NOGATECH INC, S-1, 2000-03-14

NOGATECH INC
S-1, 2000-03-14

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 14, 2000

REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933
--------------------------

NOGATECH, INC.
(Exact name of registrant as specified in its charter)

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<S> <C> <C>
Delaware 3674 77-0525268
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

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5201 Great America Parkway
Santa Clara, California 95054
(408) 562-6200
(Address, Including Zip Code, and Telephone Number
Including Area Code, of Registrant's Principal Executive Offices)
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Nathan Hod
Chairman of the Board
Nogatech, Inc.
5201 Great America Parkway
Santa Clara, California 95054
(408) 562-6200
(Name, Address, Including Zip Code, and Telephone Number
Including Area Code, of Agent for Service)
--------------------------

COPIES TO:

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<S> <C>
Donald C. Reinke, Esq. Bruce A. Mann, Esq.
James L. Berg, Esq. Lloyd Harmetz, Esq.
Nicola R. Knight, Esq. Morrison & Foerster LLP
Gizelle A. Barany, Esq. 425 Market Street
Bay Venture Counsel, LLP San Francisco, California 94105-2482
1999 Harrison Street, Suite 1300 (415) 268-7584
Oakland, California 94612
(510) 273-8750
</TABLE>

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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
--------------------------

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant under Rule 415 of the Securities Act of
1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

CALCULATION OF REGISTRATION FEE

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<CAPTION>
PROPOSED MAXIMUM
AGGREGATE OFFERING AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common stock, par value $0.001 per share.................... $57,500,000 $15,180
</TABLE>

(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o).
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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[Cover design to include graphics]
<PAGE>
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of our common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of our common stock.

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TABLE OF CONTENTS

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PAGE
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Prospectus Summary.......................................... 3
The Offering................................................ 4
Summary Consolidated Financial Data......................... 5
Risk Factors................................................ 6
Cautionary Note on Forward-Looking Statements............... 17
Use of Proceeds............................................. 18
Dividend Policy............................................. 18
Capitalization.............................................. 19
Dilution.................................................... 21
Selected Consolidated Financial Data........................ 22
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 23
Business.................................................... 29
Management.................................................. 40
Certain Relationships and Related Transactions.............. 50
Principal Stockholders...................................... 52
Description of Capital Stock................................ 55
Shares Eligible for Future Sale............................. 57
Plan of Distribution........................................ 59
Legal Matters............................................... 64
Experts..................................................... 64
Where You Can Get More Information.......................... 64
Index to Consolidated Financial Statements.................. F-1
</TABLE>

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Our logo is our registered trademark. Other service marks, trademarks and
trade names referred to in this prospectus are the property of their respective
owners.

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PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS AND NOTES APPEARING ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY MAY NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD
CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE ENTIRE
PROSPECTUS CAREFULLY. ALL INFORMATION IN THIS PROSPECTUS GIVES EFFECT TO A
ONE-FOR-TWO REVERSE STOCK SPLIT WITH RESPECT TO OUR COMMON STOCK THAT WILL BE
EFFECTED PRIOR TO THE CLOSING OF THIS OFFERING.

NOGATECH

We provide compression chips for video connectivity between video devices
and computers, as well as between video devices across a variety of networks.
Our products enable real-time transmission of video, audio and data signals into
personal computers and personal digital assistants. Our chips are small, power
efficient and work together with our related decompression software for use with
all major operating systems. Our products are based on our video compression
algorithms and enable communication of video and other data from a variety of
video sources through standard interfaces into PCs. Our chips and software
provide high quality video while efficiently using resources of the PC's central
processing unit.

We principally sell our chips on a stand-alone basis to original equipment
manufacturers, who design them into products such as PC digital video cameras,
video capture devices and PC-TVs. In addition, we sell to original equipment
manufacturers our own video devices that incorporate our chips. In 1999,
purchasers of our products included AME Group, Camtel Technology, Fujitsu
General, Hauppauge Computer Works, Interex, IO Data, Pinnacle Systems, Sharp
Electronics and X-10.com.

The convergence of TV and PC applications, the growth of the Internet and
the establishment of high speed broadband communication networks have created an
increased demand for high quality video connections. We believe that the
marketplace will demand additional digital video connectivity solutions that are
compatible with the new MPEG-4 standard. We are developing chips based on the
MPEG-4 standard that will enable a variety of applications across the Internet
and mobile and broadcast networks, including video streaming and video
archiving.

Our objective is to be a leading provider of video connection solutions for
products using advanced video compression technology and plug-and-play
interfaces. Key elements of our strategy are to:

- maintain our expertise in video compression technology;

- focus on high volume applications;

- create and strengthen relationships with key customers; and

- build upon existing technologies to penetrate new markets.

Our sales were $3.2 million in 1998 and $8.9 million in 1999, with net
losses of $1.8 million in 1998 and $1.1 million in 1999.

We were initially incorporated in California in 1993 and reincorporated in
Delaware in 1999. Our principal executive offices are located at 5201 Great
America Parkway, Santa Clara, California, 95054, and our telephone number is
(408) 562-6200. The address of our office in Israel is 3 Gavish Street, Kfar
Saba 44641. Our world wide web address is www.nogatech.com. The information on
our website does not constitute part of this prospectus.

In this prospectus, the terms "Nogatech, Inc.," "Nogatech," "we," "us," and
"our" refer to Nogatech, Inc. and our subsidiaries Nogatech Ltd. and Nogatech
California, Inc., unless the context requires otherwise.

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THE OFFERING

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Common stock offered......................... shares

Common stock to be outstanding after this
offering................................... shares

Use of proceeds.............................. We expect to use the net proceeds from this
offering for working capital and other
general corporate purposes. We may use a
portion of the net proceeds to acquire
complementary products, technologies or
businesses.

Proposed Nasdaq National Market symbol....... NGTC
</TABLE>

The common stock to be outstanding after this offering is based on
11,157,234 shares outstanding as of March 1, 2000, after giving effect to:

- the conversion of our outstanding shares of Series A preferred stock into
8,609,783 shares of common stock;

- the conversion of our outstanding shares of Series B preferred stock into
an estimated 683,297 shares of common stock; and

- the assumed issuance of 1,213,319 shares of common stock upon the exercise
of options and warrants at a weighted average exercise price of $1.57 per
share that terminate upon the closing of this offering, a portion of which
are exercisable on a cashless basis.

The common stock to be outstanding after this offering excludes:

- 1,145,720 shares of common stock issuable as of March 1, 2000 upon the
exercise of outstanding stock options issued under our 1999 Stock Option
Plan at a weighted average exercise price of $1.17 per share;

- 3,850,000 shares of common stock reserved for issuance under our 2000
Equity Incentive Plan and 2000 Stock Purchase Plan; and

- 350,000 shares of common stock issuable as of March 1, 2000 upon the
exercise of warrants at an exercise price of $0.13 per share.

This offering will be made through the OpenIPO process, in which the
allocation of shares and the public offering price are primarily based on an
auction in which prospective purchasers are required to bid for the shares. This
process is described under "Plan of Distribution." Except as otherwise
indicated, the information in this prospectus assumes no exercise of the
underwriters' over-allotment option.

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SUMMARY CONSOLIDATED FINANCIAL DATA

The following table summarizes the consolidated financial data of our
business. The pro forma 1999 statement of operations data give effect to the
automatic conversion of our Series A and Series B preferred stock, and assumes a
one-for-two reverse stock split with respect to our common stock that will be
effected prior to the closing of this offering. See note 1(j) to our
consolidated financial statements for a discussion of our pro forma basic and
diluted net loss per share.

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YEAR ENDED DECEMBER 31,
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1997 1998 1999
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(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales.................................................. $ 2,551 $ 3,205 $ 8,856
Gross profit........................................... 852 1,167 3,745
Operating loss......................................... (1,430) (1,913) (1,107)
Net loss............................................... (1,462) (1,823) (1,096)
Accretion of redemption value of Series A redeemable
convertible preferred stock.......................... (300) (383) (427)
Net loss applicable to common stock.................... (1,762) (2,206) (1,523)
Net loss per share of common stock, basic and
diluted.............................................. $ (5.86) $ (7.13) $ (4.50)
Weighted average number of shares of common stock
outstanding.......................................... 300,709 309,536 338,295
======== ======== ==========
Pro forma net loss per share of common stock........... $ (0.12)
==========
Pro forma weighted average number of shares of common
stock outstanding.................................... 8,948,078
==========
</TABLE>

The following table summarizes our balance sheet data as of December 31,
1999. This balance sheet data is presented:

- on an actual basis;

- on a pro forma basis to give effect to:

- the sale of 1,196,172 shares of our Series B preferred stock in January
2000;

- the exercise of options to purchase 120,000 shares of our common stock
in January and February 2000;

- the exercise of warrants to purchase 111,464 shares of our common stock
in January and February 2000; and

- on a pro forma as adjusted basis to give effect to:

- the conversion of all outstanding shares of preferred stock into an
estimated 9,293,080 shares of common stock upon the closing of this
offering;

- the assumed exercise of options and warrants to purchase up to
1,213,319 shares of our common stock upon completion of this offering
at a weighted average exercise price of $1.57 per share; and

- the sale of the shares of common stock in this offering at the assumed
initial public offering price of $ per share, after deducting
the estimated underwriting discounts and commissions and offering
expenses.

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<CAPTION>
AS OF DECEMBER 31, 1999
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PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
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(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 2,475 $ 7,768
Working capital............................................. 3,111 8,404
Total assets................................................ 6,321 11,614
Series A redeemable convertible preferred stock............. 8,243 8,243
Series B redeemable convertible preferred stock............. -- 5,000
Stockholders' equity (capital deficiency)................... (4,886) (4,593)
</TABLE>

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RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND ALL OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS BEFORE YOU DECIDE TO BUY OUR COMMON STOCK. WE HAVE
INCLUDED A DISCUSSION OF EACH MATERIAL RISK THAT WE HAVE IDENTIFIED AS OF THE
DATE OF THIS PROSPECTUS. HOWEVER, ADDITIONAL RISKS AND UNCERTAINTIES NOT
PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL MAY ALSO IMPAIR OUR
BUSINESS OPERATIONS. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR OPERATING RESULTS COULD SUFFER. IF THIS OCCURS, THE
TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU COULD LOSE ALL OR PART
OF THE MONEY YOU PAID TO BUY OUR COMMON STOCK.

RISKS RELATING TO NOGATECH

OUR SALES WILL BE REDUCED IF WE ARE UNABLE TO KEEP PACE WITH TECHNOLOGICAL
CHANGES.

The emerging video compression and video image processing industry is
characterized by:

- rapidly changing technologies;

- frequent new product introductions; and

- rapid changes in customer requirements.

Video compression and video image processing technologies have reached
commercially acceptable levels only in the last several years and continue to
experience numerous changes. As a result, we must be able to sell products that
incorporate the technological advances in our industry in order to ensure that
they remain commercially viable.

Our future success will depend on our ability to enhance our existing
products and to develop and introduce new products and product features. These
products and features must be cost-effective and keep pace with technological
developments and address the increasingly sophisticated needs of our customers.
We may not be successful at these tasks. We may also experience difficulties
that could delay or prevent the successful development, introduction and
marketing of these new products and features. In either case, our sales would be
reduced.

WE MAY NOT BE ABLE TO TIMELY ADOPT EMERGING INDUSTRY STANDARDS, WHICH MAY MAKE
OUR PRODUCTS UNACCEPTABLE TO POTENTIAL CUSTOMERS, DELAY OUR PRODUCT
INTRODUCTIONS OR INCREASE OUR COSTS.

Our products must comply with a number of current industry standards and
practices established by various international bodies. Our failure to comply
with evolving standards, including video compression and computer interface
standards, will limit acceptance of our products by market participants. In
particular, the MPEG-4 standard is becoming the primary standard for PC
applications requiring video compression, but we have not yet completed our
development of any products that are based upon MPEG-4. If new standards are
adopted in our industry, we may be required to adopt those standards in our
products. It may take us a significant amount of time to develop and design
products incorporating these new standards, and we may not succeed in doing so.
We may also become dependent upon products developed by third parties and have
to pay royalty fees, which may be substantial, to the developers of the
technology that constitutes the newly adopted standards.

IF WE DO NOT DEVELOP NEW PRODUCTS OR NEW PRODUCT FEATURES IN RESPONSE TO
CUSTOMER REQUIREMENTS OR IN A TIMELY WAY, CUSTOMERS MAY NOT BUY OUR PRODUCTS.

Our customers' products tend to have short life cycles, which require both
them and us to design and introduce new products within a relatively limited
period of time. We must, therefore, coordinate our sales cycle with the sales
and development cycles of our customers. If we experience development, design or
manufacturing difficulties that delay or prevent our timely introduction or
marketing of a new chip, we would miss the opportunity to have the chip
incorporated into a customer's new product, which would cause us to lose sales.

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WE RELY UPON OUR SALES OF A SMALL NUMBER OF PRODUCTS, AND THE FAILURE OF ANY ONE
OF OUR PRODUCTS TO BE SUCCESSFUL IN THE MARKET COULD SUBSTANTIALLY REDUCE OUR
SALES.

We rely upon sales from a small number of products to generate substantially
all of our sales. We are developing additional chips, but there can be no
assurance that we will be successful in doing so. Consequently, if our existing
products are not successful, our sales could decline materially, which would
adversely affect our financial performance.

THE LOSS OF ANY OF OUR LARGE CUSTOMERS, OR THE FAILURE OF ONE OF THESE CUSTOMERS
TO SELL A SUBSTANTIAL AMOUNT OF ITS PRODUCTS INCORPORATING OUR CHIPS, COULD
SUBSTANTIALLY REDUCE OUR SALES.

Historically, a substantial portion of our sales has come from purchases by
a few large customers. We expect this trend to continue. For example, in 1999,
our top three customers accounted for approximately 51% of our sales.
Accordingly, our future operating results depend on the ability of our largest
customers to sell products incorporating our chips and on our success in selling
large quantities of our products to them. We have not entered into long-term
agreements with any of our customers, nor have we obtained their commitment to
purchase any specific quantities of our products. Our customers may cancel or
reschedule orders on short notice or may discontinue using our products at any
time. If we lose a large customer and fail to add new customers to replace lost
sales, our operating results may not recover.

The concentration of our sales with a few customers makes us particularly
dependent on commercial factors affecting those customers. For example, if
demand for their products decreases, or if they identify alternative sources for
our chips, they may stop purchasing our products and our operating results will
suffer. These customers often have the resources to produce products like ours
internally, and if they elect to do so, they may cease to do business with us.
Additionally, if our target markets undergo a consolidation, we may lose
existing customers or have difficulties in obtaining new ones.

WE RELY ON OTHERS TO MANUFACTURE OUR CHIPS AND THEREFORE HAVE ONLY A LIMITED
ABILITY TO CONTROL MANUFACTURING COSTS, CHIP DELIVERY SCHEDULES OR MANUFACTURING
QUALITY.

Our chips are manufactured and tested by subcontractors located in Korea and
Japan. We currently obtain each of our chips from a single manufacturer. As a
result of our reliance on subcontractors, we cannot directly control chip
delivery schedules. Recently, chip fabricating subcontractors have not had
sufficient capacity to keep up with chip fabrication demand. This has led to
longer chip manufacturing cycles and longer lead times on orders. Any problems
that occur and persist in connection with the delivery, quality or costs of
assembly of our chips could cause us to lose customers or increase the expenses
that we incur. Our reliance on subcontractors could lead to product shortages or
quality assurance problems. In addition, these manufacturers could significantly
increase the prices that they charge us, and we may be unable to obtain
alternative sources of supplies. We may need to hold more inventory than is
immediately required to compensate for potential component shortages or
discontinuation. These factors could lead to an increase in the costs of
manufacturing or assembling our chips.

We are in the process of qualifying additional subcontractors in order to
satisfy the demand for our products. However, qualification of new
subcontractors will require a significant period of time. Therefore, we may not
be able to obtain new subcontractors within a period of time that is sufficient
to respond to the needs of our customers.

WE ACCUMULATE INVENTORY TO MINIMIZE THE IMPACT OF SHORTAGES FROM MANUFACTURERS,
AND MAY HAVE OBSOLETE INVENTORY THAT WE HAVE TO WRITE OFF.

Managing our inventory is complicated by fluctuations in the demand for our
products; however, we must have sufficient quantities of our products available
to satisfy our customers' demand. As a result, we generally accumulate inventory
for a period of time to minimize the impact of undercapacity

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at our suppliers' plants. Although we expect to sell the inventory within a
short period of time, products may remain in inventory for extended periods of
time and may become obsolete because of the passage of time and the introduction
of new products. In these situations, we would be required to write off obsolete
inventory.

OUR COMPETITIVE POSITION COULD SUFFER IF WE MAY FAIL TO ADEQUATELY PROTECT OUR
PROPRIETARY TECHNOLOGY.

Our success and ability to compete depend primarily upon our proprietary
technology. We rely on a combination of trade secrets, copyright and trademark
laws, nondisclosure and other contractual agreements and technical measures to
protect our proprietary rights. Currently, we have three U.S. patents pending
that relate to our video technology. However, we have not obtained patent
protection for our proprietary algorithms, and the absence of patent protection
may increase the risk that those algorithms will be misappropriated.

We are subject to a number of risks relating to intellectual property
rights, including the following:

- the means by which we seek to protect our proprietary rights may not be
adequate to prevent others from misappropriating our technology or from
independently developing or selling technology or products with features
based on or similar to ours;

- our products may be sold in foreign countries that provide less protection
to intellectual property than is provided under U.S., Japanese or Israeli
laws;

- our intellectual property rights may be challenged, invalidated, violated
or circumvented and may not provide us with any competitive advantage; and

- our patents pending may not be approved or may be only partially approved.

IF OUR PROPRIETARY TECHNOLOGY INFRINGES UPON THE INTELLECTUAL PROPERTY RIGHTS OF
OTHERS, OUR COSTS COULD INCREASE AND OUR ABILITY TO SELL OUR PRODUCTS COULD BE
LIMITED.

Other companies may hold or obtain patents or may otherwise claim
proprietary rights to technology that is necessary to our business. Particular
aspects of our technology could be found to violate the intellectual property
rights of other parties. The resulting risks include the following:

- if we violate the intellectual property rights of other parties, we may be
required to modify our products or intellectual property or to obtain a
license to permit their continued use; and

- any future litigation to defend us against allegations that we have
infringed upon the rights of others could result in substantial costs to
us, even if we ultimately prevail.

There are a number of companies that hold patents for various aspects of the
technology incorporated in our industry's standards. We expect that companies
seeking to gain competitive advantages will increase their efforts to enforce
any patent rights that they may have. The holders of patents from which we have
not obtained licenses may take the position that we are required to obtain a
license from them. We cannot be certain that we would be able to negotiate any
license at an acceptable price. Our inability to do so could substantially
increase our operating expenses or require us to seek and obtain alternative
sources of technology necessary to produce our products.

WE BEGAN SELLING OUR CURRENT PRODUCT LINE OF CHIPS ONLY RECENTLY AND, AS A
RESULT, YOUR ABILITY TO EVALUATE OUR PROSPECTS MAY BE LIMITED.

Although we have been operating since 1993, we did not begin commercial
shipments of our present product line of video compression chips until 1998.
Prior to that time, we sold different products, which we do not anticipate
selling after 2000. As a result, our future success will depend primarily upon
the sales of our chips. Our limited operating history with respect to our video
compression chips may limit your ability to evaluate our prospects because of:

- our limited historical financial data relating to sales of our chips;

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- our unproven potential to generate profits from sales of our chips; and

- our limited experience in addressing emerging trends that may affect our
chip business.

As a young company that recently commenced a new product line, we face risks
and uncertainties relating to our ability to implement our business plan
successfully. You should consider our prospects in light of the risks, expenses
and difficulties we may encounter.

WE HAVE ONLY BEEN PROFITABLE FOR THE LAST TWO QUARTERS, AND MAY NOT BE
PROFITABLE IN THE FUTURE.

We incurred net losses of $1.8 million in 1998 and $1.1 million in 1999. As
of December 31, 1999, we had an accumulated deficit of $9.2 million. Our sales
may not grow or even continue at their current level. Although we have been
profitable for the last two quarters, if our sales do not increase or if our
expenses increase at a greater pace than our sales, we will not remain
profitable. In addition, we will recognize a beneficial conversion charge of
$5.0 million on account of our issuance of Series B preferred stock, which will
adversely affect our operating results during the fiscal year ending
December 31, 2000. Any losses that we incur could be substantial.

OUR INABILITY TO MANAGE EFFECTIVELY OUR RECENT GROWTH, AND OUR EXPECTED
CONTINUING INCREASED GROWTH, COULD MATERIALLY HARM OUR PERFORMANCE.

The growth in our business has placed, and is expected to continue to place,
a significant strain on our management and operations. To manage our growth, we
must continue to implement and improve our operational, financial and management
information systems and expand, train and manage our employees. We may not have
made adequate allowances for the costs and risks associated with this expansion,
and our systems, procedures or controls may not be adequate to support our
operations. Our failure to manage growth effectively could cause us to incur
substantial additional costs, lose opportunities to generate sales or impair our
ability to maintain our customers.

WE ARE SUBJECT TO RISKS FROM INTERNATIONAL SALES, INCLUDING THE RISK THAT THE
PRICES OF OUR PRODUCTS MAY BECOME LESS COMPETITIVE BECAUSE OF FOREIGN EXCHANGE
FLUCTUATIONS.

Sales to customers located outside the U.S. accounted for 51.8% of our sales
in 1997, 57.2% of our sales in 1998 and 38.6% of our sales in 1999. We expect
that international sales will continue to be significant. International sales
are subject to a variety of risks, including risks arising from currency
fluctuations, trading restrictions, tariffs, trade barriers and taxes.

Because most of our sales are denominated in dollars, our products become
less price competitive in countries with currencies that are low or are
declining in value against the dollar. In addition, our international customers
may not continue to place orders denominated in dollars. If they do not, our
reported sales and earnings will be subject to foreign exchange fluctuations.

WE MAY EXPERIENCE FLUCTUATIONS IN OUR FUTURE OPERATING RESULTS, WHICH WILL MAKE
PREDICTING OUR FUTURE RESULTS DIFFICULT.

Historically, our quarterly and annual operating results have varied
significantly from period to period, and we expect that they will continue to do
so. These fluctuations result from a variety of factors, including:

- market acceptance of our products, including changes in order flow from
our largest customers, and our customers' ability to forecast their needs;

- the timing of new product announcements by us and our competitors;

- the lengthy sales cycle of our products;

- increased competition, including changes in pricing by us or our
competitors;

- delays in deliveries by our suppliers and subcontractors;

- currency exchange rate fluctuations; and

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- general economic conditions in the geographic areas in which we operate.

Accordingly, any sales or net income in any particular period may be lower
than our sales and net income in a preceding or comparable period.
Period-to-period comparisons of our results of operations may not be meaningful,
and you should not rely upon them as indications of our future performance. In
addition, our operating results may be below the expectations of securities
analysts and investors in future periods. Our failure to meet these expectations
will likely cause our share price to decline.

WE RELY ON A SINGLE DISTRIBUTOR FOR MOST OF OUR SALES IN JAPAN, AND THE LOSS OF
THIS DISTRIBUTOR COULD SUBSTANTIALLY REDUCE OUR SALES.

Our future performance depends on our ability to compete successfully in
Japan, where all of our sales to date have been made through a single
distributor, Tomen Electronics Corporation. Upon completion of this offering,
Tomen will own approximately % of our common stock. We do not have a
distribution agreement with Tomen, and Tomen could terminate its relationship
with us at any time. In addition, Tomen is free to distribute the products of
our competitors as well as our products, and it is not required to maintain any
minimum sales levels. The loss of our relationship with Tomen, or any inability
or failure by Tomen to sell our products, could substantially reduce our sales.
In addition, we may not succeed in attracting new distributors for the Japanese
market or in replacing Tomen in the event that we do not continue our
relationship.

WE DEPEND ON A LIMITED NUMBER OF KEY PERSONNEL, AND THE LOSS OF THEIR SERVICES
COULD SUBSTANTIALLY INTERFERE WITH OUR OPERATIONS.

Because our products are complex and our market is new and evolving, the
success of our business depends in large part upon the continuing contributions
of our management and technical personnel. The loss of the services of several
of our key officers, including Nathan Hod, our Chairman of the Board, and Arie
Heiman, our President and Chief Executive Officer, could substantially interfere
with our operations. Our dependence upon these officers is increased by the fact
that they are responsible for our sales and marketing efforts, as well as our
overall operations. We do not have key person life insurance policies covering
any of our employees other than Arie Heiman. The insurance coverage that we have
on Mr. Heiman is likely to be insufficient to compensate us for any loss of his
services.

WE WILL NOT INCREASE OUR SALES OR GROW OUR BUSINESS IF WE ARE UNABLE TO ATTRACT,
TRAIN AND RETAIN QUALIFIED ENGINEERS AND SALES AND MARKETING AND TECHNICAL
SUPPORT PERSONNEL.

We will need to hire additional engineers and highly trained technical
support personnel in order to succeed. We will need to increase our technical
staff to support new customers and the expanding needs of existing customers, as
well as our continued research and development operations. We will need to hire
additional sales and marketing personnel to target our potential customers.
Hiring engineers and sales and marketing and technical support personnel is very
competitive in our industry because of the limited number of people available
with the necessary skills and understanding of our products. This is
particularly true in Israel and California, where the competition for qualified
personnel is intense. If we are unable to hire and retain necessary personnel,
our business will not develop and our operating results will be harmed.

OUR PRODUCTS COULD CONTAIN DEFECTS, WHICH WOULD REDUCE SALES OF THOSE PRODUCTS
OR RESULT IN CLAIMS AGAINST US.

We develop complex chips and related software for video compression and
video image processing. Despite testing by our subcontractors and our customers,
errors may be found in our existing or future products. This could result in,
among other things, a delay in recognition or loss of sales, loss of market
share, failure to achieve market acceptance or substantial damage to our
reputation. We could be subject to material claims by customers, and we may need
to incur substantial expenses to correct any product defects. We do not have
product liability insurance to protect us against losses caused by

10
<PAGE>
defects in our products, and we do not have "errors and omissions" insurance. As
a result, any payments that we may need to make to satisfy our customers may be
substantial.

FUTURE ACQUISITIONS BY US COULD DIVERT SUBSTANTIAL MANAGEMENT RESOURCES, GIVE
RISE TO UNKNOWN OR UNANTICIPATED LIABILITIES AND LEAD TO ADVERSE MARKET
CONSEQUENCES FOR OUR STOCK.

We may acquire or make substantial investments in other companies or
businesses in order to maintain our technological leadership or to obtain other
commercial advantages. Identifying and negotiating these transactions may divert
substantial management resources. An acquisition could require us to expend
substantial cash resources, to incur or assume debt obligations, or to issue
additional common or preferred stock. We have no experience in making
acquisitions and we may not be successful in executing an acquisition
transaction or integrating an acquired entity into our operations. These
additional equity securities would dilute your holdings, and could have rights
that are senior to or greater than the shares that you purchase in this
offering. An acquisition could involve significant one-time non-cash write offs,
or could involve the amortization of goodwill over a number of years, which
would adversely affect earnings in those years. Acquisitions outside our current
business may be viewed by market analysts as a diversion of our focus. For these
and other reasons, the market for our stock may react negatively to the
announcement of any acquisition. An acquisition will continue to require
attention from our management to integrate the acquired entity into our
operations, may require us to develop expertise in fields outside our current
area of focus, and may result in departures of management of the acquired
entity. An acquired entity may have unknown liabilities, and its business may
not achieve the results anticipated at the time of the acquisition.

RISKS RELATING TO OUR INDUSTRY

IF VIDEO COMPRESSION TECHNOLOGY OR OUR IMPLEMENTATION OF THIS TECHNOLOGY IS NOT
ACCEPTED, WE WILL NOT BE ABLE TO SUSTAIN OR EXPAND OUR BUSINESS.

Our future success depends on the growing use and acceptance of video
applications for PCs, including the growth of video on the Internet. The market
for these applications is new and is still evolving, and may not develop to the
extent necessary to enable us to expand our business. We have recently invested
and expect to continue to invest significant time and resources in the
development of new products for this market. Our dependence on sales of chips
and lack of product diversification exposes us to a substantial risk of loss in
the event that the video compression market does not develop or if a competing
technology replaces our chips. If the target market for our products does not
grow, we may not obtain any benefits from these investments.

WE ARE HEAVILY DEPENDENT ON THE U.S. AND JAPANESE MARKETS FOR SALES OF OUR
PRODUCTS, AND ADVERSE CHANGES IN THESE MARKETPLACES COULD REDUCE OUR SALES.

Our future performance will be dependent, in large part, on our ability to
continue to compete successfully in the U.S. and Japanese markets, where a large
portion of our current and potential customers are located. Our ability to
compete in these markets will depend on several factors, including:

- the state of trade relations among Japan, Israel and the United States;

- the imposition of tariffs in our industry;

- adverse changes in the applicable political, economic or regulatory
environments;

- our ability to develop products that meet the technical requirements of
Japanese and American customers; and

- our ability to maintain satisfactory relationships with our Japanese and
American customers and distributors.

11
<PAGE>
THE MARKETS IN WHICH WE OPERATE ARE HIGHLY COMPETITIVE, AND MANY OF OUR
COMPETITORS HAVE MUCH GREATER RESOURCES THAN WE DO, WHICH MAY MAKE IT DIFFICULT
FOR US TO REMAIN PROFITABLE.

Competition in our industry is intense, and we expect competition to
increase. Competition could force us to charge lower prices for our products,
reduce demand for our products and reduce our ability to recover development and
manufacturing costs.

Some of our competitors:

- have greater financial, personnel and other resources than we have;

- offer a broader range of products and services than we offer;

- may be able to respond faster to new or emerging technologies or changes
in customer requirements than we can;

- may have a more substantial distribution network than we do;

- benefit from greater purchasing economies than we do;

- offer more aggressive pricing than we offer; and

- devote greater resources to the promotion of their products than we do.

We will not be able to compete effectively if we are not able to develop and
implement appropriate strategies to address these factors.

INTERNAL DEVELOPMENT EFFORTS BY OUR CUSTOMERS AND NEW ENTRANTS TO THE MARKET MAY
INCREASE COMPETITION.

In the future, some of our customers may internally develop products that
will replace the products that we currently sell to them. In addition, some
leading companies, with substantially greater resources than we have, may
attempt to enter our market. The recent substantial growth in the market for
video compression and related technologies is attracting large entrants. We
believe that some large companies may have already begun to develop internally
the technology that we provide. Furthermore, alliances between semiconductor
companies and companies providing software to them could increase our
competition.

WE HAVE EXPERIENCED, AND EXPECT TO CONTINUE TO EXPERIENCE, INTENSE DOWNWARD
PRICING PRESSURE ON OUR PRODUCTS, WHICH COULD SUBSTANTIALLY IMPAIR OUR OPERATING
PERFORMANCE.

We are experiencing, and are likely to continue to experience, downward
pricing pressure on our chips. As a result, we have experienced, and expect to
continue to experience, declining average sales prices for our products.
Increases in the number of units that we are able to sell or reductions in per
unit costs may not be sufficient to offset reductions in per unit sales prices,
in which case our net income could be reduced or we could incur losses. Since we
must typically negotiate supply arrangements far in advance of delivery dates,
we may need to commit to price reductions for our products before we are aware
of how, or if, these cost reductions can be obtained. As a result, any current
or future price reduction commitments and any inability of our company to
respond to increased price competition could substantially impair our operating
results.

OUR PRODUCTS GENERALLY HAVE LONG SALES CYCLES AND IMPLEMENTATION PERIODS, WHICH
INCREASE OUR COSTS IN OBTAINING ORDERS AND REDUCES THE PREDICTABILITY OF OUR
EARNINGS, AND WE MAY NOT BE ABLE TO RECOUP COSTS FOR PROPOSALS THAT ARE NOT
ACCEPTED.

Our products are technologically complex and are typically designed into
applications and products that may be critical to the business of our customers.
Prospective customers generally must make a significant commitment of resources
to test and evaluate our chips and to integrate them into their products. As a
result, our sales process is often subject to delays associated with lengthy
approval processes that typically accompany the design and testing of new
computer accessories. For these and

12
<PAGE>
other reasons, the sales cycles of our products to new customers are often
lengthy, recently averaging approximately six to nine months.

Long sales cycles are also subject to a number of significant risks over
which we have little or no control. These risks include our customers' budgetary
constraints, internal acceptance reviews and cancellations. In addition, orders
expected in one quarter could shift to another because of the timing of our
customers' procurement decisions. This complicates our planning process and
reduces the predictability of our financial results. We could incur costs that
might not be recouped if we respond to a request for proposals from a potential
customer who does not purchase our chips.

RISKS RELATING TO THIS OFFERING

OUR MANAGEMENT HAS BROAD DISCRETION AS TO THE USE OF THE NET PROCEEDS OF THIS
OFFERING AND, IF WE DO NOT ALLOCATE THESE PROCEEDS EFFECTIVELY, YOUR INVESTMENT
COULD SUFFER.

We intend to use the net proceeds from this offering for working capital and
general corporate purposes, including funding additional research and
development projects and expanding our sales and marketing activities. We may
also use a portion of the net proceeds to acquire complementary products,
technologies or businesses. However, there is no specific allocation of the
proceeds, and our management retains the right to use the net proceeds as they
determine. There can be no assurance that management will be able to use the
proceeds to continue the growth of our business effectively or to increase our
market value.

WE MAY NEED ADDITIONAL FINANCING, AND MAY NOT BE ABLE TO RAISE ADDITIONAL
FINANCING ON FAVORABLE TERMS OR AT ALL, WHICH COULD LIMIT OUR ABILITY TO GROW
AND INCREASE OUR COSTS.

We anticipate that we may need to raise additional capital in the future to
continue our longer term expansion plans, to respond to competitive pressures or
to respond to unanticipated requirements. We cannot be certain that we will be
able to obtain additional financing on commercially reasonable terms or at all.
Our failure to obtain additional financing or our inability to obtain financing
on acceptable terms could require us to limit our plans for expansion, incur
indebtedness that has high rates of interest or substantial restrictive
covenants, issue equity securities that will dilute your holdings or discontinue
a portion of our operations.

THERE HAS BEEN NO PRIOR MARKET FOR OUR COMMON STOCK, AN ACTIVE MARKET MAY NOT
DEVELOP, THE MARKET PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY, AND
THE MARKET PRICE MAY NOT EXCEED THE INITIAL PUBLIC OFFERING PRICE.

Before this offering, our common stock did not trade in any market, and we
cannot be certain that an active market will develop. The initial public
offering price may not be indicative of our actual value. Numerous factors, many
of which are beyond our control, may cause the market price of the common stock
to fluctuate significantly. These factors include, but are not limited to, the
following:

- fluctuations in our quarterly sales and operating results;

- shortfalls in our operating results from levels forecast by securities
analysts;

- announcements concerning us, our competitors or our customers;

- announcements of technological innovations, new industry standards or
changes in product price by us or our competitors; and

- market conditions in the industry and the general state of the securities
markets, particularly the technology and Israeli sectors.

In addition, the stock prices of many technology companies fluctuate
significantly for reasons that may be unrelated to operating results. These
fluctuations, as well as general economic, political and market conditions,
including recession, international instability or military tension or conflicts,
or any such conditions specifically affecting Israel, may adversely affect the
market price of our common stock.

13
<PAGE>
If we are named as a defendant in any securities-related litigation as a result
of decreases in the market price of our shares, we may incur substantial costs,
and our management's attention may be diverted, for lengthy periods of time. The
market price of our common stock may not increase above the initial public
offering price or maintain its price at or above any particular level.

WE DO NOT EXPECT TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.

We have not declared or paid any cash dividends in the past and do not
expect to pay cash dividends in the foreseeable future. We intend to retain our
future earnings, if any, to finance the development of our business. The board
of directors will determine any future dividend policy in light of then existing
conditions, including our earnings, financial condition and financial
requirements. You may never receive dividend payments from us.

FUTURE SALES OF OUR COMMON STOCK IN THE PUBLIC MARKET MAY DEPRESS OUR STOCK
PRICE.

After this offering, we will have outstanding approximately shares of
common stock. Sales of a substantial number of shares of our common stock in the
public market following this offering could cause our stock price to decline.
All the shares sold in this offering will be freely tradable. Of the remaining
shares of common stock outstanding after this offering, an estimated
shares will be eligible for sale in the public market beginning 180 days
after the effective date of this offering. The remaining shares will
become freely tradable at various times thereafter. In addition, holders of up
to approximately 10,894,864 shares of our common stock will have the right to
require us to register their shares for resale beginning 180 days after the
effective date of this offering. We intend to file a registration statement
registering shares of common stock subject to outstanding options or reserved
for future issuance under our stock option and purchase plans. As of March 1,
2000, options to purchase a total of 1,527,220 shares were outstanding under our
1999 Stock Option Plan. As a result, common stock issuable upon exercise of
outstanding vested options, other than common stock issuable to our affiliates,
will be available for immediate resale in the open market. In addition, the sale
or registration of these shares could impair our ability to raise capital
through the sale of additional stock. See "Shares Eligible for Future Sale."

THERE WILL BE IMMEDIATE AND SUBSTANTIAL DILUTION TO A PURCHASER OF OUR COMMON
STOCK.

The initial public offering price is substantially higher than the book
value per share of our common stock. You will experience immediate and
substantial dilution of $ per share of common stock, based on an assumed
initial public offering price of $ per share, in the net tangible book
value of our common stock from the initial public offering price. To the extent
outstanding options or warrants to purchase shares of common stock are
exercised, there will be further dilution.

OUR PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND DIRECTORS HAVE SUBSTANTIAL
CONTROL OVER MOST MATTERS SUBMITTED TO A VOTE OF THE STOCKHOLDERS, WHICH WILL
LIMIT YOUR POWER TO INFLUENCE CORPORATE ACTION.

We anticipate that after this offering our officers, directors and present
stockholders will beneficially own % of our common stock, or % if the
underwriters' over-allotment option is exercised in full. As a result, these
stockholders will have the power to control the outcome of most matters
submitted to a vote of stockholders, including the election of members of our
board, and the approval of significant corporate transactions. The stockholders
purchasing shares in this offering will have little influence on these matters.
This concentration of ownership may also have the effect of making it more
difficult to obtain the needed approval for some types of transactions that
these stockholders oppose, and may result in delaying, deferring or preventing a
change in control of our company.

14
<PAGE>
THE EFFECTS OF ANTI-TAKEOVER PROVISIONS IN OUR CERTIFICATE OF INCORPORATION AND
BYLAWS COULD INHIBIT THE ACQUISITION OF US BY OTHERS.

Several provisions of our certificate of incorporation and bylaws could
discourage potential acquisition proposals and could delay or prevent a change
in control of our company. For example, only one-third of our board of directors
will be elected at each of our annual meetings of stockholders, which will make
it more difficult for a potential acquirer to change the management of our
company, even after acquiring a majority of the shares of our common stock.
These provisions, which cannot be amended without the approval of two-thirds of
our stockholders, could diminish the opportunities for a stockholder to
participate in tender offers, including tender offers at a price above the then
current market value of our common stock. In addition, our board of directors,
without further stockholder approval, may issue preferred stock, with such terms
as the board of directors may determine, that could have the effect of delaying
or preventing a change in control of our company. The issuance of preferred
stock could also adversely affect the voting powers of the holders of common
stock, including the loss of voting control to others. We are also afforded the
protections of Section 203 of the Delaware General Corporation Law, which could
delay or prevent a change in control of our company or could impede a merger,
consolidation, takeover or other business combination involving our company or
discourage a potential acquirer from making a tender offer or otherwise
attempting to obtain control of our company.

RISKS RELATING TO OUR OPERATIONS IN ISRAEL

CONDITIONS IN ISRAEL AFFECT OUR OPERATIONS AND MAY LIMIT OUR ABILITY TO PRODUCE
AND SELL OUR PRODUCTS.

The offices of our principal operating subsidiary are located in Israel.
This facility is the location of, among other things, our research and
development efforts. As a result, political, economic and military conditions in
Israel directly affect our operations. Accordingly, any major hostilities
involving Israel, the interruption or curtailment of trade between Israel and
its present trading partners or a significant downturn in the economic or
financial condition of Israel could result in a loss of sales or the disruption
of our operations. Despite the progress towards peace among Israel, neighboring
countries and the Palestinians, the future of these peace efforts is uncertain.
A number of countries continue to restrict or ban business with Israel or
Israeli companies. Restrictive laws or policies directed towards Israel or
Israeli businesses could impair our ability to increase our international sales.
Additionally, some of our officers and employees in Israel are obligated to
perform up to 39 days of military reserve duty annually. The absence of these
employees for significant periods during the workweek may cause us to operate
inefficiently during these periods.

CURRENCY FLUCTUATIONS AND THE RATE OF INFLATION IN ISRAEL MAY NEGATIVELY IMPACT
OUR FINANCIAL PERFORMANCE.

Most of our sales are in dollars or linked to dollars, and a material portion of
our expenses are incurred in New Israeli Shekels (NIS). As a result, we bear the
risk that the rate of inflation in Israel will differ from the rate of
devaluation of the NIS in relation to the dollar. For example, the annual rate
of inflation in Israel was 7.0% in 1997, 8.6% in 1998 and 1.3% in 1999, while
the NIS was devalued against the dollar by 8.8% in 1997 and 17.6% in 1998, and
the dollar was devalued against the NIS by 0.2% in 1999. The recent devaluation
may be followed by an increased rate of inflation in Israel, but the current
economic outlook in Israel is uncertain. Our operating results may be materially
harmed in the future if the rate of inflation in Israel exceeds the devaluation
of the NIS against the dollar or if the timing of a devaluation lags behind
increases in inflation in Israel.

To date, we have not engaged in hedging transactions. In the future, we may
enter into currency hedging transactions to decrease the risk of financial
exposure from fluctuations in the exchange rate of the dollar against the NIS.
These measures may not adequately protect us against these risks.

15
<PAGE>
THE GOVERNMENT PROGRAMS AND TAX BENEFITS THAT WE CURRENTLY PARTICIPATE IN OR
RECEIVE REQUIRE US TO MEET SEVERAL CONDITIONS AND MAY BE TERMINATED OR REDUCED
IN THE FUTURE, WHICH WOULD INCREASE OUR COSTS.

We benefit from a variety of government programs and tax benefits,
particularly as a result of exemptions and reductions resulting from the
"Approved Enterprise" status of our existing facility in Israel. To be eligible
for these programs and tax benefits, we must continue to meet specific
conditions, including making specified investments in fixed assets and financing
a percentage of investments with share capital. If we fail to meet these
conditions in the future, the tax benefits would be canceled and we could be
required to refund the tax benefits to which we are entitled. Israeli
governmental authorities have indicated that these programs and tax benefits may
not be continued in the future at their current levels or at any level. The
termination or reduction of these programs and tax benefits could increase our
expenses substantially.

Prior to 1995, we obtained royalty-bearing grants from the Office of the
Chief Scientist in Israel's Ministry of Industry and Trade to fund a portion of
our research and development. The terms of the grants from the Chief Scientist
prohibit the transfer of technology developed under these grants to any person
without the prior written consent of the Chief Scientist. We may apply for such
grants for the development of new products in the future.

IT MAY BE DIFFICULT TO ENFORCE A U.S. JUDGMENT AGAINST US, OUR OFFICERS AND
DIRECTORS AND SOME OF THE EXPERTS NAMED IN THIS PROSPECTUS, OR TO ASSERT U.S.
SECURITIES LAWS CLAIMS IN ISRAEL.

Substantially all of our executive officers and directors and some of the
experts named in this prospectus are nonresidents of the U.S., and a substantial
portion of our assets and the assets of these persons are located outside the
U.S. Therefore, it may be difficult to enforce a judgment obtained in the U.S.
against us or any of those persons or to effect service of process on them
outside the U.S. Additionally, it may be difficult for you to enforce civil
liabilities under U.S. federal securities laws in original actions instituted in
Israel.

16
<PAGE>
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

Some of the matters discussed under the captions "Prospectus Summary," "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere in this prospectus include
forward-looking statements. We have based these forward-looking statements on
our current expectations and projections about future events, including, among
other things:

- implementing our business strategy;

- attracting and retaining customers;

- obtaining and expanding market acceptance of the products and services we
offer;

- forecasts of Internet usage and the size and growth of relevant markets;

- rapid technological changes in our industry and relevant markets; and

- competition in our market.

In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "could," "predicts," "potential," "continue,"
"expects," "anticipates," "future," "intends," "plans," "believes," "estimates"
and similar expressions. These statements are based on our current beliefs,
expectations and assumptions and are subject to a number of risks and
uncertainties. Actual results, levels of activity, performance, achievements and
events may vary significantly from those implied by the forward-looking
statements. A description of risks that could cause our results to vary appears
under the caption "Risk Factors" and elsewhere in this prospectus. These
forward-looking statements are made as of the date of this prospectus, and
except as required under applicable securities law, we assume no obligation to
update them or to explain the reasons why actual results may differ.

17
<PAGE>
USE OF PROCEEDS

We estimate that we will receive net proceeds from the sale of shares of our
common stock in this offering of approximately $ million, and $
million if the underwriters exercise their over-allotment option in full, based
upon an assumed offering price of $ per share and after deducting
estimated underwriting discounts and commissions and offering expenses. The
principal purposes of this offering are to obtain additional capital and to
create a public market for our common stock. We expect to use the net proceeds
from this offering for working capital and other general corporate purposes. We
may use a portion of the net proceeds to acquire complementary products,
technologies or businesses; however, we currently have no commitments or
agreements relating to any of these types of transactions.

We will have significant discretion in the use of the net proceeds of this
offering. Investors will be relying on the judgment of our management regarding
the application of the proceeds of this offering. Pending use of the net
proceeds as discussed above, we intend to invest these funds in short-term,
interest-bearing, investment-grade obligations.

DIVIDEND POLICY

We have never declared or paid any dividends on our capital stock. We expect
to retain any future earnings to fund the development and expansion our
business. Therefore, we do not anticipate paying cash dividends on our common
stock in the foreseeable future. Through our subsidiary, Nogatech Ltd., we
participate in the "alternative benefits program" under the Israeli Law for the
Encouragement of Capital Investments--1959, under which we receive a number of
tax exemptions. These tax exemptions will apply only after our net operating
losses are utilized. As a result, we have not yet benefited from these
exemptions. If Nogatech Ltd. distributes a cash dividend to us from income which
is tax exempt, it would have to pay corporate tax at the rate of between 10% to
15% on an amount equal to the amount distributed and the corporate tax which
would have been due in the absence of the tax exemption. As a result, we may
determine that it is not in your best interests to cause Nogatech Ltd. to
declare a dividend on any of its own profits to us in order to enable us to pay
a dividend to our stockholders.

18
<PAGE>
CAPITALIZATION

The following table summarizes our balance sheet data as of December 31,
1999. This balance sheet data is presented:

- on an actual basis;

- on a pro forma basis to give effect to:

- the sale of 1,196,172 shares of our Series B preferred stock in January
2000;

- the exercise of options to purchase 120,000 shares of our common stock
in January and February 2000; and

- the exercise of warrants to purchase 111,464 shares of our common stock
in January and February 2000; and

- on a pro forma as adjusted basis to give effect to:

- the conversion of all outstanding shares of preferred stock into an
estimated 9,293,080 shares of common stock upon the closing of this
offering;

- the assumed exercise of options and warrants to purchase up to
1,213,319 shares of our common stock upon completion of this offering
at a weighted average exercise price of $1.57 per share; and

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- ---------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Series A redeemable convertible preferred stock, $0.001 par
value, at redemption value; 30,000,000 shares authorized,
actual and pro forma; no shares authorized, pro forma as
adjusted; 15,906,304 shares issued and outstanding, actual
and pro forma; no shares issued and outstanding, pro forma
as adjusted (1)........................................... $ 8,243 $ 8,243
Series B redeemable convertible preferred stock, $0.001 par
value, at redemption value; no shares authorized, issued
and outstanding, actual and pro forma as adjusted;
1,196,172 shares authorized, issued and outstanding, pro
forma (1)................................................. 5,000
Stockholders' equity:
Common stock, $0.001 par value; 40,000,000 shares
authorized; 419,370 shares issued and outstanding, actual;
650,834 shares issued and outstanding, pro forma;
shares issued and outstanding, pro forma as
adjusted.................................................. 1 1
Additional paid-in-capital.................................. 4,754 5,047
Note receivable from a stockholder.......................... (57) (57)
Deferred compensation....................................... (392) (392)
Accumulated deficit......................................... (9,192) (9,192)
------- -------
Total stockholders' equity (capital deficiency) (4,886) (4,593)
------- -------
Total capitalization........................................ $ 3,352 $ 8,650
======= =======
</TABLE>

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

(1) Our shares of Series A and Series B preferred stock entitle their holders to
a liquidation preference in the event that our operations terminate. The
terms of the preferred stock provide that events such as a change of control
are considered a liquidation that entitles the holders to the liquidation
preference.

19
<PAGE>
The previous information should be read together with our consolidated
financial statements and the related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing elsewhere
in this prospectus.

The shares of common stock outstanding in the actual, pro forma and pro
forma as adjusted columns exclude:

- 3,850,000 shares of common stock reserved for issuance under our 2000
Equity Incentive Plan and 2000 Stock Purchase Plan; and

- 350,000 shares of common stock issuable as of March 1, 2000 upon the
exercise of outstanding warrants at an exercise price of $0.13 per share.

20
<PAGE>
DILUTION

Our pro forma net tangible book value as of December 31, 1999 was
approximately $3,357,000, or $0.37 per share of common stock. Pro forma net
tangible book value per share represents the amount of total tangible assets
less total liabilities, divided by 9,029,153, the number of shares of common
stock treated as outstanding on a pro forma basis after giving effect to the
conversion of our Series A preferred stock. After giving effect to the sale of
the shares of common stock offered in this offering at the assumed public
offering price, our pro forma net tangible book value at December 31, 1999 would
have been $ , or $ per share of common stock. This represents an
immediate increase in net pro forma tangible book value to existing stockholders
of $ per share and an immediate dilution of $ per share to new
investors. The following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........... $
Pro forma net tangible book value per share before this
offering as of December 31, 1999...................... $0.37
Increase per share attributable to new investors........
-----
Pro forma net tangible book value per share after this
offering................................................
-----
Dilution per share to new investors.......................
$
=====
</TABLE>

The following table summarizes on a pro forma basis, after giving effect to
the conversion of our Series A preferred stock, the total number of shares of
common stock purchased from us, the total consideration paid to us and the
average price per share paid by existing stockholders and by new investors, in
each case based upon the number of shares of common stock and Series A preferred
stock outstanding as of December 31, 1999.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders..................... 9,029,153 % $12,118,00 % $1.34
New investors.............................
--------- ----- ---------- -----
Total................................... 100.0% $ 100.0%
========= ===== ========== =====
</TABLE>

If the underwriters' over-allotment option is exercised in full, the number
of shares of common stock held by existing stockholders will be reduced to %
of the total number of shares of common stock to be outstanding after this
offering and the number of shares of common stock held by new investors will
increase to shares, or % of the total number of shares of common stock to
be outstanding immediately after this offering.

The foregoing discussions and tables assume no exercise of any stock options
or warrants outstanding. As of December 31, 1999, there were options outstanding
to purchase 1,636,220 shares of common stock at a weighted average exercise
price of $0.92 and 1,293,283 warrants outstanding to purchase shares of common
stock at a weighted average exercise price of $2.16 per share. If any of these
options or warrants are exercised, there will be further dilution to new
investors.

21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The statement of operations data for each of the years in the three-year
period ended December 31, 1999 and the balance sheet data at December 31, 1998
and December 31, 1999 are derived from our financial statements included
elsewhere in this prospectus. The statement of operations data for the year
ended December 31, 1996 and the balance sheet data at December 31, 1996 and 1997
are derived from our audited financial statements that are not included in this
prospectus. The statement of operations data for the year ended December 31,
1995 and the balance sheet data at December 31, 1995 are derived from our
unaudited financial statements that are not included in this prospectus. The
following selected consolidated financial data should be read in conjunction
with our consolidated financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1995 1996 1997 1998 1999
----------- -------- -------- -------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (UNAUDITED)
Sales....................................................... $ 931 $ 2,630 $ 2,551 $ 3,205 $ 8,856
Cost of sales............................................... 777 1,855 1,699 2,038 5,111
----------- -------- -------- -------- ----------
Gross profit................................................ 154 775 852 1,167 3,745
Operating expenses:
Research and development.................................. 1,314 997 1,266 1,451 2,283
Sales and marketing....................................... 491 898 695 1,020 1,689
General and administrative................................ 258 473 321 609 880
----------- -------- -------- -------- ----------
Total operating expenses.................................... 2,063 2,368 2,282 3,080 4,852
----------- -------- -------- -------- ----------
Operating loss.............................................. (1,909) (1,593) (1,430) (1,913) 1,107
Other income (expense), net................................. (288) (21) (32) 90 11
----------- -------- -------- -------- ----------
Net loss.................................................... (2,197) (1,614) (1,462) (1,823) 1,096
Accretion of redemption value of Series A redeemable
convertible preferred stock............................... (120) (173) (300) (383) (427)
----------- -------- -------- -------- ----------
Net loss applicable to common stock......................... $ (2,317) $ (1,787) $ (1,762) $ (2,206) $ (1,523)
=========== ======== ======== ======== ==========
Net loss per share of common stock, basic and diluted....... $ (4.04) $ (3.12) $ (5.86) $ (7.13) $ (4.50)
=========== ======== ======== ======== ==========
Weighted average number of shares of common stock
outstanding............................................... 573,250 573,250 300,709 309,536 338,295
=========== ======== ======== ======== ==========
Pro forma net loss per share of common stock, basic and
diluted................................................... $ (0.12)
==========
Pro forma weighted average number of shares of common stock
outstanding............................................... 8,948,078
==========
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------------
1995 1996 1997 1998 1999
----------- -------- -------- -------- ----------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 1,114 $ 95 $ 271 $ 3,791 $ 2,475
Working capital............................................. 915 (96) 223 4,171 3,111
Total assets................................................ 2,235 1,368 1,568 5,566 6,321
Series A redeemable convertible preferred stock............. 3,783 4,147 4,954 7,816 8,243
Stockholders' equity (capital deficiency)................... (1,919) (4,047) (4,524) (3,517) (4,886)
</TABLE>

22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS IN CONJUNCTION WITH
OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN
THIS PROSPECTUS. EXCEPT FOR HISTORICAL INFORMATION, THE DISCUSSION IN THIS
PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE PRINCIPAL FACTORS THAT COULD CAUSE OR CONTRIBUTE TO
DIFFERENCES IN OUR ACTUAL RESULTS ARE DISCUSSED IN THE SECTION TITLED "RISK
FACTORS."

OVERVIEW

We design and sell video compression chips that establish connections
between video devices and computers, as well as connections between video
devices across a variety of networks. Our video compression chips and related
decompression software use proprietary algorithms designed to provide high
quality video, low power consumption and advanced capabilities. These features
enable cost-effective plug-and-play video connections.

In 1995 and 1996, we introduced our NT1001 video chip and NT1002 sound chip
for connecting video sources to laptop computers. We sold both of these chips
embedded in PCMCIA cards. In 1998, we introduced our NT1003 chip, which
compresses video for transfer through the Universal Serial Bus (USB) interface
to computers. The USB is an interface standard for connections between a
computer and its accessories using a standard cable. We sold the NT1003 chip on
a stand-alone basis to OEMs for integration into their video products and also
incorporated into our own video devices.

With the introduction of our NT1003 chip, we began to reduce our sales of
NT1001 and NT1002 chips embedded in PCMCIA cards. In addition, we began to
increase our sales of NT1003 chips on a stand-alone basis. Our strategy is to
continue increasing our sales of chips on a stand-alone basis rather than
incorporated into our own video devices. We anticipate that these sales will
constitute the primary portion of our future sales.

We primarily sell our chips to original equipment manufacturers (OEMs) that
incorporate our chips into their video applications and products. Purchasers of
our chips in 1999 were AME Group, Camtel Technology, Fujitsu General, Hauppauge
Computer Works, Ingram Micro, Interex, IO Data, Pinnacle Systems, Sharp
Electronics and X-10.com. In 1999, approximately 61% of our sales were derived
from customers in North America, 31% from customers in Asia, and 8% from
customers in Europe and other regions.

Our sales are concentrated among relatively few customers. In 1999, sales to
Hauppauge represented approximately 24% of sales, sales to Tomen Electronics,
our Japanese distributor, represented approximately 14% of sales, and sales to
Interex represented approximately 13% of sales. Tomen Electronics accounted for
approximately 41% of sales in 1998 and 17% of sales in 1997. Although our
principal customers are likely to vary on a quarterly basis, we anticipate that
our sales will remain concentrated among a few customers for the foreseeable
future.

The sales prices of our chips decreased in 1999 primarily as a result of
increased competition, and we may need to reduce prices further in order to
remain competitive. We have offset decreased chip prices by reducing the prices
we pay our chip suppliers due to increased volume. In addition, we design each
generation of our chips to use more advanced process technology. For example,
our NT1003 chip uses 0.60-micron process technology and our NT1004 chip uses
0.35-micron process technology. Our use of smaller micron process technology
results in lower costs per chip. We are designing our next generation of chips
to be manufactured using smaller micron process technology, which we believe
will enable us to reduce manufacturing costs further.

We have incurred significant net losses since our inception, and we may
continue to do so for the foreseeable future. We incurred net losses of $1.8
million in 1998 and $1.1 million in 1999. Our accumulated deficit was $9.2
million as of December 31, 1999.

23
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth selected data from our consolidated statement
of operations as a percentage of sales for the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1998 1999
-------- -------- --------
(AS A PERCENTAGE OF SALES)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales....................................................... 100.0% 100.0% 100.0%
Cost of sales............................................... 66.6 63.6 57.7
------ ------ ------
Gross profit................................................ 33.4 36.4 42.3
Operating expenses:
Research and development.................................. 49.6 45.3 25.8
Sales and marketing....................................... 27.2 31.8 19.1
General and administrative................................ 12.6 19.0 9.9
------ ------ ------
Total operating expenses.................................... 89.4 96.1 54.8
------ ------ ------
Operating loss.............................................. (56.0) (59.7) (12.5)
Other income (expense), net................................. (1.3) 2.8 0.1
------ ------ ------
Net loss.................................................... (57.3)% (56.9)% (12.4)%
====== ====== ======
</TABLE>

SALES. Sales to OEMs are recorded when we ship our products. We recognize
sales to distributors when they ship our products to their customers. We accrue
for estimated product warranty and liability costs upon recognition of product
sales.

Sales increased approximately 26% from $2.6 million in 1997 to $3.2 million
in 1998 and 176% to $8.9 million in 1999. These increases primarily reflect the
increase in unit sales of our products. Sales increased from 1998 to 1999
primarily as a result of increased sales of our NT1003 chip, on both a
stand-alone basis and incorporated into our video devices. Our sales in 1997 and
1998 were primarily derived from sales of PCMCIA cards, which we are no longer
selling.

COST OF SALES. Cost of sales consists of component costs, warranty costs,
royalties and overhead related to manufacturing our products. Cost of sales
increased from $1.7 million in 1997 to $2.0 million in 1998 and to $5.1 million
in 1999. These increases were primarily due to increased shipments of our
products. Gross margins were 33.4% in 1997, 36.4% in 1998 and 42.4% in 1999. The
increase from 1997 to 1998 was primarily due to cost reductions that we
implemented in our PCMCIA cards, and the increase from 1998 to 1999 was
primarily due to the transition to our higher margin video compression chip
business.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
consist primarily of personnel, equipment, software tools and supplies for our
research and development activities. Substantially all of our research and
development activities occur in our facility in Israel. These expenses are
charged to operations as incurred. Our research and development expenses
increased from $1.3 million in 1997 to $1.5 million in 1998 and to $2.3 million
in 1999. These increases were primarily due to increased levels of research and
development activities and related costs of personnel. Research and development
expenses as a percentage of sales were 49.6% in 1997, 45.3% in 1998 and 25.8% in
1999. The decrease as a percentage of sales from 1998 to 1999 was due to our
substantial increase in sales in 1999. We believe significant investment in
research and development is essential to our future success. We plan to increase
our research and development activities, including recruiting and hiring
additional personnel, and to incur non-recurring engineering expenses associated
with the manufacture of our next generation chips, which will result in
increased expenses in absolute dollars.

24
<PAGE>
SALES AND MARKETING EXPENSES. Sales and marketing expenses consist of
salaries and related costs of sales and marketing employees, consulting fees,
and expenses for travel, trade shows and promotional activities. Sales and
marketing expenses increased from $695,000 in 1997 to $1.0 million in 1998 and
to $1.7 million in 1999. These increases were primarily due to increases in the
number of our sales and marketing personnel. Sales and marketing expenses as a
percentage of sales were 27.2% in 1997, 31.8% in 1998 and 19.1% in 1999. The
decrease as a percentage of sales from 1998 to 1999 was due to our substantial
increase in sales in 1999. We plan on increasing our sales and marketing
activities, including recruiting and hiring additional senior personnel, which
will result in increased expenses in absolute dollars.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of personnel and related costs for general corporate
functions, including finance, accounting, strategic and business development,
human resources and legal. General and administrative expenses increased from
$321,000 in 1997 to $609,000 in 1998 and to $880,000 in 1999. General and
administrative expenses as a percentage of sales were 12.6% in 1997, 19.0% in
1998 and 9.9% in 1999. We expect general and administrative expenses to increase
in absolute dollars as a result of our growing operational and corporate
activities, including activities related to our operations as a public company.

OTHER INCOME (EXPENSE), NET. Other income (expense) consists of interest
earned on cash and cash equivalents offset by interest expense related to bank
loans. Net interest income (expense) was an expense of $32,000 in 1997, income
of $90,000 in 1998 and income of $11,000 in 1999.

INCOME TAXES. As of December 31, 1999, we had approximately $2.3 million of
Israeli net operating loss carryforwards, $5.2 million of U.S. federal net
operating loss carryforwards and $1.7 million of state net operating loss
carryforwards. The Israeli net operating loss carryforwards have no expiration
date. The U.S. net operating loss carryforwards expire in various amounts
between the years 2004 and 2019.

25
<PAGE>
QUARTERLY RESULTS OF OPERATIONS

The tables below set forth unaudited statement of operations data for each
of the eight consecutive quarters ended December 31, 1999. This information has
been prepared on the same basis as our audited consolidated financial
statements. The information should be read in conjunction with our consolidated
financial statements and notes thereto appearing elsewhere in this prospectus
and, in the opinion of management, includes all adjustments, consisting only of
normal recurring adjustments, that we believe are necessary to present fairly
the unaudited quarterly results. Our limited operating history with respect to
our current chips makes the prediction of future operating results difficult or
impossible. We believe that period-to-period comparisons of our financial
results are not necessarily meaningful and should not be relied upon as an
indication of future performance.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEP. 30, DEC. 31, MAR. 31, JUNE 30, SEP. 30, DEC. 31,
1998 1998 1998 1998 1999 1999 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales............................. $ 670 $ 589 $ 873 $ 1,073 $ 870 $ 1,953 $ 2,947 $ 3,086
Cost of sales..................... 500 361 529 648 518 1,167 1,678 1,748
----- ----- ----- ------- ------- ------- ------- -------
Gross profit...................... 170 228 344 425 352 786 1,269 1,338

Operating expenses:
Research and development........ 359 352 369 370 588 520 622 554
Sales and marketing............. 209 239 244 329 383 511 413 382
General and administrative...... 116 133 153 207 195 183 215 286
----- ----- ----- ------- ------- ------- ------- -------
Total operating expenses.......... 684 724 766 906 1,166 1,214 1,250 1,222
----- ----- ----- ------- ------- ------- ------- -------
Operating income (loss)........... (514) (496) (422) (481) (814) (428) 19 116
Other income (expenses), net...... (15) (17) 64 55 (3) 9 59 (54)
----- ----- ----- ------- ------- ------- ------- -------
Net income (loss)................. $(529) $(513) $(358) $ (426) $ (817) $ (419) $ 78 $ 62
===== ===== ===== ======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEP. 30, DEC. 31, MAR. 31, JUNE 30, SEP. 30, DEC. 31,
1998 1998 1998 1998 1999 1999 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
(AS A PERCENTAGE OF SALES)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales............................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales..................... 74.6 61.3 60.6 60.6 59.5 59.8 56.4 56.6
----- ----- ----- ------- ------- ------- ------- -------

Gross profit...................... 25.4 38.7 39.4 39.6 40.5 40.2 43.1 43.4
Operating expenses:
Research and development........ 53.6 59.8 42.3 34.5 67.6 26.6 21.1 18.0
Sales and marketing............. 31.2 40.6 27.9 30.7 44.0 26.2 14.0 12.4
General and administrative...... 17.3 22.6 17.5 19.3 22.4 9.4 7.3 9.2
----- ----- ----- ------- ------- ------- ------- -------
Total operating expenses: 102.1 123.0 87.7 84.5 134.0 62.2 42.4 39.6
----- ----- ----- ------- ------- ------- ------- -------
Operating income (loss)........... (76.7) (84.3) (48.3) (44.9) (93.5) (22.0) 0.70 3.8
Other income (expenses), net...... (2.2) (2.9) 7.3 5.1 (0.3) 0.5 2.0 (1.7)
----- ----- ----- ------- ------- ------- ------- -------
Net income (loss)................. (78.9)% (87.2)% (41.0)% (39.8)% (93.8)% (21.5)% 2.7% 2.1%
===== ===== ===== ======= ======= ======= ======= =======
</TABLE>

Our quarterly results tend to fluctuate significantly. Sales decreased from
the fourth quarter of 1998 to the first quarter of 1999 because of our shift in
product mix from selling chips embedded in PCMCIA cards to selling our chips and
video devices to OEMs and the associated time required to ramp-up sales of those
products. Sales increased on a quarterly basis in 1999 as a result of increased
unit shipments of our NT1003 chip, which was introduced in the second quarter of
1998. Gross margins have generally increased due to the transition to our higher
margin video compression chip business.

26
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have funded operations primarily through the private
placement of our preferred stock and bank loans. We raised proceeds of
approximately $1.8 million in 1997, $5.6 million in 1998 and $4.7 million in
January 2000 from private placements of our securities, net of issuance costs.
Through January 2000, we issued an aggregate of 15,904,304 shares of Series A
preferred stock and 1,196,172 shares of Series B preferred stock. We estimate
that these shares will be converted into approximately 9,293,080 shares of our
common stock upon the closing of this offering. As of December 31, 1999, we had
cash and cash equivalents of $2.5 million, and as of January 31, 2000, we had
cash and cash equivalents of $7.1 million.

Cash used in operations include expenditures associated with development
activities and marketing efforts related to commercialization and improvement of
our current products, as well as the development of our future products. Cash
used in operations was $1.1 million in 1997, $1.8 million in 1998 and $1.1
million in 1999. We made investments in fixed assets of approximately $472,000
between January 1, 1997 and December 31, 1999.

We have a line of credit arrangement with a bank for an aggregate amount of
$2.0 million. The loans under this line of credit bear interest at a rate that
is a fixed percentage in excess of the interest rate set by the Bank of Israel.
The line of credit is secured by liens on our assets. Bank guarantees provided
under the line of credit amounted to approximately $2.0 million at December 31,
1999.

Our capital requirements depend on numerous factors, including market
acceptance of our products, the resources we devote to developing, marketing,
selling and supporting our products, the timing and extent of establishing
additional international operations and other factors. We expect to devote
substantial capital resources to expand our research and development and our
sales and marketing activities, and to other general corporate activities. We
expect that the net proceeds from this offering, our cash on hand and cash from
operations will be sufficient to meet our working capital and capital
expenditure needs for at least the next 12 months. After that, we may need to
raise additional funds which we may not be able to obtain on acceptable terms,
if at all.

BENEFICIAL CONVERSION CHARGE

In January 2000, we issued 1,196,172 shares of our Series B preferred stock
to a financial investor, which will convert into shares of our common stock upon
the closing of this offering. In connection with this issuance, we will record a
beneficial conversion charge of $5.0 million in the three months ended
March 31, 2000. This charge will be calculated as the difference between the
estimated fair value of one share of our common stock on the date of issuance
and the per share conversion price applicable to the Series B preferred stock,
multiplied by the number of shares of common stock into which the shares of
Series B preferred stock are convertible. This nonrecurring charge will be
entirely reflected as a decrease of any net income that we record that is
applicable to common stock during this period, against a corresponding credit to
additional paid-in capital.

EFFECTIVE CORPORATE TAX RATES

Our tax rate will reflect a mix of the U.S. federal and state tax on our
U.S. income and Israeli tax on non-exempt income. The majority of our Israeli
subsidiary's income is derived from our capital investment program with
"Approved Enterprise" status under the Israeli Law for the Encouragement of
Capital Investments--1959, and therefore is eligible for tax benefits. Under
these benefits, we will enjoy a tax exemption on income derived during the first
four years in which this investment program produces taxable income, provided
that our Israeli subsidiary does not distribute this income to us as a dividend,
and a reduced tax rate of 10% to 15% for the remaining term of the program. All
of these tax benefits are subject to various conditions and restrictions. Since
we have incurred tax losses through December 31, 1999, we have not yet used the
tax benefits for which we are eligible.

27
<PAGE>
YEAR 2000 ISSUES

We currently are not aware of any Year 2000 problem in any of our critical
systems and products. However, the success to date of our Year 2000 efforts
cannot guarantee that a Year 2000 problem affecting third parties upon which we
rely will not become apparent in the future and interfere with our operations or
otherwise harm our business.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, which establishes
accounting and reporting standards for derivative instruments and hedging
activities. SFAS No. 133 requires recognition of all derivatives at fair value
in the financial statements. We believe that, upon implementation, the standard
will not have a significant effect on our financial statements.

MARKET RISK

We are exposed to financial market risks including changes in interest rates
and foreign currency exchange rates. Substantially all of our cash and cash
equivalents consisted of short-term deposits and therefore are not subject to
significant interest rate risk. Substantially all of our sales and capital
spending is transacted in U.S. dollars, although a substantial portion of the
cost our operations, relating mainly to our personnel and facilities in Israel,
is incurred in New Israeli Shekels or NIS. We have not engaged in hedging
transactions to reduce our exposure to fluctuations that may arise from changes
in foreign exchange rates. In the event of an increase in inflation rates in
Israel, or if appreciation of the NIS occurs without a corresponding adjustment
in our dollar-denominated sales, our results of operations could be materially
harmed.

28
<PAGE>
BUSINESS

OVERVIEW

Our products simultaneously compress video and stream audio and data,
enabling real-time transmission into personal computers and personal digital
assistants through the Universal Serial Bus (USB) interface standard. The USB is
a widely accepted interface standard for plug-and-play connections between a PC
and its accessories. Our chips are integrated into PC digital video cameras,
video capture devices and PC-TVs.

Our products are compatible with the Windows 95, Windows 98, Windows 2000,
Mac OS and Windows CE operating systems. In addition to our chips, we also sell
our own video devices that incorporate our chips.

Demand for video over the Internet and over other communication networks,
for convenient connectivity solutions and for low-cost video-enabled consumer
products is currently undergoing substantial growth. In order to meet this
demand, the Moving Picture Experts Group, an industry committee commonly known
as MPEG, has developed a new standard for video compression known as MPEG-4. We
expect that MPEG-4 will be the primary standard for integrating and
standardizing a wide range of video applications. We are currently in the early
stages of developing our next generation of chips to be compatible with the
MPEG-4 compression standard. We believe that compatibility with the MPEG-4
standard will enhance the market for our chips.

In 1999, purchasers of our products included AME Group, Camtel Technology,
Fujitsu General, Hauppauge Computer Works, Interex, IO Data, Pinnacle Systems,
Sharp Electronics and X-10.com.

INDUSTRY BACKGROUND

RECENT MARKET TRENDS

The markets for products that incorporate our chips are growing rapidly. The
primary factors driving this growth include the following:

- IMPLEMENTATION OF PLUG-AND-PLAY CONNECTIONS: New PC systems today are
generally being developed and shipped to the market with standard
plug-and-play interface ports. The USB is a widely accepted standard
interface between PCs and computer accessories. International Data
Corporation (IDC) estimated that the USB would be available on 92.2% of
all desktop PC shipments in the U.S. in 1999 and would reach 100% by the
year 2001. As a result, the demand for plug-and-play computer accessories,
especially in the video area, is expected to increase.

- CONVERGENCE OF TV AND PC: In recent years, there has been substantial
convergence of applications designed for television sets and PCs,
including the capacity to watch television broadcasts on a PC. This
development has resulted in the introduction of new services and products,
such as targeted interactive Internet and TV advertising, video streaming
and digital TV and set top boxes.

- ESTABLISHMENT OF BROADBAND COMMUNICATION NETWORKS: Broadband communication
networks based on cable and wide-band digital subscriber line (DSL) modems
enable the use of digital video applications for high speed Internet
access and voice, data and video communications. We believe that broadband
communication networks will increase the popularity of applications such
as video conferencing and video streaming. These networks may also lead to
the development of

29
<PAGE>
future applications, such as video cellular phones, that will require
advanced video compression and capture technology. According to a November
1999 IDC study, the number of U.S. households using cable modems was
expected to grow to 1.3 million in 1999 and to reach 9.0 million by 2003.

- DRAMATIC GROWTH OF INTERNET COMMUNICATION: According to IDC, there were
an estimated 142 million users of the Internet at the end of 1998 and the
number of users is expected to grow to over 500 million by the end of
2003. The dramatic growth of the Internet has led to substantial increases
in the amount of video, audio and other data that is transferred between
computers. In addition, Internet communication increasingly involves video
and audio streaming. As a result, there has been substantial growth in the
use of digital cameras for video e-mail, webcams, video conferencing and
website development, driving demand for products that can input video
images into computers.

- STANDARDIZATION OF DIGITAL VIDEO COMPRESSION: The sharp increase in
demand for video compression for the Internet, for convenient connections
between computers and for video-enabled consumer products has fueled the
computer industry's search for a compression standard. We expect that
MPEG-4 will become the primary standard for integrating and standardizing
a wide range of applications, including video streaming, digital
television broadcasting, home video archiving, interactive local
multimedia and other modes of video communication across the Internet and
third generation mobile phone and broadcast networks. We believe that the
standardization of video compression through the growing acceptance of
MPEG-4 will significantly expand the range of products and devices that
use the next generation of our chips.

THE CHALLENGES

The technologies involved in video compression and its integration into
computer products pose unique challenges:

- TIME TO MARKET: In the computer industry, the average product life cycle
is short, making time to market critical. As a result, manufacturers must
continuously, effectively and rapidly offer new products.

- CPU EFFICIENCY: Video applications, such as video conferencing, video
e-mail and other related video capture software programs, use significant
power and memory of the CPU to compress and decompress video data.
Typically, the more complex the video application, the greater the
utilization of the CPU. The continued expansion of video applications
requires improvements in CPU speed and efficiency and, in particular,
requires an efficient balance between video compression and decompression
in order to minimize CPU usage.

- FLEXIBLE ADAPTATION TO CHANGING COMPUTER INTERFACES AND MULTIPLE OPERATING
SYSTEMS: The USB is currently the most popular PC interface standard. In
the future, however, manufacturers may introduce interfaces based on new
standards. In addition, OEMs offer their products for use on a wide range
of operating systems. As a result, the chips used for video devices must
operate with major operating systems for PCs and personal digital
assistants, including Windows and Mac.

- QUALITY OF VIDEO IMAGE: Efficient video compression algorithms are
essential for high quality video imaging. Without seamless migration of
the video image from the camera to the ultimate display on the screen,
poor quality video images will occur. As a result, the efficiency of
algorithms must continue to develop in a manner consistent with the
complexity of the video data that is being transmitted.

30
<PAGE>
- DEMAND FOR STANDARD VIDEO COMPRESSION: The proliferation of video
communication applications has fueled the demand for standard video
compression for wide and narrow band video communication across the
Internet and mobile and broadcast networks. Video compression chips and
algorithms must enable video compression and archiving for a broad range
of applications in the new standardized environment that we expect will be
governed by MPEG-4.

THE NOGATECH SOLUTION

Our products are designed to address the substantial need for video
connections for computers. Our video compression chips, which are based upon our
algorithms, are incorporated into new video-to-PC solutions for consumer
electronics products, such as PC-TVs and PC digital video cameras. We expect to
develop new algorithms and chips that will respond to the growing demands for
connections between video devices across a variety of networks resulting from
increasing Internet video use and plug-and-play applications.

We believe that we were the first company to introduce a single chip that
enabled the streaming of video, audio and data through the USB interface for a
variety of PC video products and applications. Our chips operate on all major
operating systems for PCs and personal digital assistants and are compatible
with a wide variety of video applications.

We believe that our technology and expertise will enable us to develop
future products that will comply with the evolving standardization of video
compression reflected in MPEG-4. We anticipate that our chips will have wide
applications for the broadband communication networks that are being established
and will ensure high video quality for the advanced video communication that
those networks will facilitate.

We believe that our products have successfully addressed the market's
challenges as follows:

- TIME TO MARKET: We design our chips to be compatible with products of
leading OEMs and consumer electronics companies. We support our customers
with reference designs that facilitate their ability to respond quickly
and efficiently to market demands. In addition, we work closely with our
customers to tailor our products to meet their specific needs. We assist
our customers in integrating our chips into their products and to help
them bring their new products to market on a cost-effective and timely
basis.

- CPU EFFICIENCY: Our chips require low usage of CPU processing time,
memory and power. This is achieved through the combination of advanced
compression algorithms and efficient decompression software tailored
specifically to transferring video into the computer through the USB
interface.

- FLEXIBLE ADAPTATION TO CHANGING COMPUTER INTERFACES AND MULTIPLE OPERATING
SYSTEMS: We have developed compression algorithms that respond to the
changing requirements of a wide variety of computer interfaces. As the
interfaces have changed and advanced, we have adapted our technology to
the new interfaces. In addition, our products are used on a variety of
operating systems. We believe that we can rapidly adapt our software to
other operating systems. Our design also offers our customers additional
versatility in that our chips can be incorporated into different
video-based accessories, which reduces the customers' time to market,
support costs and overall chip costs.

- QUALITY OF VIDEO IMAGE: Our compression algorithms are designed to
minimize noticeable degradation in video images.

- DEMAND FOR STANDARD VIDEO COMPRESSION: We have developed substantial
knowledge and experience in developing video compression algorithms in
order to develop algorithms and chips

31
<PAGE>
that can implement the broad range of video applications that will be
possible in the standardized MPEG-4 environment.

BUSINESS STRATEGY

Our goal is to be the leading provider of video connection solutions using
enhanced video compression technology and plug-and-play interfaces.

The following are the key elements of our strategy:

- MAINTAIN EXPERTISE IN VIDEO COMPRESSION TECHNOLOGY: We use our expertise
in developing and implementing algorithms and software to develop chips
that establish connections between video devices and computers, as well as
connections between video devices across a variety of networks and media.
We believe that our expertise in all aspects of video compression
technology and our focus on emerging industry standards enable us to
design "system-on-chip" products for video connections that are attractive
to a broad range of customers. Our engineering team of mathematicians and
chip designers, of which a significant number hold Ph.D. and MSEE degrees,
is experienced in all aspects of algorithm development. For over
15 years, our key development personnel have been developing video
compression technology and video connectivity products. We are active
committee members in the Video Class USB Implementers Forum, an industry
organization founded by the companies that developed the USB standard.

- FOCUS ON HIGH VOLUME APPLICATIONS: We focus on designing chips for
manufacturers of video products for emerging high volume PC business and
consumer applications, such as video streaming, interactive multimedia on
mobile networks and digital multimedia broadcasting. In cooperation with
leading manufacturers of video equipment in the commercial and consumer
markets, we attempt to identify market segments that have the potential
for substantial growth and to tailor our products for these markets. By
focusing our marketing efforts on leading OEMs with large volume
potential, we believe that we will reach a substantial segment of our
potential customer base while minimizing the cost and complexity of our
marketing efforts.

- CREATE AND STRENGTHEN OUR RELATIONSHIPS WITH KEY CUSTOMERS: Our goal is
to sell our products to leading OEMs in the consumer electronics market
and to develop long-term working relationships with them. We work closely
with our customers to develop and modify our chip designs to meet their
particular needs. Based upon our experience with our customers' projects,
we typically are involved from the design stage to the product launch
stage.

- BUILD EXISTING TECHNOLOGIES TO PENETRATE NEW MARKETS: We plan to use the
algorithms that we developed in connection with the current video-based
USB market to develop new chips for future products. Our new products use
many of the same design features that we have previously developed. We
believe that these factors will enable us to quickly establish new
reference designs for emerging new market opportunities for our existing
and potential OEM customers.

PRODUCTS

We design, develop and market chips for video connectivity that enable
video-to-PC connections and high quality video on PCs. Our chips are
"system-on-chip" products that process and compress video images and handle the
transfer of data through the USB interface. Our chips work in tandem with our
PC-based software, which decompresses and processes the video. We believe that
our chips, which are small, power-efficient and compatible with a variety of
operating systems, are effective PC interface solutions for manufacturers of
USB-based digital video cameras, PC-TVs and video capture devices. We also
provide our customers with comprehensive reference designs for our chips. These
reference designs enable our customers to design and build new products rapidly
and to reduce significantly the amount of time that they need to introduce new
products.

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<PAGE>
Each of our chips incorporates its own related software. Our software is the
interface between the chips and PCs and can be installed and used rapidly,
enabling plug-and-play connectivity. Our software enables video decompression,
USB protocol implementation and video device control, such as brightness, hue
and zoom control. The key feature of our software is its ability to maintain
high video quality while using the CPU's resources efficiently.

The role that our chips play in the transmission of digital video from a
video device to a PC is illustrated below:

[CHART]

In the future, we expect that more advanced versions of our chips will
support additional connections between PCs and video-based accessories, as well
as video network connections for the Internet and mobile and broadcast
communication networks. We anticipate that our next-generation chips will be
compatible with MPEG-4 applications. These applications include advanced video
streaming through the Internet, digital video archiving, personal video
recorders and high quality streaming using wireless networks.

In 1995 and 1996, we introduced our NT1001 video chip and NT1002 sound chip
for connecting video sources to laptop computers. We sold both of these chips
embedded in PCMCIA cards. In 1998 we introduced our NT1003 chip which compresses
video for transfer through the USB interface to computers. We sold the NT1003
chip on both a stand-alone basis to OEMs for integration into their video
products and also incorporated into our own video devices.

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<PAGE>
The following table describes our current and anticipated future chips and
the products in which they are or are expected to be used:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
CHIP DATE INTRODUCED DESCRIPTION OEM PRODUCTS
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NT1003 Second quarter 1998 - Video compression across USB - PC-TVs
interface - Video capture devices
- Plug-and-play - PC digital video cameras
- Low power consumption
- --------------------------------------------------------------------------------------------------
NT1004 Fourth quarter 1999 - Video compression, audio and - PC-TVs
data streaming across USB - PC digital video cameras
interface - Video capture devices
- Plug-and-play
- Low power consumption
- --------------------------------------------------------------------------------------------------
NT1005 Scheduled for second - Companion chip for NT1004 chip - PC-TVs with VBI
quarter 2000 - Data streaming enhancements:
Vertical Blank Interval (VBI)
- --------------------------------------------------------------------------------------------------
NT1006 Scheduled for third - Dual mode camera chip for - PC digital video cameras, with
quarter 2000 digital still pictures when possible dual mode for digital
detached from computer and live still pictures
video when connected to - Webcams
computer
- For USB and wireless Bluetooth
interfaces
- --------------------------------------------------------------------------------------------------
</TABLE>

NT1003. The NT1003 is a video chip for video communication across the USB
channel to the PC. The NT1003 chip is incorporated into a variety of video
products, including PC-TVs, PC digital cameras and video capture devices. We
also sell our own video devices that incorporate the NT1003 chip. These devices
include our PC-TV device, which enables users to watch television on a PC, video
cable adapters and PC digital video cameras.

NT1004. The NT1004 chip incorporates video, audio and data streaming into a
single chip for video, audio and data transfer across the USB channel to the PC.
In addition to its use with PC cameras and PC-TVs, the NT1004 can be
incorporated into PC set-top boxes, cable modems and computer displays.

NT1005. The NT1005 is a companion chip to the NT1004. We expect to
introduce this chip in the second quarter of 2000. It is being designed to
enhance the NT1004 chip by offering additional features such as data streaming
for Vertical Blank Interval (VBI), which enables text to be displayed on a
screen in connection with PC-TV applications.

NT1006. The NT1006 chip is scheduled to be introduced in the third quarter
of 2000. It is being designed to enable larger video images than the NT1004 chip
and has additional features, such as dual mode camera functionality for still
and video images. It also enables the transmission of live video through the
Bluetooth interface, a standard for short range wireless transmissions.

NEXT GENERATION. We are designing our next generation chips to be
compatible with the MPEG-4 standard. These chips will be designed to provide
video streaming through the Internet and video archiving for personal computers,
personal digital assistants, PC digital video cameras, video capture devices and
PC-TVs.

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<PAGE>
SALES AND MARKETING

The majority of our customers are OEMs that buy our chips and design them
into their products. We work closely with existing and potential customers to
assist them in integrating our chips into their products by offering reference
designs and close collaboration with our application engineers. In some cases,
we collaborate with manufacturers whose products work together with our chips to
create and market reference designs for OEM customers. This approach encourages
these manufacturers to market our chips with their products, increasing our
market reach and visibility.

We market our products worldwide from our direct sales offices in the U.S.
and Israel. We depend solely upon Tomen Electronics for distribution of our
products in Japan, which we view as a critical market for our success. We
provide marketing and customer support services from our U.S. office.

The following table sets forth OEM purchasers of our products in 1999 and
their products incorporating our chips:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S> <C>
PURCHASER PRODUCTS
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S> <C>
AME Group Video capture devices, PC digital video cameras, PC-TVs
Camtel Technology Video capture devices, PC digital video cameras, PC-TVs
Fujitsu General PC digital video cameras
Hauppauge Computer Works Video capture devices, PC-TVs
Interex Video capture devices
IO Data Video capture devices
Pinnacle Systems PC-TVs
Sharp Electronics Video capture devices
X-10.com Video capture devices
- --------------------------------------------------------------------------------------------------
</TABLE>

We do not have long-term contracts with any of our customers. Sales of our
products are made under firm purchase orders. However, we do at times allow
customers to reschedule deliveries. Our business is characterized by short lead
times and quick delivery schedules. Our backlog fluctuates substantially from
period to period. As a result, we do not believe that backlog at any given time
is a meaningful indicator of future sales.

CORE TECHNOLOGY

We believe that one of our key competitive advantages is our unique core
technologies. These range from advanced video compression and image processing
algorithms to the design of our system architecture, efficient software
implementation, cost-effective design of high-performance video processing chips
and the integration of these core technologies into our chips. We have developed
and continue to build on the following key technology areas:

- standard and proprietary high quality video compression algorithms;

- advanced image processing algorithms that enable our bit rate control of
USB data, Vertical Blank Interval (VBI) detection, infrared remote control
detection and scene analysis for computer control applications;

- multiple-platform video streaming software for Windows 95, 98, 2000, CE
and Mac operating systems; and

35
<PAGE>
- implementation of "system-on-chip" architecture for multiple video
applications.

Each of these technologies is described in further detail below:

STANDARD AND PROPRIETARY HIGH QUALITY VIDEO COMPRESSION ALGORITHMS

Video compression techniques exploit redundancies between various parts of
the video image and redundancies between consecutive video frames. These
redundancies are used to reduce the data required for representing video on the
computer while maintaining acceptable video quality. In "closed loop systems,"
such as video data transmitted through the USB interface, no industry standard
is required. However, in open systems such as the Internet, standard protocols
must be used to facilitate communications between different systems. As a
result, our technology addresses standard as well as proprietary video
compression techniques.

Our compression technology provides the following features:

- high quality image with minimal and imperceptible degradation of the
picture;

- high frequency details of the image, including edges;

- efficient use of CPU resources;

- use of minimal silicon area on the chip;

- ability to compress images and display them in real time; and

- highly efficient cost and performance.

We are developing advanced video processing technology for implementation
and enhancement of the MPEG-4 video compression standard for PC video
accessories and for communication across networks. MPEG-4 builds on the
experience of the MPEG-1 and MPEG-2 standards, which are currently used in
digital video applications. MPEG-4 is rich in features, and can be customized to
serve the needs of specific industries while preserving a high level of
interoperability across a variety of applications. It allows a new level of
interaction with visual content, providing the ability to view, access and
manipulate objects rather than pixels. MPEG-4's impact is especially significant
in video streaming, digital television, mobile multimedia and game applications.
We are adapting and enhancing our existing core technologies in order to develop
algorithms and chips that will be compatible with the variety of Internet video,
plug-and-play and other applications based upon MPEG-4.

IMAGE PROCESSING ALGORITHMS

We have developed a library of digital signal, image and video processing
algorithms that provide video image processing solutions for different video
applications. These algorithms enable the delivery of additional functionality,
such as segmentation of objects by motion, bit rate control, VBI detection and
camera-aided touch-screen, as described below. The segmentation of objects by
motion is a key pre-processing algorithm for the MPEG-4 standard. Since the
MPEG-4 standard allows the separation of images into distinct visual objects, it
supports higher quality video images, especially for mobile applications. We use
bit rate control, VBI detection, multiple-platform video streaming software and
system-on-chip architecture in our products, and we expect to include
camera-aided touch screen in our future products. These additional functions can
be described as follows:

- Bit rate control

In the USB interface, the available channel bandwidth between the PC and
its accessories varies. Consequently, when only a single accessory is
connected to the PC, available bandwidth may be fairly broad, while in
cases where multiple accessories are connected, the available bandwidth
per accessory will be narrower. Our flexible image processing algorithms
allow the

36
<PAGE>
PC to choose any bandwidth per accessory at variable rates. This
technology can be modified to comply with restrictions imposed by the
MPEG-4 standard and for other computer interfaces.

- VBI detection

Vertical Blank Interval (VBI) is a standard technique that enables
transmission of digital data simultaneously with standard analog video.
This technique is used by most cable, over the-air and satellite
television companies and involves the insertion of information such as
closed-captions into the blank vertical lines in the broadcast video data
stream. We have developed an algorithm that allows detection of the VBI
information. In addition, we have developed technology that allows our
chips to use the VBI information to integrate television, VBI and
Internet capabilities.

- Multiple-operating system video streaming software

We have developed software that can be implemented on various operating
systems while maintaining an efficient decompression algorithm and bit
rate control. Our software maintains system stability, plug-and-play and
ease of use while achieving high performance on the target operating
system. The software, when used together with our chips, provides a
complete system solution. We work with Microsoft Corporation and Apple
Corporation to ensure that our software works properly on their operating
systems.

- "System-on-chip" architecture

Our chips are "system-on-chip" solutions, consisting of an image
processing unit, image compression unit and an interface protocol unit.
The image processing unit is designed to comply with as many available
digital video sources as possible. Our chips can process images from most
video sources without additional hardware changes. Using our chips,
systems designers are able to develop many cost-effective applications
for camera sensors, tuners or video decoders without any restrictions.

The image compression unit compresses the video signal to the desired bit
rate. The interface protocol unit handles the USB data transfer while
optimizing overall system performance, reliability, flexibility, image
quality, size, cost and power consumption.

- Camera-aided touch-screen

We developed our camera-aided touch-screen technology to provide
touch-screen pointing and selecting functionality using a conventional
low cost video camera together with image processing software running on
the PC. The video camera is used to obtain a video image of a finger or a
pointing device, pointing at an icon on the screen. The image processing
algorithm analyzes the video image and determines whether the icon is
being touched. In response, the computer performs the required operation
of the icon. We have applied for a patent relating to this technology,
which we plan to incorporate into our software.

RESEARCH AND DEVELOPMENT

In order to accommodate the rapidly changing needs of the markets that we
serve, we place a major emphasis on research projects designed to improve our
existing chips, software and reference designs. We are developing more advanced
video compression and video connectivity technology to meet the new standards
that are currently evolving. These new products will enable our customers to
operate their video-enhanced devices with the interfaces that will be used on
future PC platforms. From time to time, we engage in research and development
projects with our customers to develop special devices for their specific
product designs.

37
<PAGE>
We are designing the NT1006 chip to support multiple applications, including
digital still camera mode as well as live video camera mode and the transmission
of live video for wireless applications. In 2000, a significant part of our
development efforts will concentrate on MPEG-4 technology.

As of March 1, 2000, 18 of our employees were engaged in research and
development.

Prior to 1995, we participated in two Israeli government research and
development incentive programs, under which we received research and development
participation of approximately $263,000. We are obligated to pay royalties at
rates that generally range from 100% to 150% of revenues resulting from the
funded projects up to maximum amounts of 100% to 150% of the funded amount.
Because we no longer intend to manufacture and sell products developed under the
projects funded by the Chief Scientist, we believe that we no longer have
royalty liability to the Chief Scientist.

