ZORAN CORP \DE\, DEF 14A, 2000-06-26

ZORAN CORP \DE\
DEF 14A, 2000-06-26
SEMICONDUCTORS & RELATED DEVICES

Previous: BBH INTERNATIONAL EQUITY PORTFOLIO, NT-NSAR, 2000-06-26

Next: ZORAN CORP DE, 8-K, 2000-06-26

<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12

ZORAN CORPORATION
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>

Payment of Filing Fee (Check the appropriate box):

<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
ZORAN CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 18, 2000

TO THE STOCKHOLDERS:

The Annual Meeting of Stockholders of Zoran Corporation, a Delaware
corporation (the "Company"), will be held at the offices of the Company at 3112
Scott Boulevard, Santa Clara, California on July 18, 2000 at 2:00 p.m. for the
following purposes:

1. To elect five (5) directors.

2. To approve an amendment to the Company's 1993 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 980,000 shares.

3. To approve an amendment to the Company's 1995 Employee Stock Purchase
Plan to increase the number of shares of Common Stock reserved for
issuance thereunder by 100,000 shares.

4. To approve an amendment to the Company's 1995 Outside Directors Stock
Option Plan to increase the number of shares of Common Stock reserved for
issuance thereunder by 100,000 shares.

5. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent accountants of the Company for the year ending December 31,
2000.

6. To transact such other business as may properly come before the meeting,
or any adjournment thereof.

Stockholders of record at the close of business on June 2, 2000 shall be
entitled to vote at the meeting.

By order of the Board of Directors

/s/ Dennis C. Sullivan

DENNIS C. SULLIVAN
Secretary

Santa Clara, California
June 26, 2000

IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO
SO EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
<PAGE>
ZORAN CORPORATION
3112 SCOTT BOULEVARD
SANTA CLARA, CALIFORNIA 95054

PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING

GENERAL

The enclosed Proxy is solicited on behalf of Zoran Corporation, a Delaware
corporation ("Zoran" or the "Company"), for use at the Annual Meeting of
Stockholders to be held July 18, 2000 at 2:00 p.m., local time, or at any
adjournment thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the
offices of the Company, 3112 Scott Boulevard, Santa Clara, California. The
Company's principal executive offices are located at 3112 Scott Boulevard, Santa
Clara, California. Its telephone number at that address is (408) 919-4111.

These proxy solicitation materials were mailed on or about June 26, 2000 to
all stockholders entitled to vote at the Annual Meeting.

RECORD DATE

Stockholders of record at the close of business on June 2, 2000 are entitled
to notice of, and to vote at, the Annual Meeting. At the record date, 14,143,954
shares of the Company's Common Stock, $0.001 par value, were issued and
outstanding.

REVOCABILITY OF PROXIES

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.

VOTING

The shares represented by the proxies received will be voted as you direct.
If you give no direction, the shares will be voted as recommended by the Board
of Directors. Each stockholder is entitled to one vote for each share of stock
held by him or her on all matters.

SOLICITATION

The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
and any additional soliciting materials sent to stockholders. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation materials to such
beneficial owners. The Company has retained the services of MacKenzie Partners
to aid in the solicitation of proxies, deliver proxy materials to brokers,
nominees, fiduciaries and other custodians for distribution to beneficial owners
of stock and to solicit proxies therefrom. MacKenzie Partners will receive a fee
of approximately $8,000 and reimbursement of all reasonable out-of-pocket
expenses. Proxies may also be solicited by certain of the Company's directors,
officers and regular employees, without additional compensation, personally or
by telephone or telegram.
<PAGE>
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING

The Company's bylaws require advance notice of any stockholder proposals to
be brought before a stockholders' meeting. Under the bylaws, in order for
business to be properly brought before a meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Company. To be timely, a stockholder proposal to be presented at an annual
meeting must be received at the Company's principal executive offices not less
than 120 calendar days in advance of the date that the Company's proxy statement
was released to stockholders in connection with the previous year's annual
meeting of stockholders, except that if no annual meeting was held in the
previous year or the date of the annual meeting has been changed by more than 30
calendar days from the date contemplated at the time of the previous year's
proxy statement, or in the event of a special meeting, notice by the stockholder
to be timely must be received not later than the close of business on the 10th
day following the day on which such notice of the date of the meeting was mailed
or such public disclosure was made.

Accordingly, proposals of stockholders intended to be presented at the 2001
Annual Meeting of Stockholders must be received by the Company no later than
February 28, 2001. Such proposals may be included in next year's proxy statement
if they comply with certain rules and regulations promulgated by the Securities
and Exchange Commission (the "SEC").

PROPOSAL NO. 1
ELECTION OF DIRECTORS

A board of five directors will be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the five nominees named below. All of the nominees are currently directors
of the Company.

If elected, Management's nominees will serve as directors until the
Company's next Annual Meeting of Stockholders and until their successors are
elected and qualified. If a nominee declines to serve or becomes unavailable to
serve for any reason, or if another vacancy occurs before the election (although
Management knows of no reason to anticipate that this will occur), the proxies
may be voted for such substitute nominee as management may designate.

If a quorum is present and voting, the five nominees for director receiving
the highest number of votes will be elected as directors. Abstentions and shares
held by brokers that are present but not voted because the brokers were
prohibited from exercising discretionary authority (i.e., "broker non-votes")
will be counted as present for purposes of determining if a quorum is present.

2
<PAGE>
The table below sets forth, for the current directors, certain information
with respect to age and background. The nominees for election as director at the
Annual Meeting are Messrs. Gerzberg, Galil, Meindl, Stabenow and Young.
Mr. Haber will not be standing for reelection.

<TABLE>
<CAPTION>
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---------------- -------- ------------------------------------------------------ --------------
<S> <C> <C> <C>
Levy Gerzberg........ 55 President and Chief Executive Officer of the Company 1981

Uzia Galil........... 75 Chairman of the Board of Directors, Uzia Initiative 1983
and Management, Ltd.

George T. Haber...... 48 President and Chief Executive Officer, GigaPixel 1996
Corporation

James D. Meindl...... 67 Professor of Microelectronics, Georgia Institute of 1986
Technology

Arthur B. Stabenow... 61 Private Investor 1990

Philip M. Young...... 60 General Partner, U.S. Venture Partners 1986
</TABLE>

LEVY GERZBERG was a co-founder of Zoran in 1981 and has served as our
President and Chief Executive Officer since December 1988 and as a Director
since 1981. Dr. Gerzberg also served as our President from 1981 to 1984 and as
our Executive Vice President and Chief Technical Officer from 1985 to 1988.
Prior to co-founding Zoran, Dr. Gerzberg was Associate Director of Stanford
University's Electronics Laboratory. Dr. Gerzberg holds a Ph.D. in Electrical
Engineering from Stanford University and an M.S. in Medical Electronics and a
B.S. in Electrical Engineering from the Technion-Israel Institute of Technology
in Haifa, Israel.

UZIA GALIL has been a director of Zoran since 1983 and has served as
Chairman of the Board of Directors since October 1993. Mr. Galil currently
serves as President and Chief Executive Officer of Uzia Initiative and
Management Ltd., a company specializing in the promotion and nurturing of new
businesses associated with electronic commerce and medical information media,
which he founded in November 1999. From 1962 until November 1999, Mr. Galil
served as President and Chief Executive Officer of Elron Electronic
Industries Ltd., an Israeli high technology holding company, where he also
served as Chairman of the Board. From January 1981 until leaving Elron, Mr.Galil
also served as Chairman of the Board of Directors of Elbit Ltd., an electronic
communication affiliate of Elron, and as a member of the Boards of Directors of
Elbit Systems Ltd., a defense electronics affiliate of Elron, and all other
private companies held in the Elron portfolio. Mr. Galil currently serves as a
member of the Boards of Directors of Orobotech Ltd., NetManage Inc. and Partner
Communications Ltd. From 1980 to 1990, Mr. Galil served as Chairman of the
International Board of Governors of the Technion. Mr. Galil holds an M.S. in
Electrical Engineering from Purdue University and a B.S. from the Technion.
Mr. Galil has also been awarded an honorary doctorate in technical sciences by
the Technion in recognition of his contribution to the development of
science-based industries in Israel, an honorary doctorate in philosophy by the
Weizmann Institute of Science, an honorary doctorate in engineering by
Polytechnic University, New York, and an honorary doctorate from the Ben-Gurion
University of the Negev in Israel. Mr. Galil is also a recipient of the Israel
Prize.

GEORGE T. HABER has been a director of Zoran since December 1996. Mr. Haber
also served as our Executive Vice President from December 1996 to August 1997.
Since August 1997, Mr. Haber has served as President and Chief Executive Officer
of GigaPixel Corporation, a developer of 3-D graphics rendering systems.
Mr. Haber was a founder of CompCore Multimedia, Inc., a developer of multimedia
software and semiconductor products, and served as its President, Chief
Executive Officer, Chief Financial Officer and as a director from its founding
in November 1993 until its acquisition by Zoran in December 1996. Prior to
founding CompCore, Mr. Haber held engineering positions at

3
<PAGE>
Toshiba/SGI from January 1993 to August 1993 and Sun Microsystems, Inc. from
1990 to January 1993. Mr. Haber holds a B.A. from the Technion.

JAMES D. MEINDL has been a director of Zoran since March 1986. Dr. Meindl
has been a professor of microelectronics at Georgia Institute of Technology
since November 1993. From September 1986 to November 1993, Dr. Meindl served as
Provost and Senior Vice President of Academic Affairs at Renssalaer Polytechnic
Institute. Prior thereto, Dr. Meindl was a professor of electrical engineering
and Director of the Stanford Electronics Laboratory and Center for Integrated
Systems at Stanford University. Dr. Meindl is also a director of SanDisk, Inc.
and Digital Microwave.

ARTHUR B. STABENOW has been a director of Zoran since November 19990.
Mr. Stabenow has been principally engaged as a private investor since
January 1999. From March 1986 to January 1999 Mr. Stabenow was employed as Chief
Executive Officer of Micro Linear Corporation, a semiconductor company.
Mr. Stabenow also serves as a director of Applied Micro Circuits Corporation.

PHILIP M. YOUNG has been a director of Zoran since January 1986. Mr. Young
has been a general partner of U.S. Venture Partners, a venture capital
partnership, since April 1990. Mr. Young is also a director of The Immune
Response Corporation, Vical Incorporated and 3Dfx Interactive, Inc.

Mr. Haber will not be standing for reelection at the annual meeting. At a
meeting held on June 18, 2000, the Board of Directors approved a slate of
nominees for reelection to the Board at the annual meeting in which, over
Mr. Haber's objections, the Board omitted Mr. Haber as a nominee. The following
day, Mr. Haber sent the following letter to the Board, which is included in this
proxy statement at his request:

"Dear Gentlemen.

I would like to thank you for the amazing experience that being on
ZORAN's BOD provided me.

It is my believe that Levy is incapable to decently run a company
like ZORAN and that it would be to the benefit of all the share
holders to find another President & CEO.

During my tenure I was the "Watch Dog" keeping an eye on Levy and I
hope someone else will do that on the next Board.

Given my position and the discussions we have had during our last
Board Meeting I decided NOT to ask for my nomination for the next
year.

However I want my opinion to be included in the Minutes and in the
PROXY statement to be sent out to the share holders.

Wish you all good luck and all the best.

Regards
George"

The other members of the Board of Directors strongly disagree with the views
expressed in Mr. Haber's letter and believe that Mr. Haber's comments were
prompted by his exclusion from management's slate of nominees, rather than by
any legitimate concerns regarding Dr. Gerzberg's qualifications. The other
directors believe that Dr. Gerzberg has been and continues to be a very
effective Chief Executive Officer and that Mr. Haber's inability or
unwillingness to work effectively with Dr. Gerzberg has been detrimental to the
effective management of the Company.

BOARD MEETINGS AND COMMITTEES

The Board of Directors of the Company held five meetings during the year
ended December 31, 1999. The Board of Directors has a Compensation Committee and
an Audit Committee. The Board of

4
<PAGE>
Directors has no standing nominating committee or committee performing similar
functions. During the year ended December 31, 1999, no incumbent director
attended fewer than 75% of the aggregate of (i) all meetings of the Board of
Directors (held during the period in which such director served) and (ii) all
meetings of committees of the Board on which such director served.

The Compensation Committee, which consists of Uzia Galil and Arthur B.
Stabenow, is responsible for reviewing the performance of the officers of the
Company and making recommendations to the Board concerning salaries and
incentive compensation for such officers. The Compensation Committee held five
meetings during the year ended December 31, 1999.

The Audit Committee, which consists of Mr. Stabenow and James D. Meindl, is
responsible for reviewing the Company's financial statements and significant
audit and accounting practices with the Company's independent auditors and
making recommendations to the Directors with respect thereto. The Audit
Committee held three meetings during the year ended December 31, 1999.

5
<PAGE>
PRINCIPAL STOCKHOLDERS AND SHARE
OWNERSHIP BY MANAGEMENT

The following table sets forth certain information known to the Company
relating to the beneficial ownership of the Company's Common Stock, as of
March 31, 2000, by: (i) each person who is known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock;
(ii) each executive officer named in the tables set forth under "Executive
Compensation"; (iii) each director; and (iv) all executive officers and
directors as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED (1) PERCENT (1)
---------------- ---------------------- -----------
<S> <C> <C>
Elron Electronic Industries Ltd............................. 713,965 5.1%
Advanced Technology Center
P.O. Box 1513
Haifa 31015, Israel

Levy Gerzberg, Ph.D. (2).................................... 412,832 2.9%

Isaac Shenberg, Ph.D. (3)................................... 95,020 *

Aharon Aharon (4)........................................... 89,533 *

Karl Schneider (5).......................................... 52,990 *

Paul R. Goldberg (6)........................................ 47,868 *

Uzia Galil (7).............................................. 50,649 *

James D. Meindl, Ph.D. (8).................................. 40,547 *

Philip M. Young (9)......................................... 40,495 *

Arthur B. Stabenow (10)..................................... 29,781 *

George T. Haber (11)........................................ 14,800 *

All directors and executive officers as a group (14 persons) 1,063,657 7.6%
(12)......................................................
</TABLE>

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

* Represents less than 1%

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options or warrants held by that person
that are currently exercisable, or will become exercisable within 60 days
after March 31, 2000, are deemed outstanding. Such shares, however, are not
deemed outstanding for purposes of computing the percentage ownership of
any other person. In general, options granted under the 1993 Stock Option
Plan are fully exercisable from the date of grant, subject to the Company's
right to repurchase any unvested shares at the original exercise price in
the event of termination of the optionee's employment. Unless otherwise
indicated in the footnotes to this table, the persons and entities named in
the table have sole voting and sole investment power with respect to all
shares beneficially owned, subject to community property laws where
applicable.

(2) Includes 351,323 shares subject to stock options that are currently
exercisable.

(3) Includes 93,785 shares subject to stock options that are currently
exercisable.

(4) Includes 88,500 shares subject to stock options that are currently
exercisable.

(5) Includes 51,800 shares subject to stock options that are currently
exercisable.

6
<PAGE>
(6) Includes 46,250 shares subject to stock options that are currently
exercisable.

(7) Includes 3,008 shares held by Mr. Galil's spouse. Mr. Galil may be deemed
to be a beneficial owner of these shares, although Mr. Galil disclaims such
beneficial ownership. Also includes 34,400 shares subject to stock options
that are currently exercisable.

(8) Includes 222 shares held jointly with Dr. Meindl's spouse and 1,125 shares
held by James and Frederica Meindl as trustees of the Meindl Trust dated
February 4, 1972. Also includes 34,400 shares subject to stock options that
are currently exercisable.

(9) Includes 35,666 shares subject to stock options that are currently
exercisable.

(10) Includes 14,400 shares subject to stock options that are currently
exercisable.

(11) Includes 943,111 shares subject to stock options that are currently
exercisable.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater-than-10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all reports they file under
Section 16(a).

To the Company's knowledge, based solely on its review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with
during the year ended December 31, 1999, except that Dr. Gerzberg and Ron
Richter, the Company's former Vice President, Worldwide Sales, each filed a late
report with respect to one transaction.

7
<PAGE>
EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table sets forth information concerning the compensation
received for services rendered to the Company during the years ended
December 31, 1997, 1998 and 1999 by the Chief Executive Officer of the Company
and the four other most highly compensated executive officers of the Company
whose total salary and bonus for such fiscal year exceeded $100,000
(collectively, the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION OPTIONS
--------------------- GRANTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS (SHARES) COMPENSATION
--------------------------- -------- ---------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Levy Gerzberg, Ph.D...................... 1999 $300,011 $225,000 55,000 $ 237(2)
President and Chief 1998 $294,270 -- 231,666 $ 154(2)
Executive Officer 1997 $270,095 $100,000 75,000 $ 538(2)

Paul R. Goldberg......................... 1999 $159,723 $ 24,000 15,000 $ 157(2)
Vice President, Audio Products 1998 $149,209 -- 55,000 $ 120(2)
and Intellectual Properties 1997 $136,166 $ 58,750 10,000 $ 518(2)

Isaac Shenberg, Ph.D..................... 1999 $155,167 $ 55,000 20,000 $36,117(3)
Senior Vice President, Business 1998 $152,574 -- 55,000 $24,430(3)
and Strategic Development 1997 $120,542 $ 50,000 40,000 $44,169(3)

Aharon Aharon(4)......................... 1999 $205,584 $ 72,000 30,000 $28,238(2)(3)
Senior Vice President and 1998 $161,582 -- 110,000 $28,652(3)
Chief Operating Officer 1997 $122,653 $ 45,000 60,000 $34,053(3)

Karl Schneider(5)........................ 1999 $158,653 $ 50,000 15,000 $ 153(2)
Vice President, Finance and 1998 $122,152 -- 50,000 $ 125(2)
Chief Financial Officer
</TABLE>

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

(1) Includes amounts (if any) deferred under the Company's 401(k) Plan.

