SILAN-ESS COOPERATION IN VCD AGREEMENT

Cooperation Agreement

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ESS TECHNOLOGY INC | Hangzhou Silan Microelectronics Joint-Stock Co., Ltd.

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Title: SILAN-ESS COOPERATION IN VCD AGREEMENT
Governing Law: California Date: 11/9/2005
Industry: SEMICO Sector: TECHNO

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exv10w33

EXHIBIT 10.33

****Certain confidential information contained in this document, marked by brackets, has been omitted and filed with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

SILAN-ESS COOPERATION IN VCD AGREEMENT

The Parties:


		Party A:		Hangzhou Silan Microelectronics Joint-Stock Co., Ltd. ( referred to hereinafter as “Silan”)
				Address: No. 4 Hang-Zhou Huang Gu Shan Road Post Code: 310012 Telephone: Facsimile:

		Party B:		ESS Technology, Inc. (referred to hereinafter as “ESS”) Address: 48401 Fremont Blvd., Fremont, California 94538, U.S.A Telephone: Facsimile:

RECITALS


Ø		ESS’ matured VCD decoding circuitry [**] has been on sale in the market for several years, and has [**] in the combined China and India VCD market;

Ø		ESS owns all the intellectual property rights [****], and owns the rights to license or assign those rights in any way to a third party, and ESS has never licensed, assigned or transferred those rights in any manner to any third party;

Ø		Silan has successfully developed a VCD optical servo DSP controller chipset, [**] (one set consists of two pieces), which can be coupled with ESS’ [**]circuitry;

Ø		Both of the parties have cooperated in selling into VCD systems in China and India over a period of time; and

Ø		Both of the parties wish to advance a mutually beneficial business relationship for the purpose of promoting their joint market share in China’s and India’s VCD market by enhancing the features and controlling the cost of their joint products.

Therefore, in consideration of the mutual benefits flowing from cooperation in future VCD products, both parties agree as follows:


1.		Goals and Transfers of Responsibility:

1.1		ESS will assign its [**] distribution contract with FE Global for VCD applications in China and India to Silan, and Silan will become responsible for managing both China and India sales and China and India sales channels with respect to the VCD backend decoding circuitry comprised ESS’ [**] (the “VCD Backend Decoding Circuitry”);

1.2		Silan shall pay [**] to ESS as a product licensing fee (“Product License Fee”) per sale []. For sales made by Silan or its agents in VCD applications in China or India, Silan may purchase []from ESS at ESS’ Manufacturing Cost (the sum of ESS’ cost of die, packaging, testing, and overhead) plus the [**].

****Confidential Treatment Requested.


1.3		The circuitry shall be under the Silan’s brand name and trademarks and the [****] once requested by Silan for new production units only. ESS shall not remark any finished goods inventory.

2.		Scope of License Authorization.

2.1 Subject to compliance by Silan of its obligations hereunder and subject to termination as provided in this Agreement, ESS hereby grants to Silan the exclusive right to market and sell the VCD Backend Decoding Circuitry to VCD customers in China and India. For purposes of clarity, ESS retains the right to sell the [****]in non-VCD applications in China and India, as well as to sell the [****] in VCD applications in countries other than China and India.

2.2 ESS authorizes Silan to market and sell the VCD Backend Decoding Circuitry under [****] during the Transition Period defined below in section 6.2.

2.3 Silan is hereby licensed to use or refer to ESS’ product specifications in connection with marketing and sales of the VCD Backend Decoding Circuitry, to the extent the specifications accurately represent such circuitry.

2.4 During the term of this Agreement, ESS will not license, assign, transfer or otherwise distribute the rights as set forth to any person or entity other than Silan.

2.5 To ensure proper processes are used during the production, quality control and sales of the [****] under this Agreement, ESS shall provide Silan the following technical documentation:

			Ø The technology and quality control documentation related to the circuitry’s manufacturing, packaging and testing.

			Ø An illustration of the test patterns or test vectors related to the circuitry testing and product testing.

			Ø VCD firmware and corresponding software development tools needed by existing VCD applications and customers.

2.6 The parties agree that all right, title and ownership of the technical documents provided by ESS under section 2.5 of this Agreement is held by ESS, and that Silan is licensed to use such materials and the information they contain only in testing, quality control, and support of the VCD Backend Decoding Circuitry. The parties further agree that such materials are confidential and proprietary ESS information, and that Silan shall exercise no less than reasonable care to protect the confidentiality of such materials and shall not disclose or disseminate them to anyone other than Silan employees bound by confidentiality agreements with a need to know the ESS information in the performance of their job duties associated with the VCD Backend Decoding Circuitry. Upon the termination of this Agreement, Silan shall return all copies of the materials ESS provided under section 2.5, in any medium, together with any copies, extracts and derivatives thereof, to ESS.


3.		VCD Single-Chip Development

3.1 Following execution of the Agreement, Silan and ESS shall actively pursue integration of Silan’s servo processor system and ESS’ VCD backend decoding system into a single-chip (the “Single-Chip VCD”). ESS shall provide Silan with all necessary technical documentation and data for this project. Further, ESS shall provide email and telephone engineering support to complete integration. Before merging the ESS IP for the final layout, ESS shall dispatch an engineer to Silan’s headquarters to provide on-site assistance for no

****Confidential Treatment Requested.

more than [****], after receiving a written request from Silan. Overall, ESS agrees to make good faith and reasonable efforts to provide support, both in terms of technical documentation and service, to achieve complete integration of the Silan servo processor and ESS’ VCD backend decoding system.


3.2		Both parties agree to adopt the [****] for the Single-Chip VCD.

3.3		ESS shall provide the [****] process technology.

3.4		ESS shall license to Silan [****],which will be provided to Silan as soon as the agreement executed.

3.5 The only derivative work from ESS licensed technology that Silan shall be allowed to create is the Single-Chip VCD.

3.6 Silan and ESS will retain their own respective intellectual property rights in the subsystems provided individually to the Single-Chip VCD.

3.7 The Single-Chip VCD will be produced, marketed, and sold under Silan’s brand name, trademarks and a Silan label.

3.8 During the term of this Agreement, ESS will not license, assign, transfer the Technology (hereinbefore referred to) to any person or entity other than Silan.

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