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                                                                   EXHIBIT 10.35

[VIRAGE LOGIC LOGO]

                            MASTER LICENSE AGREEMENT

This Master License Agreement ("Agreement") is made and entered into 8 June 2001
("Effective Date") by and between VIRAGE LOGIC CORPORATION ("Virage Logic"), a
Delaware corporation, with offices at 46501 Landing Parkway, Fremont, California
94538 USA, and STMICROELECTRONICS SA ("Licensee"), a French corporation, with
offices at 29, Bd Romain Rolland, 92120 Montrouge -- France, (collectively or
individually referred to as "the Parties" or "the Party").

        This Agreement is a master license agreement that will govern the
license of certain Virage Logic software products and other technology by Virage
Logic to Licensee and all its Affiliated Companies as defined below. Licensed
Materials will be listed in exhibits attached hereto that may be added upon
mutual agreement from time to time. The first exhibit under this Agreement shall
be known as Exhibit 1 and subsequent exhibits shall be consecutively numbered.
The Parties have agreed on a format for exhibits, which shall serve as a draft
exhibit, to be completed and signed by the Parties for each separate project
(see Appendix A attached hereto).

1.      DEFINITIONS.

        1.1. "Compiler" means each Virage Logic development tool listed in an
Exhibit, which tool consists of: (i) object code versions of a set of executable
software program(s), (ii) libraries containing design elements of memory cell
arrays and control logic, and (iii) all related documentation. Each Compiler
includes any and all updates, replacements and enhancements thereto that Virage
Logic delivers to the Licensee.

        1.2. "Instance(s)" means designs of discrete integrated circuit memory
cell arrays and corresponding control logic, which are either generated for
Licensee by Virage Logic and described in an Exhibit, or are generated by
Licensee or by a third party authorized by this Agreement or the applicable
exhibit acting on behalf of Licensee through subcontracting services through the
use of a Compiler licensed hereunder. Instances may be expressed in GDSII,
hardware definition languages, or other formats. Each Instance includes all
documentation related to the design and any and all updates, replacements and
enhancements thereto that Virage Logic delivers to the Licensee.

        1.3. "Licensed Material(s)" means, collectively, the Compiler(s)
licensed hereunder and any Instance(s) generated by Licensee or by a third party
on behalf of Licensee on any Compiler licensed hereunder or generated for
Licensee by Virage Logic.

        1.4. "Intellectual Property Rights" means patent rights (including
patent applications and disclosures), mask work rights, copyrights, trade
secrets, know-how and any other intellectual property rights recognized in any
country or jurisdiction of the world; exclusive of trademarks, trade names,
logos, service marks, and other designations of source.

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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        1.5. "Affiliated Companies" means any company, group or entity
worldwide, at least fifty (50) per cent owned or controlled, directly or
indirectly, now or hereafter by STMicroelectronics NV, a Dutch corporation, with
offices at Stawinskyaan 1725 -- World Trade Center -- Tower B -- 17th Floor --
1077XX -- Amsterdam -- THE NETHERLANDS.

        1.6. "Product(s)" means any semiconductor devices designed, developed
and manufactured by or on behalf of Licensee or any of its Affiliated Companies
using Compilers and Instances, at any stage, of its design, development or
manufacture process.

        1.7. "Partner(s)" means any company which is involved, at any stage, in
the design, development or manufacturing of Products with Compilers and
Instances. Partner excludes direct competitors of Virage Logic as such parties
as defined in Section 11.2(b) and as specifically identified in Appendix C.

2.      RESERVED.

3.      LICENSE GRANTS.

        3.1. License Grants. Virage Logic hereby grants to Licensee and any and
all its Affiliated Companies, subject to the terms and conditions of this
Agreement and in accordance with the applicable exhibit,

             (a)    a non-exclusive, non-transferable, fee-bearing license to
                    use each Compiler licensed hereunder to create Instances;

             (b)    a worldwide, non-exclusive, non-transferable license to use
                    and reproduce, on its own or to have used or reproduced by
                    Partners, Instances licensed hereunder (whether generated by
                    Licensee or by Virage Logic on Licensee's behalf) for
                    Licensee's process for Products manufactured solely at
                    Licensee's manufacturing facilities (except as otherwise
                    provided for in the applicable exhibit) solely to design,
                    develop and manufacture Licensee's Products. For the
                    avoidance of confusion, Instances will be available to
                    Partners in all formats including all documentation; and

             (c)    a worldwide, non-exclusive, non-transferable license to
                    distribute or have distributed and supply or have supplied
                    such Instances

                    solely: (i) in GDSII data format and only to the
                    semiconductor manufacturer selected by Licensee or any of
                    its Affiliated Companies subject to commercially reasonable
                    terms as shown on the applicable exhibit and solely for the
                    purpose of enabling such manufacturer to design, develop and
                    manufacture Products for Licensee, and (ii) as incorporated
                    into physical implementations of Licensee's Products as
                    reduced to silicon.

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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        3.2. Limitations on Licenses.

             (a) Licensee and any and all its Affiliated Companies may use
Compilers and Instances, subject to the terms and conditions of this Agreement
and in accordance with the applicable exhibit only for the applications and
processes set forth for those Compilers and Instances in the pertinent exhibit.

             (b) Licensee has no right to transfer, sublicense, or otherwise
distribute Licensed Materials except as expressly set forth in Section 3.1 of
this Agreement and the applicable exhibit,

               (c) Licensee will not: (i) copy or otherwise reproduce any
Licensed Materials, in whole or in part, except as expressly authorized by this
Agreement and the applicable exhibit or to make reasonable numbers of back-up
copies; or (ii) use the Licensed Materials in any manner to provide services to
third parties, including, but not limited to, integrated circuit design services

               (d) Licensee's rights in the Licensed Materials will be limited
to those expressly granted in this Agreement and the applicable exhibit, and
Virage Logic reserves all rights and licenses not expressly granted to Licensee
in this Agreement.

4.      PROPRIETARY RIGHTS.

             (a) The Licensed Materials are and will remain the sole and
exclusive property of Virage Logic and its suppliers, if any, whether the
Licensed Materials are separate or combined with any other products. Virage
Logic's rights under this subsection (a) will include, but not be limited to,
all copies of the Licensed Materials, in whole and in part; and all Intellectual
Property Rights in the Licensed Materials.

             (b) Products shall be the sole and exclusive property of Licensee
or any of its Affiliated Companies. The rights of Licensee or any of its
Affiliated Companies under this subsection (b) will include, but not be limited
to, all copies of the Products, in whole and in part, and all Intellectual
Property Rights in the Products.

             (c) Licensee will not delete or in any manner alter the
Intellectual Property Rights notices of Virage Logic and its suppliers, if any,
appearing on the Licensed Materials as delivered to Licensee.

             (e) Nothing in this Agreement grants Licensee any rights in or to
use any of Virage Logic's trademarks, tradenames, service marks, and/or service
names.

             (f) The sole trademark appearing on the Products shall be the
trademark of Licensee or of any of its Affiliated Companies.

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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             (g) Licensee acknowledges and agrees that all output generated for
Licensee by Virage Logic under this Agreement or any exhibit, or generated by
Licensee or by any authorized party (including Partners, semiconductor
manufacturers, and Affiliated Companies) through use of any Compiler licensed
hereunder contains information that complies with the Virtual Component
Identification Physical Tagging Standard (VCID) as maintained by the Virtual
Socket Interface Alliance (VSIA). Such information may be expressed in the
specific GDSII layer designated by the VSIA, hardware definition languages, or
other formats. Licensee is not authorized to alter or change any such
information.

5.      DELIVERY

        5.1 Virage Logic shall deliver the Licensed Materials pursuant to the
time-schedule and modalities as set forth in the pertinent exhibit.

        5.2 Upon the acceptance of an order by Virage Logic, Virage Logic will
electronically deliver to the Licensee by making the Licensed Materials
specified in the Exhibit, including any related Documentation, and the License
Key(s) available on the FTP Server or via Electronic mail (E-Mail).

        5.3 Virage Logic will electronically notify the Licensee's designated
Key Contact that the Licensee's order has been fulfilled and that the Licensed
Materials are available on the FTP Server or via E-mail. Such electronic
notification of the availability of the Licensed Materials shall constitute the
shipment of goods to Licensee and Licensee's receipt of such goods so long as
electronic pickup is actually available to Licensee. Should electronic
notification not be possible for technical reasons, facsimile or telephone
notification will be made to the Licensee and such notification shall have the
same force and effect as electronic notification.

        5.4 Licensee shall be responsible for obtaining access to the Internet
and retrieving the fulfilled order from the FTP Server or E-Mail. Licensee
acknowledges that certain Internet connections and hardware capabilities are
necessary to complete the electronic delivery. Licensee accepts the risk that
electronic delivery may be slow and time-consuming for the Licensee depending
upon network traffic and reliability.

        5.5 Licensee acknowledges and agrees that Virage Logic will only deliver
the Licensed Materials electronically and shall not deliver in any tangible
medium, including but not limited to, CD-ROM, tape, or paper, unless otherwise
agreed in advance.

        5.6 Any update to the Licensed Materials to be provided to the Licensee
in accordance with this Agreement, shall also be delivered electronically in the
manner described above.

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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5 bis.  EXAMINATION

        Promptly upon delivery of the Licensed Materials, Licensee will verify
that the Licensed Materials conform to the relevant exhibit. Licensee is
entitled to reject any Licensed Material in the event that such Licensed
Material does not conform to the relevant exhibit (hereinafter "Deficiencies").
When rejecting the Licensed Material, Licensee will provide written notice to
Virage Logic describing the Deficiencies. Within a reasonable delay after
receiving each such notice regarding Deficiencies, Virage Logic will exert its
commercially reasonable efforts to correct the Deficiencies so that the Licensed
Material conforms to the relevant exhibit. The Parties will define a mutually
agreed upon schedule for the correction of the Deficiency. The procedure in this
section 5 bis will be repeated with respect to a revised Licensed Material to
determine whether it is acceptable to Licensee, unless and until issues a final
rejection of the revised Licensed Material after rejecting the Licensed Material
on at least two (2) prior occasions. If Licensee issues a final rejection of the
revised Licensed Material pursuant to this section 5 bis, Virage Logic shall,
upon Licensee's request, exchange the rejected Licensed Material with
commercially available, off-the-shelf Licensed Materials of equal value.

6.      PAYMENT TAXES.

        Licensee will pay Virage Logic the license fee(s) set forth in the
pertinent exhibit in accordance with the terms of such exhibit. All license fees
and other charges stated herein are exclusive of any sales, use, value-added, or
other federal, state or local taxes (excluding taxes based on Virage Logic's net
income) and Licensee agrees to pay such taxes.

7.      CONFIDENTIALITY

        Reference is made to the Non disclosure Agreement signed by the Parties
and attached hereto in Appendix B.

8.      MAINTENANCE

        With respect to the Licensed Materials, Virage Logic shall provide the
following maintenance services on a royalty-free basis and for a period of
twelve (12) months from the acceptance of the Licensed Materials.

        (i)    provision of all new EDA Models releases; and

        (ii)   provision of all updates (minor and major) to existing EDA
               Models; and

        (iii)  telephone support during European business hours and enhancements
               to the Compiler Software (but only those enhancements as provided
               by Virage Logic in its ordinary course of business)

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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        (iv)   on site support for severe problems (if it is determined that the
               severe problem is caused by Licensee, Licensee agrees to
               reimburse Virage Logic for its reasonable costs in traveling to
               Licensee's site)

in accordance with the following service lead times:

        (i)    acknowledge of problem submitted within 48 hours by E-Mail

        (ii)   provision of plan for correction within one week

        (iii)  for severe problems, intervention on site within one week, where
               the parties agree that such on site intervention is appropriate
               to resolve the problem.