MANUFACTURING

Our manufacturing process consists primarily of the production of chips,
test engineering, assembly of chips and OEM products and quality control. In
1998 and 1999, Fujitsu Microelectronics Europe and Hyundai Electronics
manufactured all of our chips, which we purchased from an independent
distributor. We may use additional manufacturing sources in the future. Our
manufacturers use a range of manufacturing technology, known as process
technology. Our NT1003 chip is based on 0.60-micron process technology. Our
NT1004 and NT1005 chips are based on the more advanced 0.35-micron process
technology. We believe that other components are generic in nature and can be
obtained from a variety of suppliers. Our USB video devices are assembled by
subcontractors in Israel.

COMPETITION

Our industry is characterized by intense competition. The markets in which
we operate are characterized by rapid technological change, evolving industry
standards and declining average selling prices, and we expect them to become
increasingly competitive. We believe that the key competitive factors in our
markets are product design, performance, price, features, size, reliability,
time to market and customer support. In particular, we believe that our ability
to offer chips that have the flexibility to be used in a variety of products and
on a variety of operating systems will be critical to the competitiveness of our
products.

Our principal competitors in the sale of USB-compliant chip solutions for
video applications include Divio, SunPlus Technology and Winbond Electronics,
each of which supplies these chips to OEMs for use in consumer electronics
products. We expect that large manufacturers of generic chips or manufacturers
of chips in the video compression arena, such as Zoran and C-Cube Microsystems,
may begin marketing competing chips and become more active in our target
markets. Additionally, in the future, some of our customers may internally
develop products that we currently sell to them.

Some of our competitors have greater financial, personnel and other
resources or offer a broader range of products and services than we do, and may
be able to respond more quickly to new or emerging technologies or changes in
customer requirements, benefit from greater purchasing economies, offer more
aggressive pricing or devote greater resources to the promotion of their
products. In addition, one or more of our competitors may develop products that
are superior to ours or that will achieve greater market acceptance than our
products.

We believe that our success will depend primarily on our ability to provide
technologically advanced and cost-effective video connectivity solutions for
consumer electronics products. Additionally, we will have to provide our
customers with a short time to market for their products and responsive customer
support.

38
<PAGE>
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

Our success is largely dependent upon proprietary technology. We rely
primarily on a combination of copyright and trade secret laws, as well as
confidentiality procedures and contractual provisions, to protect our
proprietary rights. We also rely to a lesser extent on trademark protection
concerning various names and marks that serve to identify our products.

We have applied for three U.S. patents that relate to our video technology.
These patent applications do not cover our proprietary algorithms, for which we
have not applied for patents to date. We also seek to protect our proprietary
rights through copyright protection and through restrictions on access to our
trade secrets and other proprietary information contained in confidentiality
agreements with our customers, suppliers, employees and consultants. While our
ability to compete may be affected by our ability to protect our intellectual
property, we believe that, because of the rapid pace of technological change in
our industry, maintaining our technological leadership and our comprehensive
familiarity with all aspects of the technology contained in our chips and
associated software is of great importance in addition to patent protection.

EMPLOYEES

As of March 1, 2000, we employed a total of 39 persons worldwide, including
18 in research and development, 10 in technical service support, sales and
marketing, eight in management and administration and three in operations.
Thirty-five of our employees are based in Israel and four of our employees are
based in Santa Clara, California. None of our employees is subject to a
collective bargaining agreement, and we consider our relations with our
employees to be good.

Israeli labor laws and regulations are applicable to our employees in
Israel. These laws principally concern matters such as paid annual vacation,
paid sick days, length of the workday, pay for overtime, insurance for
work-related accidents, severance pay and other conditions of employment.
Israeli law generally requires severance pay, which may be funded by Manager's
Insurance, described below, upon the retirement or death of an employee or
termination of employment without cause. This insurance policy provides a
combination of savings plans, insurance and severance pay, if the employee is
legally entitled upon termination of employment. Furthermore, Israeli employees
and employers are required to pay specified sums to the National Insurance
Institute. Since January 1, 1995, these amounts also include payments for
national health insurance. The payments to the National Insurance Institute are
approximately 14% of wages, up to a specified amount. The employee contributes
approximately 66% and the employer contributes approximately 34% of these
amounts. Although not legally required, we regularly contribute to a "Manager's
Insurance" fund or to a privately managed pension fund on behalf of our
employees located in Israel.

LEGAL PROCEEDINGS

We are not a party to any legal proceedings.

FACILITIES

We lease a 1,800 square foot facility in Santa Clara, California at an
annual rental of approximately $60,000. This lease expires in September 2002.
Our main office and research and development facilities, located in Kfar Saba,
Israel, occupy approximately 7,800 square feet, which we lease at an annual
rental of approximately $95,000. This lease expires in February 2003, with an
option to extend until February 2008, subject to an increase in our annual
rental payments to a range of $120,000 to $140,000. We believe that our
properties are adequate to meet our current needs and that any additional space
that we may need in the future will be available on commercially reasonable
terms.

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<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information with respect to our directors and
executive officers:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
Nathan Hod............................. 54 Chairman of the Board
Arie Heiman............................ 53 President and Chief Executive Officer and Director
Yaron Garmazi.......................... 36 Chief Financial Officer and Secretary
Aryeh Gavrieli......................... 38 Vice President of Engineering
Liat Hod............................... 26 Vice President of Business Development
Gerald Dogon........................... 60 Director
Avraham Fischer........................ 43 Director
Davidi Gilo............................ 43 Director
Moshe Harel............................ 59 Director
Yirmiyahu Kaplan....................... 64 Director
Andrew Schonzeit....................... 43 Director
Yossi Vinitski......................... 33 Director
</TABLE>

NATHAN HOD co-founded Nogatech in 1993. Mr. Hod has served as our Chairman
since August 1995. From August 1995 though November 1995, Mr. Hod also served as
our Chief Executive Officer, Treasurer and Chief Financial Officer. From March
1994 until July 1998, Mr. Hod also served as Chief Executive Officer and
President of DSP Communications, a manufacturer of digital wireless technology
that was acquired by Intel in 1999. From November 1997 until October 1998,
Mr. Hod also served as Chairman of the Board of DSP Communications. Mr. Hod also
served as General Manager of Scitex Japan, a subsidiary of Scitex Corporation, a
developer of imaging and publishing systems, from 1986 until 1992. Mr. Hod has a
Masters degree in Business Administration from the University of Massachusetts,
Amherst.

ARIE HEIMAN, PH.D., co-founded Nogatech in 1993. Dr. Heiman has served as a
director and as our Chief Executive Officer since November 1995 and served as
our Chief Financial Officer between November 1995 and February 1999. In
addition, from January 1993 to November 1995, Dr. Heiman served as our Vice
President of Engineering and Technology. From 1990 to 1993, Dr. Heiman served as
Vice President, Image Activity for DSP Group, a computer technology company.
From 1978 to 1990, Dr. Heiman was Head of Digital Signal Processing Activities
for Tadiran Communications Group, an electronics/communications manufacturing
company. Dr. Heiman has a Ph.D. degree in Electrical Engineering from Tel Aviv
University.

YARON GARMAZI has served as our Chief Financial Officer since February 1999.
From 1995 until that time, he served as Controller for DSP Communications, where
he was responsible for the company's financial reporting system. Prior to that
time he was an auditor with Doron & Co., an Israeli accounting firm.
Mr. Garmazi has a Bachelors degree from Tel Aviv Management College. Mr. Garmazi
is an Israeli certified public accountant.

ARYEH GAVRIELI has served as our Vice President of Engineering since January
1998. From January 1997 to December 1997, Mr. Gavrieli served as our Vice
President of Mobile Video Conference Products. From 1993 to December 1996 he
held various engineering positions with us. Mr. Gavrieli was with the image
processing group at DSP Group from 1991 to 1993. He was with the Israeli Defense
Forces during from 1985 to 1991. Mr. Gavrieli has a Masters of Science degree in
Electrical Engineering from the Technion Israel Institute of Technology.

LIAT HOD has served as our Vice President of Business Development since
August 1996. Between January 1996 and July 1996, she was our U.S. Marketing
Manager. Ms. Hod received her Masters

40
<PAGE>
degree in Business Administration from San Francisco State University in June
1996. Ms. Hod is the daughter of Nathan Hod, our Chairman of the Board.

GERALD DOGON has served as a director since August 1999. Mr. Dogon served as
a director of DSP Communications from November 1997 through January 1999, as
Chief Financial Officer of DSP Communications from August 1994 through October
1998, as Executive Vice President of DSP Communications from July 1996 through
October 1998 and as Senior Vice President of DSP Communications from August 1994
through July 1996. Between April 1992 and August 1994, Mr. Dogon served as
Director of Finance of Nilit, an Israeli manufacturer of nylon fibers. From
March 1991 to March 1992, Mr. Dogon served as Vice President of Finance of
Mul-T-Lock, an Israeli manufacturer of security devices. Between March 1989 and
March 1991, he served as Manager of the International Division of the Israel
General Bank. From December 1987 to March 1989, he served as Chief Financial
Officer of Indigo, an Israeli developer of imaging systems. Prior to December
1987, he was employed for 17 years by Scitex, where he last served as Executive
Vice President and Chief Financial Officer. Mr. Dogon has a Bachelors degree in
Economics and Commerce from the University of Cape Town, South Africa.

AVRAHAM FISCHER has served as a director since January 1995. Mr. Fischer is
a managing partner of the law firm Fischer, Behar, Chen & Co., of Tel Aviv,
Israel, where he has practiced since 1982. Mr. Fischer has also served as a
director of DSP Group from 1989 through 1997, of DSP Communications from 1996
through 1999, and of Vyyo, a developer of wireless broadband technologies, since
April 1996. Since January 1998, Mr. Fischer has served as co-Chairman of the
Board of Israir Aviation and Tourism and since January 1997, he has been
co-Chairman of the Board of Ganden Investment, which has holdings in a group of
Israeli tourism and aviation companies. Mr. Fischer has a law degree from the
Tel Aviv University Law School and was a lecturer at the school from 1982 to
1987.

DAVIDI GILO has served as a director since August 1999. Mr. Gilo has served
as the Chairman of the Board of Vyyo since its inception in 1996. In March and
April 1996, and from April 1999 through the present, Mr. Gilo has served as the
Chief Executive Officer of Vyyo. Mr. Gilo served as the Chairman of the Board of
DSP Communications from October 1998 through November 1999, and as Chief
Executive Officer of DSP Communications from June 1999 through November 1999.
Mr. Gilo also served as the Chairman of the Board of DSP Communications from its
founding in 1987 through November 1997. Since 1996, Mr. Gilo has also been the
manager of the Gilo Group, an investment company he founded in 1996. Between
1987 and 1993, Mr. Gilo was the President and Chief Executive Officer of DSP
Group, and he served as Chairman of the board of DSP Group from 1987 until April
1995.

MOSHE HAREL has served as a director since July 1998. Mr. Harel joined the
Van Leer Group Foundation in 1991 as the General Manager of Sor-Van Radiation.
He is currently responsible for the business activities of the Van Leer Group
Foundation in Israel. Since 1994, Mr. Harel has served as a director and member
of the executive board of Inventech, Mercator Management and several companies
in which Inventech has invested. From 1980 to 1991, Mr. Harel served in
management positions at several Israeli and U.S. companies. In 1964, Mr. Harel
joined the Israeli Air Force and served as a research and development engineer
and a fighter pilot. He retired in 1980 after commanding the air force flight
test center. Mr. Harel has a Bachelors of Science degree in Aeronautical
Engineering from the Technion in Israel and a Masters of Science degree in Data
Management and Automation from Princeton University.

YIRMIYAHU KAPLAN has served as a director since July 1998. Since 1993,
Mr. Kaplan has been Managing Director of Ophir Holdings. From 1986 to 1993,
Mr. Kaplan managed various projects and activities for the Investment Company of
Bank Hapoalim. Mr. Kaplan is a director of a number of private companies in
which Ophir Holdings is a shareholder, including Memco Software. Mr. Kaplan

41
<PAGE>
has a Bachelor of Arts degree in Economics and a Masters degree in Business
Administration from the Hebrew University.

ANDREW SCHONZEIT has served as a director since January 1996. Since 1984
Mr. Schonzeit has served as the President of Idesco, a manufacturer and
distributor of identification, security and safety products, and as its Chairman
of the board since 1989. Mr. Schonzeit served as a director of DSP
Communications from 1992 to 1999. Mr. Schonzeit has a Bachelors degree in
Economics from New York University.

YOSSI VINITSKI was appointed a director in December 1999. Mr. Vinitski is a
Vice President and investment committee member at Challenge Fund-Etgar, a
venture capital fund. From 1995 to 1999, Mr. Vinitski was a Senior Investment
Manager at Yozma Management and Investment Ltd., an Israeli venture capital
fund. From 1993 to 1995, Mr. Vinitski served as a development engineer for
several high-tech companies. Mr. Vinitski has a Bachelors of Science degree, cum
laude, in Mechanical Engineering and a Masters degree in Business Administration
from Tel Aviv University.

CLASSIFIED BOARD AND TERM OF OFFICES

Our bylaws provide for a board of directors consisting of nine members.
There are currently nine directors on the board. Effective upon the closing of
this offering, our board will be divided into three classes of directors,
denominated Class I, Class II and Class III. Members of each class will hold
their office for three-year staggered terms. At the annual meeting of our
stockholders to be held in 2001, the term of office of the Class I directors
will expire, and Class I directors will be elected for a three-year term. At the
annual meeting of our stockholders to be held in 2002, the term of office of the
Class II directors will expire, and Class II directors will be elected for a
three-year term. At the annual meeting of our stockholders to be held in 2003,
the term of office of the Class III directors will expire, and Class III
directors will be elected for a three-year term. At each succeeding annual
meeting of stockholders, successors to the class of directors whose term expires
at that annual meeting will be elected to a three-year term. The initial Class I
directors will be Messrs. Fischer, Heiman and Hod. The initial Class II
directors will be Messrs. Harel, Kaplan and Vinitski. The initial Class III
directors will be Messrs. Dogon, Gilo and Schonzeit.

Our certificate of incorporation does not provide for cumulative voting;
therefore, our stockholders representing a majority of the shares of common
stock outstanding will be able to elect all of the directors. The classification
of the board of directors and lack of cumulative voting will make it more
difficult for our existing stockholders to replace the board of directors or for
another party to obtain control of our company by replacing the board of
directors. Since the board of directors has the power to retain and discharge
our officers, these provisions could also make it more difficult for existing
stockholders or another party to effect a change in our management.

Under a stockholders' agreement dated as of January 13, 2000, Holland
Ventures, Ophir Holdings, Docor International, Inventech and Ronchal Investments
(the "Holland Investors"), together with some of our other stockholders,
including Nomura International, Challenge Fund-Etgar and Corex Israeli
Industries, agreed to vote their shares in favor of the election of the
following members of our board:

- Holland Investors Nominees:

- two representatives nominated by the Holland Investors, one of whom is
nominated by Holland Ventures, so long as the Holland Investors
collectively hold at least 10% of our issued and outstanding capital
stock; and

- one representative nominated by the Holland Investors, who is selected
by Holland Ventures, so long as the Holland Investors collectively own
less than 10%, and at least 5% of our issued and outstanding capital
stock.

- Challenge Nominee:

- one representative nominated by Challenge, so long as Challenge holds
at least 89,928 shares of our common stock.

42
<PAGE>
Upon completion of the offering, the parties to this agreement will hold up
to approximately 8,262,698 shares of our common stock, or % of the total
outstanding number of shares. Mr. Vinitski currently serves as the designee of
Challenge and Messrs. Harel and Kaplan currently serve as the designees of the
Holland Investors. Unless otherwise terminated by the parties, this agreement
will continue in effect after the closing of the offering.

BOARD COMMITTEES

We have established an audit committee and a compensation committee. The
audit committee reviews our internal accounting procedures and considers and
reports to the board of directors with respect to other auditing and accounting
matters, including the selection of our independent auditors, the scope of
annual audits, the fees to be paid to our independent auditors and the
performance of our independent auditors. The audit committee consists of
Messrs. Dogon, Harel and Kaplan. The compensation committee reviews and
recommends to the board of directors the salaries, benefits and stock option
grants for all employees, consultants, directors and other individuals
compensated by us. The compensation committee also administers our stock option
and benefit plans. The compensation committee consists of Messrs. Fischer, Hod
and Schonzeit.

DIRECTOR COMPENSATION

Directors who are also our officers or employees do not receive any
compensation for their services as directors. Each nonemployee director receives
an annual retainer of $20,000, payable in quarterly installments of $5,000 each
at the end of each fiscal quarter. The retainer contemplates attendance at four
board meetings per year. Additional board meetings attended in person are
compensated at the rate of $1,000 per meeting. Additional board meetings
attended by telephone are compensated at the rate of $250 per meeting. In
addition, each committee member receives $500 for attending in person, and $250
for attending by telephone, each committee meeting held on a day other than a
day on which a board meeting is held. Directors are reimbursed for expenses
incurred in connection with attending board and committee meetings. Under our
2000 Equity Incentive Plan, each of our non-employee directors elected to the
board for the first time after the effective date of this offering will
automatically receive options to purchase 20,000 shares of our common stock at
fair market value on the date of grant. These options will have a 10-year term
and will vest over a four-year period. In addition, under the 2000 Plan, each of
our non-employee directors will annually receive options to purchase
5,000 shares of our common stock. These options will have a 10-year term and
will vest immediately upon the date of grant. In 1999, some of our directors
received options to purchase shares of our common stock as compensation for
their services. See "Stock Option Plans" and "Certain Relationships and Related
Transactions."

43
<PAGE>
EXECUTIVE COMPENSATION

SUMMARY OF COMPENSATION. The following table sets forth all compensation
earned or paid for services rendered to us in all capacities for the year ended
December 31, 1999 by our Chief Executive Officer and by our only other executive
officer who earned more than $100,000 in salary and bonus for the year ended
December 31, 1999.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------- ------------------------------------------
ALL OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)(1)
- --------------------------- --------- ---------- ---------------- --------------------- ------------------
<S> <C> <C> <C> <C> <C>
Arie Heiman............... $168,500 -- -- 37,500 $34,621
President and Chief
Executive Officer

Aryeh Gavrieli............ $129,640 -- -- 15,000 $12,020
Vice President of
Engineering
</TABLE>

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

(1) On behalf of each of these officers, we make monthly payments to a severance
fund, a pension fund and a risk/disability fund. The amounts held in such
funds on their behalf are payable to them upon termination of their
employment.

OPTION GRANTS. The following table sets forth information with respect to
stock options granted during 1999 to the executive officers named in the summary
compensation table. In accordance with the rules of the Securities and Exchange
Commission, also shown below is the potential realizable value over the term of
the option based on assumed rates of stock appreciation of 5% and 10%,
compounded annually. We assume that:

- the fair market value of our common stock on the date of grant appreciates
at the indicated annual rate compounded annually for the entire term of
the option; and

- the option is exercised and sold on the last day of its term for the
appreciated stock price.

These amounts are based on assumed rates of appreciation and do not
represent an estimate of our future stock price. Actual gains, if any, on stock
option exercises will be dependent on the future performance of our common
stock.

OPTION GRANTS IN 1999

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
----------------------------------------------------- ASSUMED RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM($)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME GRANTED(#)(1) 1999(%)(2) PRICE($) DATE(3) 5% 10%
- ---- ------------- ------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Arie Heiman................... 37,500 13.8% $3.00 08/06 $181,198 $272,596
Aryeh Gavrieli................ 15,000 5.5% $3.00 08/06 $ 72,479 $109,038
</TABLE>

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

(1) All options were granted under the 1999 Stock Option Plan.

(2) Based on an aggregate of 271,000 options granted to employees.

(3) These options will vest immediately if a change of control of our company
occurs or if we are merged into another company, unless these options are
assumed by our successor.

44
<PAGE>
OPTION EXERCISES IN 1999 AND 1999 YEAR-END OPTION VALUES

The following table sets forth information concerning option exercises and
the aggregate value of unexercised options for the year ended December 31, 1999,
held by each executive officer named in the summary compensation table above.
Neither of these officers exercised any stock options in 1999.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE
UNEXERCISED OPTIONS AS OF MONEY OPTIONS AS OF
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999(1)
ACQUIRED ON VALUE --------------------------------- ---------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- ---- ----------- ----------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Arie Heiman................ -- -- 364,473 134,791 $ $
Aryeh Gavrieli............. -- -- 20,000 32,500 $ $
</TABLE>

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

(1) Value is based on the difference between the option exercise price and
$ , the initial public offering price of our common stock, multiplied
by the number of shares of common stock underlying the option. No market
existed for our common stock prior to this offering.

STOCK OPTION PLANS

1999 STOCK OPTION PLAN. Our 1999 Stock Option Plan provides for the grant
of incentive stock options and non-qualified stock options to our directors,
officers, employees and consultants, including some of our employees and
consultants that are based in Israel. A total of 3,041,537 shares of common
stock have been reserved for issuance under the 1999 Plan. As of December 31,
1999, options to purchase 1,636,220 shares of common stock were outstanding
under the 1999 Plan at a weighted average exercise price of $0.92 per share.
Since December 31, 1999, 120,000 shares of common stock have been issued upon
exercise of options that were granted under the 1999 Plan. We do not currently
anticipate granting options pursuant to the 1999 Plan following the offering.
The 1999 Plan will automatically terminate in October 2009.

The 1999 Plan is administered by our compensation committee. The
compensation committee has the authority to construe, apply and interpret the
terms of the 1999 Plan. In the event that we merge with or into another
corporation or sell substantially all of our assets, the 1999 Plan provides for
the full acceleration of the exercisability of all outstanding options, unless
an outstanding option is assumed or an equivalent option is substituted by the
successor corporation or the option is replaced by a cash incentive program of
the successor corporation that preserves the compensation element of the option
at the time of the transaction and provides for subsequent payout in accordance
with the vesting schedule applicable to the option.

2000 EQUITY INCENTIVE PLAN. Our 2000 Equity Incentive Plan, or 2000 Plan,
will become effective on the date of this prospectus and will serve as the
successor to our 1999 Plan. The 2000 Plan is for the benefit of our officers,
directors, employees, advisors and consultants and provides for the issuance of
stock-based incentive awards, including stock options, stock appreciation
rights, limited stock appreciation rights, restricted stock, deferred stock and
performance shares. An award may consist of one arrangement or benefit or two or
more of them. Under the 2000 Plan, awards covering no more than 80% of the
shares reserved for issuance under the 2000 Plan may be granted to any
participant in any one year. We have reserved 3,500,000 shares of common stock
for issuance under the 2000 Plan. The 2000 Plan provides for an annual increase
of the shares of common stock reserved for issuance to be added automatically on
the first day of each fiscal year, commencing in 2001, equal to the lesser of
500,000 shares or 5% of the number of outstanding shares of our common stock on
the last day of the immediately preceding fiscal year.

Each of our non-employee directors elected to the board for the first time
after the effective date of this offering will receive, upon election, options
to purchase 20,000 shares of our common stock at fair market value on the date
of grant. These options will have a 10-year term and will vest over a

45
<PAGE>
four-year period. In addition, under the 2000 Plan, each of our non-employee
directors will annually receive options to purchase 5,000 shares of our common
stock. These options will have a 10-year term and will vest immediately upon the
date of grant.

The compensation committee of our board of directors initially will be the
plan administrator of the 2000 Plan. The plan administrator may interpret the
2000 Plan and may prescribe, amend and rescind rules and make all other
determinations necessary or desirable for the administration of the 2000 Plan.
The 2000 Plan permits the plan administrator to select the officers, directors,
employees, advisors and consultants, including directors who are also employees,
who will receive awards and generally to determine the terms and conditions of
those awards.

We may issue two types of stock options under the 2000 Plan: incentive stock
options which are intended to qualify under the Internal Revenue Code and
non-qualified stock options. The option price of each incentive stock option
granted under the 2000 Plan must be at least equal to the fair market value of a
share of common stock on the date the incentive stock option is granted.

Stock appreciation rights and limited stock appreciation rights may be
granted under the 2000 Plan either alone or in conjunction with all or part of
any stock option granted under the 2000 Plan. A stock appreciation right granted
under the 2000 Plan entitles its holder to receive, at the time of exercise, an
amount per share equal to the excess of the fair market value at the date of
exercise of a share of common stock over a specified price fixed by the plan
administrator. A limited stock appreciation right granted under the 2000 Plan
entitles its holder to receive, at the time of exercise, an amount per share
equal to the excess of the price of a share of common stock upon a change in
control of our company over a specified price fixed by the plan administrator. A
limited stock appreciation right may only be exercised within the 30-day period
following a change in control.

Restricted stock, deferred stock and performance shares may be granted under
the 2000 Plan. The plan administrator will determine the purchase price,
performance period and performance goals, if any, with respect to the grant of
restricted stock, deferred stock and performance shares. Participants holding
restricted stock and performance shares generally have all of the rights of a
stockholder. With respect to deferred stock, during the deferral period, subject
to the terms and conditions imposed by the plan administrator, the deferred
stock units may be credited with dividend equivalent rights. If the performance
goals and other restrictions are not attained, the participant will forfeit his
or her shares of restricted stock, deferred stock and/or performance shares.

In the event we merge or consolidate with another entity in which we are not
the surviving corporation, dissolve or liquidate or sell substantially all of
our assets, outstanding awards under the 2000 Plan may be assumed or replaced by
the successor corporation, if any, or its parent. If the successor corporation
or its parent does not assume outstanding awards or substitute equivalent
awards, these awards will automatically become fully vested and exercisable and
be released from any restrictions on transfer or any repurchase or forfeiture
right.

The terms of the 2000 Plan provide that the plan administrator may amend,
suspend or terminate the 2000 Plan at any time, provided, however, that some
amendments require approval of our stockholders. Further, no action may be taken
that adversely affects any rights under outstanding awards without the holder's
consent. The 2000 Plan will terminate in 2010.

SPECIAL PROVISIONS FOR OPTION GRANTS TO ISRAELI EMPLOYEES AND
CONSULTANTS. The 2000 Plan and the 1999 Plan set forth special provisions to
ensure that option grants to Israeli employees and consultants of Nogatech Ltd.
conform to the Israeli Income Tax Ordinance [New Version]--1961. All option
grants to Israeli employees and consultants of Nogatech Ltd. will be subject to
a trust agreement among us, Nogatech Ltd., and a trustee who will hold the
options for at least two years on behalf of these employees and consultants. All
issuances of common stock upon exercise of the options will be issued in the
name of the trustee until the shares may be released to the employee or
consultant beneficiary

46
<PAGE>
in accordance with applicable law. No shares of common stock will be released to
a beneficiary of the trust unless the beneficiary deposits sufficient funds to
discharge his or her tax obligations under Israeli law. Once the shares have
been issued to the trustee, the employee or consultant beneficiary will have the
right to vote his or her shares and receive cash dividends on those shares.

2000 EMPLOYEE STOCK PURCHASE PLAN

Our 2000 Employee Stock Purchase Plan, or Purchase Plan, will become
effective on the day after the date of this prospectus. The Purchase Plan allows
eligible employees to purchase our common stock at a discount from fair market
value. The Purchase Plan initially will be administered by the compensation
committee of our board of directors A total of 350,000 shares of our common
stock have initially been reserved for issuance under the Purchase Plan. The
number of shares reserved for issuance will be increased automatically on the
first day of our fiscal year, commencing in 2001, by an amount equal to the
lesser of 500,000 shares or 1% of the number of outstanding shares on the last
trading day of the immediately preceding fiscal year. The plan administrator may
interpret the Purchase Plan and, subject to its provisions, may prescribe, amend
and rescind rules and make other determinations necessary or desirable for the
administration of the Purchase Plan.

Employees generally will be eligible to participate in our Purchase Plan if
they are employed by us, or any subsidiaries that we designate, for more than 20
hours per week and more than five months in a calendar year. Employees are not
eligible to participate in our Purchase Plan if they are 5% stockholders, or
would become 5% stockholders as a result of their participation in this plan.
Under our Purchase Plan, eligible employees may acquire shares of our common
stock through payroll deductions. Eligible employees select a rate of payroll
deduction between 1% and 15% of their cash compensation and are subject to a
maximum purchase limitations. An employee's participation in the Purchase Plan
ends automatically upon termination of employment for any reason. A participant
will not be able to purchase shares having a fair market value of more than
$25,000, determined as of the first day of the applicable offering period, for
each calendar year in which the employee participates. Each offering period
under the Purchase Plan will be for two years and will consist of four six-month
purchase periods. The first offering period is expected to begin on the first
business day after the date of this prospectus. Offering periods thereafter will
begin on February 15 and August 15. The purchase price for common stock
purchased under this plan will be 85% of the lesser of the fair market value of
our common stock on the first day of the applicable offering period or the last
day of each purchase period. The plan administrator will have the power to
change the duration of offering periods. Our Purchase Plan is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code. This plan will terminate in 2010, unless it is terminated earlier
under its terms.

EMPLOYMENT AGREEMENTS

We have entered into an employment agreement with Arie Heiman, our President
and Chief Executive Officer. The agreement with Dr. Heiman became effective on
March 1, 2000 and is for an initial term of 12 months and will automatically
renew for successive 12 month periods unless sooner terminated by us immediately
for cause or on 12 months notice without cause, or by Dr. Heiman on 30 days
notice. Under his agreement, Dr. Heiman is entitled to receive a monthly salary
equal to NIS 51,000, or approximately $12,700, adjusted periodically to reflect
changes to the Israeli consumer price index. We also contribute to a "Manager's
Insurance" policy on behalf of Dr. Heiman in an amount equal to 15.83% of his
salary and to a continuing education fund in an amount equal to 7.5% of his
salary. If Dr. Heiman's employment is terminated by us without cause, he is
entitled to the amounts accumulated in his Manager's Insurance policy and
education fund. We are also required on such a termination to extend to Dr.
Heiman a loan, repayable in five years, in an amount equal to the aggregate
price of his vested and unexercised stock options.

47
<PAGE>
We have entered into an employment agreement with Aryeh Gavrieli, our Vice
President of Engineering. The agreement with Mr. Gavrieli became effective on
January 1, 1993 and is for an indefinite term. Mr. Gavrieli's employment may be
terminated by Mr. Gavrieli or by us with 30 days advance notice. Under this
agreement, Mr. Gavrieli currently receives a monthly salary equal to
approximately NIS 25,000, or approximately $6,250 per month, adjusted
periodically to reflect changes to the Israeli consumer price index. Mr.
Gavrieli is entitled to receive overtime payments at a rate of 175% of his
salary calculated on an hourly basis. We also contribute to a "Manager's
Insurance" policy on behalf of Mr. Gavrieli in an amount equal to 13.33% of his
salary and to a continuing education fund in an amount equal to 7.5% of his
salary. If Mr. Gavrieli's employment is terminated by us without cause, he is
entitled to the amounts accumulated in his Manager's Insurance policy and
continuing education fund.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation committee was formed in March 2000 and currently consists
of Messrs. Fischer, Hod and Schonzeit. Prior to that time, compensation
decisions were made by our board of directors. In 1999, Nathan Hod, our Chairman
of the Board, and Arie Heiman, our President and Chief Executive Officer,
participated in deliberations of our board of directors concerning executive
compensation. None of our executive officers serve as members of the board of
directors or compensation committee of any entity that has one or more executive
officers who serve on our board or compensation committee.

LIMITATION ON LIABILITIES AND INDEMNIFICATION MATTERS

Our certificate of incorporation limits the personal liability of our
directors to our stockholders to the maximum extent permitted by Delaware law.
Delaware law provides that directors of a corporation will not be personally
liable for monetary damages for breach of their fiduciary duties as directors,
except with respect to liability for:

- any breach of their duty of loyalty to the corporation or its
stockholders;

- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- unlawful payments of dividends or unlawful stock repurchases or
redemptions; or

- any transaction from which the director derived an improper personal
benefit.

This provision will have no effect on any non-monetary remedies that may be
available to us or our stockholders, nor will it relieve us or other officers or
directors from compliance with federal or state securities laws.

Our certificate of incorporation and bylaws also generally provide that we
will indemnify, to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law, any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit,
investigation, administrative hearing or any other proceeding by reason of the
fact that he or she is or was a director or officer of ours, or is or was
serving at our request as a director, officer, employee or agent of another
entity, against expenses incurred by him or her in connection that proceeding.
An officer or director will not be entitled to indemnification by us if:

- the officer or director did not act in good faith and in a manner
reasonably believed to be in, or not opposed to, our best interests; or

- with respect to any criminal action or proceeding, the officer or director
had reasonable cause to believe his or her conduct was unlawful.

48
<PAGE>
In addition, we have entered into indemnification agreements with our
directors and executive officers containing provisions that may require us,
among other things, to indemnify them against various liabilities that may arise
by virtue of their status or service as directors or executive officers and to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified.

At the present time there is no pending litigation or proceeding involving
any of our directors, officers, employees or agents for which indemnification
will be required or permitted. We are not aware of any threatened litigation or
proceeding which may result in a claim for indemnification.

49
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since January 1, 1997, there has not been, nor is there currently proposed,
any transaction or series of similar transactions to which we were or are to be
a party in which the amount involved exceeds $60,000 and in which any director,
executive officer or holder of more than 5% of our common stock, or an immediate
family member of any of the foregoing, had or will have a direct or indirect
interest other than:

- compensation arrangements described where required under "Management"; and

- the transactions described below.

SALES OF STOCK AND WARRANTS

On February 1, 2000, we sold 79,617 shares of common stock at $3.14 per
share to Les Fils Dreyfus & Cie., one of our principal shareholders, upon
exercise of a warrant.

On January 13, 2000, we sold 1,196,172 shares of Series B preferred stock at
$4.18 per share to Nomura International.

On July 15, 1998, we sold Series A preferred stock at $1.04 per share and
warrants to purchase shares of our common stock at an exercise price of $2.08
per share to the following investors, among others:

<TABLE>
<CAPTION>
NAME NUMBER OF SHARES NUMBER OF WARRANTS
- ---- ---------------- ------------------
<S> <C> <C>
Holland Ventures............................................ 1,921,667 144,125
Ophir Holdings.............................................. 1,441,251 108,094
Docor International......................................... 960,834 72,062
Inventech................................................... 960,834 72,062
</TABLE>

On February 4, 1997, we sold 159,235 shares of Series A preferred stock at
$1.57 per share and warrants to purchase 79,617 shares of our common stock at an
exercise price of $3.14 per share to Les Fils Dreyfus & Cie.

STOCK OPTION GRANTS

We have granted the following options to purchase shares of our common stock
to our directors and executive officers as set forth below:

<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS EXERCISE PRICE GRANT DATE RELATIONSHIP TO NOGATECH
- ---- ----------------- -------------- ---------- -------------------------------
<S> <C> <C> <C> <C>
Nathan Hod..................... 259,000 $0.02 07/98 Director, Chairman of the Board

Arie Heiman.................... 12,500 $0.72 01/98 Director, Chief Executive
Officer
122,500 $0.02 07/98
37,500 $3.00 08/99

Yaron Garmazi.................. 2,500 $3.00 08/99 Chief Financial Officer,
Secretary
22,500 $0.72 03/99

Aryeh Gavrieli................. 10,000 $0.72 03/97 Vice President of Engineering
12,500 $0.72 08/98
15,000 $3.00 08/99

Liat Hod....................... 20,000 $0.72 01/98 Vice President of Business
2,500 $0.72 08/98 Development
35,000 $3.00 08/99

Gerald Dogon................... 40,000 $3.00 08/99 Director
</TABLE>

50
<PAGE>

<TABLE>
<CAPTION>
NAME NUMBER OF OPTIONS EXERCISE PRICE GRANT DATE RELATIONSHIP TO NOGATECH
- ---- ----------------- -------------- ---------- -------------------------------
<S> <C> <C> <C> <C>
Avraham Fischer................ 12,500 $0.72 01/98 Director
12,500 $3.00 08/99

Davidi Gilo.................... 75,000 $3.00 08/99 Director

Moshe Harel.................... 12,500 $3.00 08/99 Director

Andrew Schonzeit............... 12,500 $0.72 01/98 Director
12,500 $3.00 08/99
</TABLE>

In January 2000, Andrew Schonzeit, a member of our board, exercised options
to purchase 25,000 shares of our common stock at an exercise price of $0.14 per
share.

In February 2000, Davidi Gilo, a member of our board, exercised options to
purchase 75,000 shares of our common stock at an exercise price of $3.00 per
share.

OTHER

Tomen Electronics Corporation is our distributor in Japan and one of our
principal stockholders. Tomen purchases products from us and resells them to
OEMs. Our sales to Tomen were approximately $439,000 in 1997 and approximately
$1.3 million in each of 1998 and 1999. We purchased from Tomen components of our
video devices having an aggregate purchase price of approximately $194,000 in
1998 and $151,000 in 1999. In 1997, we entered into an engineering agreement
with Tomen. In 1997, we received $100,000 under this agreement, which was
terminated in 1998. We believe that these transactions were on terms comparable
to the terms that would have applied to similar transactions with unrelated
parties. Upon completion of this offering, Tomen will own approximately % of
the shares of our common stock.

In 1997, Kenwood Corporation, one of our principal stockholders, subleased
property from us. Kenwood's rental payments to us amounted to approximately
$75,000.

In 1999, Fischer, Behar, Chen & Co., our Israeli counsel, provided us with
legal services with respect to a variety of matters. Mr. Avraham Fischer, one of
our directors, is a managing partner of the firm.

On July 8, 1997, Mr. Nathan Hod, our Chairman of the Board, issued to us an
amended and restated secured promissory note in the principal amount of $56,500
with accrued interest at an annual rate of 5.5%. This amended note extended the
term of a secured promissory note that Mr. Hod issued to us in July 1994 in
connection with his purchase of shares of our common stock. All principal and
accrued interest on this amended note was paid in full on March 8, 2000.

51
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table indicates information as of March 1, 2000 regarding the
beneficial ownership of our common stock by:

- each person known to the board of directors to own beneficially 5% or more
of our common stock;

- each of our directors;

- the executive officers identified in the Summary Compensation table under
"Management"; and

- all of our directors and executive officers as a group.

Information with respect to beneficial ownership has been furnished by each
director, officer or 5% or more stockholder, as the case may be. Except as
otherwise noted below, the address for each person listed on the table is c/o
Nogatech, Inc., 5201 Great America Parkway, Santa Clara, California 95054.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power or
investment power with respect to those securities and includes shares of common
stock issuable pursuant to the exercise of stock options or warrants that are
immediately exercisable or exercisable within 60 days of March 1, 2000. These
shares are deemed to be outstanding and to be beneficially owned by the person
holding those options or warrants for the purpose of computing the percentage
ownership of that person, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person. Unless otherwise
indicated, the persons or entities identified in this table have sole voting and
investment power with respect to all shares shown as beneficially owned by them,
subject to applicable community property laws.

Arie Heiman(2).................................... 491,097 4.7

Aryeh Gavrieli.................................... 22,500 *

Gerald Dogon(3)................................... 40,000 *

Avraham Fischer(4)................................ 85,000 *

Davidi Gilo(5).................................... 75,000 *

Moshe Harel(6).................................... 12,500 *

Yirmiyahu Kaplan(7)............................... 828,719 8.2

Andrew Schonzeit(8)............................... 145,489 1.5

Yossi Vinitski(9)................................. -- *

All directors and executive officers as a group 2,890,760 28.0%
(12 persons)....................................
</TABLE>

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

* represents less than 1%

52
<PAGE>

<TABLE>
<CAPTION>
PERCENT OF SHARES
NUMBER OF OUTSTANDING
SHARES BENEFICIALLY ----------------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED BEFORE THE OFFERING AFTER THE OFFERING
- ------------------------------------ ------------------- ------------------- ------------------
<S> <C> <C> <C>
5% STOCKHOLDERS
Kenwood Corporation ............................. 1,255,496 12.6%
Alive Mitake
2-5, Shibuya 1-chome
Shibuya-ku
Tokyo, 150 Japan
Tomen Electronics Corporation ................... 1,255,496 12.6
1-1, Uchisaiwai-cho
2-Chome, Chiyoda-ku
Tokyo 100, Japan
Holland Ventures B.V.(10) ....................... 1,104,958 11.0
Dreeftoren-Etagel 14
Haaksbergweg 55
1101 BR Amsterdam Z.O.
Netherlands
Les Fils Dreyfus & Cie S.A. ..................... 838,876 8.4
c/o Ajax Trading Co.
2525 Davie Rd. Extension, Suite 320
Davie, FL 33317
Ophir Holdings Ltd.(11) ......................... 828,719 8.2
Amot Mishpat Bldg, 10(th) Floor
8 Shaul Hamelech Boulevard
Tel Aviv 64733, Israel
Nomura International plc ........................ 683,297 6.9
Nomura House
1 St. Martins-le-Grand
London EC1A 4NP, United Kingdom
Docor International B.V.(12) .................... 552,479 5.5
P.O. Box 448
Kiryat Weizman
Rehovot, 76100 Israel
Inventech Ltd.(13) .............................. 552,479 5.5
Shalom Tower
Echad Ha'am 9
P.O. Box 29076
Tel Aviv 65251, Israel
</TABLE>

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

(1) Includes outstanding options and warrants to purchase 452,205 shares of
common stock that are exercisable on or prior to April 30, 2000. Also
includes an option to purchase 259,000 shares of common stock exercisable
with respect to 86,334 shares on or prior to April 30, 2000, and
exercisable with respect to the remaining 172,666 shares on the date of
this prospectus. We have assumed that the option to purchase 172,666 shares
will be exercised in full prior to its termination on the closing of this
offering.

(2) Includes outstanding options to purchase 326,765 shares of common stock
that are exercisable on or prior to April 30, 2000. Also includes an option
to purchase 122,500 shares of common stock exercisable with respect to
40,833 shares on or before April 30, 2000, and exercisable with respect to
the remaining 81,667 shares of common stock on the date of this prospectus.
We have assumed

53
<PAGE>
that the option to purchase 81,667 shares will be exercised in full prior
to its termination on the closing of this offering.

(3) Consists of outstanding options to purchase 40,000 shares of common stock
that are exercisable on or prior to April 30, 2000.

(4) Includes outstanding options to purchase 60,000 shares of common stock that
are exercisable on or prior to April 30, 2000.

(5) Consists of 75,000 shares of common stock issued to Harmony Management, an
affiliate of Mr. Gilo.

(6) Includes outstanding options to purchase 12,500 shares of common stock that
are exercisable on or prior to April 30, 2000.

(7) Consists of 720,626 shares of common stock issuable upon conversion of
1,441,251 shares of our Series A preferred stock and a warrant to purchase
108,094 shares of common stock held by Ophir Holdings Ltd. Mr. Kaplan is
the Managing Director of Ophir Holdings Ltd. and may be deemed to share
voting and investment power with respect to the shares held by Ophir
Holdings Ltd. Mr. Kaplan disclaims beneficial ownership of these shares.

(8) Includes outstanding options to purchase 50,000 shares of common stock that
are exercisable on or prior to April 30, 2000. Excludes 13,176 shares of
common stock issuable upon conversion of 23,322 shares of our Series A
preferred stock held in four trusts for the benefit of Mr. Schonzeit's
children, as to which Mr. Schonzeit has no voting or investment power.
Mr. Schonzeit disclaims beneficial ownership of these shares.

(9) Excludes 359,712 shares of common stock issuable upon conversion of 636,942
shares of Series A preferred stock held by the Challenge Fund-Etgar L.P.
Mr. Vinitski disclaims beneficial ownership of these shares.

(10) Includes 144,125 shares of common stock issuable upon exercise of warrants
that will terminate on the closing of this offering and which we have
assumed will be exercised.

(11) Includes 108,094 shares of common stock issuable upon exercise of warrants
that will terminate on the closing of this offering and which we have
assumed will be exercised.

(12) Includes 72,062 shares of common stock issuable upon exercise of warrants
that will terminate on the closing of this offering and which we have
assumed will be exercised.

(13) Includes 72,062 shares of common stock issuable upon exercise of warrants
that will terminate on the closing of this offering and which we have
assumed will be exercised.

54
<PAGE>
DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 40,000,000 shares of common stock,
$0.001 par value per share, and 32,000,000 shares of undesignated preferred
stock, $0.001 par value per share.

We currently have 650,834 shares of common stock outstanding. We currently
have 15,906,304 shares of Series A preferred stock outstanding, which will
convert into 8,609,783 shares of common stock upon completion of this offering.
We also currently have 1,196,172 shares of Series B preferred stock outstanding.
The number of shares of our common stock into which our Series B preferred stock
is convertible increases each day based upon a formula set forth in our
certificate of incorporation. For purposes of this prospectus, we have assumed
that the closing of this offering will take place on May 15, 2000, and that the
Series B preferred stock will convert into 683,297 shares of common stock. Upon
the consummation of this offering, no shares of preferred stock will be
outstanding, and we have no present plans to issue any shares of preferred
stock.

We have issued warrants to purchase up to 831,819 shares of our common stock
which will terminate upon the closing of this offering. A portion of these
warrants may be exercised on a cashless basis, in which case a smaller number of
shares of our common stock will be issued. We will not be certain as to the
exact number of shares that will be issued upon exercise of these warrants until
the closing of this offering. In addition, if all of the shares issuable upon
exercise of these warrants are exercised in cash for the maximum number of
shares that may be purchased, we will receive proceeds of approximately $1.9
million.

As of March 1, 2000, there were 20 holders of our common stock, 41 holders
of our Series A preferred stock and one holder of our Series B preferred stock.

COMMON STOCK

VOTING RIGHTS. Each outstanding share of common stock is entitled to one
vote on all matters submitted to a vote of our stockholders, including the
election of directors. There are no cumulative voting rights, and therefore the
holders of a plurality of the shares of common stock voting for the election of
directors may elect all of our directors standing for election. However, our
certificate of incorporation provides that actions may only be taken by our
stockholders at a duly called meeting, and may not be taken by written consent.

DIVIDENDS. Holders of common stock are entitled to receive dividends at the
same rate if and when dividends are declared by our board of directors out of
assets legally available for the payment of dividends, subject to preferential
rights of any outstanding shares of preferred stock.

LIQUIDATION. In the event of a liquidation, dissolution or winding up our
affairs, whether voluntary or involuntary, after payment of our debts or other
liabilities and making provisions for the holders of any outstanding shares of
preferred stock, our remaining assets will be distributed ratably among the
holders of shares of common stock.

RIGHTS AND PREFERENCES. Our common stock has no preemptive, redemption,
conversion or subscription rights. The rights, powers, references and privileges
of holders of common stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of preferred stock that we may
designate and issue in the future.

FULLY PAID AND NONASSESSABLE. All of our outstanding shares of common stock
are, and the shares of common stock to be issued pursuant to this offering will
be, fully paid and nonassessable.

55
<PAGE>
PREFERRED STOCK

Our board of directors has the authority, without action by our
stockholders, to provide for the issuance of preferred stock in one or more
classes or series and to designate the rights, preferences and privileges of
each class or series, which may be greater than the rights of the holders of
common stock. We cannot predict the effect of the issuance of any shares of
preferred stock upon the rights of holders of the common stock until the board
of directors determines the specific rights of the holders of the preferred
stock. However, the effects could include one or more of the following:

- restricting dividends on the common stock;

- diluting the voting power of the common stock;

- impairing the liquidation rights of the common stock; or

- delaying or preventing a change in control of us without further action by
the stockholders.

DELAWARE ANTI-TAKEOVER LAW

We are subject to Section 203 of the Delaware General Corporation Law, an
anti-takeover law. Generally, Section 203 of the Delaware General Corporation
Law prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless:

- prior to the date of the business combination, the transaction is approved
by the board of directors of the corporation;

- upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owns at
least 85% of the outstanding voting stock of the corporation; or

- on or after the date the business combination is approved by the board of
directors of the corporation and by the affirmative vote of at least 2/3
of the outstanding voting stock which is not owned by the interested
stockholder.

A "business combination" includes mergers, asset sales and other
transactions that may result in a financial benefit to the stockholder. An
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within the three-year period immediately prior to the
relevant date, did own, 15% or more of the corporation's outstanding voting
stock. The existence of this provision would be expected to have an
anti-takeover effect with respect to transactions not approved in advance by our
board of directors, including discouraging attempts that might result in a
premium over the market price for the shares of common stock held by
stockholders.

TRANSFER AGENT AND REGISTRAR

EquiServe Trust Company will serve as transfer agent and registrar for our
common stock.

LISTING

We have applied to have our common stock approved for quotation on the
Nasdaq National Market under the trading symbol "NGTC."

56
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Future sales of our common stock, and the availability of our common stock
for sale, may depress the market price for our common stock. After this
offering, approximately shares of common stock will be outstanding. All of
the shares sold in this offering will be freely tradable except for the shares
purchased by our affiliates. The remaining shares of common stock outstanding
after this offering will be restricted as a result of securities laws or lock-up
agreements. These remaining shares will be available for sale in the public
market as follows:

<TABLE>
<CAPTION>
DATE OF AVAILABILITY FOR SALE NUMBER OF SHARES
- ----------------------------- ----------------
<S> <C>
As of the date of this prospectus...........................
At various times afterwards upon expiration of applicable
lock up agreements and holding periods....................
</TABLE>

Each of our directors, executive officers and holders of 1% or more of our
outstanding common stock has agreed to certain restrictions on his ability to
sell, offer, contract or grant any option to sell, pledge, transfer or otherwise
dispose of shares of our common stock for a period of 180 days after the date of
this prospectus, without the prior written consent of WR Hambrecht + Co. WR
Hambrecht + Co may release all or a portion of the shares subject to this lockup
agreement at any time without notice.

In general, under Rule 144 under the Securities Act of 1933, as currently in
effect, a person who has beneficially owned shares of our common stock for at
least one year would be entitled to sell within any three-month period a number
of shares that does not exceed the greater of:

- 1% of the number of shares of our common stock then outstanding, which
will equal approximately shares immediately after this offering;
or

- the average weekly trading volume of our common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to the sale.

Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us.

Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell the shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

Rule 701, as currently in effect, permits resales of shares in reliance upon
Rule 144 but without compliance with certain restrictions, including the holding
period requirement, of Rule 144. Any of our employees, officers, directors or
consultants who purchased shares under a written compensatory plan or contract
may be entitled to rely on the resale provisions of Rule 701. Rule 701 permits
affiliates to sell their Rule 701 shares under Rule 144 without complying with
the holding period requirements of Rule 144. Rule 701 further provides that
non-affiliates may sell their shares in reliance on Rule 144 without having to
comply with the holding period, public information, volume limitation or notice
provisions of Rule 144. All holders of Rule 701 shares are required to wait
until 90 days after the date of this prospectus before selling their shares.
However, substantially all Rule 701 shares are subject to lock-up agreements and
will only become eligible for sale at the earlier of the expiration of the
180-day lock-up agreements or no sooner than 90 days after the offering upon
obtaining the prior written consent of WR Hambrecht + Co.

We intend to file a Registration Statement on Form S-8 registering shares of
common stock subject to outstanding options or reserved for future issuance
under our stock plans. As of March 1, 2000,

57
<PAGE>
options to purchase a total of 1,527,220 shares were outstanding under our 1999
Stock Option Plan. Common stock issued upon exercise of outstanding vested
options after the filing of this Registration Statement on Form S-8, other than
common stock issued to our affiliates, will be available for immediate resale in
the open market.

REGISTRATION RIGHTS

Upon completion of this offering, the holders of an aggregate of up to an
estimated 10,894,864 shares of our common stock and warrants to purchase shares
of our common stock will be entitled to rights with respect to the registration
of these shares under the Securities Act of 1933. Under the terms of the
registration rights agreements, if we propose to register any of our securities
under the Securities Act, either for our own account or for the account of other
security holders exercising registration rights, these holders are entitled to
notice of this registration and are entitled to include shares of common stock
in the registration. The rights are subject to conditions and limitations,
including the right of the underwriters of an offering subject to the
registration to limit the number of shares included in the registration. These
registration rights have been waived with respect to this offering. Holders of
these rights may also require us to file a registration statement under the
Securities Act at our expense with respect to their shares of common stock, and
we are required to use our best efforts to effect this registration.
Furthermore, beginning one year after the date of this prospectus, stockholders
with registration rights may require us to file additional registration
statements on Form S-3, if we qualify for the use of this form.

58
<PAGE>
PLAN OF DISTRIBUTION

In accordance with the terms of an underwriting agreement between us and WR
Hambrecht + Co, as representative of the underwriters, the underwriters will
purchase from us the following respective number of shares of common stock at
the public offering price less the underwriting discounts and commissions
described on the cover page of this prospectus.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
WR Hambrecht + Co..................................

-------
Total......................................
=======
</TABLE>

The underwriting agreement provides that the obligations of the underwriters
are subject to conditions, including the absence of any material adverse change
in our business, and the receipt of certificates, opinions and letters from us
and our counsel and independent accountants. Subject to those conditions, the
underwriters are committed to purchase all shares of our common stock offered if
any of the shares are purchased.

The underwriters propose to offer the shares of our common stock directly to
the public at the offering price set forth on the cover page of this prospectus,
as this price is determined by the OpenIPO process described below, and to
certain dealers at this price less a concession not in excess of $ per
share. Any dealers that participate in the distribution of our common stock may
be deemed to be underwriters within the meaning of the Securities Act, and any
discounts, commissions or concessions received by them and any provided by the
sale of the shares by them might be deemed to be underwriting discounts and
commissions under the Securities Act. After completion of the initial public
offering of the shares, the public offering price and other selling terms may be
changed by the underwriters. The underwriters have informed us that they do not
intend to confirm discretionary sales in excess of 5% of the shares of our
common stock offered by this prospectus.

The following table shows the per share and total underwriting discount to
be paid to the underwriters by us in connection with this offering. These
amounts are shown assuming both no exercise and full exercise of the
over-allotment option.

<TABLE>
<CAPTION>
PER SHARE NO EXERCISE FULL EXERCISE
--------- ----------- -------------
<S> <C> <C> <C>
Public Offering Price.......................
Underwriting Discounts......................
Proceeds, before expenses, to us............
</TABLE>

The expenses of the offering, exclusive of the underwriting discounts, will
be approximately $ . These fees and expenses are payable entirely by us.

59
<PAGE>
THE AUCTION PROCESS

The method of distribution being used by the underwriters in this offering
is known as the OpenIPO process. It differs from that traditionally employed in
underwritten public offerings. In particular, the public offering price will be
based primarily on an auction conducted by the underwriters. The allocation of
shares of our common stock will be determined entirely by the auction process.
The following describes how the auction process works:

- Before the registration statement relating to this offering becomes
effective, the underwriters and participating dealers will solicit
conditional offers to purchase from prospective investors through the
Internet, telephone and facsimile. The conditional offers to purchase will
specify the number of shares of our common stock the potential investor
proposes to purchase and the price the potential investor is willing to
pay for the shares.

- After the registration statement relating to this offering becomes
effective, the underwriters and participating dealers will contact
potential investors who have submitted conditional offers by e-mail,
telephone or facsimile. Potential investors will be advised that the
registration statement has been declared effective and requested to
affirmatively confirm their previous conditional offer to purchase the
shares.

- All conditional offers to purchase that are not confirmed before the time
specified by the underwriters, or if the time is not specified, by the
close of the auction, will be deemed withdrawn.

- Once a potential investor affirmatively confirms its previous conditional
offer to purchase, the confirmation will remain valid for seven days from
the time the request for confirmation was sent by the underwriters unless
subsequently withdrawn by the potential investor. Potential investors will
be able to withdraw their conditional offers at any time before the close
of the auction by notifying WR Hambrecht + Co or a participating dealer.

- The auction will close after the registration statement becomes effective
at a time agreed to by us and WR Hambrecht + Co. The actual time at which
the auction closes will be determined by us and WR Hambrecht + Co based on
general market conditions during the period after the registration
statement becomes effective.

- Following the closing of the auction, the clearing price will be
determined based on the results of all valid bids at the time the auction
is closed. The clearing price will not necessarily be the public offering
price, which will be set as described in "Determination of Public Offering
Price" below. The public offering price will determine the allocation of
shares to potential investors, with all bids submitted at or above the
public offering price receiving a pro rata portion of the shares bid for.

- Once the auction closes and a clearing price is set as described below, WR
Hambrecht + Co will accept the conditional offers to purchase from those
bidders whose bid is at or above the public offering price but may accept
a lesser number of shares than the number included in the conditional
offers to purchase submitted by potential investors.

- WR Hambrecht + Co or a participating dealer will notify successful bidders
that their confirmed conditional offers to purchase have been accepted.

- If the public offering price range is changed after a potential investor
affirmatively confirms an offer to purchase, or if the public offering
price is outside the public offering range previously provided to the
potential investor in the prospectus, the underwriters and participating
dealers will notify potential investors of the change and that offers will
not be accepted until the potential investor has again re-confirmed its
offer regardless of whether the potential investor's initial offer to
purchase was above, below or at the public offering price.

60
<PAGE>
- Potential investors may at any time expressly request that all, or any
specific, communications between them and the underwriters and
participating dealers be made by specific means of communication.

DETERMINATION OF PUBLIC OFFERING PRICE

The public offering price for this offering will ultimately be determined by
negotiation between the underwriters and us after the auction closes and will
not necessarily bear any direct relationship to our assets, current earnings or
book value or to any other established criteria of value, although these factors
were considered in establishing the initial public offering price range. Prior
to the offering, there has been no public market for our common stock. The
principal factor in establishing the public offering price will be the clearing
price resulting from the auction.

The clearing price is the highest price at which all of the shares offered,
including the shares that may be purchased by the underwriters to cover any
overallotments, may be sold to potential investors, based on the valid offers to
purchase at the time the auction is run.

Factors considered in determining the initial public offering price range
included an assessment of our management, operating results, capital structure
and business potential and the demand for similar securities of comparable
companies. Changes, if any, in the public offering price range will be based
primarily on the conditional offers received.

The public offering price may be lower, but will not be higher, than the
clearing price based on negotiations between the underwriters and us. The public
offering price will always determine the allocation of shares to potential
investors. Therefore, if the public offering price is below the clearing price,
all offers that are at or above the public offering price will receive a pro
rata portion of the shares bid for. If sufficient conditional offers are not
received, or if we do not consider the clearing price to be adequate, or if we
and the underwriters are not able to reach agreement on the public offering
price, then we and the underwriters will either postpone or cancel this
offering. Alternatively, we may file a post-effective amendment to the
registration statement in order to conduct a new auction.

The following simplified example illustrates how the public offering price
will be determined through the auction process:

Company X offers to sell 100 shares in its public offering through the
auction process. WR Ham-
brecht + Co, on behalf of Company X, receives five conditional offers to
purchase, all of which are kept confidential until the auction closes.

The first conditional offer to purchase is to pay $10 per share for 20
shares. The second conditional offer to purchase is to pay $9 per share for 30
shares. The third conditional offer to purchase is to pay $8 per share for 60
shares. The fourth conditional offer to purchase is to pay $7 per share for 40
shares. The fifth conditional offer to purchase is to pay $6 per share for 80
shares.

Assuming that all of these conditional offers to purchase are confirmed and
not withdrawn or modified before the auction closes, and assuming that no
additional conditional offers to purchase are received, the clearing price used
to determine the public offering price would be $8 per share, which is the
highest price at which all 100 shares offered may be sold to potential investors
who have submitted valid bids. However, the shares may be sold at a price below
$8 per share based on negotiations between the underwriters and Company X.

If the public offering price is the same as the $8 per share clearing price,
the underwriters will confirm conditional offers to purchase at or above $8 per
share. Because 110 shares were bid for at or above the clearing price, each of
the three potential investors who bid $8 per share or more would

61
<PAGE>
receive approximately 90% of the shares for which bids were made. The two
potential investors whose bids were below $8 per share would not receive any
shares in this example.

If the public offering price is $7 per share, the underwriters will confirm
conditional offers to purchase that were made at or above $7 per share. No
conditional offers to purchase made at a price of less than $7 per share will be
accepted. The four potential investors with the highest offers to purchase would
receive a pro rata portion of the 100 shares offered, based on the 150 shares
they requested, or two-thirds of the shares for which bids were made. The
potential investor with the lowest conditional offer to purchase would not
receive any shares in this example.

REQUIREMENTS FOR VALID CONDITIONAL OFFERS TO PURCHASE

Valid conditional offers to purchase are those that meet the requirements,
including eligibility, account status and size, established by the underwriters
or participating dealers. In order to open a brokerage account with WR Hambrecht
+ Co, potential investors must deposit $2,000 in their account. In addition,
once the registration statement becomes effective and the auction closes, a
prospective investor submitting a conditional offer to purchase through a WR
Hambrecht + Co brokerage account must have an account balance equal to or in
excess of the amount of its conditional offer to purchase or its conditional
offer will not be accepted by WR Hambrecht + Co. No funds will be transferred to
the underwriters, however, until the acceptance of the conditional offer to
purchase and the subsequent closing of this offering. Conditions for valid
conditional offers to purchase, including eligibility standards and account
funding requirements of other underwriters or participating dealers other than
WR Hambrecht + Co, may vary.

THE CLOSING OF THE AUCTION AND ALLOCATION OF SHARES

The auction will close on a date estimated and publicly disclosed in advance
by the underwriters on the web site of WR Hambrecht + Co at www.wrhambrecht.com
or www.openipo.com. The shares offered hereby, or shares if the
underwriters' overallotment option is exercised in full, will be purchased from
us by the underwriters and sold through the underwriters and participating
dealers to investors who have submitted offers to purchase at or higher than the
public offering price. These investors will be notified by e-mail, telephone,
voice mail, facsimile or mail as soon as practicable following the closing of
the auction that their conditional offers to purchase have been accepted.

Each participating dealer has agreed with the underwriters to sell the
shares it purchases from the underwriters in accordance with the auction process
described above, unless the underwriters otherwise consent. The underwriters
reserve the right to reject bids that they deem manipulative or disruptive in
order to facilitate the orderly completion of this offering, and they reserve
the right, in exceptional circumstances, to alter this method of allocation as
they deem necessary to ensure a fair and orderly distribution of the shares of
our common stock. For example, large orders may be reduced to ensure a public
distribution and conditional offers to purchase may be rejected by the
underwriters or participating dealers based on eligibility or creditworthiness
criteria.

Price and volume volatility in the market for our common stock may result
from the somewhat unique nature of the proposed plan of distribution. Price and
volume volatility in the market for our common stock after the completion of
this offering may adversely affect the market price of our common stock.

We have granted to the underwriters an option, exercisable no later than 30
days after the date of this prospectus, to purchase up to an aggregate of
additional shares of our common stock at the offering price, less the
underwriting discount, set forth on the cover page of this prospectus. To the
extent that the underwriters exercise this option, the underwriters will have a
firm commitment to purchase the additional shares, and we will be obligated to
sell the additional shares to the underwriters. The underwriters may exercise
the option only to cover over-allotments made in

62
<PAGE>
connection with the sale of shares offered. The underwriting agreement provides
that we will indemnify the underwriters against specified liabilities, including
liabilities under the Securities Act, or contribute to payments that the
underwriters may be required to make.

We have agreed not to offer, sell, contract to sell, or otherwise dispose of
any shares of common stock, or any options or warrants to purchase common stock
other than the shares of common stock or options to acquire common stock issued
under our stock option plans and stock purchase plan, for a period of 180 days
after the date of this prospectus, except with the prior written consent of WR
Hambrecht + Co. Each of our directors, executive officers and holders of 1% or
more of our outstanding capital stock has agreed to restrictions on his or her
ability to sell, offer, contract or grant any option to sell, pledge, transfer
or otherwise dispose of shares of our common stock for a period of 180 days
after the date of this prospectus, without the prior written consent of WR
Hambrecht + Co.

In connection with the offering, persons participating in the offering may
purchase and sell shares of common stock on the open market. These transactions
may include short sales, stabilizing transactions in accordance with Rule 104 of
Regulation M under the Securities Exchange Act of 1934, as amended, and
purchases to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of shares than they are required to
purchase in the offering which creates a syndicate short position. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the common stock. The
underwriters also may impose a penalty bid. This occurs when a particular
underwriter repays to the underwriters a portion of the underwriting discount
received by it because the representative has repurchased shares sold by or for
the account of that underwriter in stabilizing or short covering transactions.
These activities by the underwriters may stabilize, maintain or otherwise affect
the market price of our common stock. As a result, the price of our common stock
may be higher than the price that otherwise might exist in the open market. If
these activities are commenced, they may be discontinued by the underwriters at
any time. These transactions may be effected on the Nasdaq National Market, in
the over-the-counter market or otherwise.

Persons participating in this offering may also engage in passive market
making transactions in our common stock on the Nasdaq National Market. Passive
market making consists of displaying bids on the Nasdaq National Market limited
by the prices of independent market makers and affecting purchases limited by
such prices and in response to order flow. Rule 103 of Regulation M promulgated
by the SEC limits the amount of net purchases that each passive market maker may
make and the displayed size of each bid.

Passive market making may stabilize the market price of our common stock at
a level above that which might otherwise prevail in the open market and, if
commenced, may be discontinued at any time.

WR Hambrecht + Co currently intends to act as a market maker for our common
stock following this offering. However, WR Hambrecht + Co is not obligated to do
so and may discontinue any market making at any time.

WR Hambrecht + Co is an investment banking firm formed in February 1998. In
addition to this offering, WR Hambrecht + Co has engaged in the business of
public and private equity investing and financial advisory services since its
inception. The manager of WR Hambrecht + Co, William R. Hambrecht, has 40 years
of experience in the securities industry.

63
<PAGE>
LEGAL MATTERS

The validity of our shares of common stock being offered will be passed upon
for us by Bay Venture Counsel, LLP, Oakland, California. Fischer, Behar, Chen &
Co. will render opinions for us as to matters of Israeli law. Mr. Avraham
Fischer, senior partner of Fischer, Behar, Chen & Co., is a member of our board
of directors and owns 25,000 shares of our common stock and options to purchase
60,000 shares of our common stock. Legal matters in connection with this
offering will be passed upon for the underwriters by Morrison & Foerster LLP,
San Francisco, California.

EXPERTS

Our consolidated balance sheets at December 31, 1998 and 1999, and our
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1999,
included in this prospectus have been included herein in reliance on the report
of Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International
Limited, independent certified public accountants in Israel, given upon the
authority of that firm as experts in accounting and auditing.

WHERE YOU CAN GET MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the shares of
common stock being offered. This prospectus does not contain all of the
information described in the registration statement and the related exhibits and
schedules. For further information with respect to Nogatech and the common stock
being offered, reference is made to the registration statement and the related
exhibits and schedule. Statements contained in this prospectus regarding the
contents of any contract or any other document to which reference is made are
not necessarily complete, and, in each instance, reference is made to the copy
of the contract or other document filed as an exhibit to the registration
statement, each statement being qualified in all respects by the reference. A
copy of the registration statement and the related exhibits and schedule may be
inspected without charge at the public reference facilities maintained by the
Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices located at the Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048, and copies of all or any part of
the registration statement may be obtained from these offices upon the payment
of the fees prescribed by the Commission. Information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-800-SEC-0330. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
site is http://www.sec.gov. Upon approval of our common stock for quotation on
the Nasdaq National Market, our reports, proxy statements and other information
may be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.

We intend to provide our stockholders with annual reports containing
combined financial statements audited by an independent accounting firm and to
file with the Commission quarterly reports containing unaudited combined
financial data for the first three quarters of each year.

64
<PAGE>
NOGATECH, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Report of Independent Accountants........................... F-2

Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-3

Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-4

Consolidated Statements of Changes in Stockholders' Equity
(Capital Deficiency) for the Years Ended December 31,
1997, 1998 and 1999....................................... F-5

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1998 and 1999.......................... F-7

Notes to Consolidated Financial Statements.................. F-8
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders of
NOGATECH, INC.

We have audited the consolidated balance sheets of Nogatech, Inc. and its
subsidiaries (collectively, the "Company") as of December 31, 1998 and 1999 and
the related consolidated statements of operations, changes in stockholders'
equity (capital deficiency) and cash flows for each of the three years in the
period ended December 31, 1999. These financial statements are the
responsibility of the Company's Board of Directors and management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards in Israel and in the United States, including those prescribed by the
Israeli Auditors (Mode of Performance) Regulations, 1973. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by the Company's Board
of Directors and management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a fair basis for our
opinion.

In our opinion, the consolidated financial statements referred to above,
present fairly, in all material respects, the consolidated financial position of
the Company as of December 31, 1998 and 1999 and the consolidated results of
their operations, changes in stockholders' equity (capital deficiency) and their
cash flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.

<TABLE>
<S> <C>
Tel Aviv, Israel
February 25, 2000
(except for Note 12,
the date of which is Kesselman & Kesselman
March 9, 2000) Certified Public Accountants (Israel)
</TABLE>

F-2
<PAGE>
NOGATECH, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
PRO FORMA
(NOTE 1N)
DECEMBER 31, -------------
------------------- DECEMBER 31,
1998 1999 1999
-------- -------- -------------
ASSETS (UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 3,791 $ 2,475 $ 2,475
Accounts receivable: (note 9a)
Trade................................................... 848 1,019 1,019
Other................................................... 140 197 197
Inventories (note 9b)..................................... 581 2,109 2,109
Other current assets...................................... 26 169 169
------- ------- -------
Total current assets.................................. 5,386 5,969 5,969
------- ------- -------
FIXED ASSETS (note 2):
Cost...................................................... 535 835 835
Less--accumulated depreciation and amortization........... 355 483 483
------- ------- -------
Total fixed assets.................................... 180 352 352
------- ------- -------
$ 5,566 $ 6,321 $ 6,321
======= ======= =======
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accruals:
Trade................................................... $ 508 $ 1,967 $ 1,967
Other (note 9c)......................................... 707 891 891
------- ------- -------
Total current liabilities............................. 1,215 2,858 2,858
EMPLOYEE RIGHTS UPON RETIREMENT (note 3).................... 52 106 106
------- ------- -------
COMMITMENTS AND CONTINGENT
LIABILITIES (note 4)
Total liabilities..................................... 1,267 2,964 2,964
------- ------- -------

SERIES A REDEEMABLE CONVERTIBLE PREFERRED
STOCK, at redemption value (note 5)....................... 7,816 8,243 --
------- ------- -------
STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
(note 6):
Common stock*, $0.001 par value:
authorized--40,000,000 shares at
December 31, 1998 and 1999;
issued and outstanding: 310,995 shares and 419,370
shares at December 31, 1998 and 1999, respectively;
December 31, 1999 pro forma--9,029,153 shares......... 1 1 9
Additional paid-in capital.............................. 4,906 4,754 12,989
Note receivable from a stockholder (note 12f)........... (57) (57) (57)
Deferred compensation................................... (271) (392) (392)
Accumulated deficit..................................... (8,096) (9,192) (9,192)
------- ------- -------
Total stockholders' equity (capital deficiency)......... (3,517) (4,886) 3,357
------- ------- -------
$ 5,566 $ 6,321 $ 6,321
======= ======= =======
</TABLE>

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

*After giving retroactive effect to the reverse stock split, see note 6a.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.

F-3
<PAGE>
NOGATECH, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
SALES (notes 8 and 11).................................. $ 2,551 $ 3,205 $ 8,856

COST OF SALES (notes 8 and 11).......................... 1,699 2,038 5,111
----------- ----------- -----------
GROSS PROFIT............................................ 852 1,167 3,745
----------- ----------- -----------
OPERATING EXPENSES:
Research and development.............................. 1,266 1,451 2,283
Sales and marketing................................... 695 1,020 1,689
General and administrative............................ 321 609 880
----------- ----------- -----------
TOTAL OPERATING EXPENSES................................ 2,282 3,080 4,852
----------- ----------- -----------
OPERATING LOSS.......................................... (1,430) (1,913) (1,107)

OTHER INCOME (EXPENSE), NET............................. (32) 90 11
----------- ----------- -----------
NET LOSS................................................ (1,462) (1,823) (1,096)

ACCRETION OF REDEMPTION
VALUE OF SERIES A REDEEMABLE CONVERTIBLE
PEREFERRED STOCK...................................... (300) (383) (427)
----------- ----------- -----------
NET LOSS APPLICABLE TO
COMMON STOCK.......................................... $ (1,762) $ (2,206) $ (1,523)
=========== =========== ===========
NET LOSS PER SHARE OF COMMON STOCK,
basic and diluted (note 1j)........................... $ (5.86) $ (7.13) $ (4.50)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK OUTSTANDING (note 1j).......... 300,709 309,536 338,295
=========== =========== ===========
PRO FORMA NET LOSS PER SHARE OF COMMON
STOCK, basic and diluted (note 1j).................... $ (0.12)
===========
PRO FORMA WEIGHTED AVERAGE
NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING (note 1j)................................. 8,948,078
===========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.

F-4
<PAGE>
NOGATECH, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
NOTE TOTAL
COMMON STOCK ADDITIONAL RECEIVABLE STOCKHOLDERS'
------------------------- PAID-IN FROM A DEFERRED ACCUMULATED EQUITY (CAPITAL
NUMBER* AMOUNT CAPITAL STOCKHOLDER COMPENSATION DEFICIT DEFICIENCY)
----------- ----------- ----------- ----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1,
1997..................... 286,625 $ 1 $ 820 $ (57) $ $ (4,811) $ (4,047)
Issuance of common stock
in connection with
stock options
exercised.............. 18,120 ** 2 2
Excess of consideration
received, net of
issuance costs of $60,
over the redemption
value of series A
redeemable convertible
preferred stock issued
(note 5b(1))........... 1,283 1,283
Accretion of redemption
value of series A
redeemable convertible
preferred stock........ (300) (300)
Net loss................. (1,462) (1,462)
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT DECEMBER 31,
1997..................... 304,745 1 1,805 (57) (6,273) (4,524)
Issuance of common stock
in connection with
stock options
exercised.............. 6,250 ** 1 1
Deferred compensation
related to employee
stock option grants.... 268 $ (268)
Deferred compensation
related to nonemployee
stock option grants.... 53 (53)
Amortization of deferred
compensation related to
stock option grants.... 50 50
Excess of consideration
received, net of
issuance costs of $355,
over the redemption
value of series A
redeemable convertible
preferred stock
issued (note 5b(1)).... 3,162 3,162
Accretion of redemption
value of series A
redeemable convertible
preferred stock........ (383) (383)
Net loss................. (1,823) (1,823)
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT DECEMBER 31,
1998--FORWARD............ 310,995 $ 1 $ 4,906 $ (57) $ (271) $ (8,096) $ (3,517)
</TABLE>

F-5
<PAGE>
NOGATECH, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>

COMMON STOCK ADDITIONAL NOTE RECEIVABLE
----------------------- PAID-IN FROM A DEFERRED ACCUMULATED
NUMBER* AMOUNT CAPITAL STOCKHOLDER COMPENSATION DEFICIT
---------- ---------- ---------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998--BROUGHT
FORWARD.................................. 310,995 $ 1 $ 4,906 $ (57) $ (271) $ (8,096)
Issuance of common stock in
connection with stock options
exercised............................ 108,375 ** 39
Deferred compensation related to employee
stock option grants.................... 214 (214)
Deferred compensation related to
nonemployee stock option grants........ 22 (22)
Amortization of deferred compensation
related to stock option grants......... 115
Accretion of redemption value
of series A redeemable convertible
preferred stock...................... (427)
Net loss................................. (1,096)
---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT DECEMBER 31, 1999............... 419,370 $ 1 $ 4,754 $ (57) $ (392) $ (9,192)
========== ========== ========== ========== ========== ==========
Pro forma conversion to series A
redeemable convertible preferred stock
(note 1n).............................. 8,609,783 8 8,235
---------- ---------- ---------- ---------- ---------- ----------
PRO FORMA STOCKHOLDERS' EQUITY AT
DECEMBER 31, 1999 (NOTE 1N) (UNAUDITED).. 9,029,153 $ 9 $ 12,989 $ (57) $ (392) $ (9,192)
========== ========== ========== ========== ========== ==========

<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY (CAPITAL
DEFICIENCY)
-----------------
<S> <C>
BALANCE AT DECEMBER 31, 1998--BROUGHT
FORWARD.................................. $ (3,517)
Issuance of common stock in
connection with stock options
exercised............................ 39
Deferred compensation related to employee
stock option grants....................
Deferred compensation related to
nonemployee stock option grants........
Amortization of deferred compensation
related to stock option grants......... 115
Accretion of redemption value
of series A redeemable convertible
preferred stock...................... (427)
Net loss................................. (1,096)
----------
BALANCE AT DECEMBER 31, 1999............... $ (4,886)
==========
Pro forma conversion to series A
redeemable convertible preferred stock
(note 1n).............................. 8,243
----------
PRO FORMA STOCKHOLDERS' EQUITY AT
DECEMBER 31, 1999 (NOTE 1N) (UNAUDITED).. $ 3,357
==========
</TABLE>

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

* After giving retroactive effect to the reverse stock-split, see note 6a.

** Representing an amount less than $1,000.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.

F-6
<PAGE>
NOGATECH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(1,462) $(1,823) $(1,096)
------- ------- -------
Adjustments to reconcile net loss to net cash used in
operating activities:
Employee rights upon retirement......................... 7 19 54
Depreciation and amortization........................... 97 91 128
Compensation relating to stock options.................. -- 50 115
Changes in operating asset and liability items:
Decrease (increase) in accounts receivable:
Trade............................................... 1 (547) (171)
Other............................................... (75) (65) (57)
Decrease (increase) in inventories.................... 94 50 (1,528)
Decrease (increase) in other current assets........... (33) 57 (143)
Increase in accounts payable and accruals:
Trade............................................... 151 2 1,459
Other............................................... 87 344 184
------- ------- -------
329 1 41
------- ------- -------
Net cash used in operating activities..................... (1,133) (1,822) (1,055)
------- ------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES--purchases of
fixed assets.............................................. (108) (64) (300)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of series A redeemable convertible preferred
stock, net of issuance costs of $60 and $355 in 1997 and
1998, respectively...................................... 1,790 5,641 --
Issuance of common stock in connection with stock options
exercised............................................... 2 1 39
Receipt (repayment) of short-term credit, net............. (375) (236) --
------- ------- -------
Net cash provided by financing activities................. 1,417 5,406 39
------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ 176 3,520 (1,316)
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR... 95 271 3,791
------- ------- -------
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF YEAR......... $ 271 $ 3,791 $ 2,475
======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION--CASH PAID
DURING THE YEARS FOR:
Interest.................................................. $ 27 $ 57 $ 41
======= ======= =======
Taxes..................................................... $ 2 $ 9 $ 4
======= ======= =======
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.

F-7
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:

A. GENERAL

1) NATURE OF OPERATIONS:

(a) Nogatech, Inc. ("Nogatech Delaware") was incorporated in Delaware on
September 22, 1999.

On December 28, 1999, Nogatech, Inc. ("Nogatech California"), which
was incorporated in California in 1993, merged into Nogatech
Delaware. In the merger, the stockholders of Nogatech California
exchanged their shares for all of the issued and outstanding stock of
Nogatech Delaware. At the time of the merger, the wholly owned
subsidiary of Nogatech California was Nogatech Ltd., an Israeli
company ("Nogatech Israel").

(b) Nogatech Delaware and its two wholly owned subsidiaries, Nogatech
Israel and Nogatech California, Inc. (collectively, the "Company"),
are engaged in research, development, production, sales and
marketing of the Company's products to customers.

The Company provides video compression chips which establish
connections between video devices and computers, as well as
connections between video devices across a variety of networks. As to
information regarding the Company's major customers and supplier, see
note 11.

(c) The merger described in (a) above has been recorded as a
reorganization of entities under common control, and has been
accounted for at the recorded amount in Nogatech California's
(predecessor) financial statements. Accordingly, the Company's
consolidated financial statements reflect the predecessor's
financial position, results of operations and cash flows, from its
inception to December 28, 1999 (date of merger), in a manner
similar to a pooling-of-interests accounting. Such presentation
reflects the combined financial statements as if the merger
occurred at the beginning of the earliest period presented herein.

2) ACCOUNTING PRINCIPLES

The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") in the United
States ("U.S. GAAP").

3) USE OF ESTIMATES IN THE PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets, liabilities at the date of the financial statements and the
reported amounts of sales and expenses during the reporting periods.
Actual results could differ from those estimates.

B. FUNCTIONAL CURRENCY

The currency of the primary economic environment in which the operations of
Nogatech Delaware and Nogatech California are conducted is the U.S. dollar
("$" or "dollar").

Most of Nogatech Israel's sales are made in dollars. Substantially all of
the subsidiary's production costs are comprised of cost of materials, which
are purchased in dollars. Most of the research and

F-8
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
development expenses and general and administrative expenses are incurred in
Israeli currency. Most of the sales and marketing expenses are incurred in
dollars. Thus, the functional currency of Nogatech Israel is the dollar, and
accordingly, the functional currency of the Company is the dollar.

Transactions and balances originally denominated in dollars are presented at
their original amounts. Balances in non-dollar (Israeli) currency are
translated into dollars using historical and current exchange rates for
non-monetary and monetary balances, respectively. For non-dollar
transactions and other items (stated below) reflected in the statements of
operations, the following exchange rates are used: (i) for transactions --
exchange rates at transaction dates; and (ii) for other items (derived from
non-monetary balance sheet items, such as depreciation and amortization,
changes in inventories, etc.) -- historical exchange rates. The resulting
currency transaction gains or losses are included in other income or
expenses, as appropriate.

C. PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Nogatech
Delaware and its two wholly owned subsidiaries. Intercompany balances and
transactions have been eliminated. Profits from intercompany sales, not yet
realized, have also been eliminated.

D. INVENTORIES

Inventories are recorded at the lower of cost or market. Cost is determined
on a "first-in, first-out" basis.

E. FIXED ASSETS

Fixed assets are stated at cost.

Depreciation in calculated using the straight-line method over the estimated
useful life of the assets, at the following annual rates:

<TABLE>
<CAPTION>
%
--------
<S> <C>
Computers and software............................... 20-33
Office furniture and equipment....................... 6-15
Laboratory equipment................................. 20
Motor vehicles....................................... 15
</TABLE>

Leasehold improvements are amortized by the straight-line method over the
term of the lease, which is shorter than the estimated useful life of the
improvements.

F. REVENUE RECOGNITION

Revenue from product sales to customers, other than sales to distributors,
is recognized when products are shipped. Sales to distributors, where the
Company allows right of return on products unsold by the distributors, are
not recognized until the products are sold by the distributors to their
customers.

The provision for warranty is recorded at the time of the sale of the
related product for probable costs in connection with warranties, based on
the Company's experience.

F-9
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
G. RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses are charged to the statements of
operations as incurred.

H. CONCENTRATION OF CREDIT RISKS AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Financial instruments that subject the Company to credit risks consist
primarily of uninsured cash and cash equivalents, which are deposited in
major financial institutions in the United States and in Israel, and trade
receivables. The Company performs ongoing credit evaluations of its
customers and generally does not require collateral. The Company provides
for estimated credit losses.

The provision for doubtful accounts is principally determined for specific
debts when their collection is doubtful.

I. CASH EQUIVALENTS

The Company considers all highly liquid investments, with an original
maturity of three months or less when issued, that are not restricted as to
withdrawal or use, to be cash equivalents.

J. NET LOSS PER SHARE OF COMMON STOCK ("EPS")

1) Historical EPS

a) Basic EPS is computed by dividing net loss applicable to common
stock by the weighted average number of shares of common stock
outstanding during each period.

b) Since the basic EPS for the years ended December 31, 1997, 1998 and
1999 represents a loss per share of common stock, the effect of
including the incremental shares of common stock from assumed
exercise of options and from assumed conversion of redeemable
convertible preferred stock in EPS computation is anti-dilutive, and
accordingly the basic and diluted EPS are the same (see also note
9d).

2) Pro forma EPS

Pro forma basic and diluted EPS have been calculated assuming the
conversion of all outstanding shares of preferred stock that are
convertible upon the Company's initial public offering into common stock,
as if the shares had been converted immediately upon their issuance.
Accretion of redemption value of redeemable convertible preferred stock
has been excluded from the calculation of pro forma basic and diluted EPS
as the related shares are assumed to be converted to common stock upon
issuance.

3) Weighted average number of common shares outstanding used in the
computation of the basic, diluted and pro forma EPS has been calculated
after giving retroactive effect in all the reported periods, to a
one-for-two reverse stock split, as approved by the Company's Board of
Directors on March 5, 2000 (note 12c).

K. STOCK-BASED COMPENSATION

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" (APB 25), and related interpretations in
accounting for its stock option plan grants to employees and directors, with
the disclosure provisions of Statement of Financial Accounting Standards FAS
No. 123, "Accounting for Stock-Based Compensation" (FAS 123). Under APB 25,

F-10
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
compensation expense is computed under the intrinsic value method of
accounting to the extent that the fair value of the underlying stock on the
date of grant exceeds the exercise price of the stock option. Compensation
so computed is deferred and then recognized over the vesting period of the
stock option.

The Company applies FAS 123 in accounting for stock options granted to
nonemployees in exchange for services received using the fair value method
of accounting. Under FAS 123, these equity transactions are accounted for
based on the fair value of the consideration received or the fair value of
the equity instruments issued, whichever is more reliably measurable. The
value of the equity instruments is calculated using a Black-Scholes pricing
model.

L. COMPREHENSIVE INCOME (LOSS)

The Company adopted FAS 130, "Reporting Comprehensive Income" (FAS 130).
FAS 130 requires reporting and display of comprehensive income (loss) and
its components, in a full set of general-purpose financial statements. The
Company has no other comprehensive loss components other than the net loss
for the reported periods.

M. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT

In June 1998, the FASB issued FAS 133, "Accounting for Derivative
Instruments and Hedging Activities" (FAS 133). FAS 133 established a new
model for accounting for derivatives and hedging activities. FAS 133
requires companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting from changes
in the values of those derivatives would be accounted for depending on the
use of the derivative and whether it qualifies for hedge accounting.
FAS 133 is effective for calendar year companies beginning January 1, 2001.
The Company does not currently use derivative instruments: accordingly, it
does not anticipate that the new standard will have any impact on its
financial statements.

N. UNAUDITED PRO FORMA BALANCE SHEET

Upon the planned closing of the Company's anticipated initial public
offering in May 2000, the outstanding shares of redeemable convertible
preferred stock will automatically convert into common stock. The unaudited
pro forma balance sheet reflects these transactions as if they occurred on
December 31, 1999.

O. DEFERRED INCOME TAXES

Deferred income taxes are created for temporary differences between the
assets and liabilities as measured in the financial statements and for tax
purposes. Deferred taxes are computed using the tax rates expected to be in
effect when these differences reverse. Valuation allowances in respect of
deferred tax assets are provided when it is more likely than not that all or
part of the deferred tax assets will not be realized.

F-11
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--FIXED ASSETS:

A. Grouped by major classifications, fixed assets are composed as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Cost:
Computers and software.................................... $404 $647
Office furniture and equipment............................ 51 78
Laboratory equipment...................................... 40 45
Leasehold improvements.................................... 40 41
Motor vehicles............................................ -- 24
---- ----
535 835
---- ----
Less--accumulated depreciation and amortization:
Computers and software.................................... 279 386
Office furniture and equipment............................ 11 16
Laboratory equipment...................................... 36 38
Leasehold improvements.................................... 29 40
Motor vehicles............................................ -- 3
---- ----
355 483
---- ----
$180 $352
==== ====
</TABLE>

B. Depreciation and amortization expenses related to fixed assets totaled
$97,000, $91,000 and $128,000 for the years ended December 31, 1997, 1998
and 1999, respectively.

NOTE 3--EMPLOYEE RIGHTS UPON RETIREMENT:

A. Israeli labor laws and agreements require payment of severance pay upon
dismissal of an employee or upon termination of employment in certain
other circumstances. Nogatech Israel's severance pay liability for its
employees, based upon length of service and the latest monthly salary
(one month's salary for each year worked), is mainly covered by purchased
insurance policies.

B. The balance sheet liability for Israeli employee rights upon retirement,
and the amount funded with insurance companies, are composed as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Severance pay liability..................................... $255 $362
Less--amount funded......................................... 203 256
---- ----
Unfunded balance............................................ $ 52 $106
==== ====
</TABLE>

F-12
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--COMMITMENTS AND CONTINGENT LIABILITIES:

A. LEASE COMMITMENTS

1) Rent:

a) The Company leases its U.S. facility under an operating lease
agreement which expires in September 2002. The Israeli subsidiary's
facility is leased under an operating lease which expires on
February 22, 2003, with an option to extend until February 2008. Up
to $120,000 of the Israeli facility rent is guaranteed by a financial
institution. The guarantee expires on March 10, 2000.

b) Future minimum lease commitments under non-cancelable operating lease
agreements are as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Year ending December 31:
2000........................................................ $ 154
2001........................................................ 156
2002........................................................ 139
2003........................................................ 129
2004........................................................ 140
Thereafter.................................................. 463
------
$1,181
======
</TABLE>

2) Car lease:

a) The Company has one vehicle which has been leased since 1999 under an
operating lease agreement for the period ending in 2002.

b) Future minimum lease commitment under this agreement is as follows:

<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Year ending December 31:
2000........................................................ $ 8
2001........................................................ 8
2002........................................................ 2
---
$18
===
</TABLE>

3) Lease expenses totaled $91,000, $86,000 and $144,000 in the years ended
December 31, 1997, 1998 and 1999, respectively.

B. ROYALTY COMMITMENTS

The Company licensed technologies from three companies that are subject
to a per unit royalty ranging from $0.50 to $3.00 The royalties are included
in the cost of sales and amounted to $61,000, $40,000 and $43,000 in the
years ended December 31, 1997, 1998 and 1999 respectively.

F-13
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--COMMITMENTS AND CONTINGENT LIABILITIES: (CONTINUED)
C. COMMISSION COMMITMENTS

Nogatech Israel is committed to pay a consulting company a commission
equal to 3.0% of the initial order of the net sales initiated by that
consulting company and a commission of 1.5% to 2.5% for all subsequent
orders.

Nogatech Israel is also committed to pay a commission equal to 3.0% of
orders of the net sales initiated by two other companies in sales to the
Far East.

Commissions paid by the Company amounted to $81,000 in the year ended
December 31, 1999.

D. LINE OF CREDIT

The Company has obtained a line of credit from an Israeli financial
institution for working capital purposes, in the amount of $2,000,000.
Repayment terms and interest rates are determined at the time of each
request for credit. The Company has pledged all of its assets as
collateral for this credit line. As of December 31, 1999, the financial
institution has provided the Company guarantees in a total amount of
$2,005,000 in favor of rent facility, a supplier and customs authorities
in Israel, which reduce the available amount of line of credit to zero.

NOTE 5--REDEEMABLE CONVERTIBLE PREFERRED STOCK:

a. Redeemable convertible preferred stock consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Series A redeemable convertible preferred stock--$0.43
redemption value plus an accrued amount (see b(1) below):
authorized 30,000,000 shares; issued and
outstanding--15,906,304 shares at December 31, 1998 and
1999 (at redemption value)................................ $7,816 $8,243

Series B redeemable convertible preferred stock--$4.18
redemption value: authorized at December 31,
1999--1,196,172 shares; no shares issued and outstanding
at December 31, 1998 and 1999 (see note 12)............... -- --
------ ------

$7,816 $8,243
====== ======
</TABLE>

In addition, the Company has authorized 803,828 shares of
undesignated convertible preferred stock.

b. Following are the main terms of the Company's redeemable convertible
preferred stock:

1) Liquidation preference

Holders of preferred stock are entitled to a liquidation preference
of $0.43 and $4.18 for series A and B, respectively, per share plus
an amount equal to 8% of such liquidation price, compounded annually,
for each year (or fraction thereof) after the first two years

F-14
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--REDEEMABLE CONVERTIBLE PREFERRED STOCK: (CONTINUED)
from issuance of the stock, plus any declared but unpaid dividends.
The terms of the preferred stock stipulate that certain events (such
as a change in control) shall be considered as a deemed liquidation
of the Company which entitle the holders to redeem the outstanding
shares based on their liquidation amounts.

The excess of the consideration received, net of issuance costs, from
the issuance of the series A convertible preferred stock over its
redemption value, is recorded as additional paid-in capital at the
date of issuance. The annual accretion of the redemption value is
also charged to additional paid-in capital.

2) Voting rights

As long as an aggregate amount of at least 4,000,000 shares of
series A and series B preferred stock are outstanding, preferred
stockholders are entitled to vote on all matters submitted or
required to be submitted to a vote of the stockholders of the Company
and shall be entitled to the number of votes equal to the number of
full shares of common stock into which such shares of series A and
series B preferred stock could be converted.

3) Election of Directors

So long as at least 4,000,000 shares of series A preferred stock are
outstanding, the authorized number of directors shall be nine and any
change in the number shall be with the consent of the holders of a
majority of the outstanding series A preferred stock. The holders of
the outstanding shares of series A preferred stock, voting as a
single class, are entitled to elect seven directors to the board of
directors. The holders of the outstanding shares of common stock,
voting as a single class, shall be entitled to elect two directors to
the board of directors.

