Document:

Prepared by R.R. Donnelley Financial -- 1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

  
 Exhibit 10.7 
  
 NVIDIA Corporation 
  
 1998 Non-Employee
Directors’ Stock Option Plan 
  
 1.    PURPOSE. 
  

(a)  The purpose of the 1998 Non-Employee Directors’ Stock Option Plan (the “Plan”) is to provide a means by which each director of
NVIDIA Corporation (the “Company”) who is not otherwise at the time of grant an employee of or consultant to the Company or of any Affiliate of the Company (each such person being hereafter referred to as a “Non-Employee
Director”) will be given an opportunity to purchase stock of the Company. 
  
 (b)  The
word “Affiliate” as used in the Plan means any parent corporation or subsidiary corporation of the Company as those terms are defined in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended from time to
time (the “Code”). 
  
 (c)  The Company, by means of the Plan, seeks to retain the
services of persons now serving as Non-Employee Directors of the Company, to secure and retain the services of persons capable of serving in such capacity, and to provide incentives for such persons to exert maximum efforts for the success of the
Company. 
  
 2.    ADMINISTRATION. 
  
 (a)  The Board of Directors of the Company (the “Board”) shall administer the Plan unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(b). 
  
 (b)  The Board may delegate administration
of the Plan to a committee composed of two (2) or more members of the Board (the “Committee”). If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board
the administration of the Plan. 
  
 3.    SHARES SUBJECT TO THE PLAN. 
  
 (a)  Subject to the provisions of paragraph 10 relating to adjustments upon changes in stock, the stock that may be sold
pursuant to options granted under the Plan shall not exceed in the aggregate One Million Two Hundred Thousand (1,200,000) shares of the Company’s common stock. If any option granted under the Plan shall for any reason expire or otherwise
terminate without having been exercised in full, the stock not purchased under such option shall again become available for the Plan. 
 

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 (b)  The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise. 
  
 4.    ELIGIBILITY. 
  
 Options shall be granted only to Non-Employee Directors of the Company. 
  
 5.    NON-DISCRETIONARY GRANTS. 
  
 (a)  Each person who is elected or appointed for the first time to be a Non-Employee Director automatically shall, upon the date of his or her initial election or appointment to be a Non-Employee Director by the
Board or shareholders of the Company, be granted an option to purchase Seventy-Five Thousand (75,000) shares of common stock of the Company on the terms and conditions set forth herein (an “Initial Grant”). 
  
 (b)  On August 1, 2002, each person who is then a Non-Employee Director automatically shall be granted an option to
purchase Seventy-Five Thousand (75,000) shares of common stock of the Company (a “2002 Grant”); provided, however, that if the person has not been serving as a Non-Employee Director for the entire period since the Annual Meeting of
Shareholders in 2001, then the number of shares subject to the 2002 Grant shall be reduced pro rata for each full quarter prior to the date of grant during which such person did not serve as a Non-Employee Director. 
  
 (c)  On August 1st of each year, commencing with August 1st,
2003, each person who is then a Non-Employee Director automatically shall be granted an option to purchase Twenty-Five Thousand (25,000) shares of common stock of the Company (an “Annual Grant”); provided, however, that if the
person has not been serving as a Non-Employee Director for the entire period since the preceding August 1st, then the number of shares subject to the Annual Grant shall be reduced pro rata for each full quarter prior to the date of grant during which such person did not serve as a Non-Employee Director. 

 
 (d)  On August 1st of each year, commencing with August 1st,
2002, each Non-Employee Director who is then a member of a committee of the Board automatically shall be granted, for each such committee, an option to purchase Five Thousand (5,000) shares of common stock of the Company (a “Committee
Grant”); provided, however, that if the person has not been serving as a Non-Employee Director for the entire period since the preceding August 1st, the number of shares subject to the Committee Grant shall be reduced pro rata for each full quarter prior to the date of grant during which such person did not serve as a Non-Employee
Director. 
  