        After the expiry of the twelve (12) month period, Licensed may decide to
enter into a maintenance agreement for the above-mentioned maintenance services.
In this event, the Parties agree to negotiate in good faith a reasonable level
of fees.

        Extended maintenance services may be added from time to time upon mutual
agreement of the Parties and in accordance with the applicable exhibit.

9.      WARRANTY

9.1.    Power and Authority. Each party warrants to the other that it has
        sufficient corporate power and authority to enter into this Agreement
        and to grant to the other all licenses and rights that it grants under
        this Agreement.

9.2.    Term of Warranty.

        Virage Logic warrants, for a period of [***] from the acceptance of the
Licensed Materials by Licensee in accordance with the applicable exhibit, that
the Licensed Materials will substantially conform to the functional
specifications of the Licensed Materials provided to Licensee by Virage Logic as
set forth in the pertinent exhibit and shall be free from defects in material
and workmanship when used in accordance with the functional specifications. The
foregoing warranty does not apply to any element of the Licensed Materials that
has been modified, combined with other products or used contrary to Virage
Logic's written instructions.

        With respect to the maintenance service set up in Section 8 above,
Virage Logic warrants for a period of [***] from the date of execution that such
service will be performed in a workmanlike manner.

        9.3. Sole and Exclusive Remedy. FOR ANY BREACH OF THE WARRANTY CONTAINED
IN SECTION 9.2 ABOVE, LICENSEE'S SOLE AND EXCLUSIVE REMEDY WILL BE THAT VIRAGE
LOGIC WILL, AT VIRAGE LOGIC'S OPTION, EITHER REPLACE OR CORRECT THE DEFECTIVE
PORTION OF THE LICENSED MATERIALS

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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OR EXECUTE AGAIN THE SERVICE WITHIN THIRTY (30) DAYS OF BEING INFORMED OF THE
BREACH OF WARRANTY.

9.4. Disclaimer of Other Warranties. THE WARRANTIES IN THIS SECTION ARE IN LIEU
OF ALL OTHER WARRANTIES, EXPRESS AND IMPLIED, INCLUDING BUT NOT LIMITED TO ANY
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,AND
NONINFRINGEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, VIRAGE LOGIC
DOES NOT WARRANT THAT THE LICENSED MATERIALS WILL MEET LICENSEE'S REQUIREMENTS,
THAT THE LICENSED MATERIALS WILL OPERATE IN THE COMBINATIONS THAT LICENSEE MAY
SELECT OR USE, THAT THE OPERATION OF THE LICENSED MATERIALS WILL BE
UNINTERRUPTED OR ERROR FREE, OR THAT ALL ERRORS IN THE LICENSED MATERIALS WILL
BE CORRECTED.

10.     INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS

        10.1. Reserved

        10.2. Infringement Indemnity.

              (a) Duty to Indemnify and Defend. Virage Logic will indemnify
Licensee and its Affiliated Companies against, and will defend or settle at
Virage Logic's own expense, subject to the limitations set forth in Section 12
of this Agreement, any action or other proceeding brought against Licensee to
the extent that it is based on [***]. Virage Logic will pay costs, damages, and
expenses (including reasonable attorneys' fees) finally awarded against
Licensee, subject to the limitations set forth in Section 12 of this Agreement,
in any such action or proceeding attributable to any such claim. Virage Logic
will have no obligation under this Section as to any action, proceeding, or
claim unless: (i) Virage Logic is notified of it promptly; (ii) Virage Logic has
sole control of its defense and settlement; and (iii) Licensee provides Virage
Logic with reasonable assistance in its defense and settlement.

              (b) Injunctions. If Licensee's use of any Licensed Materials under
the terms of this Agreement is, or in Virage Logic's opinion is likely to be,
enjoined due to the type of infringement or misappropriation specified in
subsection (a) above, then Virage Logic shall, at its sole option and expense,
either: (i) procure for Licensee the right to continue using such Licensed
Materials under the terms of this Agreement; or (ii) replace or modify such
Licensed Materials so that they are noninfringing and meet the same functional
specifications as the enjoined Licensed Materials.

              (c) Sole Remedy. THE FOREGOING ARE VIRAGE LOGIC'S SOLE AND
EXCLUSIVE OBLIGATIONS, AND LICENSEE'S SOLE AND EXCLUSIVE REMEDIES, WITH RESPECT
TO INFRINGEMENT OR MISAPPROPRIATION OF INTELLECTUAL PROPERTY RIGHTS.

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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               (d) Exclusions. Virage Logic will have no obligations under this
Section 10.2 with respect to infringement or misappropriation arising solely
from: (i) modifications to the Licensed Materials by any party other than Virage
Logic except if Virage Logic approved such modifications in writing, (ii)
Licensed Material specifications requested by Licensee, (iii) any Instances
generated by Licensee except to the extent such infringement or misappropriation
existed in the Licensed Materials as provided to Licensee , or (iv) the use of
the Licensed Materials in combination with products or technology not provided
by Virage Logic.

11.     TERM AND TERMINATION.

        11.1 Term. The term of this Agreement will begin on the Effective Date
and will continue, unless terminated earlier in accordance with the provisions
of Section 11.2 below.

        11.2 Events of Termination.

             (a) Either party will have the right to terminate this Agreement
if: (i) the other party breaches any material term or condition of this
Agreement and fails to cure such breach within thirty (30) days after written
notice; (ii) the other party becomes the subject of a voluntary petition in
bankruptcy or any voluntary proceeding relating to insolvency, receivership,
liquidation, or composition for the benefit of creditors; or (iii) the other
party becomes the subject of an involuntary petition in bankruptcy or any
involuntary proceeding relating to insolvency, receivership, liquidation, or
composition for the benefit of creditors, if such petition or proceeding is not
dismissed within sixty (60) days of filing.

               (b) Virage Logic will have the right to terminate this Agreement
if Licensee acquires, consolidates or merges with a direct competitor of Virage
Logic. For the purposes of this Agreement, a direct competitor of Virage Logic
is any person or entity engaged in the commercial sale or license of Compilers
and/or Instances as defined in Sections 1.1 and 1.2 of this Agreement
respectively.

               (c) Licensee may terminate this Agreement on thirty (30) days
prior notice to Virage Logic only after all exhibits have been completed and
there has been no new exhibits in a six (6) month period from the date the work
on last exhibit was delivered to the Licensee.

        11.3. Effect of Termination.

              (a) Upon termination or expiration of this Agreement, Licensee
will immediately return to Virage Logic or (at Virage Logic's request) destroy
all copies of the Licensed Materials and other Confidential Information in its
possession or control, and an officer of Licensee will certify to Virage Logic
in writing that Licensee has done so. Provided that Virage Logic did not
terminate this Agreement for Licensee's breach or for the event specified in
Section 11.2 (b) above, Licensee will have the right to continue to use the
Licensed Materials, subject to the terms of Section 3.1 and the applicable
exhibit, for which Licensee has paid the license fees as of the effective date
of the termination.

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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        (b) Licensee will be entitled to manufacture or have manufactured, sell
or have sold, supply or have supplied, and distribute or have distributed,
Products created under the licenses granted in this Agreement.

        (c) Licensee shall be entitled to manufacture or have manufactured, sell
or have sold, supplied or have supplied and distributed or have distributed to
any third party any Product created under the licenses granted in this Agreement
which has been ordered, is in, or has been in, production, or is held in stock,
prior to the date of termination. However, Licensee may not generate, or have
generated, any new Instances or begin any new designing using the previously
generated Instances after the date of termination.

        Upon termination of this Agreement for Virage Logic's breach in
accordance with Section 11.2 (a) above, the licenses granted under this
Agreement for Licensed Materials shall continue without any further payment by
Licensee.

        11.4. No Damages for Termination. Neither party will be liable to the
other on account of termination or expiration of this Agreement for
reimbursement or damages for the loss of goodwill, prospective profits or
anticipated income, or on account of any expenditures, investments, leases based
upon or growing out of such termination or expiration.

        11.5. Nonexclusive Remedy. The exercise by either party of any remedy
under this Agreement will be without prejudice to its other remedies under this
Agreement or otherwise.

        11.6. Survival. The rights and obligations of the parties contained in
Sections 1, 3.2, 4, 5, 6 (to the extent that any payment has accrued and is
outstanding), 7, 8, 9, 10, 11, 12 and 13 will survive the termination or
expiration of this Agreement.

12.     LIMITATIONS OF LIABILITY.

        12.1 Limitations.

              (a) EXCEPT FOR THE PROVISIONS OF SECTION 7 "CONFIDENTIALITY, AND
SECTION 10 "INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS" (SECTION 10 BEING
APPLICABLE TO VIRAGE LOGIC ONLY) OF THIS AGREEMENT, AND IN CASE OF GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, WHETHER BASED
ON BREACH OF CONTRACT, TORT, PRODUCT LIABILITY, OR OTHERWISE, AND WHETHER OR NOT
THE OFFENDING PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE

              IN THE EVENT OF A BREACH OF SECTION 7 AND SECTION 10, THE TOTAL
LIABILITY FOR INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF EITHER PARTY
SHALL NOT EXCEED THE AMOUNT OF [***].

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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              IN THE EVENT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT THE ABOVE
LIMIT OF LIABILITY SHALL APPLY.

              (b) EACH PARTY'S TOTAL LIABILITY TO THE OTHER PARTY UNDER THIS
AGREEMENT FOR DIRECT DAMAGES WILL BE LIMITED TO [***].

13.     GENERAL.

        13.1 Compliance with Law. Each party agrees to perform this Agreement in
compliance with all applicable laws, rules, and regulations in connection with
its activities under this Agreement. Without limiting the foregoing, Licensee
acknowledges that all Licensed Materials, including documentation and other
Virage Logic technical data, may be subject to export controls imposed by the
U.S. Export Administration Act of 1979, as amended (the "Act"), and the
regulations promulgated thereunder. Licensee shall not export or re-export
(directly or indirectly) any Licensed Materials or other Virage Logic technical
data therefor without complying with the Act and the regulations thereunder.

        13.2. Assignment. This Agreement will bind and inure to the benefit of
each party's permitted successors and assigns. Neither Party may assign this
Agreement either voluntarily, by merger, by operation of law or otherwise in
whole or in part, without the other Party's written consent, which consent will
not be unreasonably withheld. Any attempt to assign this Agreement without such
consent will be null and void. Notwithstanding the foregoing, Licensee may at
all times subject to prior notification assign its respective rights and
obligations under this Agreement to any Affiliated Company as defined above.

        13.3. Governing Law. All disputes arising out of or in connection with
the present Agreement shall be finally settled under the Rules of Conciliation
and Arbitration of the International Chamber of Commerce by one or more
arbitrators appointed in accordance with the said Rules. Such arbitration shall
take place in Paris and shall be conducted in English. Laws of England shall be
applicable.

        10.5. Injunctive Relief. Licensee acknowledges that the Licensed
Materials contain and embody trade secrets and other intellectual property of
Virage Logic, the disclosure or unauthorized use of which would cause
substantial harm to Virage Logic that could not be remedied by the payment of
damages alone. Accordingly, Virage Logic will be entitled to preliminary and
permanent injunctive relief and other equitable relief for any breach of
Licensee's obligations of confidentiality or use of Licensed Materials not in
accordance with this Agreement.

        13.4. Severability. If any provision of this Agreement is found invalid
or unenforceable, that provision will be enforced to the maximum extent
permissible, and the other provisions of this Agreement will remain in force.

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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        13.5. Force Majeure. Except for payments due under this Agreement,
neither party will be responsible for any failure to perform due to causes
beyond its reasonable control (each a "Force Majeure"), including, but not
limited to, acts of God, war, riot, embargoes, acts of civil or military
authorities, denial of or delays in processing of export license applications,
fire, floods, earthquakes, accidents, strikes, or fuel crises, provided that
such party gives prompt written notice thereof to the other party. The time for
performance will be extended for a period equal to the duration of the Force
Majeure, but in no event longer than ninety (90) days.

