Document:

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                                                                   EXHIBIT 10.35

                             DISTRIBUTION AGREEMENT

      This DISTRIBUTION AGREEMENT (the "Agreement") is made effective as of
September 1, 2001 ("Effective Date") by and between Scil Animal Care Company
GmbH (hereinafter called "Distributor"), and ABAXIS, Inc. (hereinafter called
"Company"), a California corporation ("ABAXIS").

                                    RECITALS

      A. ABAXIS is the manufacturer of blood analyzers described in Exhibit A,
attached (the "Products").

      B. Distributor wishes to acquire non-exclusive rights to distribute the
products in the territory described in Exhibit B.

ITEM 31. Definitions.

1.    "INSTRUMENTS" MEANS THE ELECTROMECHANICAL DEVICES WHICH ARE MORE FULLY
      DESCRIBED IN EXHIBIT A TO THIS AGREEMENT.

2.    "DISCS" MEANS THE REAGENT DISCS, OR ROTORS, WHICH ARE MORE FULLY DESCRIBED
      IN EXHIBIT A TO THIS AGREEMENT.

3.    "PRODUCTS" MEANS THE INSTRUMENT AND THE DISCS.

ITEM 32. Purchase and Distribution Rights.

1.    PURCHASE RIGHTS. ABAXIS WILL SELL TO DISTRIBUTOR AND DISTRIBUTOR WILL
      PURCHASE FROM ABAXIS THE PRODUCTS FOR DISTRIBUTION ACCORDING TO THE TERMS
      AND CONDITIONS OF THIS AGREEMENT.

      Distribution Rights. Subject to the terms of this Agreement, ABAXIS grants
Distributor, and Distributor accepts, the non-transferable right to distribute
the Products within the territory. Distributor may not transfer any of these
rights to any sub-distributor either in the employ or in any other way
associated with Distributor.

2.    DISTRIBUTION OBLIGATIONS OF DISTRIBUTOR. DURING THE TERM OF THIS
      AGREEMENT, DISTRIBUTOR WILL:

            i. Obtain all reasonable governmental approvals and make all
governmental registrations and filings necessary to import the Products into the
territory and to distribute the Products in the territory, including obtaining
approvals to import and distribute each lot of Discs that Distributor purchases
under this Agreement, or will return the distribution rights for the individual
country to the company;

            ii. If any approval or registration of this Agreement will be
required to make it enforceable in the territory, or to comply with exchange
regulations or other requirements so as to allow remittance abroad of payment as
required in this Agreement. Distributor shall immediately take all required
action and pay all required charges to obtain such approvals and registrations
or will return the distribution rights for the individual country to the
company. Distributor shall keep ABAXIS informed of the status of all efforts
relating to such approvals and registrations, and ABAXIS shall be under no
obligation to ship Products to Distributor thereunder until Distributor has
provided ABAXIS with satisfactory evidence that such approval or registration is
not required or that it has been obtained;

            iii. Use its adequate efforts to promote the sales of the Products
to customers located in the territory;
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            iv. Provide and maintain an adequately staffed, equipped and trained
sales organization, whose members will be able to explain in detail to customers
the specification, features and benefits of the products and the differences
between the Products and competitive products;

            v. Provide sales and market data reports on a yearly basis, and at
ABAXIS' request, including customer identities, sales volume, and other
information relating to the actual and potential market for the Products in the
territory;

            vi. Keep ABAXIS informed concerning problems encountered and their
resolutions, and communicate promptly to ABAXIS any and all modifications,
design changes or improvements of the Products suggested by any customer of
distributor or any employee or agent of Distributor (Distributor agrees that
ABAXIS shall be and remain in the sole and exclusive owner of all such
information).

ITEM 33. Price and Taxes.

1.    PRICE. THE PRICE FORMULA FOR THE PRODUCTS IS SET FORTH IN EXHIBIT C
      ("PRICE LIST") TO THIS AGREEMENT.

2.    PRICE CHANGES. AFTER ONE (1) YEAR, ABAXIS RESERVES THE RIGHT TO AMEND THE
      PRICES SHOWN ON THE PRICE LIST UPON NINETY (90) DAYS PRIOR WRITTEN NOTICE
      TO DISTRIBUTOR. NO INCREASE IN PRICES OR REDUCTION IN DISCOUNTS WILL APPLY
      TO ITEMS FOR WHICH FIRM ORDERS (AS DEFINED IN SECTION 5.1 BELOW) ARE
      ACCEPTED BY ABAXIS BEFORE THE EFFECTIVE DATE OF THE CHANGE. DISTRIBUTOR
      WILL HAVE THE BENEFIT OF ANY REDUCTION IN PRICES OR INCREASE IN DISCOUNTS
      FOR FIRM ORDERS ACCEPTED BUT NOT SHIPPED BEFORE THE EFFECTIVE DATE OF SUCH
      CHANGE.

3.    TAXES. DISTRIBUTOR WILL PAY FOR ALL SALES, USE, VALUE-ADDED, AND OTHER
      TAXES, AND ALL CUSTOMS, DUTIES, AND TARIFFS NOW OR HEREAFTER CLAIMED OR
      IMPOSED BY ANY GOVERNMENTAL AUTHORITY UPON THE SALE OF THE PRODUCTS TO
      DISTRIBUTOR, OR UPON PAYMENTS TO ABAXIS UNDER THIS AGREEMENT.

ITEM 34. Payment. All payments under this Agreement to ABAXIS are due sixty (60)
      days after invoice date and will be made in United States dollars, free of
      any currency control or other restrictions, by wire transfer to the ABAXIS
      bank account designated by ABAXIS' credit department (Exhibit D). Credit
      terms may be extended to Distributor at the complete discretion of ABAXIS.
      ABAXIS reserves the right, upon written notice to Distributor, to declare
      all sums immediately due and payable in the event of a breach by
      Distributor of any of its obligations to ABAXIS; including the failure of
      Distributor to comply with credit terms. Furthermore, ABAXIS reserves the
      right at all times either generally or with respect to any specific order,
      to vary, change, or limit the amount or duration of credit to be allowed
      to Distributor.

ITEM 35. Orders.

1.    FORECAST; FORM OF ORDERS. DISTRIBUTOR WILL PROVIDE ABAXIS WITH A GOOD
      FAITH ROLLING NON-BINDING TWELVE-MONTH FORECAST OF ITS REQUIREMENTS
      UPDATED EVER THREE (3) MONTHS. DISTRIBUTOR WILL PURCHASE PRODUCTS FROM
      ABAXIS BY THE ISSUANCE OF FIRM WRITTEN PURCHASE ORDERS ("FIRM ORDERS")
      SPECIFYING THE QUANTITY OF EACH PRODUCT ORDERED AND THE SHIPPING DATE OR
      DATES FOR SHIPMENT THEREOF.

ITEM 36. Shipment and Acceptance.

1.    SHIPMENT. ABAXIS WILL USE DILIGENT EFFORTS TO SHIP THE PRODUCTS AT THE
      TIME REQUESTED IN FIRM ORDERS ACCEPTED BY ABAXIS. IN THE EVENT OF SHORTAGE
      OF LABOR, ENERGY, COMPONENTS, RAW MATERIALS OR SUPPLIES OR INTERRUPTION OF
      ABAXIS' PRODUCTION OR SHIPMENT FOR REASONS BEYOND ABAXIS' REASONABLE
      CONTROL, ABAXIS WILL GIVE DISTRIBUTOR REASONABLE PRIORITY IN TERMS OF
      ALLOCATING ABAXIS' PRODUCTION AND SHIPMENT OF THE PRODUCTS.

      Without liability to any person and without prejudice to any other remedy,
ABAXIS may withhold or delay shipment of any order if Distributor is late in
payment or is otherwise in default under this Agreement. ABAXIS shall promptly
notify Distributor in the event that ABAXIS withholds or delays shipments under
this Agreement.

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2.    PACKAGING AND SHIPMENT-RISK OF LOSS. ABAXIS WILL PACKAGE AND SHIP ALL
      ITEMS SUBJECT TO FIRM ORDERS IN ABAXIS' CUSTOMARY MANNER. ALL SHIPMENTS
      WILL BE F.O.B. ABAXIS' SHIPPING LOCATION. TITLE TO THE PRODUCTS AND THE
      RISK OF LOSS OF OR DAMAGE TO THE PRODUCTS ORDERED BY DISTRIBUTOR WILL PASS
      TO DISTRIBUTOR UPON ABAXIS' DELIVERY TO THE CARRIER FOR SHIPMENT.
      SUBSEQUENT LOSS OR DAMAGE WILL NOT RELIEVE DISTRIBUTOR OF ANY OBLIGATION
      UNDER THIS AGREEMENT.

3.    SHIPMENT EXPENSE. DISTRIBUTOR WILL INSTRUCT ABAXIS IN WRITING AS TO WHICH
      CARRIER ABAXIS WILL USE TO TRANSPORT THE PRODUCTS ORDERED BY DISTRIBUTOR.
      IF DISTRIBUTOR HAS NOT SO INSTRUCTED ABAXIS AT THE TIME OF THE ORDER,
      ABAXIS MAY SELECT THE CARRIER. DISTRIBUTOR WILL PAY ALL COSTS OF
      TRANSPORTATION, ANY INSURANCE REQUESTED BY DISTRIBUTOR, EXPORT AND IMPORT
      FEES, CUSTOMS BROKERAGE EXPENSES AND SIMILAR CHANGES. DISTRIBUTOR AT ITS
      EXPENSE WILL MAKE AND NEGOTIATE ANY CLAIMS AGAINST ANY CARRIER, INSURER,
      CUSTOMS BROKER, FREIGHT FORWARDER OR CUSTOMS COLLECTOR. ABAXIS WILL
      COOPERATE WITH AND ASSIST DISTRIBUTOR IN MAKING SUCH CLAIMS.

