Document:

<PAGE>
                                                                   Exhibit 10.10

July 27, 2000

Wind River Systems, Inc.
1010 Atlantic Avenue
Alameda, California  94051

Ladies and Gentlemen:

     In connection with, as a condition to, and as consideration for, the
purchase by Wind River Systems, Inc. ("Wind River") of $1,000,000 of Common
Stock of Tvia, Inc. (the "Company" or "Tvia") and $500,000 of warrants to
purchase Common Stock of the Company at the initial public offering price to the
public (the "IPO price") of the shares of common stock being sold in the
Company's proposed initial public offering pursuant to that Registration
Statement on Form S-1 filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended (Registration Statement No. 333-34024),
the Company and Wind River agree to the terms and obligations of this letter
agreement (this "Agreement").

     1.  MUTUAL COLLABORATION.
         --------------------
         1.1  Terms.  The Company and Wind River agree to the following terms
              -----
and conditions:

              (a)  The Company and Wind River will hold quarterly meetings at
which the parties will exchange information regarding the technology
developments which have occurred during the quarter and any proposed future
technology developments in the areas of broadband internet appliances and
graphics libraries ("Areas"). Each party shall in its sole discretion
determine which of its products is included in these Areas. Wind River will
use commercially reasonable efforts to solicit feedback from the Company and
from the Company's customers, whose contact information Company shall provide
to Wind River, subject to any customer confidentiality agreements and customer
approval, with respect to the performance of Wind River software. Upon such
feedback, Wind River will decide in its sole discretion whether to implement
the result of Company's feedback in a future version of Wind River software
for use with the Company's Products.

              (b)  The Company will distribute directly and through its
distributors and OEMs, a Tornado Evaluation program CD, which comprises a
sixty (60) day evaluation copy of the Tornado tools and VxWorks/UGL software
(and the appropriate documentation) pursuant to the terms of the Evaluation
License Agreement attached hereto as Exhibit A, along with the appropriate
Tvia software development kits pursuant to the terms of the Tvia Inc. SDK
License Agreement attached hereto as Exhibit B, to all appropriate customers
of Tvia Products ("Prospective Customers") Such Prospective Customers will at
least include all customers who previously have not purchased or otherwise
received Tvia Products; provided, however, that the Company shall not
distribute the Tornado Evaluation program CD to any Prospective Customers if
such distribution, in the Company's sole discretion, would damage the
Company's business relationship with such Prospective Customer. Without
limiting the foregoing, the Company shall

                                       1
<PAGE>

determine in its sole discretion all appropriate Prospective Customers. For
such Prospective Customers, the Company agrees to provide to Wind River
contact information within thirty (30) days of shipment of Tornado Evaluation
CDs, subject to customer confidentiality agreements. Upon Wind River's request
and as mutually agreed to by The Company, The Company together with Wind River
will conduct joint Prospective Customer visits.

              (c)  Within approximately sixty (60) to ninety (90) days of Wind
River's delivery of a copy of the newest commercial release of the UGL
software, the Company agrees to work jointly with Wind River to develop and
produce one optimized UGL driver for the highest shipping volume Tvia chips,
and non-optimized UGL drivers, consisting of initialization, TV output, and
acceleration, for all shipping Tvia products. At Wind River's sole discretion,
Wind River may provide to the Company access to UGL software before the
commercial release date for purposes of the Company optimizing UGL drivers for
Tvia products.

     2.  LICENSE GRANTS.
         ---------------

         2.1  License to the Company. Subject to the terms and conditions of
              ----------------------
this Agreement, Wind River grants to the Company a non-exclusive, revocable
(in accordance with Section 8) license under all intellectual property rights
to (i) distribute the Tornado Evaluation Program CD, in object code form only,
as set forth in Section 1.1(b); and (iii) use and reproduce the UGL software,
in object code form, for the sole purpose of developing and optimizing the UGL
driver pursuant to Section 1.1(c).

         2.2  License to Technology Developments. License grants to any
              ----------------------------------
technology developments discussed at the quarterly meetings as provided in
Section 1.1(a) are subject to a separate agreement between the parties.

     3.  FUTURE COMMITMENTS.
         ------------------

         3.1  Future Purchases. The Company and Wind River agree to use good
              ----------------
faith efforts to commence negotiation on a definitive agreement with respect
to the purchase of additional software seats of Tornado Standard Software for
the Company's China development center within fourteen (14) days of the date
of this Agreement.

         3.2  Professional Service Opportunities. The Company and Wind River
              ----------------------------------
agree to use good faith efforts to enter into a non-exclusive professional
service arrangement, on terms mutually acceptable to both parties, to handle
design opportunities as reasonably determined by Wind River in the Internet
appliance, broadband set-top box and digital television markets that require
the Tvia chipset software and design expertise.

         3.3  Public Relations Activities. The Company and Wind River will
              ---------------------------
each use commercially reasonable efforts to engage in mutually agreed upon
joint public relations activities concerning Wind River's and the Company's
Products, the parties' product development efforts and the parties' strategic
partnership, including but not limited to, joint press releases, press release
support and quotes; provided, however, that neither party shall be required to
issue a joint press release if such release would violate any law or agreement
applicable to such party.

                                       2
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         3.4  Account Reference; Co-Marketing. Each party may use the other
              -------------------------------
partyas an account reference for other broadband Internet appliance, set-top
box, and digital television companies. Each party will participate in other co-
marketing activities as the parties may mutually agree to in writing,
including, but not limited to, trade shows, direct marketing efforts, offline
and online promotions and the creation by each party of a Customer Case
History for use on such party's website.

     4.  OWNERSHIP.
         ---------

         4.1  The Company's Ownership. The Company and its licensors shall
              -----------------------
retain all right, title and interest in and to the Tvia Products and software
development kits, including, without limitation, any derivatives, or
improvements thereof and all associated intellectual property rights therein.
All Technology Developments developed by or for the Company, including,
without limitation, any derivatives or improvements thereof and all associated
intellectual property rights therein and discussed with Wind River at the
quarterly meetings as provided in Section 1.1(a) shall be and remain the sole
property of the Company. To the extent Wind River has or obtains any ownership
interest in any of the foregoing, Wind River agrees to and hereby does
transfer and assign to Company all such rights.

         4.2  Wind River's Ownership. Wind River and its licensors shall
              ----------------------
retain all right, title and interest in and to the Tornado Evaluation Program
CD, the Tornado Tools, VxWorks/UGL Software, including, without limitation,
any derivatives or improvements thereof and all associated intellectual
property rights therein. All Technology Developments developed by or for Wind
River, including, without limitation, any derivatives or improvements thereof
and all associated intellectual property rights therein and discussed with the
Company at the quarterly meetings as provided in Section 1.1(a) shall be and
remain the sole property of Wind River. To the extent Company has or obtains
any ownership interest in any of the foregoing, Company agrees to and hereby
does transfer and assign to Wind River all such rights.

         4.3  Ownership of the UGL Driver. The parties shall jointly own all
              ---------------------------
rights, title, and interest in and to the optimized and non-optimized UGL
drivers in equal shares, without any duty of accounting. Each party will be
entitled to develop, manufacture, sell, offer for sell, import and license the
UGL drivers to any third party and to enforce its ownership and intellectual
property rights against such third parties at its sole discretion and without
the involvement of the other party.

                                       3
<PAGE>

     5.  WARRANTY DISCLAIMER. THE PRODUCTS, DELIVERABLES AND SERVICES PROVIDED
         -------------------
BY EACH PARTY TO THE OTHER PARTY PURSUANT TO THIS AGREEMENT ARE PROVIDED "AS
IS" WITHOUT ANY WARRANTY OF ANY KIND. NEITHER PARTY WARRANTS THAT THE USE OF
THE DELIVERABLES OR PRODUCTS WILL BE ERROR FREE, SECURE OR UNINTERRUPTED. BOTH
PARTIES EXPRESSLY DISCLAIM ALL EXPRESS AND IMPLIED WARRANTIES INCLUDING,
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE AND NONINFRINGEMENT OF THIRD PARTY RIGHTS.