(2) Represents premiums paid by the Company with respect to term life insurance
for the benefit of Dr. Gerzberg and Messrs. Goldberg, Aharon and Schneider.

(3) Consists of (i) premiums paid by the Company under an insurance policy that
covers certain severance and other benefits that may be payable to the Named
Executive Officer and (ii) contributions by the Company toward a continuing
education fund for his benefit. The Company paid insurance premiums for the
benefit of Dr. Shenberg and Mr. Aharon in the amounts of 24,507, and 24,695,
in 1999 respectively, $21,080 and $25,300, respectively, in 1998 and $19,086
and $17,580, respectively, in 1997. In addition, the Company made continuing
education contributions for the benefit of Dr. Shenberg and Mr. Aharon in
the amounts of 11,610 and 3,373, respectively, in 1999, $3,350 and $3,352,
respectively, in 1998 and $9,041 and $9,200, respectively, in 1997.

(4) Mr. Aharon joined the Company as an officer in February 1997.

(5) Mr. Schneider joined the Company as an employee in January 1998 and became
an executive officer in July 1998. The reported compensation for 1998
includes compensation earned by Mr. Schneider during the full fiscal year.

8
<PAGE>
OPTION GRANTS

The following table sets forth information concerning grants of options to
purchase the Company's Common Stock made during the year ended December 31, 1999
to the Named Executive Officers:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN FISCAL 1999
----------------------------------------------- POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(1)
OPTIONS IN FISCAL OR BASE EXPIRATION ---------------------------
NAME GRANTED YEAR(2) PRICE(3) DATE 5% 10%
---- ---------- ---------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Levy Gerzberg, Ph.D............. 55,000(4) 7.9% $20.375 8/4/09 $704,755 $1,785,988
Paul R. Goldberg................ 15,000(4) 2.1% $20.375 8/4/09 $192,206 $ 487,087
Isaac Shenberg, Ph.D............ 20,000(4) 2.9% $20.375 8/4/09 $256,274 $ 649,450
Aharon Aharon................... 30,000(4) 4.3% $20.375 8/4/09 $384,412 $ 974,175
Karl Schneider.................. 15,000(4) 2.1% $20.375 8/4/09 $192,206 $ 487,087
</TABLE>

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

(1) Potential gains are net of exercise price, but before taxes associated with
the exercise. These amounts represent certain hypothetical gains based on
assumed rates of appreciation, based on the Securities and Exchange
Commission's rules, and do not represent the Company's estimate or
projection of future Common Stock prices. Actual gains, if any, on stock
option exercises are dependent on the future performance of the Company,
overall market conditions and the optionees' continued employment through
the vesting period. The amounts reflected in this table may not be achieved.

(2) The Company granted options to purchase an aggregate of 698,803 shares of
Common Stock during the year.

(3) All options were granted at an exercise price equal to the fair market value
of the Common Stock on the date of grant.

(4) The option is fully exercisable from the date of grant, subject to the
Company's right to repurchase any unvested shares at the original purchase
price upon the optionee's termination as an employee. The shares vests in 48
equal monthly installments from the date of grant.

9
<PAGE>
OPTION EXERCISES AND YEAR-END HOLDINGS

The following table sets forth information concerning the stock options held
as of December 31, 1999 by the Named Executive Officers:

AGGREGATE OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999(1)
ACQUIRED ON VALUE ------------------------------ ------------------------------
NAME EXERCISE REALIZED EXERCISABLE(2) UNEXERCISABLE EXERCISABLE(2) UNEXERCISABLE
---- ----------- ---------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Levy Gerzberg.......... 145,000 $3,650,850 361,323 -- $17,635,838 --
Paul R. Goldberg....... 10,312 $ 156,882 56,250 -- 2,585,287 --
Isaac Shenberg......... 27,000 $ 806,638 95,785 -- 4,602,696 --
Aharon Aharon.......... 33,500 $ 693,694 106,500 -- 4,871,715 --
Karl Schneider......... 8,000 $ 206,032 57,000 -- 2,622,695 --
</TABLE>

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

(1) Based on the closing price of $55.75, as reported on the Nasdaq National
Market on December 31, 1999, less the exercise price.

(2) All options are fully exercisable, subject to the Company's right to
repurchase any unvested shares at the original exercise price in the event
of the optionee's termination. Options (or shares issued upon exercise
thereof) vest over a period of four years from the date of grant.

COMPENSATION OF DIRECTORS

Directors receive quarterly fees of $3,000 as compensation for their
services as members of the Board of Directors. In addition, directors receive
fees of $500 for each Board or committee meeting attended.

The Company's 1995 Outside Directors Stock Option Plan (the "Directors
Plan") provides for formula-based grants of options to non-employee directors.
Under the Directors Plan, each non-employee director of the Company is
automatically granted a nonstatutory stock option to purchase 20,000 shares of
Common Stock (an "Initial Option") on the date on which such person first
becomes a non-employee director of the Company. Thereafter, on the date
immediately following each annual stockholders' meeting, each non-employee
director who is reelected at the meeting to an additional term is granted an
additional option to purchase 4,800 shares of Common Stock (an "Annual Option")
if, on such date, he has served on the Board of Directors for at least six
months. The Directors Plan provides that each Initial Option shall become
exercisable in installments as to one-fourth of the total number shares subject
to the option on each of the first, second, third and fourth anniversaries of
the date of grant, and each Annual Option shall become exercisable in full one
year after the date of grant, subject to the director's continuous service. The
exercise price per share of all options granted under the Directors Plan shall
be equal to the fair market value of a share of the Company's Common Stock on
the date of grant. Options granted under the Directors Plan have a term of ten
years.

10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION

COMPENSATION PHILOSOPHY

The goals of the Company's compensation policy are to attract, retain and
reward executive officers who contribute to the overall success of the Company
by offering compensation that is competitive in the semiconductor industry, to
motivate executives to achieve the Company's business objectives and to align
the interests of officers with the long-term interests of stockholders. The
Company currently uses salary, bonuses and stock options to meet these goals.

FORMS OF COMPENSATION

The Company provides its executive officers with a compensation package
consisting of base salary, incentive bonuses and participation in benefit plans
generally available to other employees. In setting total compensation, the
Compensation Committee considers individual and Company performance, as well as
market information regarding compensation paid by other companies in the
Company's industry.

BASE SALARY. Salaries for executive officers are initially set based on
negotiation with individual executive officers at the time of recruitment and
with reference to salaries for comparable positions in the semiconductor
industry for individuals of similar education and background to the executive
officers being recruited. The Company also gives consideration to the
individual's experience, reputation in his or her industry and expected
contributions to the Company. Salaries are generally reviewed annually by the
Compensation Committee and are subject to increases based on (i) the
Compensation Committee's determination that the individual's level of
contribution to the Company has increased since his or her salary had last been
reviewed and (ii) increases in competitive pay levels.

BONUSES. It is the policy of the Company that a substantial component of
each officer's potential annual compensation take the form of a
performance-based bonus. Bonus payments to officers other than the Chief
Executive Officer are determined by the Compensation Committee, in consultation
with the Chief Executive Officer, based on the financial performance of the
Company and the achievement of the officer's individual performance objectives.
The Chief Executive Officer's bonus is determined by the Compensation Committee,
without participation by the Chief Executive Officer, based on the same factors.

LONG-TERM INCENTIVES. Longer term incentives are provided through the 1993
Stock Option Plan, which rewards executives and other employees through the
growth in value of the Company's stock. The Compensation Committee believes that
employee equity ownership is highly motivating, provides a major incentive for
employees to build stockholder value and serves to align the interests of
employees with those of stockholders. Grants of stock options to executive
officers are based upon each officer's relative position, responsibilities,
historical and expected contributions to the Company, and the officer's existing
stock ownership and previous option grants, with primary weight given to the
executive officers' relative rank and responsibilities. Initial stock option
grants designed to recruit an executive officer to join the Company may be based
on negotiations with the officer and with reference to historical option grants
to existing officers. Stock options are granted at an exercise price equal to
the market price of the Company's Common Stock on the date of grant and will
provide value to the executive officers only when the price of the Common Stock
increases over the exercise price.

11
<PAGE>
1999 COMPENSATION

Compensation for the Chief Executive Officer and other executive officers
for 1999 was set according to the Company's established compensation policy
described above. At the end of fiscal 1999, the Company paid bonuses to the
Company's executive officers, including a cash bonus of $225,000 to
Dr. Gerzberg. These payments were based upon the Company's successes in 1999 in
the execution of its operating and strategic plan, including substantial growth
in revenue and operating income, the individual executives' contributions to
these successes and the overall performance of the Company and the individual
officers' performance with respect to certain specific operational and strategic
objectives.

Uzia Galil
Arthur B. Stabenow

12
<PAGE>
PERFORMANCE GRAPH

Set forth below is a graph indicating cumulative total return at
December 31, 1996, 1997, 1998 and 1999 on $100 invested, alternatively, in the
Company's Common Stock, the CRSP Total Return Index for the Nasdaq Stock Market
and the Nasdaq Electronic Components Stock Index on December 15, 1995 (the date
of the Company's initial public offering).

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
ZORAN CORPORATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ZORAN NASDAQ STOCK NASDAQ ELECTRONIC
<S> <C> <C> <C>
Corporation Market (US Companies) Components
6/30/95 90.085 107.145
7/31/95 96.700 118.248
8/31/95 98.663 115.929
9/29/95 100.936 115.433
10/31/95 100.354 120.868
11/30/95 102.709 109.899
12/15/95 100.000 100.000 100.000
12/29/95 131.746 102.166 99.733
1/31/96 244.444 102.677 99.689
2/29/96 231.746 106.591 104.022
3/29/96 141.270 106.949 99.117
4/30/96 201.587 115.809 116.105
5/31/96 149.206 121.120 123.303
6/28/96 122.222 115.660 113.269
7/31/96 79.365 105.367 109.756
8/30/96 98.413 111.288 117.723
9/30/96 107.937 119.796 137.359
10/31/96 101.587 118.464 147.550
11/29/96 133.333 125.809 171.164
12/31/96 114.286 125.704 172.748
1/31/97 141.270 134.625 205.624
2/28/97 114.683 127.178 181.832
3/31/97 102.381 118.886 174.079
4/30/97 82.540 122.591 188.660
5/30/97 132.540 136.471 194.955
6/30/97 143.651 140.669 186.100
7/31/97 123.810 155.489 233.586
8/29/97 131.746 155.259 239.153
9/30/97 167.857 164.462 241.577
10/31/97 106.349 155.894 202.082
11/28/97 108.730 156.716 201.140
12/31/97 76.587 154.018 181.103
1/30/98 98.016 158.893 201.597
2/27/98 110.317 173.834 224.209
3/31/98 85.714 180.258 199.268
4/30/98 77.778 183.295 209.368
5/29/98 73.413 173.111 182.438
6/30/98 80.159 185.202 185.273
7/31/98 50.397 183.043 200.532
8/31/98 37.302 146.760 164.831
9/30/98 44.444 167.122 192.490
10/30/98 65.476 174.469 208.645
11/30/98 81.746 192.205 249.332
12/31/98 111.111 217.176 279.764
1/29/99 125.794 248.684 325.422
2/26/99 114.286 226.416 281.265
3/31/99 103.968 243.511 290.585
4/30/99 68.651 251.229 306.885
5/28/99 64.286 244.437 286.122
6/30/99 106.349 266.461 330.510
7/30/99 155.556 261.679 366.004
8/31/99 211.111 272.704 420.016
9/30/99 172.222 272.861 395.370
10/29/99 183.333 294.524 437.630
11/30/99 253.175 330.172 477.360
12/31/99 353.968 402.571 547.504
</TABLE>

13
<PAGE>
PROPOSAL NO. 2
AMENDMENT TO 1993 STOCK OPTION PLAN

At the Annual Meeting, the stockholders are being asked to approve an
amendment to the Company's 1993 Stock Option Plan (the "Employee Option Plan")
to increase the number of shares of Common Stock reserved for issuance
thereunder by 980,000 shares.

Management believes that the availability of additional options to purchase
Common Stock is necessary to enable the Company to continue to provide its
employees with equity ownership as an incentive to contribute to the Company's
success. The proposed increase in the share reserve under the Employee Option
Plan is necessitated by the Company's anticipated future growth and need to
provide additional long-term performance incentives to current employees.

As of March 31, 2000, 122,000 shares remained available for future option
grants under the Employee Option Plan, a number that the Board of Directors has
determined to be insufficient to meet the Company's anticipated needs. In order
to provide an adequate reserve of shares to permit the Company to continue to
provide long-term equity incentives both in the near-term and on an ongoing
basis, the Board of Directors has amended the Employee Option Plan, subject to
stockholder approval, to increase the number of shares authorized for issuance
under the Employee Option Plan by 980,000 shares.

The Board of Directors believes that the Company's stock option program is
an important factor in attracting and retaining the high caliber employees and
consultants essential to the success of the Company and in aligning their
long-term interests with those of the stockholders. Because competition for
highly qualified individuals in the Company's industry is intense, management
believes that to successfully attract the best candidates, the Company must
offer a competitive stock option program as an essential component of its
compensation packages. The Board of Directors further believes that stock
options serve an important role in motivating their holders to contribute to the
Company's continued growth and profitability. The proposed amendment is intended
to ensure that the Employee Option Plan will continue to have available a
reasonable number of shares to meet these needs for the remainder of its term.

SUMMARY OF THE 1993 STOCK OPTION PLAN, AS AMENDED

The following summary of the Employee Option Plan is qualified in its
entirety by the specific language of the Employee Option Plan, a copy of which
is available to any stockholder upon request. Additional information concerning
options outstanding under the Employee Option Plan is set forth under "Executive
Compensation."

PURPOSE

The purposes of the Employee Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility and to provide
additional incentives to employees, directors and consultants of the Company and
its subsidiaries to promote the success of the Company's business. The Employee
Option Plan provides for the grant of incentive stock options within the meaning
of Section 422 of the Code and nonstatutory stock options.

SHARES SUBJECT TO EMPLOYEE OPTION PLAN

The stockholders have previously authorized the issuance of a maximum of
2,940,000 shares under the Employee Option Plan. The Board of Directors has
amended the Employee Option Plan, subject to stockholder approval, to authorize
an additional 980,000 shares for issuance upon the exercise of options granted
under the Employee Option Plan, for an aggregate maximum of 3,920,000 shares.
Furthermore, the Employee Option Plan imposes a limit (the "Grant Limit") under
which no employee

14
<PAGE>
of the Company or any subsidiary may be granted in any fiscal year options to
purchase more than 500,000 shares in the aggregate. Appropriate adjustments will
be made to the shares subject to the Employee Option Plan, to the ISO Share
Limit and to the Grant Limit and to the terms of outstanding options upon any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company. To
the extent that any outstanding option under the Employee Option Plan expires or
terminates prior to exercise in full, the shares of Common Stock for which such
option is not exercised are returned to the Employee Option Plan and become
available for future grant. As of March 31, 2000, options for 1,670,685 shares
were outstanding at a weighted average exercise price of $12.49 per share and
options for 890,921 shares had been exercised. The closing price of the Common
Stock as reported on The Nasdaq National Market on March 31, 2000 was $56.31 per
share.

ADMINISTRATION

The Employee Option Plan is administered by the Board of Directors of the
Company, or by a committee appointed by the Board and consisting of at least two
members of the Board. For purposes of this discussion, the term "Board" refers
to the Board of Directors or any committee authorized to administer the Employee
Option Plan. Subject to the provisions of the Employee Option Plan, the Board
determines the persons to whom options are to be granted, the number of shares
to be covered by each option, whether an option is to be an incentive stock
option or a nonstatutory stock option, the timing and terms of exercisability
and vesting of each option, the exercise price and the type of consideration to
be paid to the Company for shares acquired pursuant to an option, the time of
expiration of each option, and all other terms and conditions of options granted
under the Employee Option Plan.

The Board may amend, modify, extend, renew, or grant a new option in
substitution for, any option, waive any restrictions or conditions applicable to
any option or any shares acquired thereunder, and accelerate, continue, extend,
or defer the exercisability of any option or the vesting of any shares acquired
under the Employee Option Plan. Notwithstanding the foregoing, in June 2000, the
Board of Directors amended the Employee Option Plan to provide that no option
may be repriced without stockholder approval. The Board is authorized to
interpret the Employee Option Plan and options granted thereunder, and all
determinations of the Board are final and binding on all persons having an
interest in the Employee Option Plan or any option.

ELIGIBILITY

The Employee Option Plan provides that options may be granted to current and
prospective employees (including officers and employee directors), non-employee
directors (other than directors serving on the Compensation Committee) and
consultants of the Company and its majority-owned subsidiaries. As of March 31,
2000, the Company had approximately 167 employees, including eight executive
officers and four non-employee directors eligible to participate in the Employee
Option Plan. While any eligible person may be granted a nonstatutory stock
option, only employees may be granted incentive stock options.