4.    ACCEPTANCE. DISTRIBUTOR WILL HAVE TEN (10) WORKING DAYS AFTER ITS RECEIPT
      OF PRODUCTS TO ACCEPT OR REJECT THOSE PRODUCTS. DISTRIBUTOR MAY ONLY
      REJECT PRODUCTS WHICH FAIL TO CONFORM TO THE WARRANTY FOR THE PRODUCTS
      CONTAINED IN SECTION 7 BELOW.

ITEM 37. Warranty.

1.    INSTRUMENT WARRANTY. ABAXIS WARRANTS THAT THE INSTRUMENTS CONFIRM IN ALL
      MATERIAL RESPECTS TO THE PACKAGE INSERT FOR THE INSTRUMENTS AND WILL BE
      FREE FROM DEFECTS IN MATERIALS AND WORKMANSHIP UNTIL THE DATE WHICH IS ONE
      YEAR AFTER INSTALLATION AT THE END USER'S FACILITY (THE "WARRANTY
      PERIOD"). THIS LIMITED WARRANTY DOES NOT COVER THE RESULTS OF ACCIDENTS
      (INCLUDING UNUSUAL PHYSICAL OR ELECTRICAL STRESS), ABUSE, NEGLECT,
      VANDALISM, USE CONTRARY TO HANDLING OR OPERATING INSTRUCTIONS SUPPLIED BY
      ABAXIS, OR REPAIR OR MODIFICATION BY ANYONE OTHER THAN ABAXIS OR ABAXIS
      TRAINED DISTRIBUTOR PERSONNEL.

2.    DISC WARRANTY. ABAXIS WARRANTS THAT THE DISCS CONFORM IN ALL MATERIAL
      RESPECTS TO THE PACKAGE INSERT FOR THE DISCS UNTIL THE EXPIRATION DATE
      MARKED ON THE DISC AND/OR THE DISCS PACKAGING (THE "WARRANTY PERIOD").
      THIS LIMITED WARRANTY DOES NOT COVER THE RESULTS OF ACCIDENTS (INCLUDING
      UNUSUAL PHYSICAL STRESS), ABUSE, NEGLECT, VANDALISM, USE CONTRARY TO
      HANDLING OR OPERATING INSTRUCTIONS SUPPLIED BY ABAXIS, OR MODIFICATION BY
      ANYONE OTHER THAN ABAXIS.

3.    WARRANTY CLAIMS. IF DISTRIBUTOR BELIEVES THAT PRODUCTS DO NOT CONFORM TO
      THE WARRANTY SET FORTH IN SECTIONS 7.1 AND 7.2, DISTRIBUTOR SHALL NOTIFY
      ABAXIS IN WRITING OF SUCH NON-CONFORMANCE WITHIN TEN (10) WORKING DAYS
      AFTER DISCOVERING SUCH DEFECT DURING THE WARRANTY PERIOD, AND SHALL
      PROVIDE SUCH DETAILS OF THE NON-CONFORMANCE AS ABAXIS REASONABLY REQUESTS;
      INCLUDING, BUT LIMITED TO, SALES DOCUMENTS AND/OR OTHER SALES INFORMATION
      DESIGNED TO PROVE THAT THE NON-CONFORMITY WAS DISCOVERED DURING THE
      WARRANTY PERIOD. DISTRIBUTOR WILL, UPON THE REQUEST OF ABAXIS AND IN
      ACCORDANCE WITH ABAXIS' STANDARD PROCEDURES, RETURN SUCH PRODUCTS TO
      ABAXIS AT ABAXIS' EXPENSE AND RISK. IF ABAXIS DETERMINES THAT A RETURN
      PRODUCT DOES CONFORM TO THIS WARRANTY, OR THE NON-CONFORMITY WAS FOUND
      AFTER THE EXPIRATION OF THE WARRANTY PERIOD. ABAXIS WILL RETURN SUCH
      PRODUCTS. IF PRODUCTS ARE DEEMED TO FAIL TO CONFORM TO THIS WARRANTY BY
      ABAXIS, DISTRIBUTOR'S SOLE REMEDY SHALL BE, AT ABAXIS' OPTION AND EXPENSE,
      THE REPAIR (APPLIES SOLELY TO INSTRUMENTS) OR REPLACEMENT AND RETURN OF
      THE PRODUCTS WITHIN (10) WORKING DAYS AFTER ABAXIS RECEIVES THE PRODUCTS,
      OR A CREDIT OF THE PRICE OR FEE PAID BY DISTRIBUTOR FOR THE PRODUCTS.
      NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, THE FOREGOING
      IS DISTRIBUTOR'S SOLE AND EXCLUSIVE REMEDY FOR BREACH OF WARRANTY BY
      ABAXIS WITH RESPECT TO THE PRODUCTS.

4.    DISCLAIMER OF WARRANTIES. EXCEPT FOR THE LIMITED WARRANTY FOR THE PRODUCTS
      CONTAINED IN SECTIONS 7.1 AND 7.2, ABAXIS AND ITS SUPPLIERS DISCLAIM ALL
      WARRANTIES WITH RESPECT TO NON-INFRINGEMENT OF THIRD PARTY RIGHTS,
      MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OTHER THAN STATED IN
      PRODUCT DESCRIPTION.

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5.    ROTOR FAILURES. ABAXIS WILL REPLACE ROTORS ON A LIMITED 2% RATIO
      INDEPENDENT OF CAUSE, DISTRIBUTOR DOCUMENTS PRODUCT FAILURES BY CUSTOMER.
      PRODUCT FAILURES DUE TO IMPROPER USE OF THE EQUIPMENT OR FAILURE TO FOLLOW
      PROCEDURES WILL NOT BE COMPENSATED. ABAXIS MAY REQUEST THAT DISTRIBUTOR
      RETURN THE FAILED ROTORS FOR INVESTIGATION.

ITEM 38. Training and Maintenance.

1.    PRODUCT TRAINING. ABAXIS WILL OFFER, WITHOUT CHARGE AND AT A MUTUALLY
      ACCEPTANCE TIME, ONE (1) TRAINING SESSION IN THE OPERATION AND MAINTENANCE
      OF THE PRODUCTS AT ABAXIS' OFFICES FOR A REASONABLE NUMBER OF
      DISTRIBUTORS' QUALIFIED PERSONNEL. IN ADDITION, DISTRIBUTOR PERSONNEL MAY
      ATTEND ABAXIS' SCHEDULE TRAINING SESSIONS CONDUCTED AT ABAXIS' FACILITIES
      FOR ABAXIS' THEN CURRENT TRAINING FEES.

2.    ENGINEER TRAINING. ABAXIS WILL OFFER, WITHOUT CHARGE AND AT A MUTUALLY
      ACCEPTABLE TIME, ONE (1) TRAINING SESSION TO RECEIVE FULL SERVICE AND
      MAINTENANCE QUALIFICATION FOR THE PRODUCTS AT ABAXIS' OFFICES FOR A
      REASONABLE NUMBER OF DISTRIBUTOR'S QUALIFIED PERSONNEL.

3.    SPARE PARTS. ABAXIS AGREES TO SELL TO DISTRIBUTOR SPARE PARTS FOR REPAIR
      OF THE PRODUCTS FOR A PERIOD OF FIVE (5) YEARS AFTER DISCONTINUING A
      PARTICULAR PRODUCT ORDERED UNDER THIS AGREEMENT. NOT LESS THAN SIX (6)
      MONTHS PRECEDING THE EXPIRATION OF THIS PERIOD, ABAXIS WILL PROVIDE
      DISTRIBUTOR WITH A DETAILED SPARES PROVISIONING DOCUMENT, INCLUDING
      PRICES, TO ENABLE DISTRIBUTOR TO ORDER SPARE PARTS IT MAY REQUIRE AFTER
      THE PERIOD OF AVAILABILITY. THE PRICES FOR SPARE PARTS WILL BE ABAXIS'
      CURRENT PRICES AT THE TIME OF DISTRIBUTOR'S ORDER THEREOF.

4.    OUT-OF-WARRANTY MAINTENANCE. FOR DISTRIBUTOR WITHOUT QUALIFIED PERSONNEL,
      ABAXIS WILL PROVIDE MAINTENANCE SERVICES TO DISTRIBUTOR FOR PRODUCTS WHICH
      ARE OUT OF WARRANTY AT ABAXIS' THEN CURRENT MAINTENANCE FEES AND SUBJECT
      TO ABAXIS' POLICIES WITH RESPECT TO SUCH MAINTENANCE; PROVIDED, HOWEVER,
      THAT ABAXIS WILL USE ITS BEST EFFORTS TO REPAIR SUCH PRODUCTS WITHIN TEN
      (10) WORKING DAYS AFTER RECEIPT OF THOSE PRODUCTS.

ITEM 39. Engineering Changes; Documentation; Cooperation.