     6.  LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
         -----------------------
THE OTHER PARTY FOR LOSS OF PROFITS, INTERRUPTION OF BUSINESS, OR ANY OTHER
SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES,
HOWEVER CAUSED, WHETHER FOR BREACH OF CONTRACT, NEGLIGENCE, STRICT LIABILITY
OR OTHERWISE, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. NEITHER PARTY's TOTAL CUMULATIVE LIABILITY WITH RESPECT TO THIS
AGREEMENT AND FOR ANY AND ALL CAUSES OF ACTION UNDER ANY THEORY OR LIABILITY,
WHETHER IN CONTRACT OR TORT OR OTHERWISE, WILL EXCEED FIVE HUNDRED THOUSAND
DOLLARS (US$ 500,000).

     7.  CONFIDENTIALITY.

         7.1  Confidential Information. Each party may, from time to time
              ------------------------
during the term of this Agreement, including without limitation during the
quarterly meetings set forth in Section 1.1 (a), deliver or make available to
the other party certain non-public information including data or information
(whether written, oral or graphical) that relates to the disclosing party's
products, technology, research, development, customers, financial plans,
software (including without limitation source code), marketing plans or other
business activities, and which is confidential or proprietary to, or a trade
secret of, the disclosing party (collectively, "Confidential Information").
Such Confidential Information shall be in writing and marked prominently with
the legend "confidential," "proprietary" or with a similar legend, or if
disclosed orally shall be described as Confidential Information at the time of
disclosure. Regardless of whether so marked or identified, however, any
information that the receiving party knew or should have known, under the
circumstances, was considered confidential or proprietary by the disclosing
party will be considered Confidential Information of the disclosing party.
Confidential Information shall not include any information, data or material
which: (a) the disclosing party expressly agrees in writing is free of any non-
disclosure obligations; (b) at the time of disclosure to the receiving party
was known to the receiving party free of any non-disclosure obligations; (c)
is independently developed by the receiving party; (d) is lawfully received by
the receiving party, free of any non-disclosure obligations from a third party
having the right to so furnish such Confidential Information; or (e) is or
becomes generally available to the public without any breach of this Agreement
or unauthorized disclosure of such Confidential Information by the receiving
party. Notwithstanding anything to the contrary herein, the UGL Software and
Tornado/VxWorks and all improvements and derivatives thereof shall be deemed
the Confidential Information of Wind River.

                                       4
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         7.2  Protection. The receiving party shall not use or disclose
              ----------
Confidential Information of the disclosing party, except as expressly
authorized by this Agreement or in writing by the disclosing party, using the
same degree of care which the receiving party uses with respect to its own
confidential or proprietary information, but in no event with less than
reasonable care. Upon the expiration or termination of this Agreement, the
receiving party shall promptly return to the disclosing party all Confidential
Information of the disclosing party in tangible form, and shall promptly
confirm in writing to the disclosing party that it has done so. The receiving
party shall have written agreements with its own employees and other third
parties to whom Confidential Information of the disclosing party shall be made
available, pursuant to the terms of this Agreement, and such written
agreements shall have terms at least as restrictive as those contained herein.

         7.3  Certain Exceptions. The obligations set forth in this Section 10
              ------------------
shall not apply to any Confidential Information which must be disclosed
pursuant to applicable federal, state or local law, regulation or court order,
or other legal process, provided that the receiving party uses reasonable
efforts to give the disclosing party reasonable notice of such required
disclosure.

     8.  TERM AND TERMINATION

         8.1  Term of Agreement. The term of this Agreement shall commence on
              -----------------
the Effective Date and continue through August 1, 2002, if not otherwise
terminated under this Section.

         8.2  Termination by Mutual Agreement. The parties may terminate this
              -------------------------------
agreement at any time by mutual written agreement.

         8.3  Termination for Convenience. Either party may terminate this
              ---------------------------
Agreement for any reason at any time upon ninety (90) days' prior written
notice to the other party.

         8.4  Termination for Breach. This Agreement may be terminated by
              ----------------------
either party upon thirty (30) days' prior written notice if the other party
materially breaches any term hereof and the breaching party fails to cure such
breach within the thirty- (30) day period.

         8.5  Effect of Termination.
              ---------------------

              (a)  Upon termination all rights granted under this Agreement
will immediately cease to exist and each party shall immediately return or
destroy all tangible copies of the software and Confidential Information
received from the other party and certify that it has done so. The licenses
granted to Prospective Customers shall survive pursuant to the license terms
set forth in the license agreement distributed with the Tornado Evaluation
program.

              (b)  Sections 4, 5, 6, 7, 8, and 9 shall survive any termination
or expiration of this Agreement.

                                       5
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     9.  MISCELLANEOUS.
         -------------

         9.1  Governing Law. This Agreement shall be governed by and construed
              -------------
in accordance with the laws of the State of Delaware without reference to
principles of conflicts of law.

         9.2  Jurisdiction and Venue. Any suit, action or proceeding arising
              ----------------------
from or relating to this Agreement must be brought in a federal court in the
Northern District of California or in state court in Santa Clara County,
California, and each party irrevocably consents to the jurisdiction and venue
of any such courts in any such suit, action or proceeding.

         9.3  Counterparts. This Agreement may be executed in counterparts,
              ------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

         9.4  Binding Effect. This Agreement shall inure to the benefit of and
              --------------
be binding upon the parties hereto and their respective successors and
assigns.

         9.5  Injunctive Relief. It is understood and agreed that,
              -----------------
notwithstanding any other provision of this Agreement, any material breach of
Section 2 or 7 of this Agreement will cause irreparable damage for which
recovery of money damages would be inadequate, and that the non-breaching
party will therefore be entitled to seek timely injunctive relief to protect
such party's rights under this Agreement in addition to any and all remedies
available at law.

         9.6  Independent Contractor. Wind River's relationship to the Company
              ----------------------
is that of an independent contractor. Nothing contained in this Agreement will
be construed to create or imply a joint venture, partnership, principal-agent
or employment relationship between the parties.

         9.7  Amendments and Waivers. This Agreement may not be amended or
              ----------------------
modified without the written consent of Wind River and the Company.

         9.8  Severability. If any provision of this Agreement shall be
              ------------
declared void or unenforceable by any judicial or administrative authority,
the validity of any other provision and of the entire Agreement shall not be
affected thereby.

         9.9  Entire Agreement. This Agreement (together with the Tvia Common
              ----------------
Stock and Warrant Purchase Agreement and agreements ancillary thereto)
constitutes the entire agreement between the parties regarding the subject
matter hereof. Any previous understanding or agreement relating to such
subject matter is superseded by this Agreement.

                            [Signature Page Follows]

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     If the foregoing accurately sets forth the agreements that the Company and
Wind River have reached with respect to the subject matter hereof, please
indicate your agreement to the terms contained herein by countersigning in the
place indicated below.

                                        Sincerely,

                                        TVIA, INC.

                                        By: /s/ Jack Guedj
                                           ---------------------------------

                                        Name: Jack Guedj
                                             -------------------------------

                                        Title: President
                                              ------------------------------

AGREED AND ACCEPTED:

WIND RIVER SYSTEMS, INC.

By: /s/ Jerry Fiddler
   ---------------------------------

Name: Jerry Fiddler
     -------------------------------

Title: Chairman
      ------------------------------

                                       7<PAGE>

                                                                   Exhibit 10.12

CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.

                         TECHNOLOGY LICENSE AGREEMENT
                         ----------------------------

     This Technology License Agreement ("Agreement") is entered into as of July
1st, 1997 ("Effective Date") by and between Reality Simulation Systems
Acquisition Corporation ("RSS"), a California corporation, with its principal
place of business 1020 Asbury Street, San Jose, California 95126, and
InteGraphics Systems, Inc. ("IGS"), a California corporation, having its
principal place of business at 4001 Burton Drive, Santa Clara, California 95054.

     WHEREAS, RSS has developed or will develop 3-D graphics technology useful
in personal computers and consumer electronics products;

     WHEREAS, IGS desires to obtain a license to such RSS technology to develop
a semiconductor and certain driver software for use in 2-D and 3-D graphics
applications, and RSS desires to grant IGS a license, pursuant to the terms and
conditions in the Agreement, to its technology;

     WHEREAS, RSS wishes to obtain a license to sell and distribute products and
chips and IGS desires to grant RSS such a license pursuant to the terms and
conditions of this Agreement; and

     WHEREAS, RSS and IGS each desire to distribute the products developed
hereunder on an exclusive basis to separate geographic and platform markets.

     NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:

1.   Definitions.
     -----------

     1.1  "AGP Technology" shall mean the graphics port protocol promoted by
Intel Corporation, a Delaware corporation, and implemented by IGS, and further
specified in Exhibit A hereto. The AGP Technology includes, without limitation,
Source Code, test vectors, schematics, and descriptive specifications.

     1.2  "CyberPro3000 Products" shall mean products based on or incorporating
encrypted Verilog Source Code and further specified in Attachment B hereto
regardless of the name or commercial designation of such products. Any
CyberPro3000 Products Introduced by or for a party for a period of twelve (12)
months following completion of the first production CyberPro3000 Product for
commercial sale which is substantially similar to the CyberPro3000 Products
shall also be a CyberPro3000 Product hereunder.

     1.3  "Derivative Work" shall mean:

          (a)  for copyrights and copyrightable materials, any modification,
revision, port, translation, abridgement, condensation or expansion of the pre-
existing work, or any portion thereof, or any form in which the preexisting work
is recast, transferred, transformed or adapted;

<PAGE>

          (b)  for patents and patentable materials, any improvement thereon;
and

          (c)  for trade secrets and materials protected by trade secret, any
new material derived from such existing trade secret or materials, including new
material which may be protected by copyright, patent or trade secret or any
combination of the foregoing.

     1.4  "Documentation" shall mean any user documentation or materials
relating to CyberPro3000 Products and Unencrypted Verilog Based Products,
including, without limitation, screen displays, "read me" files and reference,
user, installation, systems administrator and technical guides.

     1.5  "IGS Chip" shall mean the IGS graphics chip based on the ***
Technology, produced by or for IGS hereunder and further specified in Attachment
A, including, without limitation, any and all semiconductor masks used to
fabricate or manufacture such chips. Any graphics chip Introduced by or for IGS
for a period of twelve (12) months following completion of the first production
CyberPro3000 Product for commercial sale which is substantially similar to the
IGS Chip shall also be an IGS Chip hereunder.

     1.6  "IGS Market" shall mean the platform(s) and territory(ies) specified
in Attachment C hereto.

     1.7  "IGS Software" shall mean the IGS driver software specified in
Attachment A.

     1.8  "Introduced" shall mean the announcement of a product by press
release, trade show announcement, or other like marketing technique.

     1.9  "*** Technology" shall mean the RSS Software and Verilog Source Code
(in both encrypted and unencrypted forms).

     1.10 "Proprietary Rights" shall mean patents, patent rights, copyright
rights, trademark rights, trade secret rights, mask work rights, and all other
intellectual property rights worldwide.

     1.11 "RSS Market" shall mean the platform(s) and territory(ies) specified
in Attachment C.

     1.12 "RSS Software" shall mean the RSS driver software specified in
Attachment A.

     1.13 "Source Code" shall mean those statements in a computer language
which, when processed by a compiler, assembler or interpreter, become executable
by a computer and includes, without limitation, all comments, notes, flow
charts, decision tables, argument lists and other human readable references
relating to the operation, purpose, compilation, assembly or interpretation
thereof.

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                       2
<PAGE>

          1.14  "*** Technology" shall mean the successor technology to the ***
Technology specified in Attachment E hereto.

          1.15  "Verilog Source Code" shall mean the IGS Chip and associated
electronics as described and documented in a human readable hardware description
language which can reproduce the same netlist description of the Encrypted
verilog.

          1.16  "Unencrypted Verilog Based Products" shall mean CyberPro3000
Products based on or incorporating the unencrypted Verilog Source Code
regardless of the name or commercial designation of such products.

     2.   License Grant to IGS.
          --------------------

          2.1  Subject to all of the terms and conditions of this Agreement, RSS
hereby grants to IGS a royalty-bearing (as provided in Section 10 below), non-
transferable, non-sublicenseable (except as provided in Section 2.1(e) below)
license to:

               (a)  use and reproduce for its internal purposes only the RSS
Software Source Code and modify, create and prepare Derivative Works thereof.
IGS assumes all responsibility for integrating the RSS Software into the IGS
Software;

               (b)  use and reproduce for its internal purposes only the
encrypted Verilog Source Code, make speed improvements through layout,
process, and silicon integration refinements, and manufacture IGS Chips and
successor therefrom;

               (c)  use, reproduce, manufacture. market, display, license, sell
and distribute solely within the IGS Market the RSS Software (in object code
form only) and only as embedded and incorporated into CyberPro3000 Products and
Unencrypted Verilog Based Products;

               (d)  use, reproduce, manufacture, market, display, license, sell
and distribute the Documentation solely within the IGS Market and only together
with CyberPro3000 Products and Unencrypted Verilog Based Products; and

               (e)  reproduce, license and distribute the RSS Software Source
Code to such third parties as the parties mutually approve in writing and for
the sole purpose of allowing such third parties to provide end user technical
support; provided such third parties agree in writing to be bound by all of the
obligations and restrictions herein with regard to such Source Code.

          2.2  Upon completion of the first production CyberPro3000 Product for
commercial sale which substantially conforms to the specifications in Attachment
B;

               (a)  RSS will grant IGS, subject to all the terms and conditions
of this Agreement (including, without limitation, Sections 9, 10.3(b) and 16,
but not Section 8.2), a non-exclusive, non-transferable, non-sublicenseable,
royalty-bearing license to use and reproduce for its internal purposes only the
unencrypted Verilog Source Code and modify, create and prepare Derivative
Works thereof for the sole purpose of developing and manufacturing the IGS
Chip (for

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                       3
<PAGE>

               (b)  For the purposes of distinguishing the encrypted and
unencrypted versions of the Verilog Source Code, and by extension the
CyberPro3000 Products and Unencrypted Verilog Based Products, IGS agrees to
perform, prior to tape out at RSS' request, Verilog design verification tests
provided by RSS to IGS ("Verification Tests"). IGS shall complete each
Verification Test and provide to RSS a written report detailing all the
results of each Verification Test within ten (10) days of RSS request or IGS'
receipt of such Verification Test, whichever is later. IGS further agrees to
allow RSS to physically inspect each and every IGS site during IGS' normal
business hours to verify IGS' compliance with this Section 2.2 and to
determine, by whatever means necessary, the version of the Verilog Source Code
used in each IGS chip (and any successor chip based in whole or in part on ***
Technology) prior to tapeout. In the event of any dispute between IGS and RSS
arising under this Section 2.2, both parties agree to settle the dispute by
arbitration as outlined in Section 20.4. If IGS agrees beforehand to pay
Unencripted Royalties no inspection will be required.

     3.   License Grant to RSS.
          --------------------

          3.1  Subject to all of the terms and conditions of this Agreement, IGS
hereby grants to RSS a non-exclusive, non-transferable, non-sublicenseable
(except as provided in Section 3.2 and 6.3 below), royalty-bearing (as provided
in Section 10 below), fully paid-up, worldwide license to:

               (a)  use, reproduce, manufacture, market, display, distribute,
modify and create Derivative Works based on the AGP Technology if developed
internally by IGS for the CyberPro3000 products or Unencrypted Verilog Based
Products.

               (b)  use, reproduce, manufacture, market, display, license,
sell and distribute solely within the RSS Market the IGS Software (in object
code form only) and IGS Chip and only as embedded and incorporated into
CyberPro3000 Products or Unencrypted Verilog Based Products; and

               (c)  reproduce, license and distribute the IGS Software Source
Code by IGS to such third parties as the parties mutually approve in writing and
for the sole purpose of allowing such third parties to provide end user
technical support; provided such third parties agree in writing to be bound by
all of the obligations and restrictions herein with regard to such Source Code.

          3.2  The license grant under Section 3.1 is sublicensable by RSS only
to a third party manufacturer mutually agreed upon by both parties who will
provide a source of CyberPro3000 Products and Unencrypted Verilog Based
Products to both IGS and RSS, provided, however, that such third party
manufacturer shall be bound in writing to all restrictions on RSS under this
Agreement and further provided that such third party manufacturer shall not
have the right to manufacture such products for any third party. The parties
hereby acknowledge and agree, that at RSS expense, Seiko Epson Corporation
("Seiko"), a Japan corporation, shall be an authorized third party
manufacturer under this Section 3.2 upon Seiko's written agreement to be bound
by all restrictions on RSS under this Agreement.

                                       4
<PAGE>

bound by all restrictions on RSS under this Agreement.