 6.    OPTION PROVISIONS. 
  
 Each option shall be subject to the following terms and conditions: 
  
 (a)  The term of each option commences on the date it is granted and, unless sooner terminated as set forth herein, expires on the date ten (10) years from the date of grant

 

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 (“Expiration Date”). If the optionee’s service as a Non-Employee Director of the
Company or an employee, member of the Board of Directors or consultant to the Company or any Affiliate terminates for any reason or for no reason, the option shall terminate on the earlier of the Expiration Date or the date twelve (12) months
following the date of termination of all such service; provided, however, that if such termination of service is due to the optionee’s death, the option shall terminate on the earlier of the Expiration Date or eighteen (18) months
following the date of the optionee’s death. 
  
 (b)  The exercise price of each option shall be
equal to one hundred percent (100%) of the Fair Market Value of the stock (as such term is defined in subparagraph 9(d)) subject to such option on the date such option is granted. 
  
 (c)  The optionee may elect to make payment of the exercise price under one of the following alternatives: 
  
 (i)  Payment of the exercise price per share in cash at the time of exercise; 
  
 (ii)  Provided that at the time of the exercise the Company’s common stock is publicly traded and
quoted regularly in the Wall Street Journal, payment by delivery of shares of common stock of the Company already owned by the optionee, held for the period required to avoid a charge to the Company’s reported earnings, and owned free and clear
of any liens, claims, encumbrances or security interest, which common stock shall be valued at its Fair Market Value on the date preceding the date of exercise; or 
  
 (iii)  Payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board which results in the receipt
of cash (or check) by the Company either prior to the issuance of shares of the Company’s common stock or pursuant to the terms of irrevocable instructions issued by the optionee prior to the issuance of shares of the Company’s common
stock. 
  
 (iv)  Payment by a combination of the methods of payment specified in
subparagraph 6(c)(i) through 6(c)(iii) above. 
  
 (d)  An option shall be transferable only to the
extent specifically provided in the option agreement; provided, however, that if the option agreement does not specifically provide for the transferability of an option, then the option shall not be transferable except by will or by the laws
of descent and distribution, and shall be exercisable during the lifetime of the person to whom the option is granted only by such person (or by his guardian or legal representative) or transferee pursuant to such an order. Notwithstanding the
foregoing, the optionee may, by delivering written notice to the Company in a form satisfactory to the Company, designate a third party who, in the event of the death of the optionee, shall thereafter be entitled to exercise the option.

  
 (e)  The options granted pursuant to Section 5 shall vest and become exercisable as
follows: 
 

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 (i)  The Initial Grant shall vest quarterly over
the three (3)-year period following the date of grant such that the entire Initial Grant shall become exercisable on the three (3)-year anniversary of the date of grant of the option, provided that the optionee has, during the entire period prior to
each such vesting installment date, continuously served as a director or employee of or consultant to the Company or any Affiliate of the Company, whereupon such option shall become fully vested and exercisable in accordance with its terms with
respect to that portion of the shares represented by that installment. 
  
 (ii)  With respect to a 2002 Grant, if the optionee has attended at least seventy-five percent (75%) of the meetings of the Board held between the date of grant of the option and the one (1)-year anniversary of the
date of grant of the option, then the 2002 Grant shall vest thirty-three percent (33%) on the one (1)-year anniversary of the date of grant of the option with the remaining sixty-seven percent (67%) vesting quarterly over the second and third years
following the date of the grant of the option such that the entire 2002 Grant shall become vested and exercisable on the three (3)-year anniversary of the date of the grant of the option. If the optionee’s service as a Director terminates
between the date of grant of the option and the three (3)-year anniversary of the date of grant of the option due to the disability or death of the optionee, then the 2002 Grant shall immediately vest and become exercisable on a quarterly pro rata
basis. Unless the 2002 Grant sooner vests and becomes exercisable as provided in this subsection 6(e)(ii), the 2002 Grant shall vest annually over the four (4)-year period following the date of grant at the rate of ten percent (10%) per year for the
first three (3) years and seventy percent (70%) for the fourth (4th) year such that the entire 2002 Grant shall become vested and exercisable on the four (4)-year anniversary of the date of grant of the option, provided that the optionee has, during
the entire period prior to each such vesting installment date, continuously served as a director or employee of or consultant to the Company or any Affiliate of the Company, whereupon such option shall become fully vested and exercisable in
accordance with its terms with respect to that portion of the shares represented by that installment. 
  