1.    PRODUCT CHANGES. ABAXIS SHALL HAVE THE RIGHT TO MAKE CHANGES,
      SUBSTITUTIONS AND MODIFICATIONS IN THE PRODUCTS AND THE PACKAGE INSERTS.
      SUCH SUBSTITUTIONS OR MODIFICATIONS, OTHER THAN MANDATORY FIELD CHANGE
      ORDERS REQUIRED FOR EQUIPMENT SAFETY OR PROPER OPERATION, WILL NOT
      MATERIALLY AND ADVERSELY AFFECT THE FORM, FIT OR FUNCTION OF THE PRODUCTS
      AND WILL BE OPERATIONALLY COMPATIBLE WITH PRIOR VERSIONS OF THE PRODUCTS.

2.    RIGHT TO REPRODUCE DOCUMENTATION. SUBJECT TO SECTION 10.2 OF THIS
      AGREEMENT, DISTRIBUTOR SHALL HAVE THE RIGHT TO TRANSLATE, REPRODUCE AND
      DISTRIBUTE ANY TRAINING AND END-USER DOCUMENTATION PROVIDED BY ABAXIS
      PURSUANT TO THIS AGREEMENT.

ITEM 40. Proprietary Rights; Records.

1.    OWNERSHIP BY ABAXIS. DISTRIBUTOR ACKNOWLEDGES AND AGREES THAT DISTRIBUTOR
      HAS NO PROPRIETARY RIGHTS IN THE PRODUCTS OR ANY OTHER MATERIALS AND
      RECEIVED FROM ABAXIS, AND DOES NOT ACQUIRE ANY PROPRIETARY RIGHTS BY
      VIRTUE OF THIS AGREEMENT, EXCEPT THOSE CONTRACTUAL RIGHTS THAT ARE
      EXPRESSLY GRANTED HEREIN.

2.    TRADEMARKS AND TRADE NAMES. ABAXIS GRANTS TO DISTRIBUTOR A LIMITED LICENSE
      TO USE ABAXIS' TRADEMARKS. DISTRIBUTOR AGREES THAT THE NATURE AND QUALITY
      OF ANY PRODUCTS OR SERVICES IT SUPPLIES IN CONNECTION WITH THE TRADEMARKS
      SHALL CONFORM TO THE STANDARDS SET BY ABAXIS.

            i. Distributor must prominently display and use ABAXIS' trade name,
trademarks and product names in connection with Distributor's promotion and
distribution of the Products.

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            ii. Format and style used by Distributor must be approved, in
writing in advance, by ABAXIS to protect ABAXIS' trademark rights. All products
must be sold in the original packaging and no additions or deletions to the
labeling can be made by Distributor unless approved by ABAXIS in writing.

            iii. Distributor agrees that all use of ABAXIS' trademarks shall
clearly indicate ABAXIS as the trademark owner, and Distributor shall not do or
cause anything to be done anything that would impair or reduce ABAXIS' rights,
title and interest in the trademark information.

ITEM 41. Indemnification.

1.    INDEMNIFICATION. ABAXIS AGREES TO DEFEND AND OTHERWISE HOLD DISTRIBUTOR
      HARMLESS FROM ALL CLAIMS BY THIRD PARTIES PERTAINING TO THE INFRINGEMENT
      OF UNITED STATES AND AUSTRALIAN PATENTS, COPYRIGHTS AND TRADE SECRETS BY
      ANY OF THE PRODUCTS, PROVIDED THAT DISTRIBUTOR GIVES ABAXIS REASONABLE
      WRITTEN NOTICE OF ANY SUCH CLAIM TO ABAXIS WITH FULL COOPERATION (AT
      ABAXIS' EXPENSE) FOR THE DEFENSE OF SETTLEMENT OF THE SAME.

2.    OPTIONS. IF ABAXIS RECEIVES NOTICE OF AN ALLEGED INFRINGEMENT OR IF
      DISTRIBUTOR'S USE OF THE PRODUCTS IS PREVENTED BY PERMANENT INJUNCTION,
      ABAXIS MAY, AT ITS SOLE OPTION AND EXPENSE, PROCURE FOR DISTRIBUTOR THE
      RIGHT TO CONTINUED USE OF THE PRODUCTS, OR PROVIDE DISTRIBUTOR WITH
      VERSIONS OF THE PRODUCTS THAT ARE NOT INFRINGING, OR REFUND TO DISTRIBUTOR
      ALL PAYMENTS RECEIVED BY ABAXIS UNDER THIS AGREEMENT RELATING TO THE
      PRODUCTS (REFLECTING ANY QUANTITY OR OTHER DISCOUNTS GRANTED TO
      DISTRIBUTOR, LESS ANY AMOUNT FOR DEPRECIATION CALCULATED IN A
      STRAIGHT-LINE BASIS OVER AN ASSUMED USEFUL LIFE OF THREE (3) YEARS).

3.    EXCLUSIONS. IN NO EVENT WILL ABAXIS HAVE ANY LIABILITY UNDER THIS SECTION
      11 FOR ANY CLAIM OF INFRINGEMENT WHICH IS BASED ON (A) COMBINATION OR USE
      OF THE PRODUCTS WITH EQUIPMENT WHERE THE INFRINGEMENT WOULD NOT BE CAUSED
      BY USE OF THE PRODUCTS ALONE, OR (B) MODIFICATION OF THE PRODUCTS BY OTHER
      THAN ABAXIS IF SUCH CLAIM WOULD HAVE BEEN AVOIDED BY THE USE OF UNMODIFIED
      VERSIONS OF THE PRODUCTS.

4.    LIMITATION. THE RIGHTS GRANTED TO DISTRIBUTION UNDER THIS SECTION 11 ARE
      DISTRIBUTOR'S SOLE AND EXCLUSIVE REMEDY FOR ANY ALLEGED INFRINGEMENT OF
      ANY PROPRIETARY RIGHTS OF ANY KIND.

5.    DISTRIBUTORS' INDEMNIFICATION. DISTRIBUTOR WILL INDEMNIFY ABAXIS AGAINST
      THIRD-PARTY CLAIMS BASED ON MISLEADING STATEMENTS, PROVIDED THAT ABAXIS
      GIVES DISTRIBUTOR REASONABLE WRITTEN NOTICE OF ANY SUCH CLAIM AND PROVIDES
      DISTRIBUTOR WITH FULL COOPERATION (AT DISTRIBUTOR'S EXPENSE) FOR THE
      DEFENSE OR SETTLEMENT.

ITEM 42. Limited of Liability.

1.    IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL
      DAMAGES, INCLUDING ANY LOST PROFITS, LOST SAVINGS OR OTHER INCIDENTAL OR
      CONSEQUENTIAL DAMAGES OF ANY KIND, HOWEVER CAUSED, WHETHER FOR BREACH OR
      REPUDIATION OF CONTRACT, TORT, BREACH OF WARRANTY, NEGLIGENCE, OR
      OTHERWISE, WHETHER OR NOT THE PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH
      LOSS OR DAMAGES.

2.    NO ACTION MAY BE BROUGHT OR ARBITRATION DEMANDED UNDER THIS AGREEMENT AT
      ANY TIME MORE THAN TWELVE (12) MONTHS AFTER THE CAUSE OF ACTION OR
      ARBITRATION AROSE.

3.    NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT, ABAXIS' TOTAL
      LIABILITY TO DISTRIBUTOR ARISING FROM OR IN RELATION TO THIS AGREEMENT OR
      THE PRODUCTS SHALL BE LIMITED TO THE TOTAL PAYMENTS TO ABAXIS UNDER

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      THIS AGREEMENT FOR THE RELEVANT PRODUCTS. THIS LIMITATION WILL APPLY TO
      ALL CAUSES OF ACTION IN THE AGGREGATE. IN NO EVENT WILL ABAXIS BE LIABLE
      FOR THE COST OF PROCUREMENT OF SUBSTITUTE GOODS.

ITEM 43. Confidential Information.

1.    CONFIDENTIAL INFORMATION. EACH PARTY AGREES TO USE THE OTHER PARTY'S
      CONFIDENTIAL INFORMATION ONLY AS AUTHORIZED IN THIS AGREEMENT AND TO USE
      DILIGENT EFFORTS, AND AT LEAST THE SAME DEGREE OF CARE THAT IS USED TO
      PROTECT ITS OWN CONFIDENTIAL INFORMATION OF LIKE IMPORTANCE, TO PREVENT
      UNAUTHORIZED USE, DISSEMINATION AND DISCLOSURE OF THE OTHER'S CONFIDENTIAL
      INFORMATION DURING AND AFTER THE TERM OF THIS AGREEMENT. "CONFIDENTIAL
      INFORMATION" INCLUDES:

            i. In the case of ABAXIS, any software and hardware designs,
drawings, procedures and trade secrets, including any specifications, schematic,
mechanical and engineering drawings, and engineering documentation for the
Products;

            ii. Any and all methods, algorithms, techniques and processes
contained in or related to the Products;

            iii. Both parties' research and development, pricing and new product
and marketing plans, unless and until publicly disclosed;

            iv. Nonpublic financial and administrative information concerning
either party; and

            v. Any other information designated by either party in writing as
confidential or proprietary.

      Exceptions. Confidential Information will not include any information that
(a) becomes known to the general public without fault or breach on the part of
the receiving party; (b) the receiving party obtains from a third party without
breach of a non-disclosure obligation and without restriction on disclosure; or
(c) is already known to the receiving party prior to its disclosure by the other
party.