     4.   Restrictions.
          ------------

          4.1  The license grants herein shall be not be exercisable by a
party's contractors, except those contractors who agree in writing to be bound
to all of such party's obligations and restrictions under this Agreement.

          4.2  Each party agrees to include and not to obscure or modify the
other party's copyright and other notices which appear in or on the CyberPro3000
Products, Unencrypted Verilog Based Products, *** Technology or Documentation.

          4.3  Each party agrees not to develop or use any benchmarking tests
which cheat on results of he CyberPro3000 Products, Unencrypted Verilog Based
products or portions thereof.

          4.4  No rights or licenses are granted or deemed granted to any
Proprietary Rights of either party to the other party to any subject matter of
this Agreement except those rights or licenses expressly and unambiguously
granted herein.

          4.5  In no event whatsoever, except as expressly and unambiguously
stated herein, shall a party use, disclose or distribute to any third party
Source Code, or any portion thereof, of the other party including, without
limitation, encrypted and unencrypted Verilog Source Code (in the case of IGS).

     5.   Right of First Refusal. RSS agrees that IGS shall, for a period of
          ----------------------
three (3) months following the Effective Date and to the exclusion of all other
parties, have the first opportunity to acquire a non-exclusive, worldwide
license to use, reproduce, market, manufacture, display, license, sell,
distribute and modify the *** Technology for use in graphics chips.

     6.   Distribution Rights.
          -------------------

          6.1  IGS shall have the exclusive, non-transferable (except as
provided below) right to market, sell and distribute CyberPro3000 Products and
Unencrypted Verilog Based Products in the IGS Market and RSS shall have the
exclusive, non-transferable (except as provided below) right to market, sell
and distribute CyberPro3000 Products and Unencrypted Verilog Based Products in
the RSS Market except that the exclusive rights granted under this Section 6.1
shall automatically and irrevocably become non-exclusive as to both parties:

               (a)  on January 1, 2000; or

               (b)  in the event that a party fails to sell one hundred thousand
(100,000) units of CyberPro3000 Products and/or Unencrypted Verilog Based
Products within six (6) months of the first retail sale of a CyberPro3000
Product or Unencrypted Verilog Based Product.

          6.2  The parties acknowledge and agree that IGS may continue to
develop graphics technology after the Execution Date and that, as to products
Introduced by IGS after the

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION

                                       5
<PAGE>

sale, no right, tide or interest in or to any Proprietary Rights in such
products is transferred under this Agreement and IGS may freely market, sell,
distribute or otherwise transfer such products in all markets worldwide.

          6.3  A party's exclusive rights under Section 6.1 above may be
transferred only with the prior written approval of the non-transferring party,
except that RSS may, in its sole discretion and without the prior written
approval of IGS, transfer its exclusive rights hereunder to S-MOS Systems Inc.
("S-MOS"), a California corporation.

          6.4  A party may appoint a third party distributor to exercise such
party's distribution rights under this Section 6 to a third party distributor
who agrees in writing to be bound by all the terms and conditions of this
Agreement.

     7.   Ownership.
          ---------

          7.1 As between the parties and subject to the licenses granted herein,
RSS owns all right, title and interest in and to all of the *** Technology and
Documentation and all copies and portions thereof and all Proprietary Rights
thereto. As between the parties and subject to the license granted herein, IGS
owns all right title and interest in and to the IGS Chip and all Proprietary
Rights thereto, subject to RSS' rights in the *** Technology. IGS agrees to
assign and hereby does assign to RSS any and all Proprietary Rights IGS may
acquire in the *** Technology or Documentation or any Derivative Work of the
foregoing. In the event RSS is unable for any reason to secure IGS' authorized
signature to apply for or to pursue any application for any United States or
foreign letters patent or copyright registrations or other intellectual property
protection relating to Proprietary Rights assigned to RSS hereunder, then IGS
hereby irrevocably designates and appoints RSS and its duly authorized officers
and agents as its agent and attorney-in-fact, with full power of substitution,
to act for and in its behalf and stead to execute and file any such applications
and to do all other lawfully permitted acts to further the prosecution and
issuance of letters, patent or copyright registrations or other intellectual
property protection thereon with the same legal force and effect as if executed
by IGS.

          7.2  The foregoing ownership provision in Section 7.1 shall not be
construed to Emit either party's right to independently develop or acquire
similar products or technology without use of the other party's Confidential
Information (as defined in Section 16 below), products or technology; provided
that, except for the licenses expressly granted in this Agreement, nothing in
this Section 7.2 shall be deemed to grant either party a license under the other
party's Proprietary Rights.

          7.3  In the course of marketing the CyberPro3000 Products and
Unencrypted Verilog Based Products, IGS will use the then current names and
designations used by RSS therefor ("Marks") but will not represent or imply
that it is RSS or a part of RSS. However, all advertisements, promotional
materials, packaging and anything else bearing a Mark, including, without
limitation, any product based on or incorporating *** Technology or Derivative
Works thereof, shall identify RSS as the Mark owner and shall be subject to
the prior written approval of RSS, which approval shall not be unreasonably
withheld. IGS also agrees not to use or contest, during or after the term of
this Agreement, any name, mark or designation used by RSS

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                       6
<PAGE>

advertisements, promotional materials, packaging and anything else bearing a
Mark, including, without limitation, any product based on or incorporating ***
Technology or Derivative Works thereof, shall identify RSS as the Mark owner and
shall be subject to the prior written approval of RSS, which approval shall not
be unreasonably withheld. IGS also agrees not to use or contest, during or after
the term of this Agreement, any name, mark or designation used by RSS anywhere
in the world (or any name, mark or designation similar thereto). IGS
acknowledges and agrees that all use of Marks by IGS shall inure to the benefit
of RSS.

     8.   Delivery of RSS Software.
          ------------------------

          8.1  RSS will use its diligent commercial efforts to deliver to IGS
the RSS Software and encrypted Verilog Source Code in accordance with the
milestones set forth in Attachment D hereto.

          8.2  IGS may perform acceptance tests on the RSS Software and
encrypted Verilog Source Code for a period of thirty (30) days following IGS'
receipt thereof for conformance with RSS' specifications therefor as set forth
in Attachment A. If IGS discovers material non-conformance in conducting such
acceptance tests and provides RSS with sufficient written instructions,
equipment, machines and documentation ("Nonconformance Materials") to allow RSS
to readily reproduce the problems at its facility, RSS shall, at its cost, use
reasonable efforts to make corrections or develop workarounds within thirty (30)
days after receipt of the required Nonconformance Materials or such longer
period as the parties agree in writing after conferring in good faith. The RSS
Software and encrypted Verilog Source Code will be deemed accepted upon the
earliest of the following: (i) IGS provides written notice of acceptance, (ii)
thirty (30) days after IGS commercially ships or licenses CyberPro3000 Products,
or (iii) thirty (30) days after delivery to IGS of the RSS Software or encrypted
Verilog Source Code or a correction thereto if IGS has not first provided the
necessary Nonconformance Materials. IGS shall have the right to terminate this
Agreement if RSS has not corrected any material non- conformance in the RSS
Software or encrypted Verilog Source Code in connection with this Section 8.2
within one hundred twenty (120) days of IGS' delivery to RSS of Nonconformance
Materials therefor.

