an acquired
                      business;

               (xiii) To correct any defect, supply any omission, or reconcile
                      any inconsistency in the Plan, any Stock Option Agreement
                      or any Stock purchase Agreement; and

               (xiv)  To take any other actions deemed necessary or advisable
                      for the administration of the Plan.

Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions and limitations as it may deem appropriate,
except that the Committee may not delegate its authority with regard to the
selection for participation of or the granting of Options or other rights under
the Plan to persons subject to Section 16 of the Exchange Act. All decisions,
interpretations and other actions of the Committee shall be final and binding on
all Offerees, all Optionees, and all persons deriving their rights from an
Offeree or Optionee. No member of the Committee shall be liable for any action
that he has taken or has failed to take in good faith with respect to the Plan,
any Option, or any right to acquire Shares under the Plan.

SECTION 4. ELIGIBILITY.

        (a)    General Rule. Only Employees shall be eligible for designation as
               Optionees or Offerees by the Committee. In addition, only
               individuals who are employed as common-law employees by the
               Company or a Subsidiary shall be eligible for the grant of ISOs.

        (b)    Outside Directors. Any other provision of the Plan
               notwithstanding, the participation of Outside Directors in the
               Plan shall be subject to the following restrictions:

               (i)    Outside Directors shall only be eligible for the grant of
                      Nonstatutory Options as described in this Section 4(b).

               (ii)   Each Outside Director shall automatically be granted a
                      Nonstatutory Option to purchase 40,000 Shares (subject to
                      adjustment under Section 9) as a result of their
                      appointment as an Outside Director. Subject to paragraph
                      (iii) below, upon the conclusion of each regular annual
                      meeting of the Company's stockholders following the
                      meeting at which they were appointed, each Outside
                      Director who will continue servicing as a member of the
                      Board thereafter shall receive a Nonstatutory Option to
                      purchase 20,000 Shares (subject to adjustment under
                      Section 9). All such Nonstatutory Options shall vest and
                      become exercisable at the rate of twenty-five percent
                      (25%) upon each one (1) year anniversary of the date the
                      option is granted to the Outside Director. No Shares shall
                      vest after termination of the Outside Director's Service.

               (iii)  Each Outside Director who serves on the Board on December
                      14, 1998 shall automatically be granted a Nonstatutory
                      Option to purchase 100,000 Shares (subject to adjustment
                      under Section 9): provided that such Nonstatutory Options
                      shall be lieu of any Nonstatutory Options that would
                      otherwise be granted to the Outside Director pursuant to
                      paragraph (ii) above before the 2004 annual meeting of the
                      Company's stockholders. Such Nonstatutory Options shall
                      vest and become exercisable as follows: 20,000 shares vest
                      and become exercisable at the rate of twenty-five percent
                      (25%) upon each one (1) year anniversary of the regular
                      annual meeting of the Company's stockholders occurring in
                      calendar year 1999; 20,000 shares vest and become
                      exercisable at the rate of twenty-five percent (25%) upon
                      each one (1) year anniversary of the regular annual
                      meeting of the company's stockholders occurring in
                      calendar year 2000; 20,000 shares vest and become
                      exercisable at the rate of twenty-five percent (25%) upon
                      each one (1) year anniversary of the regular annual
                      meeting of the Company's stockholders occurring in
                      calendar year 2001; 20,000 shares vest and become
                      exercisable at the rate of twenty-five percent (25%) upon
                      each one (1) year anniversary of the regular annual
                      meeting of the Company's stockholders occurring in
                      calendar year 2002; and 20,000 shares vest and become
                      exercisable at the rate of twenty-five percent (25%) upon
                      each one (1) year anniversary of the regular annual
                      meeting of the company's stockholders occurring in
                      calendar year 2003. No Shares shall vest after termination
                      of the Outside Director's Service.

               (iv)   All Nonstatutory Options granted to an Outside Director
                      under this Section 4(b) shall also become exercisable in
                      full in the event of (a) the termination of such Outside
                      Director's service because of death or Total and Permanent
                      Disability or (b) a Change in Control of the Company.