2.    PUBLICITY. NEITHER PARTY SHALL MAKE THE PUBLIC INFORMATION CONCERNING THIS
      AGREEMENT NOR THE SUPPLIES OR SERVICES PROVIDED THEREUNDER WITHOUT THE
      PRIOR WRITTEN CONSENT OF THE OTHER PARTY EXCEPT AS MAY BE REQUIRED BY LAW
      OR PURSUANT TO A LAWFUL REQUEST OF A GOVERNMENTAL AGENCY. SUCH DISCLOSURE
      REQUIRED BY LAW OR PURSUANT TO LAWFUL REQUEST UPON ONE PARTY SHALL BE
      COMMUNICATED, IN A TIMELY MANNER, TO THE OTHER PARTY. NOTWITHSTANDING THIS
      PROVISION, ABAXIS RESERVES THE RIGHT TO USE DISTRIBUTOR'S NAME AND SALES
      IN PRESS RELEASES ABOUT THE SALE OF ABAXIS PRODUCTS IN THE FOREIGN MARKET.

ITEM 44. Term and Termination.

1.    TERM. THE INITIAL TERM OF THIS AGREEMENT WILL COMMENCE ON THE EFFECTIVE
      DATE AND, UNLESS EARLIER TERMINATED AS PROVIDED BELOW, WILL CONTINUE FOR A
      PERIOD OF FIVE (5) YEARS AFTER THE EFFECTIVE DATE (THE "INITIAL TERM").

2.    TERMINATION FOR CAUSE. THIS AGREEMENT AND ALL LICENSES THEREUNDER WILL
      TERMINATE:

            i. On the thirtieth (30th) day after either party gives the other
notice of a material breach by the other of any term of condition of this
Agreement, unless the breach is cured or notice of intent to cure and accept of
such notice by other party before that day; provided that (i) any breach of
Section 13 ("Confidential Information") will be deemed a material breach of this
Agreement that cannot be cured, and (ii) if the material breach is either
party's failure to pay any amounts due in a timely manner, the notice of default
shall provide for a cure period of not less than five (5) working days; or

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            ii. Immediately and without further liability after either party
gives written notice to the other party if either party declares bankruptcy or
bankruptcy proceedings are instituted involuntarily on its behalf and the
voluntary or involuntary proceedings are not dismissed without sixty (60)
calendar days.

3.    THE EFFECT OF TERMINATION. AFTER TERMINATION (NOT FOR CAUSE):

            i. Any Firm Orders received by ABAXIS prior to termination will
remain enforceable, regardless of when such Firm Orders will be shipped;

            ii. Distributor may continue to market the Products in its
possession in its customer manner in the ordinary course of business; and

            iii. Payment and indemnification obligations arising prior to
termination and the obligations of each party to keep the other's Confidential
Information confidential, will remain in force.

4.    LIABILITY AND OTHER REMEDIES. NEITHER PARTY WILL BE LIABLE FOR DAMAGES OF
      ANY LAND AS A RESULT OF EXERCISING ITS RIGHT TO TERMINATE THIS AGREEMENT
      ACCORDING TO ITS TERMS, AND TERMINATION WILL NOT AFFECT ANY OTHER RIGHT OR
      REMEDY OF EITHER PARTY.

ITEM 45. Arbitration. Except as set forth in this Section 15, any controversy,
      claim or dispute arising out of or related to this Agreement, or the
      breach of alleged breach hereof, will be submitted by the Distributor to
      arbitration by the American Arbitration Association in the City of
      Sunnyvale, State of California, United States, under the Laws of the State
      of California in accordance with the commercial arbitration rules. Any
      controversy, claim or dispute arising out of or related to this Agreement,
      or the breach or alleged breach hereof, will be submitted by the company
      to arbitration by the Landgericht Darmstadt in Germany under the Laws of
      Germany in accordance with the commercial arbitration rules.

      Both parties agree to file any related counter legal actions at the
location of the initial filing.

      The decision of the arbitrators shall be final and binding, and judgment
on the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The aware rendered by the arbitration board shall include
costs of arbitration, reasonable attorneys' fees and reasonable costs for expert
and other witnesses.

      Although all disputes must be settled under arbitration nothing in this
Agreement shall prevent either party from seeking injunction (or any other
provisional remedy) from any court having jurisdiction to protect their
respective Confidential Information. In any suit or arbitration to enforce this
Agreement, the prevailing party will have the right to recover its costs and
reasonable fees of attorneys and other professionals.

ITEM 46. Export Control. In exercising its rights under this Agreement,
      Distributor agrees to comply strictly and fully with all export controls
      imposed on the products by any country or organization or nations within
      whose jurisdiction Distributor operates or does business. Distributor
      agrees not to export or permit exportation of any part of the Products or
      any related technical data or any direct product of any related technical
      data, outside of the United States other than to its territory without
      ABAXIS first either (a) obtaining any required written permission to do so
      from the United States Office of Export Administration and other
      appropriate governmental agencies of the United States, or (b) complying
      fully and strictly with all requirements of any general license exempting
      the exportation form the requirement for such permission.

ITEM 47. General Provisions.

1.    ASSIGNMENT. ABAXIS MAY ASSIGN THIS AGREEMENT TO THE SURVIVING ENTITY IN A
      MERGER OR CONSOLIDATION IN WHICH IT PARTICIPATES OR TO A PURCHASER OF ALL
      OR SUBSTANTIALLY ALL OF ITS ASSETS; OR, ABAXIS MAY ASSIGN THIS AGREEMENT
      TO ANY PERSON TO WHOM IT TRANSFERS ALL OR SUBSTANTIALLY ALL OF ITS
      PROPRIETARY RIGHTS IN THE PRODUCTS. OTHERWISE, NEITHER PARTY MAY ASSIGN
      ANY RIGHTS OR DELEGATE ANY DUTIES UNDER

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      THIS AGREEMENT WITHOUT THE OTHER PARTY'S PRIOR WRITTEN CONSENT, AND ANY
      ATTEMPT TO DO SO WITHOUT THAT CONSENT WILL BE VOID. THIS AGREEMENT WILL
      BIND AND INURE TO THE BENEFIT OF THE PARTIES AND THEIR RESPECTIVE
      SUCCESSORS AND PERMITTED RIGHTS.

2.    CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE
      LAWS OF THE STATE OF CALIFORNIA AND THE LAWS OF GERMANY. THE PARTIES
      EXCLUDE IN ITS ENTIRETY THE APPLICATION TO THIS AGREEMENT OF THE UNITED
      NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.

3.    AMENDMENT. THIS AGREEMENT MAY BE AMENDED OR SUPPLEMENTED ONLY BY A WRITING
      THAT REFERS EXPLICITLY TO THIS AGREEMENT AND THAT IS SIGNED ON BEHALF OF
      BOTH PARTIES.

4.    WAIVER. NO WAIVER WILL BE IMPLIED FROM CONDUCT OR FAILURE TO ENFORCE
      RIGHTS. NO WAIVER WILL BE EFFECTIVE UNLESS IN WRITING, SIGNED ON BEHALF OF
      THE PARTY AGAINST WHOM THE WAIVER IS ASSERTED.

5.    CONTINGENCIES. NEITHER PARTY WILL HAVE THE RIGHT TO CLAIM DAMAGES OR TO
      TERMINATE THIS AGREEMENT AS A RESULT OF THE OTHER PARTY'S FAILURE OR DELAY
      IN PERFORMANCE DUE TO CIRCUMSTANCES BEYOND ITS REASONABLE CONTROL,
      INCLUDING, BUT NOT LIMITED TO, LABOR DISPUTES, STRIKES, LOCKOUTS,
      SHORTAGES OF OR INABILITY TO OBTAIN LABOR, ENERGY, COMPONENTS, RAW
      MATERIALS OR SUPPLIES, WAR, RIOT, INSURRECTION, EPIDEMIC, ACTS OF GOD, OR
      GOVERNMENTAL ACTION NOT THE FAULT OF THE NON-PERFORMING PARTY.

6.    SEVERABILITY. IF ANY PART OF THIS AGREEMENT IS FOUND INVALID OR
      UNENFORCEABLE THAT PART WILL BE ENFORCED TO THE MAXIMUM EXTENT PERMITTED
      BY LAW AND THE REMAINDER OF THIS AGREEMENT WILL REMAIN IN FULL FORCE.

7.    ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING ALL EXHIBITS TO THIS
      AGREEMENT, WHICH ARE HEREBY INCORPORATED BY REFERENCE, REPRESENTS THE
      ENTIRE AGREEMENT BETWEEN THE PARTIES RELATING TO ITS SUBJECT MATTER AND
      SUPERSEDES ALL PRIOR REPRESENTATIONS, DISCUSSIONS, NEGOTIATIONS AND
      AGREEMENTS, WHETHER WRITTEN OR ORAL. THE ORIGINAL OF THIS AGREEMENT HAS
      BEEN WRITTEN IN ENGLISH AND ENGLISH IS THE GOVERNING LANGUAGE OF THIS
      AGREEMENT.