     9.   Protection of the *** Technology.
          --------------------------------

          9.1  In addition to its obligations under Section 16 below, IGS shall
restrict access to and shall not disclose any *** Technology to any person or
entity except to a limited number (but in no event more than ten (10)) of IGS'
employees and independent contractors (i) located at 4001 Burton Drive, Santa
Clara, CA. 95054, and (ii) who have a need to access the *** Technology to
enable IGS to exercise its rights and perform its obligations under this
Agreement. Within thirty (30) days after request from RSS but not more than
three (3) times each year, IGS shall provide RSS with a list of the names of any
and all individuals (employees, independent contractors, employees of
independent contractors, and any other individuals) who then have or have had,
at any time since IGS last provided such a list, access to the *** Technology.
IGS shall inform all persons who are given access to the *** Technology that the
*** Technology contains confidential trade secrets of RSS and is the
Confidential Information (as defined in Section 16 below) of RSS. IGS shall
employ its best efforts to prevent unauthorized physical or electronic access,
use, reproduction, transmission, display, disclosure and

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                       7
<PAGE>

at RSS' request, but no more than three (3) times each calendar year, for the
purpose of (i) confirming that it is protecting the *** Technology in accordance
with this Agreement, and (ii) reminding its employees and independent
contractors of the limited rights and obligations of IGS and each employee and
independent contractor pertaining to the *** Technology. Following each review,
IGS will notify RSS in writing that IGS conducted the review and (a) that no
violations were discovered, or (b) that violations were discovered, a
description of the nature and extent of the violations, and a description of the
actions taken by IGS to correct the violations. IGS shall take all actions
reasonably required to recover and prevent further use, reproduction and
disclosure of the *** Technology in the event of loss or misappropriation;
provided that if IGS fails to enforce any confidentiality obligations of its
employees or independent contractors or fails to recover and prevent further use
of the *** Technology, then RSS may take all necessary steps, including, without
limitation, initiating legal action, to enforce such agreements to protect its
interests in the *** Technology. IGS shall be fully responsible for the conduct
of all of its employees, independent contractors, agents and representatives who
may in any way breach this Section 9 or Section 16 below and shall indemnify RSS
for any damages relating to or arising from such breach.

     9.3  IGS expressly agrees to keep the *** Technology and Derivative Works
thereof and any portions or copies of the foregoing at IGS' offices located at
4001 Burton Drive, Santa Clara, CA. 95054, and not to move, transmit, view,
access, store, situate or otherwise transfer, distribute, display or relocate
for any period of time whatsoever, physically, electronically or otherwise, or
allow any third party to do any of the foregoing, any *** Technology or
Derivative Works thereof or any portions or copies of the foregoing without the
prior written approval of RSS.

     10.  License Fees: Royalties.
          -----------------------

          10.1  Initial Payments.  In consideration of the licenses granted to
                ----------------
IGS by RSS herein, upon execution of this Agreement, IGS shall pay RSS a non-
refundable, non-recoupable, non-creditable RSS Software license fee in the
amount of *** Dollars ($***) and a non-refundable, non-recoupable, non-
creditable encrypted Verilog Source Code license fee in the amount *** Dollars
($***).

          10.2  Milestone Payments.  In consideration of RSS' development of
                ------------------
the *** Technology for use in CyberPro3000 Products, IGS shall pay RSS the
following non-refundable, non-recoupable, non-creditable milestone payments upon
RSS' completion of the milestones below and further specified in Attachment D:

                (a)  *** Dollars ($***) upon sign-off by IGS of a test sample of
the IGS Chip;

                (b)  *** Dollars ($***) upon the commercial production release
of the IGS Chip; and

                (c)  *** Dollars ($***) upon the commercial production release
of the RSS Software.

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                       8
<PAGE>

     Notwithstanding anything else in this Agreement, the first commercial sale
of a CyberPro3000 Product shall conclusively be deemed to satisfy each and every
milestone requirement in this Section 10.2 and IGS shall immediately pay to RSS
any milestone payment(s) not yet paid hereunder.

          10.3  Royalties.
                ---------

                (a)  Each party shall pay royalties to the other party for each
unit of CyberPro3000 Product sold, distributed or otherwise transferred under
this Agreement by or for such selling party as follows:

               Number of Units                 Royalty Per Unit
               ---------------                 ----------------

               1-20,000                            $***
               20,001- 750,000                     $***
               750,001- 1,500,000                  $***
               1,500,001+                          $***

                (b)  Each party shall pay royalties to the other party for each
unit of Unencrypted Verilog Based Product sold, distributed or otherwise
transferred under this Agreement by or for such selling party in the amount of
*** ($***) for each unit of the first *** (***) units of Unencrypted Verilog
Based Products, licensed, distributed or otherwise transferred.

                (c)  All royalties shall be due and paid at the same time as the
quarterly reports are provided under Section 10.5 below. No royalties shall
accrue with respect to either party after January 1, 2001, provided all
royalties accrued prior to January 1, 2001 have been paid in full on or before
January 31, 2001. Royalties shall continue to accrue after January 1, 2001 with
respect to a party which has not paid royalties as provided in this paragraph
(c) until such time as that party has paid all outstanding and accrued royalties
in full. No royalties shall be payable for (i) units of CyberPro3000 Products
and Unencrypted Verilog Based Products that are returned and for which a credit
has been made to a customer or (ii) commercially reasonable quantities of
CyberPro3000 Products and Unencrypted Verilog Based Products used for testing,
demonstration and similar purposes provided a party is not paid for such use.

          10.4  New Markets. In the event the parties agree in writing to amend
                -----------
either the IGS Market or RSS Market to add any additional platform or territory,
all royalties for units of CyberPro3000 Products sold in such new market shall
be calculated based only on the unit sales applicable to such additional
platform(s) or territory(ies), as the case may be.

          10.5  Payments; Reports; Audit. Each party shall bear its own
                ------------------------
manufacturing, marketing, sales and distribution costs including, without
limitation, taxes, duties and other government assessments. All late payments
will be assessed a service fee of one and one-half percent (1.5%) per month or
the maximum rate allowed under applicable law, whichever is less. Each party
shall provide to the other party, within thirty (30) days after the end of each
calendar quarter, quarterly written reports of the total number of units of
CyberPro3000 Products and

      *** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

                                       9
<PAGE>

Unencrypted Verilog Based Products distributed by or for such party and the
royalties payable, if any, which have accrued under Section 10.3 above. Each
party shall keep complete and accurate books and records of its sales and
distribution of CyberPro3000 Products and Unencrypted Verilog Based Products
all other transactions relating thereto in sufficient detail to enable any
payments due hereunder to be determined and verified. Each party shall have
the right (at its expense, upon reasonable notice and during the audited
party's normal business hours) to have an independent certified public
accountant inspect and audit the books and records of the other party for the
purpose of verifying any reports, information or payments provided or due
hereunder. Such accountant shall be bound in confidence not to use or disclose
any information except to the extent necessary to inform the auditing party of
any non-compliance with the reports, information or payments provisions of
this Agreement. All underpayments revealed by such audit shall be paid within
thirty (30) days of the audit results. If such audit reveals an underpayment
in excess of five percent (5%), the underpaying party shall bear the expense
of the audit. Each party may exercise its right to audit no more than once per
year unless an underpayment of over five percent (5%) has been discovered in
the prior audit. In such event, the underpaid party shall have the right to
audit once every three (3) months until the results of the three (3) most
recent audits show less than a five percent (5%) underpayment.

     11.  Training and Support.
          --------------------

          11.1  The parties agree to cooperate in the development and support of
the *** Technology, IGS Software, IGS Chip and CyberPro3000 Products.
Accordingly, each party shall provide, at the other party's request and expense,
up to eighty (80) man hours of training and technical support during the
providing party's normal business hours. A party may request additional training
and technical support at the providing party's then current consulting fee,
which request shall not unreasonably be denied.

          11.2  The parties shall together and in good faith negotiate with
third parties for the right to bundle mutually acceptable third party products
with the CyberPro3000 Products and Unencrypted Verilog Based Products.

     12.  Representations and Warranties.
          ------------------------------

          12.1  Each party represents and warrants that:

                (a)  it has the corporate power and authority to enter into and
to fulfil its obligations under this Agreement;

               (b)   it will use its diligent commercial efforts to successfully
market, distribute and support the CyberPro3000 Products in the IGS Market (in
the case of IGS) and the RSS Market (in the case of RSS) on a continuing basis
and to comply with good business practices and all laws and regulations relevant
to this Agreement or the subject matter hereof;

               (c)   it is fully responsible for the satisfaction and support of
its customers. Each party will be responsible for, and shall indemnify, defend
and hold the other party harmless from, all claims, damages, settlements,
expenses and attorneys' fees incurred by a party

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                      10
<PAGE>

with respect to the other party's customers and their claims; and

               (d)  to keep for three (3) years after termination of this
Agreement records of all CyberPro3000 Product and Unencrypted Verilog Based
Product sales and customers sufficient to adequately administer a recall of
any such products and to fully cooperate in any decision by RSS or IGS to
recall, retrieve and/or replace any such products.