4) Right to convert

At the option of the holder, each share of series A preferred stock
is convertible, at any time after issuance, into common stock based
on the determined conversion price subject to certain antidilution
provisions. According to the determined conversion price, as of
December 31, 1999, 5,765,003 shares of series A preferred stock are
convertible on a basis of two shares of preferred stock for one share
of common stock and 10,141,301 shares are convertible according to a
ratio of 1.7707 share of preferred stock for one share of common
stock.

At the option of the holder, each share of series B preferred stock
is convertible, at any time after issuance, into common stock, based
on the determined conversion price subject to certain antidilution
provisions. The determined conversion price of series B preferred
stock through February 28, 2000 is on a basis of two shares of
preferred stock for one share of common stock and thereafter the
conversion price decreases ratably over the period up to a final
ratio of two shares of series B preferred stock for each 1.50 share
of common stock commencing on August 1, 2000 and thereafter.

The series A and B preferred stock will be automatically converted
into common stock concurrently with the closing of an underwritten
public offering of common stock resulting in aggregate gross cash
proceeds from the issuance in excess of $10,000,000.

F-15
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5--REDEEMABLE CONVERTIBLE PREFERRED STOCK: (CONTINUED)
5) Dividends

When and if declared by the board of directors, noncumulative
dividends at the annual rate of $0.0258 per share of series A
preferred stock and $0.1039 per share of series B preferred stock are
payable in cash to the preferred stockholders, in preference to any
declaration or payment on the common stock.

C. Details regarding issuances of redeemable convertible preferred stock:

<TABLE>
<CAPTION>
SERIES A REDEEMABLE
CONVERTIBLE
PREFERRED STOCK
-----------------------
AMOUNT (IN
NUMBER THOUSANDS)
---------- ----------
<S> <C> <C>
Balance at January 1, 1997.................................. 8,962,959 $ 4,488
Preferred shares issued in 1997............................. 1,178,342 *1,790
---------- -------
Balance at December 31, 1997................................ 10,141,301 6,278
Preferred shares issued in 1998............................. 5,765,003 *5,641
---------- -------
Balance at December 31, 1998 and at December 31, 1999....... 15,906,304 $11,919
========== =======
</TABLE>

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

* Net of issuance cost of $60,000 and $355,000 in 1997 and 1998, respectively.

d. As to the issuance of series B redeemable convertible preferred stock in
January 2000, see note 12a.

NOTE 6--STOCKHOLDERS' EQUITY

a. REVERSE STOCK SPLIT

On March 5, 2000, the Company's Board of Directors approved a
reorganization of the Company's share capital, whereby each two shares of
common stock of $0.001 par value will be reverse stock split into one
share of common stock of $0.001 par value (see note 12c). All share and
per share data included in these financial statements have been
retroactively adjusted to reflect the abovementioned reverse stock split.
In addition, the conversion ratio of the convertible preferred stock, the
number of options and their exercise price have been adjusted
accordingly.

b. EMPLOYEE STOCK OPTION PLANS

1) Previous stock option plans:

a) U.S. 1993 Stock Option Plan

In February 1993, the Company's Board of Directors approved a
U.S. stock option plan (the U.S. plan), under which options are
to be granted to the Company's employees including officers,
directors and consultants, without consideration. Each option can
be exercised to purchase one common share of the Company. Any
option

F-16
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--STOCKHOLDERS' EQUITY (CONTINUED)
not exercised within 4 or 5 years, as applicable, from allotment
date will expire, unless extended by the Board of Directors.

Options granted under the plan may be either incentive stock
options or nonstatutory stock options and become exercisable as
specified in each option agreement.

Options granted to a holder of more that 10% of the voting stock
of the Company may be granted at not less than 110% of fair value
of the common share on the date of grant. Incentive stock options
granted to employees under the U.S. plan must have exercise
prices not less than 100% of fair value of the common share on
the date of the grant, as determined by the Board of Directors.

b) Israeli 1993 Stock Option Plan

In July 1993, the Company's Board of Directors approved an
Israeli employee option plan (the Israeli plan), under which
options are to be granted to the Company's employees including
officers, directors and consultants without consideration. Each
option can be exercised to purchase one common share of the
Company. Any option not exercised within 7 years from allotment
date will expire, unless extended by the Board of Directors.

c) Options granted to consultants under these plans were excluded
from the summary presented in the tables 3 and 4 below and were
treated as options granted to nonemployees, see c below.

2) Existing stock option plan--1999 stock option plan

On December 8, 1999, in connection with the merger (note 1a(1)), the
Company adopted the 1999 stock option plan. All issued and
outstanding options under the 1993 plans were assumed under the 1999
stock option plan. In addition, the Company has the right to issue
new options pursuant to the 1999 plan. The terms of the new options
issued under the 1999 plan are identical to the terms of the options
granted under the 1993 plans.

The rights of the common stock obtained upon exercise of the options
will be identical to those of the other shares of common stock of the
Company.

F-17
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--STOCKHOLDERS' EQUITY: (CONTINUED)

3) A summary of the status of the 1999 stock option plan as of
December 31, 1997, 1998, 1999, and changes during the years ended on
those dates, is presented below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1997 1998 1999
--------------------- --------------------- ---------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
NUMBER PRICE NUMBER PRICE NUMBER PRICE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at beginning of year........ 772,720 $ 0.24 734,470 $ 0.28 1,248,470 $ 0.26
Changes during the year:
Granted....................................... 51,750 $ 0.72 549,000 $ 0.24 431,000 $ 2.78
Exercised..................................... (18,120) $ 0.14 (6,250) $ 0.12 (100,875) $ 0.34
Forfeited..................................... (71,880) $ 0.30 (28,750) $ 0.64 (47,375) $ 0.72
--------- --------- ---------
Options outstanding at year end................. 734,470 $ 0.28 1,248,470 $ 0.26 1,531,220 $ 0.94
========= ========= =========
Options exercisable at year end................. 556,014 $ 0.26 791,146 $ 0.28 948,261 $ 0.72
========= ========= =========
Options available for grant under the stock
option plan................................... 473,823 953,572 3,011,787
========= ========= =========
Weighted average fair value of options granted
during the year*.............................. $ 0.27 $ 0.58 $ 1.52
</TABLE>

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

* The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model, based on the following
weighted average assumptions: dividend yield of 0% for all years; expected
volatility of 55% for all years; risk-free interest rates (in dollar terms):
1997-6.1%; 1998-5.4% and 1999-5.7%; and expected lives of 4 years in 1997,
1998 and 1999.

4) The following table summarizes information about options outstanding at
December 31, 1999:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------------- ----------------------------
WEIGHTED
AVERAGE
REMAINING WEIGHTED
CONTRACTUAL AVERAGE WEIGHTED
RANGE OF NUMBER LIFE EXERCISE NUMBER AVERAGE
EXERCISE PRICE OF OPTIONS IN YEARS PRICE OF OPTIONS EXERCISE PRICE
-------------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$0.02-$0.20 867,970 2.9 $ 0.09 610,511 $ 0.12
$0.72 297,250 3.8 $ 0.72 181,250 $ 0.72
$3.00 366,000 5.9 $ 3.00 156,500 $ 3.00
----------- -----------
1,531,220 $ 0.94 948,261 $ 0.72
=========== ===========
</TABLE>

5) Options to employees were granted at exercise prices which were equal
to the fair value of the common stock at dates of grant, except for
381,500 options granted in July 1998, to the Company's Chairman of
the Board of Directors and to its Chief Executive Officer and except
for 40,000 options granted to employees in December 1999 which were
granted at exercise prices lower than the fair value of each share of
common stock at dates of grant. The options granted in 1998 were
issued at an exercise price of $0.02 for

F-18
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--STOCKHOLDERS' EQUITY: (CONTINUED)
each share of common stock, while the fair value of each share of
common stock was $0.72. The fair value of each of these options
granted was $0.71. These options will vest over a period of three
years but shall vest immediately upon the consummation of an initial
public offering or upon the occurrence of a corporate sale, as
defined in the agreement. These options will expire if not exercised
after a certain period in the event the Company files a registration
statement for an initial public offering. The 40,000 options granted
in 1999 were issued at an exercise price of $3.00 for each share of
common stock, while the fair value of each share of common stock at
the dates of grant, was $8.30. The fair value of each of these
options granted was $5.91.

6) Accounting treatment of the employee stock option plans

As to the accounting treatment with respect to employee stock option
grants, see note 1k.

In 1998 and in 1999, the Company recorded $268,000 and $214,000,
respectively, of deferred stock compensation for the excess of the
deemed fair value of a share of common stock over the exercise price
at the date of grant related to certain options granted to employees
and directors. The compensation expense is being amortized over the
vesting period of the options. The compensation costs that have been
charged to the statements of operations in the years ended
December 31, 1998 and 1999 are $45,000 and $92,000, respectively.

7) Pro forma disclosure

Had compensation cost for the Company's plans been determined using
the fair value at the grant dates, consistent with the method of
FAS 123, the Company's net loss and loss per share of common stock
would have been increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1997 1998 1999
------------------- ------------------- -------------------
AS PRO AS PRO AS PRO
REPORTED FORMA REPORTED FORMA REPORTED FORMA
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net loss applicable to common stock--in thousands...... $(1,762) $(1,774) $(2,206) $(2,228) $(1,523) $(1,584)
======= ======= ======= ======= ======= =======
Net loss per share of common stock--Basic and
diluted.............................................. $ (5.86) $ (5.90) $ (7.13) $ (7.20) $ (4.50) $ (4.68)
======= ======= ======= ======= ======= =======
</TABLE>

c. WARRANTS AND OPTIONS TO NONEMPLOYEES

1) In 1998, in order to obtain a credit line, the Company granted a bank
options to purchase 240,208 shares of common stock at an exercise
price of $2.08 per share. These options are exercisable during a
period of three years. According to the agreement, the options will
expire after a certain period, if not exercised in the event the
Company files a registration statement for an initial public
offering. The Company recorded deferred compensation of $37,000
associated with these options based on the fair value of these
options at the date of grant.

2) In December 1998, the Board of Directors granted 75,000 options to a
consulting company. The options which were vested in January 1999 and
are exercisable for 75,000 shares of common stock at an exercise
price of $0.72 per share. The Company recorded

F-19
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--STOCKHOLDERS' EQUITY: (CONTINUED)
deferred compensation of $16,000 associated with these options based
on the fair value of these options at the date of grant.

3) In connection with the change of ownership in the Company in 1995,
the Board of Directors granted 350,000 options to the Company's
current Chairman of the Board of Directors who did not have an active
role in the Company at the date of grant. The optionee paid $5,000
for this right. Each option can be exercised to purchase one share of
common stock of the Company at an exercise price of $0.125 per share.
The options expire in June 2000. An expense of $10,000 associated
with these options, reflecting the fair value of the option at date
of grant, net of the amount paid for the option, was charged in the
statement of operations for the year ended December 31, 1995.

4) a) In October 1995, the Company issued 7,500 common stock options
to a consultant at an exercise price of $0.125 per share. These
options were exercised in 1999.

b) In January 1996, the Company issued 10,000 common stock options
to a consultant at an exercise price of $0.14 per share. These
options were exercised in January 2000.

c) In August 1999, the Company issued 20,000 common stock options to
four consultants at an exercise price of $3.00 per share. Two
consultants' options vest ratably over a period of four years and
the options issued to the other consultants are fully vested. The
total deferred expense of $22,000 associated with these options
reflects the fair value of the options at dates of grant.

5) Accounting treatment of options granted to nonemployees.

As to the accounting treatment with respect to options granted to
nonemployees, see Note 1k.

The fair value of equity instruments issued in exchange for services
received is charged against income over the vesting period.

The following weighted average assumptions were used for estimating
the fair value of the options under Black-Scholes option pricing
model: dividend yield of 0%; and expected volatility of 55% for the
years 1998 and 1999, risk free interest of 5.4% and 5.7% for the
years 1998 and 1999 respectively and average expected life of 4 years
for the years 1998 and 1999.

Services costs charged against income in respect of equity
instruments granted to nonemployees were $5,000 and $25,000 in the
years ended December 31, 1998 and 1999, respectively.

d. WARRANTS ISSUED TO SERIES A REDEEMABLE CONVERTIBLE PREFERRED
STOCKHOLDERS

1) In 1997, in connection with the issuance of series A redeemable
convertible preferred stock, the Company issued to the buyers of
those shares options to purchase up to 589,171 shares of common stock
at an exercise price of $3.14 per share. 318,471 of these options
expired in 1999, 111,464 options were exercised in January 2000 and
159,236 options will expire in August 2000.

2) In 1998, in connection with the issuance of series A redeemable
convertible preferred stock, the Company granted the buyers of those
shares options to purchase 432,375 shares

F-20
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--STOCKHOLDERS' EQUITY: (CONTINUED)
of common stock at an exercise price of $2.08 per share. These
options expire in July 2000.

3) According to the applicable agreements, the options described in 1
and 2 above will expire after a certain agreed period if not
exercised, in the event the Company files a registration statement
for an initial public offering.

e. COMMON STOCK RESERVED

As at December 31, 1999, the Company has reserved shares of common stock
for future issuance, as follows:

<TABLE>
<CAPTION>
NUMBER OF
SHARES
----------
<S> <C>
Conversion of series A redeemable convertible preferred
stock..................................................... 8,609,783
Employee stock option plans................................. 4,543,007
Warrants and options to nonemployees........................ 1,398,283
----------
14,551,073
==========
</TABLE>

NOTE 7--INCOME TAXES:

A. U.S. INCOME TAXES

As of December 31, 1999, the Company had federal and state net operating
loss carryforwards of approximately $5,200,000 and $1,700,000, respectively,
which expire through 2019 and 2004, respectively.

Utilization of the net operating loss carryforwards may be subject to a
substantial annual limitation due to the ownership change limitations
provided by the Internal Revenue Code of 1986, as amended, and similar state
provisions. The annual limitation may result in the expiration of net
operating loss carryforwards before utilization.

b. ISRAELI INCOME TAXES

Nogatech Israel has been awarded "approved enterprise" status by the Israeli
government, under the Law for the Encouragement of Capital Investments,
1959. Under the approved enterprise status, Nogatech Israel is entitled to a
four-year tax exemption on undistributed earnings commencing in the year in
which it attains taxable income and a reduced corporate tax rate of 10%-15%
for the remaining term of the program on the plan's proportionate share of
income. The period of tax benefits has not yet commenced. In the event of
the distribution of dividends from income which was tax exempt, the amount
distributed will be liable to corporate tax of 10%-15%.

The entitlement to the above benefits is conditional upon the fulfillment of
conditions stipulated by the law, regulations published thereunder and the
instrument of approval for the specific investment in approved enterprises.
In the event of failure to comply with these conditions, the benefits may be
cancelled and Nogatech Israel may be required to refund the amounts of the
benefits in whole or in part with the addition of linkage differences and
interest.

F-21
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--INCOME TAXES: (CONTINUED)

Nogatech Israel's results for tax purposes are measured on a real basis,
adjusted for the increase in the Israeli Consumer Price Index (CPI). As
explained in note 1b, the financial statements of the Israeli subsidiary
included in consolidation are expressed in U.S. dollars. The difference
between the changes in the Israeli CPI and the NIS/U.S. dollar exchange
rate--both on annual and cumulative basis--causes a difference between
taxable income (loss) and income (loss) reflected in Nogatech Israel's
financial statements expressed in dollars.

Israeli taxable income not eligible for "approved enterprise" benefits
mentioned above is taxed at the regular tax rate of 36%.

As of December 31, 1999, Nogatech Israel has Israeli net operating loss
carryforwards of approximately $2,300,000. The Israeli loss carryforwards
have no expiration date. The Company expects that during the period these
tax losses are utilized, most of its income would be tax exempt, and
therefore, the utilization of the net operating losses will generate no tax
benefit. Accordingly, deferred tax assets from such losses have not been
included in the financial statements.

Net loss applicable to the Israeli operations included in the statements of
operations amounted to approximately to $1,000,000, $1,000,000 and $500,000,
in the years ended December 31, 1997, 1998 and 1999 respectively.

c. DEFERRED INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
In respect of the U.S. operating loss carryforwards......... $1,500 $2,000
Valuation allowance......................................... (1,500) (2,000)
------ ------
Net deferred tax assets..................................... $ - $ -
====== ======
</TABLE>

The valuation allowance increased by $400,000, $300,000 and $500,000 for the
years ended December 31 1997, 1998 and 1999, respectively. These changes in
the valuation allowance were charged to expenses.

FAS 109 provides for the recognition of deferred tax assets if realization
of such assets is more likely than not. Based upon the weight of available
evidence, which includes the Company's historical operating performance and
the reported cumulative net losses in all prior years, management has
determined that the future realization of the tax benefit is not
sufficiently assured. Consequently, a full valuation allowance has been
provided against the net deferred tax assets.

d. ISRAELI TAX ASSESSMENTS

Nogatech Israel has had no final tax assessments since its incorporation
in 1993.

F-22
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--RELATED PARTY TRANSACTIONS

Kenwood Corporation ("Kenwood") is a stockholder in the Company. During
1997, Kenwood subleased premises from the Company for a specific period of
time. Rental income earned by the Company from this sublease was $75,000 for
1997 and at December 31, 1997, Kenwood owed the Company $75,000 pertaining
to this sublease.

Tomen Electronics ("Tomen") is a stockholder in the Company. Sales made to
Tomen were $439,000, $1,324,000 and $1,272,000 in 1997, 1998 and 1999,
respectively. As of December 31, 1998 and 1999, Tomen owed the Company
$35,000 and $68,000, respectively. The Company purchases certain products
from Tomen. Purchases from Tomen aggregated $194,000 and $151,000 in 1998
and 1999, respectively. As of December 31, 1998 and 1999, the Company owed
Tomen $32,000 and $60,000, respectively, pertaining to these purchases.
Additionally, during 1997, the Company entered into an engineering agreement
with Tomen, whereunder the Company will receive four payments of $50,000
upon the achievement of certain milestones, as agreed. The Company
recognized $100,000 of revenue under this agreement for the year ended
December 31, 1997. In 1998, the engineering agreement was canceled and it
was agreed between the companies that there would be no further obligations.

F-23
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION:

BALANCE SHEETS:

a. ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
1) Trade:
Open accounts........................................... $813 $ 951
Related party (note 8).................................. 35 68
---- ------
$848 $1,019
==== ======
The item is net of--
Allowance for doubtful accounts......................... $(24) $ (150)
==== ======
</TABLE>

The change in the allowance for doubtful accounts in the year ended
December 31, 1997 was a decrease of expenses of $23,000. The changes
in the allowance in the years ended December 31, 1998 and 1999
increased the expenses by $20,000 and $126,000, respectively.

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
2) Other:
Employees............................................... $ 65 $ 89
Institutions............................................ 36 82
Other receivables....................................... 39 26
---- ------
$140 $ 197
==== ======
</TABLE>

b. INVENTORIES

<TABLE>
<CAPTION>
Raw materials. $ 413 $ 843
<S> <C> <C>
Finished goods.......................................... 168 1,266
---- ------
$581 $2,109
==== ======
</TABLE>

c. ACCOUNTS PAYABLE

<TABLE>
<CAPTION>
1) Trade:
<S> <C> <C>
Open accounts........................................... $476 $1,907
Related party (note 8).................................. 32 60
---- ------
$508 $1,967
==== ======
2) Other and accruals:
Payroll and related expenses............................ $149 $ 90
Provision for vacation.................................. 95 127
Deferred income......................................... 321 56
Provision for warranty.................................. 65 177
Distributors............................................ 11 244
Accrued expenses........................................ 66 197
---- ------
$707 $ 891
==== ======
</TABLE>

F-24
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION: (CONTINUED)
STATEMENTS OF OPERATIONS:

d. NET LOSS PER SHARE OF COMMON STOCK

The following table sets forth the computation of historical basic and
diluted net loss per share of common stock:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
NUMERATOR--IN THOUSANDS
Net loss applicable to common stock....................... $ (1,762) $ (2,206) $ (1,523)
Accretion of redemption value of series A redeemable
convertible preferred stock............................. 300 383 427
--------- --------- ---------
Numerator for diluted net loss per share of common
stock................................................... $ (1,462) $ (1,823) $ (1,096)
========= ========= =========

DENOMINATOR
Denominator for basic net loss per share of common stock--
weighted average number of shares of common stock....... 300,709 309,536 338,295
Redeemable convertible preferred stock.................... 5,568,334 7,048,428 8,609,783
Options granted........................................... 61,818 331,087
--------- --------- ---------
Denominator for diluted net loss per share of common
stock--adjusted weighted average number of shares....... 5,869,043 7,419,782 9,279,165
========= ========= =========
</TABLE>

The effect of the inclusion of the redeemable convertible preferred stock
and options granted in 1997, 1998 and 1999 is anti-dilutive.

NOTE 10--FAIR VALUE OF FINANCIAL INSTRUMENTS

The financial instruments of the Company consist of non-derivative current
assets and liabilities.

In view of their nature, the fair value of financial instruments included in
working capital of the Company is usually identical or close to their
carrying value.

NOTE 11--SEGMENT INFORMATION

The Company adopted the provisions of FAS 131 which sets out disclosure and
reporting requirements in respect of segments.

Management identifies two reportable operating segments that are
differentiated by the locations of the Company's customers: (1) the United
States and (2) the rest of the world. The Company evaluates performance of
these two operating segments based on sales only. The Company does not
evaluate performance based on segment asset information.

F-25
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--SEGMENT INFORMATION (CONTINUED)
SEGMENT SALES--SALES CLASSIFIED BY GEOGRAPHIC AREA (based on the location of
the customers):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1997 1998 1999
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
United States--North America........................ $1,230 $1,373 $5,436
------ ------ ------
The rest of the world:
Japan............................................. 836 1,341 1,314
Taiwan............................................ 93 59 1440
Europe............................................ 335 356 617
Other............................................. 57 76 49
------ ------ ------
1,321 1,832 3,420
------ ------ ------
Total............................................... $2,551 $3,205 $8,856
====== ====== ======
</TABLE>

COMPANY-WIDE DISCLOSURE REGARDING ITS TOTAL ASSETS, LONG-LIVED ASSETS AND
MAJOR CUSTOMERS:

a. TOTAL ASSETS AND LONG-LIVED ASSETS

The Company's total assets and long-lived assets, net of accumulated
depreciation and amortization, are located in the following geographical
areas:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------
1998 1999
--------------------- ---------------------
TOTAL LONG-LIVED TOTAL LONG-LIVED
ASSETS ASSETS ASSETS ASSETS
-------- ---------- -------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Israel.................................. $ 923 $168 $4,014 $324
North America........................... 4,643 12 2,307 28
------ ---- ------ ----
Total................................... $5,566 $180 $6,321 $352
====== ==== ====== ====
</TABLE>

b. MAJOR CUSTOMERS

In the years ended December 31, 1997, 1998 and 1999, major customers of
the Company represented the following percentages of sales:

<TABLE>
<CAPTION>
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Customer A................................................. * * 24%
Customer B................................................. 17% 41% 14%
Customer C................................................. * * 13%
Customer D................................................. 32% 20% 11%
</TABLE>

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

*Less than 10%.

MAJOR SUPPLIER

In the years ended December 31, 1997, 1998 and 1999, a major supplier of the
Company represented 8%, 10% and 58% of cost of sales, respectively.

F-26
<PAGE>
NOGATECH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12--SUBSEQUENT EVENTS:

a. On January 15, 2000, the Company issued 1,196,172 shares of series B
redeemable convertible preferred stock to a financial investor for a total
consideration of $5,000,000. These shares of preferred stock are convertible
into common stock as described in note 5b(4). In connection with this
issuance, the Company will record a beneficial conversion charge of
$5,000,000 in the quarter ending March 31, 2000. This charge is calculated
as the difference between the per share value of the conversion feature and
the estimated fair value of the common stock at commitment date multiplied
by the applicable number of equivalent shares of common stock. This
nonrecurring amount will be entirely reflected as an increase (decrease) of
the net loss (income) applicable to common stock, against a corresponding
credit to additional paid-in capital.

b. On March 5, 2000, the Board of Directors authorized the Company to file a
registration statement with the U.S. Securities and Exchange Commission for
an initial public offering of its common stock.

c. On March 5, 2000, the Company's Board of Directors approved a reorganization
of the Company's share capital, whereby each two shares of common stock of
$0.001 par value will reverse stock split into one share of common stock of
$0.001 par value. All share and per share data included in these financial
statements have been retroactively adjusted to reflect the abovementioned
reverse stock split. In addition, the conversion ratio of the convertible
preferred stock, the number of options and their exercise price have been
adjusted accordingly.

d. On February 2, 2000, the Company granted stock options for an aggregate of
11,000 shares of common stock to two employees at an exercise price of $8.00
and on March 5, 2000, the Company granted an aggregate of 10,000 stock
options to two employees at an exercise price of $15.00.

e. 1) On March 5, 2000, the Board of Directors adopted the 2000 Equity
Incentive Plan, under which the Company's employees, directors and
consultants are eligible to receive grants of options to purchase common
stock, stock appreciation rights and restricted shares of common stock.
It was further resolved to reserve for issuance under the plan a maximum
amount of 3,500,000 shares plus automatic annual increases equal to the
lesser of 500,000 shares or 5% of the Company's outstanding shares on the
last day of the preceding year. This plan will become effective after the
consummation of the Company's initial public offering.

2) On March 5, 2000, the Board of Directors adopted the 2000 Employee Stock
Purchase Plan, which permits eligible employees to purchase shares of the
Company's common stock pursuant to payroll deductions periodically
applied to the purchase of such shares. A total of 350,000 shares of
common stock initially have been reserved for issuance under the Purchase
Plan. The number of shares reserved for issuance will be increased
automatically on the first day of the Company's fiscal year, commencing
in 2001, by an amount equal to the lesser of 500,000 shares or 1% of the
number of outstanding shares on the last trading day of the immediately
preceding fiscal year.

f. On March 8, 2000, the note receivable from a stockholder was repaid to the
Company, including the interest accrued at an annual rate of 5.5%.

F-27
<PAGE>
[LOGO]

SHARES OF COMMON STOCK

OpenIPO

WR HAMBRECHT+CO

Until , 2000 (25 days after the date of this offering), all dealers
that effect transactions in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. This is in addition to
the dealers' obligation to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table indicates the expenses to be incurred in connection with
the offering described in this Registration Statement, all of which will be paid
by us. All amounts are estimates, other than the registration fee, the NASD
filing fee, and the Nasdaq National Market listing fee.

<TABLE>
<S> <C>
SEC Registration fee........................................ $15,180
NASD Filing fee............................................. 6,250
Nasdaq National Market listing fee.......................... *
Accounting fees and expenses................................ *
Legal fees and expenses..................................... *
Director and officer insurance expenses..................... *
Printing and engraving expenses............................. *
Transfer agent fees and expenses............................ *
Blue sky fees and expenses.................................. *
Miscellaneous fees and expenses............................. *
-------
Total..................................................... $
=======
</TABLE>

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

*To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 102 of the Delaware General Corporation Law, or the DGCL, as
amended, allows a corporation to eliminate the personal liability of directors
of a corporation to the corporation or its stockholders for monetary damages for
a breach of fiduciary duty as a director, except where the director breached his
duty of loyalty, failed to act in good faith, engaged in intentional misconduct
or knowingly violated a law, authorized the payment of a dividend or approved a
stock repurchase in violation of Delaware corporate law or obtained an improper
personal benefit.

Section 145 of the DGCL provides, among other things, that we may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by us or in our right) by reason of the fact that the person is or was
our director, officer, agent or employee or is or was serving at our request as
a director, officer, agent, or employee of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys'
fees, judgment, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with the action, suit or proceeding. The
power to indemnify applies (a) if the person is successful on the merits or
otherwise in defense of any action, suit or proceeding, or (b) if the person
acted in good faith and in a manner he or she reasonably believed to be in our
best interest, or not opposed to our best interest, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The power to indemnify applies to actions brought by us or in our
right as well, but only to the extent of defense expenses (including attorneys'
fees but excluding amounts paid in settlement) actually and reasonably incurred
and not to any satisfaction of judgment or settlement of the claim itself, and
with the further limitation that in these actions no indemnification shall be
made in the event of any adjudication of negligence or misconduct in the
performance of his or her duties to us, unless the court believes that in light
of all the circumstances indemnification should apply.

II-1
<PAGE>
Section 174 of the DGCL provides, among other things, that a director, who
willfully or negligently approves of an unlawful payment of dividends or an
unlawful stock purchase or redemption, may be held liable for these actions. A
director who was either absent when the unlawful actions were approved or
dissented at the time, may avoid liability by causing his or her dissent to
these actions to be entered in the books containing the minutes of the meetings
of the board of directors at the time the action occurred or immediately after
the absent director receives notice of the unlawful acts.

Our certificate of incorporation includes a provision that eliminates the
personal liability of our directors for monetary damages for breach of fiduciary
duty as a director, except for liability for:

- any breach of the director's duty of loyalty to us or our stockholders;

- acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law;

- unlawful dividends and stock purchases; or

- any transaction from which the director derived an improper personal
benefit.

These provisions are permitted under Delaware law.

Our bylaws provide that:

- we must indemnify our directors and officers to the fullest extent
permitted by Delaware law;

- we may indemnify our other employees and agents to the same extent that we
indemnified our officers and directors, unless otherwise determined by our
board of directors; and

- we must advance expenses, as incurred, to our directors and executive
officers in connection with a legal proceeding to the fullest extent
permitted by Delaware law.

The indemnification provisions contained in our certificate of incorporation
and bylaws are not exclusive of any other rights to which a person may be
entitled by law, agreement, vote of stockholders or disinterested directors or
otherwise. In addition, we maintain insurance on behalf of our directors and
executive officers insuring them against any liability asserted against them in
their capacities as directors or officers or arising out of this status.

We have entered into agreements to indemnify our directors and executive
officers, in addition to indemnification provided for in our bylaws. These
agreements, among other things, will provide for indemnification of our
directors and executive officers for expenses, judgments, fines and settlement
amounts incurred by any such person in any action or proceeding arising out of
the person's services as a director or executive officer of us or another entity
at our request. We believe that these provisions and agreements are necessary to
attract and retain qualified persons as directors and executive officers.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since March 1, 1997, we have sold and issued the following unregistered
securities (the share numbers and per share prices below reflect the one-for-two
reverse stock split of the outstanding common stock to be effected prior to the
completion of this offering:

(1) Between March 1, 1997 and March 5, 2000, we granted stock options under our
1999 Stock Option Plan to 66 of our officers, employees, directors and
consultants, to purchase an aggregate of 1,162,250 shares of common stock.
During this period, optionees exercised options to purchase an aggregate of
156,125 shares of common stock at various exercise prices.

(2) On August 17, 1997, we issued 318,471 shares of our Series A preferred
stock at $1.57 per share to Corex Israeli Industries Ltd. for an aggregate
cash consideration of $500,000.

II-2
<PAGE>
(3) On August 17, 1997, we issued a warrant (the "1997 Warrant") to purchase
159,235 shares of our common stock to Corex Israeli Industries Ltd. at an
exercise price of $3.14 per share and an aggregate exercise price of
$500,000.

(4) On June 24, 1998, we issued warrants to purchase an aggregate of 288,249
shares of our common stock to Hapoalim Nechasim (Menayot) Ltd. and Be'ery
Investment Bankers at an exercise price of $2.08 per share and an aggregate
exercise price of $600,000.

(5) On July 15, 1998, we issued 5,765,003 shares of our Series A preferred
stock to Docor International BV, Holland Ventures BV, Inventech Ltd., Ophir
Holdings Ltd. and Ronchal Investments NV, at $1.04 per share and an
aggregate cash consideration of $6,000,000.

(6) On July 15, 1998, we issued warrants to purchase 432,375 shares of our
common stock to Docor International BV, Holland Ventures BV, Inventech
Ltd., Ophir Holdings Ltd. and Ronchal Investments NV, at an exercise price
of $2.08 per share and an aggregate exercise price of $900,000.

(7) On July 15, 1998, we amended the 1997 Warrant and two warrants issued on
February 4, 1997 to purchase an aggregate of 111,464 shares of our common
stock to extend the term of the 1997 warrant and the two warrants by one
year.

(8) On September 24, 1999, in connection with our reincorporation into
Delaware, we issued one share of our common stock to one of our executive
officers who was not a U.S. resident for $1.00 per share.

(9) On January 13, 2000, we issued 1,196,172 shares of our Series B preferred
stock to Nomura International plc at $4.18 per share for an aggregate
consideration of $5,000,000.

The sales of the above securities were deemed to be exempt from registration
under the Securities Act of 1933, as amended (the "Act") in reliance on Section
4(2) of the Act, Regulation D promulgated under the Act, Regulation S
promulgated under the Act, or Rule 701 promulgated under Section 3(b) of the
Act. In each such transaction, the recipients of securities represented their
intentions to acquire securities for investment only and not with a view to or
for sale in connection with any distribution thereof, and appropriate legends
were affixed to the securities issued in such transactions.

II-3
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

a. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
1.1* Form of Underwriting Agreement.

2.1 Agreement and Plan of Merger, by and between Nogatech, Inc.,
a California corporation and the Registrant, dated as of
December 28, 1999.

3.1 Second Amended and Restated Certificate of Incorporation of
the Registrant.

3.2 Bylaws of the Registrant.

4.1* Specimen common stock certificate.

5.1* Opinion of Bay Venture Counsel, LLP.

10.1.1 Warrant to purchase shares of common stock issued to Corex
Industries.

10.1.2 Warrant to purchase shares of common stock issued to Bank
Hapoalim.

10.1.3* Form of Warrant to purchase shares of common stock issued to
certain investors.

10.1.4 Warrant to purchase shares of common stock issued to Nathan
Hod.

10.2 Form of Indemnification Agreement for officers of the
Registrant.

10.3 1999 Stock Option Plan.

10.4 2000 Equity Incentive Plan.

10.5 2000 Employee Stock Purchase Plan.

10.6 Stock Purchase Agreement, by and among DSP Group, Inc.,
Scitex Corporation, Ltd., and Noga Technology, Inc., dated
as of January 1, 1993.

10.7 Stock Purchase Agreement, by and among DSP Group, Kenwood
Corporation, Tomen Electronics Corporation and Nogatech,
Inc., a California corporation, dated as of June 30, 1995.

10.8 Series A Preferred Stock Purchase Agreement by and between
the Registrant and Arie Heiman, dated February 28, 1996.

10.9 Series A Preferred Stock Purchase Agreement, by and among
Registrant and Nathan Hod, dated January 30, 1996.

10.10 Series B Preferred Stock Purchase Agreement, by and between
the Registrant and Nomura International plc, dated
January 13, 2000.

10.11 Shareholder Agreement, by and among Nomura International
plc., Holland Venture B.V., Ophir Holdings Ltd., Docor
International B.V., Inventech Ltd., Ronchal Investments
N.V., Challenge Fund-Etgar, L.P., and Corex Israeli
Industries Ltd., dated as of January 13, 2000.

10.12 Second Amended and Restated Registration Rights Agreement,
by and among the Registrant and certain security holders,
dated January 13, 2000.

10.13* Credit Agreement by and between Bank Hapoalim and Nogatech
Ltd., dated June 24, 1998.

10.14+ Development Agreement, by and between Supertec Electronics
Ltd. and Nogatech, Ltd., dated as of August 1999.

10.15+ Development Agreement, by and between Supertec Electronics
Ltd. and Nogatech, Ltd., dated as of June 24, 1997.

10.16 Employment Agreement with Arie Heiman.
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
10.17 Employment Agreement with Yaron Garmazi.

10.18 Employment Agreement with Aryeh Gavrieli.

10.19 Employment Agreement with Liat Hod.

10.20 Series A Preferred Stock Purchase Agreement, by and among
the Registrant and Andrew Schonzeit, dated December 27,
1995.

21.1 Subsidiaries of the Registrant.

23.1 Consent of Kesselman & Kesselman, Independent Accountants.

23.2* Consent of Bay Venture Counsel, LLP (included at Exhibit
5.1).

24.1 Power of Attorney (included in signature pages).

27.1 Financial Data Schedule.
</TABLE>

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

* To be filed by amendment.

+ We intend to seek confidential treatment from the Commission for selected
portions of this exhibit. The omitted portions will be separately filed with
the Commission.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14, or otherwise, the
Registrant has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against pubic policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 5430A and contained
in a form of prospectus filed by the Registrant under Rule 424(b) (1) or
(4) or 497 (h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bonafide offering thereof.

II-5
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Santa Clara, State of
California, on March 14, 2000.

<TABLE>
<S> <C> <C>
NOGATECH, INC.

By: /s/ NATHAN HOD
-----------------------------------------
Nathan Hod
CHAIRMAN OF THE BOARD
</TABLE>

POWER OF ATTORNEY

We, the undersigned directors and/or officers of Nogatech, Inc. (the
"Registrant"), hereby severally constitute and appoint Nathan Hod, Yaron Garmazi
and Arie Heiman, and each of them individually, with full powers of substitution
and resubstitution, our true and lawful attorneys, with full powers to each of
them to sign for us, in our names and in the capacities indicated below, the
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission, and any and all amendments to said Registration Statement (including
post-effective amendments), and any registration statement filed pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, in connection with the
registration under the Securities Act of 1933, as amended, of equity securities
of the Registrant, and to file or cause to be filed with the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as each of them might or could do in person, and hereby
ratifying and confirming all that said attorneys, and each of them, or their
substitute or substitutes, shall do or cause to be done by virtue of this Power
of Attorney. This Power of Attorney may be executed in counterparts.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ ARIE HEIMAN President and Chief Executive Officer March 14, 2000
--------------------------------- and Director (Principal Executive
Arie Heiman Officer)

/s/ YARON GARMAZI Chief Financial Officer and Secretary March 14, 2000
--------------------------------- (Principal Financial and Accounting
Yaron Garmazi Officer)

/s/ NATHAN HOD Chairman of the Board March 14, 2000
---------------------------------
Nathan Hod

/s/ GERALD DOGON Director March 14, 2000
---------------------------------
Gerald Dogon
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ AVRAHAM FISCHER Director March 14, 2000
---------------------------------
Avraham Fischer

/s/ DAVIDI GILO Director March 14, 2000
---------------------------------
Davidi Gilo

/s/ MOSHE HAREL Director March 14, 2000
---------------------------------
Moshe Harel

/s/ YIRMIYAHU KAPLAN Director March 14, 2000
---------------------------------
Yirmiyahu Kaplan

/s/ YOSSI VINITSKI Director March 14, 2000
---------------------------------
Yossi Vinitski

/s/ ANDREW SCHONZEIT Director March 14, 2000
---------------------------------
Andrew Schonzeit
</TABLE>

II-7
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
1.1* Form of Underwriting Agreement.

2.1 Agreement and Plan of Merger, by and between Nogatech, Inc.,
a California corporation and the Registrant, dated as of
December 28, 1999.

3.1 Second Amended and Restated Certificate of Incorporation of
the Registrant.

3.2 Bylaws of the Registrant.

4.1* Specimen common stock certificate.

5.1* Opinion of Bay Venture Counsel, LLP.

10.1.1 Warrant to purchase shares of common stock issued to Corex
Industries.

10.1.2 Warrant to purchase shares of common stock issued to Bank
Hapoalim.

10.1.3* Form of Warrant to purchase shares of common stock issued to
certain investors.

10.1.4 Warrant to purchase shares of common stock issued to Nathan
Hod.

10.2 Form of Indemnification Agreement for officers of the
Registrant.

10.3 1999 Stock Option Plan.

10.4 2000 Equity Incentive Plan.

10.5 2000 Employee Stock Purchase Plan.

10.6 Stock Purchase Agreement, by and among DSP Group, Inc.,
Scitex Corporation, Ltd., and Noga Technology, Inc. 1996,
dated as of January 1, 1993.

10.7 Stock Purchase Agreement, by and among DSP Group, Kenwood
Corporation, Tomen Electronics Corporation and Nogatech,
Inc., a California corporation, dated as of June 30, 1995.

10.8 Series A Preferred Stock Purchase Agreement by and between
the Registrant and Arie Heiman, dated February 28, 1996.

10.9 Series A Preferred Stock Purchase Agreement, by and among
Registrant and Nathan Hod, dated January 30, 1996.

10.10 Series B Preferred Stock Purchase Agreement, by and between
the Registrant and Nomura International plc, dated
January 13, 2000.

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
10.12 Second Amended and Restated Registration Rights Agreement,
by and among the Registrant and certain security holders,
dated January 13, 2000.

10.13* Credit Agreement by and between Bank Hapoalim and Nogatech
Ltd., dated June 24, 1998.

10.14+ Development Agreement, by and between Supertec Electronics
Ltd. and Nogatech, Ltd., dated as of August 1999.

10.15+ Development Agreement, by and between Supertec Electronics
Ltd. and Nogatech, Ltd., dated as of June 24, 1997.

10.16 Employment Agreement with Arie Heiman.

10.17 Employment Agreement with Yaron Garmazi.

10.18 Employment Agreement with Aryeh Gavrieli.

10.19 Employment Agreement with Liat Hod.

10.20 Series A Preferred Stock Purchase Agreement, by and among
the Registrant and Andrew Schonzeit, dated December 27,
1995.

21.1 Subsidiaries of the Registrant.

23.1 Consent of Kesselman & Kesselman, Independent Accountants.

23.2* Consent of Bay Venture Counsel, LLP (included at Exhibit
5.1).

24.1 Power of Attorney (included in signature pages).

27.1 Financial Data Schedule.
</TABLE>

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

* To be filed by amendment.

+ We intend to confidential treatment from the Commission for selected
portions of this exhibit. The omitted portions will be separately filed with
the Commission.

<PAGE>

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, is made and entered into as of
this 28 day of December, 1999, by and between Nogatech, Inc., a California
corporation ("Nogatech California" or the "Disappearing Corporation") and
Nogatech, Inc., a Delaware corporation ("Nogatech Delaware" or the "Surviving
Corporation" and, together with Nogatech California, the "Constituent
Corporations").

R E C I T A L S

A. Nogatech California is a corporation organized and
existing under the laws of California with its principal place of business at
5201 Great America Parkway, Santa Clara, California.

B. Nogatech Delaware is a corporation organized and
existing under the laws of Delaware with its principal place of business at
5201 Great America Parkway, Santa Clara, California, and was formed for the
purpose of reincorporating Nogatech California in the State of Delaware.

C. The board of directors of the Constituent Corporations
deem it desirable and in the best interest of such Constituent Corporations
and their shareholders that Nogatech California be merged with and into
Nogatech Delaware pursuant to the provisions of the California Corporations
Code and the Delaware General Corporation Law in order that the transaction
qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").

In consideration of the mutual covenants, and subject to
the terms and conditions set forth in this Agreement, the Constituent
Corporations agree as follows:

A G R E E M E N T

1. THE MERGER. Upon the terms and subject to the conditions
hereof, Nogatech California shall merge with and into Nogatech Delaware, in
accordance with the relevant provisions of the California Corporations Code
and the Delaware General Corporation Law and the parties hereto shall take
any other actions required by law to make the merger effective.

Following the merger, Nogatech Delaware, with all its
purposes, objects, rights, privileges, powers and franchises, shall continue,
and Nogatech California shall cease to exist.

2. EFFECTIVE DATE OF THE MERGER. The effective date of the
merger shall be the date upon which the requisite documents are filed with
the Secretary of State of California and the Secretary of State of Delaware
(the "Effective Date").

3. TERMS AND CONDITIONS. On the Effective Date, the
separate existence of Disappearing Corporation shall cease, and the Surviving
Corporation shall succeed to all the rights,

<PAGE>

privileges, immunities, and franchises, and all the property, real, personal,
and mixed, of the Disappearing Corporation without the necessity for any
separate transfer. The Surviving Corporation shall, after the Effective Date,
be responsible and liable for all liabilities and obligations of the
Disappearing Corporation, and neither the rights of creditors nor any liens
on the property of the Disappearing Corporation shall be impaired by the
merger.

4. CONVERSION. On the Effective Date, by virtue of the
merger and without any further action on the part of the Disappearing
Corporation or the Surviving Corporation or the holder of any of the
following securities, (i) each issued and outstanding share of the common
stock of the Disappearing Corporation shall be converted into and become one
fully paid and nonassessable share of common stock, $0.001 par value, of the
Surviving Corporation; and (ii) each issued and outstanding share of the
Series A Convertible Preferred Stock of the Disappearing Corporation shall be
converted into and become one fully paid and nonassessable share of Series A
Convertible Preferred Stock, $0.001 par value, of the Surviving Corporation.
After the Effective Date of the merger, each holder of certificates for
shares of common stock and Series A Convertible Preferred Stock in the
Disappearing Corporation shall surrender them to the Surviving Corporation or
its appointed agent, in the manner as the Surviving Corporation shall legally
require. On receipt of the share certificates, the Surviving Corporation
shall issue and exchange therefor certificates for shares of common stock and
Series A Convertible Preferred Stock, as applicable, in the Surviving
Corporation, representing the number of shares of that stock to which the
holder is entitled as provided above. The share of Common Stock of the
Surviving Corporation outstanding immediately prior to the effective time of
the merger shall be cancelled on the Effective Date.

5. CERTIFICATE OF INCORPORATION. The certificate of
incorporation of the Surviving Corporation, as in effect immediately prior to
the merger, shall continue to be its certificate of incorporation following
the Effective Date.

6. BYLAWS. The bylaws of the Surviving Corporation as in
effect immediately prior to the merger shall continue to be its bylaws following
the Effective Date.

7. DIRECTORS AND OFFICERS. The directors and officers of
the Surviving Corporation on the Effective Date shall continue as the
directors and officers of the Surviving Corporation for the full and
unexpired terms of their offices and until their successors have been elected
or appointed and qualified.

8. TAX CONSEQUENCES. It is intended that the merger shall
constitute a reorganization within the meaning of Section 368(a) of the Code,
and that this Agreement shall constitute a "plan of reorganization" for the
purposes of Section 368 of the Code.

9. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Date, whether before or after approval of the
matters presented in connection with the merger by the stockholders of
Nogatech California or Nogatech Delaware, or by action of the Board of
Directors of Nogatech California. In the event of the termination and
abandonment of this Agreement pursuant to this Section 9, this Agreement
shall forthwith become void and have no

<PAGE>

effect, without any liability on the part of any party hereto or its
affiliates, directors, officers or stockholders.

10. AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective boards of
directors, at any time before or after approval of the matters presented in
connection with the merger by the stockholders of Nogatech California or
Nogatech Delaware, but, after any such approval, no amendment shall be made
which by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.

NOGATECH, INC., a NOGATECH, INC., a
California Corporation Delaware Corporation

By: /s/ Arie Heiman By: /s/ Yaron Garmazi
--------------------------------- -----------------------------
(Signature) (Signature)

Arie Heiman, Chief Executive Officer Yaron Garmazi, Secretary
- --------------------------------------- --------------------------------
(print name and title) (print name and title)

<PAGE>

Exhibit 3.1

SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NOGATECH, INC.

NOGATECH,INC., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), does hereby
certify:

FIRST: The name of the Corporation is Nogatech, Inc., and the original
Certificate of Incorporation of the Corporation was filed with the Secretary of
State of the State of Delaware on September 22, 1999.
SECOND: Pursuant to Section 245 of the General Corporation Law of the
State of Delaware, this Amended and Restated Certificate of Incorporation amends
and restates the provisions of the Certificate of Incorporation of the
Corporation. This Amended and Restated Certificate of Incorporation was duly
approved by the Corporation's Board of Directors, and was duly approved by
written consent by the holders of the requisite number of shares of the
Corporation in accordance with Sections 228, 242 and 245 of the Delaware General
Corporation Law. The number of shares voting in favor of such amendment and
restatement equaled or exceeded the vote required, such required vote being a
majority of the outstanding shares of Common Stock and a majority of the
outstanding shares of Series A Convertible Preferred Stock.

THIRD: The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as follows:

The name of this Corporation is NOGATECH, INC.

The address of the registered office of this Corporation in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, County
of New Castle. The name of its registered agent at that address is The
Corporation Trust Company.

III

- 1 -
<PAGE>

The nature of the business or purposes to be conducted or promoted by
this Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.

A. AUTHORIZED SHARES. This Corporation is authorized to issue two
classes of shares, to be designated Common Stock and Preferred Stock,
respectively. This Corporation is authorized to issue 40,000,000 shares of
Common Stock with a par value of $0.001 per share (the "Common Stock") and
32,000,000 shares of Preferred Stock with a par value of $0.001 per share (the
"Preferred Stock"). The Preferred Stock authorized by this Certificate of
Incorporation shall be issued from time to time in one or more series.

B. AUTHORIZED SHARES - PREFERRED STOCK. Within the limits and
restrictions stated in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any series of Preferred
Stock, the Board of Directors may increase or decrease (but neither above the
total number of authorized shares of the class, nor below the number of shares
of such series, then outstanding) the number of shares of any such series
subsequent to the issue of shares of that series. In addition, the Board of
Directors is authorized, subject to limitations prescribed by law and the
provisions of this Article IV, to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.

Subject to Section G (below) the authority of the Board with respect to
each series shall include, but not be limited to, determination of the
following:

i) The number of shares constituting that series and the
distinctive designation of that series;

ii) The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on shares of
that series;

iii) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of such
voting rights;

iv) Whether that series shall have conversion privileges,
and, if so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;

v) Whether or not shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or date upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;

- 2 -
<PAGE>

vi) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;

vii) The rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution or winding up of this
Corporation, and the relative rights or priority, if any, of payment of shares
of that series; and

viii) Any other relative rights, preferences and
limitations of that series.

C. AUTHORIZED SHARES - SERIES A STOCK AND SERIES B STOCK. A
series of Preferred Stock which shall be comprised of a total of 30,000,000
shares shall be designated "Series A Convertible Preferred Stock" (also referred
to herein as "Series A Stock".), and a series of Preferred Stock which shall be
comprised of a total of 1,196,172 shares shall be designated "Series B
Convertible Preferred Stock (also referred to herein as "Series B Stock").
Certain terms used in this Article IV are defined in Section I below.

D. ATTRIBUTES OF PREFERRED STOCK. The rights, preferences,
privileges and restrictions of the Series A Stock and the Series B Stock and of
the holders thereof shall be as follows:

1. DIVIDENDS.

a. PREFERENTIAL RIGHT TO DIVIDENDS. Each holder
of outstanding shares of Preferred Stock shall be entitled to receive, when and
if declared by the Board of Directors and out of any funds legally available
therefor, non-cumulative dividends at the annual rate of $0.0258 per share of
Series A Stock (the "Series A Preferential Dividend"), and $0.1039 per share of
Series B Stock (the "Series B Preferential Dividend"), payable in cash during
each fiscal year of this Corporation and in preference to any declaration or
payment (payable other than in Common Stock) on the Common Stock.

b. PAYMENT OTHER THAN CASH. If the Corporation
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Corporation or other persons, assets (excluding
cash dividends) or options or rights to purchase any such securities or
evidences of indebtedness, then, in each such case, the holders of Series A
Stock and Series B Stock shall be entitled to a proportionate share of any such
distribution as though the holders of Series A Stock and Series B Stock were the
holders of the number of shares of Common Stock of the Corporation into which
their respective shares of Series A Stock and Series B Stock are convertible as
of the record date fixed for the determination of the holders of Common Stock of
the Corporation who are entitled to receive such distribution.

c. PARTIAL PAYMENTS. If the Board of Directors
shall declare a dividend on the outstanding shares of Series A Stock and Series
B Stock and the amount available for payment thereof is insufficient to permit
the payment of the full preferential amount of such dividend required to be paid
to the holders of the outstanding shares of Series A Stock then the amount
available for such dividend payment shall be distributed ratably among the
holders of the outstanding

- 3 -
<PAGE>

shares of Series A Stock and Series B Stock in proportion to the amounts that
would be payable if the full amount of such dividends was then paid.

d. PARTICIPATING DIVIDENDS AFTER PREFERENTIAL
PAYMENTS. After the holders of Series A Stock and Series B Stock receive their
non-cumulative Series A Preferential Dividends and Series B Preferential
Dividends accrued through the end of any fiscal year, the holders of Series A
Stock and Series B Stock shall participate ratably with the Common Stock in any
other dividends during such fiscal year, as if such holders had converted their
Series A Stock and Series B Stock into the number of shares of Common Stock into
which outstanding shares of Series A Stock and Series B Stock are convertible
pursuant to this Article IV, as of the record date of the dividend.

e. ADJUSTMENTS FOR SPLITS, ETC. All numbers
relating to the amount of dividends payable on the Series A Stock and Series B
Stock as specified in this Section 1 shall be Appropriately Adjusted.

2. PREFERENCE ON LIQUIDATION.

a. PREFERENCE PRICE. In the event of any
liquidation, dissolution or winding up of this Corporation, whether voluntary or
involuntary (a "Liquidation Event"), the holders of the outstanding shares of
Series A Stock and Series B Stock shall be entitled to be paid in cash out of
the assets of this Corporation available for distribution to its stockholders,
whether from capital, surplus or earnings, before any payment is made in respect
of the outstanding shares of Common Stock or any other equity security of this
Corporation of a lesser priority than the Series A Stock and Series B Stock,
(i)the amount of Forty-Three Cents ($0.43) per share for each share of Series A
Stock held by them, plus an amount equal to eight percent (8%) of such
Forty-Three Cents ($0.43), compounded annually, for each year (or fraction
thereof) after the first two years following the issuance date of such Series A
Stock, plus any declared and unpaid dividends thereon (the "Series A
Preferential Liquidation Price") and (ii) and Four Dollars and Eighteen Cents
($4.18) per share for each share of Series B Stock held by them, plus an amount
equal to eight percent (8%) of such Four Dollars and Eighteen Cents ($4.18),
compounded annually, for each year (or fraction thereof) after the first two
years following the issuance date of such Series B Stock, plus any declared and
unpaid dividends thereon (the "Series B Preferential Liquidation Price").

b. PARTICIPATION RIGHTS . After payment in full
of the Series A Preferential Liquidation Price and the Series B Preferential
Liquidation Price, the remaining assets of the Corporation shall be distributed
to the holders of shares of Common Stock, Series A Stock and Series B Stock in
an equal amount per share as if all Series A Stock and Series B Stock had been
converted into Common Stock as of the date of such Liquidation Event in
accordance with this Article IV.

c. PARTIAL PAYMENT. If, upon a Liquidation
Event, the assets of this Corporation available for distribution to its
stockholders shall be insufficient to pay the Series A Preferential Liquidation
Price and the Series B Preferential Liquidation Price required to be paid to the
holders of the outstanding shares of Series A Stock and Series B Stock, then all
of the assets of this Corporation legally available for distribution to the
holders of equity securities shall be

- 4 -
<PAGE>

distributed ratably among the holders of the outstanding shares of Series A
Stock and Series B Stock and, as between such series, in proportion to the
product of the respective Preferential Liquidation Price multiplied by the
number of shares of each such shares of such stock owned by each such holder.

d. OTHER DISTRIBUTIONS. If any of the assets of
the Corporation are to be distributed other than in cash under this Section 2,
then the Board of Directors of the Corporation shall promptly engage independent
competent appraisers to determine the value of the assets to be distributed to
the holders of Series A Stock and Series B Stock. The Corporation shall, upon
receipt of such appraisers' valuation, give prompt written notice of the
appraisers' valuation to each holder of Series A Stock, Series B Stock and
Common Stock of the Corporation.

e. ADJUSTMENTS. Notwithstanding the foregoing,
the amount to be paid for each share of Series A Stock, Series B Stock and
Common Stock upon liquidation shall be adjusted for any combination(s), stock
split(s), stock distribution(s) or dividend(s) with respect to such shares from
the date on which this Certificate of Incorporation became effective (the
"Filing Date").

3. CERTAIN TRANSACTIONS. The following events shall be
deemed a Liquidation Event: (A) A merger or consolidation of the Corporation
with or into any other corporation or corporations, unless the stockholders of
this Corporation hold at least fifty percent (50%) of the outstanding voting
securities of the surviving corporation or members of the Board of Directors of
this Corporation constitute a majority of the members of the Board of Directors
of the surviving corporation; (B) a sale of more than fifty percent (50%) of the
outstanding voting securities of this Corporation on a fully-diluted basis,
except pursuant to an underwritten public offering; or (C) a sale of all or
substantially all of the assets of the Corporation; provided that nothing
contained in this Section shall limit the right of a holder of Series A Stock or
Series B Stock to convert such shares into Common Stock prior to the effective
date of such transaction.

E. VOTING.

1. GENERALLY. Except as otherwise required by law or
expressly provided herein, including Sections E.3. and E.4 below, so long as an
aggregate of at least four million (4,000,000) shares of Series A Stock and
Series B Stock are outstanding (subject to adjustment for stock dividends, stock
splits and any recapitalization), each share of Series A Stock and Series B
Stock shall be entitled to vote on all matters submitted or required to be
submitted to a vote of the stockholders of the Corporation and shall be entitled
to the number of votes equal to the number of full shares of Common Stock into
which such shares of Series A Stock and Series B Stock could be converted
pursuant to the provisions hereof, at the record date for the determination of
stockholders entitled to vote on such matters or, if no such record date is
established, at the date such vote is taken or any written consent of
stockholders is solicited. At such time that less than an aggregate of four
million (4,000,000) shares of Series A Stock and Series B Stock are outstanding
(subject to adjustment for stock dividends in the form of Series A Stock and
Series B Stock, or stock splits and any recapitalization of the Series A Stock
and Series B Stock), the shares of Series A Stock and Series B Stock shall
become non-voting and the holders thereof shall have no right to vote on any
matter submitted to the Corporation's stockholders, except as may be required by
law.

- 5 -
<PAGE>

So long as an aggregate of at least four million
(4,000,000) shares of Series A Stock and Series B Stock are outstanding (subject
to adjustment for stock dividends in the form of Series A Stock and Series B
Stock, or stock splits and any recapitalization of the Series A Stock and Series
B Stock), the shares of Common Stock shall be non-voting and the holders thereof
shall have no right to vote on any matter submitted to the Corporation's
stockholders, except as provided in section E.5. and as may be required by law.
Except as otherwise required by law or expressly provided herein, at such time
that less than an aggregate of four million (4,000,000) shares of Series A Stock
and Series B Stock are outstanding (subject to adjustment for stock dividends in
the form of Series A Stock and Series B Stock, or stock splits and any
recapitalization of the Series A Stock and Series B Stock), each share of Common
Stock shall be entitled to vote on all matters submitted or required to be
submitted to a vote of the stockholders of the Corporation of record on the
record date for the determination of stockholders entitled to vote on such
matters or, if no such record date is established, on the date such vote is
taken or on the effective date of any written consent of stockholders.

2. NUMBER OF DIRECTORS. So long as at least four million
(4,000,000) shares of Series A Stock are outstanding (subject to adjustment for
stock dividends in the form of Series A Stock, or stock splits and any
recapitalization of the Series A Stock), the authorized number of directors of
this Corporation shall be nine (9), which number shall not be increased or
decreased without the consent of the holders of a majority of the outstanding
Series A Stock.

3. SERIES B STOCK. The Series B Stock shall not be
entitled to elect any Directors of the Corporation.

4. SERIES A STOCK. So long as at least four million
(4,000,000) shares of Series A Stock are outstanding (subject to adjustment for
stock dividends in the form of Series A Stock, or stock splits and any
recapitalization of the Series A Stock), the holders of the outstanding shares
of Series A Stock, voting as a single class, shall be entitled to elect seven
(7) Directors to the Board of Directors. At such time that less than four
million (4,000,000) shares of Series A Stock are outstanding (subject to
adjustment for stock dividends in the form of Series A Stock, or stock splits
and any recapitalization of the Series A Stock), the holders of the outstanding
shares of Series A Stock shall not be entitled to elect any members of the Board
of Directors.

5. COMMON STOCK. So long as at least four million
(4,000,000) shares of Series A Stock are outstanding (subject to adjustment for
stock dividends in the form of Series A Stock, or stock splits and any
recapitalization of the Series A Stock), the holders of the outstanding shares
of Common Stock, voting as a single class, shall be entitled to elect two (2)
Directors to the Board of Directors. At such time that less than four million
(4,000,000) shares of Series A Stock are outstanding (subject to adjustment for
stock dividends in the form of Series A Stock, or stock splits and any
recapitalization of the Series A Stock), the holders of the Common Stock shall
be entitled to elect all nine (9) Directors to the Board of Directors (or such
number as then constitutes all of the authorized number of Board members) in
accordance with the Corporation's Bylaws.

6. ADJUSTMENTS FOR SPLITS, ETC. All numbers relating to
the Series A Stock and Series B Stock as specified in this Section E shall be
Appropriately Adjusted.

- 6 -
<PAGE>

7. SECTION 2115(b). In the event that the Corporation is
subject to Section 2115(b) of the California Corporations Code (the "CCC") at
any time, or from time to time, and not exempt therefrom by Section 2115(c) of
the CCC, then the following shall apply:

a. Every stockholder entitled to vote in any
election of directors of the Corporation during such time the Corporation is
subject to Section 2115(b) may cumulate such stockholder's votes and give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which the stockholder's shares are
otherwise entitled, or distribute the stockholder's votes on the same principle
among as many candidates as such stockholder thinks fit;

b. No stockholder, however, may cumulate such
stockholder's votes for one or more candidates unless (i) the names of such
candidates have been properly placed in nomination, in accordance with the
Bylaws of the Corporation, prior to the voting (ii) the stockholder has given
advance notice to the Corporation of the intention to cumulate votes pursuant to
the Bylaws, and (iii) the stockholder has given proper notice to the other
stockholders at the meeting, prior to voting, of such stockholder's intention to
cumulate such stockholder's votes; and

c. If any stockholder has given notice, all
stockholders may cumulate their votes for any candidates who have been properly
placed in nomination. The candidates receiving the highest number of votes of
the shares entitled to be voted for them up to the number of directors to be
elected by such shares shall be declared elected.

F. CONVERSION. The holders of the outstanding shares of Series A
Stock and Series B Stock shall have the conversion rights set forth below (the
"Conversion Rights"):

1. RIGHT TO CONVERT.

(a) SERIES A STOCK. Each share of Series A Stock
shall be convertible, at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of this Corporation or any
transfer agent for the shares of Series A Stock or Common Stock into that number
of shares of Common Stock which is equal to the quotient obtained by dividing
the Original Issue Price of such share of Series A Stock by the Series A
Conversion Price (as such term is hereinafter defined) immediately prior to the
time of such conversion. The "Series A Conversion Price" shall be One Dollar and
Thirty-Nine Cents ($1.39), until Appropriately Adjusted.

(b) SERIES B STOCK. Each share of Series B Stock
shall be convertible, at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of this Corporation or any
transfer agent for the shares of Series B Stock or Common Stock into that number
of shares of Common Stock which is equal to the quotient obtained by dividing
Four Dollars and Eighteen Cents ($4.18) by the Series B Conversion Price (as
such term is hereinafter defined) in effect immediately prior to the time of
such conversion. The "Series B Conversion Price" shall be equal to Four Dollars
and Eighteen Cents ($4.18) through February 28, 2000, unless Appropriately
Adjusted, and thereafter commencing on February 29, 2000 through July 31, 2000,

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<PAGE>

the Series B Conversion Price on any given date shall be equal to the result
obtained by dividing (i) 100,000,000 less the result of multiplying 163,398.69
by the number of days after February 29, 2000 on which such measurement date
occurs, by (ii) 23,912,562; subject on any such given date to being
Appropriately Adjusted. Commencing on August 1, 2000, the Series B Conversion
Price shall be $3.14, unless Appropriately Adjusted.

2. MECHANICS OF OPTIONAL CONVERSION. Each holder of
outstanding shares of Preferred Stock converted at the option of such holder of
Preferred Stock in accordance with Section 1 (above) by surrendering the
certificate or certificates therefor, duly endorsed, at the office of this
Corporation or of any transfer agent for the shares of Preferred Stock or Common
Stock and shall give written notice to this Corporation at such office that such
holder elects to convert the same and shall state therein the number of shares
of Preferred Stock being converted. Thereupon, this Corporation shall issue and
deliver at such office to such holder a certificate or certificates for the
number of shares of Common Stock to which such holder is entitled and shall
promptly pay all declared but unpaid dividends on the shares being converted in
cash or, if this Corporation so elects or is legally or financially unable to,
pay in cash and/or shares of Common Stock (valued at the Common Stock's fair
market value at the time of surrender as determined in good faith by the Board
of Directors), subject to the limitations on the payment of accrued dividends as
set forth in Section D.1 (above) and so long as all cash and non-cash payments
are made in the same relative proportions to all holders of PARI PASSU Preferred
Stock. Such conversion shall be deemed to have been made immediately prior to
the close of business on the date of such surrender of the certificate or
certificates representing the shares to be converted, and the person entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as having become the record holder of such shares of
Common Stock on such date.

3. AUTOMATIC CONVERSION.

a. INITIAL PUBLIC OFFERING. Each outstanding
share of Series A Stock and Series B Stock shall automatically be converted into
shares of Common Stock based upon the Series A Conversion Price or Series B
Conversion Price, as applicable, upon the closing of a Qualified Public
Offering.

b. AUTOMATIC CONVERSION MECHANICS. Upon the
occurrence of an event specified in Section 2.a above, the outstanding shares of
Series A Stock and Series B Stock shall be converted into shares of Common
Stock, whether or not the certificates representing such shares are surrendered
to the Corporation or its transfer agent; provided, however, that the
Corporation shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon such conversion unless the certificates evidencing
such shares are either delivered to the Corporation or its transfer agent as
provided below or the holder notifies the Corporation or its transfer agent that
such certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation indemnifying the Corporation from any loss
incurred by it in connection with the issuance of such certificate. Upon the
occurrence of such automatic conversion of the outstanding shares of Series A
Stock and Series B Stock, the holders of the outstanding shares of Series A
Stock and Series B Stock shall surrender the certificates representing such
shares at the office of the Corporation or any transfer agent for the shares of
Series A Stock or Series B Stock, as applicable, or Common Stock. Thereupon
there shall be issued and delivered to such holder, promptly at such

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<PAGE>

office and in its name as shown on such surrendered certificate or certificates,
a certificate or certificates for the number of shares of Common Stock into
which the surrendered shares of Series A Stock and Series B Stock of such holder
were convertible on the date on which such automatic conversion occurred, and
the Corporation shall promptly, pay in cash or shares of Common Stock (taken at
the Common Stock's fair market value as of the date of such conversion), or
both, all declared but unpaid dividends on the shares of Series A Stock or
Series B Stock, as applicable, so converted.

4. ADJUSTMENTS TO SERIES A CONVERSION PRICE.

a. ADJUSTMENT FOR STOCK SPLITS AND
COMBINATIONS. If this Corporation at any time or from time to time after the
Filing Date, effects a division of the outstanding shares of Common Stock, then
the Series A Conversion Price and the Series B Conversion Price shall be
proportionately decreased and, conversely, if this Corporation at any time, or
from time to time, after the Filing Date combines the outstanding shares of
Common Stock, then the Series A Conversion Price and the Series B Conversion
Price shall be proportionately increased. Any adjustment under this Section F.3a
shall be effective on the close of business on the date such division or
combination becomes effective.

b. ADJUSTMENT FOR CERTAIN DIVIDENDS AND
DISTRIBUTIONS. If this Corporation at any time or from time to time after the
Filing Date pays or fixes a record date for the determination of holders of
shares of Common Stock entitled to receive a dividend or other distribution in
the form of shares of Common Stock, or rights or options for the purchase of, or
securities convertible into, Common Stock, then in each such event the Series A
Conversion Price and the Series B Conversion Price shall be decreased, as of the
time of such payment or, in the event a record date is fixed, as of the close of
business on such record date, by multiplying the Series A Conversion Price and
the Series B Conversion Price by a fraction (i) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to the
time of such payment or the close of business on such record date, as the case
may be, and (ii) the denominator of which shall be (a) the total number of
shares of Common Stock outstanding immediately prior to the time of such payment
or the close of business on such record date, as the case may be, plus (b) the
number of shares of Common Stock issuable in payment of such dividend or
distribution or upon exercise of such option or right of conversion; PROVIDED,
however, that if a record date is fixed and such dividend is not fully paid or
such other distribution is not fully made on the date fixed therefor, then the
Series A Conversion Price and the Series B Conversion Price shall not be
decreased as of the close of business on such record date as hereinabove
provided as to the portion not fully paid or distributed and thereafter the
Series A Conversion Price and the Series B Conversion Price shall be decreased
pursuant to this Section F.3.b as of the date or dates of actual payment of such
dividend or distribution.

c. ADJUSTMENTS FOR OTHER DIVIDENDS AND
DISTRIBUTIONS. If this Corporation at any time or from time to time after the
Filing Date pays, or fixes a record date for the determination of holders of
shares of Common Stock entitled to receive, a dividend or other distribution in
the form of securities of this Corporation other than shares of Common Stock or
rights or options for the purchase of, or securities convertible into, Common
Stock, then in each such event provision shall be made so that the holders of
outstanding shares of Series A Stock and Series B

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<PAGE>

Stock shall receive upon any conversion thereof, in addition to the number of
shares of Common Stock receivable thereupon, the amount of securities of this
Corporation which they would have received had their respective shares of Series
A Stock and Series B Stock been converted into shares of Common Stock on the
date one day before such event and had such holders thereafter, from the date of
such event to and including the actual date of conversion of their shares,
retained such securities, subject to all other adjustments called for during
such period under this Section F.3.c with respect to the rights of the holders
of the outstanding shares of Series A Stock and Series B Stock.

d. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE
AND SUBSTITUTION. If at any time or from time to time after the Filing Date the
number of shares of Common Stock issuable upon conversion of the shares of
Series A Stock and Series B Stock is changed into the same or a different number
of shares of any other class or classes of stock or other securities, whether by
recapitalization, reclassification or otherwise (other than a recapitalization,
division or combination of shares or a stock dividend, or a reorganization,
merger, consolidation or sale of assets provided for elsewhere in this Section
F.3, then in any such event each holder of outstanding shares of Series A Stock
and Series B Stock shall have the right thereafter to convert such shares of
Series A Stock and Series B Stock into the same kind and amount of stock and
other securities receivable upon such recapitalization, reclassification or
other change, as the maximum number of shares of Common Stock into which such
shares of Series A Stock and Series B Stock could have been converted
immediately prior to such recapitalization, reclassification or change, all
subject to further adjustment as provided herein.

e. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR
SALES OF ASSETS. If at any time or from time to time after the Filing Date there
is a capital reorganization of the Common Stock (other than a recapitalization,
division, combination, reclassification or exchange of shares provided for
elsewhere in this Section F3) or a merger or consolidation of this Corporation
into or with another corporation or a sale of all or substantially all of this
Corporation's properties and assets to any other person, then, as a part of such
capital reorganization, merger, consolidation or sale, provision shall be made
so that the holders of outstanding shares of Series A Stock and Series B Stock
shall thereafter receive upon conversion thereof the number of shares of stock
or other securities or property of this Corporation, or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of the number of shares of Common Stock into which their shares of Series
A Stock and Series B Stock were convertible would have been entitled on such
capital reorganization, merger, consolidation or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section F.3 with respect to the rights of the holders of the outstanding
shares of Series A Stock and Series B Stock after such capital reorganization,
merger, consolidation, or sale. The provisions of this Section F (including
adjustment of the Series A Conversion Price and the Series B Conversion Price
and the number of shares into which the outstanding shares of Series A Stock and
Series B Stock may be converted) shall be applicable after that event and be as
nearly equivalent to such Conversion Prices and number of shares as may be
practicable.

f. SALE OF SHARES BELOW CONVERSION PRICE.

1. In the event this Corporation shall
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to

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<PAGE>

Section F.3.f.4 (below), without consideration or for a consideration per share
less than the Series A Conversion Price or the Series B Conversion Price, as
applicable, in effect on the date of, and immediately prior to, such issue,
then, and in such event, such Conversion Price shall be reduced, concurrently
with such issue, to a price (calculated to the nearest cent) determined by
multiplying such Conversion Price by a fraction, the numerator of such shall be
the number of shares of Common Stock outstanding immediately prior to such
issue, plus the number of shares of Common Stock which the aggregate
consideration received by the Corporation for the total number of Additional
Shares of Common Stock so issued would purchase at such Conversion Price; and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue, plus the number of such Additional
Shares of Common Stock so issued; and, provided further that, for the purposes
of this Section F.3.f.1, all shares of Common Stock issuable upon conversion of
outstanding Convertible Securities, Options, Series A Stock and Series B Stock,
shall be deemed to be outstanding, and immediately after any Additional Shares
of Common Stock are deemed issued pursuant to Section F.3.f.4 such Additional
Shares of Common Stock shall be deemed to be outstanding.

2. For purposes of this Section F.3.f,
the consideration received by the Corporation for the issue of any Additional
Shares of Common shall be computed as follows:

(a) CASH AND PROPERTY: Such
consideration shall:

(I) insofar as it
consists of cash, be computed at the aggregate amount of cash received by the
Corporation, excluding amounts paid or payable for accrued interest, accrued
dividends, expenses, discounts or commissions;

(II) insofar as it
consists of property other than cash, be computed at the fair value thereof at
the time of such issue, as determined in good faith by the Board;

(III) in the event
Additional Shares of Common Stock are issued, together with other shares or
securities or other assets of the Corporation for consideration which covers
both, be the proportion of such consideration so received, computed as provided
in clauses (a)(I) and (a)(II) b) (above), as determined in good faith by the
Board.

(b) OPTIONS AND CONVERTIBLE
SECURITIES. The consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued pursuant to the
portion of Section F.3.f.4 (below), relating to Options and Convertible
Securities, shall be determined by dividing:

(I) the total
amount, if any received or receivable by the Corporation as consideration for
the issue of such Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such consideration), payable to the Corporation upon the exercise
of such Options or the conversion or exchange of such Convertible Securities, or
in the case of Options for Convertible Securities,

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<PAGE>

the exercise of such Options for Convertible Securities, and the conversion
or exchange of such Convertible Securities by:

(II) the maximum
number of shares of Common Stock (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.

3. No adjustment in the Conversion
Price of a particular share of Preferred Stock shall be made in respect of the
issuance of Additional Shares of Common Stock, unless the consideration per
share for an Additional Share of Common Stock issued or deemed to be issued by
the Corporation is less than the Conversion Price in effect on the date of, and
immediately prior to such issue, for such share of Preferred Stock.

4. In the event the Corporation at any
time, or from time to time after the Original Issue Date, shall issue any
Options or Convertible Securities, or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number), of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Section F.3.f.2 hereof) of such Additional
Shares of Common would be less than the Conversion Price in effect on the date
of and immediately prior to such issue, or such record date, as the case may be,
and provided further than in any such case in which Additional Shares of Common
are deemed to be issued:

(a) no further adjustment in
the Conversion Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;

(b) if such Options or
Convertible Securities by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to the Corporation, or
decrease in the number of shares of Common issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options or the rights of conversion or exchange under
such Convertible Securities;

(c) upon the expiration of
any such Option or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Conversion Price computed
upon the original issue thereof (or upon the occurrence of a record date

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<PAGE>

with respect thereto), and any subsequent adjustment based thereon, shall, upon
such expiration, be recomputed as if:

(I) in the case of
Convertible Securities or Options for Common Stock, the only Additional Shares
of Common Stock issued were shares of Common Stock, if any, actually issued upon
the exercise of such Options, or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the consideration
actually received by the Corporation for the issue of all such Options, whether
or not exercised, plus the consideration actually received by the Corporation
upon such exercise, or for the issue of all such Convertible Securities which
were actually converted or exchanged, plus the additional consideration, if any,
actually received by the Corporation upon such conversion or exchange; and,

(II) in the case of
Options for Convertible Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time of issue of
such Options, and the consideration received by the Corporation for the
Additional Shares of Common Stock deemed to have been then issued was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration deemed to have been
received by the Corporation upon the issue of the Convertible Securities with
respect to which such Options were actually exercised;

(d) no readjustment pursuant
to clause (b) or (c) (above) shall have the effect of increasing the Conversion
Price to an amount which exceeds the lower of (1) the Conversion Price on the
original adjustment date; or (2) the Conversion Price that would have resulted
from any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date; and

(e) in the case of any Options
which expire by their terms not more than thirty (30) days after the date of
issue hereof, no adjustment of the Conversion Price shall be made until the
expiration or exercise of all such Options, whereupon such adjustment shall be
made in the same manner provided in clause (c) (above).

5. "ADDITIONAL SHARES OF COMMON STOCK"
shall mean all shares of Common Stock issued (or pursuant to Section F.3.f.4 ,
deemed to be issued) by the Corporation upon or after the Original Issue Date,
other than shares of Common Stock issued or issuable at any time:

(a) upon conversion of the
shares of Series A Stock and Series B Stock authorized herein;

(b) up to three million one
hundred eighty-two thousand one hundred thirty-five (3,182,135) shares of Common
Stock issued to officers, directors, and employees of, and consultants to, the
Corporation to be designated and approved by the Board of Directors
(collectively, the "Incentive Shares");

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<PAGE>

(d). by way of subdivision,
combination or consolidation of shares of Common Stock described in Section
F.3.a (above);

(e) pursuant to a
distribution, reorganization, reclassification, exchange or substitution
described in Sections F.3.b, F.3.c, F.3.d and F.3.e (above);

(f) up to five million eight
hundred seventy-nine thousand five hundred seven (5,879,507) shares of Common
Stock to be issued upon the exercise of warrants, options or other rights to
purchase this Corporation's Common Stock issued by this Corporation in
connection with the merger("Existing Options");

(g) all shares of Common Stock
reissued as a result of Incentive Shares repurchased by this Corporation, and
all shares of Common Stock reissued as a result of the repurchase of shares
issued upon the exercise of Existing Options and all shares of Common Stock
issued under options and warrants issued by the Corporation after the Filing
Date in place of any Existing Options which expire without being exercised;

(h) shares of Common Stock
issued by way of dividend or other distribution on shares of Common Stock
excluded from the definition of Additional Shares of Common Stock; or

(i) shares of Common Stock and
Series A Stock, and options and warrant, issued in connection with the Merger.

If at any time, or from time to time, after
the Filing Date this Corporation effects a division or combination of the
outstanding shares of Common Stock, or pays a dividend in or makes any other
distribution of additional shares of Common Stock, the aggregate number of
shares of Common Stock specifically excluded from the definition of Additional
Shares of Common Stock by this Section F.3.f.5.h shall be increased or decreased
appropriately to reflect such division, combination, dividend, or other
distribution.

4. FRACTIONAL SHARES. No fractional shares of Common
Stock shall be issued upon conversion of the shares of Series A Stock or Series
B Stock. In lieu of any fractional share to which the holder of such shares
would otherwise be entitled, this Corporation shall pay cash equal to the
product of (a) such fraction multiplied by (b) the fair market value of one
share of the Common Stock on the date of conversion, as determined in good faith
by the Board of Directors.

5. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Series A Stock and Series B Stock, such number of
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series A Stock and Series B Stock. If at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion

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<PAGE>

of all then outstanding shares of Series A Stock and Series B Stock, the
Corporation shall take such action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.

6. NOTICES. Any notice required by the provisions of
this Section F to be given to a holder of shares of Series A Stock and Series B
Stock shall be deemed given upon the earlier of actual receipt, seventy-two (72)
hours after the same has been deposited in the United States mail, or ten (10)
days after the same has been deposited for international delivery, certified or
registered mail, return receipt requested, postage prepaid, addressed to the
holder at the address of such holder appearing on the books of the Corporation
or 24 hours after it is sent by facsimile transmission.

7. NO DILUTION OR IMPAIRMENT. The Corporation shall not
amend its Certificate of Incorporation or participate in any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action for the purpose of avoiding or seeking
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in carrying out all such action as may be reasonably necessary or
appropriate in order to protect the Conversion Rights of the holders of the
shares of Series A Stock and Series B Stock against dilution (as contemplated
herein) or other impairment.

8. NO REISSUANCE. Any shares of Series A Stock or Series
B Stock which are converted pursuant to the provisions of this Section F shall
not be eligible to be, and shall not be, reissued by the Corporation at any
time.

G. CORPORATE ACTION.

1. SERIES A STOCK. Except as otherwise required by law,
so long as at least four million (4,000,000) shares of Series A Stock remain
outstanding (adjusted for stock splits and combinations), the Corporation shall
not without the vote or written consent of the holders of a majority of the
shares of Series A Stock:

(a) increase the authorized number of shares of
Series A Stock;

(b) increase the authorized number of shares of
Preferred Stock,

(d) merge, consolidate, or reorganize, where
such merger, consolidation, or reorganization directly involves more than fifty
percent (50%) of the Corporation's Common and Preferred Stock; or

(e) sell all or substantially all of its assets
or permit the sale of any of its Subsidiary's assets or issue more than fifty
percent (50%) of the Corporation's or sell or permit the issuance of any of its
Subsidiary's Common Stock or Ordinary Shares, as the case may be, in one
transaction or series of related transactions.

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<PAGE>

2. SERIES B STOCK. Except as otherwise required by law,
so long as at least one hundred fifty-five thousand one hundred thirty-one
(155,131) shares of Series B Stock remain outstanding (adjusted for stock splits
and combinations), the Corporation shall not without the vote or written consent
of the holders of a majority of the shares of Series B Stock:

(a) increase the authorized number of shares of
Series B Stock;

(b) increase the authorized number of shares of
Preferred Stock,

(d) merge, consolidate, or reorganize, where
such merger, consolidation, or reorganization directly involves more than fifty
percent (50%) of the Corporation's Common and Preferred Stock; or

(e) sell all or substantially all of its assets
or permit the sale of any of its Subsidiary's assets or sell more than fifty
percent (50%) of the Corporation's or sell or permit the issuance of any of its
Subsidiary's Common Stock or Ordinary Shares, as the case may be, in one
transaction or series of related transactions.

H. REPLACEMENT OF CERTIFICATES. Upon receipt of evidence
reasonably satisfactory to this Corporation of the loss, theft, destruction, or
mutilation of a certificate representing any of the outstanding shares of Series
A Stock, Series B Stock or Common Stock, and, in the case of loss, theft, or
destruction, the execution of an agreement satisfactory to this Corporation to
indemnify this Corporation from any loss incurred by it in connection therewith,
this Corporation will issue a new certificate representing such shares of Series
A Stock, Series B Stock or Common Stock in lieu of such lost, stolen, destroyed
or mutilated certificate.

I. DEFINITIONS. Unless the context clearly requires otherwise,
the following terms when used herein have the respective meanings indicated:

"ADDITIONAL SHARES OF COMMON STOCK" shall have the meaning
specified in Section F.5.f.5.

"APPROPRIATELY ADJUSTED" shall mean appropriately adjusted for
stock splits, stock dividends, combinations, recapitalizations and the like in
the manner set forth in Section 3.f (above).

"COMMON STOCK" shall have the meaning specified in Section A.

"CONVERSION RIGHTS" shall have the meaning specified in the
introduction to Section F.

"CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares (other than Common Stock) or other securities convertible
into or exchangeable for Common Stock.

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<PAGE>

"CORPORATION" shall mean Nogatech, Inc., a Delaware
corporation.

"FILING DATE" shall mean the date on which this Amended and
Restated Certificate of Incorporation is filed with the Delaware Secretary of
State.

"LIQUIDATION EVENT" shall have the meaning specified in
Section D.2.a.

"MERGER" shall mean the merger between this Corporation and
Nogatech California effected on December 28, 1999, pursuant to which each
outstanding share of common stock of Nogatech California was converted into one
share of Common Stock of this Corporation, and each outstanding share of Series
A Convertible Preferred Stock of Nogatech California ("Nogatech California
Series A Stock") was converted into one share of Series A Stock of this
Corporation.

"NOGATECH CALIFORNIA" shall mean Nogatech, Inc., a California
corporation.

"OPTIONS" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire either Common Stock or Convertible
Securities.

"ORIGINAL ISSUE DATE" shall mean the Filing Date.

"ORIGINAL ISSUE PRICE" shall mean (i) $1.57, with respect to
each share of Series A Stock issued in the Merger in exchange for shares of
Nogatech California Series A Stock that were previously issued by Nogatech
California prior to July 15, 1998, and (ii) $1.39, with respect to each share of
Series A Stock issued in the Merger in exchange for shares of Nogatech
California Series A Stock that were previously issued by Nogatech California
effective on July 15, 1998 and with respect to any other shares of Series A
Stock that are issued by the Corporation after the Filing Date.

"PROCEEDING" shall have the meaning specified in Section A.1
of Article VI.

"PREFERRED STOCK" shall have the meaning specified in Section
A.

"QUALIFIED PUBLIC OFFERING" shall have the meanings specified
in Article VIII, Section A.

"SERIES A CONVERSION PRICE" shall have the meaning specified
in Section F.1.

"SERIES B CONVERSION PRICE" shall have the meaning specified
in Section F.1.

"SERIES A CONVERTIBLE PREFERRED STOCK" shall have the meaning
specified in Section C.

"SERIES B CONVERTIBLE PREFERRED STOCK" shall have the meaning
specified in Section C.

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<PAGE>

"SERIES A PREFERENTIAL DIVIDEND" shall have the meaning
specified in Section D.1.a.

"SERIES B PREFERENTIAL DIVIDEND" shall have the meaning
specified in Section D.1.a.

"SERIES A PREFERENTIAL LIQUIDATION PRICE" shall have the
meaning specified in Section D.2.a.

"SERIES B PREFERENTIAL LIQUIDATION PRICE" shall have the
meaning specified in Section D.2.a.

"SERIES A STOCK" shall have the meaning specified in Section
C.

"SERIES B STOCK" shall have the meaning specified in Section
C.

"VOTING STOCK" shall have the meaning specified in Section
A.3. of Article VIII.

J. RESTATED CERTIFICATE OF INCORPORATION. Upon the conversion of all
outstanding shares of the Series A Stock and Series B Stock, Sections C, D, E,
F, G, H and I of this Article IV (the "Deleted Provisions") shall be of no
further force or effect, and this Certificate of Incorporation may be restated
by a resolution of the Board of Directors (and without further action by the
stockholders) to delete the Deleted Provisions and this Section J of this
Article IV and renumber or restate the remaining provisions.

A. ELECTION OF DIRECTORS. The election of the Directors of this
Corporation need not be by written ballot, unless the Bylaws of this Corporation
shall so provide.

B. ARRANGEMENT WITH CREDITORS. Whenever a compromise or
arrangement is proposed between this Corporation and its creditors or any class
of them and/or between this Corporation and its stockholders or any class of
them, any court of equitable jurisdiction within the State of Delaware may, on
the application in a summary way of this Corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers appointed
for this Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this Corporation, as the case
may be, and also on this Corporation.

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<PAGE>

C. FIDUCIARY DUTY. A director of this Corporation shall not be
personally liable to this Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to this Corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (iii) under Section
174 of the Delaware General Corporation Law; or (iv) for any transaction from
which the director derived an improper personal benefit. If the Delaware General
Corporation Law is amended after the filing of the Certificate of Incorporation
of which this Article V is a part to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of this Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended. Any
repeal or modification of the foregoing paragraph by the stockholders of this
Corporation shall not adversely affect any right or protection of a director of
this Corporation existing at the time of such repeal or modification.

A. INDEMNIFICATION.

1 RIGHT TO INDEMNIFICATION. Each person who was or is
made a party, or is threatened to be made a party to, or is involved in, any
action, suit or proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), including, without limitation, Proceedings by or
in the right of this Corporation to procure a judgment in its favor, by reason
of the fact that he or she, or a person for whom he or she is the legal
representative, is or was a director or officer, employee or agent of this
Corporation, or is or was serving at the request of this Corporation as a
director or officer, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such Proceeding is
alleged action in an official capacity as a director, officer, employee or
agent, or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by this Corporation to the
fullest extent authorized by the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent such amendment permits this Corporation
to provide broader indemnification rights than said law permitted this
Corporation to provide prior to such amendment) against all expenses, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amount paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith. Such right shall be a contract
right and shall include the right to be paid by this Corporation for expenses
incurred in defending any such Proceeding in advance of its final disposition;
PROVIDED, however, that the payment of such expenses incurred by a director or
officer of this Corporation in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such person
while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of such Proceeding,
shall be made only upon delivery to this Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it
should be determined ultimately that such director or officer is not entitled to
be indemnified under this section, or otherwise.

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<PAGE>

2 RIGHT OF CLAIMANT TO BRING SUIT. If a claim under
Section 1 (above) is not paid in full by this Corporation within ninety (90)
days after a written claim has been received by this Corporation, the claimant
may at any time thereafter bring suit against this Corporation to recover the
unpaid amount of the claim, and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any Proceeding in advance of its final
disposition where the required undertaking has been tendered to this
Corporation), that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
this Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on this Corporation. Neither the failure
of this Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by this Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that claimant had not met the applicable standard of conduct.

B. NON-EXCLUSIVITY OF RIGHTS. The rights conferred by Section A.1
and A.2 (above) shall not be exclusive of any other right which such person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors, or otherwise.

C. AMENDMENT OR REPEAL. Neither any amendment nor repeal of this
Article VI, nor the adoption of any provision of this Corporation's Certificate
of Incorporation inconsistent with this Article VI, shall eliminate or reduce
the effect of this Article VI, in respect of any matter occurring, or any action
or Proceeding accruing or arising, or that, but for this Article VI would accrue
or arise, prior to such amendment, repeal or adoption of an inconsistent
provision.

VII

A. DIRECTORS' POWERS. The Directors of this Corporation shall
have the power to adopt, amend or repeal the Bylaws of this Corporation. The
management of the business and the conduct of the affairs of this Corporation
shall be vested in its Board of Directors. The number of directors which shall
constitute the whole Board of Directors shall be fixed exclusively by, or in the
manner provided in, the Bylaws of this Corporation.

B. CORPORATION EXISTENCE. This Corporation is to have perpetual
existence.

VIII

A. QUALIFIED PUBLIC OFFERING. For the management of the business,
and for the conduct of the affairs of this Corporation, and in further
definition, limitation and regulation of the powers of this Corporation, of its
directors and of its stockholders or any class thereof, as the case may be, it
is further provided that, effective upon the closing of an underwritten public
offering pursuant to

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<PAGE>

an effective registration statement under the Securities Act of 1933, as
amended, covering the offering and sale of shares of Common Stock for the
account of this Corporation (other than a registration statement effected solely
to implement an employee benefit plan, a transaction in which Rule 145 of the
Securities and Exchange Commission is applicable or any other form or type of
registration in which the shares of Common Stock issuable upon conversion of the
shares of Series A Stock and Series B Stock cannot be included pursuant to the
Securities and Exchange Commission rules or practices) resulting in aggregate
proceeds to this Corporation (before the payment of underwriting discounts and
commissions and the expense of the offering) in excess of $10,000,000 (a
"Qualified Public Offering"):

1. BOARD CLASSES AND TERMS. The Board of Directors shall
be divided into three classes, designated as Class I, Class II, and Class III,
respectively. Directors shall be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. At the first annual
meeting of stockholders following the date of the Qualified Public Offering, the
term of office of the Class I directors shall expire, and Class I directors
shall be elected for a full term of three (3) years. At the second annual
meeting of stockholders following the date of the Qualified Public Offering, the
term of office of the Class II directors shall expire, and Class II directors
shall be elected for a full term of three (3) years). At the third annual
meeting of stockholders following the date of the Qualified Public Offering, the
term of office of the Class III directors shall expire, and Class III directors
shall be elected for a full term of three (3) years). At each succeeding annual
meeting of stockholders, directors shall be elected for a full term of three (3)
years to succeed the directors of the class whose terms expire at such annual
meeting.

Notwithstanding the foregoing provisions of this Article, each
director shall serve until his or her successor is duly elected and qualified,
or until his or her death, resignation or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.

2. NUMBER OF DIRECTORS. The authorized number of
directors shall be determined in accordance with the Bylaws of the Corporation.

3. BOARD VACANCIES. Any vacancies on the Board of
Directors resulting from death, resignation, disqualification, removal, or other
causes shall be filled by either (i) the affirmative vote of the holders of a
majority of the voting power of the then-outstanding shares of voting stock of
this Corporation entitled to vote generally in the election of directors (the
"Voting Stock"), voting together as a single class; or (ii) by the affirmative
vote of a majority of the remaining directors then in office, even though less
than a quorum of the Board of Directors. Newly created directorships resulting
from any increase in the number of directors shall, unless the Board of
Directors determines by resolution that any such newly-created directorship
shall be filled by the stockholders, be filled only by the affirmative vote of
the directors then in office, even though less than a quorum of the Board of
Directors. Any director elected in accordance with the preceding sentence shall
hold office for the remainder of the full term of the class of directors in
which the new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified.

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<PAGE>

B. BYLAWS. In furtherance, and not in limitation, of the powers
conferred by statute, the Board of Directors is expressly authorized to make,
alter, amend, or repeal the Bylaws of this Corporation.

C. VOTE. Any director, or the entire Board of Directors, may be
removed from office at any time (i) with cause by the affirmative vote of the
holders of at least a majority of the voting power of all of the
then-outstanding shares of the voting stock, voting together as a single class;
or (ii) without cause by the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of the Voting Stock.