8.    NOTICES. EVERY NOTICE OR OTHER COMMUNICATION REQUIRED OR CONTEMPLATED BY
      THIS AGREEMENT BY EITHER PARTY SHALL BE DELIVERED EITHER BY (A) PERSONAL
      DELIVERY, (B) CERTIFIED OR REGISTERED AIR MAIL (POSTAGE PREPARED, RETURN
      RECEIPT REQUESTED), OR (C) "TESTED" FAX (A FAX FOR WHICH THE PROPER
      ANSWERED BACK HAS BEEN RECEIVED) ADDRESSED TO THE PARTY FOR WHOM INTENDED
      AT THE FOLLOWING ADDRESS:

If to ABAXIS, at the following address:

      ABAXIS, Inc.
      3240 Whipple Road
      Union City, CA  94587
      Attn:  President
      Fax:  1-510-441-6151

If to Distributor, at the following address:

      Scil Animal Care Company GmbH
      Dina-Weissmann-Allee 6
      D 68519 Viernheim, Germany
      Attn:  President
      Fax:  +49 620478 90 200

      or at such other address as the intended recipient shall have designated
by written notice to the other parties. Notice by mail shall be effective on the
date it is officially recorded as delivered to the intended recipient by return
receipt or equivalent. All notices and other communication required or
contemplated by this Agreement delivered in person or sent "tested" fax shall be
deemed to have been delivered to and received by the addressee and shall be
effective on the date of personal delivery or on the date sent, respectively.
Notice not given in writing shall be effective only if acknowledged in writing
by a duly authorized representative of the party to whom it was given.

9.    RELATIONSHIP OF PARTIES. THE PARTIES TO THIS AGREEMENT ARE INDEPENDENT
      CONTRACTORS. THERE IS NO RELATIONSHIP OF AGENCY, PARTNERSHIP, JOINT
      VENTURE, EMPLOYMENT OR FRANCHISE BETWEEN THE PARTIES. NEITHER PARTY HAS
      THE AUTHORITY TO BIND THE OTHER OR TO INCUR ANY OBLIGATION ON ITS BEHALF.
      DISTRIBUTOR SHALL NOT HAVE, AND SHALL NOT REPRESENT THAT IT HAS, ANY
      POWER, RIGHT OR AUTHORITY TO BIND ABAXIS, OR TO ASSUME OR CREATE ANY
      OBLIGATION OR RESPONSIBILITY, EXPRESS OR IMPLIED TO APPEAR AS A BONA FIDE
      AGENT

                                       82
<PAGE>
      OR REPRESENTATIVE, ON BEHALF OF ABAXIS OR IN NAME, EXCEPT AS EXPRESSLY
      PERMITTED IN WRITING. ALL SUCH DUTIES SHALL EXTEND TO DISTRIBUTOR'S
      EMPLOYEES, SUBCONTRACTORS, AGENTS, HEIRS AND ASSIGNS.

10.   EFFECTIVE DATE. THIS AGREEMENT IS SUBJECT TO ALL NECESSARY APPROVALS
      AND/OR AUTHORIZATIONS OR OTHER REQUIRED PROCEDURES OF THE GOVERNMENTS OF
      GERMANY, AND THE UNITED STATES HAVING BEEN OBTAINING OR COMPLETED. IN THE
      EVENT THAT A RECOMMENDATION OR ORDER FOR MODIFICATION OR SUSPENSION OF THE
      TERMS AND CONDITIONS OF THIS AGREEMENT OR THE ACTS CONTEMPLATED HEREUNDER
      IS MADE BY EITHER OF THE ABOVE-MENTIONED GOVERNMENTS, THIS AGREEMENT SHALL
      ONLY BECOME OR CONTINUE TO BE EFFECTIVE IF AN AMENDMENT IS EXECUTED IN
      WRITING BY THE PARTIES. FAILURE BY THE PARTIES TO REACH AN AGREEMENT SHALL
      RESULT IN THIS AGREEMENT BEING DEEMED NULL AND VOID AB INITIO, AND ALL
      RIGHTS, DUTIES AND OBLIGATIONS OF EACH PARTY TO THE OTHER SHALL NO LONGER
      EXIST. IN THE EVENT OF SUCH TERMINATION, ANY EXPENSES WHICH EITHER PARTY
      MAY HAVE INCURRED IN RESPECT TO THIS AGREEMENT AND THE SUBJECT MANNER OF
      THIS AGREEMENT SHALL BE FOR THE ACCOUNT OF THE PARTY HAVING INCURRED THEM.

11.   AUTHORITY. EACH PARTY WARRANTS THAT IT HAS FULL POWER TO ENTER INTO AND
      PERFORM THIS LICENSE AGREEMENT, AND THE PERSON SIGNING THIS LICENSE
      AGREEMENT ON SUCH PARTY'S BEHALF HAS BEEN DULY AUTHORIZED AND EMPOWERED TO
      ENTER IN THIS LICENSE AGREEMENT, UNDERSTANDS IT AND AGREES TO BE BOUND BY
      IT.

      IN WITNESS WHEREOF, the parties hereto have executed this Distributor
Agreement as of the day and year first written above.

ABAXIS, Inc.

By: ____________________________________     Date:______________________________
Achim Henkel
Director

Scil animal care company GmbH

By: ____________________________________     Date:______________________________
Ulrich Frank
Geschaeftsfuehrer

                                       83
<PAGE>
                                    EXHIBITS

Exhibit A                      -      Products Description

Exhibit B                      -      Territory

Exhibit C                      -      Price List

Exhibit D                      -      Bank and Wire Information
<PAGE>
                                    EXHIBIT A

                              PRODUCTS DESCRIPTION

A.     INSTRUMENTS
       VetScan(R) Chemistry Analyzer

B.     REAGENT DISCS
       All VetScan(R) Chemistry products
<PAGE>
                                    EXHIBIT B

                                    TERRITORY

Belgium
Denmark
Finland
Germany
Norway
Sweden
The Netherlands
<PAGE>
                                    EXHIBIT C

See Attached Price List

Additional Agreement:

ABAXIS grants distributor 5% f.o.c. rotors of each individual rotor order.

Limited to the first order of 10 VetScan(R) blood analyzer ABAXIS accepts a
special purchase price of US $6000,00 per instrument.
<PAGE>
                          VetScan(R) Chemistry Analyzer

                      International Distributor Price List
                           Effective February 12, 2001
                        FOB Union City, California 94587

<TABLE>
<CAPTION>
CATALOG NO.             PRODUCTS                                                               DISTRIBUTOR PRICE
-----------             --------                                                               -----------------
<S>                     <C>                                                                    <C>
                        Instruments
200-0000                VetScan(R) Point-of-Care Analyzer                                          $6,500.00

                        Reagents Discs 9 Box of 10, unless otherwise noted)
500-0017                VetScan(R) Critical Care Profile                                              $90.00
                        ALN, GLU, BUN, CRE, NA+, K+, tCO2

500-0002                VetScan(R) Diagnostic Profile Plus                                           $115.00
                        ALB, ALP, ALT, AMYL, BUN, CA, CHOL, CREA, GLU, K+, TBIL,
                        TP

500-0052                VetScan(R) Diagnostic Profile Plus                                           $250.00
                        Package of 25 Discs

500-0003                VetScan(R) Liver Profile                                                      $85.00
                        ALB, ALP, ALT, AST, GGT, GLOB, TBIL, TP

500-0004                VetScan(R) Thyroxin (T4) Test                                                 $95.00
                        T4

500-0014                VetScan(R) Equine Profile                                                     $95.00
                        ALB, AST, BUN, CA, CREA, CK, GGT, GLU, TBIL, TP

500-0023                VetScan(R) Large Animal Profile                                              $100.00
                        ALB, ALP, AST, BUN, CA, CK, GGT, PHOS, MG, TP, GLOB

500-0026                VetScan(R) Prep Profile II                                                    $80.00
                          ALP, ALT, BUN, CREA, GLU, TP

500-0256                VetScan(R) Prep Profile II                                                   $185.50
                        Package of 25 Discs

500-0024                VetScan(R) Diagnostic Profile II                                             $115.00
                        ALB, ALP, ALT, AMYL, BUN, CA, PHOS, CREA, GLU, K+, TBIL,
                        TP, GLOB

500-0254                VetScan(R) Diagnostic Profile II                                             $250.00
                        Package of 25 Discs
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CATALOG NO.             PRODUCTS                                                               DISTRIBUTOR PRICE
-----------             --------                                                               -----------------
<S>                     <C>                                                                    <C>
100-901                 Instrument Case with Wheels                                                  $343.00

400-7000                Results Cards 15/Pkg.                                                          $3.00

100-801                 Plug, Lighter Adapter                                                         $25.00

500-9006                Mini Pipette, 100uL                                                           $15.00

500-9007                Tip, Disposable, Rack of 96                                                   $31.50

                        4-page Brochure, 50/pkg                                                      $100.00
                        VetScan(R)

                        2-page Datasheet, 100/pkg                                                    $100.00
                        VetScan(R)
</TABLE>

                                       89<PAGE>

                                                                     EXHIBIT 4.6

                          CATALYST SEMICONDUCTOR, INC.

                            2003 STOCK INCENTIVE PLAN

                        EFFECTIVE AS OF DECEMBER 20, 2002

<PAGE>

                          CATALYST SEMICONDUCTOR, INC.

                            2003 STOCK INCENTIVE PLAN

                        EFFECTIVE AS OF DECEMBER 20, 2002

SECTION 1.   INTRODUCTION.