        13.6. Notices. All notices under this Agreement will be deemed given
when delivered personally, sent by confirmed facsimile transmission, or sent by
certified or registered U.S. mail or nationally-recognized express courier,
return receipt requested, to the address shown below or as may otherwise be
specified by either party to the other in accordance with this Section.

        13.7. Independent Contractors. The parties to this Agreement are
independent contractors. There is no relationship of partnership, joint venture,
employment, franchise, or agency between the parties. Neither party will have
the power to bind the other or incur obligations on the other's behalf without
the other's prior written consent.

        13.8. Waiver. No failure of either party to exercise or enforce any of
its rights under this Agreement will act as a waiver of such rights.

        13.9. Entire Agreement. This Agreement and its Appendices and Exhibits,
are the complete and exclusive agreement between the parties with respect to the
subject matter hereof, superseding and replacing any and all prior agreements,
communications, and understandings (both written and oral) regarding such
subject matter. This Agreement may only be modified, or any rights under it
waived, by a written document expressly referring to an amendment of this
Agreement and executed by both parties.

        13.10 Counterparts. This Agreement may be signed in one or more
counterparts, each of which will be deemed to be an original and all of which
when taken together will constitute the same agreement. If this Agreement is
executed in counterparts, no signatory hereto shall be bound until both Parties
named below have duly executed or caused to be duly executed a counterpart of
this Agreement. Any copy of this Agreement made by reliable means is considered
an original.

        13.11 Order of Precedence. In case of conflict between the terms and
conditions herein and any other document or correspondence between the Parties,
the precedence of all such documents shall be as follows: (1) the exhibits to
this Agreement , (2) Appendices to this Agreement (3) this Agreement, (4) the
terms of Licensee's purchase orders, (5) Virage Logic's quotes.

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

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

Licensee: STMICROELECTRONICS SA           VIRAGE LOGIC CORPORATION

By:     /S/ JOEL MONNIER                  By:   /S/ ADAM KABLANIAN
    ----------------------------------       -----------------------------------

Name:    Joel Monnier                     Name:   Adam Kablanian
      --------------------------------          --------------------------------

Title:   Corporate Vice President,        Title:  President and CEO
         Director of CR&D
       -------------------------------          --------------------------------

Date:    October 15, 2001                 Date:   October 15, 2001
      --------------------------------        ----------------------------------

Address: 29, Bd Romain Rolland           Address:   46501 Landing Parkway
         -----------------------------            ------------------------------

         92120 Montrouge -- France                  Fremont, California 94538
         -----------------------------            ------------------------------

Facsimile: +33-476-08-9652               Facsimile: 510-360-8099
         -----------------------------            ------------------------------

The following documents are incorporated into this Agreement in their entirety:

Appendix A -- Exhibit No 1

Appendix B -- Non disclosure agreement

Appendix C -- List of Virage Logic Direct Competitors

  THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
  OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
              BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

                                     Page 12
                                  Confidential
<PAGE>

                                   APPENDIX B

                            NON DISCLOSURE AGREEMENT

This Non Disclosure Agreement (hereinafter referred to as the "Agreement"),
effective on November 15th, 2001 (hereinafter referred to as the "Effective
Date")

By and between:

STMICROELECTRONICS SA, a company incorporated and existing under the laws of
France, having its registered office at 29, Bd Romain Rolland - 92120 MONTROUGE,
France, (hereinafter referred to as "ST"),

on the one hand, and,

VIRAGE LOGIC CORPORATION, a company incorporated and existing under the laws of
Delaware, having its principal place of business at 46501 Landing Parkway,
Fremont CA 94538 (hereinafter referred to as "VIRAGE LOGIC"),

on the other hand, hereinafter collectively referred to as the "Parties".

WHEREAS the Parties desire to exchange proprietary and confidential information
relating to 0.10 and 0.13 im technologies in order to evaluate the feasibility
and modalities of possible cooperation for Memory Generators on 0.10 and 0.13 im
(hereinafter referred to as the "Project"). Virage will disclose information of
the following nature:

Product plans, roadmaps, and information related to Virage Logic's embedded
memory products, including NOVEA, and software tools, techniques used for
designing memory compilers, circuit design techniques and architecture used to
improve memory area, power consumption, electromigration, manufacturability, and
testability. Information and specifications relating to Embedded Test and Repair
of embedded memories and related technology. Silicon Test and Characterization
Reports for Virage Logic embedded memory products.

NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

1.      CONFIDENTIAL INFORMATION under this Agreement shall mean any item or
        information including bid not limited to electrical/electronic schematic
        and circuit diagrams, documentation, specifications, formulas,
        manufacturing processes, know-how, computer programs, technology,
        technical descriptions and other technical and economic data, records
        and information pertaining to the Project, which is disclosed by one
        Party (hereinafter referred to as the "DISCLOSING PARTY") to the other
        Party (hereinafter referred to as the "RECEIVING PARTY") under this
        Agreement whether orally and/or in writing and/or in graphic or in
        electronic or electromagnetic form and any derivatives of any of the
        foregoing, provided that it is clearly and conspicuously marked or
        designated in writing by the DISCLOSING PARTY as being CONFIDENTIAL
        INFORMATION or

THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

                                       1
<PAGE>

        if originally disclosed orally, provided that it is confirmed in writing
        as being CONFIDENTIAL INFORMATION by the DISCLOSING PARTY within thirty
        (30) calendar days after oral disclosure.

2.      The RECEIVING PARTY undertakes to apply to all CONFIDENTIAL INFORMATION
        at Least the same degree of care with which it treats and protects its
        own proprietary in formation against public disclosure but no less than
        reasonable care. AD such CONFIDENTIAL INFORMATION shall not be disclosed
        to any third party without the prior written consent of the DISCLOSING
        PARTY except as hereunder provided.

3.      The RECEIVING PARTY undertakes to restrict its use of CONFIDENTIAL
        INFORMATION to the Project, to make no further or other use of the same
        and to ensure that dissemination of CONFIDENTIAL INFORMATION within its
        own organization is made on a strict "need to know" basis. The RECEIVING
        PARTY shall ensure that all persons to whom CONFIDENTIAL INFORMATION is
        made available arc aware of the confidential nature of such CONFIDENTIAL
        INFORMATION and comply with the terms and conditions of this Agreement
        relating to protection and use of CONFIDENTIAL INFORMATION.

4.      Notwithstanding the foregoing, due to the organization and structure of
        the STMicroelectronics NV Group, ST reserves the right and VIRAGE LOGIC
        agrees, that ST may disclose the CONFIDENTIAL INFORMATION of VIRAGE
        LOGIC to persons working as employees of an ST Affiliated Company on a
        "need to know" basis, provided that ST shall ensure that such persons
        comply with the provisions of this Agreement. For the purpose of this
        Agreement, an ST Affiliated Company shall mean STMicroelectronics NV and
        any ST company, owned or controlled, directly or indirectly, now or
        hereafter, by STMicroelectronics NV.

5.      For the purpose of this Agreement, information shall not be considered
        to be CONFIDENTIAL INFORMATION if the RECEIVING PARTY can prove that
        such information is:

        (a)  in or passes into the public domain other than by breach of this
             Agreement; or,

        (b)  known to the RECEIVING PARTY prior to disclosure by the DISCLOSING
             PARTY; or,

        (c)  disclosed to the RECEIVING PARTY by a third party having the full
             right to disclose it; or,

        (d)  independently developed by an employee of the RECEIVING PARTY; or,

        (e)  approved for unlimited release or use by written authorization of
             the DISCLOSING PARTY, or required to be disclosed as a result of a.
             Court order or pursuant to government action.

THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

                                       2

<PAGE>

6.      The obligations set forth in this Agreement relating to the protection
        of CONFIDENTIAL INFORMATION shall remain in effect for a period of five
        (5) yews from the expiration or termination of this Agreement.

7.      For the purpose of this Agreement, the persons responsible for holding
        CONFIDENTIAL INFORMATION shall be:

        For ST:                                            For VIRAGE LOGIC:
        Stephane Hanriat                                   Simon Fielding

8.      Neither Party shall assign or transfer any of its rights or obligations
        thereunder without the prior written consent of the other Party.

9.      Nothing in this Agreement shall be deemed to grant either Party a
        license directly or by implication under any patent; patent
        applications, copyright, design right (whether registrable or not) mask
        work rights, trade secrets or know how.

10.     This Agreement does not Emit either Party's rights as existing as of the
        date of its signature. It does not create any additional right or
        obligation which is not expressly included herein and in particular it
        shall not be deemed to create any obligation for either Party to enter
        into any further contractual arrangements of any kind.

11.     This Agreement shall remain in force for a period of two (2) years as
        from the Effective Date. However, this Agreement may be terminated,
        prior to its expiry, by either Party on thirty (30) day written notice
        to the other.

12.     In the event of termination each Party undertakes to deliver to the
        other Party all the CONFIDENTIAL INFORMATION of the other Party, or to
        certify destruction thereof, at the requesting Party's option.

13.     The Parties shall ensure that all communications to be made under or in
        connection with this Agreement, are made in writing,

if to ST:                                   if to VIRAGE LOGIC:

STMicroelectronics SA                       Virage Logic
Attn:  Peter Hirt                           Attn:  Paul Brady
850, rue Jean Monnet                        46501 Landing Parkway
F-38926 Crolles                             Fremont, California, 94538
France                                      USA
Fax:  +33 476 08 96 52                      Fax:  +1 510.360.8099

THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

                                       3
<PAGE>

Copy to:

STMicroelectronics SA
Attn:  General Counsel
165, rue Edouard Branly - BP 112
01637 Saint-Genis-Pouilly cedex, France
Fax:  +33 4 50 40 25 70

14.     Neither Party shall reverse-compile, reverse-assemble or
        reverse-engineer the CONFIDENTIAL INFORMATION or any part of it, of the
        other.

15.     This Agreement embodies the entire understanding of the Parties and
        shall supersede an previous communications, representations or
        understandings, either oral or written between the Parties relating to
        the subject matter hereof.

16.     All disputes arising in connection with the present Agreement shall be
        amicably solved between the Parties. If they cannot be so amicably
        solved, such disputes shall be finally submitted to the jurisdiction of
        the Commercial Court of Paris. French Law shall be applicable.

IN WITNESS WHEREOF, ST and VIRAGE LOGIC have hereby executed this Agreement as
of the day and year first written above.

FOR STMICROELECTRONICS SA                   FOR VIRAGE LOGIC

Name:                                       Name:

------------------------------------------- ------------------------------------
Title:                                      Title:

------------------------------------------- ------------------------------------
Signature:                                  Signature:

------------------------------------------- ------------------------------------
Date:                                       Date:

------------------------------------------- ------------------------------------

THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

                                       4
<PAGE>

              APPENDIX C - LIST OF VIRAGE LOGIC DIRECT COMPETITORS

                                     Dolphin

                               Artisan Components

                                 Virtual Silicon

                                      CSEM

                                     Avant!

Virage Logic reserves the right to update this Appendix C upon thirty (30) days
notice to Licensee.

THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

                                    Page 13
                                  Confidential

<PAGE>

                    EXHIBIT NO 2 TO MASTER LICENSE AGREEMENT
                     0.13um, 90nm AND 65nm MEMORY COMPILERS

Exhibit No. 002 dated as of 1st April 2002 (the "Effective Date of this
Exhibit") to the Master License Agreement ("Master License") dated as of 8th
June 2001, between STMICROELECTRONICS SA ("Licensee or ST") and VIRAGE LOGIC
CORPORATION ("Virage Logic").