D. NO ACTION. Effective upon a Qualified Public Offering, no
action shall be taken by the stockholders of this Corporation, except at an
annual or special meeting of the stockholders called in accordance with the
Bylaws. Effective upon a Qualified Public Offering, the Stockholders shall not
take any action by written consent. Until a Qualified Public Offering,
stockholder actions shall be governed by this Certificate of Incorporation and
this Corporation's Bylaws.

E. STOCKHOLDER NOMINATION. Advance notice of stockholder
nomination for the election of directors and of business to be brought by
stockholders before any meeting of the stockholders of this Corporation shall be
given in the manner provided in the Bylaws of this Corporation.

F. AMENDMENT. Notwithstanding any other provisions of this
Certificate of Incorporation, or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of the
holders of any particular class or series of the Voting Stock required by law,
this Certificate of Incorporation or any Preferred Stock Designation, upon a
Qualified Public Offering, the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the
then-outstanding shares of the Voting Stock, voting together as a single class,
shall be required to alter, amend or repeal this Article VIII.

This Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in Article VIII of this
Certificate, and all rights conferred upon the stockholders herein are granted
subject to this right.

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<PAGE>

IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed and attested by Arie Heiman, its Chief Executive Officer and Yaron
Garmazi, its Secretary, as of January 13, 2000.

NOGATECH, INC.

BY: /s/ A. Heiman
------------------------------------
Arie Heiman, Chief Executive Officer

ATTEST: /s/ Y. Garmazi
--------------------------------------
Yaron Garmazi, Chief Financial Officer

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<PAGE>

EXHIBIT 3.2

BYLAWS

NOGATECH, INC.

A DELAWARE CORPORATION

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1: OFFICES................................................................................................1
Section 1. REGISTERED OFFICE...................................................................1
Section 2. OTHER OFFICES.......................................................................1

ARTICLE II: MEETINGS OF STOCKHOLDERS..............................................................................1
Section 1. PLACE OF MEETINGS...................................................................1
Section 2. ANNUAL MEETING......................................................................1
Section 3. SPECIAL MEETING.....................................................................1
Section 4. NOTICE OF STOCKHOLDERS' MEETINGS....................................................2
Section 5. LIST OF STOCKHOLDERS ENTITLED TO VOTE...............................................2
Section 6. QUORUM..............................................................................2
Section 7. ADJOURNED MEETING; NOTICE...........................................................2
Section 8. VOTING..............................................................................3
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT STOCKHOLDERS..................................3
Section 10. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING............................4
Section 11. RECORD DATE FOR STOCKHOLDER NOTICE, VOTING, AND GIVING CONSENTS....................4
Section 12. PROXIES............................................................................5
Section 13. INSPECTORS OF ELECTION.............................................................5

ARTICLE III: DIRECTORS............................................................................................6
Section 1. POWERS..............................................................................6
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS...............................................6
Section 3. ELECTION AND TERM OF OFFICE OF DIRECTORS............................................7
Section 4. VACANCIES...........................................................................7
Section 5. PLACE OF MEETINGS...................................................................7
Section 6. ANNUAL MEETING......................................................................7
Section 7. OTHER REGULAR MEETINGS..............................................................7
Section 8. SPECIAL MEETINGS....................................................................7
Section 9. QUORUM..............................................................................8
Section 10. WAIVER OF NOTICE...................................................................8
Section 11. ACTION WITHOUT MEETING.............................................................8
Section 12. TELEPHONIC MEETINGS................................................................8
Section 13. FEES AND COMPENSATION OF DIRECTORS.................................................8

ARTICLE IV: COMMITTEES............................................................................................9
Section 1. COMMITTEES OF DIRECTORS.............................................................9
Section 2. MEETINGS AND ACTION OF COMMITTEES...................................................9

ARTICLE V: OFFICERS...............................................................................................9
Section 1. OFFICERS............................................................................9
Section 2. ELECTION OF OFFICERS................................................................9
Section 3. SUBORDINATE OFFICERS...............................................................10
Section 4. REMOVAL AND RESIGNATION OF OFFICERS................................................10
Section 5. VACANCIES IN OFFICES...............................................................10
Section 6. CHAIRMAN OF THE BOARD..............................................................10
Section 7. PRESIDENT..........................................................................10
Section 8. VICE PRESIDENTS....................................................................10

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<PAGE>

Section 9. SECRETARY..........................................................................10
Section 10. CHIEF FINANCIAL OFFICER...........................................................11

ARTICLE VI: INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,AND OTHER AGENTS...................................11
Section 1. RIGHT TO INDEMNIFICATION...........................................................11
Section 2. PREPAYMENT OF EXPENSES.............................................................12
Section 3. CLAIMS.............................................................................12
Section 4. NON-EXCLUSIVITY OF RIGHTS..........................................................12
Section 5. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION.........................12
Section 6. OTHER INDEMNIFICATION..............................................................12
Section 7. AMENDMENT OR REPEAL................................................................12

ARTICLE VII: RECORDS AND REPORTS.................................................................................12
Section 1. FORM OF RECORDS....................................................................12
Section 2. INSPECTION BY STOCKHOLDERS.........................................................12
Section 3. INSPECTION BY DIRECTORS............................................................13

ARTICLE VIII: GENERAL CORPORATE MATTERS..........................................................................13
Section 1. CERTIFICATES FOR SHARES............................................................13
Section 2. LOST CERTIFICATES..................................................................13
Section 3. REGISTERED STOCKHOLDERS............................................................13
Section 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS.....................................14
Section 5. CONSTRUCTION AND DEFINITIONS.......................................................14

ARTICLE IX: AMENDMENTS...........................................................................................14
Section 1. AMENDMENT BY STOCKHOLDERS..........................................................14
Section 2. AMENDMENT BY DIRECTORS.............................................................14

</TABLE>

ii
<PAGE>

BYLAWS

NOGATECH, INC.

ARTICLE 1: OFFICES1 OFFICES

Section 1. REGISTERED OFFICE1. REGISTERED OFFICE. The registered office
shall be at such place within the State of Delaware that the board of directors
may determine from time to time.

Section 2. OTHER OFFICES2. OTHER OFFICES. The corporation may also have
offices at such other places both within and without the State of Delaware as
the board of directors may from time to time determine or the business of the
corporation may require.

ARTICLE II: MEETINGS OF STOCKHOLDERS II MEETINGS OF STOCKHOLDERS

Section 1. PLACE OF MEETINGS1. PLACE OF MEETINGS. Meetings of
stockholders shall be held at any place within or outside the State of Delaware
designated either by the board of directors or the president (if not contrary to
any action taken by the board of directors). In the absence of any such
designation, stockholders' meetings shall be held at the principal executive
office of the corporation in the City of Santa Clara, State of California.

Section 2. ANNUAL MEETING2. ANNUAL MEETING.

a. The annual meeting of stockholders of the corporation for
the purpose of electing directors and for the transaction of such other proper
business as may come before such meetings, shall be held at such time and place
as the board of directors shall determine by resolution. Only persons who are
nominated in accordance with the procedures set forth in this Section 2 shall be
eligible for election as Directors.

b. At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be: (A)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors; (B) otherwise properly brought before
the meeting by or at the direction of the Board of Directors; or (C) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the Corporation not less than one hundred
twenty (120) calendar days in advance of the date specified in the Corporation's
Proxy Statement released to stockholders in connection with the previous year's
annual meeting of stockholders; provided, however, that in the event that no
annual meeting was held in the previous year or the date of the annual meeting
has been changed by more than thirty (30) days from the date contemplated at the
time of the previous year's proxy statement, notice by the stockholder to be
timely must be so received a reasonable time before the solicitation is made. A

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<PAGE>

stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting: (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting; (ii) the name and address,
as they appear on the Corporation's books, of the stockholder proposing such
business; (iii) the class and number of shares of the Corporation which are
beneficially owned by the stockholder; (iv) any material interest of the
stockholder in such business; and (v) any other information that is required to
be provided by the stockholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as a
proponent to a stockholder proposal. Notwithstanding the foregoing, in order to
include information with respect to a stockholder proposal in the Proxy
Statement and form of Proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The Chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (b); and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.

c. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of stockholders by or at
the direction of the Board of Directors, or by any stockholder of the
Corporation entitled to vote in the election of Directors at the meeting who
complies with the notice procedures set forth in this paragraph c. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation in accordance with the provisions of paragraph (b) of this
Section 2. Such stockholder's notice shall set forth: (i) as to each person, if
any, whom the stockholder proposes to nominate for election or re-election as a
Director: (A) the name, age, business address and residence address of such
person; (B) the principal occupation or employment of such person; (C) the class
and number of shares of the Corporation which are beneficially owned by such
person; (D) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nominations are to be made by the stockholder;
and (E) any other information relating to such person that is required to be
disclosed in solicitations of proxies for elections of Directors, or is
otherwise required, in each case pursuant to Regulation 14A under the 1934 Act
(including, without limitation, such person's written consent to being named in
the Proxy Statement, if any, as a nominee and to serving as a Director, if
elected); and (ii) as to such stockholder giving notice, the information
required to be provided pursuant to paragraph (b) of this Section 2.2. At the
request of the Board of Directors, any person nominated by a stockholder for
election as a Director shall furnish to the Secretary of the Corporation that
information required to be set forth in the stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for election as a
Director of the Corporation unless nominated in accordance with the procedures
set forth in this paragraph (c). The Chairman of the meeting shall, if the facts
warrant, determine and declare at the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if he should so
determine, he shall so declare at the meeting, and the defective nomination
shall be disregarded.

Section 3. SPECIAL MEETING3. SPECIAL MEETING. A special meeting of the
stockholders may be called for any purpose or purposes at any time by the board
of directors, or by the chairman of the board, or by the president, or the chief
executive officer, but such special meetings may not be called by any other
person or persons.

Section 4. NOTICE OF STOCKHOLDERS' MEETINGS4. NOTICE OF STOCKHOLDERS'
MEETINGS. All notices of meetings of stockholders shall specify the place, date
and hour of the meeting and, in the case of a special

2
<PAGE>

meeting, the purpose or purposes for which the meeting is called. Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice. Unless otherwise provided by law, the certificate
of incorporation or these bylaws, the written notice of any annual or special
meeting of stockholders shall be given not less than ten (10) nor more than
sixty (60) days before the date of the meeting. If mailed, notice is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at such stockholder's address as it appears on the records of the
corporation.

An affidavit of the secretary or an assistant secretary or of the
transfer agent of the corporation that the notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.

Section 5. LIST OF STOCKHOLDERS ENTITLED TO VOTE5. LIST OF STOCKHOLDERS
ENTITLED TO VOTE. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten (10) days before every meeting
of the stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.

Section 6. QUORUM6. QUORUM. The presence in person or by proxy of the
holders of a majority of the shares entitled to vote at any meeting of
stockholders shall constitute a quorum for the transaction of business. The
stockholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority of the shares
required to constitute a quorum.

Section 7. ADJOURNED MEETING; NOTICE7. ADJOURNED MEETING; NOTICE. Any
stockholders' meeting, annual or special, whether or not a quorum is present,
may be adjourned from time to time by the vote of the majority of the shares
represented at that meeting, either in person or by proxy, but in the absence of
a quorum, no other business may be transacted at that meeting, except as
provided in Section 6 of this Article II.

When any meeting of stockholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at a meeting at which the
adjournment is taken, unless a new record date for the adjourned meeting is
fixed, or unless the adjournment is for more than thirty (30) days from the date
set for the original meeting, in which case the board of directors shall set a
new record date. Notice of any such adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting in accordance
with the provisions of Section 4 of this Article II. At any adjourned meeting
the corporation may transact any business which might have been transacted at
the original meeting.

Section 8. VOTING8. VOTING. Unless otherwise provided in the
certificate of incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power upon the matter in question held by such
stockholder, but no proxy shall be voted on or after three years from its date,
unless the proxy provides for a longer period. Vote may be via voice or ballot;
provided, however, that elections for directors must be by ballot if demanded by
any shareholder at the meeting and before the voting has begun.

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<PAGE>

Any holder of shares entitled to vote on any matter may vote a part of
the shares in favor of the proposal and refrain from voting the remaining shares
or, except when the matter is the election of directors, vote them against the
proposal, but, if the stockholder fails to specify the number of shares which
the stockholder is voting affirmatively, it will be conclusively presumed that
the stockholder's approving vote is with respect to all shares that the
stockholder is entitled to vote.

At all meetings of stockholders for the election of directors a
plurality of the votes cast shall be sufficient to elect. All other elections
and questions shall, unless otherwise provided by law, the certificate of
incorporation or these bylaws, be decided by the vote of the holders of shares
of stock having a majority of the votes which could be cast by the holders of
all shares of stock entitled to vote thereon which are present in person or
represented by proxy at the meeting.

Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT STOCKHOLDERS9. WAIVER
OF NOTICE OR CONSENT BY ABSENT STOCKHOLDERS. The transaction of any meeting of
stockholders, either annual or special, however called and noticed, and wherever
held, shall be as valid as though transacted at a meeting duly held after
regular call and notice, if a quorum be present either in person or by proxy,
and if, either before or after the meeting, each person entitled to vote, who
was not present in person or by proxy, signs a written waiver of notice or a
consent to a holding of the meeting, or an approval of the minutes. Such waiver,
consent or approval need not specify either the business to be transacted or the
purpose of any annual or special meeting of stockholders, unless so provided by
the certificate of incorporation or these bylaws. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.

Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened, and except that attendance at a meeting is
not a waiver of any right to object to the consideration of matters required by
law to be included in the notice of the meeting but not so included if that
objection is expressly made at the meeting.

Section 10. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING10.
STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Unless otherwise
provided in the certificate of incorporation, any action which may be taken at
an annual or special meeting of stockholders may be taken without a meeting and
without prior notice, if a consent in writing, setting forth the action so
taken, is signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take that action
at a meeting at which all shares entitled to vote on that action were present
and voted. All such consents shall be delivered to the corporation by delivery
to its registered office in Delaware, its principal place of business, or an
officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded.

Any stockholder giving a written consent, or the stockholder's proxy
holder, or a transferee of the shares or a personal representative of the
stockholder or their respective proxy holders, may revoke the consent by a
writing received by the secretary of the corporation before written consents of
the number of shares required to authorize the proposed action have been
delivered to the corporation. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.

Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days
after the date of the earliest dated consent delivered to the corporation, a
written consent

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or consents signed by a sufficient number of holders to take action are
delivered to the corporation in the manner prescribed in the first paragraph of
this Section.

Section 11. RECORD DATE FOR STOCKHOLDER NOTICE, VOTING, AND GIVING
CONSENTS11. RECORD DATE FOR STOCKHOLDER NOTICE, VOTING, AND GIVING CONSENTS. In
order that the corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to express consent to corporate action without a meeting, or entitled
to receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date:

(a) In the case of determination of stockholders entitled to
vote at any meeting of stockholders or adjournment thereof, shall, unless
otherwise required by law, not be more than sixty (60) nor less than ten (10)
days before the date of such meeting;

(b) In the case of determination of stockholders entitled to
express consent to corporate action in writing without a meeting, shall not be
more than ten (10) days after the date upon which the resolution fixing the
record date is adopted by the board of directors; and

If no record date is fixed by the board of directors:

(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held;

(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting when no prior
action of the board of directors is required by law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation in accordance with applicable law, or if
prior action by the board of directors is required by law, shall be at the close
of business on the day on which the board of directors adopts the resolution
taking such prior action; and

(c) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.

Section 12. PROXIES12. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders may authorize another person or persons to act for him
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A stockholder may revoke any proxy which is not irrevocable
by attending the meeting and voting in person or by filing an instrument in
writing

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revoking the proxy or another duly executed proxy bearing a later date with the
Secretary of the corporation.

Section 13. INSPECTORS OF ELECTION13. INSPECTORS OF ELECTION. The
corporation may, in advance of any meeting of stockholders, appoint one (1) or
more inspectors to act at the meeting and make a written report thereof. The
corporation may designate one (1) or more persons as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate is able to
act at a meeting of stockholders, the chairman of the meeting may appoint one or
more inspectors to act at the meeting. Each inspector, before entering upon the
discharge of such inspector's duties, shall take and sign an oath faithfully to
execute the duties of inspector with strict impartiality and according to the
best of such his or her ability.

These inspectors shall:

(a) Ascertain the number of shares outstanding and the voting
power of each;

(b) Determine the shares represented at the meeting and the
validity of proxies and ballots;

(d) Determine and retain for a reasonable period a record of
the disposition of any challenges made to any determination by the inspectors;

(e) Certify the determination of the number of shares
represented at the meeting, and the count of all votes and ballots; and

(f) Do any other acts that may be proper to conduct the
election or vote with fairness to all stockholders.

The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of their duties.

ARTICLE III: DIRECTORSIII DIRECTORS

Section 1. POWERS1. POWERS. The business of the corporation shall be
managed by or under the direction of its board of directors which may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by statute or by the certificate of incorporation or by these bylaws
directed or required to be exercised or done by the stockholders.

Without prejudice to these general powers, and subject to the same
limitations, the directors shall have the power to:

(a) Select and remove all officers, agents, and employees of
the corporation; prescribe any powers and duties for them that are consistent
with law, with the certificate of incorporation, and with these bylaws; fix
their compensation; and require from them security for faithful service.

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(b) Change the principal executive office or the principal
business office from one location to another; cause the corporation to be
qualified to do business in any state, territory, dependency, or country and
conduct business within or without the State of Delaware; and designate any
place within or without the State of Delaware for the holding of any
stockholders' meeting, or meetings, including annual meetings.

(c) Adopt, make, and use a corporate seal; prescribe the forms
of certificates of stock; and alter the form of the seal and certificates.

(d) Authorize the issuance of shares of stock of the
corporation on any lawful terms, for such consideration as permitted by law.

(e) Borrow money and incur indebtedness on behalf of the
corporation, and cause to be executed and delivered for the corporation's
purposes, in the corporate name, promissory notes, bonds, debentures, deeds of
trust, mortgages, pledges, hypothecations, and other evidence of debt and
securities.

Section 2. NUMBER AND QUALIFICATION OF DIRECTORS2. NUMBER AND
QUALIFICATION OF DIRECTORS. The exact number of directors of the corporation
shall be nine (9) until changed by a bylaw amending this Section 2, duly adopted
by the board of directors or by the stockholders. The definite number of
directors may be changed by a duly adopted amendment to the certificate of
incorporation or by an amendment to this bylaw duly adopted by the vote or
written consent of the board of directors or by the holders of a majority of the
outstanding shares entitled to vote. Directors need not be stockholders.

Section 3. ELECTION AND TERM OF OFFICE OF DIRECTORS3. ELECTION AND TERM
OF OFFICE OF DIRECTORS. Directors shall be elected at each annual meeting of the
stockholders, but if any such annual meeting is not held, or the directors are
not elected thereat, the directors may be elected at any special meeting of the
stockholders held for that purpose. All directors shall hold office until the
expiration of the term for which elected and until their respective successors
are elected, except in the case of death, resignation or removal of any
director.

Section 4. VACANCIES4. VACANCIES. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the remaining members of the board of directors,
although such majority is less than a quorum, or by a sole remaining director,
and the directors so chosen shall hold office until the expiration of the term
for which elected and until their successors are duly elected and shall qualify,
unless sooner displaced.

A vacancy or vacancies in the board of directors shall be deemed to
exist in the event of the death, resignation, or removal of any director, or if
the stockholders fail, at any meeting of stockholders at which any director or
directors are elected, to elect the number of directors to be voted for at that
meeting. Any director may resign at any time upon giving written notice to the
corporation. The entire board of directors or any individual director may be
removed from office, prior to the expiration of their or his term of office only
in the manner and within the limitations provided by the General Corporation Law
of Delaware

Section 5. PLACE OF MEETINGSSECTION 5. PLACE OF MEETINGS. Meetings of
the board of directors may be held at any place within or outside the State of
Delaware that has been designated in the notice of the meeting or, if not so
stated or if there is no notice, by resolution of the board or by the chairman
of the board or by the president (if not contrary to any action taken by the
board of directors). In the absence of such a designation, meetings shall be
held at the principal executive office of the corporation.

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Section 6. ANNUAL MEETING6. ANNUAL MEETING. Immediately following each
annual meeting of stockholders, the board of directors shall hold a regular
meeting for the purpose of organization, any desired election of officers, and
the transaction of other business. Notice of this meeting shall not be required.

Section 7. OTHER REGULAR MEETINGS7. OTHER REGULAR MEETINGS. Other
regular meetings of the board of directors shall be held without call at such
time as shall from time to time be fixed by the board of directors.
Such regular meetings may be held without notice.

Section 8. SPECIAL MEETINGS8. SPECIAL MEETINGS. Special meetings of the
board of directors for any purpose or purposes may be called at any time by the
chairman of the board or the president or any vice president or secretary or any
two directors. Notice of the time and place of special meetings shall be
delivered personally or by telephone to each director or sent by first-class
mail or telegram, charges prepaid, addressed to each director at that director's
address as it is shown on the records of the corporation. In case the notice is
mailed, it shall be deposited in the United States mail at least four (4) days
before the time of the holding of the meeting. In case the notice is delivered
personally, or by telephone or telegram, it shall be delivered personally, or by
telephone or to the telegraph company, at least forty-eight (48) hours before
the time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the director or to a person at the
office of the director who the person giving the notice has reason to believe
will promptly communicate it to the director. The notice need not specify the
purpose of the meeting nor the place if the meeting is to be held at the
principal executive office of the corporation.

Section 9. QUORUM9. QUORUM. At all meetings of the board of directors a
majority of the authorized number of directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the board of
directors, except as provided by, the certificate of incorporation, or other
applicable law. If a quorum shall not be present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present. A meeting at which a quorum is initially present may continue
to transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.

Section 10. WAIVER OF NOTICE10. WAIVER OF NOTICE. Notice of a meeting
need not be given to any director who signs a waiver of notice or a consent to
holding the meeting or an approval of the minutes thereof, either before or
after the meeting, or who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to said director. All such waivers,
consents, and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting. A waiver of notice need not specify the purpose
of any regular or special meeting of the board of directors.

Section 11. ACTION WITHOUT MEETING11. ACTION WITHOUT MEETING. Unless
otherwise restricted by the certificate of incorporation or these bylaws, any
action required or permitted to be taken at any meeting of the board of
directors or of any committee thereof may be taken without a meeting if all
members of the board or committee, as the case may be, shall individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous vote of the board of
directors. Such written consent or consents shall be filed with the minutes of
the proceedings of the board or committee.

Section 12. TELEPHONIC MEETINGS12. TELEPHONIC MEETINGS. Members of the
board of directors, or any committee designated by the board of directors, may
participate in a meeting thereof by means of,

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conference telephone or similar communication equipment, so long as all persons
participating in the meeting can hear one another, and all such persons shall be
deemed to be present in person at the meeting.

Section 13. FEES AND COMPENSATION OF DIRECTORS13. FEES AND COMPENSATION
OF DIRECTORS. Directors and members of committees may receive such compensation,
if any, for their services, and such reimbursement of expenses, as may be fixed
or determined by resolution of the board of directors. This Section 13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee, or otherwise, and receiving
compensation for those services.

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ARTICLE IV: COMMITTEESIV COMMITTEES

Section 1. COMMITTEES OF DIRECTORS1. COMMITTEES OF DIRECTORS. The board
of directors may designate one or more committees, each consisting of one or
more directors, to serve at the pleasure of the board. The board may designate
one or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member.

Any committee, to the extent provided in the resolution of the board,
shall have and may exercise all the powers and authority of the board in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation
under Sections 251 or 252 of the General Corporation Law of Delaware,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the bylaws of the corporation; and, unless the resolution or the
certificate of incorporation expressly so provide, it shall not have the power
or authority to declare a dividend to authorize the issuance of stock, or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
General Corporation Law of Delaware.

Section 2. MEETINGS AND ACTION OF COMMITTEES2. MEETINGS AND ACTION OF
COMMITTEES. Meetings and actions of committees shall be governed by, and held
and taken in accordance with, the provisions of Article III of these bylaws,
with such changes in the context of those bylaws as are necessary to substitute
the committee and its members for the board of directors and its members, except
that the time of regular meetings of committees may be determined either by
resolution of the board of directors or by resolution of the committee; special
meetings of committees may also be called by resolution of the board of
directors; and notice of special meetings of committees shall also be given to
all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these bylaws.

ARTICLE V: OFFICERSV OFFICERS

Section 1. OFFICERS1. OFFICERS. The officers of the corporation shall
be a president, a secretary and a chief financial officer. The corporation may
also have, at the discretion of the board of directors, a chairman of the board,
one or more vice presidents, one or more assistant secretaries, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article V. Any number of offices may be held by the same person.

Section 2. ELECTION OF OFFICERS2. ELECTION OF OFFICERS. The officers of
the corporation, except such officers as may be appointed in accordance with the
provisions of Section 3 or Section 5 of this Article V, shall be chosen by the
board of directors, and each shall serve at the pleasure of the board, subject
to the rights, if any, of an officer under any contract of employment.

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Section 3. SUBORDINATE OFFICERS3. SUBORDINATE OFFICERS. The board of
directors may appoint, and may empower the president to appoint, such other
officers as the business of the corporation may require, each of whom shall hold
office for such period, have such authority and perform such duties as are
provided in the bylaws or as the board of directors may from time to time
determine.

Section 4. REMOVAL AND RESIGNATION OF OFFICERS4. REMOVAL AND
RESIGNATION OF OFFICERS. Subject to the rights, if any, of an officer under any
contract of employment, any officer may be removed, either with or without
cause, by the board of directors, at any regular or special meeting of the
board, or, except in case of an officer chosen by the board of directors, by any
officer upon whom such power of removal may be conferred by the board of
directors.

Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.

Section 5. VACANCIES IN OFFICES5. VACANCIES IN OFFICES. A vacancy in
any office because of death, resignation, removal, disqualification or any other
cause may be filled in the manner prescribed in these bylaws for regular
appointments to that office.

Section 6. CHAIRMAN OF THE BOARD6. CHAIRMAN OF THE BOARD. The chairman
of the board, if such an officer be elected, shall, if present, preside at
meetings of the board of directors and exercise and perform such other powers
and duties as may be from time to time assigned to him by the board of directors
or prescribed by the bylaws. If there is no president, the chairman of the board
shall in addition be the chief executive officer of the corporation and shall
have the powers and duties prescribed in Section 7 of this Article V.

Section 7. PRESIDENT7. PRESIDENT. Subject to such supervisory powers,
if any, as may be given by the board of directors to the chairman of the board,
if there be such an officer, the president shall be the chief executive officer
of the corporation and shall, subject to the control of the board of directors,
have general supervision, direction, and control of the business and the
officers of the corporation. He shall preside at all meetings of the
stockholders and, in the absence of the chairman of the board, or if there be
none, at all meetings of the board of directors. He shall have the general
powers and duties of management usually vested in the office of president of a
corporation, and shall have such other powers and duties as may be prescribed by
the board of directors or the bylaws.

Section 8. VICE PRESIDENTS8. VICE PRESIDENTS. In the absence or
disability of the president, the vice presidents, if any, in order of their rank
as fixed by the board of directors or, if not ranked, a vice president
designated by the board of directors, shall perform all the duties of the
president, and when so acting shall have all the powers of, and be subject to
all the restrictions upon, the president. The vice presidents shall have such
other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors or the bylaws, and
the president, or the chairman of the board.

Section 9. SECRETARY9. SECRETARY. The secretary shall keep or cause to
be kept, at the principal executive office or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of the
directors, committees of directors, and stockholders, with the time and place of
holding, whether regular or special, and, if special, how authorized, the notice
given, the names of those present at directors' meetings or committee meetings,
the number of shares present or represented at stockholders' meetings, and the
proceedings.

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The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent or
registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation if one be
adopted, in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or by the bylaws.

Section 10. CHIEF FINANCIAL OFFICER10. CHIEF FINANCIAL OFFICER. The
chief financial officer shall keep and maintain, or cause to be kept and
maintained, adequate and correct books and records of accounts of the properties
and business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings,
and shares. The books of account shall at all reasonable times be open to
inspection by any director.

The chief financial officer shall deposit all monies and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all of his transactions as chief financial officer and of the financial
condition of the corporation, and shall have other powers and perform such other
duties as may be prescribed by the board of directors or the bylaws.

ARTICLE VI: INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTSVI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS

Section 1. RIGHT TO INDEMNIFICATION. Each person who was or is
made a party, or is threatened to be made a party to, or is involved in, any
action, suit or proceeding, whether civil, criminal, administrative or
investigative ("Proceeding"), including, without limitation, Proceedings by or
in the right of this Corporation to procure a judgment in its favor, by reason
of the fact that he or she, or a person for whom he or she is the legal
representative, is or was a director or officer, employee or agent of this
Corporation, or is or was serving at the request of this Corporation as a
director or officer, employee or agent of another corporation, or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such Proceeding is
alleged action in an official capacity as a director, officer, employee or
agent, or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by this Corporation to the
fullest extent authorized by the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent such amendment permits this Corporation
to provide broader indemnification rights than said law permitted this
Corporation to provide prior to such amendment) against all expenses, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amount paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith. Such right shall be a contract
right and shall include the right to be paid by this Corporation for expenses
incurred in defending any such Proceeding in advance of its final disposition;
PROVIDED, however, that the payment of such expenses incurred by a director or
officer of this Corporation in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such person
while a director or

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officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of such Proceeding, shall be made only upon
delivery to this Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it should be determined
ultimately that such director or officer is not entitled to be indemnified under
this section, or otherwise.

Section 2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under
Section 1 (above) is not paid in full by this Corporation within ninety (90)
days after a written claim has been received by this Corporation, the claimant
may at any time thereafter bring suit against this Corporation to recover the
unpaid amount of the claim, and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any Proceeding in advance of its final
disposition where the required undertaking has been tendered to this
Corporation), that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
this Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on this Corporation. Neither the failure
of this Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by this Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that claimant had not met the applicable standard of conduct.

Section 3. NON-EXCLUSIVITY OF RIGHTS. The rights conferred by
Article VI, Sections 1 and 2 (above) shall not be exclusive of any other right
which such person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested directors, or otherwise.

Section 4. AMENDMENT OR REPEAL. Neither any amendment nor
repeal of this Article VI, nor the adoption of any provision of this
Corporation's Bylaws inconsistent with this Article VI, shall eliminate or
reduce the effect of this Article VI, in respect of any matter occurring, or any
action or Proceeding accruing or arising, or that, but for this Article VI would
accrue or arise, prior to such amendment, repeal or adoption of an inconsistent
provision.

ARTICLE VII: RECORDS AND REPORTSVII RECORDS AND REPORTS

Section 1. FORM OF RECORDS1. FORM OF RECORDS. Any records maintained by
the corporation in the regular course of its business, including its stock
ledger, books of account, and minute books, may be kept on, or be in the form
of, punch cards, magnetic tape, photographs, microphotographs, or any other
information storage device, provided that the records so kept can be converted
into clearly legible form within a reasonable time. The corporation shall so
convert any records so kept upon the request of any person entitled to inspect
the same.

Section 2. INSPECTION BY STOCKHOLDERS2. INSPECTION BY STOCKHOLDERS. Any
stockholder, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's stock ledger, a
list of stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean a purpose reasonably related to
such person's interest as a stockholder. In

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every instance where an attorney or other agent shall be the person who seeks
the right to inspection, the demand under oath shall be accompanied by a power
of attorney or other such writing which authorizes the attorney or other agent
to so act on behalf of the stockholder. The demand shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.

Section 3. INSPECTION BY DIRECTORS3. INSPECTION BY DIRECTORS. Any
director shall have the right to examine the corporation's stock ledger, a list
of its stockholders and its other books and records for a purpose reasonably
related to his position as a director.

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ARTICLE VIII: GENERAL CORPORATE MATTERSVIII GENERAL CORPORATE MATTERS

Section 1. CERTIFICATES FOR SHARES1. CERTIFICATES FOR SHARES. Every
holder of stock shall be entitled to have a certificate signed by or in the name
of the corporation by the chairman or vice chairman of the board of directors,
if any, or the president or a vice president, and by chief financial officer or
an assistant treasurer, or the secretary or an assistant secretary, of the
corporation, certifying the number of shares owned by such stockholder in the
corporation. Any of or all the signatures on the certificate may be a facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.

The board of directors may authorize the issuance of shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor; provided that upon the face or back of each certificate issued to
represent any such partly paid shares or upon the books and records of the
corporation in the case of uncertificated partly paid shares, the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated. Upon the declaration of any dividend on fully paid shares, the
corporation shall declare a dividend upon partly paid shares of the same class,
but only upon the basis of the percentage of the consideration actually paid
thereon.

Section 2. LOST CERTIFICATES2. LOST CERTIFICATES. Except as provided in
this Section 2, no new certificates for shares shall be issued to replace an old
certificate unless the latter is surrendered to the corporation and cancelled at
the same time. The board of directors may, in case any share certificate or
certificate for any other security is lost, stolen, or destroyed, authorize the
issuance of a replacement certificate on such terms and conditions as the board
may require, including provision for indemnification of the corporation secured
by a bond or other adequate security sufficient to protect the corporation
against any claim that may be made against it, including any expense or
liability, on account of the alleged loss, theft, or destruction of the
certificate or the issuance of the replacement certificate.

Section 3. REGISTERED STOCKHOLDERS3. REGISTERED STOCKHOLDERS. The
corporation shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends, and to vote
as such owner, and to hold liable for calls and assessments a person registered
on its books as the owner of shares and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.

Section 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS4.
REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairman of the board, the
president, or any vice president, or any other person authorized by resolution
of the board of directors or by any of the foregoing designated officers, is
authorized to vote on behalf of the corporation any and all shares of any other
corporation or corporations, foreign or domestic, standing in the name of the
corporation. The authority granted to these officers to vote or represent on
behalf of the corporation any and all shares held by the corporation in any
other corporation or corporations may be exercised by any of these officers in
person or by any person authorized to do so by a proxy duly executed by these
officers.

Section 5. CONSTRUCTION AND DEFINITIONS5. CONSTRUCTION AND DEFINITIONS.
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the General Corporation Law of Delaware shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.

15
<PAGE>

ARTICLE IX: AMENDMENTSIX AMENDMENTS

Section 1. AMENDMENT BY STOCKHOLDERS1. AMENDMENT BY STOCKHOLDERS. New
bylaws may be adopted or these bylaws may be amended or repealed by the vote or
written assent of stockholders entitled to exercise a majority of the voting
power of the corporation, except as otherwise provided by law or by the
certificate of incorporation.

Section 2. AMENDMENT BY DIRECTORS2. AMENDMENT BY DIRECTORS. Subject to
the rights of the stockholders as provided in Section 1 of this Article IX, to
adopt, amend, or repeal bylaws, bylaws may be adopted, amended, or repealed by
the board of directors.

16
<PAGE>

CERTIFICATE OF SECRETARY

I, the undersigned, do hereby certify:

1. That I am the duly elected and acting secretary of Nogatech, Inc.,
a Delaware corporation; and,

2. That the foregoing bylaws, comprising fourteen (14) pages,
constitute the bylaws of said corporation as duly adopted by the sole
incorporator of the corporation on September 24, 1999.

IN WITNESS WHEREOF, I have hereto subscribed my name this 24th day of
September, 1999.

/s/ Y. Garmazi
-----------------------------
Yaron Garmazi, Secretary

<PAGE>

EXHIBIT 10.1.1

OPTION #

NEITHER THIS OPTION, NOR THE SHARES REPRESENTED BY THIS OPTION, HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW
OF ANY STATE, AND THEREFORE THEY MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR ASSIGNED UNLESS REGISTERED UNDER THE APPLICABLE PROVISIONS OF
SUCH ACTS OR UNLESS THE CORPORATION HAS RECEIVED AN OPINION FROM LEGAL COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

RECITALS
--------

A. Effective August 17, 1997, Nogatech, Inc., a California
corporation (the "Corporation") and Corex Israeli Industries Ltd. ("Optionee")
entered into a Series A Preferred Stock Purchase Agreement (the "Purchase
Agreement") for the purchase by Optionee of Three Hundred Eighteen Thousand Four
Hundred Seventy-one (318,471) shares of Series A Preferred Stock from the
Corporation.

B. In connection with the terms and conditions of the Purchase
Agreement, the Corporation has agreed to issue to Optionee an option to purchase
shares of the Corporation's Common Stock in accordance with the terms and
conditions herein.

OPTION
------

In exchange for consideration the sufficiency of which is hereby
acknowledged by the parties hereto, the Corporation hereby grants to Optionee
the right to purchase from the Corporation up to Three Hundred Eighteen Thousand
Four Hundred Seventy-one (318,471) shares of the Common Stock of the Corporation
(the "Option Shares"), subject to the following terms and conditions:

1. TERM. Subject to Sections 2 and 4 below, this Option may be
exercised in whole or in increments of not less than Ten Thousand (10,000)
Option Shares at any time from the date of issuance of this Option through
August 17, 1999 (the "Exercise Period").

2. MATERIAL EVENTS.

a. INITIAL PUBLIC OFFERING. In the event that the
Corporation files a registration statement ("the Registration Statement") for
the initial public offering pursuant to the Securities Act of 1933, as amended,
of the Corporation's Common Stock resulting in gross cash proceeds to the
Corporation in excess of Ten Million U.S. Dollars ($10,000,000) (the "IPO"), the
Corporation shall provide written notice of such filing to

<PAGE>

Optionee (the "Corporation IPO Notice"). Within twenty (20) days after
Optionee's receipt of the Corporation IPO Notice (the "IPO Exercise Date"),
Optionee must notify the Corporation in accordance with Section 4 below if
Optionee intends to exercise this Option, which notice may state that such
exercise shall be effective contingent upon and immediately prior to the
consummation of the IPO. Thereafter, so long as the Corporation consummates the
IPO within one hundred eighty (180) days after the filing of its Registration
Statement (the "IPO Closing Date"), Optionee shall have no further rights
hereunder and this Option shall be terminated. If the Corporation fails to
consummate such IPO within such time, then to the extent this Option was not
exercised as provided herein or contingent upon the consummation of the IPO,
such Option shall remain in effect subject to Sections 1 and 2.b. herein and
this Section 2.a. in the event of further filings of Registration Statements for
an IPO. During the period of time between the IPO Exercise Date and the IPO
Closing Date, Optionee shall be prohibited from further exercising this Option.

b. MERGER, TRANSFER OF ASSETS, OR CHANGE OF CONTROL. In
the event (i) of a bona fide transaction whereby the Corporation has received
written terms and an offer for a (A) merger or consolidation in which the
Corporation is not the consolidated or surviving corporation and the controlling
shareholders (or their affiliates) of the Corporation are not the controlling
shareholders of the surviving corporation; or (B) transfer of all or
substantially all of the assets of the Corporation; or (ii) the officers or
directors of the Corporation receive actual knowledge of a bona fide written
offer which would result in a change in the control of the Corporation from the
sale or exchange of more than 51% of the Corporation's outstanding voting
securities (collectively, the "Corporate Sale"), the Corporation shall provide
Optionee written notice of such information (the "Corporate Sale Notice").
Within twenty (20) days after Optionee's receipt of the Corporate Sale Notice
(the "Corporate Sale Exercise Date"), Optionee must notify the Corporation in
accordance with Section 4 below if Optionee intends to exercise this Option,
which notice may state that such exercise shall be effective contingent upon and
immediately prior to the consummation of the Corporate Sale. Thereafter, so long
as the Corporation or its shareholders consummate the Corporate Sale within one
hundred eighty (180) days after furnishing the Corporate Sale Notice to Optionee
(the "Corporate Sale Closing Date"), Optionee shall have no further rights
hereunder and this Option shall be terminated. If the Corporation or its
shareholders fail to consummate the Corporate Sale within such time, then to the
extent this Option was not exercised as provided herein or contingent upon the
sale consummation of the Corporate Sale, such Option shall remain in effect
subject to Sections 1 and 2.a. herein and this Section 2.b. in the event of
further Corporate Sales. During the period of time between the Corporate Sale
Exercise Date and the Corporate Sale Closing Date, Optionee shall be prohibited
from further exercising this Option.

<PAGE>

3. PURCHASE PRICE. The purchase price for each share of the
Corporation's Common Stock purchasable hereunder shall be One and 57/100 U.S.
Dollars (U.S. $1.57) (the "Option Exercise Price"), although this Option shall
only be exercisable pursuant to Section 4 (below).

4. EXERCISE OF OPTION. The Option may be exercised by Optionee as
follows:

a. OPTION EXERCISEABLE IN INCREMENTS. Optionee may
exercise this Option, in whole or in increments of not less than Ten Thousand
(10,000) Option Shares, by providing written notice (the "Notice") to the
Corporation of exercise pursuant to the terms and conditions of Section 4.b.
herein. Optionee may exercise this Option up to Twenty (20) times during the
Term of this Option or until such time as Optionee has exercised all of the
Option Shares subject to this Option, whichever is earlier to occur.

b. NOTICE OF EXERCISE. The Notice shall set forth the
Optionee's election to exercise the Option and the number of shares with respect
to which the Option is being exercised, and shall be signed by the Optionee. The
Notice, other than the notice required under Sections 2.a. and 2.b. herein
(collectively, the "Material Events Notices") , shall be accompanied by payment
of the appropriate exercise price in cash or a cash equivalent. The Option shall
be deemed exercised upon the Corporation's receipt of the Notice accompanied by
the appropriate exercise price. Payment for Options exercised in connection with
the Material Events Notices (the "Material Events Options") shall be delivered
to the Corporation no later than five (5) days following receipt from the
Corporation of notice informing Optionee of the consummation date of the IPO or
Corporate Sale, as applicable. Notwithstanding anything contrary herein, all
Material Events Options for which payment has not been received by the
Corporation as set forth above shall be deemed terminated.

Certificates for shares purchased hereunder shall be delivered
to the Optionee within thirty (30) business days after the date on which this
Option shall have been exercised as aforesaid other than the Material Events
Options, but Optionee shall be deemed the record owner of such Option Shares as
of and from the close of business on the date on which the Notice, together with
the payment, is received. Certificates for shares purchased in connection with
the Material Events Options hereunder shall be delivered to the Optionee within
thirty (30) business days after receipt of payment therefor, but Optionee shall
be deemed the record owner of the related Option Shares as of and from the close
of business on the date on which such payment is received.

5. FRACTIONAL INTEREST. The Corporation shall not be required to
issue any fractional shares on the exercise of this Option.

<PAGE>

6. OPTION CONFERS NO RIGHTS OF SHAREHOLDER. Optionee shall not
have any rights as a shareholder of the Corporation with regard to the Option
Shares prior to actual exercise resulting in the purchase of the Option Shares.

7. INVESTMENT REPRESENTATION. Neither this Option nor the Option
Shares issuable upon the exercise of this Option have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under the
California Corporate Securities Law of 1968. Optionee acknowledges by acceptance
of the Option that (a) it has acquired this Option for investment and not with a
view toward distribution; (b) it has a pre-existing personal or business
relationship with the Corporation, or its executive officers, or by reason of
its business or financial experience it has the capacity to protect its own
interests in connection with the transaction; and (c) it is an accredited
investor as that term is defined in Regulation D promulgated under the
Securities Act. Optionee agrees that any Option Shares issuable upon exercise of
this Option will be acquired for investment and not with a view toward
distribution; and acknowledges that to the extent such Option Shares will not be
registered under the Securities Act and applicable state securities laws, that
such Option Shares may have to be held indefinitely unless they are subsequently
registered or qualified under the Securities Act and applicable state securities
laws; or, based on an opinion of counsel reasonably satisfactory to the
Corporation, an exemption from such registration and qualification is available.
Optionee, by acceptance hereof, consents to the placement of the following
restrictive legend, or similar legend, on each certificate to be issued to
Optionee by the Corporation in connection with the issuance of such Option
Shares:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES
LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) THERE
IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING SUCH
SECURITIES, OR (B) THE OPTIONEE RECEIVES AN OPINION OF COUNSEL FOR THE OPTIONEE
OF THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND ANY FURTHER QUALIFICATION
REQUIREMENTS UNDER APPLICABLE STATE LAW."

<PAGE>

8. STOCK FULLY PAID, RESERVATION OF SHARES. All Option Shares
that may be issued upon the exercise of the rights represented by this Option
and Common Stock will, upon issuance, be fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue thereof. The
Corporation agrees at all times during the Exercise Period to have authorized
and reserved, for the exclusive purpose of issuance and delivery upon exercise
of this Option, a sufficient number of shares of its Common Stock to provide for
the exercise of the rights represented hereby.

9. ADJUSTMENT OF OPTION EXERCISE PRICE AND NUMBER OF SHARES. The
number and kind of securities purchasable under the exercise of the Option, and
the Option Price shall be subject to adjustment from time to time on the same
day as the occurrence of certain events, as follows:

a. SUBDIVISIONS OR COMBINATIONS OF SHARES. If the
Corporation at any time while this Option remains outstanding and unexpired
shall subdivide or combine its Common Stock, the Option Exercise Price, and the
number of Shares issuable upon exercise hereof shall be proportionately
adjusted.

b. STOCK DIVIDENDS. If the Corporation at any time while
this Option is outstanding and unexpired shall pay a dividend payable in shares
of Common Stock (except as a distribution specifically provided for in the
foregoing subsection 9.a.) then the Option Exercise Price shall be adjusted,
from and after the date of determination of shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Option Exercise Price in effect immediately prior to such date of determination
by a fraction (i) the numerator of which shall be the total number of Shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of Shares of Common
Stock outstanding immediately after such dividend or distribution and the number
of Option Shares subject to this Option shall be proportionately adjusted.

c. NO IMPAIRMENT. The Corporation will not, by amendment
of its Articles of Incorporation or through any dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 9, and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of Optionee
against impairment.

<PAGE>

d. NOTICE OF ADJUSTMENTS. Whenever the Option Exercise
Price shall be adjusted pursuant to the provisions hereof, the Corporation shall
within thirty (30) days after such adjustment deliver a certificate signed by
its Chief Financial Officer to Optionee setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the Option Exercise Price, after
giving effect to such adjustment.

10. REPRESENTATIONS AND OPTIONS. This Option is issued and
delivered on the basis of the following:

a. CORPORATE AUTHORIZATION. This Option has been duly
authorized and executed by the Corporation, and when delivered will be the valid
and binding obligation of the Corporation, enforceable in accordance with the
terms hereof.

b. OPTION AUTHORIZATION. The Option has been duly
authorized by the Corporation and, when issued in accordance with the terms
hereof, will be validly issued.

c. ARTICLES OF INCORPORATION. The rights, preferences,
privileges and restrictions granted to or imposed upon the Shares of Common
Stock and Optionee are as set forth in the Corporation's Articles of
Incorporation, as amended, a true and complete copy of which has been delivered
to the Optionee.

d. RESERVATION OF SHARES. The Shares of Common Stock
issuable upon exercise of this Option have been duly authorized and reserved
and, when issued in accordance with the terms of the Corporation's Articles of
Incorporation, as amended, will be validly issued, fully paid and nonassessable.

e. DELIVERY. The execution and delivery of this Option
are not, and the issuance of the Shares upon exercise of this Option in
accordance with the terms hereof will not be, inconsistent with the
Corporation's Articles of Incorporation or Bylaws; do not and will not
contravene any law, governmental rule or regulation, judgment or order
applicable to the Corporation; and do not and will not contravene any provision
of, or constitute a default under, any indenture, mortgage, contract or other
instrument of which the Corporation is a party, or by which it is bound or
requires the consent or approval of, the giving of notice to, the registration
with or the taking of any action in respect of or by, any federal, state or
local government authority or agency, or other person, other than qualification
and filing of the appropriate notice with the California Department of
Corporations and a notice filing on Form D with the United States Securities and
Exchange

<PAGE>

Commission by the Corporation within fifteen calendar days following the date of
execution of this Option.

11. MISCELLANEOUS

a. SURVIVAL. Subject to Sections 2 a. and 2.b. herein,
the covenants and agreements made herein shall survive the Closing of the
transactions contemplated hereby and shall end upon the consummation of an IPO.

b. OPTION AGREEMENT. This Option and any other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between and among the parties with regard to the subjects hereof and
thereof.

c. GOVERNING LAW. This Option shall be governed by and
construed in accordance with the laws of the State of California, applicable to
contracts between California residents entered into and to be performed entirely
within the State of California.

d. DISPUTES. Any dispute arising out of the transactions
contemplated by this Option shall be adjudicated by a court of competent
jurisdiction sitting in the city of Tel Aviv/Jaffa, subject, in any event, to
the provisions of section 11.c. of this Option. The parties hereby submit
themselves to the exclusive jurisdiction of such courts for the purposes hereof.

e. SUCCESSORS AND ASSIGNES. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.

f. NOTICE. Any notice, payment, report or other
communication required or permitted to be given by one party to any other party
by this Option shall be in writing and either (i) served personally on the other
party or parties; (ii) sent by express, registered or certified first class
mail, postage prepaid, addressed to the other party or parties at its or their
address or addresses as indicated next to their signatures below, or to such
other address as any addressee shall have theretofore furnished to the other
parties by like notice; (iii) delivered by commercial courier to the other party
or parties; or (iv) sent by facsimile. Such notice shall be deemed received (A)
on the third day after sending if sent by one day courier; (B) to the extent
such day is a business as recognized by the country of sender's principal place
of business, on the day of transmission of such notice by facsimile, or, to the
extent such day is not a business as recognized by the country of sender's
principal place of business, on the first business day of the sender following
the day of

<PAGE>

transmission, in each case if the recipient has the capability to receive a
facsimile at its address, the sender has the capability of obtaining from its
facsimile machine a confirmation of transmission and the sender mails to the
recipient a copy of such confirmation by regular first class mail no later than
the next business day (as recognized by the country of sender's principal place
of business) following such transmission; and (C) upon receipt if sent by other
methods.

g. ATTORNEYS FEES. If either party to this Option shall
bring any action for any relief against the other, declaratory or otherwise,
arising out of this Option, the losing party shall pay to the prevailing party a
reasonable sum as determined by the court for attorneys fees incurred in
bringing such suit and/or enforcing any judgment granted therein, all of which
shall be deemed to have accrued upon the commencement of such action and shall
be paid whether or not such action is prosecuted to judgment. Any judgment or
order entered in such action shall contain a specific provision providing for
the recovery of attorneys fees and costs incurred in enforcing such judgment.
For the purposes of this section, attorneys fees shall include, without
limitation, fees incurred in the following: (1) post-judgment motions; (2)
contempt proceedings; (3) garnishment, levy and debtor and third-party
examinations; (4) discovery; and, (5) bankruptcy litigation.

Should judicial proceedings be commenced to enforce or carry out this
provision or any award or judgment in connection with this Option, the
prevailing party in such proceedings shall be entitled to reasonable attorneys'
fees and costs in addition to other relief. Either party shall have the right,
prior to receiving an arbitration award, to obtain preliminary relief from a
court of competent jurisdiction to avoid injury or prejudice to that party.

h. DESCRIPTIVE HEADINGS. The headings used herein are
descriptive only and for the convenience of identifying provisions, and are not
determinative of the meaning or effect of any such provisions.

AGREED BY UNDERSIGNED AND BINDING ON OPTIONEE THAT THIS OPTION
SUPERSEDES AND REPLACES ANY AND ALL EXISTING OPTIONS OF THE SAME NUMBER
OF OPTION SHARES.

Dated: August 17, 1997 NOGATECH, INC.

By: /s/ A. Heiman
Dr. Arie Heiman, President

<PAGE>

Exhibit 10.1.2

Option #___

THE SECURITIES REPRSENTED BY OR UNDERLYING THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH A
DISTRIBUTION THEREOF. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION AND QUALIFICATION WITHOUT AN OPINION OF LEGAL
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT ARE SUBJECT TO
RESTRICTIONS ON TRANSFER PURSUANT TO REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
EXCEPT PURSUANT TO THE PROVISIONS UNDER REGULATION S OR PURSUANT TO REGISTRATION
UNDER SUCH SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION.

THE OPTIONS AND OPTION SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT,
AND (i) THE OPTIONS AND THE OPTION SHARES MAY NOT BE EXERCISED, OFFERED OR SOLD
BY OR ON BEHALF OF U.S. PERSONS, (ii) THE OPTIONS MAY NOT BE EXERCISED IN THE
UNITED STATES AND (iii) THE OPTION SHARES MAY NOT BE DELIVERED IN THE UNITED
STATES UNLESS, IN EACH CASE, THERE IS A REGISTRATION STATEMENT IN EFFECT
GOVERNING THE OPTIONS AND OPTION SHARES OR THERE IS AVAILABLE AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

OPTION

In exchange for consideration the sufficiency of which is hereby
acknowledged by the parties hereto, the Corporation hereby grants to Hapoalim
Nechasim (Menayot) Ltd. ("Optionee"), a wholly owned subsidiary of Bank Hapoalim
B.M., the right to purchase from the Corporation up to Four Hundred and Eighty
Thousand Four Hundred Seventeen (480,417) shares of the Common Stock of the
Corporation (the "Option Shares"), subject to the following terms and
conditions:

1. TERM.

a. Subject to Sections 2 and 4 below, this Option may be
exercised at any time during the period beginning on the date hereof
and ending on May 1, 2001 (the "Exercise Period").

b. Notwithstanding anything to the contrary herein, this
Option shall only be exercisable so long as Bank Hapoalim B.M. makes
available or

<PAGE>

certifies its willingness to make available, to Nogatech Ltd., a
wholly-owned subsidiary of the Corporation, a continuous line of
credit of up to Two Million Dollars ($2,000,000), or such lower amount
(including zero) as is requested by the Corporation or Nogatech Ltd.

2. MATERIAL EVENTS.

a. INITIAL PUBLIC OFFERING. In the event that the Corporation
files a registration statement ("the Registration Statement") for an initial
public offering, on any recognized public securities exchange, including an
initial public offering pursuant to the Securities Act of 1933, as amended, of
the Corporation's Common Stock resulting in gross cash proceeds to the
Corporation in excess of Ten Million U.S. Dollars ($10,000,000) (the "IPO"), the
Corporation shall provide written notice of such filing to Optionee (the
"Corporation IPO Notice"). Within twenty (20) days after Optionee's receipt of
the Corporation IPO Notice (the "IPO Exercise Date"), Optionee must notify the
Corporation in accordance with Section 4 below if Optionee intends to exercise
this Option, which notice may state that such exercise shall be effective
contingent upon and immediately prior to the consummation of the IPO.
Thereafter, so long as the Corporation consummates the IPO within one hundred
and twenty (120) days after the filing of its Registration Statement (the "IPO
Closing Date"), Optionee shall have no further rights hereunder (other than the
completion of such exercise and the rights specified in Section 10 herein) and
this Option shall be terminated if not so exercised. If the Corporation fails to
consummate such IPO within such time, then to the extent this Option was not
exercised , such Option shall remain in effect subject to Sections 1 and 2.b.
herein and this Section 2.a. in the event of further filings of Registration
Statements for an IPO. During the period of time between the IPO Exercise date
and the IPO Closing Date, Optionee shall be prohibited from further exercising
this Option.

b. MERGER, TRANSFER OF ASSETS, OR CHANGE OF CONTROL. In the event (i)
of a bona fide transaction whereby the Corporation has received written terms
and an offer for a (A) merger or consolidation in which the Corporation is not
the consolidated or surviving corporation and the controlling shareholders (or
their affiliates) of the Corporation are not the controlling shareholders of the
surviving corporation; or (B) transfer of all or substantially all of the assets
of the Corporation; or (ii) the officers or directors of the Corporation receive
actual knowledge of a bona fide written offer which would result in a change in
the control of the Corporation from the sale or exchange of more than 51% of the
Corporation's outstanding voting securities (collectively, the "Corporate
Sale"), the Corporation shall provide Optionee written notice describing the
material terms of the Corporate Sale including without limitation, price (the
"Corporate Sale Notice"). Within twenty (20) days after Optionee's receipt of
the Corporate Sale Notice (the "Corporate Sale Exercise Date"), Optionee must
notify the Corporation in accordance with Section 4 below if Optionee intends to
exercise this Option, which notice may state that such exercise shall be
effective contingent upon and immediately prior to the consummation of the
Corporate Sale. Thereafter, so long as the Corporation or its shareholders
consummate the Corporate Sale within one hundred and twenty (120) days after
furnishing the Corporate Sale Notice to Optionee (the "Corporate Sale Closing
Date"), Optionee shall have no further rights hereunder (other than the
completion of such exercise and the rights specified in Section 10 herein) and
this Option shall be terminated if not so exercised. If the Corporation or its
shareholders fail to

-2-
<PAGE>

consummate the Corporate Sale within such time, then to the extent this Option
was not exercised, such Option shall remain in effect subject to Sections 1 and
2.a. herein and this Section 2.b. in the event of further Corporate Sales.
During the period of time between the Corporate Sale Exercise Date and the
Corporate Sale Closing Date, Optionee shall be prohibited from further
exercising this Option.

3. PURCHASE PRICE. The purchase price for each share of the
Corporation's Common Stock purchasable hereunder shall be One and 4.07628/100
U.S. Dollars (U.S. $1.0407628) (the "Option Exercise Price"), although this
Option shall only be exercisable pursuant to Section 4 (below).

4. EXERCISE OF OPTION. The Option may be exercised by Optionee as
follows:

a. OPTION EXERCISABLE IN INCREMENTS. Optionee may exercise
this Option, in whole or in increments of not less than Ten Thousand (10,000)
Option Shares, by providing written notice (the "Notice") to the Corporation of
exercise pursuant to the terms and conditions of Section 4.b. herein.

b. NON-U.S. PERSON. It shall be a condition to the exercise of
this Option that the Optionee certify to the Corporation, at the time of
exercise, either that he or it is not a U.S. Person (as defined in Regulation S
under the Securities Act of 1933, as amended (the "Securities Act") and that
this Option is not being exercised on behalf of a U.S. Person, or to provide an
opinion of counsel that the Option and the Option Shares to be delivered upon
exercise thereof have been registered under the Securities Act or that an
exemption from the registration requirements of the Securities Act is available.
It shall be a further condition to the exercise of this Option that the Option
may not be exercised in the United States and the Option Shares may not be
delivered to the United States absent registration under the Securities Act or
an available exemption from registration.

c. NOTICE OF EXERCISE. The Notice shall set forth the
Optionee's election to exercise the Option and the number of shares with respect
to which the Option is being exercised, and shall be signed by the Optionee. The
Notice, other than the notice required under Sections 2.a. and 2.b. herein
(collectively, the "Material Events Notices") , shall be accompanied by payment
of the appropriate exercise price in cash or a cash equivalent. The Option shall
be deemed exercised upon the Corporation's receipt of the Notice accompanied by
the appropriate exercise price. Payment f or Options exercised in connection
with the Material Events Notices (the "Material Events Options") shall be
delivered to the Corporation upon the earlier of (i) 60 days following receipt
from the Corporation of notice informing Optionee of the consummation date of
the IPO or Corporate Sale, as applicable, and (ii) the consummation date of the
IPO or Corporate Sale, as applicable.

Certificates for shares purchased hereunder shall be delivered to the Optionee
within thirty (30) business days after the date on which this Option shall have
been exercised as aforesaid other than the Material Events Options, but Optionee
shall be deemed the record owner of such Option Shares as of and from the date
on which the Notice, together with the payment, is received. Certificates for
shares purchased in connection with the Material Events Options hereunder shall
be delivered to the Optionee within thirty (30) business days after receipt of
payment therefor, but

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<PAGE>

Optionee shall be deemed the record owner of the related
Option Shares as of and from the date on which such payment is received.

d. NON-TRANSFERABLE. Notwithstanding anything to the contrary
herein, the Option is personal in nature and is non-transferable, except for
transfers to (a) any entity of which more than 50% of its outstanding voting
securities are controlled by Bank Hapoalim B.M, and (b) any third party to which
the Corporation gives its prior written consent.

5. FRACTIONAL INTEREST. The Corporation shall not be required to issue
any fractional shares on the exercise of this Option. Should the exercise of the
Option results in a fractional share, the Corporation shall pay the Optionee
concurrent with the issuance of the Option Shares, the value of such fractional
share.

6. OPTION CONFERS NO RIGHTS OF SHAREHOLDER. Optionee shall not have any
rights as a shareholder of the Corporation with regard to the Option Shares
prior to actual exercise resulting in the purchase of the Option Shares.

7. INVESTMENT REPRESENTATION. Neither this Option nor the Option Shares
issuable upon the exercise of this Option have been registered under the
Securities Act, or any state securities laws.. The Optionee acknowledges by
acceptance of the Option that as of the date of this Option and at the time of
exercise (a) Optionee has acquired this Option or the Option Shares, as the case
may be, for investment and not with a view to distribution; (b) Optionee has a
pre-existing personal or business relationship with the Corporation, or its
executive officers, or by reason of its business or financial experience
Optionee has the capacity to protect its own interests in connection with the
transaction; (c) Optionee is an accredited investor as that term is defined in
Regulation D promulgated under the Securities Act; and (d) Optionee meets all of
the requirements for a purchaser to qualify for exemption under Regulation S
promulgated under the Securities Act. Optionee acknowledges receiving Audited
Consolidated Financial Statements of the Corporation and Nogatech Ltd. for the
years ended December 31, 1996 and 1995, and internally prepared (unaudited)
Consolidated Financial Statements of the Corporation and Nogatech Ltd. for the
year ended December 31, 1997. Optionee further acknowledges and agrees that the
Corporation has made no representations as to the business or business success
of the Corporation or Subsidiary. Optionee agrees that the Option Shares
issuable upon exercise of this Option will be acquired for investment and not
with a view to distribution and such Option Shares will not be registered under
the Securities Act and applicable state securities laws and that such Option
Shares may have to be held indefinitely unless they are subsequently registered
or qualified under the Securities Act and applicable state securities laws; or,
based on an opinion of counsel reasonably satisfactory to the Corporation, an
exemption from such registration and qualification is available. Optionee, by
acceptance hereof, consents to the placement of the following restrictive
legends, or similar legends, on each certificate to be issued to Optionee by the
Corporation in connection with the issuance of such Option Shares:

"THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OR QUALIFIED

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<PAGE>

UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR LAWS COVERING SUCH SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THE SECURITIES SATISFACTORY TO THE CORPORATION,
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE
QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE LAW."

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER PURSUANT TO REGULATION S PROMULGATED UNDE R THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED EXCEPT
PURSUANT TO THE PROVISIONS UNDER REGULATION S OR PURSUANT TO REGISTRATION UNDER
SUCH SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH
REGISTRATION.

8. STOCK FULLY PAID, RESERVATION OF SHARES. All Option Shares that may
be issued upon the exercise of the rights represented by this Option and Common
Stock will, upon issuance, be fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issue thereof. The Corporation
agrees at all times during the Exercise Period to have authorized and reserved,
for the exclusive purpose of issuance and delivery upon exercise of this Option,
a sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented hereby.

9. ADJUSTMENT OF OPTION EXERCISE PRICE AND NUMBER OF SHARES. The number
and kind of securities purchasable under the exercise of the Option, and the
Option Price shall be subject to adjustment from time to time on the same day as
the occurrence of certain events, as follows:

a. SUBDIVISIONS OR COMBINATIONS OF SHARES. If the Corporation
at any time while this Option remains outstanding and unexpired shall subdivide
or combine its Common Stock, the Option Exercise Price, and the number of Shares
issuable upon exercise hereof shall be proportionately adjusted.

b. STOCK DIVIDENDS. If the Corporation at any time while this
Option is outstanding and unexpired shall pay a dividend payable in shares of
Common Stock (except as a distribution specifically provided for in the
foregoing subsection 9.a.) then the Option Exercise Price shall be adjusted,
from and after the date of determination of shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Option Exercise Price in effect immediately prior to such date of determination
by a fraction (i) the numerator of which shall be the total number of Shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of Shares of Common
Stock outstanding immediately after such dividend or distribution and the number
of Option Shares subject to this Option shall be proportionately adjusted.

c. NO IMPAIRMENT. The Corporation will not, by amendment of
its Articles of Incorporation or through any dissolution, issue or sale of
securities, or any

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<PAGE>

other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 9, and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of Optionee against impairment.

d. NOTICE OF ADJUSTMENTS. The Corporation shall provide
Optionee with written notice, at least twenty (20) days prior to an adjustment
of the Option Exercise Price pursuant to the provisions hereof. To the extent
the Option has not been exercised, in whole or in part, the Corporation shall,
within thirty (30) days after such adjustment, deliver a certificate signed by
its Chief Financial Officer to Optionee setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the Option Exercise Price, after
giving effect to such adjustment.

10. Piggyback Registration

a. THE CORPORATION'S OBLIGATION TO REGISTER. At any time
beginning immediately after the exercise of the Option, in whole or in part, and
ending 3 years after the consummation of an initial public offering of the
Corporations capital stock pursuant to the Securities Act, if the Corporation at
any time proposes to initiate a registration of its securities under the
Securities Act on its own or upon request of other shareholders, and thereafter
registers any of its securities under the Securities Act (other than a
registration effected solely to implement an employee benefit plan, to effect an
exchange, merger or acquisition of shares pursuant to Form S-4 or equivalent
form, a transaction effected in order to comply with Rule 145 of the United
States Securities and Exchange Commission or any other United States federal
agency at the time administering the Securities Act ("Commission"), or any other
form or type of registration in which Option Shares cannot be included pursuant
to Commission rule), it will give written notice to the Optionee of its
intention to do so at least twenty (20) days prior to the filing of any such
registration (stating the intended method and terms of disposition of such
stock, including a list of the jurisdictions in which the Corporation intends to
qualify such stock). Upon the written request from the Optionee within fifteen
(15) days after receipt of the Corporation's notice to the Optionee subject to
the limits contained in this Section, the Corporation shall afford the Optionee
an opportunity to include in such registration all or any part of the Option
Shares then held by the Optionee to the extent requisite to permit such sale or
other disposition by the Optionee of the Option Shares so registered and to the
extent permissible under applicable securities laws. All expenses in connection
with such registration shall be borne by the Corporation, except that the
Optionee shall bear its pro rata share of underwriters' commissions and
discounts. .

b. CUTBACKS. In connection with an offering involving an
underwriting of shares of the Corporation's capital stock, the Corporation shall
not be required under Section 10.a. to include any of the Optionees Option
Shares in such underwriting unless the Optionee accepts the terms of the
underwriting as agreed upon between the Corporation and the underwriters
selected by it, and then only in such quantity as the underwriters determine in
their sole discretion will not jeopardize the success of the offering by the
Corporation. If the underwriter managing such registration notifies the Optionee
in writing that market or economic

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<PAGE>

conditions limit the amount of securities which may reasonably be expected to be
sold, the Optionee will only be allowed to register such number of Option Shares
as permitted by the underwriters up to the maximum amount requested by the
Optionee, and in proportion to the number of shares held by all the security
holders of the Corporation entitled to any registration rights and included in
such registration.

11. REPRESENTATIONS AND OPTIONS. The Corporation represents and
warrants to the Optionee as follows:

b. OPTION AUTHORIZATION. The Option has been duly authorized
by the Corporation and, when issued in accordance with the terms hereof, will be
validly issued.

c. ARTICLES OF INCORPORATION. The rights, preferences,
privileges and restrictions granted to or imposed upon the Shares of Common
Stock are as set forth in the Corporation's Articles of Incorporation, as
amended, a true and complete copy of which has been delivered to the Optionee.

d. RESERVATION OF SHARES. The Shares of Common Stock issuable
upon exercise of this Option have been duly authorized and reserved and, when
issued in accordance with the terms of the Corporation's Articles of
Incorporation, as amended, will be validly issued, fully paid and nonassessable,
and not subject to any preemptive rights.

e. DELIVERY. The execution and delivery of this Option are
not, and the issuance of the Shares upon exercise of this Option in accordance
with the terms hereof will not be, inconsistent with the Corporation's Articles
of Incorporation as currently in effect; do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to the
Corporation; and do not and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument of which
the Corporation is a party, or by which it is bound or requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
action in respect of or by, any federal, state or local government authority or
agency, or other person, other than qualification and filing of the appropriate
notice with the California Department of Corporations and a notice filing on
Form D with the United States Securities and Exchange Commission by the
Corporation within fifteen calendar days following the date of execution of this
Option.

12. MISCELLANEOUS

a. SURVIVAL. Subject to Sections 2 a. and 2.b. herein, the
covenants and agreements made herein shall survive the Closing of the
transactions contemplated hereby..

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<PAGE>

c. GOVERNING LAW. This Option shall be governed by and be
construed in accordance with the laws of the State of California, applicable to
contracts between California residents entered into and to be performed entirely
within the State of California.

e. SUCCESSORS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, heirs, executors and administrators of the parties hereto.

f. NOTICE. Any notice, payment, report or other communication
required or permitted to be given by one party to any other party by this Option
shall be in writing and either (i) served personally on the other party; (ii)
sent by express, registered or certified air mail, postage prepaid, addressed to
the other party at its address as indicated next to its signatures below, or to
such other address as any addressee shall have theretofore furnished to the
other parties by like notice; (iii) delivered by commercial courier to the other
party or parties; or (iv) sent by facsimile. Such notice shall be deemed
received (A) on the third day after sending if sent by one day courier; (B) to
the extent such day is a business as recognized by the country of sender's
principal place of business, on the day of transmission of such notice by
facsimile, or, to the extent such day is not a business as recognized by the
country of sender's principal place of business, on the first business day of
the sender following the day of transmission, in each case if the recipient has
the capability to receive a facsimile at its address, the sender has the
capability of obtaining from its facsimile machine a confirmation of
transmission and the sender mails to the recipient a copy of such confirmation
by regular air mail no later than the next business day (as recognized by the
country of sender's principal place of business) following such transmission;
and (C) upon receipt if sent by other methods.

g. ATTORNEYS FEES. If either party to this Option shall bring
any action for any relief against the other, declaratory or otherwise, arising
out of this Option, the losing party shall pay to the prevailing party a
reasonable sum as determined by the court for attorneys fees incurred in
bringing or defending such suit and/or enforcing any judgment granted therein,
all of which shall be deemed to have accrued upon the commencement of such
action and shall be paid whether or not such action is prosecuted to judgment.
Any judgment or order entered in such action shall contain a specific provision
providing for the recovery of attorneys fees and costs incurred in enforcing
such judgment. For the purposes of this section, attorneys fees shall include,
without limitation, fees incurred in the following: (1) post-judgment motions;
(2) contempt proceedings; (3) garnishment, levy and debtor and third-party
examinations; (4) discovery; and, (5) bankruptcy litigation.

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<PAGE>

h. DESCRIPTIVE HEADINGS. The headings used herein are
descriptive only and for the convenience of identifying provisions, and are not
determinative of the meaning or effect of any such provisions.

Dated: June 24 , 1998 NOGATECH, INC.
-------------------
By: /s/ Nathan Hod
Nathan Hod, Chairman
of the Board

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<PAGE>

EXHIBIT 10.1.4

STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (this "Agreement"), is entered into as of
June 30, 1995, by and between NATHAN HOD (the "Optionee") and NOGATECH, INC.,
a California corporation (the "Corporation").

RECITALS

A. The Corporation wishes to sell to the Optionee an option (the
"Option") to purchase seven hundred thousand (700,000) shares of the
Corporation's Common Stock (the "Shares") under the terms and conditions
described below.

B. The Optionee wishes to purchase such an Option.

AGREEMENT

NOW, THEREFORE, in exchange for the consideration set forth below, the
sufficiency of which is hereby acknowledged, the parties agree as follows:

A. OPTIONEE'S PAYMENT FOR THE OPTION. Upon execution of this Agreement,
the Optionee shall pay the Corporation Five Thousand Dollars ($5,000) for the
Option.

1. GRANT OF THE OPTION. The Corporation hereby grants to the
Optionee the Option to purchase the Shares, subject to the terms and
conditions contained herein.

2. TERM OF THE OPTION. The Option shall remain in effect for a
period of five (5) years commencing with the date of this Agreement. The
Option shall only be exercisable by the Optionee if prior to August 31, 1995,
DSP Group, Inc., a Delaware corporation ("DSPG") has sold all of its shares
of the Corporation to a third party.

3. PARTIAL EXERCISE PERMITTED. The Optionee shall be allowed to
exercise the Option with respect to some or all of the Shares covered by the
Option. The Optionee's exercise of the Option with respect to fewer than all
of the Shares shall not terminate the Optionee's rights hereunder with
respect to the remaining Shares subject to the Option.

4. EXERCISE PRICE. The exercise price for the purchase of Shares
under the Option shall be six and 25/100 cents ($0.0625) per Share for each
Share subject to the Option.

5. METHOD OF EXERCISE.

<PAGE>

a. DELIVERY OF NOTICE AND EXERCISE PRICE. The Optionee may
exercise the Option, in whole or in part, by providing written notice (the
"Notice") to the Corporation of exercise. The Notice shall set forth the
Optionee's election to exercise the Option and the number of shares with
respect to which the Option is being exercised, and shall be signed by the
Optionee. The Notice shall be accompanied by payment of the appropriate
exercise price, after taking into account the credit described in Section 6.b
(below), in cash or a cash equivalent. The Option shall be deemed exercised
upon the Corporation's receipt of the Notice accompanied by the appropriate
exercise price.

b. CREDIT FOR PRIOR PAYMENT. The Optionee shall receive
credit, in determining the price payable upon exercise of the Option, for the
Five Thousand Dollars ($5,000) payment Optionee furnishes the Corporation
pursuant to Section 1 (above). The amount of such credit which the Optionee
may apply to the purchase of any share subject to the Option shall equal Six
and 25/100 cents ($0.0625).

c. NO RIGHTS AS SHAREHOLDER UNTIL SHARES ARE ISSUED. The
Corporation shall issue Shares to the Optionee promptly upon the Optionee's
exercise of the Option. The Optionee shall not have rights as a shareholder
with respect to such Shares until such Shares are issued.

d. INVESTMENT REPRESENTATIONS. The Optionee shall provide
such investment representations in connection with his exercise of the Option
as the Corporation shall reasonably request.

6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The number of the
Corporation's Common Stock Shares subject to the Option, as well as the
exercise price for each of such Shares, shall be proportionately adjusted for
any increase or decrease in the number of issued Shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares of Common Stock effected without
receipt of consideration by the Corporation.

7. MISCELLANEOUS.

a. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California and, where
appropriate, applicable federal law.

b. ATTORNEYS' FEES; COSTS. In the event a party breaches
this Agreement, the breaching party shall pay all costs and attorneys' fees
incurred by the other party in connection with such breach, whether or not
any arbitration or litigation is commenced.

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<PAGE>

c. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which may be executed by less than all of the
parties, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.

d. DESCRIPTIVE HEADINGS. The headings used herein and in
any of the documents attached hereto as schedules, lists or exhibits, if any,
are descriptive only and for the convenience of identifying provisions, and
are not determinative of the meaning or effect of any such provisions.

e. FURTHER DOCUMENTS. The parties shall execute any and
all further instruments and documents, and take any and all actions,
reasonably necessary or advisable and proper to carry out the intent and
purpose of this Agreement.

f. NOTICES. Any notice required or permitted under this
Agreement shall be in writing and shall be delivered to the following
addresses:

If to the Corporation:

NOGATECH, INC.
3120 Scott Boulevard
Santa Clara, California 95054

With a copy to:

Stephen P. Pezzola, Esq.
PEZZOLA & REINKE, APC
1999 Harrison Street, Ste. 1300
Oakland, California 94612

If to the Optionee:

Nathan Hod
1035 Aster Ave., No. 2205
Sunnyvale, California 94086

g. SEVERABILITY. If any provision of this Agreement is
held to be void or unenforceable, the rest of the Agreement shall remain in
effect.

h. SUCCESSORS AND ASSIGNS. Subject to any provisions
herein with regard to assignment, all covenants and agreements herein shall
bind and inure to the benefit of the respective heirs, executors,
administrators, successors and assigns of the parties hereto.

i. VENUE. Any action or proceeding arising directly or
indirectly from this Agreement shall be litigated in an

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<PAGE>

appropriate state or federal court in the County of Santa Clara, State of
California.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first written above.

CORPORATION: OPTIONEE:

NOGATECH, INC. NATHAN HOD

By /s/ F. Judson Mitchell /s/ Nathan Hod
----------------------------------- --------------------------------------
(Signature) (Signature)

F. Judson Mitchell
- -------------------------------------
(Print Name & Title)

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<PAGE>

Exhibit 10.2

NOGATECH DELAWARE, INC.

FORM OF INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("Agreement") is effective as of
October ___, 1999, by and between Nogatech , Inc., a Delaware corporation
(the "Company") and ____________________ ("Indemnitee").

WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;

WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and
directors to expensive litigation risks at the same time as the availability
and coverage of liability insurance has been severely limited;

WHEREAS, Indemnitee does not regard the current protection available
as adequate under the present circumstances, and the Indemnitee and other
officers, directors and key personnel of the Company may not be willing to
continue to serve in such capacities without additional protection;

WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and,
in part, in order to induce Indemnitee to continue to provide services to the
Company, wishes to provide for the indemnification and advancing of expenses
to Indemnitee to the maximum extent permitted by law; and

WHEREAS, in view of the considerations set forth above, the Company
desires that effective as of the date hereof, Indemnitee shall be indemnified
by the Company as set forth herein.

NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

1. INDEMNIFICATION.

(a) THIRD PARTY PROCEEDINGS. The Company shall indemnify
Indemnitee to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any threatened, pending
or completed action, suit, arbitration or proceeding, whether civil,
criminal, administrative or investigative or other (other than an action or
suit by or in the right of the Company or any subsidiary of the Company) or
any inquiry or investigation that Indemnitee in good faith believes might
lead to the institution of any such action, suit, arbitration or proceeding,
whether civil, criminal, administrative, investigative or other, by reason of
(or arising in part out of) any event or occurrence related to the fact that
Indemnitee (i) is or was a director, officer, employee, agent or fiduciary of
the Company or any subsidiary of the Company, (ii) is or was serving at the
request of the Company as a director, officer, employee, agent or

<PAGE>

fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or (iii) by reason of any action or inaction on the part of
Indemnitee while serving in any such capacity, against any and all expenses
(including reasonable attorneys' fees) and all other costs, expenses and
obligations paid or incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or preparing to
defend, be a witness in or participate in, any such action, suit,
arbitration, proceeding, inquiry or investigation, judgment, fines, penalties
and amounts paid in settlement (if such settlement is approved in advance by
the Company, which approval shall not be unreasonably withheld), including
all interest, assessments and other charges paid or payable in connection
therewith or in respect thereof (collectively, hereinafter "Expenses"), in
each case to the extent actually and reasonably incurred by Indemnitee, if
Indemnitee acted in good faith and in a manner Indemnitee reasonably beleved
to be in or not opposed to the best interests of the Company or any
subsidiary of the Company, as applicable, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe Indemnitee's conduct
was unlawful. The termination of any action, suit, arbitration or
proceeding, inquiry or investigation by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not,
in and of itself, create a presumption that Indemnitee did not act in good
faith and in a manner which Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company or any subsidiary of the
Company, as applicable, or, with respect to any criminal action or
proceeding, that Indemnitee's had reasonable cause to believe that
Indemnitee's conduct was unlawful.

(b) PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The
Company shall indemnify Indemnitee to the fullest extent permitted by law if
Indemnitee was or is or becomes a party to or witness or other participant
in, or is threatened to be made a party to or witness or other participant
in, any threatened, pending or completed action or suit by or in the right of
the Company, any subsidiary of the Company or Old Nogatech to procure a
judgment in its favor by reason of any event or occurrence related to the
fact that Indemnitee (i) is or was a director, officer, employee, agent or
fiduciary of the Company, any subsidiary of the Company, (ii) is or was
serving at the request of the Company as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, trust or
other enterprise, or (iii) by reason of any action or inaction on the part of
Indemnitee while serving in any such capacity, against any and all Expenses
and, to the fullest extent permitted by law, amounts paid in settlement of
any such action or suit, in each case to the extent actually and reasonably
incurred by Indemnitee, if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests
of the Company or any subsidiary of the Company, as applicable, except that
no indemnification shall be made in respect of any claim, issue or matter as
to which Indemnitee shall have been adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit is brought shall determine
upon application that, in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses
and then only to the extent that the Court of Chancery of the State of
Delaware or such other court shall determine.

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<PAGE>

(c) MANDATORY PAYMENT OF EXPENSES. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit,
arbitration, proceeding, inquiry or investigation referred to in Section
(l)(a) or (b) hereof or in the defense of any claim, issue or matter therein,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.

2. EXPENSES; INDEMNIFICATION PROCEDURE.

(a) ADVANCEMENT OF EXPENSES. The Company shall advance all
Expenses and, to the fullest extent permitted by law, amounts paid in
settlement of any action, suit, arbitration, proceeding, inquiry or
investigation referred to in Section (l)(a) or (b) hereof. Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined by a final judicial determination (as to which
all rights of appeal therefrom have been exhausted or lapsed) that Indemnitee
is not entitled to be indemnified by the Company as authorized hereby. The
advances to be made hereunder shall be paid by the Company to Indemnitee
within twenty (20) days after receipt of the written request of the
Indemnitee.

(b) NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as
a condition precedent to Indemnitee's right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
claim made against Indemnitee for which indemnification will or could be
sought under this Agreement. Notice to the Company shall be directed to the
Chief Executive Officer of the Company at the address shown on the signature
page of this Agreement (or such other address as the Company shall designate
in writing to Indemnitee). Notice shall be deemed received five (5) business
days after the date postmarked if sent by domestic certified or registered
mail, properly addressed; otherwise notice shall be deemed received when such
notice shall actually be received by the Company. In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.

(c) PROCEDURE. Any indemnification and advances provided
for in Section 1 and this Section 2 shall be made no later than thirty (30)
and twenty (20) days, respectively, after receipt of the written request of
Indemnitee. If a claim under this Agreement, under any statute, or under any
provision of the Company's Certificate of Incorporation or Bylaws providing
for indemnification, is not paid in full by the Company within thirty (30)
days after a written request for payment thereof has first been received by
the Company, Indemnitee may, but need not, at any time thereafter bring an
action against the Company to recover the unpaid amount of the claim and,
subject to Section 14 of this Agreement, Indemnitee shall also be entitled to
be paid for the Expenses of bringing such action. It shall be a defense to
any such action (other than an action brought to enforce a claim for Expenses
incurred in connection with any action, suit, arbitration, proceeding,
inquiry or investigation in advance of its final disposition) that Indemnitee
has not met the standards of conduct or did not have such belief which make
it permissible under applicable law for the Company to indemnify Indemnitee
for the amount claimed, but the burden of proving such defense shall be on

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<PAGE>

the Company, and Indemnitee shall be entitled to receive interim payments of
Expenses pursuant to Section 2(a) unless and until such defense may be
determined by a final judicial determination (as to which all rights of
appeal therefrom have been exhausted or lapsed). It is the parties'
intention that if the Company contests Indemnitee's right to indemnification,
the question of Indemnitee's right to indemnification shall be for the court
to decide, and neither the failure of the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because
Indemnitee has met any applicable standard of conduct or hd any particular
belief, nor an actual determination by the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel or its stockholders) that Indemnitee has not met such standard
of conduct or did not have such belief, shall create a presumption that
Indemnitee has or has not met the applicable standard of conduct or did not
have any particular belief.

(d) NOTICE TO INSURERS. If, at the time of the receipt by
the Company of a notice of a claim pursuant to Section 2(b) hereof, the
Company has officers' and directors' liability insurance in effect, the
Company shall give prompt notice of the commencement of the action, suit,
arbitration, proceeding, inquiry or investigation relating to the claim, to
the insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable
action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such action, suit, arbitration, proceeding,
inquiry or investigation in accordance with the terms of such policies.

(e) SELECTION OF COUNSEL. In the event the Company shall be
obligated under Section 2(a) hereof to pay the Expenses of any action, suit,
arbitration, proceeding, inquiry or investigation against Indemnitee, the
Company, if appropriate, shall be entitled to assume the defense of such
action, suit, arbitration, proceeding, inquiry or investigation, with counsel
approved by Indemnitee, upon the delivery to Indemnitee of written notice of
its election so to do. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to Indemnitee under this Agreement for any fees of
counsel subsequently incurred by Indemnitee with respect to the same action,
suit, arbitration, proceeding, inquiry or investigation; provided that, (i)
Indemnitee shall have the right to employ Indemnitee's counsel in any such
action, suit, arbitration, proceeding, inquiry or investigation at
Indemnitee's expense and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense or (C) the Company
shall not continue to retain such counsel to defend such action, suit,
arbitration, proceeding, inquiry or investigation, then the fees and Expenses
of Indemnitee's counsel shall be at the expense of the Company.

3. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.

(a) SCOPE. The Company hereby agrees to indemnify the
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not

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<PAGE>

specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's Bylaws or by statute.
In the event of any change after the date of this Agreement in any applicable
law, statute or rule which expands the right of a Delaware corporation to
indemnify a member of its board of directors or an officer, employee, agent
or fiduciary of the Company, or any subsidiary of the Company, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change. In the event of any change
in any applicable law, statute or rule which narrows the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary of the Company, or any subsidiary of the
Company, such change, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement, shall have no effect on this
Agreement or the parties' rights and obligations hereunder.

(b) NONEXCLUSIVITY. The indemnification provided by this
Agreement shall be in addition to any rights to which Indemnitee may be
entitled under the Company's Certificate of Incorporation, its Bylaws, any
agreement, any vote of stockholders or disinterested directors, the General
Corporation Law of the State of Delaware, or otherwise, both as to action in
Indemnitee's official capacity and as to action in any other capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken or not taken while serving in
an indemnified capacity even though Indemnitee may have ceased to serve in
such capacity at the time of any such action, suit, arbitration, proceeding,
inquiry or investigation or other covered proceeding.

4. NO DUPLICATION OF PAYMENTS. The Company shall not be liable
under this Agreement to make any payment in connection with any action, suit,
arbitration, proceeding, inquiry or investigation against Indemnitee to the
extent Indemnitee has otherwise actually received payment (under any
insurance policy, Bylaw or otherwise) of the amounts otherwise indemnifiable
hereunder.

5. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses reasonably incurred by Indemnitee in the
investigation, defense, appeal or settlement of any civil or criminal action,
arbitration, or any other proceeding, but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled.

6. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee
acknowledge that in certain instances, Federal law or applicable public
policy may prohibit the Company from indemnifying its directors and officers
under this Agreement or otherwise. Indemnitee understands and acknowledges
that the Company has undertaken or may be required in the future to undertake
with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of
the Company's right under public policy to indemnify Indemnitee.

7. CONTRIBUTION. If the indemnification provided in this
Agreement is unavailable and may not be paid to Indemnitee for any reason
other than statutory

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<PAGE>

limitations set forth in the Delaware General Corporation Law, then in
respect of any threatened, pending or completed action, suit, arbitration,
proceeding, inquiry or investigation in which the Company or any subsidiary
of the Company, as applicable,is jointly liable with Indemnitee (or would be
if joined in such action, suit, arbitration, proceeding, inquiry or
investigation), the Company shall contribute to the amount of Expenses
actually and reasonably incurred and paid or payable by Indemnitee in such
proportion as is appropriate to reflect (i) the relative benefits received by
the Company or any subsidiary of the Company, as applicable, on the one hand
and Indemnitee on the other hand from the transaction from which such action,
suit, arbitration, proceeding, inquiry or investigation arose, and (ii) the
relative fault of the Company or any subsidiary of the Company, as
applicable, on the one hand and of Indemnitee on the other in connection with
the events which resulted in such Expenses, as well as any other relevant
equitable considerations. The relative fault of the Company or any
subsidiary of the Company, as applicable, on the one hand and of Indemnitee
on the other shall be determined by reference to, among other things, the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent the circumstances resulting in such Expenses. The Company
agrees that it would not be just and equitable if contribution pursuant to
this Section 7 were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.

8. OFFICERS' AND DIRECTORS' LIABILITY INSURANCE.

(a) INITIAL COVERAGE. The Company shall, from time to time,
make the good faith determination whether or not it is practicable for the
Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the
Company's performance of its indemnification obligations under this
Agreement. Among other considerations, the Company will weigh the costs of
obtaining such insurance coverage against the protection afforded by such
coverage. To the extent the Company maintains officers' and directors'
liability insurance, Indemnitee shall be covered by such policies in such a
manner as to provide Indemnitee the same rights and benefits as are accorded
to the most favorably insured of the Company's directors, if Indemnitee is a
director; or of the Company's officers, if Indemnitee is not a director of
the Company but is an officer; or of the Company's key employees, if
Indemnitee is not an officer or director but is a key employee.
Notwithstanding the foregoing, the Company shall have no obligation to obtain
or maintain such insurance if (a) the Company determines in good faith that
(i) such insurance is not reasonably available, (ii) the premium costs for
such insurance are disproportionate to the amount of coverage provided or
(iii) the coverage provided by such insurance is limited by exclusions so as
to provide an insufficient benefit, or (B) Indemnitee is covered by similar
insurance maintained by a subsidiary or parent of the Company.

(b) NOTICE UPON TERMINATION. In the event that the
insurance coverage provided in Section 8(a) is canceled or will not be
renewed or replaced by the Company because the Company has determined in good
faith that such insurance is not reasonably available, that the premium costs
for such insurance are disproportionate to the amount of coverage provided,
that the coverage provided by

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<PAGE>

such insurance is limited by the exclusions so as to provide an insufficient
benefit, or otherwise, then the Company shall notify the Indemnitee in
writing within fifteen (15) days after the date that such insurance is
canceled or the date the decision not to renew or replace such insurance is
made.

(c) "TAIL" COVERAGE. In the event that the insurance
coverage provided in Section 8(a) is canceled or will not be renewed or
replaced, the Company will make the good faith determination whether or not
it is practicable for the Company to obtain and maintain a "tail" insurance
policy or policies with reputable insurance companies providing the officers
and directors of the Company with coverage for losses for wrongful acts, or
to assure the Company's performance of its indemnification obligations under
this Agreement. Among other considerations, the Company will weigh the costs
of obtaining such insurance coverage against the protection afforded by such
coverage.

9. SEVERABILITY. Nothing in this Agreement is intended to require
or shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court
order, to perform its obligations under this Agreement shall not constitute a
breach of this Agreement. The provisions of this Agreement shall be
severable as provided in this Section 9. If this Agreement or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the
full extent permitted by any applicable portion of this Agreement that shall
not have been invalidated, and the balance of this Agreement not so
invalidated shall be enforceable in accordance with its terms.

10. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

(a) EXCLUDED ACTION OR OMISSIONS. To indemnify Indemnitee
for acts, omissions or transactions from which Indemnitee may not be relieved
of liability under applicable law; or

(b) CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
Expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except (i) with
respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law, (ii) in
specific cases if the Board of Directors has approved the initiation or
bringing of such proceedings or claims or (iii) as otherwise required under
Section 145 of the Delaware General Corporation Law; or

(c) LACK OF GOOD FAITH. To indemnify Indemnitee for any
Expenses incurred by the Indemnitee with respect to any proceeding instituted
by Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

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<PAGE>

(d) CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for
Expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.

11. CONSTRUCTION OF CERTAIN PHRASES.

(a) For purposes of this Agreement, references to the
"Company" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
employees, agents or fiduciaries, so that if Indemnitee is or was a director,
officer, employee, agent or fiduciary of such constituent corporation, or is
or was serving at the request of such constituent corporation as a director,
officer, employee, agent or fiduciary of another corporation, partnership,
joint venture, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting
or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.

(b) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on Indemnitee with respect to an
employee benefit plan; and references to "serving at the request of the
Company" shall include any service as a director, officer, employee, agent or
fiduciary of the Company which imposes duties on, or involves services by,
such director, officer, employee, agent or fiduciary with respect to an
employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan, Indemnitee shall be deemed to have acted in a manner "not
opposed to the best interests of the Company," as referred to in this
Agreement.

12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors (including any direct or indirect successor of the Company by
purchase, merger, consolidation or otherwise to all or substantially all the
business and/or assets of the Company), assigns, estates, spouses, heirs,
executors and personal and legal representatives.

14. EXPENSES AND ATTORNEYS' FEES. In the event that any action is
instituted by Indemnitee under this Agreement, or under any directors' and
officers' liability insurance policy maintained by the Company, to enforce or
interpret any of the terms hereof or thereof, Indemnitee shall be entitled to
be paid all court costs and Expenses incurred by Indemnitee with respect to
such action and shall be entitled to the advancement of such costs and
Expenses with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, unless as a part of such

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<PAGE>

action the court having jurisdiction over such action determines that each of
the material assertions made by Indemnitee as a basis for such action was not
made in good faith or was frivolous. In the event of an action instituted by
or in the name of the Company under this Agreement to enforce or interpret
any of the terms of this Agreement, Indemnitee shall be entitled to be paid
all court costs and Expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including reasonable costs and Expenses
incurred with respect to Indemnitee's counterclaims and cross-claims made in
such action) and shall be entitled to the advancement of such costs and
Expenses with respect to such action, unless as a part of such action the
court having jurisdiction over such action determines that each of
Indemnitee's material defenses to such action were made in bad faith or were
frivolous.