 (iii)  With respect to an Annual Grant, if the optionee has attended at least seventy-five percent (75%) of the meetings of the Board held between the date of grant of the option and the two (2)-year anniversary of
the date of grant of the option, then the Annual Grant shall begin vesting quarterly in equal installments on the two (2)-year anniversary of the date of grant such that entire Annual Grant shall become vested and exercisable on the three (3)-year
anniversary of the date of the grant of the option. If the optionee’s service as a Director terminates between the date of grant of the option and the two (2)-year anniversary of the date of grant of the option due to the disability or death of
the optionee, then the Annual Grant shall immediately vest and become exercisable on a quarterly pro rata basis. Unless the Annual Grant sooner vests and becomes exercisable as provided in this subsection 6(e)(iii), the Annual Grant shall vest over
the four (4)-year period following the date of grant at the rate of thirty percent (30%) on the three (3)-year anniversary of the date of grant of the option and seventy percent (70%) on the four (4)-year anniversary such that the entire Annual
Grant shall become vested and exercisable on the four (4)-year anniversary of the date of grant of the option, provided that the optionee has, during the entire period prior to each such vesting installment date, continuously served as a director or
employee of or consultant to the Company or any Affiliate 
 

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 of the Company, whereupon such option shall become fully vested and
exercisable in accordance with its terms with respect to that portion of the shares represented by that installment. 
  
 (iv)  With respect to each Committee Grant, if the optionee has attended at least seventy-five percent (75%) of the meetings of the committee held between the date of grant of the option and the one (1)-year
anniversary of the date of grant of the option, then the Committee Grant shall vest and become exercisable in full on the one (1)-year anniversary of the date of grant. If the optionee’s service as a committee member terminates between the date
of grant of the option and the one (1)-year anniversary of the date of grant of the option due to the disability or death of the optionee, then the Committee Grant shall immediately vest and become exercisable on a monthly pro rata basis. Unless the
Committee Grant sooner vests and becomes exercisable as provided in this subsection 6(e)(iv), the Committee Grant shall vest annually over the four (4)-year period following the date of grant at the rate of ten percent (10%) per year for the first
three (3) years and seventy percent (70%) for the fourth (4th) year such that the entire Committee Grant shall become exercisable on the four (4)-year anniversary of the date of grant of the option, provided that the optionee has, during the entire
period prior to each such vesting installment date, continuously served as a director or employee of or consultant to the Company or any Affiliate of the Company, whereupon such option shall become fully vested and exercisable in accordance with its
terms with respect to that portion of the shares represented by that installment. 
  
 (f)  The
Company may require any optionee, or any person to whom an option is transferred under subparagraph 6(d), as a condition of exercising any such option: (i) to give written assurances satisfactory to the Company as to the optionee’s knowledge
and experience in financial and business matters; and (ii) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the option for such person’s own account and not with any present
intention of selling or otherwise distributing the stock. These requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise of the option has been registered under a
then currently-effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need
not be met in the circumstances under the then applicable securities laws. The Company may require any optionee to provide such other representations, written assurances or information that the Company shall determine is necessary, desirable or
appropriate to comply with applicable securities laws as a condition of granting an option to the optionee or permitting the optionee to exercise the option. The Company may, upon advice of counsel to the Company, place legends on stock certificates
issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock. 
  
 (g)  Notwithstanding anything to the contrary contained herein, an option may not be exercised unless the shares issuable
upon exercise of such option are then registered under the Securities Act or, if such shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities
Act. 
 

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 7.    COVENANTS OF THE COMPANY. 
  
 (a)  During the terms of the options granted under the Plan, the Company shall keep available at all times the number of
shares of stock required to satisfy such options. 
  
 (b)  The Company shall seek to obtain
from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the options granted under the Plan; provided however, that this undertaking shall
not require the Company to register under the Securities Act either the Plan, any option granted under the Plan, or any stock issued or issuable pursuant to any such option. If, after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise
of such options. 
  
 8.    USE OF PROCEEDS FROM STOCK. 
  
 Proceeds from the sale of stock pursuant to options granted under the Plan shall constitute general funds of the Company. 