      The Company's Board of Directors adopted the Catalyst Semiconductor, Inc.
      2003 Stock Incentive Plan on November 12, 2002 (the "Adoption Date"). The
      Plan is the successor to the Company's Stock Option Plan (the "Predecessor
      Plan"). Awards granted pursuant to the Predecessor Plan are subject to the
      terms and conditions of the Predecessor Plan. The Plan is effective on the
      date the Company's stockholders approve the Plan.

      The purpose of the Plan is to promote the long-term success of the Company
      and the creation of shareholder value by offering Key Employees an
      opportunity to acquire a proprietary interest in the success of the
      Company, or to increase such interest; to encourage such selected persons
      to continue to provide services to the Company, and to attract to the
      Company new individuals with outstanding qualifications.

      The Plan seeks to achieve this purpose by providing for Awards in the form
      of Restricted Stock, Stock Appreciation Rights and Options (which may
      constitute Incentive Stock Options or Nonstatutory Stock Options).

      The Plan shall be governed by, and construed in accordance with, the laws
      of the State of California (except its choice-of-law provisions).
      Capitalized terms shall have the meaning provided in Section 2 unless
      otherwise provided in this Plan or the applicable Stock Option Agreement,
      SAR Agreement or Restricted Stock Agreement.

SECTION 2.   DEFINITIONS.

(a)   "AFFILIATE" means any entity other than a Subsidiary, if the Company
      and/or one or more Subsidiaries own not less than 50% of such entity. For
      purposes of determining an individual's "Service," this definition shall
      include any entity other than a Subsidiary, if the Company, a Parent
      and/or one or more Subsidiaries own not less than 50% of such entity.

(b)   "AWARD" means any award of an Option, SAR or Restricted Stock under the
      Plan.

(c)   "BOARD" means the Board of Directors of the Company, as constituted from
      time to time.

(d)   "CHANGE IN CONTROL" except as may otherwise be provided in a Stock Option
      Agreement, SAR Agreement or Restricted Stock Agreement, means the
      occurrence of any of the following:

      (i) The consummation of a merger or consolidation of the Company with or
into another entity or any other corporate reorganization, if more than 50% of
the combined voting power of the continuing or surviving entity's securities
outstanding immediately after such merger, consolidation or other reorganization
is owned by persons who were not stockholders of the Company immediately prior
to such merger, consolidation or other reorganization;

      (ii) The sale, transfer or other disposition of all or substantially all
of the Company's assets;

      (iii) A change in the composition of the Board, as a result of which less
than a majority of the incumbent directors are directors who either (i) had been
directors of the Company on the date the

<PAGE>

Company's stockholders initially approve the Plan (the "original directors") or
(ii) were elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of the aggregate of the original directors who were
still in office at the time of the election or nomination and the directors
whose election or nomination was previously so approved;

      (iv) Any transaction as a result of which any person becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing at least 50% of the
total voting power represented by the Company's then outstanding voting
securities. For purposes of this Paragraph (iii), the term "person" shall have
the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act
but shall exclude:

            (A) A trustee or other fiduciary holding securities under an
      employee benefit plan of the Company or a subsidiary of the Company;

            (B) A corporation owned directly or indirectly by the stockholders
      of the Company in substantially the same proportions as their ownership of
      the common stock of the Company; and

            (C) The Company; or

      (v) A complete liquidation or dissolution of the Company.

(e)   "CODE" means the Internal Revenue Code of 1986, as amended.

(f)   "COMMITTEE" means a committee consisting of one or more members of the
      Board that is appointed by the Board (as described in Section 3) to
      administer the Plan.

(g)   "COMMON STOCK" means the Company's common stock.

(h)   "COMPANY" means Catalyst Semiconductor, Inc., a Delaware corporation.

(i)   "CONSULTANT" means an individual who performs bona fide services to the
      Company, a Parent, a Subsidiary or an Affiliate other than as an Employee,
      Director or a Non-Employee Director.

(j)   "DIRECTOR" means a member of the Board who is also an Employee.

(k)   "DISABILITY" means that the Key Employee is unable to engage in any
      substantial gainful activity by reason of any medically determinable
      physical or mental impairment which can be expected to result in death or
      which has lasted or can be expected to last for a continuous period of not
      less than 12 months.

(l)   "EMPLOYEE" means any individual who is a common-law employee of the
      Company, a Parent, a Subsidiary or an Affiliate.

(m)   "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

(n)   "EXERCISE PRICE" means, in the case of an Option, the amount for which a
      Share may be purchased upon exercise of such Option, as specified in the
      applicable Stock Option Agreement. "Exercise Price," in the case of a SAR,
      means an amount, as specified in the applicable SAR Agreement, which is
      subtracted from the Fair Market Value of a Share in determining the amount
      payable upon exercise of such SAR.

(o)   "FAIR MARKET VALUE" means the market price of Shares, determined by the
      Committee as follows:

<PAGE>

      (i) If the Shares were traded on a stock exchange on the date in question,
then the Fair Market Value shall be equal to the last trading price reported by
the applicable composite transactions report for the date of Grant;

      (ii) If the Shares were traded over-the-counter on the date in question
and were classified as a national market issue, then the Fair Market Value shall
be equal to the last trading price quoted by the NASDAQ system for the date of
Grant;

      (iii) If the Shares were traded over-the-counter on the date in question
but were not classified as a national market issue, then the Fair Market Value
shall be equal to the mean between the high bid and low asked prices quoted by
the NASDAQ system for the date of Grant; and

      (iv) If none of the foregoing provisions is applicable, then the Fair
Market Value shall be determined by the Committee in good faith on such basis as
it deems appropriate.

Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in the Western Edition of The Wall Street
Journal. Such determination shall be conclusive and binding on all persons.

(p)   "GRANT" means any grant of an Award under the Plan.

(q)   "INCENTIVE STOCK OPTION" or "ISO" means an incentive stock option
      described in Code section 422(b).

(r)   "KEY EMPLOYEE" means an Employee, Director, Non-Employee Director or
      Consultant who has been selected by the Committee to receive an Award
      under the Plan.

(s)   "NON-EMPLOYEE DIRECTOR" means a member of the Board who is not an
      Employee.

(t)   "NONSTATUTORY STOCK OPTION" or "NSO" means a stock option that is not an
      ISO.

(u)   "OPTION" means an ISO or NSO granted under the Plan entitling the Optionee
      to purchase Shares.

(v)   "OPTIONEE" means an individual, estate or other entity that holds an
      Option.

(w)   "PARENT" means any "parent corporation" of the Company as defined under
      Code section 424(e). An entity that attains the status of a Parent on a
      date after the adoption of the Plan shall be considered a Parent
      commencing as of such date.

(x)   "PARTICIPANT" means an individual or estate or other entity that holds an
      Award.

(y)   "PLAN" means this Catalyst Semiconductor, Inc. 2003 Stock Incentive Plan,
      as it may be amended from time to time.

(z)   "RESTRICTED STOCK" means a Share awarded under the Plan.

(aa)  "RESTRICTED STOCK AGREEMENT" means the agreement described in Section 8
      evidencing each Award of Restricted Stock.

(bb)  "SAR AGREEMENT" means the agreement described in Section 9 evidencing ach
      Award of a Stock Appreciation Right.

<PAGE>

(cc)  "SECURITIES ACT" means the Securities Act of 1933, as amended.

(dd)  "SERVICE" means service as an Employee, Director, Non-Employee Director or
      Consultant.

(ee)  "SHARE" means one share of Common Stock.

(ff)  "STOCK APPRECIATION RIGHT" or "SAR" means a stock appreciation right
      awarded under the Plan.

(gg)  "STOCK OPTION AGREEMENT" means the agreement described in Section 6
      evidencing each Grant of an Option.

(hh)  "SUBSIDIARY" means any "subsidiary corporation" of the Company as defined
      under Code section 424(f) (other than the Company). An entity that attains
      the status of a Subsidiary on a date after the adoption of the Plan shall
      be considered a Subsidiary commencing as of such date.

(ii)  "10-PERCENT SHAREHOLDER" means an individual who owns more than ten
      percent (10%) of the total combined voting power of all classes of
      outstanding stock of the Company, its Parent or any of its Subsidiaries.
      In determining stock ownership, the attribution rules of section 424(d) of
      the Code shall be applied.

SECTION 3.   ADMINISTRATION.

(a) COMMITTEE COMPOSITION. A Committee appointed by the Board shall administer
the Plan. The Board shall designate one of the members of the Committee as
chairperson. If no Committee has been approved, the entire Board shall
constitute the Committee. Members of the Committee shall serve for such period
of time as the Board may determine and shall be subject to removal by the Board
at any time. The Board may also at any time terminate the functions of the
Committee and reassume all powers and authority previously delegated to the
Committee.

With respect to officers or directors subject to Section 16 of the Exchange Act,
the Committee shall consist of those individuals who shall satisfy the
requirements of Rule 16b-3 (or its successor) under the Exchange Act with
respect to Awards granted to persons who are officers or directors of the
Company under Section 16 of the Exchange Act. Notwithstanding the previous
sentence, failure of the Committee to satisfy the requirements of Rule 16b-3
shall not invalidate any Awards granted by such Committee.

The Board may also appoint one or more separate committees of the Board, each
composed of one or more directors of the Company who need not qualify under Rule
16b-3, who may administer the Plan with respect to Key Employees who are not
considered officers or directors of the Company under Section 16 of the Exchange
Act, may grant Awards under the Plan to such Key Employees and may determine all
terms of such Awards.