Licensee                                       Address for Notices:
STMicroelectronics SA                          Virage Logic Corporation
850, rue Jean Monnet                           3 Toomers Wharf
F-38926 Crolles Cedex                          Newbury
France                                         Berkshire
                                               RG14 1DY, UK

Attn:  Peter Hirt                              Attn:  Paul Brady

<TABLE>
<CAPTION>
                      SILICON MANUFACTURER                  PROCESS
                                                  ------------------------------
                                                    MICRON       LM      VOLTAGE
                                                  ---------   ------   ---------

<S>                                                <C>        <C>      <C>
 [***] & any semiconductor manufacturer with       0.13um       5 - 8
      STMicroelectronics' HCMOS9 (0.13um),           90 nm
   HCMOS10 (90nm) & HCMOS11 (65nm) (and              65nm
    variants thereof) processes installed

</TABLE>

DESIGNATED SITE(S): Single Site, Crolles, France

EXHIBIT DURATION: This Exhibit will expire on the third anniversary of the
Effective Date of this Exhibit. Upon receipt of a renewal purchase order to be
received at Virage Logic no later than 30 days prior to the expiration date of
the initial three (3) year term of this Exhibit, this Exhibit will renew for a
second three (3) year term on the third anniversary of the Effective Date of
this Exhibit.

ENGAGEMENT OF VIRAGE LOGIC: [***]

TERM OF LICENSE:  The following licenses will be granted:

      a)   0.13um ACCESS LICENSE

           -  Access License for all currently available off the shelf, as of
              the Effective Date of this Exhibit, 0.13um [***] Virage Logic
              memory compilers

              - Access License will be granted upon Licensee's execution of
                this Exhibit

              - Licensee will have the right to use the memory compilers for
                silicon verification and project work, but may not tape out for
                divisional projects until the appropriate Project Based Fee has
                been paid

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                  Page 1 of 12
<PAGE>

      b)   90nm AND 65nm ACCESS LICENSE

           - Access License for all 36 Virage Logic memory compilers as listed
             in Appendix 1 for 90nm and any other memory compilers that may
             become available in the future on 90nm and 65nm [***] technology
             nodes during the Exhibit Duration

             - Access License will be granted upon Licensee's execution of this
               Exhibit

             - Licensee will have the right to access all of the memory
               compilers as listed in Appendix 1 for 90nm and any other memory
               compilers that may become available in the future on 90nm and
               65nm [***] technology nodes during the Exhibit Duration

             - Licensee will have the right to use the memory compilers for
               silicon verification and project work, but may not tape out for
               divisional projects until the appropriate Project Based Fee has
               been paid

      c)   PROJECT BASED LICENSE

             - A Project Based License will be granted for the respective
               Project upon receipt of a correct Purchase Order from the
               Licensee

             - Licensee will have the right to tape out divisional projects to
               either Crolles II and/or [***] and manufacture silicon using the
               currently available off the shelf memory compilers and any other
               memory compilers that may become available in the future on
               0.13um, 90nm & 65nm [***] technology nodes during the Exhibit
               Duration

             - A Project is defined as one tape-out of a Licensee's product
               excluding test chips or bug fixes

      d)   MANUFACTURING LICENSE

             - Licensee will have the right to proceed to silicon volume
               manufacturing at Licensee's facilities or at [***] using Virage
               Logic memory compilers

             - Licensee will have the right to manufacture on HCMOS9, HCMOS10
               and HCMOS11 and process options (flash, eDRAM, RF,) Licensee will
               have the right to manufacture on any optical shrink of the ST
               HCMOS9, HCMOS10 and HCMOS11 processes assuming no GDS II changes
               are required for the Virage Logic memory compilers

             - Licensee will have the right to manufacture on any Licensee
               process at any semiconductor company world-wide [***]
               where any or all of the HCMOS9, HCMOS10 & HCMOS11 processes or
               derivatives are installed. Licensee agrees to provide a copy of
               the appropriate section in the aforementioned agreement relating
               to this right to manufacture

             - Licensee shall be entitled to manufacture or have manufactured,
               sell or have sold, supplied or have supplied and distributed or
               have distributed to any third party any Product created under the
               licenses granted in this Exhibit which has been ordered, is in,
               or has been in, production, or is held in stock, prior to the
               expiration date of this Exhibit. However, Licensee may not
               generate, or have generated, any new Instances or begin any new
               designing using the previously generated Instances after the
               expiration date of this Exhibit.

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                  Page 2 of 12
<PAGE>

SUMMARY OF FEES:

<TABLE>
<CAPTION>
                           ---------------------------------------------------------------------------
                                                                              MANUFACTURING
                              ACCESS FEE $             PROJECT BASED FEE           FEE
------------------------------------------------------------------------------------------------------
<S>                          <C>                     <C>                      <C>
ASAP COMPILERS                                               [***]
                                                                                  Manufacturing
                                                                                Fee of [***]% of
                                                                                  wafer price
STAR COMPILERS

                                                             [***]
------------------------    [***] per quarter    -----------------------------------------------------

                                                             [***]               Manufacturing
                                                                                  Fees to be
                                                                                 agreed for
                                                                                STAR, CAM and
                                                                                 NOVeA by 30th
                                                                                September 2002

--------------------------                --------------------------------------
MULTIPORT COMPILERS                                          [***]
--------------------------                --------------------------------------
CAM COMPILERS                                                [***]
--------------------------                --------------------------------------
NOVeA COMPILERS                                              [***]
--------------------------                --------------------------------------

</TABLE>

NOTES TO ABOVE SUMMARY OF FEES:

        1.  Prices do not reflect any applicable duties or taxes. The terms of
            Incoterms 2000 apply with shipments DDU.

        2.  Access Fee will provide Access to all available [***] memory
            compilers on 0.13um, 90nm and 65nm technology nodes for the duration
            of the Exhibit

        3.  [***]

        4.  All products are standard [***] off the shelf compilers with no
            changes except for those agreed in the SOW as shown in Appendix 2

        5.  All 90nm and 65nm products will have an extended temperature and
            voltage range (excluding NOVeA currently) as defined in the SOW
            shown in Appendix 2

        6.  Quarterly Access fee includes maintenance and IBC ("Instance Based
            Characterization"), where applicable, for all currently off the
            shelf memory compilers and any other memory compilers that

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                  Page 3 of 12
<PAGE>

            may become available off the shelf in the future on 0.13um, 90nm and
            65nm [***] technology nodes

        7.  Virage Logic will prepare the 90nm and 65nm memory compilers (with
            the help of Licensee) to a pre-defined Licensee CAD maturity level,
            as described in the SOW in Appendix 2, in order for Licensee to
            incorporate the memory compilers in WebGen

        8.  [***]

        9.  Pricing assumes that all products are based on the latest Virage
            Logic datasheets and the relevant [***] spice models, etc. and that
            they will be maintained accordingly

        10. Virage Logic agrees to deliver all of the 36 90nm memory compilers
            as listed in Appendix 1 in accordance with the schedule as listed in
            Appendix 3.

        11. Licensee agrees to provide Virage Logic, within one hundred and
            twenty (120) days of the Effective Date of this Exhibit, the final
            schedule for the products on the G and LP processes for 90nm.

        12. Licensee agrees to provide Virage Logic with silicon
            characterization data carried out by Licensee for use in Virage
            Logic's day to day commercial activities. Prior to distributing this
            data to any third party, Virage Logic would need to have the data or
            report reviewed by Licensee

        13. Licensee agrees to the release of a press release announcing the
            relationship between the companies for release no later than 30th
            September 2002

        14. Licensee agrees to cooperate with Virage Logic to promote the
            relationship described within this Exhibit at the world-wide design
            locations of the Licensee

FEES: Access Fees, Project Based Fees, and Manufacturing Fees, as set forth
below

ACCESS FEE

        -   [***] for the first three years payable at [***] as outlined in the
            below payment schedule

        -   Upon receipt of a renewal purchase order to be received at Virage
            Logic no later than 30 days prior to the expiration date of the
            initial three (3) year term of this Exhibit, this Exhibit will renew
            for a second three (3) year term on the third anniversary of the
            Effective Date of this Exhibit and a further [***] is payable
            at [***] as outlined in the below payment schedule

        -   Includes maintenance and IBC for the duration of the Exhibit

PROJECT BASED FEES FOR LICENSEE

        -   [***]

        -   Licensee agrees to provide a report no later than 30 days after the
            end of each calendar quarter detailing the number of projects that
            have reached tape-out. An Invoice will be generated for the
            appropriate number of projects within 2 weeks of receipt of the
            report on a quarterly basis.

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                  Page 4 of 12
<PAGE>

MANUFACTURING FEES FOR LICENSEE

        -   ASAP & Multiport

            -  [***]% of wafer price

            -  First [***] wafers for each project will bear no manufacturing
               fees

        -   Manufacturing Fees for ASAP and Multiport are due when Licensee
            ships product for revenue to its customers and invoices them.
            Reports are made quarterly 30 days after Licensee's quarter end and
            will be invoiced by Virage Logic upon receipt. Licensee will agree
            to generate a report containing the number of good wafers
            manufactured, the foundry tracking number (in the case of [***]) and
            the wafer price containing Virage Logic memory compilers. Licensee
            will agree to Virage Logic conducting an annual audit at its own
            expense if the need arises

        -   STAR, CAM & NOVeA

            -  Virage Logic and Licensee agree to have in place no later than
               30th September 2002, details of the Manufacturing Fees associated
               with STAR, CAM and NOVeA, the results of which will be appended
               to this Exhibit in Appendix 5

            -  First [***] wafers for each project will bear no manufacturing
               fees

MAINTENANCE FEES:  included in the Access Fee for duration of the Exhibit.

MAINTENANCE: Product Updates may include one or more of the following:

        -   Modifications to the memory design database due to any of the
            following:

            -  Re-layout of the physical design due to design rule changes

            -  Analysis of silicon data

            -  Re-characterization of the database due to spice model, process
               changes etc

            -  New EDA models that Virage Logic may offer

            -  Updates to existing EDA models that Virage Logic offer

            -  Enhancements to the Software supplied with the product

            -  Telephone and email support during normal business hours

            -  Provide support to optimise the yield of the memories when in
               volume

        -   Examples of what is not included with Product Updates:

            -  Re-optimization due to more aggressive design rules

            -  Architectural changes in the process (adding local interconnect)

            -  Physical changes which require a change in the architecture of
               the memory compilers

            -  Additional PVT points or changes in the current PVT conditions

PAYMENT TERMS AND SCHEDULE:

All payments due net forty five (45) days after Licensee's receipt of invoice in
accordance with the below schedule, except for the first two invoices ([***])
which are due upon receipt.

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                  Page 5 of 12
<PAGE>

<TABLE>
<CAPTION>

                                       ACCESS FEES
             -------------------------------------------------------------------
<S>                                                       <C>
                           Invoicing Event/Date            Amount
             -------------------------------------------------------------------
                                  [***]                     [***]
             -------------------------------------------------------------------
</TABLE>

Upon Licensor issuance of the renewal purchase order for the second three (3)
year term of the Exhibit, the following Access Fee Payment Schedule will apply.
For the avoidance of doubt, Licensor is under no obligation to renew this
Exhibit for the second three (3) year term.

<TABLE>
<CAPTION>
             -------------------------------------------------------------------
<S>                                                       <C>
                           Invoicing Event/Date            Amount
             -------------------------------------------------------------------
                                  [***]                     [***]
             -------------------------------------------------------------------
</TABLE>

PHYSICAL TAGGING STANDARD COMPLIANCE:   Please refer to the Master License

DELIVERY: Please refer to the Master License.