          12.2 IGS represents and warrants that:

               (a)  it has the right to grant RSS the licenses in Section 3
including, without limitation, the license to the AGP Technology;

               (b)  IGS shall not enter into any manufacturing, fabrication or
foundry agreement with any third party for the CyberPro3000 Products,
Unencrypted Verilog Based Products or IGS Chips which does not expressly grant
RSS the irrevocable right to obtain manufacturing, fabrication or foundry
services for CyberPro3000 Products, Unencrypted Verilog Based Products or IGS
Chips from such third party on the same terms as IGS and grant RSS discounts,
credits or other favorable terms (including, without limitation, price) based
on the number of units thereof produced by such third party manufacturer for
IGS; and

               (c)  the deliverables provided by it hereunder shall be the same
in every respect as the products shipped by IGS to its customers and that it
will, without charge, provide to RSS for the term of this Agreement, all
improvement, upgrades, updates, bug fixes and other enhancements which IGS makes
generally available to its customers.

          13.  Warranty; Disclaimer. RSS represents and warrants that (i) the
               --------------------
*** Technology, as delivered by RSS hereunder, will conform substantially to
RSS' specifications therefor, provided that IGS' sole remedy for breach of the
warranty in this clause (i) shall be IGS' rights under Section 8.2; and (ii) to
the best of RSS' knowledge, the RSS Software does not infringe any United States
Proprietary Rights of any third party, provided that IGS' sole remedy for breach
of the warranty in this clause (ii) shall be IGS' rights under Section 15.
EXCEPT AS EXPRESSLY AND UNAMBIGUOUSLY SET FORTH IN TIES SECTION 13, RSS MAKES NO
WARRANTIES TO ANY PERSON OR ENTITY WITH RESPECT TO ANY PRODUCTS, *** TECHNOLOGY
OR DOCUMENTATION OR ANY PORTION OR DERIVATIVE WORK THEREOF OR ANY SERVICES OR
LICENSES AND HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT.

          14.  Limited Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS
               -----------------
AGREEMENT OR OTHERWISE (EXCEPT SECTION 15 BELOW), NEITHER PARTY WILL BE LIABLE
WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST DATA, (II) COST OF
PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES, (III) ANY AMOUNTS IN
EXCESS IN THE AGGREGATE OF

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                      11
<PAGE>

THE MILESTONE PAYMENTS ACTUALLY PAID TO RSS BY IGS PURSUANT TO SECTION 10.2
ABOVE, OR (IV) ANY MATTER BEYOND ITS REASONABLE CONTROL.

          15.  Indemnification.  Each party shall indemnify, defend and hold
               ---------------
the other party and its officers, directors, agents and employees harmless from
liability, damages, costs, and attorneys' fees, if any, finally awarded in any
suit or the amount of the settlement thereof resulting from any third party
claim that the *** Technology or Derivative Works thereof created by or for RSS
(in the case of RSS) or IGS Chip, IGS Software or Derivative Works thereof or
other deliverable created by or for IGS (in the case of IGS) infringes any
United States patent, copyright or trademark or misappropriates any trade
secret, provided that: (i) the indemnifying party is promptly notified of any
and all threats, claims and proceedings related thereto, (ii) the indemnifying
party shall have sole control of the defense and/or settlement thereof, (iii)
the indemnified party furnishes to the indemnifying party upon the indemnifying
party's request and expense, information reasonably available to the indemnified
party for such defense, and (iv) the indemnified party provides the indemnifying
party with reasonable assistance. Neither party shall admit any such claim
without prior written consent of the other party. Neither party shall have any
obligation under this Section 15 with respect to any *** Technology, IGS Chip,
IGS Software or any portion, component or Derivative Works of the foregoing (a)
not supplied by the indemnifying party, (b) made in whole or in part in
accordance with the indemnified party's specifications, (c) that are modified
after delivery by the indemnifying party, if the alleged infringement relates to
such modification, (d) combined with other products, processes or materials
where the alleged infringement relates to such combination, (e) where the
indemnified party continues allegedly infringing activity after being notified
thereof or after being informed of modifications that would have avoided the
alleged infringement and such modifications are not fully implemented, or (f)
where the indemnified party's use of the *** Technology, IGS Chip, IGS Software
or Derivative Work thereof is not strictly in accordance with the licenses
granted herein.

          16.  Confidentiality.
               ---------------

               16.1  Each party ("disclosing party") may, from time to time, in
connection with performance under this Agreement, disclose confidential
information ("Confidential Information") to the other party ("receiving party").
Each recipient party agrees not to use (other than for purposes contemplated by
this Agreement), and will use reasonable efforts to prevent the disclosure to
third parties of, any of the disclosing party's Confidential Information that is
identified as confidential at the time of disclosure and is provided in tangible
form marked "confidential" or "proprietary" (or is reduced to such form within
thirty (30) days after oral disclosure). All RSS Software, Source Code, Verilog
Source Code and Derivative Works of any of the foregoing provided by RSS is
hereby identified and marked as RSS' Confidential Information. The IGS Chip, IGS
Software and Derivative Works provided by IGS are hereby identified as IGS'
Confidential Information. The recipient party's confidentiality obligation
hereunder shall not apply to information that the recipient party can document:

                     (i)  was in the recipient party's possession or known by it
prior to receipt from the disclosing party;

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                      12
<PAGE>

               (ii)   is or (through no fault of the recipient party or any of
its employees, contractors, agents or licensees) becomes generally available to
the public;

               (iii)  is rightfully disclosed to the recipient party by a third
party having no obligations of confidentiality to the disclosing party, provided
the recipient party complies with any restrictions imposed by the third party;

               (iv)   is independently developed by the recipient party without
use of or reference to the disclosing party's Confidential Information; or

               (v)    is required by law or regulation to be disclosed
(including, without limitation, in connection with SEC filings), provided that
the recipient party uses reasonable efforts to restrict disclosure and to obtain
confidential treatment therefor.

          16.2 Each recipient party acknowledges and agrees that due to the
unique nature of the disclosing party's Confidential Information, there can be
no adequate remedy at law for any breach of its obligations hereunder, that any
such breach may allow the recipient party or third parties to unfairly compete
with the disclosing party resulting in irreparable harm to the disclosing party
and, therefore, that upon any such breach or threat thereof, the disclosing
party shall be entitled to injunctive relief and other appropriate equitable
relief in addition to whatever remedies it may have at law, and to be
indemnified by the recipient party from any loss or harm (including, without
limitation, attorneys' fees) in connection with any breach or enforcement of the
recipient party's obligations hereunder or the unauthorized use or release of
any Confidential Information. The recipient party will notify the disclosing
party in writing immediately upon the occurrence of any such unauthorized
release or other breach of which it is aware.

     17.  Term and Termination.
          --------------------

          17.1  This Agreement shall commence on the Effective Date and shall
remain in effect until terminated.

          17.2  This Agreement will terminate:

                (a)  upon thirty (30) days (ten (10) days in the case of
nonpayment) prior written notice if IGS shall be in breach or default of any
material obligation under this Agreement; provided however, IGS may avoid such
termination if, before the end of such notice period, it cures such breach;

                (b)  immediately if IGS ceases to do business, or otherwise
terminates its business operations;

               (c)  immediately if IGS seeks protection under any bankruptcy,
receivership, trust deed, creditors arrangement, composition or comparable
proceeding, or if any such proceeding is instituted against IGS (and not
dismissed within sixty (60) days); or

               (d)  immediately if IGS is unable to grant RSS the AGP Technology

                                      13
<PAGE>

license specified in Section 3.1(a).

          17.3  Neither party shall incur any liability whatsoever for any
damage, loss or expenses of any kind suffered or incurred by the other (or for
any compensation to the other) arising from or incident to any termination of
this Agreement by such party which complies with the terms of the Agreement
whether or not such party is aware of any such damage, loss or expenses.

          17.4  Upon termination of this Agreement by either party: (i) all
rights and licenses granted hereunder shall immediately terminate, except that
licenses to end user customers for the use of the RSS Software, Documentation,
IGS Chip and IGS Software pursuant to this Agreement shall continue in
accordance with the applicable end user agreements therefor; (ii) IGS will
immediately return to RSS all *** Technology and all materials relating to ***
Technology or portion(s) thereof and all RSS Confidential Information in IGS'
possession, custody or control in whatever form held (including all copies or
embodiments thereof), except that IGS may maintain one (1) copy of the RSS
Software solely to the extent necessary to support its installed base of
customers for the CyberPro3000 Products and Unencrypted Verilog Based Products;
and (iii) except to the extent expressly provided to the contrary in this
Agreement, all rights to payment (including, without limitation, milestone
payments and royalties) and the following provisions shall survive the
termination of this Agreement: Sections 4, 7, 9.1, 9.3, 10.5, 12.1(a), (c) &
(d), 12.2(a) and 13 through 20, inclusive.