               (v)    The Exercise Price of all Nonstatutory Options granted to
                      an Outside Director under this Section 4(b) shall be equal
                      to one hundred percent (100%) of the Fair Market Value of
                      a Share on the date of grant, payable in one of the forms
                      described in Sections 8(a), (b) and (d).

               (vi)   All Nonstatutory Options granted to an Outside Director
                      under this Section 4(b) shall terminate on the earliest of
                      (A) the 10th anniversary of the date of grant of such
                      Options. (B) the date ninety (90) days after the
                      termination of such Outside Director's service for any
                      reason other than death, Total and Permanent Disability or
                      voluntary retirement as an Outside Director at or after
                      the age of 60, or (C) the date twelve (12) months after
                      the termination of such Outside Director's service because
                      of death, Total and Permanent Disability or voluntary
                      retirement as an Outside Director at or after the age of
                      60.


                                       34
<PAGE>

               (vii)  Each Outside Director serving on the Board on February 28,
                      2000 shall automatically be granted a Nonstatutory Option
                      to purchase 20,000 Shares (subject to adjustment under
                      Section 9) on such date. All such Nonstatutory Options
                      shall vest and become exercisable at the rate of
                      twenty-five percent (25%) upon each one (1) year
                      anniversary of the date the option is granted to the
                      Outside Director. No Shares shall vest after termination
                      of the Outside Director's Service.

        (c)    Limitation on Grants. No Employee shall be granted Options to
               purchase more than 1,500,000 Shares in any fiscal year of the
               Company; provided, however, that with respect to fiscal year
               1998, the 1,500,000 Share limit shall be increased to 4,500,000
               Shares.

        (d)    Ten-Percent Stockholders. An Employee who owns more than 10
               percent of the total combined voting power of all classes of
               outstanding stock of the Company or any of its Subsidiaries shall
               not be eligible for the grant of an ISO unless such grant
               satisfies the requirements of Code section 422(c)(6).

        (e)    Attribution Rules. For purposes of Subsection (d) above, in
               determining stock ownership, an Employee shall be deemed to own
               the stock owned, directly or indirectly, by or for his brothers,
               sisters, ancestors and lineal descendants. Stock owned, directly
               or indirectly, by or for a corporation, partnership, estate or
               trust shall be deemed to be owned proportionately by or for its
               shareholders, partners or beneficiaries.

        (f)    Outstanding Stock. For purposes of Subsection (d) above,
               "outstanding stock" shall not include shares authorized for
               issuance under outstanding options held by the Employee or by any
               other person.

SECTION 5. STOCK SUBJECT TO PLAN.

        (a)    Basic Limitation. Shares offered under the Plan shall be
               authorized but unissued Shares or treasury Shares. As of December
               14, 1999, 26,253,105 shares have been reserved for issuance under
               the Plan (upon exercise of Options or other rights to acquire
               Shares), which includes the 4,500,000 Shares reserved for
               issuance on October 20, 1998. On each January 1 for the remaining
               term of the Plan, the aggregate number of Shares which may be
               issued under the Plan to individuals other than Outside Directors
               (upon exercise of Options or other rights to acquire Shares)
               shall be increased by a number of Shares equal to 3.25 percent of
               the total number of Shares of the Common Stock of the Company
               outstanding at the end of the most recently concluded calendar
               year. Any Shares that have been reserved but not issued as Shares
               or Options during any calendar year shall remain available for
               grant during any subsequent calendar year. Notwithstanding the
               foregoing, no more than 36,000,000 Shares may be issued under
               ISO's for the remaining term of the Plan. The aggregate number of
               Shares which may be issued under the Plan shall at all times be
               subject to adjustment pursuant to Section 9. The number of Shares
               which are subject to Options or other rights outstanding at any
               time under the Plan shall not exceed the number of Shares which
               then remain available for issuance under the Plan. The Company,
               during the term of the Plan, shall at all times reserve and keep
               available sufficient Shares to satisfy the requirements of the
               Plan.