MASTER LICENSE: This Exhibit is issued pursuant to the Master License identified
above and the terms and conditions of the Master License are incorporated and
made a part of this Exhibit except as modified herein. This Exhibit constitutes
a separate License with respect to the Licensed Material(s) described herein.
Capitalized terms used in this Exhibit shall have the same meaning as defined in
the Master License, unless otherwise stated.

           IN WITNESS WHEREOF, the parties have caused this Exhibit to be
executed by their duly-authorized representatives as of the Effective Date of
this Exhibit.

<TABLE>
Licensee: STMICROELECTRONICS SA                                VIRAGE LOGIC CORPORATION

<S>                                                            <C>
By: /S/ JOEL MONNIER                                           By: /S/ ADAM KABLANIAN
    ------------------------------------------                     -----------------------------------

Date:  June 28, 2002                                           Date:  June 28, 2002
      ----------------------------------------                       ----------------------------------

Name: Joel Monnier                                             Name: Adam Kablanian
      ----------------------------------------                       ----------------------------------

Title: Corporate Vice President, Director CR&D                 Title: President & CEO
      ----------------------------------------                       ----------------------------------

Address:   850, rue Jean Monnet                                Address: 46501 Landing Parkway
         -------------------------------------                         --------------------------------

           F-38926 Crolles Cedex, France                               Fremont, California 94538, USA
         -------------------------------------                         --------------------------------

Facsimile: +33  4 76 08 96 52                             Facsimile:      510-360-8099
         -------------------------------------                         --------------------------------
</TABLE>

The following Appendices are incorporated into this Exhibit in their entirety:

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                  Page 6 of 12
<PAGE>

Appendix 1 -- List of 36 Memory Compilers

Appendix 2 -- 90nm SOW

Appendix 3 -- 90nm Development Schedule

Appendix 4 -- Right to Sublicense

Appendix 5-- Manufacturing Fees for STAR, CAM and NOVeA

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                  Page 7 of 12
<PAGE>

                 APPENDIX 1 -- LIST OF 36 90nm MEMORY COMPILERS

<TABLE>
<CAPTION>
                                                    Process Options
                                                    Required for ST
                                                   -----------------
                                                      G        LP
<S>            <C>      <C>              <C>       <C>        <C>
--------------------------------------------------------------------
                             1P           16K      [***]       [***]
                RF
                             2P           16K      [***]       [***]
--------------------------------------------------------------------
                             SP          512K      [***]       [***]
                             DP          512K      [***]       [***]
                HD

                          via ROM         1M       [***]       [***]
  ASAP                    Diff ROM        1M       [***]       [***]
--------------------------------------------------------------------
                             SP          512K      [***]       [***]
                HS
                             DP          512K      [***]       [***]
--------------------------------------------------------------------
                             SP          512K      [***]       [***]
                ULP          DP          512K      [***]       [***]
                            ROM           16M      [***]       [***]
--------------------------------------------------------------------
                             SP          512K      [***]       [***]
                HD           SP           8M       [***]       [***]
                             DP          512K      [***]       [***]
--------------------------------------------------------------------
                             SP          512K      [***]       [***]
  STAR          HS
                             DP          512K      [***]       [***]
--------------------------------------------------------------------
                             SP          512K      [***]       [***]
                ULP          DP          512K      [***]       [***]
                            ROM           16M      [***]       [***]
--------------------------------------------------------------------
Multiport                    6P           72K      [***]       [***]
--------------------------------------------------------------------
                           Binary        144K      [***]       [***]
  CAM
                           Ternary       144K      [***]       [***]
--------------------------------------------------------------------
 NOVeA          RAM          1P           16K      [***]       [***]
--------------------------------------------------------------------

</TABLE>

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                  Page 8 of 12
<PAGE>

                             APPENDIX 2 -- 90nm SOW

                     (to be completed by 30 September 2002)

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                  Page 9 of 12
<PAGE>

                     APPENDIX 3 -- 90nm DEVELOPMENT SCHEDULE

          Note: Variants to be delivered at a maximum of 10 per quarter

<TABLE>
<CAPTION>
                                                           Availability
                                                   -----------------------------
                                                        FE           GDS
                                                   -----------------------------
<S>            <C>        <C>            <C>        <C>         <C>
                             1P           16K          [***]         [***]
                RF

                             2P           16K          [***]         [***]
--------------------------------------------------------------------------------
                             SP          512K          [***]         [***]
                             DP          512K          [***]         [***]
                HD

                          via ROM         1M           [***]         [***]
  ASAP                    Diff ROM        1M           [***]         [***]
--------------------------------------------------------------------------------
                             SP          512K          [***]         [***]
                HS

                             DP          512K          [***]         [***]
--------------------------------------------------------------------------------
                             SP          512K          [***]         [***]
                ULP          DP          512K          [***]         [***]
                            ROM          16M           [***]         [***]
--------------------------------------------------------------------------------
                             SP          512K          [***]         [***]
                HD           SP           8M           [***]         [***]
                             DP          512K          [***]         [***]
--------------------------------------------------------------------------------
                             SP          512K          [***]         [***]
  STAR          HS
                             DP          512K          [***]         [***]
--------------------------------------------------------------------------------
                             SP          512K          [***]         [***]
                ULP          DP          512K          [***]         [***]
                            ROM          16M           [***]         [***]
--------------------------------------------------------------------------------
Multiport                    6P           72K          [***]         [***]
--------------------------------------------------------------------------------
                           Binary        144K          [***]         [***]
  CAM

                           Ternary       144K          [***]         [***]
--------------------------------------------------------------------------------
 NOVeA          RAM          1P           16K          [***]         [***]
--------------------------------------------------------------------------------
</TABLE>

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                 Page 10 of 12
<PAGE>

                             APPENDIX 4 -- RIGHT TO SUBLICENSE:

Licensee will have the right to sub-license the Virage Logic instances or memory
compilers as described in the table below:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                       DESIGN TYPE                   MANUFACTURED
                                                   THROUGH LICENSEE
--------------------------------------------------------------------------------
<S>                    <C>                         <C>
  MODEL 1                 [***]                         [***]
   [***]
--------------------------------------------------------------------------------
  MODEL 2                 [***]                         [***]
   [***]
--------------------------------------------------------------------------------
  MODEL 3                 [***]                         [***]
   [***]
--------------------------------------------------------------------------------
  MODEL 4                 [***]                         [***]
   [***]
--------------------------------------------------------------------------------
  MODEL 5                 [***]                         [***]
   [***]
--------------------------------------------------------------------------------
</TABLE>

Notes:

-       Licensee agrees to enter into agreements with its sublicensees that
        protect Virage Logic's confidential information, including specifically
        the memory compilers and/or instances, at least to the same extent as
        those protections provided in the Master License. In no event shall
        Licensee sublicense the memory compilers and/or instances to any entity
        that is involved in the commercial sale or license of memory compilers
        and/or instances.

-       Partner is defined as a company that collaborates closely with Licensee
        for the development of mutually beneficial products

-       Partner as referred to in the table above excludes Crolles II [***].

-       Regarding Model 3 above; in the event that the partner wishes to
        manufacture at [***], the Partner pays the appropriate project fee as
        defined in body of this Exhibit

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                 Page 11 of 12
<PAGE>

              APPENDIX 5-- MANUFACTURING FEES FOR STAR, CAM & NOVeA

                     (to be completed by 30 September 2002)

          THE SYMBOL "[***]" IS USED TO INDICATE THAT A PORTION OF THE
             EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
           COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
                        RESPECT TO THE OMITTED PORTIONS.

                                 Page 12 of 12<PAGE>

                                                                   EXHIBIT 10.44

                              ESS TECHNOLOGY, INC.

                           1997 EQUITY INCENTIVE PLAN

                   (AMENDED AND RESTATED AS OF APRIL 20, 2002)

        1. PURPOSES OF THE PLAN. The purposes of this ESS Technology, Inc.
Equity Incentive Plan are to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to
Employees and Consultants and to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant of an
option and subject to the applicable provisions of Section 422 of the Code and
the regulations promulgated thereunder.

        2. DEFINITIONS. As used herein, the following definitions shall apply:

           (a) "ADMINISTRATOR" means the Board or its Committee appointed
pursuant to Section 4 of the Plan.

           (b) "AFFILIATE" means an entity other than a Subsidiary (as defined
below) which, together with the Company, is under common control of a third
person or entity.

           (c) "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option and restricted stock purchase plans under
applicable U.S. state corporate laws, U.S. federal and applicable state
securities laws, the Code, any Stock Exchange rules or regulations and the
applicable laws of any other country or jurisdiction where Options are granted
under the Plan, as such laws, rules, regulations and requirements shall be in
place from time to time.

           (d) "BOARD" means the Board of Directors of the Company.

           (e) "CAUSE" for termination of a Participant's Continuous Service
Status will exist (unless otherwise defined in an applicable employment
agreement) if the Participant is terminated for any of the following reasons:
(i) Participant's willful failure substantially to perform his or her duties and
responsibilities to the Company or deliberate violation of a Company policy;
(ii) Participant's commission of any act of fraud, embezzlement, dishonesty or
any other willful misconduct that has caused or is reasonably expected to result
in material injury to the Company; (iii) unauthorized use or disclosure by
Participant of any proprietary information or trade secrets of the Company or
any other party to whom the Participant owes an obligation of nondisclosure as a
result of his or her relationship with the Company; or (iv) Participant's
willful breach of any of his or her obligations under any written agreement or
covenant with the Company. The determination as to whether a Participant is
being terminated for Cause shall be made in good faith by the Company and shall
be final and binding on the Participant. The foregoing definition does not in
any way limit the Company's ability to terminate a Participant's employment or
consulting relationship at any time as provided in

<PAGE>

Section 5(d) below, and the term "Company" will be interpreted to include any
Subsidiary, Parent, Affiliate or successor thereto, if appropriate.

           (f) "CHANGE OF CONTROL" means a sale of all or substantially all of
the Company's assets, or any merger or consolidation of the Company with or into
another corporation other than a merger or consolidation in which the holders of
more than 50% of the shares of capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, or such surviving entity,
outstanding immediately after such transaction.

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

           (h) "COMMITTEE" means one or more committees or subcommittees of the
Board appointed by the Board to administer the Plan in accordance with Section 4
below.

           (i) "COMMON STOCK" means the Common Stock of the Company.

           (j) "COMPANY" means ESS Technology, Inc., a California corporation.

           (k) "CONSULTANT" means any person, including an advisor, who is
engaged by the Company or any Parent, Subsidiary or Affiliate to render services
and is compensated for such services, and any director of the Company whether
compensated for such services or not.

           (l) "CONTINUOUS SERVICE STATUS" means the absence of any interruption
or termination of service as an Employee or Consultant. Continuous Service
Status as an Employee or Consultant shall not be considered interrupted in the
case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence
approved by the Administrator, provided that such leave is for a period of not
more than ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) in the case of
transfers between locations of the Company or between the Company, its Parents,
Subsidiaries, Affiliates or their respective successors. A change in status from
an Employee to a Consultant or from a Consultant to an Employee will not
constitute an interruption of Continuous Service Status.

           (m) "CORPORATE TRANSACTION" means a sale of all or substantially all
of the Company's assets, or a merger, consolidation or other capital
reorganization of the Company with or into another corporation and includes a
Change of Control.

           (n) "DIRECTOR" means a member of the Board.

           (o) "EMPLOYEE" means any person employed by the Company or any
Parent, Subsidiary or Affiliate, with the status of employment determined based
upon such factors as are deemed appropriate by the Administrator in its
discretion, subject to any requirements of the Code or the Applicable Laws. The
payment by the Company of a director's fee to a Director shall not be sufficient
to constitute "employment" of such Director by the Company.