TERMS OF OPTIONS

Each option is evidenced by a stock option agreement between the Company and
the person to whom such option is granted, which sets forth the terms and
conditions of the option. The following terms and conditions generally apply to
all options, unless the stock option agreement provides otherwise:

EXERCISE OF THE OPTION. The Board determines when options granted under the
Employee Option Plan may be exercisable. In general, an option granted under the
Employee Option Plan is immediately

15
<PAGE>
exercisable, subject to the Company's right to repurchase any unvested shares
issued upon exercise of such option, at the original exercise price, upon the
optionee's termination as an employee, director or consultant of the Company. An
option may be exercised by written notice of exercise to the Company specifying
the number of full shares of Common Stock to be purchased (which may not be less
than 10 shares), along with tender of payment to the Company of the purchase
price. Unless otherwise provided in the stock option agreement, the purchase
price of shares purchased upon exercise of an option may be paid by cash, check
or any other means authorized by the Board and permitted by the Delaware General
Corporation Law, including surrender of shares of the Company's Common Stock
having a fair market value equal to the exercise price or a cashless exercise
procedure in which the optionee assigns the proceeds of a sale or loan with
respect to some or all of the shares acquired upon the exercise.

EXERCISE PRICE. The exercise price of options granted under the Employee
Option Plan is determined by the Board and must not be less than: (i) the fair
market value of the Common Stock on the date the option is granted in the case
of incentive stock options; or (ii) 85% percent of such fair market value in the
case of nonstatutory stock options. Where the participant owns stock
representing more than 10% of the total combined voting power of the Company's
outstanding capital stock, the exercise price for a stock option must not be
less than 110% of such fair market value.

TERMINATION OF EMPLOYMENT. If an optionee's employment or other service
with the Company terminates for any reason other than permanent and total
disability or death, options under the Employee Option Plan may be exercised not
later than 90 days after such termination (or such other period of time as is
determined by the Board), but may be exercised only to the extent the options
were exercisable on the date of termination, subject to the condition that no
option may be exercised after expiration of its term.

DISABILITY. If an optionee should become permanently and totally disabled
while employed by or engaged in other service for the Company, or within
90 days after termination of employment or other service, options may be
exercised at any time within 90 days following the date of disability, but only
to the extent the options were exercisable on the date of termination or
disability, whichever occurs first, subject to the condition that no option may
be exercised after expiration of its term.

DEATH. If an optionee should die while employed by or engaged in other
service to the Company, or within 90 days after termination of employment or
other service, options may be exercised at any time within one year following
the date of death, but only to the extent the options were exercisable on the
date of termination or death, whichever occurs first, subject to the condition
that no option may be exercised after expiration of its term.

TERMINATION OF OPTIONS. All options granted under the Employee Option Plan
expire on the date specified in the option agreement, but in no event shall the
term of an incentive stock option exceed 10 years. However, no incentive stock
option granted to any participant who owns stock possessing more than 10% of the
total combined voting power of the Company's outstanding capital stock may have
a term exceeding five years from the date of grant.

NONTRANSFERABILITY OF OPTIONS. An option is not transferable by the
optionee other than by will or the laws of descent and distribution and is
exercisable during his lifetime only by him, or in the event of his death, by a
person who acquires the right to exercise the option by bequest or inheritance
or by reason of the death of the optionee.

OTHER PROVISIONS. The option agreement may contain such other terms,
provisions and conditions not inconsistent with the Employee Option Plan as may
be determined by the Board.

16
<PAGE>
ADJUSTMENTS UPON MERGER OR DISSOLUTION

Upon any merger or consolidation in which the Company is not the surviving
corporation, all outstanding options shall either be assumed by the surviving
entity or shall terminate, unless otherwise determined by the Board. Unless
otherwise determined by the Board, upon the dissolution or liquidation of the
Company, all outstanding options shall terminate if they are not exercised.

AMENDMENT AND TERMINATION OF THE EMPLOYEE OPTION PLAN

The Board of Directors may amend the Employee Option Plan at any time or
from time to time or may terminate it without the approval of the stockholders;
provided, however, that stockholder approval is required for any amendment that
increases the maximum number of shares for which options may be granted or
changes the standards of eligibility. However, no such action by the Board of
Directors or stockholders may alter or impair any option previously granted
under the Employee Option Plan. In any event, the Employee Option Plan will
terminate in July 2003.

SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE EMPLOYEE OPTION PLAN

The following summary is intended only as a general guide as to the United
States federal income tax consequences under current law of participation in the
Employee Option Plan and does not attempt to describe all possible federal or
other tax consequences of such participation or tax consequences based on
particular circumstances.

INCENTIVE STOCK OPTIONS

An optionee recognizes no taxable income for regular income tax purposes as
the result of the grant or exercise of an incentive stock option qualifying
under Section 422 of the Code. Optionees who do not dispose of their shares for
two years following the date the option was granted nor within one year
following the exercise of the option will normally recognize a long-term capital
gain or loss equal to the difference, if any, between the sale price and the
purchase price of the shares. If an optionee satisfies such holding periods upon
a sale of the share, the Company will not be entitled to any deduction for
federal income tax purposes. If an optionee disposes of shares within two years
after the date of grant or within one year from the date of exercise (a
"disqualifying disposition"), the difference between the fair market value of
the shares on the determination date (see discussion under "Nonstatutory Stock
Options" below), and the option exercise price (not to exceed the gain realized
on the sale if the disposition is a transaction with respect to which a loss, if
sustained, would be recognized) will be taxed as ordinary income at the time of
disposition. Any gain in excess of that amount will be a capital gain. If a loss
is recognized, there will be no ordinary income, and such loss will be a capital
loss. A capital gain or loss will be long-term if the optionee's holding period
is more than 12 months. Any ordinary income recognized by the optionee upon the
disqualifying disposition of the shares generally should be deductible by the
Company for federal income tax purposes, except to the extent such deduction is
limited by applicable provisions of the Code or the regulations thereunder.

The difference between the option exercise price and the fair market value
of the shares on the determination date of an incentive stock option (see
discussion under "Nonstatutory Stock Options" below) is an adjustment in
computing the optionee's alternative minimum tax taxable income and may be
subject to an alternative minimum tax which is paid if such tax exceeds the
regular tax for the year. Special rules may apply with respect to certain
subsequent sales of the shares in a disqualifying disposition, certain basis
adjustments for purposes of computing alternative minimum taxable income on a
subsequent sale of the shares and certain tax credits which may arise with
respect to optionees subject to the alternative minimum tax.

17
<PAGE>
NONSTATUTORY STOCK OPTIONS

Options not designated and qualifying as incentive stock options will be
nonstatutory stock options. Nonstatutory stock options have no special tax
status. An optionee generally recognizes no taxable income as the result of a
grant of such an option. Upon exercise of a nonstatutory stock option, the
optionee normally recognizes ordinary income in the amount of the difference
between the option exercise price and the fair market value of the shares on the
determination date (as defined below). If the optionee is an employee, such
ordinary income generally is subject to withholding of income and employment
taxes. The "determination date" is the date on which the option is exercised
unless the shares are subject to a substantial risk of forfeiture and are not
transferable, in which case the determination date is the earlier of (i) the
date on which the shares are transferable or (ii) the date on which the shares
are nor subject to a substantial risk of forfeiture. If the determination date
is after the exercise date, the optionee may elect, pursuant to Section 83(b) of
the Code, to have the exercise date be the determination date by filing an
election with the Internal Revenue Service not later than 30 days after the date
the option is exercised. Upon the sale of stock acquired by the exercise of a
nonstatutory stock option, any gain or loss, based on the difference between the
sale price and the fair market value on the determination date, will be taxed as
capital gain or loss. A capital gain or loss will be long-term if the optionee's
holding period is more than 12 months. No tax deduction is available to the
Company with respect to the grant of a nonstatutory stock option or the sale of
the stock acquired pursuant to such grant. The Company generally should be
entitled to a deduction equal to the amount of ordinary income recognized by the
optionee as a result of the exercise of a nonstatutory stock option, except to
the extent such deduction is limited by applicable provisions of the Code or the
regulations thereunder.

OPTIONS GRANTED TO CERTAIN PERSONS

During the year ended December 31, 1999: (i) Messrs. Gerzberg, Goldberg,
Shenberg, Aharon and Schneider were granted options to purchase 55,000 shares,
15,000 shares, 20,000 shares, 30,000 shares and 15,000 shares, respectively;
(ii) all current executive officers as a group were granted options to purchase
an aggregate of 265,000 shares; and (iii) all current employees, including
officers who are not executive officers, as a group were granted options to
purchase an aggregate of 405,300 shares. During the year ended December 31,
1999, no options were granted under the Employee Option Plan to any directors
who are not executive officers or to any associate of any director, executive
officer or Board nominee of the Company, and, other than Messrs. Gerzberg,
Shenberg and Aharon, no person was granted 5% or more of the total amount of
options granted under the Employee Option Plan during that year.

REQUIRED VOTE

The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented by proxy and entitled to vote at the Annual Meeting
is required for approval of this proposal. Abstentions will be counted as
present for purposes of determining the presence of a quorum but will be treated
as a vote against the proposal. Broker non-votes will be counted as present for
purposes of determining the presence of a quorum but will have no effect on the
outcome of the vote.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE AMENDMENT TO THE 1993 STOCK OPTION PLAN.

18
<PAGE>
PROPOSAL NO. 3
AMENDMENT TO 1995 EMPLOYEE STOCK PURCHASE PLAN

At the Annual Meeting, the stockholders are being asked to approve an
amendment to the Company's 1995 Employee Stock Purchase Plan (the "Purchase
Plan") to increase the number of shares of Common Stock reserved for issuance
thereunder by 100,000 shares. The Purchase Plan provides for the purchase of the
Company's Common Stock by employees of the Company and any subsidiaries
designated by the Board. Management believes that the Purchase Plan is an
important factor in attracting and retaining qualified employees essential to
the success of the Company. As of March 31, 2000, a total of 238,442 shares of
the Company's Common Stock had been issued under the Purchase Plan, leaving
161,558 shares available for issuance.

SUMMARY OF THE 1995 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED

The following summary of the Purchase Plan is qualified in its entirety by
the specific language of the Purchase Plan, a copy of which is available to any
stockholder upon request.

GENERAL

The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Code. Each participant in the Purchase Plan is
granted, at the beginning of each offering under the plan (an "Offering"), the
right to purchase through accumulated payroll deductions up to a number of
shares of the Common Stock of the Company (a "Purchase Right") determined on the
first day of the Offering. The Purchase Right is automatically exercised on the
last day of each purchase period within the Offering unless the participant has
withdrawn from participation in the Offering or in the Purchase Plan prior to
such date.

SHARES SUBJECT TO PURCHASE PLAN

As proposed to be amended, a maximum of 500,000 of the Company's authorized
but unissued or reacquired shares of Common Stock may be issued under the
Purchase Plan, subject to appropriate adjustment in the event of a stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the Company's capital structure or in the
event of any merger, sale of assets or other reorganization of the Company. If
any Purchase Right expires or terminates, the shares subject to the unexercised
portion of such Purchase Right will again be available for issuance under the
Purchase Plan.

ADMINISTRATION

The Purchase Plan is administered by the Board of Directors or a duly
appointed committee of the Board (hereinafter referred to as the "Board").
Subject to the provisions of the Purchase Plan, the Board determines the terms
and conditions of Purchase Rights granted under the plan. The Board will
interpret the Purchase Plan and Purchase Rights granted thereunder, and all
determinations of the Board will be final and binding on all persons having an
interest in the Purchase Plan or any Purchase Rights.

ELIGIBILITY

Any employee of the Company or of any present or future parent or subsidiary
corporation of the Company designated by the Board for inclusion in the Purchase
Plan is eligible to participate in an Offering under the plan so long as the
employee is customarily employed for more than 20 hours per week and more than
five months in any calendar year. However, no employee who owns or holds options
to purchase, or as a result of participation in the Purchase Plan would own or
hold options to

19
<PAGE>
purchase, 5% or more of the total combined voting power or value of all classes
of stock of the Company or of any parent or subsidiary corporation of the
Company is entitled to participate in the Purchase Plan. As of March 31, 2000,
167 employees were eligible to participate in the Purchase Plan. During the
fiscal year ended December 31, 1999, Messrs. Gerzberg, Goldberg, Shenberg,
Aharon and Schneider purchased 2,439 shares, 1,819 shares, 1,717 shares, 1,974
shares, and 1,406 shares, respectively, under the Purchase Plan and all current
executive officers as a group and all current employees who are not executive
officers (including officers who are not executive officers) as a group
purchased 10,747 shares and 76,475 shares, respectively, under the Purchase
Plan. During that fiscal year, no nominee for election as a director other than
Dr. Gerzberg was eligible to participate in the Purchase Plan.

OFFERINGS

Generally, each Offering of Common Stock under the Purchase Plan is for a
period of 24 months (an "Offering Period"). Offering Periods under the Purchase
Plan are overlapping, with a new Offering Period beginning every six months.
However, employees may only participate in one Offering at a time. Offering
Periods generally commence on the first day of May and November of each year (an
"Offering Date") and end on the last day of the second following April and
October, respectively. Each Offering Period is generally comprised of four
six-month purchase periods ("Purchase Periods"). Shares are purchased on the
last day of each Purchase Period ("Purchase Dates"). The Board may establish a
different term for one or more Offerings (not to exceed 27 months) or Purchase
Periods or different commencement or ending dates for an Offering or a Purchase
Period.

PARTICIPATION AND PURCHASE OF SHARES

Participation in the Purchase Plan is limited to eligible employees who
authorize payroll deductions, which may not exceed 10% of compensation for each
pay period during an Offering or such other rate as the Board determines. Once
an employee becomes a participant in the Purchase Plan, the employee will
automatically participate in each successive Offering until such time as the
employee ceases to be an eligible employee, withdraws from the Purchase Plan, or
terminates employment.

The Purchase Plan provides that each participant in an Offering has a
maximum Purchase Right equal to the lesser of the number of whole shares
determined by dividing $50,000 by the fair market value of a share of Common
Stock on the Offering Date or 5,000 shares, subject to certain limitations.
These dollar and share amounts are pro-rated for any Offering Period that is
less than 23 1/2 months or more than 24 1/2 months in duration. Notwithstanding
any other provision of the Purchase Plan, no participant may purchase under the
Purchase Plan shares of Common Stock having a fair market value exceeding
$25,000 in any calendar year (measured by the fair market value of the Company's
Common Stock on the Offering Date).

At the end of each Purchase Period, a participant acquires the number of
shares of the Company's Common Stock determined by dividing the total amount of
payroll deductions from the participant's compensation during the Purchase
Period by the purchase price, limited in any case by the number of shares
subject to the participant's Purchase Right for the Offering. The purchase price
per share at which the shares are sold under the Purchase Plan generally equals
85% of the lesser of the fair market value of a share of Common Stock on the
Offering Date or on the Purchase Date. The fair market value of the Common Stock
on any relevant date generally will be the closing price per share on such date
as reported on the Nasdaq National Market. Any payroll deductions under the
Purchase Plan not applied to the purchase of shares are returned to the
participant, except for an amount insufficient to purchase another whole share,
which amount may be applied to the next Offering.

20
<PAGE>
A participant may withdraw from an Offering at any time without affecting
his or her eligibility to participate in future Offerings. However, once a
participant withdraws from an Offering, that participant may not again
participate in the same Offering.

CHANGE IN CONTROL

The Purchase Plan provides that, in the event of (i) a sale or exchange by
the stockholders in a single or series of related transactions of more than 50%
of the Company's voting stock, (ii) a merger or consolidation in which the
Company is a party, (iii) the sale, exchange or transfer of all or substantially
all of the assets of the Company, or (iv) a liquidation or dissolution of the
Company wherein, upon any such event, the stockholders of the Company
immediately before such event do not retain direct or indirect beneficial
ownership of more than 50% of the total combined voting power of the voting
stock of the Company, its successor, or the corporation to which the assets of
the Company were transferred (a "Change in Control"), the acquiring or successor
corporation may assume the Company's rights and obligations under the Purchase
Plan or substitute substantially equivalent Purchase Rights for such
corporation's stock. If the acquiring or successor corporation elects not to
assume or substitute for the outstanding Purchase Rights, the Board may adjust
the next Purchase Date to a date on or before the date of the Change in Control.
Any Purchase Rights that are not assumed, substituted for, or exercised prior to
the Change in Control will terminate.

TERMINATION OR AMENDMENT

The Purchase Plan will continue until terminated by the Board of Directors
or until all of the shares reserved for issuance under the Purchase Plan have
been issued. The Board may amend or terminate the Purchase Plan at any time,
except that the approval of the Company's stockholders is required within
12 months of the adoption of any amendment increasing the number of shares
authorized for issuance under the Purchase Plan or changing the definition of
the corporations that may be designated for inclusion in the Purchase Plan.

SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE PLAN

The following summary is intended only as a general guide as to the United
States federal income tax consequences under current law of participation in the
Purchase Plan and does not attempt to describe all potential tax consequences.
Furthermore, the tax consequences are complex and subject to change, and a
taxpayer's particular situation may be such that some variation of the described
rules is applicable.