        (b)    Additional Shares. In the event that any outstanding Option or
               other right for any reason expires or is canceled or otherwise
               terminated, the Shares allocable to the unexercised portion of
               such Option or other right shall again be available for the
               purposes of the Plan. If Shares are forfeited before any
               dividends have been paid with respect to the Shares, then such
               Shares shall again be available for award or sale under the Plan.

SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.

        (a)    Stock Purchase Agreement. Each award or sale of Shares under the
               Plan (other than upon exercise of an Option) shall be evidenced
               by a Stock Purchase Agreement between the Offeree and the
               Company. Such award or sale shall be subject to all applicable
               terms and conditions of the Plan and may be subject to any other
               terms and conditions which are not inconsistent with the Plan and
               which the Committee deems appropriate for inclusion in a Stock
               Purchase Agreement. The provisions of the various Stock Purchase
               Agreements entered into under the Plan need not be identical.

        (b)    Duration of Offers and Nontransferability of Rights. Any right to
               acquire Shares under the Plan (other than an Option) shall
               automatically expire if not exercised by the Offeree with thirty
               (30) days after the grant of such right was communicated to him
               by the Committee. Such right shall not be transferable and shall
               be exercisable only by the Offeree to whom such right was
               granted.

        (c)    Purchase Price. The Purchase Price shall be determined by the
               Committee at its sole discretion. The Purchase Price shall be
               payable in one of the forms described in Sections 8(a) and (c).

        (d)    Withholding Taxes. As a condition to the purchase of Shares, the
               Offeree shall make such arrangements as the Committee may require
               for the satisfaction of any federal state or local withholding
               tax obligations that may arise in connection with such purchase.

        (e)    Restrictions on Transfer of Shares. Any Shares awarded or sold
               under the Plan shall be subject to such special forfeiture
               conditions, rights of repurchase, rights of first refusal and
               other transfer restrictions as the Committee may determine. Such
               restrictions shall be set forth in the applicable Stock Purchase
               Agreement and shall apply in addition to any general restrictions
               that may apply to all holders of Shares.

SECTION 7. TERMS AND CONDITIONS OF OPTIONS.


                                       35
<PAGE>

        (a)    Stock Option Agreement. Each grant of an Option under the Plan
               shall be evidenced by a Stock Option Agreement between the
               Optionee and the Company. Such Option shall be subject to all
               applicable terms and conditions of the Plan and may be subject to
               any other terms and conditions which are not inconsistent with
               the Plan and which the Committee deems appropriate for inclusion
               in a Stock Option Agreement. The provisions of the various Stock
               Option Agreements entered into under the Plan need not be
               identical.

        (b)    Number of Shares. Each Stock Option Agreement shall specify the
               number of Shares that are subject to the Option and shall provide
               for the adjustment of such number in accordance with Section 9.
               The Stock Option Agreement shall also specify whether the Option
               is an ISO or a Nonstatutory Option.

        (c)    Exercise Price. Each Stock Option Agreement shall specify the
               Exercise Price. The Exercise Price of an ISO shall not be less
               than 100 percent of the Fair Market Value of a Share on the date
               of grant, except as otherwise provided in Section 4(d). Subject
               to the preceding sentence, the Exercise Price under any Option
               shall be determined by the Committee at its sole discretion. The
               Exercise Price shall be payable in one of the forms described in
               Sections 8(a), (b) and (d).

        (d)    Withholding Taxes. As a condition to the exercise of an Option,
               the Optionee shall make such arrangements at the Committee may
               require for the satisfaction of any federal, state or local
               withholding tax obligations that may arise in connection with
               such exercise. The Optionee shall also make such arrangements as
               the Committee may require for the satisfaction of any federal,
               state or local withholding tax obligations that may arise in
               connection with the disposition of Shares acquired by exercising
               an Option.

        (e)    Exercisability and Term. Each Stock Option Agreement shall
               specify the date when all or any installment of the Option is to
               become exercisable. The Stock Option Agreement shall also specify
               the term of the Option. The term shall not exceed ten (1) years
               from the date of grant, except as otherwise provided in Section
               4(d). Subject to the preceding three sentences, the Committee at
               its sole discretion shall determine when all or any installment
               of an Option is to become exercisable and when an Option is to
               expire.