15. NOTICE. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed
duly given (i) if delivered by hand and receipted for by the party addressee,
on the date of such receipt or (ii) if mailed by domestic certified or
registered mail with postage prepaid, on the fifth business day after the
date postmarked. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written
notice.

16. CONSENT TO JURISDICTION. The Company and Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action, suit, arbitration,
proceeding, inquiry or investigation which arises out of or relates to this
Agreement and agree that any action, suit, arbitration, proceeding, inquiry
or investigation instituted under this Agreement shall be commenced,
prosecuted and continued only in the Court of Chancery of the State of
Delaware in and for New Castle County, which shall be the exclusive and only
proper forum for adjudicating such a claim.

17. CHOICE OF LAW. This Agreement shall be governed by and its
provisions construed and enforced in accordance with the laws of the State of
Delaware, as applied to contracts between Delaware residents, entered into
and to be performed entirely within the State of Delaware, without regard to
the conflict of laws principles thereof.

18. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all documents required
and shall do all acts that may be necessary to secure such rights and to
enable the Company effectively to bring suit to enforce such rights.

19. CONTINUATION OF INDEMNIFICATION. All agreements and obligations
of the Company contained herein shall continue during the period that
Indemnitee is a director, officer or agent of the Company and shall continue
thereafter so long as Indemnitee shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative, by reason of the
fact that Indemnitee was serving in the capacity referred to herein.

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<PAGE>

20. AMENDMENT AND TERMINATION. Subject to Section 19, no
amendment, modification, termination or cancellation of this Agreement shall
be effective unless it is in writing signed by both the parties hereto.

21. WAIVER. No failure or delay on the part of the Company or
Indemnitee in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of
any other right or power.

22. HEADINGS. Section headings used herein are for convenience of
reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.

23. INTEGRATION AND ENTIRE AGREEMENT; NO IMPLIED RIGHT OF
EMPLOYMENT. This Agreement sets forth the entire understanding between the
parties hereto and supersedes and merges all previous written and oral
negotiations, commitments, understandings and agreements relating to the
subject matter hereof between the parties hereto. Nothing contained in this
Agreement is intended to create in Indemnitee any right to continued
employment.

24. CONFLICT OF INTEREST. Indemnitee acknowledges that Bay Venture
Counsel, LLP ("BVC"), is the general corporate counsel to the Corporation and
waives any conflicts associated therewith, and hereby consents to BVC's role
hereunder notwithstanding its position as the Corporation's law firm in
drafting this Agreement and advising the Corporation with respect to this
Agreement. Indemnitee acknowledges that BVC has advised Indemnitee to seek
independent counsel to advise him as to matters relating to this Agreement.

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<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

NOAGATECH , INC.

By:
---------------------------------
Arie Heiman, President and
Chief Executive officer

AGREED TO AND ACCEPTED:

INDEMNITEE:

(Signature)

- ---------------------------------
(Name of Indemnitee)

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

- ---------------------------------
(Address)

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<PAGE>

EXHIBIT 10.3

NOGATECH, INC.

1999 STOCK OPTION PLAN

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,
Directors and Consultants of the Company and its Subsidiaries and to promote
the success of the Company's business. Options granted under the Plan may be
Incentive Stock Options or Non-Qualified Stock Options, as determined by the
Administrator at the time of grant. The Company wishes the issuance of
options to its employees in Israel to conform with the requirements of
Section 102 of the Israeli Income Tax Ordinance, and for this purpose the
appended document Annex A amends this plan to so conform.

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

a. "ADMINISTRATOR" means the Board or any of the Committees
appointed to administer the Plan.

b. "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act.

c. "APPLICABLE LAWS" means the legal requirements relating
to the administration of stock option plans, if any, under applicable
provisions of federal securities laws, state corporate and securities laws,
the Code, the rules of any applicable stock exchange or national market
system, and the rules of any foreign jurisdiction applicable to Options
granted to residents therein.

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

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

f. "COMMITTEE" means any committee appointed by the Board
to administer the Plan.

g. "COMMON STOCK" means the common stock of the Company.

h. "COMPANY" means Nogatech, Inc., a Delaware corporation.

i. "CONSULTANT" means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services
as an independent contractor and is compensated for such services.

j. "CONTINUING DIRECTORS" means members of the Board who
either (i) have been Board members continuously for a period of at least
thirty-six (36) months or (ii) have been Board members for less than
thirty-six (36) months and were elected or nominated for election as Board
members by at least a majority of the Board members described in clause (i)
who were still in office at the time such election or nomination was approved
by the Board.

<PAGE>

k. "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT" means that the employment, director or consulting relationship
with the Company, any Parent, or Subsidiary, is not interrupted or
terminated. Continuous Status as an Employee, Director or Consultant shall
not be considered interrupted in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. A leave
of absence approved by the Company shall include sick leave, military leave,
or any other personal leave approved by an authorized representative of the
Company. For purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract.

l. "CORPORATE TRANSACTION" means any of the following
stockholder-approved transactions to which the Company is a party:

i. a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;

ii. the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock
of the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company; or

iii. any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding
securities are transferred to a person or persons different from those who
held such securities immediately prior to such merger.

m. "COVERED EMPLOYEE" means an Employee who is a covered
employee under Section 162(m)(3) of the Code.

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

o. "EMPLOYEE" means any person, including an Officer or
Director, who is an employee of the Company or any Parent or Subsidiary of
the Company for purposes of Section 422 of the Code. The payment of a
director's fee by the Company shall not be sufficient to constitute
employment by the Company.

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

q. "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:

i. Where there exists a public market for the Common
Stock, the Fair Market Value shall be (A) the closing sales price for a Share
for the last market trading day prior to the time of the determination (or,
if no sales were reported on that date, on the last trading date on which
sales were reported) on the stock exchange determined by the Administrator to
be the primary market for the Common Stock or the Nasdaq National Market,
whichever is applicable or (B) if the

2
<PAGE>

Common Stock is not traded on any such exchange or national market system,
the average of the closing bid and asked prices of a Share on the Nasdaq
Small Cap Market for the day prior to the time of the determination (or, if
no such prices were reported on that date, on the last date on which such
prices were reported), in each case, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable; or

ii. In the absence of an established market of the
type described in (i), above, for the Common Stock, the Fair Market Value
thereof shall be determined by the Administrator in good faith.

r. "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code

s. "NON-QUALIFIED STOCK OPTION" means an Option not
intended to qualify as an Incentive Stock Option.

t. "OFFICER" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.

u. "OPTION" means a stock option granted pursuant to the
Plan.

v. "OPTION AGREEMENT" means the written agreement
evidencing the grant of an Option executed by the Company and the Optionee,
including any amendments thereto.

w. "OPTIONED STOCK" means the Common Stock subject to an
Option.

x. "OPTIONEE" means an Employee, Director or Consultant who
receives an Option under the Plan.

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

z. "PERFORMANCE - BASED COMPENSATION" means compensation
qualifying as performance-based compensation under Section 162(m) of the Code.

aa. "PLAN" means this 1999 Stock Option Plan.

bb. "RULE 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor thereto.

cc. "SHARE" means a share of the Common Stock.

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

3. STOCK SUBJECT TO THE PLAN.

3
<PAGE>

a. Subject to the provisions of Section 10, below, the
maximum aggregate number of Shares of Common Stock which may be optioned and
sold under the Plan is six million eighty-three thousand
seventy-five(6,083,075) Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.

b. If an Option expires or becomes unexercisable without
having been exercised in full, or is surrendered pursuant to an Option
exchange program, such unissued or retained Shares of Common Stock as were
subject to the Option shall become available for future grant under the Plan
(unless the Plan has terminated). Shares that actually have been issued
under the Plan shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if unvested
Shares are forfeited, or repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.

4. ADMINISTRATION OF THE PLAN.

a. PLAN ADMINISTRATOR.

i. ADMINISTRATION WITH RESPECT TO DIRECTORS AND
OFFICERS. With respect to grants of Options to Directors or Employees who
are also Officers or Directors of the Company, the Plan shall be administered
by (A) the Board or (B) a Committee designated by the Board, which Committee
shall be constituted in such a manner as to satisfy the Applicable Laws and
to permit such grants and related transactions under the Plan to be exempt
from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board.

ii. ADMINISTRATION WITH RESPECT TO CONSULTANTS AND
OTHER EMPLOYEES. With respect to grants of Options to Employees or
Consultants who are neither Directors nor Officers of the Company, the Plan
shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy
the Applicable Laws. Once appointed, such Committee shall continue to serve
in its designated capacity until otherwise directed by the Board. The Board
may authorize one or more Officers to grant such Options and may limit such
authority by requiring that such Options must be reported to and ratified by
the Board or a Committee within six (6) months of the grant date, and if so
ratified, shall be effective as of the grant date.

iii. ADMINISTRATION WITH RESPECT TO COVERED EMPLOYEES.
Notwithstanding the foregoing, grants of Options to any Covered Employee
intended to qualify as Performance-Based Compensation shall be made only by a
Committee (or subcommittee of a Committee) which is comprised solely of two
or more Directors eligible to serve on a committee making Options qualifying
as Performance-Based Compensation. In the case of such Options granted to
Covered

4
<PAGE>

Employees, references to the Administrator or to a Committee shall be deemed
to be references to such Committee or subcommittee.

iv. ADMINISTRATION ERRORS. In the event an Option is
granted in a manner inconsistent with the provisions of this subsection (a),
such Option shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.

b. POWERS OF THE ADMINISTRATOR. Subject to Applicable Laws
and the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:

i. to select the Employees, Directors and
Consultants to whom Options may be granted from time to time hereunder;

ii. to determine whether and to what extent Options
are granted hereunder;

iii. to determine the number of Shares to be covered
by each Option granted hereunder;

iv. to approve forms of Option Agreement for use
under the Plan;

v. to determine the terms and conditions of any
Option granted hereunder;

vi. to establish additional terms, conditions, rules
or procedures to accommodate the rules or laws of applicable foreign
jurisdictions and to afford Optionees favorable treatment under such laws;
provided, however, that no Option shall be granted under any such additional
terms, conditions, rules or procedures with terms or conditions which are
inconsistent with the provisions of the Plan;

vii. to amend the terms of any outstanding Option
granted under the Plan, including a reduction in the exercise price of any
Option to reflect a reduction in the Fair Market Value of the Common Stock
since the grant date of the Option, provided that any amendment that would
adversely affect the Optionee's rights under an outstanding Option shall not
be made without the Optionee's written consent;

viii. to construe and interpret the terms of the Plan
and Options granted pursuant to the Plan; and

ix. to take such other action, not inconsistent with
the terms of the Plan, as the Administrator deems appropriate.

5
<PAGE>

c. EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be conclusive
and binding on all persons.

5. ELIGIBILITY. Non-Qualified Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee, Director or Consultant who has been granted
an Option may, if otherwise eligible, be granted additional Options. Options
may be granted to such Employees of the Company and its subsidiaries who are
residing in foreign jurisdictions as the Administrator may determine from
time to time.

6. TERMS AND CONDITIONS OF OPTIONS.

a. DESIGNATION OF OPTIONS. Each Option shall be designated
as either an Incentive Stock Option or a Non-Qualified Stock Option.
However, notwithstanding such designation, to the extent that the aggregate
Fair Market Value of Shares subject to Options designated as Incentive Stock
Options which become exercisable for the first time by an Optionee during any
calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds one hundred thousand dollars ($100,000), such excess Options, to the
extent of the Shares covered thereby in excess of the foregoing limitation,
shall be treated as Non-Qualified Stock Options. For this purpose, Incentive
Stock Options shall be taken into account in the order in which they were
granted, and the Fair Market Value of the Shares shall be determined as of
the date the Option with respect to such Shares is granted.

b. CONDITIONS OF OPTION. Subject to the terms of the Plan,
the Administrator shall determine the provisions, terms, and conditions of
each Option including, but not limited to, the Option vesting schedule,
repurchase provisions, rights of first refusal, forfeiture provisions, and
satisfaction of any performance criteria. The performance criteria
established by the Administrator may be based on any one of, or combination
of, increase in share price, earnings per share, total stockholder return,
return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in vesting
corresponding to the degree of achievement as specified in the Option
Agreement.

c. TERM OF OPTION. The term of each Option shall be the
term stated in the Option Agreement, provided, however, that the term of an
Incentive Stock Option shall be no more than ten (10) years from the date of
grant thereof. However, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the term of the Option shall be five
(5) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement.

d. TRANSFERABILITY OF OPTIONS. Incentive Stock Options may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in
any manner other than by will or by the laws of descent or distribution and
may be exercised, during the lifetime of the Optionee, only

6
<PAGE>

by the Optionee. Non-Qualified Stock Options shall be transferable to the
extent provided in the Option Agreement.

e. TIME OF GRANTING OPTIONS. The date of grant of an
Option shall for all purposes, be the date on which the Administrator makes
the determination to grant such Option, or such other date as is determined
by the Administrator. Notice of the grant determination shall be given to
each Employee, Director or Consultant to whom an Option is so granted within
a reasonable time after the date of such grant.

7. OPTION EXERCISE PRICE, CONSIDERATION AND TAXES.

a. EXERCISE PRICE. Exercise Price. The exercise price for
an Option shall be as follows:

i. In the case of an Incentive Stock Option:

(1) granted to an Employee who, at the time of
the grant of such Incentive Stock Option owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price shall be not less
than one hundred ten percent (110%) of the Fair Market Value per Share on the
date of grant.

(2) granted to any Employee other than an
Employee described in the preceding paragraph, the per Share exercise price
shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.

ii. In the case of Options intended to qualify as
Performance-Based Compensation, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on
the date of grant.

iii. In the case of a Non-Qualified Stock Option
granted to a person who, at the time of the grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or any Parent or Subsidiary, the per Share exercise
price shall be no less than one hundred ten percent (110%) of the Fair Market
Value per Share on the date of the grant.

b. Consideration. Subject to Applicable Laws, the
consideration to be paid for the Shares to be issued upon exercise of an
Option including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). In addition to any other types of
consideration the Administrator may determine, the Administrator is
authorized to accept as consideration for Shares issued under the Plan the
following:

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<PAGE>

i. cash;

ii. check;

iii. delivery of Optionee's promissory note with such
recourse, interest, security, and redemption provisions as the Administrator
determines as appropriate;

iv. surrender of Shares (including withholding of
Shares otherwise deliverable upon exercise of the Option) which have a Fair
Market Value on the date of surrender equal to the aggregate exercise price
of the Shares as to which said Option shall be exercised (but only to the
extent that such exercise of the Option would not result in an accounting
compensation charge with respect to the Shares used to pay the exercise price
unless otherwise determined by the Administrator);

v. delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker,
if applicable, shall require to effect an exercise of the Option and delivery
to the Company of the sale or loan proceeds required to pay the exercise
price; or

vi. any combination of the foregoing methods of
payment.

c. TAXES. No Shares shall be delivered under the Plan to
any Optionee or other person until such Optionee or other person has made
arrangements acceptable to the Administrator for the satisfaction of any
foreign, federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the
receipt of Shares or the disqualifying disposition of Shares received on
exercise of an Incentive Stock Option. Upon exercise of an Option, the
Company shall withhold or collect from Optionee an amount sufficient to
satisfy such tax obligations.

8. EXERCISE OF OPTION.

a. PROCEDURE FOR EXERCISE: RIGHTS AS A STOCKHOLDER.

i. Any Option granted hereunder shall be exercisable
at such times and under such conditions as determined by the Administrator
under the terms of the Plan and specified in the Option Agreement.

ii. 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. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such
Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Optioned Stock, notwithstanding the
exercise of an Option. The Company shall issue (or cause to be issued) such
stock certificate promptly upon exercise of the Option. No adjustment will
be made for a dividend or other right for

8
<PAGE>

which the record date is prior to the date the stock certificate is issued,
except as provided in the Option Agreement or Section 10, below.

b. EXERCISE OF OPTION FOLLOWING TERMINATION OF EMPLOYMENT,
DIRECTOR OR CONSULTING RELATIONSHIP.

i. TERMINATION. Upon termination of an Optionee's
Continuous Status as an Employee, Director or Consultant, other than upon the
Optionee's death or disability, the Optionee may exercise his or her Option
within such period of time as is specified in the Option Agreement to the
extent that the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the
Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for three (3) months following
the Optionee's termination. If, on the date of termination, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

ii. DISABILITY OF OPTIONEE. If an Optionee's
Continuous Status as an Employee, Director or Consultant terminates as a
result of the Optionee's disability, the Optionee may exercise the Option to
the extent the Option is vested on the date of termination, but only within
twelve (12) months from the date of such termination (and in no event later
than the expiration date of the term of such Option as set forth in the
Option Agreement). If such disability is not a "disability" as such term is
defined in Section 22(e)(3) of the Code, in the case of an Incentive Stock
Option such Incentive Stock Option shall automatically convert to a
Non-Qualified Stock Option on the day three (3) months and one (1) day
following such termination. If, on the date of termination, the Optionee is
not vested as to the entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Option is not exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

iii. DEATH OF OPTIONEE. In the event of the death of
an Optionee, the Option may be exercised at any time within twelve (12)
months following the date of death (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement) to the
extent vested on the date of death. If, at the time of death, the Optionee
is not vested as to the entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. The Option may be exercised
by the executor or administrator of the Optionee's estate or, if none, by the
person(s) entitled to exercise the Option under the Optionee's will or the
laws of descent or distribution. If the Option is not so exercised within
the time specified herein, the Option shall terminate, and the Shares covered
by such Option shall revert to the Plan.

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

9
<PAGE>

offer is made.

9. CONDITIONS UPON ISSUANCE OF SHARES.

a. Shares shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all Applicable Laws, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.

b. 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 Applicable Laws.

10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the stockholders of the Company, the number of Shares
covered by each outstanding Option, and the number of Shares which have been
authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan, as well as the price
per share of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other similar event resulting in an increase or decrease in the number of
issued shares of Common Stock. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason hereof shall be made with respect to, the number or
price of Shares subject to an Option.

11. CORPORATE TRANSACTIONS.

a. In the event of any Corporate Transaction, each Option
which is at the time outstanding under the Plan automatically shall become
fully vested and exercisable and be released from any restrictions on
transfer and repurchase or forfeiture rights, immediately prior to the
specified effective date of such Corporate Transaction, for all of the Shares
at the time represented by such Option. However, an outstanding Option under
the Plan shall not so fully vest and be exercisable and released from such
limitations if and to the extent: (i) such Option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
Parent thereof or to be replaced with a comparable Option with respect to
shares of the capital stock of the successor corporation or Parent thereof,
or (ii) such Option is to be replaced with a cash incentive program of the
successor corporation which preserves the compensation element of such Option
existing at the time of the Corporate Transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to such
Option. The determination of Option comparability under clause (i) above
shall be made by the Administrator, and its determination shall be final,
binding and conclusive.

10
<PAGE>

b. Effective upon the consummation of the Corporate
Transaction, all outstanding Options under the Plan shall terminate and cease
to remain outstanding, except to the extent assumed by the successor company
or its Parent.

c. The portion of any Incentive Stock Option accelerated
under this Section 11 in connection with a Corporate Transaction shall remain
exercisable as an Incentive Stock Option under the Code only to the extent
the one hundred thousand dollar ($100,000) limitation of Section 422(d) of
the Code is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated excess portion of such Option shall be exercisable as a
Non-Qualified Stock Option.

12. TERM OF PLAN. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the stockholders of
the Company. It shall continue in effect for a term of ten (10) years unless
sooner terminated.

13. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.

a. The Board may at any time amend, suspend or terminate
the Plan. To the extent necessary to comply with Applicable Laws, the Company
shall obtain stockholder approval of any Plan amendment in such a manner and
to such a degree as required.

b. No Option may be granted during any suspension of the
Plan or after termination of the Plan.

c. Any amendment, suspension or termination of the Plan
shall not affect Options already granted, and such Options shall remain in
full force and effect as if the Plan had not been amended, suspended or
terminated, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company.

14. RESERVATION OF SHARES.

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

b. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is 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 failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

15. NO EFFECT ON TERMS OF EMPLOYMENT. The Plan shall not confer
upon any Optionee any right with respect to continuation of employment or
consulting relationship with the Company, nor shall it interfere in any way
with his or her right or the Company's right to terminate his or her
employment or consulting relationship at any time, with or without cause.

16. STOCKHOLDER APPROVAL. The grant of Incentive Stock Options
under the Plan shall

11
<PAGE>

be subject to approval by the stockholders of the Company within twelve (12)
months before or after the date the Plan is adopted. Such stockholder
approval shall be obtained in the degree and manner required under Applicable
Laws. The Administrator may grant Incentive Stock Options under the Plan
prior to approval by the stockholders, but until such approval is obtained,
no such Incentive Stock Option shall be exercisable. In the event that
stockholder approval is not obtained within the twelve (12) month period
provided above, all Incentive Stock Options previously granted under the Plan
shall terminate.

12
<PAGE>

ANNEX A TO
NOGATECH, INC.
1999 STOCK OPTION PLAN

ISRAELI SEC. 102 STOCK OPTION PLAN

1. DESIGNATION AND PURPOSE OF THE ISRAELI PLAN

This Annex A to the Nogatech, Inc. 1999 Stock Option Plan (the "General
Plan"), is the Israeli Sec. 102 Equity Incentive Plan (the "Israeli Plan")
for key employees (including directors who are employees) and consultants of
Nogatech Ltd., a wholly-owned Israeli subsidiary of Nogatech, Inc. (the
"Company") in accordance with the terms and conditions set forth below. For
the purposes of this Annex A, the Israeli Sec. 102 Stock Option Plan shall be
referred to as such, or as the "Plan."

2. GENERAL PLAN INCORPORATED BY REFERENCE

The provisions of the General Plan shall apply to the Israeli Plan, MUTATIS
MUTANDIS, except that the General Plan shall be deemed amended to incorporate
the provisions herein and shall be interpreted in such a way as to ensure
conformity with Section 102. Any provisions of the General Plan which are in
violation of Section 102 shall not apply to the Israeli Plan. In the event of
any conflicting provisions between the law applicable to the General Plan and
the Israeli Law which is applicable to this Israeli Plan, the provisions of
the Israeli Law shall prevail. In respect of issuances of Options under this
Israeli Plan (as annexed to the General Plan), the Committee need not
determine whether the issuances hereunder are "Incentive Stock Options"
within the meaning of the US Federal Income Tax Code or "Non-Qualified Stock
Options".

In the event of any conflict between the Israeli Plan and the General Plan,
then the provisions of the Israeli Plan shall prevail.

All capitalized terms used in this Israeli Plan shall have the meanings
designated in the General Plan, unless otherwise defined in this Israeli
Plan.

3. ELIGIBILITY

Options may be granted only to employees (including directors who are
employees) and consultants of Nogatech Ltd.

4. DEFINITIONS

13
<PAGE>

The following definitions shall be applicable to the terms used in the
Israeli Plan:

4.a "Committee" shall mean a Committee of the Board of Directors of the
Company (the "Board"), or a group approved by the Board, established
to administer the terms of the Israeli Plan. If no Committee is
approved by the Board, then the Committee shall be the full Board.

4.b "Trust Agreement" means the agreement between the Company, Nogatech Ltd.
and the Trustee as may be in effect from time to time specifying the
duties and authority of the Trustee.

4.c "Trust Assets" means the Options or shares held by the Trustee under the
Trust Agreement for the benefit of the Optionees pursuant to the Israeli
Plan and the Trust Agreement.

4.d "Trustee" means the Trustee (and any successor Trustee) appointed by the
Board to hold the Trust Assets.

5. GRANT OF OPTIONS

Each Option granted for the benefit of a Optionee under the Israeli Plan
shall be evidenced by a Stock Option Agreement, to be entered into by and
between the Company, Nogatech Ltd. and such Optionee, in form and substance
as may be from time to time approved by the Committee, which shall
incorporate the provisions of the General Plan, as amended hereby, and the
Trust Agreement by reference. In the event of any conflict between the terms
and conditions of a Stock Option Agreement and the terms hereof, the terms
hereof shall control.

6. GRANT OF OPTIONS TO BE HELD BY TRUSTEE; DIVIDEND AND VOTING RIGHTS

6.a GRANT OF OPTIONS TO BE HELD BY TRUSTEE

(i) Each Option shall be issued to the Trustee to be held in
trust for the benefit of the Optionee. All certificates representing Options
shall be issued in the name of the Trustee under the Israeli Plan, shall be
deposited with the Trustee, and shall be held by the Trustee until such time
that the shares issued pursuant to the exercise of such Options are released
as permitted under Section 102 and as further provided in the Israeli Plan.

14
<PAGE>

Options, provided that no shares shall be released by the Trustee to the
Optionee unless and until such Optionee shall have deposited with the Trustee
an amount of money which, in the Trustee's sole judgment, is sufficient and
necessary for the discharge of such Optionee's tax obligations with respect
to such Options and shares. Upon the release by an Optionee of any shares
held in Trust, the Company shall (or shall cause the Trustee to) withhold
from the proceeds of such release all applicable taxes, shall remit the
amount withheld to the appropriate Israeli tax authorities, shall pay the
balance thereof directly to such Optionee and shall report to such Optionee
the amount so withheld and paid to said tax authorities.

6.b DIVIDEND AND VOTING No Optionee shall have any of the rights of a
shareholder of the Company with respect to any Options or Shares which are to
derive from the exercise of any Options, until such time as the Options are
duly exercised. If upon the exercise of any Option, Shares are issued
hereunder to the Trustee, the relevant Optionee shall be entitled to receive
(i) a proxy from the Trustee to vote the Shares that the Trustee holds for
Optionee's benefit and (ii) any cash dividends paid with respect to such
Shares.

7. MAINTENANCE OF ASSETS BY TRUSTEE

The Trustee shall maintain records of the Options held for the benefit of
each Optionee.

8. METHOD OF EXERCISE OF OPTION

An Option shall be exercisable, in whole or in part, during the Option
Period, upon delivery by the Optionee to each of the Trustee and the Company
of a duly executed copy of the relevant notice of exercise in the prescribed
form, specifying the number of Shares as to which such Option is being
exercised. The notice to the Company shall be accompanied by full payment of
the option exercise price thereof (the "Option Exercise Price") in NIS or in
such currency as may be required by the Company or the Committee. If the
exercise price is paid in any currency other than United States Dollars, the
exchange rate shall be that reasonably specified by the Company at the time
of exercise. The shares issued pursuant to exercise of the Options shall be
delivered by the Company to the Trustee pursuant to the provisions of
Section 6(a) above, or upon the Trustee's confirmation that the Trustee has
received an amount sufficient to pay the full withholding tax liability in
accordance with Section 6 above, the Company shall deliver the shares
directly to the Optionee, or the Optionee's nominee.

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<PAGE>

9. ADMINISTRATION, AMENDMENT AND TERMINATION OF THE ISRAELI PLAN

The Board and the Committee shall have the same power and authority with
respect to the administration, amendment and termination of the Israeli Plan
as they hold in respect of the General Plan, except that no discretion or
authority is hereby granted to the Board or the Committee so as to disqualify
the Israeli Plan under Section 102.

10. GOVERNING LAW

This Israeli Plan, and any dispute, controversy or claim arising out of, or
relating to, any tax issue regarding the General Plan which might arise
between (i) the Company, Nogatech Ltd., or the Trustee, and (ii) a Optionee
who was granted an Option pursuant to this Israeli Plan, shall be governed
and interpreted in accordance with the laws of the State of Israel.

16
<PAGE>
ANNEX A TO
NOGATECH, INC.
1999 STOCK OPTION PLAN

ISRAELI SEC. 102 EQUITY OPTION PLAN

2. DESIGNATION AND PURPOSE OF THE ISRAELI PLAN

This Annex A to the Nogatech, Inc. 1999 Stock Option Plan (the "General
Plan"), is the Israeli Sec. 102 Equity Incentive Plan for key employees
(including directors who are employees) and consultants of Nogatech Ltd., a
wholly-owned Israeli subsidiary of Nogatech, Inc. (the "Company") in
accordance with the terms and conditions set forth below. For the purposes
of this Annex A, the Israeli Sec. 102 Equity Option Plan shall be referred to
as such, or as the "Plan."

The Plan is being instituted in order to ensure that all issuances of options
by the Company to employees, officers and consultants of Nogatech Ltd.
conform with the provisions of Section 102 of the Israeli Income Tax
Ordinance [New Version], 1961, the rules and regulations promulgated
thereunder, from time to time ("Section 102") and the Israeli Tax Authorities
(the "Tax Authority") authorization, received on ____________, to impose
taxes on the shares underlined by the options when such shares are sold or
transferred on the name of the Participant (the "Tax Ruling"), a copy of
which is attached as Exhibit 1 together with a non-binding English
translation of the Tax Ruling.

2. GENERAL PLAN INCORPORATED BY REFERENCE

The provisions of the General Plan shall apply to the Plan, MUTATIS MUTANDIS,
except that the General Plan shall be deemed amended to incorporate the
provisions herein and shall be interpreted in such a way as to ensure
conformity with Section 102. Any provisions of the General Plan which are in
violation of Section 102 shall not apply to the Plan. In the event of any
conflicting provisions between the law applicable to the General Plan and the
Israeli Law which is applicable to this Israeli Sec. 102 Equity Incentive
Plan, the provisions of the Israeli Law shall prevail. In respect of
issuances of Options under this Plan (as annexed to the General Plan), the
Committee need not determine whether the issuances hereunder are "Incentive
Stock Options" within the meaning of the US Federal Income Tax Code or
"Non-Qualified Stock Options".

In the event of any conflict between the Plan and the General Plan, then the
provisions of the Plan shall prevail.

All capitalized terms used in this Plan shall have the meanings designated in
the General Plan, unless otherwise defined in this Plan.

3. ELIGIBILITY

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<PAGE>

Options may be granted only to employees (including directors who are
employees) and consultants of Nogatech Ltd.

4. DEFINITIONS

The following definitions shall be applicable to the terms used in the Plan:

4.1 "Committee" shall mean a Committee of the Board, or a group approved by
the Board, established to administer the terms of the Plan. If no
Committee is approved by the Board, then the Committee shall be the full
Board.

4.2 "Trust Agreement" means the agreement between the Company, Nogatech Ltd.
and the Trustee as may be in effect from time to time specifying the
duties and authority of the Trustee.

4.3 "Trust Assets" means the Options or shares held by the Trustee under the
Trust Agreement for the benefit of the Participants pursuant to the Plan
and the Trust Agreement.

4.4 "Trustee" means the Trustee (and any successor Trustee) appointed by the
Board of Directors of the Company ("Board") to hold the Trust Assets.

5. GRANT OF OPTIONS

Each Option granted for the benefit of a Participant under the Plan shall be
evidenced by a Stock Option Agreement, to be entered into by and between the
Company, Nogatech Ltd. and such Participant, in form and substance as may be
from time to time approved by the Committee, which shall incorporate the
provisions of the General Plan, as amended hereby, and the Trust Agreement by
reference. In the event of any conflict between the terms and conditions of a
Stock Option Agreement and the terms hereof, the terms hereof shall control.

6. GRANT OF OPTIONS TO BE HELD BY TRUSTEE; DIVIDEND AND VOTING RIGHTS

6.1 GRANT OF OPTIONS TO BE HELD BY TRUSTEE

6.1.1 Each Option shall be issued to the Trustee to be held in trust for the
benefit of the Participant. All certificates representing Options shall
be issued in the name of the Trustee under the Plan, shall be deposited
with the Trustee, and shall be held by the Trustee until such time that
the shares issued pursuant to the exercise of such Options are released
as permitted under Section 102 and as further provided in the Plan.

6.1.2 Anything herein to the contrary notwithstanding, no Option shall be
released

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<PAGE>

by the Trustee from trust until after two (2) years subsequent to the
grant of the Option to the Trustee for the benefit of the Participant
(the "Earliest Release Date"). Subject to the terms hereof and the
terms of the Option Agreement, at any time after the Earliest Release
Date with respect to any Option, each Participant may, after
exercising the Options or any part thereof, require the Company to
cause the Trustee to release the shares issued pursuant to the
exercise of such Options, provided that no shares shall be released by
the Trustee to the Participant unless and until such Participant shall
have deposited with the Trustee an amount of money which, in the
Trustee's sole judgment, is sufficient and necessary for the discharge
of such Participant's tax obligations with respect to such Options and
shares. Upon the release by a Participant of any shares held in Trust,
the Company shall (or shall cause the Trustee to) withhold from the
proceeds of such release all applicable taxes, shall remit the amount
withheld to the appropriate Israeli tax authorities, shall pay the
balance thereof directly to such Participant and shall report to such
Participant the amount so withheld and paid to said tax authorities.

6.2 DIVIDEND AND VOTING No Participant shall have any of the rights of a
shareholder of the Company with respect to any Options or Shares which
are to derive from the exercise of any Options, until such time as the
Options are duly exercised. If upon the exercise of any Option, Shares
are issued hereunder to the Trustee, the relevant Participant shall be
entitled to receive (i) a proxy from the Trustee to vote the Shares that
the Trustee holds for Participant's benefit and (ii) any cash dividends
paid with respect to such Shares.

7. MAINTENANCE OF ASSETS BY TRUSTEE

The Trustee shall maintain records of the Options held for the benefit of
each Participant.

8. METHOD OF EXERCISE OF OPTION

An Option shall be exercisable, in whole or in part, during the Option
Period, upon delivery by the Participant to each of the Trustee and the
Company of a duly executed copy of the relevant notice of exercise in the
prescribed form, specifying the number of Shares as to which such Option is
being exercised. The notice to the Company shall be accompanied by full
payment of the option exercise price thereof (the "Option Exercise Price") in
NIS or in such currency as may be required by the Company or the Committee.
If the exercise price is paid in any currency other than United States
Dollars, the exchange rate shall be that reasonably specified by the Company
at the time of exercise. The shares issued pursuant to exercise of the
Options shall be delivered by the Company to the Trustee pursuant to the
provisions of Paragraph 6.1 above, or upon the Trustee's confirmation that
the Trustee has received an amount sufficient to pay the full withholding tax
liability in accordance with Paragraph 6 above, the Company shall deliver the
shares directly to the Participant, or the Participant's nominee.

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<PAGE>

9. ADMINISTRATION, AMENDMENT AND TERMINATION OF THE ISRAELI PLAN

The Board and the Committee shall have all power and authority with respect
to the administration, amendment and termination of the Plan as they hold in
respect of the General Plan, except that no discretion or authority is hereby
granted to the Board or the Committee so as to disqualify the Plan under
Section 102.

10. GOVERNING LAW

This Plan, and any dispute, controversy or claim arising out of, or relating
to, any tax issue regarding the General Plan which might arise between (i)
the Company, Nogatech Ltd., or the Trustee, and (ii) a Participant who was
granted an Option pursuant to this Plan, shall be governed and interpreted in
accordance with the laws of the State of Israel.

<PAGE>

EXHIBIT 10.4

NOGATECH, INC.

2000 EQUITY INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

The name of this plan is the Nogatech, Inc. 2000 Equity
Incentive Plan (the "Plan"). The Plan was adopted by the Board (defined
below) on March 5, 2000 and approved by the stockholders of the Company
(defined below) on ___________, 2000. The purpose of the Plan is to enable
the Company to attract and retain highly qualified personnel who will
contribute to the Company's success and to provide incentives to Participants
(defined below) that are linked directly to increases in stockholder value
and will therefore inure to the benefit of all stockholders of the Company.
The Company wishes the issuance of Awards (defined below) to its employees in
Israel to conform with the requirements of Section 3(9) of the Israeli Income
Tax Ordinance, and for this purpose the appended document Annex A amends this
Plan to so conform.

For purposes of the Plan, the following terms shall be defined
as set forth below:

(a) "ADMINISTRATOR" means the Board, or if and to the extent
the Board does not administer the Plan, the Committee in accordance with
Section 2 below.

(b) "AFFILIATE" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, another corporation, where "control"
(including the terms "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to cause the direction of
the management and policies of the corporation, whether through the ownership
of voting securities, by contract or otherwise.

(d) "AWARD AGREEMENT" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.

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

<PAGE>

(f) "CODE" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.

(g) "COMMITTEE" means any committee the Board may appoint to
administer the Plan. To the extent necessary and desirable, the Committee
shall be composed entirely of individuals who meet the qualifications
referred to in Section 162(m) of the Code and Rule 16b-3 under the Exchange
Act. If at any time or to any extent the Board shall not administer the
Plan, then the functions of the Board specified in the Plan shall be
exercised by the Committee.

(h) "COMMON STOCK" means the common stock, par value $0.001
per share, of the Company.

(i) "COMPANY" means Nogatech, Inc., a Delaware corporation
(or any successor corporation).

(j) "DEFERRED STOCK" means the right to receive Shares at
the end of a specified deferral period granted pursuant to Section 8 below.

(k) "DISABILITY" means the inability of a Participant to
perform substantially his or her duties and responsibilities to the Company
or to any Parent or Subsidiary by reason of a physical or mental disability
or infirmity (i) for a continuous period of six months, or (ii) at such
earlier time as the Participant submits medical evidence satisfactory to the
Administrator that the Participant has a physical or mental disability or
infirmity that will likely prevent the Participant from returning to the
performance of the Participant's work duties for six months or longer. The
date of such Disability shall be the last day of such six-month period or the
day on which the Participant submits such satisfactory medical evidence, as
the case may be.

(l) "ELIGIBLE RECIPIENT" means an officer, director,
employee, consultant or advisor of the Company or of any Parent or Subsidiary.

(m) "EMPLOYEE DIRECTOR" means any director of the Company
who is also an employee of the Company or of any Parent or Subsidiary.

(n) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended from time to time.

(o) "EXERCISE PRICE" means the per share price at which a
holder of an Award may purchase the Shares issuable upon exercise of the
Award.

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<PAGE>

(p) "FAIR MARKET VALUE" as of a particular date shall mean
the fair market value of a share of Common Stock as determined by the
Administrator in its sole discretion; PROVIDED, HOWEVER, that (i) if the
Common Stock is admitted to trading on a national securities exchange, fair
market value of a share of Common Stock on any date shall be the closing sale
price reported for such share on such exchange on such date or, if no sale
was reported on such date, on the last date preceding such date on which a
sale was reported, (ii) if the Common Stock is admitted to quotation on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
System or other comparable quotation system and has been designated as a
National Market System ("NMS") security, fair market value of a share of
Common Stock on any date shall be the closing sale price reported for such
share on such system on such date or, if no sale was reported on such date,
on the last date preceding such date on which a sale was reported, (iii) if
the Common Stock is admitted to quotation on the Nasdaq System but has not
been designated as an NMS security, fair market value of a share of Common
Stock on any date shall be the average of the highest bid and lowest asked
prices of such share on such system on such date or, if no bid and ask prices
were reported on such date, on the last date preceding such date on which
both bid and ask prices were reported; (iv) in the case of a Limited Stock
Appreciation Right, the fair market value of a share of Common Stock shall be
the "Change in Control Price" (as defined in the Award Agreement evidencing
such Limited Stock Appreciation Right) of a share of Common Stock as of the
date of exercise.

(q) "INCENTIVE STOCK OPTION" means any Option intended to be
designated as an "incentive stock option" within the meaning of Section 422
of the Code.

(r) "LIMITED STOCK APPRECIATION RIGHT" means a Stock
Appreciation Right that can be exercised only in the event of a "Change in
Control" (as defined in the Award Agreement evidencing such Limited Stock
Appreciation Right).

(s) "NON-EMPLOYEE DIRECTOR" means a director of the Company
who is not an employee of the Company or of any Parent or Subsidiary.

(t) "NON-QUALIFIED STOCK OPTION" means any Option that is
not an Incentive Stock Option, including any Option that provides (as of the
time such Option is granted) that it will not be treated as an Incentive
Stock Option.

(u) "OPTION" means an option to purchase Shares granted
pursuant to Section 6 below.

(v) "PARENT" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if each of the
corporations in the chain (other

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<PAGE>

than the Company) owns stock possessing 50% or more of the combined voting
power of all classes of stock in one of the other corporations in the chain.

(w) "PARTICIPANT" means (i) any Eligible Recipient selected
by the Administrator, pursuant to the Administrator's authority in Section 2
below, to receive grants of Options, Stock Appreciation Rights, Limited Stock
Appreciation Rights, awards of Restricted Stock, Deferred Stock, or
Performance Shares or any combination of the foregoing, or (ii) any
Non-Employee Director who is eligible to receive grants of Options pursuant
to Section 6(i) below.

(x) "PERFORMANCE SHARES" means Shares that are subject to
restrictions based upon the attainment of specified performance objectives
granted pursuant to Section 8 below.

(y) "REGISTRATION STATEMENT" means the registration
statement on Form S-1 filed with the Securities and Exchange Commission for
the initial underwritten public offering of the Common Stock.

(z) "RESTRICTED STOCK" means Shares subject to certain
restrictions granted pursuant to Section 8 below.

(aa) "SHARES" means shares of Common Stock reserved for
issuance under the Plan, as adjusted pursuant to Sections 3 and 4, and any
successor security.

(bb) "STOCK APPRECIATION RIGHT" means the right pursuant to
an Award granted under Section 7 below to receive an amount equal to the
excess, if any, of (i) the Fair Market Value, as of the date such Stock
Appreciation Right or portion thereof is surrendered, of the Shares covered
by such right or such portion thereof, over (ii) the aggregate Exercise Price
of such right or such portion thereof.

(cc) "SUBSIDIARY" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations (other than the last corporation) in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain.

SECTION 2. ADMINISTRATION.

The Plan shall be administered in accordance with the
requirements of Section 162(m) of the Code (but only to the extent necessary
and desirable to maintain qualification of Awards under the Plan under
Section 162(m) of the Code) and, to the extent applicable, Rule 16b-3 under
the Exchange Act ("Rule 16b-3"), by the Board or, at the Board's sole
discretion, by

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<PAGE>

the Committee, which shall be appointed by the Board, and which shall serve
at the pleasure of the Board.

Pursuant to the terms of the Plan, the Administrator shall have
the power and authority to grant to Eligible Recipients Options, Stock
Appreciation Rights or Limited Stock Appreciation Rights, Awards of
Restricted Stock, Deferred Stock or Performance Shares or any combination of
the foregoing; PROVIDED, HOWEVER, that automatic, nondiscretionary grants of
Options shall be made to Non-Employee Directors pursuant to and in accordance
with the terms of Section 6(i) below. Except as otherwise provided in
Section 6(i) below, the Administrator shall have the authority:

(a) to select those Eligible Recipients who shall be
Participants;

(b) to determine whether and to what extent Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, Awards of Restricted
Stock, Deferred Stock or Performance Shares or a combination of any of the
foregoing, are to be granted hereunder to Participants;

(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of each Award granted hereunder (including, but
not limited to, (x) the restrictions applicable to Awards of Restricted Stock
or Deferred Stock and the conditions under which restrictions applicable to
such Awards of Restricted Stock or Deferred Stock shall lapse, and (ii) the
performance goals and periods applicable to Awards of Performance Shares);

(e) to determine the terms and conditions, not inconsistent
with the terms of the Plan, which shall govern all written instruments
evidencing Options, Stock Appreciation Rights, Limited Stock Appreciation
Rights, Awards of Restricted Stock, Deferred Stock or Performance Shares or
any combination of the foregoing granted hereunder;

(f) to reduce the Exercise Price of any Option to the then
current Fair Market Value if the Fair Market Value of the Shares covered by
such Option has declined since the date such Option was granted; and

(g) the Committee may, at any time or from time to time,
authorize the Company, with the consent of the respective Participants, to
issue new Awards in exchange for the surrender and cancellation of any or all
outstanding Awards. The Committee may at any time buy from a Participant an
Award previously granted with payment in cash, Shares

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<PAGE>

(including Restricted Stock) or other consideration, based on such terms and
conditions as the Committee and the Participant shall agree.

The Administrator shall have the authority, in its sole
discretion, to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall from time to time deem
advisable; to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any Award Agreement relating thereto); and to
otherwise supervise the administration of the Plan.

All decisions made by the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company and the Participants.

SECTION 3. SHARES SUBJECT TO PLAN.

The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be [3,500,000 [assumes
contemplated one-for-two reverse stock split] shares], plus an annual increase
to be added on the first day of the Company's fiscal year (beginning 2001)
equal to the lesser of (i) [500,000 [assumes contemplated one-for-two reverse
stock split]] shares or (ii) five percent (5%) of the number of outstanding
shares of Common Stock on the last day of the immediately preceding fiscal
year. Such shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares. The aggregate number of Shares as to
which Options, Stock Appreciation Rights, and Awards of Restricted Stock,
Deferred Stock and Performance Shares may be granted to any Participant
during any calendar year may not, subject to adjustment as provided in this
Section 3, exceed 80% of the Shares reserved for the purposes of the Plan.

Consistent with the provisions of Section 162(m) of the Code,
as from time to time applicable, to the extent that (i) an Option expires or
is otherwise terminated without being exercised, or (ii) any Shares subject
to any Award of Restricted Stock, Deferred Stock or Performance Shares
granted hereunder are forfeited, such Shares shall again be available for
issuance in connection with future Awards granted under the Plan. If any
Shares have been pledged as collateral for indebtedness incurred by a
Participant in connection with the exercise of an Option and such Shares are
returned to the Company in satisfaction of such indebtedness, such Shares
shall again be available for issuance in connection with future Awards
granted under the Plan.

6
<PAGE>

In the event of any stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
an equitable substitution or proportionate adjustment shall be made in (i)
the aggregate number of Shares reserved for issuance under the Plan, (ii) the
kind, number and Exercise Prices of Shares subject to outstanding Options,
and (iii) the kind, number and Exercise Prices of Shares subject to
outstanding Awards of Restricted Stock, Deferred Stock and Performance
Shares, in each case as may be determined by the Administrator, in its sole
discretion, subject to any required action by the Board or the stockholders
of the Company and in compliance with applicable securities laws; PROVIDED,
HOWEVER, that fractions of a Share shall not be issued but shall either be
paid in cash at Fair Market Value or shall be rounded up to the nearest whole
share, as determined by the Committee. An adjusted Exercise Price shall also
be used to determine the amount payable by the Company upon the exercise of
any Stock Appreciation Right or Limited Stock Appreciation Right related to
any Option.

7
<PAGE>

SECTION 4. CORPORATE TRANSACTIONS

(a) ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In
the event of (i) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in
the stockholders of the Company and the Awards granted under the Plan are
assumed or replaced by the successor corporation, which assumption shall be
binding on all Participants); (ii) a dissolution or liquidation of the
Company; (iii) the sale of substantially all of the assets of the Company; or
(iv) any other transaction which qualifies as a "corporate transaction" under
Section 424(a) of the Code wherein the stockholders of the Company give up
all of their equity interest in the Company (EXCEPT for the acquisition, sale
or transfer of all or substantially all of the outstanding shares of the
Company), any or all outstanding Awards may be assumed or replaced by the
successor corporation (if any) or Parent thereof, which assumption or
replacement shall be binding on all Participants. In the alternative, the
successor corporation or Parent thereof may substitute equivalent awards or
provide substantially similar consideration to Participants as was provided
to stockholders of the Company (after taking into account the existing
provisions of the Awards). The successor corporation or Parent thereof may
also issue, in place of outstanding shares of the Company held by the
Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant. In the event
such successor corporation (if any) or Parent thereof does not assume or
substitute awards, as provided above, pursuant to a transaction described in
this Section 4(a), such Awards shall automatically become fully vested and
exercisable and be released from any restrictions on transfer and repurchase
or forfeiture rights, immediately prior to the specified effective date of
such transaction, for all the Shares at the time represented by such Awards.
In such event, effective upon the consummation of the transaction, or at such
other time and on such conditions as the Board shall determine, all
outstanding Awards under the Plan shall terminate and cease to remain
outstanding, except to the extent assumed by the successor corporation or its
Parent.

(b) OTHER TREATMENT OF AWARDS. Subject to any greater
rights granted to Participants under the foregoing provisions of this Section
4, in the event of the occurrence of any transaction described in Section
4(a), any outstanding Awards shall be treated as provided in the applicable
Award Agreement or plan of merger, consolidation, dissolution, liquidation,
sale of assets or other "corporate transaction."

(c) ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other
company or otherwise, by either (i) granting an Award under the Plan in
substitution of such other company's award; or (ii) assuming such award as if
it had been granted under the Plan if the terms of such assumed award could
be applied to an

8
<PAGE>

award granted under the Plan. Such substitution or assumption shall be
permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under the Plan if the other company had
applied the rules of the Plan to such grant. In the event the Company
assumes an award granted by another company, the terms and conditions of such
award shall remain unchanged (EXCEPT that the exercise price and the number
and nature of Shares issuable upon exercise of any such option will be
adjusted approximately pursuant to Section 424(a) of the Code). In the event
the Company elects to grant a new Option rather than assuming an existing
option, such new Option may be granted with a similarly adjusted Exercise
Price.

SECTION 5. ELIGIBILITY.

Eligible Recipients shall be eligible to be granted Options,
Stock Appreciation Rights, Limited Stock Appreciation Rights, Awards of
Restricted Stock, Deferred Stock or Performance Shares or any combination of
the foregoing hereunder. The Participants under the Plan shall be selected
from time to time by the Administrator, in its sole discretion, from among
the Eligible Recipients, and the Administrator shall determine, in its sole
discretion, the number of Shares covered by each such Award.

SECTION 6. OPTIONS.

Options may be granted alone or in addition to other Awards
granted under the Plan. Any Option granted under the Plan shall be in such
form as the Administrator may from time to time approve, and the provisions
of each Option need not be the same with respect to each Participant.
Participants who are granted Options shall enter into an Award Agreement with
the Company, in such form as the Administrator shall determine, which Award
Agreement shall set forth, among other things, the Exercise Price of the
Option, the term of the Option and provisions regarding exercisability of the
Option granted thereunder.

The Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options.

The Administrator shall have the authority to grant to any
officer or employee of the Company or of any Parent or Subsidiary (including
directors who are also officers of the Company) Incentive Stock Options,
Non-Qualified Stock Options, or both types of Options (in each case with or
without Stock Appreciation Rights or Limited Stock Appreciation Rights).
Directors who are not also officers of the Company or of any Parent or
Subsidiary, consultants or advisors to the Company or to any Parent or
Subsidiary may only be granted Non-Qualified Stock Options (with or without
Stock Appreciation Rights or Limited Stock Appreciation Rights). To the
extent that any Option does not qualify as an Incentive Stock Option, it
shall

9
<PAGE>

constitute a separate Non-Qualified Stock Option. More than one Option may
be granted to the same Participant and be outstanding concurrently hereunder.

Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Administrator
shall deem desirable:

(a) OPTION EXERCISE PRICE. The per share Exercise Price of
Shares purchasable under an Option shall be determined by the Administrator
in its sole discretion at the time of grant but shall not, (i) in the case of
Incentive Stock Options, be less than 100% of the Fair Market Value of the
Common Stock on such date, (ii) in the case of Non-Qualified Stock Options
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Code, be less than 100% of the Fair Market Value of the
Common Stock on such date and (iii) in any event, be less than the par value
(if any) of the Common Stock. If a Participant owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Company or of any Parent or Subsidiary and an Incentive Stock Option is
granted to such Participant, the per share Exercise Price of such Incentive
Stock Option (to the extent required at the time of grant by the Code shall
be no less than 110% of the Fair Market Value of the Common Stock on the date
such Incentive Stock Option is granted.

(b) OPTION TERM. The term of each Option shall be fixed by
the Administrator, but no Option shall be exercisable more than ten years
after the date such Option is granted; PROVIDED, HOWEVER, that if an employee
owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all classes
of stock of the Company or of any Parent or Subsidiary and an Incentive Stock
Option is granted to such employee, the term of such Incentive Stock Option
(to the extent required by the Code at the time of grant) shall be no more
than five years from the date of grant.

(c) EXERCISABILITY. Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined
by the Administrator at or after the time of grant. The Administrator may
provide at the time of grant, in its sole discretion, that any Option shall
be exercisable only in installments, and the Administrator may waive such
installment exercise provisions at any time, in whole or in part, based on
such factors as the Administrator may determine, in its sole discretion,
including but not limited to in connection with any "change in control" of
the Company (as defined in the Award Agreement evidencing such Option).

(d) METHOD OF EXERCISE. Subject to Section 6(c), Options
may be exercised in whole or in part at any time during the Option period, by
giving written notice of exercise to the

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<PAGE>

Company specifying the number of Shares to be purchased, accompanied by
payment in full of the aggregate Exercise Price of the Shares so purchased in
cash or its equivalent, as determined by the Administrator. In addition,
payment for Shares purchased pursuant to the Plan may be made, where
expressly approved for the Participant by the Committee and where permitted
by law:

(i) by cancellation of indebtedness of the
Company to the Participant;

(ii) by surrender of shares of Common Stock that
either (1) have been owned by Participant for more than six (6)
months and have been paid for within the meaning of SEC Rule 144
(and, if such shares were purchased from the Company by use of a
promissory note, such note has been fully paid with respect to
such Shares); or (2) were obtained by Participant in the public
market;

(iii) by waiver of compensation due or accrued to
Participant for services rendered;

(iv) by tender of property;

(v) with respect only to purchases upon exercise
of an Option, and provided that a public market for the Common
Stock exists: (i) through a "same day sale" commitment from
Participant and a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer") whereby the
Participant irrevocably elects to exercise the Option and to sell
a portion of the Shares so purchased to pay for the aggregate
Exercise Price of the Shares so purchased, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward
such Exercise Price directly to the Company; or (ii) through a
"margin" commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount
of the aggregate Exercise Price of the Shares so purchased, and
whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward such Exercise Price directly to the Company;

(vi) in the case of the exercise of a Non-Qualified
Stock Option, in the form of Restricted Stock or Performance Shares
subject to an Award hereunder (based, in each case, on the Fair Market
Value of the Common Stock on the date the Option is exercised);
PROVIDED, HOWEVER, that in the case of an Incentive Stock Option, the
right to make payment in the form of already owned

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<PAGE>

shares of Common Stock may be authorized only at the time of grant.
If payment of the Exercise Price of a Non-Qualified Stock Option is
made in whole or in part in the form of Restricted Stock or
Performance Shares, the Shares received upon the exercise of such
Option shall be restricted in accordance with the original terms of
the Restricted Stock Award or Performance Shares Award in question,
except that the Administrator may direct that such restrictions shall
apply only to that number of Shares equal to the number of shares
surrendered upon the exercise of such Option.

(vii) by any combination of the foregoing or

(viii) by any other form of consideration permitted
by applicable law.

A Participant shall generally have the rights to dividends and
any other rights of a stockholder with respect to the Shares subject to the
Option only after the Participant has given written notice of exercise, has
paid in full for such Shares, and, if requested, has given the representation
described in Section 11(b).

The Administrator may require the surrender of all or a portion
of any Option granted under the Plan as a condition precedent to the grant of
a new Option. Subject to the provisions of the Plan, such new Option shall
be exercisable at the Exercise Price, during such period and on such other
terms and conditions as are specified by the Administrator at the time the
new Option is granted. Consistent with the provisions of Section 162(m), to
the extent applicable, upon their surrender, Options shall be canceled and
the Shares previously subject to such canceled Options shall again be
available for future grants of Options and other Awards hereunder.

(e) LOANS. The Company or any Parent or Subsidiary may make
loans available to Option holders in connection with the exercise of
outstanding Options, as the Administrator, in its sole discretion, may
determine. Such loans shall (i) be evidenced by promissory notes entered
into by the Option holders in favor of the Company or any Parent or
Subsidiary, (ii) be subject to the terms and conditions set forth in this
Section 6(e) and such other terms and conditions, not inconsistent with the
Plan, as the Administrator shall determine, (iii) bear interest at the
applicable Federal interest rate or such other rate as the Administrator
shall determine, and (iv) be subject to Board approval (or to approval by the
Administrator to the extent the Board may delegate such authority). In no
event may the principal amount of any such loan exceed the sum of (x) the
aggregate Exercise Price less the par value (if any) of the Shares covered by
the Option, or portion thereof, exercised by the holder, and (y) any Federal,
state, and local income tax attributable to such exercise. The initial term
of the loan, the schedule of payments of

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<PAGE>

principal and interest under the loan, the extent to which the loan is to be
with or without recourse against the holder with respect to principal and/or
interest and the conditions upon which the loan will become payable in the
event of the holder's termination of service to the Company or to any Parent
or Subsidiary shall be determined by the Administrator. Unless the
Administrator determines otherwise, when a loan is made, Shares having an
aggregate Fair Market Value at least equal to the principal amount of the
loan shall be pledged by the holder to the Company as security for payment of
the unpaid balance of the loan, and such pledge shall be evidenced by a
pledge agreement, the terms of which shall be determined by the
Administrator, in its sole discretion; PROVIDED, HOWEVER, that each loan
shall comply with all applicable laws, regulations and rules of the Board of
Governors of the Federal Reserve System and any other governmental agency
having jurisdiction.

(f) NON-TRANSFERABILITY OF OPTIONS. Except under the laws
of descent and distribution, the Participant shall not be permitted to sell,
transfer, pledge or assign any Option, and all Options shall be exercisable,
during the Participant's lifetime, only by the Participant; PROVIDED,
HOWEVER, that the Participant shall be permitted to transfer one or more
Non-Qualified Stock Options to a trust controlled by the Participant during
the Participant's lifetime for estate planning purposes.

(g) TERMINATION OF EMPLOYMENT OR SERVICE. If a
Participant's employment with or service as a director, consultant or advisor
to the Company or to any Parent or Subsidiary terminates by reason of his or
her death, Disability or for any other reason, the Option may thereafter be
exercised to the extent provided in the Award Agreement evidencing such
Option, or as otherwise determined by the Administrator.

(h) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent
that the aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of Shares with respect to which Incentive Stock
Options granted to a Participant under this Plan and all other option plans
of the Company or of any Parent or Subsidiary become exercisable for the
first time by the Participant during any calendar year exceeds $100,000 (as
determined in accordance with Section 422(d) of the Code), the portion of
such Incentive Stock Options in excess of $100,000 shall be treated as
Non-Qualified Stock Options.

(i) AUTOMATIC GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS.
The Company shall grant Non-Qualified Stock Options to Non-Employee Directors
pursuant to this Section 6(i), which grants shall be automatic and
nondiscretionary and otherwise subject to the terms and conditions set forth
in this subsection (i) and the terms of the Plan (the "Automatic Non-Employee
Director Options"). Each Non-Employee Director who first becomes a director
of the Company following the Effective Date (as defined in Section 12) shall
be automatically granted a Non-Qualified Stock Option to purchase 30,000
[20,000 [assumes contemplated one-for-two reverse stock split]] Shares (an
"Initial Option"). Each

13
<PAGE>

Non-Employee Director shall be automatically granted a Non-Qualified Stock
Option to purchase [5,000 [assumes contemplated one-for-two reverse stock
split]] Shares (the "Annual Options") on the date immediately following
the Company's annual meeting of stockholders; PROVIDED, HOWEVER, that he or
she is then a director of the Company and, PROVIDED, FURTHER, that as of such
date, such director shall have served on the Board for at least the preceding
six (6) months.

The term of each Automatic Non-Employee Director Option shall
be ten (10) years, and the Exercise Price purchasable under an Automatic
Non-Employee Director Option shall be no less than 100% of the Fair Market
Value of the Common Stock on the date of grant, PROVIDED, HOWEVER, in no
event shall the Exercise Price purchasable under an Automatic Non-Employee
Director Option be less than the par value (if any) of the Common Stock. The
Initial Options shall vest and become exercisable in four equal annual
installments on each of the first four anniversaries of the date of grant.
The Annual Options shall be 100% vested and fully exercisable as of the date
of grant.

In the event that the number of Shares available for grant
under the Plan is not sufficient to accommodate the Automatic Non-Employee
Director Options, then the remaining Shares available for Automatic
Non-Employee Director Options shall be granted to Non-Employee Directors on a
pro-rata basis. No further grants shall be made until such time, if any, as
additional Shares become available for grant under the Plan through action of
the Board and/or the stockholders of the Company to increase the number of
Shares that may be issued under the Plan or through cancellation or
expiration of Awards previously granted hereunder.

SECTION 7. STOCK APPRECIATION RIGHTS AND LIMITED STOCK APPRECIATION RIGHTS.

Stock Appreciation Rights and Limited Stock Appreciation Rights
may be granted either alone ("Free Standing Rights") or in conjunction with
all or part of any Option granted under the Plan ("Related Rights"). In the
case of a Non-Qualified Stock Option, Related Rights may be granted either at
or after the time of the grant of such Option. In the case of an Incentive
Stock Option, Related Rights may be granted only at the time of the grant of
the Incentive Stock Option. The Administrator shall determine the Eligible
Recipients to whom, and the time or times at which, grants of Stock
Appreciation Rights or Limited Stock Appreciation Rights shall be made; the
number of Shares to be awarded, the Exercise Price (or, in the case of a
Limited Stock Appreciation Right, the "Change in Control" price), and all
other conditions of Stock Appreciation Rights and Limited Stock Appreciation
Rights. The provisions of Stock Appreciation Rights and Limited Stock
Appreciation Rights need not be the same with respect to each Participant.

Stock Appreciation Rights and Limited Stock Appreciation Rights
granted under the Plan shall be subject to the following terms and conditions
and shall contain such additional

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<PAGE>

terms and conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable:

(a) AWARDS. The prospective recipient of a Stock
Appreciation Right or Limited Stock Appreciation Right shall not have any
rights with respect to such Award, unless and until such recipient has
executed an Award Agreement evidencing the Award (a "Stock Appreciation Right
Agreement" or "Limited Stock Appreciation Right Agreement," as appropriate)
and delivered a fully executed copy thereof to the Company, within a period
of sixty days (or such other period as the Administrator may specify) after
the award date. Participants who are granted Stock Appreciation Rights or
Limited Stock Appreciation Rights shall have no rights as stockholders of the
Company with respect to the grant or exercise of such rights.

(b) EXERCISABILITY.

(i) Stock Appreciation Rights that are Free
Standing Rights ("Free Standing Stock Appreciation Rights") shall
be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Administrator at or after
grant; PROVIDED, HOWEVER, that no Free Standing Stock Appreciation
Right shall be exercisable during the first six months of its
term, except that this additional limitation shall not apply in
the event of a Participant's death or Disability prior to the
expiration of such six-month period.

(ii) Stock Appreciation Rights that are Related
Rights ("Related Stock Appreciation Rights") shall be exercisable
only at such time or times and to the extent that the Options to
which they relate shall be exercisable in accordance with the
provisions of Section 6 above and this Section 7 of the Plan;
PROVIDED, HOWEVER, that a Related Stock Appreciation Right granted
in connection with an Incentive Stock Option shall be exercisable
only if and when the Fair Market Value of the Common Stock subject
to the Incentive Stock Option exceeds the Exercise Price of such
Option; PROVIDED, FURTHER, that no Related Stock Appreciation
Right shall be exercisable during the first six months of its
term, except that this additional limitation shall not apply in
the event of a Participant's death or Disability prior to the
expiration of such six-month period.

(iii) Limited Stock Appreciation Rights shall only
be exercised within the 30-day period following a "Change in
Control" (as defined by the Administrator in the Limited Stock
Appreciation Right Agreement evidencing such right) and, with
respect to Limited Stock Appreciation Rights that are Related
Rights ("Related Limited Stock Appreciation Rights"), only to the
extent

15
<PAGE>

that the Options to which they relate shall be exercisable in
accordance with the provisions of Section 6 above and this Section 7
of the Plan.

(i) Upon the exercise of a Free Standing Stock
Appreciation Right, the Participant shall be entitled to receive
up to, but not more than, an amount in cash or that number of
Shares (or any combination of cash and Shares) equal in value to
the excess of the Fair Market Value as of the date of exercise
over the per share Exercise Price specified in the Free Standing
Stock Appreciation Right (which Exercise Price shall be no less
than 100% of the Fair Market Value of the Common Stock on the date
of grant) multiplied by the number of Shares in respect of which
the Free Standing Stock Appreciation Right is being exercised,
with the Administrator having the right to determine the form of
payment.

(ii) A Related Right may be exercised by a
Participant by surrendering the applicable portion of the related
Option. Upon such exercise and surrender, the Participant shall
be entitled to receive up to, but not more than, an amount in cash
or that number of Shares (or any combination of cash and Shares)
equal in value to the excess of the Fair Market Value as of the
date of exercise over the per share Exercise Price specified in
the related Option multiplied by the number of Shares in respect
of which the Related Stock Appreciation Right is being exercised,
with the Administrator having the right to determine the form of
payment. Options which have been so surrendered, in whole or in
part, shall no longer be exercisable to the extent the Related
Rights have been so exercised.

(iii) Upon the exercise of a Limited Stock
Appreciation Right, the Participant shall be entitled to receive
an amount in cash equal in value to the excess of the "Change in
Control Price" (as defined in the Award Agreement evidencing such
Limited Stock Appreciation Right) of a share of Common Stock Share
as of the date of exercise over (A) the per share Exercise Price
specified in the related Option, or (B) in the case of a Limited
Stock Appreciation Right which is a Free Standing Stock
Appreciation Right, the per share Exercise Price specified in the
Free Standing Stock Appreciation Right, such excess to be
multiplied by the number of Shares in respect of which the Limited
Stock Appreciation Right shall have been exercised.

(a) NON-TRANSFERABILITY.

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<PAGE>

(i) Free Standing Stock Appreciation Rights shall
be transferable only when and to the extent that an Option would
be transferable under Section 6(f) of the Plan.

(ii) Related Stock Appreciation Rights shall be
transferable only when and to the extent that the underlying
Option would be transferable under Section 6(f) of the Plan.

(iii) Limited Stock Appreciation Rights shall be
transferable only when and to the extent that an Option would be
transferable under Section 6(f) of the Plan.

(b) TERMINATION OF EMPLOYMENT OR SERVICE

(i) In the event of the termination of employment
or service of a Participant who has been granted one or more Free
Standing Stock Appreciation Rights, such rights shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Administrator at or after
grant.

(ii) In the event of the termination of employment
or service of a Participant who has been granted one or more
Related Stock Appreciation Rights, such rights shall be
exercisable at such time or times and subject to such terms and
conditions as set forth in the related Options.

(iii) In the event of the termination of employment
or service of a Participant who has been granted one or more
Limited Stock Appreciation Rights, such rights shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Administrator at or after
grant.

(i) The term of each Free Standing Stock
Appreciation Right shall be fixed by the Administrator, but no
Free Standing Stock Appreciation Right shall be exercisable more
than ten years after the date such right is granted.

(ii) The term of each Related Stock Appreciation
Right shall be the term of the Option to which it relates, but no
Related Stock Appreciation Right shall be exercisable more than
ten years after the date such right is granted.

17
<PAGE>

(iii) The term of each Limited Stock Appreciation
Right shall be fixed by the Administrator, but no Limited Stock
Appreciation Right shall be exercisable more than ten years after
the date such right is granted.

SECTION 8 RESTRICTED STOCK, DEFERRED STOCK AND PERFORMANCE SHARES.

Awards of Restricted Stock, Deferred Stock or Performance
Shares may be issued either alone or in addition to other Awards granted
under the Plan. The Administrator shall determine the Eligible Recipients to
whom, and the time or times at which, Awards of Restricted Stock, Deferred
Stock or Performance Shares shall be made; the number of Shares to be
awarded; the Exercise Price, if any, to be paid by the Participant for the
acquisition of Restricted Stock, Deferred Stock or Performance Shares; the
Restricted Period (as defined in Section 8(b)) applicable to Awards of
Restricted Stock or Deferred Stock; the performance objectives applicable to
Awards of Deferred Stock or Performance Shares; and all other conditions of
the Awards of Restricted Stock, Deferred Stock and Performance Shares.
Subject to the requirements of Section 162(m) of the Code, as applicable, the
Administrator may also condition the grant of the Award of Restricted Stock,
Deferred Stock or Performance Shares upon the exercise of Options, or upon
such other criteria as the Administrator may determine, in its sole
discretion. The provisions of the Awards of Restricted Stock, Deferred Stock
or Performance Shares need not be the same with respect to each Participant.
In the sole discretion of the Administrator, loans may be made to
Participants in connection with the purchase of Restricted Stock under
substantially the same terms and conditions as provided in Section 6(e) of
the Plan with respect to the exercise of Options.

(a) AWARDS AND CERTIFICATES. The prospective recipient of
Awards of Restricted Stock, Deferred Stock or Performance Shares shall not
have any rights with respect to any such Award, unless and until such
recipient has executed an Award Agreement evidencing the Award (a "Restricted
Stock Award Agreement," "Deferred Stock Award Agreement" or "Performance
Shares Award Agreement," as appropriate) and delivered a fully executed copy
thereof to the Company, within a period of sixty days (or such other period
as the Administrator may specify) after the award date. Except as otherwise
provided below in Section 8(b), (i) each Participant who is granted an Award
of Restricted Stock or Performance Shares shall be issued a stock certificate
in respect of such shares of Restricted Stock or Performance Shares; and (ii)
such certificate shall be registered in the name of the Participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to any such Award.

The Company may require that the stock certificates evidencing
Restricted Stock or Performance Shares granted hereunder be held in the
custody of the Company until the restrictions thereon shall have lapsed, and
that, as a condition of any Award of Restricted Stock

18
<PAGE>

or Performance Shares, the Participant shall have delivered a stock power,
endorsed in blank, relating to the Shares covered by such Award.

With respect to Awards of Deferred Stock, at the expiration of
the Restricted Period, stock certificates in respect of such Shares of
Deferred Stock shall be delivered to the Participant, or his legal
representative, in a number equal to the number of Shares covered by the
Deferred Stock Award.

(b) RESTRICTIONS AND CONDITIONS. The Awards of Restricted
Stock, Deferred Stock and Performance Shares granted pursuant to this Section
8 shall be subject to the following restrictions and conditions:

(i) Subject to the provisions of the Plan and the
Restricted Stock Award Agreement, Deferred Stock Award Agreement
or Performance Shares Award Agreement, as appropriate, governing
any such Award, during such period as may be set by the
Administrator commencing on the date of grant (the "Restricted
Period"), the Participant shall not be permitted to sell,
transfer, pledge or assign shares of Restricted Stock, Deferred
Stock or Performance Shares awarded under the Plan; PROVIDED,
HOWEVER, that the Administrator may, in its sole discretion,
provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions in whole or in part based on
such factors and such circumstances as the Administrator may
determine, in its sole discretion, including, but not limited to,
the attainment of certain performance related goals, the
Participant's termination of employment or service as a director,
consultant or advisor to the Company or any Parent or Subsidiary,
the Participant's death or Disability or the occurrence of a
"change in control" as defined in the Restricted Stock Award
Agreement, Deferred Stock Award Agreement or Performance Shares
Award Agreement, as appropriate, evidencing such Award.

(ii) Except as provided in Section 8(c)(i), the
Participant shall generally have the rights of a stockholder of
the Company with respect to Restricted Stock or Performance Shares
during the Restricted Period. The Participant shall generally not
have the rights of a stockholder with respect to Shares subject to
Awards of Deferred Stock during the Restricted Period; PROVIDED,
HOWEVER, that dividends declared during the Restricted Period with
respect to the number of Shares covered by Awards of Deferred
Stock shall be paid to the Participant. Certificates for
unrestricted Shares shall be delivered to the Participant promptly
after, and only after, the Restricted Period shall expire without
forfeiture in respect of such Awards of Restricted Stock,
Deferred Stock

19
<PAGE>

or Performance Shares except as the Administrator, in its sole
discretion, shall otherwise determine.

(iii) The rights of Participants granted Awards of
Restricted Stock, Deferred Stock or Performance Shares upon
termination of employment or service as a director, consultant or
advisor to the Company or to any Parent or Subsidiary terminates
for any reason during the Restricted Period shall be set forth in
the Restricted Stock Award Agreement, Deferred Stock Award
Agreement or Performance Shares Award Agreement, as appropriate,
governing such Awards.

SECTION 9 AMENDMENT AND TERMINATION.

The Board may amend, alter or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made that would impair the
rights of a Participant under any Award theretofore granted without such
Participant's consent, or that, without the approval of the stockholders (as
described below), would:

(a) except as provided in Section 3 of the Plan, increase
the total number of Shares reserved for issuance under the Plan;

(b) change the class of officers, directors, employees,
consultants and advisors eligible to participate in the Plan; or

Notwithstanding the foregoing, stockholder approval under this
Section 9 shall only be required at such time and under such circumstances as
stockholder approval would be required under Section 162(m) of the Code or
other applicable law, rule or regulation with respect to any material
amendment to an employee benefit plan of the Company.

The Administrator may amend the terms of any Award theretofore
granted, prospectively or retroactively, but, subject to Section 3 of Plan,
no such amendment shall impair the rights of any Participant without his or
her consent.

SECTION 10 UNFUNDED STATUS OF PLAN.

The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained

20
<PAGE>

herein shall give any such Participant any rights that are greater than those
of a general creditor of the Company.

SECTION 11 GENERAL PROVISIONS.

(a) Shares shall not be issued pursuant to the exercise of
any Award granted hereunder unless the exercise of such Award and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act
of 1933, as amended, the Exchange Act and the requirements of any stock
exchange upon which the Common Stock may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

(b) The Administrator may require each person acquiring
Shares to represent to and agree with the Company in writing that such person
is acquiring the Shares without a view to distribution thereof. The
certificates for such Shares may include any legend which the Administrator
deems appropriate to reflect any restrictions on transfer.

All certificates for Shares delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Stock is then listed, and any applicable Federal or
state securities law, and the Administrator may cause a legend or legends to
be placed on any such certificates to make appropriate reference to such
restrictions.

(c) Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval, if such approval is required; and such arrangements may
be either generally applicable or applicable only in specific cases. The
adoption of the Plan shall not confer upon any Eligible Recipient any right
to continued employment or service with the Company or any Parent or
Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company or any Parent or Subsidiary to terminate the employment
or service of any of its Eligible Recipients at any time.

(d) Each Participant shall, no later than the date as of
which the value of an Award first becomes includable in the gross income of
the Participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld
with respect to such Award. The obligations of the Company under the Plan
shall be conditional on the making of such payments or arrangements, and the
Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant.

21
<PAGE>

(e) No member of the Board or the Administrator, nor any
officer or employee of the Company acting on behalf of the Board or the
Administrator, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Administrator and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted
by law, be fully indemnified and protected by the Company in respect of any
such action, determination or interpretation.

SECTION 12 STOCKHOLDER APPROVAL; EFFECTIVE DATE OF PLAN; EFFECTIVE DATE OF
AMENDMENTS.

(a) The grant of any Award hereunder shall be contingent
upon stockholder approval of the Plan being obtained within 12 months before
or after the date the Board adopts the Plan.

(b) Subject to the approval of the Plan by the stockholders
of the Company within twelve (12) months before or after the date the Plan is
adopted by the Board, the Plan shall be effective as of ___________, 2000.

(c) Subject to the approval of the Amendments by the
stockholders of the Company within twelve (12) months before or after the
date the Amendments are adopted by the Board, the Amendments to the Plan
shall be effective as of the first trading day on or after the date on which
the Securities and Exchange Commission declares the Company's Registration
Statement effective (the "Effective Date").

SECTION 13 TERM OF PLAN.

No Option, Stock Appreciation Right, Limited Stock Appreciation
Right, or Awards of Restricted Stock, Deferred Stock or Performance Shares
shall be granted pursuant to the Plan on or after ___________, 2010, but
Awards theretofore granted may extend beyond that date.

22
<PAGE>

ANNEX A TO
NOGATECH, INC.
2000 EQUITY INCENTIVE PLAN
ISRAELI SEC. 102 STOCK OPTION PLAN

1. DESIGNATION AND PURPOSE OF THE ISRAELI PLAN

This Annex A to the Nogatech, Inc. 2000 EQUITY INCENTIVE PLAN (the "General
Plan"), is the Israeli Sec. 102 Equity Incentive Plan (the "Israeli Plan") for
key employees (including directors who are employees) and consultants of
Nogatech Ltd., a wholly-owned Israeli subsidiary of Nogatech, Inc. (the
"Company") in accordance with the terms and conditions set forth below. For the
purposes of this Annex A, the Israeli Sec. 102 Stock Option Plan shall be
referred to as such, or as the "Plan."

2. GENERAL PLAN INCORPORATED BY REFERENCE

The provisions of the General Plan shall apply to the Israeli Plan, MUTATIS
MUTANDIS, except that the General Plan shall be deemed amended to incorporate
the provisions herein and shall be interpreted in such a way as to ensure
conformity with Section 102. Any provisions of the General Plan which are in
violation of Section 102 shall not apply to the Israeli Plan. In the event of
any conflicting provisions between the law applicable to the General Plan and
the Israeli Law which is applicable to this Israeli Plan, the provisions of the
Israeli Law shall prevail. In respect of issuances of Options under this Israeli
Plan (as annexed to the General Plan), the Committee need not determine whether
the issuances hereunder are "Incentive Stock Options" within the meaning of the
US Federal Income Tax Code or "Non-Qualified Stock Options".

In the event of any conflict between the Israeli Plan and the General Plan, then
the provisions of the Israeli Plan shall prevail.

All capitalized terms used in this Israeli Plan shall have the meanings
designated in the General Plan, unless otherwise defined in this Israeli Plan.3.
ELIGIBILITY

Options may be granted only to employees (including directors who are employees)
and consultants of Nogatech Ltd.

4. DEFINITIONS

The following definitions shall be applicable to the terms used in the Israeli
Plan:

4.a "Committee" shall mean a Committee of the Board of Directors of the
Company (the "Board"), or a group approved by the Board, established to
administer the terms of the Israeli Plan. If no Committee is approved by
the Board, then the Committee shall be the full Board.

<PAGE>

4.b "Trust Agreement" means the agreement between the Company, Nogatech Ltd.
and the Trustee as may be in effect from time to time specifying the
duties and authority of the Trustee.

4.c "Trust Assets" means the Options or shares held by the Trustee under the
Trust Agreement for the benefit of the Optionees pursuant to the Israeli
Plan and the Trust Agreement.

4.d "Trustee" means the Trustee (and any successor Trustee) appointed by the
Board to hold the Trust Assets.

5. GRANT OF OPTIONS

Each Option granted for the benefit of a Optionee under the Israeli Plan shall
be evidenced by a Stock Option Agreement, to be entered into by and between the
Company, Nogatech Ltd. and such Optionee, in form and substance as may be from
time to time approved by the Committee, which shall incorporate the provisions
of the General Plan, as amended hereby, and the Trust Agreement by reference. In
the event of any conflict between the terms and conditions of a Stock Option
Agreement and the terms hereof, the terms hereof shall control.

6. GRANT OF OPTIONS TO BE HELD BY TRUSTEE; DIVIDEND AND VOTING RIGHTS

6.a GRANT OF OPTIONS TO BE HELD BY TRUSTEE

(i) Each Option shall be issued to the Trustee to be held in trust for
the benefit of the Optionee. All certificates representing Options shall be
issued in the name of the Trustee under the Israeli Plan, shall be deposited
with the Trustee, and shall be held by the Trustee until such time that the
shares issued pursuant to the exercise of such Options are released as permitted
under Section 102 and as further provided in the Israeli Plan.

(ii) Anything herein to the contrary notwithstanding, no Option shall
be released by the Trustee from trust until after two (2) years subsequent to
the grant of the Option to the Trustee for the benefit of the Optionee (the
"Earliest Release Date"). Subject to the terms hereof and the terms of the
Option Agreement, at any time after the Earliest Release Date with respect to
any Option, each Optionee may, after exercising the Options or any part thereof,
require the Company to cause the Trustee to release the shares issued pursuant
to the exercise of such Options, provided that no shares shall be released by
the Trustee to the Optionee unless and until such Optionee shall have deposited
with the Trustee an amount of money which, in the Trustee's sole judgment, is
sufficient and necessary for the discharge of such Optionee's tax obligations
with respect to such Options and shares. Upon the release by an Optionee of any
shares held in Trust, the Company shall (or shall cause the Trustee to) withhold
from the proceeds of such release all applicable taxes, shall remit the amount
withheld to the appropriate Israeli tax authorities, shall pay the balance
thereof directly to such Optionee and shall report to such Optionee the amount
so withheld and paid to said tax authorities.

6.b DIVIDEND AND VOTING No Optionee shall have any of the rights of a
shareholder of the Company with respect to any Options or Shares which are to
derive from the exercise of any Options, until such time as the Options are duly
exercised. If upon the exercise of any Option, Shares are issued hereunder to
the Trustee, the relevant Optionee shall be entitled to receive (i) a

<PAGE>

proxy from the Trustee to vote the Shares that the Trustee holds for Optionee's
benefit and (ii) any cash dividends paid with respect to such Shares.

7. MAINTENANCE OF ASSETS BY TRUSTEE

The Trustee shall maintain records of the Options held for the benefit of each
Optionee.

8. METHOD OF EXERCISE OF OPTION

An Option shall be exercisable, in whole or in part, during the Option Period,
upon delivery by the Optionee to each of the Trustee and the Company of a duly
executed copy of the relevant notice of exercise in the prescribed form,
specifying the number of Shares as to which such Option is being exercised. The
notice to the Company shall be accompanied by full payment of the option
exercise price thereof (the "Option Exercise Price") in NIS or in such currency
as may be required by the Company or the Committee. If the exercise price is
paid in any currency other than United States Dollars, the exchange rate shall
be that reasonably specified by the Company at the time of exercise. The shares
issued pursuant to exercise of the Options shall be delivered by the Company to
the Trustee pursuant to the provisions of Section 6(a) above, or upon the
Trustee's confirmation that the Trustee has received an amount sufficient to pay
the full withholding tax liability in accordance with Section 6 above, the
Company shall deliver the shares directly to the Optionee, or the Optionee's
nominee.

<PAGE>

9. ADMINISTRATION, AMENDMENT AND TERMINATION OF THE ISRAELI PLAN

The Board and the Committee shall have the same power and authority with respect
to the administration, amendment and termination of the Israeli Plan as they
hold in respect of the General Plan, except that no discretion or authority is
hereby granted to the Board or the Committee so as to disqualify the Israeli
Plan under Section 102.

10. GOVERNING LAW

This Israeli Plan, and any dispute, controversy or claim arising out of, or
relating to, any tax issue regarding the General Plan which might arise between
(i) the Company, Nogatech Ltd., or the Trustee, and (ii) a Optionee who was
granted an Option pursuant to this Israeli Plan, shall be governed and
interpreted in accordance with the laws of the State of Israel.

<PAGE>

EXHIBIT 10.5

NOGATECH, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN

SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

The name of this plan is the Nogatech, Inc. 2000 Employee Stock
Purchase Plan (the "Plan"). The Plan was adopted by the Board (defined
below) on March 5, 2000, and approved by the stockholders of the Company
(defined below) on __________, 2000. The purpose of the Plan is to provide
Employees (defined below) of the Company (defined below), its Parent (defined
below) and any Designated Subsidiary (defined below) with the opportunity to
purchase Common Stock (defined below) through accumulated payroll deductions.
It is the intention of the Company that the Plan qualify as an "employee
stock purchase plan" within the meaning of Section 423 of the Code (defined
below), and that the provisions of the Plan be construed in a manner
consistent with the requirements of such Section of the Code.

For purposes of the Plan, the following terms shall be defined
as set forth below:

a. "ADMINISTRATOR" means the Board, or if and to the extent
the Board does not administer the Plan, the Committee in accordance with
Section 11 below.

b. "BOARD" shall mean the Board of Directors of the Company.

c. "CHANGE IN CAPITALIZATION" shall mean any increase,
reduction, change or exchange of Shares for a different number of shares
and/or kind of shares or other securities of the Company by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
issuance of warrants or rights, stock dividend, stock split or reverse stock
split, combination or exchange of Shares, repurchase of Shares, change in
corporate structure or otherwise.

d. "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.

e. "COMMITTEE" shall mean a committee appointed by the
Board to administer the Plan and to perform the functions set forth herein.

f. "COMMON STOCK" shall mean the common stock, $0.001 par
value, of the Company.

g. "COMPANY" shall mean Nogatech, Inc., a Delaware
corporation.

h. "COMPENSATION" shall mean the fixed salary or wage paid
by the Company to an Employee as reported by the Company to the United States
government for Federal income tax purposes, including an Employee's portion
of salary deferral contributions pursuant to Section 401(k) of the Code and

<PAGE>

any amount excludable pursuant to Section 125 of the Code, but excluding any
payments for overtime, shift premium, incentive compensation, bonuses,
commissions, severance pay, expense reimbursements or any credit or benefit
under any employee plan maintained by the Company.

i. "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the
absence of any interruption or termination of service as an Employee.
Continuous Status as an Employee shall not be considered interrupted in the
case of a leave of absence agreed to in writing by the Company, its Parent or
a Designated Subsidiary, as appropriate, provided that (x) such leave is for
a period of not more than 90 days or (y) reemployment with the Company, its
Parent or a Designated Subsidiary, as appropriate, is guaranteed by contract
or statute upon expiration of such leave.

j. "DESIGNATED SUBSIDIARY" shall mean a Subsidiary that has
been designated by the Administrator from time to time in its sole discretion
as eligible to participate in the Plan.

k. "EMPLOYEE" shall mean any person who is customarily
employed for at least twenty (20) hours per week and more than five (5)
months in a calendar year by the Company, its Parent or a Designated
Subsidiary.

l. "ENROLLMENT DATE" shall mean the first Trading Day of
each Offering Period.

m. "FAIR MARKET VALUE" as of a particular date shall mean
the fair market value of the Shares as determined by the Administrator in its
sole discretion; PROVIDED, HOWEVER, that (i) if the Shares are admitted to
trading on a national securities exchange, fair market value of the Shares on
any date shall be the closing sale price reported for the Shares on such
exchange on such date or, if no sale was reported on such date, on the last
date preceding such date on which a sale was reported, (ii) if the Shares are
admitted to quotation on the National Association of Securities Dealers
Automated Quotation ("Nasdaq") System or other comparable quotation system
and have been designated as a National Market System ("NMS") security, fair
market value of the Shares on any date shall be the closing sale price
reported for the Shares on such system on such date or, if no sale was
reported on such date, on the last date preceding such date on which a sale
was reported, or (iii) if the Shares are admitted to quotation on the Nasdaq
System but have not been designated as an NMS security, fair market value of
the Shares on any date shall be the average of the highest bid and lowest
asked prices of the Shares on such system on such date or, if no bid and ask
prices were reported on such date, on the last date preceding such date on
which both bid and ask prices were reported. Notwithstanding anything to the
contrary contained herein, for purposes of the Enrollment Date of the first
Offering Period under the Plan, fair market value of the Shares shall be the
initial price to the public as set forth in the final prospectus included
within the registration statement in Form S-1 filed with the Securities and
Exchange Commission for the initial underwritten public offering of the Stock
(the "Registration Statement").

n. "OFFERING PERIOD" shall mean a period as described in
Section 3 hereof.

o. "PARENT" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at
the time of the granting of an option, each of the corporations

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<PAGE>

other than the Company owns Shares possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain, whether or not such corporation now exists or
hereafter acquires the Company.

p. "PARTICIPANT" shall mean an Employee who elects to
participate in the Plan pursuant to Section 4 hereof.

q. "PURCHASE DATE" shall mean the last Trading Day of each
Purchase Period.

r. "PURCHASE PERIOD" shall mean the approximately six-month
period commencing after one Purchase Date and ending with the next Purchase
Date, except that the first Purchase Period of any Offering Period shall
commence on the Enrollment Date and end on the next Purchase Date; provided,
however, that the first Purchase Period of the first Offering Period under the
Plan shall commence on the date on which the Securities and Exchange Commission
declares the Company's Registration Statement effective and end on the last
Trading Day occurring in the period ending on August 14, 2000.

s. "PURCHASE PRICE" shall mean an amount equal to the
lesser of (i) 85% of the Fair Market Value of a Share on the Enrollment Date
or (ii) 85% of the Fair Market Value of Share on the Purchase Date.

t. "SHARE" shall mean a share of Common Stock.

u. "SUBSIDIARY" shall mean any corporation (other than the
Company) in an unbroken chain of corporations, beginning with the Company,
if, at the time of the granting of an option, each of the corporations other
than the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain, whether or not such corporation now exists
or is hereafter organized or acquired by the Company or a Subsidiary.

v. "TRADING DAY" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.

SECTION 2. ELIGIBILITY.

a. Subject to the limitations set forth in Section 2(b)
hereof, any person who is an Employee as of an Enrollment Date shall be
eligible to participate in the Plan in accordance with Section 4 hereof and
shall be granted an option for the Offering Period commencing on such
Enrollment Date.

b. Notwithstanding any provision of the Plan to the
contrary, no Employee shall be granted an option under the Plan (i) if such
Employee (or any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own stock and/or hold
outstanding options to purchase stock possessing five percent (5%) or more of
the total combined voting power or value of all

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<PAGE>

classes of stock of the Company, its Parent or of any Subsidiary, or (ii) if
such grant would permit such Employee's right to purchase stock under all
employee stock purchase plans (described in Section 423 of the Code) of the
Company, its Parent and of any Subsidiary to accrue at a rate that exceeds
twenty-five thousand dollars ($25,000) of Fair Market Value of such stock
(determined at the time such option is granted) for any calendar year in
which such option would be outstanding. Any amounts received from an
Employee that cannot be used to purchase Shares as a result of this
limitation shall be returned as soon as reasonably practicable to the
Employee without interest.

SECTION 3. OFFERING PERIODS.

The Plan shall be implemented by a series of consecutive,
overlapping twenty-four month Offering Periods, with a new Offering Period
commencing on the first Trading Day on or after August 15 (beginning in the
year [2000] and February 15 (beginning in the year 2001) of each year, or at
such other time or times as may be determined by the Administrator, and
ending on the last Trading Day on or before February 14 and August 14,
respectively, occurring twenty-four months later or at such other time or
times as may be determined by the Administrator; PROVIDED, HOWEVER, that the
first Offering Period under the Plan shall be a shortened Offering Period
of approximately twenty-one (21) months, commencing with the first Trading Day
on or after the date on which the Securities and Exchange Commission declares
the Company's Registration Statement effective and ending on the last Trading
Day on or before February 14, 2002. The Plan shall continue until terminated
in accordance with Section 17 hereof. Subject to Section 17 hereof, the
Administrator shall have the power to change the duration and/or the
frequency of Offering Periods with respect to future offerings and shall use
its best efforts to notify Employees of any such change at least fifteen (15)
days prior to the scheduled beginning of the first Offering Period to be
affected. In no event shall any option granted hereunder be exercisable more
than twenty-seven (27) months from its date of grant.

To the extent permitted by applicable laws, if the Fair Market
Value of a share of Common Stock on any Purchase Date in an Offering Period
is lower than the Fair Market Value of a share of Common Stock on the
Enrollment Date of such Offering Period, then all Participants in such
Offering Period shall be automatically withdrawn from such Offering Period
immediately after the exercise of their option on such Purchase Date and
automatically re-enrolled in the immediately following Offering Period as of
the first day thereof.

SECTION 4. ENROLLMENT; PARTICIPATION.

a. On each Enrollment Date, the Company shall commence an
offering by granting each eligible Employee who has elected to participate in
such Offering Period pursuant to Section 4(b) hereof an

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<PAGE>

option to purchase on each Purchase Date of such Offering Period up to a
number of Shares determined by dividing each Employee's payroll deductions
accumulated prior to such Purchase Date and retained in the Participant's
account as of such Purchase Date by the applicable Purchase Price; provided
that in no event shall a Participant be permitted to purchase during each
Offering Period more than 5,000 Shares (assumes contemplated one-for-two
reverse stock split) (subject to any adjustment pursuant to Section 16
hereof), PROVIDED, FURTHER, that such purchase shall be subject to the
limitations set forth in Sections 2(b) and 10 hereof. Exercise of the option
shall occur as provided in Section 6 hereof, unless the Participant has
withdrawn pursuant to Section 8 hereof. The option with respect to an
Offering Period shall expire on the last Purchase Date with respect to such
Offering Period or the withdrawal date if earlier.

b. Subject to the limitations set forth in Section 2(b)
hereof, an Employee may elect to become a Participant in the Plan by
completing and filing a subscription agreement authorizing the Company to
make payroll deductions (as set forth in Section 5 hereof) at least five (5)
business days prior to the applicable Enrollment Date unless a later time for
filing the subscription agreement is set by the Administrator for all
Employees. Unless a Participant, by giving written notice (or such other
notice as may from time to time be prescribed by the Administrator), elects
not to participate with respect to any subsequent Offering Period, the
Participant shall be deemed to have accepted each new offer and to have
authorized payroll deductions in respect thereof during each subsequent
Offering Period.