A participant recognizes no taxable income either as a result of commencing
to participate in the Purchase Plan or purchasing shares of the Company's Common
Stock under the terms of the Purchase Plan so long as it qualifies under
Section 423 of the Code. If a participant disposes of shares purchased under the
Purchase Plan within two years from the first day of the applicable Offering or
within one year from the Purchase Date (a "disqualifying disposition"), the
participant will realize ordinary income in the year of such disposition equal
to the amount by which the fair market value of the shares on the date the
shares were purchased exceeds the purchase price. The amount of the ordinary
income will be added to the participant's basis in the shares, and any
additional gain or resulting loss recognized on the disposition of the shares
will be a capital gain or loss. A capital gain or loss will be long-term if the
participant's holding period is more than twelve months, otherwise it will be
short-term.

If the participant disposes of shares purchased under the Purchase Plan at
least two years after the first day of the applicable Offering and at least one
year after the Purchase Date, the participant will realize ordinary income in
the year of disposition equal to the lesser of (i) the excess of the fair market
value of the shares on the date of disposition over the purchase price or
(ii) the difference between the fair market value of the shares on the first day
of the applicable Offering and the purchase price

21
<PAGE>
(determined as if the Purchase Right were exercised on such date). The amount of
any ordinary income will be added to the participant's basis in the shares, and
any additional gain recognized upon the disposition after such basis adjustment
will be a long-term capital gain. If the fair market value of the shares on the
date of disposition is less than the purchase price, there will be no ordinary
income and any loss recognized will be a long-term capital loss.

If the participant still owns the shares at the time of death, ordinary
income will be recognized in the year of death equal to the lesser of (i) the
excess of the fair market value of the shares on the date of death over the
purchase price or (ii) the difference between the fair market value of the
shares on the first day of the Offering in which the shares were purchased and
the purchase price (determined as if the Purchase Right were exercised on such
date).

The Company should be entitled to a tax deduction in the year of a
disqualifying disposition equal to the amount of ordinary income recognized by
the participant as a result of the disposition, except to the extent such
deduction is limited by applicable provisions of the Code or the regulations
thereunder. In all other cases, no deduction is allowed to the Company.

REQUIRED VOTE

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE AMENDMENT TO THE 1995 STOCK PURCHASE PLAN.

22
<PAGE>
PROPOSAL NO. 4
AMENDMENT TO 1995 OUTSIDE DIRECTORS STOCK OPTION PLAN

At the Annual Meeting, the stockholders will be asked to approve an
amendment to the Company's 1995 Outside Directors Stock Option Plan (the
"Directors Plan") to increase the number of shares of Common Stock reserved for
issuance thereunder by 100,000 shares.

The Directors Plan is intended to assist the Company to attract and retain
highly qualified individuals to serve as directors of the Company and to provide
incentives directed toward increasing the value of the Company for its
stockholders. As of March 31, 2000, a total of 35,000 shares remained available
for the future grant of options under the Directors Plan. The Board of Directors
believes that approval of this amendment to the Directors Plan is in the best
interest of the Company and its stockholders in order to provide a competitive
equity incentive program that will enable the Company to continue to recruit and
retain the capable directors who are essential to the long-term success of the
Company.

SUMMARY OF THE 1995 OUTSIDE DIRECTORS STOCK OPTION PLAN, AS AMENDED

The following summary of the Directors Plan is qualified in its entirety by
the specific language of the Directors Plan, a copy of which is available to any
stockholder upon request.

GENERAL

The Directors Plan provides for the automatic grant of nonstatutory stock
options to members of the Board of Directors who are not employees of the
Company or of any subsidiary or parent of the Company ("Outside Directors"). It
is intended to qualify as a "formula plan" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended.

SHARES SUBJECT TO DIRECTORS PLAN

The stockholders have previously authorized the issuance of a maximum of
200,000 shares of Common Stock under the Directors Plan. The Board of Directors
has amended the Directors Plan, subject to stockholder approval, to authorize an
additional 100,000 shares for issuance upon the exercise of options granted
under the Directors Plan, for an aggregated maximum of 300,000 shares. Upon any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company,
appropriate adjustments will be made to the shares subject to the Directors
Plan, to the terms of the automatic grant of options described below, and to
outstanding options. To the extent that any outstanding option under the
Directors Plan expires or terminates prior to exercise in full or if shares
issued upon the exercise of an option are repurchased by the Company, the shares
of Common Stock for which such option is not exercised or the repurchased shares
are returned to the plan and again become available for grant.

ADMINISTRATION

The Directors Plan is intended to operate automatically without
discretionary administration. To the extent administration is necessary, it will
be performed by the Board of Directors or a duly appointed committee of the
Board. For the purposes of this discussion, the term "Board" refers to the Board
of Directors or any committee authorized to administer the Directors Plan. The
Board has no discretion to select the Outside Directors who are granted options
under the Directors Plan, to set the exercise price of the options, to determine
the number of shares for which or the time at which particular options are
granted or to establish the duration of the options. The Board is authorized to
interpret the Directors Plan and options granted under it, and all
determinations of the Board will be final and binding on all persons having an
interest in the Directors Plan or any option.

23
<PAGE>
ELIGIBILITY

Only directors of the Company who, at the time of grant, are Outside
Directors are eligible to participate in the Directors Plan. Currently, the
Company has four Outside Directors.

AUTOMATIC GRANT OF OPTIONS

Options are granted automatically under the Directors Plan without any
discretionary action by the Board. Each person first elected or appointed as an
Outside Director is granted an option (an "Initial Option") for 20,000 shares of
the Company's Common Stock on the day of his or her initial election or
appointment. However, a director who did not previously qualify as an Outside
Director and who subsequently becomes an Outside Director will not receive such
an option. On the day immediately following each annual meeting of the
stockholders, each Outside Director remaining in office (including directors who
previously did not qualify as Outside Directors) is granted an option (an
"Annual Option") for 4,800 shares of Common Stock.

TERMS AND CONDITIONS OF OPTIONS

Each option granted under the Directors Plan is evidenced by a written
agreement between the Company and the Outside Director specifying the number of
shares subject to the option and the other terms and conditions of the option,
consistent with the requirements of the Directors Plan. The exercise price per
share under each option must equal the fair market value of a share of the
Company's Common Stock on the date of grant. Generally, the fair market value of
the Common Stock is the closing price per share on the date of grant as reported
on the Nasdaq National Market. The exercise price may be paid in cash, by check,
or in cash equivalent, by surrendering previously acquired shares of Common
Stock having a fair market value not less than the exercise price or by
assigning the proceeds of a sale or loan with respect to some or all of the
shares acquired upon the exercise.

Initial Options become exercisable in equal annual installments on each of
the first four anniversaries of the date of grant, provided in each instance
that the Outside Director's service with the Company has not terminated. Annual
Options become exercisable in full on the first anniversary of the date of
grant, provided that the Outside Director's service has not terminated. Unless
earlier terminated under the terms of the Directors Plan or the option
agreement, each option remains exercisable for ten years after grant. During the
lifetime of the optionee, the option may be exercised only by the optionee and
may not be transferred or assigned, except by will or the laws of descent and
distribution.

CHANGE IN CONTROL

The Directors Plan provides that in the event of (i) a sale or exchange by
the stockholders in a single or series of related transactions of more than 50%
of the Company's voting stock, (ii) a merger or consolidation in which the
Company is a party, (iii) the sale, exchange or transfer of all or substantially
all of the assets of the Company, or (iv) a liquidation or dissolution of the
Company wherein, upon any such event, the stockholders of the Company
immediately before such event do not retain direct or indirect beneficial
ownership of more than 50% of the total combined voting power of the voting
stock of the Company, its successor, or the corporation to which the assets of
the Company were transferred (a "Change in Control"), then all options
outstanding under the Directors Plan will become immediately exercisable and
vested in full as of the date ten days prior to the Change in Control unless the
surviving, continuing, successor, or purchasing corporation or parent
corporation thereof either assumes or substitutes new options for the options
outstanding under the Directors Plan. To the extent that the options outstanding
under the Directors Plan are not assumed, substituted for, or exercised prior to
the Change in Control, they will terminate.

24
<PAGE>
TERMINATION OR AMENDMENT

Unless earlier terminated by the Board, the Directors Plan will terminate in
December 2005 or when all of the shares available for issuance under the
Directors Plan have been issued, whichever occurs first. The Directors Plan may
be terminated or amended by the Board at any time, subject to stockholder
approval only if such amendment would increase the total number of shares of
Common Stock reserved for issuance thereunder or would expand the class of
persons eligible to receive options. No termination or amendment of the
Directors Plan may adversely affect an outstanding option without the consent of
the optionee.

SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE DIRECTORS PLAN

All options granted under the Directors Plan will be nonstatutory options,
that is, options not intended to be incentive stock options within the meaning
of Section 422 of the Internal Revenue Code. For a summary of the United States
federal income tax consequences under current law of participation in the
Directors Plan, see the discussion of the treatment of nonstatutory stock
options under "PROPOSAL NO. 2. AMENDMENT TO 1993 STOCK OPTION PLAN--Summary of
Federal Income Tax Consequences of the Employee Option Plan."

AMENDED PLAN BENEFITS AND ADDITIONAL INFORMATION

The following table sets forth the grants of stock options that will be
received under the Directors Plan during the year ending December 31, 2000 by
all current directors who are not executive officers provided that such persons
remain Outside Directors. None of the other groups or individuals for whom
disclosure would otherwise be required are eligible to participate in the
Directors Plan.

AMENDED PLAN BENEFITS

<TABLE>
<CAPTION>
NO. OF SHARES
NAME IN FISCAL 2000
---- --------------
<S> <C>
Uzia Galil.................................................. 4,800

James D. Meindl............................................. 4,800

Arthur B. Stabenow.......................................... 4,800

Philip M. Young............................................. 4,800

All Outside Directors as a Group (4 persons)................ 19,200
</TABLE>

From the inception of the Directors Plan through March 31, 2000,
Messrs. Galil, Meindl, Stabenow and Young have each received options under the
Directors Plan for an aggregate of 39,200 shares, and all current directors who
are not executive officers, as a group, have received options for an aggregate
of 166,400 shares.

VOTE REQUIRED

Approval of this proposal requires a number of votes "For" the proposal that
exceeds the number of votes "Against" the proposal, provided a quorum is
present. Abstentions and broker non-votes will be counted as present for
purposes of determining the presence of a quorum but otherwise will have no
effect on the outcome of the vote.

The Board of Directors believes that approval of the foregoing amendment to
the Directors Plan is in the best interests of the Company and the stockholders
for the reasons stated above.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE AMENDMENT TO THE 1995 OUTSIDE DIRECTORS STOCK OPTION PLAN.

25
<PAGE>
PROPOSAL NO. 5
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors of the Company has selected PricewaterhouseCoopers
LLP as independent accountants to audit the financial statements of the Company
for the year ending December 31, 2000. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting with
the opportunity to make a statement if the representative desires to do so, and
is expected to be available to respond to appropriate questions.

The ratification of the selection of PricewaterhouseCoopers LLP will require
the affirmative vote of not less than a majority of the shares of the Company's
Common Stock represented and voting at the Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP.

OTHER BUSINESS

The Company currently knows of no other matters to be submitted at the
Annual Meeting. If any other matters properly come before the Annual Meeting, it
is the intention of the persons named in the enclosed form of proxy to vote the
shares they represent as the Board of Directors may recommend.

THE BOARD OF DIRECTORS

Dated: June 26, 2000

26
<PAGE>

ZORAN CORPORATION

1993 STOCK OPTION PLAN

(As Amended Through June 18, 2000)

1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentives to Employees, Non-Employee
Directors and Consultants of the Company and its Subsidiaries, and to promote
the success of the Company's business. Options granted hereunder may be either
Incentive Stock Options or Nonstatutory Stock Options at the discretion of the
Committee.

2. DEFINITIONS. As used herein, and in any Option granted hereunder, the
following definitions shall apply:

(a) "BOARD" shall mean the Board of Directors of the Company.

(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.

(d) "COMPANY" shall mean Zoran Corporation, a Delaware corporation.

(e) "COMMITTEE" shall mean the Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan. If the Board does not
appoint or ceases to maintain a Committee, the term "Committee" shall refer to
the Board.

(f) "CONSULTANT" shall mean any independent contractor retained to
perform services for the Company.

(g) "CONTINUOUS SERVICE" shall mean the absence of any interruption
or termination of service with the Company, a successor of the Company or any
Parent or Subsidiary, whether in the capacity of an Employee, a Non-Employee
Director, or a Consultant. Continuous Service shall not be considered
interrupted (i) during any period of sick leave, military leave or any other
leave of absence approved by the Board, (ii) in the case of transfers between
locations of the Company or between the Company and any Parent, Subsidiary or
successor of the Company, or (iii) merely as a result of a change in the
capacity in which the Optionee renders such service provided that no
interruption or termination of the Optionee's service occurs.

(h) "DISINTERESTED PERSON" shall mean a person who has not at any
time within one year prior to service as a member of the Committee (or during
such service) been granted or awarded Options or other equity securities
pursuant to the Plan or any other plan of the Company or any Parent or
Subsidiary.

<PAGE>

Notwithstanding the foregoing, a member of the Committee shall
not fail to be a Disinterested Person merely because he or she participates in a
plan meeting the requirements of Rule 16b-3(c)(2)(i)(A) or (B) promulgated under
the Exchange Act.

(i) "EMPLOYEE" shall mean any person, including officers (whether
or not they are directors), employed by the Company or any Subsidiary.

(j) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

(k) "INCENTIVE STOCK OPTION" shall mean any option granted under this
Plan and any other option granted to an Employee in accordance with the
provisions of Section 422 of the Code, and the regulations promulgated
thereunder.

(l) "NON-EMPLOYEE DIRECTOR" shall mean any director of the Company or
any Subsidiary who is not employed by the Company or such Subsidiary.

(m) "NONSTATUTORY STOCK OPTION" shall mean an Option granted under
the Plan that is subject to the provisions of Section 1.83-7 of the Treasury
Regulations promulgated under Section 83 of the Code.

(n) "OPTION" shall mean a stock option granted pursuant to the Plan.

(o) "OPTION AGREEMENT" shall mean a written agreement between the
Company and the Optionee regarding the grant and exercise of Options to purchase
Shares and the terms and conditions thereof as determined by the Committee
pursuant to the Plan.

(p) "OPTIONED SHARES" shall mean the Common Stock subject to an
Option.

(q) "OPTIONEE" shall mean an Employee, Non-Employee Director or
Consultant who receives an Option.

(r) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined by Section 424(e) of the Code.

(s) "PLAN" shall mean this 1993 Stock Option Plan.

(t) "REGISTRATION DATE" shall mean the effective date of the first
registration statement filed by the Company pursuant to Section 12(g) of the
Exchange Act with respect to any class of the Company's equity securities.

(u) "SECTION 162(m)" means Section 162(m) of the Code.

(v) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.

(w) "SHARE" shall mean a share of the Common Stock subject to an
Option, as adjusted in accordance with Section 11 of the Plan.

<PAGE>

(x) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be issued under the
Plan shall be three million nine hundred twenty thousand (3,920,000). If an
Option expires or becomes unexercisable for any reason without having been
exercised in full, the Shares which were subject to the Option but as to which
the Option was not exercised shall, unless the Plan shall have been terminated,
become available for other Option grants under the Plan.

The Company intends that as long as it is not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act and is not an investment
company registered or required to be registered under the Investment Company Act
of 1940, all offers and sales of Options and Shares issuable upon exercise of
any Option shall be exempt from registration under the provisions of Section 5
of the Securities Act, and the Plan shall be administered in such a manner so as
to preserve such exemption. The Company intends that the Plan shall constitute a
written compensatory benefit plan within the meaning of Rule 701(b) of 17 CFR
Section 230.701 promulgated by the Securities and Exchange Commission pursuant
to such Act. The Committee shall designate which Options granted under the Plan
by the Company are intended to be granted in reliance on Rule 701.

4. ADMINISTRATION OF THE PLAN.

(a) PROCEDURE. The Plan shall be administered by the Board. The Board
may appoint a Committee consisting of not less than two (2) members of the Board
to administer the Plan, subject to such terms and conditions as the Board may
prescribe. Once appointed, the Committee shall continue to serve until otherwise
directed by the Board. From time to time, the Board may increase the size of the
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 the Committee and, thereafter,
directly administer the Plan.

Members of the Board or Committee who are either eligible for
Options or have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of options pursuant to the Plan, except
that no such member shall act upon the granting of an Option to himself, but any
such member may be counted in determining the existence of a quorum at any
meeting of the Board or the Committee during which action is taken with respect
to the granting of an Option to him or her.

The Committee shall meet at such times and places and upon such
notice as the chairperson determines. A majority of the Committee shall
constitute a quorum. Any acts by the Committee may be taken at any meeting at
which a quorum is present and shall be by majority vote of those members
entitled to vote. Additionally, any acts reduced to writing or approved in
writing by all of the members of the Committee shall be valid acts of the
Committee.

(b) PROCEDURE AFTER REGISTRATION DATE. Notwithstanding subsection (a)
above, after the date of registration of the Company's Common Stock on a
national securities exchange

<PAGE>

or the Registration Date, the Plan shall be administered either by: (i) the full
Board, provided that all members of the Board are Disinterested Persons: or (ii)
a Committee of two (2) or more directors, each of whom is a Disinterested
Person. After such date, the Board shall take all action necessary to administer
the Plan in accordance with the then effective provisions of Rule 16b-3
promulgated under the Exchange Act, provided that any amendment to the Plan
required for compliance with such provisions shall be made consistent with the
provisions of Section 13 of the Plan, and said regulations.