        (f)    Nontransferability. During an Optionee's lifetime, his Option(s)
               shall be exercisable only by him and shall not be transferable.
               In the event of an Optionee's death, his Option(s) shall not be
               transferable other than by will or by the laws of descent and
               distribution.

        (g)    Exercise of Options Upon Termination of Service. Each Stock
               Option Agreement shall set forth the extent to which the Optionee
               shall have the right to exercise the Option following termination
               of the Optionee's Service with the Company and its Subsidiaries,
               and the right to exercise the Option of any executors or
               administrators of the Optionee's estate or any person who has
               acquired such Option(s) directly from the Optionee by bequest or
               inheritance. Such provisions shall be determined in the sole
               discretion of the Committee, need not be uniform among all
               Options issued pursuant to the Plan, and may reflect distinctions
               based on the reasons for termination of Service.

        (h)    Leaves of Absence. An Optionee's Service shall be deemed to
               continue while the Optionee is on military leave, sick leave or
               other bonafide leave of absence (as determined by the Committee).
               The foregoing notwithstanding, in the case of an ISO granted
               under the Plan, Service shall not be deemed to continue beyond
               the first ninety (90) days of such leave, unless the Optionee's
               re-employment rights are guaranteed statute or by contract.

        (i)    No Rights as a Stockholder. An Optionee, or a transferee of an
               Optionee, shall have no rights as a stockholder with respect to
               any Shares covered by his Option until the date of the issuance
               of stock certificate for such Shares. No adjustments shall be
               made, except as provided in Section 9.

        (j)    Modification, Extension and Renewal of Options. Within the
               limitations of the Plan, the Committee may modify, extend or
               renew outstanding options or may accept the cancellation of
               outstanding options (to the extent not previously exercised),
               whether or not granted hereunder, in return for the grant of new
               Options at the same or a different price. The foregoing
               notwithstanding, no modification of an Option shall, without the
               consent of the Optionee, impair his rights or increase his
               obligations under such Option.

        (k)    Restrictions on Transfer of Shares. Any Shares issued upon
               exercise of an Option shall be subject to such special forfeiture
               conditions, rights of repurchase, rights of first refusal and
               other transfer restrictions as the Committee may determine. Such
               restrictions shall be set forth in the applicable Stock Option
               Agreement and shall apply in addition to any general restrictions
               that may apply to all holders of Shares.

SECTION 8. PAYMENT FOR SHARES.

        (a)    General Rule. The entire Purchase Price or Exercise Price of
               Shares issued under the Plan shall be payable in lawful money of
               the United States of America at the time when such Shares are
               purchased, except as provided in Subsections (b), (c) and (d)
               below.

        (b)    Surrender of Stock. To the extent that a Stock Option Agreement
               so provides, payment may be made all or in part with Shares which
               have already been owned by the Optionee or his representative for
               more than twelve (12) months and which are surrendered to the
               Company in good form for transfer. Such Shares shall be valued at
               their Fair Market Value on the date when the new Shares are
               purchased under the Plan.

        (c)    Services Rendered. At the discretion of the Committee, Shares may
               be awarded under the Plan in consideration of services rendered
               to the Company or a Subsidiary prior to the award. If Shares are
               awarded without the payment of


                                       36
<PAGE>

               a Purchase Price in each, the Committee shall make a
               determination (at the time of the award) of the value of the
               services rendered by the Offeree and the sufficiency of the
               consideration to meet the requirements of Section 6(c).

        (d)    Cashless Exercise. To the extent that a Stock Option Agreement so
               provides, payment may be made all or in part by delivery (on a
               form prescribed by the Committee) of an irrevocable direction to
               a securities broker to sell Shares and to deliver all or part of
               the sale proceeds to the Company in payment of the aggregate
               Exercise Price.

SECTION 9. ADJUSTMENT OF SHARES.