Notwithstanding the foregoing, the Board shall constitute the Committee and
shall administer the Plan with respect to all Awards granted to Non-Employee
Directors.

(b) AUTHORITY OF THE COMMITTEE. Subject to the provisions of the Plan, the
Committee shall have full authority and discretion, subject to approval by the
Board to take any actions it deems necessary or advisable for the administration
of the Plan. Such actions shall include:

      (i) selecting Key Employees who are to receive Awards under the Plan;

      (ii) recommending to the Board the type, number, vesting requirements and
other features and conditions of such Awards;

<PAGE>

      (iii) interpreting the Plan;

      (iv) making all other decisions relating to the operation of the Plan;

      (v) creating such plans or subplans as may be necessary or advisable to
allow the grant of Awards under the Plan in non-United States jurisdictions or
to non-United States taxpayers; and

      (vi) effectuating an exchange of Awards for other Awards or other
consideration.

The Committee may adopt such rules or guidelines, as it deems appropriate to
implement the Plan. Subject to approval by the Board, the Committee's
recommendations under the Plan shall be final and binding on all persons.

(c) INDEMNIFICATION. Each member of the Committee, or of the Board, shall be
indemnified and held harmless by the Company against and from (i) any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by
him or her in connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under the Plan or any
Stock Option Agreement, SAR Agreement or Restricted Stock Agreement, and (ii)
from any and all amounts paid by him or her in settlement thereof, with the
Company's approval, or paid by him or her in satisfaction of any judgment in any
such claim, action, suit, or proceeding against him or her, provided he or she
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he or she undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's Certificate of Incorporation or Bylaws, by contract, as a matter of
law, or otherwise, or under any power that the Company may have to indemnify
them or hold them harmless.

SECTION 4.   ELIGIBILITY.

(a) GENERAL RULES. Only Employees, Directors, Non-Employee Directors and
Consultants shall be eligible for designation as Key Employees by the Committee.

(b) INCENTIVE STOCK OPTIONS. Only Key Employees who are common-law employees of
the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.
In addition, a Key Employee who is a 10-Percent Shareholder shall not be
eligible for the grant of an ISO unless the requirements set forth in section
422(c)(5) of the Code are satisfied.

SECTION 5.   SHARES SUBJECT TO PLAN.

(a) BASIC LIMITATION. The stock issuable under the Plan shall be authorized but
unissued Shares or treasury Shares. The aggregate number of Shares reserved for
Awards under the Plan shall initially equal 4,811,250, which includes Shares
available for future grant under the Predecessor Plan and Shares subject to
Awards under the Predecessor Plan.

(b) ANNUAL ADDITION. Beginning with the first fiscal year of the Company
beginning after the effective date of this Plan, on the first day of each fiscal
year, Shares shall be added to the Plan equal to the lesser of (i) 5% (five
percent) of the outstanding Shares as of the last day of the prior fiscal year,
(ii) 1,000,000 Shares, subject to the adjustment pursuant to Section 10, or
(iii) such lesser amount as the Board may determine.

(c) ADDITIONAL SHARES. If Awards are forfeited or terminate for any other reason
before being exercised, then the Shares underlying such Awards shall again
become available for Awards under the Plan.

<PAGE>

If SARs are exercised, then only the number of Shares (if any) actually issued
in settlement of such SARs shall reduce the number available under Section 5(a)
and the balance shall again become available for Awards under the Plan.

(d) DIVIDEND EQUIVALENTS. Any dividend equivalents distributed under the Plan
shall not be applied against the number of Shares available for Awards.

(e) LIMITS ON OPTIONS AND SARS. No Key Employee shall receive Options to
purchase Shares and/or SARs during any fiscal year covering in excess of
500,000.

(f) LIMITS ON RESTRICTED STOCK. No Key Employee shall receive Award(s) of
Restricted Stock during any fiscal year covering in excess of 500,000 Shares.

SECTION 6.   TERMS AND CONDITIONS OF OPTIONS.

(a) STOCK OPTION AGREEMENT. Each Grant under the Plan shall be evidenced by a
Stock Option Agreement between the Optionee and the Company. Such Option shall
be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions that are not inconsistent with the Plan and
that the Committee deems appropriate for inclusion in a Stock Option Agreement.
The provisions of the various Stock Option Agreements entered into under the
Plan need not be identical. A Stock Option Agreement may provide that new
Options will be granted automatically to the Optionee when he or she exercises
the prior Options. The Stock Option Agreement shall also specify whether the
Option is an ISO or an NSO.

(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the number of
Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 9.

(c) EXERCISE PRICE. An Option's Exercise Price shall be established by the
Committee and set forth in a Stock Option Agreement. To the extent required by
applicable law the Exercise Price of an ISO shall not be less than 100% of the
Fair Market Value (110% for 10-Percent Shareholders) of a Share on the date of
Grant.

(d) EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. The Stock
Option Agreement shall also specify the term of the Option; provided that the
term of an ISO shall in no event exceed ten (10) years from the date of Grant.
To the extent required by applicable law, an Option that is granted to a
10-Percent Shareholder shall have a maximum term of five (5) years. No Option
can be exercised after the expiration date provided in the applicable Stock
Option Agreement. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee's service. A Stock Option Agreement may
permit an Optionee to exercise an Option before it is vested, subject to the
Company's right of repurchase over any Shares acquired under the unvested
portion of the Option (an "early exercise"), which right of repurchase shall
lapse at the same rate the Option would have vested had there been no early
exercise. In no event shall the Company be required to issue fractional Shares
upon the exercise of an Option.

(e) MODIFICATIONS OR ASSUMPTION OF OPTIONS. Within the limitations of the Plan,
the Committee may modify, extend or assume outstanding options or may accept the
cancellation of outstanding options (whether granted by the Company or by
another issuer) in return for the grant of new Options for the same or a
different number of Shares and at the same or a different Exercise Price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.

<PAGE>

(f) TRANSFERABILITY OF OPTIONS. Except as otherwise provided in the applicable
Stock Option Agreement and then only to the extent permitted by applicable law,
no Option shall be transferable by the Optionee other than by will or by the
laws of descent and distribution. Except as otherwise provided in the applicable
Stock Option Agreement, an Option may be exercised during the lifetime of the
Optionee only or by the guardian or legal representative of the Optionee. No
Option or interest therein may be assigned, pledged or hypothecated by the
Optionee during his lifetime, whether by operation of law or otherwise, or be
made subject to execution, attachment or similar process.

(g) NO RIGHTS AS STOCKHOLDER. An Optionee, or a transferee of an Optionee, shall
have no rights as a stockholder with respect to any Common Stock covered by an
Option until such person becomes entitled to receive such Common Stock by filing
a notice of exercise and paying the Exercise Price pursuant to the terms of such
Option.

(h) RESTRICTIONS ON TRANSFER. Any Shares issued upon exercise of an Option shall
be subject to such rights of repurchase, rights of first refusal and other
transfer restrictions as the Committee may determine. Such restrictions shall
apply in addition to any restrictions that may apply to holders of Shares
generally and shall also comply to the extent necessary with applicable law.

SECTION 7.   PAYMENT FOR OPTION SHARES.

(a) GENERAL RULE. The entire Exercise Price of Shares issued upon exercise of
Options shall be payable in cash at the time when such Shares are purchased,
except as follows:

      (i) In the case of an ISO granted under the Plan, payment shall be made
only pursuant to the express provisions of the applicable Stock Option
Agreement. The Stock Option Agreement may specify that payment may be made in
any form(s) described in this Section 7.

      (ii) In the case of an NSO granted under the Plan, the Committee may in
its discretion, at any time accept payment in any form(s) described in this
Section 7.

(b) SURRENDER OF STOCK. To the extent that this Section 7(b) is applicable,
payment for all or any part of the Exercise Price may be made with Shares which
have already been owned by the Optionee for such duration as shall be specified
by the Committee. Such Shares shall be valued at their Fair Market Value on the
date when the new Shares are purchased under the Plan.

(c) OTHER FORMS OF PAYMENT. To the extent that this Section 7(c) is applicable,
payment may be made in any other form that is consistent with applicable laws,
regulations and rules.

SECTION 8.   TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK.

(a) TIME, AMOUNT AND FORM OF AWARDS. Awards under this Section 8 may be granted
in the form of Restricted Stock. Restricted Stock may also be awarded in
combination with NSOs or SARs, and such an Award may provide that the Restricted
Stock will be forfeited in the event that the related NSOs or SARs are
exercised.

(b) AGREEMENTS. Each Award of Restricted Stock under the Plan shall be evidenced
by a Restricted Stock Agreement between the Participant and the Company. Such
Awards shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions that are not inconsistent with
the Plan and that the Committee deems appropriate for inclusion in the
applicable Agreement. The provisions of the various Agreements entered into
under the Plan need not be identical.

<PAGE>

(c) PAYMENT FOR RESTRICTED STOCK. Restricted Stock may be issued with or without
cash consideration under the Plan.

(d) VESTING CONDITIONS. Each Award of Restricted Stock shall become vested, in
full or in installments, upon satisfaction of the conditions specified in the
applicable Agreement. An Agreement may provide for accelerated vesting in the
event of the Participant's death, Disability or retirement or other events.