          17.5  Termination is not the sole remedy under this Agreement and,
whether or not termination is effected, all other remedies will remain
available.

     18.  Export Requirements. IGS agrees to comply with the U.S. Foreign
          -------------------
Corrupt Practices Act (regarding, among other things, payments to government
officials) and all export laws, restrictions, national security controls and
regulations of the United States and all other applicable foreign agencies and
authorities, and not to export or re-export, or allow the export or re-export
of, any CyberPro3000 Product, Unencrypted Verilog Based Product, *** Technology
or Documentation or any copy or direct product thereof (a) in violation of any
such restrictions, laws or regulations or (b) without all required licenses and
proper authorizations, to Cuba, Libya, North Korea, Iran, Iraq or Rwanda or to
any Group D or E country (or any national of such country) specified in the then
current Supplement No. 1 to part 740 of the U.S. Export Administration
Regulations (or any successor supplement or regulations). IGS shall promptly
execute any documents required by U.S. export requirements and demonstrate upon
demand to RSS its compliance with such requirements. IGS shall obtain and bear
all expenses relating to any licenses, exemptions and other requirements with
respect to the export from the U.S. of any and all CyberPro3000 Products,
Unencrypted Verilog Based Products, *** Technology, Documentation, information,
materials or items deliverable by RSS hereunder to any location and shall
demonstrate to RSS compliance with all applicable laws and regulations prior to
export thereof.

     19.  Assignment. Neither this Agreement nor any rights, licenses or
          ----------
obligations hereunder, may be assigned by either party without the prior written
approval of the non-assigning party. Notwithstanding the foregoing, either party
may assign this Agreement (with no rights or obligations retained by the
assignor) to any acquiror of all or substantially all of such party's stock

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                      14
<PAGE>

assets or business to which this Agreement relates. The provisions of this
Agreement shall inure to the benefit of, and be binding upon, RSS and IGS and
their respective successors and permitted assigns.

     20.  Miscellaneous.
          -------------

          20.1  Entire Agreement: Amendment.  This Agreement (and all
                ---------------------------
Attachments hereto) constitutes the entire and only agreement between the
parties relating to the subject matter hereof, and supersedes all other prior
negotiations, representations, understandings and agreements. No agreements
amending, modifying or supplementing the terms hereof shall be effective except
by means of a written document signed by the duly authorized representatives of
both parties.

          20.2  Notices. All notices, consents, or approvals required by this
                -------
Agreement shall be in writing and shall be deemed given five (5) days after
being sent by certified or registered air mail, postage prepaid, or when
received after being sent by facsimile (confirmed by such certified or
registered mail) or by commercial overnight courier service with tracking
capabilities, to the parties at the addresses below or such other addresses as
may be designated in writing by the respective parties pursuant to the terms of
this notice provision:

     To RSS:

          Reality Simulation Systems Acquisition Corporation
          1020 Ashbury St.
          San Jose, CA 95126
          Attn:  Sandeep Gupta

     To IGS:

          InteGraphics Systems, Inc.
          4001 Burton Drive
          Santa Clara, CA 95054
          Attn:  Kenny Liu

          20.3  Governing Law and Legal Accounts.  This Agreement shall be
                --------------------------------
governed by and construed under the laws of the State of California and the
United States, without regard to the conflicts of laws provisions thereof and
without regard to the United Nations Convention on the International Sale of
Goods. In any action or proceeding to enforce rights under this Agreement, the
prevailing party shall be entitled to recover its costs and attorneys' fees.

          20.4  Arbitration.  Except that either party may seek equitable or
                -----------
similar relief from a court, any dispute, controversy or claim arising out of or
in relation to this Agreement or at law, or the breach, termination or
invalidity thereof, that cannot be settled amicably by agreement of the parties
hereto, shall be finally settled by arbitration in accordance with the
arbitration rules of the American Arbitration Association ("AAA"), then in force
by one or more qualified, independent arbitrators appointed in accordance with
said rules; provided, however, that arbitration proceedings

                                      15
<PAGE>

may not be instituted until the party alleging breach of this Agreement by the
other party has given the other party not less than thirty (30) days to remedy
any alleged breach and the other party has failed to do so. The arbitration will
take place in San Jose, California. The award rendered shall be final and
binding upon both parties. Judgment upon the award may be entered in any court
having jurisdiction, or application may be made to such court for judicial
acceptance of the award and/or an order of enforcement as the case may be.

     20.5  Waiver.  The failure of a party to enforce a right under this
           ------
Agreement shall not act as a waiver of that right or the ability to assert that
right relative to the particular situation involved. The waiver by either party
of a breach of any provisions contained in this Agreement shall be effective
only if set forth in a writing signed by both parties and shall in no way be
construed as a waiver of any succeeding breach of such provision or the waiver
of the provision itself.

     20.6  Headings.  Headings included herein are for convenience only and
           --------
shall not used to interpret or construe this Agreement.

     20.7  Severability.  If any provision of this Agreement shall be held void,
           ------------
invalid, illegal or unenforceable, that provision shall be limited or eliminated
to the minimum extent necessary so that this Agreement shall otherwise remain in
full force and effect and enforceable.

     20.8  Remedies; Injunctive Relief. Except as otherwise expressly provided,
           ---------------------------
rights and remedies of a party set forth herein with respect to failure of the
other party to comply with the terms of this Agreement are not exclusive, the
exercise thereof shall not constitute an election of remedies and the aggrieved
party shall in all events be entitled to seek whatever additional remedies may
be available in law or in equity (including, without limitation, appropriate
injunctive relief).

     20.9  Nonsolicitation.  During the term of this Agreement and for a
           ---------------
period of one (1) year after the termination or expiration of the Agreement,
neither party shall, directly or indirectly, solicit the employment or services
of any employee of the other party, or encourage employees to leave the employ
of the other party.

     20.10 No Joint Venture.  Nothing in this Agreement shall be deemed or
           ----------------
construed as creating a joint venture or partnership between the parties. Except
as expressly set forth, no party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party, and the relationship
of the parties is, and at all times shall continue to be, that of independent
contractors.

     20.11 Further Assurances. Each party agrees to cooperate fully with the
           ------------------
other party and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
the other party, to better evidence and reflect the transactions described in
and contemplated by this Agreement, and to carry into effect the intents and
purposes of this Agreement.

                                      16
<PAGE>

     20.12  Counterparts. This Agreement may be executed in counterparts, each
            ------------
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

            IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the Effective Date.

REALITY SIMULATION SYSTEMS ACQUISITION          INTEGRAPHICS SYSTEMS, INC.
CORPORATION

By: /s/ Sandeep Gupta                           By  /s/ Kenny Liu
    -----------------------------------            -----------------------------
Name:  Sandeep Gupta                            Name: Kenny Liu
      ---------------------------------               --------------------------
Title: President                                Title: CEO/President
       --------------------------------                -------------------------

                                      17
<PAGE>

                                 ATTACHMENT A

AGP Technology Specification:
[to be provided]

IGS Chip Specification:
[to be provided]

IGS Software Specification:
[to be provided]

RSS Software Specification:
[to be provided]

                                      18
<PAGE>

                                 ATTACHMENT B

                             CYPERPRO3000 PRODUCTS

                               [to be provided]

                                      19
<PAGE>

ATTACHMENT B                                                      [***(TM) Logo]
------------
                                                   2D/3D/Video Graphics Chip
PRELIMINARY