        (a)    General. In the event of a subdivision of the outstanding Stock,
               a declaration of a dividend payable in Shares, a declaration of a
               dividend payable in a form other than Shares in an amount that
               has a material effect on the value of Shares, a combination or
               consolidation of the outstanding Stock (by reclassification or
               otherwise) into a lesser number of Shares, a recapitalization or
               a similar occurrence, the Committee shall make appropriate
               adjustments in one or more of (i) the number of Shares available
               for future grants under Section 5, (ii) the number of Shares
               available for grants under Section 4(c), (iii) the number of
               Shares covered by each outstanding Option, (iv) the Exercise
               Price under each outstanding Option, (v) the number of shares
               covered by each outstanding award or (vi) the Purchase Price of
               each outstanding award.

        (b)    Reorganizations. In the event that the Company is a party to a
               merger or other reorganization, outstanding Options shall be
               subject to the agreement of merger or reorganization. Such
               agreement may provide for the assumption of outstanding Options
               by the surviving corporation or its parent or for their
               continuation by the Company (if the Company is a surviving
               corporation); provided, however, that if assumption or
               continuation of the outstanding Options is not provided by such
               agreement then the Committee shall have the option of offering
               the payment of a cash settlement equal to the difference between
               the amount to be paid for one Share under such agreement and the
               Exercise Price, in all cases without the Optionees' consent.

        (c)    Reservation of Rights. Except as provided in this Section 9, an
               Optionee or Offeree shall have no rights by reason of any
               subdivision or consolidation of shares of stock of any class, the
               payment of any dividend or any other increase or decrease in the
               number of shares of stock of any class. Any issue by the Company
               of shares of stock of any class, shall not affect, and no
               adjustment by reason thereof shall be made with respect to, the
               number or Exercise Price of Shares subject to an Option. The
               grant of an Option pursuant to the Plan shall not affect in any
               way the right or power of the Company to make adjustments,
               reclassifications, reorganizations or changes of its capital or
               business structure, to merge or consolidate or to dissolve,
               liquidate, sell or transfer all or any part of its business or
               assets.

SECTION 10. LEGAL AND REGULATORY REQUIREMENTS.

        Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations and the regulations of any stock exchange on which the
Company's securities may then be listed, and the Company has obtained the
approval or favorable ruling from any governmental agency which the Company
determines is necessary or advisable.

SECTION 11. NO EMPLOYMENT RIGHTS.

        No provision of the Plan, nor any right or Option granted under the
Plan, shall be construed to give any person any right to become, to be treated
as, or to remain an Employee. The Company and its Subsidiaries reserve the right
to terminate any person's Service at any time and for any reason, with or
without notice.

SECTION 12. DURATION AND AMENDMENTS.

        (a)    Term of the Plan. The amended and restated Plan, as set forth
               herein, shall terminate automatically on December 13, 2008 and
               may be terminated on any earlier date pursuant to Subsection (b)
               below.

        (b)    Right to Amend or Terminate the Plan. The Board of Directors may
               amend the Plan at any time and from time to time. Rights and
               obligations under any Option granted before amendment of the Plan
               shall not be materially altered, or impaired adversely by such
               amendment, except with consent of the person to whom the Option
               was granted. An amendment of the Plan shall be subject to the
               approval of the Company's stockholders only to the extent
               required by applicable laws, regulations or rules.

SECTION 13. EMPLOYEES BASED OUTSIDE OF THE UNITED STATES.

        Notwithstanding any provision of the Plan to the contrary, in order to
foster and promote achievement of the purposes of the Plan or to comply with
provisions of laws or regulations in other countries in which the Company and
its Subsidiaries operate or have employees, the Committee, in its sole
discretion, shall have the power and authority to (a) determine which Employees
outside the United States are eligible to participate in the Plan, (b) modify
the terms and conditions of any Options granted to Employees outside the United
States and (c) establish subplans, modified option exercise procedures and other
terms and procedures to the extent such actions may be necessary or advisable.

SECTION 14. EXECUTION.


                                       37
<PAGE>

        To record the adoption of the amended and restated Plan by the Board of
Directors effective as of May 16, 2001, the Company has caused its authorized
officer to execute the same.

                                        SONICblue INCORPORATED

                                        By: /s/ Ken Potashner
                                            ------------------------------
                                        Ken Potashner
                                        President, Chairman and Chief
                                        Executive Officer





                                       38