(c) POWERS OF THE COMMITTEE. Subject to the provisions of the Plan,
the Committee shall have the authority: (i) to determine, upon review of
relevant information, the fair market value of the Common Stock; (ii) to
determine the exercise price of Options to be granted, the Employees, Directors
or Consultants to whom and the time or times at which Options shall be granted,
and the number of Shares to be represented by each Option; (iii) to interpret
the Plan; (iv) to prescribe, amend and rescind rules and regulations relating to
the Plan; (v) to determine the terms and provisions of each Option granted under
the Plan (which need not be identical) and, with the consent of the holder
thereof, to modify or amend any Option; (vi) to authorize any person to execute
on behalf of the Company any instrument required to effectuate the grant of an
Option previously granted by the Committee; (vii) to accelerate or (with the
consent of the Optionee) defer an exercise date of any Option, subject to the
provisions of Section 9(a) of the Plan; (viii) to determine whether Options
granted under the Plan will be Incentive Stock Options or Nonstatutory Stock
Options; (ix) to make all other determinations deemed necessary or advisable for
the administration of the Plan; and (x) to designate which options granted under
the Plan will be issued in reliance on Rule 701.

(d) EFFECT OF COMMITTEE'S DECISION. All decisions, determinations and
interpretations of the Committee shall be final and binding on all potential or
actual Optionees, any other holder of an Option or other equity security of the
Company and all other persons.

5. ELIGIBILITY AND OPTION LIMITATIONS.

(a) PERSONS ELIGIBLE FOR OPTIONS. Options under the Plan may be
granted only to Employees, Non-Employee Directors or Consultants whom the
Committee, in its sole discretion, may designate from time to time. For purposes
of the foregoing sentence, "Employees," "Non-Employee Directors" and
"Consultants" shall include prospective Employees, prospective Non-Employee
Directors and prospective Consultants to whom Options are granted in connection
with written offers of employment or other service relationship. Incentive Stock
Options may be granted only to Employees. Any person who is not an Employee on
the effective date of grant of an Option to such person may be granted only a
Nonstatutory Stock Option. An Employee who has been granted an Option, if he or
she is otherwise eligible, may be granted an additional Option or Options.
However, the aggregate fair market value (determined in accordance with the
provisions of Section 8(a) of the Plan) of the Shares subject to one or more
Incentive Stock Options grants that are exercisable for the first time by an
Optionee during any calendar year (under all stock option plans of the Company
and its Parents and Subsidiaries) shall not exceed $100,000 (determined as of
the grant date).

(b) SECTION 162(m) GRANT LIMIT. Subject to adjustment as provided in
Section 11, no Employee shall be granted one or more Options within any fiscal
year of the Company

<PAGE>

which in the aggregate are for the purchase of more than five hundred thousand
(500,000) Shares (the "SECTION 162(m) GRANT LIMIT"). An Option which is canceled
in the same fiscal year of the Company in which it was granted shall continue to
be counted against the Section 162(m) Grant Limit for such period.

(c) NO RIGHT TO CONTINUING EMPLOYMENT. Neither the establishment nor
the operation of the Plan shall confer upon any Optionee or any other person any
right with respect to continuation of employment or other service with the
Company or any Subsidiary, nor shall the Plan interfere in any way with the
right of the Optionee or the right of the Company (or any Parent or Subsidiary)
to terminate such employment or service at any time.

(d) DIRECTORS SERVING ON COMMITTEE. At any time that any class of
equity security of the Company is registered pursuant to Section 12 of the
Exchange Act, no member of a Committee established to administer the Plan in
compliance with the "disinterested administration" requirements of Rule 16b-3,
if any, while a member, shall be eligible to be granted an Option.

(e) OPTION REPRICING. No Option shall be repriced without the
approval of a majority of the shares of Common Stock present or represented by
proxy and voting at a meeting of the stockholders of the Company at which a
quorum representing a majority of all outstanding shares of Common Stock is
present or represented by proxy.

6. TERM OF PLAN. The Plan shall become effective upon its adoption by the
Board or its approval by vote of the holders of the outstanding shares of the
Company entitled to vote on the adoption of the Plan (in accordance with the
provisions of Section 18 hereof), whichever is earlier. It shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 13 of
the Plan.

7. TERM OF OPTION. Unless the Committee determines otherwise, the term of
each Option granted under the Plan shall be ten (10) years from the date of
grant. The term of the Option shall be set forth in the Option Agreement. No
Incentive Stock Option shall be exercisable after the expiration of ten (10)
years from the date such Option is granted, and no Incentive Stock Option
granted to any Employee who, at the date such Option is granted, owns (within
the meaning of Section 424(d) of the Code) more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any Parent
or subsidiary shall be exercisable after the expiration of five (5) years from
the date such Option is granted.

8. Option Price and Consideration.

(a) OPTION PRICE. Except as provided in subsection (b) below, the
option price for the Shares to be issued pursuant to any Option shall be such
price as is determined by the Committee, which shall in no event be less than:
(i) in the case of Incentive Stock Options, the fair market value of such Shares
on the date the Option is granted; or (ii) in the case of Nonstatutory Stock
Options, 85% of such fair market value. Fair market value of the Common Stock
shall be determined by the Committee, using such criteria as it deems relevant;
provided, however, that if there is a public market for the Common Stock, the
fair market value per Share shall be the average of the last reported bid and
asked prices of the Common Stock on the date of

<PAGE>

grant, as reported in THE WALL STREET JOURNAL (or, if not so reported, as
otherwise reported by the NASDAQ System) or, in the event the Common Stock is
listed on a national securities exchange (within the meaning of Section 6 of the
Exchange Act) or on the NASDAQ National Market System (or any successor national
market system), the fair market value per Share shall be the closing price on
such exchange on the date of grant of the Option, as reported in THE WALL STREET
JOURNAL.

(b) TEN PERCENT SHAREHOLDERS. No Option shall be granted to any
Employee who, at the date such Option is granted, owns (within the meaning of
Section 424(d) of the Code) more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Parent or Subsidiary,
unless the option price for the Shares to be issued pursuant to such Option is
at least equal to 110% of the fair market value of such Shares on the grant date
determined by the Committee in the manner set forth in subsection (a) above.

(c) CONSIDERATION. The consideration to be paid for the Optioned
Shares shall be payment in cash or by check unless payment in some other manner,
including other shares of the Company's Common Stock or such other consideration
and method of payment for the issuance of Optioned Shares as may be permitted
under Section 152 of the Delaware General Corporation Law, is authorized by the
Committee at the time of the grant of the Option. Any cash or other property
received by the Company from the sale of Shares pursuant to the Plan shall
constitute part of the general assets of the Company.

9. EXERCISE OF OPTION.

(a) VESTING PERIOD. Any Option granted hereunder shall be exercisable
at such times and under such conditions as determined by the Committee and as
shall be permissible under the terms of the Plan, which shall be specified in
the Option Agreement evidencing the Option. Unless the Committee specifically
determines otherwise at the time of the grant of the option, each Option shall
vest and become exercisable, cumulatively, in four substantially equal
installments on each of the first four anniversaries of the date of the grant of
the option, subject to the Optionee's Continuous Service. However, no Option
granted to a prospective Employee, prospective Non-Employee Director or
prospective Consultant may become exercisable prior to the date on which such
person commences service.

(b) EXERCISE PROCEDURES. An Option shall be deemed to be 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
full payment for the Shares with respect to which the Option is exercised has
been received by the Company. An Option may not be exercised for fractional
shares or for less than ten (10) Shares. As soon as practicable following the
exercise of an Option in the manner set forth above, the Company shall issue or
cause its transfer agent to issue stock certificates representing the Shares
purchased. Until the issuance of such stock certificates (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 stockholder shall exist with respect to the Optioned Shares notwithstanding
the exercise of the Option. No adjustment will be made for a dividend or other
rights for which the record date is prior to the date of the transfer by the
Optionee of the consideration for the purchase of the Shares, except as provided
in Section 11 of the Plan. After

<PAGE>

the Registration Date, the exercise of an Option by any person subject to
short-swing trading liability under Section 16(b) of the Exchange Act shall be
subject to compliance with all applicable requirements of Rule 16b-3(d) or (e)
promulgated under the Exchange Act.

(c) DEATH OF OPTIONEE. In the event of the death during the Option
period of an Optionee who is at the time of his death, or was within the ninety
(90) day period immediately prior thereto, an Employee, Non-Employee Director or
Consultant, and who was in Continuous Service from the date of the grant of the
Option until the date of death or termination, the Option may be exercised, at
any time within one (1) year following the date of death, by the 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 accrued right to exercise at the
time of the termination or death, whichever comes first.

(d) DISABILITY OF OPTIONEE. In the event of the permanent and total
disability during the Option period of an optionee who is at the time of such
disability, or was within the ninety (90) day period prior thereto, an Employee,
Non-Employee Director or Consultant, and who was in Continuous Service from the
date of the grant of the Option until the date of disability or termination, the
Option may be exercised at any time within one (1) year following the date of
disability, but only to the extent of the accrued right to exercise at the time
of the termination or disability, whichever comes first, subject to the
condition that no option shall be exercised after the expiration of the Option
period.

(e) OTHER TERMINATION OF CONTINUOUS SERVICE. If the Continuous
Service of an Optionee shall cease for any reason other than permanent and total
disability or death, he or she may, but only within ninety (90) days (or such
other period of time as is determined by the Committee) after the date his or
her Continuous Service ceases, exercise his or her Option to the extent that he
or she was entitled to exercise it at the date of such termination of Continuous
Service, subject to the condition that no Option shall be exercisable after the
expiration of the Option period.

(f) EXERCISE OF OPTION WITH STOCK AFTER REGISTRATION DATE. After the
Registration Date, the Committee may permit an Optionee to exercise an Option by
delivering shares of the Company's Common Stock. If the Optionee is so
permitted, the option agreement covering such Option may include provisions
authorizing the Optionee to exercise the Option, in whole or in part, by: (i)
delivering whole shares of the Company's Common Stock previously owned by such
Optionee (whether or not acquired through the prior exercise of a stock option)
having a fair market value equal to the aggregate option price for the Optioned
Shares issuable on exercise of the Option; and/or (ii) directing the Company to
withhold from the Shares that would otherwise be issued upon exercise of the
Option that number of whole Shares having a fair market value equal to the
aggregate option price for the Optioned Shares issuable on exercise of the
Option. Shares of the Company's Common Stock so delivered or withheld shall be
valued at their fair market value at the close of the last business day
immediately preceding the date of exercise of the Option, as determined by the
Committee, in accordance with the provisions of Section 8(a) of the Plan. Any
balance of the exercise price shall be paid in cash. Any shares delivered or
withheld in accordance with this provision shall not again become available for
purposes of the Plan and for Options subsequently granted thereunder.

<PAGE>

(g) TAX WITHHOLDING. After the Registration Date, when an Optionee is
required to pay to the Company an amount with respect to tax withholding
obligations in connection with the exercise of an option granted under the Plan,
the optionee may elect prior to the date the amount of such withholding tax is
determined (the "Tax Date") to make such payment, or such increased payment as
the Optionee elects to make up to the maximum federal, state and local marginal
tax rates, including any related FICA obligation, applicable to the Optionee and
the particular transaction, by: (i) delivering cash; (ii) delivering part or all
of the payment in previously owned shares of Common Stock (whether or not
acquired through the prior exercise of an Option); and/or (iii) irrevocably
directing the Company to withhold from the Shares that would otherwise be issued
upon exercise of the Option that number of whole Shares having a fair market
value equal to the amount of tax required or elected to be withheld (a
"Withholding Election"). If an Optionee's Tax Date is deferred beyond the date
of exercise and the Optionee makes a Withholding Election, the Optionee will
initially receive the full amount of Optioned Shares otherwise issuable upon
exercise of the option, but will be unconditionally obligated to surrender to
the Company on the Tax Date the number of Shares necessary to satisfy his or her
minimum withholding requirements, or such higher payment as he or she may have
elected to make, with adjustments to be made in cash after the Tax Date.

Any withholding of Optioned Shares with respect to taxes arising
in connection with the exercise of an Option by any person subject to
short-swing trading liability under Section 16(b) of the Exchange Act shall
satisfy the following conditions:

(i) An advance election to withhold Optioned Shares in
settlement of a tax liability must satisfy the requirements of Rule
16b-3(d)(1)(i), regarding participant-directed transactions;

(ii) Absent such an election, the withholding of Optioned Shares
to settle a tax liability may occur only during the quarterly window period
described in Rule 16b-3(e);

(iii) Absent an advance election or window-period withholding,
the Optionee may deliver shares of Common Stock owned prior to the exercise of
an Option to settle a tax liability arising upon exercise of the Option, in
accordance with Rule 16b-3(f); or

(iv) The delivery of previously acquired shares of Common Stock
(but not the withholding of newly acquired Shares) will be allowed where an
election under Section 83(b) of the Code accelerates the Tax Date to a day that
occurs less than six (6) months after the advance election and is not within the
quarterly window period described in Rule 16b-3(e).

Any adverse consequences incurred by an Optionee with respect to
the use of shares of Common Stock to pay any part of the option Price or of any
tax in connection with the exercise of an option, including without limitation
any adverse tax consequences arising as a result of a disqualifying disposition
within the meaning of Section 422 of the Code, shall be the sole responsibility
of the Optionee. Shares withheld in accordance with this provision shall not
again become available for purposes of the Plan and for Options subsequently
granted thereunder.

<PAGE>

10. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent and distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required
action by the shareholders of the Company, the number of shares subject to the
Plan, the Section 162(m) Grant Limit set forth in Section 5(b), the number of
Optioned Shares covered by each outstanding Option, and the per share exercise
price of each such 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, recapitalization, combination, reclassification, the
payment of a stock dividend on the Common Stock or any other increase or
decrease in the number of such 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 Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue 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.

The Committee may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the number or class of securities
covered by any Option, as well as the price to be paid therefor, in the event
that the Company effects one or more reorganizations, recapitalizations, rights
offerings, or other increases or reductions of shares of its outstanding Common
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.

Unless otherwise determined by the Board, upon the dissolution or
liquidation of the Company the Options granted under the Plan shall terminate
and thereupon become null and void.

Upon any merger or consolidation, if the Company is not the surviving
corporation, the Options granted under the Plan shall either be assumed by the
new entity or shall terminate in accordance with the provisions of the preceding
paragraph.

12. TIME OF GRANTING OPTIONS. Unless otherwise specified by the Committee,
the date of grant of an Option under the Plan shall be the date on which the
Committee makes the determination granting such Option. Notice of the
determination shall be given to each Optionee to whom an Option is so granted
within a reasonable time after the date of such grant.

13. AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable, except that, without approval of the shareholders of the Company, no
such revision or amendment shall change the number of Shares subject to the Plan
or change the designation of the class of employees eligible to receive Options.
Any such amendment or termination of the Plan shall not affect Options

<PAGE>

already granted, and such Options shall remain in full force and effect as if
the Plan had not been amended or terminated.

14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an Option unless the exercise of such Option and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance. As a condition to the exercise of an Option, the Company may
require the person exercising such Option 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 any of
the aforementioned relevant provisions of law.

15. RESERVATION OF SHARES. During the term of this Plan the Company will
at all times reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain from any regulatory body having jurisdiction and authority deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares
hereunder shall relieve the Company of any liability in respect of the
nonissuance or sale of such Shares as to which such requisite authority shall
not have been obtained.

16. INFORMATION TO OPTIONEE. During the term of any option granted under
the Plan, the Company shall provide or otherwise make available to each Optionee
a copy of its financial statements at least annually.

17. OPTION AGREEMENT. Options granted under the Plan shall be evidenced by
Option Agreements.

18. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the Plan
is adopted. Any option granted before shareholder approval is obtained and any
exercise of such option must be rescinded if such shareholder approval is not
obtained within twelve (12) months after the Plan is adopted. Shares issued upon
the exercise of such options shall not be counted in determining whether such
approval is obtained. Shareholder approval of the Plan and any amendments
thereto requiring shareholder approval shall be by the affirmative vote of the
holders of a majority of the capital stock of the Company present or represented
and entitled to vote at a duly held meeting or by the written consent of the
holders of a majority of the outstanding capital stock of the Company entitled
to vote.

<PAGE>

ZORAN CORPORATION

AMENDED AND RESTATED

1995 EMPLOYEE STOCK PURCHASE PLAN

(AS AMENDED THROUGH JUNE 18, 2000)

1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

1.1 ESTABLISHMENT. The Zoran Corporation 1995 Employee
Stock Purchase Plan was initially established effective December 14, 1995
(the "EFFECTIVE DATE"), the effective date of the initial registration by the
Company of its Stock under Section 12 of the Exchange Act (the "INITIAL
PLAN"). The Initial Plan was amended and restated in its entirety as the
Zoran Corporation Amended and Restated 1995 Employee Stock Purchase Plan (the
"PLAN") effective as of the date of commencement of the first Offering under
the Plan following approval of the Plan by the stockholders of the Company on
June 6, 1996.

1.2 PURPOSE. The purpose of the Plan to provide Eligible
Employees of the Participating Company Group with an opportunity to acquire a
proprietary interest in the Company through the purchase of Stock. The
Company intends that the Plan shall qualify as an "employee stock purchase
plan" under Section 423 of the Code (including any amendments or replacements
of such section), and the Plan shall be so construed.