<TABLE>
<CAPTION>
Features                                     High Performance 3D Rendering Engine
<S>                                          <C>
3-D Rendering Engine                         The 30 Rendering Engine is based on the ***(TM) which performs many of the 3D operation
                                             such as polygon setup, rasterization, and texturing on chip resulting in minimal
 .  On-chip polygon setup                     overhead on the host processor to deliver outstanding texture mapped graphics. The
 .  16-bit Z visibility                       patented rendering engine utilizes and takes advantage at a no Z-buffer memory
 .  Bilinear filtering                        architecture, increasing the resolution and amount of textures that can be stored in
 .  RGB lighting                              any given memory configuration.
 .  Gouraud Color Interpolation
 .  Per Pixel Fog and Depth Cues              Superb 2D 64-bit Graphics Accelerator
 .  Perspective-correct Interpolation
 .  100 million textured pixels/sec,           ***(TM) includes a glueless solution for simple, efficient, cost effective high
   bilinear MIP-mapped*                       performance graphics subsystem design for PCI bus systems. The integrated 230 MHz 24-
 .  800 thousand polygons/sec,                 bit true color DAC dual programmable clocks, write FIFO and dual command FIFO's reduce
   10 pixel-polygons. RGB lighting,           system cost while optimizing memory bandwidth for maximum graphics performance.
   alpha, floating point (API natural)
   input*                                     Flicker-Free TV Direct(TM) Output

2D 64-bit Accelerator                         The ***(TM) incorporates a flicker-free technology, vertical scaling and an integrated
                                              TV encoder on-chip for true TV quality output.
 .  64-bit GUI engine
 .  230MHz RAMDAC, dual clock                  Since the TV screen does not display as many vertical lines as a VGA monitor, scaling
 .  Supports up to 1600x1200x256               is implemented to avoid losing information when lines are dropped. The data from the
   colors, True color & 90Hz up to            lines which are eliminated during scaling is incorporated into adjacent lines, thus
   1280x1024                                  avoiding a loss of data.
 .  VESA DDC28, DPMS support
 .  WINBench97 @ 1024x768                      Fig. 1 - ***(TM) Chip Block Diagram
   Pentium 200MHz: 90 (est.)*

TVDirect(TM) Output                                                              [GRAPHIC OMITTED]

 .  Low cost Accelerator with
   on-chip digital NTSC/PAL
   encoder
 .  Proprietary non-linear 3 line
   flicker-free filtering.
 .  Enhanced TV text & video quality
   with 9-bit DAC
 .  NTSC (800x600/640x480x60Hz),
   PAL (800x600/640x480x60Hz)
 .  Underscan, overscan, positioning,
   & TV auto-detect
 .  Requires only a single crystal for
   NTSC/PAL output.
 .  Support for SCART output.
 .  S-video/Composite direct TV
   output
 .  Simultaneous & different
   resolution/color/refresh rate VGA
   & TV outputs
 .  Supports Macrovision(TM) 7.01

* Mileage might vary depending on
  actual system implementation
</TABLE>

                                 CONFIDENTIAL

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                       20
<PAGE>

                                                                  [***(TM) Logo]
                                                   2D/3D/Video Graphics Chip

<TABLE>
<CAPTION>
PRELIMINARY
<S>                                                    <C>
Video Editing/Conferencing                             Better Video Capture Quality

 .  3 scaleable video, windows plus                     Video phone and video conferencing can capture very high quality video
   PIP                                                 through the video port and the hardware filter. The filter averages the
 .  High Quality multi-tap filtering                    scaled down video for better quality before minifying for capture. The
   during video capture.                               ***(TM) will support both CCIR601 RGB and YUV formats as well as CCIR656 8
 .  H/V Interpolation with edge                         and 16-bit interfaces.
   smoothing
 .  Mirror/upside down support for                      Enhanced Triple Video Windows
   Video Conferencing
 .  Filtering during down scaling &                     The ***(TM) supports hardware assisted three independently scaleable video
   video capture                                       windows enabling video phone and video conferencing applications.

Flexible Video Inputs                                  Where necessary, the video is scaled with interpolation and displayed for
                                                       better video quality. This multimedia chip provides excellent video and
 .  VBI, Intercast Teletext & closed                    playback when scaling from 32x32 icon size to full screen because it supports
   caption support                                     both horizontal and vertical interpolation along with edge smoothing
 .  Support for CCIR601/656, YUV                        technologies for jagged edges, In addition, it eliminates the combing effect
   411/420/422                                         of rapid movement. When video is scaled down, the video is filtered and
 .  Direct Interface for popular                        either captured or displayed at a much higher quality.
   NTSC/PAL decoders

Multiplatform Support
                                                       Table 1 - Supported 3D Resolutions*
 .  Intel(TM), Cyrix(TM), and
   AMD (TM)                                                                     [GRAPHIC OMITTED]
 .  PowerPC(TM)
                                                                       FB           2MB                4MB                8MB
Drivers & Software                                                                    Texture             Texture            Texture
                                                       Resolutions    bpp   Supported   MEM     Supported   MEM   Supported    MEM
 .  Microsoft DirectX(TM)                               -----------------------------------------------------------------------------
 .  Apple QuickDraw3D(TM) RAVE                          640x480        18       X        848        X       2,896      X       6,992
 .  BIOS                                                               24       X        248        X       2,296      X       6,392
                                                                      32                           X       1,696      X       5,792
Documentation                                          -----------------------------------------------------------------------------
                                                       800x600        18       X        173        X       2,221      X       6,317
 .  Technical Manual                                                   24                           X       1,284      X       5,380
                                                                      32                           X         346      X       4,442
Reference Board                                        -----------------------------------------------------------------------------
                                                       1024x768       18                           X       1,024      X       5,120
 .  Reference Design Board                                             24                                              X       3,584
                                                                      32                                              X       2,048
RSSI                                                   -----------------------------------------------------------------------------
2355 Old Oakland Road, Suite #4                        1280x1024      18                                              X       3,072
SAN JOSE, CA 95131                                                    24                                              X         512
PH: 408-955-9663                                                      32
FX 408-955-9671
                                                       * Includes single-butter, double-buffer, z -butter with remaining texture map
http://www.simsys.com                                  storage as shown above (kB).
                                                       x Not supported by traditional 2D/3D chips.
RSSI assumes no responsibility or liability
for any errors or errors contained in this
document. This includes any claim for
\copyright or patent infringement or direct,
indirect, special or consequential damages.
The information herein is subject to
change without notice from RSSI.

AD trademark and registered trademarks
are property of their respective owners.

Glossy rev. 004 06/97 - EH01
</TABLE>

                                 CONFIDENTIAL

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                       21
<PAGE>

                                 ATTACHMENT C

                           PLATFORMS AND TERRITORIES

As used herein, "Network Computer" and "Settop" shall mean consumer information
appliances based on Java or a real time operating system using embedded central
processing units and a television as a primary display.

IGS market:
--------------------------------------------------------------------------------
Platform                                Territories
--------------------------------------------------------------------------------

Settop                                  Europe
Network Computer                        Hong Kong
Laptop Computer                         Japan
                                        Malaysia
                                        Singapore
                                        Taiwan
                                        PRC
                                        Korea
--------------------------------------------------------------------------------
RSS Market:
--------------------------------------------------------------------------------
Platform                                Territories
--------------------------------------------------------------------------------
All MAC OS accounts                     N. American PC desktop accounts
--------------------------------------------------------------------------------

                                       22
<PAGE>

                                 ATTACHMENT D

                              MILESTONE SCHEDULE

           ------------------------------------------------------
                  Milestone                      Target Date
           ------------------------------------------------------
            Execution of Agreement               June 1, 1997
            Test Sample sign-off                 July 31, 1997
            Commercial Production Release       October 31, 1997
           ------------------------------------------------------

                                       23
<PAGE>

                                 ATTACHMENT E

                                *** TECHNOLOGY

<TABLE>
<S>                                            <C>
 .  Triangle, Line, Point rendering             Input display list can include all basic 3D primitives.
 .  Setup from floating point coordinates       No driver overhead for reformatting data
 .  Perspective correct interpolation           All values, including Z
 .  RGB per-pixel lighting                      Allows colored lights
 .  STMA interpolation per-pixel                Texture plus MIP-map level and alpha-transparency
 .  Specular Lighting                           Best quality lighting enabled by API's
 .  Point/Linear/Bilinear filtering             Fast and High-quality texturing modes
 .  24-bit Z buffer                             Flexible Z-outputs for apps that read Z buffer
 .  Alpha channel mixing (translucency)         No front-back sorting required
 .  Oversampling anti-aliasing                  Reduces "jaggies" on edges of triangles and lines
 .  Anisotropic texturing                       Better filtering than tri-linear
 .  Sub-pixel accuracy                          No texture jitter
 .  Source color keying                         For textures with transparent texels
 .  Multiple texture palettes                   Compact high quality textures
</TABLE>

*** CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.

                                       24

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