SECTION 5. PAYROLL DEDUCTIONS.

a. An Employee may, in accordance with rules and procedures
adopted by the Administrator and subject to the limitation set forth in
Section 2(b) hereof, authorize payroll deductions in amounts which are not
less than one percent (1%) and not more than fifteen percent (15%)[CONFIRM]
of such Employee's Compensation on each payday during the Offering Period.
Payroll deductions shall commence on the first payroll paid following the
Enrollment Date, and shall end on the last payroll paid prior to each
Purchase Date of the Offering Period to which the subscription agreement is
applicable, unless sooner terminated by the Participant's withdrawal from the
Plan or termination of the Participant's Continuous Status as an Employee as
provided in Section 8 hereof. A Participant may increase or decrease his or
her rate of payroll deductions at any time during an Offering Period by
giving written notice (or such other notice as may from time to time be
prescribed by the Administrator). The change in rate shall be effective the
first full payroll period following five (5) business days after the
Company's receipt of the new subscription agreement unless the Company elects
to process a given change in rate of payroll deductions more quickly.

b. All payroll deductions made by a Participant shall be
credited to such Participant's account under the Plan and shall be withheld
in whole percentages only. A Participant may not make any additional payments
into such account.

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<PAGE>

c. Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 2(b) hereof, a
Participant's rate of payroll deductions may be decreased by the Company to
zero percent (0%) at any time during an Offering Period. Payroll deductions
shall recommence at the rate provided for in such Participant's subscription
agreement at the beginning of the first Offering Period which is scheduled to
end the following calendar year, unless a Participant increases or decreases
the rate of his or her payroll deductions as provided in Section 5(a) hereof,
or terminates his or her participation in the Plan as provided in Section 8
hereof.

SECTION 6. PURCHASE OF SHARES.

Unless a Participant withdraws from the Plan as provided in
Section 8 hereof, such Participant's election to purchase Shares shall be
exercised automatically on each Purchase Date, and the maximum number of
whole Shares subject to option shall be purchased for each Participant at the
applicable Purchase Price with the accumulated payroll deductions in each
Participant's account as of the Purchase Date. No fractional Shares may be
purchased hereunder. Any payroll deductions accumulated in a Participant's
account following the purchase of Shares on any Purchase Date that are not
sufficient to purchase a full Share shall be retained in the Participant's
account for the subsequent Offering Period, subject to earlier withdrawal by
the Participant as provided in Section 8 hereof. Any additional amounts
remaining in a Participant's account following the purchase of Shares on any
Purchase Date that are equal to, or in excess of, the amount required under
this Section 6 to purchase at least one full Share shall be returned to the
Participant as soon as reasonably practicable following the Purchase Date.
During a Participant's lifetime, a Participant's option to purchase Shares
hereunder is exercisable only by the Participant.

SECTION 7. DELIVERY OF SHARES; WITHDRAWAL OR SALE OF SHARES.

As promptly as reasonably practicable after each Purchase Date,
the Company shall either arrange the delivery of the whole Shares purchased
on such date by each Participant to the Participant's brokerage account or
arrange the delivery to the Participant of a share certificate representing
such Shares.

SECTION 8. WITHDRAWAL; TERMINATION OF EMPLOYMENT.

a. A Participant may withdraw all, but not less than all,
of the payroll deductions credited to such Participant's account (that have
not been used to purchase Shares) under the Plan by giving written notice to
the Company at least five (5) business days prior to the Purchase Date of the
Offering Period in which the withdrawal occurs. Withdrawal of payroll
deductions shall be deemed to be a withdrawal from the

6
<PAGE>

Plan. All of the payroll deductions credited to such Participant's account
(that have not been used to purchase Shares) shall be paid to such
Participant promptly after receipt of such Participant's notice of
withdrawal, and such Participant's eligibility to participate in the Plan for
the Offering Period in which the withdrawal occurs shall be automatically
terminated. No further payroll deductions for the purchase of Shares shall be
made for such Participant during such Offering Period. If a Participant
withdraws from an Offering Period, payroll deductions for such Participant
shall not resume at the beginning of the succeeding Offering Period unless
the Participant timely delivers to the Company a new subscription agreement
in accordance with the provisions of Section 4 hereof. A Participant's
withdrawal from an Offering Period shall not have any effect upon a
Participant's eligibility to participate in any similar plan which may
hereafter be adopted by the Company or in succeeding Offering Periods which
commence after termination of the Offering Period from which the Participant
withdraws.

b. Upon termination of a Participant's Continuous Status as
an Employee during the Offering Period for any reason, including
Participant's voluntary termination, retirement or death, all the payroll
deductions credited to such Participant's account (that have not been used to
purchase Shares) shall be returned to such Participant or, in the case of
such Participant's death, to the person or persons entitled thereto under
Section 12 hereof, and such Participant's option shall be automatically
terminated. Such termination shall be deemed a withdrawal from the Plan.

SECTION 9. INTEREST.

No interest shall accrue on or be payable by the Company with
respect to the payroll deductions of a Participant in the Plan.

SECTION 10. STOCK SUBJECT TO PLAN.

(a) Subject to adjustment upon Changes in Capitalization of
the Company as provided in Section 16 hereof, the maximum aggregate number of
Shares which shall be reserved for sale under the Plan shall be 350,000
Shares (assumes contemplated one-for-two reverse stock split), plus an
annual increase to be added on the first day of the Company's fiscal year
(beginning 2001) equal to the lesser of (i) 100,000 Shares (assumes
contemplated one-for-two reverse stock split) or (ii) one percent (1%) of
the number of outstanding shares of Common Stock on the last Trading Day of
the immediately preceding fiscal year. Such Shares shall be available as of
the first day of the first Offering Period that commences in each such fiscal
year. The Shares may consist, in whole or in part, of authorized and
unissued Shares or treasury Shares. If the total number of Shares which
would otherwise be subject to options granted pursuant to Section 2(a) hereof
on an Enrollment Date exceeds the number of Shares then available under the
Plan (after deduction of all Shares for which options have been exercised or
are then outstanding), the Administrator shall make a pro rata allocation of
the Shares remaining available for option grant in as uniform a manner as
shall be practicable and as it shall determine to be equitable. In such
event, the Administrator shall give written notice to each Participant of
such reduction of the number of option Shares affected thereby and shall
similarly reduce the rate of payroll deductions, if necessary.

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<PAGE>

(b) No Participant shall have rights as a stockholder with
respect to any option granted hereunder until the date on which such Shares
shall be deemed to have been purchased by the Participant in accordance with
Section 6 hereof.

(c) Shares purchased on behalf of a Participant under the
Plan shall be registered in the name of the Participant or, if requested in
writing by the Participant, in the names of the Participant and the
Participant's spouse.

SECTION 11. ADMINISTRATION.

The Plan shall be administered by the Board or a Committee. The
Board or the Committee shall have full power and authority, subject to the
provisions of the Plan, to promulgate such rules and regulations as it deems
necessary for the proper administration of the Plan, to interpret the
provisions and supervise the administration of the Plan, and to take all
action in connection therewith or in relation thereto as it deems necessary
or advisable. Any decision reduced to writing and signed by a majority of the
members of the Committee shall be fully effective as if it had been made at a
meeting duly held. The Company shall pay all expenses incurred in the
administration of the Plan. No member of the Board or Committee shall be
personally liable for any action, determination, or interpretation made in
good faith with respect to the Plan, and all members of the Board or
Committee shall be fully indemnified by the Company with respect to any such
action, determination or interpretation.

All decisions, determinations and interpretations of the Board
or Committee shall be final and binding on all persons, including the
Company, its Parent, any Subsidiary, the Employee (or any person claiming any
rights under the Plan through any Employee) and any stockholder of the
Company, its Parent or any Subsidiary.

The Committee may adopt rules or procedures relating to the
operation and administration of the Plan to accommodate the specific
requirements of local laws and procedures. Without limiting the generality
of the foregoing, the Committee is specifically authorized to adopt rules and
procedures regarding handling of payroll deductions, payment of interest,
conversion of local currency, payroll tax, withholding procedures and
handling of stock certificates which vary with local requirements. The
Committee may also adopt sub-plans applicable to particular Subsidiaries or
locations, which sub-plans may be designed to be outside the scope of Section
423 of the Code. The rules of such sub-plans may take precedence over other
provisions of this Plan, with the exception of Section 10(a), but unless
otherwise superseded by the terms of such sub-plan, the provisions of this
Plan shall govern the operation of such sub-plan.

SECTION 12. DESIGNATION OF BENEFICIARY.

a. A Participant may file, on forms supplied by and
delivered to the Company, a written designation of a beneficiary who is to
receive Shares and/or cash, if any, remaining in such Participant's account
under the Plan in the event of the Participant's death.

b. Such designation of beneficiary may be changed by the
Participant at any time by written notice. In the event of the death of a
Participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such Participant's death, the Company shall
deliver the balance of the Shares and/or cash credited to Participant's
account to the executor or administrator of the estate of the Participant or,
if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver

8
<PAGE>

such Shares and/or cash to the spouse or to any one or more dependents or
relatives of the Participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.

SECTION 13. TRANSFERABILITY.

Neither payroll deductions credited to a Participant's account
nor any rights with regard to the exercise of an option or any rights to
receive Shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by the laws of descent and
distribution or as provided in Section 12 hereof) by the Participant. Any
such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds in accordance with Section 8 hereof.

SECTION 14. USE OF FUNDS.

All payroll deductions received or held by the Company under
the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.

SECTION 15. REPORTS.

Individual accounts shall be maintained by the Company for each
Participant in the Plan. Statements of account shall be given to each
Participant at least annually which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of Shares purchased and
the remaining cash balance, if any.

SECTION 16. EFFECT OF CERTAIN CHANGES.

In the event of a Change in Capitalization or the distribution
of an extraordinary dividend, the Administrator shall conclusively determine
the appropriate equitable adjustments, if any, to be made under the Plan,
including without limitation adjustments to the number of Shares which have
been authorized for issuance under the Plan, but have not yet been placed
under option, as well as the Purchase Price of each option under the Plan
which has not yet been exercised. In the event of a Change in Control of the
Company, the Offering Period shall terminate unless otherwise provided by the
Administrator.

SECTION 17. AMENDMENT OR TERMINATION.

The Board may at any time terminate or amend the Plan. Except
as provided in Section 16 hereof, no such termination may adversely affect
options previously granted and no amendment may make any change in any option
theretofore granted which adversely affects the rights of any Participant.
To the extent necessary to comply with Section 423 of the Code (or any
successor rule or provision or any other applicable law, regulation or stock
exchange rule), the Company shall obtain stockholder approval in such a
manner and to such a degree as required.

SECTION 18. NOTICES.

All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been
duly given when they are received in a timely manner in the form specified by
the Company at the location, or by the person, designated by the Company for
the receipt thereof.

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<PAGE>

SECTION 19. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.

(a) This Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of
the State of California without giving effect to the choice of law principles
thereof, except to the extent that such law is preempted by Federal law.

(b) The obligation of the Company to sell or deliver Shares
with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Administrator.

SECTION 20. WITHHOLDING OF TAXES.

If the Participant makes a disposition, within the meaning of
Section 424(c) of the Code of any Share or Shares issued to Participant
pursuant to Participant's exercise of an option, and such disposition occurs
within the two-year period commencing on the day after the Enrollment Date or
within the one-year period commencing on the day after the Purchase Date,
Participant shall, within ten (10) days of such disposition, notify the
Company thereof and thereafter immediately deliver to the Company any amount
of Federal, state or local income taxes and other amounts which the Company
informs the Participant the Company may be required to withhold.

SECTION 21. EFFECTIVE DATE.

Subject to the approval of the Plan by the stockholders of the
Company within twelve (12) months before or after the date the Plan is
adopted by the Board, the Plan shall be effective as of the first Trading Day
on or after the date on which the Securities and Exchange Commission declares
the Company's Registration Statement effective (the "Effective Date").

SECTION 22. TERM OF PLAN.

No option shall be granted pursuant to the Plan and no Offering
Period shall commence on or after the tenth anniversary of the Effective
Date, but options theretofore granted may extend beyond that date.

<PAGE>

EXHIBIT 10.6
----------------

NOGA TECHNOLOGY, INC.
STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT is entered into as of January 1, 1993, by
and among DSP GROUP, INC., a California corporation ("DSPG"), SCITEX
CORPORATION, LTD., an Israeli public company ("SCITEX") (SCITEX and DSPG are
sometimes referred to herein individually as an "Investor" and collectively as
the "Investors"), and NOGA TECHNOLOGY, INC., a California corporation ("NOGA").

RECITALS

A. NOGA desires to raise money and obtain access to certain
technology through the sale of its stock to the Investors.

B. The Investors desire to purchase stock from NOGA, and NOGA
desires to sell stock to the Investors, on the terms and conditions hereinafter
set forth.

AGREEMENT

1. AUTHORIZATION AND SALE OF SECURITIES.

a. AUTHORIZATION. NOGA will authorize on, or before, the
Closing Date the sale and issuance of (i) up to six million (6,000,000) shares
of its Series A Preferred Stock (hereinafter the "Series A Preferred Stock"),
having the rights, preferences and privileges set forth in the Articles of
Incorporation in the form attached as Exhibit A to the Preincorporation
Agreement by and between SCITEX and DSPG (the "Preincorporation Agreement");
(ii) up to two thousand (2,000) shares of its common stock (hereinafter the
"Common Stock"); and (iii) a warrant to purchase up to one million (1,000,000)
shares of its Series A Preferred Stock in the form of Exhibit G attached to the
Preincorporation Agreement (the "Warrant") (the Series A Preferred Stock, the
Common Stock and the Warrant are herein collectively referred to as the
"Securities").

b. SALE OF SERIES A PREFERRED STOCK. Subject to the
terms and conditions hereof, NOGA will issue and sell to each Investor, and each
Investor shall purchase from NOGA, two million (2,000,000) shares of Series A
Preferred Stock for a per-share purchase price of One Dollar ($1.00). As
consideration for the purchase of the Series A Preferred Stock (i) SCITEX shall
pay Two Million Dollars ($2,000,000) to NOGA by cashier's check or wire
transfer; and (ii) DSPG shall transfer to NOGA certain technologies under the
terms of the Technology Transfer Agreement in the form of Exhibit C attached to
the Preincorporation Agreement (the "Technology Transfer Agreement"), and DSPG
shall license certain technologies to NOGA under the terms and conditions of
that certain Non-Exclusive License Agreement in the form of Exhibit F attached
to the Preincorporation Agreement (the

<PAGE>

"Non-Exclusive License Agreement").

c. SALE OF COMMON STOCK. Subject to the terms and
conditions hereof, NOGA will issue and sell to each Investor one thousand
(1,000) shares of Common Stock for a per-share purchase price of Ten Cents
($0.10). As consideration for the purchase of the Common Stock (i) SCITEX shall
pay One Hundred Dollars ($100.00) to NOGA; and (ii) DSPG shall transfer to NOGA
certain technologies under the terms of the Technology Transfer Agreement, and
DSPG shall license certain technologies to NOGA under the terms and conditions
of the Non-Exclusive License Agreement.

d. SALE OF WARRANT. Subject to the terms and conditions
hereof, NOGA will issue and sell to DSPG the Warrant to purchase up to one
million (1,000,000) shares of Series A Preferred Stock. As consideration for the
purchase of the Warrant, DSPG shall transfer to NOGA certain technologies under
the terms of the Technology Transfer Agreement, and DSPG shall license certain
technologies to NOGA under the terms and conditions of the Non-Exclusive License
Agreement.

2. ISSUANCE AND PAYMENT.

a. CLOSING. Subject to the terms and conditions hereof,
the closing of the purchase and sale of the Securities (hereinafter the
"Closing") shall be held at the law offices of Goldfarb, Levy, Giniger, Eran &
Co., Eliahu House, 21BN Gvirol, Tel Aviv, 64077, Israel, on, or about December
31, 1992, or at such other time and place upon which NOGA and the Investors
shall agree (the date of the Closing is hereinafter referred to as the "Closing
Date").

b. DELIVERY. At the Closing, NOGA will deliver to the
Investors their respective Securities, registered in their names, against
payment of the purchase price therefor.

3. SCITEX ADDITIONAL CONTRIBUTION OBLIGATION. SCITEX agrees to
contribute an additional One Million Dollars ($1,000,000) to NOGA (the "SCITEX
Additional Contribution Obligation") within twelve (12) months after the Closing
Date for an additional purchase of one million (1,000,000) shares of Series A
Preferred Stock if NOGA has received from an independent third party (other than
by way of equity investment), other than the Israeli Chief Scientist, at least
Five Hundred Thousand Dollars ($500,000) for development of technology or
products ("NRE Receipts"). If NOGA fails to receive the Five Hundred Thousand
Dollars ($500,000) in NRE Receipts within twelve (12) months after the Closing
Date, SCITEX or NOGA may extend by written request, the SCITEX Additional
Contribution Obligation deadline from twelve (12) months to fifteen (15) months.
If within the applicable time period, NOGA does not have NRE Receipts of at
least Five Hundred Thousand Dollars ($500,000), then (a) SCITEX shall not
obligate to make the SCITEX Additional Contribution Obligation; (b) DSPG shall

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not be obligated in any manner to transfer any additional technology to NOGA,
including any modifications, improvements, enhancements or debugging
("Improvements") to any technology already transferred to NOGA; and (c) either
party may trigger Quick Liquidation as such term is defined in the
Preincorporation Agreement. If SCITEX is obligated to make the SCITEX Additional
Contribution Obligation, but fails to timely meet that obligation then DSPG
shall not be obligated in any manner to transfer any additional technology to
NOGA, including any Improvements.

4. NOGA'S REPRESENTATIONS AND WARRANTIES. NOGA hereby represents
and warrants effective as of the Closing as follows:

a. CORPORATE ORGANIZATION AND STANDING. NOGA is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. NOGA has the requisite corporate power to carry on
its business as presently conducted, and as proposed or contemplated to be
conducted in the future, and to enter into and carry out the provisions of this
Agreement and the transactions contemplated hereby. NOGA is not presently
qualified to do business as a foreign corporation in any jurisdiction where the
failure to be so qualified would materially and adversely affect NOGA's
business.

b. SUBSIDIARIES. NOGA has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity, except for
its to-be-formed Israeli subsidiary.

c. CORPORATE CAPITALIZATION.

i. Immediately prior to the Closing, NOGA's
authorized capital stock shall include only two authorized classes of capital
stock consisting of eight million (8,000,000) shares of Preferred Stock, seven
million five hundred thousand (7,500,000) shares of which shall be designated as
Series A Preferred Stock, and twenty million (20,000,000) shares of a sole class
of Common Stock.

ii. Except as contemplated or set forth in this
Agreement, or in the Preincorporation Agreement, as of the Closing, there are no
outstanding preemptive or other rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from NOGA of any shares of its
capital stock.

iii. As of the date hereof, NOGA does not have
any declared and unpaid dividends (whether payable in cash, securities or other
consideration).

d. AUTHORIZATION. All corporate action on the part of
NOGA, its directors and shareholders necessary for the authorization, execution,
delivery and performance of this Agreement by NOGA, the authorization, sale,
issuance and delivery of

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<PAGE>

the Securities and the performance of all of NOGA's obligations hereunder has
been taken or will be taken prior to the Closing. This Agreement, when executed
and delivered by NOGA, shall constitute a valid and binding obligation of NOGA,
enforceable in accordance with its terms, except as may be limited by principles
of public policy, and subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies. The
Securities, when issued in compliance with the provisions of this Agreement,
will be validly issued, will be fully paid and nonassessable, and will have the
rights, preferences and privileges described in the Articles of Incorporation;
and the Securities will be free of any liens or encumbrances, other than any
liens or encumbrances created by or imposed upon the Securities hereunder, and
by the Voting Trust Agreement set forth in Exhibit M to the Preincorporation
Agreement; provided, however, that the Securities may be subject to restrictions
on transfer under state and/or federal securities laws.

e. MATERIAL LIABILITIES. Neither NOGA nor its subsidiary
has any material liabilities or obligations, absolute or contingent
(individually or in the aggregate).

f. LITIGATION. There are no actions, proceedings or, to
NOGA's best knowledge, investigations pending, or any threat thereof, against or
affecting NOGA which, either individually or in the aggregate, might result in
any material adverse change in the business, prospects, condition, affairs or
operations of NOGA or in any of its properties or assets, or in any material
impairment of the right or ability of NOGA to carry on its business as proposed
to be conducted, and none which questions the validity of this Agreement or any
action taken or to be taken in connection herewith.

g. GOVERNMENTAL CONSENTS. To NOGA's knowledge, no
consent, approval, order, authorization or registration, qualifications,
designation, license, declarations or filings with any Federal or state
governmental authority is required on the part of NOGA in connection with the
consummation of the transactions contemplated herein, except for securities law
filings, and the IITSSA filing set forth in Section 5.h (below).

h. REGISTRATION RIGHTS. Except as provided hereunder,
NOGA is not a party to any "registration rights agreement" or any similar
agreement pursuant to which any person would have the right to cause, under any
circumstances, the registration of securities under the Securities Act of 1933,
as amended (the "Securities Act").

i. DISCLOSURE. No representation or warranty by NOGA in
this Agreement, or in any statement or certificate furnished or to be furnished
to the Investors pursuant hereto or in connection

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<PAGE>

with the transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.

j. SURVIVAL OF REPRESENTATIONS. All representations made
by NOGA in or under this Agreement shall be true and accurate as of the Closing.

5. INVESTORS' REPRESENTATIONS AND WARRANTIES. Each of the
Investors represents and warrants to NOGA that:

a. INVESTMENT. The Investor is acquiring the Securities
for investment for its own account, and not with a view to, or resale in
connection with, any distribution thereof, and it has no present intention of
selling or distributing any such Securities. It understands that the Securities
has not been registered under the Securities Act by reason of a specific
exemption from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of the investment as expressed
herein.

b. RULE 144. The Investor acknowledges that because the
Securities has not been registered under the Securities Act, the Securities must
be held indefinitely unless subsequently registered under the Securities Act or
an exemption from such registration is available. It is aware of the provisions
of Rule 144 promulgated under the Securities Act which permits limited resale of
securities purchased in a private placement under certain circumstances.

c. NO PUBLIC MARKET. The Investor understands that no
public market now exists for any stock issued by NOGA, and that it is uncertain
whether a public market will ever exist for any such securities.

d. ACCESS TO DATA. The Investor has had an opportunity
to discuss NOGA's business, management and financial affairs with its
management, and to obtain any additional information given to it necessary or
appropriate for deciding whether or not to purchase the Securities. The Investor
acknowledges that no representations or warranties have been made by NOGA, or
any agent thereof, except as set forth in this Agreement.

e. INVESTMENT EXPERIENCE. The Investor is an "accredited
investor" as that term is defined in Regulation D promulgated by the Securities
and Exchange Commission.

f. PREVIOUS INVESTMENTS. The Investor has previously
invested in securities of companies in the development stage and acknowledges
that it is able to fend for itself, can bear the economic risk of its investment
and has such knowledge and

-5-

<PAGE>

experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment contemplated herein.

g. RISKS. The Investor understands that an investment in
NOGA involves a high degree of risk and is suitable only for investors who can
afford a loss of their entire investment and who have no need for liquidity from
their investment.

h. IITSSA COMPLIANCE. The Investor shall provide to NOGA
all such information as is necessary to complete the forms required to be filed
by NOGA with the U.S. Department of Commerce, Bureau of Economic Analysis, under
the International Investment and Trade in Services Survey Act, as amended, and
regulations issued thereunder.

i. GOVERNMENTAL CONSENTS. To the Investor's knowledge,
except as set forth in this Agreement, no consent, approval, order,
authorization or registration, qualifications, designation, license,
declarations or filings with any governmental authority is required on the part
of the Investor in connection with the consummation of the transactions
contemplated herein.

6. RESTRICTIVE LEGENDS. Each certificate or other written
documentation representing any of the Securities which the Investor is
purchasing or may purchase hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event (unless no longer required in the opinion of the counsel for NOGA) shall
be stamped or otherwise imprinted with a legend substantially in the following
form:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE HOLDER
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITIES
SATISFACTORY TO NOGA, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS UNDER STATE
LAW.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO VARIOUS
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK PURCHASE AGREEMENT
ENTERED BY THE PURCHASER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE."

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<PAGE>

NOGA shall be entitled to enter stop transfer notices on its stock
books with respect to the Securities.

7. PREEMPTIVE RIGHTS. NOGA shall not issue, sell, or enter into
any agreement(s) or commitment(s) pursuant to which it becomes obligated to
issue, any securities other than the Securities described herein, and any
issuances under any NOGA plan for issuances of equities to NOGA's employees,
consultants or Directors ("Permitted Issuances"), unless NOGA shall first offer
to sell to each of the Investors, on the same terms and conditions and at the
same price, an amount of such securities proposed to be offered by NOGA, pro
rata to the Investors' proportionate ownership of NOGA's Series A Preferred
Stock on a fully-diluted basis. Each Investor shall have the right, subject to
the terms of this Section, to purchase up to its pro rata interest of the
securities, excluding Permitted Issuances, proposed to be offered by NOGA. Such
offer shall remain outstanding for ten (10) days from the date of receipt of
written notice from NOGA and shall be exercised by the Investor by serving
written notice on NOGA within such ten (10) day period. NOGA shall, within
fifteen (15) days (the "Notice Period") from the end of such ten (10) day
period, deliver written notice to all Investors who have elected to exercise
their preemptive rights of any Investor not exercising its preemptive rights in
full. Each Investor entitled to such a notice shall have a right of
overallotment such that by giving written notice to NOGA within ten (10) days
from the end of the Notice Period, it may purchase that number of securities for
which preemptive rights were not exercised, pro rata based upon the number of
shares of NOGA's capital stock on a fully diluted basis held by all of the
Investors seeking to exercise their overallotment rights; provided, however,
that any Investor desiring to purchase its allocable share of the proposed new
issuance must exercise in full its overallotment provisions or be prohibited
from purchasing any of the new issuance.

8. RIGHT OF FIRST REFUSAL. If an Investor desires to sell any or
all of such Investor's Securities pursuant to a bona fide third-party offer,
such Investor (the "Seller") may not sell such Securities except pursuant to the
provisions of this Section 8 as follows:

a. INVESTOR'S RIGHT. Seller shall deliver written notice
to the remaining Investors of Seller's intention to transfer (the
"Offer") all, or a portion, of its Securities ("Transferred
Securities"). The Offer shall name the proposed transferee, the price
per share, the total purchase price for all such Transferred Securities
and the other terms and conditions of such purchase. At the Investor's
request, Seller shall also provide reasonable proof of the existence of
the bona fide offer to purchase its Securities, including a copy of
such offer from the proposed third-party transferee. The Investor, or
its nominee, shall, for a period of thirty (30) days following the date
the Offer is

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<PAGE>

given, have the right (the "Investor's Right") to purchase all, but not
less than all, of the Securities proposed to be transferred at the same
price and on the same terms and conditions set forth in the Offer. The
Investor shall exercise the Investor's Right by delivering written
notice to the Seller of its election to purchase all of such
Transferred Securities.

b. NOGA'S RIGHT. If the Investors do not elect to
purchase all of the Transferred Securities which Seller proposes to
transfer, the Seller shall, within seven (7) days after the expiration
of the Investor's Right, deliver the Offer to the President of NOGA.
NOGA shall, for a period of thirty (30) days after the delivery to it
of the Offer, have the right ("NOGA's Right") to elect to purchase the
Transferred Securities specified in the Offer at the same price and on
the same terms and conditions set forth in the Offer by delivering
written notice of election to the Seller.

c. RIGHTS NOT EXERCISED. If the Investors and NOGA do
not elect to purchase all of the Transferred Securities specified in
the Offer, Seller may, not later than thirty (30) days after the
expiration of NOGA's Right, sell all of the Transferred Securities to
the proposed transferee at the purchase price and on the other terms
and conditions set forth in the Offer; provided, however, that (i) such
third-party purchaser shall, prior to the transfer of such Transferred
Securities, agree in writing that the transferee shall receive and hold
the Transferred Securities subject to all the provisions and
restrictions of this Agreement and shall be deemed to be an Investor
under this Agreement; and (ii) if a non-selling Investor, in its sole
judgment (to be reasonably applied), believes that the proposed
transferee would not make a good strategic alliance with the
non-selling Investor, then the non-selling Investor shall have the
right to prohibit such sale. If the Seller desires to challenge such
prohibition, it may still sell to the proposed transferee, provided the
proposed transferee purchases all, or, if the non-selling Investor
desires, a lesser portion, of the non-selling Investor's Securities on
the same terms and conditions as set forth in the Offer. Any proposed
modification of the number of Transferred Securities, or purchase price
for the Transferred Securities, or any agreement to transfer such
Transferred Securities after the expiration of such thirty (30) day
period shall require delivery of a new Offer to the Investors and shall
give rise to the rights provided in this Section.

9. BOARD SEATS. DSPG and SCITEX agree that (i) DSPG and SCITEX
shall each elect two (2) Directors, (ii) the Directors so elected shall fill the
vacancy with the criterion that the fifth (5th) Director so elected be the
President of NOGA, and (iii) no matter how many shares of Series A Preferred
Stock or Common Stock

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<PAGE>

are held by either DSPG or SCITEX, neither shall be able to elect more than
fifty percent (50%) of the members of the Board; provided that they each own an
equal amount of NOGA shares.

10. REGISTRATION RIGHTS. At any time after three (3) years from
the Closing Date, or eighteen (18) months after NOGA's initial public offering,
whichever is earlier, Investors holding at least twenty percent (20%) of the
Common Stock issuable upon conversion of all the Series A Preferred Stock may
request registration by NOGA of their shares, if the anticipated aggregate gross
cash proceeds would exceed Ten Million Dollars ($10,000,000). In such event,
NOGA will use its best efforts to cause such shares to be registered. NOGA shall
only be obligated to effect two (2) registrations under these demand
registration rights provisions. Persons holding Series A Preferred Stock or
Common Stock issuable upon conversion of the Series A Preferred Stock, shall be
entitled to S-3 registration rights no more often than once per every eighteen
(18) month period on form S-3, if available for use by NOGA, for an aggregate
offering price of at least Five Hundred Thousand Dollars ($500,000) per
offering. Persons holding Series A Preferred Stock or Common Stock issuable upon
conversion of the Series A Preferred Stock shall be entitled to unlimited
"piggyback" registrations on a registration of NOGA's equity, subject to a
prorata cutback with all those holding "piggyback" registration rights in the
underwriter's discretion and reasonable lock-ups as requested by underwriters.
The registration expenses (exclusive of underwriting discounts and commissions)
shall be borne by NOGA for all permitted registrations.

11. MISCELLANEOUS.

a. SURVIVAL. The representations, warranties, covenants
and agreements made herein shall survive the Closing of the transactions
contemplated hereby.

b. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.

c. ENTIRE AGREEMENT. This Agreement, and the Exhibits
referenced herein, constitute the entire agreement and understanding between the
parties with respect to the subject matters herein and therein, and supersede
and replace any prior agreements and understandings, whether oral or written
between and among them with respect to such matters. The provisions of this
Agreement may be waived, altered, amended or repealed, in whole or in part, only
upon the written consent of all parties to this Agreement.

d. NOTICES. All notices, requests, demands, instructions
or other communications required or permitted to be given

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<PAGE>

under this Agreement shall be in writing and shall be deemed to have been duly
given upon delivery, if delivered personally, or if given by prepaid telegram,
or mailed first-class, postage prepaid, registered or certified mail, return
receipt requested, shall be deemed to have been given ten (10) days after such
delivery, to the address set forth on the signature page below or twenty four
(24) hours after sending by facsimile to the number set forth on the signature
page below. Either party hereto may change the address to which such
communications are to be directed by giving written notice to the other party
hereto of such change in the manner above provided.

e. TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and are
not to be considered in construing this Agreement.

f. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

g. APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, applicable
to contracts between California residents entered into and to be performed
entirely within the State of California.

h. ARBITRATION. Any dispute between the parties arising
out of this Agreement shall be submitted to final and binding arbitration in the
City of San Jose, County of Santa Clara, State of California, under the
Commercial Arbitration Rules of the American Arbitration Association then in
effect, upon written notification and demand of either party therefor. In the
event either party demands such arbitration, the American Arbitration
Association shall be requested to submit a list of prospective arbitrators
consisting of persons experienced in matters involving securities offerings. The
provisions of California Code of Civil Procedure Section 1283.05 and the laws of
the State of California are incorporated herein and shall be applicable to the
arbitration. In making the award, the arbitrator shall award recovery of costs
and expenses of the arbitration and reasonable attorneys' fees to the prevailing
party. Any award may be entered as a judgment in any court of competent
jurisdiction. Should judicial proceedings be commenced to enforce or carry out
this provision or any arbitration award, the prevailing party in such
proceedings shall be entitled to reasonable attorneys' fees and costs in
addition to other relief. Either party shall have the right, prior to receiving
an arbitration award, to obtain preliminary relief from a court of competent
jurisdiction to avoid injury or prejudice to that party.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

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<PAGE>

i. VENUE. Any action or proceeding arising directly or
indirectly from this Agreement shall be litigated in an appropriate state or
federal court in the County of Santa Clara, State of California.

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

DSP GROUP, INC. NOGA TECHNOLOGIES, INC.
4050 Moorpark Avenue 4050 Moorpark Avenue
San Jose, CA 95117 San Jose, CA 95117
Fax No: (408)985-7582 Fax No: (408)985-7582

By: /s/ Davidi Gilo By: /s/ Nathan Hod
------------------------------- ---------------------------
DAVIDI GILO, President (Signature)

NATHAN HOD, PRESIDENT
--------------------------------
(Print Name and Title)

SCITEX CORPORATION, LTD.
Industrial Area
Herzlia B 46103 Israel
Fax No: 011-972-52-558-037

By: /s/ Shamir Yair /s/ Yoav Chelouche
------------------------------------------
(Signature)

Shamir Yair Yoav Chelouche
- ---------------------------------------------
(Print Name and Title)

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EXHIBIT 10.7

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is effective this
30th day of June, 1995, by and among DSP GROUP, INC., a Delaware corporation
("DSPG"), KENWOOD CORPORATION, a Japanese corporation ("Kenwood"), TOMEN
ELECTRONICS CORP., a Japanese corporation ("Tomen"), and NOGATECH, INC., a
California corporation ("Noga").

RECITALS

A. DSPG is the owner of two thousand (2,000) shares of Common
Stock of Noga (the "Common Stock"), and four million four hundred forty-four
thousand four hundred forty-four (4,444,444) shares of Series A Preferred
Stock of Noga (the "Preferred Stock", and together with the Common Stock, the
"Shares").

B. Scitex Corporation, Ltd ("Scitex"), DSPG's predecessor in
interest to one thousand (1,000) shares of Common Stock and two million
(2,000,000) shares of Preferred Stock (collectively, the "Scitex Shares") and
DSPG entered into a Preincorporation Agreement (the "Preincorporation
Agreement") dated December 31, 1992, for the formation of Noga.

C. DSPG California, Scitex and Noga entered into a Stock Purchase
Agreement effective January 1, 1993 (the "DSPG Stock Purchase Agreement"),
pursuant to which Scitex acquired the Scitex Shares from Noga.

D. Scitex, DSPG and Noga entered into a Stock Purchase Agreement,
effective April 24, 1994, pursuant to which DSPG acquired the Scitex Shares
from Scitex (the "Scitex Purchase Agreement", and together with the
Preincorporation Agreement (the "Ancillary Agreements")).

E. DSPG, Noga and its subsidiary Nogatech, Ltd. ("Noga Ltd")
entered into a Technology Retransfer Agreement (together with the documents
represented by the Exhibits thereto, the "Technology Retransfer Agreement"),
in the form attached hereto as Exhibit A, on June 29, 1995.

F. Subject to the terms and conditions hereof, DSPG desires to
sell to Kenwood and Tomen, and Kenwood and Tomen desire to acquire from DSPG
the Shares, all as set forth below.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained and other valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the

<PAGE>

parties hereby agree as follows:

<PAGE>

1. SALE AND PURCHASE OF SHARES.

a. THE KENWOOD PURCHASE. DSPG hereby agrees to sell,
assign, transfer, convey and deliver one thousand (1,000) shares of the
Common Stock and two million two hundred twenty-two thousand two hundred
twenty-two (2,222,222) shares of the Preferred Stock (collectively, the
"Kenwood Shares") to Kenwood, and Kenwood hereby agrees to purchase the
Kenwood Shares from DSPG for the purchase price (the "Kenwood Purchase
Price") of Seven Hundred Fifty Thousand United States Dollars (U.S. $750,000)
at the Closing (as defined below), payable by wire transfer to DSPG in
immediately available funds on the Closing Date (as defined below).

b. THE TOMEN PURCHASE. DSPG hereby agrees to sell, assign,
transfer, convey and deliver one thousand (1,000) shares of the Common Stock
and two million two hundred twenty-two thousand two hundred twenty-two
(2,222,222) shares of the Preferred Stock (collectively, the "Tomen Shares")
to Tomen, and Tomen hereby agrees to purchase the Tomen Shares from DSPG for
the purchase price (the "Tomen Purchase Price") of Seven Hundred Fifty
Thousand United States Dollars (U.S. $750,000), payable by wire transfer to
DSPG in immediately available funds on the Closing Date.

c. CLOSING. Subject to the terms and conditions hereof,
the closing of the purchase and sale of the Shares (the "Closing") shall be
held via facsimile transmittal and wire transfers through DSPG's counsel,
Pezzola & Reinke, A Professional Corporation, on August 11, 1995 at 2:00
p.m., Pacific Standard Time, or at such other time and place upon which
Kenwood, Tomen and DSPG shall agree (the date of the Closing is herein
referred to as the "Closing Date").

d. AT THE CLOSING:

i) Kenwood shall deliver as full and complete
payment for the Kenwood Shares, the Kenwood Purchase Price;

ii) Tomen shall deliver as full and complete payment
for the Tomen Shares, the Tomen Purchase Price;

iii) DSPG shall deliver to Kenwood and Tomen their
respective original certificates of their respective Shares executed on the
reverse side of the certificates, or on assignments separate from
certificates, to show the transfer of the Kenwood Shares to Kenwood and the
transfer of the Tomen Shares to Tomen; and

iv) DSPG and Noga shall deliver a duly executed
Technology Retransfer Agreement to one another.

2. CONDITIONS PRECEDENT. As a condition precedent to the

<PAGE>

obligations of the parties hereto, the parties must receive effective the
Closing Date a copy of an executed Mutual Release between DSPG and Nathan
Hod, in the form attached hereto as Exhibit B.

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASERS.
Kenwood and Tomen (together, the "Purchasers") each severally represent,
warrant and covenant to DSPG the following as of the date of this Agreement
and as of the Closing Date on its behalf:

a. PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares to be
purchased by each Purchaser will be acquired for investment for such
Purchaser's own account and not with a view to the resale or distribution of
any part thereof, and each Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same. By
executing this Agreement, each Purchaser further represents that it does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to any of its respective Shares.

b. RELIANCE UPON PURCHASERS' REPRESENTATIONS. Each
Purchaser understands that its respective Shares are not registered under the
Securities Act of 1933, as amended (the "Act"), on the grounds that the sale
provided for in this Agreement and the issuance of Shares hereunder is exempt
from registration under the Act, and that DSPG's reliance on such exemption
is based, in part, on each Purchaser's representations set forth herein.
Each Purchaser realizes that the basis for the exemption may not be present
if it has in mind merely acquiring its respective Shares for a fixed or
determinable period in the future, or for a market rise, or for sale if the
market does not rise.

c. RECEIPT OF INFORMATION. Each Purchaser believes it has
received all the information it considers necessary or appropriate for
deciding whether to purchase its respective Shares. Each Purchaser further
represents that it has had an opportunity to ask questions and receive
answers from Noga's officers regarding the business, properties, prospects
and financial condition of Noga, and to obtain additional information (to the
extent Noga possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to it or to which such Purchaser had access.
Specifically, each Purchaser acknowledges receipt of, among other things, the
Technology Retransfer Agreement.

d. INVESTMENT EXPERIENCE. Each Purchaser and its officers
are experienced in evaluating and investing in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can
bear the economic risk of its investment, and has such knowledge and
experience in financial and

<PAGE>

business matters that it is capable of evaluating the merits and risks of the
investment in its respective Shares.

e. RESTRICTED SECURITIES. Each Purchaser understands that
its respective Shares may not be sold, transferred or otherwise disposed of
without registration under the Act or an exemption therefrom, and that in the
absence of an effective registration statement covering such Shares, or an
available exemption from registration under the Act, such Shares must be held
indefinitely. In particular, each Purchaser is aware that its respective
Shares may not be sold pursuant to Rule 144 promulgated under the Act unless
all of the conditions of Rule 144 are met. Among the conditions for use of
Rule 144 is the availability of current information to the public about Noga.
Such information is not now available and each Purchaser understands that
Noga has no present plans to make such information available.

f. LEGENDS. To the extent applicable, each certificate or
other document evidencing any of the Shares shall be endorsed with
appropriate securities legends; and each Purchaser covenants that, except to
the extent such restrictions are waived by Noga, such Purchaser shall not
transfer its respective Shares represented by any such certificate without
complying with the restrictions on transfer described in the following legend
endorsed on such certificate:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH
RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND
ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."

g. RISKS OF INVESTMENT. Each Purchaser represents that it:
(a) has such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of its prospective investment
in its respective Shares; (b) has received from DSPG all the information it
has requested and considers necessary or appropriate for deciding whether to
purchase its respective Shares, and has been given the opportunity to examine
all relevant documents and to ask questions of, and to receive answers from,
the management of Noga concerning Noga and its affairs, and to obtain any
additional information necessary to verify the accuracy of the information
given such Purchaser, and that no representations have been made to such
Purchaser concerning its respective Shares, Noga, its business, prospects or
other matters, except as expressly made herein; (c) has the ability to bear
the economic risks of its prospective investment; and (d) is able, without
materially impairing its financial condition, to hold its respective Shares
for an indefinite period of time and to suffer complete loss of its
investment.

<PAGE>

h. CORPORATE AUTHORITY. Each Purchaser represents that it
has full corporate authority to purchase its respective Shares in accordance
with this Agreement, as evidenced by the signature binding such Purchaser on
the signature page hereinbelow and all other approvals necessary to purchase
its respective Shares.

i. CAPITALIZATION. Each Purchaser acknowledges that the
capitalization of Noga as of the Closing Date shall be as set forth on
Exhibit C attached hereto, and shall include options granted by Noga to
Messrs. Heiman and Hod conditioned upon the Closing occurring. Additionally,
each Purchaser understands that Noga may be obligated to grant an additional
option for Twelve Thousand Five Hundred (12,500) shares of Common Stock at an
exercise price of Ten Cents ($0.10) per share to Michael Corwin.

j. DEBT TO CHIEF SCIENTIST. Each Purchaser acknowledges
and agrees to the following:

The unaudited June 30, 1995 financial statement (the "Financial
Statement") attached hereto as Exhibit D shows an obligation to the Chief
Scientist of Israel (the "Chief Scientist") of One Hundred Fifty Thousand
United States Dollars (U.S. $150,000) (the "Obligation"). This is the
initial payment that is now due to the Chief Scientist. The Chief
Scientist is owed sixteen percent (16%) of the royalty income received by
Noga from Zen Research, N.V. ("Zen"), up to an aggregate maximum of Four
Hundred Two Thousand United States Dollars (U.S. $402,000). DSPG has
caused Noga to pay One Hundred Fifty Thousand United States Dollars (U.S.
$150,000) of the Obligation to the Chief Scientist. Noga has entered
into an agreement with Zen to arrange for payment by Noga of all sums
still owing to the Chief Scientist.

k. Each Purchaser acknowledges and agrees that as of June
30, 1995, any prior arrangement for DSPG to loan money to Noga shall
terminate, and DSPG shall have no further arrangement requiring it to loan
any money to Noga.

4. REPRESENTATIONS OF DSPG. DSPG represents, warrants and
covenants to each Purchaser that:

a. OWNERSHIP. DSPG is the owner of the Shares. The Shares
have not been encumbered, pledged or mortgaged in any manner whatsoever. All
approvals necessary to transfer the respective Shares to each Purchaser have
been obtained. DSPG has the full corporate power to sell the Shares in
accordance with this Agreement, as evidenced by the signature binding DSPG on
the signature page hereinbelow.

b. TECHNOLOGY AGREEMENT. The Technology Retransfer
Agreement has been duly executed by DSPG.

<PAGE>

c. ORGANIZATION AND CORPORATE POWER. Noga is a corporation
duly incorporated and validly existing under the laws of the State of
California, and Noga is qualified to do business in every jurisdiction in
which its ownership of property or conduct of business requires it to
qualify. Noga has all requisite corporate power and authority and all
material licenses, permits, and authorizations necessary to own and operate
its properties and to carry on its business as now conducted. The copies of
Noga's charter documents and Bylaws furnished to Purchasers reflect all
amendments made thereto at any time prior to the date of this Agreement and
are correct and complete.

d. SUBSIDIARIES. Noga does not own or hold any rights to
acquire any shares of stock or any other security or interest in any other
corporation or entity, except for Nogatech Ltd., its wholly-owned Israeli
subsidiary.

e. CONDUCT OF BUSINESS; LIABILITIES. Noga is not in
default under, and no condition exists that with notice or lapse of time
would constitute a default of Noga under (i) any mortgage, loan agreement,
evidence of indebtedness, or other instrument evidencing borrowed money to
which Noga is a party or by which Noga or the properties of Noga are bound or
(ii) any judgment, order, or injunction of any court, arbitrator, or
governmental agency that would reasonably be expected to affect materially
and adversely the business, financial condition, or results of operations of
Noga taken as a whole.

f. FINANCIAL STATEMENTS. Except as disclosed in Section 9
herein, (i) the unaudited balance sheet and income statement of Noga as of
June 30, 1995, in the form attached to this Agreement as Exhibit D, fairly
presents the financial position of Noga as of June 30, 1995 (the "Financial
Statements"); and (ii) the Proforma Balance Sheet attached hereto as Exhibit
E sets forth Noga's financial position after the effect of the Technology
Retransfer Agreement.

g. NO UNDISCLOSED LIABILITIES. Except for (i) liabilities
and obligations disclosed in Section 9 herein; (ii) liabilities and
obligations incurred in the ordinary course of business since June 30, 1995
("Statement Date"); and (iii) liabilities or obligations described in this
Agreement, neither Noga nor any of the property of Noga is subject to any
material liability or obligation that was required to be included or
adequately reserved against in the Financial Statements or described in the
notes thereto and was not so included, reserved against, or described.

h. ABSENCE OF CERTAIN CHANGES. Since the Statement Date
there has not been:

i) any material adverse change in the business,

<PAGE>

financial condition, operations, or assets of Noga;

ii) any damage, destruction, or loss, whether covered
by insurance or not materially adversely affecting the properties or business
of Noga;

iii) any sale or transfer by Noga of any tangible or
intangible asset other than in the ordinary course of business, any mortgage
or pledge or the creation of any security interest, lien, or encumbrance on
any such asset, or any lease of property, including equipment, other than tax
liens with respect to taxes not yet due and contract rights of customers in
inventory;

iv) any material transaction not in the ordinary
course of business of Noga;

v) the making of any material loan, advance, or
guaranty to or for the benefit of any person except the creation of accounts
receivable in the ordinary course of business; or

vi) an agreement to do any of the foregoing.

i. TITLE AND RELATED MATTERS. Noga has good and marketable
title to all of its property, real and personal, and other assets included in
the Financial Statements (except properties and assets sold or otherwise
disposed of subsequent to the Statement Date in the ordinary course of
business or as contemplated in this Agreement), free and clear of all
security interests, mortgages, liens, pledges, charges, claims, or
encumbrances of any kind or character, except (i) statutory liens for
property taxes not yet delinquent or payable subsequent to the date of this
Agreement and statutory or common law liens securing the payment or
performance of any obligation of Noga, the payment or performance of which is
not delinquent, or that is payable without interest or penalty subsequent to
the date on which this representation is given, or the validity of which is
being contested in good faith by Noga; (ii) the rights of customers of Noga
with respect to inventory under orders or contracts entered into by Noga in
the ordinary course of business; (iii) claims, easements, liens, and other
encumbrances of record pursuant to filings under real property recording
statutes; and (iv) as described in the Financial Statements or the notes
thereto.

j. LITIGATION. There are no material actions, suits,
proceedings, orders, investigations, or claims pending or, to the best of
DSPG's and Noga's knowledge, overtly threatened against Noga or any property
of either, at law or in equity, or before or by any governmental department,
commission, board, bureau, agency, or instrumentality.

k. TAX MATTERS. Noga has prepared in a substantially
correct manner and has filed all federal, state, local, and foreign tax
returns and reports heretofore required to be filed by

<PAGE>

them and have paid all taxes shown as due thereon, and no taxing authority
has asserted any deficiency in the payment of any tax or informed Noga that
it intends to assert any such deficiency or to make any audit or other
investigation of Noga for the purpose of determining whether such a
deficiency should be asserted against Noga.

l. COMPLIANCE WITH LAWS. To the best of DSPG's knowledge,
Noga is, in the conduct of its business, in substantial compliance with all
laws, statutes, ordinances, regulations, orders, judgments, or decrees
applicable to them, the enforcement of which, if Noga was not in compliance
therewith, would have a materially adverse effect on the business of Noga,
taken as a whole. Neither DSPG nor Noga have received any notice of any
asserted present or past failure by Noga to comply with such laws, statutes,
ordinances, regulations, orders, judgments, or decrees.

m. DISCLOSURE. Neither this Agreement nor any of the
schedules, attachments, written statements, documents, certificates, or other
items prepared or supplied to Purchasers by or on behalf of Noga or DSPG with
respect to this purchase contain any untrue statement of a material fact or
omit a material fact necessary to make each statement contained herein or
therein not misleading.

n. PATENTS, TRADEMARKS, TRADE NAMES, ETC. To Noga's best
knowledge, the use of its patents, trademark, trade name, service marks, and
copyrights by it does not materially infringe on any patents, trademarks, or
copyrights or any other rights of any person. To Noga's best knowledge, it
has not operated and is not operating its business in a manner that infringes
the proprietary rights of any other person in any patents, trademarks, trade
names, service marks, copyrights, or confidential information.

5. RELEASE OF VARIOUS AGREEMENTS. Upon delivery to DSPG of the
payment for the Shares by each Purchaser:

a. DSPG RELEASE. DSPG releases any claims or rights that
it may have against Noga, or Noga's subsidiary or affiliated companies,
concerning the Ancillary Agreements, and/or any other agreements (except in
connection with any representations and warranties made by Noga in this
Agreement and the Technology Retransfer Agreement and Noga's obligations
under the Technology Retransfer Agreement) by and between DSPG and Noga, or
any of Noga's subsidiaries, concerning Noga. Each of DSPG and Noga agree
that the pre-emptive rights in Section 7 of the DSPG Stock Purchase Agreement
no longer exists in favor of DSPG; that the Registration Rights stated in
Section 10 of the DSPG Stock Purchase Agreement shall no longer be effective
for DSPG but shall be transferred to its transferees; the right to choose
board seats stated in Section 9 of the DSPG Stock Purchase Agreement shall no
longer exist in favor of DSPG; any arrangement for DSPG to loan money to Noga
shall terminate as of June 30, 1995; and the

<PAGE>

Technology Retransfer Agreement shall remain in full force and effect.

b. NOGA RELEASE. Noga releases any claims or rights that
it may have against DSPG, or DSPG's subsidiary or affiliated companies,
concerning the Ancillary Agreements, and/or any other agreements (except in
connection with any representations and warranties made by DSPG in this
Agreement) by and between DSPG and Noga, or any of DSPG's subsidiaries,
concerning DSPG, except as specifically set forth herein. In addition, Noga
releases DSPG from any agreement to provide services to Noga, including
without limitation, services for accounting, facilities, personnel support
and payroll.

6. DSPG TECHNOLOGY. Noga agrees that to the extent that it was
using technology and confidential information of DSPG which had been
disclosed to Noga by DSPG, Noga will discontinue such use, except to the
extent that such use is consistent with the terms of the Technology
Retransfer Agreement. Additionally, Noga agrees to return to DSPG on the
Closing Date, all technology and confidential information of DSPG which had
been delivered to Noga by DSPG, subject to the terms of the Technology
Retransfer Agreement.

7. EMPLOYEE MATTERS. DSPG represents and warrants to each
Purchaser and Noga, that it has no present intention of hiring employees of
Noga. DSPG agrees, for a period ending June 30, 1997, not to solicit or
recruit any employees of Noga.

8. DSPG GUARANTY.

a. REPLACEMENT GUARANTY. Purchasers shall use its best
efforts to either replace DSPG by August 31, 1995 as the guarantor under the
Guaranty (the "Guaranty"), dated November 3, 1994, issued by DSPG to the
lessor (the "Lessor") under the Lease, dated November 3, 1994, between Lessor
and Noga Ltd, as lessee, for the property located at Mivtza Kadesh 2, Givat
Shmuel, 54100, Israel, or to obtain a satisfactory replacement (collectively,
the "Replacement Guaranty").

b. INDEMNIFICATION. From and after the Closing Date and
until a Replacement Guaranty has become effective (the "Replacement
Period"), Noga and Noga Ltd shall indemnify and hold DSPG, its successors and
assigns, harmless from, against and in respect of any and all loss, liability
and damage (including the payment of reasonable attorneys' fees), arising out
of or resulting from any and all losses, liabilities and obligations, or
claims or causes of action of any nature, arising during the Replacement
Period in connection with to the Guaranty.

9. CONTINGENT LIABILITY. The parties hereto acknowledge and
agree that (i) there is a contingent liability (the "Contingent Liability")
of Noga in the amount of up to $170,000

<PAGE>

claimed by SCI Systems, Inc.("SCI") in connection with the return of certain
materials related to Noga purchase order number 89028; (ii) neither the
Contingent Liability nor the related inventory is reflected on Exhibits D or
E hereto; (iii) SCI has indicated that it may attempt to seek recovery of the
Contingent Liability from both Noga and DSPG; (iv) DSPG denies responsibility
for payment of any portion of the Contingent Liability; (v) Noga acknowledges
that Noga, rather than DSPG, is responsible for any amounts due SCI in
connection with the Contingent Liability;(vi) in the event that DSPG
determines or is required to pay any amounts to SCI in connection with the
Contingent Liability, DSPG shall give Noga fourteen (14) days written notice
prior to informing SCI of such determination or making any payment, as
applicable; and (vii) in the event SCI recovers any amount from DSPG in
connection with the Contingent Liability, Noga shall indemnify and hold DSPG
harmless from, against, and in respect of any and all loss, liability, and
damage (including the payment of reasonable attorney's fees), arising out of
or resulting from any and all losses, liabilities and obligations, or claims
or causes of action of any nature, in connection with the Contingent
Liability.

10. MISCELLANEOUS.

a. ENTIRE AGREEMENT. This Agreement and the Exhibits
hereto constitute the entire agreement and understanding between the parties
with respect to the subject matters herein, and supersede and replace any
prior agreements and understandings, whether oral or written between and
among them with respect to such matters. The provisions of this Agreement
may be waived, altered, amended or repealed, in whole or in part, only upon
the written consent of all parties to this Agreement.

b. SUCCESSORS AND ASSIGNS. Subject to any provisions
herein with regard to assignment, all covenants and agreements herein shall
bind and inure to the benefit of the respective heirs, executors,
administrators, successors and assigns of the parties hereto.

c. APPLICABLE LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California,
applicable to contracts between California residents entered into and to be
performed entirely within the State of California.

d. ATTORNEYS' FEES; COSTS. In the event a party breaches
this Agreement, the breaching party shall pay all costs and attorneys' fees
incurred by the other party in connection with such breach, whether or not
any arbitration or litigation is commenced.

e. ARBITRATION. Any dispute between the parties arising
out of this Agreement shall be submitted to final and binding arbitration in
the City and County of Santa Clara, State of California, under the Commercial
Arbitration Rules of the

<PAGE>

American Arbitration Association then in effect, upon written notification
and demand of either party therefor. In the event either party demands such
arbitration, the American Arbitration Association shall be requested to
submit a list of prospective arbitrators consisting of persons experienced in
matters involving corporate law. The provisions of California Code of Civil
Procedure ?1283.05 and the laws of the State of California are incorporated
herein and shall be applicable to the arbitration. In making the award, the
arbitrator shall award recovery of costs and expenses of the arbitration and
reasonable attorneys' fees to the prevailing party. Any award may be entered
as a judgment in any court of competent jurisdiction. Should judicial
proceedings be commenced to enforce or carry out this provision or any
arbitration award, the prevailing party in such proceedings shall be entitled
to reasonable attorneys' fees and costs in addition to other relief. Either
party shall have the right, prior to receiving an arbitration award, to
obtain preliminary relief from a court of competent jurisdiction to: (i)
avoid injury or prejudice to that party; (ii) to protect the rights of any
party; or (iii) to obtain possession or property in order to avoid a material
risk of damage to or loss of that property.

f. NOTICES. All notices, requests, demands, instructions
or other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given
upon delivery, if delivered personally, or if given by prepaid telegram, or
mailed first-class, postage prepaid, registered or certified mail, return
receipt requested, shall be deemed to have been given seventy-two (72) hours
after such delivery, to the address set forth on the signature page below.

Either party hereto may change the address to which such communications are
to be directed by giving written notice to the other party hereto of such
change in the manner above provided.

g. SURVIVAL. The representations, warranties, covenants
and agreements made herein shall survive the closing of the transactions
contemplated hereby.

h. DESCRIPTIVE HEADINGS. The headings used herein and in
any of the documents attached hereto as exhibits, are descriptive only and
for the convenience of identifying provisions, and are not determinative of
the meaning or effect of any such provisions.

i. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which may be executed by less than all of the
parties, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.)

<PAGE>

j. VENUE. ANY ACTION OR PROCEEDING ARISING DIRECTLY OR
INDIRECTLY FROM THIS AGREEMENT SHALL BE LITIGATED OR ARBITRATED AS
APPROPRIATE IN A STATE OR FEDERAL COURT IN THE COUNTY OF SANTA CLARA, STATE
OF CALIFORNIA.

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

DSP GROUP, INC. KENWOOD CORPORATION
a Delaware corporation a Japanese corporation
3120 Scott Boulevard Alive Mitake
Santa Clara, CA 95054 2-5, Shibuya 1-chome, Shibuya-ku
Tokyo, 150, JAPAN

By: /s/ Karin Pitcock By: /s/ Takes Suzuki
--------------------------------- ---------------------------------
Karin Pitcock (Signature)
Corporate Secretary
Derecker
---------------------------------
(Print Name & Title)

NOGATECH, INC. TOMEN ELECTRONICS CORP.
a California corporation a Japanese corporation
3120 Scott Boulevard
Santa Clara, CA 95054 ------------------------------------

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

------------------------------------
(Print Address)

By: /s/ Eli Porat By: /s/ Shizeyuki Nazawa
--------------------------------- ---------------------------------
Eli Porat (Signature)
President
President
---------------------------------
(Print Name & Title)

<PAGE>

EXHIBIT A

FORM OF TECHNOLOGY RETRANSFER AGREEMENT

<PAGE>

EXHIBIT B

FORM OF MUTUAL RELEASE

<PAGE>

EXHIBIT C

CAPITALIZATION CHART

ISSUED CAPITAL STOCK
(AFTER SALE BY DSPG OF ALL ITS INTEREST)
ON A FULLY-DILUTED BASIS(1)

<TABLE>
<CAPTION>
Shareholder Type of Security Number of Shares Percentage
- ----------- ---------------- ---------------- ----------
<S> <C> <C> <C>
Kenwood/Tomen Series A Preferred 4,444,444 71.46%
Kenwood/Tomen Common Stock 2,000 0.03%
Nathan Hod Common Stock 565,000 9.08%
Nathan Hod Options for Common Stock 750,000 12.06%
Arieh Heiman Options for Common Stock 451,825 7.26%
Mike Campbell Common Stock 6,250 0.10%

TOTALS 6,219,519 100.00%
</TABLE>

(1) Does not include potential grant of option for 12,500 shares to Michael
Corwin.

<PAGE>

EXHIBIT D

FINANCIAL STATEMENTS

<PAGE>

EXHIBIT E

PROFORMA FINANCIAL STATEMENTS

<PAGE>

EXHIBIT 10.8

NOGATECH, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT

THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT is entered into as of
February 28, 1996, by and among NOGATECH, INC., a California corporation
(hereinafter the "Corporation"), and Dr. Arie Heiman or any nominee company
including one in formation (hereinafter referred to as the "Investor").

RECITALS

A. The Corporation desires to raise money by the sale of Series A
Preferred Stock to the Investor.

B. The Investor desires to purchase shares of Series A Preferred
Stock from the Corporation, and the Corporation desires to sell shares of
Series A Preferred Stock to the Investor, on the terms and conditions
hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties agree
as follows:

1. AUTHORIZATION AND SALE OF PREFERRED STOCK.

a. AUTHORIZATION. The Corporation will authorize on, or
before, the Closing the sale and issuance of up to seventy-four thousand one
hundred seventy-four (74,074) shares of its Series A Convertible Preferred
Stock (hereinafter the "Series A Preferred Stock") to the Investor, having
the rights, privileges and preferences as set forth in the Amended and
Restated Articles of Incorporation (hereinafter the "Articles") in the form
attached to this Agreement as Exhibit A.

b. SALE OF SERIES A PREFERRED STOCK. Subject to the terms
and conditions hereof, the Corporation will issue and sell to the Investor,
seventy-four thousand seventy-four (74,074) shares of Series A Preferred
Stock (the "Shares") at a per share purchase price of 3,375/10,000 U.S.
Dollars ($0.3375), for an aggregate purchase price of Twenty-five Thousand
U.S. Dollars (U.S. $25,000) (the "Purchase Price").

2. ISSUANCE AND PAYMENT.

<PAGE>

Suite 1300, Oakland, California, on, or about, December 28, 1995, at 5:00
p.m., local time, or at such other time and place upon which the Corporation
and the Investor shall agree (the date of the Closing is hereinafter referred
to as the "Closing Date"). If Investor chooses to wire the Purchase Price,
the wire transfer of the Purchase Price (plus an additional Fifteen Dollars
($15.00) for international wire transfers) shall be sent to Pezzola &
Reinke's Attorney Trust Account at: SUMMIT BANK, 2969 Broadway, Oakland, CA
94611; for deposit into ACCOUNT No. 01-20019741 (Summit Bank's telephone
number is (510) 839-8800 and its ABA Number is 121138958). The wire
instructions shall include a message identifying the name of the Investor as
the originator of the wire. If Investor chooses to send a cashier's check,
it shall be made payable to "Pezzola & Reinke Trust Account for the benefit
of Nogatech, Inc." and shall identify Investor as the originator.

b. ISSUANCE OF SHARES. At the Closing, or as soon as
practical thereafter, the Corporation will deliver to the Investor a
certificate, registered in its name, representing the Shares to be purchased
by the Investor, against payment of the purchase price therefor, by cashier's
check payable to the Corporation, or by wire transfer through the
Corporation's counsel, Pezzola & Reinke, or as otherwise instructed by the
Corporation.

3. CORPORATION'S WARRANTIES. The Corporation hereby represents
and warrants effective as of the Closing as follows:

a. CORPORATE ORGANIZATION AND STANDING. The Corporation is
a corporation duly organized, existing and in good standing under the laws of
the State of California. The Corporation has the requisite corporate power
to carry on its business as presently conducted, and as proposed or
contemplated to be conducted in the future, and to enter into and carry out
the provisions of this Agreement and the transactions contemplated hereby.
The Corporation is not presently qualified to do business as a foreign
corporation in any jurisdiction where the failure to be so qualified would
materially and adversely affect the Corporation's business.

b. SUBSIDIARIES. The Corporation has no subsidiaries or
affiliated companies and does not otherwise own or control, directly or
indirectly, any equity interest in any corporation, association or business
entity, except for its Israeli subsidiary, Nogatech, Ltd.

c. CORPORATE CAPITALIZATION.

-2-
<PAGE>

fifteen million (15,000,000) shares of which shall be designated as Series A
Convertible Preferred Stock, and (ii) forty million (40,000,000) shares of a
sole class of Common Stock.

ii. Except as contemplated or set forth in this
Agreement, there are no outstanding preemptive or other rights, options,
warrants, conversion rights or agreements for the purchase or acquisition
from the Corporation of any shares of its capital stock.

iii. As of the date hereof, the Corporation does not
have any declared and unpaid dividends (whether payable in cash, securities
or other consideration).

d. AUTHORIZATION. All corporate action on the part of the
Corporation, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Corporation, the
authorization, sale, issuance and delivery of the Series A Preferred Stock
(and the Common Stock issuable upon conversion of the Series A Preferred
Stock) and the performance of all of the Corporation's obligations hereunder
has been taken or will be taken prior to the Closing. This Agreement, when
executed and delivered by the Corporation, shall constitute a valid and
binding obligation of the Corporation, enforceable in accordance with its
terms, except as may be limited by principles of public policy, and subject
to laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific performance, injunctive
relief or other equitable remedies. The Shares, when issued in compliance
with the provisions of this Agreement, will be validly issued, will be fully
paid and nonassessable, and will have the rights, preferences and privileges
described in the Articles; the Common Stock issuable upon conversion of the
Shares has been duly and validly reserved and, when issued in compliance with
the provisions of this Agreement and the Articles, will be validly issued,
fully paid and nonassessable; and the Shares and such Common Stock will be
free of any liens or encumbrances, assuming the Investor takes the Shares
with no notice thereof, other than any liens or encumbrances created by or
imposed upon the Shares hereunder; provided, however, that the Shares (and
the Common Stock issuable upon conversion thereof) may be subject to
restrictions on transfer under state and/or federal securities laws.

-3-
<PAGE>

knowledge, since August 31, 1995 there has not been any material change in
the assets, liabilities, financial condition or operations of the Corporation
or its subsidiary, from that reflected in the Financial Statements, except
changes in the ordinary course of business which have not been, either in any
case or in the aggregate, materially adverse.

f. MATERIAL LIABILITIES. Neither the Corporation nor its
subsidiary has any material liabilities or obligations, absolute or
contingent (individually or in the aggregate), except (i) the liabilities and
obligations set forth in the Financial Statements; (ii) liabilities and
obligations which have been incurred subsequent to August 31, 1995 in the
ordinary course of business which have not been, either in any case or in the
aggregate, materially adverse; and (iii) liabilities and obligations under a
lease for its principal offices and leases for equipment and liabilities and
obligations under sales, procurement and other contracts and arrangements
entered into in the normal course of business.

g. LITIGATION. There are no actions, proceedings or, to
the Corporation's best knowledge, investigations pending, or any threat
thereof, against or affecting the Corporation which, either individually or
in the aggregate, might result in any material adverse change in the
business, prospects, condition, affairs or operations of the Corporation or
in any of its properties or assets, or in any material impairment of the
right or ability of the Corporation to carry on its business as proposed to
be conducted, and none which questions the validity of this Agreement or any
action taken or to be taken in connection herewith.

h. GOVERNMENTAL CONSENTS. To the Corporation's knowledge,
no consent, approval, order, authorization or registration, qualifications,
designation, license, declarations or filings with any Federal or state
governmental authority is required on the part of the Corporation in
connection with the consummation of the transactions contemplated herein,
except for applicable security law filings and the IITSSA filing set forth in
Section 4(h) below.

i. REGISTRATION RIGHTS. The Corporation has granted
registration rights to the current holders of the shares of Series A
Convertible Preferred Stock, as successors in interest to the prior holders
of such shares, pursuant to the terms and conditions set forth in a Stock
Purchase Agreement dated as of January 1, 1993 (the "1993 Agreement"), among
the Corporation, DSP Group, Inc. and Scitex Corporation, Ltd. Except as
provided hereunder and in the 1993 Agreement, the Corporation is not a party
to any "registration rights agreement" or any similar

-4-
<PAGE>

agreement pursuant to which any person would have the right to cause, under
any circumstances, the registration of securities under the Securities Act of
1933, as amended (the "Securities Act").

j. DISCLOSURE. No representation or warranty by the
Corporation in this Agreement or in any statement or certificate furnished or
to be furnished to the Investor pursuant hereto or in connection with the
transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

k. SURVIVAL OF REPRESENTATIONS. All representations made
by the Corporation in or under this Agreement shall be true and accurate as
of the Closing.

4. INVESTOR REPRESENTATIONS AND WARRANTIES. The Investor
represents and warrants to the Corporation that:

a. INVESTMENT. The Investor is acquiring the Shares and
any shares of Common Stock issuable pursuant to conversion of the Shares
(hereinafter collectively the "Securities") for investment for their own
account, and not with a present intention to resell in connection with, any
distribution thereof, and they have no present intention of selling or
distributing any such Securities. It understands that the Securities have
not been registered under the Securities Act by reason of a specific
exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment as
expressed herein.

b. RULE 144. The Investor acknowledges that because the
Securities have not been registered under the Securities Act, the Securities
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available. The Investor is
aware of the provisions of Rule 144 promulgated under the Securities Act
which permits limited resale of shares purchased in a private placement under
certain circumstances.

c. NO PUBLIC MARKET. The Investor understands that no
public market now exists for any securities issued by the Corporation and
that it is uncertain whether a public market will ever exist for any such
securities.

d. ACCESS TO DATA. The Investor has had an opportunity to
discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information given to it necessary or
appropriate for deciding whether or not to purchase the Securities. The
Investor acknowledges that no representations or warranties have been made

-5-
<PAGE>

by the Corporation or any agent thereof except as set forth in this Agreement.

e. INVESTMENT EXPERIENCE. The Investor is an "accredited
investor" as that term is defined in Regulation D promulgated by the
Securities and Exchange Commission.

f. PREVIOUS INVESTMENTS. The Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
herein.

g. RISKS. The Investor understands that an investment in
the Corporation involves a high degree of risk and is suitable only for an
investor who can afford a loss of their entire investment and who have no
need for liquidity from their investment.

h. IITSSA COMPLIANCE. The Investor shall provide to the
Corporation all such information as is necessary to complete the forms
required to be filed by the Corporation with the U.S. Department of Commerce,
Bureau of Economic Analysis, under the International Investment and Trade in
Services Survey Act, as amended, and regulations issued thereunder.

i. GOVERNMENTAL CONSENTS. To the Investor's knowledge, no
consent, approval, order, authorization or registration, qualifications,
designation, license, declarations or filings with any Israeli governmental
authority is required on the part of the Investor in connection with the
consummation of the transactions contemplated herein.

j. RESTRICTIONS ON TRANSFER RE REGULATION S.

PLEASE INITIAL WHERE INDICATED BELOW

______INITIAL i. NOT A "U.S. PERSON". The Investor hereby certifies that
(i) it is not a "U.S. Person" as defined under Rule 902, Section (o) of
Regulation S promulgated under the Securities Act, incorporated herein by
reference and is not acquiring the Securities for the account or benefit of
any U.S. Person, and (ii) it is acquiring the Securities in an "offshore
transaction" as defined under Section (i) of such Rule 902, incorporated
herein by reference.

ii. TRANSFER RESTRICTIONS. The Corporation

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<PAGE>

shall not register any transfer of the Securities not made in accordance with
the provisions of Regulation S. In addition to any other restrictions on
transfer set forth in this Agreement, the Investor agrees to transfer the
Securities only (i) in accordance with the provisions of Regulation S,
pursuant to registration under the Securities Act, or pursuant to an
available exemption from registration, and (ii) in accordance with any
applicable state securities laws. Unless so registered or exempt therefrom,
such transfer restrictions shall include but not be limited to and the
Investor warrants and represents the following:

(i) Investor shall not sell the Securities to any
U.S. Person, whether directly or indirectly, or for the account or benefit of
any such U.S. Person for a period of at least one year after the purchase of
the Securities;

(ii) Any other offer or sale of the Securities shall
be made only if any subsequent purchaser certifies in writing that it is not
a U.S. Person and is not acquiring the Securities for the account or benefit
of any U.S. Person or is a U.S. Person who purchased the Securities in a
transaction that did not require registration under the Securities Act; and

(iii) Any transferee of the Securities shall agree in
writing to resell the Securities only in accordance with the provisions of
Regulation S, pursuant to registration under the Securities Act, or pursuant
to an available exemption from registration.

5. RESTRICTIVE LEGENDS. Each certificate or other written
documentation representing any of the Securities which the Investor is
purchasing or may purchase hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or
similar event (unless no longer required in the opinion of the counsel for
the Corporation) shall be stamped or otherwise imprinted with legends
substantially in the following form:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR
THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE
SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND
THE QUALIFICATION REQUIREMENTS UNDER STATE

-7-
<PAGE>

LAW."

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER PURSUANT TO REGULATION S PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED EXCEPT PURSUANT TO THE PROVISIONS UNDER
REGULATION S OR PURSUANT TO REGISTRATION UNDER SUCH ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM SUCH REGISTRATION."

The Corporation shall be entitled to enter stop transfer notices on
its stock books with respect to the Securities.

6. AFFIRMATIVE COVENANTS OF THE CORPORATION. So long as the
Investor owns of record and beneficially at least fifty percent (50%) of the
Series A Preferred Stock shares purchased by it hereunder, until the
Corporation effects a registered underwritten public offering of its common
stock, the Corporation shall deliver to such Investor internally prepared
quarterly and annual financial statements.

7. REGISTRATION RIGHTS. At any time after three (3) years from
the Closing Date, or eighteen (18) months after the Corporation's initial
public offering, whichever is earlier, Persons holding at least twenty
percent (20%) of the Common Stock issuable upon conversion of all the Series
A Preferred Stock may request registration by the Corporation of their
shares, if the anticipated aggregate gross cash proceeds would exceed Ten
Million Dollars ($10,000,000). In such event, the Corporation will use its
best efforts to cause such shares to be registered. The Corporation shall
only be obligated to effect two (2) registrations under these demand
registration rights provisions. Persons holding Series A Preferred Stock or
Common Stock issuable upon conversion of the Series A Preferred Stock, shall
be entitled to S-3 registration rights no more often than once per every
eighteen (18) month period on form S-3, if available for use by the
Corporation, for an aggregate offering price of at least One Million Dollars
($1,000,000) per offering. Persons holding Series A Preferred Stock or
Common Stock issuable upon conversion of the Series A Preferred Stock shall
be entitled to unlimited "piggyback" registrations on a registration of the
Corporation's equity, subject to a prorata cutback with all those holding
"piggyback" registration rights in the underwriters' discretion and
reasonable lock-ups as requested by underwriters. The registration expenses
(exclusive of underwriting discounts and commissions) shall be borne by the
Corporation for all permitted registrations.

8. NEGATIVE COVENANTS. The Corporation shall not, without the
vote or written consent of the holders of a majority of the shares of Series
A Stock, voting as a separate class:

-8-
<PAGE>

i. create any new class or series of shares having
preference over the Series A Stock;

ii. merge, consolidate, or reorganize, where such
merger, consolidation, or reorganization results in the change of a majority
of the members of the Board of Directors;

iii. sell all or substantially all of its assets or
sell more than 50% of the Corporation's Common Stock in one transaction or
series of related transactions.

iv. enter into a transaction with a related party on
terms and conditions which are not done in the ordinary course of business or
which are not done on terms and conditions which represent a fair value to
the Corporation.

9. MISCELLANEOUS.

a. SURVIVAL. The covenants and agreements made herein
shall survive the Closing of the transactions contemplated hereby and shall
end when fewer than fifty percent (50%) of the Shares are outstanding or upon
the consummation of an initial public offering of any of the Corporations'
shares.

c. ENTIRE AGREEMENT. This Agreement and the exhibits
attached hereto and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between and among the parties
with regard to the subjects hereof and thereof.

d. NOTICE. Any notice, payment, report or other
communication required or permitted to be given by one party to any other
party by this Agreement shall be in writing and either (i) served personally
on the other party or parties; (ii) sent by express, registered or certified
first class mail, postage prepaid, addressed to the other party or parties at
its or their address or addresses as indicated next to their signatures
below, or to such other address as any addressee shall have theretofore
furnished to the other parties by like notice; (iii) delivered by commercial
courier to the other party or parties; or (iv) sent by facsimile. Such
notice shall be deemed received on the second day after transmittal if sent
by one day courier together with a transmission of such notice by facsimile
if the recipient has the capability to receive a facsimile at its address and
if sent by other methods shall be deemed received upon receipt.

-9-
<PAGE>

e. FINDER'S AND BROKER'S FEES. The Corporation and
Investor each represents and warrants that it has retained no finder or
broker in connection with the transactions contemplated by this Agreement.
Each party hereby agrees to indemnify and to hold the other harmless from any
liability for any finder's or broker's fee to any broker or other person or
firm (and the costs and expenses of defending against such liability or
asserted liability) for which such indemnifying person, or any of its
employees or representatives, are responsible.

f. TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and
are not to be considered in construing this Agreement.

g. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

h. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable
to contracts between California residents entered into and to be performed
entirely within the State of California.

i. USE OF PROCEEDS. The Corporation may use the proceeds
of this financing for (i) working capital purposes; or (ii) capital
investment.

j. ARBITRATION. Any dispute between the parties arising
out of this Agreement shall be submitted to final and binding arbitration in
the City of Cupertino, County of Santa Clara, State of California, under the
Commercial Arbitration Rules of the American Arbitration Association then in
effect, upon written notification and demand of either party therefor. In
the event either party demands such arbitration, the American Arbitration
Association shall be requested to submit a list of prospective arbitrators
consisting of persons experienced in matters involving securities offerings.
The provisions of California Code of Civil Procedure Section 1283.05 and the
laws of the State of California are incorporated herein and shall be
applicable to the arbitration. In making the award, the arbitrator shall
award recovery of costs and expenses of the arbitration and reasonable
attorneys' fees to the prevailing party. Any award may be entered as a
judgment in any court of competent jurisdiction.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

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<PAGE>

Should judicial proceedings be commenced to enforce or carry out this
provision or any arbitration award, the prevailing party in such proceedings
shall be entitled to reasonable attorneys' fees and costs in addition to
other relief. Either party shall have the right, prior to receiving an
arbitration award, to obtain preliminary relief from a court of competent
jurisdiction to avoid injury or prejudice to that party.

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

CORPORATION:

NOGATECH, INC.
a California corporation
20300 Stevens Creek Boulevard, 4th Fl.
Cupertino, California 95014

By: /s/ N. Hod
----------------------------------
(Signature)

- -------------------------------------
(Print Name and Title)

<TABLE>
<CAPTION>
Investor: Number of Shares:
- --------- -----------------
<S> <C>
DR ARIE HEIMAN 74,074
</TABLE>

/s/ Heiman
- -------------------------------------
(Signature)

- -------------------------------------
(Print and Name)

- -------------------------------------
(Print Address)

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

-11-

<PAGE>

EXHIBIT 10.9
----------------

NOGATECH, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT

THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT is entered into as of
January 30, 1996, by and among NOGATECH, INC., a California corporation
(hereinafter the "Corporation"), and Nathan Hod (hereinafter referred to as the
"Investor").

RECITALS

A. The Corporation desires to raise money by the sale of Series A
Preferred Stock to the Investor.

B. The Investor desires to purchase shares of Series A Preferred
Stock from the Corporation, and the Corporation desires to sell shares of Series
A Preferred Stock to the Investor, on the terms and conditions hereinafter set
forth.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties agree as
follows:

1. AUTHORIZATION AND SALE OF PREFERRED STOCK.

a. AUTHORIZATION. The Corporation will authorize on, or
before, the Closing the sale and issuance of up to two hundred twenty-two
thousand two hundred twenty-two (222,222) shares of its Series A Convertible
Preferred Stock (hereinafter the "Series A Preferred Stock") to the Investor,
having the rights, privileges and preferences as set forth in the Amended and
Restated Articles of Incorporation (hereinafter the "Articles") in the form
attached to this Agreement as Exhibit A.

b. SALE OF SERIES A PREFERRED STOCK. Subject to the
terms and conditions hereof, the Corporation will issue and sell to the
Investor, two hundred twenty-two thousand two hundred twenty-two (222,222)
shares of Series A Preferred Stock (the "Shares") at a per share purchase price
of 3,375/10,000 U.S. Dollars ($0.3375), for an aggregate purchase price of Fifty
Thousand U.S. Dollars (U.S. $75,000).

2. ISSUANCE AND PAYMENT.

a. CLOSING. Subject to the terms and conditions hereof,
the closing of the purchase and sale of the Shares (hereinafter the "Closing")
shall be held (via facsimile transmittal and wire transfers or cashier's check)
at the Corporation's counsel's offices located at 1999 Harrison Street, Suite
1300, Oakland, California, on, or about, December 28, 1995, at 5:00 p.m., local
time, or at such other time and place upon which the

<PAGE>

Corporation and the Investor shall agree (the date of the Closing is hereinafter
referred to as the "Closing Date"). If Investor chooses to wire the purchase
price, the wire transfer shall be sent to Pezzola & Reinke's Attorney Trust
Account at: SUMMIT BANK, 2969 Broadway, Oakland, CA 94611; for deposit into
ACCOUNT NO. 01-20019741 (Summit Bank's telephone number is (510) 839-8800 and
its ABA Number is 121138958). The wire instructions shall include a message
identifying the name of the Investor as the originator of the wire. If Investor
chooses to send a cashier's check, it shall be made payable to "Pezzola & Reinke
Trust Account for the benefit of Nogatech, Inc." and shall identify Investor as
the originator.

b. CLOSING. At the Closing or as soon as practical
thereafter, the Corporation will deliver to the Investor a certificate,
registered in its name, representing the Shares to be purchased by the Investor,
against payment of the purchase price therefor, by cashier's check payable to
the Corporation, or by wire transfer through the Corporation's counsel, Pezzola
& Reinke, or as otherwise instructed by the Corporation.

3. CORPORATION'S WARRANTIES. The Corporation hereby represents
and warrants effective as of the Closing as follows:

a. CORPORATE ORGANIZATION AND STANDING. The Corporation
is a corporation duly organized, existing and in good standing under the laws of
the State of California. The Corporation has the requisite corporate power to
carry on its business as presently conducted, and as proposed or contemplated to
be conducted in the future, and to enter into and carry out the provisions of
this Agreement and the transactions contemplated hereby. The Corporation is not
presently qualified to do business as a foreign corporation in any jurisdiction
where the failure to be so qualified would materially and adversely affect the
Corporation's business.

c. CORPORATE CAPITALIZATION.

i. Immediately prior to, or simultaneously
with, the Closing, the Corporation's authorized capital stock shall include only
two authorized classes of capital stock consisting of (i) sixteen million
(16,000,000) shares of Preferred Stock, fifteen million (15,000,000) shares of
which shall be designated as Series A Convertible Preferred Stock, and (ii)
forty million (40,000,000) shares of a sole class of Common Stock. The
Corporation intends to issue in late November, 1995 through early December, 1995
an aggregate of four million four hundred forty-

-2-

<PAGE>

four thousand four hundred forty-four (4,444,444) shares of series A Preferred
Stock, including the issuance of the shares hereunder (the "Intended Series A
Shares"). Immediately prior to, or simultaneous with, the Closing (without
taking into consideration the Closing), the Corporation will have a total of
five hundred seventy-three thousand two hundred fifty (573,250) shares of Common
Stock outstanding; and up to one million four hundred eighty thousand three
hundred twenty-five (1,480,325) shares of Common Stock subject to issuance
pursuant to outstanding options (the "Options") granted to employees under stock
plans or to certain investors under option agreements. All issued and
outstanding shares of capital stock will have been duly authorized and validly
issued and will be fully paid and nonassessable. The Corporation has reserved
four million four hundred forty-four thousand four hundred forty-four
(4,444,444) shares of Series A Preferred Stock for issuance of the Intended
Series A Shares and four million four hundred forty-four thousand four hundred
forty-four (4,444,444) shares of Common Stock for issuance upon conversion. The
Corporation has also reserved (a) four million four hundred forty-four thousand
four hundred forty-four (4,444,444) shares of its Common Stock for issuance upon
conversion of the Series A Convertible Preferred Stock issued and outstanding
prior to the issuance hereunder; (b) one million four hundred eighty thousand
three hundred twenty-five (1,480,325) shares of its Common Stock for issuance
upon exercise of the Options.

ii. Except as contemplated or set forth in this
Agreement, there are no outstanding preemptive or other rights, options,
warrants, conversion rights or agreements for the purchase or acquisition from
the Corporation of any shares of its capital stock.

iii. As of the date hereof, the Corporation does
not have any declared and unpaid dividends (whether payable in cash, securities
or other consideration).

-3-

<PAGE>

preferences and privileges described in the Articles; the Common Stock issuable
upon conversion of the Shares has been duly and validly reserved and, when
issued in compliance with the provisions of this Agreement and the Articles,
will be validly issued, fully paid and nonassessable; and the Shares and such
Common Stock will be free of any liens or encumbrances, assuming the Investor
takes the Shares with no notice thereof, other than any liens or encumbrances
created by or imposed upon the Shares hereunder; provided, however, that the
Shares (and the Common Stock issuable upon conversion thereof) may be subject to
restrictions on transfer under state and/or federal securities laws.

e. FINANCIAL STATEMENTS. The Corporation has made
available to the Investor the consolidated audited Balance Sheet and Statement
of Operations of the Corporation, together with its subsidiaries, for the period
ended August 31, 1995 (collectively the "Financial Statements"). The Financial
Statements are complete and correct in all material respects. To the
Corporation's knowledge, the Financial Statements accurately set out and
describe the Corporation's financial condition and operating results and that of
its subsidiary as of the dates, and during the periods, indicated therein. To
the Corporation's knowledge, since August 31, 1995 there has not been any
material change in the assets, liabilities, financial condition or operations of
the Corporation or its subsidiary, from that reflected in the Financial
Statements, except changes in the ordinary course of business which have not
been, either in any case or in the aggregate, materially adverse.

f. MATERIAL LIABILITIES. Neither the Corporation nor its
subsidiary has any material liabilities or obligations, absolute or contingent
(individually or in the aggregate), except (i) the liabilities and obligations
set forth in the Financial Statements; (ii) liabilities and obligations which
have been incurred subsequent to August 31, 1995 in the ordinary course of
business which have not been, either in any case or in the aggregate, materially
adverse; and (iii) liabilities and obligations under a lease for its principal
offices and leases for equipment and liabilities and obligations under sales,
procurement and other contracts and arrangements entered into in the normal
course of business.

g. LITIGATION. There are no actions, proceedings or, to
the Corporation's best knowledge, investigations pending, or any threat thereof,
against or affecting the Corporation which, either individually or in the
aggregate, might result in any material adverse change in the business,
prospects, condition, affairs or operations of the Corporation or in any of its
properties or assets, or in any material impairment of the right or ability of
the Corporation to carry on its business as proposed to be conducted, and none
which questions the validity of this Agreement or any action taken or to be
taken in connection herewith.

-4-

<PAGE>

h. GOVERNMENTAL CONSENTS. To the Corporation's
knowledge, no consent, approval, order, authorization or registration,
qualifications, designation, license, declarations or filings with any Federal
or state governmental authority is required on the part of the Corporation in
connection with the consummation of the transactions contemplated herein, except
for applicable security law filings and the IITSSA filing set forth in Section
4(h) below.

i. REGISTRATION RIGHTS. The Corporation has granted
registration rights to the current holders of the shares of Series A Convertible
Preferred Stock, as successors in interest to the prior holders of such shares,
pursuant to the terms and conditions set forth in a Stock Purchase Agreement
dated as of January 1, 1993 (the "1993 Agreement"), among the Corporation, DSP
Group, Inc. and Scitex Corporation, Ltd. Except as provided hereunder and in the
1993 Agreement, the Corporation is not a party to any "registration rights
agreement" or any similar agreement pursuant to which any person would have the
right to cause, under any circumstances, the registration of securities under
the Securities Act of 1933, as amended (the "Securities Act").

j. DISCLOSURE. No representation or warranty by the
Corporation in this Agreement or in any statement or certificate furnished or to
be furnished to the Investor pursuant hereto or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.

k. SURVIVAL OF REPRESENTATIONS. All representations made
by the Corporation in or under this Agreement shall be true and accurate as of
the Closing.

4. INVESTOR REPRESENTATIONS AND WARRANTIES. The Investor
represents and warrants to the Corporation that:

a. INVESTMENT. The Investor is acquiring the Shares and
any shares of Common Stock issuable pursuant to conversion of the Shares
(hereinafter collectively the "Securities") for investment for their own
account, and not with a present intention to resell in connection with, any
distribution thereof, and they have no present intention of selling or
distributing any such Securities. It understands that the Securities have not
been registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment as expressed herein.

b. RULE 144. The Investor acknowledges that because the
Securities have not been registered under the Securities Act,

-5-

<PAGE>

the Securities must be held indefinitely unless subsequently registered under
the Securities Act or an exemption from such registration is available. The
Investor is aware of the provisions of Rule 144 promulgated under the Securities
Act which permits limited resale of shares purchased in a private placement
under certain circumstances.

c. NO PUBLIC MARKET. The Investor understands that no
public market now exists for any securities issued by the Corporation and that
it is uncertain whether a public market will ever exist for any such securities.

d. ACCESS TO DATA. The Investor has had an opportunity
to discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information given to it necessary or
appropriate for deciding whether or not to purchase the Securities. The Investor
acknowledges that no representations or warranties have been made by the
Corporation or any agent thereof except as set forth in this Agreement.

e. INVESTMENT EXPERIENCE. The Investor is an "accredited
investor" as that term is defined in Regulation D promulgated by the Securities
and Exchange Commission.

h. IITSSA COMPLIANCE. The Investor shall provide to the
Corporation all such information as is necessary to complete the forms required
to be filed by the Corporation with the U.S. Department of Commerce, Bureau of
Economic Analysis, under the International Investment and Trade in Services
Survey Act, as amended, and regulations issued thereunder.

i. GOVERNMENTAL CONSENTS. To the Investor's knowledge,
no consent, approval, order, authorization or registration, qualifications,
designation, license, declarations or filings with any Israeli governmental
authority is required on the part of the Investor in connection with the
consummation of the transactions contemplated herein.

5. RESTRICTIVE LEGENDS. Each certificate or other written

-6-

<PAGE>

documentation representing any of the Securities which the Investor is
purchasing or may purchase hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event (unless no longer required in the opinion of the counsel for the
Corporation) shall be stamped or otherwise imprinted with a legend substantially
in the following form:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE HOLDER
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITIES
SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION
REQUIREMENTS UNDER STATE LAW."

The Corporation shall be entitled to enter stop transfer notices on its
stock books with respect to the Securities.

6. AFFIRMATIVE COVENANTS OF THE CORPORATION. So long as the
Investor owns of record and beneficially at least fifty percent (50%) of the
Series A Preferred Stock shares purchased by it hereunder, until the Corporation
effects a registered underwritten public offering of its common stock, the
Corporation shall deliver to such Investor internally prepared quarterly and
annual financial statements.

7. REGISTRATION RIGHTS. At any time after three (3) years from
the Closing Date, or eighteen (18) months after the Corporation's initial public
offering, whichever is earlier, Persons holding at least twenty percent (20%) of
the Common Stock issuable upon conversion of all the Series A Preferred Stock
may request registration by the Corporation of their shares, if the anticipated
aggregate gross cash proceeds would exceed Ten Million Dollars ($10,000,000). In
such event, the Corporation will use its best efforts to cause such shares to be
registered. The Corporation shall only be obligated to effect two (2)
registrations under these demand registration rights provisions. Persons holding
Series A Preferred Stock or Common Stock issuable upon conversion of the Series
A Preferred Stock, shall be entitled to S-3 registration rights no more often
than once per every eighteen (18) month period on form S-3, if available for use
by the Corporation, for an aggregate offering price of at least One Million
Dollars ($1,000,000) per offering. Persons holding Series A Preferred Stock or
Common Stock issuable upon conversion of the Series A Preferred Stock shall be
entitled to unlimited "piggyback" registrations on a registration of the
Corporation's equity, subject to a prorata cutback with all those holding

-7-

<PAGE>

"piggyback" registration rights in the underwriters' discretion and reasonable
lock-ups as requested by underwriters. The registration expenses (exclusive of
underwriting discounts and commissions) shall be borne by the Corporation for
all permitted registrations.

8. NEGATIVE COVENANTS. The Corporation shall not, without the
vote or written consent of the holders of a majority of the shares of Series A
Stock, voting as a separate class:

i. create any new class or series of shares
having preference over the Series A Stock;

ii. merge, consolidate, or reorganize, where
such merger, consolidation, or reorganization results in the change of a
majority of the members of the Board of Directors;

iii. sell all or substantially all of its assets
or sell more than 50% of the Corporation's Common Stock in one transaction or
series of related transactions.

iv. enter into a transaction with a related
party on terms and conditions which are not done in the ordinary course of
business or which are not done on terms and conditions which represent a fair
value to the Corporation.

9. MISCELLANEOUS.

a. SURVIVAL. The covenants and agreements made herein
shall survive the Closing of the transactions contemplated hereby and shall end
when fewer than fifty percent (50%) of the Shares are outstanding or upon the
consummation of an initial public offering of any of the Corporations' shares.

c. ENTIRE AGREEMENT. This Agreement and the exhibits
attached hereto and the other documents delivered pursuant hereto constitute the
full and entire understanding and agreement between and among the parties with
regard to the subjects hereof and thereof.

