Chief Operating Office (Herb Martin) Employment Agreement

ESS TECHNOLOGY, INC. LOGO]


October 23, 1996


Mr. Herbert J. Martin 24890 Tiare Lane Los Altos Hills, CA 94024


Dear Herb:


We would like you to become an advisor to ESS for a period of up to 90 days, commencing August 18, 1996, under the following terms and conditions:


1. You will work like a regular executive employee of the company, observing
the normal ESS work week.


2. Work will be performed mainly at ESS headquarters in Fremont, where an
office will be provided.


3. Directions relative to assignments will be given directly by myself.


4. You will be paid $9,166.67 per pay period ($220,000.00 per annum), payable
in the normal ESS payroll cycle.


5. An annualized bonus in the amount of $110,000.00 will be paid against
mutually agreed upon MBOs.


6. An option will be granted in your favor for the purchase of 320,000 shares
of ESS common stock, vesting at a rate of 80,000 shares per year, subject to
Board approval.


It is our mutual intention that, given a satisfactory completion of this 90-day period, or sooner if mutually agreed, you will be appointed President and Chief Operating Officer of ESS. The salary and bonus for this position will be as outlined in Paragraphs 4 and 5.


Sincerely, Agreed:


ESS TECHNOLOGY, INC.


/s/ Fred Chan /s/ Herbert J. Martin - ------------------------------- ------------ ...