2. DEFINITIONS AND CONSTRUCTION.

2.1 DEFINITIONS. Any term not expressly defined in the Plan
but defined for purposes of Section 423 of the Code shall have the same
definition herein. Whenever used herein, the following terms shall have their
respective meanings set forth below:

(a) "BOARD" means the Board of Directors of
the Company. If one or more Committees have been appointed by the Board to
administer the Plan, "Board" also means such Committee(s).

(b) "CODE" means the Internal Revenue Code of
1986, as amended, and any applicable regulations promulgated thereunder.

(c) "COMMITTEE" means a committee of the
Board duly appointed to administer the Plan and having such powers as shall
be specified by the Board. Unless the powers of the Committee have been
specifically limited, the Committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

<PAGE>

(d) "COMPANY" means Zoran Corporation, a
Delaware corporation, or any successor corporation thereto.

(e) "COMPENSATION" means, with respect to an
Offering Period under the Plan, all amounts paid in cash in the form of base
salary during such Offering Period before deduction for any contributions to
any plan maintained by a Participating Company and described in Section
401(k) or Section 125 of the Code. Compensation shall not include
commissions, overtime, bonuses, annual awards, other incentive payments,
shift premiums, reimbursements of expenses, allowances, long-term disability,
workers' compensation or any amount deemed received without the actual
transfer of cash or any amounts directly or indirectly paid pursuant to the
Plan or any other stock purchase or stock option plan.

(f) "ELIGIBLE EMPLOYEE" means an Employee who
meets the requirements set forth in Section 5 for eligibility to participate
in the Plan.

(g) "EMPLOYEE" means any person treated as an
employee (including an officer or a Director who is also treated as an
employee) in the records of a Participating Company and for purposes of
Section 423 of the Code; provided, however, that neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
employment for purposes of the Plan.

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

(i) "FAIR MARKET VALUE" means, as of any
date, if there is then a public market for the Stock, the closing price of a
share of Stock (or the mean of the closing bid and asked prices of a share of
Stock if the Stock is so reported instead) as reported on the National
Association of Securities Dealers Automated Quotation ("NASDAQ") System, the
NASDAQ National Market System or such other national or regional securities
exchange or market system constituting the primary market for the Stock. If
the relevant date does not fall on a day on which the Stock is trading on
NASDAQ, the NASDAQ National Market System or other national or regional
securities exchange or market system, the date on which the Fair Market Value
shall be established shall be the last day on which the Stock was so traded
prior to the relevant date, or such other appropriate day as shall be
determined by the Board, in its sole discretion. If there is then no public
market for the Stock, the Fair Market Value on any relevant date shall be as
determined by the Board without regard to any restriction other than a
restriction which, by its terms, will never lapse. Notwithstanding the
foregoing, the Fair Market Value per share of Stock on the Effective Date
shall be deemed to be the public offering price set forth in the final
prospectus filed with the Securities and Exchange Commission in connection
with the initial public offering of the Stock.

(j) "OFFERING" means an offering of Stock as
provided in Section 6.

(k) "OFFERING DATE" means, for any Offering
Period, the first day of such Offering Period.

(l) "OFFERING PERIOD" means a period
determined in accordance with Section 6.1.

<PAGE>

(m) "PARENT CORPORATION" means any present or
future "parent corporation" of the Company, as defined in Section 424(e) of
the Code.

(n) "PARTICIPANT" means an Eligible Employee
participating in the Plan.

(o) "PARTICIPATING COMPANY" means the Company
or any Parent Corporation or Subsidiary Corporation which the Board
determines should be included in the Plan. The Board shall have the sole and
absolute discretion to determine from time to time what Parent Corporations
or Subsidiary Corporations shall be Participating Companies.

(p) "PARTICIPATING COMPANY GROUP" means, at
any point in time, the Company and all other corporations collectively which
are then Participating Companies.

(q) "PURCHASE DATE" means, for any Purchase
Period, the last day of such Purchase Period.

(r) "PURCHASE PERIOD" means a period
determined in accordance with Section 6.2.

(s) "PURCHASE PRICE" means the price at which
a share of Stock may be purchased pursuant to the Plan, as determined in
accordance with Section 9.

(t) "PURCHASE RIGHT" means an option pursuant
to the Plan to purchase such shares of Stock as provided in Section 8 which
may or may not be exercised during an Offering Period. Such option arises
from the right of a Participant to withdraw such Participant's accumulated
payroll deductions not previously applied to the purchase of Stock under the
Plan (if any) and terminate participation in the Plan or any Offering therein
at any time during an Offering Period.

(u) "STOCK" means the common stock, par value
$0.001, of the Company, as adjusted from time to time in accordance with
Section 4.2.

(v) "SUBSIDIARY CORPORATION" means any
present or future "subsidiary corporation" of the Company, as defined in
Section 424(f) of the Code.

2.2 CONSTRUCTION. Captions and titles contained herein are
for convenience only and shall not affect the meaning or interpretation of
any provision of the Plan. Except when otherwise indicated by the context,
the singular shall include the plural, the plural shall include the singular,
and use of the term "or" shall include the conjunctive as well as the
disjunctive.

3. ADMINISTRATION. The Plan shall be administered by the
Board, including any duly appointed Committee of the Board. All questions of
interpretation of the Plan or of any Purchase Right shall be determined by
the Board and shall be final and binding upon all persons having an interest
in the Plan or such Purchase Right. Subject to the provisions of the Plan,
the Board shall determine all of the relevant terms and conditions of
Purchase Rights granted pursuant to the Plan; provided, however, that all
Participants granted Purchase Rights pursuant to the Plan shall have the same
rights and privileges within the meaning of Section 423(b)(5) of the Code.
All expenses incurred in connection with the administration of the Plan shall
be paid by the Company.

<PAGE>

4. SHARES SUBJECT TO PLAN.

4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to
adjustment as provided in Section 4.2, the maximum aggregate number of shares
of Stock that may be issued under the Plan shall be five hundred thousand
(500,000) and shall consist of authorized but unissued or reacquired shares
of the Stock, or any combination thereof. If an outstanding Purchase Right
for any reason expires or is terminated or canceled, the shares of Stock
allocable to the unexercised portion of such Purchase Right shall again be
available for issuance under the Plan.

4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the
event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification or similar change in the
capital structure of the Company, or in the event of any merger (including a
merger effected for the purpose of changing the Company's domicile), sale of
assets or other reorganization in which the Company is a party, appropriate
adjustments shall be made in the number and class of shares subject to the
Plan, to the Offering Share Limit set forth in Section 8.1 and to each
Purchase Right and in the Purchase Price.

5. ELIGIBILITY.

5.1 EMPLOYEES ELIGIBLE TO PARTICIPATE. Any Employee of a
Participating Company is eligible to participate in the Plan except the
following:

(a) Employees who are customarily employed by
the Participating Company Group for twenty (20) hours or less per week;

(b) Employees who are customarily employed by
the Participating Company Group for not more than five (5) months in any
calendar year; and

(c) Employees who own or hold options to
purchase or who, as a result of participation in the Plan, would own or hold
options to purchase, stock of the Company or of any Parent Corporation or
Subsidiary Corporation possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of such corporation
within the meaning of Section 423(b)(3) of the Code.

5.2 LEASED EMPLOYEES EXCLUDED. Notwithstanding anything
herein to the contrary, any individual performing services for a
Participating Company solely through a leasing agency or employment agency
shall not be deemed an "Employee" of such Participating Company.

6. OFFERINGS.

6.1 OFFERING PERIODS. Except as otherwise set forth below,
the Plan shall be implemented by sequential Offerings of approximately
twenty-four (24) months duration (an "OFFERING PERIOD"); provided, however
that the first Offering Period shall commence on the Effective Date and end
on October 31, 1997 (the "INITIAL OFFERING PERIOD"). Subsequent Offerings
shall commence on the first days of May and November of each year and end on
the last days of the second April and October, respectively, occurring
thereafter. Notwithstanding the foregoing, the Board may establish a
different term for one or more Offerings or different commencing or ending
dates for such Offerings; provided, however, that no Offering may

<PAGE>

exceed a term of twenty-seven (27) months. An Employee who becomes an
Eligible Employee after an Offering Period has commenced shall not be
eligible to participate in such Offering but may participate in any
subsequent Offering provided such Employee is still an Eligible Employee as
of the commencement of any such subsequent Offering. Eligible Employees may
not participate in more than one Offering at a time. In the event the first
or last day of an Offering Period is not a business day, the Company shall
specify the business day that will be deemed the first or last day, as the
case may be, of the Offering Period.

6.2 PURCHASE PERIODS. Each Offering Period shall consist of
four (4) consecutive purchase periods of approximately six (6) months
duration (individually, a "PURCHASE PERIOD"). The Purchase Period commencing
on the Offering Date of the Initial Offering Period shall end on April 30,
1996. A Purchase Period commencing on the first day of May shall end on the
last day of the next following October. A Purchase Period commencing on the
first day of November shall end on the last day of the next following April.
Notwithstanding the foregoing, the Board may establish a different term for
one or more Purchase Periods or different commencing or ending dates for such
Purchase Periods. In the event the first or last day of a Purchase Period is
not a business day, the Company shall specify the business day that will be
deemed the first or last day, as the case may be, of the Purchase Period.

6.3 GOVERNMENTAL APPROVAL; STOCKHOLDER APPROVAL.
Notwithstanding any other provision of the Plan to the contrary, any Purchase
Right granted pursuant to the Plan shall be subject to (a) obtaining all
necessary governmental approvals or qualifications of the sale or issuance of
the Purchase Rights or the shares of Stock and (b) obtaining stockholder
approval of the Plan. Notwithstanding the foregoing, stockholder approval
shall not be necessary in order to grant any Purchase Right granted in the
Plan's Initial Offering Period; provided, however, that the exercise of any
such Purchase Right shall be subject to obtaining stockholder approval of the
Plan.

7. PARTICIPATION IN THE PLAN.

7.1 INITIAL PARTICIPATION. An Eligible Employee shall
become a Participant on the first Offering Date after satisfying the
eligibility requirements of Section 5 and delivering to the Company's payroll
office or other office designated by the Company not later than the close of
business for such office on the last business day before such Offering Date
(the "SUBSCRIPTION DATE") a subscription agreement indicating the Employee's
election to participate in the Plan and authorizing payroll deductions. An
Eligible Employee who does not deliver a subscription agreement to the
Company's payroll or other designated office on or before the Subscription
Date shall not participate in the Plan for that Offering Period or for any
subsequent Offering Period unless such Employee subsequently enrolls in the
Plan by filing a subscription agreement with the Company by the Subscription
Date for such subsequent Offering Period. The Company may, from time to time,
change the Subscription Date as deemed advisable by the Company in its sole
discretion for proper administration of the Plan.

7.2 CONTINUED PARTICIPATION. A Participant shall
automatically participate in the Offering Period commencing immediately after
the final Purchase Date of each Offering Period in which the Participant
participates until such time as such Participant (a) ceases to be an Eligible
Employee, (b) withdraws from the Plan pursuant to Section 13.2 or (c)
terminates employment as provided in Section 14. If a Participant
automatically may participate in a subsequent Offering Period pursuant to
this Section 7.2, then the Participant is not required to

<PAGE>

file any additional subscription agreement for such subsequent Offering
Period in order to continue participation in the Plan. However, a Participant
may file a subscription agreement with respect to a subsequent Offering
Period if the Participant desires to change any of the Participant's
elections contained in the Participant's then effective subscription
agreement.

8. RIGHT TO PURCHASE SHARES.

8.1 PURCHASE RIGHT. Except as set forth below, during an
Offering Period each Participant in such Offering Period shall have a
Purchase Right consisting of the right to purchase that number of whole
shares of Stock arrived at by dividing Fifty Thousand Dollars ($50,000) by
the Fair Market Value of a share of Stock on the Offering Date of such
Offering Period; provided, however, that such number shall not exceed 5,000
shares (the "OFFERING SHARE LIMIT"). Shares of Stock may only be purchased
through a Participant's payroll deductions pursuant to Section 10.

8.2 PRO RATA ADJUSTMENT OF PURCHASE RIGHT. Notwithstanding
the foregoing, if the Board shall establish an Offering Period of less than
twenty-three and one-half (23 1/2) months in duration or more than
twenty-four and one-half (24 1/2) months in duration, (a) the dollar amount
in Section 8.1 shall be determined by multiplying $2,083.33 by the number of
months in the Offering Period and rounding to the nearest whole dollar, and
(b) the Offering Share Limit shall be determined by multiplying 208.33 shares
by the number of months in the Offering Period and rounding to the nearest
whole share. For purposes of the preceding sentence, fractional months shall
be rounded to the nearest whole month.

9. PURCHASE PRICE. The Purchase Price at which each share of
Stock may be acquired in a given Offering Period pursuant to the exercise of
all or any portion of a Purchase Right granted under the Plan shall be set by
the Board; provided, however, that the Purchase Price shall not be less than
eighty-five percent (85%) of the lesser of (a) the Fair Market Value of a
share of Stock on the Offering Date of the Offering Period, or (b) the Fair
Market Value of a share of Stock on the Purchase Date of the Offering Period.
Unless otherwise provided by the Board prior to the commencement of an
Offering Period, the Purchase Price for that Offering Period shall be
eighty-five percent (85%) of the lesser of (a) the Fair Market Value of a
share of Stock on the Offering Date of the Offering Period, or (b) the Fair
Market Value of a share of Stock on the Purchase Date of the Offering Period.

10. ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION.
Shares of Stock which are acquired pursuant to the exercise of all or any
portion of a Purchase Right for an Offering Period may be paid for only by
means of payroll deductions from the Participant's Compensation accumulated
during the Offering Period. Except as set forth below, the amount of
Compensation to be deducted from a Participant's Compensation during each pay
period shall be determined by the Participant's subscription agreement.

10.1 COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions
shall commence on the first payday following the Offering Date and shall
continue to the end of the Offering Period unless sooner altered or
terminated as provided in the Plan.

10.2 LIMITATIONS ON PAYROLL DEDUCTIONS. The amount of
payroll deductions with respect to the Plan for any Participant during any
pay period shall be in one percent (1%) increments not to exceed ten percent
(10%) of the Participant's Compensation for such pay

<PAGE>

period. Notwithstanding the foregoing, the Board may change the limits on
payroll deductions effective as of a future Offering Date, as determined by
the Board. Amounts deducted from Compensation shall be reduced by any amounts
contributed by the Participant and applied to the purchase of Company stock
pursuant to any other employee stock purchase plan qualifying under Section
423 of the Code.

10.3 ELECTION TO CHANGE OR STOP PAYROLL DEDUCTIONS. During
an Offering Period, a Participant may elect to increase or decrease the
amount deducted or stop deductions from his or her Compensation by filing an
amended subscription agreement with the Company on or before the "Change
Notice Date." The "CHANGE NOTICE DATE" shall initially be the seventh (7th)
day prior to the end of the first pay period for which such election is to be
effective; however, the Company may change such Change Notice Date from time
to time. A Participant who elects to decrease the rate of his or her payroll
deductions to zero percent (0%) shall nevertheless remain a Participant in
the current Offering Period unless such Participant subsequently withdraws
from the Offering or the Plan as provided in Sections 13.1 and 13.2,
respectively, or is automatically withdrawn from the Offering as provided in
Section 13.4.

10.4 PARTICIPANT ACCOUNTS. Individual Plan accounts shall
be maintained for each Participant. All payroll deductions from a
Participant's Compensation shall be credited to such account and shall be
deposited with the general funds of the Company. All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose.

10.5 NO INTEREST PAID. Interest shall not be paid on sums
deducted from a Participant's Compensation pursuant to the Plan.

10.6 COMPANY ESTABLISHED PROCEDURES. The Company may, from
time to time, establish or change (a) a minimum required payroll deduction
amount for participation in an Offering, (a) limitations on the frequency or
number of changes in the rate of payroll deduction during an Offering, (c) an
exchange ratio applicable to amounts withheld in a currency other than U.S.
dollars, (d) payroll deduction in excess of or less than the amount
designated by a Participant in order to adjust for delays or mistakes in the
Company's processing of subscription agreements, (e) the date(s) and manner
by which the Fair Market Value of a share of Stock is determined for purposes
of administration of the Plan, or (vi) such other limitations or procedures
as deemed advisable by the Company in the Company's sole discretion which are
consistent with the Plan and in accordance with the requirements of
Section 423 of the Code.

11. PURCHASE OF SHARES.

11.1 EXERCISE OF PURCHASE RIGHT. On each Purchase Date of
an Offering Period, each Participant who has not withdrawn from the Offering
or whose participation in the Offering has not terminated on or before such
Purchase Date shall automatically acquire pursuant to the exercise of the
Participant's Purchase Right the number of whole shares of Stock arrived at
by dividing the total amount of the Participant's accumulated payroll
deductions for the Purchase Period by the Purchase Price; provided, however,
in no event shall the number of shares purchased by the Participant during an
Offering Period exceed the number of shares subject to the Participant's
Purchase Right. No shares of Stock shall be purchased on a Purchase Date on
behalf of a Participant whose participation in the Offering or the Plan has
terminated on or before such Purchase Date.

<PAGE>

11.2 RETURN OF CASH BALANCE. Any cash balance remaining in
the Participant's Plan account shall be refunded to the Participant as soon
as practicable after the Purchase Date. In the event the cash to be returned
to a Participant pursuant to the preceding sentence is an amount less than
the amount necessary to purchase a whole share of Stock, the Company may
establish procedures whereby such cash is maintained in the Participant's
Plan account and applied toward the purchase of shares of Stock in the
subsequent Purchase Period or Offering Period.