 
 9.    MISCELLANEOUS. 
  
 (a)  Neither an optionee nor any person to whom an option is transferred under subparagraph 6(d) shall be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such option unless and until such person has satisfied all requirements for exercise of the option pursuant to its terms. 
  
 (b)  Nothing in the Plan or in any instrument executed pursuant thereto shall confer upon any Non-Employee Director any right to continue in the service of
the Company or any Affiliate in any capacity or shall affect any right of the Company, its Board or shareholders or any Affiliate, to remove any Non-Employee Director pursuant to the Company’s Bylaws and the provisions of Delaware general
corporation law. 
  
 (c)  In connection with each option made pursuant to the Plan, it shall
be a condition precedent to the Company’s obligation to issue or transfer shares to a Non-Employee Director, or to evidence the removal of any restrictions on transfer, that such Non-Employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal, state or local withholding tax required to be withheld with respect to such sale or transfer, or such removal or lapse, is made available to the Company for timely payment of such tax.

  
 (d)  As used in this Plan, “Fair Market Value” means, as of any date, the value
of the common stock of the Company determined as follows: 
  
 (i)  If the
common stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap, the Fair Market Value of a share of common stock shall be the closing sales price
for 
 

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 such stock (or the closing bid, if no sales were reported) as quoted on
such system or exchange (or the exchange with the greatest volume of trading in common stock) on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Board deems reliable;
or 
  
 (ii)  In the absence of an established market for the common stock, the Fair
Market Value shall be determined in good faith by the Board. 
  
 10.    ADJUSTMENTS UPON CHANGES IN STOCK.

  
 (a)  If any change is made in the stock subject to the Plan, or subject to any option
granted under the Plan (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the Company), the Plan and outstanding options will be appropriately adjusted in the class(es) and maximum number of shares subject to the Plan and the class(es) and number
of shares and price per share of stock subject to outstanding options. Such adjustments shall be made by the Board, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a “transaction not involving the receipt of consideration by the Company.”) 
  
 (b)  In the event of: (1) a dissolution, liquidation, or sale of all or substantially all of the assets of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation; (3) a
reverse merger in which the Company is the surviving corporation but the shares of the Company’s common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; or (4) the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any Affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors, then to the extent not prohibited by applicable law, (i) any surviving or
acquiring corporation shall assume any options outstanding under the Plan or shall substitute similar options (including an option to acquire the same consideration paid to the shareholders in the transaction described in this subparagraph 10(b))
for those outstanding under the Plan, or (ii) such options shall continue in full force and effect. In the event any surviving or acquiring corporation refuses to assume such options, or to substitute similar options for those outstanding under the
Plan, then such options shall be terminated if not exercised prior to such event. 
  
 11.    AMENDMENT
OF THE PLAN. 
  
 (a)  The Board at any time, and from time to time, may amend the Plan and/or
some or all outstanding options granted under the Plan. However, except as provided in paragraph 10 relating to adjustments upon changes in stock, no amendment shall be effective unless approved 
 

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  by the shareholders of the Company to the extent shareholder approval is necessary for the Plan
to satisfy the requirements of Rule 16b-3 under the Exchange Act or any Nasdaq or securities exchange listing requirements. 
  
 (b)  Rights and obligations under any option granted before any amendment of the Plan shall not be impaired by such amendment unless (i) the Company requests the consent of the person to whom the option was granted
and (ii) such person consents in writing. 
  
 12.    TERMINATION OR SUSPENSION OF THE PLAN. 

 
 (a)  The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall
terminate ten (10) years after the date adopted by the Board. No options may be granted under the Plan while the Plan is suspended or after it is terminated. 
  
 (b)  Suspension or termination of the Plan shall not impair rights and obligations under any option granted while the Plan is in effect, except with the
consent of the person to whom the option was granted. 
  
 13.    EFFECTIVE DATE OF PLAN; CONDITIONS OF
EXERCISE. 
  
 (a)  The Plan shall become effective on the same day that the Company’s
initial public offering of shares of common stock becomes effective, subject to the condition subsequent that the shareholders of the Company approve the Plan. 
  
 (b)  No option granted under the Plan shall be exercised or exercisable unless and until the condition of subparagraph 13(a) above has been met.