<PAGE>

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

           (q) "FAIR MARKET VALUE" means, as of any date, the fair market value
of the Common Stock, as determined by the Administrator in good faith on such
basis as it deems appropriate and applied consistently with respect to
Participants. Whenever possible, the determination of Fair Market Value shall be
based upon the closing price for the Shares as reported in the Wall Street
Journal for the applicable date.

           (r) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable Option Agreement.

           (s) "Involuntary Termination" means termination of a Participant's
Continuous Service Status under the following circumstances: (i) termination
without Cause by the Company or a Subsidiary, Parent, Affiliate or successor
thereto, as appropriate; or (ii) voluntary termination by the Participant within
90 days following (A) a material reduction in the Participant's job
responsibilities, provided that neither a mere change in title alone nor
reassignment following a Change of Control to a position that is substantially
similar to the position held prior to the Change of Control shall constitute a
material reduction in job responsibilities; (B) relocation by the Company or a
Subsidiary, Parent, Affiliate or successor thereto, as appropriate, of the
Participant's work site to a facility or location more than 50 miles from the
Participant's principal work site for the Company at the time of the Change of
Control; or (C) a reduction in Participant's then-current base salary, provided
that an across-the-board reduction in the salary level of all other employees or
consultants in positions similar to the Participant's by the same percentage
amount as part of a general salary level reduction shall not constitute such a
salary reduction.

           (t) "LISTED SECURITY" means any security of the Company that is
listed or approved for listing on a national securities exchange or designated
or approved for designation as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc.

           (u) "NAMED EXECUTIVE" means any individual who, on the last day of
the Company's fiscal year, is the chief executive officer of the Company (or is
acting in such capacity) or among the four most highly compensated officers of
the Company (other than the chief executive officer). Such officer status shall
be determined pursuant to the executive compensation disclosure rules under the
Exchange Act.

           (v) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable Option
Agreement.

           (w) "OPTION" means a stock option granted pursuant to the Plan.

           (x) "OPTION AGREEMENT" means a written document, the form(s) of which
shall be approved from time to time by the Administrator, reflecting the terms
of an Option granted under the Plan and includes any documents attached to or
incorporated into such Option

<PAGE>

Agreement, including, but not limited to, a notice of stock option grant and a
form of exercise notice.

           (y) "OPTION EXCHANGE PROGRAM" means a program approved by the
Administrator whereby outstanding Options are exchanged for Options with a lower
exercise price or are amended to decrease the exercise price as a result of a
decline in the Fair Market Value of the Common Stock.

           (z) "OPTIONED STOCK" means the Common Stock subject to an Option.

           (aa) "OPTIONEE" means an Employee or Consultant who receives an
Option.

           (bb) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code, or any successor provision.

           (cc) "PARTICIPANT" means any holder of one or more Options, or the
Shares issuable or issued upon exercise of such Options, under the Plan.

           (dd) "PLAN" means this 1997 Equity Incentive Plan.

           (ee) "REPORTING PERSON" means an officer, Director, or greater than
ten percent shareholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.

           (ff) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange
Act, as amended from time to time, or any successor provision.

           (gg) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.

           (hh) "STOCK EXCHANGE" means any stock exchange or consolidated stock
price reporting system on which prices for the Common Stock are quoted at any
given time.

           (ii) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.

           (jj) "TEN PERCENT HOLDER" means a person who owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary.

        3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares that may be sold under the Plan
is 12,000,000 Shares of Common Stock. The Shares may be authorized, but
unissued, or reacquired Common Stock. If an award should expire or become
unexercisable for any reason without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased Shares that
were subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan. In addition, any Shares of Common
Stock which are retained by the Company upon exercise of an award in order to
satisfy the exercise or purchase price for such

<PAGE>

award or any withholding taxes due with respect to such exercise or purchase
shall be treated as not issued and shall continue to be available under the
Plan. Shares issued under the Plan and later repurchased by the Company pursuant
to any repurchase right which the Company may have shall not be available for
future grant under the Plan.

        4. ADMINISTRATION OF THE PLAN.

           (a) GENERAL. The Plan shall be administered by the Board or a
Committee, or a combination thereof, as determined by the Board. The Plan may be
administered by different administrative bodies with respect to different
classes of Participants and, if permitted by the Applicable Laws, the Board may
authorize one or more officers to make awards under the Plan.

           (b) COMMITTEE COMPOSITION. If a Committee has been appointed pursuant
to this Section 4, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of any Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies (however caused) and remove all members of a Committee
and thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws and, in the case of a Committee administering the Plan in
accordance with the requirements of Rule 16b-3 or Section 162(m) of the Code, to
the extent permitted or required by such provisions.

           (c) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:

               (i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(q) of the Plan, provided that such determination shall
be applied consistently with respect to Participants under the Plan;

               (ii) to select the Employees and Consultants to whom Options may
from time to time be granted;

               (iii) to determine whether and to what extent Options are
granted;

               (iv) to determine the number of Shares of Common Stock to be
covered by each award granted;

               (v) to approve the form(s) of agreement(s) used under the Plan;

               (vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder, which terms and
conditions include but are not limited to the exercise or purchase price, the
time or times when awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option, Optioned Stock or restricted
stock issued upon exercise of an Option, based in each case on such factors as
the Administrator, in its sole discretion, shall determine;

<PAGE>

               (vii) to determine whether and under what circumstances an Option
may be settled in cash under Section 10(c) instead of Common Stock;

               (viii) to implement an Option Exchange Program on such terms and
conditions as the Administrator in its discretion deems appropriate, provided
that no amendment or adjustment to an Option that would materially and adversely
affect the rights of any Optionee shall be made without the prior written
consent of the Optionee;

               (ix) to adjust the vesting of an Option held by an Employee or
Consultant as a result of a change in the terms or conditions under which such
person is providing services to the Company;

               (x) to construe and interpret the terms of the Plan and awards
granted under the Plan, which constructions, interpretations and decisions shall
be final and binding on all Participants; and

               (xi) in order to fulfill the purposes of the Plan and without
amending the Plan, to modify grants of Options to Participants who are foreign
nationals or employed outside of the United States in order to recognize
differences in local law, tax policies or customs.

        5. ELIGIBILITY.

           (a) RECIPIENTS OF GRANTS. Nonstatutory Stock Options may be granted
to Employees and Consultants. Incentive Stock Options may be granted only to
Employees, provided that Employees of Affiliates shall not be eligible to
receive Incentive Stock Options.

           (b) TYPE OF OPTION. Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.

           (c) ISO $100,000 LIMITATION. Notwithstanding any designation under
Section 5(b), to the extent that the aggregate Fair Market Value of Shares with
respect to which Options designated as Incentive Stock Options are exercisable
for the first time by any Optionee during any calendar year (under all plans of
the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options
shall be treated as Nonstatutory Stock Options. For purposes of this Section
5(c), Incentive Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of the Shares subject to an
Incentive Stock Option shall be determined as of the date of the grant of such
Option.

           (d) NO EMPLOYMENT RIGHTS. The Plan shall not confer upon any
Participant any right with respect to continuation of an employment or
consulting relationship with the Company, nor shall it interfere in any way with
such Participant's right or the Company's right to terminate his or her
employment or consulting relationship at any time, with or without Cause.

        6. TERM OF PLAN. The Plan shall become effective upon its adoption by
the Board of Directors. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 15 of the Plan.

<PAGE>

        7. TERM OF OPTION. The term of each Option shall be the term stated in
the Option Agreement; provided that the term shall be no more than ten years
from the date of grant thereof or such shorter term as may be provided in the
Option Agreement and provided further that, in the case of an Incentive Stock
Option granted to a person who at the time of such grant is a Ten Percent
Holder, the term of the Option shall be five years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.

        8. LIMITATION ON GRANTS. Subject to adjustment as provided in Section 13
below, the maximum number of Shares that may be subject to Options granted to
any one individual under this Plan for any fiscal year of the Company shall be
500,000; provided, however, that up to 1,000,000 shares subject to options may
be granted to an individual in the calendar year in which the individual
commences his or her employment with the Company, a Parent, a Subsidiary or an
Affiliate.

        9. OPTION EXERCISE PRICE AND CONSIDERATION.

           (a) EXERCISE PRICE. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be such price as is determined by
the Administrator and set forth in the Option Agreement, but shall be subject to
the following:

               (i) In the case of an Incentive Stock Option

                   (A) granted to an Employee who at the time of grant is a Ten
Percent Holder, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant; or

                   (B) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.

               (ii) In the case of a Nonstatutory Stock Option, the per share
Exercise Price shall be such price as determined by the Administrator provided
that if such eligible person is, at the time of the grant of such Option, a
Named Executive of the Company, the per share Exercise Price shall be no less
than 100% of the Fair Market Value on the date of grant if such Option is
intended to qualify as performance-based compensation under Section 162(m) of
the Code.

               (iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price other than as required above pursuant to a merger or
other corporate transaction.

           (b) PERMISSIBLE CONSIDERATION. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist entirely of
(1) cash; (2) check; (3) delivery of Optionee's promissory note with such
recourse, interest, security and redemption provisions as the Administrator
determines to be appropriate; (4) cancellation of indebtedness; (5) other Shares
that have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which the Option is exercised, provided that
in the case of Shares acquired,

<PAGE>

directly or indirectly, from the Company, such Shares must have been owned by
the Optionee for more than six months on the date of surrender (or such other
period as may be required to avoid the Company's incurring an adverse accounting
charge); (6) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and a securities broker approved by the
Company shall require to effect exercise of the Option and prompt delivery to
the Company of the sale or loan proceeds required to pay the exercise price and
any applicable withholding taxes; or (7) any combination of the foregoing
methods of payment. In making its determination as to the type of consideration
to accept, the Administrator shall consider if acceptance of such consideration
may be reasonably expected to benefit the Company and the Administrator may, in
its sole discretion, refuse to accept a particular form of consideration at the
time of any Option exercise.

        10. EXERCISE OF OPTION.

            (a) GENERAL.

                (i) EXERCISABILITY. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Administrator, consistent with the term of the Plan and reflected in the Option
Agreement, including vesting requirements and/or performance criteria with
respect to the Company and/or the Optionee. The Administrator shall have the
discretion to determine whether and to what extent the vesting of Options shall
be tolled during any unpaid leave of absence; provided, however, that in the
absence of such determination, vesting of Options shall be tolled during any
such leave.

                (ii) MINIMUM EXERCISE REQUIREMENTS. An Option may not be
exercised for a fraction of a Share. The Administrator may require that an
Option be exercised as to a minimum number of Shares, provided that such
requirement shall not prevent an Optionee from exercising the full number of
Shares as to which the Option is then exercisable.

                (iii) PROCEDURES FOR AND RESULTS OF EXERCISE. An Option shall be
deemed exercised when written notice of such exercise has been given to the
Company in accordance with the terms of the Option by the person entitled to
exercise the Option and the Company has received full payment for the Shares
with respect to which the Option is exercised. Full payment may, as authorized
by the Administrator, consist of any consideration and method of payment
allowable under Section 9(b) of the Plan, provided that the Administrator may,
in its sole discretion, refuse to accept any form of consideration at the time
of any Option exercise.

                Exercise of an Option in any manner shall result in a decrease
in the number of Shares that thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

                (iv) RIGHTS AS SHAREHOLDER. Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 14 of the Plan.

<PAGE>

            (b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Except as
otherwise set forth in this Section 10(b), the Administrator shall establish and
set forth in the applicable Option Agreement the terms and conditions upon which
an Option shall remain exercisable, if at all, following termination of an
Optionee's Continuous Service Status, which provisions may be waived or modified
by the Administrator at any time. To the extent that the Optionee is not
entitled to exercise an Option at the date of his or her termination of
Continuous Service Status, or if the Optionee (or other person entitled to
exercise the Option) does not exercise the Option to the extent so entitled
within the time specified in the Option Agreement or below (as applicable), the
Option shall terminate and the Optioned Stock underlying the unexercised portion
of the Option shall revert to the Plan. In no event may any Option be exercised
after the expiration of the Option term as set forth in the Option Agreement
(and subject to Section 7).