11.3 TAX WITHHOLDING. At the time a Participant's Purchase
Right is exercised, in whole or in part, or at the time a Participant
disposes of some or all of the shares of Stock he or she acquires under the
Plan, the Participant shall make adequate provision for the foreign, federal,
state and local tax withholding obligations of the Participating Company
Group, if any, which arise upon exercise of the Purchase Right or upon such
disposition of shares, respectively. The Participating Company Group may, but
shall not be obligated to, withhold from the Participant's compensation the
amount necessary to meet such withholding obligations.

11.4 EXPIRATION OF PURCHASE RIGHT. Any portion of a
Participant's Purchase Right remaining unexercised after the end of the
Offering Period to which such Purchase Right relates shall expire immediately
upon the end of such Offering Period.

12. LIMITATIONS ON PURCHASE OF SHARES; RIGHTS AS A STOCKHOLDER.

12.1 FAIR MARKET VALUE LIMITATION. Notwithstanding any
other provision of the Plan, no Participant shall be entitled to purchase
shares of Stock under the Plan (or any other employee stock purchase plan
which is intended to meet the requirements of Section 423 of the Code
sponsored by the Company or a Parent Corporation or Subsidiary Corporation)
at a rate which exceeds $25,000 in Fair Market Value, which Fair Market Value
is determined for shares purchased during a given Offering Period as of the
Offering Date for such Offering Period (or such other limit as may be imposed
by the Code), for each calendar year in which the Participant participates in
the Plan (or any other employee stock purchase plan described in this
sentence).

12.2 PRO RATA ALLOCATION. In the event the number of shares
of Stock which might be purchased by all Participants in the Plan exceeds the
number of shares of Stock available in the Plan, the Company shall make a pro
rata allocation of the remaining shares in as uniform a manner as shall be
practicable and as the Company shall determine to be equitable.

12.3 RIGHTS AS A STOCKHOLDER AND EMPLOYEE. A Participant
shall have no rights as a stockholder by virtue of the Participant's
participation in the Plan until the date of the issuance of a stock
certificate for the shares of Stock being purchased pursuant to the exercise
of the Participant's Purchase Right. No adjustment shall be made for cash
dividends or distributions or other rights for which the record date is prior
to the date such stock certificate is issued. Nothing herein shall confer
upon a Participant any right to continue in the employ of the Participating
Company Group or interfere in any way with any right of the Participating
Company Group to terminate the Participant's employment at any time.

13. WITHDRAWAL.

13.1 WITHDRAWAL FROM AN OFFERING. A Participant may
withdraw from an Offering by signing and delivering to the Company's payroll
or other designated office a written notice of withdrawal on a form provided
by the Company for such purpose. Such withdrawal

<PAGE>

may be elected at any time prior to the end of an Offering Period; provided,
however, if a Participant withdraws after a Purchase Date, the withdrawal
shall not affect shares of Stock acquired by the Participant on such Purchase
Date. Unless otherwise indicated, withdrawal from an Offering shall not
result in a withdrawal from the Plan or any succeeding Offering therein. By
withdrawing from an Offering effective as of the close of a given Purchase
Date, a Participant may have shares of Stock purchased on such Purchase Date
and immediately commence participation in the new Offering commencing
immediately after such Purchase Date. A Participant is prohibited from again
participating in an Offering at any time following withdrawal from such
Offering. The Company may impose, from time to time, a requirement that the
notice of withdrawal be on file with the Company's payroll office or other
designated office for a reasonable period prior to the effectiveness of the
Participant's withdrawal from an Offering.

13.2 WITHDRAWAL FROM THE PLAN. A Participant may withdraw
from the Plan by signing and delivering to the Company's payroll office or
other designated office a written notice of withdrawal on a form provided by
the Company for such purpose. Withdrawals made after a Purchase Date shall
not affect shares of Stock acquired by the Participant on such Purchase Date.
In the event a Participant voluntarily elects to withdraw from the Plan, the
Participant may not resume participation in the Plan during the same Offering
Period, but may participate in any subsequent Offering under the Plan by
again satisfying the requirements of Sections 5 and 7.1. The Company may
impose, from time to time, a requirement that the notice of withdrawal be on
file with the Company's payroll office or other designated office for a
reasonable period prior to the effectiveness of the Participant's withdrawal
from the Plan.

13.3 RETURN OF PAYROLL DEDUCTIONS. Upon a Participant's
withdrawal from an Offering or the Plan pursuant to Sections 13.1 or 13.2,
respectively, the Participant's accumulated payroll deductions which have not
been applied toward the purchase of shares of Stock shall be returned as soon
as practicable after the withdrawal, without the payment of any interest, to
the Participant, and the Participant's interest in the Offering or the Plan,
as applicable, shall terminate. Such accumulated payroll deductions may not
be applied to any other Offering under the Plan.

13.4 AUTOMATIC WITHDRAWAL FROM AN OFFERING. If the Fair
Market Value of a share of Stock on a Purchase Date of an Offering (other
than the final Purchase Date of such Offering) is less than the Fair Market
Value of a share of Stock on the Offering Date for such Offering, then every
Participant shall automatically (a) be withdrawn from such Offering at the
close of such Purchase Date and after the acquisition of shares of Stock for
such Purchase Period and (b) be enrolled in the Offering commencing on the
first business day subsequent to such Purchase Period. A Participant may
elect not to be automatically withdrawn from an Offering Period pursuant to
this Section 13.4 by delivering to the Company not later than the close of
business on the last day before the Purchase Date a written notice indicating
such election.

13.5 WAIVER OF WITHDRAWAL RIGHT. The Company may, from
time to time, establish a procedure pursuant to which a Participant may
elect, at least six (6) months prior to a Purchase Date, to have all payroll
deductions accumulated in his or her Plan account as of such Purchase Date
applied to purchase shares of Stock under the Plan, and (a) to waive his or
her right to withdraw from the Offering or the Plan and (b) to waive his or
her right to increase, decrease, or cease payroll deductions under the Plan
from his or her Compensation during the Purchase Period ending on such
Purchase Date. Such election shall be made in writing on a form

<PAGE>

provided by the Company for such purpose and must be delivered to the Company
not later than the close of business on the day preceding the date which is
six (6) months before the Purchase Date for which such election is to first
be effective.

14. TERMINATION OF EMPLOYMENT OR ELIGIBILITY. Termination of a
Participant's employment with the Company for any reason, including
retirement, disability or death or the failure of a Participant to remain an
Eligible Employee, shall terminate the Participant's participation in the
Plan immediately. In such event, the payroll deductions credited to the
Participant's Plan account since the last Purchase Date shall, as soon as
practicable, be returned to the Participant or, in the case of the
Participant's death, to the Participant's legal representative, and all of
the Participant's rights under the Plan shall terminate. Interest shall not
be paid on sums returned to a Participant pursuant to this Section 14. A
Participant whose participation has been so terminated may again become
eligible to participate in the Plan by again satisfying the requirements of
Sections 5 and 7.1.

15. TRANSFER OF CONTROL.

15.1 DEFINITIONS.

(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to
have occurred if any of the following occurs with respect to the Company: (i)
the direct or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty percent
(50%) of the voting stock of the Company; (ii) a merger or consolidation in
which the Company a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.

(b) A "TRANSFER OF CONTROL" shall mean an
Ownership Change Event or a series of related Ownership Change Events
(collectively, the "TRANSACTION") wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the
Transaction, in substantially the same proportions as their ownership of
shares of the Company's voting stock immediately before the Transaction,
direct or indirect beneficial ownership of more than fifty percent (50%) of
the total combined voting power of the outstanding voting stock of the
Company or the corporation or corporations to which the assets of the Company
were transferred (the "TRANSFEREE CORPORATION(S)"), as the case may be. For
purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the
voting stock of one or more corporations which, as a result of the
Transaction, own the Company or the Transferee Corporation(s), as the case
may be, either directly or through one or more subsidiary corporations. The
Board shall have the right to determine whether multiple sales or exchanges
of the voting stock of the Company or multiple Ownership Change Events are
related, and its determination shall be final, binding and conclusive.

15.2 EFFECT OF TRANSFER OF CONTROL ON PURCHASE RIGHTS. In
the event of a Transfer of Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may assume the Company's rights and obligations
under the Plan or substitute substantially equivalent Purchase Rights for
stock of the Acquiring Corporation. If the Acquiring Corporation elects not
to assume or substitute for the outstanding Purchase Rights, the Board may,
in its sole discretion and notwithstanding any other provision herein to the
contrary, adjust the Purchase Date of the then

<PAGE>

current Purchase Period to a date on or before the date of the Transfer of
Control, but shall not adjust the number of shares of Stock subject to any
Purchase Right. All Purchase Rights which are neither assumed or substituted
for by the Acquiring Corporation in connection with the Transfer of Control
nor exercised as of the date of the Transfer of Control shall terminate and
cease to be outstanding effective as of the date of the Transfer of Control.
Notwithstanding the foregoing, if the corporation the stock of which is
subject to the outstanding Purchase Rights immediately prior to an Ownership
Change Event described in Section 15.1(a)(i) constituting a Transfer of
Control is the surviving or continuing corporation and immediately after such
Ownership Change Event less than fifty percent (50%) of the total combined
voting power of its voting stock is held by another corporation or by other
corporations that are members of an affiliated group within the meaning of
Section 1504(a) of the Code without regard to the provisions of Section
1504(b) of the Code, the outstanding Purchase Rights shall not terminate
unless the Board otherwise provides in its sole discretion.

16. NONTRANSFERABILITY OF PURCHASE RIGHTS. A Purchase Right may
not be transferred in any manner otherwise than by will or the laws of
descent and distribution and shall be exercisable during the lifetime of the
Participant only by the Participant. The Company, in its absolute discretion,
may impose such restrictions on the transferability of the shares purchasable
upon the exercise of a Purchase Right as it deems appropriate and any such
restriction shall be set forth in the respective subscription agreement and
may be referred to on the certificates evidencing such shares.

17. REPORTS. Each Participant who exercised all or part of his
or her Purchase Right for a Purchase Period shall receive, as soon as
practicable after the Purchase Date of such Purchase Period, a report of such
Participant's Plan account setting forth the total payroll deductions
accumulated, the number of shares of Stock purchased, the Purchase Price for
such shares, the date of purchase and the remaining cash balance to be
refunded or retained in the Participant's Plan account pursuant to Section
11.2, if any. Each Participant shall be provided information concerning the
Company equivalent to that information generally made available to the
Company's common stockholders.

18. RESTRICTION ON ISSUANCE OF SHARES. The issuance of shares
under the Plan shall be subject to compliance with all applicable
requirements of foreign, federal or state law with respect to such
securities. A Purchase Right may not be exercised if the issuance of shares
upon such exercise would constitute a violation of any applicable foreign,
federal or state securities laws or other law or regulations. In addition, no
Purchase Right may be exercised unless (a) a registration statement under the
Securities Act of 1933, as amended, shall at the time of exercise of the
Purchase Right be in effect with respect to the shares issuable upon exercise
of the Purchase Right, or (b) in the opinion of legal counsel to the Company,
the shares issuable upon exercise of the Purchase Right may be issued in
accordance with the terms of an applicable exemption from the registration
requirements of said Act. The inability of the Company to obtain from any
regulatory body having jurisdiction the authority, if any, deemed by the
Company's legal counsel to be necessary to the lawful issuance and sale of
any shares under the Plan shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such
requisite authority shall not have been obtained. As a condition to the
exercise of a Purchase Right, the Company may require the Participant to
satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation, and to make any
representation or warranty with respect thereto as may be requested by the
Company.

<PAGE>

19. LEGENDS. The Company may at any time place legends or other
identifying symbols referencing any applicable foreign, federal or state
securities law restrictions or any provision convenient in the administration
of the Plan on some or all of the certificates representing shares of Stock
issued under the Plan. The Participant shall, at the request of the Company,
promptly present to the Company any and all certificates representing shares
acquired pursuant to a Purchase Right in the possession of the Participant in
order to carry out the provisions of this Section. Unless otherwise specified
by the Company, legends placed on such certificates may include but shall not
be limited to the following:

"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY
THE CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES
UNDER AN EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE TRANSFER AGENT
FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION
IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER
HEREOF MADE ON OR BEFORE __________, 19__. THE REGISTERED HOLDER
SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED
HOLDER'S NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS
DATE."

20. NOTIFICATION OF SALE OF SHARES. The Company may require the
Participant to give the Company prompt notice of any disposition of shares
acquired by exercise of a Purchase Right within two years from the date of
granting such Purchase Right or one year from the date of exercise of such
Purchase Right. The Company may require that until such time as a Participant
disposes of shares acquired upon exercise of a Purchase Right, the
Participant shall hold all such shares in the Participant's name (and not in
the name of any nominee) until the lapse of the time periods with respect to
such Purchase Right referred to in the preceding sentence. The Company may
direct that the certificates evidencing shares acquired by exercise of a
Purchase Right refer to such requirement to give prompt notice of disposition.

21. AMENDMENT OR TERMINATION OF THE PLAN. The Board may at any
time amend or terminate the Plan, except that (a) such termination shall not
affect Purchase Rights previously granted under the Plan, except as permitted
under the Plan, and (b) no amendment may adversely affect a Purchase Right
previously granted under the Plan (except to the extent permitted by the Plan
or as may be necessary to qualify the Plan as an employee stock purchase plan
pursuant to Section 423 of the Code or to obtain qualification or
registration of the shares of Stock under applicable foreign, federal or
state securities laws). In addition, an amendment to the Plan must be
approved by the stockholders of the Company within twelve (12) months of the
adoption of such amendment if such amendment would authorize the sale of more
shares than are authorized for issuance under the Plan or would change the
definition of the corporations that may be designated by the Board as
Participating Companies.

22. CONTINUATION OF INITIAL PLAN AS TO OUTSTANDING PURCHASE
RIGHTS. Any other provision of the Plan to the contrary notwithstanding, the
terms of the Initial Plan shall remain in effect and apply to all Purchase
Rights granted pursuant to the Initial Plan.

<PAGE>

IN WITNESS WHEREOF, the undersigned Secretary of the Company
certifies that the foregoing sets forth the Zoran Corporation Amended and
Restated 1995 Employee Stock Purchase Plan as duly adopted by the Board of
Directors of the Company on January 24, 1996 and amended through June 18,
2000.

---------------------------------
Secretary
<PAGE>

ZORAN CORPORATION

1995 OUTSIDE DIRECTORS STOCK OPTION PLAN

(AS AMENDED THROUGH JUNE 18, 2000)

1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

1.1 ESTABLISHMENT. The Zoran Corporation 1995 Outside
Directors Stock Option Plan (the "PLAN") is hereby established effective as of
the effective date of the initial registration by the Company of its Stock under
Section 12 of the Exchange Act (the "EFFECTIVE DATE").

1.2 PURPOSE. The purpose of the Plan is to advance the
interests of the Participating Company Group and its stockholders by providing
an incentive to attract and retain highly qualified persons to serve as Outside
Directors of the Company and by creating additional incentive for Outside
Directors to promote the growth and profitability of the Participating Company
Group.

1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed. However, all Options
shall be granted, if at all, within ten (10) years from the Effective Date.

2. DEFINITIONS AND CONSTRUCTION.

2.1 DEFINITIONS. Whenever used herein, the following terms
shall have their respective meanings set forth below:

(a) "BOARD" means the Board of Directors of the
Company. If one or more Committees have been appointed by the Board to
administer the Plan, "Board" also means such Committee(s).

(b) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.

(c) "COMMITTEE" means a committee of the Board duly
appointed to administer the Plan and having such powers as shall be specified
by the Board. Unless the powers of the Committee have been specifically
limited, the Committee shall have all of the powers of the Board granted
herein, including, without limitation, the power to amend or terminate the
Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law.

(d) "COMPANY" means Zoran Corporation, a Delaware
corporation, or any successor corporation thereto.

<PAGE>

(e) "CONSULTANT" means any person, including an
advisor, engaged by a Participating Company to render services other than as
an Employee or a Director.

(f) "DIRECTOR" means a member of the Board or the board
of directors of any other Participating Company.

(g) "EMPLOYEE" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in
the records of a Participating Company; provided, however, that neither
service as a Director nor payment of a director's fee shall be sufficient to
constitute employment for purposes of the Plan.

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

(i) "FAIR MARKET VALUE" means, as of any date, if there
is then a public market for the Stock, the closing price of the Stock (or the
mean of the closing bid and asked prices of the Stock if the Stock is so
reported instead) as reported on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") System, the NASDAQ National Market
System or such other national or regional securities exchange or market
system constituting the primary market for the Stock. If the relevant date
does not fall on a day on which the Stock is trading on NASDAQ, the NASDAQ
National Market System or other national or regional securities exchange or
market system, the date on which the Fair Market Value shall be established
shall be the last day on which the Stock was so traded prior to the relevant
date. If there is then no public market for the Stock, the Fair Market Value
on any relevant date shall be as determined by the Board without regard to
any restriction other than a restriction which, by its terms, will never
lapse.

(j) "OPTION" means a right to purchase Stock (subject
to adjustment as provided in Section 4.2) pursuant to the terms and
conditions of the Plan.

(k) "OPTIONEE" means a person who has been granted one
or more Options.

(l) "OPTION AGREEMENT" means a written agreement
between the Company and an Optionee setting forth the terms, conditions and
restrictions of the Option granted to the Optionee.