 

 8SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE

     This Settlement Agreement and Mutual General Release (the "Settlement
Agreement") is made and entered into by and between GolfGear International,
Inc., a Nevada corporation ("GOLFGEAR"), and MC CORPORATION, JOHN KURA, and
KEIZAIKAI USA, INC. (unless otherwise indicated, these parties are collectively
referred to herein as the "MC CORPORATION parties").

                                    RECITALS

     A.     Whereas, MC CORPORATION, a Japanese corporation, has commenced an
action against GOLFGEAR in the United States District Court, Central District of
California, Southern Division, Case No. SA-01-1129 AHS (MLGx) (the "Subscription
Agreement lawsuit") in which it contends it is entitled to additional shares of
GOLFGEAR common stock under the reset provisions of a Subscription Agreement
executed in 1999;

     B.     Whereas, GOLFGEAR has filed an answer in the Subscription Agreement
lawsuit denying the allegations in the Complaint and asserting a counter-claim
against MC CORPORATION for reformation of the Subscription Agreement;

     C.     Whereas, GOLFGEAR and MC CORPORATION entered into a Distribution
Agreement (the "Distribution Agreement") in 1999, which GOLFGEAR contends has
been breached by MC CORPORATION, and which was terminated on March 5, 2002;

     D.     Whereas, the trial judge in the Subscription Agreement lawsuit has
given GOLFGEAR to and including May 31, 2002 within which to amend its
counter-claim to allege a breach of the Distribution Agreement by MC
CORPORATION; and

     E.     Whereas, GOLFGEAR and the MC CORPORATION parties desire to settle
all of their differences on the terms and conditions as described below.

     NOW, THEREFORE, FOR THE MUTUAL CONSIDERATION STATED HEREIN, IT IS AGREED BY
GOLFGEAR AND THE MC CORPORATION PARTIES AS FOLLOWS:

     1.     GOLFGEAR and the MC CORPORATION parties agree to dismiss the
Subscription Agreement lawsuit, including the counter-claim by GOLFGEAR, with
prejudice, with each side bearing its own attorneys' fees and costs.

<PAGE>
     2.     The Distribution Agreement between GOLFGEAR and MC CORPORATION will
be formally terminated upon the execution of this Settlement Agreement by all
parties hereto.  GOLFGEAR and MC CORPORATION each waive all damages and claims
that they have against each other pertaining to the Distribution Agreement.

     3.     MC CORPORATION will terminate its golf operations in Japan with
respect to the sale of golf equipment upon execution of this Settlement
Agreement by all parties hereto.  Nothing contained herein shall prevent MC
CORPORATION from engaging in the development and/or operation of golf courses in
Japan in the future.  MC CORPORATION hereby represents that it has an
insignificant inventory of GOLFGEAR products remaining in Japan.  GOLFGEAR
agrees to assume all warranty obligations for GOLFGEAR products previously sold
in Japan by MC CORPORATION.

     4.     MC CORPORATION hereby gives up its right to a seat on the Board of
Directors of GOLFGEAR, and Mr. Kinoshita agrees to resign as a Director of
GOLFGEAR.  MC CORPORATION agrees to give up its 14.3% anti-dilution right and
all other rights under the Subscription Agreement.  Each of these provisions
becomes effective upon the execution of this Settlement Agreement by all parties
hereto.

     5.     MC CORPORATION drops its reset claim and all claims against
GOLFGEAR based on the Subscription Agreement.  In exchange for the 245,030
shares of Series A Senior Convertible Preferred Stock in GOLFGEAR that are
currently owned by MC CORPORATION, GOLFGEAR will issue to MC CORPORATION
2,450,300 shares of GOLFGEAR common stock.  As part of this Settlement
Agreement, GOLFGEAR will issue to MC CORPORATION an additional 549,700 shares of
GOLFGEAR common stock as additional consideration.  MC CORPORATION will receive
a total of 3,000,000 shares of GOLFGEAR common stock under this Settlement
Agreement.  GOLFGEAR will issue said 3,000,000 shares of common stock to MC
CORPORATION within 15 days after this Settlement Agreement has been executed by
all parties hereto.  Such common shares will be unregistered, have no
registration rights, and will bear an appropriate restrictive legend.