           The following provisions (1) shall apply to the extent an Option
Agreement does not specify the terms and conditions upon which an Option shall
terminate upon termination of an Optionee's Continuous Service Status, and (2)
establish the minimum post-termination exercise periods that may be set forth in
an Option Agreement:

                (i) TERMINATION OTHER THAN UPON DISABILITY OR DEATH OR FOR
CAUSE. In the event of termination of an Optionee's Continuous Service Status,
such Optionee may exercise an Option for 30 days following such termination to
the extent the Optionee was entitled to exercise it at the date of such
termination. No termination shall be deemed to occur and this Section 10(b)(i)
shall not apply if (i) the Optionee is a Consultant who becomes an Employee, or
(ii) the Optionee is an Employee who becomes a Consultant.

                (ii) DISABILITY OF OPTIONEE. In the event of termination of an
Optionee's Continuous Service Status as a result of his or her disability
(including a disability within the meaning of Section 22(e)(3) of the Code),
such Optionee may exercise an Option at any time within six months following
such termination to the extent the Optionee was entitled to exercise it at the
date of such termination.

                (iii) DEATH OF OPTIONEE. In the event of the death of an
Optionee during the period of Continuous Service Status since the date of grant
of the Option, or within thirty days following termination of Optionee's
Continuous Service Status, the Option may be exercised by Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance at any time within twelve months following the date of death, but
only to the extent of the right to exercise that had accrued at the date of
death or, if earlier, the date the Optionee's Continuous Service Status
terminated.

                (iv) TERMINATION FOR CAUSE. In the event of termination of an
Optionee's Continuous Service Status for Cause, any Option (including any
exercisable portion thereof) held by such Optionee shall immediately terminate
in its entirety upon first notification to the Optionee of termination of the
Optionee's Continuous Service Status. If an Optionee's employment or consulting
relationship with the Company is suspended pending an investigation of whether
the Optionee shall be terminated for Cause, all the Optionee's rights under any
Option likewise shall be suspended during the investigation period and the
Optionee shall have no right to exercise any Option.

<PAGE>

            (c) BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted under the
Plan based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.

        11. TAXES.

            (a) As a condition of the exercise of an Option granted under the
Plan, the Participant (or in the case of the Participant's death, the person
exercising the Option) shall make such arrangements as the Administrator may
require for the satisfaction of any applicable federal, state, local or foreign
withholding tax obligations that may arise in connection with the exercise of
the Option and the issuance of Shares. The Company shall not be required to
issue any Shares under the Plan until such obligations are satisfied. If the
Administrator allows the withholding or surrender of Shares to satisfy a
Participant's tax withholding obligations under this Section 11 (whether
pursuant to Section 11(c), (d) or (e), or otherwise), the Administrator shall
not allow Shares to be withheld in an amount that exceeds the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes.

            (b) In the case of an Employee and in the absence of any other
arrangement, the Employee shall be deemed to have directed the Company to
withhold or collect from his or her compensation an amount sufficient to satisfy
such tax obligations from the next payroll payment otherwise payable after the
date of an exercise of the Option.

            (c) This Section 11(c) shall apply only after the date, if any, upon
which the Common Stock becomes a Listed Security. In the case of Participant
other than an Employee (or in the case of an Employee where the next payroll
payment is not sufficient to satisfy such tax obligations, with respect to any
remaining tax obligations), in the absence of any other arrangement and to the
extent permitted under the Applicable Laws, the Participant shall be deemed to
have elected to have the Company withhold from the Shares to be issued upon
exercise of the Option that number of Shares having a Fair Market Value
determined as of the applicable Tax Date (as defined below) equal to the amount
required to be withheld. For purposes of this Section 11, the Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined under the Applicable Laws (the "Tax
Date").

            (d) If permitted by the Administrator, in its discretion, a
Participant may satisfy his or her tax withholding obligations upon exercise of
an Option by surrendering to the Company Shares that have a Fair Market Value
determined as of the applicable Tax Date equal to the amount required to be
withheld. In the case of shares previously acquired from the Company that are
surrendered under this Section 11(d), such Shares must have been owned by the
Participant for more than six (6) months on the date of surrender (or such other
period of time as is required for the Company to avoid adverse accounting
charges).

            (e) Any election or deemed election by a Participant to have Shares
withheld to satisfy tax withholding obligations under Section 11(c) or (d) above
shall be irrevocable as to the particular Shares as to which the election is
made and shall be subject to the consent or

<PAGE>

disapproval of the Administrator. Any election by a Participant under Section
11(d) above must be made on or prior to the applicable Tax Date.

            (f) In the event an election to have Shares withheld is made by a
Participant and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Participant shall receive
the full number of Shares with respect to which the Option is exercised but such
Participant shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.

        12. NON-TRANSFERABILITY OF OPTIONS.

            (a) GENERAL. Except as set forth in this Section 12, Options may not
be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent or distribution. The
designation of a beneficiary by an Optionee will not constitute a transfer. An
Option may be exercised, during the lifetime of the holder of an Option, only by
such holder or a transferee permitted by this Section 12.

            (b) LIMITED TRANSFERABILITY RIGHTS. The Administrator may in its
discretion grant transferable Nonstatutory Stock Options pursuant to Option
Agreements specifying the manner in which such Nonstatutory Stock Options are
transferable. "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.

        13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR CERTAIN OTHER
TRANSACTIONS.

            (a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, the numbers of Shares set forth in Sections 3 and 8
above, and the number of Shares of Common Stock that have been authorized for
issuance under the Plan but as to which no Options have yet been granted or that
have been returned to the Plan upon cancellation or expiration of an Option, as
well as the price per Share of Common Stock covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued Shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination, recapitalization or reclassification
of the Common Stock, or any other increase or decrease in the number of issued
Shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares of Common Stock subject to an Option.

<PAGE>

            (b) DISSOLUTION OR LIQUIDATION. In the event of the dissolution or
liquidation of the Company, each Option will terminate immediately prior to the
consummation of such action, unless otherwise determined by the Administrator.

            (c) CORPORATE TRANSACTION. In the event of a Corporate Transaction,
each outstanding Option shall be assumed or an equivalent option or right shall
be substituted by such successor corporation or a parent or subsidiary of such
successor corporation (the "Successor Corporation"), unless the Successor
Corporation does not agree to assume the award or to substitute an equivalent
option or right, in which case such Option shall terminate upon the consummation
of the transaction.

            Notwithstanding the above, in the event of a Change of Control in
which outstanding awards are not being assumed, substituted or terminated in
connection with the transaction, the vesting and exercisability of each
outstanding Option may, in the Administrator's sole discretion, accelerate such
that the Options shall become vested and exercisable to the extent of up to 100%
of the Shares then unvested, in each case effective as of immediately prior to
consummation of the transaction. To the extent that an Option is not exercised
prior to consummation of a Corporate Transaction in which the Option is not
being assumed or substituted, such Option shall terminate upon such consummation
and the Administrator shall notify the Optionee or holder of such fact at least
five (5) days prior to the date on which the Option terminates.

            For purposes of this Section 13(c), an Option shall be considered
assumed, without limitation, if, at the time of issuance of the stock or other
consideration upon a Corporate Transaction or a Change of Control, as the case
may be, each holder of an Option would be entitled to receive upon exercise of
the award the same number and kind of shares of stock or the same amount of
property, cash or securities as such holder would have been entitled to receive
upon the occurrence of the transaction if the holder had been, immediately prior
to such transaction, the holder of the number of Shares of Common Stock covered
by the award at such time (after giving effect to any adjustments in the number
of Shares covered by the Option as provided for in this Section 13); provided
that if such consideration received in the transaction is not solely common
stock of the Successor Corporation, the Administrator may, with the consent of
the Successor Corporation, provide for the consideration to be received upon
exercise of the award to be solely common stock of the Successor Corporation
equal to the Fair Market Value of the per Share consideration received by
holders of Common Stock in the transaction.

            (d) CERTAIN DISTRIBUTIONS. In the event of any distribution to the
Company's shareholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.

        14. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator,
provided that in the case of any Incentive Stock Option, the grant date shall be
the later of the date on which the Administrator makes the determination
granting such Incentive Stock Option or the date of commencement of

<PAGE>

the Optionee's employment relationship with the Company. Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
so granted within a reasonable time after the date of such grant.

        15. AMENDMENT AND TERMINATION OF THE PLAN.

            (a) AUTHORITY TO AMEND OR TERMINATE. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation (other than an adjustment pursuant to Section 13
above) shall be made that would materially and adversely affect the rights of
any Optionee under any outstanding grant, without his or her consent. In
addition, to the extent necessary and desirable to comply with the Applicable
Laws, the Company shall obtain shareholder approval of any Plan amendment in
such a manner and to such a degree as required.

            (b) EFFECT OF AMENDMENT OR TERMINATION. No amendment or termination
of the Plan shall materially and adversely affect Options already granted,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee or holder and the
Company.

        16. CONDITIONS UPON ISSUANCE OF SHARES. Notwithstanding any other
provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for
failure, to issue or deliver any Shares under the Plan unless such issuance or
delivery would comply with the Applicable Laws, with such compliance determined
by the Company in consultation with its legal counsel. As a condition to the
exercise of an Option, the Company may require the person exercising the award
to represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required by law.

        17. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

        18. AGREEMENTS. Options shall be evidenced by Option Agreements in such
form(s) as the Administrator shall from time to time approve.

        19. SHAREHOLDER APPROVAL. If required by the Applicable Laws,
continuance of the Plan shall be subject to approval by the shareholders of the
Company within twelve (12) months before or after the date the Plan is adopted.
Such shareholder approval shall be obtained in the manner and to the degree
required under the Applicable Laws.

        20. INFORMATION AND DOCUMENTS TO OPTIONEES AND PURCHASERS. If required
by the Applicable Laws, the Company shall provide financial statements at least
annually to each Optionee and to each individual who acquired Shares pursuant to
the Plan, during the period such Optionee or purchaser has one or more Options
outstanding, and in the case of an individual who acquired Shares pursuant to
the Plan, during the period such individual owns such Shares. The Company shall
not be required to provide such information if the issuance of Options under the
Plan is

<PAGE>

limited to key employees whose duties in connection with the Company assure
their access to equivalent information

<PAGE>
                               ESS Technology, Inc
                           1997 EQUITY INCENTIVE PLAN

                          NOTICE OF STOCK OPTION GRANT

Optionee's Name and Address:

[Optionee]
[OptioneeAddress1]
[OptioneeAddress2]

You have been granted an option to purchase Common Stock of ESS Technology,
Inc., (the "Company") as follows:

Board Approval Date: _____________________________

Date of Grant (Later of Board
Approval Date or
Commencement of
Employment/Consulting):            [ExercisePrice]

Exercise Price Per Share:          [ExercisePrice]

Total Number of Shares Granted:    [NoofShares]

Total Price of Shares Granted:     [TotalExercisePrice]

Type of Option:                    [NoSharesISO] Shares Incentive Stock Option
                                   [NoSharesNSO] Shares Nonstatutory Stock
                                   Option

Term/Expiration Date:              [Term]/[ExpirDate]

Vesting Commencement Date:         [VestingCommencementDate]

Vesting Schedule:                  [CliffVestAmount]

Termination Period: Option may be exercised for a period of 30 days after
termination of employment or consulting relationship except as set out in
Sections 7 and 8 of the Stock Option Agreement (but in no event later than the
Expiration Date).

By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the ESS Technology, Inc. 1997 Equity Incentive Plan and
the Stock Option Agreement, all of which are attached and made a part of this
document.