-8-

<PAGE>

or to such other address as any addressee shall have theretofore furnished to
the other parties by like notice; (iii) delivered by commercial courier to the
other party or parties; or (iv) sent by facsimile. Such notice shall be deemed
received on the second day after transmittal if sent by one day courier together
with a transmission of such notice by facsimile if the recipient has the
capability to receive a facsimile at its address and if sent by other methods
shall be deemed received upon receipt.

e. FINDER'S AND BROKER'S FEES. The Corporation and
Investor each represents and warrants that it has retained no finder or broker
in connection with the transactions contemplated by this Agreement. Each party
hereby agrees to indemnify and to hold the other harmless from any liability for
any finder's or broker's fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which such indemnifying person, or any of its employees or representatives,
are responsible.

f. TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and are
not to be considered in construing this Agreement.

g. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

h. APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts between California residents entered into and to be performed
entirely within the State of California.

i. USE OF PROCEEDS. The Corporation may use the proceeds
of this financing for (i) working capital purposes; or (ii) capital investment.

j. ARBITRATION. Any dispute between the parties arising
out of this Agreement shall be submitted to final and binding arbitration in the
City of Cupertino, County of Santa Clara, State of California, under the
Commercial Arbitration Rules of the American Arbitration Association then in
effect, upon written notification and demand of either party therefor. In the
event either party demands such arbitration, the American Arbitration
Association shall be requested to submit a list of prospective arbitrators
consisting of persons experienced in matters involving securities offerings. The
provisions of California Code of Civil Procedure Section 1283.05 and the laws of
the State of California are incorporated herein and shall be applicable to the
arbitration. In making the award, the arbitrator shall award recovery of costs
and expenses of the arbitration and reasonable attorneys' fees to the prevailing

-9-

<PAGE>

party. Any award may be entered as a judgment in any court of competent
jurisdiction.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.)

-10-

<PAGE>

Should judicial proceedings be commenced to enforce or carry out this
provision or any arbitration award, the prevailing party in such proceedings
shall be entitled to reasonable attorneys' fees and costs in addition to other
relief. Either party shall have the right, prior to receiving an arbitration
award, to obtain preliminary relief from a court of competent jurisdiction to
avoid injury or prejudice to that party.

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

CORPORATION:

NOGATECH, INC.
a California corporation
20300 Stevens Creek Boulevard, 4th Fl.
Cupertino, California 95014

By: /s/ Arie Heiman
---------------------------
(Signature)

Arie Heiman
- ------------------------------
(Print Name and Title)

INVESTOR: NUMBER OF SHARES:
- -------- -----------------
<S> <C>
222,222
</TABLE>

/s/ Nathan Hod
- ----------------------------
(Signature)

Nathan Hod
- ----------------------------
(Print Name)

- --------------------------
(Print Address)

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

-11-

<PAGE>

EXHIBIT 10.10

NOGATECH, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT

THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"),
is made and entered into as of January 13, 2000 by and between NOGATECH,
INC., a Delaware corporation (hereinafter the "Corporation"), and Nomura
International plc, a public limited company incorporated under the laws of
England and Wales ("Investor").

RECITALS

A. The Corporation desires to raise money by the sale of its
Series B Convertible Preferred Stock (hereinafter, the "Series B Preferred
Stock").

B. The Investor desires to purchase shares of Series B Preferred
Stock from the Corporation on the terms and conditions hereinafter set forth.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties agree
as follows:

1. AUTHORIZATION AND SALE OF SERIES B PREFERRED STOCK.

a. AUTHORIZATION. The Corporation will authorize on, or
before, the Closing the sale and issuance of up to one million one hundred
ninety-six thousand one hundred seventy-two (1,196,172) shares of its Series
B Preferred Stock (hereinafter the "Purchased Shares") to Investor having the
rights, privileges and preferences as set forth in the Second Amended and
Restated Certificate of Incorporation (hereinafter the "Certificate")
substantially in form and substance to EXHIBIT A attached hereto and
incorporated by reference herein.

b. SALE OF SERIES B PREFERRED STOCK. Subject to the terms
and conditions hereof, the Corporation will issue and sell to Investor and
Investor will purchase from the Corporation the Purchased Shares at a per
share purchase price of Four U.S. Dollars and Eighteen Cents (U.S. $4.18),
for an aggregate purchase price of Five Million U.S. Dollars (U.S.
$5,000,000) (the "Purchase Price").

2. ISSUANCE AND PAYMENT.

a. CLOSING. Subject to the terms and conditions hereof,
the closing of the purchase and sale of the Purchased Shares (hereinafter the
"Closing") shall be held (via facsimile transmittal and wire transfers) at
the offices of Bay Venture Counsel, LLP, 1999 Harrison Street, Suite 1300,
Oakland, California 94612, on or about January 15, 2000, or at such other
time and place upon which the Corporation and Investor shall agree (the date
of the Closing is hereinafter referred to as the "Closing Date"). Investor
shall wire the Purchase Price to the Corporation's account in accordance with
the wiring instructions set forth on Schedule 2.a. hereto. The wire
instructions shall include a message identifying the Corporation as the
recipient of the wire.

b. DELIVERY OF DOCUMENTS BY THE CORPORATION AT THE CLOSING.

At the Closing, the Corporation will deliver to Investor
executed originals of the following documents:

i. Copy of a Special Resolution of the Corporation's
shareholders, attached hereto as EXHIBIT B, by which, among other things, the
Second Amended and Restated Certificate of Incorporation of the Corporation
as in effect to date shall be amended pursuant to the Amended Certificate.

ii. Copies of resolutions of the Corporation's Board
of Directors, attached hereto as EXHIBIT C, approving the transactions
contemplated by this Agreement

iii. this Agreement;

<PAGE>

iv. a stock certificate ("Certificate"), registered
in the name of Investor, representing the Purchased Shares to be purchased by
Investor, substantially in the form of EXHIBIT D attached hereto and
incorporated by reference herein;

v. an opinion of United States counsel (the "BVC
Opinion") substantially in the Form of EXHIBIT E attached hereto and
incorporated by reference herein;

vi. an opinion of special Delaware counsel (the "PHS
Opinion") substantially in the form of EXHIBIT F attached hereto and
incorporated by reference herein;

vii. an opinion of Israeli counsel (the "Fischer Behar
Opinion") substantially in the Form of EXHIBIT G attached hereto and
incorporated by reference herein;

viii. a Waiver of the Right of First Refusal Agreement
("Waiver") signed by Challenge Fund-Etgar, L.P., Les Fils Dreyfus & Cie,
S.A., Simha Sharon Corex Israeli Industries Ltd., Holland Venture BV, Ophir
Holdings Ltd., Docor International BV, Inventech Ltd., and Ronchal
Investments N.V. (collectively, the "Existing Investors") pursuant to which
the Existing Investors, among other things, waive their right of first
refusal and consent to the sale and issuance of the Purchased to Investor,
substantially in the form of EXHIBIT H attached hereto and incorporated by
reference herein;

ix. an Shareholders Agreement (the "Shareholders
Agreement") substantially in the form of EXHIBIT I attached hereto;

x. an Liquidation Preference Agreement (the
"Liquidation Preference Agreement") substantially in the form of EXHIBIT J
attached hereto; and

xi. a Second Amended and Restated Registration Rights
Agreement (the "Registration Rights Agreement") substantially in the form of
Exhibit K attached hereto.

c. DELIVERY OF DOCUMENTS BY THE INVESTOR AT THE CLOSING. At
the Closing, Investor will deliver to the Corporation executed copies of (i)
this Agreement; (ii) the Shareholders Agreement; (iii) the Liquidation
Preference Agreement; and (iv) the Registrations Rights Agreement.

3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. Except as
set forth on Schedule 3 attached hereto, the Corporation hereby represents
and warrants to Investor, and acknowledges that the Investor is entering into
this Agreement in reliance thereon, as follows:

a. ORGANIZATION.

i. As of the date hereof, the Corporation is duly
organized, validly existing and in good standing under the laws of the State
of Delaware, and has full corporate power and authority to own, lease and
operate its properties and assets and to conduct its business as now being
conducted and as proposed to be conducted. Except as set forth in Section
3.a.i. of Schedule 3 attached hereto, the Corporation has all requisite power
and authority to execute and deliver this Agreement, and other agreements
contemplated hereby or which are ancillary hereto, and to consummate the
transactions contemplated hereby and thereby. Neither the nature of the
Corporation's business as now conducted nor its ownership or leasing of
property require that the Corporation be qualified to do business or in good
standing in any jurisdiction other than the State of Delaware. Copies of the
Corporation's Second Amended and Restated Certificate of Incorporation and
Bylaws, as in effect on the date hereof are attached hereto as EXHIBITS A AND
L and incorporated by reference herein, respectively. The Corporation has not
taken any action or failed to take any action, which action or failure would
preclude or prevent the Corporation from conducting its business after the
Closing in the manner heretofore conducted. The Corporation has all
franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted and as proposed to be
conducted by it, the lack of which would have a material adverse effect on
the business, properties, prospects, or financial condition of the
Corporation, and the Corporation believes that it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted. The Corporation is not in default under any of such
franchises, permits, licenses, or other similar authority which would have a
material adverse effect on the business,

<PAGE>

properties, prospects or financial condition of the Corporation.

ii. The Corporation's wholly-owned subsidiary,
Nogatech Ltd., an Israeli company (the "Nogatech Ltd."), is duly organized,
validly existing and in good standing under the laws of the State of Israel,
and has full corporate power and authority to own, lease and operate its
properties and assets and to conduct its business as now being conducted and
as proposed to be conducted. Neither the nature of Nogatech Ltd.'s business
as now conducted nor its ownership or leasing of property require that
Nogatech Ltd. be qualified to do business or in good standing in any
jurisdiction other than the State of Israel. Nogatech Ltd. has not taken any
action or failed to take any action, which action or failure would preclude
or prevent Nogatech Ltd. from conducting its business after the Closing in
the manner heretofore conducted. Nogatech Ltd. has all franchises, permits,
licenses, and any similar authority necessary for the conduct of its business
as now being conducted and as proposed to be conducted by it, the lack of
which would have a material adverse effect on the business, properties,
prospects, or financial condition of Nogatech Ltd., and the Corporation
believes that Nogatech Ltd. can obtain, without undue burden or expense, any
similar authority for the conduct of its business as planned to be conducted.
Nogatech Ltd. is not in default under any of such franchises, permits,
licenses, or other similar authority which would have a material adverse
effect on the business, properties, prospects or financial condition of
Nogatech Ltd.

iii. The Corporation's wholly-owned subsidiary, Nogatech
California, a California corporation ("Nogatech California," and together
with Nogatech Ltd., "Subsidiaries" or each a "Subsidiary"), is duly
organized, validly existing and in good standing under the laws of the State
of California, and has full corporate power and authority to own, lease and
operate its properties and assets and to conduct its business as now being
conducted and as proposed to be conducted. Neither the nature of Nogatech
California's business as now conducted nor its ownership or leasing of
property require that Nogatech California be qualified to do business or in
good standing in any jurisdiction other than the State of California.
Nogatech California has not taken any action or failed to take any action,
which action or failure would preclude or prevent Nogatech California from
conducting its business after the Closing in the manner heretofore conducted.
Nogatech California has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted
and as proposed to be conducted by it, the lack of which would have a
material adverse effect on the business, properties, prospects, or financial
condition of Nogatech California, and the Corporation believes that Nogatech
California. can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted.
Nogatech California is not in default under any of such franchises, permits,
licenses, or other similar authority which would have a material adverse
effect on the business, properties, prospects or financial condition of
Nogatech California.

b. OWNERSHIP OF STOCK.

i. Immediately prior to the Closing, the
Corporation's authorized capital stock shall include only two authorized
classes of capital stock consisting of (A) thirty-two million (32,000,000)
shares of Preferred Stock, thirty million (30,000,000) shares of which have
been designated as Series A Convertible Preferred Stock; and (B) forty
million (40,000,000) shares of a sole class of Common Stock. Immediately
prior to the Closing (not taking into account the Closing), the Corporation
will have a total of eight hundred thirty-eight thousand seven hundred forty
(838,740) shares of Common Stock outstanding; a total of fifteen million nine
hundred six three hundred four (15,906,304) shares of Series A Preferred
Stock outstanding; and up to (Y) three million two hundred ninety-two
thousand nine hundred forty (3,292,940) shares of Common Stock subject to
issuance pursuant to outstanding options granted to employees under stock
plans; and (Z) two million five hundred eighty-six thousand five hundred
sixty-seven (2,586,567) shares of Common Stock subject to issuance to
investors pursuant to investor stock option agreements. Attached hereto as
Attachment 3.b.i. is a capitalization table setting forth a detailed summary
of the equity holdings of the Corporation taking into account the Closing.
To the extent that such capitalization table identifies sets forth the names
and beneficial holdings of shareholders of the Corporation, such information
is based on information received by the Corporation as of Closing from the
shareholders of record of the Corporation.

ii. Simultaneously with the Closing, the
Corporation's authorized capital stock shall include only two authorized
classes of capital stock consisting of (i) thirty-two

<PAGE>

million (32,000,000) shares of Preferred Stock, thirty million (30,000,000)
shares of which have been designated as Series A Convertible Preferred Stock,
and one million one hundred ninety-six thousand one hundred seventy-two
(1,196,172) of which have been designated as Series B Convertible Preferred
Stock; (ii) forty million (40,000,000) shares of a sole class of Common
Stock. Immediately prior to, or simultaneous with, the Closing (taking into
consideration the Closing), the Corporation will have a total of eight
hundred thirty-eight thousand seven hundred forty (838,740) shares of Common
Stock outstanding; a total of fifteen million nine hundred six thousand three
hundred four (15,906,304) shares of Series A Preferred Stock outstanding; and
(iii) and up to one million one hundred ninety-six thousand one hundred
seventy-two (1,196,172) shares of Series B Convertible Preferred Stock
outstanding; and up to (A) ) three million two hundred ninety-two thousand
nine hundred forty (3,292,940) shares Common Stock subject to issuance
pursuant to outstanding options granted to employees under stock plans; and
(B) two million five hundred eighty-six thousand five hundred sixty-seven
(2,586,567) shares of Common Stock subject to issuance to investors pursuant
to investor stock option agreements (together with (A) of this Section
3.b.(ii), the "Options"). Immediately prior to, or simultaneous with, the
Closing (taking into consideration the Closing), the Corporation has reserved
(X) one million one hundred ninety-six thousand one hundred seventy-two
(1,196,172) shares of the outstanding Common Stock for issuance upon
conversion of the Series B Preferred Stock; (Y) seventeen million one hundred
ninety-seven thousand one hundred seventy (17,197,170) shares of Common Stock
for issuance upon conversion of the outstanding Series A Preferred Stock; and
(Z) five million eight hundred seventy-nine thousand five hundred seven
(5,879,507) shares of Common Stock subject to issuance upon exercise of the
Options.

iii. Except for the transactions contemplated by this
Agreement and as described in Section 3.b. (i), 3.b. (ii) and in Section 3.b.
(iii) of Schedule 3, herein, there are no other capital stock, preemptive
rights, convertible securities, outstanding warrants, options or other rights
to subscribe for, purchase or acquire from the Corporation any capital stock
of the Corporation and there are no contracts or binding commitments
providing for the issuance of, or the granting of rights to acquire, any
capital stock of the Corporation or under which the Corporation is, or may
become, obligated to issue any of its securities. At the Closing, the
Purchased Shares will be duly authorized, validly issued, fully paid,
nonassessable, and free of any preemptive rights, and will have the rights,
preferences, privileges, and restrictions set forth in the Amended
Certificate, and will be free and clear of any liens, claims, encumbrances or
third party rights of any kind and duly registered in the name of each
Investor in the Corporation's stock register. The Common Stock issuable upon
conversion of the Purchased Shares have been duly authorized and reserved for
issuance by all necessary corporate action and, when issued and allotted in
accordance with the terms of the Amended Certificate, will be duly and
validly issued, fully paid, nonassessable, and free of any preemptive rights,
will have the rights, preferences, privileges and restrictions set forth in
the Amended Certificate, and will be free and clear of any liens,
encumbrances, claims, or third party rights of any kind and duly registered
in the name of each Investor in the Corporation's stock register. Except as
provided in certain of the material agreements set forth in Section 3.m.A.1.
of Schedule 3, the Corporation is not under any obligation to register for
trading on any securities exchange any of its currently outstanding
securities or any of its securities which may hereafter be issued. Since its
incorporation, there has been no declaration or payment by the Corporation of
dividends, or any distribution by the Corporation of any assets of any kind
to any of its shares in redemption of or as the purchase price for any of the
Corporation's securities.

iv. Simultaneously with the Closing, (A) Nogatech
Ltd.'s authorized capital stock shall include only one authorized class of
capital stock consisting of seventeen thousand six hundred (17,600) Ordinary
Shares; and (B) Nogatech California's authorized capital stock shall include
only one authorized class of capital stock consisting of one thousand (1,000)
shares of Common Stock.

c. SUBSIDIARIES. The Corporation does not own any of the
issued and outstanding capital stock of any other company other than the
Subsidiaries, and is not a participant in any partnership or joint venture.

d. DIRECTORS, OFFICERS. Immediately prior to the Closing,
the directors of the Corporation are Nathan Hod, Andrew Schonzeit, Avraham
Fischer, Dr. Arie Heiman, Yossi Vinitski, Davidi Gilo, Gerald Dogon, Yirmiahu
Kaplan and Moshe Harel. Except as set forth in Section 3.d of Schedule 3, the
Corporation has no agreement, obligation or commitment with respect to the
election of any individual or individuals to its Board of Directors and, to
the best of the Corporation's

<PAGE>

knowledge, there is no voting agreement or other arrangement among the
holders of the Corporation's shares. As of the Closing, Dr. Arie Heiman is
the Corporation's Chief Executive Officer, and Yaron Garmazi is the
Corporation's Chief Financial Officer and Secretary. All agreements,
commitments and understandings, whether written or oral, with respect to any
compensation to be provided to any of the Corporation's directors or officers
have been fully disclosed in writing to Investor. Simultaneous with the
Closing, the directors of Nogatech Ltd. are Dr. Arie Heiman and Yaron
Garmazi, and the officers of Nogatech Ltd. are Dr. Arie Heiman, Chief
Executive Officer, and Yaron Garmazi, Chief Financial Officer and Secretary.
The directors and officers of Nogatech California are the same as the
directors and officers of the Corporation.

e. FINANCIAL STATEMENTS. The Corporation has furnished
Investor with the financial statements attached hereto as EXHIBIT M and
incorporated by reference herein (the "Financial Statements"). The Financial
Statements have been prepared in accordance with United States generally
accepted accounting principles and are true and correct in all material
respects, are in accordance with the books and records of the Corporation,
and fairly and accurately present in all material respects the financial
position of the Corporation as of such dates and the results of its
operations for the periods then ended. Neither the Corporation nor either
Subsidiary has liabilities, debts or obligations, whether accrued, absolute
or contingent, other than liabilities (i) set forth in the Financial
Statements, or (ii) as may occur in the ordinary course of business since the
date of the Financial Statements Balance Sheet, and have not or will not have
singly or in the aggregate a materially adverse effect on the Corporation's
or Subsidiary's business, prospects, condition (financial or otherwise),
affairs, operations or assets.

f. AUTHORIZATION; APPROVALS. All corporate action on the
part of the Corporation necessary for the authorization, execution, delivery,
and performance of all of the Corporation's obligations under this Agreement
and for the authorization, issuance, and allotment of the Purchased Shares
being sold under this Agreement and of the Common Stock issuable upon
conversion of the Purchased Shares has been (or will be) taken prior to the
Closing. This Agreement, when executed and delivered by or on behalf of the
Corporation, shall constitute the valid and legally binding obligations of
the Corporation, legally enforceable against the Corporation in accordance
with their respective terms, except as such enforceability may be subject to
or limited by bankruptcy, insolvency, reorganization, arrangement, or
moratorium or other similar laws relating to or affecting the rights of
creditors, or general principles of equity, regardless of whether considered
in a proceeding in equity or at law. Except as set forth on Schedule 3.f. of
Schedule 3, no consent, approval, order, license, permit, action by, or
authorization of or designation, declaration, or filing with any governmental
authority on the part of the Corporation is required that has not been, or
will not have been, obtained by the Corporation prior to the Closing in
connection with the valid execution, delivery and performance of this
Agreement or the offer, sale, or issuance of the Purchased Shares.

g. COMPLIANCE WITH OTHER INSTRUMENTS. Neither the
Corporation nor any Subsidiary is in default (i) under, in the case of the
Corporation, its Amended Certificate or Bylaws, in the case of Nogatech
California, its Articles of Incorporation as currently in effect or Bylaws,
and in the case of Nogatech Ltd., its Memorandum and Articles of Association,
or other formative documents, or under any note, indenture, mortgage, lease,
agreement, contract, purchase order or other instrument, document or
agreement to which the Corporation or any Subsidiary is a party or by which
the Corporation or any Subsidiary or any of their respective property is
bound or affected, or (ii) with respect to any law, statute, ordinance,
regulation, order, writ, injunction, decree, or judgment of any court or any
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, including without limitation, all
certificates of approval as issued by the Investment Center of the Ministry
of Industry and Trade of the State of Israel to any Subsidiary], which
default, in any such case, would adversely affect or in the future is
reasonably likely to have a material adverse effect on the Corporation's or
any Subsidiary's business, prospects, condition (financial or otherwise),
affairs, operations or assets. Except as set forth in Section 3.g of Schedule
3, to the best of the Corporation's knowledge, no third party is in material
default under any agreement, contract or other instrument, document or
agreement to which either the Corporation or any Subsidiary is a party or by
which it or any of their respective property is affected. Neither the
Corporation nor any Subsidiary is a party to or bound by any order, judgment,
decree or award of any governmental authority, agency, court, tribunal or
arbitrator.

h. NO BREACH. Neither the execution and delivery of this
Agreement nor

<PAGE>

compliance by the Corporation with the terms and provisions hereof and
thereof, will conflict with, or result in a breach or violation of, any of
the terms, conditions and provisions of (i) the Amended Certificate or the
Bylaws, or other governing instruments of the Corporation, (ii) any judgment,
order, injunction, decree, or ruling of any court or governmental authority,
domestic or foreign, (iii) any agreement, contract, lease, license or
commitment to which the Corporation is a party or to which it is subject, or
(iv) applicable law. Such execution, delivery and compliance will not (A)
give to others any rights, including rights of termination, cancellation or
acceleration, in or with respect to any agreement, contract or commitment
referred to in this paragraph, or to any of the properties of the Corporation
or any Subsidiary or (B) otherwise require the consent or approval of any
person, which consent or approval has not heretofore been obtained.

i. RECORDS. The Corporation has made available to or
provided Investor with accurate and complete copies of the minutes of every
meeting of the Corporation's Stockholders and Board of Directors (and any
committee thereof). No resolutions have been passed, enacted, consented to or
adopted by the directors (or any committee thereof) or Stockholders of the
Corporation, except for those so provided. The corporate records of the
Corporation have been maintained in accordance with all applicable statutory
requirements and are complete and accurate in all respects.

j. OWNERSHIP OF ASSETS. Neither the Corporation nor any
Subsidiary currently leases or licenses any property or owns any material
assets other than as described in detail in Section 3.j. of Schedule 3 hereto.

k. INTELLECTUAL PROPERTY AND OTHER INTANGIBLE ASSETS.

i. Each of the Corporation and each Subsidiary, as
the case may be, owns or has the right to use, free and clear of all liens,
claims and restrictions, except as set forth in Section 3.k. (i) of Schedule
3 hereto, all patents, trademarks, service marks, trade names and copyrights,
and applications, licenses and rights with respect to the foregoing, and all
trade secrets, including know-how, inventions, designs, processes, works of
authorship, computer programs and technical data and information
(collectively herein "Intellectual Property") used and sufficient for use in
the conduct of its business as now conducted and as proposed to be conducted,
without infringing upon or violating any right, lien, or claim of others,
including without limitation any of its past or present shares, past and
present employees and employers of the founding shares, and past and present
employees and employers of the past and present employees of the Corporation
or any Subsidiary, as applicable. Except as set forth in Section 3.k. (i) of
Schedule 3, neither the Corporation nor any Subsidiary is obligated or under
any liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service mark, trade name, copyright or other intangible asset,
with respect to the use thereof or in connection with the conduct of its
business as now conducted or as proposed to be conducted or otherwise.

ii. Any and all Intellectual Property in connection
with the Corporation's and each Subsidiary's business which was developed, is
currently being developed, or will be developed in the future, by any
employee of each Subsidiary, shall be the property solely of such Subsidiary.
The Corporation and each Subsidiary has taken security measures to protect
the secrecy, confidentiality and value of all the Intellectual Property,
which measures are reasonable and customary in the industry in which the
Corporation and the Subsidiaries operate. Except as set forth on Section 3.k.
(ii) of Schedule 3, each Subsidiary's past and present employees and other
persons who, either alone or in concert with others, developed, invented,
discovered, derived, programmed or designed the Intellectual Property, or who
has knowledge of or access to information about the Intellectual Property
have entered into a written agreement with the Subsidiary, in the case of the
Nogatech California, in the form set forth as EXHIBIT N attached hereto and
incorporated by reference herein (the "U.S. Proprietary Information and
Non-Competition Agreement"), and in the case of Nogatech Ltd., in the form
set forth as EXHIBIT O attached hereto and incorporated by reference herein
(the "Israeli Proprietary Information and Non-Competition Agreement").

iii. Neither the Corporation nor any Subsidiary has
received any communications alleging that the Corporation or any Subsidiary
has violated or by conducting its business as proposed, would violate, any of
the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. To the
best of the Corporation's knowledge, none of either Subsidiary's employees
are obligated under any contract

<PAGE>

(including licenses, covenants or commitments of any nature) or other
agreement, or are subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's
best efforts to promote the interests of the Corporation or any Subsidiary,
as applicable, or that would conflict with the Corporation's or any
Subsidiary's business as conducted and as proposed to be conducted. Neither
the execution nor delivery of this Agreement, nor the carrying on of the
Corporation's or either Subsidiary's business by the employees of either
Subsidiary, nor the conduct of the Corporation's or the Subsidiary's business
as proposed to be conducted, will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which either of the Subsidiaries'
employees are obligated. It is not, and will not become, necessary to utilize
any inventions of either of the Subsidiary's employees (or people either
Subsidiary currently intends to hire) made prior to their employment by
Subsidiary, other than those that have been assigned to the Subsidiaries
pursuant to the U.S. Proprietary Information and Non-Competition Agreement or
the Israeli Proprietary Information and Non-Competition Agreement, as
applicable, signed by such employee.

l. TAXES. Neither the Corporation nor any Subsidiary has
made any elections under applicable laws or regulations (other than elections
related solely to methods of accounting, depreciation or amortization) that
would have a material adverse effect on the Corporation or any Subsidiary,
its financial condition, its business as presently conducted or proposed to
be conducted or any of its properties or assets. Each of the Corporation and
each Subsidiary is current in the payment of all its tax liabilities and has
not received notice of any tax delinquencies.

m. CONTRACTS. Section 3.m. of Schedule 3 contains a true
and complete list of all written and oral contracts and agreements to which
either the Corporation or any Subsidiary is a party or by which either of its
property is bound, except for those contract or agreements which if
terminated would not have a material adverse effect on the Corporation's or
any Subsidiary's business, prospects, condition (financial or otherwise)
affairs, operations or assets. To the best of the Corporation's knowledge,
each of such contracts and agreements is in full force and effect, and none
of the Corporation, any Subsidiary or, to the best of the Corporation's
knowledge, any other party thereto is in breach thereof, except for a breach
which would not have a material adverse effect on the Corporation's or any
Subsidiary's business, prospects, condition (financial or otherwise) affairs,
operations or assets. True and correct copies of all such contracts
identified on Section 3.m. of Schedule 3 have been delivered to Investor.
Except as set forth in Section 3.m. of Schedule 3 hereto, neither the
Corporation nor any Subsidiary has employment or consulting contracts,
deferred compensation agreements or bonus, incentive, profit-sharing, or
pension plans currently in force and effect, or any understanding with
respect to any of the foregoing, except for those contracts, agreements,
plans or understandings which if enforced would not have a material adverse
effect on the Corporation's or any Subsidiary's business, prospects,
condition (financial or otherwise) affairs, operations or assets. Neither
the Corporation nor any Subsidiary has either received or served any notice
of termination under any agreement or contract identified in Section 3.m. of
Schedule 3.

n. LITIGATION. No action, proceeding or governmental
inquiry or investigation is pending or threatened against the Corporation,
any Subsidiary or any of the Corporation's or any Subsidiary's officers,
directors, or employees (in their capacity as such), or against any of the
Corporation's or any Subsidiary's properties, before any court, arbitration
board or tribunal or administrative or other governmental agency, nor is
there any basis for the foregoing, which if decided against the Corporation
or any Subsidiary, as the case may be, would have a material adverse effect
on the Corporation's or any Subsidiary's, as applicable, business, prospects,
condition (financial or otherwise) affairs, operations or assets. The
foregoing includes, without limiting its generality, actions pending or
threatened involving the prior employment of any of the Corporation's or any
Subsidiary's employees or use by any of them in connection with the
Corporation's or any Subsidiary's business of any information, property or
techniques allegedly proprietary to any of their former employers. Neither
the Corporation nor any Subsidiary is a party to or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or
governmental agency or instrumentality. There is no action, suit, proceeding
or investigation by the Corporation or any Subsidiary currently pending or
that the Corporation or any Subsidiary intends to initiate.

o. NO PUBLIC OFFER. Neither the Corporation nor anyone
acting on its behalf has offered or will offer securities of the Corporation
or any part thereof or any similar securities for issuance or sale to, or
solicit any offer to acquire any of the same from, anyone so as to make
issuance and sale of the Purchased Shares not exempt from the registration
requirements of Section 5 of the

<PAGE>

U.S. Securities Act of 1933, as amended (the "Securities Act") or the Israeli
Securities Law, 1968. Assuming Investor's representations and warranties
contained herein are true and correct as of the Closing, none of the
Purchased Shares issued and outstanding has been offered or sold in such a
manner as to make the issuance and sale of such Purchased Shares not exempt
from such registration requirements, and all such Purchased Shares have been
offered and sold in compliance with all applicable federal and state
securities laws.

p. INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 3.p. of Schedule 3 attached hereto, no officer, director or
Stockholder of the Corporation, or any affiliate of any such person or entity
of the Corporation, has or has had, either directly or indirectly, (i) an
interest in any person or entity which (A) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold
by the Corporation or any Subsidiary, or (B) purchases from or sells or
furnishes to the Corporation or any subsidiary any goods or services, or (ii)
a beneficial interest in any contract or agreement to which the Corporation
is a party or by which it may be bound or affected. Except as set forth in
Section 3.p. of Schedule 3 attached hereto, there are no existing
arrangements or proposed transactions between the Corporation or any
Subsidiary and any of either the Corporation's or either Subsidiary's
officers, directors, or holders of more than 5% of the capital stock of the
Corporation, or any affiliate or associate of any such person. Except as set
forth in Section 3.p. of Schedule 3 attached hereto, no employee,
Stockholder, officer, or director of the Corporation or Subsidiary is
indebted to the Corporation or Subsidiary, nor is the Corporation or any
Subsidiary indebted (or committed to make loans or extend or guarantee
credit) to any of them.

q. BROKERS. Except as set forth in Section 3.q. of
Schedule 3 hereto, no agent, broker, investment banker, person or firm acting
in a similar capacity on behalf of or under the authority of the Corporation
are or will be entitled to any broker's or finder's fee or any other
commission or similar fee, directly or indirectly, on account of any action
taken by the Corporation in connection with any of the transactions
contemplated under this Agreement. The Corporation agrees to indemnify and
hold Investor harmless from and against any claim or liability resulting from
any party claiming any such commission or fee, if such claims shall be
contrary to the foregoing statement.

r. FULL DISCLOSURE. Neither this Agreement, its Schedule
nor any certificates made or delivered in connection herewith contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements herein or therein not misleading, in view of
the circumstances in which they were made. There is no material fact or
information relating to the business, prospects, condition (financial or
otherwise), affairs, operations, or assets of the Corporation that has not
been disclosed to the Investor in writing by the Corporation.

s. EFFECTIVENESS; SURVIVAL; INDEMNIFICATION. Each
representation and warranty herein is deemed to be made on the date of this
Agreement and at the Closing, and shall survive and remain in full force and
effect after the Closing. In the event of any breach or misrepresentation of
any covenant, warranty or representation made by the Corporation under this
Agreement, the Corporation shall indemnify the Investor and hold them
harmless from any and all loss, damage (including, without limitation, any
decrease in the value of the Purchased Shares), liability and expense
(including reasonable legal fees and costs)("Losses") sustained or incurred
by Investor as a result of or in connection with said breach or
misrepresentation for a period of three (3) years following the Closing,
except with respect to Losses which may be incurred as a result of a breach
of the representations contained in Sections j, k and l of this Section 3,
with respect to which the Corporation's indemnification obligation shall
remain in effect for a period of five (5) years following the Closing.

t. USE OF PROCEEDS. The Corporation shall use the proceeds
of this financing only for (i) working capital purposes; or (ii) capital
investment.

u. EMPLOYEES. Neither the Corporation nor any Subsidiary
have employment agreements with any officer or employee or any other
consultant or person which is not terminable by it at will, without
liability, upon thirty (30) days prior notice. As of the date hereof, neither
the Corporation nor any Subsidiary have deferred compensation covering any of
its officers or employees. Each of the Corporation and each Subsidiary have
complied with all applicable employment laws. Section 3.m. of Schedule 3
attached hereto lists all employment, non-competition and confidentiality
agreements between the Corporation and each Subsidiary and any employee or
consultant of the Corporation and either the Subsidiary and true and correct
copies of such agreements have been delivered to the Investor. To the best
of the Corporation's knowledge, neither the Corporation nor any

<PAGE>

Subsidiary is aware that any officer or any key employee, including without
limitation, any hardware or software engineer of the Corporation or any
Subsidiary, or that any group of key employees, including without limitation,
any group of hardware or software engineers of the Corporation or any
Subsidiary, intends to terminate his or their employment with the Corporation
or any Subsidiary, nor does the Corporation or any Subsidiary have a current
intention to terminate the employment of any officer, key employee or group
of key employees, including without limitation, any hardware or software
engineer or group of hardware or software engineers of the Corporation or any
Subsidiary.

v. A true and correct copy of the Business Plan as in
effect as of December 1999 is attached hereto as EXHIBIT P (the "Business
Plan"). The parties are aware that the Business Plan is based upon various
estimates and assumptions, and contains certain forecasts of results and
operations of the Corporation. Such estimates, assumptions and forecasts are
subject to significant uncertainties and contingencies, many of which are
beyond the Corporation's control. There is no assurance that such estimates,
assumptions and forecasts will be realized, and actual results may vary
significantly from those shown. The Corporation does not know of any material
fact which contradicts such estimates, assumptions and forecasts in any
material respect, and such estimates, assumptions and forecasts represent the
Corporation's reasonable professional judgment as of December 1999. The
Corporation is not aware of any material adverse changes since that time that
would cause the Corporation to believe that such estimates and assumptions
and the forecasts derived therefrom are no longer valid.

4. INVESTOR REPRESENTATIONS AND WARRANTIES. Without derogating
from the liability of the Corporation to Investor under this Agreement,
Investor represents and warrants to the Corporation that:

a. INVESTMENT. Investor is acquiring the Purchased Shares
and any shares of Common Stock issuable pursuant to conversion of the
Purchased Shares (hereinafter collectively the "Securities") for investment
for its own account, and not with a present intention to resell in connection
with, any distribution thereof, and it has no present intention of selling or
distributing any such Securities. Investor understands that the Securities
have not been registered under the Securities Act by reason of a specific
exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment as
expressed herein.

b. RULE 144. Investor acknowledges that because the
Securities have not been registered under the Securities Act, the Securities
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available. Investor is aware of
the provisions of Rule 144 promulgated under the Securities Act, which
permits limited resale of shares purchased in a private placement under
certain circumstances.

c. NO PUBLIC MARKET. Investor understands that no public
market now exists for any securities issued by the Corporation and that it is
uncertain whether a public market will ever exist for any such securities.

d. ACCESS TO DATA. The Investor have had an opportunity to
discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information requested by them, that
they believe is necessary or appropriate for deciding whether or not to
purchase the Securities. Investor acknowledges that no representations or
warranties have been made by the Corporation or any agent thereof except as
set forth in this Agreement and the attachments thereto.

e. INVESTMENT EXPERIENCE. Investor is an "Accredited
Investor" as that term is defined in Regulation D promulgated by the
Securities and Exchange Commission.

f. PREVIOUS INVESTMENTS. Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
herein.

g. RISKS. Investor understands that an investment in the
Corporation involves a high degree of risk and is suitable only for an
investor who can afford a loss of its entire investment and who has no need
for liquidity from its investment.

<PAGE>

h. USE OF PROCEEDS. Investor acknowledges and agrees that
the Corporation may use the proceeds of this financing for (i) working
capital purposes; or (ii) capital investment.

5. INVESTOR'S CONDITIONS TO CLOSING. The obligations of Investor
to purchase the Purchased Shares and transfer funds at the Closing are
subject to the fulfillment at or before the Closing of the following
conditions precedent, any one or more of which may be waived in whole or in
part by Investor, which waiver shall be at the sole discretion of Investor:

a. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Corporation in this Agreement shall have been true and
correct when made, and shall be true and correct as of the Closing as if made
on the date of the Closing.

b. COVENANTS. All covenants, agreements, and conditions
contained in this Agreement shall be performed, satisfied or complied with by
the Corporation prior to the Closing.

c. CONSENTS, ETC. The Corporation shall have secured all
permits, consents and authorizations that shall be necessary or required
lawfully to consummate this Agreement and to issue the Purchased Shares to be
purchased by Investor at the Closing, and shall have prepared the Amended
Certificate.

d. PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions
shall be satisfactory in substance and form to Investor and it's counsel, and
Investor and their counsel shall have received all such counterpart originals
or certified or other copies of such documents as Investor or it's counsel
may reasonably request.

e. DUE DILIGENCE REVIEW. Investor's legal and financial
due diligence review of the Corporation shall have been completed to the
satisfactory of Investor at their sole discretion.

f. ABSENCE OF ADVERSE CHANGES. From the date hereof until
the Closing, there will have been no material adverse change in the financial
or business condition of the Corporation, in the sole judgment of the
Investor.

6. CORPORATION'S CONDITIONS TO CLOSING. The Corporation's
obligations to sell and issue the Purchased Shares at the Closing are subject
to the fulfillment at or before the Closing of the conditions that:

a. all covenants, agreements and conditions contained in
this Agreement to be performed, or complied with, by Investor prior to the
Closing shall have been performed or complied with by Investor prior to or at
the Closing;

b. the representations and warranties made by the Investor
in this Agreement shall have been true and correct when made, and shall be
true and correct as of the date of the Closing, which conditions may be
waived in whole or in part by the Corporation, and which waiver shall be at
the sole discretion of the Corporation; and

c. the Corporation shall have secured all permits,
consents, approvals and authorizations that shall be necessary or required to
lawfully consummate this Agreements (including all Schedules and Exhibits
attached hereto) and to issue the Purchased Shares to be purchased by
Investor at the Closing.

7. RESTRICTIVE LEGENDS. Each Certificate or other written
documentation representing any of the Securities which the Investor is
purchasing or may purchase hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or
similar event (unless no longer required in the opinion of the counsel for
the Corporation) shall be stamped or otherwise imprinted with the legends
substantially in the following form:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE

<PAGE>

SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING
SUCH SECURITIES, OR THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
OF THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION
REQUIREMENTS UNDER STATE LAW."

"A STATEMENT OF THE RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS GRANTED
TO OR IMPOSED ON THE SERIES B CONVERTIBLE PREFERRED STOCK OF THE CORPORATION
AND UPON THE HOLDERS THEREOF AS ESTABLISHED BY THE SECOND AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION MAY BE OBTAINED BY ANY SHAREHOLDER UPON
REQUEST AND WITHOUT CHARGE AT THE PRINCIPAL OFFICES OF THE CORPORATION."

"THE SHARES OF SERIES B CONVERTIBLE PREFERRED STOCK ARE CONVERTIBLE INTO
COMMON STOCK AT THE TIMES AND ON THE TERMS SET FORTH IN THE SECOND AMENDED
AND RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION."

"NOTWITHSTANDING ANY OTHER LEGEND PROVISION CONTAINED HEREIN, THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE OR
HYPOTHECATION COMPLIES WITH THE TERMS AND PROVISIONS OF THAT CERTAIN SERIES B
PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF JANUARY 13, 2000 BETWEEN THE
COMPANY AND THE ORIGINAL HOLDER OF THE SHARES, THAT CERTAIN SECOND AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT DATED AS OF JANUARY 13, 2000 BY
AND AMONG THE CORPORATION, THE HOLDER OF THE SHARES AND THE ORIGINAL HOLDER
OF THE SHARES AND THAT CERTAIN SHAREHOLDERS AGREEMENT DATED AS OF JANUARY 13,
2000, BY AND AMONG THE CORPORATION AND THE ORIGINAL HOLDER OF THE SHARES.
ANY SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE OR HYPOTHECATION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IN VIOLATION OF SUCH AGREEMENTS SHALL BE VOID
AND INVALID."

The Corporation shall be entitled to enter stop transfer notices on
its stock books with respect to the Securities.

8. AFFIRMATIVE COVENANTS OF THE CORPORATION.

a. REPORTS. The Corporation shall deliver to each Investor:

i. ANNUAL FINANCIAL STATEMENTS. So long as Investor
owns shares of the Corporation, or until the Corporation effects a registered
underwritten public offering of its Common Stock, the earlier of the two, as
soon as practicable, but in any event within 75 days after the end of each
fiscal year of the Corporation, a consolidated balance sheet of the
Corporation as of the end of such year, and statements of income and
statements of cash flow of the Corporation for such year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
in reasonable detail, prepared in accordance with U.S. generally accepted
accounting principles (GAAP), audited by a firm of Independent Certified
Public Accountants in the State of California and accompanied by an opinion
of such firm which opinion shall state that such balance sheet and statements
of income and cash flow have been prepared in accordance with GAAP applied on
a basis consistent with that of the preceding fiscal year, and present fairly
and accurately the financial position of the Corporation as of their date,
and that the audit by such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards.

ii. QUARTERLY FINANCIAL STATEMENTS. So long as
Investor owns of record and beneficially at least five percent (5%) of the
Corporation's issued and outstanding Series B Stock, or until the Corporation
effects a registered underwritten public offering of its Common Stock, the
earlier of the two, as soon as practicable, but in any event within
forty-five (45) days after the end of each quarter of each fiscal year of the
Corporation, an unaudited consolidated balance sheet of the Corporation as at
the end of each such period and unaudited consolidated statements of (i)
income, (ii) cash flow, and (iii) management's analysis of results and a
statement of an executive officer

<PAGE>

explaining any differences from budget of the Corporation for such period
and, in the case of the first, second and third quarterly periods, for the
period from the beginning of the current fiscal year to the end of such
quarterly period, setting forth in each case in comparative form the figures
for the corresponding period of the previous fiscal year, all in reasonable
detail and certified, by the chief financial officer (or if none, by the
chief executive officer) of the Corporation, that such financial statements
were prepared in accordance with GAAP applied on a basis consistent with that
of preceding periods and, except as otherwise stated therein, fairly present
the financial position of the Corporation as of their date subject to (y)
there being no footnotes contained therein and (z) changes resulting from
year-end audit adjustments.

iii. ANNUAL PLAN. So long as Investor owns of record
and beneficially at least five percent (5%) of the Corporation's issued and
outstanding Series B Stock, the management of the Corporation shall establish
annually an operating plan and budget for the Corporation prepared on a
quarterly basis (the "Annual Plan"), in consultation with the Corporation's
Board of Directors (the "Board"). The Annual Plan for the following year
shall be submitted to the Board for its approval and shall be delivered to
the each Investor at least thirty (30) days prior to the first day of the
year covered by such Annual Plan. The Annual Plan for the year 2000 is
attached hereto as EXHIBIT Q and incorporated by reference herein. The
Annual Plan for the year 2000 sets forth financial projections for the
Corporation for the period from January 1999 through December 2001. The
parties are aware that these projections are only estimates and the
Corporation's actual financial results may vary significantly from those
projections. The actual financial results of the Corporation for the year
ended December 31, 1999 are as set forth in the Financial Statements. The
Corporation makes no representation or warranty that the financial
projections set forth in the Annual Plan for the year 2000 for the period
January 2000 through December 2001 will reflect the actual financial results
of the Corporation during such time period.

iv MONTHLY SUMMARY. So long as Investor owns of
record and beneficially at least five percent (5%) of the Corporation's
issued and outstanding Series B Stock, no later than five (5) business days
following the end of each calendar month, the Corporation shall deliver to
each Investor a brief summary of the Corporation's and each Subsidiary's
activities for such calendar month. The Corporation shall not be obligated to
attach financial statements to such monthly summary or refer to financial
statements in such monthly summary. Such monthly summary may be prepared by
any knowledgeable employee of the Corporation or the Subsidiary.

b. KEY MAN INSURANCE. No later than 90 days after
Closing, the Corporation shall obtain a reasonbale amout of "key man"
insurance coverage covering the following employees of Nogatech Ltd.: (i)
Arie Heiman, Chief Executive Officer; (ii) Eran Kishon, Senior Asic Engineer;
and (iii) Arie Gavrieli,, Vice President Engineering.

c. DISASTER RECOVERY PLAN. Within 30 days following the
Closing, the Corporation shall implement a disaster recover plan which shall
require the Corporation and the Subsidiaries to produce and retain back-up
copies of its software every two weeks and which shall be stored at an
address other than the Corporation's or its Subsidiaries principal place of
business.

d. EMPLOYEE NON-COMPETE AND PROPRIETARY INFORMATION
AGREEMENTS. Within 60 days following the Closing, the Corporation shall and
shall cause each Subsidiary to amend the terms of its non-competition and
proprietary information agreements, as applicable, with its employees in a
manner reasonably satisfactory to counsel to Investor and the Corporation.

e. CO-LEAD MANAGER AND CO-FINANCIAL ADVISOR. The
Corporation agrees that following the Closing, prior the consummation of the
Corporation's underwritten initial public offering of its Common Stock
("IPO"), (i) the Corporation will consider and consult with Investor as to
Investor's or any of its affiliates' participation in the IPO on customary
and reasonable terms as a co-lead manager or co-financial advisor to the
extent that Investor or any of its affiliates is able to participate in such
capacities under applicable laws or regulations, including NASD rules, and
(ii) if Investor or any of its affiliates becomes a co-lead manager or
co-financial advisor in the IPO, Investor or its affiliates, as the case may
be, will have no direct influence over the valuation or timing of the IPO.
Notwithstanding the foregoing, the Corporation shall have no obligation
whatsoever to engage Investor or any of its affiliates as a co-lead manager
or co-financial advisor for the IPO.

9. VISITATION RIGHTS. Notwithstanding any other provision in
this Agreement, with

<PAGE>

respect to the Corporation's Board of Directors, Investor shall have the
rights set forth in this Section 9:

a. VISITATION RIGHTS. As long as Investor holds at least
400,000 of the Purchased Shares of the Corporation's issued and outstanding
share capital, Investor shall be entitled to appoint one observer on their
behalf (the "Observer") prior to any meeting of the Board of Directors of the
Corporation. The Corporation shall invite the Observer to attend all meetings
of its Board of Directors in a non-voting observer capacity and, in this
respect, shall give the Observer copies of all notices, minutes, consents and
other materials that the Corporation provides to its directors. The
Corporation reserves the right to exclude the Observer from access to any
material or meeting or portion thereof only in those instances where the
Corporation believes, upon written advice of counsel (a copy of which shall
be delivered to the Investor), that such exclusion is necessary to preserve
the attorney-client privilege or for other similar reasons. The Observer may
participate in discussions of matters brought to the Board.

b. CONFIDENTIAL INFORMATION. The Investor agrees to, and
agrees to cause its Observer to, hold in confidence and trust and not use or
disclose any confidential information provided to or learned in connection
with its rights hereunder. This Section 9.b. shall not apply to the
following: (1) information available in the public domain; (2) information
known to Investor prior to the date of the Board of Directors meeting where
the confidential information is first disclosed; and (3) information first
learned by Investor or the Observer from a third-party having an unqualified,
legal right both to possess and disclose such confidential information to the
Investor.

10. NEGATIVE COVENANTS. Except as otherwise provided by law and in
the Corporation's Amended Certificate, the Corporation shall not, without the
vote or written consent of the holders of a majority of the shares of Series
B Preferred Stock, voting as a separate class:

a. increase the authorized number of shares of Series B
Preferred Stock or the Preferred Stock of the Corporation;

b. create any new class or series of shares having
preference over the Series B Preferred Stock;

c. merge, consolidate, or reorganize, where such merger,
consolidation, or reorganization directly involves more than fifty percent
(50%) of the Corporation's Common and Preferred Stock or results in the
change of a majority of the members of the Board of Directors;

d. sell all or substantially all of its assets or permit
the sale of any of its Subsidiary's assets or issue more than 50% of the
Corporation's or sell or permit the issuance of any of its Subsidiary's
Common Stock or Ordinary Shares, as the case may be, in one transaction or a
series of related transactions.

e. enter into a transaction with a related party on terms
and conditions which are not done in the ordinary course of business or which
are not done on terms and conditions which represent a fair value to the
Corporation, unless approved by an Audit Committee that shall be established.

11. MISCELLANEOUS.

a. SURVIVAL. Subject to Section 3.s. herein, the covenants
and agreements made herein (other than those set forth in Section 9) shall
survive the Closing of the transactions contemplated hereby and shall end
upon the consummation of an IPO.

b. INITIAL PUBLIC OFFERING. The Corporation shall use its
best efforts to consummate a public offering of its shares as soon as
practical according to the best interests of the Corporation as determined by
the Board.

c. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.

<PAGE>

e. NOTICE. Any notice, payment, report or other
communication required or permitted to be given by one party to any other
party by this Agreement shall be in writing and either (i) served personally
on the other party or parties; (ii) sent by express, registered or certified
first class mail, postage prepaid, addressed to the other party or parties at
its or their address or addresses as indicated next to their signatures
below, or to such other address as any addressee shall have therefor
furnished to the other parties by like notice; (iii) delivered by commercial
courier to the other party or parties; or (iv) sent by facsimile. Such notice
shall be deemed received (A) on the third day after sending if sent by one
day courier; (B) to the extent such day is a business day as recognized by
the country of sender's principal place of business, on the day of
transmission of such notice by facsimile, or, to the extent such day is not a
business day as recognized by the country of sender's principal place of
business, on the first business day of the sender following the day of
transmission, in each case if the recipient has the capability to receive a
facsimile at its address, the sender has the capability of obtaining from its
facsimile machine a confirmation of transmission and the sender mails to the
recipient a copy of such confirmation by regular first class mail no later
than the next business day (as recognized by the country of sender's
principal place of business) following such transmission; and (C) upon
receipt if sent by other methods.

f. TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and
are not to be considered in construing this Agreement.

g. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

h. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts between Delaware residents entered into and to be performed
entirely within the State of Delaware.

i. DISPUTES. Any dispute arising out of the transactions
contemplated by this Agreement shall be adjudicated by a court of competent
jurisdiction sitting in the city of Tel Aviv/Jaffa, subject, in any event, to
the provisions of section 13(h) of this Agreement. The parties hereby submit
themselves to the exclusive jurisdiction of such courts for the purposes
hereof.

j. ATTORNEYS FEES. If either party to this Agreement shall
bring any action for any relief against the other, declaratory or otherwise,
arising out of this Agreement, the losing party shall pay to the prevailing
party a reasonable sum as determined by the court for attorneys fees incurred
in bringing such suit and/or enforcing any judgment granted therein, all of
which shall be deemed to have accrued upon the commencement of such action
and shall be paid whether or not such action is prosecuted to judgment. Any
judgment or order entered in such action shall contain a specific provision
providing for the recovery of attorneys fees and costs incurred in enforcing
such judgment. For the purposes of this section, attorneys fees shall
include, without limitation, fees incurred in the following: (1)
post-judgment motions; (2) contempt proceedings; (3) garnishment, levy and
debtor and third-party examinations; (4) discovery; and, (5) bankruptcy
litigation. Should judicial proceedings be commenced to enforce or carry out
this provision or any award or judgment in connection with this Agreement,
the prevailing party in such proceedings shall be entitled to reasonable
attorneys' fees and costs in addition to other relief. Either party shall
have the right, prior to receiving an arbitration award, to obtain
preliminary relief from a court of competent jurisdiction to avoid injury or
prejudice to that party.

k. EXPENSES. Each of the Corporation and Investor shall
pay all its own costs and expenses that it incurs with respect to
negotiation, execution, delivery and performance of this Agreement.

[THIS SPACE WAS INTENTIONALLY LEFT BLANK]
<PAGE>

SIGNATURE PAGE TO THE PURCHASE AGREEMENT

If this Agreement is satisfactory to the Purchaser, please so indicate by
signing the acceptance on a counterpart of this Agreement and deliver such
counterpart to the Corporation whereupon this Agreement will become binding
between the Corporation and each such Purchaser in accordance with its terms.

INVESTOR:

NOMURA INTERNATIONAL plc

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

By: /s/ K. Yamazse
----------------------------------
(Signature)

- -------------------------------------
(Print Name and Title)

CORPORATION:

NOGATECH, INC.
a Delaware corporation
[NEW ADDRESS]

By: /s/ A. Heiman
----------------------------------
(Signature)

- -------------------------------------
(Print Name and Title)

<PAGE>

EXHIBIT 10.11

SHAREHOLDERS AGREEMENT

THIS SHAREHOLDERS AGREEMENT (this "Agreement") made as of the 13th day of
January, 2000, by and among Nomura International plc ("Purchaser"), Holland
Venture BV, Ophir Holdings Ltd., Docor International BV, Inventech Ltd., and
Ronchal Investments N.V. (hereinafter collectively as the "Holland
Investors"), Challenge Fund-Etgar, L.P. ("Challenge"), Corex Israeli
Industries Ltd. ("Corex") and the additional persons and entities identified
in SCHEDULE 1 attached hereto (collectively, the Additional Shareholders, and
together with Challenge and Corex, the "Shareholders").

RECITALS

A. The Shareholders and Holland Investors collectively hold shares
of Common Stock and Series A Convertible Preferred Stock (collectively,
"Stock") of Nogatech, Inc., a Delaware corporation (the "Company"); and

B. Challenge and the Additional Shareholders are parties to a
certain Stockholders Agreement dated February 4, 1997 (the "Challenge
Agreement"); and

C. Corex and certain of the Additional Shareholders are parties to
a certain Stockholders Agreement dated August 17, 1997 (the "Corex
Agreement");

D. The Holland Investors and the Additional Shareholders are
parties to a certain Stockholders Agreement dated July 15, 1998 (the "Holland
Agreement"), and together with the Challenge Agreement and the Corex
Agreement, the "Prior Shareholder Agreements"); and

E. Purchaser has entered into a Series B Stock Purchase Agreement
with the Company, dated as of January 13, 2000 (the "Purchase Agreement"),
herein incorporated by this reference; and

F. The Holland Investors, Shareholders and Nomura desire to set
forth certain matters regarding the ownership of Stock in accordance with the
terms and conditions of this Agreement and desire that this Agreement shall
amend and restate the Prior Shareholder Agreements such that the terms and
conditions of the Prior Shareholder Agreements shall have no further force
and effect.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, and other good and valuable consideration the sufficiency
of which is hereby acknowledged, the parties hereby agree as follows:

1. COMPOSITION of the Board. Each of the Holland Investors and the
Shareholders shall at all times exercise all rights they may have as holders
of Stock to appoint, to vote for, and to otherwise act in favor of
designating as members of the Board of Directors of the Company (the
"Board"): (i) one representative nominated by Challenge, only so long as
Challenge holds at least 25% of the shares

-1-
<PAGE>

it received as a result of the merger of Nogatech, Inc. a California
corporation with and into the Corporation, which merger was effectuated on
December 28, 1999 (ii) two representatives nominated by the Holland
Investors, one of whom shall be nominated by Holland Venture, only as long as
the Holland Investors collectively hold at least 10% of the Company's issued
and outstanding share capital, or (iii) one representative nominated by the
Holland Investors, only as long as the Holland Investors collectively hold at
least 5% of the Company's issued and outstanding share capital, in which case
the Holland Investors' representative shall be nominated by Holland Ventures.
Notwithstanding any provision of the Company's Certificate of Incorporation
as may be in effect, each of the Holland Investors and the Shareholders agree
that in any vote or any election for members of the Board, they each shall
take all such actions as are necessary in favor of the individuals designated
by the Purchasers to ensure the appointment of such individuals to serve as
members of the Board. Nothing herein shall derogate form Sections 141 (k) of
the Delaware General Corporation Law.

2. PARTICIPATION ("TAG-ALONG") RIGHTS.

a. Subject to Section 2.b below, in the event that Nathan
Hod and/or Arie Heiman, jointly or severally (the "Selling Shareholder"),
initiates or otherwise receives a bona-fide offer from a third party (a
"Proposed Purchaser") to purchase all or any portion of the Stock owned by
the Selling Shareholder (a "Proposed Transfer"), then each Holland Investor
and the Purchaser, severally, shall have the right (the "Participation
Right") to require the Proposed Purchaser to purchase from such each of them
under the same terms and conditions as the Proposed Transfer, up to the
number of shares of Stock owned by each Holland Investor and the Purchaser
multiplied by the ratio between the number of shares of Stock which the
Selling Shareholder is offering to sell and the total number of shares of
Stock held by the Selling Shareholder prior to the sale.

If the Proposed Transfer shall relate to the sale by the
Selling Shareholder of an aggregate of more than 50% of their shares of Stock
in the Company, then each Holland Investor and the Purchaser shall have the
right to require the Proposed Purchaser to purchase from such Holland
Investor and the Purchaser all of the shares of Stock owned by it.

A notification regarding the Proposed Transfer shall be
forwarded to each Holland Investor and the Purchaser by the Selling
Shareholder in writing, 30 days prior to the consummation of the proposed
transaction.

If the Proposed Purchaser refuses to complete a transaction
with any Holland Investor or the Purchaser as described in this Section 2.a.
and the Selling Shareholder completes the Proposed Transfer in derogation of
this Section 2, then the Selling Shareholder shall be obligated to purchase
from such Holland Investor and the Purchaser the same number of shares which
such Holland Investor and the Purchaser would otherwise have been permitted
to sell under this Section and under the same terms and conditions to the
Proposed Purchaser.

b. Notwithstanding anything to the contrary contained
herein, no Participation Right shall arise in the event of:

i. a Proposed Transfer by Arie Heiman at any time to
a

-2-
<PAGE>

family member; or

ii. a Proposed Transfer by Nathan Hod (a) at any time
to a family member, (b) at any time after termination without cause of his
position as director of the Company, and/or (c) at any time after he is
unable to fulfill the duties of director of the Company by reason of death,
disability, illness, incapacitation, or otherwise.

3. TERMINATION. The foregoing provisions of Section 2 shall
terminate upon the earlier of: (i) the closing of an IPO yielding ten million
US dollars ($10,000,000) to the Company; or (ii) the consummation of a merger
or sale of the Company in which the Company is not the consolidated or
surviving company and the controlling shareholders (or their affiliates) of
the Company are not the controlling shareholders of the surviving company.
Notwithstanding the foregoing, the provisions of Section 2 shall terminate as
to any Investor on the date that such Investor holds less than twenty five
percent (25%) of his/its shares acquired pursuant to his/its respective Stock
Purchase Agreement.

4. MISCELLANEOUS

a. FURTHER ASSURANCES. Each of the parties hereto shall
perform such further acts and execute such further documents as may
reasonably be necessary to carry out and give full effect to the provisions
of this Agreement and the intentions of the parties as reflected thereby.

b. SEVERABILITY. If any provision of this Agreement is held
by a court of competent jurisdiction to be unenforceable under applicable
law, then such provision shall be excluded from this Agreement and the
remainder of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms; provided,
however, that in such event this Agreement shall be interpreted so as to give
effect, to the greatest extent consistent with and permitted by applicable
law, to the meaning and intention of the excluded provision as determined by
such court of competent jurisdiction.

d. ENTIRE AGREEMENT. This Agreement and the exhibits attached
hereto and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between and among the parties with
regard to the subjects hereof and thereof, and supersede all prior agreements
and understandings between and among the parties with regard to the subjects
hereof and thereof, including, without limitation, the Term Sheet dated April
27, 1998 between the Holland Investors and the Nogatech, Inc., a California
corporation , predecessor in interest to the Company and the Term Sheet dated
December 22, 1999 between Purchaser and the Company and the Prior Shareholder
Agreements.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

-3-
<PAGE>

e. NOTICE. Any notice, payment, report or other
communication required or permitted to be given by one party to any other
party by this Agreement shall be in writing and either (i) served personally
on the other parties; (ii) sent by express, registered or certified first
class mail, postage prepaid, addressed to the other party or parties at its
or their address or addresses as indicated next to their signatures below, or
to such other address as any addressee shall have theretofore furnished to
the other parties by like notice; (iii) delivered by commercial courier to
the other party or parties; or (iv) sent by facsimile. Such notice shall be
deemed received (A) on the third day after sending if sent by one day
courier; (B) to the extent such day is a business day as recognized by the
country of sender's principal place of business, on the day of transmission
of such notice by facsimile, or, to the extent such day is not a business day
as recognized by the country of sender's principal place of business, on the
first business day of the sender following the day of transmission, in each
case if the recipient has the capability to receive a facsimile at its
address, the sender has the capability of obtaining from its facsimile
machine a confirmation of transmission and the sender mails to the recipient
a copy of such confirmation by regular first class mail no later than the
next business day (as recognized by the country of sender's principal place
of business) following such transmission; and (C) upon receipt if sent by
other methods.

f. TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and
are not to be considered in construing this Agreement.

g. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

i. DISPUTES. Any dispute arising out of the transactions
contemplated by this Agreement shall be adjudicated by a court of competent
jurisdiction sitting in the District of Tel Aviv/Jaffa, subject, in any
event, to the provisions of section 4.8 of this Agreement. The parties hereby
submit themselves to the exclusive jurisdiction of such courts for the
purposes hereof.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

-4-
<PAGE>

SIGNATURE PAGE OF SHAREHOLDERS AGREEMENT

IN WITNESS WHEREOF the parties have signed this Agreement as of the date
first hereinabove set forth.

CORPORATION:

NOGATECH, INC.

By: /s/ A. Heidann
------------------------------
(Signature)

------------------------------
(Print Name & Title)

HOLLAND INVESTORS:

HOLLAND VENTURES, B.V. OPHIR HOLDINGS LTD.

By: /s/ ER Deves By: /s/ Y. Kaplan
------------------------------ ------------------------------
(Signature) (Signature)

By: /s/ S. Wookamir
-----------------------------
(Signature)

Managing Director Managing Director/Controller
------------------------------ ------------------------------
(Print Name & Title) (Print Name & Title)

DOCOR INTERNATIONAL BV RONCHAL INVESTMENTS N.V.

By: /s/ Moshe Harel By: /s/ G. P. le Goede
------------------------------ ------------------------------
(Signature) (Signature)

Managing Director
------------------------------ ------------------------------
(Print Name & Title) (Print Name & Title)

INVENTECH LTD.

By: /s/ A. Mayer
------------------------------
(Signature)

CEO
------------------------------
(Print Name & Title)

-5-
<PAGE>

SECOND SIGNATURE PAGE OF SHAREHOLDERS AGREEMENT

SHAREHOLDERS:

KENWOOD CORPORATION, TOMEN ELECTRONICS CORP.,
A JAPANESE COMPANY A JAPANESE COMPANY

By: /s/ Yasunobu Namiki By: /s/ Katsuyeshi Taniguchi
------------------------------ ------------------------------
(Signature) (Signature)

Director Corporate Planning
Yasunobu Namiki Katsuyeshi Taniguchi, President
------------------------------ ------------------------------
(Print Name & Title) (Print Name & Title)

NATHAN HOD ARIE HEIMAN

By: /s/ Nathan Hod By: /s/ Arie Heiman
------------------------------ ------------------------------
(Signature) (Signature)

LES FILS DREYFUS & CIE, S.A. COREX ISRAELI INDUSTRIES, LTD.

By: /s/ Saul Gilinski By: /s/ Basil S. Gamsu
------------------------------ ------------------------------
(Signature) (Signature)

Corex Israeli Industries
Basil Selwyn Gamsu
------------------------------ ------------------------------
(Print Name & Title) (Print Name & Title)
Managing Director

CHALLENGE FUND-ETGAR, L.P. SIMHA SHARON

BY: /s/ J. Ciechanover /s/ Simha Sharon
------------------------------ ------------------------------
(Signature) (Signature)
J. Ciechanover
President

(Print Name & Title)

-6-
<PAGE>

PURCHASER:

NOMURA INTERNATIONAL PLC

By: /s/ K. Yamazoe
------------------------------
(Signature)

K. Yamazoe, Director
------------------------------
(Print Name & Title)

-7-
<PAGE>

SCHEDULE 1

Kenwood Corporation, a Japanese corporation

Tomen Electronics Corporation, a Japanese corporation

Arie Heiman

Nathan Hod

Les Fils Dreyfus & Cie, S.A.

Simha Sharon

-8-

<PAGE>

EXHIBIT 10.12

NOGATECH, INC.
SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

THIS SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"Agreement") is entered into as of January 13, 2000, by and between NOGATECH,
INC., a Delaware corporation (the "Corporation"), Challenge Fund-Etgar, L.P.,
a Delaware limited partnership, Les Fils Dreyfus & Cie, S.A., Simha Sharon,
Corex Israeli Industries, Ltd., Holland Venture BV, Ophir Holdings, Ltd.,
Docor International BV, Inventech Ltd., Ronchal Investments NV and Nomura
International plc (each individually, a "Holder" and collectively, the
"Holders").

RECITALS

A. Challenge Fund-Etgar, L.P., Les Fils Dreyfus & Cie, S.A., Simha
Sharon, Corex Israeli Industries, Ltd. ("Corex" and collectively, the 1997
Investors"), Holland Venture BV, Ophir Holdings, Ltd., Docor International
BV, Inventech Ltd., and Ronchal Investments NV (collectively, the "Holland
Investors", and together with the 1997 Investors, the "Existing Investors")
each entered into either (i) an Amended and Restated Registration Rights
Agreement with Nogatech, Inc., a California corporation ("Nogatech
California") dated as of August 17, 1997 (the "1997 Registration Rights
Agreement); or (ii) a Series A Preferred Stock Purchase Agreement with
Nogatech California, dated as of June 4, 1998 ( the "1998 Stock Purchase
Agreement", and together with the 1997 Registration Rights Agreement, the
"Prior Agreements").

B. Nogatech California was merged with and into the Corporation in
December 1999, and the shareholders of Nogatech California received in the
merger shares of common stock and Series A Convertible Preferred Stock, as
applicable, of the Corporation.

C. As of the date hereof, Nomura International plc ("Nomura") has
entered into a Series B Preferred Stock Agreement ("Purchase Agreement") with
the Corporation pursuant to which the Corporation is obligated to enter into
this Agreement.

D. The Existing Investors, Nomura, and the Corporation desire to
enter into this Agreement to (i) make the Corporation a party to this
Agreement and reflect that the Corporation's securities are subject to the
registration rights set forth in the Prior Agreements, (ii) to include Nomura
as a party to this Agreement as an inducement to Nomura to purchase shares of
Series B Convertible Preferred Stock of the Corporation, and (iii) to amend
and restate the 1997 Registration Rights Agreement and Section7 of the 1998
Stock Purchase Agreement such that the terms and conditions of the 1997
Registration Rights and Agreement and Section 7 of the 1998 Stock Purchase
Agreement shall have no further force and effect.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties
hereto hereby

<PAGE>

agree as follows:

1. DEFINITIONS. As used herein, the following terms are defined
as follows:

a. "HOLDER" means any holder of outstanding Registrable
Shares or shares convertible into Registrable Shares, who acquired such
Registrable Shares or shares convertible into Registrable Shares in a
transaction or series of transactions not involving any registered public
offering.

b. "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended or any similar Federal statue and the rules and regulations
of the Commission thereunder all as the same shall be in effect at the time.

c. "FORM S-3" means Form S-3 under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the Securities and Exchange Commission ("SEC") which
permits inclusion or incorporation of substantial information by reference to
other documents files by the Corporation with the SEC.

d. "INITIATING HOLDERS" means the Existing Investors
holding Two Hundred Seventy Eight Thousand Six Hundred Sixty Two (278,662) of
the Registrable Shares, assuming for purposes of such determination the
conversion of all securities convertible into Registrable Shares.

e. "IPO" means the Corporation's initial firmly
underwritten public offering of its Common Stock pursuant to an effective
registration statement under the Securities Act.

f. "REGISTER", "REGISTERED" AND "REGISTRATION" refer to a
registration effected by filing a registration statement in compliance with
the Securities Act and the declaration or ordering by the Commission of
effectiveness of such registration statement, or the equivalent actions under
the laws of another jurisdiction.

g. "REGISTRABLE SHARES" means (i) all shares of Common
Stock of the Corporation issued or issuable upon conversion of the Series A
Convertible Preferred Stock of the Corporation held by the Existing
Investors, (ii) all shares of Common Stock of the Corporation issued or
issuable upon conversion of the Series B Convertible Preferred Stock of the
Corporation held by Nomura, and (iii) all Common Stock that the Holders may
hereafter acquire; PROVIDED, however, that any Common Stock that could be
distributed by the holder thereof (in accordance with applicable law) within
six (6) months following a request for registration under sections 2.a., 2.b.
and 2.c. herein without the registration of such shares, shall not be deemed
to be Registrable Shares.

h. "SECURITIES ACT" means the Securities Act of 1933, as
amended, or any similar Federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

2. REGISTRATION RIGHTS. The following provisions govern the
registration of the Corporation's Registrable Shares:

<PAGE>

a. INCIDENTAL REGISTRATION. If the Corporation at any time
proposes to register any of its securities, other than in a demand
registration under Section 2.b. or Section 2.c. of this Agreement, it shall
give notice to the Holders of such intention. Upon the written request of
any Holder given within twenty (20) days after receipt of any such notice,
the Corporation shall include in such registration all of the Registrable
Shares indicated in such request so as to permit the disposition of the
shares so registered. Notwithstanding any other provision of this Section
2.a., if the managing underwriter advises the Corporation in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then there shall be excluded from such registration and
underwriting to the extent necessary to satisfy such limitation, first the
shares on a pro rata basis held by any shareholder, including any Holder,
participating in such registration, and thereafter shares to be issued by the
Corporation to the public.

b. DEMAND REGISTRATION.

(i) At any time beginning on the date of this
Agreement, the Initiating Holders may request in writing that all or part of
the Existing Investors' Registrable Shares shall be registered for trading on
any securities exchange. Any such demand must request the registration of
shares in a minimum amount of (A) in the case of an IPO, Ten Million United
States Dollars ($10,000,000); or (B) other than in the case of an IPO, Three
Million United States Dollars ($3,000,000). Within 20 days after receipt of
any such request, the Corporation shall give written notice of such request
to the other Holders and shall include in such registration all Registrable
Shares held by all such Holders who wish to participate in such demand
registration and provide the Corporation with written requests for inclusion
therein within 15 days after the receipt of the Corporation's notice.
Thereupon, the Corporation shall effect the registration of all Registrable
Shares as to which it has received requests for registration for trading on
the securities exchange specified in the request for registration; provided,
however, that the Corporation shall not be required to effect any
registration under this Section 2.b. within a period of one hundred and
eighty (180) days following the effective date of a previous registration.
Notwithstanding any other provision of Section 2.a, 2.c, or this Section
2.b(i), if the managing underwriter advises the Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then there shall be excluded from such registration and
underwriting to the extent necessary to satisfy such limitation, (Y) in the
case of an IPO, first the shares on a pro rata basis or in total if required
held by any shareholder, including any Holder, participating in such
registration, and thereafter, to the extent necessary, shares to be
registered by the Corporation; and (Z) other than in the case of an IPO,
first shares to be registered by the Corporation; and thereafter, to the
extent necessary, the shares on a pro rata basis held by any shareholder,
including any Holder. The Corporation may not cause any other registration
of scurities for sale for its own account (other than a registration effected
solely to implement an employee benefit plan or in a Rule 145 transaction) to
be initiated after a registration requested pursuant to this Section 2.b(i).
and to become effective less than 120 days after the effective date of any
registration requested pursuant to this Section 2.b(i). The Corporation shall
not be required to effect more than two (2) registrations under this Section
2.b(i).

(ii) At any time beginning one hundred eighty (180)
days following the closing of the IPO, Nomura may request in writing that all
or part of Nomura's Registrable Shares shall be registered for trading on any
securities exchange. Any such demand must request the registration of shares
in a minimum amount of Three Million

<PAGE>

United States Dollars ($3,000,000). Within 20 days after receipt of any such
request, the Corporation shall give written notice of such request to the
other Holders and shall include in such registration all Registrable Shares
held by all such Holders who wish to participate in such demand registration
and provide the Corporation with written requests for inclusion therein
within 15 days after the receipt of the Corporation's notice. Thereupon, the
Corporation shall effect the registration of all Registrable Shares as to
which it has received requests for registration for trading on the securities
exchange specified in the request for registration; provided, however, that
the Corporation shall not be required to effect any registration under this
Section 2.b(ii), within a period of one hundred and eighty (180) days
following the effective date of a previous registration. Notwithstanding any
other provision of this Section 2, if the managing underwriter advises the
Holders in writing that marketing factors require a limitation of the number
of shares to be underwritten in a demand registration under this Section
2.b(ii), then there shall be excluded from such registration and underwriting
to the extent necessary to satisfy such limitation, first shares to be
registered by the Corporation; then, to the extent necessary, the shares held
by any shareholder other than Nomura, including any Holder other than Nomura,
on a pro rata basis or in total if required, and thereafter, to the extent
necessary, the shares to be registered by Nomura. The Corporation may not
cause any other registration of securities for sale for its own account
(other than a registration effected solely to implement an employee benefit
plan or in a Rule 145 transaction) to be initiated after a registration
requested pursuant to this Section 2.b(ii) and to become effectiveless than
120 days after the effective date of any registration requested pursuant to
this Section 2.b(ii). The Corporation shall not be required to effect more
than one (1) registration under this Section 2.b(ii).

(iii) In the event that Nomura requests registration of
its Registrable Shares under Section 2.b(ii) before either of the demand
registrations under Section 2.b(i) have been effected, the Holders may,
within 10 days following receipt of the Company's written notice under
Section 2.b(ii), elect to exercise their demand rights under Section 2.b(i).
In the event the Holders elect to request registration under Section 2.b(i),
the provisions of Section 2.b(i) shall apply to the registration effected,
and Nomura shall retain its right to request a registration under Section
2.b(ii) following such registration effected by the Holders.

c. FORM S-3 REGISTRATION. In case the Corporation shall
receive from any Holder or Holders a written request or requests that the
Corporation effect a registration on Form S-3, and any related qualification
or compliance, with respect to Registrable Shares where the aggregate net
proceeds from the sale of such Registrable Shares equals to at least One
Million United States Dollars ($1,000,000), the Corporation will within
twenty (20) days after receipt of any such request give written notice of the
proposed registration, and any related qualification or compliance, to all
other Holders, and include in such registration all Registrable Shares held
by all such Holders who wish to participate in such registration and provide
the Corporation with written requests for inclusion therein within 15 days
after the receipt of the Corporation's notice. Thereupon, the Corporation
shall effect such registration and all such qualifications and compliances as
may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or Holders' Registrable
Securities as are specified in such request, together with all or such
portion of the Registrable Securities of any other Holder or Holders joining
in such request as are specified in a written request given within fifteen
(15) days after receipt of such written notice from the Corporation;
PROVIDED, HOWEVER, that the

<PAGE>

Corporation shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 2.c., (i) if Form S-3
is not available for such offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of the Corporation entitled
to inclusion in such registration, propose to sell Registrable Securities and
such other securities (if any) at an aggregate price to the public (net of
any underwriters' discounts or commissions) of less than One Million United
States Dollars ($1,000,000); (iii) if the Corporation shall furnish to the
Holders a certificate signed by the President of the Corporation stating that
in the good faith judgment of the Board of Directors of the Corporation it
would be seriously detrimental to the Corporation or its stockholders for
such Form S-3 registration statement to be effected at such time, in which
event the Corporation shall have the right to defer the filing of the Form
S-3 registration statement for a period of not more than one hundred twenty
(120) days after receipt of the request of the Holder or Holders under this
Section 2.c.; PROVIDED, HOWEVER, that the Corporation shall not utilize this
right more than once in any twelve (12) months period; (iv) if the
Corporation has, preceding the date of such request, already effected two (2)
registrations on Form S-3 for the Holders pursuant to this Section 2.c.; (v)
during the period starting with the date sixty (60) days prior to the
Corporation's estimated date of filing of, and ending on the date six (6)
months immediately following the effective date of, any registration
statement pertaining to securities of the Corporation (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Corporation is actively employing
in good faith reasonable efforts to cause such registration statement to
become effective and that the Corporation's estimate of the date of filing
such registration statement is made in good faith; or (vi) in any particular
jurisdiction in which the Corporation would be required to qualify to do
business or to execute a general consent to service of process in effecting
such registration, qualification or compliance. Notwithstanding the
provisions of this Section 2.c and in addition thereto, in the event the
Holland Investors' and/or Nomura's Registrable Shares are not sold in full
after exercise of the Holland Investors' or Nomura's, as the case may be
rights pursuant to this Section 2.c, each of the Holland Investor and Nomura
shall be entitled to an additional Form S-3 Registration for its remaining
unsold Registrable Shares under the terms and conditions of this Section 2.c.

d. DESIGNATION OF UNDERWRITER. In the case of any
registration effected pursuant to this Section 2, the Corporation shall have
the right to designate the managing underwriter(s) in any underwritten
offering.

e. EXPENSES. All expenses incurred in connection with any
registration under Section 2.a., Section 2.b. or Section 2.c. shall be borne
by the Corporation; PROVIDED, however, that each of the Holders participating
in such registration shall pay its pro rata portion of the discounts or
commissions payable to any underwriter.

f. INDEMNITIES. In the event of any registered offering of
Common Stock pursuant to this Section 2:

i. The Corporation will indemnify and hold harmless,
to the fullest extent permitted by law, any Holder and any underwriter for
such Holder, and each person, if any, who controls the Holder or such
underwriter, from and against any and all losses, damages, claims,
liabilities, joint or several, costs and expenses (including any amounts paid
in any settlement effected with the Corporation's consent) to which the
Holder or any such underwriter or controlling person may become subject under
applicable law or

<PAGE>

otherwise, insofar as such losses, damages, claims, liabilities (or actions
or proceedings in respect thereof), costs or expenses arise out of or are
based upon (A) any untrue statement or alleged untrue statement of any
material fact contained in the registration statement or included in the
prospectus, as amended or supplemented, or (B) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they are made, not misleading, and the Corporation will reimburse the
Holder, such underwriter and each such controlling person of the Holder or
the underwriter, promptly upon demand, for any reasonable legal or any other
expenses incurred by them in connection with investigating, preparing to
defend or defending against or appearing as a third-party witness in
connection with such loss, claim, damage, liability, action or proceeding;
PROVIDED, HOWEVER, that the Corporation will not be liable in any such case
to the extent that any such loss, damage, liability, cost or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information furnished
in writing by a Holder, such underwriter or such controlling persons
specifically for inclusion therein; PROVIDED, FURTHER, that this indemnity
shall not be deemed to relieve any underwriter of any of its due diligence
obligations; PROVIDED, FURTHER, that the indemnity agreement contained in
this subsection 2.f.(i). shall not apply to amounts paid in settlement of any
such claim, loss, damage, liability or action if such settlement is effected
without the consent of the Corporation, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the selling
shareholder, the underwriter or any controlling person of the selling
shareholder or the underwriter, and regardless of any sale in connection with
such offering by the selling shareholder. Such indemnity shall survive the
transfer of securities by a selling shareholder.

ii. Each Holder participating in a registration
hereunder will indemnify and hold harmless the Corporation, any underwriter
for the Corporation, each officer and director of the Corporation, and each
person, if any, who controls the Corporation or such underwriter, from and
against any and all losses, damages, claims, liabilities, costs or expenses
(including any amounts paid in any settlement effected with the selling
shareholder's consent) to which the Corporation or any such controlling
person and/or any such underwriter may become subject under applicable law or
otherwise, insofar as such losses, damages, claims, liabilities (or actions
or proceedings in respect thereof), costs or expenses arise out of or are
based on (A) any untrue or alleged untrue statement of any material fact
contained in the registration statement or included in the prospectus, as
amended or supplemented, or (B) the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading, and each such Holder will reimburse the Corporation,
any underwriter each officer and director of the Corporation and each such
controlling person of the Corporation or any underwriter, promptly upon
demand, for any reasonable legal or other expenses incurred by them in
connection with investigating, preparing to defend or defending against or
appearing as a third-party witness in connection with such loss, claim,
damage, liability, action or proceeding; in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was so made in substantial conformity with
written information furnished by such Holder specifically for inclusion
therein. The foregoing indemnity agreement is subject to the condition that,
insofar as it relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended

<PAGE>

prospectus at the time the registration statement becomes effective or in the
final prospectus, such indemnity agreement shall not inure to the benefit of
(Y) the Corporation and (Z) any underwriter, if a copy of the final
prospectus was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is
required by the Securities Act; PROVIDED, FURTHER, that this indemnity shall
not be deemed to relieve any underwriter of any of its due diligence
obligations; PROVIDED, FURTHER, that the indemnity agreement contained in
this subsection 2.f.(ii) shall not apply to amounts paid in settlement of any
such claim, loss, damage, liability or action if such settlement is effected
without the consent of the Holders, as the case may be, which consent shall
not be unreasonably withheld. In no event shall the liability of a Holder
exceed the gross proceeds from the offering received by such Holder.

iii. Promptly after receipt by an indemnified party
pursuant to the provisions of Sections 2.f.(i) or 2.f.(ii) of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to
be made against the indemnifying party pursuant to the provisions of said
Section 2.f.(i) or 2.f.(ii), promptly notify the indemnifying party of the
commencement thereof; but the omission to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in, and,
to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that if the
defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to select one
separate counsel to participate in the defense of such action on behalf of
such indemnified party or parties. After notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party pursuant
to the provisions of said Sections 2.f.(i) or 2.f.(ii) for any legal or other
expense subsequently incurred by such indemnified party in connection with
the defense thereof, unless (A) the indemnified party shall have employed
counsel in accordance with the provision of the preceding sentence, (B) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after the notice of the commencement of the action and within 15 days
after written notice of the indemnified party's intention to employ separate
counsel pursuant to the previous sentence, or (C) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense
of the indemnifying party. No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.

iv. If recovery is not available under the foregoing
indemnification provisions, for any reason other than as specified therein,
the parties entitled to indemnification by the terms thereof shall be
entitled to contribution to liabilities and expenses as more fully set forth
in an underwriting agreement to be executed in connection with such
registration. In determining the amount of contribution to which the
respective parties are entitled, there shall be considered the parties'
relative knowledge and access to

<PAGE>

information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate under the circumstances.

g. OBLIGATIONS OF THE CORPORATION. Whenever required under
this Section 2 to effect the registration of any Registrable Shares, the
Corporation shall, as expeditiously as possible:

i. prepare and file with the SEC a registration
statement with respect to such Registrable Shares and use its best efforts to
cause such registration statement to become effective, and, upon the request
of the holders of a majority of the Registrable Shares registered thereunder,
keep such registration statement effective for a period of up to one hundred
twenty (120) days or, if sooner, until the distribution contemplated in the
Registration Statement has been complete.

ii. prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of
all Registrable Shares covered by such registration statement.

iii. furnish to the Holders such numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Shares owned by them.

iv. in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering.
Each Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.

v. notify each holder of Registrable Shares covered
by such registration statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing.

vi. cause all Registrable Shares registered pursuant
hereunder to be listed on each securities exchange on which similar
securities issued by the Corporation are then listed.

vii. provide a transfer agent and registrar for all
Registrable Shares registered pursuant hereunder and a CUSIP number for all
such Registrable Shares, in each case not later than the effective date of
such registration.

viii. furnish, at the request of any Holder requesting
registration of Registrable Shares pursuant to this Section 2, on the date
that such Registrable Shares are delivered to the underwriters for sale in
connection with a registration pursuant to this

<PAGE>

Section 2, if such securities are being sold through underwriters, or, if
such securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i)
an opinion, dated such date, of the counsel representing the Corporation for
the purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Shares and (ii) a letter dated such date, from the independent
certified public accountants of the Corporation, in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters, if any,
and to the Holders requesting registration of Registrable Shares.

ix. ASSIGNMENT OF REGISTRATION RIGHTS. Holder may
assign its rights to cause the Corporation to register Purchased Shares
pursuant to this Section 2 to a transferee of at least twenty-five percent
(25%) of its Registrable Shares. The transferor shall, within twenty (20)
days after such transfer, furnish the Corporation with written notice of the
name and address of such transferee and the securities with respect to which
such registration rights are being assigned, and the transferee's written
agreement to be bound by this Section 2.

x. LOCK-UP. In any registration of the
Corporation's shares all Holders agree that (A) in the case of an IPO, any
sales of Registrable Shares may be subject to a "lock-up" period restricting
such sales for a period beginning fourteen (14) days prior to, and ending, at
the discretion of the underwriter, up to one hundred and eighty (180) days
following the effective date of the registration ("Lock-Up Period"), and all
Holders will agree to abide by such Lock-Up Period as is required by the
underwriter in such registration; (B) other than in the case of an IPO, the
sales of the Holders' Registrable Shares participating in such registration
may be subject to the Lock-Up Period restricting such sales for the Lock-Up
Period, and all Holders will agree to abide by such Lock-Up Period as is
required by the underwriter in such registration; and (C) each Holder that is
not participating in a given Registration in which Registrable Shares are
included agrees not to sell or distribute any shares of the Corporation
during such Lock-Up Period as is required by the underwriter in such
registration.

xi. PUBLIC INFORMATION. At any time and from time to
time after the earlier of the close of business on such date as (a) a
registration statement filed by the Corporation under the Securities Act
becomes effective, (b) the Corporation registers a class of securities under
Section 12 of the Exchange Act, or (c) the Corporation issues an offering
circular meeting the requirements of Regulation A under the Securities Act,
the Corporation shall undertake to make publicly available and available to
the Holders pursuant to Rule 144, such information as is necessary to enable
the Holders to make sales of Registrable Shares pursuant to that Rule. The
Corporation shall comply with the current public information requirements of
Rule 144 and shall furnish thereafter to any Holder, upon request, a written
statement executed by the Corporation as to the steps it has taken to so
comply.

h. TERMINATION OF REGISTRATION RIGHTS. Any and all of a
Holder's Registration Rights provided for in this Section 2 shall expire and
terminate if (i) the Company has completed an IPO and is subject to the
Exchange Act, and (ii) all Registrable Securities held by and issuable to
Holder (and its affiliates) may be sold under Rule 144

<PAGE>

during any ninety (90) day period.

3. MISCELLANEOUS.

a. AMENDMENT, WAIVER, ADDITIONAL REGISTRATION RIGHTS. This
Agreement may be amended or modified by the consent in writing of the
Corporation, Nomura and a majority-in-interest of all of the Existing
Investors. The Corporation may not grant registration rights to additional
parties without the prior written consent of Nomura and a
majority-in-interest of all of the Existing Investors.

b. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
covenants and agreements made herein shall survive the closing of the sale of
the Corporation's Series A Preferred Stock to each of the Holders and shall
terminate according to the terms set forth in Section 2.

d. SEVERABILITY. Each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of this
Agreement.

e. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts when taken together shall
constitute one and the same Agreement.

f. DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.

g. NOTICE. Any notice, payment, report or other
communication required or permitted to be given by one party to any other
party by this Agreement shall be in writing and either (i) served personally
on the other party or parties; (ii) sent by express, registered or certified
first class mail, postage prepaid, addressed to the other party or parties at
its or their address or addresses as indicated next to their signatures
below, or to such other address as any addressee shall have theretofore
furnished to the other parties by like notice; (iii) delivered by commercial
courier to the other party or parties; or (iv) sent by facsimile. Such
notice shall be deemed received (A) on the third day after sending if sent by
one day courier; (B) to the extent such day is a business as recognized by
the country of sender's principal place of business, on the day of
transmission of such notice by facsimile, or, to the extent such day is not a
business as recognized by the country of sender's principal place of
business, on the first business day of the sender following the day of
transmission, in each case if the recipient has the capability to receive a
facsimile at its address, the sender has the capability of obtaining from its
facsimile machine a confirmation of transmission and the sender mails to the
recipient a copy of such confirmation by regular first class mail no later
than the next business day (as recognized by the country of sender's
principal place of business) following such transmission; and

<PAGE>

IF TO HOLDERS: Corex Israeli Industries, Ltd.
Corex Building
Maskit Street, 4th Floor
Herzelia Pituah 46733, Israel

Challenge Fund-Etgar, L.P.
One Hashikma Street
P. O. Box 55
Savyon 56530, Israel

Les Fils Dreyfus & CIE Societe Anonyme
Banquiers
c/o Saul Gilinski
Ajix Trading Co.
2525 Davie Road Extension, Suite 320
Davie, FL 33317

Simha Sharon
45 Mt. Sinai Rise, No. 05-01
Beaverton Court, Postal Code 276958
Republic of Singapore

Nomura International plc
Nomura House
1 St. Martin's - le - Grand
London ECIA 4NP
Telecopy 011-44-171-521-3655
Attn: Senia Rapisarda

WITH A COPY TO: Weil, Gotshal & Manges LLP
One South Place
London ECZM ZWG
Telecopy 011-44-171-903-0990
Attn: Douglas P. Warner, Esq.

IF TO THE CORPORATION: Nogatech, Inc.
5201 Great America Parkway, Suite 351
Santa Clara, CA 95054

WITH A COPY TO: Bay Venture Counsel, LLP
1999 Harrison, Suite 1300
Oakland, CA 94612
Attention: Donald C. Reinke, Esq.

h. TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and
are not to be considered in construing this Agreement.

<PAGE>

i. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts between Delaware residents entered into and to be performed
entirely within the State of Delaware.

j. DISPUTES. Any dispute arising out of the transactions
contemplated by this Agreement shall be adjudicated by a court of competent
jurisdiction sitting in the city of Tel Aviv/Jaffa, subject, in any event, to
the provisions of section 3(i) of this Agreement. The parties hereby submit
themselves to the exclusive jurisdiction of such courts for the purposes
hereof.

k ATTORNEYS FEES. If either party to this Agreement
shall bring any action for any relief against the other, declaratory or
otherwise, arising out of this Agreement, the losing party shall pay to the
prevailing party a reasonable sum as determined by the court for attorneys
fees incurred in bringing such suit and/or enforcing any judgment granted
therein, all of which shall be deemed to have accrued upon the commencement
of such action and shall be paid whether or not such action is prosecuted to
judgment. Any judgment or order entered in such action shall contain a
specific provision providing for the recovery of attorneys fees and costs
incurred in enforcing such judgment. For the purposes of this section,
attorneys fees shall include, without limitation, fees incurred in the
following: (1) post-judgment motions; (2) contempt proceedings; (3)
garnishment, levy and debtor and third-party examinations; (4) discovery;
and, (5) bankruptcy litigation.

Should judicial proceedings be commenced to enforce or carry out this
provision or any award or judgment in connection with this Agreement, the
prevailing party in such proceedings shall be entitled to reasonable
attorneys' fees and costs in addition to other relief. Either party shall
have the right, prior to receiving an arbitration award, to obtain
preliminary relief from a court of competent jurisdiction to avoid injury or
prejudice to that party. addressed as follows:

l SCHEDULES AND EXHIBITS. All Exhibits of the Purchase
Agreement are an integral part of this Agreement and incorporated fully
herein.

m SPECIFIC PERFORMANCE. Each party's obligation under
this Agreement is unique. If any party should default in its obligations
under this Agreement, the parties each acknowledge that it would be extremely
impracticable to measure the resulting damages; accordingly, the
nondefaulting party, in addition to any other available rights or remedies,
may sue in equity for specific performance and the parties each expressly
waive the defense that a remedy in damages will be adequate.

n FINAL AGREEMENT. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof and
supersedes and terminates all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written,
including but not limited to the 1997 Registration Rights Agreement and
Section 7 of the 1998 Stock Purchase Agreement and each of the Existing
Investors' (other than Corex's) Series A Preferred Stock Purchase Agreements.