     6.     For a period of 18 months from the date this Settlement Agreement
has been executed by all parties hereto, the MC CORPORATION parties (including
any subsidiary or affiliate of MC CORPORATION which may in the future own such
shares) agree to restrict the sale of their GOLFGEAR common shares in a public
transaction as follows:

<PAGE>
          (a) For the first 6 months of the 18 month period, MC CORPORATION will
     not sell any shares in a public transaction;

     (b) For the second 6 months of the 18 month period, MC CORPORATION may sell
GOLFGEAR common shares in an amount up to 50% of the Rule 144 volume limitations
in a public transaction;

          (c) For the third 6 months of the 18 month period, MC CORPORATION may
sell GOLFGEAR common shares in an amount up to 100% of the Rule 144 volume
limitations in a public transaction;

     (d) Rule 144 stipulates that the common shares sold within a three-month
period shall not exceed the greater of (i) 1% of the outstanding shares of the
Company's common stock, or (ii) the average weekly trading volume for the
Company's common stock on all exchanges and/or reported through NASDAQ during
the four weeks before the sale, or (iii) the average weekly trading volume for
the Company's common stock reported through the consolidated transaction
reporting system during the four weeks before the sale.

     (e) There shall be no carryover to future periods of any wholly or
partially unused rights to sell common stock.

     (f) All sales of common stock by MC CORPORATION will comply with all
applicable federal and state securities laws and regulations.

     7.     For a period of 18 months from the date this Settlement Agreement
has been executed by all parties hereto, MC CORPORATION hereby grants to
GOLFGEAR a right of first refusal with respect to any shares of GOLFGEAR common
stock that MC CORPORATION may desire to sell in a private transaction.  MC
CORPORATION shall notify GOLFGEAR in writing of any third party's offer, and
shall provide GOLFGEAR with written documentation of the terms and conditions of
such third party's offer.  GOLFGEAR shall have 10 business days after receiving
written notice from MC CORPORATION to decide whether to exercise its right of
first refusal, and a further 10 business days to consummate the transaction.

     8.     All stock options or warrants to acquire GOLFGEAR common stock held
by the MC CORPORATION parties are cancelled as of the date of the execution of
this Settlement Agreement by all parties hereto.

     9.     GOLFGEAR and the MC CORPORATION parties each release the other
parties, including the other parties' officers, directors, employees, agents,
consultants,

                                      -3-
<PAGE>
advisors, representatives, attorneys, accountants, shareholders, affiliates, and
parent or subsidiary corporations, if any, from any and all claims, demands, or
causes of action which GOLFGEAR or the MC CORPORATION parties have against each
other, including, but not limited to, any claims arising out of or related to
the Subscription Agreement, the Subscription Agreement lawsuit, or the
Distribution Agreement, as well as any and all debts or obligations, EXCEPT for
the obligations of each of the parties hereto to perform according to the terms
and conditions of this Settlement Agreement.

     10.     The parties to this Settlement Agreement agree that this Settlement
Agreement extends to all claims of every nature and kind whatsoever between
them, EXCEPT the duty to perform according to the terms and conditions of this
Settlement Agreement, arising up to and including the date of execution hereof,
whether such claims are known or unknown, suspected or unsuspected, and
accordingly, each of the parties hereto expressly, knowingly, voluntarily and
advisedly WAIVE all rights given them under California Civil Code Sec. 1542,
                                            ---------------------
which provision reads as follows:

          A general release does not extend to claims which the creditor does
          not know or suspect to exist in his favor at the time of executing the
          release, which if known by him must have materially affected his
          settlement with the debtor.

     11.     This Settlement Agreement supercedes any prior written or verbal
agreements and representations regarding these matters.  There shall be no
modification of this Settlement Agreement except in a writing signed by all
parties hereto.

     12.     This Settlement Agreement constitutes the compromise and settlement
of disputed claims.  Nothing contained in this Settlement Agreement shall
constitute, be construed as, or be deemed to be an admission of fault,
liability, or wrongdoing on the part of any party hereto.  GOLFGEAR and the MC
CORPORATION parties each expressly deny any fault, liability, or wrongdoing.