(m) "OUTSIDE DIRECTOR" means a Director of the Company
who is not an Employee.

(n) "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.

(o) "PARTICIPATING COMPANY" means the Company or any
Parent Corporation or Subsidiary Corporation.

(p) "PARTICIPATING COMPANY GROUP" means, at any point
in time, all corporations collectively which are then Participating Companies.

<PAGE>

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

(r) "SERVICE" means the Optionee's service with the
Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. The Optionee's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Optionee
renders Service to the Participating Company Group or a change in the
Participating Company for which the Optionee renders such Service, provided
that there is no interruption or termination of the Optionee's Service. The
Optionee's Service shall be deemed to have terminated either upon an actual
termination of Service or upon the corporation for which the Optionee
performs Service ceasing to be a Participating Company.

(s) "STOCK" means the common stock, par value $0.001,
of the Company, as adjusted from time to time in accordance with Section 4.2.

(t) "SUBSIDIARY CORPORATION" means any present or
future "subsidiary corporation" of the Company, as defined in Section 424(f)
of the Code.

3. ADMINISTRATION.

3.1 ADMINISTRATION BY THE BOARD. The Plan shall be
administered by the Board, including any duly appointed Committee of the Board.
All questions of interpretation of the Plan or of any Option shall be determined
by the Board, and such determinations shall be final and binding upon all
persons having an interest in the Plan or such Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, determination or election which
is the responsibility of or which is allocated to the Company herein, provided
the officer has apparent authority with respect to such matter, right,
obligation, determination or election.

3.2 LIMITATIONS ON AUTHORITY OF THE BOARD. Notwithstanding any
other provision herein to the contrary, the Board shall have no authority,
discretion, or power to select the Outside Directors who will receive Options,
to set the exercise price of the Options, to determine the number of shares of
Stock to be subject to an Option or the time at which an Option shall be
granted, to establish the duration of an Option, or to alter any other terms or
conditions specified in the Plan, except in the sense of administering the Plan
subject to the provisions of the Plan.

4. SHARES SUBJECT TO PLAN.

4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment
as provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be three hundred thousand (300,000) and shall
consist of authorized but unissued shares or reacquired shares of Stock or any
combination thereof. If an outstanding

<PAGE>

Option for any reason expires or is terminated or canceled or shares of Stock
acquired, subject to repurchase, upon the exercise of an Option are
repurchased by the Company, the shares of Stock allocable to the unexercised
portion of such Option, or such repurchased shares of Stock, shall again be
available for issuance under the Plan.

4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event
of any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan, to the "Initial Option" and "Annual Option" (as defined in
Section 6.1), and to any outstanding Options, and in the exercise price of any
outstanding Options. If a majority of the shares which are of the same class as
the shares that are subject to outstanding Options are exchanged for, converted
into, or otherwise become (whether or not pursuant to an Ownership Change Event
as defined in Section 8.1) shares of another corporation (the "NEW SHARES"), the
Board may unilaterally amend the outstanding Options to provide that such
Options are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to, and the exercise price of, the outstanding Options
shall be adjusted in a fair and equitable manner as determined by the Board, in
its sole discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be rounded down
to the nearest whole number, and in no event may the exercise price of any
Option be decreased to an amount less than the par value, if any, of the stock
subject to the Option.

5. Eligibility and Type of Options.

5.1 PERSONS ELIGIBLE FOR OPTIONS. An Option shall be granted
only to a person who, at the time of grant, is an Outside Director.

5.2 OPTIONS AUTHORIZED. Options shall be nonstatutory stock
options; that is, options which are not treated as incentive stock options
within the meaning of Section 422(b) of the Code.

6. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced
by Option Agreements specifying the number of shares of Stock covered
thereby, in such form as the Board shall from time to time establish. Option
Agreements may incorporate all or any of the terms of the Plan by reference
and shall comply with and be subject to the following terms and conditions:

6.1 AUTOMATIC GRANT OF OPTIONS. Subject to execution by an
Outside Director of the appropriate Option Agreement, Options shall be granted
automatically and without further action of the Board, as follows:

(a) INITIAL OPTION. Each person who is (i) an Outside
Director on the Effective Date, or (ii) first elected or appointed as an
Outside Director after the Effective Date shall be granted an Option to
purchase twenty thousand (20,000) shares of Stock on the Effective Date or
the date of such initial election or appointment, respectively (an "INITIAL
OPTION"). Notwithstanding anything herein to the contrary, a Director of the
Company who previously did

<PAGE>

not qualify as an Outside Director shall not receive an Initial Option in the
event that such Director subsequently becomes an Outside Director.

(b) ANNUAL OPTION. Each Outside Director (including
any Director of the Company who previously did not qualify as an Outside
Director but who subsequently becomes an Outside Director) shall be granted,
on the date immediately following the date of each annual meeting of the
stockholders of the Company (an "ANNUAL MEETING") following which such person
remains an Outside Director, an Option to purchase four thousand eight
hundred (4,800) shares of Stock (an "ANNUAL OPTION"). Notwithstanding the
foregoing, an Outside Director who has not served continuously as a Director
of the Company for at least six (6) months as of the date immediately
following such Annual Meeting shall not receive an Annual Option on such date.

(c) RIGHT TO DECLINE OPTION. Notwithstanding the
foregoing, any person may elect not to receive an Option by delivering
written notice of such election to the Board no later than the day prior to
the date such Option would otherwise be granted. A person so declining an
Option shall receive no payment or other consideration in lieu of such
declined Option. A person who has declined an Option may revoke such election
by delivering written notice of such revocation to the Board no later than
the day prior to the date such Option would be granted pursuant to Section
6.1(a) or (b), as the case may be.

6.2 EXERCISE PRICE. The exercise price per share of Stock
subject to an Option shall be the Fair Market Value of a share of Stock on the
date the Option is granted.

6.3 EXERCISE PERIOD. Each Option shall terminate and cease to
be exercisable on the date ten (10) years after the date of grant of the Option
unless earlier terminated pursuant to the terms of the Plan or the Option
Agreement.

6.4 RIGHT TO EXERCISE OPTIONS.

(a) INITIAL OPTION. Except as otherwise provided in
the Plan or in the Option Agreement, an Initial Option shall (i) first become
exercisable on the date which is one (1) year after the date on which the
Initial Option was granted (the "INITIAL OPTION VESTING DATE"); and (ii) be
exercisable on and after the Initial Option Vesting Date and prior to the
termination thereof in an amount equal to the number of shares of Stock
initially subject to the Initial Option multiplied by the Vested Ratio as set
forth below, less the number of shares previously acquired upon exercise
thereof. The Vested Ratio described in the preceding sentence shall be
determined as follows:

<PAGE>

<TABLE>
<CAPTION>
Vested Ratio
------------
<S> <C>

Prior to Initial Option Vesting Date 0

On Initial Option Vesting Date, provided the 1/4
Optionee's Service is continuous from the date of
grant of the Initial Option until the Initial Option
Vesting Date

Plus
----

For each full year of of the Optionee's 1/4
continuous Service from the Initial Option Vesting
Date until the Vested Ratio equals 1/1, an additional
</TABLE>

(b) ANNUAL OPTION. Except as otherwise provided
in the Plan or in the Option Agreement, an Annual Option shall first become
exercisable on the date which is one (1) year after the date on which the
Annual Option was granted (the "ANNUAL OPTION VESTING DATE"), provided the
Optionee's Service is continuous from the date of grant of the Annual Option
until the Annual Option Vesting Date. The Annual Option shall be exercisable
on and after the Annual Option Vesting Date and prior to the termination
thereof in an amount equal to the number of shares of Stock initially subject
to the Annual Option, less the number of shares previously acquired upon
exercise thereof.

6.5 PAYMENT OF EXERCISE PRICE.

(a) FORMS OF CONSIDERATION AUTHORIZED. Except as
otherwise provided below, payment of the exercise price for the number of
shares of Stock being purchased pursuant to any Option shall be made (i) in
cash, by check, or cash equivalent, (ii) by tender to the Company of shares
of Stock owned by the Optionee having a Fair Market Value not less than the
exercise price, (iii) by the assignment of the proceeds of a sale or loan
with respect to some or all of the shares being acquired upon the exercise of
the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board
of Governors of the Federal Reserve System) (a "CASHLESS EXERCISE"), or (iv)
by any combination thereof.

(b) TENDER OF STOCK. Notwithstanding the
foregoing, an Option may not be exercised by tender to the Company of shares
of Stock to the extent such tender of Stock would constitute a violation of
the provisions of any law, regulation or agreement restricting the redemption
of the Company's stock. Unless otherwise provided by the Board, an Option may
not be exercised by tender to the Company of shares of Stock unless such
shares either have been owned by the Optionee for more than six (6) months or
were not acquired, directly or indirectly, from the Company.

<PAGE>

(c) CASHLESS EXERCISE. The Company reserves, at any
and all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.

6.6 TAX WITHHOLDING. The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable upon the exercise of
an Option, or to accept from the Optionee the tender of, a number of whole
shares of Stock having a Fair Market Value equal to all or any part of the
federal, state, local and foreign taxes, if any, required by law to be withheld
by the Participating Company Group with respect to such Option or the shares
acquired upon exercise thereof. Alternatively or in addition, in its sole
discretion, the Company shall have the right to require the Optionee to make
adequate provision for any such tax withholding obligations of the Participating
Company Group arising in connection with the Option or the shares acquired upon
exercise thereof. The Company shall have no obligation to deliver shares of
Stock until the Participating Company Group's tax withholding obligations have
been satisfied.

7. STANDARD FORM OF OPTION AGREEMENT.

7.1 INITIAL OPTION. Unless otherwise provided for by the Board
at the time an Initial Option is granted, each Initial Option shall comply with
and be subject to the terms and conditions set forth in the form of Nonstatutory
Stock Option Agreement for Outside Directors (Initial Option) adopted by the
Board concurrently with its adoption of the Plan and as amended from time to
time.

7.2 ANNUAL OPTION. Unless otherwise provided for by the Board
at the time an Annual Option is granted, each Annual Option shall comply with
and be subject to the terms and conditions set forth in the form of Nonstatutory
Stock Option Agreement for Outside Directors (Annual Option) adopted by the
Board concurrently with its adoption of the Plan and as amended from time to
time.

7.3 AUTHORITY TO VARY TERMS. Subject to the limitations set
forth in Section 3.2, the Board shall have the authority from time to time to
vary the terms of any of the standard forms of Option Agreement described in
this Section 7 either in connection with the grant or amendment of an individual
Option or in connection with the authorization of a new standard form or forms;
provided, however, that the terms and conditions of any such new, revised or
amended standard form or forms of Option Agreement are not inconsistent with the
terms of the Plan. Such authority shall include, but not by way of limitation,
the authority to grant Options which are immediately exercisable subject to the
Company's right to repurchase any unvested shares of Stock acquired by the
Optionee upon the exercise of an Option in the event such Optionee's Service is
terminated for any reason. In no event, however, shall the Board be permitted to
vary the terms of any standard form of Option Agreement if such change would
cause the Plan to cease to qualify as a formula plan pursuant to Rule 16b-3 at
any such time as any class of equity security of the Company is registered
pursuant to Section 12 of the Exchange Act.

<PAGE>

8. TRANSFER OF CONTROL.

8.1 DEFINITIONS.

(a) An "OWNERSHIP CHANGE EVENT" shall be
deemed to have occurred if any of the following occurs with respect to the
Company:

(i) the direct or indirect sale or
exchange in a single or series of related transactions by the stockholders of
the Company of more than fifty percent (50%) of the voting stock of the
Company;

(ii) a merger or consolidation in
which the Company is a party;

(iii) the sale, exchange, or transfer
of all or substantially all of the assets of the Company; or

(iv) a liquidation or dissolution of
the Company.

8.2 EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the
event of a Transfer of Control, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be (the
"ACQUIRING CORPORATION"), may either assume the Company's rights and
obligations under outstanding Options or substitute for outstanding Options
substantially equivalent options for the Acquiring Corporation's stock. In
the event the Acquiring Corporation elects not to assume or substitute for
outstanding Options in connection with a Transfer of Control, any
unexercisable or unvested portion of the outstanding Options shall be
immediately exercisable and vested in full as of the date ten (10) days prior
to the date of the Transfer of Control. The exercise or vesting of any Option
that was permissible solely by reason of this Section 8.2 shall be
conditioned upon the consummation of the Transfer of Control. Any Options
which are neither assumed or substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control shall terminate and cease to be outstanding effective as
of the date of the Transfer of Control. Notwithstanding the foregoing, shares
acquired upon exercise of an Option

<PAGE>

prior to the Transfer of Control and any consideration received pursuant to
the Transfer of Control with respect to such shares shall continue to be
subject to all applicable provisions of the Option Agreement evidencing such
Option except as otherwise provided in such Option Agreement. Furthermore,
notwithstanding the foregoing, if the corporation the stock of which is
subject to the outstanding Options immediately prior to an Ownership Change
Event described in Section 8.1(a)(i) constituting a Transfer of Control is
the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power
of its voting stock is held by another corporation or by other corporations
that are members of an affiliated group within the meaning of Section 1504(a)
of the Code without regard to the provisions of Section 1504(b) of the Code,
the outstanding Options shall not terminate.

9. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or the Optionee's guardian
or legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.

10. INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan, or any right granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such person
is liable for gross negligence, bad faith or intentional misconduct in duties;
provided, however, that within sixty (60) days after the institution of such
action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at its own expense to handle and defend the same.

11. TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or amend
the Plan at any time. However, subject to changes in the law or other legal
requirements that would permit otherwise, without the approval of the Company's
stockholders, there shall be (a) no increase in the total number of shares of
Stock that may be issued under the Plan (except by operation of the provisions
of Section 4.2), and (b) no expansion in the class of persons eligible to
receive Options. Furthermore, to the extent required by Rule 16b-3, provisions
of the Plan addressing eligibility to participate in the Plan and the amount,
price and timing of Options shall not be amended more than once every six (6)
months, other than to comport with changes in the Code, the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder. In any event,
no termination or amendment of the Plan may adversely affect any then
outstanding Option, or any unexercised portion thereof, without the consent of
the Optionee, unless such termination or amendment is necessary to comply with
any applicable law or government regulation.

<PAGE>

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing sets forth the Zoran Corporation 1995 Outside Directors Stock
Option Plan was duly adopted and amended by the Board through June 18, 2000.

_____________________________________
Secretary

<PAGE>

ZORAN CORPORATION

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS

The undersigned, revoking all prior proxies, hereby appoints Levy
Gerzberg and Karl Schneider, or either of them, with full power of
substitution, as proxies to represent and vote as designated in this proxy
any and all of the shares of stock of Zoran Corporation, held or owned by or
standing in the name of the undersigned on the Company's books on June 2,
2000 at the Annual Meeting of Stockholders of the Company to be held at the
Company's offices at 3112 Scott Blvd., Santa Clara, CA 95054 at 2:00 p.m. on
July 18, 2000, and any continuation or adjournment thereof, with all powers
the undersigned would possess if personally present at the meeting.

The undersigned hereby directs and authorizes said proxies, and each
of them, or their substitute or substitutes, to vote as specified with
respect to the proposals listed on the reverse side, or, if no specification
is made, to vote in favor thereof.

The undersigned hereby further confers upon said proxies, and each
of them, or their substitute or substitutes, discretionary authority to vote
with respect to all other matters, which may properly come before the meeting
or any continuation or adjournment thereof.

The undersigned hereby acknowledges receipt of: (a) Notice of Annual
Meeting of Stockholders of the Company, (b) accompanying Proxy Statement, and
(c) Annual Report to Stockholders for the fiscal year ending December 31,
1999.

(TO BE SIGNED ON REVERSE SIDE)

<PAGE>

PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED

/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR
AND FOR PROPOSALS 2, 3, 4 AND 5.

1. Election of the five (5) directors to the Board of Directors.

FOR WITHHELD
/ / / /

For all nominees except as follows:

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

Nominees: Levy Gerzberg
Uzia Galil
James O. Meindl
Arthur B. Stabenow
Philip M. Young

2. To approve an amendment to the 1993 Stock Option Plan to increase the
number of shares of Common Stock reserved for issuance thereunder by
980,000 shares.

FOR AGAINST ABSTAIN
/ / / / / /

3. To approve an amendment to the 1995 Employee Stock Purchase Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 100,000 shares.

FOR AGAINST ABSTAIN
/ / / / / /

4. To approve an amendment to the 1995 Outside Directors Stock Option Plan
to increase the number of shares of Common Stock reserved for issuance
thereunder by 100,000 shares.

FOR AGAINST ABSTAIN
/ / / / / /

5. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending December 31,
2000.

FOR AGAINST ABSTAIN
/ / / / / /

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN
AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR STOCK MAY BE
REPRESENTED AT THE MEETING.

MARK HERE FOR ADDRESS / /
CHANGE AND NOTE AT LEFT

Signature: _______________________________________ Date: ___________________

Note: Sign exactly as your name(s) appears on your stock certificate. If
shares of stock are held in the name of two or more persons or in the
name of husband and wife, either as joint tenants or otherwise, both or
all of such persons should sign the above Proxy. If shares of stock are
held by a corporation, the Proxy should be executed by the President or
Vice President and the Secretary or Assistant Secretary. Executors or
administrators or other fiduciaries who execute the above Proxy for a
deceased stockholder should give their full title. Please date the
Proxy.