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

<PAGE>

(SIGNATURES FOLLOW ON NEXT PAGE)

<PAGE>

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

CORPORATION:

NOGATECH, INC.
a Delaware corporation Ophir Holdings Ltd.

By: /s/ A. Heiman By: /s/ Y. Kaplan
---------------------------------- --------------------------
Arie Heiman /s/ S. Wolkamir
President and CEO --------------------------

HOLDER:

COREX ISRAELI INDUSTRIES, LTD. DOCOR International

By: /s/ Basil S. Gamsu By: /s/ Moshe Harel
---------------------------------- --------------------------
(Signature)

Managing Director Ronchal Investments NV
- ------------------------------------- By: /s/ Moshe Harel
(Print Name and Title) --------------------------

CHALLENGE ETGAR-FUND, L.P. Inventech, Inc.
By: /s/ Akiva Mayer, CEO
--------------------------

By: /s/ J. Ciechanaver
----------------------------------
(Signature)

President
- -------------------------------------
(Print Name and Title)

LES FILS DREYFUS & CIE, S.A.

By: /s/ Saul Gilinski
----------------------------------
Saul Gilinski

SIMHA SHARON

/s/ Simha Sharon
- -------------------------------------

NOMURA INTERNATIONAL PLC

By: /s/ K. Yamazoe
----------------------------------
(Signature)

Director
- -------------------------------------
(Print Name and Title)

<PAGE>

Exhibit 10.14

CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

DESIGN AND DEVELOPMENT AGREEMENT

This is an agreement, dated as of August, 1999 ("Effective Date") by and
between SUPERTEC ELECTRONICS LTD., address of 1 Hamasger St., POB 2550,
Raanarm 43653, Israel (hereinafter "SUPERTEC"), and NOGATECH address of 3
Gavish, St. Kfar Saba 44444, Israel (hereinafter "CUSTOMER").

Whereas, CUSTOMER requires a design for a particular semiconductor based on
FUJITSU'S technology.

Whereas, SUPERTEC has expertise in the design of semiconductor products and
believes it can perform the obligations described herein relating to the
production of a design for the Product in accordance with this Agreement; and

Whereas, FUJITSU has expertise in the manufacturing of integrated circuits,
and believes it can perform the obligations described herein relating to the
production of a design for Product and the manufacture of the Product in
accordance with this Agreement;

Whereas, CUSTOMER desires to purchase from SUPERTEC as its supplier of NT100 and
targeting for the quantity of more than 100K PCS units per year, and SUPERTEC
desires to sell such semiconductor products which are developed by NOGATECH and
produced by FUJITSU.

Now, therefore, in consideration of the Agreements between SUPERTEC and FUJITSU
the parties hereto agree as follows:

PRODUCTION & DEVELOPMENT

SUPERTEC and CUSTOMER agree to use their respective best efforts to perform the
Design Steps for which such party is responsible as follows and to complete each
such Design Step by the appropriate Target Completion Date as follows:

<PAGE>

1. DEFINITION

Project Name: NT 1004
Part Number: CS66-P4 (MB87L2030)
Package: LQFP100
Technology: 0.35 um

2. TURN AROUND TIME

2.1 Validation and Layout-6 weeks
2.2 Prototypes - 8 Weeks Ex. Japan
2.3 Mass Production-
- Lead-Time for first mass production order (including QC) will be no more
than 12 weeks.
- SQTAT with 4 weeks delivery ex Japan, cost 50K DM, SQTAT Slot Time -
6/9/99.
2.4 In case CUSTOMER gets a big order that was out of the forecast, Fujitsu will
deliver the product no longer than 15 weeks. (This lead-time is independent of
the actual load on the Fujitsu Fab).

TERMS OF CONTRACT

1. GENERAL TERMS

This AGREEMENT shall be effective from the date that this agreement is signed by
both parties and shall extend for a term of 5 years from the function approval
of the samples.

The CUSTOMER should confirm in writing the Prototype approval of the ASIC
product as soon as possible after receipt of the Prototype but no later than 30
DAYS.

In the event that CUSTOMER does not specifically reject the prototypes provided
by SUPERTEC in writing within 30 days, such samples shall be deemed to be
accepted by CUSTOMER.

After Prototype approval CUSTOMER will issue a non-binding 6-month rolling
forecast for expected quantity. The rolling forecast shall be updated by the
CUSTOMER in writing every month.

CUSTOMER will be able to increase the actual PO relative to the forecast as
follows

- One month before delivery no change.
- Two month before delivery increase of 10% from the forecast.
- Three month before delivery and above, 15% from the forecast.

<PAGE>

Any changes to the specifications of the Product requested by CUSTOMER shall be
subject to mutual agreement by both parties by written consent of both parties,
as to adjustments to the Design and Payment Schedule.

2. PRICES/SHIPMENT

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PRODUCT QTY/YEAR Unit Price Unit Price
Package DIE/Wafer
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
*************** *K First order *.** USD
- ------------------------------------------------------------------------------------------
***K *.** USD *.** USD
- ------------------------------------------------------------------------------------------
***K-***K *.** USD *.** USD
- ------------------------------------------------------------------------------------------
***K-***K *.** USD *.** USD
- ------------------------------------------------------------------------------------------
***K-****K *.** USD *.** USD
- ------------------------------------------------------------------------------------------
****-****K *.** USD *.** USD
- ------------------------------------------------------------------------------------------
*** ***,*** DM
- ------------------------------------------------------------------------------------------
******* (in case A. Metal only redesign ***,*** DM
of redesign) (logic change)
- ------------------------------------------------------------------------------------------
B. More layers are ***,*** DM
affected (RAM/ROM
size and/or location
change)
- ------------------------------------------------------------------------------------------
Supertec work ****+****-**** **,*** USD
- ------------------------------------------------------------------------------------------
</TABLE>

- **,*** DM will be deducted from the first NRE (P3 Trial Layout),
- NRE includes * pcs ES
- Prices are valid on a ********** ******* or ***** **** and for calendar
year **** to ****.
- In case of *** NRE/A the ********* NRE has to be applied, as ******* need
to change the routing metal layer only.
- In case of *** NRE/B, the NRE has to be applied, as ******* need a new
set of masks.
- Maximum number of chips Nogatech can order for the first shipment is **K
units.
- If Nogatech will request to stop the manufacturing of the **K units before
******* made the package and the testing. Nogatech will cover the ******
expenses that ******* had up that point according to a price of *.* per
chip.

Minimum order quantity is *******. With deliveries within *** year starting
from first mass production delivery date. Min LOT ****** each type *******
or *****/***.

3. PAYMENT

3.1 Payment for Mass Production orders Net 30 days, plus 17% VAT, covered by
CUSTOMER, Bank Guarantee in advance. After one year from first mass
production shipment date, the bank guarantee will be reviewed with the
intention to either reduce amount or cancel it.
3.2 Prices for Unit Price are in USD and price for NRE is in DM.

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

3.3 The NRE'S Costs will be invoiced as follows:
25% at project start
50% at sign-off
25% at prototype delivery

4. SHIPMENT AND BILLING

4.1 Shipment from Supertec warehouse to Nogatech in Israel.
4.2 Drop shipments from FMG to Nogatech to max. 2 addresses.
4.3 All billings are from Supertec to Nogatech.

GENERAL

1. EXCLUSIVE RIGHTS AND CONFIDENTIALITY

Either parties understand and hereby acknowledge that it may become informed of,
and access to, confidential information of the other party including, but not
limited to trade secrets and technical information, and that such information is
the exclusive property of the other party.
Parts of the product which are not trade secrets or professional secrets or
commonly known and are released by the CUSTOMER, may be used in other designs
completed by SUPERTEC or FUJITSU or 3rd parties.

It is agreed that CUSTOMER is the owners and holders of all proprietary
rights and has exclusive rights and absolute title respecting all of the data
base that he has given to SUPERTEC including all inventions process,
know-how, computer program, and technical data and information trade secrets,
copy writing and any other rights with respect to the foregoing.

2. RESPONSIBILITY

CUSTOMER will be responsible for Prototypes and Sign Off Approvals and for all
the developmental work for both the CUSTOMER and SUPERTEC.

3. FORCE MAJOR

Neither party to this Agreement shall be liable for its failure to perform any
of its obligations hereunder during any period in which such performance is
prevented by any cause beyond its control such as war, riots, sovereign act,
civil conditions, act of God, earthquakes, epidemics, floods, fires, quarantine
restrictions, accident, strike or lock out (also on part of suppliers), delays
in transportation, raw material shortages or delay in the delivery of essential
operating supplies or raw materials. An agreed

<PAGE>
delivery period shall be extended for the time after which such prevention
continues and for a reasonable period.

4. APPLICABLE LAW; JURISDICTION

The validity, performance and construction of this Agreement shall be governed
by the laws of Israel, and Tel Aviv. Israel, shall be the appropriate venue and
jurisdiction for the resolution of disputes hereunder.

5. INVALIDITY

Should any one or more parts of this agreement be declared invalid by any court
of jurisdiction for any reason, such decision shall not affect the validity of
any portions, which shall remain in full force can effect as if this agreement
has executed with the invalid part or parts thereof eliminated.

6. ATTORNEY'S FEES

The prevailing party in any legal action arising out of or related to this
Agreement shall be entitled to its reasonable court costs and attorneys' fees.

SUPERTEC ELECTRONICS LTD. NOGATECH

BY: SUPERTEC ELECTRONICS LTD. BY: NOGATECH

NAME: YAACOV COHEN NAME: ARIE HEIMAN

SIGNATURE: /s/ Yaacov Cohen SIGNATURE: /s/ Arie Heiman
----------------- ----------------
TITLE: DIRECTOR TITLE: PRESIDENT

DATE: 30/8/99 DATE: 30/8/99

<PAGE>

CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

Exhibit 10.15

ASIC DEVELOPMENT AGREEMENT

This is an agreement, dated as of June 24th, 1997 ("Effective Date") by and
between SUPERTEC ELECTRONICS Ltd., located at 1 Hamasger St., Raanara 43653,
POB 2550 Israel (hereinafter "SUPERTEC"), and NOGATECH Ltd., located at 3 Miviz
Kudash St. Givat Shmuel 54100, Israel (hereinafter "CUSTOMER").

Whereas, CUSTOMER requires a design for a particular semiconductor product in
accordance with the design based on LG SEMICON'S technology.

Whereas, SUPERTEC has expertise in the design of semiconductor products and
believes it can perform the obligations described herein relating to the design
and production of the Product in accordance with this Agreement; and

Whereas, LG SEMICON has expertise in the manufacturing of integrated circuits,
and believes it can perform the obligations described herein relating to the
production of a design for Product and the manufacture of the Product in
accordance with this Agreement;

Whereas, CUSTOMER desires to purchase from SUPERTEC as its sole supplier for the
following design, and targeting for the quantity of more than 1 MILLION units
per year and SUPERTEC desires to sell such semiconductor products which are
developed by CUSTOMER and SUPERTEC and produced by LG SEMICON.

Now, therefore, in consideration of the Agreements between SUPERTEC and LG
SEMICON the parties hereto agree as follows:

PRODUCTION & DEVELOPMENT

<PAGE>

1. DEFINITION

Project Name: NT 1003
Part Number: GVS 853XX
Package: 100 PQFP
Technology: 0.35 um SC TLM
Size: 4,014 um x 4,014 um
Description: 80 K gate 4 K byte DPRAM, USB transceiver, PLL,
Power-On-Reset, Clock Generator

2. DEVELOPMENT OF PRODUCT

2.1 Development of * module (DRAM controller preliminary estimation *-*
******).
2.2 Synthesis of RTL Varilog files and test vectors generation (preliminary
satisfaction - * ****** of **** time of an engineer).
3.3 Development of ***** ***** ASIC in *.* um SC for ****** fair (including **
K gate, * K byte DPRAM, *** transceiver).
2.4 Development of second stage **** ASIC in *.** um S.C.

* If there is a significant change in the development hours (more than 10%)
SuperTec should notified Nogatech to get the exceeded hours.

3. FORECAST FOR COMPLETION DATES

<TABLE>
<CAPTION>
Design Step Completion Date
----------- ---------------
<S> <C>
* Beginning of ASIC design Upon placement of the CUSTOMER'S order
* Design1 module 1-2 months - by Supertec
* Altera preliminary NL + TV Beginning of July - Nogatech releases
* Altera Full Integration Aug 3rd - Nogatech releases
* Altera Final NL + TV Aug. 10th - Nogatech releases
* LG final NG + TV Aug. 24th - Supertec releases
* LG final NG + TV tape-out Sep. 1st - Nogatech approval
* 1st Sign-Off, (*.*um) Sep. 8th - Nogatech approval
* SDF out (*.*um) Sep. 15th - LG releases
* 2nd Sign-Off (*.*um) Sep. 18th - Nogatech approval
* Delivery of Prototypes (*.*um) Oct. 20th - by LG ex Korea
* LG NI + TV tape-out (*.**um) Nov. 6th - by LG ex Korea
* 1st Sign-Off, (*.**um) Nov. 10th - Nogatech approval
* SDF est (*.**um) Nov. 17th - LG releases
* 2nd Sign-Off.(*.**um) Nov. 20th - Nogatech approval
* Delivery of Prototypes (*.**um) Dec. 25th - by LG ex Korea
* Prototype Approval (*.**um) Jan 8th 1998- Nogatech approval
* Mass Production (*.**um) Feb. 26th 1998 - by LG ex Korea
</TABLE>

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

TERMS OF CONTRACT

1. GENERAL TERMS

This Agreement shall be effective from the date that this agreement is signed by
both parties and shall extend for a term of 5 years from the function approval
of the samples.

The CUSTOMER should confirm in writing the Prototype approval of the ASIC
product as soon as possible after receipt of the Prototype but no later than 60
days.

In the event that CUSTOMER does not specifically reject the prototypes provided
by SUPERTEC in writing within 60 days, such samples shall be deemed to be
accepted by CUSTOMER.

After Prototype approval CUSTOMER will issue a yearly forecast for expected
quantity. The CUSTOMER shall confirm the rolling forecast two quarters before
delivery. The rolling forecast shall be updated by the CUSTOMER in writing at
the beginning of each quarter.

After Prototype approval with respect to the yearly forecast, CUSTOMER must
issue a firm order 2-3 months before delivery. The order cannot be canceled 75
days before confirmed delivery date (Ex Korea).

2. PRICES
------

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Pcs. Product Pkg. Qty/Yr. Unit Price
USD
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. *** gates *** PQFP ***K *.**
4x1K 8bit DPRAM ***K *.**
SC TLM *.**um ***K *.**
*M *.**
- ------------------------------------------------------------------------------------------
2. *** - *.** um SC TLM **,***
60 Prototypes are included
- ------------------------------------------------------------------------------------------
3. *** - *.* um SC TLM **,***
50 Prototypes are included
- ------------------------------------------------------------------------------------------
4. Development Charge per hour **

- ------------------------------------------------------------------------------------------
</TABLE>

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

3. PAYMENT

Payment for Mass Production orders will be NET 30 days after delivery, FOB
Korea, covered by CUSTOMER's Bank Guarantee in advance in addition to Bank
Guarantee according to paragraph 3.3, or any other arrangement which will be
agreed.

3.2 The NRE'S Costs will be invoiced as follows:

- $39 M immediately at Order Placing.
- $39 M immediately at the 0.5 mm SC 1" Sign-Off design step.
- $52 M a 0.35 mm SC at Prototype Delivery
- All development cost of $65 per Hour which will be paid during 1998,
and will be added to the Unit Price of the first 100K units, by
dividing the total cost to 100K units.

3.3 CUSTOMER will issue within the 0.6 um SC 1st Sign-Off design step, a Bank
Guarantee in the amount of $52,000 US plus 17% VAT with validity until Dec.
1, 1998.

3.4 SUPERTEC reserves the right to use the Bank Guarantee in paragraph 3.3 only
in case of the following:

* Non payment or Partial Payment by the CUSTOMER.
* CUSTOMER fails to purchase the 100,000 pieces, by Dec. 31, 1998.

3.5 Unless otherwise stated herein, the prices quoted in this Agreement do not
include custom duties or sales, use, ending or other similar taxes payable
hereunder, and the same shall be added.

GENERAL

CUSTOMER agrees and understands that all development efforts were a long term
relationship. If the project will continue in a second generation or version,
the continued development will be done through SUPERTEC, boxed on first refusal,
and meeting technical and marketing requirements.

1. EXCLUSIVE RIGHTS AND CONFIDENTIALITY

[**] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

<PAGE>

Parts of this product which are not trade secrets or professional secrets or
commonly known and are released by the CUSTOMER, may be used in other designs
completed by SUPERTEC or LG or 3rd parties.

It is agreed that CUSTOMER is the owners and holders of all proprietary rights
and has exclusive rights and absolute title respecting all of the data box, that
he has given to SUPERTEC including Verilog RTL and all inventions process,
know-how, computer program, technical data, information trade secrets, copy
writing and any other rights with respect to the foregoing.

It is agreed that SUPERTEC is the owners and holders of all proprietary rights
and has exclusive rights and absolute title respecting all of the data which
SUPERTEC developed for the project done by SUPERTEC for the CUSTOMER including
Net List, Test Vectox, Layout Masks and all inventions process, know-how
computer program, technical data, information trade secrets, copy writing and
any other rights with respect to the foregoing.

It is agreed that SUPERTEC is not allowed to use the Net List, Test Vectors, and
Layout Masks which SUPERTEC developed for the project done by SUPERTEC for the
CUSTOMER other than for the CUSTOMER Mass Production supply.

It is agreed that SUPERTEC is not the owners of the 2 modules which were
developed for the CUSTOMER.

2. RESPONSIBILITY

CUSTOMER will be responsible for Prototypes and Sign Off Approvals and for all
the developmental work for both the CUSTOMER and SUPERTEC.

3. MAJOR FORCE

Neither party to this Agreement shall be liable for its failure to perform any
of its obligations hereunder during any period in which such performance is
prevented by any cause beyond its control such as war, riots, sovereign act,
civil conditions, act of God, earthquakes, epidemics, floods, fires, quarantine
restrictions, accident, strike or lock out (also on part of suppliers), delays
in transportation, raw material shortages or delays in the delivery of essential
operating supplies or raw materials. An agreed delivery period shall be
extended for the time after which such prevention continues and for a reasonable
period of no more than 4 weeks.

4. APPLICABLE LAW; JURISDICTION

The validity, performance and construction of this Agreement shall be governed
by the laws of Israel, and Tel Aviv, Israel, shall be the appropriate venue and
jurisdiction for the resolution of dispatch hereunder.

<PAGE>

5. INVALIDITY

6. ATTORNEY'S FEES

The prevailing party in any legal action giving out of or related to this
Agreement shall be entitled to its reasonable court costs and attorneys' fees.

SUPERTEC ELECTRONICS LTD. NOGATECH LTD.

BY: SuperTec Electronics Ltd. By: Nogatech Ltd.

NAME: Udi Shamir NAME: Arie Heiman

Signature /s/ Udi Shamir Signature: /s/ Arie Heiman
-------------- ---------------

TITLE: General Manager TITLE: General Manager

DATE: 24 June, 1997 DATE: 24/June, 1997
-------------

<PAGE>

EXHIBIT 10.16

EMPLOYMENT AGREEMENT
DATED MARCH 1, 2000
BY AND BETWEEN

NOGATECH LTD., a company having an office and place of business in 3 Hagavish
St., Kfar Saba, Israel (the "COMPANY")

AND

DR. ARIE HEIMAN, identity number 045391760 of 45 Yehuda Halevi Street,
Ra'anana, Israel (the "EMPLOYEE")

WHEREAS, the Company desires to employ the Employee as its President and
Chief Executive Officer, and to avail itself of the Employee's talents and
abilities; and

WHEREAS, the Employee desires to be employed by the Company, subject to the
terms and conditions set forth below.

NOW, THEREFORE, the parties hereby agree as follows:

1. EMPLOYMENT DUTIES

1.1. Employee shall perform the responsibilities of President and Chief
Executive Officer, and any responsibilities incidental thereto.
Employee shall not become engaged in any other occupation whether
for compensation or not while employed hereunder, without the
express written consent of the chairman of the Board of Directors
of the Company.

1.2. Employee's employment with the Company may require travel outside
Israel, and the Employee agrees to such travel as may be necessary
in order to fulfill his duties toward the Company.

1.3. Employee's position is a "senior managerial position", as defined
in the Work and Rest Hours Law, 1951, and requires a high level of
trust. Accordingly, the provisions of said law shall not apply to
Employee and Employee agrees that he may be required to work
beyond the regular working hours of the Company, for no additional
compensation other than as specified in this Agreement.

<PAGE>

1.4. Employee declares that the fulfillment of the undertakings
pursuant to this Agreement, his employment by the Company and the
use of information in his possession and of his abilities, does
not breach, and will not breach, any other agreement or
undertaking for the preservation of confidentiality and
non-competition to which he is a party. Employee agrees and
undertakes not to perform any act or to omit to perform any act
which may breach his fiduciary duty to the Company or which may
place him in a position of conflict of interest with the
objectives of the Company. In addition, Employee agrees and
undertakes to inform the Company promptly of any such matter which
may place him in such a situation of potential conflict of
interest.

2. TERM

This Employment Agreement commences as of March 1, 2000 and shall
continue for a period of twelve (12) months (the "Initial Term"),
unless sooner terminated in accordance with the terms of Section 9.1
below. Upon the expiration of the Initial Term, this Employment
Agreement shall automatically renew for successive twelve (12) month
periods (each twelve month period shall be referred to as an "Extended
Term"), unless sooner terminated in accordance with the terms of
Sections 9.1 or 9.2 below.

3. COMPENSATION

3.1. FIXED SALARY. Employee shall receive a fixed monthly Gross Salary
of NIS 51,000 (Fifty One Thousand New Israeli Shekels) (the "GROSS
SALARY"), payable on a monthly basis.

3.2. VACATION. Employee shall accrue paid vacation at the rate of
twenty-five (25) days for each twelve (12) months of employment.
Employee may not accumulate his vacation days for more than twenty
four (24) months of employment.

3.3. SICK LEAVE. Employee shall accrue sick leave at the same rate
generally available to the Company's employees according to the
provisions of the Sick Pay Law - 1976 and subject to Employee
producing the required medical certificates.

3.4. BENEFITS. During the term of Employee's employment, Employee shall
be entitled to Manager's Insurance (Bituach Menhalim) to be
registered on his name, in an amount equal to 15.83% of the Gross
Salary, which shall be paid monthly to said Manager's Insurance
Plan directly by the Company. The insurance shall be allocated as
follows: (i) 8.33% in respect of severance compensation, (ii) 5%
in respect of pension and (iii) up to 2.5% in respect of

<PAGE>

disability. An additional 5% of the Gross Salary shall be
deducted by the Company from the monthly payment of Employee's
salary as Employee's contribution to said Manager's Insurance.
Notwithstanding anything in this agreement to the contrary, in the
event that the employment relationship between Employee and the
Company is terminated in such circumstances that entitle the
Company to refrain from paying Employee severance pay pursuant the
relevant labor laws of the State of Israel, Employee shall
immediately transfer and return to the Company the title and any
and all amounts accumulated in the Manager's Insurance on account
of severance pay.

3.5. EDUCATION FUND. The Company shall contribute to a Continuing
Education Fund (Keren Hishtalmut), to be chosen by the Company for
the benefit of Employee, in an amount equal to 7.5% of his Gross
Salary per month, subject to Employee's contribution of an
additional 2.5% of his Gross Salary per month. All tax obligations
related to the Education Fund shall be borne by the Employee.

3.6. The Company shall provide and pay Employee Recreation Funds (Dmei
Havra'ah) at the rate required by law and regulations.

4. EXPENSES

The Company shall reimburse Employee for his normal and reasonable
expenses incurred for travel, entertainment and similar items in
promoting and carrying out the business of the Company in accordance with
the Company's general policy, in effect from time to time. The Employee
shall provide the Company with copies of all invoices and receipts, and
otherwise account to the Company in sufficient detail to allow the
Company to claim an income tax deduction for such paid item, if item is
deductible. Reimbursement shall be made on a monthly, or more frequent,
basis, in accordance with Company's policy.

5. RESERVE DUTY

Immediately upon receipt of a notice of reserve duty, Employee shall
report such notice to the Company's Board of Directors. Upon Employee's
return from reserve duty, Employee shall deliver to the Company
appropriate confirmation of reserve duty served from his military unit,
against which the Company shall pay Employee his regular compensation
package with respect to the period served.

6. COVENANT NOT TO COMPETE

Employee agrees that he is and shall be in a position of special trust
and confidence and will have access to confidential and proprietary
information about the Company's

<PAGE>

business and plans. Employee agrees that he will not directly or
indirectly, either as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officer, director, or in
any similar individual or representative capacity, engage or
participate in any business competitive with the Company's business,
including projects under consideration by the Company at the time of
termination, during the term of his employment for a period of
eighteen (18) months after the termination of his employment,
regardless of the reason for such termination and regardless of
whether such termination was initiated by the Employee or by the
Company.

7. CONFIDENTIALITY AND TRADE SECRETS

7.1. KNOW-HOW AND INTELLECTUAL PROPERTY. It is understood that the
Company has developed or acquired and will continue to develop or
acquire certain products, technology, unique or special methods,
manufacturing and assembly processes and techniques, trade
secrets, written marketing plans and customer arrangements, and
other proprietary rights and confidential information which are
not in the public domain (collectively referred to as the "COMPANY
PROPERTY"). It is expected that the Employee will gain knowledge
of and utilize the Company Property during the course and scope of
his employment with the Company, and will be in a position of
trust with respect to the Company Property. All inventions and
developments made by the Employee for the Company in the context
of his employment with the Company, and all intellectual property
rights contained therein, are Company Property. Employee agrees
that all rights he has to any technology, patents, copyrights,
ideas in whatever form, and any other intellectual property
rights, which relate to the Company Property are unconditionally
assigned to and owned, free of any third party rights or
encumbrances, by the Company, and the Employee agrees to cooperate
with the Company and to provide to it all details necessary to
carry out any registration or act, to sign all documents and to
take all actions to enable the Company to make use of all the
Company Property, to duly register the same, whether in Israel or
abroad, should the Company desire to do so, and/or to protect the
same in any other manner as the Company shall see fit. The
Employee's obligation to assist the Company in the acquisition and
enforcement of intellectual property rights and protections in
connection with the Company Property shall survive the termination
of this Agreement and the termination of Employee's employment
with the Company.

7.2. COMPANY PROPERTY. It is hereby stipulated and agreed that the
Company Property shall remain the Company's sole property. It is
further stipulated and agreed by the parties, as a material
inducement for the Company having entered into this Agreement and
remaining a party hereto (subject to any early

<PAGE>

termination hereof by the Company), that Employee shall be
bound by the Employee Non-Disclosure Agreement appended hereto
as Appendix A.

Notwithstanding the foregoing, it is hereby agreed that the patents
specified in Appendix B hereto were developed by the Employee prior his
commencement of employment for the Company, and therefore such patents
shall not be deemed to be Company Property.

7.3. EFFECT OF TERMINATION. In the event that Employee's employment is
terminated, for whatever reason, Employee agrees not to copy, make
known, disclose or use, any of the Company Property, and the
Employee shall continue to observe the provisions of the Employee
Non-Disclosure Agreement, which shall survive such termination.
Without derogating from the Company's rights under the law of
torts, Employee further agrees not to endeavor or attempt in any
way to interfere with or induce a breach of any relationship that
the Company may have with any employee, customer, contractor,
supplier, representative, or distributor for a period of eighteen
(18) months from the date of any termination of Employee's
employment with the Company for any reason whatsoever. Employee
agrees, upon termination of employment, to deliver to the Company
all confidential papers, material documents, records, lists and
material notes (whether prepared by Employee or others), in any
media whatsoever, comprising or containing the Company Property,
without retaining any copies thereof, and any other property of
the Company.

7.4. MATERIAL BREACH. It is hereby agreed that a breach of Sections 6
or 7 or Appendix A hereto shall be considered as a material
breach of this Agreement.

8. CORPORATE OPPORTUNITIES

In the event that during the Employment Term, any business opportunity
related to the Company's business shall come to Employee's knowledge,
Employee shall promptly notify the chairman of the Board of Directors of
the Company of such opportunity. Employee shall not appropriate for
himself or for any other person other than the Company, any such
opportunity, except with the express written consent of the chairman of
the Board of Directors of the Company, in advance. Employee's duty to
notify the Company and to refrain from appropriating all such
opportunities shall neither be limited by, nor shall such duty limit, the
application of the general law of Israel relating to the fiduciary duties
of an agent or employee.

9. TERMINATION OF EMPLOYMENT

<PAGE>

9.1. GENERAL. This Agreement may be terminated by Employee at any
time, without cause, by giving the Company 30 (thirty) days
advance written termination notice.

This Agreement may be terminated by the Company at any time, without
cause, by giving the Employee a twelve (12) months advance written
termination notice ("Notice Period").

In the event that the Company terminates this Agreement without cause,
Employee shall be deemed to have continuously remained an Employee of the
Company throughout the Notice Period. Notwithstanding Section 1.1
hereinabove, during the Notice Period, Employee shall be entitled to be
employed by other employers, subject to Sections 6 and 7 above, and
the terms of Appendix A hereto. In the event that the Company terminates
this Agreement without cause, the non-competition period (as specified in
Section 6 above) shall commence upon the delivery to the Employee of
notice of discharge by the Company.

9.2. TERMINATION FOR CAUSE. The Company may immediately terminate
Employee's employment at any time for Cause. Termination for Cause
shall be effective from the receipt of written notice thereof to
Employee. "Cause" means: (i) material violation of any of Sections
1, 6, 7, 8 of this Agreement; (ii) conviction of any
felony which involves moral turpitude; or (iii) intentional
disclosure confidential information relating to the Company or its
business to a third party, other than in the course of carrying
out Employee's duties hereunder. The Company's exercise of its
rights to terminate with Cause shall be without prejudice to any
other right or remedy it may have.

9.3. LOAN. In the event that the Company terminates this Agreement
without cause, the Company shall extend the Employee a loan (the
"Loan") in an amount equal to the aggregate exercise price of the
vested and unexercised options to purchase shares of Nogatech,
Inc., then held by the Employee. The Loan shall bear interest and
shall be linked to the Consumers Price Index then in effect, all
as shall then be customary with respect to loans from employers to
employees. The maturity date of the Loan shall be at the end of
five (5) years following its grant. Employee shall bear all tax
consequences in connection with the Loan.

9.4. During the notice period, Employee shall cooperate with the
Company in connection with its efforts to substitute a successor
in place of Employee and smoothly transfer Employee's
responsibilities to such successor.

10. MISCELLANEOUS

<PAGE>

10.1. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject
matters herein, and supersedes and replaces any prior agreements
and understandings, whether oral or written between them with
respect to such matters. For the avoidance of doubt, it is hereby
clarified that nothing herein shall affect any of the social
benefits accrued by the Employee prior to the date hereof pursuant
to the employment agreement dated July, 1993. The provisions of
this Agreement may be waived, altered, amended or repealed in
whole or in part only upon the written consent of both parties to
this Agreement.

10.2. NO IMPLIED WAIVERS. The failure of either party at any time to
require performance by the other party of any provision hereof
shall not affect in any way the right to require such performance
at any time thereafter, nor shall the waiver by either party of a
breach of any provision hereof be taken or held to be a waiver of
any subsequent breach of the same provision or any other
provision.

10.3. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Israel. In the event
of any controversy or claim arising out of or relating to this
Agreement, or breach thereof, the parties may apply solely to the
court having jurisdiction in Tel Aviv - Jaffa, Israel.

10.4. NOTICES. All notices, requests, demands, instructions or other
communications required or permitted to be given under this
Agreement or related to it shall be in writing and shall be deemed
to have been duly given upon delivery, if delivered personally, or
if given by prepaid telegram, or mailed first-class postage
prepaid, registered or certified mail, return receipt requested,
shall be deemed to have been given two (2) days after such
delivery, if addressed to the other party at the addresses as set
forth on the signature page below. Either party hereto may change
the address to which such communications are to be directed by
giving written notice to the other party hereto of such change in
the manner above provided.

10.5. NO CONFLICTING AGREEMENTS. Employee declares that he is not bound
by any agreement, understanding or arrangement according to which
the execution of and compliance with this Agreement may constitute
a breach or default.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

<PAGE>

/s/ A. Heiman
- ------------------------------------ ------------------------------------
NOGATECH LTD. DR. ARIE HEIMAN

BY: /s/ Nathon Hod
---------------------------------

<PAGE>

Appendix B

1. Channel error recovery.

2. video cassette directory.

<PAGE>

Exhibit 10.17

Date: DECEMBER 22, 1998

Attn.: Mr. Yaron Garmazi

Dear Mr. Garmazi,

Re: EMPLOYMENT WITH NOGATECH LTD.

Nogatech Ltd. (hereinafter: the "Company") was organized in order to be a
pioneer in the field of implementing image processing technologies. On behalf
of the shareholders and management of the Company, I wish to congratulate you
in your position in the Company. For form's sake, I would like to specify
hereunder the terms of your employment with the Company:

1. JOB DESCRIPTION

Your position in the Company shall be: NOGATECH INC. CFO.

The Company shall be entitled to modify your position or impose
additional tasks on you, at its discretion.

2. PERIOD OF EMPLOYMENT AND TERMINATION THEREOF

a. This agreement shall become effective as of FEBRUARY 1,
1999.

b. The duration of your employment is indefinite
(hereinafter: the "Period of Employment"). Both parties
may terminate the employment by written notice to the
other given 60 days in advance.

c. Notwithstanding the provisions of subsection (b) above,
the Company shall be entitled to dismiss you without
prior warning in each of the following cases:

1) Commitment of a criminal offense related to work
and/or a flagrant offense.

2) Breach of your undertaking pursuant to clause 13
of this agreement.

3) Breach of the undertaking to maintain
confidentially and non-competition, attached to
this agreement as APPENDIX A.

d. Please be advised that the Company may establish and/or
join new activities within the framework of
subsidiaries, sister companies and/or

<PAGE>

companies in which the Company shall invest money. As
part of the discharge of your duties, you may be
requested by the Company to act in additional settings
too, all within the scope of this agreement.

3. WORKING HOURS

a. The working week comprises a minimum of 45 working
hours. Should the work needs so require, you may be
requested, from time to time, to stay on after normal
working hours and to put in more than the usual
workload. Working overtime requires the prior written
approval of your supervisor.

It is further clarified that in cases of business travel
overseas, the length of the working days shall in all
cases be deemed as ordinary days.

4. SALARY

a. Your gross monthly salary shall be NIS 24,000
(hereinafter: the "Salary").

The following components shall be added to the Salary:

1) Convalescence pay at the maximal rate granted
from time to time in expansion orders as in
effect in the labor market at the time being.

The convalescence pay shall be divided into
monthly payments to be added to your Salary each
month.

At the time hereof, this component amounts to NIS
_______ per month.

This refund is subject to the filing of a
monthly/periodical report in the form to be used
by the Company from time to time.

b. The Company shall deduct tax and other lawful payments
from your Salary.

c. The Salary shall be linked to the cost of living
increments payable in the labor market from time to
time, without a ceiling, and shall be updated
accordingly.

5. ANNUAL VACATION

<PAGE>

policy, as in effect from time to time, but in no case
will the vacation be shorter than the vacation fixed in
the Annual Vacation Law.

b. The timing of your vacation shall be coordinated with
your supervisor one month in advance, unless the
vacation shall be less than three days long, in which
case an advance update of one week shall suffice.

c. No accumulation of vacation days exceeding the vacation
due for two years of employment is allowed.

d. The Company may instruct you to go on a central
organized vacation concurrently with all of the
Company's employees, utilizing no more than one half of
your annual vacation.

6. SICK LEAVE

Payment for sick leave shall be made subject to the provision
of medical certificates pursuant to the Sick Leave Law.

7. MILITARY RESERVE DUTY

a. Leave for active military reserve duty requires the
rendering of notice to the Company upon receipt of the
order.

b. During active military reserve duty, you shall be
entitled to receive your Salary in full, subject to
provision of the appropriate confirmations upon
conclusion of the service.

8. MANAGERS' INSURANCE

a. The Company shall pay the following amounts to a pension
fund, a provident fund or managers' insurance, at the
choice thereof:

1) 8.33% of the Salary, as defined in clause 4(a),
for severance pay - at the Company's expense.

2) 5% of the Salary, as defined in clause 4(a), for
provident payments - at the Company's expense.

3) 5% of the Salary, as defined in clause 4(a), for
provident payments - at your expense.

b. The Company's payments to managers' insurance as set out
in subsection (a) above shall be in lieu of any other
duty of payment of severance pay, payments to a pension
fund etc.

In the event that the payments to be made prior to
termination of your employment shall not suffice in
order to cover the severance pay due to

<PAGE>

you under this agreement, the Company shall complement
the payment within the period of time fixed in the law.

c. Your consent to section (b) exempts the Company from the
need to apply to the Minister of Labor for his approval
under Article 14 of the Severance Pay Law; however, if
such a need for an application for an appropriate permit
should arise, your signing of this agreement shall
constitute an authorization of the Company to apply for
the permit on your behalf too.

d. Should the Company be required in future, whether by law
or by an expansion order which shall apply to the entire
labor market, to make payments to another comprehensive
pension fund or arrangement, such payment to the new
applicable fund or arrangement shall be in lieu of the
arrangement herein, and you will not be permitted to
draw funds on account of the payments made within the
framework of the previous arrangement, but subject to
the regulations of the appropriate fund.

9. ADVANCED STUDY FUND

During the Period of your Employment with the Company and
subject to the General Manager's approval, the Company shall
make payments to an advanced study fund to which you belong at
the acceptable rate, i.e., 7.5% of the Salary, as defined in
clause 4(a), at the Company's expense, and 2.5% at the
employee's expense.

10. CONFLICT OF INTERESTS

You shall perform no act which shall derogate from your loyalty
to the Company and/or which may place you in a conflict of
interests with the Company's objectives. In addition,
throughout the term of your employment, you shall work in no
other occupation or employment without the Company's prior
written approval.

11. DECLARATION OF CONFIDENTIALITY AND NON-COMPETITION

You undertake to maintain confidentially and non-competition,
both during the term of your employment with the Company and
thereafter, as specified in the undertaking of confidentially
and non-competition of the Company in the form attached to this
letter, marked as Appendix A and constituting an integral part
of this letter.

12. DEFENSE SECRETS

a. Please be advised that the Company may engage, INTER
ALIA, in secret projects for the defense forces; you
therefore undertake to maintain in confidence
information, or defense secrets, which shall reach you,
both in writing and verbally, while discharging your
duties, and to refrain

<PAGE>

from transferring the same to any person and/or entity,
unless required to do so by your duties, as imposed on
you.

b. Please be advised that should you fail to fulfill this
undertaking, you shall be liable for the penalties
prescribed by the Criminal Amendment Law (State
Security), 5717-1957.

13. PATENTS, INVENTIONS AND COMMERCIAL SECRETS

a. The Company shall have exclusive title to any copyright
to any invention or patent (related to the fields in
which the Company engages) which you or any Company
employee under your supervision shall invent during the
Period of your Employment with the Company, and to any
commercial secret related to the Company's work. The
Company shall be entitled to defend any invention,
patent or commercial secret by way of registration or
otherwise in Israel or elsewhere. It is clarified that
you will not be entitled to register the invention
and/or patent or commercial secret nor take any action
with respect thereto, save for the acts necessary for
the registration or utilization of the patent in the
name of or by the Company. The provisions of this clause
shall remain in effect also after termination of your
work for the Company and shall bind you and your lawful
representatives.

b. You undertake to notify the Company in writing of any
invention, patent or commercial secret which either you
or any Company employee under your supervision shall
invent, immediately upon discovery thereof.

c. Save as set forth in Appendix B hereof, you have no
interest in any invention, patent, patent application or
copyright.

14. a. The Company's rights under this contract may be assigned.

b. Your undertakings under this contract may not be
modified and shall not be terminated, either in whole or
in part, but pursuant to a written document signed by an
authorized representative of the Company.

c. If any of the terms of this contract shall, for any
reason, be determined to be invalid or unenforceable,
the validity and effect of the remaining provisions of
the contract shall not be affected.

Upon signing this personal contract and formally joining the Company's staff,
we wish you continued satisfaction and enjoyment from your work. I hope that
our relationship will yield cooperation for many years to come, for the
benefit of yourself and of the Company, the employees and owners thereof.

Sincerely,

<PAGE>

(-) /s/ A. Heiman
- ------------------------------------
- General Manager
Nogatech Ltd.

I have perused this letter and Appendix A hereof, and have prepared Appendix
B and I hereby express my agreement to the content of the letter and of the
Appendix.

I am aware that this letter is a special and personal contract which
regulates the relationship between the Company and myself, and that the
provisions of no other agreement, including collective agreements between the
Company and the employees thereof, shall apply to me so long as this
agreement is in force.

I am further aware that the terms of the above agreement and any conditions
which shall be in effect so long as I am employed by the Company are personal
and I undertake to maintain them in confidence.

Name: Date: DECEMBER 22, 1998
-------------------------------

I.D.:
-------------------------------

Address:
----------------------------
Employee's signature: (-) /s/ Y. Garmazi
- -------------------------------------

IN THE EVENT THAT THE EMPLOYEE SHALL RETIRE VOLUNTARILY, AND SHALL NOT HAVE
COMMITTED AN ETHICAL VIOLATION, THE COMPANY SHALL PAY HIM THE COMPENSATION
WHICH WOULD HAVE BEEN PAYABLE TO HIM IN THE EVENT OF DISMISSAL.

THE EMPLOYEE SHALL RECEIVE A LOAN FOR THE PURCHASE OF A CAR IN THE AMOUNT OF
NIS 90,000. THE LOAN SHALL STAND FOR FIVE YEARS, AND 20% THEREOF SHALL BE
WAIVED EACH YEAR.

THE EMPLOYEE SHALL RECEIVE CAR MAINTENANCE ACCORDING TO THE "HESHEV" RATE FOR
1,500 KM PER MONTH.

<PAGE>

APPENDIX A

Attn.: Nogatech Ltd.

Re: UNDERTAKING OF CONFIDENTIALITY AND NON-COMPETITION

Whereas I wish to be employed by your company (hereinafter: the
"Company"); and

Whereas the Company is in the business of _______________________ and
engages in projects related thereto; and

Whereas during the term of my employment with the Company, I received
and will receive Information, as defined hereunder:

Any information, document, draft, process, material, commercial
secret, formula, datum, program, plan, algorithm, patent,
invention, whether patent-worthy or otherwise, discovery,
innovation, improvement, research, any method, scientific
technical development, prototype, model, picture, record,
compact disc, tape, description, drawing, computer tape, sketch
and any other thing or means of storage, whether in writing or
verbal and relating to the planning and development of control
systems, including software integrated with hardware and
information concerning the unique matters in which the Company
deals, and, INTER ALIA, on the subjects of
____________________, and matters in which the Company and/or a
new company to be organized within the Company shall engage,
and any information relating to the Company's customers and/or
manufacturing or marketing facilities, except for information
which:

(1) Is in the public domain or will be in the public domain
other than as a result of the breach of this undertaking;

(2) Was in my lawful possession prior to my employment;

(3) Constituted part of my general knowledge prior to my
employment;

(hereinafter: the "Information"); and

Whereas my undertaking to maintain confidentiality and non-competition
is a condition precedent to my employment with the Company and
to receipt of the Information by myself;

Therefore I declare and undertake as follows:

<PAGE>

PART I - CONFIDENTIALITY

1. To maintain the Information which has reached or shall reach me
or become known to me, whether directly or indirectly, during
the term of my employment with the Company and/or my
involvement in the Company, without limitation in time, also
after termination of my employment with the Company, in strict
confidence.

2. Not to divulge and/or sell, whether for or without
consideration and/or cause the Information to be divulged,
whether directly or indirectly, and to take all measures in
order to maintain the secrecy of the Information and to prevent
the delivery or transfer thereof to any third party, person,
entity or corporation, except to my supervisors in the Company
or pursuant to their instructions for the purpose of
discharging my duties as an employee of the Company.

3. To make no use of the Information or any part thereof for my
needs or for the needs of others, whether directly or
indirectly, other than for the purpose of executing my duties
as an employee of the Company pursuant to the instructions of
my supervisors in the Company.

4. To make no copies of the Information in any manner or form,
other than pursuant to the instructions of the Company or of
another authorized for this purpose on its behalf.

5. I am aware that sole title to the Information which has reached
me or which shall reach me or become known to me in any way
belongs to the Company and that it is the exclusive property
thereof, and I hereby undertake to surrender thereto,
immediately upon termination of my work for any reason, or
immediately upon its demand at any time, any material
containing Information, whether written or in any other form,
which is or shall be in my possession at any time.

6. I am aware that the delivery of the Information and/or any part
thereof to any third party may inflict severe damages on the
Company, and I shall commit no act of manufacture and/or
marketing and/or transfer and/or sale of the Information and/or
of the products developed by you and/or existing products
and/or products developed by myself or jointly with others,
including customers of the Company or jointly with any third
party, whether to your customers or to others.

PART II - NON-COMPETITION

7. I undertake than from the date of termination of my work for
the Company for any reason, I shall neither work for, nor
maintain, nor consult, nor take part in a business competing
with the Company, whether directly or indirectly, whether alone
or jointly with others.

<PAGE>

I further undertake to render no advice of any kind to such
competing business nor be employed by such competing business,
whether for or without remuneration, nor be directly or
indirectly active in the management and/or operation of such
competing business.

This undertaking shall be valid for eighteen (18) months from
the date of termination of my employment. For the purposes of
this clause, "competing business" shall mean a business dealing
with and/or marketing and/or manufacturing and/or developing
products in which the Company shall have dealt or products in
the process of being developed by the Company during the three
years preceding the termination of my employment (hereinafter:
the "Company's Products"). For the removal of doubt, the
employee shall not be barred from working in a business dealing
with products containing components of the same type as the
Company's Products, so long as the employee shall not engage,
whether directly or indirectly, in the development, manufacture
or marketing of components which may compete with the Company's
Products.

PART III - VARIOUS BREACHES

8. In any case in which I shall breach my foregoing undertaking or
part thereof, I shall be obliged to compensate the Company for
all the damages and/or expenses which the Company shall incur
due to such breach, without derogating from any other remedy
available to you against me under any law due to the breach of
my foregoing undertakings.

9. This undertaking is attached to the employment agreement signed
between myself and the Company on ________ and constitutes an
integral part thereof. This undertaking does not derogate from
any undertaking imposed on me as an employee of the Company
pursuant to the said agreement and/or any law.

10. I am aware that this undertaking contains limitations to which
I shall be subject after termination of my employment with the
Company. I am signing the same after having considered the
matter and been given time to consult with a professional.

---------------------- -----------------------------
Date Employee's signature

<PAGE>

APPENDIX B

Pursuant to clause 13(c) of the employment agreement

EMPLOYEE'S INTELLECTUAL PROPERTY

NONE.

<PAGE>

Exhibit 10.18

Date: JUNE 2, 1993

Attn.: Mr. Aryeh Gavrieli

Re: EMPLOYMENT WITH NOGATECH LTD.

Nogatech Ltd. (hereinafter: the "Company") was organized in order to be a
pioneer in the field of implementing image processing technologies. On
behalf of the shareholders and management of the Company, I wish to
congratulate you in your position in the Company. For form's sake, I would
like to specify hereunder the terms of your employment with the Company:

1. JOB DESCRIPTION

Your position in the Company shall be: ___________________.

The Company shall be entitled to modify your position or impose
additional tasks on you, at its discretion.

2. PERIOD OF EMPLOYMENT AND TERMINATION THEREOF

a. This agreement shall become effective as of JANUARY 1, 1993.

b. The duration of your employment is indefinite (hereinafter:
the "Period of Employment"). Both parties may terminate the
employment by written notice to the other given 30 days in
advance.

c. Notwithstanding the provisions of subsection (b) above, the
Company shall be entitled to dismiss you without prior warning
in each of the following cases:

1) Commitment of a criminal offense related to work
and/or a flagrant offense.

2) Breach of your undertaking pursuant to clause 13 of
this agreement.

3) Breach of the undertaking to maintain confidentially
and non-competition, attached to this agreement as
APPENDIX A.

d. Please be advised that the Company may establish and/or join
new activities within the framework of subsidiaries, sister
companies and/or companies in which the Company shall invest
money. As part of the

<PAGE>

discharge of your duties, you may be requested by the Company
to act in additional settings too, all within the scope of
this agreement.

3. WORKING HOURS

a. The working week comprises a minimum of 45 working hours.
Should the work needs so require, you may be requested, from
time to time, to stay on after normal working hours and to put
in more than the usual workload. Working overtime requires the
prior written approval of your supervisor.

It is further clarified that in cases of business travel
overseas, the length of the working days shall in all cases be
deemed as ordinary days.

b. In consideration for working overtime, you will be entitled to
remuneration at the rate of 175% of the hourly rate to be
calculated on the basis of the monthly salary, subject to
compliance with the Company's procedures as set out in
subsection (a) above.

4. SALARY

a. Your gross monthly salary shall be NIS 6,811 (hereinafter: the
"Salary").

The following components shall be added to the Salary:

1) Convalescence pay at the maximal rate granted from
time to time in expansion orders as in effect in the
labor market at the time being.

The convalescence pay shall be divided into monthly
payments to be added to your Salary each month.

At the time hereof, this component amounts to NIS 65
per month.

2) Since you will be using your private car for work,
you shall be entitled to car maintenance in the
amount of NIS 1,047 per month.

This refund is subject to the filing of a
monthly/periodical report in the form to be used by
the Company from time to time.

3) Since you will be using your home telephone for work,
you shall be entitled to telephone costs in the
amount of NIS 90 per month.

<PAGE>

This refund is subject to the filing of a
monthly/periodical report in the form to be used by
the Company from time to time.

b. The Company shall deduct tax and other lawful payments from
your Salary.

c. The Salary shall be linked to the cost of living increments
payable in the labor market from time to time, without a
ceiling, and shall be updated accordingly.

5. ANNUAL VACATION

a. During the first two years of the Period of your Employment,
you shall be entitled to an annual vacation of 20 days.
Thereafter, the length of the annual vacation shall be
extended according to the Company's policy, as in effect from
time to time, but in no case will the vacation be shorter than
the vacation fixed in the Annual Vacation Law.

b. The timing of your vacation shall be coordinated with your
supervisor one month in advance, unless the vacation shall be
less than three days long, in which case an advance update of
one week shall suffice.

c. No accumulation of vacation days exceeding the vacation due
for two years of employment is allowed.

d. The Company may instruct you to go on a central organized
vacation concurrently with all of the Company's employees,
utilizing no more than one half of your annual vacation.

6. SICK LEAVE

Payment for sick leave shall be made subject to the provision of
medical certificates pursuant to the Sick Leave Law.

7. MILITARY RESERVE DUTY

a. Leave for active military reserve duty requires the rendering
of notice to the Company upon receipt of the order.

b. During active military reserve duty, you shall be entitled to
receive your Salary in full, subject to provision of the
appropriate confirmations upon conclusion of the service.

8. MANAGERS' INSURANCE

a. The Company shall pay the following amounts to a pension fund,
a provident fund or managers' insurance, at the choice
thereof:

<PAGE>

1) 8.33% of the Salary, as defined in clause 4(a), for
severance pay - at the Company's expense.

2) 5% of the Salary, as defined in clause 4(a), for
provident payments - at the Company's expense.

3) 5% of the Salary, as defined in clause 4(a), for
provident payments - at your expense.

b. The Company's payments to managers' insurance as set out in
subsection (a) above shall be in lieu of any other duty of
payment of severance pay, payments to a pension fund etc.

In the event that the payments to be made prior to termination
of your employment shall not suffice in order to cover the
severance pay due to you under this agreement, the Company
shall complement the payment within the period of time fixed
in the law.

c. Your consent to section (b) exempts the Company from the need
to apply to the Minister of Labor for his approval under
Article 14 of the Severance Pay Law; however, if such a need
for an application for an appropriate permit should arise,
your signing of this agreement shall constitute an
authorization of the Company to apply for the permit on your
behalf too.

d. Should the Company be required in future, whether by law or by
an expansion order which shall apply to the entire labor
market, to make payments to another comprehensive pension fund
or arrangement, such payment to the new applicable fund or
arrangement shall be in lieu of the arrangement herein, and
you will not be permitted to draw funds on account of the
payments made within the framework of the previous
arrangement, but subject to the regulations of the appropriate
fund.

9. ADVANCED STUDY FUND

During the Period of your Employment with the Company and subject to
the General Manager's approval, the Company shall make payments to an
advanced study fund to which you belong at the acceptable rate, i.e.,
7.5% of the Salary, as defined in clause 4(a), at the Company's
expense, and 2.5% at the employee's expense.

10. CONFLICT OF INTERESTS

You shall perform no act which shall derogate from your loyalty to the
Company and/or which may place you in a conflict of interests with the
Company's objectives. In addition, throughout the term of your
employment, you shall work in no other occupation or employment without
the Company's prior written approval.

<PAGE>

11. DECLARATION OF CONFIDENTIALITY AND NON-COMPETITION

You undertake to maintain confidentially and non-competition, both
during the term of your employment with the Company and thereafter, as
specified in the undertaking of confidentially and non-competition of
the Company in the form attached to this letter, marked as Appendix A
and constituting an integral part of this letter.

12. DEFENSE SECRETS

a. Please be advised that the Company may engage, INTER ALIA, in
secret projects for the defense forces; you therefore
undertake to maintain in confidence information, or defense
secrets, which shall reach you, both in writing and verbally,
while discharging your duties, and to refrain from
transferring the same to any person and/or entity, unless
required to do so by your duties, as imposed on you.

b. Please be advised that should you fail to fulfill this
undertaking, you shall be liable for the penalties prescribed
by the Criminal Amendment Law (State Security), 5717-1957.

13. PATENTS, INVENTIONS AND COMMERCIAL SECRETS

a. The Company shall have exclusive title to any copyright to any
invention or patent (related to the fields in which the
Company engages) which you or any Company employee under your
supervision shall invent during the Period of your Employment
with the Company, and to any commercial secret related to the
Company's work. The Company shall be entitled to defend any
invention, patent or commercial secret by way of registration
or otherwise in Israel or elsewhere. It is clarified that you
will not be entitled to register the invention and/or patent
or commercial secret nor take any action with respect thereto,
save for the acts necessary for the registration or
utilization of the patent in the name of or by the Company.
The provisions of this clause shall remain in effect also
after termination of your work for the Company and shall bind
you and your lawful representatives.

b. You undertake to notify the Company in writing of any
invention, patent or commercial secret which either you or any
Company employee under your supervision shall invent,
immediately upon discovery thereof.

c. Save as set forth in Appendix B hereof, you have no interest
in any invention, patent, patent application or copyright.

14. a. The Company's rights under this contract may be assigned.

<PAGE>

b. Your undertakings under this contract may not be modified and
shall not be terminated, either in whole or in part, but
pursuant to a written document signed by an authorized
representative of the Company.

c. If any of the terms of this contract shall, for any reason, be
determined to be invalid or unenforceable, the validity and
effect of the remaining provisions of the contract shall not
be affected.

Upon signing this personal contract and formally joining the Company's staff, we
wish you continued satisfaction and enjoyment from your work. I hope that our
relationship will yield cooperation for many years to come, for the benefit of
yourself and of the Company, the employees and owners thereof.

Sincerely,

(-)
/s/ Nathan Hod
- --------------
Nathan Hod - General Manager
Nogatech Ltd.

I have perused this letter and Appendix A hereof, and have prepared Appendix B
and I hereby express my agreement to the content of the letter and of the
Appendix.

I am aware that this letter is a special and personal contract which regulates
the relationship between the Company and myself, and that the provisions of no
other agreement, including collective agreements between the Company and the
employees thereof, shall apply to me so long as this agreement is in force.

Name: Aryeh Gavrieli Date: June 2, 1993
------------------ -------------
I.D. : 057213837
------------
Address: 3, Hamacabim St.
-----------------
Holon 58335 Employee's signature: /s/ Aryeh Gavriel
- ----------- -------------------

<PAGE>

APPENDIX A

Attn.: Nogatech Ltd.

Re: UNDERTAKING OF CONFIDENTIALITY AND NON-COMPETITION

Whereas I wish to be employed by your company (hereinafter: the
"Company"); and

Whereas the Company is in the business of _______________________ and
engages in projects related thereto; and

Whereas during the term of my employment with the Company, I received
and will receive Information, as defined hereunder:

Any information, document, draft, process, material,
commercial secret, formula, datum, program, plan, algorithm,
patent, invention, whether patent-worthy or otherwise,
discovery, innovation, improvement, research, any method,
scientific technical development, prototype, model, picture,
record, compact disc, tape, description, drawing, computer
tape, sketch and any other thing or means of storage, whether
in writing or verbal and relating to the planning and
development of control systems, including software integrated
with hardware and information concerning the unique matters in
which the Company deals, and, INTER ALIA, on the subjects of
____________________, and matters in which the Company and/or
a new company to be organized within the Company shall engage,
and any information relating to the Company's customers and/or
manufacturing or marketing facilities, except for information
which:

(1) Is in the public domain or will be in the public
domain other than as a result of the breach of this
undertaking;

(2) Was in my lawful possession prior to my employment;

(3) Constituted part of my general knowledge prior to my
employment;

(hereinafter: the "Information"); and

Whereas my undertaking to maintain confidentiality and non-competition
is a condition precedent to my employment with the Company and
to receipt of the Information by myself;

Therefore I declare and undertake as follows:

<PAGE>

PART I - CONFIDENTIALITY

1. To maintain the Information which has reached or shall reach me or
become known to me, whether directly or indirectly, during the term of
my employment with the Company and/or my involvement in the Company,
without limitation in time, also after termination of my employment
with the Company, in strict confidence.

2. Not to divulge and/or sell, whether for or without consideration and/or
cause the Information to be divulged, whether directly or indirectly,
and to take all measures in order to maintain the secrecy of the
Information and to prevent the delivery or transfer thereof to any
third party, person, entity or corporation, except to my supervisors in
the Company or pursuant to their instructions for the purpose of
discharging my duties as an employee of the Company.

3. To make no use of the Information or any part thereof for my needs or
for the needs of others, whether directly or indirectly, other than for
the purpose of executing my duties as an employee of the Company
pursuant to the instructions of my supervisors in the Company.

4. To make no copies of the Information in any manner or form, other than
pursuant to the instructions of the Company or of another authorized
for this purpose on its behalf.

5. I am aware that sole title to the Information which has reached me or
which shall reach me or become known to me in any way belongs to the
Company and that it is the exclusive property thereof, and I hereby
undertake to surrender thereto, immediately upon termination of my work
for any reason, or immediately upon its demand at any time, any
material containing Information, whether written or in any other form,
which is or shall be in my possession at any time.

6. I am aware that the delivery of the Information and/or any part thereof
to any third party may inflict severe damages on the Company, and I
shall commit no act of manufacture and/or marketing and/or transfer
and/or sale of the Information and/or of the products developed by you
and/or existing products and/or products developed by myself or jointly
with others, including customers of the Company or jointly with any
third party, whether to your customers or to others.

PART II - NON-COMPETITION

7. I undertake than from the date of termination of my work for the
Company for any reason, I shall neither work for, nor maintain, nor
consult, nor take part in a business competing with the Company,
whether directly or indirectly, whether alone or jointly with others.

<PAGE>

I further undertake to render no advice of any kind to such competing
business nor be employed by such competing business, whether for or
without remuneration, nor be directly or indirectly active in the
management and/or operation of such competing business.

This undertaking shall be valid for eighteen (18) months from the date
of termination of my employment. For the purposes of this clause,
"competing business" shall mean a business dealing with and/or
marketing and/or manufacturing and/or developing products in which the
Company shall have dealt or products in the process of being developed
by the Company during the three years preceding the termination of my
employment (hereinafter: the "Company's Products"). For the removal of
doubt, the employee shall not be barred from working in a business
dealing with products containing components of the same type as the
Company's Products, so long as the employee shall not engage, whether
directly or indirectly, in the development, manufacture or marketing of
components which may compete with the Company's Products.

PART III - VARIOUS BREACHES

8. In any case in which I shall breach my foregoing undertaking or part
thereof, I shall be obliged to compensate the Company for all the
damages and/or expenses which the Company shall incur due to such
breach, without derogating from any other remedy available to you
against me under any law due to the breach of my foregoing
undertakings.

9. This undertaking is attached to the employment agreement signed between
myself and the Company on JUNE 2, 1993 and constitutes an integral part
thereof. This undertaking does not derogate from any undertaking
imposed on me as an employee of the Company pursuant to the said
agreement and/or any law.

10. I am aware that this undertaking contains limitations to which I shall
be subject after termination of my employment with the Company. I am
signing the same after having considered the matter and been given time
to consult with a professional.

June 2, 1993 /s/ A. Gavrieli
- ------------ --------------
Date Employee's signature

<PAGE>

APPENDIX B

Pursuant to clause 13(c) of the employment agreement

EMPLOYEE'S INTELLECTUAL PROPERTY

NONE.

<PAGE>
Exhibit 10.19

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

Attn.: Ms. Liat Hod

Dear Mr. / Ms. ,
--------------

Re: EMPLOYMENT WITH NOGATECH LTD.

Nogatech Ltd. (hereinafter: the "Company") was organized in order to be a
pioneer in the field of implementing image processing technologies. On behalf of
the shareholders and management of the Company, I wish to congratulate you in
your position in the Company. For form's sake, I would like to specify hereunder
the terms of your employment with the Company:

1. JOB DESCRIPTION

Your position in the Company shall be: .
-------------------

The Company shall be entitled to modify your position or impose
additional tasks on you, at its discretion.

2. PERIOD OF EMPLOYMENT AND TERMINATION THEREOF

a. This agreement shall become effective as of AUGUST 25, 1996.

b. The duration of your employment is indefinite (hereinafter:
the "Period of Employment"). Both parties may terminate the
employment by written notice to the other given 30 days in
advance.

c. Notwithstanding the provisions of subsection (b) above, the
Company shall be entitled to dismiss you without prior warning
in each of the following cases:

1) Commitment of a criminal offense related to work
and/or a flagrant offense.

2) Breach of your undertaking pursuant to clause 13 of
this agreement.

3) Breach of the undertaking to maintain confidentially
and non-competition, attached to this agreement as
APPENDIX A.

<PAGE>

discharge of your duties, you may be requested by the Company
to act in additional settings too, all within the scope of
this agreement.

3. WORKING HOURS

a. The working week comprises a minimum of 45 working hours.
Should the work needs so require, you may be requested, from
time to time, to stay on after normal working hours and to put
in more than the usual workload. Working overtime requires the
prior written approval of your supervisor.

It is further clarified that in cases of business travel
overseas, the length of the working days shall in all cases be
deemed as ordinary days.

4. SALARY

a. Your gross monthly salary shall be NIS __________
(hereinafter: the "Salary").

The following components shall be added to the Salary:

1) Convalescence pay at the maximal rate granted from
time to time in expansion orders as in effect in the
labor market at the time being.

The convalescence pay shall be divided into monthly
payments to be added to your Salary each month.

At the time hereof, this component amounts to NIS
_______ per month.

2) Since you will be using your private car for work,
you shall be entitled to car maintenance in the
amount of NIS _______ per month.

This refund is subject to the filing of a
monthly/periodical report in the form to be used by
the Company from time to time.

3) Since you will be using your home telephone for work,
you shall be entitled to telephone costs in the
amount of NIS _______ per month.

<PAGE>

This refund is subject to the filing of a
monthly/periodical report in the form to be used by
the Company from time to time.

b. The Company shall deduct tax and other lawful payments from
your Salary.

c. The Salary shall be linked to the cost of living increments
payable in the labor market from time to time, without a
ceiling, and shall be updated accordingly.

5. ANNUAL VACATION

a. During the first two years of the Period of your Employment,
you shall be entitled to an annual vacation of 14 days.
Thereafter, the length of the annual vacation shall be
extended according to the Company's policy, as in effect from
time to time, but in no case will the vacation be shorter than
the vacation fixed in the Annual Vacation Law.

b. The timing of your vacation shall be coordinated with your
supervisor one month in advance, unless the vacation shall be
less than three days long, in which case an advance update of
one week shall suffice.

c. No accumulation of vacation days exceeding the vacation due
for two years of employment is allowed.

d. The Company may instruct you to go on a central organized
vacation concurrently with all of the Company's employees,
utilizing no more than one half of your annual vacation.

6. SICK LEAVE

Payment for sick leave shall be made subject to the provision of
medical certificates pursuant to the Sick Leave Law.

7. MILITARY RESERVE DUTY

a. Leave for active military reserve duty requires the rendering
of notice to the Company upon receipt of the order.

b. During active military reserve duty, you shall be entitled to
receive your Salary in full, subject to provision of the
appropriate confirmations upon conclusion of the service.

8. MANAGERS' INSURANCE

a. The Company shall pay the following amounts to a pension fund,
a provident fund or managers' insurance, at the choice
thereof:

<PAGE>

1) 8.33% of the Salary, as defined in clause 4(a), for
severance pay - at the Company's expense.

2) 5% of the Salary, as defined in clause 4(a), for
provident payments - at the Company's expense.

3) 5% of the Salary, as defined in clause 4(a), for
provident payments - at your expense.

b. The Company's payments to managers' insurance as set out in
subsection (a) above shall be in lieu of any other duty of
payment of severance pay, payments to a pension fund etc.

c. Your consent to section (b) exempts the Company from the need
to apply to the Minister of Labor for his approval under
Article 14 of the Severance Pay Law; however, if such a need
for an application for an appropriate permit should arise,
your signing of this agreement shall constitute an
authorization of the Company to apply for the permit on your
behalf too.

d. Should the Company be required in future, whether by law or by
an expansion order which shall apply to the entire labor
market, to make payments to another comprehensive pension fund
or arrangement, such payment to the new applicable fund or
arrangement shall be in lieu of the arrangement herein, and
you will not be permitted to draw funds on account of the
payments made within the framework of the previous
arrangement, but subject to the regulations of the appropriate
fund.

9. ADVANCED STUDY FUND

During the Period of your Employment with the Company and subject to
the General Manager's approval, the Company shall make payments to an
advanced study fund to which you belong at the acceptable rate, i.e.,
7.5% of the Salary, as defined in clause 4(a), at the Company's
expense, and 2.5% at the employee's expense.

10. CONFLICT OF INTERESTS

You shall perform no act which shall derogate from your loyalty to the
Company and/or which may place you in a conflict of interests with the
Company's objectives. In addition, throughout the term of your
employment, you shall work in no other occupation or employment without
the Company's prior written approval.

<PAGE>

11. DECLARATION OF CONFIDENTIALITY AND NON-COMPETITION

You undertake to maintain confidentially and non-competition, both
during the term of your employment with the Company and thereafter, as
specified in the undertaking of confidentially and non-competition of
the Company in the form attached to this letter, marked as Appendix A
and constituting an integral part of this letter.

12. DEFENSE SECRETS

a. Please be advised that the Company may engage, INTER ALIA, in
secret projects for the defense forces; you therefore
undertake to maintain in confidence information, or defense
secrets, which shall reach you, both in writing and verbally,
while discharging your duties, and to refrain from
transferring the same to any person and/or entity, unless
required to do so by your duties, as imposed on you.

b. Please be advised that should you fail to fulfill this
undertaking, you shall be liable for the penalties prescribed
by the Criminal Amendment Law (State Security), 5717-1957.

13. PATENTS, INVENTIONS AND COMMERCIAL SECRETS

a. The Company shall have exclusive title to any copyright to any
invention or patent (related to the fields in which the
Company engages) which you or any Company employee under your
supervision shall invent during the Period of your Employment
with the Company, and to any commercial secret related to the
Company's work. The Company shall be entitled to defend any
invention, patent or commercial secret by way of registration
or otherwise in Israel or elsewhere. It is clarified that you
will not be entitled to register the invention and/or patent
or commercial secret nor take any action with respect thereto,
save for the acts necessary for the registration or
utilization of the patent in the name of or by the Company.
The provisions of this clause shall remain in effect also
after termination of your work for the Company and shall bind
you and your lawful representatives.

b. You undertake to notify the Company in writing of any
invention, patent or commercial secret which either you or any
Company employee under your supervision shall invent,
immediately upon discovery thereof.

c. Save as set forth in Appendix B hereof, you have no interest
in any invention, patent, patent application or copyright.

14. a. The Company's rights under this contract may be assigned.

<PAGE>

b. Your undertakings under this contract may not be modified and
shall not be terminated, either in whole or in part, but
pursuant to a written document signed by an authorized
representative of the Company.

c. If any of the terms of this contract shall, for any reason, be
determined to be invalid or unenforceable, the validity and
effect of the remaining provisions of the contract shall not
be affected.

Upon signing this personal contract and formally joining the Company's staff, we
wish you continued satisfaction and enjoyment from your work. I hope that our
relationship will yield cooperation for many years to come, for the benefit of
yourself and of the Company, the employees and owners thereof.

Sincerely,

(-)
- ---------------------------
- General Manager
Nogatech Ltd.

I have perused this letter and Appendix A hereof, and have prepared Appendix B
and I hereby express my agreement to the content of the letter and of the
Appendix.

I am aware that this letter is a special and personal contract which regulates
the relationship between the Company and myself, and that the provisions of no
other agreement, including collective agreements between the Company and the
employees thereof, shall apply to me so long as this agreement is in force.

Name: LIAT HOD Date: SEPTEMBER 3, 1996
-------- -----------------
I.D. : 017686494
---------
Address: 6, ZLOFIST ST.
--------------
TEL AVIV 62994 Employee's signature: (-) /s/ L. Hod
- -------------- -----------

<PAGE>

APPENDIX A
----------

Attn.: Nogatech Ltd.

Re: UNDERTAKING OF CONFIDENTIALITY AND NON-COMPETITION
--------------------------------------------------

Whereas I wish to be employed by your company (hereinafter: the
"Company"); and

Whereas the Company is in the business of _______________________ and
engages in projects related thereto; and

Whereas during the term of my employment with the Company, I received
and will receive Information, as defined hereunder:

Any information, document, draft, process, material,
commercial secret, formula, datum, program, plan, algorithm,
patent, invention, whether patent-worthy or otherwise,
discovery, innovation, improvement, research, any method,
scientific technical development, prototype, model, picture,
record, compact disc, tape, description, drawing, computer
tape, sketch and any other thing or means of storage, whether
in writing or verbal and relating to the planning and
development of control systems, including software integrated
with hardware and information concerning the unique matters in
which the Company deals, and, INTER ALIA, on the subjects of
____________________, and matters in which the Company and/or
a new company to be organized within the Company shall engage,
and any information relating to the Company's customers and/or
manufacturing or marketing facilities, except for information
which:

(1) Is in the public domain or will be in the public
domain other than as a result of the breach of this
undertaking;

(2) Was in my lawful possession prior to my employment;

(3) Constituted part of my general knowledge prior to my
employment;

(hereinafter: the "Information"); and

Whereas my undertaking to maintain confidentiality and non-competition
is a condition precedent to my employment with the Company and
to receipt of the Information by myself;

Therefore I declare and undertake as follows:

<PAGE>

PART I - CONFIDENTIALITY
- ------------------------

1. To maintain the Information which has reached or shall reach me or
become known to me, whether directly or indirectly, during the term of
my employment with the Company and/or my involvement in the Company,
without limitation in time, also after termination of my employment
with the Company, in strict confidence.

2. Not to divulge and/or sell, whether for or without consideration and/or
cause the Information to be divulged, whether directly or indirectly,
and to take all measures in order to maintain the secrecy of the
Information and to prevent the delivery or transfer thereof to any
third party, person, entity or corporation, except to my supervisors in
the Company or pursuant to their instructions for the purpose of
discharging my duties as an employee of the Company.

3. To make no use of the Information or any part thereof for my needs or
for the needs of others, whether directly or indirectly, other than for
the purpose of executing my duties as an employee of the Company
pursuant to the instructions of my supervisors in the Company.

4. To make no copies of the Information in any manner or form, other than
pursuant to the instructions of the Company or of another authorized
for this purpose on its behalf.

5. I am aware that sole title to the Information which has reached me or
which shall reach me or become known to me in any way belongs to the
Company and that it is the exclusive property thereof, and I hereby
undertake to surrender thereto, immediately upon termination of my work
for any reason, or immediately upon its demand at any time, any
material containing Information, whether written or in any other form,
which is or shall be in my possession at any time.

6. I am aware that the delivery of the Information and/or any part thereof
to any third party may inflict severe damages on the Company, and I
shall commit no act of manufacture and/or marketing and/or transfer
and/or sale of the Information and/or of the products developed by you
and/or existing products and/or products developed by myself or jointly
with others, including customers of the Company or jointly with any
third party, whether to your customers or to others.

PART II - NON-COMPETITION
- -------------------------

7. I undertake than from the date of termination of my work for the
Company for any reason, I shall neither work for, nor maintain, nor
consult, nor take part in a business competing with the Company,
whether directly or indirectly, whether alone or jointly with others.

<PAGE>

I further undertake to render no advice of any kind to such competing
business nor be employed by such competing business, whether for or
without remuneration, nor be directly or indirectly active in the
management and/or operation of such competing business.

This undertaking shall be valid for eighteen (18) months from the date
of termination of my employment. For the purposes of this clause,
"competing business" shall mean a business dealing with and/or
marketing and/or manufacturing and/or developing products in which the
Company shall have dealt or products in the process of being developed
by the Company during the three years preceding the termination of my
employment (hereinafter: the "Company's Products"). For the removal of
doubt, the employee shall not be barred from working in a business
dealing with products containing components of the same type as the
Company's Products, so long as the employee shall not engage, whether
directly or indirectly, in the development, manufacture or marketing of
components which may compete with the Company's Products.

PART III - VARIOUS BREACHES
- ---------------------------

8. In any case in which I shall breach my foregoing undertaking or part
thereof, I shall be obliged to compensate the Company for all the
damages and/or expenses which the Company shall incur due to such
breach, without derogating from any other remedy available to you
against me under any law due to the breach of my foregoing
undertakings.

9. This undertaking is attached to the employment agreement signed between
myself and the Company on ________ and constitutes an integral part
thereof. This undertaking does not derogate from any undertaking
imposed on me as an employee of the Company pursuant to the said
agreement and/or any law.

10. I am aware that this undertaking contains limitations to which I shall
be subject after termination of my employment with the Company. I am
signing the same after having considered the matter and been given time
to consult with a professional.

SEPTEMBER 3, 1996 (-) /s/ L. Hod
- ----------------- ------------------
Date Employee's signature

<PAGE>

APPENDIX B
----------
Pursuant to clause 13(c) of the employment agreement

EMPLOYEE'S INTELLECTUAL PROPERTY
--------------------------------

NONE.
- -----

<PAGE>

EXHIBIT 10.20
-----------------

NOGATECH, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT

THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT is entered into as of
December 27, 1995, by and among NOGATECH, INC., a California corporation
(hereinafter the "Corporation"), and Andrew Schonzeit (hereinafter referred to
as the "Investor").

RECITALS

A. The Corporation desires to raise money by the sale of Series A
Preferred Stock to the Investor.

B. The Investor desires to purchase shares of Series A Preferred
Stock from the Corporation, and the Corporation desires to sell shares of Series
A Preferred Stock to the Investor, on the terms and conditions hereinafter set
forth.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties agree as
follows:

1. AUTHORIZATION AND SALE OF PREFERRED STOCK.

a. AUTHORIZATION. The Corporation will authorize on, or
before, the Closing the sale and issuance of up to four million four hundred
forty-four thousand four hundred forty-four (4,444,444) shares of its Series A
Convertible Preferred Stock (hereinafter the "Series A Preferred Stock") to the
Investor, having the rights, privileges and preferences as set forth in the
Amended and Restated Articles of Incorporation (hereinafter the "Articles") in
the form attached to this Agreement as Exhibit A.

b. SALE OF SERIES A PREFERRED STOCK. Subject to the
terms and conditions hereof, the Corporation will issue and sell to the
Investor, one hundred forty-eight thousand one hundred forty-eight (148,148)
shares of Series A Preferred Stock (the "Shares") at a per share purchase price
of 3,375/10,000 U.S. Dollars ($0.3375), for an aggregate purchase price of Fifty
Thousand U.S. Dollars (U.S. $50,000).

2. ISSUANCE AND PAYMENT.

a. CLOSING. Subject to the terms and conditions hereof,
the closing of the purchase and sale of the Shares (here-

<PAGE>

inafter the "Closing") shall be held (via facsimile transmittal and wire
transfers or cashier's check) at the Corporation's counsel's offices located at
1999 Harrison Street, Suite 1300, Oakland, California, on, or about, December
27, 1995, at 5:00 p.m., local time, or at such other time and place upon which
the Corporation and the Investor shall agree (the date of the Closing is
hereinafter referred to as the "Closing Date"). If Investor chooses to wire the
purchase price, the wire transfer shall be sent to Pezzola & Reinke's Attorney
Trust Account at: SUMMIT BANK, 2969 Broadway, Oakland, CA 94611; for deposit
into ACCOUNT NO. 01-20019741 (Summit Bank's telephone number is (510) 839-8800
and its ABA Number is 121138958). The wire instructions shall include a message
identifying the name of the Investor as the originator of the wire. If Investor
chooses to send a cashier's check, it shall be made payable to "Pezzola & Reinke
Trust Account for the benefit of Nogatech, Inc." and shall identify Investor as
the originator.

3. CORPORATION'S WARRANTIES. The Corporation hereby represents
and warrants effective as of the Closing as follows:

a. CORPORATE ORGANIZATION AND STANDING. The Corporation
is a corporation duly organized, existing and in good standing under the laws of
the State of California. The Corporation has the requisite corporate power to
carry on its business as presently conducted, and as proposed or contemplated to
be conducted in the future, and to enter into and carry out the provisions of
this Agreement and the transactions contemplated hereby. The Corporation is not
presently qualified to do business as a foreign corporation in any jurisdiction
where the failure to be so qualified would materially and adversely affect the
Corporation's business.

c. CORPORATE CAPITALIZATION.

-2-

<PAGE>

A Convertible Preferred Stock, and (ii) forty million (40,000,000) shares of a
sole class of Common Stock. The Corporation intends to issue in late November,
1995 through early December, 1995 an aggregate of four million four hundred
forty-four thousand four hundred forty-four (4,444,444) shares of series A
Preferred Stock, including the issuance of the shares hereunder (the "Intended
Series A Shares"). Immediately prior to, or simultaneous with, the Closing
(without taking into consideration the Closing), the Corporation will have a
total of five hundred seventy-three thousand two hundred fifty (573,250) shares
of Common Stock outstanding; and up to one million four hundred eighty thousand
three hundred twenty-five (1,480,325) shares of Common Stock subject to issuance
pursuant to outstanding options (the "Options") granted to employees under stock
plans or to certain investors under option agreements. All issued and
outstanding shares of capital stock will have been duly authorized and validly
issued and will be fully paid and nonassessable. The Corporation has reserved
four million four hundred forty-four thousand four hundred forty-four
(4,444,444) shares of Series A Preferred Stock for issuance of the Intended
Series A Shares and four million four hundred forty-four thousand four hundred
forty-four (4,444,444) shares of Common Stock for issuance upon conversion. The
Corporation has also reserved (a) four million four hundred forty-four thousand
four hundred forty-four (4,444,444) shares of its Common Stock for issuance upon
conversion of the Series A Convertible Preferred Stock issued and outstanding
prior to the issuance hereunder; (b) one million four hundred eighty thousand
three hundred twenty-five (1,480,325) shares of its Common Stock for issuance
upon exercise of the Options.

ii. Except as contemplated or set forth in this
Agreement, there are no outstanding preemptive or other rights, options,
warrants, conversion rights or agreements for the purchase or acquisition from
the Corporation of any shares of its capital stock.

iii. As of the date hereof, the Corporation does
not have any declared and unpaid dividends (whether payable in cash, securities
or other consideration).

-3-

<PAGE>

other equitable remedies. The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, will be fully paid and
nonassessable, and will have the rights, preferences and privileges described in
the Articles; the Common Stock issuable upon conversion of the Shares has been
duly and validly reserved and, when issued in compliance with the provisions of
this Agreement and the Articles, will be validly issued, fully paid and
nonassessable; and the Shares and such Common Stock will be free of any liens or
encumbrances, assuming the Investor takes the Shares with no notice thereof,
other than any liens or encumbrances created by or imposed upon the Shares
hereunder; provided, however, that the Shares (and the Common Stock issuable
upon conversion thereof) may be subject to restrictions on transfer under state
and/or federal securities laws.

f. MATERIAL LIABILITIES. Neither the Corporation nor its
subsidiary has any material liabilities or obligations, absolute or contingent
(individually or in the aggregate), except (i) the liabilities and obligations
set forth in the Financial Statements; (ii) liabilities and obligations which
have been incurred subsequent to August 31, 1995 in the ordinary course of
business which have not been, either in any case or in the aggregate, materially
adverse; and (iii) liabilities and obligations under a lease for its principal
offices and leases for equipment and liabilities and obligations under sales,
procurement and other contracts and arrangements entered into in the normal
course of business.

g. LITIGATION. There are no actions, proceedings or, to
the Corporation's best knowledge, investigations pending, or any threat thereof,
against or affecting the Corporation which, either individually or in the
aggregate, might result in any material adverse change in the business,
prospects, condition, affairs or operations of the Corporation or in any of its
properties or assets, or in any material impairment of the right or ability of
the Corporation to carry on its business as proposed to be

-4-

<PAGE>

conducted, and none which questions the validity of this Agreement or any action
taken or to be taken in connection herewith.

h. GOVERNMENTAL CONSENTS. To the Corporation's
knowledge, no consent, approval, order, authorization or registration,
qualifications, designation, license, declarations or filings with any Federal
or state governmental authority is required on the part of the Corporation in
connection with the consummation of the transactions contemplated herein, except
for applicable security law filings and the IITSSA filing set forth in Section
4(h) below.

i. REGISTRATION RIGHTS. The Corporation has granted
registration rights to the current holders of the shares of Series A Convertible
Preferred Stock, as successors in interest to the prior holders of such shares,
pursuant to the terms and conditions set forth in a Stock Purchase Agreement
dated as of January 1, 1993 (the "1993 Agreement"), among the Corporation, DSP
Group, Inc. and Scitex Corporation, Ltd. Except as provided hereunder and in the
1993 Agreement, the Corporation is not a party to any "registration rights
agreement" or any similar agreement pursuant to which any person would have the
right to cause, under any circumstances, the registration of securities under
the Securities Act of 1933, as amended (the "Securities Act").

j. DISCLOSURE. No representation or warranty by the
Corporation in this Agreement or in any statement or certificate furnished or to
be furnished to the Investor pursuant hereto or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.

k. SURVIVAL OF REPRESENTATIONS. All representations made
by the Corporation in or under this Agreement shall be true and accurate as of
the Closing.

4. INVESTOR REPRESENTATIONS AND WARRANTIES. The Investor
represents and warrants to the Corporation that:

a. INVESTMENT. The Investor is acquiring the Shares and
any shares of Common Stock issuable pursuant to conversion of the Shares
(hereinafter collectively the "Securities") for investment for their own
account, and not with a present intention to resell in connection with, any
distribution thereof, and they have no present intention of selling or
distributing any such Securities. It understands that the Securities have not
been registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment as expressed herein.

-5-

<PAGE>

b. RULE 144. The Investor acknowledges that because the
Securities have not been registered under the Securities Act, the Securities
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available. The Investor is aware
of the provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement under certain
circumstances.

c. NO PUBLIC MARKET. The Investor understands that no
public market now exists for any securities issued by the Corporation and that
it is uncertain whether a public market will ever exist for any such securities.

d. ACCESS TO DATA. The Investor has had an opportunity
to discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information given to it necessary or
appropriate for deciding whether or not to purchase the Securities. The Investor
acknowledges that no representations or warranties have been made by the
Corporation or any agent thereof except as set forth in this Agreement.

e. INVESTMENT EXPERIENCE. The Investor is an "accredited
investor" as that term is defined in Regulation D promulgated by the Securities
and Exchange Commission.

h. IITSSA COMPLIANCE. The Investor shall provide to the
Corporation all such information as is necessary to complete the forms required
to be filed by the Corporation with the U.S. Department of Commerce, Bureau of
Economic Analysis, under the International Investment and Trade in Services
Survey Act, as amended, and regulations issued thereunder.

i. GOVERNMENTAL CONSENTS. To the Investor's knowledge,
no consent, approval, order, authorization or registration, qualifications,
designation, license, declarations or filings with any Israeli governmental
authority is required on the part of the Investor in connection with the
consummation of the transactions contemplated herein.

-6-

<PAGE>

5. RESTRICTIVE LEGENDS. Each certificate or other written
documentation representing any of the Securities which the Investor is
purchasing or may purchase hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event (unless no longer required in the opinion of the counsel for the
Corporation) shall be stamped or otherwise imprinted with a legend substantially
in the following form:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR THE HOLDER
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITIES
SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION
REQUIREMENTS UNDER STATE LAW."

The Corporation shall be entitled to enter stop transfer notices on its
stock books with respect to the Securities.

6. AFFIRMATIVE COVENANTS OF THE CORPORATION. So long as the
Investor owns of record and beneficially at least fifty percent (50%) of the
Series A Preferred Stock shares purchased by it hereunder, until the Corporation
effects a registered underwritten public offering of its common stock, the
Corporation shall deliver to such Investor internally prepared quarterly and
annual financial statements.

7. REGISTRATION RIGHTS. At any time after three (3) years from
the Closing Date, or eighteen (18) months after the Corporation's initial public
offering, whichever is earlier, Persons holding at least twenty percent (20%) of
the Common Stock issuable upon conversion of all the Series A Preferred Stock
may request registration by the Corporation of their shares, if the anticipated
aggregate gross cash proceeds would exceed Ten Million Dollars ($10,000,000). In
such event, the Corporation will use its best efforts to cause such shares to be
registered. The Corporation shall only be obligated to effect two (2)
registrations under these demand registration rights provisions. Persons holding
Series A Preferred Stock or Common Stock issuable upon conversion of the Series
A Preferred Stock, shall be entitled to S-3 registration rights no more often
than once per every eighteen (18) month period on form S-3, if available for use
by the Corporation, for an aggregate offering price of at least One Million
Dollars ($1,000,000) per offering. Persons holding Series A Preferred Stock or
Common Stock issuable upon conversion of the Series A Preferred Stock shall be
entitled to unlimited "piggyback" registrations on a registration of the
Corporation's equity, subject to a prorata cutback with all those holding
"piggyback" registration rights in the underwriters' discretion and reasonable

-7-

<PAGE>

lock-ups as requested by underwriters. The registration expenses (exclusive of
underwriting discounts and commissions) shall be borne by the Corporation for
all permitted registrations.

8. NEGATIVE COVENANTS. The Corporation shall not, without the
vote or written consent of the holders of a majority of the shares of Series A
Stock, voting as a separate class:

i. create any new class or series of shares
having preference over the Series A Stock;

ii. merge, consolidate, or reorganize, where
such merger, consolidation, or reorganization results in the change of a
majority of the members of the Board of Directors;

iii. sell all or substantially all of its assets
or sell more than 50% of the Corporation's Common Stock in one transaction or
series of related transactions.

iv. enter into a transaction with a related
party on terms and conditions which are not done in the ordinary course of
business or which are not done on terms and conditions which represent a fair
value to the Corporation.

9. MISCELLANEOUS.

a. SURVIVAL. The covenants and agreements made herein
shall survive the Closing of the transactions contemplated hereby and shall end
when fewer than fifty percent (50%) of the Shares are outstanding or upon the
consummation of an initial public offering of any of the Corporations' shares.

c. ENTIRE AGREEMENT. This Agreement and the exhibits
attached hereto and the other documents delivered pursuant hereto constitute the
full and entire understanding and agreement between and among the parties with
regard to the subjects hereof and thereof.

-8-

<PAGE>

the other parties by like notice; (iii) delivered by commercial courier to the
other party or parties; or (iv) sent by facsimile. Such notice shall be deemed
received on the second day after transmittal if sent by one day courier together
with a transmission of such notice by facsimile if the recipient has the
capability to receive a facsimile at its address and if sent by other methods
shall be deemed received upon receipt.

e. FINDER'S AND BROKER'S FEES. The Corporation and
Investor each represents and warrants that it has retained no finder or broker
in connection with the transactions contemplated by this Agreement. Each party
hereby agrees to indemnify and to hold the other harmless from any liability for
any finder's or broker's fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which such indemnifying person, or any of its employees or representatives,
are responsible.

f. TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and are
not to be considered in construing this Agreement.

g. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

h. APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts between California residents entered into and to be performed
entirely within the State of California.

i. USE OF PROCEEDS. The Corporation may use the proceeds
of this financing for (i) working capital purposes; or (ii) capital investment.

j. ARBITRATION. Any dispute between the parties arising
out of this Agreement shall be submitted to final and binding arbitration in the
City of Cupertino, County of Santa Clara, State of California, under the
Commercial Arbitration Rules of the American Arbitration Association then in
effect, upon written notification and demand of either party therefor. In the
event either party demands such arbitration, the American Arbitration
Association shall be requested to submit a list of prospective arbitrators
consisting of persons experienced in matters involving securities offerings. The
provisions of California Code of Civil Procedure Section 1283.05 and the laws of
the State of California are incorporated herein and shall be applicable to the
arbitration. In making the award, the arbitrator shall award recovery of costs
and expenses of the arbitration and reasonable attorneys' fees to the prevailing
party. Any award may be entered as a judgment in any court of competent
jurisdiction.

-9-

<PAGE>

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.)

-10-

<PAGE>

Should judicial proceedings be commenced to enforce or carry out this
provision or any arbitration award, the prevailing party in such proceedings
shall be entitled to reasonable attorneys' fees and costs in addition to other
relief. Either party shall have the right, prior to receiving an arbitration
award, to obtain preliminary relief from a court of competent jurisdiction to
avoid injury or prejudice to that party.

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

CORPORATION:

NOGATECH, INC.
a California corporation
20300 Stevens Creek Boulevard, 4th Fl.
Cupertino, California 95014

By: /s/ Arie Heiman
------------------------------
(Signature)

- ---------------------------------
(Print Name and Title)

INVESTOR: NUMBER OF SHARES:
- -------- ----------------
<S> <C>
148,148
</TABLE>

/s/ Andrew Schonzeit
- ------------------------------------
(Signature)

Andrew U. Schonzeit
- ------------------------------------
(Print Name)

255 W. 88th St. #2c
- ------------------------------------
(Print Address)
NY, NY 10024
- ------------------------------------

-11-

<PAGE>

Exhibit 21.1

Subsidiaries of the Registrant

<TABLE>
<CAPTION>
Name Jurisdiction of Incorporation
- ---- -----------------------------
<S> <C>
Nogatech, Inc. California
Nogatech, Ltd. Israeli
</TABLE>

<PAGE>
Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We hereby consent to the use in the prospectus constituting part of this
Registration Statement on Form S-1 of our report dated February 25, 2000, except
as to the subsequent events described in Note 12 which are as of March 9 2000,
relating to the financial statements of Nogatech, Inc., which appear in such
Prospectus.

We also consent to the references to our firm under the caption "Experts".

<TABLE>
<S> <C>
Tel Aviv, Israel Kesselman & Kesselman
March 14, 2000 Certified Public Accountants (Israel)
</TABLE>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF NOGATECH INC. FOUND ON PAGES F-3, F-4, F-5
AND F-6 OF THE COMPANY'S FORM S-1 FOR THE YEAR ENDED DECEMBER 31, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1999 JAN-01-1998 JAN-01-1997
<PERIOD-END> DEC-31-1999 DEC-31-1998 DEC-31-1997
<CASH> 2,475 3,791 0
<SECURITIES> 0 0 0
<RECEIVABLES> 1,216 988 0
<ALLOWANCES> 150 24 0
<INVENTORY> 2,109 581 0
<CURRENT-ASSETS> 169 26 0
<PP&E> 352 180 0
<DEPRECIATION> 483 355 0
<TOTAL-ASSETS> 6,321 5,566 0
<CURRENT-LIABILITIES> 2,858 1,215 0
<BONDS> 0 0 0
8,243 7,816 0
0 0 0
<COMMON> 1 1 0
<OTHER-SE> (4,887) (3,518) 0
<TOTAL-LIABILITY-AND-EQUITY> 6,321 5,566 0
<SALES> 8,856 3,205 2,551
<TOTAL-REVENUES> 8,856 3,205 2,551
<CGS> 5,111 2,038 1,699
<TOTAL-COSTS> 5,111 2,038 1,699
<OTHER-EXPENSES> 4,852 3,080 2,282
<LOSS-PROVISION> 126 20 (23)
<INTEREST-EXPENSE> 11 90 (32)
<INCOME-PRETAX> (1,096) (1,823) (1,462)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (1,096) (1,823) (1,462)
<EPS-BASIC> (4.50) (7.13) (5.86)
<EPS-DILUTED> (4.50) (7.13) (5.86)

</TABLE>