     13.     This Settlement Agreement and the rights and obligations hereunder
shall be governed by, and construed, and be interpreted in all respects in
accordance with the laws of the State of California.

     14.     In the event that any party to this Settlement Agreement is alleged
to have breached any of the terms of this Settlement Agreement, such dispute
shall be resolved by binding arbitration in Orange County, California in a
proceeding brought under the auspices of the Judicial Arbitration and Mediation
Services, with such rights to discovery as shall be ordered by the retired judge
selected to decide the matter.  Each party to this

                                      -4-
<PAGE>
Settlement Agreement knowingly waives the right to institute legal proceedings
of any other kind except as just described, and each party understands that this
agreement to submit such disputes to binding arbitration constitutes a waiver of
the right to a trial by jury. The prevailing party in any such dispute shall be
awarded its reasonable attorneys' fees and costs, including the costs of
arbitration and the fees of the arbitrator.

     15.     Each of the parties hereto acknowledges that this Settlement
Agreement has been entered into and negotiated fairly and in good faith.  The
terms of this Settlement Agreement shall not be construed against any party but
rather shall be construed in an evenhanded manner.

     16.     The parties hereto represent and warrant to each other that they
have the authority and capacity to make the agreements and releases set forth in
this Settlement Agreement, they are the owners of, and have not transferred,
assigned or hypothecated any of the claims, rights, demands or causes of action
they have asserted or released herein, and no other person or entity owns, holds
or has any interest in the claims, rights or causes of action that are being
released herein.  Each of the corporate parties signing this Settlement
Agreement represent that this Settlement Agreement has been approved by its
Board of Directors and that the corporation has authorized its signatory below
to execute this document on its behalf.

     17.     GOLFGEAR and the MC CORPORATION parties each acknowledge that they
have read this Settlement Agreement and fully understand its terms, nature, and
effect, and that they are executing this Settlement Agreement knowingly,
intentionally, and voluntarily.

     18.     This Settlement Agreement shall be binding upon and for the benefit
of the parties hereto, and each of their successors-in-interest, including heirs
and assigns.

     19.     The parties hereto agree to execute any additional legal documents
reasonably necessary to accomplish any of the items set forth in this Settlement
Agreement, and that they will cooperate in providing such other information as
may be necessary to promptly carry out the terms of this Settlement Agreement
and its intent.

     20.     Each of the parties to this Settlement Agreement agrees that time
is of the  essence in executing this Settlement Agreement.  This Settlement
Agreement may be executed in counterparts and by facsimile signature.  Facsimile
signatures shall be as binding and enforceable as originals, and each party
signing by facsimile shall immediately transmit by facsimile its executed
signature page to counsel for each of the other parties hereto.  Each party
shall submit its original executed signature page to

                                      -5-
<PAGE>
GOLFGEAR'S legal counsel within 15 days of having transmitted a facsimile
signature page. This Settlement Agreement shall be deemed fully executed when
each party hereto has signed and faxed its executed signature page to legal
counsel for the other party. Legal counsel for each party shall retain a
fully-executed copy of this Settlement Agreement.

Dated: May __, 2002
                                       -------------------------------
                                       JOHN KURA

                                       KEIZAIKAI USA, Inc.

Dated: May __, 2002
                                       -------------------------------
                                       By:  JOHN KURA, President

                                       MC CORPORATION

Dated: May __, 2002
                                       -------------------------------
                                       By:  NAOYA KINOSHITA, President

                                       GOLFGEAR INTERNATIONAL, INC.

Dated: May __, 2002
                                       -------------------------------
                                       By:  Donald Anderson, President

                                      -6-
<PAGE>
APPROVED AS TO FORM AND CONTENT

                                        ORRICK, HERRINGTON &
                                          SUTCLIFFE, LLP

Dated: May __, 2002
                                       -------------------------------
                                  By:  BRIAN H. NEWMAN
                                       Attorneys for MC CORPORATION

                                       COTKIN, COLLINS & GINSBURG

Dated: May __, 2002
                                       -------------------------------
                                  By:  JAMES P. COLLINS, JR.
                                       Attorneys for GOLFGEAR
                                       INTERNATIONAL, INC.

                                      -7-
<PAGE>

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