OPTIONEE:                                    ESS Technology, Inc.

-----------------------------------          -----------------------------------
Signature                                    By:

-----------------------------------          -----------------------------------
Print Name                                   Title:

<PAGE>

                              ESS TECHNOLOGY, INC.

                             STOCK OPTION AGREEMENT

1. GRANT OF OPTION. ESS Technology, Inc., a California corporation (the
"Company"), hereby grants to the Optionee named in the Notice of Stock Option
Grant attached to this Agreement ("Optionee"), an option (the "Option") to
purchase the total number of shares of Common Stock (the "Shares") set forth in
the Notice of Stock Option Grant, at the exercise price per share set forth in
the Notice of Stock Option Grant (the "Exercise Price") subject to the terms,
definitions and provisions of the 1997 Equity Incentive Plan (the "Plan")
adopted by the Company, which is incorporated in this Agreement by reference. In
the event of a conflict between the terms of the Plan and the terms of this
Agreement, the terms of the Plan shall govern. Unless otherwise defined in this
Agreement, the terms used in this Agreement shall have the meanings defined in
the Plan.

To the extent designated an Incentive Stock Option in the Notice of Stock Option
Grant, this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and, to the extent not so designated, this Option is intended to be a
Nonstatutory Stock Option.

2. EXERCISE OF OPTION. This Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Stock Option Grant
and with the provisions of Sections 9 and 10 of the Plan as follows:

    (a) RIGHT TO EXERCISE.

           (i)    This Option may not be exercised for a fraction of a share.

           (ii)   In the event of Optionee's death, disability or other
                  termination of employment, the exercisability of the Option is
                  governed by Sections 6, 7 and 8 below, subject to the
                  limitations contained in paragraphs (iii) and (iv) below.

           (iii)  In no event may this Option be exercised after the date of
                  expiration of the term of this Option as set forth in the
                  Notice of Stock Option Grant.

           (iv)   If designated an Incentive Stock Option in the Notice of Stock
                  Option Grant, in the event that the Shares subject to this
                  Option (and all other Incentive Stock Options granted to
                  Optionee by the Company or any Parent or Subsidiary) that vest
                  in any calendar year have an aggregate fair market value
                  (determined for each Share as of the Date of Grant of the
                  option covering such Share) in excess of $100,000, the Shares
                  in excess of $100,000 shall be treated as subject to a
                  Nonstatutory Stock Option, in accordance with Section 5 of the
                  Plan.

    (b) METHOD OF EXERCISE.

           (i)    This Option shall be exercisable by delivering to the Company
                  a written notice of exercise (in the form attached as Exhibit
                  A) which shall state the election to exercise the Option, the
                  number of Shares in respect of which the Option is being
                  exercised, and such other representations and agreements as to
                  the holder's investment intent with respect to such Shares of
                  Common Stock as may be required by the Company pursuant to the
                  provisions of the Plan. Such written notice shall be signed by
                  Optionee and shall be delivered in person or by certified mail
                  to the Secretary of the Company. The written notice shall be
                  accompanied by payment of the Exercise Price. This Option
                  shall be deemed to be exercised upon receipt by the Company of
                  such written notice accompanied by the Exercise Price.

           (ii)   As a condition to the exercise of this Option, Optionee agrees
                  to make adequate provision for federal, state or other tax
                  withholding obligations, if any, which arise upon the exercise

<PAGE>

                  of the Option or disposition of Shares, whether by
                  withholding, direct payment to the Company, or otherwise.

           (iii)  No Shares will be issued pursuant to the exercise of an Option
                  unless such issuance and such exercise shall comply with all
                  relevant provisions of law and the requirements of any stock
                  exchange upon which the Shares may then be listed. Assuming
                  such compliance, for income tax purposes the Shares shall be
                  considered transferred to Optionee on the date on which the
                  Option is exercised with respect to such Shares.

3. OPTIONEE'S REPRESENTATIONS. In the event the Shares purchasable pursuant to
the exercise of this Option have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company an investment
representation statement in customary form, a copy of which is available for
Optionee's review from the Company upon request.

4. METHOD OF PAYMENT. Payment of the Exercise Price shall be by any of the
following, or a combination of the following, at the election of Optionee: (a)
cash; (b) check; (c) surrender of other Shares of Common Stock of the Company
that (i) either have been owned by Optionee for more than six (6) months on the
date of surrender or were not acquired, directly or indirectly, from the
Company, and (ii) have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised; (d) authorization from the Company to retain from the total number of
Shares as to which the Option is exercised that number of Shares having a Fair
Market value on the date of exercise equal to the exercise price for the total
number of Shares as to which the Option is exercised; or (e) if there is a
public market for the Shares and they are registered under the Securities Act,
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds required to pay the exercise price.

5. RESTRICTIONS ON EXERCISE. This Option may not be exercised until such time as
the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.

6. TERMINATION OF RELATIONSHIP. In the event of termination of Optionee's
Continuous Status as an Employee or Consultant, Optionee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise this Option during the Termination Period set out in the Notice of
Stock Option Grant. To the extent that Optionee was not entitled to exercise
this Option at the date of such termination, or if Optionee does not exercise
this Option within the time specified in the Notice of Stock Option Grant, the
Option shall terminate.

7. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 6 above, in
the event of termination of Optionee's Continuous Status as an Employee or
Consultant as a result of total and permanent disability (as defined in Section
22(e)(3) of the Code), Optionee may, but only within six (6) months from the
date of termination of employment (but in no event later than the date of
expiration of the term of this Option as set forth in Section 10 below),
exercise the Option to the extent otherwise so entitled at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of termination, or if Optionee does not exercise such Option (to the
extent otherwise so entitled) within the time specified in this Agreement, the
Option shall terminate.

8. DEATH OF OPTIONEE.  In the event of the death of Optionee:

    (a) During the term of this Option and while an Employee of the Company
        and having been in Continuous Status as an Employee or Consultant since
        the date of grant of the Option, the Option may be exercised, at any
        time within six (6) months following the date of death (but in no event
        later than the date of

<PAGE>

        expiration of the term of this Option as set forth in Section 10 below),
        by Optionee's estate or by a person who acquired the right to exercise
        the Option by bequest or inheritance, but only to the extent of the
        right to exercise that would have accrued had Optionee continued living
        and remained in Continuous Status as an Employee or Consultant three (3)
        months after the date of death, subject to the limitation contained in
        Section 2(i)(d) above in the case of an Incentive Stock Option; or

    (b) Within thirty (30) days after the termination of Optionee's Continuous
        Status as an Employee or Consultant, the Option may be exercised, at any
        time within six (6) months following the date of death (but in no event
        later than the date of expiration of the term of this Option as set
        forth in Section 10 below), by Optionee's estate or by a person who
        acquired the right to exercise the Option by bequest or inheritance, but
        only to the extent of the right to exercise that had accrued at the date
        of termination.

9. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution. The
designation of a beneficiary does not constitute a transfer. An Option may be
exercised during the lifetime of Optionee only by Optionee or a transferee
permitted by this section. The terms of this Option shall be binding upon the
executors, administrators, heirs, successors and assigns of Optionee.

10. TERM OF OPTION. This Option may be exercised only within the term set out in
the Notice of Stock Option Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.

11. NO ADDITIONAL EMPLOYMENT RIGHTS. Optionee understands and agrees that the
vesting of Shares pursuant to the Vesting Schedule is earned only by continuing
as an Employee or Consultant at the will of the Company (not through the act of
being hired, being granted this Option or acquiring Shares under this
Agreement). Optionee further acknowledges and agrees that nothing in this
Agreement, nor in the Plan which is incorporated in this Agreement by reference,
shall confer upon Optionee any right with respect to continuation as an Employee
or Consultant with the Company, nor shall it interfere in any way with his or
her right or the Company's right to terminate his or her employment or
consulting relationship at any time, with or without cause.

12. TAX CONSEQUENCES. Optionee acknowledges that he or she has read the brief
summary set forth below of certain federal tax consequences of exercise of this
Option and disposition of the Shares under the law in effect as of the date of
grant. OPTIONEE UNDERSTANDS THAT THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT HIS OR
HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

    (a) EXERCISE OF INCENTIVE STOCK OPTION. If this Option is an Incentive Stock
        Option, there will be no regular federal income tax liability upon the
        exercise of the Option, although the excess, if any, of the fair market
        value of the Shares on the date of exercise over the Exercise Price will
        be treated as an item of alternative minimum taxable income for federal
        tax purposes and may subject Optionee to the alternative minimum tax in
        the year of exercise.

    (b) EXERCISE OF NONSTATUTORY STOCK OPTION. If this Option does not qualify
        as an Incentive Stock Option, Optionee may incur regular federal income
        tax liability upon the exercise of the Option. Optionee will be treated
        as having received compensation income (taxable at ordinary income tax
        rates) equal to the excess, if any, of the fair market value of the
        Shares on the date of exercise over the Exercise Price. In addition, if
        Optionee is an employee of the Company, the Company will be required to
        withhold from Optionee's compensation or collect from Optionee and pay
        to the applicable taxing authorities an amount equal to a percentage of
        this compensation income at the time of exercise.

    (c) DISPOSITION OF SHARES. If this Option is an Incentive Stock Option and
        if Shares transferred pursuant to the Option are held for more than one
        year after exercise and more than two years after the Date of Grant, any
        gain realized on disposition of the Shares will be treated as long-term
        capital gain for federal income tax purposes. If Shares purchased under
        an Incentive Stock Option are disposed of before the end of either of
        such two holding periods, then any gain realized on such disposition
        will be treated as

<PAGE>

        compensation income (taxable at ordinary income rates) to the extent of
        the excess, if any, of the lesser of (i) the fair market value of the
        Shares on the date of exercise, or (ii) the sales proceeds, over the
        Exercise Price. If this Option is a Nonstatutory Stock Option, then gain
        realized on the disposition of Shares will be treated as long-term or
        short-term capital gain depending on whether or not the disposition
        occurs more than one year after the exercise date.

    (d) NOTICE OF DISQUALIFYING DISPOSITION. If the Option granted to Optionee
        in this Agreement is an Incentive Stock Option, and if Optionee sells or
        otherwise disposes of any of the Shares acquired pursuant to the
        Incentive Stock Option on or before the later of (i) the date two years
        after the Date of Grant, or (ii) the date one year after transfer of
        such Shares to Optionee upon exercise of the Incentive Stock Option,
        Optionee shall notify the Company in writing within thirty (30) days
        after the date of any such disposition. Optionee agrees that Optionee
        may be subject to income tax withholding by the Company on the
        compensation income recognized by Optionee from the early disposition by
        payment in cash or out of the current earnings paid to Optionee.

13. SIGNATURE. This Stock Option Agreement shall be deemed executed by the
Company and Optionee upon execution by such parties of the Notice of Stock
Option Grant attached to this Stock Option Agreement.

                  [Remainder of page left intentionally blank]

<PAGE>

                                    EXHIBIT A

                               NOTICE OF EXERCISE

To:            ESS Technology, Inc.
Attn:          Stock Option Administrator
Subject:       Notice of Intention to Exercise Stock Option

This is official notice that the undersigned ("Optionee") intends to exercise
Optionee's option to purchase __________ shares of ESS Technology, Inc. Common
Stock, under and pursuant to the Company's 1997 Equity Incentive Plan and the
Stock Option Agreement dated ___________, as follows:

Grant Number:           ________________________________

Date of Purchase:       ________________________________

Number of Shares:       ________________________________

Purchase Price:         ________________________________

Method of Payment of Purchase Price: ________________________________

Social Security No.: ________________________________

The shares should be issued as follows:

Name:    __________________________________

Address: _______________________________

         _______________________________

         _______________________________

         _______________________________

Signed: _______________________________

Date: ________________________________

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