(e) ASSIGNMENT OR TRANSFER OF RESTRICTED STOCK. Except as provided in Section
13, or in a Restricted Stock Agreement, or as required by applicable law, a
Restricted Stock Award granted under the Plan shall not be anticipated,
assigned, attached, garnished, optioned, transferred or made subject to any
creditor's process, whether voluntarily, involuntarily or by operation of law.
Any act in violation of this Section 8(e) shall be void. However, this Section
8(e) shall not preclude a Participant from designating a beneficiary who will
receive any outstanding Restricted Stock Awards in the event of the
Participant's death, nor shall it preclude a transfer of Restricted Stock Awards
by will or by the laws of descent and distribution.

(f) TRUSTS. Neither this Section 8 nor any other provision of the Plan shall
preclude a Participant from transferring or assigning Restricted Stock to (a)
the trustee of a trust that is revocable by such Participant alone, both at the
time of the transfer or assignment and at all times thereafter prior to such
Participant's death, or (b) the trustee of any other trust to the extent
approved in advance by the Committee in writing. A transfer or assignment of
Restricted Stock from such trustee to any person other than such Participant
shall be permitted only to the extent approved in advance by the Committee in
writing, and Restricted Stock held by such trustee shall be subject to all of
the conditions and restrictions set forth in the Plan and in the applicable
Restricted Stock Agreement, as if such trustee were a party to such Agreement.

(g) VOTING AND DIVIDEND RIGHTS. The holders of Restricted Stock awarded under
the Plan shall have the same voting, dividend and other rights as the Company's
other stockholders. A Restricted Stock Agreement, however, may require that the
holders of Restricted Stock invest any cash dividends received in additional
Restricted Stock. Such additional Restricted Stock shall be subject to the same
conditions and restrictions as the Award with respect to which the dividends
were paid. Such additional Restricted Stock shall not reduce the number of
Shares available under Section 5.

SECTION 9.   TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.

(a) SAR AGREEMENT. Each Award of a SAR under the Plan shall be evidenced by a
SAR Agreement between the Optionee and the Company. Such SAR shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan. The provisions of the various SAR Agreements
entered into under the Plan need not be identical. SARs may be granted in
consideration of a reduction in the Optionee's other compensation.

(b) NUMBER OF SHARES. Each SAR Agreement shall specify the number of Shares to
which the SAR pertains and shall provide for the adjustment of such number in
accordance with Section 10.

(c) EXERCISE PRICE. Each SAR Agreement shall specify the Exercise Price. A SAR
Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the SAR is outstanding.

(d) EXERCISABILITY AND TERM. Each SAR Agreement shall specify the date when all
or any installment of the SAR is to become exercisable. The SAR Agreement shall
also specify the term of the SAR. A SAR Agreement may provide for accelerated
exercisability in the event of the Optionee's death, Disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee's Service. SARs may also be awarded in
combination with Options or

<PAGE>

Restricted Stock, and such an Award may provide that the SARs will not be
exercisable unless the related Options or Restricted Stock are forfeited. A SAR
may be included in an ISO only at the time of Grant but may be included in an
NSO at the time of Grant or at any subsequent time, but not later than six
months before the expiration of such NSO. A SAR granted under the Plan may
provide that it will be exercisable only in the event of a Change in Control.

(e) EXERCISE OF SARS. If, on the date when a SAR expires, the Exercise Price
under such SAR is less than the Fair Market Value on such date but any portion
of such SAR has not been exercised or surrendered, then such SAR shall
automatically be deemed to be exercised as of such date with respect to such
portion. Upon exercise of a SAR, the Optionee (or any person having the right to
exercise the SAR after his or her death) shall receive from the Company (i)
Shares, (ii) cash or (iii) a combination of Shares and cash, as the Committee
shall determine. The amount of cash and/or the Fair Market Value of Shares
received upon exercise of SARs shall, in the aggregate, be equal to the amount
by which the Fair Market Value (on the date of surrender) of the Shares subject
to the SARs exceeds the Exercise Price.

(f) MODIFICATION OR ASSUMPTION OF SARS. Within the limitations of the Plan, the
Committee may modify, extend or assume outstanding SARs or may accept the
cancellation of outstanding SARs (whether granted by the Company or by another
issuer) in return for the grant of new SARs for the same or a different number
of Shares and at the same or a different Exercise Price. The foregoing
notwithstanding, no modification of a SAR shall, without the consent of the
Optionee, alter or impair his or her rights or obligations under such SAR.

SECTION 10.  PROTECTION AGAINST DILUTION.

(a) ADJUSTMENTS. In the event of a subdivision of the outstanding Shares, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the price
of Shares, a combination or consolidation of the outstanding Shares (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization, reorganization, merger, liquidation, spin-off or a similar
occurrence, the Committee shall make such adjustments as it, in its reasonable
discretion, deems appropriate in order to prevent the dilution or enlargement of
rights hereunder in one or more of:

      (i) the number of Shares available for future Awards and the Share limits
under Sections 5(b), 5(e) and 5(f);

      (ii) the number of Shares covered by each outstanding Award; or

      (iii) the Exercise Price under each outstanding SAR or Option.

(b) PARTICIPANT RIGHTS. Except as provided in this Section 10, a Participant
shall have no rights by reason of any issue by the Company of stock of any class
or securities convertible into stock of any class, any subdivision or
consolidation of shares of stock of any class, the payment of any stock dividend
or any other increase or decrease in the number of shares of stock of any class.

SECTION 11.  EFFECT OF A CHANGE IN CONTROL.

(a) MERGER OR REORGANIZATION. In the event that the Company is a party to a
merger or other reorganization, outstanding Awards shall be subject to the
agreement of merger or reorganization. Such agreement may provide, without
limitation, for the assumption of outstanding Awards by the surviving
corporation or its parent, for their continuation by the Company (if the Company
is a surviving corporation), for accelerated vesting or for their cancellation
with or without consideration.

<PAGE>

(b) ACCELERATION. The Committee may determine, at the time of granting an Award
or thereafter, that such Award shall become fully vested as to all Shares
subject to such Award in the event that a Change in Control occurs with respect
to the Company.

SECTION 12.  LIMITATIONS ON RIGHTS.

(a) RETENTION RIGHTS. Neither the Plan nor any Award granted under the Plan
shall be deemed to give any individual a right to remain an employee, consultant
or director of the Company, a Parent, a Subsidiary or an Affiliate. The Company
and its Parents and Subsidiaries and Affiliates reserve the right to terminate
the Service of any person at any time, and for any reason, subject to applicable
laws, the Company's Certificate of Incorporation and Bylaws and a written
employment agreement (if any).

(b) STOCKHOLDERS' RIGHTS. A Participant shall have no dividend rights, voting
rights or other rights as a stockholder with respect to any Shares covered by
his or her Award prior to the issuance of a stock certificate for such Shares.
No adjustment shall be made for cash dividends or other rights for which the
record date is prior to the date when such certificate is issued, except as
expressly provided in Section 10.

(c) REGULATORY REQUIREMENTS. Any other provision of the Plan notwithstanding,
the obligation of the Company to issue Shares under the Plan shall be subject to
all applicable laws, rules and regulations and such approval by any regulatory
body as may be required. The Company reserves the right to restrict, in whole or
in part, the delivery of Shares pursuant to any Award prior to the satisfaction
of all legal requirements relating to the issuance of such Shares, to their
registration, qualification or listing or to an exemption from registration,
qualification or listing.

SECTION 13.  WITHHOLDING TAXES.

(a) GENERAL. A Participant shall make arrangements satisfactory to the Company
for the satisfaction of any withholding tax obligations that arise in connection
with his or her Award. The Company shall not be required to issue any Shares or
make any cash payment under the Plan until such obligations are satisfied.

(b) SHARE WITHHOLDING. If a public market for the Company's Shares exists, the
Committee may permit a Participant to satisfy all or part of his or her minimum
withholding or income tax obligations by having the Company withhold all or a
portion of any Shares that otherwise would be issued to him or her or by
surrendering all or a portion of any Shares that he or she previously acquired.
Such Shares shall be valued at their Fair Market Value on the date when taxes
otherwise would be withheld in cash. Any payment of taxes by assigning Shares to
the Company may be subject to restrictions, including, but not limited to, any
restrictions required by rules of the Securities and Exchange Commission.

SECTION 14.  DURATION AND AMENDMENTS.

(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become effective on
the date of its approval by the Company's stockholders. To the extent required
by applicable law, the Plan shall terminate on the date that is 10 years after
its original adoption by the Board on November 12, 2002 and may be terminated on
any earlier date pursuant to Section 14(b).

(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board may amend or terminate the
Plan at any time and for any reason. The termination of the Plan, or any
amendment thereof, shall not affect any Award previously granted under the Plan.
No Awards shall be granted under the Plan after the Plan's termination. An
amendment of the Plan shall be subject to the approval of the Company's
stockholders only to the extent required by applicable laws, regulations or
rules.

<PAGE>

SECTION 15.  EXECUTION.

      To record the adoption of the Plan by the Board, the Company has caused
      its duly authorized officer to execute this Plan on behalf of the Company.

                                         CATALYST SEMICONDUCTOR, INC.

                                         By /s/ Thomas E. Gay III
                                             _________________________________

                                         Title  Chief Financial Officer
                                                ______________________________

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